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Thursday, 2 August 1906

Senator PLAYFORD (South Australia) (Minister of Defence) . - I am sure that we have all listened to' Senator

O'Keefe with a great deal of interest. He has placed the mattervery fairly before us. I point out to him, however, that if he will turn to the Treasurer's Budget speech, delivered on Tuesday last, he will find that- the Government has fully dealt with this matter. We realize the difficulties under which some of the States are labor: ing under the present manner of distribution. But any system except that which we have adopted would have been unfair to some States. The system recommended by Senator O'Keefe would have been grossly unfair to Western Australia. In some of the States the revenue derived from Customs and Excise amounts to £4 and over per head of the population ; in other States it does not amount to half so much. If we were to distribute that revenue on a per capita basis, some States would therefore be robbed at the expense of others. Tasmania may think that she is injured by the existing system. Personally, I fail to see that she has been injured to any great extent. At the present time she is getting the whole of her share of the revenue collected from Customs and Excise after the Commonwealth has taken a proportion to cover necessary expenditure.

Senator O'Keefe - No, she is not.

Senator PLAYFORD - Tasmania, I think, pays £1 16s. 81/4d. per head, and Western Australia pays £4 5s. per head-

Senator O'Keefe - £3 odd, I think.

Senator PLAYFORD - £4 5s. I have the latest figures, laid on the table of the House of Representatives by the Treasurer. On page 11 of the Budget papers for 1905- 6 these figures are given.

Senator O'Keefe - I took a newspaper report, which shows that the amount paid in Western Australia is £3 12s. 5d. per head.

Senator PLAYFORD - If the honorable senator's motion were carried to-morrow, an injustice would immediately arise to Western Australia far greater than any that he can now allege.

Senator Clemons - Is the honorable senator quoting from, last year's Budget papers or this year's?

Senator PLAYFORD - From the papers for 1905-6.

Senator Clemons - Senator O'Keefe quoted the latest figures.

Senator PLAYFORD - The figures for 1906- 7 can only be an estimate, not an ascertained amount.

Senator O'Keefe - It was the estimate I used. I said so.

Senator PLAYFORD - I prefer to rely upon an actuality, not an estimate. I find that the figures for 1905-6 show that the Customs and Excise receipts for Tasmania per head of population in successive years from J900 to 1905-6 were £2 16s. 6|d., £2 15s. 2fd., £z 2s. rod., £2 os. 8£d., £1 18s. r|d., £1 16s. 8Jd., and £1 16s. ojd. In Western Australia, however, the receipts in the first year were £5 6s. 2d. per head of the population. They rose to £5 16s. 4¾d. in 1901-2. In the next year thev dropped to £5 8s., then to £4. 13s. £4 4s. 11¾d., and £3 14s. 9%d. So that apparently the consumption of Western, Australia is gradually coming down to something like the level reached in the other States of the Commonwealth. It may come down further within the next five years.

Senator Staniforth Smith - If the Tasmanians do not shoot we will come down.

Senator PLAYFORD - These figures show the reasons why Tasmania is receiving so small an amount per head of population, and they also show why. if the distribution were made all over the Commonwealth per head of population, Tasmania would gain largely at the expense of her neighbours. Even supposing that an injustice is inflicted upon her now, which I do not conceive to be the case, if effect were given to Senator O'Keefe's motion a considerably greater injustice would be inflicted upon other States.

Senator O'Keefe - - Is the honorable senator in favour of continuing the expenditure upon the present system?

Senator PLAYFORD - The present is a hybrid system. The "transferred " expenditure, that is expenditure in connexion with services taken over from the States, such as expenditure in connexion with militan matters - is put under one heading ; and "other" expenditure is dealt with in a different manner. The " other " expenditure is divided amongst the' State on a per capita basis. Western Australia is a goahead State, requiring a large number of new works. Since Sir George Turner provided that all new public works should be paid' for out of "other" expenditure, Western Australia, so far as concerns money spent on public works, has apparently had more than her fair share. But it must be recollected that, although that may be the case, the State that is gaining least from this system is Victoria. Victoria has not had anything like the amount of " other " . expenditure within her territory that little Tasmania has had in proportion to population. At the present time we are building a fort at Hobart. The payment is debited to "other" expenditure.

