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Wednesday, 19 May 1965

Senator CORMACK (Victoria) .- I do not intend to discuss eggs to the extent that Senator O'Byrne has discussed them, or to the extent that they were discussed in another place. I want to say at the outset that I am in favour of orderly marketing as a principle, in exactly the same way as I am in favour of abolishing sin as a principle.

But there are many people who believe that it should not be abolished, and there are also many people who think that it is difficult to say what constitutes sin in various categories. Having made it clear that I am in favour of the principle of orderly marketing, I want to engage the interest of honorable senators on the constitutional problems that I find embedded in the three Bills. Therefore, it will be only incidental if I discuss the question of eggs.

In looking for the source and the fount of the concept of orderly marketing, I spent some interesting hours in the Parliamentary Library reading about the problems of board control in Russia, which I discovered only incidentally to other matters that I was examining. In Russia there is board control of produce within the Commissariat of Trade. For example, there are produce receiving boards. One of the great problems in Russia is not merely a shortage of produce, but the sheer incapacity of the produce receiving boards effectively to distribute the available produce. It is interesting to carry out research of this kind. In Australia from time to time we find a newspaper proprietor or editor sending a reporter to find out why the egg which he had for breakfast that morning was stale; or alternatively, after having heard his wife complaining that the price of eggs was to be increased to 3s. or 4s. a dozen, sending a reporter out to examine the Australian equivalent of the Russian receiving boards.

Invariably one will find in Russian newspapers, such as " Izvestia ", that one of the fundamental problems in Russia is that produce receiving boards are not efficient. I suggest there is ample evidence in the past to indicate that, whatever the principles involved in orderly marketing, the boards that are constituted under the acts of parliament, whether State or Federal, have no test applied to them to determine whether or not they are efficient. I suggest that the three Bills that we are discussing at the present moment are an elaborate facade to circumvent section 92 of the Constitution. One of the Bills invokes section 96, which is the provision that enables the Commonwealth to make grants to the States on conditions and under such terms as the Commonwealth Parliament sees fit. The first Bill invokes section 96, under which the Commonwealth may make grants to the States, for assistance in the orderly marketing of eggs.

So far as I am qualified to say, this Parliament has power to pass such a measure. The Poultry Industry Assistance Bill sets out to devise methods by which taxes may be levied in order to provide the money to assist the States under section 96. The Poultry Industry Levy Collection Bill sets out the method, not only for the imposition of the tax, but also for the collection of the tax. I think that this matter has to be thoroughly understood by all honorable senators. The three Bills invoke section 96 of the Constitution. Two of them skirt around the provision of section 55 of the Constitution, which relates to the raising of money by taxation. This matter fills me with a little surprise, not because I oppose the orderly marketing of eggs, but because I feel that when you begin to devise a sort of legal chicanery in order to set up a circumstance of government, as these three Bills set out to do, it is as inevitable as that night must fall that you get very close to the edge of illegality.

Senator Prowse - Is the honorable senator supporting the Bill or opposing it?

Senator CORMACK - I am doing what the honorable senator should do - that is, examining the legalistic background of the

Bills. When the time comes for him to speak, if he makes a proper senatorial examination of the Bills be will be doing a service to the Parliament instead of to his party. I want to bring these points strictly before the Senate. It is the proper function of the Senate to decide whether or not the Bills are unconstitutional. One of the functions of the High Court of Australia is to determine from time to time whether the Parliament has exceeded its authority. I do not know whether it has exceeded its authority in regards to the device that has been used in order to circumvent section 92, and therefore to empower the State egg marketing authorities to avoid section 92.

The Minister for Primary Industry (Mr. Adermann) at the end of the second reading debate in another place, I thought gave a deep sigh and said he was sorry that section 92 existed because if it did not exist it would make his job of devising schemes for orderly marketing so much more easy to carry out. Obviously, that indicated that he had Ohe whole problem connected with section 92 in his mind. I do not want to embark on this line of argument any further. I wish to draw the attention of the Senate to two or three other matters that have given me some surprise. First, I refer to the methods by which section 92 can be circumvented in a perfectly legal way. lt is perfectly proper for each State to pass legislation referring power to the Commonwealth Parliament to make laws. But in this instance no attempt has been made to refer power to the Commonwealth Parliament. Of course, it is possible - although governments do not like it - to conduct a referendum in order to embody in the Commonwealth Parliament power to control an industry. But it is curious that the States have not referred such power to the Commonwealth Parliament, thus providing the means by which this particular industry might have orderly marketing arrangements.

