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1463

1925.

THE PARLIA]IENT OF COMliONWEALTH OF AUSTH.AI,IA.

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REPORT OF THE

ROYAL COMMISSION

ON THE

-FINANCES -OF WESTEJlN AUSTRALIA, AS AFFECTED BY FEDERATION,

TOGETHER WITH

APPENDICES.

Presented by command; ordered to be printed, 231·d September, 1925.

[Cost of Paper :-Prepar. 1

Printed and Published for the GoVERNMENT of the of .AusTRALIA by H. J . GBUN,

Government Printer !or the State of V\ctona.

No. 49.-FRICE 3s. 9d.-F.2517.

....

GREETING:

iii

COMMONWEALTH OF AUSTRALIA.

T

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GEORGE V., by the Grace of God, of the United, Kingdom of Great Britain and Ireland and of lhe BritUA DominioM beyond the Seaa King, of &he Faith, Emperor of India,

TO Our trusty and weU-beloved the HoNORABLE WILLIAM GUY HIGGS, JoHN ENTWISTLE, E8quire, J.P., alad STEPliiiN MILLS, Esquire, C.M.G.

KNOW YE THAT We do, by these Our Letters Patent, issued in · Our name. by Our Governor-General of Our Commonwealth of Australia, acting with the advice of Our Federal Executive Council, and in purBUance of the COnstitution of Our. said Commonwealth, the Royal Commissions Act 1002-1912, and all other powers him thereunto enabling, appoint you to be Commiasioners to inquire into and report upon the effect of Federation upon the financial position of the State .ofWe8tern Australia. and as to any special financial disability

suffered by that State as a result of Federation whkk is not truffered by the other States of &he Commonwealth, and to recommend wlul.t ateJU should be talcen to remedy sWJh financial disability, if any, suffered by tlul.t State.

AND WE APPOINT you the said WILLIAM GuY HIGGS to be the Clul.irman of the said Commissioners.

AND WE DIRE

AND WE REQUIRE you with a8 littk delay as possible to report to Our Governor-General of Our said Commonwealth the resull of your i111juiries into the matters entrusted to you by these Our Letters Patent.

IN TESTIMONY WHEREOF We have caused these Our Letters to be made patent and the Seal of Our said Commonwealth 16 6e thereunto a.ffixed.

(COMMONWEALTH

SEAL AFFIXED.]

WITNESS Our righl, trusty and weU-beloved HENRY WILLIAM, BARON FoRSTER, a M.ember of Our Most Honorable Privy Council, Knighl, of the Mo8t Distinguished Order of Saint .Yichael and Saint George, Governor-General and Commander-in-Chief of the Commonwealth of Australia, this fifth day of November, in the year of Our Lord One thousand nine hundred and twemy-four, and. in the fifteenth year of Our Reign.

(Signed) FORSTER,

GofJI!fflOr-Gemral.

By His Excellency's Command, Ll. ATKINSON, For Prime Minister.

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Terms of Commission .. lll

Vll

xi

Summary of Conclusions and Recommendations Names of Witnesses Part I.-Introduction to Report xiii

XIV

xviii XX

XXV XClV

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!I.-Federation IlL-The State Case IV.-Surplus Revenue V.-Competition of the Commonwealth Savings Bank

Reservation by the Chairman VI.-Acquisition of Gold by the Commonwealth during War years .. VII.-Proposal for Gold Bounty Reservation by. the Chairman VIII.--Commonwealth Customs Tariff

Reservation by Commissioner J1 ills ..

IX.---Noposal to Revive Interstate Commission .. X.-Immigration XI.--Rcqucst for Grant in Aid of Technical Education XII.-Federal and State Arbitration Courts

Reservation by Commissioner Ent·wistle XIII.-Navigation Act .. Reservation by Mills

XIV.-Request for Federal Convention XV.-Thc North-West Reservation by the Chairman. XVI.--Thc Commonwealth Parliament

· . Reservation by the Chairrnan.

XVII.-Financial Figures--Western Australia XVIII.-Commonwealth Financial Statements XIX.--Population, Hands, Savings Bank Deposits, Wealth Graphs

XX.-Taxation XXI.-Grant of Money to State of Western Australia Reservati

Reserr•ation blj Commissioner Ent:u:istle XXIV.---Other States' Disabilities Attributable to Federation

xxvii XXXI

xcvi xxxix cv !vii

lxii lxiv lxvi cxii lxvii

CXII

XVIll

lxix CX111

lxxii cxx lxxii lxxiv lxxvi lxxvii

lxxxi lxxxiv cxxvii

.. lxxxviii .. lxxxviii cxxvii xcn

Appendix I. --Total of Commonwealth Revenue collected from the Sta t<>s durin I! ,·ears of

,.

Federation cxxviii

!I.--Statement of Expenditure from Consolidated Revenue cxx x

!H.--Commonwealth (approximate), State of 1\Pw !-;outh Wall's cxxxi

IV.--Commonwealth Expenditure (approximate), State of Victoria . . cxxxii

¥.--Commonwealth Expenditure (approximate), State of Queensland exxxiii YI.--Commonwealth Expenditure (approximate), State of South Australia cxxxiv VII.--Vommonwealth Expenditure (approximate), State. of Western Australia cXXXY VIII.-Commonwealth Expt•nditure (approximate), St.ak of Tasmania cxxxvi

IX.--Loans made by the Commonwealth to the States" outstanding at 30th June, l\124 cxxxvii X.----Articles and Rat-es of Dut\" at tht· commencement of Ft•deration-f.:tate of Western Australia ·· cxxxviii

XI.---Returns submitted by the HonorablP Xorbert Keenan. K.(' .. "" h<•half of th" Advisory Committe.: cxliv

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1469

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ROYAL ON THE FINANCES OF WESTERN

AUSTRALIA_ A8 BY FEDERATION.

SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS.

PART lV.- CLAlM ON ACCOUNT OF SURPLUS REVENUE.

1. The Commission concluded-(a) That neither the State of Western Australia nor any other State has a just grievance or is entitled to complain on account of the procedure which has now been followed by the Commonwealth for seventeen years of transferring certain . portion of the revenue to Trust Funds to meet future

expenditures for the purposes of appropriations previously made by Parliament. (b) If the finances of Western Australia have sutlered as a consequence of the agreement of 20th August, 1909, to which that State, through its Premier, was a party, that result must be attributed to reliance upon figures of future population increase which were then merely of the nature of

prophecy-'-a prophecy which was not fulfilled. {See para. 41.)

PART V.-cOMPETITION OF COMMONWEALTH SAVINGS BANK.

2. Commissioners Entwistle and Mills are of opinion-that the claim by the State for pecuniary compensation on account of the extension of Commonwealth Savings Bank business to that State has not been established • . (See para. 56.)

.. 3. The Chairman. expresses dissent from this opinion; and recommends as a partial remedy

for the fin11nGial disabilities of the State of Western Australia that- · · (a) The Commonwealth Bank withdraw from the Savings Bank business in that State ; (b) That Commonwealth postal officials shall, where required, act as agents for the State, payment to be made by the State for services rendered. (See para, 420.)

PART VI.-ACQUISITION OF GOLD BY THE COMMONWEALTH DURING WAR YEARS.

CLAIM FOR COMPENSATION-£3,000,000 TO MINING INDUSTRY. £2,600,000 LOSS TO STATE.

4. The Commissioners state that-After careful consideration of all the facts presented, they are unable to reeommend · the claim for compensation to the gold producers, which, as put forward, would involve a payment to those producers of about £3,000,000. (See para. 78.)

5. The Commission also-Rejects the State Advisory CoJlUUittee's claim of £2,600,000 alleged loss to the State due to Commonwealth action. (See para. 83.)

PART VII.-PROPOSAL FOR GOLD BOUNTY.

6. Commissioners Entwistle and Mills reject the proposal on the ground that---. "A perusal of Mr. Thomas's report has left upon their minds the ftrm impression that, leaving out of account the objections of a general economic character, to the proposal for a gold bounty of 20s. per ounoo (or a lesser amount), it would be impossible to recommend that proposal in view of the present inefficiency

of the industry (fortunately a remediable inemciency) as judged by an independent expert.'' (See para. 119.)

7. The Chairman expresses dissent from this finding, and recommends-{ a) That during a period of ten years, and thereafter until Parliament otherwise provides, a bonus or bounty of ten shillings (10s.) per ounce be paid upon all new gold produced within the Commonwealth. (b) That the necessary steps be taken to prevent fraud. (See para. 464.)

PART vm.-cOMMONWEALTH CUSTOMS TARIFF.

8. The Chairman and Commissioner Entwistle are of opinion-" That whatever benefit the Commonwealth protectionist poliey may have conferred upon other States of the Commonwealth it has not benefited the State of Western Australia; that it is impossible to give the primary producers of Western Australia relief by way of reduced Customs duties without

industries of the Eastern States ; and that the only eflective means of removing the chief dtsablhtr, of the State is to restore to the State, for a period of years, the absolute control of its own customs and Excise. (See para.129.)

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9. They recommend-" That the State of Western Australia shall, during a period of 25 years, and thereafter until the Parliament otherwise provides, have the absolute (a) To impose its own Customs Tariff as in pre-Federation days, provided the State of Western Australia

shall not impose higher duties upon the importation into the State of Western Australia of any goods produced or manufactured in or imported from other States of Australia than are imposed on the importation into the States of Western Australia of the like goods produced or manufactured in or imported from other countries ; (b) To impose its own Excise Tariff.

The amount of money to be contributed by the State of Western Australia to the Federal expenditure of the Commonwealth in excess of Federal income tax, land tax, and probate duties, &c., to be determined by negotiation between the Commonwealth Government and the Government of the State of Western Australia ; or, in case of disagreement, by an arbitrator who shall be a citizen of the British Empire." (See para. 205.)

10. Commissioner Mills expresses .dissent in these words-" For the above reasons (see paras. 503-520) it is, in my opinion, highly undesirable that the recommendation of the Report, to the effect that Western Australia be given complete independence of the Commonwealth in all Tariff matters, should be adopted." (See para. 521.)

PART IX.-PROPOSAL TO REVIVE mE INTERSTATE COMMISSION. 11. The Chairman and Commissioner Entwistle recommend-(a) that a Federal Court be created with such judicial powers as Parliament deems necessary for the execution and maintenance within the Commonwealth of the provisions of the Constitution Act

relating to Trade· and Commerce, and of all laws made thereunder. (b) That the. law creating the Federal Court before-mentioned shall contain a provision that after 25 years service as a member of the Interstate Commission, a member may retire on a pension of £1,000 a year, and that a member of the Interstate Commission, on reaching the age of 70 years; may retire

on a pension computed at the rate of £50 for each year of service, with a maximum pension of £1,000 per annum. (See paras. 237-239.)

(Owing to his unavoidable departure from Australia on the 18th July, Commissioner Mills no opportunity of perusing the foregoing section of the Report.)

PART X.-IMMIGRATION.

12. The Commission is of opmwn-"That it appears to be prudent not to make any estimate of the capacity of the Commonwealth to absorb population at a rate higher than that suggested by the Commonwealth Statistician, viz., about 3 per cent. (See para. 248.) It is not necessary that any part of the grant to be made to ·Western Australia

(see paras. 365 and 579) should be specially allocated to the settlement of migrants." (See para. 253.)

PART XI.-REQUEST FOR GRANT IN AID OF TECHNICAL EDUCATION. 13. The Commission state that-"ln respect of primary and secondaryeducation,it may be that no direct assistance would besought by any State ; but in view of the drift of population to the capital cities of the Commonwealth, the Commission

is of opinion that it would be in the interests of Australia if, on the application of any State, substantial subsidies were granted in aid of provision for instructions in agricultural methods ; in the care of farm animals, and in the handicrafts incidental to the economical working of a farm, e.g., repairs to farm vehicles and implements, erection of sheds, mending of harness, &c., &c." (See para. 262).

PART XII.-FEDERAL AND STATE ARBITRATION COURTS.

14. The Chairman and Commissioner Mills state-" There is no doubt that the irremovable barrier of distance places Western Australian citizens at a disadvantage in matters where attendance upon Arbitration Tribunals sitting in other States becomes necessary in the interests of their industries. Citizens of other States to some extent suffer the same disadvantage, The whole question of the relation between Federal and State Arbitration Tribunals is, however, a very wide one, and one as to which we have no special mandate. To decide what industries should be treated as federal in charaeter, and therefore requiring an Arbitration award covering the whole Commonwealth, and those industries the wages and hours of labour in which should be determined solely by State Arbitration Courts or Wages Boards, would require a special and thorough investigation. We, therefore, do not feel justified in doing more than make this brief reference to the main facts brought under out notice." (See para. 269.)

15. Commissioner Entwistle dissents from the foregoing opinion, and recommends-"That the industries of Western Australia (and of all other States) be reUeved, as much as possible, from fhe overlapping of the Federal and State Arbitration Courts, and for that purpose that the jurisdiction of the Commonwealth Court of ConeUJation and Arbitration be eon1lned strictly to Shipping and Shearing. • • (See para. 522.)

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PART XIII.-NAVIGATION ACT.

16. The Chairman and Commissioner Entwistle are of opinion--"That Part VI. of the Navigation Act, having reference to the 'Coasting Trade,' should be repealed." (See para. 276.)

17. Commissioner Mills makes a Heserva tion in these terms-" This is a question which has been the subj ct of inquiry and report by a Royal Commission constituted for the special purpose of considering the effect of the operation of the Navigation Act. That fact appears to me to indicate that the subject was not.intended to be covered by the general words of our Terms of Reference . (though, incidentally, we heard a little evidence on the matter, all adverse to the Coasting Trade Provisions).

Holding that view, I prefer, therefore, to refrain from making any recommendati.on in relation to the Navigation Act." (See paras. 524-526.)

PART XIV.-REQUEST FOR FEDERAL CONVENTION.

18. The Commission makes no recommendation as to the holding of a ]'ederal Convention to revise the Commonwealth Constitution Act. (See para. 286.)

PART XV.-THE NORTH .. WEST.

19. Commissioners Entwistle and Mills state-"Untll the proposals for Commonwealth assistance in the development of the north-that is, above 20 degrees S. latitude-,--have reached a further stage of development, it is difficult to offer any suggestion in relation thereto. On the whole, the Commission is of opinion that it is not desirable for it to make a

specific recommendation in respect either of any different form of control of the North-West, or of financial assistance specifically confined to that area. As shown above (para. 296), the Western Australian· Government expects some .proposals to be submitted for its consideration by the Commonwealth. In the absence of any such proposals dealing with any part of the North-West, we are of opinion that any question of surrender of territory should be initiated, if at all, by the State Government." (See para. 299.)

20. The Chairman expresses dissent and recommends-That the Government of the Commonwealth invite the State Government of Western Australia to surr.ender to the Commonwealth that portion of North and North-West of Western Australia above (approximately) the 26th parallel of South latitude, on the following terms :-

(a) That the Commonwealth shall take over the sum,. of £3,680,231 of the public debt of the State of Western Australia, incurred on account of the North-West to 30th June, 1924. (See Appendix XI.) (b) That the Commonwealth shall undertake, within a period of twelve months after the surrender of the

Territory, to create a new State of the said Territory, granting such representation in either House of the Commonwealth Parliament as the Parliament thinks fit. (c) That the Commonwealth shall grant to the new State a Government partly nominee and partly elected, with powers equivalent to the powers possessed by the Legislative and Executive Councils of

Papua. ·

(d) That the question how much shall the grant to Western Australia, over and above the 25s. per capita allowance, be diminished upon the surrender of the territory, be determined by mutual agreement between the Commonwealth Government and the Government of the State of Western Australia, or in the event of disagreement, by an arbitrator who shall be a citizen of the British Empire.

(See para. 558.)

P ,ART XVI.-COMMONWEALTH PARLIAMENT.

21. Commissioners Entwistle and Mills state--Whether or not the party affiliations of the Senate constitute a root cause of the financial difficulties of Western Australia, as Dr. Battye suggested, neither he nor any other witness showed exactly the relation between the political ties of Senators and the present financial position of Western Australia. It is possible

to conceive alterations of the Constitution wl,lich might have the effect of increasing the influence which the smaller States have upon Commonwealth legislation ; but, in our opinion, the relation between any such changes and the immediate questions affecting the financial position of Western Australia, which are the concern of the present Commission under its Terms of Reference, is too remote to justify us in making recommendations on the subject .. (See para. 301.)

• 22. The Chairma?- expresses dissent, and recommends-1. That the membership of the Senate be increased from thirty-six (36) to fortY-eight (48). 2. That the membership of the House of Representatives be increased from seventy-six (76) to approximately one hundred· ( 100). 3. Tbatclause 7 of the Constitution Act be amended to provide that the Senators shall be chosen for a term of ten (10) years. 4. That clause 28 of the Constitution be amended to provide that " every House of Representatives shall continue for a period of five ( 5) years from the first meeting of the House and no longer ; but may be sooner Jlissolve«f by the Governor-General."

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5. That the Electoral Law of the Commonwealth be amended to provide-(a) That any Member of either House of the Parliament who shall offer, promise, or give, directly or indirectly, to or for any club or other association, any subscription, gift, donation, or prize of greater value than the minimum subscription given by the majority of the members of the said club or

association, shall be incapable of being chosen or of sitting as a Senator or a Member of the House of Representatives. (b) That any person pledging himself not to submit himself as a candidate for election to the Parliament unless selected by a society, association, or union, shall be incapable of bems chosen or of sitting

as a Senator or Member of the House of Representatives. (c) That any person taking part in a pre-selection ballot of candidates to contest a State or Federal parliamentary election shall be mcapable of being chosen or of sitting as a Senator or a Member of the House of Representatives, or of voting at elections for either House of the Parliament of the

Commonwealth. (See para. 574.)

23. Chairman also recommends-" That the recall of a Senator or a Member of the House of Representatives be made · a Jaw of the Commonwealth." (See para. 577.)

PART XXI.-GRANT OF MONEY TO THE STATE OF . WESTERN AUSTRALIA.

24. The Chairman and Commissioner Entwistle recommend-"That until the State of Western Australia is granted the right to impose its own Customs and Excise Tarifts, the Commonwealth shall pay to the State a special payment of £450,000 per annum in addition to the 25s. per capita payment made in accordance with Clause 4 of the Surplus Revenue A.ct of 1910, the aforesaid special payment to include the special annual payment now being made to the State of Western Australia in accordance with clause 5 of the said Act. The above special payment of £450,000 to commence on the 1st July, 1924." (See para. 365.)

25. Commissioner Mills recommends-'-,, That a special grant of £300,000 per annum be paid by the Commonwealth to the State for a period of ten years, comlilencing on 1st July, 1924, the question of further assistance to be reviewed towards the end of that period. This recommendation is made on the asstu:nption that the present capitation allowance of 25s. per head of population will continue for the same period of ten years, and on the further assumption that if the special grant of £300,000, as recommended, be made, the present diminishing special grant shall cease.''

(See paras. 579-580.)

PART XXD.-AID TO OR BOUNTY ON THE OR EXPORT OF GOODS.

26. The Chairman and Commissioner Entwistle ·recommend-. " That the Parliament of the Commonwealth, in accordance with Section 91 o.f the Commonwealth Constitution, shall express by resolution its consent to the State of Western Australia granting any aid to, or bounty on, the production or export of goods during a period of 25 years:

Provided that if the Interstate Commission, after public inquiry, is of opinion that any aid or bounty is operating unfairly and to the disadvantage of any State of the Commonwealth, the Parliament of the Commonwealth may, by resolution, withdraw wholly or m part the consent so expressed." (See para. 368.)

PART XXIII.-THE QUESTION OF SECESSION.

27. The Chairman and Commissioner · Mills state-" It is dimcult in a community such as Western Australia, with its relativeisolation!from the Seat o Government and also from o.ther States, to prevent the creation and growth of a belief that other States are somewhat indi1Jerent to Western Australia's peculiar problems and ditHcultias. It is indeed very desirable that a greater knowledge of Westem Australia should be attained by the residents in other States, and ably directed propaganda, having that object in view, should, . in our opinion, be undertaken. Some reasonable degree of assistance by the Commonwealth, on the lines indicated in other sections of this Report, would, in our opinion, go far to put an end to the dissatisfaction with FIIJeration which has been sedulously fostered by at least one Western Australian journal of wide circulation, aim which has obtained a degree of acceptance

that be dismissed as insignitlcant." (See para. 392;)

28. Commissioner Entwistle expresses dissent in terms-" In my opinion Western Australia should · never have entered the Federation, but, having done so, there is, I feel convinced, only one complete and satisfactory remedy for her present disabilities, viz,, Secession. H that event occurred, all .other recommendations in this Report would become unnecessary. As, however,

it cannot be taken for granted that Secession will take place, I have joined in recommendations having the object of relieving (at least to some extent) the present financial disabilities of the State ofWestemAustralia," (See paras. 581-582.) · ·

Name of Witness.

Abbott, John Edward Allsop, Fredk. William Anderson, William Martin Nymbert Anderton, John William . . . .

Andrews, Frederic Shirley Angelo, Edward Houghton Angwin, Ron. William Charles Armstrong, Andrew Cecil

Baldock, John Geo. Barker, Ernest Herbt. Barnett, Leonard Stewart Battye, Dr. Jas. Sykes Bell, Norris Garret

Bennett, Samuel Bern.ales, Claude De Black, Edwin Alex.

Bloxsc.me, Oswald Lloyd Boyd, Dr. Thos. Craig Brooker, Arthur John Brown, Harry Percy Burnell, Norman Leslie Calanchini, Michael Jas.

Camm, John Percy Campbell, John Francis

Carroll, William ..

Cha.ndler, Alfred Thos. Clarke, (}eo. Ephraiin Clifton, Carmalt

Collins, Jas Richard Cooper, Lealie ChAs. Cowan, James ..

Cowie, Felix Cecil Cox, J as. Norman Crawcour,Isaac .. Cra.wford, Alexander Crawford, Eileen Frances Crawford, Robert • . • .

Cumpston, Dr. John Howard Lidgett Dale, Hylton Burleigh . . . .

Dale, Dr. John ..

Day, Herbt. Arthur

Doheny, John Patrick ..

Doolette, Dorham Longford Durack, Michael Patrick .. Elliot, Cha.s. Geo. Elliot, Martin Evans, Ernest Alfred

Hon. Jas. McKinnon

Garran, Sir Robt. Randolph

Goodison, Vincent Henry .. Gray, Wm. Mount ..

Greeri, Albert Ernest, M.P. Green, Frank • . • .

Green, Oracle Stewart Greenard, Wm. Fredk. . . Gregory, Ron. Henry, M.P. Hall, Edmond Hy. Hartley

Hamilton, Richard

Harper, Chas. Walter Hartigan, Martin Joseph Haynes, Thos. Watson Hedges, Wm. Noah

Hubbard, Stanley Harold ..

Hughes, Edward Hunt, Henry Ambrose Hurley, Lionel Jas. Irving, Edward Hamilton Israel, John Willia.m

Jack, .Edward Francis .. Johnston, Edward Bertram

Jonea, Sir Henry Jorgensen, Valdemar •• Keenan, K.C., Ron. Norbert

XI

WITNESSES.

Designation.

Owner, Gimlett South Gold Mine, at Ora Banda, Kalgoorlie Mayor of Kalgoorlie . . . . . . . . • .

Officer-in-Charge Mining Statistics, State Mines Department, Perth Secretary, Chamber of Mines, Kalgoorlie. . . . .

Secretary, W.A. Employers' Federation Incorporated, Perth M.L.A. for Gascoyne, and Stock & Station Agent, Perth Acting Premier, Perth . . . . . . . .

School Teacher, Derby

Importing 1ronmonger, Bunbuty . . . . . .

General Secretary, W.A. Branch, Australian Labour Perty Merchant, President of Chamber of Commerce, Albany .. Public Librarian, Perth . . . . . . . .

Commissioner of Commonwealth Railways, Melbourne ..

WeJtern Australian State Government.Statistician and Actuary Manufacturer and Representative of Mining Interests, Perth . . . . Commissioner of Taxation and Deputy Federal Commissioner of Taxation

Representative Chamber of Mines, Incorporated,.Kalgoorlie . . . . . Medical Practitioner and Member Primary Producers' Association, Geraldton Jam, &c., Manuf;wturer, Adelaide Secretary and Director, Postmaster-General's Department, Melbourne

Merchant and Manufacturer, Perth . • . . . . . .

Under-Secretary for Mines, and Chairman, Council of Industrial Develop-m4;lnt, Perth Surveyor-General, Perth Deputy Master, Royal Mint, Perth ..

Secretary, Primary Producers' Association, Perth

Leader Writer, Perth Sunday Times . . . . . .

Estate Agent, and Secretary, Wellington Agricultural Society, Bun bury Engineer, Bun bury . . . . . .

Secretary, Commonwealth Treasury, Melbourne Manager, Western Australian Rope & Twine Company Pty. Ltd., Perth Formerly Police Magistrate, Perth . . . . . . . .

Legal Practitioner, Kalgoorlie .. Fruit Grower, Coolup, Western Australia. Officer-in-Charge, Immigration, Perth Formerly Chief Inspector of Rabbits, Perth

Acting-Secretary, Council of Industrial Development, Perth Mine Owner, Carbine, Kalgoorlie . . . . . .

Commonwealth Director-General of Health, Melbourne .. Formerly connected with Coal Trade in England Medical Officer, Health Department, Perth .. Statistical Officer, Western Australian Government Railways, Perth

Storekeeper,NorthPerth .• Mining Investor, Perth Pastoralist, Perth .. Tributer and Councillor, Kalgoorlie Journalist, Bun bury . • . . . .

Chief Mechanical Engineer, Western Australian Government Railways, Perth Ex-member for Perth, House of Representatives . . . . . .

Secretary, Attorney-General's Department, and Commonwealth Solicitor-General, Melbourne Prospector, Kalgoorlie . . . . . . . . . .

President of Chamber of Manufactures of Western Australia, Perth Federal Member of House of &presentatives for Kalgoorlie Storekeeper and Mayor of Geraldton. . . . . .

Mine Owner, Geraldton Government Mining Inspector, Ka.lgoorlie .. Member of House of &presentatives for Swan Assistant &tail Storekeeper, Geraldton

President, ChAmber of Mines of Western Australia, and Manager Great Boulder Gold Mine, Ka.lgoorlie Director of Westra.lian Farmers Ltd., Perth .. Mine Owner a.nd Miner, Kalgoorlie . . . . . .

General Manager, Mt. Lyell Chemical Works, Melbourne Formerly Member of House of &presentatives, Director, Western Australian Gold-fields Firewood Supply Co., Kurrawang, and Pai>toralist, Perth Secretary, Pearse Bros. Ltd., Tanners & Boot Manufacturers, North Fro-

mantle Gold Mining Leaseholder and Prospector, Kalgoorlie Commonwealth Meteorologist, Melbourne .. Deputy Director of Imprigration, Melbourne The Editor, KalgoorZie Miner, Kalgoorlie Commonwealth Auditor-General, Melbourne

Mining Secretary, and Director, Ka.lgoorlie . . • . . . . .

M.L.A. of Western Amtra.lia. (Willia.ms-Narrogin), Deputy Leader of Country Party, and Wheat Grower Jam Manufacturer, Hobart Captain, Gwydir oa,ue, Mauritius 0 0 • • 0 ° 0 0

Presented Official Calle of behalf of Western Australhm Government

Minutes of Evidence.

Page No. Question No.

453 4380--4381 420 4190-4200 77 383-397 78 Affidavit

281 2462-2485 276 2428-2461 137 1249-1341 { 71 280-328

158 1409-1410 181 1615-1631 390 3872-3907 401 3956-3974 459 4582-4645 { 526 5216-5255

551 5518B-C 75 329-382 133 1211-1233

f 112 759-779 291 2640-2737 475 468'6 299 2753-2825 337 3268-3288 455 4400-4551 603 6228-6297 284 2486-2511 197 1738-1775 97 591-600 321 3037-3071 { 102 601-625 112 780-890 416 4153 209 1881-1911 175 1554-1588 178 1589-1614 577 5837-6027 123 962-1184 231 2071 434 4293-4310 106 675-693 78 433-444 304 2826-2855 82 445-459 440 4311 536 5336-5358 322 3072-3114 325 3115-3136 co3 77-78 626 398-432 298 2738-2752 224 1977-1996 254 2206-2222 443 4330-4331 182 1632-1642 241 2119-9B 529 5256-5335 539 5359-5453 453 4382--4386 164 1453-1518 426 4236-4281 333 3228-3263 341 3311-3323 424 4207--4235 185 1685-1724 340 3296-3310 417 4164-4189 231 2072-2094 442 4324-4329 382 3759-3792 158 1411-1452 416 4154-4163 423 4201--4206 512 5016-5044 552 5519-5619 444 4338-4339 519 5ll4-5184. 441 4316-4323 410 4086-4152 591 6059-6097 590 6042 1, 55, 90,94, •123, 144

Xll

W ITNESSES-contintted.

Name of Witness. Designation.

MJnutes of Evidence.

Page No. Question No.

----------------------------1--------------------------------------------------------I--·------------ Lahiff, Arthur David Lambert, Percy . . . . Lathlain, Sir Wm. Francis Lee, Fredk. Roy . . . . Lefroy, Geo. Anthony .. Le Mesurier, Cecil John Thlginald . . . Lealie, Bernard . . . . ,John, M:.J.,.A. . . Lynch, Senator Patrick Jooeph Macfarlane, Hon. Jas. Mortimer Maley, Hon. Henry Kennedy Mann, Edward Alex. . . Mann, Wm. Joseph .. McCay, Walter Heywood .. McFarlane, Stuart Gordon McGhie, Leslie Jamieson .. McGibbon, Sinclair J as. . . McLarty, Edward Aubrey Miles, Henry Edgar . . . . Miles, Hon. Geo . . Jas. Gallop Warden Milligan , Thos. Jaa. . . Mills, John .. Mitchell, Sir James, K.C.M.G. Monger, Alex:-. Joseph .. .Morrison, John Crawford .. Mountain, Arthur Henrv .. Oakley, Robt,Mc .. O'Halloran, Goo. Michael . . Pad bury, Matthew Thos. . . Padbury, \Villiam .. Pope, Harold . . . . P rowse, John Henry, M.P. Ramsbotham, Joshua Fielden Raphael, Alfred . . . . RaynN, Henry Robert .. Reid, 'Alex. Jas. Richardson, Alex. Robt. . . Robinson, John Hayward Rosenstamm, Benjamin .. Sanderson, Wm. Lauchlan Scaddan, Hon. John Seddon, Hon. Harold, M.L.C. Shaw, Frank Ernest .. Simpson, George \villiam .. Sleeman, Herbt. Richard .. Smith, Fredk. Chas. Snashall, Henry . . Stevenson, J ohn .. Stone, Patrick . . Tarrant, Harvey Alfred Taylor, William Henry Thomson, Alexander, M.L.A. Thomas, William Emest Toby, Raymond Thos. Fitzgerald V o.le, William Henry Weeks, Leslie James Wickens, Chas. Henry Wise, Fredk. Lyon Yates, William Henry Young, Frank Henry Director, McG!ew & Co. Ltd., Commission Agent<;, Adelaide ..

Manufacturer and Mayor of Albany . . . . . . . .

Vice-President, Town and Country Tariff Thlduction League, Perth . . Journalist, Fremantle . . . . . . · .. · . . . .

Engineer, Guildford, Wwtern Australia. · . . . . . . . .

Solicitor and Manufacturer of Asbestos, Perth . . . . . .

Representing Kalgoorlie Chamber of Conimerce, and Secretary, Employers Union, Kalgoorlie Member for Toodyay, Wheatgrower in the Upper Wheat Belt .. Farmer, Three Springs, Western Australia, and Member of Senate M.L. C. , Dairv Produce Merchant, Porth . . . . . .

Farmer, Formerly Ministerfor Agriculture . . . . . .

Member of House of Representatives for Perth . . . .

Newspaper Proprietor, Busselton . . . . . . . .

Under-Secretary for Lands (Group Settlement Branch), Perth . .

458 406 216 82 353 223 447

136 44 379 271 242

183 274 (562

4552-4581 4030-4056 1912-1929 460-487 3440-3451 1962-1976 4344-4346

Thl presenting Commonwealth Treasury, Mel):Journe .. 593

i

590

1234-1248 55-130 3713-3758 2343-2401 2120-2179 1663-1684 2402-2427 5686-5$36 6043-6058 6098-6227 6298-6363 6980-7182 1930-1961 5518A 2994-3036 2897-2993

General Manager, Wyndham Meat Works

Public Accountant, Perth . . . .

Managing Trustee, Agricultural Bank, · and General Manager, Industries Assistance Board, Perth Storekeeper albany . . . .,. . . . . . . . . . . . .

M.L.C., President North Australian Railway and Development League In-corporated, Perth . .

President,. State Sc'hool Teachers Unio!l of Western Australia, Perth .. Manager, Drew, Robinson & Co. , Albany . . . . . . . .

609 l665

{

220 551 316 310

404 199

4001-4029 1776-1839

Leader of Opposition, and Member for. No.rtllam (formerly Premier) " . .-Farmer (formerly President Farmers a.rtd Settlers Perth) ..

328 3155-3227A 402 397 5-4000 263 2263-2342 169 1519.:..1553

145 1343-1408 336 3264-3267 643 6741-6841 182 11>43-1662 195 1725-1'737 350 3388-3439 234 2095-2118

J ournalist, Perth . . . . . . . . . . . .

Wholesale Grooor, Geraldton . . . . . . . . . .

Coip.ptroller-General of Customs, Melbourne . . . . . . . .

Chairman, Busselton Chamber of Commerce, and Storekeeper . . . . President, Primary Producers Association ()f Western Perth . .

Merchant, Miller, and Managing DirectOr of Stores Ltd., Perth Commissioner of Western Australian ,Government Railways, Perth .. Farmer and Grazier, and Member for Forrest; House of :Representatives .. Director of Lighthouses, Melbourne . . . . . . . . . .

Wholesale Merchant, Perth . . . . . . . . . .

Jam Manufacturer, Perth . . . . . . . . . . • .

Government Statistician's Office, Perth . . . . . . . •

For.tPerly M.P. for Northern Districts, Perth . : . . . . . . . .

Manager, Trescowthick & Co., Boot. Manufacturers, Melbourne . . . . Leather Merchant and Tanner, Perth ·. . ' . . . . . . . .

Secretary, P.Mtoralists Association of Western Australia Incorporated, Perth Western-Australia Motors Ltd., Perth, and f,ormerly . Premier of Western Australia Member for North:Ea.st Province, Kalgoorlie General Manager, State Implement Works', Perth

Allilistant Under. Treasurer, Perth, repretienting Western Aust,ralian Govern- ment ·. '

Mining Engineer, Pastoralist, &c., Whim Creek, Western Australia .. Representative of The Worker newspo.per, Ka!goorlie . . . . . ·

Building Contractor, Perth . . . . . . . . . ·

Proprietor, Grand H otel, Kalgoorlie . . . . . . . . . . ,

Retired Merchant, Geraldton . . . . . . . . . .

Representing Master Coach builders' and . Motor Bodies Builders' Association of Weatern Australia, Perth · ·

General Manager, Western Australian Government Tramways and Elec· tricity Supply Undertaking, Perth · . .

Leader of Country Party in Legislative Asilembly of State of Western Aus­ tralia

37 1-54

548 5482--5517 90 488-690

{

.226 1997-2070 510 5001 67 131-271 307 2856-2896 546 5454-5481 355 3452-3496 258 2223-2262 341 3324-3387

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358

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516 5045-5113 524 5185-5215

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{

385 454 130

3793-3871 4387-4399 1185-1210

Secretary, State School Teachers' Union of Western Australia, Perth Secretary, Calyx Porcelain Paint Co., Perth . . . . . .

. · ' 330 3168-3227A

'286 2512-2554

Mining Engineer, Kalgoorlie

Secretary, A. J. Brooker, & Sons, Jam; ·&c., MB.nilfa

Presented Memorial from the Citizens, Perth .. Manager, Calyx Co., Perth . . . . . .

Accountant, Public Works Department, Perth

{

433 4282-4292 . . 443 4332-4337

453 4367-4379 45.'> 4400-45.'>1

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466 464.6-5000 551 5518

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!i'

1475

X: Ill

REPORT OF THE COlVlJ\iiiSSI(JNEH.S.

PART I.-INTRODUCTION.

l'o His Excellency the Right Honorable HENRY WILLIAM, BARON FoRSTER, a Member of His Majesty's Most Honorable Privy Council, Knight Grand Cross of the Most Order of Saint Michael and Saint George , Governor-Gen.eral and

Commander-in-Chief of the Commonwealth of Australia.

May it please Your Excellency: . We, the Commissioners appointed by Royal Letters Patent to inquire into and report upon the effect of Federation upon the financial position of the State of Western Australia, and as to any special financial disability suffered by that State as a result of Federation which is not by the otheJ; States of the Commonwealth, and to recommend what steps should be taken

tq remedy such financial disability, if any, suffered by that State, have the honour to report as follows:- · .

1: As soon as possible after our appointment, we assembled in Melbourne for the purpose of considering the necessary arrangements for the conduct of our inquiry. The first matter which engaged our attention was the scope of the investigation as defined by our Commission. A literal reading of the terms of inquiry might suggest that the only subject of inquiry

was . the :financial effect of Federation upon the State of Western Australia, as represented by its Executive Government. We realized, however, that such an interpretation, even if possibly justified by the letter of our Commission, would fail to give effect to its spirit and intention. We interpreted term " State '' to mean not only the organized and responsible State

Government, but also the people of the State, whether concerned as individuals or as collective bodies, corporate or 0therwise.

2. Another question of interpretation which it became necessary to decide was whether a · financi11l disability suffered by the State ·of Western Australia should be disregarded if other States suffered a similar disability. After consideration, we came to the conclusion that any financial disability su,ffered by the State of Western Australia, even though suffered also by

other St11tes, was a proper subject for investigation where there was a material difference in the degree of disability affecting Western Australia as compared with other States.

3. In order to give the widest publicity to the investigations of the Commission, and to elicit th.e fWlest of informed opinion on the subject-matter of the inquiry, we forwarded a of to gi:ve evidence to the Premier of the State, to Senators and Members of the

House of Representatives re_ presenting Western Australia, to every newspaper published in the State, and to the principal organizations representing commercial, producing, manufacturing, and financial interests in Western Australia.

4. In reply to a letter to the Premier of the State informing him of our appointment ; of the Terms of Reference ; of our interpretation of those terms, and of our intention to proceed to Western Australia as soon as convenient in order to hear evidence in public, . the Premier informed us that he had appointed an Advisory Committee consisting of the Hon. Norbert

Keenan, K.C. (Chairman), the Hon. James Gardiner (a former W.A. State Treasurer), Mr. John Curtin (Editor Westralian Worker), Mr. M. J. Calanchini (Under-Secretary for Mines) , Mr. G. W. Simpson, A.I.C.A. (Assistant Under-Treasurer), and Mr. A. J. Reid, B.A., A.I.C.A. (of the Government Statistician's Department), Secretary, to draw up a Statement of the Case for the State,

and a&ked for a postponement of the Commission's visit in order to allow ample time for that work. The Commission assented to this course, and a date was fixed which was subsequently altered on a further request of the State Premier. As a result, the first public sitting of the Commission, which was held at Perth, did not take place until the 9th February, 1925. During the interval,

the Commission met on a number of occasions for the purpose of collecting and studying numer?us books and documents relating to the investigation, and of dealing with a somewhat extensive correspondence. ·

5. The great majority of the public sittings of the Commission were held in Western Australia, the centres visited being Perth, Albany, Kalgoorlie, Geraldton, Bunbury and was one sitting in Adelaide, and a few in Melbourne. While in Western Austraha the

Commission took the opportunity of visiting the Group Settlements south of Busselton; the wheat areas on the great Southern Line, and other centres of special activities.

XIV

6. Great interest was manifested in the work of the Commission in Western Australia, and the press, both metropolitan and country, devoted a large amount of space to reports of the evidence, and various phases of the inquiry were discussed in a number of leading articles. The witnesses who tendered evidence included the Acting Premier of Western Australia, members of the Commonwealth and State Parliaments, Federal and State Government Officers, representatives of the pastoral, agricultural, milling, manufacturing, and other industries, also the trade and commerce, the employers associations, and the trade unions of the State. Very many of the witnesses prepared careful and lucid statements in· writing, which were presented as their evidence-in-chief. One hundred and thirty-three (133) witnesses were examined.

PART 11.-FEDERATION.

DEFINITION OF THE TERM.

7. Your Commission sought the opinion of Sir Robert Garran, Solicitor-General of the Commonwealth, and joint a1,1.thor with Sir John Quick of the annotated copy of the" Constitution ofthe Commonwealth," as to the meaning of the term" Federation." Federation, as understood by Sir Robert Garran, is-

" A form of Government in which sovereignty. or political power is divided between the central and the local Governments, so that each of them· within its own sphere is independent of the other. The distribution of powers between the local and central Governments may vary to any extent ; but the fundamental idea is always

that of the twofold sovereignty and the independence of each Government within its own sphere." (Q.5362.) Sir Robert Garran supported his opinion by a reference to Constitutional Authorities, A. V. Dicey, Sir William Harrison Moore, Edward A. Freeman, and James Bryce.* (Q.5363.)

8. Federation is distinguished from Unification. by its twofold sovereignty. If any citizen of the Commonwealth takes exception to . what .. he • considers the importunities of any other citizen of the· Commonwealth in respect . to Federation, he should remember this. The sovereign powers of the Commonwealth are defined in the Commonwealth Constitution Act, particularly in section 51 thereof. The State of Western Australia has sovere.ign powers in respect to the lands of the State, the pastoral, agricultural, and other industries, . the

trade and commerce within the State, and over all matters not referred to in clause 51 of the Commonwealth Constitution Act. Theoretically it is practicable for the Federation to avoid encroaching upon the sovereign rights of the States. In practice there is difficulty in de:fiiting the liinits so clearly and completely that there will always be certainty on the part of the legislators-or even the Courts-as to whether the limits are being transgressed or not. · ·

THE VOTING ON THE QUESTION OF FEDERATION.

9. The proposal that the six States or Colonies of Australia should" unite in one indissoluble Federal Commonwealth " was not readily agreed to. During a period of 50 years Federation had, at different times, been advocated without success. Finally, after two ardent campaigns

*DEFINITIONS OF THE WORD "FEDERATION."

Dicey, A. V. The Law of the Constitution : 7th ed. : ch. 3 : p. 139. " A federal state is a political contrivance intended to reconcile. national unity and power with the maintenance of 'state rights.'" · . ·

Moore, Sir William: Harrison. The Constitution Of the Commonwealth of Australia : 2nd ed. : pt. 2 : ch.l : p. 68, "A 'federal government' exists where, in a political community, the. powers of government are distributed between two classes of organization-a central government affecting the whole territory and population of the sovereignty, and a number of local governments affecting particular areas an(! the persons or things therein-which are so fa.r independent of each other that the one cannot destroy the other, or encroach upon the sphere of the other· as determined by the Sovereign in the

Constitution. Both are completely subject to the State. Either may be changed or abolished at will by the State. It appears to involve also the existence of some authority recognized by the central and local parts as competent to determine the conflicts which arise as to their respective powers." Freeman, Edward A. History of federal government in Greece and -Italy : 2nd ed. : ch. 1 : p. 2.

" The name of ;Fe.deral government may be applied to any union of component members, where the degree of union between the members surpasses that of mere alliance, however intimate, and where the degree of independence possessed by each member surpasses anything which can fairly come under the head of merely municipal freedom." Bryce, James. The American Commonwealth: new ed., 1910: vol. 1.: pt. 1: oh. 2: p. 16.

" Its (the American Federal Republic's) central or national government is not a mere league, for it does not wholly depend on the component communities which we call the States. It is itself a commonwealth as well as a union of commonwealths, because it claims directly the obedience of every citizen, and acts immediately upon him through its courts and executive officers: Still less are its minor communities the States, mere subdivisions of the Union, mere creatures of the national government, hke the

counties of England or the departments of France. They have over their citizens an authority which is their own, and not delegated by the central government. They have not been ca.lled into being by that government. They-tha.t is, the older ones among them-existed before it. They could exist without it.''

1477

XV

in 1898 and 1899, the union of the States was accomplished. The project failed at the first referendum, 3rd and 4th June, 1898, when the voting was as follows:-

I

. I

State. For. Against. Majority.

New South Wales . . . . .. . . . . . . 71,595 66,228 5,367

Victoria . . .. . . . . . . .. . . 100,520 22,099 78,421

South Australia . . . . .. . . . . . . 35,800 17,320 18,480

Tasmania .. . . . . . . . . . . . . 11,797 2,716 9,081

219,712 108,363 111,349

·--·-

Queensland and Western Australia did not take part in the above referendum. At the second referendum on the 20th June, 1899, the voting was as follows:-State. For. Against. Majority.

New South Wales . . . . .. . . . . . . 107,420 82,741 24,679

Victoria . . . . . .. . . . . . . 152,653 9,805 142,848

South Australia . . . . .. . . . . . . 65,990 17,053 48,937

Tasmania .. . . . . . . . . . . . . 13,437 791 12,646

Queensland . . .. . . . . . . . . 38,488 30,996 7,492

I

377,988 141,386 236,602

' ·â€¢

-

Western Australia still declined to take part in the referendmrr. The Parliament of the State was opposed to entering the Federation, but as the result of petitions by the gold-fields population to Her Majesty Queen Victoria, the Secretary of State for the Colonies brought such pressure to bear upon the Western Australian Government, in a telegram dated the 27th April, 1900, that a hurried meeting of the State Parliament was called, the Federal Enabling Bill was rapidly passed

through all stages, and received the Royal Assent on the 13th Jun 'l, 1900, providing for a This referendum of the electors took place on the 31st July, 1900. The voting was as follows:-Yes 44,800

No . . 19,691

Majority ... 25,109

OPINIONS OF SOME WESTERN AUSTRALIAN WITNESSES CONCERNING FEDERATION.

10. In the opinion of many of the prominent citizens of the State of Western Australia, that State made a mistake in joining the Federation. The Ron. Norbert Keenan, who presented the case prepared by the Western Australian Advisory Committee, said: "The cause of Western Australia's altered fortunes cannot arise from any other source than that of Federation." (page 3);

but Mr. Keenan also said-. " I hold the very strong view that the fact that the British. Empire exists to-day is in one sense due to Federation, because the war decided our fighting strength to the last breaking strain, and any sensible man must admit that the effort Australia made

must have been of greatest value, as the very last ounce of strength was exhausted before we became victorious. Discounting the more extravagant claims made by some Australians, no reasonable person can question the fact that, if the effort which Australia made had been wanting, it would have dangerously imperilled the Empire. Remembering that, and remembering that effort could not have been made, as you put it, Mr. Chairman, if the States had been all separate States, it is not possible to lightly conceive the

possibility of Federation being destroyed. That is the view I take. But, notwithstanding the pTide and value of Federation, it might be purchased at too high a price, and it may be the view of many in this State that, although they favoured Federation, and still do so, ihe price they are called upon to pay for it is far too high. That is the most grave danger m the situation that reasonable men, not those carried away by light considerations, but those who only are swayed by well thought-out grounds, may come to the conclusion . that, although Federation is a very valua?le asset to the Empire, and a very val?able

asset to Australians, we Western Australians are called upon to pay too excessiVe a price for it." (Q.961:)

XVI

lVlr. J. H. Prowse, Member of the Federal Parliament, farmer and grazier, said that--" After twenty years' experience, he came to the conclusion that Western Australia had made a very great mistake in entering into partnership with the Commonwealth.'' (Q.26.) Senator P. J. Lynch, Member of the Commonwealth Senate, a farmer, and a 30 years' resident of the State, said-

" As one who voted for l?ederation, and who is still an ardent Federalist, I am bound to admit reluctantly that not only has this State not shared in the general and acknowledged measure of benefits due to Federation, but it has had to suffer positive and direct loss and through becoming a member of the Federal Union.

Gains have accrued to other States in the Commonwealth from Federation and not to Western Australia. . The gain to Queensland consisted in the unsettled sugar question being settled, and an unstable industry being made stable by making the Commonwealth an exclusive market for the Queensland product. Queensland's output of sugar has trebled since Federation, the cash equivalent of which must be over £20,000,000 added to the wealth of that State. The gains to New South Wales are the Federal Capital, upon which nearly £2,000,000 have been already spent ; the centralizing in that State of other administrative activities, and the altered face of its metropolitan landscape, where huge factories now stand on the milking fields of the pre-Federation days. The gain to Victoria has been the temporary possession of the Federal Capital and the domicile of all Government Departments to date. 'Like New South Wales, when the Commonwealth was made available, its manufacturing progress, previously arrested for want of that market, was set at full speed, and still continues to expand. The gain to South Australia was the taking over of the Northern Territory and the Port Augusta-Oodnadatta railway. In justice to South Australia it is to be said that had that State not shouldered the Northern Territory burden, it might have lapsed into a Crown Colony with weightier obligations to discharge to-day, and involving danger to our racial purity. Tasmania, like this State (Western Australia), has gained nothing by Federation, and lost much. " (Q.58.) · Sena.tor Lynch admitted, in reply to questions (Q.59) that in the matter of postal, telegraph, and telephone services, there is an advantage to the State of Western Australia in being federated.

" Western Australia has an advantage, when compared with other States, in ·sharing a common service, the extra expense of which she does not bear individually." (Q.63.) Sir James Mitchell, K.C.M.G., M.L.A., Leader of the Opposition and Member for Northam in the Parliament of Western Australia, said--

" With our present population,· we are of limited use to the Commonwealth and the Empire, and the disadvantages of Federation are greater than I think this State should be asked to bear." (Q.2263.) Hon. John Scad dan, formerly Premier and Minister for Mines, Western Australia, said-

" I consider that during the last ten or twelve years the Federal authorities, if they have not entirely ignored Western Australia, have certainly given it very little consideration. . . . The Federal authorities ignored this State, and in some cases they imposed conditions which, while beneficial to certain industries of the eastern States, had the effect of practically stifling industries here, and particularly the mining industry. . .. . I do not want it to he accepted as my opinion that all the disabilities from which Western Australia suffers are due to the Federal Parliament or to the Federal Government. I think th<:lY are due in some measure to trade .·and commerce, and the conditions under which trade and commerce operate here as against the conditions under which they are carried on in the eastern States. Nearly all our big warehouses and other business concerns, including our banking institutions, are merely branches operating under a head office in Sydney or Melbourne, principally in Sydney." (Q.3325.) Hon. J. McK. Fowler, formerly Member for Perth in the House of Representatives, prefaced his statement to the Commission with the remarks-

" After every great movement there is generally reaction, and an outburst of enthusiasm is apt to be followed by more or less disillusionment. Federation in Australia has run this almost inevitable cour!le. The first stage of its existence-the experimental­ is revealing the imperfections in the new machine, and a period of re-adjustment must necessarily follow before the best results are obtainable. During this period of re-adjustment we shall need the best statesmanship that Australia can obtain in order to deal wisely and effectively with the problems that are awaiting solution. If these are approached in the true federal spirit by all political parties, the Commonwealth will be established on a firmer basis than ever." (Q.5257.)

