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Wednesday, 13 September 1911

Senator ST LEDGER (Queensland) . - Prior to the adjournment of the Senate on Friday last, I pointed out that as soon as the Prime Minister had returned from the Imperial Conference he was interviewed and was met, very properly so, by his colleagues within the precincts of Parliament House. I mentioned that in his address to his supporters he used these words -

I say at once that, if the Empire is at war the Commonwealth is, de facto, at war.

With that sentiment, at any rate, the Opposition will entirely agree, but in the very same breath the Prime Minister used words so important to the Labour party, as well as the Opposition, and the country generally, that they will require, shortly I think, a clear and unequivocal explanation or interpretation, addressed as they were to his colleagues while he was dealing with an important matter of Imperial policy discussed at the Imperial Conference. His words were -

I do say, however, that the autonomy of the Dominions is complete ; that this autonomy is such that it is for the Dominions Parliaments to say how far they will actually participate in any war, and how they will dispose of their forces.

Senator Givens - Well, is it not for them to say ?

Senator ST LEDGER - The honorable senator is quite right to ask the question ; but I will now ask the Minister of Defence, and through him the Government, this question :

Why are we voting millions for our Military and Naval Forces? Is there such a thing as the passive prosecution of a war as well as the active prosecution of a war? That question is answered by the Prime Minister himself in the first portion of the statement that I read, where he said that when any portion of the Empire is at war the whole Empire is de facto at war. But what was in the mind of the Prime Minister when in the very next breath he made a limitation to the effect that in consequence of the autonomous powers exercised by the Dominions it will be for them, through their Governments, to say whether they will actively participate in any war in which the Empire may be concerned? It is not less vital to the Mother Country than to ourselves that those questions should be answered in clear and unmistakable terms. I venture to make the statement that we are voting these millions - and I suppose we shall be asked to vote more - for naval and military purposes in order that if the Empire becomes engaged in war our forces shall be an integral portion of the forces which will co-operate for- the preservation of the integrity of the Empire.

Senator Needham - That is already admitted.

Senator ST LEDGER - I said clearly enough in the former portion of my speech that apparently so much was frankly admitted. But we know the circumstances in which some of the utterances of the Prime Minister with regard to the Imperial Conference were made. Not a single member of the Opposition party, as far as I am aware - certainly not one inside Parliament, nor, I believe, outside - has struck into this controversy for any other purpose than to ask what exactly the expressions of the Prime Minister mean. If he is not understood, the Prime Minister himself is to blame. He has provoked comment from the press of the country by using the expression that in time of war, because of the autonomous powers which we have, and which the Imperial Government concedes that we have, it will be for us to decide whether or not we actively participate. I venture to say, as a matter of individual opinion, and as one having some acquaintance with the opinions and policy of the Liberal Opposition, that we are voting millions for our Naval and Military Forces in order that when any portion of the Empire is engaged in war we shall not passively, but actively, co-operate to preserve for every portion of the Empire its integrity within the Empire.

Senator Needham - Is that a secondary consideration ?

Senator ST LEDGER - No, it is a primary consideration from top to bottom. The unity and integrity of the Empire is a supreme consideration, inasmuch as, except for it, the separate portions of the Empire would not exist independently and possess the autonomy they enjoy. Does the Minister of Defence expect that he is going to get millions voted for defence in face of an utterance of that kind, unless we have a clear declaration of the policy which is to guide the Ministry?

Senator Needham - It is an old policy.

Senator ST LEDGER - The Prime Minister is responsible for the introduction of this comment. Are we to adopt this interpretation of his utterances - that when the Empire is at war with a foreign Power, the Commonwealth Ministry shall come down to Parliament and ask us to discuss the question whether or not we shall participate in it? As a matter of fact, there can, I think, be no departure from the policy that we have always pursued in this respect. We cannot build up our Naval and Military Forces except with the object of preserving our unity and integrity as part of the Imperial Dominions. That is a plain, intelligible statement. I take it that this country is willingly consenting to be taxed, and will willingly pay any amount in reason that may be required for such Naval and Military Forces as are necessary for the purpose that I have indicated.

Senator W RUSSELL (SOUTH AUSTRALIA) - The honorable senator would borrow the money.

Senator ST LEDGER - That is a side issue. It is not now a matter of money, but of the policy upon which the money will or will not be expended.

Senator Givens - The honorable senator is making the matter as clear as mud.

Senator ST LEDGER - In answer to that very courteous interjection, I say that if the subject is clear to the honorable senator's brain, the explanation has probably gone through the substance to which he has referred. An echo of the statement made by the Prime Minister is to be found in an utterance made by Sir Wilfrid Laurier during the Imperial Conference, or, at any rate, to some interviewer while he was in England. I take it that, in this matter, the whole of the Dominions have interests in common, and the criticism which affects one calls forth a criticism from the others who may be affected by such an utterance. I venture to say, therefore, thai Sir Wilfrid Laurier's reported utterances upon Imperial policy are also such as to call for some explanation from him.

Senator Needham - What have we to do with Sir Wilfrid Laurier?

Senator ST LEDGER - We are an integral portion of the Empire, and, as I have said before, the policy which affects one portion affects the remainder.

Senator Needham - Sir Wilfrid Laurier is minding his business, and we have to mind ours.

