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Thursday, 5 December 1935


Senator HARDY (New South Wales) (1:29 AM) . - The Leader of the Opposition (Senator Collings) has given very doubtful support to this bill. He has declared that he will vote for the measure ; yet at the same time he proclaims that the bill has no virtue whatsoever.


Senator Collings - I said that it could be improved.


Senator HARDY - The honorable senator implied that the wheat-growers would be infinitely better off if this bill were not passed, whilst their conditions would be infinitely improved if a compulsory wheat pool were established. This measure is the outcome, not of a sudden decision on the part of the Government, but of a resolution by the whole of the representatives of thi wheat industry in Australia. Thi Leader of the Opposition (Senator Collings) ignores the fact that, at the conference held in Canberra some weeks ago, it was decided that constitutional legislation to assist the wheat industry could be framed, and an almost unanimous decision was reached. I admit that, since that conference, various suggestions have been made by the representatives of wheat-growers' organizations, and that there has been a general lament over the lack of a compulsory pool, but the fact remains that at that gathering representatives of every interest associated with the industry considered the constitutional aspects, discussed first the establishment of a Commonwealth compulsory pool; secondly, the principles which are embodied in the bill now before the Senate; and thirdly, the imposition of a flour tax. Although preferring a compulsory pool, the conference decided unanimously to adopt the principles embodied in this measure. That decision was based on a realization of the constitutional difficulties that surround compulsory pooling. I admit that the Premier of South Australia, Mr. Butler, on his- return to that State, reversed his original decision, and decided not to have, anything to do with the legislation now proposed. I am convinced that there are great difficulties associated with the formation of a compulsory pool - for some time I have been and still remain one of its strongest advocates - but what the wheat-growers really require more than anything else is a home-consumption price for their product. I admit that great advantages can be obtained by the compulsory pooling system, and I would cast my vote in favour of it to-morrow; but if wheat-growers in New South "Wales were asked individually what they require more than anything else, they would say without hesitation that they favoured a home-consumption price.


Senator J V MACDONALD (QUEENSLAND) - Of course they would.


Senator HARDY - I am pleased to have that admission from a member of the Opposition. That has been the desire of the representatives of the wheat industry for some time. They have held up organized marketing as an ideal to be achieved, but their strongest agitation has been in support of an endeavour to avoid the low prices ruling in Australia for wheat, and to reach some basis upon which they can derive the benefits associated with a homeconsumption price. The Leader of the Opposition (Senator Collings) assumed that, if the wheat-growers could only get a compulsory pool, they would be relieved of all their economic troubles almost immediately, and the industry would reach prosperity again. I fail to see how that can be the case, because I say quite definitely that the industry is in such difficulties to-day that, even if a home-consumption price be paid, it will still be far from stabilization. Merely by providing that a higher price shall bc paid on a certain percentage of the wheat produced we shall not place the industry on an economic basis. The Leader of the Opposition, who charged the Government with having refused to grant a compulsory pool, should realize the actual conditions of the industry. It is estimated that the total debt of the wheat-growers of- Australia amounts to £151,000,000. That is an enormous sum. That can be described as it would be in the balance-sheets of a company, as the liabilities of the industry. Of this sum approximately £37,000,000' is due to private mortgagees, £33,000,000 to joint stock banks, roughly £30,000,000 to governmental organizations,, other than State banks, about £20,000,000 to State banks, and £14,000,000 to trustee, assurance and other financial companies. The sum due to unsecured and secured creditors outside this classification, is, in round figures, £15,000,000. On one side of the ledger is an aggregate liability of approximately £151,000,000,. and it is only right to consider what the assets are and endeavour to determine whether a home-consumption price will have the beneficial effect of liquidating liabilities which some anticipate. According to the report of the Royal Commission on the Wheat Industry, the assets of that industry consist of stock, machinery and land amounting to £136,000,000. If we subtract the value of the assets from the liabilities we find that there is a deficiency of £15,000,000.


Senator Herbert Hays - The assets are largely speculative.


