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Wednesday, 1 September 1937

Senator UPPILL (South Australia) . - I should not have taken part in this debate but for the remarks of Senator Leckie, who seized on that portion of the commission's report which declared that grants should be distributed not on the basis of disabilities suffered under federation, but on needs. I am, however, inclined to believe, that he disagreed with the ultimate finding of the commission that South Australia required £1,200,000.

Senator Leckie - I did not disagree with the findings of the commission.

Senator Duncan-Hughes - The honorable senator said that there were no disabilities; only needs.

Senator Leckie - That is in the commission's report.

Senator UPPILL - The commission made a thorough investigation, and did its duty conscientiously. It approached the consideration of the problems involved with an unbiased mind, and admitted the difficulty of making a distinction between disabilities and needs. The South Australian Disabilities Committee which considered the second and third reports of the commission consisted of gentlemen of equal ability, and therefore its opinion is entitled to equal respect. The history of the federation has shown that the smaller States have suffered definite disabilities which demand consideration from the stronger States. This contingency was foreseen by the framers of the Constitution, and led to the insertion of what was known as the " Braddon Blot " which, for the first ten years, safeguarded the interests of the smaller States by ensuring the return to them of a portion of the revenue received from customs and excise. At the end of that period other provision was made, and in more recent years the Commonwealth Grants Commission has been entrusted with the difficult task of determining what amount of financial assistance is properly payable to the smaller States for disabilities which they have suffered under federation. "We who are familiar with the development of the mallee farming districts in South Australia and Western Australia know the handicap under which settlers labour owing to the increased costs of farm machinery due to the tariff policy of the Commonwealth. I am, however, sure that the great majority of the people appreciate the work which this Government has done to place all the States on something like an even footing.

Senator SirGEORGE PEARCE (Western Australia - Minister for External Affairs) [9.25]. - in reply - I invite the attention of honorable senators to the fact that the third report of the Commonwealth Grants Commission consisted of 147 pages of close reading, and 5Q pages of appendices, and also that the. fourth report contains 101 pages of close reading and about 40 or 50 pages of appendices. This being so, I suggest to Senator Johnston and other honorable senators who have criticized the Government, that it is not responsible for all the arguments and conclusions contained in the commission's reports. The Government does, however, accept responsibility for the amount of the grant recommended. Senator Johnston^ said that the commission refused to recognize that the tariff had placed a burden on Western Australia. An examination of the report will show that the commission inquired fully into the matter. In its third report, its comments on the effect of the tariff policy run to nine pages ; its f fourth report contains six pages of reasoning with regard to the hurden of the tariff. The commission admits that the tariff is a burden. On page 67 of the third report, it stated in paragraph 141 -

There is, however, one point of importance which has become increasingly clear. Whatever the burden of the tariff may be, it is much greater on Western Australia than on any other State. The subsidies to protected production per head, whatever their absolute amount or value, must be 30 per cent, greater for Tasmania than for Western Australia, and 60 per cent, greater for South Australia. If unsheltered industry bears a great part of excess costs, then Western Australia again must be most adversely affected, for unsheltered production in 1932-33 was £41 per head in Western Australia, -against £24 in South Australia, and £.18 in Tasmania. On both counts the adverse effects on Western Australia must be very much greater than on any other State.

In the light of that statement, how can Senator Johnston say that the commission refused to recognize that the tariff was a.burden on Western Australia ? The commission did, however, say that other advantages are a set-off against the burden of the tariff. After an examination of tariff costs, the commission stated, on page 68 -

We are taking these tariff costs tentatively as measuring substantially the net adverse effects of Commonwealth policy so far as tho States themselves are able to estimate them. Against them must be set the benefits from the allocation of Commonwealth revenue and expenditure, omitting special grants.

It appears then, without reckoning any benefit from exchange, benefits and burdens from federation almost balance for South Australia and Western Australia, while for Tasmania there is a net benefit of nearly £1 per head. It follows that no substantial part of the special grant received was made necessary by the effects of federation. We mayconclude that these States unfederated would lui ve been at least in the same financial difficulties as at present.

That policy was adopted by the commission in framing its third report, and a similar attitude is taken up by the present commission on pages 10, 11, 12, 49 and 50 of the fourth report. It is unfair to suggest that the commission did not take into consideration the effect of the tariff upon Western Australia; it has stated that the tariff is a burden which presses with greater severity on Western Australia than on any other State.

Senator Johnston,who raised the question of advances, should realize that the Government is merely asking Parliament to authorize the payment of the grants to the States set out in the bill. The grant of £575,000 to Western Australia is not less than the grant of last year, as stated by Senator johnston, but actually £75,000 more. It is true that, in assessing the amount, the commission has treated £136,000 as an advance, but that does not affect the amount of the grant Senator Marwick should understand that the Treasurer of Western Australia will receive from the Commonwealth £575,000, and if the Western Australian

Government elects to use £136,000. of that amount in the direction suggested by Senator Marwick, there is nothing to prevent it from doing so. There is no need for the Commonwealth to earmark the £136,000 for any specific purpose.

I remind honorable senators that the present commission is not the same commission that compiled the third report. It is true that it accepted some of the bases laid down by the previous commission and extended them in some directions. I remind Senator Johnston, who grudgingly admitted that the present commission has introduced the area factor, which is an advantage to Western Australia, that had that factor not been taken into consideration, the grant would have been less. That is ohe direction in which the commission has advanced. It has recognized a disability which was not recognized previously. A subsequent commission may take up the work of this investigating authority, and form its own opinion on future grants upon the evidence submitted from time to time. It will not be bound by the conclusions of previous commissions, but it will be foolish if it is not guided by them. Any one reading the third report must admit that it is one of the most valuable documents on Australian finance that has been produced in the history of federation. I have read many similar, reports, and have no hesitation in saying that the information it discloses on the subject is of greater value than any previously submitted to this Parliament.

Senator Marwick - It is very useful.

Senator Sir GEORGEPEARCE.The fourth report also is a very valuable document. Future governments or commissions will not be bound by the reasons or arguments contained in those reports, but future commissions would be foolish not to take advantage of all the information gathered in the course of these investigations. In justice to the commission, I should like to say that I do not think that any of its members has an axe to grind. All three are conscientious men, definitely striving to do justice to the parties concerned. No one can say that the claimant States did not have full opportunity to present their cases to the best advantage. The men who prepared the cases for the claimant States were competent officials. South Australia had the assistance of the UnderTreasurer, the Auditor-General and Mr. Pickering, all of whom are competent to place the position of that State fairly before the commission. The representatives of the States collected a mass of evidence and also appeared before the commission, and it will be seen that there must have been a full investigation of the position of all claimant States. The Government is merely asking Parliament to pass judgment, not upon the reasoning and conclusions of the commission, but upon the amount of the grants tobe paid.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

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