1927-03-03 10 1 2 REPS 56 0 House of Representatives. 1927-03-03 Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 2.30 p.m., and read prayers. 56 Questions 56 56 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - I ask the Treasurer whether, as the Commonwealth Auditor-General has asserted that so involved is the method of budget presentation adopted by the Treasurer that financial experts often misunderstand the true position of the Commonwealth finances, he will give consideration to the matter, with a view to the presentation in future of a budget that will clearly set out the finances of this country? 56 C7E CP 0 0 PAGE, Earle Dr EARLE PAGE - I differ from the Auditor-General with regard to the proper method of presenting the accounts of the Commonwealth. He apparently desires that the whole of the Consolidated Revenue Fund should be set out on one side of the account, and the expenditure on the other. 59 KZA 0 0 WEST, John Edward Mr WEST - Not a bad idea. 56 C7E 0 0 PAGE, Earle Dr EARLE PAGE - It was a good idea before the various Governments of Australia interested themselves in public utilities and business enterprises. It is now obvious that if we set out on one hand our taxation, which we are trying to reduce, and on the other the expenditure on business undertakings, which we are trying to increase, the result will be a meaningless mass of figures which will confuse every one who sees them. Not merely has the method adopted in the presentation of the budget received unstinted praise from all quarters of Australia, but its extension last year received further praise. 56 miscellaneous Report op Joint Select Committee. Mr. BOWDEN presented the report of the Joint Select Committee on Commonwealth Electoral Law and Procedure, together with the minutes of evidence. Ordered to be printed. 57 Questions 57 Personal Explanation 57 KX9 0 0 WATKINS, David Mr WATKINS - By permission of the House I desire to say, in connexion with a question which I asked yesterday, I stated upon information received that the Commonwealth Oil Refineries Limited had increased its price for petrol, but I have since ascertained that it has not increased its price. 57 Allowances to Public Servants 57 KXY 0 0 PERKINS, John Mr PERKINS - I ask the Prime Minister whether, in view of the difficulties which public servants have in securing accommodation at Canberra, he will make an investigation to see whether it is possible to grant the allowances recently proposed for those who take up residence in the Federal Territory to those who may find it necessary to reside in the neighbouring town of Queanbeyan ? 57 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - The honorable member's suggestion will receive consideration, but I point out to him that every possible step is being taken to provide accommodation for members of the Public Service at Canberra, as they are moved from the present seat of government. 57 Mining 57 JVT 0 0 NELSON, Harold Mr NELSON - In view of the fact that the Chairman of the North Australian Commission is an expert in mining matters, will the Prime Minister consider the advisability of placing mining in the Territory under the Commission over which he presides? 57 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - The scope of the Commission was settled by Parliament in the measure dealing with the subject, but the honorable member's suggestion will receive consideration. 57 57 JWQ NAT 0 0 FRANCIS, Grosvenor Mr G FRANCIS - I ask the Minister representing the Minister for Defence whether, in view of the very much interrupted postal service to the Gulf of Carpentaria, by reason of the recent cyclone in the north, he will inform the House as to the position of the proposed Cioncurry-Normanton aerial mail? 57 KMW NAT 1 0 MARR, Charles Mr MARR - The Government has approved of the acquisition of an aerodrome at Normanton. The clearing of the ground is in progress at the present moment, and the Government hopes shortly to extend the service there. 57 57 KQW 0 0 SEABROOK, Alfred Mr SEABROOK - I ask the Prime Minister whether it is a fact that the Royal Commission on Wireless has omitted Tasmania from its itinerary? If so, will the right honorable gentleman get the commission to visit Tasmania and take evidence there? 57 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - I have no knowledge that the Royal Commission on Wireless in considering its itinerary, has taken any such steps as the honorable member suggests. I remind him, however, that the commissioners must determine where they shall go to obtain necessary evidence in carrying out the duties imposed upon them. The Government could not attempt to influence them in any way in carrying out the commission with which they have been entrusted. 57 57 JOS 0 0 BELL, George Mr BELL - I ask the Minister for Trade and Customs whether the Tariff Board has yet presented its report upon its inquiry into the importation of potatoes from New Zealand? If so, has the Minister considered it, and how does he propose to deal with the matter? 57 K1J NAT 0 0 PRATTEN, Herbert Mr PRATTEN - I understand that the report is in course of preparation, but since the inquiry was instituted an embargo has been placed by the health authorities upon the importation of potatoes from New Zealand. That embargo still exists. 57 Primary Industries 57 JLJ CP 0 0 ABBOTT, Charles Mr ABBOTT asked the Prime Minister, upon notice - Can he say if the Development and Migration Commission will, at an early date, institute an inquiry into the main primary industries of Australia, viz., wool, meat, wheat, and dairying, with a view to definitely ascertaining their present resources and future possibilities of expansion? 58 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - The reply to the honorable member's question is as follows: - Since the constitution of the Development and Migration Commission in October last, it has made investigations and recommendations which have been adopted by the Government in regard to a number of schemes approved under the £34,000,000 migration agreement, involving an expenditure of over £6,000,000, and further schemes submitted by the State amounting to approximately £10,000,000 are now being investigated. The Commission has also given consideration to the re-organization of the Commonwealth migration activities both in Australia and in Great Britain. In addition, the Commission has had referred to it and is giving attention to the following questions: - Unemployment survey including the problem of seasonal variations. The present position and the future possibilities of Tasmania on the economic side, in consultation with the State Government and the Council for Scientific and Industrial Research. The dried fruits industry throughout Australia. The gold-mining industry of Australia with particular reference to Kalgoorlie, and The economic utilization of Australian oil shale deposits. The honorable member will appreciate that this programme of work is already very extensive, and, in the opinion of the Government, and of the Commission, investigational work of this character to be effective can only be developed as the Commission strengthens its organization to cope with the numerous problems which are unquestionably awaiting close examination. While at the moment it cannot be said that the wool or wheat industries are in an altogether unsatisfactory position, it is evident that they provide an ample field for investigation, both in the light of increased productivity, transport, and other important phases, and these, together with the meat and dairying industries and their attendant problems of breeding, animal nutrition, and improved pasturage, are at present receiving consideration. Although no plan of attack has yet been made on these problems, preliminary inquiries which have already been instituted by the Development and Migration Commission and the Council for Scientific and Industrial Research, are resulting in the collection of most valuable data which, as opportunity offers, will enable a systematic attack to be made upon the problems referred to by the honorable member, after all necessary consultation with the State and the industries themselves. 58 58 JY7 0 0 DUNCAN-HUGHES, John Mr DUNCAN-HUGHES asked the Postmaster-General, upon notice - Is Blood's Creek the only telegraph office in South Australia which is north of Ooanadatta ? Has this telegraph office been closed, or is it intended to close it; if so, why? 58 KAY CP 0 0 GIBSON, William Mr GIBSON - The answers to the honorable member's questions are - Blood's Creek is the only telegraph office in South Australia north of Oodnadatta., but Charlotte Waters, which is in Northern Territory, is only 34 miles north of Blood's Creek. Yes. The former postmaster was unwilling to continue performing telegraphic and postal duties after 21st February, 1927, and no suitable person has yet been found to take over the office. 58 Motor Transport Facilities 58 JZK 0 0 COLEMAN, Percy Mr COLEMAN asked the Minister for Defence, upon notice - Whether action will be taken by the Government to provide motor transportation facilities for paralyzed and double-amputation eases amongst disabled returned soldiers, as requested by the Limbless Soldiers' Association and other returned soldier organizations? 58 KMW NAT 1 0 MARR, Charles Mr MARR - The Government is considering the most satisfactory method of dealing with this question. 58 KYX ALP; FLP from 1931 0 0 RILEY, Edward Charles Mr C RILEY asked the Minister for Defence, upon notice - Whether any decision has yet been arrived at in connexion with the request of the Returned Soldiers' Association that means of transport be provided to those returned soldiers whose present disabilities are as a result of double amputations or paralysis? If it is considered that the question of granting conveyances to disabled soldiers does not come within the scope of the Repatriation Act, will he take steps to have the Act amended to permit of the request being granted? 58 KMW 0 0 MARR, Charles Mr MARR - The Government is considering the most satisfactory method of dealing with these questions. 58 Assisted Immigrants 58 JXA 0 0 CHARLTON, Matthew Mr CHARLTON asked the Prime Minister, upon notice - Is it a fact that the Premier of New Zealand admitted to a deputation of unemployed, on 18th February last (see Age, 19th February), that immigration bad a direct bearing on the number who find employment, and, in consequence, his Government had suspended all assisted immigration, except public school boys, domestics, and farm workers, for four or five months ? In view of the fact that the latest figures of the Commonwealth Statistician show that there are 25,351 trade unionists unemployed in Australia, will he take similar action ? 59 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - The answers to the honorable member's questions are ae follow : - I have no knowledge of the matter beyond the report in the newspaper press. As I have frequently pointed out, the Commonwealth can only assist the migration to Australia of such persons, or classes of persons, as are requisitioned by the Governments of the various States. 59 Compensation 109 JZK 0 0 COLEMAN, Percy Mr Coleman (through Mr. E. Riley) asked the Minister for Defence, upon notice - Has a request been received from the New South Wales Permanent Military Forces Veterans' Association for compensation on the basis of one month's pay for each year of service; if so, will the Government accede to this request? 59 KMW NAT 1 0 MARR, Charles Mr MARR - Such a request was received, and it was also the subject of a deputation to the Minister, Sir Neville Howse. The Minister promised to personally further consider the matter, but he, unfortunately, was unable to do so prior to his departure for England. I will bring the request again to his notice as soon as possible after his return to Melbourne. 59 Abolition of Trial by Jury. 59 KZA 0 0 WEST, John Edward Mr WEST asked the Minister representing the Minister for Home and Territories, upon notice - Is it a fact that a new Ordinance relating to the trial of civil actions in the higher courts has been issued by the Federal Capital Commission to provide for the abolition of trial by jury in all civil cases, and the trial of all civil actions coming within Federal Capital Territory jurisdiction by a judge without a jury? Is it a fact that the proposed amended section of the Ordinance reads as follows : - " The trial of any civil action, cause, suit, or other proceeding in any court of the State of New South Wales exercising Federal Territory jurisdiction shall be by a judge of the court without a jury " ? Will the Prime Minister give the House notice before ratifying such Ordinance, which deprives the residents of thu Federal Capital and others of the right of having a jury to deal with civil cases? 59 KMW NAT 1 0 MARR, Charles Mr MARR - The answers to the honorable member's questions are as follow : - No. Ordinances relating to the Territory for the Seat of Government are made by the Governor-General, not by the Federal Capital Commission. The Ordinance to which the honorable member presumably refers relates only to civil actions in the District Court. The Ordinance was made in January last and is already in operation. The relevant section reads as follows : - " 5a. The trial of any civil action, cause, suit, or other proceeding in any District Court of the State of New South Wales while exercising jurisdiction in the Territory, shall be by a judge of that court without a jury." A copy of the Ordinance was laid upon the table of this House yesterday, and it is competent for any honorable member, within fifteen sitting days after that date, to give notice of a resolution disallowing the Ordinance. 59 59 KYX ALP; FLP from 1931 0 0 RILEY, Edward Charles Mr C RILEY asked the Prime Minister, upon notice - Have any representations been received by the Government from municipal councils and other public bodies owning halls regarding the demand made by the Australasian Performing Rights Association for the payment of an annual licence fee to permit of the performance in public halls of any musical or dramatic work which has been protected by copyright? As the chief owners of public halls are councils, literary institutes, friendly societies, and returned soldiers' associations, will he consider the advisability of amending the Copyright Act with a view to exempting such bodies from the provisions of the Act? 59 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - The answers to the honorable member's questions are as follow : - Yes. I would refer the honorable member to the statement made by me in reply to a question without notice, wherein I pointed out that the whole question of copyright law is an extraordinary difficult and complex one, and that because of the number of international conventions with regard to copyrights, it cannot be dealt with by an alteration of our law without possibly very serious results to Australian citizens who desire copyright privileges in other countries. I also stated that last year a conference of many of the parties interested was held, and it is understood that a fair and reasonable arrangement had been reached. 60 60 L1T 0 0 YATES, George Mr YATES asked the Postmaster-General, upon notice - Whether a departmental inquiry was held into the circumstances which led up to the tragedy whereby the Deputy Postmaster-General in Adelaide was seriously wounded by an ex-employee? If so what was the finding? 60 KAY CP 0 0 GIBSON, William Mr GIBSON - No departmental inquiry was deemed to be necessary. 60 Personnel 60 KZA 0 0 WEST, John Edward Mr WEST asked the Prime Minister, upon notice - Is it a fact that the following appeared in the press telegrams of the 5th February last: - "It was the intention of the Prime Minister of Australia to select the Migration Commission: and the names of Lord Weir, Lord Lovat, and E. Hilton Young, M.P., are mentioned. The Morning Post states that four new men must be found who are accustomed to spend millions, who could visualize the creation of vast industries in the wilderness"? Will he, before any steps are taken to make such appointments, exhaust the list of persons in Australia who have the ability and knowledge to carry out the work? 60 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE There is no power or intention by the Commonwealth Government to make any such appointment. 60 60 JPV 0 0 BLAKELEY, Arthur Mr BLAKELEY asked the Minister for Trade and Customs, upon notice - Whether it is a fact that certain literature including The Ragged Trousered Philamihropisls, Ten Days that Shook 'the World (by John Reid), The Communist Internationalist, and Road to Insurrection (by Lenin), all of which are printed and circulated in England, have been prohibited from entering the Commonwealth; if so, will he see that such working-class matter is infuture allowed to enter Australia ? 60 K1J NAT 0 0 PRATTEN, Herbert Mr PRATTEN - The book, The Ragged Trousered Philanthropists, has not yet come under my notice. Ten Days that Shook the World is not being stopped by the Customs. The Communist Internationalist and Road to Insurrection have been refused admission because, on legal advice, they are considered to come within the terms of the proclamation of the 16th June, 1921, under the Customs Act, which prohibits the importation of literature which advocates the overthrow by violence of established government, or wherein a seditious intention is expressed or advocated. 60 Classification Mr.WEST asked the Prime Minister, upon notice - Will he inform the House when the classification of the Public Service will be completed? In view of the delay that has taken place in finalizing the classification, will he impress upon the Board of Commissioners the necessity of expediting the matter? 60 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - The answers to the honorable member's questions are as follow : - No definite date can be assigned for completion of the classification, but it is anticipated that it will be completed in June next. The matter is being expedited by the Public Service Board as far as possible. 60 60 KEQ 0 0 KILLEN, William Mr KILLEN asked the Minister for Trade and Customs, upon notice - Whether, in view of the fact that about half the quantity of rice consumed in Australia is now grown on the Murrumbidgee irrigation area on land unsuitable for other purposes except grazing in large areas, that the rice grown there is superior in quality to imported rice, and that the growers, while contributing to the high protection policy of the Commonwealth, are denied any participation in its benefits, he will recommend the Government to remove this apparent injustice by placing a duty on imported rice, or alternatively paying a bounty to the growers, and that the duty or bounty shall apply to the crops now growing? 60 K1J NAT 0 0 PRATTEN, Herbert Mr PRATTEN - The question of the imposition of a duty on rice is receiving consideration. 60 Song of Australia 60 L1T 0 0 YATES, George Mr YATES asked the Prime Minister, upon notice - Whether, at the opening of Parliament, at Canberra, by His Royal Highness the Duke of York, he will give instructions that the Song of Australia be included in the programme? 60 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - I will bring the matter under the notice of the committee in charge of the arrangements for the Royal visit. 60 Recruiting Fee 60 KZA 0 0 WEST, John Edward Mr WEST asked the Minister for Defence, upon notice - Is it a fact that schoolmasters have been receiving a fee of£ 1 for all boys that are induced to join the Australian Navy? If so, will he state the amount of expenditure so incurred? 61 KMW NAT 1 0 MARR, Charles Mr MARR - The answers to the honorable member's questions are as follow : - The recruiting regulations provide tor the payment of a capitation allowance of £1 to military warrant or non-commissioned officers of the instructional staff, or to members of the Royal Australian Navy or naval reserve staff, or schoolmasters, provided they are responsible for the candidate making application to enter the Navy. The allowance is paid only for each recruit finally entered. As regards Victoria, no payments to schoolmasters have been made. The figures for the other States will be obtained and supplied in due course. 61 61 F4B NAT 1 0 BRUCE, Stanley Mr BRUCE - On the 2nd March the honorable member for Hunter (Mr. Charlton) asked me the following question, upon notice - Have any Commonwealth steamers been sold since his statement on the 13th July last (Hansard, page 4036). If so, to whom (name and address), and what was the price paid for each ? To which I replied - This information is being obtained. I am now in a position to furnish the following information : - Yes. The Booral, purchasers The Shipping Development Company, London, price £9,000; the Bulla, same purchasers, price £13,000; the Boorara, purchaser E. E. Hadjilias, Athens, Greece, price £40,000; and the Carina, purchaser G. Vergettis, London, price £26,000. 61 F4B 0 0 BRUCE, Stanley Mr BRUCE - On the 2nd March, the honorable member for Wentworth (Mr. Marks) asked me the following question upon notice - Is it a fact that of the Seagoing Staff of the Commonwealth Shipping Line there arc two commanders, three chief engineers, three chief stewards, and other officers and ratings, all of whom are receiving Australian rate of wages, but whose families and homes are situate in the United Kingdom? Is it a fact that the wages paid to these men amounts to considerably over £5,000 per annum? Whether, having in view the migration policy of the Government to encourage the settling of families in the Commonwealth, it might be considered that a condition precedent to employment on the sea-going staff of the Line be residence in the Commonwealth of applicant and his family? To which I replied - This information is being obtained. I am now in a position to furnish the following information : - Yes. Yes. The control of the line has been vested by Parliament in the Commonwealth Shipping Board, and it is not competent for the Government to interfere. The matter was, however, brought under the notice of the Board, who have replied that the question of the domicile of the families of the present staff cannot be dictated by the board. The attention of the Board, however, is being drawn to the fact that it is within their power to consider this question in regard to all future employment. 61 papers The following papers were presented : - Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - No. 30 of 1926 - Amalgamated Postal Workers' Union of Australia. No. 31 of 1926 - Commonwealth Public Service Clerical Association. No. 32 of 1926 - Commonwealth Telephone Officers' Association. No. 33 of 1926- Fourth Division Officers' Association of the Trade and Customs Department. No. 35 of 1926 - Australian Postal Electricians' Union. No. 36 of 1926- Federated Public Service Assistants Association. No. 37 of 1926 - Fourth Division Officers' Association of the Trade and Customs Department. No. 38 of 1926 - Australian Telegraphists and Clerical Assistants' Union. No. 39 of 1926 - Common Rule (Sick Leave) . No. 40 of 1926 - Arms, Explosives, and Munition Workers' Federation of Australia. No. 41 of 1926 - Arms, Explosives, and Munition Workers' Federation of Australia; Amalgamated Engineering Union; and Australasian Society of Engineers. No. 42 of 1926 - Commonwealth Medical Officers' Association. No. 43 of 1926 - Commonwealth Temporary Clerks' Association. No. 45 of 1926- Amalgamated Postal Workers' Union of Australia. No. 46 of 1926 - Amalgamated Postal Workers' Union of Australia. Nos. 47 and 48 of 1926 - Commonwealth Public Service Clerical Association. Nos. 49 and 50 of 1926 - Commonwealth Storemen and Packers' Union of Australia. No. 51 of 1926 - Commonwealth Storemen and Packers' Union of Australia. No. 52 of 1926 - Commonwealth Foremen's Association. No. 53 of 1926 - Arms, Explosives, and Munition Workers' Federation of Australia. InternationalLabour Organization of the League of Nations - Eighth and Ninth' Sessions, held at Geneva from26th May to 5th June, and from 5th June to 24th June, 1926, respectively - Report of the Australian Government Delegate. Report of the Australian Employers' Delegate. Report of the Australian Workers' Delegate. Lands Acquisition Act - Land acquired at Port Adelaide, South Australia - For Postal purposes. Northern Territory Acceptance Act and Northern Territory (Administration) Act - Ordinance of 1927 - No. 3 - Gaming. 62 Debate 62 F4B Flinders NAT Prime Minister and Minister for External Affairs 1 0 BRUCE, Stanley Mr BRUCE . - I lay upon the table of the House a summary of the proceedings of the Imperial Conference of 1926, and move - That the paper be printed. Having recently attended the Imperial Conference in London, it is now my duty to submit to this Parliament a report upon the work done at that gathering. In addition to the summary of proceedings which I have laid upon the table, there is a very large bound volume of appendices containing the speeches, reports of committees, and general information about the transactions of the conference. Because of the large expense that would be involved, I do not propose to move that that volume be printed, but we have already received from Great Britain 30 copies of it, and are expecting further supplies, which will be placed upon the table of the Library, where they will be available to honorable members. The summary and the bound appendices will inform the minds of honorable members fully of the discussions and resolutions of the conference, and will supply a great deal of information that I could not be expected to convey to the House in one speech. May I say at the outset that exceedingly valuable work was done at the conference, which will be remembered as a gathering at which much was accomplished to cement the unity of the Empire and promote amongst its constituent parts a broader spirit of cooperation than has existed in the past. That is an aim which, I am sure, commends itself to all honorable members and the whole of the Australian people. The matters with which an Imperial Conference deals are outside the realm of ordinary party political controversy; they are wider than the purely Australian issues that engage this House and divide our people from time to time, but they are of paramount importance to every citizen of the Empire. I left Australia on the 2nd of September, 1926, and returned on the 7th of February of this year. Five months - the period for which I was absent - is, I understand, the shortest period for which any Australian delegate to an Imperial conference has been absent from the Commonwealth. Nevertheless, I found it possible in that time, in addition to attending the conference, to visit most of the big centres in the United Kingdom, and to spend about a fortnight in the United States of America and Canada during the return journey. I was able to do so much in a comparatively short period because on this occasion the procedure of the conference was altered. Instead of the conference sitting continuously in plenary session, , and long speeches being made by the representatives of the dominions, the plenary sittings were reduced to sixteen, and, apart from the general introductory speeches, every subject, whether political, constitutional, or economic, was first referred to a committee or sub-committee for consideration. During the period of the conference, from the 19th of October to the 23rd of November, there were 148 meetings of committees or sub-committees. This method proved unquestionably more effective than that adopted on previous occasions, and will, I am confident, be followed at future conferences. The subjects dealt with may be divided under five broad headings, namely : - Inter-imperial relations, foreign policy, communications and consultation, defence and economic questions. All honorable members will agree that the most important of these was interimperial relations, because without cordial relations and willing co-operation between the different parts of the Empire, based upon goodwill and understanding, it would be futile to consult upon foreign policy, common defence, methods of communication, and closer economic union. If there is a will to co-operation, and the relations of the different parts are established and maintained on a basis of complete understanding, we can look to the future confident that there will be an ever increasing degree of unity. Therefore the subject of inter-imperial relations transcended all others. Prior to my departure from Australia the agenda for the conference was presented to this House, and in my speech upon it I referred to the uncertainty which was manifesting itself in different parts of the Empire in regard to inter-imperial relations, and the great danger that threatened the Empire itself unless a better understanding of the constitutional relations of the Mother Country with the dominions could be established. When I arrived in Great Britain that atmosphere of doubt was noticeably prevalent. Many people were sceptical as to what the conference would accomplish, and some questioned the wisdom of even attempting to deal with constitutional and inter-imperial relations at that juncture. Others were so pessimistic as to predict that that conference would inevitably lead to the disintegration of the Empire. Undoubtedly, the greatest anxiety was felt by many close students of imperial affairs. The tension had been increased by speeches which had been made by the Prime Minister of one dominion, and particularly by his claim that the conference should declare to the world the absolute independence of the dominions in foreign affairs. That statement caused grave anxiety in this country", and elsewhere. The press led the people of Great Britain, and, I! assume, the people of other parts of the Empire also, to believe that a dramatic situation was likely to arise, and that the conference would disclose serious differences of opinion between the representatives of the self-governing parts of the Empire. I am happy to say say that none of those fears was realized. Every one of the representatives, without exception, expressed a desire for greater co-operation and closer unity, and showed a strong attachment to the Empire, and a firm belief in its value as an instrument of good in the world. The continued growth of the Empire was held to be in the interests of the people not only of the Empire, but also of the world. At the opening of the conference that spirit, was immediately manifested. Before leaving this country I defined very clearly what I believed was Australia's attitude on all these questions. I then said - Australia's aspiration must be a closer linking together ot all the self-governing portions of the Empire, with as full recognition of the independent status of all the self-governing dominions as is compatible with the recognition of nui' British nationality and the maintenance of the closest possible relations