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Wednesday, 16 March 1927

Senator NEEDHAM (Western Australia) . - Senator Pearce, yesterday, in moving the second reading of this bill contended that the Government had a mandate from the people to abolish, in an arbitrary manner, the per capita payments to the States. I question that assertion, because during the whole course of the 1925 election campaign there was not on any platform, or in any newspaper in Australia, a declaration by a responsible person that it was the intention of the Government to abolish these payments. It is quite evident that because of their victory at that election Mr. Bruce and Dr. Earle Page considered that they were entitled to do anything that they chose. They gained their majority, not on the question of the financial relations of the Commonwealth and the States, but by raising the bogey that the Commonwealth was on theedge of a volcano, and that red revolution was stalking throughout the land. They said that if the Labour party gained power organized government in Australia would disappear. As a matter of fact, they maintained their hold on the Treasury bench by the blackest lie that has ever fouled the pages of a nation's history. During the whole of the campaign there was not one word uttered about the intention to abolish the per capita payments. Senator Pearce questions the statement that public opinion is against the Government. I have just returned from Western Australia, and I say, advisedly, that I have never heard or known of a greater chorus of disapproval against any Government's proposal than I have heard in the western State in reference to this bill. Nearly every organization supporting the Government has declared its opposition to the measure. I have heard of no organization supporting it. Senator Pearce went to the trouble of saying that in his policy speech Mr. Bruce announced that it was the intention of the Government to abolish these payments, but I have perused that policy speech, and find that it contains no reference whatever to the bill. There was, it is true, a vague reference in it to the financial relations of the Commonwealth and the States, but there was no word of a definite character declaring that if the Government succeeded in retaining the Treasury bench it would abolish the per capita payments. Yesterday, Senator Pearce quoted from the speech delivered by the Prime Minister at Dandenong, and from his own speech to the electors of Western Australia, when as the leader of the Government's campaign in that State, he spoke in Perth. I have read both utterances, and I find in neither speech any definite statement in reference to the present proposals of the Government. The very words " per capita " are not mentioned in either.

Senator Pearce - If the honorable senator reads the report of my speech he will find that that statement is incorrect.

Senator NEEDHAM - In Perth, Senator Pearce did not say that it was the intention of the Government to abolish the per capita payments.

Senator Pearce - The honorable senator will find the words per capita in my speech.

Senator NEEDHAM - When the representative of the King opens our Parliament it is customary for him to declare the policy of the Government, but I have perused the speech delivered by His Excellency the Governor-General, at the opening of this Parliament, and I find it contains no reference to an indention on the part of the Government to abolish the per capita payments. I claim, therefore, that there has been no mandate from tike people authorizing this Parliament to put an end to the present system of making payments to the States.

Yesterday, I said that there was no urgency for this bill, and that there were many ' reasons for delaying it. The Government had already agreed to postpone the consideration of the measure for a year, and broke its promise by calling us together within a few weeks of our departure to another habitation to consider hurriedly a matter of such vital importance to every citizen of the Commonwealth. I agree with the suggestion that the measure should be postponed until after the next general election, and I urge Senator Pearce to withdraw it and allow the Ministry to make its proposals in this regard a vital part of its platform at that election, thus giving the people a chance to say whether or not the present system of payments to the States should be retained.

My right honorable friend said yesterday that the State Governments had frequently been invited to attend conferences to determine the financial relationship of the Commonwealth and the States, but he forgot to mention that on a recent occasion when the Premiers of the States were called into consultation no matter what proposition the States put forward neither the Prime Minister nor the Treasurer would entertain it.

Senator Pearce - Did the States pur, forward any proposition?

Senator NEEDHAM - I will not say that they put forward a definite proposal ; hut the right honorable gentleman did not tell the Senate yesterday that Mr. Bruce and Dr. Earle Page attended that conference with a prepared programme and a definite policy, and I venture the opinion that no matter what proposal had been put forward by a State Treasurer it would not have been enter tained. The dice were loaded against the States. Dr. Earle Page had made up his mind that he would have his way. In an historical review of the circumstances leading up to the present bill we next come to the proposal to appoint a royal commission to investigate certain matters allegedly appertaining to the bill now before us, but there was nothing in the proposed reference to a royal commission that really had any vital connexion with the principle at stake in this legislation. Here again the States were being treated to a kind of comedy, because while they were told that a commission was to be appointed, they were also informed that this hill was to be put through Parliament. The Government proposed to adopt the policy of "first behead the man and then diagnose his illness." However, it receded from that attitude as the result of pressure from the States, and it has now come forward with another proposal to put the bill through and afterwards meet the Premiers in conference.

