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Tuesday, 31 July 1906

Sir JOHN FORREST (Swan) (Treasurer) . - This is the second Budget speech that I have had the honour of delivering to this House, but on eleven previous consecutive occasions I discharged a similar duty in the Parliament of the State which I, in conjunction with other honorable members, represent in this House. Therefore this is the thirteenth time-

Mr Mcwilliams - Thirteen is an unlucky number.

Sir JOHN FORREST - This, therefore, is the thirteenth occasion upon which I have submitted a Budget to aParliament in Australia. My honorable friends opposite say that thirteen is an unlucky number. I hope that it will not bring ill-luck tothis side of the Chamber. On the eleven occasions on which I presented the Budget in the Legislative Assembly of Western Australia, the duty I had to perform was very different from that which lies before me to-day. This Parliament, unlike that of Western Australia, in which I held office as Premier and Treasurer for over ten years, has not the control of the lands, the mines, nor the railways of Australia, nor can we, unless with the consent of the States, enter upon any large schemes of national development. We have no power reserved to us under the Constitution unless with the consent of the States to undertake any ^beneficent development works such as the Coolgardie waterworks scheme, the Fremantle harbor works, or railway construction throughout the States such as I used to have the pleasure of proposing in the State Parliament. The Federal Budget is limited by the Constitution, and during the :first ten years of the life of the Commonwealth it must be limited also -by section 87, popularly known as the "Braddon section." We have full power to impose taxation but I do not suppose that power could be popularly exercised unless in the direction of taxing others than those who so readily express an opinion upon it. Even if we indulge in Customs and Excise taxation during the continuance of the Braddon section, we have to raise _£4, when we require only £1. This disability will pass away at the end of 1910. Thereafter the power of the Parliament, in regard to the distribution of the Customs and Excise revenue, will be materially extended. I hope, however, that long before that time arrives, we shall have come to an understanding which will be fair and satisfactory both to Commonwealth and States. The year just closed has been a very prosperous one. It was the most prosperous year that we {have had since the establishment of the Constitution. I do not propose to unduly weary honorable members with figures, because they will all be found in the Estimates of Revenue and Expenditure and in the Budget papers. I think it will be found that the Budget papers are full and complete. A great deal of trouble has been taken to make them even more complete than in. former years, our desire being to give as much information as possible on every relevant subject. In addition to the ordiinary statistical information connected with the Estimates, and also with the progress of the Commonwealth, there will be found the full report of a scheme prepared bv me. and approved bv the Government, for solving the financial problems of the Constitution. That will be found at the end of the Budget papers. Last year the total revenue received was £11.879,343, being an increase of £413^45 above that received in the previous year. This increase was made up as follows : - From Customs and .Excise, .£199,955 ; from the Post Office. £191,631 : from patents, £13.377 ; and from miscellaneous items, £8,782. This revenue was collected in the States in the following amounts: - In New South Wales, £4,3*3,779 > Victoria, £3,292,202 ; Queensland, £1,550,025; South Australia, £987,620 ; Western Australia, including £77,666 from its special Tariff, £1,286,878 ; and Tasmania, £448,839. Dealing with these sums in the order I have named, I find that the Customs and Excise revenue for 1905- 6, including £77,666 from Western Australia's special Tariff, was £8,999,485, being an increase of £i99,955 over the receipts for the previous year, which were £8,799,530. It may be remembered probably by some honorable members that last year's Estimate was based upon a. reduction of £65,000 in the receipts from Western Australia's special Tariff, £50,000 on sugar and other reductions, which amounted altogether to £117,000. Notwithstanding these estimated reductions, the result was an' increase of £199,955 on the receipts for the previous year, instead of a decrease of £1 1 7 ,000. It may be remembered, too, that last year we passed an Act to prohibit the importation of opium. That necessitated a loss of £22,000 to the revenue last year, because it was in operation for only a part of the period, but in this year it will involve a loss of £64,000. We estimate that the loss will fall upon the States in the following proportions : - New South Wales, £16,000 ; Victoria, £10,000 ; Queensland, £26,000; South Australia, £7,000 ; Western Australia, £4,000; and Tasmania. £1,000. I, therefore, estimate that the loss of revenue consequent upon the prohibition of the importation of opium will be £64,000 during the year. The increase in the revenue from Customs and Excise was arrived at in the following manner. In New South Wales there was an increase of £200,305; in Victoria, of £48,228; in Queensland, of £87,769; and in South Australia, of £9,16(3 - making the total increases in those four States £345,462. But there were decreases in two States. In Western Australia there was a decrease on the ordinary account of £76.368, and on the special Tariff account - which is being gradually reduced under the sliding scale - of £64,883. In Tasmania the decrease was £4,256. So that there were decreases in these two States amounting to £145,507. Deducting those decreases from the increases in the other four States, there is left a total increase of £199,955. I now come to the

Post and Telegraph Department. The facts which I shall be able to give to the Committee .in regard to it are very satisfactory. The year has been a very prosperous one. The revenue for 1905-6 amounted to £2,824,182, being an increase of .£191,631 over the revenue for the previous year, which was ,£2,632,551. The increase was made up as follows : - In New South Wales the increase was £85,467 ; in Victoria, £52,013 ; in Queensland, £27,981 ; in South' Australia, £25,208; and in Tasmania, '£[5,800. There was an apparent decrease in Western Australia, amounting to £4,838. There were extraordinary payments made during the year 1904- * 5, principally in Western Australia, for savings bank work by the States, amounting to £[18,000. But for this, the total increase on account of the Post and Telegraph Department would have been about ,£209,000 instead of £191,631. The revenue from patents last year amounted to £23,936, being an increase of .£13,377 over the revenue for the previous year, 'which amounted to £10, 559. There were also a number of small increases, totalling £8,7'82. The total increase of revenue in 1905-6 over 1904-5 was, as I said before, £413,745. The past is very interesting, but it is not so interesting as the future. We know the past. We have to estimate the future. I therefore have not spent very much time in dealing with the past. Honorable members are aware of what has been going an in this country. An intelligent press takes an immense amount of trouble in placing information before the people of Australia, and that information is constantly being read by honorable members. Returns are published as the year proceeds, and at the end of the year, so that what I have been saying is. to a large extent, contained in information that is generally available; though it was not possible for me to do otherwise than to refer to it again. I now come, however, to estimate the revenue- which I anticipate will be received during the present financial year. The revenue of the Commonwealth for 1906-7 is estimated at £11, 969,500, being .£90,157 more than we received last year, when we obtained £11,879,343. I have no doubt that honorable members who have studied the finances and who are in a position to judge of the future, will think that the estimated increase of .£90,157 is a very small amount, seeing that: last year it was ,£413,745- I may inform honorable members at once that the amount would have been greater, but for a matter I shall refer topresently. The revenue is made upof Customs and Excise, .£9,115,000, including ,£15,000 from the Western Australian special Tariff, which comes to anend on the 8th October this yearAfter that date the intercourse between all the States of Australia will be absolutely free. From the Post and Telegraph Department we estimateto receive £[2,813,000; from patents, £22,500; and from miscellaneous sources, £19,000, making the total revenue for 1906-7, as I just now stated, £11,969.500. It is anticipated that the revenue will be , obtained in the several States as follows: - New South Wales, £4,493,409 p Victoria, £3,327,256; Queensland, £1,502,525; South Australia, £[982,473;. Western Australia, including the .£15.000 from the special Tariff, ,£1,223,082 ; Tasmania. £440,755; making the total, as estimated, £[11,969,500. In regard tothe Western Australian revenue, the special Tariff expires on the 8th October thisyear. But I desire to place on record that the special Tariff for that State, up .to the 30th June, 1906, realized .£852,187, andi it is estimated this year to realize £15,000,. so that the Treasury of Western Australia has, by the provision of section 95 of the Constitution, known as the sliding scale, benefited to the total amount of ,£867,187. Now that the special Tariff is about to come to an end, I feel that I may congratulate myself on having been the means of, at any rate, helping the Treasury of Western Australia during the last few years.

Mr Mahon - It would have been far better to have had a transcontinental railway instead.

