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Tuesday, 18 October 1904

Sir GEORGE TURNER (BalaclavaTreasurer) (Treasurer) - Once again it is my privilege to place before honorable members the financial position of the Commonwealth. They will, no doubt, bear with me when they recollect that in this financial statement I have to deal with practically seven statementsone for the Commonwealth, and six for the various States. While the Treasurer of the Commonwealth is "in the happy position of not having to impose taxation, or to talk about deficits and retrenchments, he still has to place on record, for . the information of honorable members, and especially for the information of the various States Treasurers, the fullest particulars he can possibly give, so that they may know exactly the position in which the.y are likely to stand at the end of the year. Therefore . a Commonwealth Budget becomes, to a . very great extent, a mere statement of figures. . There are a few matters of general interest to which I will refer later on in my speech, but in the meantime I have distributed to . honorable members papers in the form of tables, giving all the information that . 1 think will be useful to them. I propose, if honorable members will follow me through those papers, to explain them as shortly as I can. Other figures which I may not use, and which will be- explanatory of those which I do use, I propose - as I did last year - to insert in Hansard so that honorable members, when they refer to the official report, will have as full information as I think they will require in order to enablethem to deal with any question which may arise in connexion with the finances. To plunge at once into the mass of figures, I will ask honorable members to take page 1 of the papers, on which . they will find the total Customs revenue collected during the last financial year. It amounts to , £9,105,758. That amount is £1,243 less than my estimate; but it is only fair to say that some £34,000 was collected in Victoria from sugar excise, and placed in a Trust Fund, instead of being paid into revenue. It will also be noticed that whilst the total collected very nearly corresponds with my estimate, there are considerable variations in some of the States. Unfortunately, Queensland and Western Australia came out much worse than I anticipated. I estimate that the revenue from Customs for the present financial year will be £8,980,000. That is a decrease, as compared with the revenue last year, of £12 5,758.The receipts this year include a windfall to the State of Victoria in the shape of £50,000 for sugar, which has been placed in a Trust Fund- A dispute arose between the Sugar Refining Company and the Government of the Commonwealth - and this also applies, although in a less degree, to the State of Queensland - as to whether certain sugar, made before Federation, was liable to pay the excise duty. The Customs Department insisteduponthewholeof the duty being paid. The case was tried, and is now under appeal to the Privy Council. In the mean-, time the sum of £61,000 or £62,000 has been deposited by the company, and is kept in a trust fund- £27,000 being paid in one year, and £34,000 last year. That money has not yet got into revenue, but I have . arranged with the company's legal advisers that, if it be possible, £50,000 out of the £61,000 will be paid over to Victoria,which State naturally requires the money, £1 1,000 remaining to meet any verdict that could possibly be given, that being the full amount in dispute between the company and the Government. So far as t'he decrease is concerned, I propose to explain that later on when dealing with details. In the Postal Department we have collected £2,510,264, an increase of £60,264on my estimate. That was not my fault - I am glad to see the increase - but to a very great extent it is accounted for by the fact that the Postal Department was able to collect arrears for services rendered to the Savings Banks in some of the States, going back to the commencement of Fed'eration. The amount collected was about . £41,000, bur I had not calculated such a sum in the amount I expected to receive. The estimated revenue from the post-offioe this year is £2,560,000, an increase of £49,736 on the revenue of last year. It will be seen that the total revenue received last year was £11,631,056, or £64,881 over my estimate; and this year I anticipate to receive the reduced amount of . £11,570,000, or a decrease of £61,056. But as this year we get the benefit of the , £50,000 I have mentioned, and last year we did not get the benefit ofthe £34,000 we ought to have received, the real falling-off in the total revenue amount-! to£145,000. The following table gives a detailed comparison of the estimate of revenue for the year 1903-4, and of the estimate for the present year, with the actual receipts for the year 1903-4: -


We have had to contend against the reduced telegraphic rates which were sanctioned by this House.

Mr Higgins - In Victoria?

Sir GEORGE TURNER - No, throughout the Commonwealth. These were the reductions in the rates brought into effect under the Postal and Telegraph Rates Act, and there is also the decrease caused by the reduction of the postage in Victoria to one penny. On the other hand, we have gained somewhat by charging all the States for Government postage and telegrams. .Only some of the States used to pay those charges. In addition, we have received a considerable revenue, as I have said, from carrying out the Savings Bank work for the various States. The postal receipts are steadily improving in New South Wales, Victoria, and Tasmania, but. unfortunately, in Queensland, they are not so good as we could wish. In the latter State the receipts are practically stationary, and in South Australia and Western Australia heavy losses have been occasioned in consequence of the Pacific Cable, and also in consequence of alterations made in agreements entered into with the Eastern Extension Telegraph Company, those bargains having been made by the States before Federation. I mentioned that last vear we got the benefit of a certain amount of Savings Bank business, and this year we expect £45,000 from the same source. This, of course, somewhat disarranges the comparison with previous years, and in addition the Postal Department is sanguine enough to expect from the States Treasurers a considerable amount from what are called weather telegrams. A bargain was made two, or it may be nearly three years ago, that such telegrams should be sent by the Commonwealth without charge, on the understanding, however, that the States were to be debited with the cost. So far no amounts have been collected under this head. The total amount we expect from the Postal Department in New South Wales is £935,000, a decrease of £6,000 on the revenue of last year; in Victoria we expect to receive £660,000, an increase of £9,000; in Queensland, £324,000, practically the same as last year; in South Australia, £273,000, an increase of £14,000; in Western Australia, £258,000, an increase of £27,000; and in Tasmania, £110,000, an increase of £5,000 - a total increase of some £49,000. On pages 2 and 3 of the distributed papers honorable members will find the details with regard to the finances of the Post Office. The following table shows the total receipts for four years : -


Mr Higgins - How much is expected from the weather telegrams?

Sir GEORGE TURNER - I am not certain, but it should be a considerable sum.

Mr Higgins - Is it included in the receipts which have been mentioned ?

Sir GEORGE TURNER - No, because I am not certain what amount can be collected. I might say. however, that it will certainly be ,£20,000 to .£30,000.

Mr HUME COOK (BOURKE, VICTORIA) - What is the explanation of the immense difference between the receipts in New South Wales and the receipts in Victoria?

Sir GEORGE TURNER - A larger business is done there, the population being greater, and as my honorable friend knows


the postage is more than in Victoria. Penny postage is universal here, whereas in New South Wales it exists in only certain centres. Honorable members will find that in the next table, on pages 4 and 5, the main source of revenue - the Customs - is dealt with. In previous years I had to give the gross amounts, and take off certain lump sums for drawbacks and Inter-State trade. I am glad to say that now I can place before honorable members the net amount so that the amounts which are entered against each State are those which have been credited, and which in this year we expect will be credited to the particular States. But I wish to ask honorable members in studying any of these figures, or in making any calculations, to bear in mind that there are disturbing elements in the fact that in the first years of Federation great loading up had taken place in New South Wales and other States, and that this inevitably reduced our' Customs revenue. In 1902-3 and 1903-4 we received very large amounts from the grain and fodder duties, and this year we received practically nothing from that source. As showing the great effect which the grain duties would have, I may state that, in 1901-2, the total amounts came to £69,000 ; in 1902-3 they jumped to £597,000, being an increase of £528,000 ; in 1903-4 they came down to £265,000, showing a fall of .£332,000; while in 1904-5 we expect to get £33,000, showing another fall of £232,000. Honorable members will see, therefore, that the States finances are somewhat disarranged ; that one item has a large effect in causing trouble with regard to the revenue. Then this year, in consequence of the larger crop in Queensland, we expect a decrease of £100,000 in the revenue from sugar. I mentioned that this year shows less than last year to the amount of £125,000, but the two items I mentioned as deposits in a trust fund - £50,000 and £34>00° - have to be taken into consideration when making any comparison. So that the actual falling off in the Customs revenue- for this year is £209,000. Of that sum, £56,000 is accounted for by the reduction in the special Tariff of Western Australia, leaving an anticipated reduction of £I 53,000 on the uniform Tariff in all the States. The special Tariff of Western Australia has now got down to- the twofifths stage, and the result is that that State, having been able to charge on foreign imports the State or Federal duty, whichever might be the higher, received a considerable amount of revenue which it will now lose. There will also be a far larger trade with the eastern States. This fall to the two-fifths duties very largely interferes with the revenue in Western Australia. There is an anticipated falling off of £232.000 from grain, £102,000 from sugar, altogether £334i 21 5- But the comparison I am making for the consideration of honorable members takes the form which will be found at the end of page 5. I desire to leave out the disturbing elements of grain and sugar in both years, and make a comparison with regard to all other items, so that honorable members will then be able to see whether I have allowed fairly for increase or decrease on that particular basis. That seems to me the best and fairest mode of making a comparison. I have allowed for increases amounting to £180,000, namely, to New South Wales £51,000, to Victoria ,£67,000, to Queensland £24,000, to South Australia £13,000, to Western Australia ,£21,000, and to Tasmania £2,000 - that is, about 2 per cent, all round on the total amount of the collections. That I consider is justifiable. I do not think that a Treasurer ought to unduly lower the anticipated receipts. At the same time it is wise to keep within the mark, because if we do not, and the receipts should fall .short of the anticipations to a great extent, then the Federation and the Federal Parliament would unquestionably be held to be blameworthy. So that, while not over-stating the amounts I expect to collect, I certainly do not understate them, and have given what I believe will be approximately the amount collected. This year we certainly have better prospects. The crops seem to be turning out well, people are getting into better heart, and there is no doubt that imports are increasing in consequence of people having more money to expend on luxuries and various imported articles. On the other hand we certainly have an increase in . Inter-State trade, and increases in manufactures in many of the States. These matters have to be taken into consideration by honorable members when endeavouring to arrive at a fair estimate of what we may expect from our Customs revenue. The experience of the three months, I am sorry to say, has led me to believe that my estimate with regard to Queensland is very doubtful. I am afraid it will not be realized. So far as Western Australia, also, is concerned, the returns have certainly been very disappointing, and unless some very great improvement takes place, I am afraid that State will have to meet a considerable falling off in the amount I have estimated. I have allowed for this year, taking all sources of collection into consideration, for New South Wales, £3,160,000, a falling off of £69,786; for Victoria, £2.440,000, an increase of £46,000; Queensland, £1,115,000, a falling off of £16,761 .; South Australia, ,£685,000, a falling off of. £14,792; Western Austrafia, £1050,000, a falling off of £12,296; Tasmania; £340^00, a falling off of £2,189; anc

Western Australia, Special Tariff, £140,000, a falling off of £56,429. But if we take into consideration the sugar excise items, there is a falling off in Victoria of £37,505. The following table shows the amounts in a tabulated form: -

I hope that Queensland will get the amount of excise that is now in a trust fund, amounting to some £20,000, because it may be of some help to her. In the same way that Victoria will get £11,000, and that will assist her revenue also. I have set out later on the items of increase and de crease, and I will draw honorable members' attention to them when I get to that particular table. During the last three months, and1 especially in the States of Victoria and New South Wales, there has been a considerable increase in the importations of apparel. Honorable members, I think, will be pleased to know that the increases are occasioned by imports of what we may regard as raw material for manufacturers within the States - silks, velvets, trimmings, cotton-piece goods, and such like. The returns lead us to believe that there is a smaller importation of made-up articles and a larger importation of material for the purpose of manufacture in the Commonwealth by our own people.

Mr Hughes - Is that true of all the States ?

Sir GEORGE TURNER - The difference has not been so marked in the case of the other States, but in the two States to which I have referred the returns show very large increases. The following is an epitome of the Customs and Excise revenue : -


On pages 6 and 7 I have endeavoured to place before honorable members certain very interesting information with regard to sugar, from which we derive a very large revenue. Honorable members will recollect that the sugar excise and sugar bonus will expire on the 1st January, 1907, and shortly it will be the duty ot the Parliament to take into consideration what course should be pursued with regard to the excise, and with regard to the rebates.

Mr Fisher - This session?

Sir GEORGE TURNER - I do not know that it- will be possible to deal with the matter this session. It is one which requires very careful and full inquiry, but so far as I am personally concerned, I sympathize altogether with the position, especially of Queensland', in this connexion, and I may say I am prepared to do whatever is possible to assist the sugar industry, to keep it alive, and to enable growers of sugar to work in such a way that they will be able to do without black labour, without suffering any real hardship or loss. The return to which I direct the attention of honorable members sets forth the yield of white and black grown sugar, the number of producers, the area under cultivation, the quantity of sugar produced, and the amount of bonus paid. Honorable members will recollect that the Commonwealth passed a Bill providing the basis for the bonus or rebate. It is pleasing to know that in Queensland there has been a large increase in the number of white producers. In the first year of the operation of our legislation, there was an increase of 527, which was an increase of about 33 per cent, of the total number, and there was a further increase last year of 94. The white producers now number over 'two to one in Queensland. In New South Wales the producers of sugar are nearly all producing it by means of white labour. New South Wales has undoubtedly received a very large benefit from the sugar rebate, because, before Federation, the planters there were growing nearly all their sugar with the aid of white labour. Consequently, the bonus has been a little god-send to them. Unlike the people of Queensland, they have not had to change their methods of production. During the two years I have mentioned, the area under sugar cane in Queensland tilled by white labour has increased from 36.088 acres to 56,289 acres, whilst the area tilled by black labour has decreased from 59,609 acres to 57,402 acres. We expect that this year Queensland will produce 31,000 tons of white-grown sugar, and 98.000 tons of black-grown sugar - a total of 129,000' tons - which is an increase of about 40,000 tons on the production of last year.

