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Tuesday, 17 June 1902

Mr WATSON (Bland) - I intend to vote against the second reading of the Bill. Our experience in connexion with loans in New South Wales, at all events, has been that whilst honorable members have on every occasion deprecated loans in theory, and expressed bushels of good resolutions, they have never gone any further. I have voted for loans, and I am prepared in some circumstances to vote for further loans, but I refuse to believe that the Commonwealth is in such a position that we must go to the money lender for £500,000. I could quite conceive of circumstances in which it would be impossible to do without a loan for the purpose of carrying out public works. Proposals have been made for the construction of two transcontinental railways which inquiry may prove to be justified, and we also have schemes suggested for the locking and weiring of two or three of our principal rivers. So far as my inquiries have gone, I believe that one of the latter proposals is abundantly justified. To carry out any one of the works referred to such a large sum would be required that we could not expect it to be provided out of the revenue of any one year. I do not therefore suggest that some circumstances may not occur in which I would ' be quite prepared to vote for a loan Bill. Even in connexion with works such as that mentioned by the honorable member for South Australia, where there is a reasonable prospect of interest being earned, it must be recollected that the interest payments to people outside the Commonwealth constitute an annual drain upon the resources of those engaged in production within the Commonwealth, and that, when taken in conjunction with the already heavy obligations of the States, they have a serious effect so far as the annual return from labour is concerned. The fact that even a few millions of money had been spent in South Australia without yielding any return from which the interest upon loan money might be provided is significant when one considers the small population of that State. Even in Victoria there has been a great waste of loan money so far as non-interest returning expenditure is concerned.

Mr Poynton - Take the river scheme. Will that pay interest upon the outlay directly 1

Mr WATSON - Not directly ; but I believe that indirectly the return will justify the expenditure.

Mr Poynton - Does not that apply to a number of these proposed works t

Mr WATSON - I am not denying that. I merely assert that there has been a wasteful extravagance in connexion with loan expenditure, which would never have occurred had the people been compelled to dip their hands into their pockets to find the necessary money. That is the chief objection which I entertain in regard to such expenditure. The people are careless of the amounts voted, because they entertain the idea that the matter does not concern them, but only posterity. Year by year, however, theburden which they are called upon to bear increases and its evil effects are multiplied. The Treasurer proposes that this year we shall borrow £600,000. Yet . in October last he anticipated that there would be a surplus revenue on account of the Commonwealth of £534,000. Since then - in March last - he stated that he had to add to his estimated revenue £575,000. Our onefourth share of that amount represents £140,000. In addition to that, owing to the reduction of the Defence Estimates, we have effected a saving of at least £130,000. A number of other economies have also been made. For example, there is the non-establishment for the time being of the High Court and Inter-State Commission. These savings will give the Commonwealth a surplus of between £800,000 and £900,000.

Sir George Turner - Not so much as that.

Mr WATSON - Of course I have not allowed for the loss involved in the remission of the duties upon tea and kerosene.

Sir George Turner - The honorable member is leaving out of consideration the additional expenditure.

Mr WATSON - The expenditure upon the Commonwealth account has been kept well within limits.

Sir George Turner - The honorable member has not seen the figures which were circulated on the 25th April. They show a surplus of, close upon £600,000.

Mr WATSON - Is that after making an allowance for the remission of the duties upon tea and. kerosene?

Sir George Turner - Yes.

Mr WATSON - Then the position is practically what I have stated. Had the Commonwealth retained its one-fourth share of the Customs revenue, the Treasurer would have a sufficient sum of money in hand to carry out the works proposed in this Bill without having recourse to the money-lender.

Mr Poynton - Has the Treasurer allowed for the increased expenditure in the Postal department?

Mr.WATSON. - I take it for granted that he has allowed for that. According to the right honorable gentleman the Commonwealth should have a balance of £600,000 on the present financial year. I admit that that money is not in hand, because he has handed over to the various States whatever balances seemed to be available. In defence of that practice, he has cited the financial condition of some of the smaller States, and declared that each State practically has a deficit. But I hold that so long as we provide the States with the money they will continue to have deficits. So long as the Commonwealth furnishes the revenue, the States Governments will take every care that it is spent, and possibly mortgaged a little in advance to deter us from economizing so far as our taxation is concerned. Therefore we cannot too soon show the States Governments that we intend to use every penny that we deem necessary of our share of Customs revenue to efficiently carry on the services of the Commonwealth. It seems to me that money derived from taxation can be applied to no better purpose than the creation of public works, because they relieve the taxpayer from the very moment of their completion. If they are reproductive, they at once begin to return revenue, either directly or indirectly, and consequently relieve the taxpayer to that extent. I trust that the result of this debate will be to convince the Treasurer that these works should be constructed out of revenue, so that the taxpayers may be eased of some of their burdens immediately. That is a "consummation devoutly to be wished." In New Zealand, for years past, the practice has been adopted of transferring from the general revenue account to the public works account nearly £500,000 annually. The result is that a good many of the public works of that colony are now producing an amount which goes a long way towards relieving the general taxation of the country.

