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Tuesday, 29 September 1942

Mr CHIFLEY - The explanation is simple. Over a number of years it has been the practice of the commission to inform the Prime Minister confidentially, and before the report is made available, of its recommendations for grants to claimant States. This course is taken in order to permit the Prime Minister confidentially to advise the Premiers of the claimant States of the recommendations of the commission so that undue delay does not occur in preparing the State budgets. That procedure was followed this year. It was not an innovation by this Government. When the Prime Minister received the confidential information from the Commonwealth Grants

Commission this year he followed the procedure of his predecessors, and on the 4th August sent coded confidential telegrams to the Premiers of South Australia, Western Australia and Tasmania, informing them of the amounts of the proposed grants in each case. Unfortunately the wrong figures were sent to Tasmania. The telegrams were forwarded simultaneously and in almost identical language, but the amount of £800,000 used in the telegrams to South Australia and Western Australia was repeated in the telegram to Tasmania, whereas the figure should have been £575,000. The DirectorGeneral of Posts and Telegraphs has caused an inquiry to be made into the error in the transmission of the telegram to the Premier of Tasmania. The text of his report is as follows: -

The mutilation was due to carelessness on the part of the transmitting telegraphist at Canberra who Sailed to notice the slight variation in the text of the telegram addressed to the Tasmanian Premier as compared with the messages to Adelaide and Perth. In order to expedite their disposal, the texts of the three telegrams were prepared simultaneously with the result that the Hobart message was received with the same text as those of the other States.

Suitable corrective action has been taken in respect of the officer at fault and regret is expressed for the unfortunate happening.

In order to avoid a recurrence of similar failures in the future, instructions have been issued to the telegraph personnel at Canberra that, in all cases where messages appear to be alike, simultaneous transmission must not be undertaken unless every word in the messages concerned has first been checked and all copies found to agree.

Mr Guy - It is unfortunate that the incorrect amount was sent to Tasmania, for the State Treasurer framed his budget upon it.

Mr CHIFLEY - I agree with the honorable gentleman, but I assure him that there was no communication between the Commonwealth Grants Commission and the Prime Minister, except the normal information sent by the commission confidentially intimating the amount of the proposed grant in respect of each State. It would be most improper for a member of the Government to attempt to influence the Commonwealth Grants Commission in such a matter. Neither the Prime Minister nor I would-be a party to such a procedure. I believe that if any move of that nature were made the commission would strongly and properly resent it. I cannot believe that any government would attempt to influence a body like the Commonwealth Grants Commission in the discharge of its important duties. The honorable member for Wilmot (Mr. Guy) has referred to the smallness of the grant to Tasmania. Under section 6 of the States Grants (Income Tax Reimbursement) Act, any State may approach the Commonwealth Grants Commission for consideration of a claim for greater compensation because of the condition of its finances. It would he very difficult for the commission thus early in the year to determine what the deficit or surplus of a State is likely to be. This is proven by the fact that last year New South Wales budgeted for a surplus of £20,000 but ended the year with a surplus of £1,100,000; Victoria budgeted for a surplus of £11,000 and had a surplus of £792,000; Queensland budgeted for a surplus of £12,000 and had a surplus of £64,000 ; South Australia budgeted for a surplus of £10,000 and had a surplus of £1,087,000

Mr PROWSE - Those surpluses were the result of war expenditure.

Mr CHIFLEY - The States were aware bef ore they prepared their budgets that there would be a large war expenditure. Western Australia budgeted for a deficit of £198,000 and had a surplus of £2,000. Tasmania budgeted for a deficit of £156,000 and had a surplus of £2,000. In 1936-37 and 1937-38, Western Australia received advances of £44,000 and £136,000, respectively, for the purpose of tiding it over difficulties arising from drought. The circumstances that then caused that State to approach the Commonwealth Grants Commission had an effect on the budgetary position that was not capable of prior estimation; consequently it rereceived the advances I have mentioned against future grants. I say frankly that, so far as one is able to judge, the financial position of Tasmania is such that it will be less able to meet its commitments this year than will any of the other claimantStates. It will be recalled that the Government of Tasmania claimed that hecause of certain changes its income tax collections for one of the .base years used in the determination of the compensation to be payable in connexion with uniform taxation were very much lower than they would normally have been. The matter was referred to theCommonwealth Grants Commission, which found that assessments had been issued late and that the returns from income tax for that year had consequently been lower than the normal collection. It recommended an increase of the compensation by £77,000; and that increase was made. This has no relation to the position of Tasmania or any other State during the present year. Any State which, as time goes on, finds that circumstances arising out of the war or otherwise have prevented it from achieving the financial stability it anticipated, may apply to the Commonwealth Grants Commission for consideration of its position. I have no doubt that that body will deal fairly with any application that may come before it. It is claimed that Tasmania derives no benefit from war expenditure by the Commonwealth. It is perfectly true that, so far, Tasmania has not received from this source benefits equal to those that have been obtained by the other States. In some degree that is true also of Western Australia. The honorable member for Forrest (Mr. Prowse) referred to the decline of the wheat-growing and gold-mining industries in that State. The circumstances in relation to gold-mining are well known; what has happened was absolutely unavoidable. If, in consequence, the State should find itself in financial difficulties, I have no doubt that it will approach the Commonwealth Grants Commission for reconsideration of its position. It is not quite correct to say that Tasmania has not received any benefit from Commonwealth war expenditure. That its factory production has risen considerably cannot be disputed. Since 1934-35, it has increased from £3,100,000 to £6,900,000. The increase since the year prior to the war has been substantial - £1,500,000. According to the index numbers, there has been substantial improvement of the average production for the three years 1938-39 to 1940-41. Taking the average production of the three previous years asthe base figure of 100, mining production has increased from 99 to 142, secon dary production from 103 to 133, and savings bank deposits from 108 to 115 in 1940-41, despite the loss of population referred to by the honorable member for Wilmot. These increases prove that there has been some improvement of the economic position of Tasmania. I am not attempting to dispute the honorable member's statement that certain factors have not been so beneficial to Tasmania as to other States. I wish it to be clearly understood, however, that if at any time a State considers that there are factors which warrant its receiving an increase of the allocation or compensation made under uniform taxation, the act specifically gives to it the right to approach the Commonwealth Grants Commission for reconsideration of its position. The commission is recognized as a fairminded, semi-judicial body. The mere fact that, because of certain of its recommendations, some States have received less than they considered they ought to have been given, does not mean that, in the final analysis, they will not obtain justice from the commission. I repeat the important point: It is very difficult for the commission early in the financial year, particularly in view of what happened to budget estimates last year, to determine exactly what the financial position of a State may be later in the year. I believe that it will adjust equitably whatever disabilities may afflict any of the States.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

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