1479

"' XVTt

Mr. A. J. Monger, farmer, and formerly President of the Farmers and Settlers Association of Western Australia, said-" This State has suffered, and is still suffering, serious financial disabilities consequent upon Federation. The taxpayers of \Vestern Australia have been

more heavily taxed than the citizens o-f other States where incomes are comparable with those enjoyed by our local people. . . . The maximum income tax in \Vestern Australia is 4s. 7d. in the £1 sterling. Many of the taxpayers of tills State who have to pay, say, f.rom 2s. in the £1 upwards do not re-invest their surplus moneys in Western

Australia, but remit them for investment to other States, particularly Victoria, where the maximum State tax is only 6td. in the £1 sterling. . . . Owing to the small population of this State, the cost. of public serVices per head of the population is high. . . . Those who settle on the land in Australia to-day are considerably handicapped

as compared with those who did so in the days prior to the war. The rates of freight and wages, and the cost of machinery, wire; galvanized iron, and numerous other commodities essential to the proper development of the land have all materially increased. . . Our primary industries are carried on under a high tariff,

which increases the cost of production in practically every direction; but we have to sell in the open markets . of the world and compete against countries where the cost of production is infinitely lower. . . . Federation has been on trial for 24 years, and it has proved a disastrous experiment for Western Australia." (Q.l519.) . Mr. Wm. Carroll, representing the Western Australian Primary Producers Association, said-

" I am strongly of opinion that it would have been quite possible for Western Australia to have federated in regard to Defence matters, and similar matters, but in regard to her domestic affairs she entered Federation too soon, and has suffered for it ever since." (Q.852.) Mr. Alexander Thomson, M.L.A., Leader of the Country Party in the Legislative Assembly of the

State of Western Australia., said-" From our point of view Federation has not assisted us in any shape or form ; but, as a .matter of fact, it has placed upon our shoulders a very heavy burden." (Q.ll88.) Mr. Sinclair James McGibbon, Public Accountant of Perth, said--

" There is no doubt that Federation has b$}en a wonderfully good thing for the . eastern States." (Q.3016.) Mr. Herbert Richard Sleeman, Mining Engineer and Pastoralist, of Whim Creek, North-west of Australia,

"Twenty-four years' trial has proved that Federation as it exists is a failure so far as the West is concerned. The factors causing that failure, far from being less now, have become· intensified. So far as the \Vest is concerned, Federation ought therefore to be ended or . mended. People do not exist for systems. Systems should exist (and be

designed) for people. That Federation is injuring this State, you can now need no demonstration. The evidence · before you must be overwhelming that the conditions- · of a young and nearly unpeopled and undeveloped State of huge dimensions, having a fiscal policy imposed on it, designed, not for it but for others (and by others), a policy

which heavily taxes practically all its existing and potential industries and helping practically none- -are injuring it and must continue to injure it yet more grievously." (Q.3908.) Sir William Francis Lathlain, President of the Town and Country Tariff Reduct1on League, said- ·

"Twenty-five years ago we all boarded the goodship Commonwealth for a lifelong voyage, with the full assurance that there would be only one class for all the passengers. During the voyage we found, to our great surprise, that there were four classes . Victoria and New South Wales had secured all the saloon cabins, South Australia and

Queensland the second class, little Tasmania was put in the steerage, whilst Western Australia is compelled to work for her passage in the forecastle. May I say, without any egotism, that none of the passengers have worked harder or more loyally to ensure a happy voyage; but we have now arrived at a stage when we emphatically protest against

being compelled to occupy a status inferior to that enjoyed by our fellow passengers for · the term of our natural life, especially as we were paying full fares." (Q.l913.) }lr. Edward B. Johnston of Narrogin, Member of the Legislative Assembly of Western Australia, Deputy Leader of the Country Party, and wheat-grower, said-

. " When '.Ye entered the federal family we may be said to have contracted an

unfortunate marriage with the eastern States years before we were ready to take the responsibilities of step, and when we were too young to hold our own against the. other members of the family. We were full of youth and hope, but we find we are veritably the Cinderella of the family. (Q.4150.) F.2517.-2

I

,, ·;-

xvm

PART m.-THE STATE CASE.

11. The case prepared by the Advisory Committee, appointed by the Government of Western Australia, was presented to the Commission by the Hon. Norbert Keenan, K.C. Mr. Keenan introduced the case by a short statement, the object of which was to indicate the forces which brought about the birth of the Commonwealth, and especially which caused the adherenc" of Western Australia to the Federation. -

12. The following may be quoted from Mr. Keenan's introduction :--" There can be no doubt as to the forces which brought about the birth of the Commonwealth These forces are purely political. If there was any business consideration to. which any weight was given it was submerged in the wave of national enthusiasm. Speaking with some knowledge of the reasons and arguments used to induce the people of Western Australia to enter the Federal bond, I can say that the business aspect of the union was never in the forefront, butonly the desire to join hands with all their fellow colonists in the eastern Colonies to found the Australian nation ; for without the concurrence of Western Australia Federation was an impossible dream. Western Australia comprises almost one-third of the entire continent of Australia, and if she had stood out of Federation it would mean that the idea of Federation would have been killed, and therefore the strongest effort was made on the part of those who wished to see the fruition of the great scheme for establishing an Australian nation to win the assent of the citizens of Western Australia by appeals to their patriotic sentiments. Yet, nevertheless, despite the fact that business considerations were given scant thought, nothing could have been more important. Here was a partnership about to be formed in which some of the intending partners were possessed of highly-developed resources of great wealth and linge population, whilst Western Australia would be a partner with all the problems and cost of development of her resources still before her, and with very limited wealth and a small population t o enable her to solve these problems. It should have been manifest that the conduct of the business of this partnership when it came into existence, which would meet the interests of the powerful partners, might

well be disastrous to that. of the weaker partner, and yet it was joyfully entered into on the basis of giving these dominant partners full control without any safeguard to protect the vital interests of Western Australia save and except the totally inadequate provision that for a limited period of time Western Australia was to continue to enjoy her Customs. Even this was to be, reduced by fractional parts in each year, and the

whole to disappear within a term of :five years."

PRE-FEDERATION EXPENDITURE ON DEVELOPMENT.

13. Mr. Keenan went on to quote figures of expmditure in Western Australia during the period from June, 1890, to June, 1901. The point of the return submitted was to establish that Western Australia during these years had spent on development works a figure of £114 per head of the average population or over four times as much per head as any other State and over five times the average of all the States. The principal works upon which the money was expended were-railways, telegraphs, works, other necessary public serVices.

The total expenditure on railway constructiOn Within the period was £6,023,000; for telegraphs, £118,747; and on harbour works (almost entirely upon the harbour at Fremantle), £1,660,899. Figures were put in also to illustrate the scattered nature of population served by railways in Western Australia. The figures in proof, showing that the population: pei mile of railways constructed in the Australian States as at 30th June, 1923, were as follows :'-

In New South Wales 412

In Victoria 364

In Queensland . . 136

In South Australia 215

In Western Australia 97

In Tasmania .. . 330

. " What is abundantly demonstrated by the above returns and by the facts established by them Is that for .the whole period of its existence as a Colony _prior to _

Western Australia faced and met the problem of developing Its resources With a bolder policy than any that was followed by any other Australian Colony." ·

EXPENDITURE SINCE FEDERATION.

_ _ 14.- 1\1!· Keenan then turned to the financial history of Western Australia during two periods : the first penod from 1st July, 1890, to 30th June, 1901, and the second period from 1st July, 1901, to 30th June, 1923. With regard to the earlier period, Mr. Keenan stated that an amount of £2,144,641 had been taken out of revenue and used for purposes of capital expenditure in The accumulated of over expenditure per head of population

m Western Australia at the end of the periOd m q11estwn was stated as 16s. 2d. Moreover, the

1481

included provision for a sinking fund . Figures showing the position of the other

Colonies during the same period were given, which indicated that in ·every Colony except Tasmania. a deficit had accumulated. Tasmania showed a surplus of 18s. 2d. per head of population. During the perio4 1st July, 1901, to 30th June, 1923, Western Australia spe:J?-t on public works and on its developmental work generally a sum of £36,933,967, or, on the basis of the average population,

£12919s. 3d. per head. , Of the other States, Tasmania had the highest average per head, namely, £76 2s. 9d., and the average for all the six States was £69 16s. 4d. At the end of the period, that is, 30th June, 1923, Western Australia had an accumulated deficit of £17 18s. 4d. per head of population as compared with the accumulated surplus of 16s. 2d. per head of population in 1901.

The figures given with regard to the surpluses or deficits of the other States as at 30th June, 1923, show that New South Wales* and Victoria had accumulated surpluses, that Queensland had reduced its deficit, and that South Australia had. increased its deficit from lls. lOd. before Federation to £9 Ss. in 1923, while Tasmania, which had ·an accumulated surplus of 18s. 2d. in

1901, had changed this into a deficit of £2 16s. lOd. in 1923.

. 15. Anticipating the criticism that the present difficult financial position of Western Australia was partly due to excessive expenditure per head of population on developmental works, Mr. Keenan urged that this workwas absolutely necessary and that if it had not been carried out the position of the State would have been worse. He added that developmental work on a more

extensive scale was carried on in the pre-Federation days, and yet the State was well able to finance . the cost. This statement led up to the conclusion that the altered fortune of Western Australia " cannot arise from any source other than Federation." . The statement went on to show that up to 1910 the State still had a surplus, though less in amount than at the beginning

of Federation, but that wheri the per capita grant of 25s. per head of population was substituted for Customs receipts the State of Western Australia, even with the aid of a special grant (commencing at a figure of £250,000 and diminishing year by year by £10,000) passed from the era of surpluses into that of deficits, the accumulated deficit at 30th June, 1923, being as

already stated £17 8s. 4d. per head.

GRIEVANCES AND .DISABILITIES OF tHE STATE.

. · . 16. The points (which the Advisory Committee consider to have been established by the preceding informl:l,tion are that in pre-Federation days Western Australia, with control of her own Customs, was able to carry mi a vigorous policy of development and yet more than pay her way . Nearly the same position continued until 1910, from which date the State had to rely, so far as

Commonwealth assistance is concerned, upon the capitation grant of 25s. per head, with a special grant in addition. The statement proceeded to set out the grievances and disabilities of the State, especially under three headings, namely, lossesresulting from the passing of the Surplus Revenue Act 1910, from the entry of the Commonwealth Bank into Savings Bank business, and from the

compulsory acquisition of gold by the Commonwealth dnring the war period.

17. The claims of the State under the above three headings, viz., the Surplus Revenue Act, Savings Bank competition, and the Gold Industry, are discussed in detajl in later sections of this Report (see paragraphs 24- 41, 42- 56, 57- 83.)

PRIMARY PRODUCTION.

18. During the last fourteen years the State of Western Australia has devoted special attention to the development of agriculture. "Since 1910 the State has advanced for agricultural settlement the sum of £19,434,427, and of these advances only a sum of £7,142,272 has been repaid to the State." It is that the industry in the State has been very seriously

prejudiced by the high Customs tariff . upon its material ·equipment, although as its return is · dependent upon the price of its products in the world's markets it derives "a very limited, if any, benefit at all from the high Customs tariff." The Committee's remarks with regard to agriculture · were applied also to the pastoral industry and to other phases of primary production, such as dairying. In addition to complaints with regard to the tariff, the so-called Dumping Act came

in for a large amount of criticism, particularly in respect to the duties levied under that Act upon wire-netting. ·

SECONDARY INDUSTRIES.

19. It was said by the Committee that the position of the secondary industries in Western Australia since the establishment of Federation has always been one of a most difficult, if not hopeless struggle against the established secondary industries in the eastern States. There was • The 1\ta.t.oment is in error with rega.rd to New South Wales, ae tba.t State had a. deficit a.nd not a. surplus a.t 30th June, 1923.

xx·

also a complaint of unfair competition by the practice of '.'dumping". by eastern ma:r;mfacturers in respect to a number of items. · A return (Z, see Appendix XI.) put m by the Committee shows that, whereas in 1901 the excess of imports over exports from the eastern to

the figure of £1,984,398, in the year 1924 it amounted to £6,217,471. Details of special cases which were brought before the Commission are given in paras. 141-147, 152-157.

TAXATION.

20. It is contended by the Advisory Committee that the State taxation has been to a point at which "to those who are conversant with the stringency of finance in this State It seems ludicrous to talk of the capacity of Western Australia to bear an increased burden of · ·

CLAIM FOR FINANCIAL ASSISTANCE.

21. The Committee urged that assistance of a financial character is necessary to ensure the stability of the State, and " It is clear that apart from compensation made either to the State or to those engaged in any industry in the State, in respect of injuries inflicted on such industry by the act of the Commonwealth, and

apart from any compensation made to any other primary industry to counteract the injurious effect of a high Customs Tariff,'. and apart from any grant in aid made to the State by way of set-off for losses already incurred by the State as .the result . of .acts of the Commonwealth, it will be absolutely necessary that an annual vote of a substantial amount shall be available for the State to enable the State to carry on the work of development and particularly the work of settling immigrants on the vacant lands of the State. Moreover, inasmuch as the State Treasurer must be assured of this finljsllcial aid, it should be provided that the State will be heard through its representatives before some such tribunal as the present, and that until the State has so been heard no alteration will take place in the amount. of the aid granted."

UNIFICATION OR SECEsSION.

22. The final paragraphs of the Committee's statelllent hint that in the absence of adequate assistance the State would be forced into one of two positions, that is, either to surrender its individuality and to allow the State to become absorbed as a Commonwealth territory, or to "seek soinerelieffrom a partnership which has brough't 'disaster on her." _ (See Secession, Part XXIII., paras; 369--'392.) ·

PART IV .-SURPLUS REVENUE.

23. A general claim is made by the State· AdviSory Committee that Western Australia has suffered a severe loss owing to the alleged non-fulfilment of an agreement made in 1909 between the Commonwealth and the Premiers of the Statesip.regard to distribution of surplus revenue .

. FIRST SURPLUS ACT.

. . F?r an of the situation it is desirable to consider very shortly the

eai'her history .. The first Surplus Act, 10th June, 1908,-contained aprovision (section 5) 'that where ,Parhament had appropriated moneys for the purpose of any authorized Trust Account .. the Treasurer may, in any year, pay to the credit of the Trust Account out of the Consolidated such moneys as the Goy-ernor-General necessa!Y. for the purposes of

appropnat10n. .. On the 30th June, 1908, m accordance With this authonty, " a sum of £193,621 wa.stransfer .·red to Invalid and _Old-age Pensions," having previously

passed an Act app-ropnatmg £750,000 for Invahd and Old-age Penswns (Act 18 of 1908).

ACT CHALLENGED BY NEW SOUTII WALES.

25. An appropriation of £250,000 for Harbour and Coastal Defence· was under similar :circumstances P!1ssed to ·:;t Account. Debits were made of this amount against the States, _ and the proportional debitagamst New South Wales was £160,000. The New South Wales State the validitvof-t-his course. and b"'=qught an action against the Commonwealth

. . .· . . . . .. . ... . . ..J...... .... . . . ... . .- . .

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XXI ·

in the High Court* to recover that sum on the grom1d that it was money payable to the State hy Commonwealth as surplus revenue of the Commonwealth for the month of June, 1908. TbeHigh Court gave judgment in favour of the Commonwealth on the ground that-" The Commonwealth Parliament has authority to appropriate money out of the Consolidated Revenue for a specific

purpose; and money so appropriated, although not yet actually disbursed, is ·expenditure' within the meaning of sectwn 89 of the Constitution, a.nd cannot fo rm part ot the · surplus revenue' d181,ributab1e among the States under section 94 until the actual disbursement of it for that pu"·poEe is no longer lawful or no longer thought ne·cessary by the Government. Held, therefore, that the sums appropriated,,by the Otd-age Pensions Appropriation Act l9U8 and the Coast Defence

Act 1908 were properly deducted !rom the revenue for the finanmal year in which the approptiations were

made m order to ascertain the · surplus revenue ' payable to the States in respect of that year under section 94 of the Constitution and section 4 of Surpl'!'s Revenue Act 1008. "

26. It appears that the New South Wales authorities took the view that" surplus revenue" must include· any balance of revenue over current expenditure, that is, over actual payments within the financial year. The judgment of the High Court establishes the validity of the action taken by the Commonwealth in establishing Trust .Funds to which moneys may be transferred

in ac9ordance with any appropriation made by Parliament.

MEETING OF PRIME MINISTER AND PREMIERS.

27; In order of time, the next event to which notice should be directed is that of a meeting of the Prime Minister of the Commonwealth with the Premiers of the States which took place in August, 1909. At this meeting the agreement referred to in para. 24 was drawn up, the preamble of which reads-

" In the public interests of the people of Australia, to secure economy and efficiency in the raising and spending of their revenues, a.nd to permit their Governments to exercise unlettered control of their receipts a.nd expenditure, it is imperative that the finanmal relations of the Federal and State Governments- whwh under the Constitut.ion were determined only in part, and for a term of years-should be placed upon a sound and permanent basis." ·

THE 25s. PER CAPITA.

The document goes on-,, Itistherefore ag1·eed by the Ministers of State of the Commonwealth and the Ministers of the component States in conference assembled to advise (inter (2) That in order to give freedom to the Commonwealth in levying duties of G'ustoms and Exciee, and to assure to the States a certain annual income, the Conunonwea.lth shall, after the first day of July, One thousand nine hundred and ten, pay monthly to the States a sum calculated at the rate of One pound five shillmgs per annum rer head of popuLation according to the latest stllotistics of. the Commonwealth. ·

. (4) That ,in view of the large contribution to the Customs revenue per. capita made by the State of Western Australia the Commonwealth shall (in addttion to the payment provided for in paragraph No. 2) make to such State special a.nnual payments, commencing at Two hundred and fiity thousa.nd pounds in the fma.ncial year One thousand nine hundred and ten a.nd One thousand n ine hundred and eleven·, and diminishing at the rate of 'l'en thousand pounds per annum. The Commonwealth shall in each year deduct on a per capita basis irom the moneys payable to the States of the Commonwealth a.n ,amount equal t o one-half of the sum so paya.ble to the State of Westem Australia.

(5) That the Government of the Commonwealth bring lefore tr.e l'ar!iarr.ent du:ring.this the necessary n:easure · .to enable an alteration of the Constitution (giving eflect to the precedin g paragraphs, :J)

AGREEMENT DEPENDENT ON REFERENDUM.

28. It will be seen that this document, though called an agreement, is not a contract on the part of the Commonwealth to make certain payments, but that the whole matter is to be dependent . upon the will of the electors as expressed under a referendum. .

AGREEMENT REJECTED.

29. The questions (2) and (4) were submitted to the electors in 1910, but they did not approve of the proposed alteration of the Constitution. Two important results of the adverse vote on that occasiOn may be noted. First, that it left the Commonwealth free as from the 31st December, 1910, to pay a subsidy to the States at any rate decided by the Commonwealth

Parliament, or to cease such payments altogether. The second result, especially affecting the State of Western Australia, was that whereas if the proposed alteration in the Constitution had been approved, the State of Western Australia would have been entitled, as of constitutional right, to the special annual payment beginning from the 1st July, 1910, of £250,000, and diminishing annually by £10,000, thus running for 25 years, but the adverse vote left the amount and period of payments to the discretiOn of .the .t:>arliament. ·

SECOND SURPLUS REVENUE ACT.

30. In 1910 the second Surplus Revenue Act was passed, taking effect as from the 1st July of that year. The power of the Parliament under the" Braddon Clause," section 87, of the Constitution, to change the basis of contribution to the States did not become absolute until 31st December, 1910, but by inserting provisions to prevent conflict with that section the Parliament was enabled to legislate on the subject · before that date.

* The State of New South Wales v. the Commonwealth. 7 C.L.R. 179. t No. 3 was a temporary provision.

'I;

t· !

xxn

SPECIAL GRANT TO WESTERN AUSTRAUA. · 31. The Surplus Revenue Act 1910 was framed to avoid any breach of the provisions of section 87. It provided (section 4) t.hat for a period .of ten years from 1st July, 1910, and thereafter untilthe Parliament otherwise provides, the Commonwealth should H pay to each Stateby monthly

instalments or apply to the payments of interest on debts of the State taken over by the Commonwealth, an annual su:m amounting to 25s. per head of the number of the people of the State." The Act also provided (section 5) "that the Commonwealth shall during the period of ten years beginning on the 1st July, 1910, and thereafter until Parliament otherwise provides, pay to the State of Western Australia by monthly instalments an annual sum, which in the first year shall be £250,000 .and in each subsequent year be progressively diminished by a sum of £10,000." The section also provided that one-half of the payments should be debited on a per capita basis to all the States, including Western Australia.

GRANT MAY TERMINATE IN 1935.

32. It will be seen that this section differs from the proposal in the " agreement " of 1909 to the extent that it makes a grant to Western Australia absolute for ten years, only leaving subsequent payments entirely at the discretion of the Parliament. When that period of ten years expired no action was taken to vary or cancel the provision, which is still in force, and there is at present no reason to anticipate that Parliament will make any alteration. Unless special action is taken the payment will finally terminate . in 1935. . The . arrangement for a capitation . payment to all States of 25s .. per head which also was made absolute for ten years (expiring in 1920) remains unaltered up to the present.

SURPLUS REVENUE (IF ANY).

33. Section 6 of the Act of 1910reads as follows :-" In addition to the payments referred to in section four of this Act, t.he Treasurer shall pay to the Eevera.I States, in proportion to the nuni ber of their people, a.ll surplus revenue (if any) in hi1> hands a.t the close of each financial year."

RESENTMENT JN . WESTERN ·AUSTRAIJA.

· 34. The wordinp; of this section appears. to have: created expectations of distribution to the States over and above the capitation. grant of 25s. per head of po-pulation, and as these expectations have never been realized, disappointment, not 1lntinp;ed with resentment, has been felt, at least in Western Australia, and has been expressed in the evidence submitted to the Commission. For example, Mr. Keenan, presenting the case for the State, complained that section 6 above quoted makes provision for the return to the States " of surplus revenue remaining

over in any one year after payment of all Commonwealth expenditure during that year.. . but the Commonwealth Treasurer and the Commcmwealth Parliament evaded the obligations of that section by paying in the surplus remaining after payment of all Commonwealth expenditure in any one year to a Trust Fund, the object of the Trust being to provide special funds for old-age

and invalid pensions, &c." Mr. Keenan went on to say_:__,_ . · , . .

"It may be argued that inasmuch as this surplus was. in tact distributed throughout Australia no harm or damage was suffered by any one State, because the arrangement made at the conference as to the distribution of surplus moneys was not carried out ; but in fact the distribution ofthis surplus in the form of Old-age and Invalid Pensions resulted in a considerable .loss to Western Australia as compared with wbat she would have received if that surplus had been distributed on the basis of a per capita allowance for each of the States." . , 35. At a later stage the representative of the State, Mr. G. W. Simpson, took up very much the same position, as shown by the following extract from the evidence. (Q.5786/5789.)

5786. "Mr. it not good policy to charge as much as you possibly can against revenue, and so keep down the Loan Account ? · · · . . ' ·

5787. Mr. Simpson.-It is a good financial policy, but when it is a matter of diViding your revenue either against loan or to the States, as was oontemplated by the Constitution, it seems to me to be a very wrong attitude. 5788. Mr. Mills.-You will excuse me iU say that your arguments seem to be directed tOwards 'the suggestion that the Commonwealth is acting in some way which is not quite legitimate,

Mr. Simpson-Morally I think that is so, and T think evp,rv State in the Commonwe..alth will agree with that ; but legally, we have no standing." ·

RESENTMENT SHOULD NOT EXIST.

36. It is unfortunate that such a feeling should exist, for in. our opinion it should not exist when the position is fully known. Whatever doubt may have existed prior to the judgment of the High Court in 1908 (see para. 26 above) as to the meaning of the term " surplus revenue " as used in section 89 of the Constitution, after that judgment it was no longer possible to doubt that the Commonwealth in transferring any portion of its revenue to ·a Trust Fund for any

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to whi.ch by the was act!ng strictly_ in accordance

with what the ConstitutiOn mtended, that Is to say, the only tnbunal With authonty to declare the intention o£ the Constitution, had spoken to that effect. The terms " spirit of the Constitution " and " intention of the Constitution " were .frequently used by witnesses in · connexion with this and other matters. It seems clear from the evidence of the Commonwealth

Solicitor-General (Q.5416-17) that such terms must be regarded as expressions which, as commonly used, vary in meaning according to the political or other interests in respect of which they are introduced.

. 37. With regardto the 1909 agreement between the. Commonwealth and the States, the State Advisory Committee also puts forward two statements in respect of the claim that Western Australia has -received less than her due, namely :- . "(1) An understanding that Western Australia . would receive certain estimated payments, which

represented her minimum requirements ; (2) A definite assurance from the Prime Minister that any surplus revenue in the hands of the Commonwealth Treasurer would be returned to the States on a per capita basis."

COMMONWEALTH TREASURY WITNESS.

Number ·one is said to be supported by certain which it was said have always beenattached to the 1909 agreement as a Parliamentary Paper and represent amounts which Western Australia is estimated to receive. The representative of the Commonwealth Treasury (Mr. S. G. McFarlane) said (Q.5694)-

" Mr. Keenan refers to these e8timated payments as a 'specific sum,' and states 'that specific sum was submitted to the conference, and, whilst it is not incorporated in the terms of the agreement, yet it has always been attached to that agreement as an appendix.' The report of the conference contains no such tables or any reference thereto. The subject was discussed in committee, consequently there is no record of that discussion in the report. . . . . • It is more than likely that some tal)les were presented

to the conference showing the estimated results of proposals under discussion. In any case, it is obvious that such tables could be accepted as 'estimates' only. They could not, under .any circumstances, be construed as conveying an equitable right apart from the precise terms of the agreement. It is submitted . that no reasonable grounds exist for supposing that the representative of Western Australia was misled

·as to the intention of the agreement. On the contrary, it is more than probable that the per capita method of distribution was regarded as favourable to a growing State. It would appear that the claim made by Western Australia in thiS connexion is opposed to the facts, and is unreasonable."

As to Number two, the evidence of the representative of the Commonwealth Treasury (Q.5694) is to the following effect:-. "In answer to a question by the Chairman, Mr. Keenan, on pagl:l 7, stated that the exact terms of the assurance of the Prime Minister in this matter would be found in the report of Conference. A

careful search of this report has revealed no such assurance, or even any reference to ' surplus revenue.' On the contrary, it would appear to be the intention of the agreement that the States should receive no further payments than those specified."

OPINION OF SECRETARY TO COMMONWEALm TREASURY.

38. ·Further light is thrown upon the matter by the evidence of the Secretary to the Commonwealth Treasury, Mr. J. R. Collins, who said (Q.5857) (referring to section 6 of the 1910 Act)-- ·

" Now, that section was never intended to give to the States any money at all. It was put into the Bill, within my own knowledge, because of a constitutional difficulty.* The peculiar wording of the Constitution may be read by soine as implying that all surplus revenue of the Commonwealth shall be paid to the States, and for a number of years we did that. On the last day of each month, we struck a rough

balance of our accounts, and every penny of the revenue money remaining in the Treasury, according to that estimate, was handed over to the States. That crippled the Commonwealth. It could not carry forward any money to meet engagements which it had entered into, and the Commonwealth was placed in a position subordinate to the States, because, if that interpretation were correct, it was only a collecting

agency for the States. But a decision of the High Court showed that it was not necessary to hand over every penny of which remain Ad in the Treasury at the end of the month. It was shown that the Commonwealth up money for its own use, and the way in which that could be done was by appropriating the money. . . . . . . It was never at any time agreed or suggested that moneys in

addition to the 25s. should be paid over to the States. It was fully understood by everybody concerned that the 25s. was to be a ftnal payment. It 'was estimated that the surplus revenue available would be 25s., and not more. . . . . . . And it was deliberately intended that there should be no surplus to distribute under that section.''

By the Chairman-" Deliberately intended by the. Treasurers 1-Answer: "By the Treasurers, and agreed to by all the States."

* The Sta.te Representative cl.a.ims ." tha.t the Section was deliberately put into the Act a.t the request of the Conference" (Q.6879), but nothlng tha.t can be called proof of that statement wa.s a.dduced. In any case, in view of the. High Oourt decision of 1908, and the practice of the Commonwealth (the validity of which was established by tha.t judgment). the Section could not secure to the States any "'dditiona.l payments by the Commonwealth.

U there were no technical r68110Jl8 for retention of the Section it lO'ould 100m desira.ble to repeal it.

XXIV

. " But why should the provision be there ?-Merely for technical reasons. The draftsman thought that the Act might be held to be unconstitutional if it did not follow the wording of the Constitution. He thought that some authority might rule that the Commonwealth was bound to pay over to the States all of its surplus revenue, although it was intended only to give 25s , per head. It was necessary, in order that.

the Act might be constitutional, that that clause should be inserted. It was put in for formal and technical reasons only, and was never intended to be operative . . 'It never has been operative, and until recently no State ever made a claim under it. . . . . . The Parliament itself arranged that there should be .no surplus to be distributed in accordance with the provisions of that section. . . . . . . . It was

deliberately arranged that the Commonwealth should have freedom of tlnance. It was not done with a view of hurting the States, but with a view of maintaining the financial strength of the Commonwealth itself. . . . . . It is true that but for the Appropriation Acts moneys whould have had to be paid. to the States. but they would have got something they never expected to get, and which they did not bargain for. This was a matter of honourable arrangement between the Commonwealth Ministers and the State Ministel'f' of the day. It was accepted on botbsides that the surplUs revenue available for the States was to be fixed at 25s. per head. (Q.5867 et seq.)

OPINION OF COMMISSION •

. . 39. In our opinion the judgment of the High Court in 1908 and the evidence cited should finally dispose of any suggestion that the action of the Commonwealth in transferring revenue to Trust Funds for purposes of which Parliament has approved is in any way illegitimate or that it violates any reasonable standards, moral, political, or commercial. The State has, however, based a money claim upon what it alleges it should have received, if the estimate to which reference has already been made, had been realized. Certain estimates of future increase of population are shown in the tables referred to, but the growth of the population. of the failed to continue at the rapid rate which was adopted as the basis of the table. The claim now put forward is that the State representatives at the 1909 Conference relied upon this estimate as representing lump sum payments which they regarded as the minimum requirements of the State. When and by whom these population estimates were prepared and presented is doubtful. The State representative says " that I do not know who made the population estiwate, but I know it was made officially'by the Commonwealth Government.* I should have thought that it would have

been made by the Statistician's Department, but Mr. Wickens has told you that he was not consulted. " (Q.6875.) The witness went on to say "that both the State delegates at the 1909 · Conference were. now in the Old Country, and it was not possible to secure their evidence on the point, and the natur:e of their was . c?vered in such a number. ways tha:t it was

not altogether possible to put many de:finjte report, although the mdicat10n Is eVIdent m many ways of what they had in their minds as a result of that Conference." (Q.6881.)

NO CLEAR STATEMENT AVAILABLEAS TO UNDERSTANDING • . · 40. No clear statement is available as to the understanding which the Western Australian delegates carried away with them from the 1909 Conference, and in any caseit would seem very unusual for representatives of the to receive definite sums at the expiryof future periods, to rest satisfied with the determination of those sums on the basis of a continued increase of population at a rate which, at the best, could only be considered highly problematical. Nothing I'

would have been easier than to make their claim: definite at the tirne, willch it appears was certainly not done. If the claim put forward by the State were valid, it would be valid in respect of all the States. If all the States received distribution on the lines advocated by Western Australia, the Commonwealth, according to the evidence of the Secretary to the Treasury (Q.5857), would

be crippled, and evidently would be compelled to impose additional taxation in order to meet its recurring obligatioi1s. It is to be noted also that in the 1909 (Agreement) there is no · reference to any payment to the States other than the 25s. per capita; nor was there any such reference in the questions submitted to the electors of the Commonwealth by the Referendum of 1910. If, however, the electors on that occasion had voted in the affirmative on the principal question, the would be entitled in perpetuity (unless the Constitution were again altered) to the per

capita payment.

CONCLUSION.

41. After careful consideration, we are forced to the conclusions---: (a) That neither the State of Western Australia nor any other State has a just grievance or is entitled to complain on account of the procedure which has now been followed by the Commonwealth for seventeen years of transferring certain

portion of the revenue to Trust Funds to meet future expenditures for the purposes of appropriations previously made by Parliament. (b) If the finances of Western Australia have suffered as a consequence of the agreement of 20th August, 1909, to which that State, through its Premier, was a party,

result. must be attributed to reliance upon · figures of futne

mcrease whiCh were then merely of the nature of prophecy--a propliecy. which was not fulfilled. · ·

. . * It is not certain when this estimate wa.s prepared or by whom, hut there is some ground for it wasn:otprepa.red

untll after the Conference. . · ·

' • , ·. '

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PART V.-COMPETITION OF THE COMMONWEALTH SAVINGS BANK.

CLAIM FOR COMPENSATION.

42. The fact of the establishment of a Commonwealth Savings Bank in Western Australia, as in other States, is made the subject of a complaint by the State Advisory Committee, and a money claim for compensation is put forward on account of an alleged loss to the State in being compelled to pay higher interest for certain moneys which, if the Commonwealth Savings Bank had not been established, it is estimated would have been deposited in the State Savings Bank,

and available to the State at a low rate of interestr-4 per cent.

43. The Commonwealth Savings Bank· commenced business in Western Australia on 13th January, 1913. ·The following table taken from the evidence (Q.5708) gives the amounts of depositB ofthe State and Commonwealth Savings Bank in 'Vestern Australia in 1913 and 1924. Australia,. State. Commonwealth.

:30th June, 1913 .. £4,570,379 £112,359

30th June, 1924 5,920,119 2,298,027

- ---·

Increase £1,349,740 £.2,185,668

-----

44. The deposits in the State Savings Bank are to a large extent loaned to the Government at a: rate of interest, usually i per cent. above the rate allowed to depositors. This addition of i pet cent. is intended to cover costs of administration. 45. The State makes two claims in respect of this matter. The first for total loss of interest

through the competition of the Savings Bank, and second the loss of interest from that competition suffered by the State of ·western Australia beyond the average of all States. The amount claimed under the first heading of total loss is up to 1924, £195,195, and accumulative loss up to the maturity of existing loans, £533,970. The loss beyond the average of all States is shown as £170,150 up to the terms of maturity of existing loans, and loss from the same source calculated up to the 30th June, 1924; £53,675.

· 46. It is quite clear that any disability suffered-" by the State of Western Australia on account of the establishment of the Commonwealth Savings Bank is suffered also by other States. The State, however, urges that in degree its disability is greater than that of any other State, and on that account alone it is entitled to compensation.

47. The fact that upon the entry of the Commonwealth Bank into Savings Bank business the State was deprived of the use ·of post offices for its Savings Bank business is represented as a particular hardship in the case of a State of such immense areas, and in which the difficulty and expense of finding or providing special buildings for Savings Bank purposes 'is so much greater

than in other States. ·

48. 'fhe deposits -of the Commonwealth Savings Bank per head of population in Western Australia are in excess of the average of all States, and ·western Australia claims that this is due to its widely scattered population. · ·

49. For some time after the establishment of ·the Commonwealth Savings Bank the rate of per then being paid by the State Savings Bank was continued, but on the

lst July, 1915, that rate was raised to 3!- per cent., and has not since been altered. On the 1st July, 1920, the Commonwealth Savings Bank also raised itsrate to 3i per cent. In New South Wales, Victoria, and South Australia, however, higher rates have always been paid than those granted by the Commonwealth Savings Bank.

50. The following statement (Q.5717) shows an approximate comparison of State and Commonwealth Savings Bank deposits per head of population at 30th June, 1923 :-

1 State. Commonwealth. I

. ·-· -·-- .. --- --- .. - .. -----·---- -- ------!----- .. ·--- .. --

1

r s. d. r 8. d. 1 r 8. d .

New South Walt's 25 17 0 3 10 0 29 7 0

Vil;toria . . j 31 7 0 3 11 0 :34 18 0

Sr.uth Australia 31 f) 0 4- 0 0 35 6 0

Western . . . . I J i 3 0 5 19 0 23 2 C•

Total.

_____________________ i -- --- --·

I

. I

XXVI-

51,· The Witness who presented the above table (the representative _o£ the Dommonwea!th Treasury) remarks that " the above. comparisons would appear to be a fairly accurate reflection of the rates in force," and he comes to the conclusion that :-"If Western Australia pays a lower rate, she cannot expeet to obtain the same J?roportion of business

as those other States. Any disability she may suffer, as compared with other States, IS a result of her own polic:r.':

MAJORITY OPINION OF COMMISSION.

(Cormnissioners Entwistle and Mills.)

52. In our opinion the . view taken by the witness is the correct· one. Where two people are competing for the same commodity the bu;rer wh.o quotes the higher rate naturally business.· The State at while P.aymg same to Savings Bank depositors

as IS paid by the Commonwealth Savings Bank, IS holding approximately 75 per cent. of all the Savings Bank deposits in the State. Moreover, it cannot be taken for granted that if the Common­ wealth Savings Bank were not operating in Western Australia the State would have received the whole of the deposits now: within the Commonwealth Bank. The State Savings Bank pays interest, 3-! per cent., only up .to the liinit of £500. For deposits from £500 to £1,000, 3 per cent. is paid, and no interest for any sums above £1,000. It is reasonable to assume that a proportion of the deposits with the Commonwealth Savings Bank is made by depositors who had reached the limit of interest bearing accounts with the State Savings Bank, and who would in no case have been prepared to deposit further moneys with the State Savings Bank, either in the absence of interest or with a rate of interest so low as 3 per cent,

53. Proposals for amalgamation of Savings Banks with the Commonwealth Bank were submitted to a Conference of State Premiers in 1912 by the,Prime Minister. This was prior to the establishment of the Commonwealth Savings Bank. Further suggestions have from time to time been made to the States, and in 1918 the State of Tasmania and in 1920 the State of Queensland came to terms with the Commonwealth, with the consequence that amalgamation of the State Savings Banks of those States ·'With the Commonwealt}l Savings Bank has taken place.

54. It has been suggested in evidence that Western .Australia might very properly have followed Queensland's lead. That, however, is a matter wholly within the discretion of the State. and upon which we do not desire to comment. In the opinion ofthe State Advisory Committee the suggestions made by the Commonwealth with regard to amaJgamation have always had attached to .them conditions which are so. onerous that no Government, whatever its political complexion, has ever favoured acceptance of them.

55. While the establishment of the Commonwealth Savings Bank has not been entirely without effect upon the financial position of the State of Western Australia, in our opinion it has not been proved that the State has suffered any disability as a· result of that action which is not suffered by the otherStates of the Commonwealth, and that even in degree it is difficult to contend that the pesition of the State has been affected more than that of other States, when allowance is made for th.e low rate of interest, 3! per cent., paid by Western Australian Savings Bank as compared With the rates, 4 per cent. to 4! per cent., paid In other

56. We are, therefore, of opinion that the claim by the State, for pecuniary compensatiO'n on account of the extension of Commonwealth Savings Bank business to that State, has not been established.

(From this sect1:on of the Repo,rt, the Chairman expresses dissent. 8ee paras. 404-420.)

1489

xrvii

PART VI.-ACQUISITION OF GOLD BY THE COMMONWEALTH DURING YEARS . . J.:.

CLAIMS FOR COMPENSATION.

£2,600,000 _LOSS TO STATE AND £3,000,000 TO MINING INDUSTRY.

_ 57. In the State Case, and in much subsequent evidence, claims were made that the State revenueand thegold producers have suffered hugelosses in consequence of .the acquisition bJthe Commonwealth of gold produced during the war years at the standard priee of £3 17s. 9d. per standard ounce (22 car.ats fine).

. The State Advisory Committee estimated the losB-'-(a) To the State from the decline of the mining industry at £2,600,000. (b) To the gold producers "at the figure of £3,000,000, being the amount of the premium distributed during the yea,n 1919-1923. (In those years the export of gold being freely permitted and gold being at a. premium in several

countries, the Gold Producers' Association was enabled to obtain a. premium to the extent of the figure cited.)

DATE OF PROCLAMATION.

_ ·58. Up to the 17th August, 1915, gold was not subject to control, and exports were freely inade by banks as part of their regular banking business. On 17th August in that year, however, a proclamation was issued, under the Customs Act 1901-1914, prohibiting the exportation of gold or bullion from the Commonwealth except with the consent, in writing, of the Treasurer

of the Commonwealth (Gazette, page 1326 of 1915). .

.' · ... . .: .

WAs A PROm MADE BY IMPERIAL OR COMMONWEALTH GOVERNMENT . · _ ' 59. It appears from the evidence (Q.6386) that, in the Senate on 24th Ma,rch, 1923, Senator (W.A.) asked tb,efollowing questions:- _ .

(1) Will the Government ascertain from the British Government what was the. prolit, if .any, made by that Government, on the purchase of gold during the war period from the Commonwealth Government or through its agency? (2) If any prolit has been made, what was the destination of such profit ? . ·

The Minister replied as" follows :-" It is not usual to ask the British Government questions of this kind, and there may be reasons for treating war transactions as secret; As the Honorable Senator has asked the question, however, I shall endeavour to ascertain the views of the British Government on the subject."

A letter dated 24th May, 1923, was sent to Senator Drake-Brockman by the Minister for Home and Territories, Senator Pearce, giving the information asked for, which had been obtained by cable from the Secretary of State for the Colonies. The cablegram quoted in that letter read as follows:-

"Early in 1916 High ComrniBBioner offered to sell sovereigns to Imperial Government to assist war finance. Actual a.mo11nt of sovereigns purchased WRS £13,500,000 which was paid for at face value of £3 17s. 9d. per standard ounce, these being &&me terms as thOle given to English Banks who surrendered SQveteil!DS for war purposes. Payment was made by telegraphic transfer at par, which at the then rate of exchange represented considerable premium on selling. Not possible

tO identify particular transactions such as these for the purpose of assigning commercial profit or loss. It will then be appreciated that these sovereigns went to form part of central gold reserve used for effecting external payments required for prosecution of war." · · · ·

60. It may be pointed ou't that the South Mrican gold producers, producinghalf the world total, entered into an arrangement under which, throughout the war, all their gold was taken by the Bank of England at the standard price of £3 17s. 9d. per standard ounce.

REQUEST FROM IMPERIAL GOVERNMENT. 61. It appears from the evidenee given by the representative Treasury (p. 574) that--of the Commonwealth

"In June, 1916, the Imperial Government asked the Commonwealth Government if it could arrange to ship gold to the extent of £13,000,000* in connexion with war finance. It was this.request which led to the Commonwealth Government acquiring the gold production from August, 1916, in order to control the exports."

·· . 62. A Treasury file made available to the Commission shows that about £5,000,000 of the

gold required was supplied by the banks, and the balance from the existing gold reserve of the Commonwealth note issue and from subsequent production. The export of the sum named took place at intervals extending over about twelve months from .June, 1916. 63. (P. 574.) "The Imperial Government accepted delivery in Australia for all gold handed over and arranged for shipment and protection during transit. Payment was made at the normal price of £3 17s. 9d. per standard ounce, which was the price paid to the British banks for the gold they had _ handed over. No profit was made by the Commonwealth Government or the

Commonwealth Bank on this transaction."

• The amo•mt wa.s afterwards increaeed to £13,500,000.

I

XXVlll

STATEMENT THAT PROm COULD H.4.VE BEEN MADE. . · 64. The State Advisory Com·mittee claim that a profit on the export of gold from Australia during the years 1917-18 could have been made amounting to over £1,000,000. Thisstatement was based upon the exchange rate of sterling in the years 1917-18 in certain neutral capitals, viz., Christiania, Stockholm, Copenhagen, Berne, and Madrid. The evidence of official papers, however, proves that the Commonwealth made no further exports of gold after the requisition of the

British Government for £13,500,000 already referred to had been satisfied, except one sum of £1,500,000 to South Africa. In evidence later than that of the State Advisory Committee, the State representative (Q.6399) based the elaim of the producers upon profit said to have been obtaina.ble in 1916. The witness quoted the telegraphic premium, exchange selling, Australia to London-" 6th January, 1916, 32s. 6d. 20th February, 1916, 37s. 6d. That rate was not altered until the 16th November, 1916, when it was reduced to 32s. 6d . . Those were the only official quotations for exchange in that year. If we allow the exchange at 32s. 6d. on £13,000,000 we have an exchange rate of £211,250, which must have been made by some one."

CLAIM BASED ON MISCONCEPTION.

65. The claim that a profit of £211,250 was .made in connexion with this transaction is based upon a misconception of the situation. We learn, through the courtesy of the Commercial Bank of Australia Ltd., that when the premium of 32s. 6d. Australia to London :was in force (1916) London drafts on Australia were selling at par, and the arrangement with the British Government

was that "for every 100 sovereigns placed on board :ship in Australia credit for exactly £100 was given by the Imperial Government in London." On that basis the Commonwealth made no profit. ·

· 66. The State Representative, however, estimated (mistakenly) {Q .. 6429) that. the premium :12s. 6d. at the Australian end was obtainable at the London end .on transfers of credit to Australia. Also, there is no evidence that the Commonwealth Government desired to transfer or 'in fact did transfer to Australia any of the money with which it was credited in London by the British Government. If it had immediately transferred the whole of the credit of £13,000;000 it could have made no profit on the transaction inthe then position of the exchanges. ·

SIDPMENTS TO AMERICAN AND .· INDIA.

67. Information supplied to the Commission by the Commonwealth Bank' shows. that of the £13,500,000 gold agreed to be shipped from the Commonwealth, £10,500,000 was shipped to American ports between 3rd August, 1916, and 5th April, . 1917, and the balance at . the · of the British Government was shipped to India between the 4th June and the 20th November, 1917.

68. The State Representative expressed the opinion (Q.6378) that " a total of something like £21,000,000 worth was exported, of that a large portion went to South Africa and other countries. " . That figure may be approximately correct for the whole war period, · but the only period which comes into question is that during which the Commonwealth acquired the gold production, i.e., from shortly after June, 1916, until about the end of 1918.

TRANSACTIONS DURING ·l916-1918.

69. The following statement supplied by the Commonwealth Treasury shows, in round figures, the gold position from the 30th Ju:ne, 191:6, .to 31st December, 1918 Gold Transactions.

Total Gold held in Commonwealth by Government and Ballks at 30th June, 1916 Add-Production-'1916 (6 months) approximate 1917

1918

lJediet-Shipment at request of Imperial Government Shipment to South Africa fo r currency purposes ..

Balance . . . . . . . .

Uold held in Gommonwea.lth »t Dece mber, 1918 (approximate)

Difforence

.·.

. . £

. . 3, 500, (}()() . . 6,185,000

.. . 5, 408, (}()()

£

44,050,000

--- ·- 15,093,000

. . 13,500,000 . . 1,500,000

59,143;000

·--"---· 15,000,000 . . 44,143,000

. . 43,773,(}()()

£370,000

The difference of £370,000 would be accounted for by sundry exports (chiefly .to islands in the Pacific) and sales to jewellers and travellers. . ·

1491

XXIX

ATTITUDE OF AUSTRALIAN GOLD PRODUCERS IN 1919. 70. It is interesting to notice the position taken up by the gold producers of Australia iu 1919; immediately after the end of the war. In January of that year a conference of Australian gold producers was held at Melbourne, at which certain resolutions were passed, the mostimportant

of which, for the purposes of our inquiry, are probably Resolutions Nos. 1 and 2, which read as follows:-RESOLUTION No. 1. " This Conference of gold producers who are responsible for the conduct of the industry, points out to the .Federal

Government that the decline in gold production during the past five years has been mostly due to increased working costs which has not been compensated for by any increased price for gold, and further points out that if there is no in the conditions under which gold production is carried on, the industry must decline at an even more rapid rate than It has during the past four years."

RESOLUTION No. 2.

"Whereas other producing intetests in Australia have received assistance from the Federal Government in securing for their products the highest prices possible, the gold-mining industry, which has had to meet the same, or even higher increased workin! costs, has been prevented by the embargo on the export of gold; from realizing the world's best prices for its product, now this Conference of gold producers from all parts of Australia appeals to the Federal Government for

the immediate removal of the embargo on the export of new production, or alternatively the payment of the parity valuP if the retention of new gold within Australia be, for national reasons, essential. "

DEPurATION TO ACTING PRIME MINISTER (HON. W. A. WATT). 71. At the conference representatives were appointed to wait upon the Acting Prime Minister, the Rt. Hon. W. A. Watt, for the purpose of presenting to him "the claim of the industry to be relieved from some of the more onerous conditions weighing upon it." The President

of the Chamber of Mines of Victoria, who had been chairman of the conference, and who was the principal spe11ker of the deputation to the Acting Prime Minister, said--" The claims of the industry at the present time might be reduced to (a) The removal of the embargo on the export of new production, or, failing that, the payment of the parity valnt·

for such portion of the Australian production as was required to be retained in Australia for the purpost· of strengthening the national reserves. (b) The removal of Federal and State taxation on the gold mining industry, and the relaxing or removal of thi· restrictions on the formation of gold mining companies. (c) The. encouragement of prospectin!:[ by the Federal and State Governmenis."

Mr. Lloyd 'Blbxsome, r@presenting the "\Vestern Australian Chamber of Mines, said- -" . . . . They did not wish to press for assistance in a direct. money direction in the granting of bonuse> ..

. because they did not consider that method of assistance waQ likely to hE' of permanent value."

It will be observed that the· deputation made no request to the Commonwealth Government fox c.ompensationin respect of losses on premium during the war period as now claimed and it is noteworthy .that the claim is not made until after the lapse of six years, during which time ther•' has been a free export market for Australian gold at rates of premium which have produced profits to the producers exceeding £3,000,000. The premium, which had been decreasing during the last

two years, had been almost extinguished by adverse exchanges at the recent date when the gold standard was again brought into operation.

THE MARKET IN CHINA.

72. The State representative (Mr. G. W. Simpson) (Q.6582) quoted figures, supplied by the Secretary of the Gold Producers' Association, to show that during the years 1916-18 there was a premium· on sovereigns to be obtained in Hong Kong at rates which, if the whole of the Australia11 output for these years had been sold in that market, would have produced a profit of something

over .£3,000,000. An assertion was also made that during the years 1916-1918 China could have absorbed the whole of the gold output of Australia. The assumption is made throughout this claim that the Commonwealth Government in purchasing Australian gold at the standard price placed itself in a fiduciary position with regard to the producers, and was in fact an agent for

sale of the gold at the best pri9e obtainable, and responsible for any lack of knowledge or ability· in endeavouring to discover and make use of markets outside Australia in which a profit on thP re-sale of gold could have been obtained. This appears to us to be an unreasonable position. 73. The report of the gold producers' conference of January, 1919, and the papers presented

at that conference seem to indicate that the information now brought forward was either not known to the Australian producers before the war ended, or, if it had been so known, it was never brought to the attention of the Government with any request that a change of the poli(oy of that Government should take place and that the gold should be exported.

COMMONWEALTH PROm ONLY £11,572.

74. It has been shown above that, with the exception of a sum of £11,572, a profit madt• ;by the Commonwealth Government early in the war on exchange operations. that Government made no profit in respect of the export of gold.

t 1 ' l \' ' I r l I: I ,. 1' t !: f

.XXX

THE PRODUCERS IN SOUTH AFRICA.

75. It is pertinent to refer to the position of the producers of gold in South Africa .during the war. The producers in that country sold the whole of their output, by arrangement Wltb t,he Bank of England, at the standard price, and also paid the cost of transit to England and insura;nce. This arrangement co?tinue.d .until the 20th In a letter sent by the. Chamber of Transvaal to the Prime Mmister of South Africa m 1919, that Chamber, referrmg to the war-time condition; said:_" Under the shipping conditions of the time, the mines, if they had desired to carry thei; gold elsewhere (which, of course, upon patriotic grounds alone they would not have ·done) would have been unable to do so." (Q.5831.)

THE DECUNE IN GOLD PRODUCTION.

76. In Part VII., "Proposalfor Gold Bounty,'' para. 107, the fact is mentioned that, during the post-war years when a premium was obtained averaging nearly 19s; per fine ounce for four years, the output of gold not only_ did not but declined at a than in the

preceding four Y.ears. When qu_estioned on this pomt, the State representative (9.6596)­ " I think that Is largely explamed by the fact. that so many of the whiCh

producing gold had closed, and there was no defimte assurance that the prellllum would contmue for any lenrrth of time, and that did not warrant the companies which had closed re-opening." The Chain:an of the Gold Producers' Association, however, at the -1919 Conference,. in a paper read before the Conference, said-" No prophecy of value as to the duration ofapremium for gold ,can be made by the writer, but on historical grounds the period of restoration of the currencies is likely to be slow, and,. if S?, the premil?ll will continue for some years." The following

question and answer on this pomt are material (Q.6599) :-" Does it not show that, in the opinion of the President of the Gold Producers' :Association, the premium was likely to continue for a number of years ?-Yes, hut the premium would be counterbalanced by the exchange rates. While the premium is· still available on ·the purchase of gold, the exchange rate makes it an unprofitable business." ·

The fact is that the exchange rate, which, according to the above answer, now makes it an unprofitable business to sell gold outside Australia, only became effective -for that purpose for a short period immediately prior to the recent restoration of the gold standard, and itis at least. a remarkable coincidence that a claim for compensation in respect of the years 1916-18 was not put forward until the practical close of a period of more than five years during which the producers had been receiving substantialpremiums on the sale of their product.

77. It is further to be noted that no gold-producing State, except Western Australia, has put in any claim.for compensation on the lines of the Western Australian claim, nor has approached the Commission for support or assistance to the industry many way whatever.

CLAIM FOR £3,000,000 I$JECTED.

78. After careful consideration of all the facts presented we are unable to the claim for compensation to the gold producers, which as put forward wo.uld involve a payment to those producers of about £3,000,000. .

CUlM BY STATE GOVERNMENT.

1g. A claim is made by the State for compensation in respect of reduced :railway freights a.nd water rates alleged to have been caused by the, acquisition by the Commonwealth ofall gold during: the years 1916-18. at the price. In the stated by the .State

Advisory Committee were. giVen showmg a. decrease in freights on the gold-fields section of the Government Railways durmg the years 1915---24, the _total being stated at a sum of nearly £2,000,000: For the same years figures were put In showing a decreased revenue from the Government Supply Department for water supply sold to the. consumers on the gold­ fields, the total loss bemg giVen as £481,471. It was also alleged that by decreased taxation on profits made in the gold-mining industry the State has suffered a loss of £95,801.

AMOUNT £2,600,000.

, 80. The grouping these figures tog:ether, claim as a loss to the State due to

Commonwealth actiOn the sum of £2.600,000 for whwh the State should be reimbursed bv the Commonwealth. •

. . . 81. In important respects this claim is one _which we are unable to endorse, but detailed . m:It1c1sm appears unne?essary, as we the v1ew that the claim is not self-subsisting but dependent upon the claim for compensatiOn made on behalf of the producers of gold.

I

1493

82. Attention may be drawn to the attitude taken by the State Government. The representative of that Government (Q.6624) said that " the Government still desires to press the past disabilities claim for losses made even if. a gold bonus were granted. They still desire to press them, and tell me definitely that they could not accept payment in. the form of a gold bonus as compensation for other disabilities that have resulted · in regard to Federal acts arising out

of Federation." ·

CLAIM REJECTED.