Senator Pearcequoted the financial arrangements that had been made in Canada, South Africa, and other dominions. Realizing that every honorable senator is familiar with the history of this question from the inception of the Commonwealth, I shall not repeat the review given by the right honorable senator, except to mention briefly a few of the steps that have been taken. New proposals were submitted to a second referendum of all the States, and passed. At a conference of Premiers, held in Melbourne in 1908, it was resolved that in view of the large and varied responsibilities of the States in connexion with land settlement, railway construction, education, irrigation, &c, no definite scheme could be agreed to by the States which did not provide for their receiving (a) a fixed annual sum, and (&) a proportion of the increase in revenue from Customs and excise. At a further conference, in March, 1909, at which Commonwealth and State Ministers were present, a resolution was passed to the effect that not less than three-fifths of the Customs and excise revenue should be annually returned to the States, without limit of duration. In August of the same year, an agreement was entered into between the

Premiers of the States and the then Prime Minister (Mr. Deakin), in which provision was made for a payment of 25s. per capita to the States. That agreement was submitted to a referendum of the people in 1910, but was defeated. As tho Minister said yesterday, the Fisher Government came into office in that year, and immediately brought down the Surplus Revenue Bill, providing for the payment to the States of 25s. per capita for ten years, and until Parliament otherwise provided. The measure, which Parliament passed in 1910, is still operative, and as Parliament has not deemed it wise to repeal or amend it, it should prove conclusively that the consensus of opinion is that the States are still entitled to a share in the Customs and excise revenue. Where did the Labour party stand on that occasion? In this connexion, I refer to a statement, made in another place, that the Labour party had fought to the death to put an end to the per capita payment; but the Surplus Revenue Act of 1910, which Avas passed by the Labour party when in power, gives the lie direct to such an utterance. If the Labour party at that time had been in favour of the abolition of a per capita payment, the Surplus Revenue Act would not now be on the statute-book.

Senator THOMAS (NEW SOUTH WALES) - Who made that statement?

Senator NEEDHAM - It Avas made by an honorable member in another place, whose name I need not mention. For the information of the Senate, I now quote the opinion of Sir John Quick, who was then a member of another place. He said -

I welcome the bill, because I think it is the manifestation of a desire on the part of the Ministry and the Labour party to do some measure of justice to tho States in the distribution of surplus revenue.

An authority such as Sir John Quick,.

Whose ability and integrity we all recognize, is worth quoting. The platform of the Labour party to-day contains a plank against diminution of the per capita payment to the States, and any one who says that the members of our party have at any time fought to the death, for their abolition, is entirely wrong. Sir John Quick further said -

The attitude of the Labour party has shown clearly that they recognize the rights of the

States to participate in the Customs and. excise revenue.

It is true that in 1910 the Labour party was opposed to the financial agreement of that day being embodied in the Constitution, and in this regard the Minister yesterday regaled us Avith quotations from speeches of members of the Labour party at that time. He referred to my own utterances and Avas wondering, I suppose, how I would answer the charge of inconsistency which he levelled against me. Tho right honorable gentleman has traversed many tracks, and sometimes, in returning, has met his own ghost. A charge of inconsistency from such a source is remarkable. It is true, as I have said, that in 1910 Ave opposed the placing of the agreement arrived at between the State Premiers and the then Prime Minister (Mr. Deakin) in the Constitution; but Senator Pearce did not tell us, when he quoted the speeches of Senator Findley and myself, that he Avas then a member of our party, and that we favoured the payment of 25s. per capita. With his usual adroitness he avoided a vital point, and endeavoured to place Senator Findley and myself in a false position. When a member of our party, he also opposed the inclusion of the agreement in the Constitution, and in company with Senator Lynch, who was then a member of our party, and others, addressed the electors of Western Australia in opposition to the proposal. I remind Senator Pearce that at the time to which I am referring he advocated the continuation of the payment of 25s. per capita for a period of 25 years, and if he had had his way the present system would have, continued until 1935. Surely a charge of inconsistency can be laid at the door of the Leader of the Government in the Senate, who, at that time, Avas a strong advocate of the par capita payment being continued until the year I have mentioned. In a letter to the West Australian on 22nd February, 1910, he said-

T will stand by my original contention that the Labour party is in favour of paying 253. per head to the States, and a special grant to Western Australia, and, if the agreement is kept out of the Constitution, is pledged (o embody it in an act of Parliament for a fixed period of, say, 25 years.

That Avas the opinion of the Minister who nOW charges Senator Findley and myself with inconsistency. The right honorable gentleman is now a member of a Government in favour of reducing the period he then advocated by eight years. On the 11th "March, 1910, he is reported as having said -

Ho pledged the Labour party to give the same terms as those in the existing agreement in an act of Parliament for a term of years, and knew that an overwhelming majority .if the party was in favour of 25 years.

Senator Pearcehas been a member of many Governments; but where is the pledge which he gave to the electors of Western Australia in 1910? From the information I have given it will be seen that in those days he recognized the rights of the States in this regard. Senator Kingsmill was also a strong supporter of the agreement which provided for 25s. per capita being inserted in the Constitution. Not only was Senator Kingsmill in favour ott" that proposition, but all members of the Liberal party at that time held a similar view. The late Lord Forrest, when speaking on the 15th July, 1910, said -

T make the statement in the full knowledge of its truth that the reason the States were willing to accept 25s. per head was that they were guaranteed that amount until Parliament otherwise directs, and that it did not depend upon a chance vote in Parliament.