Sir JOHN FORREST - We cannot always judge correctly, what is for the best : if we were wise men always we should be invariably right. The Customs and Excise revenue for 1906-7 is estimated at £9,115,000, including the special revenue of £15,000 from Western Australia; and that is £115,515 more than was received in 1905-6, when the revenue was £8.099,485. If certain sums which, were received last year had been available this, year, the revenue from the Western Australian: special Tariff would have been -C62. 666 received as a sugar windfall, the result of a decision in a law case, and a further sum of £42,000 from opium, which, together with the increase of £115,51.5 we are to receive as compared with last year, would have made the total increase for this year £251,869. That is to say, that if we had the same conditions in regard to those items as existed last year, the estimated revenue for 1906-7 would have exceeded the actual amount received last year by £25^,869. able increase in a that the estimate having regard to in most parts of am sorry to say,

That is a consideryear, but I think is fully justified, the .good season Australia, though, I not iri every part, because in the north-western part of Australia climatic conditions are not at all favorable this year. In most parts of Australia, however, the season is good, and the prospects have very much improved. I am, therefore, sanguine that this estimate, which, if analyzed, will be found to be a liberal one, will be realized. There is a,n important matter to which I should like to refer in regard' to the revenue of the different States, and that is the Inter-Stale Customs and Excise adjustments under the Constitution. In accordance with the provisions of the Constitution, duties of Customs and Excise are credited to the State in which the dutiable good's are consumed.

If duties of Customs and Excise are paid in one State on dutiable articles consumed in another, the State in which the articles are consumed is credited with the revenue. It will be apparent, from the figures before honorable members, that the two great cities of Sydnev and Melbourne are, as was naturally to be expected, becoming every year to a greater extent distributing centres for the rest of the States. Owing to their large populations, and the consequent volume of importations, freights from all parts of the world to these centres are necessarily lower than to smaller centres. The result of this has been that during the past financial year, New South Wales was debited with £133,396, and Victoria with £366,411, making a total of £499,807 on imported dutiable goods transferred to other States for consumption, as against £75,607 and £196,152 respectively, or a total of £271,759 in 1902-3. It is clear, therefore, that, although not very rapidly, a process is going on under which these two great centres of Sydney and Melbourne; are gradually increasing as distributors of imported Roods to the rest of Australia. During the past financial year the States credited with the amount debited to New South Wales and Victoria were Queensland, £214,358; South Australia. £36,940; Western Australia, £135,917; Tasmania, £112,592; a total of £499>8°7-


I will now deal with the receipts per head of population. The population on 31st December, 1905, numbered 4,052,475; and the revenue from Customs and Excise, excluding £77,666 derived from the Western Australian special Tariff, amounted to £8,921,819. The receipts from Customs and Excise per head of population were distributed as follows : - New South Wales, £2 3s. 4d'. ; Victoria, £2 is. 8d. ; Queensland, £2 4s. iod. : South Australia. £1 1.6s. 4d. ; Western Australia, £3 14s. iod. ; and Tasmania, £1 16s. The average per head for the whole of the Commonwealth was £2 4s.

Mr Mcwilliams - Does that include for Western Australia the figures of the special Tariff.

Sir JOHN FORREST -I have excluded from the figures for Western Australia, the amount of 6s. id. per head due to the special Tariff. Tt is estimated that on the 31 st December, 1906. the population of the Commonwealth will be 4,121,000. The population used in the Treasury returns is the estimated population at the middle of the financial year. The estimated receipts per head of population for 1906-7 are, for New South Wales, £2 4s 7d. ; for Victoria, £21s. 8d. ; for Queensland, £2 3s. ; for South Australia,£1 16s3d.; for Western Australia, £3 12s. 5d. ; for Tasmania, £1 16s. 1d., an average per head for the population of the Commonwealth of £2 4s. 2d. Honorable members will notice that there has not been a great increase. The receipts from Western Australia, however, have decreased from £5 16s. 4d. per head in 1901-2, to an estimated sum of£3 12s. 5d. for the financial year 1906-7, adecrease of £2 3s.11d. This is, no doubt, largely due to an increase in the number of women and children in that State, and probably to some extent to more settled conditions on the gold-fields and elsewhere.

Mr McWilliams - A normal condition of things is coming about in Western Australia.

Sir JOHN FORREST - It will be a long time before we have an absolutely normal condition of things there. It is estimated that during 1906-7, the receipts per head fromWesternAustralia will be £312s 5d., as against£1 16s.1d. from Tasmania, or more than twice as much.


Last year the Customs and Excise duties obtained from stimulants and narcotics amounted to . £4,383,340, and all other duties, £4.616,145; the total revenue received being £8,999,485. For this year it is estimated that the receipts from the duties of Customs and Excise on stimulants and narcotics will be £4,525,800, and from all other duties, £4,589.200, bringing the total revenue up to £9,115,000. I honour those who are total abstainers, arid who do not smoke, because they think it right to deny themselves those indulgences, but as Treasurer, I am in a position to assure them that, in addition to the other advantages which I understand they claim their self-denial gives them, they are able to escape a large share of taxation, paying only about £1 a head, while about £3 a head is paid by those who use stimulants and narcotics. I wish now to say a word in regard to the total gains and losses of the Treasuries of the States, after deducting the cost of Federation, from the 1 st July, 1901, to the 30th June, 1907; comparing the returns made to them by the Commonwealth with the revenue raised by themby means of Customs and Excise duties during 1900, which was before the inauguration of Federation. This information is detailed in the following table : -


It will be noticed that the Treasuries of New South Wales and Western Australia have been great gainers, whilst the Trea suries of Queensland and Tasmania have been great losers. This return is,of course, approximate, because there has been an increase of population in some of the States, especially in Western Australia, and this fact, combined with others, may, to some extent, influence the present condition of affairs. I now come to a very important matter. It affords me great pleasure to announce that the Government propose to recommend Parliament to establish penny post throughout the Commonwealth and the Empire on the 1st October next. We propose to also extend penny postage to all foreign countries that will agree to deliver our letters. My honorable colleague, the PostmasterGeneral, recommended that the time had arrived when this benefit should be accorded to the people, and I am very glad to say that the Government approved of it. As Treasurer, I have satisfied myself that funds are available, and I hope that the amendment of the law necessary to insure the establishment of penny post will be unanimously agreed to by Parliament at the earliest possible moment. My estimate of the post and telegraphic revenue for the current year would have been £2,970,000, but, owing to" provision having to be made for penny post, I have reduced my figures by £157,000, viz., to £2,81,3,000. My estimate of the loss covers only nine months, because one-fourth of the year will have passed before the reduced postage comes into operation. If the loss extended over the whole year it would, according to my estimate, amount to £209,000. I may say that my estimate is not so sanguine as that of the PostmasterGeneral, who will, in a day or two, submit his proposals. The estimated loss of £157,000 for the nine months will be distributed among the States as follows : - New South Wales, £58,000 ; Victoria. £14,000 - Victoria, has for some time past adopted the penny postage; Queensland, £29,000; South Australia, £23,000; Western Australia, £19,000; and Tasmania, £14,000. It is encouraging to know that penny post has been successful ' in all British countries in which it has been tried. I have not recent statistics relating to New Zealand, but I believe that the system has proved very successful there. The penny post was established in Canada in I()00. and the Minister of Finance, Mr. Fielding, speaking on the 22nd May last, said : -

It is but a few years since Canada had i£d. domestic letter rate and a rate on letters to Great Britain, and even with these heavy postal rates the Post Office Department absorbed all the revenue it could collect, and at the close of the year some ^120,000 or ^140,000 was usually required from the Public Treasury to make good the deficiency and keep the postoffice running - we have no longer a i£d. rate - Canada has penny post within her own borders and penny post with the mother country. The Post Office Department no longer absorbs all its own revenue, no longer calls for ^120,000- or ^140,000 from the Treasury. After affording the people a very liberal postal service, after giving reduced rates, after establishing the blessing - for it is not too much to speak of it so - of penny post, the Postmaster-General comes, at the close of the year, asking nothing from the Public Treasury, but tenders the splendid sum of £180,000 to assist the other public services of the country.