Senator ST LEDGER - Exactly so; that is what is the matter. But it is impossible for us to look exclusively to our own selfish interests in questions which affect war. We have to consider the graver issues which will not only confront us, but every portion of the Empire; and I am afraid that the policy which Sir Wilfrid Laurier's utterance indicates would not only be cowardly, if it were possible to carry it out, but would tend towards the disintegration of the Empire itself - that is to say, if his words bear the only construction which it appears to me can be placed upon them. I will read the comment made by the Times upon Sir Wilfrid Laurier's utterance, and which applies also to the statement .of the Prime Minister. After this remarkable utterance by Sir Wilfrid Laurier, the Times - I am quoting from the weekly edition of that journal of 19th May, of the present year - wrote -

If Canada and British Imperial interests diverge no statesmanship will bridge the gap made. But do they diverge, and are there any questions of foreign policy which can be regarded as of Canadian interest alone? If there are, then British statesmen will certainly prefer to see them settled by the Canadian Government alone. The fact, however, is that no part of the Empire can have relations with foreign Powers in which the rest of the Empire is not concerned, unless it is prepared to face the full responsibility of a diplomacy of its own. In that case it would enter the international arena with only such influence as its own resources supplied. This is very naturally a consummation much to be desired by foreign Powers, but it would hardly enhance the autonomy of the dissenting British States.

I entirely dissent from the position taken up at the Imperial Conference by Sir Wilfrid Laurier in regard to this matter of Imperial defence. I think that he dragged a question of the highest Imperial policy down to the level of the exigencies of a political party conflict in Canada. I go further, and say, without hesitation, that the warning sounded by the Times was an exceedingly opportune one. Now that we are building up our Naval and Military Forces---now that that process is in its infancy - it is only right that we should have an early declaration of the express purpose for which those Forces are being established. More than one portion of the speech delivered by the Prime Minister makes it clear that he recognises the obligation of the Commonwealth, as an integral part of the Empire, and that he appreciates keenly our duty in regard to that Imperial relation. It was not until he came into personal contact with his own colleagues that he qualified that doctrine by a comment which is capable of a dangerous and most disastrous application. When the Minister of Defence asks Parliament to vote more millions of pounds for the building up of our Army and Navy, honorable senators upon this side of the chamber will require, on behalf of the country, an unqualified expression as to what is to be the military and naval policy of the Government. Is the question of whether we are to take part in any war waged by the Motherland to be, in time of war, considered merely as an academic one.

Senator W RUSSELL (SOUTH AUSTRALIA) - Is that a decision which has been arrived at by the Liberal Caucus?

Senator ST LEDGER - I stated at the outset of my remarks upon this subject that I spoke only for myself, although, from personal contact with many honorable senators upon this side of the chamber, I believe that they share my opinion.

Senator Needham - Is this a continuation of Mr. Stead's attack?

Senator ST LEDGER - I say, "Steady upon that matter." I regret that even an honorable senator opposite should endeavour to extract from me a declaration upon that subject. Notwithstanding my honorable friend's attempt ,to side-track me, I am content to found my comments upon impeachable extracts from speeches delivered by the Prime Minister. I do not think that I owe any apology to the Senate for having dealt with two of the most important portions of the Vice-Regal utterance. I now propose to deal in a cursory fashion with some of the important items which were alluded to by the Minister of Defence in the course of his reply to the criticism of the Leader of the Opposition. The Minister, in referring to the incidence of the Federal land tax, affirmed that until the near approach of the imposition of that tax there was not much room for land settle ment in Australia. I do not think that I have misinterpreted the substance of his reply. The only inference which one can draw from that statement is that theFederal land tax is responsible for the breaking up of large estates, which have hitherto prevented closer settlement. Surely the statement that there was no room for land settlement in Australia prior tothe imposition of the tax was a whole burntoffering on the altar of the god of clap-trap. It is evident, too, that that whole burntoffering was a whole-hogged statement. What are the facts of the case? I have here a few figures which will speak for themselves, and which will show what was the area of land held for developmental purposes in Australia long before a land tax was thought of.

Senator W RUSSELL (SOUTH AUSTRALIA) - That was a long time ago.

Senator ST LEDGER - Exactly.

Senator Lynch - Even before the honorable senator commenced to hunt for Labour votes.

Senator ST LEDGER - The honorable senator is degrading himself by making such a remark as that. A personal reference of that kind is certainly more or less degrading to the honorable senator to whom it is applied, and as it is utterly unjustifiable, it is also a degradation to the honorable senator who makes it. The reason why it was made is that honorable senators opposite cannot sit quietly under the fire of criticism.

Senator Lynch - It was intended as a compliment to the honorable senator.

Senator ST LEDGER - I fear the Greeks when they bring me gifts. I propose now to quote some figures relating to the area of land under crop in Australia

Senator Givens - Does the area alienated give any indication of the area which is devoted to agriculture?

