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Tuesday, 25 September 1906

Senator DRAKE (Queensland) - - This Bill, in my opinion, is open to the same objection as the Bill with which we were previously dealing. It proposes to amend the Constitution at a very late period of the session, when it is almost impossible to get the Senate to seriously discuss so important a matter. I cannot help looking on the proposed amendment of the Constitution as virtually a breach of a compact entered into between the States. We have to bear in mind that, though there is ample provision for amending the Constitution, and that, therefore, almost any kind of alteration is within our legitimate powers, there is something beyond that we have to consider. The Constitution is the fundamental instrument of government; and it represents the compact made between the States when they federated. That is the compact which was ratified by the people; and we ought to be specially careful to do nothing which would, in spirit, if not in letter, violate the arrangement then approved. It will be seen how closely this Bill is connected with the Bill we have just been discussing. All the States before Federation had, as they have now, very heavy debts, and big interest bills to meet. The States, before Federation, were accustomed to rely on the Customs and Excise for the fund with which to meet their debts; and when they agreed to resign the power of raising revenue from Customs and Excise, they did so on the understanding that the Commonwealth Government would take over their debt liabilities. As the Minister for Defence stated a short time ago, in connexion with another Bill, there would have been no difficulty in connexion with the matter if the provision with regard to taking over the debts had been made mandatory and not permissive. In that, I quite agree with the Minister, because then, under the Constitution, the States would have agreed to give up their right to raise revenue by Customs and Excise On the condition that the Commonwealth took over their debts. That being so, we are not justified in trenching on this particular source of revenue, which should go towards the payment of the States debts. A Bill of the kind before us, which says that we may raise revenue from Customs and Excise,and devote it to a special purpose outside the payment of the interest on the debts, seems practically a breach of that agreement. Section 87 of the Constitution was carefully inserted in order that, if the debts were not taken over, a large proportion of this particular revenue should be paid to the Treasurers of the States for a period of ten years. The object of the Bill now before us is to provide that the Government may raise revenue from Customs and Excise, and, at the same time, escape the provision which is made in section 87 for the protection of the States.

Senator Findley - But these will be special duties.

Senator DRAKE - They will be special duties for a special purpose; and for that reason they appear to me to be wrong. The result will be to reduce the fund available to the States for the payment of their debts. The Bill will leave to the States the obligation to pay the interest on the whole of the debts, and deprive them of a portion of the revenue raised from Customs and Excise, which they had a right to expect.

Senator Findley - The special duties will not do that.

Senator DRAKE - They will. There is a revenue derived from Customs and Excise, and anything that trenches on that source must be an injury to the States, which rely on the Braddon section to insure them with the moneys necessary to pay the interest on their debts.

Senator de Largie - But the States get nothing from the duties on tea and kerosene at the present time.

Senator DRAKE - I must answer that from the point of view of my own State, because in some of the other States the position is not felt so keenly. For the past four orfive years, there has been a constant struggle in Queensland to preserve financial equilibrium, owing to the great falling off in the Customs and Excise revenue, which the State Treasurer previously had the handling of. As a matter of fact, in Queensland more help is required from Customs and Excise than in the past; but this year the State Treasurer has received an intimation that his share of the threefourths revenue returned will be less by £83,000

Senator Findley - The honorable senator says that Queensland is expecting more through the Customs; is not Queensland a protectionist State?

Senator DRAKE - I may say that I do not agree with the dictum that revenue cannot be raised by a protective Tariff.

Senator Findley - But the more protection the less the revenue.

Senator DRAKE - That does not follow. Of course, it is obvious that if duties are raised to such a height that nothing can enter the country, no revenue is returned; but it does not follow that there may not be a Tariff highly protective, and, at the same time, highly revenue producing. If there be any doubt on the point, honorable senators have only to look to the United States, where, under a heavy protective Tariff, there has been an enormous revenue for years past - a revenue so large that sometimes the Government have scarcely known what to do with it.

Senator Stewart - But the revenue in America is very low per head of the population - about one-third of that in Australia.

Senator DRAKE - The revenue is not so low, considering the purposes for which it is required, a large proportion being used for the payment of pensions to soldiers and so forth. However, it is no use discussing the matter now; but, if time permitted, I think I could easily show that the result depends exactly on the pointto which the Tariff is raised. No doubt Queensland, in the main, is in favour of a policy of protection. The trouble of the Treasurer of Queensland is that he has very heavy liabilities to meet, and that for a long time the Customs and Excise have been looked to as the principal source of revenue. Various expedients have been resorted to in the last few years to raise revenue to take the place of that previously derived by the State from Customs and Excise, and those expedients, while occasioning a great deal of friction and inconvenience, have not resulted in placing the State in what may be considered a satisfactory financial position. The Queensland Treasurer was hoping that the amount from Customs and Excise under the Commonwealth Tariff would this year be larger than in the past; but now we have a Bill to provide that this particular source of revenue may be tapped for a special purpose, and that no part of the revenue thus raised shall go to the assistance of the States Governments in the payment of their debts. That is not treating the States fairly. The measure has been tacked on to a subject we all have very much at heart. I do not think the Government would have brought it forward, or that Parliament would have been disposed to consider it for five minutes, if it had not been devised as a means of providing for old-age pensions. It is that which has gilded this proposal, and which has probably recommended it to many members of the Federal Parliament. Still the principle involved is one which is entirely wrong. I think we should hold ourselves bound to give back to the States as much as we possibly can of the whole of the revenue derived from Customs and Excise that is not absolutely required for Commonwealth expenditure.

Senator Findley - Still the States will be considerably relieved if Commonwealth old-age pensions are established as a result of this proposal.