It was not possible that the different rates of postage existing in the various States could for long continue. It is absolutely inconsistent with the principles underlying Federation that the people of one State should enjoy privileges at the hands of the Government which those of other States are denied, or that the people of the cities and towns should be charged one-half the rate charged to the people in the country. Almost since the establishment of the Commonwealth the people of Victoria have had the benefit of penny postage within their borders, and I believethe people of Victoria would not thinkvery highly of the present Government if we declared that we intended to .level up instead of levelling down in regard to their rate of postage. What would they say if we recommended to equalize the postagerate all over Australia, but, instead of making it a penny, we proposed to make it twopence? I' am inclined (to think that there would be a howl of oppositionfrom one end of this State to the otherHonorable members will be afforded an opportunity to discuss the details of our proposal within a day or two. The Postmaster-General has looked into the matter most carefully, and when he introduces! the Bill - which he probably will do at once - to authorize the adoption of the penny postage system, he will beprepared to .give honorable members full information in regard to the matters towhich I referred. I need scarcely point out that we already enjoy uniform duties of Customs and Excise. Weenjoy uniform telelgraph rates - except in the case of Tasmania - and* we now propose a uniform system of penny postage, rot only throughout the Commonwealth, but throughout the Empire, and" throughout foreign countries which are willing to deliver Australian letters. Upon* this occasion I do not propose to say more than to express my satisfaction that this great advantage is to be conferred upon everybody in Australia and throughout the Empire. I have no doubt whatever that it will become an accomplished fact, because I believe that honorable members will be only too glad to vote for the adoption of our proposal. I most heartily congratulate my honorable friend and colleague, the PostmasterGeneral, upon the fact that it is to be accomplished during his term of office, and upon his recommendation. The fact that he has made such a proposal shows that, after travelling in other parts of the world and rubbing shoulders with men charged with responsibility, he has returned to us more convinced1 than ever of the need for this advance in postal facilities for the people. I can assure the representatives of Tasmania that I have always advocated ' that we should do all within our power to give consideration to that State. I recognise that, as one of the smaller States, its Treasury has laboured under difficulties as the result of Federation ; and' that the revenue it has. received since the establishment of the Commonwealth is £998,112 below that which it would have received - on the basis of its returns for 1900 - under its own Tariff. In these circumstances, I have pleasure in intimating that the Government have decided to reduce the rate in respect of telegrams to Tasmania from is. 8d. to is. per message of sixteen words. In order that this may be done, provision is made on the Estimates for a payment, at the rate of £[5,600 a year, tlo the cable company. We guarantee the cable company £[5,600 a year, but no payment has been made under that guarantee since the extra charge of ½d. per word has hitherto been imposed. "This additional |d. per word - as compared with the rate prevailing in other parts of the Commonwealth - has returned more than the guaranteed amount of £[5,600. Under -our present proposal, the people of Tasmania will secure that to which they are -entitled. They should have the same concessions, rights and privileges as are given the people in other parts of the Commonwealth with regard, not only to postal and telegraphic communication, but to every other Federal service. I do not think it was ever intended Jo differentiate between the States ir. regard to telegraphic communication. It is an anomaly that one should be able to send a telegraphic message of sixteen words from Thursday

Island, via Melbourne, Adelaide, and Perth, to Wyndham, Western Australia, a distance of 7,000 or 8,000 miles for is., when a message of the same number of words cannot be sent from 'here to Tasmania for less than is. 8d., owing to the fact that a stretch of 150 miles of sea separates that State from the mainland. I am very glad1 indeed that this anomaly is to be removed, and that the people of Tasmania will thus be benefited. There will, I believe, he but little loss of revenue consequent upon this change, because the increased traffic as the result of the reduced rate will be sufficient in a year or two to recoup it. I am also glad to say that on these Estimates the Government propose to deal with the increased subsidy of £7,000 for the mail service between Melbourne and Launceston, in the same way that we have dealt with other ocean mail services, and that is, to charge the amount -per capita amongst the States. Prior to Federation New South Wales had a mail service ' from Sydney to some of the Pacific islands, and under that contract it paid a few thousand pounds a year-. After Federation the contract was renewed with other conditions, and the extra amount paid was considered as "other" expenditure, and charged per capita amongst the States. That is exactly analogous to the case of Tasmania. Prior to Federation, that State had' a service for which it paid £[6,000 a year. Since Federation a. contract has been made for £[13,000 a year, and, as in the case of New South Wales, we intend to charge the difference of £7,000 as "other" expenditure per capita. For the future Tasmania will only pay her share per capita of the additional cost of £[7,000, and this will also obviate the necessity of making any mileage payment to the Orient Steam Navigation Company, as was done last year. The estimated revenue, as before stated, from the Post and Telegraph Department for 1906-7 is £2,813,000. If it had not been for the introduction of penny postage, if would have been £[2,970,000. The revenue is estimated to be obtained in the following manner : - From telegraphs, £[587,000: telephones, £[382,000 ; postage, £1,687,000 : and miscellaneous items, £157,000. If the provision had not been made for a penny post the estimated revenue for the Department would have shown an increase of £[145,818 instead of a decrease of £[11,182. After making an allowance of £157,000 for the loss of revenue in connexion with penny post, it is estimated that the postal revenue for 1906-7 will be contributed by the States as follows: - New South Wales , £1,075,000; Victoria, £751,000; Queensland, £347,000; South Australia, £284,000 ; Western Australia, £245,000; Tasmania,£111,000 ; total, £2,813,000. These amounts show an increase on the revenue received for 1905-6 for New South Wales of £9,382, and

Victoria an increase of £15,507, but decreases for Queensland £12,755; South Australia, £7,927; Western Australia, £7,665, and Tasmania, £7,724.Taking the estimated receipts together for the year, the revenue from the Department will be £11,182 less than it was last year. The following tables show particulars of the total revenue received from all sources for 1905-6 and 1906-7, together with a comparison of estimated and net receipts: -




I mow come to the Estimates of Expenditure for the present year. Last year the total expenditure was £4,494,841, being £111,432 Jess than the Estimate. . The amount which the Commonwealth had a legal right to spend, under the Constitution, was £5,324,766, whilst the amount actually expended was £4,494,841. Consequently, we returned to the States £829, 925 more than was constitutionally obligatory. In other words, if we had spent that sum of £829,925, which we had a right to do under the Constitution, the States would have received that much less from the Commonwealth. I only mention this to show that the facts do not bear out those charges of recklessness and carelessness which are often levelled against this Parliament by ill-informed people who criticise us. If this House wanted to get kudos for itself by spending as much as it could on necessary works throughout the different States, thereby gaining to some extent the approbation of the people, we could have spent very much more than we did. But, instead of so doing, we have handed over to the States an immense sum during the past6½years, allowing the States Governments to spend1 the money, andthereby to gain any kudos that might be attached to the expenditure.

Mr.JosephCook. - We could not. help ourselves.

Sir JOHN FORREST - I beg the honorable member's pardon; we could easily have spent the money ourselves. But last year we were able, by economy and carefulness in our management, to return to the States £829,925 more than it was obligatory upon us to return. Therefore, I say a.gain, the facts do not bear out the criticism often directed against this Parliament. The facts show that this House has always been most economical, and that it has at all times given full consideration to the interests of the States. I may, however, say that the time isfast approaching when new obligations entailed upon the Commonwealth will make it impossible to return to the States more than the three-fourths of the. Customs and Excise revenue to which they are entitled under section 87 of the Constitution. The estimates of expenditure for 1905-6 were very closely adhered to, but there were underdrafts on various items, none of which were very large, amounting to £161,379; and there were overdrafts, amounting to £49,947.


Deducting the overdrafts from the under-' drafts, the result shows that £111,432 less than was estimated was spent during 1905- 6. Coming now to the present year, 1906- 7, it is estimated that the expenditure will be £5,020,215 being an increase over the actual expenditure of last year of £525,374.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - We have to pay for things !

