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Monday, 21 March 1927

Senator PEARCE (Western AustraliaVicePresident of the Executive Council) . - The Government cannot accept the requested amendment, and if it is carried will have to ask another place not to make it. It would certainly destroy the bill, and subsequent happenings would be on the lap of the gods. The following is the statement which I made in Perth when outlining the policy of the Government and I had the authority of the Government for making it. It is taken from the West Australian of the 9th October, 1925-

The Commonwealth Government, after fully considering the position, has decided to ask Parliament for authority to make a special grant this year to Western Australia of £450,000, which will be inclusive of the grant now paid.

That statement, to any intelligent person, cannot have a doubtful meaning. I was applauded, which is a proof that it was not unpalatable to my audience. I continued -

Although this proposal is made for this year only, pending the holding of the conference with the State' Governments on Federal and State financial relations, to which I have already referred, it is a recognition and an admission by the Commonwealth Government that the findings of the Royal Commission justify Western Australia receiving that amount of financial compensation, and it therefore establishes a basis upon which any decision as to future financial relationships shall rest - (Applause). The amount of £450,000 is not granted for the purpose of being splashed up on State enterprises or political adventures - (Loud applause). The Commonwealth Government expects that it will be used to give relief in the directions indicated by the commission to those industries which it has been proved are suffering from the tariff or from other conditions of federation that adversely effect Western Australia. One of these disabilities, the commission points out, is the present high rate of State income tax, particularly on the higher incomes, which is undoubtedly driving capital out of the State.

Later, I repeated that statement at Kalgoorlie, and added that, apart from any financial arrangements the Commonwealth might make with the States, Western Australia needed, and must receive, £450,000 a year inclusive of the . special grant. This is a result of the appointment of the Disabilities Royal Commission by the present Government. It does not follow that when a commission is appointed a government is bound to advise Parliament to accept the methods it may propose for giving relief. In this case the Government did not follow the exact methods by which the commission recommended that relief should bc given. Any honorable senator who reads the report and the findings of the commission will recognize immediately that the mere giving of a grant of money to Western Australia is not the best method for relieving that State of her heavy financial liabilities. Right through the report will be found references to the fact that one of the chief disabilities of Western Australia is the vast territory that she has to administer and govern with a handful of people. One of the commissioners went so far as to recommend as a partial remedy that the Commonwealth should assume financial liability for the territory in the north-west of Western Australia. The calculation of the amount of relief that would bo given to Western Australia, if that were done, is the calculation of the Under-Treasurer of i iic State, not of the Commonwealth Treasurer. The figure which he stated before ( lie commission was £150,000 per annum. In addition to undertaking to pay thi3 grant of £300,000 inclusive oi' the diminishing grant to which Western Australia is entitled, the Commonwealth Government offered to take over the northwestern territory of Western Australia, down to the 26th parallel of south latitude. To that the Western. Australian Government has demurred, but it has expressed its willingness to discuss the question of the Commonwealth Government taking over the north-west territory, down to the 20th parallel of south latitude.

Senator Kingsmill - That is quite fi good proposal.

Senator PEARCE - The Commonwealth Government has replied that it is willing to negotiate the matter, and take over the territory clown to the 20th parallel of south latitude, and our information is that it would not make very much difference in the amount of financial relief given to Western Australia, because the greater amount of the liability of the State arises from government activities north of the 20th parallel of south latitude. The Commonwealth Government, therefore, has adopted the £450,000 recommendation of the majority of the Disabilities Commission, but it has said that it will give that relief in two directions, the first being a grant of £300,000 for five years, and the second the taking over and assumption of the obligations and debts appertaining to the north-western territory of the State, down to the 20th parallel of south latitude, and interest on the liabilities incurred amounting roughly to £150,000 a year. Seeing that the Western Australian Government is willing to negotiate on those terms, and seeing further that with the relief already given this year the Premier of tho State is able to announce a surplus for the year, it cannot be said that the Commonwealth is treating the State ungenerously. No State has the right to ask the Commonwealth Government to vote more money than is actually required to put it on a fair financial basis, unless it be a mendi cant State seeking charity. The Government believes that if Western Australia has a grant of £300,000 for five years, and the Commonwealth assumes the liability for the north-west territory referred to, the State will very soon be able to put its finances in order and need not seek relief from any other source. At any rate, the Government is doing justice to the State, and also to the finding of the royal commission, although not in exactly the way the commission has recommended. Five years hence I venture to say this Parliament will be as national iu its outlook as it is to-day, and can be trusted to deal fairly with the State if then the State is still in need of assistance. In these circumstances I ask the committee .not to endanger the grant or the bill by carrying an amendment, but to agree with ina that,, having regard to all the circumstances, and the .immediate necessity of the State, the Government has done substantial and fair justice to Western Australia.

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