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Wednesday, 17 September 1958

Mr THOMPSON (Port Adelaide) . - I am very pleased to have the opportunity to speak on this bill. I do not intend to follow closely the lead that has been given by others. I must say, however, that the honorable member for Chisholm (Sir Wilfrid Kent Hughes), was on the right track when he said this afternoon, and again this evening, that honorable members should strive for a better understanding of the problems of the States than many of them, have at present. I have had experience in both State and Commonwealth spheres, and I know what the position is.

The measure that we are discussing tonight does not deal with the actual tax reimbursement formula. What we are discussing arises from the fact that the amounts provided under that formula are insufficient to meet the needs of the States. The Government has agreed with the contention of the State Premiers that something must be added to the amount provided under the formula. The Treasurer (Sir Arthur Fadden) has told us that he cannot say exactly how much will be given to the States under the formula. That amount must be determined after investigations by the appropriate officers. The Treasurer has said, however, that the total amount that will be provided under the tax reimbursement formula this year is estimated to be £174,600,000. I believe the States are quite right in saying to the Commonwealth, " We are not getting sufficient from the revenues gathered- by the Commonwealth. We are not getting a sufficient proportion of the taxes that are collected ".

The legislation before us is designed to bridge the gap between the estimated £174,000,000 that will be' distributed under the formula and £205,000,000, which is the total amount to be granted to the States. The special grant will amount to about £30,000,000, which is a little more than one-sixth of the formula grant. This indicates, to me at any rate, that the formula that we are using at present provides a good deal less money for the States than they require. The £205,000,000 to be provided for the States will be distributed amongst them in the following manner - leaving out the odd thousands of pounds: -


The honorable member for Moore (Mr. Leslie), said, towards the conclusion of his speech to-night, that we must look at these matters from a national standpoint. On this, aspect I quite agree with the. honorable member.. But he then expressed himself in opposition to. anything in the way of unification. I know that he does not believe in unification, but as I consider the matter now before us, and have in mind the extra £30,000,000 that is to be paid to the States, it seems to me that some degree of unification is inevitable, whether we like it or not. Over the years, many people have spoken to me about unification and federation. I have told them that unification is Labour's policy, but that we cannot achieve unificaton by direct legislative action because of constitutional provisions. We can go only so far as the Constitution will allow. But, as I have said, that does not worry me in the least, because unification will come about gradually, and is coming about gradually, whether we like it or not.

Our friends opposite chide us on being socialists. They say they do not want socialism - and I notice an honorable member of the Australian Country party nodding his head in agreement with that remark - yet we find that we are to have a wheat stabilization scheme. This is particularly strange when we see that the proposal has the approval of the Australian Country party, although I do not want it to be thought that I am condemning the. members of the Australian Country party for their approval of the scheme. Let me say, however, that a few years, ago we were discussing in this. House the fruit industry, the wheat industry and other primary industries, and the present Minister, for Social Services (Mr. Roberton) said he believed in the right of the individual to control what he produced. He said that the commodities a man produced belonged to that man, and that he should be able to sell them for what he liked, because the goods were his and no one should interfere with him. But to-day honorable members opposite are supporting a wheat stabilization scheme.. They will say to the man who grows wheat, " You cannot sell that for what you like; you will have to give it to us and let us seU it ".

Mr Turnbull - The scheme was approved by the growers.

Mr THOMPSON - I do not suggest it was not approved by the growers, but is it any less socialistic because of having been approved by the growers? The whole matter of unification is closely connected with the question of what is in the best interests of the community. There is no question of the fact that if we are to have the best for the community we must institute some system of control. Whether we like controls or not, we must have them.

In this regard let me speak about the poultry-farmers. When I was in the South Australian Parliament there was a time when the Liberal-Country party group had a majority in both Houses. The majority in the Legislative Council was sixteen to four. The Government said, "The egg producers are not getting a reasonable price, so we will appoint an egg board ". This board decreed that if a man kept more than twelve fowls he would have to send his eggs to the board and accept the price decided by the board. The producer would have to sell in the market selected by the Egg Board. He could not sell his eggs to the local grocer without the permission of the Egg Board. That was the position under State legislation. Later, when I came to the Federal Parliament I found that although the States had their systems of controls of the poultry industry, we also had Commonwealth control. As I consider the trend of events, it appears to me that the policy advocated for years by the Labour party - call it socialistic if you like - is the policy adopted by the non-Labour parties when they come to power. The measure before us deals with the formula to income tax reimbursement to the States. What brought about this formula? Why was: it needed? It became necessary because the Australian Labour party, when it was in- office, decided upon uniform taxation.

Mr Turnbull - As a war-time measure.

Mr THOMPSON - It does not matter whether it was a war-time measure or not. Labour decided upon uniform taxation intending that, after the war, the States could recover their taxing rights if they so desired. I d'o not think that the honorable member can question that statement. It is correct.

