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Friday, 10 August 1906

Generally, I agree with the other proposals in the Treasurer's memorandum, except those to which objection is taken in the following : -

Clauses 9 and 10. - While the States may properly expect reasonable security for the payment from Customs and Excise revenue of interest on at least the bulk of their loans, the hampering provisions and complex effects of the Braddon clause, even as the Treasurer proposes to vary it, should not be continued for a day longer than necessary..

Clause 13 (1) The Treasurer proposes "to pay annually to each State for ten years after 31st December, 1910 (the date on which Section 87 (the Braddon clause) becomes alterable), a fixed sum equal to the average annual amount of three-fourths of the net revenue from Customs and Excise which that State has contributed during (say) the five years preceding such 31st December, 1910 (not including the special revenue in the case of Western Australia)."

This would mean that, did the present duties yield an increase of revenue before 1910, or special new taxation be necessary before then, not only would three-fourths of the proceeds for that period go to the States, but, irrespective of Commonwealth requirements, three-fourths of that increased revenue would be taken by the States for the following ten years.

Clause 13 (2) reads -

(2)   " If three-fourths of the total net revenue received by the Commonwealth from Customs and Excise in any year after. 31st December, 1910, exceeds the aggregate amount of the annual fixed sum guaranteed to all the States, any such sum in excess to be distributed among the States fer cafiia."

This would guarantee a further payment to the States, irrespective of Commonwealth requirements, should there be an increase of nonearmarked revenue, and practically extends the Braddon clause to 1920. The proposal is all against the Commonwealth, as a deficiency may have to be created one year to- pay the fixed amount to the States, and the surplus of the next year cannot be taken to make it good.

Clause 13 (3) reads -

(3)   "Provided that after 31st December, 1910, the Commonwealth may impose additional Customs and Excise duties for specific purposes, and may specially appropriate and retain and ' ear-mark ' the whole of the revenue -

(a)   Derived from any new items of duties imposed solely for specific purposes ;

(i)   Derived from any additional duties on existing items of duties imposed solely for specific pur- poses.

If any surplus remains in any year after providing for such specific purposes from the revenue derived from such special appropriations, threefourths of such surplus to be annually returned to the States fer cafiia.

These arrangements to continue for ten years, viz., after the 31st December, 1910, up to 31st December, 1920, and thereafter until the Parliament otherwise provides."

This is the only real modification of the Braddon clause, and does not operate until after ig'io, at which time the Commonwealth will be free to make this or any other provision. It is objectionable, because it divides the Customs and Excise duties into two classes, the one benefiting the Commonwealth, the other the States, and it thus, to some extent, creates rival interests. In providing, if a special duty is an increase of an existing one, for proportional divisions, it may raise endless complexities.

The whole of clause 13 simply postpones the adoption of a system possessing any elements of permanency for 14 years, to a time when the circumstances may be more unfavorable for reasonable adjustment than they are to-day. It refuses to approach nearer to what must be the financial goal, and, while conferring no benefit sufficient to justify it on the States, it continues to hamper the Federation. Only if a better and more federal system is shown to be impossible now, or proved to be far more readily realizable in the future, should there be postponement. The Treasurer declares as one reason for delay that the people do not yet think federally. It is hard for them to do so, when, instead of their interests being merged in those of Australia, State distinctions are allowed, without good reason, to remain, although it was intended they should disappear in union.

Turning briefly to one other matter, as there is not time to deal with others as I intended, I cannot agree with the proposal for the introduction of universal penny postage. Personally, I am very strongly in favour of the system, but, having regard to the finances of the States which have most severely felt the strain of Federation, I cannot see my way to support the present proposal. It would be very desirable if we could introduce penny postage into New South Wales, where the present system is rather mixed.

Mr Johnson - Would it not be desirable to introduce penny postage within the Commonwealth itself ?

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