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Tuesday, 30 October 1956

Mr DUTHIE (Wilmot) .- The honorable member for Melbourne Ports (Mr. Crean) opened the debate for the Opposition on this bill last Thursday. It is one of many measures which go through this Parliament without opposition, but on which we like to state our views, even though we may agree with the general principles. About 85 per cent, of the measures introduced' in this Parliament are passed without a division. We may differ on details, but the measures are passed. This hill comes within that category.

When the Treasurer (Sir Arthur Fadden; introduced this measure, he said that the grants recommended for Tasmania, South Australia and Western Australia - the three claimant States, or the poorer States in the financial sense - for this year totalled £18,500,000, and were made up of £5,800,000 for South Australia, £9,200,000 for Western Australia and £3,500,000 to Tasmania. He said that the totals were exactly the same as those for last year, but added that the reimbursements of taxation to the three claimant States, for this year, had risen by £3,711,000. The total revenue grants to the three claimant States will rise by that amount. South Australia will receive £2,077,000, Western Australia £1,627,000, and Tasmania the tiny sum of £7,000. That is all we Tasmanians can expect by way of an increase this financial year, but the Premier said recently that he has learnt to be thankful for small mercies and small blessings. The amount is inadequate to help meet some of the major increased costs of our State administration. 1 feel, therefore, that Tasmania has a right to protest at the paucity of the increase for this year.

Measures of this kind have been before the Parliament for over 40 years. The first was introduced in 1910. The principle of these measures is laid down in section 96 of the Constitution, which reads as follows: -

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Par liament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

In 1933, the Commonwealth Grants Commission was formed, lt tidied up this legislation and has been a major part of what might be called extra-parliamentary work since 1933. The commission has met in the three claimant States every year since 1933. The principle on which it works is a simple one. It is -

Special grants are justified when a State through financial stress from any cause is unable efficiently to discharge its functions as a member of the Federation and should be determined by the amount of help found necessary to make it possible for that State by reasonable effort to function at a standard not appreciably below that of the other States.

It means, in effect, that the Commonwealth Grants Commission is empowered by this Parliament to make sure each year that Tasmania, South Australia and Western Australia, the three claimant States, do not suffer financially through any disadvantage of population, geography or for any other reason. It tries to balance the budgets of those three States and to give their people a standard of living equivalent to that enjoyed by the residents of the major and wealthier States of the Commonwealth - Queensland, New South Wales and Victoria. For that reason, £18,500,000 will be paid by the Treasury this year to the three claimant States to balance our economy and to give it pep and strength where it is weaker, so that our standard of living will not be impaired.

I wish to refer to the twenty-third report of the Commonwealth Grants Commission. It is an excellent document. I am always amazed at the detail of the commission's reports, the mass of data and the detailed information on the economy of the six States in its various phases. The following statement appears on page 19 of the report -

It might well be asked, however, why the need for special grants persists so strongly when other Commonwealth payments to the States have increased greatly, and when there is evidence of economic expansion in the claimant States at least equal to that which has occurred in the non-claimant States. In general terms, the reason is that costs of expansion of State services, of development of undertakings such as railways and water supply, and of general administration are relatively heavy in the States of smaller populations.

At the same time, benefits to revenue arising from economic expansion do not flow directly to the State governments.

The commission is the champion of the three smaller States and must be commended for its attitude, as expressed in this report, lt has even been tackled by the Commonwealth Treasury, and on this occasion it was obliged to answer three suggestions from Treasury officials, the top financial men of the Commonwealth. They are the hierarchy, so far as finance is concerned, and the States dance to their tune. I admire the Commonwealth Grants Commission for standing up to the Treasury and saying, in effect, " We are not going to be brow-beaten on these three matters. We have our own opinions concerning them ". It is good to see that there is in Australia a group of men powerful enough to stand up to the Commonwealth Treasury officials. The three instances in which the commission has stood up to the Treasury during the last twelve months are recorded in this dramatic document.