Senator ST LEDGER - I cannot say that. If necessary, I shall take the figures further when a favorable opportunity presents itself. These figures, which show the area under crop in Australia, are in themselves a complete refutation of the statement made by the Minister of Defence. These are the figures of the acreage under crop at the periods mentioned. In 1860-1. 1,188.282 acres; in 1870-r, 2;i85."534 acres; in 1880-1, 4.577.699 acres; in 1900-1, 8,812.463 acres; in 1909-10, 10,972,299 acres. These figures indicate a progressive increase in the area placed under cultivation, in the decades mentioned, varying from 50 to 200 per cent. In the circumstances, it is about time that Ministers addressed themselves to those who can consider the application of a policy rather than to those whose minds can be led away by the- grossest political claptrap, for that is the only term that can be applied to the statement that until the present Government reached the Treasury benches, or immediately prior to their advent to power, there was no agricultural settlement in Australia. The figures I have given completely refute the statement.

Senator Givens - Is not 10,000,000 acres a very small area to have under cultivation in a huge continent like Australia?

Senator ST LEDGER - That is a proposition with which I have nothing whatever to do. I am dealing only with the statement made by the Minister of Defence, and I express my astonishment that he ever made it. I have to say, further, that in respect of that statement, one can only compliment his honesty at the sacrifice of his intelligence, or compliment his intelligence at the sacrifice of his honesty.

Senator Needham - Can the honorable senator explain why eleven people should hold 1,500,000 acres in the Western District of Victoria?

Senator ST LEDGER - My honorable friend desires me to follow a great fallacy in logic by drawing general inferences from particular instances. He is unable to see how dangerous and fallacious that kind of reasoning must always be. The fact that one or two men have held unduly large areas of land in Australia does not affect the general proposition that land settlement in Australia has been steadily progressing notwithstanding the imposition of the Federal land tax. The figures I have given show it. What better test can there be of close settlement than the amount of the wheat crop? Generally speaking, the cultivation of wheat is associated with the settlement of the land in comparatively small areas. Now, what are the figures with respect to the increase in the acreage under wheat? In 1 860-1, the acreage under wheat in Australia was 643.983 acres; in 1870-1, it was 1,123,839 acres; in 1.880-1, it was 31054,305 acres ; in 1 900- 1. it was 5.115,965 acres; and in 1909-10. it was 6.586,236. Clearly therefore, close settlement was going ahead by leaps and bounds, notwithstanding the proposed imposition of a Federal land tax.

Senator W RUSSELL (SOUTH AUSTRALIA) - And yet the Queensland Government have had to repur chase properties to secure land for the people.

Senator ST LEDGER - Until the end of time, the State Governments for State purposes will have to repurchase land. No Government, not excepting a Labour Socialist Government, can carry on its operations without buying back for State purposes lands, the fee-simple of which has already been parted with to private owners-

Senator Needham - For agricultural development ?

Senator ST LEDGER - We can never' hope to get agricultural development tin-' less the land is alienated in freehold. There could be no more striking illustration of that fact than is provided by the. recent history of land settlement in Queensland. The Queensland Government offered about 8,000 acres on perpetual leasehold, and after two or three years they were able to alienate no more than 2,000 acres in this way, whereas the alienation of land under freehold tenure for agricultural purposes was at the same time going ahead by leaps and bounds in every portion of the State.

Senator McGregor - How much land is under cultivation in Queensland?

Senator ST LEDGER - I am unable to say now. Could the Vice-President of the Executive Council tell me at once how many officers there are in the Department of Defence? I can however say, from his general reading, that any man who has given attention to public affairs must be aware that close settlement has been steadily increasing, though he may not be able to say what is the area actually under cultivation in Queensland.

Senator Needham - Since when?

Senator ST LEDGER - Since Noah's Ark if the honorable senator pleases.

Senator McGregor - Only since the Labour Government came into power.

Senator ST LEDGER - Exactly. These interjections remind me of a passage which occurs in one of George Elliot's novels, in which Mrs. Poyser complains that her husband is like the bantam cock in the backyard, that was always of opinion that the sun never rose in the morning until he had got up and crowed. A great deal of that kind of reasoning we have from the other side, and the statement of the Minister of Defence is a glaring illustration of it, and it displays the same kind of intellect in the failure to discern between cause and effect as was displayed by Mrs. Poyser's bantam cock.

Senator de Largie - Then, it was only a coincidence that the cock crowed and the sun rose a little later?

Senator ST LEDGER - Honorable senators opposite, from the Minister of Defence downwards, are apparently unable to distinguish the difference between coincidence and cause and effect, for they invariably confuse the two things. Can we blame them when we find a Minister, who has gone through a "long parliamentary training, and a previous experience of platform debating, standing up in this chamber and making such an extraordinary statement as that which was made by the Minister of Defence with regard to the. progress of land settlement in Australia.

Senator McGregor - Did the honorable senator ever know the effect to come before the cause?

Senator ST LEDGER - The honorable senator is dealing in metaphysics, and there is an old saying about asking questions which I shall refrain from quoting. Now, what about the imposition of this Federal land tax? It was pretended during the discussion of the matter that it was to break up large estates. The Minister of Defence says, by inference, if not directly, that it is doing so, and he quotes the Van Diemen Company's land. Does the Minister console himself with this view ? What Australia is gaining or suffering by the imposition of the progressive land tax it is impossible at this stage to determine exactly. (But I venture to say, on fairly strong grounds, that three-fourths, if not a greater percentage of the total tax, falls upon the backs of the workers and wage-earners, in the form of increased rents. There is scarcely an office in any city in the Commonwealth of any size, the rent of which was not raised immediately upon the imposition of the progressive land tax. There is scarcely a portion of any residential district in Australia in which landlords whose property has been assessed at ^5,000 and over have not recouped themselves for the taxation by increasing the rents charged for their property. Who paid it?

