Senate
1 September 1937

14th Parliament · 2nd Session

  1. Senate
  2. 14th Parliament
  3. 1937

The .Deputy President (Senator Sampson) took the chair at 3 p.m., and read prayers.

page 343

QUESTION

AVIATION

Senator SAMPSON:
through Senator PAYNE

asked the Postmaster-General - 1. Has the Minister seen newspaper reports to the effect that an Australian air company with a capital of £1,000,000 is to be formed, and that the board of directors will include a chairman to be approved by the Government and two directors to be appointed by the Bank of New South Wales and the Commercial Bank of Australia on behalf of the underwriters? 2. Has he also seen a report that guarantees have been placed with the Bank of New South Wales and the Commercial Bank of Australia through the Bank of America and the National City Bank of New York by the underwriters ?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I have read the reports referred to. To-day the Government was advised by both the Bank of New South Wales and the Commercial Bank of Australia that they .have no knowledge of the proposed company or of any arrangements connected with it. 1 have also noted press cables from America stating that the Bank of America and the National City Bank have denied having had any connexion* with the. proposed company. I would add that the statement that the board of directors would include a chairman to bc approved by the Government is made without any authority.

page 343

QUESTION

AUSTRALIA HOUSE, LONDON

Lift EMPLOYEES.

Is it a fact that, the lift employees arn females, and, if so, why are such jobs not given to limbless soldiers?

I now inform the honorable senator that the following advice has been furnished by the High Commissioner, London : - “ Owing to the large number of tenants and their callers, the traffic on lifts is very heavy. Each lift has a sliding door and nl each floor there arc double doors opening outward which necessitate the attendant stepping: out of the lift at each stop to close them. It would bc impracticable for a one-legged man to operate these doors combined with the control of the motor. In the case of a onearmed man, operation would be difficult and the service would be slowed down appreciably,”

page 344

QUESTION

GALVANIZED IRON AND STEEL PLATES

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

-On the 27th August Senator Grant addressed the following questions to the Minister representing the Minister for Trade and Customs, upon notice: -

  1. Has the Minister had his attention called to the statements made in the Argus of the 25th instant -

    1. That the manufacturers of galvanized iron are from three to four months behind in their commitments?
    2. That in some cases orders for steel sheets will be accepted - subject to delivery in about eight months from receipt of order?
    3. That delivery of steel plates cannot be given fora period of eight to twelve months?
    4. That for special large-sized steel plates acceptance of orders is subject to rolling about SeptemberOctober next year?

  2. If the above statements are correct, what attitude does the Government propose to take in order to make supplies available within a more reasonable time?

The Minister for Trade and Customs has now supplied the following answers-: -

  1. Yes.
  2. The delivery periods mentioned are not properly indicative of the steel position. While it is possible that some orders placed with steel manufacturers may not be completed until the periods mentioned, this is not generally the case. Merchants and manufacturers have placed orders with the steel mills covering their requirements for many months ahead and will thus be receiving steel regularly from those mills. Users may also purchase from steel merchants who hold stocks. Generally speaking, the position regarding steel supplies in most other countries is no better. An abnormal world demand exists for iron and steel because of requirements for armament purposes. This is particularly the case in the United Kingdom, where the demands for Empire defence purposes are particularly heavy. Because of the comparatively low price of Australian-made iron and steel some users who formerly preferred to import their requirements are anxious now to purchase from local sources. Australian steel manufacturers have recently expended large sums in plant extensions in order to cope with the normal Australian demand. There is little doubt that Australian steel producers have taken, and are still taking, all possible steps to meet the position. When the price factor is taken into consideration Australian users are being better served as regards iron and steel requirements than are users in most countries. There is nothing which the Government can be expected to do to make supplies available. It is the function of traders, not the Government, to import any requirements which Australian steel-makers cannot meet.
Senator LECKIE:
VICTORIA

– Is the Minister aware that galvanized iron manufactured in Australia is selling at from £5 to £7 a ton below the price of imported galvanized iron duty free, and is he aware also that owing to this difference in price Australian galvanized iron is nowbeing exported ?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I understand that that is so,but I am not sure of the details. If the honorable senator will place his question on the notice-paper, I shall have inquiries made.

page 344

PAPERS

The following papers were presented : -

Munitions Supply Board - Report for period 1st July, 1933, to 30th June, 1935, together with Report of Commonwealth Government Clothing Factory for the Financial Years 1933-34 and 1934-35.

Australian Imperial Force Canteens Funds Act - Seventeenth Annual Report, for the year ended 30th June, 1937.

Petroleum Oil Search Act - Statement of Expenditure for the period 28th May, 1936, to 30th June, 1937.

New Guinea Act - Ordinance No. 24 of 1937 - Indemnity.

page 344

QUESTION

INTERNATIONAL RELATIONS

Sino-Japanese Crisis

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA

– On Wednesday last the Minister for External Affairs (Senator Pearce) presented an interesting statement on the international situation but omitted to make any reference to any steps which have been, or are being, taken by the League of Nations. With regard to the unfortunate conflict that is taking place in China will the Minister now amplify his statement in order to give the Senate this information?

Senator Sir GEORGE PEARCE:

– When I made the statement last week no approach had been made by either China or Japan to the League of Nations, but I read in the newspapers to-day that such an approach has now been made. I shall inquire whether my department has any official advice on the subject.

By leave. - For the information of honarable senators, I propose briefly to review recent important developments of the Sino-Japanese crisis. On the 17 th August, the British Government made a proposal to the Chinese and Japanese Governments to the effect that if both the Japanese and Chinese would agree to withdraw their naval and military forces from the Shanghai area and would also agree that GreatBritain, the United States of America and France should be responsible for the protection of Japanese nationals in the International Settlement, the British Government would undertake this responsibility, provided that it could securethe co-operation of the United States of America and France. The British Government also made it clear that its sole object in making this proposal was to keep the International Settlement free from hostilities, and the commitments contemplated would be of a temporary nature to hold good- only during the continuance of the crisis. The Commonwealth Government has reason to suppose that the Chinese Government would have favorably considered this proposal if it had proved acceptable to the Japanese Government.

The Japanese Governmenthas now replied to the British proposals in a note which contends that British interests in Shanghai are not being endangered by the Japanese Army, but by illegal Chinese attacks on the Settlement. Japanese troops were landed to protect 30,000 Japanese residents from attack by Chinese forces. The Note concludes by stating that the protection of British lives and property in Shanghai is always a matter of concern to the Japanese Government, whose forces are constantly devoting themselves to this end.

A pact of mutual non-aggression between China and SovietRussia was signed on the 21st August, This consisted of three clauses -

  1. That neither party should commit any act of aggression on the other;
  2. That neither party should assist any third party which might commit an act of aggression on either of the signatories;
  3. That all existing agreements, whether bilateral or multilateral, to which the signatories were parties, should remain in force.

The Chinese Government has informed the British Government thatthis pact is purely negative in character. Itmerely indicates China’s fixed purpose to live at peace with its neighbours, and does not signify any abandonment on the part of China of its fixed policy of antiCommunism.

Honorable senators will recollect that the British Government recently addressed a Note to the Japanese Government protesting against the attack on the British Ambassador in China, Sir Hughe Knatchbull-Hugessen, by Japanese aeroplanes, as a result of which he was severely injured. The full text of this Note has appeared in the press, and it is sufficient for me to remind honorable senators of the three requests made to the Japanese Government by the British Government. These were, first, a formal apology to be conveyed by the Japanese Government to the British Government; secondly, suitable punishment of those responsible for the attack; thirdly, an assurance by the Japanese Government that the necessary measures would be taken to prevent a recurrence of incidents of such a character. No reply to this Note has as yet been received, but the text of a statement issued by the Japanese Foreign Office on the 27th August, is as follows : -

It was with profound regret that we heard the news that Sir Hughe KnatchbullHugessen, the British Ambassador to China, was seriously wounded by machine-gun fire from an aeroplane, whilst he was on his way from Nanking to Shanghai. The Japanese Foreign Minister immediately instructed the Japanese Ambassador to China to convey to the British Ambassador his (the Foreign Minister’s) sympathy while the Japanese Consul-General in Shanghai called upon the Acting British ConsulGeneral and expressed his regret.

The Japanese Government is now conducting an investigation into the matter at Shanghai. However, it is absolutely unthinkable that a Japanese plane would intentionally attack the automobile in which the British Ambassador was driving.

The Japanese Consul-General in Australia has personally expressed to the Commonwealth Government his sincere sympathy at the wounding of the British Ambassador.

page 345

STATUTE OF WESTMINSTER

Senator DUNCAN-HUGHES:

– In view of the fact that a bill for the adoption of the Statute of Westminster has been introduced in the House of Representatives, will the Leader of the Senate say whether ample time will be allowed for a full discussion of this important matter in the Senate.

Senator Sir GEORGE PEARCE:

– Yes.

page 346

ADDRESS-IN-REPLY

The DEPUTY PRESIDENT. - I have received from His Excellency the Governor-General the following message in connexion with the AddressinReply : -

Mr. President:

I desire to acquaint you that the Addressin -Reply at the opening of the second session of the Fourteenth Parliament was duly laid before His Majesty the King and I am commanded to convey to you and to honorable senators, His Majesty’s sincere appreciation of the loyal assurances to which Your Address gives expression.

Gowrie,

Governor-General. 30th August, 1937.

page 346

ACTS INTERPRETATION BILL 1937

Assent reported.

page 346

QUESTION

YAMPI SOUND IRON ORE DEPOSITS

Senator E B JOHNSTON:
WESTERN AUSTRALIA

asked the Minister for External Affairs, upon notice -

With reference to the Minister’s statement to the Senate on the 26th August that the Government has not prohibited the export of iron ore from Yampi Sound -

1 ) Is the Minister in a position to state that no such prohibition will be imposed by this Government?

If so, will the Government convey this assurance to the Yampi Sound Mining Co. and other persons engaged in the development of those deposits ?

Is it a fact that operations at Yampi are being suspended as a result of the uncertainty consequent on previous ministerial statements on the subject?

Senator Sir GEORGE PEARCE:

– I invite the honorable senator’s attention to the following statement made by the Prime Minister in the House of Representatives on the 31st August: -

I wish to dispel any misapprehension that may exist in regard to the attitude of the Commonwealth Government in connexion with the export of iron ore from Yampi Sound. In connexion with potential supplies of iron ore a preliminary survey has been made which shows very considerable deposits in sight, sufficient for all our requirements for a great many years ahead. However, this survey is incomplete, and it, is believed that much greater supplies exist than have been taken into account in this preliminary survey. A more detailed and comprehensive examination is now in hand. In regard to the proposed export of iron ore from Yampi Sound: The leases were granted to Brassert & Company by the present State government in Western Australia. The Commonwealth Government is aware of no reason why it should interfere. The Government regards the necessity for any limitation on the export of iron ore on the grounds set out above as unlikely. The responsibility for constant watchfulness for the conservation in the national interests not only of the resources of iron ore but also of the essential non-ferrous metals is one which falls on the Commonwealth Government. This responsibility the Government accepts and will act upon whenever and in whatever connexion it is necessary.

page 346

QUESTION

CORONATION POSTAGE STAMPS

Senator ALLAN MACDONALD:
WESTERN AUSTRALIA · UAP; LP from 1944

asked the Postmaster-General, upon notice -

  1. Is it the intention of the Government to issue a complete range of commemorative coronation postage stamps?
  2. Is it intended to issue postage stamps of a new design for the values other than those already substituted during the past six months ?
  3. Owing to criticisms of the design and execution of the present 2d. stamps, is it intended to substitute a new 2d. stamp of better and more effective design ?
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The answers to the honorable senator’s questions are as follows : -

  1. No.
  2. Yes; but it will be done gradually.
  3. No. The department does not consider that any change is necessary.

page 346

QUESTION

FINANCIAL ASSISTANCE TO QUEENSLAND

Senator COOPER:
QUEENSLAND

asked the Minister representing the Treasurer, upon notice -

  1. What was the amount paid into the National Debt Sinking Fund from federal revenue on behalf of the State of Queensland for the years 1935, 1936, 1937?
  2. What other financial grants have been made to the State of Queensland during this period ? 3.For what purposes were those grants paid ?

Senator Sir GEORGE PEARCE.The Treasurer has supplied the following answers : -

  1. 1934-35, £175,236;1935-36, £176,479;

1936-37, £186,322. Total for three years, £538,037. 2 and 3. Other financial grants to the State and the purpose thereof for the same period were: -

page 347

QUESTION

WIRE NETTING

Senator MARWICK:
WESTERN AUSTRALIA

asked the Minister representing the Treasurer, upon notice -

In view of the great losses suffered through the rabbit invasion and the present high cost of netting, will the Government renew its past policyof making advances through the State governments at a low rate of interest for the purchase of netting?

Senator Sir GEORGE PEARCE.The Treasurer has supplied the following answer : -

The Commonwealth Government, in order to assist the States with their loan programmes, has agreed to make no demands on the Australian loan market in 1937-38 other than for such moneys as are required to be paid to the States for farmers’ debt adjustment. In the circumstances the Government regrets its inability to makemoneys available for advances to the States for the purchase of wire netting. With a view to assisting the States in their endeavour to combat the rabbit menace, however, the Commonwealth, in 1935, offered to contribute the equivalent of 1 per cent. on Stateloan money used for advances to settlers for the purchase of wire netting. That offer is still open.

page 347

DAIRY PRODUCE EXPORT CONTROL BILL 1937

Bill read a third time.

page 347

DRIED FRUITS EXPORT CONTROL BILL 1937

Bill read a third time.

page 347

STANDING ORDERS COMMITTEE

In committee (Consideration of report) :

Standing Order No. 13 -

The President shall report to the Senate the presentation of, and His Excellency the Governor-General’s reply to, their address.

Committee’s recommendation -

Alter wording to read -

The President shall report to the Senate the presentation of the Address and the reply of His Excellency the Governor-General thereto.

Motion (by Senator Sampson) agreed to-

That the amendment be agreed to.

Standing Order No. 36a-

  1. 1 ) A Standing Committee, to be called the Standing Committee on Regulations and Ordinances, shallbe appointed at the commencement of eachsession.
  2. The committee shall consist of seven senators chosen in the following manner: -

Committee’s recommendation -

Add newsub-clause -

  1. Any vacancy arising in the committee shall be filled after the Leader of the Government or the Leader of the Opposition, as the case may be, has nominated, in writing addressed to the President, some senator to fill the vacancy.

Motion (by Senator Sampson) agreed to-

That the amendment be agreed to.

