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Friday, 10 August 1906

Mr REID (East Sydney) .- I am one of those who recognise-

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - I think that we oughtto have a quorum present. [Quorum formed.]

Mr REID - I recognise the very intelligent interest which the honorable member for Wentworth has exhibited in the questionof national defence. With reference to the preceding speech which was delivered last night bv the honorable member for Gwydir, I feel very grateful to you, sir, for having called on the honorable member instead of upon myself - following the established rule of alternating the speakers from different sides of the House, which is a very proper rule - because he has provided us with the missing Jink in the practical politics of Australia to-day. The Treasurer proudly boasted that there were no political skeletons in the cupboard of the Ministry, but I know of half-a-dozen, and one of them -is this question of, a Federal progressive land tax. It is .rather surprising - in view of the important bearings of such a proposition, and the demand which has been made upon the Government by the .great body of their nominal supporters in the Labour corner - that the Treasurer in his exhaustive survey of the affairs of Australia - and incidentally I must give him credit for the great industry which he displayed in the Budget recently presented to us - did not even mention this matter. In passing, I wish to recognise in the fullest possible way the ample information which has been given by the Treasurer in connexion with the public finances. At the same time, we must not forget the great debt of obligation which we owe to the right honorable member for Balaclava in this connexion. Unfortunately his health precludes his attendance regularly in this House. But I look upon the labours of that eminent statesman in laying the foundations of a proper system for the exhibition of the financial affairs of Australia as services which ought long to be remembered. He has formulated a plan which I am glad to see the Treasurer has faithfully observed. In my opinion, nothing could exceed the completeness of the information which the right honorable member for Balaclava, as Treasurer, gave to us in years gone by in his Budget statements. In .this connexion I wish also to express - and I think I may express it on behalf of honorable members upon both sides of the Chamber - mv sense of obligation to the permanent officials of the Treasury Department. Nobody knows better than does the Treasurer how invaluable are the labours of these officers in connexion with this great question of Australian finance. Reverting to the speech of the honorable member for Gwydir, I should like to say that in the most exhaustive and thorough way he has revealed to us the result of the caucus deliberations upon the vexed question of a Federal progressive land tax. Of course, we are not privileged to send reporters to the meetings of that body-

Mr Watson - The right honorable member does not invite us to the meetings of his party.

Mr REID - We have very seldom the slightest chance of learning the nature of the deliberations of the caucus, and I do not think that we have even yet discovered where it meets. That is still a matter of profound speculation. But wherever it may meet, we are sometimes indebted to an unusually verdant member of the party for a limelight exhibition of the effect of the proceedings which are elaborated in the hidden recess where the caucus assembles. The honorable member for Gwydir disclosed the policy of the Labour Party in reference to the imposition of a progressive land tax with a thoroughness and enthusiasm which left nothing to be desired. I am glad to see that he has recovered from his great effort, and is looking excellently well. I should like to express my acknowledgments to him for the thorough and earnest way in which he expounded the views of the Labour and Socialistic Party upon the question of a Federal land tax. In the first place, setting aside the policy which is in view, ray matured opinion is that the project of making use of the powers of the Federal Parliament to impose direct taxation in order to burst up big estates amounts to a deliberate attempt to outrage the fundamental principles of the Federal Constitution.

Mr Watson - Nonsense.

Mr REID - I may be wrong, but I am simply claiming my right to express my own opinions on the subject.

Mr Watson - One might as well claim that the adoption of the policy of protection is an outrage of the principles of the Constitution.

Mr REID - I am not expressing the views of the honorable member; I am simply endeavouring to express my own views on this question.

Mr Webster - Are thev authenticated?

Mr REID - We listened to the honorable member last night when, for, about three hours, he perspired tears, not of blood, but of bathos, and surely he will permit me to briefly1 express my views. I do not know what order the honorable member observes in the caucus, but he ought to behave himself better when he is in the Chamber. I wish to briefly explain my reasons for taking the view of this question that I have just enunciated. The lands of the States are left under the sovereign control of each of them. The electors of Victoria, New South Wales, Queensland, South Australia, Western Australia, and Tasmania are not enabled by the Federal Constitution to exercise the slightest control over the respective policies of those respective States. Victoria has sovereign control over its land problems, and so with New South Wales and the remaining States. Each State has complete control and sovereignty over all questions affecting land settlement and' the ownership of the land. On the principle that the Federal Constitution vests in the Parliament of the Commonwealth, only that power which is expressly given, and that all that is not so given is left to the States, this Legislature has nothing to do with the lands of Australia, save in regard to the imposition of direct taxation. The object of the proposals of the Labour Party is not to fill the Treasury with revenue in some emergency, because at this very moment, when a ' progressive land tax is being advocated, the Federal Government are proposing to give away revenue to the extent of ,£200,000 per annum - a sacrifice for which no one has asked. That being so, there is no pretence of an emergency in relation to the Federal Treasury. The endeavour to make use of the power given to the Commonwealth, Parliament to impose taxation for revenue purposes, in order to do something that has everything to do with the land, policies of the States, and nothing to do with the raising of revenue is a direct attempt to twist our powers under the Constitution - to invade the rights of the States in one of the most vital problems in Australian politics to-day. If we took over the burden of the management of the lands of Australia, the case would be different, but in an arena where none of the anxieties of land problems haw to be dealt with, we are assuming to interfere in a vital way with the administration of the lands of the States. Each State to-day is perfectly free to pass any system of progressive land taxation that it pleases. In considering such questions, the people of one State have not the slightest right to interfere with the decisions of another. What right would the people of New South Wales or Victoria; have to interfere with the views of the people of