83. In our opinion this position is untenable. If, as the State alleges, considerable reduction took place in its revenue from railway and water supply, owing to the reduced gold output, then the State would certainly be recoul?ed if a bounty granted to the industry, as it is claimed that such .a bounty would largely mcrease productiOn. Indeed a bounty of £1 per ounce for a

period of ten years, so far as can at·-present . be estimated, would be probably more than three times as great as the sum of £3,000,000 claimed as compensation to the gold producers. The I statement made by the State Representative (Q.6626) that "if a bounty were granted the State Government would forego compensation for any loss for continuing disabilities in regard to

f' railways, waters supply, &c.," seems to .us to be merely a withdrawal of a claim which never had any substance.

PART VU.-PROPOSAL FOR GOLD BOUNTY.

DECUNE IN GOLD PRODUCTION.

84. The production of gold in Western Australia reached . its maximum in 1903, which was also the year of greatest production for Australia generally. · Since 1903 the production has shown a steady decline, with the exception of one year, 1913, which showed an advance in Western Australia of about £133,000 over the figures for the previous year. The following table

gives the figures for the years 1901-1923 :--'-(.

GOLD OUTPUT OF WESTERN AUSTRALIA AND OF AUSTRALIA, SHOWING THE PERCENTAGE OF THE WESTERN AUSTRALIAN OUTPUT FROM_ THE YEAR 1901 INCLUSIVE ONWARD,

-·- Western Australia. Australia. Percentage.

£ £

1901 . . .. .. .. 7,235,653 14,017,508 51.62

1902 .. . . . . .. 7,947,661 14,811,823 53.66

1903 8,770,719 . 16,302,731 53.79 .. . . . . .. 1904 .. . . . . . . 8,424,226 15,935,118 52.86

1905 .. . . . . . . 8,305,654 15,571,331 53.34

,. 1906 .. . . . . . .. 7,622,749 14,626,384 52.12

1907 . . . . . . . . 7,210,749 13,514,762 53.35

1908 . . .. . . . . 6,999,882 13,058,852 53.60

1909 .. . . . . .. 6,776,274 12,611,287 53.73

1910 . . .. . . . . 6,246,848 11,557,650 54.05

1911 . . .. . . . . 5,823,075 10,551,624 55.19

1912 . . . . .. . . 5;448,385 9,879,928 55.15

1913 . . .. . . . . 5,581,701 9,376,573 59.53

1914 . . .. . . -· 5,237,353 8,728,946 53.83

1915 . . .. . . . . 5,140,228 8,269,938 62.16

1916 . . .. . . . . 4,508,532 7,075,980 63.71

1917 . . .. . . .. 4,121,645 6,185,410 66.63

1918 .. . . . . . . 3,723,183 5,438,243 68 .46

1919 .. . . . . . . 3,118,113 4,572,778 68.19

1920 .. . . . . . . 2,624,427 4,023,317 65.20

1921 . . . . . . .. 2,352,098 3,258,832 72.113

1922 .. . . . . . . 2,286,325 3,264,450 70.04

1923 .. . . . . . . 2,143,028 3,031,508

I

70.69

-··-

-·- ----·--·-------·-

85. Great was given by the State Advisory Committee and other witnesses to the effect upon the mdustry and upon the State of the decline in gold production. Apart from the effect of the compulsory sale of gold to the Commonwealth during the war years, it was urged that the decline is due mainly to the great increase in working costs since 1914, which precludes

the of any but fairly high-gra4e ore. Of this increase, the two principal causes are the war, wtth 1ts general enhancement of pnces, and the high Federal tari.fi. . .

XXXJl

INCREASING COSTS OF PRODUCTION.

86. The report put hy VJ.0 Committee giving the tonnage of ore treated in the gold­ mining industry from 1908-1!.)21 .: shows that from 1915 onwards the cost per ton of has steadily gone up until it had practically doubled itself in 1921, the figure for 1915 bemg 19s. 9d. and the figure for 1921 38s. 7 d." .

87. The reduction in tonnage treated resulted in a corresponding reduction in the personneL the number of employees in the industry having fallen from 11,722 in 1914 to 5,787 in 1923.

STATE GOVERNMENT AID.

88. It was · also stated by the Committee that for the purpose of developing the mining industry the State Government of Western Australia had expended on railways built to serve the mining districts £5,000,000, on water supply £3,000,000, and generally on mining development and by way of grants £2,000,000, a total of £10,000,000.

89. A return was put in showing that the decrease in freights on the purely gold-field section of the Government Railways from 1915 to 1924, both inclusive, amounted to nearly £2.000,000, while revenue from the Government Water Supply Department for water supplied to the fields showed a reduction from 1914 to 1924 of £481,471.

90. It was further submitted by the Committee that the State .Government has incurred an indirect loss owing tq the reduction in tax collected by the State upon profits made in the gold-mining industry. The loss from this source was estimated to be nearly £96,000. 91. The tariff effect upon the industry, by increasing the cost of necessary

material, was also the subject of comment by several witnesses ; but where, as in \Vestern Australia, the mines have been equipped at a period of lower tariff and lower prices, the total effect of this source of increase in cost cannot be considered as of high importance.

TWENTY SHILLINGS PER FINE OUNCE FOR PERIOD OF TEN YEARS. 92. At an early stage of our inquiry .in Western Australia a suggestion was made that, in order " to establish the industry, an.d to afford direc.t relief and encouragement to every seeker for gold ' big and small,' " the Commonwealth should grant a bounty upon gold _production to the extent of 20s. per fine ounce for a period of ten years. . Before considering the '\Vestern Australian evidence given in relation to this proposal, itmay ,be ;useful to refer tO aninquiry made during the year 1918 into the gold production of the'J3rit,i$b Empixe and to the report of the Australian

Gold Producers Association of 1919.

MEETING] OF AUSTRALIAN

93. The meeting of the Australian Association was called for the purpose of discussing " the very serious positio:Q. into which the gold mining industry of Australia had drifted owing to adverse conditions due to the war, and other causes. The Conference was attended by considerably over 100 delegates from every gold pr:oducing State in the Commonwealth. " The

Conference passed several resolutions which may be summarized as follows :-1. That the decline in gold production · during the five .years prior. to the Meeting had been chiefly due to increa.s!'d working costs, which were not compensated fo:r by any increase in the price for gold. 2. That whereas other producing interests in Australia had received assistance in securing the highest possible price fol'

their products, the gold mining industry had be(ln .. prevenwd from·BO doing by the embargo on the export of gold. Attached to this resolution was · an appeal to the Federal Govemment for the immediate· removal ·of the emba:rgo on the export of new production, or • alternatively payment · of the .parity value if the. new gold were :retained within Australia. .

That all State and Federal taxation on gold mining be removed and that machinery and supplies u sed in gold mining

which cannot be manufactured in Avstralia be admitted free of duty. 4 . That the Australian Government· encouvage gold prospecting: by various means enumerated, .Uwluding a subsidy of 5 per cent. for fiv e years on .tb:e gold produced ·a.nd the payment of subst.tntial rewards for .the discovery of new goJd.fields in Austra.Jia. ·

RELIEF BY WAY OFJINCOME TAX REDUCTION . . . 94. It may be stated in relation to these resolutions that both the Commonwealth and the have since. amended income .tax statutes for the .purpose 'of relieving the

mmmg. mdust.ry, and the State Government of We&tern Australia has made important concessiOns, said to be of the value of about .£40,000, in the case of water supplied to the Eastern gold-fields. ·

IMPERIAL COMMITTEE, 1918.

95. The inquiry into the gold in the British Empire, to which reference is made, para. 92, was conducted by a Committee of bankers and financiers under the Chairmanship of Lord Inchcape. .

96. Among the findings of the Committee was " that the .decline in Australasia in 1917 1918 was normal and in main to . natural causes, but it was accelerated by the

mcrease of costs and decrease m effimency of labour .caused by the war. ··

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· 97. The question of a subsidy had been raised, and " the Gold Producers' Committee," which apparently represented both South African and Australian interests, stated that in their opinion " if it is desired to maintain the existing production of gold, as far as the Witwatersrand Gold-field is.concerned, about 12s. 6d. per standard ounce of raw gold would counteract the present increased cost of production, and would tend to check a further decline in the output, but it is

by no means certain that it would restore the pre-war output." The findings of Lord Inchcape's Comn:rittee, however, included this sentence:-"We are not prepared to recommend any bounty or subsidy for the purpose of stimulating the gold output of the Empire ; gold being the standard of value no more can properly be paid for it than its value

in ciurency."

PRINCIPAL POINTS URGED IN FAVOUR OF AUSTRALIAN PROPOSAL . . 98. The Western Australian proposal .that the Commonwealth Parliament should provide a bounty of 20s. per fine ounce of gold produced in Australia during a pericd of 10 years was supported by a number of witnesses. The principal points urged in favour of the proposal were

as follows · ·

l. That the industry is no w declining at such a rate that it is doomed to premature extinction unless the nation can afford it direct relief, and thus come to its salvation and ensure a practically endless life for It. 2. That the decline iii mining is attributable to the great increase in working costs since 1914, which precludes the treatment of any but high grade ore. The two principal causes of this increase are the war with its' enhancement of prices

and the high Federal tariff. :i. That the tariff by raising the eosts of mining machinery and reqnisites has handicapped all Inines not yet equipped, has increased the cost of living and so necessitated the payment of higher wages; 4. That it is a white labour industry competing unequally with its outside competitors who employ coloured and cheap

labour.

5. That the · price of gold being fixed the Inining industry is unable to pass to the purchaser an increase in the cost of production. . ·

6. ·That the industry and the men employed in it are entitled to participate fairly in what is already the public policy of protection. .

7. That, to date, it has not cost the national purse one penny, figuratively speaking, to develop an industry which has largely developed the national purse. 8. That them is no fear of over production. 9. That the request for a gold bounty is not beyond the Commonwealth's capaoity to pay it. l<''urther, that it would go

far towards removing one of Western Australia's severest disabilities. ·\ 10. That the bounty would be the means of largely increasing the population of the ··gold field to"Wns, and for every man actually working on the mines at least six people are directly dependent upon their produce, and the value of the production per bead of the people on the gold field, with gold at its standard price of £4 5s. per ounce, was £65 .6s.,

"a figure which compares well with the production per head of the State of £70 or the Commonwealth of £67 8s." To this may be added the contention (Q.4164) that the Commonwealth would be reimbursed the greater part of the bounty paid, through increased Customs and E xcise Revenue. H. That the bounty would avert a huge depreciation on £8,000,000 worth of Commonwealth, State, and Crown property. 12. That the bounty would attract practically unlimited new capital into this State and other Australian mining 13. That the bounty would bring so much more ore into profits that it' would extend the lives of the mines and certamly

increase their number. 14. That while the after-war premium on gold was obtainable a. bounty on gold was not necessary or asked for from the Commonwealth, but with the loss of the premium a gold bounty becomes imperative. 15: That the bounty would afford the rich classes of the world an opportunity to indulge in a gamble, provided there were

enough mines which would give some men a fortune, though causing others to lose everything . . (

COMMENTS BY MAJORITY OF COMMISSION.

"(Commissioners Entwistle and Mills.)

99. 'fhe following comments may be made on the points stressed by witnesses:-­ Comment on 1-· The term " premature extinction" is a vague one and the 'records of gold production in Australia since 1903 show that the industry in every State has steadily and continuously declined. .

During the war years 1914-18 when the producers were receiving only the standard price for then gold, the production in Western Australia steadily fell, the amount produced in 1918 being about 29 per cent. less than in 1914. During the period 1918-22 the decline still continued and at an accelerated rate, the production

in 1922 being less than that of 1918 by nearly 4.0 per cent., although during thiR period the producers had enjoyed the benefit of the gold premium then existing. Taking the figures of gold prices in Commonwealth Year-Book No. 17, page 772, and computing the (weighted) average premium {or the period it is found that that average represents a premium of about 19s. per ounce or very nearly the of the bount:r

asked for. The fact that while this high premium was being received the productiOn of gold at a more rapid rate than during the corresponding period 1914-18 when only the standard received, suggests that even a bounty of 20s. per ounce might be insufficient to arrest the declme m production.

Comment on 2- ··· Whilst no doubt the increase in working costs since 1914 has been a contributing factor to the general decline the comment on No. 1 shows that the industry has been irresponsive to a remarkable stimulus which existed for some years aJter 1918. Comment on 3-

It is believed that hardly any important mines in Western Australia have newly for a number of years and some witnesses expressed the view that the tariff upon IS not

of great importance in the aggregate of costs. The effect of the tariff has been. an me! ease m cost of living followed by increases in wages, not only in the mining industry but in all mdustr1es. F.25l7.-3

xxx:iv

Comment on 4-This needs little comment. The mining industry like all other industries in Australia, is a white labour industry, and like some other important industries, e.g., agriculture, it has to compete with outside rivals, some of whom employ coloured and cheap labour.

Comment on It is true that the preaent standard price of gold represents a reduced commodity-value as compared with the pre-war value, but it might be pointed out on the other hand that the gold industry has always enjoyed an advantage denied to all ot.her industries, that of having a standard price and an unlimited ma.rket with no advertising expenBes and no sales expenses.

Comment on";6-- . ... Certain bounties or assistance in the nature of guarantees are in . existence with regard to some Australian industries, but in our opinion the extension of the bounty systeiJ:l to a product such as gold, which is the standard of value, is to apply that system in the most inappropriate manner possible. From

one point of view gold is a commodity· and a proportion of the annual production, probably from 20 per cent. to 30 per cent., is used as a commodity, but its predominating use is in relation to currency, whether as coinage in immediate circulation ; for transfer from one country to another in settlement of inter­ national trade balances ; or for storage by national Treasuries and Banking institutions as the substructure upon which rests the superstructure of credit represented by note issues and other modern forms of credit. ·

The views of British Committee concerned with Empire production of gold upon this point will be seen in paragraph 97. ·

Comment on 7-If by the term " national purse " in the above sentence is meant a direct Commonwealth expenditure it may be sufficient to remark that the particular expenditure necessary for enabling the industry to be carried on is that provided by the State in the form of railways, water supplies, and general administrative services. So far as Western Australia is concerned it may be added that Commonwealth expenditure on the construction and maintenance of the railway from Port Augusta to Kalgoorlie has of course been

drawn from the national purse andhas been of benefit not only to the State but also directly to the town of KaJgoorlie, the most important gold mining centre.

Comment on 8-. .· Primarily the fact that there is no fear of over production is an immen:se advantage to the . industry, as it is thus protected against a risk which at times seriously affects other important industries.

Comment on 9-It may be true thatCommonwealth finances .are capable of bearing impost suggested in thu way of a gold bounty, but it must never be forgotten that bopnties are taken from the pockets of the people by taxation and to the extent of the levy reduce the· capl}cjty of the nation for. ente;rpriRe and deyelopment in other directions. That " the bounty will go far i;Owards removing one of Western Australia's severest disabilities " must be considered purely from the point; of view of whether the disabilities of the State as such or disabilities of a section of the citizens of the State are 'in 'question. The grant of a bounty, while of some indirect benefit to State finances, would for the most part be a direet benefit only to certain citizens of the State and to mining share_ holders resident outside the State and outside Australia.·

Comment on 10--Experience in the past has shown that a great gold discovery is a powerful magnet for population, but the subsidized working of relatively low-grade ores, which under existing economic conditions would not be worked without a bounty, would 1e unlikely to more than transfer population from other industries within the State or from other States, and in our opinion would have but litt.Ie effect in increasing the total Australian population. As a Western Australian Witness said (Q. 4635): "There would not -be a rush such as in the nineties without the discovery of a field of similar character to Kalgoorlie, which-onJv comes once in the history of a State.'' ' •

Comment on 11-What has already been . said indicates that in _the absence of further rich .discoveries ··power of a bounty to permanence 00 the gold industry can in np be taken for granted. . It Is a. regrettable fact that many worthy Alli'tralian workers in mining fields have been compelled to theu. employment, and have suffered a loss owing to the depreciation in value of their homes.

This, however, Is one of the unpreventable concomitants of a transition from mining to agriculture.

Comment on 12-. . A rate of bounty, as that l?rop?sed for 11: premium of ten years, certainly be effective

m mtroduemg the entry of additiOnal capital mto t.he mdustry, but the statement as it stands as to the introduction of practically unlimited new capital must be regarded as extravagant.

Comment on 13-. . This statement, made .the President of the Chamber of Mines, Western Australia, appears to be a fall statement of the probabilities. · ·

1491 7

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Comment on 14-. The remarkable absence of recuperative power shown by the industry, even when the strong stimulus of a premium averaging nearly 19s. per ounce for four years was applied (see comment on 1), makes prophecy as to the permanent effect of a bounty appear highly questionable.

In relation to comments on Nos. 1, 2, 10; 11, and 14, attention is particularly invited to the extracts from Mr. Kingsley Thomas's Report quoted in paragraphs 115-119 below:-

REASONS GIVEN FOR TEN-YEAR PERIOD.

100. The President of the Chamber · was asked if the encouragement of the industry suggested bv a deputation representing the gold producers of Australia to the Federal Treasurer· in 1919 wou1d not be sufficient. The proposals then made were a 5 per cent. subsidy on the value of gold production for a period of five years ; mining companies to be exempt from income tax

until the subscribed capital had been returned, and certain minor proposals. The President's answer was that further consideration by the Chamber had convinced· the members that those proposals would only assist the gold mining industry in a small way, and that if it were desired to revive it and get the most profit . out of it from the point of view of the Commonwealth

Government or the State Government, it must be assisted properly. The witness said ''We · have asked for a period of ten years so that time is given to find new mines and after finding them to find new capitalin order .to equip the mines." ·

OTHER PROPOSALS.

101. Other proposals submitted by witnesses were-L That a bounty of lOs. per fine ounce be paid on all gold produced for ten years. 2. That a bounty be ·paid upon the tonnage of oi:e crushed or treated, independently of the percentage of gold obtained. · ·

3. That payment of bounty upon 12 dwts . . ore be made on the first 6 dwts. only. 4. That a flliding scale subsidy be paid· on the tonnage of ore milled. The scale submitted wa.& specially designed to encourage the treating of low-grade ore, and the author recommended that no subsidy be paid on ore the ,yalue of which is 30s. per ton (about 9 dwts.). This scheme also provided for differential

rates as between free milling ore and ore requiring roasting or flotation processes. The estimated cost of this scheme was greatly in excess of the probable cost of a bounty of £1 .per fine ounce. 5. That sums be granted to be administered by State Departments of Mines, for special work'l or equipment of a character considered necessary or beneficial for the development or successful working of any particular field.

102. of schemes attracted much support. Nl!IDbers 2, 3, and 4 were condemned by expert Witnesses as hkely to lead to fraud, and 1t was pointed out that Number 1 or any modification of it as to amount, would also offer opportunities for fraud, especially if gold coins were restored to free circulation;

OFFICIAL ENDORSEMENT OF OIAMBER OF MINES AND MINING ASSOCIATION.

. 103. The official endorsement of the Chamber of Mines of Western Australia, representing about 90 per cent. of the value of gold production within the State, as also that of the Mining Association representing nearly 10 per cent. of the production was given to the proposal for a bounty of 20s. per fine ounce to be continued for ten years. The President of the Chamber said (Q.4165) "To pay less than 20s. per ounce would not, in our opinion, be sufficiently effective, for it would not make available for profitable working a sufficient quantity of low grade ore."

COST TO COMMONWEALTH.

104. If this had the e:ffect of increasing the average output during the period by 50 per cent. (some witnesses in sanguine mood said the present output would be doubled) the total to the Commonwealth would be between £11,000,000 and £12,000,000. If Western Australia continued to produce its present proportion of the total Australian output, i.e., about 70 per cent.,

the amount of the bounty distributable to producers in that State would be about £8,000,000.

OTHER STATES DO NOT APPROACH COMMISSION,

105. It is worth noting that although, as the Commission is aware, representative bodies of gold :producers in all the States were supplied with copies of "The Case for the Gold. and therr co-operation invited, and although the opportunity to approach the Comm1ss1on on the . matter remained open for more than tbree months, no witness appeared on. of a:ny

State other than Western Australia nor did th(' Commission receive any representatiOns m relatiOn to the matter h-om other States.

' I \ I !

XXXVl

FINDINGS OF IMPERIAL COMMITTEE.

The British Committee of 1918 referred to above (paragraph 95), in the of their report said :-"Our witnesses admitted that from the point of view of the purchaf!er the grant of a subsidy in addition to the price would amount to an increase in price. They agreed without hesitlltion to the importance of maintaining the standard price

of gold. But the conclusion is irresistible that gold cannot be purchased at 23s. 9d. per sovereign, concurrently with the preservation of the gold bl!sis which assumes the maintenance of the existing fine content of the sovereign as to the importance of which there can, we think, be no difference of opinion. A subsidy for the production of gold appears to us to be fundamentally unsound. Gold has been adopted as the standard of value because, by reason of the operation of natural causes, it is available in such quantities and at such a cost of production in terms of other commodities as to give it a more or less stable value. · Its value, in terms of commodities, is directly influenced by the laws of supply and demand. Periods of increasl)d gold production, following on the discovery of further deposits of gold capable of extraction at a low cost, have been marked by an increase in the price of commodities. The exhaustion of these sources of supply has been accompained by a declin.e in the price of commodities.

The intention of the subsidy suggested by the Gold Producers is to enable gold to be produced which otherwise would not, conformably with the economic laws of supply and demand, be produced 11-t all. Other things being equal, the result would be that the purchasing power of the whole of the world's gold would be diminished pro tanto. The value, in terms of gold, of the co=odities for which it is exchanged would rise.

It is undoubte"dy desirable that considerable gold reserves should be held in this country, but in our view the most important function of a gold reserve is that gold from the reserve should be available fo:rexport at the standard price when required to meet foreign indebtedness. We think it essential to preserve a free l!1-!trket m gold, but clearly it would not be a business proposition to do so if we had to pay £4 lOs. 3d. for an ounce of gold in order to export it £3 17s. IOkd.

We can only maintain our gold reserves in this country if the value of our exports, visible and invisible, exceed on the balance the value of our imports. If we want gold and cannot produce it at a profit, we must depend on our capacity to render services and to produce at a profit the commodities wanted elsewhere by the holders of gold, and to do so we must adjust our prices to world prices.

We shall not be able to keep gold which we acquire by means of a subsidy if the balance of trade is against us, and apart from the shareholders in gold-mining concerns whose gain would be merely temporary, the only people who would benefit by the subsidy would be the foreign purchaser of the gold. To glve more for an ounce of gold than it is worth in currency appears to us out of the question, except on the supposition that we want gold for the purpose of keeping it locked up and unavailable for export. We cannot, however see any use in acquiring gold for· such a purpose." ·

106. The recent reversion of the United Kingdom and the Dominions, including Australia, to a free market in gold for the purposes of international trade, makes . the views jus,t . cited of special application to the situation now being discussed. ·

DECUNE IN SPITE OF STIMULUS.

107. It has already been shown in paragraph 76 that during the period of four years 1919-1922, inclusive, the gold industry was in receipt of the equivalent of a bounty at the average rate of about 19s. per fine ounce, being the then premium on gold. The amount received as premium by the producers during that period amounted in the aggregate to a sum exceeding

£3,000,000. Even under that stimulus the production not only continued to fall but it fell at a rate more rapid than that of the preceding four years when the producers received only the standard price. PART BOUNTY TO BE PAID TO MINERS.

. 108. The bounty to be partly allotted to payment of increased wages. A feature of the bounty proposal submitted is that 25 per cent. of the bounty shall be distributed as a bonus to the miners employed. A witness supporting the suggestion for the bounty proposed (Q.4299-4302) that in order to avoid inequalities ·which arise, the whole amount available for the

arranged bonus should be placed in a poolfand distributed at intervals equally among all the miners engaged in gold mining irrespective of the amount of gold annually won in each mine during the period. 109. A witness, who approved of the bounty, said that this payment would make the gold miner the best paid in the State (Q.4299). One view of the proposal might be that the proponents really had in mind a bounty of 15s. per ounce for the proprietors or shareholders of the mines, and added the extra 5s. for miners with the idea of protecting themselves against future claims for increases of wages founded upon increases in the net return from the mines. This wage­ bonus proposal appears to have in it the seeds of industrial disturbance by causing discontent amongst workers in other industries in which no special bonus could be paid. It also appears to us to be object1onable from the point of view that it would interfere with and embarrass the Tribunals specially constituted for the purpose of determining rates of wages .

. REDUCTION IN TOTAL ORE MINED.

110. A table included in the evidence of one of the witnesses at Kalgoorlie (Q. 4347) shows that between 1918 and 1924 there was a very remarkable reduction of the total tons of ore mined per man underground. The figure for the year 1918 was 402 tons and by 1924 a reduction to 291 tons had occurred. The explanation of the high tonnage during the years 1914-18, given by the witness, was" the indication is that men were employed stoping ore and that development work had practically ceased." That .explanation, however, is somewhat discounted by a further

tixvii

statement of witness "that end ?f the war, reserves had been depleted and although men were available, the cost of nunmg had mcreased to the extent that development was almost prohibitive." · · · ·

LARGE SUM OF MONEY INVOLVED.

111. The adoption of the bounty proposal would involve direct payments by the Common­ wealth during the suggested period of ten years of a very large sum of money; probably amounting to £11,000,000 or £12,000,000. Of this sum Western Australia producers would, on the present State ratios of production, receive about 70 per cent. or, say, £8,000,000. It is difficult to suppose that if these payments were made the Commonwealth Parliament would find itself able to afford financial assistance in any other form to the State of vVestern Australia or to any other section

of the citizens of that State. The evidence of the State Advisory Committee, read as a whole, strongly suggests that the most important thing for the State, in its present financial position, is that direct financial aid should be rendered to the State Treasury. The payment of the bounty would of course not be to the State Treasury, but to individual proprietors or companies producing gold. If the bounty proved adequate(which wesubmit is still open to doubt) to cause a material increase in the amount of gold produced and to enable the mine owners to pay substantial dividends, the State would, of course, obtain some direct benefits by the increased taxpaying capacity of mining shareholders and less directly by some increase in its receipts from railway freights and from water rates. The amount so received by the State from these sources would,

however, appear to be quite inadequate to place the State finances upon a sound footing. 112. A further fact, telling against the proposal for bounty, is that the gold-producing States other than Western Australia, and which represent about 30 per cent. of the total production, have not indicated the slightest desire for this bounty. If the payment be made at all it would have to be extended to all States. Further, it has been said inevidence that of the money put into gold mining probably not more than about 60 per cent. is recovered. Assuming bounty at

the rate suggested to be paid for the ten-year period, and that the gross payments amount to £12,000,000, then it will be seen that the Commonwealth Parliament would have to commit itself to this large disbursement, with.a reasonable certainty that between £4,000,000 and £5,000,000 would be. totally lost.

INCOMPATIBLE WITH GOLD STANDARD. 113. Payment of a bounty upon gold, apart from the opportunities for fraud which it would present, is, in our opinion, incompatible with the maintenance of the gold standard to which, as we have been officially informed (Q.5921), Australia has lately returned.

QUESTION WHETHER EXPENDITURE BETTER EMPLOYED OTHER DIRECTIONS. 114. The claim for assistance by way of bounty is made on the ground that mining is a national interest, and that there is a national responsibility to keep the industry in successful operation. As to this, it may be said that to some extent natural causes have operated and are operating to cause decline, and it is impossible to avoid the question as to whether in national interests such expenditure as would be involved in the payment of the proposed bounty should

not be devoted to purposes of more permanent promise, such as the settlement of suitable migrants or Australian citizens upon lands suitable for agricultural production. Gold is not a perishable product, and deposits not Iiow mined will remain without deterioration until change in econ01nic conditions and/or improved methods enable them to be profitably worked.

ANOTHER ASPECT OF GREATEST IMPORTANCE. 115. We have so far discussed the bounty proposals upon general lines. We now turn to another aspect which is of the greatest importance. Early in the present year the Western Australian Government, feeling concerned at the decline of the gold-mining industry, appointed Mr.

C. Kingsley Thomas, a South African mining expert, as a Royal Commissioner to investigate the whole position, and to make recommendations as to possible improvement of the industry. Thomas' report, which is dated 12th June, 1925, has been made available to the CommissiOn. In many important particulars Mr. Thomas condemns the methods and management of most of the important gold Inines of Western Australia, particularly the Kalgoorlie-Boulder group.*

116. A few quotations from Mr. Thomas' Report may be of interest:­ "BOULDER BELT-tmiTICISMS AND COMPARISONS. P.ll.-The lodes were abnormally rich in gold, of great length and breadth and supplying .a.

remarkably high tonnage, area for area, compared with the gold mines of other countries. was a good B

When the character and permanency of the gold-field became manifest, and comparues were makmg large pro.fits, it should have been realized that the size of the shafts, through which mining operations were conducted, wa8 entirely inadequate for proper exploitation of the gold bearing lodes at depth. ·----------------------• One or two mines, particularly the mine known as "The Sons of Gwalia.,'' are spoken of in eommendatory

XXXVlll

DEVELOPMENT.

P.8.-Very little real development work appears to have do_ne on the ' Golden Mile' for the last ten years or so, but the companies are doing a certain amount. Here, too, effie1enoy Is very poor.

TRANSPORT OF ORE UNDERGROUND.

P.8.-Tramming and trucking underground and hoisting are usua.lly coated under one head and are abnormally high, and the work badly organized. ·

COST OF PRODUCTION.

P.l3.-The oost per ton varies considerably, the lowest given being £1 Ss. 3d. per ton, and the highest £2 2s. 2d. per ton, the average being £1 168. 6d. per ton.

SBAFI'S.

P.l3.-The hoistin<> units are small, the largest being about three tons, and following from that down to 10 cwt. Manysh'lfts employ in which the rock is hoiated in its truck. With the exception of_ one or two shafts, the methods employed for hobting ore are cumbersome, costly, and out of date, and should have been discarded many years ago.

STOPING.

P.l4.-The rock breaking efficiency in the mines of the Boulder Belt is deplorably low.

GENERAL REMARKS.

P.l8.-The question of wages and conditions of labour are not within the province of. this CommisRicn, .but there are just one or two p:>ints that I must mention. It is not so much the wages that bear heanly on the compames a_s return in work for the wages. As I said before, the efficiency on these mines is lamentably low, and what proportiOn 1s due to inefficient labour, and what to inefficient appliances, .lack of control, and lack of discipline, I leave those interested to determine.

CONCLUSION OF PART n.

P.I6.-Seeing that in the period of their existence the mines under review have paid in diVidends the sum of £16,455,161, or a return of over 303 .per cent., it is evident that funds were not lacking, and a very small of the above amount, properly applied at the right time, would have spelt a very different and much more pleasmg story to-day."

117. In comparison with the South African mines, Mr. Thomas, referring to " the so-called cheap native labour and different nature of the ore occurrence, " points out that for years the cost of production on Western .Australian field was within a_bout Is. per ton of that of the" Rand." He also points out certain advantages in Western Australian mines over the mines in the "Rand" which however are "counter-balanced by the disadvantage of a more difficult and costly treatment process ·being necessary."

''CAPITAL.

P.l2. In the preceding section !Jf tbis Report I have given the total grol§! papital of the companies at present operating on the Boulder Belt at £5,418,396, and the dividends paid as £16,455,161, equal to 303·6. per cent. If a. small proportion of this distributed profit had from time to time been devoted to a progressive policy of larger shafts, vigorous development, up-to-date equipment, and combined metallurgical research, there is no doubt, in my mind, that the companies concerned would never have gone from profit to loss, and moreover, would still be returning an adequate interest on

capital. P.l7.- • ·â€¢ • • mines on this belt with an average grade of 11·4 dwt,g, are in difficulties, whilst on the Rand 6! dwts. shows a. profit of lOs. per ton."

118. Mr Thomas makes a number of important suggestions, both of a technical and administrative character, including suggestions for something like amalgamation of the working of the seven great mines which make up the" Golden Mile" and goes on to say (p. 18) "Carried out on the lines I have indicated, and with the whole'-hearted co-operation of all concerned, I see no reason why costs should not be reduced to below 25s. per ton, and have no doubt that the tonnage of ore treated will be gradually raised to 100,000 tons per month, and ·the field worked at a profit for another generation." ·

MAJORITY REJECT PROPOSAL.

(Commissioners Entwistle and Mills.)

. 119. A perusal of Mr. report has left upon our minds the firm impression that, leavmg out of account the obJectiOns of a general economic character, to the proposal for a Gold Bo11:nty _of 20s. per ounce (?r a amount), it would be impossible to recommend that proposal .m VIew

(From this section of the Report the Chairman expresses dissent. See paras. 421--464.)

1501

XXXIX

PART Vlli.-COMMONWEALTH CUSTOMS TARIFF.

VIEW OF STATE GOVERNMENT.

120. Many representative witnesses complained of the incidence and effect of the Commonwealth Customs -Tariff. ·

121. The Hon. Norbert Keenan, K.C., speaking on behalf of the Advisory Committee appointed by the Government of Western Australia, said- · " I am not here to question the fact that New South Wales and Victoria the high Customs Tariff or, as they prefer to call it, the high protective policy, is advantageous.

It certainly meets with the approval of the citizens of those States. No doubt the supporters of this policy contend that for Australia as a whole the protectionist policy is the most advantageous. We do not wish to be taken aR challenging the right of the majority of the citizens of Australia to determine the policy to be applied to Australia, but whatever else may be the the subject of controversy, it cannot be for one moment

questioned that all the so-called protection policy has achieved is to become a huge revenue collector. The swollen and still swelling figures of Customs receipts put this beyond the range of argument. This huge revenue is paid by those industries which rise articles affected by the tariff, and what, therefore, we say is, that however good a . policy the high Customs Tariff may be for the rest of Australia, it is beyond any doubt a · very bad policy for Western Australia."-(Evidence,.page 11.)

OPINION -OF PRIMARY PRODUCERS ASSOCIATION. . 122. Mr. Carroll, representing the Primary Producers Association of Western Australia, an association with 180 branches and a membership of 2,500, the branches being situated mostly through the Great Southern District, the eastern portion, and as far north as Geraldton, said Western Australia, under the Constitution- ·

"was compelled to surrender control of her Customs House before she had time reap the benefit that might reasonably be expected to have accrued to her as a result

of its retention. At that time her agricultural industry was in its infancy, and her · secondary industries were practically non-existent. During the intervening years her primary industries have made some progress, but her secondary industries, exposed as they have been to the unrestricted competition of the more advanced and highly­

developed Eastern States, _have not progressed at all, the result being that our primary industries have suffered considerably through the non-absorption of their unexportable products. . ·. . Whatever benefit the protectionist policy may have conferred upon any other State in the Commonwealth, it has not only failed to . confer any benefit, but has

actually imposed an enormous burden upon the producers of this State (Q.791).

123. Mr. Carroll submitted a retU:rn showing the approximate cost of equipping a 1,000-acre mixed farm with a minimum equipment of machinery, implements, and fencing material in 1901 and the cost of an equivalent equipment to-day, together with a comparison of the Customs duties imposed on agricultural machinery, &c., at the two periods named, showing that the equipment in 1901 would cost £569 3s., and the cost for the same farm in 1925 would be

£1,188 17s. {Q.791). Mr. Carroll said- .

" The Western Australian Primary Producers Association is of opinion that the greatest benefit which could accrue would be the removal of the duties that retard _ production, or, alternatively, the re-possession of their own Customs House " (Q.832).

SENATOR P. ). LYNCH.

124. Senator P. J. Lynch said that Western Australia had suffered loss " through surrender of its taxing power through the Customs House without ways or means or prospects of making good that loss. . . . If Western Australia had not joined the Federation it might have imposed heavy duties with corresponding results to those at present for their primary industries, or it

might have had an ineffective tariff with no secondary industries worth speaking about, and a primary one encouraged to the maximum. Either course would be a preferable alternative to the present position, for in either case they would have at least one set of thriving industries, whereas at present such is not the case" (Q.58).

Mr. W. N. HEDGES.

125. Mr. W. N. Hedges said:-" The Parliament, with an overwhelming majority of i.ts members representing the older manufacturing State8, can impose, and has imposed, high tanff duties. New South Wales and Victoria elect 48 members to the House, and, therefore, they have a preponderance compared with the small number elected from this State. Under that · what voice have we in any matter? Victoria and New South Wales can pass any tanff they ' I ' /r.!

xl

desire. High tariff duties, when added to the ':"alue an com.pel this

to trade with the older States, where protected mdustnes eXIst, and which mstalled to Federation. They have power to make what profit they like by merely ra1smg the tanff · (Q.1426). .

Mr. A. J. MONGER.

126. Mr. Alexander Joseph Monger, farmer, and formerly President of the Farmers and Settlers Association, Perth, said:-" Our primary industrjes are carried on under a high protective tariff, which increases the cost of production in practically every direction, but we have to sell in the. ope_n

markets of the world and compete against countries where the cost of productiOn IS infinitely lower, and where the work of production is often carried out by black labour. If the prices of wheat and wool suffer in the future a fall, the cost of

production may well be found to exceed the value of these commodit1es on the market. The effect of such a fall would be calamitous, and might be the means of forcing many persons off the land into non-productive avenues. . . . While the State is exerting every effort possible towards the settlement of its vacant lands, it is being severely hampered by what at present is considered to be the settled policy of the Commonwealth. If we take into account the average duties levied on agricultural requirements, we find that these have the effect of reducing the value of every pound sterling advanced by the State for land settlement purposes to approximately 13s. 4d. The imposition of duties means that every pound sterling that is advanced to the settler by the State 1s reduced in value by about 33! per cent. This, in effect, is a direct heavy levy upon capital. No other interpretation can be placed upon the Federal tariff, as it applies to State Governments, than that it is aimed directly at unification " (Q.l519).

Mr. J. C. MORRISON.

127. Mr. John Crawford Morrison, journalist, "Our real ill is the tariff, and I say this, although I am not a freetrader, I say it because it operates with peculiar harshness to us under the Federal system. We get all the disadvantages and none of the advantages of the protective policy. Can a remedy

be applied ? Yes, an annual special Federal grant of a sufficient amount, or the restoration to us over a period of years of control over our Customs and Excise, with the right to impose duties upon products of the other States. Natural justice and a true conception of national interest demand that the burden which we bear shall be lightened " (Q.l379).

THE COMMONWEALTH TARIFF BOARD.

128. The Commonwealth Tariff Board ,(Messrs. R. McK. Oakley {Chairman), W. Leitch, and H. Brookes) consider it is true that- ·

"Whatever additional cost the policy of protection may add to the price of goods and material imported by the Australian consumer, the citizens of the Eastern States gain as a compensating advantage the presence of a large production and manufacture. Such is not the case with Western Australia, which is so placed that at present it has to bear whatever burden may arise under the protectionist tariff without reaping any of the accom­ panying advantages!' (Tariff Report to June, 1924, page 28.)

MAJORITY OPINION OF COMMISSION. (Commissioners Higgs and Entwistle.)

129. Your Commission is of opinion that if the State of Western Australia had not joined the that State might have imposed Customs duties partly protective and partly revenue producmg, and derived advantage therefrom; that having joined the Federation, whatever benefit the protectionist policy may have conferred upon other States of the ,Common­ wealth, It has nQt benefited the State of Western Australia ; that the primary producers of the State of Western Australia have to pay more fortheir agriculturalmachinery, &c., than theprimary producers of the Eastern States; that the primary producers of the State of Western Australia _not the benefit of markets like Sydney with its 1,008,500 population, or Melbourne

With Its 885,700 populatiOn-home markets of such value that three-fourths of the primary pro­ ducts of New South Wales and Victoria, other than wheat or wool are consumed within those that the primary producers of the State of Western Australia have to sell th'eir products

m of the world; that it is impossible to give the primary producers of Western Aus­ tralia rehef by way of reduced Customs duties without injuring the secondary industries of the Eastern States; and that the effective means of removing the chief disability of the State is to restore to the State, for a penod of years, the absolute control of its own Customs and Excise.

(From this section of the Report Commissioner Mills expresses dissent, See paras 503-521.)

1503

xli

THE EFFECT OF FEDERATION UPON- SECONDARY INDUSTRIES.

. •

OPINION OF REPRESENTATIVE OF STATE ADVISORY COMMITTEE . 130. The effect of Federation upon the secondary industries of the State of Western Australia is thus described by the Hon. Norbert Keenan, K.C. :-"The position of the secondary industries in Western Australia since the establish­

ment of Federation has always been one of a most difficult, if not hopeless, struggle against the established secondary industries in the . Eastern States. Mass production enables the cost in the Eastern States to be always considerably less than the corresponding cost in Western Australia, and notwithstanding the addition of the charges made for carriage and for insurance, the Western Australian market always has been and always will be

flooded with the products of the factories of the East at a figure which prohibits the successful pursuit of the production of such products locally. . . In fact, the effect of Federation was to place the secondary industries of Western Australia in a much weaker position than they would have been in if no tariff existed at all against the competition of the world at large; since, in this latter case, the products sold would have to be carried distances many times as great as that between Melbourne and Perth, ·or Sydney and Perth, to reach the market. . . . The result, therefore, of throwing down the Customs barrier between the State of Western Australia and the highly equipped (in industrial factories) States of the East, led to Western Australia becoming merely a customer of

the Eastern States." (Evidence, page 17.)

OPINION OF COMMONWEALTH TARIFF BOARD. 131. That the position of the secondary industries of the State of Western Australia is unfortunate is admitted by the Commonwealth Tariff Board (Messrs. R. McK. Oakley (Chairman}, W. Leitch, and H. Brookes), in their Report to 1924, from which the following extract is taken:-

"It has been claimed by the critics, and it will be conceded by the Tariff Board, that the position into which the ser.ondary industries of Western Australia have drifted is most unfortunate. The Tariff Board is further satisfied that the situation has been growing steadily worse since the Colonial Treasurer (the Ron. H. P. Colebatch) made his statement in 1918. . . . . The Tariff Board is satisfied that it is wrong to blame the Tariff for position alone. Western Australia's remoteness from the other States,

and the continually increasing cost of transport, coupled with the impracticability of manufacturing on a large scale from lack of capacity to compete on competitive terms in Eastern State markets, is in a great part responsible for this backward state of secondary industries.'' (Tariff Board Report, 1924, page 27.)

THE SECRETARY AND DIRECTOR, POSTMASTER .. GENERAL'S DEPARTMENT.

132. The Commonwealth Postal, Telegraphic and Telephonic Services are a very great success throughout the Commonwealth of Australia, but when the Secretary and Director, Postmaster­ General's Department (Mr. H. P. Brown) was asked whether if he, as a private individual, were going into business in the Postal, Telegraph and Telephone Service as a private venture, he would go to Western Austalia in preference to Victoria or New South Wales, he said he certainly would not, if he had the choice. (Q.6274.) Asked," Do you feel disposed to express an opinion whether

you would prefer to invest money in secondary industries in New South Wales or Victoria, or in Western Australia," Mr. Brown replied: "You are in a very big centre of population in the States of New South Wales and Victoria, and you can make investments in businesses where there is a big demand on the spot for the article which you may produce. I think that my preference would undoubtedly go to the more densely populated States, if it were simply a question of trying to get a return for the money which I had to invest" (Q.6275).

Sir W. F. LATHLAIN.

133. Sir William Francis Lathlain specially stressed the fact that, " at the inception of Federation, the other States were well founded, not only in their primary, but in their secondary industries, whilst Western Australia was in her infancy in regard to both. " Sir William added : " The problems which present themselves to those who are charged with the development of this

vast State are so great that one is almost appalled by their immensity, and is compelled to say, ' so little done, so much left undone.' vV e are asked to develop an area of nearly a million square miles under the highest protective tariff, the highest rate of interest, the highest wages , and the . highest cost of transport in the history of Australia " (Q.1913).

xlii

SUCCESSFUL SECONDARY INDUSTRIES.

134. Mr. Norman Leslie Burnell, Manager of the Westralian Knitting .Mills, of Perth, Western Australia, said it appeared· to him that Western.Australia's trou?les due to­ (a) situation, that is, distance from centres of consumption; (b) small populatiOn, With consequent difficulty in establishing secondary industries (Q.2487). The first point, be said, could be overcome. "The only hope of salvation lies with the second." Undoubtedly, he said, population is growing yearly, and in timethis disability will vanish (Q.2487). Mr. Burnell said his firm was able to compete with the eastern States, and sent away to the eastern States _about one-third of their product. Their particular line is hosiery (Q.2491-2). Describing the :eohcy _by the adoption of which his firm succeeded, Mr. Bul'llell said-'' In our OWn Western Austraha:p. mills we began with the idea of catering for the local demand, and consequently we manufactured a large number of different lines to supply the various requirements of the market. At the end of eighteen months we found we were losing money heavily, and a change of policy was absolutely necessary. · After consideration, we therefore decided to cut our numerous lines down to tw_o, and concentrating on these, push through the greatest possible number regardless of orders m hand. I am pleased to say the policy is successful. Since that time we have made a profit instead of a loss, and have always had more orders than we could supply (Q.2487).

135. Mr. Benjamin Rosentamm, of Perth, leather merchant and tanner,

employing about 50 employees on the average (Q.S464), and who has made a success of his business (Q.3459), thus expressed himself regarding the establishment of secondary industries:-" Unlike the evidence that has already been . tendered before the Royal Commion, my remarks will be in the direction of pointing out that whilst Western Australia, on account of its isolation, labours

under many disabilities, in regard to the exte11sion of secondary industries, these disabilities will disappear as the population of the State increases. The process, however, must be slow, unless there is a more rapid flow of people int<> the State. It has been proved that certain industries can exist in Western Australia, and that theyean compete with manufactures in other parts of Australia. It is true there are initial difficulties, but they are not insuperable in respect of certain industries. As the manager of the knitting mills pointed out, experience only can teach us to what extent concentration on one particular article is necessary in order to succeed. In my opinion, this essential factor towards success has been neglected by some, and consequently the industries concerned have failed to become established. The importance of the immediate establishment of many industries, as they exist elsewhere, has been overrated.

. . . Secondary industries cannot be forced upon the people by propaganda ; the people will not buy an article simply because it is made in Western Australia. The article must be equal to, if not better, than that made elsewhere. ·To succeed at once is therefore impossible . . ·It time, and the process may _involve loss of capital for a few years. Those who have a knowledge of their business will pull through,

provided the shareholders are content to wait for a return until the undertaking has been placed on a sound footing."

MAJORITY OPINION OF COMMISSION.

(Commissioners Higgs and Entwistle.)

In the opinion . of your Commission, the most convincing evidence in support of the ·

complamt ;made ?Y Australian witnesses it is practically impossible to establish secondary Industries m the State of Western Australia because of eastern competition, is to be found in the tables showing the imports into Western Australia from other Australian States, and exports from Western .Australia to other States, appearing at page xliii. The statistics shown I_n the tables referred to make it clear that, though here and there be found a Western who has made a success of his business, secondary industries in Western

Australia have very httle chance of being successfully established . ..

137. Where other States sent Western Australia £734,867 worth of apparel and softgoods of Australian origm m 1922-3, the State of Western Australia sent to the other States £1,123 worth _of Western Australian origin. Western Australia sent no butter to the other States, but received £512,199 worth. In the matter of boots and shoes, Western Australia exported £8,115 worth of Western Australian origin, but imported from other States of the Commonwealth £335,882 worth of boots and shoes of Australian origin. Other States of the Com_monwealth sent to Western _Australia implements and machinery, agricultural and horticultural, &c., £252,567_; machines and machinery (except agricultural), £99,597-total, Western Australia sent to the other States only £20,356 worth of machinery and

Implements. _Western Australia exported to the other States of the Commonwealth only £2,476 worth of vehicles and parts. The other States of Australia exported to Western Australia £80,270 worth.

Frmn this section of the Report Commissioner Mills expresses dissent. (See paras. 467-521.)

1505

x.liii

WESTERN AUSTRALIA.

I'RINCil'AL IMPORTs li'ROM oTHER AusTRALIAN STATES DURING THE YEAR 1922-23.

• \rtlclea.

Apparel and Soft Goods . . . . . . • •

Sugar . . . . . . . . . . . owi.

Butter , • • .. .. • . • • lb.

Implements and Machinery-Agricultural, Horticultural, &c. Tobacco-Mo.nuf&etured . . . . . . , lb.

Metals, Manufactures of . . . . . • . •

Boots and Shoes .. .. . . . . . .

Cigarettes • . .. .. .. .. lb.

Bacon and Ham . . . . . . . . ..

Railway Material • . . • . . . . . .

Machines and Machinery, exoept Agricultural, &o. . . . . .Milk and &o. • . . . lb.

Tea •. .. .. .. .. ,

Confectionery . . . . . . . . ,

Vehicles and Parts . . • . . . . . . .

Jams and Jellies . . . . . . . . lb.

Drugs and Chemicals . . . . . . . . . .

Rubber Goods .. .. .. .. ..

Hats and Caps . . . . . . . . . .

Paper, Books, and Stationery . . . . . . . ,

Leather and Manufactures . . . . . . . .

Horses , .. .. .. .. .. No.

Cheese , . . . , . . . . . lb.

Cattle . . • . . . . . . . No.

Copper-Bar, Rod, Sheet, &o. . . . . . . cwt.

Potatoes .. .. .. .. ..

Wine.. .. .. .. .. ..

Coal •• .. .. .. .. ..

Soap.. . . .. .. . . ..

Paints, Colours, Varnishes . . . . . .

Iron and Pig, Rod, Bar, &c. . . . .

Sheep . . .. .. .. ..

Oilmen's Stores . . . . . . . .

Pickles and Sauces . . . . . . . .

Fruita and Vegetables in liquid . . . . . .

Manures and Fertilizers . . . . . . . .

Fruits-Dried . . . . . . . . . ,

Furniture . • . . (, . . . . . .

Meats, preserved in tillS . . . . . . .

Biscuits . . .. .. .. ..

All other articles . . . . . . . .

Total

ton lb.

cwt. No.·

lb.

lb.

Quantity .

Australian Origin.

281,471 5,580,257

917,939

282,364 2,497,433

3,602,975

1,702,992

3,394,175

297

..

3,575

1,449,363 620 7,907 120,346 148,331

76,230 1,399,188

23,070 7,840

41,338 1,064,466

521,497 596,012

Overseas Origin .

120

89,656

1,384

3

8,844

1,456,058 1,394

4,710 ll, 717

2,561

3

3.061 4

7

192

12,526

1,819

..

9,266 11 ,565

Value .

Australian Origin Ovef'eas Origin.

£

734,86'7 591,438 : 512,199 ' 252,567

L322,40l 178,928 335,882 207,706

156,511 107;925 99,597 165,105

158,928 80,270 110,249 107,338

103,561 121,170 86,071 85,179 126,692

69,308 11,529 58,132 05,112

69,51!5 93,783 6J;!l07 44,457

16,460

£

176,681 308 8,486 21 ,341

646

20,384 2,774 4

73,724 1,352 149,111 166

32,036 131 17,484 13,942

2,552 18,994 425 500

174 550 . 11 2

327

2,289 714 2,540

43,057 I

44,912 , . s 82

42,280

1 - 3,369

25,938 545

29,255 ; 7,146

Ill . . : -- 1,028,900 251,030

6,465,587 811,756

--

7,277,343

WESTERN AUSTRALIA.

!'RINCil'AL EXPORTS TO OTHER AUSTRALIAN STATES DURING THE YEAR 1922-23.

Quantity. Value ,

Article,

Western Other Oth er Overseas Western 0\'erseas Australian :Australian Origin . Australian Australian Origin , Origin. Origin, Origin. Origin . ----------- ---£ £ £ Timber .. .. , , .. .. sup. ft. 31,850,503 . . 438 315,592 I . . 17 Apparel o.nd Soft Goods ' .. .. . ' .. .. . . ,, 1,123 I 41,237 15,399 Wool .. ,, '' . , '' lb. 1,428,015 .. .. 78,762 .. .. Hides and SkillS .. .. . ' . . .. .. . , 120,147 I .. . . Machinery and Implements .. . . , . .. .. . . . . 20,356 I 15,899 21 ,588 Copper Ore '. . . . ' cwt. 43,024 . . .. 36,279 .. .. Metal-Manufactures of .. , , ,, .. .. . . .. 9,202 18,341 12,142 Potatoes .. .. . . ,, , , cwt. 30,082 40 ,, 15,783 18 .. Leather and Manufactures . . .. .. . . .. . . .. 25,761 729 85 Boots and Shoes .. . . .. .. .. .. , . .. 8,115 5,668 29 Vehicles and Parts .. , , .. . . . . .. . . ',0 2,476 1,091 19,844 Bark, tanning . . .. .. .. cwt. 39,594 .. . . 21,158 .. l . ' Confectionery .. , . . . ,, lb. 329,903 12,433 122 l 19,363 1,280 ! 23 Cattle • , . . , , , , . . . ' No. 19 •' , , 676 . . I ' ' Tin-Ote .. .. .. . . owt. 1,791 , , ,, 9,080 , , I ' ' Gold-Uncoined .. .. .. I I I 23,777 I I .. . . .. I .. I . . .. .. Silver-Bar, Rod, Matte .. .. .. oz • 115,631 ,, I '' 16,961 ,, i .. Oils-Essential .. .. .. ,, .. 1,175 I .. I .. 11,762 .. 329 Cigarettes •• .. .. .. ,. .. 4,016 5,710 13.3 I 3,744 l 3,555 66 Earthenware, China., &c. . . .. , , . . , , ' ' ! , , ! 10,213 479 I 1,145 All other articles .. ... .. .. . . .. l . . j ' . I 87,421 83,286 56,222 Total . . .. .. ,, .. . . I ,, 837,751 -161,583 I 126,889 I ---Commonwealth Bureau of Census and Statistics. Melbourne, 20th January, 1926. ---·· ----' _ __!_ _________ _ _ 1 1,126,223 t. : 'r' ,

xliv

ALLEGED DUMPING.