Standing Order No. 64 (1)-

A motion without notice, that the Senate at its rising, adjourn to any day or hour other than that fixed for the next ordinary meeting of the Senate, for the purpose of debating some matter of urgency,can only be made after petitions have been presented and notices of questions and motions given, and before the business of the day is proceeded with . . . The senator so moving must make, in writing, and hand in to the President, a statement of the matter of urgency . . . Only the matter in respect of which such motion is made can be debated . . .

Committee’s recommendation -

Leave out “ Only the matter in respect of which such motion is made can he debated “.

Motion (by Senator Sampson) agreed to-

That the amendment be agreed to.

Standing Order No. 190-

In bills which the Senate may not amend, the question “That this bill be now read a first time” may be debated, and the debate need notberelevant to the subject-matter of such bill.

Committee’s recommendation -

Leave out” and the debate need not be relevant to the subject-matter of such bill,” add “ and in such debate matters both relevant and not relevant to the subject-matter of the bill may be discussed.”.

Senator SAMPSON:
Tasmania

– I move -

That the amendment be agreed to.

Varying interpretations have been made of the provisions of this standing order, and opinions have been expressed that at this stage debate should be confined to subjects irrelevant to the subject-matter of the bill, leaving debate on relevant matters to the second-reading stage. However, the latest ruling of the President, endorsed by the Senate, is to the effect that matters both relevant and irrelevant may be discussed. The amendment is proposed to make this clear. It may be mentioned that Standing Order No. 252 provides that requests to the House of Representatives may be made at the firstreading stage, and, as any request would be for an amendment relevant to the subject-matter of the bill, it would appear necessary that debate should be provided for.

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[3.30]. - This is not a government matter, and government supporters may takeup whatever attitude they like in regard to it. But I, personally, am not in favour of the proposed amendment, because it does not take cognizance of the origin of the practice which the Senate has hitherto followed. Honorable senators generally are aware that the procedure in the Senate is different from that in the House of Representatives. The Standing Orders of the House of Representatives provide for a “Grievance Day.” Every alternate week, a formal motion is proposed “ That the House resolve itself into a Committee of Ways and Means,” and upon that motion members may discuss any administrative or other matter they desire to bring under the notice of the House. This procedure follows the practice of the House of Commons. When the Senate met for the first time, its President, Sir Richard Chaffey Baker, an eminent South Australian, pointed out that the Senate was unlike an ordinary upper house, because it had powers with respect to money bills which were greater than those possessed by the upper houses of the State legislatures. He said that he proposed, on the first reading of a money bill -that is, a bill which the Senate could not amend - to allow discussion on matters not relevant to the bill. Under the Standing Orders of the Senate, the first reading of an ordinary bill is formal, but he proposed to allow a general debate on the first reading of a money bill, in order to give members of the Senate a privilege similar to that enjoyed by members of the House of Representatives on “ Grievance Day.” In other words, he proposed to afford honorable senators an opportunity to ventilate grievances, and to bring up any matters on which they desired to express their views. He said that, as money bills came before the Senate from time to time, honorable senators would have an opportunity equivalent to the grievance debate in the House of Representatives. It was never intended that this was to give an opportunity for a discussion of the bill itself at the firstreading stage, because, obviously, it is unnecessary to have practically two second-reading debates. I am aware that in practice the principle laid down by Sir Richard Baker has been departed from. I have tested the matter in the past, and I do not propose to do so again; but I now inform the Senate that the original intention of the Standing Order is being departed from by the amendment now before the chamber. On the first reading of money bills, we have frequently had the equivalent of secondreading debates, no matters beyond the scope of the bill being mentioned. It is then possible on the second reading to have a repetition of the debate. In my judgment, the original practice to which I have referred was introduced for the orderly conduct of our business, and at the same time for the purpose of conferring on honorable senators a valuable privilege.

Motion agreed to.

Standing Order 246-

Every bill originated in the Senate . . . shall be fair printed, and presented by the President to the Governor-General for His Majesty’s assent, having been first certified by the signatures of the President and the Clerk …

Committee’s recommendation -

Leave out “ signatures of the President and “ insert “ signature of “.

Senator SAMPSON:
Tasmania

– I move -

That the amendment be agreedto.

It is unusual to require the President to sign copies of bills to be presented for assent, and, in practice, it has been found to present difficulties, owing to the time necessary for obtaining a fair print of the bill. The Standing Orders of the House of Representatives require the signature of the Clerk only. I understand that this is also the practice in most other parliaments.

Motion agreed to.

Standing Order 284-

A notice of the order for a call of the Senate, signed by the Clerk, shall be forwarded by post, or delivered by hand, to each senator.

Committee’s recommendation -

Leave out “ post “ insert “ letter or telegram “.

Senator SAMPSON:
Tasmania

– I move -

That the amendment be agreed to.

There is not always time for a notice to be sent by post, and to reach each honorable senator before the day on which Parliament is summoned to meet. The practice has been to despatch telegrams in such instances, and it was deemed desirable to make provision in the Standing Orders for such a procedure.

Motion agreed to.

Standing Order 291-

The President shall be ex officio a member of the Standing Orders Committee, and of the Library Committee, and of the House or Refreshment Department Committee . . .

Committee’s recommendation -

Leave out “ and of “, first occurring, and “ or Refreshment Department “.

Senator SAMPSON:
Tasmania

– I move -

That the amendment be agreed to.

As there is no such body as the Refreshment Department Committee, it is thought desirable to excise these words.

Motion agreed to.

Standing Order 357 -

The ballot shall be taken in the following manner . . .

Committee’s recommendation -

Before “ The ballot “ insert “ Exceptwhere otherwise provided “.

Senator SAMPSON:
Tasmania

– I move -

That the amendment be agreed to.

Standing Order 20 provides the procedure for the ballot held in connexion with the choice of a President.

Motion agreed to.

Standing Order 382-

Witnesses, not being senators, shall be ordered to attend before the Senate, or a committee of the whole, by summons under the hand of the Clerk of the Parliaments; or before a Select Committee, by summons under the hand of the Clerk attending the committee.

Committee’s recommendation -

Leave out “ Parliaments “, insert “ Senate “.

Senator SAMPSON:
Tasmania

– I move -

That the amendment be agreed to.

There is no such office as Clerk of the Parliaments; there is, however, a Clerk of the Senate.

Motion agreed to.

Standing Order 407 -

Unless otherwise provided, every senator may speak once on -

Any question before the Senate;

Any amendment thereon;

In reply, if he is entitled to reply.

Committee’s recommendation -

Leave out “ on “ and insert such word before “ any “ wherever occurring.

Motion (by Senator Sampson) agreed to-

That the amendment be agreed to.

Standing Order 422 -

No senator shall interrupt another senator whilst speaking, unless ( 1 ) to request that his words be taken down; (2) to call attention to a point of order or privilege suddenly arising; or (3) to call attention to the want of a quorum.

Committee’s recommendation -

Add “ (See also Standing Order 420.) “

Motion (by Senator Sampson) agreed to-

That the amendment be agreed to

Standing Order : “ Disagreement between the Houses “ -

  1. The members present at the joint sitting shall appoint by ballot a member to preside, and until such appointment the Clerk of the Parliaments shall act as chairman . . .

Committee’s recommen dation -

Leave out “ Parliaments “, insert” Senate “.

Motion (by Senator Sampson) agreed to-

That the amendment be agreed to.

Resolutions reported.

Motion (by Senator Sir George Pearce) agreed to -

That the report from the committee be adopted, and the amendments and additions to the Standing Orders come into force from 1st October, 1937.

page 350

INVALID AND OLD-AGE PENSIONS BILL 1937

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Sir George Pearce) read a first time.

Second Reading

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[3.45]. - I move -

That the billbe now read a second time.

The purpose of this bill is to increase to£ 1 a week the maximum rate of invalid and old-age pensions. It will be recalled that in 1931, when the financial position made it necessary for expenditure to be curtailed, the maximum rate of pension was reluctantly reduced from£l to 17s. 6d. a week. The resultant sacrifice was accepted with commendable fortitude by the greatbody of the pensioners, and this large section of the community has the gratifying knowledge of having made a valuable contribution to the rehabilitation of the country’s finances. The reduction was, of course, a temporary one, and the Government has had constantly bef ore it the objective of restoring pensions to their original rate as soon as the financial position permitted. In pursuance of this policy the present Government increased the maximum pension to 18s. in July, 1935, and again to 19s. a week in September, 1936. After a careful survey of the financial position, the Government believes that it is now warranted in making available the final instalment of the amount which is equivalent to the reduction made in 1931, and it is privileged to present to Parliament proposals for the restoration of pensions to the previous maximum rate of £1 a week, with a corresponding increase of the limit of income plus pension.

I propose briefly to review the various changes of the maximum rate of invalid and old-age pensions since the first payments were made in 1909. The maximum rate of pension was then 10s. a week. In October, 1916, the Hughes Labour Government raised the pension to 12s. 6d. a week. That was followed, in January, 1920, by an increase to 15s. a week made by the Hughes Nationalist Government. In September, 1923, a further increase was made by the Bruce-Page Government, the new rate being 17s. 6d. a week. Then, in October, 1925, the Bruce-Page Government raised the pension to £1 a week, and that amount continued until July, 1931, when, owing to the financial position of the Commonwealth, the Scullin Government found it imperative as part of the financial emergency legislation to reduce the maximum pension to 17s6d. a week.

In October, 1932, the financial position demanded further emergency legislation, and the Government found it necessary to reduce pensions by not more than 2s. 6d. a week in certain cases in which the pensioners possessed income. In. October, 1933, as part of its financial relief measures, the Government fully restored the pensions to the rate at which they stood prior to the reductions made in 1932, and at the same time introduced into the Invalid and Old-age Pensions Act provision for a yearly review of the maximum rate of pension on the basis of the price index number for food and groceries for the twelve months ending 31st March in each year, and for a variation of the maximum Tate by 6d. a week, according to each rise or fall of IGO points in the index number. The table then inserted in the act fixed the maximum pension at 17s. 6d. a week, with provision for increases, on a sliding scale, until the price index number should reach 1,800, when the maximum pension? would reach £1 a week. In accordance with that table the maximum rate of pension was increased from 17s. 6d. to 18s. a week from the 4th July, 1935, based on the price index number of 1,412 as at the 31st March, 1935.

In September of last year the Government liberalized the law by substituting a new table of price index numbers under which the then pension of 18s. a week would be further increased according to rises of the price index number until the pension would reach £1 a week at 1,640, instead of at 1,800, as in the previous table. The immediate effect of the new table was the increasing of the maximum rate of pension from 18s. to 19s. a week, based on a price index number of 1,44S. That increase came into operation on the :24th September, 1.936. The price index number for the year ended the 31st March, 1937, was i,491 which, under the existing provisions of the law, did not permit of any increase of the pension above 19s. a week. The Government now proposes, however, to amend the law so as to provide specifically for a pension of £1 a week, and to repeal the whole of the provisions relating to the variation of the pension according to the price index number.

I should like specially to direct the attention of honorable senators to the fact that the Government’s proposals provide a further concession to invalid and old-age pensioners, inasmuch as not only will the pension be increased to £1 a week, but also the removal of the provisions regarding price index numbers will mean that never again will the- pension fall below that amount without the express sanction of Parliament. As a result of this legislation every pension in- force will bc increased by 2s. a fortnight. The number of pensioners who will benefi t from this legislation is just over 300,000, and the additional financial liability which will be incurred by the Commonwealth is estimated at £800,000 per annum. The effect on the budget for the current year will be approximately £600,000, making the total estimated expenditure for the- year on invalid and old-age pensions £15,900,000. This represents an increase of nearly £2,000,000 over the expenditure for last year, and will be the highest amount paid in any one year since the Commonwealth commenced to pay pensions in 1909.

The bill also makes provision for an increase of the limit of income plus pension to £84 10s. per annum, or 32s. 6d. a week. Ever since 1923 the law has allowed a pensioner to have an income of £32 10s. per annum - 12s. 6d. a week - without the rate of his pension being affected. Under the new provisions the pensioner will still be allowed to have an income of 12s. 6d. a week as well as a pension of £1 a week, or a total of 32s. 6d. a week instead of 31s. 6d. a week as at present. The income plus pension limit of £84 10s. per annum, or 32s. 6d. a week, will thus return to the amount which was in operation in the predepression years. Never at any time have the income provisions been more liberal.

The limit of income inclusive of pension in the case of blind pensioners was increased in January, 1921, by the Hughes Nationalist Government from £65 per annum, which was then the limit for other pensioners, to £221 per annum, or £4 5s. a week. In July, 1935, the limit for blind pensioners was automatically increased to £222 6s. per annum - £4 5s. 6d. a week - as the result of the general increase of pensions by 6d. a week under the scale of price index numbers, and in September of last year the limit was further increased to £224 18s. per annum - £4 6s. 6d. a week - following the general increase of pensions by ls. a week. Under this bill the income Limit for blind pensioners will be further increased by ls. a week to £4 7s. 6d. a week, or £227 10s. per annum.

I should particularly like to point out that, with the exception of the’ second quarter of 1931, when the rapid fall of prices . had increased the purchasing power of the pension to its highest level, the new pension rate of 20s. a week will give to invalid and old-age pensioners throughout the Commonwealth a greater purchasing power than they have ever had since the introduction of Commonwealth pensions. The reason for this is that 20s. to-day will purchase what 23s. lOd. would have purchased in 1925, when the pension was first increased to 20s. a week, and what 22s. 2d. would have purchased in 1930, which was the last full year in which the pension was 20s. a week.

The bill also provides for an increase of the amount of pension payable to pensioner inmates of institutions. Honorable senators will call to mind that in September of last year the Government increased the amount of benevolent, » asylum and hospital pension from 5s. to 5s. 6d. a week, thus restoring to these pen.sioners the amount of pension which they received prior to the financial emergency legislation of 1931. It is proposed that the forthcoming increase of ls. a week shall bo divided equally between the pensioner and the institution, so that in future the pensioner inmate will receive- 6s. a week for his personal use, and the institution will be paid 14s. a week for his maintenance, instead of 13s. 6d. a week as at present. The amount of benevolent asylum and hospital pension will thus be greater than at any previous stage in the history of Commonwealth pensions. Approximately 5,000 pensioner inmates of institutions will benefit by this increase.

As already indicated, the pensions liability during the current year will reach the highest amount yet expended on this service, namely, £15,900,000. The Government realizes that this is a very heavy burden to be borne by the taxpayers of the Commonwealth, but it feels that the people of Australia will cheerfully shoulder that burden in the knowledge that this large expenditure is bringing some measure of happiness and contentment to many thousands of their less fortunate fellow citizens in the eventide of their lives. I, therefore, urge honorable senators to facilitate the passage of the hill in order that the proposed increase may be made available from the next pension pay day.