Sir George Turner - I am doing exactly the same thing ; I am taking a large sum out of revenue.

Mr WATSON - To that extent I congratulate theTreasurerupon havingdeparted from the evil course followed by the States Governments. But I contend that he should go still further. In Western Australia, during the past few years, a number of permanent and semi-permanent works have been constructed out of revenue. Of course they have expended loan moneys upon their larger undertakings. I think that there are some items included in this Bill which, on account of the returns which may reasonably be expected from them, are not only justifiable, but are practically urgent. If this measure be rejected, I trust that the House will see the wisdom of insisting that a large number of these works are undertaken out of revenue.

Mr Poynton - And so depriving the States of revenue?

Mr WATSON - So far as that goes, where is the difference between the States being compelled to borrow and the Commonwealth being obliged to adopt the same course 1 The honorable member seems to lie happy in the idea that the States will be relieved from the necessity of borrowing, whilst the Federal Parliament will be compelled to engage in it. He knows that the only alternative to constructing these works from revenue is that we must borrow. He proposes that we should hand the revenue over to the States, and subsequently float loans.

Mr Poynton - It is a fair proposition that new works should be constructed out of loan money.

Mr WATSON - From that stand-point, I do not see that it much matters whether tha Commonwealth or the States do the borrowing. The States have the ordering of their own affairs.

Mr Poynton - We have no right to play " ducks and drakes " with their finances.

Mr WATSON - Certainly not. But, on the other hand, they can play " ducks and drakes " with every cent we hand over to them, and what voice have we in its expenditure? I say it is a wrong principle that we should be expected to find money for other persons to spend. If we have to accept the responsibility of raising taxation from the people, at least we ought to have control of that expenditure, so that we may account to them for our charge. The States ought to be encouraged to rely upon the taxation resources which still remain to them. It is their business to make ends meet without depending upon the parentalism of the Federal Government. Regarding the general principle involved in the Bill, the honorable member for Wentworth and the honorable and learned member for Parkes, by way of interjection, pointed out that a sufficient sign that the States were progressing was supplied by the fact that recently the New South Wales Government had been able to borrow money at a very cheap rate, and that the loan asked for was subscribed several fold. I do not know that that has any bearing upon the question of whether it is wise that we should borrow.

Sir William McMillan - I think that interjection was made in connexion with something that was said, but not as the honorable member puts it.

Mr WATSON - We have to remember that every young spendthrift who is cast upon the world finds usurers who are ready to advance him any amount of money up to the extreme limit of his assets. I do not think the financial position of Australia is such as to justify any adverse criticism regarding our ability to pay our debts. We are absolutely solvent. The people of Australia can meet their engagements, and have a handsome margin to spare. Many of the works enumerated in the schedule are directly or indirectly reproductive, and the money-lender need entertain no apprehension so far as the return of his principal or interest is concerned. Still it is questionable whether it is wise of the Commonwealth to assume liabilities because it may be offered cheap money, when by compelling the Government to expend revenue we should insure due criticism on the part of honorable members, the press, and the public generally, which would probably result in economy where otherwise extravagance would continue. The Treasurer should insist on carrying a number of the items, whether the Loan Bill pass or not, seeing that they are essentially reproductive, either directly or indirectly. But there are other items, totalling a fairly round sum, which it would be wiser to allow to wait. I refer particularly to the item of the switch -boards,' on which it is proposed to expend a total sum of £75,000 in four capitals of the Commonwealth. It is. specially indefensible to provide a switchboard in Sydney from loan expenditure, even if it be thought advisable to have a new one. It is only about three years ago, I think, since the present switch-board was ordered, and it has not been in active work more than two years.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - - It was ordered six years ago.

Sir George Turner - If the work is done out of revenue, the other States will have to contribute their proportion, and New South 'Wales will pay only a third of the total. The other States will have to suffer for some mistake made in New South Wales.

Mr WATSON - The other States will have to suffer just the same if a loan be raised, seeing that they will have to pay their share of the interest.

Sir George Turner - New South Wales will have to pay the interest on the total sum.

Mr WATSON - But the proportion to be paid by the other States remains exactly the same.