Senator McGregor - In 1887 rents were as high as, if not higher than they are to-day, and there was no land tax then.

Senator ST LEDGER - My honorable friend cannot wriggle out of the position. Again that does not touch the point I took. We were led to understand by the Minister of Defence that the imposition of the Federal land tax was a sort of heaven-sent blessing, which his party alone conferred upon the people of Australia. His statement has been- repeated, and possibly will be repeated again, but I wish to draw the attention of honorable senators on the other side to the consideration of where this tax is falling. Every land-owner who holds a residential or city property at once passed the tax on to his tenants, and we shall shortly have a return showing how it bears upon the tenants. My honorable friends may indulge in self-congratulations about their land tax, but they cannot get away from the fact that, immediately upon its imposition, the rent of every office in every thickly-populated city in Australia went up, and the rent of almost every cottage went up immediately too.

Senator de Largie - Who got the increased rent?

Senator ST LEDGER - The landlords.

Senator de Largie - We shall have to get a little more out of the landlords, then.

Senator ST LEDGER - Do not honorable senators see that the Federal land tax is already falling upon the backs of the workers, although they are pretending all the time that it is not? Further than that, what else happens ? When land-owners who held more than ,£5,000 worth of residential or city property, and who, therefore, were directly affected by the land tax, protected themselves, the rents of adjoining cottages or properties went up in accordance with the law of sympathy. Because, if one landlord having property of a value of more than ,£5,000, raised his rents by is. or 2s. a week in order to compensate himself for the payment of the land tax, the man who owned the adjoining cottage naturally looked to his tenant for a corresponding increase in the rent. That is how this tax is operating throughout the Commonwealth .

Senator Givens - Where did your law of supply and demand come in then?

Senator ST LEDGER - Call it what you like, the land tax is operating in that way. I do not think that, under present conditions of society, there is a tax which will not be passed on, and which will not ultimately fall, if not wholly, largely on the backs of the masses. So far they ha 'is been deluded by the hypocritical cry that the land tax will break up large estates. In at least nineteen-twentieths of the cases the tax cannot do so, because the estates on which it operates are so closely settled thai further breaking up is impossible. It may follow that, in some isolated instances, a large holding, being subject to the operation of the tax, is in course of transition. But supposing that that is the case, who is going to pay the tax ? If a large holder transfers his land to a small holder, the small holder will take the land with the tax, so that the transferror shall not bear the imposition, and the terms will in nearly all cases be so arranged that the small holder will pay not only the capital value of the land, but every penny of the land tax. There is no royal road to taxation, and it will not take much longer, I think, for the people of Australia to understand that the last thing which an honest Government should do if it desires not to increase the burdens of the country, is to impose taxes of any kind, and never to impose them except in cases of necessity, because, if ill-regulated, the worker will suffer all the time.

Senator W RUSSELL (SOUTH AUSTRALIA) - And leave land monopoly as it is?

Senator ST LEDGER - That may be cured in other ways. We cannot escape from the fact that this boasted land tax is falling to-day on the backs of the workers as tenants. If my honorable friends want to get hold of big estates, and such estates are really preventing settlement, there are other ways of dealing with the matter. What the Government has done in this case in order to get a few cracklings foi; themselves, has been to burn down the whole house. A paragraph of the opening Speech refers to the consolidation of the State debts. I am not going to ladle out, if I may be pardoned for using that expression, any particular censure on the Government in this matter, because I think that every Government of the Commonwealth is justly open to like censure. The subject has not been dealt with so far, and I hope that the Ministry will be able to make good their word, and, at any rate, do something. I take it that the consolidation of the State debts, embracing at least £250,000,000, will be the biggest financial transaction which a Commonwealth Government has ever undertaken; that a satisfactory solution of the difficulty will tax the highest financial talent, not only inside Australia, but outside as well, and that it cannot be settled satisfactorily by Parliament until the whole question has been threshed out from top to bottom by a competent financial committee, capable of advising us as to the action to be taken. As soon as the matter is dealt with, in justice to the States, the better. We have already deprived the States of half of their Customs returns, which was the principal security for, and the fund for the payment of interest on, their debts; and therefore, in duty to the States, we are forced to take up the question. The only way in which it can be approached is, I think, the way in which a similar question was approached in England, when about ,£350,000,000 or £400,000,000 worth of Government stock was gradually converted into what are known as consols. The operation took about twenty or thirty years ; but it was preceded and accompanied by various Acts of Parliament, and expert financial advice, both inside and outside Parliament, carefully piloted the Government through every measure necessary to carry out that gigantic financial transaction. In a similar way. we must deal with this £250,000,000 worth of stock. I hope that the Government will at once appoint a competent Royal Commission, and, if possible, not allow the consideration of the question to be delayed a day longer. On the matter of policy, I express this opinion, which I have frequently expressed elsewhere, that, in the taking over or the consolidation of the State debts, I shall be no party to any policy which would interfere with future borrowing by them. In support of that opinion, I can quote the advice given by the Agent-General for New South Wales in 1909, when the question of consolidation and the future policy to be observed was being spoken of in this Parliament, and indirectly in the State Parliaments. It has been contended here and elsewhere, over and over again, by political and financial leaders of far higher standing and authority than I would presume even to think myself to be, that you cannot approach this big financial operation without restricting the borrowing powers of the States. I have differed, and, in the light of information which I possess, I shall continue to differ from those persons. The matters seems to me to be entirely distinct from one another, and, rather than see the borrowing powers of the States for the present, and for years to come restricted, I would prefer the State debts not to be touched or consolidated. ' In support of the opinion that we can separate the two questions, I shall quote the advice of the Agent- General for New South Wales, Mr. T. A. Coghlan, wired from