Sir JOHN FORREST - Of course, we do not get anything without paying for it ; but I may tell honorable members that, while we are paying for new services, we are well within our constitutional rights. I do not propose to deal with the expenditure in detail. I may mention that the estimated expenditure on the Department of Trade and Customs - the cost of collection, in fact - is , £264,258, an increase of.£4,208 on the expenditure on the same service last year, which was £260,050 ; on defence, £854,705, an increase over last year, which was£777,714, of . £76,991, and on the Post Office, £2,704,105; an increase over last year, which was £2, 629, 702, of . £74,403. The foregoing figures relate to transferred expenditure only. " Other " expenditure - that is, in contradistinction to transferred expenditure, is estimated at £7 18,923, an increase over last year, which was £508,867, of £210,056, while on new works, &c, for transferred departments, the estimated expenditure is £478.224, an increase over lastyear, which was £318,488, of£159,736. Less a miscellaneous item of £20. These figures show, as I said before, an estimated in- crease this year over the expenditure of last year of £525,374-

Mr Watson - Will the right honorable member say how much these estimates are an increase on last year's estimate?

Sir JOHN FORREST - The estimated expenditure for 1905-6 was £4,606,273, and' the actual expenditure was £111,432 less. The estimated expenditure for 1906-7 is £413,942 more than the estimate for 1905-6. The Commonwealth, under the Constitution, has available for expenditure this year the sum of £5,331,443, and it is proposed to expend £5,020,215; so that if we receive the estimated revenue, and expend the sum I have just mentioned, we shall, during 1906-7, expend £311,228 less than might be legally expended under the Constitution1.

Mr McCay - And the estimated expenditure this year is half-a-million ahead of the expenditure of last year !

Sir JOHN FORREST - Yes. The estimated expenditure for 1906-7 is £5,020,215, and the actual expenditure for 1905-6 was £4,494,841. We propose,, therefore, to return to the States this year the sum of £311,228 out of the Commonwealth one-fourth of net Customs and Excise revenue. I shall inform honorable members how we arrive at the amount which the Commonwealth is entitled to expend. A quarter of the estimated net Customs and Excise revenue is £2,212,685. The revenue from Customs and Excise used for maintenance of the Customs Department is £264,258; the Post Office revenue is £2,813,000; Patents revenue, £22,500; any miscellaneous revenue, £19,000 ; making the total amount available . for Commonwealth expenditure £5*33* .443- If we deduct from that the estimated expenditure of £5,020,215, we arrive at £311,228 as the estimated amount to be returned to the States in excess of our obligation. The principal increases in the present Estimates are sugar bounties, £130,394; repatriation of kanakas, £25,000; repairs and maintenance of buildings, £21,817 ; advertising the Commonwealth, £5,000 ; statistics, £7,453 ; elections and other electoral matters, £55,900; Defence, £72>45I > Post Office, including £5,600 for the Tasmanian Cable Company, £68,714; new works and special defence material, £.160,004; anr1 Pensions, £8,813, making the total increases .£555,346. The decreases are for the Queen's Memorial, ,£25,000, and other net decreases, £5,172, making a total of £30,172, leaving the total estimated increase over the actual expenditure of last year, .£525,374. Included amongst the items of expenditure are £58,803 Of revotes under the Home Affairs' Department, and £34,302: under the control of the Post Office. These re-votes are necessitated because the money was not expended last year, but every effort will be made "to avoid a similar occurrence in the future. Provision has been made, amongst other things, for the following expenditure : - £8,000 for the purchase of a trawler ; £10.000 for wireless telegraphy ; £40,000 for underground telephone wires in cities; and £37,000 for the telephone line from Melbourne to Sydney.

Mr Watson - Is that a re-vote?

Mr Glynn - The purchase of the trawler is in accordance with the motion of the honorable member for Barrier.

Sir JOHN FORREST - The £37,000 for the telephone from Melbourne to Sydney is a re-vote to the extent of £30,000. The following tables illustrate my remarks concerning the estimated and actual expenditure for 1905-6, and the proposed expenditure for 1906-7 : -



I now come to deal with some questions affecting our expenditure on Defence. The total expenditure on Defence last year was - Naval Agreement, £200,000. Chief Administration, repairs, works, and buildings, and everything, except new works, £798,431, or £25,584 less than the estimate, which was £824,015. The estimate for 1906-7, including £200,000 under the Naval Agreement, is £876,078. The Government intend to continue and extend the practice of sending officers abroad for instruction. The policy of training cadets for naval and military service is to be energetically carried out. There is provision on the Estimates for 20,000 junior and 3,000 senior cadets. The Education Departments of the various States are co-operating willingly and successfully, and the whole of the Cadet Forces of the Commonwealth are now under the Defence Department. £r,000 has been provided on the Estimates to meet the initial expense of forming a corps of guides composed of surveyors and other persons in the various States pos- .sessed of * local knowledge. The Department is also providing for more rifles. There is an amount of £50,000 on the Estimates for the purchase of 10,000 additional rifles of the most modern service pattern. The rifle clubs are progressing satisfactorily, and on the 1st July, 1906,' they included a total of 37,082 members, an increase of 7,000 over last year. Provision is also made on the Estimates for 5,300 cadet rifles which, with those in stock and on order, will make the number- 16,100. An increased reserve of rifle ammunition is also provided for, while accoutrements and equipments are gradually being obtained in order to bring them up to emergency requirements. I am glad to be able to inform honorable members that Fremantle, will shortly cease to be an undefended port, one fort there being about finished, while a second is in progress. The Government have decided to give £i for £i, to an amount not exceeding £1,000, towards sending a rifle team to Bisley.

Mr McCay - There is a little for everyone in this Budget.

Mr Robinson - It is a good election Budget

Sir JOHN FORREST - The works for which the money is proposed to be appropriated are all necessary. I come now to an important matter, in which I, and honorable members generally, take a great interest - the Naval Agreement. Our contribution under that agreement is £200,000, while New Zealand contributes another £40,000, so that Australasia pays in all £240,000 to the Admiralty towards Naval defence. It was understood, when the agreement was made, that the Imperial Government would provide as much again ; but we have been informed by His Excellency the, Admiral that the Admiralty expends on the Australasian Squadron between £650,000 and £700,000 a year, which' includes 5 per cent, on prime cost, while considerably more is expended on the Australian station than the Commonwealth contributes. Of the ships on the station, the Challenger and three drill ships carry 461 Imperial men, that is, men brought from England, and 518 Australians and New Zealanders ; while, on the 30th June, 1906, there were in the Australian Naval Reserve seven officers and 316 men, or 323 altogether. The squadron consists at the present time of one first-class cruiser, three second class cruisers, and five third class cruisers, one sloop,, and one surveying vessel. The first and second class cruisers, and two of the third class cruisers, are in full commission, the remaining three third class cruisers being used as drill ships. It is gratifying to know that His Excellency the Admiral has advised the Government that he has received very favorable reports . from his officers as to the intelligence and good behaviour of the men. The enrolment of Australians and New Zealanders began on the 1st May, 1904 - only two years ago - and I think that I am justified in saying that our expectations as to the adequate manning of the squadron by Australians and New Zealanders will be fully realized. I have been informed that there are difficulties in the way of training men here for the higher ratings, because there are not in. existence in Australia the technical schools necessary to impart the required knowledge ; but these difficulties are likely to be overcome by' sending men to England for instruction in the same way as officers are being sent. Those who desire to remain in the Naval service will have an opportunity to qualify, themselves for the higher ratings by proceeding to England and there undergoing a course of instruction in the same way as is provided for the officers of our Military Forces who are sent Home every year.. In order to make the agreement more workable, we require to have more Australiansand New Zealanders employed on the station, and it is also desirable that we should have more Australian officers on the ships. I have no doubt that these improvementswill be brought about in due time. The difficulties that had to be surmounted in> the beginning are gradually being removed' as we gain experience, and I have no doubtthat during the next two years relatively much greater progress will be made thar* hitherto. It must be gratifying to honorable members to know that so many men of good character are willing to enter the: Navy. At the time that 'the agreement wasunder consideration, it was feared by some that Australians would not accept servicein the Navy, but that statement has been controverted by the fact that: already 518 Australians and New Zealanders have been enlisted, and are now doing duty on H.M.S. Challenger and the three drill ships. The Government have had under consideration the recommendations of the Imperial DefenceCommittee as to the best means of protecting Australia from invasion or aggression. The report deals with our land1 forces, and also with our harbor and1 coastal naval defence. I regret to say that the document is confidential, but the Government hope to be in a position to communicate its contents to the House very shortly. They have taken steps in thedirection of obtaining the necessary authorization. In the meantime, the matter is being: carefully considered by the Naval and' Military authorities. It is often said that Federation costs an enormous amount, and* in conformity with the practice that hasbeen established, I desire to give honorable members some information. It will be remembered that at the AdelaideConference it was stated that the extra cost of Federation would amount to- £300,000 per annum. Last year the " other " expenditure, as distinguished? from transferred expenditure, amounted to ,£827,355. If we deduct from that amount the provision made for mew works in the transferred Departments ^318,488, New Guinea .£20,000, sugar bounty and expenses ,£1541706, "and the Queen Victoria Memorial ,£25,000, we arrive at a net amount of ,£309,161, equal to is. 6d. per head' of the population. For the current year, 1906-7, it is estimated that the other expenditure will amount to ,£1,197,147. If we deduct from this amount the provision made for new works, transferred Departments ,£478,224, NewGuinea ,£20,000, sugar bounty ,£284,428, kanakas .£25,000, cable, Tasmania £5,600, and mails, Tasmania £1,000, we reach a net amount of £376,895, equal to is. iod. per head of the population. The following tables show the proportion in which the " other " expenditure has been debited to the States : -