Queensland as to the way in which the land policy of that State should 'be settled? And so with all the States. When the Conciliation and Arbitration Bill was before Parliament, the Prime Minister - who, whether his opinion was right or wrong, deserves a large degree of credit for his action - viewed an amendment with reference to the application of the Bill to States railwayservants as an infringement of States, rights. Greatly to the regret of a largenumber of honorable members who voted for that amendment, he took the view that he could not honorably remain in office, having regard to that outrage on the principles of the Constitution, and the consequent aggression on the rights of the States. Within a few short years, however, we find him lending hi,s support to a project of this' kind which would seriously interfere with the sovereign rights of the States in a matter of infinitely more vital concern. I am. sure that the Treasurer will not even, because of his official position, pretend to sympathize with such an outrage on theConstitution. He is man enough to says that he would not do so.

Sir John Forrest - I have expressed! myself clearly on the subject.

Mr REID - The right honorable: gentleman, in a most straightforward and prompt manner, expressed his views in the direction I have indicated.

Mr Frazer - But Iia did not base his objection on constitutional grounds.

Mr REID - No. I do not think that he has studied the constitutional aspect of the question ; but he based his objections on. verv broad grounds of principle and ex- pediency, which are quite sufficient. In these circumstances, therefore, we have thePrime Minister of the Commonwealth obeying the mandate of the leader of the Labour Party - saying " Yes, Mr. Watson,"" on the question of a Federal land tax - whilst we have the Treasurer, the custodian of the finances of the Commonwealth, scouting the project as one that is inadvisable, to say the least.

Mr Mauger - What is the Minister of Trade and Customs doing?

Mr REID -Who knows what he is. doing? Everything he does that is worth anything is precisely that of which no oneknows anything ; it is all underground work. I approach now the consideration of a principle which has been laid down by the honorable member for Gwydir. The honorable member drew a picture which somesimple person in the- gallery might have- thought was wrung from a bleeding, lacerated heart, but which we, knowing, him, recognise as_ simply one of his amateurish efforts at rhetorical effect. He attempted to draw a picture - which was painful enough to move even one of these massive pillars in the House - of the horrible sufferings of the Australian artisan because at present he has not a farm. It is the artisans who, according , to "the honorable member, are to go on the farms to be opened up to Australian industry. The honorable member, in drawing his touching picture about the inalienable right of the States to the ownership of land, should have remembered that he was twisting the Constitution! and proposing to put it to an unworthy use. In England, in days of old, the sovereign was the owner of the land, and so, in one sense, the State - not the Federal Parliament, but each of the States - is the owner of the land within its boundaries. But when an owner- of land sells that land to an individual, and takes money for it, and then talks of his inalienable right to occupy that land - he is a rogue, or else holds the view - an honorable view it may be - that the proceeding itself was one that was attended with some fraud or inequity. The position in this democratic country which has unlocked the lands, and which, under a democratic system of manhood suffrage, has sold it. is different from that which may be said to have existed in older countries. The position of the Australian democracy in reference to the land is that that land was vested in it by the Crown, and that it sold it and-

Mr Harper - Got the money.

Mr REID - And got the money. When the honorable member for Gwydir says that, in spite of that transaction, the State still has a right to the land, and should take it by, means of bursting up big estates-

Mr Webster - I did not say anything of the kind.

Mr REID - The honorable member went as nearly as he could to making such a statement.

Mr Webster - The right honorable member should not attribute to me statements that I have not made.

Mr REID - I can never thoroughly appreciate the views of the honorable member, because he cannot express himself clearly.

Mr Webster - It is the right honorable member's denseness that makes him unable to appreciate my views.

Mr REID - What I was able to gather from the remarks of the honorable member was that-

Mr Webster - Better judges than the right honorable member have said-


Mr REID - I think that the honorable member ought to take punishment better. We all have to take it in turn.

Mr Webster - The right honorable member leaves the Chamber when another honorable member proceeds to criticise him.

Mr REID - I have had to take a fair amount of punishment in my time.

Mr Webster - The right honorable member takes very little in this Chamber.

Mr REID - The honorable member spoke of the inalienable right of the people to the land. I recognise that, in the sense that no man has a stronger belief than I have in the principle of breaking up big estates. So far from having any' conservative view on this subject, I hold that Australia will never be anvthing like a country fit to develop on broad national lines until its enormous estates are broken up. I admit that no statesman in any State could have a stronger or more beneficial policy in view. That being so, it is not from any antagonism to the object which the honorable member and his party have in view that I am criticising the means by which they seek to achieve it. I merely say that the Federal Parliament has no more right to take up the process of breaking up large estates than has an individual to pull down the fences which subdivide them. Every individual has just as much right to do that as the Federal Parliament has to endeavour to break them up. There is. a very simple method of dealing with this problem. All that is necessary is to resume the land for the purpose of closer settlement, and to pay its honest value. That is a simple method, which will solve all difficulties in regard to the large estates.