between the English-speaking peoples. That, I believe, is the view which this community takes to-day. That was the view which representatives at the conference took. They were all anxious to preserve the rights they had; but there was also a marked desire for greater unity and greater cooperation. The British Government was of the same opinion. Before I left Australia I also said - If a single thing that could be regarded as a real limitation of our autonomy could be pointed to, I have no hesitation whatever in saying that the Imperial Government would, if possible, remove it; but I know of nothing whatever that could be rightly considered a restriction of the authority of the Commonwealth Government to deal with Commonwealth affairs. That was the attitude of the British Government, which was prepared to do anything that the dominions desired, so that the independent nationhood - if one must use that word, although there is no desire for independence, as some persons understand it - the absolute, self-governing rights of the dominions should be recognized. At the opening of the conference, after the Prime Minister of Great Britain had extended a welcome, speeches were made by the various dominion Prime Ministers, the President of the Executive Council of . the Irish Free State, and by the Maharajah of Burdwan I had been only a few days in Great Britain, but had had an opportunity of meeting the representatives of other dominions, and it was clear to me that there was not the anxiety to break up the Empire that some persons thought to exist. There was no such desire in the mind of any of the representatives. At the opening session I said - I think it is very unfortunate that so much has been suggested as to great constitutional difficulties which exist at the present time, for it amounts to an implication that there is friction between the different parts of the Empire and the Governments that represent them. I think the Prime Minister of Canada, in his admirable remarks has, if he will permit me to say so, shown the position in a very clear light, and has brought us all to the recognition, to which I hope we had come before, that the problems of the Empire, with the diversity of conditions which exist of race, and fortunately not of ideal but possibly of tradition, render it necessary that we should have the fullest discussion with a complete recognition by all of us that our desire' is mutually to advance the interest of the Empire as a whole. If there are any misunderstandings let us clear them away by a frank interchange of views. For my part I am certain that those constitutional difficulties which some people are trying to suggest will disappear entirely when around this table we come to discussion. We have been able to solve all our problems in the past, we have gone through the system of progress and advance in the Empire which you have recounted to us to-day, we go right back to the first Imperial Conference, we come to the testing period of the war, and the sittings of the War Cabinet. Wo pass on into the post-war period, and, as each new problem has arisen, we have met it. I am confident to-day that if we have to face further problems we shall be able to find a solution for them all. All the Prime Ministers spoke, and from the reports of their speeches I wish to read what was said bv General Hertzog, Prime Minister of South Africa, as showing the view of that dominion, which has been much misunderstood. He said - I take it that one of the objects of our gathering together here to-day and for the following weeks is to ensure the usefulness and permanency of our relations as an Empire by advancing its efficiency as an instrument of good for each of its associated members as well as for the world at large. In the attempt to attain that object, I wish to assure you, sir, of the hearty support and co-operation of myself and my colleague on behalf of the Union of South Africa. We are prepared to cooperate to the fullest extent in laying as solidly as possible the foundations of our commonwealth of nations, so as to make it as durable as it oan be, and here I wish to say a few words as to South Africa's attitude in regard to the Empire, or British Community of Nations. It has our hearty support, and will ever have our hearty support, irrespective of parties and races, as long as it is, and shows the character of, a commonwealth of free and independent nations, each free and striving to attain what is best for itself, yet in such a manner and in such a spirit as will conduce wherever and as much as possible to the wellbeing of all. If I may state in a few words the principle which should guide us in matters of general Imperial interest, I would say : In principle unrestrained freedom of action to each individual member of the commonwealth; in practice, consultation with the view to cooperative action wherever possible. I think, sir, it will be generally admitted that the corner stone of the Empire is the will, the goodwill, of those who compose it. Without that will the Empire must collapse. If, therefore, the Empire is to be maintained, if it is to flourish and fulfil that great task which we all hope it will achieve in the history of the world, we must see that the will to live in the Empire as a commonwealth of free nations will in future, as it is to-day, be present and active with every one of ite constituent 'elements Speaking merely for South Africa, I think they are not. South Africa is anxious to possess that will equally with every other member of the commonwealth, but that will can be assured for the future only if she can be made to feel implicit faith in her full and free nationhood upon the basis of equality with every other member of the commonwealth. I hope, therefore, that this question of the status of the dominions, which concerns their own communities no less than the world at large, will receive due consideration by this conference, and will be agreed upon in a manner that will remove all fear and doubt for the future. I am glad to see, Prime Minister, that, according to the agenda, this question will be treated, and I hope the result may be such as I see Mr. Bruce, the representative from Australia, contemplates will be the effect - if we, with a will, set to business to settle these questions, they will find a solution which will satisfy us all, I have no doubt. That was the atmosphere in which the conference started. The speech of General Hertzog, who, we have so often heard, has no desire for co-operation with the British Empire, showed that he had been misrepresented. Two things that he said had caused some anxiety. He referred, for instance, to " independence." The committee which dealt with the question had not been meeting very long before it became apparent that General Hertzog's use of the word " independence " did not express a desire to be outside the Empire. His only anxiety was that the position should be clarified, and that the Dominion of South Africa should have absolute autonomy, and should be free from the possibility of the overlordship of Great Britain. There was a feeling in South Africa that they were not a true partner in the Empire, were not enjoying full self-governing rights, but were subject to over -lordship by Great Britain, which had power to coerce them. In the course of the discussion it was shown that this was not so, and then the whole atmosphere was changed. I have referred to Genera] Hertzog's use of the word " independence " to show that he did not mean what many people thought that he meant. This question was not dealt with in the plenary session of the conference or in committee. The committees consisted of a considerable number of persons. Elaborate shorthand notes were taken of all their proceedings and transcribed and filed. But our inter-imperial relations were dealt with by the Prime Ministers, sitting alone in the PrivyCouncil chamber, presided over by Lord Balfour. The atmosphere there made possible the freest possible discussion. I think that there was no problem of the constitutional relations of the different parts of the Empire that was not threshed out round that table, in an atmosphere of freedom, where every difficulty could be brought forward, and every political consideration taken into account. It was that round-table method of considering this great question that rendered it possible for us to arrive at what I believe honorable members will agree is a satisfactory solution of it. I should like to deal first with the report of the Imperial Relations Committee. The first part of the document is quite general. It is headed, " Status of Great Britain and the Dominions." The Prime Ministers of the Dominions set out their view of the stage of evolution that has now been reached by the extraordinary group of nations comprising the British Empire. But no part of the report purports to set out in any sense a constitution for the Empire. Before I went to the conference I stated quite definitely that I would not be a party to setting down a definite constitution. The British Empire has grown and expanded as it has because of the amazing flexibility of the ties that bind its members together. The first part of this document, therefore, is in no sense a constitution. Its opening paragraphs merely attempt to declare to the peoples of the Empire and the nations of the world the stage that has been reached in our imperial evolution. Dealing with this definite matter, the report reads - There is, however, one most important element in it which, from a strictly constitutional point of view, has now, as regards all vital matters, reached its full development. We refer to the group of self-governing communities composed of Great Britain and the dominions. Their position and mutual relation may be readily defined. They are autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations. That is the definition that one would give of the relationship of the various parts of the Empire if he were asked to state it in a few simple words. Enlarging somewhat upon the position, the reports states - But no account, however accurate, of the negative relations in which Great Britain and the dominions stand to each other can do more than express a portion of the truth. The British Empire is not founded upon negations. It depends essentially, if not formally, on positive ideals. Free institutions ave its lifeblood. Free co-operation is its instrument. Peace, security, and progress are among its objects. Aspects of all these great themes have been discussed at the present conference; excellent results have been thereby obtained. And, though every dominion is now, and must always romain, the sole judge of the nature and extent of its cooperation, no common cause will, in our opinion, bc thereby imperilled. Equality of status, so far as Britain and the dominions arc concerned, is thus the root principle governing our interImperial relations. But the principles of equality and similarity, appropriate to status, do not universally extend to function. Here we require something more than immutable dogmas. For example, to deal with questions of diplomacy and questions of defence, we require also flexible machinery - machinery which can from time to time, be adapted to the changing circumstances of the world. This subject also has occupied our attention. The rest of this report will show how we have endeavoured not only to state political theory, but to apply it to our common needs. The definition that I have read, and the subsequent remarks, indicate clearly that there is something more than a negative aspect of our inter-imperial relations. Those extracts from the report have been subjected to the criticism that they contain no reference to the obligations of the different parts of the Empire towards each other. It is said that their rights are set out, but not their obligations. In my opinion, it was proper that the statement should be made in this way. Each dominion in the future, as hitherto, while it remains a member of the Empire, must be the sole judge of its obligations; and I believe, as the report states, that under these conditions our co-operation in any common cause will be such that no part of the Empire will be imperilled. In the past, notwithstanding that our imperial obligations have not been specifically set out, there has never been a time when any part of the Empire has been allowed to suffer through a division of forces, and I believe that if we do our best to develop the spirit of imperial goodwill and co-operation we shall maintain our unity. In the past our sense of obligation and responsibility to the Empire has been such that in time of need every part of His Majesty's far-flung dominions has responded to the appeal for help in a way that has amazed the whole world. We do not need to set out our obligations; it will be quite sufficient if we create a spirit of co-operation and goodwill. We need not fear that its obligations will not be observed and recognized by every part of the Empire. The commencement of this document, therefore, sets out the actual position in a few words. Then the report deals with specific matters, the first of which is the title of His Majesty the King. A slight alteration was made in His Majesty's title, merely with the object of meeting changed circumstances within the Empire. As honorable members know, the title of His Majesty the King has been " George V., by the Grace of God, of the United Kingdom of GreatBritain and Ireland, and of the British Dominions beyond the Seas, King." The alteration is the deletion of the word " and ", so that the title now reads, " George V., by the Grace of God, of the United Kingdom of Great Britain Ireland, and the British Dominions beyond the Seas, King." That alteration - which was in no sense substantial - was made because it was felt that the form of the title hardly accorded with the altered state of affairs arising from the establishment of the Irish Free State as a dominion. It would perhaps be stretching language to describe the Irish Free State as a dominion overseas, seeing that it lies only across the Bristol Channel. I should, of course, add that it was the desire of His Majesty that this question should be examined by the Imperial Conference, with a view to making any alteration in the title that it considered desirable. The next subject dealt with was the position of Governors-General, and no alteration whatever was made in that regard. All that was done was merely Lo set out definitely and clearly the position of the Governors-General of the various dominions. It is now stated clearly and definitely that a Governor-General to-day, as ever since there has been a Commonwealth, is the representative of His Majesty the King, and in no sense the representative of the British Government. At one period in the evolution of the Empire, Governors were the direct representatives of the Pritish Government, and exercised powers that were conferred upon them by that Government. In an autonomous self-governing dominion the Governor- General is the representative of the King alone, and is in no sense a representative of the British Government. The conference also considered the existing method of carrying on communication between the two governments, through the Governors-General of the dominions. At the present time all communications from the Australian Government are forwarded by the Prime Minister's Department to the office of the Governor-General, and are by that office despatched to the British Government. 66 KNP 0 0 MAXWELL, George Mr Maxwell - Is any change in the existing method of appointment of the Governor-General involved ? 66 F4B 0 0 BRUCE, Stanley Mr BRUCE - No. It has long been an established fact that the Governor-General cannot interfere in the slightest degree with any communication that passes through his hands from one government to the other ; it is sent to him merely for his own information. The conference definitely laid it down that each dominion should act according to its own judgment as to the better course to adopt, but it proposed the alternative method of cables being sent by the Prime Ministers of the dominions direct to the British Government, with the very important proviso that the Governor-General of the dominion concerned should be supplied with copies of all documents of importance, and that, generally, he should be kept as fully informed as is His Majesty the King by. the British Government. The alteration will not affect in substance the existing arrangement. The operation of dominion legislation was then considered. The position that now exists is very well set out in the report itself, which reads - Existing administrative, legislative, and judicial forms are admittedly not wholly in accord with the position as described in section II. of this report. This is inevitable, since most of these forms date back to a time well antecedent to the present stage of constitutional development. Our first task, then, was to examine these forms, with special reference to any cases where the want of adaptation of practice to principle caused, or might be thought to cause, inconvenience in the conduct of inter-Imperial relations. There are a number of practices which are, in some respects, merely a survival from a time when the constitutional position was entirely different from what it is now, and when full autonomy and self-governing rights were not enjoyed. The particular points that we examined were - Existing statutory provisions requiring reservation of dominion legislation for the assent of His Majesty, or authorizing the disallowance of such legislation. In effect, they had ceased to operate, yet the matter could not be brushed aside without consideration, because there are certain kinds of legislation to which I shall refer in a moment, in regard to which it is essential that an endeavour should be made to ensure uniformity throughout the Empire, and such coordination as will conserve the interests of every portion of the Empire. There is an anachronism, but the conference recognized that the matter should be considered. Other points examined were - (a) The present position as to the com- petence of dominion Parliaments to give their l egislation extra-territorial operation. The practicability and most convenient method of giving effect to the principle that eachdominion Parliament should have power to give extra-territorial operation to its legislation in all cases where such operation is ancillary to provision for the peace, order, and good government of the dominion. The principles embodied in or underlying the Colonial Laws Validity Act 1865, and the extent to which any provisions of that act ought to be repealed, amended, or modified in the light of the existing relations between the various members of the British Commonwealth of Nations as described in this report. Each of those questions will require the most careful and deliberate consideration, and probably will involve the examination of a great deal of detail to ascertain the wisest course to adopt. Another difficult subject was merchant shipping legislation. It was decided that it was necessary to consider the principles which, in the general interest, should govern practically all legislation relating to merchant shipping in the various parts of the Empire, having regard to the changes which have taken place in constitutional status and general relations. It may be necessary to enlist the assistance of constitutional lawyers in the endeavour to unravel the extremely difficult problems which arise. The conference considered that the best course would be to hold a subsidiary conference, consisting of representatives of . all parts of the Empire, for their examination, these representatives to report to their respective governments. The first step will be a close examination by each dominion of the present position. The British Government has already appointed a committee to deal with the matter, and the Commonwealth Government and the other dominion governments are taking similar steps to have a full investigation made, so that complete information may be placed before the conference when it is held. 67 KEV 0 0 FENTON, James Mr Fenton - May that me,an an interference with our Navigation Act ? 67 F4B 0 0 BRUCE, Stanley Mr BRUCE - No. The idea is to devise means for retaining complete freedom, with a general definition of the powers and rights of the different self-governing dominions of the Empire. The next matter was the right of appeal to the Judicial Committee of the Privy Council. Some of the dominions do not desire that there should be the right of appeal to the Privy Council; they hold that there should be no appeal to any tribunal outside their own borders. In other dominions certain sections of the community would view with very grave alarm the withdrawal of the right of appeal to the Privy Council. In Australia the position is complicated because of the existence of both States and Commonwealth, and there may be a very wide divergence of opinion regarding the desirableness of retaining the right to appeal to the Privy Council. The' matter has been left for each dominion to determine for itself. The British Government has stated its position clearly and definitely, as will be seen from the following paragraph in the report: - From these discussions it became quite clear that it was no part of the policy of His Majesty's Government in Great Britain that questions affecting judicial appeals should be determined otherwise than in accordance with the wishes of the part of the Empire primarily affected. Clearly, it is for every dominion to settle this question for itself. ' The view was strongly expressed by some dominions that mutual interests may be of such a character that the right of appeal to the Privy Council should continue. That difficulty is met, as the summary ex plains, in these terms - It was, however, generally recognized that, where changes in the existing system were proposed, which, while primarily affecting one part, raised issues in which other parts were also concerned, such changes ought only to be carried out after consultation and discussion. That in no way limits the right of a dominion to say that it does not desire to have appeals taken to the Privy Council. But, before action was taken, if there should be such a position as I have referred to, one dominion would consult and discuss the matter with the other dominion which might be concerned. I consider this a satisfactory manner of dealing with the right of appeal to the Privy Council. The next subject discussed was relations with foreign countries. What was primarily dealt with was the procedure in relation to treaties, the form of treaties, the powers to be issued, the manner in which treaties are to be signed, and representation at international conferences. These matters are supplementary to the resolutions passed at the 1923 conference. As honorable members will no doubt remember, those resolutions dealt with the relations of the dominions with foreign countries, and, to summarize them, were based upon the principle of consultation wherever any action was being taken that could in any possibility involve any outlying part of the Empire. The points dealt with in the report of the last conference are in amplification of what was done in 1923, mainly with regard to treaties and treaty matters. One particular point dealt with was that there are different bases for the drawing up of treaties. Treaties between nations \ax&' generally on the basis of agreements between the heads of respective States. The treaties und'er the League of Nations, however, are dealt with on the basis of agreement between countries. The subject has been dealt with in a manner which it is hoped may bring about uniformity. The resolutions are somewhat exhaustive, and must be read by honorable members if their significance is to be fully understood; but, broadly speaking, they endeavour to bring the practice into line with what is to-day admittedly the position in the different self-governing parts of the Empire. The next matter considered was the channel of communication between dominion governments and foreign governments. As honorable members are aware, it is quite within the competence of any dominion to appoint its direct representative to any foreign country. This is one of the matters concerning which there was found to be a certain confusion of thought when the conference assembled. It was thought by some that the dominions had not power to make these appointments. They have the power, and its exercise has been recognized. For example, the Irish Free State, two or three years ago, appointed a direct representative at Washington. There -should, never have been any doubt that the power existed; but such a doubt did exist in some people's minds. It was felt that, human nature being what it is, there might be an inclination on the part of some dominion to exercise the power in order to show that it possessed it. However, the whole matter was dealt with in such a way that no doubt remains that a dominion if it chooses can appoint its direct representative in any foreign country. The general opinion expressed from all parts of the Empire was that it would be undesirable, and would probably subject any dominion government responsible for it to very strong criticism in its own parliament if direct representatives should be appointed to countries in which the Empire had no diplomatic representation at all. The conference saw that in a case such as that of Canada, which shares with the United States of America a common boundary extending for 4,000 miles, and where there are intricate questions affecting water rights and other matters to be dealt with, it was a logical and proper thing to appoint a direct representative ; but it was not desirable, nor would it be wise for dominion governments to commence duplicating representation where no questions of moment were likely to arise. That may be taken as broadly the position with regard to representation. I may add a word with regard to Australia's position, and the attitude of this Government in this connexion. Canada recently appointed a representative at Washington. When in the United States of America I was asked whether the Australian Government proposed to adopt a similar course. 1 indicated that it did not, and that there were not sufficient questions of moment between Australia and the United States of America to warrant our appointing a special representative at Washington to handle diplomatic questions. I think that the view I expressed will be generally acceptable to the people of Australia. The system of communications and consultations was the next matter to be discussed. I may say a word here as to the present system. During recent years there have been tremendous improvements in this regard. The dominion governments now receive the fullest information by cables and despatches concerning what has taken place in connexion with the foreign relations of the British Empire. But it is felt that it is necessary to have something more than these direct formal communications from time to time, and all representatives at the conference were agreed that it would be desirable to have some official channel of communication between the governments in connexion with ,any questions -that might arise. It is very difficult in the dominions, when a formal communication is received to which a formal reply must be sent, to find time to deal with the matters involved, draft a reply, and think out all the possibilities of the situation, when, as a matter of fact, all that may be required is information upon a particular point, to get the atmosphere or to know some detail of arrangements come to between representatives of the different countries. It was decided that it should be for each dominion to -arrange with the British Government for whatever form, of channel of unofficial communication it might desire. There were two alternatives. One is that in Great Britain there should be a senior representative of the dominions to act as a channel of communication with the British Government, of if a dominion preferred to adopt that course the British Government would send some representative to the dominion to act as its unofficial channel of communication. So far as Australia, is concerned, the High Commissioner is the unofficial channel for any communications we wish to convey to the British Government. I have referred to the questions affecting the relations of the different parts of the Empire on specific matters. They were the only questions which when we sat round the table we found it necessary to raise and discuss in order to discover what the exact position was. I think that the solutions arrived at are such as will be found acceptable to the people of every part of the Empire. There are some people who say that it was quite unnecessary to have the InterImperial Relations Committee, that its report means nothing, that it has not altered the position one iota from what it was before the committee met, and that, the whole action was utterly futile. I am afraid that I cannot agree with that view. Even if there is nothing new, and if the document to which I have referred merely sets out the position as it was before we -met in conference, there is yet direct evidence that the people of a great dominion like South Africa did not clearly understand what was meant by the equality of status and full self-governing rights of the dominions. They were under some apprehension that Great Britain possessed some overlord powers, but they now know that the time, position, and inter-imperial relations are based on goodwill and mutual understanding. Surely it was worth while to set out what is exactly the position we have now reached! I believe that the report will be informative for our own people, and will have a great effect throughout all parts of the Empire. It has had a great effect in South Africa already, as honorable members will see from something which was said by General Hertzog on his return to that country. He paid tribute to the generosity with which the British Government had met the dominions. He was convinced that no declaration could be drafted by which their liberty could in a most unlimited manner be so clearly demonstrated. He wanted them to express thanks to the British statesmen for giving something so thoroughly acceptable. Of the old Empire nothing remained but the free alliance of seven nations forming their own League of Nations. The measure of their liberty was equal to that of England herself. Greater liberty no people could enjoy, and he thought no one wanted greater liberty. Any one who looked for greater freedom was looking for something impossible so far as the Empire as at present constituted was concerned. No Englishman need fear that they would be prepared tu say farewell. He thought that if separation were proposed to-day, not 5 per cent, of the population would approve of it; but if the old idea of Empire had been maintained, then there would have been the probability of the Empire being disrupted. That was the great fact that had emerged from the conference. 