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Wednesday, 26 October 1904

Sir JOHN FORREST (Swan) - It is my first duty to compliment the Treasurer on the very full information regarding the public accounts which he has placed in our hands. We are now iri a position to compare the expenditure of the Federal Depart- ments during a period of four years, and are therefore better able to understand the. financial position of the Commonwealth than we were ever in before. At first sight, however, it is not easy to ascertain from the documents presented to us the full cost ofeach Department, including works and buildings, because there is no summary.

Sir George Turner - Not for new works* and buildings.

Sir JOHN FORREST - It seems to me that a statement of that sort would be very useful in showing exactly how much is spent, say, in the Post Office.

Sir George Turner - The Post Office expenditure is especial lv shown.

Sir JOHN FORREST - I have not. been able to find out exactly what the cost of the Post Office is.

Sir George Turner - It is on page 44 of the Budget papers.

Sir JOHN FORREST - I have not been able to ascertain by inspection and with certainty the total' expenditure on the Post Office. But,' as I have already said, the information is obtainable in the public documents, and it only requires a little ferreting out to learn everything that we desire or require. As my honorable friend, the member for Parkes, has laboured a matter to which I intended to refer, I will deal with it rather out of the order which I had laid down. It seems to me that we ought never to forget that the Commonwealth and the States are composed of the same people, and that, therefore, if we have to pay any State a sum of money for buildings, not only has that State to contribute towards the payment for its own buildings, but that also it has to pay per capita for buildings taken over in every other State. I cannot look upon it as a sound business transaction, that we should borrow a large sum of money in order to pay for the buildings transferred from the States to the Commonwealth, in order to distribute that money amongst the States, thus placing upon them the obligation to pay interest, and to repay the capital borrowed within a certain time. It would mean that we should be adding largely to the public debt of the Commonwealth, and doing no good to the States either individually or collectively. This subject has been very well considered by the present Treasurer, and I myself have contributed a paper, which has been laid before Parliament and the country, in regard to the different means by which it would be possible to pay these immense sums of money for public buildings taken over by the Commonwealth. The conclusion at which I arrived was that instead of borrowing immense sums of money the same result would be obtained by debiting and crediting the amounts to be paid and the amounts to be received by each State. For instance, suppose that the Commonwealth has to pay £3,000,000 to New South Wales for public buildings taken over, and that New South Wales has to pay £2,000,000 as her share of the cost of the buildings taken over by the Commonwealth from herself and all the other States. Surely, in a transaction of that kind, it is not necessary that the £3,000,000 should actually be paid to New South Wales, and that £2,000,000 should be paid back by that State. All that it is necessary to pay to New South Wales is £1,000,000, which is the difference between the amount which the State has to pay, and the amount which she has to receive. That is surely the commonsense way of dealing with the matter. If I owed the honorable and learned member for Parkes £10, and he owed me £5, I should not pay him ten sovereigns and let him pay five sovereigns to me; I should pay him five sovereigns and complete the transaction. Whatever method is adopted, a different result cannot work out, so far as each State is concerned. The States will get exactly the amount that they are entitled to receive. There is a fixed indebtedness to each State, and there is a fixed liability on the part of each State to the other States.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Is a proper record kept ?

Sir JOHN FORREST - Surely my honorable and learned friend does not think that it is impossible to keep a proper record of transactions of this kind. He cannot have looked into this matter as carefully as he ordinarily looks into subjects with which he deals. During his speech he was subjected to some interjections which I regret, but they were caused by my belief that he had not given sufficient attention to the subject.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - In 1901 I went fully into it for an hour in this House.

Sir JOHN FORREST - Then the honorable and learned member must have forgotten the subject since 1901.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - I have not read the right honorable member's paper.

