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Tuesday, 25 September 1906

Senator O'KEEFE (Tasmania) .- This is one of the most important questions we have yet had before us, and I have listened with! the greatest attention to the deeply interesting discussion, with a view to getting as much light as possible. While we may give the Treasurer andhis colleagues credit for doing their very best in what they consider the direction of benefiting the Commonwealth and the States, this Bill, after all, deals with only one section of a very big problem. This question may be divided into three parts - States debts, the bookkeeping period, and the Braddon section - and I have come to the conclusion that it is impossible to separate one from the other.

Senator Clemons - We require one pronouncement on the three questions before we can know where we are.

Senator O'KEEFE - It seems to me that, by taking any important departure in dealing with one section of the question without at the same time considering the other sections, we might be doing something which would prove to be dangerous to the finances of the States. The question of State and Federal finance is one of the biggest questions before the people at the present time. I am unable to separate the question of the transfer of the States debts and the proposal to deal with them in the way provided for in this Bill, from the other two sections of the same important question - the discontinuance of the bookkeeping system next month or next year, or its continuance indefinitely ; and the operation of the Braddon section until 1910 - the substitution for it of some other provision which will guarantee to the States Treasurers something in lieu of what they now get under that section, or its termination without provision for any substitute. These three questions, separate in themselves, are involved in the one big question of the financial relations between the Commonwealth and the States. In the circumstances one may be excused for asking for further time to consider this measure in all its bearings. I subscribe to the statement of the Minister that Commonwealth stock must inevitably become of greater value than the stock of any particular State, owing to the fact that the Commonwealth has far greater powers of taxation than has any single State; but I still hold that we should go slowly in seeking to alter one of the most important provisions of the Constitution. No harm will result if this question is deferred for further consideration. If the measure before the Senate should become law, and a future Parliament should take over a loan floated by any particular State, that State must be responsible for the interest on the loan. Each State will have to find the amount of money, in excess of the surplus revenue from Customs and

Excise returnable to it; required to meet the interest on the whole of its loans that have been taken over. The question is one which is so mixed up with the general financial relations between the States and the Commonwealth, and is so important in its bearing upon the interests of the States, that it should detract in no way from the dignity of the Government if the Senate, which is in a particular sense the States House, should decide that the matter should be deferred. I have not much sympathy with the cry which is sometimes raised with respect to States rights. The rights of the States are the rights of the people, of the Commonwealth, and the electors of the States are the electors of the Commonwealth; but this question is one which affects the interests of the States individually, and which may affect the interests of one State as against those of another. If the Senate, in the circumstances, considers that sufficient time has not been given for the consideration of the Bill in all its bearings, and of the consequences likely to follow from it, we shall do nothing wrong in postponing its consideration until next session. I should like to vote for the measure, if I could feel that it had been sufficiently discussed, but we cannot forget that another branch of the Legislature did not thoroughly discuss the measure. One thing is certain, and that is that the other financial questions to which I have referred, and which seem to me to be inseparably bound up with this measure, were scarcely mentioned in another place.

Senator Pearce - How does this affect the bookkeeping system ?

Senator O'KEEFE - It must be patent to everybody that the bookkeeping system has a most important bearing upon the finances of the States.

Senator Pearce - How will it be affected by this Bill ?

Senator O'KEEFE - We must consider what is to be done in connexion with the bookkeeping system as a portion of the same question.

Senator McGregor - The honorable senator loses sight of the fact that this is a referendum Bill.

Senator Pearce - How will the bookkeeping system affect this Bill ?

Senator O'KEEFE - If this Bill is passed, and is subsequently approved by the people immediately Parliament begins to exercise "the power which will thus be conferred upon it for the transfer of the first State loan, it must be patent to every one that the whole question of the relationship between Commonwealth and State finance will be brought under review.

Senator McGregor - That will be the time to deal with the matter.

Senator Pearce - Does not that difficulty arise under the Constitution as it stands at present?

Senator O'KEEFE - There is another reason why I think we should gain by delay irc dealing with this measure. When we seek to alter the Constitution to give us the power to deal with the debts of the States in the way contemplated bv the Government, would it not be wise that we should ask the people at the same time to give us the power to limit further State borrowing outside of Australia. The chief object of this measure is to enable the Commonwealth to take over £34,000,000 of States debts other than the £202,000,000 which we have constitutionally the power to deal with now. If the Commonwealth is given that power, and the Federal Parliament proposes to exercise it immediately, we shall be able to deal with the whole of the States debts as they exist next year, and not as they existed at the establishment of the Commonwealth. Parliament might assume responsibility for the whole of the debts of the States, and there is no power provided in the Constitution, nor is such a power sought, in this Bill, to prevent the States from immediately becoming borrowers again. The fact that no such power is provided for in this measure seems to me to be rather a serious, blot upon it. If the Government had included in the measure a provision to restrain .the States from borrowing outside of Australia, except with the consent of the Commonwealth Parliament, there would be some good reason for asking that the Commonwealth should have the power to deal with the whole of the "debts of the States.

Senator McGregor - The honorable senator is condemning the Constitution as strongly as he is condemning the Bill.

Senator O'KEEFE - - It does not matter what I am- condemning, we cannot escape from the fact that if this Bill is approved by the people, and the new Parliament chooses "to exercise the powers it confers, there will be nothing to prevent the States borrowing again immediately. That may appear to be desirable to the Treasurer, but I think that the majority of the people of the Commonwealth would not consider it so.

Senator Guthrie - The States are as anxious to refrain from borrowing as is the Commonwealth.

Senator O'KEEFE - I do not know that they are. I believe that some of the States Governments have said that they do not wish to be restricted as to future borrowing. It seems to me to be rather a loose way of doing business to submit a measure to enable the Commonwealth to assume control of and responsibility for the whole of the debts of the States, without at the same time placing some restraint upon future borrowing by the States outside of the Commonwealth, unless with the consent of the Federal Parliament. Viewing the matter as I do, and having fully considered the measure, it appears to me that the best thing I can do is to vote against the second reading, in order that more time may. be given for the discussion and consideration of the important financial questions with which it is inseparably bound up.

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