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Thursday, 28 May 1942

Mr PROWSE (Forrest) (12:15 PM) . - I do not wish to record an affirmative vote on the motion for the second reading of this important measure without giving some reasons for doing so. If this were peace-time no one would need to ask me in what way I was about to vote. I would vote against the extension hi the powers of the Commonwealth Government, and against any further interference with, or infringement of, State rights. I have repeatedly said in this House that £1 in the pocket of a citizen in one part of Australia should be equal in value to £1 in the pocket of a citizen in any other part, but it is not >o, and the reason lies in the varying taxation demands' made by the States upon their people brought about by Commonwealth .tariffs, navigation and other laws, favouring some States to the disadvantage of others. Now we are at war. When I last went before the electors in my division I told them that I regarded the winning of the war as paramount over everything else, and they endorsed that view. As a matter of fact, we have in Australia to-day only one industry, that of the war, together with essential subsidiary industries. We are completely and totally at war ; nothing else matters so much. I am a State righter, but no State right is more important than a free Australia. I stand for a free Australia, and all other con siderations, including State rights, must yield to that.

I like the Government's proposals better than those put forward by the Leader of the Opposition (Mr. Fadden) when he was Treasurer. Ordinarily, we find ourselves with a certain amount of taxable income, and there - has been an arrangement between the States and the Commonwealth that between them they should take in the form of taxes just as much of that income as was reasonable. Now, in present circumstances, the States will do well if they remain financially static. They are not in the business of war to the extent that the Commonwealth is. Upon the shoulders of the Commonwealth Government and of this Parliament rests the responsibility of keeping the enemy out of Australia, and of enabling us to play our part as one of the allied nations in the fight for liberty. What I like about this measure is that it does not do any serious injury to the States. It pegs State revenue at its present level. It hands to the States for the duration of the war, and for a year afterwards, the average of their income tax returns for the last two years. They are assured of that, when, to . my mind, there exists a possibility that, if they were to depend upon their ordinary methods of revenue raising, they might be worse off. The total taxable income of the Commonwealth has increased as a result -of the expenditure by the Commonwealth of money on the prosecution of the war. This expenditure has placed most of the citizens of Australia in a much better financial position than they were in peace-time. Of course, this prosperity is evanescent. It will pass, and we shall have to pay for it in the long run because the industry of war returns no profits! It is all loss, but in the meantime, the expenditure of so much money leaves us without unemployment in the States, and places in the pockets of the people more money than they had in peace-time. The Commonwealth Government, being responsible for the defence of the country, has a Tight to all the extra revenue which may be raised by taxing the increased national income. It does nothing to strengthen my resolution to vote for this measure to hear honor: able members speak of it as a steppingstone to unification. I am opposed to unification. The Prime Minister (Mr. Curtin) knows that the people of "Western Australia are opposed to it, and to the extension of Commonwealth powers. I hare held a sort of Gallup pole of my constituents on this issue, and over 90 per cent, of them are in favour of the Government's proposal for the duration of the war. Some of them have asked me to seek an assurance from the Government that, after the war is over, there shall be no tricky business - that advantage will not be taken of the situation to implement a political platform. I have faith in the Prime Minister in that regard. I believe that he will not take advantage of the situation, but will allow the people themselves to settle a question of that kind. I am not a unificationist; I am a State righter. I even went farther than that in the past, but I want unity when we are fighting the enemy. The States have a good deal of reason to be jealous and fearful. When they entered federation, it was said to be for the purpose of achieving unity in regard to three principal things, customs, postal services and defence. Since then, the Commonwealth has assumed the direction of a great deal more than that. It has impinged upon State rights. It has entered fields of taxation never dreamt of at first. However, any objection which we may have to this extension of Commonwealth power must be subordinated to the present need to defend the country. In that connexion, the Government's proposal serves a proper purpose. State representatives, if they are honest with themselves, must recognize that this is not a time for the States to embark upon new enterprises. If they can receive the same revenue as before and maintain existing services, they will have very little to complain of. I like this scheme the better because it docs mean unification of income tax legislation. The people of some States may feel that they will now be called upon to pay more than they formerly did, and they are inclined to take credit for the fast that in the past they paid so little in taxes, saying that their low taxes were due to good government. I disagree with that, but even if it were true, I still say that those States which, at this time, have a high taxable capacity, should be

Mr. Prowseprepared to pay more. I honour the right honorable member for Yarra (Mr. Scullin) for the attitude he has taken up. He is a Victorian, and in his State taxes have been low, .but he recognizes that it is only just that Victoria should now pay more if it is able to do so. Victoria has derived more benefit from the expenditure of Commonwealth money on defence than has any other State. As a matter of fact, it is not only since the outbreak of war that Victoria has been in a favorable position compared with the other States. I lived in Victoria before the inception of federation. At that time, Victoria was a protectionist State, and in the shelter of its tariff, it established secondary industries. ."When the federal system was instituted, the customs barriers between States were broken down, and Victoria had the whole of the Commonwealth for a market. In Western Australia, at that time, certain factories had been established, and were developing satisfactorily. Victoria en- joyed protection against overseas competition, but we needed protection against Victoria just as much as it needed protection against more efficient competition from overseas. Thus, ever since, federation, Victoria has been in a favorable position as compared with the more distant States, and for that reason taxes in Victoria have remained low. Before the war, Western Australia bought on an average £10,000,000 worth of goods each year from the eastern States, mostly from Victoria, and sold to the eastern States only £1,000,000 worth of goods each year, leaving an adverse trade balance of £9,000,000. That money pro- vided employment in the manufacturing. States, to make profits for the manufacturers, and eventually to provide revenue for the governments of Victoria and New South Wales. The people of Western Australia have had to buy in a dear market, and its government is charged with the development of a State one-third of the area of the Commonwealth. It has heavy burdens to bear, and consequently has been forced to tax its citizens heavily, who do not benefit by it» trade-with the eastern States. Now, however, we are at war, and I recognize that taxation should be, as far as possible, unified for the purpose of carrying on essential services, and particularly those associated with the prosecution of the war. [ shall vote in favour of this measure, because I regard it as necessary for the purposes of the war effort. I am told that, by the unification of income taxation, man-power will be released. The passage of this bill ought to release manpower directly to a considerable degree and indirectly to probably an even greater degree. It will also effect a saving of money. Some people fail to understand that the Treasurer will get a greatly increased revenue, largely on account of this scheme, because of the increased taxable capacity of the people and of companies. With an expenditure for waT purposes of £1,000,000 a day, much of that money will find its way back into revenue in the form of taxes, and it must he returned to the coffers of the Commonwealth rather than to those of the States, since we are at deadly grips with the enemy.

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