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Wednesday, 30 October 1912

Senator O'KEEFE (Tasmania) . - I thoroughly indorse 'everything which hasbeen said by Senator Clemons. The position is not at all satisfactory to senatorsfrom Tasmania. While we fully recognise that the present Government have donemore than did any previous Government" in bringing down a proposal for compensation we feel that the amount proposed to be- paid is too small. After this question had been discussed in Both Houses of this Parliament for a number of years, a Royal Commission was appointed to investigate the whole of the circumstances. I know that the chief ground which led to its appointment was that there had been a big Customs leakage, lt was discovered in the course of the very voluminous evidence taken that there was a leakage; but those who read the evidence, as I have done, will find that there was a great variety of opinion respecting the actual amount. Owing to the system of Inter-State transfers, it was impossible to discover what the leakage was, but it was put down unanimously by the Commissioners at about £10,000 a year for seven years, making a total leakage of £70,000. During the course of the inquiry it was shown clearly that Tasmania's chief disadvantages under Federation were due to the fact that she was taking goods from the mainland, where they were produced or manufactured. On these goods there was no duty collected by Tasmania, because they had been made within the Commonwealth. I do not propose to refer at any length to the evidence, but I wish to call the attention of honorable senators to paragraph 15 of the report, which is unanimously signed by the Commissioners. It reads as follows -

Your Commissioners therefore recommend : -

That Parliament be asked to grant financial assistance to the State of Tasmania in terms of section 96 of the Constitution to the amount of£900,000 during the ten years ending 1920-21.

The payment of £900,000 on a sliding scale was recommended. I now ask honorable senators to listen to paragraphii of the report -

Definite action has been taken by successive Governments to grapple with the situation. Expenditure has been cut down, developmental work retarded, and direct taxation heavily increased. From 12s.10d. per head prior to Federation, it has increased to 32s. 6d., an increase of 19s. 8d. per head, as against an average increase for all six States of 2s. 4d.

That increase ought to satisfy Senator Stewart that the Tasmanian Government have done their duty, at least, in increasing the direct taxation.

Senator Stewart - It ought not to satisfy you.

Senator O'KEEFE - The paragraph continues -

The direct taxation of 32s. 6d. per head compares with an average for all six States of 18s. 4d. The State has been compelled to increase its direct taxation by over 800 per cent. more than the average of the other States. From £111,515 in 1901 it had risen to £303,390in 1909-10. The exemption under the income tax is down to £100 for married and £80 for single men.

There is no other State in which the wageearners have to pay an income tax on such a low amount.

Senator Stewart - You do not get any income tax from the land-holders.

Senator O'KEEFE - Yes ; we have the heaviest land tax of any State.

Senator Stewart - That is not an income tax.

Senator O'KEEFE - I am afraid that Senator Stewart has not given to this subject the very close consideration which he gives to most subjects. Taking the evidence of all the witnesses whose names are furnished, it will be found that the consensus of opinion was to the effect that there was a loss of about £100,000 a year. The Commission came to the conclusion that the annual loss was at least £100,000 for nine years; but the facts elicited in the evidence show that the average loss for the period was considerably greater.

Senator Clemons - It was twice that amount.

Senator O'KEEFE - Under its own Tariff, Tasmania had a revenue of £2 15s. 10d. per head ; whereas the Federal Tariff returned a revenue of only £2 is.10d. per head. During this period of nine years the State had a population of about 180,000, and if we multiply the per capita difference of 14s. between the two Tariffs, we get a leakage of £126,000 a year.

Senator Stewart - That was saved to the people.