At page 24 of the report, the commission states that the Commonwealth Treasury suggested that, in the future, the commission should devote a greater part of its attention than was the case hitherto to the calculation of the second part of a grant. I might perhaps explain that there are two sections of these grants, the first part being designed to adjust the previous budgets of the States, and the second part to balance their budgets in the coming twelve months. As I say, the Treasury suggested that the commission should give greater attention to the calculation of the second part, and it also suggested special hearings each year in camera, in other words, secret sessions. The commission considered this matter and the three humble men replied in the following heroic words: -

The commission does not agree with the contention that the second part of a special grant is more important than the first part.

In other words, it said to the Treasury, " Keep out of our field. This is our domain ". However, it agreed to meet Treasury officials early in 1957 for the purpose of considering the Treasury proposal in greater detail. That consideration will relate to future occasions, but, for the time being, the proposal has been rejected.

The second occasion on which this brave group of three men stood up to the Commonwealth Treasury is referred to on page 28 of the report. The Treasury had pointed out that the value of the allowances made by the commission had reached £2,600,000 for the year under review, 1954-55. What are known as percentage allowances are made to meet special difficulties in providing social services in the three smaller States. The percentage allowance had been doubled in only one State, Tasmania, the allowance having been increased from 6 per cent, to 12 per cent. The Treasury endeavoured to establish that the commission had increased the allowances in respect of all three States, which was not so! The commission decided that the allowances should remain as they were, and stated its decision in the following words: -

The commission has decided to make the same percentage allowance in this Report as in the 22nd Report.

So, the Treasury lost the second battle in the war.

On the third occasion, the Commonwealth Treasury expressed doubt concerning the validity of the commission's calculations regarding the severity of State nonincome taxes and suggested that they be reviewed. From the commission's calculations, the Treasury derived figures concerning the relative taxable capacity of the States. Taking the simple average of the non-claimant States as 100, the relative capacity of South Australia to pay nonincome taxes was 86, whilst that of Western Australia was 82, and that of Tasmania 70. The commission replied, in respect of this matter, that it would not alter the basis, and it claimed that there was no point in the criticism advanced by the Treasury. The Treasury, therefore, lost all three battles*

Mr Curtin - It was knocked right out of the ring!

Mr DUTHIE - Yes, to put it in simple language. 1 commend the commission for the strength of character that its members showed on those three occasions.

It is interesting to note that the railways of Australia, of all the instrumentalities under the control of the State governments, add most to State indebtedness. Of course, the Commonwealth has been able to make a profit on its railways, and is to be congratulated. The day may well come when all the railways of this country wlil become a national responsibility. I do not think that that would worry the States unduly, because the deficits of the State railway systems have assumed enormous proportions. At the moment, the total indebtedness of the railways of the six States amounts to £69,000,000. Their position is becoming hopeless. One rarely hears of a State railway making a profit. We appreciate, of course, that one of the main reasons for their construction is to develop the country, and we know, too, that they provide cheap freight rates for big companies, primary producers and others. In addition, they help to reduce transportation costs; but, of course, they do those things at the expense of the budget. The deficits of the State railways are increasing year by vear.

The Commonwealth Grants Commission has devoted a considerable portion of its report to this matter. At page 48, it indicates that railway revenue for 1954-55 throughout the six States amounted to £169,786,000, but. as usual, expenditure exceeded revenue, with the result that South Australia, Western Australia and Tasmania had deficits totalling approximately £5,000,000. New South Wales, Victoria and Queensland achieved the miracle of surpluses of approximately £6,000,000. We know, however, that their total indebtedness, in respect of capital and interest, is huge. New South Wales has not yet paid for its railways, which cost approximately £28,000,000 originally. In Tasmania, from 2nd May, 1955, it was necessary to increase rail charges by an average of approximately 7 per cent. In South Australia, suburban fares were increased by 15 per cent, from 1st April, 1955. It will be seen, therefore, that, in an endeavour to overtake railway deficits, the States have had to increase freight charges, to the disadvantage of the general economy. I mention this matter to indicate one of the major difficulties of the States.

At page 45 of the report, the commission sets out comparative expenditures throughout the Commonwealth on education, health, hospitals, law and order, and so on, for the year 1954-55. In respect of education, Western Australia led the field with expenditure per head of 201s.; Tasmania came next with expenditure of 197s.; and New South Wales was third with expenditure of 179s. Id. Queensland, as most honorable members know, spent most on health, hospitals and charities. Tt spent 146s. lid. per head, while Tasmania was next with 137s. 6d., and Western Australia third with 131s. 7d. Tasmania spends more than any other State on law and order and public safety. The expenditure per capita in that State is 55s. 4d. In Queensland the amount spent per capita under this heading is 50s. 5d. Tasmania is the only State that spends more than Queensland op these services.