Senator Mulcahy - Building a fort at Hobart !

Senator PLAYFORD - Yes.

Senator Mulcahy - All that is being clone is to provide for one gun on a hill !

Senator PLAYFORD - We have to spend some thousands of pounds. That is not "transferred" but "other" expenditure.

Senator Mulcahy - One gun to defend all Tasmania !

Senator PLAYFORD - So far as concerns the distribution of revenue on a per capita basis a paper distributed by the Treasurer shows what the effect would have been, if the distribution had been made on the basis of population. First the table shows the actual amount distributed, and then the amount that would have been distributed if on the basis of population. In the first year of the existence of the Commonwealth we find that New South, Wales would have gained £192,534; Victoria £344,271 ; Queensland ,£42,509, and South Australia '£67,902. Western Australia, however, would have lost, if the amounts paid to the State Treasurers had been distributed on the basis of population, £658,256 in that one year. Tasmania would have gained the very small amount of £11,040. In the following year the tables would have been turned against New South Wales, which, instead of a gain., would have experienced a loss of £171,696; Victoria would have come out with a gain- of £373,089 ; Queensland with a gain of £142,974; South Australia with a gain of £173,306; Western Australia with a loss of £579,834 ; and Tasmania with a gain of £62,161. In the year 1903-4, New South Wales would have lost £71,659; Victoria would have gained £209,116; Queensland would have gained £132,439; South Australia would have gained £117,908; Western Australia would have lost £453,035 ; and Tasmania would have gained '£65, 231. ' If the matter be put in another way, and the gain or loss to the States shown if the actual distribution had been varied by charging new works and buildings on a population basis - what we are doing now - as compared with the result if the whole surplus had been distributed on a popu- lation basis, New South Wales would have lost £[78,533 ; Victoria would have gained £[233,866 ; Queensland would have gained £[144,996 ; South Australia would have gained £[114,240; Western Australia would have lost £478,575, or still more than under the per capita system ; and Tasmania would have gained £64,006. In the year 1904-5, there would have been a turn, I do not know for what particular reason, in favour of New South Wales, which State, under the per capita system in that year, would have gained £30,788, although previously she had* suffered a loss, except in the first year of Federation. Victoria, in 1905-6, would have come down to a gain of £[100,402 ; and Queensland would have come down to a gain of £95,215. South Australia, in that year, would have come out pretty well, with a gain of ,£122,636, and, therefore, the system would have suited' my own State. Western Australia, however, would have come out with, a heavy loss of .£335,868. It is estimated that in the year 1906-7, New South Wales, under a per capita system, would . come out with a loss of £1.73,089 ; Victoria with a gain of £.104,643; Queensland with a gain of £[r55',668; South Australia with a gain of £141,139; Western Australia with less loss than she Has ever experienced before, namely, £[309,279. Bui) Tasmania, it is esti-mated, would make a most marvellous jump to a gain of £80,000. I have now shown honorable senators what the position would be if we were to pass this motion - that New South Wales would lose heavily, and Western Australia would lose most disastrously. How would the result in the case of Western Australia be brought about? The Western Australian people, through the Customs, are paying p-r h-id into the Commonwealth Treasury, an amount considerably in excess of that paid by any other State; and under the system now proposed, money thus paid would be simply placed to the credit of the other States. I suppose that some people would call that robbery; at all events, it is much like robbery.

Senator Keating - The figures quoted do not take into consideration the per capita distribution of the transferred expenditure that would have to take place.

Senator PLAYFORD - I have not touched on the question of expenditure, but only dealt with the receipts out of which the expenditure has to be made.