London on oth March, 1909, to his Premier. He said -

I would like to correct statements made at the Conference of Premiers, 1906, that I considered Slates could borrow on better terms than could the Commonwealth. The contrary is the case for equal amounts. Commonwealth could certainly borrow on better terms than could any State. Its credit could not be quite as good as Canada, but where New South Wales would obtain 99 for a 3^ per cent, loan, Commonwealth would obtain at par. The idea encouraged in Australia that where States pay 3^ per cent. Commonwealth would pay 3 per cent, is ridiculous. India, with the guarantee of the Imperial Government, borrowed recently exactly on the same terms as New South Wales, and Canada shade better, both at 3^ per cent., and underwriting cannot be avoided. Imperial Government only party able to place loan without underwriting. But though superior to individual States the Commonwealth's credit could be only maintained within narrow limits. There is no question here that the six States, acting separately, could obtain from London sums far larger than could the. Commonwealth, perhaps twice as much. This arises from strong growing tendency amongst all classes of investors to distribute investment risk. Present difficulty of States obtaining loans arises from the inability of the market to forecast the European situation, and will soon pass away. This affects even the Imperial Government, which is waiting to place loan Irish stocks.

My opinion, supported by leading financiers here, is that, if power to borrow in London be surrendered by the States to the Commonwealth, the Commonwealth will find itself in difficulties when providing for renewals, and it would not be able to obtain any money for new undertakings. Axiom, " Whole greater than the part," is, in this instance, fallacious. You must remember that the Commonwealth inevitably will be a borrower sooner or later.

To-day it has been announced to the world that the Commonwealth is going to borrow money for the construction of two railways.

No reliance can be placed on policy of abstention. My advice is that the question of the transfer of State debts be kept distinct from settlement of Commonwealth surplus distribution, and that in the interests of the Commonwealth and States the power to borrow be not surrendered.

I know of nothing which materially modifies that important' opinion from a high financial authority. That the States' credit to-day is stronger than the Commonwealth's estimate of its own credit, is proved by the fact that the Queensland Government raised its last loan at about 12s. 6d. per cent, less than the rate at which the Commonwealth Government was lending money to various States.

Senator Millen - I think it was 32s. 6d.

Senator ST LEDGER - So much the better, and that only confirms my argu ment. I was putting it at the very lowest figure.

Senator de Largie - How can you gauge the power of the Commonwealth as a borrower?

Senator ST LEDGER - Who is the best judge of the credit of the Commonwealth, when it exacts from its own borrowers a higher rate than that at which the Queensland Government can borrow money in the open market in London ?

Senator Pearce - There is no difficulty in disposing of the money, anyhow.

Senator ST LEDGER - That is not the point. The Commonwealth is exacting a higher price from its borrowers than a powerful and big State was able to borrow money at when it appealed to the market in London. For this very reason, the States will naturally demand that when the question of consolidating the State debts comes up, that their power to borrow shall not be restricted unless they are to have two markets - the Commonwealth market and the open market of the world - to appeal to.

Senator de Largie - Why did not the other States also borrow at lower rates of interest ?

Senator ST LEDGER - I think that every State could have got .almost the same terms as Queensland ; and, that being so, it seems to me that the States are quite right in insisting that they shall not be forced to go into a dear market when the world's market is open to them, especially in view of the fact that the larger States have lying before them the great work of developing their immense territories.

Senator de Largie - Then, the honorable senator's statement amounts to a charge of extravagance against the States which did not borrow at lesser rates of interest.

Senator ST LEDGER - I do not think that they made a good bargain. I do not like making comparisons, which are always more or less odious, but certainly Queensland scored when her Government refused to take money from the Commonwealth Treasurer, and went into the open market and obtained the money she wanted at cheaper rates than the Commonwealth Government was asking for its advances. Queensland took the risk, and it was proved that she was thoroughly justified. For some time to come, at any rate, why should we restrict the borrowing powers of the States? On the other hand, the consolidation of the State debts is one of the most pressing and important necessities of the Commonwealth.

Senator Pearce - According to the honorable senator's argument, it would be a bad thing to consolidate the debts, because the States can borrow cheaper than the Commonwealth ; and there is no need to consolidate the debts of the States if the credit of the Commonwealth is lower than that of the States.

Senator ST LEDGER - Yes, for this reason - that if you consolidate the debts of the States and you can bring down the interest on State stocks the States will come to the Commonwealth and not go to the open market.

Senator Pearce - The honorable senator argues that they cannot do that to advantage.

