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1929. 1281

THE PARLIAMENT OF THE COj\IIMONWEALTH OF AUSTRALIA.

REPORT OF THE

ROYAL COMMISSIC)N

ON

CHILD ENDOWMENT OR F AMIL.Y ALLOWANCES.

Presented by Command; O'fMred to be printed, 18th Ma1'ch, 1929.

[Cost of Papw :-Preparation, not given; .1,050 copies; approximate cost of printing and publishing, £172.)

Printed and Published for the GoVERNMENT of the CoMMONWEALTH of AusTRALIA by H. J. GREEN, · · Government Printer. Canberra.

No. 20.-F.24.-PRICE 5s. 4D.

GREETING:

1283

COMMONWEALTH OF AUSTRALIA.

GEORGE THE FIFTH, by the G1-a<,e of God, of Great Britain, Ireland and the British Dominiona beyond the StAU King, Defender of the Faith, Emperor of India:

TO our trusty and well-beloved THoMAs SHULDHAM O' HALLORAN, Esquire, K.C.; J OHN CuRTIN, Esqui·re; IvoR EvANS, Esquire; Mrs. FLoRENCE MILDRED Musmo, M.A.; STEPHEN MrLLS, Esquire, C. M.G.

K NOW ye that We do by these Our Letters Pat-em, issued in Our name by Our Governor-General of Our Commonwealth of Austral·ia acting with the advice of Our Federal Executive Coun<-il, and in pu·rsuan<-e of the 00'/I.Stitution of Our said Commonwealth, the " Royal Commi!siona Act 1902-1912 ",and all other p

(I) The general question of the institution of a system of child endowment or family allowances in Australia, with particular. referen<-e to its social and economic effects, and, if the institution of Mtch a system is recommended-

(2) The methods by which &uch a system could be established;

(3) The relation of such a system to wage-fixation, having rega.rd to the interests of the wage-earner, of generally, and nf the community ;

(4) The application of a system of child endowment or family allowances to persons whose wages are not regulated by law or who are not engaged in industry as wage earners :

( 5) The limit of income, if any, subject to which payments by wa.y of child endowment or family allowances should be made :

(6) The methods of financing and giving effect to a system of child endowment or family allowances, with partiC11lar reference to the practicabilily and desirability of providing the necessary .funds from public revenue, from industry, or fro m both source 8, and in what proportions, and upon what p1·inciple ;

(7) The methods of administering ltUch a system:

(8) The cost of a system, including administrative expenses and reserve" if thought necessary:

(9) The legal methods of giving effect to any system recommended, with particular reference to the existing distribution of Commonwealth and State p

(10) Any matters of public interest which may arise as the result of the institution of a system of child endowment or family allowances.

AND WE appoint you the said THoMAs SHULDHAM O'HALLORAN to be the Chairman of the sa·id Commissioners :

AND WE direct that, for the purpose of taking evidence, three Commissione·rs shall be S'ujji.cient to constitute a quorum, and may proceed with the inquiry under these Our Letters Patent :

AND WE require you with as little delay as possible to report to Our Gove-rnor-General of Ou·r said Commonwealth the result of your inquiriu into the matters entrusted to you by these Our Letters Patent :

IN TESTIMONY WHEREOF We ha·ve caused these Our Letters to be made Patent, and the Seal of 01tr said Cotmnonwealth lo bt thereunto affixed.

WITNESS our right trusty and well-beloved Counsellor, JoHN LAWRENCE, BARON STONEHAVEN, Knight G1-and Cross, of Our Most Order of Saint Michael and Saint George, Companion of Our Distinguished Service Order, Our Governor-General and Commander-in-Chief in and over our Commonwealth of Austmlia, this twenty-eighth day of September in the year of our Lord One thousand nine hu.ndred a.nd twenty-seven, and in the eighteenth year of our reign.

STONEHA VEN,

Governor-General.

By His Excellency's Command,

S.M. BRUCE, Prime Minister.

ENTERED on record by me, in Register of Patenls, No. 56, page 28, this thirtieth day of Septembe·r, One thousand nine hundred and

twenty-seven.

P. E. DEANE.

·-

CONTENTS.

TERMS OF COMMISSION

TABLE oF CoNTENTs

REPORT OF CoMMISSIONERS-Preliminary

MAJORITY REPORT-The Chairman and Commissioners and Mills

Preface Introductory Statenaent

Section 1. Constitutional Aspects

Section 2. Economic Considerations

Section 3. Child Endowment or Family Allowances-Existing Systems­ A.-Europe .. B.-New Zealand C.-New South Wales D.-Conanaonwealth Public Service

Section 4. Inter-relation of Wage Fixation and Child Endowment

Section 5. Industrial Legislation and Practice of Arbitration Tribunals­ A.-Conanaoriwealth B.-New South Wales •

C.-Queensland D.-South Australia E.-Western Australia F.-Victoria and Tasmania

Section 6. Regulation of Wages and Working Conditions-Variations in Statutes and in Practice Tribunals

Section 7. Conflict of Industrial Laws-Judicial Comment

Section 8. Basic Wage Commission' 1920-Judicial and other Comments

Section 9. The Basic Wage-Standard of Living, Conditions, &c.

Section 10. Have Effective Wages increased 1 ..

Section 11. Endownaent for Wives and Children embodied in Basic Wages and in Taxation Systems

Section 12. Child Endowment-

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P.AGE

3

5

7

9

9

9

10

15

21 26 29 32

34

35 36 42 44

45 46

of

46

49

50

52

60

62

A.-Basis of Claims-How far supported 63

B.-Opinions of Economists 66

C.-If Child Endowment be established-should there be a Commonwealth Scheme or separate State Schemes . . 70

D.-Child Endowment-Provision of Full Maintenance-Objections 71

E.-Endownaent Schemes excluding one or more Dependent Children 73

F.-Endownaent Schemes without Government Aid-Unit for Basic Wage-Cost o£ Endowment 75

1 G.-Birth Rate in relation to Child Endowment 78

H.-Eugenic control . . 79

Section 13. Terms of Reference 2 to 10-General Comment 80

Section 14. Welfare Services 84

Section 15: Salient Points 90

Addendum to Majority Report 102

MINORITY Mrs, Muscio and John Curtin 103

•

1287

COMMONWEALTH OF AUSTRALIA.

REPORT OF THE COMMISSIONERS.

To His Excellency the Right Hon?rc:ble !OHN LAWRENCE,. STONEHAVEN, Knight Grand C:oss of the Order of and Saint George,

of the S ervwe Order, Governor-General and Commander-

in-Chief in and over the Cmnrn.onwealth of Australia. ·

MAY IT PLEASE YouR ExcELLENCY:

We, the Commissioners appointed by the Royal Letters Patent (the Terms of which appear on page iii) have the honour to report as follows:-As soon as possible after our appointn'lerit, we assembled in Melbourne to make necessary arrangements for the conduct of our inquiry.

The matters referred to us for inquiry and report involved among other things an examination of existing legislation and administ ration relating to Child Endow1nent, Wage Fixation, Maternity and Child \Velfare Services, and. Charity Organizations, &c., throughout Australia. _In order to ascertain the nature and extent of these activities, and also in order to allow interested bodies to place their views before the Commission, it was found necessary

to take evidence in all the States of the Commonwealth. Prior to the visit of the Commission to each State full publicity was given by advertisement in the principal newspapers. Formal invitations were extended to all interested public bodies or persons, to p,lace their views before the Comn'lission.

Witnesses who appeared and gave evidence before the C01nmission included official representatives of Comn1.onwealth and State Government Departments, members of Professional Staffs attached to the Departments of Economics and Commerce at various Universities, members . of the medical profession connected with Maternity and Child Welfare activities, representatives

of a number of larae commercial undertakings (including banks), also of organized bodies, chiefly organizations of ·and of workers, women's leagues and associations, charitable and philanthropic bodies, nursing societies, kindergarten unions, baby health centres, &c. · The Commission is indebted to witnesses for much carefully prepared and valuable evidence.

The places visited and the number of witnesses examined were as follows :-Sydney 75

Melbourne 51

Brisbane 17

Adelaide . . . •. 24

Perth . . 27

Hobart.. 31

Canberra 2

Total 227

Discussions of the subject, together with opinions and recommendations of Members of the Commission are embodied in two separate reports. The first of these (the maJonty report) is signed by the Chairman and Evans Mills. The seconli (the minority report)

is signed by Commissioners l\1rs. Musmo and J . Curtin. · We wish to place on record our appreciation of the conscientiou$ services rendered by our Secretary, Mr. T. F. Ijyons.

T. F. I. .. YONS, Secretary.

We have the honour to be, Your Excellency's most obedient servants, T. S. Ch9,irman.

JOHN CURTIN. IVOR EVANS. F. M. l\IUSCIO. STEPHEN Ml:IALS.

Melbourne, 15th December, 1928.

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1289

MAJORITY REPORT.

The Chairman and Commissioners Evans and Mills.

PREFACE.

The investigation of the question of Child Endowment is attended with peculiar difficulties. Announced as a new e_vangel, with to "banish real poverty from every employee's home" (The Next Step, p. 45) It created around Itself an atmosphere of warm emotion .

. a large number of people, including some text writers, and many witnesses before this Child End<;>wment ceased to be a socio-economic problem, to be dispassionately

stud1ed, and became a passionately-voiced dogma, any criticism of which renders one "suspect" as lacking the capacity to recognize, and the will to grant, justice. ·

Beneath the claim, seldom avowed, there was in many instances a clearly perceptible hope that the appealing suggestion of child happiness would make Child Endowment an easy means of bringing about a "vertical" re-distribution of wealth.

To understand the question, sympathy is essential.

To surrender to the sway of a sympathy which usurps the place of patient thought and careful tracing of causes and effects, is to defeat the very purpose which sympathy hopes to achieve. , '

·The lure of the short-cut, of the generous-sounding formula, made deceptively simple by the omission of vital faetors, is strong. ·

But, if the cause of a firmly-based social justice is to be served, that lure must be resisted.

_INTRODUCTORY STATEMENT.

_ This brief statement is placed at the threshold of our report in order to answer in advance the first question likely to arise in the minds of readers :-Do the writers of this Report recommend child endowment or While the statement answers that first question in the negative, it leaves untouched many important points connected with the subject, which we hope will be elucidated by a perusal of the -succeeding pages.

The scheme contemplated in the Terms of Reference is one in which the necessary funds would be provided from public revenue, or from industry, or from both sources. The assumption seems to be (and this was the point of view of "\vitnesses) that this provision of funds should be wholly an addition to the sums now paid as wages. •

In our opinion, such a scheme should not be adopted. Some of the reasons for that conclusion are that :- ·

(1) The claim that child endowment in this form is necessary on the ground that wages are insufficient, has not, we think, been established. (2) The additional taxation necessary to finance from public revenue a scheme for full maintenance of dependent ehildren as claimed, would cause disastrous rea..ctions. (3) if "industrv" were directly levied upon to provide the funds, or an important

proporti;n of the fUnds, the result would be not less injurious. An immediate effect would be an increase in the cost of living, partially defeating the object of the levy. Also there would be great danger of adding to unemployment, and so increasing rather than diminishing the total of distress in the community. (4) The basic wage contains elements of child e·ndowment much more than sufficient,

if directly applied, to provide tor all existing dependent children. If the basic wage be not reduced by the elimination of those elements, and if funds be applied to provide a general scheme of child end9wment, the result, in our opinion, would be a marked flush of extravagant spending and a sharp rise in the cost of living, shortly followed by a check in prosperity, by a more or less severe -collapse in values, and by serious unemployment. ( 5) By removing from parents all financial responsibility for their children, parental

responsibility would be weakened, incentive to effort reduced, and the sense of unity of interest between parents lessened.

10

(6) Any available public money could be more beneficially used than 1n providing child endowment. So far as the residual cases in the community which need some assistance are concerned, we are satisfied that the expenditure of sums much less than those required, even for a small measure of child endowment,

would, if applied to· the extension and perfecting of existing social services, secure greater benefits. _

(7) VIe are of opinion that essential conditions precedent to the establishment of any scheme of child endowment should be-(1) that the Commonwealth Parliament should have first obtained full and exclusive power-

( a) to control wage fixation, and "industrial matters" as defined in Industrial Statutes·; ·

(b) to establish and control child endowrnent. (2) that any existing State legislation . instituting scheme of child endowment be repealed. (3) [a condition of another order] that the basic wage shoulq.. be reduced

by elimination of the provision for childrep_ which is now an integral part of that wage. (8) Unless both Child Endown1ent and wage fixation were under the exclusive control of one tribunal, new and prolific causes of industrial discontent and

disputes would be created.

SECTION· t.

CONSTITUTIONAL ASPECTS.-COMMONWEALTH · LEGISLATIVE POWER WITH REGARD TO CHILD ENDOWMENT.

1. Under Paragraph 9 of our Terms of Reference, we are required to inquire into and report upon .the legal methods of giving effect to any system of child endowment recommended, with particular reference to the existing distribution of Commonw.ealth and State powers.

2. vVe had, therefore, to consider whether, if the Commonwealth Parliament desired to legislate for the establishment of Child Endowment, it possesses the necessary powers, and if not. what further powers it should obtain.

3. On this question we sought the assistance of learned Counsel, viz., Sir Robert Garran, Solicitor-General for the Comrnonwealth ; Sir Edward Mitchell, K.C. ; Mr. Owen Dixon, K.C. ; and Mr. Maurice Blackburn. We have included an opinion of Dr. Evatt, K.C., of the New South Wales Bar, expressed in his capacity as a member of the Legislative Assembly of that State.

4. Sir Robert Garran was of opinion that under Section 96 of the Constitution, the Commonwealth could hand over moneys to the States, "earmarked" for the purpose of Child EndoWinent, just as it has done ·with regard to roads. He was a.lso of opinion that under Section 81 of the Constitution, Child Endowment could be declared ·one of " the purposes of the

Commonwealth", and a Commonwealth scheme instituted. But in that event, the legislation of the Commonwealth on the subject would have no effect on State legislation of a similal' kind. He thought that in order to carry out a scheme which would be Commonwealth-wide, the Commonwealth could proceed only by way of aid to the States, contro1Iing all necessary details through agreements with the States. Sir Robert Garran was of opinion that under the general power the Commonwealth could devise a system of child endowment ·payments without reference to Arbitration Statutes, or to other Federal or State laws, " but always on the a_ssumption that the appropriation power is good.''

5. On the question of the power of the Qommonwealth Parliament to appropriate moneys (under · Section 81) for purposes which it declares to be " purposes of the Commonwealth," Sir Robert said that he has always considered Section 81 as conferring "an absolute power of appropriation for general purposes, and the Commonwealth Parliament has always acted on that supposition." He cited a number of Acts such as the Precious Metals Prospecting Act_1926; the Oil Agreement Act 1920-23-26; the Science and Industry Endowment Act 1926; the Federal Aids Roads Act, and many others.

6. He further mentioned a number of items taken from annual Appropriation Acts, in which the Commonwealth had voted money in respect of matters which at first sight do not appear to be directly referable to any· particular one of the specific powers of the Commonwealth Parliament. ·

11

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Sec. I.-Constitutional Aspects.

. ? . -Sir Robert. pointed out that the Commonwealth -might acquire complete power over matters., either by means of an amendment of the Constitution, in accordance with the

of Section 128 of the Constitution. oT by a transfer of legislative power from the StateR

under Section 51 (xxxvii.) '

. 8. Sir said, with regard to the latter method:-" My own opinion is that any

IS and when a power is -referred by the States to the Commonwealth,

It IS somethmg like an. amendment of the Constitution. Thereafter the Commonwealth has that .power, and the States cannot take it away." . however, that the question is a very difficult one, and he did not like to express an opm1on with· any great confidence.

. 9. Questioned as to whether it would be possible for the Commonwealth to legislate for Child Endowment under Section 5L (xxiii) of the Constitution, which gives authority for the Commonwealth Parliament_ to legislate with regard to Invalid and Old-age Pensions, Sir Robert said he did not think that provision gives the Commonwealth power to deal with the matter .

. 10. If the Commonwealth appropriated money for the purpose of Child Endowment, IS doubt as to .whether a · Commonwealth Statute dealing with that subject could validly

enact provisions regulating the proper administration of the rnoney, and imposing penalties upon persons acting fraudulently in connection ·with applications . . 11. _ Sir Edward Mitchell, K.C., was of opinion that the Commonwealth has no power to enact such a Statute, "unless and until 'references' were made bv one or more of the State Parliaments to the Commonwealth Parliament under section 51 of ' matters ' which would enable such legislation to be validly enacted. Under that section 'the law' so enacted would only extend td States by whose Parliament the matter was so referred or which afterwards adopted that law." ·

Sir Edward also said:-" It is possible that the High Court might hold there was power to such legislation under Section 51 (xxxviii)-although I do not think it would." He said further that he does not agree with the view held by some lawyers, " that legislation of the kind suggested could be enacted upon the ground that the Commonwealth can

dispose of its moneys as it pleases and accompany gifts with the imposition of conditions and penalties for the breach of such conditions-practically as done in the ' Baby Bonus ' legislation." His reason for from that view was stated thus:-" I do not agree with this

view-which· would necessitate giving to the words 'the purposes of the Comrnonwealth' in section 81 of the Constitution-a much wider meaning than I think would be upheld, although no doubt, if the Commonwealth Parlian1ent simply confined its legislation to distributing money, it may be impracticable to attack the legislation for the want of a eompetent Plaintiff who could

show it or he was injuriously affected by such legislation. But where any rule of conduct is enforceable by some sanction like a penalty in respect of matters which the Commonwealth

Parliament has no ·power to legislate about-I think that any person upon whom sueh penalty was imposed would be a competent Plaintiff to successfully challenge the constitutionality of such legislation." 12. Mr. Owen Dixon, K.O., dealing with the sarne point by way of a concise answer to a _specific question, said:-" The Commonwealth Parliament has not power to legislate for the

establishment of a co1nplete system of Child Endowment, including the raising by taxation or otherwise of the moneys necessary to pay such endowment, and providing for the imposition of penalties for breaches of the Act." 13. In a fuller discussion, Mr. Dixon said, inter alia:-" The subjects of legislative power

confided by the Constitntion to the Parliament of the Commonwealth include none which would enable it to enact a law provjding a complete scheme of child endowment. If the

Parliament determined on a policy of child endoWIJlent, its purpose might perhaps be sufficiently accomplished by the indirect use of the following powers :- ,

l. The power to make laws with respect to taxation, but so as not to discriminate between States anrl parts of States (Section 51 (ii) ). 2. The power which the Parliament has. long assumed to authorize the expenditure of moneys without limitation of subject matters.

3. The power to make laws with respect to census and statistics. (Section 51 (xi) ). · 4:. The power to make laws with respect to matters incidental to the execution of any power vested by this in the rarliament or in the Government

of the Commonwealth. (Section 51 (xxxix) )

12

Sec. I.-Constitutional Aspects.

'' But the real difficulty lies in the question whether in truth the Parliament does possess a power to authorize the expenditure of revenue upon child endowment.'' "It has assumed from time to time that it possesses a power to appropriate revenue for any purpose without regard to the limitation of subject-matter which the Federal system imposes."

14. Mr. Dixon then some Commonwealth Statutes of the kind referred to, including the Maternity Allowance Act 1912, and expressed the view (in with that of Sir Edward Mitchell, though contrary to that of Sir Robert Garrail) that such appropriations are invalid. He quoted fro:rn a memorandum on the subject composed by a of the Committee of Counsel of Victoria (of which Mr. Dixon was a member) and submitted by him to the Royal Commission on the Constitution of the Commonwealth. In that memorandum American cases were discussed and it was pointed out that the United States Congress, like the Commonwealth Parliament, has disregarded theoretical objections, and has acted on the view that Congress may appropriate money in aid of matters which the Federal Government is not constitutionally able to administer and regulate. The Victorian Committee concluded that :-" Upon its true interpretation the Commonwealth Constitution restricts the power of Parliament to appropriate money to subjects assigned to the Federal legislative power." . · & •

15 . Their opinion includes the following points:-Appropriation of money is an exercise of the power of law-making, and not a separate power. A Statute to be valid must deal with one or some of the enumerated subjects of

Commonwealth legislative power. Child Endowment is not one of those enumerated powers, and, therefore, it is not competent for the Parliament to appropriate money for the purpose of such endowment.

16. Mr. Dixon said upon Sir Robert Garran's view of the power of appropriation, the Commonwealth could proc.eed by the indirect methods above suggested.

17. vVith regard to the point mentioned by Sir Edward Mitchell as to who would be a competent Plaintiff to attack the constitutionality of a Statute appropriating money for a purpose outside the legislative competence of the Parliament, Mr. Dixon remarked that: "since the repeal of section 4-7 of the Surplus

Revenue Act 1910, by the States Grant Act 1927, it would seem that the States could not."

IS. It appears that the point is discussed more fully in the evidence submitted by Mr. Dixon to the Royal Commission on the Commonwealth Constitution.

19. Mr. Maurice Blackburn summarises his opinion on the question the powers of the Cornmonwealth Parliament to legislate on the subject of Child Endowment as follows:-" In my opinion the Commonwealth Parliament can-" (a) validly impose taxation having as its motive the provision of a fund for Child

Endowment; "(b) validly grant the proceeds of that taxation to the States upon terms conditions constituting a Scheme of Child Endowment to be administered by the States ; ·

" (c) validly (except as against the States) itself apply the proceeds of the taxation to a scheme of Child Endowment to be ,administered by the Commonwealth; "(d) validly (except as against the States) make theverific.ation by solemn declaration, according to the State la.w of the declarant's residence, a condition of the

payment by the Commonwealth of Child Endowment payments." 20. Mr. Blackburn's argument with regard to Clause (c) above, is that-" If the Parliament votes money for some purpose not within the legislative competence nor authorized by the Constitution, I think that it will be 'surplus revenue'

(see section 94) and that the States, or any of them, could claim that it belongs to the States (see the expressions on this point in New South Wales v. the Commonwealth -1908-7 C.L.R. 179). If the suggested application is assailable,it is assailable on the part of the States only." · .

13 1293

Sec. I.-Constitutional Aspects.

With regard to clause (d), Mr. Blackburn's explanation is in these words :-

" B"?-t if the Act were to impose penalties for breaches of its provisions, persons might successfully question the Act's validity, provided that the penal clause

. to could not be severed from the rest of the _Act, i.e. , struck out without

rmparrmg the completeness of the remainder."

"It is conceivable that the only breaches of the Act would be breaches of the obligation upon a claimant for pa"Yment, truly to answer questions and make As State. laws provide for the making, on practically any subject, of

false statements in which render the declarant punishable

as for perJury, It appears to me that the Commonwealth Parliament might validly enact that each claimant of an endowment payment must verify his claim by Statutory Declaration 'according to the law of that State in which he might reside."

. 22. Speaking in the New South Wales Legislative Assemblv on the New Sout.h Wales Child Endowment legislation, Dr. Evatt said:- "

"So far as Federal Legislation is concerned, I think Mr. Bruce is right. (He had quoted a statement made by Mr. Bruce at the Premiers' Conference in 1927: 'It can only be dealt with nationally and by co-operation between the Commonwealth and the States'). I do not think the Commonwealth Parliament could of its own motion pass a law of this nature. It has no power to legislate with respect to pensions with the exception of invalidity and old-age pensions; therefore, legislation on the part ·of the State Parliaments will be needed." (Page 1173) . . . . . . . .

"As I read the Constitution, one way in which the __scheme can be made a national scheme covering the whole Commonwealth is for the States to refer the question to the Federal Parliament. . "

Mr. Arkins.;:_" Do I understand you to say that Mr. Bruce could not move in this direction 1 " Dr. Evatt.-" I do not think he could of his own motion, but he could give money to the States . . . . .

Recently, the High Court in the Roads case decided that althop.gh the Commonwealth Parliament cannot make a direct allowance in respect of the main roads of the · Commonwealth, it can pass a law giving money to the States to carry out such a scheme. Similarly it has power to pass a law allocating money to the State

Parliaments so that the States can proceed with Child Endowment according to their several constitutions." (Page 1174.) '

23. Another question submitted to counsel was as follows:- .

"Has t}le Commonwealth power, as part of any such scheme or independently of any such scheme, to establish a tribunal for the purpose of fixing a basic wage for ,the Commonwealth 1"

24. Sir Robert Garran, Sir Edward Mitchell, K .C., Mr. Owen Dixon, K.C., and Mr. Maurice Blackburn were all of opinion that the Commonwealth Parliament has no such power.

25. All the counsel were also of opinion that a Statute introdur.ing Child Endowment could not be validly passed under the provision of Section 51 (xxiii), which gives power to the Parliament to legislate upon Invalid and Old-age Pensions. .

26. To the question whether the Commonwealth Court of Conciliation and Arbitration has. power to include in an award a direction that all employers in an industry covered by the award shall in addition to specified wages pay, say £13 per annum, in respect of each dependent child of the employees covered by the Award, Sir Edward Mitchell's opinion was thus expressed :- -

" I think there n1ight be a valid dispute as to such a matter­

within Section 51 _ (xxxvii) in which case such a direction might be inserted in a valid Federal award, and if it happened that all the emp]oyers in the industry were parties to this award they would be all bound. No employer -in the industry not a party would be bound. would be no power to make a common rule in the indw;;try . ·-to the effect stated in the query."

14

Sec. I.-Constitutional Aspects. 27. Mr. Owen Dixon replying to the same question said :- .

"The Commonwealth Court of Conciliation and Arbitration could not include in an award a direction that in the industry employers hound by the award shall, in addition t.o specified wages, pay say £13 per annum in respect of each dependent child of the employees covered by the award, unless this was incidental to the settlement of an industrial dispute extending beyond one State." . 28. Mr. Maurice Blackburn answered the same question by saying:-

"If such a payment as is s11ggested in this question were claimed in an industrial dispute, I think that such a ·might validly be included in the

award made in settlement of the dispute." ·

29. It will be seen that on important points the learned counsel consulted are not all in agreement. The only undoubted legislative power of the Commonwealth Parliament with regard to the subject of :Child Endowment appears to be a power under Section 96 of the Constitution to " grant financial assistance " to the States, and, by agreement, to the application of the moneys handed over, :in accordance with speci:fied terms and conditions.

30. Sir Robert Garran appears to be of opinion that the Parliament could act under Section 81 of the Constitution, and in effect, make Child E'ndowment a "purpose of the Commonwealth" under that section, by appropriating money for the pmpose,_ and (although this is not stated unreseryedly) could pass a machinery Act regulating the administration, and imposing penalties for breaches of the Act. On this point, the other learned counsel consulted held a contrary opinion.

31. Tt may be noted that among the many Acts passed by the Commonwealth Parliament appropriating money (the Maternity Allowance Act is an example) for a purpose not within the enumerated powers of the Parliament, and which Acts in the opinion of the Victorian legal witnesses are void, not one has ever been attacked in the High Court. . Perhaps the prin.cipal reason for this immunity may be found in the view that most o£ those Acts effect purposes which are generally approved by the community, and impose no direct burden or disability on any individual.

32. In view of the conflict of legal opinion as to the power of the Parliament to deal comprehensively with the subject of Child Endowment, the existence of a power to legislate on that subject, in the same way as was done in the case of the Maternity Allowance, must be regarded as, at best, doubtful.

33. It is not for this Commission to attempt to solve this difficult problem. If at any time a Commonwealth Government considers that a Commonwealth scheme of Child Endowment is desirable, and economically possible, it might choose to act on the view that it possesses the necessary legislative power to effect its purpose. If it is of the opposite opinion, it will no doubt seek the necessary power by existing constitutional methods. ·

34. It would, in our opinion, be calamitous for a Commonwealth Government to introduce a scbeme of Child Endowment, unless the validity of the necessary legislation was beyond dispute. 35. From the evidence submitted to us, it appears that there are only two possible ways in which the Commonwealth Parliament can obtain_ power-( a) to control wage fixation, and (b) to establish and control a scheme of child endowment* These two methods (equally applicable

to both matters) are :-(1)

By an alteration of the Constitution under the provisions of Section 128. . . By reference of such matters to the Parliament of the Commonwealth, by the Parliaments of all the States, pursuant to the power conferred by Section 51 (xxxvii) of the Constitution. · ·

36. It is not necessary to elaborate the question of the obtaining of such powers bv an alteration of the Constitution, but in our opinion, the Commonwealth Parliament should not act upon a reference of the proposed powers by a State or States, unless all the States joined in such reference.

37. A possible objection by the States to surrender either power, without knowing the details and incidence of the scheme which the Commonwealth Parliament proposes to adopt, could be overcome by all the States agreeing to surrender the power to pass an Act setting out a scheme mutually agreed upon by all the States. From Sir Robert Garran's evidence, it would ..

*As to (a) the present la.ck of power is undoubted; a.s to (b) the balance of legal opinion obtained by the Commission indicates t.hat power is lacking under th.&t he&d &lao. . ·

15 1295

Sec. I.-Constitutional Aspects.

appear there. a_re difficulties in this and in any event it would probably

prove too rigid. Crrcumstal?-ces nnght anse rep.dermg amendments desirable. A further sur::ender of State powers m1ght be necessary . before the Commonwealth Parliament could vahdly effect those amendments. 38. An alteration of the Constitution by the prescribed method of a referendum (under

Section 128) is, in our opinion, the better method.

SECTION 2.

SOME ECONOMIC CONSIDERATIONS .

. 39 .. A series of witnesses, chiefly, but not wholly, representative of Trade Union Orgamzat10ns, the institution of a Commonwealth Scheme of Child Endowment providing the_full cost of mamtenance for every dependent child under the age of fourteen. A few witnesses desrred to the age to sixteen, or even beyond, if the child were continuing some educational

course, techrucal or otherwise. Without exception the Trade Union representatives urged that over and above the basic wage as determined in accordance with present methods, the rate of should be sufficiently high to cover the full cost of maintenance of the child, and

funds should _be provided by Commonwealth taxation. Stated in money, the

maJonty of such witnesses considered that lOs. per week per child (or more) should be paid. In our opinion that claim can only be considered as applying to the first child. If there is more than one child, the cost per child would diminish (see para. 601.) •

40. The annual amount necessary to make such a payment in respect of all dependent children in the Commonwealth who are under the age of fourteen, would be about £50,000,000, or more than double the amount collected in 1925-26 by both Commonwealth and States as Income Tax; that is, assuming the amount were to be raised by means of Federal and State Income Tax, the present return from those taxes would require to be trebled. Expressed in another form, this sum of £50,000,000 is equivalent to over 57 per cent. of the total taxes

(£87,000;000) .raised in the financial year 1926-27 by both Commonwealth and States, including the large revenue (over £43,000,000) from Customs and Excise. If, as many witnesses appeared to think both desirable and practicable, that sum of were to be raised by

means of increases in the Federal Income Tax, the yield of that Tax would have to be about three and a half times as great as it was in the peak year 1921-22 (when the maximum rate was 8s. 6d. in the £) and about :five and a half times as great as the average yield for the last four years. For further discussion of this matter, see paragraphs 515-521.

41. Witnesses- favoring such a large scheme of endowment were, for the most part, disinclined to enter upon a consideration ofthe practicability, or of the economic reactions of so enormous an addition to the burden of taxation. A reply commonly made to questions upon the subject was that if Australia could afford to raise hundreds of millions for the War, it could afford to raise the sums required for Child Endowment. In one or two instances, the witnesses, on being pressed, admitted that the production of the country would need to be increased in order to provide the necessary funds. Otliers were content to urge what in their opinion is the social desirability of Child Endowment, while disclaiming any competence to discuss the financial

difficulties or the economic effects. 42. Such proposals necessitate a general view of the present economic position of the Australian community. 43. The first and most important fact is the magnitude of the Australian (Commonwealth and State) Public Debt, which at the 3oth June, 1927, stood at £1,043,481 ,224. * The 1928-29 Budget Papers show that during the financial year 1927-28 the net increase in the Public Debt was £33,000,000. This includes " Loans for States and Federal Capital Commission," the amounts of which are not separately stated.

44. In 1914 the total Public Debt of Australia was £318,000,000, so that in thirteen years the amount has more than trebled. Nearly £300,000,000 of the increase is War debt, but if that be left out of account, it will be seen that the public debt more than doubled in the years 1914-1927. 45. The :five years 1929-1933 will be critical years in relation to the Public Debt, for the that huge sums of debt mature those years, and will have to be redeemed

or converted. In 1930 alone, the debts maturmg (Commonwealth and States) arriount to £107,000,000, while during the :five 1929-33 inclusive, the amounts falling due total about £256 000 000 of which £152,000,000 represent State loans, and the balance Commonwealth of the Commonwealth loans redeemable during that period were raised over-sea,

but State over-sea loans maturing during the same term, amount to over £39,000,000. * This is exclusive of Municipal Debt totalling about £40,000,000 •

•

16

Sec. 2.-Econornic Considerations. 46. Not only are the five years 1929-33 of critical importance with regard to the maturing debt, but if we look a little farther ahead, we f!nd that in the ten years succeeding 1933, additional amounts totalling £276,000,000 must be rede.emed or converted. During the fifteen years -

1929-1943, a total of about £532,000,000 of debt falls due, or an average of about £35,500,000 per annum. _

4 7. The annual interest on the total public debt as at 30th June, 1927, is £52,000,000. Of that sum £31,000,000 are payable on account of State debts, and the balance on account of Commonwealth debts. Roughly about 50 per cent. of the total interest payable is in respect of loans raised in Australia.

48. During 1926-27 the amount paid out of revenue by the Commonwealth Government for Sinking Funds in respect of Commonwealth Public Debt was £3,310,426. Under the recent Financial Agreement between the Commonwealth and the States, the Commonwealth, in respect of the year 1927-28 contributed towards the Sinking Funds on State debts} a sum of £820,274.

The commitment of the States in this respect was £1,650,000. 49. The following table shows the rapidity with which the Public Debt of Australia has grown during the five years, 1922-23 to 1926-27 :-

1923 1924 1925 1926 1927

At 30th June. Net Public Debt of Australia.

£

905,484,946 951,849,136 963,146,844 1,012,24 7,061 1,043,481,224

Net Public Debt Per Capita.

£

159 3 9

164 0 3

162 8 10

167 9 8

169 4 8

It will be seen that during the four years 1923 to 1927 the total Public Debt increased by £138,000,000, or at an average rate of £34,500,000 annually. In the two years of greatest increase, 1923-24 and 1925-26, the State debts were increased by £41,000,000 and £38,000,000 respectively.

50. Looking at the immediate pre-war period, we find that from 1909 to 1914 the average increase in States public debt was about £13,000,000. 51. From 1914 to 1919 (War period) the average was £15,800,000; from 1919 to 1924 the average was £38,000,000 ; while for the two years 1924-26 the average was £24,500,000. The average increase in Commonwealth Public Debt for the same two years was about £21,500,000.

52. It is impossible to forecast at what rate the Australian Public Debt will be added to from year to year by loans of " new money", though a decline in the rate of increase appears inevitable. 53. The inclusion in the recent Financial Agreement between the Commonwealth and

the States, of permanent and properly safe-guatded provisions for a Sinking Fund applicable to all debts, suggests that the obligations of the community may be stated in the form of yearly payments. The rate of Sinking Fund chosen, one-half per cent., will extinguish the debts to which it is applied in a period of about 53 years. The present total of interest, as shown above, 0 f Commonwealth and State debts is £52,000,000 per annum and Sinking Fund payments about , £5,750,000.

54. The indebtedness of Australia may then be stated in the form of an obligation ·to provide, during 53 years, an annuity of nearly Presuming the continuance of the Sinking Fund payments for that period, the present aggregate indebtedness will, at the end of the period, be extinguished. '

55. The provisions for a Sinking Fund, in respect of each future loan, are on . the same lines, that is to say, the sinking fund payments, accumulated at compound interest, will, in 53 years after the date of issue of the loan, amount to the principal sum to be repaid. 56. Of the total volume of State debts about 48 per cent. is represented by Railways and Tramways; nearly 15 per cent. by Water Supply, Sewerage and Water Conservation; 9 per cent. by Harbour and River Works ; 12 per cent. by land for Settlement, and advances to settlers ; 3l per cent. by Public Buildings, and the balance chiefly by other public works and purposes.

57. While many of the works carried out by means of State loans are earning income, in some cases sufficient to pay the whole of the interest, there is a large and growing balance of interest, particularly in connection with the Railway Services, which, during the last six years, has had to be provided by way of taxation. In most State Railway Services, the growth of motor .

•

lT 1297

Sec. 2.-Economic Considerations.

competition has. element in the capacity of undertaking to pay

full on Its as well as working expenses. An Item of cost which has

grown !apidly, has borne heavily upon Railway finance, is the increase in wages

by Arbitration Courts. More recently, costs have also been added to by reduction in

workmg hours.

58. \Yith regard. t o Aust ralian R ailways generally, the position for a number of years has been unsatisfactory. As to State Railways, the amount payable as interest on

from loans on construction and equipment, which in 1917 was £7,865,153, had

nsen In 1927 to £14,059 ,909. A disquieting fact is that for the same eleven years, taking the whole of States as a unit, there has been a large and growing net loss each year after debiting full workrng and. interest. The aggregate net loss under this heading is over £27,000,000, or an average O.l ab out 2,500,000 per annum. It appears certain that the amounts of net loss

thus shown would not fully represent the actual deficit, if the undertakings had been charged to the proper ext ent -vvith necessary for depreciation and obsolescence. For

example, in the table from which the above :figures are taken (Bulletin No. 19, " Transport and Communication," Commonwealth Statistician) it is shown that in Victoria, for each of the six years ending 30th June, 1927, there has been a net profit. The evidence of Mr. Harold Clapp, Chief Commissioner of Victorial!: Railways, shows that those surpluses would have disappeared,

and would have been replaced by deficits, if the revenue had been debited with proper charges for depreciation, &c. 59. Mr. Clapp said that for several years it has been impossible to pro.vide, out of revenue, the large sums which, in a healthy condition of the undertaking, would be set aside annually for

depreciation and obsolescence. He stated that for the year ended 30th June, 1927, the estimated depreciation an1ounted · to £426,000. _This was excluding from consideration the accrued depreciation of past years. The provision made out of the year's revenue for the 1927 depreciation was £200,000, thus leaving £226,000 as a debit, which presumably will ultimately be written off, or fo rm part of a· " funded" debt. Mr. Clapp subsequently forwarded a statement in which he said-

" Since I gave evidence before your Co1nmission, it becan1e necessary to investigate the question of accrued depreciation in Inore detail than had been done before, and when giving evidence before the State Royal Commission on the Railway Department I stated that the estimated accrued depreciation was £16,536,000." 60. With regard to the amounts added by wage-fixing bodies, Mr. Clapp stated that between 30th June, 1919, and 30th June, 1927, wage-fixing tribtmals had increased the annual pay-roll of the Victorian Railway Employees by £2,275,000, and he estimated that at the 30th June, 1928, that sum would be by another £200,000.

61. The estimate submitted by the Victorian Railways Commissioners to the Commonwealth Arbitration Court during the hearing of the 44-hours case, showed that the increased cost in labour and material due to the proposed reduction of hours to 44 per week, would be £636,256 per annum. 62. With regard to the Fede1·al each of the. years in question, 1917

has shown a net loss, after payment of working expenses and Interest. The trans-Australian hne, however, has for the last eight years, shown a steadily decreasing amount of net loss, and appears to have nearl,Y. reached the point at the revenue will be

to cover

expenses, ana Interest on loan expenditure. The line exhioits no such promise,

the annual deficiencies having largely incTeased during the last three years. 63. As to New So uth vVales Railways, it is probable that the position is somewhat similar to that of Victoria, but the Commission was unable to obtain full information from the Department. Published :figures show a loss for the year ended 30th June, 1928, of £1,609,267. ·

· 64. With regard to Australian Railways, the. evidence to the Commission

showed that for the year ending 30th June, 1927, the defi?It on current £1,118,252. It was stated that increased wages, decreased hours, and Improved working conditions had added over £900,000 per annum to the cost the Railways,. as with 1915, and that

the application of the 44-hour week decision of Federal Arb1trat1on would add another large sum to the working cost. It was that at eVIdence qfebruar;:, 1928)

a case was before the Commonwealth Arbitration Court whiCh, If It resulted In granting the Union demands would cause a further addition to the Wages Bill of about £200,000 per annum. Witness also said (Q. 10761) that" when we say the deficit of the last year was £1,118,252, that is without taking depreciation into account.'.'" .And in. reply to further he made it clear that accumulated sums in respect of depreCiation, whiCh had not been proVIded for out of revenue,

amounted to £1,562,719. F.24j28.-2 ·

18

Sec. 2.-Economic Considerations.

· 65. The Railway Commissioner, Mr. \V. A. Webb, in his Annual Report, dated 3oth August, 1927, made a frank disclosure of the financial position of the South Australian Railways. He says :- " Since the beginning of the Railways, for more than 50 years, no provision has been made, prior to the previous year, for debiting to each year's operations the proper depreciation of assets, nor has any reserve been created to take care of the necessary charges for renewals and replacement of obsolete plant, rolling-stock and equipment . . . The present balance sheet for the first time presents the true situation."

66. Mr. Webb showed that the total capital expenditure on the Railways at the 30th June, 1927, was £18,728,256, and that the annual interest on that sum is £1,352,516. 67. "The accumulated deficit in working to the 30th June, 1926, was £3,98i,099. Due to the debiting of accumulated depreciation charges, as previously mentioned, the accumulated

deficit to the 30th June, 1927, is £7,061,430." The' 9ommissioner said :-" A sum of £3,596,303 represents the cost of assets which are no longer in existence . . . . . . . . . . . and also the depreciation of rolling-stock

still in use. The Railways are debited with interest on this amount." Some of the causes of the losses have been already mentioned (paragraph 64). Others are, increases in the cost of coal (which has added over £250,000 to the working account compared with 1915) and increased rates of interest. "The Railways are debited with full interest on all capital expenditure on new and developmental lines, although most of this added mileage does not even earn sufficient to pay working expenses.''

68. Published figures in respect of the year ended 30th June, 1928, record a deficit of £999,862. 69. As in other States, road motor competition takes from the Railways a considerable volume of high-class traffic.

70. In a paper recently presented to the Victorian Branch of the Economic Society by Sir Lennon Raws, the accumulated deficit upon Business undertakings, Commonwealth and States, up ,_ to 30th June, 1927, was stated at nearly £60,000,000. Of this sum Railway deficit, Commonwealth and States, accounts for nearly £44,000,000, more than half of which (£24,000,000) is the Queensland :figure.

71. In all States the position taken up by Railway witnesses was that the Railway services are in a position in which it is impossible for them to bear the cost of any child endowment scheme superimposed upon wages. 72. Taking the States as a whole, the balance of interest on State debts which has to be

covered by taxation (largely due to losses on State Railways) has grown from £6,600,000 in 1921-22 to £12,300,000 in 1926-27. The evidence suggests that this item will increase year by year. 73. While the total debt of Australia has been rising so rapidly, as above indicated, taxation has risen even more rapidly. A prepared for the Commonwealth Arbitration Court in the forty-four hours case, and quoted by His Honour Judge Lukin, gives a comparison of the Public Debt ; Taxation ; Interest on the Total Debt ; and the value of production in Australia in the years 1911-25 :-

- Net Total Debt. Taxation. Interest on Net Total Debt. Value of Product.lon.

£ - £ £ £

1911 .. . . . . 273,059,605 18,546,273 9,662,753 189,098,000

1925 .. . . . . 965,870,844 74,505,273 51,113,845 449,157,000

Percentage increases between these years for each :-254 302 429 138

"That is to say that while our net total debt in 1925 vvas three and a half times, our taxation four times, our interest on net total debt five and a quarter times, our production was only two and one-third times what each was in 1911." (See also

pagragraphs 87-89). ·

74. Several witnesses referred to reductions made since 1922 in the rates of Commonwealth Income Tax, and took the view that it is both desirable and justifiable to restore the high rates then in force, or even to raise those rates materially, in order to provide funds for Child Endowment.

1299

Sec. 2.-Economic Considerations. . . 75. The amounts raised respectively through the medium of Commonwealth Income Tax, and the State Income Taxes, for the financial years 1920-21 to 1926-27, are shown in the followmg table :- · Financial Year. Commonwealth Income Combined Commonwealth Tax. State Income Tax. and State Income Taxes collected. £ £ £ : 1920-21 .. . . . . 14,351,408 10,180,024 24 ,531,432 1921-22 . . . . . . 16,790,682 9,543,424 26 ,334,106 - 1922-23 .. . . . . 12,904,513 9,667,762 22,572,260 1923-24 . . . . . . 11,057,555 10,420,760 21,478,315 1924--25 .. . . . . 11,136,344 12,014,662 23,151,006 1925-26 .. . . . . 10,858,046 13,225,091 24,083,137 1926- 27 11,126,278 15,521,962 26,648,240 r . . .. . . ' 76. It will be seen that 1921-22 was the financial year in which the Commonwealth Income Tax collections reached their maximum. The rates of Commonwealth Income Tax, first imposed in 1915 during the War, had been raised by successive percentages until they stood at a point more than 70 per cent. above those first prescribed. During the years subsequent to 1921- 22; several reduqtions in the rate were approved by Parliament, and the scale of rates at present is about 8 per cent. above the scale originally prescribed in 1915. These reductions in rates caused corresponding reductions in the collections. The amount collected in. 1926-27, £11,126,278, is about 34 per cent. less than the collections of the peak-year. 77 . It will further be observed from the Table, that the successive reductions in amounts levied under Commonwealth · Income Tax have been increasingly off-set by additions · to levies made under State Income Taxes. The combined Commonwealth and State Income Tax collections for 1926- 27 exceeded the collections for any previous year. Successive additions t o State Income Tax levies have gradually absorbed the whole amount by which the Commonwealth collections have been reduced. 78. With regard to the Land Tax of the Commonwealth and of the States, the position may be more shortly stated. The Commonwealth collections of Land Tax have varied from about £-2,200,000 at the beginning of the six-year period (1920-1921 to 1925-26) to £2,500,000 at the end of that period. The State collections on account of Land Tax during the same period have increased year by year from £1,100,000 in 1920-21 to £1,400,000 in 1925-26. 79. In considering the pressure of taxation, it is essential to take account of the sums collected from the community under the heading of Customs and Excise, as well as under the so-called "direct" taxes upon incomes and upon land values. The following table shows the Customs and Excise collections for the six-year period 1921- 22 to 1926-27 :-Year. Castoma Revenue. Excise Revenue. Total Custollli! ·and Excise Revenue. £ £ £ 1921-22 . . . . .. 17,328,310 10,302,049 27,630,359 1922-23 . . . . .. 22,597,306 10,274,823 32,872,129 1923-24 . . . . .. 10,572,902 35,750,784 1924--25 . . . . .. 26,405,161 10,787,620 37,192,781 1925-26 . . . . . . 27,839,889 11,358,989 39,198,878 1926-27 . . . . . . 31,792,642 11 ,754,003 ' 43,546,645 . 80. It will be observed that while the Excise Revenue has increased gradually until in 1926-27 it was about 14 per cent. higher than in 1921-22, there has been a large and rapid increase in the Customs Revenue, the difference between the figures of the final year compared with those of the initial year exhibiting an increase of about 84 per cent. The Customs and Excise collections for the year 1927-28 showed a decline of £2,105,000 as compared with the figures of preVIous year. 81. The Customs and Excise collections are of great importance in relation to the cost of living, since the amounts paid as Customs Excise Duties are more certainly "passed to the ultimate consumer, with profit add1twns, than are payments made by way of direct taxation.

il

20

Sec. 2.-Economic Considerations.

. .

82. Production.-One of the questions of greatest importance is whether production in relation to population is, or is. not, keeping pace with the_ great increases in the community's liabilities.

83. In a ·study . of Australian Productive Efficiency by C. H. Wickens, the

Commonwealth Statistician, published in the Economic Record for November, 1927, Mr. Wickens gives a table of the productive efficiency Index, 1908 to 1924 inclusive, seventeen years in all. Comparing the first five years of the period with the last five years, Mr. Wickens concludes that there is evidence that in respect of all industries combined there has been in the twelve years, from the middle of the first five years, to the middle of the last five years, an increase of I. 66

per centum in the productive efficiency per person engaged. That table was in evidence before the Commonwealth Arbitration Court in the 44-hours case (see page 66 of Report of that case) . . His Honour Judge Lukin, who quoted the table, with Mr. "\Vickens' conclusions based upon it, quoted also from a memorandum prepared by Sir George I{nibbs, in which, referring to the same table, Sir George said:-" It was apparently adn1itted that for the purpose of comparing the productive efficiency at different dates, the four years, 1910, 1911, 1912, and 1913 might very appropriately be compared with the years 1921, 1922, 1923, and 1924. The indexes for the

two sets of years are given as 1058, 1000,. 1008, 1053, the total being 4119, or average 1030; and 1032; 99-9, 976, and 1079, the total being 4086, or average 1022." -He adds :-" Thus one sees that despite all advance in technical organization, despite all improvements in machinery; and all reactions which tend · to more efficient production, there is, according to these figures, a retrograde effect, taking the four into account."

84. The incl'ease in equipment referred to by Sir George Knibbs, and particularly in the unit of horse-power, which is commonly used in making comparisons In thes_ e matters, does not appear in Mr. Wickens' discussion o£ the question, his table apparently being based merely upon the n1oney valuy of production of the different industries, with the necessary corrections for variation in nur_nbers of persons engaged, and changes in price level.

85. In evidence before this Commission, l\Ir. P. J. Pringle, representing the Victorian Chamber of Manufacturers, referred to the table in question and to the use made of it iri the Arbitration.Court. Quoting the manufacturing production for 1911, per head of the estimated populati9n, namely £41 5s., Mr. Pringle took the corresponding :figures for the years 1921-22 and 1925-26, showing that they produced an average result of £39 6s. 2d., as the value of manufacturing production per. head of the population. This, he said, means that every inhabitant has produced 5. per centum less than in 1911. He also said that while the · wages paid to employees in manufacturing industries in the Commonwealth increased on the equated value of money from £92.26 in to £109.61 in 1925-26, or 18.82 per centum, the value added per employee to

materials in the process of manufacture rose from £164 to £176, or only 7. 31 per centum, notwithstanding that each employee had at his ,command 2. 96 horse-power in 1925 as compared with 1.10 horse-power in 1911, or an increase of 169 per centum.

86. It may be noted that in Mr. Wickens' discussion of this matter, he gave separate figures for agriculture and kindred industries for the same period of seventeen years, and concluded from an examination of those figures, that, comparing the first five years . of the period with the last five, there is evidence, for the interval of twelve years, of an increase in productive efficiency per person engaged of 3 per centum for this group. As already indicated, different :results may be obtained from the figures of this period of 17 years, according to whether the

average of the whole of the years is taken, or whether, ·as in comparisons by Mr. Wickens and by Sir George Knibbs, separate groups within the period are selected. In any case, the figures appear to take no account of the great increase in the instruments of production, particularly in horse-power, referred to by Mr. Pringle.

87. It is difficult to take any other view than that there is, at the best, a lack of advance in productivity where, as in manufacturing industries, the aids to such advance have been most liberally supplied. -

. 88. On the pastoral and agricultural side, we find the foundatio?- of Australian prosperity m two gTeat staple products-wool and wheat. These are almost entirely dependent upon the movement of world markets.. While have been tisfactor:y for some years, no prophecy .be made as. to the continued of those pnces, partiCularly as to wheat. Expert

·oprmon to the the trend of wheat prices will probably

be such as to emphasize the need ror caution In Australian :(inance. ·

21 1301

Sec. 2.-Economic Considerations.

H9. Summarizing, we find as the chief features of the present economic situation in Australia :-(1) A very large total of Public Debt.

(2) A very large annual interest charge.

(3) A large and increasing total of Public Debt unrepresented by existing assets, or represented by assets not full interest upon their cost. ,

(4) A high and growing taxation. Taking the years 1921-22 to 1925-26, we find that Commonwealth taxation increased by £5,000,000 and States taxation by £6,000,000. For the years 1926-27, the combined total of Commonwealth and State taxation was £87,000,000. (5) In production, an absence of advance such as might reasonably have been expected.