The discussion has special reference to Tasmania; and all I know is that that State is treated in precisely the same way as is every other State, so that there can scarcely be any complaint on that score. Tasmania is credited with the amount of Customs and Excise revenue she pays, less any sum which the Commonwealth Parliament may deem necessary for the purposes of Commonwealth administration; and she is debited with all transferred expenditure on a per capita basis, as are all the other States. For instance, the expenditure on Thursday Island is called " other " expenditure; and why? Because, originally, Thursday Island was fortified at the joint expense of most of the States; and it was contended that all the States should contribute to the maintenance of the fortifications, just as in the case of Albany. Then, again, we have taken over the administration of Papua, which costs £20,000 or £[30,000 a year ; and towards this expenditure Tasmania simply pays in proportion to population ; in short, Tasmania is treated in exactly the same way as is every other State. If we adopt this motion, and alter the system, the result will be that Tasmania will dip her hands into the pockets of New South Wales and Western Australia; and I do not think that that is the desire of the people of Tasmania. Surely Tasmania does not want to use for her own special benefit money contributed by the people of New South Wales and Western Australia ?

Senator Mulcahy - Was that state of things not contemplated when we federated ?

Senator PLAYFORD - I am not going into the question of what was contemplated when we federated. We know that all sorts of things were contemplated ; but the men who framed the Constitution were wise in their generation. They foresaw the difficulties, and knew that, unless they adopted the system of each State being credited with the amount contributed through Excise and Customs, and of each State paying its expenditure on a fair basis, the grossest injustice would be inflicted on certain of the States.

Senator de Largie - Do I understand the Minister to say that Tasmania pays a quota in the case of Thursday Island"?

Senator PLAYFORD - Tasmania, like every other State of the Commonwealth, pays on a per capita basis for the upkeep of the fortifications.

Senator Mulcahy - And also for. the upkeep of the fort at Fremantle.

Senator de Largie - Tasmania contributes neither in the case of Thursday Island nor in the case of Fremantle.

Senator PLAYFORD - Tasmania contributes towards the cost of new works, and so forth. In regard to the expenses of New Guinea, she contributes exactly in the same way as Western Australia and the other States.

Senator de Largie - Tasmania does not contribute to the upkeep of the fortifications at Thursday Island.

Senator PLAYFORD - Tasmania also contributes per capita to the cost of making the fort at Fremantle.

Senator O'Keefe - Why was the five years' limit put in the Constitution?

Senator PLAYFORD - I do not know. I was in England, as Agent-General for South Australia, when the Federal Convention met, and I did not follow the discussions very closely. It appears to me, however, that the members of the Convention were able to present to the people of the various States a statement of how the revenue was to be derived and expended ; and they concluded that this could not be done fairly on a per capita basis, but they left it to the Parliament to decide whether that basis should be adopted after a certain period. Senator O'Keefe has told us that Western Australia appears to be the " lion in the path." .

Senator O'Keefe - The only stumblingblock.

Senator PLAYFORD - I do not know how the honorable senator can call Western Australia the only stumbling-block, when we recollect that New South Wales would, under the system proposed, lose £173,089, in 1906-7, which, with the £309,000 already alluded to, would make a total loss of very nearly ,£500,000. But Senator O'Keefe practically suggests that Western Australia should be left out of consideration, and that we should then see how the figures would come out. Sir John Forrest, following the example of Sir George Turner, has afforded the Commonwealth information of the most valuable character relating to these matters. Amongst the tables laid before another place, when the Budget speech was delivered, was a statement comparing the amounts paid to the States Treasurers with the amounts which would have been paid if distributed on the basis of population, excluding Western Austra lia. This table shows that under such circumstances New South Wales, in 1902, would have lost £43,685, Victoria would have gained1 £106,609, Queensland would have lost £46,123, South Australia would have gained .£6,153, and Tasmania would have lost £22,954. It will be seen, therefore, that Tasmania would have started with a loss on this particular basis. Senator O'Keefe has suggested that we should practically exclude Western Australia. That, however, could not be done under the Constitution, which, provides that in these matters there shall be uniformity. But, supposing it had been possible to exclude Western Australia, Tasmania, it will be seen, would have started with a loss of £22,954.

Senator O'Keefe - I said so ; the Minister is only repeating the statement I made.

Senator PLAYFORD - Although Tasmania would have gained under that system in the year following, the loss to New South Wales would have amounted to £399,892. We should here be met with another difficulty. The honorable senator would eliminate Western Australia, but other States would be very badly off under the system he proposes. Honorable senators must remember that I am quoting actual figures, and not merely estimates.

