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Thursday, 12 November 1936

Senator Sir GEORGE PEARCE (Western Australia) (Minister for External affairs) [5.2]."- I must express my surprise at some of the criticism directed at this bill, because I think much of it arises from misapprehension of what the proposed amendment would effect. And I wag particularly surprised to hear a Tasmanian, Senator Millen, oppose an alteration of the Constitution which is designed to give to the primary producers an opportunity to secure for themselves what the secondary producers already have.

Senator Collings - Hear, hear!

Senator Sir GEORGEPEARCE.I can understand the opposition of the Premier of Tasmania (Mr. Ogilvie). That arises from that party attitude to which the last speaker referred. Nothing that this Go- vernment can do can be right, according to Mr. Ogilvie. But I take it that a Tasmanian senator should look at this matter as it affects the interests of his State. I have been for a considerable time a member of governments that have had to deal with appeals by primary producers for assistance to their industries. We have had more appeals for assistance from more sections of primary industry in Tasmania than from any other State in the Commonwealth. Those appeals nearly all arose from a set of circumstances due to disorganization in the industry, and in nearly every case where assistance was given it had to be accompanied by some stipulation that the industry would do something to help itself by some form of reorganization. In other words many of these appeals came to the Commonwealth because of the lack of organization in the industry and because of lack of the means of orderly marketing.

Senator Payne - Can the right honorable senator name any industry of that nature in Tasmania?

Senator Sir GEORGE PEARCE - I could name several.

Senator Payne - Name one.

Senator Sir GEORGE PEARCE - I suggest that there is no part of the Commonwealth in which the primary industries would benefit more by the adoption of orderly marketing and organization in industry, than would the States of Tasmania and Western Australia. Senator Millen, who took exception to the word" marketing", conjured up dreadful consequences to the people of the Commonwealth if the proposal in the bill be accepted. He contended that " marketing " has a much wider meaning than the supporters of the bill say it has. I advise honorable senators to read carefully the terms of the proposed alteration : - 92a. The provisions of the last preceding section shall not apply to laws with respect to marketing made by, or under the authority of, the Parliament in the exorcise of any powers vested in the Parliament by this Constitution.

In any law we pass with respect to marketing, we are limited to the powers vested in us by the Constitution.

Senator Grant - And with respect to interstate trade and commerce.

Senator Sir GEORGE PEARCE - Yes, but not intra-State trade and commerce. Therefore there is nothing we can do in regard to marketing that would exceed the powers already vested in this Parliament under the Constitution.

Senator Grant - Because section 92 prevents us.

Senator Sir GEORGEPEARCE. - The honorable senator is quite wrong. The suggestion is that the present proposal would interfere in some way with the trade and commerce power of the States, but the trade and commerce power of this Parliament is limited to trade and commerce " with other countries and among the States". That limitation is found in section 51 itself, and does not depend on section 92. Therefore there can be no dread spectre behind the word " marketing ". Senators Millen and Duncan-Hughes pointed out the very obvious fact that the duty of the Senate is to safeguard State rights. I hope that they do not assume that only those honorable senators who oppose the bill are prepared to stand for the rights of the States. Some of us consider that by supporting the bill we shall also support State rights. What are State rights, and what is a State right in respect of the subject of marketing! Here, let us say, is a State that desires to assist its primary producers by means of orderly marketing. Whether we believe in orderly marketing or not, if we favour State rights we must believe in the right of a State to assist its primary producers by the means which it thinks fit; but the State finds that it cannot do that because the people of another State can, by reason of the freedom now declared by the Privy Council to be enjoyed under section 92, defeat the object of legislation passed to assist producers. Thus the right of that State has been destroyed ; because of the judgment of the Privy Council it has no right to protect and assist its own primary producers.

I shall not leave the matter there. I point out that this right at one time existed. Prior to federation, every colony had the right to assist and protect primary or any other industries within its own borders. Is it imagined that when the people of the colonies joined the federation they intended to destroy their rights? What was federation? It was merely a distribution of powers. Certain powers were to be exercised federally and certain others were to be exercised by the States. Nobody intended that some powers should disappear altogether and cease to be exercisable by either the Commonwealth or the States. Yet that is what has happened. Schemes for orderly marketing could have been carried out completely and absolutely by any one of the six colonics, prior to federation. They could have not only devised such schemes within their own borders, but they could also have prevented their destruction through intercolonial competition, and could have regulated marketing so as to cope with the competition of foreign trade.

