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Friday, 23 March 1928


Senator FOLL (Queensland) .- A great deal of bitterness was felt in Queensland in the early stages of the negotiations between the Commonwealth and the States when it was thought that the Commonwealth intended to throw upon the States the onus of collecting through income taxation the amount of revenue that it would lose by the abolition of the per capita payments. But the people of Queensland were not so much disturbed because of the proposals of the Commonwealth itself. They realized that for the previous ten or twelve years they had been heavily overtaxed and they felt that if the Commonwealth Government abandoned the field of direct taxation mid handed it over to the State Government, the taxation would be imposed by the State in an inequitable way, just as it bacl been in the immediate past, and that considerably more would be extracted from the taxpayers than was actually needed to compensate the State for the loss of the per capita payments. That was the main objection of a large section of the people of Queensland to the original proposals brought forward by the Commonwealth Government.


Senator Givens - If the State Government was taxing the people inequitably, the electors of Queensland had the remedy in their own hands.


Senator FOLL - The honorable senator knows quite well that what he says is theoretically correct.


Senator Givens - And actually, too.


Senator FOLL - The electors of Queensland are the victims' of one of the biggest swindles which has ever been perpetrated in the political life of Australia. Even if those opposed to State Labour rule secure a majority of the votes cast, they are prevented from securing a majority of the seats owing to the unfair redistribution. That is the reason why such a strong feeling exists in that State. They have been swindled out of their rights.

Although those opposed to the present administration have polled a majority of the votes, they have not had an opportunity to unseat the present government.


Senator Givens - That is quite true.


Senator FOLL - Yes'. That is why a majority of the people of Queensland regard the Commonwealth Government as their only arm of defence, and the only source from which they can get justice under present conditions. When the Government stated that they proposed to dispense with the per capita payment, and to make available to the States certain fields of taxation in which the Commonwealth was operating, the States thought that they were not getting a fair deal. That is why the Queensland Chamber of Commerce and other influential organizations waged such a bitter' campaign against the original proposals of the Government. The agreement now under consideration has been signed by the Commonwealth Government and the Governments of the six States, and has also been ratified by four of the State Parliaments. 1 believe that a majority of the people in Queensland are satisfied with the Government's proposals, and are gratified to learn that the agreement is likely to be ratified by all parties. The proposal for a readjustment of Commonwealth' and State finances is not of recent origin; the problem has been a nightmare to Commonwealth and State treasurers ever since the financial operations of the Commonwealth reached any magnitude. After nearly 28 years' experience of other systems, we can say that this agreement will have the effect of overcoming practically all the difficulties in this regard with which the Commonwealth and States have been confronted for many years. It is a tribute to the present Commonwealth Government that such an arrangement should have been reached. I do not blame the State Governments for declining to offer suggestions at the first conference. It was only natural that they should wish to retain the per capita system under which they received moneys 'which they did not raise. They were able to spend that money as they liked, 'and, to use a colloquialism, would have" been "mugs" if they had given up their claims to it without putting up a strong fight. When the

Government decided to simplify the financial arrangements between the Commonwealth and the States they had to definitely dispense with the per capita payments. The fact that this agreement has been entered into will have a very beneficial effect upon the credit of the Commonwealth arid of the States, and will assist them considerably in many of their financial transactions overseas. When the agreement was adopted, many/ of the leading financial newspapers in Great Britain expressed pleasure at the prospect of Australia's finances being placed on a much sounder basis, and provision being made for our debts to be redeemed within a specified period. During the last twelve or thirteen years the taxpayers in Queensland have been wondering what the future has in store for them. They have been alarmed at the unrestricted borrowing which has been carried on by the Government without any attempt to establish a sinking fund to provide for the redemption of the debt within a certain period. Many loans on falling due have been converted at higher rates involving expenditure greater than the taxpayers should be asked to bear. Under the re-constituted Australian Loan Council, each State will have an interest in the borrowing policy of the Commonwealth and the other States. In the past the Commonwealth Government and two or three of the State Governments have been on the London money market at the same time. In one instance when South Australia and Queensland were anxious to obtain a fairly substantial loan, there was almost indecent competition between the two States. Tinder this agreement the Australian Loan Council will function on behalf of the - Commonwealth and the States, and their representatives on the Loan Council will, in a sense, be financial partners. Prior to New South Wales being represented on the Loan Council, that State raised a loan on which the flotation expenses and interest charges for the first year amounted to thousands of pounds more than they need have done. That was due largely to the fact that Mr. Lang, who was then Premier of New South Wales, declined to be associated with the Loan Council. The terms tinder which that loan

Senator Foll.was obtained were so disadvantageous to the State that even Mr. Lang eventually decided that his Government should be represented on the council. This was on the eve of the New South Wales election. It must be satisfactory to the Commonwealth and State Governments and also to the people to realize that in all future borrowing, the Commonwealth and the States will be acting in unison, instead of competing against each other. Every credit is due to those responsible for the establishment of an Australian Loan Council. A few years ago almost unlimited amounts of money were available to borrowers, but that is not the position ta-day. Mr. McCormack, the Labour Premier of Queensland, on his " return from Great Britain a few months ago, sounded a wise note of warning when he said that Australia should call a halt in borrowing, and that in future the same amount of loan money would not be available. That is interesting, coming as it does from- one who for years has spent freely from the public purse, and who was a member of the State Government led by the honorable member for Dalley (Mr. Theodore), who was responsible for the most reckless financing that Queensland has ever experienced. In saying that overseas borrowing should be curtailed I do noi suggest that Australia's credit has been impaired. This agreement is a satisfactory solution of the problem that was unsolved by the original proposals. Under this arrangement the Commonwealth and State Governments are working in a partnership for the purpose of stabilizing the finances of Australia generally, instead of the States as formerly competing one against the other for any loan moneys that might be available. I believe that this agreement will do much to create a truer spirit of federation and a better feeling between the Commonwealth and the States than has existed up to the present.


Senator THOMAS (NEW SOUTH WALES) - Does not the honorable senator think that it will lead to unification?







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