Mr Batchelor - Compulsory resumption?

Mr REID - Compulsory resumption. Mr. Batchelor. - The honorable member would be described in some places as an anarchist for making; such a proposal.

Mr REID - I am expressing the view that I enunciated before a large gathering in Adelaide a night or two ago.

Mr Batchelor - And did not the right honorable member's audience howl at it?

Mr REID - No; and even the honorable member's supporters did not howl at me when 1 was dealing with other points. I am very grateful to the people of Adelaide for the magnificent hearing they gave me. It will be seen from what I have said that it is not because of any unfriendliness to the policy of closer settlement that I object to the Labour Party's proposal. My opinion is that if the Federal Parliament begins, even for a good object, to twist the Constitution to-day, it will create a precedent which may be followed for the most pernicious and wicked objects. I am glad that the Labour Party, as represented by the honorable member for Gwydir, has, in the most candid way, put forth its views in connexion with this subject. On this issue I am prepared to meet the Labour Party all over Australia. The land of Australia can be thrown open to the young Australian farmer to-morrow, or as soon as the people of any State are in favour of closer settlement. I believe that the majority of them are. The simple plan to adopt would be to more fully exercise the power of resumption which is now being exercised in several of the States. But we must pay honestly for the land according to its value.

Mr Wilkinson - Much of it was dummied and stolen.

Mr REID - That is a matter which may be investigated on its merits. We must not confound' the man who holds land under honest conditions with those who have abused the laws of the country. It would be a novel way of finding the path of equity to confound the man who has abused the land laws with the man .who has honestly taken up - land under those laws. Besides, it must be remembered that, in imposing taxation, we cannot pick out one man, and another, and not apply it to all. May I remind' honorable members who sit in the Government corner benches that the Western Australian Labour Federation, whose members cannot be . accused of sympathizing with the holders of large estates, have passed a resolution, denouncing the policy of the Labour Party as an incentive to frauds on the revenue?

Mr Frazer - And they, in their turn, are being denounced for having taken such action.

Mr REID - That is a matter which Labour members must settle amongst themselves. The Labour Federation of Western Australia has denounced the policy of the Labour Party, on the ground' that it offers incentive to fraud, and would interfere with those who have bond fide exercised the powers given to them by the States. My strong point is that the policy of closer settlement is a policy for the people of each State to deal with. We have no more right to use our power of taxation to solve the land problems of the States than we have to put our hands into the States Treasuries.

Mr Webster - If that is the only argument to which we have to reply, we shall be able to meet it.

Mr Bamford - The difficulty is that each State Parliament has an "Upper House.

Mr REID - My difficulty lies in having to acknowledge valueless interjections which cause a painful waste of time. There are several subjects1 upon {which I wish to touch, and I shall proceed now to refer briefly to some of the salient features in the Financial Statement. In the first place, I notice that, whereas last year the Commonwealth returned ,£829,000 to the States, in. addition to three-fourths of the revenue for Customs and Excise, this year it will return only £311,000 - a drop of over £500,000. To Victoria and New South Wales that may not be a very serious matter, but it is most serious for Queensland, South Australia, and Tasmania. Their finances are not on a large scale, though their difficulties are. The difficulty they find im making both ends meet is very great. Therefore the reduction I speak of is a most serious thing to them, and I cannot congratulate the Treasurer, or the country upon it. If we were paying interest on the properties which we have taken over from the States - the post-offices, telegraph and telephone lines, defences, and public buildings generally - we should have no surplus to return to the States, because it has been estimated that, having regard to both interest and depreciation, £2,000,000 should have been deducted from our revenues, which has not been so deducted, because Jio arrangement has yet been made for paying for the transferred properties.

Mr King O'malley - The amount of the interest due is ,£2.300,000.

Mr REID - I put it at £2,000,000 in older to be on the safe side. These figures have to be considered in the light of facts which we must not forget. The Treasurer estimates that our revenue for next year will show an increase on the revenue of last year of about f per cent., which means practically stagnation. In a time of admitted prosperity, he estimates that our revenue will not increase at the rate of i per cent. But, nevertheless, he proposes to increase our expenditure by 12½ per cent. One of the most unsatisfactory and astounding features of the Budget is that the Treasurer, with a practically stagnant avenue, is proposing to increase the public expenditure by 12½ per cent., or somethink like , £500,000. I admit that the expenditure of £50,000 or£60,000 on the forthcoming general elections is a special item.

Sir John Forrest - There was a good deal underdrawn last year.

Mr REID - Yes; but the broad result affecting the finances of the States is that they will receive back this year more than £500,000 less then they received last year, and that, with a practically stagnant revenue, our expenditure is to be increased by 12½ per cent., while £200,000 which should be obtained for services rendered is to* be surrendered. Revenue to the amount of , £200,000 is to be given up without any demand from the public for such action. The picnic of the PostmasterGeneral to Rome is going to cost the Commonwealth a large sum of money. He must have got the idea there, when mingling with the distinguished men who formed the Conference which he attended. He has come back with these grand ideas, but let us see how they affect the position of the States. No State has had a more bitter trial with misfortune than has Queensland during the last few years.

Mr McWilliams - Or Tasmania.