90. This slight reconnaissance of the Australian position seems to us to .lead to the inescapable conclusion that any proposals, (such as for Child Endowment) involving a serious addition to taxation could only claim acceptance, if it were possible to demonstrate that their adoption would produce benefits more than compensating for the difficulties and disadvantages which such additional taxation would inevitably bring in its train. . ·

91. In our opinion, that has not been demonstrated, and study of the evidence does not suggest to us that such a demonstration is possible. ·

92. Some of the specific proposals involving taxation are discussed in paragraphs 40 and 518-524.

SECTION 3.

CHILD ENDOWMENT OR FAMILY ALLOWANCES-EXISTING SYSTEMS.

A. EUROPE.

93. Child Endowment or Family Endowment, as a part of the social or industrial scheme, of modern life, has a short history. So far as it has formed a part of Government administration, it appears to have had its beginning in France, in 1862, in the reign of Napoleon III., when by an Imperial decree an allowance of 10 centimes a day for each child below the age of 10 was granted to seamen up to the rank of Quartermaster of over five years' service. In 1908 this allowance was transformed into a house bonus for all married seamen, without consideration of the number of dependent children. In 1913 the principle was applied to officers, non-commissioned officers,

and soldiers attached to civilian offices and the Ministry of Marine, as well as to members of the gendarmerie employed by the_ Ministry for the Colonies. The allowance in ·these cases was 200 francs a year for each child after the first, and up to the age of sixteen years.

94. Various grants to employees of specified departments had been made from 1899 onwards. apparently ·without any decision to extend such a system to Government Departments generally. The effect of the war upon prices, and consequently upon the cost of living, created difficulties which in 1917 caused the French Government to deal with the matter in a more complete way. For all civil servants whose annual salary did not exceed 4,500 francs, an allowance of 100 francs a year was granted for each child under 16 years of age. .Where there were notmorethan two children the maximum qualifying salary -v-vas 3,600 francs. Following some minor changes it was prescribed in November, 1918, that salary limits should be abolished, and the amount of allowance fixed at 350 francs for each of the first two children, and 480 francs for each subsequent child. This increase in the amount of allowance where there were more than two children in the family was avowedly based upon the desire to encourage large families, and the belief that such

allowance would have an effect on population increase. The 1918 increase of allowance was not, however, the final increase, for in 1924 the scale applying to officials was increased from 350 francs per year for each of the first two children to 495 francs, and to 840 francs for the third and any subsequent child. The example of the State was widely followed by other authorities and by the governing bodies of French cities. - · · .

95. According to Professor Douglas, "Wages and the Family," page 50, it seems probable that the 1,000,009 persons who are in government service receive annually over 400,000,000 francs in the form of allowances. This total of 1,000,000 persons appears to include about 220,000 employees of municipal and other authorities who, in the narrow sense of the word, are not State

employees.

22

Sec. 3.-Child Endowment.-A. Europe . . : 96. The family allowance movement in France is notable, not only because of its adoption by the Government and by municipal and other authorities created by the State, but also because of the wide range of voluntary action to effect the same purpose. Two of the great Railway instituted· family allowance in 1890, and a third in I892. The four other great

railway companies in France had also established similar. systems by I9I6, but there were great differences, both as to the amounts paid and the conditions of benefit. In I9I6, at the instance of the Government, the railway companies agreed upon a uniform system with an increase on the general scale of allowances then. current. · All employees who were he_ads of families and .in receipt of salaries less than 6,000 francs a year, were granted allowance for every dependent child under sixteen years on the scale:-

For the first child 50 francs per annum

For the second and third child . . 100 francs per annum each

· For each of the following children 200 francs per annum each

. 97. In 1919, the Ministry of Labour subsidized the funds from which allowances were being paid to Railway .workers, to an extent sufficient to make the scale the same as that for all Government employees. The number of children of railway employees in that year who benefited from the allowance was 327,000, and the total amount of allowance about 120,000,000 francs, or an average of 366 francs for every dependent child. Of this total, 65,000,000 francs

was contributed by the State, and 55,000,000 by the railway companies. The total number of employees affected was 416,700. 98. Many of the tramway services and other public utilities adopted the system of the Railway companies and that formerly prevailing in the Government Service, namely, an annual grant of 330 francs for each of the first two children, and 480 francs for each child beyond the second ..

99. In another branch of industry, namely, coal-mining, some of the companies had, even before the war, voluntarily introduced schemes of family allowances. The movement was greatly extended during and after the war, and in that industry is now almost universal. l\1any of the allowances are the result of agreements between employees and employers. The rates, however, have not been unified as they" were in the railway systems. In the north, and in Pas-de-Calais, the allowance was fixed in 1920 at· one franc for each dependent child for each day worked by the father, but most of the allowances in the mining industry are lower than this.

In some cases the payment of the allowance is made conditional upon the miners working a certain number of days per month, excluding those lost through illness. In many cases, allowances are made for dependent wives as well as children. 100. In I924 the total amount paid out in allowances by the mining industry was approximately 80,000,000 frBJncs, equivalent to between 5 per cent. and 6 per cent. of the wages

paid. It be noted that, while the amounts originally fixed by way of child allowances in the fuining industry were .the result of agreement by joint committees representing the employers and em.ployees, . as time went on these rates were occasionally altered in connection with the . settlement of industrial disputes. On a number of occasions when such disputes arose, arbitrators, appointed by the Government, were called in, and their awards frequently embodied provisions for family allowances .and at a level higher than that fixed by the joint committees. The 1927 scale for State employees in France was:- ·

For the first child . . 604 francs per annum

For the second child 806 francs per annum

For the third child . . I ,209 francs per annum

For the fourth and each subsequent child I ,41I francs per annum

: IOI. Apart from the adoption of a system of Family Allowances by the State, and by such great groups as the Railway Companies and Coal Mining Companies, a very considerable movement took place among manufacturers and other employers, who individually controlled much fewer number of employees. The movement among this section of the community appears to have owed its origin and incentive to M. Remanet, the manager of the Joya Engineering Works at Grenoble in I916. In that year M. Romanet, as a result of investigation into the domestic conditions of his employees, himself thatl.the wages were then insufficient to meet the needs of married workers having children. On his recommendation the proprietors of the Works granted allowances on the following scale for children under the age of thirteen years:-

First child 7f francs month

Second child 18 . francs per month

· Third 3I i francs per month

Fourth child L18 francs per month

1303 J3

Sec. 3.-0h{ld Endowrnent.-A. Europe.

102. The movement met with favour among other engineering employers in the district and was unanimously adopted. In 1918, the rates were rajsed, and in order to prevent any prejudice to the chance of employment of the married man, a so-called Compensation Fund was instituted, into which all contributions by the employers were paid and thence distributed to the workmen entitled. It thus became a matter of indifference to an employer whether he engaged single men or those with family responsibilities. The movement grew with great rapidity through France.until, in 1925, the employers who had adhered to this scheme numbered 11,200, their employees 1,210,000, while the total benefits paid in that year amounted to 160,000,000 francs.

103. At a Conference held at Grenoble in 1926 it was stated that the total number of employees in France working under a system of Family Allowances was about 3,500,000, or about five-sevenths of the total population industrially occupied. This total includes State and municipal employees.*

104. A con1putation made in 1926 by Mr. J. H. Richardson, of the International Labour Office, gives in British · currency the equivalent of the average family allowance in France as follows:- s. d.

First child 5 0 per month

Second child 12 6 per month

Third child 22 0 per month

Fourth child 34 0 per month

These ·figures apply to the workers in industries governed by the so-called Compensation Funds. The allowances paid to those who are not in the funds are somewhat larger. The extremely rapid spread of the voluntary movement for the payment of family allowances among manufacturers and other employers in France has been partly, to an attempt made in 1920 to make it compulsory for all employers to pay family allowances.

105. In that year M. Bokanowski introduced a Bill in the Chamber of Deputies for the compulsory payment by all employers of family allowances. This proposal was strongly opposed by organizations of employers. It was urged that any form of State compulsion would lack the necessary flexibility and adaptation to local needs and conditions. It was also objected that the cost would be considerably augmented, as the Bill proposed allowances considerably larger than those then customary. It was said, too, that cost of administration of State funds would

be greater than that of local funds, and much emphasis was placed upon the desirability of giving opportunity for further free development of private initiative. The trade union influence on the other side was, and is, in favour of the introduction of State compulsion. The Bokanowski Bill was referred to a committee of · deputies, but it was never passed into law.

106. In Belgium the family allowances system has also taken root .. Beginning in a small way d:uring the war, it received considerable in1petus about 1921, partly through the example of France, and partly" because it was found that a considerable migration of Belgian workers to France was o_ ccurring, especially among family men who were anxious to secure the extra allowance for dependants then being paid by French employers_. In 192.6 it was estimated that there ·were 400,000 persons in private employ who were benefiting by family allowance plans in Belgium, and the annual amount being paid was about francs. There are in addition 230)000 persons employed by the State to whom allowances may apply. In Belgium) as in France, some

action has -been taken to make payment of such allowances compulsory. The Federation of Trade Unions drew up a Bill providing for a monthly payment of 30 francs where there is one child under fourteen years, or invalid, or one incapable of earning, of-45 francs for the second child.

60 francs for the third child. 65 francs for the fourth child.

107. The proposal was that the scheme should be financed by contributions of employers 60 per cent. of the total, workers 10 per cent., and the State 30 per cent. The socialist members of the Belgian Parliament voted against the introduction of the Bill, and nothing has yet been done. Both 'in France and in there is evidence of much divergence of opinion, not

only upon the major question of establishing a system of child endowment by law, but also on the numerous matters of detail which inevitably arise in connection with such systems. Although compulsionhas been demanded in Franc·e, Belgium and Holland, and in each case with a greater or less measure of State subsidy, everything actually achieved so far has been by individual

initiative or by the initiative of public bodies. *In a. report issued in February, 1928, by the International Labour Office, M. Crehange, Assistant Director at the French Labour Ministry is quot-ed as estimating the number of wage-earners in France who are entitled to family allowances at 4,000,000, made up as follows :-1,500,000 workers belonging to Compensation Funds; 1,500,000 employees of the State, the Departments, and Communes; a.nd finally a. group of 1,000,000 wage-earners, consisting chiefly of miners and railwaymen.

24

·sec. 3.-Child Endowment.-A. Europe. 108. In Germany before the War, the Government had been accustomed to provide special allowances to those of its officials who had dependent children, but such a system had not extended into industry except in a few special cases of semi-monopolistic concerns. During the war, the practice of paying allowances to workers in pFivate industries was extended, but at .the time of the Revolution in 1918, after the Armistice, the Unions who had been opposed to such allowances succeeded in having them abolished. vVith the rapid rise of prices in 1919 and 1920, the system was to a considerable extend reintroduced in private employment, and. in 1920 was extended to all branches of governmental employment. For reasons which are not apparent, the system has not been completely adopted in industry, there being a sharp division in this respect between different groups, and to some extent within certain large groups. Since the stabilization of the currency, its application has been very much restricted. For example, it is said thatthe payment of allowances has been adopted by approximately half of each of the

following industries :-Stone, clay and glass, printing, commerce, traJnsportation (other than railroads___:-the system is universal on the State railroads), sugar, dairying, slaughtering, and baking. It has scarcely found a foothold in the clothing, shoemaking, leather, building, wood-working, brewing, milling and tobacco trades.

109. At the beginning of 1927 the number of recipients was as follows:--Industry. Number of recipients.

Mining 426,426

Metallurgical 484,416

Chemical 58,000

Soap-making 800

Textile 168,809

Breweries and flour-mills 8,365

Paper manufacture 21,200

(a) Mining mining industry is the only one in which the payment of

family allowances is altogether general. The current rates paid vary to some extent from one district to another, and this also applies to the proportion of the wages represented by the allowances. The following table gives the rates of allowances and waJges for top rippers in certain districts in June, 1927.

RATE OF WAGES AND FAMILY ALLOvVANCES FOR ToP RIPPERS IN JuNE, 1297.

Allowances per Post held.

Coalfteld. Wages per Hour. ,

Wife. Each Child .

.<·

Pfennigs. Pfennigs. Pfennigs.

Magdgeburg . . . . . . . . .. 49·9 10 10

Waldenburg in Silesia . . . . . . .. 60·6 9 9

Aix-la-Chapelle . . . . . . .. 75·3 10 10

Dortmund and Essen . . .. . . . . 91·3 16 16

(b) Metallurgical Industry.-0£ the 484,416 workers in this industry in receipt of allowances, 221,000 are heavy metal workers; 56 per cent. work in the Rhenish-VIestphalian . basin, and 20 per cent. in Bavaria. The rate of the allowance varies considerably from one district to another. The following table gives the rates in force in the principal districts at the

end of June, 1927 :- ·

District.

Bremen and Kiel Dortmund, Essen and Mannheim Cologne ..

Stet tin Munich and Nuremberg

'

Allowances.

Wife. Each Child.

Pfennigs per hour. 1

2

2

1

1·2

Pfennigs per hour. 2

1

2

1

1 ·2

The allowances paid for a wife and two children represent approximately from 3! to 6 per cent. of the wages of a skilled worker, and from 5 to 8 per cent. of those of an unskilled worker:

25 1305

Sf3!J. 3.-0hild Endowment.-A. Europe.

· (c) Other lnd,ust1·ies.-The system of family allowances is much less general in the other ·industries. Twenty--one collective contracts, covering 168,809 workers in the t extile .industry, provide for the pay1nent of family allowances. At the end of June, 1927 , the rates of -the allow8Jnces paid for the wife and for each child were:-

Frankfort-on -Main and Cologne

Bremen Essen ..

Pfennigs.

. 3 per hour 2 per hour 1 per hour 100 per week

In the chemical and soap-n1aking industries, the rate of the allowances varies from two to four pfennigs per hour and per dependent member of the family. In the paper industry, the rates . are from one to two pfennigs per hour. In the breweries, the weekly rates are 2.30 marks at Cologne, Dortmund, and three marks at Aix-la-Chapelle.

110. The system of fa1nily allowances was introduced into the banks in 1919, and became general from 22nd October, 1920, when a national collective contract, valid for every part of the Reich, was concluded. The number of bank employees affected is between 80,000 and 90,000 (including commercial employees and workmen attached to the establishments) and the number of recipients of allowances is approximately -45 per cent. of this figure. Some 36,000 wives and 44,000 children are beneficiaries.

111. The rate of allowances for the wife and each child is 20 marks a month in the case of employees in the large cities. In smaller places, the allowance is 4, 8, 12 and 16 per cent. below this figure.

112. With regard to officials and employees of public administration, the position in Germany, according to the latest report on the subject issued by the International Labour Office is as follows :-113. The payment of family allowances is general in the case of the officials and employees of municipal and State authorities, including the national railways. The general rate of the allowance paid to employees is at present 3 pfennigs per hour for the wife and each child under sixteen years of age. Government officials receive in respect of dependent children an allowance

of 16 marks per month for each child under six years of age, 18 marks for each child between six and fourteen, and 20 marks for each child between 14 and 21. The allowance is not paid after the child is . sixteen unless it is attending a secondary school or university, is receiving vocational training, or is suffering £ro1n some physical or mental disability vvhich prevents it from earning anything, or unless the child's own income does not exceed the amount of the allowance including the cost-of-living bonhs. If. the child's incon1e exceeds the amount of the allowance, including the cost-of-living bonus, but is than twice the arnount of the

family allowance, the parents receive one-half the allowance. Should the child's income be more than twice as much as the farnily allowance, including the cost-of-living bonus, the allowance is stopped. 114. These allowances are granted in respect of legitimate, legitimated, acknowledged or adopted children, or children of a former marriage living at home. Married officials also receive an allowance of 10 marks per month for their wives, in addition to which a supplementary allowance of 2 marks a month has been granted for the fiscal year of 1927. Officials employed

by the State and co1nmunes receive the same allowances, whether they work for an actual administration or for a public industrial undertaking. The same allowances are also in fo rce oh the State railways, and postal, telegraph, and telephone services.

115. Tl;te number of workers employed by the Reich and by the States, provinces, districts, and communes, who are entitled to family allowances is 825,000, the tot al number of officials ·being 885,000. -116. Herr head of the National Federation of German Trade Unions, is quoted

by Professor Douglas as opposing the reduction of the wage of single men, on the ground that thev should be given enough to provide for marriage, and to meet their needs for education and As a substitute, he proposes that the State should grant subsidies to those with

families, in the _form of lower taxes, free clothing, free 1n ilk fo r the child, t ogether with an extension of free public school education. The Christian or Catholic Trade Unions, on the ot her hand have favored the svstem of cash allowance. ' ,,

26

Sec. 3.-0hild Endowment.-A. Europe. 117. The payment of family allowances to State employees has been adopted in a number of countries, including Austria, Czecho-Slovakia, Belgium, Denmark, Finland, France, Germany,. Greece, Holland, Irish Free State, Italy, Norway, Poland, Servia, Sweden, and Switzerland. With regard to many of these countries, however, the evidence appears to show that so far as the system has been introduced into industry generally it not promise to be

This remark does not apply to France and Belgium. ·

118. In a letter received by the Commission from the International Labour Office, Geneva, dated November, 1927, the Chief of the Intelligence and Liaison Division says:-" The general situation n1ay be summarized by saying that in France and Belgium, the equalization fund system, introduced by the employers, has increased in · importance during recent years. Also, the State, especially in France, has introduced important provisions for the benefit of private persons with large families, and pays allowances to its employees. In other Continental European countries, family endowment has declined in importance during recent years, especially in private industry; in a number of these countries, however, the system is still applied in some industries, and for the employees of public authorities. In Great Britain there is no important application of the principle, although the Fa1nily Endowment Society is focussing public attention on the subject, and various political parties are examining it; the Independent Labour party has declared itself in favour of a system of allowances provided from State revenue. Outside Europe, except in Australia and New Zealand, the system has attracted little attention."

119. The informat ion given as to the development of family allowance schemes in Europe must be read with the knowledge t hat in none of the countries where these schemes are in operation is there any system of fixat ion of wages by law. This constitutes a fundamental distinction between thos.e schemes, and the schetnes which are now in operation in New Zealand and in New South

Wales. _

120. It is further to be borne in mind that while there is evidence of the existence of humanitarian motives in the initiation of many of the European schemes, it is also patent that another motive in their inauguration was that a grant of family endowment avoided the necessity for an all-round increase of wages, applicable both to married and unmarried workers. This could be shown by public admissions made by leading members of some of the great equalization funds. It might be argued that this view is economically sound, and justifiable on the ground that the actual needs of unmarried men, or of married men without families, were already met

by the existing wages. Indeed, there appears to be no evidence that such schemes would have come into existence at all had it not been for the accepted insufficiency of current rates of wages to provide a suitable standard of living for workers' families, especially those in which the numbers of children exceed two.

CHilD ENDOWMEtJT OR FAM ilY ALLOWANCES-EXISTING SYSTEMS. B.-FAMILY ALLOWANCES IN NEW ZEALAND. 121. In 1926, the New Zea.iand Government introduced and passed an Act providing for famil y allowances. The amount of the allowance was fixed by the Act at 2s. per week for each rh ild (under the age of fifteen years) in excess of two, provided that the average weekly income, including the amount of allowance, if any, payable under the Act does not exceed £4 plus 2s. for each child in excess of t wo. For example, an applicant with eight children under fifteen

years of age, whose weekly income does not exceed £4; is eligible for an allowance of 12s. weekly, i.e., at the rate of 2s. weekly for each child in excess of two. In the case of an applicant with the same number of children, but whose weekly income is more than £4, the allowance will be at the rate of the difference between his weekly income and £4 12s., e.g., if his income is £4 5s. weekly, then his allowance will be 7s. weekly.

122. The benefits of the Act do not extend to illegitimate children, nor to any child not maintained as a member of the family of the applicant, nor to any child to whom a pension is paid out of public moneys. In computing the average weekly income, there are computed all moneys or money's wort h received during the preceding year, exclusive of payments made from any registered friendly society. The average incorile is also taken to include interest at 5 per cent. on the value of the beneficial interest of any member of the family in real or personal property

(other than residence, furniture, or personal effects). Allowances under this Act, save in exceptional cases, are paid t o the mother. The allowances must be expended exclusively for the benefit of the child or children. 123. The residence conditions which qualify applicants are :-

(a) That t he applicant and his wife have been permanently resident Zealand for one year ; and ·

(b) That the children to be have been resident in New Zealand for one year, or have been born therein. No allowance is payable in the case of aliens or Asiatics.

27

1307

Sec. 3.-0hild Endowment.-B. New Zealand.

124. In his second reading speech in the House of Representatives (see New Zealand Parliamentary Debates, August, 1926, page 527 et seq) the Honorable Mr. Anderson, Minister in charge of Pensions, said that the Ministry had carefully considered a scheme on a contributory basis, but had decided that such a basis would not be satisfactory in New Zealand.

125. On figures deduced from particulars in the most recent census, the Ministry estimated that the cost under the Act would be £260,000 per annum, based on round figures of 20,000 children. The Ministry was satisfied that the principle of the Bill was a strong one.

126. There was much criticism by Opposition members of the smallness of the amount to be granted, 2s. per week per child. In reply to this, the Prime Minister, the Right Honorable J. G. Coates, said :--:--" It may be small, and, incidentally I may say in candour it was the intention to give more, but on account of the somewhat hazy position of the future, it is not thought wise to do so."

127. In the course of the Debate, the view of the Opposition was stated by Mr. Parry (page 600) , thus :-" The principle of the Bill is good. At least it will establish a precedent in this country that will be pushed-make no mistake about that-at every conceivable opportunity, with the object of giving to the children, in every fa m.ily of mote than t wo, full maintenance.

Before this Government, or any other Governn1ent can say it is doing a fair thing bythe children of New Zealand, we have to see to it that provision is made for fu ll maintenance for every child in our country." -

128. With regard to the limitations of the allowance to children in a family exceeding t wo . it was shown in the debate that the unit adopted by the New Zealand Arbitration Court in fixing wages is man and wife and two children.

129. The Right _Honorable the Prime Minister of New Zealand kindly supplied the Commission with the following information:-"For the period of twelve months ended the 31st March, 1928, the number of applications lodged was . 3,980, of which 3,1 54 were granted and 579 were declined.

The following table of weekly rates relates to the 3,154 claims granted :-£ s. d.

At 0 1 0 weekly 17

At 0 2 0 weekly 582

At 0 2 6 weekly 1

/ At 0 3 0 weekly 36

At 0 4 0 weekly 749

At 0 5 0 weekly 22

At 0· 6 0 weekly 712

At 0 7 0 weekly 19

At 0 7 6 weekly l

At 0 8 0 weekly 488

At 0 9 0 weekly .. . 8

At 0 10 0 weekly 302

At 0 11 0 weekly 1

At 0 12 0 weekly 144

At 0 14 0 weekly 43

At 0 15 0 weekly 1

At 0 16 0 weekly 21

At 0 18 0 weekly 6

At 1 0 0 weekly 1

Total . . 3,154

Of the 3,154 claims grant-ed, 148 were cancelled for various reaeons, leaving in force on the 31st March, 1928.

Total weekly liability at 31st March, 1928 Total annual liability at 31st March, 1928 Average per endowed family weekly .... Average per endowed family per annun1

£ s. d.

947 0 0

49,276 0 0

0 6 3

16 11 0

28

Sec. 3.-0hild Endowment.-B. New Zealand.

· When introducing the ·Bill in the House of Representatives in 1926, the Honorable the Minister of Pensions estimated the annual liability in· respect of Family Allowances at £250,000, this estimate being based on figures supplied by the Government Statistician from information collected at the 1926 census relating to the weekly income of breadwinners. From. these figures, it was deduced that approximately fathers of families of three or more children with 50,000

children under fifteen years (i.e., children in excess of two) were eligible for the family allowance on the father's earning power. Experience has shown, however, that this estimate of the annual liability will be by no rneans realized for some time at any rate, and the discrepancy may be ·reasonably. accounted for by the following :-

(a) The Govern1nent Statistician did not allow in his computation for income other than that shown on the census papers, whereas the Act provides for the charging as income of 5 per cent. on all propert"y owned ·other than that used as a hon1e ) quite apart from the actual receipts of the family; (b) No allowance was made for other disqualifications under t_ he Act; _

(c) Many people apparently under-stated their income on the census papers;

(d) The experience of the Department in respect · of pensions generally is that with regard to a new class of allowance many people do not apply immediately the law becomes operative; (e) The low rate of the allowance has no doubt deterred many people from

applying who would--' have become applicants were the allowance larger.

The· following table sets out the reasons for the twelve months ended 31st March, 1928 :-Income in excess Withdrawn ..

Children not at home (Section 2 (b)) Already in receipt of pension (Sectio.n 2 (c)) Husband must apply (Section 3) No children under fifteen in excess of two No evidence of income Alien (Section 8) Husband dead Insufficient residence (Section 7) Children illegitimate .. Bad character Not residing in New Zealand Divorced Widow not eligible to apply

411 33 25 20

16 11 41 8

4

3

2

2

I

1

I

579

The administration of the Act has been placed under the control of the Comn1issioner of Pensions, and, with the existing machinery for administration of . pensions generally, the investigation of family allowance applications has proceeded ­ smoothly. \Vhile no particular record has been kept of the cost of administration of

fa1nily allowances, as distinct from other activities of the Department, it is safe to assume that the cost has been well within the percentage shown last year as the total cost of administration, to the total payments of the Department, na1nely 2.48 per cent.

It will be seen that the expenditure under the Act is likely, at any rate for the first year or two, to be considerably less than that estimated by the Government in submitting the matter to Parliament. One of the principal reasons appears to be that a great nu1nber of persons who were supposed to have incomes low enough to make

them as applicants under the Act have in incomes beyond the limit

allowed.''

29 1309

Sec. 3.-0hild Endowment.-B. New Zealand.

130. In his annual report (to 31st l\1arch, 1928) the Commissioner administering the Act, referring to this matter, said:-" It must be remembered that the experience in connection with the old-age pension and the widows' pension law was that in the early years of both these schemes there was on the part of certain classes of people either a lack of knowledge of the legislation

passed to benefit them, or a diffidence to take advantage of such legislation. In regard to the allo:vance at least another full year's working will be required to enable anything like rehable estimates to be adduced."

CHILD ENDOWMENT OR FAMILY ALLOWANCES-EXISTING SYSTEMS.

C.-CHILD ENDOWMENT IN NEW SOUTH WALES. 131. While schemes for child endowment were considered by the Legislature in New South Wales earlier than in New Zealand, it was not until after the New Zealand Act had been placed on the Statute Book that the New South Wales Legislature took effective action.

132. In 1919, under the Premiership of the Honorable W. A. Holman, K.C., the Government introduced a scheme for child endowment. At that time, in New South Wales a living wage was fixed year by year, on the inquiry of a body called the Board of Trade, into any increase or decrease in the cost of living. In 1919, the current basic wage was .£3 per week, and the Board was conducting an inquiry into the cost of living with a view to further determination

of the wage. The Government learned that in all probability the Board would declare a basic wage of £3 17s. in lieu of £3. This would have meant a very heavy increase in wages expenditure by the Government, especially on railways and tramways, while private enterprizes would, of course, have been affected in the same way. There was also a fear that the large sudden increase in wages would cause a serious amount of unemployment.

133. The party then in power in the State was committed to the principle of child endowment, and thought the time opportune for introducing a Bill on the subject, which accordingly they did. - It was proposed to alter the unit-man, wife, and two children-used by the Board of Trade for the purpose of detennining tp_e basic wage, and to adopt the unit of man and wife only, the basic wage to be fixed in relation to the cost of living of a married pair·.

This basic wage was to be supplemented by a payment of 7s. 6d. per week in respect of each dependent child, and on the statistical ratio of children to employees at that time, it was estimated that a payment by employers of Ss. per week per employee would provide the necessary funds. The amounts so provided were to be paid into a pool frmn which distribution was to be made to each wage-earner according to the number of his children.

· 134. The Bill met with opposition both from employers and from trade unions. The opposition of the employers was not rempved by the argument that the passing of the Bill would, in fact, reduce the total amount of wages they would probably be called upon to pay. The increase under the endowment scheme (regarding the endowment payment as part of wages)

would be from £3 to £3 Ss., while, without endowment, it seemed likely that wages would he increased to £3 17s. The unions opposed the Bill chiefly because it was regarded as depriving .the workers of some part of the increase in wages. The Bill passed the Legislative Assembly, and also the second-reading stage in the Legislative Council, but was defeated on

the third reading. Subsequently, the-Board of Trade declared the basic wage at the expected amount of £3 17s.

135. In the following year, the Holman Government was defeated: and was succeeded by a Labour Government, which in 1921 introduced a Bill to give effect to a scheme of family allowances. , This Bill prescribed a family unit of man, wife: and two dependent children, instead of man and wife only, as in the 1919 Bill. In view of the enlarged family unit adopted it was

proposed that allowances .be paid in respect of child exceeding in the family.

This Bill also passed the Legislative Assembly, but was reJected by the CounciL

136. In 1926, Mr. Lang's Government introduced ·a Family Endowment Bill, which, after lengthy debates in both Houses, was passed into law in March, 1927, and was brought into operation on the 22nd July of, The Act provides for: payment to the of 5s.

per week for each dependent cnild under the age of fourteen years. The fund from whwh these payments are made is derived from a tax, levied upon every employer, of 3 per cent. upon ·the total amount of wages paid by him. . ·

30

Sec. 3.-Child Endowment.-0. New South Wales.

137. The levy was continued for three months and one week after the Act came into operation. It had then become probable that claims upon the fund would be so much less than at first anticipated that continuance of the statutory levy for the whole year would be unnecessary. The levy was therefm;e suspended. We understand that the amount collected during the first

fourteen weeks proved approximately sufficient to cover the cost for the whole financial year. That cost was about £1,250,000. This included cost of administration, and an amount of special non-recurring expenditure of, roughly, £50,000. ·

138. These figures are in striking contrast to those given in the statement of the then Premier of New South Wales, the Honorable J. T. Lang, in a foreword to a pamphlet issued by the Government in August, 192.7, outlining the objects of the Act. · He said :-" The fact that about 596,000 children will be endowed, that

about £5,000,009 per annum will be paid to mothers for the maintenance and education of their children has fully justified the Government in accepting the measure as it left the Legislative Council." (See paragraphs 146-148.) ·

139. One note-worthy feature of the Act is that, although endowment is payable in respect of the children of non-wage earners as well as of wage-earners, the Act only provides one source of revenue, namely, the levy of 3 per cent. on wages.

140. The Act provides that the Crown shall be considered as an employer. This provision imposes liability upon the great State enterprises such as railways, tramways, and other forms of public undertaking.

141. The Act limits the full amount of endowment to cases where the. combined family . ncome, that is the incomes of both parents and of children under fourteen, · does not exceed the living wage. This wage is, at the time of writing this report, £4 5s. per week for 52 weeks, or £221 per annum. If the family income exceeds the living wage (£221) the total of that income is deducted from the arnount of the full endowment for each child, £13 per annum plus the amount

of the living £221, and the balance is the (reduced) endowment payable. For example, a claimant having five children, where the family income is £230 would receive £56 a year in respect of endowment for the five children, made up in this way :-

Basic wage .. Plus £13 per annum for each of five children

Less the amount of family income

Amount payable as (reduced) endowment

£

221 65

286 230

56

This shows that in such a case the endowment of £13 per child would be reduced to about £11.

142. The result can be reached in another way., If the amount by which the family income exceeds the living wage (£221) is deducted from the amount of the full endowment for the number of dependent children in the family, the balance, if any, is the amount of endowment payable. This is necessarily less than the full endowment of £13 per child. Thus, in example above, where the family income is shown as £230, the excess of that amount above the living wage (£221) is £9. The full amount of endowment for the five children would be £13 x 5=£65. ])educt £9 from that sum, arid we have again the amount of £56 'as the amount of endoWinent payable in the case where there are five dependent children. If the income for a family of that structure were £286, no endowment would be payable.

143. Figures supplied to the Governn1ent when forn1ing estimates of the cost of the scheme, indicated that there were in the State 712,000 children under the age of fourteen years.

144. From this number_ certain deductions were made as follows :-Dependent children provided for or illegitimate '

Dependent children of Federal employees (who were completely excluded 72,000 15.000 .

11

Sec. 3.-0hild Endowment.-0. New South Wales.

1311

145. The income limitation included in the Bill as introduced was £364, plus any endowment payable. When the Bill reached the Legislative Council, however, an amendment was carried reducing that income limitation to £221 (the amount of the basic wage) plus any endowment payable.

146. In connection with the_ original limit of £364, it was estimated that this income limit would exclude about 12! per cent. of the dependent children who otherwise would be eligible.

147. After making all these deductionf-< the total estimate of dependent children considered likely to become claimants upon t h _. endowment fund was about 550,000. The extent to which this estimate has been affected by the amendment of the Act, reducing the income limit from £364 to £221, cannot be exactly stated, but evidently, that effect has been considerable.

148. Experience gained during the first twelve months of the operation of the Act, suggests that a large proportion of those who were nominally eligible are never likely to come within the scope of the scheme. 149. Evidence given by Mr. A. T. Treble (the Commissioner administering the Act),

supplemented by later information, shows that up to30thJune, 1928, the nu1nberof endowment claims received was 48,000. Of these, 5,000 were duplicate claims wrongly submitted, or merely additional to accepted claims; 7,000 were rejected or withdrawn; 28,000 had been granted, and 8,000 had not been completely dealt ·with. The average number of children represented by each endowment was 2 ·6. Mr. Treble expressed the opinion, based on twelve months of experience, that of the 712,000 children under the age of fourteen years within the State, no

more than 200,000 would be likely to become a charge upon the fund, that is, roughly that only two-sevenths of all those who, but for the Statutory income li1nit, rnight have come within ·the scope of the Act Will ever become The chief reason assigned_ by Mr. Treble for this remarkable fact was that only a small proportion of the families having dependent children were

receiving incomes low enough to make them eli1)ible as claimants under the Act. That opinion is supported by the information relating to coal miners and others in paragraph 487.

150. A minor cause stated by Mr. Treble as operating in the same direction is a disinclination of some parents to apply for the benefits of any scheme of Government assistance.

151. On Mr. Treble's e:stiinate of the maximum number of children likely to become a charge on the fund, the approximate maximum expenditure under the Act, apart from the gradual increase due to increase of population, would be about £2,600,000 per annum. If further experience proves the approxin1ate accuracy of l\1r. Treble's view, and assu1ning (what is roughly

true) that the -population of New South Wales is 40 per cent. of that of the Commonwealth, it would appear that a Commonwealth Child Endowment scheme, subject to the New South Wales income limitation, and providing the present New South Wales rate of benefit, 5s. per week per child, could be established at a cost, at least in the earlier years of about £6,500,000 per annum.

152. The New South Wales experience as to the actual expenditure necessary for financing such a scheme, as compared with what_appeared to be necessary on the statistical figures relating to the number of dependent children, corresponds approximately with the experience of New Zealand, where the actual cost of the scheme for the first year was £45,000 as against the estimated cost of £250,000. In any such scheme, it is no doubt true that a great many people, who are eligible as claimants, fail make_ claims in _the stages of partly through

complete ignorance, or through Imperfect Information as to thmr nghts ; partly through disinclination to comply with the detailed of the administration; and partly for

other reasons, such as the desire to maintain their complete independence of assistance from the State. 153. The New South Wales and New Zealand figures show the difficulty of ascertaining beforehand the cost of any such schemes, and the probability that estimates made before

administrative experience has been gained will be in excess of the reality. It has yet to be learned to what extent the applications made during the first year's operation can be accepted as accurately defining the limits of charge upon revenue which may finally be made in respect of any such scheme, apart altogether from any increase which may be made in the rate of benefit:

154. A complete analysis of the inforn1ation in the of the New South Wales Commissioner for Child Endowment would-be valuable. We should have liked to obtain such an analysis, but after consultation with Mr. Treble, -we were satisfied that it could not be prepared within the time at our disposal. _

32

CHILD ENDOWMENT OR FAMILY ALLOWANCES-EXISTING SYSTEMS.

D. CHILD ENDOWMENT IN THE COJYIMONWEALTH PUBLIC SERVICE.

155. For a number of years there has existed in the Commonwealth Public Service a scherrie of Child Endowment which differs in important respects from the New South Wales scheme. The history and operation of the Commonwealth scheme were described to us by Mr. Atlee Arthur Hunt, C.M.G., Commonwealth Public Service· Arbitrator. '

156. Shortly after the report of the Basic Wage Commission of 1920 had considered by the Government, a speech on the subject was made in the House of Representatives by the then Prime Minister, the Right Honorable W. M. Hughes, and a resolution was passed to the effect that it be an instruction to the Government to take into consideration the wages of public servants, and to do something to improve them. On that the Government announced an allround increase of pay of £12 per annum within the Public Service, and also a Qhild allowance of 5s. per week for each dependent child of employees in the service. ·

157. In December, 1920, a Regulation was issued under the Public Service Act, which provided for each n1arried officer in the Commonwealth Public Service, whose salary did not exceed £300, a sum of £13 per annum in respect of each dependent child under the age of 14 years. A proviso was included under which this payment of £13 per annum was to be reduced py £1 for every £16 by which the rate of salary exceeds £300 per annum. By an amending regulation of 20th January, 1921, the scheme was n1ade n1ore liberal by fixing £500 as the limit which any officer should receive including both salary and endowment. For example, an officer whose salary was £487 per annum and who had one dependent child would receive the full endowment of £13 per annum in respect of that child, bringing his salary up to £500. If, ·in the

same family another child were born, no further' endowment would be payable under the Regulation lirnit. By an amending Statutory Rule of 1st August, 1921, while allowance of £13 per annum, and the salary plus endowment limit of £500 were left unchanged, an amendment was made which admitted of payment to female officers, having the relation of mother or step-mother to dependent children, and also, in the case of male officers, rendered a step-father eligible as well as a father.

.l f

158. The of pay1nent by way of endowment, na1nely f?s. per week or £13 pe(annum, has remained unchanged. At the beginning, and for smne time subsequently,. this payment was directly an addition to existing rates of pay. In 1923, the dealt with a claim ·by the

Australian Postal-Electricians Union for a new scale of salaries. In connection with that claim the union asked that all allowances except the child endowment allowance, ·should be in salaries, and the Arbitrator acceded to that request. The action taken by the- Arbitrator in the matter is described by him as follows :- ·

"I had then to consider the fixation of the basic wage. I took the Harvester Wage as fixed in 1907, and brought it up-to-date by the application of the Statistician's index numbers. That gave t he result of £205 8s. I discussed the position as follows:-,,If then, £205 8s. would be a fair basic wage outside, if wages were now

as formerly claimed calculated on yearly figures , howfarisitapplicable to the Service ? What is the basic wage intended to cover ? It was originaJly stated that it was intended to provide for a household of about five persons ; that has come to mean a man, his wife, and three children. · Neither inside nor outside the Service is the average family three children, and it would be 1nore correct to say . that nowadays the basic wage is intended to cover the

requirements of the average household. In New South Wales the basic wage is nominally to provide for a man, wife, and two children) _but the difference between the basic wage as laid down by the New South V\T ales Board of Trade and those where the three children are nominally allowed for is not marked.

Under the system which I an1 asking Parliament to endorse, it is proposed that a separate payment shall be made for children, and it would, therefore, be unjust to include any payment for children -in the basic wage on which _ to calculate service rates of pay.

Now the question is what amount should be deducted from -the basic wage to get such a fair sum ·as will provide a definite foundation on which to build up a scheme of salaries for the Service 1 '

33

131_3

Sec. 3.-0hild Endowment.-D. Commonwealth Public S ervice. It was stated in the course of -this case that the average number o£ children under fourteen years was in proportion to adult males . 7 only. That is t he figure obtainable by taking the total numbers of adult males and of

children under fourteen in the whole Comn1onwealth. I an1 informed that taking the number of adult rnales in the Service and the number of children in respect of whom child endowment is paid; the figure will be . 84. The number of adult m;:tles includes a comparatively small·number of men salaries of over £500 per annum who draw no child allowance. In most

these are men of mature age whose families will have passed the fourteen-year lin1it. On the whole it n1ay be taken that. 84 fairly represents the proportion of children per adult male in the Service. I s it not fair) therefore, 1nerely to deduct the su1n represented by . 84 of the Government allowance for

children and regard the balance as the proper amount payable to an adult male. The rate of the allowance is £13 per annum; the actual cost of

maintenance of a child may be and probably is higher, but I think it fair to n1.ake a deduction only of the amount that will be received if there are children . . 84 of £13 is £10 l8s:, and deducting that from £205 8s. gives £194 lOs., say, for purposes of convenience, £195, as a first foundation on which to build. Salaries were then fixed with £195 per annu1n as the basic wage in the Public Service." -

159. It will be observed that the Arbitrator's determination above described introduced an i1nportant change o£ principle in connexion with the payment of child endowment in the Commonwealth Public Service. Up to that time, the endowment had been a bounty granted by the Government, but from that time onwards the whole amount necessary to provide the regulation payment of 5s. per week for each dependent child ·under fourteen was drawn from a

fund made up by a deduction of about £I i per annum from the salary of every officer, married or unmarried. Collsequently; as the Arbitrator informs us, "the Governme:Q-t pays the same with the allowance as they would pay without the allowance; the only difference is that the amount which the Government pays is distributed differently."

160. When in 1923, the Arbitrator, as above shown, had to consider the fixation of the basic wage, he was not concerned with the family unit which that wage was supposed to represent. In evidence before the Commission he said:-

•

(Q. 11955).-" Therefore, the unit which you have employed is more than a man and wife, but is less than a man, wife, and one child ?-You can put it that way, but I prefer to put it the way I have already explained, that I adopted as the basis wage the general wage which was current outside, irrespective of its foundation."

(Q. 11956).-" You ignored the foundation ?-Yes." (Q. 11908)-" When you took the action you describe on page 5 of your statement you were detennining a basic wage, but you did not take single men directly as the unit ?-No. I wanted to put them as nearly as I could on the same basis as men outside, and therefore, I took the wage which was current outside, excepting the

3s.*, which I have never regarded as justifiable on any grounds."

161. Mr Hunt informed the Commission that the scheme of endowment in the Public Service has worked satisfactorily and that the rate, 5s. per week, appears to have been accepted by the Service Unions as a reasonable compromise. 162. Questioned as to the economic and social effects of this scheme of Endowment within

the Public Service, lVIr. Hunt said:-"As to the economic effect, the position is that since the adoption in 1923 of the method described in paragraph IX., the cost to the country has been practically nothing. The general scale of wages has been reduced by an amount which suffices to pay the cost of the allowance. If the allowance were now to be withdrawn, the

basic wage of the Service would have to be brought up at least to the level of the basic wage outside the Service, less the 3s. weekly which for some years has been added by the Arbitration Court to the }larvester YVage equivalent. That is a contention which could not be opposed. With the allowance, those whose needs are greatest, i.e., the public

servants on low or low salaries, receive more than those whose needs

are less, without this allowance· those men would suffer hardship." * This 3s. is an amount added to the Basic Wage by Mr. Justice Powers in 1921', ostensibly to compensate the wage-earners for the "lag" which was said to occur between date of of increased prices and the date upon which the increase in wage,

based upon a higher price-index-number, comes mto operatiOn.

F.24/28.-3

t'

34

Sec. 3.-0hild Commonwealth Public Service.

163. "As to the social effect ; it is not easy to eXJ?ress this in precise terms. For the past six years it has been my duty ·to see public servants of all grades at their work in addition to hearing the evidence and arguments that have been addressed to me in court and at conferences. During the earlier portion of that period it was my frequent custom to ask men when talking to them about their jobs what their views were in regard to the allowance and found that there was an almost universal opinion in its favour. At times some of the younger men thought it

rath@r hard that they should receive less than others doing the same work merely because the latter had families, but that view was not expressed with any special vigor, as it always seemed to be modified by the possibility that some day they might find themselves in the same position as the others mentioned. For the last few years I have made no inquiries as all parties seemed to regard the matter as permanently settled."

"My last public utterance on the subject was made in 1926 (Vol. 6, page 330), when I said:­ 'There is no doubt, as I have frequently stated, that experience has proved that this innovation has been of great benefit, particularly to men on humble salaries who have many children.'"

164. In many respects the in:stitution and continuance of a, system of Child Endowment in a large Public Service presents few difficulties as compared with an application of the same idea to organized industry outside the service. The unity of management, continuity of employment1 and other special conditions which apply to the Commonwealth Public Service, remove many of the difficulties which might the application of the system to enormously greater numbers of employees, owing service to a great many different employers.

165. In making determinations of the basic wage, the Arbitrator, as already shown above, has been guided chiefly by the current rates awarded by Courts, and applying outside the Public Service. From the basic wage determined by the Arbitrator, he deducts a sum per annum per employee sufficient to provide endowment at the rate of £13 per annum for each dependent child. .At the highest point yet reached that deduction represents something less than 5s. per week per employee.* .

' 166. This method .of treatment is essentially different from the proposal made to us by many witnesses that the wage of the single man should be determined by deducting from the present basic wage the arnount considered to represent the proportion of child allowance (full maintenance) which it includes, for two, or as in Federal and some State awards, for three children.

The deduction which would be made upon that basis would at present be much greater than that made by the Public Service Arbitrator. The deduction made by the Arbitrator provides funds for an endowment which does not purport to provide the full maintenance cost of a child. On the evidence brought before us, that endowment represents. about 60 per cent. of full maintenance where there is only one child. The cost per child diminishes as the number increases .

•

167. It is of high importance to observe that a scheme of child endowment possessing the following features has been successfully establh•hed, and is working without friction :-(1) The fund from which the endowment is paid is provided by an all-round flat-rate deduction from wages and

(2) Neither the employer (in this case the Commonwealth Government) nor the general taxpayer is required to contribute anything to the fund. (3) The benefits of the fund are distributable only among a section of those who. contribute. (Contributors having more than one dependent child derive

benefits in excess of their contributions.)

SECTION 4.

INTER-RELATION OF WAGE FIXATION AND CHILD ErtDOWMENT. . 168. We are required to c?nsider systems of child in :elation to wage fixation;

we have felt compelled to consider systems of :fixat1on m relation to child endowment. This has meant esamination of industrial Statutes of the Commonwealth and of the States. It also_ a study of Some of these principles;

descnJ:>e . ; some set m high relief defects of practwe, difficulties of mterpretation,

conflicts of JuriSdiction. *Unless-fa) the rate of endowment were 'raised, or (b) the percentage of children per adult male rose considerably, this amount could not be exceeded.

1315 35

Sec. 4.-Inter-relation of Wage Fixation and Child Endowment.

169. The and nebulousness of Parliamentary directions to Industrial Tribunals leave Industrial Judges moving continually through areas of cloud and low visibility. In the Statutes, much imperfectly implicit as to child endowment, little perfectly explicit. The general impression is one of vagueness. Even skilled interpreter& are often in doubt; the indications are faint, like the shadows in a skiagram. Rare the sharp outline, product of

micrometric.focussing and crystal clarity of thought.

170. A review of Commonwealth .and State industrial legislation and practice, and of underlying principles, is long overdue. . ,

171. Such examination should be carried out yvith the object-of evolving a uniform system which is simpler, less expensive, and more clearly defined than the present medley of systems. This, of course, is on the assumption that the continuation of a system or systems of wage fixation is desirable, a question outside the terms of reference, and on which we, therefore, express no . opinion. · So ·far as we are aware, no authority has attempted to present a complete statement

either of principles or

172. The phrase used by several witnesses that" wage fixation is an industrial matter and child endowment a social obligation," though open to criticism, is useful so .far as it suggests the necessity (if child endowment be adopted) of keeping the two subjects apart in thought and iii practice. •,

173. In: our systems of wage regulation (apart from recent New South Wales leg!slation) the two have been blended into one, every basic wage containing elements of endowment, though these elements have not been separately and accurately evaluated.

174. Industrial tribunals, in prescribing wages, have hitherto found it convenient, whatever family structure is assumed, to consider the family as an entity, and to provide a family wage. This mode of dealing with the subject ·maintained, if it did not .create, the view that there is a chemical affinity between wage and endowment. It is now seen that the combination is a mechanical mixture, and not a chemical union.

175. If child ·endowment be set up as the disch arge of a " social obligation " of the Commonwealth, wages should be stripped of endowment elements, and well-considered safeguards be devised to keep separate the factors which so many people are interested in bringing together. To ·use a colloquialism, many people are interested in'' having it both ways.'' They wish to retain as an "industrial matter" all endowment content of the present wage, and add a whole

scheme of endowment, designated as "the discharge of a social obligation." Unless guided and restrained by very clear Statutory declarations, wage-fixing tribunals may, 'more or less consciously, aid in the effectuation of that purpose.

SECTION 5.

INDUSTRIAL LEGISLATION AND PRACTICE OF ARBITRATION TRIBUNALS. A.-COMMONWEALTH. 176. The powers of the Commonwealth Parliament in respect to industrial Arbitration are_ contained in Section 51 (xxxv). Power is given to make laws for the peace, order and good government of the Commonwealth with respect to " conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any

177. Pursuant to this power, the Commonwealth Parliament has established the Commonwealth Court of Conciliation and Arbitration. For the present purposes, the aspect of importance is ·the power of :that Court to fix a basic wage to operate ill those industries which become the subjects of awards of the· Court.

178. From the evidence, it would appear that the awards of Commonwealth Court govern the wages and conditions of about 50 per cent. of the employees who are subject to awards of any tribunals. 179. Unlike the Statutes creating State Industrial Tribunals, the Commonwealth Arbitration Act makes no express provision for the fixation of a basic wage. Nor does it indicate the family unit to be adopted, or the standard of living on which the basic wage is to be founded.

In practice, the Court, in the exercise of its jurisdiction to settle industrial disputes, declares a basic wage for the mdustries with which it deals.- As a subject of that wage the Court has selected a man of " the humblest class " or " unskilled worker ". The established practice of the Court is to consider the family unit as consisting of a man, wife, and three children. The "standard

36

Sec. 5.-Industrial Legislation and Practice of Arbitration Tribunals.-A. Commonwealth.

of living" adopted by the Court is "the normal needs of the average employee (the unskilled worker) regarded as a human being in a civilized community," the wage being sufficient to provide " food )", " shelter ", and " clothing " " and a condition of frugal comfort estimated by current human standards." (2 C.A.R., page 3-4.)

INDUSTRIAL LEGISLATION AND PRACTICE OF ARBITRATION TRIBUNALS. B.-NEW SOUTH \VALES. 180. New South Wales was the first State in which legislation was enacted to constitute a Tribunal to deal with the fixation of wages.and industrial conditions generally. Partly for that reason, and partly because of the special manner in which both legislation and judicial methods

have developed, it seems to us desirable to trace the course of events in that State. During the last two -years especially, the introduction of a system of Child Endowment; the statutory prescription of a family unit of man and wife only ; and subsequent action by the Industrial Tribunal, have created a situation so · different in important respects from that existing in other States as, in our opinion, to justify a relatively detailed examination.

181. The original New South Wales Arbitration Act of 1901, which established the first Court, dealt only with the actual settlement of industrial disputes. The Court, entering an entirely experimental field, was left to evolve its own principles ; as the basic wage, the Court adopted the average wage paid by reputable employers. -

182. An Act passed in 1908 transferred the regulation of industrial conditions from the Court to Boards (though the Court was retained as an appellate body), and every well-defined industry secured a special tribunal to deal with its conditions. These Boards were composed of representatives of employers and of employees. As a rule each Board had a different Chairman. As the Boards acted on different principles in arriving at minimum wages, confusion and overlapping occurred.

183. The Court then instituted a search for some general principle for the guidance of the Boards and their Chairmen. It finally arrived at the conclusion that the basic wage of all industries must bear relation, not to existing average standards, but to the actual needs of the workers.

184. On the 16th February, 1914, Mr. Justice Heydon, in the first judgment following a general inquiry into the cost of living, accepted the decision of Mr. Justice Higgins in the 1907 Harvester Judgment, that the standard should be "the normal needs of the average employee regarded as a human being in a civilized community", and that the average employee must be regarded as carrying the responsibilities of an average dependent family. this class as between the ages of 20 and 59, the average family was fixed as comprising a man, wife, and two children. A basic wage of £2 Ss. per week was declared.