Mr Mcwilliams - Then, the production of black-grown sugar is increasing much more quickly than that of whitegrown sugar?

Mr Mahon - And the number of black labourers employed seems also to be increasing ?

Sir GEORGE TURNER - The number of black labourers has increased, and so has the area under cultivation by black labour. While the sugar grown by whitelabour has increased from 24,000 to 31,000 tons, the sugar grown by black labour has increased from 65,000 to 97,000 tons.

Mr Fisher - All on account of the season.

Mr Hughes - What percentage of that is due to the increased crop for this year?

Sir GEORGE TURNER - It would be impossible to say. I have given the number of additional acres under cultivation, and the number of additional producers,, but I do not think it is possible to give more definite information to the honorable and learned member. In New South Wales the estimated production for the year 1904-5 is 18,600 tons of white-grown sugar, and 2,000 tons of black-grown sugar, or 20,600 tons altogether. Therefore,, the total production, of the Commonwealth for the year 1904-5 will be 149,600 tons; while our requirements amount to about 187,000 tons. Honorable members will see that, as the production of sugar increases, our Customs revenue will decrease, because whereas wecollect an import duty of £6 per ton onimported sugar, we collect only an excise- of £3per ton on locally-produced sugarNearly all the imported sugar comes first to Victoria and South Australia; but part of it is re-exported to the other States, so that during the book-keeping period the chief loss will fall on the two States I. have mentioned. When we supply the whole of our requirements by local production, there will be a very serious loss in revenue.

Mr Fisher - The same thing would happen if we produced locally all the boots or all the hats that we require.

Sir GEORGE TURNER - Yes ; but not to so great an extent. I am not complaining about the increase in the local production of sugar ; I am glad of it. I draw attention to the fact because, since some hon- orable members may think that the Treasurer should spend more money than we propose to spend, I wish to place it on record that we may in a year or two have to face a very serious situation by reason of the decrease of revenue, due to the increased production of sugar in Queensland and New South Wales.

The bounties which have been paid amount to over £250,000, including £100,000 paid this year. Of the amount just named, £137,000 has been paid to Queensland, and £113,000 to New South Wales. The anticipated expenditure this year is £[100,000. The figures are given in full in the following statement: -



We expect that the Commonwealth will import 42,000 tons, from which we shall obtain a revenue of £252,000; and we estimate the consumption of Australian sugar at 145,000 tons, from which, we shall receive a revenue of £435,000, a total of £687,000, which is £100,000 less than last year. Page 8 of the papers gives a very interesting monthly comparison of the receipts under the Tariff, and page 9 will enable those who desire to do so to check the figures which I have given, because it gives the population of the Commonwealth and the percentage of popu lation in each State. On pages 10, uv and 12 are a series of very interesting comparisons with regard to the revenues of the various years. I do not intend to refer to these in detail. I would ask honorable members to look at table C on page 10, in which I have set out for last year - amongst others - the amount collected per head under the operation of the uniform duties. The average for the Commonwealth is £2 5s. 4 1/2d. New South Wales collected £2 5s. 3d. per head, Victoria £2 os. 5d., Queensland ,£2 3s. nd., South Australia £1 17s. 11 1/4d., Western

Australia £4 13s. 7¼d., and Tasmania £1 18s.1½d., whilst the Western Australian special Tariff realized 17 s. 3¾d. per head. Honorable members will notice that in Western Australia the amount collected per head is being steadily reduced. To a very great extent that is accounted for by the number of women and children who are now joining their husbands and fathers in that State, and also by the production of goods there. When I come to deal with a later portion of the Estimates I will show that the fact that Western Australia still continues to collect per head of population an amount far in excess of that which is collected by the other States is responsible for a difficulty in dealing with the distribution of the surplus revenue. The following tables give a comparison of receipts : -


The Customs revenue forms a very important part of the revenues of the various States, and at the top of page 11 honorable members will find a comparison of the Customs revenue with the total revenue of the . different States. The average is 26.98 - practically the same as it was in 1 899-1 900. But since that period the conditions obtaining in the various States have changed considerably. Naturally the revenue of New South Wales has been largely increased ; that of Queensland, Western Australia, and Tasmania, has, unfortunately,., been very considerably reduced, whilst that of Victoria and South Australia remains about the same as it was. My desire has always been to return to the States approximately the amount of the Customs revenue which they collected in 1900, which was a fairly favorable year, in addition to providing for the " other " expenditure of the Common wealth. By "other" expendiutre . I mean . not merely the expenditure caused by 'Federation, but all the "other" expenditure, not including new works and buildings in connexion with the transferred services - a special loan expenditure ; money which in the States would have been spent out of loan funds. I have given the details relating to this matter for the various years, an epitome of which will be found on page 12. The epitome gives the details for four years. " It shows that after paying all the "other" expenditure which I have mentioned, New South Wales has received an amount - in excess of her Customs revenue during 1900 - of . £5,000,000, South Australia of £78,000, and Western Australia of £545,000. in addition to £771,000 collected under her special tariff ; whereas Victoria lost , £16,000, Queensland . £1,634,000, and Tasmania . £607,000. There is thus a total gain of . £3,369,000, not including the receipts from the' Western Australian spe cial Tariff. The following table shows the details : -


I do not say that this result is entirely attributable to the alterations which we have made in the Tariff, because it is undeniable that in some States changes would have taken place. Unquestionably, some States were bound to be affected by the drought, and, consequently, by the smaller purchasing power of the people. But, as I have already pointed out, other States have derived a largely increased revenue in consequence of the grain duties. Nevertheless, it cannot be doubted that one State has gained an immense sum of money, whereas Queensland and Tasmania have, unfortunately, lost very heavily. The loss in those States has been occasioned by our action in having abolished many of the revenue duties which they formerly collected under their State Tariffs. The difficulty which the right honorable member for Adelaide, as Minister of Trade and Customs, and I experienced in framing the Tariff was due, to a very great . extent, to our efforts to preserve, as far as we could, the finances of those two States, and we had to provide for revenue duties, which otherwise - we certainly should not have asked the House to impose. I may mention, in passing, that for the four years the total " other " expenditure was £1,473,000. In addition to that for the first six months there was an expenditure of £131,000. So that our outlay under what is known as "other " expenditure has amounted to a considerable sum. I shall now ask honorable members to refer to page 13 of the Budget papers, where they will find what is called the Inter-State Adjustment Account. Honorable members will, no doubt, recollect that, regardless of the State in which they may have been collected, duties have to be credited to the State in which the goods, in respect of which they are obtained, are consumed. They may be transferred from one State to another, the State in which the goods are consumed receiving the benefit of the revenue so collected. Last year there was a debit against New South Wales of £122,309; and against Victoria a debit of £254,287 ; whilst Queensland received a credit of £158,793; South Australia, £20,721; Western Australia, £90,442 ; and Tasmania, £106,640. These figures show a very large increase indeed on those for the previous year, as honorable members will see themselves on referring to the comparison at the end of the table. New South Wales and Victoria are evidently the Australian centres of distribution for imported goods. Honorable members must bear in mind that the table to which I have referred, does not in any way "deal with Australian goods. The returns for the first three months of the present financial year show a further increase, more especially in Victoria, in this particular direction. The following statement gives a comparison of the last two years: -


On page 14 will be found a table showing that I anticipate the receipts of the Patents Office at £13,400, and the expenditure at £9,203, so that this Department at all events appears likely to show a profit.

Mr Higgins - -What, the Patents Office show a profit?


Mr Higgins - Does the right honorable gentleman allow in his estimate for the salaries of officers and all expenditure in connexion with the office?

Sir GEORGE TURNER - Yes, ' everything chargeable against the -Department for any purpose whatever is provided for in this estimate, and the details are set out in the following table: -

On page 15 honorable members will find a comparison of the net receipts under each heading for the years 1900-1, 1901-2, 1902-3, 1903-4, and the estimated net receipts for the year 1904-5. I have tabulated them as follows : -


I shall not take the Committee through the details, but simply give them some figures which are interesting in regard to the addi tional amount collected through the Customs Department during the five years. The collections, as compared with those for 1900, showed an increase in New South Wales of .£5,710,901; in Victoria, £666,852; South Australia, £271,339; and Western Australia, £677,361 ; while those for Queensland show a falling off of £1,502,271 ; and those for Tasmania, a falling off of £554,251, or a net increase during the five years of £[5,269,931. This does not include the sum of £771,000 received from the special Western Australian Tariff. The figures which I have just given I have tabulated as follows: -


The returns for the earlier years of the Commonwealth were largely affected, of course, by the " loading up " in anticipation of the uniform Tariff, which has been in operation for only a portion of the period covered by these figures. The total revenue may be seen in the following tabulation : -


The revenue under general heads is tabulated as follows: -


I have come to the end of my story so far as the receipts for the two years are concerned, but if honorable members turn to page 17 of the Budget papers they will see how we deal with the expenditure. The actual amount of Commonwealth expenditure for last year was £4,252,562, being £67,887 less than my estimate. That was occasioned by the fact that a large number of works were not carried out as I had anticipated ; and that on thu other hand, we had to pay an increased amount under the Naval Agreement Act. I antici pate this year an expenditure of £4,433,233, an increase of £180,671. on the expenditure for last year. I give the details of that increase in a table which I shall quote later on. In the meantime, I may mention that provision is made for an increased expenditure of £38,561 in New South Wales; £88,735 in Victoria; £45,549 in Queensland; £10,600 in South Australia; £[7,261 in Tasmania; and a reduction of £10,035 in Western Australia.

Mr Groom - That is including buildings and everything chargeable to revenue ?

Sir GEORGE TURNER - Everything for which we pay out of revenue. The following statements give the information in tabulated form: -


I shall deal later on with the question of making provision for buildings, and shall show how the item has been affected in that direction. It may be necessary during the currency of the financial year to provide for unforeseen items of expenditure for which no provision has been made on the Estimates; but, naturally, a certain saving will be effected in the different Departments. It is fairly certain that there is one item for which we shall have to provide, but for which no provision has been made, and that is a portion of the cost of carrying out the survey of the Western Australian railway.

Mr Higgins - Does the Treasurer include "new" expenditure as well as " transferred ' ' expenditure in this estimate ?

Sir GEORGE TURNER - Yes; these tables cover the whole.

Sir JOHN FORREST (SWAN, WESTERN AUSTRALIA) - What did the right honorable gentleman say about the Transcontinental Railway ?

Sir GEORGE TURNER - Provision will , have to be. made for that survey out of the Treasurer's advance account.