Senator Morris - Would it be practicable for a State government to refer powers to the Commonwealth Government on one aspect of primary production and not on other aspects?

Senator CORMACK - The States did this in relation to the barley industry. The Australian barley industry is governed by a

Commonwealth act which stabilises it and constitutes the Australian Barley Board. That was done by common reference by each State to the Commonwealth.

Senator Webster - Is there anything in this Bill which restricts interstate trade in any way?

Senator CORMACK - By implication it restricts interstate trade because it imposes a levy of 7s. a hen when there are 20 or more hens. The effect of the levy will be to inhibit, as Senator O'Byrne mentioned-

Senator O'Byrne - It inhibits the " lurk " man.

Senator CORMACK - Whatever word the honorable senator used, it inhibits people from moving eggs from one place to another. It is correct, as an honorable senator has interjected, that this equalises prices.

Senator Webster - The producer can still sell interstate.

Senator CORMACK - That is so. He can still sell interstate at a loss. There is no question about that. All I am saying is that this is an elaborate method of getting round section 92 of the Constitution. That is all it is. On whether this action is constitutional or not, it is not for me to proffer an opinion. I suppose it will be tested outside this Parliament. All I am saying is that I draw the attention of honorable senators to the fact that this is a legal device to circumvent section 92 of the Constitution and it is being done in order to achieve this system of stabilisation proposed in these three Bills.

The next thing that worries me in regard to these three Bills is not that there is a Council of Egg Marketing Authorities of Australia drawn from the various egg boards in each State. What worries me is this: When we set up the Australian Meat Board we provided it with an instrument to enable it to operate. But in this instance we find ourselves in a situation where an ad hoc committee called the Council of Egg Marketing Authorities of Australia, constituted by representatives of each egg marketing authority with no statutory position either in the States or the Commonwealth, will become the official adviser to the Minister for Primary Industry to enable this system of stabilisation to be enforced. It is my belief that, in a situation of this nature, at least there should be a statutory requirement as to who shall be the constituents of the Council of Egg Marketing Authorities. I said this to the Chairman of the existing Council of Egg Marketing Authorities. My conversations with him are personal and it is therefore not for me to elaborate on them except to say that I consider that in view of the vast sums of money which it is proposed to raise, and in view of the position of the Council of Egg Marketing Authorities - a non-statutory body - as embodied in this Bill at least upon the subsequent presentation to the Parliament of legislation that affects orderly egg marketing this position should be examined. It is true, of course, that the advice the Council tenders to the Minister may be authoritative but it is not final. The Minister is not bound to accept the advice. I think, to that extent. Parliament is safeguarded in the way the Bills are devised at the present moment. 1 turn now to another subject. I was glad to see that in another place honorable members put an upper limit on the amount of the levy that could be imposed by these Boards. I now come to a matter which does disturb me. We have before us a Bill which proposes to place an excise tax on laying hens. I believe it to be an excise tax and I am reinforced in that opinion by the advice of an eminent counsel which I sought before I spoke on these matters. The power to collect and hand over this excise tax is given to the State instrumentalities known as Egg Boards but the Commonwealth has the responsibility of imposing the tax. Then this Bill to which I am now directing the attention of honorable senators - A Bill for an Act Relating to the Collection of Levy under the Poultry Industry Levy Act 1965 - states -

5.   - (1.) For better securing the payment of levy, the Commonwealth may enter into an arrangement with a State with respect to the collection of levy in that State, on behalf of the Commonwealth, by the State Egg Board for that State.

It then goes on and states - (2.) Without prejudice to the generality of the last preceding sub-section, an arrangement under that sub-section with a State may provide for-

The word used is " may " - a permissive word. Then, in clause 5. - (2.) (d), it states -

.   . the inspection and audit of the accounts and records kept by the State Egg Board with respect to amounts of levy collected by the Board.

This Bill proposes that a tax be imposed by the Commonwealth. Clause 6 of the Bill then sets out the means of collecting this tax. lt will not be collected by a Commonwealth instrumentality. It will be collected by agencies of the various States under varying legislation in each State. There is no provision in this Bill to enable the official of the Commonwealth who is responsible to Parliament, the Auditor-General, to audit the accounts of these instrumentalities of the States. It is true that the practice in these matters, where there is a marriage of powers between the Commonwealth and the States, is for the Commonwealth Auditor-General to accept the certificate of the State Auditor-General. But, in the circumstances in which it is proposed to ask Parliament to sustain these Bills as presented to us in the Senate at the moment, it is my opinion that this should not be a permissive clause providing that tha Auditor-General of the Commonwealth may enter into consultation with the States. I think it is proper that Parliament on this occasion, because of the circumstances involved, should invoke a mandatory word and say that the Auditor-General of the Commonwealth shall enter into arrangements. By doing that we will satisfy the Auditor-General and, perhaps, satisfy the Parliament.