Mr REID - The finances of Tasmania and of South Australia have also been strained. Those three States have suffered severely. Queensland has just had another blow, owing to our very proper action in regard to the opium trade, whereby the State loses revenue to the amount of £22,000 per annum. We do not mind that, because the object which is being achieved is such a good one ; but on top of this loss of £22,000 is to come a loss of £'29,000 in carrying out the proposal of the Postmaster-General, or a total loss of £50,000. To New South Wales a loss of revenue of £50,000 or £100,000 per annum would not mean much.

Mr McLean - In addition to the loss of which the right honorable member speaks, there will be a great curtailment of country services.

Mr REID -Yes. That aspect must not be forgotten. Tasmania will lose £14,000 a year and South Australia about £22,000.

Mr Batchelor - Together with £7,000 in connexion with the opium reform, making about £30,000 altogether.

Mr REID - I look upon the establishment of penny postage throughout Australia as a noble idea, but, like many other splendid ideas, it must be approached rather slowly. I do not think that there is a man in this Chamber who wouldgrudge the expenditure of money for extending the facilities of the post-office to the most remote settlements. That is the direction in which we should be liberal. If we have £200,000 to spare, we might very well spend it in extending the postal service to the most remote parts of Australia.

Mr Johnson - And in giving better telephone facilities.

Mr REID - I do not think that the Committee would grudge the expenditure of £200,000 in extending the postal service, and in giving better telegraph and telephone facilities to our pioneers. The gieat bulk of the advantage to be gained by the adoption of the PostmasterGeneral's proposal will go, not to the poor or to the pioneers, but to the great commercial interests of Australia. If the state of the revenue would allow us to make the sacrifice, I would agree to the giving of this boon to the commercial classes, because of its probable effect in increasing trade. But, at a time when the revenue is practically stagnant, and our liabilities increasing, the proposal is indefensible. Of course, it will be popular in business circles; but it stands out in singular contrast to the action of the Postmaster-General in trying to get a few extra pennies from the telephone service by the adoption of the toll system. There is no consistency in the honorable gentleman's policy.

Mr Austin Chapman - In both cases a reduction is proposed.

Mr REID - I admit that the object is a good one, but I do not think we are at the present moment justified in giving up this large amount of revenue.

Mr Austin Chapman - Does the right honorable member think that we should be justified in raising the Victorian postage rates to the level of the New South Wales postage rates?

Mr REID - I shall be willing to consider the matter when a proposal to that effect is brought forward by the PostmasterGeneral. With reference to our trade, I should like to mention some rather interesting results, which. I have obtained from the statistics which have been so well prepared by the Treasury Department. In the first place, the importance of our primary industries stands out when the total value of our exports of primary produce is seen. In an export trade valued at £54,000,000, more than £50,000,000 represents the value of primary products. When statistics are given showing the enormous wealth per head of population in Australia, some self-satisfied Australians think what marvellous people we must be; but it is Nature that is producing this wealth for us. Whilst we have magnificent developments of personal enterprise, taking into consideration the sparseness of our population, the crowning factor in our marvellous progress is the fact that our great primary industries are making wealth for us without any personal effort of a commensurate character. I wish now to refer to the figures dealing with the trade between Australia, the motherland, and foreign countries. Another of the skeletons in the Ministerial cupboard is fiscal peace and preferential trade. Ministers are now going to put up a high Tariff wall,- which will injure the trade of the mother country. Their supporters are visiting the factories, making speeches; and the honorable member for Bourke told a meeting the other day that we should build our Tariff wall as high as that of the United States.

Mr Mauger - Mr. Irvine says the same thing.

Mr REID - It does not make the situation any better that Mr. Irvine should have gone back upon his old fiscal faith. I am not responsible for this extraordinary development; that is a matter for him to explain.

Mr Frazer - The Opposition are a happy family !

Mr REID - At any rate, we can talk frankly, which is sometimes more than a bullock-team can do. The Prime Minister has unfurled an enormous flag, bearing on it the legend - "The mother country for ever, and preferential trade," while the Government Whip is walking after him, holding aloft a little piece of calico, on which is written - " Down with the British manufacturer. 'Build the Tariff walls of Australia so high that he shall not have a chance to even put his nose over." Car* even the credulity of Victorian protectionists be imposed upon by inconsistencies so glaring as that? The two things will not hang together at all. We have already heard of the subsequent remarks of the men who have attended these gatherings. They go away saying, " These gentlemen with the big manufacturers behind them are sounding the drum, and we are good protectionists ; but we are going to vote for a labour protectionist, and not for one of the long-coated brigade." They listen to these gentlemen with their tongues in the cheeks, and all the time say that, although the principles advocated are excellent, they are going to vote for their own men.

Mr Frazer - There is no objection; to their enjoying themselves.

Mr REID - No; but the question is whether they are getting any nourishment, particularly during a time that really ought to be devoted to that healthy object. With reference to our imports from Great Britain, I should like to point out that it is remarkable that, in spite of the absence of a preferential trade arrangement, during the eleven years from 1894 to 1905 the British goods sold in. Australia were valued at £1,000,000 more than the increase from all the foreign countries of the world put together.

Mr Mauger - The right honorable gentleman knows why that is?

