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Tuesday, 22 March 1927

Senator FINDLEY (Victoria) .- I avail myself of this last opportunity to express my conviction that the Government is not justified in taking the action proposed in this measure. It has no authority from the people to introduce legislation of this kind. I go further, and say that had the people of Victoria, at the last election, known that such proposals would be brought forward they would have voted against the Government. In the Senate this question has been discussed in a cooler atmosphere than that which pervaded the last Federal election. At that time party feeling ran high; indeed, the atmosphere was somewhat electrical.

The DEPUTY PRESIDENT.- That has nothing to do with the bill.

Senator FINDLEY - I ask you, sir, not to be so impetuous. I intend to connect my remarks with the bill before the Senate. The last election was fought on only one issue. Although the withdrawal of the per capita payments from the States was referred to in a general way, the fact remains that the average elector paid little or no attention to any reference to the desirability of effecting a change in the financial relations of the Commonwealth and the States. Both the Prime Minister and the Leader of the Government in this chamber have said that they made perfectly clear the Government's intention in this connexion, and that the vote of the people was equivalent to a mandate to proceed with this legislation. Yet a few days ago the Prime Minister, when addressing a meeting of the Australian Women's National League, said that various views, opinions, and prejudices existed in regard to this subject, and that the people were confused and did not know right from wrong. In the light of that admission, how can it be said that in the heated atmosphere prior to the last election the people were in a better state to understand this question than they are now?

Senator Foll - The vote of the people showed that they knew right from wrong.

Senator FINDLEY - The Prime Minister's admission that the people could not distinguish between right and wrong in relation to this question was a reflection on the Government, because had it made the issue clear the people would not now be confused about it. In effect, the Government is now saying to the people that the practice which has continued since federation is wrong in principle, that the States have been receiving money to which they are not justly entitled.Recognizing that direct taxation is unpopular, the Government proposes to evacuate certain fields of direct taxation, so that the State Governments will be blamed for having imposed additional taxation on the people. At least, five of them are Labour Governments. If there had been anti-Labour Governments in five of the States, this Government would have hesitated to introduce such a measure as the bill now before us.

Senator Reid - No; the difficulty would have been settled long ago.

Senator FINDLEY - That is the opinion of the honorable senator. I do not share it. In Victoria there is an anti-Labour Government in a Parliament composed of different parties, every member of which is opposed to this proposal. Why are they objecting to it?

Senator Reid - Because it is good election material.

Senator FINDLEY - The people of Victoria are as intelligent as the people of any other State. They pay close attention to all public questions of vital importance, and I am satisfied that the majority are entirely opposed to the action of this Government in taking away from them that portion of the Customs and excise revenue which they have received for 27 years.

Senator THOMAS (NEW SOUTH WALES) - Victoria is not getting one penny of Customs and excise revenue; it is all required for Commonwealth needs.

Senator FINDLEY - Has not Victoria been receiving the per capita payments?

Senator THOMAS (NEW SOUTH WALES) - Yes; but they are not made from Customs and excise revenue. They come from other sources, including probate duties, land, and income taxation.

Senator FINDLEY - The Commonwealth will receive during this financial year approximately £44,000,000 from Customs and excise duties, besides certain revenue from other sources.

Senator THOMAS (NEW SOUTH WALES) - How much of its revenue is required for Commonwealth purposes ?

Senator FINDLEY - That is beside the question. Why does the Government propose to abandon certain fields of taxation ? The land tax has realized nearly £32,000,000. It is obvious that the same measure of land taxation cannot be imposed by the Victorian or other State Government. The Federal land tax has had a most important effect upon the material prosperity of the Commonwealth. In Victoria particularly it has stimulated activity and increased production. Unless honorable senators have been wholly unobservant they must have noticed the rapid .progress that has been made in Melbourne during the past few years, largely owing to the fact that in 1910 a Labour Government imposed the Federal land tax to which the strongest opposition was taken by that section which now supports this Government in its proposal to abandon it.

Senator Crawford - The progress of Melbourne is chiefly due to the Government's protectionist policy.

Senator FINDLEY - The transformation in the city of Melbourne, and, I think, the same may be said of other capital cites of the Commonwealth, is largely, if not wholly, due to the operation of the Federal land tax. Large landowners were forced to realize that if they wished to get an adequate return on money invested in city lands, they would have to erect more modern buildings that would bring them in higher rentals. Before the imposition of thetax there were in many parts of Melbourne buildings that had been erected in some cases, for half a century. They were more or less a disfigurement; but with the increase in population, leadingto the development of commercial and industrial enterprises, laud values commenced to soar to such an extent that land which was worth £600 a foot a few years ago was sold recently for about £3,000 a foot. With the rise in values owners found it imperative to erect up-to-date buildings on city allotments. Day after day for months past one has seen old tenements being demolished, four and five story buildings coming down and mighty up-to-date edifices being erected in their place. All this, I submit, is largely due to the effect of the Federal land tax.

Senator Andrew - What a.bout the effect of the tariff?