Senator ST LEDGER - I do not say anything of the kind, as a universal proposition. The Minister of Defence is particularly ingenious in trying to twist one's arguments. I said, as distinctly and clearly as I could, that on the present occasion we have a positive instance that a State could borrow in the open market at a cheaper rate than the Commonwealth placed its own credit. But I do not say that that position is going to last for all time. On the contrary, I believe that the successful consolidation or conversion of the debts of the States, at a rate of interest less than the rates on the loans originally incurred, would act as a most powerful magnet for the States to come to the Commonwealth to borrow, rather than go to the open market. But the States have no reason for doing so yet, because the Commonwealth has been dallying with this question year after year, talking about it and doing nothing. In my opinion, the Commonwealth has been mixing up this question of the consolidation of the debts with the threat of restricting the borrowing of the States, which naturally they will resist.

Senator Givens - The States, as a whole, have been opposed to the taking over of their debts by the Commonwealth.

Senator ST LEDGER - How can that be so, when the last referendum showed that tlie majority of the people were in favour of the Commonwealth taking over the debts of the States?

Senator Givens - But, as a general rule, the State Governments have been opposed to the taking over of the debts by the Commonwealth.

Senator Millen - Opposed to the restriction of further borrowing.

Senator ST LEDGER - They have certainly been opposed to the restriction of borrowing, and members of the State Governments, as individuals, if not as Ministers, have not been too favorable to the proposition made from time to time for the conversion and the consolidation of their loans. But there is a good deal to justify their attitude. I have pointed out one reason : that they will not be favorable to the proposition as long as the Commonwealth authorities insist on mixing up the two questions, the restriction of their right to borrow, and the consolidation of their debts. Paragraph 30 of the GovernorGeneral's Speech deals with the right of Commonwealth public servants to appeal to the Conciliation and Arbitration Court. There can, I think, be but one comment on a. proposal of that kind. It is a confession of inefficiency on the part of the Postmaster- General, and a confession of gross timidity on the part of the Government itself. If the management of the Post and Telegraph Department is such that its officers do not get fair play in the exercise of their duties as public servants the Minister is responsible for not relieving that situation through the action of Parliament.

Senator W RUSSELL (SOUTH AUSTRALIA) - The honorable senator's party was responsible.

Senator ST LEDGER - It is not a question of a particular party being responsible. I am not going to separate one party from another, except to say that, if the public servants of the Commonwealth are not being treated properly in the matter of salaries or wages, the Minister is not doing his duty, either to the Parliament or to the people of this country, when he does not make out a case to Parliament for an improvement of their lot. There is certainly one branch of the Post and Telegraph Department that is grossly ineffective. I allude to the Telephone branch. The reason for its ineffectiveness is that more money is required to carry it on. I believe that the Telephone branch, from the time when the Department was taken over by the Commonwealth, has never been supplied with sufficient funds for discharging its functions, if they were to be carried out effectively. We cannot expect public servants to administer the machinery of a Department properly if they have not sufficient motive power at their disposal. A report laid before Parliament some five or six years ago informed us that the Post, and Telegraph Department required some two or three million pounds to bring it up to a modern standard and to satisfy the reasonable requirements of Australia. The Government could have relieved the situation by resorting to the system which prevails iri the British Post Office. The PostmasterGeneral in Great Britain has been asking for some millions for the purpose of taking over the 'telephones, which have been in the hands of private companies. He proposed to finance hig policy by a system of terminable annuities. In just the same way here the difficulty of extending the work of the Post and Telegraph Department could be. got over by a species of loan, which might be paid back to the Treasurer after a certain number of years. I believe that the Postmaster-General in Great Britain published a memorandum showing that he would require about £6,000,000 in order to bring the telephone system, formerly controlled by private companies, up to the standard required by the people of the United Kingdom.

Senator Givens - The privately-owned telephones were not in an efficient state, then ?

Senator ST LEDGER - So it seems. The British Postmaster-General wished to take them over. It is not for us to say whether he was right or wrong. The fact remains that, in order to bring the service up to a state of efficiency, the PostmasterGeneral required a very large sum of money. He had no hesitation about his procedure. Did he wait until Parliament provided the money for him out of revenue? He did nothing of the kind. He raised the necessary amount of money on a system of terminable annuities. It seems rather extraordinary that the Government of the Commonwealth, when they knew that the telephone service was in a state of howling inefficiency, should not have taken steps to improve it, although they had about ,£3,000,000 available, arising out of the note issue, which they were willing to lend to the States at interest.

Senator W RUSSELL (SOUTH AUSTRALIA) - The honorable senator opposed the Surplus Revenue Bill.

Senator ST LEDGER - What on earth has that to do with the question?- The awful aptitude which the honorable senator displays for connecting things which have nothing whatever to do with each other is so remarkable that if his talent enabled him to connect related subjects with the same ease he would be one of the most remarkable statesmen in Australia. It seems an extraordinary thing, I say again, that the Treasurer of the Commonwealth should have his vaults bursting with gold, and should be lending out money to the various States, while one of the Commonwealth Departments is in a state of howling inefficiency. A telephone in one's house at the present time is an instrument of torture. Personally, I would almost rather go into a dentist's chair, and have an operation performed, than go to my telephone and use it.

Senator W RUSSELL (SOUTH AUSTRALIA) - The telephone that I have is a delight to me, and to my whole family.