Senator Millen - And with their eyes open they decided upon interstate freetrade.

Senator SirGE ORGE PEARCE - No. They did not give up any of the powers they enjoyed when they federated. They thought that they redistributed the powers in this way: As it was essential in connexion with federation that there should be interstate free trade, they thought that each colony gave up the power to interfere in that regard. But they believed that the power reposed somewhere, and so did the High Court. For years the court held the view that, whilst the words of section 92 bound each State, they did not bind the Commonwealth. The interpretation of the High Court was that the power reposed in the Commonwealth. Therefore the people as federal electors and the same people as State electors, enjoyed the same powers and not less power than they had before federation. Those who talk of State rights are not the champions of the States which they claim to be when they take up this attitude, but would deprive the people of a right they had before federation.

Senator Duncan-Hughes - If we were proposing to take away State rights would not the Premier of South Australia, for instance, object to it?

Senator Sir GEORGEPEARCE.The attitude to which I have referred is due in many cases to a misunderstanding.

The proposal in this bill is to restore that right, so that the Commonwealth and the States, acting together, may be able to do what is necessary to protect the interests of the primary producers. Senator Duncan-Hughes somewhat incorrectly stated the attitude of Mr. Forgan Smith, the Premier of Queensland. . 1 attended the conference of Commonwealth and States Ministers held in Adelaide from the 26th to the 28th August last, and therefore have direct knowledge of what was done there.I have the official report of the conference proceedings before me, and in the quotations which I am. about to make I shall not omit anything essential to the consideration of the matter. Turning to page 37 of the report, I find that Mr. Forgan Smith, after congratulating the Attorney-General (Mr. Menzies) upon hit presentation of the case, said -

It seems an extraordinary position that there should continue to exist a gap in the legislative powers of the people of Australia. That, to me, is the main issue which must be decided by the Commonwealth and the States . . . Obviously, however, in bringing about federation and the establishment of a Commonwealth Parliament the people intended to amplify and extend their legislative powers. They had no desire to stultify their rights of self-govern ment. Consequently, the power to regulate trade and commerce between the States should reside somewhere. Under a federal system the only authority that can operate it effectively is the federal authority ... I remember a few years ago a fierce and bitter controversy as to who should control grading for export. The matter was submitted to me by Mr. Rodgers, then Minister for Trade and Commerce. I asked myself: Is it desirable to have uniform grades and standards for export in respect of dairy and other produce? Obviously that question had to be answered in the affirmative. The question then arose: How is this uniform control to bo exercised? Obviously only the Commonwealth could exercise it because it had authority in all the States. As a result we have the Commonwealth exercising authority in regard to uniform grades and quality for export. I venture to say that those who opposed it a few years ago would not desire now to go back to the old system of each State fixing its own standard, with resultant confusion in regard to quality and grades on our markets . . .

The right thing to do is to take legislative powers and exercise them for and on behalf of the people of Australia. The gap in the Constitution is one that must be bridged at the earliest possible moment, otherwise the people will be stultified in the exercise of authority which they must have to give a fair and decent deal to all sections of the community . . .

I am prepared to recommend to my Government that an amendment of the Constitution should take place to bridge the gap.

Referring to the proposal to assist primary producers with bounties provided by means of excise duties, Mr. Forgan Smith remarked -

The other suggestion put forward can he regarded as a temporary measure. The securing of an amendment of the Constitution is a long and tortuous proceeding, so I suggest that in the meantime the bounty and excise powers should be operated to bridge the gap temporarily. However, the exercise of t 110 se power, and their implementation by the Commonwealth authority may create a fresh problem. Often a Statute is found valid, but regulations under it are ultra vires. It is a complicated matter to control marketing throughout Australia of all the products sold within Australia and exported, and, therefore, it will be difficult so to devise a system of bounty and excise as to achieve the objective and keep within the Constitution. It may be held that any operation of the bounty and excise provisions aimed at defeating the provisions of section 02 will be invalid. Great care must be exercised in drafting and giving effect to such provisions. The orderly marketing of primary products is an essential part of our legislative system. It is immaterial what may have been in the minds of the people who agreed to the Constitution 36 years ago.

I now refer honorable senators to page 42 of the report, of the conference, on which the position of "Western Australia was stated by Mr. Millington. He did not think that there was any doubt about the attitude of his State. He said that it would not hand over any additional power to federal authorities, but at page 44, he said -

The Commonwealth says that it should he given increased powers, and uses as an argument the urgent needs of certain industries. We are not prepared to give that. It may be possible to show how additional power, which can be controlled to an extent by the States, oan be given to the Commonwealth. Without expressing this as the view of my Government since the recent Privy Council decision. I would be prepared to discuss such' an alteration.