That fairly shows that Lord Forrest, Senator Kingsmill, and other members of the Liberal party considered that, until the people decided, the per capita payment should not be abolished. In 1910 Senator Kingsmill, when speaking on the financial agreement, said that -

Throughout Australia the Liberal party was giving the agreement hearty support because they felt it was the best arrangement that could be arrived at.

In order that I shall not do the honorable senator an injustice, I shall quote his own words. Speaking in connexion with his candidature for ' Parliament in 1910, Senator Kingsmill on the 2nd March of that year said -

The Liberal party, which he was representing, claimed that in order to give the agreement sufficient permanence to make it worth while registering it, it should be placed in such a position that it could not be changed at the will, practically, of a Government which might be suffering from a temporary want of funds. It was thought that the State finances should not be subject to changes, which might be rabid and inconvenient, and which might hamper and restrict the progress of the State.

At that time Senator Kingsmill realized that care should be taken to protect the finances of the States.

Senator Kingsmill - How does the honorable senator know that I am not of the same opinion still ?

Senator NEEDHAM - I am not imputing motives ; I am merely quoting the honorable senator's statements at a time when Western Australia and the other States were discussing the financial agreement with the Commonwealth. I have quoted his remarks to support my own arguments in favour of the rejection of this measure. I hope that Senator Kingsmill in 1927 will vote as he spoke in 1910, when he also said -

A State Treasurer was sufficiently harassed, oven when he knew what money he had, to make proper provision for the spending of that money; but his position would be very much worse if he did not know where he was to get the money to spend.

The position is the same to-day. If the per capita payment is withdrawn, the States will wonder from what source they will be able to obtain the revenue to meet their various commitments. The report of the honorable senator's speech continues -

It was obvious that a state of financial uncertainty, such as would result from the re- jection of the financial agreement, would provide a check to the development of Western Australia which could only bo described as disastrous.

Those words are as true to-day as when they were uttered. If this bill becomes law, the effect on Western Australia will be exactly -what Senator Kingsmill predicted in 1910. Western Australia has reached that stage of development at which the withdrawal of the per capita payments would be disastrous. The payment of 25s. per head of population for which the Labour Government made provision has continued to the present time. I desire to make a further quotation from the honorable senator's speech -

It was all-important that Western Australia should retain those rights which she now possessed under the Constitution. . . . Further, the Liberal party were fighting for the retention of State rights.

Senator McLachlan - Was Senator Kingsmill at that time opposed to the retention of those rights by the States ?

Senator NEEDHAM - No. I am hopeful that he will vote against this bill. The fallacy of the Treasurer's argument, that those who spend money should raise it, has been exploded, because, even if this bill becomes law, the Commonwealth Government will still engage in its roads and housing schemes.

Senator THOMAS (NEW SOUTH WALES) - And will continue its gifts to Western Australia.

Senator NEEDHAM - We shall still find one government raising money to be spent by another. If, when the conventions which resulted in federation were held, it had been thought that the action now proposed by the Government would be taken, the States would not have agreed to federate. The agreement was an honorable one. The State Governments at that time did not dream that the Commonwealth Government, after it had obtained control of the Customs and excise revenue, would retain the whole, making it necessary for the States to look elsewhere' for their revenue. The Treasurer lias attempted to show that the States will benefit from this proposal. I intend to show the Senate how it will affect Western Australia. I do not propose to refer to the legal or moral rights of the States to the continuation of the per capita payments, but shall deal only with the question of equity. For 26 years successive Governments have recognized the right of the States to a portion of the revenue derived from Customs and excise. This Parliament should not discontinue those payments without the authority of the people. If the impossible happened, and the Government resigned, and made the continuation of the per capita payments an issue, it would not regain the Treasury bench, because public opinion is so strongly against any alteration of the existing arrangement. The State Governments are in a better position to judge how the Treasurer's proposal would affect them than is the Treasurer himself. I propose to quote the remarks of one who took an active part in the conventions at which the Constitution was drafted, and afterwards in this Parliament. Referring to the relations between the States and the Commonwealth, Lord Forrest on the 15th July, 1910, said -

If honorable .members look at the Constitution, they will see there are practically no powers, or, at any rate, no vital powers, which interfere with the relations of the States and the Commonwealth left in the hand of this Parliament. The reason is that this Parliament is not a proper tribunal to judge 'be tween the interests of the States and the Commonwealth, and so nearly all the important matters which affect the States are left to the will of the people.

The present Government evidently thinks otherwise, but, in my opinion, nothing could be fairer than to ask the people to decide vital matters such as this. Amongst those who in another place opposed this bill were men who had had considerable experience as State Ministers and knew how the proposal would affect the finances of the States. I am not surprised that Dr. Earle Page should desire to abolish the per capita payments, because he has been a somewhat erratic Treasurer.

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