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Tuesday, 19 September 1972
Page: 1543

Mr CONNOR (Cunningham) - Some 90 years ago the fathers of the Australian Constitution met. They proceeded, in their deliberations, to frame a constitution with which we are still saddled. It is true that an Australian nation emerged, but our fathers lacked perhaps the foresight and certainly the charity to ensure that the States continued to discharge their proper functions. We are saddled with a constitution which is typical of Australia, the land of paradox. It is a constitution which leaves the sovereign powers in the major responsibilities, forgetting international relations, with the States, but in fact and as a result of the effluxion of time and a major number of interpretative court judgments it leaves the fiscal and financial powers very much with the Commonwealth. In other words, those who need financial assistance most, the States, have not first call; the Commonwealth has it. Conversely, no provision has been made for a proper proportion of the national revenues to be allocated between the Commonwealth and the States according to their respective functions and their true needs. That being so, we come today to a situation in which the States, the second tier of government, and local government, the third tier, literally have their backs to the wall.

As a result of 23 years of the present Administration we have an utter and complete distortion of even the limited powers of the States. Today the position is nothing short of a major national scandal. Finance is government. If I might paraphrase Galbraith, we have today Federal affluence and State squalor in financial affairs. It is the States which in fact provide the infrastructure. To put it in its crudest terms, the States could exist without the Commonwealth; the Commonwealth could not exist without the States, because while we have the present Constitution and the present unwillingness on the part of this Government to alter the situation it will continue and will worsen. It was a former Prime Minister, Alfred Deakin, who said - he was absolutely correct and he said it nearly 70 years ago - that the States would finish up tied to the financial chariot wheels of the Commonwealth, and in fact they are.

The final enslavement of the States in financial terms came with the uniform tax legislation which was passed as a war-time measure, and to this day as a result of a High Court ruling the Commonwealth has priority in the field of income tax collection and the paradox continues. If revenue is to be collected, whether directly or indirectly, it comes only through the activities of the States. Just imagine the situation in Australia today if the 25,000 miles of railway line owned by the States, when they finally repay the loans on it, were to fold up. Just imagine the situation if the present main roads system, with all its limitations, did not exist. Where would the Commonwealth be? Both these fields have received scurvy and niggardly treatment. The glamour form of transport, aviation - I give the honourable member for Melbourne Ports (Mr Crean) great credit for what he said about it - has money lavished on it, and it is used by fully 3 per cent of the Australian community. The rest of the people use the motor car and the rail transport system.

Take the road system. This Government, of course, has been responsible for the swindle of the petrol tax. Only 70 per cent of it goes to the States, and of that 70 per cent the greater proportion goes where it is of the least use. To this day in Australia one will find the scandal of gravel surfaced main roads and fully bituminised farm roads leading on to them. The responsibility lies again with this Government. Australia is a maritime nation, but on the eastern seaboard of Australia there is not a single harbour which at its present depth at low water is capable of taking a ship of more than 100,000 tons capacity. We are in the world of the super freighter and the super tanker and 150,000 tons is the size of the average ship, the ship of all work, the ship to meet all trades in the world today. This Government leaves the responsibility to the States.

Take housing. Here we come again to the impact of immigration. What has the Government done? We have attempted in Australia, and I do not disagree with it, an increase in population through both immigration and natural growth which is an alltime record for any part of the world, or at least any part of what we might call the western democracies. But in the process it has been the resources of the States that have been strained to the limit; 1 repeat strained to the limit'. The policy of the Government has been to say: 'Get them here. Kid them into coming. But when we get them here we will put them on the doorstep of the States and we will give them as little as possible'. Mr Deputy Speaker, if you want the proof of that, have a look at the backlog today in the waiting lists of approved tenants of the Housing Commission in New South Wales or any of the other State housing authorities. If you want further proof of the position, have a look at the inflated rates that are being charged for interest on housing loans, have a look at the inflated charges that are being imposed for land and have a look at (he deficits, the record deficits of the State governments. Only last week it was announced that the railway deficit in Victoria in the coming year will be $66m. In New South Wales it will be $40m. One could go right through every aspect of State administration and find the same system in operation. 1 regret to have to say that, looking at the difference in viewpoint between State administrations and the national Administration, it is the latter which leaves much to be desired. The States are more experienced. New South Wales and Victoria have been in the business of government for more than 100 years. They have made their mistakes. Today Australia is being ruled from a city which might be a fairyland and which might have in it some very competent men provided that we stick to the text: books, but when it comes to the hard realities 1 would back the State administrations collectively against that of the Commonwealth. Some of the people who are here in Canberra are the third generation of Canberra administrators. We have had father, son and grandson, and in administrative terms the people here are mentally inbred. If they had to get into industry or commerce and make a living they would be kicked to pieces. There is here a lack of sophistication and an elitism and brahminism which need to be well and truly broken up. These people are not the repositories of all knowledge or all experience. Today the Commonwealth and the Administration here are too apt to look upon the States as the poor relatives instead of as the major milking cows. They are apt to look upon them as a necessary evil to be tolerated, endured, taxed and then ignored.