70 JXA 0 0 CHARLTON, Matthew Mr Charlton - We all realized that before the conference. 70 F4B 0 0 BRUCE, Stanley Mr BRUCE - I agree that we all realized it; but was it not worth while that some who did not realize it should have it set out in unmistakable language '{ I think that another consideration will show that what has been done was well worth while. It is a fact that nearly every foreign country through its press and its public men regards what was Hone at the conference as a great achievement by the British Empire. It is an admirable thing that every one should believe that the British Empire has accomplished something. Unquestionably, the work of the conference has had a tremendous effect in every foreign country. Perhaps the most outstanding tribute to what was accomplished was that by Dr. Nicholas Murray Butler, of the United States of America, who is a great international authority. He said - When the history of government in sill its forms comes to be written, it will be found that if a federal system of highest significance and importance was brought into the world by the Convention at Philadelphia in 1.7S7, and its subsequent adoption by the States, that a new significant and most interesting form of political association and organization came quietly into existence during the autumn weeks of 1926. I would suggest that- the desire on the part of the British dominions to define their position in relation to Great Britain will be of the greatest advantage and will add unquestionably to the prestige and position in the world of. the British Empire. In addition, this specific committee of the dominions dealt with three other questions of immediate and practical concern. The first related to compulsory arbitration in, international disputes. As the House knows, the statute establishing the Permanent Court of International Justice provides that nations can adhere to the court and to compulsory arbitration in all matters under all circumstances. Some nations have adhered to the compulsory clause, but speaking generally, the great powers have not done so. Until the great powers as a whole take action it will be very difficult for the British Empire' to accept compulsory arbitration in all cases. After a full discussion the conclusion come to by the conference was that whilst the members of the committee - which committee was composed of all the Prime Ministers with the exception of the Prime Minister for Great Britain, who was represented by Lord Balfour - were unanimous in favouring the widest possible extension of the method of arbitration for the settlement of international disputes, the feeling was that it was at present premature to accept the obligations under article 36 of the statute. A general understanding was reached that none of the governments represented at the imperial conference would take any action in the direction of the acceptance of the compulsory jurisdiction of the permanent court, without bringing up the matter for further discussion. Honorable members know that it is essential to discuss further that subject before one unit of the Empire enters into such an obligation. The next question related to the adherence of the United States of America to the Protocol establishing the Permanent Court of International Justice. As will be remembered, the United States of America indicated certain reservations when it proposed to become a party to the Protocol. Those reservations were considered by a special conference at Geneva held just prior to the meeting of the Assembly of the League. All the Prime Ministers at the Imperial Conference approved of the decision that was come to at Geneva. The last question related to the policy of the British Government in entering into the Locarno treaties. That subject was exhaustively discussed. All the representatives of the dominions appreciated the importance of the Locarno pact and they signified their absolute approval of the course that had been adopted. The following resolution was passed by the committee : - It was therefore possible to envisage the results which the Locarno policy had achieved already, and to forecast to some extent the further results which it was hoped to secure. These were explained and discussed. It then became clear that, from the stand-point of all the dominions and of India, there was complete approval of the manner in which the negotiations had been conducted and brought' to so successful a conclusion. The final and unanimous conclusion of the committee reads as follows: - The conference had heard with satisfaction the statement of the Secretary of State for Foreign Affairs with regard to the efforts made to ensure peace in Europe, culminating in the agreements of Locarno; and congratulates His Majesty's Government in Great Britain on its share in this successful contribution towards the promotion of the peace of the world. Prior to leaving for the conference I indicated that I would not in any way pledge Australia to the ratification of the Locarno treaties without coming to this House for an expression of its views. In view of that resolution and the united action taken by all the Prime Ministers, the Government does not now propose to submit to the House any proposals for the ratification of the treaties. That is all I have to say of the work of the InterImperial Relations Committee. Another result which will follow from a clear and absolute definition of the status of the various self-governing dominions is that it will bring to us a greater realization of our obligations of nationhood which all of us are now privileged to enjoy. Two important subjects were fully discussed at the Imperial Conference, and it is only right that honorable members should discuss them and express their views. Our first obligation is to play a part by consultation in the foreign policy of the British Empire. Our second obligation is to co-operate in the defence of the Empire as a whole. Regarding the first, we have demanded for ourselves the status of full equality with Great Britain and the right of consultation respecting her foreign policy. We found ourselves involved in the Great War because of a foreign policy about which we had never been consulted, and I think we are all determined that we shall never again be so involved by a policy of which we have no information. For our own protection, and in the interests of our people, we must recognize that we are part of the Empire, and if Britain were confronted with a great disaster, we should be involved. That was recognized at the Imperial Conference when we were discussing our constitutional relations. This House recognizes that the measure of co-operation that we are to give to Great Britain in war-time is for this Parliament to determine. Whether we assist with men or money, or in any other way, is entirely for us to determine; but should it suit an enemy at war with His Majesty the1 King, the head of the British Empire, to attack Australia, then immediately we should be defensively at war, and would have to protect ourselves. That point was definitely recognized at the Conference. We must consider that position when considering our obligation to play a part by consultation in the foreign policy of the British Empire. As an independent country, with a population of 6,000,000, our voice in foreign affairs would count for little, but when nations like Canada, Australia, South Africa, and New Zealand all look in one direction, and are animated with a desire to promote world's peace, their right of consultation in the foreign policy of Great Britain must exercise a tremendous influence upon the world. We have to remember, if we are sincere in our protestations of a desire for world's peace and to play a part in the recognition of the nationhood of the British Empire, that the voice of that Empire as a whole is infinitely stronger and more effective in the counsels of the world than the voice of Great Britain alone. We sometimes forget the million men from the British dominions, excluding the Crown colonies who took part in the Great War. I venture to say that their worth has not been forgotten by other nations, who now recognize how great is the part played by the united British Empire in the affairs of the world. 71 JXA 0 0 CHARLTON, Matthew Mr Charlton - Did- the Conference come to any decision regarding the dominions having a direct voice in the foreign affairs of Great Britain ? 71 F4B 0 0 BRUCE, Stanley Mr BRUCE - No. We have it to-day. 71 JXA 0 0 CHARLTON, Matthew Mr Charlton - No alteration was made? 71 F4B 0 0 BRUCE, Stanley Mr BRUCE - No. We are to-day claiming the privileges and assuming the obligations of nationhood. As a result of the Conference, the nations of the world now clearly and definitely understand that the foreign policy of Great Britain is actually the foreign policy of the Empire. This makes greater the possibility of establishing an understanding between the English-speaking peoples of the world. Previously, when Great Britain has given voice to its policy there has been an unfounded suspicion in the minds of the people of America that British statesmen were dragging the dominions at their heels. America was, therefore, a little anxious and a little unsympathetic. The questions of foreign policy were, of course, exhaustively examined at the Conference. It was impossible to embody the statement of the Secretary of State for Foreign Affairs in the reports of the Conference. That statement was frank in every respect, and set out for the information of the Prime Ministers the present position respecting the whole of our international relations. {Extension of -time granted.) The outstanding result of the discussion on foreign affairs is that in every part of the Empire there is the greatest desire to promote the world's peace, and to do everything possible to bring about the progressive reduction of armaments. I think that the attitude of Great Britain and of the other parts of the Empire, as expressed by their representatives, will commend itself to the people of Australia, because it is based upon the ideals of peace, support for the League of Nations, and the need for progressive disarmament. Hitherto there always has been the fear that we in Australia may be dragged into some of the difficulties and troubles of Europe. In the past the foreign relations of the Empire presented a very difficult problem. But in the provision for the settlement of international disputes we see the greatest achievement of the League of Nations. There is now a basis for a policy which should be acceptable to the dominions. "When minor troubles occur between the smaller nations, Great Britain and the dominions must give their full support to the League of Nations, because it is to that body that we look for the solution of such troubles, and not to direct intervention, as in pre-League days. The work of the League will become more effective as time goes on. We have to recognize that the League has not yet acquired sufficient strength to handle the troubles that may arise between the great powers, and from time to time it may be necessary for the British Empire to play a direct part in such matters, and to give a lead, as it did when the Locarno Treaty was entered into. I do not think that any one would object to the taking of action by the Great Powers for the ensuring of the peace of the world. The League of Nations, so far from being antagonistic, would be actually sympathetic. Such action has ifr. Bruce. already led to the inclusion of Germany in the League. In this we have a basis of foreign policy that would be acceptable to all parts of the Empire, which, by speaking with a united voice, could render .great service to the world, and the cause of peace. Defence was again considered by the Conference. The statements on this" subject by the First Sea Lord, the Chief of the General Staff, and the Chief of the Air Service, being confidential, cannot be disclosed, but the general resolutions of the Conference, after confirming those of the 1923 Conference, express regret that greater progress had not been made with the international reduction and limitation of armaments, and indicate the common desire of the Governments represented to achieve this object, consistently with the safety of the Empire. They then proceed to deal with certain specific subjects, of which the most interesting to Australia are the construction of the Singapore base, and the establishment of imperial air routes and bases. Tine representatives (of all the dominions recognized that in the air a new arm of defence has developed, and that to the British Empire with its far-flung territories, and its commerce traversing the trade routes of the whole world, air routes and bases will probably be as important in the future as fleetsand naval bases have been and still are. In the summary of the proceedings ot the Conference it is stated that - Impressed with the vital importance of ensuring the security of the world-wide trade routes upon which the safety and welfare of all parts of the Empire depend, the representative of Australia, New Zealand and India note with special interest the steps already taken by His Majesty's Government in Great Britain to develop the naval base at Singapore, with the object of facilitating the free movements of the fleets. On behalf of the Government I have said on many occasions that, pending a further agreement between the nations for progressive disarmament, the existence of a naval base at Singapore is vital to the security of the Empire trade routes through the Pacific and Indian oceans, and to the great dominions in the south. These matters can be dealt with in detail more appropriately when the Defence Estimates are under consideration, but I shall explain briefly my attitude in regard to an Australian contribution towards the cost of the base. Upon my return from the Conference of 1923, I intimated to Parliament that the Government would submit proposals in regard to the Singapore base, but I was not then in a position to indicate what those proposals would be, because we were not certain that the construction of the base would be proceeded with. Subsequently, the project was abandoned by the British Government of the day, and Australia decided on a programme of naval construction extending over a period of five years and involving the construction of two 10,000-ton modern cruisers, two ocean-going submarines, and certain other expenditure. At the recent Imperial Conference I pointed out that, owing to the belief at that time that the Singapore base would not be proceeded with, the Commonwealth had shouldered heavy financial obligations in connexion with naval defence, and that it would be for this Parliament to consider whether it could do anything further at present; that the Government was so heavily committed that it was impossible to promise that Australia would contribute towards the cost of the Singapore base. The matter will have to be considered by this Parliament, but there does not appear to be need for immediate action, because, owing to the generosity of their Highnesses, the Rulers of the Federated Malay States, the necessary financial provision, for the next two years is assured. It was generally recognized at the conference that of all the dominions Australia had shown the greatest desire to carry out the principle affirmed at the 1923 conference, that the primary responsibility of each portion of the Empire represented at the gathering was to attend to its own defence. The present expenditure of the Commonwealth upon defence is greater than the total expenditure of all the other dominions; but there is, I think, an increasing recognition in the other dominions of their obligation to provide for their own defence, and to contribute also towards the general defence of the Empire and the protection of its trade routes. The subject of nationality was dealt with by a sub-committee, by which certain recommendations were made. One phase of it upon which this Parliament has already expressed itself by resolution is the nationality of married women. The Australian representatives pressed the opinions which I enunciated on behalf of the Government in this House, and which were endorsed by other honorable members; but, unfortunately, we could not get unanimity in the committee. Upon this subject the summarized report states - Since, however, the committee attached great importance to the maintenance of uniformity throughout the different parts of the Empire in the law relating to British nationality, they decided to recommend to the conference that further consideration of the question should be postponed pending the report of the committee of experts referred to in the report of the Inter-Imperial Relations Committee, which it is proposed should deal with various matters connected with the operation of dominion legislation, and, in view of the possibility of an attempt being made to regulate the problem of dual nationality and no nationality by international agreement. The conference adopted that recommendation. It is possible that the whole question of dual nationality and no nationality will be dealt with on an international basis, because many difficult and invidious positions arise under the present conflict of laws. Mandates also were discussed by the conference, the mandatory powers represented being Great Britain, South Africa, New Zealand, and Australia. The main discussion was upon the work of the Permanent Mandates Commission of the League of Nations, the questionnaire issued by that commission, and its proposal to invite witnesses from the mandated territories to Geneva to give evidence. Upon this matter the representatives of the mandatory governments were unanimous, and to the communication from the League of Nations the Governments concerned sent almost identical replies. The fullest consideration was given to the unsatisfactory conditions arising out of the condominium in the New Hebrides. Direct and formal representations were made to the French Government for a partition of the islands to remove the present difficulty. That, however, was not agreed to, and certain other action was proposed which I hope to be able to indicate to the House in the course of a few days. British policy in the Antarctic Ocean was reported upon by a committee, particularly in regard to the British spheres of influence and the promotion of exploration and scientific research in that region. The highly important subject of air communication was fully considered. There are great possibilities of early developments in connexion with both heavier-than-air and lighter-than-air transport. The British Government is now opening up a regular service between Cairo and Karachi, and an experimental service between Khartoum and Kisumu. The Imperial Government and the Union of South Africa are carrying out experimental flights, with a view to connecting up the air services throughout Africa, and, on behalf of the Commonwealth, I indicated, after consultation with my colleagues in London, that Australia would be prepared to cooperate with Great Britain in experimental flights between Australia and Singapore. The British Government will promote a flight to Singapore during the current year, and it is proposed that Australia should co-operate in trying to establish heavier-than-air communication between Australia and Singapore as part of an eventual through route from London to the Commonwealth. A fact that should be particularly gratifying to Australians is that this country has done far more than any other part of the Empire in the development of commercial and passenger-carrying air services. The route from Cairo to Karachi, and the service by defence planes between Cairo and Iraq, extending over a route of approximately 800 miles, are regarded as great achievements; but I was happy in being able to tell the conference that for some years Australia has maintained a commercial and passenger-carrying air service over a route 1,400 miles long. A very interesting development is taking place in lighter-than-air machines. The British Government is building two airships, and has one in commission. Those that are being built are of increased capacity, and all the technical advisers of the Air Ministry are confident that they have solved the problems relating to stresses, and have overcome other difficulties hitherto associated with the use of airships. Three years ago when I was in England, the Air Ministry had grave doubts about the practicability of airships; but to-day it is impossible to find any one associated with the Air Ministry who will say that the new airships' are not- going to be a great success. It is predicted that they will immediately be able to come to Australia, if we so desire. They will both be in the air this year, and there is the great probability that they will be successful. If they come up to expectations, we shall be able to travel from Australia to London in a period of about eleven days. They will be quite different in construction from previous airships. The difficulty of providing hangars has disappeared. As soon as they are constructed, they will be put in the air and taken to their mooring masts, just as sea-going ships are anchored, or tied to a wharf, and they will remain up in the air until they have to be placed in dock for repairs. The erection of a mooring mast in Australia must receive consideration. Canada and South Africa have each agreed to erect a mast; but, on behalf of Australia, I said that I wanted to know a little more about the matter before committing myself. The required information is being supplied. Communications other than by air were very exhaustively examined. A scheme was investigated for the building of 22,000-ton steamers to run at 20 knots an hour, to reduce substantially the time occupied in the voyage between Great Britain and Australia. It is impossible to give practical effect to such a scheme at the present time; but I believe that in the not far distant future there may be a development in that direction. In the first scheme, the use of Diesel engines was suggested; but in the second scheme, eighteen months later, the principle of superheated steam, which Sir Charles Parsons - who is probably the greatest authority on boilers in the world - is prepared to guarantee as technically right, was employed. The type of engine to which that principle is being applied is in the experimental stage; it has not been placed on any craft, except a small pleasure steamer on the River Clyde. Therefore, although a great development in sea transport is possible in the near future, we could not arrive at a practical basis for the adoption of a scheme at the present time. Another subject dealt with was that of the Pacific Cable Board, the operations of which are of considerable interest to Australia. As a result of the fight which we put up, I think Australia will receive some money from the board. The Pacific cable is owned and controlled by the Governments of Great Britain, Australia, New Zealand, and Canada. Australia has the greatest holding in the enterprise, her share amounting to six-eighteenths, and Great Britain and Canada' have five-eighteenths each, and New Zealand two-eighteenths. The Commonwealth has the largest holding, because it took over the holdings of the Australian States. The basis of representation was altered by the conference. Great Britain had three representatives against our two; but the new representation will be - Great Britain, 2; Australia and Canada, 2 each; and New Zealand, 1. The method of appointing the chairman, which was in the hands of the British Treasury, has been altered. We have arranged to get back part of the moneys we provided to meet deficits between the years 1901 and 1915, our share being £320,000. The British Government, which found the money originally, is being paid off by annuities; but the control, being in the hands of representatives of the dominions, the board can appropriate to reserve whatever it thinks fit. It built up a reserve fund of £2,000,000, and used it for the duplication of the cable. There is nothing to prevent all the surplus profits being placed to reserve. The British Government, under an act of 1911, is entitled to receive surplus profits for the purpose of accelerating the date when it will be repaid the money it has advanced; but the board can counter that provision by placing all the profits to reserve. In that matter there was obviously room for a compromise. I said emphatically, on behalf of Australia, that the British Government, which was receiving interest on its money, should not receive a farthing beyond annuities, and that all the surplus should be placed in reserve. The British Government thought that that was wrong, but I said that we had moneys outstanding on which we were receiving no interest. The question was finally settled by determining the amount to be placed to reserve year by year; the surplus profits for the next two years will be employed for the redemption of deficits, after which one half of the surplus profits will go to the payment of the original advance by the British Government, and the other half to the partner Governments in payment of their deficits. As the board is now making substantial profits, considerable sums should be received by the Consolidated Revenue from this source. I have now dealt practically with all the political and constitutional issues raised at the conference. There are, however, economic questions, and one or two other " matters, about which I must speak. The outstanding feature of the conference was the attitude of Great Britain and the dominions to interimperial trade and economic co-operation. At the conference of three years ago there was some sympathy with certain views I put forward as to the importance of this question, and since then conditions have been so difficult, and have shown how necessary it is to promote inter-imperial trade and bring about greater economic cooperation within the Empire, that at the present conference there was a marked de. ire by all representatives to advance the matter. The only practical and immediate way in which governments, as governments, can do anything to promote inter-imperial trade, is by the granting of preferences. Three years ago I stressed that fact strongly to the British Government, indicated the preferences we were giving, and urged the necessity, if we were to develop this country and absorb an increasing population, for developing the market for Australian products in Great Britain. As a result certain preferences which have been of very great value were granted to Australia. At the recent conference it was quite useless to attempt anything on those lines, because the British Government, which had been returned to power about a year before the holding of the conference, had given definite pledges that during the present Parliament it would not deal with that matter. It was, therefore, necessary to consider other methods of promoting trade, and I believe that much was accomplished that will be of great value in the future. The changed atmosphere was clearly shown by the attitude of representatives to the Imperial Economic Committee. The committee came into existence as a result of the 1923 conference, and at that time Canada actually voted against the motion which I submitted for the creation of the committee. The committee was established only on an ad hoc basis, to deal with specific references. Before the holding of the last conference the committee had submitted four reports on four references; and the representatives present agreed to the continuance of the committee, and to the reference to it, not only of questions relating to foodstuffs and ad hoc references, to which it had previously been limited, but also questions affecting raw materials. It was agreed that the committee should make an examination of the trade of the Empire from the point of view of what the Empire is purchasing, and where it is purchasing it, what it is producing, and where it is selling it, what are the great avenues of consumption in the world, and to what extent the Empire can supply the world's needs. The committee is first dealing with trade from the statistical stand -point, and is issuing to the various governments a statistical outline of the industries and raw materials which it appears desirable to investigate. If the governments approve, the inquiry will be held, in the same way as the inquiry by the committee into fruit, meat, and certain other things. The Empire Marketing Board is also now firmly established, and is, I believe, doing valuable work. It was created to control the expenditure of £1,000,000 annually, which the British Government agreed to provide because it did not give certain preferences it had agreed to at the 1923 conference. The board is organizing propaganda, and is endeavouring to create a feeling in Great Britain in favour of voluntary preference for dominion products. It is also assisting in scientific research throughout the Empire, and c really acts like a great philanthropist who might devote a fortune to be expended in the acceleration of scientific research in agriculture and industry. It is doing something more than the various governments are doing, and has indicated directions in which it can co-operate with us in the solution of some of our problems. We find ourselves in a more fortunate position than some other parts of the Empire, because, by the establishment of the Council of Scientific and Industrial Research, we have in this country an authority, which is coordinating our scientific research work, with which the Empire Marketing Board can deal. I am hoping that by this means we shall be assisted in the solution of many of the problems that now confront us. A sub-committee of the conference considered the important matter of the application of scientific research to industry. Time will not permit me' to deal exhaustively with its report; but I commend it to the consideration- of honorable members, and particularly the introduction to it which was written by Lord Balfour. 76 10000 0 0 LEY, Thomas Mr DEPUTY SPEAKER (Mr Bay ley - The time allowed by the Standing Orders for this discussion has expired. Is it the wish of honorable, members that an extension be granted, and the Prime Minister permitted to continue ? HONORABLE Members. - Hear, hear ! 