185. Mr. Justice Heydon further indicated that the main element for consideration in future applications should be fluctuations in the cost of living. 186. These principles were applied until 1918. In that year, by an amendment of the Industrial Arbitration Act which become operative on the 22nd March, 1918, the Industrial Court was superseded, and a new tribunal called the Board of Trade· was created. This Board was given power to declare from year to year the living wage to be paid to adult male employees, and to adult female employees. Special provision was made for separate inquiry and declaration in respect of workers in rural occupations.

187. On the 5th September, 1918, the Board held its first public inquiry. At the request of the Board the representatives of the partie.s went beyond the mere inquiry into the rise or fall of the cost of living, and placed before the Board their respective views as to the amount of the living wage for adult males. The Board found that the living wage should be £2 ISs. 6d. (a rise of 3s.) but thinking that " under the very special circumstance·s of the present time" and for the present time only, something might be done for the lowest paid class of workers, added

Is. 6d. per week, and fixed the living wage at £3. .

188. On the 8th Octo.ber, 1919, the Board made its living wage declaration for that year. The Board stated the construction it placed upon Section 79, the section enacted in 1918, as to publiG inquiry into the cost of living. The Board held-(a) that the public inquiry directed as to the cost of living, referred to the system for

ascertaining the living wage established by the judgment of the 16th February, 1914, and "which system had the force of law" ; and (b) that the Statute imposed upon the Board the duty of carrying out the principles underlying that judgment.

37 l3l7

Sec. 5.-lndustrial Legislation and Practice of Arbitration Tribunals.-B. New South Wales.

189. The Board re-stated (and re-a:$rmed) those principles in the following terms:-* (1) The ?

·and wife and the average number of dependent children in the families of the said class. (3) The standard of living should be such as to provide a worker of the said class and his said dependent family with the normal require,ments of a member of

a civilized community. 190. In accordance with the above construction of the Statutory direction, the Board held the public inquiry required by Section 79, and fixed the living wage at £3 l7s., an increase of l7s. ,

191. Representatives of employees contended that the dependent family should be taken at the Commonwealth Arbitration Court basis of three children, instead of the New South Wales basis of two children. Having made a statistical inquiry, the Board refused to follow the practice of the Commonwealth Court.

192. The Board of Trade in its declaration of 8th October, 1921, which lowered the 1920 living wage of £4 5s. to £4 2s., said:-" The maintenance of a standard for those who are fortunate enough, in a general state of economic disturbance, to get wages, is not the public purpose for which the Board was appointed. The maintenance of a standard relative to a general equilibrium of industrial and economic· relations is rather the Board's business, and the intention of Parliament."

193. It was suggested to the Board that its declaration should be based on the needs of a male adult worker, taking into consideration his family obligations, if any. 194. The Board adhere<;]. to the family basis on the ground that "there seems little doubt that the legislature entrusted the Board with the duty of fixing the general living wage on the

assumption that the well-established principle would continue." 195. On 24th August, 1925, after re-adjusting the method of calculating the rent item and allowing a higher sum for rent, the Board fixed the living wage for the family unit of four at £4 4s. ·

ESTABLISHMENT OF INDUSTRIAL COMMISSION. DIRECTION TO DECLARE A STANDARD OF LIVING.

196. In 1926 the Industrial Law was further amended. The Board of Trade was abolished and a new tribunal set up called the Industrial Commission. 197. The Commission was composed of the Industrial Commissioner, four representatives of employers and four representatives of employees.

198. By the 1926 Amendment , Section 79 (1) of the Act of 1918 was repealed, and the following Section 7, sub-section (1) (b) substituted :-" The powers and functions of 'tihe Commission shall include the following :-(b) Not more frequently than once in every six months to determine a standard

of living. and to declare what shall , for the putpose of this Act and th e Principal Act, be the living wages based upon such standard for adult male and adult female employees in the State." 199. The Industrial Commission made its first report on the 15th December, 1926. 200. That Commission had, on the 29th October, 1926, decided that only one living wage could be declared for the whole of the State. This decision was important, as the evidence disclosed a substantial difference in cost, in various items, between country and metropolitan areas.

201. The Commission pointed out that the powers and functions conferred on it represented a new departure in the duty prescribed by Parliament, and that no" definite mandate" from the legislature had been hitherto given to the Commonwealth Court, or to any of the State Arbitration or wage-fixing tribunals, " to determine expressly a standard of living." .It aJso

pointed out that "various Arbitration authorities, including the Commonwealth Arb1trat10n Court, have from time to time announced what they considered the cost of living to be for families of a defined structure, but without any fully itemised finding of the constituents going to make up a standard of living."

* In October, 1921, the Board again re-stated those principles with slight changes. The term " unskilled" was used in place of "lowest paid," and the number of <:'hildren to be provided for (two) was definitely stated.

38

8ec. 5.-lndustriaz'Legislation and Practice of Arbitration Tribunals.-B. New Sooth

202. It appears to us that Statute made no real change in the existing system.

203. The wage-fixing-· tribunals of . New South Wales (since 1918) Queensland, South Australia, and, Western Australia, under the construction placed upon the Statutes prescribing their duties, or by the practice they have established, could have exercised, if they had thought fit, powers as wide as the powers conferred by Section 7 (1) (b).

204.' The Commonwealth Court· assumed similar powers, when it adopted the Harvester judgment as a rule to be followed in framing its a wards.

205. The findings of the Industrial Commission on the determination of the standard of living seem to us to have such an important bearing on the question of Family Endowment, as to justify the insertion of a short account of them here. Vp to the 15th December, 1926, New South Wales tribunals had continued to accept

a family unit of man, wife, and two childr/en. The Industrial Commission, however, took evidence and made its finding on the basis of man, wife, and three children. No reason was given for changing from the four-unit family to the five unit, other than the following :-"In order to determine a standard of living, it is essential that some hypothetical

structure . of family be taken as a basis. for evidence, though it does not matter what selection is made, because by known statistical methods the cost of providing the standard of living once ascertained for domestic unit or family of one structure can be converted into the cost necessary for any other dom.estic unit."

207. It was also said that .the fact of evidence having been directed to the cost ·of living o£ a family of five, did not necessarily involve the dec,laration of the basic wage as for that unit.

208. The Commissioner first dealt with the contentionof the employers, that the family unit of four, which had been laid down in 1914 and continued ever since, should be adhered to, and pointed out that with that unit the employers in New South Wales would be compelled to pay for 488,000 non-existent children, but that 288,000 existent children would be inadequately . provided for.

209. The Commissioner then dealt with the contention of the employees, who had again claimed the adoption of a new family unit of five, and pointed out that with that unit the employers would be compelled to pay for 973,000 non-existent cliildren, while 183,000 existent children would be inadequately provided for. . -

210. With regard to the Statement of the Industrial Commissioner that "It does not matter what selection is made of the hypothetical structure of family to be taken as a basis," we suggest _ that. at least on the rent item, it makes a considerable difference. For example the Board of Trade in its Declaration of 7th September, 1923, had expressly .declared that its "standard

of shelter" for a four-unit family was a four-roomed house, but _ the Industrial Commissioner stated that "on the hypothesis of a family of five, four rooms and a kitchen. is the minimum that can be accepted according to Australian stand_tard of reasonable comfort in respect of housing." 211. As a consequence of discarding the four-roomed standard and adopting a five-roomed standard, the rent item in the standard of living was increased from £1 Os. lOd. to £1 8s., or by 7s. 2d. per week. ·

212. The housing standard was declared to be "a five-roomed house in sound tenantable condition, not actually cramped as to allotment, situated in decent surroundings and provided with bath, copper and fixed tubs."

213. The Industrial Commission, in fixing the standard of comfort, worked on the cost of living in the metropolitan area alone, and discarded from consideration uncontradicted evidence that the cost of living was lower in the rural portions of the State, notwithstanding that their determination of the standard of living w:as applicable . throughout the whole State.

214. The representatives of employers claimed that the previously accepted unit of husband, wife, and two children should be adopted ; that some allowance should be made for lower cost of living in rural portions of the State, a;nd that the determination of the standard of living, and the declaration of what should be the living wage, based on such standard, were parts of one task, and did not impose two separate and distinct duties.

215. The representatives of employees apparently a;greed that only one duty was imposed un the Commission, but, accepting a five-unit family, they claimed that an adequate standard . of living could not be provided on a wage less than £6 1 Os.

39

Sec. 5.--Industrial Legislation and Practice of Arbitration Tribunals.-B .. New South lVales.

- 216. The Industrial Commissioner determined the" standard of living" for a hypothetical domestic unit of five persons at £5 6s.* - ·

217. In dealing with the amount of the living wage the Commissioner said:_:__" It is thus evident that a change over must be made from the present system of a flat-rate living wage on a fictitious domestic unit, to a flat-rate living wage coupled with separate and elastic provision for real family life." Without referring to any definite family unit, he then stated that, -regarding the present position as transitional, he declared the living wage " at its then present· figure of £4 4s., which will as it happens provide the standard of living for a man, wife, and one child."

. 218. The Industrial Commissioner coupled with that determination his ·" recorded decision that early legislation by the State Parliament is imperative to secure family allowances."t 219. The Commissioner proceeded to indicate a specimen family income scheme. A schedule exhibiting that scheme showed a "uniform living wage paid by employers to all adult male employees, single or married, with children or without ", of £4 4s. and an assumed addition

of endowment at the rate of 6s. per week for each dependent child. A note appended to the schedule reads as follows:-"It is not suggested that the amount of 6s. per week is enough for the full support of a child, but the schedule as a whole has to be considered."

220. The Commissioner in setting out that schedule said :--=" It is distinctly understood that it is not put forward as a proposalt but as a specimen." .

221. The note above quoted is significant in the light of the fact that the starting point of the illustration, viz., the "uniform living wage of £4 4s. . . . . to all adult male

employees, single or married, with children or without ", was 6d. higher than the amount which, if the practice of the previous twelve years had been followed, would have had to be fixed for a man, wife, and two children. In other words, the £4 4s. really included :-(a) a sufficient sum of money to provide for the comfort of two children, on the basis

of the 1925 living wage declaration, or (b) the sum ef 11s., being the amount included for one child in the new standard of comfort determined by the Commission in the present judgment. 222. The employers' representatives claimed that the living wage should be declared at £3 19s. The employees' representatives claimed that it should be £6 lOs., but the Industrial

Commissioner declared the living wage at the same sum, £4 4s., as in 1925, and this became the declaration of the Commission. . . 223. The position of .the 1926 Judgment was that the Commissioner had determined that the amount necessary to provide the proper standard of comfort for a man, wife, and three

children was £5.6s. He then declared the living wage at £4 4s., which sum he stated would provide that standard for a man, wife· and one child. The difference between those two sums was, therefore, due to the fact that the £5 6s. related to a five-unit family and the £4 4s. to a family,

or to analyse the position still further, the £5 6s. standard of living was nlade up of £3 13s. for the man wife, and lls. each, or £1 l3s. in all, for the three children. 224. An increase of the living wage from £4 4s. per week to £5 6s. would imposed upon employers an increase in their wages bill, for 475,000 adult male employees, of about

£27,000,000 per annum, also a large additional sum in respect adult female employees and juniors of both sexes. 225. On the other hand, had the Commission (without making any alteration in the rent item) adapted the £5 6s. standard of living to a four-unit instead of a five-unit family, the result

would have been to increase wages cost by £13,500,000, plus the large addition in respect of adult female employees, and juniors of both sexes. 226. The mere statmnent of the above figures makes it reaso.nably certain that the all­ important factor of capacity to pay was one of the reasons, if not the only reason, which barred

the way to a declaration of £5 6s. as the living wage. · . .

*This standard is higher than that of the findi.11g of the Basic Wage Commission 1920, which was then declared to be beyond the productive capacity of the country to pay. The 1920 finding, reduced in accordance with the cost of living figures, was at the date of the 1926 judgment equivalent to £5 ls. 6d. · t The Family Endowment Act passed shortly afterwards provided for the payment of 5s. per week for each dependent child, but subject to an income limit. -

t Notwithstanding the definite pronouncement that the above-mentioned schedule was "not a proposal" but. an illustrative specimen of a hypothetical family endowment scheme, it was treated by the Commissioner himself, only six months later, as an actual decision. He said in ms declaration of the 27th June, 1927 :-"The schedule . . . . . headed in the first column' Uniform Living wage ' . . . . £4 4s. amounted to determining the living wage at £4 4s. on a standard of living appropriate to any male adult employee

apart from any question of c.hildren. _In that sense the judgment raised the of living, for it allocated to a sma!ler dome.sti?, unit the same · amount of wage whtch would have been allocated to the large, umt of the Board of Trade at that Board s standard.

40

Sec. 5.-Industrial Legislation and Practice of Arbitration Tribunals.-B. New South Wales.

227. The Industrial Commissioner, in referring, in his 1927 determination, to the 1926 declaration, said:- -

'' Assuming that the Commission had in December last adhered to the standard of living of the Board of Trade, and had also adhered to the domestic unit of the Board of Trade (a man, wife, and two children, which had been formerly established for twelve years), the actual wage that must have been declared in December, 1926, would have been £4 3s. 9d." 228. The Industrial Commissioner might have added that,, eliminating one of the two children from the family unit (as he claimed power to do), the actual wage that must have been declared for a man, wife, and one child, on the hitherto accepted standard of living, would have been £4 3s. 9d., less cost of one child 11 / -, (see para. 221) that is £3 12s. 9d.

229. Child Endowment legislation and change of family .unit for basic wage.-In the interval between the date (16th December, 1926, on which the standard of living was determined at £5 6s., and the living wage declared at £4 4s.), and the meeting of the I ndustrial Commission (27th June, 1927), to declare and the 1927 standard of living and living wage, the New South \Vales Legislature passed three new Acts dea1ing with the subjects under review.

Their short titles are respectively :-The Industrial Arbitration ·(Living .· TV age Declaration) Act 1927. The Fa1nily Endowment Act 1927. The Finance (Family Endowment Tax) .Act October 1927. 230. The Industrial Arbitration (Living Wage Declaration) Act Aprill927, Section 2-

(1) Any declaration of a living wage for male adult employees made on or after the fifteenth day of June, ·One thousand nine hundred and twenty-seven shall be in accordance with the provisions of this Act, but any determination of a standard of living made on or after that date shall be in accordance with the provisions of Section 7 of the IndustTial Arbitration (Amendment) Act 1926. (2) any declaration of a living wage for adult 1nale emp"loyees, such living wage

shall be based upon a standard of living in accordance with the provision of Section 7 of the Industrial Arbitration (.Amendment) Act 1926, and on the requirements of a man and wife without children. 231. By sub-section (3) of Section 2 the Co.mmission was enjoined to declare afresh between 15th June and 30th September, 1927, the living wage for male workers. Thereafter the provisions of_ Section 7 as to date applied, viz., that the living wage is not to be declared 1nore frequentJy than once in every six months.

232. An important change effected by the 1927 Act permitted the making of a declaration of a separate living wage for rural employees, or any section thereof. 233. The Industrial Commissioner pointed out that the most i1nportant change e:ffe.cted by this Act was that up to the date of its passing" the legislation in New South Wales upon living wages had not prescribed any domestic unit, nor indeed had there been any definition of the contents of a living wage."

234. It appears to us, however, that a family unit consisting of husband, wife, and two children had been consistently accepted by the wage-fixing tribunals in New South Wales from 1914 to the passing of the Act of 1926. And though no definition of the contents of the living wage had been prescribed by legislation, Mr. Justice Heydon, in his 1914 had accepted as the standard to be declared, such a surD as would be necessary to provide for " the normal needs of the average employee regarded as a hu1nan being in a civilized community."

235. Following this new legislation the Industrial Commissioner, although in December, 1926, he had found that £4 4s. provided the necessary standard of comfort for a man, wife, and one child, and although he found that the cost of living had only risen lOd. per week, declared the living wage at £4 5s. for the new statutory unit of man and wife without children.

236. The employers' representatives claimed that on the Industrial Commissioner's own Judgment in 1926, lis. for one child, at least, should be deducted. This reasoning appears to us to be sound. 237. The employees' representatives were in favour of declaring a living wage of £4 17s.

238. Under the circumstances (in view of the conflicting opinions of the representatives), the judgment: of the Industrial Commissioner, as provided by the Act, became the judgment of the Commission.

41 1321

Sec. 5.-Industrial Legislation and Practice of Arbitration Tribunals.-B. New South Wales. 239. The 1927 Act by express words substituted the new unit of man and wife for the theretofore judicially accepted unit for New South Wales of man, wife, and two children. 240. Industrial Arbitration (Amend1nent) Act 1927.-The above Act altered the

Constitution of the . I?-dustrial, by omitting representatives .of employers and

and prov1du?-g for tne. of three 1nembers, one of who.m was, by his

comm1ss1on, to be appo1nted Pres1dent. Each member n1ust possess legal qualifications. The Act conferred upon each member the same rank, title, status, &c., as a Puisne Judge of the Supreme Court. .

. 241. Pursuant to the Act, Piddington, J., was appointed President, his colleagues being Street, J., and Cantor, J. 242. The Act also provided that the decision of the majority should be the decision of the Commission.

243. Since the foregoing resume of New South Wales industrial legislation and practice vras written, we have perused the individual judgn1ents of the Commission delivered on the 25th September, 1928, a pronouncement by· the full Bench on the same date, and statements made by the members of the Com1nission on the pth November, 1928.

244. The judgments were delivered upon an application based on the ground that the declaration of living wage made in June, 1927 (see paragraph 235), based upon wrong principles and was · not made in accordance with the directions contained in the Statute, and that,. therefore, this Commission should re-consider the whole position,and hold a fresh inquiry".

245. The actual questions of law argued were apparently accepted as submitted by Mr. Flannery, K.C., as :-

"That the duty of the Cornmission in declaring a living wage for rural employees should be discharged by the Commission _ detern1ining upon a standard of living in accordance with the provisions of Section 7 of the Industrial Arbitration (Amend1nent) Act 1926, and having determined upon such standard of living by fixing the requirements of a man and wife without children, which would secure the attainrnent of such standard of living for them, and by declaring thereupon a living wage adequate to such requirements.'' 246. As a result of the argument, the Industrial Commission was divided in opinion, Piddington, J., adhering to his 1927 Living Wage J udgment. On the other hand, Street, J., and

Cantor, J., arrived at a conclusion which is clearly stated in the following quotation frmn the judgment of Cantor, J. :-"It is plain that His Honour, and in my opinion without any justification, departed entirely frorn the principles laid down in the Judg1nent of June, 1926, which

I have already quoted, and in determining the standard of living, and fixing the living wage, adopted methods which had already been conden1ned by the Federal Royal Con1mission on the Basic Wage, and which , with every respect, were in -my mind, fundamentally wrong". 24 7. On another point, the learned Judges constituting the majority apparently agreed with the view expressed by Piddington J., in his 1926 Judgment, that the standard of living to be determined "should be one and the same throughout the whole zone of industrial life."

248. As we have pointed out (paragraphs 303 and 376) this apparently involves the discarding of the "humblest class of worker" or "the lowest paid class of worker" as the class for which the living wage is to be .

249. It would further appear from the judgment of the majority that the determination of the standard of living was intended, by the Act to be " entirely independent of the determination of the cost of providing that standard". This, in our opinion, results in an impossible position.

250. The review afford a of the difficulties we

in any scheme involv1ng tnbunal wage fixatwn. (1n New South Wales, t he Ir:dustnal Commission) and another tnbunal for ch1ld endow1nent (1n New South Wales, the Parhament). 251. One such difficulty results from the view expressed in t he minority judgment. It would seem to follow from the majority judgn1ent that on account of children being dissociated from the fixing of. the living wage, _a sum of lls. would h_ave to be deduct ed fr01n the

existing living wage. The by the Judg1nent 1s that as the lls .represents

full cost of maintenance of one ch1ld, and as Parliament has only endowed that ch1ld to the extent of 5s., only 5s. instead of lis. should be deducted fron1 the living wage. This would still leave childless adult workers with an allowance of 6s. for a non-existent child. ·

42

Sec. 5.-Legislation and. Practice of Arbitration Tribunals.-B. New South Wales. 252. Street, J., emphasized in his judgment the fact that "the Commission is the sole judge of the extent of its own jurisdiction and powers. There exists ·no Appellate Court or Tribunal which can review a decision of this Commission ".

253. The above judgments stress the following :-(a) the necessity of using definite and clear language in · enactments conferring - jurisdiction on industrial tribunals. (b) t he question whether t he decisions of industrial tribunals should not be subject

to appeal.

INDUSTRIAL LEGISLATION AND PRACTICE OF ARBITRATION TRIBUNALS. C.-QUEENSLAND. 254.'Prior to 1925 all matters under the Industrial Arbitration Acts were dealt with by the Court of Industrial Arbitration, but by the amending Act of 1925 such Court was abolished and a Board of Trade and Arbitration substituted.

255 . Section 8 of t he Ind'ustrial Arbitration Act 1912 (as amended) provided that the Board of Trade and Arbitration " ma.y make an award with reference to a calling or callings-(i) Fixing the quantum of work or service to be done, and the lowest prices for their ·work or rates of wages payable to employees other than aged or infirm workers:

Provided t hat in fixing rat es of ·wages in any calling-( a) The same wage shall be paid to persons of either sex performing the same work or producing the same return of profit to their employer; .

(b) The Board of T rade and A rbitration shall be entitled to consider the prosperity of the calling and the value of an emp loyee's to his employer in addition to the standard of living, but in no case shall a rate of wages be paid which is 'ower than the minimum wage declared by the Board of Trade and Arbitration.

256. Section 9, sub-section (3) provides that the Court may from time to time make declarations as to-( a) The ·cost of living ; (b) The standard of living;

(c) The minimum rate of wages t o be paid to persons of either sex; (d) The st andard hours :

Provided that-(i) The minirnum wage of an adult male employee shall be not less than is sufficient to maintain a well-:conducted employee of average health) strength, and competence, and his wife, and a family of ,three children in a fair and average standard of

comfort having regard to the conditions of living prevailing among employees . in t he calling in respect of which such minimum rate is fixed, and provided that in fixing such minim urn wage the earnings of the children and wife of said mnployee shall not be t aken int o account. (ii) The wage of an adult female employee shall not be less than is sufficient

t o enable her t o support . herself in a fair and average standard of comfort having regard t o the nature of her duties and to the conditions of living prevailing among fen1ale employees in the calling in respect of which such .minimum wage is fixed.

257 . These sect ions of the Act were considered before the Full Bench of the Court o. Industrial Arbitration in February, 192 1. The Court in considering the sections pointed out that the terms " Basic Wage ", " Living Wage " and " Minimum Wage " have not always been used in the same sense, and referred t o the New South Wales Living Wage Declaration of 1920 (New South Wales I ndust-rial Gazette, page 620) , where-the Board of Trade remarked, " parti.es fail to distinguish bet ween the living and the minimum wage. The minimum wage is fixed by Arbitration Court s after consideration of the general conditions of each

t he living wage fixed by this board controls all industries irrespective of their ability or otherwise to meet increased labour cost." The Full Court then continued as follows-'' We are asked t o determine ' t he minimun1 rat e of wages t o be paid to persons of either sex ' " . If what we are to determine is ·t he living wage the Court would be required to fix a wage below which no indust ry in the Stat e may be permitted to go " .

Se(\ 5.-1 ndustrial Legislation and Practice of Arbitration Tribunals.-0. Queensland_ .

. 258. The Court interpreted its powers thus:-

1323

. " We think it is permissible to lay down a minimum wage which shall be applicable in industries of average- prosperity; reserving to the Court the' right to fix a lower 1ninimum in industries which are unable to bear that minimum, and to fix a higher wage where the prosperity of a calling renders· such higher wage proper (Section 8 (i) (b)).

We are aware / that in adopting this course we are departing from the generally recognized custom 9f Courts of Arbitration, and particularly of the Commonwealth .Arbitration Court. The alternative would be to retain the existing minimun1 and fix a higher wage after consideration of the prosperity of each particular industry. This

would involve an examination of the profits or financial position of each industry and lead to varying minima which would become a source of friction. \Ve think it better to lay down a wage which shall be the minimum in of average prosperity,

avoiding the need for an inquiry into the financial position of a particular industry unless the employer contends that he cannot pay the wage, or unless the employee contends that the prosperity of the industry demands a wage still higher". . . 259. The Court then declared the wage at £4 ·5s. per week) and proceeded as follows:­ " 'This minimum will not be automatically applicable to all industries, but upon application duly made, the Court will apply it to an industry unless it can be shown phat the special circumstances

of the industry justify a lower minin1um . In considering whether an industry is sufficiently prosperous to permit of the adoption of the minimum wage, the Court will take into consideration all circumstances incidental to the industry, including its freedom from strikes: With regard to wages well above the minimum, the Court will on each award consider whetherthey should bE' raised to the same extent as the basic rate, _or at all".

260. It would seem from evidence before this Commission that neither the Court, nor the Board which took the place of the Court of Industrial Arbitration of Queensland, has ever exercised the power of declaring a n1.inimum wage conferred by Section 9 (3) (c). From the same evidence it would also appear to be arguable that the declaration of a minimum wage was intended by the Legislature to be a condition precedent to the exercise of the power to "give effect

to the words " the minirnum wage of an adult male employee shall not be less than is sufficient to maintain a well · cond·ucted employee of average health, st-rength, and competence, in a fair and average standard of c01nfort." Frmn a consideration of these powers and limitations, it would also appear that in the absence of any declaration by the Court of a minimum rate of wages,

the Court may have power in its awards to fix rates of wages without any necessary reference to any particular standard of comfort. But it is certainly clear that, if a declaration is made by the Court, the minimum fixed must be not less than sufficient to provide the statutory standard of comfort, and also that no rate of wages may be paid, lower than the declared minirnum.

261. The decision of the Full Court may have been arrived at by construing the proviso as being such in form only, and as being in substance an evidence of the paramount intention of the legislature that under no circumstances should less than a minimum wage providing the statutory standard of con1fort be paid to any adult n1ale of average strength and competence.

Or it may be that the Full Bench deduced fron1 Section 8 (1) (b), which cuts down the limitation as to the minimun1 wage imposed by the proviso to Section 9, that the legislature contemplated that a declaration of a minimum would precede every award, and to avoid defeating that anticipation, the Court felt constrained to act as if the declaration had in fact been made. (Vide

the statement of the learned President, Q. 2120.) _

262. From evidence placed before the Comn1ission it would appear that the Court, in the exercise from time to ti1ne of its functions in dealing with the fixation of the minimum wage, never made an independent inquiry into what ought to be the statutory standard of comfort.

263. It would further appear that the Court fixed the minimum wage from time to time " at a point indicated by the New South Wales basic wage, but never below the ' Harvester ' rate adjusted to date. These two rates apparently marked the lirnit upwards and downwards respectively of the Queensland basic as the Queensland basic. wage :vas

only for industries of average prospe:tLty, and a or lower wage was pa1d for IndustneE conspicuously above or below average prosperity, it follo wed that the Court also took into account general capacity to pay." ( ib.) 264. In 1925, as has been pointed out, the Court was abolished · and its functions were transferred to the Board of Trade and Arbitration. The Board has adopted the late Court' ·

methods without restriction.

44

Sec. 5.-Industrial Legislation and Practice of Arbitration Tribunals.-0. Queensland.

265. In our opinion it followsfrom the above considerations that the accuracy or otherwise of the contention that the minimum or basic wage of Queensland (these terms being used inter­ changeably) is sufficient to provide a reasonable standard of comfort for a man and his wife and three children, rests to some on the accuracy or otherwise of the same contention in relation to the Commonwealth basic wage for Queensland. That wage is fixed on the Harvester equivalent adjusted to date but without addition of the Powers' 3s. The

Commonwealth basic wage for Queensland for first quarter 1928 is £3 18s. 6d., but the Queensland basic wage is""£4 5s., which is 6s. 6d. higher than that of the Commonwealth. The present Board has pointed out in the basic wage judgment (Government Gazette, 22nd March, 1927) that the late Court "appears to have felt at liberty to fix the Queensland basic rate at that point between the Commonwealth basic rate and the New South Wales basic rate, which was determined by general capacity to pay, and further that the Court was always able to fix a basic rate well above the ' ·Harvester rate ', because the cost of living in Queensland throughout remained comparatively low. Vv orkers on the Queensland basic wage have an advantage over

workers on the Commonwealth basic wage, not only in nominal wage but also in effective wage ".

266. Industrial Boards· in Queensland.-Provision is made under the Industrial Arbitration Acts 1916 to 1925, for the appointment of Industrial Boards for any calling, industry, or undertaking. These Boards are appointed by the Minister charged with the administration of the Acts, on the recommendation of the Board of Trade and Arbitration .

.

267. The functions of these Boards are twofold :-(1) The making of an award in any industrial cause remitted to the Board by the Board of Trade and Arbitration; or (2) The making, after inquiry, of recommendations-as to the regulation of any calling

for the purpose of enabling the Board of Trade and Arbitration to 1nake an award; or inquirillg into and reporting to the Board of Trade and Arbitration on any matter remitted by such Board. (Section 39.)

268. The declarations of the Board of Trade and Arbitration as to cost and standard of living, minimum rate of wages, and standard hours, are binding on industrial boards, and an appeal lies to the Board of Trade and Arbitration against any award, or part of an award, of an Industrial Board.

2.69. Outstanding Differences of Queensland System co·mpared with Systems of Other States-( I) The practice adopted in relation to the fixing of the minimum wage. (2) Express power to consider the prosperity of the calling. (Section 8 (i) (b).)

(3) Express power to consider the value of an employee's labour to his employer. (Section 8 (i) (b).) (4) The direction that the same wage shall be paid to persons of either sex performing . the same work or producillg the same return of profit to their employer.

(Section 8 (i) (a).) '

( 5) Express power to make declarations as to­ ( a) The cost of living. (b) The standard of livillg (the New South Wales tribunal has this power). (c) _ The standard hours. (Section 9 (3).) · (6) The standard of comfort to be provided by the minimum wage has to be arrived

at after having" regard to the conditions of livillg prevailing among employees ill the calling in respect of which such millimum wage is fixed". (Section (i) (d) (1).) /

(7) Although the Board of Trade and Arbitration, like the New South Wales Industrial Commission, (See para. 230) has power to declare the standard of livillg, it apparently does not exercise such power.

INDUSTRIAL ·LEGISLATION AND PRACTICE OF ARBITRATION TRIBUNALS. D.-SOUTH AUSTRALIA. 270. The Industrial Court was constituted by the Industrial Arbitration Act 1912, and Section 22 enacted that 'the Court should not have power to order or to prescribe wages which did not secure to the employee affected a " living wage " which was defined as a s·um sufficient for the normal and reasonable needs of the average employee living in the locality where the work under

consideration is done or to be done.

45

1_325

Sec. 5.-Industrial Legislation and Practice of Arbitration Tribunals.-D. South Australia.

. 271. The j-irrisdiction of the Court was limited to employers and employees in industry, and was defined as meaning any business, trade, manufacture, undertaking, occupation or. calling agriculture) in which persons are employed for hire or reward. Agriculture (Without limiting its ordinary meaning) includes horticulture, viticulture, and the use of land for any purpose of husbandry, including the keeping and breeding of live stock, poultry or bees, the growth of trees, plants, fruits, vegetables, and the like. It followed that persons engaged

In the· great primary industries of wool, wheat, wine, fruit, &c., were definitely excluded from the operation of the Act.

272. The Industrial Arbitration Act was repealed in 1920 by" The Industrial Code 1920." The Industrial Court constituted by the Act of 1920 was continued.

273. The Code provided for the appointment of a Board of Industry consisting of a President, or a Deputy President of the Court, and four -Commissioners, two to be representatives of employers, and two of employees. One of the functions of the Board is; after public inquiry as to the increase or decrease in the average cost of living, to declare the living ·wage to be paid

to adult male employees and to adult female employees, with full power to fix different rates to be paid in different defined areas. While the "living wage" is declared by the Board, the Industrial Court determines secondary wages and labour conditions generally .

. 274. "Living wage" was again defined as meaning a sum sufficient for the normal and . reasonable needs of the average employee living in the locality where the work under consideration is done or to be done. ,

275. In 1920, in The Living Wage (Printing Trades) Case 3 S.A.LR., page 215, the learned President after hearing elaborate arguments, and giving consideration to previous judgn1ents of the Court, construed various expressions in the above definition of the "living wage " as follows:-" Dealing with the expression 'the normal and reasonable needs' he said, "I have frequently said that such needs cannot be interpreted withottt refe'rence to national incorne and

national output.''

276. Dealing with the construction to be placed upon the words "average employee," the learned President referred to fact that Gordon J. in the Brushn1akers' Case (1908) expressly laid down that the living wage W2oS a family wage, and that he based his decision on data with respect to a man, wife, and three children. The President also referred to the fact that the New South V/ales tribunal avowedly proceeded on the basis that the adult male vrage should be a wage for an aver3Jge family, and had concluded that it was only permissible to assume a family

of four. Referring further to a previous judgment of his own in 1918, the learned President said:-" I think it desirable at once to state that 1ny judgment did assume the existence of a man, wife, and three children."

277. The final conclusion arriyed at by the learned President on the construction of the statutory expression "average fa1nily" is as follows :-" I arrive then at the general conclusion that both in law and comrnonsense, the '' living wage '' should be such as to support a faJnily of five.''

278. Ever since the date of the above judgment the Board of Industry in South Australia has acted in accordance with this interpretation of the Statute.

279. In South Australia, as in l¥ estern Australia, the" living wage " is fixed on the asswnption that it is the wage for the unskilled worker.

INDUSTRIAL LEGISLATION AND PRACTICE OF ARBITRATION TRIBUtJALS. E.-WESTERN AUSTRALIA. 280. Under of the I ndustrial Arbitration Act 1912-1925, the Court of Arbitration, which consists of a Judge and a representative of employers, and a representative o): mnployees, is required to determine before the 14th day of June in each year the basic wage to be paid to male

and female workers. The san1e section also provides that "the expression ' basic wage' means a sum sufficient to .the .average to whom it applies to live in having

regard to any domestw to whwh such average W?rker would be snbJect.

281. The difficulties of construction arising out of the language used by the legislature are apparent on the face of tbe section.

46

SIX. 5.-Industrial Legislation and Practice of Arbitration Tribunals.-E. Western Australia.

282. Mter an exhaustive analysis, the Arbitration Court on the 11th day of June, 1926, arrived at the following conclusion, upon which it fixed the basic wage for ·western Australia for the year 1926-27. (I) The "average worker" is the "unskilled worker." (This construction was

unanimously accepted.) (2) The expression "the domestic obligations to which such average worker would be ordinarily subject" means a wife and two dependent children. (This was a majority judgment), the dissentient member holding that the expression

means a wife and three dependent children. 283. The material section of the Industrial Arbitration Act, so construed, placed upon the Court the obligation to determine a basic wage to be paid to each unskilled adult male worker, sufficient to enable him, with his wife and two children, to Jive in reasonable comfort. Every ·adult male worker to whom the act applied would receive not less than the declared basic wage,

quite irrespective of his actual family obligation. 284. The Members of the Court all differed on the question of the amount to be declared. Mr. Justice Dwyer, after considering the evidence, the Commonwealth award, various State awards, and the report of the Basic Wage Commission, arrived at the sum of £4 5s. The

representative of the employees gave no actual figure, but it is obvious from the report of his judgment that he favoured a higher amount. The representative of the employers favoured an . amount of £4 ls. ·

285. The Act required a majority decision, and, as a compromise, the representatives of the employers and employees accepted the figures of the learned President. 286. In 1927, the Court of Arbitration fixed the basic wage for ·western Australia at the sum of £4 5s., on the same family unit of husband, wife, and two children. No alteration was

made in 1928. ·

INDUSTRIAL LEGISLATION AND PRACTICE OF ARBITRATION TRIBUNALS. F. VICTORIA AND TASMANIA. 287. These two States have no Industrial Courts, but have -adopted the wages board system. The evidence indicated that in practice the boards in these two States, in fixing wages, use the basic wage of the Commonwealth Arbitration Court as their starting point.

288. An essential difference between the practice of these two States, is that the wages boards in Victoria include an element of the Commonwealth basic wage, known as the " Powers' 3s. ", but in Tasmania this amount is not included. 289. In Victoria, many of the Boards provide for quarterly adjustments of the wages fixed, in accordance with the rise or fall in the Commonwealth cost of living figures. Such adjustments are not provided for in Tasmania.

SECTION 6.

REGULATION OF WAGES AND WORKING CONDITI_ONS-VARIATIONS IN STATUTES AND IN PRACTICE OF TRIBUNALS. 290. The multiform methods adopted in Australia for the regulation of wages and conditions of labour impose an unnecessary burden upon both employees and employers.

291. A few of these differences may be indicated; there are many more. 1. The Commonwealth Court of Conciliation and Arbitration operates m each State, and by its awards, regulates many industries, or branches of industry. 2. The coal-mining industry has a special Commonwealth tribunal of its own.

3. The employees in the Commonwealth Public Service have a separate tribunal. 4. In addition to the Commonwealth system, each State has at least one system, while some of the States have more than one, and one State has four.* - - - --------------- ------,------------- ----------

State.

New South Wales

Queensland

South Australia

Western Australia.

Victoria Tasmania.

No. of Systems. Tribunals.

2 l. Industrial Commission

2. Wages Boards

2 l. Board of Trade and Arbitration

2. Industrial Boards 4 l. Industrial Court

2. Board of Industry 3. Wages Boards 4. Public Service Commission 2 l. Court of Arbitration

2. Public Service Commission Wages Boards Wages Boards

47 1 3.2 7

Sec. 6.-Regulation of Wages and Working Conditions.-Variations in Statutes and m Practice of Tribunals. 5. The powers, duties and functions of the various tribunals exhibit many points of difference (some of which we have already referred to). In some of the States these

variations are not clearly apparent on the face of the Statute, but depend upon the construction placed by the Tribunal on vague and indefinite words and phrases. 6. The over-lapping of, and variations between, Commonwealth and Stat e Awards are serious matters, as is also the power of parties to invoke the jurisdict ion of a State tribunal, and if not satisfied to endeavour t o obt ain a more favorable award from the

Commonwealth Court or vice versa . An attempt has been made in the Commonwealth Conciliation and Arbitration Act of 1928, Sections 17 and 32, to deal with these matters, but the amendments do not cover the whole of the field.* 7. The question of hours of labQur.

8. The Commonwealth Court in general fixes its basic wage for any industry where no special conditions exist , by ascertaining the Harvester equivalent , and adding thereto 3s. per week. (See paragraphs 444 and 452.) 9. The direction contained in the New South Wales and Queensland Acts t o

declare the standard of living. Special reference is made t o this in paragraphs 198-255 of this report. 10. The powers of State tribunals are not co-extensive, e.g., the New South Wales Industrial Commission controls rural industries ; the Sout h Australian Industrial Court does not. 292. Further specific differences of detail follo w. 293. Capacity to Pay .-Under the Commonwealth syste m t an d th e systems of So uth Austl·alia and Western Australia, capacity to pay is theoretically, at least, disregarded by t he Industrial Tribunals. If an industry cannot pay the declared basic wage, it must go out of existence .

294. In Queensland (and in that State alone) the St atute expressly empowers the tribunal when, fixing wages to consider the relative prosperity of industries, and the value of the employee's labour to his employer. That is, the Court is expressly empowered t o consider capacity to pay. (See also paragraphs 257 and 269). ,

295. The Family Unit.-'-The family unit, as prescribed by Statute or adopted in practice by wage fixing tribunals, varies as follows :-Commonwealth . ·I

Queensland . . wife, and three children

South Australia .. ) . ·

Western Australia Man , wife, and two children

New South Wales.. Until l927 , man, wife, and two children, but since the passing of the Family Endowment A ct 1927 , man and wife only Victoria .. · .. \._No statutory unit, but the five-person unit may be

Tasmania .. J said to be in operation

296. Standard of living-Commonwealth.-" The normal needs of the average employee regarded as a human being in a civilized community," and the wages to. ensure such standard were wages " sufficient to provide these things (food and shelter) and clothing, and a condition of frugal comfort estimated by current human standards." (Higgins, J ., in the Harvester Case, 1907. )

297. South Australia.- The standard of living is represented by a wage sufficient to provide for the normal and reasonable needs of " the unskilled man " and his wife, and three children, living in the locality where the work under construction is done or t o be done. 298. Western Australia.-The standard of living is represented by a wage sufficient t o enable " the unskilled worker " and his wife, and two children t o live in reasonable comfort .

299. Queensland.-The standard of living is represented by a wage not less t han sufficient to maintain " a well conducted adult male emplo yee of average health, strength and competence " • Under Section 17.-" If it appears to the Court that. any Industrial Authority is dealing or about to deal with an industrial dispute, or with a mat ter which is .J?rovided in an a of Court or is t he subject of proceedings the Court, the Court may

order restraining the State Indust r1al Authonty from dealing w1th that diSpute, or any p art thereof, or w1th that matter as t he Court thinks fi t , and thereupon the authorit y shall, in accordance with t hat order, cease to proceed .in the or part t hereof, or in that matter. " Section 38o (Sect ion 32 of the Amending Act) is as follows:-" The Court shall, in the case of every indust rial dispute consider in the course. of the hearing and as prompt ly as possible if there is anything in the nature or circumstances of the industry, or any other

reason, which m akes it more desirable that t he dispute or any par t of it should be dealt with by the Court than by any St ate Indust.rial Authority or by State Industrial Authorit ies in t he several States, and unless t he Court so declares, it shall dismiss or refrain from further hearing or determining, the dispnte or part." t By an amendment of the Commonwealth Al·bit ration Act , assented to Decem ber, 1928, the Co urt is empowered to consider (except as to the baaic wage), the probable economic effect of its determin ations. The Section in question reads aa follows :-" The Court shall, before making any award or cer tifying any agreement, and in proceedings for t he variation or cancellation of an award or

agreement, take into consideration the probable economic effect of the· agreement or a ward in relation to the com munit y in general and the probable economic effect thereof upon the industry or industries concerned :-Provided t h at this section shall not affect the practice of the Oourl in fi:cing the ba8ic wage."

48

Sec. 6.-Regulatton of Wages and Conditions.-Variations in Statutes and in Practice oj T ribunals. · ·

and his wife, and a family of three children, on a fair and average standard of comfort having regard to the conditions of living p revailing among ernployees in the calling in respect of which the tninimu?n rate is fixed. 300. New South Wales.-In 1926 t he Amending Act empowered the Indust rial Commission

" not more frequent ly t han once in every six mont hs t o determine a standard of living, and to de clare what shall be the living wage based upon such standard." This has been described by t he Industrial Commissioner as representing '"' a new departure in the duty prescribed by Parliar.aent."

301 The new statutory provision has been constr ued by the New' South Wales Industrial Comrnission as follows :- ' ' The standard of living . . . . was to be a standard of living as t o which t he intention cannot be ascribed to t he Legislature that it should be a standard of living suitable to n1ales, and not t o fmnales; to seniors and )lot t o juniors; to men wit h fa1nilies and not t o men without fan1ilies. The intention was that what may be called an standard should be determined by ordinary methods of investigation and that. tlu:s standard should be one and th e

sarne throughout the 1chule zone of industrial life. " (30. I. G. , page 1441.) 302. The above conclusion was amplified by the Industrial Commissioner in the Living Wage Declaration of 27th J une, 1927 (xxxii I. G. , 49), as follows.:-" An Industrial Arbitration authorit y in New South vVales could have declared a living wage on the footing of bare subsistence

. . . . or upon the standard of living of a skilled or a professional worker, or upon a standard of luxury, not comfort. The new Act . . . . leaves 3Js it was, the liberty of the Comn1ission t o adopt whatever standard of living it finds to be just. No other restriction is placed upon the judicial principles of action the Con11nission should adopt.''

303. The New South Wales Con1n1ission, t herefore, apparently discarded " the humblest class of worker " or " the unskilled worker" as t he type for which in· accordance with the previous practice of the New South Wales tribunals the living wage has t o be declared, and revert ed in effect to t he declaration of the Basic \Vage Comrnission, that their duty was not to discriminate bet ween t he standard reasonable for one type of employee and that which is reasonable for another type. (S ee per Higgins, J ., 15. C.A.R. 106.)

304. To attem pt to determine a stan dard of living which in any real sense would be one and the same througho ut the whol e zo ne of industri al li fe is to attempt the impossible. · 305. logicall y, that woul d inv olve (a) a reduction of t he whole industrial community (skilled and unskilled, indust rious and lazy) to the dead level of a communistic identity of wage ;· (b) an entire disregard of t he value of services in production; and (c) the impossible condition that every worker shall be part of a fan1ily unit of the same structure.

306. But the determination of t he New South Wales Commission is not subject to appeaL and therefore, whether right or wrong, has the force of law, until altered by legislation. Until so altered it represents a marked and important difference in wage-fixing method, as compared with the methods of t he Commonwealth and of all the other States. It is to bring out and emphasize this difference , which is a mat ter of cardinal importance, not only with regard to wage­ fixation, but also with regard t o t he consideration of any scheme of Child Endowment, which is n ot entirely separat ed in operation from wage-fixation, that we have ventured to analyse and criticize the interpretation of t he St atut e, adopted by the New South Wales Industrial Commission, and the consequential effects. -

307 . Determinat ion of Basic Wage-Time intervals.-There are also essential differences in the legislation of the Commonwealth and of those States (Queensland, New South Wales, S.outh Australia, and West ern which have industrial tribunals, as to the statutory period which must elapse before a change can be made in the basic or living wage, and, therefore, in t he standard of living.

308. Those st at ut ory periods are a:s follows :- -Cmnmo nwealt h.-No time is specified. The Court does not declare a basic wage applicable to all industries. It fixes a basic wage in connexion with each award. On application by either part y to an award the Court may vary that basic r ate.

309. New Sou th oftener t han once in every six months. (Act No. 14 of 1926.)

The first declaration was made under that Act on the 16th December, 1926. The second declaration, which raised t he standar d lls. per week, was made on the 27th June, 1927 (six months and eleven days aft er the first declaration). In connection with the 1927 declaration, the Industrial Com1nissioner said:-" It is a mistake to suppose that the Commission is to re-determine the standard of living and tore-declare the living wage every six months A standard which changed every six months could hardly be called a standard."

49

1329

Sec. 6.-Regulation of liVages and Working Conditions-Variations Statutes and in Practice of Trihunals.

310. Queensland.-From time to time, i.e. , whenever the Court thinks fit.

311. South Australia.-The Board is required to hold " an inquiry for the purpose of declaring a basic wage whenever a substantial change in the cost of living, or any other circumstance has, in the opinion of the Board, rendered it just or expedient that the question of the living wage should be re-opened or reviewed." But no new detennination may be 1nade until the expiration of six months from the date of the prior detennination.

312. Western Australia.-Before the l4th.June in every year.

SECTION 7.

CONFLICT OF INDUSTRIAL LAWS-JUDICIAL COMME NT. 313. The Industrial Reports contain frequent judicial comrnents and complaints on some of .the aspects to.

314. The following are illustrative quotations:-"The avowed policy of the Commonwealth which has remained unchallenged for many years is to impose on all industries the obligation of providing at least a living wage for all employees. There have been and there ate undoubtedly to-day imperfections in the legislative devices for the carrying out of this policy." (The President, New South Wales Board of Trade, Declaration 8th October, 1920.) ·

315. "The various States in declaring a living wage have to consider the question of interstate competition. Mr. Justice Higgins has pointed out the fact, and has expressed in unambiguous terms, his opinion as to the propriety of the States paying due respect to this limitD,tion of powers. The limitation points to the desirability of providing some machineTy which will fix the living wage for with due regard to the problem as a whole, and to particular condit .i:ons, such as the cost of livjng in each State or locality. While such machinery need not involve a sacrii1ce of Industrial Court autonomy, it would simplify materially the complexities of the industrial situation as it preva,ils now, and as it prevailed in 1916.'' (The President, Board of Industry, S.A., in the Living Wage Judgment, 2 S.A.I.R. page 114.)

316. "The confusion between the principles adopted by different Australian tribunals is serious, and some uniformity in fundamentals is most desirable. The disconnected systems of wage fixing of the continent require national co-relation, but pending public appreciation of this need, the Board can only carry out to the best of its ability the duties imposed upon it by the Statute. The wages paid in Adelaide

are largely fixed by the Commonwealth Court of Conciliation and Arbitration. They are without exception higher than the 13/4 which has hitherto been the basi? wage in this State. Here again is a fertile source of dissatisfaction and irritation . . . . . . ·. industrial peace is not to be promoted by marked

disparities in rates of wage for similar types of work done in the same State." (The President, S.A. Board of Industry, 7 S.A.I.R.. page 209.) 317. " The Board feels impelled to draw the attention of the Minister of Industry to the menace involved to industrial peace, stability, and efficiency, as a result of the non-existence O'j ·machinery for ha1·monizing

basic wage rates throughout Australia." (The President, S.A. Board of Industry, 7 S.A.I.R. 222) . . 318. "No wage-fixing authority in any State can afford to disregard wages and conditions applying in other States of Australia, as the Commonwealth Constitution prescribes that commerce and intercourse shall be free, and finally when we have two independent bodies fixing wages binding on employers and

workers in the same area, each must to some extent bear in mind the possible effects of differentiation of wage rates." (The President of the Court of Arbitration, vV .A. Basic Wage 1927-8, page 13). 319. "Another important consideration is that the industrial world is now sensitive throughout to changes in any of its parts. This used not to be so, when the bargains of the unions with their employers

were not published, but the operations of the Industrial Courts during the past seventeen years have altered that. To raise one set of wages now without affecting the whole is something like trying to create a column of wate1· in a lake by pour·ing wateT in one spot." (New South Wales Board of Trade Declaration of 17th December, 1919).

320. "A word of caution is necessary about the Federal basic wage. . That

wage contains a1_1 amount of. three_ :vhich is known to be a spurious fr?m t_he point of

view of any logical connectiOn with the hvmg wage standard of the Commonwealth Arb1trat10n system. It came into a certain award fortuitously; it was repeated in one or two other awards fortuitously, and has come to be frequently added into the true living wage declared on the Commonwealth Arbitration Court's principles. It is not, however, included in all awards. For example, Federal awards concerning

railway men omit this spurious ingredient." (New South Wales Industrial Commissioner, Declaration 27th June, 1927). 321 " It is generally conceded that, as the national corollary of inter-State f1·ee tmde, the machiner·y for ji.xing wages and conditions of employment throuqlwut Australia shoulcl i.e co-ordinated." (Court of

Industrial Arbitration of Queensland, 15th February, 1921.) 322 "We think it is permissible to lay down a minimum wage which shall be applicable to industries of average prosperity. reserving to the Court the right to fix a lower minimum in industries which are unable to bear that minimum, and to fix a higher wage where the prosperity of a calling renders such higher wage proper. We are aware that in adopting this course we are departing from the generally recognised custom of Courts of Arbitration, and particularly of the Commonwealth Arbitration Court." (Court of Industria . Arbitration of Queensland, Declaration February, 1921).

F.24j28.-4.

50

Sec. 7.-0onjlwt oflndustrial Laws.-Judicial Comment. 323 "But althougli I dismiss the application, this case puts in a glaring light the inconvenience nnd danger of the constitutional position. Here are two tribunals-one constituted by the Commonwealth and one constituted by a State-handling the same subject matters independently as if the other tribunal did not exist. There is no co-ordination, no inter-dependence between the Courts, and the disputants are only too apt to treat the Courts as rival shops. This position involves grave danqer to industrial peace, and to the continuity of operations in industries. But I' cannot see how the position can be altered without a change of the Constitution." (Mr. Justice Higgins, 14 C.A.R.. 364, at page 369).

324. "There are two Commonwealth awards operating in the same field as the Determination. The resulting complications are chaotic. T fit we·re desired to design such a situation it might be conceived by the disordered mental e.fforts oj,a commission of lunatics. Not only are there two living wage rates arrived at by different methods and different but the very bases of the two jurisdictions also differ."

(Mr. President Hewitson, Brassworkers Board Appeal Case, S.A.I.R. 28.)

SECTION 8.

BASIC WAGE COMMISSION, 1920-JUDICIAL AND OTHER COMMENTS.