Senator BROWN:
Queensland

. -The Opposition is pleased that, at last, justice is being done to pensioners. I do not know whether the proposal to increase the pension to £1 a week is to be regarded as a death bed repentance on the part of the Government for the wrong which it has done to pensioners since it assumed office, or whether it is intended as political bait for the coming elections ; but I have no doubt at all that pensioners will be delighted to draw the extra ls. a week on next pension pay day.

Senator HARDY:
NEW SOUTH WALES

– It is not clue to the Labour party that they will be able to do that.

Senator BROWN:

– For many years the Labour party have been demanding an increase of pensions as an act of justice to pensioners. I am convinced, also, that the pensions law would not have been enacted but for its strong advocacy by members .of my party; they have always been in the van fighting for social reforms which have been won despite the resistance of our political opponents. Ministers will claim all the credit for what is being done, and it is essential that the true position should be put before pensioners, some of whom have good memories, and do not forget .what happened to them shortly after the Lyons Government came into office. They have received many hard and cruel knocks from this Administration. They have good reason to remember the incorporation in the act of the- provisions relating to pensioners’ property. That caused them a great deal of anxiety. All Labour members, and I suppose many Government supporters also, received letters from hundreds of pensioners asking what they should do - whether it would be better to surrender their pensions or continue to receive them with the definite prospect of having claims made against their estates after their death. In many cases, the pension became merely a loan on the security of pensioners’ properties. Sir John Latham, the present Chief Justice, was Attorney-General in the Lyons Ministry when the obnoxious property provisions were inserted in the act. He declared that, in addition to the 12,000 pensioners who surrendered their pensions, 13,000 persons, who otherwise would have been eligible, refrained from applying for the pension, and he estimated that the property provisions saved the Government an expenditure of £610,000. From this it will be seen that by increasing pensions to £1 a week the Government is merely doing tardy justice to a most deserving section of the community. When the Financial Emergency Bill was being discussed in the House of Representatives, Mr. Lyons, who was then Leader of the Opposition, declared that-

Not one member on this side of the House- the Tory side - supports withpleasure a reduction of wages and pensions. As far as we are concerned the reductions will not operate longer than is necessary for the restoration of financial stability.

Senator Hardy:

– What does the honorable senator mean by his reference to the Tory side?

Senator BROWN:

– I mean the political troglodytes; those who have always opposed political and social reforms. All conservatives are Tories. It is a generic term and includes members of the United Australia and Country parties, especially men of the political school to which Senator Hardy belongs..

Senator Hardy:

– Then even ministers and supporters of a government that introduced and passed the legislation dealing with war pensions would be, in the view of the honorable senator, Tories?

Senator BROWN:

– That legislation was the outcome of constant agitation by Labour members. In fact, all social reforms have been won only after continual pressure from Labour and Liberal sources upon the conservative elements in control of governments. For instance, when the bill for the payment of maternity allowances was being discussed, its Tory opponents called it a sop to profligacy, and when Queensland introduced its scheme of national insurance, Tory opponents described it as a “ Loafers’ Paradise Bill “. I suppose it is natural that opponents of reform should fight for the interests of the classes to which they belong, and this being so there always will be in the community a certain number of “ dyedinthewool Tories”. Some of them are supporters of this Government, which, shortly after it came into office, reduced pensions from 17s. 6d. a week to 15s. a week. When that fact was stated in this chamber a year or two ago Senator Duncan-Hughes challenged it, yet the Leader of the Senate (Senator Pearce) stated the case quite fairly this afternoon when he said that, in certain cases, the pensions were reduced to 15s. by the Lyons Government.

Senator Duncan-Hughes:

– Is the honorable senator suggesting that there was an all-round reduction to 15s. a week?

Senator Grant:

– That is what he is trying to do.

Senator BROWN:

– I wish to be perfectly clear.

Senator Duncan-Hughes:

– The honorable senator does not suggest that an allround reduction to 15s. was made by this party.

Senator BROWN:

– I said that in moving the second reading of the bill, the Leader of the Senate dealt with the subject fairly by saying that in certain circumstances there was a reduction to 15s. The Government at that time reduced the rate of pension, and made definite excuses for doing so. In the first six months it had a surplus of £1,300,000, and in the second it said that to make certain “ cuts “ of the pensions rate were essential because there was a possibility of a deficit. When the members of the Labour party and others protested, Mr.Lyons said, “In what way is the Government to get money?” The Prime Minister was told that the Government would have a surplus. The year closed with a substantial surplus, but the pensioners were robbed of an amount to which they were entitled.

Senator Hardy:

– Was not a Labour government responsible for the first reduction of pension ever made in Australia?

Senator BROWN:

- Senator Hardy knows the circumstances of the financial blizzard which swept not only Australia, hut also other countries, and how the then Prime Minister of the Commonwealth was strong enough, despite the pressure brought upon him, to reduce pensions rather than do as some suggested, place the responsibility upon his political opponents. At that time he said, “ A Labour government should be able to govern in times of depression as well as in times of prosperity.” Mr. Scullin was afraid that if his Government did not act in the way it did, pensions might be reduced by the succeeding government to even 12s. a week. Although at the time I did not agree with him, I admire .Mr. Scullin for the _ moral courage he displayed at that critical period in our history. Undoubtedly his policy had a most beneficial effect upon the .Commonwealth ; it placed Australia on a; much better financial footing, -and enabled the Tory Government which followed to benefit by his action. The present High Commissioner (Mr. Bruce) has given Mr. Scullin credit for his statesmanlike action. Only yesterday a representative of Queensland in the House of Representatives spoke most highly of Mr. Scullin’s courage, and said that no other action was possible to get Australia out of the financial morass in which, it then found itself. I know that there is a tendency on the part of some to villify that gentleman, but those who are acquainted with all the circumstances will recognize that James Scullin is a statesman of great ability, who on that occasion had the courage to do what he knew was in the interests of Australia. Many members of the Labour party wanted him to hand over the reins of government to his political opponents rather than reduce pensions, but he declined’ to do so. The Lyons Government reduced pensions by 2s. 6d. a week at a time when it knew there was every likelihood of the Treasury having a surplus. As a result of reductions of pensions since 1932, pensioners have lost approximately £7,000,000. Mr. Lyons also said that as soon as the financial stability of the country permitted the pensions would be restored to the original amount, but the right honorable gentleman did not honour his promise. Having regard to the fact that there was a surplus in that year, the full rate of pension should have been restored instead of remitting the taxes of those able ‘ to pay them. The aggregate value of taxes remitted between 1932 and 1936-37 was approximately £1S,500,000. Although these huge remissions were made to the wealthy, the Government said that it was impracticable to give a- few paltry shillings to pensioners. I an. pleased to learn that pensioner inmates of hospitals or other similar institutions are to receive an additional 6d. a week, but it would have been an act of grace had the full increase of ls. been given to them rather than allow the institution to collect one-half of the amount. I doubt if the cost of living has decreased to the extent suggested, but if it has those controlling the institutions in which pensioners are accommodated will be well paid even if the amount they are now receiving is not increased. From an economic viewpoint Australia can well afford to maintain pensioners who, generally speaking, live almost entirely on goods produced by Australian labour. If pensioners had to be maintained on commodities produced in other countries the position would be entirely different, hut surely a community such as ours can afford to provide pensioners “with the necessaries of life, ail of which, with the exception of tea and coffee, are produced in this country. I am strongly opposed to those who always denounce an increase of pensions. The majority of pensioners are thrifty men and women and are entitled to assistance. According to an advertisement published by the Australian Mutual Provident Society a year ago, in 40 years of every 100 healthy men now 25 years of age, only one will be wealthy, four will be well off, five will be working for their living, 36 will he dead, and 54 will be dependent on relatives or on charity. That destroys the argument used by some honorable senators opposite that many pensioners Have been thriftless and consequently are compelled to come to the Government for assistance. The Labour party believes in the pension system and contends that every man or woman on reaching the age of 65 years is entitled to a pension. A man who works hard throughout his life should not have to seek assistance from relatives. Under our present system how can he save sufficient to maintain himself when he is unable to work? The suggestion that he should have saved sufficient to maintain himself is so much “bunk.” Possibly some pensioners have been thriftless, but the majority deserve the best the community can give them. I was pleased that some measure of justice is to be given to invalid and old-age pensioners, but I regret that £1 a week is to be the statutory maximum and that no provision is made to increase the amount in certain cases. Had a Labour government been in power greater consideration would be shown to the working classes and the pensioners than is shown’ by this Government which merely protects the interest of those who live on the labour of others. Within a few weeks a Labour government will be in power, and will have the opportunity to legislate in the interests of the real workers of this country. Such a government will not put the fear of God into the hearts of pensioners as this Government did when it enacted the property sections of our pensions legislation, and by that means deprived certain people of their rights.

Senator HARDY:
New South Wales

– Although Senator Brown said that the Labour party had always been in the forefront of the fight for invalid and old-age pensions, I waited patiently to hear from him exactly what that party lias done. History records that the Labour party was not even responsible for the introduction into Australia of the invalid and old-age pensions system and that it has never raised the rate of pension by any appreciable amount. Every real effort to improve the position of the pensioners has been made by non-Labour governments, and the record of the Labour party is a blank. The Labour party’s “ blue book “ states that the .Labour party was responsible for the introduction of the first invalid and old-age pensions bill; but as honorable senators are aware, the first bill ‘ was introduced into the Commonwealth Parliament . in 1908 by the Deakin Ministry, which was not a Labour government; it was what Senator Brown has been pleased to call a Tory government. A scrutiny of the pages of Ilansard will prove conclusively that the invalid and old-age pension was first introduced into the national life of this country, not by a Labour government, but by a. non-Labour government - one of the despised “ Tory “ governments of which the honorable senator spoke to-day.

Senator Duncan-Hughes:

– Mr. Deakin was no more a Tory than Senator Hardy himself is.

Senator HARDY:

– That is so. Speaking to the first bill making provision for the payment of invalid and old-age pensions the then Leader of the Opposition in the House of Representatives said that he did not think that the introduction of such legislation would be possible for years. Yet on every street corner and in the highways and byways spokesmen of the Australian Labour party are claiming, without foundation, that that party introduced the invalid and old-age pension into Australia. Such a claim is nothing more than deliberate political misrepresentation and I say emphatically that it cannot be substantiated.

Senator Brown:

– .The Labour party has never made that claim.

Senator HARDY:

– It has made it repeatedly - during, the Gwydir election campaign at least sixty times. I have no doubt that it will be repeated again during the coming elections. Listening to Labour spokesmen one would gain the impression that the Labour party has never’ occupied the treasury bench, and therefore has never had an opportunity of doing anything for the invalid and oldage pensioners. Let us consider, however, the number of occasions on which a Labour government has occupied the treasury bench and has had the opportunity to give the pensioners a fair deal. The first Labour government led by Mr. Watson, was in office in 1908 and it had the opportunity, if it so desired, to increase the original rate of pension which had been fixed at 10s. a week. Bur a perusal of the pages of Hansard reveals that the first Labour government made no attempt to raise the rate of pension above 10s. a week, and went out of office* without having done a single thing to assist the pensioners. It is obvious that the Watson Government was quite content to accept the pensions legislation introduced by the Deakin Government which preceded it in office. The second Labour government, of which Mr. Fisher was Prime Minister, attained tho treasury benches in 1910, and remained in office for three years, but during the whole of that time the rate of pension remained at 10s.. a week, the amount fixed by a non-Labour government in earlier years. Yet the Labour party today, in the hope of catching votes, makes the unwarranted claim that it was responsible for the introduction of invalid and old-age pensions. The third Labour government, it is true, raised the rate of pension by 2s. 6d. a week, but the fourth Labour government reduced the rate by 2s. 6d. a week, bringing it back to what it had been before. The real test is to ask ourselves what governments or parties have assisted the invalid and old-age pensioners, and what governments were responsible for the seven distinct increases which have increased the rate of pension from 10s. .to £1 a week. The answer is that, in every instance, with the one exception I have mentioned, the pension was increased by a non-Labour government. That is the truth in regard to this matter and it should he told to the people of the Commonwealth. That claim can be supported by the Hansard record, and the truth of it will be recognized at the next elections. So it’ ill-becomes the Australian Labour party to try to hang its political hat on that peg.

Senator DUNCAN-HUGHES:
South Australia

– I do not propose to make a long speech on this bill, nor do 1 propose to deal in general terms with the merits of the increase of the pension rate from 19s. to £1 a week.- I rise to make it clear that my views in regard to invalid and old-age pensions remain as they were in the past; I regret this increase from 19s. to £1, and I am personally opposed to it. I am perfectly aware that in saying this I may be isolated - I may be the only senator on this side of the chamber holding these views, hut I am not by any means the only person in the community subscribing to them. There are two points in. regard to this matter which I would like to put to the Senate : The first is that, as Senator Hardy has said with substantial accuracy, the hulk of the increases made in respect of the pension rate have been made by nonLabour governments. The parties they represented get credit for that at present, but if, later on, the credit becomes a debit will they accept responsibility for all of the increases they have made? When I came into parliament fifteen years ago, invalid and old-age pensions were costing the country £5,500,000 a year; for the current financial year they are to cost over £16,250,000, or nearly three times as much.

Senator Brown:

– Has the honorable senator always opposed the increases?

Senator DUNCAN-HUGHES:

– I have. I have always said that we should take note of what is done in other parts of the British Empire.. The pensions bill has trebled in 15 years; if it continues to increase at the same rate - and there is nothing to show why we should stop at £1 a week; why not make it £2 a week - invalid pensions will cost this country something like £50,000,000 a year. That will be a burden that the country cannot carry.

Question resolved in the affirmative.

Bil] read a second time, and passed through its remaining stages without amendment or debate.

page 356

AUSTRALIAN SOLDIERS’ REPATRIATION BILL 1937

Bill received from the House’ of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator A. J. MoLachlan) read a first time.

Second Reading

Senator A J McLACHLAN:
Postmaster.General · SOUTH AUSTRALIA · NAT

– I move-

That the bill bc now read a second time.

The bill has two objects. First. it is designed to increase the maximum rate of service pension by ls. a week in harmony with the increase of the invalid and old-age pension. An unmarried man will now receive 20s. a week, whilst a married man and his wife will each receive 17s. a week, and those in institutions - except pulmonary tubercular sufferers who receive a higher rate - will have 7s. a week instead of 6s. It is calculated that more than 8,000 cases will benefit to the extent of approximately £21,000 during the ensuing twelve months. Secondly, it is proposed to amend the existing law so that if a widow in receipt of a service pension re-marries, her own service pension only will be cancelled; those being paid to her children will continue to the age of sixteen years as in the case of a war pension.

