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Wednesday, 26 November 1941

Mr ANTHONY (Richmond) . - The presentation of the report of the Commonwealth Grants Commission, in conjunction with this measure, which provides for the payment of certain sums of money to what are known as the claimant States, affords an opportunity to review the financial and constitutional relationship of the Commonwealth and the States. The commission has presented a comprehensive report. Its members are to be congratulated on the thoroughness of their investigations of the numerous facts and circumstances which they were obliged to consider in order to determine the relative payments which should be made to the

States concerned. The report contains a wealth of information and reveals certain factswhich should be brought to the notice of Parliament and of the country generally. A table in the report shows that for the financial year 1939-40 an amount of £54,386,000 was collected in State taxation. In addition, out of the £90,000,000 revenue which the Commonwealth received the States received £18,691,000. Therefore, out of Commonwealth and State revenue from taxation in that year totalling £144,000,000 the States received over £73,000,000, or more than half of the total collections by the Commonwealth and the States. The report of the commission reveals that in the period from 1930-31 to 1.939-40, the Commonwealth Government paid to the various States, from its revenue, no less a sum. than £167,417,000. Payments to the States by the Commonwealth began, of course, at the inception of Federation ; but since the appointment of the Commonwealth Grants Commission in 1933, the claims of the States of "Western Australia, South Australia and Tasmania have been placed on a more scientific basis. In the seven-year period 1928-1934, before any of the commission's recommendations became operative, Western Australia, South Australia and Tasmania received £9,388,000 in Commonwealth grants, whereas in the following seven-year period under the Commonwealth Grants Commission they received £16,020,000. The annual average in the first seven-year period was £1,335,000 and in the second sevenyear period £2,288,000. I mention this not because I am opposed to the payment of grants by the Commonwealth to the States mentioned, but because I am anxious to bring the situation into proper perspective. I believe that the time has arrived for a reexamination of the functions, responsibilities and burdens of the States and of those of the Commonwealth, particularly since the beginning of the war. In my view it is necessary in the interests of the whole community, that the relations of the Commonwealth and the States should be re-examined. I offer two reasons in support of this contention. First, the Commonwealth is now exercising, under the National Security Act, so many functions which cut across the peace-time interpretations of the Constitution, and has invaded so many fields formerly occupied exclusively by the States, specially in relation to primary products, that it will probably be impossible to revert to pre-war conditions after the war ends, especially in respect of marketing. Unless some decisive move is made during the war period to revise the Commonwealth Constitution, it is likely that people engaged in primary industries will find themselves facing almost insuperable constitutional difficulties in relation to their marketing organizations after the war. We should therefore consider the substitution of our present constitutional machinery, by some other machinery which will permit of the preservation after the war of the marketing organizations established under national security regulations.

My second reason for suggesting that we should at this juncture re-examine our Constitution is that the duplication of taxation by Commonwealth and State Governments has developed to such an oppressive degree that it must ultimately retard the progress and prosperity of the people of the Commonwealth as a whole. The burden of taxation must be considered not only in relation to its complexity in varieties, but also in relation to its difficulties in respect of the preparation of returns. Nowadays, it is almost impossible for an ordinary individual to prepare, in proper form, all the returns he is expected to submit to the taxing authorities. Confusion is added to confusion because different methods of assessment in respect of income tax and other forms of taxation are employed by the Commonwealth and the States. The list of the variety of taxes is impressive. It includes -

Commonwealth and State income tax.

Special income tax.

Unemployment relief taxes.

State development taxes.

Wage taxes in one form or another.

Commonwealth and State land taxes.

Sales tax.

Commonwealth and State probate and estate duties.

Entertainments taxes.

Gold taxes.

Flour tax.

Payroll tax.

Commonwealth and State company taxes. Commonwealth and State gift duties. Customs and excise duties. Inspection fees of various kinds. Licence-fees in respect of wireless, motor vehicles, dogs and other matters.

The history of Commonwealth taxation is interesting. It would appear that it was not intended at the inception of federation that the Commonwealth should duplicate fields of taxation to any great degree by the States. For the first ten years of federation the Commonwealth collected only customs and excise duties; then the land tax was added. In 1914, estate duties were imposed by the Commonwealth, and in 1915 income taxes were levied. The Commonwealth enter.tainments tax followed in 1916, and the war-time profits tax in 1917. I do not believe that the framers of the Commonwealth constitution nor those who voted for it3 adoption, contemplated that the Commonwealth would ever enter so many fields of taxation which circumstances have compelled it to do, or that the duplication of taxation would occur to the degree it has. It is frequently beyond the physical and accounting capacity of many taxpayers to prepare their returns, let alone submit them within the prescribed times, and failure to do so brings upon them fresh additional penalties.

