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Wednesday, 28 March 1928

Senator CARROLL (Western Australia) . - The subject of the per capita payments, about which' a good deal has been said, is not really the issue before the Senate. We are now considering whether this is a just and a reasonable agreement. The money thatany Government raises is drawn from the pockets of the taxpayers, whether they are considered as the inhabitants of the respective States, orare regarded collectively as the people of the Commonwealth. If the States receive less under this agreement than would have been paid to them had the per capita system been continued, either the Commonwealth will take more money than heretofore from the pockets of the taxpayers, or agreater sum. will remain in their possession. I do not think that the charge canbe sustained that the Commonwealth is collecting more than is required for its commitments, although it has been said that the Government is doing that by reason of the roads grant. Nobody will deny that this Parliament legislates to-day upon lines that were not contemplated when Federation was inaugurated. The people alone can prevent the continuationof that policy. Whether they reside in Queensland or Western Australia, they have the power of expressing their opinion on this as on every other matter through the ballot box. I have no doubt that the electors generally have a good idea of what is taking place.

Senator McLachlan - They know what they have to pay, at any rate.

Senator CARROLL - Certainly ; and I think that they are asked to pay a great deal too much, both in Federal and State taxation. The cost of government is constantly increasing. The Commonwealth should return portion of its revenue to the States, not only because of the heavy obligation incurred by the States in supplying the services that they rendered prior to the establishment of federation, but principally because the union took from them their chief sources of revenue, and those moneys that were most easily collected. Under the Constitution, the Commonwealth was obliged to return a specific proportion of itscustoms and excise revenue to the States; but, even before the expiration of the 10 years' bookkeeping period, during which the Braddon section operated,that system broke down and became inoperative by reason of a judgment of the High Court. In 1908 the court ruled that money appropriated by. this Parliament, and not actually expended, was expended within the meaning of the act, and was justifiably deducted from the customs' and excise revenue.

Frequent endeavours have been made by governments of all shades of political thought to alter that position. The argument that the States will lose by the withdrawal of the per capita payments presupposes that, but for this action of the Government, those payments would have continued for all time. But, to my mind, the arrangement would have been varied, if not abolished, in the near future. If it had not been varied in the manner now proposed, it would have been changed in some other way that, perhaps, would not have been so beneficial to the States as the present agreement.

Senator Needham - Is this alteration beneficial toWestern Australia?

Senator CARROLL - I cannot say. I am not, like Saul, "also among the prophets." The Premier of Western Australia, Mr. Collier, remarked that the proposals of the Commonwealth Government were very attractive, in that they provided a larger contribution to the States for a number of years than they would have received under the per capita system. He added that it was difficult to say for how long the States would benefit under the scheme, because, after all, it was purely a matter of speculation. It was stated in another place that the States would lose this, that, or the other amount ; but, as Mr. Collier remarked, the exact sum is merely a matter of speculation. Although the agreement has been accepted by the various States, it is not like the laws of the Medes and the Persians; it can be altered. It is unthinkable that we should tie the hands of the States in such a manner that they would be unable to get out of their bonds for 58 years. The arrangement could be altered later if experience of the present agreement showed that it was inequitable or injurious in its effects. The agreement provides that the Commonwealth shall take over the net debts of the States. That will be distinctly unfair to those States which have made an effort to provide for the extinction of their public debts by the establishment of a sinking fund. Western Australia stands in a very good, perhaps the foremost, position in that regard. Tasmania, also, has done a great deal in a similar direction ; but the other States have made practically no provision.

Senator Payne - Does the honorable senator consider that special consideration should be given to those States which have made that provision?

Senator CARROLL - The Commonwealth should calculate the percentage which the net debt of a State like Western Australia bears to the gross debt, and take over a like percentage of the debts of the other States.

Senator Herbert Hays - Has not that factor been taken into consideration?

Senator CARROLL - The gross debt of Western Australia is £70,705,000, and the net debt £61,000,000.

Senator Lynch - Western Australia is given credit for her sinking fund.

Senator CARROLL - She gets credit for her sinking fund; but, at the same time, the Commonwealth proposes to take over her net debt. Some of the States have not made any effort to liquidate their indebtedness, and, therefore, they do not occupy a similar position. A good deal has been said in regard to the miserable pittance which the various States will receive under the sinking fund arrangement. It does not make any difference what money is actually paid ; the effect of the arrangement is that the Commonwealth will pay one-third of all existing debts and one-half of all future borrowings of the States. The basis of the sinking fund is that the debts shall be extinguished in a given time. As the Commonwealth is to contribute one-third of the total sinking-fund payments in relation to existing debts, the effect is that she will repay one-third of those debts; and, as she is to provide one-half of the sinking fund to liquidate future borrowings, in effect she will repay onehalf of those borrowings. Reference has been made to unification. I remind honorable senators of the Labour party that, on one or two occasions in the past, they have propounded socialistic schemes which, if agreed to, could have been financed only by the abolition of the per capita payments. It was even suggested that those payments should be abolished to enable their schemes to be put in operation.

Senator Needham - What were those schemes ?

Senator CARROLL - I cannot name them at the moment ; but I can distinctly remember their having been brought forward.

Senator Needham - Does the honorable senator say that we advocated the abolition of the per capita payments?

Senator CARROLL - In the past, yes.

Senator Needham - Oh, no! The honorable senator is altogether astray.

Senator CARROLL - The appointment of the Development and Migration Commission, which received the approval of a majority of the States, has gone a' long way towards unification, and the taking away of the sovereign rights of the States. Every State in Australia welcomed the appointment of that commission, and none more so than Western Australia. The commission decides what public works in the States shall be financed out of the loan of £34,000,000 made to the Commonwealth byGreat Britain. If there were a real desire to preserve the sovereign rights of the States a move in that direction ought to have been made when it was proposed to appoint that commission ; yet no such action was taken.

Senator Needham - Honorable senators who sit on this side objected to the appointment of the commission, and fought the bill.

Senator CARROLL - For the reason that positions carrying very big salaries were to be found for one or two men.

Senator Needham - That was not the reason. We said that it was work which should be undertaken by the Commonwealth Government, not by a commission.

Senator CARROLL - I supported the abolition of the per capita payments when the States Grants Bill came before the Senate in Melbourne. I believe that the agreement which we are now considering will benefit the people of Australia and result in a more harmonious relationship being established between the States and the Commonwealth. I am not able to indulge in prophecy, but I sincerely trust that the agreement will be of advantage to the States. I do not believe that any man who holds such a responsible position 'as that of Premier of a State would sign the agreement under duress. Those gentlemen would have been acting quite within their rights if they had opposed it and put forward counter proposals. In my opinion this arrangement is the very best that they could have made. If in the future it is found not to be to their advantage the people of Australia will be quite capable of handling the position. They will not regard their hands as having been tied.

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