Senator ARKINS:
New South Wales

– Senator Duncan-Hughes has drawn attention to the increased cost to the nation of old-age and invalid pensions. This bill provides for an increased expenditure by the nation for the pur- pose of giving increased benefits to those who rendered service to their country at a time of grave national emergency. Under modern economic conditions we have witnessed a tremendous increase in the mechanization of industry. Machinery has been invented which produces enormous quantities of goods, the manufacture of which previously gave a great deal of employment to our people. We have to recognize the fact that economic systems are changing. There was a time, even in the history of Australia or at least of Great Britain, when those who gave their services to, and suffered injury in the defence of, their country received no pensions at all. Ultimately very small pensions were granted, but they were hardly enough to enable the recipients to keep body and soul together. A great change has occurred in the attitude of governments to ex-service men, and it is now recognized that liberal provision should be madeto assist those who have made great sacrifices in the interests of their country. I should have liked to see certain additional benefits granted in respect of war pensions, but I recognize that there are difficulties in the way of accomplishing what I desire.

Although I admire Senator DuncanHughes in many respects, and understand his attitude to the invalid and oldagepension, I consider that the most valuable asset a nation can have is internal peace. We have had the spectacle in recent history of nations rising against one another. There have been even civil wars; but we also have to guard against industrial wars, and the best way to preserve social peace is to provide social security. Those who need the help of the nation are, first, the aged and the infirm. Then we have to consider those who are sick; and, thirdly, but not lastly, those who, when they were in full health and strength, gave their services to their country. No returned soldier should be allowed to be in want. I believe that the future welfare of mankind is bound up with the great principle of social security for all. It is of no use merely to talk about Christianity; we must give practical effect to Christian principles by seeing that those who now lack physical strength, and probably lost many opportunities of profitable employment through war service, are not left in want.

Senator BROWN:
Queensland

– I should like to know whether Senator Duncan-Hughes is in favour of the proposed increase of war pensions, since he has consistently opposed increases of the old-age and invalid pension.

Senator Duncan-Hughes:

– I shall speak later.

Senator BROWN:

– I desire to call the attention of the Senate to the grave injustice suffered by a blind ex-soldier who receives no pension at all.

The DEPUTY PRESIDENT.- The honorable senator may not discuss that matter on this bill.

Senator DUNCAN-HUGHES:
South Australia

– I have always held the view that there is a great distinction between the invalid and old-age pension and the pension granted to ex-soldiers. Old-age and invalidity are natural infirmities, whereas pensions are granted to ex-soldiers because of the valuable service which they have rendered to their country. I do not think that I have ever opposed any increase of war pensions. This bill involves an amount, relatively small when compared with the previous measure. I shall support this bill, as I have supported the granting of assistance to returned soldiers in the past.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 357

STATES’ GRANTS BILL 1937

Second Reading

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[4.48]. - I move -

That thebill be now read a second time.

The grants for which approval is sought in this bill are those recommended by the Commonwealth Grants Commission to be paid to the States of South Australia, Western Australia and Tasmania during 1937-38. It has been the custom hitherto to provide for the appropriation for these grants by means of separate bills, but to debate the three of them together. On the present occasion, for the sake of convenience, this is being accomplished by means of one measure. The recommendations of the commission are contained in its fourth report, which was tabled on the 24th August. The proposed grants, compared with those paid during 1936-37, are as follows: -

For the information of honorable senators, I submit a table showing the special grants made to the three States since 1928-29. The grants paid for the year 1934-35 and following years are those based on recommendations of the Commonwealth Grants Commission: -

In presenting similar legislation last year I went fully into the grounds on which the commission based its recommendations. On this occasion I do not propose to cover that ground so fully, but I suggest that honorable senators would find the third and the fourth reports of the commission interesting.

I refer, in passing, to the fact that two of the three commissioners have acted during the last year for the first time as members of the commission. Assistant Professor G. L. Wood, of the University of Melbourne, and Mr. G. L. Creasey, of Launceston, have replaced Professor Giblin and Sir Wallace Sandford, and the appointments of the two gentlemen first-named have been extended to the 31st December next. Notwithstanding the change in personnel, the commission has based its recommendations broadly on similar grounds to those used in previous years. The possible bases for grants of this kind are narrowed down to those of “ needs “ or “ disabilities “. The Commonwealth has consistently advocated the latter basis, but the difficulties . of assessment appear insuperable, whilst, on the other hand, the commission has evolved a technique in assessing on the “ needs “ basis that gives a very workable and adequate result. In support of its use of this basis the commission, in its fourth report, said -

Thus, a grant on these principles, is not merely for the relief of distress; it covers the effect of forces, arising indifferently from geography, from economic conditions, or from national policy, which tend to make it impossible for a State to give its citizens the standard of public services necessary for a State in the Commonwealth.

The measurement of the needs of the claimant States is based, in the first place, on their budgetary results in relation to those of certain standard States. This relation is subjected to . a number of adjustments designed to make the comparison equitable. These adjustments make allowance for such factors as severity of taxation, differences in the cost of social services, and other matters. The commission does not, however, tie itself to an arithmetical result, and in this connexion it made the following observation : -

We do not take the various calculations as a final determinant of the grants, but as the material on which our final judgment is to be exercised. We test the figures by our knowledge of economic conditions of the claimant States, and take into account conclusions which are derived from the movements of the finances of the various States. The commission has now been considering these finances for four years, and is in a position to sec factors operating which are not visible merely from the analysis of accounts or from the presentation of a series of figures.

In one respect the commission has made an important departure from a practice followed in its recommendations for 1935-36 and 1936-37. In its first report, it arrived at a “ standard “ deficit for comparison with the claimant States by taking into account the financial position of New South Wales, Victoria and Queensland. In its second and thirdreports, Victoria and Queensland only were used. In the words of the commission they constituted - a fairly balanced pair, Victoria with a settled policy of great economy of administration with low taxation, and Queensland of more liberal provision of services with high taxation.

New South Wales was excluded because of certain abnormal features in its accounts. This year, New South Wales has been restored as a standard State, a course which, I may add, was advocated in the evidence submitted by the Commonwealth Treasury. The commission made the following remarks on this change: -

Without the inclusion o£ New South Wales, the grants would have suffered a substantial reduction. By the inclusion of that State tha grants are lower than in the previous year, but not seriously low. It is fortunate, therefore, that the present year offers a very good opportunity to adopt a course which is logically right, but which could not be followed before because of disturbing features in the finances of New South Wales.

Because of the higher rate of expenditure on social services in New South Wales, this action will probably tend to higher grants than would otherwise have been the case, but the Government agrees with the view of the commission that it is logically right.

In its assessment of the allowance to the claimant States in respect of the costof services, the commission has on this occasion introduced an area allowance to cover the increased cost of social services and administration. This allowance is designed to meet the increased overhead cost of administration over wide and sparsely populated areas.

A feature to which I draw special attention is the “advance” of £136,000 to Western Australia. The proposed grant for 1937-3S to that State consists of a grant proper of £439,000 and an advance of £136,000, the total being £575,000. The grants for 1937-38, for which appropriation is now sought, are assessed on the results of the financial year 1935-36, the last year for which complete statistics arc available to the commission. As, however. Western’ Australia has been suffering from a severe drought, the effects of which on its budgetary position are already being felt, the commission recommends the advance of £136,000 so that that State may receive the assistance when it is most needed. This -advance is to be adjusted in 193.9-40, grants for which year will be based on the accounts for the current year, 1937-38. A similar advance of £44,000 was included in the amount paid in 1936-37, and will become due for adjustment, in 1938-39.

These special grants to the States are decreasing as the necessity for them diminishes with returning prosperity. This is, of course, to be expected, and, as the commission observes, the grants are pursuing a normal course when they decrease with financial recovery. The decrease is retarded by the time lag attendant on recommendations being based on the results of the last previously completed year, but this time lag is adjusted over a series of years.

It. seems unlikely, at least for many years, that a position will be reached when grants will be unnecessary. Some adjustment must therefore he made to enable the less fortunate States to function on a basis comparable with the others. It is the aim of the Government that an impartial and periodic examination of the subject be maintained, and, in its opinion, that cannot be effected better than by a commission which impartially examines evidence and economic effects. The Government is confident that the proposed grants for 1937-38 represent a reasonable estimate of the needs of the States.

Senator BROWN:
Queensland

– Whilst the members of the Opposition have no immediate interest in this measure, Queensland not being a claimant State, they realize their duty to those who pay the taxes which make possible these payments to the claimant States. The Opposition does not begrudge these payments,’ for it is always prepared to recognize the disabilities which some States suffer. It hopes, however, that in the near future, there will be a change of government, resulting in the lessening of the disabilities of certain States.

Senator Herbert Hays:

– What has the honorable senator in mind?

Senator BROWN:

– I am thinking of unification, although I readily admit that, even under a unified form of government, there would still be ground for claims by Provinces, but not to the same extent as at present. In the United States of America, because of the special difficulties of certain States, financial adjustments between the Federal and. State governments are constantly being made. In pre-war Germany, payments were made by the Reich to various States, but the position is different under the Nazi, regime and the Hitler dictatorship. Even in South Africa, where there is a unified form of government, financial adjustments between the provinces and the central government have to be made from time to time.

There is dissatisfaction on the part of not only the claimant States, but also the other States, in regard to the financial relations of the Commonwealth and the States. Speaking at a conference on constitutional matters about three years ago, Mr. Forgan Smith, the Premier of Queensland, said that it was grossly unfair that there should develop in Australia a financial over-lordship by the Commonwealth Government. He said that action would have to be taken to remedy what he described as . a hybrid state of affairs.

Senator Sir GEORGE Pearce:

– No two States could agree as to the action to be taken.

Senator BROWN:

– Admittedly, there is a difference of opinion among the States upon this subject. The Premier of Queensland said that it would be only fair for the Commonwealth Government to take over some *.of the capital debts of the States. He contended that, as State governments expended large sums on roads and- other works, thus contributing to an improvement of Commonwealth finances, the Commonwealth should, as far as possible, reimburse them, especially as the tendency of the central government was to invade still further areas from which State governments obtained their revenue. However, this is a subject for future consideration rather than for debate on this measure. I merely express the hope that one day the people of Australia will approve of proposals to widen the Constitution, and so render unnecessary the payment of further subsidies and grants to State governments. The smaller States must not misunderstand the attitude of the Labour party to their claims for compensation for disabilities which they suffer under the present federal system. I understand that the Commonwealth Grants Commission will shortly be abolished and that much of the work done by it will then be undertaken by the proposed Inter-State Commission. The personnel of the latter body is not yet settled, so we are not certain whether, as rumoured. Senator Sir George Pearce will be its chairman, whether Mr. Lyons will take the job, or whether it will be given to Senator E. B. Johnston who, I think, would prove highly capable. But I have learned that there is likely to be some hitch over the arrangements, because of the possible construction to be placed on section 101 of the Constitution. According to the former Governor-General, Sir Isaac Isaacs, this section will prevent the Inter-State Commission from taking over the work now being done by the Commonwealth Grants Commission. I hope that this possibility, which, I understand, was mentioned by Mr. Blackburn in the House of Representatives, will not disturb unduly the minds of any aspirants for a position on the commission. We know that the first. Inter-State Commission, nearly in its career, encountered a veritable Serbonian bog of legal and constitutional difficulties. I doubt if it would be possible for anybody to satisfy the claims of all the States that have suffered disabilities under federation. I expect that my Tasmanian friends will have something to say about the conclusions of the commission in its fourth report. In paragraph 81 the commission stated -

Tlie -dependence of the finance of Tasmania on federal subsidies gives cause for serious consideration ; and it would be unhealthy if this had to continue permanently. This position, however, has to be looked at in the light of the State’s history, and of the static conditions of the last 20 and 30 years. Tasmania mice supplied the mainland with many products of the soil, from timber to wheat and from potatoes to hops. This market has declined because these industries have been developed on the mainland.

Thus we see a development of the spirit of economic nationalism in the Commonwealth, industries which formerly flourished in Tasmania, being established on the mainland, to the detriment of the island State.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– One industry - sugar growing - has not moved from its original State.

Senator BROWN:

– That is because it was established in a fertile part of Australia, has been developed on scientific lines, and has rendered wonderful service to Australia, although Senator Brennan said on one occasion, prior to becoming a member of the Ministry, that it would pay Australia to abolish the sugar industry and pay a subsidy to every person engaged in it, in order to be free to import sugar from other countries. But I am digressing. The Commonwealth Grants Commission made this further statement in its fourth report -

Tasmania is deficient in natural resources, and, as we have seen,has a poor terrain. But she has some assets of great value; and a constructive policy of development is needed to induce these to contribute to community income.

I understand that the present Labour Government in Tasmania has adopted a constructive policy of development to counteract the effect of economic nationalism on the mainland. I feel sure that the pending economic development of Tasmania will make for the benefit of its people and that, under the aegis of a Labour government, the island State will again make rapid progress.

I was interested in the commission’s observations concerning future problems. In paragraph 222 it stated -

The commission, in its recommendation of grants, has attempted to find amounts which will enable the claimant States to bring their financial position up to what the commission has called an Australian standard.

It goes on to say that this standard has been based on the financial position of non-claimant States. For two years it took Queensland and Victoria as the standard. This year New South Wales is included -

Three views have been put to us. The first view is that we should not do more than would enable the claimant States to balance their budgets, and, if the application of a standard obtained from the position of the standard States would do more than this, the excess should be ignored. This view is justified by the statement of principles of the old commission, although it never had to deal with this precise position. The second point of view was urged by South Australia, namely, that the grants should enable the claimant Statesto balance their budgets even if the standard States were in deficit. This the first commission rejected, and with that decision we agree. There remains the third view. Tasmania contended that if the standard States are in surplus there should be astandard surplus and the grants should enable the claimant States to show a surplus. This is the main point of controversy. We have not to decide it this year, but it may be an issue next year.

Thus there are still many difficulties to be dealt with. The solution, I believe, is the adoption of a more modern form of government, wherein power is vested in the central governingbody and residual power is delegated to the States.

Senator Millen:

– That will be ten years ahead, and has no present interest for the States.

Senator BROWN:

– I am aware that because of the disabilities which they suffer under federation, the claimant States require relief from year to year, and knowing the interest which our Tasmanian friends have in this matter, I shall listen with interest to what they, as well as senators from Western Australia and South Australia, may say on the bill.