Senator O'KEEFE - No; that argument has been used in the Senate, but it is absolutely fallacious. If the honorable senator had been living in Tasmania for the last eight or nine years, he would know that, in spite of the fact that the InterState duties were swept away, very gradually, but steadily, prices came back to the old level. Before Federation, Tasmania collected, say, 20 per cent. on articles produced or manufactured in Australia; but as soon as Free Trade within the Commonwealth was established, the producers and manufacturers on the mainland got the benefit of the sweeping away of those duties, because the prices were gradually and steadily put up to what they were before Federation. The statement has often been made that the 14s. per head remained in the pockets, of the people of Tasmania, but it is proved to be entirely fallacious. The greater portion of it has gone to benefit the producers and manufacturers of the mainland. I only say "Good luck" to them. That is one of the benefits they derive from Federation.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Cameron. - And a part of the price we had to pay for Federation.

Senator O'KEEFE - That is so. On the question whether the grant should bc £500,000 or £900,000, as recommended by the Royal Commission, it is clear that the difference of 14s. per head in the Tasmanian revenue from Customs during Federation would account, with a population of 180,000 people, for £126,000 per annum. Taking the average Customs revenue per capita in all the other States, the amount received by Tasmania each year has been considerably less. In 1903 Tasmania received in Customs revenue 8s. 3d. per head less than the average received by the other States from the same source. In 1904, Tasmania received 7s. 6d. per head less; in 1905, 8s. 4d. ; in 1906, 8s. 8d. ; in 1907, its. ; in 1908, 10s. 6d. ; and in the financial year ending 30th June, 1909, Tasmania received us. 3d. per head less from Customs revenue than the average of the other States. This is another set of figures which completely establishes the statement that Tasmania has suffered financially as a result of Federation. -I do not hold a brief from the Government of Tasmania, but I say that the Governments in power in that State during the last few years could scarcely have made a more heroic effort than they did to meet the situation by an increase of direct taxation. As I have already stated, the direct taxation in Tasmania prior to Federation amounted to 12s. 6d. per head, and up to the time the report of the Royal Commission was presented it had been increased to 32s. 6d. per head, or an increase, of £1 per head since Federation, whilst the average increase of direct taxation in the other States during the same period has amounted to only 2s. 4d. per head. Answering the question by another set of figures, let me inform honorable senators that in 1901 the value of the dutiable imports into Tasmania amounted to £1,586,000, whilst in 1909, although there was in the meantime an increase of population, the value of the dutiable imports had fallen to £1,486,000, or a decrease of £100.000. In order to show that the population had increased, I may say that the total value of goods transferred from other States to Tasmania, and imported from beyond the Commonwealth, increased* during the period mentioned by £1,156,000, or an average of about £100,000 a year. In spite of this fact, E have shown that the total value of the dutiable imports in the same period decreased:* by £100,000. These figures again showthat our claim is a sound one, and that Tasmania's position under the uniformTariff has become a very difficult one todeal with. This question is now a matter of practically ancient history. Some attempts were made to deal with it as farback as 1903. Senator Keating will re- ( member that at that time Sir William Lynewent into the matter, and, speaking from memory, I believe that he recommended' that Victoria and New South Wales should make some kind of compensation to Tasmania. At the close of the first five yearsof Federation, when it became competent for this Parliament to distribute the Customs revenue under a per capita system, instead of under the bookkeeping system; I' submitted a motion in the Senate to providefor that being done. If that course had?then been followed Tasmania would not' have the claim to compensation which isnow urged on her behalf. The numberswere against me, however, and I was unable, with the assistance of other representatives of Tasmania, to carry my motion. Then we know that the Royal Commission,, to which reference has been made, was appointed, and its report was in due coursesubmitted to Parliament. My quarrel withthe Government is that they have notadopted the recommendation of the Royal* Commission in its entirety, because theCommission, after taking voluminous evidence, unanimously reported that Tasmaniais entitled to a grant of £900,000. It is, of course, a question of finance, and the Prime Minister, who is also Treasurer of' the Commonwealth, being possessed of afull amount of Scotch caution, says that agrant of £500.000 is a fair grant at the present time. No words used by the righthonorable gentleman or by any other member of the Government in the Senate or inanother place have led me to believe that the proposed grant of £500,000 should" end the matter. I understand that the. idea in the minds of Ministers is that £500.000' is a fair grant to make at present, and that if the circumstances of Tasmania show at some later period that she is entitled to thebalance of £400,000 of the amount recommended by the Royal Commission, the-

Commonwealth Government then in power will be able to deal with the matter.