Sir William McMillan - Ultimately, but not at present.

Mr WATSON - I admit that the amount is not the same, but the proportion to be paid is the same, whether the expenditure be out of revenue or out of loan.

Sir George Turner - The interest on the £30,000 will be charged against New South Wales alone.

Mr WATSON - I cannot see why that should be so under the Constitution.

Sir George Turner - New South Wales gets the benefit of the work.

Mr Deakin - And the revenue which' the work earns.

Mr WATSON - As it happens, the new switch-board will not earn any additional revenue. The switch-board there now is earning as much as a new one would, within a comparatively small amount. I find that in speaking a few nights ago on the Estimates I did the electrician now in charge in Sydney some injustice. I then assumed from the report laid before us by the Treasurer that the switch-board in Sydney had -room for only 100 or 200 more subscribers. That assumption was no fault of mine, because that is the simple statement in the portion of the report submitted to us. I find, however, on further inquiry that while in a measure the statement was true that the board already erected is nearly full, it is possible to so extend the board as to provide for double the present number of subscribers. As the report laid before us seems- in this respect to have been incorrect, I must withdraw any imputations on the administration of the gentleman responsible in Sydney. I should like to point out that the switch-board in Sydney which it is now proposed to replace at a cost of £30,000 is working reasonably well. The service is perhaps a little more expensive than it would be if a common battery switch-board were installed, but the former is giving as much satisfaction to the subscribers as can be given without the installation of a metallic circuit. In the present state of telephonic science, it would, in my opinion, be a grave error on the part of the Government to spend £75,000 in erecting four switch-boards, which, even according to the information we have today, will in all probability be superseded before they really get into working order. This is an important phase, which we ought to consider. In New South Wales, four or six years ago, there was erected, at a cost of £30,000, what was considered to be an up-to-date switch-board.


Mr WATSON - Whatever the price was, the board was considered to be up to date. But now experts have reported, and the Government seem to have adopted the report, in favour of ins'talling what is known as the common battery system. A system is to be tried in Chicago under which the switching is done automatically, and not only cheaply, but without any waste of time or temper ; and I personally object to the expenditure of any sum of money on switch- boards, either in Melbourne or Sydney, pending the development of inventions. In both Melbourne and Sydney the main drawback at present in this connexion is the absence of the metallic return ; at any rate that is the drawback which mostly affects the subscribers. Even if the metallic return would not mean economy, its absence interferes with the efficiency to such an extent as to largely render the telephone useless to the people.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - The instalment of the metallic return would be purely a replacement.

Mr WATSON - To an extent I admit that would be the case. This expenditure on the switch-boards might very- well be held over for a year or so, though I think that the installation of the metallic circuit in Melbourne and Sydney and other large centres is most urgent. There is necessity for this Parliament to take a definite stand in regard to the loan expenditure. We should adopt the idea that loan expenditure is justifiable only in the case of large and important works, which it would be unfair to expect one year's revenue to bear. Where such works are entered upon, we are perfectly justified in asking the money-lender to assist ; but in regard to ordinary small works, it ought to be possible to raise a fund of £500,000 a year from the vast population of the Commonwealth. The honorable member for South Australia, Mr. Batchelor, has said that he would agree to a tea duty in order to enable these works to be carried out. If it be proved that extra taxation is necessary for this purpose, I should be prepared to vote for extra taxation, but not for a tea duty, seeing that the Commonwealth would get only onefourth of the revenue raised from such a source.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - We should not require to raise £500,000 a year.

Mr WATSON - The amount necessary has yet to be shown. But if it be necessary to raise contributions from the people in order to carry out these works by means of the revenue, I should be quite willing to support such a step, and I do not believe that the people as a whole would object. Prom the 4,000,000 people in the Commonwealth, a few pence, or at most1s. per head would be quite sufficient to obviate the necessity of going to the money market.

Mr Poynton - Does the honorable member suggest a poll tax?

Mr WATSON - There are various direct taxes which might be adopted.

Mr Poynton - But we cannot get at all the people by means of direct taxation.

Mr WATSON -I thought that the principle of direct taxation was so clear as to leave no possibility of a misunderstanding. It is pretty well established that under direct taxation every individual in the community participates - at any rate so far as a land tax is concerned, seeing that each person at least stands on the land, and has in some way to pay his proportion. I am not now suggestinga means ; but I say that if it is necessary to have a Public Works fund, I am prepared to take the step of asking the people to contribute. At the present time, pending whatever com- plications may arise in the finances later, we have more than ample funds to carry out the works necessary, and I trust that the House will insist, during this year at any rate, that these shall be constructed out of revenue.

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