Mr L R JOHNSON (HUGHES, NEW SOUTH WALES) - The Liberal governments are well down the list.

Mr DUTHIE - That is so. The Liberal governments are well down the list in expenditure on health, hospitals, charities, law and order and public safety, and I think that it is to the credit of Tasmania and Western Australia, two of the claimant States, that they spend so much a head on these very vital services. Tasmania has the most ambitious education system in Australia, including 40 area schools. It is costing the Tasmanian Government £250,000 a year to transport the children to the schools. Hardly a child who lives within 8 miles of an area school is not provided with transport to and from that school, and that service has become very costly. The increase in building costs has caused a substantial increase in the cost of education services in Tasmania.

The grants made by the Commonwealth Grants Commission enable the States of South Australia, Western Australia and Tasmania to carry on and to maintain their high level of educational facilities. A country is judged, surely, on its standards of education, health, law and order, and its provisions for charities. Those matters must be the touchstones of a government's attitude towards its people, and I think that the claimant States are to be congratulated on the high standards that they have maintained in respect of these services.

I wish now to refer to the matter of uniform income tax, and taxation generally. The States have their own avenues of revenue. Since 1942, as we all know, the uniform income tax system has been in operation, and it has proved to be the best taxation method ever devised. Whatever the Vicorians may think of it, I believe that the people generally would be loath to return to the system of double taxation, under which they were compelled to complete two income tax returns and pay more in taxes, per capita, than they pay under the uniform tax scheme. One result of the system, however, is that the States have been left with very limited fields of taxation, and 1 shall indicate briefly the kinds of tax that, the States have to impose in an endeavour to raise enough revenue to meet their expenses in providing the services to which I have referred. The States now impose estate duty, stamp duty, land tax, motor tax, liquor tax, racing tax, entertainments tax and lotteries tax. They are the main fields of taxation that have been left to the States. In several of these directions Tasmania has been compelled to increase the rates of taxation. As honorable members know, the attitude of the Commonwealth Grants Commission is that it will not help a State that is not prepared to help itself. The commission says, " We will not make a grant to a State that is imposing too low a rate of tax in one of these fields, or a rate that is appreciably lower than that being charged in any other State of the Commonwealth ". The result is that the claimant States must make it clear that they have not lowered their rates of internal tax to what the commission may consider an unfair extent. This helps to keep the States up to scratch, because they cannot obtain Commonwealth help unless they are prepared to help themselves, and to raise just and reasonable taxes from the sources to which I have referred.

Mr CLYDE CAMERON (HINDMARSH, SOUTH AUSTRALIA) - What is the commission's attitude to entertainments tax?

Mr DUTHIE - The commission's attitude to entertainments tax has altered very little since the days when the Commonwealth was imposing that tax. The Commonwealth has left the field in the last two years, and now the States impose entertainments tax only on admissions to motion picture theatres and to horse and dog race meetings. I think that those are the only three kinds of entertainment that are now taxed. The limitation of the tax to those classes of entertainment has been a great help to such sporting bodies as football clubs and cricket clubs, which do not have to pay entertainments tax.

Mr CLYDE CAMERON (HINDMARSH, SOUTH AUSTRALIA) - What is the position in regard to motor registration?

Mr DUTHIE - The Tasmanian Government had to increase the tax on motor registrations last year, more or less to meet the wishes of the Commonwealth Grants Commission. Motorists in Tasmania paid £100,644 more in tax for the year ended 30th June, 1956, than they did in the previous year. The total revenue for last year was £623,782, compared with £523,138 in the previous year. This increase was due mainly to the increased rate of tax imposed last year, and the motorists of Tasmania, like motorists everywhere, complain from time to time of the great inroads being made on their purses foi the privilege of driving motor cars. That is a problem for the State governments to work out, and it is difficult for us in the federal sphere to advise them on it. The Tasmanian Government, when it felt that it was right and proper to do so, increased this tax to a certain extent last year, in order to bring in extra revenue. Tasmania is trying to play its part in raising as much revenue as possible, in accordance with the principles laid down by the Commonwealth Grants Commission.

