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Wednesday, 26 October 1904

Mr DEAKIN (Ballarat) - I rise, not', so much to join in this discussion, as to give reasons why it is not desirable to occupy the time of the Committee at this juncture, except to guard myself against the suspicion that I under-estimated the significance of the financial question. In my opinion, the work of the Treasurer during the last four years has not been rightly appreciated by the people of the Commonwealth, and is not likely to be appreciated by them for some time to come. Then it will be seen how difficult a task he had to encounter, and how complex were the problems with which he had to cope, because of the restrictions in the Constitution, or created by our circumstances. I join with the honorable and learned member for Northern Melbourne in his expression of regret that the Federal Parliament has not done more in regard to this matter, but am not surprised at it, and shall be surprised if we do more until we are absolutely obliged to act. That necessity will arise within a very short time. We are approaching the end of the first five-years' period of our financial development. In the second five-years' period we shall have to face a new set of circumstances, and at the end of ten years, if we have not already confronted it, we must deal with a condition of affairs that will make the financial issue, which has hitherto occupied a third or fourth place, probably the most important in public interest. The taxation which the people will have to pay as citizens of the States, and their obligations as citizens of the Commonwealth, must be determined by the financial- policy which this Parliament adopts. It is true that the States will continue to possess the constitutional freedom which they now enjoy ; but our necessities, our policy, which is likely to prove in many respects costly, and the development of the Commonwealth, must inevitably alter the financial policies of the States which make up the Union. The Constitution imposes certain limitations upon the power of the Commonwealth in regard to the Customs revenue which are shortly to be removed, while we possess certain powers of federal development which are sure to be exercised, and these, too, must- gravely and seriously affect the financial position of the States. Therefore I do not undervalue the importance of these financial questions, because I pass them over to-night with a few cursory remarks. It is not necessary for me to detain the Committee now, because for more than three .years I enjoyed the "privilege of continually discussing such questions with the Treasurer, and his views in regard to them are closely in accord with mine. I look forward with hopeful anticipations to the meeting of the Premiers of the States in Conference in Hobart early next year, and am aware that the Treasurer is also impressed with the importance of that occasion, and the consequences which may flow from it. A series of great problems will then have to be considered, in regard to some of which the interests of the several States are antagonistic, while i 1 regard to others the interests of the States are opposed to the apparent interests of the Commonwealth. It is too much to expect that the next Conference, or even a series of conferences, will lead to a unanimous settlement of our difficulties. The Treasurer, by previous meetings of the kind, has made a great advance towards a public understanding of the matters which have to be dealt with, but it can hardly be claimed that he has done' more. If he takes another stride forwardand I hope that it will be a long one - that seems as much as reasonable men should expect. In the Conference he will have to face the conditions which he has discovered to us in his Budget. The Commonwealth revenue, though not declining by any great amount, is still declining, and on that question it would be possible to say a great deal which the time at our disposal this ses.sion will not permit to be said. Furthermore,' we have an increasing expenditure, though it is 'not increasing by much. The Federal Parliament has exercised its undoubted financial authority, and its command over its 'resources, in a spirit of consideration to the States, for which the Treasurer deserves the utmost commendation. He has not merited the criticism of some Treasurers of the States, for no man in the Commonwealth could have more earnestly desired to meet them in every way. He has been content in some respects to cripple, or to, at all events, postpone for a time, what might have been considered the natural growth of the Commonwealth so as to allow the States to accommodate themselves to their new circumstances without undue hardship. With a declining revenue and an increasing expenditure, the Treasurer finds himself confronted by proposals which have already been formulated in this Chamber, that would not only carry us to the full margin of the fourth of the Customs revenue, over which we are entitled, under the Constitution, to exercise control, but beyond it. When we consider the question of imposing direct taxation, we have to remember that this will mean taxation by a new body, and will be taxation affecting the whole of the people of Australia. When we have to face our constituents, with proposals for imposing this new taxation; in addition to that levied by the States - of which they cannot be relieved except by the action of the States - we shall be facing a very serious situation.

Mr Gibb - I hope that we shall never be called upon to do that.