325. Serious increases and relatively rapid changes in the cost of most commodities and services during and immediately after the Great War, and numerous complaints as to the inadequacy of wages to meet the continually rising cost of living, led the Federal Government, in 1920, to appoint a Royal Commission to inquire into" t'he actual cost of living at the present time according to reasonable standards of comfort, including all matters comprised in the ordinary expenditure of a household for a man, with a wife, and three children under fourteen years of age, and the several items which make up that cost." ·

326. That Commission became known as the Basic Wage Commission. It instituted a series of minute inquiries into cost of articles of food, of clothing, and of rents. The result of these inquiries was in an elaborate report with lists* of articles which, in the opinion of the Commission, were necessary to maintain reasonable standards of comfort." The Qommission set down the then money values in the capital cities and in the city of Newcastle, New South

Wales, of the items which they had-selected as constituting a "reasonable standard of comfort." The amounts ranged from £5 6s. 2d. in Brisbane to £5 17s. in Sydney. 327. It was not the duty of the Commission to declare a basic wage: but in.the opinion of two of the members, expressions were used in the report which seemed to imply that the findings of the Commission as to the cost of living must necessarily become the basic wage. Those two members were of opinion that the Harvester decision (see paras. 349 and 442) . represented a fair and reasonable remuneration for mnployees. The money findings of the Commission were so much above the rates of wage then existing as to cause a great amount of discussion. The Prime Minister of the day, the Right Honorable W. M. Hughes, immediately called for a report from the Comn1onwealth Statistician, I\1r. (now Sir) G. H. Knibbs, as to the possibility of paying to all

adult rilale employees the amount of £5 16s. per week which was roughly the average of the amounts found by the Commission as the cost of living. Mr. Knibbs reported that such a wage cannot be paid to all adult male employees, because the whole produced wealth of the country, including all that portion of produced wealth which now goes in the shape of profit to the employers, would not, if

divided up equally amongst the employees, yield the nec!ssary weekly amount." 328. In the result, the standard suggested by the findings of the Com1nission was nowhere applied by any wage-fixing authority as the basic wage. vVhen read in conjunction with the explanation given by the Commission, it did not purport to represent a basic wage in the sense of being a wage adequate merely for the "humblest class of

329. inquiry and report of the 1920 Basic Wage Commission have had a great and continuing effect upon the expectations and dmnands of organised workers, as to the amounts which should be awarded by way of a basic wage. 330. Mr. Justice Higgins (15 C.A.R. 306) made the following comment:-" What the Commissioners have reported on is not a ' Basic Wage ' at all . There is no

meaning in ' basic ' except in relation to something higher . . . . . . . . Yet, though for

a basic wage one ·had to find the wage adequate for the humblest class of worker the Commissioners expressly say that their duty was not to discriminate be1ween the standard reasonable for one type of employee and that which is reasonable for another type . . . . . . . It would obviously be much better for all parties-union and employers-to begin again and press for an inquiry that will replace the Harvester judgment on scientific lines rather than to press for payment of this so-called 'hasic wage' of the Con1mission, which is not a true basic wage,. but a will-a-the­ wisp that will lead them into the ditch." (15 C.A.R. 306)

* The Terms of Reference necessitated compilation by the Commission of detailed lists.

51

1331

Sec. 8.-Basic lVage Commission 1920.-Judicial and other Comments.

. 331. Ivir. Justice Powers, in the Federated Gas E1nployees Case, 1921, out that "the difference between the :Harvester judgment and the finding of the Royal Comrnission arises from the fact that this Court [i.e., the Commonwealth Arbitration Court] has to fix a 1ninimum wage for an unskilled worker with a wife and farnily of tl}.ree and the 1nembers

of the Royal Commission set thernselves the task of finding out the cost of living of a, typical family under the highest standard set out in that report, nan1ely, any man, his wife and fan1ily of three, whether he was a wage-earner or not." His Ho.nour also said :-" The Royal Cornrnission in question \vas not appointed to find out what the basic wage of an unskilled \vorker or of any

worker should :be. It adn1ittedly called itself a Basic "'N age Commission, but it -vvas not appointed as such.'' 332. The very use of the term "Basic Wage Commission" appears to have caused a confusion of thought as to the real limits of the inquiry, and that confusion has not been dissipated by explanations since made.

333. Mr. Justice Powers, in the case previously mentioned, pointed oi.It that not,\rith-standing a widespread belief to the contrary: the 1920 Commission-(!) did not find what the basic 'vvage should be ; (2) did not report to the Government what the basic wage should be ; ·

(3) did not recommend that their finding should be adopted by the G-overr1111en t or by the Courts as a basic wage. 334. His Honour quoted from an address by the Chairman of the Corr1mission, in which he said:-" The Basic Wage Commission itself in its second report swept away the notion that it recommended what it found necessary for five persons should be made the basic wage."

335. The Com1nission, basing its finding upon lengthy lists of comn1odities Honour said:-" The Conunission allows 'the typical fan1ily 'a quantity and quality of clothes which I know fron1 n1y experience in this Court are not necessary for menJ women, and children to live in reasonable cornfort) even

when in receipt of £400 a year. 337. Mr. Justice Powers e1nphasized that the Commonwealth Arbitration Court, when fixing a 1ninimum wage, ' was li1nited to considering the unskilled worker. This point was emphasized by Mr. Justice Higgins in the Amalgamated Society of Engineers' Case, 1921

(C.A.R. Vol. 15, page 297). His Honour said :-" If there has been one thing that has been made clear in all the Australian tribunals, it is that the basic wage is the wage of the base­ the wage for the unskilled worker, and that the secondary wage for skill, and other necessary qualifications, has to be added to the basic wage. The basic wage rn,ust not take ,in,to accm,tnt the

conditions appropriate to the skilled workers at all." 338. The indicator lists for clothing promulgated by the Basic \Vage Comrnission enun1erated 21 separate items for the husband, 40 for the wife, 21 for each of the first two children, and lR for the third, at an average cost, for all the States, of £70 per annu1n. The food list detailed 25 items, although the Unions' clairn covered 58.* The miscellaneous list cmnprised 25 items,

the Unions having clain1ed 459. 339. The following is the comment of the Basic Wage Com.n1ission on its O\Vn clothing "indicator }ist" :-"It is to be distinctly understood that the Cmnmission in no sense regard this indicator list as being likely to be invariably followed or as setting any rnodel to be followed."

(Page 32). 340. The wife of the "humblest class of worker/' though probably astonished, would certainly rejoice in a f;tandard of " frugal con1fort " \vhich provided her (as the indicator list sets out) with a costume costing £11, silk blouses and a 35s. golfer, and 35s. shoes.

341. The Basic Wage Comn1ission's indicator lists were practically adopted by the New South Wales Industrial Commission, in determining the standard of living, and the living wage. in 192(). 342. Mr. Justice Dwyer, of the Western Australian Arbitration Court, in the course of a

judgment given in June, 1926, in which the Court declared the basic wage, referred to the report of the Basic Wage Comrp.ission. He said that "while the amount allowed for food seemed to be fair when we consider that whatever class· of society the worker belongs to, the food regimen 1nust practically remain the same, but when the items for clothing and miscellaneous are weighed and

considered the findings of the Basic Wage Commission appear to be in excess of the requirements of the unskilled worker on the basic wage." *This food scale, all calories and no vitamins, is symbolic of the mechanization of socio-economics which is tending to extinguish individual initiative and ostracize parental responsibility.

52

Sec. 8.-Basic Wage Commission 1920.-Judicial and other Comments.

343. Though no tribunal felt itself in a position to give effect as a basic wage to the fi.nQ.ings of the 1920 Commission, the scale adopted by that Commission continued to be urged before the Arbitration Tribunals (as it has been urged before this Commission) as one representing the proper minimum wage for unskilled workers. A typic-al illustration of the answer which the tribunals

have felt bound to give to this contention may be cited from the judgment of the learned President of the New South Wales Board of Trade, Judge Beeby, in the declaration of the basic wage for New South Wales in 1920. His Honour said:-" It is necessary to again point out that the function of the Board is the fixing of the basic wage, i.e., the lowest wage to be paid to an adult citizen carrying average responsibility. Appeals to sentiment and arguments as to the necessity for a more equitable distribution of wealth cannot assist a tribunal which is discharging a duty carefully defined by Parliament. 'The Board has not the power to say what wage it would like to see every citizen receive, or to set .up an ideal standard of comfort."

344., How remote from reality were the findings of the Basic Wage Commission, as material upon which a tribunal could found a basic wage, may be gathered from the facts that-1. A few months before the Commission made its report, Mr. President Brown, of the South Australian Court, after full and independent inquiry into cost of living,

declared a basic wage (covering a five-unit family) for South Australia at £3 15s. 2. In December, 1920, a few weeks after the date of the Commission's report, the New South Wales Board of Trade, also after an independent inquiry into cost of living, declared a basic wage of £4 5s. 3. It was officially stated by the Com1nonwealth Statistician that the whole production

of the country was not sufficient to pay a basic wage in accordance with the findings of the Commission. '

SECTION 9.

THE BASIC WAGE-STANDARD OF LIVING, CONDITIONS, ETC. 345. In order to guard against possible misconception, we think it desirable to preface this section of the report by a repetition of the statement made in, paragraph 171 that as the question whether a system or systems of wage. should o: should is

outside our terms of reference, we express no opm1on upon that p01nt. The Inevitable reactions between existing Australian systems of wage fixation and any system of child endowment, and the necessity for a single exclusive control of both, have supplied the leitmotiv for this section. 346. Not a little confusion has, in our opinioh, been · introduced by a somewhat indiscriminate use of the terms " Basic Wage", "Living Wage " and " Minimum Wage ". These terms are not always used in the same sense either in Industrial Statutes, or in the decisions of the various tribunals.

34 7. " Basic wage " appears to us the best and most expressive term. The wage is to be the "base" or bedrock wage, below which it is not deemed fitting that a normal adult male worker should be asked or allowed to work. The chief object of legal fixation of wages was to protect the worker against being compelled to accept a sweating wage.

348. In New South Wales Statute and practice, the term "living wage" apparently has not the same meani:p.g as "basic wage ", though in the South Australian Statute. and practice it has. 349. The basic wage system, as Australians understand it, arose through the adoption

by the Commonwealth Court of Conciliation and Arbitration, in the Marine Cooks Case (2 C.A.R. 53) of the principles of the 1907 Harvester Judgment. 350. It has been said that since then "all the old economic theories of wages must be cast aside." The theory of a f' living wage is based on rights in -distribution, not services in production." (TheN ext Step, page 28).

351. If, in that passage, the expression "living wage" is used in relation to the wage of workers other than the "unskilled" or "humblest class" the passage is, in our opinion inconsistent with the judgments and practice of all Australian Arbitration tribunals, except that of New South Wales since 1926.

352. If " needs ", or " rights in distribution ", constitute the prin.ciple upon which the basic wage is founded, then it appears that the actual or accepted limitations of jurisdiction of Arbitrations Courts prevent them from giving that doctrine a lngical application.

53 1333

Sec. 9.-The Basic Wage.-Standard of Living, Conditions, &c.

353. If "rights in distribution" limited by "needs" and having no relation to "services in -production" constitute·a title to a part of the total production of the community, it is obvious that children and others who are incapable of adding to the aggregate of that production must have their needs considered. . .

354. To give a large part of the children's share (as is done under the present system) to those who are not responsible for, ancl who contribute nothing to, their maintenance, is clearly both illogical and unjust, and is .a root cause of many of the industrial disturbances which occur and of the social evils which exist.

355. The basic wage is designed to ensure provision for the "needs" of the unskilled worker. The skilled worker is protected by the addition to that wage of a sum, based on the extra value of his services in production, and known as his " margin for skill ".

356. Reference is continually being made to the heavy burden placed upon industry by the adoption of a flat rate wage, fixed, not upon consideration of the value of services in production, but by reference to the family needs of the worker. But, it is fair to say that a flat rate wage for a given class of work is not a new invention of Australian wage tribunals. Apart from piece-work, which must always have had a place in wage-systerns, flat rates were universal long before the idea of creating such tribunals became viable. Undissected and undiscussed, those rates must

yet have included amounts going beyond the act-q.al needs of the individual worker, since otherwise the married worker with a family could not have lived upon the wage.

357. The new aspects of wage fixation introduced by Australian methods were :-(a) The public announcement of family obligations as the leading or the only factor to be considered in determining basic wage rates. (b) The dismissal, or the relegation to the background, of the fundamental notion

that a wage is really and properly based upon the value of " services in production" of the worker. (c) The ousting of the "iron law of wages" which was supposed to depress the lot of the worker, without injury to the employer, and its replacement by the

Draconian Decree of a tribunal, which consigns employer and employee alike to a common industrial extinction, if their joint "industry" fails to provide for the payment of a prescribed basic wage.

358. Rigidity of the Basic Wage.-The inflexibility of basic wage law, in our opinion, requires consideration. In times of emergency a:ud of national or local stress, the whole community may be forced to lower its standard of living. Or a local lowering of standard may become unavoidable, as the result of stresses affecting a particular industry only. When such conditions exist, Industrial Tribunals. should have express power-

( a) to review, and if necessary, to reduce the basic wage ; (b) to direct that part time should be worked; (c) after having ascertained the views of the workers as distinct from those of union officials, to sanction agreements between employers and employees, providing

for a temporary reduction of wages, even of the "basic wage", andj or a temporary alteration of conditions.

359. The greater flexibility of industrial regulation, thus attained, would in our opinion­ (a) tend greatly to prevent or reduce unemployment; and (b) to lessen the necessity (if any such necessity exists) for special assistance to the families of workers.

360. Uniformity necessary.-Uniformity is in our opinion necessary in respect of the following matters :-(1) the class of workers for whom the basic wage is to be fixed; (2) the family unit;

(3) the standard of living (if such term be retained) (paragraphs 414, 415) ; (4) the basic wage (which logically depends on the family unit adopted, and the standard to be provided for that unit.)

361. The evils arising from over-lapping of industrial awards, and absence of uniformity in Commonwealth and State systems, have been . the subject of frequent comment by the learned Presidents of State tribunals, who have urged need for co-ordination or uniformity, especially in relation to the basic wage. (See paragraphs We carefully considered

54

Sec. 9.-The Basic Wage.-Standard of Living, &c.

whether, and to what extent, those evils are capable of being effectively remedied by the adoption of uniform State systems, either alone, or in conjunction with Commonwealth legislation wjthin the present competence of the Commonwealth Parliament. Whether such competence exists is at least doubtful.

362. ·what is implied in the word " co-ordination:' might, if it could be given practical operation, effect important improvements. A study of the situation convinces us, however, that such improvements (mainly based, as they would necessarily be, upon amending legislation in each of the six States) .would have no promise of completeness, and in any event, would lack the essential quality of permanence. Especially would this be the case if statutory provisions relating to child endmvment were added to the catena of industrial legislation. ·Any such statutory provision would always be liable to be defeated by decisions of tribunals which, acting indirectly, could render nugatory the intention of the Legislature.

363 . . In considering the of ensuring uniformity of methods of basic wage-fixation, >ve may mention two suggestions to which our attention has been directed. One is that a conference should be arranged between the heads of and State tribunals

364. It may bQ noted that Section 29 of the Commonwealth Amending Act 1928, opens the way for the holding of a voluntary conference between a Judge of the Court and a State industrial authority, with a view to securing co-ordination between the Court's awards or orders and the awards, decisions or orders of the State industrial authority.

365. A difficulty which immediately presents itself is that Victoria and Tasmania have no "State Industrial Authorities" other than wages boards, and a voluntary conference between a Judge of the Commonwealth Conciliation and Arbitration Court and the Wages Boards of Victoria or Tasmania does not seem feasible. In any event such conference could not in the light of the proviso to Section 22 of the Amending Act affect the matter which we consider of vital importance, viz ., the declaration of the basic wage.

366. Co-ordination of Commonwealth and State basic wages as a result of the holding of voluntary conferences is excluded by the terms of the proviso to Section 22AA, and the relevant sections of legislation of the States. 367. More serious objections are the inherent di..1iculty of securing uniform legislation to give effect to any conclusions arrived at, and the continuing power of State Parliaments to alter such legislation, and so to destroy the essential uniformity. With regard to the Commonwealth an added difficulty would probably be an absence of legislative power to give effect to the conclusions of any such conference.

. 368. The other suggestion, by Dr. Jethro Brown, a former President of the Industrial Court of South Australia, is that an appellate tribunal should be established, to which an appeal could be made from the basic wage declaration of any State. Objections to this system include the difficulty of conferring jurisdiction on such a body, and the great, cost involved in appealing. Either the tribunal would have to travel extensively, covering places as far apart as Brisbane and Perth, or witnesses would have to be brought from great distances. Obviously, also, such a tribunal created by St ate legislation would have no jurisdiction to review a determination of the Commonwealth Arbitration Court. We do not consider that either of these suggestions should be adopted.

369. We have considered whether the problem could be solved by conferring power on the Commonwealth Court to declare a basic wage operative throughout Australia, while retaining all other powers of the State tribunals. · ·

370. The following quotation from the Judgment in the Living Wage (Storemen and Packers') Case (2 S.A. I.R. at p. ll4) is relative. The President of the Industrial Court of South Australia referred to " the desirabilit)' of providing some machinery which will fix the living wage for Australia with due regard to the problem as a whole, and to particular conditions, such as the cost of living, in each State or locality. While such machinery need not involve a sacrifice of Industrial Court autonomy, it would simplify materially the complexities of the industrial situation as it prevails now and as it prevailed in 1916."

371. A study of that question has led us to the conclusion that the retention of " State Industrial Court au tonomy " might easily prevent the effective operation of the Commonwealth basic wage. For example, if, in accordance with present practice, the Commonwealth tribunal fixed the basic wage · as applicable to " unskilled " wor'kers, the State tribunals might determine with regard to almost all industries, that there were no employees in such industries to whom the Commonwealth wage was applicable.

55 1335

Sec. 9.-The Basic Wage.-Standard of Living, Conditions, &c.

372. It would be impracticable, in the Statute conferring power to fix a Commonwealth basic wage, to enumerate every occupation to which such wage is to apply. · 373. The State tribunals might" find" some degree of" skill" in all the classes of workers appearing before them, or some other reason for granting a margin above the Commonwealth basic wage, thus practically leaving that wage entirely without effect.

374. In our opinion, therefore, authority to declare a Commonwealth basic wage could be made effective only by vesting in the Commonwealth Parliament exclusive power of industrial legislation. 375. Class of worker.-The term "basic", as Mr. Justice Higgins pointed out in his criticism of the finding of the Basic Wage Commission of 1920, implies that it is a wage which will afford a reasonable standard of living for the "humblest class of worker." In the decisions

of some of the tribunals, the term " unskilled worker" is used, but the concept is the same.

376. It would appear, however, that since the amending legislation of 1926, this distinction has been discarded in New South Wales, and that the Industrial Commission, in determining the standard of living, has accepted the view of the Basic Wage Commission, viz., that the standard should be determined" not by reference to any one type or group of employees,

but by reference to the needs which are common to all employees." 377. This involves a vital departure from the hitherto accepted theory of basic wage-fixation. The nominal standard* of living of an unskilled worker, and of a skilled worker, each of whom has a wife, and three children, cannot be the same unless each receives the same wage. This being impossible, for obvious reasons, industrial tribunals fix the basic wage on that family unit for an unskilled worker.

_ 378. The skilled worker is given a higher wage which will enable him to live on a higher standard, money being the only common measure which can be applied by wage-fixing tribunals. How much higher this standard will be depends entirely upon his capacity, willingness, and ?pportunity, to increase his margin of skill, or the value of his service.

379. It follows that if some tribunals determine the standard of living for the " unskilled worker" and other t ribunals determine the standard for a "skilled worker", the results arrived at would be very different. This difference, when reflected· in wages, would inevitably result in discontent, and consequent industrial unrest.

380. From these considerations, we arrive at the conclusion that basic wages throughout Australia should have reference to the needs of unskilled workers. 381. Family unit-Witnesses appearing before this Commission repeatedly claimed that child endowment should be kept entirely separate from wage-fixation, on the ground that

" wage-fixation is an industrial matter ", whilst child endowment is a " social obligation ".

382. In making this distinction, those witnesses have, however, not been actuated by any puristic desire for merely literary accuracy. Their aim is sharply practical. They seek to establish as a right that child endowment shall be super-imposed upon basic wages fixed in accordance with existing methods. The claim is illogical, because, while asserting the

necessity for a divorce between child endowment and wage-fixation, they cling to a wage, an important part of which consists of an allowance for children. They neglect the implication, necessarily involved in their claim, that the allowance should be struck out of the wage.

383. A great objection to existing methods of basic wage-fixation (including as they do full endowment for some children) is that they require the choice of a family unit as an essential preliminary to the determination of the wage. 384. ·whatever unit be chosen, the wage fixed for that unit necessarily gives to workers,

whose family obligations are less than those of the adopted unit, a wage more than sufficient to provide for the needs of their families on the assumed standard. (The chief advocates of child endowment have not complained of this result.) But, in the case of workers whose family are than those of unit, the wage fixed is, ex

insuffiCient to proVIde for the needs- of their families on the same standard. Inequality at thiS end of the scale is ·the foundatio·n of the claim presented to the Commission for the of a scheme of child endowment for all dependent children, super-imposed on the endowment already provided in the basic wage. · ·

* The real standard varying indefinitely between families with the same money incom.e, is greatly dependent upon the health, energy, efficiency, and general outlook upon life of the family.

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Sec. 9.-The Basic Wage.-Standard of Living, Conditions, &c.

385. Since the adoption by the Commonwealth Arbitration Court of the principles of the Harvester Judgment in 1907, thebasic wage which provides for the needs of a man, wife, and three children is also the basic wage paid to the unmarried worker ; to the married worker without children: to the worker ·with one child; to the worker with two or more children. It follows that the man receives for his labour a wage sufficient to provide, not only for his own needs,

but also for the needs of a non-existent wife, and three non-existent children. In the case of a married couple with no children, the wage is sufficient to provide for the needs of three non-existent children. The wage for a married couple with one child is sufficient to provide for the needs of two non-existent children, and where there are two children, for the needs of one non-existent child.

386. To give effect to the claim for the complete separation of wage-fixation from child endowment, it would be essential to abolish the powe1·, possessed and exercised by all tribunals, Commo nwealth and State, * to assume the existence of children when fixing the basic wage. To include in the basic wage an allowance for two, or for three children, and in addition to endow all children is to provide double endowment for the children whose needs are provided for iri the wage.

387. As we have pointed out (paragraph 179), the established practice of the Commonwealth Court is to assume that the basic wage worker has to provide for himself, wife, and three children. The Queensland Statute expressly requires the Court to adopt this family unit of man, wife, and three children. In South Australia, the tribunal has interpreted the Statute as necessitating the adoption of the same unit. In Western Australia, the Court has construed the Statute as

necessitating the adoption of a family unit of man, wife, and two children. It follows that elimination from existing basic wage systems of provision for children would require an alteration in the Statute law of Queensland, South Australia and Western Australia, and a legislative Jirection to the Commonwealth Court to adopt a unit in which children are not included. The evidence of Sit· Robert Garran ( Q. 20193-20 198) seems to indicate a lack of legislative power in the Commonwealth Parliament to give such a direction.

388. Victoria and Tasmania have no Industrial Tribunals, but have adopted wages boards systems. These St ates could, if they so desired, pass legislation appointing wage-fixing tribunals, and conferring powers similar to those possessed by the tribunals in other States. 389. As to the family unit, and the class of worker for whom a basic wage is to be declared, we have aiTived at the eonclusion that these should be definitely fixed once and for all, not by a

ju dicial body, but by legislation operating throughout Australia. Even if (under existing conditions) the different States passed uniform legislation prescribing a certain unit and class of worker, each State would retain power to alter such legislation at any time, thus imperilling the whole system.

390. In our opinion, uniformity in the determination of­ (1) the family unit, and of the class of worker for whom the basic wage is to be declared, is of cardinal

importance. · These determinations should be made under exclusive power by the Commonwealth Parliament. 391. Standard of living.-In the Industrial Statutes of New South Wales and Queensland, and in judgments of . Australian basic wage fixing tribunals, the term " standard of living " occupies a prominent position. ·

392. The phrase was coined by Industrial Tribunals in the course of the evolution of the living wage doctrine, which followed the adoption, }?y the Commonwealth Court of Conciliation and Arbitration, of the principles of the Harvester Judgment. Finally, the phrase appeared in State Industrial Statutes, first in the Queensland Act, and then in the New South Wales Act of 1926.

393. The Commonwealth Court, having selected " the humblest class of worker" as the type, and the family of a man, wife , and three children, as the unit, proceeded to ascertain the "needs" of such a family. Mr. Justice Higgins indicated the nature of those "needs " as follows :-" Surely the State in stipulating for fair and reasonable remuneration for the employees means that wages shall be sufficient to provide those things (food and shelter) and clothing, and a condition of frugal comfort estimated by current human standards." (2 C.A.R. page 4).

394. Otherwise defined, the " needs " of the " humblest class of worker " are represented by the "market basket" of t4e commodities and services." (Stabilizing

the Dollar.-Irving Fisher, 1920.)

• New South Wales, since an exception,

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Sec. 9.-The Basic Wage.-Standard oj.Living, Conditions, &c.

395. The basic wage is nominally the sum of money which will enable the worker to purchase that "basket" of commodities and services. 396. In order that the Tribunal may be in a position to arrive at a conclusion, it may be necessary to hear evidence as to what the contents of tne " basket" should be, and as to cost.

397. The Australian "standard of living " is commonly conceived as something which, if not actually tangible, is at least definitely measurable or ascertainable, and theoretically is more or less uniform and permanent. 398. But the inclusion of that item in Statutes, or its · adoption in practice by Industrial

Tribunals, has produced unfortunate results. 399. The meticulous compila,tion of lists of commodities and services seems, with apparent inevitability, to lead to claims being continually asserted which go beyond the bounds, not only_ of justice, but of possible realization.

400. Ext1·avagant and indefinitely extended lists are submitted, proceedings unduly, prolonged, and expense unreasonably increased.

401. These extravagances and exaggerations are by no means wholly due to any real necessity for supporting claims by evidence. They will be stimulated and enlarged in cases where the tribunal publishes in its judgment a detailed schedule of the items which it selects as constituting the" standard of living."

402. However appropriate such a method might be for estimating the cost and scale of supply for institutions of a military or bureaucratic character, it seems unsuited for use in determining the requirements of private households. It appears to disregard the elements of flexibility and individual skill, of efficiency and adaptability, which characterize the activities of competent housewives. Again, it ignores those varieties of individual taste and choice which

are inseparable from the management of their homes by a free people. There is at all times a high degree of elasticity in the individual interpretation given by members of the community, of what constitutes for them a desirable and practical regimen within the limits of a given income. 403. The method also tends to ignore the absolute change in regimen which at time

occurs in a marked degree. A striking example of this has taken place in the United States where according to recent statements, the consumption of meat has decreased during the last few years to the extent of about 16 lb. per annum per head of the population. The foods substituted are said to be cereals, fruit and vegetables.

404. Regimen examinations by Tribunals, the construction of detailed lists with prices and the continual re-opening of such matters, have the effect of deflecting public opinion from the desirability of encouraging "homecraft" (one of the most valuable of all our arts) and of setting up as the desirable aim what may be described as the "factory-made and delicatessen standard." Particularly is this the case where the tribunals give detailed prominence in their

judgments, to the items upon which they declare the basic wage. 405. The President of the Industrial Court of South Australia dealt with this matter as follows:- " The appellants (employees) argue that while adjustments of the living wage might be made by reference to the cost of the more important items, such as food, groceries, and rent, ·

a more detailed allocation of the living wage into its constituent elements vvas both practicable and desirable. . . . . . . . . It was conceded, that as a matter of expediency, any

detailed allocation made by the Court need not be incorporated in a final judgment." (3 S.A.I.R. at page 264). 406. As far as the evidence discloses, no tribunal, other than the New South Wales Industrial Commission, has ever published details of its determinations, beyond a dissection of

the declared basic wage under the heads of Food, Clothing, Rent and Miscellaneous. 407. To "determine,"* is, we submit, not synonymous with to "declare"* that is to announce publicly. 408. But in any case, a separate announcement of the money cost of the items in the

" indicator list" of the so-called st andard of living does not appear to serve any good purpose. If the items comprising the standard are necessary to provide for the " needs " of the worker, the cost thereof must, ex hyp:1thesi, be the basic wage. 409. Some of the factors which should be taken into' account when fixing the basic wage

are the items representing "needs," capacity of industry to pay, the possible effect of the declared wage upon inter-State trade, upon unemployment, and upon production. * Vide tho Now South Wales Act.

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Sec. 9.-The Basic W age.-Standard of Living, Conditions, &c.

410. A Statute* which imposes a duty upon a Tribunal to " determine " a standard, and then to " declare " a living wage based upon that standard may be prescribing an impossible process. The unrealities which may follow an attempt to apply such a process are illustrated by the action of the New South Wales Industrial Commission in 1926, when it "determined" a standard of living at £5 6s., and" declared" a basic wage of £4 4s.

411. The duty to "determine a standard " is, in any real sense, a duty to fix a basic wage. A standard is wrapped up in every wage. Apart from crystallization in a wage, the " determination" of a "standard" is as impermanent and futile as a decree "writ in water." But, the announcement of an unrealizable " standard ", though fleeting and useless for any good purpose, is permanent and dangerous in its fatal power to excite discontent and bitterness.

412. So long as it is a real or assumed duty of Industrial Tribunals to "determine" a " standard of living," provision must be made for periodic re-consideration of the "standard." As aptly poil).ted out by the New South Wales Industrial Commissioner, to re-determine the standard of living say every six months, "would be to deprive both employers an

of the stability and security · which it has been from the outset one of the objects of industrial arbitration to achieve . A standard which changed every six months could

hardly be called a standard " (1927 Judgment.)

413. We are of opinion that except under stress of serious emergency, a standard of living (i.e., a basic wage) once fixed should not be capable of being altered oftener than once in five years. Even after the expiration of five years, it should be left to the tribunal to decide whether an alteration of the standard is necessary and economically desirable.

414. The disappearance of the term "standard of living" from Industrial Statutes, and from Industrial litigation, would constitute a minor, but not a negligible reform. We recommend the elision of th e term. 415. If, however, it be decided that determination of a "standard of living" be continued as a part of the process of basic wage fixation, it is, in our opinion, essential that all powers in !'elation to that determination be vested in a Commonwealth Tribunal, exercising the exclusive industrial jurisdiction throughout Australia, which we recommend.

416. The Doctrine of Vested Rights.-A doctrine has been promulgated in the June, 1927, Judgment of the New South Wales Industrial Commissioner that, once a standard of living has been " expressed on the living wage level ", the worker obtains a " vested right "t to the enjoyment of that standard. Expressed more concretely; this means a vested right to receive not less than that declared basic wage. It would also appear (to be contended) that such

"vested right" cannot be interfered with except by legislation. In our opinion, the application of this doctrine involves the impossibility, apart from price index adjustments, of ever reducing a declared basic wage, except by express legislation. 417. Since that judgment, we find claims made by employees, echoed in speeches delivered in the New South Wales Parliament, accepting and pressing this doctrine.

418. We deemed it advisable to obtain opinion of learned Counsel, and accordingly . placed the matter before Sir Edward Mitchell, K.C., Mr. Owen Dixon, K.C., and Mr. Maurice Blackburn, as follows ·

A Statute gives a Tribunal the power and function to determine not more frequently than once in every six months a standard of living, and to decli:tre what shall be the living wage based upon such standard. Pursuant to the Statute the tribunal determines a certain standard and in the following year again sits to exercise such power and functions.

Can the employees who are affected be s11id to have a "vested right " to enjoy the standard of living determined in the previous year, so that while such standard may by the new determination be maintained or increased, it cannot be lowered. 419. In reply, Sir Edward Mitchell said, in effect, that such a vested right would not exist, unless it had been explicitly granted by a legislature possessing plenary powers.

420. Mr. Owen Dixon said, that in the circumstances stated, the employees who are affected cannot be said to have any legal right, vested or contingent, "to enjoy the standard of living determined in the previous year, so that while such standard may by a new determination be maintained or increased, it cannot be lowered." ·

* e.g., the New South Wales Amending Act No. 14 of 1926. t This t erm has been defined as "the legitimate rig_ht to obtain something for nothing;" (Veblen-Pla<:e of Science in Oivili%ation.)

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Lr v

Sec. 9.-The Basic Wage.-Standard uf Living, Conditions, &c.

421. Mr. Maurice Blackburn said :-" I should not say that the employees affected would have "vested rights" as suggested by this question."

422. We accept those statements of the law.

423. The following illustration shows how unfairly the " vested right " doctrine would operate. The Queensland Tribunal on one occasion fixed a higher basic rate for the sheep industry, on account of its prosperity being above the average, and a lower basic wage for the cattle industry, on account of its prosperity being below average. The higher basic wage allowed

the recipients to enjoy a higher standard of living. The lower wage necessarily entailed a lOWe!' standard. If the prosperity of the sheep industry changed for the worse, and .the prosperity of the cattle industry for the better, the wage and the standard of living for the cattle industry could be raised, but an application of the "vested right" doctrine would prevent the tribunal from lowering the wage and the standard of the sheep industry. ·

424. It seems to us that the worker can no more be said to have a "vested right" in a certain wage (assumed to represent a particular standard), 'than can the employer be said to have a "vested right" to obtain the labour of the worker at a wage which shall never exceed the wage so fixed.

425. In our opinion, the doctrine of " vested right," as applied to wages, is so dangerous that its application to industrial determinations should be excluded by appropriate legislation.*

426. Basic Wage,-Even if all tribunals set out to declare a basic wage for the same class of workers, the probability of their arriving at different conclusions can be readily understood. Those conclusions might differ, not only as to the "commodities and services" deemed necessary to provide a" frugal standard of comfort," but also as to the amount of money which will purchase l'luch services and commodities.

427. ·The variations in basic wages declared from time to time by Industrial Tribunals would probably have been much greater but for the expressed disinclination of State tribunals to create differences great enough to affect interstate trade.

428. Each of the seven different tribunals has independent power, either expressly or implicitly, to determine a standard of living, from which to deduce a basic wage. The difficulties created by the independent and powers of those tribunals are discussed in some of the industrial judgments. We quote from a judgment of Dr. Jethro Brown (when President of the

South Australian Board of Industry):-" The Board feels impelled to draw the attention of the Minister of Industry to th.e menace involved to industrial peace, stability, and efficiency, as a result of the non-existence of material for harmonizing basic wage rates throughout Australia." (7 S.A.I.R. paragraph 219 at page 222). See also paragraphs 317 and 324.

429. One Tribunal Necessary.-Whatever criticism may be made of details in relation to determination of the basic wage, the salient fact which emerges from our examination of industrial legislation and practice, is that (unless the system of compulsory wage fixation is to disappear altogether) uniformity, i.e., determination of the basic wage by one tribunal

(necessarily a Commonwealth tribunal) for the whole of Australia, is a primary necessity.

430. The legislation creating that tribunal should confer power to determine a basic wage, and in subsequent proceedings to maintain, to increase, or to lower such wage as the tribunal thinks just .

. 431. In conferring the necessary powers and functions on the tribunal, language should be used much more definite and explicit than that used in the existing States' legislation. Such an expression as _" the normal and reasonable needs of the average employee" can only lead to an endless discussion and disagreement as to the conclusions arrived at. ' Normal ' is difficult

to interpret with mathematical precision. 'Reasonable' is a question-begging epithet. In any case, the two terms have to be read as complementary. The term 'average employee' is an abstraction comparable in elasticity with that concept of the 'average ' man to which generations of judges in Civil and Criminal Courts have sought to give a workable approximation."

(Dr. Jethro Brown, 3 S.A.I.R. _page 221.) *Since the above was written, we have read the judgment of the New South Wales Industrial Commission, composed of three judges, which replaced the Industrial Co=ission appointed in 1926. Piddington, J., r e-affirmed his 1926 Judgment from which we have quoted. Street, J. , and Cantor, J ., expressed a contrary opinion.

Street, J., said:-" The doctrine of 'vested right' seems to me to be wholly inapplicable in this cas<>." Cantor, J., said:-" My view is that the question of what standard of Jiving should be adopted as a living wage standard was left . . . . entirely to the Commission and , , the principle of' vested right' or the reason underlying it has no application whatever."

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Sec. 9.-The Basic }flage.-Standard of Living, Conditions, &c.

432. Once a basic wage is detennined, it should automatically be re-adjusted periodically, in accordance with t he rise or fall in the cost-of-livirig figures. The tribunal should have power, whenever it t houg}lt proper, to review the method adopted in arriving at such figures, so as to ensure the adoption from time to time of the best possible methqd.

433. The tribunal should also have exclusive power to determine hours of labour and to establish systems of payment by results. 434. If it should be said that t he consideration of these questions is outside the terms of reference, we would submit the following:-

435. It seems to us that the claim for Child Endow1nent rests on the doctrine of "needs." It is said that t he '' needs ' ' of the children are not provided for because the income of the wage­ earning parent is not sufficient to provide such "needs." The adoption of any reasonable means of increasing the effe ctive wage of the parent will obviously decrease the necessity of calling upon the community to assist in providing for the " needs " of the children. The proper maintenance of his children is, in the first place, an obligation of the . father, and it is only after

he has don e his best to provide for his children and has failed, that an obligation is cast upon the community t o come t o his assistance. It is better that the worker should be given the opportunity of earning more 1noney and t hus by his own efforts providing for the needs of his children, than that he should seek the assistance of the con1munity. Such assistance, granted in the form

of payment of money not earned, and even though the terms "charity" or " dole " are not, used, remains, in fact, a gift. 436. In substance, "wage fixation" (under existing n1ethods) and "chiid endowment" would react upon each other, and hence, for the present purpose, may be considered branches of t he same subject, rather than two distinct subjects.

437. In ord er to prevent a somewhat irresponsible competition of one branch with · thP­ other, as would inevitably happen if one tribunal dealt with Child Endowment, and another with basic wage fixation, it is essen tial that both should be placed under the exclusive control of one tt·ibun al.

438. That such competition would certainly operate, is shown· by the following extracts from speeches made when the Child Endowment Legislation was before the New South Wales · Parliament :-43 9. Dr. Evatt.-" .On the assumption that . 5s. per week is allowed in

respect of each child, then Mr. Piddington in making future awards will have to consider whether 5s. a week is sufficient in respect of the children of employees in industry. It will certainly be contended before him and probably be admitted by him that it is not sufficient, and. if he does decide t hat, his award will be made accordingly . we need not consider

what Mr. Piddington may do in t he future, but he will still have to decide whether the 5s. a week allowed by the State in respect of a child is a sufficient allowance, and if he decides that it is not sufficient, then he will have to increase the wage accordingly." (page 1172.) 440. A persistent clai1n has been made before the Commission that a system of child endowment should be super-imposed upon the existing basic wage. No particular basic wage was selected. The difference _ in range at the present time is considerable, the lowest wage apparently being about £3 15s. 6d., and the highest about £4 8s. 6d.* We consider, quite apart from the financial aspect, that such a claim is illogical and unjust.

SECTION 10.

HAVE EFFECTIVE WAGES INCREASED? 441. The affirmative answer to this question (which appears to us the correct answer) is relevant to a discussion of the capacity of wage-earners to provide for thei:s children without additional payment in the form. of child endowment.

442. Several witnesses appearing before the Commission, in referring to wages fixed by Arbitratinn Tribunals, complain ed that increases granted have been based only upon increases in the cost of living, and therefore, do not represent any improvement in the effective wage. This position is contested by Mr. P. ·J. Pringle, on behalf of the Victorian Chamber of Manufactures, who said that, since June, 1922, the standard created by the Harvester Basic Wage has been

gradually raised by the· Arbitration Court, so that, at the present time, Basic Wage Workers are enjoying an increase in effective wages amounting to nearly 15 per cent. . . * See q.2469l.

61 1341

Sec. 10.-Have Effective Wages Increased.

443. Before proceeding to Mr. Pringle's proof of his statement, we may refer to two matters relating to the Harvester Judgment, 1907, mentioned by Mr. Justice Powers in the Gas Employees Case (1921). His Honour pointed out that "the 7s . per day then declared by the Court was not a finding by the Judge against the claims of the Unions, but one against the claim

of the employers The Unions claimed 7s. per day as a fair and reasonable

living wage at that tin1e. The President granted the full claim asked for. " I-Iis Honour also said-that, by that determination the President of the Court had raised the standard of living by about 27 per cent. 444. The items composing the increase of 16 per cent. were stated by Mr. Pringle as follows :­

" (1) In June, 1922, Mr. Justice Powerr3 added 3s. to the :Harvester Basic Wage, for which there was no justification whatever. (2) The Basic Wage is still being varied according to the cost of food, groceries, and rent, which constitute approxin1ately 60 per cent. of a workers' expenditure. · Since 1922· the cost of clothing and miscellaneous, representing the 40 per cent. balance

of expenditure, has been increased or varied at a very much lower rate than the above 60 per cent., yet the basic wage has been fixed on the assumption that the cost of clothing and miscellaneous has exactly followed the variations in the cost of food, groceries, and rent.

(3) The awarding of a weekly wage has required the payment of full wages on all Public Holidays when no work is done. (4) Certain awards of the Court (and the practice is extending) provide for six days per annum sick leave without any loss of wages.

(5) The provision of annual holidays on pay has now become general. The value of this cannot wholly be classed as an increase in effective wages ; it, however, constitutes some increases in the same."

445. Mr. Pringle went on to say that the effect of the above items on the Harvester Basic Wage for Australia (30 towns) is to cause increases in effective wages, with the weekly values as set out:-INCREASE IN EFFECTIVE WAGES, THIRD QuARTER,

1. Due to commodities other than food, groceries, and rent, having risen at a very much less rate 2. Due to unjustifiable addition of 3s. per week to Harvester Basic Wage *3. Due t o nine days Statutory Holidays per annum on pay . .

*4. Due to provision of six days sick leave per annum

1927.

o/o

Increase.

6. 67

3.80 3 . 18

13 . 65 2.11

15.76

Weekly Value s. d.

5 3

3 0

2 6

10 9

1 8

12 5

446. "Applying Nos. 1, 2, and 3 to Melbourne only, the increase in effective wages and the weekly value is increased to 15.49 per cent., and 12s. 5d., respectively, and applying Nos. 1, 2, 3 and 4, the figures are further increased to 17.67 per cent. and 14s. 2d. ·

447 . "The above increases in effective wages amounting to 12s. 5d. per week provide additional endowme.nts for two to two and a half children, based on 5s. per week per child. The Melbourne basic wage gives a still greater provision.

448. "The recent practice of the Federal Arbitration Court is approximately the standard adopted by State Industrial Tribunals.

449.' " The above examination only relates to the basic wage man. All increases In ' Margins for Skill ', which are constantly occurring, constitute a further material increase In effective wages the cost of which is not included in the above calculation.

*Money values assigned by Mr. Pringle to these items are not taken into account by the Commonwealth Statistician in calculating the m ovement of wages.

\

\

Sec. 10.-Have Effective Wages Increased.

450. "If the items l to 4 were generally in force, it would repreE?ent approximately some £40,000,000 per annum increase in real or effective . wages, which has accrued to the workers during the last six years, making n..o allowance for unemploynient or margins for skill. As a conservative estimate take it at £30,000,000. In other words, this additional h,uge sum has been available to them per annum to purchase commodities and luxuries which they have never enjoyed. Obviously, this amount is a tax on industry." ·

451. The above statements by Mr. Pringle were confirmed, at least"as to the main contention, by Mr. C. H. Wickens, the Commonwealth StatisHcian. :Mr. Wickens said :--" In actual fact in recent years, the main increases have been in the selected 60 per cent., the remaining 40 per cent. being very nearly constant. The effect of this has been to produce the type of result described by Mr. Pringle. Mr. Pringle has pointed out that conversely. if. the selected 60 per cent. decreased by Is., the corresponding wage would decrease by ls. 8d. This again is quite equitable if the 40 per cent decreased proportionately, for then there would be

diminished cost over all of 1s. 8d. If, .however, the 40 per cent. remained constant in price, a reduction in cost of ls. would be accompanied by a reduction in wages of Is. 8d. . . . . There is no doubt that there is a good deal of force in what Mr. Pringle has to say, and I am entirely in accord with a great deal of it. I have not checked his figures through, there is undoubtedly

a great deal of truth in the principles which he is enunciating.. The effect is 'what he says it is, but it only has that effect the peculiar circumstances operating at present. In the days before the war, clothing, which was not included as one of the items for changes in the cost of living, was rising 1nore rapidly than other items, and there was a strong claim that clothing should be included. Since 1920, clothing has been either standing still or coming down a little,

while the other things have been going up since the big slump in 1921, and there has been no serious urge that there should be an alteration made." 452. Mr. Wickens's comment does not touch the j.tem known as the "Powers" 3s. per week (para. 444), which Mr. Pringle considers to be an unjustifiable addition to the I-Iarves.ter Basic Wage. With regard to this, Mr. Atlee Hunt, Public Service Arbitrator, said (Q. 11908) :-"I took the wage which was current outside, excepting the 3s., which I have never regarded as

justifiable on any grounds." 453. The New South Wales Industrial Commissioner, in his Declaration of the 27th June, 1927, spoke of this 3s. in the Federal Basic Wage as a " spurious ingredient" which "came into a certain award fortuitously." ·

454. In a case before the Commonwealth Arbitration Court, August, 1928, in which a claim was made by employees in glue and gelatine factories for an alteration of the basic wage, His Honour, Judge Lukin said:-" The sooner the question is inquired into and a determination is arrived at, the better ; particularly in regard to not only the basic ·wage, hut also the 3s. extra, so that the Judges will be able to give some reason for imposing that 3s. It may be quite all right. It may be that the basic wage is insufficient and that the 3s. is necessary to bring it up to the proper rate, or it may be even that the 3s. is insufficient; but if the basic wage is correct now and there is no present justification for the 3s., the 3s. would have to go."

455. In view of the evidence of Mr. P. J. Pringle, and the confirmatory statement of Mr. C. H. vVickens, the Commonwealth Statistician, there seems no room for doubt that effective wages have increased.

SECTION 11.

ENDOWMENT FOR WIVES AND CHILDREN EMBODIED IN BASIC WAGES AND IN TAXATION SYSTEMS. 456. Basic Wages.-As we have pointed out, the various wage-fixing methods of the Commonwealth Arbitration Court, and of all the wage-fixing tribunals of the Sta.tes (except · New South Wales since the passing of the 1927 legislation) provide for the endowment of

the children of wage earners.* .

457. These tribunals have not deemed it necessary, when declaring the basic or livmg wage, to say .definitely that so much of the sum determined represents the allowance made in respect of the children comprised in the family unit for which such wage is declared. It appears to us that no good purpose would be served by· making such an allocation, and, as these decisions are :final and not subject to appeal, the making of ail allocation, in which different tribunals might conceivably work on different lines, could only lead to fruitless arguments and com:earisons, to

uncertainty and discontent. *The distribution is so unequal that while provisionis made for many non-existent children, many existent children a.re inadequately provided for. (See paragraph 556, also paragraph 595.)

63 134.3

Sec. 11.-Endowmentfor Wives and-Children embodied in Basic Wages and in Taxation Systems.

458. In our opinion, Family Endowment to the extent indicated under the heading " The Family Unit " (paragraph 295) is incorporated in the basic wages fixed by the various Industrial .Tribunals. (The special position in New South Wales is discussed in paragraphs 233-239). 459. The present position has been well stated by the New South Wales Industrial

Commissioner (I. G. Vol. 30, p. 1441) :-" Both in the Federal system of Arbitration and in the State system the employer does now finance Motherhood Endowment, but the fact is camouflaged. Motherhood ·Endowment is paid by the employers for two children in the New South Wales and Western Australian systems, but for three children in the _!'est of our Arbitration ·systems. This is because the law now compels the employer to pay a wage to each adult employee, in which wage

is wrapped up the Child Endowment to two or three children." 460. Taxation systems.-In arriving at the amount of the taxable income, concessional deductions on account of children are allowed in the Commonwealth and all State taxation schemes. In some States a deduction is allowed on account of a wife. The amount of income tax which is thus saved can, we think, be regarded as equivalent to Family Endowment.

461. The amounts of such deductions from taxable income are :­ Commonwealth-£50 for each child up to sixteen years of age. New South Wales-

.. £50 for each child up to eighteen years of age. Victoria-£50 for each child up to sixteen years of age on incomes up to £801. £50 for a wife if-

(a) her income does not exceed £100 per annum; arid if (b) the husband's income does not exceed £800 per annu1n. Queensland-£50 for each child up to sixteen years of age on incomes up to £801.

£40 for a wife if-(a) her income does not exceed £26 per annum ; and if (b) the husband's income does not exceed £800 per annum. South Australia-

£30 for each child up to fifteen years of age on incomes up to £651. £50 for a wife if-(a) her income not exceed £50 per annum; and if (b) the husband's income does not exceed £650. per annum.

- Western Australia-£62 for each child up to sixteen years of age. Tasmania-£39 for each child up to sixteen years of age. 462. These deductions from taxable income if limited to persons possessing incomes not exceeding, say £300, would have no great effect as Family Endowment. But if, as many w1tnesses have urged, there should be no limitation of income, the deductions would become of importance in cases where the family is large and where the income exceeds, say £400.

SECTION 12. CHILD ENDOWMENT.

A. BASIS OF CLAIMS-HOW FAR SUPPORTED. 463. Our Terms of Reference require us to consider the desirability of instituting a systen1 of Child Endowment or Family Allowances. 464. The term " Family Allowances " connotes endowment­

(a) for a wife; and (b) for dependent children. _ 465. Evidence submitted was almost entirely confined to consideration of child endowment. 466. While not recommending Child Endowment, we have reached the conclusion (paragraph 600) that if Child Endowment be established, the most suitable family unit to be adopted in

determining a basic wage is man and wife. This excludes the idea of treating the wife as a separate

\

64:

Sec. 12.-0hild Endowment.-A. Basis of Olai1ns.-How far Supported.

economic unit on the pay-roll of the State. As Professor Gray points out (Family Endowment, page 106), that idea involves a claim that-" It is to the State that the woman renders a service in bearing a child, and it is to the State that she is justified in looking for sustenance and reward while she is doing the State's work." He further says (page 108) :-" Once it .is definitely accepted that child-bearing is a service rendered to the State, a very powerful solvent is introduced into family life as we know it." . -

467. Fo; that, and other reasons stated by Professor G_ray in the work cited, and for other practical reasons, we at·e opposed to a scheme which would treat a mother as a salaried servant of the State, by of her child-bearing. ·In the sections of this report which follow we have, therefore, invariably used the term, and discussed the subject of, Child Endowment. ·

468. The nominal basis of the claim in Australia for a scheme of Child Endowment is the alleged insufficiency of wage or income to provide adequately for children of large families.

469. The Commission found a tendency on the part of many witnesses to assume that all, or nearly all, the people with large families were on the basic wage, or had incomes not greater than that wage. The facts placed before the Commission did not, in our opinion, justify that assumption. The President of the South "\Vales Board of Trade, in the Declaration of the 8th October, 1920, pointed out "that by far the larger proportion of the population received a wage rate higher than the prescribed living wage. The wage rates for mechanics and the majority of their assistants and of nearly all partially skilled labour are above the basic declaration. Those in receipt of the basic living wage are confined mainly to limited numbers of employees in comparatively regular employment in hotels, restaurants, and businesses engaged in the

supply and distribution of foodstuffs, to lift attendants, watchmen, and men engaged in the · least skilled forms of labour in continuous industries. In the majority of well-defined industries in the State (New South Wales) by far the larger proportion of employees are paid at rates higher than the declaration.'' · . .

470 . . Figures relating to the State Railway systems and those supplied by other large employers show that the great majority of employees receive m011e than the basic wage. In the New South Wales R ailway and Tramway systems, for instance, with more than 52,000 employees, 13,595 receive from . £4 lOs. to £4 15s. per week, and 38,839 receive over £4 15s. per week. Somewhat similar proportions apply to the Railway systems in other States. In Victoria, with

over 20 ,000 employees, about 3,000 receive the basic wage, and all others receive much more; 13.000 receive more than £4 15s. per week.