Mr REID - If I were to go into these matters in detail I should occupy the attention of the Committee all day. I am merely putting to honorable members' the broad results, which are susceptible of various explanations. In spite of the fact that we have imported largely from foreigncountries having climatic conditions which are specially adapted to the cultivation of certain articles which cannot be produced in Great Britain, our trade with the mother country has increased by more than £1,000,000 above the increased trade with foreign countries. Then there is this extraordinary fact, which must not be forgotten : that the sales of the old country to ourselves have increased at twice the rate that her purchases from us have increased. I know that some protectionists lay great stress upon- the importance of increasing our exports and diminishing our imports. Our imports from Great Britain have increased to the extent of £7,300,000, whereas our exports to Great Britain have increased to the extent of only £3,750,000, or about half. But we cannot shut our eyes to the gratifying feature that, whilst our import trade with foreign countries has increased by £1,000,000 less than has our import trade with Great Britain, our exports to foreign countries have increased instead of decreasing. Whilst our imports from foreign countries have increased by only £6,000,000, our exports to foreign countries have increased by ;£i 1,000,000. No one could quarrel with a development under which we send out to foreign countries twice as much as we receive from them. We have to remember that all these foreign countries are taking our primary products at an enormous rate.

Mr Mauger - They would take them under any circumstances.

Mr REID - I do not suppose the honorable member objects to that.

Mr Mauger - They take them because they want them.

Mr REID - Then it is gratifying to find that thev want our products. I do not care how the matter is put. So far as the producer is concerned he does not ' care why they take his produce, so long as they take ' it.

Mr Johnson - We shall have them complaining of our dumping.

Mr REID - Talking about dumping, when I was recently in Queensland, I made this discovery : The complaint of the people there is not against the British or the foreign dumper, but against the Victorian dumper. They say that it is the dumpers of the two big manufacturing centres, Melbourne and Sydney, who are throwing their artisans, out of employment. I told the people that this was one of the legitimate fruits of Federation, and that the manufacturers of Melbourne and Sydney had a perfect right to the market of Queensland, whilst the . Queenslanders derived great advantages from having the Melbourne and Sydney markets thrown 1 open to their sugar and other products. I am merely showing how the shoe pinches the people of Queensland.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - It also pinches Tasmania.

Mr REID - Yes; Tasmania is suffering also. The people of Queensland say that a higher Tariff, instead of helping them, will only aggrandize the manufacturers of Melbourne and Sydney. I should like to express my great gratification, which

I am sure is shared on all hands, at the general prosperity which has come at last all over Australia. It is a subject of gratification, particularly after the terrible pictures that were drawn of the fearful suffering brought about in Victoria through the closing up of factories, owing to the operation of the Federal Tariff. It is very gratifying to know that there is already a turn of the tide in Victoria. Whatever our views upon the fiscal policy may be, we must all be delighted. I say that a man in New South Wales, who is not as delighted at the prosperity of Victoria as with that of his own State, is entirely deficient in a proper comprehension of what Federation means. I look upon the undoubted increase of the prosperity of Victoria as one of the most gratifying signs in the circumstances of Australia to-day. As so many gloomy pictures were drawn by the Melbourne Age in connexion with the alleged strangling effects of the Tariff, I should like to quote, some remarkable testimony given by that newspaper as to the glorious prosperity which has come upon Victoria, even under the present unfavorable conditions. The Age of the 22nd June, referring to the statement made by Messrs. Mann and Fleming, that there were 5,000 unemployed in Melbourne, said -

That is a most serious statement. If it were capable of being substantiated, the prosperity on which we have been priding ourselves of late would be proved a hollow sham, and we should then have occasion to doubt the accuracy of the statistics recently published concerning our expanding trade. The Customs returns show that for the first five months of this year our oversea agricultural exports have increased by £1,159,000, compared with the corresponding period of 1905. The wheat yield for the past season has been estimated at 24,000,000 bushels, an average of more than 12 bushels to the acre, and at the same time, notwithstanding our steadily increasing population, general imports from abroad have notably diminished.

This must 'have been gratifying news to the protectionists of Victoria, who have told us that the Tariff was swamping Victorian industries. The Age continued -

These figures testify that in every department of our industrial life we are forging ahead. Our agriculturists are thriving, and our manufacturers, despite the handicaps they have at present to fight in the shape of ineffective protection, foreign trust competition, and many lamentable holes in our tariff fence, are beginning to overtake and supply the wants of the people with the products of Australian labour.

Yet, although we are now producing at a rate in excess of all past precedent, we are asked to believe that we have more unemployed in the city to-day than ever. Public prosperity does not reveal itself only in statistics. It is quite apparent that we are a prosperous people. In many parts of the country there is a call for unskilled labour, which halts to be satisfied. Almost all our trades are flourishing, and the demand for skilled workmen is at least equal to the available supply.

It is very gratifying to note that the Jeremiah of Victoria is bursting out into a song of praise and jubilation. The dark cloud has passed away, and in spite of the defects in the Tariff, which the Age was among the first to point out, it is now able to assure the people that the great industries of Victoria are in a flourishing condition. There is no greater proof of that fact than is to be found in the condition of the agricultural implement industry, for which the worst fate was predicted. It was stated that the wicked Canadians and Americans were ruining the agricultural implement industry of Victoria; but what is the present condition of affairs ? The returns are most astonishing. No industry in Australia shows a more rapid development during, the past three years. In 1902 789 hands were employed; in 1903, 1,114; in 1904, 1,496; and in 1905, 1624. Thus there has been an increase of 106 per cent, in three years.