Senator FINDLEY - The same influence has been at work in connexion with large country areas, many of which have been subdivided. Considerable areas of land, which prior to the imposition of the tax had been in a more or less virgin state, carrying a certain number of stock, are now permanently occupied by contented and prosperous settlers. The tariff is wrapped up in this question. It has very much to do with the bill. If it were not for the fact that we have, not a protectionist but a revenue tariff, the probabilities are that we should' not have seen this measure, because with a protectionist tariff the revenue from Customs and excise duties should be a declining figure. Can any honorable senator seriously contend that the present tariff, which this year will return to the Commonwealth approximately £44,000,000, is protectionist in its incidence? What guarantee is this Ministry giving to the governments of the States that the proposal now before the Senate will be a permanent settlement of the problem involved in the financial relations of the Commonwealth and the States? It is true that after the passage of this bill there is to be a conference ; but even if that conference arrives at an 'agreement it will not bind future governments. Who can forecast what the future has in store so far as the parties in this Parliament are concerned ? If, as the result of the next elections, the Labour party is returned, it is as certain as that day follows night that it will enact a truly protective policy, under which revenue from Customs and excise will decrease from year to year. It is certain, also, that it will reimpose the Federal land tax if this Government abandons it. In the circumstances, what guarantee can this Government give the States that the Commonwealth will definitely vacate the field cf direct taxation ? As a matter of fact the Ministry does not propose wholly to do that. It contemplates retaining portion of the income tax, and the whole of the Customs ar-d excise revenue, but proposes to abandon the Federal land tax. At whose behest? Did the Government get a mandate from the people to do that? It might have received a mandate from the wealthy land owners of Australia to drop the land tax, but the people did not give them any such mandate. What chance has Victoria of securing anything like the measure of land taxation which operates in the Commonwealth to-day ? It is well known that the Upper House in this State would decline to pass land tax legislation to bring in anything like the revenue that is derived in Victoria from that source by the Commonwealth. If revenue which Victoria has been receiving from the Commonwealth is to be withheld, how will the State Government make good the loss? Since it will be unable to reimpose the same measure of land taxation, the only available field will be income taxation ; and if the exemption be lowered the tax, in its incidence, will impose a heavy burden on every man, woman, and child in the

State. This course has been hinted at by the Premier, and more than hinted at by the Treasurer of this State. I say definitely, that the people of Victoria are opposed to the Government's proposal. The people of this State desire that the bill shall be defeated and that the Commonwealth system of making per capita payments to the State, which has operated for 26 years, shall continue. During that period governments of different kinds have been in power in the Commonwealth, but not one suggested or even hinted at proposals such as those which the present occupants of the Treasury bench have advanced. Is it any wonder, then, that the States are up m arms? Every State Treasurer is seriously concerned regarding the future financial position of his State. That can be well understood. I ask any honorable senator to imagine himself. in the position of the Treasurer of a State.- Every State is carrying heavy responsibilities, and is hampered because of the financial stringency that exists. The Victorian Government, anticipating that it would continue to receive the per capita payment from the Commonwealth, mapped out its programme accordingly, and embarked upon huge undertakings. The sudden withdrawal of those payments is bound to cause anxiety and place the States in an awkward position. Senator Pearce tells them, "We shall meet you later and talk over the matter; but under no circumstances can that meeting take place until the per capita payment has been withdrawn." Such a statement is completely at variance with one that has been made by the Federal Treasurer (Dr. Earle Page). In effect, the statement of Senator Pearce is that there will not be a conference until the per capita payment has been withdrawn ; that that withdrawal is the beginning and the end of the matter. The Treasurer has said that after the passage of the bill a conference will be held, and the whole matter will be discussed; that the decisions of that conference will be submitted to this Parliament ; and that there is a possibility of the per capita payment being restored. If the statement of the Leader of the Senate is to be accepted as correct, what proposals are to be placed before the conference ? Will they embody the principle of "no per capita payment ; no further imposition by the Federal Government of a land tax ; and partial- withdrawal from the field of income taxation " ? Why should the Government propose to retain 60 per cent, of the income tax? The Commonwealth possesses absolute powers in relation to direct taxation. Why is the Government so anxious to vacate that field? In effect, Senator Pearce said that the expenditure of the Commonwealth is mounting

Hp, and that its responsibilities are becoming greater. That is true; and, being so, 1 cannot understand the proposal to abandon the land tax. The Government has been credited with generosity in having advanced sums to the States for certain specific purposes, such as the purchase of wire netting and the construction of roads. It has also expressed the intention to expend £20,000,000 upon a housing scheme. Its desire is to divorce the financial responsibilities of the States and the Commonwealth, and to place upon* the shoulders of the States certain obligations that it is now carrying. Why not be consistent, and allow the States to carry on their businesses in their own way ? What has the Commonwealth to do with wire netting, roads, ,and housing ? They are essentially matters of State concern and responsibility. The argument of the Government is that it is perfectly all right for it to encroach upon the domain of the States in those directions, but that the principle is wrong in its application to the -percapita payment. The Prime Minister (Mr. Bruce) maintains that the system is not right either constitutionally, legally, or morally, and that it should be brought to an end. I expect that his wish will be gratified, because the Government has for the time being made that a part of its policy. The policy speech which was made to the electors did not include the pronouncement that it was intended to discontinue the per capita payment.

I shall not occupy the time of the Senate at any greater length. My reason for rising was to enter a final protest against the measure. It is a bill for which there is no justification or warrant. Its introduction has caused financial unrest among the Treasurers of the States and irritation and hostility on the part of the Governments of the States. If there is one thing that the Commonwealth Government should do after the expiration of 26 years of federation it is to secure closer and more harmonious relations with the States, not introduce legislation that will have the opposite effect. I hope that, when the division is taken, a greater number of honorable senators will oppose the third reading of the bill than was found in opposition to its second reading.

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