Senator Millen - This seems to be a case of favoritism.

Senator ST LEDGER - It may be that I am rather irritable, and expect too much ; but 1 also hear these complaints from friends and business men in Sydney and Melbourne. When one is travelling, or doing any business, and wants to use a telephone, one finds that this, which should be one of the instruments of public convenience, is little better than a cause of wholesale lurid profanity. When I go to a public telephone, I can hear the business of other people ; but I can neither transmit a message of my own, nor hear a message that is being transmitted to me.

Senator Pearce - What a splendid romance the honorable senator could have written !

Senator ST LEDGER - The best of romancers could not do justice to our telephone system. It is of no use for honorable senators opposite to pretend that the system is in a state of anything like efficiency, because the fact that it is not is well known. It is almost impossible to get any satisfaction from a telephone in Sydney or Melbourne, where the last thing you expect is to hear your message transmitted or the message of another transmitted to you. You may be waiting fifteen or twenty minutes, and may hear everybody else's business but your own during that time. What is the reason for that? It is that the officers have not the means and the material for bringing the telephone system up to date.

Senator McGregor - People -would not use the telephone at all if it were like that.

Senator ST LEDGER - Many people will not have the telephone at present. The point that I wish to make is that it is remarkable that the Government should have millions at their disposal, .whilst they cannot find money to put the telephone system in a proper condition. Paragraph 26 of the Governor-General's Speech must have been drafted by a humorist, or by a combination of humorists, in the Ministry. It begins by saying -

My Advisers regret the result of the referenda in April last.

I wonder why it was necessary for the Government to say that.

Senator Millen - We had anticipated so much.

Senator ST LEDGER - Exactly; we knew all along that the Government would regret the result; but we did not know that we should have this childish expression recorded in a Governor- General's Speech.

Senator de Largie - - If the honorable senator is proud of the result of the referenda, Heaven help him when he goes before the electors next time.

Senator ST LEDGER - Our constituents are like our coffins, in that they are always in front of us, and that we have to face them sooner or later, whether we like it or not. If the threat of the Ministry to again submit to the people the proposals which were so decisively rejected in April last be carried into effect, it will give me the greatest pleasure, because I shall consider it my duty to once more stump the country in opposition to them. But I do not think the Government will re-submit those proposals to the people. If they do - making all the reservations that a man must make when he enters upon the field of prophecy - I think they will be soundly defeated. Further, I do not believe that the Government are game to refer them to the electors again in the form in which they were previously presented. Ministers will probably recognise that some consideration is due to the people, of whose interests they profess to be the special' guardians, by presenting them in a form which will enable the humblest, as well as the most exalted, intelligence to realize their effect. But from a statement which was made by Senator E. J. Russell, I gather that at least one of the proposals will be abandoned. That honorable senator, in championing the Minister of Defence, who charged the Opposition with having broadcasted misleading literature as to the meaning of the proposals embodied in the referenda, declared that the statement .which was contained in one pamphlet that municipalities would be robbed of their powers by the Commonwealth, was sheer nonsense. My reply was that the most eminent constitutional lawyer, in Australia held exactly the same view as that which was expressed in the pamphlet in question ; and thereupon Senator E. J. Russell pointed out that Mr. Mitchell had withdrawn his original opinion on the matter, thus implying that the view which he then expressed was a wrong one. Consequently, I venture to affirm that the Government will not bring forward that proposal again. If they do, they will bring it forward in such a form as will prevent a mistake being made such as we, as well as Mr. Mitchell, are alleged to have made. There is no political party in this country which is so stupid and undemocratic as to say to thepeople at this stage of our political history, " Either you did not understand the proposals referred to you in April last, or you were so corrupt that you allowed yourselves to be bribed. Because you were so unintelligent, or so corrupt, at the last referenda, we are again putting the proposals before you, hoping that you will now understand them, or that you will not allow yourselves to be corrupted by the organizations of the other side." No Government, I repeat, dare do that. I hope that Ministers are game to do it. If they are, they will meet with the same opposition, and with a more decisive defeat than they experienced on the last occasion. I come now to the question of the establishment of a Commonwealth bank, which has been long promised by the Labour party. That promise they are bound to redeem. The reason underlying the establishment of this institution was well explained in less than a sentence by the great financial authority on the other side of the Chamber - I refer to Senator Needham. He put into less than a sentence the whole object of the financial policy of nineteen-twentieths of the supporters of the Federal Labour party, and, indeed, of the Labour party throughout Australia, when he said that the object of establishing a Commonwealth bank was to provide the people with cheaper money. In framing such a measure, 1 believe that the Government entertain the delusion that they can provide the country with cheap money. But no fact is more clearly established historically than that Governments cannot make money cheap.

Senator Findley - Do not the State Governments lend money at lower rates than private financial institutions?

Senator ST LEDGER - It is a clearly established historical fact that Governments cannot make money cheap. No Government yet has been able to make a paper currency take the place of gold. It took Secretary Chase three or four years to understand that, as a result of using greenbacks to defray the cost of the civil war in America., he was paying ;£i 10,000,000 more than he would have had to pay had gold been used. A similar disaster will overtake any Government which attempts to act upon the principle expressed by Senator Needham. There are only two factors which can make money cheap, namely, the .general prosperity of a country in conjunction with sound government.