471. With regard to South Australia, striking figures were supplied as to the whole of the male employees of the Government, numbering 104,553. Of this total 7,209 are receiving the State basic wage of £4 5s. per week, 13,598 have a wage between £4 5s. and £4 lOs. per week, 20,192 from £4 lOs. to £4 15s. per week, and 63,287 receive over £4 15s. per week.

4 72. In a number of large enterprises conducted by companies, the ·figures of which were supplied, it appears that the adult male employees receive more, often much more, than the basic wage. It seems quite the exception to find , adult male employees in private employ who do not receive more than the basic wage.

473. The figures quoted (para. 487) relating to the number of applications for Child Endowment in New South Wales, in respect of the families of such groups as coal miners, coal lumpers and wharf labourers, suggest that the incomes in these groups must, in the majori:ty of cases, exceed the basic wage, plus £13 per annum for each dependent child under fourteen

years of age. 474. In each State, the Commission sought evidence which might support the suggestion that insufficiency of wage is a general cause of any existing distress amongst children. . The Chairman, at the request of the Commission, made in each State a public statement to the following effect:-

" The Commission wishes to refer to a question to which little attention has . been given by witnesses, viz., whether the dependent children of workers, with large fa1nilies, in reasonably constant employment, receiving the basic wage or thereabouts are, to any appreciable extent, affected by the i:p.ability of their parents to provide for

their reasonable requirements. The Commission feels that there may be societies or persons working amongst, or interested· in the welfare of, the poorer classes of the community, who would be able to give valuable assistance in this respect. We are particularly anxious to obtain evidence on these lines, and we thought that by calling special attention, as we have· done in each of the cities at wp.ich we have sat, we might get some good results by mentioning the matter."

65

1345

Sec. 12.-0hild Endowment.-A. Basis of Olaims.-How far Supported.

475. Not only was that announcement made, but in each State capital the Commission sought out witnesses who wouldotherwise not have attended, in the endeavour to secure evidence on the lines indicated in the above statement. As a result, evidence obtained from a number of orgamsations working among the poorer classes of the community, but that evidence failed to the view that mere insu_fficiency of wage is a cause of distress among the children of

workers In reasonably constant employment. Many witnesses in each of the States spoke as to the existence of distress among children, but nearly al.l of them negatived insufficiency of wage as the. cause. They assigned other definite causes such as unemployment, sickness, accident, and drink, want of suitable housing accommodation, excessive rent,

widowhood, and Wife desertion.

476. Inefficiency of the mother was mentioned as frequently affecting the well-being of her children.

477. The term "inefficiency,., was, however, not to be taken as implying that in the majority of cases the mother was not desirous of doing her best for her children, but that through lack of knowledge and training in domestic economy, hygiene, and food values, she was unable to make the family income go as far, or produce as good results, as it would have done had she the necessary knowledge. _ ·.

478. It is apparent that payment in cash would not provide a remedy in cases where distress among children is due to drinking, gambling, or extravagant habits of one or both of the parents. It might even happen that, in such cases, the receipt of money would the

evil. No estimate is possible of the nmnber of cases coming under these three heads, but they are probably not insignificant in number.

479. Where distress among children is caused by sickness of, or accident to, the bread­ winner, we are of opinion that the remedy should be sought under a scheme of insurance, in preference to granting relief under a scheme of Child Endowment.

480. Two of the causes most deeply affecting fa1nily well-being are the difficulty of obtaining suitable housing accommodation and the excessive rents which often have to be paid. Witness after witness spoke of the evil effects attributable to these two causes.

481. The first requires no elaboration, as it is obvious that slum conditions prejudicially affect family life, not only from the point of view of health, but also from the point of view of character and moral well-being.

482. Under the second head, it is clear that the necessity of diverting a large proportion of the family income to pay for shelter, makes a serious inroad into the amount otherwise available-for food and clothing. · The amounts paid for rent vary in the different capitals, but generally speaking, rents are high .

. 483. Unemployment, casual employment, is a 1nuch more difficult question.

484. Dealing first of all with casual employment, it must be remembered that wage tribunals when fixing the wage, take into account the seasonal or casual nature o.f the occupation. For instance, the pay of wharf labourers is determined on the basis of 44 hours' pay for 30 hours' work. The worker is, therefore, paid for 14 hours each week during which it is assumed he will not be employed.

485. Such groups of workers as wharf labourers, coal miners and coallumpers represent relatively intermittent forms of e1nployment. The fact of such intermittency is often assumed, without justification, to be an inevitable cause of more or less chronic distress among the families of such workers. ,

486. Instances of this occurred when the Child Endowment Legislation was before the. New South Wales Legislative Assembly in 1927, as shown by the following quotations from Hansard

"The coal miners for the last two years have not earned an a1nount equal to the. basic wage, so what is going to become of their (Per Mr. Lysaght, page

1187.) " Many of these people do not earn the basic wage every week, many are casual workers such as wharf labourers, coallumpers, many who work in and around the :mines." (Per Mr. Tonge, page 1187.)

"The coal miners have no basic wage, they are not averaging £3 lOs. a week, and there are 30,000 of them." (Per Mr. Lysaght, page 1306.) F.24/28.-S

\

G6

Sec. 12.-0hild Basis of Olaims.-How jar Supported.

487. rrhe·J:Commission was induced by the above statements to ask Mr. Treble, the Commissioner administering the Child Endowment Act, to furnish the respective numbers of coal miners, coal lumpers and . wharf labourers in New South \Vales, and the percentage of those persons whose wives have applied for: Child Endowment. The figures supplied were as follows:-

(a) Number of coallumpers in the State . . 800

(b) Number whose wives applied for endowment a percentage of

2. (a) ' Number of wharf labourers in the State

(b) Number whose wives have applied for endowment Representing a percentage of -3. (a) Number of coal miners in the State (b) Number whose wives have applied for endowment

Representing a percentage of

129

16.125 per cent.

6,404

421

6. 577 per cent.

24,000

1,650 6. 87 4 per cent.

488. ·After making allowance for the percentage of unmarried and childless workers in those industrial groups, the :figures seem strongly to supp.ort the EndoWJ.nent Commissioner's opinion, that the chief cause of the low aggregate of applications under the Act is that the great majority of wage-earners. have incomes exceeding the basic wage, plus £13 per annum for each dependent child. ·

489. In our opinion, the claim for Child Endown1ent based upon alleged ·insufficiency of wage among workers is untenable.

490. In the Australian. community, as elsewhere, there is a residuum of cases in which special assistance to children is needed. Those cases can be dealt with by existing agencies, extended where necessary, as recommended in another part of this report. (See section 14.)

491. To set · up a general scheme of . Child Endowment to deal wHh this small residual percentage in the community would, in our opinion, be both unnecessary and unjustifiable.

B. OPINIONS OF ECONOMISTS. ,

492. Witnesses, representing many interests, who have urged upon us the adoption of a scheme of child endowment, have generally looked to Commonwealth taxation as the source of the necessary funds. Some of the schemes propounded have been fantastically irresponsible, and impossible to treat seriously.

493. Within the region of stvdied moderation, we have had the valuable assistance of several learned economists. The th eoretical fouodation of much of their evidence is to be found in their acceptance of the doctrine which was thus by Professor R. C .. Mills of the University of Sydney:-" The effects upon distribution must be pronounced good from the economic point of view in so far as inequality of income is reduced, for it is generally admitted that the

present high degree of inequality [of income] is economically bad. But, those effects are only _ good, if on balance, they are not ·?utweighed by other effects upon production."

494. Professor Pigou in his "Economics of Welfare," page 78, referring to the increase in the aggregate sum of" S3Jtisfaction" which might be brought about by'transference of income from a relatively rich man to a relatively poor man of similar temperament says:-" The old law of 'diminishing utility ' thus leads securely to the proposition : any cause which increases

the absolute sliare of real income in the hands of the poor, provided that it does not lead to a contraction in the size of the national dividend from any point of view, will, in general, increase economic welfare."

495. In another work, " Wealth and Welfare " Professor Pigou, speaking on the same subject says:-" Generally speaking, a transference of resources from the relatively rich to the relatively poor brought about· by interference with the natural course of wages at any point, is unlikely to do otherwise than to injure the national dividend and therewith the end the real income of ,the relatively poor." '

496. The question of the amount of transference of income which might be made without affecting adversely the total of the national dividend, or producing other unwelcome effects, was dealt with by several of the economic witnesses.

67

1347

Sec. 12.-0hild Endowment.-B. Opinions of Eoonomists. . -

· 497. Professor Alcock of Brisbane, for example said, (Q. 1678) "Allowances to be worth making at all should be fairly but they should not be so .large as to destroy

responsibility. I am disposed to regard 2s. 6d. to 3s. per week per dependant, as a fairly satisfactory figure, haying regard to the preceding sentence . . . . . Responsibility is learned

at Under universal suff1·age the only guarantee of is- in the personal sense of

responsibility." · ·

498. ]?rofess.or Alcock thought that for such a .provision, contributions would have .to be drawn both from industry and from general revenue. His reasons for thinking tax-subventions necessary were, to relieve wages of cost of administration, to reduce inequality of contribution between efficient and inefficient industries, and also for the purpose of providing for non-employees with inadeq11ate incomes. The Professor also said, (Q. 1726) he was not convinced that it is necessary at all to have a system of child endowment, but a wisely-framed systeD;l · with

suitable s:;tfe-guards, might cause an improvement in . standards. '

. . . .

499. With regard to the effects of taxing industry to provide endowment, P;rofessor Alcock pointed to the dangers of increasing unemployment to an extent that wpuld outweigh the gains of endowment. He said :-" An extra 5s. added to the basic wage might cause anyth4Ig from a 30,000 to a:p. 80,000 increase in the number of unemployed."

501. Professor J. B. (Hobart) thought that no scheme of Chi.ld Endowment is practicable that does not transfer something fr·om wages, but that taxation is also required. He pointed out that what is known _as the "Powers 3s." which has. beeri added to the Harvester equivalent, is a sum available for transference, as " it is not at all necessary on any cost of basis £or man without dependants." •

502. l-Ie did not, however, suggest the transference of more than 2s. of that amount from the weekly wage, partly because, in his opinion, that might be to begin with, and partly because workers might called upon for other contributions by way of provision for health and unemployment insurance. This amount of 2s. per week, or £5 per annum per wage earner, would produce, he estimates, about £5,500,000 per year if it could all be and provision_ ally he suggested an addition of £2,000,000 from taxation to provide endoyvment of 2s. per. week for children of non-wage-earners. Questioned as to whether the scheme advocated by other which would involve doubling the present income taxes, was practicable, he said:­

(Q. 12887) "Certainly not. I do not think you would get the money. Any attempt to get it would bring chaos into our economic system." (Q. 12888) "Including "

(Answer) "Yes, very much so." .

503. Mr. G. L. Wood, Senior Lecturer in Economics, Melbourne University, was of opinion that "the diversion of portion of the National dividend for the purpose of increasing the efficiency of the poor, would yield a return exceeding that received on the part of the dividend invested in capital goods." He said, however, that there was :o.o guarantee as to any amount provided by way of Child Endowment being used in the best possible· way to promote the efficiency of the recipients and their families.

504. On the question of the transference of the "Powers 3s." from wages to fund, Mr. Wood thought that (Q. 22621) " . the worker having received

3s. for so long, it has come · to be regarded as part of the wage. I believe the industrial friction which would arise from any attempt to tamper with it, for this or any other purpose, would be serious." 505. l\ir. Wood thought that additional Commonwealth taxation amounting to say £6,000,000 for the purpose of providing Child Endowment was" a sum which appears to be well

within the resources of the_ community." 506. His proposal was that such a sum should be used toprovide Child Endowment as a flat rate of £10 per annum per dependent child, excluding the first two children in a family. · ·The sum of £6,000,000 would be sufficient to provide endowment at that rate for 600,000 children, a number a little in excess of alL dependent children in Australia, irrespective of the parents' income, i-f the first two in each family are excluded. (See paragraph 566.) ·

507. Professor D. B. Copland, Professor of Commerce, Melbourne Univers!ty·, ·thought that a scheme of endowment going rather beyond the scale of Bridgen's proposal (which involves £2,000,000 from taxation) might be adopted. He thought also that (Q. 23986) " if _ you are going to have a Child Endowment system based on taxation, there should be some

re-distribution of wages for single men . . . . . . . That would make the thing fair

in its incidence."

68

Sec. 12.-0hif4: Endowment.-B. Opinions of Economists.

508. We have carefully considered these opinions of economists as well as those of other witnesses, and think that as to schemes dependent upon funds provided by additional taxation, the question resolves itself into a dilemma.

509. If additional taxation is to be the source of the necessary funds a scheme of Child Endowment on a scale sufficient to· provide full cost of maintenance, appears to us to be practically an impossibility. If attempted, it would, we think, cause economic disturbances and losses (especially through unemployment) greatly outweighing any possible benefits derivable.

If on the other hand, the so-called "modest" scheme commencing with say 2s. or 2s. 6d. per week, were adopted, we are of opinion that the effect would be simply to bring into being a new and prolific cause of industrial disputes,. with incessant demands for increases, either direct as endowment, or through manipulation of the basic wage. This matter is referred to in paragraph 645.

510. One statement with regard to the additional amount of taxation which n1ight be raised in Australia should be mentioned. That is contained in a passage in Mr. (now Dr.) Benham's recent book "Prosperity of Australia," page 80, where the statement is made that £50,000,000 per year might be raised in additional taxation without imposing an undue burden. Dr. Benham did .not appear before us, but this statement in his- book was referred to by more than

one witness. 511. Professor R. ·c. Mills (who first mentioned Dr. Benham's statement) was questioned as to the amount of taxation which might be imposed for endowment purposes. We quote from the evidence:* (Q. 17151)-" As you consider £4,500,000 would not qe immediately • practicable, what portion of that sum would you consider within the competency of the nation

to find immediately? " (A.) "That is a very hard question to answer. For this particular purpose I think we could find something not more than £10,000,000, or less than £5,000,000; it is very vague I know." (Q. 17164) "If we had only £8,000,000 to spare I think at any rate the greater · part of it would be better expended in a scheme of unemployment insurance."

(Q. 17168) " I simply said from £6,000,000 to £10,000,000, because it is an ·extraordinarily difficult thing to estimate."

512. Professor Mills also expressed the opinion that if such a sum as £10,000,000 were raised by taxation, probably the best proportions in which that motley might be

expended would be say £6,000,000 for unemployment insurance, and £4,000,000 for child endowment, or £7,000,000 for unemployment insurance and £3,000,000 for child endowment. (Q. 1765.) .

513. Professor Copland (Evidence page 2248) referring to Dr. Benham's proposal said:-­ "Expenditure upon public works from funds raised by taxation·has many advantages from this point of view, and Dr. Benharp. was doubtless thinking of this when he made the assertion that £50,000,000 a year :might be raised in taxation without imposing an undue burden."

" I think the figure of £50,000,000 is quite out of the question, because the community as a whole would not be seized with the national importance of this method of financing public ·works and would probably feel that sound developmental works were being unduly unrestricted. Without agreeing to this high figure, I think Mr. Benham's contention is in general terms sound

and that Australia should save a greater proportion of her national income." ·

514. We quote further from the evidence of Professor Copland :-(Q. 23983) " You will not have Professor Benham's £50,000,000 a year taxation ; have you any idea of the extreme limit as to the amount that could be raised? " (A.) "No, I have not come to any definite figure at all, and I think that a definite figure is out of the question, because, as I have already explained, the limit will be altered according to a number of different conditions, one of which is the community's belief in the expenditure proposed." (Q. 24038) "With regard to Mr.

Benham's views on the. capacity to bear further taxation, you suggest that he is thinking primarily of desirable objects of expenditure. With regard to direct taxation, particularly, do you think any objects of expenditure whatever, would justify increasing the taxation to the extent he suggested-?" (A.) "I should say not during peace time." .

)

515. The text (p. 80) of Dr. Benham's proposal reads as follows:-"There is another course possible, but it would be most unpopular. It is, compulsorily to increase the actual saving of the community by greate:r: taxation . . At present little more than 12 per cent. (£75,000,000) of the home produced income

of Australia is paid in taxation. In England percentage is said to be nearly 20; • Copies of the book were not then available.

69

1349

Sec. 12.-0hild Endowment.-B. Opinion of Economists.

and in other countries such as France; to be still greater. Australia probably'has a larger possible 'margin for saving' per head than such countries. This indicates that an additional £50,000,000 a year might ·be raised by taxation without imposing an undue 'burden.' (It is not suggested that the whole of this additional sum need be raised for immediate purposes.) Part of it could be used to reduce the debt and part for purposes indicated in final chapter of this work. " 516. We suggest that the premise in the above argument that, for the purpose in question, Australia can be properly compared with such countries as England and France, cannot sustain the conclusion which is based upon it. A relatively small, densely populated country, the capital equipment of which may be said to be complete cannot, in our opinion, be reasonably compared with a very large, scantily occupied country like Australia, so much of the capital equipment

of which has yet to be created. ·

517. Dr. Benham goes on to deal with the sources from which money might be raised. He says :-" As I have mentioned the somewhat staggering :figure of £50:000,000 a year, it is perhaps advisable to go further and indicate the chief sources from which it might be raised. At present, nearly half the total taxation· is provided by customs and excise duties. Although

these duties 'pluck the goose with the least squealing' they are regressive; they impose a heavier proportionate burden.upon the poor than upon the rich. Additional taxation should be direct rather than indirect, .and should fall most heavily upon those best able to bear it. This points to greater income taxation (yielding at present less than £4 per head of population per year)

and to greater estate, probate, and succession duties ·(yielding about lOs. per head at present). Income taxation is at present much less · steeply 'progressive' than in England for example. · It might well be made much heavier in the upper reaches, and especially upon incomes of £5,000 a year and more. "

518. It will be seen that Dr. Benham turns to direct taxation upon incomes of £5,000 a year and more, as the chief source from which to raise the additional sum of £50,000,000 per annum. 519. Let us consider first the State probate and succession duties "yielding about lOs. per head at present." present population of the Commonwealth being about 6. 3 millions, and the total Commonwealth and State tax collections in connexion with estates of deceased persons being about £4,300,000, that :figure of lOs. per head is not quite accurate. It would

be more correct to say nearly 14s. per head. But in respect of taxes of this kind, a statement of the amount per head of population is almost meaningless. The combined rates of Commonwealth and State taxation upon estates of deceased persons reach fairly high :figures. If we assume that those rates were even doubled (and it is unlikely this would be suggested by ariy responsible authority) the utmost additional return from those sources would be about, say, £4,500,000, leaving: ·say, £45,000,000 of the suggested amount to be raised from other sources.

. 520. Companies are not specially mentioned as subjects of the suggested additional taxation. From that fact, and from the emphasis upon the "steeply progres$ive" scale (under the taxation laws of the Commonwealth and of most of the States, companies are taxed at a flat rate) it may be inferred that Dr. Benham had in mind incomes of individual taxpayers, as

the source from which most of the additional £50,000,000 should be raised. Another fact s-q.pporting that inference is that every of taxation upon the profits of companies is likely to reduce pro tanto the taxable income of individuals. 521. We assume then, that as to income taxation, we are to look to the in

the upper reaches" and especially to t,hose having taxable incomes exceeding £5,000 per annum. If, by nearly doubling their present taxation, absentees were called upon to provide an additional £1,000,000, resident individual taxpayers would be called upon to furnish the balance, say £44,000,000. Let us examine the capacity of those individuals to provide that sum in addition

to the present taxation. •

522. For the latest information we turn to the eleventh Report of the Federal Commissioner of Taxation (page 40) which shows that the total taxable income of resident individuals for the year 1925-26 was £107,000,000. Of the incomes exceeding £5,000 the total taxable income was £16,000,000. Of that ·sum about £2,700,000 is taken by Commonwealth income taxation, leaving

only £13,300,000 from which any additional tax could be drawn. Hence, if the whole of that balance of taxable income were confiscated, it would provide less than one-third of the amount whch Dr. Benham thinks might be raised " without imposing an undue burden." 523. I£ incomes of £5,000 and upwards are exhausted, obviously we must go further

down the)cale. ·

I

\

70

Sec. 12.-Child Endowment-B. Opinions of Economists.

'524. Additions to the present rates, equivalent to an all-round increase of lOs. in the £, would perhaps constitute the utmost limit which even tax fanaticism would suggest. If we assume the imposition of such a scale, we find ·that in order to raise the balance, £44,000,000 (see para. 521 ), it would be necessary to apply those new additional rates to all individual incomes exceeding about £350. The stupendous assumption that such a scale is practicable, ignores the

great diminution in taxable capacity of the individuals concerned,, which would immediately follow its imposition. It ignores also the pa1·alysis of enterprise which would ensue, and which would cause an overwhelming flood of unemployment. ·

525. Many other modes of analysing the proposal suggest themselves, but it' is probably unnecessary to develop them. 526. Dr. Benham's proposal is not in audacity. It drives a salient of excess into the territory of moderation. No subtle penetration was needed to perceive its psychological effect upon some of our witnesses. '

527. That is one of the reasons why we have thought it necessary to treat the text au grand serieux and to subject it to the disintegrating impact of ineluctable facts. · 528. That duty discharged, we view the text from another angle.

529. A learned and public-spirited doctor looks out upon his world He sees his fellow­ citizens narcotized by indulgence in a prolonged course of borrowing, and needing to be startled into the re·assertion of their virile capacities. Shock seemed the only tactic.

530. But bomb-throwing, even of economic bombs, is a dangerous pastime.

531. It might destroy some things which even the most humourous of economists would · · wish to preserve. It might shatter the confidence of the community in the sanity and wise insight of its leaders in economic science. 532. That would be a serious loss to the community.

533. It would not be a gain to the economic leaders.

C. IF CHILD ENDOVIMENT ESTABLISHED SHOULD THERE BE A COMMONWEALTH SCHEME OR SEPARATE STATE SCHEMES? 534. Witnesses · appearing before the Commission, who supported the establishment of Child Endowment, unanimously favoured a Commonwealth scheme in preference to State schemes. With few exceptions, they expressed their preference for schemes involving cash payments such

as that operating in New South Wales. 535. No witness before the Commission supported the establishment of State systems of Child Endowment. ·

536. · One of the main objections to separate State systems is the strong probability, amounting almost to certainty, that there would be a lack of uniformity. Diversities of system would create difficulties similar to those created by the lack of uniformity in wage fixing legislation and in the practice of industrial tribunals . . In addition, those diversities would accentuate the difficulties now resulting from varying systems of wage :ti.,"':ation.

537. In the 1926 Living Wage judgment in New South Wales, the Industrial said:-" It may be said at once that the question of motherhood endowment is

ultimately one for the Federal Parliament rather than for any of the State Parliaments, because of the obvious difficulty of any one State providing a full system of family allowances as an adjunct to the living wage, and thus putting its own producers and manufacturers at some competitive disadvantage under a Constitution which postulates inter-State free-trade."

• 538. The argument in the above passage for Federal, rather than State control, applies equally whatever form State schemes may take. . . ·

539. New South Wales witnesses claimed that even the.comparatively small sum, £1 ,250,000, * actually levied on industry to finance the provisions of the New South Wales Child Endow­ ment Act for the first year, placed industry in that Stat e at a disadvantage in competing with adjoining States. The estimated cost of the scheme as originally introduced was £7,750,000. The effect of such a burden placed upon industry inN ew South Wales and not placed upon industry in Victoria, need not be discussed.

* of applications!proved!to be so mt\cb fewer than was anticipated that the statutory levy of 3 per 'cent. on wages wa.a auspended after the first fourteen weeks. ·

71 1351

Sec. 12.-0hild Endowment.-0. Should the Scheme be Commonwealth or State. -540. The difficulty mentioned by the Industrial Commissioner would be obviated if all States were prepared to establish Child Endowment schemes with uniform rates and conditions but in that case a much simpler method would be for the States to refer the matter to

Commonwealth Parliament pursuant to the provisions of Section 51 (xxxvii) of the Constitution.

541. For the reasons stated above, we are opposed to State schemes of Child Endowment. If, however,_ the States, or some of them, are desirous of establishing their own schemes (which are ve:y to be in character) they should, in our opinion, carry the consequential

financial obligatiOn. We thmk that the Commonwealth Parliament should not grant assistance to the States in the financi ng of State schemes of Child Endowment.

542. While, as between a Commonwealth scheme and separate State schemes, a Commonwealth scheme wou'ld, in our opinion be preferable, we are also opposed to a Commonwealth scheme of Child Endowm en t, because we believe that public moneys, if any available, can be more beneficially expended upon 'Nelfare services. (paragraph 698.) .

543. But if, contrary to our view, a Commonwealth scheme be proposed, then; in our opinion, conditions precedent to its establishment should be :-(I) that any existing State legislation instituting a scheme of Child Endowment should be repealed ;

(2) that the Commonwealth Parliament should have first obtained full and exclusive power-( a) to control wage fixation, and "industrial matters " as defined in Industrial Statutes ;

(b) to establish and control Child Endowment.

D. PROVISION OF FULL MAINTENANCE. OBJECTIONS.

544. The institution of a system of Child Endowment, which, as a supplement to wages, would provide the full cost of Illltintenance for each dependent child, is open to grave objection. Involving, as it would, a high increase of taxation, almost certainly of direct taxation, we are satisfied from the evidence, and from a c.onsideration of the present economic position of Australia, that' the result would be to check progress, to increase unemployment, and to reduce the sum of

human welfare in the community.

545. On the social side the main objection is, that if the State relieves parents of all financial responsibility for every dependent child in the family, the sense of parental responsibility and the incentive of parents to do their best to prepare their children for the full life of citizens in a free State would be seriously weakened. That incentive is so invaluable, and if removed, so

irreplaceable, that any course likely to have the effect of destroying it, in whole or to a material degree, would be a sacrifice of one of the best elements in the character of the people.

[)46. On the economic side, the effect on the father would. be much more apparent in a probable slackening of energy, than in the case of the mother. It would be

dangerously easy for many fathers to slacken off in their own efforts, and to pass into a condition of careless acquiescence in a system made their children, at least from the financial point gf view, wards of State. The price of this easy acquiescence would be the loss of much of that virile and strenuous independence of character, and ready acceptance of the whole responsibility for his children, which are among the most admirable characteristics a man can possess.

547. A scheme of Endowment may indeed corrode incentive just where it is particularly desirable tor incentive to be maintained in full strength, that is among skilled workers. Under the New South Wales scheme, for example, a skilled worker with three children, receiving the basic wage, plus a margin for skill of l5s. per week, or in all, £260 per annum, finds that the

unskilled worker with three Qhildren would receive, in wage plus endowment, exactly the same sum. The skilled worker with that rate of pay is debarred from participating in the endowment fund. 548. From the point of view of the mother, many instances might occur in which the financial relief brought about by the payment to her of the sums granted by of Child Endowment, would be seriously discounted by a withdrawal from her of portion of her husband's

wages, which formerly he had handed ?ver for the up-keep of household. N_o one contends that this would be the umversal expenence, or that 1t would be likely to happen m the majority of cases. But, in opinion of several witnesses, in opinion, it would

probably happen in so many mstances as to create a new ev1l m fam1ly life and would lower,

72

Sec. 12.-Child Endowment.-D. Provision of Full Maintenance-Objections.

instead of raising, the standard of independence of the mother, and the standard of comfort of the family. Webelievealsothat itwould cause a diminution in thesenseofunityof interest between husbands and wives, and an increase in the number of deserted wives. Opinions of witnesses on this point are somewhat confl.icting. This is not surprising, as the results of such an experiment cannot be predicted with an approach to certainty. -

549. If the rate of payment in any scheme purporting to provide endowment for each dependent child is avowedly, or obviously, insufficient to provide the estimated full cost of maintenance, it seems certain that there will be an unceasing demand for an increase up to the point of full cost. Where, indeed, a scheme is founded on a re-distribution of wages, so that the unit of wage-fixation is the individual worker, it be both logical and necessary to provide, in addition, the cost of maintenance of each existing dependent child,.

550. It is clear from the Parliamentary Debates which occurred in New Zealand and New South Wales when the respective Endowment Statutes were under consideration, that in spite of the endowment-components in the basic wage, continuous pressure would be brought to bear upon Governments to increase the amount granted under the Child Endowment Act, up to the estimated complete cost of maintenance of each child.

55L In New Zealand, for example, where the scheme is designed to provide for endowment (not whole cost of maintenance) for each child in the family beyond the second, it was emphatically stated in Parliament, that the Labour Party would use every possible opportunity to push the scheme further, with the object of giving to the children in every family (of more than two*) full maintenance. ·

552. In Australia, evidence submitted to this Commission in every State, on behalf of the Labour movement, includes definite claims that no reduction whatever shall t ake place in the basic wage for the purpose of providing endowment, and that in addition to the basic wage, which, admittedly, is partly made up of provision for children, there should be endowment of every

dependent child to the amount necessary for its complete maintenance.

553. Every Industrial Tribunal in Australia has experie:p.ce of the manner in which the needs of large families are continually urged, as a reason for raising the wage of the family man, which wage, however, under the present system, must al.so be granted to the single man. One form in which this claim is often presented is that the Tribunal should adopt a higher family unit

(three children instead of two, where two has been the basis.)

554. If Child Endowment as a gage of battle, is to be tossed into the arena of the present Industrial Tribunals, disputes will inevitably increase in number, and in intensity. Such results will indeed follow, although the schemes may differ in detail; for example, they may embody endowment for all· children in excess of one, of two, or of a greater number. (A note on another phase of schemes of this kind appears in paragraphs 581- 584.)

555. It may, we think, be regarded as certain that if a scheme of Child Endowment be placed upon the Statute Book, providing endowment fot dependent children at a rate less than the full cost of maintenance, it will be only a matter of time when incessant pressure will cause the raising of the amount up to full cost. ·

556. This point is further illustrated by the following extracts from the New South Wales Parliamentary Debates (1927) on the Family Endowment Bill.

557. The Honorable A. C. Willis, speaking on behalf of the Government in the Legislative Council, 23rd February, 1927 (see New South Wales Parliamentary Debates page 1473) said:­ "The allowance per child should be at least lis. if the basis is adopted of what is regarded as right for a family allowance. Some have criticized us from that point of view; they say the scheme is not scientific. Well, there had to be a jumping-off place . . But if under

this proposal the single men may be getting something more than what would be their rightful proportion, on a scientific basis, they are getting it at the expense of children who are not getting what they are entitled to. Those children are getting not lis., but only 5s., and it is at their expense that the single men are getting more."

558. Mr. Willis also said :- " You have built up for a single man a basic wage higher than is scientifically warranted. What is more, the Commissioner holds that under your basic wage system, you are providing for thousands of children who do not exist. But as against that, and because of your system, you are unable to provide a proper allowance for those who do exist."

*The New Zealand scheme is designed (see paragraph 121) to provide assiHtance in the maintenance of children beyond the number of two in any family.

73 1353

Sec. 12.-Child Endowment.- D. Provision of Full Maintenance-ObJections.

559. Dr. Evatt, K.C., a Ministerial supporter, had previously said in the Legislative Assembly that:-" Mr. Piddington does not commit himself to the principle that 5s. per week is sufficient to properly provide for a child. This Government has not said that. If . this Government could provide more it would do so."

560. If the conception of " needs " which plays a dominating part in both the theory the practice of our basic wage tribunals, is to retain its dominant position, it should be applied with more justice and discernment. The" needs" of the numerous family (at one end of the scale) has long been the main lever by which the unmarried and childless man (at the other end of the

scale) has succeeded in raising his own wage to the present level. But if justice is to rule our conception of wage distribution, and if the measuring rod of " needs" is to be applied to the family unit consisting say of five persons, it must equally be applied at the opposite end of the scale to the single man and to the married man without children.

561. Using the familiar idea of an index number, and t aking the number lOO.as representing the needs of a family of five persons, it requires no argument to support the assertion that the index number representing the needs of the single man would be much less than 100; perhaps not exceeding the number 60.

562. We cannot think otherwise than that, if a general scheme of child endowment supplementary to an unreduced basic wage, and providing full cost of maintenance be established, it will not be very long before the question of fully preserving parental incentive in relation to the childJ:en will be a lost cause.

563. This compels us also to the further conclusion that an essential condition precedent to the establishment of any scheme of child endowment provided by public funds, should be a reduction of the basic wage by elimination of the provision for children which is now an integral part of that wage.

564. Logically the reduction should be carried to the point at which the wage would. reasonably provide for .the. needs of the individual worker only. But for practical reasons, (see paragraph 600) we think the unit to be adopted for the purpose of such reduction, should be man and wife.

E. ENDOWMENT SCHEMES, EXCLUDING ONE OR MORE DEPENDENT CHILDREN. 565: Suggestions have been made by witnesses before the Commission that a scheme of Child Endowment might be established, which would exclude those children whose needs are provided for in the basic wage.

·. 566. Exclusion of the first two children.-The result of a Commonwealth scheme of Child Endowment which excluded the first two children would be as follows. We deal first with the Commonwealth and all States other than New South Wales. 567. In families covered by Commonwealth Arbitration Court Awards, by Awards of the

State Tribunals in Queens-land, and South Australia, and by Wages Boards Determinations in Victoria, Queensland, South Australia and Tasmania, the third child would be fully provided for in the family wage and would in addition be specifically endowed. 568. To avoid double provision, it would be necessary for the Commonwealth, Queensland,

South Australian, Victorian and Tasmanian Wage Tribunals to reduce their respective basic wages liy the amount included therein for the third child. 569. If the amount included for each child in the basic wage be taken at lls. (as implicit in the 1926 determination of the New South Wales Industrial Commission) it follows that the

basic wages of the Commonwealth, of Queensland, South Australia, Victoria and Tasmania would have to be reduced by lls. per week so as to cover the needs of two children only instead of three as at present: This would place the basic wage of these tribtmals at £3 14s. or thereabouts.

570. Summarizing, the effect on basic wages would be : In Commonwealth Awards, and those of Queensland, Victoria, South Australia and Tasmania, a decrease from say £4 5s. to £3 14s. 571. In Western Australian Awards, the present basic wage of £4 5s . would be unchanged. 572. Dealing now with the position in New South Wales.-In all families covered by State

Awards and Determinations, the first two children would be excluded, not only from provision in the wage , but also from endowment . 573. The legislative change necessary would be to amend the I ndustrial Arbitration (Living Wage Declaration) Act 1927, by including two chilill·en in the Statu.tory family unit

which at present consists of man and wife only.

74

Sec. 12.-Child Endowment.-E. Endowment ea;cluding one or more Dependent Children.

574. As we have mentioned above (paragraph 223) the New South Wales Industrial Commissioner in his 1926 judgment pointed out that the basic wage then declared at £4 4s. per week provided a standard of living for a man, wife, and one child. The legislature in amending the Act, might, of course, give a specific direction to the Tribunal that the provision for one child in that wage should be eliminated and that (in accordance with present index figures) provision should be made for two children in the family unit. If the absence of specific Statutory direction on that point, the Tribunal might, perhaps, feel bound to act as if such a direction were already sufficiently supplied, and provide an amount of maintenance for two children on the basis above-mentioned, lis. per week per child.

575. If such an were . not effected, but provision made for two children, the present basic wage of £4 5s. would be raised by 22s., making that wage £5 7s. ·

576. Exclusion of the first three children.-The result of excluding the first three children from a scheme of child endowment would be as follows :-. · 577. The Commonwealth, Queensland, South Australia, Victorian and Tasmanian basic wages would remain as at present, say £4 5s. or thereabouts (some are slightly higher.) In­ Western Australia· an allowance for t]le third child of lis. per week would have to be added to the present basic wage of £4 5s., making a new basic wage of £4 l6s. In New South Wales, while the family unit provided for in the basic wage is nominally man and wife only, the rate of wage is said by the Industrial Commissioner (see paragraph 223). to include provision for one child.

578. We must, however, in this case, as in the case above where two children were considered, assume that the Commission would adopt the Statutory family unit of man and wife only and make the additional provision for the relevant numbe;r of children, here · assumed to be three. This would necessitate an addition of 33s. per week to the present New South Wales Basic Wage of £4 5s., making a new basic wage of £5 l8s.

579. We have already expressed the opinion (paragraph 295) that the basic wages of .Australia generally contain provision for the first three children in a family. We, therefore, think that if any children are to be excluded from the benefits of a child endowment scheme such a scheme should begin with the fourth child and not with the third. ·

580. The difficulties which would arise in a scheme which exCluded one or more children in a family were thus commented upon by Dr. Evatt, K.C., M.L.A., in the New South Wales Legislative Assembly:-" I repeat that if the first child is omitted from the scheme, we may as well tear the Bill up. It will not be a child endowment scheme, but simply the removal of the effect of the State basic wage, in an attempt to devise a new scheme to equalize that basic wage, on the one hand providing for one child, and the Federal Basic Wage on the other hand providing for three children. It will lead tq all sorts of inconsistencies, and if the amendment is agreed to the Bill will be the most incoherent Bill we have ever seen. It will be -absolutely impossible to understand it either in principle or in application."

581. At whichever of the two points in the family scale endowment began, that is, with the third child or the fourth child, considerable alteration in the legislation of several States would be necessary. - '

582. Even if, as is improbable, the great difficulties of obtaining legislation in all States prescribing the same family unit could be ·overcome, the further problem of inducing a number of independent tribunals to preseribe the_ same basic wage for tl;at unit would remain-unsolved.

583. Not less important would be the .necessary action by the Commonwealth. 584. But here the difficulty is of a different order. The Commonwealth Parliament appears to lack power to take its share in securing by legislation the adoption of a uniform family unit. Even it it could legislate for that purpose, the Commonwealth Court might prescribe a basic wage for that unit differing materially from the basic wage or wages prescribed by State Industrial

Tribunals. 585. These considerations emphasize the essentiality of a unified · control of industrial legislation. 586. Even unified control of industrial legislation by the Commonwealth Parliament would

not of itself remove the probability of friction and difficulty if-(a) The Commonwealth Arbitration Court could make provision in the basic wage for the fir·st two or three children in a family, ,and (b) Child Endowment fo r the remaining children in the family were

(l) directly enacted by Parliament as in New South Wales or

, (2) granted through a tribunal (other than the Commonwealth Arbitration Court) established by Parliament for the purpose.

75

1355

Sec. 12.-0hild Endowment.-E. Endowment Schemes, excluding one or more Dependent Children.

587. That is, that friction and difficulty could no't be avoided if there were two controlling bodies, one to fix a basic wage which n1ight include provision for two or three children, and the other to grant endowment for such of the children in a family as were not specifically provided · for in the basic wage. ·

588. The probable result of the existence of two independent tribunals would be the.m·eation of a '' vicious spiral '' of the t ype referred t o in the 1926 report of the Tariff Board, from which we quote the following :-" Immediately following upon the increase in the Tariff in regard to woollen

piece goods, passed by the House of on the recommendation of the

Tariff Board, with a view to relieving certain sections of the industry which were suffering detriment from external competition, the Industrial Union embracing the operations in this industry lodged an application before the Federal Arbitration Court for heavy increases in their wages and modified working conditions . . . . . .

This action of the Textile Workers Union seems to have been influenced by the judgment of l\1r. Justice Powers, wherein it was laid down that his Court would take no cognizance of the capacity of an to pay certain wages, but would fix what wages it thought necessary and the industry would then have recourse to the Tariff Board which had been created by the Federal Parliament to make recmnmendations for the granting

of whatever protection was necessary. In this case, the various unions appeared before Tariff Board to assist the en1ployers in obtaining necessary· increases in order to

make it possible to work the mills at a profit instead of at a loss and then immediately approached the Arbitration Court for their share of these increases. In this way a precedent is created for passing back and forth between the Federa] Arbitration Court and the Tariff Board for increments in wages and duties, which can

only result in an ever-increasing wage rate, and an ever-3!Scending tariff. This course must ultimajely defeat itself, and by continually raising the cost of living bring about an industrial paralysis." -

589. The matter is further illustrated by the following extracts from the debate on the Child Endowment Bill 1927. in the New South Wales Parliament :-Dr. Evatt.-590. "On the assumption that : . . . . . 5s. per week is allowed in respect of

each child, then Mr. Piddington in making future awards will have to consider whether 5s. a week is sufficient in respect of the children of e1nployees in industry. It will certainly be contended before him and probably be admitted by him that it is not sufficient, and if he does decide that, his award will be made accordingly . . We do not need to consider what

Mr. Piddington may do in the future, but he will still have to decide whether the 5s. a week in respect of a child is a sufficient allowance, then he will have to increase the basic wage accordingly. (p. 1172.) 591. Whether Child Endowment began with the third child or the fourth child, wage

tribunals would, in our opinion, be continually pressed to restore '(at least) any part of the basic wage which had been eliminated for the purpose of preventing double provision for one or Inore children. As a consequence, the present confusion and industrial unrest caused by variations in existing methods of wage fixation would be extended and intensified.

F. ENDOWl\1ENT SCHEMES WITHOUT GOVERNMENT AID-UNIT FOR BASIC WAGE---COST OF ENDOWMENT.

· 592. In the present Australian system, wage tribunals determine the basic wage in relation to the "needs" of the worker as measured by certain assumed family obligations. The unit adopted is a family unit The logical unit for that wage, however, is the individual worker. The adoption of that unit wou.ld involve a system of allowances_, in the first place for a wife if the worker marries, and later for each child born 1nto the family. The allowance for the would be continued throughout the years of dependence, which are usually taken as terminating at the age of fourteen.

1

Some as t? the which for the

wife should bear to the wage, may oe found 1n a consideration of the relative food reauirements of a man and wife, as determined by physiological authorities. One the the best of these determinations (Atwaters'), taking the figure one as representing the food requirements of the man; fixed . 8 as the requirements for the woman. ·

78

Sec. 12.-0hild Endowment.-F. Endowment Schemes without Government Aid.

593. As an illustration, if we take' the average of the present Commonwealth and States Basic Wages as approximately £4 5s. per week, and assume that three· children at the average rate of 7s. each are provided for in that wage, the amount remaining as representing the remuneration for the unit of man and wjfe, is £3 4s. per week. That sum, distributed according to the Atwater co-efficients for man and wife, would give £1 15s. 7 d. per week as provision for the man, and £1 8s. 5<1. per week as provision for the wife. On the logic, and on the arithmetic of the case, with the assumptions ,of the preceding paragraph, the wage of the single man, if the "needs" theory is to govern, would be £115s. 7d. per week, and that of the mar+ied man without children, £3 4s. per week.

594. But human affai1·s are not wholly controlled by logic and arithmetic. Even though · the single man is not always so conspicuous an upholder of the standard of saving as he is of the standard of enjoyment*, there was much agreement among witnesses that he should have a margin above the amount deducible from the Atwater co-efficients.

595. At present the wage of the single man not only includes a substantial amount for non-existent children, but also for a non-existent wife. This is sought to be justified on two grounds · -first, it is said that the single man has to pay for some services a wife renders her husband without money payment. This is doubtless true, but the cost of maintaining, housing, and

clothing a wife is substantially more than the single man pays for board and lodging and clothing; &c., plus the amount paid for other services. 596. The second ground is that the wage of the single man ought to provide a sufficient ·margin to allow him to save in contemplation of marriage. The Savings Bank returns vvere

referred to as showing that the single man does save in contemplation of marriage. 597. We have examined several sets of Savings Bank statist ics, and are of opinion that, the large extension of amounts upon which the Savings Banks allow interest, and the ever-growing use of Savings Bank facilities made on behalf of their clients by solicitors, trustee companies, and other finance companies, are the principal causes of the increase in deposits. It is no doubt true that some single men save a portion of their wages, but the figures of attendances at race­ courses, theatres, picture shows, and other forms of amusement, as indicated by the _ amounts paid in amusements tax, and the heavy expenditure upon tobacco and liquor, provide an

argument against the assumption that there is large and systematic saving for n1arriage on the part of single men who are wage-earners. 598. The following pertinent statement on the matter was made by Dr. Arthur during the debate on the Child Endowment Bill in the New South Wales Parliament (Hansard, page 1177):­ " When in 1919, the basic wage went up 17s., and every single man and married man without children received that wage, next year it was found that the drink bill had gone up £3,000,000."

59 9. While it is regettable that a large proportion of the single man's wage seems to be devoted to purposes less praiseworthy than that of saving for marriage, we are not unsympathetic towards the idea that a margin for that special saving should be allowed. 600. For that reason and for other reasons of a practical character, we are of opinion that if an Australian schen1e of Child Endowinent were adopted, the family unit for the -purpose of

determining the basic wage should be taken as a man and wife. The single man would then receive more than he would strictly be entitled to, as a 1natter of allocation of the wage to actual " needs," but the scheme would approach more nearly to the idea of justice than it does at present. 601. If, therefore, the unit of man and wife were adopted in fixing the basic wage, provision for existing children would hay e to be considered. In our opinion, the evidence given t o the Comn1ission justifies the staten1ent that n1aintenance for each existing dependent child

would be fully provided by payment upon a scale cor.amencing with 8s. for the frrst child in the family, the ·amount di1ninishing by Is. for each subsequent child, up t o and including the fifth, with 4s. for each child beyond the fifth. ··Fron1 figures kindly supplied by the Victorian G-overnment Statist, it appears that a fund established by a contribution frmn existing wages of 7s. per week per adult male worker, would enable payment to be made in accordance with that scale. t If, then, the wage could be re-distributed in that way, results would be as follo.ws :--=- ·

(I) A basic wage of say £4 5s. would be reduced (by 21 s.") to £3 4s. for each adult male worker, married or single. (2) Of the 2ls. thus deducted from the wage, 7s. would be paid by the employer into a fund to provide an endowment on the above scale for all existing dependent

children.

* One witness was ot opinion that the special function of the unmarried wage-earner is to raise and keep flying high the standard of ·" enjoyment . " The unfortunate point about that doctrine is that the high standard of enjoyment of the unmarried wage-earner i'!l kept up at the expense of parents and children, especially in families where the children are numerous. t The basis of the calculation is the fact that the average number of children per adult male worker is less than one, (about . 9).

"7_7 1_ 357

Sec. 12.-0hild Endowment.-F. Endowment Schemes with01ft Government Aid.

(3) Every married worker having dependent children would receive endowment in accordance with the a hove scale. (4) There would be a considerable balance in the wage-fund (using that term as meaning the amount now paid in wages) which would be "saved to industry."

That a1nount would be 14s. per week per adult male worker. The question of the effect (if any) upon wages of females and juniors ·would be a matter of investigation. . ·

602. A number of witnesses forward the view that the amount so " saved to industry " would simply be an addition to the profits of the employers, at the expense of the employees. ·· This we think is a misconception. Except in the few and probably negligible cases, where effective competition is absent, it seen1s certain that a reduction in the total amount of wages paid would

quickly result in a reduction in prices, and of the cost of living, to that extent raising real wages and improving real standards.

603. Fron1 political as well as ·:fron1 industrial points of view, the difficulty perhaps would be the considerable initial reduction which this sch.en1e would involve in the actual wage now received by persons without family responsibilities, and to a lesser extent by those vvhQse fan1ily responsibilities are more than covered by the endowment elements contained in the present

wage. This difficulty is mainly the economic sphere. V1ithin that sphere, material benefits would result, and the apparent loss to a section ·of the wage-earning con1munity would be at any rate pa:rtjally compensated by a decided reduction in the cost of living, while the benefits to persons with large would be very great. The su1n of hun1an welfare would, in our opinion, be increased.

604. But, it might be necessary to consider an alternative. Assume that the aggregate 'vage-fund is to remain undiminished, but that foT the purpose of providing endowment for children, a degree of re-distribution of that fund is agreed upon. Assun1e also that the degree of re-distribution is to be the least possible consistent with providing the necessary funds for child endow1nent. Using the same figures as in paragraph 601, above, a contribution from wages

of 7s. per week would provide endowment for all dependent children of workers on the scale mentioned in that paragraph.

605. The basic wage, now averaging about £4 5s.* would then be reduced to £3 l8s., the difference 7s. being paid by the employers into a fund for endowment. 606. ·This we suggest opens a wide door for. a scheme which in effect would be a voluntary scheme, as it is unlikely that it be adopted without son1e initial evidence of goodv1ill on the part of the wage-earners.

607. We suggest that such a change in the distribution of wages deserves ·the most earnest and favorable consideration of wage-eai·ners and of industrial tribunals. " 608. That change, with somewhat s1naller figures, has been effected in the Commonwealth Public Service, with results which (we are assured) are considered to be highly satisfactory. We are fully conscious of the special conditions in that service which made it easier to bring about

such a change than it \vould be in connection .with industry generally. 609. Even in relation to the Public Service, the Tribunal lT.tight have hesitated to order the necessary deduction fron1 wages and salaries, unless there had been some evidence that the · change would commend itself to the organizations whose members would be affected. A

Tribunal having jurisdiction over industry throughout the Commonwealth (and this jurisdiction would be a necessary condition) although convinced of the beneficial results that would follow , would perhaps also hesitate to make the change, unless satisfied that it would be received with a reasonable an1ount of goodwill by wage-earners. With that goodwill, founded upon a recognition

of the importance of introducing a higher degree of justice into a system which is now marred by fundamental injustice, a valuable reform would be effected. · 610. A challenge of such a reform would probably come from those who claim that Child Endowment is a "social obligation ". By that term they intend to i1nply that over and above the highest wages obtainable by negotiation, or by contests between parties in the Industrial

Courts, the community as a whole should be taxed to provide endowment for children of all workers, at rates sufficient to provide full 1naintenance. A phase of the same claim is that if the" needs" of the children of workers are met, or the provision for those "needs" supplernented by contributions fron1 wages of, all workers, those contributions am9unt to a class levy, frmn

which members of the community better able to bear such a levy would be exempt. Such an ·

*The adoption of this method would not affect any movement of the basic wage either by way of adjustment in accordance with price index figures, or as altered for other reasons. ·

78

Sec. 12.-0hild Endowment.-F. Endowment Schemes without Government A.id . .

argument has an obvious appeal, and affects the mental attitude of many. the most serious and sympathetic consideration of that view, we believe that it is founded upon an erroneous analysis of the causes affecting the general level of prosperity of the workers. The heavy increase in taxation which some of ·their representatives advocate for the purpose of providing Child Endowment in addition to present wages, would not only fail to purge the present wage system of the elements of injustice which it now contains, but would, we believe, reduce, rather than raise, the general standards to which workers have attained.

611. If the method indicated ill paragraphs 604-605 were adopted, the benefits from the point of view of child endowment would be the same as in t he scheme indicated in paragraph 601. i. e., every dependent child of workers in organized industry would be fully provided for. But as the total wage-fund would remain undiminished, there would be no reduction in the cost of production, nor prima facie, in the cost of living. Such a reduction in our opinion is very desirable .

. 612. If such a scheme we1·e adopted, we suggest that the Commonwealth Pa1·liament should assist by providing the machinery and defraying the cost of administration. 613. In conjunction with that provision, the Commonwealth Parliament would probably be impelled to consider the application of that administrative machinery t o the ·cases of those who, though receiving wages, are not subject to awards; to self-employed persons; and to persons who by reason of their family obligations and the limitation of their income might reasonably claim to be included in a scheme. (See paragraphs 647- 648).

SECTION 12.

G. BIRTH RATE IN RELATION TO CHILD ENDOWMENT. 614. In Australia, as in France and other places, the movement for the payment of Child Endowment has derived a large part of its strength from faith in its probable effect in increasing the birth rate. That rate has been falling for nearly seventy years. In 1860 it was 25 per 1,000 ; in 1926 it was 13 per 1,000.

615. A few years ago, Mr. McGirr intTOduced an Endowment Bill in the New South Wales Legislative Assembly, and in the course of his speech said:-" Motherhood endowment is based on the fact that we want population in Australia." 616. In The Next Step Mr. A. B. Piddington, K.C., holds the view that payment of

Child Endowment will increase the birth rate. ""vVe may be sure that reasoning from the past into the future, when every child has an adequate living ready for it, thousands would welcome children who now avoid them . . . If organized on a sensible scale, the

principle of Child Endowment could, .therefore, revolutionize; in a country so ill populated as Australia, the whole outlook as far as the natural increase is concerned." 617. Most of the witnesses who advocated Child Endowment before this Commission expressed the opinion that it would cause a desirable increase in the birth rate.