At that time the proposed alteration of the Constitution as now- drafted had not been framed. Under the bill the power cannot be exercised unless the States first legislate in regard to marketing schemes. Senator Duncan-Hughes said that the Commonwealth Parliament had ample power to deal with this matter, but what power, I ask, has the Commonwealth without an alteration of the Constitution ? It is the power to impose excise and pay the proceeds of excise by means of bounties. Yet excise and bounties do not deal at all with orderly marketing, which is the very thing that has saved the dairying and dried fruits industries. 1. know a good deal concerning the history of the dried fruits industry, because I was the Minister controlling the Development and Migration Commission which conducted an inquiry into the conditions in the industry. Senator MassyGreene will remember that extraordinary action was taken before that inquiry was held to save this industry from utter ruin.

Senator Sir WALTER Massy-Greene - That is so.

Senator Sir GEORGE PEARCE - Large sums of money had to be expended, not merely because of unpayable prices - subsequently prices did not improve - but also to enable the industry to get on a business footing. At that time, there was complete disorganization in the industry, a lack of marketing methods, and a low standard of efficiency. I invite honorable senators to peruse the report of the Development and Migration Commission on one of the most valuable investigations conducted by that body. The report revealed a shocking state of inefficiency and lack of organization in the industry. The drying sheds were more or less hopelessly inefficient, there was no standard of quality, cut-throat competition prevailed, and, generally speaking, the industry was dying on its feet.

Senator Guthrie - To-day it is conducted on a highly efficient basis.

Senator Sir GEORGEPEARCE.Exactly. The commission recommended not doles of money, but that the industry should be organized and proper business methods introduced. In consequence of the commission's recommendations, a number of the drying plants were amalgamated and made efficient, and, to-day, the whole industry is on an efficient commercial basis. Arrangements were made for the control of marketing in Australia and overseas, and a Dried Fruits Export Control Board was appointed. But all our efforts could have been defeated by men like James had it not been that, in the matter of orderly marketing, each State, in cooperation with the Commonwealth, gave legislative effect to the commission's recommendations in order to prevent pirates from -going over the borders and destroying the effect of the legislation in States which had asked for control.

Senator McLeay - South Australia asked the Commonwealth to intervene.

Senator Sir GEORGE PEARCE - Yes. The Commonwealth did not intervene until it was asked to pass complementary legislation.

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) -Hughes. - I rise to a point of order. Is the Leader of the Senate (Senator Pearce) in order in describing as a pirate a reputable citizen whose appeal has been upheld by the Privy Council?

Senator Sir GEORGE PEARCE - I merely said that the Commonwealth cooperated with the States in order to prevent pirates going over the borders and destroying the effect of the legislation of other States. I applied the term " pirates " to those operating under conditions contrary to those laid down by the States. These men came in to reap the harvest which they did not help to provide. How could a system of orderly marketing be conducted under excise duties and the payment of bounties? An excise scheme does not touch that essential point at all. Such a system could not regulate the trade between the States which is essential in an orderly marketing scheme. One State provides standards and quotas, but the producers in another State can by disregarding the regulations destroy the effectiveness of the scheme.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - They are starting in Western Australia in respect of butter.

Senator Sir GEORGEPEARCE. - I believe that they are. It is useless throwing dust in our own eyes by saying that we should use the powers we possess and everything will be well, and I am sure that if we did propose to exercise the powers which we possess we should not have the support of Senator DuncanHughes. I cannot imagine the honorable senator supporting an excise duty on dairy produce, dried fruits and wheat. Consider the complications that would arise in federal finance if millions of pounds were being poured into the Federal Treasury in the form of excise, and millions being paid out by way of bounties. Another objection to the suggestion is that there would be no per manency in such a scheme. There is no guarantee that such a scheme would extend beyond a year or beyond the life of one parliament. Political parties would be bargaining and competing against each other. I ask Senator Duncan-Hughes if that is a desirable element to introduce when there is already too much political bargaining in respect of other matters?

Senator Duncan-Hughes - There is that danger. Does the Minister think that the referendum will be carried?