It is all very well in principle to set up boards. But the character and quality of this particular board or system by which board control of the production and distribution of eggs in Australia will take place, is not, in essence, as stated by Senator O'Byrne. He said that this was an industry which would tax itself in order to obtain necessary revenues. In essence, it is not that at all. These Bills provide for a tax to be imposed upon the industry. The egg marketing authorities, in fixing their prices - of course they will be a price fixing agency - will then pass this tax on to the consumer. Therefore it will be a consumer paid tax. This leads me to this point to which I draw the attention of honorable senators: The character and quality in all these boards is such as to obtain from the consumer or the taxpayer the capital by which the orderly marketing system can be set up. In the second place, the character and quality associated with all boards is such that they do not imoose any test as to their own internal efficiency - the test of profitability.

It is a curious thing to note as one examines the problem in relation to distribution system in Russia that that country has made a great new discovery. No doubt in the book of the national biography of Russia it will be claimed in future years, in the re-write system that they have, that this is a Communist or a Socialist discovery; but the great new discovery that they have made is that they have to apply to their own boards and commissariats concerned with distribution the test of profitability. They have had to establish profit and loss accounts. Nowhere in these Bills is there any indication whatsoever, that I can discover, that the test of profitability is to be applied to these boards. That is a matter which disturbs me.

Finally, I am disturbed about some of the powers that the Minister proposes to give to himself. The cat seems to have been partially let out of the bag by the honorable member for Wilmot in another place who has some deep space communication system, by virtue of his private office, which I do not have. I understand that, constitutionally, the Commonwealth cannot make grants of assistance to the States in terms that are disparate. It cannot favour one State against another. During the debate on these measures in another place, the honorable member for Braddon (Mr. Davies) spoke of the problems of Tasmania- a State which I gather has big problems not only in regard to eggs. He quoted a minute of the meeting of the Technical Sub-Committee of the Council of Egg Marketing Authorities of Australia, held at the Belvedere Hotel in Sydney, on Wednesday, 11th March 1964. The minute reads -

In reply to a question by Mr. Fairbairn as to what reimbursement Tasmania could expect to receive from the levy having regard to the fact that Tasmania is not normally an exporting State, Mr. Giles-

I take it that Mr. Giles is from the Department of Primary Industry - made reference to Paragraph 3 of the explanatory sheet to indicate that the Minister may authorise the payment of fund money to the States in such amounts as he determines after taking into account recommendations by C.E.M.A.

In other words, although the principal Bill derives its authority from section 96 of the Constitution, which authorises the making of grants of assistance to the States, the quotation that I have read from "Hansard" indicates that the Minister proposes, once the Poultry Industry Trust Fund is set up, to make grants to the States in accordance with what he conceives to be the requirements.

Senator O'Byrne - Acting on the advice of C.E.M.A.

Senator CORMACK - He is not obliged to act on the advice of the C.E.M.A. He may act on the advice of C.E.M.A. At page 1165 of the "Hansard" to which I have already referred, the honorable member for Wilmot (Mr. Duthie) is reported as having quoted a letter from Mr. Patrick, a Tasmanian representative on C.E.M.A., which, in part, reads as follows -

This agreement was again unanimously confirmed by all States at the meeting held this week on April 28, and in view of the varying conditions in the States it was again agreed that it was not advisable to actually put this in the Bill itself; -

That refers to the words relating to the distribution of the levy -

Tasmania would stand to get better treatment under the " Gentlemen's Agreement " than under a compulsory legal point.

This Parliament is not here to endorse gentlemen's agreements made behind closed doors. There cannot be what is delightfully called a gentlemen's agreement in regard to public moneys, raised by taxation and disbursed by a Minister acting by regulation. These are not State Egg Board moneys; they are public moneys. It is alarming to find that disbursement will be made, under ministerial hand, of money raised by taxes authorised by the Commonwealth Parliament, collected by the State Egg Boards, passed into a trust fund, and disbursed so as to favour one State as against another by the simple device of the Minister, on advice preferred to him under a gentlemen's agreement, deciding that one State should get more than another. It is on those constitutional points that I have addressed myself to these three Bills, and I commend them to the Senate.

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