618. In Great Britain, however, where a diminution rather than an increase of population is desired, the advocates of Child Endowment endeavour to show that the payment of Child ·Endowment will NOT increase the birth rate. 619. Miss E. Rathbone. that " the most reasonable and reputable objection urged

against family endowment is the fear that it may encourage early marriages and large families especially amongst the very poor." 620. She proceeds t o consider whether the objection is justified. She states as an in­ indisputable fact " that up t o now, once the bare rninimum necessary for existence has been

reached, every improvement in the standard of living of any cla-ss, has been followed by a decrease, not an increase, in its birth rate. This is, I believe, admitted by practically every authority on the subject." 621. After examining the various authorities, Miss Rathbone concludes that the balance

of expert opinion is against the view that Child Endowment would cause an increase in the birth rate. 622. Professor Viba1·t (Oxford)t sums up as follows :-" On the whole, so far as any conclusion may be reached, there appears t o be but little reason t o anticipate that the family

allowance will have any very considerable direct effect on the birth rate. " 623. Professor Alexander Gray (Aberdeen)t deals with the arguments pro and con and appears to regard the actuai result oi Child Endowment upon birth rate as highly speculative. * The Ethics and Economics of Family Endowment, p. 107.

t" Family Allowances and Practice," page 179. t " Family Endowment," pa.ge 95 et •eq.

7t

1359

Sec. 12'.--Child Endowment.-G. Birth Rate in relation to Child Endowment.

624. It is generally accepted that the Australian standard of living at the present time is higher for all classes than it was at the time when wage-fixing tribunals were first established. Notwithstanding that increase in standard, the birth rate is ·steadily falling year by year.

625. The rapid development of contraceptive methods, and the world-wide tendency to reduction in the number of children in a family, will probably be stimulated rather than checked by any general increase in family incomes.

626. There seems, therefore, no reason to assume that a further increase in the standard of living, whether made possible by an increase in wages, or by the payment of Child Endowment in addition to present wage rates, would increase the birth rate, or even check its decline.

H. EUGENIC CONTROL.

627. If public funds are to be applied for the establishment and maintenance of a scheme of Child Endowment and especially if such endowment is designed to provide full cost of maintenance of dependent children, eugenic considerations which have not hitherto been regarded must be taken into account.

628., The children who would be beneficiaries by such a scheme would, by that fact, beeome in an important sense of the term "wards of State," and "assets" entering in a somewhat direct fashion into :the national balance-sheet.

629. The authorities responsible for the expenditure of large sums of public money in building up such assets, could·hardly fail to attempt some form of eugenic control which would tend to assme that the recipients of the national bounty shall be born .of healthy parents, and therefore, shall start life without any unfavorable handicap. This, of course, means some degree

of selective control of candidates for marriage. ·

630. We quote the following from evidence given by the Commonwealth Director-General of Public Health, Dr. J. H. L. Cumpston:-(Q.l2,022.)-" If the Government undertakes any system of child endowment it must be assumed that this is an expression of the Government's intention to treat children

as national assets . . . . If this be correct, then it is

clearly economical for the Government to concern itself ' with two considerations:-(a) that so far as possible, the right kind of children shall be born ; (b) that so far as possible, the children who are born shall be preserved as assets to ·the State.

"In the question of assuring the birth of the right kind of stock, there is much general misconception. The rules of heredity have not been sufficiently clarified to permit of the enunciation of any general principles upon which a universal system of eugenics or selective mating could be devised. In terms of general application, therefore, it is not practicable to consider any scheme of control of marriage for the

purpose of the production of good stock On the other hand, there are certain steps which might' be considered practicable. It might, for example, be quite possible to require that no person with the condition of demonstrable syphilis shall be permitted to marry '; such recognizable conditions as deaf-mutism, feeble-mindedness, &c. , would also be considered as declared barriers to legal marriage. There would be no serious difficulty in accomplishing this in practice . . It is realized that such a

system would not infallibly prevent marriages of this kind, but for the most part it would prevent the undesirable miixriages under consideration . For this purpose it would be necessary that the Commonwealth should exercise its Constitutional powers in relation to marriage and divorce, as such legislation could only be effective if it were applicable over the whole Commonwealth. It would also be desirable that revision should be made of the position in respect of feeble-mindedness and the segregation and control of those individuals declared to to be feeble-minded.',

631. Accepting that evidence as a correct statement of the present state of knowledge with regard to eugenics, it appears that while there may be a large difference of opinion as to how far eugenic control could safely be carried at present, there is no doubt that up to a certain point, expert op1nion would be practically unanimous with regard to t_ he possibility and the desirability of applying that control. The unmistakably feeble-minded ; persons unmistakably

tainted with practically incurable forms of disease, or affected by other serious and transmissible defects, should be prevented from reproducing their species. ·

80

Sec. 12.-0hild Endowment.-H. Euge'!l'ic Control.

632. Important as this subject is, it is, in a sense, only a side-issue in our inquiry. Our investigation was not particularly designed t o e'licit evidence which would form a scientific foundation of a definite scheme of eugenic control. \¥e think, however, that within the limits above suggested, the creation of eugenic control should be regarded as one of the necessary

concomitants of any scheme which removes the financial responsibility for the maintenance of children from their parents, and places that responsibility upon the State. 633. Within those su ggested li mits, such eugenic conii'OI should, in om· opinion, be established whethei' or not Child Endowment be accepted as a feature of national policy.

SECTION 13.

TERMS OF REFERENCE-CLAUSES 2 TO 10-GENERAL COMMENT. 634. ,Our Terms of Reference require that, if we recommend the institution of a system of Child Endowment or family allowances, we shall report upon a number. of matters (Clauses 2 t o 10 inclusive , of the Terms of Reference.)

635. Al th oug h we do not 1·ecommend the institution of such a _system, we think that, in view of the range of evidence submitted, and in view of the possibility of the establishment at some future time of such a system, we should briefly comment upon some points ,covered by those Terms of Reference.

636. Possible varieties of family allowances may, for the present.purpose, be divided into two main groups, namely those which are independent of, and unaided by public moneys or by moneys in any way derived from t axation, and those which are, to some extent at least, dependent upon such aid. The methods in use in some European countries, of which we have given a short account in the section headed " F amily Allowances in Europe," are examples of schemes formed outside Governmental control and assistance.

637. The scheme in open ition in the Commonwealth Public Service (while it is in one sense closely connected with the Government) is another example, as the fund from which endow­ ments are paid consists wholly of amounts deducted from salaries and wages. A special feature of that fund is, that the deductions are imposed by authority, that is by a judgment of the Public Service Arbitrat or. ·

638. We read the expression " Child Endowment or Family Allowances " in our Terms of Refem r.ce as meaning a system which falls within the second of our two divisions, that is, a a system in wh ich endowment is provided from public funds. The case in which the endowment fund is subsidized from, but not wholly made up from, publiC'moneys would be a yariant.

639. Nearly all the witnesses who favoured the establishment of Child Endowment, contemplated a scheme in which t he fund should be wholly provided by the Commonwealth Treasury , and be supplementary to existing rates of wages. That is the form (which while we do not recommend it) we are considering in the following comments upon Clauses of the Terms of Reference.

640. Clause 2. "The methods by which such a system could be established."

641. This system (assumed to be a Commonwealth system) would necessarily be " established " by a Commonwealth Statute. 642. That statement takes for granted that the Commonwealth had acquired full powers of legislation. Alternatively, if the Commonwealth Parliament, with its present restricted powers of legislattion, thought proper to provide the money for an endowment scheme covering the whole Commonwealth, it might give effect to its intentions through the medium of agreements made with each of the Stat e Govern1nents. But (see Para. 541) we think that the

Commonwealth Parliament should not finance Stat e schemes of Child Endowment.

643. Clause 3. "The relation of such a system to wage-fixation, having regard to the interests of the wage-earner, of indust1·y generally ,. and of the community." 644. Under other headings in this report we have dealt at length with the relation of systems of Child E ndowment to wage-fixation. We refer specially to Sections 3D, 4, and 5B.

645. A perusual of those paragraphs will show that we regard a system of Child Endowment as closely related to wage fixation. The present system of wage-fixation definitely includes payments ;which must be regarded as representing Child Endowment or family allowances. We have shown also that our opinion, before any system of Child Endowment should be considered, it is imperative that exclusive control of industrial legislation be secured by the Commonwealth;

that certain matters related to wage fixation, such as the selection of the class of workers to

1361 81

Sec. 13-Terms of Reference.-Clauses 2 to 10.-General Comment. whom tne wages should apply, and the family unit, should be determined by the Commonwealth· Parliament. We have further concluded that the determination of the "standard of living" (if, contrary to our recommendation, it be decided to retain that practice), and the declaration

of the basic wage, should be exclusively within the control of a Commonwealth tribunal. To introduce a system of Child Endowment, while the present conflict of jurisdiction as regards industrial matters remains, would, in our opinion, greatly aggravate the difficulties already so keenly realized in relation to industrial matters.

646. Clause 4. " The application of a system of Child Endowment or family allowances to persons whose wages are not regulated by law, or who are not engaged in industry as wage­ earners." 647. The application of a system of Child Endowment to self-employed persons and persons

who do not come within the jurisdiction of wage-fixing tribunals, offers certain difficu]ties which do not exist in connection with persons whose wages are regulated by law. It would, however, seem unwise to devise a scheme applicable only to that section of the community whose wages at·e determined by Statutory Tribunals.

648. The fact that administration would be rendered more difficult by the inclusion of persons whose wages are not so determined, should not be decisive against them. Their exclusion would rightly be regarded as an injustice, and in our opinion, provision should be made for them in any proposed scheme.

649. We do not doubt that the Commonwealth Treasury would be able to cope with any consequent administrative difficulties. 650. Clause _5. "The limit of income, if any, subject to which payments by way of Child Endowment or family allowances should be made."

651. There was considerable diversity of opinion among witnesses who appeared before us as to whether a limit of income should be fixed, beyond which no payments by way of Child Endowment, of Family Allowances should be made. Those who advocated that no income limit should be introduced, argued that the administration would thereby be greatly simplified and

cheapened, and that if an income limit were fixed, the proportion of persons having incomes beyond that limit would be so small, in proportion to the total number of claimants, that the added expense need hardl:Y be considered. The absence of income limit in connection with Maternity Allowance payments was repeatedly cited as affording a precedent which should be followed in dealing with Child Endowment. ·

652. Many witnesses expressed the view that if an income limit be fixed, the endowment payments would be regarded as a "dole" or "charity." We do not see why it should be so regarded, and the evidence tendered to us with regard to the New South Wales scheme, in which there is an income limit, shows that no such stigma attaches.

653. Further, it was contended that thewhole claim for Child Endowment is based on the alleged insufficiency of family income to provide for the " needs " of the children of families, in which there are more than three children. A necessary consequence of the acceptance of this contention is that there could be no justification for making endowment payments where the family incomes are sufficient to provide for those "needs."

_ 654. One of the objections urged to a scheme of Child Endowment, limited to persons having a relatively low income limit, is that the unskilled worker, with several dependent children, may receive a total income larger than that of a highly skilled worker with fewer children, or . with none.

655. The argument is that in these circumstances, the margin for skill disappears, and that the incentive to acquire, or to maintain and increase skill is destroyed. Such a result is felt to be an injurious anomaly. 656. A method of avoiding this result suggested by some witnesses, would be to raise

the income limit, or to abolish it altogether. 657. The following comments may be made :-(1) With regard to the effect upon margins for skill, it may be stated as a preliminary point, that Child Endowment can only be regarded as having any effect upon

the margin for skill, if it is assumed that the endowment payment is part of the wage. Viewed (as in our opinion it should be) as an independent payment by the community to the mother of children for the benefit of the children, it cannot, of course, be regarded as having a direct relation to wages, and

consequently, can have no effect upon the additional wage which is the reward of the skilled worker. F.24j28.-6

Sec. 13.-Terms of Reference.-Olauses 2 to 10.-General Comment.

(2) Further with regard to the assumed effect upon skill, two things may be said, namely: -(a) The strongest influence operating against ·the acquisition of skill by young workers is the of the high wages granted to young

unskilled workers. The apprentice to a skilled trade is, of course, gaining knowledge and manipulative ability which will be of value to him throughout his subsequent life, but in_ the early stages he must be content with less money than his unskilled contemporary Perhaps a partial solution of this difficulty may be found

by reducing the difference . between the rates of pay for skilled workers during the apprenticeship years, and for unskilled workers of about the same age. .. _ ·

(b) Endowlr_lent payments are limited to the period of dependency of the children in a family, but this limitation does not apply to the rewards for skill. 658. Anything that stifles or reduces the incentive to acquire, or to maintain and increase skill, is an injury to the community, and lowers the intrinsic value of the individual affected. So far, therefore, as the introduction of a system of Child Endowment would reduce the incentive to acquire, or to continue the application of skill, it would create an evil.

659. But, to set up a fund at.the expense of the community, ostensibly for -the purpose of meeting urgent needs, but which would, in many cases, merely supplen1ent incomes already adequate, would be a still evil, and would generally be

660. On ·,balance then, we reach the conclusion that an income limit of eligibility should be an essential part of any of child endowment. .

661. A measur'e of that limit may be found by assuming that, in accordance with our recommendatio"n (see Paragraph 600) the Child Endowment component _ of the basic wage has been eliminated, and a family unit of man and wife only has been adopted, with a correspondingly reduction of that wage. If the family income, apart from any endo·wment payable, does not

exceedthe wage fixed for that reduced family unit, 'the parents should be eligible to receive full Child Endowment, but not otherwise. ·

662 .. We refer to _paragraphs 141-)42, where numerical examples are If for the an1ount of £221 shown in those examples, there be s:ubstituted the amount of the basic wage as suggested in the those examples will i:J!dicate the mode of calculating the

amount of endowment, either full or reduced, at any selected rate, and wiph to any number of dependent children. · · · ·

663. Clause 6. " The of giving effect to 'a system of Child Endowment

or Family allowances, with particular reference to the practicability and desirability of providing the necessary funds from public revenue, from indush·y, or fr·om both sources, and in what proportion and upon what principle.'' _ - ·

664. The schen1e we have been discussing is one which, as urged by many witnesses, depends entirely upon provision of the funds from revenue. In such a case, some form or forms of _taxation would, of course, be the only meap.s of procuring the necessary moneys. Some witnesses were of opinion that the direct taxes-Income Tax and Land Tax-should be used for the purpose. Others expressed indifference as to :whether the money were raised by those direct taxes, or through the Customs and· Excise Revenue. The method to be pursued would, doubtless, be always dependent upon the aggregate sums to be raised. Those sums, if the requests of Labour representatives were granted, would be so large -(see Paragraphs 39-40) that perhaps, no single source of revenue could be depended .

665. A small increase in direct taxation would have a correspondingly small effect as a factor of disturbance of business, but as. their evidence shows, those advocates of Child Endow1nent . would not be satisfied with a small scheme. The financing of a large scheme by increased taxation would, in our opinion, have injurious reaction·s, .and by its effect upon unemployment and the cost

of living :would, to an appreciable extent, defeat its own object. , 666. An alternative would be to raise the necessary funds by a tax payable by employers on. the amount of wages paid. This is the sc_ hen:te of the New South vV ales legislation, which levies a tax of 3 per cent. on the payment to -the fund being an obligation of each employer

of labour. This method, unless the were quite small-say not exceeding 1 per cent. -would, as the evidence makes clear, have an immediate effect in raising the cost of production, which it is at present so essential for Australia to reduce. Almost the only merit of that form of levy is its simplicity, especially as applied to industries where large numbers. of :men are employed.

1363

83

Sec. 13.-Terms of Reference.-Olauses 2 to 10-General Comment.

667. But it is just in those that the ra!io of to turnover is apt to be very high,

and the effect of that form of taxation to be specially undesirable.

It wou!d of course, be possible to make an allocation of the total obligation,

say a moiety upon the balance being provided from Commonwealth revenue.

669. That division of obligation would, in our opinion, but slightly lessen the injurious effects upon industry,. and upon cost of production, which would certainly result from any but a scheme of very small proportions. A very sn1all scheme though in itself of very little value, would be used as a precedent, and become the centre, especially at election time, of continuous

and urgent propaganda for extension. Such a scheme would be one of unstable equilibrium, pressure being continually exerted to transfer all obligations to public revenue. Holding this view, it does not seem necessary to express any opinion as to the proportions upon which an allocation of cost between the revenue and industry should be made.

670. As to the principle upon which the necessary funds are to be provided, it may be said in abstract terms, that so far as the public revenue is drawn upon, the justifying principle can only be that the effectuation of the purpose to which the money is to be applied will, upon balance, confer substantial benefits upon · the Such a substantial balance of benefits would

also, we think, be the sole justification for imposing. upon industry the duty of providing the whole, or part, of the funds required. . But in both cases detrimental effects would be produced which, in our opinion, would greatly outweigh the benefits sought to be attained. 671. This is a phase of the inquiry in which little or no assistance is derivable from the

evidence. The majority of witnesses confined their of opinion either to a claim that Child Endowment should be wholly provided by public funds, or on the other hand, that while it is not desirable to establish the system at all, if as a necessary evil it had to be endured, the application of public moneys would be less objectionable than any direct levy upon industry, either for the whole or part of the needed moneys.

672. With regard to the endowment of dependent children of persons whose wage is not subject to awards or determinations, or of persons who are carrying on business on . their own account, no system of specific contributions, such as is applicable in the case of organized industry, is practicable. There are, however, no valid grounds for the exclusion of the children

of such persons.

673. Clause 7. "The methods of administering such a system."

674. The evidence of Mr. J. T. Heathershaw, Secretary to the Commonwealth Treasury, shows that the Treasury already possesses, in the Invalid and Old-Age Pensions and Maternity Allowance Branch, an organization that could · be adapted to the administration of a scheme of Child Endowment. We do not think it necessary to discuss details of the administration.

675. Clause 8. "The cost of such a system, including administrative and reserves, if thought necessary." ·

676. The cost of the system would depend largely upon the rate of endowment. To an important extent it would depend also upon whether any limit of income were fixed, beyond which parents would not be eligible as applicants. Using round figures, it may be said with an approx­ mation to accuracy, that for each ·shilling per week of endowment for every dependent child

under fourteen within the Commonwealth,. the cost would be about £4,750,000, or say, £5,000,000*. This cost, however, as the short experience in New South Wales indicates, would probably be considerably reduced if a low income limit were fixed. The income limit in New South Wales, we may repeat, is the amount of the basic wage, now £221 per annum, plus any amount payable as endowment. (See paragraphs 141-142). But, it is necessary to remember the caution which we quote (Para. 130) from the. New the effect that the experience of the first

year is of small as a basis for an estrmate of the permanent cost of a scheme. 677. On the question of whether reserves would be necessary, we think there is not at present a sufficient quantum of experience on which to found a It seems

reasonably certain that for the first year or two at proportio?- of applicants would be considerably less than might be ex:pe?ted the statistical figure, ':1-th the consequ?nce that any provision based upon the statistical estnr:-ate would probably _be In ex?ess of reqUirements. The result would be that if money had been raised on those theoretwal requuements there would be a surplus during the first year or t"':o. The strain upon the fund if there were an income li1nit, might increase very considerably In a year of much unemployment.

*If, aa suggested by many witnesses, the age were extended to 16, the a.dditiona.l cost would be about £700,000 per annum.

84

Sec. 13.-Terms of Refererwe.-Olauses 2 to 10-General Comment.

678. As to administra.tive costs, the. Secretary to the Commonwealth Treasury gave as a rough approximation of the administrative costs of the scheme, the sum of £55,000, to which he thought would have to be added about £100,000, to be paid to the Postmaster-General's Department as commission for work connected with the distribution of payment s, that is a total of £155,000 per annum.

679. Clause 9. The legal methods of giving effect to any system recommended, with particular reference to existing distribution of Commonwealth and State powers."

680. Under the heading of "Constitutional Aspects," we have quoted the opinions of learned Counsel, as to the existing distribution of _ Commonwealth and State powers. These show that the Commonwealth at present has not the complete powers of legislation which in our opinion are necessary. In Section 12 (Paragraph fi43) we have expressed the opinion that an

essential condition precedent to the establishment any Commonwealth scheme of Child Endowment is, that the Commonwealth Parliament shall have acquired exclusive powers of industrial legislation. It would be necessary also for the Commonwealth Parliament to acquire complete and exclusive power of legislation with regard to Child Endowment. . With such powers the legal methods of giving effect to any system adopted would be matters of detail.

· 681. Clause I 0. Any matters of public interest which may arise as the result of the institution of a system of Child Endowment · or Family Allowances.

682. The general reactions resulting from the establishment of a universal scheme of Child Endowment, providing full maintenance from public funds for dependent children, are difficult to predict. But, it seems reasonably certain that there would be a decided weakening of the sense of parental responsibility, and of the stimulus to self-improvement and vigour in craftmanship. On these points, however, much would depend upon whether the scheme were one in which the large additional sums necessary for full maintenance were distributed without corresponding, or at least partial, reductions being made in the basic wage. Without such reduction, the result, in our opinion, would be a marked flush of extravagant spending and a sharp rise in the cost of living, shortly followed by a check in prosperity, by a more or less

severe collapse in values, and by serious unemployment.

683. An injurious effect of a different kind which would need consideration would be the greater impulse towards strikes likely to be created.

684. This could and should be counteracted by a provision that on the occurrence of a strike, any right to endowment on the part of the strikers, should be In that case

parties affected should be at li'Qerty to apply to the authority appointed for that purpose, for a certificate that a particular cessation of work was a strike, or on the other hand was a justifiable cessation. If the authority certified that such general cessation of work was justifiable, the right to endowment should revive, and should be regarded as not having been interrupted. If,

on the other hand, the cessation of work were held to be a strike, no endowment should be payable to the strikers in respect of the period covered by the strike.

SECTION 14. . WELFARE SERVICES.

685. The evidence exhibited a perpetual conflict of opinion between the relative advantages of the expenditure of publicmoney, by way of Child Endowment through cash payments to parents, and by way of the establishment and improvem.ent of forms of public service contributing more or less directly to the health and well-being of the population, particularly of mothers and children.

686. An inclusive " Insurance " formula for dealing with the whole problem was suggested to us by Mrs. J. M. G. Street, of Sydney. This witness advocated grouping together, under the term " social benefits " all the systems of relief and amelioration maintained at present by public funds or private subscriptions, such as old-age pensions, invalid pensions, widows' pensions, children's relief, hospital grants, orphanages, homes, and every other channel through which the people

are aided in sickness and poverty. Add to the above benefits that of Child Endowment. Let all these contingencies then be considered as " risks " and worked out in the form of insurance policies. With regard to the cost, Mrs. Street suggested that if the amount that industry pays

1365 85

Sec. 14.-Welfare Services.

in wages for non-existent children were added to the sums provided by Governments, and to those ?Y private for the social benefits mentioned, and if the annual amount paid

m Workers CompensatiOn Insmance premiums were also added, the total would probably be a sum much in excess of that required as premiums for the most generous benefits and bonuses. Mrs. Street was of opinion th_at such a scheme might be worked out to give a measure of relief much beyond that which is achieved by present methods. .

687. Some of the difficulties which suggest themselves in connection with Mrs, Street's scheme are :- . ·

( l) Our Terms of Reference do not include power to make investigations which would be necessary before an opinion could be expressed upon the technical validity and other matters connected with the wide application of insurance methods to welfare services.* {2) The suggestion that a deduction be made of the whole amount now included

in wages, which provides for non-existent children, would prove very difficult in application. ( 3) Such a general scheme of insurance against the ills of life would in our opinion necessarily be a Commonwealth scheme. The fact that it was a scheme of

the central Governmeyt might lead to a cessation of the appropriations now made by State Governments to such forms of community welfare, and also might cause almost a complete cessation of the private benefactions now devoted to the same purposes. The amounts at issue under these two heads are approximately, appropriations by the States, about £4,750,000 per annum,

and voluntary subscriptions from the public, about £4,000,000.

688. While not attempting to discuss exhaustively the above diffiQulties, we are of opinion that the mere enumeration of them is sufficient to justify us in refraining from a recommendation.

689. More than one form of Child Endowment was advocated. Trade union witnesses invariably favoured cash payments to the mother. Other witnesses preferred the free supply to mothers of certain commodities, especially of milk. .

690. Mrs. Adela Constantia Mary Walsh, of Sydney, submitted another view. In her opinion assistance to families on incomes approximating to the basic wage would best be rendered, not by money payments, but by provision of certain services. Mrs. Walsh said that she had presented her scheme to the Victorian Labour Women's Conference about three years ago and they were very favorable to it. (Q. 16627.) The outline of the scheme is as follows :-

(1) Exemption from taxation, according to the size of the family.

(2) Concessions to heads of families, mothers and children, when travelling to work, business or school, or for holidays. · (3) Housing schemes to enable families to secure homes under decent conditions, with proper facilities for women's work on reasonable terms. The community

ought definitely to aim at making it easy for families to leave slum areas and go into outer suburbs. \Vhen building its houses, the State ought to encoura-ge healthy family life, and the use by mothers of labour-saving appliances, in the interests of their health. · ( 4) Better provision for kindergarten and play centres for children.

(5) Provision for dental and medical attention to families at reduced fees (or free if necessary). (6) Free ante-natal treatment for expectant mothers, and other special help to mothers, on the recommendation of a medical advisor. · (7) Establishment of rest homes and holiday houses for parents and children; of

maternity homes and home-nursing services. .

(8) Improvement in educational facilities, including the raising of the school-age.

691. The more important of Mrs. Walsh's suggestions are among those discussed in the following pages, coming within the general heading of welfare services. *We are, of course, aware of the special inquiry made by the Royal Commission on National Insurance, and of the introduction by the Federal Government of a Bill to deal with some of the investigated by that Commission.

86

Sec. 14.-Welfare Services.

692. Cash payments for Child Endowment may or may not be used for the intended purpose. In some cases the money received will inevitably be directed into channels of expenditure tending to increase rather than to remove any existing distress among children. In other cases, while the money may not be actually misspent, it may be wholly or partially diverted from the purpose intended.

693 . It may be objected that as the scheme of the basic wage (using the unit adopted by the Commonwealth Court, i.e., man, wife, and three children) does not purport to provide for a family of more than five persons, the families in which dependent children exceed three must, in the absence of a scheme of cash endowment, or other form of special assistance, live on a

reduced standard, or, in extreme cases, suffer some hardship. If equal capacity to use a given income in the most efficient way be postulated, the statement that the more numerous family will have a lower standard of comfort than the less numerous is, of course, provable bY the most elementary- arithmetic. It may be admitted also that the parents of the more numerous families, taken as a group, are not likely to be sensibly superior in skill and household management to the parents of the less numerous families.

694. We grant, therefore, that there is some ground for the objection that the present system of basic wage fixation does not, and cannot, provide the same standard for a family of eight as for a family of five.

695. But the assumption is too often made, and without justification, that in all these cases the father is on the basic wage. A point that should not be left out of account is that many parents are stimulated by the coming of children to increase their earriing capacity, and to be more watchful for opportunities of improving their financial· position. Often too, the -stimulus acts in the direction of creating greater ingenuity in devising means for more

effective use of the income they have.

696. While the statistical information we have been able to obtain is not sufficiently definite to warrant us in stating as a deduction of fact, that wage-earners having large families invariably succeed in improving their position to a stage with their larger

responsibilities, the figures certainly suggest that as at least a possibility. .

697. The Australian "standard of living," often spoken of as if it were one and indivisible, a tangible concrete fact, is in reality a pure abstraction. We have already pointed out (see paragraphs 354, 380, 558, 595) that the basic wage system, so far as it creates a high standard of living does so only at one end of the scale, that is among young and unmarried

workers, and that the comparative lavishness of their monetary reward, with the accompaniment of lavish expenditure, is gained at the expense of the children in families at the other end of the scale.

698. Special value is realized from the wisely-controlled expenditure of public money upon such services as those which deal with hospitals, child welfare, adequate provision for training and assistance to mothers, before, during and after the births of children ; bush nursing ; kindergarten ; training of girls in domestic economy and hygiene ; and similar services.

699. The health and efficiency of the mother are of vital importance. The chances of the infant surviving the perils of the first year of life must depend greatly upon the mother's vigour and skilL

700. The sombre tragedy of Australian family life is the high rate of maternal mortality and the high infantile mortality during the first year of life. Dr. J. W. Springthorpe, President of the Society for the Health of Women and Children of Victoria, said (Q. 24576) :- "A.s regards the condition of affairs in Victoria, we had in 1927, 35,074 births, with some 200 mothers dying in confinement, and some 2,000 babies dying within the first year, while 36 per cent. of the gynaecology of our chief obstetric hospital-the Women's Hospital-followed confinement".

· 701. In the same proportion to the population, the deaths of mothers, arising from confinement, would for the Commonwealth exceed 600 per annum. ·

702. Services which tend to preserve the life of the mother and expectant mother, and to make child-bearing " not a d!sease, but a natural funt;:tion " must regarded as in the rank of importance: ··

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Sec. 14.-Welfare Servwes.

703. The effect of the efficiency of the mother (of which sound health is the natural was the subject of an inter esting research, conducted by a number of doctors during

a perwd of seven years. We quote from The World's Health, October, 1926 :-"The objects of the investigation were various. In the first place the pre-school child population in the slums of three large cities, Glasgow, Edinburgh, and Dundee, was studied and compared with a similar population in agricultural and rural coal-mining areas. Comparison between town and country children was thus possible. At the same time the relationship between income, diet and home conditions and the nutrition of the child in all these districts received careful investigation. Lastly the parental factors concerned were all · carefully analysed. The health of the mother during -pregnancy, the occupation of the mother during pregnancy, the influence of suckling during pregnancy, and the 'efficiency' of , the mother were all statistically considered with regard to the growth and nutrition of the child. The father was also studied but in a more limited manner. The results obtained were not at all those

expected by the investigators. In the first place, · although there is some evidence of retardation in the gro-vvth of the town infant as compared with children living under almost similar conditions in the country, after the age of eighteen months the town child begins to grow more rapidly and the growth curves run fairly parallel. There

is some eVidence that the small size of the town child is in part an inborn characteristic; it may even be that this is an adaptation to environment, for the smaller type of individual is more suited to industrial life, while the large brawny man gains his livelihood in the fields or in the mines in country districts. Over-crowding, diet, and the family income, ­

do not bear the relation to the state of nutrition of the child which is generally attributed to them. In other words, the saying that 'what is wrong with the poor is poverty ' is not confirmed by these _ investigators. The only factor which appears to have any significant relationship with the nutrition of the child is the character of the mother. Is she 'efficient' 1 Is she a 'good' mother 1 If so, then the child's

growth and nutrition will be normal or above the average. The 'inefficient' mother will have poorly-nourished children. To some extent the health of the mother and the waterial with which she has to work in form of income and accommodation will affect her ' efficiency ', but a direct relationship between the condition of t he child and such economic factors as ' poverty ', ' overcrowding ', and undernutrition ', is not substantiated by the investigators. Such a conclusion is of wide-reaching importance. It does not appear to matter greatly what the family income is; if the mother is efficient the children will grow up normally. The justification for the various schemes to from time to time in these columns for the training of young girls in the

principles of motherhood is amply supplied. The role of the voluntary worker in establishing a more satisfactory standard of nutrition among children of all classes is clearly indicated. The so-called economic fa.cts are apparently no longer the obstacle; ignorance is the main enemy to be combated. The pressing need for further investigation in other countries along the lines of this brilliant pioneer work here

summarized must again be emphasized. ' The slum child tends to develop along the lines ofits parents' (p. 304). It is in raising the intelligence of such paren ts more than in the bettering of the environment of the-child that improvement lies ".

704. The State, municipal, and othe1· local authorities have already done much, and their efforts to raise the standard of community health show a continuous expansion.

705. The total expenditure of the Australian community upon welfare services and organized charities is about £27,000,000 annually. 706. There is a further expen4iture of nearly £10,000,000, under the heading of education, science and art. Almost the whole of this is expended by the States fo r the purpose of primary, secondary and technical education.

707. expenditure by State Governments upon welfare services and organized charities is about £4,750,000 per annum. Public contribut.ions to services of that kind amount to over £4,000,000 per annum.

708. The Commonwealth also provides about £700,000 per annum for maternity allowances and nearly £10,000,000 for old-age and invalid pensions. There is also an,expenditure of nearly £8,000,000 for war pensions. This expenditure upon pensions, while not strictly coming the same category as other welfare services, no doubt does much to relieve the add1twnal strain which would otherwise be imposed in connection with those

88

Seo. 14.-W elfare Services.

709. The following table gives details of Commonwealth and State expenditure on welfare services, pensions and education:- . ·

Expenditure at. Latest Available Dates .

.Activities.

Commonwealth State Public

Government Funds. Government Funds. Total.

£ £ £ £

Asylums for the Aged, &c. . . . . .. . . 270,750 177,945 448,695

llomes .. . . . . .. . .

I

7,332 39,047 46,379

District and Bush Nursing . . . . .. . . 2,824 22,380 25,204

:Refuges, &c. . . . . . . .. . . 3,511 101,100 104,611

Institutions for the Deaf, Dumb, and Blind .. . . 34,612 168,895 203,507

Child Welfare J)epartments (including boarded· out children, reformatories, &c.) . . .. . . -. 1,296,678 117,297 1,413,975

Free Kindergartens . . . . . . . . . .. 6,719 31,019 37,738

Baby llealth Centres, Pre-Natal Clinics, and llealth Assistance t o Mothers and Children .. .. . . 135,572 99,832 235,404

Education Departments, Medical and Dental Inspections . . . . . . .. . . 63,167 .. 63,167

Other Relief Services .. .. . . . . .. 131,644 503,488 635,132

Generalllospitals . . .. . . . . . . 1,334,461 . 1,741,664 3,076,125

Mentalllospitals . . .. . . . . . . 1,434,8[i0 214,776 1,849,626

Maternity Allowances .. .. . . . . 694,410 . . . . 694,410

Old-age and Invalid Pensions . . . . .. 9,908,987 . . ' 9,908,987 . .

War Pensions . . . . . . .. 7,790,459 . . . . 7,790,459

Education, Science and Art .. . . . . . . 9,810,566 . . 9,810,566

Workers' Compensation (incomplete) . . .. .. . . 792,588 792,588

Total . . .. 18,393,856 14,532,686 4,010,031 36,936,573

711. At this stage we may mention the Federal Health Council, a body which is composed ol the Chief Executive Health Officer of each State, two medical officers of the ComiJlonwealth Health Department, with the Commonwealth Director-General of Public Health as ex officio President. The existence, and harmonious working of this body conduce to effective action in many important matters affecting the health and. welfare of the community.

712. The evidence dis.closed that in addition to Government institutions and agencies, there are many valuable and widely distributed organizations with similar aims, which were created, and are maintained by voluntary effort.

713. The members of the Commission were deeply impressed with the earnestness and capacity of the voluntary workers,. chiefly ladies, who devote their tim-e and talents to the organization and operation of these aids to public welfare. It js, we think, extremely desirable that nothing should be done to check the stream of their concerted and beneficence.

714. It is, however, advisable that some action should be taken to co-ordinate the work of official and non-official organizations dealing with these matters. In every State we found evidence of some over-lapping. This has two aspects. Privately-supported welfare organizations sometimes over-lap one another, a-nd sometimes also over-lap the work of official bodies. There is need for a comprehensive survey of official and non-official efforts, with a view, while preserving to the community the enthusiasm and invaluable services of voluntary workers, to ensuring that the money and effort now being expended shall produce the best results. In one State, Victoria, and in one State aione, a body has been created by statute, namely the Charities Board, which has the necessary power, and possesses the necessary machinery to· make a survey.

715. The Chief Executive Officer of that Board informed us that up to the present, the Board has been mainly occupied with the study of questions relating to the hospitals of the State, public and private. A comprehensive scheme for the improvement of the hospital system has been prepared, and is being worked out. The Board recognizes that a survey of all the benevolent activities of the public and private institutions of the State would be of considerable value and such a _survey may be undertaken at an early date.

716. We suggest that other State authorities be invited to undertake a similar survey. This, perhaps, would preferably be preceded by discussion of the subject in the Federal Health Council, with the view of enlisting the co-operation of the official representatives of Public Health of all the States? and through them, of their We would emphasize, however, the

89

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Sec. 14.-Welfare Services.

desirability, in our opinion, of avoiding action which might be deterrent to private efforts though everything possible should be done to unif:Y those efforts, and to prevent the over-lapping and the proportion of waste which to son1e extent are now .occurring. 717. It rna}' be noted that, with regard to one branch of voluntary work, namely that

of the free- Kindergartens, many municipalities subsidize the free kindergarten movement for the special purpose of establishing branches in districts under the Council's control. This is mentioned as indicating that, in the opinion of those qualified to judge, the work conducted by the free kindergarten authorities is efficiently conducted, and that it is in the extension of work

of that kind, rather than -by the creation of new and competing public institutions, that the welfare of children of kindergarten age, that is from two _ and a half to six years, may best be served. ·

718. Some witnesses favored alteration of Kindergarten practice, to take children at an earlier age. Others were more impressed with the necessity for uninterrupted parental care of the children in the early years. One witness said:-" The pre-school age child should be left at home; should not be brought under educational control, but should be the subject of annual medical inspection as a compulsory measure, this inspection (as a matter of convenience) being

made at school.'' 719. Other evidence, however, showed that opportunities now exist, to a limited extent, for mothers to leave their children in the care of competent persons during the day-the mothers being necessarily absent from home in various gainful occupations. These facilities, in the case of very young children, and children, say, between the ages of three and four years up to the school age of six, are a necessity, at any rate, of metropolitan'life, and are among the institutions, the extension of which would probably be justified. This is one of the matters which would be

ascertained by the survey of charitable and benevolent efforts which we have recomn1ended. 720. With regard to the children who have reached school age, valuable work is being done in every State, through the Education Department, in the way of dental and 1nedical inspection at the cost of the Some of the medical evidence is to 'the effect that this is a

direction in which any moneys ;made available by the Commonwealth by way of a subsidy to the States, might be usefully allocated. This also is a branch of Public Welfare in which the advice and assistance of the Public Health Council would, in our opinion, be useful. 721. The evidence submitted has satisfied us that the expenditure of relatively moderate

sums, far below those which would be required even for a small n1easure of Child Endowment by cash payments, would . be sufficient, if continued during some years, gradually to bring the special public services to which we have referred, into the condition in which they could fully cope with needs of the community.

722. In this connection we may refer to evidence given by medical witnesses with regard to the Comn1onwealth lVIaternity Allowances Act, which provides a bonus of £5 to mothers at the birth of each child. The amount annually expended in this way is at present about £700,000. The view expressed was that this expenditure would secure greater benefits to the community if diverted to the services we are discussing. Much of the evidence submitted by those who are

responsible for the administration of hospital work or of voluntary efforts, such as Baby Health Centres, &c., was to the same _ effect. 723. There is sorne evidence to show that a portion at least of the Maternity Allowance is effectively used in the way of payment by mothers for the services rendered to them by hospitals in which their confinen1ent takes place. The evidence satisfies us that an important proportion

ot the sum of £700,000 expended tor Maternity Allowances is probably diverted to uses which have no direct bearing upon the oomfm·t or welfare of the mother or of the child. 724. One of the outstanding advantages of expenditure of public money under the effective supervision of the Federal Health Council would be, that no diversion to purposes alien from the main object could occur. -

725. The Con11nonwealth Director-General of Public Health (Dr. Cumpston) expressed the opinion that additional grants of money, commencing perhaps with an amo1;1.nt between £200,000 and £300,000, and gradually increasing up to a possible maximum in five or seven years of £500,000, would place upon a satisfactory footing all the public services relating to Maternal

care, Infant Welfare, the care of pre-school-age children, and of school-age children. 726. Dr. Cumpston informs us that following the report (1926) of the Royal Commission on Health, a conference of Ministers of Health was convened. "At that Conference it was decided that subsidies, and generally speaking, the forn1ulation of standards in relation to infant should be subj ect to deliberation of the Federal Health Council."

I

90

Sec. 14.-Welfare Services.

727. The methods which would be followed if further funds were placed at the disposal of the Council for expansion of this group of public services would, the witness states, take the following course : " After discussion by Council, a preliminary survey would be made ; full discussion of the data obtained by that survey would then take place at the Federal Health

Council; standards of procedure would be· formulated, and thereafter the ·payment of any subsidies which might be provided, would proceed smoothly along well-ordered lines." 728. In our opinion, such a course would be satisfactory both to the Commonwealth and to the States. It would ensure that every step of the necessary extension of these special public services, or the creation of auxiliary services, would be preceded by a competent examination of all the essential data, and would be carried out under expert guidance.

729. The perfecting of such services would achieve nearly all that is aimed at by advocates of Child Endowment. It would also avoid the disadvantages associated with cash payments to individuals, would ensure a higher degree and wider range of community welfare. 730. This view involves the rejection of a system of Child Endowment by way of cash payments provided from public funds.

731. Other reasons for that rejection appear in our Introductory Statement, p. 9.

SECTION 15. SALIENT POINTS.

732. With reference to the existing distribution of Commonwealth an_ d State powers in relation to child endowment and wage fixation, the Comn1ission consulted learned Counsel. (Para. 3.) 733. On s01ne points there were differences of opinion. The Commonwealth t;ollcltor­

General, Sir Robert Garran, was of opinion that under Section 96 of the Constitution, the Common­ wealth could hand ove:r moneys to the States ear-marked for the purpose of child endowment, just as it has done with regard to roads. (Para. 4.) 734. Sir Robert said also that he has always considered the. power of the Parliament to appropriate moneys under Section 81 as conferring" an absolute power of appropriation for general purposes, and the Commonwealth Parliament has always acted on this supposition." (Para 4.)

735. The Victorian of Counsel, on the other hand, concluded that "upon

its true interpretation, the Commonwealth Constitution restricts the pGwer of Parliament to appropriate money to subjects assigned to the Federal legislative power." (Para 14.) 736. Child endowment is not one of the subjects so assigned, hence if that is the " true interpretation " of the Constitution, the Commonwealth Parliament could not validly establish a scheme of child endowment under its own legislative control. (Para 12.)

737. As to who would be a competent plaintiff to attack the constitutionality of a Statute appropriating money for a purpose outside the competence of the Parliament, Sir Edward Mitchell thought that any person upon whom a penalty was imposed under · such­ legislation, might successfully challenge the · constitutionality. (Para. 11.)

738. Mr. Owen Dixon was of opinion that "since the repeal of Section 47 of the Surplus Revenue Act of 1910 by the States Grant Act 1927, it would seem that the States could not be ["a competent plaintiff for that purpose."]. (Para. 17.) 739. Mr. Maurice Blackburn took another view. He thought that money so voted would be "surplus revenue," and that the States could claim that, as such, it belongs to the States. (Para. 20.)

740. The only undoubted legislative power of the Commonwealth Parliament with regard to the subject of Child Endowment, appears to be a power, under Section 96 of the Constitution, to subsidize State schemes, the necessary money being appropriated under that section as "financial assistance to the States." (Para. 29)

741. Another question submitted to Counsel is this: -" Has the power,

as part of any scheme of Child Endowment or independently of any sucli scheme, to establish a tribunal for the purpose of fixing a basic wage for the Commonwealth." (Para. 23.) 742. All the learned Counsel consulted were of opinion that the Commonwealth Parliament has no such power. (Para. 24.)

743. There are two methods by which the Commonwealth Parliament might acquire power to deal fully with Child Endowment Sl,JJ.d industrial legislation. (Para. 35.)

91 1371

Sec. 15.-Salient Points.

7 44. Those two methods are :-(1) by alteration of the Constitution under Section 128, and (2) by reference of those matters to the Parliament of the Cmnmonwealth by the Parliaments of all the Sta-tes under Section 51 (xxxvii.) (Para. 35.)

745. In our opinion, the Commonwealth Parliament should not act upon a reference from State Parliaments unless all the States t ake the necessary action. (Para. 36.)

_ 746. Alteration of the Constitution by referendum under Section 128 is, in our opinion, .the preferable (Para. 38.)

747. The clairn made by numerous witnesses was t hat a Con1monwealth scheme of Child Endowment should be instituted providing full cost of maintenance for every dependent chil

748. Man}rwit?-esses stated that cost at about lOs. per week per child. (Para.-39.)

749. That, however, would appear to apply only to the first child .in the family.

750 . . Provision of full maintenance cost for all dependent children under fourteen years of age at the rate of lOs. per week per child would involve a new expenditure of about £50,000,000 per annum. (Para. 40.) · 751. If that addit_ ional sum were to through the F ederal Income Tax, the yield of

that tax would have to be about five and a half times as great as the average yield for the four years ending 30th June, 1927. (Para. 40.)

752. Claims of this order necessitate some consideration of the economic position. (Para. 42.)

753. A fact of the first importance on the econon1ic side is the magnitude of the Australian public which at 30th June, 1927, amounted to £1,043,481,224. The net increase in the public debt _during 1927-28 was £33,000,000. (Para. 43.) ·

754. The annual interest on the total public debt as at 30th June, 1927, is £52,000,000. Sinking Fund payments 1926-27, in respect of Commonwealth public debts amounted to £3,310,426 (Para. 47.)

, · 755. The accumulated deficit upon railway and other business undertakings of the Commonwealth and States up to 30th June,. 1927, was nearly £60,000,000. (Para. 70.)

7 56. This deficit tends to grow larger every year·, particularly in connection with State and Commonwealth railw8Jys. (Para. 58.)

757. During the five years 1929-33, public debt maturing amounts to £256,000,000. In the ten years succeeding 1933, additional amounts totalling £276,000,000 fall due.

758. The present indebtedness of Australia may be stated in the fonn of an obligation to provide, during 53 years, an annuity of nearly £58,000,000. (See Para. 54.) 759. Any proposal such as that fm· Child Endowment, involving a serious addition to taxation, only claim acceptance if it could be demonstrated that its adoption would produce benefits

more than compensating for the dis_ advantages which such, additional taxation would bring in its train. (Para. 90.) 760. That has not been demonstrated, and study of the evidence does not suggest that it can be. (Para. 91.) ·

: . .. 761. ·In Australian ·systems of wagefuation, apart from recent New South Wales legislation, the basic wage contains elements of Child. Endowment much more than sufficient, if directly to provide for all e;cisting dependent children. (Para. 173.)

92

Sec. 15.-Salient Points.

762. Child Endowment exists in France and Belgium on a considerable scale, and in some other European countries on a much smaller scale. (Para 93 et seq.)

763. The system has been widely extended to State employees. (Para. 103.)

764. In France and Belgium, however, the has been perhaps most important through what are called the Compensation Funds. These have been voluntarily formed by organizations of employers. (Para. 102.) ·

765. The latest information is to the effect that outside France and Belgium, family endowment has declined in importance, during recent years, especially in private industry. (Para: 118.)

766. In considering what has been done in European countries, it is necessary to remember that in those countries there is no system of fixation of wages by law. 119.)

767. In 1926, family allowances were instituted by Statute in New Zealand. (Para. 121.)

768. The amqunt of allowance is 2s. per week for each child (under fifteen years of age) in excess of two. (Para. 121.) -

769. The allowance is payable only where the average weekly income including the amount of the allowance if any does not exceed £4 plus 2s. for each child in excess of two. (Para. 121.)

770. In reply to criticism of the amount 2s. per week, the Prime Minister, the Right Honorable J. G. Coates, said in Parliament :-" It may be small ; and incidentally I may say in candour it was the intention to give more, but on account of the somewhat hazy position of the future, it is not thought wise to do so ". (Para. 126.) ·

771. The view of the Opposition was thus stated:-" It will establish

a precedent in this country that will be pushed-make no mistake about that-at every conceivable opportunity with the object of giving to the children in every family of more than two, maintenance". (Para: 127.)

772. Information supplied by the New Zealand. authorities shows that on the first year's experience, the number of claims upon the fund is likely to be ·much less than was at first anticipated. The chief reason seems to be that the of incomes is in excess of the

limit fixed by the Act. (Para. 129.)

773. A system. of child endowment was brought into operation in New South Wales in March, 1927. (Para. 136.)

774. This provides for payment to the mother of 5s. per week for each dependent child .. under the age of fourteen years. (Para. 136.)

775. The fund from which these payments are made is derived from a tax levied upon every employer of 3 per cent. upon the total amount of wages paid by him. (Para. 136.)

. 776. The full amount of endowment _under the Act is limited to cases where the family income does not exceed the living wage, now £4 5s. (Para. 141.)

777. Reduced endowment is payable where the family income, though exceeding the basic wage, does not exceed the basic wage plus full amount of endowment payable under the Act. (Paras. 141-142.)

778. As in New Zealand, the number of claims received during the first full year of operation was much less than had been anticipated. (Para. 149.)

779. The Commissioner administering the Act expressed the npinion that the chief reason for the relatively low percentage of claim!3 is that the general level of income among workers is higher than was supposed. (Para. 149.)

1373 93

Sec. 15.-Salient Points.

780. It would appear that, if the short experience in New South Wales and New Zealand could be accepted as a guide, a Commonwealth Child Endowment scheme subject to the same income limitations as in New South Wales, and providing the rate of benefit of the New South Wales Act, namely 5s. per week per dependent child under the age of fourteen, could be established

at an initial cost of about £6,500,000 per annum. (Para. 151.)

781. It is too soon, however, to form a definite opinion as to the extent to which claims on these funds, both in New Zealand and New South Wales, will grow. (Para. 153.)

781A. If no income limit were fixed, the payment of endowment at the rate of 5s. per week per dependent child under the age of 14, would cost about £24,000,000 per annum. (Para. 676.)

782. A sectional scheme of Child Endowment has existed for a number of years in the Commonwealth Public Service. (Para. 155.) .

783. This was originally granted in December, 1920, as in substance a bonus of £13 per annum for each dependent child under the age of fourteen years. The recipients were limited to those whose salary did not exceed £300, later raised to £500. (Para. 157.) 784. In 1923 the Public Service Arbitrator put the scheme on a new basis. In effect, this basis is that the whole fund required for payn1ent of the amount of endowment, 5s. per week,

is provided by a deduction from wages and salaries of all Commonwealth employees. (Para. 158.)

785. This deduction is somewhat less than 5s. per week per employee. (Para. 158.)

786. The Commonwealth · Public Service Arbitrator informed the Commission that the system of Child Endowment within the Commonwealth Public Service is working without complaint, and is regarded by the Service unions as a reasonable compromise. 161.)

787. In practice the relation between Child Endowment and wage fixation is very close, and there are inescapable interactions. (Para. 168.)

788. In Australian systems of wage regulation, apart from recent New South Wales legislation, the two have been blended into one, every basic wage containing unanalysed elements of endowment. (Para. 173.)

789. The inter-relation of Child Endowment and Industrial Regulation led us to devote attention to industrial legislation, and practice of arbitration tribunals. (Para. 168.) 790. The tribunals are numero_us ; the methods are multiform. (Para. 290.)

, 791. Each State has at least one system, while some States have more than one, and one State has four. (Para. 291 (4).) 792. The Commonwealth Arbitration Court, operating upon some industries in every State, appears to govern the wages and conditions of about 50 per cent. of the employees who are subject to awards of any tribunals. (Para. 178.)

793. There are two special Commonwealth tribunals apart from the Arbitration Court, namely, one for the coal-mining industry, and one for the Commonwealth Public Service. (Para. 291 (2-3).) 794. The manner in which inter-action may occur between Child Endowment and wage fixation is s_ trikingly illustrated by the following sequence of events in New South Wales:-

795. Up to December, 1926, the family unit accepted for wage fixation was man, wife, and two children. (Para. 206.)

.796. On that date the Industrial Cmnmissioner declared the living wage at £4 4s., which sum, he stated, would provide the proper standard for a m.an, wife , and one child. (Para. 217.)

94

Sec. 15.-Salient Points.

797 .. By an Amending Act of April, 1927, the family unit was prescribed as man and wife only. By other legislation at the same ti1ne, family endowment of 5s. per week per dependent child was provided. (Para. 230.) . ·

798. After the passing of these Acts, the New South Wales Industrial

Commission met, on 27th June, 1927, to determine the 1927 standard .of Jiving, and to declare the li:ving wage. The Industrial Commissioner declared the living wage at £4 5s. for the new statutory unii of man and Wife only, although- - ·

(a) in December, 1926, he found that £4 4s. provided the necessary standard of comfort fo.r a man and wife and one child, and (b) that the cost of living had in the interval risen only by lOd. per week. (Para. 235.)