Mr DEAKIN - The honorable member says that he hopes we shall never be called upon to consider the question of imposing new taxation. Does the honorable member suppose for one moment that, in view of the demands which are being made upon us, the Commonwealth expenditure will be limited to one-fourth of the Customs revenue ? The necessity for adopting special measures of defence might arise at any time, and in such an event we should have to enter upon expenditure which would carry: us far beyond the amount represented by one-fourth of the Customs revenue.

Mr Page - Does the honorable and learned member think that it would be fair for us to spend as much as we liked of the States. Customs revenue, without facing the responsibility of raising taxation?

Mr DEAKIN - I think that we are spending as little as we can. So far, wehave exercised great self-restraint and economy. We have hot spent nearly the full amount which we are authorized to expend.We have followed a considerate policy that is in every way commendable; but Ithink that, even if we continue to be economical and cautious, the amount at present, under our control is not likely to prove sufficient. If some of the demands made in this Chamber are to be met we shall have to raise the necessary funds by' means of direct taxation. I am not arguing for or against such taxation, but I am pointing out that we are approaching a new crisis in addition to several' others with- which we are confronted in other fields - a financial crisis, which will become very real directly this Commonwealth proposes to become a seventh taxing body over the people of Australia.

Mr Page - We cannot escape it.

Mr DEAKIN - The crisis has not yet arisen, but it is well that we should utter a few words of warning in order that the country may consider the position, and be fully advised of the road which we shall, be bound to travel.

Mr G B EDWARDS (SOUTH SYDNEY, NEW SOUTH WALES) - The Customs revenue will expand.

Mr DEAKIN - It will be necessary to revise the Tariff before we can look for anyexpansion of the Customs revenue. That, however, is a question for the future. Then, in addition to this natural outcome of the situation, which the mere lapse of time will bring upon us, the expiration of the fiveyear period will open up one set of seriousconsiderations, and the expiration of the tenyear period in another five years will open up another. All these consequences will be brought upon us in their natura) course by the terms of the Constitution, in the exercise of the powers intrusted to us by the people. My right honorable friend, the Treasurer, will, at the forthcoming Conference, necessarily give much of his attention to the great problem which exercised the Governments of which he and I were members for some considerable time, namely, the problem of the transfer of the States 'debts. Whilst cordially indorsing my right honorable friend's desire to establish a good understanding with the States, it will be only fitting for him to remember, and if necessary to remind the Premiers of the States, that there is a point beyond which it will not be possible for him to go in the matter of making concessions. We are called upon to undertake the transfer of the States debts only upon such terms as .will be beneficial to Australia. The Commonwealth cannot make money, and will not seek to make money, out of the necessities of the States, or of the transfer of their debts ; but we shall fail in our duty if we accept the responsibility for the States debts without imposing conditions which will protect the interests pf the people - first as citizens of the Commonwealth, and next as citizens of the States - against the possibility of over -borrowing in the future. As a Commonwealth we have brought nothing to the common stock. The States have incurred their several debts upon, the security of their lands, their railways, and other assets, and the credit of their people. We have united the States, but we have added nothing to the securities upon which they borrow. We have added together the people and the assets of the States, but we have added nothing else to these, and the prospect of a seventh borrowing power operating upon the same, securities must become a matter for serious consideration. When we are asked to accept the responsibility of the States debts and make ourselves answerable for the payment of the interest upon them, whether at the present rates, or at the lower rates, which we hope will be arranged, we are being requested to take a step which will be justified only if we can place the people as a whole, in a better position, and afford them greater safeguards against the abuse of the power of borrowing. The only consideration the Commonwealth can demand for its electors on assuming the burdens of the States debts is that an ample guarantee shall be given against over-borrowing. It is our duty to insist that the transfer shall be made . in such a manner as to protect the interests of the people of the whole Commonwealth. The only way in which that can be done without attempting to interfere with the full liberty of the States Legislatures, is by adopting the proposal of the Treasurer, that in addition to whatever share of the Customs revenue may be allocated for the purpose of discharging the interest payments upon the debts of the States. the Treasurer shall have in his hand a sufficient sum of the States money to enable him to pay that interest directly instead of being called upon to find the money in the first instance from some other source, and then claim repayment by the States - a claim which could be enforced only by means of a suit in the High Court. All the Treasurer is proposing is that extra security shall be given- for the prompt -payment of the interest on the debts incurred by the States, without recourse to law, or without contention as1 between the Commonwealth and the State. He does not ask that the railways shall be placed under Commonwealth control. The States aTe under obligations to pay their debts, and no doubt would pav them to the last farthing. All he asks is that, whilst he is acting as their agent, he shall be able to place his hand upon a sum of money sufficient to pay their interest for them, without being compelled to await the convenience of the States Treasurers, or have recourse to law. That is' the least demand that he could make, and that the House should support him in making. We are asking for nothing for the Commonwealth, but only for sufficient guarantees for the smooth working of the financial machinery, so as to enable the interest payments to be promptly made, as they have ever been in the past, without conflict between the States and the Commonwealth. It seems to me that that is a minimum and a reasonable demand. I hope that the Treasurer will attend the Premiers' Conference, strong in the assurance that he will have behind him the united Parliament of the Commonwealth when he represents that, whilst we recognise our obligation to undertake the burdens of the States debts, we ask that such arrangements shall be made as will prevent friction, and will place us in a position to maintain our reputation abroad. I may, in conclusion, express the hope that my right honorable friend will, when he has an opportunity 'of meeting the Premiers of the States renew the discussion of the subject which I had the honour of broaching at the last Conference. That is, the consideration of the question which always goes hand in hand with the payment of interest on the debts, namely, the increase of the population of the Commonwealth. It is only by adding to our population that we can expect to have an expanding revenue, and to reduce the burden of the interest upon our national debt. I believe that some of the Premiers' have not even answered the circular which I addressed to them some time ago with regard to making their lands available for settlement in the most expeditious manner.