76 F4B 0 0 BRUCE, Stanley Mr BRUCE - The application of scientific research to industry was considered from an Empire stand-point, the object being to secure some means of coordination, so that what is done in one part of the Empire may be beneficial to other parts. An effective arrangement of this kind would have a tremendous influence upon the efficiency of the whole Empire. The sub-committee did admirable work, and Lord Balfour's introduction to its report is, as I have said, well worth perusal. Steps have been taken which, I believe, will lead to a greater measure of co-operation within the Empire, and to the doing of much more research work 'than formerly. The direct result of this to Australia will be incalculably beneficial. I was glad to find that since the war there has been an increasing appreciation in Great Britain of the value of scientific research, and a great organization has been built up there through which £2,000,000 a year is being spent. The results of the work of this organization in Great Britain will now be made available to Australia, and must surely be very helpful to us. Unquestionably some other countries are ahead of Great Britain in industrial research, but the arrangements that are now contemplated, after the investigation of this question at the conference will, I am sure, mean that the Empire will take a place in the front rank in industrial research, and that all the benefits that can be derived by industry from scientific research will be available to our industries. A conference is to be held in Great Britain this year on agricultural research, and I believe that excellent results will flow from it. Another question dealt with was industrial standardization. A valuable basis has been laid down for Empire standardization, more or less on the lines that we already follow in Australia. Afforestation was also considered, and I am glad to say that the next Imperial Forestry Conference will be held in Australia and New Zealand in 1928. The compilation of wool statistics was considered. There was a clear appreciation on the part of the conference of the desirableness of obtaining the fullest statistics possible, including every aspect of the subject. But there was- an equally clear appreciation of the fact that unless we could secure the co-operation of foreign countries in compiling these statistics, it would be undesirable to compile Empire statistics. An effort is now being made to obtain the agreement of other countries to the production of this information. Consideration was given to the publication of statistics covering foodstuffs in cold storage. It would be of the greatest possible assistance to the industries concerned if accurate figures on this matter were available; but, again, the co-operation of other countries is necessary before satisfactory information can be secured. The compiling of Empire statistics was also mentioned ; but I need not delay honorable members in dealing further with these matters at this stage. Other matters to which the general economic sub-committee gave attention were conventions relating to the limitation of ship-owners' liability and maritime mortgages and liens; conventions relating to the immunity of Stateowned vessels ; valuation of goods for customs purposes; immunity of State enterprises from taxation; and the taxation of non-resident traders. These are all set out in the summary and annexe. The only other remark I wish to make on the economic side is that the conference realized that it was imperative that we should have inside the British Empire a greater measure of co-operation and a great deal more pooling of our brains, credit, and experience. I think the representatives of every part of the Empire now recognize the desirableness of interimperial co-operation. The British Government proposes to send out to Australia four fully qualified representatives of British financial, business, and commercial interests to discuss with the Migration and Development Commission, and the Commonwealth and State Governments, ways and means by which close co-operation may be secured in the development and utilization of Australian resources, and the promotion of inter-imperial trade. I understand that these gentlemen will arrive here in the near future. They have not yet been selected, ' but I have received a cabled communication from the Secretary of State on the matter. All this brings us back to the fundamental problem of the British Empire and of Australia. The problem of the Empire is a better distribution of its white population, and that of Australia the securing of a larger population for the development of her great resources. A good deal was done at the conference in regard to migration, but I do not propose now to deal with that question at length. Honorable members will recollect that, prior to our leaving Australia to attend the conference, the various State Governments were invited to discuss the conditions governing the acceptance of the £34,000,000 migration loan; and a great number of suggestions were made with the object of securing the best possible result from the expenditure of that money. These were discussed with the British Government, and many tentative alterations were made to the agreement to the advantage of Australia generally. It was agreed, for instance, that the amount of £1,000 proposed as the maximum advance to a married farm settler should be increased to £1,500; that the average family to be absorbed on a farm should be reduced from five to four ; and that unassisted migrants should be taken into account in the allotment of farms. A number of alterations were also made in the financial clauses of the agreement which should greatly benefit Australia. As these will be submitted to the States, I think it wise that I should not, at this stage, indicate their exact nature. The details of our general migration plans were also discussed very exhaustively with the British Government, particularly by Mr. Gepp, the Chairman of the Development and Migration Commission, who accompanied me to London. As a result of our negotiations, the British Government is now prepared to share equally with the Commonwealth Government in affording joint financial assistance in connexion with rural housing. This whole matter is to be discussed with the State Governments and a working basis arranged. Every one who has investigated the problem of rural development and the promotion of rural settlement has come to the conclusion that, before anything effective can be done, the difficulties connected with rural housing must be solved. The British Government has also agreed to provide free rail fares to the port of embarkation for assisted migrants who reside outside a radius of 40 miles of London. It will also share equally with the Commonwealth in the cost of establishing centres in Great Britain for training women domestics for employment in Australia. Another arrangement is that the British Government will share equally with the Commonwealth the cost of permanent matrons on vessels carrying large numbers of women to Australia. Honorable members who have studied the subject will agree with me that it is desirable that permanent matrons should be appointed on these vessels. It was agreed to increase the maximum amount of capital for each assisted migrant with a family to £.1,500, plus £200 for each child. The amount for unmarried assisted migrants remains at £750. The passage-money agreement has been altered, and the British and Australian Governments are now providing free passages for domestic servants. The British Government is also prepared to go further in the direction of contributing to the reduction of migrants' fares to Australia. But the whole question must be given further consideration. 78 KV8 0 0 STEWART, Percy Mr Stewart - Is the £34,000,000 loan based solely on land settlement? 78 F4B 0 0 BRUCE, Stanley Mr BRUCE - No. In regard to this whole question of migration, I suggest that it would be desirable for honorable members to meet Mr. Gepp, the Chairman of the Commission, in a committee room of the House at some suitable time, so that he may inform them on all the details of the matter. 78 JXA 0 0 CHARLTON, Matthew Mr Charlton - Shall we not have an opportunity in the House to discuss the amended agreement? 78 F4B 0 0 BRUCE, Stanley Mr BRUCE - That matter will come up later. The amendments will first be submitted to the States. I shall be glad to make arrangements for honorable members to meet Mr. Gepp in the way I have suggested. While I was in London I visited the House of Commons on two occasions with the object of discussing this matter with honorable members. On one occasion I addressed a meeting of members of all parties in one of the committee rooms. I spoke for only a quarter of an hour, and then answered questions for about two hours. On another occasion I attended a meeting of the Empire group of the Labour party, and the four-hours' session was devoted to continuous questions. I think that is certainly the most satisfactory way to deal with this subject, and for that reason I trust that honorable members will take steps to meet Mr. Gepp in the way I have suggested. There remain but one or two matters to which I need now refer. One is Australia's interest payments upon the advances that were made to her by the British Government for the carrying on of war services. Honorable members will doubtless recollect that that indebtedness, amounting to approximately £92,000,000, was funded some little time ago. Bills were given for the whole of the outstanding interest, and were paid off within a year. On the £92,000,000 we are paying 6 per cent., of which £4 18s. 4d. is for interest, and the balance credited to a sinking fund for the redemption of the loan. Whilst in Great Britain I took up the matter with the Chancellor of the Exchequer upon the basis that, although not wishing to be charged a rate of interest less than Great Britain herself is paying on her war indebtedness, Australia did not desire to pay a greater rate. I expressed the view that it would be intolerable if, after the lapse of a period of years, Australia was paying to Great Britain a rate of interest in excess of the average that Great Britain herself was paying in respect of her war indebtedness. The suggestion which I made to the Chancellor of the Exchequer was that the average rate which was being paid by the British Government should be the rate charged to Australia upon the money which we had borrowed from her for war purposes. The basis of that suggestion was that the war was a common effort in which we were jointly concerned, and that, therefore, there should not be any variation in the rate of interest paid by each constituent party. At the present time it is very difficult to ascertain what is the average rate that is being paid by Great Britain, but it is probably a fraction less than the £4 18s. 4d. per cent, that Australia is paying to her. 79 JXA 0 0 CHARLTON, Matthew Mr Charlton - Great Britain pays a less rate than that to the United States of America. 79 F4B 0 0 BRUCE, Stanley Mr BRUCE - The rate of interest upon the money which Great Britain owes to America is approximately 3 per cent. There are many reasons for having this matter readjusted. Australia was the first of the allied countries, or for that matter any country which engaged in the war, to provide for its indebtedness, and have the debt funded. When that was done the British Government had not entered into any arrangement with the United States of America. I feel sure that the people of Australia do not wish to seek a revision of the contract into which we have entered, but that they believe it undesirable to have any differentiation between the rate . of interest that Great Britain is paying on her war indebtedness, and that which she is charging us in respect of the sums which we borrowed from her. The matter is at present under discussion between the Australian and the British Governments. Another question which I took up with the Chancellor of the Exchequer, and which, after very considerable discussion and negotiation was finalized, is the claim of Australia to a portion of the reparation payments that were made by Germany prior to the 1st September, 1924. In that month the Dawes plan became operative, and a new era of reparations' payments began. Australia has since received her share of those payments, and that phase of the matter does not present any difficulty. Large sums, however, were paid prior to the coming into operation of that plan. The situation is greatly complicated by the priorities which were granted in respect of armies oi occupation, and certain other priorities such as that given to Belgium. After very full discussion and examination of the position a settlement was reached, as a result of which the payment of £912,445 has been made to Australia. That sum, of course, under the provisions of the Sinking Fund Act, goes to the trustees of the national debt, to be used in the reduction of the debt. The Minister for Defence (Sir Neville Howse) dealt with the purchase of the Small Arms Factory owned by the Colonial Munition Company. In 1921, when the last arrangement was made, the Australian Government leased the factory for a period of seven years at a rental of £20,000 per annum. Sir Neville Howse displayed commendable ability in carrying out the arrangement for the purchase of the factory. The Government considers that it is more desirable that such a factory should be owned by the nation than by a private company. The purchase price is £150,000, the payments to be spread over a period of ten years, commencing on the 1st January of this year. The Minister for Defence will be in a position to deal with the matter more fully when the Estimates of his Department are being considered, or at some other opportune time. I consider that he did an extraordinarily good piece of work for Australia. There are many other matters with which I need not deal at the present juncture. The most troublesome question that had to be handled during my visit abroad was the attack, to which I made reference yesterday, upon the finances of the Commonwealth. It was an insidious attack and launched in such a way that it was most difficult to meet it. There was really no substance in the statements that were made; and although the position is now quite clearly understood in Great Britain, it is undoubtedly desirable that in both that country and the United States of America, where Commonwealth and State loans are on the market, a better understanding of Australia's conditions and her present position should exist, and we should do everything in our power to create it. I visited the United States of America on the return journey to Australia. Time will not permit me to say more than that I was received there with the greatest possible cordiality wherever I went, and that the utmost admiration was expressed for the Australian people, and particularly our soldiers. The keenest interest was displayed in Australia's development. It may possibly interest honorable members to learn that, in New York, I heard the greatest compliment that, I think, has ever been paid to our Australian soldiers. It was at a dinner which was given by the Pilgrims, when the general who commanded the 27th division of the American Expeditionary Forces, said, in the course of his speech, that the Americans - and he thought the majority of the nations that participated in the war - regarded the Australians as the best troops that were employed on either side. He added that the reason for that opinion of them was that they possessed all the characteristics which the Americans would like to think they possessed, in addition to experience, which the Americans would have gained had the war continued. That, he said, in a great measure, was the spirit iu which the American people regarded Australia generally; and his remarks, it will be conceded, show a very high appreciation of this country and its possibilities. In Washington, I was honoured by being received by President Coolidge, and met all his Secretaries of State. With Mr. Kellogg, Secretary of State, I had an opportunity of discussing the very serious disadvantage suffered by Australian business men through having to leave the country after a certain limited period, because of the operation of the immigration quota. I apprehend no difficulty in securing the exemption of Australian business men from the quota system. Wherever I travelled in Canada and New Zealand, I was received with the greatest courtesy, and the most friendly regard for Australia and her people was everywhere expressed. I greatly appreciate the assistance which I received from Sir Neville Howse before he, unfortunately, was compelled to undergo a very serious operation. It must be gratifying to every member of the House to learn that he has returned to Australia practically restored to his usual health. To Mr. Latham - who, fortunately, was available in London when I was deprived of the services of Sir Neville Howse! - I express my thanks. It would have been impossible to cope with the work which I had to undertake without the help that he gave me. I thank also the High Commissioner for Australia, who rendered every assistance in his power. On the economic side I was assisted by the Chairman of the Development and Migration Commission, Mr. Gepp, and Mr. McDougall, the value of whose services cannot be assessed. I had the great good fortune to find the honorable member for Macquarie (Mr. Manning) in London, and to receive from him invaluable help. In conclusion, I should like to say that the staff which accompanied me rendered the greatest service possible, and in so doing, I believe advanced the interests of Australia. Honorable members will realize that, because of the multiplicity of subjects that are dealt with at an Imperial Conference of the nature of that from which I have just returned, it was not possible for me to exercise greater condensation than I have done in the remarks which I have made this afternoon; but it has been my obligation to give to this House, to which I am primarily responsible, a full account of what occurred at that conference. Debate (on motion by Mr. Charlton) adjourned. 80 bill Second Reading Debate resumed from 2nd March (vide page 41), on motion by Dr. Earle Page - That the bill be now read a second time. 80 F4Q Yarra 0 0 SCULLIN, James Henry Mr SCULLIN .- This House will now descend from a consideration of Imperial relations to that of the financial relations which exist between the Commonwealth and the States of Australia, thus coming a little nearer home than we have been during the last few hours. On the 4th of June last the Treasurer (Dr. Earle Page) made his second-reading speech on the bill that is now before us. Although the matter was then deemed to be a very urgent one - so urgent, in fact, that it was considered not possible to give the States even a month in which to devise means for making good the loss of revenue that would be caused by the withdrawal of the per capita payments - the second speech in the debate was made only yesterday, and that by the Prime Minister (Mr. Bruce). The right honorable gentleman then announced a material alteration in the proposals that were submitted originally by his colleague, the Treasurer. The Prime Minister and his Government have learned that what they set out to do last year does not meet with the approval of the people of this country. The right honorable gentleman told us that on his arrival from England he found that there was a good deal of hot air and considerable difficulty surrounding himself and his party as a result of these propositions. !We have the farce presented to this House of one Minister coming down to us with certain propositions, and another, a little later, telling us that the Government does not intend to go on with the whole of them. In this farce the Treasurer (Dr. Earle Page) appears as a small boy who starts a grass fire, and the Prime Minister (Mr. Bruce), as his big brother, who tries to put out the fire with his hat. This is fairly descriptive of the speech delivered by the Prime Minister yesterday, because, if he believes that the feeling in this country will be allayed by the apolog'etics to which we had to listen yesterday, he will find that he is greatly mistaken. What are the material alterations of this measure which the Prime Minister suggests? The original proposition was contained in a bill introduced to provide for the withdrawal of the per capita payments to the States. This measure was introduced with notice of intention to bring in other bills enabling the Commonwealth to withdraw from certain fields of taxation. The only matter before us is the withdrawal of the per capita payments. A financial scheme was laid down to enable the States to enter certain fields of taxation. What change is indicated by the Prime Minister's speech? The Government still proposes to go on with its original proposition, and pass a bill to withdraw the per capita payments from the States. That is the major question, and, so far as any alternative scheme or suggestion, there is now a blank as to the action to be taken by the Federal Government. The position is now worse than it was before the Prime Minister spoke yesterday. The right honorable gentleman says that the Government will go on with the measure to withdraw the per capita payments from the States, and will subsequently confer with the States as to what they are to do about it. There will be nothing about which to confer when the per capita payments have been withdrawn. The State Governments are masters in their own homes, and will decide for themselves what they will do to make up the loss of revenue due to the withdrawal of the per capita payments I may suggest that the action taken by the Government is like chopping a man's head off and proposing then to discuss with him the state of his liver. 81 KNP 0 0 MAXWELL, George Mr Maxwell - It is decapitation. 81 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - It is, absolutely, and after the man is decapitated the Government proposes to discuss with him how he shall dispose of his limbs. We were told by the Prime Minister that this matter is of grave importance. The right honorable gentleman realizes its gravity now, but he did not appear to realize it last year. I heard the speech of the Treasurer in introducing the bill, and the only contribution we have been able to make to the discussion up to the present has been an occasional interjection. If honorable members will look up the Hansard report of the debate, they will find that there were numerous interjections during the Treasurer's speech, and that I broke the Standing Orders myself more than once to make one or two. One feature of the proposal certainly did amaze us, and that was the time within which it was proposed to bring the measure into effect. The State Treasurers were given one month in which to prepare for the withdrawal of the per capita payments. When a protest was made, the Treasurer said that he would make arrangements to collect the necessary taxes for the States if they would indicate their desire to levy a land tax, an entertainments tax, or probate duty to make good the revenue they would lose. The State Governments were given a month in which to make up their minds, though some of the State Parliaments were not sitting at the time. The Treasurer's proposal was an outrageous one. The proposed alterations of the measure will extend the time given to the States to the 30th June, 1927, instead of the 30th June, 1926; but the Treasurer, in introducing this bill on the 4th June, 1926, declared that the percapita payment would cease on the 30th of the same month. The proposal was preposterous, and yet the Government wonders why there was antagonism and an outcry. The action taken by the Government was the most stand-and-deliver attitude that any government ever took towards another in this country. I have listened to excuses for this. One excuse was that the Government proposed to get the States to come into line, but they would not discuss anything, and insisted upon a moral claim to the per capita payments. Supposing that everything alleged against the State Governments was true - and I deny the statement - it only proves that the action of the Federal Government was taken in a spirit of pique and annoyance. That is not a statesman-like way in which to approach such a big question as the financial relations between the Commonwealth and the States. The Prime Minister, in the preamble to a speech of considerable length, yesterday declared that antagonism had been stirred up amongst the people of the States with regard to the attitude taken by his Government. I emphasize this because I believe that if there is one responsibility which more than another rests upon the parliaments of this country, it is the responsibility of maintaining cordial relations between the sovereign governments of Australia. There must be no stand-and-deliver attitude adopted by one government towards another. The Prime Minister said something about the relations between the governments being cordial. I endorse the statement that they should be cordial, but I am unable to understand how, in the circumstances, the Prime Minister can deplore the antagonism between the Commonwealth and State authorities when he knows that it is due primarily to the attitude of his own Government in approaching the settlement of this question. I agree as to the importance of the question involved. It was one of the most outstanding questions for consideration prior to federation. The financial relations between the Commonwealth and the States were discussed at the different federal conventions, and eventually a certain section was introduced into the Constitution to deal with it. 82 KFE 0 0 GREGORY, Henry Mr GREGORY - But for the insertion of that section federation would not have been brought about. 82 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - While I believe there is much truth in that statement, I do not endorse the section in the Constitution to which I refer. I regard it as a blot- 82 KXG 0 0 WATT, William Mr Watt - It was a compromise adopted after lengthy debate. 82 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - It was a compromise, and at least its operation was limited to a period of ten years. The fact that it was a blot did not arise because the States were to share in the Customs and Excise taxation of the Commonwealth, but because the section tied the hands of the supreme Parliament of Australia. Apart from that aspect of the question, I. never did regard the section as a blot, because I recognized that the Commonwealth, if it could, should share with the States some of its revenue from Customs and Excise duties. Some argument has been advanced in dealing with the question whether the Government proposal is not an invasion of a consitutional, legal, or moral right of the States. I submit that we should not delay to consider these questions. It is not now a question of the constitutional, legal, or moral right of the States - if, by the way, one could define what a moral right is ; it is a ' question of the people's rights. We all, whether members of this or of the State Parliaments, represent the same people. We" have to consider what are the relative obligations of the two authorities, and what is equitable as between these different instruments of government. Those are the only questions to be considered. Considering the state of the Commonwealth's finances to-day, and the position of the State finances, we have to determine whether there is a case for the withdrawal of the per capita payments from the States. On what grounds is it proposed to withdraw them ? The States are asked to retain their present responsibilities. We could take over some of their responsibilities, and, when we do so, we might speak of withholding some of the moneys which we now contribute to them. We could take over the responsibilities of the States in two ways. We might do so against the will of the State Governments, by a vote of the people in support of an amendment of the Constitution. The only other way in which we could take over the responsibilities of the States is by consent of the States concerned. Until we have done so, either by an amendment of the Constitution, or with the consent of the States, we shall have a big contract before us to make out a case in the existing position of Commonwealth and State finances for the abolition of the per capita payments. I do not subscribe for a moment to the idea that the lapse of time confers vested rights that are unassailable, but I do say that when a practice has been followed for over a quarter of a century, the duty devolves upon those who would alter the practice to make out a good case for the alteration. 83 C7E 0 0 PAGE, Earle Dr Earle Page - Section 105 gives absolute power to the Commonwealth to deal with the debts question. 83 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I am not discussing the question of our powers under the Constitution. It is not in issue. I readily grant, if that will satisfy the honorable gentleman, that there is nothing in the Constitution to prevent us doing what is proposed. That is not the question. The question for our consideration is, whether there is justification for our exercise of the power. What reasons can be put forward in support of it? Can it be suggested that it is necessary, because of the needs of the Commonwealth? Surely that cannot be argued. Is it because the States have overflowing treasuries that we can withdraw the per capita payment from them? That cannot be argued. What, then, is the Government reduced to? It is reduced to setting up a great principle enunciated by the Treasurer, and emphasized yesterday several times by the Prime Minister. We have been told that the principle underlying the proposal is that the authority which spends an amount shall have the responsibility for raising it. That is a paraphrase of a section of a report by the royal commission on taxation, on which I shall say a word or two later. The Treasurer says that it is a vicious system, and cannot be justified. The Prime Minister was even more emphatic yesterday. He told us that the Government is prepared, at a conference with the representatives of the State Governments, to discuss methods, but that there should be no discussion of this principle, which is sacred and beyond discussion. I have endeavoured to study the principles of taxation, but I do not claim to have mastered them. I see no such vital principle laid down as that which is contended for by the Government. Let us examine the arguments put forward in support of it. The Prime Minister said that one Government raised money and another spends it, and that that is wrong in principle. There immediately sprang to the mind of every honorable member who listened to the right honorable gentleman the fact that his Government went to the hustings and proposed to raise £20,000,000 for some one else to spend. 83 KXG 0 0 WATT, William Mr Watt - The amount was £40,000,000- £20,000,000 for roads and £20,000,000 for housing. 83 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That is so. The Prime Minister was astute enough to anticipate the objection. It was very obvious. He said, " You will refer to the vote for roads, but there is a distinct difference in principle between the Commonwealth Government collecting money and handing it over to the States to spend on roads and the collection of Customs and excise revenue and handing it over to the States to spend in any way they please." The reason for the difference, apparently, is that, according to the Government, the expenditure upon roads was in accordance with an agreement with the States. When this statement was made I interjected the one word " Agreement!" If there was' an agreement with the States it was the sort of agreement that is entered into when a man hands over his purse to another who holds a pistol to his head. 83 C7E 0 0 PAGE, Earle Dr Earle Page - No, it was a mutual agreement with the States. 