, 799. The Industrial Commission having in the meantime been re-constituted, and now consisting of three Justices, a majority judgment of 25th September, 1928, adjudged the June, 1927, decision to have "departed entirely from the principles laid down in the judgment of June, 1926," and to be "based upon methods which are fundamentally wrong". (Paras. 241, 242, 246.)

800. The Queensland Industrial Arbitration law contains provisions not found in the · industrial legislation of other States.

801. These special provisions enable the tribunal, when fixing rates of wages, to consider the prosperity of the calling, and the value of the employee's labour. There is, however, a datum wage fixed independently of those conditions. Above that datum, wages may be fixed in accordance with the opinion of the tribunal · as to the relative prosperity of the industry.

(Para. 255.)

802. The 'Queensland basic wage is £4 5s. This is 6s. 6d. higher than that of the Commonwealth in that State. .. (Para. 265.)

803. The family unit adopted in Queensland is man, wife, and three children. (Para. 256.)

804. In South Australia the "living" or " basic" wage is fixed upon a family unit of man, wife, and three children. (Para. 277.)

805. The assumption is that the living wage is the wage for the unskilled worker. (Para. 279.)

806. In Western Australia, also, the unskilled worker is the assumed recipient of · the basic wage. By construction of the Act, the Court has determined the family · unit as being man, wife, and two children. (Para. 282.)

807. In Victoria and Tasmania, there are no Industrial Courts, but the Wages Boards system prevails. (Para. 287.)

808. The Victorian vVages Boards include_ the element of the Commonwealth basic wage known as the " Powers 3s. ". In Tasmania this is not included. (Para. 288.)

95

1375.

Sec. 15.-SalientJPoints.

809. Under the Commonwealth system, and the systems of South Australia and Western Australia, capacity to pay is, theoretically at least, disregarded by the Industrial Tribunals. (Para. 293.)

810. If an industry cannot pay the declared wage it must go out of existence. (Para. 293.)

811. The periods between successive declarations of the basic wage differ in different States. In New South Wales and South Australia, declarations may not be made oftener than · once in every six n1onths. In Queensland, the Court is free to use its own discretion. In Western Australia, the wage must be before 14th June each year. (Paras. 308-312.)

812. The anomalies, and conflicts of determinations, in Australian Industrial" Courts. urgently need .harmonizing. 813. This has been repeatedly en1phasized by Industrial Judges. (Para. 313.)

814. For example, this conflicting jurisdiction has been described (we quote from various industrial judgments) as, "a menace to industrial peace, stability, and efficiency". (Para. 317.) "The machinery for fixing wages and conditions throughout Australia should be co-ordinated." (Para. 321.)

"There is no co-ordination, no inter-dependence between the Courts, and the disputants are only too apt to treat the Courts as rival shops, and this position involves grave danger to industrial peace and to the continuity of operations in industry." (Para. 323.)

" Resulting complications are chaotic. If it were desired to design such a situation, it might be conceived by the disordered mental efforts of a Commission of lunatics." (Para. 324.)

815. The methods and results of the Basic Wage Commission 1920 have been much misunderstood, and the misunderstanding has caused many difficulties. (Para. 328.)

816. The Commission was required to give in detail the commodities and services, with their cost, ·which in its opinion would a reasonable standard of c01nfort. (Para. 338, footnote.) 817. The cost so found varied from £5 6s. 2d. in Brisbane, to £!5 17s. in Sydney. (Para.

326.) 818. This was interpreted in many quarters as equivalent to a declaration of the basic wage. (Paras. 327-328.) · 819. Mr; Justice Higgins, commenting on the report said:-" What the Commissioners have reported on is not a basic wage at all . . . . . . . . This so-called basic wage

of the Commission is not a true basic wage, but a will-o'-the-wisp that will lead them into a ditch." (Para. 330.) 820. Mr. Justice Powers, referring to the clothing list drawn up by the 1920 Commission, said :-" The Commission allows the typical family a quantity and quality of clothes which I know from tny experience in ,this .Court .are not necessary men, women, and children to live in reasonable comfort even wnen 1n receipt of £400 a year. (Para. 336.)

821. The frequent compilation by Industrial Tribunals of lists of commodities and services, leads to claims being asserted which go beyond the bounds of possible realization. (Para. 399.) 822. It also has the undesirable effect of deflecting public opinion from the desirability

of encouraging home-craft, one of the most valuable of our arts. (Para. 404.)

96

Sec. 15.-Salient Points.

823. On evidence submitted by lVlr. P. J. Pringle., on behalf .of the Victorian Chamber of Manufactures, it appears that, since 1907, effective wages have increased by 12s. to 14s. per week. Mr. Pringle says that, as a conservative estimate, the resulting aggregate increase in wages paid since 1907 may be taken at £30,000;000. (Para. 446-450.)

824. Mr. Pringle's statements were confirmed, at least as to the main contention, by Mr. ·C. H. Wickens, the Commonwealth Statistician. (Para. 451.)

825. The basic wage system, as understood in Australia, arose through the adoption by the Commonwealth Court of Conciliation and Arbitration of the principles of the 1907 Judgment known as Harvester Judgment. (Para. 349.)

826. The basic wage is designed to ensure provision for the "needs" of the unskilled worker. (Para. 355.)

·827. The new aspects of wage fixation introduced by ·Australian methods were :-(a) the public announcement of fa1nily obligations as the leading or the only factor to be considered in determining basic wage rates; (b) the dismissal, or the relegation to the background, of t he fundamental idea that

a wage is really and properly based upon the value of "services in produc-tion" of the worker ;- -

(c) the ousting of the "iron law of wages " which was supposed to depress the lot of the worker without injury to the employer, and its replacement by the Draconian Decree of a tribunal, which consigns employer and employee alike to a common industrial extinction, if their joint "industry" fails to provide for the payn1ent of a prescribed basic wage. (Para. 357.)

828. The rigidity of the basic wage is one of its great defects. There is urgent need for the introduction of greater flexibility. · (Para. 358_ .) ·

829. In times of stress, or of economic emergency, either national or local, Arbitration Tribunals should have express power to meet the situation by review, and if necessary by reduction, of the basic wage, or to adopt other n1easures calculated to prevent unemplC>yment. (Para. 358.) - -

830. In fixing the basic wage, the standard of living throughout Australia should have reference to the same class of workers, namel y, the " unskilled " or " lowest paid " class. (Para. 380.)

831. It is also essential that, so long as the basic wage includes provision for marital or family obligations, the family unit upon .which the wage is based, should be uni- form throughout Australia. (Para. 390.)

832. Uniformity, both with regard to the class of worker, and the family unit, should, in our opinion, be determined, under excl.usive power, by the Commonwealth Parliament. (Para. 390.)

833. Except in times of emergency, the standard of living the basic wage founded upon that standard, should not, except as to cost-of-living adjustments, b·e altered oftener than say once in every five years. (Para. 413.)

834. If compulsory wage fixation is to continue in Australia, it is in our opinion, essential that determination of the basic wage should be made exclusively by a Commonwealth tribunal. (Para. 415.)

835. As, under the existing system, '' wage fixation '' and '' child endowment '' would react upon each other, both should be under the exclusive control of one tribunal. This would be necessary in order to prevent a dangerous competition.

836. In a judgment of June, 1927, the New_ South Wales Industrial Commission declared in effect that the worker obtains a "vested right " to the declared basic wage. (Para. 416.)

837. The doctrine is in our opinion dangerous, ·and in the opinion of learned Counsel consulted by the Commission, is legally untenable. (Paras. 416-424.)

97 1377

Sec. 15.-Salient Points.

838. The majority of the New South Wales Industrial Commission, as now constituted, has over-ruled the 1927 judgment on that point. (Para. 425, footnote.)

839. Th e application of the doctrine of " vested right " to i.ndustrial determinations should, in our opinion, be excluded by appropriate legislation. (Para. 425.) _

840. The basis of the claim to Child Endowment is an alleged· insufficiency of the wage to provide for children in large families. (Para. 468.) 841. 1\'Iany witnesses assun1ed that all, or nearly all, workers ·with large families were on the basic wage, or had incon"les not greater than that wage. (Para. 469.)

842. Much evidence was tendered in disproof of that assun1ption. (Paras. 470-472.)

843. To give one extract only-in South Australia, out of 104,000 male employees of the Government, 7,000 are receiving the State basic wage, £4 5s., 34,000 have a wage between £4 5s. and £4 15s., and 63,000 receive over £4 15s. per week. . (Para. 471.)

844. In private employ (as the evidence shows) it is the exception to find adult male employees who are not receiving more than the basic wage. (Para. 472.)

845. Evidence of witnesses representing organizations of a charitable or benevolent character aimost invariably negatived insufficiency of wage as the cause of existing distress. (Para. 475.)

846. Those witnesses assigned other causes, such as unemployment, . sickness; ·gambling, drink, wife desertion, &c. (Para. 4 7 5.)

846A. A remedy for distress among children, caused by sickness of, or accident to; the bread-wiv..ner, should be sought under a scheme of insurance rather than under a scheme of Child Endowment. (Para. 479.)

847. In our opinion, the claim for Child Endowment based upon an alleged insufficiency of wage among workers is untenable. (Para. 489.) · ·

848. To set up a general scheme of Child Endowment to deal with the small residual percentage of persons in the c01nmunity who need some assistance, would be both unnecessary and unjustifiable. (Para. 491.) ' ·

849. Econ01nist witnesses favored the doctrine that generally a lessening of present irtequalities of income is econom.ically good, if, on balance, the effects of any given re-distribution are not outweighed by adverse effects upon production. (Para. 493.) 850. Various sums were suggested by economists as possible additions to taxation for purposes of These s:ums from £·2,000,000 to £10,000,000, but, "it

is an extraordinarily drfficult thing to estimate . (Paras. 500, 502, 505.) 851. It was pointed out that there would be a great danger of increasing unemployment to an extent that would outweigh the gains of endowment. (Para. 499.) 852. Professor Alcock (Queensland) said:-" An extra 5s. added to the present basic

wage might cause anything from a 30,000 to an 80,000 increase in the nun1ber of unemployed. " (Para. 499.) 853. Professor Brigden (Hobart) and Professor Copland (Melbourne) thought that an essential element in any endowment scheme would be some re-distribution of wages for the purpose.

(Paras. 501, 507.) 854. Professor Brigden suggested that 2s. per week out of the so-called "Powers 3s." should be transferred from the weekly wage. That would produce about £5,500,000 per annum "if it could all be collected." (Paras. 501-502).

F.24/28.-7

98

&c. 15.-Salient Points. 85,5. l?rofessor (Sydney) said:-" If we had only £8,000,000 to spare, I think at any rate the greater o£ it would be better expended ina scheme o£ unemployment insurance." (Para. 500.)

855A. Dr. Benham, in a recent work, "The of Australia," expresses the

opinion that an additional £50,000,000 a year might be raised by taxation without .imposing a:n.y undue burden. That statement is commented upon in paras. 510-533.

856. In . our opinion, the imposition of large additional taxation for a scheme of Child £qdowment, leaving present wage rates untouched, is practically an impossibility. (Para. 509.) 857. If on the other hand, a small scheme commencing with say 2s. per week (as suggested by a witness) were adopted, the effect would simply be to bring into being a new and prolific

patJse Qf industrial disputes and political conflict. (Para. 509.)

858. Witnesses supporting the establishment of Child Endowment were unanimously in favour of a Commonwealth scheme,. rather than of independent and differing State schemes. (Para. 534.) 859. As between a Commonwealth scheme and separate State schemes, we agree with the views of witnesses that a Commonwealth scheme would be preferable. (Para. 542.)

860. But for reasons appear-ing above we are opposed to State schemes of Child Endowment. (Paras. 536-539.) . . ·

861. In our opinion, the Commonwealth Parliament should not grant assistance to the States in the financing of State schemes of Child Endowment. (Para. 541.) 862. But, for reasons set out in our introductory statement, we are also opposed to a Commonwealth scheme of Child Endowment.

863. We repeat some of the reasons for rejecting that scheme. 864. The burden ·created by additional taxation to finance the scheme from public revenue or by way of a direct levy upon industry would, in our opinion, increase cost of living ; increase unemployment ; check prosperity ; cause a collapse in values. (Para. 544.) -

865. By the removal of fina:qciaJ responsibility from parents for their children, both economic · and domestic incentive would be seriqusly reduced. (Paras. 545-546.) 866. If Child Endowment as a gage of battle be tossed into the arena. of the present Industrial Tribunals, disputes will inevitably increase in number and in intensity. (Par. 554.) ,

867. That result could not fail to follow the introduction of a Commonwealth scheme of Child Endowment, unless the Commonwealth possessed exclusive control of industr·ial legislation. (Para. 543.) 868. Friction and difficulty could not be a voided if there were two controlling bodies (one to fix a which might include provision for two or three children) and the other to grant endowment to such children as were not specifically provided for in the basic wage. (Para. 587.)

869·. Each would be the .subject of pressure to supplement the grants made by the other, thus creating a " viciou,s spiral" similar to that which the Tariff Board has denounced as created by the "passing back and forth between the Federal Arbitration Court and the Tariff Board." (Para. 588.)

870. Any available public money could be more beneficially used in perfecting social services. · (Paras. 727-729.) · 871. If (contrary to our view) a Commonwealth scheme beproposed, then, in our opinion, conditions precedent to its establishment should be- -

(I) That the Commonwealth Parliament should have first obtained full and exclusiv·e power-( a) to control wage fixation, and "industrial matters" as defined in Industrial Statutes; ·

(b) to establish and control Child Endowment. (2). That any existing State legislation instituting a scheme of Child Endowment · should be repealed. (Para. 543.)

1379

Sec. 15.-Salient Points.

872. An income limit should . be an essential part of any proposal for the establishment of a scheme of Child Endowment. (Para. 660.) A family income not exceeding a re-adjusted basic wage should be the datum with regard to the payment of full endowment. For a reduced endowment eligibility could be calculated by the method shown in para. 141-142.

873. The inclusion of persons whose wages are not regulated by law, or who are not engaged in ind-qstry as wage-earners, in any scheme of Child Endowment, would, in our opinion, be both just and necessary. (Para. 648.)

. 87 4. Assuming provision for. Child Endowment to be made from public funds, direct taxation appears to us the preferable form.

875. The principle justifying the provision of public funds for the purpose . of Child Endowment can only be that,. upon 'f?aJance, substantial wo11ld be conferred _upon the community. 670.) . - _

876. Such a substantial balance ·of benefits would also, we think, be the sole justification for imposing upon "indlf-stry" the duty. of providing the. whole or part of the (Para. 670.) . . . ,_ _ . .

877. But, in both cases, detrimental effects would be produced which, in our opinion, - would greatly outweigh the benefits sought to he attained. (Para. 670.)

878. The logical unit for wage fixation on the " needs " theory is the individual worker. (Para. 592.) 879. We are of opinion that, for practical reasons, if an Australian scheme of Child Endowment were adopted, the family unit for the purpose of determining the basic wage should

be taken as a man and wife. (Para. 600.)

· 880. In our opinion, the evidence justifies the. ·statement that full maintenance for each existing dependent child, on a scale commencing ·with 8s. per week for the first child in , each family, the amount diminishing by ls. for each subsequent child up to and including the fifth, with 4s. for ,.each child beyond the fifth, could be _provided by a contribution from wages of about

7s. per week. (Para. 601.) 8_ 81. This we suggest opens a wide door for a scheme which in effect would be a voluntary scheme, as it is unlikely that it will be adopted without some. initial evidence of goodwill on the part of wage-earners. (Para: 606.)

882. We suggest that such a change in the distribution of wages deserves the most earnest and favorable consideration of wage-earners and of industrial tribunals. 607.) 883. That change (with somewhat smaller figures) has been effected in the Commonwealth Public Service, with results which (we are assured) are considered to be highly satisfactory.

(Para. 608.) ·

- 884. If a voluntary scheme of Child Endowment were adopted, under which the funds were provided by means of a of we suggest that. the Commonwealth

should assist by providing the necessary machinery, and defraJing .the cost of · adm1mstrat1on. (Para. 612.) · · · · ·

100

Sec. 15-Salient Points.

885 . . In Australia, where a higher birth-rate is generally 'desired, many witnesses expressed the opinion that an increase in that rate would result from the establishment of a scheme of Child Endowment. (Para. 617.)

886. In Great Britain on the other hand, where an increase in the birth-rate is feared rather than desired, many advocates of Child Endowment argue that the introduction of the system will not increase, but rather decrease, the birtli-rate. ·(Para. 618.)

887. A. study of the evidence, and· of the works of writers on Child Endowment, leads us to the conclusion that there is no reason to assume that a further increase in the standard of living, whether made possible by an increase in wages, or by payment of Child EndowlJlent, . in addition to present wage rates, would increase the birth-rate, or even check its decline. (Para. 625.)

888. A logical consequence of the establishment of a Commonwealth of Child Endowment would be the creation of some form of eugenic control. (Para. · 627-629.)

. 889 Expert witnesses appeared to be unanimous that up to a certain point, such control is both practicable and desirable. (Para. 631.)

890. The unmistakably feebleminded, and persons tainted with serious and transmissible diseases or defects, be prevented from reproducing their species. (Para. 631-633).

891. Within such limits, in our opinion, eugenic control should be established, whether or not Child Endowment be accepted as a feature of national policy. (Para. 631-633.)

892. The administrative cost for a Commonwealth scheme of Child Endowment, as estimated by the Secretary to the Commonwealth Treasury, is about £155,000 per annum. (Para. 678.)

893. The general reactions resulting from the establishment of a 11niversal scheme of Child Endowment, providing full maintenance from public funds for qependent children, are difficult to predict. (Para. 682.) · ·

894. But, it seems reasonably certain that there would be a decided weakening of the sense of parental responsibility, and of the stimulus to self-improvement and vigour in craftsmanship. (Para. 682.) 895. On these points, however, much w_ould depend upon whether the scheme were one in which the large additional sums necessary for full maintenance, were distributed without corresponding, or at least partial reductions being made in the basic wage. ·(Para. 682.)

896. Without such reduction, the result, in our opinion, would be a marked flush of extravagant spending, and a sharp rise in the cost of living, shortly followed by a check in prosperity, by a more or less severe collapse in values, and by serious unemployment. . (Para. 682.) ·

897. An injurious effect of a different kind w:Q.ich would need consideration would be. the greater impulse towards strikes likely to be created by the introduction of a general scheme of Child Endowment. (Para. 683.)

898. This should be counteracted by a provision that on the occurrence of a strike, any right to endowment on the part of the strikers R honld be suspended, and, in respect of the period of the 1:1trike, should not revive unless the Court certified that the " ·strike" was a justifiable cessation of work. (Para·. 684.) · · ·

101

1381

Sec. 15.-Salient Points.

899. No expenditure of public money realizes such special value as that upon wisely controlled services, such as hospitals, maternity training, maternity homes, child welfare, training of nurses, bush nursing, kindergarten, training of girls in domestic economy and similar services. (Para. 698.)

900. The expenditure by State Governments upon welfare services and organized charities is about £4,750,000 per annum. Public contributions to services of that kind amount to over £4,000,000 per annum. (Para. 707.) 901. The States also expend nearly £10,000,000 per annum under the heading of Education, Science and Art. (Para. 706.)

902. The Commonwealth expenditure upon Old-Age and Invalid Pensions is about £10,000,000 per annum ; upon War Pensions nearly £8,000,000 per annum, and upon Maternity Allowances about £700,000. (Para. 708.) ·

903. Apart from the maintenance of public hospitals, (which in every State are partially supported by Government funds) the amount necessary to extend and complete services relating to maternal care, infant welfare, care of pre-school-age children and of school-age children, is estimated as £300,000 per annum, increasing up to a possible maximum of £500,000. (Para. 725.)

904. We do not recommend the method of Child Endowment by way of cash payments provided by public funds, as we believe that any public money available can be more profitably devoted to the extension of services of the nature we have mentioned. (Paras. 698 and 729.)

905. We are satisfied that the expenditure of relatively moderate sums, far below those which would be required even for a small1neasure of Qhild Endowment, would suffice to secure superior benefits to the community. (Para. 542.)

T. S. O'HALLORAN, Chairman.

IVOR EVANS.

STEPHEN MILLS.

102

ADDENDUM TO MAJQ-RITY REPORT.

Many passages in our Report tend to indicate the desirability which, in our opinion, exists fot a thorough investigation into the Australian system of industrial regulation by means of Arbitration Courts and similar tribunals.

_ It. was not within the powers conferred by our Terms of Reference for us to make such an investigation, although the interrelation ·of industrial regulation with such a subject as child endowment became continually more evident as our inquiry proceeded.

- At many stages of our work the closeness of that interrelation and the increasingly compelling reasons for inquiry into the Australian system of industrial regulation, created in our minds a firm opinion that a study of industrial regulation must he regarded as the major question, with child endowment occupying a minor position.

From some points of view, of course, it is possible to discuss child endowment· as separable from the subject of industrial regulation, and capable of being dealt with as an independent self -subsisting n1echanism

But, unless a radical alteration in the distribution of the power of industrial regulation take place, a unifying of the perplexingly diverse methods which now exist side by side be effected, the probability of the successful working of any scheme of child endowment would, in our opinion, be negligible.

In view of the nature of the Terms of Reference, we did not feel at liberty to make a " recommendation" on the subject in our Report) but we suggest that a comprehensive investigation of the Australian systems of j regulation is a matter of prime and urgent importance. - - ·

T. S. O'HALLORAN, Chair1nan.

IVOR EVANS.

STEPHEN MILLS.

103 1383

MINORITY REPORT

Of

COMMISSIONERS Mrs. F. M. MUSCIO and JOHN CURTIN.

May it please Your Excellency :

1. We dissent from the finding of the majority of the Commission that no consideration be given to the payment of allowances to dependent children until the Commonwealth has control over the whole field of industry and wage regulation, and that even when this

1s effected the allowances should be contingent on the adoption of the revolutionary innovation indicated in :their report. To delay what we regard as a measure of justice for the families hereinafter specified, while the body politic is engaged in a protracted and highlv contentious constitutional struggle., involving a re-casting of the powers ·of the Commonwealth and the States in regard to industrial sovereignty, is not only unnecessary, but unjustified. The people of

Australia on several occasions have by popular plebiscite rejected the proposal. We do not regard it as an essential feature of a system of family allowances. ·

CHILDREN'S ALLOWANCES FOR THE LARGER FAMILIES. agreeing with the recommendation that services such as pre-natal and maternity

treatment, dental and medical attention should be made i).Ccessible to all families as soon as possible, and that a scheme of housing within the resources of large families on a low wage should be in_ troduced in those cities where housing is a difficult problem (particularly in Sydney and Melbourne), we are of opinion that such measures alone, even if widely extended at an early

date, would not meet the special difficulties of the larger families. 3. Such schemes as these apply equally to all--children. Medical and dental attention are already provided to some extent, and the various States are gradually widening the area of such services. It is highly desirable that all mothers and children should have their teeth and theu bodies generally kept. in sound condition, but these things do not augment the family income.

On the other hand a family income that is too small for .reasonable needs may help to produce the ill-effects that these services seek to correct.. The provision of boots and warm clothing, for example, may reduce the need for medical attention. Ability to pay the rent for a decent house, to buy the foods needed for building up young bodies and the clothing needed to protect them, keeps away physical ills as well as the psychological ills of undue strain and anxiety to the father and mother, which strike at the very roots of family well-being.

4. Some witnesses have stressed the need for sacrifiee . in the family, but the value of "doing without" can be exaggerated. No one would deliberately lower the standard of the family basic wage, for the purpose of improving· character by increasing sacrifice, and such . loose assertions should not be made. without reference to some standard accepted as a reasonable m1n1mum. Arbitration authorities have decided that for the family beyond the unit specified in their awards the reasop.able minimum is not provided and the services of doctors and

dentists will not provide it. 5. The provision of instruction in food values and housecraft generally is a most desirable one, and this national service should be within the reach of all girls. But such teaching will not provide the tools with which the mother is to do her work; at best it shows her how tq use those tools well. The tools she needs are those which will procure suitable foods and the means

of cooking them, adequate clothing and reasonable home conditions from the point of view of health and comfort. It is probable that the more efficient she becomes, the more she will demand these_ things. Ignorance may be the reason for purchasing unsuitable foods, but the foods and suitable cooking of them may prove more costly than the provision of less swtable foods.

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6. Housing schemes ·nnder which satisfactory homes may be rented or purchased by workers are badly needed, especially in the larger centres of population, but the larger the. family on any given wage the less, generally speaking, will be its chance of securing such a house. Such a family needs a larger house than the smaller family, and at the same time can spare less for rent than the smaller family because more has to be expended. in food and clothing for its members.

To make the family income among workers more nearly proportioned to family needs is an essential precondition of any national housing scheme, if the larger families whose need of such provision is the greatest, are really to benefit by it. Otherwise, they will, as a rule, have the poorest houses, those which are rejected by the smaller families. Mr. George Emery (General Manager of the Government Savings Bank of Victoria) in giving evidence with regard to the housing scheme operated by the Bank, said that of 1,396 borrowers during the year ended 30th June, 1928, 859, that is nearly 62 per cent. of the applicants: had wages exceeding £5 per week.

Of these 1,396 borrowers, 718 had no children, and only 229 or 16 per cent. had three or more children. Evidently, this scheme is not being used to any great extent by fathers of larger families on a_low wage. Mr. Emery considered that outside this scheme houses could not be · got more cheaply unless of a poor type, but that at the same time these houses (of timber) were beyond the reach of many workmen with families.

7. These considerations make it clear that extension of services, whether medical or dental, or the teaching of housewifery or the building of decent houses, which benefit families irrespective of their size, will do nothing to abolish the hardships of the larger families as compared with the smaller ones. It will not give the larger families the wherewithal to reach the minimum standard of comfort which is considered by the Courts as the inherent right of every· family.

8. The problem of Child Endowment or of Children's Allowances is primarily one of disparity between the standards of families of different size on the same wage.

9. In the Industrial world different standards of comforts have definitely been allotted by basing the wage for all families on the cost of supplying the needs of an average family. As the standard implied for this average family is the minimum standard which should be adopted according to current social it follows that the families of wage-earners which are largm

than the average live on a lower standard than the one supposed to be ·allowed by the wage.

10. Some system of family allowances is thus the logical corollary qf the living wage doctrine which is in theory the principle underlying our present methods of wage fixing.

DEPENDENT CHILDREN.

II. The Commonwealth Statistician estimates that approximately 92 per cent., or about 1,035,000 of the children dependent on parents who are wage and salary earners, belong to families "vith an income of less than £300 per annum; of the children dependent on employers, workers on own account, and other non-employees 85 per cent., or say 595,000, have parents whose annual income is under £300.

12. There was among witnesses that any system of allowances should not be restricted to the wage-earning community, but should extend also to the families of non-employees. It is worthy of note that both the New Zealand and New South vVales systems operate irrespective of the occupation of the father on whom the children are dependent.

13. The importance of the well-being of children to the nation is not confined to any class; it involves all children. It is the family life which furnishes the two elements that more than any other contribute most powerfully to the developn1ent of human beings: viz., heredity and environment during the formative period. The sociological function of the family is to ensure as far as possible that children will be well and healthfully born and well and healthfully nurtured. ·

14. To differentiate between families, in any system of family allowances, because of the occupation of the bread·winner, would diminish the national benefit and also be unjust to a large number of children.

.. 15. There never has been any doubt of the value of the services, infinite in variety and extent, which the family renders to the nation. Primarily it is the source of national continuance ; it has supplied the human material indispensable for the production of the means of subsistence; 1t provides for the replace1nent of the old ?-nd the dead, and is . the sole guarantee for the

redemption in the future of those obligations which previous and present generations have found it desirable to incur in order to enjoy the fullest attainable measures of security, comfort and civilization.

105 1385

· 16. The Commonwealth Statistician's tables indicate that the 92 per cent. of the children of the wage and salary earners whose parents are said to have an incon1e of less than £300 and the . 85 per cent. of the childrel?- of sinularly restricted, constitute nearly 90 per

cent. of the total dependent children 1n the Com1nonwealth. The figure implies the correctness of Mr. Sutcliffe's (see The National Dividend) that 83 per cent. of the people in 1921

had incomes of less than £25.0 per annum. ·

· 17. the groups of male wage and salary-earners those families which had two or more children Hl that year were 58.4 per cent. of the total membership of the workers' households, counting the unmarried males and the families in which the children had grown up. (See The l'l ext Step, page ·

THE STANDARD OF LIVING.

18. ]t is extraordinary t.hat ·the Com.monwealth Court of Conciliation and Arbitration .made general inquiry into·the standard of living except the admittedly inadequate

Investigation conducted by Mr. Justice IIiggins '21 years ago when he laid it down that the standard of remuneration of a worker should be "the normal needs of the average employee regarded as a human being living in a civili1:ed community," and that wages should be "sufficient to _Provide these things, (i.e., · food and shelter) ·and clothing and a condition of frugal comfort estimated by current human standards."

19. then," says the Com1nonwealth Statistician· (Lahour Report No. 17 page 88) "only one comprehensive. attt1mpt has been made by the Federal authorities to ascertain specifically what the actual requirements were in the various States according to reasonable standards of comfort, including all matters comprised in ordinary expenditure of a household in respect of a family consisting of man, wife and three children under fourteen years of age."

This was the inquiry conducted in 1 920 by a Hoyal Com1nission composed of three representatives eaeh of employer3 and employees with 1\ifr. A. R. Piddington, ICC., as Chairman. It is i1nportant to note that the findings of the Commission were unanimous. · -

20. ·Evidence was submitted to us to show that had Mr. Justice Higgins in the Harvester Case in 1907 declared the merits of the issues on the equivalents in that year of the findings of the Commission, the basic wage for unskilled labour would have been fixed at 53s. lOd. instead of 42s. per week.

21. In reply to Question 11,733, Mr. C. H. ¥1ickens (Commonwealth Statistician) testified that Mr. Piddington had pointed out that as a fact it wuuld be found that the wage fixed by Mr. Justice Higgins, instead of being sufficient to provide for a man, wife and three children, . was sufficient to provide for a man, wife and but one child. Mr. Wickens further said that this

contention was the justification for the equity of the reduction of the allowance cost of one child which the Commonwealth Public Service makes from the ascertained basic wage in order to provide the fund for the Commonwealth Service scheme of child endown:ent;

22. It is, therefore, -difficult to escape the conc:usion that probably even in the families with two children, and more definitely in those with \hree or more children, there has been awarded a wage rate for the parent less than that needed to provide the standard of life which would satisfy the demands of healthful nurture for the children.

23. Significantly enough, the wage paid by reputable employers prior to the declaration of the Judgment, and arrived at independently--- of any professed domestic u:pit was 7s. per day, the amount declared'· in the judgtnent. The pre-" I-Iarvester ' ' standard emerged fronl the competition of all workers, whether unmarried, rnarried and childless, or married with

varying nu1nbers of dependent children, for en1ployment. The a venige number of dependent children per adult male worker was then, as now, approximately one. ·

24. One ·child was, therefore, the economic -reality, and it would appear was the natUr-al domestic appendage which, with the wife and mother, such -vvorker would have to· earn a wage to maintain, and it would appear that the real fact of the obligation of a wife and one child as the domestic unit of the workers as a class arose historically by the natural law of supply and

demand and constituted the eeonomic foundation for the price at which labour would be available. No judgment altered the reality. Judicial pronouncements, however, which were not reflected in judicial findings, have led to the fiction that wages have been and are computed on the assumption that each worker has a wife and three dependent children to maintain, but

no basic wage . adjudication will bear dissection on this hypothesis. No court has divided its group wage into the proportions that would be required for its alleged mathematical units.

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DEPRESSING THE STANDARD.

25. Whatever may be thought of the standard actually provided by the Harvester and succeeding judgments, it is obvious that to provide for all families by providingOfor the average family is an injustice to those families which are larger than the average. The money which will provide a frugal standard of comfort for a family of four or five can provide only a lower standard for say, six, seven or more persons.

26. As the family on the basic wage grows larger, its standard becomes more meagre until the children are old enough to become wage-earners. · The larger the family the greater the pinch, and the greater the pressure on the child to become as early as possible an unskilled labourer. This is not only a hardship to the child, but involves ultimate loss to the community.

· 27. Even with the most efficient management, present standards of wages leave little or no room for provision for sickness or accident, or for saving, in the family to which they applied. The larger the family the less the possibility of any margin even at the lowered standard which, notwithstanding equal efficiency in management, larger numbers in the family will automatically produce. When President of the Commonwealth Arbitration Court, Mr. Justice Powers said,

"The present basic wage . allows the workers who have more than three living children under fourteen years of age to live without the necessaries of life as a human being."

28. One measure of progre·ss in civilization is the advance made in protecting classes of the community who by reason of old age or youth or .sickness or misfortune are unable to provide for themselves. The child is the most important of all these, for the children are the future citizens, and to the case of children the doctrines of independence and self-help cannot be applied. ·

29. It is becoming more and more an .accepted principle that every child has a right to opportunity for full physical, mental, and moral development. The first responsibility is upon the parents to provide the means for this opportunity, but the precedent is well established for the State supplementing the efforts of parents to obtain the possibility of full development for their children. The provision of schools and of medical attention, and the insistence on

some recognition of family responsibilities in wage-awards, are examples of the State's participation in the parents'

30. It not only because of the disparity in standards, due to the varying sizes of families, that a system of allowances to children is recommended as an act of justice, but also because we are assured that the establishment of such a system would be a sound national investment.

31. In considering the transference of any part of the national income from ·one section of the community to another, careful consideration must be given to the results likely to arise. There is every reason to believe that, considering the present distribution of the national dividend, the diversion of part to those who, is assumed, will expend it on the better maintenance of children who will later be a large proportion of the workers, will, if -carefully done, justify the expenditure on strictly economic grounds. The theory and practice of modern wage-earning which treat the father as the sole economic unit have tended to obscure the importance to the community of the money and services expended in rearing and training children. The exemptions allowed in income tax returns on account of dependent children are some recognition of these services, · being in fact a form of family allowances.

32. Money may profitably be invested by society in children as well as in machinery, buildings, transport and so on. Mr. G. L. Wood, Lecturer in Economics at the University of Melbourne, dealt . with this point in his evidence before the Commission, saying:-" There is no doubt that the ordinary play of economic forces tends unduly to limit investment in the

persons and capacities of wage-earners, with the result that the marginal returns to resources invested in the poor and their children would promise to be higher than the marginal return to resources invested ·in machinery and plant. The ground for this belief is that the wage-earners are nearly always without sufficient funds to invest adequately in their own or their children's capacities . . . . Emphasis should be laid on the fact that the proportion of Australian children who pass their earlier years in comparative poverty, or at least some portion of their earlier years, is much larger than the proportion of families who are in that condition at anv

one time . ·. . Despite our boasted prosperity, far too large a proportion of the childreil. of our wage-earners pass some portion of their school-age in households where the standards of life, health and decency do not measure up to any reasonable optimum. Properly administered help to these children constitutes our best form of investment."

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1387

. 33. The weight of expert evidence suggests to us the correctness ·of this view. Support 1t was given by Mr. Peter Board, ex-Director of Education, in New South Wales, who, giving

evidence as Chairman of the Soldiers' Children's Education Board under the Repatriation Department, spoke of an "extraordinary waste of ability in the community," and when asked whether it was due to poverty or lack of direction, replied that he considered it due to both, but mostly to poverty. We further agree with Professor Shann's belief that" the human capital of the country is as likely to respond to further investment as its fields and factories." Provisions that materially benefit the health and growth of children and the well-being of mothers may considered a true national economy. It may be expected that the quality of child life will

Improve and that many mothers will be relieved of anxieties which now impair their health and efficiency.

34. The gain to the nation from the resulting -improvements in family life would be very great; child labour and the -labour of mothers with dependent children would become less the improved of mothers would probably be reflected in a reduction of the

Infantile and maternal death rates; that portion of social and industrial discontent now arising !rom the necessities of the larger families carrying on an unequal struggle because of insufficient Income would be greatly _ modified. In short, by this widening of the ambit of social justice, a valuable contribution would be made to the peace, order and good government of the

Commonwealth . .

35 . The diversion of a part of the national income to the mothers would probably increase on the -whole the eA.rpenditure on -consumption goods more desirable in the interests of the community, e.g., on food and clothing and household necessities. It was pointed out that such purchasers use a large proportion of goods made in Australia in primary or secondary industries. Professor Copland also stressed this point when discussing the reduction in saving which is involved in taxation, pointing out that not all the funds would entrench on savings, as part

of the taxation would have been spent by the taxpayers on consumption goods, probably less desirable from a national point of view. He offered the opinion that "an economist on the whole considers a limited application of child endowment as economically sound."

A COMMONWEALTH SCHEME.

3'6. Any scheme of family allowances should be controlled by the Commonwealth. Control by Federal authority is recommended in the first place of the difficulty of ensuring uniform or similar action by the various State authorities, and in the second place because it seems wiser for the Commonwealth to control what is more a question of social reform than one of wage fixation. . ·

37, Though the question of fa:rillly allowances cannot be wholly dissociated from the question of the amounts of wages fixed by the various arbitration authorities, particularly in view of the · consideration of family responsibilities already implied in the various awards, yet in their essence family allowances belong to the class of provisions such as the old -age and invalid pensions and the maternity allowances which are already ·administered by the Commonwealth.

38. Any reform which represents a direct of the social conscience and

expresses itself in provision for certain categories of citizens, who by reason of youth, old age or disability beyond their control have received-less than the degree of justice recognized in current sopial theory, should be a me.asure which affects all Australian citizens falling within the particular category defined. State Governments ffi:ay lead the way in proposals which show some definite development of social theory, but ideally such measures should be for the benefit of all Australian citizens. Moreover such action by one State, if not adopted by its neighbours, penalizes that State industrially in competition with the others.

39. To make any system of child wait either upon its adoption by all the

legislative bodies in Australia, or upon special agreement between the several State Governments and the Federal Government, would be to delay it indefinitely. E'ven if a measure of agreement were secured regarding the introduction of the scheme, there might be deviatiou from the normal practice by different States at a later date. To wait for a change in the Constitution which would give the Commonwealth power to regulate all industrial matters would be to shelve · the proposal. ·

COMMONWEALTH POWER.

40. A scheme, simple and uniform in character, of allowances paid by the Commonwealth need add no further confusion to the confusions aheady existing in industrial arbitration in Australia, and might even tend towards simplifying the fixing of wages. The Commonwealth's power to wages is limited to cases where the parties concerned have come und-er the

108·

jurisdiction of the Commonwealth Court of Conciliation and ArbitratiOn tor the settlement of inter-State disputes. It has, however, power to expend money for · such a purpose as allo'IVances for childrfm.

41. Sir Robert Garran giving evidence before the Commission stated as to the powers of the Commonwealth in taxation: "It seems to me there is no difficulty in collecting by means of taxation on any basis whatever provided it complies with the requirement of being uniform throughout the Commonwealth." In regard to the power of appropriation he said: . " Generally speaking, I have always considered that 1-1ection 81 was an absolute power of appropriation ·for general purposes and the Commonwealth Parliament has. always acted on that supposition."

/

42. And again: "There is in the Commonwealth Constitution no limitation whatever of the purposes for which money may be raised by t axation. The Commonwealth Government can increase its taxation to any extent, and what constitutional or other reason there can be for limiting its power to spend the money so raised, I confess I am unable. to see." On the other hand, dealing with Child Endowment as a part of the industrial law and involving a readjustment of the wage system, Sir Robert said: " It seems to me that there are great difficulties in the way of the Commonwealth controlling the rate of wages or making a readjustment of the wage system by means of Child Endowment."

43. It is clear from these statements that in the opinion of the Federal Solicitor-General the Commonwealth can both raise money and disburse money for the purpose of children's allowances, though it cannot under its present powers base such a system on any readjustment of wage fixation.

THE FINANCIAL PROVISION.

44. It is our opinion that money for children's allowances should be a charge on the Consolidated Revenue of the Commonwealth. The Commission has considered suggestions made by witnesses that the money should be raised by a special tax, direct or indirect, as for examp1e a tax on luxuries or a poll t.ax, but we consider that any extra taxationrendered necessary should be obtained throuf;h an increase in Federal income tax '\,vhich has lately been reduced, and that the other types of tax suggested would not be scientific in their application.

45. Income Tax is more difficult to pass on than other forms of taxation and less likely to be reflected in an increased cost of living. It may be noted that the Colwyn Report(" British National Debt and Taxation" Part l, Section IV., 3-4) endorses this view. Professor Mills argued that " to make child endowment clearly depend upon a fund raised by additional taxation is to make clear the issue and to define both the cost and the benefits." Indirect taxation would affect more certainly the cost of living, as it would certainly be passed on in the increased cost of products. It should be noted that one advantage of using the Commonwealth Income Tax to meet the cost of children's allowances is that the poorer·States would pay relatively less in taxation, but would receive the same endowment per child as the other States. This type of procedure assists in the automatic adjustment of disabilities experienced by some States.

46. Under the New South Wales Family Endowment Act the money required is raised by a tax on industry as a percentage payment of the total amount paid out in wages. This method we reject as unjust. Obviously it must act as a discouragement to the payment of high wages, and to the employment of skilled men. As a rule the greater the average amount paid in wages per employee by any firm the greater the tax paid by that firm, while at the same time the smaller t he benefits received by its employees. It seems unfair, also, to burden industry alone directly in order to pay allowances to children whose fathers are not employees in industry. But even for those in industry, a crude percentage tax on the wages bill is inequitable in its incidence.

Not only is it to the advantage of employers to pay lower wages, but no account is taken of their profits. A large amount paid in wages may go with small profits and vice versa. This type of tax offends the economic principle of" ability to pay" which we consider the right foundation on which to raise. money for family allowances.

47. Furt her, the enactment of a system of family allowances through a Federal law, and the payment of such allowances from the consolidated revenue of the Commonwealth would make much easier the extension of the benefits of the allowances to the families of those who are not employees. The desirability of this has already been stressed, and it appears to us

essential that no system should have the effect of encouraging fathers to prefer wage-work to self-employment as would happen were the benefits confined to the families of wage-earnerf .

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WAGE RE-DISTRIBUTION.

48. The recommendations above outlined involve i{he rejection of any scheme of family allowances which would up?n a reduction in the wages now paid under any award, State or Federal, to workers without children. It has been contended by many witnesses that the onlY. way to establish family ,allowanc_es, at least for t?e families of employees, is by a of the present wage-mnd. Those representatives of. employers who have not

reJected child endowment have advocated that it should be established in this way. They assume that under the living wage the9;ry the single man and the married man and the man with fewer children than the unit provided for are being paid too much, while the man with a family larger than the specified family is obviously receiving too little to attain the standard implied in the award of the Court. Some advocates of Child Endowment have referred to

mythical wives and children who are being paid for by industry while other real children are not being paid for. It is supposed that in the net result over 2,000,000 children above the number actually existent are, as a matter of fact, being paid for in the wages disbursed by employers, in addition to over 1,000,000 'vives who do not exist.

49. On examination this is not so clear. In the first place it is assumed in making_ this calculation that all workers are working under awards, whereas, as a fact, large classes of workers work outside the jurisdiction of any tribunal. It may be that many receive wages ·equal to those working un¢1.er awards, but there are no figures to show how many, and a large number certainly receive less. The Commonwealth Statistician's figures indicate that on an average about 8 per cent. of workers are always unemployed.

50. Secondly, these numbers of mythical wives and children assume that all wage awards provide for a man, wife and three children, whereas State awards in New South Wales (until recently) and in Western Australia have purported to provide for a man, wife and two children. The basic wage m New South Wales since June, 1927, is supposed to provide only for a man and wife. Thirdly it has been assumed that the Federal basic wage does, in fact, provide for a

man, wife and three children, although this has been· denied by critics of the data on which the Harvester Judgment was made. The only careful standard of living inquiry for the whole Commonwealth, viz., that made by the Basic Wage Commission of 1919-20 arrived at a cost considerably higher than the Harvester Basic Wage for keeping a man, wife and three children. Mr. J. T. Sutcliffe, in a paper read before the Science Congress in Adelaide in August, 1927 , discussing the basis of wage-fixation said:-

"Enough has been said to show that the Harvester basic wage was not determined as the result of a complete inquiry into all the items of necessary expenditure but as the result of a 'partial investigation and the adoption of a daily wage being paid by what Mr. Justice Higgins described as reputable employers. It is clear, therefore, that

it was the adoption of a rate which had been secured by workers as a, result of . competition for jobs. Such a rate, one would expect, would bear some relation to the average requirements of the workers. Such average requirements would be arrived at by the eompetition between single men with no family responsibility, married men with

no children, and married men wi(b. varying numbers of dependent children. Statistics show that if the number of children be divided among all workers, single and married, the average would be approximately one. Therefore, it might be expected that the average wage secured as the result of competition would be about sufficient to provide for that average family of a man, wife, and one child. It is possible to determine the requirements of a family of any particular composition according to the Basic Wage Commission's findings, and it is remarkable -to find (a) the cost of a family comprising man, wife and one child is approximately 79 per cent. of the cost of a family comprising

man, wife and three children, (b) that the Harvester Wage in 1907 was approximately 79 per cent. of the Basic Wage Commission's finding calculated on 1907 prices. The Harvester Wage, therefore, was not, in 1907. an adequate wage for the expenditure pf a family of five."

51. Thus, on closer examination, many of the mythical children disappear even as myths. The advocates of a re-distribution of the wage-fund are on firmer ground when they argue that . even if the wage provides only for a man, wife and one child,. even so all phildren are included, seeing that the proportion of children dependent on employees 1s roughly . 9 to every adult male

employee. To provide the full cost of keeping all workers' children, it would be necessary to subtract from the wage of each worker only the cost of keeping one child. If it be proposed to pay as endowment only part of the cost of keeping a child, still less would need to be subtracted. Five shillings from each wage would provide 5s. for each child. The man with one child would get

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his 5s. back so that only the childless would really suffer reduction. The man with two children would get 1 Os. back and be 5s. to the good ; the man with three children would receive 15s. and be 1 Os. to the good ; and so on. · · . ·

52: Not only employers' representatives, but at least two other witnesses (Professor Brigden and Mr. Sutcliffe) have advocated child endowment by re-distribution, considering it an essential part of any scheme. Some assume that the total wages fund is the workers' share, and that the problem j s one of allocatrng that share more equitably, in the light of the doctrine of the living wage. Mr. Sutcliffe expressly dissociated himself from any opinion that the national dividend was justly distributed as between workers and ·others, but considered that child endowment should on no apcount be made the occasion of any vertical re-distribution of national income, should such be thought desirable. Such injustice, if it exists, should,_ in his opinion, be remedied in other ways.

53. On the other hand, Mr. G. L. Wood, of Melbourne University said : " Child Endowment and labour cost must be regarded as distinct questions, the forn1er as a social recognition of the service of motherhood or of the rights of the child, and the latter as a recognition of the service of work. And again, "I would stress most emphatically the danger of any such manipulation of existing .wages as has been proposed in connection with the temporary cost of living bonus of 3s. (Mr. Justice Powers' 1921 award)"which was added to the Harvester Award. Such manipulation would cut right across my belief that the ·question of wages and child endowment should be kept separate." ·

54. Professor Brigden proposed, in addition to raising £2,000,000, by taxation, to take 2s. of this 3s. "lag" which he considered has been reflected in the State awards, although it has been added expressly only to the Federal A·wards. It may be said in passing

that this "reflection" was not obvious in ,New South Wales where, before the reduction in 1927 of the family unit to man and wife, the Federal Basic Wage was £4 9s. 6d. and the State wage £4 5s. It is true that the Federal wage nominally provided for a man, wife and three children while the State wage provided nominally only for a man, wife and two children. As these wages did, in fact, provide for families of every size, it would be absurd casuistry to that a wage could be made more generous by reducing the unit for which in theory it provided. New South Wales with the highest cost of living had the lowest effective State wage, and there is no proof that the 3s. allowed by the Federal Court to cover the'' lag'' ·of wages behind prices was · reflected in the New South Wales Basic Wage, nor indeed, in wages in Western Australia, South Australia, or Queensland.

55. It has been pointed out that this method of approach, viz., the creation of a Child Endowment Fund by a deduction from wages, whether that deduction be nominally from the "lag" money or any other part of the wage, would tend to limit the application of any system of child endowment to workers under awards, but , even accepting that limitation, the objection has been offered that injustice would be done to the worker whose wage is reduced. Witnesses have contended that the worker's wage is his own which he has earned as payment for work done at the value at which that work is currently estimated. Considering himself as a member of the community in receipt of a certain wage he asks why only such as himself receiving a low income should be t axed to provide for certain children, while men with much higher incomes. pay nothing. If he can afford to help to pay for this social reform, surely richer men can afford to do so n1uch more easily. When considering the equity of the transference of jncome he does not consider himself as a member of a special class of wage-earners, but as a member of the whole community.

It has been pointed out in rebuttal of this argument, -v iz., that what a man earns is his own and , should not he taken from hi1n, that income taxation does, .in principle, take from a man what he has earned. The single man, or the childless man, would, however, not feel the same objection if, by a lowering of the income t ax level, he found himself contributing along with. others reached by •

the same machinery towards the fund for family allowances. 56. Whether Child Endowment be regarded as a necessary benefit to certairi classes of citizens or as a social investment, it appears to us more equitable to provide it out of income tax levied in proportion t.o individual capacity to pay. The broadest backs should bear burdens carried in the interests of the community as a whole. · At times when wages were rising it might have been wise to divert some of the increase to the larger families instead of continuing the :flat rate scale of payments which re-act harshly on such families , but such opportunities have been missed (asin New South Wales, in 1919, when the Maintenance of Children Bill was defeated, and in Queensland, i:p 1925, as recommended by the Queensland Economic Com1nission.) The difference, however, between receiving what might or might not have been given, and losing what one already has is a wide one.

57. The successful application of a system of re-distribution of income to provide children's allowances within the group of employees of the C01nmonwealth Public Service has been quoted to controvert the argument against re-distribution of wages. An experiment which worked

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without opposition or discontent within a limited group un4er one employer, many of whe:>m enjoy assured employment for life, together with gradual increments in salary, might not so easily be· applied to a large heterogeneous mass of workers living under widely different conditions and working for different

58. To one of such workers without children a positive reduction of wage might appear simply as a loss because the future compensation of possible payments to hirriself would seem too remote, in his less secure economic life, to be balanced against immediate loss. He might feel that he was simply paying for the other fellow's children out of a comparatively small income and that he might be hy future legislation or change in his status wherein he became

self-employed, or not employed, so as to lose future compensation even if he did become the head of a family. But) even granting for the m01nent that it would be posssible to re-distribute the existing wage fund, the chief oojection to it would still remain, that such a scheme could touch only those wage-earners who are affected by basic wage declarations. There is also the objection ·that the present generation of older men would suffer the reduction after they had brought up

their families on the flat rate wage, an obvious injustice from every point of view. . 59. Another strong objeqtion to this course would be the practical difficulties of putting it into operation. The volume of casual and contract work in Australia is considerable and a good deal is piece work. These factors, in our opinion; would add seriously to the administrative

complications of the system. Until there is but one industrial authority in Australia and all workers are subject to its awards, with adequate provision for the hazards of unemployment, any system of wages re-distribution would be full of unjust anomalies and unworkable. The comparison with insurance schemes is, in our opinion, invalid, as the having of children is not an uaavoidable "risk" in the sense in which fire and accident and illness are risks.

THE DOMESTIC UNIT.