Senator MARWICK:
WESTERN AUSTRALIA · CP

– I am aware that anything that may be said in this debate will not alter the allocation of grants to the various States, but I wish to make it clear that I entirely disagree with the grounds upon which the grants have been made this year. As is well known, the personnel of the commission has been changed. Of the three original members only the chairman remains. This being so, the commission should have spent much more time in the various States than it did. When the commission was in Western Australia, one of the two new members was ill and unable to leave Perth, and the others spent only five days in the older and more established country areas. They did not see anything of the development that has taken place in the newer areas, and therefore were not in a position to decide whether money expended on developmental works had been used to the best advantage. I stated last year that the cost of clearing country and preparing it for full production was considerable. I also stressed this fact before the commission and they made the same comments in the report. The proposed grant to Western Australia is £61,000 less than last year, the actual amounts recommended being £439,000 as a grant and £136,000 as a loan.

Senator Sir George Pearce:

– Taken together, the allocation recommended for Western Australia is an increase on the grant for the previous year.

Senator MARWICK:

– That is so, but a portion of it is to be regarded as a loan.

Senator Sir George Pearce:

– It is described as an advance.

Senator MARWICK:

– An advance which has to be adjusted two years hence. I hope that it will not be regarded as a loan. The position ofWestern Australia calls for the most earnest consideration. Only 3 per cent. of the total area of the State has been alienated, another 3 per cent. is in course of alienation, 33 per cent. is held under leasehold, and thebalance, 61 per cent., is unoccupied. I contend that the Commonwealth Government is, to some extent, responsible financially for the development of those unoccupied areas. National security demands that some form of assistance should be given to Western Australia. In this matter I wish to be perfectly fair. I acknowledge the assistance rendered by the Commonwealth to my State. During the last six years there have been special grants amounting, in the aggregate, to £3,300,000; special non-recurring grants totalling £200,000; road grants under the Federal Aid Roads Act, amounting to £2,731,446; assistance to primary industries by way of bounties and special relief, £4,460,000 ; and in addition, approximately £620,000 annually under the financial agreement. The Commonwealth has also helped the smaller States by way of social services, such as pensions, and maternity allowances on an Australia-wide basis. Last year the commission, realizing that a portion of Western Australia was experiencing a very serious drought, increased the grant by £136,000; but that amount is to be adjusted in 1939-40, when the figures for this financial year are under consideration. The Loan Council also realized that Western Australia was experiencing adverse seasonal conditions, and agreed very largely, I think, with the views expressed by the Leader of the Senate, and allowed Western Australia an additional £1,000,000 for this year. While fully appreciating the fact that, when a drought occurs the budgetary position of the State concerned suffers in consequence of reduced revenue, many of the residents in that State receive practically no returns at all. Instead of taking the increase of £136,000 into account two years hence, I suggest that it should be distributed amongst those unfortunate people who have experienced drought conditions for two consecutive years; the amount might either be allocated on an acreage basis or paid to those who have reaped less than three or four bushels an acre. Moreover, many pastoralists have lost80 per cent. of the flocks, the restoration of which will take years. It would be a gracious act on the part of the Government to expend the amount mentioned in rehabilitating distressed wheat-farmers and pastoralists who have suffered so severely. If that were done many men, women and children in the droughtstricken area would be able to receive some of the comforts of life of which they have been deprived during the last two years. The budgetary position of the Commonwealth would not be affected, and, in view of the fact that the Commonwealth Grants Commission realized the extreme conditions which exist in that area, I trust that my suggestion will be adopted. The loan of an extra £1,000,000 to Western Australia is merely a loan to unfortunate settlers in drought-stricken areas, and will only build up the dead-weight debt on already overburdened farms. I realize that that is a responsibility of the State.

Senator E B Johnston:

– Why should not the Commonwealth assist?

Senator MARWICK:

– The Commonwealth allows the State to use £300,000 of its loan moneys; but I am appealing for help in a different direction. In the drought-stricken area, many settlers are not clients of the Agricultural Bank, and therefore cannot obtain assistance. It would be a gift from the gods if they could receive some small allowance to enable them to renew the clothing of their children, which in many cases is completely worn out. Having been through the droughtstricken area on several occasions during the short period I have been a member of this chamber., I know the hardships which the settlers are experiencing, and I trust that some arrangement will be made so that the grant will not have to be repaid.

Senator Herbert Hays:

– What is the State doing?

Senator MARWICK:

– Those who ask what the State is doing to assist the settlers while it is receiving money from the Commonwealth should read the following tables on page 33 of the commission’s report under the heading of “ Economic position of the claimant States “ : -

It will therefore be seen that the total of the rural, non-rural and factory production of Western Australia is higher than that of any other part of the Commonwealth, which proves conclusively that the Western Australian people are industrious. In 1934-35, Western Australia’s total rural production per capita was 7 per cent.; non-rural production, chiefly mining, 268 per cent. ; all primary production, 56 per cent.; and the total of all production 13 per cent. above the average for the Commonwealth. It may be said that Western Australia should be in a fortunate position, but, as I have pointed out in this chamber on several occasions, many of the mines and factories in that State are controlled from the eastern States. On this point, the commission states -

Any judgment of the relative prosperity of Western Australia cannot be guided alone by these figures. They fail, for instance, to express the facts of external ownership of absentee of landlordism, so to speak. Many mines have been financed by “ foreign “ capital; many industries are controlled from other States; many trading concerns are branches of interstate firms. Community income is reduced by dividends paid to external shareholders in the same way as it is by interest on the public debt. There is no way of reckoning this deduction accurately. The “ balance of payments “ for Western Australia would be a fair guide if it could be ascertained.

As practically all the money borrowed to assist rural production is obtained from financial institutions in the eastern States the greater portion of the wealth pro duced and payments in the form of dividends is remitted to the eastern States. Moreover, the Western Australian people are obliged topurchase food and clothing from the eastern States to the value of £11,000,000. If more factories were owned in Western Australia, we would have sufficient fundsto establish additional secondary industries. In 1931-32, the net loan expenditure per head of population in Western Australia was £2 12s. 7d., and in 1935-36 it was £5 6s. 8d, whereas in 1931-32 the taxation per head of population was £3 6s. 4d., and in 1935-36 it was £6 3s. 5d. It will therefore be seen that the taxation imposed has been heavy. It is ridiculous for these fellows to spend five days in the State and then say that we do not suffer any disability under the tariff. Their report in that respect is a foolish and ill-considered statement.

I stated earlier that I would suggest the way in which future grants should be allocated. I realize the difficult position of the Western Australian Government, but I believe that when the new commission commences its work, it should realize that 61 per cent. of Western Australia needs population, and the best way in which to populate that area would be to authorize the payment of a developmental grant rather than a grant which is paid into Consolidated Revenue. When money once reaches a government, it will most likely be expended in a way that will attract the attention of a large number of electors. That is the general practice with most governments, and’ I do not think that the Western Australian Administration is an exception. The conservation of water in country areas and the purchase of water pipes to provide adequate supplies of water in isolated areas is of the greatest importance. Senator Lynch made an excellent suggestion regarding assistance to the mining industry. In travelling through the mining areas of Western Australia, I was impressed by the fact that that State is suffering from the lack of good, practical miners. Many experienced miners in Western Australia are to-day receiving pensions because they are certified as unfit for underground work, yet they are the men with a knowledge of mining conditions in that State. The adoption of Senator Lynch’s suggestion would cost the Government very little, and it might result in the production of many millions of pounds worth of gold. These miners have a practical knowledge of mining in those areas where gold is most likely to be discovered in payable quantities. It has been proved, as the result of boring operations, that considerable bodies of ore exist in Western Australia; but, unfortunately, owing to the many wild-cat schemes that have shaken the confidence of investors in the past, owners are finding it difficult to get the necessary capital to procure plant and machinery to operate mines which might have up to 100,000 tons of payable ore blocked out and ready to bring to the surface. Considerable difficulty exists. in securing the capital necessary to bring mines into profitable production.

I have just returned from a trip through the vast north-west of this country, and from the experiences gained during my travels I say that it should be part of the duty of each member of this Parliament at least once during his term of office to travel through the northwest of Western Australia and the Northern Territory, and familiarize himself with the conditions in those distant parts of the Commonwealth. I would even say that every member of this Parliament, in order to gain firsthand knowledge of the country as a whole, should visit all of the States. From the information which I gathered during my visit to the north-west of Western Australia-, . I have come to certain conclusions which I hesitate to express in this chamber. It must be patent to anybody with a knowledge!.- of the conditions which operate in the farflung portions of Australia that something must be done very soon if we intend to retain that part of the continent for any length of time. Large areas in the north-west of Western Australia and the Northern Territory have enormous possibilities, and only finance is necessary for their development. I hope that, when future grants to the States are under consideration, the need for the development of this portion of the Commonwealth will not be overlooked.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– As a layman, I feel somewhat diffident in offering any criticism of this bill, not because of the lack of definite opinion but more becauseof my lack of actuarial experience or education that would permit me to make an analysis of a mass of figures. Any criticism to be of value must offer an analysis of the figures relating to South Australia and their value when compared with the figures set out for the standard States. We recognize that the Commonwealth Grants Commission, at its inception, began by establishing a basis for its calculations. The commission, as reconstituted, has, in the introductory remarks of its latest report, expressed itself as satisfied with the basis originally adopted, and claims that its decisions are based on those premises. Many of the critics of the latest findings of the. commission appear to have an exceptionally hazy knowledge of the subject. In fact, many of them argue from premises which have been excluded by the commission. It must be admitted that even with the standard set there is ample scope for a very honest difference of opinion. Of course, I regret exceedingly the decision of the commission to reduce the grant to South Australia below the amount made available last year. I view with alarm the rapid decrease of the grant during the past two years. South Australians, as citizens of the Commonwealth, frankly admit that all sections of the community are much better off than they were two or three years ago; but, knowing the conditions in my own State, I am of opinion that, comparing the added prosperity with the decreased grant, and taking into consideration the fact that the present commission is working on the same basis as the original commission, the decrease is unduly severe. I do not insinuate bias on the part of the commission, nor do I, in any way, question the integrity of the members of that body. Amongst the disabilities for which relief is granted to the claimant States is the amount of their taxation, the standard fixed being the average taxation of the non-claimant States. For the purposes of analysis the commission divides taxation under different headings - taxation for social services, motor taxation, local government taxation, and other imposts. These divisions are further dissected and are then allowed or disallowed wholly or in part. One is inclined to query this procedure because, although we speak of certain “ State disabilities “, they are really the disabilities of the resident taxpayers, and if any relief is given for excessive taxation, the taxpayers are entitled to full consideration, regardless of how the tax is allocated unless it can be shown that the money so collected has been recklessly or extravagantly used by a government. If taxes have been extravagantly used by a government the taxpayers can effect a change of government.

Another feature of the commission’s investigations which has seriously affected the claimant States is that, in arriving at a standard of comparison, the commission has included the figures for New South Wales. Previously, the claimant States were subjected to a 6 per cent. reduction of the average net cost of social services in the then standard States of Victoria and Queensland. With the inclusion of New South Wales this reduction was increased to 10 per cent., which resulted in a difference of some £80,000 in the South Australian figures. With due deference to the commission, I was somewhat surprised at the statement in paragraph 164 of its report that “ the claimant States have urged the inclusion of New South Wales “. Some of them may certainly have done so, but I know of no occasion when South Australia advocated that. I know that South Australia urged the exclusion of Queensland and asked that Victoria should be accepted as the standard State.

The commission was also very outspoken with regard to the loans of the claimant States. On page 16 of its report it said -

Grants are made, partly to rectify inequalities in the financial system of the group, and partly to prevent default; and duringthe past few years the prevention of default has been all important. In the recommendations, therefore, loan charges have been allowed in full, with only the modification represented by a small penalty.

That is a penalty on the smaller States -

This should be recognized by the claimant States when criticizing our recommendations in detail. These debts have been incurred by the States on their own responsibility, and the losses represent failure and miscalculation intensified by a lack of firmness in administration.

I regard that criticism as very severe, because during the last four or five years no State has been more severe on its people than South Australia, nor have the finances of any State been more economically administered. This surely cannot be held against South Australia for all time. Since the establishment of the Loan Council opportunity for extravagant borrowing has been curtailed. I think this aspect may be eliminated in the future inquiries of the commission. On page 132 of its report the commission stated -

South Australia did not submit figures showing how the amount claimed, viz., £2,000,000, was computed. The formal application for a special grant was expressed thus - “ A formal claim for a special grant of £2,000,000 for the financial year 1937-38 is now made . . . The grounds for the claim are -

To compensate the State for disabilities sustained under federation.

To enable State taxation to be reduced to a level commensurate with that levied in other States.

To enable the State to balance its budget “.

The commission would lead one to believe that practically no figures were supplied by South Australia. As a matter of fact, when the South Australian Disabilities Commission met the Commonwealth Grants Commission in Adelaide on the 2nd February, 1937, and presented the case for South Australia, it was willing to supply any evidence required to substantiate the claim for a grant of £2,000,000 made by South Australia on the 18th August, 1936. The evidence given before the Grants Commission, or the substance of it, is contained in a printed paper, a perusal of which will satisfy the most critical financial student that reliable figures were furnished by all South Australian departments, setting out the position from 1899 to 1936. I cannot understand how the commission could say that, there was only a bald application for a grant of £2,000,000, without giving figures to substantiate the statement. Probably no State has been more consistent than South Australia ‘in its advocacy of the appointment of a commission to determine the amounts to be paid to the smaller States by way of grants rather than leave this entirely to parliamentary debate. I do not question the decision of the commission at this juncture, but I feel sure that the arguments used by the South Australian Disabilities Commission, and those which have been advanced in this chamber by members from the claimant States, will assist in regard to future decisions. No doubt the amounts of the next grants will be determined by another commission. Despite what has been said by Senator Brown this afternoon, I have no doubt that the Inter-State Commission will have the necessary power to decide what future grants shall be made to the smaller States. I consider that I have offered fair criticism, and I hope that it will be of some help in regard to future grants.