Senator W RUSSELL (SOUTH AUSTRALIA) - The State bank in South Australia made money much cheaper than it was previously.

Senator ST LEDGER - In times of paralysis, it is not the capitalist who suffers by a depreciated currency, because he holds every civilized Government to its contract to redeem that currency in gold or silver. Thus it is not the moneyholders who suffer at such critical periods, but the workers. As Lord Farrar, a most eminent authority upon money, says -

A depreciated currency benefits the employer, and is a robbery of the worker.

I do not know whether my honorable friends opposite will dispute that proposition. The only other subject with which I wish to deal is the proposed amendment of the Conciliation and Arbitration Act. Amendments dealing with the parent Act have been made by almost every Parliament since the inception of the Commonwealth, and the Wages Board system has been operative here for many years. There is not an employe^ in the Commonwealth but must admit that no Government on earth has tried harder and more honestly to provide machinery for the settlement of industrial disputes than have the Governments of the Commonwealth and of the States. But, after twenty years of experimenting in this matter, we are again confronted with the need for a further amendment of existing legislation, presumably in the interests alike of the workers and of the employers. If there .be one thing more than another which Australia requires to-day, it is industrial peace. We have already provided the machinery for bringing about industrial peace, but, if the desire of the unionists or employes is not in that direction, all our Wages Boards and Arbitration Courts are in vain. It is the duty of every representative of the people, and of every employer and employe^ to do his utmost to insure that the instrument that we have designed to secure industrial peace in Australia is not converted into an instrument for industrial warfare. If we are going to write over the doors of our Wages Boards and Conciliation and Arbitration Courts, " Every employer is a highway man, and every employe an Esau," we might as well close those institutions. By so doing you would be making the last stage worse than the first. To approach any matter from that point of view would be to doom it to failure.

Senator McGregor - Why does not the honorable senator include himself? Why does he always say "You"? He is asmuch responsible as are we for defective legislation.

Senator ST LEDGER - My mentor again. Perhaps I should apologize to the Vice-President of the Executive Council for having been so late in enforcing thisproposition, but better late than never. I have the feeling, however, that I have already written and said something on this matter. ,1 take the opportunity now arising from recent events, to emphasize thewarning that any hope that a multiplication of these tribunals will benefit the employer or the employe will be only a delusion if Acts of Parliament are to be administered and Courts to be appealed to inthe spirit that every employer is a highwayman, and every employ^ an Esau.

Senator Millen - It is characteristic of the Vice-President of the Executive Council, and the party opposite, to throw all responsibility upon others.

Senator ST LEDGER - Possibly that is so; but surely the Government have sufficient experience now to be in a position to frame an Act which must be used for the purpose of promoting industrial peace. In a country that is prospering at the present time, and whose prosperity is increasing by leaps and bounds, who has more to gain by industrial peace than the worker. The responsibility rests upon their leaders, inside and outside of Parliament, to impress upon them the necessity for industrial peace. Surely it is time we gave a fair trial to the machinery we have set up for the regulation of industry, and that members of both parties inside and outside of Parliament should ask employes and employers alike frankly and fully to see to it that they will drive out political agitation, cease to appeal to the stupid prejudice of politics or class, and insist that our legislation and our tribunals to give it effect shall be administered from the most economical stand-point for any community, the stand-point of peace between employer and employe. It is one of the most dangerous and despairing signs that we should have preached in Parliament, and from platforms outside, maxims which can only tend to inflame the hatred of the two classes and drive them further apart. The more closely the two classes in industrial life are brought together the better it will be for themselves, and for the community at large.

Senator Givens - There was a beautiful reign of peace between the slave-owner and the slave.

Senator ST LEDGER - Here, again, we have the reference to the highwayman and the Esau. The slave-owner on the one hand, and the slave-driven employe" on the other. The honorable senator by his interjection seeks to institute a parallel for the position of employer and employe in the position of the slave-owner and his nigger.

Senator Givens - Is not that the ideal for which the honorable senator is striving when he speaks of industrial peace?

Senator ST LEDGER - Why not strive for industrial peace? Following up the interjection of the honorable senator, I say that if the industrial conditions of Australia can only be regulated upon the supposition that one factor in the development of industries is the slave, and the other the slave-driver, the end can only be civil Avar or revolution. I say that such conditions as the honorable senator suggests do not exist in Australia. The employes of Australia are not slaves. I take this opportunity of saying that I do not believe there is a country in the world in which, from any stand-point, the workers are better off than are the workers of Australia. I do not say that they should be content for all time with existing conditions ; but I do say that if they do not consider that they are getting a fair return for their labour in all departments of industry, and desire to better their condition, their hope for the future will lie, not merely in the passing of legislation and the institution of Courts for the settlement of industrial questions, but in approaching the settlement of those questions in the spirit that what must be insisted upon is the establishment of industrial peace. I am sure that Ministers are anxious that we should get to business as soon as possible ; and now that I have settled, from my point of view, so many matters of importance referred to in the Governor-General's Speech,

I hope that any honorable senator opposite, or the Vice-President of the Executive Council, should he think it well to rise, will confine himself to a cursory .reply to my remarks, in order that we may conclude this debate as quickly as possible.

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