Senator Clemons - That could not be done, because it would be based on something that is going on now, and we do not claim anything under the existing state of things.

Senator O'KEEFE - Certainly not. I was going to say that I think it would have been far better if the Government had adopted the recommendation of the Royal Commission. There is ample evidence attached to their report to justify a grant of ?900,000 to the people of the Commonwealth. One does not need to compare the circumstances of one State with another, but we are all aware that the State of Western Australia, under the present financial agreement with the States, is to receive on a sliding scale an amount of ?2,250,000, in addition to the amount of 25s. per head of her population, the amount of the payment made to the other States. We know also that Western Australia had her own Customs Tariff, in addition to the Commonwealth Tariff, during the first years of Federation. I propose, when the Bill gets into Committee, to move that another place be requested to increase the proposed grant of ?500,000 to ?900,000, and in support of that amendment 1 ask what better evidence could we have than that given by Mr. Knibbs, the Commonwealth Statistician, who, it will be admitted, was an absolutely disinterested and impartial witness before the Royal Commission? I quote the following evidence, which will be found at page 15 of the Minutes of Evidence attached to the report of the Commission -

I take it that the Official Year-Book of the Commonwealth is as accurate as it is possible to make it? It is as accurate as the data.

At page 806 of the issue No. 3, covering the period 1901-g, you give a table showing the surplus Commonwealth revenue per head of population paid to the States for '1904-5 to 1908-9. Docs anything in that table strike you with regard to the position of each Slate? - Tasmania, of course, appears in a very disadvantageous position indeed, while New South Wales, Queensland, South Australia, and Victoria are in a very relatively favorable position. Western Australia, on account of her special circumstances, appears in a very favorable position.

Tasmania comes out a very bad last in that regard? - Yes. I state in my memorandum previously referred to that in the nature of the case, a small State, other things being equal, is at some disadvantage, and T urge that as a ground for favorable consideration, apart from the evidence of the Tasmanian claim. From the figures it appears that Tasmania does come [ out very badly. In my memorandum of 9th

May, 1907, I endeavoured to compare, item by item, the previous Tariff of Tasmania and the Commonwealth Tariff. This was a big undertaking, and it was necessary to interpret as best, we could when there was a difference in the items, because there was a difficulty in that regard. It gave this result : - " It appears thathad the Tasmanian Customs and Excise Tariff of 1899, namely, that in vogue in 1900, been in operation in that State in 1906, the revenuederived from this source would have been ?708,735, instead of ?326,395 actually collected. This indicates that the substitution of the Commonwealth for the State Tariff, and the accompanying provision of Inter-State free-trade, has had the effect of depriving the State Treasury of a certain amount of the funds, namely,. ?382>34?, which it would otherwise have received.

That is, of course, for one year. It seems to me that that argument is unanswerableAccording to the evidence of Mr. Knibbs, Tasmania in 1906 received ?383,000 lessthan she would have received prior to Federation if her population had remained thesame. I say that our claim that we havereceived an average of ?100,000 a year less from Customs revenue for the past nine years can be substantiated from theevidence of almost any witness who appeared before the Royal Commission. Surely we could have no better authority than the Commonwealth Statistician for such a statement? I can refer honorablesenators to another authority, Sir ElliotLewis, who was Premier of Tasmania. I admit that he may be considered prejudiced, to some extent, in favour of Tasmania's claim, but in this matter he was only stating the facts. In giving evidencebefore the Commission, he said -

I have taken from the last Budget-paper of" Mr. Fisher, at page 23, a table which shows.the net Customs and Excise revenues of theStates between 1900-1 and 1909-10, and whichI have had printed, and which I ask the Committee to append to my evidence [vide appendix). It shows that in 1900-1 Tasmania received' ?475,000. Leaving out the odd figures the average return since that year has been ?.361,000,. or an average loss of ?114,000 per year, a percentage loss of 20.04 p?r year, and an aggregate loss of ?1,028,000 in nine years.