Until May, 1932, this Parliament had the assistance of a Public Accounts Committee, and a few days ago I placed a question on the notice-paper asking whether this committee would be reconstituted. It seems to me that inquiries by such a body would be of great advantage in dealing with State grants and the banking system. Every honorable senator will admit that on going into the figures published in the report of the Commonwealth Grants Commission, even if we have before us the views of men who have been engaged for almost a lifetime in that, class of work, we become more or less bewildered. If a Public Accounts Committee could analyse the figures, it would be of great advantage to this Parliament and .to the States generally. Such a committee is appointed by the House of Commons, and it has very wide powers. If a uniform system of bookkeeping were adopted by the various State governments and the Commonwealth Government, it would help to solve some of the problems that arise in dealing with the claims of the smaller States. It appears to me that in many instances the allocation of the grants, rather than the total sum voted, is the chief cause of trouble. I happened to be a member of the Parliament of South Australia for some time, and there I always held the view that a commission should be appointed to deal with these matters.

It would not be fair on my part to dispute the decision of the umpire on this occasion, but I think that the decrease of the grant is out of proportion to the increase of prosperity. South Australia is decidedly better off than it was two or three years ago, but so also are Queensland, New South Wales and Victoria. I have no doubt that the three claimant States will still be asking for grants for some years to come, and, whatever the next commission may do in the matter, I think that it would be advisable to provide for a fixed grant, which could be increased, if necessary, in the event of a particularly bad year being experienced.

Senator DUNCAN-HUGHES:
South Australia

– I congratulate the last speaker on his remarks. He has obviously devoted a good deal of consideration to this subject. To some extent, I agree with him, but I am not in entire accord with him in the suggestion that if one disagrees with a finding one is making an attack on the umpire. The commission is expected to do the best it can to reach an impartial decision. It is open to anybody, whether a member of parliament or not, to say whether he considers the commission right or wrong in its finding, and if wrong, where. So long as his remarks are impersonal, as far as the commission is concerned, there can be no objection to criticism; but I suggest that honorable senators have very little reason to be critical of the commissions which have been carrying out this arduous work for the last three years. I remember the debate/ in this chamber on the appointment of the original commission, and the fact that the Chairman; in particular, was fiercely, and, I think, quite undeservedly, assailed, because those who know anything about him will admit that he is a man of very great ability and industry, as well as integrity. I remember Sir Harry Lawson saying so when the bill was before this chamber.

Senator E B Johnston:

– Even admitting that, it is unfortunate that he had written severe criticisms of Western Australia.

Senator Sir George Pearce:

– He criticized all of the governments, even the Commonwealth Government.

Senator DUNCAN-HUGHES:

– A publicist is expected to express Iris views on public affairs. I suppose that I do not change my views as much as most people do; but I admit that, with increasing knowledge, and on .viewing matters from new angles, a man may find that he has to alter his opinions considerably.

I do not in any way associate myself with personal criticism of Mr. Eggleston, for whom I have much admiration, although I know him only slightly. I think that Ave were also fortunate in the two other members of the commission who have retired. I need hot indulge in any eulogy of them, but I think that Sir Wallace Sandford, who was selected from my own State, is an able man, and did valuable work on the commission. At the same time, I regret that, in the change that was made, for some reason or other - it may have been the lack of a suitable man - a Western Australian was not appointed to the new commission.

Senator E B Johnston:

– Western Australia has always been excluded.

Senator DUNCAN-HUGHES:

– The present Commonwealth Grants Commission is what one might call only a temporary body. It may be that, when the members of the Inter-State 00m-mission are known, a West Australian will be found to have been appointed. Western Australia is furthest away from the centre of things in Australia, and I think it very desirable, from the point of view of the whole of Australia, that a West

Australian should be a member of the new body.

This seems to be a suitable opportunity to recognize the fact that, whilst the smaller States received a good deal of consideration from the Bruce-Page Government, they have had even more consideration from the Government which has been in power for the last six years. In saying that, I do not suggest that the smaller States have got everything they would have liked, or thought” they should have had; ‘‘but the fact remains that, by the appointment of the Commonwealth Grants Commission, and speaking generally, the claimant States, as they are called - and nobody who looks at the matter fairly can contest this statement - have had better treatment than, ever before in the way of help m respect of their disabilities or needs. It might have been better, if there had not been so much necessity for these needs to be assessed and made good. Nevertheless, assuming a continuance, of the present policy of this country, this Government has done more for the smaller States than has any previous ministry. I must confess that, when this commission was appointed, I was in considerable doubt as to whether th© Government would stand up to the payments which the commission might suggest. There was never any guarantee, and rightly so, that the Government would commit itself to approve of any payments which the commission considered should be made to the smaller States ; but, as a matter of fact, in every case the amounts recommended by the commission have been accepted by the Government.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Was there not a sort of honorable understanding?

Senator DUNCAN-HUGHES:

– I do not think so. I should have a much lower opinion of the Leader of the Senate than I ‘have if I thought that he would commit himself in advance to any payment which the commission might recommend. I do not believe that any sensible government would dream of doing such a thing.

Speaking in general terms, I should prefer that these grants be assessed on the basis of disabilities rather than needs.

A grant made on the basis of needs may easily come to be regarded as being in the nature of a charity, or a dole; whereas a grant based on disabilities is regarded as something in the way of a recompense for disadvantages actually suffered. There is always the clanger that a grant based on needs will be greater than is justified by deserts. Personally, I favour disabilities as the determining factor, although, as regards the tariff, for instance, the commission is of the opinion that it causes no real disability to the smaller States, because, for any disability that it causes they hold that there is a compensating advantage.

Senator Sir George Pearce:

– Both commissions came to the same conclusion.

Senator DUNCAN-HUGHES:

– It is undoubtedly true that it is difficult to assess disabilities, but I do not think that the difficulty is insuperable. The commission informs us that Tasmania has accepted needs as the basis of its grant, and that South Australia, reserves the right to base its claim on other grounds when a new authority has been appointed. I am glad to notice that Western Australia has consistently adhered to the view that disabilities should be the determining factor. If it is claimed that there is no disability, it is natural to look around to find grounds for that claim. I do not propose to go into details in this matter, or to recite all the points which South Australia might advance, and to some extent has advanced in support of its claim for an increased grant, but I say that, regarding Australia as a whole, it is evident that Western Australia has not developed to the extent that we might have expected. It is generally agreed, by those who think on these matters at all, that Queensland and Western Australia are the States which possess the greatest chances of development. If that be so, those two States, particularly Western Australia, which is right away from the centres of population, are not going ahead as quickly as the interests of Australia, as a whole demand. How can we expect, anything else, when on page 166 of the report we find that the urban population of Australia constitutes 64 per cent, of the total population of the Commonwealth? That means that in the cities and those towns which are incorporated for local government, there are nearly two people to every one person in country areas. In my opinion, that is unsound and lopsided, and it is one of the reasons why I have consistently urged greater decentralization of the population. There is opportunity - for greater settlement in country districts in Western Australia, and one can only hope that the decisions and recommendations of the new commission, which is to be appointed, will assist in that direction. Unfortunately, both the wealth and the man-power of the smaller States are flowing to the more densely populated and more highly industrialized States; and that tendency will increase more “and more as secondary industries develop. That is another reason why I prefer that grants to the States should be based on disabilities. I am certain that disabilities exist, and also that a continuation of the present Australian policy will mean that they will increase, and that the smaller States will have growing difficulty in balancing their budgets and in maintaining their existing standard of living, because, as I have said, there is a tendency for both population and wealth to flow more and more to the eastern States. Should the proposals of the Government for the development of the shale oil deposits at Newnes be successful, the expenditure of Commonwealth money will tend to augment the population and increase the wealth of the eastern portion of Australia, thereby causing financial and other difficulties in other parts of the Commonwealth. Again, every reference to the hydrogenation process for the extraction of oil from coal naturally has in mind in this case the development of one of the stronger States. That is necessarily so, because the process can be undertaken only where coal exists. Even in defence matters there is a tendency for the bulk of the money to be expended in the more densely populated areas.

Senator Brown:

– There is no need to erect defences to protect a wilderness.

Senator DUNCAN-HUGHES:

– That may be ; but it would be far better if the people were scattered more generally throughout the Commonwealth so that there would lie less wilderness. There is much to be said for spending, as far as possible, in each State a portion of the defence vote for the whole of the Commonwealth. That has been done to some extent, particularly as regards Western Australia, but I do not know of any increased expenditure recently on defence works in either Tasmania or South Australia. I do not wish to be unduly critical of a report which I have not yet had time to consider in minute detail. I doubt whether any honorable senator has had sufficient time to compare the commission’s latest report with its third report. Nor do I suggest that there are not in it statements which are capable of being criticized by the States; but I do say that, looking at the whole subject broadly, and assuming that the present Australian policy will be continued, the Government has done more for the smaller States than any other government has attempted to do. I shall therefore support the measure in its entirety.

Sitting suspended from6.14 to 8 p.m.

Senator LECKIE:
Victoria

.- In this debate so far we have heard mostly from the representatives of States which may be regarded as thereceivers of Commonwealth bounty, so it is fitting that something should be said by the representatives of States which stand in the position of givers, particularly as the receivers have, I consider, been looking a gift horse in the mouth. The biblical statement that it is more blessed to give than to receive is not always comfortable to the giver. The system for the distribution of Commonwealth grants to claimant States on account of disabilities or needs is entirely wrong, and some better method should be devised. I am not, at the moment, prepared to offer a suggestion on this point, but I believe that a thorough investigation should be made by competent authorities to see if some more satisfactory arrangement can be made that will place the financial relations of the Commonwealth and States on a better basis.

Senator Foll:

– Will not the InterState Commission be able to do that ?

Senator LECKIE:

– I do not know, but I am convinced that this is one of the major problems and it will have to be solved some day. It is not businesslike that State treasurers should be dependent on the overflowing coffers of the Commonwealth. As a matter of fact, the Commonwealthhas not the purse of Midas. Its coffers are just about depleted and it has nothing more to give to the States. In this measure, for example, we arc handing over to the States £2,500,000. This cannot make pleasant reading for the people of Victoria, New South Wales and Queensland, who provide the bulk of the tax revenue of the Commonwealth. Naturally they will think that if this immense disbursement of revenue had not to be made the Commonwealth would be able to reduce their tax burdens very substantially, and that, I need hardly say, would be most acceptable to them. The claimant States have put forward the plea that they suffer certain disabilities under federation. A patient investigation by men who know their job and of whose impartiality there can be no doubt, has disclosed that the disabilities of the smaller States are imaginary rather than real, and that the advantages which they enjoy under federation more than balance any disabilities which they may suffer. If, for instance, the claims of South Australia for compensation in respect of disabilities due to Commonwealth tariff policy were considered in all its aspects, our South Australian friends would have to confess that if the factories of General Motors Holdens Limited, T. J. Richards & Sons Limited, and a number of other firms which have prospered under protection, were removed to the eastern States, many thousands of South Australian operatives would be thrown Out of work. It is as well that people in the claimant States should remember that the great bulk of the Commonwealth revenue is collected in the eastern States, and much of it is distributed through various Commonwealth channels on what may be termed a flat rate to the smaller States. According to the Commonwealth Grants Commission, the advantages which these States enjoy in this way balance any disabilities which they may suffer in other directions. I repeat that the system of distributing the Commonwealth grants is unbusinesslike and unsatisfactory, because if a State mismanages its finances so seriously as to get into difficulties, all it need do is to appeal to the Commonwealth for assistance on the ground of needs. The excuse that it suffers disabilities under federation was long ago worked out. Apparently the intention is to subsidize the claimant States to an extent necessary to bring their finances up to the average for the Commonwealth. For this purpose a comparison is this year made of the budgetary position of the States of New South Wales, Victoria and Queensland. Hitherto Victoria and Queensland have been regarded as standard States.

Senator E B Johnston:

– The exclusion of New South Wales until this year has been a disadvantage to the smaller States.

Senator LECKIE:

– In addition to the advantages which the smaller States will enjoy under this measure it should not be forgotten that the Federal Aid Roads and Works Bill, which was passed in the last session, confers substantial benefits on them. The sum of £1,260,000, practically one-third of the petrol tax, is collected in Victoria, and £450,000 of that amount will be used for the making of roads in Western Australia. Where, then, are the grievances of the smaller States ?

Senator Marwick:

– Victor ia was in a desperate plight when gold was discovered in Western Australia, and gave employment to tens of thousands of people from the eastern States.

Senator LECKIE:

– By that reasoning Western Australia ought to be in no need of assistance now, because of the revival of gold-mining and the high price of the metal.

Senator ALLAN MACDONALD:
WESTERN AUSTRALIA · UAP; LP from 1944

– The greater part of the new revenue is going to Victoria.

Senator LECKIE:

– I admit that Western Australia is a good customer of the eastern States, and takes annually about £10,000,000 worth of manufactured goods.

Senator Marwick:

– £11,000,000.

Senator LECKIE:

– Well, let us say it takes £11,000,000 worth of goods manufactured in the eastern States. The average profit earned by manufacturers is not more than 5 per cent., so the actual contribution to the eastern States by

Western Australia is not so substantial as the honorable gentleman would suggest.

Senator Marwick:

– Consider also the employment which is given to secondary industries in the eastern States by Western Australia’s demand for goods.

Senator LECKIE:

– Victoria is a good example for Western Australia to follow. I remind Senator Marwick that, when the population of Victoria approximated that of Western Australia to-day, its manufacturing industries were fairly well established.

Senator Marwick:

– Victoria has become a highly-developed State under a tariff which has not benefitedWestern Australia.

Senator LECKIE:

– I know that Victoria is a well-managed State, and I consider that it deserves its high place in the federation. I have no desire to block the passage of the bill or to reflect upon the claimant States, but it is just as well that the views of Victoria, New South Wales and to a lesser extent, Queensland, should be stated, because the people of those States are “ carrying the baby. “ For instance, the operations of the Postal Department in the three eastern States show immense profits, whereas, in Western Australia, the telephone services show a loss and the postal figures just about balance. A large proportion of the profits earned by this department in the eastern States is used for the extension of postal services, and Western Australia, South Australia, and Tasmania get more than their fair share.

I rose to speak in this debate because I considered that the practice of looking a gift horse in the mouth is being carried a bit too far by senators from the claimant States. Even if the gift horse has not very many teeth it is still a good horse, and the recipient should not look on it with suspicion. The smaller States should be grateful for the grants which the Commonwealth is making to them. From a business point of view, I doubt that the claimant States are entitled to anything.

Senator Duncan-Hughes:

– If that is so, what is the reason for the provision in the Constitution regarding the appointment of the Inter-State Commission ?

Senator LECKIE:

– That section was not inserted for the purpose of ensuring grants to any of the States.

Senator Duncan-Hughes:

– Its purpose was to adjust ‘the difficulties of any of the States under federation.