In the next tables, page 18, I compare the expenditure of the different States, and then I give the full details of the expendi ture on page 19, compared year by year, taking the headings as they appear in the Estimates. The totals are as follow : -


But the table to which I desire particularly to draw the attention of honorable members is the one on page 21, because that shows the total cost of each Department. Honorable members will be aware that various amounts are paid by the different Departments for other Departments, and when I first became Federal Treasurer, I was anxious to ascertain how much each Department cost in each particular State; but I found it was almost impossible to do so. The items were scattered over different parts of the States Estimates, in places where no one would ever dream of looking for them. Therefore, I have brought into .the table to which I have referred an account of everything expended on account of each Department, so that honorable members . and . the Treasurers of the States will have an opportunity of seeing what the cost of each of our Departments has been in the past, and what-, the cost has been during the past year. I do not propose to go through all these details, because it would take me a very long time to do so; but, later on, when we are dealing with the Estimates, if honorable members desire to have fuller information, I shall be very pleased to deal with the subject with greater fulness. Honorable' members are aware that we have to close down the Commonwealth accounts on the 30th June of each year. We do not, as some of the States do, keep our accounts open for two or three months, or for ten days after the close of the financial year. Therefore, it is somewhat difficult to pay all our accounts during the year. The first year of the existence of the Commonwealth, when the arrears were £281,000, afforded an unfair comparison in this respect, because we closed down our accounts on the 30th June, whereas the ordinary payments would run two or three months over that period. In that year th"; total arrears came to £281,000. But in the next year 1901-2, we had brought down the amount to £104,000 ; and in the year 1902-3 the amount was down to £41,000. This year, I am told .that the total unpaid accounts on the 30th June, for work done during the year, amount to only £25>000- That shows that the Departments were able to pay their accounts promptly. A great portion of the sum unpaid is accounted for by the fact that the Railway Departments have not all sent in their accounts ; otherwise, we should practically have had no arrears on the 30th June last. The following table, relating to new works and buildings, will be of great interest to honorable members : -


The proposed expenditure for this year is £404,240. The actual expenditure last year was £325,009 ; or an apparent increase of £79,231. Of that sum, we have provided £33,016 extra for a special vote for armament for the Defence Department ; so that our actual expenditure for this year would exceed that of last year by only £46,000. This year, also, there are re-votes from last year to the extent of £47,431. In addition, the Postal Department has considerable amounts to pay for goods which were ordered last year, but were not delivered until the early part of this year. There was unexpended last year a sum of £139,000; and a great cause of com- plaint I have always had against the Department of Home Affairs is that the money voted is not spent more rapidly. This causes me trouble, inasmuch as if I provide money one year and tell the States. Treasurers that they will receive back a certain amount, and the Department of Home Affairs does not spend the amount voted to the extent of £100,000 or £150,000, the States receive more than was anticipated by that amount. In the next Estimates, .however, I have to provide both for the current year and the past year, and this leads to Federation' being charged with extravagance. However, I believe that the arrangements have now been made more per- feet in the Department, and it is to be hoped that the amount I have provided will be expended in proper time. It is of 110 use my placing on the Estimates sums which cannot be expended during the currency of the financial year. Under the circumstances, however, I do not think that we shall have anything like the unexpended balance that we have met with in previous years. To show that the Commonwealth is not extravagant in this particular item, I may say that last year the Estimates, exclusive of armament, amounted to £367,000, and this year they are £274,000, a decrease of £93,000. As I mentioned, the amount I ask for is £404,00(0, (Which, with revotes amounting to £47.000, leaves for new expenditure, £356,000. That '.expenditure is made up of armaments, £130,000; telegraph and telephone works, £155,000; and machinery, £1,600, leaving only the comparatively small sum of ,£70,000 for any new buildings required in the Customs Department, for any post-offices which may be required, and also for a large number of works which have to be provided for in the Defence Department, not only in the way of buildings, but also in the shape of rifle ranges, small alterations to fortifications, and so on. The amount is made up as follows: - Customs, £[3,000 ; Defence, £35,000 ; and Postoffice, £32.000. I think, therefore, that honorable members will agree that I have not asked for too large a sum. In fact, honorable members will probably say, when I ask for £70,000 for new works, that that is much less than they would be prepared to vote if I thought the finances of the various States could stand the strain. The figures appear in the following table : -


We have to bear in mind that, whereas in the old days the States met this particular class of expenditure out of loan monies, the Commonwealth Parliament has determined that it shall be met out of revenue. When we compare our expenditure with the expenditure anticipated by the

Federal Convention, we must remember that the Convention never contemplated that all new works would be paid for out of revenue, and merely went to the extent of providing for the interest on any money which might be borrowed for the purposes of new works. I have information which leads me to believe that there will be a saving in the Department of Home Affairs of £[25,000; and I shall 'have the full concurrence of the Committee when I say that, whatever savings I may see later on in the year - ;any savings which are likely, or are certain to be made in the Departments - I purpose to add to the special vote for armament in the Defence Department. For that latter purpose I have provided £130,0.00 this year. Before leaving office I originally fixed the amount at £125,000, and the honorable member for Bland, when Treasurer, raised it to £129,000 odd, so I thought I would " gp one better," and ask for the round sum of £130,000.

Mr McCay - The sum asked for was £177,000.

Sir GEORGE TURNER - That -is so ; and if the Department will only be a little economical in the way of lace and feathers, and if there are savings on other works and buildings. I have no doubt that the sum provided will be somewhere near £177,000. I confess I would much rather see the money for the Defence Department spent in the direction I have indicated than in any other. We must keep up the efficiency of the forces - we must have officers, and men must be trained, and ammunition provided. At the same time, there is no doubt that if we have money to spare from any of the other votes, we shall be fully justified in applying it to the purchase of rifles, guns - extra armament or accoutrement - which are not provided for in the special votes. By that means we shall not lessen the amount we have led the States Treasurers to believe they will receive, and we shall apply the money to as good and as useful a purpose .as could the States Treasurers themselves if they had control of the expenditure.

Mr Higgins - Is the honorable gentleman going to apply it to increasing the Australian Light Horse?

Sir GEORGE TURNER -I shall leave the Minister of Defence to deal with that matter as he is more intimate with the details than I am. One of the large expenditures, and one that will require the serious attention of honorable members, is in connexion with Fremantle in Western Australia, as is stated on page 31. Apparently, from the best advice we can get, it is necessary that fortifications should be


erected at Fremantle and North Fremantle, and the expense will be very large. The total amount that will be required as estimated is £87 ,000. The details are as follow : -


Allowing for the usual errors in estimates, we may reckon any sum up to £100,000. If it is necessary, in this and the two following years, to put Western Australia in a fair state of defence, the money must be expended because the defence of any particular place vitally affects the defence of the whole Commonwealth. Therefore, if we are satisfied, no matter what State we may represent, that that is a reasonable and proper expenditure, I am certain that honorable members will not fail to pass the amount asked for.

Mr Kelly - Was not a sum, voted on the Estimates last year, devoted to some other purpose?

Sir GEORGE TURNER - There was. My rule is always to tell honorable members the total amount of expenditure to which I believe . I am committing them when passing any items. On that occasion the information given to me by the Department of Defence was not as full as it ought to have been. I was misled, and I innocently misled the 'House into believing that a comparatively small sum would be required for this purpose. But when I came to go into the details before authorizing the expenditure, I found that the sum asked for was absolutely inadequate, that it would be useless to spend that sum unless we were prepared to spend an additional sum of £60,000 or £70,000. Not having given Parliament that information, I felt bound to come down here before expending that vote and state the full facts. I did not divert the vote on the Estimates, but I allowed an amount equal to that sum and other amounts to go for the purchase of a reserve of ammunition which was badly required in all the States.

Mr HUME COOK (BOURKE, VICTORIA) - Who misled the honorable gentleman?

Sir GEORGE TURNER - The simple fact was that the officers of the Defence Department did not give me the full information. Several schemes have been suggested, and have been investigated by our advisors. Taking into consideration the area available for the works, the scheme to be carried out, if approved by the Committee is, I believe, the best one possible, and as I said, it will cost £87,000. The land will cost £[34,000, but of that sum nearly £24,000 is required for land belonging to Western Australia. In order to assist 'in getting the work carried out, the State, instead of asking us to pay cash for the land, as in strictness it would be entitled to do, is prepared to let it be considered as one of the transferred properties, and to be so dealt with. That, of course, relieves the revenue from -a considerable expenditure. Then more land has to be purchased. The cost of the works is estimated at £[22,000, and the cost of the armament is set down at £31,000. When we come to deal with this item, no doubt the Minister of Defence will be able to give any fuller information which may be required. It is impossible for us to disclose confidential communications from our own officers and our advisors in the old country. Therefore honorable members have to be satisfied with our assurances that the best that can be done is being done, and that about the amount named will be required. It will be. for them to say whether an expenditure of say £[100,000 is justifiable for the purpose of putting this portion of the Commonwealth in a fairly satisfactory state of defence. I have considered the matter as carefully as I possibly could. I have gone into it very fully with the responsible officers and the Minister, and I have no hesitation in placing this amount on the Estimates, and in asking the House to pass it, in order that the work may be proceeded with asrapidly as possible.

Mr Carpenter - Is that the actual expenditure that will be necessary?

Sir GEORGE TURNER - The actual expenditure required for this year on this particular work is £24,400. Seeing that it is now pretty late in the year, the probabilities are that the whole of that amount will not be expended.

Mr KING O'MALLEY (DARWIN, TASMANIA) - Is not this for the defence of Western Australian property ; and why, should that State charge the Common wealth with the cost of defending its property?

Sir GEORGE TURNER - The honorable member might just as fairly make the same complaint with regard to all defence works which have been handed over to the Commonwealth. The same principle would apply to the expenditure on Thursday Island, King George's Sound, and everywhere else.

Mr McDonald - Would it not be better to have direct taxation, consideiing that this expenditure is required for the purpose of defending private property?

Sir GEORGE TURNER - I am not in accord with the honorable member foi Kennedy on the subject of direct taxation for the Commonwealth. I tried it for the State of Victoria, and got beaten. When the demand was made, in fixing the land tax, for an exemption of £500, and when I desired the exemption to be only £100, I looked upon it as class taxation, and objected to it.

Mr Higgins - The right honorable gentleman helped us to get the income tax.

Sir GEORGE TURNER - I did, and it' was badly wanted. I shall not detain honorable members by referring in detail to pages 32, 33, and 34. These pages contain details of the estimated expenditure for 1904-5 in the various States. I was asked on one occasion to give the information in this particular form, in order that honorable members might not have to go through all the returns to pick out the amounts from other parts of the Estimates. I wish to say that if honorable members desire to make any calculation, I hope they will, not try to pick the items out from, particular returns, which, to my officers, are no doubt very simple, and which are comparatively simple to myself, but which to honorable members who have not our full knowledge of the subject must be to some extent confusing. If honorable members desire fuller information, or any details as to how any particular amount is made up,, we shall be only too happy to supply them with the full figures if they will apply for. the information. It will be recollected that last year we altered the Naval Agreement. If honorable members will turn to page 35 they will find the particulars in connexion with this matter. We agreed to contribute a sum of £200,000 instead of the amount of £106,000 which we had previously been contributing an.nually. It so happened that last year we paid, up to the11th November. We had to pay for a year in advance, six months after the Agreement came into operation. However, the Imperial authorities desired that the payment should apply only, to their financial year ending on 31st March. The result of that was that last year we paid a considerable amount in excess of what we otherwise would have been called upon to pay. We are therefore able this year to considerably reduce the amount, and instead of asking for the full amount of £200,000, which will have to be asked for next year and in subsequent years, we are asking for only £148,000. That amount, with the balance of last year's payment, will make the full payment required up to the 31st March next year, and will do more - it will pay £50,000 for a quarterly instalment on the 1st April. It has cost a considerable -amount in exchange to remit this £200,000 to Great Britain, and, after some pressure, the Home authorities have agreed in future, at the end of this financial year, to allow us to pay this money over to their representatives in Sydney, as a great part of the money is expended there. By that means we should, under ordinary circumstances, save £1,000 a year in exchange. At the present time, as the banks are not in agreement, the saving will be small, but the banks will, no doubt, come into agreement again, and if we can save £1,000 in that way, it will be of advantage to the States.

Mr McDonald - They want their pound of flesh.

Sir GEORGE TURNER - The banks are not so very bad to deal with, although, up to the present, I have not been able to enter into an agreement with them on behalf of the Commonwealth. There has been a sort of go-as-you-please arrangement, under which I think I have been doing better than I would have done under the agreement which I tried to get. Then we have established a Commonwealth Fidelity Guarantee Fund, the receipts and expenditure of which are shown on page 36. The total amount collected from our officers at the rate of 2s. 6d. per cent, per annum was £1,587, while the defalcations made good during the year amounted to £66, so that we made a profit of . £1,521. I hope that, for the sake of the fund, for the honour of the service, and for the good example which will be set in dealing with other matters of a similar nature, that state of affairs will long continue in the Commonwealth.

Mr King O'Malley - That is Socialism.

Sir GEORGE TURNER - It may be, but it is not the Socialism which my honorable friend desires.

Mr HUME COOK (BOURKE, VICTORIA) - Those facts ought to encourage the Government to establish a Commonwealth Life Insurance office.

Sir GEORGE TURNER - I see no objection to the Commonwealth insuring the lives of its own officers. On page 37 appear various comparisons which I have prepared for the information of honorable members. They show the percentage of the receipts and the expenditure for the years 1901-2, 1902-3, and 1903-4, compared with the percentage of ' the population of each State, and honorable members may, if they desire, study them at their convenience. I do not propose to give the details now, though they will be found in the following table : -


On pages 38 and 39 is a statement which contains information as to "other " or new expenditure. These are the actual payments on a cash basis : -


I prefer, however, for many reasons, to compare the Departments on the actual cost during the year. Under the cash system, more especially during the first year, we had to pay a very large amount in arrears from previous years, and, therefore, to make a fair comparison, I ask honorable members to turn to pages 40 to 42. There the cost of each Department for each year is shown, and, as usual, I have made clear what is the amount of expenditure actually caused by .Federation.