It is estimated that from the ist January, 1 901, to the 30th June, 1907, a period of six and a half years, the Commonwealth will have returned to the States, in addi- i tion to the three-fourths net Customs and

Excise, the amount of £5,233,591 It was constitutionally competent for the Commonwealth to have spent the whole of this money. When Federation was established, it was never supposed that such a large amount over and above the three-fourths of the Customs and Excise revenue to which they were entitled would be returned to the States. It was generally felt that the Commonwealth would avail itself of the whole of the income at its command, but that has not been the case. Of the total referred to, New South Wales has received £2,203,393; Victoria, £1,409,705; South Australia, ,£450,115; Western Australia, £i,077,83S J Tasmania, £133,628. I am sorry to say that Queensland received less than her three-fourths to the extent of £41,085. The three-fourths of the net Customs and Excise from the 1st January, 1901, to 30th June, 1907, is estimated to amount to £42,789,945. If to this sum we add the .£5,233,591 returned to the States, in addition to the three-fourths of the net Customs and Excise revenue, we arrive at a total of .£48,023,536 paid to the States in the six and a half years. The amounts returned to the

States are shown -in the following table: -

If we compare the amount to be paid to the States for 1906-7 with the amount actually" paid for 1905-6, we find that the position works out as follows : -

It is estimated that the States will in 1906-7 be paid £434,370 less than last year, but still .£31.1,228 more than the three-fourths of net Customs and Excise revenue for 1906-7, which is estimated at £6,638,057, and £167,613 more than it was estimated would be returned to the States last year, namely,. £6,783,748. The total amount paid to the States for 1905-6 was-£829,925 in excess of the three-fourths of net Customs and Excise revenue. The figures are as follow : -


If the Sugar Bounty had been treated as a rebate for 1905-6, ,£111,080 would have been added, and the amount paid to States out of the Commonwealth one-fourth would have been £941,005 in excess of threefourths of theset Customs and Excise revenue. The following particulars re lating to the finances of the Commonwealth will be of interest to honorable; members : -



The following tables give further information relating to expenditure: -





It is the intention of the Government not only to encourage existing industries, but also to endeavour to establish new industries by means of bounties. Honorable members will recollect that amongst the bounties which we propose to offer is one of _fd. a lb. upon canned or tinned fish. That proposal is contained in the Bounties Bill. Provision has been made upon the Estimates for the purchase of a trawler to explore the fishing grounds on the Australian coast, and thus assist the industry. Our object' is to encourage the fishing industry and help our fishermen. The payment of the bounty, we hope, will encourage fishermen to embark capital in the enterprise. The sum of ,£8,000 has been set apart for the purchase of a trawler and' equipment, and the intention is - ais I said before - to explore the fishing grounds along the coast of Australia. I am quite sure that a good reward awaits our labours in that direction. So far, very little in the way of systematic trawling has been undertaken in Australia, and it seems to me that any expenditure by which new industries may be established is wise. I would remind honorable members that over £300,000 annually is sent abroad for the purchase of preserved fish. As a protectionist, I should like to see that sum spent in providing employment for the, fishermen of Australia. In Great Britain, the consumption of fish per head of the population is five times that of. Australia, the reason1, being no doubt that fish is cheaper there than it is here. The United States spend .£100,000 per annum upon their fisheries, whilst Canada has disbursed £600,000 upon fish bounties, and an additional £32,000 annually in assisting the industry. In the latter country, 80,0,00 persons are employed in the fishing industry, and the plant in use is valued at £2,000,000. The lobster -in- dustry alone employs 17,000 persons. At the Cape of Good Hope, a beginning was made in- 1897 upon similar lines to those which the Government now propose to follow. A trawler was purchased for the purpose of exploring the fishing grounds, with the result that capital and enterprise have embarked upon the business, and a great industry has been established. If there are industries which are worth establishing in a country, I do not think that anybody will object to a small initial expenditure in fostering them in their infancy, because the small expenditure must be altogether incommensurate with the ultimate advantages' which will result to theCommonwealth. The Government propose very soon to take over the lighthouse services of the States as provided by the Constitution.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Is any provision made upon the Estimates for the present year for any expenditure in that connexion ?


Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Nothing has been provided for this year?

Sir JOHN FORREST - There is something provided, but not for construction of lighthouses. There are some new lighthouses required, and provision is made on the Estimates for the expenditure of £1,500 to obtain surveys and drawings, and to collect information regarding the best positions in which to erect them.

Mr Harper - Will the Government proposal include harbor lighthouses?

Sir JOHN FORREST - The amount in question is to be devoted exclusively to ocean lighthouses. For instance, there is a light very much needed upon the Glennie Group, west of Wilson's Promontory. Another small one is urgently required at Point St. Albans, in Backstair's Passage, Kangaroo Island, South Australia. Then a lighthouse is needed upon Eclipse Island, near King George Sound, and another is necessary at Point Dentrecasteaux, between King George Sound ' and Cape Leuwin. No doubt there are some others needed between Wilson's Promontory and Cape York. But those to which I have referred I have personal knowledge in regard to, and' they have also been brought under my notice by the captains of mail steamers. There is no doubt that we are under a great obligation to provide those who are engaged in navigating our coasts with adequate lights at prominent points.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - What other evidence 'has the Treasurer that these lights are necessary ?

Sir JOHN FORREST - I know most of the places I have, mentioned, and have the testimony of the captains of our mail steamers. I know perfectly well where a lighthouse is required, and I can confidently assert that lights are needed at the points I have named.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - At what does the Treasurer estimate the expenditure necessary to provide those lights?

Sir JOHN FORREST - I have not gone into that matter, but if we estimate the cost of a first-class lighthouse at from £10,000 to £,15,000" we shall not be far wrong. Then a sum of £10,000 has been placed or. the Estimates in connexion with installations of the system of wireless telegraphy. The Government have not yet definitely decided what they intend to do. in this direction during the current year, but we are convinced that this wonderful invention should be utilized by the Commonwealth as it is utilized by other countries, and especially in providing for the protection and safety of shipping. The connexion of Australia with New Guinea by this means will at once appeal to honorable members. There we have a settlement containing 642 white residents, men, women, and children, and 375,000 Papuans, and so far there is no ready means of communicating with the mainland. It seems to me that that fact needs only to be mentioned to show the necessity of establishing communication bv means of wireless telegraphy with that largely populated country. Then we have to consider the safety of ships approaching our shores. The time has almost arrived - it will probably have arrived before the Treasurer has the honour of submitting his next Budget statement - when all the mail steamers coming to Australia will be provided with wireless telegraphic instal lations. Are we to sit idly by and do nothing in this direction when the safety of the lives of our people and of their property may be in jeopardy ? What would happen to any of these vessels if her shaft were broken? It would be absolutely unwieldy, and would not be able even to get steering way on. Therefore; we should be censurable if, having this cheap means of communication available, we did not take advantage of it.