83 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - Mutual ? I did not know that the Treasurer was humorous. I must consult a dictionary, because if that was a mutual agreement, hitherto I have not known the meaning of the word "mutual." It is true that the States rushed a grant of £20,000,000 when they thought that it was a gift; but when they found out the method by which the money was to be taken from their own taxpayers they at once repudiated it. Take the case of Victoria. The Premier of the State, after signing the agreement, handed to the Governor of the State an amendment to his own Address-in-Reply, repudiating the agreement. Of course, Victoria has now come into the scheme because it found the Commonwealth collecting millions of pounds within the State and saying, " If you do not sign this agreement you will not get any of this money; but if you sign the agreement you will share in it." But let us concede for the moment that it is an agreement. The Treasurer says that the present system is vicious, and the Prime Minister that it is wrong in principle; but evidently if you " mutually " agree to do a wrong it becomes right, and vice becomes virtue by mutual consent. That is a new moral code. 84 JSC 0 0 BRENNAN, Frank Mr Brennan - It is the Government's policy. 84 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I want to be as liberal as possible, to a Government which finds itself in a fix. Conceding that it was an agreement in the roads case, and that if you mutually agree to do wrong it becomes right, and vice becomes virtue by agreement, where is the difference between the roads agreement and the per capita agreement? Was not the proposal to pay 25s. a head from the Commonwealth Customs revenue to the States an agreement? Was it not an agreement that after the expiry of the Braddon section in 1910 these payments should continue? Prior to the expiry of that provision of the Constitution were there not conferences between the Commonwealth Government and the State Governments, and was not the result of those conferences a signed agreement between the respective bodies that the States would accept 25s. per head - probably as a compromise or as a fair arrangement between the one authority and the other? It was an agreement. The only difference between the respective parties at that time was that the State Governments desired to embody that agreement in the Constitution, in which view they were supported by the then Government of the Commonwealth - the Fusion Government - whereas the Labour party took up the attitude that while the agreement in itself was all right, the proposal to place it in the Constitution was all wrong, seeing that it would bind future generations. And when the matter was submitted to a referendum of the people the country adopted the proposal to pay 25s. a head, but on a voluntary basis, and refused to embody it in the Constitution. The point I make is that the payment of 25s. per head to the States was the result of an agreement by which after the expiry of the Braddon section the Commonwealth Parliament undertook to make these payments for ten years. 84 KFE 0 0 GREGORY, Henry Mr Gregory - The people believed that this Parliament would protect the States ? 84 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - This Parliament gave an undertaking to pay the 25s. for ten years. 84 KFP 0 0 FOSTER, Richard Mr Foster - Or until otherwise provided. 84 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That time expired in 1920, but the Commonwealth is still paying the 25s. a head in accordance with its agreement with the States. It was certainly more of a " mutual " agreement than that which was arrived at over the roads question. In his second-reading speech, the Treasurer (Dr. Earle Page) said - The scheme is on the lines of the recommendations by the royal commission on taxation. It is a pity the Treasurer did not follow other recommendations of that royal commission. There were many fine recommendations, but the honorable gentleman not only failed to follow them, he violated the recommendation that the Commonwealth should continue the taxation on Crown leaseholds. If the honorable gentleman can find in the report of the royal commission anything to substantiate his present attitude, he is entitled to put it forward, because it was a commission for which I had very great respect, consisting, as it did, of capablemen, who were to a large extent experts and specialists. But I dispute the contention that their recommendations absolutely bear out the position taken up by the Treasurer. Among other things, the commission investigated the harmonization of Federal and State taxation, and the delimitation of spheres of taxation; and it expressed the united opinion that " any scheme for the allocation of subjects of taxation should be inaugurated by a voluntary agreement." It stressed that point in many pages of its report. The Treasurer speaks of " mutual agreement in the respective fields of taxation." I do not suppose he will say there is any " mutual agreement " in regard to his Government's proposals in respect of per capita payments. One principle enunciated by the Treasurer, and repeated and emphasized yesterday, has been taken from the report of the royal commission; but the Government has paraphrased the commission's recommendation, and has not quoted the whole of it. What the Commissioners recommended was as follows: - Wo consider it a sound principle that where any authority is by right - not by grace - receiving revenue through taxation imposed upon its citizens, that authority should bc charged with the responsibility of determining the nature and incidence of this taxation. Then they went on the say what the Treasurer did not quote: - The per capita payment does not infringe that principle. There are two points in that: The first is that the per capita payment did not infringe that principle. The second point is - Are the States to expect the payments by right, and not as as act of grace ? These per capita payments are not handed over to the States as a State right in a legal or constitutional sense. They receive them by grace. That is where the Commissioners make the distinction. What they were referring to in the particular passage so much relied upon by the Government was a suggestion that the States should collect revenue and hand over certain sums to the Commonwealth, and that the Commonwealth should have no voice as to the incidence of the taxation, but should merely accept the sum handed over. The Commissioners say that that is not a sound principle. 85 KXG 0 0 WATT, William Mr Watt - Does the honorable member think that it is a fair deduction to say that the per capita payments do not disturb the principle the commission laid down ? 85 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - It is clear that the per capita payments are received as an act of grace, and not as a right. 85 KXG 0 0 WATT, William Mr Watt - That makes no difference. 85 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - If the payments are received by the States as a right, then the Commonwealth Government's attitude is wrong. 85 KXG 0 0 WATT, William Mr Watt - I know that it is wrong; but I do not agree with the honorable member in the point he is endeavouring to make. 85 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - At any rate that is the recommendation upon which the Government is relying, and I claim that they will get no satisfaction out of it. 85 C7E 0 0 PAGE, Earle Dr Earle Page - We are not relying on that. 85 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I have with me the Treasurer's own interpretation of the real principle underlying the action of the Government. Speaking in Sydney, on the 21st June, 1926, he said - The principle uunderlying the action of the Government in connexion with the abolition of the per capita payment was that the public would know whom to bblame for the effects of taxation, and its incidence. In other words, the Government's proposal amounts to this: " Get a monopoly of all the indirect taxation, because the people do not know whom tto blame for that, and place upon the shoulders of the States the odium of all direct taxation, so that they will become unpopular, while the Federal Treasurer will become the most popular man in the land by reducing direct taxation." Of course, a lot of people do not know the extent to which they pay under direct taxation. Let us examine the figures of direct and indirect taxation. The expenditure from revenue, after allowing for the per capita payments to the States, from indirect taxation for the last financial year was £32,000,000, while the expenditure from direct taxation was £15,000,000. Thus 68 per cent, of the expenditure of the Commonwealth was paid from indirect taxation, and 32 per cent, from direct taxation. What will be the position after the Government's proposal comes into operation ? The expenditure from revenue derived from indirect taxation will be over £40,000,000, and the expenditure from direct taxation will be £7,000,000. In other words, 85 per cent, of the Federal expenditure will be from indirect taxation, and only 15 per cent, from direct taxation. Therefore, the Commonwealth will not become very unpopular with the taxpayers. But what will be the position of the States? Approximately one-fourth of their revenue is now derived from indirect taxation, that is to say, from the per capita payments, whereas under the new proposals the whole of their revenue will be derived from direct taxation. I submit that in the existing circumstances of Commonwealth finances such a distribution of the indirect taxation paid by all the people of Australia, State taxpayers as well as Commonwealth taxpayers, is not equitable. 85 C7E 0 0 PAGE, Earle Dr Earle Page - Surely the per capita payments are paid out of Consolidated Revenue, and not out of Customs revenue ? 86 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That assertion may be technically correct, but that is all. 86 C7E 0 0 PAGE, Earle Dr Earle Page - It was made by Mr. Deakin in this House. 86 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - The fact that it was made by Mr. Deakin would not make it correct, because, although he was a very estimable gentleman, he made many incorrect statements. I want to draw attention to a remarkable change of tone, and to contrast the statement made by the Treasurer in Sydney in June last with the statements made by the Prime Minister (Mr. Bruce) yesterday. The present proposal of the Government, according to the Prime Minister, is not to make the people blame the States for the direct taxation, but to save the States. Apart from the fact that a great principle is involved, it is apparently the desire of the Prime Minister to save the States from the dangerous position of living at the whim of the Federal Parliament. According to the right honorable gentleman, the Federal Parliament becomes a dictator. What ungrateful beings these State Governments and State Parliaments must be, because we find all parties in all the States unanimously opposed to the Commonwealth Government's proposals. 86 KYV ALP 0 0 RILEY, Edward Mr E RILEY - They do not know their friends ! 86 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - They do not. They do not know that the Prime Minister and his Government are anxious to save them. These foolish States! They love the danger in which they are placed; they are glad to live at the whim of the Commonwealth Parliament. The Commonwealth Government wants to save them, but they do not want to be saved. What proof that the States were in grave danger did the Prime Minister produce ? He pictured the evil possibility of another Government coming into power in the Commonwealth, and in order to enable it to carry out some social reform in which it believed, sweeping away all the per capita payments, and leaving the States without any other financial provision. Of course it could; but it does not require much argument to show how illogical is that position. If the Commonwealth Government succeeds in putting through its present proposal to abolish the per capita payments, and evacuate cer tain fields of direct taxation, what will prevent another Government, anxious to bring about certain social reforms, re-imposing all the direct taxation thus abandoned to the States? 86 KFP 0 0 FOSTER, Richard Mr Foster - Nothing at all, 86 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - There will be no thing in the world to prevent its being done. Therefore the position of the States is. no less precarious to-day than it would be then, and is not likely to be improved by the proposal of the Government to evacuate certain fields of taxation. In 1910, for example, £3,000,000 was cut off from the States in order to pay old-age pensions, and the Prime Minister's contention is that what happened then can happen again. The position is not likely to be altered by the Government's proposals. Is there to be any guarantee of safety for the States. Does the Treasurer suggest that this proposal will bind all future Parliaments? I submit that it cannot. Another argument used by the Prime Minister was the inequity of the per capita payments, by which he endeavoured to buttress the alleged unassailable principle upon which he rested his whole case. He said that under the per capita system the more populous States received a greater sum of money than the less populous States. Two considerations arise from that statement. One is that if the method of contributing from the Customs revenue by so much per head is inequitable, could not that method be changed without withdrawing the whole of the payments ? I suggest that it would be difficult to find a basis more equitable than the population basis. The subject under discussion, however, is not whether the method of distributing the money is inequitable, but whether the payments should still be made to the States. If the method of distribution is inequitable, I suggest that it can be changed. It is very amusing to find the Prime Minister, as it were, beating out a grass fire with his hat, by resorting to these futile arguments. The schedule presented by the Treasurer when he introduced the bill, shows the alleged gain to the respective States under the Government's proposal to evacuate the fields of land and entertainments taxation and to forgo the revenue from estate duties and so forth. If we examine that schedule we shall find that the greatest gain, will be derived by the more populous States. 87 C7E 0 0 PAGE, Earle Dr Earle Page - It would be the same if we left the collection of the taxes in the hands of the States. 87 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - The fact remains that the Prime Minister has told us that when revenue is distributed per capita, the large States benefit more than the small States; and when I show that there is a greater disparity between the States under the new scheme, the Treasurer says that the larger States are entitled to the greater amount of taxation because they collect it. The large States collect more because they have a greater population, and they will, therefore, gain under the new fields of direct taxation that the Government proposes to open to them, just as they now gain by the distribution of the per capita payments. Special adjustments are proposed, so that every State will gain at least £50,000. Comparing South Australia with New South Wales, under the Treasurer's suggestion, South Australia will gain £51,000, and New South Wales £459,000. If the Government is resting its case partly on the ground that the continuation of the per capita payments is inequitable, what kind of language could one apply to the suggestions of the Treasurer himself? I am not saying that either is inequitable. What I am saying is that, as far as the disparity between the States is concerned, it is inevitable that the more populous States will receive the larger share of revenue. 87 KNP 0 0 MAXWELL, George Mr Maxwell - Because they contribute more. 87 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That is so. The Prime Minister suggested a number of subjects for discussion at the conference that is to take place after the deed has been done. 87 KXG 0 0 WATT, William Mr Watt - After the funeral? 87 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - Perhaps, or just be fore it. 87 KXG 0 0 WATT, William Mr Watt - After the post-mortem. 87 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - Yes. The Prime Minister mentioned three subjects in particular, and they might well be discussed by the representatives of the Commonwealth and the States in a clear atmosphere and not after an action has been taken which must be irritating and is sure to create antagonism. I am a strong believer in the holding of conferences between the Commonwealth and the States. I believe that every effort should be made by all responsible bodies to bring about harmony in taxation, to remove overlapping, to effect economy, and to bring about equitable methods as far as possible. This condition can be brought about only by starting from scratch on a fair and square basis, and not after taking from the States over £7,000,000, and then proposing the holding of a conference to devise methods of adjustment. The Prime Minister made an interesting suggestion when he said that in lieu of the per capita payments, we might consider taking over portion of the State debts. Say, for the sake of argument, that, in lieu of the per capita payments, we take over £100,000,000 of State debts and pay the interest and sinking fund on that amount, what is the difference between that method and the present method 1 The Prime Minister and the Treasurer have stressed the fact that although the States have no moral claim to the per capita payments, they are prepared to favorably consider taking over portion of the State debts. The interest and sinking fund payments on those debts equal, approximately, the per capita payments. In other words, this Parliament would be bound for 50 years to the payment to the States of over £7,000,000 annually. 87 KXG 0 0 WATT, William Mr Watt - The difference is, of course, that the per capita payments would grow, but the other payments would not. 87 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - The right honorable gentleman has supplied the States with a good argument for refusing to adopt the suggestion. Let us examine what is in the mind of the Government. After all, the Prime Minister's speech yesterday was designed to prevent any discussion or criticism of the scheme as outlined by the Treasurer, but we are entitled to consider at least what is in the mind of the Federal Government when it suggests the holding of a conference, so that we can determine whether it is accomplishing what it has really set out to do. The bill proposes to terminate the per capita payments. Notice of motion has been given for bills to evacuate completely the field of land tax and entertainments tax, to forgo estate duties, and to surrender 4.0 per cent, of income taxation. We are told by the Treasurer and the Prime Minister that the States will benefit under the scheme. The Treasurer says that the States will benefit by £1,527,852 annually. The tax surrendered will amount to £7,787,352. Theper capita payments to be withdrawn total £7,687,500, leaving a difference of £99,852. Special adjustments of £600,000 are added, and also special grants of £828,000 to Western Australia and Tasmania, making a total alleged gain to the States under the proposed scheme of £1,527,852. My first comment is that the special grants to Western Australia and Tasmania have nothing to do with this issue. An examination has been made of the conditions of those States under the federation. There is power under the Constitution to make grants in necessitous cases. This Parliament unanimously agreed to those grants, and they stand irrespective of this proposal. It is not quite honest to drag that issue across the trail. The sum of £828,000 must be deducted from the Treasurer's claim of a gain to the States of £1,527,852. 88 C7E 0 0 PAGE, Earle Dr Earle Page - The special grant to Western Australia is provided for in the Surplus Revenue Act. 88 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - On that point the Treasurer is again technically correct, but I ask him, Would not these grants be made were there no suggestion to withdraw the per capita payments ? Out of £1,527,852, this sum of £828,000 must therefore go by. the board. Let us examine the special adjustments of £600,000 to make up the loss that certain States will suffer under the proposed scheme. For how long are those special adjustments to be made ? I have read the Treasurer's statement, and I confess that I cannot tell. At one point he says that the adjustments will last for one year only, and at another he says that the adjustments will be made every year. The question is - Will the adjustments continue ? If not, then some of the States must lose. If the adjustments are to continue, we shall then have adjustments every year, entailing constant calculations, constant irritations, and endless arguments. 88 KXG 0 0 WATT, William Mr Watt - No government could assure a continuation. 88 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That is so, and yet we are told that this scheme is to separate the finances of the Commonwealth from those of the States. I submit that under this scheme our finances will be more closely interwoven than they are to-day. The Treasurer said that the special adjustmentswould be reviewed each year. For the first year the loss to the Commonwealth revenue, he said, would be £1,527,852, thus suggesting that the next re-adjustment would not be so generous as far as the States are concerned. The object of the proposal is, as we are told, to avoid duplication. I suggest that under the scheme we shall have more duplication. We shall still have income tax duplication and the duplication of federal machinery for land taxation. I asked the Treasurer what was the position of the States respecting the aggregation of interstate estates in the collection of land tax, and he said that we could do the same as we do with probate duties in Tasmania - we could provide machinery for the collection of the tax. That is all very well, because we have the machinery; but, apart from the income tax, where is the machinery to come from? The Treasurer says that we will provide special federal machinery for land tax if the States pay for it. We are still to have our finger in the State financial pie. The same applies to probate duties. We must provide the machinery for the aggregation of property in. the different States. If we do not, considerable revenue will be lost, because the aggregation principle applying to interstate estates, whether in regard to income tax, probate duties, or land tax, is surely more equitable than the system obtaining in the States to-day. The royal commission on taxation, to which reference has been made, stated that, on account of the aggregation principle being restricted by State boundaries, the yield of any tax at the same rate would be greater in the hands of the Commonwealth than in the hands of the States. 88 KXG 0 0 WATT, William Mr Watt - Does the honorable member think that the States could aggregate, even with the aid of federal machinery? 88 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I have very grave doubts on that point, and I suggest that, if we are to get rid of duplication, the Commonwealth Should act as the collector of both Federal and State taxes at the rates required. 89 KMQ 0 0 MANN, Edward Mr Mann - Then what becomes of the principle. 89 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That is the point. If we do not aggregate, it means that interstate companies, and individuals with interstate interests, will pay less tax than they otherwise would. Obviously, that will happen, and more will have to be paid by the smaller taxpayers. The Prime Minister emphasized another point to which the Treasurer drew attention, namely, that the war and defence obligations of the Commonwealth amounted to some £34,000,000, to which were added other sums, such as the cost of invalid and old-age pensions, making a total of £44,000,000. Prom that we drew the inference that the Commonwealth was not in a position to continue the per capita payments to the States. Yet we are told that under the new proposal the States would be £50,000 per annum better off than they are at the present time. Let me draw attention to the two voices of the Treasurer in the one speech. He stated in one case, "We give the States £1,500,000 more than we take," but, further on, he said, " There is no possibility of returning anything to the States out of Customs revenue.." On the 4th June last, the Treasurer said, "An obligation rests on us to make concessions in revenue duties." On the 8th July, however, a schedule was tabled for the purpose of raising £1,500,000 by new revenue duties. Is there any consistency in the Minister's statements? In another instance, the Treasurer said, " The States should be financially independent." I submit that they cannot become financially independent. Despite the Treasurer's contention, we find proposals for special adjustments accounting for £600,000; also, grants to Western Australia and Tasmania totalling £828,000, and road grants aggregating £20,000,000. There was an electioneering promise of a further £20,000,000 to be spent on housing. All that is proposed by the Government, while at the same time it is talking about making the States financially independent. Another point seems to have been missed in the discussion by speakers on the Government side. They debated the matter merely as one of adjustment of taxation as between the Commonwealth and the States, but I point out that taxes are imposed for other than revenue purposes. There is a difference between the Commonwealth imposing that kind of tax and the States doing it. The difference lies largely in the fact that there are Upper Houses in the States that will not agree to taxation for certain purposes. One of the taxes imposed by the Commonwealth - the land tax - was introduced not only for the purpose of raising revenue, but also for the breaking up of large estates. The Prime Minister, when Treasurer, admitted that principle. In 1922, when he brought down a measure to remove a surcharge on the land tax, he went out of his way to make it clear that there was no intention to interfere with the original land tax, which was imposed for the purpose of breaking up large estates. He said on that occasion, " The land tax was a definite act of policy to break up large estates," and he went on to point out that he did not intend to interfere with that principle. The Government's proposals are based on the asumption that the Customs revenue will continue to be as high as it is to-day, because there is an implied agreement not to resume abandoned fields of taxation. What would be the value of this proposal, or of any similar scheme to evacuate certain fields of direct taxation? The States would naturally ask, " Do you bind yourself not to resume those fields of taxation when the per capita payments are withdrawn?" It is obvious that the Commonwealth Government could not give such an undertaking; but if it did it would be claimed that there was a moral obligation on the Parliament not to resume those fields of taxation. Then some day this Parliament might pass a really protective tariff. 89 KFE 0 0 GREGORY, Henry Mr Gregory - What would that be like? 89 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I am hoping for such a tariff. 89 KFP 0 0 FOSTER, Richard Mr Foster - If the honorable member wants more, I hope he will not secure it. 89 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I am a better Australian, apparently, than the honorable member. 89 KFE 0 0 GREGORY, Henry Mr Gregory - The honorable member was doing very well up to this point. 89 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - I should be very sorry to find myself in entire agreement with the honorable member on a tariff question. I hope to see the day when we shall be able more fully to protect Australian industries, and exclude the imports from foreign countries. When that day comes our tariff revenue will not be so high ; but the assumption upon which the Government scheme is founded is that the Customs revenue will continue to be high. 90 KFE 0 0 GREGORY, Henry Mr Gregory - We were told in connexion with the tariff of 1920 that the revenue would decline. 90 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - But I was not responsible for that tariff. I helped the present Minister for Trade and Customs to do his best for many Australian industries, but I am not yet satisfied with what has been done for them. If there is an implied guarantee not to resume abandoned fields of taxation, the powers of the Commonwealth will be limited, not legally, but probably morally. 90 KXG 0 0 WATT, William Mr Watt - If that is so, it is dangerous. 90 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - Yes. At the same time there is nothing to prevent discussions, and voluntary arrangements to delimit certain fields of taxation, and above all to obtain a common collector of taxes in order to. prevent overlapping. We have not succeeded in eliminating overlapping by means of the scheme for the collection of income tax which the Treasurer brought down, although the conditions under it are better than those that previously obtained. 90 C7E 0 0 PAGE, Earle Dr Earle Page - It was the best we could do. 90 F4Q 0 0 SCULLIN, James Henry Mr SCULLIN - That may be; but it is not all that ought to be done, and the Treasurer should keep striving in that direction. The clash of political views in every country is inevitable; but if we have a conflict between State and Federal Governments as such, a dangerous position will be created for the federation. The unanimous opinion of every party in the States is against the Government's proposal, and surely those parties represent public opinion. Against a united public opinion in the States, and united State Parliaments, we have a divided Federal Parliament. We even have two voices from the Ministry in two speeches by the two heads of the Government, and I am afraid they are both swelled heads on this subject. The scheme is already creating considerable antagonism between the States and the Commonwealth - greater antagonism than I can remember for many years. It contributed very largely last year to the defeat of the proposals submitted by referendum to the people. I very much regret the result of that vote, because the increased powers asked for, though not adequate, represented a distinct advance along the lines of greater Federal power. The present proposal created fears of what might be done if greater powers were granted to the Commonwealth Parliament. The deportation proceedings led many people to believe that the Commonwealth sought greater powers in. order to continue that fiasco. The intended withdrawal of the -per capita payments con:tributed largely to the defeat of the referenda proposals, and the oil interests and the press completed the job. We must use our present powers justly. After examining this measure from every point of view, it seems to me that it is not a just proposition. Nor was the original proposal a just one. We must co-operate with the States and not bully them, if we are to receive from the people, eventually, the extended powers that are required to advance the interests of Australia. 