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Wednesday, 28 March 1928

Senator LYNCH (Western Australia) . - Before the curtain is rung down on this act of humiliation, this tragic despoiling of the States, I propose to move the following amendment: - 6. (1) Notwithstanding anything contained in this act for the first ten years after the passing of this act there shall be paid to each State 25s. per head of its estimated population.

(2)   For the first year following ten years after the passing of this act, and thereafter for each succeeding year, there shall be paid to each State a sum equivalent to 20s. per head of its estimated population.

(3)   For the purpose of computing the sums payable under (1) and (2), all moneys paid in liquidation of the debts of the States, payment of interest, and other purposes under the act, shall be deemed to be part of the total amount required to be paid on a per capita basis.

The PRESIDENT (Senator the Hon. Sir John Newlands). - I take it that the honorable senator is indicating his intention to move an amendment when the bill is in committee.

Senator LYNCH - Yes. For greater accuracy and in order to make my meaning clear to honorable senators, I propose, with your permission, Mr. President, to direct the attention of honorable senators to a diagram which I have prepared, and which, I believe, will assist them to comprehend my argument more clearly. The diagram, as honorable senators will observe, contains three figures whose superficial areas approximate the amounts proposed to be paid under three respective schemes. All these figures start from a common line representing the present financial year. The scale is half an inch to £1,000,000. The first, shown in red, represents what would be the natural development of the per capita payment of 25s. over a period of 58 years, which is the term fixed under the financial agreement attached as a schedule to the bill, and then on to 65 years. It starts with the payment this year to the States of £7,584,000, the amount mentioned by the Prime Minister when explaining the agreement to another place, and shows the expansion which would take place as population increased, and as the resourcesof the Commonwealth were developed. It shows that at the end of the period of 58 years the payment would be in the vicinity of £25,000,000 per annum. I arrive at this amount by computing the increase in population on the accepted basis of 2 per cent., which would mean, in the 58th year, a population of 19,630,000, or, in round figures, 20,000,000 of people. If the per capita payments were continued, as I contend they ought to be, the several States of the Commonwealth would receive from the Federal Government £25,000,000 in that year.

I turn now to the second figure, printed in black. It represents what will be the position of the States under the proposal embodied in the bill. Its shape, as honorable senators will observe, follows that of a spade, an implement used for the purpose, amongst others, of digging graves. As a matter of fact, this agreement virtually represents the financial grave of the several States. It begins, as honorable senators will see,with a slightly better scale of payments. Like the mermaid, it begins well and ends up anyhow. A mermaid is usually depicted as having a well-shaped head, comely features, and shoulders of the approved Grecian model; but there her beauty ends. The same may be said of the scheme as accepted by the State Treasurers. It begins well, but during the 58 years' period instead of expanding as does the figure setting out what would be the effect of continuing the old per capita payments, it contracts. After the end of the term, payments to the States practically cease. In the 58th year, namely, in 1986, the payments to the States will consist of £7,584,912; the capitation amount for the year 1926-27- £801,000, the yearly contribution of 2s. 6d. to a sinking fund for existing debts; £163,865, covering the increased interest on transferred properties, and a variable annual sum representing 5s. sinking fund in respect of all future debts calculated not to exceed £100,000 per annum, but commencing at £84,000. The total will be £13,800,000. In the following year, however, 59 years from the commencement of this financial agreement, the States will be in receipt of only £5,200,000, and this annual payment will go on until it is time to make another attack on the States. The last crumb will be gobbled up by the Commonwealth. In the total for the 58th year the Government improperly includes the payment of £165,000 a year as interest upon transferred properties. This is done to make the Government's scheme appear more magnanimous than it is. This payment of interest on the capital value of transferred properties should have no place in the calculation. We might as well include in the cost the stationery and furniture in this Senate. Another item improperly employed is £100,000, which is to De set aside annually to finance a borrowing policy of £40,000,000 per annum.

I turn now to the third figure in the diagram which outlines what would be the position of the States under my proposal. For the first seven years it runs side by side with the scheme for which this agreement provides, but there it parts company. The per capita payments widen, but not at the same rate as is indicated in the graph dealing with the old per capita payments, because I propose to reduce the amount from 25s. to 20s. a head then and thereafter.

I remind honorable senators that this chamber is upon its trial, and therefore, it should take action to avert this deadly blow which is being aimed at the States' financial security. I wish the Senate to stand up to allotted task. The Government's proposal will mean financial unification. Within the 58 years covered by the agree ment, the Commonwealth Treasury will be relieved of about £30,000,000, including £7,000,000 for war debts, £1,000,000 for repatriation services, and £20,000,000 for interest upon war indebtedness. This amount of £30,000,000 will definitely end 40 years hence, ,or eighteen years before the scheme reaches maturity, and to that extent the Com monwealth will be saved £30,000,000, That means that; with the £20,000,000, saved from the payment to the States the Commonwealth will be a gainer to the extent of £50,000,000 in the 58 years. That will be the position when it will reduce the States to the receipt of a miserable dole of £5,200,000 a year. When the words, "until the Parliament otherwise provides " were placed in the Constitution, it never entered the minds of the fathers of federation that this would be the destiny of the States' pass. "Until the Parliament otherwise repudiates " are the words that should have been employed, for this is an act of repudiation. That term would have truly and honestly expressed the present position. The six States are entitled to a substantial share of the Commonwealth revenue, and yet we find that the amount will eventually be reduced to £5,200,000. Even that is an inflated figure, because it is calculated on the basis of an impossible borrowing rate. The sum of - £100,000 annually is employed to sustain a borrowing policy of £40,000,000 a year, which is perfectly absurd. We shall never borrow £40,000,000 a year for the simple reason that the money lenders will check us long before that sum is reached. What would we do with £40,000,000 a year for the next 58 years ? Yet the sum of £100,000 is used in this deceptive calculation in order to obtain a favorable verdict from this Parliament, and, in particular, from the Senate. To make the position plainer, the Commonwealth undertakes to pay to the States 5s. per cent, as sinking fund on all future borrowings. For this purpose "the annual sum of £100,000 is used and payable to the States. In the 53rd year - the peak' 'year - the payment would be £5,300,000, and this sum would never increase if the Commonwealth borrowed for ever at the rate of £40,000,006 a year. In the previous calculation I have used £5,200,000 instead of £5,300,000 on account of the reduced amount, namely, £84,000, payable for this year; but that is immaterial.

I appeal to honorable senators with all the earnestness at my command to reject this agreement. I point out that, if they pass this bill, they will assuredly sign the death warrant of the States' financial -security and independence. If they do, the fault will be on their own heads. I shall fight the measure to the last ditch,:¥nd to the limit of my endurance in Western Australia. I will not allow such a fraud to be perpertrated on the people. The late Chief Justice Griffith described " as an act of fraud under the Constitution" something far less serious than this. This chamber is the custodian of the rights of the States. It is the supposed citadel of State rights. We are here to see that they get a fair deal, and they are entitled to natural justice. The present necessities of the States should not be dealt with as merchandise, as this Government is doing. No doubt normal times will return. Fiftyeight years hence, Western Australia, on a most moderate estimate, should have a population of 1,500,000. When that time comes, the grant to Western Australia under this financial agreement will amount to 30d. per head of the population. Thirty pieces of copper - not even silver - to the betrayed in this case, and not to the traitor !

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