Mr Calwell - What is the honorable gentleman's solution of these difficulties?

Mr ANTHONY - I believe that an increasing number of people in Australia are coming to the conclusion that a revision of the constitution is essential in order to eliminate overlapping in Commonwealth and State administrations. This conclusion has been forced upon them because so many demands are being made upon the same purse. Circumstances over which we have little control - the circumstances of war - are leading us steadily to the conclusion that the days of absolute sovereignty of the States must come to an end if the people of Australia are to fashion for themselves an effective organization of government necessary to .meet the changing needs of society, rapidly being revolutionized by war. I- am speaking straight for a unified system of government for Australia; I am faking advantage of the fact that many members of the present Government, and T believe the policy of the party to which they belong, favour unification. A number of members on this side of the House hold the same view. The time is appropriate during the consideration of a States Grants Bill to call attention to this particular matter. In order to revise the Constitution, a new federal convention may be necessary to formulate definite proposals for a referendum of the people, and to secure a majority of the electors voting in a majority of the States. Attempts to secure constitutional revision on previous occasions failed because it was made a party question. I hoped that might he avoided. Although there might be a majority of electors voting in favour of any proposals submitted, there might not be a majority in a majority of the States. Even if an overwhelming majority of the electors of, for example, the States of New South Wales, Queensland and Victoria, voted in favour of unification, if the support of one of the other States could not he secured, the toad would be barred.

Mr Marwick - Western Australia can always be relied on to do that.

Mr ANTHONY - That leads me to my next point. The grants recommended by the Commonwealth Grants Commission, based as .they are on the principle that the higher the taxation in the eastern States, the higher should be the grant paid to the claimant States. It has been such easy money that the claimants will have little incentive to favour revision of the Constitution. So long as heavy automatic grants are made to Tasmania, South Australia and Western Australia, those States will stand in the way of a unified Australia, despite all the reasons that may be advanced in favour of it; and the report of the commission contains some very good ones. The people of Australia may have been complacent in past years in regard to the inefficiency and expense of governmental machinery, but the mounting burden, of taxation and the pressure on private purses must compel everyone to try to seek a way out of the mire. The grants for which thi= bill makes provision have a. per capita basis, which is calculated according to the rate of expenditure in the most extravagant States. For example, the taxation per capita in Queensland, which is a highlytaxed State, is ?8 4s. In Victoria, it is £<3 1.4s, 6d., and in New South Wales, £8 13s. 3d. After attempting to compare the social sendees of the different States, the commission struck an average of the per capita taxation in the three eastern States, in order to arrive at what ought to be paid to the three claimant States. Thus Western Australia, South Australia and Tasmania relatively get the benefit of the average of New South Wales, Victoria and Queensland, which amounts to approximately £7 17s. 3d. per capita. Therefore,, by reason of the system adopted, there is retained all over Australia the implementation of very high taxation ; because the taxation imposed by Queensland and New South Wales is automatically repeated in Tasmania, South Australia and Western Australia. Since the last war the taxation per capita, Commonwealth and State, as revealed by the figures quoted in the report, has more than doubled. In 3918-19, the combined Commonwealth and State taxation was £8 14s. 6d. per capita. The report reveals that for the year 1939-40 it was £20 12s. per capita. It is rapidly rising, and I cannot conceive what the present figures would reveal. In suggesting that steps be taken with a view to securing a unified system of government to replace the federation, I do not wish to convey the idea that the entire difference between State and Federal taxation would necessarily be saved to the taxpayer. Every one realizes that the services performed by the States have to be carried on by means of the money provided. Hospitals, police, education, justice, agriculture, irrigation, public works, and sundry other functions would have to be continued, and the money for them would have to be raised. But I believe that if one Parliament imposed taxation there would be greater hesitancy on the part of that single authority to levy crippling taxes in any particular direction. Under the present system of double taxation, neither the Federal nor the State authority realizes the disastrous effects of the taxes imposed. Some relief must bc granted to the taxpayers, and one of the greatest measures of relief, apart from reductions of taxes, would be the simplification of taxation returns, which at present, present a problem to almost every individual whose income is more than a few pounds a week. If we are te- solve our problems of the future, we must improve our system of government, and when we are considering a -report of the Commonwealth Grants Commission is a fitting occasion to express our ideas on this subject. I believe that the members of this Parliament are too few. The House of Representatives consists of only 74 members with a vote> although the parliaments of countries with comparable populations have several hundred members. The Parliament of the Union of South Africa has over 150 mem'bers, who represent a population of about 2,000,000. If the Commonwealth Parliament had a larger number of members than at present, many of our political problems could be solved, because the voting on important public questions would not be so close as it has been in the last few years.

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