Mr Johnson - That is in one of the declining industries.

Mr REID - Yes. Victoria is the only place in the world in which we find people libelling their own country and' disclaiming their own prosperity. Here is a magnificent development. The number of hands employed in the agricultural implement industry has been doubled in three years, and yet we have these unpatriotic and absolutely false descriptions of the condition of the people connected with the industry. This has been the most elastic progressive industry in Australia from the point of view of the employment afforded. The total returns for Victoria show that in 1904 there was an increase of 3,000 hands in the number of workers employed' in the factories, and a further increase of 3,000 hands in 1905. Therefore, whatever our fiscal views may be, we must be delighted to find that in spite of the Tariff' which is certainly lower than that to which Victoria had been accustomed, the industries of the State are not showing any sign of degeneracy, to say nothing of the predicted ruin. The remarkable fact is that Victoria was at her worst when she imposed the -highest duties. Desperate efforts were made to put things right by adding to the duties after the panic of 1893, but as the duties went on the people went out.

Mr Johnson - Mr. McKay makes a clear profit of £28,000 per annum.

Mr REID - Mr. McKay is a very clever man. He removed' his works to Braybrook in order to evade the operation of the Victorian Factories and Shops Act. He went away from

Mr Bamford - Only one class of Mr. McKay's employes would come under the Wages Board provisions of the Act.

Mr REID - I see that the Government are going to extend the operation of the Act to Braybrook, so that evidently they consider that it is necessary to apply it to Mr. McKay. I do not know what the real cause was, but I think that Mr. McKay objected to the Factories Act in so far as it prevented him from employing a large number of boys in proportion to the men engaged'. Under the Wages Boards, the employment of only a small number of boys is permitted, and I understand he has a very much larger proportion of boys at his works at Braybrook., I do not feel any particular sympathy with Mr. McKay under the circumstances.

Mr Bamford - Nor do I.

Mr REID - I think that Mr. McKay's invention is one of a most useful character, and that his career as an. inventor is one that we cannot help admiring. It is the use that Mr. McKay is trying to make of his previous enterprise and exploits that I do not quite sympathize with. Now, with regard to the question! of immigration, which has been elevated to a position of great importance by the Government, and' with regard to which I hope that they will take some effective action, I wish to direct attention to the significance . of the returns. During the last five years we have added 286,000 infants to our population, but for the whole of Australia our excess of immigration over emigration has amounted to only 440 souls per annum. At that rate of immigration* it would take us 800 years . to equal the increase by immigration during the ten years from 1880 to 1890. Is it not most significant that this great Commonwealth, instead of being in the highest degree attractive to the enterprise of the world, should have been for all these years under the shadow of a black cloud, and that the stream of immigration should have been practically stagnant? So far as I am concerned, I will never be a party to any immigration which will have the effect of increasing the population of our big towns. I think it would be a crime to spend public money in gorging the over-crowded cities of Australia. There is no patriotism in that. The current of immigration that I desire to assist is the immigration of persons who will devote themselves to the primary industries! of Australia. That is the sort of immigration we want. We want to make the current flow from the towns into the country, instead of from the country into the towns. I merely wish to touch briefly upon these matters, because I do not think I would be justified in occupying very much time at the present juncture. But I wish to refer to the proposed duties upon spirits. The Government proposals in this connexion are very important. So far as my experience as an ex-Treasurer of New South Wales goes, and so far as I can learn, the proposed increase of is. per gallon in the Customs duty upon spirits - an increase from 14s. to 15s. per gallon - is an absolutely unjustifiable one. It will only have the effect of increasing the evils connected with the spirit trade, and will not be of the slightest benefit to any proper interest. I would have supported the recommendation of the Tariff Commission in this connexion, because my view has always been that, having appointed a body of able gentlemen, who have exhibited marvellous industry in conducting their inquiries, we should, wherever possible, presume in favour of their mature and deliberate conclusions. I was prepared to accept their recommendation implicitly-

Mr Wilks - They were unanimous upon the question.

Mr REID - Exactly. Their recommendation was that of the whole Commission. I think that wherever we can we should give effect to the improvements recommended bv the Commission without delay. But the Government proposal will probably involve a long debate. The experience of all Treasurers is that if the duty upon spirits be raised beyond a certain point the revenue will gain nothing, while the quality of the article will deteriorate.

Sir John Forrest - In Western Australia, for many years prior to Federation, the duty was 16s. per gallon.