Sir ElliotLewis, dealing with the question through another set of figures, shows that for the last nine years the loss to Tasmania was ?1,028,000. Evidence was also given- before the Royal Commission by Captain. Evans, who was Treasurer for Tasmania for some time. I find that he said -

As regards its finances, Tasmania would have been to-day in a very flourishing condition indeed if there had been no Federation. 1 donot want it to be understood that Tasmaniahas not gained advantages by Federation, but it certainly had to make sacrifices in the matterof its finances. I have pointed our what would have received some years after the advent of Federation by increased imports under our old Tariff between £600,000 and £700,000. I have noticed that already the figures have been quoted at this inquiry. In the year prior to Federation we collected under our Customs Tariff about ' £497,000. So strongly was I of opinion that Federation was going to be a good thing for Tasmania that I spared no effort in that direction; in fact, I not only spoke from the platform, but also from lorries and carts, and all sorts of things, in fighting for Federation. We were always led to believe that at no time in the history of the Commonwealth would this little State be in a worse position than it was at that time prior to Federation - that is, that we should always get from the Commonwealth a return sufficient to pay the interest on our pre-Federal debts, which was something like £319,000. In 1900 we obtained from Customs £497,000, but only in one instance have we received back from the Commonwealth the amount of £300,000. It has been a diminishing amount each year. In 1902-3 we received £301,978; in 1903-4, £263,191; in 1904-5, £259,099; in 1905-6, £256,391; and in 1906-7, £223,727. I cannot give the figures for later years, but they can be obtained without difficulty from the Statistician. You will see that only in one year have we received over £300,000; it has been a diminishing amount each year. Therefore, I am quite satisfied that Tasmania has made a sacrifice of something like £200,000 a year in the interests of Federation.

I quote this evidence from Captain Evans in reply to the interjection made, by Senator Stewart -

I know it has been said that while it came out of one pocket it went into the other, that under our Federal Tariff we get free a large number of goods which were not on the free list of the State Tariff, that we have also got a reduced Tariff in other directions, and that the prices of goods, clothing, &c, have been cheaper, and, therefore, the people have gained a benefit. But my personal experience, and the information I have .gained from various householders, is not in that direction at all. They state that the prices of their goods are higher than they were prior to Federation. T am convinced that if we had simply gone in for Inter-State free-trade, Tasmania would be in a far better position financially, and we would not have1 such heavy burdens of taxation on the people of the State as we have been forced to impose on them owing to our reduced revenue from Customs year by year.

To sum up, it seems to me that during the nine years which have been referred to we received in Tasmania, roughly speaking, about one-half the amount we would have received from Customs revenue if there had been no Inter-State Free Trade. Though only about half the amount of Customs revenue has been collected from the people of Tasmania, they have been no better off, because they have had to pay the same prices for the goods they have consumed, and the benefit" has been derived by the manufacturers and producers of the mainland. On these grounds I think that representatives of Tasmania are fully entitled to. ask the Senate to give effect to the recommendation of the Royal Commission in its entirety. One need not go into history to show that such grants as are asked for here are not new to Federation. It is sufficient to say that in the Dominion of Canada similar contributions have been made in aid of some of the Canadian Provinces, whose financial arrangements were disturbed by the establishment of the Dominion.

Senator Keating - Only recently that was again done in Canada.

Senator O'KEEFE - That is so. Clause 96 of the Constitution is very clear on this question. It reads -

During a period of ten years after the establishment of the Common-wealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

In . granting such assistance to Tasmania, the Federal Parliament will not be entitled to consider that it is making Tasmania a charitable allowance. It is really a question of compensation.

Senator Clemons - The matter ought to be put on the same footing as the special terms granted to Western Australia.

Senator Needham - It is not a dole.