There is a saying that the Deputy Leader oi the Opposition (Mr. Calwell) once used, and which members of the Australian Country party quote very often, to the effect that once the eggs have been mixed together it is a job to unscramble them. I would not like a return to the system of taxation that existed before the introduction of uniform taxation, not because it is in accordance with the policy of my party, but in the interests of the future of my State of South Australia. I remember the conditions which existed before we had uniform taxation and before special grants were made to the smaller States. I remember the difficulties that the State Labour Government experienced in relation to taxation.

In South Australia before uniform taxation, from time to time the Labour party had a chance of winning a majority in the Legislative Assembly. But never in our history did Labour win more than five seats out of twenty in the Legislative Council, which has to pass every bill that was passed by the Lower House before it can become law, I remember a time, during the depression, when we did not have enough money coming in to meet the needs of the State. The Labour Government would have raised taxation in order to give a better deal to the people, but the members of the Legislative Council shook their heads, and it was not possible for the State Government to increase taxation.

In Queensland, where there is only one House, the elected Government imposed taxation. When uniform taxation was introduced, the taxation reimbursement formula for the distribution of taxes collected by the Commonwealth was introduced. I think that Victoria bemoans this a lot because until the introduction of uniform taxation, the Victorian Government collected rather more in taxes in relation to its needs than did the other States. The Victorian Government alleges that, as a result, it has been paying the penalty ever since because the formula is based on the amount that was formerly collected by each State in taxes.

Day after day, during this session, petitions have been presented to the Parliament by tens of thousands of people from all over Australia praying that more shall be provided by this Government for education. We have received petitions from all over the country praying for increases in pensions. The people have made their appeal, not to their State governments, but to this Parliament. Various motorists' roads associations have sent printed pamphlets to every member of this House, stating that they want the Government to provide tens of millions of pounds to the States for road maintenance and construction. They say that this is a defence matter, or some other matter. They contend that it is not a State matter, but a federal matter.

Financial aid has been requested for hospitals, although the States are not prepared to transfer the control of hospitals to the Commonwealth. A similar position, exists in relation to housing. All the States keep asking this Government for additional assistance. These claims have not been put forward merely by socialists in the Labour party. They have been made by big bodies of people many of whom oppose the Labour party and vote for members on the Government side of the House. Every time that one more person gets the idea that the Commonwealth should assist in another sphere of activity is another step towards unification. I can see that the people of this country are gradually forming the impression that we are not merely a number of States grouped together, but a nation.

I hope that the Constitution Review Committee will soon furnish its report. I am very deeply disappointed that we have not yet received the report. I do not want to condemn any member of that committee, but as it was appointed by this Parliament, its duty is to present its report before this Parliament is dissolved. The members of the committee may say that they have good reasons for not having prepared the report. It has been said that we will receive a report and that, perhaps, we may be able to deal with some parts of it. But this Parliament will conclude its sittings in a few weeks' time. The report of the committee should be presented to us before then. I am prepared to say to any member of that committee that I think that its members, as a body, have fallen down on the job because they have not yet presented a report to his Parliament.

I do not know whether the committee has dealt with the raising of revenue by the States. I do not know what it has done. That is what hurts me. It has gone all over Australia and got all the information it could, yet we have no idea what the committee intends to recommend. Some of the committee may not be returned in the new Parliament. We do not know. However, I do not want to continue with this subject. I know that the committee comprises members of the Labour party as well as members of the Australian Country party and of the Liberal party. 1 am not making a party affair of it, but I think that the committee has not done its job, because it has not furnished its report. It may be said that I .am speaking too soon, and that we shall get the review committee's report within the next fortnight, before the life of this Parliament ends. I hope we do, but, whenever the report becomes available, I shall be extremely disappointed if nothing comes of it.

Honorable members should realize that, as the honorable member for Chisholm has said, uniform taxation will probably not be abandoned. Some years ago, when the Prime Minister (Mr. Menzies) said that, within the next year or two, the Commonwealth would take action in conjunction with the States in order to do away with uniform taxation, I just laughed quietly to myself and decided that I would wait and see when it would come about. I recall the Premier of my own State, South Australia, talking about the State getting back its taxation rights, and how, in many public statements that he has made since, he has indicated very clearly, by implication if not in plain terms, that he would not like to return to the situation that existed in South Australia before the advent of uniform taxation. I remind the honorable member for Moore, just as I would remind any one in South Australia, that under the uniform taxation system all the States have been able to do many things that they would probably not have been able to do if they had been left to depend on their own taxation resources. That is my candid opinion about the consequences of uniform taxation. By that, I do not mean that I am satisfied we have done all that we should have done or could have done, but I firmly believe that the uniform taxation system, under which the Commonwealth makes reimbursement grants to the States in accordance with the formula, together with special grants, and under which the three smaller, or claimant, States have their budgets supplemented each year by the Commonwealth, has been worth a great deal to the country and to Australians individually.