Mr REID - But Western Australia occupied a different position from that of the other States. Her people could stand anything in those days; but in these older States the imposition of such a duty would constitute a strain upon the purity of the article which would do more harm than good. Moreover, the revenue will not be improved if the proposed duty upon spirits be ratified by Parliament. During the bad times in Victoria the Customs duty upon spirits was increased from 13s. to 35s., and the Excise duty from 10s. to 12s. The result was that, whereas under the old rate of 13s. per gallon a revenue of £806,622 was collected, under the 15s. rate only £[472,805 was collected. In other words, there was a loss of revenue which represented nearly 50 per cent. Of course, it is only fair "to remember that the bad times which had fallen upon Victoria and upon other parts of Australia were an element which contributed to that loss. But that factor did not fully account for the enormous decline which took place in the Customs receipts. I wish now to say a few words with reference to a very important question connected with the financial provisions of the Constitution - I refer to the taking over of the States debts. This matter has been exhaustively dealt with by the Treasurer and the honorable member for Mernda, and consequently I do not intend to deal with it in detail. I propose to give the fullest consideration to the schemes of both those honorable gentlemen. I do not forget the very valuable service which was rendered by the honorable member for Koovong last session in bringing this matter before the House, and I am very glad' that since then the honorable member for Mernda has devoted his large business and practical knowledge, and his great political experience to- it. I would like to put the position as it occurs to me in this way : The scheme of the honorable member for Mernda, if it will stand the test of criticism, and elaborate, careful scrutiny, possesses some splendid features. It is a scheme which is well worthy of the fullest consideration. The only question which arises in my mind is, "Is it a sound scheme-"? I am not competent within the few days which have been available to me, to express an opinion upon that . subject, but I do say that the scheme is worthy of the fullest consideration. I hops that the States Governments will express their views upon it, and also upon the scheme submitted by the Treasurer. The latter follows very closely the lines laid down at the Hobart Conference of Premiers. The Treasurer has adopted very largely the view of that gathering. But there are features connected with the scheme of the honorable member for Mernda which demand the closest attention, because of the obvious advantages which would be conferred by several of his proposals if they could be carried out in fairness to the States ; and we must always be anxious to consult the financial authorities of the States in dealing with these problems. There is a little bit of bookkeeping, however, which ought to be ended without delay - I refer to the bookkeeping which relates to goods passing- from one State to another. We had a general idea that that sort of thing had been done away with. It was one of the objects of the framers of the Constitution that at the end of five years' experience of the bookkeeping system this Parliament should be able to settle the matter. The view taken by the delegates was that, in the course of five years, we could surelv gain some approximate idea which would enable us to dispense with these differences. I do not want to look too closelv at profit and loss in matters of this sort. We shall never realize the spirit of Federation, and bring about its smooth working, until we get rid of these constant sources of irritation. At the present time there is a sort of inquisition established' over the movements of trade which is verv much to be deplored.

Sir John Forrest - The smaller States cannot afford to depart from the existing practice.

Mr REID - Surely an arrangemenl might be made. I desire that anv arrangement which may be made shall operate fairlv to the several States.

Mr Harper - But Tasmania and Queensland object.

Sir John Forrest - And Western Australia also.

Mr REID - In establishing a basis which would avoid the existing trouble their claims should be thoroughly safe guarded.

Mr Harper - In getting rid of the necessity for the present system ?

Mr REID - Exactly. I do not wish to bring about any arrangement which would result in injustice, but with the ability and efficiency that we have in the Commonwealth Treasury, working in conjunction with the States themselves, we ought to be able to strike some basis - upon the experience of the past five years - which would be sufficiently fair to allow us to get rid of the present obnoxious state of things.

Sir John Forrest - We have to keep some accounts.

Mr REID - For statistical purposes, I suppose.

Sir John Forrest - That is all that is done between the two larger States.

Mr REID - But there are a lot of entries and certificates required which practically involve as much trouble as would be associated with the payment of a duty. The Treasurer should certainly use his influence to do away with this evil. Regarding the return of revenue to the States, the scheme of the honorable member for Mernda comes in very forcibly. But the Treasurer's scheme recognises the abnormal position of Western Australia, when it is in her interests to do so, and ignores it when it is in her interests to db so. The . very reason which makes it necessary to give Western Australia special treatment renders his proposal that Western Australia should - on the basis of a five-years' test-

Sir John Forrest - My proposal is upon the Basis of five years preceding the 31st Decernber, 19 10.

Mr REID - I am not forgetting that. But if honorable members will look at the working of the Tariff they will see that, on the basis of a five-years' test, Western Australia would get more than she is entitled to.

Sir John Forrest - Her population is increasing.

Mr REID - But, as her population increases, the rate per head will decline. The difference between the two processes is very well shown in the figures which have been supplied by the Treasurer, and which enable me to ascertain the per capita payment of Customs and Excise. I find that in 1901-2 in' Western Australia this payment amounted to £5 16s. 4¾d., but five years later it had fallen to £3 14s. 9¾d. - a. decline of £2 is. 7d. per head. In New

South Wales, during the same period, instead of a fall of £21s. 7d., there was an increase of 2s. 5d. per head, whilst in Victoria there was an increase of 2s. 4d. per head. Consequently, if we take these returns upon a fluctuating basis, we cannot accept them in the case of Western Australia, and for obvious reasons. If we did so it might very conceivably happen that we should be 'giving to that State a basis for a number of years which would not be fair to the other States.

Sir John Forrest - Western Australia merely wants what is fair.

Mr REID - The only thing is to get the " other fellow " to think so.

Sir John Forrest - It is quite open for the right honorable member to suggest a more equitable plan.

Mr REID - I am not endeavouring to criticise the views of the Treasurer in this connexion.

Sir John Forrest - To adopt a per capita basis would not have been proper or reasonable.