In addition to the departmental expenditure, there is the expenditure upon New Guinea', and the sugar rebates for which Parliament in its wisdom thought fit to provide. The expenditure upon the Commonwealth celebrations is, of course, a non recurring item. At the end of page 42 honorable members will find a useful epitome of the preceding tables. The " other " expenditure has been debited to the States as follows : -



They will see that the cost of the Departments in the year 1901-2 was £205,288, or1s.1d. per head of population; in 1902-3 £228,181, or1s. 2¼d. per head; in 1903-4 it was £342,308, or1s. 9d. per head; while for 1904-5 it is estimated at , £296,108, or1s. 5¾d. per head. The total of the " other " expenditure fairly chargeable as caused by Federation is £1,071,000, to which we have to add about £7.7,000, incidental to the first six months. The expenditure during 1903-4 was large, but, in making comparisons, two facts should be taken into consideration, namely, that in that year general elections were held, and cost £47,000, while the expense of bringing the Electoral Act into operation was £33,000. Those sums, in making a comparison, are hardly chargeable against the particular year in which they were expended. We never know what- may occur; but under ordinary circumstances, that expenditure might fairly be distributed over a period of two or three years. This year we have to provide £21,503 for New Guinea, £104,000 for sugar rebate and expenses, making the total " other " expenditure, apart from new works, £422,000.

Mr McWilliams - That is quite enough.

Sir GEORGE TURNER - I shall be glad if my honorable friend would show me how to decrease it. I have spent many an hour trying to ascertain how it could be decreased. I cannot see any means of decreasing it, except by some small savings which may be made during the course of the year. In the next table I deal with a matter which has caused me great trouble and anxiety, because I wish to do what is fair and just to the States, and at the same time to keep within the provisions of the Constitution. Under section 89 of the Constitution we have to charge as transferred expenditure all moneys required for the maintenance or continuance as at the time of transfer of the Departments transferred. Any other expenditure is looked upon as "other" expenditure. The provision to which I have referred has puzzled me very greatly, and, although I have consulted the law advisors of the Crown in regard to it, I have not been much helped by their opinion. Last year it seemed to me somewhat inequitable to charge against the States more than the amount expended in them, say, for telegraphs and telephones, for example. In some of the States it is necessary to spend a large amount on these works ; but it seemed to me rather unfair to charge this expenditure on a population basis, when the revenue derived from them is paid to the State in which they are carried out. I thought that it would be just to charge the whole expenditure for new works against the State in which they were contracted. As I told honorable members, I was doubtful if to do so would be to comply strictly with the terms of the Constitution ; but I thought that it would be well to ascertain by way of experiment how the system would work out in actual practice when compared with the system of charging on a population basis. I believed that when the Commonwealth Treasurer came to settle with the Treasurers of the States in connexion with the transferred buildings, there would be very little difficulty in making any necessary adjustments. Honorable members will see that in connexion with four of the States the arrangement I suggested worked out fairly well. New South Wales gained only £1,176 in three years, Queensland £3,616, and Tasmania £147, while South Australia lost £1,701. It would not have been very difficult to rectify matters in connexion with those States, either in consultation with their Treasurers, or in the financial arrangements of the fourth year. But in regard to Victoria and South Australia, I came across a state of things which I had not anticipated. I found that Victoria, being charged only the amount actually expended within the State, gained in the three years £23,939, while Western Australia lost £27,177, the reason being that, as Victoria is compact and well settled, she does not require so much expenditure on new works and buildings; and where new telephones and telegraphs are provided it is not necessary to erect such long lengths of lines. Western Australia, on the other hand, is a very big State, with a small population, and is only now being opened up, so that the expenditure on new works there is much larger. I was, therefore, forced to reconsider the whole of the circumstances. When I worked out the arrangement for this year in the same way as I had worked it out for previous years, I found that New South Wales would gain £16,196; Victoria, £40,927; Queensland, £2,560 ; and Tasmania, £2,442 ; while South Australia would lose £7,458, and Western Australia, £54,667. These figures somewhat startled me. They appeared to be getting too large to permit of any hope of an adjustment being arrived at hereafter, especially if they continued for another year or two at the same alarming rate. This year we are spending - as honorable members are aware - a considerable sum upon defence, more particularly in Western Australia. Next year that expenditure will be still larger. Whatevei view I might entertain in regard to expenditure upon post offices, telegraph's, and telephones, I could come to only one conclusion concerning Defence expenditure, namely, that it ought to be charged against the whole of the Commonwealth upon aper capita basis. Wherever expenditure is incurred upon defence matters, it must be regarded - if it is necessary - as being for the benefit of the whole of the Commonwealth, and consequently it should be borne by the Federation. I endeavoured to pick out certain items which might be regarded as constituting transferred expenditure, and others which might be looked upon as " new" expenditure, but in so doing, and in studying the opinions of the Crown Law. officers, I became more mixed than ever. Finally, I determined that the only way in which I could deal with this matter was to charge the whole of the works and buildings to the Commonwealth upon a population basis, thus reversing the course which I followed last year. I think that in acting thus, I am keeping strictly within the bounds of the Constitution. We shall ultimately have to pay for whatever buildings we took over when the Commonwealth was inaugurated upon a population basis, and whatever works we undertake after we get a common purse will also be paid for upon that basis. Therefore, I have concluded- that, upon the whole, it is wise to reverse the course which I pursued last year, and not to charge each State with the expenditure therein. It would be manifestly unfair to impose an extra expenditure of £54,000 upon Western Australia, when a large number of the works which are to be carried out there will benefit the whole of the Commonwealth. If it is necessary hereafter, rectifications can be made in respect of past expenditure.

Mr Hughes - Has the right honorable gentleman any reason to believe that the Crown Law officers regard his action as unconstitutional ?

Sir GEORGE TURNER - No; but it was difficult for me to say whether it was constitutional or otherwise.

Mr McCay - The opinion of the Crown Law officers stated that there was a good deal to be said upon both sides.

Sir GEORGE TURNER - Yes; and it also said a good deal upon both sides. I passed it on to my honorable and learned friend, as a constitutional lawyer, but he has not yet given his- reading of it. I have already shown the effect upon the various States of distributing the expenditure upon new works and buildings in the way I have mentioned, instead of charging them with the actual expenditure incurred within their borders. The information has been tabulated as follows : -


The question still resolves itself into one between Victoria and Western Aus tralia. If I followed the old practice, I should put£40,000 into the coffers of Vic- toria, and take £54,000 from Western Australia. That is what has been done to a small extent hitherto. I am not above reversing the course which I have hitherto followed, when I think that it is inequitable to the whole of the States.

Mr Webster - It is a point which is worth considering, at any rate.

Sir GEORGE TURNER - It is a point "which is well worthy of consideration. We often desire to know the position of the Post and Telegraph Department. Upon page 44, I have attempted to give particulars in regard to this large revenue-producing, and equally large expending, Department. Honorable members will notice that no charge is made for interest upon its works and buildings. It is impossible to make any such charge, because we do not yet know the value of its various properties, and what interest can fairly be debited to them.

Mr Webster - When will that be ascertained ?

Sir GEORGE TURNER - I shall speak of that matter at a later stage. . In this Department - as in the Customs - there are always varying circumstances in connexion with receipts and expenditure. However, taking the figures from the actual cash basis, in 1902, there was a loss throughout the Commonwealth of £57,784. Honorable members can peruse the details connected with each particular State if they so desire. The new works and buildings cost £37,149 in 1901-2, and £i35.°99 in 1902-3. In 1903-4, for the first time, the Department showed a profit of nearly £2,000. That, however, was not a genuine profit, because it included arrears which we had collected for conducting the Savings Banks business. But for that unforeseen source of revenue we should have sustained a small loss. Works, and buildings cost £[187,776. This year we anticipate a loss of £36,000, and the buildings to be erected and the new works to be undertaken represent an outlay of £217,648. The following table gives the particulars for two years : -




Thus in three States, namely, New South Wales, Victoria, South Australia, we anticipate that the Department will show a profit, whilst in Queensland, Western Australia, and Tasmania, unfortunately,, it will sustain losses. In this connexion, I wish to draw particular attention to the position which is occupied by Queensland. We have recently heard some complaints concerning the amount of revenue which is returned to that State.

Mr Groom - Does the Treasurer refer to the return of three-fourths of the Customs revenue collected by that State?

Sir GEORGE TURNER - Yes. I am speaking of the amount returned to the. Queensland Treasurer and to our encroachment upon the three-fourths of its Customs revenue. I desire to point out that during the past four years the working of the Department in that State has resulted in persistent losses. These represent £^02,505 in 1901-2, ,£105,887 in 1902-3, and £90,489 in 1903-4, while the estimate for 1904-5 is £99j639, a total loss upon t'he working of the Post Office during that period of £400,000, not taking into account new works and buildings. Honorable members will admit that such a loss would dislocate the finances of any State. I do not know how this position of affairs is to be remedied. We cannot increase the revenue, and, except by making small savings in administration, I cannot see much hope of reducing that loss. I have set out in the following table the estimated receipts and expenditure so as to complete the Budget papers for the convenience of those who have not got copies of the Estimates : -


Upon pages 48 and 49, it will be seen that the balance to the credit of our Trust Fund is £188,000. I was anxious to invest a considerable portion of that amount, but I found, upon going through the figures, that considerable advances had been made for Post Offices, Money Orders, Savings Banks, and Telegraphs. Consequently, I discovered that at the most I could not invest more than £[35,000 or £[40,000. However, that amount, if invested, will return us some revenue, and accordingly I have given instructions that the largest sum con sistent with safety shall be invested. I was, to some extent, under a misapprehension upon this matter, because last year I thought that a much larger sum could have been invested. Upon page 50, I deal with the very important question of the surplus returnable to the different States. I have shown it year by year, and have instituted a comparison in the case of each State, and of the whole Commonwealth, with the sum returned in previous years. The figures are epitomized in the following table: -


The return for this year amounts to no less than £7,138,986, which is a falling off of £243,000 as compared with that of last year - a very serious matter for the States. That amount is made up by a loss of revenue representing £.6 4 008, and an increased expenditure of £180,000. This comes upon the heels of last year, when the amount returned to the States declined to the extent of £817,000 as compared with that of the previous year, the amount being made up of £474,000 loss of revenue, and £351,000 increased expenditure. In two years, therefore, the surpluses have fallen off to the extent of over £1,000,000. To a great extent that is accounted for by the fact that in the previous year - 1902-3 - the States received an unforeseen revenue from the grain and sugar duties, aggregating £600,000, and the amount of their surpluses in that year, as compared with the preceding twelve months, was increased by £832*000. At the same time, I realize that it is very hard for the States Treasurers to find year after year that the amount returned to them by the Commonwealth as decreasing. Nevertheless, it is scarcely fair for them to attribute this fact wholly to additional expenditure, or to declare that it is due to extravagance on the part of the Commonwealth. The various States have suffered losses in their revenue, the extent of which honorable members would be able to see for themselves by reference to the Budget papers. I do not propose to take them through all the details. On pages 51 to 57 inclusive will be found all the tables necessary for the information of the States Treasurers, and on these the summary with which I have been dealing has been built. On page 57a will be found a new table, which I have prepared, and which honorable members, I believe, will find very interesting, showing the reasons for the falling off in the amount of the surplus paid last year to the several States^ From a perusal of it honorable members will find what fluctuations in the revenue and expenditure were responsible for this falling off, and what increases or decreases have taken place in the revenue obtained from different Customs duties. Some startling figures are given, in regard to these changes, and information is afforded as to where the increases 01 decreases - mostly increases - in expenditure have taken place. I now ask honorable members to proceed to the comparison of this year's expenditure with that of last year, which can be found on page 57c. The following is a summary : -



The falling off in the estimated surplus to be paid to the States for the year 1904-5 as compared with that for 1903-4, amounts to ,£243,474, mainly accounted for by a loss to the extent of £215,658 in the collections in respect of agricultural products, and of £56,429 under the Western Australian present Tariff. Had it not been for these fluctuations we should have been able to return to the States a larger surplus than was received by them in previous years. I have mentioned that the increased expenditure is estimated at £180,671 ; but, in taking these amounts into consideration honorable members must remember that we are dealing, not with an individual State, but with the six States of the Union. If the Treasurer of a State proposed an increased expenditure of £30,000 or £40,000 in any one financial year, .no one would regard it as a very extravagant increase. The increase in our case is mainly made up of provision for new works, etc., for transferred Departments amounting to £65,414, and £33,016 for rifles, guns,' and other equipment That accounts for an increase of £98,000. I have allowed for an increase of £77,863 in the expenditure of the Defence Department, and of £[85,675 in the Postal Department. The increased " other " expenditure amounts to £[14,120. Against that we have a reduction of £47,519 -in respect of the Naval Agreement, and of £[58,936 in electoral expenditure. Honorable members will probably be glad to know how these items are made up. I mentioned a few moments ago that new- works for the transferred Departments and equipment for the Defence Department largely accounted for the increased expenditure. I do not think that anyone will cavil at the increase in the Defence and .Works Estimates, for which we are asked to make provision, when we compare them with those for 1903-4, and realize that we have also to provide for re- votes from previous years. On page 57c I show that in the Defence Department there is an increase of £42,300 in respect of pay. That increase is accounted for by the fact that last year the ranks were not filled. Recruiting was held back until January last, to a large extent at my request, in order that savings might be effected in the interests of the