60 The evidence available indicated, as stated, that in those cases where there are three · children, the basic wage is doubtfully capable of providing a reasonable standard of comfort. It is of significance that in the decisions (1926-27:-28) of 1dr. Justice Dwye:r, of the Western Australian Arbitration Court, the domestic unit contemplated as covered by the basic wage

is a man, wife and two children and not three. Yet the 1926 Award was for Perth £4 5s., compared with the Federal wage for the same city of On the index numbers for food, groceries, and rent (all houses) the Perth £4 5s. was then equivalent in purchasing power to £4 13s. 4d. in Melbourne and £4 l5s. 6d. in Sydney, although the Federal Award rate for those

two cities was only £4 7s. 6d. and £4 lls. respectively. At the present time the comparison is not substantially different. 61. Clearly, if the Western Australian State award provided for but two children, it is difficult to support the claim that the Federal Awards provided for three. In our judgment all the families on the basic wage with more than two were being denied the standard

affirmed by the Courts as the declared minimum standard. Indeed, but for the "Powers Lag" and the use by the Court of index figures for food, rent and groceries only (omitting clothing· and miscellaneous), the Federal wage would, as already stated, provide on the Basic Wage Commission standard for a famih with but one child. In Western Australia there were

10,293 male workers, each of families two dependent children, and their children· totalled 31,7Q8 who were thus inadequately provided for. The number represented 66 per cent. of the total ot all dependent children in the State. In the Commonwealth the children ir1 families in excess of two total 1,177,297, or over 64 per cent. of the whole. If in the future

the basic wage provides for 1nan, wife and two children, then the number left in each family for whom other provision should be made is 582,264. By a declaration directing the Courts to fix wages for a family of four, the legislatures could cover all the dependent children by a system of family allowances commencing where the Courts' average ceased, the number of children affected being as stated fewer than 600,000.

62. Why should wages be con1puted to provide for a man, wife and two children 1 Why not fix wages on the basis of an unmarried man, or that of a man and wife, or man, wife and one or three or five children 1 Here is where eonsiderations of practice and workability cannot be thrust aside. Neither economics nor sociology is an exact science and their relation to each other in problem of life and living is such that what would appear as logical principles are not always capable of rigid Men and women must live, and if worthy of empJoyment

at all, deserve to be paid enough to permit them to go on working. An industry that does not pay its workers enough to enable them to maintain then1selves is extracting more vitality from its employees than it is returning to them. It is, · therefore, parasitic, and either other sources are bearing the burden of supporting its workers., or the workers themselves are making severe inroads on their strength.

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6.3. The 'declaration by Mr. Justice Higgins that industry ought to pay a living wage not only recognized these dicta, but involved the corollary, as he affirmed, that an industry which could not cor.o.ply- wit h t he obligation ought not to exist. The right of m en and women to live obviously implies 1nuch 1nore t han the mere right of their own personal subsistence. The normal life includes the reproduction of the species; it postulates the right of marriage and the coming

of children. vVhen indust ry is said t o have an obligation to pay enough to jts workers to enable them to continue working and maintain reasonable health- and well-being, there is involved the well-being of t he worker's natural state which is not that of himself alone, but includes his wife and their dependent children. Furthermore, industry has :o.ot .. only an obligation to pay

a living wage to t he worker to include the normal family conditions of the worker as being merged in his own being-it has no other source of supply from which to draw the continuous flow of its labour agent. The provision, therefore, of children to grow up and replace the worn-out units in ·the labour army is an economic necessity, and should be included in full current " cost of production " just as surely as replacement charges for other producing agents. The worker'_s norn1al life cannot be separated from the life of his wife and children. ·

64. Therefore, the claim t hat wages be computed on. other than a family basis is negatived from the point of view of industry as well as from that of purely family considerations, and if this were not adeguaJte for it s rejection, there are the problems inherent in its application which make it undesirable.

65. Should wages be based on the circumstances of the unmarried worker, as has been suggested in evidence, then other provision would have to be made ·for the full maintenance eost of wife and children., This course is neither socially desirable nor economically workable. To begin with, it means t hat the male brea dwinner will no longer be for the financial cost of the subsistence, first of his wife and then of any children who may be born to them. The State out, of it s revenue must assume the whole obligation. No 1nere will meet t he case, as t he worker will be paid solely for what suffices for himself. If the unmarried man is taken as the wage unit, it will mean t hat allowances will need to be paid not only respect

of each of the f, 824, 7 42 children, but also in respect of the wives of the adult wage-earning population as well.

66. This colossal proposal is not administratively practicable. It entirely reverses the established principles of social and indust rial practice as they eoncern relationship with the State, and it would revolutionize the organic unity of the family and involve' a financial c·ontract which t he State would effect with wives and children in their individual right, apart from the husband and father; they would be independent of his exertions, and the probability is that by t he effacing or even t he minimizing of his incentive to provide for them the State would be ultimately unable to meet the obligat ions which this plan of wage fixing would transfer to it.

One further and crucial object ion may pe st ated; those who would allow the existing position of t he larger families to continue until the present industrial system is revolutionized by the adoption of the unmarried worker as the wage unit are merely· sacrificing those who now suffer in order t o plan theoretical -utopias.

67. It was sub1nitted in evidence; however, that the unit of man and wife would be a sound wage basis with a systen1 of allowan·ces for children superimposed. weakness in this proposit ion is that it would involve the same objection in principle as that mentioned earlier -the State would have t o make full fina ncial provision for the maintenance of the c4ildren. As stated, we reject as wrong any proposal that would transfer to the State the whole financial responsibility for children. Qhildren are not liabilities only, but assets of their parents even while dependent. They are a source of enjoyment and happiness, and the work of the father out of the h orne and of the 1nother within the home should pay the price of that enjoyment. It is when t he price exacted is too heavy t o be tolerable and inflicts damage on the family that allowances for children should supplement t he father's efforts. 68. Chiefly it was urged by these witnesses that during ,bachelorhood, which ends on the average for the Commonwealth at the age of 29, an1ple provision should be included.in the wage to save for equipping a home and marrying at an early age. But, if single men are moving t owards marriage. they are also moving towards fatherhood. The average . number of dependent children per 1n ale householder, 1narried and . unmarried, in the Commonwealth is 1.45; in the case of 1narried male householders the percentage is 1.64. The male adult wage and salary-earners who are married and heads of families total 633,149, and the number of dependent children is 1,11 1,291 , the average for each working out at 1.74. The only practicable alternative t o uni?-arried worker unit is the a ·family unit. Once it is conceded that the forn1er 1s undesirable, the latter becomes the only logical formula.

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69. But if the average number of children under 14 vears is shown to be 1.74 per cent. per married wo:rtker, why fix two children as the nillnber to associated with the man wife in the computing of wages The reason is found at once in the meaning of the term

children." It is extraordinary that the assumption that the dependency of

children ceases at 14 years shoula be entertained by Courts or Statisticians. To contend that children are wholly self-supporting at 14 years is not justified by the facts. Of those between.14 and 21 .years of age, 40 per cent. are not classified either as wage and salary-earners or working on theu own account, or as employers, or assisting. Many of them continuing

school and other instructional courses, a number are physically unfitted to maintain themselves, and a number are prohibited by law from being industrially employed. In the case of those who are working, no authority has determined what the minimum wage for self-support is; the rates for apprentices differ substantially from those fixed :for non-apprentices; thousands of

youths move from job to job in dead-end occupations and their periods of intennittent employ1nent are numerous and not statistically ascertainable.

70. Arbitrarily to select 14 years as the abrupt ending of the period of dependency for children, therefore, is unjustified, and a .refusal to fix two children as the average nun1ber of those dependent on the average n1arried worker because the precise figure at 14 years is 1. 74 would be to compel the wage to ·bear an obligation beyond its range. The extent to which the

earnings of children over 14 fall short of full maintenance is the measure by which the domestic obligation of the parent is increased, and his wage should be computed to meet it. The need for this margin is emphasized when it is remembered that the natural dependants of the wage-earner include also · classes of adults for whom the State does not provide full maintenance, such

as old-age and invalid pensioners, workers temporarily unable through sickness or unemployn1ent to wages, and fathers and mothers or other relatives deprived by various means of a livelihood, who, not being in receipt of State assistance, are by the circumstances of their lives dependent on their wage-earning families. All these classes, generally speaking, are ranked as having natural claims -on their fa1nily groups. They rank with the children under 14 years

as sharers in the family pool, and a family wage should not be computed in such rigid sharpness as to exclude them absolutely, which would happen were wages restricted to the bare needs of the unmarried worker or the childless married worker.

MAN, WIFE, AND TWO CHILDREN.

71. That a man a;nd wife and two children is the normal average measure for a family wage in Australia is further demonstrated by the fact that two Courts which specially investigated the question of the domestic unit decided on the four-unit family. In 1914 Mr. Justice Heydon, o£ New South Wales, on an analysis of statistics found that the average number of dependent

children under 14 years per family in the Commonwealth was between 1. 7 and 1. 9. After making an allowance for those over fourteen not working or self -supporting, he fixed the standard at two. Ip. 1926 Mr. Justice Dwyer, of Western Australia, 1nade a similar He

said: " The Court has an obligation imposed upon it to ascertain specifically apart fron1 precedent or practice in any other Court, what the domestic obligation of the average worker should be. Having decided that the average worker should be taken to be the average m.arried worker the next matter for consideration was: \Vhat were the domestic obligations of the

ayerage married worker Having quoted the latest census "Bulletin '' (l 921) showing that the average issue of husbands for· Australia was 3. 38, the learned Justice summarized the statistical data submitted by saying that it was established that " The average number of children under 14 years of age per married male between the ages of 21 and 60 in Australia was 1 . 8, and the average number of children under 16 years of age per married male aged 21 to

60 was 1. 99." The figures confirm almost to a decimal point those indicated by Mr. Justice Heydon twelve years previously.

. 72. Both authorities declared dependency did not cease at :t4 years and both decided that the domestic obligations of the average worker should be regarded as including a wife and two dependent children. Investigation, therefore, has confirmed the appropriateness of a wage which will provide for a family of four. The adoption of. this course would not involve any disruption of the general principles of existing practice, except iJ?- a lin1ited in New South Wales and Queensland Stat-e Awards. For the rest of Austraha, the four-un1t standard ·would not necessitate any appreciable change in arbitration procedure; it would not call for

any re-distribution of wages; nor would it in the case of the Commonwealth Court require any alteration in the law, or in the relation of State Industrial Tribunals to the Commonwealth Court of Conciliation and Arbitration. F.24/28.-8

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73. All proposals that the CommonweaJth should be the sole source _of industrial control depend on the doubtful prospect of far-reaching changes in the Commonwealth -Constitution being effected. To delay justice for the families in excess of two while this protracted struggle for industrial sovereignty for the Commonwealth and the entire evacuation of the industrial sphere by .the States is being waged is, in effect, to deny it. The Commonwealth Parliament has power, immediate power, to enact a system of allowances for children. The logical corollary to a wage that provides but for two children is that assistance shall be given to those families which exceed two in proportion as they do exceed it. ·

PAYMENT- BY RESULTS.

74. A number of witnesses, especially of employers, have maintained

before the Commission that the present wage-fixing system is wrong in principle and that they would prefer some method of payment by results. 1;5ut even were such a system brought into general use, there would still appear the need for a minimum wage for the unskilled worker and for those' in occupations where piecework rates cannot be applied. In fixing this minimum should family responsibilities be taken into . A wage which would merely keep an unskilled worker from starvation and would not enable him to marry and have children, would not be tolerated in a community which -has gone so far in recognizing the normal needs of the individual in the fixing of wages.

75. Even if it could be shown that fewer families would need child endowment under a system of payment by results than under a flat wage system, some· families would still need it. A man's earning power is not necessatily commensurate with size of · his family, and with the best will in the world a father of a large family might find himself amongst the ·slowest workers. Ill-luck and ill-health, as well as lack of ability, are factors which lower capacity even when there· is no lack of zeal.

PAYMENT TO THE MOTHER.

76. Almost all -witnesses who have favoured any scheme of children's allowances at all have suggested payments being made to the mother. This has generally been advocated on the ground that the mother is the direct provider for the child, knows its needs, and is, as a matter of fact, in charge of the expenditure in the home. . ..

77. There was a consensus of opinion that the mother should receive the payments direct, and that they should not be identified with that part of the wage paid directly by the employer to the employee, even were the allowance to be provided out of some. fund established within the industrial world. We entirely agree with this view.

PAYMENT . IN KIND.

78. Several witnesses urged that any payments made on behalf of children should not be in money, but in kind, e.g. food or clothing. Their contention was that when money is given there is no guarantee that ,it will be spent on the child, or, if so spent, that it will be wisely and economically spent, whereas, if food or clothing is supplied, it is much more probable that it will. serve the purpose for which it is intended. Objections offered to this suggestion were t hat this would be much more a "charity" or a "dole " than cash payments; that

"standardized" food and clothing· could hardly be supplied to cover a very wide variety of cases; and that such a system would be much more difficult to administer than one of payments by money. 79. Some witnesses had in mind the giving of orders on tradesmen as is done, for example, by various_benevolent societies where the recipient is given a limited choice of goods which .may be ordered up to a certain value. This point of view would appear to be founded upon mistrust of t he capacity of the mother to use the money wisely. A number of witnesses who took this view, either in their statements or in reply to questions; were connected with various charitable or benevolent agencies and accustomed to dealing with cases of acute distress and, probably, often with. cases of a less degree of efficiency in household n1anagement than is usual in the average home. Other witnesses directly acquainted with homes run on low wages were emp:P.atic that the mother is, on the whole, a better judge the needs of the individual child than a staff of officials or technical experts dictating a standardized regime. ·

80. ·In our opinion, there is no reason to differentiate between the expending of the part of the inco:rne received as family endowment and that received as wages which the mother already expends. Some families would not apply for relief in kind, though they might be willing to comply with legal regulations leading to the payment of endowment as a social

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UNEMPLOYMENT AND CHILDREN.

81. The need for research into the causes of, and for some organized attempt to deal with, unemployment, is glaringly obvious in our communities. Allowances paid for children would have at least the effect of assuring to the home so:tne regular income during shorter or longer spells of ·unemployment. Since allowances would help to meet rent and the cost of essential

foods and so keep the home together for the larger families, they might also ultimately do something, by securing a better standard of nurture in the home, to reduce unemployment in the next generation by raising the physical and mental standard of those who will be the employees of the future.

More than allowances for children is needed to meet the problem of unemployment,

but any scheme of social insurance that may be devised will need to be supplemented when the breadwinner is out of work, by allowances proportionate to the size of the famil} so insured. Children's allowances are not an alternative to unemployment insurance, but an essential supplement to it. It has been asserted before the Commission that some scheme of

unemployment insurance is essential before even the of unemployment be classified and understood. A scheme of unemployment insurance with even small benefits combined with a system of allowances for children would dispel a great deal of misery in our communities. Until some unemployment insurance scheme is framed, the payment of the allowances for

children would take off the sha7pest edge of want and anxiety during'a season of unemployment.

WIDOWS WITH DEPENDENT CHILDREN. -83. The first great class of sufferers relieved by the charitable societies is that of the unemployed and their families; the second great class is that which includes families with no male breadwinner, or whose breadwinner is unable by reason of ill-health to earn any wage or only an inadequate wage. There is undoubtedly an urgent need for the establishment of pensions for widows left without means, or with small means, who have children to support. In these cases allowances for the children shoula be supplemented by some allowance for the mother.

In New South Wales, the Widows Pensions' Act of 1925 provides for a payment of £1 a week for a widow who has any children dependent on her, and lOs. for each child so dependent, there being deducted from this amount one pound per· annum for each one pound per annum by the widow's income exceeds £78 per annum. (The amount actually paid in rent not exceeding £78 per annum is deducted from -the income of the widow). These amounts do not provide adequate maintenance for families deprived of the male breadwinner and need to be supplemented by the mother's efforts, but they have made things much better for such family groups and have often enabled the widow to keep her children with her instead of having them boarded out

elsewhere by the State.

84. The case of the deserted wife is similar, and when the desertion is undoubted and she has young children to care for, she should receive similar assistance. It is recommended that any system of allowances should include payments at a higher rate in such cases, together with a payment for the mother at a standard at least equal to the payments provided for widows

with dependent children under the New South Wales Act.

THE SICK OR-ABSENT FATHER.

85. The case of a breadwinner who is chronically ill is met to some extent by the Invalid Pensions paid by the Commonwealth Government, and in some cases also by allowances from the various State Child Welfare Departments. Temporary sickness of the breadwinner should be provided for under a system of compulsory Health Insurance. In these cases the allowances

for children would be especially valuable and should be augmented in the absence of income in the home through unavoidable causes. As a matter of fact, this is what happens now in the absence of the male bread winner when the Child Welfare Departments in the various States board out children to their own mothers at rates which have been stated before the Comrnission

as varying from 5s. to £1 per week, or eyen to sums in very special cases. It

interesting to note, by the way, that when children are boarded out to persons other than therr own mothers, the payment made is usually lOs. to 12s. a week, (though in some States it may vary from 7s. to 30s. in certain cases) and a home is selected which is cqmfortable and well-kept. The evidence pointed to the conclusion tha-r; the standard of comfort fa -such children boarded out by the State is often distinctly higher than that which can be enjoyed by the children of a man on the basic wage who has more than three children to support.

86. One effect -of the payment of special rates for the children who are without an adult male breadwinner may be to reduce the number of children living in institutions. Dr. Harvey Sutton, Chief Medical Officer of the New South Wales Department of Public Instruction, gave as his opinion " A second-rate family is better than a first-rate institution. A third-rate

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institution is almost worse than any type of family we know." These considerations apply particularly to the children of widowed or deserted mothers. In such cases, the waste of potential health and ability is obvious when the mother struggles on endeavouring to earn money and care for her children also. Where she fails to do this (and the task is more than can reasonably

be expected), it is a better investment for the community to supply her with the 'means for providing for her children than to take them from her and place them in an institution. The gain to the happiness of the mother and her children also is obvious.

OBJECTS TO SEEK.

87. It is desirable that any scheme adopted should be as uniform throughout the Commonwealth and as simple in operation as is consistent with the effective spending of the money to . · .

(a) a standard of living for members of the larger families which is the standard · recognized as a minimum standard aceording to current theory, and

(b) the encouragement as far as possible, having regard to the sum which can be spent and the need for securing the standard of necessaries implied in (a), of special training beyond the primary school-leaviJ;lg age for children who can profit by it.

Any scheme evolved should be such that, if only a small sum of money can be spent on it at first, it canfeasily be extended to cover more adequately the objects in (a) and (b).

88. As the primary object of any system of family allowance is to se-cure a standard of maintenance for families beyond a certain size, it appears clear that the lower the income, the more necessary the allowance. It follows, therefore, that those families who are in receipt of less than the basic wage have paramount claims, in that their standard of living is inferior to the accepted minimum standard. Widows with dependent should be included in this category. Secondly, families with more than two children whose income does not exceed the basic wage have the next claim. As it is desirable to prevent the scheme of payments, as far

as from destroying the value of margins for skill, it is our opinion that. the scheme of allowances should be extended to overcome the disparity in standards of men of equal skill arising from differing sizes of families. The extent to which this can be done will depend upon the amount of n1oney the Government of the day can make available.

THE RESPONSIBLE

89. The question arises whether the an1ount of the allowance should be left to the Commonwealth Parliament or to an Industrial Tribunal to determine. It is objected that if Parliament fixes the amount its increase may be used as an election" bribe" by politicians without regard to the capacity of the revenue to meet it. But an Industrial Court, too, may fix an amount or change an an1ount without close regard to the capacity of the commnnity

to pay. In view of the contention that endowment should be kept apart from wage fixation, it would seem better to fix an amount by statute .to be reviewed, if necessaty, at the end of a certain period. The difficulty associated with "bribery " at election time would be no greater than at present exists in other ways, and it seems to us that in accordance with the principles

of representative government the interests of the community would be amply safeguarded by the assurance that any change in the amount of the allowance would be made by the authority on whom would be cast the responsibility of finding the money. A policy to increase taxation, is not, after all, a favorite election cry with any party. Provision might be made in the Act Jor a flat rate to be reviewed at the end of a term of years, and only to -be altered then if

the index figures of the cost of essential commodities showed marked change at the e:J;ld of that period.

LIMIT OF INCOME.

90. One very difficult point is the question of the family income · lin1it at which the payment of children's allowances should cease. W_itnesses whose. opinions are worthy of respect have urged that in the interest of administrative simplicity, allowances should be paid to all children of the prescribed age without regard to the income of the parents.. It has been argued that not much would be saved if allowa_ nces were paid to all, and that, both in order to secure administrative simplicity and in order to avoid any stigma of charity, it is not worth · while to exclude the comparatively few children whose fathers have an income, say, of over £300 a year

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91. The experience so far obtained from the administration of the New South Wales Act and of the New Zealand Family Allowances Act (1926) would tend to prove that such estimat.es of the number of children in income groups below a certain figure do not accord with the number shoswn in applications actually made for endowment. The only figures of income available are thooe obtained from income tax returns, and it is probable that a good many returns are not

made when the income is just above the taxable level. Then, further, there are no actual returns ?f income along with the sizes of families, except those obtained by noting the number of children Included in allowances for exemption from tax for each dependent child where the income is not otherwise below the taxable limit. ·

92. The of families of varying sizes for the whole population is applied to

?'ny one income level as a theoretical measure of the nun1ber of children in families receiving Incomes at that level. Such estimates must be hypothetical only. If only a limited sum of money can be expended, therefore, <:tnd it is desired to expend it on families where the need ?f the children is probably greatest, it cannot be recommended that allowances be· paid Irrespective of income. There may be other considerations such as the importance of encouraging

the fullest qpportunities for children of thrifty and devoted parents whose incomes may not be amongst the lowest incomes group, and the importance of not reducing the incentive of workers to acquire skill. But even if such problems as these deserve attention, they cannot remove the fundamental principle of such allowances, viz., that all children in the community should, . as far as possible, have the possibility of the minimum standard of living implied in current wage

awards. To pay money to families for whom this standard of living is already assured, and so_ to be obliged .. to pay less to those where the standard of living is lacking, would be a use of funds not easily to be justified by reference to any principle of mere universality in the payment of such allowances. The principle of expediency has been appealed to, but it might prove a costly expediency. Both economy and social justice would point to the need for an income limit, though it has, indeed, been argued that social justice demands payment to all. On the

principles set out in this report, social justice could not be invoked to support universal payments. As to the fear that allowances may be regarded as charity if confined to those with lower incomes, experience of the working of the New South Wales Act goes to prove that payments of this kind assured by law are soon regarded as a right of citizenship, eyen when an income limit is set.

93. The case of the Maternity Allowance which is paid on the birth of all children irrespective of the parents' income has been quoted by a number of witnesses, but the payments in that-case are much smaller and less frequent and the sum involved is not comparable with that needed to provide any sche1ne of children's allowances that would be worth while.

94. Both in New South Wales and in New Zealand the numbers receiving payrnent as endowment for children have proved to be much smaller than was anticipated. It is true that the former Act has not been in operation long enough for all claimants to have been discovered, but it is anticipated that even the final number will not exceed two-thirds of the

original estimate. In the case of the New Zealand Act the payments are much smaller (2s. for each child beyond the second on an income limit of £4 per week), so perhaps more of entitled have not troubled to apply. In the New South Wales Act the upper limit is not a fixed one, but varies with the size of the family, being the basic wage plus 5s. for each dependent child. Thus the New South Wales basic wage being £4 5s., the family income of any fa1nily with three dependent children would be made up to the sum of £5 by whatever sum it fell short of £5 provided that sum did not exceed 15s. (i.e.) £4 5s. plus 15s. being '5s. for each of three children.) Endowment is paid for all dependent children within the income limit fixed in this way. There are difficulties associated with this method, notably the difficulty of ascertaining

the true income of applicants who are casually or intermittently employed and also the difficulty of the possible reduction of the margin received by the skilled 1nan as compared with the unskilled. The scheme does reach the families whose resources are scantiest for the maintenance of their dependent children.

THE COST.

· 95. The of the income limit beyond which allowances shall not be paid, and also

of -the type of to be is entirely governed by the su.m which the Common­

wealth Government will devote to the purpose. To provide allowances for all children at the rate of £10 per year per child, excluding

the first two in any family would cost about £6,000,000 ; on the only statistics available it would -appear that by restricting the payments to children of parents receiving less than £300 per annum this scheme would cost about £5,400,000 ; by making the income limit £250 a year, the would not exceed £4,500,000. Although an exact figure in this connection is not deduCl:ble

from the evidence available, the is that the cost woulq l;>e C?OASi

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97. If the scheme were restricted to an application to the Commonwealth of the system now operating in New-South Wales, the cost wou]d be about £4,152,000 according to the estimate of Mr. Waites, the New South Wales Government Statistician. 98. A mod1fieation of the New South Wales scheme by which allowances would only be paid commencing at third child in each family, except in cases where the income is less than the basw wage, would cost under £2;000,000.

99. To meet the . cost _ of our· recommendation that a1lowances be paid to wi.dows with dependent children on the principles o£ the New South Wales Widows' Pensions Act, we esti1nate that the sum required would be about £1,520,000. ·

100. As, in our opinion, it is important that encouragement should be g1ven to children to proceed with instruction, either technical or otherwise, beyond the age of 14 years, we ·propose that the definition of dependency should be extended to include such children up to the age of at least 16 years in the dependent group ; this would increase the cost of each type of scheme proportionately, but not to any burdensome degree.

101. 'If payments are as a rule to be made ·only after the birth of the third dependent child, it is clear that in justice payments should be made in certain cases for the first and second child when, even with those payments, the family income does not exceed the basic wage adopted. The cost of this addition would depend on the extent of the. recognition of the claims of these children. It may be noted that the estimate of the New South Wales Family Endowment

Commissioner is that in the case of 60 per cent. of the applications the family income is below the basic wage.

METHOD OF ADMINISTRATION.

102. In its Invalid and Old-Age Pensions and Maternity Allowances Departments, the the Commonwealth Treasury has already an organization capable of being used to administer a system of allowances. This organization operates in all States and, by using the Post Office for effecting individual payments, a satisfactory service would be assured. Considerable work would be involved in determining

The type of scheme operating would influence considerably the magnitude of the work.

COST OF ADMINISTRATION.

103. No precise estimate of the cost of administration is practicable until a particular scheme has been decided on. Generally speaking, the experience of the Treasury in respect of pensions payments is that every 100 payments cost ISs. 6d., which is now paid to the Post Office Department as commission. We estimate that with an income limit of £300 in respect to children excluding the first two, and payments to widows with dependent children, there w:ould be about 250,000 family claims. It would not be to pay for each child in the family separately. If payments were made fortnightly this would entail about 6,500,000 payments per annum, costing about £60,000. -The administrative costs including ·office rent and salaries we estimate, on the data supplied by the Secretary to the Commonwealth Treasury, would be about £33,000 or a total administrative cost of about £100,000. It would seem wise to review the income of applicants more often than once a year; returns every six months ought

not to make the administration too difficult once the scheme is working.

RELATIONSHIP TO EXISTING SYSTEMS.

104. Two systems of family allowances are already operating in Australia, one for the Commonwealth Public Service and the other for the State of New South Wales. Each is distinctive in scope and principle. In the of the Commonwealth Public Service a

payment of 5s. a week is made in respect of all the children of every officer up to an income limit of £500 per year, the money being found by a re-adjustment of the basic wage which deducts 5s. from the wage of each adult male officer. The New South Wales scheme applies only to two children out of every seven, the payment of 5s. per week being made only where the family income does not exceed the basic wage plus 5s. for each dependent child in the family, the computation of income being made annually. The provision of the fund involves a percentage tax on the wages paid by each employer. We are unable to recommend either of these systems for general application, the objections thereto being set out in previous paragraphs. The ·question that arises here is whether or not these schemes should be superseded or merged in the general scheme recommended in this report. ·

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105. The New South Wales difficulty can be met either by a repeal of the -State law directing the Industrial Commission to fix wages on the basis of a man and wife and a reversion to the Heydon declaration that wages should provide for a man, wife and two children, or, alternatively, by leaving the State la'Y as it stands, the State paying allowances as now, but excluding childreJ.?- beyond two ,in each family, these to be paid for by the Commonwealth.

106. The Commonwealth Public Service scheme operates in pursuance of the Commonwealth Service Regulations, the practice being to gazette as a regulation the award of the Arbitrator. We see no reason why there should be a distinctive scheme for public servants, but if these latter desire to· continue the present arrangement the proposals put forward herein constitute no impediment to their doing so. In regard to the Widows' Pensions Act of New South Wales there would be no need to continue it as a state law once the Commonwealth enacted legislation providing for at least similar allowances. ' .

CAN THE COST B.E MET 1

107. Having indicated that the selection of a particular type of scheme will be largelv decided by the_amount of money which the is prepared to find for family

the question emerges as to whether it is practicable to appropriate funds for this purpose. The evidence tendered to the Commission on ·this point was exhaustive and varied. Witnesses representing commercial and employing interests urged that any scheme would impose an intolerable burden on the community, a contention that has been made in respect of almost every reform that has been introduced in our history.

108. The amount required for the application of the widest scheme indicated in this report would not exceed £6,000,000 per year, or less than £1 per head of our present population.

10-9. It is significant that for otP.er purposes Commonwealth and Taxation was increased for the period 1922-23 to 1926-27 by £2 ls. 5d. per head. M:uch was made of the interest burden on the people arising from the Public Debt which·for the year ended June, 1927 -was for the States and the Commonwealth £52,122,334. But £20,353,931 of this amount was

not a· charge. on taxation at all, having been earned by revenue producing assets. Moreover, of the total interest burden more than half was payable within Australia representing merely a transfer

110 . . The Secretary to the Treasury, Mr. J. T. Heathershaw, testified

that the States paid over £19,000,000 of their £31,000,000 of interest obligatiQn without recourse to the proceeds of taxation, and it would appear that but for the interest payable on loans raised by the Commonwealth for war purposes, the burden leviable against taxation in this connection should not be deen1.ed excessive. The point is generally overlooked that the Commonwealth

has now found rnore money for war services out of revenue than has been expended for the same purpose from loan funds, the amounts respectively at 30th June, 1928, being £310,000,000 and £306,000,000. About .£30,000,000 a year is expended out of revenue for this purpose. This represents ·n1ore than half the annual amount raised in taxation during the past five years; in the financial year ended June last, the Commonwealth revenue from taxation was £56,600,000

while the expenditure out of revenue for war services amounted to £36,900,000. It will, therefore, be seen that, when there is added the yearly expenditure on defence and the provision made in recent years for special defence, the greater part of the Commonwealth taxation is absorbed_in meeting the burdens bequeathed by the Great War.

111. The cost of the war services is an honourable obligation which should be met to the full, but it appears to us that there is no adequate reason why the nation should not now find money for the positive purposes of the health and welfare of children. Statesmanship should be capable of devising ways and means to cope with the situation if only it"_is inspired by the , will and the courage to do so. .

112. The real. test -of burden is the capacity to 1neet it. Payment of interest upon that portion of the Public Debt which wa·s raised- within the Commonwealth or repayment of part or all ·of -the principal involves only the transfer of Australian produced revenue to Australian holders of debt securities. The total of the internally produced revenue is not diminish@d -by these · transactions-the ·money does not leave the country thereby reducing taxal;>le . (See The Prosperity of Australia by F. C. Benham, page 65). More

than one-half of the Puqlic Debt has now been floated within Australia, whereas· in the year 1901 only one-sixth of the total had been so raised.

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113. That portion' of taxation required to pay interest on the internal -public- debt may 1n practice actually increase savings and thus add to the capital resources of the country. The Australian holders of the national debt who receive interest payments probably save a greater proportion of these " funds" than would the ordinary tax-payers had they not been co:rp.pelled

to pay taxes. Professor D. B. Copland informed us that for these reasons it is conceivable that so far from drying up the sources of capital a part .of the taxati.on to be irnposed for a system of family allowances rnay actually replenish them.

114. In present circumstances the provision to meet over-seas interest obligations appears to us to be a more reliable indication of the national burden ·of taxation. Contrary to the general belief the real burden of the external debt (per head) is appreciably less than at the beginning of .the century, while the capacitf to pay is greater. External interest payments take only about 5 per cent. of home-produced income now as compared with about 8 per cent. at the beginning of the century_ , and the real burden is considerably less. (See Benham's Prosperity of Australia, page 218). This burden, therefore, is not an insuperable impediment to the increased use of public funds for social purposes in Australia. It could, however, easily becon1e one, if the amount of taxation required to pay interest on capital sums expended in unproductive works was appreciably increased.

115. We consider that the right test to apply to any form of Federal expenditure is the objects on which the funds are to be spent. All too frequently, this point is over-shadowed by considerations of less irnportance. Australia has never hesitated to increase taxation to meet for the Clevelopment of public. and work.,. 'Ve are unable to discern

any sound reason vvhy there should -not be the same readiness to expend m-oney in promoting the health and welfare of the children of the country. At present about 12 per of the home­ produced income of Australia is paid in taxation.; in England the percentage is nearly 20, and in other countries such as Franc_ e it is said to be even higher. The evidence given by economists betore the Con1mission indicated that there was no reason why taxation should ·not be increased to provide for a 1noderate scheme of allowances for fan1ilies.

116. F rom the standpoint of Australian production it would appear that support is given to this reasoning. A comparison of relative productive activity for the period 1871 to 1925-26 (s ee the latest issue of the Commonwealth Year Bool<;, page 983) evidence that the value of production per capita is increasing. In the latest year for which statistics are available, it equalled nearly £72 per head. Surely one of these pounds may be used to provide far the proposals set out in this report, more particularly when it is recognized that the proportion of workers engaged in industry co1npared to the whole community is diminishing. The Statistician declares

(page 984) that if the figures comparing the relative productive activity of Australia were based on persons engaged in the industries rather than on total population, they would be increased in more recent years cmnpared with the position in 1911. 117. In these circumstances,· we submit that a refusal to do justice to the larger families

of the workers is unjustified. Mr. J. T. Sutcliffe (see The National . Dividend: page 68) states that in Australia, 58 ·7 per cent. of the breadwinners received less than £200 per year at 1920-21 prices. Yet fewer than 4! per cent. received nearly 22 per cent. of the national dividend. The inequity of this distribution is self-evident. Mr Sutcliffe's admirable brochure on the subject

concludes with this paragraph:-" They (the various tables and statistics quoted) show that for a very large proportion of the people the income received is barely sufficient to provide for maintenance on a 1noderate standard of life. ·If it were possible to further analyse the tables and give married and single separately, it would probably show that for a large number of married n1en with farnilies the incon1e received is inadequate to provide the moderate standard of life upon which the computations have been made." The remedy is in our opinion a system of allowances to be paid to families for each child beyond the second child in all cases where the income does not exceed £300. That the nation is capable of finding the provision for these

payments we have no doubt. 118. In recommending · even a moderate measure of family allowances, we recognize that it Inay have to be introduced gradually. The allowances for widows without means who have children dependent upon then stand in a class by themselves. Beyond this, the provision of allowances for fan1ilies whose income is below the basic wage, and for families on or near the basic wage where the number of children exceeds ·the standard number, would be a valuable measure of assistance. The provision for the children of widows would naturally be more costly proportionately than for the other group, but it is estimated that an expenditure of approximately 3-! millions would cover the allowances to both these groups as outlined in the Minority Report. · Should part of the burden of payments to widows be taken over by a National Insurance scheme, as seems possible, an expendjture pf from 2! to 3 millions in wo-uld probably: cover these classest · - ·

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A BUREAU OF SOCIAL AND ECONOMIC RESEARCH. 119. "\Ve wish strongly to recommend that the Federal Government establish some organization for the study of social and economic conditionsin Australia, so that accurate and intelligently compiled information may be obtainable by Govern1nents to guide them in introducing measures for social reform. A large quantity of interesting data in the Statistician's

office is nop worked up, and other data could be .obtained. As members of the Commission, we felt strongly the lack of expert investigation into many of the questions which came up in the course of the inquiry, and in the absence of such impartial expert research a good deal of the evidence tended to be mere opinion. Every social reform is an experiment, and intelligent

observation should accompany all experiments. This applies not only to "social" reforms, but to developments of economic policy also. The industrial and social legislation of Australia. offers a rich field for research. The returns made under the Fan1ily Endowment Act of New South Wales, to take a recent and .closely relevant example, must be bringing into existence a

body of information making possible a survey of the problems facing families on low incomes in our comrnunity. Amongst other things, such a survey would help to throw light on the incidence unemployment and its effects on family life. The time has arrived when a Bureau of Social

and Economic Research should be set up in Australia, and we would recommend that this be done. Even one trained economist with an adequate clerical staff attached to the Statisticirtn's office or to the Council of Scientific and Industrial Research could render valuable service, though the establishment of an independent Bureau would be better. Such a Bureau would co-ordinate

and evaluate not only information obtained through the Census and other official returns, but also the data obtainable through social workers whether Government officials or otherwise. Wider economic questions, _too, such as the relation of economic policy to national prosperity, to amount and distribution of income, to cost of living, to unemployment and so on would be material for research by such. a Bureau. The advice of a body such as this would be invaluable in helping the Government to decide .in what way to amend or enlarge any preli1ninary scheme of family allowances after it had been in operation some time.

INCIDENCE OF INCOME TAX.

120. We would suggest that in order to increa2e the amount to be raised by incon1e tax for the payment of family allowances, the limit of exemption from tax should be lowered to £200 a year for persons without .• f an exemptiOn of £100 were a!lowcd for a w1ie and

£50 for each child uHrler tou.rteen or other bona fide dependant, .income tax would be paid as now married men if earning over £300 a _ year, by married men with one child if earning

oyer £.350 a year and so on. Generous for dependants make clearer the principle

of " capacity to pay "-and £200 a year is a sufficiently high level of exemption for unmarried . men without dependa·nts. 121. In addition. the rate of tax should be graded more steeply for the higher Incomes in order to raise the sum reg uired for these allowances.

SERVICES FOR FAMILIES.

· · 122. The members of the Commission were all impressed by the work of the various welfare agencies which are gradually, through Govermnent or private channels, thongh chieAy through the former, car1ng for children in essent1al ways. It is strongly urged upon aU State Governments that services which ensure expert medical and dental attention to children, and to their parents

also, and especially which afford all aid possible to the mother before, during and after the birth of her child, should be so extended that no mother and no child should suffer rl.eteriorated health for lack of those services. ·

12,3. During the past five years Au'3tralia lost by death over 35,000 infants under twelve months of life._ The dea"Lh. rate per 1,000 births was 55 ·54. Although there has been a decline in the death-rate this improvement applies only to the cases where the children have survived the first month of li.fe. Even in New Zealand, despite the excellent general rate in that country, the mortality rate under one month of -life is remaining stationary. In Australia the data available indicate that the death-rate under one month iR higher in the industrial areas than in those described

as residential areas. It is· also significant that the percentage of deliveries which have had medical supervision is lower in the former than in the latter districts. If our death-rate be taken at 56, dissection shows that the deaths under one week were 22 ·6, from two to four weeks 8 ·7 (or a total of 31 ·3 for the first month) and 2·4 ·8 for the remaining eleven months.

124. The maternal death rate has remained extraordinarily high, averaging about one death in every 175 confinements. Although slight improvement has been noted in the past twenty-five years the rate has recently begun to rise. Tills is the case in nearly all the States. Two-fifths of the mortality is due to puerperal infection or puerperal sepsis. There is an

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undoubted close association between maternal mortality and the still-birth and early infantile death-rates. Diseases caused by maternal ill health during pregnancy are. an important factor in both cases. That the. potential fertility of married wo1nen is not now yielding its former relatively high proportion_ of births, while partly due to social and economic causes, is also explained by the continuing gravity of the hazards of child-birth. The evidence indicated that mothers oyer 35 years and those under 20 have the greatest hazard, the former due to lessened physical vitality, and the latter to immaturity and an increased proportion of operative deliveries. The highest maternal death-rate among married women occurs in the case of those who have already borne children. Ante-natal supervision by doctors in respect to this category of mothers is said to be difficult owing to indifference because previous confinements were normal, or because family and domestic ties prevent regular medical consultation.

·· 125. number of women who suffer chronic ill health after child-birth is far too great, it being testified by Dr. Marshall. Allan (Ex-Director of Obstetrical Research in Victoria) that no fewer than 50 per cent. of mothers suffer some weakening of bodily function subsequent to delivery. T:P.e records of the Melbourne Women's Hospital show that 36 per cent. of all the

admissions to the gynaecological department have been due to the effects of a previous confinement. When to this is added the realization that diseases responsible for infantile mortality cripple more persons than they kill, it becomes apparent that the present national burden of sickness and invalidity is in great measure due to lack of proper care in infancy and the neglect of proper treatment for child-bearing women.

126. A fact to consider in this connection is that the numerical burden of child life on the community is progressively decreasing. The proportion of children up to the age of 15 in 1871 was 42 per cent. of the total population; at the 1921 census it was 32-per ·cent. 127. Despite the awakening of the public conscience regarding the vital importance of the problem of child welfare, much yet remains to be done. Pre-natal and _post-natal

and medical and dental inspection of kindergarten children and children attending primary schools are merely indicative of the field that awaits energetic and comprehensive expansion. At present there is rio inspection of about 200,000 children attending primary, denominational and other private schools; nor is there .any medical or dental inspection for the children of pre ... school age; thousands of young children do not attend kindergarten schools; the number of infant health centres, although increasing, is .- entirely insufficient; more mothercraft training centres are necessary. All. the activities associated with infants and young children should be brought together and co-ordinated in each locality. To the busy- mother

with a family who is restricted by the routine of her daily domestic duties this would mean less time away from home, whether it was her own health or that_ of one of the children which attention. -

-128. Obstetric hospital accommodation is not satisfactory, the private hospitals being chiefly at fault. Out of 435 hospitals registered and examined in Victoria to admit these cases, only 16 per cent. were found to be good, 56 per cent. fair, and 28 per · cent. poor to bad (by Dr. Marshall Allan who investigated them in 1925-28.)

129. While the methods used in the variou_ s States in respect to the routine medical and dental inspection at schools are deserving of the highest commendation; the evidence disclosed the imperative need for an enlargement of treatme:p.t services in order to ensure that ascertained defects will be properly dealt with. Statistics, although incomplete, suggest that more than 50 per cent. of the children examined suffer physical defects. Out of 146,453 recorded as defective in New South Wales in the triennium ended March 1925, the number treated subsequently was only 80,876. In the latest year for which complete figures are available in that State 102,000 were examined, nearly 43,000 were notified for treatment, and only 21,000 were treated. In all the States there are large numbers who for various reasons do not ·undergo necessary surgical, medical or dental treatment, and even though in .each capital city, and certain larger towns, free treatment is available for children of indigent parents, the pressure on the hospital

or the cost of transportation, together with the exigencies of a household in which there are other children, accounts for many children not being dealt with. What is overlooked is that "free" treatment at a central hospital does not mean no expense to the family. 130. That the failure to treat children for physical defects is productive of natioJ?-alloss

is attested by the results of the Citizen Forces medical examination of the 1908 quota for the half year ended June 1926. The numberof youths examined was 18,463, of whom 12,531 were passed as fit and 5,932 were unfit, the percentage being 67 ·9 a,nd 32 ·1 respectively. All things considered, the latter rate is grievously suggestive; the probability is that were the girls of a similar age also subjected to a medical examination the figures would be repeated. Therefore,

one-third of the populatio_ n may be said to enter adulthood physically unfitted for the normal demands of the struggle for existence.

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. 131. Associated with ·any national programme of child welfare and maternity services 18 the need for assisting the potential mothers of the future to gain a sound knowledge of

household economy and n1othercraft. Before a woman is considered qualified to teach arithmetic or secure employment as a stenographer she requires to undergo a course of special trai.ning, but thousands of women become wives and mothers without having had any preparation at all for a career beset with tremendous problems and demanding at all times a maximu1n of competency and devotion. The State which has control of all potential mothers, at least until they are 14 years of age, should see that all are instructed in the obvious principles of home-craft and mother-craft which can be learned by its charges. Such general training would help to make the factor of inefficiency in the home referred to by- some witness_ es more evident and more censurable where it did exist.

132. All the expert testimony agreed that the health of children is a purchasable commodity, the principal question being whether the community is willing to pay the price involved in assisting the child and its mother in overcoming various physical handicaps that, in the main, are preventable and remediable. . .

MATERNITY ALLOWANCE .

. 133. Some witnesses. suggested that the money ·now spent annually on Maternity Allowances, viz., £5 at each birth (some £700,000 per annum) would be more profitably employed in the proyision of maternity hospitals and infant health centres and that the allowance should be discontinued and the money used for these purposes. We consider that this course would not be justified.

134. In the first place this matter was carefully considered by the Federal Royal Commission on Health (1925), and these experts did not recomn1end the abolition oftheMaternity Allowance. Further, the percentage of won1en attended in confinement by medical practitioners has increased frorn 68 in 1911 (the year before the allowance was instituted) to 90 in 1926. It

appears certain that the allowance has been the principal factor in this satisfactory improvement.

135. Many individuals are not within reach of Maternity Hospitals and ante-natal clinics, so that payrnent to these individuals is the only way of ensuring to them the means of expert assistance. Of the 90 per cent. or more of mothers who now get medical attention in confinements, a good number·already spend the whole or part of the allowance at public maternity hospitals

or private maternity hospitals of good standard, or for the best private medical and nursing assistance. Inferior hospitals and inferior nursing may be expected to disappear gradually; the great need is for the establishment of enough ante-natal clinics and well-equipped maternity hospitals and the increase of properly qualified medical .men and midwives, so that mothers having now the wherewithal to expend on these services shall also have the right services

obtainable in return for their expenditure.

HOUSING.

136. There can be no question but that bad housing accommodation, particularly in the larger cities, has been responsible for much ill health and hardship to children and mothers. -Witnesses of undoubted standing were emphatic that the housing conditions for the poorer families are far from satisfactory. Dr. Purdy (Officer of ·Health for the City of Sydney) said

there could be no disguising the fact that in Sydney domestic discomfort and insanitary conditions existed which made for irlevitable disease and degeneration of race. There were, he said; 179 families consisting of from two to nine persons in that city living in one-romned dwellings; in addition there were living in one-roomed tenements and flats 514 families of from two to ten persons. .In effect, these t wo groups of one-room families totalled 1,596 persons who were living in 693 one-roomed homes-if the word home may be used.

137. The .shortage of houses is attested by the present practice of sub-letting rooms and the multiplication of small flats. In many of these places there is insufficient air and yard space and as a consequence the children are cra1nped a nd deprived of fresh air, sunlight, and opportunity for play. That their health suffers · is undoubted. - It appears that economic conditions are at the root of the concentration of families in these habitations; many wage-earners, particularly those on the lowest incomes and dependent on casual or intermittent work, congregate proximity to shipping, large , factories and big industrial works. Their circu1nstances explmn the demand for house _accommodation in these localities and provide opportunity for much exploitation. Instances were cited of houses being rented at £2 5s. per week and sub-let room

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by room for £8 lOs. ; in one such room, a man, wife .and· four children lived, while a daughter fifteen years of age slept on the balcony; they paid 25s. per week for the room. The number of families living in this way was very many and in most cases they had to use a gas ring for cooking, there being no other convenience. Poor conditions, though not to the same degree, operate in other capitals, Perth and Brisbane being little affected. It should be noted that the Industrial- Commissioner for New South Wales when fixing a standard of in December

1926, allowed 28s. l'er week as rent in Sydney for a " five-roomed house in sound tenantable condition, not actually cramped as to allotment, situated in decent surroundings and provided with bath, copper, and fixed tubs." Witnesses testified that in Sydney and suburbs from 25s. to 35s., or even more, was a rent commonly paid by working men. The amount allowed by the Commissioner would not appear to be too high, but it is a heavy charge for -the ma:ri on the basic wage.

138. Reference to the report by the Inter-State Commission in 1919 on Rents and the report by the Basic Wage Commission of 1920 suggests that there is urgent need for an effective housing scheme. The various systems by which people may have advances made with a view t o acquiring their own homes do not appear to touch the root of the matter; what is required is provision by means of which houses of a moderate type may be rented 1n reasonably close proximity to wharves and other centre::; where casual labour tends to concentrate; so long as the basic wage is about £4 5s., the rent has to be kept within bounds or the provision for fooJ will be inadequate. At present families pay as much for a barely furnished room as should be paid for a dwelling. The conditions are not precisely similar in each city and it wouJd appear that the remedy IS to be found in municipal initiative supported in the interests of national

health by Commonwealth subsidies. ·

FINDINGS.

We find:-1. That for workers in industry some system of family allowances is the logical corollary of the living wage doctrine.

That on the whole the basic wage as determined by the Commonwealth and State

Tribunals has provided a frugal standard of comfort for a family of man, wi!e and two children.

3. That for families of wage-earners where the children number more than two, the standard has been generally lower than is reasonable, having regard to the definitions implied in the awards of the courts, the disparity increasing with the size of the family.

4. That in equity any system of allowances to improve the standard of living for the larger families of wage-earners should be extended to similar families of those who are not wage-earners. 5. That in the case of widows with dependent children and other families without a male

wage-earner there is urgent need both in the interests of these families and of the community for the payment of allowances.

6. That it is undesirable to make allowances for the families of wage-earners part of the system of wage fixing, and that although it may be desirable for all wages to be fixed for the same family unit, it is not essential that any scheme of family allowances should be delayed because the Commonwealth Government has not at present sole control of industrial matters.

7. That the country can at present afford to inaugurate a moderate system of family allowances.

8. That such an expenditure of part of the national income would be a good investment for the community. ·

9. That according to the evidence of the Federal Solicitor-General (Sir Robert R. Garran) the Commonwealth Parliament possesses the constitutional power to enact legislation providing for a system of allowances to families.

10. That the present services in respect of maternity and child welfare are inadequate and need considerable extension to ensure that all mothers and children who need them have these facilities available.

II. That in the larger cities the supply of rented houses is inadequate for families on a low income.

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RECOMMENDATIONS.

\Ve recommend :-. l. That the Commonwealth Government pay to widows with dependent children and also to other families of dependent children where there is no male bread winner, allowances equal to those paid under the, New South Wales Widows' Pensions Act of 1925, i. e., £l per week for the mother and lOs. per week for each dependent child, with a similar limitation of income to that adopted in the New South Wales Act.

2. That the Commonwealth Government pay to the mothet in each family where there are more than two children an allowance of £10 per annum for each dependent child excluding the first two in each family, provided the total income of the family shall not thereby be increased beyond the sum of £300 per annum.

3. That this allowance be paid also for the first and second dependent child in families where the income falls below the ba_ sic wage to an extent which makes it necessary for the allowance to bring the income up to the basic wage. In the case of non-wage-earners or of those not working under specified awards it is recommended that the wage level used as a basic wage for the purposes of the computation of income be the Commonwealth Basic Wage adjusted to the 30 towns weighted average, or the State basic wage, whichever is the lower.

4. That for the purposes of these allowances the definition of the age of dependency (taken usually as under the school leaving age, at present 14 years of age in all States) be extended so as to include all children attending school or other instructional courses until the age of at least 16 years.

5. That in the computation of wages Industrial Tribunals adopt the family unit of man, wife and two children. 6. That until all tribunals so adopt a similar unit, it be assumed by the Commonwealth Parliament in legislating to establish family allowances that the wages paid at present for

unskilled workers do provide for a family unit of man, wife, and two children. 7. That, to obtain. funds for family allowances, the Federal income tax be reviewed in order (a) to lower the limit of taxable income fQr persons without dependants to £200, and (b) to grade more steeply the rate of tax for incomes at the highest levels.

8. That the Federal Government establish a Bureau of Social and Economic Research, either as an independent organisation or attached to some existing Department. 9. That the State Governments extend as quickly as is practicable the provision now being developed for :- ·

(a) Pre-natal clinics and Infant Health Centres, (b) Maternity hospitals, (c) Schools for mothercraft, (d) Dental and medical services for school children (including treatment for those

who require it) so that these services shall be within the reach of all. 10. That children of pre-school age (from two to five) be examined once every twelve months by school medical and dental officers. ll. That the Commonwealth Government subsidize the services above mentioned as recommended by the Federal Health Council which is representative of the States and the Commonwealth and has already laid the foundations of a joint policy in these matters.

12. That the Federal Health Council arrange for a survey of the housing of the. people to discover the extent to which the health of children suffers by reason of unsuitable living premises and make recommendations for reform. 13. That the Department of Education in each State extend as rapidly as possible the

teaching of domestic economy for all girls attending primary schools.

We have the honour to be

Your Excellency's most obedient servants,

T. F. LYONS, Secretary, Office of the Commission,

MILDRED MUSCIO, Commissioner. JOHN CURTIN, Commissioner.

Melbourne, third day of September, 1928.

Printed a.nd Published for the Gov:BRIDUCNT of the CoiiDlONWJIALTH of AusTRALIA by H. J. GRB111N, Government Printer, Canberra..

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