Senator LECKIE:

– My impression is that the claimaint States now expect not justice, but generous treatment at the hands of the larger States. It should never be forgotten that the grants to the smaller States come from Commonwealth taxes and that the Commonwealth Government gets the whole of the blame for their imposition. Except for the demands of the smaller States, there would be no need for the Commonwealth to budget in excess of its requirements. But the position being as it is, the Commonwealth has to raise immense sums by taxation and hand them over to the States to enable them to balance their budgets. Thus the States get .the money without any of the odium attached to the method adopted for raising it. In 1926, of the total revenue raised from Australian taxpayers, the Commonwealth took 57 per cent, for its purposes and the States received 42.9 per cent. In the last financial year, the Commonwealth took 45.3 per cent., and the States 54.7 per cent.

Senator Duncan-Hughes:

– Does that include indirect taxation?

Senator LECKIE:

– Yes. If such direct imposts as sales tax were included, probably SO per cent, of the total collections would be obtained in the three eastern States. . I am wondering how long they will tolerate the present unsatisfactory position.

Senator Marwick:

– And I am wondering how long the farmers’ will be able to stand the present tariff burdens.

Senator LECKIE:

– One would think, from, the honorable senator’s interjection, that there arc no farmers in Victoria, New South Wales, or Queensland, when, as a matter of fact, although South Australia and Western Australia are regarded as primary-producing States, Victoria, New South Wales, and Queensland lead in primary production. The grants made under this bill are an act of grace and are based on needs, not disabilities. Senator Duncan-Hughes has said that he would prefer the grant to be based on disabilities. If that principle were observed, the claimant States would get nothing.

Senator Payne:

– Does the honorable senator know of any disability without a need?

Senator LECKIE:

– I know of a need without a disability and that, I suggest, is the position of the claimant States. The system for the distribution of these grants is, in essence, bad. The States should raise the money which they spend. That is a sound principle of government. I am not offering any alternative course, but it has occurred to mc that if some arrangement could be made for the Commonwealth to take over some of the States’ functions such, for instance, as education and, perhaps, railways administration, the relations of Commonwealth and States would be regularized. My objection is not to the bill so much as to the system for the allocation of the grants, and I hope that, before long, it will be possible to put State finances on a proper basis. The States should raise all the revenue they require and spend it according to their needs.

Senator PAYNE:
Tasmania

.- I should not have spoken on the second reading of this bill but for the extraordinary speech delivered by Senator Leckie. I remind the honorable senator that we have a federation into which all States entered in a spirit of co-operation. It was understood at the inception of the union that some States would experience serious disabilities, and that others would benefit. I cannot help thinking of the benefits obtained by the eastern States, and the losses sustained by the less populous States. The enormous areas of two of the so-called smaller States render it necessary for the other States to come to their rescue, in the true spirit of federation. I represent a State which has as many difficulties as any other member of the federation, largely because of its isolation in that it is separated from the mainland by 200 miles of water. Owing to. its contour, the cost of development is much greater relatively than that in any other State of the Commonwealth. Those who have visited Tasmania must have realized the enormous engineering difficulties that have to be encountered over a large portion of the State to render the land productive. Unfortunately, many persons have the idea that, because Tasmania is sometimes designated “ The Garden of Australia “ it has no poor land ; but that is not the case. Those areas which can be made highly productive are separated by large tracts of unproductive country, and very heavy expenditure has tobe incurred in bringing the adjoining country into production. Senator Leckie should be one of the last to complain of the financial assistance proposed to be granted to the claimant States.

Senator Leckie:

– I was not complaining.

Senator PAYNE:

– I know of no State in the Commonwealth which has benefited more from Tasmanian trade than has Victoria. The Tasmanian people get a large proportion of their requirements from Victoria, yet Senator Leckie objects to Tasmania and other States receiving grants to assist their development, which benefits not only them, but also the whole Commonwealth. The stronger members of the family should help the weaker members. I appreciate the help given to Tasmania, and I trust that some day there will be no need for that State to seek financial assistance from the Commonwealth. I understand that it is proposed to reconstitute the Inter-StateCommission, and I presume that no grant will be made to any claimant State until a close investigation has been made by that body. I support the bill.

Senator E B JOHNSTON:
Western Australia

– If the speech delivered by Senator Leckie has served no other purpose, it has directed attention to the nature of the opposition to the claimant States which have suffered so much under the federal system. In reviewing briefly the report, of the Commonwealth Grants Commission, I cannot disregard the fact that each recommendation made within the last few years has been less favorable to Western Australia. In 1933-34, before the commission was appointed, the grant to that State was £600,000. The commission was then appointed, and after an exhaustive examination of the finances of the claimant States, it found that the amount paid by the Commonwealth during the previous year was fair and in 1934-35, a similar grant of £600,000 was recommended. The second report of the commission was presented, curiously enough, after the referendum on secession had been held, when the people of Western Australia, by a two to one majority, declared for separation from the Commonwealth. Shortly after the vote was taken, a Federal cabinet meeting was held in Perth, and we discovered that our grant had been increased to £800,000 for 1935-36. That was a direct benefit from the secession vote. But in 1936-37, the amount was reduced by £300,000; the State’s deficit that year was a little in excess of that amount. I protested last year, and I again protest, against the action of the Commonwealth Government in varying the grant from year to year instead of making a fixed grant for a term of years. Last year the premier’s budget speech had been delivered before the Government knew what the amount of the Commonwealth . grant was to be and, when a reduction of the amount was announced, the State’s finances were seriously dislocated. When the commission was appointed, we thought that it would recommend a fixed grant over a stated period, and in that way let the States know,bef ore their budgets were prepared, the amount they were to receive. We now find that the grant of £500,000 for 1936-37 included an advance of £44,000, which is to be adjusted in 1938-39. I did not realize at the time that the actual grant last year was not £500,000, but was £466,000, a reduction of £344,000 on theprevious year. Western Australia is entitled to a greater measure of financial stability than it has to day, particularly in view of the possibility of the number of senators holding views similar to those expressed by Senator Leckie increasing. Our actual grant this year has been reduced to £439,000, when allowance is made for the advance of £136,000 which is to be deducted two years hence. Two years ago the grant to Western Australia was £800,000, but this year, despite two bad droughts and a serious position in the whole of our pastoral areas, it has been reduced to £439,000, only a little more than one half. It appears to me that if it goes on diminishing much longer, there will be no need for a commission to assess grants to the States. Until I read the Treasurer’s budget speech and heard the remarks of the Leader of the Senate (Senator Pearce) to-day, I hoped that the Government would not approve of the commission’s recommendation that £136,000 of this year’s grant should be regarded only as an advance. In view of the very difficult financial position of Western Australia, as disclosed by a deficit of over £300,000 last year, and in view of the distressed condition of a large portion of our agricultural areas, and almost the whole of the outer pastoral areas, I was hoping that the Government would be generous enough to grant £575,00.0 this year, without ^ regarding any portion of it as an advance. I still think that that would be the right thing to do, and I coin mend Senator Marwick for the valuable suggestion he has made that the £136,000 should he given to the State and earmarked for the relief of those who have suffered so severely through drought during the last two years. I trust that the Minister will intimate that that policy will be adopted. On page 91 of the commission’s report the following paragraph appears -

As indicated in paragraph 216 an advance of £44,000 was included in the Western Australian grant of £500,000 for 1936-37. In making this advance it was pointed out that it would be taken into account when a grant was recommended on the basis of the financial position for 1936-37.

It will be seen that over the last two years Western Australia has been given £170,000 in advances. That State has suffered because it is not represented on the commission, which unfortunately spends only a limited time in the State. Western Australia,’ alone of the claimant States, has never had a representative on the Commonwealth Grants Commission. I do not know why the members of the commission do not spend one-third of their time in each of the claimant States. They were content to pay a brief visit to Western Australia, and the visit included a little run to the wheat belt and southwest portions of the State, which are amongst its most beautiful and fertile areas. Such a brief excursion in pleasant summer weather will not help them very much to arrive at a real understand ing of the position of a State, constituting almost one-third of Australia, and extending from the tropical north-west to the far south. The report stated -

The figures for 1936-37 will form the basis of the grant for 1938-39-

They are always a couple of years behind the times -

And the £44,000 advance should normally be deducted from the grant for 1938-39. The advance of £136,000 recommended for 1937-38 should be repaid or ‘ adjusted in a similar way.

That is to say, it should be deducted from the grant for 1939-40, which will be based on the figures for 1937-38, the year in which the advance was received -

The procedure suggested involves a lag in repayment of advances corresponding to the lag in the payment of grants which now takes place.

Finally, we recommend grants as follows for the year 1937-38: -

It is a’ curious fact that, when the first intimation of the amount of the grant was telegraphed to Western Australia, we were told that a grant of £575,000 had been recommended, apparently an advance of £75,000 over the previous year’s grant; but, on the following day, the sad news was received that the real grant was to be £439,000, and that the balance of £136,000 was to be an advance against what we are to receive two years hence. I emphasize again that this so-called advance of £136,000 should not he regarded as an advance or a loan. There is nothing in the bill to say that it is an advance or a loan. The bill speaks of “ a grant “ of £575,000 to Western Australia, I ask that the amount of £136,000 be made a free gift to Western Australia for the assistance of those people in the agricultural and pastoral areas who have suffered severely from drought during the last two years. This assistance is needed to augment the provision made for this purpose by the State’Government from its scanty resources. I had hoped that the Government would have taken up this attitude in regard to the grant for Western Australia, but I was disillusioned when the Treasurer (Mr.

Casey), in introducing this bill in the House of Representatives on the 24th August, made it quite clear that the £136,000 is to be regarded as an advance. He said -

A feature to which I draw special attention is the advance of £130,000 to Western Australia. The proposed grant for 1937-38 to that State consists of a grant proper of £439,000 and an advance of £136,000, the total being £575,000.

Senator Arkins:

– Free of interest?

Senator E B JOHNSTON:

– Yes ; I am glad that that Shylockian remark has not come from the ministerial bench -

The grants for 1937-38, for which appropriation is now sought, are assessed on the results of the financial year 1935-36, the last year for which complete statistics were avail’ able to the commission. As, however, Western Australia has been suffering from a severe drought, the effects of which on its budgetary position are already being felt, the commission recommends an advance of £136.000 so that the State may receive the assistance at the time when it is most needed.

Here is the Treasurer of the Commonwealth, whom I regard as a clever and capable gentleman, pointing out that Western Australia, has suffered from severe drought conditions, the effects of which arc already being reflected in its budgetary position. In view of this admission, we would have expected him to say that ho would increase the grant to £S00,000, the amount provided for Western Australia two years ago, when that State was in much less difficult circumstances. But the honorable gentleman did not say anything of the kind. On the contrary, he said, “ We shall reduce the grant to little more then onehalf of what it was two years ago, hut we shall give Western Australia an advance of £136,000.” That amount, even as a grant to make up for the difficult circumstances of drought which were investigated on the spot by the Assistant Minister for Commerce (Mr. Thorby) a little more than a year ago, would be’ altogether inadequate, but I hope that the Leader of the Senate (Senator Pearce) will be able to tell us that the Government has decided to treat the amount not as an advance, but as a straight-out grant to the State towards relieving the distressed settlers in the wheat areas, particularly those in the north-western districts, who, during last harvest when prices were good, were in the . unsatisfactory position of having little or no wheat to garner. During the Treasurer’s speech, Mr. Curtin interjected -

The commission has failed to explain why its new .system of making an area allowance has not been .applied retrospectively. The States affected must have suffered considerable loss through its omission in the past.

I think Mr. Curtin might have gone further. If, for the first time, area is being taken into consideration as a new factor in assessing grants, I ask why, in view of the fact that Western Australia constitutes nearly one-third of the total area of the Commonwealth and yet has only about one-sixteenth of the Australian population, the .grant to that State is being reduced from £800,000 two years ago, to £439,000 for the present financial year? That is most unsatisfactory; obviously there is something wrong with the commission’s finding. I should like the Government to refer the report back to the commission for further investigation: I suggest that the members of the commission should spend two or three months in Western Australia examining the matter thoroughly, and that they might well emulate Senator Marwick and myself by taking a trip through the northwest portion of Western Australia. They would not then recommend a reduction of the grant to £439,000, when, for the first time, area was being taken into consideration. “If the commission had not taken, area into account, to what amount would, the grant have been reduced ? The Treasurer said further -

The commission . has never pretended to place its recommendations upon a strictly arithmetical basis.

The DEPUTY PRESIDENT (Senator Sampson). - From what report is the honorable senator reading?

Senator E B JOHNSTON:

– From Hansard.

The DEPUTY PRESIDENT. - Tho honorable senator is not in order in quoting the Ham-sard report of the debates in the House of Representatives during the current session.

Senator DUNCAN-HUGHES:

– The Leader of the Senate made a speech in similar language in this chamber to-day.

Senator E B JOHNSTON:

– Yes, I believe that Senator Pearce said this afternoon -

The commission lias never pretended to place its recommendations upon a strictly arithmetical basis. It has gone on investigating and improving its technique year by year.

Its technique may have been improved from the point of view of the Treasurer, who is anxious to show a surplus, and who, I admit, is doing good work for Australia in sonic directions. I give him every credit for that, but not for the reduction of the grant.

Senator Sir George Pearce:

– Does the honorable senator give mc credit for anything?

Senator E B JOHNSTON:

– I was giving the credit to the Treasurer; but whenever I have occasion to do so it will be a pleasure for me to give to the Leader of the Senate the full credit .that, in my opinion, his public services deserve. The right honorable gentleman continued-

This advance is to be adjusted in the year 1939-40, grants for which will be based on. the accounts for thu current year, 1037-38. A similar advance of £44,000 was included in the amount paid in .1936-37 and this is due lor adjustment in 1938-39. 1 appeal this time to Senator Sir George Pearce to make the amount of £136,000 a grant to Western Australia to be earmarked for the relief of settlers who have suffered from drought. If the right honorable gentleman will persuade the Government to do that, he will be doing something which both he and I know is fully warranted by the circumstances of the people. He knows that there can be no justification whatever for the reduction under this bill of a grant of £S00,000 two years ago to £439,000 this year. I challenge the Government or the commission to show any warrant for such a reduction at a time when the economic circumstances of many people on the land in Western Australia are very much worse than they were two years ago. The Government should have rejected the recommendation that the £136,000 should be regarded as an advance; it might well have made a gift of the amount. Even then the grant to Western Australia would 1 1 fi ve been very small. If the Go vernment accepts this recommendation, it will show that both the Government and the commission have displayed an utter lack of sympathy with the sufferers from drought in both the agricultural and pastoral areas of Western Australia. My State wants a straight out grant of £575,000. Again I protest against Western Australia being singled out by a portion of the grant being regarded as an advance against money that is to bc received from the Commonwealth two years hence. The commission has gone off the rails in this matter. The Government has rejected many recommendations by other commissions, including important proposals made by the Royal Commission on the Wheat Industry, and I urge it to reject the recommendation of the Commonwealth Grants Commission that £136,000 of the amount to be received by Western Australia be regarded as a loan.