RELUCTANT WITNESSFS.

138. During our investigation we heard evidence from witnesses who complained that. goods were dumped in Western Australia by the eastern manufacturers, i.e., manufacturers .m the eastern States disposed of their goods to wholesale or retail buyers in Western Australia at a lower price than they charged forthe same goods in the States in which the goods were manufactured. It was difficult to obtain evidence as to dumping from niany witnesses who were themselves the

victims, probably for the reason that, having gone into other lines of business, they were not disposed to give evidence which might entail further losses. ·

· 139. Mr. Stanley Harold Hubbard, Secretary of Pearse Bros. Limited, tanners and boot manufacturers of North Fremantle, who appeared before the Commission on behalf of that firm to give evidence concerning eastern competition, admitted that firms were disinclined to come forward as witnesses (Q.4161). He said it was very likely that witnesses might meet with adverse criticism from business people in Perth (Q.4162). He gave as a reason that ''retailers who are able to buy competitive lines cheaper than we make will not thank us for giving such evidence. They are probably able to sell those lines at the same price as they would sell our lines, which they could not buy so cheaply, and we depend upon the retailers for our business" (Q.4163).

140. Mr. Frank Green, storekeeper, and Mayor of Geraldton, said: "Many of the firms which are interested aJ?pear t<;> be very reluctant to give evidence. Dalgety's.pro.mised to give me a statement, but this mornmg I was told that the amount was .so small that 1t did not matter. However, DalgetJ's had considerably more trade than my firm, so that their loss was probably double ours" (Q.3241). Asked "Why do you say that witnesses are reluctant to appear before the Commission," Mr. Green said : " I think that nearly all the businesses here have . their head offices in the eastern States, and in Fremantle, and they do not wish to do anything detrimental to the general interests of their firms. The men here are simply managers, and very often the head offices refuse to give them permission to give evidence" (Q.3242). "Dalgety's representative was reminded last night about his evidence, but this morning he said that it was not worth while. 1 can . only conclude that he has had instructions not to give evidence, because I know that Dalgety's brought more stuff over the Midland line than my firm did" (Q.3243).

ONLY JAM FACTORY IN WESTERN AUSTRALIA IN HANDS OF THE OFFICIAL RECEIVER.

141. Mr. Harry Robert Rayner (H. Rayner and Company), jam manufacturer, of 567 Perth, said his company purchased the business of the Associated Fruit-growers'

Cannmg Company from the State Government of Western Australia, on the instalment system, at a purchase price of £10,000, repayments . to be made annually (Q.2003-4). The State Government were the debenture-holders of stock equal to about £4,900 in the Associated Fruit-growers' Canning Company, and, seeing no reasonable'prospect of the company succeeding, foreclosed (Q.2006). During the first six months Messrs. Rayner and Company managed to meet

the · Government liability, pay some of their instalments, and made a net profit of about £97. " Almost imm,e

in_quiry _by myself the Council of Industrial Development (a Government

body functwrung at the ttme w Perth) ascertamed from the· Agricultural Department, South Atistialia.n Government, that the following were the retail prices in Adelaide of the lines mentioned :-Pl':m, 13s. per dozen. Apple jelly, 15s. per dozen.

Qmnce, 13s. per dozen. Orange marmalade, 15s. per dozen.

Apricot, I4s. per dozen, Blackberry, 18s. per dozen.

and lemon, 14s. per dozen. Raspberry, 19s. per dozen.

Fig, 15s. per dozen.

The price to the of the local Western Australian [jams at this period (March 1923) was 12s. lOd. per dozen 24-oz. tms assorted, a case containing- '

14 1 tin.peach.

6 apricot. 2 tins plum and apple.

2 raspberry. 10 tins fig.

1 strawberry. 2 tins raspberry and apple.

1 tm gooseberry. 3 tins melon and 1etnon.

l tin Cape gooseberry. 2 tins quince.

xlv

The foregoing :figures go to prove that the price ruling in Adelaide for South Australian packed jams was more near the cost of production at the time than was the price being obtained in Perth for the same brand, viz., lOs. to lOs. 6d. per dozen. Other South Australian jams, too, have had their dump on this market-' Ellythorp' and 'Croydon' brands. Owing to the cheapness of these cut lines the larger manufacturing houses of the east, such as H. Jones and Company, Rosella, Studley Preserving Company,

&c., found their sales very much affected by these competitors, and, to use the words of one of them, they determined to 'get their trade back again at any cost.' Hence another price war commenced about nine months ago by the combine to recover their lost trade, and the Western Australian public were again invited to eat Jones's jal)l in :Perth at 8s.1Qd. f.o.b. Adelaide basis, which jam is to-day being retailed in Perth shops at 9s. 6d. per dozen, followed by Rosella at lOs. 6d., the local brand to-day being lls. lOd. per dozen to

retailers. The eastern States houses may call this tactics business acumen-they do not like the word dumping-but it certainly is dumping" (Q.l998).

142. Mr. Rayner said the sales of his company had fallen to 40.7 per cent., making the business totally unprofitable. "Four years ago I had a turnover of £27,000 per annum, to-day it is reduced to £16,000. . . . The cause is a harshly-operating Federal system, which permits of one State quitting its surplus goods to another State at a figure that presumably does not include the overhead charges; the necessary profit having been made on the home market turnover, they can afford to dump the surplus at a price, minus the overhead charges, and still show a profit. But it is dumping all the same. Jams and sauces to the value of £184,200 are imported into this State annually, and these imports are increaEing each year, whilst my factory's

turnover has been decreasing. There is no shadow of doubt that dumping is the cause of this depression" (Q.l998). "The fact that the affairs of the only jam factory in the State of Western Australia are in the hands of the Official Receiver in Bankruptcy, with little prospect of success, should indicate that something is

wrong in a State containing approximately 360,000 people. The result of the strangling methods was finally reached in 1923 when this industry was forced into liquidation" (Q.l998).

143. Mr. Rayner suggested that what is wanted is a law to stop the present abuse. He suggested-. ·

"That no goods being exported from one State to any other State shall be offered for sale at a price lower than that ruling for the same article in the State of its manufacture" (Q.l998).

MESSRS. BROOKER AND SONS.

144. Exception having been taken by Messrs. Brooker and Sons, of Port-road, Croydon, South Australia, to statements made by Mr. Rayner, evidence was taken by your Commission in Adelaide on the 23rd April, 1925, when Mr. Arthur John Brooker, of the firm of Brooker and Sons, and Mr. Leslie James Weeks, secretary to that firm, were examined. Mr. Brooker said that Messrs. McGlew and Co., of Weymouth-street, Adelaide, were their Western Australian agents (Q.4407-8); but he could not say what prices Messrs. McGlew and Co. charged for Messrs. Brooker and Sons' jams sold in the State of Western Australia. Mr. Weeks said that, having sold the company's jams to McGlew and Co., they did not bother about the price charged in Western Australia (Q.4452-3). Mr. Brooker quoted a letter from the Western Australian branch of Messrs. McGlew and Co., dated the 3rd October, 1924, and reading as follows:-·

"We regret very much that the sales of Croydon and Goldfinch jams have fallen off so considerably in Western Australia during the last few months. This position has been brought about entirely by the fact that Jones's, A.J.C., and Rosella have been cutting prices to such an extent that it has been very difficult for us to make what few sales we have made. That is signed by Mr. Isaacson. Another paragraph of the letter reads: ''We appreciate your endeavours to help us to make sales, but we feel you will fully realize

the position we are up against, that whilst first grade jams are being sold at 8s. 4d. per dozen f.o.b., less discount and agent's commission, it is very difficult for us to sell Croydon at lOs., less discounts, and oui of the discounts allowed by yourselves to provide for our own commission" (Q.4549).

McGLEW AND COMPANY.

145. Mr. Arthur David Lahiff, of 136 Hutt-street, Adelaide, director of Messrs. lVIcGlew and Company Limited, .said he could not give any information at all about the disposal of Mef'srs. Brooker and Sons' jams in Western Australia (Q.4552). Mr. Panel, the firm's salesman, was the only man who could help the Commission (Q.4553). He (Mr. Lahiff) had asked Mr. Panel " to down to the Commission, and he was on his way down" (Q.4565). At a later hour Mr.

Lahiff went to a telephone, and, returning, said : "He had tried to get Mr. Panel on the telephone, but he could not be found."

. Your Commission did not feel justified in remaining in Adelaide with a view to further mvest1gat10n.

i

xlvi

MESSRS. HENRY JONES AND COMPANY.

147. Sir Henry Jones, of H. Jones and Company, jam manufacturers, Hobart, was examined in lVIelbourne on the 2nd June, 1925, in reference to statements made by Mr. Ra.yner in a letter dated the 30th April, 1925, quoting prices at which jams were obtained in Melbourne, Victoria, and the prices charged for the same jams in Perth, Western Australia. Sir Henry Jones said : '' I cannot swear that the facts he " (Mr. Rayner) "gives are incorrect. I do not say they are incorrect, because we do not distribute jam in Melbourne ourselves, and the competition is certainly very keen from Adelaide" (Q.6064). His firm had a chain of factories "located in Melbourne, Hobart, New South Wales, and_ Adelaide" (Q.6073A). These were the firm's manufacturing centres. Sir Henry Jones continued-

" Jam making is one of the keenest businesses in Australia at the present time. It is so keen that you cannot work out the profit per ton. It is only on the year's turnover that you can calculate the profit. The profit is made by economical working, by the use of big plants and up-to-date machinery. A small man who has not got up-to-date machinery and thorough organization cannot succeed. That is why so many businesses have failed. few firms have succeeded mak!ng jam in A_ustralia with a pr?fit. Jones and Company have succeeded so well because we have bmlt up 1n the last thuty odd years vanous outside interests, such as fruit shipping. We made a great feature of shipping fruit for growers to the Old Country, and we have control of a large proportion of the apples in Tasmania. _We are also agents for steamship lines, and we haveour own saw-mills. We cut our own timber. The best of it is sold, and the second class stuff is used for making our own cases. We also handle 90 per cent. of the hops grown in Australia. These outside facilities and profits help us to build up our big business, and show a handsome

profit on our turnover. When I say 'a handsome profit,' it might mean, say, 10 per cent., because we have 50 per cent. of reserves in our business. When we pay 12! per cent. dividend, it is in reality only 7! per cent., if you take all our reserves into consideration. Jalll is a very keen business. It is so keen that when I went to Western Australia before Mr. Rayner bought that business we could not do any business. I went there with the idea of buying that and I discussed the matter with Mr. Rayner, the

Government and the growers did not see eye to eye with us. They thought we were better out of the place because they were afraid we might establish a monopoly. Therefore, they turned us down._ If they had sold us the business at that. time, it would have been of benefit to Western Australia rather than an ury. If you let a big man come into the business, it is not necessary that it should become a monopoly. By operating in a large way, and by the use of up-to-date machinery and extensive capital, it is possible to give the public cheaper goods than: can be produced. by a man with insufficient capital" (Q.6074).

MAJORITY OPINION OF COMMISSION.

(Commissioners Higgs and Entwistle.)

148. Hit is true, as stated by Sir Henry Jones, that "jam making is one of the keenest businesses in Australia at the present time;" that "very few firms have succeeded in making jam in Australia with a profit;" that Messrs. Jones and Co. have succeeded so well because they have built up in the last 30 odd years various outside interests, _such as " fruit shipping," "control of a large proportion of the apples in Tasmania," "agents for steamship lines," "their own saw-mills," that they "cut their own timber," and that they "handle 90 per cent. of the hops grown in Australia" (Q.6074), your Commission is of opinion that in all probability Messrs. Rayner and Company cannot compete in the manufacture· and .sale of jam with Messrs. Henry. Jones and Company. But your Commission is also of opinion that some authority, such as the Interstate Commission, might with- advantage to the Commonwealth, and .to the State of Western Australia particularly, inquire by what method Sir Henry Jones and Company have built up such various outside interests, and whether that method tends to monopoly or to restraint of

THE FAR.URE OF THE WEST AUSTRALIAN ROPE -AND PINDER TWINE COMPANY.

149. Mr. Alfred Raphael; wholesale merchant, Perth, gave evidence that a company called the West Australian Rope and Binder Twine Co., with a capital of £14,053, was formed in Western Australia in 1911 to carry on a rope-making works (Q.488--540). The firm obtained the best type of machinery, commenced manufacturing in 1912, and sold their product at a price similar to that charged by manufacturers in the eastern States. At the end of 1912 eastern States manufacturers, Mr. Raphael said, reduced theirprices. "There was a scale of reduction. As we brought down our prices to meet theirs, they continued to bring down their prices still lower, until ultimately we were supplying· rope at practically our manufacturing cost against tha

competition of eastern States manufacturers, who were selling rope cheaper in Western Australia than in their own States " (Q.492-501), As a result of the cutting down of the prices, the Western Australian Rope and Binder Works became a losing proposition, and he(Mr. Raphael) interviewed the eastern competitors who ultimately bought the business. The terms of the agreement covering the purchase and sale of this business show that on the 29th July, 1914, the business of the Western Australian Rope and Twine Works was sold to James Mitchell and Company Proprietary Limited, of Little Collins-street, Melbourne, Victoria ; M. Donaghy and Sons Proprietary Limited, of

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xlvii

Packington-street, Geelong, Victoria; Geo. Kinnear and Sons Proprietary Limited, Melbourne ; Rope, Nail, and Barb Wire Manufacturing Company Limited,

Croydon, South Austraha; A. Forsyth and Company, Kent-street, Sydney, New South Wales; and F. G. Armstrong, of St. Perth, Western Australia. The parties to the

agreement formed a new company; with the title of " Western Australian Rope and Twine Compa.nv Proprietary Limited," and carries on business at Cottesloe, Western Australia. ..

150. Mr. Leslie Charles Cooper, manager of the new company, admitted in evidence that the new company met with no competition from any of the firms mentioned in the agreement. There · was competition from a small manufacturing ropemaker named Scott, of Sydney, but he and the partners m the Western Australian Rope and Twine Company were the only ropemakers and binder twine manufacturers in the Commonwealth of Australia (Q.l132). Mr. Cooper also admitted that he had a verbal agreement withthe Western Australian Hardware Association that, "in the event of the Hardware Association confining all its orders to him, he supplied certain houses, according to au . . ; at certain discounts." He would give a person not in the Hardware

Association the same discount, provided that his business justified it (Q.l055) ; but he hardly thought it fair to supply goods to smaller nien at the same discount as he gave the ordinary big wholesale dealers (Q.l062). He said "you cannot split your distribution amongst a thousand houses" (Q.l159). Mr. Raphael said: "As a wholesale merchant I am excluded from purchasing rope from the local company because I am not a member of the Western Australian Hardware

Association" (Q.563).

AGREEMENT REFERRED TO BY MR. RAfHAEL. 151. The following is an extract from the agreement mentioned by Mr. Raphael in his evidence:-ARTICiiES OF AGREEMENT made this twenty-ninth day of July, One thousand nine hundred and fourteen, between FORRESTER GoLDSMITH ARMSTRONG, o! St. George's-terrace, Perth, in the State of Western Australia, manufacturer, DAVID MITCHELL, of Chester-road, Claremont, in the said State. of Western Aus­ tralia, manufacturer, and RITCHIE DIXON - BRYANT, of Battle­ street, Cottesloe Beach, near Perth aforesaid, manufacturer,

carrying on business together in co-partnership as rope and twine manufacturers, at ·Claremont; in the State of Western Australia, under the style or firm of "West Australian Rope :md Binder Twine Company" (hereinafter referred to as " the vendors") of the one part, and JAMES MILLER AND CoM­ PANY PROPRIETARY LIMITED, of Little Collins-street, Melbourne, in the State of Victoria, M. DONAGHY AND SONS PROPRIETARY

LIMITED, of Packington-street, Geelong, in the said State of Victoria, GEO. KINNF.AR AND SONS PROPRIETARY LIMITED, of Lonsdale-street, Melbourne aforesaid, ADELAIDE ROPE, NAIL _ . AND BARB WIRE MANUFACTURING COMPANY LIMITED, of Croy­ don, in the State of South Australia, A. FORSYTH AND CoM­

PANY LIMITED, of Kent-street, Sydney, in the State of New South Wales, arid FORRESTER GOLDSMITH ARMSTRONG, of St. George's-terrace, Perth aforesaid, manufacturer (hereinaft.er referred· to as '' the Purchasers ") of the other part.

WHEREAS the vendors are now carrying on the business of rope and twine manufacturers at_ Cottesloe Beach, in the said State of Western Australia. AND WHEREAS the vendors have agreed with the purchasers

for the sale to them of the said business and the goodwill,

trade name. trade marks, lease of works, including building on Show Ground at Claremont aforesaid, office furniture, machinery, and working plant, all current contracts, stocl's of raw material and manufa.ctured goods, their right and in ­ terest in and . to deposits lodged with the Government of

Western Australia with respect to Government contracts, with right t.o receive and give discharges for the €arne and all

other ·their business and undertaking above-mentioned (here­ inaft-er referred to · as " the business, property, and premises sold"), but. the said business, property, and premises sold shali not include the book debts or ledgers, hooks or · accounts of the . firm, all of which are reserved to the vendors as their

own _ propprty. AND WHER-EAS it has been agreed that a company shall

hereafter be formed to acquire and t ake ove.r from the pur­ chasers the said business, property, and premises sold and all benefits and advantages to he derived therefrom as herein ­ after provided.

Now I'f IS HEREBY AGREED between the parties hereto follows:--1. The vendors shall sell to and the purchasers sh all pur­ ch ase in equal shares and proportions as tenants in common from them as on the thirty-first day of October, One thou­ sand nine hundred and fourteen, . the said business, property, and premises sold at or for the price or sum of six th<;msand

three hundred · and fifty pounds for the plant and bmldmgs to be paid in cash on transfer or n.ssignmP.nt of th<' anrl

delivery nf. the plant ..

OTHER EVIDENCE AS TO DUMPING.

WESt AUSTRALIAN CHAMBER OF MANUFACTURES. 152. lVIr. William l\L Gray, President of the Chamber of of Australia,

said: "We, the Chamber of Manufactures, have searched the questiOn of dumpmg m every way, but the difficulty is to nail down any particular industry which is .suffering . . only one we can mention in that way is the jam industry. We know of other such as goods, &c., which are being dumped at cost price as surplus productwns of the factones m the

east, but it is impossible for us to give you the exact data on that matter " (Q.1471). boot factories which came into existence either before or after Federation have gone out of busmess in consequence of eastern competition. The names of those factories are Ezywalkin's, Walton and Rogers, Clinton's Boot Company, and Weaver's Boot Factory" (Q.l518).

Mr. A. J. MONGER.

153. Mr. Alexander Joseph Monger, formerly President of the Farmers and Association, Perth, said : " The development of this State is furthe! reta!ded b:y- th.e pauc1ty of secondary industnes, due mainly to the fact that the older m the

States do not hesitate to crush the attempts of our people to found Similar mdustr1es by underselling them in their own markets." (Q.l519.)

xlviii

THE GENERAL MANAGER, Mt. LYELL CHEMICAL WORKS. 154 . .Mr. Thomas ·watson Haynes, General Manager forthe Mount Lyell Chemical Works in Australia (head office, Melbourne, Victoria), who has been in the habit of '!"isiting Western Australia each year for "a considerable number of years" (Q.3760), said: "Western .Australia is a very easy country to dump material in from the east-,-that is to say, m'1terial not bearmg heavy freight per article " (Q.3760). Asked whether as a business man he would recommend any one

to put capital into secondary industries in Western Australia, said : " I would not say that as · regards all secondary industries, but as regards most of the secondary industries " (Q.3763). "People with capital to invest in new factories will not discuss Western Australia because here" (Western Australia) " one cannot expect sufficient demand to. pay fixed charges and compete

with the east under existing conditions of population" (Q.3762).

REPRESENTATIVE OF PRIMARY PRODUCERS. 155. Mr. Wrn. Carroll, representative of the Western Australian Primary Producers Association, said: "One of the most serious disabilitjes under which our producers suffer as a result of Federation is the extent to which eastern States produce is dumped in Western Australia

to the detriment of its own producers. In proof of this, it is only necessary to refer to the tables of imports and exports, where it would be seen that large quantities of certain products were imported into Western Australia when that State's own production in similar lines was ample for its own needs ; but, in consequence of the eastern States importations, the State's growers

were compelled to find markets elsewhere. . . . . At least 90 per cent. of the £138,000 worth of the jams and jellies and canned fruit imported into Western Australia annually is manufactured from fruit that can be grown in that State of a quality equal to anything in Australia. Many hundreds of tons go to waste annually because there is no market" (Q.832).

THE DEPUTY LEADER OF COUNTRY PARTY. 156. Mr. Edward Bertram Johnston, of Narrogiu, member of the Assembly of Western Aus,tralia, and Deputy Leader of the Country Party in that State, said : " One of the chief industries that suffer in Western Australia under Federation is the dairying industry, and

I have been specially requested by the Butter and Bacon Factories Association of Western Australia to put the case of the butter factories and butter producers of the State before you. There is a successful co-operative butter factory at Narrogin, in my own electorate, so that I am in close touch with the industry there. The industry suffers in this State mainly by reason of the low price we receive for the butter. When the cost of production is reasonable in Western Australia, in the period between May and December, cream can be produced on our succulent green pastures,

but after that period dairy farmers have to resort to hand feeding on chaff, bran, &c., in order to maintain their milk supplies. It is during this latter six months that Western Australia acts as a dumping ground for cheap South Australian butters, and a threat is held over the heads of local factories by wholesalers that if the local factories do not reduce their prices to the levels of South Australian prices they will buy South Australian butter, which means that the Western Australian farmers suffer considerably" (Q.4089).

THE CHAIRMAN, STATE DAIRY ADVISORY BOARD. 157. Mr. James Mortimer McFarlane, member of the Western Australian Legislative Council, dairy produce merchant and butter factory proprietor, Chairman of the State Dairy Advisory Board, and member of the Australian Dairy Council, said: "The greatest disability I :find in regard to the eastern manufacturers is that whenever a State has a bumper vear, and has difficulty in disposing of its produce, it looks to Western Australia to dispose of it. Consequently for a certain period that State submits the lowest quotations on the market, and we have to contend

with that all the time. For _instance, South Australia usually. has a flush at

about the same time as Western Australia, and she sends her butter across m undue competition ,. (Q.-3715). Mr. that, as a of. the Al:stralian Dairy Council, he brought

this Western Australian ?isabihty under the notiCe of Influential men of the different States, and th_ey we:re so that _he could say there was har.dly any trouble in this regard during this year (1924). · "We do get It, but not because of the b1g concerns. It comes from a source which is not :fully represented on the council. The bigger bodies nearly all have representatives on the counCil. There are other bodies of less weight that I do not come in touch with, but who

send on consignments" (Q.3727). Asked if he thought, in view of the competition by the smal!er butter of the easte.rn States, that any would put any capital into butter

manufacture, relymg upon what nught be done by the AdVIsory Council to prevent competition,

xlix

:, Mr. McFarlanesaid: "So far as this State is concerned, all fool Governments have been putting

money into a thing and throwing it away. They are the only people who have put money into it except myself. Mine is the only proprietary concern here. Every concern that is run is run on Government capital, and everything is being, or has been, closed down. Geraldton had £12,000 spent on it, and it closed down. · Northam is just about to be taken back by .the Government after a twelve months' trial. Gnowangerup is closing down, and the State factory is making no progress. It is a.ll Government money" (Q.3741).

THE STATE TO IMPOSE ITS OWN CUSTOMS AND EXCISE.

158. The proposal that the State of Western Australia shall have the .right to impose it& own Customs and Excise Tariffs during a period of years was supported by many witnesses.

THE SECRETARY, THE PASTORALISTS' ASSOCIATION.

159. Mr. William Lauchlain Sanderson, Secretary of the Pasto:talists' Association of Western Australia, who said that his evidence, in the form of a prepared statement, had been read and approved by the president of the association (Mr. Ernest LeeSteere) and the vice-president (Mr. Church), said: "I would respectfully suggest that Western Australia be given her own control over the Customs for a period of 50 years, not 25 as suggested, and that the Federal Government

cease t'() levy income taxation in this State for the same period" (Q.2241) . ·

160. Mr. A. J. Monger said : " If, as a result ofthe Commission's inquiries, the Parliament of. Australia is convinced that Western Australia is suffering under the disabilities mentioned, that her. development has been seriously and harmfully retarded because . of the conditions arising out of the Federal pact, and is prepared to place us upon such a basis that we can more rapidly develop the southern portion of the State, I would suggest that effect can best be given to such a by making to this State a monetary grant to compensate for past losses, and handing over

·to it absolute control of its own Customs and Excise duties for a period of not less than 25 years " . . . "I think it ,control of Customs) would undoubtedly tend to help our secondary

industries. If we had the power to frame our own Customs and Excise duties; I think we would be· to restrict dumping or undue competition by the east" (Q.1540).

. .· . 161. Sir William Francis Lathlain said: " I am in·complete accord with Mr. Monger and the other witnesses who suggest that our only solution is the complete control of our Customs and Excise duties. . . . I feel that this would give us the opportunity to work out our own problems. It is . well to remember that those responsible for Federation admitted our position

at its inception, and that special consideration of a very temporary nature was given to us" (see footnote (*). "Experience has proved that the assistance given was not sufficient, and we now ask for 'the whole control of our Customs for a period of 25 years. When you consider the future greatness of Australia, the concession asked for is a very small one if it preserves the unity and maintains the general happiness of the Commonwealth as a whole " (Q.l913). . . . " We have· had 25 years of Federal life already, and it is the passing of a mere day as time goes "

(Q.1923). . . . "I have considered the matter carefully from all points of view, and that is the only remedy which I can see " (Q.1924). •

162. Mr. W. N. Hedges, Director of the Western Australian Gold-fields. Firewood Supply Company, Kurrawang, and a pastoralist, formerly a member of the House of Representatives and a resident in the State of Western Australia for 31 years, asked if the State had the right to impose its own Customs and Excise tariff, as was the case before Federation, would that assist

the State to remove its disabilities, replied : " It is an impossibility, but I think the State, under those conditions, would go ahead by leaps and bounds " (Q.1445).

163. Mr. Alexander · Thomson, M.L.A., Leader of the Country Party in the Legislative Assembly of the State of Western Australia, said : " 1 would prefer to see the Customs handed over to us for a period of 25 years " (Q.ll92). ·

164. Asked whether, if the State of Western Australia were given the :power to impose its own Customs and Excise tariff, it would be a remedy for the State's disabilities, Senator P. J. Lynch said : " Unquestionably, if it were possible, that would be a great relief to the State . . . " (Q.81).

* Notwithstanding a.nythipg in this Constitution, the Parliament of the Sta.te of Western Australia., if that Sta.te be an original Sta.te, 11\ay, during the first five years after the imposition of unifo1m duties of Customs, impose duties of Customs on goods pa.ssing into that Sta.te and not originally imported from beyond the limita of the Commonwealth; and such duties shall be collected . by the Commonwealth (clause 95 of the Constitution).

F.2517.-4

:·;

1

165. Asked whether, if Western Australia had the right to impose its own Customs tariff for a period of, say, 25 years, it would permit of the development of the State of Western Australia, Mr. W. M. Gray, President of the Chamber of Manufacturers, Western Australia, replied: " Assuming it were possible to obtain such a concession, I should say that it would be a way out of our difficulty" (Q.l474). · .

166. Mr. Edward Houghton Angelo, M.L.A. for the electorate of Gascoyne, Western Australia, asked if he supported the suggestion that Western Australia should have the right to have its own tariff for a period of 25 years or more, replied : "Undoubtedly "(Q.2445).

· 167. The Hon. H. Gregory, member of the Commonwealth House of Representatives for the electorate of Swan, Western Australia, a member of the Legislative Assembly from 1897 to 1911, and during nine years a Minister of the Crown, occupying the positions of Minister for Mines I Minister for Railways, and Acting Premier and .Treasurer of Western Australia, said : " . . , am satisfied that only by an amendment of the Constitution giving us fiscal freedom for the next 25 years can we hope to develop this great area (Western Australia) ·and successfully. play our part " (Q.l691).

168. Mr. Richard Herbert Sleeman, pastoralist, mining engineer, &c., said: " If no other way can be found, then this State should be given her fiscal freedom to expand naturally according to her circumstances" (Q.3908). . ·

169. Mr. Wm. Carroll, representing the Western Australian Primary Producers' Association, said : " I think that if Western had her own Customs House to-morrow one of the

immediate results would be that big manufacturing concerns which are supplying us from the . eastern States would :find it more profitable to establish branch factories here " (Q.868).

170. Mr. Thomas Watson Haynes, of Collins House, l\felbourne, General Manager for the Mount Lyell Chemical Works in Australia, considered that abnormal-!lleasu,res would have to be . taken to remedy the disabilities of Western Australia (Q.3768). " One abnormal measure would be to put the tariff of Western Australia in the lrands of a locaiboard oftrade or,some such body "

(Q.3768). . . "There is no other way to meet all parties, such as the small manufacturing interests and the. big manufacturing interests. It will not be possible to avoid doing damage unless these l9cal people, who are so far away from the Seat of Federal Gover11ment, control the tariffrequirernents of Western Australia" (Q.3769); . ; . "I have thought over the subject a great deal, and I see no way by which the Western Australian situation could be relieved except an alteration of the Constitution. In my opinion it is useless to discuss any other means (Q.3771).

17L Mr. John Lindsay, member for Toodyay, in the Western Austra.Iian Leg4>1ative. Assembly, supported the evidence given by the representative . of the Priml:!.ry ·Producers' Association (Mr. Carroll) (Q.l238). He was of opinion that for .the State · to · have the right to impose its own tariff would be a remedy because Western Australia is a.primary producing country

(Q.l240). .

•

172. Mr. John CrawfordMorrison, journalist, for twelve years principal leader writer on the Westralian newspaper, said: ''Undoubtedly the Constitution would need to be amended jf we were to have control of our Customs and Excise, but, as I have already suggested, there is nothing startling in a proposal to give back to Western Australia, for a period, control over its

Customs and Excise, because the need of that control in a certain set of circumstances was recognized in the beginning of Federation. That set of circumstances remains to-day in the light of the experience of Federation, and therefore we offend against no principle if Western Australia obtains control over her Customs and Excise again " (Q.l379).

173. Mr. George Ephraim Clarke; of Bunbury, Secretary of the Agricultural Society, which has a membership of 330.agriculturalists in the south-west of the State of Western Australia, said that in his opinion the proposal that Western Australia should have the right, for a period of 25 years, to impose its own Customs and Excise tariff would be a very good thing for Western Australia " (Q.l569).

174. Mr. Matthew Thomas Padbury, President of the Primary Producers' Association Western Australia, endorsed the views embodied in the statementput before the Commission by Mr. Win. Carroll, General Secretary, and suggested that, "failing the granting to the State of ·Western Australia the right to impose its own duties of Customs and Excise, the Commonwealth

should evacuate the whole field of direct taxation in that State" (Q.I725).

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1i

175. "The Hon. George J. G. W. Miles, M.L.C., President of the North Australian Railway and Development League lncorporated, Perth, said : " If we could be given freedom from the tariff. for 25 years we could at once get the necessary capital from the Old Country, where they are only too anxious to assist us. We would then right the balance of exchange, and so save the 3 per cent. duty on our primary products. That point again would be of great benefit to the south'' (of Western Australia) (Q.l'795).

176. Mr. Alfred Thomas Chandler, leader writer on the staff of the Perth Sunday Times, who, as a remedy for the disabilities of the State of Western Australia, advocated " withdrawal from the Commonwealth, and the restoration of complete autonomy and State sovereignty the ·same as prevailed prior to Federation" (Q.1890), said: " The tariff concession could not be a

remedy, but only a palliative. If we had our own tariff for all time, subject to certain agreed restrictions, it might make us more satisfied " (Q.1895).

177. Mr. Alexander Robert Richardson, of South Perth, for ten years a member of the State Parliament of Western Australia, a trustee of the State Agricultural Bank for seventeen years, and Chairman of the State Industries Assistance Board for about five years, asked-if the State of Western Australia had the right to impose its own tariff as it had for the first five years of Federation, would it remove any of the ·disabilities, said : " It would remove a great many of .

them " (Q.2873) . .

178. Mr. Sinclair Jas. McGibbon, public accountant, of Perth, said: "If Western Australia had control of its O\vn. Customs, and collected such Cu..stoms revenue as suited its . own re(luirements, at least twice the number of workers at present engaged in the gold-mining industry would be employed "(Q.3003).

179. Dr. Thomas Craig Boyd, Gerald ton, said : " As regards the tariff, I think that it would be a very good thing if, for 25 years at least, Western Australia were cut off from the rest of the (Q.3279. . . . "I would propose a revenue-producing tariff, but I am not

in a position to say in. rletail what it would mean " (Q.3280). Question: " You do not mean absolute freetrade " Reply : "No, I think that we must have some protection " (Q.3281) .

. .. 180. Mr. Patrick Stone, retired merchant, ofGera.ldton, asked what he meant when he spoke of separation, said: "I mean cutting the painter with the eastern States, and having very little to do with them except giving a proportion for naval and military defence. vVe should have our own Customs" (Q.3293). Question: "Is that your remedy for the disabilities of the Reply : "It is the principal remedy. \Ve shall have no peace or prosperity until we get separation " (Q.3294).

· ·. 180A. Sir James Mitchell, said : " I believe that the position could be remedied if we had fiScal freedom for 25 years. Of course, if we had been wise, I think that we should have obtained a period of 25 years, or 50 years, when we federated, because there was no need to enter Federation unconditionally. We could then have made conditions, but it is not too late to rectify a wrong when it means a benefit to the people" (Q.2296).

WITNESSES DISAPPROVE OF PROPOSAL.

THE STATE GOVERNMENT.

181. The proposal that the State of Western Australia shall have the right during a period of years to impose its own Customs and Excise tariff did not meet with the approval of the State Government of Western Australia. The opinion of the Government, as stated by the Hon. William Charles Angwin, Acting Premier of the State, is as follows : " We do not believe the

citizens of Australia would agree to amend the Constitution to allow Parliament such power. If this were done it would apparently destroy one of the principal conditions of the Federation.

/

...

1" 11

the tesuits of the referendum votes taken since Federation in Western Australia for increased powers to the Commonwealth Parliament--:--the majority of the electors in every i1_1stance passed their votes in favour of same-convince me that Western Australia IS more anxious to strengthen Federation than to do anything that is likely to weaken or destroy it" (Q.l250). Later, Mr. Angwin said he did not think the right to fix its own tariff would remedy the State's disabilities.

He said : " It might assist the State in building up industries, but then additional legislation would be required in that regard, as well as in regard to dumping " (Q.1285). .

182, Other expressions of disapproval were voiced by the following

The Hon. Norbert Keenan, K.C.,. , said : . " I am .afraid that if you proposed an

amendment of that character it would be described as the destruction of th.e Constitution, because the very keynote of Federation is the fact that after its establishment the· intercourse of ·trade between the States should be absolutely free. There should be only one Customs barrier, which should be controlled by the Federal authorities, and, therefore, if you asked for an amendment of the Constitution creating a second barrier controlled by another authority, I apprehend that you would be regarded as a person who was desirous of destroying the whole scheme of Federation " (Evidence, page 23). · ·

184. Mr. Michael Patrick Durack, pastoralist, of Howard-street, Perth, did not altogether approve of the State of Western Australia having the right to impose its own Customs tariff. He said : " Whilst certain industries applicable to Western Australia might be built up by the application of her own tariff, I do not altogetl!er ·approve ofthe principle of creating our own tariff, since it would destroy the true spirit of Federation, and might hit back upon the producers at a later stage " (Q.2207).

185. The Hon. H. K. Maley, formerly Minister for Agripulture in the State Government of Western Australia, said : "I do not think can have fiscalautonomy ; but we ought to be able to .arrange so that in connexion with the Govern:rnent, which is not a merchant or a manufacturer, certain lines that have to be imported for actual development work, say rolling-stock, rails, and fastenings, and things of that sort, should be admitted duty free" (Q.2382).

186. Mr. Edward Alexander Mann, member for Perth in the Federal House of Representatives summed up his opinion upon the questions' of (a) secession, and (b) the State of Western Australia regaining its own Customs, in these words: "On these two questions I would like to sum up my opinion that their results would be very dubious, and their attainment very difficult. I therefore consider that a definite system of tariff reduction throughout the Commonwealth is more probable and more in accordance with a true conception of our national ideals and destiny " (Q.2129). .

. 1?7. Mr. L. Burnell_, merchant and m.anufacture!, Manager of the Westralian Knitting Mills, said: "If 1t were possible to have a tariff wall agamst goods from other States, it would undoubtedly stimulate manufactures here, but, I believe that such an artificial stimulant would be harmfu.l to State as a whole, for. reaso?- that the. of its people have to pay

uneconomic prices for goods produced m msuffiCient quantities or under cond1twns which would not make for keenest possible costs" (Q.2487). ·

188. Dr. J. S. Battye, Public Librarian of Perth, Western Australia, said:- " I do not agree with that (the Cust?ms Tariff.) · Looking at the .questioll: dispassi?nately, apart from any State, and then particularly m regard to Western Australia, the drfficulty m that State is not a difficulty under the people suffer. you have 1_10 doubt observed, the people

of Western Austraha, taken by and large, give every eVIdence of bemg a prosperous community and unquestionably their power to be greater. than that of any other people i

ever knew; but the Government IS always m a difficulty. I thmk that any relief would have to be to the Government rather than to the people. Then the question naturally arises how that relief can be givel!· The tariff cannot be only .cause of the trouble, because the people are prosperous under It ; but of. the umform tariff collected by the Commonwealth, and used ' by the Commonwealth, bemg m eXIstence, takes away from the State Government one of the

principal means of revenue which it might otherwise have " (Q.4586).

1515

liii

MAJORITY OPINION OF COMMISSION.

Commissioners Higgs and Entwistle.

189. With due deference to the opinion of the State Government of Western Australia, voiced by the Hon. W. C. Angwin, that the Government " did not believe that the citizens of Australia would agree to amend the Constitution to allow the State Parliament of Western Australia to impose its own Customs and Excise tariffs," and that "if this were done it would apparently destroy one of the principal conditionsof the Federation" (Q.1250) , your Commission takes the view thatwhen the citizens of the other five States of Australia realize the true position of the State of Western Australia they will readily grant. the concession.

STATES MOSnY CONCERNED WITH OWN AFFAIRS.

190. It is no reflection upon the people of the States of New South Wales, Victoria, Queensland, South Australia, · and Tasmania that at the present moment they know comparatively little about the disabilities of the State of Western Australia. The people of each State are mostly concerned with their own affairs. People in the eastern States probably know as much about

Western Australia as Western Australians know about the eastern States.

PUBUCITY WORK NECESSARY.

. 191. If the case for the State of Western Australia is properly placed before the people of the other States of the Commonwealth, and this must be done mainly by the Government and people of the State themselves, as the case for the Queensland sugar industry was placed before the Australian public (chiefly at the Seat of Government and throughout the country districts of Victoria) prior to and during the year 1922, a majority of the people in a majority of the States

of the Commonwealth are certain to do full and complete justice to the State of Western Australia.

THE DANGER OF REFUSING . TO RECOGNIZE THE STATE'S CLAIMS.

192. The remarks of the Hon. Norbert Keenan that to propose that the State of Western Australia shall be given the right, during a period of years, to establish its own Customs and Excise tariffs would be· described as "the, destruction of the Constitution,". and that any one proposing such an amendment of the Constitution would be regarded " as ·a person who was

desirous of destroying the whole scheme of Federation " . must be read in conjunction with his peroration at the close of his address on behalf of the State Government Advisory Committee (minutes of Evidence, page 33) . He then said " if the Commonwealth authority decided not to recognize the claims of the State, or of those engaged in an industry carried on in the State. . .

such a decision would not merely affront all sense of justice, but also engender a deep feeling of distrust on the part of the people of the State. Nevertheless, it would no doubt be borne as many wrongs have, in the world's long history, been borne, in the silence of subdued resentment." " Suppose also," said he, "the Commonwealth authority not to recognize the claims of this State to consideration because of the policy of the high Customs tariff. . .. . Again, I say, such

refusal would be borne as one more Wrong done to the weak by the strong. Suppose, again, the Commonwealth authority refused to recognise any claim by the State founded on breach by the Commonwealth of the understanding on which this State agreed to enter the Federation. No doubt this State would continue to suffer such wrongs in silence. Suppose, lastly, the Commonwealth authority refused to take on its shoulders any fair share of placing new settlers

on the vacant lands. . . what is the inevitable end of things if all these wrongs as the State conceives them are left unrighted. There will be no room for choice. . . . The State will seek sollle relief from a partnership which has brought disaster upon her, and so endanger if not ruin edifice which has been created by the genius and patriotism of Australia's noblest citizens."

REVISION OF THE PARTNERSHIP AGREEMENT,

193. Mr. Keenan, when questioned as to the meaning of those grave, almost threatening remarks said: ". . . ·It might be that the people of the State might say-' We are not prepared to give up our rights to local government on the lines on which we entered the Commonwealth bond originally, but, as we cannot continue under the existing circumstances, we demand that the

relationship between us and the other partners be revised and placed on a different basis, which will permit of our existence notwithstanding the fact that 1ve remain within the union ' " (Evidence, page 57) .

. _ 'rhis is a very different proposal from whioh will :U.()t

i!he edifice. " Your Commission is in favour of a revision of the terms of the partnership on the lines suggested in our proposal, ami we are satisfied sur.h ·a revision will neither ruin nor even endanger the :Federation. ··

liv

SEPARATE CUSTOMS TARIFFS WITHIN THE EMPIRE.

195. The Imperial House of Lords and House of Commons appear have had no fear. of the destruction of the Empire when they granted fiscal autonomy to the Ir1sh Free State (portion of the United Kingdom). Those who are of opinion that the revival of clause 95 (Western Australian special tariff) of the Commonwealth Constitution Act will destroy the Commonwealth should contemplate page lv of this Report showing the magnitude of the Empire, the a:rea

and population of the Dominions of Canada, Australia, New Zealand, the Umon of South India, the colonies, protectorates, and dependencies. There at least 57 separate dommwns, colonies, protectorates, or dependencies possessing the right to their own Customs tariffs. It is this liberal policy of granting to every portion of the Empire a measure of local govern?Ient suited to its peculiar circumstances and needs that has united the Empire in bonds of extraordinary elasticity yet of amazing strength. Why should the re-insertion hi the Constitution of a temporary measure designed to place the State of Western Australia on an equal footing with other States of the Commonwealth cause ill-feeling or anxiety.

THE ISOLATION OF WESTERN AUSTRALIA.

196. The State of Western Australia is isolated. As Mr. Ernest H. Barker, General Secretary of the Western Australian Branch of the Australian Labour Party, said in his evidence: "Western Australia may be as an economic island separated from the rest of Australia by a 'sea of solid ground' " (Q.387 4-5). * Fremantle is 2,181 miles distant by land from Melbourne, and 1,886

miles distant by sea. Wellington (New Zealand) is 1,200 miles from Sydney (Australia), and Auckland (New Zealand) is 1,277 miles distant.

SEPARATE CUSTOMS TARIFFFOR PAPUA.

197. Because of its isolation, and for no other reason, the of Australia­

(an Empire in miniature)-has granted the Legislative Council of theTerritory of Papua the right to impose Customs and Excise duties, making only one stipulation, viz,, that the Legislative Council " shall not, by any ordinance, impose higher duties upon the importation into the Territory of any goods produced, or manufactured in, or imported fron1 Australia than· are imposed on the importation into the Territory of the like goods produced or manufactured in or imported from other countries" (clause 37, Papua Act). A similar proviso could be inserted in the special Customs law for Western Australia.

THE WESTERN AUSTRAUAN CUSTOMS TARIFFIN 1900.

198. The Customs tariff the Western Australians would probably favour, in view q_f their present state of development, depending as they are mainly on the primary industries which have to compete in the markets of the world,' would be similar to that 'which prevailed at the commencement of Federation, and which they were allowed toimpose on a diminishing scale for a period of five years. (See Appendix X.) .

SITUATION GROWING S'fEAl)n. Y WORSE.

Your Commission is unable to. discern any better of solving some . of the

problems of the State of Western . Australia than the separate tariff proposal. Elsewhere we ·suggest the revival of · the Interstate Commission, but, while the Interstate Commission will be able to check and perhaps prevent dumping,.it cannot prevent the export to Western Australia of commodities that can be sold at a low price because of mass production. The Commonwealth

Tariff Board, quoted in previous pages, concedes that the pol'!itioninto which secondary industries of Western Australia have drifted is most unfortunate, and that itis satisfied that the situation has been growing steadily worse since 1918. How can a of money relieve the situation ? In addition to its own business enterprises, the State Government of Western Australia has repeatedly tried to establish secondary industries by lending money to -private persons, firms, or companies without success. Of advanced 23rd February, 1925, by way of loans and

guarantees, only £3,380 had been re"Paid. The failure of the State to . establish the dairying industry has been described by Mr. J. M. McFarlane (Q.3741). ' ·

• Mr. Ernest HArbert Barker, General &crete.ty, Australian Labour Party, Western Austmlian Bran-ch, Perth, said: ''In &o:rne respects the State of Western Australia may be regarded as an economic island, separnted froni the rest of Australia. by a spa of-sand somewhat in the S'l.me fashion that New Zealand is separated by a sea of water" (Q.3874). Asked: "Is it correct to say there is a of sand between Western Australia an

ly

1517

THE BRITISH EMPIRE.

SEPARATE TARIFFS . WITHIN THE EMPIRE.

Kelly's Population

Count.ry.

Customs Tariffs Area.

-- of the World Squa:re MileB. (Oenstll!, 1921, (1924 Edition)' where available). PAO.R Great Britain and Northern Ireland, including Own Customs Tariff .. 3 94,633 44,200,000 Channel Islands and the Isle of Man Europe-Irish Free State . . . . . . Own Customs Tariff .. 16 27,000 3,165,000t · Gibraltar . . . . . . . . Own Customs Tariff .. 218 2 21,000 Malta . . . . . . . . . . Own Customs Tariff .. 223 118 213,000 Asia-Aden, Perim and Protectorate . . . . Own Customs Tariff .. 172 9,000 55,000 :Bahrein· Islands . . . . . . . . . . .. . . 250 110,000 Borneo, Brunei and Sarawak . . . . Own Customs Tariff .. 174-5-6 77,10() 1,000,000 Ceylon . . . . . . . . Own Customs Tariff .. 36 25,331 4,505,000 Cyprus . . . . . . . . Own Customs Tariff .. 215 3,584 311,000 Hong Kong . . . . . . . . Own Customs Tariff .. 223 391 625,000 India . . . . . . . . . . Own Customs Tariff .. 27 1,805,332t 318,942,000§ Straits Settlements . . . . . . Own Customs Tariff .. 233 1,600 884,000 Federated Malay States . . . . . . Own Customs Tariff .. 233 27,506 1,326,000 Other Malay States . . . . . . Own Customs Tariff .. 238 23,486 1,123,000 Wei-hai-wei . . . . . . . . .. . . .. . . 285 154,000 Iraq* . . . . . . Own Customs Tariff .. 219 143,250 2,849,000 Palestine* . . . . . . . . Own Customs Tariff .. 218 9,000 757,000 Africa-, Kenya Colony and Protectorate . . . . Own Customs Tariff .. 62 200,000 2,376,000t Uganda Protectorate . . . . . . Own Customs Tariff .. 66 110,390 3,066,000t Zanzibar . . . . . . . . Own Customs Tariff .. 69 1,020 197,000t Mauritius and Dependencies . . . . Own Customs Tariff .. 224 809 385,000 Nyassa.land Protectorate .. . . . . Own Customs Tariff .. 61 39,573 1,201,000 St. Helena and Ascension . . . . Own Customs Tariff .. 228 81 4,000 Seychelles . . ... . . . . Own Customs Tariff . . 227 156 25,000 Somaliland Protectorate .. . . . . Own Customs Tariff .. 68 68,000 300,000t Basutoland .. . .. . . . . . . . . .. . . 11,716 498,000 Bechuanaland Protectorate . . . . . . . . .. . . 275,000 153,000 Southern Rhodesia . . . . . . Own Customs Tariff .. 47 149,000 804,000 Northern Rhodesia . . . . . . Own Customs Tariff .. 52 291,000 932,000 Swaziland . . . . . . . . . . . . .. . . 6,678 134,000 Union of South Africa . . . . . . Own Customs Tariff .. 41 473,089 6,929,000 Nigeria . . . . . . . . Own Customs Tariff .. 246 335,700 18,500,000t Gambia . . . . . . . . Own Customs Tariff .. 245 4,134 209,000t Gold Coast and Protectorate . . . . Own Customs· Tariff .. 244 80,000 2,078,000 Sierra Leone and Protectorate . . . . Own Customs Tariff .. 243 31,000 1,541,000 Anglo-Egyptian Sudan . . . . . . Own Customs Tariff .. 216 1,014,000 5,900,000t Tanganyika Territory* . . . . . . Own Customs Tariff .. 64 365,000 4,122,000 S;W. Africa* . . . . . . . . Own Customs Tariff .. 248 332,400 230,000t Camerc;>on* .. . . . . . . Own Customs Tariff . . 248 31,000 400,000t Togoland* .. . . . . . . Own Customs Tariff . . 248 12,600 188,000 America-Bermudas .. . . . . . . Own Customs Tariff . . 172 19 21,000 Canada .. . . . . . . Own Customs . Tariff . . 73 3,729,665 8,788,000 Falkland Islands and South Georgia . . Own Customs Tariff .. 217 5,618 3,000 British Guiana .. . . . . . . Own Customs Tariff . . 176 89,480 298,000 British Honduras . . .. . . Own Customs Tariff . . 180 8,598 45,000 Newfoundland and Labrador . . .. Own Customs Tariff . . 105 162,734 263,000 Bahamas .. . . . . . . Own Customs Tariff . . 210 4,404 53,000 Barbados .. . . . . . . Own Customs Tariff . . 197 166 156,000 Jamaica, &c. .. . . . . . . Own Customs Tariff . . 185 4,431 864,000 Leeward Islands . . . . . . Own Customs Tariff .. 187 715 122,000 Trinidad .. . . . . . . Own Customs Tariff . . 212 1,974 366,000 Windward Island . . . . .. Own Customs Tariff .. 200 516 163,000 Australasia-Australian Commonwealth .. .. Own Customs Tariff . . 119 2,974,581 5,436,000 Papua .. . . . . . . Ow:n Customs Tariff . . 168 90,540 280,000t New Zealand .. . . . . . . Own Customs Tariff . . 145 104,751 1,219,000 Fiji .. .. . . . . . . Own Customs Tariff . . 163 7,083 157,000 Pacific Islands .. . . . . . . Own Customs Tariff . . 163 11,450 265,000t h, Territory of New Guine.a* . . . . Own Customs Tariff .. 168-171 89,252 400,000t Western Samoa* • . . . . . . Own Customs Tariff .. 168 1,250 36,000 Nanrn* - 10 2,000 .. . . . . . . . . . . . . . . --------I 13,367,672 449,349,000 I ,tl , • ){andat•d 'renttory. t Eotimate. : Yncludlng "'Jllarc mile•; State• JiOpnl"tion, 71,939,000. ! JnC'luding l'cndatorr.

lvi

DESTRUCTION · OF ·BREEDING HERDS.

200. One witness, not a resident of the State, suggests that " part of the difficulty has been due to the fa ct that Western Australia not applied itself to the development of its dairying industry through the improvement of its breeds of dairy cattle, which is a most important factor" (Q.4910). But Mr. E. B. Johnston, of Narrogin, of the Legislat!ve Assembly of Western Australia, and Deputy Leader of the Country Party m that State, said :

"Lovely herds of cows which they had striven so hard to build were driven to the slaughter­ house through unrestricted competition in our local markets by the eastern States producers " (Q.4089). . . " Quite a proportion of the cattle have been · bought by butchers " (Q.4091). . . . . " Within the last few months one of the leading dairy prize breed herds in Australia, owned at Brunswick by a gentleman named Goyder, who won very many prizes in the east as well as in Wewtern Australia, was dispersed recently" (Q.4092). .

NO OPPORTUNITIES IN SECONDARY INDUSTRIES FOR NATIVE BORN.