Senator DRAKE - Some of them will be, to a certain extent. It seems, however, to be a roundabout way of taking money out of one pocket and putting it into another. If the States desire that a Commonwealth system of old-age pensions shall be established, why should they not in some way contribute to the fund necessary to provide for them, to the extent of the expenditure which they now devote to a similar purpose? In two of the States old-age pensions schemes have been established, and if the Commonwealth were to take over the whole business the burden upon those States would be no greater than it is now. In some of the other States a smaller expenditure is incurred in maintaining homes and providing trifling pensions.

Senator Findley - They involve fairly large sums.

Senator DRAKE - In Queensland an institution for old people is maintained, and in addition an allowance of 5s. per week is made to a number of persons. I think that the practice in that State has not even the direct sanction of 'aw, but I am aware that, on the whole, it involves a considerable expenditure, of which the State would be relieved, in a certain sense, if a uniform Commonwealth system of old-age pensions were established. It is a very great pity that some arrangement could not be come to by which States in which old-age pensions are now being paid could contribute to the Commonwealth fund to the extent of the expenditure they now devote to the same purpose. That would very considerably reduce the amount which it would be necessary for the Commonwealth to raise for such a purpose. If the Commonwealth raises money through Customs and Excise taxation to provide a fund for the payment of old-age pensions, the States now paying pensions will be relieved without any request on their part, and at the same time the people of those States will be called upon to find the money in another way. Victoria is now paying a certain amount to provide old-age pensions.

Senator Pearce - The cost is £205,000 a year.

Senator DRAKE - Under this proposal the State would be relieved of that expenditure, but at the same time the people of

Victoria would really be paying for old-age pensions in another way, and how? I point out that under existing conditions the £205,000 which Victoria pays for old-age pensions is derived partly from the surplus Customs and Excise revenue returned by the Federal Government, partly from land, income, and other forms of taxation, since the money is paid from the Consolidated Revenue of the State. If the proposed scheme were carried out, the Commonwealth would pay the pensions from a fund derived from the taxation of tea and kerosene, which would be contributed chiefly by the poorer people. One honorable senator mentioned that it was likely that a tax of 5d. per lb. on tea, and 3d. per gallon on kerosene, would be imposed. Honorable senators will remember that when, in another place, it was proposed to impose a duty of 2d. per lb. on tea and 2d. per gallon on kerosene, the proposal was scouted and thrown out, on the ground that it would be a tax upon the poor. This proposal, as I understand it, involves a tax of 5d. per lb. on tea, and5d. per gallon on kerosene, in order to provide for the payment of old-age pensions, which at the present time in Victoria are paid from the Consolidated Revenue, which includes revenue derived from all sources of taxation. Honorable senators must see from this that there is an element of weakness in it. The same remarks will apply to New South Wales. Old-age pensions are paid in that State from the Consolidated Revenue, and we are here really proposing that they shall be paid instead from the taxation of the tea and kerosene used by the poorer people.

Senator Findley - Queensland and Western Australia would probably suffer most from the imposition of tea and kerosene duties.

Senator DRAKE - In Queensland, prior to Federation, we derived a revenue of £130,000 a year from a tax of 6d. per gallon on kerosene, and of 6d. per lb. on tea, and 8d. per lb. on packet tea. The proposal would be of no benefit to Queensland. The State Government of Queensland might well say that this is a matter with which! they should be left to deal for the next three or four years. Victoria and New South Wales have dealt with it. We have dealt with it in Queensland to a certain extent, and I think I may say that if the Government of Queensland have not done more in providing for old-age pensions, it is simply because of their financial embarrassments, due to a great extent to the small amount they have been receiving fromCustoms and Excise revenue through the Federal Government. If the Commonwealth Parliament were now, without passing any measure of this kind, to impose duties on tea and kerosene, and to permit the revenue derived from those duties to be distributed in the ordinary way, under the Braddon section, States like Queensland would receive so much larger a sum from Customs and Excise taxation than they now receive that they would be in a position to institute a system of old-age pensions. I can quite understand the Treasurer of Queensland saying, " This is very hard upon us. We are willing to incur expenditure of this kind, but we are unable to do so because the amount we receive from Customs and Excise is so small." It does not seem a fair thing that we should say in reply, " Although we shall not give you any more revenue from Customs and Excise for general purposes, we are going to impose duties upon the tea and kerosene consumed by your people in order to raise a fund which we shall ourselves devote to the payment of old-age pensions." The operation of the Braddon section will cease in four years time.

Senator Findley - Unless Parliament otherwise provides.

Senator DRAKE - Just so; but it seems to me that there is something radically faulty in a proposal which requires that the provisions of the bookkeeping section and of section 87 of the Constitution, should be set on one side in order that revenue derived from Customs and Excise should be devoted to the special purpose of providing a fund for the payment of oldage pensions. Of course, there will be a good deal to be said in Committee when we come to deal with the particular provisions of the Bill, because we shall then lose sight of old-age pensions, which I think has been the sole consideration recommending the Bill. When we come to examine the Bill as it stands, we shall find that it proposes to give the Commonwealth Parliament extraordinary powers. It sets whole provisions of the Constitution entirely on one side, and gives the Commonwealth Parliament power to levy special duties of Customs and Excise on any article not dutiable at present, and for any purpose whatever. If the , Common wealth Government had a big scheme on hand, and found that in the attempt to finance it they were getting near to a deficit, as they well might be, they could, under this measure, impose duties of Customs and Excise on some special articles for the purpose of replenishing the Treasury. That would be a special purpose, and it seems to me that She Bill upsets one's idea of Federal Government, and sets aside the compact which I think underlay the agreement of the States to adopt Federation, and that was that if they gave up their right to levy duties of Customs and Excise, the Commonwealth Government in return would take over the debts of the States. I must vote against the second reading of the Bill.

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