States. Last year we had to provide a comparatively small amount in this respect, as the ranks were only filling up slowly ; but this year we have to provide practically for full ranks in all' the regiments. Rifle clubs represent an increased expenditure of £20,400, due to the fact that the effective allowance is for twelve instead of for six months, and that an increased grant of ammunition is to be made. No one will begrudge the expenditure on our rifle clubs. It is likely to increase .from year to year, but, having regard to the good value we receive from the clubs compared with the return from other branches of the Defence Department I believe that no reasonable expenditure in that direction -will be opposed. I think that the rifle clubs cost us about £2 2s. 6d. per member, as against a considerable amount per head of militia. Military camps will cost £2,400 more than last year. More men will be in camp, and increased railway fares will have to be paid. The States insist on our paying extra railway fares, which must increase the expenditure of the Commonwealth - it will" be spoken of as "more extravagance on the part of the Commonwealth " - and increase the railway revenue for the States.- In- equipment there will be ari increase of £6,000, but of that sum £500 represents an old indent order given before the Federation was established. The goods have been delivered, and we now have to find the money for them. Ammunition represents £200 extra, general £1,300, and repairs, &c., £6,000, making a total of £78,600; but allowing for a reduction of £800 in respect of stores, we have a total increase of £77,800 in this Department. I have gone very carefully through these estimates with the Minister of Defence, and his officers, and, while I think that there will be savings in. respect of effective allowance, not. fully earned, as well as in other directions, I do not expect the saving will be a very large one. Whatever it may be, if the Committee concurs, I shall be only too glad to utilize it in increasing the armament expenditure. For the Postal Department the expenditure provided for also seems large, but' we must realize that the expenditure of this Department must necessarily increase. The revenue is increasing, and it is necessary to give the people, and more expecially those of the more sparsely populated States, all the conveniences which they may reasonably expect. To do that we must provide for an increase of expenditure. Salaries account for £63,000 . of this increase, and mails for £11,000. Here again the railways are calling upon us to pay more for services rendered. In Victoria, the Railway Department used to transact our telegraphic work for 25 per cent, of the receipts on telegrams transmitted through its agency ; but it now insists upon receiving 50 per cent, of the receipts. That means an increased expenditure amounting to £3,000 in the Postal Department in Victoria, and an increased revenue of ,£3,000 to the State Railway Department. I do not pretend to say that it is unfair for the Department to make this charge, but I mention it as showing an increase which the Commonwealth cannot avoid.

Mr McDonald - And yet the Premier of Victoria refuses to pay for weather telegrams.

Sir GEORGE TURNER - The maintenance of lines accounts for an increase of £4,500; uniforms, which were not provided for in last' year's Estimates, of ,£6,500; pensions, ,£4,500; and repairs, &c, ,£6,000. Allowing for savings amounting to ,£10,000, the increase in the departmental expenditure amounts to £85,500. Then, under the heading of " other " expenditure, an increase of £6,000 is provided for in respect of one item in the Estimates of the Department of External Affairs. This is to provide for increased mail and shipping facilities between the Commonwealth and the Islands of the Pacific. The question has been under the consideration of several Cabinets,, and from time to time it has been determined that the Government should do all that it could within reasonable limits to increase the facilities for trade between the Commonwealth and the islands. It is with this object in view that we propose this additional expenditure of £6,000. We able to deal fully with the matter later on, and the Minister in charge of the Department will be able to furnish the Committee with a full explanation of the details when the Estimates of the Departments are before us. An increased sum of £1,500 is provided for in respect of British New Guinea. This amount is necessary to pav an overdraft with the Bank of Queensland, which was guaranteed by the Government of that State. It will be returned to us Li about three years' time in the shape of £500 per year received by way of survey fees.

Mr McWilliams - What is the total expenditure in respect of New Guinea?

Sir GEORGE TURNER - I think it amounts to about £21,500 per annum. An increased expenditure is also provided for in the Attorney-General's Department, provision having to be made for the maintenance of the High Court for the whole year, instead of for only a portion of the year, as was the case in the last Estimates. The total cost of the High Court per year is estimated at £14,885.Increased expenditure . has also to be provided for in the Department of Home Affairs. The additions necessary to complete the staff and the classification scheme, account for an increase of £5,500. A further sum of £1,500 has to be provided for the Treasury, owing to increases under the classification scheme, which considerably raised the salaries that I fixed for my staff. The Patents Office shows an increased expenditure of £6,300, whilst we provide £1,700 for statistics. A further increase will probably lake place during the year, under the head of statistics, and I, for one, shall not object to it.

Mr Groom - Is that money to provide for a new Statistical Department, or for payments under the existing arrangements?

Sir GEORGE TURNER - We provide for work to be carried out through the agency of Mr. Coghlan. That gentleman will be allowed certain assistance, and is to receive a- reasonable remuneration for the work performed by him on behalf of the Commonwealth. That matter has not yet been finally dealt with ; but £1,700, to which I have referred, will provide for printing the statistics. While I naturally object to any increase if it can be reasonably avoided, I must confess that I think it absolutely necessary that we should have uniform Commonwealth statistics. We can only obtain a uniform system by the Governments of the States and of the Commonwealth working in conjunction for their mutual benefit. Whenever I have sought statistical information from the different States I have never been able to obtain it, except on a varying basis, which rendered it of no service to me. Under all these circumstances I think the House will willingly consent to an increase for that particular purpose. There are small increases for other Departments : For the Customs Department there is a small increase of , £500; for the Defence Department, £800 ; and for the Post Office, £500. The following table is an explana tion of the increases for 1904-5, compared with those of 1903-4: -


Last year, I went ' fully into the question of the charges of extravagance which are sometimes made against us in the States, and I tried to show, as far as our administration as a Government and as a Parliament were concerned, that there was no extravagance. We have thought it wise to increase the pay of some of our lowly-paid public servants, and to undertake new services and projects in ceiiiin directions, but so far as the actual expenditure itself is concerned, there has been no extravagance. I do not intend to go into that matter in detail again, because I give my personal assurance to the Committee that everything in connexion with the Commonwealth Departments is conducted on as economic a basis as possible.

Mr Hughes - Who makes these charges of extravagance?

Sir GEORGE TURNER - They are generally made in the different States, but they are made very vaguely.

Mr Hughes - I think the present Prime Minister made some of them.

Sir GEORGE TURNER -I wish to deal just for a minute or two with the position of Queensland. It is a matter of deep regret that that particular State does not come out as well as we should all like, with regard to her revenue. I found last year that there was likely to be an encroachment on the three-fourths revenue which- I had hoped to return to the State. I, therefore, went again into the Estimates and cut down and kept back whatever expenditure I could. The result was that we had an unexpended amount of £36,000, which was of great benefit to that State. But, unfortunately the consideration which I showed works out in this way against me. I put off works which I should have liked to carry out last year, but I have to provide for them on the Estimates this year. I kept back the matter of filling up the ranks in the Defence Department last year, but I have to provide for filling them up this year. The result is this : If last year I had, we will say - spent £3,000 upon a new Post-office - for which provision was made on the Estimates - expenditure to the amount of £3,000. would have been incurred. But as it was not spent last year, the amount 'has to be placed upon the Estimates against this year. That increases the current year's expenditure by . £3,000, and makes a difference of £6,000 as between the two years. It is in regard to matters of that kind ' that some of our financial critics do not treat us very fairly when they compare our totals. They do not take into consideration the amount which we have endeavoured to save in one particular year in order' to suit the convenience of the States. They do not consider that the more I try to keep down expenditure in one year, the more I may have to increase expenditure in the following year. These vague remarks about our extravagance are continually being made, and I wish to place before the Treasurers of the States, the full facts of the case, giving the most complete figures which I can give, in order that our critics may, if they can, pick out any item of extravagance. If they will do so, and will let me know of it I will take care that an investigation is made by myself and by the Department interested. I come now to another difficulty, in which the State of Queensland is especially interested. That is in regard to the effect of section 87 of the Constitution. The details are given on page 58 of the budget papers. In the Convention we fought time after time to obtain a guarantee for some of the States that they should have a certain amount of revenue returned to them. I know that in Victoria, unless there had been some guarantee, probably there would have been very great difficulty indeed in securing Federation. But the feeling in the Convention was strongly against the Federal Parliament being in any way tied or hampered. The members of the Convention wanted to trust the Parliament entirely, as to how much of the revenue collected it should return to the States, and how much it should expend. I was not prepared to agree to that because - although I believed that the Federal Parliament would always try to do justice to the States - I knew that some people would not look upon it in the same spirit; and I was aware that, unless we had some guarantee, there would be a difficulty in some of the States in carrying out what we earnestly desired. Eventually we were able to prepare a clause which bears the name of a respected member of this House, who, unfortunately, has passed away. I allude to the Braddon section. That guarantee was to the States collectively that they should get back threefourths of the net Customs and Excise revenue. But that did not mean that any individual State must get back three-fourths of its own net Customs revenue. I had fought for that in the finance committee of the Convention, and had fought for it in the Convention itself, 'but I had been over-ruled, and had to accept the best compromise we could get. There was no misunderstanding on this subject in the Convention.- The" Convention knew perfectly well what it was doing. It did not intend to tie the Federal Parliament to give back to each State three-fourths of its Customs excise revenue.

Sir John Forrest - Yes, it did; I understood it in that wavi

Sir GEORGE TURNER - There can be no doubt whatever that there was no intention in the Convention to give back that amount to each State individually. I recollect the matter distinctly, and I have since looked it up in the reports. I myself fought very hard to try to get what it is now said by some people that the Convention intended. But I was beaten, and had to accept the best compromise I could get. I will admit, however, that it was never dreamt that any State would not get back its three-fourths. That is the exact posi- tion. Queensland was not represented in the Convention. If she had been represented, information might have been placed before the Convention to show how the proposal would affect her financial position.

Mr McDonald - Then we should never have had Federation.

Sir GEORGE TURNER - I think we should have had Federation, and, if possible, a more democratic Constitution. I do not wish it to go forth that the States were in any way misled. They could not have been misled if they followed the Convention debates; although I freely confess that the (Convention and the Treasurers who were present at that Convention never dreamt that the Federal Parliament would haw to utilize more than one-fourth of the net Customs revenue of any one State. But still, as far as the Constitution is concerned, we have a right to do it. It, however, is a right which should be used as sparingly as possible. The States have received during the four years over and above the amount that we might have expended if we had appropriated the full one-fourth the following amounts: - New South Wales, £1,403,115; Victoria, £837,952; South Australia, £297,693; Western Australia, ,£794,402 ; Tasmania, £110,620. This year we have encroached on the three-fourths of the Queensland revenue to the extent of £56,602 ; but taking the Commonwealth as a whole, the States have during the four years got back £3,379,583, which, if we had chosen, we might have expended. It shows that this Parliament, having a free hand to the extent of £3,400,000, has not abused the privilege conferred upon it by the Constitution, but has dealt as fairly as possible with the various States. That amount includes £192,000, the one-fourth of the special Western Australian Tariff. Queensland is a State which unfortunately has been " hit," but, taking the three years up to the present time, even that State has not much to complain about. In '1901-2 the shortage in Queensland was £20,000 ; in 190374, in consequence of my keeping back expenditure, the encroachment was represented by only £2,000, whereas in 1902-3 Queensland received- more than her three-fourths to the extent of £15,000. It will be seen that in the three years this State has had only £7,500 taken from its three-fourths of Customs revenue. But in the period from the 1st January, 1901, to the 30th June, 1904, we have returned £62,926 more than the three-fourths. In addition, the expenditure in Queensland in 1903-4 exceeded that in the previous year by only £1,325, the loss to that State being caused by reduced revenue. This year, unless we have the savings for which I hope a much larger amount will be deducted from the sum returned to Queensland ; but experience so far has shown that a comparatively small amount has been retained over and above what the Commonwealth would have been entitled to keep, even if we had been bound to return threefourths to the State.

Mr Fisher - What does the Treasurer mean by "keeping back" ?

Sir GEORGE TURNER - I mean keeping back expenditure on defences - asking the Department not to fill up vacancies, and so on, and also asking the Postal Department not to proceed with new buildings.

Mr Fisher - Those are savings.

Sir GEORGE TURNER - I hardly like to call them savings, although they may in one way be so termed. The practice is one I do not like, namely, postponing expenditure, in order to help a State through a particular financial year.

Mr Hughes - Is the expenditure necessary ?

Sir GEORGE TURNER - Yes. This year- the total ^amount to be returned to the States is £600,000 more than the Commonwealth would be bound to return if we took advantage of our full power under the Constitution. In considering this question, we must not forget that in the past we have not been paying interest or sinking fund in connexion with the transferred buildings. Unfortunately, I have not yet been able to come to a satisfactory arrangement with the States, but, assuming an arrangement is arrived at this year and the payments start from the 1st July last, it will necessitate our providing £450,000, which will leave us only about £150,000. We have still to take over departments, such as the administration of quarantine and the lighthouses, which are non-paying, and honorable members will see that we shall have very little to "come and go" upon. in connexion with' the surplus in the future, after charges under these heads have been met. Therefore, while I should be very glad to ask the Committee to institute penny postage throughout the Commonwealth, the accounts disclose facts which prohibit my making that request. We certainly should not be able to spare the amount of revenue which would be lost in consequence of such a reduction in the postage rate.