Mr Lonsdale - They are all talking about buying land for closer settlement.

Mr DEAKIN - I do not presume to discuss the policy of the States in regard to that matter. Whether they buy up land or not, what is desired is that they should make available for settlement any land that they may have in districts suitable for carrying on agricultural operations with reasonable assurance of success. We do not wish to interfere with them or dictate to them in any way in regard to matters of detail ; but we desire to point out to them that with more land available, in districts suitable for closer settlement, and with the greater development of the resources df the Commonwealth which will naturally follow, we shall stand a chance of obtaining our share of the extra population, which is being secured by New Zealand. The recent report of the Agent-General of that Colony shows that since the new regulations regarding land settlement were adopted1 by the New Zealand Government, some 1,300 or 1,400 settlers with small capital have been introduced, are now applying that capital to profitable account, and are becoming most useful citizens. It is only by encouraging settlement of this kind, and by affording employment in connexion with our industries that we can hope to promote the development of the Commonwealth, and add to the wealth of the community. I hope, therefore, that when my right honorable friend brings under the notice of the Premiers the question of the transfer of the debts of the Commonwealth, he will not fail to remind them of the unsatisfactory condition of the population of the Commonwealth, and to impress upon them the importance of finding employment for the people we have here now, and of offering inducements that will attract to our shores a fair proportion of the splendid class of settlers who are now passing to other parts of the Empire, or, unfortunately to places outside the Empire altogether. I do not propose to detain the Committee bv entering into as full an exposition of any of these matters as they deserve. I have passed bv all the contentious points to which allusion has been made by honorable members who .preceded me in an effort to con dense my remarks, which - at this period - can be effective only in a minor degree, if effective at all. I trust that the close of this session will mark the end of the period of parliamentary stagnation which we have experienced. We hope from the Government next session a positive programme of a progressive character. I trust that the materials for that programme will be obtained upon the financial side from the Conference to which reference has been made. I hope that next session, upon the general side, we shall have an announcement of a policy which is deliberately designed to take the fullest advantage of those great opportunities with which we have been endowed by Nature, in order that we may obtain our fair share of the great exodus of population from other countries, and give employment to our own people. I trust that we may see the expanding revenue to which the honorable member for South Sydney has alluded, and that we shall be able to face the grave financial difficulties with which we shall shortly be confronted, by wise provision for economy, by foresight and energy, and by having the burdens which Australia is called upon to carry better distributed.

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