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Monday, 9 November 1964

Senator WRIGHT (Tasmania) .- As I rise to speak tonight I feel the frustration felt by Rupert Brooke when, climbing the stairway with a sense of demand, reaching the throne of heaven and wishing to assert his view upon what was there, he found only vacant halls, moss growing on the stairs and a listless breeze blowing gently moving the curtains on the walls. When we are discussing the fundamental sinew of government in this Federation - the question of adjustment of finance between the entities that constitute the Federation - we have a listless debate, the conduct of which seems to be the prerogative of representatives of what are called, to the amusement of some of the occupants of the Press gallery, the hill-billy States, and of other apprentices there, the mendicant States. I wonder how many of us remind ourselves of the basis upon which the Federation was established from the financial point of view.

We have only to go back to the mainland conception of the original proposal in section 85 of the Constitution that some mainlanders with mildewed eyes described inveterately - and so persistently that it has become almost a truism - as the Braddon blot. After the first 10 years of Federation it gave way to the whim of this Parliament which substituted therfor per capita payments of 30s. to the States. It was thought that such payments should be sufficient for the needs of the State Governments. During the 1920's, this arrangement led to the necessity for supplementary grants.

I have spoken in this way in order to put into perspective the political genius of the Commonwealth Grants Commission, the thirty-first report of which we are discussing tonight. As my colleague, Senator Lillico, has reminded those few in the Senate who were here to hear him, J. A. Lyons, after the financial adversity that he had suffered as Premier of Tasmania, entered the wider Federal field and became Prime Minister. He said: " Let us have a continuing commission which, developing a theme based upon principle, will level out the disparities between the States in such a way as to make this Federation financially viable ". And institute that Commission he did. Those mendicant or hill-billy States which have been the beneficiaries of the grants recommended by the Commission and which rejoice in those fantastic tricks that little governments, whether Federal or State, have played under the throne of heaven ever since, ought to recognise that they owe some of their means of subsistence to the institution that J. A. Lyons, the Tasmanian who became the Prime Minister of the Commonwealth, established, after he had seen the matter from the point of view of an outlying State.

It is that sort of Commission which, if it maintains a purpose true to the ideal of making this Federation financially viable, renders a substantial contribution to evening out the disparities between the various States so as to make the economy of Sydney not over-grandiose compared with that of the villagers of Hobart, and even allow to penetrate into the Melbourne soul that degree of condescension and comfort that comes from giving a little prosperity to the province across Bass Strait.

When we establish a Federation which maintains six separate entities, we must recognise that, to have a unity within the Federation, the economy of one unit must be comparable with that of each other unit. J. A. Lyons appointed to that Commission a citizen of the hill-billy State of

Tasmania, Professor L. F. Giblin. As soon as he accepted the position, the University of Melbourne was pleased to adopt him as its Professor of Economics. It was he who framed the formula to which Senator McKenna has paid tribute tonight as one that has been adopted by every Grants Commission since 1936. It appears on page 37 of the current report. It provides that the Commission shall adjust the financial assistance that should be given from the Federal Treasury to even up financial disparities between the States according to Federal capacity to pay, so that each State unit in the Federation will be economically comparable in- strength with the others.

Having mentioned J. A. Lyons and Professor L. F. Giblin as great contributors to this idea, I speak with no sense of mendicancy as a Tasmanian. I speak as an Australian. The mainland States, in yielding 'bis small modicum of money to Western Australia and Tasmania, show no great generosity. I appreciate the fact that Mr. P. D. Phillips, Q.C., has been appointed Chairman of the Grants Commission. He is forcible in his approach and has a marked impact on any community he enters. At first his appointment caused some disquiet but this report shows him to be not only a Victorian of some prestige but a man with the status of a true Australian. The Commission stated at page 35 of its 31st report -

The Commission is of the opinion that the standards of government services are not in general higher in the claimant States than in the standard States, with some exceptions, e.g., the higher school-leaving ag*e in Tasmania. Furthermore it has arrived at the conclusion that the economy of administration in the claimant States is not less than in the standard States, except in limited spheres such as some areas of public hospital service. If the conviction of the Commission is well founded in these two respects, the conclusion is inescapable that the cost of providing standard services' is greater in the claimant States principally because the number of units served is relatively greater, as for instance the greater relative number of school children.

As I have said, the Commission under the chairmanship of Mr. Phillips has shown a true Australian outlook. Its desire is to encourage a unity of development throughout Australia. We have seen this institution develop in our own time. At one time there was a danger of its disintegration in a financial sense when Queensland was enter ing the arena as an applicant for assistance. The Commonwealth Government took the situation in hand in 1957 and presented a point of view to the States. Afterwards, Queensland was no longer interested in establishing itself as a claimant State and South Australia was able to secure independence. If this situation had not been achieved so that there were fewer claimant States than standard States, the Commonwealth Grants Commission would have been frustrated. This Government converted the situation so that instead of having four claimant States there were but two.