It may be said that, in respect not only of South Australia but also of other States, there is a weakness in a system that allows a State to spend money with the thought that it can get from the Commonwealth whatever funds it needs. A claimant State can do that only if it is able to satisfy the Commonwealth Grants Commission that the charges it makes for the services that it provides in the way of railways, water supply and sewerage, and other undertakings under State control, other charges such as wharfage dues, to give one example, and the taxation that it imposes, compare with those in the larger States. Unless a claimant State can satisfy the Grants Commission of this, it will not receive grants such as the claimant States now get.

I am not altogether sure whether the special grants recommended by the grants commission come within the scope of this debate, Sir. I look upon them as being one of the greatest contributions that we have made to Australia's greatness. Before these special grants were paid to the claimant States, South Australia could not pay its school teachers as well as school teachers in New South Wales and other States were paid. South Australia was unable to do a hundred and one things on a comparable basis with the other States. Under the uniform taxation system, South Australia may not be able to pay higher salaries than are paid in other States, but it can be assured that it will receive assistance from Commonwealth revenue if it is unable to balance its budget. This situation has done much to put the people of South Australia on a comparable basis with the people of the other States.

The business expansion in South Australia since the introduction of uniform taxation has been remarkable. It began during World War II., largely because South Australia offered many favorable sites at a distance from the sea coast where factories would be safe from enemy attack. This led to the establishment of big munitions factories in South Australia. When the war finished, the buildings in these establishments were made available to overseas firms as an inducement to them to establish branches in South Australia. This was of great benefit to the State, and set it on the road to prosperity. Since the war. a great many new industries have been established there, but ;I do not .think that the State would be as prosperous, or would have so many industries as at present, had it not been for the introduction of uniform taxation by the Curtin Labour Government and the sound administration of the Chifley Government.

The scale of the special grants to be made indicates that the Commonwealth admits that the States need more than is provided forby the reimbursement formula. We have heard much high-pressure talk, and seen displays of power politics accompanied by requests 'for more financial assistance to the States for the provision of schools, hospitals, homes and State social services as distinct from those provided by the Commonwealth, as well as for developmental works. I look upon those things as constituting the staircase up which we have walked in order to get this increase over the formula grants that has been paid to the States by the Commonwealth. This Government has said that, in the current financial year, even though it will collect less in taxation than it collected last financial year, it will increase the reimbursement formula grants by some millions of pounds. The Commonwealth is saying, in effect, that although the financial harvest will be reduced, it realizes that the needs of the States are greater than they were, and that it should give them more funds. And the extra provision will help materially, Sir.

It is not my purpose this evening to say what Labour will do if it is elected to office. I cannot tell the House just what Labour will do in that event, but I do know that it will 'attempt at least to give everybody the greatest possible share in the prosperity and productivity of the country. That is the principle for which I stand, and I do not care what name is given to it. This country should give to the pensioners and others in need as much as it is possible to give them in order that they may lead decent lives. We should do for them whatever economics will permit, but we cannot put everybody on an equal footing. This brings me to mention the wheat industry. We know that wheatgrowers' associations have asked for a few pence more a bushel to be allowed for the cost of production. We know, too. that that will not be equitable to all the wheat farmers. It cannot be? A farmer whose family has owned his land for -/generations, and who owes nothing on it, has a cost of production - based on his real costs and not on the book value of his land - far different from that of, say, a man put on a block under the Australian Mutual Provident Society's scheme in South Australia, where, on a block of 1,000 acres, there is an overhead of perhaps £20,000 when the settler goes on it. The economics of his property, and his cost of production, are very much different from those of the man whose family has had his land for 50 or 60 years - land on which he owes nothing and incurs only the ordinary annual taxes and charges. As I have said, I know that one cannot make everything the same for everybody. But we should try to set a standard, and help everybody as much as we can.

I know that the grants provided for in this measure will not give the States all the help they need. T know, too, that even if the grants were increased by 50 per cent, the States would need still more. In any field of activity, the more funds one has, the more one incurs items of expenditure that had not been thought about before. When a person gets something he did not expect, he does not like to lose it, but looks upon it as his entitlement.

I came to this House from a State parliament and I say that we should stick to uniform taxation so that every part of the Commonwealth will get an equal deal. We in the Australian Labour party believe that not enough has been done for the States. I make no bones about that. More should be done for them. That applies particularly to the return to them of revenue derived from taxation. I object strongly to the proposition of the present Government to the effect that when the States cannot raise enough money by loans, the Commonwealth will underwrite the loans and lend the money to. the States. The Government does not raise the money by treasury-bills, but takes it from the taxpayers and then lends it back to the States, but charges them 5 per cent, interest and also requires repayment. I question the soundness of that policy. I know that this year the Government will raise moTe than £100,000,000 by treasury-bills but I do not like the system.

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