Sir JOHN FORREST - If the honorable and learned member had read it I think he would have a better knowledge of the subject than he appeared to have to-night. Some reference has been made to what is called the fixed policy of the Commonwealth Parliament against public borrowing. I am not aware that this House has made any declaration of that kind. I am aware that on an occasion when the Barton Government proposed to obtain authority to raise a loan, the Bill, after some discussion, was withdrawn ; but I have not heard that there has been any declaration on the part of the Commonwealth Parliament against borrowing. I am as much against public borrowing as any one can be, if it is intended that the amount borrowed shall be spent on unproductive works. Notwithstanding all that has been said to the contrary, I believe that public and private borrowing have been largely instrumental in our prosperity. We should never have been in our present position, and the members of the community represented by honorable members opposite would never have enjoyed their present prosperity, if we had not indulged in an extensive public works policy by means of borrowed money. We should not have developed our resources and our production of material wealth would not have reached its present proportions, but for the private enterprise of our citizens, and the public enterprise of our statesmen. Speaking generally, I do not believe in borrowing money for the purpose of erecting public buildings. I believe that in our present circumstances we should limit the expenditure of loan moneys to the construction of works which will afford facilities for transit, encourage production, and which are likely to prove directly reproductive to the State.

Mr Tudor - Such as the Port Augusta to Kalgoorlie railway ?

Sir JOHN FORREST - Yes, undoubtedly. The best evidence has been afforded that such undertakings have laid the foundations of our prosperity. Notwithstanding all that has been stated with regard to the money wasted in the construction of railways in Victoria, there is no doubt that the facilities provided for transit in the State have alone rendered its development possible. Countries are not injured by entering upon a borrowing policy, but by the expenditure of borrowed money upon works that are not reproductive. So far as borrowing for the purpose of constructing reproductive works is concerned, there is practically no difference between a private individual and the State.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Would not the right honorable member class a post office as a reproductive work?

Sir JOHN FORREST - No. Generally speaking I believe that all public buildings should be built out of revenue.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Surely post offices are reproductive.

Sir JOHN FORREST - I do not know that they are in all cases. However that may be, the whole of the post offices and other public buildings built during my long administration in Western Australia, with the exception of a very few upon the gold-fields, were erected out of revenue.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Why should the present generation bear the * capital cost of works which are intended to confer benefits upon posterity?

Sir JOHN FORREST - I am not prepared to argue that matter at the present time. My opinion, speaking generally, is that bricks and mortar should be provided for out of revenue: The honorable and learned member for Ballarat referred more than once to what he described as a falling revenue. I do not think there is any necessity for directing special attention to the decrease in our receipts, because I notice that' the estimate of the Treasurer for the current, year is only £61,000 less than the amount actually received last year. The Commonwealth revenue has been remarkably steady during the last three years, and no radical change is expected to occur during the current year. In 1901-2 we received £11,296,985; in 1902-3, £12,105,937 ; and in 1963-4, £11,631,056 ; whilst the Treasurer's estimate for the current year is £11,570,000. I regard the steadiness which is exhibited bv these figures as being . satisfactory, and as giving a great hope for the future.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - The revenue, in a country like this, should not be steady.

Sir JOHN FORREST - I prefer to see steadiness rather than marked fluctuations as being more indicative of stability.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - We ought to be going ahead

Sir JOHN FORREST - No doubt; but it must be remembered that we have passed through a very hard time during the last two or three years, and that we have not yet recovered from the drought, which resulted in such a serious loss to the Commonwealth. In view of the adverse conditions under which we have been labouring, I think that the present position of affairs may be considered to be satisfactory. I notice that notwithstanding all the efforts of the Treasurer to keep down the expenditure, it is gradually increasing. In 1901- 2 we spent £3,733,218.

Sir George Turner - The expenditure for that yeardoes not afford a fair basis for comparison.

Sir JOHN FORREST - The Treasurer has included the revenue for that year amongst his figures without any explanatory note. I am aware that there were special circumstances to be taken into account during that year.

Sir George Turner - We did not spend anything on public works, and many of oui Departments were not fully organized.

Sir JOHN FORREST - Just so. We were only making a commencement. In 1902- 3 the expenditure amounted to £3,901,371, and in 1903-4 to £4,252,562, whilst for the current year the Treasurer's estimate is £4,433,233. There has been an increase every year.

Sir George Turner - The increase is accounted for almost wholly by the expenditure upon new works and upon the sugar bonus.

Sir JOHN FORREST - At the same time we were led to believe that Federation would result in great economic administration.

Sir George Turner - Yes, but we did not expect that we should have to pay for new works out of revenue, instead of out of loans.

Sir JOHN FORREST - I am very glad that that system is being adopted, but I do not see why the expenditure upon new works should be increased every year. To have continued the policy of constructing buildings out of loan funds must eventually have resulted in great injury to Australia.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) (Minister for Home Affairs) - The expenditure upon new works will not show an increase this vear.

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