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Monday, 9 November 1964

Senator COOKE (Western Australia) . - It is rather refreshing to hear a discourse from Senator Wright on the position of the States in this Federation. He is quickly, and quite probably intelligently, coming to the conclusion, reached long ago by the Australian Labour Party, that Australia is a nation and that federalism ls the fundamental base on which our nation will become great. The honorable senator's argument followed that line right through his speech. Nevertheless, whilst agreeing with him on that point, I think he has taken the debate out of the relevant field. We have before us a measure that is dependent upon section 96 of the Constitution which empowers this Parliament to disburse moneys to the States. The section reads - - During the period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

That was, of course, in addition to certain obligations that the Commonwealth had in relation to the States on other financial matters. We are here as senators to protect the much talked of sovereign rights of the States. But those powers were passed over by the States, in a large degree, when the right to impose income tax was handed over to the Commonwealth.

Senator Hannan - The States did not hand it over. The power was taken from them.

Senator Wright - The States acquiesced later.

Senator COOKE - The States acquiesced to a degree in respect of the handling of taxation.

Now I come to the report of the Commonwealth Grants Commission which we are discussing here. In view of the basis on which the Commission may work, no honorable senator could quarrel with the recommendations it has made. But I think that this Parliament should have a close look in the near future at what the Commission is charged to do in relation to the Commonwealth's responsibility for the development of States and the responsibilities which the States have to carry at the present time. Therefore, whilst not disagreeing in any way with the work the Commission has done and, indeed, commending its members for the volume of work they have carried out, I really think that the Commission should be given wider scope in respect of its responsibilities to the claimant

States and also in relation to establishing the standard of advancement of Australia. At the present time the non-claimant States set the standard. That standard, when assessed by the Grants Commission, is the maximum that can be enjoyed by claimant States, irrespective of the fact that it may not necessarily be the best standard that could be applicable in Australia. The grants to the claimant States are based upon the assessment of certain sections of the economy, the policies of the State Governments, social services, our attitude towards development, our treatment of firms in regard to taxation, and our rates and charges. So, we are, to a degree, put in a strait jacket by this Government through the medium of the Grants Commission. The maximum level which can be attained by a claimant State is equivalent to the average advancement or standard of the non-claimant States.

Therefore, while agreeing with the Bill, I say to the Senate that consideration has to be given to those services for which the State Governments are responsible to their people. When Senator Wright spoke of " our electors " he was referring to the Australian citizens who elect-the members of the State Parliaments and the Commonwealth Parliament. In each case the electors are the same people. Nor is there any difference between the purposes for which the Parliaments of Australia are elected. I say, therefore, that there is a very urgent need for a re-assessment of the Commonwealth Government's responsibility to the States and to their development. A flat average standard which has to be accepted should not be adopted just because it is the best that one non-claimant State can achieve. The Commonwealth Government should not be in the position to say: " We will raise money by way of taxation, lend it to the States and charge them interest on it ". The money has been provided by the Australian citizens who elect to Commonwealth and State Parliaments. The Commonwealth Government should not be able to say to the States: "You will have to cut back your programme of development or accept loans from us to enable you to obtain a fair average quality standard of advancement ". As Senator Wright says, we should ponder on these matters. But I do not think that the Federal Government has the right to display the arrogance it has in respect of

State rights and handle the States in an uppish and domineering way. This Government, which is charged to carry out certain responsibilities, raises large revenues in various ways and, without any inhibitions or restrictions on expenditure, can spend this money unwisely or without obtaining the full advantage from it for Australia. At the same time the Government can audit the budgets of States which have direct responsibilities to the same electors as the Commonwealth Government has.

I am rather happy to see that some consideration has been given to the costs of hospitalisation. This is not a new problem for the State Governments. In the Senate over the last decade, appeals have been made in respect of this service in regard to States such as Western Australia. In that State, hospital facilities have to be provided in remote areas for small populations. The running costs of such hospitals are high. The Commonwealth Government's assistance to the States for this purpose, either through its health scheme or its grants, has been thoroughly inadequate. As a matter of fact, this assistance has embarassed the States more than it has aided them. In Western Australia, for example, many of the people who work in the outback areas do not belong to any medical or hospital fund, and therefore hospitals which treat such patients may recover only a part of the cost. This adds to the cost of running a hospital. Absolutely fantastic costs per bed are reported by some outback hospitals and, for that matter, even in city hospitals. I am glad that the Grants Commission is considering this matter, although it does need consideration on a much higher plane.

As I have said, the Opposition approves of this Bill and certainly offers no criticism of the Grants Commission, which, within its terms of reference, does an excellent job. However, we say that it is very necessary for the Commonwealth Government to consider with greater reasonableness the rights of the States to share in the bountiful revenues which the Commonwealth collects. From these revenues, Commonwealth services are maintained and seem to be uninhibited. In relation to the States the Commonwealth is cheese-paring and gives them small amounts to provide services for which they are responsible to the Australian people who elect not only the Stale Parlia ments but also this Federal Parliament. I think it is arrogant for the Government or any honorable senator to say that this Parliament will dictate the policies of State Parliaments by financial restriction or by putting a boa constrictor's hold on a State Government and saying: " Your policy might be approved of by your citizens, but we will put a financial hold on you to ensure that it cannot be carried out; or we will place you at a disadvantage in an economic sense by restricting the flow of money you need to carry out your responsibilities to your electors ". This is a very wrong approach.

Whilst commending the Grants Commission for the work it has done - and I think it could not have come to a better conclusion in view of the scope within which it is permitted to work - I think the fundamental principle in respect of the Commonwealth Government's attitude towards the responsibilities of State Governments should be examined and changed. Although the Commonwealth is the collector of the main revenues of the nation, its attitude towards the States needs examination. Reference has been made to the disbursement of the collections of customs duty. There must be a very keen analysis of the financial set-up in the Commonwealth if Australia is to obtain the best advantage from her prosperity. We cannot afford to have the financial administration of the States restricted by the Commonwealth's saying that the maximum standard to be adopted shall be that of the non-claimant States.

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