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Tuesday, 29 September 1942

Mr PROWSE (FORREST, WESTERN AUSTRALIA) - Neither does Western Australia.

Mr GUY - That is probably true, but I shall leave the honorable member to speak for his own State. This, differentiation in war expenditure has resulted in a great loss of population in Tasmania, particularly of skilled workers, who have been enticed to other States where more attractive industrial conditions prevail, lt has been contended that Tasmanian resources are not being fully utilized for war production. The geographical isolation of Tasmania is a tremendous drawback. A stretch of water played a most important part in saving England militarily, but the stretch of water between Tasmania and the mainland has been a serious economic drawback to that State. Compensation to Tasmania for the adverse effects of federal policy has not been on the scale to which Tasmania is entitled. The Commonwealth Grants Commission, on page 9 of its report, states -

The disappearance of State income taxation for the duration of the war and for one year thereafter must lead to some modification in the method of ascertaining relative severity of taxation, which is arrived at by relating taxable capacity to State collections of taxation.

We do not, however, think that the circumstances have yet arisen which render our method invalid or impracticable far dealing with grants based on the financial year 1940-41, and we have therefore decided substantially tomaintain for this year our existing basis of assessment. ... It appears that, as the war proceeds, the commission may have to rely rather more on broad judgment and somewhat less on statistical analysis.

It appears that the commission should have given more consideration to the fact that Tasmania will receive not more than £880,000 in 1942-43 from the Commonwealth under the uniform taxation plan. That amount is £220,000 less than the income tax collected in Tasmania in the previous year. This is because, in arriving at the amount repayable to the States under the uniform taxation plan, the average collections for the years 1939-40 and 1940-41 were taken as a basis, whereas the taxation revenue from Tasmania in 1941-42 was £220,000 higher than the average for the two previous years. In another part of its report, the commission states -

The drain of labour from Tasmania, which is a continuation of what was happening for years prior to the war, can seriously affect the State's economic and financial position.

I agree that it does very seriously affect the financial and economic position of Tasmania. The effect in Tasmania is shown by an examination of the " Economic Indicators ", which appear on page 26 of the report. The base, being the average from 1936-37 to 1938- 39, is 100 in each case. The value of potato production fell from 117 in 1939- 40 to 75 in 1940-41; apple production from 87 to 70; and wool production from 125 to 117. The volume of butter and cheese production declined by over 7 per cent. and the net value of agricultural production fell by 29 per cent. Pastoral production remained almost stationary, whilst mining and secondary production increased.

In the period 1938-39 to 1940-41, agricultural production in Tasmania declined from £130s. 5d. a head to £7 5s. 9d. A similar serious decrease is noticeable in the dairying industry, where, over the same period, the decline was from £2 16s. to £1 19s. 6d. a head. In 1938-39 the value of all rural production in Tasmania was £23 14s.11d. a head, but two years later it was only £18 18s. 7d. a head. I direct the attention of the House to the fact that these serious decreases have occurred at a time when Australia urgently requires increased food production for its fighting forces and civil population.

Mr Collins - And our allies.

Mr Marwick - The position is most serious.

Mr GUY - I agree. I ask the Treasurer to give further consideration to the proposal to grant to Tasmania only £575,000, because the State Treasurer now faces a deficit of nearly £400,000. If the Commonwealth Government insists upon the figure of £575,000, the State Government will find it impossible to grant cost of living adjustments to the State Public Service. In fact, the State Government cannot review or adjust its expenditure in order to meet this position without inflicting distinct hardship upon the State. Whilst other States are now enjoying unbounded prosperity, Tasmania is forced to submit to rigid economy, such as no other State experiences.

Mr Marwick - Except Western Australia.

Mr GUY - I agree with the honorable member, who doubtless will explain the hardships of Western Australia during this debate. I supported the Government's proposal for introducing a uniform income tax because I believed that the reform was most necessary. I was assisted in forming my judgment by the promise of the Treasurer that any adverse effect on Tasmania financially would be adequately met when the State submitted its case to the Commonwealth Grants Commission. In my opinion, the case of Tasmania has not received due consideration. Alone among the States, Tasmania is forced to practise austerity to a much greater degree than any other State. Tasmania does not object to austerity, but I contend that the degree to which it is applied should be uniform throughout the Commonwealth. In view of the promise of the Treasurer, many Tasmanians now regard themselves as the victims of a confidence trick. The taxable capacity of Tasmania in 1940-41 was only 70.9 per cent. of the average for all States, and I contend that a just claim has been made for an increase of the grant on account of the relative severity of its taxation for that year.

These are days of mystery telegrams. Recently, a telegram which was supposed to have been sent by the Prime Minister, was read at a public meeting at Paddington. The right honorable gentleman subsequently repudiated the telegram.

Mr Calwell - Did he repudiate it?

Mr GUY - I read in the press that he had done so. On the 4th August, the Prime Minister despatched to the Premier of Tasmania a telegram stating that the grant to the State for the current financial year would be £800,000. As Tasmanians know to their sorrow, the grant will be only £575,000.

Mr.Chifley. - The statement of the honorable member is not true. The Prime Minister did not despatch any such telegram.

Mr GUY - All Iknow is that the telegram which reached the Premier of Tasmania announced that the grant to the State for the current financial year would be £800,000. The telegram was despatched on the 4th August, whereas the report of the Commonwealth Grants Commission is dated the 17th August, thirteen days later. The Treasurer of Tasmania, Mr. DwyerGray, suggests that during those thirteen days the Commonwealth Grants Commission was asked to, and did in fact, reconsider its report, and alter its recommendation. I do not make the assertion. Whether it is correct, the Treasurer will no doubt tell honorable members when he replies to this debate. Mr. Dwyer-Gray says that Tasmania is being victimized and prejudiced financially and economically by differential Commonwealth war expenditure. I trust that the Treasurer will clarify this matter to the satisfaction of the House.

Mr Calwell - Does the honorable member contend that the grant to Tasmania should be £800,000?

Mr GUY - Yes.

Mr Morgan - Simply because a clerk in the office made a mistake in despatching the telegram.

Mr GUY - How it happened, I do not know. My point is that the telegram was sent thirteen days before the commission dated its report. I agree with the view expressed by the Commonwealth Grants Commission that -

A State seeking financial aid should make reasonable effort to preserve financial stability.

Tasmania has endeavoured to do that. For example, the expenditure by Tasmania on social services is much below the average for all States. Education in Tasmania costs £1 14s. 2d. a head, but the Commonwealth average is £1 16s. 6d. Health services in Tasmania cost £1 4s.1d. a head, but the Commonwealth average is £1 7s. 2d. This disparity is to be found in nearly every other service. Tasmania has been obliged to adopt a lower standard of living than any other State.

Mr Calwell - By necessity?

Mr GUY - Yes, because the State has not the wherewithal to finance the cost of better social services. I agree with the view that claimant States must ensure that their financial embarrassment is not due to their own extravagances. If the States do not practise reasonable austerity, they must pay for their own mistakes. In the past, all States have wasted money on unproductive works. The financial burden of the States has increased considerably over a period of years, because of the continuance of a policy of spending loan money on unproductive works, as is shown in the reports of the Commonwealth Grants Commission.

In conclusion, I consider that the disproportionate allotment of war work among the States has created great difficulty for Tasmania and has caused it to lose thousands of good citizens. In addition, this disproportion has prejudicially affected Tasmania's finances and economic stability. Insufficient consideration has been given to the plight of the State.

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