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Wednesday, 30 October 1912

Senator CLEMONS (Tasmania) - Senator Millen, who moved the adjournment of the debate on this motion, being unavoidably called away, has asked me to take his place. This is a Bill for the purpose of granting to the State of Tasmania a sum of £500,000. I do not wish to speak upon it at great length, nor to deal with matters with which the Senate is perfectly well aware. It is within the knowledge of every one that a Royal Commission was appointed to inquire into and report upon the subject, and that they recommended that a sum of £900,000 should be granted to Tasmania. The Commission started off upon its inquiries rather unfavorably. It commenced to investigate what was called " a Customs leakage," and I may admit at once that if Tasmania's claim to assistance had been based solely upon leakages in that direction, no such sum as the Government propose to grant would have been justified. It is true, and I think is generally admitted, that Tasmania did suffer from "Customs leakages"; but she only suffered to a comparatively small extent, and probably did not suffer more than did other States. For instance, it is within our common knowledge that there must have been a considerable amount of leakage affecting the State of Queensland. In fact, under our system, that was inevitable. But as the Royal Commission pursued its inquiries, I am glad to say that it discovered that there was another and very satisfactory reason why Tasmania should receive financial assistance. I may remind the Senate that both Senator O'Keefe and myself have on many occasions, in the Senate, and outside also, drawn attention to the way in which Tasmania suffered under the bookkeeping section of the Constitution. The Senate must recollect that the claim which Tasmania has to make is not based on the facts as they exist today. She is entitled to a grant from the Commonwealth, not because of the existing arrangement between the Commonwealth and the States, but because of circumstances that existed in the early days of Federation. Those circumstances are well known. We had first of all in our Con- stitution what was known as the bookkeeping section. The operation of that section, until it was amended by Parliament, continued for five years. We had also what was known as the Braddon section. I was a member of the Senate - as were many others - when the bookkeeping section expired, as far as concerned the actual time limit fixed by the Constitution itself; but, of course, as we all know, it was provided that the section should continue in operation until the Parliament otherwise provided. During the time mentioned in the Constitution - five years - I, on more than one occasion, drew attention to the consideration that on the expiration of the bookkeeping section a different arrangement, fairer to Tasmania and the other States situated as Tasmania might be, ought to be made.

Senator O'Keefe -i submitted a motion to the Senate dealing with the matter.

Senator CLEMONS - Both Senator O'Keefe and myself frequently referred to it. I might also refer to a statement made by you yourself, Mr. President, when we were discussing the financial agreement in 1909. The bookkeeping section of the Constitution operated very unfairly as far as Tasmania was concerned. When the Braddon section was on the eve of expiring it was urged that some arrangement ought to be made which would embrace in its financial aspect not only the operation of the bookkeeping section, but also the operation of the Braddon section. In other words, the financial arrangement has to be dealt with on a fresh basis. I venture to say that, while the present Ministry came into power just as the Braddon section was about to expire, and appointed the Commission to inquire into Tasmania's claims, and have since taken steps to remedy the grievance, nevertheless, any Ministry which had been in office at the time when the financial arrangement between the Commonwealth and the States came up for review would have given attention to Tasmania's heeds, and consideration to that to which she was justly entitled. I will come now to the main point on which this claim is based. It is not based upon any Customs leakage, but upon the bookkeeping section. It will be remembered that under the bookkeeping section of the Constitution the revenues which each State of the Commonwealth derived from Customs and Excise were determined by the amount of duty that was paid by the citizens of that State on goods that were imported into it from outside the Commonwealth. The corollary to that was that just to the extent that the State of Tasmania - or any other State for that matter - imported and used goods that were manufactured in some other part of theCommonwealth did her finances suffer. Perhaps I am using the word "imported" rather loosely.

Senator Givens - The goods to which the honorable senator refers would have been imported to Tasmania from the mainland.

Senator CLEMONS - Perhaps I should have used the word " transferred." In the Constitution the technical expression is "transfers." The position was this: If Tasmania imported goods largely from overseas, under the bookkeeping section of the Constitution she would derive a considerable benefit ; in other words, would be entitled to a considerable amount of revenue from Customs, because she would be the consumer of the goods that came from abroad. But if the goods which she consumed were transferred from some other part of the Commonwealth into the State of Tasmania, to that extent under the bookkeeping section she suffered. I remember discussing this matter in the Senate, and particularly referring to it- as a matter of special interest to Protectionists. I was not appealing to those holding similar views to my own, but to members of the Senate who were Protectionists. I made the appeal on this ground : I said that Protectionists ought to recognise that their best friends, and the greatest helpers of the policy which they favoured, were the people of that State which chiefly consumed goods that were produced and manufactured in Australia. I do not think that any Protectionist would object to that argument. No Protectionist would deny that the State or the person who consumed the greatest quantity of Australian-made products was the best friend to Protection. Upon that argument, the best friends to Protection in the whole Commonwealth were the citizens of Tasmania. That is why they lost so severely in the early days' of the Federation. The reason is very simple. Instead of importing goods from abroad to a large amount per capita, they transferred goods from other States of the Commonwealth, and consequently were large consumers of goods produced in Australia.