Mr Storrer - A wireless telegraphy station also requires to be erected upon the islands in Bass Strait.

Sir JOHN FORREST - Quite so. Wherever there is no means of communicationeither upon land or sea - and the wireless telegraphic system can be brought" into operation at a much less expenditure than would be involved in the laying of submarine cables or the erection of telegraph lines, we should avail ourselves of it. I now wish to say one or two words in regard to population, and I regret that I have not a very satisfactory statement to make concerning its increase throughout the Commonwealth. During the past five years our population has increased by 286,662. That increase is practically accounted for by the excess of births over deaths. During 1905 there was an increase of 68,099 over the population of last year, and it was made up by an excess of births over deaths, amounting to 61,427, and an excess of arrivals over departures of 6,672. The Government, and also the Parliament, I believe, have been very anxious to assist emigrants of the right class to come to Australia. The determination of the Ministry to encourage industries of all kinds, and so to provide remunerative employment for the people, must do good, and I believe" that when the facts are known and1 understood in the old country and elsewhere, the effect of this policy will be beneficial. The Government have no desire to bring to Australia a number of people to compete in the labour market when it is sufficiently stocked'. What we desire is to encourage the settlement of our lands, and to induce people to come here, either with strong arms and stout will, or with small capital, and to throw in their lot with us in the cultivation of the soil and the establishment of manufactures and industries. These twit enterprises must go together; they are necessarily beneficial to each other. No one can believe that a population of 4,000,000 is sufficient for this vast continent. I am not carried away by the cry of some

I believe a great deal of the country is jungle, and the means of getting from one place to another, except by narrow paths, is very difficult. What we ought to do - that is, if we take a real interest in the matter - is to spend a hundred thousand pounds in opening up, and making the Territory self-supporting and prosperous. The pastoral industry in Australia is flourishing. The value of wool produced last year was £20,125,900, being the largest amount that has ever been received. The sheep increased in number from 65,822,000 in 1904 to 74,706,000 in 1905, being an increase of 8,882,755 in twenty-one months. It is a splendid record that in a period of threeyears and nine months, sheep have increased in number by 22,000,000. Australia had her largest number of sheep in 1891, namely,106,000,000. We require an increase of 32,000,000 sheep to equal that number. But I am glad to saythatthe return from sales of wool was greater from 74,000,000 sheep in 1905 than from 106,000,000 sheep in 1891. That is very satisfactory indeed. When in London a short time ago, I made some inquiries concerning the question of silver coinage and currency. Judging from the interviews I had with the Imperial Treasury officials, there is no desire to prevent Australia from having a coinage of her own if that is desired. Their wish is to meet our desire, and I think that we should have probably had a communication to that effect if there had not been a change of Government in England.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - They have already made a communication.

SirJOHN FORREST. - I mean not the present Government, but the previous one.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The previous Government made a communication.

Sir JOHN FORREST - The question was not settled. Some communication from this Government was not answered at the time the change of Government occurred but the question was almost decided. I had a conversation on the subject with Mr. Austen Chamberlain, late Chancellor of the Exchequer. When a scheme to allow Australia to do just what she liked in the matter was placed before Mr. Austen Chamberlain for approval, he said that he wished to have a little more time in which to consider it, because he desired to ascertain whether there was not some other means by which Australia could be satisfied, without establishing asystem of coinage different from that existing in the mother country. I was assured by those with whom I conversed that the question of securing the profit or. the silver coinage for Australia does not influence the decision, and that the Imperial Government is quite willing that any profit which accrues from such coinage should go to Australia. There are, however, other questions in connexion -with the maintenance of gold to be considered. The result of my interviews was communicated on my return from London to the Prime Minister in the following terms : -

In regard to silver coinage the difficulties in the way are : -

(a)   The Treasury officials fear that the withdrawal of a larger value per annum than£100,000 would result in considerable loss, and even at that rate it would take twenty years to withdraw the£2,000,000 of silver in circulation in Australia. The continuance of two silver coinages in circulation during that period would be unsatisfactory.

(b)   The maintenance of the gold coinage of Australia at its full standard weight, which is now borne by the Imperial Mint, would, if the existing silver currency were withdrawn, become a burden on Australia, and it would have to be ascertained and decided as to how much of that coinage the obligation would rest upon.

But in addition to the foregoing considerations is the question as to whether the establishment of a different silver currency might not be in the direction of widening rather than tightening the bonds of Empire. Such a currency would require very careful watching to avoid its being either depreciated by reason of an excess issue of silver, or the public being inconvenienced through an inadequate quantity being in circulation, the difficulty being increased by reason of the smallness of the population. It was, therefore, thought worthy of consideration whether some other means could not be devised other than establishing a distinct and separate silver currency.

There would appear to be no likelihood of the United Kingdom establishing decimal currency in the near future, and the general opinion expressed was to the effect that any interference with the value of the people's penny would lead to widespread dissatisfaction and resentment. Having regard to the foregoing considerations, it was agreed that the question of silver coinage and decimal currency should be one of the subjects to be submitted to the Imperial Conference to meet in London next year, and in the meantime fuller consideration could be given to the question.

Mr.DugaldThomson. - I think that the Minister is mixing the question of coining, our own silver and the question of establishing a different currency.

Sir JOHN FORREST - I do not think so. I now come to a very important matter, and that is the position of the sugar industry. The determination of the Commonwealth to make a great effort and monetary sacrifice in order to maintain the " White Australia " policy appears to have been thus far very successful. The amount payable in bounties is increasing. This year provision is made for the payment of ^278,500, which represents a production of 139,000 tons of sugar, as against a production of 69,000 tons last year. At first I hesitated to accept the departmental estimate. It is estimated! to make an immense increase - from 69,000 tons to 139,000 tons produced by white labour in one year. But I have been assured that the estimate is based upon probabilities, and I have accepted it. It is estimated that the acreage of sugar-cane cultivated by white labour this year will be 116,750 acres, and that the area cultivated by black labour will be 37,150 acres - making ,a total of 153,900 acres under cultivation. The production this year is estimated to be - sugar produced by white labour, 144,236 tons, and sugar produced by black labour, 54,614 tons ; making the total production 198,850 tons. I think that if that estimate, which has been obtained after a good deal of trouble and care, is borne out at the end of the year, and if we produce 144,236 tons of sugar by white labour, the result cannot but be regarded as very satisfactory indeed. The number of sugar-cane growers in Queensland employing white labour in 1902 was 1,521. It is estimated that at the end of 1906 the number of growers employing white labour will be 3,393, making an increase in four years of 1,872 growers employing white labour. On the other hand, in 1902 the growers in Queensland employing black labour numbered 975, and in 1906 they numbered 837, showing a . decrease of growers employing black labour of 138, In New South Wales in 1902 there were 1,005 growers of sugar by white labour, and in 1906 there were 1,450, showing an increase in the four years of 445 farmers employing white labour. In 1902 there were in New South Wales 115 growers employing black labour, and in 1906 there were 110. So that in the four years there has been a decrease of five farmers in New South Wales who employ black labour. It is estimated that at the end! of 1906 there will be 4,843 growers of sugar-cane by. white labour in the Commonwealth, as compared with 947 growers employing black labour. Steps have been taken during the year to find > out how many persons are employed in the sugar industry. The Customs authorities have obtained information that on the 31st of December, 1905, there were 20,162 white persons so employed. That is a very satisfactory statement to be able tomake, and a fine result to have attained. There were only 8,452 coloured persons employed in the industry.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - That is in the industry as a whole ; not merely in growing.