There is a complete and utter callous disregard for the problems of the States. If honourable members require proof of that they should look at the activities of the States and the Commonwealth in the operation of the Loan Consolidation and Investment Reserve. No other country is in the position of the national Government today, which literally owns the whole of its own internal debt. The debt figures are worth citing. The Commonwealth debt domiciled within Australia is $2,73 lm, of which the Commonwealth already holds $2,550m in bonds. The States have a debt of $9,86 lm; local government debts total $ 1,800m and semi-government debts total $6.800m. In other words the Government could in this Budget take a breather from overtaxing the people of Australia, lt has been pumping surplus revenues into its own bonds, lending the money to the States and collecting the interest on it. lt is an absolute scandal. It is the old story. Hitler and Goebbels said that the technique of the big lie was the best. The big lie is that we have been told for 23 years that this Government has had a deficit, sometimes large, sometimes small.

Since 1955 the Government has been planting money away. This year for the first time it has decided to say: 'Right, we are pretty well holding all of our bonds that are domiciled within Australia and we can afford to let our heads go and give some money away by way of rebate'. That is precisely what the Government has done. Another government can do exactly the same thing and will undoubtedly do it. The loan field has been left to private enterprise. This again is unique. If you look at other countries comparable to ours you will find that in aggregate the Commonwealth for many years has been following the policy of paying cash on the barrel head, taxing to the limit, directly and indirectly. Twenty-six per cent of the gross national product is returned to the Commonwealth in the form of taxation. Posterity has never been asked to bear its proper share of the burden as is the practice in other comparable countries.

Our total public debt is between 35 per cent and 40 per cent of the gross national product. In Canada it is 75 per cent; United Kingdom 96 per cent; New Zealand 92 per cent; and in the United States of America 56 per cent. In the meantime the people and the States have been taxed to the point where they simply are not able to carry on. Local government is in a greater plight than even the States. That is a scandal that has been festering for many years. Local government income is based on an entirely wrong principle. It is based on taxing the unimproved value of land. In the average suburban street which has 20 houses of a similar type all the people in them are paying about the same rates but there can be disparities of as much as 300 per cent in the respective incomes of those people. Local government provides the infrastructure of what can be termed the State structure. Progressively over the years further functions have been passed down the line to local government authorities by the States because they just did not have the money to carry on. These local government authorities in many cases were foolish enough to accept the responsibilities. But wherever they lie, the problem is the same.

Labor's policy is a clear one. For the first time we will give local government bodies a voice at the Loan Council table. In future they will not need to act vicariously, have plans vetted and then passed on to the Loan Council by the State governments if they choose to do so and wilh whatever emphasis the State governments choose to employ. Representatives of local government bodies will attend Loan Council meetings and will have a vote. We will give a fixed proportion of the national revenue to local government. The Commonwealth Government in its relations with the States, by a system of matched grants, has required the States to allocate a proportion of their limited funds conditionally upon grants being given by the Commonwealth. This has resulted in a further distortion. This applies notably in the case of the universities, and also in many other fields. This Government has been arrogant and hard. It has taxed to the limit. The structure of the Government's present Budget shows that come hell or high water it will do all it can to extract the absolute maximum, whether by way of direct taxation - particularly on wage and salary earners - or by indirect taxation in the form of excise duty on beer, petrol, tobacco and cigarettes. Indirect taxation is of course regressive taxation, but that suits this Government because the incidence of taxation is falling most heavily and unfairly on those people who are least able to pay. Undoubtedly, gains will flow io Australia from a change of government, from a change of thinking, a change of budget structure and from financial decency, honesty and fairness that this Government will never be capable of in its relationship with the States.

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