In the field of housing Tasmania has struck some trouble. Because the full economic rents were not charged on homes built through the Agricultural Bank, Tasmania suffered a loss of nearly £30,000 on its State homes last year. This has caused the Tasmanian Government a great deal of concern. The economic rents paid in Tasmania range from £1 12s. 6d. to £4 18s. a week. A report that was tabled in the Tasmanian Parliament yesterday stated that the most typical rents being paid are in the vicinity of £2 10s. a week. My own opinion is that the average would be a bit higher than that. The Commonwealth Grants Commission would say, however, that we are not charging the full economic rents for our homes to-day. The State Government has in mind the economic plight of the lower wage groups and it has done its best to help them b> keeping rents down. Rents constitute a major item of the ordinary man's expenditure these days, if he is fortunate enough to have a house to live in. I do not know how the Tasmanian Government will solve the problem. If it raises the rents by 5' or 10s. a week it will receive a strong protest from all the lower income wageearners. It is obvious, however, that Tasmania cannot continue, year after year, to suffer a deficit of £30,000 on State homes lt would be fair for people on higher incomes to pay a little more than those on lower incomes for comparable homes. That is the only way in which the problem can be satisfactorily solved, if a flat rate of increase is not to be imposed.

While I am on the subject of State homes, I might mention that Tasmania had completed 4,494 homes to 30th June last, of which 554 had been completed in the last financial year under the State housing plan. In addition, 226 were under construction, and about 1,454 were the subject of purchase contracts during the year. That knocks out the argument of the Liberal party that we do not believe in homeownership. That has been one of our opponents' catch-cries for a long time. I point out that in Tasmania there is in operation a rent-purchase system under which the ordinary man can buy his home. You may be interested to know, Mr. Speaker, that no deposit is required on any home built by State authorities in Tasmania. After a man has been in a government house for two years, he can, if he likes, take advantage of the rent-purchase system, without being required to pay a deposit.

In conclusion, 1 want to refer to the difficulties that our coal-miners are experiencing at present, due to disposal difficulties in the coal-mining industry. The Jubilee mine, in my electorate, is to dismiss 42 men - its entire staff: The latest information that I have is that it will be closed. That would be a tragedy, because the men concerned, who live in St. Mary's could not get employment anywhere else in the district. The closing of the mine would bring impoverishment of the worst kind to them. Either to-day or to-morrow, the Tasmanian Attorney-General will confer with the management of the mine to see whether a solution of the problem can be found. To-day, the honorable member for Bass (Mr. Barnard) and I interviewed the Minister for Supply (Mr. Beale). We suggested that the management of the Bell Bay aluminium undertaking should, have a look at the quality of coal being produced by two Tasmanian coal mines which have been opened since the Bell Bay project was first mooted and Tasmanian coal was tested to ascertain its suitability for use at Bell Bay. If greater quantities of Tasmanian coal could be used in the aluminium works there, the 42 men who will be dismissed from the Jubilee mine could be absorbed into the two new mines. The Minister asked us to put our request in writing and promised to give it sympathetic consideration. The two new mines near Fingal are producing the best coal so far mined in Tasmania. I agree that, generally speaking, Tasmanian coal has very poor gasification qualities. Incidentally, if the Bell Bay works could use some of the gas generated in Parliament House here, it would not have to use coal at all! We have made what is, I think, a practicable suggestion to the Minister. Tasmanian coal has not been tested for suitability for use in the Bell Bay works since the 1940's when the project was first put on the drawing boards. It is about time that the Government tested the coal produced by these two new mines to see whether it is of better quality than the coal that was tested previously. We hope that the Minister will arrange for that to be done and that subsequently a greater quantity of Tasmanian coal will be used at the Bell Bay works, which, at present, is taking 60,000 tons of Cornwall coal and 200 tons of Jubilee coal each year.

Like all other States, Tasmania has water schemes under way and needs money for them. Money is required also for the expansion of forestry projects, for the construction of roads to timber-producing areas and for the extension of health services.

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