201. The State of Western Australia received by way of special grant from the Common­ wealth to 30th June, 1924, the sum of £2,265,562 in diminishing amounts over a period of thirteen years, and the State has borrowed and spent many millions in wh::tt might almost be described as a frantic endeavour to develop the State; yet the position of secondary industries is such that the native-born of Western Australia have to go elsewhere to seek employment. The Hon. W. C.

Arigwin, Actiii.g Premier of Western Australia, when asked whether immigrants brought to Western Australia left to go to the eastern States, said: "I do not think that a great number of the people whocome here as migrants go to the other States. There may be a few who do so. My opinion is that those who go to the other States are persons who have spent some considerable time in Western Australia. Several parents have interviewed me in regard to obtaining employment in trades for their children, but there is no hope in this State, on account of the small number of secondaryindustries established. May I give you aninstance. Only a week or two ago, a person came to Perth from the and obtained a very good position, but he could not place his boys and girls in any trade . . Then he and his wife came to me for the purpose of seeing whether I could do anything, and, during the iii.terview, the wife turned to the husband and said : ' We made a mistake in coming here. We should have gone to the east for the sake of our children. ' For that reason I think that the people who leave for the east are those who have spent some years here, and want to improve the conditions of their children. The migrants we are bringing out are principally going on the land at the. present time" (Q.l305).

PROPOSED ANNUAL VOTE FOR DEVELOPING LANDS. 202. The Hon. the Acting Premier and the State Advisory Committee are of opinion that, "apart from any compensation made either to the State or to those engaged in any industry in the State," apart from any compensation made to any primary industry "to counteract the injurious effect of a high Customs tariff," and apart from any grant-in-aid made to the State by

way of set-o:fHor losses already incurred by the State as the result of Acts of the COmmonwealth--:-" it will be absolutely necessary that an aimual vote of a substantial amount shali be available for the State to enable the State to carry on the work of development, and particUlarly the work of settling immigrants on the vacant lands of the State " (Minutes of Evidence, page 31). · ·

Wll.L NOT REMOVE MAIN DISABU.ITY.

· 203. Your Commission is of opinion that the continued expenditure of millions of pounds of loan moneys in placing men upon the lands of the State will not remove the main disability of the State. It is true the population of the State of Western Australia is increasing, and that the rate of increase in the number of persons going on the land is greater than that of any other State of the Commonwealth. But let it be remembered that, while the Commonwealth Customs tariff remains as it is-protectionist-and as it must so remain in the interests of the more populous States-every fresh settler that goes on the land in Western Australia and every adult member of his family means another so-called " secessionist " added to the already ?growing number of persons who would, as so many witnesses have remarked, vote against Federation if they had the chance. ·

VESTED INTERESTS MAY OPPOSE SPECIAL TARIFF. . . 204. Vested interests in Victoria and New South Wales will no doubt.strQngly. oppose the gra.nting to the State of Western Australia the right to impose its own Customs and Excise tanffs; but we would most strongly stress the point that it is not in the interest of the Aust:r;alian nation that the people of the Commonwealth shall be drawn mostly to. Victoria and to. New South

1519 lvii

Wales, and in such undue proportion to the capital cities of those States, as is shown in Plate II., page cxxii. The State of Western Australia, particularly in what is known as the south-west, has th(\ area, the soil, the climate, and the rainfall to enable a population at least as large as that of New South Wales .(2,265,056) to live there comfortably and happily, to prosper, and to become one of the strongest pillars of the Commonwealth. Western Australians justly pride themselves on their proved loyalty to Commonwealth and Empire. Australia can trust them.

205. We recommend-

MAJORITY RECOMMENDATION.

(Commissioners Higgs and Entwistle.)

That the State of Western Australia shall, during a period of 25 years and thereafter until the Parliament otherwise provides, have the absolute right-(a) To impose its own Customs tariff as in pre-Federation days,. provided the State of Western Australia shall not impose higher duties upon the

importation into the State of Western Australia of any goods pi"'duced or manufactured in or imported from other States of Australia than imposed on the importation into the State of Western Australia of the like goods produced or manufactured in or imported from other countries : (b) To impose its own Excise tariff. The amount of money to be contributed by the State of Western Australia to the Federal expenditure of the Commonwealth in excess of Federal income tax, land tax, and probate duties, &c., to be determined by negotiation between the Commonwealth

Government and the Government of the State of Western Australia ; or, in case of disagreement, by an arbitrator who shall be a citizen of the British Empire. (From this Section ofthe Report Commissioner Mills.expresses dissent. See paras. 503-521.) ·,

PART IX.-PROPOSAL TO REVIVE THE INTERSTATE COMMISSION.

(Owing to his unavoidable departure from Australia on the 18th of .July, Commissioner Mills had no opportunity of perusing this section of the Report.)

HISTORY OF THE COMMISSION.

206. Section 101 of the Commonwealth Constitution Act provides that "there shall be an interstate Commission with such powers of adjudication and administration as the Parliament deems necessary for the execution and maintenance within the Commonwealth of the provisions of this Constitution relating to trade and commerce and of all laws thereunder."

207. The permissive word "may" finds a place in many clauses of the Constitution Act, but the imperative word " shall " leaves no room for doubt. Though Section 101 is mandatory, a Bill to create the Interstate Commission, introduced by the Barton Ministry in 1901, was not proceeded with " because at the time the interpretation of the Constitution was still a matter of individual opinion, and Federal authority comparatively undefined. Discussion of ·the measure proved fruitless owing to want of agreement among the several critics of the measure as to the sanctions in the Constitution and its probable operation." (Deakin, Hansard, 1912, p. 7070). In 1909 the Bill was revived by the Deakin Ministry, and again shelved. A third endeavour to create the Commission was successful. In December, 1912, the Interstate Commission Bill was brought forward, with modifications, by the Fisher Ministry, and, after amendment, was passed unanimously

by both Senate and House of Representatives.

HOPES AND EXPECTATIONS.

208. The Interstate Commission was intended to be " a standing Commission of Inquiry, with power to investigate on reference by Parliament, or of its own motion, practically all matters knowledge of which is directly necessary to Parliament and the public" ; "a Board of Trade-an independent critic, not only of social, industrial, and commercial events and tendencies, but of the

operation and administration of laws"; "a Board of Advice, to make recommendations and suggestions to Parliament as to amendments of the law." It was to be "an active guardian of the Constitution, with power to deal with violations of the Constitution, with respect to trade and commerce"; "a Commerce Court, with power to adjudicate, on complaint by any person inter­

ested, or public body, or upon a charge made by its own initiative, all violations of the trade and

i:

; !

!viii

commerce law of the Commonwealth." It was to be invested, for its judicial work, with " the powers of a Court of Record ; for its investigating work, with the same powers as are possessed by a Royal Commission. " (The Right Honorable W. M. Hughes, Hansard, 1912, p. 7070.)

209. " In the Interstate Commission," said the late Alfred Deakin, the Commonwealth Parliament had "a source of power, or perhaps to be more correct, a searchlight by whosehelp the Parliament could exercise Commonwealth Powers with far. greater certainty of success than by any other method open to it ." Mr. Deakin looked upon the Interstate Commission as "the eyes and ears of the Commonwealth Government." Parliament would :find the policy, and it would be the duty of the Commission to study that in relation to the facts. Parliament should obtain great assistance froni the proposed Commission when in full working order. (Hansard, 1912, p. 7070.)

210. Sir John Quick regarded the " Interstate Commission as one of the fundamental and basic institutions of the Federal system." The powers of the Commission, if properly exercised, might be made great instruments in carrying out the designs and the desires of Parliament with reference to the maintenance and promotion of trade and commerce and commercial relations between the States and with other countries. The Commission would " .have authority, not only to prevent railway preferences and discriminations,"but also to prevent anybody, or any combina­ tion of persons, resorting to methods or expedients that might amount to restraint or obstruction of trade. The Commission would have absolute power to ascertain whether private individuals or corporations had entered into any agreement by which they might monopolize trade. The Commission "would have full authority to apply the searchlights of inquiry to the inner working of alleged trusts and combines.'' (Hansard; 1912, p. 7105 et seq.)

CREATION OF INTERSTATE COMMISSION.

211. On the 11th August, 1913, Interstate Commission was created by the appointment of A. B. Piddington, Esq., K.C., the Hon. George Swinburne, C.E., and C. Lockyer, Esq., LS.Q. Under instructions from the Commonwealth Government the Commission entered upon a pro­ longed of. the effect the Tariff Acts in force, with a

particularly to discoverillg (a) "\Yhat illdustries .ill 1!-rgent need of (b) the. in the Tanffs, and (c) the lessenillg, where consistent With.the generaLpohcy of Tanff Acts, of the cost -of the ordinary necessities of life, without injury to the workers engaged in any useful industry. · · ·

THE WHEAT CASE.

212. ·While engaged in thistask, complaints were lodged with the Commission in January, 1915, under Part V. of the Interstate Commission Act (Judicial Powers of the Commission). The basis of the complaint was that the Government of New South Wales had seized certain parcels of wheat which were the subject of interstate trade. This, it was contended, was a breach of the provisions for interstate freedom of tradecontained in Section ·92 of the Constitution.

THE WHEAT ACQUISffiON ACT.

213. The answer of the defendant State was that the wheat was, at the time of seizure, the ·property of the State by virtue of the Wheat Acquisition Act 1914, and not therefore the subject of interstate commerce. · ·

214. This answer raised the question of the power of the New South WalesParliament to pass the Act in question, and w:as the main matter at the hearing, which took

place before the Interstate CommiSSIOn ill January-February, 1915. ·. . ·

INTERSTATE COMMISSION DECLARE WHEAT ACQUISffiON ACT INVALID. · 215. The Interstate Commission, b.Y. majority (qhief K.C. ,

dissenting) found that. Wheat Acqmsitwn Act mvahd as bemg .an. illfrmgement of Section 92 of the ConstitutiOn, and. a?ts complailled of were also an Irifrmgement of that section ; and therefore granted an illJUnct:wn ill the terms asked for and ordered the defendants to pay the plaintiffs' costs.

216. From this decision the defendants appealed to the High Court by way of case stated by the Commission under Section 43 of the Interstate Commission Act. ·

QUESTION FOR IDGH COURT.

217. The following question, inter alia, was submitted for decisi.on :-" Had the Commission jurisdiction to hear and determine the petition to grant the injunction or to make the order for costs . " .

1521 lix

PART V, OF INTERSTATE COMMISSION DECLARED ULTRA VIRES. 218. It was held by Griffith, O.J., 3{ndisaacs, Powers, and Rich, J.J. (Barton and Gavan Duffy, J.J., dissenting) that Section 101 of the Constitution does not authorize the Parliament of the Commonwealth to constitute the Interstate Commission a Court, nor to give it judicial powers .nor to confer upon it the general power to restrain contraventions of interstate trading rights; and that therefore as the provisions of Part V. of the Interstate Comrnission Act 1912 were ultra vires the Parliament of the the Interstate Commission had no power to

deal with the complaint.

INTERSTATE COMMISSION CEASES TO FUNCTION. 219. Part V. (Judicial Powers) having been declared beyond the powers of the Parliament, all control or regulation or execution or maintenance of the commerce provisions of the Constitution or of the laws made under it were removed from the Commission. The Interstate Commission was thus left with powers analogous merely to those of a Royal Commission or Parliamentary

Committee. The Commission made representations to the Government during the years 1915 to 1920, but though Ministers during that period expressed themselves willing to consider the bestowal by statutory enactment of judicial and other related powers upon the Commission, nothing was done.. At the conclusion of the seven years' term of appointment of the Commission (11th August, 1920), no re-appointments were made, and the Interstate Commission ceased to function.

220. Such a termination to an institution which was to be a Board of Trade, a Board of Advice, a Commerce Court, a Court of Record, and an active guardian of .the Constitutidn, if permitted, would be a breach of the Constitution. Clothed with adequate powers which are within the authority of Parliament to grant, the Commission might at least have lessened the discontent for a long time existing in the State of Western Australia. In our judgment, the Parliament

cannot allow the Commission to remain dormant. The creation of an Interstate Commission is one of the terms of the Federal partnership agreement. It is in the bond.

WHAT WE CONSIDER AMPLE EVIDENCE.

221. During our inquiry into the disabilities of the State of Western Australia, we discovered what we consider to be ample evidence to justify immediate action, with a view to carrying out the mandate embodied in Clause 101 of the Commonwealth Constitution Act ..

222. Your Commission did not feel justified in pursuing its inquiries to the extent of calling all the witnesses who could give information in respect to cases of alleged dumping, alleged restraint of trade, alleged differential rates, alleged combination with a view to monopoly. For example-­ to absolutely prove whether Mr. Alfred Raphael was correct in his suggestion that the rope manufacturers in Melbourne, Adelaide and Sydney entered into. a combine to reduce prices in Western Australia which had the effect of making the business of the Western Australian Hope and

Binder Twine Company a losing proposition (Q.498-512), we should have to call witnesses repre­ senting Messrs. James Miller and Co, Pty. Ltd., Messrs. M. Donaghy and Sons Pty. Ltd., and Messrs. Geo. Kinnear and Sons Pty. Ltd., of Victoria; the Adelaide Hope, Nail and Barbwire Company of Croydon, South Australia; and Messrs. A. Forsyth and Co. Ltd., of New South Wales. We accept Mr. Raphael's sworn testimony and copy of the produced by him as evidence that presumably competing firms, the principal ropemakers in Australia, though residing so far a part as Adelaide, Melbourne, and Sydney, came together for the purpose of purchasing the Western Australia, Rope and Binder Twine Company's business .

•

· 223. We could not, in the time we considered at our disposal, follow up the inquiry initiated by the complaint by Mr. H. R. Hayner that his company's jam manufacturing business was insolvent because of dumping by eastern manufacturers.

224. Sir Henry Jones, of Messrs. Henry Jones and Company, said he could not swear that the facts Mr. Rayner gave were incorrect. (Q.6064.) We accept Mr. Hayner's sworn testimony that his company's factory is the only jam factory in Western Australia ; that it is insolvent ; and that the insolvency has been caused by fair or unfair competition from manufacturers in the

eastern States.

ALLEGED RESTRAINT OF TRADE.

225. Mr. Henry Snashall, Building Contractor of Perth, Western Australia, declared that he, with others, knowing of the deposits of oxides and ochres throughout Western Australia, put in machinery and other plant valued at between £2,000 and £3,000 in their works at Subiaco, Western Australia, and manufactured a first-rate paint. " They tried to put it on the market, and that was when they got their first set-back." (Q.2571.) Mr. Snashall took that part of the business in hand, and visited all the merchants in Perth. Everywhere he went he was told " We are not

interested in your products; we do not want to see them." The merchants told him they

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were agents for certain .· brands of paint manufactured in the eastern States, . (Q.2571.) One firm told him they were agents for Berger's paints; another said they were agents for the United Paints of Adelaide. The Adelaide firm informed him they were not allowed to take anyone lines of paints, but they had to get all their requirements through the United Paints ; while other firms told him they were agents for Sherwin and Williams and Major Brothers respectively. He discovered, too, that in respect of three of these brands of paints, three separate warehouses were handling one line which, although they were manufactured by one firm in the east, that firm sent paints to Western Australia and distributed them under three different names. Thus, the firm secured the three main warehouses to handle their three paints; in that way they practically commandeered the market. " That shows," said Mr. Snashall, "what we have been up against. We have tried to overcome these difficulties, but it has been of little avail. It was useless endeavouring to deal with the painters themselves, because we would have difficulty in getting our money in. We must deal with the big houses. This has been the means of closing up our business." (Q.2572.) -

ALLEGED COMBINATION AMONG EASTERN FIRMS. 226. Mr. Harvey Alfred Tarrant, representing the Master Coachbuilders and Motorbody Builders Association of Western Australia, gave evidence that during the last four or five years very large sums had been expended in laying down factories and plant in Western Australia equal in all respects to others in the Commonwealth. During the last twelve months something like

£100,000 worth of motor. bodies had been imported from the eastern States. This was due to what was considered to be unfair competition; and formed one of the disabilities under which the State of Western Australia is labouring. (Q.2187.) The witness suggested combination on the part of eastern firms. He said it was a well-known fact that the motor-car and motor-chassis, as far as the American product is eoncerned--(90 per cent. of the trade }-is controlled by only two or three concerns, and that it might reasonably be assumed that ' the agents of these firms in the State of Western Australia -are under certain obligations and conditions to warrant the observation of the operations and instructions of these principals and monopolies.'' (Q.2187.) Mt. Tarrant said : " We now learn that a system has been formulated by eastern manufacturers to establish one price for delivery of standard bodies to all States alike. Figures which have already been quoted would go to show that this relates closely to dumping, as the freight alone (even in close pack) would leave the necessary margin in fair competition." (Q.2187.) He also said: "No sooner do we " (Western Australian manufacturers) " give a price, than it is submitted to the eastern makers, who say straight out 'We will do the work for £10 less.'" (Q.2198.) ·

DIFFERENTIAL RAILWAY RATES.

THE STATE OF WESTERN AUSTRALIA.

227. Mr. Frank Green, Storekeeper, and Mayor of Geraldton, gave evidence that Midland Railway Company ofWestern Australia so arranged their railway freights that·it paid a storekeeper, at, for example, Mingenew, to have his goods sent to Geraldton and railed back to Mingenew, a distance of about 80 miles. (Q.3244.) Minegenew is 227 miles from Perth, and 239 from Fremantle. · Gerald ton is 306 miles from Perth, and. 318 from Fremantle: It was at one time-:-'-

" Cheaper to ship wool than tosendit down the Midland line, but now the Mid)and Railway Company has fixed a flat rate of freight of 50s. per ton between Geraldton and Fremantle." (Q.3239.)

228. It would appear that in most, if not all, of the States of the Com.:monwealth, it is the practice to charge differential railway rates, which are not in keeping . with the spirit of the Constitution. THE STATE OF QUEENSLAND.

229. In a leading article in the Rockhampton Morning Bulletin of 17th November, 1924, appears this complaint : " queensland, woolrates 428 miles from. Longreach to Rockham:pton -the natural port of the d1stnct-are 4.39 per ton mile, but a reductiOn of 1d. per ton per nnle is made if people will allow it to be dragged 397 miles to Brisbane, two efficient ports on the way. . . . The rate per ton per rrule IS much the same from Wmton to Brisbane, which is 1,199 miles, passing four effective ports on the way." ·

THE STATE OF NEW SOUTH WALES . .

230. Mr. W. Brownbill, a member of Vi?torian Legislative .Assembly, is reported in the Melbourne Age of 18th June, 1925, as .havmg said : "New South: Wales has a system of railway .rates .encou-M.ges . the New Wales manufacturers ·-or ·producerS to bid for

busmess m the adJOimng States With advantage. ·

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THE COMMONWEAL'I.'H TARIFF BOARD'S SUGGESTION.

231. Taking into consideration all the evidence direct and indirect, your Commission is of opinion the Interstate Commission should be revived. We do not agree with the Commonwealth Tariff Board's suggestion that-" The Minister for Customs should be equipped with power, by legislation if necessary,

to enable pim to prevent dumping in Western Australia of goods at a price below that at which they are sold in the eastern States with a view to the crippling of infant industries." (Tariff Board Report, 30th June, 1924, p. 29.)

FIFTEEN DIFFERENT MINISTERS OF TRADE AND CUSTOMS.

232. From the commencement of Federation there have been fifteen different Ministers of Trade and Customs.* The functions ofthe Interstate Commission would require to be judicial, and though Ministers of the Crown who have been appointed to judicial positions have been able to dismiss from their minds all political ties and opinions, there would be greater confidence in the

Tribunal whose duty it would be to determine. the questions under review if it were made, as the late Sir George Reid considered it should be made, " at least independent as the High Court." (Convention Debates, 3rd Session, Melbourne : pages 1528-9.)

"BEYOND THE INFLUENCE OF BOTH EXECUTIVE AND PARLIAMENT."

Thelate Mr. C. C. Kingston considered that a body such as the Interstate Commission

could not be expected to exercise the powers proposed to be conferred on it by the members of the Federal Convention unless the members of that Commission were placed beyond the influence both of the Executive and of Parliament, and that could not be done without, within the limits of their jurisdiction, giving the members of the Commission all the independence of competent judges.

(Convention Debates, Melbourne : 1898 : p. 2458-9.)

MR. JUSTICE POWERS.

· 234. In the opinion of Mr. Justice Powers, of the High Court of Australia, " all the powers set out in Part V. of the Interstate Commission Act could be given to a properly constituted Federal Court, and the individual members of the Interstate Commission could be judges of that Court with the tenure provided by Section 72 of the Constitution for Justices of Courts created by the

Commonwealth Parliament." ("Legislative Powers of Commonwealth and the States of Australia," (Quick), page 881.)

SIR JOHN QUICK.

235. Sir John Quick is of opinion that "the alteration of the Constitution necessary in order to restore to the Commission the powers and functions intended by Parliament would be by amending the Constitution, Section 71, giving the Commission a limited right to exercise ' judicial power.' The other method would be that Parliament should create a Federal Court

under the Constitution, Section 71, having jurisdiction to maintain the Commerce laws of the Commonwealth, but such Court would have to be composed of members appointed under t.he good behaviour and life tenure conditions provided by Section 72." ( "Legislative Powers of the Commonwealth and the States of Australia," (Quick), page 882.)

ALTERATION CONSTITUTION, ·UNNECESSARY DELAY.

236. Your Commission is of opinion that the Parliament of the Commonwealth should not incur the unnecessary delay attendant on an amendment of the Commonwealth Constitution Act, but should avail itself of Section 71, which enables the Parliament to create Federal Courts other than the High Court.

MAJORITY RECOMMENDATION.

(Commissioners and Entwistle.)

237. We therefore recommend-That a Federal Court be created with such judicial powers as Parliament deems necessary for the execution and maintenance within the Commonwealth of the provisions of the Constitution Act relating to trade and commerce and of all laws made thereunder.

* .Ministers for Trade and Gustom8.-Right Honorable C. C. Kingston, P.C., K.C., 1903; Honorable Sir W. J. Lyne, K.C.M.G., 1903-4; Honorable Andrew Fisher, 1904; Honorable A. McLean, 1905; Honorable Sir W. J. Lyne, 1905-7; Honorable Austin Chapman, 1907-8; Honorable F. G. Tudor, 1908-9; Honorable Sir R. W. Best, K.C.M.G., 1909-10; Honorable F. G. Tudor, 1910-13; Honorable L. E. Groom, 1913-14; Honorable F. G. Tudor, 1914-16; Honorable W. l\L Hughes, 1916; Honorable W. 0. Archibald, 1917; Honorable .J. A. Jensen, 1917-18; Honorable W. A. Watt, 1918-19; Honorable W. M. Greene, 1919-'21; Honorable A. R. Rodgers, 1921-23;

Honorable A. Chapman, 1923-24; Honorable H. E. Pratten, 1924.

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238. The members of the Intei'state Commission as members of such a Court would then be quite independent, and could not be removed except by the Governor-in-Council on an address from both Houses of Parliament in the same Session, praying for such removal on the ground of proved incapacity.

239. We make a further recommendation-That the law creating the Federal Court before-mentioned shall contain a provision that after twenty-five years' service as a member of the Interstate Commission, a member may retire on a pension of £1,000 a year; and that a member of the Interstate Commission, on reaching the · age of 70 years, may retire on a pension computed at the rate of £50 for each year of service, with a maximum pension of £1;000 per annum.

PART X.-IMMIGRATION.

THE STATE GOVERNMENT DECLARES IT CANNOT FACE THE COST. 240. One ofthe special claims put forward by the State Advisory Committee was that-,, the State of Western Australia is in a policy of immigration and land settlement which is of the highest importance to Australia as a whole. Up to now she has borne

almost the entire burden of carrying out this policy. The time has come when she cannot face the cost of continuing to do what is national work for Australia as a whole out of her attenuated resources. Unless the Commonwealth authority comes to her aid, the position must be examined carefully and the cost now being incurred must be drasticallly cut down." ·

CLAIM FOR SUBSTANTIAL ANNUAL VOTE. . .

. 241. It has already been shown {para. 201) that the State has for some years been pursuing a vigorous policy of land settlement in conjunction with immigration. · Perhaps the most definite statement by way of claim upon Commonwealth assistance put fo:rWard by the State Advisory Committee was thus phrased :-,-"It will be absolutely necessary that an annual vote of a substantial amount shall be available for the State to enable the State to carry on the work of development, and particularly the work of settling imrhigrants on the vacant lands of the State. Moreover,

inasmuch as the State Treasurer must be assured of this financial aid, it would be provided that the State will be heard through its representatives before some such tribunal as the present, and that until the State has so been heard, no alteration will take place in the amount of the aid granted.:' (Evidence, page 31.) . ·

EXPENDITURE IN .RECENT YEARS VERY RAPID.

242. Whether or not the State has been attempting to , accelerate the settlement of agricultural lands at a pace greater than that which financial prudence would dictate, it is certain the rate of expenditure in .recent years has been very rapid, as suggested in the extracts

from the evidence of the State Advisory Committee cited above. The State authorities themselves have felt doubts as to the propriety of attempting to continue such expenditure on the same scale as hitherto. · Table X , put in by the State Advisory Committee; shows that up to the 30th June, 1923, t.he amount of advances to settlers in Western Australia per head of population was £45 16s. 6d., a total of £16,213,266, an amount very greatly in excess of that expended in a similar manner by any other State. The next highest State amount was that of South Australia, £32 3s. ld. The figure for Victoria was £19 4s. 8d., no other State figure reaching £7 per head of population.

SPECIAL INQUIRY INTO LAND SETTLEMENT.

243. The State Government recently instituted a special inquiry by a Royal Commission into the land question, particularly, we understand, bec.ause of the very high total advances now bemg made to settlers, specially those within the areas in the south"west of the State which .are being prepared for the dairying industry. We are informed that the report of the CommissiOn has bee1_1 prepa!ed,. but it has n?t yet been made public . . It is possible that this report may be of value m cons1dermg the questwn whether the Commonwealth should offer any to the State to accelerate the rate at which immigration and settlement

are takmg place m that State. .

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WITNESSES URGE SPEEDY POPULATION OF UNOCCUPIED LANDS. 244. Much emphasis was placed by witnesses upon the sense of responsibility felt by the State authorities in Western Australia for the speediest possible populating of the unoccupied lands of the State, and the opinion was general that in thus acting the State is carrying a national

burden. 245. We are aware of the facilities with regard to advances of money to the States at very low interest for a number of years for the purpose of facilitating the State efforts to settle migrants upon their lands. The evidence of the Deputy Director of Immigration (Colonel Hurley) shows that while the Commonwealth and the. British Governments are sharing a·considerable proportion of the interest burden on the advances made to the States for immigration purposes, the decision as to whether any, a;nd if so, how many, migrants shall be introduced into the State, is one wholly for the decision of the State authorities.

OPINION OF COMMONWEALTH STATISTICIAN. 246. The Commonwealth Statistician, in reviewing the figures of has

expressed the opinion that the rate at which the successful absorption of migrants into a State can take place is related to the rate of natural increase, and that the experience of the past is the best guide as to the probable maximum rate at which permanent and profitable increase of population can take place. That maximum appears from the evidence to be about 3 per cent.

"If you try to get beyond 3 per cent. per annum," said Mr. Wickens, "you would riot be successful, except in exceptional cases, such as the discovery of a gold-field, and even then you would have difficulty in getting the people absorbed. The difficulty of satisfactorily absorbing the people is becoming greater as time goes . on. For the last six years, since our soldiers came back from the war; we have been trying to absorb them successfully, and we have not yet arrived at the end of our difficulties in that respect, in spite of the fact that the returned soldiers were the best class of people we could get.

Adding to the population is a serious problem, and a community increasing more than 3 cent. per annum has a very great task before it to absorb·the new arrivals. As I stated the other day, in .my opinion immigration is desirable, but it needs to be at a relatively slow rate of progress. Immigration should not be rushed.'' ( Q.4658.)

OPINION OF STATE REPRESElfTATIVE.

247. The State of Western Australia's Representative (Mr. G. W. Simpson) expressed the opinion that, subject to satisfactory financial arrangements, there is no reason why the State for a number of years should not be able to absorb population at a total rate of 5 per cent. That total would represent. the natural increase plus migration.

OPINION OF COMMISSION.

248. That rate is so high and there is so little experience of such a rate having been satisfactorily continued for any ·length of time that it appears to us to be prudent, for any public purposes, not to make any estimate based on a rate higher than that suggested by the Commonwealth Statistician-about 3 per cent. ·

DRIFT OF POPULATION TO EASTERN STATES. 249. There is a drift of population, either migrants or native born, from Western Australia to the Eastern States. The Officer-in-charge of Immigration in Western Australia said (Q.442) that the movement does occur to a very appreciable extent, but (Q.441) we cannot supply any figures in connexion with the matter, as there is no check on the movement as between States.

Another witness, however (Q.832, p. 117), quoted statistical figures for the period from December, 1919, to December, 1923, which show that the gross increase of population due to excess of births over deaths, plus the number of immigrants arriving, was less than the net gained population for the same period by approximately 10,000. This latter figure, therefore, is taken as representing the loss to the State by the movement of population to other States of the Commonwealth.

PROFESSOR J. W. GREGORY'S VIEWS.

250. There is one aspect of the question of populating the unoccupied areas within Australia which has recently attracted a certain amount of public notice, and that is the question of whether the League of Nations might at any time raise the point that a people possessing very large and scantily-occupied areas, should, in world interests, be called upon to show cause why it should not open wider its doors to the surplus populations of other races. In this connexion it may

be interesting to quote from a recent book entitled The Menace of Colour, by Professor J. W. Gregory, D.Sc. (p. 239) :-"There is no reason why Australia should be told that unless· it develops its bad lands at once, it would forfeit its rights to them, while they are allowed to remain derelict in other continents where many of them are better adapted for cultivation than in Australia ; while

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Siberia, Manchuria, and Mongolia are sparsely populated ; while in India the fertile lands at Burma have a population of only 57 per square mile-the very largest State of Rajputana a population of 5 per square mile, and in Baluchistan only 8 per square mile ; while in South America 70 per of Brazil has a population of less than 5 to the square mile ; while half of Canada has a

population of about 1 to 100 square miles, there is no justification for the idea that it is discreditable to Australia to have large areas unoccupied."

AUSTRAliA'S RATE OF INCREASE.

· 251. It may also be said that Australia has a rate of increase of population which is not far from being the highest in the world, and that it is spending very large sums in the endeavour to promote the most effective settlement,

A VAUD ANSWER TO ANY CONTENTION THAT AUSTRALIA IS FAiliNG IN HER DUlY. 252. These two facts seem to constitute a valid answer to any contention that Australia is failing in her duty with regard to development of her territory .. We sympathize with the State view that immigration may be considered a national responsibility, though not to the exclusion of the more direct State responsibility. The Commonwealth Government and the British ·Government, through the Migration Agreement recently promulgated (which is more liberal

than the previous Agreement), are both offering to carry a part of the financial burden.

NOT NECESSARY SPECIAllY ALLOCATE PORTION OF GRANT FOR SETI'LEMENT OF MIGRANTS. 253. We recommend elsewhere (paras. 365 and 579) that an annual grant shall be made to the State, but in our opinion it is not necessary that any part of .th.at grant should be specially allocated to the settlement of migrants:

PART XI.-REQUEST FOR GRANT IN AID OF TECHNICAL EDUCATION. ·

THE STATE SCHOOL TEACHERS UNION OF AUSTRALIA. 254. Mr. T. J. Milligan, President of the State School Union of Western Australia, a union with a membership of between 1,400 and 1,500 teachers., presented evide:Q.ce which had been prepared and agreed to by the executive of the Union. (Q.3155-7.) Mr. Milligan submitted that " so far the Federal Government had not considered the question of assisting the States in education." (Q.3159.) The Teachers Union "did not suggest that education should be taken

over by the Federal Government." (Q.3163.) "That education should have the attention of the central governing body," he submitted, "it3 shown by the practice of the Dominion of Canada the Union of South Africa, the Federation of the United States, the central governments in England and Wales, Scotland, and the fe

THE DOMINION OF CANADA.

255. In Canada the Dominion Government had; at-various times, set apart land, the income from which was devoted to subsidizing education in the various States. ·

ENGLAND AND WALES.

256. In England and Wales the central government granted in the yearl919-20 £25,402,489 to elementary, and £3,741,035 to higher education; that is to say, £29,143,524, or 54.3 per cent. of the cost of education.

THE UNION_ OF SOUTH AFRICA.

257. The report of the Controller and Auditor-General of the South Mrican Union for 1923-4 showed that the Union Government contributed in grants to t:tie various States the sum of £328,101 15s: 4d., the greater part to and technical colleges. In addition,

the Union contnbuted 16s. lld. to n;dustnal schools, and £86,847 3s. 5d. to the promotion of child welfare under the Children's ProtectiOn Act. (Q.3159.)

THE UNITED STATES OF AMERICA.

258. "Finally," Mr. Milligan said, "we come to theUnited States of America. In addition to vari?us allocations of land, of which the income is to devoted to development of education, the Umted States Federal Government has passed variOus acts to assist education in the States. The most recent of these are the Smith-Lever Act of 1914, which appropriated large .su:ms for the extension of the function of the agricultu_ral colleges, and the Smith-Hughes Act of 1917, which

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provided for progressively mcreasing grants . to vocational education up to and including the year 1926. Under this Act there came into being a Federal Board for Vocational Education which, under the chairmanship of the Secretary of Labour, . comprised, amongst others, the Secretary of Agriculture, the Secretary of Commerce, and the Commissioner of Education. From the report

of this Board for 1921 (to be found amongst the House reports, House document 97-240, of the United States of America Congress) it appears that 48 States voluntarily accepted the Act, a very rare unanimity in the history of the United States of America. In 1921, the Federal allotment to be definitely spent on paying the salaries of teachers of agriculture, trade industry, and home economics, and on the salaries of teachers training theseteachers, was 3,632,177 dollars(£747,361); in 1922, 4,120,833 dollars (£847,918); in 1923, 4,615,159 dollars (£949,621) ; in 1924, 5,190,448 dollars (£1,067;993) ;· in 1925, 6,168,716 dollars (£1,269,283); and in 1926, 7,154,901 dollars

(£1,472,202)." (Q.3162.)

. "COMMONWEALTH SHOULD SUBSIDIZE STATE EDUCATION."

· 260. Mr. Milligan suggested that the Commonwealth Government should subsidize State education by setting apart an annualsum to provide education for the adolescent up to the age of eighteen for the purpose of encouraging vocational, more especially · agricultural and household management, education. It was futile to expect farmers in Western Australia to compete successfully unless they were familiar with the scientific principles of agriculture, and the best

and most economical methods of practising it. It was also highly essential that the women on the land should be thoroughly instructed in all matters pertaining to household management. It should set apart an annual sum for .the purpose of assisting States- Western. Australia being by far the greatestsufferer-which are handicapped by the expensive pioneer work of rendering

larger expanses of bush land suitable for . agriculture. This money should be devoted, as in America, to the trainingcof teachers, so that the settler on the land may feel that his children are to be taught by teachers who have had every bit as good a training as the teachers in urban districts.

COUNTRY PEOPLE LEAVE FOR CITIES.

261. Mr. Milligan having been asked whether he knew of his own experience of people from country districts coming into the cities because they could there get better education for their children, said-" Yes; I am headmaster of the Practice School, Teachers' College, the enrolment at which is limited to Since Christmas we have admitted two families who have left the coilli.try because, on the statement of the parents, they could not get good education for their

children in the country districts." (Q.3181.) Mr. Milligan's evidence was supported by Mr. William Ernest Thomas, Secretary of the State School Teachers Union of Western Australia.

OPINION OF COMMISSION.

262. In respect of primary and secondary education, it may be that no direct assistance would be sought by any State ; but in view of the drift.of population to the capital cities of the Commonwealth, the Commission is of opinion that it would be in the interests of Australia if, on the application of any State, substantial subsidies were granted in aid of for instruction in agricultural methods ; in the care of farm a.nima.ls, and in the handicrafts incidental to the

economical working of a. farm ; e.g., repairs to farm vehicles and implements, erection of sheds, mending of harness, &c., &c.

THE NARROGIN (WESTERN AUSTRALIA) FARM SCHOOL. 263. Your Commission would recommend, as a model worthy of assistance, the Narrogin Farm School, situated in the centre of a farming district in Western Australia. The curriculum of this school comprises the theory and practice of agriculture and kindred activities, including

blacksmithing, plumbing, carpentry, saddlery, also English, history, chemistry, physics, farm book-keeping, farm mensuration, elementary surveying, geometrical drawing. The elements of rural economics, farm sanitation, hygiene, and first-aid are also taught. F.2517.-5

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PART XII.-FEDERAL AND STATE ARBITRATION COURTS.

EMPLOYERS IN GOLD-MINING UNABLE APPROACH COURT. 266. Mr. 0 . L. Bloxsome, Representative of the Chamber ofMinesincorporated, Kalgoorlie, W.A., said:-" The creation of a Federal Arbitration Court, having jurisdiction over State industries, has been the means of raising much industrial trouble. The labour unions have taken

advantage of the position by playing the Federal Arbitration Court off against the State Arbitration Court, in which game the employer has been hopelessly- beaten. The Federal Arbitration Act practically prohibits employers in such an industry as gold mining from approaching the Court, but any union calling itself federal, and having members in more than one State, can bring the employers before the Court. Unions connected with our industry. have taken full advantage of the position, and in effect been able to pick out whichever portion suited them, from both Federal and State awards." (Q.2755.) ·· ·

THE WESTERN AUSTRALIAN LABOUR PARTy. 267. The General Secretary of the Australian Labour Party (Western Australian Branch) Mr. E. H. Barker, contended, however (Q.3,897), that "the concurrent existence of a State and ;Federal award covering the same group of workers . . every case of which I have

knowledge entirely at the discretion of the employers." In support of this statement instances were given where the employers could have .. retired from a State ;agreement at a certain date, but allowed the agreement to run on for a considerable period. The witness, while of the opinion that there are some industries which, from their local character, should be dealt with only by the State Court, disagreed with the suggestion that the Federal Court shpuld deal only with seamen, shearers, and theatrical employees. "If the organizations a.te federil.iq their character, I see no reason why the Federal Court should not deal with them, if.itis asked to do so." (Q.3906.)

"GREAT DELAY IN STATE ARBITRATION COURT." 268. With regard to the contention of the Employers Federation· that it wouid be preferable to confine proceedings to the State Arbitration Court, the witness pointed out the great delay that sometimes occurs in that Court, instancing "the fact that the Union and the employees in the engineering industry in this State have been waiting since December, 1923, to secure a hearing of their case, but they have been unsuccessful to date.'' (Q.3897.) The witness also stated (Q.3907) that " the fear _ of competition from other States is emphasized and accentuated if there are none but State Courts dealing with the industries."

MAJORITY OPINION. (Commissioners and Mills.)

. . 269. is no that the irremovable barrier of distanc·e-places Western Australian mttzens at a disadvantage m matters where attendance upon Arbitration Tribunals sitting in other States becomes necessary in the interests of their industries . Citizens of other States to some extent suffer the same disadvantage. The whole question of the relation between Federal and · State Arbitration a very wide one, and one as to which we have no special

mandate. To decide what mdustries should be treated as federal in character and therefore requiring an Arbitrati?n aw:'rd covering the whole Commonwealth and those indu;tries the wages and hours of In should be determ.ined by State Arbitration Courts or Wages

would require a thorough Investigation. We therefore do not feel justified

m domg more than make thiS bnef reference to the main fa cts brought under our notice. From this section of the Report Commissioner Entwistle expresses dissent. (See para. 522.)

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PART ACT.

270. As the effect of the Navigation Act upon the States has been the subjectof special inquiry by a Commonwealth Royal Commission; we did not seek evidence on that subject. In a few cases, however, witnesses, giving evidence as to alleged disabilities of the State of Western Australia arising out of Federation, brought up the matter, and in two places, Albany and Geraldton, some specific evidence was given, the facts being stated as more recent than those put before the Navigation Commission. In principle there was apparently no difference between the evidence

tendered to the Navigation C01nmission and that brought before us. All the witnesses who referred to the question at our sittings were of the same opinion, viz., that the operation of the Commonwealth Navigation Act was prejudicial to the progress of Western Australia. We quote below a few brief extracts from the evidence.

"DISASTROUS TO STATE OF WESTERN AUSTRALIA."

271. Mr. Wm. Carroll, representing the Western Australian Primary Producers Association, The effect of the operations of Federal Navigation Act had been disastrous to the

State of Western Australia." (Q.832.)

"STRONGLY OPPOSED TO NAVIGATION ACT."

272. Mr. Alexander Thomson, M.L.A., Leader of the Country Party in the Legislative Assembly Of the State of Western Australia, We are strongly opposed to the Navigation Act. I speak feelingly upon this matter because Albany is the port of my district, and prior to the war and the imposition ofthe Navigation Act we had a weekly service of intercolonial steamers."

(Q.ll88.)

"AFFECTED WESTERN AUSTRALIA AS SEVERELY AS TASMANIA." ·

273. The Hon. John Scaddan, formerly Premier of Western Australia, said The Navigation Act has affected Western Australia as severely as Tasmania, and in some respects probably more severely." (Q.3327.)

"NAVIGATION ACT HANGS LIKE A CLOUD."

Mr. W. L. Sanderson, Secretary to the Pastoralists Association of Western Australia,

The position of the pastoralists as regards transportation in this State (Western Australia)

is one .of isolation. Wool has, in many cases, to be carted hundreds of miles to the coast, and from the ports shipped to the selling centres. . . . The Navigation Act hangs like a cloud over us here in Western Australia. We do not know when its provisions may be enforced, and . shipping companies are, in consequence, afraid to develop the trade and put on more boats. . . .

Our north-west coastline is a pretty long one, and we are entirely dependent on shipping to carry our food to us, and take our wool, and also our meat, to the metropolitan markets." (Q.2236.)

"HOLLOW MOCKERY TO URGE PEOPLE TO EXILE THEMSELVES."

275. Senator P. J. Lynch said:-" A State like Western Australia, having 3,500 miles of coastline, and }laving scattered settlements at various points along that coastline, must strike the most casual observer asin nowise comparable with a State having a coastline of a few hundred miles , with regular communication within itself and with -its neighbours. A Navigation Law

which would suit one would ruin the other. What a depressing spectacle it is, and it shows with what little wisdom a country is governed, when empty ships daily pass the northern coastline, the produce of settlers banks up, and they themselves are prevented from going about their business as they should without any such senseless embargo. It is hollow mockery to urge such people to exile themselves and even applaud them for doing so, and then follow them up with such insane restrictions upon themselves and their daily lives. Transport and communication are essential to Western Australia's prosperity. What is the use of producing an article if you make it next

to impossible to shift that article to where there is a demand for it." (Q.65.)

MAJORITY OPINION.

(Commissioners H '£ggs and Entwistle.)

276. Your Commission is of opinion that Part VI. of the Navigation Act, having reference to " the Coasting Trade," should be repealed.

(From this section of the Report Oommission,e1· Mills expresses dissent. See paras. 524-526.)

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PART XIV.-REQUEST FOR FEDERAL CONVENTION.

IMPLIED PROMISE CONSTITUTION WOULD BE REVISED. 277. Mr. Edward Houghton Angelo, M.L.A. for the electorate' of Gascoyne, Western Australia, who was invited to give evidence before your Commission, at first declined to do so "because he desired to enter. an emphatic protest against the appointment of the " (your)

" Commission when he thought that they were entitled, as they were promised twenty odd ago, to a Federal Convention." He said :-'-" If you read the debates of the various which framed the Constitution, you will see that the leading representatives told the representatives of the other States, who were not so keen on Federation, that after Federation had been operating for a decade or two, the Constitution could be revised and amended." (Q.2428.) .

RESOLUTION BY THE PARLIAMENT OF WESTERN AUSTRALIA. 278. Mr. Angelo said that the Prime Minister of the Commonwealth (Mr. Hughes), having definitely promised that a Convention would be held, he, in 1921, moved the following resolution in the Legislative Assembly of Western Australia:- .

H In the opinion of this House, it is desirable, in view of the contemplated Convention

to review the Federal Constitution, that a joint select committee of both Houses of the Western Australian Parliament be appointed to inquire as to the effect the Federal compact has had upon the finances and industries of Western Australia, and. to advise as to what amendments· of the Constitution are desirable in the interests of this State.'' 279. This resolution was passed unanimously by both Houses of the Parliament of the State of Western Australia. (Q.2432.)

CALL FOR CONVENTION NOT WIDESPREAD. 280. Judging by the number of witnesses who appeared before your Commission in support of the request, the demand for the holding of a. Federal Convention to revise the Commonwealth Constitution Act is not now widespread, though when the Parliament of the State of Western Australia passed the foregoing resolution, it may have .been so.

WITNESS AT GERALDTON.

281. One witness at Geraldton (Mr. E. H. H. Hall) said:-" I agree with Mr. Angelo that instead ofappointing this CoiU:tnission, it would have been wise !or the Commonwealth Government to call another Convention." (Q.3302.) ·

TIIREE WITNESSES AT ALBANY.

282. Mr. John Thomas Mills, manager of Drew, Robinson and Company at Albany, referred in his evidence to the question of new States, and in reply to a question how he thought the Federal Government could help in this matter when the State does not make a request to be divided into smaller areas, said:-" The Federal . Government can begin by ·keeping· faith with the people,

and calling the Convention which was promised years ago. Our New States League dropped out of existence in anticipation of a Convention being held. We sent a representative to the Conference held at Albury, and we hoped all along that the promise of a Convention would be honoured. When the matter fell through, we were like a voice crying in the wilderness. It was useless for us to attempt anything on our own." (Q.3984 and 3985.)

. 283. Mr. Henry Edgar Miles, formerly Secretary, Albany Knitting Company, in reply to a similar question to that put to Mr. J. T. Mills renew States, said:-" The .Commonwealth Government can keep the promise made by Mr. Hughes that there would be held a Federal Convention at which the matter of reconstruction of the States would be discussed. That Convention was promised in 1922, but it was never held, and it never will be held if it is left to the politicians. The people will demand it, and eventually force it on the St.ate Parliament or the :H'ederal Parliament." (Q.4018-40.) .

284. Mr. Percy Lambert, manufacturer and Mayor of Albany, favoured the holding of a Convention for the revision of the Constitution. (Q.4056.)

"WHAT MORE COULD A CONVENTION DO THAN THE FEDERAL PARLIAMENT ITSELF?" 285. Dr. J. S. Battye, Public Librarian of Perth, Western Australia commented on the proposal in these tenns :- '

" The principle of holding a Convention is very fine, but if you did hold a Convention what more could it do than the Federal Parliament can do. without such a Convention ? I think that in the first place the Commonwealth Parliament should set out what it deems to be the lines action to be taken in regard to the Commonwealth as a whole, and that be subuutted to the people by means of a referendum for their acceptance or otherWise; but I do not see how a Convention will be of much good in the matter." (Q.4598.) ·

1531

1.xix

NO RECOMMENDATION.

286. Your Commission makes no recommendation as to the holding of a Federal Convention to revise the Commonwealth Constitution Act.

PART XV.-THE NORTH-WEST.

AREA AND POPULATION.

287. For administrative purposes that portion of the State of Western Australia, north of the 26th parallel of south latitude(*) is described asthe North-West, and in the State Cabinet there is a Minister styled" The Minister for the North-West." The area over which he exercises Ministerial control, 562,000 square miles, is nearly 60 per cent. of the area of the State and nearly

one-fifth of the total area of Australia. The population at the 1921 Census was 5,147, and is said to be declining " principally owing to the fact that gold mining has practically died out in the north and tin mining and other forrp.s of base metals have also fallen off in production." (P. 26.) · .

CAPITAL EXPENDED.

288. The evidence of the State Advisory Committee (Return AA) shows that up to the 30th June, 1924, the capital expenditure in the North-West amounted to £3,680,232. The largest single item of capital expenditure, £1,014,693; represents the cost of the Wyndham Freezing Works .; an undertaking upon which there is also an accumulated loss of £526,274.

THE. WYNDHAM MEAT WORKS.

289. The following are soine of the principal facts elicited in evidence given by the Manager of the works ·:- -

(1) Capacity of the works would he about 30,000 head in a normal seaso;n. (Q.1948.) (2) Of the stock treated nearly 40 per cent. comes from the Northern Territory. (Q.1946.) (3) There are about 30suppliers. Some of these are very large suppliers. (Q.1936.)

(4) If the Darwin Works were operating, a material proportion of thestock now going to Wyndham would probably be treated at Darwin. (Q.1947.) (5) The joint capacity of the two works is in excess of the number of stock available. The stock are not increasing fast enough to make the two works profitable

within the next three of four years. (Q.1953 and 4.) (6) The works are handicapped by the high cost of operating, labour, and materials, also by the cost of transportation from Wyndham to Fremantle and back of all the operatives and staff each season. (Q.1934.) (7) In reply to a question as to when the works will probably pay interest on the money

invested, the Manager said-" I think it is possible, if not probable, that they might pay the interest charges in time. Probably there will be a ' writing down'." (Q.1961) (The annual interest charge is £68,550.)

290. In spite of all the difficulties the Manager takes a hopeful view of the future and says­ " The conditions are improving ; the market has substantially improved and freights are coming down; we have got over our bad times; we are approaching a period when we may say the Wyndham Works haveturned the corner and better results will be shown." (Q.1958.)

THE STATE SHIPPING SERVICE.

291. Another important item of capital expenditure in the North-West is that for the State Shipping Service, the capital cost being £393,066. On this service there is an annual loss of £90,278. In addition to the two State-owned shi.Ps engaged in the service four ships, belonging to companies and trading between Fremantle and Smgapore, provide passenger and cargo facilities

for all the Western Australian ports fromFremantle to Derby. With one exception, viz., Geraldton, all these ports are in the North-West. These four privately-owned ships have been granted permits under Section 286 of the Navigation Act, :the effect of which is to exempt them from the wages and other conditions a:ffecting the coastal trade generally.

* The Administrative boundary is not quite identical with the 26th parallel, but is approximately so.

=== -=··----- ----

lxx

"THE NORTH-WEST" AND "THE KIMBERLEY," OR "FAR NORm." 292. While as stated the term "North-West" is applied to tl:le whole of the State lying north of 26° S. latitude, that portion of the Administrative area north of 20° S. latitude, known as the "Kimberley Division," or the far north, possesses physical features which differentiate . it from the area between 20° and 26° S. latitude. The important river systems and the rich

soils give the "Kimberley" a special individuality.

THE NORTHERN AUSTRALIA BILL.

293. The Kimberley area is the subject of certain proposals by the Commonwealth indicate-d by the provisions of a Bill called the Northern Australia Bill introduced in the Commonwealth Parliament on the 1st July, 1925. _ · ·

294. Apart from ,the _ result of any such proposals, if made, it is difficult for a disinterested observer of Western Australian affairs to avoid the conviction that the Government, centred at Perth; has jurisdiction over a territory too vast for its present resources or for the resources it is likely to possess for many decades. About 90 per cent. of the population of the State is within an area of the size of Victoria, 87,000 square miles, the northern boundary of which is a parallel of laititude about F north of Perth (say 31 o south) and the eastern boundary of which is a of longitude, immediately east of Kalgoorlie (say 121 o 31' east longitude).

, POPULATION OF WESTERN AUSTRALIA. 295. The population of the whole State . is at _present only 365,000. If the net annual increase of that population could be maintained at 3 per cent., a very high rate, it would take nearly 58 years to increase to2,000,000.

SUGGESTED TRANSFER OF NORm AND NORTH .. WEST. 296. Consideration of the large capital expenditure, the heavy annual loss, and the small and declining population of the North-West, led at an early stage of our inquiry to the position indicated by the following extract from the Evidence. (p. :- . .

" The Ohairrnan.-Is it the. considered deterniination of the Advisory Committee that they shall not, under any circumstances, surrender to the Commonwealth the North-West of Western Australia above·the 26th parallel of south latitude? Mr. fat as Ikliow, that is the position. The Advisory Committee

aware of the views of the present Government in Western Australia, and it knows

that those views d() not favour anything in the 11ature of a pro:posal to hand over for Commonwealth territory two-thirds of Western Australia. _. · The Chairman.-Although that is a burden of Western Australia? Mr. Keenan.--,-Yes.

· _ ·The Ckairman.----'Although the population-hasonly increased by 1,000 in twenty years you propose to retain that part of the State ? _ ' .- · -

Mr. Keenan.-We propose the alternative by asking the Commonwealth to share the expense of immigration into Western Australia, not ·only into the northern parts, but into the parts which, at the present time, are more fitted for settlement than is north of 26th parallel of south latitude. If the Commonwealth replies and says that it will not entertain such a proposal, and aU that it will entertain is that Western Australia shall hand over as Commonwealth territory what is practically two-thirds of the existing territory of Western Australia, I presume the matter will be determined, in the first place, by the Government in power, and, in the second place, by the people of Western Australia, to whom, no doubt, the Government will refer such a question.