Senator HARDY - Not altogether; they have been compiled after extensive examination. If the honorable senator studied the report of the commission he would admit that it went to enormous: trouble to work out the debt structure of the industry. I submit these figures to> show that even if a homeconsumption price be paid all the difficulties of the industry will not be overcome. In the immediate future, other measures will have to be taken in order to bring; the industry back to an economic basis. A great deal more will have to be done than has been achieved up to the present. It may be said that the obvious thing to do is to allow tha uneconomic wheat-grower to go out of production, but that is a suggestion with, which I do not agree. I. shall not weary the Senate by arguing whether such a. proposal is economically sound, but shalL proceed to deal more particularly with the points raised by the Leader of the Opposition (Senator Collings) concerning theestablishment of a compulsory pool.. During the three years I have been a member of the Senate I have always noticed that when wheat legislation has been introduced in this chamber we can always rely upon one member of the Labour party moving for the establishment of a compulsory pool. Such a proposal is trotted out, not because it is believed to be practicable, but merely to embarrass the members of the United Country party in the wheat-growing districts of New South Wales.


Senator Brown - Some of the most reputable men in the industry believe in a compulsory pool.


Senator HARDY - That is true, and so do I. It is a plank in the platform of the United Country party of New South Wales. It is a policy in which I believe. We support the establishment of a compulsory pool for the collection, handling, storage and organized marketing of wheat under the control of the wheat-growers. Such an organization has been advocated from every platform in Australia, but the members of the Country party are sufficiently honest not to lead the wheat-growers up a blind lane. If we know that the scheme is impracticable owing to constitutional barriers, we do not hesitate to tell the growers so. I believe at the moment that constitutionally the Common-wealth compulsory wheat pool is impracticable unless we are able to secure the full cooperation of the States. The members of the Labour party assume very definitely that a Commonwealth compulsory pool could become operative without any great difficulty. They admit, however, that such a pool could not be established without the aid of the States.


Senator Collings - This legislation can be effective only with the aid of the States.


Senator HARDY - We believe that a referendum to secure an amendment of the Constitution is necessary before the Commonwealth can establish a compulsory pool without the co-operation of all the States. Under the present Constitution, such a pool can be formed only with the aid of the States. It would be very difficult to carry a referendum which would enable the Commonwealth to bring about a pool without the aid of the States, because the proposals embodied in the question submitted to the people must be carried by a majority of the electors in four of the States and a majority of the whole of the people of the Commonwealth. The Minister for Agriculture in Queensland, Mr. Bulcock, said -

If a referendum should be taken with the idea of securing additional Commonwealth marketing powers, I know that in industrial centres of Australia the issue would be not the extension of the Commonwealth marketing powers but merely a fight on the price of bread.

The Leader of the Opposition believes that it is an easy matter for the Commonwealth to establish a pool without the aid of the States.


Senator Collings - I am not suggesting an amendment of the Constitution.


Senator HARDY - Then we will consider whether it is possible to establish a pool merely with the aid of the States, and this involves a general review of section 92 of the Constitution. We have to realize that the issue under this section of the Constitution was clearly defined in the case James v. Commonwealth of Australia, in which Mr. Justice Rich said -

The issue of section 92 which declares that interstate trade shall be free involves whether it means free of State governmental interference or free of State and Commonwealth governmental interference.

The Assistant Minister in charge of the bill, who is an eminent legal authority, will say unhesitatingly that that clearly defines the issue to-day. Speaking on this subject at the recent Wheat Conference, the Attorney-General (Mr. Menzies) said -

For a number of years the High Court took the view that section 92, which provides for complete freedom of interstate trade, bound the Commonwealth just as much as it binds the States. Subsequently, however, in McArthur's case, the High Court reversed its opinion, and since that time the proposition which has been acted on in Australia under the sanction of High Court decisions is that the Commonwealth is not bound by section 92 at all, and, consequently, may legislate in respect of trade and commerce between the States without being in any way controlled by section 92. In other words, when the Commonwealth legislates in regard to interstate or export trade, it is not bound to respect the freedom of the trade, but can impose on it any restrictions it thinks fit.

That is the latest interpretation of section 92 of the Constitution by the High Court. In a few months this point will be further argued before the Privy Council, and no man can foretell the result. The point that the Leader of the Opposition should realize is that a compulsory pooling system involves the compulsory acquisition of wheat by the Commonwealth and the State authorities. It necessitates cooperative action between the Commonwealth and the States, allowing for compulsory acquisition by the Commonwealth and also compulsory acquisition by the States. When the Attorney-General (Mr. Menzies) dealt with this particular point at the conference, he said -

A scheme of compulsory pooling involves the exercise of powers by both the Commonwealth and the States. The Commonwealth comes into the scheme in order to deal, by compulsory acquisition or otherwise, with wheat moving from one State to the other, which is, therefore, outside the control of the State Parliament.