In this context I speak not only as a Tasmanian but as one who recently visited Western Australia. Anyone visiting that State and seeing the great challenge it presents with its vast areas and great distances, must agree that it deserves some of the fat of Sydney and Melbourne to succour the endeavours to establish prosperity on its frontiers. What of Tasmania, that little pocket handkerchief State with all the disabilities that Senator Lillico and I recognise? lt suffers from the insularity of its geographical position but it has aspects which I understand will be developed in tomorrow's edition of the " Australian ". Judging from a note that I saw today, I think that the " Australian " may be going to adopt a truly Australian outlook in focussing its attention on that lovely little island of great potential called Tasmania. Some of the less fortunate people north of Bass Strait do not realise the happiness of the people of Tasmania. It loses population to Sydney and Melbourne with their big payrolls. It suffers the burden of a greater poultice from the waterside workers menage than the mainland ports. It may be said that Senator Lillico and I come from the hill-billy State. That is why Tasmania is to be voted £7.3 million unconditionally to bring it into line with the Australian economy. This will enable our unit of the Commonwealth to function in a manner comparable to the standards of the mainland States.

Now we come to the kernel of the nut. We are voting £7,300,000, which will be expended at the discretion of the freely elected Government of the State of Tasmania. We must bear in mind the responsibility that we have to those who elected us. When the States in 1957 decided definitely to make themselves dependent upon financial votes from this source, in a corresponding measure they renounced their right to enunciate policies that denned the expenditure. Not only that; this touches a much more fundamental concept. The United States of America comprises 50 States whose contesting interests in themselves provide some counterbalance to irresponsibility in State expenditure and in raising State revenue, but in this Federation, constituted of only six States, we have to ponder deeply on the effect of dependence by the State Governments to an increasing degree on reimbursements of uniform taxation, and, in my own State, on the effect of supplementary supra dependence on special financial grants. We have to ponder deeply on the degree to which a government that is a recipient of that finance forfeits the right to claim that it has been elected by its people, with the authority to expend that finance according to its judgment.

This undermines the whole democratic concept of responsible government. la my view of democracy, a government exists to answer for its authority, exercised for or against its people during its term of office, and the people recognise that in the fact that the Government asks them to pay to implement its policies. In a State such as Tasmania, where the Government raises only 30 per cent, or 35 per cent, of its revenue by its own exertion-

Senator Sir William Spooner - Not that much.

Senator WRIGHT - I always err on the side of understating my argument. I am grateful to my friend. I believe we all must recognise that under this system State Governments depend on financial assistance from, the Commonwealth Government. Therefore, if we reach the situation in the near future that we who are responsible to the taxpayers for the taxes that we require to be yielded to the Commonwealth Treasury demand an increasing share in the definition of Tasmanian policy or the policy of any other State, accompanied by financial grants to the States generally and to universities, the State Governments will have to answer for that. I maintain that in a democratic community we will never keep a balance between the electors and the elected unless there is a reciprocity of obligation. Unless a government that seeks to define policy also has the responsibility of raising revenue, it is apt to forfeit its right to define policy.

I rose in my place in this Senate tonight because I believe the time has come for some deep thinking on this question. I have in mind the recent announcement by the Premier of Victoria that he will introduce a supplementary income tax. In 1957 he joined in a compact that the income tax field would be the prerogative of this Parliament. When we increased the reimbursements to the States from £120 million to £143 million, in suitable proportions, there was a compact by which the reimbursements were to be accepted. As I well remember, the compact went to the extent that the States accepted the continuance of payroll tax on their employee enrolment in State business undertakings. When we have that situation in Victoria, a standard State, and. the ever so much more exaggerated situation in Tasmania, a claimant State, we must recognise that there no longer exist within the State field what can be called sovereign Parliaments. There are Parliaments that must have some regard for the policies pursued by the Treasury out of which the payments are yielded. We can only answer to our electors if we pay these moneys to the States according to policies that they approved when they elected us. If I could put that in a nutshell I would say. "Take heed, Mr. Reece". To put a final point upon it, let me say that I have spoken here recently in a national sense on the subject of Australian civil aviation. What province has any State in relation to Australian civil aviation when the unity of federation in national activities has to be recognised? The States have no more right to a say in civil aviation than they have to a say in nuclear energy or television and wireless transmission. Heart and soul I am a Tasmanian, but we must regard all these things that defy State boundaries from the point of view of the greatest benefit to Australia as a whole. It is in that spirit, not in the spirit of mendicancy, that this vote is approved here tonight.

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