The Chairrnan.-:-l thought it advisable to ask you the question because it appears that your Advisory Committee · does not submit any proposed remedy for your disabilities other than a grant of money." ·

HOW PROPOSAL REGARDED . BY ·WITNESSES. 297. The following further extracts from the evidence show how the matter was regarded by various witnesses :-" Not prepared to surrender territory to the Commonwealth Goverm:nent. Would

con·sider proposals by Commonwealth as to formation of new States " (Q. 1268).-Hon. W. C. Angwin, Acting Premier, Western Australia. ·

" We have no settled scheme which warrants us in anticipating success in the north. The only which has the!e to-day is the pastoral industry,

and that does not admit of any extensiOn m populatiOn to any great extent" (p. 27).-­ Tke Hon. Norbert Keenan, Chairman of the State Advisory Committee.

1533

lxxi

" Any proposal to subdivide the State should not come from the outside. In any case, not in favour of handing over the north" (Q. 2299).-Sir James Mitchel!, K.C.M.G., Leader of the Opposition. "New State north of 26° S. advisable. Should have three Senators and two

Members of House of Representatives. Also­ Fiscal freedom for 25 years . . A system of local administration. . .

Financial assistance-Imperial, Federal, and immigration and

development purposes" (Q. 1790-1802).-Hon. G. J. G. W. Miles, M.L.C. "North-West should have so:p1e form of local government" (Q. 3338-3341).-H on: John Scaddan. "North should have no need for separate Government.

Board of Councillors-practical men. Little more representation in Parliament. A Sup'reme Court Judge. A Lands Commissioner. All under control of the State" (Q. 2384).-Hon. H. K. Ma'ey. "North-west' truly begins' at 22° S.

Not in fa V01!1' control from Melbourne. Prefers Crown colony system. Commonwealth duty to take over that portion of the State" (Q'. 4261).-A. E. Green, M.H.R. ·

"Impossible to develop the North-West with the present Tariff, under any form of Government. Commonwealth should spend .some money in developing the North-West" (Q. 1917-1918).-Hon. H. Gregory, M.H.R.

" Commonwealth could not govern the North-West as well as the State is governing it to-day. · Better to have a small States movement for New South Wales, Queensland, and Western Australia" (Q. 51).-J. H. Prowse, M.H.R.

''Doubtful if proposal to separate the North-West into a new State is practicable at present. Opposes handing over to Commonwealth. Commonwealth might assist in railway development " (Q. 2129).--E. A. Mann,

M.H.R. . .

" Prior to formation of a new State or States there should be local representation, part nominee, part elected, money to be provided principally by Commonwealth (Crown colony idea) " (Q. 2209).-M. P. Durack. ' Opposed to handing over to the Commonwealth.

Parliament and people not likely ever to hand over more than that portion north of 20° S.'' (Q. J. Monger.

"No reason to believe that administration by the present State is likely to be improved on by any available system" (Q. 3908).-H. R. Sleeman. "Question of giving the northern part of Western Australia a representative in the Federal Parliament as is done in Northern Territory might be considered.

If created an independent State would probably remain at a standstill, as its finances would be microscopic " (Q. 5271/2).-Hon. J. McK. Fowler. .

298. It will be seen that the leaders of both the political parties, which for a number of years have alternately directed the Government of Western Australia, are opposed to surrender of territory in the North-West of the State to the Commonwealth.

MAJORITY OPINION. (Commissioners Entwistle and Mills.)

299. Until the proposals for Commonwealth assistance in the development of the north­ that is above 20° S. latitude-have reached a further stage of development, it is difficult to offer any suggestion in relation thereto. On the whole, the Commission is of opinion that it i3 not desirable for it to make a specific recommendation in respect either of any different form of control of the North-West, or of financial assistance specifically confined to that area. As shown above (para. 296), the Western Australian Government expects some proposals to be submitted

for its consideration by the Commonwealth. In the absence of any such proposals dealing with any part of the North-West, we are of opinion that any question of surrender of territory should be initiated, if at all, by the State Government. From this section of the Report the Chairman expresses dissent. (See paras. 527-558.)

•

lxxii

PART XVI.-THE COMMONWEALTH PARUAMENT.

DISABILITIES OF SMALLER STATES· ATTRIBUTED ·yo THE SENATE BEING A PARTY HOUSE AND NOT A STATES' HOUSE. 300. In course of evidence, opinions were expressed to the effect that the disabilities of Western Australia as one of the smaller States arise from the fact that Senators are elected on party lines, with the consequence that the Senate as a deliberative and legislative body does not regard itself as being in a special sense the guardian of State interests. This view was put most directly by a Western Australian witness, Dr. J. S. Battye, who said (Q. 4587)-" It was originally intended that the Senate should be a States' Hou:se, and that the business of the Senate should be to protect the interests of the State against what one may term the opinions of the more populous States of Australia."

MAJORITY OPINION.

(Commissioners Entwistle and· Mills.)

30L Whether or not the party affiliations of the Senate constitute a root cause of the financial difficulties of Western Australia, as Dr. Battye suggested, neither he nor any other witness showed exactly the relation between the political ties of Senators and the present financial position of Western Australia. It is possible to conceive alterations of the Constitution which might have the e'ffect of increasing the influence which the smaller States have upon Qommonwealth legislation, but, in our opinion; the relation between any such changes and the immediate questions affecting the financial position of Western Australia, which are the concern of the present Commission under its Terms of Reference, is too remote to justify us in making recommendations on the subject. ·

From this section of the Report the Chairman expresses dissent. (See par(LS. 559-57 4.)

. . /

PART XVII.-:-FINANCiAL FIGURES.-WESTERN AUSTRALIA.

302. The financial statement of the Treasurer of the State of ·western Australia for the year ended 30th· June, 1924, contains the following figures :--Public Debt Public Debt per head of population

·Revenue, 1923-24 Expenditure-Totall923-24 . -. Expenditure from Loans, 1923--24 Deficit, -1923-24 Accumulated Deficit .. Total Sinking Fund ..

.·.,

£

. 62,765,782 . 172

7,865,595 . 8,094,753 3,936,833 229,158

6J40,087 . 9,373,571

303. Western Australia has by far the highest, public debt per head of population of any Australian State, and more than double the debt per of the State of Victoria. Ever since 1910 there has. been _ an annual deficit, the largest of which-£732,135-:-Dccurred in the year 1921-22. The.two following years. show a lessening of the gap between revenue and expenditure, the deficit for 1922...,.23 being £405,364, and for 1923-24

304_ During the period of thirteen years in which the deficit of £6,140,087 has been accumulated, annual contributions to the Sinking Fund have been made, amounting in all to £3,623,011, or nearly 59 per cent. of the deficit accumulated during the same period. 305. More than one view has been taken as to the relation between the accumulated deficit, £6,140,087, and the total Sinking Fund, £9,373,57L The special representative of the CommonwealthTreas.ury (Mr. S. G. McFarlane) said:- ·

" . . . . The Sinking Fund is not a true sinking.* Instead of a Sinking

Fund ·of £9,000,000 and a deficit of approximately £6,000,00p, Westem Australia should be regarded as having a true Sinking Fund of approximately £3,000.000 and no deficit." (Q.6355.) .

• There is a high authority for the statement that "the only real sinking fund by which debt can be dis-charged is the excess of over Expenditure." (Q.3589.) '

1535

lxxiii

to the Commonwealth Treasury (lVIr. J. R. Collins) appeared to adopt the . same

VIew, I.e.:-"I take your present answer to mean that the State practically has a balanced Budget, plus a Sinking Fund of £3,000,000 odd ?-Something: like that." (Q.5974.)

Mr. Collins also said--" . . ' . in considering the claims of Western Australia for assistance, the fact that a deficit of £6,000 ,000 exists should be ignored, hecause that deficit is more than set off by the very large contributions made to Sinking Fund." (Q.5996.)

306. While not directly qualifying these statements, l\'Ir. Collins, in replying to question (Q.5997) by the State representative, used words which apparently rnean that on the view most favorable to the State the figures of accumulat-ed deficit · must be reduced at least by the contributions to Sinking Fund made during the deficit years, £3,623,011, a.nd by the amount of interest, £1,081,370, paid on the funded deficit up to the 30th June, 1924. (Q.6712.) These two amounts total £4,704,881, and, deducting thi$ total from the accumulated deficit, the balance

is £1,435,706. '

307. The State representative (Mr. G: W. Simpson) suggested tlw,t this balance should be increased by sums representing-- . · ·

(1) The advantage in favour of Western Australia over other States in the matter of interest on Loans. It appears that up to the end of 1911 (after which the State Budget regularly showed deficits) t.he average rate paid by Western Australia was £3 9s. per cent., as compared with the average of other States, £3 lls. 5d.

per cent., a difference of 2s. 5d. per cent. Multiplying the latter amount by 13 (the number of years elapsed between 1911 and 1924), the result is 31s. 5d. per cent., which on the capital indebtedness of the State at 30th .Tune, 1911, £23,287,453, amounts to £351,158 . . The lower rates of State borrowing up to 1911 are attributed to the existence of the Sinking Fand. (2) Amounts contributed to Sinking Fund, 1911-24, fromt.he running of State " Business

Undertakings" and State " Trading Concerns." These contributions totalled £341 ,000. . 308. In our opinion the amount shown under (2) cannot properly be taken into account for the purpose in question. Whether the lower rates of State borrowing, prior to 1911, were, or were not, due to the existence of the State Sinking Fund provisions is not capable of absolute proof, but assuming that to be the fact the position may be set out thus :-

Accumulated deficit to 30th June, 1924, as shown in the financial statement of the State Treasurer . . £6,140,087 Add Saving in interest owing to the State borrowing

more favorably than other States . . 351,158

Deduct-Annual contributions to Sinking Fund during years of deficits up to 30th June, 1924 up to Jun_e:

Balance

3,623,0ll

1,081,370

£6,491,245

4,704,381

£1 ,786,864

309. In our opinion, taking the view most favorable to the State claim, this balance of £1,786,864 represents the maximum sum which, as at 30th June, 1924, can be regarded as the true deficit of the State. STATE TRADING CONCERNS.

310. Portion of the deficit of the State of Western Australia is c;aused by a form of enterprise, which the State conducts under the name of "State Trading Concerns." There are eight of these at present in operation. They embrace shipping, meat works. implement works , saw-mills, brick works, ferries, quarries and hotels.

NET LOSS OF £501,636.

311. It was stated in evidence that up to the 30th June, 1924, these business ventures had resulted in a net loss to the State of £501,630, and that the loss for the vear ended 30th June, 1924, was £106,7 48. ·

F.2517.-6

lxxiv

QUESTIONABLE WISDOM.

312. The wisdom of a Government entering into business enterprises other than "Public Utilities," which include railways, &c., where there is not, and cannot well be, competition is questionable. Government enterprise usually means that the Government borrows money on the credit of the taxpayers to enter into business in competition with the taxpayers ; and if there is a loss on the business, as is generally the case, the taxpayers have to make good the loss. Nearly everybody in the State of Western Australia, including the wage-earners, will contribute something

towards the losses on State enterprises, if the losses are met by the present generation. If the losses are to be funded or added to the Public Debt, as has happened in other cases {see Q.3497 A- 3498), and thus passed on to a future generation, the practice of the Government in endeavouring to establish business enterpTises is still more pernicious and unfarr. If funded, the present taxpayers are penalized,as they have to meet the interest bill. ·

THE STATE GOVERNMENT SAW-MILLS.

"RESPONSIBLE OFFICERS DIRECTLY OR INDIRECTLY INTERESTED IN COMPANIES HAVING BUSINESS RELATIONS WITH THE MILLS." 313. Even in the case of the Government State Saw-mills, which is being worked at a profit, the position is far honi satisfactory. Recently.JudgeNOTthmoTe was ·given a Commission to investigate cel'tain transactions of the State Saw-mills and its officers. His report disclosed the f.act that responsible officers of the saw-mills were directly or indirectly interested in companies or partnerships with which the saw-mills had business relations, and had derived profit therefrom. Judge Northmore, at the conclusion of his repol't, said: "It would appear that the elementary

maxim that one cannot be both buyer and seller finds little place in the ethics of the State service, for the general manager, assistant general manager, chief accountant, sub-accountant, branch accountant, bush foreman, clerks and typistes all alike appear to regard the maxim aa old fashioned and out of date." (Report-State Saw-mills Royal Commission, presented 2nd June, 1925.)

DIVERGENT VIEWS OF COMMONWEALTH .AND STATE REP.RFSENTATIVE WITNESSES-. 314. A Statement of Revenue and Expenditure of the Commonwealth for the year 1923c-24 was put in by the representative of the Commonwealth Treasury. (See Evidence, page 665.) Where possible the figures shown were actual expenditure or actual revenue. In a number of cases, however, the allocation was on the basis of population, for the reason that in the opinion of the Treasury no more suitable basis is obtainable. · . .

315. The figures for the year quoted showed that Western Australia benefited to the extent of £745,000. The statement was, however, contested by the representative of the State Government (Mr. Simpson), who contended that a number of the figures should be altered in such a way as toshow that the balance was on the other side to the extent ofabout £298,000; that that for the year 1923-24 the revenue and expenditure, allocated according to the witness's view, showed the Commonwealth Government to be the gainer.

316. Owing to_ the accounting difficulties set out in Part XVIII.-" Commonwealth Financial Statements," we are unable to determiile who is right-Mr. McFarlane or Mr. Simpson.

PART XVHI.-COMMONWEALTH . 'FINANCIAL STATEMENTS.

317. The work of your Commission, m lt,s endeavour to determine -the extent of the disabilities of the State of Western Australia attributable to Federation, would have been facilitated had it been possible to ·obtain Commonwealth balance-sheets showing the revenue derived from each State of the Commonwealth, and the expenditure by the Commonwealth in or on behalf of each State during each year since the commencement of Federation. The difficulties preventing the compilation of such a series of financial statements are set out in a

letter from Mr. J. R. Collins, Secretary to the Commonwealth Treasury, under date 17th November, 1924. 318. It was J?Ossible to comply with the wishes_ the. Commission in respect of the first ten of FederatiOn, the accounts we!e distmct m with the bookkeeping

proviSions of the ConstitutiOn. At the termmatwn of the bookkeepmg provisions on the 31st of December, 1910, State distinctions disappeared entirely from Treasury accounts.

lxxv

319. lVIr. Collins continued-" Upon the abolition of the bookkeeping provisions of the Constitution the Interstate adjustment of Customs and Excise duties was discontinued. It might be mentioned that dutiable goods are imported from abroad to, say, New South Wales and

Victoria, and goods subject to Excise duty are manufactured in those States. A considerable quantity of these goods is transferred to the other States for consumption, thus the Customs and Excise duty collected in each State does not necessarily bear any relation to the dutiable goods consumed in that State. In 1909-10, the last full year of the bookkeeping Western Australia was credited on account· of transfers of

dutiable goods from other States with £198,000; during that year the total Customs and Excise revenue was £11,593,000. What that State would be credited with now that the total revenue is nearly £36,000,000 it is impossible to say, but the absence of this figure would render the statement valueless for the purposes of comparison.

The same difficulty arises in connexion with the income tax. Income Tax assessments payable on incomes earned in more than one State are made by the Central Office and are collected wholly in Victoria. In later years these taxes were in the region of £2,000,000 per annum, and there are no data available which would permit its distribution to the States in which the income was earned.

Disturbing factors also appear in regard to the expenditure of the Commonwealth. Expenditure is frequently made by a Department in one State on behalf of a Department in another State. In the case of the whole of the Votes of the Defence DeiJartment and certain Votes of other Departments, each State operates on a common Vote. The

expenditure would, in these cases, appear in the Treasury books as a charge to the State in which the cash was actually paid out, and not to the State to which the service was rendered. The whole of the expenditure of the Navy Department, owing to bookkeeping methods, would be shown under Victoria.

" Interest and Sinking Fund, which amount to more than one-third of the Commonwealth's expenditure, is almost wholly paid by the Treasury in Melbourne and in London. It would, perhaps, be reasonable to distribute amongst the States on a population basis the interest and Sinking Fund on War Loans. Interest and Sinking

Fund on Works Loans are charged in the Treasury accounts to each Department; but, for the purposes of the statement desired by the Commission, a further distribution should be made to each State, and the information to permit this to be done is not available.

"Expenditure of Central Administration, Parliament and certain Special Appropriations to the total of upwards of £2,000,000 per annum will appear as expenditure in Victoria, notwithstanding that the expenditure is made on behalf of all the States of the Commonwealth.''

320. The Commonwealth Treasury went to considerable trouble in an endeavour to meet the -wishes of your Commission as far as in its power, and the result of its labours is shown in a series of financial statements-( a) Total of Commonwealth Revenue collected from the States during 23! years of

Federation. (See Appendix I.) (b) Expenditure from Consolidated Revenue for 23! years of Federation. (See Appendix II.) (c, d, e, J, g, h) Commonwealth expenditure (approximate) on account of each State

for 23! years of Federation. (See Appendix III., IV., V., VI., VII., VIII.) (i) Loans made by the Commonwealth to the States outstanding at 30th June, 1924. (See Appendix IX.) 321. The total revenue-Customs and Excise, Post Office, Land Tax, Income Tax, &c.­ collected from each State of the Commonwealth during 23! years of Federation amounted to

£686,766;029. The approximate Commonwealth expenditure, including War Loans and Works Loans, amounted to £1,081,277,296. This expenditure does not include interest on loans raised for the States. l't1The Loans made by the Commonwealth to the States outstanding at 30th June, 1924,

amounted to £82,952,833-

New South Wales Victoria Queensland .. South Australia Western Australia

Tasmania

£

20,226,202 19,877,251 12,345,852 9,952,388 15,338,558

;),212,582

•

•

lxxvi

PART XIX.--POPULATION, FACTORY HANDS, SAVINGS BANK DEPOSITS. WEALTH.

a22. Graphs on the ·pages immediately following show the progress made by the States during Federation.

POPULATION.

323. Population increased in the six States from 3,768,990 persons on the 31st March, L901, to an estimated population of 5,896,516 on 31st March, 1925-an increase during 24 years of 2,127,526 persons: New South 1Nales

Victoria Queensland South Australia ·western Australia Tasmania ·

Total increase

Increase 910,210 perso11s " 466,020 "

" 344,021 "

" 183,161 ,,

" 182,253 "

" 41 ,861 "

2,127,526 persons

FACTORY HANDS.

324. Iu 1903 there were 195,810 factory hands employed in the States ; at the end of June, 1924, 429;990--or an increase in 21 years of 234,180. New South \Yales · · Victoria

Queensland South Australia Western Australia Tasmania ·.·

._

· Total increase ..

SAVINGS BANK DEPOSITS.

Increase

"

"

"

"

94,041 82,933 25,662 19,226

7,884 4,434

234,180

. · 325. In 1901 the ·iri the Government Savings Banks amounted to £30,882,645. On the 31st December, 1924, the total deposits in the State Savings Banks and the Commonwealth &wings ;Bank amounted to: £172,833,818-an increase of £141,951,173,

New South Wales ·· Victoria Queensland .. So-uth Australia Western ·

Tasmania ·,·

·. Total increase ...

Increase

"

"

"

"

£

54,007,319 46;568,848 16,536,111 15,023,368

6,359,208 3,456,319

£141,951,173

EStiMATEP PR[VAT,E WEAi11I.

326. The estimated private· wealth of the States in 1901 amounted to £908, 762;.000 : 1921, £2 ,161,700,000--an increase·of £1,252,938,000.· . · ·

New South Wales Victoria Queensland .. South Australia Western Australia

Tasmania

Total increase • f .

£

Increase 527,166,000

"

"

. . . "

"

348;113,000 158,540,000 100,236,000 86,838,000

32,045,000

£1;252,938,000

Tqmanian increase, 41,861 persons

Western Australian increase, 182,253

persons

luvii

South AUIItra.JiaD

183,161 persona

,.

0

"?, ....

"' .!)

,.....

f ., ;> :n

"' ;:j 00 a>

"" ..... 0 a> ,..... "C

Ui >==

;> 0'

Scale : 250,000 per

Queentland increue, · 844,021 Mfti0Jl8

$

;i

Wales increase, 910,21(} P81'80na

PROGRESS OF THE STATES UNDER FEDERAliON.-POPULATION. The following return shows the Census of the population of the Statea of the CommonWealth 011 the 31st Ma.rch, 1901 ; estimated population on 31st March, 1925; and the estimated increaR e :-

New South Wales Victoria Queensland South Australia . .

Western Australia Tasmania

Total

('ensus, 31st .\larch, 1901.

1,354,846 1,201,070 498,12!! 358,346

184,124 172,475

\--- 31st March, 192!;. : 2,265,056

. 1,667,090

842,100 ;)41,507 366,377 214,336

lncreue.

910,210 466,020 844,021 183,161

182,2158 41,861

·-----··-------·1--------- 3,768,990 5,896,516 2,121,526

:;

. ·. ·. ,f ·.l I; I' ! :Ji

•. ·. j

:1;, . . ,._

., .··. , .. ,.

. ....

1;o

'_i ,· .. J .. . :

:' ., ·_;

,- ·

' "'• · '· ··

. . . . ;. l

. . ' ;

: ·-. -· -·.·: .

,.

>

.::[

. . . - .. ; :

.......

........

Tasmanian increase, 4,':..84

Western Auatra:iaD increase, 7,884

';!

.. ....

lxxviii

South Australiau increase, 19,226

Queensland increase, 26,662

Scale : 20,000 per inch.

1.541

New South Wales increase, 94,041

PROGRESS OF THE STATES UNDER FEDERATION.-FACTORY HANDS EMPLOYED. The following return shows the number of Factory Hands employed in each State of the Commonwealth at t.he two periods mentioned hereunder :- · ·

State. 1903. Year ended 80th June, 1924. Increase.

New South Wales . . .. . . 65,633 159,674 I 94,011 Victoria .. .. .. .. 73,229 156,162 I 82,933 Queensland .. .. .. 19,286 ! 4,948 I 25,662 South .. .. . . 18,049 37,275 I 19,226 Western Australia .. .. .. 11,828 19,712 . 7,884 Tasmania .. .. . . 7,785 12,219 4,434 - · Total . . .. . }95,810 4.29,990 234,180

\

•

. .

A .

r-a> 0

e-:

;;;

!j':.

.s

"' A

Weateru Australiall increase, 1.6,359,208

Tasmanian

,_

"' increase, "' £ ,.: £3,456,319 ,_ .,: :c :;) '!+l "

:c

""·

a

Jxxix

South AustraliaD increase, !15,023,368

$

q

a;) ....

a:;,• .....

0

!:. r:tS

"" 00 .,¢ '

=

QueenPnd increase, £16,636,111

154 3

IITewSoutll Wales increase, 154.007 .3lJ

PROGRESS OF THE STATES UNDER FEDERATION.- SAVINGS BANK DEPOSITS. The following return shows the amount of deposits in the Government Savings Banke of each State, and a lso the Commonwealth, at the periods mentioned :-Stat<>. 1901 . 31 / 12/1924. Increaae.

New South Wales .. £10,901 ,382 £64,908,701 £64,007,319

Victoria . . 9,662,006 56,230,854 46,568,848

Queensland 3,896,170 20,432,281 16,536,111

So uth Australia 3,795,631 18,818,999 15,023,368

Western Australia .. 1,61 8,35!1 7,977,567 6,3159,208

Ta.smania 1,009,097 4,465,416 3,4ll6,319

Total £30,882,645 £172,833,818 £141,951,173

; ;

' t: .c . ·, .

•. ·· ...

. ,; .

' '

§

.0 .,., 0> .0 .... '+I

Western Australian increase, . !86,838,000

Tumaniaa 8 8 q

increase, q s !32,015;000 C'l ..:

8 "" .....

§

c.!

0

"" 0> a; co .i .5! .. '+I -;e -;e .... .... ... .., ; < < d ....

lxx.x

South Australian increase, £100,236,000

§

0

"' 00 eS .....

.....

c.! ...;

0

<:> .....

-g

" ll ;::; Cj

Queenaland mcrease, £158,540,000

..... t-<>< ..: <>< -o· d .!!! "' g

Victorian mcreue,

1545 New South Waltn increase, £527,166,090

PROGRESS OF STATES UNDER FEDERATION.-PRIVATE WEALTH. The following return shows the Estimaterl Private Wealth in eMh State of the C'..ommonwealt.h in l!lOl n.nd 1921 . n.nrl the increaot· during that period :-

su.te. 1901.

- -1-1921.

1----

Increase.

--------· - -·----··-I New South Wales .. .£358,934,000 I £886,100,000

I

£527,166,000

Victoria .. 278,887,000 ! 627,000,000 348,113,000

Queensland U2,860,000 271,400,000 U8,540,000

South 81,664,000 181,900,000 100,236,000

Western Australia .. 40,462,000

I ,., ,..,"" 86,838,000 Tasmania 35,955,000 68,000,000 32,045,000 Total £908,762,000 £2,161,700,000 • £1,252.,938,000

I '

.

. :.i .. ,, J

i! ,, !

. ..

1547

lxxxi

PART XX.-'-TAXATION.

327. The Hon. NorbertKeenan, on behalf of the State Advisory Committee, submitted that-- ·

"As compared with taxation which is in vogue in any other State of Australia, except Queensland, in ·western Australia the highest burden of taxation is laid on all who are in receipt of incomes in excess of £2,000 per annum. " The only remaining avenue for raising money by taxation is the inclusion among those subject to taxation of people in receipt of very moderate incomes, who are to-day,

by reason of such moderate incomes, exempt. Even if the most generous estimates were made of the return to be obtained from including these persons within the sphere of taxation, it would fall hopelessly short of the money required to enable Western Australia to square her ledger." (Evidence, pageJ.)

"ON IUGHEST INCOMES, HIGHEST TAXATION OF THE LOT."

. . 328. Mr, Edwin Alexander Black, State Commissioner of Taxation, and Deputy Federal Commissioner of Taxation, agreed that his records showed that from incomes of from £1,500 onwards Western Australia is the highest taxed State. (Q.767.) " When you come to the highest incomes, that is, on £5,000 and over, Western Australia has the highest taxation of the lot."

(Q.770.) .

. . 329. Further, in reply to Mr. Keenan, Mr. Black said that the scheme of taxation in Western Australia, in accordance with governmental policy, would appear to be the placing of a burden on the shoulders of those who are in receipt of taxable incomes exceeding £1,500, and for incomes below that amount to gradually reduce the burden until the tax becomes much lighter than that imposed in the other States. (Q.771-3.) .

"NO MARGIN ON · HIGHER INCOMES." .

330. In Mr. opinion there is no margin for increasing the taxation on the higher incomes. "I think," said he, " Western Australia is taxed right up to the hilt with the higher incomes at the rate of 4s. 5d. in the £1 inclusive of the super-tax" (Q.774) (now4s. 3d., owing to reduction of 7! per cent. of super-tax).

Us. 3d. OUT OF EVERY POUND.

331. When giving evidence .at a later date, Mr. Black said-" At present we " (Western Australia) "have a maximum tax, with super-tax added, of 4s. 3d. in the £1 on incomes in excess of £6,672. Then there is the Federal income tax, which is about 4s. in the £1, making a total of 8s. 3d. That composite rate

does not obtain in any of the other States of the Commonwealth. The maximum State tax in Queensland, which is the highest of the other States, is 3s. in the £1, making a total of 7s. altogether. Of course, on incomes in excess of £6,500 there is a Feeleral flat rate of 7s. in the £1 (Q.2686), which, added to the State tax of 4s. 3d., makes the aggregate rate in the State of Western Australia higher than in any other State of the

Commonwealth." (Q.2687.)

"A CQMPULSORY CONTRIBUTION TO MEET THE SERVICE OF GOVERNMENT!' 332. On the evidence at our disposal your Commission is unable to say whether the people of the State of Western Australia should contribute a greater sum by way of taxation than is paid by them at the present time. A tax is a compulsory contribution imposed to meet the service of

Excepting companies, present taxpayers in Western Australia are probably paying

as much as justice demands. On companies the dividend duty tax is ls. 5!d. in the £1 on net profits in Western Australia. In all other States companies are assessed under the provisions of the Income Tax Acts. In Victoria, the tax is lower than the dividend duty rate in Western Australia; but in the other States the company rate of tax is higher than in Western Australia. It would

require an investigation into the condition of the people in each State of the Commonwealth, and a made of the vantages conferred by the State upon the ordinary or average individual,

before it could be detennmed whether the people of any State should pay as much or more than the people of another State. The people of the State of Victoria pay less in income tax than the people of any other State of the Commonwealth. It may be that the people of Victoria receive greater service for their contribution to the cost of government than the people of other States.

The State is small compared with Western Australia-an area of 87,884 square miles as against 975,920 square miles. F.2517.-8

'· '

..

i l ,, 'I

VARYING .TAXATION METHODS AN» AMOUNTS.

333. The taxation methods and amounts adopted by the States vary greatly. Queensland, Western Australia, and Tasmania have the graduated system of taxation, i.e., increasing on each pdund by fractions of a penny ; tht3 other thtee States have the " step " system, i.e., within certain totals the tax on each pound is exactly the same. ·

334. Western Australia collects income tax on smaller incomes than is th

. 335, In Western Australia a single man is taxed when his taxable income exceeds £100, ail.d the exemption of £100 which is allowed to a single man works out when his taxable income rea.ohes £150. That is to say, if a single man receives £101 in sale.ryj he would pay tax upon £3. A, minimum tax of 2s. 6d, per annum is charged. ·

is

£300, he is taxed on the full amount. In other words, he dpe.s p.ot the benefit of the statutory exemption of £200. The graduation of the exemptloh of £200 .works out absolutely l\7hen his tax_ able income renohes £300. A nut:rried man with income of £300 would pay about £3 15s. . . 337. In .New South Walesthere is a statutory deduction of £250 .which is appiietl, to all incomes irrespective of the amount of taxable income. 11 thli? exemption were applied in Australia, no ·single or married taxpayer would be taxable until his taxable income exceeded £250. In the case of a man having a taxable income of £300 in New South Wales, he would pay tax oh .£50 at the rate tlf 9d. ih the polind; aqualling £117s, 6tl.J wheteas, before stated, a·M"Payar with a similar inoomein W¢stem Australia would pay tMt

·' ·· In Victoria there is an exemption of £20dwhich operates inlavout of_the single and married taxpayer alike up to incomes of £500. · ·

STATES INCOME TAXES •

. : ·: 33ft folloWing tabula.ted statemente ehow the · tl,tnotint of ta.:te3 paid in the stt Stiateg of the Co:tnmtJnwealth on the net incotnes Itfilet the .allowMice of the exemption only :-TAX ON INCOMES FROM PERSONAL. EXERTION.

Net. Income bgfo" . .. · allll.t•hlie 'New Sdu•h Wales. Vlctdtla. Qlieerlsland. · . Siltltli Austiaila. waiei:h Allliralla. Tasmania .

8tablteij Exemption.

,,

! £ 8. d. £ s. d. £ s. d. . £ 8. d. t. 8. d. £ s. d.

'. 2(1() . . .. Nil Nil Nil 1 6 0 :tm 2 5 8

3M

... 1 17 6 1 5 0 1 15 2 a 1s 1 tu 4 6 2 10 . . . . 400 .. .. 5 12 g 2 10 0 6 0 0 6 10 2 7 6 11 10 17 6

.wo .. .. 9 7 6 8 15 0 12 4 0 9' 2 3 10 16 0 16 10 1

7oo . . .. i7 14 2 12 10 0 28 0 () 15 i7 8 .i9 8 9 ll6 13 2

1,000 . . .. 31 5 0 20 12 6 60 0 0 28 7 8 a 8 45 14 1

1,200 . . .. 41 5 0 26 14 4 79 4 0 39 1 3 52 2 9 60 18 9

1,750 . . .. ']() 16 8 44 6 a 144 7 6 79 5 4 to& 4 a 6 1

2J000 .. · ' 85 8 4 52 14 2 180 0 0 97 7 II 137 1 3

. 142 3 9

2;500 . . .. li5 12 g 12 10 0 262 10 0 133 17 1 210 to 5 209 9 6

8,000 .. . . 147 18. 4 00 0 () 36() 0 0 1'10 6 3 1 289 9 1

3ll500 .. .. 182 6 10 107 10 0 472 10 0 206 15 5 404 9 4! 345 14 1

4,000 .. . . 219 15 10 125 () 0 600 0 0 243 4 7 624 2 401 19 1

4;600 ;, . .. 261 9 2 142 10 0 690 0 0 219 13 9 001 a 6 458 4 1

5,000 .. . . 305 4 2 160 () 0 780 0 0 316 211 812 19 4 514 9 1

5,Mo .. .. 351 0 10 184 17 11 870 0 0 361 14 4 980 5) 9 516 19 1

6,(>00 .. . . 398 19 2 201! 2 6 91:10 0 0 411 311 1.;163 13 t 639 9 1

tl;oOO .. .. 446 17 6 221 1 1 1,050 0 0 46013 6 1,8152 u 3 701 19 1

7;000 ... . . 494 1lj 10 289 11 8 1;140 0 0 510 3 1 1,505 0 0 764 9 1

7;500 .. .. 543 5 0 257 16 3 1,230 0 0 559 12 8 1,612 10 0 826 19 1

8,()00 .. .. 593 15 0 276 o to 1,320 0 0 609 2 ' 3 1,'120 0 0 S89 9 1

8,5()()' . . .. 643 13 0 294 5 5 1;410 0 0 658 I:i 10 1,Sl!1 10 0 951 19 1

9;()00 ·, .. 693 15 0 312 it:J () 1,500 0 0 108 1 5 i;!JM 0 0 t,oH 9 1

9i!JOO ;; ... 743 15 0 33014 'l 1,590 0 0 757 11 0 2,0+a 10 {) 1,076 19 1

10;:000 .•.• . . 793 15 0 348 1g 2 1,680 0 0 807 0 7 2.190 {\ (I

1 1,189 9 1

. . .. · . ·."· ,,, ( .. -·, .. ... .. . <>-•-• • u • • • ··· · · . .. . ' ' .... _,. . .. . " . .... ... ·-··· .......... . -· ·

'··

In the case of the State of Western AU8tralla only, a single person, a widower, Of a widow, without dependants, In receipt 111 iillnCOIDe Ia elille88 Ill t1CMI. and under £200, Ia taxable. Such taxpayen are not Included in the above table.

1549

Ixmii

TAX ON lNCOMES FROM PROPERtY.

Net tacoihe 11orore de of :M-ew South Wales. Victoria. Queensiand. South Alistralia. Western Australia. Tasmania.

Stlttitory · xem pti on.

£ £ 8. d. £ s. d, £ s, d. £ s. d. £ s. d. £ s. d.

200 .. .. Nil Nil Nil 2 12 1 Nil 2 8 1

300 . . .. 210 0 2 10 0 3 7 5 7 16 411 4 6 16 0

. 400 . . .. 7 10 0 5 0 0 10 13 4 13 0 5 7 611 12 9 10

500 '. . . 12 10 0 7 10 0 20 6 9 18 4 7 10 16 0 19 10 1

700 . . .. 23 12 3 25 0 0 42 0 0 30 4 2 19 8 9 36 0 2

i,

1,200 . . .. 55 0 0 sg 8 s· 100 16 0 67 19 4 5!:3 2 9 100 12 5

1;750 . ' .. 94 8 11 88 12 10 166 5 0 122 711 106 4 201 16 6

2;000 .. j ... 113 17 9 105 8 4 200 0 0 147 2 8 137 1 3 256 7 9

2,500 . . .. 154 3 .4 145 () 0 275 0 0 196 12 3 10 6 325 2 9

3,000 .. .. 197 4 5 180 0 0 360 0 0 246 i 10 299 13 i 393 17 9

3,000 .. . . 243 1 1 0 0 472 10 0 295 11 5 404 g 4 462 12 9

4,000 . . .. 293 1 1 250 () 0 600 0 0 345 1 0 524 19 531 7 9

4,500 '. . . 348 12 3 285 0 0 690 0 0 394 10 7 661 2 6 600 2 9

5,000 . . .. 406 18 11 320 10 0 780 0 0 444 0 19 4 668 17 9

5;500 .. . . 468 1 1 369 15 10 870 0 0 498 19 2 980 9 9 743 17 9

6,ooa .. . . 531 18 11 406 5 0 960 0 0 556 5 0 1,163 13 9 818 17 9

6,500 . . .. 595 16 8 442 14 2 1,050 0 0 613 io 10 i,36l! i1 3 893 17 9

7,000 . . .. 659 14 5 479 3 4 1,140 0 0 670 16 8 1,505 0 0 968 17 9

7)500 .. .. 725 0 0 515 12 6 lj230 0 0 728 g 6 1,612 10 0 1,o4S 17 9

.. ' .,.;; 791 .13 4 552 1 8 1,320 0 0 785 8 4 1J720 0 0 1,118 17 9

8,500 .. .. 851'3 6 8 58S.10 10 1MO 0 0 842 14 2 1,827 10 0 1,193 11 9

9,odo .. .. 925 6 6 625 0 0 1,000 () () 960 0 () 1,935 6 (j i,268 17 9

9,500 . .. .. 99113 4 661 9 2 1,590 b 0 951 5 10 to () 1,343 11 9

10,000 .. .. 1,058 6 8 697 18 4 1,680 0 0 1,014 11 8 2,150 0 0 1,418 17 9

WESTERN AUSTRALIAN TAX, £1,362 lls. 3d. J VICTORIAN, £221 7s. ld.

339. It will be observed that Mr. Black is correct when he states (Q.2687) that on incomes in excess of £6,500 the rate of tax in Western Australia is higher than in any other State of the Commonwealth. The difference between the tax paid on an income of £6,500 from personal exertion in Western Australia, and the same amount of income in Victoria is remarkable-£1,362

lls. 3d. in Wesierh Australia;, and £221 7s. ld. in Victoria.

"CAPITAL IS BEING FRIGHTENED OUT OF. THE STATE." 340. The opinion of the State Advisory Committee of Western Australia, given in the words of the Hon. Norbert Keenan, is that it is not possible for the State of Western Australia to raise further revenue from her dWh citizens by taxation-'-

,, One thing is certain," said Mr. Keenan, '' it is not possible for this State to raise further revenue from her OWll citizens . by taxation. Already .. the danger r··· oint has been reached in the burden of taxation placed ontheshoulders of the citizens o Western Australia. Capital is being frighterted out of the State by this burden." (Evl.dence>

page 28.) "To those who are conversant with the stringency of :finance in this State, it seems ludicrous to talk o£ the capacity of Western Australia to bear an increased burden of taxation. It is a matter of notoriety that those who h111ve c111pital to. invest -ih many cases capital resultmg from savings made during a lifetime in Western

Australia-Unfortunately prefer to invest that money in Victoria, despite all local sentiment, for the simple reason that they will obtain there a larger return with a less burden of taxation." (Evidence, page 29.)

S4L Mr. A. J. Monger, Perth, Chairman of the Voluntary Wheat Pool; and also ()f the Fremantle Freezing Works; supported Mr. Keena:h. He said-· .

''Many of the taxpayers of this State, who have to pay, say, from 2s. in ihi; £1 upwards, do not re-invest their surplus moneys in Western Australia, btit them for investment to other States, particularly Victoria, where the maximum State tax' is: only ()td. in the £1." (Q.l519.)

Ixxxiv

342. Mr. Sinclair J. McGibbon, Public Accountant, of Perth, said-" We, as citizens of Western Australia, know that we are the highest taxed community in the Commonwealth, and on that account surplus moneys are being sent to the eastern States, where the income taxes are much lighter, for investment." (Q.2996.)

343. The Hon. James Mortimer Macfarlane, M.L.C., Chairman of the State Dairy Advisory Board, and Member of the Australian Dairy Council, said-'-" I speak now as a member of the Legislative Council of Western Australia· 'Realizing the difierence between taxation here and taxation in Victoria, one must

acknowledge that it means an added protection to Victoria. Further, it is an incentive for people here to send away any money they accumulate here to Victoria to be invested in industries there, instead of industries being established here. It is also an incentive for Western Australians to go away and live in Victoria. I can cite one such case which

came under my notice. The man was not of very great wealth, but still he was able to do what I am about to describe. A few weeks ago I met him in Melbourne, when he told me' I am living here now.' I said,' Have you left Western Australia altogether?' He replied,' Oh, no; I still have some interests there, but I have brought over my money.'

I asked why, and he said,' The difference in taxation is so great that I am able to school my three children and to live on the difference in taxation on the money which I brought over-'the difference as between Victoria and Western Australia. I employ my mQney here in industries that give me returns.' "

344. When it is realized that the heavy taxation on the higher incomes in the State of Western Australia has been imposed · in an endeavour to meet the State deficits, and that the gensral beliefin Western Australia is that those deficits have been caused. mainly by Federation, the strong feeling amongst .an influential section of the Western Australian people can be understood .

. PART XXI.-GRANT OF MONEY TO THE STATE OF WESTERN AUSTRALIA.

(Vtews of 'commissioners Higgs and Entwistle.)

"A GRANT IS ONLY A PALLIATIVE."

345. Having expressed so strongly our conviction that the renewal of the right to impose its own Customs and Excise tariffs will prove the most efficacious remedy for the disabilities of the State of Western Australia, it follows that we consider a grant of money only a temporary expedient. A grant will assist the State Government, and the Government will be able to further

develop the land, make concessions in railway freights, provide bounties, and in other ways assist the public of Western Australia, but as Dr. J. S. Battye said in hisevidence (Q.4.587): "A grant is only a palliative when all is said and done." Many witnesses e:x;pressed the opinion that a grant would prove to be only a temporary remedy, and would merely assist the Government of the State.

·"A TEMPORARY REMEDY."

346: Mr. Alexander Thomson, Leader of the C?untry in the Legislative

Aasem?ly m the of Western Austraha, asked he was m accord With the State Advisory Committee when It asked for a grant of money rephed : " No. A grl:!-nt of money would only assist the State Government, and I contend that the people _in the country districts are suffering from the high tariff which is being imposed. Such a grant would only be a temporary remedy, and as it would soon be absorbed, we would soon find ourselves in a similar position to that which obtains

at the present time. However, I certainly think that the State is entitled to monetary assistance in view of the fact that the Commonwealth is taking so much from us." (Q.1209.)

lxxxv

"MIGHT REDUCE THE DISABILITIES OF THE GOVERNMENT."

347. Mr. John Lindsay, M.L.A., Western Australia, asked if in his opinion; in order to remove the financial disabilities of the State, not only was a grant necessary, but there should be relief in other directions, such as the Tariff, said : " Although a grant might reduce the disabilities of the Government of the State, and although it might prevent any increase in taxation, it would not stop the rising costs of our agricultural machinery owing to the Tariff. That is to say, it would not meet the position of the individual farmer." (Q.l248.)

" DRIFT TO THE BAD HAS CONTINUED."

348. Mr. vV. N. Hedges, formerly Federal Member for Fremantle, W.A., said: "]'rom the date the Braddon Clause terminated, 1910, this State of Western Australia hp,s been gradually drifting into its present condition, notwithstanding the fact that numerous changes of Government have taken place. Each of the parties has been in power, and under each administration the drift to the bad has been continued. Urgent appeals have been made to the several Federal Governments,

and a mere trifle in the form of a dole or special allowance has been received;" (Q.1415.)

349. Asked if he was aware the special allowance to Western Australia from the year 1910-11 to 1923-24 amounted to £2,590,000, Mr. Hedges said: "I am aware of that; but we have been paying away more than that per year in many instances. That amount is o:rily a dole compared with what we have been losing. The time has arrived when the position has gone from bad to worse, until it is now quite intolerable." (Q.1416.)

" WILL NOT REMOVE DISABILITIES."

350. Mr. Wm. Carroll, representing the Primary producers of Western Australia, said: "We are not adverse to a grant of money as compensation for injuries which .we have received in the past, but it will not remove the disabilities under which we suffer." (Q.835.)

"CANNOT BE REGARDED AS PERMANENT." 351. Mr. E. H. Angelo, M.L.A., for the electorate of Gascoyne, Western Australia, said : " My idea is that if this Commission is successful, and we receive some concessions, I, for one, cannot look upon these concessions as being of a permanent nature. They can only be something of a .temporary nature to help us over our temporary disabilities." (Q.2432.)

· In a letter to the Commission, Mr. Angelo wrote: ''Even if this State did receive any temporary consideration as the result of your Board's inquiry, it wouldonly be in the nature of a dole or concession, a gift to a poor relation or younger sister. I feel sure most Western Australians would not appreciate any such consideration." (20th February, 1925.)

ON THE CONTRARY.

· 352. On the contrary, Mr. Edmund H. Hall, · of Geraldton, said: "I consider that only one form of relief will help us, and that is a grant of money." (Q.3300.)

"WANT SOMETIDNG OF PERMANENT NATURE."

353. When Sir William Francis Lathlain was giving evidence, his attention was drawn to the fact that he made no mention of any grant in his :proposed remedies for the disabilities of the State of Western Australia. He replied : " PreviOusly we have had grants from the Commonwealth Government at various times. There was a decrease in grant which came to us

each year, but I do not think grants of that nature will :fill the bill. We want something of a permanent nature to give us an opportunity to work out our salvation." (Q.1915.)

NECESSARY AFFORD STATE SUBSTANTIAL ASSISTANCE.

354. However, until the State of Western Australia is permitted to control its own Customs and Excise Tariffs (when it will have ample revenue after paying its due share .of Commonwealth Expenditure), we are of opinion it will be necessary to afford the State substantial :financial assistance .

.. BORROWING HAS FAILED, AS IT WAS BOUND TO FAIL." 355. Without a doubt the State has, as the Hon. H. P. Colebatch said in the Legislative Council of Western Australia on the 11th April, 1918, " tried to get out of its difficulties by large borrowings." "They resorted to borrowing as a way out." "We tried that device," said Mr, Colebatch, "but it has failed, as it was bound to fail."

PUBUC DEBT, £148 7s. 6d. PER HEAD.

356. The gross publio debt Df the State to 30th June, 1924, amounted to £.62,765,782, less Sinking Fund of £9,373,572, le;:tving a net public debt of £53,392 2Hh-or £148 7s. 6d. per of population.

DmCIT FOR FIVE YEARS, £544,321.

357. For the years 1919-20 to 1923-24 inclusive, the average annual deficit of the State amounted to £544,321.

•

1919-20 1920-21 1921-22 1922-23

WESTJ!RN :PIWJ:CITS, FOR FIVE YEAR_S.

fptal > ,

Average for

ACTUAL DEFICIT 1925: £59,057.

£

£668,g2§ 686,726 732,135 406,364

£2,721,(;07

35S. It is true that the estimated deficit for the fi:p.anoial year ending 30th June, 1925, was £260;0QO; a,nd that the . aetu;:tl deficit is stated to be £59,057. 13ut it should be mentioned that the Acting Premier of the State of Western Australia, the Hon. W. C. Angwin, wired to the Prime Minister of the Commonwealth (the Rt. Hon. S.M. Bruce), on the 28th April 1925, " for permission to allow the Commonwealth Tuation D•partment in Western Australia $Q wqrlf; . tb.tl St!J!te '" in t.. g9t cJqring the

IJPR-JlfiiAl tl (Q,7l54); that i& PP9Yil?io:n in th(} Copstitq.tion

allow the 11CCQMll§ tq l:>e .kept until tP-El ,lfitih JlJ.ly" (Q,7lp6) ; 11P.d thfit

in the opinion of Mr, .G. W, fo:r of W ''it is

qW.te lJkel:y th!:} ;:t:rp.QQ.D.ii repeived (by way qf t11xa.Pion} f:rr,rm the lst to .lOth July would be UgtJ,fe," (Q.7Jp4,)

To mueh. importance maf easily be t9 the . dtficit.

APPAR"Dff

359. qe has. m .. to .. pa. ,ren· .. t g. .... pro. sper. i)G. y qf th .... e. .of W.e· .stern

Australia. Mr. the Oo;mmanwefl.lth who review of

the State's case as presented by the Hon. Norbert Keenan and other witnesses, expressed the

disabilities. · · ·

HOW FAR DUE TO EXPENDITURE OF-LOAN MONEYS. 36(). We are una-ble tq. to what extent the appareut .material prosperity of the people of the is due to the expenditure of eums of ·borrowed money. · ·

a.()()Q.QOO ltOA.N MON!VS PU ANNUM.

361. lo® QJ du:rmg the year!l! end.OO 30th J®e,1924, was as

follQW!S :,;- · .

1920-21 . 2,586,404

1921-22 2,454,925

1922-23 3,389,299

1923-24 3,936,833

Total £15,030,781

An average of approximately £3,000,000 per annum.

1553

Ixnvii

LOAN PROPOSALs SHOULD BE CRITICALLY EXAMINED.

362. The circulation of three million pounds (£3,000,000) of loan moneys each year in connexion with governmental activities, plus several millions of State revenue, in a State having popu.lation of only 860,000 women and children-must have been "good for

,. as the saying goes ; hut in our opinion the State should most examine every

propOi!al to borrow further moneys for governmental purposes. Every mllhon pounds expended upon governmental works which do not directly or indirectly return interest as well as pay for !lnd provide re!'lflrves for depreciation means, &t 5 per cent., an added £50,000 per

a,Jlllum to the interest bill, whioh has to be met by taxpay@rs each year, or become part of 1 defi

363. Qf money have &ccrued to the primary produoers of Western

ht l92f.,25 from the sale of wheat and wool, wheat selling iu the early part of this year

!}.fi (71!l.) per wholesale. If the price of wheat r13mai:u.s high, without a doubt

farmer§ of and the people generally, will enjoy considerable material

prosperity. History, however, should be to a great extent our guide in, this as in other matters. Australia has many competitors iu wheat :produotiou. In 1913 the Commonwealth's contribution to the world's production of wheat was 2 ·55 per cent. ; in 1923-24 approximately 3 · 66 per cent. The following return prepared by Mr. C .. H. Wickens, Commonwealth Statistician, shows the

wholttift.le ptice o£ in England, and in the United State£ of AmeriGa, over a period of 50

............. •• .••. 0--> . . --· .. .- . . . .... -

----··

W¢ghM Aver'llle Ayerage Weltzl!teil ce of AV"eraga Price of Average Price of Average ¥w. :B 't' 4 Prjc!) per Year. J;lritisll Price rer Year. Prfce Per wnN!l Bashel of Bushe of Bashel of a per Cash Sales Wheat jier Cash Sales Whea per Casll BllShel. at Chicago, BllShel. at Chicago. Bushel. at Chleago, d. Oents. 8. d. Cents. 8. d. Cents.

. . l5 7! . . 1892 .. Q lli 71:1 1901)

.. 4; n 120

1876 .. 108 181)3 . . 3 31 68 l9l0 .. 3 llt no 18'1'1 .. 7 1* 126 1894 . . 2 10 56 19ll . . 3IH 98 187.8 . . 5 91. l05 1895 . . 2 101 60 1912 .. 4 4 105 18'19 .. 5 5f 98 1891} . . 3 3! 64 1913 . . 3 11t 99 1880 .. 5 6i 109 1897 . . 3 9l 80 1914 . . 4 4! 101 1a81 . . p s lll5 11398 .. 4 3 &9 1915 .. 6 7i 131 1882 .. 5 7t ll2 1899 . . 3 71 ·19lP . . 7 3! 135 1883 .. 5 2! 105 1900 .. 3 4! 70 1917 . . 9 5! 228 1884 .. 4 5t 89 1901 '. 3 4 72 1918 . . 9 1l 221 1885 . . 4 1l 86 1902 .. 3 6 74 1919 . . 9 1l 236 1886 .. 3 10! 78 1903 . . 3 4 79 1920 . . 10 1 252 1887 .. 4 O! 76 1904 . . 3 6t 104 1921 . . 8 11 144 1888 .. 3 11£ 92 1905 .. 3 8! 101 1922 . ' 5 lli 124 ,, 3 St 81$ l906 . . 3 6! 79 .. 5 3! ll7 1890 . . 3 lli 89 1907 . . 3 9f 91 1924 ' . 6 2 129 l$91 .. 4 '1! 96 1908 . . 4 0 99 1925 .. (ll)7 Ot (b)l99 ····A . ------•. (a) for quarter of 1925. (b) .Average to 13th February, 1925. 304. The oost price of producing wheat in Western Australia was stated by Mr. W. Carroll, the Seeretary of the Primary Producers of Western Australia, to be about four f!hllling3 (4s.) per bushel. (Q.878). If the grain producing countries of the world recover their prodU:cll;tg capacity (Russia is said to be doing so rapidly), and the price of wheat recedes to that qbtained in 1910-lS--about 4s. per bushel, the Western Australian farmers will not be able to produoe wheat at a profit at that prioe. RECOMMENDATION. 365, lteiterating our opinion that a grant can be :J."egarded only as a partial and temporary :r.,medy for the financial disabilities, we recommend-That until the. State of Western Australia is the right to impose its own Cu.stoma and Exci.$e 'hritla, the sha.Ir pay to the State a !apecial payment of £450,000 per anmun in addition to the per payment made in accordance with Ql,uG-. 4 of the SUl"plus Revenue A,ct of 1910, the aforesaid $pecial payment to include the special annual payment now being made to the of Western Australia in aceordanoe with Clause 5 of the saitl Act. The above special payment of £450,000 to on the bt of .July, 1924. FrfYm this recommendation, Commissioner Mills expresses dissent. (See pwras. 578-580.)

lx:xxviii

PART XXII.-AID TO OR BOUNTY· ON TilE PRODUCTION OR EXPORT OF GOODS.