Mr Webster - Not with the present revenue ?

Sir GEORGE TURNER - Not unless we were to make a general alteration by which we could collect more revenue from some other source. Honorable members know that in past year's I . have held the view that as soon as possible we should have "one pocket." With revenue credited and expenditure debited to the States, and accounts having to be kept as at present, we are not a 'true fede ration. In my judgment - and this I always contended for at the Convention, but was beaten - a true federation is one where you have simply a record of the receipts and expenditure, and the surplus, whatever it may be, divided amongst the various States on a population basis. However, it was seen at the time of the Convention, that, in consequence of the varying revenues, it would be very difficult under any uniform Tariff that might be adopted to have a .distribution which would be equitable to all the States. The following table shows the effect of section 87 of the Constitution on each State : -


I show in the following table what, would happen if we dealt with all the States on a population basis instead of on a bookkeeping basis: -


Last year New South Wales would have lost about £78,000 and' Western Australia £[479,000, which would have been distributed amongst the other four States. This year New South Wales would have lost £22,000 and Western Australia £468,000, which would have had to be similarly divided. I am free to confess that Western Australia could not fairly be asked to stand such a loss. It is a new country, where developments are required, and with a revenue likely to be reduced rather than increased, as already shown by the returns. It would not be fair when dealing with this question a couple of years hence to insist on a per capita, basis over the whole of the Commonwealth. I have therefore made a calculation dealing with the States other than

Western Australia, and that information will be found on page 67 of the Budget papers. . The following table epitomizes it : -


Omitting Western Australia, New South Wales last year would have lost £262,000, which would have been distributed, in the proportion shown, amongst the other States. This year. New South Wales would have lost £205,000, which would have been distributed in a similar way. But seeing that in the year before last, New South Wales 'would have lost £399,000, it can be seen that independently of any of the , disturbing elements which naturally arise in connexion with the grain duties . and other matters, the amount appears to be steadily decreasing in that State. If these disturbing elements were eliminated from the figures, the amount of loss to New South. Wales would be considerably reduced; but the tables are prepared on actual receipts. Any scheme ' which may be brought forward by a Treasurer withina reasonable number of years must, I think, provide for a certain amount of revenue belonging to New South Wales being distributed amongst the other four States, if we are to divide on a -per capita basis. But I have always felt, and experience strengthens my view, that as the years roll on less Customs revenue will be collected' in New South Wales. There will be more Inter-State trade and more Australian -manufactures, and the expenditure in a large State, such as New South Wales; will increase much more rapidly than in smaller States, such as Tasmania and Victoria. In a reasonable space of time, I have no doubt that a per capita basis will be found to be fair and equitable to all the States, resulting in what I regard as a true Federation. No one car. realize the amount of bookkeeping which has to be carried on under present circumstances. Honorable members can see the immense mass of figures which have to be dealt with in connexion with the finances of all the States. If I had only one fund to deal with, my financial statement would be very simple, and not nearly as trying to myself or to the patience of honorable members. This is a matter which will have to be dealt with, though not in this Budget statement, and I am building up the figures, year by year, so that those who follow may have the benefit of our past experience. I have no doubt that in connexion with the next Financial Statement the Committee will have to give careful consideration to the question of distributing the surplus ; and my belief is, that the true solution of the difficulty will be found in a scheme under which a sliding scale of. say, five years, is allowed to the States other than Western Australia, the latter being allowed ten years. At the end of that period after the expiration of the bookkeeping arrangements, we should not. I think, be doing any iniustice to any of the States, not even to Western Australia, by a per capita distribution.

Sir John Forrest - There is no evidence of that yet.

Sir GEORGE TURNER - I do not know that we could apply such a scheme at once to any of the States, but sooner or later, there will have to be a per capita distribution - we cannot be expected to continue the present bookkeeping for all time. - No doubt, that was known to the people- of Western Australia when they agreed" to enter the Federation, and it was one of the reasons why a concession was given to that State, enabling it to tax the productions of the other States on a sliding scale for five years.

Mr Mahon - There is no concession in that ; the Western Australian people pay.

Sir GEORGE TURNER - I have not been in Western Australia, and am not in a position to say what the people there want, but I hope shortly to take a trip West. I know only what the representatives of Western Australia at the Convention agreed to, and what I have indicated was a suggestion made to induce Western Australia to join the union - it was a bargain made between the States. On page 68, New Guinea is dealt with, and on page- 69 I have tried to get, for the information of honorable members, from the Departments, the increased expenditure on account of increments and promotions. I believe these figures to be approximately correct. In the Treasury, we have no means of checking them exactly. I fear that some States do not make them up on the same basis as others, and that I intend to inquire into, but I believe that the figures are approximately correct for the purposes of honorable members. From the table, on page 69, we see that for the three years the minimum wage has been in operation - taking the annual expenditure at the end of the year, which is something more than the amount provided on the Estimates, because, as a rule, an increment does not run for the full year in the first instance - we have paid to these lower-paid servants an extra sum of £94,000. The increases of salaries come to £82,000 this year, representing £16,000 for the minimum wage, and £60,000 for increments and promotions ; the appointment of new officers . to fill vacancies, and provision for new positions, involve a sum of . £31,500; the. increased expenditure under section 19 of the Victorian Public Service Act, comes to £5,000 ; while the increments under the law of South Australia amount to £2,000. making a total of £114 , 000. But we make savings by retirements and so forth, to the amount of' £32.000, leaving the total ' . about , £82,000, andI hope that we shall have a further saving, of some £8,000. The details are shown in the following table: -


Since. I, last delivered a Budget, statement a. classification of the Public Service has been- made. We have heard something about this from those who are interested. I asked the Public Service Commissioner to give me a short report, for the guidance of honorable members, as to. how this scheme was arrived at, and. , how, it is, likely to work out in practice., Undoubtedly he had a very difficult task to perform, I do not say that he has given satisfaction to everybody ; but I consider that he has tried to deal fairly and honestly with a most difficult and complex question., I classify the public service of Victoria,: and I had to, give up the task in despair. It will be useless for us at the present time to discuss, at any rate, at great length, the classification of our Public Service or its effect, because there are 2,000 appeals still pending, and until these have been- decided we shall not know exactly what the classification will involve.. The determination of those appeals may remove many apparent inconsistencies which might otherwise require to be discussed.

Mr Hughes - It will take a considerable time to deal with them.

Sir GEORGE TURNER - I understand from the Commissioner that the appeals will be dealt with pretty rapidly. What I propose is that the officers shall get the benefits of the classification as. fromthe 1 st July last, and it will not be finally accepted by the Governor-General inCouncil until honorable members havehad a full opportunity to. deal with any objections which they may thinkought to be brought before the House, and the Government have had an opportunity to fully consider every objection which may be raised from any quarter. After the Commissioner has dealt with the appeals, the responsibility will rest with the Government.

Mr Hughes - Will the scheme be discussed this session ?

Sir GEORGE TURNER - I do not know that the opportunity will arise this session ; but certainly before the classification is finally dealt with-

Mr Hughes - Before it takes effect?

Sir GEORGE TURNER - Before the scheme takes effect, the House will have the fullest opportunity of discussing it. Probably in the early part of next session it could easily be dealt with. On the Estimates we have provided for all the benefits given by the classification. One portion of the Publice Service will be paid at once, but another portion will not be paid the proposed increases. In the first instance - and I mention this specially because I understand that my predecessor said he did not intend to pay - in the case of all salaries upto £160, I propose to commence paying the increments at once, and not to wait for the, passing of the Estimates. That practice I followed in previous years, with the concurrence of the Committee. Under the Public Service Act there are certain increments which a man gets almost as a right. It is only in a very few cases that the Commissioner would deprive an officer of the concession, and, as the amounts are very small individually. I think it is only right that they, should be paid as they accrue. Then under section 19 of the Victorian Public Service Act, we have to allow certain officers to receive the amounts at which they have been assessed up to the present. These are higher than the amounts which are provided by the Commissioner in his scheme, but until it has been finally decided, we think it is fair that the officers shall be permitted to draw them.

Mr Tudor - When is it going to be decided ?

Sir GEORGE TURNER - Early next session, I hope. In the meantime, the officers cannot grumble, because they -are getting an increased amount. The officers of the Crown Law Department are of opinion that as soon as this classification takes effect it will supersede all State Acts with regard to salaries and such matters. That, of course, is a very important question which we shall have to fully discuss when we are dealing with the scheme of classification. As we have not too much time at our disposal, I would ask honorable members to refrain from discussing, at any rate, at great length, the various grievances, or supposed grievances, which public servants may bring under their notice when we are dealing with these particular Estimates. As far as the effect of the classification is concerned, the Commissioner took all the increases which should be provided, and against them he placed the amounts which he was giving independently of the increases. Honorable members know that up to £160 a year the increments would operate whether we had a classification or not. Unfortunately the Commissioner mentioned that the cost of the classification was £54,000. As a matter of fact as he pointed out afterwards, it is nothing of the kind. Fiftyfour thousand pounds was the total of the increases, including £34,000 for increases, which otherwise would have been given. Therefore, the present cost of the classification is £20,000 per annum. That, he believes - and I agree with him there - will be considerably reduced, probably by onethird during the year, by filling up vacancies at lower rates which he has provided in some cases, and I think it will be found when full effect is given to the scheme that what he has done will mean little, if any increased expenditure to the Commonwealth. That sum of , £54,000 includes £41,000 for increases' of salaries under £200; £12,000 for increases of salaries from £200 to £500; £200 for increases of salaries over £500; and £400 for increases for administrative division. Honorable members will therefore seethatit isnotacaseofbenefiting the tall poppiesandtramplingon the little daisies.Ibelievewhatwe have done, and whattheCommissioner hastried to carry out, has been equitable to all the Departments. Seventy-six per cent. of the concessions is give to those receiving thelowerratesof pay .The interpretation of section19 of theVictorian Public Service Actisaburningquestion with Victorian members. It does not affect other honorable members to anygreatextent. Under that provision certainofficers were to receive ashigha salary, as officers performing corresponding work or holding corresponding positionsin other States . That was thought by theStateParliamenttobe only fair, and whatevertheextra costmay be. during the book-keeping period Victoria will have to bear that burden.Sofar,for a period of three andahalfyearswehave paid £35,000. Alltheclaimshavenot yet been received,butwhentheyareallin the amount to be paidwillbeconsiderably less than any sumwhichwasestimated Some estimates amountedto£40,000a year.Ithoughtthatitmightcometo £30,000ayear,butIamsatisfiednowthat it will be considerablylessthananyestimate which was madeandtheamountprovided on the Estimateforthisyear-and we have alreadydealtwithaconsiderable portion of the claims-comestoonly £6,600.

Mr Tudor - Doesthe£35,000represent the amount for three; years?

Sir GEORGE TURNER -Forthree and a half years.

Mr Tudor - Are thebulkofficers satisfied?

Sir GEORGE TURNER -Yes,I think so. There may be a littlemorelitigation in some cases. I have prepared inprevious years for the information ofhonorable members certain figures with regard to the imports and exports of the Commonwealth. I have had to abandon all the figures Ipreviously put before honorable members. ' At the time I said that I did notplace very much reliance upon them, butthey were the best I could submit, owing to the differing circumstances of the different States. But this year I made provision for a fresh start with information furnished to me by Mr. Coghlan on a uniform basis. Each State has gone on its ownbasis, in making its calculations, but, in future; believe we shall have comparisons which will be very useful to honorable members andtothose interested in trade. I do not propose to go through,, the details of this document, but I specially recommend honorable members to study the following figures, . with regard to the net imports into the different States, showing, the dutiable and nondutiable articles: -


The total net imports during the year came to £36,244,000, and the total of the InterState transfers of our own products - not re-exports of imported foods - came to £24,431,000.' There is one matter which is somewhat peculiar in the comparison between New South Wales and Victoria. The free imports for New South Wales for the year 1903 amounted to £3,317,000, and for Victoria they. amounted to£3, 140,000. These amounts are almost the same, but in respect of dutiable goods, the figures for New South. Wales are , £9,262, 000, and for Victoria £6,948,000. Even allowing for the discrepancy in the population of the two States, it is shown that an immense amount is being imported into New South Wales in excess of the importations into Victoria, and it is for this reason that I believe that as years go on the New South Wales revenue will certainly come down very considerably from what it is at the present time. I have now given the information supplied by the Budget papers, and I can only say again that I have to go into all these matters for the information of the Treasury Department, and in order that the Treasurers of the States may have full opportunities of comparing the figures. As we have to keep these records under the bookkeeping sections, I think it wise that honorable members should have the benefit of the information they 'supply. If they desire to go to the. trouble of comparing the tables, in order to work out any amounts referred to in the financial statement, they will have all the material before them that I have had. I have concealed nothing from honorable members, and I have given them exactly the figures on which I have myself worked. There are two or three other matters not coming directly within the financial statement, to which I desire to refer.' One has reference to the question of States debts'.