Senator O'Keefe - I used actual figures also.

Senator PLAYFORD - Under the honorable senator's proposal New South Wales would have lost in 1903-4 £263,151; .Victoria would have gained £77>5o6, Queensland £78,320, . South Australia £66,537, and Tasmania £40,788. A wonderful change would have taken place in the next year, because, whilst Victoria in the previous years would havegained considerable sums, under this peculiar system of distributing the revenue, she would in 1904-5 have lost £39,999, New South Wales would have lost £.148, Z4r, Queensland would have shown a gain of £99,741, South Australia a gain of £53,190, and the gain by Tasmania would have dropped to £35,309. So the figures would run on, until the current year, for which an estimate only is given. Honorable senators will notice that in this table New South Wales is placed in exactly the same position as Western Australia occupies in the last table, because she would be the State to lose all the money under the system which Senator O'Keefe thinks would be so fair. Taking the esti- mated figures for the year 1906-7, under this system New South Wales would lose £295,548, Victoria would gain £5,964, Queensland £112,742, South Australia £110,433, and Tasmania £66,409. I do not know that I need" labour the matter any more. I have shown 4he exact position, and honorable senators are aware that the reason why Western Australia loses a larger sum than other States is that her population consumes per head dutiable goods to a much greater extent than do the people of the other States, And especially the people of Tasmania. I have shown, also, that if the system advocated by Senator O'Keefe were adopted its effect would be to inflict very grievous injustice ora Western Australia. The real point ia that the honorable senator cannot show that under the existing system any injustice is inflicted upon Tasmania. Tasmania receives the whole of the revenue from Customs and Excise collected in the State, less that which the Commonwealth spends, in just the same way as every other State does. So far as expenditure is concerned, it is not germane to the subject, and I need not deal with it.

Senator O'Keefe - It is most important.

Senator PLAYFORD - In respect to expenditure, Tasmania is treated in precisely the same way as every one of the other States.

Senator O'Keefe - And yet during the last five years she has come off very badly.

Senator PLAYFORD - There is no injustice to Tasmania, or to any of the other States. Tasmania is treated, with respect to expenditure on transferred services, and new expenditure, in just the same way as the other States. Where is the injustice? I can see none, and in the circumstances I think I may fairly ask Senator O'Keefe to withdraw his motion. The question is not one which the Government should shirk, and they do not propose to shirk it. When the five years is up, we shall be in a position to alter the mode of distribution. Honorable senators who have followed what has been taking place within the last few years are aware that meetings have been held between the States Treasurers and the Federal Treasurer, with the object of arriving at some mutual arrangement in connexion! with the operation of the Braddon section of the Constitution, and the larger question of the taking over of the States debts by the Commonwealth. At one time the Braddon section was looked upon as a fearful blot on the Constitution, but the

States d'o not now look upon that section as a blot. It is looked upon now as a bright and shining light, and a safeguard rather than as a blot. What the States Treasurers say now is that the Braddon section should be continued in operation for the next thirty years.

Senator Pearce - At the last Conference they asked that it should be continued for ever.

Senator PLAYFORD - I was not aware that thev had gone that far. I am afraid that Judgment Day would intervene to prevent that. However, we are now told that the " Braddon blot " is no longer a blot, and should be continued in operation for ever. It is the duty of the Government to deal with these questions, and they have not failed to do so. If honorable senators will read the Treasurer's Budget speech, thev will find in it a statement of the views of the Government on these questions. As far as the money to be returned to the different States is concerned, the Treasurer's proposal, which is acquiesced in by the other members of the Government, is that it shall be a fixed amount, instead of, as at present, an uncertain amount, dependent upon what is spent by the Commonwealth. The existing state of things in this respect is very unsatisfactory. If I were the Treasurer of a State, I know that I should be very much better pleased to be able to say that mv revenue from Customs and Excise would be a certain sum. If I were uncertain as to what it would be, I should have difficulty in balancing revenue and expenditure for the State. What the Government propose in this respect is that, instead of continuing the present uncertain system, under which the amount "handed to each State depends on the amount collected from Customs and Excise in each State, less the amount of Commonwealth expenditure, we should' take the last five years' receipts in each State from Customs and Excise, deduct what might be considered a fair amount for Commonwealth expenditure, and strike an average. We should then be in a position to say to the Treasurers of the States that for the next five years they will get so much. An account would be kept of the amount received by each State, and, at the end of the next five years, we could continue the process.