366. During our inquiry, the question of bounties on the production of goods was mentioned, and Mr. Edward B. Johnston, of Narrogin, Member of the Legislative Assembly of Western Australia, and Deputy Leader of the Country Party in that State, the event of payment of a grant to the State of Western Australia by the Commonwealth, he

" would respectfully request, on behalf of the Butter and Bacon Fact?ries Association of Western Australia, that portion of the grant should be specially earmarked, with the necessary constitutional approval, for the payment bJ:" the State to the butter factories of a bonus of 2d. per lb. on all produced m

Australia for a period of, say, 25 years. · Dairying in the States was under protective State tariffs, and by State bonuses, whilst m Western It

has been denied both these advantages, and has had to struggle under the additiOnal disadvantage of unrestricted competition from the established industries in the other States." (Q.4105.)

MAJORITY OPINION OF COMMISSION. (Commissioners Higgs and Entwistle.)

. 367. We are not prepared to recommend the ear-marking of any portion of the grant we propose ; but we are of opinionthat whether the State ofWestern Australia is given the right to impose its own Customs and Excise Tariffs or ·otherwise, the State should, with a proVIso hereafter mentioned, be empowered, if it so desires, during a period of 25 years and until Parliament otherwise provides, to grant any aid to or bounty on the production or export of goods.

368. We recommend-That the Parliament of the Commonwealth, in accordance with· Section 91 of the Commonwealth Constitution, express by resolution its consent to the State of Western Australia granting any aid to, or bounty on, the production or export of goods during a period of 25 years. . .

Provided that if the Inter-State Commission, after public inquiry, is of opm1on that any aid or bounty is operating unfairly and to the disadvantage of any State of the Commonwealth, the Parliament of the Commonwealth may, by resolution, withdraw wholly or in part the consent so expressed.

PART XXDI.-THE QUESTION OF SECESSION.

369. In many circumstances this word may imply merely a harmless withdrawal from some relatively loose and impermanent form of association. But, in relation to the breaking of a Federal bond between States which have covenanted to continue in an indissoluble union, it acquired sinister and sanguinary connotations durin9 the American Civil War.

Many witnesses used the term ''secession' as indicating what, in their opinion, is a on the part of a large number of the citizens of Western Australia with regard to the Federal

umon. The Hon. Norbert Keenan, K.C., in presenting the State Case,. used words suggesting some action of the kind, and when asked the exact meaning of his words, also whether there was any considerable movement for secession in Western Australia, said : "I would not agree to lead or recommend a movement in favour of secession." The appearance in the Sunday Times of Perth, dated 15th February, 1925, of an article headed " Secession our Salvation," and also the receipt of a letter on the subject from Mr. F. C. Clifton, of Bunbury, led the Cominission to question Mr. Keenan further on the matter (P.5S-60). Mr. Keenan said (P.59)

PETmON TO IMPERIAL PARLIAMENT. "It is undoubtedly a fact that there are in Western Australia a number of people, some of them entitled to be heard as leaders of groups, and possibly as leaders, to a certain extent, of public views, who are looking forward to a possibility of secession. Of course, I do not think that they;contemplate what,.one might crudely describe as a revolt, in the sense of an attempt at the forcible expulsion of Commonwealth officers·. If, in fact, the movement ever did shape, a.nd come to a head, although I kno'Y' little or nothing

beJ:ond what one reads m the pubhc press about the matter, I conceive that the form which the movement would take would be a petition to the Imperial Parliament of Great Britain for relief from the position in which this State is placed by reason of the Act passed by the Imperial Parliament."

1555

lxxxix

"WITHDRAWAL FROM TIIE CQMMON\VEALTH." 370. Mr. Alfred Thomas Chandler, leader writer on the staff of the Perth (W.A.) Sunday Times, in reply to a question what was his remedy for the disabilities of the State of. Western Australia, said : "I have advocated secession " (Q.1889). By that he meant : "Withdrawal from the Commonwealth and the restoration of our complete autonomy and State sovereignty, the same as we had prior to Federation" (Q.1890). He added: "I may add that, personally, I am extremely sorry that Federation has degenerated to what it has. I was born in the eastern

States, in Victoria, and I had a great idea of Federation as an ideal. I voted for Federation, but it has become so grossly mercenary, and this State is suffering so intensely in every direction that I see no remedy except secession" (Q.l890). He also said:-" .If a new set of circumstances arose and another referendum were taken, and

the people of this State, by an overwhelming majority, expressed a desire to withdraw from the Commonwealth, I do not think the eastern States themselves would object to · our doing so. It would be the will of the people of Western Australia, and why should the people of the eastern States object ? Arid the Imperial Government, of course,

would not interfere at all. I cannot imagine any fair-minded man in the eastern States objecting if it is shown that this State is really suffering the _ disabilities I have enumerated to-day" (Q.l892).

UNION FOR DEFENCE PURPOSES ONLY. 371. Dr. Thomas Craig Boyd, of Geraldton, said: "Without being in any way disloyal I frankly say that I am a secessionist. I think that for at least 50 years Western Australia will not prosper under Federation" (Q.3275). Dr. Boyd, when he spoke of secession, did not mean complete withdrawal from the Commonwealth. He thus defined the term: " I am a secessionist to the extent that I consider that Australia as a whole should be one for defence purposes. I do

not think we should break away entirely, but beyond the vital interests of the country as a whole we should be free in practically every way" (Q.3278).

"EMPHATICALLY A SECESSIONIST."

372. Mr. Alexander Thomson, M.L.A., leader of the Country party in the Legislative Assembly of the State of '-Western Australia, said : " If you ask me whether I am a secessionist, I say emphatically that I am. ·As far as the State of Western Australia is concerned, if we could get out of Federation at this very moment, my view is that we should do so at once" (Q.1187).

Personally, he would be prepared to take active steps to bring about the separation of Western Australia from the Commonwealth, but, in view of the Constitution, any steps which might be taken in Western Australia were null and void, and the people of Western Australia were powerless. The action .Mr. Thomson contemplated was "in the direction of a petition to the Imperial Parliament."

373. Mr. Patrick Stone, retired merchant, of Geraldton, said: "I am an advocate of separation " (Q.3292). . . . "I mean cutting the painter with the eastern States, and having very little to do with them, except giving a proportion for naval and military defence" (Q.3293).

"£100 FOR A FIGHTING FUND."

374. Sir James Mitchell, K.C.M.G., M.L.A., leader of the Opposition in the Legislative Assembly of Western Australia, said : " It is difficult to know how to face the question of secession even though we detennine to endeavour t<;> bring it about; but it is unthinkable, I think, that wrongs cannot be righted" (Q.2263). . . "I think the feeling is pretty strong " (in favour of secession). "A farmer came to me and said : 'Could we not go for separation? I am willing to put up £100 for a fighting fund.' When a f_ armer does that the people must be serious.

However, we do feel that the Federal Government, in appointing a Commission, has done aomething, and we hope that the result will be that we shall be more content to remain in the Federation" (Q.2264).

"SECESSIONIST UNDER CERTAIN CONDITIONS!' 375. Mr. John Lindsay, M.L.A., Western Australia, when asked did he describe himself as a secessionist, said: "Under certain conditions. If we cannot obtain the relief which, in my opinion, is absolutely necessary in order to increase primary production in this State, I see no alternative " (Q.l242).

"USELESS TO CONSIDER MATTER."

376. When asked his. opinion. as to the feeling of the State in respect to secession or separation, the Hon. the Actmg Prelllier (Mr. W. C. Angwin) stated that he " regarded it as useless to consider the matter, because it would be too big a job to place anything in regard to secession before Western Australia" (Q.l310).

. xo

UNABLE TO . AGREE WITH MR. ANGWIN'S INFERENCE. 377. Mr. A. J. Monger said: "With the history of the past in our minds, I cannot helP. feeling that if a referendum were taken amongst the people of this State upon the qu.estion of whetlier they prefer to remain a v.art of the Common:wealth, to revert to former

a Sovereign State, there would be an overwhel:ming vote In favour of breakmg away

from the Federal yoke. I suggest that this question could best be determined. by means of a referendum submitted to the people. I am unable to agree with the inference by the

Aoting Premier (Mr. W. C. Angwin), and invite his. Government to test the feeling of the people of the State in the nianner suggest6d '' (Q.1519).

"3S PER CENJ'. WOPIJ) VOTE TO GET Ol.JT Of . 378. Mr. W m .. Ca;r;rpll, the W ,Australian Primary ProduGers' Association,

" If the question of being relie\Ted Feder&tio:u were put to the vote, and the people

that their ' ' or ' no ' would really the 8G per eent. of them would

tp Qut of Feder3titHt " (Q.850). ·

'

1

QUOT,A TOW,A.RD.S DEFENCE."

379. Mr. Percy Lambert, manufaptuter, and Mayor of Albany1 said : " I am ·a secessionist " (Q.4039). . . " By secession I mean self-government, with control of our own Customs duties " (Q.4040). . . . "And as to defence, I contend that we would be able to contribute our quota towards defence costs " (Q.40H),

. . QfPONtNfS Qf .

. 38(). the of w:Qil¢ S.o:me of t4em

&ome. were to State by the the iu fuv<;>ur of was

likely to l:lecpr:ue intensified. ·

"FOR TJJE

38l. Mr. 1\fiqha.el PatriGk J)urMk, of Pelith1 i3aid, iu con:nn.e:ncing

his evidence as to the State's disabilities·: "At outset, I wi§h to r !HJl ap.d

opposed to any separation movement-for the present, anyhow" (Q.2207) .

.. S'I'RON

382. Sir Frap.ois Lathlain, of Perth, : "I am strongly against secession, if any · othel' l.'emedy can he found the removal of our disabilities. As I ·'believe in the unity of the Empire, so also must I believe in the unity of Australia. · But for a union to be· a pE!r/ect one every c(;)nipOI\eP.t part of that unian must be contented happy, and must receive equal justioe and

aonsidenation ll (Q.l913). · ·

NOT IN FAVOUR, .

383. MF. Edmund H. H. Hall, of Gefaldtan, r HUnlike Dr. Boyd and Mr. Stone, I am not iB favoUl' of secession, because I think that if this Oommission is able to convinee the · Federal Parliament of the di!!abilities under which this State is labouring, we shall .obtain some I cQmi.der pp.ly pp.e will th,a,t a. grant of

.. ,: . , ,

f' NOT ANY ONE WHO SERIOQSLV · P,A.VOUR!i SECESSION/' · · 384. The Hon. John Scaddan, formerly Premier and Minister for Mines in the State of Western Australia, said : I do fl.C)t think ih3t thiJ .fitage any one could be fou11d who .• Y ACtJJAl At all I do P..Ot th&t wquld it

ha!l powers. sraAt!'ldAo them by thQ of thili

&§ t;}le peoplt3 Qf the <:>f Austra.li&, a:ud . on a fl:l!ir to thm

to 'the re13t of the Cowmo:nwe<h" (Q.3321;)). .

"HISTODY T 'I:'MTU'! un ' r '1:' 'l:'uco . . . ' · .·. . . . ..·. . . ,, . -·-- . . • TO ;385. Mr. J3ertl,'4ID of NaJ::rpgi,n, (?f the A.ss'tmbly of

W oot!:ll'n :and D.t}puty o£ Cg1,1nt;ry m thf!.t St&ta., : "Jt i4l

wonder that there 1s a Widespread and popular feehng m favour of throughout th..is State. I am to the of secession from Commonwealth. Our grievances are

and genume, but.l think bemg ·fullya.nd quickly remedied within

the u.ruou. '.fhe very appo.rutr:ueiJ,t o£ this ComiPISSlOll. me tt oi the desire of the Federal .to &fiord w e!11tern . • . . 'the defenQe of ou.f

lPHty &:P.tl the of histo:ry lend$ to lit

(Q.4150). ··

"COMMONWEALTH WOULD DO WELL TO REMOVE CAUSES OF OFFENCE." . ,The Hon,, J. McK. formerly for in the !I01J.$e of

sa1d :. . It. (the .cry for seoession) · has too much JUstificfttiOn, and is too ru;Q.ch m intn earne&t to be With a Ol' a laugh, and the Federal aiJ.d will dQ weU

to treat 1t senously and endeo.vour to remove the causes of H (Q.ri257). ·

155'7

"NOT IN FA VOW OF SICJSSlQN, IN. f4.VOUR OF SMALLER STATES." 387. Mr. Leonard Stewa,:r.t mlj,nager of Edward Barnett and Company

Limit€l4, a11d pf the Alb8;l1Y Chamber of Commerce, said : " I think that this portion of the Sta,te is I1Pt i:p, favour of s!'lcession, but is in favour of smaller Sta,tes. That is, breakii1g up q:f the h¥ge of the State " . . . " We had a very strong Small Statef:l Leagu.¢

in here; and l believe tha,t the than the secessionists, predominate

in this dist:ript"

'* FAMILY TIES SflQUJJ) 8)l; :KNITTEl.> CLOSER." Mr. John Thomas :Mills, manager of Drew, Robinson, and Company, of Albany, said:

'' Although at one time during the hearin' of evidence by this Commission I placed myself on thf:} side of those who preached and taught secession, upon more mature consideration I do not think that I sho1lld pare to see it. I wo1lld prefer that the family ti(ls should be knitted closer, and I speak as one who took a very lively interest in the Smaller States League during the period when the reform was being advocated " (Q.3976).

"MANY WHO WOULD VOTE AG.UNI)T Oli?:POSE:P TQ DI$SQI,.tlfiON

OF f't:PE.UL POtU>."

389. Dr. J. S. Battye, Public Librarian, of Perth, and. author of The History of Western 4us.tr(Jlja, said : Hlf. y(Jg to a. vQtt in jt

woqhJ, b.t Jm vgt' l;»y 7Q per btJ,t wllQ wotJ,hl VQte. that

ftF9Rgly tQ th4l 1-lf ;Fetleral bgn(l. They wo-qld vote

wa,.y of the !)(lnviotlon thftt &orne in the administration of Federation

neQef?fiill>ff, ho,t n,ot in too itsf!l£, They believe iiJ. Fedemtion, but they

l>alitwe thl}t of thf'l Jllore populous and the power that those

States have been able to exert, has been suGh af' to aot in regard to the

smaller States" (Q.4605). . . . " Any secession vote taken in Western Australia, even though it might be go per cent. in favour, could have no effect directly upon the Commonwealth; but a movement of that kind in theW est with tlJ.at result might lead some of the other States to ask how they stood ; and there might be a growing C'1pinion that might become a serious menace to the Commonwealth. After all, the Co:rmn.onwealth

could be dissolved by the same means as it was brought into operation. It is all very well to say it is indissoluble, but if a majority of the people in a majority of the Stlj,tes were strongly in favour of dissolving the federal bond, no British Parliament would dare to go against that opinion P (Q.4642).

MOVEMENT ON PURELY CONSTITUTIONAL LI.NES . . 390: It seems that the majgrity of who. discuss seo.ession " in Western. Australia have ln m1nd a movement on pui!ely constitutional lmes. The evidence of the one w1tness who spoke of taking overt action may be quoted.

¥J.\ Crll>wford, of Sou.th Pe:r;th. Western forme:r;ly Un.der,Secretary

t9 of Agriculture j:p, AMtralia, : " A good :Qll;lny of onr public me:P.

recognize that secession must come, but they are not speaking publicly in favour of it, 11& thE:lY consider the time to do so is not yet ripe" (Q.2834). Asked how he proposed to secede from the Federation, how h13 would wha.t would he do, Mr. Crawford said: ·

"If the grew to such 1111 extent that Parliament was in f11vour of it,

and a big majority of the people f!l>VOlJJed it, they would simply say to the Commonwealth, · 'We ara not to with you &ny longer.' Western Australia would stand in

the sa.me to the CoffiP1QUW61lolth Australia stands to England. If Austmli11 to-morrow decided nQt to belo:p,g to the Empire a.ny more, but to go on its own, England would no regret it very IIHJ.Ph, but would not take any steps to prevent it. If Wl3 had come to a Unammou.s th11t in the interests of our own State secession was

the hast oourse to made up our minds to carry out our object, I not th.ink

CoJIW1onwealth could or would prevent us. We have not reached that p1tch

hut it qqite withiu the bound$ of possibility that we :might reach it" (Q.2844:).

Again asked what action he would take, Mr. Ora.wford sa,id: "Take possession of the Customs and post office. That would ba an extreme step. If we did not get it the other way, that would bring it to a orililiB" (Q.2845). By Mr. Entwistle: ''Shoot a. few gqns to sta.rt with 1" Mr. Orawford .' "There would be nothing of that, I think. It would be a peaceable occupation " (Q.2846).

xcii

MAJORITY OPINION OF COMMISSION. (Commissioners Higgs and Mills.)

392. It is difficult in a community such as Western Australia, with its relative isolation from the Seat of Government and also from other States, to prevent the creation and growth of a belief that other States are somewhat indifferent to Western Australia's peculiar problems and difficulties. It is indeed very desirable that a greater knowledge of Western Australia should be attained by the residents in other States, and ably directed propaganda, having that object in view, should, in our opinion, be undertaken. Some reasonable degree of assistance by the Commonwealth, on the lines indicated in . other sections of this Report, would, in our ·opinion,. go far to put an end to the dissatisfaction with Federation which has been sedulously fostered by at least one Western Australian journal of wide circulation, and which has obtained a degree of acceptance that cannot be dismissed as insignificant.

From this section of the Report Commissioner Entwistle expresses dissent. (See paras. 581-582.)

PART XXIV.-OTHER STATES' DISABILITIES ATTRIBUTABLE TO FEDERATION.

393. With a view to ascertaining the effect of Federation upon the State of Western Australia, as compared with other States of the Commonwealth, your Commission wrote to the Premiers of New South Wales, Vieiltoria, South Australia, Queensland, and Tasmania in February last, forwarding a copy of the papers. outlining the State of Western case prepared

by the Advisory Committee appointed by the Government of Western Australia, with a request that the Premiers should appoint a Committee of responsible officers to read and consider the papers referred to, with a view to ascertaining wheth.er their States. were suffering any special financial disability attributable to Federation.

THE STATE OF NEW SOUTH WALES.

394. Sir George M. Fuller, Premier of New South Wales, replied: "So far as I am aware, this State is under no disability which is not shared by the other States. The receipt of 25s. per capita in place of the Customs revenue, the invasion of the field of direct taxation by the Federal Government, and • the competition of the Commonwealth Bank with the State Savings Bank are common to all. I am of opinion that the adoption of the proposal recently put forward by the Commonwealth Government-that the States should surrender the 25s. per head capitation grant, in lieu of the Commonwealth vacating the field of direct. taxation on individuals-would be fraught with harmful effect to the States.

395. "I am of opinion that no material evidence could be collected in this State. All the public documents issued by the State Government dealing. with its finances or the industries of the State are available, and, as a matter of fact, have been largely qu0ted in the document in question."

1559

xciii

THE STATE OF SOUTH AUSTRALIA.

· 400. The Premier of South Australia, the Hon. J. Gunn, replied: "The South Australian Government did not propose to take any action in the matter."

THE STATE OF TASMANIA.

401. The Hon. J. A. Lyons, Premier of Tasmania, replied: "Referring your communication 21st February: Have long been of opinion that the di8abilities suffered by this State under Federation should be investigated. Therefore propose to appoint Committee suggested by you and in addition to ask Prime Minister to extend the powers of your Commission to investigate the position as directly affecting Tasmania distinct from the comparative position between

Tasmania and Western Australia. · ·

402. The Chairman wrote to Mr. Lyons on the 8th April as follows:-" In view of the volume of evidence taken in Western Australia, and the desire of the Commission to present its report at· the earliest possible moment, it is improbable that the Royal Commission will visit your State, and if you have any communication to make concerning the subject-matter of my letter of the 21st February, I shall be glad if you will be good enough to forward the same to the

Secretary to the Commission prior to the 4th May, if possible." 403. No reply to this letter was received, but it is understood the Premier of Tasmania is 1n communication with the Prime Minister of the Commonwealth.

ACKNOWLEDGMENT.

404. Your Commission desires to express its thanks to Commonwealth and State Depart­ mental Officers generally, to the Librarian and Staff of the Commonwealth Parliamentary Library, and to the following officers particularly, for assistance given in carrying out its investigations:­ Messrs. Samuel Bennett, Western Australian State Government Statistician and Actuary; Norris

Garret Bell, M. lust. C.E., Commissioner of Commonwealth Railways, Melbourne ; Edwin Alex. Black, Commissioner of Taxation and Deputy Federal Commissioner of Taxation; Harry Percy Brown, M.B.E., Secretary and Director, Postmaster-General's Department, Melbourne; Michael Jas. Calanchini, Under-Secretary for Mines, and Chairman, Council of Industrial Development, Perth; John Percy Camm, Surveyor-General, Perth; Jas. Richard Collins, C.M.G., C.B.E., Secretary, Commonwealth Treasury, Melbourne; Isaac Crawcour, Officer-in-Charge, Immigration, Perth;· Miss Eileen Frances Crawford, Acting-Secretary, Council of Industrial Development,

Perth; Dr. John H. L. Cumpston, D.P.H., Commonwealth Director-General of Health, Melbourne; Dr. John Dale, Medical Officer, Health Department, Perth; Messrs. Herbt. Arthur Day, Statistical Officer, Western Australian Government Railways, Perth; Percy Edgar Deane, C.M.G., Secretary, .Prime Minister's Department; Ernest Alfred Evans, Chief Mechanical

Engineer, Western Australian Government. Railways, Perth ; Robert· Ewing, Commonwealth Commissioner of Taxation, Melbourne; Sir Robert Garran, K.C.M.G., M.A., Secretary, Attorney-General's Department, and Commonwealth Solicitor-General, Melbourne; Messrs. Henry Ambrose Hunt, F.R., Met. Soc., Commonwealth Meteorologist, Melbourne; J""ionel Jas. Hurley, C.M.G., Deputy Director of Immigration, Melbourne; John William Israel, I.S.O., Common­

wealth Auditor-General, Melbourne ; Walter Heywood McCay, Assistant Under-Secretarv for Lands (Group Settlement BranchL Perth; Stuart Gordon McFarlane, Representing CommonW'ealth Treasury, Melbourne ; Edward Aubrey McLarty, Managing Trustee, Agricultural Bank, and General Manager, Industries Assistance Board, Perth; Robt. McKeenan Oakley, C.B.E., V.D.,

Comptroller-General of Customs, Melbourne ; Harold Pope, Commissioner of Western Australian Government Railways, Perth; Joshua Fielden Ramsbotham, M.Inst.C.E., Director of Lighthouses, Melbourne; Alex. Jas. Reid, B.A., A.I.C.A., Government Statisticians' Office, Perth; Frank Ernest Shaw, General Manager, State Implement Works, Perth; George William Simpson, A.I.C.A., Assistant Under-Treasurer, Perth, representing Western Australian Government. ; William Henry Taylor, General Manager, Western Australian Government Tramways and Electricity Supply

Undertaking, Perth; Chas. Henry Wickens, F.I.A., F.S.S., Commonwealth Statistician and Actuary, Melbourne; Frank Henry Young, Accountant, Public Works Department, Perth. We also desire to thank Mr. F. J. McKenna for the efficient manner in which he has carried out his duties as Secr.etary. ·

F. J. McKENNA, Secretary.

We have the honour to be, Your Excellency's most obedient servants, W. G. HIGGS, Chairman.* JOHN ENTWISTLE.t

STEPHEN MILLS.t

Melbourne, 7th September, 1925. • With reservations (see paras. 404--420, 421-464, 527-558, 559-577). t With reservations (1100 paras. 522, 581-582). t With reservatiollll (- paru. 467-521, 523-526, 578-580).

PART V.-COMPETI1ION OF tHE COMMONWI!Al.TH SAVINGS BANK.

(Reservation by the .

405. With great respect I dissent £rom my o9l1Mgues' suggestions in paragraph 55. I agree with the State Advisory Committee that the entry of the Commonwealth Bank into the Savings Ba.nk business of the State of Western Australia deprived that State "of the advantage enjoyed by the State in being able to make use, in pursuit of its developmental

policy, of moneys borrowed at rates varying ftorh 3 to 3! per cent., instead of having to pay the market rate o£ 5i to 6 per cent. (Evidence, .Page 8); that :lii all probability! if it had not been for the competition of the Commonwealth Savings Bank, the sum of £2,298,097 deposited with the Commonwealth Savings Bank in 1924 would have its way into the State Savings Bank (Evidence, page 8); that the annual loss the State of Western Australia may be safely stated to be not less than £65,675 (see Appendix XI.), and that the .loss is a continuing loss which may increa.se comparatively from year to year if the Commonwealth Bank remains in the business.

(Evideiwe, page 33;) NOT FORESEEN BY FRAMERS OF CONSTITUTION. 406. There was no occasion for the Co:oimonwealth llank to seek to collect the small savings of the Savings Bank depositors in the States of the CommortWfulllth, The Commonwealth did not want the money. T,he work was being done efficiently by the States, and the State Govern­ ments had the use of millions of pounds for the of the State at a low rate of interest. The framers of the Ot:mstitution Act; when they decided ·that the Oomm{}nwealth Parliament should have power to rriaKe laws with respect .

(XIII. of Sec. 51) other thMt State Bankihg 'ulao State Banking extending beyotld limits of the State concetiied ; the inootporation of banks, and the issue 6£ paper motley,

did.· no. t.. a .. PP. a.··.·.r .. en.-t1y·· .. · c.·oh. t .. emp .. 1a.·t .. e .. the. e .. s·t. ... ·.l.i.shfn. eh··· .t. Co.·mm···o·: 1iW. e.alth. ·.· .of a Sav.·.ifig.s Bank.· which would compete With the savings banks by the of the Commonwealth. Had the matter been mentioned during the Convention debates as one of the actiVities to be

Federal Convention. . .

PR.Ot.ESt Sy 111£ S1ATE PlttMlmts.

407, When the Commonwealth Bank. B1U contarufu.g provis1Gns for a Savings Bank was introduced into the Federal Parlitliment; the Premiers of theStates.beoame alarmed, and protested in an emphatic manner against the Commonwealth thus entering into competition with the States. The matter was discussed at an lnte:tstate Conference of Prenriers and Ministers of the States, he1d at Melbourne in January, 1912. The Prime Minister, the Right Hon, Andtew Fisher, said the GoVernment did not intend to exclude the States from participation in thl;l Comruonwealth Bank, and he made the following proposal ;-

The States to become partners with the Common>tealth in the Commonwealth Bank--(a) by supplying pottion o£ the capital1 not e:l!\ceeding one-half;. . .. . . ·

(b) by eachState becoming responsible for the liabilities oi the Bank in proportion to the capital subscribed by it; . . ·

(c) by each State shatirlg the profits in proporpitm tOcapital!:ltibsctibed by it. :Each State to use the Bank as far as ptacticltble as its BA.tiket, 'the Commonwealth Sank to take over the Savings Bank of eooh State, Whether Goverruilent or Trustee, as a going concern.

408. Mr. Fisher's proposal was rejected by the Cofiferefice, carried the following resolution :- · ·

That the Cnnference is unable to agree to the proposal laid before it by the Prime Minister, but makes the following offer in lieu thereof 1. That. in eottsidera.tion of the Conunonwealth reftublil:tg front etirerirtg. into Savmgs :Bank business, the States agree to provide on loan tiJ the VolfilnonweaUli Bank1 on terms to be. arranged; a monthly

amount equal to 25 per cent. of the increase In the excess of deposits over withdrawals In the States' Savings Banks. 2. That such arrangement comttience dn the 1st day of January, 1913, and continue for a period of five years from that date.

PROl'OSALS FOR UNIFICATION.

409; The States' counter-proposal was rejected, and the Commonwealth in due course established its Savings Eank, as well as a bank for general business. A truer conception of the rights of the States would have impelled the Parliament not to ignore the request of the States to re£rain from entering bank business ; but Federation. had proved such· a signal success that there was a disposition m some quarters to underrate the liDportance of the States,

1561

atid to questiofi the necessity for State legislatures. A section of the general public, including a number of Federal ¢-embers, proposed to abolish the State Parliaments, and to substitute therefor Ptovinoial Councils. On the 13th September, 1910, the Hon. F. W. Bamford introduced ih. the Commonwealth House of Representatives a Bill havih.g that object in view.' The preamble to Mr. Bamford's Bill reads as follows ,

"Whereas not less than 60,000 residents of the Colhfiionwealth have presented petitions to Parliament praying that the question of the reconstruction of the States of the Commonwealth on a broader andmore national basis be referred to the electors; be it therefore enacted," &c., &c. ·

410. The Act was to be called " The Constitution Alteration (Unification) Act of 1910.'' Australia was to be subdivided into sixteen Provinces, and the Provincial Councils of the Provinces were to be given po)ver to make Ordinances in relation to certain matters, subject to the provisions of the Act and the Assent of the Governor-General in Council, thus destroying the sovereignty

of the States.

·411. lt is doubtful whether there .is any considerable body of opinion in favour of Unification ; and, in my judgment, there is a stronger disposition to recognize the rights o£ States a.nd to endeavour to remove any disabilities li.ttributable to Federation.

DIFFICULTIES CONFRONTING THE STATE SAVINGS BANK. 412. The State of Western Australia was in a particularly disadvantageous position contpared wit:h other States of the Commonwealth when the Commonwealth decided to establish a Savings Bank. In other States there were considerable populations in some of the country districts.

413. Mr. G. W. Simpson, Under-Treasurer for the State of Western Australia, in giving evidence, said (Q.756)-" Immediately the Commonwealth proposed to enter the field of competition Victoria opened a large humber of brancJnes and agencies. In Victoria there ate now 172 branches and 381 agencies. In Western Australia the population was not sufficient to enable the State to establish many branches. A few offices were opened, and at the present time the State has eighteen branches; but to open branches at the smaller towns would have meant a loss to the

State, because of the cost of salaries, rent, &c."

SMALL TOWNSHIPS.

414. Mr. Simpson thus illustrates the State's difficulties-=c. '' We had to ask a storekeeper, if therewe:re ho civil servant in the town, to take oh the agency. of our Savih.gs Bank. . The public, however, would not deal with 11. Take a small town.ship where there be a couple o£

stores, a post office, and one or two mmor residences. In such a case we had to go to one of the rival storekeepers, and ask him to take on the agency of our Savings Bank, when we immediately found that the people who were dealing from thatstorekeeper would not support our agency, but transferred their accounts to the Post Office Savings

Banks of the Commonwealth. We then tried to get as many agencies as we could with stationmasters, but we found that that did not work. Usually the station was so much further out of the town than the post office, a:hd we discovered that whichever method we adopted, we were the loser." (Q.756.)

AN UNPLEASANT INCIDENT.

415. An unpleasant. incident in the negotiations between the State and the Commonwealth was the refusal of the Commonwealth to allow the officers of the Postal Department, which formerly belonged to the States, to act as agents for the State. Mr. G. W. Simpson in his evidence (Q.757) related that the State of Western Australia offered to pay the Commonwealth 6s. per cent. to act as agent for the State. The Commonwealth refused, giving as a reason that "it was impossible for the post office to act tor two parties "-a reason without foundation in fact, as any post-office official will admit. . .

" WORK TOGEtHER IN LOVE AND AMITY." 416. The spirit shown in this refusal is contrary to that voiced by the Hon. Sir John Downer (South Australia) at the Federal Convention, Sydney, 1897, when he said- . "We ate giving life and death powers of infinite importance to this body (the

Federation) which we ate constituting, a body consisting of ourselves, not consisting of strangers, Whd will work together in love and amity, and not as the colonies have from time to time worked, against each other rather than on friendly te11ns. They have got to be trusted some day, and cannot we trust them at once •

XCVJ

417. There was no love or amity in the refusal to allow the post-office officials to accept savings bank deposits on behalf of the State of Western Australia. All _States h_ave d?ne, and are doing, work for the Commonwealth, and the Commonwealth has £aid, and Is paymg, for same. Unless it is intended by the Commonwealth that the State Savmgs Banks shall be abolished, there can be no valid reason for objecting to postal officials receiving deposits .on behalf of the State, the State to pay for services rendered. ,

418. I agree with Mr. C. H. Wickens, the Commonwealth Statistician, who said : " It is a pity that the Commonwealth ever entered that fiel.d (the Savings Bank business)." (Q.4712.)

419. It is true, as stated by my colleagues in paragraph 46, that the disability suffered by the State of Western Australia on account of the establishment of the Commonwealth Savings Bank is suffered also by other States, but that does not seem to me to be a reason why the State should not be granted relief.

RECOMMENDATION.

420. I recommend, a partial remedy for the financial disabilities of the State of Western Australia, that-(a) the Commonwealth Bank withdraw from the Savings Bank business in that State ; (b) that Commonwealth postal officials shall, where required, act as agents for the

State,' payment to • be made by the State for services rendered.

(Signed) W. G. HIGGS.

PART VII.-PROPOSAL FOR GOLD BOUNTY.

(Reservation by the Chairman.)

421. With great respect I dissent from most of the comments and conclusions of my colleagues in respect to the proposal for a gold bounty. Your Commission, having invited the general public of the State of Western Australia to make suggestions whereby the disabilities of the State might be removed, Mr. F. R. Lee, Manager of the Fremantle Branch of the Perth Daily News, for four years Mining Company Secretary and Accountant, suggested the payment by the Commonwealth Government of a bonus of £1 per ounce, during a period of ten years, on all gold produced in Australia. The strongest points submitted by Mr. Lee in favour of his suggestion were:-

(a). That the gold-mining industry is a white-labour ·industry competing unequally with its outside competitors, who employ coloured and cheap labour. (b) That the industry and the men employed in it are entitled to participate fairly in what is already the public policy of protection. These are the points to which I propose to pay particular attention.

GREAT INCREASE IN WORKING COSTS.

422. Mr. Richard Hamilton, Manager of the Great Boulder Mine, Kalgoorlie, and President of the Chamber of ?f W_estern Australia, ga_ve evidence in support of the payment of the proposed bonus, and said his evidence had the unammous approval of the members of the Chamber of Mines. (Q.4164.) Mr. Hamilton said-

" The alarming and continuous decline in mining was attributable mainly to the in_crease in working . since 1914, which pre_cluded the treatment of any but fairly h1gh-grade ores. Of this mcrease, the two prmmpal causes are the war, with its general enhancement of prices, and the high Federal tariff. The tariff acts in three ways .. Firstly, Customs raise the cost _of. mining machinery and requisites, a handiCap on mmes not yet eqmpped; secondly, It mcreases the cost of living, and so necessitates the payment of higher wages, both to those employed in the mines and th?se in and thirdly, it. thus adds considerably to the

:pnce of .materials re9.u1red for mmmg work. As the price of gold is fixed, the mining mdustry cafl!lot do hke others and pass o:n to the purchaser of gold any increase in the cost of gold."

X0Vll

CONTINUOUS DECUNE.

423. That there has been a continuoua decline in gold-mining within the Commonwealth of Au_stralia is proved by the following table :-vALUE OF GOLD RAISED IN AUSTRALIA, 1903-1924,

Year.

New South Victoria. Queensland. South Western Tasmania. Northern Common· Wales. Australla. An•tralla. Territory. wealth.

£ £ £ £ £ £ £ £

1903 . . .. 1,080,029 3,259,482 2,839,801 28,665 8,770,719 254,403 69,801 16,302,900

1904 .. . ' 1,146,109 3,252,045 2,714,934 76,025 8,424,226 280,015 42,054 15,935,408

1905 . . .. 1,165,013 3,173,744 2,517,295 45,853 8,305,654 312,380 51,658 15,571,597

1906 .. . . 1,078,866 3,280,478 2,313,464 27,000 7,622,749 254,963 49,117 14,626,637

1907 . . .. 1,050,730 2,954,617 1,978,938 20,540 7,210,749 277,607 21,681 13,514,862

1908 . . .. 954,854 2,849,838 1,975,554 12,300 6,999,882 242,482 24;191 13,059,101

1909 . . .. 869,546 2,778,956 1,935,178 30,206 6,776,274 190,201 31,108 12,611,469

1910 .. . ' 802,211 2,422,745 1,874,955 28,000 6,246,848 157,370 25,521 11,557,650

1911 . . .. 769,353 2,140,855 1,640,323 15,00!) 5,823,075 132,108 30,910 10,551,624

1912 . . .. 702,129 2,039,464 1,477,979 28,000 5,448,385 164,300 22,671 9,879,928

1913 . . .. 635,703 1,847,475 1,128,768 27,800 5,581,701 141,876 13,250 9,376,573

1914 . . .. 528,873 ),755,236 1,059,674 26,581 5,237,353 111,475 9,754 8,728,946

1915 . . .. 562,819 1,397,793 1,060,703 25,830 5,140,228 78,784 3,781 * 8,269,938

1916 • oi .. 459,370 1,090,194 913,951 33,000 4,508,532 67,072 3,861t 7,075,980

i917 •··â€¢ .. 349,038 857,500 761,639 30,334 4,121,645 61,577 3,677t 6,185,140

1918 ;. .. 369,743 674,655 567,371 26,252 3,723,483 44,724 2,229t 5,408,157

1919 .. . ' 336,240 691,632 618,101 16,465 3,748,882 39,252 4,234t 5,454,806

1920 . . .. 275,109 859,461 648,168 9,546 3,475,392 35,134 5,282t 5,308,092

1921

. . 271,302 554,087 214,060 13,933 2,935,693 28,311 1,299 4,018,685 . . . . 1922 . .. .. 118,359 501,515 378,154 4,693 2,525,811 16,101 540 3,545,173 1923 . . .. 83,325 422,105 392,563 4,203 2,232,179 16,300 743 3,151,418 1924 . . .. 87,002 312,746 445,617 3,664 2,258,440 20,841 3,273 3,131,58 3 * lilt Ja.nua.'fy to 30th June. t Year ended 30th June.

424. The dedline in gold-mining within the Commonwealth from £16,302,900 in 1903 to £3,131,583'in 1924 must be regarded, at least by people directly engaged in the industry, as alatrn.p:tg. ·

THE MAIN CAUSE OF INCREASED COSTS. 425. The increas.e in the working costs of gold production complained of by Mr. Hamilton arises :tnainly from the endeavour of the Australian Nation to establish a reign of equity and law in the industrial world of the Commonwealth.

426. Other countries, Great Britain, and several European countries,

have a more or less voluntary system of Conciliation and Arbitration, but Australia and New Zealand are the onlycountries in the wtirld which have made an effort to settle industrial disputes by ll)eans of cbmpulsory Conciliation and Arbitration. Legal Courts have been established; ha-ving for their object the prevention of lockouts and strikes, and to provide for the making of agreements

between employers and employees in "all matters relating to work, pay, wages, reward, hours, privileges, rights or duties of employer or employees, or the mode, terms, and conditions of employment or non-employment.

HUNGER OFfEN THE DECIDING FACTOR. 427. Previous to the establishment of Courts of Conciliation and Arbitration, in all those trades and occupations where trade and labour unionism was not strong enough to otherwise order, those matters were determined in Australia (as they are to-day in most countries of the

world) by the lowest of money_ a, married man was prepared to work for by the hour, day or week, hunger often bemg the dee1dmg factor.

AVERAGE WAGE 33s. PER WEEK..

428. Prior to 1907, the average wage for a labouring man in Australia was 5s. 6d. per day -33s. per week. Many a male adult worker had to support himself, his wife, and children upon that low wage. INCREASE TO 42s. PER WEEK.

429. In 1907, the President. of the Commonwealth Court of Conciliation (Mr. Justice ·Higgins) fixed a basic or living wage, and awarded on the principle that a normal man has a fantily and must earn sufficient to support it. The wage then fixed was 7s. per day-42s. per week, F.2517.-9

xcvili

thus raising the standard 27 per cent. ; this raised standard has been preserved ill the succeeding awards, which increases proportionate to the cost; ot .living. The liv!ng is

ascertained by the estrmates made by the Commonwealth .StatiStician as to variatiOns m the purchasing power of money.

INCREASE TO £4 Sa. 6d. PER WEEK.

430. The basic wage to-day in each capital city of the Commonwealth is as follows :-Sydney £4 7 0· per week

Melbourne £4 7 0 ,

Brisbane £3 16 6 ,

Adelaide £4 7 6 ,

Perth . . £4 2 6 ,

Hobart £4 7 0 ,

The weighted average for the six capitals being £4 5s. 6d.-an illcrease on the basic wage o£1907 of £2 12s. 6d. The above are the rates as determined bv the Federal Court, but other rates are determined in some cases by State Authorities; thus .the basic wage under State Tribunals is £4 2s. in New Sputh Wales, £4 in Queensland, and £4 5s. 6d. in South Australia.

·EXTRA · WAGE FOR SKIUED WORKERS.

· · . 431. Having ascertained the basic _wage necessary for an ordinary ·adult labourer who has to support himself, a wife, and thiee dependent children, the Courts fix the . wages of skilled workers by adding to that basic wage the additional sum that in practice is paid to a man for the skill or opher exception31 necessary qualifications of his class.

EFFECT ON COLD-MINING INDUSTRY .

. · 432 . . The effect of compulsory Conciliation and Arbitration laws has been · to raise wages in every industrial occupation, including gold-mining. Mr. 0. L. Bloxsome, representing the Chamber of Mines of Western Australia, included industrial arbitration in the three factors which, he said, adversely affected the Western Australian gold-mining industry, under Federation­ (Protection, _lndustrial Arbitration, and Disposal of War-time'Gold). (Q;2755.) "The Arbitration Ooui:ts raised the basic wage for unskilled labour tosuch an extent that the incentive has been removed for young men to learn any business or trade in order to become a skilled tradesman. That applied in the mining mdustry to a .greater extent than in others.'' (Q.2761.) "Boys under eighteen years of age ate not permitted (Q.2764-5.) There might

be atleast nine different union organizations carperuters·, plumbers, &c., &c.), whose members would be employed byone gold-mining company, andin some instances each union would be working under Federal_ and State· awards. (Q:2771-3.) ·

MINING COSTS DOUsLED.

. ·: .. The endeavour, by .of· _ high P.rotective ·duties

ConcillatiOn and Arbitration Courts, to establish a high .standard of comfort and hvmg Within the Commonwealth has, without a doubt, increased the· cost of gold mining to such an extent that whereas the average mining costs were 19s. per ton ofore-in 1916, they were 38s. per ton tn 1924.

SHOULD A BONUS BE PAID?

434. Now arises the que:stion whether since the cost of gold production has been doubled, the. of Australia should pay a bonus, or what amounts to the same thing,

an Increased pnce for the gold produced by Its own citizens. ·

IS IT BETTER TO OBTAIN GOLD FROM SOUTH · · 435. has been that "it is not essential that we should mine gold, because

countnes that do not gold have adequate 8upplies, and carry on well"; that "it

be}etter for us to obtam gold South Africa.'' . . " " I do not see," said the

witness, how one could say that It IS essential that gold mining should be carried on. This has a ' bearing on the. question of the bc:mus ; if it is found that, in ordinary circumstances, it is to gold, b.est for Australia to do is to cease minilig it, and leave it there

until the which It will pay .. The will deteriorate, a!ld we will be switching

from or are of value In order to carry on an

1ndustry which IS a tax l!-pon us, m connenon With we.are putting more value into the ground.Jhan we are· taking out of It. It would be econormcal m those circumstances to cease golq _proquction." (Q.4738.)

XCIX

CLAIMS Of. INDUSTRY.

436. I would suggest, in reply, that to adopt the views outlined would be to overlook the claims of an industry which has done a very great deal for the Commonwealth, particularly. for the State of Western Australia ; and is still 9f value to Commonwealth and State, though declining at an alarming rate.

437. Mr. Hamilton's evidence in this regard must be given the most earnest consideration. He said-· "In 1923 the total population of the Commonwealth was 5,749,807; the total Commonwealth taxes per head of population were £8.6; the total production per head

of population was £67.8; and total exports per head were £19.9. The population of Western Australia was 353,815; the total State taxes were £2.7 per head; the total production per head was £70.1; and the value of exports of primary products per head was £27.3. In this State, the gold production amounted to £2,105,483, from 781,769

tons of ore treated; and the number ofmen employed in producing it was 5,347. The gold-fields' towns of this State are practically isolated, and it is therefore easy to learn what is the proportion of people who live in the neighbourhood of the mines, and depend for their livelihood upon the mines, as compared with the number of men actually working on the mines. We find that the proportion is at least 6 to 1. If we multiply 5,34,7 "by 6, the result is 32,082. The val"!le of the State's gold production divided by this figure shows a production of £65.6 per head for this year. The price of wheat in 1923 was about

equal to the average price during the previous fifteen years ; but the price of wool in 1923 was about 16 per cent. higher than the average of the. four previous years. The generally increased price of everything produced in Australia has inflated the value of the production per head of population in both the Commonwealth and the State ;_ll,nd yet the value of the production per head of the people on the gold-fields, with gold. at

its standard pfice of £4 5s. per ounce, was £65 6s., a figure which compares well w1th the production per head of the State of £70.1, or of the Commonwealth of £67.8, which would have been £65 had wool been at a normal price in 1923. To serve the gold-fields of this State, 1,160 miles of railways have been built, 2,000 miles of roads made, 350 miles of piping(to deliver 5,000,000 gallons of water per day laid down, innumerable

reservoirs ofwater constructed, and 1,700 miles of telegraph and 3,000 miles of telephone lines erected. Many . towns have been built ; but, taking the towns of Kalgoorlie and Boulder only, these, on municipal value, based on five years' purchase, represent over £1,000,000. To this may be added the value of the mine plants as shown in theW estern

Australian Mines Department Annual Report for the year 1923, namely, £1,950,000. It is an easy matter to prove that these items added together have a total value of over £8,000,000." (Q.4164.)

AUSTRALIA'S POUCY.

438. I have come to the conclusion that in accordance with our Australian policy of (a) Protection to Australian Secondary Industries, and (b) Assistance to Primary Industries, the claims of the Gold-mining Industry to financial assistance cannot be justly ignored. Both (a) and· (b) amount to subsidies. The Sugar Industry of Australia provides the clearest illustration

of this fact. Australia is the only country in the world where cane sugar is produced by labour. The Commonwealth Government does not subsidize the Sugar Industry directly, but it places an import duty of £9 6s. 8d. per ton on sugar, and absolutely prohibits the importation of black-grown sugar. This l?rohibition-which results in the public of Australia paying 4!d. per lb. retail for sugar as agalllSt ·3d. per lb. paid by the people of Auckland, New Zealand*­

enables Australian sugar refiners, sugar millers, and sugar-cane farmers to pay the Australian compulsory Arbitration awards to their employees.

· 439. As the number of tons of sugar consumed by the people of the Commonwealth during an average year is about 300,000 tons; the subsidy indirectly paid by the Commonwealth to the Sugar Industry amounts to £4,200,000 (300,000 tons at 4ld.=£12,600,000 ; 300,000 tons at .. £8,400,000! or The public ?f Australia .(with exceptions)

willmgly pay thiS subsidy as a contnbut10n to the cost of the pohcy of a White Australia.

* " On the 29th of June last, the Colonial Sugar Refining Company reduced the price of sugar in New Zealand by a further £1 per ton, bringing the rate to £23 10... per ton. Retailers reduced the price to 16s.rper bag, and to 3d. for a single pound. (Melbourne Arg1l>', 30th June, 1925.) In the House of Representatives on 15th July, it was stated the .retail price of sugar in New Zealand is 3}d. per lb. (including !d. duty) per lb. Asked which was the correct retail price, the General

Manager of the Colonial Sugar Refining Company (Mr. H. V. Dixon) replied, under date 18th July, 1925 : " Our Auckland office recently advised us that the Auckland grocers decided to reduce the retail prioo oflA sugar. to 3d. per lb. Beyond this we have no knowledge of retail prices elsewhere in New Zealand."

f

'

GOLD MINING IN SOU'nl AFRICA.

440. In the Gold-mining Industry of the Witwatersrand (South Africa) there were In December, 1922, approximately 176,000 native .workers to 17,000 Europeans. 'Fhe average rate of wages of coloured persons, other than native la?ourers, on the Witwatersrand gold mines in certain defined occupations underground Is approximately one-fifth of the amount earned by Europeans. The average earnings per shift of all nB:tive labourers,. surface underground, in December, 1922, Were 2s. 3d. plus f?od. of diamond

in the and in the Cape, where h_ousmg only Is provided, It IS for mmmg

compaJUes to supply therr coloured employees with free and food, m respect of

the Witwatersrand gold mines1 is estimated to have cost m June, 1921,. approximately Is. 2d. per native per shift . .. Native labourers on the Transvaal gold and coal mmes work 48 hours per .week underground, and 47i hours per week on the surface. (Financial Year-Book of the Union of South Africa, 1922, pages 328 and 330.)

"so .. cALLED CHEAP NATIVE LABOUR."

441. Mr. Kingsley Thotnas's* reference t? " cheap native ':' quoted my

colleagues, a.nd the that black Is very little than white, IS comfortmg to

tne of those who that a white . at Kalgoorlie, paid 12s. per week, can do as

much W'Qrk as four black mmers employed at Witwatersrand, South Afrwa, at £1 per week each; bUt the- -Cointno-nwealth ·Parliament did not take that when it passed the present Customs Tariff. ·

HOW PRICE OF SUGAR DETERMINED.

-' • 442. The price of sugar Within Australia is fixed after calculating the costs of production.

Wh'at valid objection can be raised against deter:rilining by the method the cost of gold pr®uced within the. Comm&nwealth.

COST OF GOLD PRODUCTION NEVER CONSIDERED. 443. I have looked in vain in various books f-or inform&tioh whether, when the mint price df gold was :fixed · by the Imperial Goveri:unent, the cost of the predn'Ction of gol-d was considered a.t aH.

444. Gold has been. the exc-lusive standard of va1ue since the 22nd of June, 1816, in the reign of George III.t;and the min.t price for gold is £3 17s. lO!d. pel' standard ounce. The Cotnmo:nwealth of Australia :has adopte-d the ·Imperial staiidard, and our Australian Coinage Act has fixed the stand-ard weight ofa sovereign at 123 ,grains, and the standard fineness at 11-12ths of fine gold and of · alloy {usual1y copper).

TENDENcY TO CONFUSE MEAsURE OF VALUE WITH COST OF · PRODUCTION. 445. In the discussion of this question there is a tendency to confuse the standard weight and the standard fineness of the sovereign with the cost of producing gold, and to imagine that if a greater price than £3 lO!d. is paid by the Commonwealth for gold, the standard measure of the sovereign will be so altered as to interfere with the vaL ue of the sovereign in international exchange. ·

A MATTER OF LOCAL POUCY •

. . . · .· 446. If a· bounty is paid on all newly:-produced gold, it will mean that the

sovereign will contain .123 grains, but to the extent of the bounty new sovereigns will cost :more than 20s. m Austraha. Any Australian sovereigns sold abroad will bring par value or whatever the exchange rate ma.y be. · -

. . . 447.. " value of a thing " will still "l?e " just so much as it will bring " abroad, and

Australia pays a bounty- to gold or not is a matter of policy having nothing

to do wtth the rate of exchange m form.gn countries·. ·

"A ROBBER INDUSTRY.''

. . . 448. ,;\- witness your Commission desc!ibed the gold-mining industry as a robber ltt

to subs1d ze the coal mdustry m Britam .to the extent. of up to the 1st May, 19-26. The -Chancellor of the (Mr. Wmston Churchill} said In the House of Commons on the

" the subs!dy nnght amount to £15,000,000." (See Daily Press, 6th August,

' - ·-··--· .. l _. .. . - . - -. . . . . .

. _ .. -,; " &port Royal Commission .· on Mining Industry" · Australia.}---'- :Kingsley Thoma.s, page I6) . . j A.n the. speeoh. of Mr. Poie, in the House of Commons, on 22nd of June, I8l6, when movi

!,or th11. purpose of .¥ Aot to. for a. coinage, and to regulate the. currency of the Gold and Silver ooin '::f

this Realm, appears at page em, at the conolumon of th1s section of the Report. Also an extract " What is the • Pound • " f s· Robert Peel's speech on the Bank Charter Act of 1844. . ' · .. . rom •r

1567

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THE GREATER THENEED FOR ADEQUATE PAYMENT. 449. Australia would be wise to persevere in its endeavours to assess the true value or service to the community; the more necessary, the more difficult, dangerous, or objectionable the service, the greater the need for adequate payment. There are, and will be, anomalies, but those can be removed as the result of greater experience by a more enlightened public opinion.

GOLD A NECESSITY.

450. Gold is a necessity, and gold-mining is both difficult and dangerous. . When used as jewellery or for some dental purposes gold becomes a luxury ; but as a basis for our Commonwealth Note Issue, it is an absolute necess ty, the Australian Notes Act providing that the Treasurer of the Commonwealth shall hold in gold coin a reserve of not less than one-fourth of the amount of Australian notes issued. Some authorities are of opinion that much less than 25 per cent. of gold would serve as an adequate reserve; but public opinion would resent the adoption of less than even 33 per cent. It may be truly said that if the Government of the Commonwealth took

any action to substitute any other metal or scrip certificates company shares, or deeds of land or of house or other property, as a reserve against our Australian Note Issue, the outcome would be a panic. THE IMPERIAL PROPOSAL.