That is the actual function of the Commonwealth Government. In other words, the Commonwealth has to licence any movement of wheat that may occur between the States. What is the position of the States? They, in turn, have to be prepared to follow the course of compulsory acquisition. I shall not deal with the matter of whether or not the States can acquire on a compulsory basis, because I know that it has been attacked during the last few years; but I shall point to the big difference that exists between the present measure, which the Leader of the Opposition (Senator Collings) says is unconstitutional, and a compulsory pooling scheme. Under section 92 of the Constitution the Commonwealth admittedly can, according to the High Court decision, control the movement of interstate trade, but what will the position be if some of the States are not prepared to do their part? The possibility of this was revealed by the lack of unanimity amongst the delegates at the conference. New South Wales, an exporting State, was agreeable to support the compulsory pool; Queensland, which is not an exporting State, and Victoria were also prepared to support it. But the Western Australian representative said : " We cannot pledge ourselves to a compulsory pool. All that we can do is to promise to consider it." And the Tasmanian representative said : " I am personally in favour of a compulsory pool, but if I submit it to my growers, they will want to shoot me off the planet." Mr. Butler, the Premier of South Australia, definitely stated his opposition to a compulsory pool. I have endeavoured to demonstrate that pooling within the original interpretation of section 92 depends on the unanimous co-operation of the States, and that it is quite evident that this co-operation cannot be expected.


Senator Collings - No.


Senator HARDY - Very well ! The Leader of the Opposition is evidently of the opinion that a pool can be established, in face of opposition from some of the States. Apparently he has overlooked section 99 which states -

The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.


Senator Collings - We know section 99 by heart.


Senator HARDY - Then the honorable senator has never until now appreciated its implications. Section 99, with its clear interpretation, prevents the Commonwealth from taking action to establish a compulsory pool in one or two of the States. This would be held by a non-co-operating State to be a preferential action. What can be done? One course is to adopt the proposal embodied in the measure now before this chamber, for that will at least give the- industry a home-consumption price. In spite of the repeated statements of the Leader of the Opposition concerning the judgment of the High Court, this legislation is not unconstitutional. When the honorable senator states that the bill before the Senate is unconstitutional, he is assuming that the Privy Council will give a ruling that section 92 binds the Commonwealth.


Senator Sir George Pearce - The Privy Council has given no decision yet.


Senator HARDY - I understand that application for the hearing of the case has not yet been received by that tribunal. Yet the Leader of the Opposition stated that this legislation is unconstitutional.


Senator Collings - I said that if the Privy Council declares in the pending case that another marketing law is unconstitutional, the measure now before the Senate must also be unconstitutional.


Senator HARDY - If the Leader of the Opposition is prepared to defer action while awaiting a decision as to whether an act is unconstitutional, he might wait a long time. If a man hesitates about getting married, because he wonders whether the marriage will be a success, he will never get married. While we are waiting the wheat-grower will not get his home-consumption price. According to the latest decision of the High Court, this legislation is within the scope of the Constitution. It gives to the wheat-grower a home-consumption price and, for that reason, should be heartily approved by every honorable senator. I know that a number of honorable senators are desirous of contributing to this debate, and I, in common with others, wish that this discussion had taken place earlier, because the subject is of tremendous importance to the wheat-growers.


Senator Collings - Let us come back next week.


Senator HARDY - Unfortunately, we have to deal with the legislation now. The bill will undoubtedly be passed, and the wheat-growers will have the benefit of it. I feel that this measure reachesthe half-way mark to compulsory pooling. We shall not cease in our efforts to secure a compulsory pool, but we realize that until we obtain the unanimous co-operation of the States or amend the Constitution, a compulsory pool is constitutionally impossible. It is of no use putting up an Aunt Sally for the first constitutional lawyer to knock down two hours afterwards. We want to give wheat-growers something permanent; something that will stand the test of years. The wheat-growers should not be made the victims of political propaganda. The Government having brought forward legislation to give 75. per cent, of what the wheat-grower desires - the home-consumption price - it behoves honorable senators to support the bill without hesitation or criticism.







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