Sir JOHN FORREST - In the sugar industry, taking into consideration everything connected with it. The total number of persons employed in the industry at the date mentioned was 28,614. There were 17,937 white persons earning bounty ; and there were 2,225 white persons and 8,452 coloured persons who were not earning the bounty. In regard to cultivation, since 1904, and up to the end of 1906 - a period of two years - it is estimated that the area cultivated by white men will have increased in Queensland from 45,424 acres to 96,000 acres - an increase of 50,576 acres. The figures with regard to cultivation in New South Wales are hot so satisfactory. In the same twoyears it is estimated that the increase will be from 19,114 acres to 20,750, an increase of only 1,636 acres. The total increase in the area cultivated by white men in the Commonwealth in the last two years amounts to 52',2i2acres. During the same two yearsthe area cultivated by black labour decreased in Queensland from 74,375 acres to 35,000, a decrease of 39,375 acres; and in New South Wales the area cultivated bv black labour decreased from 2,411 acres to- 2,150 - a decrease of 261 acres. The total' decrease in acreage where black labour was. employed in the two years was 39,636 acres. That result is most satisfactory. I never expected to have such satisfactory figures to convey to honorable members inregard to the policy which we have been trying to carry out. Since 1902 - a period of four years - the estimated production of sugar by white labour increased in Queensland from 12,254 tons to 125,000 tons - an increase of 112,746 tons.


Sir JOHN FORREST - I cannot speak of these figures as actually realized, because the period is not yet complete. They cover the period from 1902 to the 31st of December, 1907. The figures have beendefinitely ascertained up to the 31st December, 1905, but I wish to give the definite and the estimated figures together. I rr Queensland, as I have said, the increaseamounts to 112,746 tons. In New South Wales, however, it is estimated that the production by white labour will have decreased from 19,434 tons to 19,236 tons.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - That is a very good thing. There will be less bounty to pay, and the persons are more profitably engaged.

Sir JOHN FORREST - The result is not so satisfactory as the honorable member supposes, because we shall be paying bounties and getting very little in return. The total increased production by white labour in the four years is estimated at 1 1 2 , 548 tons. During the same period the estimated production by black labourin Queensland has decreased from 65,581 tons to 53,000 tons - that is to say, by 12,581 tons ; while in New South Wales, it has, I regret to say, increased from 1,526 to 1,614 tons, or, in other words, by 88 tons. There has been a total decrease of 12,493 tons of production by black labour in four years. Honorable members are aware that, under section 87, known as the Braddon section, of the Constitution, the Commonwealth receives one-fourth of the excise revenue. At present, the excise is £3 per ton, and therefore, the Commonwealth receives 15s. per ton, and has to pay £2 per ton as bounty, losing thereby £1 5s. on every ton produced by white labour.

Mr Frazer - Is the excise not £4 per ton ?

Sir JOHN FORREST - That excise will begin to operate at the beginning of next year. Making the payment a bounty instead of a rebate - which was done by Act some time ago - has resulted in the Commonwealth receiving 15s. for every , £2 it has to pay, out of its one-fourth of the Customs and Excise revenue, on every ton of sugar produced by white men. After the 1st January, 1907, the excise will be increased to £4 a ton and the bounty to £3 a ton. The Commonwealth's one-fourth of the , £4 excise will be£1, and the bounty to be repaid will be £3, so that the Commonwealth, out of its one-fourth, will have to pay , £2 more than is received. While the States revenues will receive £3 outof the £4 excise, the Commonwealth will have to pay the bounty of £3, and thus lose £2 on every ton produced by white labour.

Mr Glynn - Possibly, it does not matter much to the States in the long run, because the balance is not much upset by the change to a bounty.

Sir JOHN FORREST - The honorable and learned member may be speaking offhand, but I am sure he will realize that it is becoming a heavy charge against the onefourth received by the Commonwealth from Customs and Excise.

Mr Glynn - Not in the aggregate, though it makes a difference to some States.

Sir JOHN FORREST - This does not appear to be a good bargain or a profitable arrangement for the Commonwealth, and the matter must receive consideration with a view to making, if possible, the payment a rebate, or otherwise the Commonwealth's one-fourth may not be able to bear the charge. The bounty payments are attaining large proportions. In 1902, the bounty paid to Queensland was £24,493,andto New South Wales it was £36,333, or a total of £60,826. It is estimated that in 1906-7, the bounty paidto Queensland will amount to £240,000, and to New South Wales to £38,500, a total of . £278,500, showing an increase of , £217,674 in four years. It is estimated that the bounty paid to canegrowers by the end of 1906-7, including £25,537 the expense of supervision, will, in Queensland, amount to £532,826, and in New South Wales to £192,358, a total of , £725,184. The amount I have mentioned has been distributed amongst the States as follows: - New South Wales will have paid , £266,493; Victoria, £219,144 ; Queensland, , £94,606 ; South Australia, £67,722; Western Australia , £44,798; and Tasmania, £32,421; thus making up a total of £725,184. The following tables contain full particulars concerning this industry : -



In the case of Queensland, since the bounties were established, the sugar produced by white labour has increased by 112,746 tons, and the sum of £^512,319 will have resulted in the furtherance of the policy of the Government and Parliament. In New South Wales it is estimated that by the end of 1906 the sum of £192,358 will have been paid in bounties, including expenses. I regret to say that the payment of this large amount has not resulted in an advance of white employment or of much increased cultivation - it is an absolute present to the cane-growers of New South, Wales, and without any sufficient result, so far as the policy of the Government and! Parliament is concerned. In 1902 there were 1,526 tons:, and in 1906 there were 1,614 tons produced bv white labour.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - It is not desired to increase cane growing there.

Sir JOHN FORREST - I am only stating a fact from which we cannot escape. As I said before, the reason the "bounty has been paid to the growers in

New South. Wales is that bounties must be general, and, therefore, all sugar-growers have to participate. I think that some of the representatives of Queensland and New South Wales who object to those States assisting in great national works in other States may fairly be asked to remember that other States are willingly paying immense sums in order to carry out a great national policy in this direction.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The other States are not paying immense sums in New South Wales. It must be remembered that some of the New South Wales members opposed the bounty.

Sir JOHN FORREST - The sums paid are immense for small States like Tasmania, South Australia, and Western Australia.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Some of the strongest opponents of the bounty were New South Wales members.

Sir JOHN FORREST - I am only stating a fact.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - But the fact I have mentioned1 should also be remembered.

Sir JOHN FORREST - If we regard the position of the whole question of sugar growing by white labour, I think there is good cause for satisfaction. When the policy was introduced manyof us, and I, amongst the number, had great doubts as to whether white men would be able to work in this industry in the tropics. I had had some experience in the north-west tropical parts of Western Australia, but, so far as can be gathered from the figures, it seems that the policy established has beer. , thus far absolutely successful. It may be that finality has not been arrived at in dealing with this question, but I think we may all look' to time and experience to finally place the question in a satisfactory position. The next question associated with the sugar industry is the repatriation of the kanakas, which has to take place almost immediately. I know I am only expressing the wish of the Government and of every member of this Parliament when I say that we all hope the greatest care will be taken in returning these men to their own country - that every kindness and consideration will be shown, and that every hardship that it is possible to avoid will be avoided. The Government have provided £25,000 for the purpose of the repatriation. The Queensland Commission, which recently sat, estimated the cost of the deportation at £53, 454. The members of the Commission state that there are 5,280 islanders liable to be returned, and they anticipate that not more than 4,500 will be deported. The Pacific Islanders' Fund, of which we have heard so much from time to time, and which is in the Queensland Treasury, has, I am informed, only £10,619 credit. It is estimated that, of the 4,500 who are likely to be deported, 900 will be sent away by the end of the year, and the remainder as soon as possible thereafter. The deportation of these kanakas is a part of the White Australia policy, and must be persevered with. I aim glad to be able to inform honorable members that satisfactory communications are going on with the Queensland Government for joint action in carrying out the law in this respect. I come now to a very important matter, the external trade of the Common wealth.. I refer, not to the Inter-State trade, but to the trade in imports and exports with countries beyond the seas. The value of our imports has not greatly varied during the last three years. In 1903 it amounted to . £38, 835, 682. The value of our imports in 1905 is much about the same, the value of imports free of duty amounting to £14,072,061, and of dutiable goods to , £24,274,670, or a total of £38,346,731. The figures show that 36.70 per cent. of our imports consisted of articles free of duty, while 63.30 consisted of dutiable articles. In 1900, the year before Federation, the value of our exports was £45, 956,882 ; in 1905 the value of our exports had increased to £56,841,035, an increase in five years amounting to , £10,884,153. The value of our imports per head of population for last year amounted to , £9 9s. 3d., and of our exports to , £140s. 6d., making the total trade of Australia per head of population £23 9s. 9d. I have prepared the following table of imports for1905, showing the value of the imports received under each ad valorem percentage, under the fixed duties exclusive of narcotics and stimulants and from narcotics and stimulants, with the amount of duty paid under each head : -