Mr REID - I quite agree with the Treasurer that we could not adopt a A basis in the case of Western Australia at the present time. But after making proper allowances for inequalities we might approach as soon as possible to a per capita basis. Surely we can make some allowance for Western Australia which would bring about that result. The theory of the framers of our Constitution was that in five years we ought to be able to hit upon some scheme which would' get rid of the necessity for keeping these accounts. I am thoroughly in favour of any scheme which will get rid of them at the earliest possible moment, and in making any arrangement of that kind we can take into account the special circumstances of Western Australia.

Mr Fisher - It is a remarkable thing that of late years the transfer of goods to Queensland has been larger than it was formerly.

Mr REID - Yes. There has been dumping from Victoria mstearl of from England. But that is part of the Federal compact. We cannot have the sweets without also taking the bitters-. With reference to the conversion of the public debts of the States. I think that all these discussions are bringing, us nearer to the adoption of some feasible plan. In this connexion I may be allowed to indulge in one personal remimscence When the Con vention was sitting, I made a desperate fight - and was successful - to induce its members to substitute the word " may " for " shall." I pointed out that if the word "shall " were retained, all the bondholders of the States would get the benefit of the Commonwealth guarantee without being called upon to pay anything for it. At that time - as it turns out - we had exaggerated ideas regarding the difference between the Commonwealth and the State brand upon stock. I thought that it would be a monstrous thing to give the London stock-jobbers the advantage of the Commonwealth brand, and to give the Australian States no advantage whatever. The Treasurer has recently been to London, and he has made an observation in his Budget which is exactly upon the lines of the effort which I made upon the occasion to which I have referred. When the Convention was sitting we thought that there were millions sterling to be made by substituting the Commonwealth for the States brand upon stock. We thought that our present bond-holders would run after the Commonwealth bonds, and that we should be able to make a large saving for the States. But somehow Federation has not worked out in that way. Apart from the question of whether or not the Federation has worked well, it is only fair to say that one reason for this is that, individually, the States are so sound.

Mr Harper - There was never any doubt about that; but the holders will not surrender their securities. They will not convert.

Mr REID - They will not give up something for nothing.

Mr Fisher - According to their view, the security of an individual member of a family is as good as that of the whole family.

Mr REID - It is not when it is that of a younger son, but it" "is in the case of a political family. The fact is that the security of one State is as good as that of another, and that being so, investors do not rush for a Commonwealth security.

Mr HUME COOK (BOURKE, VICTORIA) - The Canadian experience is slightly different.

Mr REID - The circumstances may have been a little different, but the Treasurer, who is in close touch with the leading financiers-

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - That is all very well, but Mr. Coghlan points out that our politics are affecting the question.

Mr REID - That is not surprising, since, so far as I am aware, there is no Socialist party on the London Stock Exchange. I have no desire, however, at this stage to enter upon controversial matters to a greater extent than is necessary. There are a number of subjects with which I desire to deal briefly. I recognise the great difficulties with which the Treasurer is confronted in reference to taking over the public debts of the States, and to some other schemes. The problem is a most difficult one, but the light which) has ' been thrown upon it by the right honorable gentleman, as well as the honorable member for Mernda and Senator Pulsford, should help us soon to deal with it. It is a matter of .great urgency, for within the next eight or nine years we shall have about £58,000,000 of States securities coming in. The moment the Treasurer or his successor can inform the House that he has arrived at some agreement with the States Governments - and I regard that as a vital point in the transaction - honorable members will be only too anxious to give effect to it.

Mr Fisher - And if the States will not come to an agreement?

Mr REID - Then we shall have to do the best we can, but an agreement ought to be possible. I have now to deal with a sudden inspiration on the part of the Government, to which no reference is made in the Budget. We have been told during the last few days - although there was no reference to the question when the Electoral Bill was before the House - that the Government, in spite of their desire to give effect to the reports of the Tariff Commission, are going to bring in some extraordinary Bill to affect the voting at the next general election. Why did we not hear long ago of this proposal ? What sudden inspiration is it? Where does" -it come from? Who prompted it? What is its object?

Mr Wilks - To help the Labour Party.

Mr REID - I do not think so. In Germany the effect of the second ballot was that eighty-five of the Socialists who were returned on the first ballot were rejected on the second, all the other parties having combined against them.

Mr Fisher - I do not think it was quite as bad as that.

Mr REID - After all, that is a personal matter, to which we should pay no reference. We have to consider, not how a system would affect any party, but whether it would tend to the convenience of the electors, and work favorably from their point of view. But the proposal that in Australia, with its enormous Commonwealth electorates, two ballots should be taken, is the most idiotic of which I have ever 'heard.

Mr Fowler - It is intended to wipe out " the chartered libertine " of the Age.

Mr REID - If we really think that the present system is not the best, and that some change is necessary, it would be absurd and cruel to. cause the electors in country districts to. travel miles and miles to vote a second time, when under another system thev can by the one operation vote for every candidate in the order of their preference. I refer to the contingent vote system, which is in force in Queensland.

Mr Fisher - That system could not be applied to elections to the Senate.

Mr REID - The question is whether the honorable member's party are going to support this proposal. If they are, it will go through ; if not, it will be rejected.

Mr Fisher - I know nothing about it.

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