If there is one question of more importance than another to the Commonwealth it is that of the method to be adopted in dealing with the immense amount of money we owe to our creditors. I am not satisfied with matters as they stand in- this respect. I called a meeting of the Treasurers of the States, and we had a very interesting and very instructive discussion on the whole subject, extending over several days. I am glad to be able to say that we came more nearly to an agreement as to what ought to be done than I at first anticipated. When we first started our proceedings, we were very wide apart indeed, but gradually, day after day, upon arguing the matter out, we saw we could get more closely to each other. We agreed that all the debts should be taken over, and not merely a portion of them. South Australia preferred that a portion only of the debts should be taken over, but did not object to the whole being taken over. Then it was thought that we should deal with the whole subject at the earliest possible moment, and the Treasurer of New South Wales- said that he would like to wait to see what would be the effect of the working of the Federation, in order to ascertain whether the Federation could borrow more cheaply than the States. That was one of his difficulties. Then there was unanimity amongst us as to the necessity for a properly guarded sinking fund for each Commonwealth loan - a genuine sinking fund, which could not be used by the Federal Treasurer if he should require' it for any 'other purpose. It was agreed that it should be vested in trustees, and that it should be applied whenever opportunities arose in buying up our own stock, and by that means reducing the amount of our indebtedness, arid securing a good return for the ' money we were investing. The only difference between us on this point was that, while I thought the only fund which would be satisfactory to those who would be advancing us money would be a 1 per cent, fund, the States Treasurers desired that we should establish a½ per cent, sinking fund. However, I think that if we meet again, we shall probably be able to arrange this difference satisfactorily.

Mr King O'Malley - Is it proposed to take over the railways as security ?

Sir GEORGE TURNER - The amount of the sinking fund would not be very large at first. It would not apply to existing loans, but only to loans floated by the Commonwealth for the purpose of taking up existing and new loans. It would, therefore, be a number of years before the sinking fund could be any burden upon the States, because in the earlier years, they would be making considerable savings from the rate of interest, which would probably recoup them for any payments they might have to make to the sinking fund.

Mr Hughes - Those would become appreciable as time goes on.

Sir GEORGE TURNER - They would, and that is the reason I say it is open to consideration whether a sinking fund of 1 per cent, should be insisted upon. With regard to this matter, I should be very glad to have the opinions of honorable membeis who are willing to express them in discussing the Budget statement. I mention the matter now, because I like to get all the information I can from every possible source. I insisted that there should be ample security given to the Federal Treasurer, so that he should at no time be placed in the position of having to sue a State. It may appear a somewhat hard thing to say, but I came to the conclusion that the only ample security would be the right to collect the gross railway revenue of the States. The Customs and Excise revenue would be sufficient for some of the States ; in others the net receipts from the railways would probably be found sufficient to make up any deficiency, but in the case of some of the States, and more especially if further borrowing is to go on, the Commonwealth Treasurer would not be safe unless he had control over the gross revenue from the railways, and it would never do to differentiate between the different States in this respect. I met the objections of the States Treasurers in this way : I said, " I do not wish in any way to interfere with you unless the necessity to do so arises." My proposal therefore was not as put forward in the first instance, that we should collect the railway revenues and pay them back to the States . month by month as we do Customs revenue, but that we should not interfere with any State so long as we had sufficient money in hand to meet any liability we had to pay, or so long as the Treasurer of the State made up an amount required to meet a deficiency whenever the Federal Treasurer wrote to him stating that that amount was required. But I still desire to have the reserve power, in order that those in the old country who lend us money might know that if a deficiency arose, the Federal Treasurer, in case of necessity, would have the right to take possession of the gross receipts from the railways for the purpose of meeting it ; of course, returning immediately to the States any moneys which would not be required for that purpose. I have no doubt the Treasurers agreed with that modified form of my demand.

Mr Mcwilliams - In the case of most of the States, would not the Customs revenue give the Federal Treasurer ample security ?

Sir GEORGE TURNER - No: If my honorable friend will read the very inter esting report of the Treasurers' Conference, and the figures there supplied, he will fmd that I showed clearly that the Customs revenue would be sufficient only in the case of very few of the States, and that in some of the States, in one if not in two, it was perfectly clear that it would not be sufficient to take merely the net revenues of the railways. While I cannot see any harm in the Commonwealth having this particular power, to be exercised only when necessity arises, I feel positive that it will be a very great advantage to those who are acting as our financial advisers in the old country to be able to show when they are attempting to float a loan that there is ample security behind the Federal Treasurer. There is no likelihood of. payments not being made punctually. They know as well as we do that in every instance interest will foe paid when it falls due. But when they wish to make the best bargain they can for themselves and their clients, thev do not tell all that they know. I desired that the Federal Treasurer shall do all future borrowing, and- there we struck on a rock. I admitted freely that the Federal Treasurer should not control the borrowing of the States by dictating what amount of money they should borrow. In my opinion, no hard and fast line can be laid down. It could not be said that one State shall borrow so much and another State so much. I was willing to leave it to the Parliaments of the States to decide what each State should borrow, because it is certain that for many years to come there will be no heavy borrowing, and no extravagant expenditure of loan money. All I asked was that, to prevent competition between' the States and the Commonwealth, the whole of the borrowing should be done through the Commonwealth Treasurer, who would borrow for the States what they required, so long as he had ample security for repayment.

Mr Thomas - Under that arrangement would there be any danger of the Commonwealth encroaching upon the land revenues of the States?

Sir GEORGE TURNER - No; because if the borrowing of a State were approaching a dangerous point, the Commonwealth Treasurer would say, "I will not borrow any more for you, as I do not think that the security is sufficient. Your revenue may fall off. I shall not consent to borrow any more for you unless you are prepared to assign me further revenue, and to give me the right to collect it myself, if I think that necessary."

Mr Hughes - Would the purposes for which a State desired to borrow be taken into consideration by the Treasurer of the Commonwealth ?

Sir GEORGE TURNER - No ;. under my scheme the Commonwealth Treasurer would not interfere in any way with the borrowing of the States. Whatever a State asked for - £r, 000,000, ,£2,000,000, or £3,000.000 - he would borrow if the market were favorable, and the transaction would not conflict with a consolidation loan, provided that ample security was given to him. My suggestion was strongly objected to, because the Treasurers of the States desired to have unlimited and unfettered powers of borrowing. My reply was that if they persisted in that view, the Conference must end. I think that the whole, or a great portion of the benefit to be gained by allowing the Commonwealth Treasurer to borrow on behalf of the States would be in the prevention of competition between States in the London money market. We should not have one ' State rushing into the money market*" to get an advantage over another State, or over the Commonwealth, nor would a State be forced to take whatever terms it could get, and be squeezed by the financiers in the old land. I think that all borrowing should be done through the Commonwealth Treasurer. The honorable member for Kooyong has suggested that a finance commission might be appointed to do the work; but, personally, I should be prepared to trust the Commonwealth Treasurer to do what is just and equitable. Any man holding the position would have as his only object the assistance of the States, because he would know that if trouble came to one State it would react on the Commonwealth. The only agreement I could make with the Treasurers of the States was that, instead of a sinking fund of 1/2 per cent, if the Commonwealth Treasurer borrowed, they would provide a sinking fund' of 1 per cent. ' if the Treasurers of the States borrowed. That, however, is not an arrangement to which I feel inclined to agree. Of course I do not wish to utter anything in. the nature of a threat. I do not believe in doing that. But I had to point out to the Treasurers of the States what I point out again now. that, sooner or later, the States will be forced, to borrow through the Commonwealth. The Treasurers of the States insisted that the Braddon section of the Constitution should be made perpetual, and that three-fourths of the total Customs revenue raised by the Commonwealth should be returned to the States each year. South Australia and Tasmania wished to have the surplus returned on a per capita basis. I was ready to go a long way, because I was very desirous of bringing the Conference to a successful termination, and of being able to propose to Parliament a scheme which I could honestly recommend, and for which I could fairly claim support. Besides, having been a State Treasurer myself,- I know the difficulties with which the State Treasurers have to contend. I therefore offered to ask the Federal Parliament to agree to an absolute extension of the Braddon section of the Constitution for a period1 of fifteen years, thus giving it a currency of twenty-five years instead of ten years, as is now provided for. They would then be entitled to obtain collectively three-fourths of the total Customs revenue raised by the Commonwealth for a period of twenty-five years from the inauguration of Federation.. Another proposal I made to them was that, during the currency of the existing redeemable loans, which is something over forty years, the Commonwealth should return to them each year three-fourths of the net Customs and Excise revenue raised in that year, or that they should be given a sum equal to three-fourths of the average yearly collection of the Commonwealth during the ten', years of the operation of the Braddon sec- tion, whichever might be the lesser sum. At the end of ten years from the inauguration of Federation we shall know how much Customs and Excise revenue has been obtained by the Commonwealth, and will be able to determine the average yearly receipts ; and I proposed that there should be given to the States each year after that the amount of such average, or where the collections were less than the average, their three-fourths of the actual amount collected. I think that I met the States very fairly, but I shall be glad if honorable members will shortly let me know if they think that the position which I took up was justifiable, because I intend, later on, to make another effort to settle this very vexed, difficult, and important question. No one can realize its difficulties and com.plications until he begins to study it. When Federation was being advocated, it was said by some, though I did not say it, " Federate the debts, and you will save £1,000,000 straight away." Those who look deeply into the matter will see that, although it will be wise, proper, and right ito federate the debts of the States, the saving in interest would not, in the long run, amount to very much, because a considerable portion of our public debt has been borrowed at 3 per cent., and the Commonwealth could not hope to borrow at a lower rate. One of the chief advantages obtained from the federation of the debts would be the prevention of the competition to which I have referred, and the improvement of the position of the Commonwealth- and of the States in the money markets of the world.

Mr HUME COOK (BOURKE, VICTORIA) - What is the average rate of interest now paid on the debts of .the States?

Sir GEORGE TURNER - Three and five-eighths per cent., I think. Another question which I have been trying to settle since Federation was inaugurated is ,the payment for transferred properties. The Conference was most disappointing, so far as that matter was concerned. It was the second Conference held to deal with the subject, but nothing -came of its deliberations. The Treasurers of the States met in a Conference of their own, and gave me what they called their ultimate decision, but what I regarded as rather their ultimatum. At any rate, I was not at -all satisfied with it. Of course,- property exclusively 'used by -the Commonwealth -came over to us under the, Constitution with . nui any trouble,- but where' properties not exclusively used by the Commonwealth have. been taken over, other arrangements have to be made. The Treasurers of the States went to the length of saying that if a clerk employed by a State occupies any one room in the largest building taken over by the Commonwealth, that building is not exclusively used by the Commonwealth, and does not belong to the Commonwealth as a matter of right, but must be resumed under other sections of the Constitution. That may be the strict legal interpretation of the Constitution, but it is not an equitable one, and was not the intention of its framers. Their intention was that if a building were occupied mainly by officials of transferred Departments, it should be handed over to the Commonwealth, whereas if it were occupied mainly by officials retained by a State, and the Commonwealth officials occupied only a few rooms in it, it should be regarded as belonging to the State. I wished that intention to be carried into effect. The States Treasurers further suggested that the land upon which transferred buildings have been erected should be paid for by the Commonwealth at market rates, although it Eas cost the States nothing, and in many cases is of immense value. As far as I am aware, the General Post Offices at Melbourne and Sydney were erected upon Crown land, which was of very little value at the time. Now, however, it is of immense value. The States Treasurers wish the Commonwealth to pay them the present value of that land. But when it comes to the mode in which the States shall be compensated for the transferred buildings, they adopt a different system. They desire the Commonwealth to take these, not at their market value, but at their value. That really means, so far as I can ascertain, that the Commonwealth is asked to pay to the States the cost of these buildings, because the value of a post-office, if it is not used as such, i3 merely what we should obtain by pulling it clown. The States Treasurers wished to have matters all their own way.

Mr Fowler - It was a case of "heads. I win, tails you lose."

Sir GEORGE TURNER - That is what I said at the 'Conference, though I do npt like to put it exactly in. that way. If -thev States are to. be repaid the cost -.of the.transferred buildings,, thev -should also, re...,ceive the original cost of. the land upon' which those buildings.. stand: ' However, the' Treasurers do npt, .desire-, that..- They wish.; to secure the present value of the land, and the original cost of the buildings.

Mr Fisher - What is the difference to the electors?

Sir GEORGE TURNER - Very little.

Mr Isaacs - How are the two things separable ?

Sir GEORGE TURNER - I do not wish , to separate them.Istated at the Conference thatI was prepared to pay the States the market value of the land and of the buildings.