Our total oversea trade for 1905 amounted to - Exports, . £56,841,035; imports, £38,346,731; or a total of £95,187,766, being £677,708 greater than the total trade for the previous year, which was £94,510,058. Our trade with foreign countries during 1905 increased to the extent of 2.75 per cent. In 1905 our trade with the United Kingdom was 52.29 per cent. , British Possessions 18.81 per cent., and with foreign countries 28.9 per cent., so that our trade with the United Kingdom and British Possessionslast year was about 71 per cent., as against about 29 per cent. with foreign countries. Our whole trade, including imports and exports, in 1901, was, with the United Kingdom 54.74 per cent., British Possessions 18.20 per cent., foreign countries 27.06 per cent. The division of trade is practically the same now, although the movement is towards an increase in the trade with foreign countries. In 1895, ten years ago, the percentage of imports was - From the United Kingdom 71.61, from British Possessions 11.46, and from foreign countries 16.93. In I005> those percentages were - From the United Kingdom 60.17, from British Possessions 14.04, and from foreign countries 25.79. It would, therefore, appear that foreign countries are gradually increasing their trade with Australia, that our imports from the old country are gradually decreasing, and that British Possessions are holding their own. The following statistical tables will, no doubt,, be interesting to honorable members : -










Dealing with, the Inter-State trade, I may :say that it amounted last year in value to £37>6i3>75°- 1 have prepared a table which shows the value of goods imported by each State from all the other States, and also of goods exported from each State to- the other States, with the balance in each case. From this return, it will be seen that Queensland sends to the


other States goods to the value of £8,480,764, and receives from them goods to the value of .£3,535,695. Tasmania sends to the other States goods to the value °f £3>239>44I> and receives from them goods to the value of £1,913,629. The figures for the other four States tell in the opposite way.


Queensland sends away £8,480,764 to other States, and receives only ,£3,535>695 back. Tasmania sends away £3,239,441, and receives back only £1,913,629. The -other four States do the opposite. I come now to a very important matter, and that is to my recommendations with regard to the financial problems of the Commonwealth under the Constitution. I am glad to say that I have been able to submit these recommendations with the full concurrence of my colleagues in the Government. The desire of the Government is to act as far as possible in accord with the wishes of the States. When I became Treasurer, I felt that it was my duty not to follow, but to endeavour to lead, in this -crucial matter. I felt that it was the duty of the Commonwealth Government, and, If with all diffidence I mav sa,v so, the duty of Parliament as well to lead the way rather than to leave it to others to discover a suitable road. Acting upon this principle, the Government have taken the responsibility of propounding a scheme with that object in view. I do not for a moment say that we have arrived at finality, or that the scheme I have propounded, and which has been approved by the Government, is the best for the purpose that could possibly be devised. But I do say that I am convinced that the plan I Have proposed is a good one, that it will meet the circumstances, and give satisfaction, not only to the Commonwealth, but also to the States. It is a difficult matter with which to deal, as we have to continually keep in mind the terms of the Constitution, the interests of the Commonwealth, and the interests of the States. These three considerations must be constantly borne in mind, and I felt that it would be of no use to propound a scheme unless I were fairly certain that it would be acceptable to the people. It would be most undesirable, as well as difficult, to attempt to force upon the country the views of the Government or even of Parliament. The desire of the Government is to arrive at a fair and reasonable arrangement with the States, and the best way to begin is to propound and recommend, as has been done, a scheme, to be criticised by the Parliaments of the Commonwealth and of the States and by the people of Australia. It is not expedient that the Government should hesitate to take the lead in this matter. Nearly six years have passed1 since Federation was inaugurated, and that time has been fully. occupied in arranging the various Departments of Government and passing the laws necessary to give effect to the constitutional changes involved. Still, three Conferences of Premiers have been held in which this question has beer, raised, and, although some advance has been made towards a settlement, there is yet no finality. In four years' time - on the 31st December, 1910 - section 87, the Braddon clause, becomes alterable. Parliament will then have the responsibility of deciding what amount of surplus Customs and Excise revenue shall be returned to the several States, and on what basis the return shall be made. I do not fear that the States will suffer injustice under this arrangement. This Parliament represents the people of the States, and will, I feel sure, always recognise the obligations and responsibilities of the States Governments. They have to carry out great works in settling people on the land, in building railways, providing water supplies, and giving all trie other facilities which are required for the- settlement and inprovement of the condition of the people, the provision of which does not come within the province of the Commonwealth. My confidence is somewhat shaken, however, when I notice that resolutions have been passed in Conference and in Parliament asking for a per capita distribution, under which the State of which, I am a representative would suffer a loss Of about' ,£300,000 a year. But, -although I have never seen any disposition on the part of the members of this Parliament to act -other than fairly and generously to the several States, I recognise that it is not right that the financial position of the States should be uncertain or unsafe, and dependent upon the annual votes of this Parliament. We should, therefore, begin to prepare at once fori the time when the. Braddon- provision will become alterable. I felt, on taking office as Treasurer, that the question was one of the chief obligations resting upon me, and have kept it in view ever since, and I went to London specially to obtain information in regard to the matter. In considering it. I have tried to meet the views expressed by the Premiers of the States in Conference at Hobart, and to comply as nearly as possible with the terms of the Constitution. The proposals submitted have, as I have already said, received the approval of the Government, as a scheme most likely to meet with the support of those best acquainted with our constitutional and financial circumstances, and honorable members will find in the Budget papers the full proposals, with complete returns and tables which will be found useful in thoroughly investigating the position. The proposals of the Government embrace the taking over of the debts of the States, the amount of the debts to be so taken over, the continuance of section 87, the Braddon section, the amount and basis of the annual payments to the States, the bookkeeping system, the future borrowing by the States, some concluding remarks and a summary. I do not intend to deal with the scheme in detail now, as the full report is submitted for the information of honorable members. I have not consulted any one outside Australia in regard to matters between the Commonwealth and the States, because I am of opinion that those who possess full information and local knowledge are better able to deal with I hemthai: any one else. But, with regard to the taking over of the States debts and the substitution .of Australian stock for the States' stock now existing, I /felt that great financial authorities in England could give valuable information, and I was not disappointed. Amongst those whom I had the privilege of consulting were the governor, deputy-governor, and officers of the Bank o'f England, the directors and officers ofl the London and Westminster Bank, the brokers for those banks, the Chancellor of the Exchequer, and the permanent Financial Secretary to the Treasury, Sir Edward Hamilton. I also had the honour of an interview with Lord Goschen, who, when Chancellor of the Exchequer, carried out the , scheme under which nearly ^600,000,000 worth of British stock was converted. In addition to having a long interview with Lord Goschen, I had a number of interesting conversations with Sir Edward Hamilton, who was his right-hand man throughout the negotiations referred to,, and who was then, as he is now, the principal financial Secretary to the Treasury. I' also had the pleasure of meeting Lord Revelstok'e, one of the governors of the Bank of England, and the head of the firm of Messrs. Baring Brothers. The conclusions I have arrived at after carefully considering the opinions expressed by those whom I have had the privilege of consulting are contained in a memorandum I addressed to the Prime Minister as follows : -

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