Senator Dobson - Would not the States also receive a share of any surplus above the stated amount?

Senator PLAYFORD - No. If after having said to the States Treasurers, " We will return to you a certain sum of money, based on a fair estimate of your receipts from Customs and Excise, less Commonwealth expenditure," we altered our Tariff so as to increase the amount derived from Customs and Excise revenue we should require to spend the increased revenue ourselves.

Senator Sir Josiah Symon - Only if the Customs and Excise revenue is increased for some special purpose?

Senator PLAYFORD - Possibly.

Senator Dobson - There should be a distribution amongst the States of any surplus over and "above the fixed sum.

Senator PLAYFORD - The increase might be for a special purpose, towards defence, for building a fleet to carry Our mails, or for any other undertaking that Parliament might approve. That would be a very much more satisfactory way of dealing with the matter. I do not propose to discuss the question of the taking over of the debts of the States, but that has also been dealt with in the Treasurer's Budget speech. The right honorable gentleman has submitted an exceedingly valuable memorandum on the subject,, to which Ministers have given a great deal of consideration, and I think that it proposes a satisfactory system, under which we might work for years to come.

Senator Dobson - Is it proposed that the bookkeeping system shall continue for ever ?

Senator PLAYFORD - We do not wish the bookkeeping system to continue, ' and it will not be continued if we agree to pay to the States a certain fixed sum, but we must keep a record of the amount paid to each State. I think that the Government have submitted a scheme which offers a satisfactory solution of the difficulty.

Senator O'Keefe - The Government do not propose that there shall be any termination to the bookkeeping system.

Senator PLAYFORD - Certainly we do.

Senator Mulcahy - The honorable senator has been arguing the other way.

Senator PLAYFORD - I have been saying that we propose, to return a "fixed sum to each State.

Senator O'Keefe - Exactly ; and to keep a bookkeeping account for each State.

Senator PLAYFORD - We shall2 of course, keep a bookkeeping account for each State in connexion with the Customs.

Senator O'Keefe - For all time?

Senator PLAYFORD - For all time, so long as we continue to collect Customs duties.

Senator O'Keefe - And return to each State the amount collected in that State. t

Senator PLAYFORD - No.

Senator O'Keefe - That is what the honorable senator said.

Senator PLAYFORD - No, I did not say that. ' I said that we propose to return a fixed sum to each State.

Senator Sir Josiah Symon - The Government proposal is to substitute for the bookkeeping system and the present per capita distribution the payment of a fixed sum to each State.

Senator PLAYFORD - That is so. It is proposed that that shall go on for five years, and thé sum to be paid to each State will be based on actual contributions for the previous five years, less Commonwealth expenditure, divided by five. That will give the starting-point. Instead of paying, as at present, an uncertain amount to each State, we propose the adoption of the system in operation in Canada of paying, a fixed sum to each State. I believe that that will be found to be a much more satisfactory way of dealing with the matter. I am sure that honorable senators will read the memorandum on the subject submitted' by the Treasurer with a considerable amount of interest, and I think they will see that Ave have proposed 'a fair solution of the difficulties relating to the transfer of property, the taking over of the debts of the States, and the amount to 'be returned to the States as their share of the revenue derived from Customs and Excise. I ask Senator O'Keefe, -possibly after the discussion has taken place on the subject, to withdraw his motion.

Senator Dobson - Does the memorandum suggest that we should never have a per capita distribution ?

Senator Mulcahy - There is no other logical interpretation of the honorable senator's speech.

Senator PLAYFORD - I cannot go on indefinitely trying to knock things into people's heads. I may give them reasons, but I cannot give them something else.

Debate (on motion by Senator Pulsford) adjourned.

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