90 KYI Forrest 0 0 PROWSE, John Mr PROWSE . - I do not wish the second reading of this bill to be carried on the voices. The necessity for a readjustment of the Commonwealth and State finances is generally recognized, but, in ray opinion, the Government has not submitted a scheme that will provide a remedy. The present system of flat per capita payments places the smaller States in a disadvantageous position as compared with the large manufacturing States. The Prime Minister and, I think, the Treasurer, have pointed out that payments on a flat rate afford a great advantage to the larger States, the smaller States receiving an inequitable proportion of the money distributed from surplus revenue. The Government seems to realize that fact, but the mere transference to the States of the right to raise by direct taxation a sum equivalent to the per capita payments, or even a larger amount, does not remedy the position in any way. I should like honorable members to realize that the revenue that the Government intends to reserve to itself is collected from every citizen of the Commonwealth, no matter of what age. The Trade and Customs Department levies tax upon the whole of the people, and, therefore, the Federal tax touches every section of the community. A direct income tax, however, does not affect the whole of the community. When the Commonwealth collects direct tax from the citizens of the States, the States may be able to show this Parliament that a certain average amount goes to the Commonwealth exchequer annually; but will the individual States be able to rely upon a regular revenue from income taxation ? A bad season in any one of the States would cause that State very considerable financial embarrassment. It is unusual for a drought to affect the whole of Australia at the same time, but I remember one year in which this country had that experience. 91 KFP 0 0 FOSTER, Richard Mr Foster - If the per capita payments were withdrawn, another drought like that of 1914 would bring about a financial calamity in some States. 91 KYI 0 0 PROWSE, John Mr PROWSE - Precisely. When the Commonwealth Government is collecting over the whole continent, the good seasons in other States counterbalance the losses of revenue from income taxation in a State afflicted by a bad season. But when a State has to rely entirely upon the income taxation derived from its own people, its revenue must be uncertain and fluctuating, and a drought means disaster. The various State Governments have made great efforts to increase the population on the land. Western Australia is settling large numbers of people in the agricultural and pastoral areas, but the State Government derives very little income taxation from them, and will not do so for some years. The Department of Trade and Customs, on the other hand, collects about £6 per head for every man, woman, and child on those settlements. The proposal of the Commonwealth Government is that the Federal authority shall retain the whole of the revenue collected from those people, leaving the State without any revenue from them to supply their requirements and maintain them on the land. That proposal is manifestly unfair to the States. I ask the House to recognize the .many essential services that State Governments render to their citizens. Amongst them are education, police, and health. The people who contribute the revenue of the Commonwealth also contribute the revenue of the States, and although the Common wealth may hold the big end of the Constitutional stick, it should wield it justly. The intention of the Government is to enact this measure, but to defer its operation for twelve months, and in the meantime to invite the States to confer with Federal Ministers in regard to the whole problem of finance. For the sake of the good feeling which should subsist between the Commonwealth and State authorities, the Government should place the whole of its cards on the table, and make clear its intentions. Or, before proceeding with this bill, it might confer with the States, saying that it intends to place the per capita payments on an equitable basis, adopting the Canadian system of varying payments and making certain allowances to States that are at a disadvantage by their inclusion in the federation. If that were done, honorable members would have some justification for supporting the bill, but we are merely asked to substitute for a dependable form of revenue to the States another that is quite unreliable. Both the Commonwealth and State Parliaments have exempted from income taxation nearly 85 per cent, of our people, and upon the remaining 15 per cent, will fall the burden of making good to the States the loss of revenue they will sustain if the per capita payments are withdrawn. Another aspect of this" proposal is that the Commonwealth, being able to aggregate the income derived by an individual from various States, collects more revenue and at a higher rate of taxation than can be collected by the States, which can tax only the income raised within their borders. 91 KEQ 0 0 KILLEN, William Mr Killen - Does the honorable member think that one Government should raise revenue for another Government to spend? 91 KYI 0 0 PROWSE, John Mr PROWSE - We have to consider not so much the authority that collects the money, as the people who contribute it. I do not know that the Federal Government has any more right to expend the Customs revenue than have the State Governments, whose citizens contribute the money. We are told that we should obviate duplication in the collection of income taxation. The Government's proposal will not effect that, because 60 per cent, of the present federal income taxation will continue to be imposed. Therefore the federal collecting department must continue. Surely the Australian people, whose money maintains both Commonwealth and State authorities, have enough common sense to evolve a uniform incidence of taxation, and establish one collecting authority. This proposal does not seek to terminate the present duplication. 92 KXY 0 0 PERKINS, John Mr Perkins - It is a step in that direction. 92 KYI 0 0 PROWSE, John Mr PROWSE - If a more friendly attitude were adopted by the Commonwealth towards the States some agreement for the removal of anomalies and duplications would be possible. I agree with the statement of the honorable member for Yarra that the people were scared into voting against the referendum pro,posals because they regarded the withdrawal of the per capita payments as an indication of the treatment that might be expected from a dominant central parliament. It has been truly said that the mere statement of this Government, that it is withdrawing from certain fields of taxation, will not reserve those fields to the States for all time. Even without the excuse of national necessity, any future government may ask the Commonwealth to again invade the taxation area which the present Government is proposing to vacate. The Prime Minister should have frankly declared that the Government intended to follow up the withdrawal of the per capita payments by proposals for more equitable financial relations between the Commonwealth and the States. 92 KFP 0 0 FOSTER, Richard Mr Foster - The Prime Minister has offered to confer with the States. 92 KYI 0 0 PROWSE, John Mr PROWSE - He has put the cart before the horse. Had the Government's proposals been put forward in their natural order, there would have been less irritation on the part of the States and less objection in this House to the bill. The present system of per capita payments is not equitable to Western Australia. 92 JWT NAT; UAP from 1931; LP from 1944 0 0 FRANCIS, Josiah Mr J FRANCIS - The honorable member is standing in the way of an equitable re-adjustment. 92 KYI 0 0 PROWSE, John Mr PROWSE - The arrangements proposed by the Government will not rectify the existing unfairness. With an area of nearly 1,000,000 square miles, and a population of only 380,000, Western Australia has little prospect, of extensive manufacturing industries, because Commonwealth fiscal legislation tends to the industrial enrichment of the more populous eastern States. Last year Western Australia purchased from the eastern States goods to the value of approximately £8,000,000, and the purchases by those States from Western Australia amounted to only £300,000. The purchase of so much primary produce and manufactured goods from the eastern States gives employment to a very large number of people, particularly in Victoria and New South Wales. But those States get the per capita payments in respect of the people whom Western Australian money employs. The Western Australian Government is not able to tax the profits made in respect of the sale of goods to that State; the taxation benefits are received by the States in which the goods are bought. Had Western Australia been able to buy in the open market, it could have saved last year about £2,000,000 in respect of the goods which it bought from the eastern States. But it is required to buy in the dearest market, and sell its products in the open market against the competition of the world. Western Australia is really providing portion of the money which the eastern States receive in per capita payments. That is an argument against a flat per capita rate, and in favour of th.e Canadian system of varied payments. 92 JWT NAT; UAP from 1931; LP from 1944 0 0 FRANCIS, Josiah Mr J FRANCIS - This bill affords an opportunity to make a more equitable arrangement. 92 KYI 0 0 PROWSE, John Mr PROWSE - The Government should disclose fully the arrangements it proposes to substitute for the present payments. In the absence of more definite information, Western Australia is better off with the assured income it now derives from the per capita payments than it would be if obliged to rely upon the less reliable form of revenue from income taxation. That is really the only point that we have to consider this afternoon. Under the Constitution the Commonwealth Government is empowered to make special contributions to Western Australia, Tasmania, or Queensland to compensate those States for financial disabilities as the result of Federation, but I honestly believe that, instead of going on with this measure, the Government should vacate those avenues of direct taxation which it entered in a time of national stress due to the great war. Commonwealth revenue from Customs to-day is much beyond that which any Treasurer has been able to estimate. On former occasions the Treasurer has been able to reduce the rate of income taxation, and I submit that it would be better now if the Government abandoned the entertainments tax, the estate duties, and laud taxation, without touching the per capita payments. 93 KEV 0 0 FENTON, James Mr Fenton - Revenue from those sources is increasing. 93 KYI 0 0 PROWSE, John Mr PROWSE - But my point is that the . Treasurer should leave that source of revenue to the States, and, indeed, get out of all those fields of taxation which it was never intended the Commonwealth should invade. We should then get back to normal conditions. The framers of the Constitution never contemplated that the Commonwealth Government should become involved in undertakings which extract so much money from the people of Australia, leaving the States, with decreasing revenues, the same obligations as formerly. The Government should give a fairer deal to those States that are at a trade disadvantage through being compelled under Federation to depend upon other States of the Commonwealth for their requirements. This is a reasonable proposition. Honorable members are aware that there has been talk of secession in at least one of the States. This is not because the people there are antiBritish or antagonistic to their fellow citizens. They are as loyal as the people in any other part of the Commonwealth. 93 KFP 0 0 FOSTER, Richard Mr Foster - The secession talk is all " bunkum." 93 KYI 0 0 PROWSE, John Mr PROWSE - It may be, but if irritating and unfair conditions are allowed to continue for any length of time, no one will be in a position to say that the complaint is unreal or even " bunkum." 93 KFP 0 0 FOSTER, Richard Mr Foster - People are flowing into Western Australia from every part of the Commonwealth. 93 KYI 0 0 PROWSE, John Mr PROWSE - Yes, and the people there are engaged in a more gigantic struggle to develop their unoccupied areas than are the people of any other State. 93 KEV 0 0 FENTON, James Mr Fenton - They are very prosperous over in that State. 93 KYI 0 0 PROWSE, John Mr PROWSE - Because they are doing their proper work. But they are bearing a burden that they should never have been called upon to bear. It would be possible to develop that great State much more rapidly if the people there could get that £2,000,000 which they have lost through being compelled, under federation, to trade with the eastern States. They have to purchase all their requirements at excessively high prices . and sell their products in the open markets of the world. Western Australia is the only State that is increasing its wheat yield. I wish that more of the other States would set about the same task of producing new money in Australia for the payment of our national debt, instead of busying themselves about hothouse proposals that lay heavier burdens upon the real production of Australia. In the eastern States the movement is in the direction of turning wheat lands into sheep lands and employing fewer hands. Consequently, young men are drifting from the country to the cities. This policy is not good for any country. If I were to convert my own area from wheat-growing to sheep-raising I should employ only one man where at present I employ twenty, and I should not give half the traffic revenue to the railways of my State. There is not so much distribution of money in wool growing as in wheat farming. In Western Australia there is a larger area of cheap agricultural land available than in the other States, and primary production is the only thing to which settlers there can turn their hands. If the people in the eastern States were obliged to devote more attention to primary production, unquestionably they would be more prosperous than they are at present. Western Australia would develop more rapidly and the Commonwealth would benefit to a greater extent if the people in that State had not these undue burdens laid upon them. The Government, through its Customs tariff, draws heavy revenues from immigrants who come to these shores without a penny in their pockets, and, unfortunately, primary production is so heavily handicapped that it is exceedingly difficult for men who go on the land to make good. These are the problems that it would be wise for this Government to give its attention. Doubtless the Ministry is sincere in its desire to pass this measure, but I cannot see how it is going to benefit the Commonwealth. A more logical proposition should have been brought down to adjust the financial relations of the Commonwealth and the States. I am a great believer in one borrowing authority, because I believe that by this means it would be possible to obtain cheaper money. And I believe, also, that the Commonwealth should be entrusted with this responsibility, but that all borrowing should be done on estimates submitted by the States. A Government policy shaped along these lines would help the country to progress. Sitting suspended from 6.25 to8 p.m. 94 JXA Hunter 0 0 CHARLTON, Matthew Mr CHARLTON .- The bill before the House is a very important one, and the speech just delivered by the honorable member for Yarra (Mr. Scullin) showed conclusively how necessary it is for this Parliament to be careful before committing itself in this matter. The Prime Minister, in introducing the proposal, which, although somewhat modified, is in effect identical with the previous proposal, expressed an admirable sentiment when he said that it was necessary, in the interests of good government and the development of this country, for the State and Federal authorities to work together in perfect harmony. I agree with that view. We are one people, with one destiny, and good financing is vital to our government. That has been recognized from the inception of federation; but, notwithstanding the Prime Minister's sentiments, we have departed from the principles he himself laid down. Instead of co-operating with the States, and working with the degree of harmony so necessary to success, the Government is endeavouring to bludgeon them. It cannot be said to be an act of conciliation to put a decision into effect before an understanding has been reached with the States. I ask honorable members to carry their minds back to the inception of federation, while I briefly state the history of the per capita grant. It was made apparent to all who took part in the creation of the Commonwealth, that the great question of finance had to be satisfactorily arranged. At that time the States depended largely on revenue from the Customs, and the framers of the Constitution were, therefore, careful not to interfere unnecessarily with the amounts that they were receiving. So it came about that the section of the Constitution known as the " Braddon Blot " was included. It provided that for a period of ten years three-fourths of the Customs revenue should be returned to the States. As the Commonwealth progressed, and shouldered greater obligations than those conferred upon it in the early days of federation, it was found that a change was necessary. But section 94 provides that surplus revenue above the requirements of the Commonwealth may be distributed equally among the States. 94 C7E 0 0 PAGE, Earle Dr Earle Page - Fairly. 94 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - There is not much difference between "equally" and " fairly." Last evening the Prime Minister said that we had no surplus revenue. Of course we have not. because we have made provision that all surplus revenue shall be paid into the Surplus Revenue Fund. We have a statement to-day from no less an authority than the Auditor-General that we have between £6,000,000 and £7,000,000 lying in the trust account. But for legislation authorizing the creation of trust accounts, that money would have been regarded as surplus revenue, and would have been available for return to the States. We have taken every precaution to see that no more revenue goes to the States that we are compelled by the Constitution to pay to them. In 1908, when the ten-year period had almost expired, the State Premiers met in conference, and resolved - That this conference views with apprehension the proposals of the Commonwealth Government embodied in the memorandum of Sir William Lyne, and is of opinion that they will, if adopted, seriously affect the financial independence and solvency of the States, and further resolves - That, in view of the fact that upon the State Parliaments devolves the duty of developing the resources of their respective States by means of land settlement, railway construction, irrigation, and other public works, and that they are charged with the responsibility of maintaining adequate education and charity systems, and providing for the administration of justice and other services, the financial obligations connected with which will inevitably increase with the growth of population, no financial scheme can he assented to by the States which does not provide for their receiving - a fixed annual sum; and a proportionate part of all increases in revenue from Customs and excise. 94 KNP 0 0 MAXWELL, George Mr Maxwell - What was the purport of Sir William Lyne's memorandum ? 95 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - I think the object was to provide for the time when the " Braddon Blot " would expire, and then to reduce the payments considerably. The States would not agree to any financial scheme which did not provide for the payment of a fixed annual sum. A further conference was held in Hobart in March, 1909. At that time Mr. Andrew Fisher was in office as Prime Minister, supported by Mr. Deakin and his party, and he attended the conference with Mr. W. M. Hughes, Senator MacGregor, and Mr. King O'Malley. The Premiers at that conference were particularly insistent that they should have something inserted in the Constitution, when the " Braddon Blot" expired, to fix the amount which they would be able to claim until the Constitution was again amended. Mr. Fisher would not commit himself as to that, but a few months later his Government was defeated, and Mr. Deakin took office. A conference was then held In Melbourne, at which Mr. Wade, who was then Premier of New South Wales, presided, and eventually an agreement was reached fixing a payment of 25s. per capita. 95 JRH 0 0 BOWDEN, Eric Mr Bowden - Was the. Commonwealth represented at that conference? 95 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - Yes, by Mr. Deakin, who was Prime Minister. It was agreed that provision should be made in the Constitution for the payment of 25s. per head. That matter was sub- mitted to the people in 1910, when the Labour party opposed the inclusion of the provision in the Constitution. The electors declared against it, and it was therefore left for Parliament to make provision from time to time as it thinks fit. I do not argue that the time may not arrive when an alteration will be necessary; but I say, most emphatically, that we are not justified in filching revenue from the States or changing the system at the present time. 95 KZT LP; NAT from 1917 0 0 RODGERS, Arthur Mr RODGERS - For how long would the honorable member continue the present payments ? 95 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - An answer to that question is hardly relevant to my argument. I am contending that there should be no alteration until the circumstances warrant it; and that can occur only by the Commonwealth taking over heavy responsibilities from the States. Are the States' responsibilities greater or less than they were before the war ? There is only one answer to that question. Their responsibilities, like the Commonwealth's responsibilities, are very much greater in consequence of the war. 95 KMQ 0 0 MANN, Edward Mr Mann - And the purchasing power of the per capita payments is very much less. 95 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - That is so, and there is no escape from the facts. The States are charged with carrying on national works. They have to provide for railways, roads, education, irrigation, and many other important works, allof which entail a much greater expenditure than they did before the war. We have not since the war taken from the States any of their burdens. 95 KZT LP; NAT from 1917 0 0 RODGERS, Arthur Mr RODGERS - Unfortunately, we have added to them. The States are administering the whole of the soldier land settlement scheme. 95 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - That makes my point all the stronger, and is an additional reason why we should not interfere with the existing arrangements. The negotiations conducted up to 1910 were continued from time to time until the 20th May, 1926, when the Treasurer (Dr. Earle Page) notified the State Governments that, in the opinion of the Commonwealth Government, there should be only one direct taxing authority, and that in order to give effect to its proposals the Commonwealth Government proposed to introduce legislation in which provision would be made for the per capita payments to be abolished, and the States to collect the land tax, probate duties, entertainments tax, and 40 per cent, of the income taxation on individuals and companies. There was an unsuccessful conference, but it was unreasonable to suppose that the States would be in agreement with a proposal which so vitally affected their financial arrangements with the Commonwealth. If the Commonwealth Government could so unload its share of direct taxation, and place the responsibility upon the States, it would be in a very fortunate position. The Commonwealth Government could go to the people, and tell them that in future it would depend entirely upon indirect taxation, and that if any authority were responsible for the heavy burden which they were paying in the form of direct taxation, it would be the State governments. That would be a very easy way to avoid responsibility; but by pitting the State governments against the Commonwealth authority, we cannot expect to develop our resources. As the right honorable the Prime Minister said, we must have harmony between the Commonwealth and the States, but that cannot be accomplished in this way. The Prime Minister also referred to the financial responsibilities which have arisen in recent years, and said that we have an interest bill of about £29,000,000 to meet in connexion with our war expenditure, and other commitments in connexion with old-age pensions, and so on, which is quite true. When the war was in progress Parliament wisely introduced measures providing for the collection of income taxation, an entertainments tax, and probate duties, in order to meet our commitments. It was frequently stated that, as we were asking men to go overseas to fight, those who remained at home should help to contribute towards the cost of the war. The war debt is still with us. Our gross national debt of the 30th June, 1926, was £458,443,000, and our net debt £338,841.000. Prior to the war our national debt was hardly worth considering, and the taxes I have mentioned were imposed in order to meet our interest bill on war commitments. I have nothing whatever to say against any government which legitimately reduces taxation; but to endeavour to vacate certain fields of taxation, and at the same time place the responsibility of collecting the taxes upon the States; is quite a different proposition. I ask the Treasurer, and other honorable members supporting this measure, to place themselves in the position of a Treasurer in any of the States. If a State Government is to collect a portion of this taxation in addition to that which it already collects, is there any hope of it being returned with a majority ? The electors are not concerned with the cause, but only with the amount which they will have to pay. The proposal is to pay to the States for a period of twelve months an amount equivalent to that which they would receive in the form of per capita payments, and during that time they are to adjust their finances on a new basis. We cannot reasonably expect any State Government to accept such a proposal. The State responsibilities have increased considerably in consequence of the war. It has been stated by the Prime Minister and the Treasurer that the Commonwealth Government will in future depend almost entirely for its revenue upon the Customs receipts, but with effective protection we should be unable to carry on with the revenue received from that source. 96 KFE 0 0 GREGORY, Henry Mr Gregory - What does the honorable member mean by " effective protection " ? 96 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - Our present tariff is ineffective, as we are not establishing industries in our own country to the extent we should, as is shown by the increasing quantity of goods coming into Australia. 96 KMQ 0 0 MANN, Edward Mr Mann - We are increasing our Customs duties, but additional quantities of goods are still coming in. 96 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - Customs revenue has been increasing for many years. Three years ago' when what is known as the Massy Greene tariff was under consideration, the Treasurer said that the revenue from Customs duties would diminish. We had a surplus that year of between £2,000,000 and £3.000,000, but the Treasurer said that the Customs revenue had readied the peak, and would then commence to diminish. He also predicted that in the following year the revenue would about balance the expenditure, but at the end of that year he again had a, surplus of between £2,000.000 and £3,000,000. For the following years the figures were: - From the foregoing it will be seen that the Customs receipts have been increasing annually. 96 KFE 0 0 GREGORY, Henry Mr Gregory - This year they are even higher. 96 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - Yes ; we have not the figures for the last six months, which I believe will show a further heavy increase. It is the duty of this Parliament to see that manufacturing is carried on to a greater extent in Australia to provide employment for our own people and suitable immigrants. In order to achieve that end we must have effective protection, which is the policy supported by the vast majority of the people of the Commonwealth. If the Customs revenue, upon which the success of this scheme is based, with the exception of 60 per cent, to be derived from income taxation, should be substantially reduced, how could the Government expect to finance its various activities? As the revenue diminishes so will the needs of the Commonwealth' increase. 97 KFE 0 0 GREGORY, Henry Mr Gregory - They will increase when men have been driven off the land. 97 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - We do not wish for that; we wish to provide markets for the commodities they produce. As the Customs revenue diminishes a smaller amount will be available to develop this country and carry on its various important activities. When that time arrives an attempt will be made by the Commonwealth Parliament to see that it receives sufficient revenue for its purposes. Is it to be suggested that the Government of the day will not reimpose taxation ? 97 KZT LP; NAT from 1917 0 0 RODGERS, Arthur Mr RODGERS - Some of the members of the party to which the honorable member belongs believe in unification, and in taking away the revenue of the States altogether. 