Mr Groom - That is at the date of transfer?

Sir GEORGE TURNER - Exactly. I was prepared to agree to a settlement of the difficulty upon the basis of the cost of the land and buildings, and I am equally willing to pay the States the market value of the land and of the buildings. In order to arrive at the value of the transferred properties the States. Treasurers desired that for each State two valuators should be appointed with a judge of the Supreme Court as umpire, whereas, I wished one valuator to be appointed for all the States, another for the Commonwealth, and thesetwo individuals to choose the umpire. That is a detail, however, concerning which I should not be too insistent. Regarding the mode of payment to be adopted, the first idea was that the Commonwealth should hand over cash to the various States. I think that I dispelled that idea before theConference took place. Then they proposed that the Commonwealth should pay them in3½ per cent. bonds. I objected to Commonwealth bonds being held by the States to be placed upon the market as they thought fit. If the whole of the debts were taken over it became a matter of simple adjustment, but, if not, I was prepared on behalf of the Commonwealth to make an offer to pay off the total amount due to the States by providing a sinking fund of one or two per cent., and to pay3½ per cent. interest, which I regarded as a very reasonable rate. As the value of the transferred buildings is said to be £10,000,000, honorable members will see that itwould be very awkward for the Commonwealth to be required to go upon the money market for its first loan, when that market might be unfavorable, or to risk having its bonds placed upon the market and sold for whatever the States chose to accept for them. I could not agree to that proposal. The States Treasurers will not even supply us with their claims. They have them made out, but will not hand them over until we have agreed upon the mode in which they are to be compensated. I believe that these claims amount to £15,000,000 or £16,000,000. The honorable member for Wide Bay interjected just now, " What does it matter to the electors"? If the States made no charge whatever against the Commonwealth, it would not make very much difference to the position. Whatever they receive, and whatever we have to pay, must come out of the same pockets. The only difference is that upon a population basis some States will have to contribute a larger amount than others. My suggestion at the Conference was that we should strike a balance, and then leave a very small sum - perhaps £2,000,000 - to be paid in the manner I then indicated. The States Treasurers objected that the adoption of such a proposal would result in taking away from them all their buildings, and leaving them with all their loans. To my mind, there is not much in the contention. The main object, however, is to control Federal expenditure. They know that if we had to borrow money and to provide interest and sinking fund we should need to set apart £400,000 or £500,000 annually out of our one-fourth of the Customs receipts. They make no secret of their desire. Their main purpose is to restrictourexpenditure. Therefore, when we consider that we have a certain surplus, we must not forget that sooner or later we may have to meet these demands, and that there will not then be very much left.

Mr McWilliams - If the States had the security that would be provided by the extension of the Braddon section of the Constitution, the difficulty would disappear.

Sir GEORGE TURNER - I do not blame the States Treasurers for desiring to obtain some security in the form of the continuance of the Braddon section of the Constitution. I do not think they desire this so much in their own interests. But it is very easy for people outside to originate a rumour that the Federal Parliament is dreadfully extravagant, and that it is expending hundreds of thousands of poundshere, there, and everywhere. Moreover, when the Federal Treasurer has an immense surplus, there is always a temptation - if the Parliament has absolute control of it - to incur expenditure which would not be incurred if its hands were tied. I do not object to our hands being tied in this connexion, although personally I am prepared to trust the Parliament.

Mr King O'Malley -Are we not tiresome' people?

Sir GEORGE TURNER - Yes, and in view of the fact that we have a large object to gain in bringing about the federalization of the States' debts, I would not stand out for terms unless they were the essence of the bargain. There, are two other matters which I cannot discuss in detail, because, they are matters of policy. I refer to preferential trade, and the appointment of a Tariff Commission. The Prime Minister will probably speak early in the debat-; upon my Budget statement, and will then be able to discuss these, two questions fully from his point of view. So far as the Tariff Commission is concerned, we are all agreed that the fullest investigation should be made into the working and effect of the present Tariff upon Australian industries. We also agree that it should be an impartial inquiry. It should be made by persons in whom the people would have confidence, and whose decision could not be said to be tainted in any way. We should make the best selection possible with human nature to select from, and we should secure the services of a board in which the vast majority of the people have complete confidence.

Mr Hughes - Does the Treasurer mean that it should be appointed from outside of Parliament ?

Sir GEORGE TURNER - That is a point for fuller consideration. Irrespective of whether or not it is composed of members of Parliament or outsiders, the personnel of the Commission must be such that the people will have absolute confidence in it. Admittedly, it is a matter of national importance, because upon the right settlement of this question depends, to a great extent, the future prosperity of the Commonwealth. Without venturing to offer any opinion upon the question of free-trade versus protection, I say that we should have the fullest possible inquiry. With that end in view, we propose to appoint a Royal Commission, the constitution of which will have to be dealt with by the Government, because a Commission is really an appointment by the Governor-General, acting upon the advice of his responsible Ministers. There is one aspect of this matter upon which the honorable and learned member for Indi and myself differ very much. For years we worked together, although we were sometimes a little bit apart, because he was always more radical than I. Nevertheless, we worked together harmoniously for very many years. But so far as this question is concerned, I differ entirely from the views of the honorable and learned member, and because he desires to restrict the inquiry. As I understand his proposal, he desires 'that the Parliament, with practically no evidence before it, save the statements of interested parties, shall limit the scope of the inquiry to a certain number of trades. That course was adopted by the late Sir Graham Berry, when he came back from England. I was then Commissioner of Trade and Customs, and in that capacity had intimated that, except for revenue purposes, there would be no revision of the Tariff during the then session of the Parliament. But pressure was brought to bear upon Sir Graham Berry, just as it has been brought to bear on honorable members, of this House, with a view to a variation of that decision. The duties on boots, hats, and woollens were mentioned, and it was urged that there should be a revision of " just a few lines," but I warned Sir Graham Berry that if the matter were once opened it would be impossible for him . to withstand the rush that would be made to extend the revision of the Tariff to almost every industry. I feel satisfied that any effort in that direction, in the case of the Commonwealth Tariff, would be attended by the same results. If we attempted in any shape or form to restrict the inquiry to a few industries to be named by us, without having any proper information at our disposal to guide us in determining whether it should be so restricted that would be the result. The main object of the Commission will be to inquire into the effect of the Tariff, and if we attempt to restrict it in any way we shall make a great mistake. Although a thorough inquiry may take a little longer than would that suggested by the honorable and learned member for Indi, I have no hesitation in saying that, in my judgment, a full investigation should be made. The representatives of every occupation, trade, and manufacture who desire to appear before the Commission to express the views entertained by those engaged in their avocations should have an opportunity to do so. I speak from experience, because I have been through the ordeal of three Tariff revisions. Two of these took place in the Victorian Parliament, while the third was that through which we passed in this House, and which, unfortunately, broke down the health of the right honorable member for Adelaide, who was then my colleague, and seriously injured my own. The great difficulty which I experienced in dealing with the Federal Tariff was that I approached its consideration with preconceived1 ideas as to what was necessary from the Victorian stand-point; but a vast quantity of information was laid before me, and caused me to change my views. As the result of this information, I was forced to the conclusion that the very high duties which had prevailed in Victoria were not wholly required. This matter will have to be fully threshed out before a Commission in whom both sides have confidence, and the work will be a very heavy one.

Mr Isaacs - Do the Government propose that the Commission shall deal with the whole Tariff?

Sir GEORGE TURNER - Yes. Why should any industry be shut out? Why should we say, for example, that " The Commission shall deal with the industries of A, B, and C, and that should D come forward, and say, ' I am interested in an industry which, though small, constitutes my sole means of earning a livelihood, and is just as much to me as is any industry controlled by a large company. I wish to be heard,' he should be shut out." Such a man might be even more vitally interested in the work of the Commission than would be the shareholders of a company. The latter might have other means of earning a livelihood, whereas the man engaged in a small industry might have to rely upon it for a living.

Mr Crouch - An inquiry into the whole Tariff issue might extend over years

Sir GEORGE TURNER - Not necessarily.

Mr King O'malley - Will the Government provide that the Commission shall furnish progress reports on certain items?

Sir GEORGE TURNER - We may or may not do se*. If a Commission be appointed, the members of which are able to devote a considerable amount of time to its inquiries, there will not be any very great loss of time. If what I suggested had been done before the Federal Tariff was passed - if the right honorable member for Adelaide and I had been appointed a board to investigate all the claims for consideration in the Tariff before we took it up, and given power to take evidence on oath - we should have been able, in six months, to deal with the whole matter, and to report very fully upon it. I repeat that we could not, in justice or equity, shut out any industry, no matter how small or struggling it might be. Every one admits that there should be an inquiry into the working of the -Tariff, and if it is to be conducted on right lines no industry, whether it be -small or large, should be shut out.

Mr Crouch - While the Commission is sitting the men will be starving.

Mr Webster - Some trades could be dealt with before the position of others was considered.

Sir GEORGE TURNER - Probably.

Mr Webster - Could we not consider the reports of the Commission in relation to those trades?

Sir GEORGE TURNER - We could, to some extent, but my experience teaches me that the moment a Tariff Commission touches one line, it is impossible to say where its labours will terminate. Take, for example, the item of " woollens," which is subject to an import duty of 15 per cent., and in respect of which it may be urged that a duty of 25 per cent, should be imposed. If that duty were so increased, it would necessarily follow that an additional duty of 10 per cent, must be imposed on articles made up from the raw material, otherwise we should handicap those who are making up the raw material in Australia. I do not wish, however, to enter into a long discussion of the question at this stage.

Mr Hughes - It sounds like old times.

Sir GEORGE TURNER - Quite so. I speak feelingly on this matter, because I have been, on several occasions, through the ordeal of a Tariff revision, and have always recognised the difficulty of accepting onesided statements. I for one should welcome the fullest and most exhaustive inquiry that could be made into the working of the Tariff. The Commission should be so appointed' that honorable members will have every confidence in it. It should be appointed at an early date, and pressed to report to the Parliament as quickly as possible. It may take some little time to deal with the questions submitted to it; but we must take care, in dealing with the matter, that the inquiry shall be thorough. We ought not to exclude any one ; we should endeavour to do justice to all.

Mr Groom - Would the Treasurer say that the Commission should report in time for this Parliament to deal with the question of Tariff revision?

Sir GEORGE TURNER - I am pledged to oppose the present Parliament dealing" with the revision of the Tariff.

Mr Robinson - And so is the honorable and learned member. .

Sir GEORGE TURNER - I shall not be a party to any revision of the Tariff during the life of the present Parliament. Honorable members know that the Deakin Government and its supporters went to the country, as a party, knowing that certain industries were not flourishing as well as they ought, and that it was said that they were not receiving the requisite measure of protection to enable them to succeed. Knowing of these facts, we weighed them against the possibility of re-opening the whole question, and all the difficulties and trouble which invariably take place in connexion with the revision of a Tariff, and decided, not without the fullest consideration, that we would not support any revision during the life of the present Parliament. I see no reason whatever to depart from that decision. I have heard nothing to show that any change of that policy should be made. No reasons have been advanced during the various discussions that have taken place on the question this session that would justify any departure from the solemn pledge I made to my constituents that I would not support any interference with the Tariff during this Parliament. Until our constituents have released us from that pledge - and few members of the Victorian Protectionist Party, at all events, failed to give it - I, for one, shall not feel justified in doing anything to re-open the Tariff question during this Parliament.

Mr Fisher - That does not apply to the provisions of the Sugar Bounty Act.

Sir GEORGE TURNER - No; that Act provides for an experiment which we decided should extend over a certain number of years. Some of us hoped that at the end of the period named for that measure, the growers of white sugar would be able to carry on the industry without any further assistance from the Commonwealth. Whether that be so or not, it is my opinion that we shall have to thoroughly investigate the question, and if, as I said earlier in my speech, we find that the white growers . of sugar have strong claims on us for further assistance - if it be shown that their industry is likely to be destroyed, or to be prejudicially affected to any extent, I. for one, shall not stand in the way of a further extension.

Mr Isaacs - I understood from the Prime Minister this afternoon that the Treasurer, in the course of his Budget speech, would give a distinct answer to the question I put to him in regard to the Tariff Commission. 9 m 2

Sir GEORGE TURNER - I did not understand the Prime Minister to give that answer to the honorable and learned member. I understood him to say that I would briefly open the question of preferential trade, in order that honorable members might discuss it during this debate.

Mr Isaacs - I spoke not of preferential trade, but of Tariff revision.

Sir GEORGE TURNER - The Prime Minister said that I would open up the question in order that preferential trade might be discussed, as it may well be, on the Budget statement, and also to allow honorable members an opportunity to discuss the question of whether a Tariff Commission should be appointed.

Mr Isaacs - Am I to understand that the Government say " No " to my question ?

Sir GEORGE TURNER - I am not in a position to answer.

Mr Isaacs - The Government should know its mind on that question.

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