Senator Givens - Perhaps they used large quantities of goods made in Tasmania itself.

Senator CLEMONS - Unfortunately, Tasmania produces very little in the way of manufacture ' goods. The value of our manufactures may almost be considered as nothing. It was si-> small as not to be worthy of consideration. Every one will admit that the policy F Protection, whatever results it had in regard to the Com monwealth of Australia, has not resulted in any large manufacture of goods in Tasmania. That is a fact now, and always has been. Tasmania is too small to become a manufacturing State. The geographical conditions are against that. Every one must recognise that the manufacturing interests of Australia must always be in the chief centres of population. It was because of these circumstances that Tasmania suffered by Federation. If, for instance, we had got all the people of Tasmania together, we might have put to them this argument : " The amount of revenue that the State of Tasmania will get depends very largely on the total value of the goods imported into the State from oversea; the amount of revenue she will get from the Federation will have a considerable bearing upon the taxation she will have to impose on her citizens. If, therefore, you will all com-' bine to save yourselves from the heavy burden of taxation - if you will combine and buy only those things which are manufactured outside the Commonwealth, then you will be able, without any additional expense to yourselves, to add very largely to Tasmania's revenue derived from the Commonwealth, and consequently to save yourselves from taxation which the State may have to impose in order to adjust the finances." Such an argument would have been bad for any man with Federal views to advance, but he would have been absolutely justified if the one desire had been to increase Tasmania's revenue, and save the State from imposing heavy taxation. I do not want to quote figures at length, but sufficiently to show how they bear out my argument. I will take the year 1899 as a more normal year than that immediately preceding Federation. In that year, Tasmania's Customs and Excise revenue was £449,000. In 1890, it was a little more, £492,000. Federation was established in 1901, and I would like honorable senators to look at the effect 01 the Union on the Tasmanian revenue from Customs and Excise that is under the three-fourths distribution. In T901-3. it was £316,000; in 1902-3, £300,000; in 1903-4, £264,000; in 1904-5, £259,000; in 1905-6, £255,000; while in 1906-7, it was £223,000. The other figures I will not bother about. They are practically similar.

Senator Rae - Is Tasmania still on the decline, or gaining revenue?

Senator CLEMONS - Until the financial arrangement was made, the revenue kept down to about £220,000, and since then new conditions have prevailed. The point is that in 1899, prior to Federation, Tasmania derived from its Customs Tariff, and that was not so high as the present Tariff, ,£440,000. During the years I have mentioned, although Tasmania's population had not 'increased at as rapid a rate as could be desired, it still had increased. I would remind honorable senators that, had Tasmania, not gone into Federation, one. might assume that the Customs revenue would slowly but surely have increased beyond the £440,000, owing to the growth, of population- and the general improvement that has taken place. On the figures I have quoted, I am safe in saying that Tasmania lost by entering the Federation at least from £220,000 to £240,000 a year.

Senator Rae - Would it not be fair to allow something for the gain in respect of transferred services?

Senator CLEMONS - In the early days of Federation that gain was practically nothing. But it is so hard to compute the exact value to Tasmania of that transfer of services that I have left it out of my argument. I will put it in another way. Many of us have strong views on taxation. For instance, Senator Stewart has. I have heard him talking here about direct taxation as compared with indirect taxation. Let me tell the Senate how Tasmania has been affected in that way. Taking the figures in regard to the directtaxation paid in all the States, except Tasmania, the average per head is 18s. 9d. In Tasmania, the average paid in direct taxation is 32s. 6d. per head. Those figures are most instructive, almost alarming, I should say. From Senator Stewart's point of view, Tasmania, may be ideally taxed.

Senator Stewart - The high direct taxation ought to make it a most progressive' State.

Senator CLEMONS - Senator Stewart will agree that the contrast between Tasmania and the other States is tremendous. I would point to one other fact to show what Tasmania is doing to adjust her finances. Direct taxation in that State has increased since the advent of Federation from T2S. rod., which was the rate ner head in 1899, *° 32S- 6d. Per bead, which is the rate to-day.

Senator Stewart - You have abolished the ability tax.

Senator CLEMONS - No.

Senator Long - Yes.

Senator CLEMONS - We have a tax which has just the same effect - the income tax, with an £80 exemption. That was one of the main features of the ability tax.

Senator Givens - How much of that revenue comes from the other States through Tattersalls sweeps?

Senator CLEMONS - I cannot answer Senator Givens exactly, but I have been told that the revenue derived from Tattersail's is about £50,000 per annum.