97 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - There is no likelihood of that occurring, as was shown by the last referendum. I could quite understand the position if the Commonwealth Government were taking over certain obligations from the States. The Prime Minister referred in his policy speech to child endowment, the cost of which should be borne by the Commonwealth, and not by any particular State. If we were relieving the States of some heavy financial responsibility, such as child endowment or social insurance against accident, sickness, death, or unemployment, we should have some reason for seeking a re-adjustment of financial relations, but as we are not taking over any such obligations, we are not entitled to interfere with the present arrangements. Something has been said about harassing the States. As a matter of fact, this is harassing them. It is throwing down the gauntlet. In the circumstances, we cannot expect the States to respond. The Prime Minister said that he realized as he travelled through the United States of America how essential it was that Federal and State governments should work together in harmony. I agree that that is desirable. But action of this kind is not likely to promote a spirit of cooperation. There is nothing of concilia- tion in this bill. We are, as it were, holding a pistol to the head of the States. The Government brings in this measure, requests us to agree to it, and then, after everything has been done, asks the States to meet in conference to consider the matter, and promises to give them twelve months to make arrangements to meet the new conditions. That is just like holding up a man in the street at the point of a pistol, and then inviting him to meet in conference afterwards to consider the matter. I wish to quote a few newspaper extracts on this subject. It cannot be said that the Melbourne Age, Argus, or Herald are favourable to the policy of the Labour party, so that their criticism of the Government's policy is the more noteworthy. On the 7th of June, 1926, the following appeared in the Argus: - Nothing could be further removed from the spirit which was the genesis of Federation than the measure which the Federal Treasurer outlined in the House of Representatives on Friday for depriving the States of their rightful share of Customs and excise revenue. If this arbitrary disturbance of the financial relations between Commonwealth and State could have been foreseen 25 years ago it is certain that there would have been no Federation. I agree with that. There would not have been a possibility of securing federation if the States had thought for a moment that the Commonwealth would interfere with State financial rights. The States expected to get a fair deal from the Commonwealth, and it cannot be said that this proposal is fair. On the 9th of June, 1926, the following appeared in the Herald : - The Commonwealth is attempting to slip out of activities which have brought upon it a fair amount of criticism. It hopes to emerge on to the velvet of indirect taxation which is bound up with a great national policy, and therefore incurs little or no odium. On the 10th of June, 1926, the Age contained the following: - The Federal Government, even if it had a good ease - which in this instance it certainly has not - has by its arrogant, precipitate action already antagonized the public mind. 97 KFE 0 0 GREGORY, Henry Mr Gregory - Read what the Age has to say to-day. 97 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - I do not know what the Age says to-day, but I agree with the sentiments I have quoted. Proposals of this kind cannot help creating State antagonism to the Commonwealth. I agree with the honorable member for Yarra (Mr. Scullin), that the defeat of the recent referendums was due largely to the Commonwealth Government antagonizing the States. It practically ignored the States in regard to certain measures submitted to this Parliament upon which the States had a right to be consulted. On the 23rd of June, 1926, the following appeared in the Age: - The Federal Government seems doomed to invite the penalty which unsparing Fate metes out to all rulers who abuse vast powers. It may soon rush headlong down a steep place. Its latter handling of the question of the abolition of the per capita payments to the States from the Customs receipts, and its treatment of the thoroughly justifiable protests of the Premiers at the May and the sitting States conference, are so compounded of studied disdain, sharp practice, and " the young man in a hurry " that electors who have tried to follow the unlovely drama must have some difficulty in concealing their amazed contempt. That was severe criticism, but it was well warranted. The Government has no justification for introducing a measure of this kind. On the 24th of June, the Age published these words: - Apparently the Prime Minister has gone so far along the path of the political dictatorship that he dare not now withdraw. On the 11th of February, 1927, the same newspaper contained the following: - From the day the Government returned to power flushed with its fresh supply of strength it has sought to play the part of bully. . . . It is sheer cant for the Federal Government to say it has no desire to dictate to the States whilst simultaneously it is dictating. The political dictatorship has reference to the Treasurer (Dr. Earle Page). I believe that he is responsible for this measure, though, no doubt, he obtained Cabinet approval of it. It is in harmony with the principles that have guided him ever since his election to the Federal Parliament. He was responsible for exempting big leaseholders from land tax, and has always done everything in his power to relieve people of that class of their obligations to the country. It is idle for him to speak of evacuating certain fields of taxation. He knows that it is impossible to escape double taxation. 98 C7E 0 0 PAGE, Earle Dr Earle Page - Surely the Leader of the Opposition knows that our first proposal was to evacuate entirely the field of income taxation? 98 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - I well remember the Treasurer saying that he believed in one taxing authority. But even if he were to evacuate certain fields of income taxation he would still have to collect some taxes. As a matter of fact, he is retaining 60 per cent, of income taxation under this very proposal. While the Commonwealth and States have such heavy debts as at present exist, it is impossible to escape from the double taxing authority, and in these circumstances it is ridiculous to introduce a measure like this. We must retain the power of income taxation. But in any case future governments will not be bound by the actions of this Government. This Parliament can only control affairs during the period of its life. We all desire to see the country develop rapidly, and one of the greatest needs of Australia is more power for the national parliament, so that it can give effect to the desires of the people. But we shall never gain more power by following the lead of this Government. If I were on the side of the States, I should certainly be opposed to granting larger powers to a government that simply ignored the States as this Government has done. If we desire progress we must work in harmony with the States. We must recognize that we have certain functions, and the States have certain functions. The State and Federal Parliaments are elected by the one body of people, and the interests of State and Commonwealth electors are identical. It is our bounden duty to do the best we can in the interests of the whole of the people, and seek to develop this great country. It is idle to talk about Imperial Conferences, Premiers' Conferences, or conferences of any other kind if we intend constantly to antagonize the State Governments. We must be actuated by the spirit of sweet reasonableness, and the people have a right to expect a good example from this Parliament. We can set a good example by acting fairly and squarely to the States. No one dreamed at the time of federation that the Commonwealth would attempt to make inroads on State rights without, at the same time, taking over some of the big obligations and responsibilities that the States were carrying. In saying that, I wish to make it quite clear that I do not tie myself down for all time to the present arrangement. There may be necessity, on some future occasion, to reconsider the per capita payments. It may be desirable that the Commonwealth should assume responsibility for child endowment, national insurance against sickness or unemployment, or some other national obligation of that kind which should be discharged in a uniform manner throughout the Commonwealth. In those circumstances I feel sure that the States would not object to a reduction of 2s. 6d., 3s., or 4s. in the per capita payments. But at present no proposal is before us for relieving the States of any of their heavy obligations. It appears to me that the Government has made up its mind that it is the supreme authority, and that whatever it says shall be done must be done. I disagree with that attitude, which can. only create bad feeling in Australia. For these reasons I am strongly opposed to this measure. 99 KZT LP; NAT from 1917 0 0 RODGERS, Arthur Mr RODGERS - It is quite refreshing to hear the honorable member pleading for State rights. 99 JXA 0 0 CHARLTON, Matthew Mr CHARLTON - There is no justification for this proposal, and I believe that this Parliament will make a serious mistake and. do a great injustice to the States by accepting it. Tn these circumstances I moves - That all the words after the word " That " be omitted with a view to insert in lieu thereof the following words : - " in view of the State Governments' heavy financial responsibilities the bill be withdrawn." Mr. MANN (Perth) [8.45 J. -All honorable members realize that the Prime Minister's speech yesterday was one of special interest, not only because of the importance of the subject, but also on account of the peculiar and interesting conditions under which it was delivered. I could not help noticing that, while the Prime Minister was speaking, the Treasurer (Dr. Earle Page), who may be described as the coadjutor Prime Minister, occupied the seat which the Prime Minister himself generally occupies when a subordinate Minister is addressing the House, and that he followed the remarks of his Leader with concentrated interest. It appeared also that the Prime Minister was not quite at his usual ease when speaking. His remarks were unworthy of the Leader of a big State. It seemed to me that while the Prime Minister expressed in fine phrases the motives which were prompting the Government, he was not altogether in sympathy with the object to which those sentiments were directed. Personally, I could not decide' whether we were listening to the straightforward honesty of Esau or the persuasive plausibility of Jacob. Every honorable member appreciates those standards which the Prime Minister said should characterize the relations between the Commonwealth and the States. He said that he had realized during his American tour that antagonism between the States and the Commonwealth was most undesirable. It should not have been necessary for the Prime Minister to visit America to discover that fact. For a long time it has been obvious to many people in Australia that antagonism between the States and the Commonwealth is not only undesirable, but is creating a very unfavorable position in Australia. Honorable members could have informed the Prime Minister of the possible results of antagonism between the two authorities; and their opinions are entitled to as much respect as those of persons resident in the United States of America. That there is a very strong feeling regarding this matter there is no doubt, for upon a right settlement of this question depends the internal peace and stability of the Commonwealth for many years. The antagonism which has arisen is attributed to misunderstanding. That iB a convenient phrase. But the misunderstanding which has arisen is very similar to the mistaken ideas which the oysters must have had when the walrus invited them to come out and be eaten. It is complained that it has not been possible in the past to get agreement from the States. That is due to the nature of the demands made by the Commonwealth upon them. Except in respect of one relatively unimportant matter, no referendum submitted to the people has been answered in the affirmative. That is a significant fact which is worthy of the careful consideration of honorable members. We must remember that the people to whom the State Governments are answerable are the same people to whom the Commonwealth Government must give an account of its stewardship. When proposals affecting the respective spheres of the Commonwealth and the States have emanated from the Commonwealth Government and been rejected by the people, it surely is an indication that, in general, the people disapprove of the actions of the Commonwealth. 100 JWQ NAT 0 0 FRANCIS, Grosvenor Mr G FRANCIS - State referendums have been equally unsuccessful. 100 KMQ 0 0 MANN, Edward Mr MANN - So have State elections. Time after time the people have refused to give additional powers to the Commonwealth. There is no doubt that, on the occasion of the last referendum, the people rejected the proposals of the Commonwealth Government chiefly because of its contemplated action with respect to the per capita payments. On many occasions, in different parts of the country, I have heard people say that they were not prepared to grant additional powers to the Federal Government, because they were not satisfied that it was exercising its existing powers in a proper manner, especially iu respect of the per capita payments. That argument weighed very heavily in the final rejection of the Government's proposals. The latest proposals of the Commonwealth, which purport to be a modification of those previously put forward, are supposed to show some consideration to the States. The Prime Minister said that his Government was prepared to consider two or three possible forms of adjustment. First, he spoke of the complete evacuation by the Commonwealth of the taxation fields. He then suggested the provision of sinking funds for debts along the lines suggested by Mr. Warren Kerr. To that proposal the Prime Minister said that there might be the objection that it would be equivalent to telling the States to do something which they had not the sense to do for themselves. That, in my opinion, is the attitude of the Commonwealth towards the State Governments. It is causing resentment not only among the members of the State Governments, but also among the persons closely connected with them. Of the Government's road proposals it has been said that the Commonwealth has introduced them in order to compel the States to do what they ought to have done without compulsion. 100 JRH 0 0 BOWDEN, Eric Mr Bowden - The States have not done the work, because of lack of funds. 100 KMQ 0 0 MANN, Edward Mr MANN - If a fair adjustment of the finances of the Commonwealth and the States had been made, the States would have had the money. The proposals of the Commonwealth provide the States with money only so long as it is spent as the Commonwealth desires. The third alternative mentioned by the Prime Minister was that the Commonwealth should take over the debts of the States. His first proposal that the Commonwealth should evacuate the fields of taxation has already been fully dealt with. I have always maintained that the evacuation of those fields by the Commonwealth cannot be considered adequate compensation to the States for the loss of the per capita payments, for the reason that at any time those fields may again be entered by the Commonwealth. The establishment of sinking funds for debts is a matter for consideration, but it does not comply with the provision which has been made in the Constitution for talcing over the debts of the States. To provide a sinking fund is not to take over a debt. If adequate compensation is to be given in this direction it should be done by taking over an amount of debt, the interest ou which would be equivalent to the per capita payments now made. The Prime Minister said that the States had no constitutional, legal or moral right to the per capita payments.. He argued that if they considered that they had either a constitutional or a legal right they would have tested the position. That is a peculiar argument, seeing that an opportunity for testing the position has not yet occurred. The Prime Minister, knowing that the people generally consider that they have a moral right to these payments, gave special attention to that aspect of the question; but by his own statement he has cut the ground from under his feet, for he repeatedly stated that the Commonwealth desired only to make a fair adjustment of this matter. What makes one adjustment fair, and another unfair ? A fair adjustment is one which is based on a recognized moral right. The Prime Minister's statement is a recognition of the moral right of the States to the per capita payments; and, therefore, his argument falls to the ground. In the final analysis, the people themselves must be the judge of whether a moral right exists. We must remember that only by the consent of the States could federation have been consummated. We may quarrel about the amount to be paid; but that the States were to have returned to them some of the indirect taxation received by the Commonwealth was the one condition upon which they consented to surrender certain rights to the Commonwealth. Since then, proposals to deprive the States of the very condition on which they agreed to join the federation have been made from time to time. 101 L1T 0 0 YATES, George Mr Yates - Was that not anticipated in the Constitution ? 101 KMQ 0 0 MANN, Edward Mr MANN - It was expected that a fair provision would be made to meet the requirements of the States. However we may differ regarding the interpretation of the Constitution, the people generally have strong views regarding what is right or wrong and their moral right to a return of a portion of the indirect taxation received by the Commonwealth. Irrespective of what Parliament decides, the final decision must rest with the people. In the present state of public feeling in Australia, any honorable member who votes for the abolition of this public right will undoubtedly be visited by a Nemesis swift and sure. It has been asserted with a great deal of emphasis that it is wrong in principle for one Government to spend money that has been raised by another Government. That has been the argument of the Treasurer (Dr. Earle Page) from the beginning, and it has now been adopted by the Prime Minister (Mr. Bruce). It is the sole theme upon which the Treasurer has dilated, and he has repeated it from one end of the country to the other. He made the statement first in 1923, and, apparently in the belief that constant repetition would induce the people to accept it, has repeated it again and again. He has failed to realize that dull resentment has been roused in the public mind by its repetition. Like the Bourbons, the honorable gentleman forgets nothing and learns nothing. The Prime Minister has stated that, throughout the history of the Commonwealth, the practice of one Government raising money for another to spend has been recognized as entirely wrong. That is a very extraordinary statement. 101 JWQ NAT 0 0 FRANCIS, Grosvenor Mr G FRANCIS - Nevertheless it is a very true one. 101 KMQ 0 0 MANN, Edward Mr MANN - It is not true, because that was the only condition upon which the people accepted federation. The public sense of the people is still sound, and, if the question of federation were to be submitted to-day without the accompaniment of such a condition, a negative vote would be given. 101 KEV 0 0 FENTON, James Mr Fenton - What would be the fate of the bill if it were submitted to the people ? 101 KMQ 0 0 MANN, Edward Mr MANN - The Government is afraid to submit it to the people. If that course were adopted and the bill were approved, I should be perfectly content. Failing that, it is the duty of every honorable member to fight the measure at all stages, and to the limit of their powers, to endeavour to defeat it. The argument of the Prime Minister that the principle of one Government raising money for another to spend has been regarded as a wrong one throughout the history of the Commonwealth, is answered by the fact that that very principle is embodied in the Constitution itself in. the provisions that relate to grants in aid. In what respect is the principle morally wrong? The Treasurer has described it as a farce, a ridiculous thing, an absurdity, an outrage, and in various other terms. Yet this very absurdity, this very outrage, this farce, has been committed by him in connexion with the Federal-aid roads grant. If the system is wrong, he himself stands condemned. He has also said that the per capita payment in itself is wrong. His reason for such an assertion is somewhat obscure. His argument appears to be that the people who contribute the money receive the largest share of it. The purpose of the honorable gentleman is to suggest to the poorer States that if the per capita payment is abolished they will receive a greater sum by way of special grants than they are now receiving by this means. The implication is that the States that have the larger populations will receive less than is the case at present. This argument has been extensively canvassed with the object of gaining support in. the smaller States. It has been used in my State of Western Australia, and I repudiate it. Although that State desires to secure everything that is justly due to it, it will not lend support togrants that are unfair and unjust. 101 KVU 0 0 THOMPSON, Victor Mr Thompson - It wants everything that it can get. 101 KMQ 0 0 MANN, Edward Mr MANN - Everything that it can get justly and legitimately. It has not received from this Parliament any grant of which the Parliament has not unanimously approved. It is suggested to the people of the poorer States that they should assist to 'have the per capita payments abolished so that, instead of being bound down to 25s. a head, they may be able to approach a generous Treasurer, who will give them what he considers will meet their requirements. 102 JWQ NAT 0 0 FRANCIS, Grosvenor Mr G FRANCIS - Would not the honorable member support a proposal to make grants to the States according to their needs ? 102 KMQ 0 0 MANN, Edward Mr MANN - That is a very good bait with which to attempt to catch an unwary fish. Who is to determine what are the needs of the States ? 102 C7E 0 0 PAGE, Earle Dr Earle Page - The Federal Parliament. 102 KMQ 0 0 MANN, Edward Mr MANN - That Parliament is controlled by the Treasurer, with the aid of his supporters. Is anybody so misguided as to suppose that Western Australia, or any other needy State, would be given a grant greater than its just demands, when such a grant would have to be voted by the representatives of the more populous States? 102 C7E 0 0 PAGE, Earle Dr Earle Page - The honorable member a little while ago admitted that this Parliament unanimously voted grants to Western Australia. 102 KMQ 0 0 MANN, Edward Mr MANN - When they were just and fair. The present argument, however, is that the States will receive what is not fair. I, for one, do not think that this Parliament will make such grants, and I am not prepared to ask that it should. That is not the principle upon which the finances of the States and the Commonwealth should be adjusted. Many persons may hold the view that the present Government is specially desirous of assisting the backward States. Some Government, irrespective of party, which may come into office in the future may hold an entirely different view of the matter. Therefore I say that the States should be protected by the adoption of an honest and permanent method, and not one that will be subject to the whim or caprice of any Government that happens to be in power. 102 C7E 0 0 PAGE, Earle Dr Earle Page - The States will always be dependent upon the Federal Parliament, no matter what method may be adopted. 102 KMQ 0 0 MANN, Edward Mr MANN - I am aware of that. But if large sums of money are to be placed in the hands of any Commonwealth Government for distribution among the States, it will be open to that Government to make an improper use of it. This proposal places the States in an unjust and an unfair position, and one which is totally different from that which they presently enjoy without any suggestion of a political or other return. I desire to keep my State free from the necessity to make such an appeal. It is only right that the matter should be placed on a fair, just, and honorable basis. 102 JWQ NAT 0 0 FRANCIS, Grosvenor Mr G FRANCIS - That is the object of this measure. 102 KMQ 0 0 MANN, Edward Mr MANN - It is all very well to say that the intention is to do the right and the fair thing. I have been endeavouring to point out, with as much clearness as possible, that this proposal will not achieve such an object. We have been informed that the proposed method is necessary because the surplus revenue that we might otherwise have had has been absorbed by certain large commitments. Examination proves that to be a very dangerous position to take up. The assumption is that any government can so arrange its finances that it will have no surplus. Year after year we have been told that there has been no surplus because, just prior to the close of the financial year, large votes have been made from revenue account and allocated to work to be performed in the ensuing financial year. That practice has evoked serious comment by the Auditor-General. The Treasurer has stated his disagreement with the Auditor-General. That is natural. The Auditor-General disagrees with the honorable gentleman, but he .;s obliged to draw attention to anything in the Treasurer's statement to which he takes exception. Expressed in those measured terms to which we are accustomed, the Auditor-General has furnished us with the most condemnatory report that we have received from him for a very long time. The fact, as he states it, is that at the end of last year there was a surplus of £6,500,000. Yet we have been informed that there was no surplus, because it was necessary to make large commitments ! The public is quite justified in telling the Government that it has no right to enter into these commitments, but that, on the contrary, it should reduce the burden that is at present borne by the taxpayers. 102 C7E 0 0 PAGE, Earle Dr Earle Page - Those commitments are old-age pensions, war pensions, and other similar items. 103 KMQ 0 0 MANN, Edward Mr MANN - The Treasurer is perfectly well aware that they do not relate to old-age pensions. He is extremely fond of using that item of expenditure as a justification for his extravagances. Surpluses have accumulated, and the people of Australia are beginning to say that too much extravagance is being indulged in. Can an accumulated loss of £10,000,000 on Commonwealth steamers be urged as an excuse for failure to return revenue to the States ? That sort of thing is going on all the time. 103 C7E 0 0 PAGE, Earle Dr Earle Page - Does the honorable member suggest that that expenditure is being defrayed out of a surplus? 103 KMQ 0 0 MANN, Edward Mr MANN - I say that there has been too great a waste of public money, and that larger sums should be made available for economical expenditure in the development of this country. The Prime Minister has said that he hopes that this proposal will be taken as a genuine and sincere gesture on the part of the Commonwealth. We do not want generosity. It is 'not a question of generosity, but of a fair adjustment, as the right honorable gentleman himself said. If a sincere gesture is intended, the best way to prove its sincerity is not to pass the bill and have the conference afterwards, but to have the conference first and let the bill be based upon the conclusions of the conference. Time and again we have had this proposal to knock a man down and reason with him afterwards. 103 JLJ CP 0 0 ABBOTT, Charles Mr ABBOTT - The last conference with the States was unfruitful. 103 KMQ 0 0 MANN, Edward Mr MANN - The honorable member suggests that because a conference was unfavorable to the Government proposal that is a reason why there should not be a conference until the bill is passed. 103 JLJ CP 0 0 ABBOTT, Charles Mr ABBOTT - I did not say that; I said merely that the last conference was unfruitful. 103 KMQ 0 0 MANN, Edward Mr MANN - If that does not mean what I have suggested, what does it mean? The reasons why the last conference with the. States was unfruitful have been exposed during the debate on this bill. At the last conference of the State Premiers, the Prime Minister refused to meet the Premiers. 103 JLJ CP 0 0 ABBOTT, Charles Mr ABBOTT - They would not argue with him. 103 KMQ 0 0 MANN, Edward Mr MANN - The honorable member may be more in the counsels of the Government than I am, but I venture to think that he does not know what he is talking about. It is clear that he is trying to excuse the vote which evidently he intends to cast on this bill. I have ai word or two to say upon the proposed amendments of the bill, though .L recognize that they will be subjects for later consideration. I confess that I have been considerably puzzled in the effort to follow the effect of the sheets of amendment that have been circulated. In passing, I direct the attention of the honorable members to the fact that in clause 6 of the new bill it is proposed to pay money to the several States " in proportion to the number of their people." I thought that it was contended by the Government that the per capita principle of payment is immoral and inequitable. The Government will not make the payments per capita, but will make them in proportion to the number of the people of the different States, and that, apparently, is wing to make the whole thing perfectly right. I should like to draw attention to the schedule of amounts to be paid. Under the bill as proposed to be amended the amounts shown as payable to the different States to carry out the Government's scheme differ from those set out in the original table submitted. 103 C7E 0 0 PAGE, Earle Dr Earle Page - That is due to the fact that the new amounts are for the succeeding year. 103 KMQ 0 0 MANN, Edward Mr MANN - The total amount should not be less. 103 C7E 0 0 PAGE, Earle Dr Earle Page - It is £147,000 more. 103 KMQ 0 0 MANN, Edward Mr MANN - I was under the impression that the amounts of the per capita payments are shown to be less in the latest schedule. There is an amount of £483,000 as against £546,000 for Western Australia, and for New South Wales an amount of £2,978,000, as against £2,909,000. 103 C7E 0 0 PAGE, Earle Dr Earle Page - The reason is that the new figures are for a different year. 103 KMQ 0 0 MANN, Edward Mr MANN - Another matter to which I call attention is that, according to subclause (2) of clause 4 - All sums paid to the State of Western Australia during the period from 1st day of July, 1926, to the 30th day of June, 1927, in pursuance of section 5 of the Surplus Revenue Act 1910, shall be deemed to have been payment made to that State in fulfillment of the obligations of the Commonwealth to that State under sub-clause (1) of this section in respect of that period. [ wish to know what amounts have been paid during the period mentioned to which the clause alludes. The Treasurer has already dealt with the amount of £300,000, special grant. 