Senator O'KEEFE - It should not even be called a grant. It is a matter of compensation, such as was foreseen by the framers of the Constitution might, and probably would be, necessary.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Cameron. - We do not ask for the amount as charity ; we demand it as a right.

Senator O'KEEFE - Mr. JohnHenry, one of our leading politicians, a member of the Federal Convention, who had had much experience as Treasurer of Tasmania, pointed out that something of the kind might be required.

Senator Sir Josiah Symon - I drafted an amendment for Mr. Henry to the same effect, though a little wider, and he moved it in the Convention.

Senator O'KEEFE - Mr. Henryforesaw what was likely to occur. He knew that there would be financial trouble to Tasmania owing to the disturbance of her revenues under Federation, and he pointed this out to such effect that what he said hnd a great deal to do with the insertion of section 96 in the Constitution. That being so. I am going to ask the Senate to request another place to increase the sum df £500,000 to ,£900,000.

Senator Stewart - Why not make it a million?

Senator O'KEEFE - Well, I wonder that the Royal Commission did not make it a million pounds. They would have "been justified in doing so. All the figures go to prove that the loss for nine years was considerably more than-£roo,000 per annum. Still I am. willing to follow the Royal Commission's report in its entirety, and to ask for £900,000. To secure this end, I have given notice of ,a series of requests to alter the word " five " to " nine." I also propose to move an amendment to do away with the sliding scale. My idea is that the Bill should be altered to give Tasmania £100,000 a year for nine years. I would have it remembered that such a grant would, to some extent, compensate for the period of nine years during which Tasmania lost a tremendous amount of money. We should not forget that the Tasmanian people were splendid Federalists. They were absolutely and intensely loyal to the Commonwealth. Although they knew that if they purchased, for instance, boots manufactured in Great Britain or America, their State would receive so much per pair, their regard for Australia was so strong that the greater number of the young Tasmanians preferred to buy boots made in Australia.

Senator Clemons - The figures show that clearly.

Senator O'KEEFE - For example, I use" such boots, but it can be applied to nearly every other article. I may remind Senator Stewart that it applies to sugar. Tasmania was loyal to Queensland sugar. She lost in that way a great amount of revenue which she would have obtained from Customs, had . her people chosen to consume sugar produced outside the Commonwealth. I think I have quoted sufficient figures to demonstrate that the Royal Commission's report left practically no option to the Government but to bring down a proposal of this description. The evidence and recommendations would have justified the granting of the full amount mentioned by the Royal Commission, but I am grateful to the Government for what they have done, because as one of their supporters, I am glad to feel that they have done the right thing. But at the same time, -I cannot' avoid mentioning that the Royal Commission's report was unanimous, although it was a nonparty Commission, representing every State in the Union, and all shades of thought in politics. Whilst, therefore, I am glad to admit that the present Government is the first that has recognised the obligations of the Commonwealth to Tasmania, I am, at the same time, very sorry that they have not " gone the whole hog," and given effect to the Royal Commission's recommendation in its entirety.

Senator Clemons - The honorable senator ought, in fairness, to admit that this is the first Government that could have moved in the matter. No Government, until 1910, could have touched it.

Senator O'KEEFE - I do not desire to introduce contentious matter, because, as have said, the question is a non-party one'; but I may point out that the argument has been fairly -used that it was quite possible for an arrangement to be made in the early years of Federation, when all the States were receiving a large amount of money per annum beyond the three-fourths which the Constitution required to be paid 'to them. Out of the surplus, the Commonwealth Government might have paid compensation to Tasmania just as Western Australia received special treatment.

Senator Clemons - Western Australia got that under the Constitution.

Senator O'KEEFE - I do not wish to be drawn into a party argument, nor shall I pursue the point any further. If we are not successful in carrying a request to increase the amount from £500,000 to £900,000, I trust that .the present Government, if they continue in power, will bring down a Bill for the payment in the future of the Balance which I contend is rightly and justly due to Tasmania as compensation for her past losses.

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