Senator Sir GEORGEPEARCE. - I do. I am confident that when the people understand the proposal they will say that it ought to be agreed to. When I read the statements made from time to time concerning the proposal to-be submitted to the people by means of a referendum, I am convinced that many persons, including some who are members of this Parliament, do not really know what is intended. Some have an entirely wrong conception of what is proposed. Those engaged in industry should have some guarantee of permanency; they should not be in doubt from year to year as to what their actual position is to be. Our secondary industries are guaranteed some degree of permanent protection in that Customs duties are not altered until they are inquired into and reported upon by the Tariff Board. Why should not the primary producers have some better guarantee than an excise duty and the payment of a bounty which could be altered from year to year? The impermanency of such a policy is one of the fundamental objections to dealing with the subject in that manner. Senator Duncan-Hughes suggested that industries not wishing to be controlled may be brought under this scheme, but I point out that there has never been an instance under Commonwealth or State legislation where an industry has been compelled to come under a marketing scheme. A poll has always been an essential part of the legislation.

Senator Duncan-Hughes - That may be because the present political party has been in power so long.

SenatorSir GEORGE PEARCE. - Polls have been conducted in Queensland where the Labour party has been in power for many years.

Senator Sir Walter Massy-Greene -Yes, in every instance.

Senator Sir GEORGE PEARCE - Polls are an accepted feature of such legislation.

Senator Guthrie - In the States interested ?


Senator Grant -But stronger States can bind the weaker States.

Senator Sir GEORGE PEARCE - Not under Commonwealth legislation.

Senator Grant - An overwhelming majority of dairy producers in Tasmania voted against control, but the legislation was put into operation.

Senator Sir GEORGE PEARCE - Perhaps I misunderstood the honorable senator. Commonwealth legislation is ineffective unless complementary legislation has been passed by the States; the States must initiate the legislation. Commonwealth legislation would have no effect unless complementary legislation had been passed by the States. The State legislation deals only with one phase of marketing, the internal regulation of the industry.

Senator Payne - Could any future Government control an industry without the consent of those engaged in it?


Senator Duncan-Hughessaid that the wool industry might be endangered. That industry possesses possibly the best organized marketing system of any Australian industry; there has been no agitation from any substantial number of wool-growers for any assistance or alteration of the present system.

Senator Duncan-Hughes - That is because they employ the best methods available, and those conducting the industry know how to control it.

Senator Sir GEORGE PEARCE - Quite so; they are quite satisfied to run their own business. Can any one contemplate any State Government endeavouring to assume control over the wool industry?

Senator Duncan-Hughes - The Leader of the Opposition said this afternoon that the Commonwealth should have full powers overallindustries.

Senator Sir GEORGE PEARCE - The Labour government in Queensland does some unusual things, but if it attempted to control the wool industry its political life would not extend beyond the next election. After all, a government, whatever its political colour may be, must have some regard for the wishes of the people, and if it introduced a system contrary to the wishes of those engaged in the industry it would be courting disaster.

Senator Abbott - It could if it were so foolish, ruin the industry byimposing an export bounty.

Senator Sir GEORGEPEARCE.It could; but I do not think that there is the slightest danger of anything of that kind. Such suggestions are brought forward merely with the idea of endeavouring to promote opposition to the Government's proposals. I was interested to hear Senator Duncan-Hughes quota from the report of the Fruit-growers' Conference, because I know some of the gentlemen who attended the gathering, at which all the States were represented. That conference was called not to consider the proposal to be submitted to the people by means of a referendum-

Senator Duncan-Hughes - I did not suggest that it was.

Senator Sir GEORGE PEARCE - What is the value of the opinion of 33 men who met not to consider this proposal, but other problems? This proposal was brought before certain representatives of the fruit-growers quite unexpectedly, and they were asked to express their opinions. They had no opportunity to consult the branches which they represented.

Senator Duncan-Hughes - A number did not vote.

Senator Sir GEORGEPEARCE.No. Probably they declined to doso because they had not an opportunity to consult the interests which they represented.

Senator Badman - They did not know the terms of the referendum question.

Senator Sir GEORGE PEARCE - I shall be surprised if any considerable number of fruit-growers will vote against the Commonwealth having the power to supplement any legislation passed by the parliaments of their States at the request of the fruit-growers themselves, to assist them in protecting their industries. That is all that this proposal involves. I hope that, if honorable senators feel , they cannot vote for this bill, they will give better reasons than we have heard so far. The reasons given for the opposition to the bill appear to me to be due to an entire misapprehension of. what the proposed alteration of the Constitution means, and the relations of the Commonwealth and the States in regard thereto.

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