451. The proposal that the Imperial Government should make a special grant of money for the purpose of stimulating the production of gold throughout the Empire is, to my mind, entirely different from the proposal that the Commonwealth Government shall grant a bonus on the production of gold within the Commonwealth.

452. In the first case, the grant would have to be made to gold producers in the following colo-qred. labour countries within the Empire :-I11 the Transvaal, Rhodesia, British India, West Coas.t of A.frica, British Borneo, British Guiana, and the Malay States. There would be extra ordinary difficulty in preventing fraud ; in fact, it would be impossible to prevent the melting

down of sovereigns in order to secure the bonus. If the bonus were paid on tons of ore milled, it would be impossible to prevent the treatment of valueless material. 453. Within the Commonwealth, however, gold is produced by white labour. The circulation of gold is not free. Gold is mostly in the vaults of the banking companies· or of the Commonwealth. A man in possession of £1,000 or £10,000 clever enough to avoid detection in an effort to obtain the bonus by fraud, could make more than the proposed gold bonus in legitimate trade or commerce.

LORD INCHCAPE'S COMMITTEE.

454. Lord Inchcape's Committee gives as a reason for rejecting the proposal for a special grant that "a subsidy for the production of gold appears to us fundamentally unsound." 455. The framers of the Commonwealth Constitution Act did not so regard it, for they inserted a clause in the Constitution (Sec. 91) providing that "nothing in the Constitution prohibits

a State from granting any aid or bounty on mining for gold, silver,· or other metals." And the people of the Commonwealth by declared their approval of the clause.

WESTERN GRANTS TO INDUSTRY.

456. The State Advisory Committee submits that the State Government of Western Australia, besides spending £8,000,000 on railways, water supply, and mining development generally, has expended a further £2,000,000 by way of grants in aid. (Evidence, page 13.) That the proportion of this £2,000,000 which went to aid gold mining was not paid at so much per ounce of new gold produced, does not affect the principle. It was a subsidy or bounty.

FALLACIOUS REASONING.

457. Another reason given by Lord Inchcape's Committee is that "Periods of gold production, following on the discovery of further deposits of gold capable of extraction at a low cost, have been marked by an increase in the price of commodities. The exhaustion of these sources of supply has been accompanied by a decline in the price of commodities.'' This reasoning

is fallacious to-day, however true it may have been many years ago. There has been a continuous decline in the production of gold in Australia since 1903, yet prices of commodities have not declined; as a matter of fact, wholesale prices of all commodities (coal, jute, leather, agricultural produce, dairy produce, groceries, meat, building materials, chemicals) have doubled since the

decline of gold production commenced in 1904. (See Commonwealth Year-Book 1924, page 580.)

A WAR PRECAUTION.

458. Further to the point that gold is a necessity: I think the happenings during and since the Great War must convince every one that it is to the interests of both Empire and that, as a war precaution, as much gold as reasonably possible shall be accumul.ated w1thm the Commonwealth. Two matters may be mentioned-The request of the Impe:1al

to the Commonwealth in 1916 for £13,500,000 in gold, and the recent borrowmg by of £l5,000,00Q in the United States of America. An additional reason for the accumulatiOn of

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gold within the Commonwealth is provided in a state;D_ent by in book

"Restoration of the Currency," page 129 (quoted by Mr. G. W. Simpson m Eyidence­ Q.6367) ; "It certainly does seem likely that for some time the supply of gold will fad to keep pace with the increasing demands of· commerce." 459. Some day the world may become so civilized that war will a thing of the P.ast, and a paper currency backed by the Governments of all countries m3;y .be the standard medmm of exchange. Meanwhile we JAUSt prepare our plans for the world as It Is.

PRE-WAR AND POST-WAR EXPENDITURE ON DEFENCE. 460. The following table shows the estimated pre-war and expenditure on defence in the years 1913-14 and 1923-24. They are the figures av_ailable. Proba:bl:f the total for 1924-25 is just as large as that of 1923-24. If so nme (9) nat10ns-G:reat Bntam,

Italy, Spain, Sweden, Holland, Belgium, the United States, and Japan are now spending colossal sum of £430,373,000 per annum-an increase of £174,820,000 on the amount spent m the year before the war which was to end war.

ESTIMATE:O PRE-WAR AND POST-WAR EXPENDITURE ON DEFENCE-VARIOUS COUNTRIES.

Country. Year. Total Expenditure. Year. Total Expendlture.(b) Increase.

£ £ £

Great Britain . . .. 1913--14 77,179,000 1923--24 122,011,000 44,832,000

Germany '. . . .. 1913--14 . 97,845,000 (a) (a) (a)

France . . .. .. 1913 56,738,000 1924 59,656,000 2,918,000

Italy . ' .. . ' 1913--14 23,614,000 1923-24'· 25,071,000 1,457,000

Russia . . ' . .. 1913 . 86,953,000 (a) (a) (a)

Spain .. . ' .. 1913 9,218,000 1923-24 18,811,000 . 9,593,000

Sweden . ' '. . ... 1913 4,510,000 1923-24 9,121,000 4,611,000

Holland . ' .. . . 1913 4,458,000 1924 8,616,000 4,158,000

Belgium . ' . ' .. 1913 .· 3,260,000 1923 5,047,000 1,787,000

United States . . .. 1913-14 64,537,000 1923-24 149,304,000 84,767,000

Japan . . '. . . 1913-14 12,039,000 1923-24 32,736,000 20,697,000

(a) Not available. (b) Excluding expenditure in connexion with.the late war.

NOT PREPARED TO RECOMMEND 20s. PER.OUNCE. 461. I am not ·prepared to recommend the full amount of the bonus asked for (20s. per ounce) for the reason that in February of this year a depu,tation representing the Chamber of Mines of Western Australia upon the Commonwe.alth l'reasurer (The Hon. Earle Page) at Kalgoorlie, and .placed before him the following proposa.lsJor the assistance. of the Gold-mining Industry:-

1. Five per cent. subsidy on value of gold production for a period of five years. 2. Mining Companies to be exempt from income ta.qr until subsl)riJ:>ed capital returned. 3. Co=onwealth Government co-operation with State Governm!lnt in providing £ for £ expenditure mine development and rewards for new discoveries . . 4. Revision of Customs duty on machinery, &c., required in mining where such requisites are not obtainable on a. commercial

basis in Australia. 5. That all necessary ingredients for the local manufacture of mining. explosives be admitted iJJ.to the Commonwealth free of Customs duty, irrespective of the country of origin. · 6. Reduction by the Commonwealth Line of steamers of freight on cyanide shipped to Australia. 7. Every assistance to be given by the Commonwealth Government to the gold-mining industry to preserve the right to sell

its product in the best market.

· 462. Mr. Hamilton, when asked why representatives of the Gold-mining Industry were now asking for 20s. per ounce instead of 5 per cent., said, in effect, that having gone deeper into the matter, they concluded that the former proposals were altogether insufficient to revive the industry. (Q.4171.) H.e added: "I may saythat when those pr?posals Nos .. 1 to 7 were put forward, the gold premmm was l5s. per ounce, but at the present trme we receive no premium." (Q.4173.) -

.463. Both Commonwealth and State Governments have made concessions by way of reductiOn of Income Tax. In regard to other requests, Mr. Hamilton said: "If we get the bonus we can let the other proposals pass." (Q.4173.) '

464. I

RECOMMENDATION.

(a) That during a period of ten years? a:nd thereafter until Parliament otherwise provides, a bonus or bounty of ten shillings (10s.) per ounce be paid upon all new gold produced within the Commonwealth. (b) That the necessary steps be taken to prevent fraud.

(Signed} W. G. HIGGS.

1569

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. GOLD THE ONLY LEGAL TENDER. (Extract from speech made by JJJr. Wellesley Pole, in introducing the above measure in the House of Commons on 30th 1816.-Imperial Hansard, 1816, Vol. XXXIV., pages 947-954.)

"AN ACT TO PROVIDE FOR A NEW SILVER COINAGE, AND TO REGULATE THE CURRENCY OF THE GOLD AND SILVER COIN OF THIS REALM," 22nd JUNE, 1816.

"Clause XI. . . . . Be it therefore enacted, That from and after the passing of this Act, the Gold Coin of this Realm shall be and shall be considered and is hereby declared to be the only legal tender for Payments within the United Kingdom of Great Britain and Ireland ; and that the said Gold Coin snall hold such Weight and Fineness as are prescribed by the present Indenture with His Majesty's Master and Worker of the Mint for making Gold Monies at His Majesty's Mint in London."

465. ''The standard coin of this realm the measure of all exchangeable value, the scale to which all money prices are re£erred had been originally silver : at the Conquest (1066) it was found to be so, and the silver coin then in circulation was of the same standard fineness at which it is now coined : the pound in tale was then equal to the pound in weight of standard silver, divided into '20s., and each shilling into 12d. or sterlings, each penny weighed 1 dwt. or 24 gr. This was the division of our money

of account, but the only silver coins made were pennies or sterlings. ''In the reign of Edward I. (1272-1307), our silver money was first diminished iri weight, and it had since, from time to time, undergone various reductions, which ···altogether amounted to about two-thirds of the original weight (the pound in tale being

now less than it was at the Conquest as 32 to 93); the last reduction was in the 43rd (1585-1603) when the pound troy was cut into 62s., at which it has remained

ever smce. "Silver till the reign of Edward III., with he believed a small exception in the time of Henry III., was the only precious metal of which coin had been made in England. " Gold was gradually introduced into our circulation as trade and commerce

increased and the country became rich and powerful. '' The original standard of our gold coins was 23 ct. 3! gr. firie, t ct. grain alloy ; this standard continued unvaried till the reign of Henry VIII. (1509-1529) who introduced the pound troy for weighing the precious metals (instead of the moneyers

or rochelle pound, which was three-quarters of an ounce lighter than the troy pound) and coined gold at 22 ct. fine and 2 ct. alloy, which was c3clled crown gold, and is now our gold standard. " Gold of both standards however continued to be· coined till 1663, and some gold of the old standard (for both standards circulated together) was in circulation as late as the year 1732. As our gold coins increased they became more generally circulated,

they were from their first appearance, coin of the realm, their value fixed and frequently changed by proclamations, and they were withdrawn from, or thrown into circulation by the rate at which it was found convenient in the earlier reigns to fix them ; at length they were as much the current coin of the realm as the silver coins, and though not considered strictly as the legal standard and equivalent of value were yet equally

received in payments. " As the circulation of the gold coins expanded, the difficulty of regulating the relative price of the two metals to each other, as well as the difficulty of regulating the price of the coins to their respective metals began to be seriously felt, and it appeared that considerable alterations had been from time to time made in our gold money, in the hope of keeping the coins of both metals in circulation.

"James I. found it necessary in the early part of his reign to diminish the weight of the gold coins to preserve the relative value of the metals. He reduced the sovereign of 20 shillings of the old standard from 7 dwt. 4 grs. to 6 dwt. 10! grs., and he also rose the price of gold twice in the subsequent part of his reign. Charles II., in the fifteenth

of his reign, diminished the weight of the gold coins still farther. He reduced the from 5 dwt. 20! grs. to 5 dwt. 9! grs. and called it a guinea. The rise in the pnce of gold from the second of James I. to fifteenth of Charles II. was about 32 per cent. " The guinea coined by Charles II. in the year 1663 were denominated 20s.

pieces in the mint indenture. But as the public were then disposed measure the value of everything th{tt might be sold, by the silver coins, which were m fact the only

eiv

established legal standard and equivalent of value, so considered in all contracts and bargains, and all mercantile transactions, foreign and domestic, gold coin was not taken at the rate fixed by the mint indenture, passed accord.ing to the price. of g?ld bullio;n, in the market, and the price of gold bulhon became so high that the gumea m the year 1695 sold for 30s.

" The effect of this upon our silver currency was to drive the good heavy milled silver to the melting pot, and to encourage the clipping and defacing the of the silver coins; the greatest inconvenience had consequently been felt, .and It evident that the country suffered most severe loss from the m the coms ?f

the two precious metals, from the mflux of gold and the rate at whiCh It was taken m reference to our silver coins, in settling the accounts of all foreign mercantile transactions. " In December, 1717, the guinea was declared by proclamation to be of the value of 21s. and it was ordered it should pass for that sum. This proclamation was the first act of the government which tended to establish gold as the standard measure of value. By common consent it had become the competitor with silver, and, of late years had caused its almost total overthrow.

'' It had neafly driven the whole of the new coinage from the country ; and yet, .e):Ccepting in the cases of the two acts of Parliament in 1695, restraining the sale of guineas to 26s. and afterwards to 22s. Gold, from the first coinage of guineas in 1663, had been left entirely out' of consideration by Government.

"It is most singular and remarkable, that during all the fluctuations of the price of guineas in the market from. 30s. to 21s. 6d. it continl,leS in the mint indenture as a 20s. piepe, so that at the tirne it.sold for 30s., and when it was enacted th'lt it should not be &old for more than 26s., and afterwards for more than 22s., it was coined under the great by t;he mint indenture as a piece; nay, it when Sir Isaac Newton

was called upon, and the indenture, which rates it at 21s. is dated in 1718. From the however, that the proclamation of 1717 issued, gold became, in fact, the

standard measure of value, and has since been always so considered, riot only among 9:qrselves but in our foreign exchanges. "

WHAT IS THE MEANING OF THE ''POUND"?

FROM SPEECH BY SIR ROBERT PEEL, WHEN SPEAKING ON THE BANK OF ENGLAND

CHARTER ACT . OF t844.

(SeelmperialQansara, 6th M'ay, 1844, page

466. What is the meaning of the "Pound '-' according to the ancient monetary policy of this country The origin of the term was this :-In the reign ofWilliam the Cop.queror a pound weight of silver was also the polmrl of account. The " Pound " represented both the weight of metal and the denomination of money. By subsequent debasements of . the currency a great alterai,icm was made, not in the name, but in the . intrinsic of the st:rling, and it was not until later period of the of

Queen Elizabeth that silver, bemg then the standard of value, recmved that determmate weight which it retained withou.t variation, with constant refusals to debase the standard of silver, until the year 1816, when gold became the exclusive standard of value. The of silver was fixed 1567 .; -but in 1717 the va:lue of the guinea was deter­

nuned to be 21s., and for a certam period both gold and silver constituted the mixed of .. In the year 1774, it being then enacted that no legal contract should

be diScharged m silver for any sum of more than £25, gold became substantially the measure of value, and so it continued to be legally and practically until 1797, when that fatal measll:re for payments by the Bank parties were

enabled to Issue at their discretiOn paper money not convertible mto com, at the will of the .bearer. 1797 to 1810 attention was not much directed to this important subJect; but m 1810 men of sagacity observed that the exchanges had been for a consider­ able period unfavorable to this:country-more unfavorable than could be accounted for by the o.f or the of the country. A Committee

was appom_ted to mqmre mto the subJect, and opmwns, not really novel, but at .that time very startlmg, to the that the "Pound" meant, in fact, nothing

else than a definite quantity of the preVIous metals, and that those who promised to pay a Pound ought to pay that quantity.

cv

PART VIII.:...,..THE COMMONWEALTH CUSTOMS TARIFF.

SECONDARY INDUSTRIES.

(Reservation by Commissioner Mills.)

1571

467. The question of the position and progress of secondary industries in "Western AustrsJia under the Federation was one of the subjects forming part of the Case submitted to.the Commission by the State Advisory Committee.

ALLEGED DIFFICULT, IF NOT HOPELESS, STRUGGLE. 468. The Hon. Norbert Keenan, K.C., in presenting that Case, said, "The position of the secondary industries in Western Australia since the establishment of Federation has alwavs been one of a· most difficult, if not hopeless, struggle against the established secondary industries in the eastern States . . . . The result, therefore, of throwing down the Customs barrier between the State of Western Australia and the highly-equipped (in industrial factories) States of the east led to Western Australia becoming merely a customer of the eastern States.'

OPINION OF COMMONWEALTH STATISTICIAN. 469. Mr. Keenan also put in a table purporting to show that there has been a steadily increasing volume of commodities manufactured in the eastern States entering Western Australia. The table (Z) shows the value of products imported into Western Australia from the eastern States in 1901, £2,559,020, and for 1924, £7,681,416. Commenting on these figures the Commonwealth Statistician (Q.4806) said:-'' That appears to be a very large increase, but there are two facts

to be remembered. One is that the population of Western Australia in that time has rather more than doubled, and the other is that price levels have increased by more than 50 per cent." When corrections are made for the doubling of the population and for a 50 per cent. increase in prices since 1901, it appears that the volume of imports from the eastern States is about the same per head of Western Australian as in 1901.

470. Mr. Keenan put in a further return (Zl) purporting to show the increase per 10,000 of the population employed in secondary industries between the years 1903 and 1923 in each of the Australian States, and he went on to sav :-" This shows in the case of Western Australia an increase of only 5 . 3 "per cent., whereas corresponding figure for New South Wales is 51. 4

per cent., for Victoria 58.4 per cent,, for Queensland 24.4 per cent., for South Australia 27.8 per cent., and for Tasmania 9.6 per cent. These figures demonstrate the fact that practically there was no development in the secondary industries in Western Australia between 1903 and 1923 and that, too) notwithstanding the fact that in 1903 Western Australia had only a very small number of its population employed in the secondary industries."

471. The Commonwealth Statistician in evidence (Q.4682) said, "that the secondary industries of Western Australia, particularly timber, suffered considerably during the war, but that a remarkable recovery has since occurred." He said (Q.4682)-" At the 30th June, 1919, Western Australia, in the number of hands employed per 1,000 of population, was less than any

State in Australia. She then had 42 per 1,000 of population, and Australia had 67. The maximum was Victoria with 85 per 1,000. The figures for 1923-24, that is five years later, show that the number of hands employed in Western Australia had increased by 53 per cent.,* and that is the largest rate of increase in any State in Australia. Tasmania came next with 40, then South

Australia with 34, then Victoria with 28, then New South Wales with 25, and, last of all, Queensland with 10. That is the increase per cent. in the number of hands employed in the secondary industries." Also (Q.4685) dealing with the period 1918-23, the Commonwealth Statistician said, "Over all, there was an increase of 53 per cent. in the number of hands employed in the five years. As to the proportion that the number of hands bears to the population, Victoria

at the latest date available-that is the 1923-24 returns-had 96 per 1,000 of population, New South Wales 72, South A1istralia 71, Western Australia and Tasmania 57 each, and Queensland 56. On a general showing, and considering Western Australia's improvement in the last five years, I fail to see that her case in respect of secondary industries is bad. I have no douht that there

are cases as you, Mr. Chairman, mentioned in regard to jam,. but I think that they should he regulated and controlled by Commonwealth legislation dealing with the matter of internal dumping, and I presume that could be done. The general indication is that even the secondary industries in Western Australia are not in a bad way."

PRESIDENT, CHAMBER OF MANUFACTURES. 472. With regard to the alleged dumping from the eastern States, the President of the Chamber of :Manufactures, Western Australia, said (Q.1471), "We have searched the question of dumping in every way, but the difficulty is to nail down any particular industry which is

* The incluaion of Government workshops (which occurred in 1923) accounts for about 20 per cent. of the increase.

ovi

suffering. The only one we can mention in that way ·is the jam industry. We know of other lines, such as tin-ware, canvas goods, &c., which are being dumped at cost price as surplus production of the factories of the east, but it is impossible for us to give you the exact data on that matter."

PROGREsS . CANNOT BE REGARDED AS· UNFAVORABLE. 473. While the position of Western Australia with regard to the growth of secondary industries since federation is less than that of some other States, the rate of progress for the last five years has exceeded that of the three largest States. The progress of the State in respect of secondary industries on the basis of population cannot therefore be regarded as unfavorable .

. INSTANCES OF SUCCESS AND FAILURE. 474. Specific instances of success in secondary industries in Western Australia, and also of failure, were brought under our notice. Cases in which details were given are summarized under the following special headings relating to Leather, Silk Hosiery, Boots, Rope Manufacture, Jam Manufacture, Porcelain and Paint Manu{acture and Confectionery.

LEATHER.

47 5. A manufacturer of leather, Mr. Benjamin Rosenstamm, who has been successful not only in the Western Australian market, but in the markets of. the other States, in introducing his evidence made some general remarks which are as pertinent_ to the whole question of the success of secondary industries in a small Stat-e. Mr. Rosenstamm said (Q.3456) :-

Unlike the evidence that has already been tendered before the Royal Commission, my remarks will be in th direction of pointing out that Westem Australia, on account of its isolation, labours under many disabilities in regard to the extension of industries, these disabilities will disappear as the population of the State increases . . The process, however; must be slow, unless there is a more rapid flow of people into the State . . ·It has been proved that certain can exist inJVesteni Australia, and tha they can compete with manufacturers in other parts of Australia. Jt is true there are initial difficulties, tbut they are not insuperable in respect of certain industries. As the manager of the knitting mills pointed out, experience can only teach us to what extent concentration on one particular article is necessary in order to succeed . In my opinion, this factor towards success has been neglected by some, and

consequently the industries concerned have failed to become established. The importance of the immediate establishment of many industries, as they exist elsewhere, has beeJYoverrated. . . . . . . Secondary industries cannot be forced upon the people by propagaP,da.; the people will not buy' an -article simply because it is made in Western Australia. The article must _ be equal to, if not better, than that made elsewhere.

To succeed at once is therefore impossible. It _takes time, and, .the process may involve -loss of capital for a few years. Those who have a knowledge of their .W,ill pull provided the shareholders

are content to wait for a return until the unoertaking has been placed on a sound footing. Financial assistance rendered by the Government has given a death:.:blow to many enterprises otherwise might have succeeded if established by private persons. ; • • ·â€¢ . The main disability from which we are suffering is the heavy taxation, State and Federal That .is· principal stumbling block to our progress.

Our primary industries, notably wheat and wo?l, .ate the effects o£ the tariff. Primary

producers would be so mtleh betteroff were certB,m 1tems ofthe tanff reducoo or removed altogether. But in spite of this, and, taking a wide-angled view of the tlnancialpositlonof the producing community, Western Austra1ia is as solvent to--day as in any period of its hi$cy. •; This remark applies equally to the trading community of the State. , . , .

476. The capital of Mr. Rosenstamm's _ company is given at about £100,000. Mr. Rosenstamm attributes his success to the selection of a particular class of leather upon which to concentrate without attempting to manufacture a very wide range. An important Victorian firm has an interest in Mr; Rosenstamm's business, but he himself holds the controlling interest,

and his evidence is that the interest of the Victorian firm in· no way secures him against competition in the eastern States. He says (Q.3485)-" My brand is merelyone among 50 or 60 on the Melbourne market competing in the same line." With regard to the handi_ cap of the Western Australian manufacturer in competing in other States, Mr. Roselli!tamm remarked (Q.3487), "There is onlv the difference of freight as between this place and Melbourne, or Sydney, or Adelaide," a handicap which he finds is by no means insuperable.

SILK HOSIERY.

477. Mr. Norman Leslie Burnell, Manager of the Westralian Knitting Mills, is another instance of a Western Australian manufacturer who has succeeded not only in his own State, but in selling his product in the eastern States in ·competition with the manufacturers established there. Mr. Burnell's story of his experim-enting and his discovery of the "road to success " is tDld in the following words (Q.2487) :-

. . . In our own Westralian Knitting Mills we bega,n with the idea of catering for the local demand and consequently we manufactured a. large number of

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a loss, and have always had more orders than we could supply. But, and this is the point of my reference, the consumption of our lines in Western Australia was not enough, and we had to find a market in the eastern States for part of our product. . . . . . . To successfully compete in the eastern States, a

manufacturer here must produce goods that are valuable and of little bulk, so that transport costs are insignificant. The glass works mentioned above could not hope to export a large percentage of their product, for their goods were cheap a.nd bulky, and consequently transport costs were high. It can be seen, then, that for a long time it is useless to expect many lines to be suecessfully manufactured in this State, and the

question arises as to what remedy should be applied to help the State while carrying its burden.

478. While expressing the opinion that it would not be in the best interests of Western Australia itself for that State to be in a position to set up a tariff against other States, the witness made a suggestion that the imports to, and exports from, Western Australia to the eastern States should be tabulated and classified, and duties calculated on the basis of the present Customs tariff; fifty per cent. of the difference between the import and export duties so calculated to be paid

by the Commonwealth to the Government of Western Australia, say for a period of ten years, when the position could be again reviewed.

BOOTS.

479. Mr. William Mount Gray, President of the Chamber of Manufactures of ·western Australia, stated in evidence (Q.1518) :-Four boot factories which came into existence either before or after federation have gone out of business in consequence of eastern competition. The of those factories are Ezywalkin's, Walton

and Rogers, Clinton's Boot Company, and Weaver's boot factory. The boot manufacturer who gave me the information said that I could state without doubt that although boot manufacturing is reviving, and coming into own by degrees in Western Australia, he doubts whether there are as many boots made to-day, when the population is 353,000, as were made before federation, when the population was 179,000. Another

statement was made, the truth of which is obvious. Where Western Australian boots are placed in certain establishments for sale, it is urged that the eastern-made boots be pushed for sale in preference to the boots of Western Australian manufacturers, for the purpose of keeping the eastern factories fully employed. Importers of boots from the eastern States are interested in boot faetories in the and it is to

their advantage to push the eastern boots in preference to those of Western Australian manufacturers.

480. Charges of dum_pirig against eastern firms were made by various witnesses, and in connexion with boots, Mr. Frank Green, storekeeper, Geraldton, informed the Commission "that a certain class of 'military' boots, made in Victoria, were being sold at prices so much below the prices of Perth manufacturers as to suggest dumping." He also stated that "the traveller

representing the Victorian manufacturer said that this particular boot was being sold at a higher price to retailers in Victoria. The manufacturers had decided to sell them at a lower price in Western Australia because Pearse Bros., Fremant.le, were endeavouring to trade with Victorian retailers."

481. On the return of the Commission to Melbourne, the manager for the Victorian manufacturer in question (Mr. Charles Trescowthick) was called as a witness. The witness stated that" the boots in question made by his firm, instead of being sold at a higher price in Melbourne than Western Australia, were sold at a lower price." He also complained strongly of the dumping by Pearse Bros., Fremantle, in the Victorian, South Australian, and Tasmanian markets; and

as one instance, stated "that the traveller for his firm, on approaching a customer in Geelong, only last week* was told that he need not call there for three months because Pearse Bros. had just supplied them with £800 worth of boots." He also said "that his firm had not sold £800 worth of boots in Western Australia within the last five years." (Q.5458.)

482. The Victorian manufacturer in this case is also a tanner, and in that way has some advantage over a boot manufacturer who has to purchase his leather. The witness also sa.id (Q.5476) :-Again, we have found ourselves right up against Rosenstamm in Perth, who sends huge quantities

of this leather, at a low price, on to the Melbourne market.

ROPE MANUFACTURES.

483. In the course of a statement made to the Commission on 17th Februaq, 1925, the Hon. Norbert Keenan, K.C., Chairman of the State Advisory Committee, stated that "in 1911 a company had been formed for the purpose of manufacturing rope and binder twine in Western Australia. This company obtained the best machinery and began the manufacture

of rope, an article, which up to that time, had been wholly · obtained from the eastern States. The company was developing a satisfactory trade when (the witness said) a combine of manufacturers in the eastern States commenced to undersell the local company, and finally compelled that company to sell out, the purchasers being manufacturers of South Australia,

• The da.te of evidence was 13th May, 1925.

Victoria and New South Wales." The witness also said that "immediately after the transfer of had been effected, the prices in Western Australia we:re raised." The manager of the

new company, however, while admitting that increase in prices had occurred in some cases, but not in all, explained "that the increases which took place were brought about by the quality of the hemps I used. When I came here I found the h.emps the old company were usmg were, on the whole, of very inferior quality, and I ultimately turned them into second-rate goods, and stocked up with superior hemps. That is an important point."

. 484. The manager of the new company, while specifically denying that the old company had been compelled, by price-cutting tactics to sell out, admitted that " his company had no competition from the principal ropemakers in the eastern States." He mentioned one manufacturer in New South Wales, however, apparently not a member ofthe combination, who is a competitor.

485. Whatever view may be formed as to the alleged oppressive tactics of a combine of manufacturers of the eastern States, this episode has not necessarily any special relation to the fact that the original company was formed in Western Australia. Such an occurrence might have taken place where all the parties were carrying on business within one State.

486. A witness who had been connected with the original company as a distributor, but without other financial interests in the company's business, questioned the statement of the present manager that when the new c?mpany came int? superior. hemps were purchased the quality of the goods generally mcreased. On this_ pomt no finality can be reached. The witness .also stated he regarded the new company as merely a part of the combine, and in support of that

stated (Q.558), "If I, as a merchant in Western Australia, sent an order for rope to Melbourne, Adelaide, or Sydney, I could not ·get it, but would bereferred to the Western Australian Rope and Twine Company."

JAM MANUFACTURE.

487. A case which had evidently received a good deal of publicity in Western Australia before the inquiry of the Commission, and which was the ·subject of evidence, is that of a company known as Rayner and Co., Jam Manufacturers, now in liquidation. Mr. Rayner in evidence stated that he took over from the Government the business of a company known as the Associated }i..,ruit-growers' Canning Co., which company had become indebted to the Government to the extent of nearly the wholeof its capital and had eventually been taken over. In respect of the losses of that company, Mr. Rayner said that" speaking-as a practical jam manufacturer, the loss in my opinion was chiefly due to the previous bad management." Rayner and Co. (the witness said) had been successful during the first six months, meeting their liability and making a small net profit, but almost immediately after Septeii19er, 1923, the market was flooded with the product of a South Australian wa.s retaileQ, at dumping prices, the effect being that the local company was forced mto hqmdatwn, though means have been found to continue the business on a reduced scale. The witness was of the opinion that fo:r an industry, such as jam making, free trade conditions would be most favorable, because then sugar couJd he obtained at the world's parity. (Q.2068.) /

488. The South Australian firm of jam manufacturers, whose product was referred to in Mr. Rayner's evidence as having been dumped to his disadvantage, was examined by the Commission in Adelaide, but the evidence is somewhat inconclusive.

489. The manufacturer said that the statement that lO,OOOeases of his brand had been landed in Western Australia in 1923 was incorrect, only 1,000 having been sent forward. Neither the manager nor the secretary could state the prices at which their jam had been sold by the Western Australian firm to whom it had forwarded. That :firm, in a letter to the Adelaide manufacturer (Q.4455), said" that to the best of their knowledge the jam in question was never sold at less than

lOs. 6d. per dozen, or lld. per tin." The Western Australian evidence was to the effect that the brand flooded the market and was retailed at from 9s. 6d. to lOs. 6d. per dozen in Perth stores. The South Australian manufacturer also stated that his products were the subject of keen competition in Western Australia from Victorian firms. (Jones and Co., the A.J.C., and Rosella.)

490. Sir Henry Jones, who has a controlling interest in jam factories in Hobart, Melbourne Sydney, and Adelaide, said "he was unable to state whether Mr. Rayner's figures as to prices at which jams from the eastern States were sold in Western Australia were correct." He stated that " the competition was ceryainly very keen from Adelaide, much keener than the competition from Tasmania. The Adelaide manufacturer manufactured very much cheaper than we in . (Q.6064.) The also stated "jam making is _one of the

keenest busmesses m Australia at the present time, and one on which a large turnover IS required in order to produce a good return upon the capital invested."

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491. Sir Henry Jones pointed out that the Western Australian manufacturer receives · protection to the extent of nearly Is. per dozen tins on his product, that being the rate of freight :from Tasmania.

492. It is impossible, without detailed investigation in various capitals, . which, in our opinion, would be outside the scope of our Terms of Reference, for us to say definitely whether the relative lack of success in jam manufacturing in Western Australia is due to any continuous policy of dumping on the part of manufacturers in other States. Questions of quality are factors in the situation. It may be on a particular occasion an eastern manufacturer may find himself much over-stocked and be compelled to realize at prices below those _ordinarily current. Cases of this kind were stated -by one witness to arise occasionally in any manufacturing business, and the witness who made that statement (Q.2497) stated, "Goods may have been made beyond the demand, and I do not bear any grudge against the manufacturers for unloading in a case like that, so long as it is not continued. If I were overloaded, I should promptly try to do the same thing over in the eastern, States, in order to get rid of my surplus product. Therefore I do not complain about that at all.'' ,,

PORCELAIN AND PAINT MANUFACTURE.

493. A company, called the Calyx Porcelain Paint Company, was formed in 1920 for the purpose of making general domestic earthenware from materials obtained in Western Australia. It is stated in evidence that these materials-kaolin, felspar, and sand-are equal to the raw material obtained in other parts of the world, and that the company make goods similar to the ordinary earthenware goods that are made in the potteries of England. (See Q.2516-18.)

494. The company received some financial assistance from the State Government in the nature of an advance of £10,000 "which was all spent on buildings in order to increase the output and make production more economical. It was then suggested that we should make insulators. In order to put up the necessary plant we borrowed another £3,500. All this money has been spent on building." (Q.2546.)

495. The paid-up capital the company is £27,000. Of the company's output (approximately per annum), about 60 per cent. to 70 per cent. is sold in Western Australia, and the balance in other States at a reduced price. (Q.2533.)

496. The company is not operating at a profit, and while the complaint of the company is specially one for consideration by the Tariff Board, the evidence was tendered to this Commission on the ground that, up to the present, applications to the Board for assistance had been without results. It was stated that no as yet, had been made to the Commonwealth

Government for a bouilty. (Q.2527.) The representative of the company suggested that if Western Australia had her own tariff they might get some protection. ·

· 497. The company's chief difficulty is stated to be competition from abroad. The secretary o£ the company stated that " since their operations began, the wages in England had been reduced by about 50 per cent., and the corresponding reduction in the prices of ware, and that similar conditions exist in Japan and Czecho-Slovakia, both of which compete against Australian manufacturers."

498. The company:also:began the manufacture of paints. The secretary stated (Q.2512)­ " The Calyx Paint Works, which was associated with the Calyx Porcelain Works, showed a loss of over £4,000 after two years' operations, and had to be disposed of at any price owing to the competition of the large eastern States companies."

499. It appears from the evidence of this company, and also from the evidence of another witness interested in the paint industry, that Western Australia is particularly rich in raw materials -oxides and ochres-for paint making. (Q.2571.) 500. The difficulty of the local manufacturer is stated to be the very strong position of

manufacturers in South Australia, Victoria and New South Wales, and it was stated by a witness (Q.2590) that three of the largest firms of eastern manufacturers of paints carry on under one ownership and dispose of their paints under three names in Western Australia.

501. The principal difficulty of the Calyx Company, with regard to their porcelain manufactures, appears to be that of the limited home market, which they have practically over­ taken, and the handicap under which they suffer in connexion with their · trade in other States owing to the freight charges, and presumable breakage losses on their somewhat bulky and fragile goods. Primarily; however, it would appear that any assistance that might be given to the

company's industry is a subject for the Tariff Board, whether the assistance takes the place of additional duty or a bounty.

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CONFECTIONERY.

502. Among the Western Australian manufacturing industries which have the business of Plaistowe and Co. Ltd., Confectiq,nery lVIanufacturers, may be mentwned. This firm did not send a witness to the Commission, but the business was referred to by more than one witness as an instance in which not only was large business transacted within the State, but the company had demon,strated its capacity to compete successfully with ma]fufactures in the other States, its export to those States being on a considerable scale. (Q.6789.)

THAT THE STATE OF WESTERN AUSTRAUA SHOULD BE AllOWED TO RESUME CONTROL OF ITS OWN CUSTOMS AND EXCISE TARIFFS. 503. 'Vith much respect for the opinions of my colleagues, I am unable to concur in their Report on the above subject. The recommendation that the Constitution be altered so that ·for 25 years or a longer period the State of Western Australia, while remaining a member of the

Federation for every "'other purpose, should in effect be constituted a separate domibion for tariff purposes, · may be considered from two points of view :-(1} Itspracticability.

(2} Its desirability :-(a} From the point of view of the State finances of Western Australia. (b) In the intE)rcsts of the oth-er States of the Commonwealth. ·(c) In the interests of the Federal Union.

ITS PRACTICABD.ITY.

504. As to the practicability of that Recommendation, the opinion of the Government of the State was expressed by' the Acting Premier, the Hon. W. C. Angwin, thus:-The View taken: by Governnl.ent in that direction is as follows :--The Commonwealth Parliament has no power· to grant permission to any State to levy ,Pus:to!lls duty, and we do not believe the citizens of

Austri!olia would agree amend the Constitutionto allow Parliament such power. If this were done it would apparently destroy one of the principal conditions of the Federation. , . . . . The suggestion for .the State to levy a tariff independent of other States and against other States will not in our opinion ever be accomplished while the Federa .. tion exists, and attention should be directed to something that can be accomplished.

. 505. With only one or two exceptions, witnesses who expressed .opinions on the matter shared Mr. Angwin's view as .above cited. ·That indeed is,also my . own view.

AS TO THE DESIRABILITY OF THE PROPOSAL, lf'IT WERE PRACTICABLE. . 506. (a) From the point of .view of theState cannot be doubted that if the State

were given the legislative authority of an independent dominion in respect of Customsarid Excise Tariffs (and that is the proposal oCthe Report), a large incteasein total re-venue; chiefly at the expense of the Commonwealth revenue, could be attained, . For the tfuee years ended 30th June, 1900 (i.e., immediately prior to Federation), .the an:inial average of the State Customs and Excise net revenue was about £908,000. * If the quantities per ·head of population of goods introduced

were as great as formerly, this figure would have to be materially· increased · on account of the higher price levels of The population, as ascertained by the Census of 31st March, 1901, was 184,12L The :Ropulation is doubl.e that figure. (3.66,000), it would appear, therefore, that even the lmuted State tanff of that t1me would, 1f m operation to..,day, produce a revenue of at least £1,800,000. The value of the oversea imports into Western Australia for the year 1923-24 was £6,662,729, and thenet Commonwealth Customs revenue collected thereon,

£1,162,195. The Excise duties for the same year amounted to £593,590, or a total of Customs and Excise duties of £1,755,785. Western Australia derives nearly half its importations of commodities from the otherAustralian States. The value of goods transferred from tb.ose States to Western Australia during the year 1923-24 was £6,663,000, or practically the same value as the oversea imports. Some of the largest items introduced from the other States were;..,.._

Apparel and softgoods .. Boots and shoes Hats . . . . . . . .

. Machinery, implements and manufactures of metal Butter Sugar . . . .

Tobacco, cigars, cigarettes

£

853,000

109,000 857,000 506,000 567,000

556,000

. 507. all the goods obtained from the States of kinds which, if they had

been 1mporteddnect from overseas, would have been dutiable, and It seems a reasonable assumption that if duty had been collected upon them at overseas rates, the amount so collected would have * Report by l'tlr. E. T. Owen, State Under-Treasurer, 1919.

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been about the same (the total value being almost identical) as that collected upon the oversea imports. If then the State had been in control of its own tariff during the year 1923-24, and if that tariff had been a replica of the present Commonwealth tariff, the revenue of the State from this source would apparently have been about £3,500,000, or about £2,900,000 in excess of the sum (£585,723) received by the State from the Commonwealth during the same year.

508. Allowip.g for a reduction, say £500,000, to meet the wishes of electorally-poweTful sections of the community who desire the reduction or abolition of certain duties, the increased revenue of the State would apparently be about £2,400,000. This leaves out of account the question of the extent to which the State might be called upon to defray certain expenses now borne bythe Commonwealth, such as old-age pensions, maternity allowances, &c., &c. It is clear, therefore, that from the State Treasury point of view the change would be a welcome one.

509. It is also to be admitted that the State Parliament would, in such a case, be in a position to exercise powers of selective encouragement to industries, which powers are not possessed by individual member-States of the Federation, though in this sphere no doubt the same difficulties would be experienced as elsewhere in ·reconciling the conflicting claims of different classes of producers and those of consumers.

510. There would, however, be serious disadvantages. In the first place, it would probably be very difficult to determine with satisfaction to both Commonwealth and State the amount of contribution which Western Australia should make on account of Commonwealth and services, from the cost of which the State is now exempt.

511. A further drawback is that an immediate effect of the alteration of the Constitution would probably be to deprive some successful secondary industries of the State of an important part of their. trade which now consists of exports to the eastern States. 512. A great constitutional change such as is proposed in the Report cannot be discussed in vacuo. The pre-federation status cannot be restored. Twenty-five years of interstate freetrade have brought into being large interests dependent upon the maintenance of that freedom of

commercial intercourse, whieh the Constitution provides.

INTERESTS OF OTHER STATES.

513. (b) As to the desirability of the proposal in the interests of the other States of the Commonwealth. From the point of view of other States such a change would probably be looked at differently, according to each State's financial and economic position, and perhaps according to the length of the term for which Western Australia was to have fiscal independence. One State at least, Tasmania, would probably be stimulated to press its o\vn demand for a similar concession. The States, in which manufacturing is most highly developed, and which have the greater part of the interstate trade with Western Australia, supplying to that State between

£6,000,000 and £7,000,000 worth of goods annually, would not unnaturally regard the severance of Western Australia from the economic unity of the Commonwealth as unjustly barring against them a door which they had a right to regard as having been permanently opened to them by the Constitution.

514. The present relatively small development of secondary industries within Western Australia is almost certainly due largely t9 its limited population, 366,000, and to the absence of any special natural advantages not possessed by other States. Its industrial progress would perhaps compare not unfavorably with that of other communities of similar numbers.

INTERESTS OF FEDERATION.

515. (c) Its desirability in the interests of the Federation. From the point of view of the Federation as a whole, I am strongly of opinion that to divorce Western Australia for a term of years from the fisc.al union with the other States would be a mistake of the first magnitude. 516. 'l'hroughout the half century during which the question of Federation was discussed,

the first great matter was that of interstate freetrade. Without a provision for the imposition of a uniform tariff, with its accompaniment of interstate freetrade, the Commonwealth Constitution could not have come into being. That provision is the real economic focus of the Federation. (Defence, a question of a different order, came later.) Every State, large and small, had held up to it as an inducement to enter Federation the enlarged market which the establishment of

the Commonwealth would provide, free of any Customs barriers. 517. At present Western Australia presents the picture of a prosperous people and an imperfectly-filled State Treasury. With a West€rn Australian tariff operating against the rest of Australia, and a Commonwealth tariff operating against Western Australia, the picture would

probably be one of a lesE prosperous people and a fuller State Treasury.

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518. The secondary industries of the State whioh are e±porting to the eastern States would find that part of their market closed. ·

519. The secondary industries of other States which are exporting, on a much greater scale, to Western Australia would find that part of their market closed:

520. The provisions of the Constitution which ensure interstate freetrade are of central importance. To shake the belief in their permanence and in the safety of the interests which are built upon them would be both dangerous and unnecessary. The Constitution itself provides simple means whereby tlie transitory* financial difficulties of Western Australia can be relieved

without the immense dislocation which would be caused by the adoption of the proposal in the Report. The assistance now being given linder those provisions should, as recommended elsewhere, be extended.

.. 521. For the above reasons it is, in my opinion, highly undesirable that the Recommendation

of the Report, to the ·effect that Western Australia be given complete independence of the Commonwealth in ail tariff matters, should be adopted.

(Signed) STEPHEN MILLS.

PART XII.-FEDERAL AND STATE ARBITRATION COURTS.

(Reservation by Commissioner Entwistle.)

· 522. I recommend that the industries of W:e1:1tern Australia (and of all other States) be relieved, as much as possible, from the overlapping o£ the Federal and State Arbitration Courts, and for that purpose that tlie jurisdiction· of . the Commonwealth Court of Conciliation and Arbitration be confined strictly to Shipping and Shearing. ·

.(Signed) J. ENTWISTLE.

PART XUI.-NAVIGATION ACT.

(Reservation by Commissioner Mills.)

523. On the above subject my colleagues make a recommendation, that Part VI. (The Coasting Trade) of the Navigation Ac_ t be repealed . . 524. That is a question which has been the subject of inqlliry and report by a Royal Commission constituted for the specialpurpose of considering the effect of the operation of the Navigation Act.

525. That factappearsto me to indicate that the subject was not intended to be covered by the general words of our Terms of Reference{though, in:{}identally, we heard a little evidence on the matter, all adverse to the Coasting Trade Provisions). 526. Holding that view, I prefer, therefore, to refrain frotn making any recommendation in relation to the Navigation Act.

(Signed) STEPHEN MILLS.

* The remarkable recovery of the State finances, as evidenced by the sharp reduction in deficits during l&et three (3) years, the latest financial year, 1924-25, closing with a deficit of only £69;000, snggest that with a moderate· degree ·of 11.8sistance the recuperatiTe powers of the State will, within a reasonable period, restore a condition of financial health.

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PART XV.-THE NORTH-WEST OF WESTERN AUSTRALIA.

(Reservation · by the Chairman.)

· 527. With great respect, I dissent from the opinion expressed by my colleagues that "it is not desirable for your Commission to make a specific recommendation in respect to a different form of control of the North-west of Western Australia," and that "any question of surrender of territory should be initiated, if a.t by the State Government of Western Australia."

BALANCE-SHEET NOT AVAILABLE.

528. To what extent the financial disabilities or the State of Western Australia arise out of the efforts made by the State Government in the past to develop the North" west, it is impossible to determine withorit a balance-sheet showing the revenue derived from the North-west, and the expenditure in or on behalf of the Unfortunately, such a balance-sheet was not

available, the advice of Lord Derby in 1883, when discussing the question of granting Responsible Government, not having been followed, that a. separate account should be kept of the revenue raised a.nd expended in each district of the Colony." (Letter to Governor Broome, 23rd July, 1883.)

"IDGHLY DANGEROUS TO LEAVE NORTH AND NORTH-WEST UNOCCUPIED." 529 •. lion. Norbert Keenan, in presenting the case on behalf of the· State Gover:nnlent and the Advisory Committee, said that " by far the :most important problem which faces the Governml:!nt of Western Australia is that of immigration, and particularly of settlement of the la.nds in the great tracts of the North." . "It would be not only impolitic; but highly dangerous . and manifestly unjust, to lM.ve the North-west and North unoccupied and undeveloped."

(Evidence, page 18.)

ALLEGED ANNUAL LOSS OF £318,036.

530. Mr. Keenan submitted a table (see Appendix XI.) showing that the State of Western Aust:ra.lia. had expended from general loan fund in the North-west to 30th June, 1924; exclusive of interest, £2,681,935 2s. 4d., oil- _ '

Railways and Tramways. Harbour and River Improvements. Public Buildings. . Roads and Brigdes.

Miscellaneous. Water Supplies, Stock Routes, &c.

'felegraph Lines. Federal Buildings. Development . of. Tropical Agriculture. Wyndham Freezmg Works (30.12.23). Development of Mining and Erection of

State Batteries.

l.ight State Shipping Service.

531. To this amount of £2,681,935 2s. 4d. was added the following:-Loss Wyndham Meat Works .. · £526,273 13 9

Loss State Steamers . . 300,528 2 7

Loss Port Hedland-Ma.rble Bar Railway 171,495 0 0

Grand Total

£998,296 16 4

£3,680,231 18 8

532. An annual loss of £318,036 on account o£ the North-west of Western Australia was made up in the following manner :-Approx:.-Annual Interest at 5 per cent., Sinking Fund at ! per cent. =5! per cent. on -£2,681,935 . . . . . . . .

Add annual loss on-

F.2517.-10

State Shipping Service Wyndham Meat Works Marble Bar Railway

Annual loss of North-west

£147,500

90,278 68,550 11,708

£318,036

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WESTERN AUSTRALIA ASKS THAT COMMONWEALTH GOVERNMENT SHALL SHARE BURDEN. 533. The above-mentioned grand total of £3,680,231 18s. 8d., said Mr. Keenan, had been expended between the years 1890 and 1924 in furnishing to those who were dwelling in the North.:. west the most necessary facilities of life. "The cost of these services may well be described as a premium paid by Western Australia to secure the safety of Australia as a whole. All that Western Australia asks is that the National Government shall share with her, on some equitable basis, the cost of ensuring this safety." (Evidence, page 26.)

STATEMENTS AS TO LOSS CHALLENGED. 534. When the report of the evidence alleging a loss of £318,036 on the North-west of Western Australia was published in the daily press of Western Australia, the statement was immediately challenged by the Hon. G. W. Miles, M.L.C., who wrote to the press that if proper accounts had been kept, it would be shown there was a good deal of revenue obtained by the State from the

535. Giving evidence before your Commission, Mr. Miles said:-" Of the 5,000 people residing in the North-west, I estimate that 2,000 are income tax payers. The population in the South has not the same earning capacity ; you could not get 500 out of 5,000 in the South who would pay the same as those in the North. The Northern people are paying for every penny spent in the North, and for all the losses made, notwithstanding which we have a little to spare each year. So the North is not the burden on the South as has been put up to you by the Advisory Committee." (Q.l791.)

REVENUE FROM LAND.

536. Mr. G. W. Simpson, Under Treasurer of the State of Western Australia, in reply to a request from the Commission· for a return showing the revenue received by the State from the North-west, said "it was not possible to get a return of the taxation collected from that source; but in regard to land rents, a return has been taken out, and the following are the figures :-The annual rental for all land leased north of the 20th parallel amounts to £24,029 per annum, and south of the 20th parallel and north of the 26th parallel, £67,668, or a grand total of actual rentals of £91,697." (Q.5185.)

"LOSS ON NORTH-WEST NOT SO GREAT AS ORIGINALLY THOUGHT." 537. Asked as to expenditure in the North and North-west of Western Australia, Mr. Simpson replied have already given you a return in the case of our loan expenditure, and I think, so far as the ordinary expenditure in the North is concerned, it. would be only slightly in excess of the revenue that we. received for other than land rents." (Q.5186.)

Question : " Would you say that the country north of the 26th parallel is a financial burden to the State of Western Australia " Mr. Simpson: "I would not say that it was a. burden to any extent beyond the cost of the upkeep of the steamers and the Wyndham Meat Works." (Q.5189.) ·

Question : " W auld you say that the revenue received from land and incomes would balance the expenditure " ·

Mr. Simpson: "It would balance the interest on loan expenditure other than trading concerns. Of course, you understand that I am speaking without any definite figures before me. It· is impossible to get them out without a tremendous amount of work. · . I do not mind telling you that from the 1st July instructions are going to be issued that will enable us

to have these figures compiled for the future, so that they will be available in the case of emergency; but they have never been segregated in the past." (Q.5190.) Question : " Your case as prepared suggests that you lose the interest on that large sum of £3,680,231, money borrowed for the "

Mr. Simpson : " The loss on the North-west was not as great as was originally thought, when the case was first presented." (Q.5191.)

LOSS OR A PROFIT EQUALLY WRONG.

538. If the people of the South of Western Australia incur a loss through trying to govern No!th of Western Australia, they should not be called upon to bear that loss. If the South

IS makmg a profit out of the North, as suggested by the Hon. G. W. Miles, M.L.C. (Q.l791), and by the Hon. J. Scaddan (Q.3339), that is equally wrong.

STATE SHOULD SURRENDER TERRITORY. 539. However, whether the North-west of the State of Western Australia is a burden to the South of Western 1\ustralia, or otherwise, people of the South would be wise, in my judgment, to transfer* that portiOn of Western Australia above the 26th parallel of South latitude to the

* The Parliament of the State of Western Australia has full power, under Clause 124 of the Constitution, to make this transfer­ A new State may be formed by separation of teiTitory from a State. but only with the consent o£ the Parliament thereof."

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Commonwealth Government on eertain conditions, viz., that the Commonwealth Government shall take over that portion of the public debt of Western Australia incurred by the State oil behalf of the North-west, and that the Commonwealth Government shall undertake, within a reasonable period after the transfer, to create a new State, and provide the North-west of Western Australia with a Government similar to that obtaining in the Territory of Papua.

OPPONENTS SHOULD REMEMBER THE HISTORY OF WESTERN AUSTRALIA.

. . 540. Australians in the who insist on clinging to a Territory they cannot

poss1bly effectively govern, ·and Australians m other States of the Commonwealth who object to the creation of a new State in the North of Western Australia because there are only 5,000 white persons in the Terr.itory, should remember the history of :western Australia itself.

GOVERNMENT IN THE HANDS ,OF ONE MAN.

541. From the 30th December, 1828,* until the close of 1830, the Government of Western Australia was vested by His Majesty's Government solely in the hands of Captain Stirling, of the Royal Navy, who had nothing to guide him save a few general instructions, chiefly urging him to guard against an improvident disposal of the lands of the colony.

NOMINEE LEGISLATIVE COUNCIL APPOINTED.

542. In 1829 there were only 652 Europeans in Western Australia. In in accordance with British principle that every part of the British Dominions ought to possess a Government, the Imperial Government passed a law enabling the King, with the advice of the Privy Council, to make and to authorize any three or more persons to make all necessary laws, and to constitute all necessary courts for the peace, order, and good government of the settlement. A Legislative Council was appointed, consisting of the Governor (Sir James Stirling), the Senior Military Officer next in command, the Colonial Secretary, the Surveyor-General, arid the

These officers were also appointed as an Executive Council for the assistance and advice of the Governor. There were then only 2,000 persons in the colony of Western Australia, apart from aboriginals. LEGISLATIVE COUNCIL MADE PARTLY ELECTIVE, PARTLY NOMINEE.