104 C7E 0 0 PAGE, Earle Dr EARLE Page - That is a diminishing payment. 104 KMQ 0 0 MANN, Edward Mr MANN - I should like clearly to understand how the proposed new arrangement differs, if it differs at all, from the previous schedule published. 104 C7E 0 0 PAGE, Earle Dr EARLE Page - I shall make that clear in my reply to the debate. 104 KMQ 0 0 MANN, Edward Mr MANN - That is all I ask. I feel that it is due to us to make a strong protest against this action by the Government, because we all feel the necessity of bringing the States and the Commonwealth together. I admit that it will not be easy, and, in fact, that it will be a little difficult, though a very honorable, thing for Ministers to do; but I ask them to withdraw from their present position. If they can do so, even, at the cost of some little loss of pride, they will be making a gesture to' the States which will give proof of their desire to co-operate heartily with the State Governments. Such a gesture on their part would do an immense amount to bring about a better feeling throughout Australia. But let the Government go on with their present project, and no one can say where the consequences, immediate and indirect, will end. Let the Government say that it has misjudged public opinion and laid itself open to suspicion arid distrust in the past, but is now sincere in its protestations, and will prove its sincerity by agreeing not to pass this bill and not to exercise the powers it possesses until it has met the representatives of the States in conference and unshackelled in any way. If they go into the conference with the bill passed, and the whole question already settled, what will the representatives of the States have to argue about ? In previous conferences that have been held, the representatives of the States have been asked willingly or unwillingly to accept certain arrangements, because if they did not they would have to accept something worse. A threat has been held over them all the time. The argument has been by bludgeon and not by reason. For the States to go into a conference with the bill passed would be like sitting down to play a game of cards with the cards stacked against them. I think this is a most favourable opportunity for the Commonwealth to wipe out many of the misunderstandings that are alleged to exist, by making a really statesmanlike gesture towards the States to bring about a better feeling. There will be no need for apology or explanation. The act will speak for itself and will prove the strongest cement for the various political forces in this country for the good of the Commonwealth as a whole. 104 KFE Swan 0 0 GREGORY, Henry Mr GREGORY .- I had no desire to speak on the bill to-night, but as no honorable member seems inclined to continue the debate, it would appear that only a few honorable members for Western Australia take any interest in the measure. I am hopeful that, in connexion with this bill, we shall have a result somewhat similar to that which we had a little time ago in- connexion with the referenda. I would not have referred to the matter had not the honorable member for Yarra (Mr. Scullin) 1 rather spoiled his very excellent speech to-day by his reference to the referenda and influences brought to bear in connexion therewith. Though probably the honorable member had no such intention, his references were a little offensive. There can be no question that it is the desire of the whole of the people of Australia to uphold the federation, leaving to this Parliament matters of national concern, and reserving the settlement of matters of domestic concern to the parliaments of the States. I tell the Government that when it goes to the electors it will find that very strong feeling will be aroused by the vote to be taken on this measure. I feel satisfied that the result will be very much the same as the result of the referenda, and those supporting this measure will be fully called to account. So far as the bill is concerned, my position in connexion with it is clearly understood. The moment the measure was proposed in the party room, I expressed myself very strongly, and stated the action I proposed to take. No' member of the party on this side can have any doubt as to my attitude towards that bill. I was one of those who fought for federation ; I believe in it, and am keenly desirous that it should continue. But I have a very strong opinion that if this policy is to be pursued the effect will be to gradually destroy the federation. To those people who desire unification, and who support legislation of this description without consulting the people to bring it about, I would say, " Go ahead with measures of this kind." The action now taken by the Government is taken without the slightest consultation with the people. They have had no opportunity of saying whether or not it should be taken, and that is very wrong indeed. We have a federation in Australia of which we have a right to be very proud. It is the most democratic federation in the whole world. C can remember the debates of the last federal convention held here, when Sir Edmund Barton, pointing out how gloriously democratic it was, reminded those who listened to him of the way in which this federation would differ from any other in the world. He pointed out that property had no voice in either chamber of the federal legislature, and that both were to be elected by the people of Australia. 105 KXR 0 0 PARSONS, Walter Mr Parsons - I understand that people in Western Australia wish to secede from the federation. 105 KFE 0 0 GREGORY, Henry Mr GREGORY - When so much stupidity is exhibited in this House, it is not surprising to find that some people will desire to secede from the federation. One of those who have spoken most highly of the federation is the Prime Minister (Mr. Bruce). Looking through his speeches to discover what references he might have made to this drastic change proposed in the financial relations between the States and the Commonwealth, t found that he made these remarks concerning the federal Constitution - The ideal the framers of the Constitution had before them was to weld Australia into one great nation while preserving to the States their right of self-government. Is it not an undoubted fact that, if the financial fabric of the State be destroyed, its power of self-government is likewise destroyed? The right honorable gentleman described the Constitution as an imperishable monument. Very well, let us do all we can to preserve the federation, and if there be a desire on the part of any one to destroy it, let him come out into the open, so that the people may know their danger. The Treasurer is fond of saying that finance is government. If the finances of the State are destroyed, as they will be if this bill is passed, the power of the State to carry on its developmental work is destroyed. When I was speaking on the budget, 1 dealt with the matter of the per capita payments at great length, and I do not wish to go into details again, but I contend that any one who, having read the debates at the various Federal conventions, at which men of great intellect laid the foundation of our great Constitution, still maintains that the States have no moral right to a share of the Commonwealth Customs revenue, cannot understand the meaning of words. Would there have been the slightest possibility of the people of Australia agreeing to the Constitution without a special provision in it giving this protection to the States? Prior to federation, the States had expended immense sums of borrowed money upon roads, railways, and harbours, and all the necessary works that bring prosperity to a country. It was, therefore, essential that some provision should be made in the Constitution to enable them to pay interest on the large indebtedness they had incurred in carrying on their work of development, and had it not been for that provision, the States would not have agreed to federate. In any case, if the present Government was anxious to bring forward this proposal, why did it not at the last election make an announcement of its intentions in this regard. 105 C7E 0 0 PAGE, Earle Dr Earle Page - The Prime Minister dealt with this matter. 105 KFE 0 0 GREGORY, Henry Mr GREGORY - All that the Prime Minister said in his policy speech at Dandenong on the 9th October, 1925, was - More expenditure in charges renders necessary an examination of the financial relationship between the Commonwealth and the States. 105 C7E 0 0 PAGE, Earle Dr Earle Page - Is the honorable member quoting from a verbatim report of the Prime Minister's speech? 105 KFE 0 0 GREGORY, Henry Mr GREGORY - I am quoting from his policy speech at Dandenong as reported in the Argus of 9th October. When Senator Pearce spoke in Western Australia, he read a speech every word of which had come direct from Cabinet, and in that speech he referred to the necessity for " less involved methods of dealing with the per capita payments," and announced that there would be a conference with the States. Full reports of both speeches were published, and if the Government was so desirous of taking the drastic action of depriving the States of the per capita grant, how was it Ministers did not have the courage to say so when they were on the public platforms seeking the suffrages of the people. 106 C7E 0 0 PAGE, Earle Dr Earle Page - If the honorable member will read the full statement of the Prime Minister, he will find that it was quite specific on the point. 106 KFE 0 0 GREGORY, Henry Mr GREGORY - To the Treasurer the agreement of the past is apparently merely " a scrap of paper." Moreover, after the election was over, and when the Government submitted its policy speech to Parliament, why did it not tell Parliament what action it proposed to take? All it said in the Governor-General's speech was - In view of the problems arising out of the relations between the Commonwealth and the States, my Ministers propose to invite the States to meet the Commonwealth in conference to consider these matters. A royal commission has already considered the position of Western Australia, and au investigation will be made into the circumstances of Tasmania. For the present year you will be asked to grant a subsidy of £450,000 to the State of Western Australia. Where in that statement is there any mention of the distinct proposal now before us? When it was brought forward in the party room it came to- me like a thunderbolt. I had not the slightest idea that the Government intended to bring forward such a proposition. I feel sure that very few honorable members would on the public platforms in their States tell the people that they were willing to support a Bill of this sort and expect to be returned to this House. Why cannot the Government make the bill operative a year after the next election, thus giving the people ample time to consider the matter and affording honorable members an opportunity to go to their constituents and tell them what it is proposed to do? I wonder how many honorable members would be prepared to support the Government in its attitude? 106 JOG 0 0 BAYLEY, James Mr Bayley - Would the honorable member do so? 106 KFE 0 0 GREGORY, Henry Mr GREGORY - No, because I do not approve of the policy. But surely t is an honest course to tell the people what action is proposed to be taken in a matter of this sort. When we have a mandate from the people we are justified in bringing forward measures of this nature, but how can the Ministry say that the people have approved of its present proposal ? I have quoted all that was said in regard to the matter in the policy speech. 106 C7E 0 0 PAGE, Earle Dr Earle Page - That is not so. Let the honorable member quote the full speech -at Dandenong. 106 KFE 0 0 GREGORY, Henry Mr GREGORY - Let the Minister go through all the speeches as I did. 106 C7E 0 0 PAGE, Earle Dr Earle Page - We shall put on record in Hansard what the Prime Minister said. 106 KFE 0 0 GREGORY, Henry Mr GREGORY - I went carefully through the right honorable gentleman's speech because I had no desire to misquote any Minister in regard to the matter. I certainly did not read the Treasurer's speeches, but I read those of the Prime Minister and Senator Pearce. In fact, I was sitting alongside Senator Pearce when he read a written speech to the people of Western Australia, telling them what the Government, proposed to do. 106 KV8 0 0 STEWART, Percy Mr Stewart - The Government said that it would meet the States, but it did not say that it would abolish the per capita payments. 106 C7E 0 0 PAGE, Earle Dr Earle Page - The Government said that it would deal with the whole question of the financial relations of the Commonwealth and the States. 106 KFE 0 0 GREGORY, Henry Mr GREGORY - That is an entirely different matter. The Government should accept my suggestion and make this Bill operative in a couple of years from now ; but in any case I am opposed to the principle involved. When I look at the obligations of the States, 1 feel that they are justified in expecting assistance from the Commonwealth, particularly because of the great concessions they made in order to bring about federation. It was the States that brought about federation. It has been frequently said in this chamber that the States made great sacrifices to build up national aspirations. They handed over their Customs revenue, their post and telegraph offices, and other functions, for the purpose of building up a national parliament. The Prime Minister said yesterday that the spirit of partnership seemed dead in Australia, and spoke of the desire to bring about a different atmosphere. If the spirit of partnership is dead, I should like to know who is responsible for it. In any case, if there is a desire on the part of Ministers to bring about a different atmosphere, their methods are somewhatcrude. I have already pointed out what waa promised to Western Australia in the Governor-General's Speech. In August last the Premier of the State, anxious to get the grant which had been promised by the Commonwealth Government, wrote to the Prime Minister, and received the following telegram in reply: - Referring to your telegrams of the 3rd and 10th August, the Commonwealth Government considers that the question of special assistance to Western Australia should be dealt with in conjunction with the general proposals for and adjustment of the financial relationships of the States and the Commonwealth. Both matters have accordingly been provided for in the States Grants Bill now before Parliament. That telegram gives the Western Australian Government clearly to understand that the grant of £300,000 recommended by the Western Australian Disabilities Commission would depend entirely upon the votes of honorable members upon the States Grants Bill. That does not appeal to me, nor do I think to most people, as being the best means to employ to bring about a different atmosphere or remove the bad feeling which now exists. The Prime Minister also said that we could have an assurance of fair, just, and honorable treatment. I am always prepared to accept the word of the right honorable gentleman; but i-s he justified in asking us to give him a blank cheque by passing a bill of this sort, thus allowing him to go to the various State Governments, saying, " Here is what Parliament has done; come together now and we shall consider the financial proposals with you for the future." In my opinion, that is not the way to approach the States. If there is the slightest desire to have fair, just, and honorable treatment in regard to this matter, the manner in which financial assistance is to be given to the States should be clearly defined. Parliament should know the exact proposals of the Government before the bill is considered. It is useless to ask the States to meet the Commonwealth afterwards. The Treasurer says - The system of capitation grants is an unsound one. It is wrong in principle, unfair in its incidence, and stands in the way of the Commonwealth evacuating the field of direct taxation. This Government has not promised to evacuate the field of direct taxation. In any case how could this Government bind any future Government? After the Treasurer had finished his speech on the budget, the honorable member for Yarra (Mr. Scullin) gave this House distinctly to understand that the moment the Labour party regained office it would re-introduce the land tax. In view of that statement the promises of this Government are absolutely worthless. I have not the slightest doubt that this Government would do its best to carry out any obligation that it entered into, but how could we give the States any guarantee that future Governments would not re-enter the field of direct taxation. The Treasurer says that the system of per capita payments is wrong in principle, and that one Government should not raise money for another to spend. The Government is inconsistent in its attitude, because no sooner was this proposal put forward than the Main Roads Bill was introduced. It is also proposed to introduce a bill providing for advances for wire netting. Both of these impugn the principle. This is a most extraordinary attitude for the Government to adopt. Then the Treasurer says that the system is unfair in its incidence. He pointed out what had happened in Canada. If it were a question of incidence only, I could quite understand the Government calling the States together, and saying to them, "Victoria and New South Wales are profiting exceedingly; large numbers of people are being absorbed there, and it is unfair that those States should be getting all the advantages of the system, while the other States are losing by it." The incidence of the system could have been discussed at a conference to enable a larger proportion of the money to be given to the poorer States. When the agreement respecting the per capita payments was come to in 1910, it was pointed out that Western Australia suffered . financially by federation, and provision was made for a grant of £250,000, to be reduced by £10,000 annually, but that half of that sum would be provided by the other States. This was a clear indication that the States were prepared to discuss the question of incidence. The question of incidence, however, has never been discussed by the Treasurer. I said just now that the Commonwealth Government objects to the per capita payments on the ground that it is unfair for one party to raise money for another to spend. Yet this Government is providing large sums of money for road-making in the various States. The Minister for Works and Railways (Mr. Hill) yesterday admitted that the Western Australian Government on the eve of an election sent large bodies of workmen into various constituencies at a period just far enough ahead to get their names on the roll, and that the Commonwealth were providing part of the funds. 108 F4Q 0 0 SCULLIN, James Henry Mr Scullin - That was suggested by political partisans of that side. 108 KFE 0 0 GREGORY, Henry Mr GREGORY - One body of workmen was sent to Northam ; but, strange to say, owing to the men being within the wrong boundaries, the Commonwealth funds were spent without any advantage to the Labour party. What is the need for this sudden and drastic action on the part of the Government? It is not because of any shortage of Commonwealth funds. In 1919 the then Treasurer (Mr. Watt) suggested that the Government would have to consider a reduction of the per capita payments, and he proposed to reduce the amount by 2s. 6d. annually. That proposal was made just after the expiry of the war, and it was then difficult to estimate the requirements of the Commonwealth. In 1919 the Customs revenue was £21,000,000, but for the previous three years it did not average £16,000,000. This year the Customs revenue will be about £45,000,000, so that it cannot be argued that the present state of the finances has caused the Government to bring forward such a drastic proposal. In the Argus, this morning, appeared the following extract from the Auditor-General's report: - At the end of the financial year 1924-25 the unexpended money resulting from what ought to have been called surpluses amounted to £6,472,673, which was appropriated to various uses. In the following year, 1925-26, not only was this money not spent, but the trust funds were increased by £151,318, making the total amount in trust funds £6,623,991. In other words, the Treasury had this large amount of money in hand at the end of the financial year. It cannot be suggested that there is the slightest justification for this proposal on the grounds of financial stringency. We have only the Treasurer's bare statement that the system of per capita payments is wrong in principle. This proposal should have been brought forward just before the elections. The Treasurer in his speech spoke of the blind worship of State rights. I believe in federation, and I would remind that honorable gentleman that State rights were the outcome of federation. I wish to have those rights protected until the people themselves, by an alteration of the Constitution decide on a change. In Western Australia a feeling of discontent is undoubtedly growing, because of the continual increase in the tariff and the operation of the Navigation Act. Unless there is some drastic reform the people there will surely advocate secession. Western Australia is a magnificent country, but the people who are settling on the new areas there are compelled to pay 100 per cent, and 200 per cent, more for every article that they require. In the event of a bad harvest, the feeling of discontent among the people respecting the Commonwealth policy must inevitably develop in intensity. Federation, for Western Australia, has been most disastrous, and, without it, that State would have made much greater progress. No section of this community has been more loyal to federation and the Empire than have the people of Western Australia. They have always been quite as loyal as any other section, but they are suffering greatly through the effects of federation and the policy of the Federal Parliament. One has only to look at the mining industry. Gold and copper mining have almost been crushed out, although tin and lead mining, because of the high prices of those metals, is certainly flourishing. Twenty years ago 100,000 men were employed in the mining industry, but, to-day, less than 40,000 men are so employed. Enormous sums have been expended on the construction of railways, public buildings, and water conservation, and yet the mining districts are now becoming deserted. One knows that mining is an evanescent industry, but there are still millions of tons of ore in the Kalgoorlie and other mining belts, which, were it not for the high cost of production, would be employing many thousands of people. The farmers have to pay 100 per cent, more for their implements and other requirements, due entirely to the high tariff and the Navigation Act. In 1914 we had a splendid mercantile fleet, but it has vanished, owinig to the harsh operation of the Navigation Act. Western Australia is a new country, and has many difficulties to contend with. It is essential that the settlers should be given advances for wire netting, in order to keep the rabbits in check. About eighteen months ago, just as the wheat crops were sprouting, I travelled through one portion of my electorate, and I saw thousands of acres as bare as the floor of this House because of the ravages of this pest. Yet we have the most extraordinary dumping duties imposed on their goods. 109 10000 0 0 GROOM, Littleton Mr SPEAKER (Hon Sir littleton Groom - Does the honorable member propose to connect his remarks with the bill? 109 KFE 0 0 GREGORY, Henry Mr GREGORY - I am pointing out the effects of the federal policy upon Western Australia. Some 10,000 souls have been placed in the group settlement areas in my State. Eur many years they must confine their energies to dairying or pig-raising, and I do not suppose they will contribute anything by way of income tax for many years. But every new settler represents an asset to the Commonwealth, and surely Western Australia is entitled to a fair share of the Customs revenue thus created. Last year I asked for a return showing the sums paid to the various States during the past four years by way of federal bounties. The statement furnished by the Treasurer showed that New South Wales had received £872,000, which included bounty amounting to ,£664,000 on the manufacture of wire netting and wire. Victoria received an even larger payment, totalling about £900,000. I have included £240,000 paid to the Commonwealth Oil Refineries Limited, since Victoria got the principal benefit from it. Queensland's largest payment by way of bounty was made on ita meat- export. Western Australia received £20,000 on its beef export, £41,000 to enable it to cope with the outbreak of rinderpest, and £64,000 for wire netting, which sum the settlers are required to repay. 109 F4Q 0 0 SCULLIN, James Henry Mr Scullin - The money allocated for the suppression of the outbreak pf rinderpest was spent for the benefit of the Commonwealth. 109 KFE 0 0 GREGORY, Henry Mr GREGORY - Yes ; but it was included' among the payments to my Stale as a bounty. That shows the efforts of the Treasury to make it appear that Western Australia got something out of the large sum distributed by way of bounties. Although great wealth has been created in the wheat areas of Western Australia, and many of the settlers haw contributed large sums by way of income tax. the group settlers and others in new areas will not be in a position to pay income tax for many years. Consequently the present system of Commonwealth doles will have to be continued. Probably the only means of remedying the position, and silencing the cry for [«] secession, would be to give Western Australia control of ita own tariff for the next twenty years. 109 JZK 0 0 COLEMAN, Percy Mr Coleman - The honorable member knows that under the Constitution that cannot be done. 109 KFE 0 0 GREGORY, Henry Mr GREGORY - I recognize that, but I had hoped that the necessary alteration of the Constitution would be made. If there should be a fall in the price of wheat, settlers on new areas in Western Australia would be in a serious plight; but if that State had control of its own tariff I feel sure that within 25 years it would be one of the most- flourishing portions of the Commonwealth. The freight on goods from the eastern States to Western Australia is enormous, being in some instances greater than that from Great Britain. In the course of his policy speech in Western Australia, Senator Pearce said that, although the proposal for a grant to that State of £450,000 was made for that year, the proposed conference between the Commonwealth and the States was a recognition by the Commonwealth that tha findings of the Disabilities Commission justified the payment to Western Australia of that amount of compensation, and further established a basis on which any future relationship should rest. But the Treasurer, in dealing with that matter, said that the findings of the Commission did not demonstrate to the satisfaction of the Commonwealth Government that federation had substantially affected the financial strength of the smaller States. The chairman and, I think, another member of that commission also affirmed that the only way in which Western Australia could be assisted would be by giving it control of its own tariff for a certain period, and until that was done it should receive £450,000 a year. 109 K1J NAT 0 0 PRATTEN, Herbert Mr PRATTEN - That is about one-third of the total Customs revenue collected in that State. 109 KFE 0 0 GREGORY, Henry Mr GREGORY - The Minister is forgetting that Western Australia purchases over £8,000,000 worth of goods per annum from the eastern States. If those purchases were made elsewhere, there would be a remarkable difference in the figures. I intend to support the amendment, and if it is defeated I shall en- deavour to have an amendment inserted to make the bill operative only after the next elections. Until the people have had an opportunity to express their views on this proposal, the Government cannot claim to have any mandate to proceed with it. If we cannot defeat the bill on the motion for the second reading, I hope that when it is in committee, it will be so amended that it will not take effect until the people's wishes are ascertained. 110 KZA 0 0 WEST, John Edward Mr WEST - Move that the bill be read this day six months, and so defeat the Government. 110 KFE 0 0 GREGORY, Henry Mr GREGORY - The fate of Governments do not affect my attitude when the future of the State I represent, and, indeed, the whole Commonwealth, is at stake. This bill is entirely opposed to the intentions of the framers of the Constitution and to my conception of federation. Although it is qualified by certain promises by the Government of to-day, ultimately it will be disastrous to the States. I appeal to the House to take such action as will ensure that Commonwealth Ministers shall confer with representatives of the States before this bill is enacted. The proposal of the Prime Minister that the per capita payments shall be withdrawn and the States consulted afterwards as to the readjustment of their financial relations with the Commonwealth, is most unjust. I accept his word that he is prepared to deal equitably with the States, but another Government may take a different view of what is fair and equitable. In any case, I should not be justified in voting for the bill on a mere assumption that the Government will act fairly. I am not prepared to give a blank cheque to any Government. We must look to the future, and until this matter has been referred to the people, the only course open to the House is to reject the bill. Debate (on motion by Mr. Theodore) adjourned. 110 miscellaneous Message received from the Senate transmitting the following resolution in which the concurrence of the House of Representatives was requested: - " That- a joint committee be appointed to inquire into and report on the moving picture industry in Australia; three senators be appointed to serve on such committee ; the committee have power to send for persons, papers, and records, to move from place to place,andsit during any adjournment of the Parliament: a message be sent to the House of Representatives requesting its concurrence, and asking that four members of the House of Representatives be appointed to serve upon the said committee." 110 adjournment 110 Mr. BRUCE (Flinders- Prime Minister and Minister for External Affairs} [10.15]. - I move- That the House do now adjourn. In order to enable honorable members to make their arrangements for next week, I desire to inform them that the Government will ask the House to meet on Tuesday next. Question resolved in the affirmative. 110 22:15:00 House adjourned at 10.15 p.m.