Senator Ready - I understand from a very reliable source that it is not more than £30,000 or £40,000.

Senator CLEMONS - I merely said what I believed to be the case. It does not affect this question at all. If Tasmania gets that revenue now, it had it years prior to Federation.

Senator Givens - It means that Tasmanian citizens are not paying quite so high a direct tax, as your figures show. Some of it comes from the Australian citizens who do business with Tattersalls.

Senator CLEMONS - The citizens of Tasmania have a direct taxation of 32s. 6d. per head, while the average for the whole of the other States is only 1.8s. 9d. The figures I have given are sufficient to show that Tasmania's financial position is a very singular one compared with that of the other States. Those figures ought to convince honorable senators that Tasmania does deserve some pecuniary compensation for the loss she suffered during the earlier years of 'Federation. The question we are discussing has nothing to do with our position to-day. The Bill deals with nine years of Federation, and it was never intended by the Government or any of their supporters to have any reference whatever to the state of things to-day. Tasmania has now no complaint to make. She is in the same position as every other State. It was anticipated in framing the Constitution that certain inequalities would arise as between the States. We could have no greater proof of that than the bookkeeping provision and Braddon section. I would like to point out that it was hardly contemplated at that time that the financial arrangement entered into would be other than tentative, a time limit being introduced of five and ten years respectively. I regret very much, of course, and every honorable senn tor for Tasmania regrets, that the Government have not deemed it advisable to give Tasmania the whole of the amount the Commission decided in its unanimous recommendation that that State was entitled to. It is not for me to go into the reasons . for their action. I regret it. It is for me rather to justify the action of the Commission. I do not hesitate to say for one moment that it would have paid Tasmania as a commercial transaction, to have given to the Commonwealth Government £100,000 every year of the first nine years of Federation to be allowed the same source of Customs and Excise revenue as she had before Federation. I say that without the slightest hesitation.

Senator Givens - It would have been better for the Government, but would it have been as good for the people?

Senator Long - And have continued the duties on tea and kerosene.

Senator CLEMONS - I have not introduced any debatable matter. Senator Long perhaps does not know how I voted in this Senate. But I have never voted in my life for duties on tea and kerosene.

Senator Long - I am sorry if I misunderstood the honorable senator.

Senator CLEMONS - I have been particularly careful not to deal with any controversial questions. I have confined my remarks simply and solely to the subject-matter of the Bill. Will Senator Long say that if Tasmania had been left alone to make its own Customs and Excise Tariff, it would always have had a duty on this article, or a duty on that article? I cannot say what the State would have done, nor can the honorable senator do so. I shall deal with things just as they are without going into the question of policy. I believe that it would have paid Tasmania financially to have given the Commonwealth £100,000 a year for the right to determine her' own Tariff. In these circumstances, surely it is almost an easy task for any senator from Tasmania to say that, on the facts which are presented in regard to the financial arrangements of the State, and especially in regard to its revenue since Federation, the present Government of the Commonwealth would Have been abundantly justified in giving full effect to the recommendation of the Royal Commission. I do not think that it is quite sufficient to tell us, as Senator McGregor did, that we ought to be satisfied with getting £500,000. I believe that the Government have recognised that the position is such that Tasmania is entitled to some assis tance. I know that many a senator hasrecognised that, too, before this question ever came up. I also know that many a member of another place has recognised inpast years Tasmania's real claim to compensation. If the Government recogniseTasmania's claim, and the facts and the figures do show that the sum recommended by the Commission, namely, £900,000, isnot in excess of the actual loss which the State sustained, it is exceedingly regrettable, at any rate to me,' that they havepractically halved the amount. I know that it is difficult for me, standing on theOpposition side, to offer any remarks which would affect the decision of the Government. I am not speaking in a party sense.

Senator Long - They will get some remarks from this side of the Chamber, too.

Senator CLEMONS - I can only hopethat they will have more practical effect than, unfortunately, any remarks will havecoming from me. I dismiss the question of Customs leakage altogether, because leakage happened, wherever goods had to be transferred from State to State. Queensland, no doubt suffered from Customs leakage, and even South Australia suffered to a. certain extent, but that, consideration I dismiss altogether. I submit that, on thefigures, it is abundantly proved that, because of Tasmania's loyalty to Federation, and the Tariff which this Parliament imposed, the State suffered. I say, further,, that the facts abundantly justify my statement that the State suffered to the extent: of more than the amount which the Royal Commission recommended Parliament should pay to the State. Because of thesefacts, if I am given an opportunity bySenator O'Keefe, or any one else, I shall' be only too glad to support a request, because I believe absolutely in the meritsof this claim. I hope that the Government will give Tasmania the £900,000. I trust that an opportunity will be given tome to vote for that amount, because, on the facts and figures submitted, it ishonestly and fairly due. once the Government admitted the principle by offering; £500,000.

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