Let us consider the budgetary position of the Commonwealth. I was amazed to find that, in a record budget providing for the expenditure ‘of £85,000,000, £3,000,000 more than last year, one of the amounts in which a reduction is being made is that of the grants to the smaller States. All are experiencing a reduction, but Western Australia, which is the largest in area, is for the first time having the biggest reduction, compared with two. years ago, and also the heaviest, since the beginning of federation. I protest against this treatment of Western Australia. I point out how small is the grant provided to this State, when compared with those to the other two claimant States, when the matter is considered on a population basis. The grant works out, in the case of Western Australia, at 19s. 4d. per head of the population, compared with £2 0s. 9d. for South Australia, and £2 9s. 5d. for Tasmania, and this despite the fact that, with the more than average masculinity of the population of Western Australia, the contributions of that State to customs and excise are higher per head of the population than are those of any other State. If the Government approves of my request, and regards the amounts of £136,000 and £44,000 as grants and not advances, the amount per head of the population granted to Western Australia will still be very much lower than those received by the other claimant States. At present it is less than onehalf of that of South Australia, and only two-fifths of that of Tasmania. The Government should increase the grant to £800,000, and even then it would be only a small grant per head of the population compared with that voted to the two other claimant States. In view of the scattered nature of the population of Western Australia, which has the task of developing one-third of the area of the Australian continent, the Commonwealth Government has shown an utter lack of consideration for that State. Its population is only one-sixteenth of that of the Commonwealth, and greater consideration should have been given to its claims in the interests of national safety and a fairly balanced Australian development.

I say also - and I commend Senator Duncan-Hughes for his remarks on the subject - that grants, should be made mainly on the basis of disabilities imposed by federation. I am pleased to know that governments of varying political character in Western Australia have always urged the adoption of that basis. Grants should be given for disabilities under federation, rather than on the basis of needs alone, as decided by the commission. In looking through the States Grants Acts I can see nothing to justify the commission in deciding, as it did; in that matter. It went beyond the powers granted by the act governing its appointment, and this fact gives all the more backing to the request that the Government should not approve of its recommendation in toto as it always has done in the past.

The first royal commission was appointed in 1925 to consider the disabilities of Western Australia under federation, and the title of its report showed that that was what it did. Its major recommendation, which was never carried into effect by any Commonwealth Government, was that for a period- of 25 years Western Australia should be permitted to control its own tariff. That was the recommendation of two of the three members of the commission. The third commissioner said that that plan would not be satisfactory, and he recommended that the State should secede from the Commonwealth. I am prepared for the present debate to stand solely on the majority recommendations of the commission, although secession would be more acceptable. Its chairman, Mr. Higgs, an ex-Treasurer of the Commonwealth, not only said that the tariff was a burden to Western Australia, rather than merely a disability, but he also recommended that for a period of 26 years Western Australia should he given complete tariff control of its own territory.

Senator ARKINS:

– But Western Australia did not stand up to that.

Senator E B JOHNSTON:

– It did. The honorable member for Swan (Mr. Gregory), a valiant fighter for Western Australia, submitted a motion in the House of Representatives to give effect to the recommendation. Although he received a promise that an opportunity would be given for the consideration of that motion that opportunity was never afforded.

The Commonwealth Grants Commission also refused to recognize the burden of the tariff as a ground for giving Western Australia special consideration, despite the huge volume of evidence provided, not only by the royal commission that, in 1925, inquired into the disabilities of the State under federation, but also by the five Australian economists who were appointed by the Bruce-Page Government to inquire into the effect of the Australian tariff. The latter reported that Western Australia suffered more than any other State through the tariff, and that the loss to the primary producers, and to the State generally, amounted to millions of pounds yearly. Yet the Commonwealth Grants Commission says that it does not consider this a burden at all and gives no grant to compensate for the injury suffered by our people from the tariff ! I have before mc a copy of the report by Professor Bridgen, Professor Copland, Mr. E. C. Dyason, Professor Giblin and Mr. C. H. Wickens entitled The Australian Tariff. At page 230 the report states -

The subsidies to production through the tariff are £36,000,000, which would average a.ll round £6 per head of population. But if the £36,000,000 is distributed among States iii proportion to the quantity of protected indus- try, the amount per head will vary greatly from State to State, as shown approximately in the following table: -

These amounts are additions made to the income per head in each State, and no immediate deduction can be made as to the consequent effect on State revenue. But it is to he noticed that the subsidies to Victoria and Queensland are twice as great as those to Western Australia, South Australia and Tasmania.

We next inquire in what proportion these subsidies are contributed by the different States in paying the excess prices of protected Australian products. We have found that these excess costs are borne in the last resort partly by luxury expenditure and fixed incomes and protected production itself, but most of all by the export industries. Without attempting to give a full distribution, of costs on these lines, we may say that the result is to make the burden per head of Victoria, and Queensland, which have relatively small exports, much below the general average, with the other States above the average and Western Australia particularly high.

Yet the grant to be made to Western Australia this year is reduced by almost one half, compared with two years ago, and no consideration whatever is given by the commission to the views of the five noted Australian economists, who further stated -

So it comes about that the same two States, Victoria and Queensland, both get the greatest increase to income per head, and pay least per head for it; New South Wales is in a middle position; and the other three States both receive least and pay most, with Western Australia in a somewhat worse position than Smith Australia and Tasmania.

It is to bo noted that these three States arc all claimants for special Commonwealth assistance. The effect on State revenue from these combined causes is obvious though not easily measurable . . . We will only saythat the discriminating effect on the revenue of different States appears to be substantial on account of the causes considered both in this paragraph and the preceding one. It is natural that the harmful effects of the tariff should express themselves most acutely as difficulties of State finance. The effects are not felt directly by land owners nor in the check to production. Land generally does not decline in value, nor does it go out of production.

They were wrong there, because a good deal of land has gone out of production in Western Australia. I admit that drought and bad seasons generally have been a contributing cause, but I do not think that any other factor has had so great a part in putting that land out of production as has the tariff, which, statistics show, has more than doubled the cost of bringing the average wheat farm into production, compared with the period prior to the adoption of a high protective policy. The report from which I have quoted continued. -

It merely fails to respond adequately to development expenditure, and in so far as State assistance succeeds in cancelling the tariff costs borne by farmers, it does so at State expense.

Of the truth of that statement the huge losses of the Agricultural Bank and Group Settlement Scheme of Western Australia provide evidence -

The State taxpayers are called upon to meet deficits on railways (the capital and working expense of which are inflated because of the tariff), because tariff costs do not allow of freights, being raised. The State finances, therefore, bear a substantial share of the tariff costa.

The States which enjoy more than their proportional share of the benefits of protected industries may be able to afford this result. Their taxable capacity is increased through the protected industries established iti their territories.

That is the fortunate position of Victoria, New South Wales and Queensland, hut in the other States the results are exactly the opposite. The report stated -

Their taxable capacity is lowered, so that their rates of taxation have to be increased ; industry is further encouraged to concentrate in the more fortunate States, and the cumulative effects which follow intensify the inequalities created by the tariff itself.

I wonder whether the members of the Commonwealth Grants Commission have read that report?. If so, I should like to know how they reconcile the views of those five distinguished Australian economists, who were specially selected for the task, with their own recommendations, and particularly with the statement that the smaller States do not suffer from the tariff. Few students of economics will agree with the conclusions of the Commonwealth Grants Commission with regard to the effect of the tariff on the smaller States.

Senator Leckie:

– The commissioner did . not say that the tariff was not a hurden, but that there were compensating advantages.

Senator E B JOHNSTON:

– The five economists to whom I have referred expressed an entirely opposite opinion. Senator Marwick said that the views expressed by the Commonwealth Grants Commission as to the effect of the tariff on Western Australia proved them to be either fools or ignoramuses. I commend the honorable senator for his clear-cut expression of opinion. The views of the Commonwealth Grants Commission are at complete variance with those of all Australian economists, and prove that its members are quite incompetent for their task, from the point of view of the primary industries of Western Australia, which have to carry the burden of the tariff. In this connexion, I quote, in reply to Senator Leckie, what the Commonwealth Grants Commission expressed in paragraph 98 of its last report -

Other things being equal the claimant States possess exactly the same measure of protection that the Eastern States en joy ; and there are no barriers to the establishment of manufactures in Western Australia and South Australia. But other things are not equal, particularly natural resources and a wide range of conditions attractive to manufacturing enterprises. To admit the argument would be equivalent to admitting the validity of a plea for special treatment owing to the unequal distribution of natural resources among the States.

The commission does not say anything of the unequal distribution of population, or of the advanced state of development of the eastern States, or of the benefit of the big home-market provided by the big eastern cities where so many people are employed in manufacturing goods for the use of residents in the outback parts of the’ Commonwealth. At least 40,000 wage-earners are employed in the eastern States, making goods for the Western Australian market, but we hope to alter this by the establishment ‘ of our own factories. I propose to call as a witness the Labour Premier of Western Australia. I thought that the Labour party was pledged to high tariffs, but, in a statement which appeared in the Wed Australian of the 25th August, Mr. Wilcock, the Premier of that State, when replying to the statement of the Common-* wealth Grants Commission regarding Western Australia’s position under the tariff, said -

This is rather an extraordinary statement as it suggests that, but for the unkindness of Providence in denying to Western Australia as lavish a share of natural resources as has been bestowed on the Eastern States, we would enjoy the same benefits from the federal policy of protection as does, say, Victoria.

If the commission is right, it could bc claimed that, other things being equal, Australia possesses exactly the same opportunities for secondary industry production as are enjoyed by the older countries of Europe. But manufacturers in Melbourne would not be impressed by such a statement and they would still clamour for high protective duties against oversea manufacturers.

Our position in relation to the Eastern Status is exactly comparable with that of the Eastern States in relation to oversea manufacturers. Experience has shown that if secondary industries in Western Australia are to have any chance to become established, protection against the Eastern States is essential during the initial years. While a policy of interstate free-trade exists we are forced to purchase our requirements in the highly - protected markets of Victoria and New South Wales, while we sell most of our products in the open market of the world. This policy throws a heavy additional cost on the shoulders of our people and makes Western Australia a valuable market to the Eastern States.

The fact that the tariff places a burden on Western Australia for which compensation should be paid has been recognized by the Commonwealth ever since the inception of federation. It is therefore disturbing to find that this disability docs not impress itself upon the Grants Commission. Even if we accepted the commission’s method of measuring the grants according to the relative needs of the claimant States, it would appear to be no more than justice to expect the commission to allow us to function at a somewhat higher cost for social services, and at a lower severity of taxation than the States which enjoy at our expense such substantial benefits from federal policy.

That is the view of the Labour Premier of Western Australia as to the baleful effect of the tariff on his State. It has been pointed out that the severity of taxation in Western Australia is above the average for the whole of Australia. The Leader of the Senate (Senator Pearce) knows something of the excessive emergency taxes which have been imposed there. Western Australia has a heavy income tax, in addition to State land tax, hospital and vermin taxes. The rich State of New South Wales is entirely free from any State land tax. In all the circumstances, a reduction of the grant to “Western Australia from £800,000 to £439,000 this year is entirely unwarranted. I urge the Commonwealth to make the amounts of £44,000 and £136,000 available to Western Australia as grants and not as advances.

Senator McLEAY:
South Australia

– I take this opportunity to congratulate the Government on the appointment of the Commonwealth Grants Commission. Having listened to the speeches of Senators Leckie and E. B. Johnston, it is obvious that we should get nearer to the true position by adopting the report of the commission than by following either of those two honorable senators. Some of the States will never be satisfied. I agree- with Senator Duncan-Hughes that the present Government has done more for the smaller States than any previous government has done. Having considered tho facts, the Commonwealth Grants Commission has made its recommendation. I regret the attacks which have * been made on that body, because it is generally recognized by those who have taken an interest in the difficult problem of the relations of the Commonwealth and the States, that the commission has done exceptionally good work.

Senator ALLAN MACDONALD:
WESTERN AUSTRALIA · UAP; LP from 1944

– Its members are not qualified to deal with Western Australia.

Senator McLEAY:

– That is a onesided view which should not be expressed in this National Parliament. South Australia appointed its Under- Treasurer and its Auditor-General - men of outstanding ability - to prepare its case for submission ro tho commission. In view of what has been said during this debate, I propose to read to the Senate what they said following the publication of the commission’s second report -

Although we have, made certain comments on some aspects of the’ commission’s report, we desire to place on record our appreciation of the very valuable work done by the commission. The commission’s reports cover a very wide field, and include such important matters as government finance, taxation, tariff, exchange, and the principal economic factors which affect national life, and, in our opinion, the reports make a most valuable contribution to the elucidation of some very difficult and baffling problems.

In fairness to the commission, that expression of opinion should be placed on record in this Parliament. The South Australian committee in its comments on the third report of the Commonwealth Grants Commission stated in paragraph 46- “

The third report of the commission adheres largely to the principles and ideas set out in the second report. It may be said at the outset that the commission’s third report is a very line production and is well worthy of close study by any person interested in the problems dealt with in tho report.-

All ! can say is that I sincerely trust that the members of the Inter-State Commission will be as well qualified as members of the Commonwealth Grants Commission have been to study and pass judgment on this very baffling problem. I congratulate the Government upon what it has done, and I suggest that the constructive suggestions contained in the commission’s report are worthy of the most earnest consideration.

It is obvious from the drift of population from South Australia and the decline that is taking place in Tasmania, that the position in both States is becoming increasingly serious. I agree with Senator Duncan-Hughes that it is the duty of this Parliament to assist in promoting development of that important area in Western Australia which, at present, is- unoccupied, but action is limited by our financial means. As regards the establishment, in the furtherance of defence, of secondary industries in the smaller States, we arc not suggesting that the Federal Government should adopt a policy of nationalization ; we consider that the success of secondary industries in those States must depend largely upon the business ability of those who embark their capital in such enterprises. I appreciate the interest shown by the Leader of the Senate (Senator Pearce) in the position of the smaller States, and also what this Government has done for the development of aerial mail services and in other directions, and I consider that it is the duty of the representatives of all the States to see that available Commonwealth money i3 distributed on a basis equitable to the weaker States. I congratulate the Government upon what has been accomplished during its term of office, and I believe that the findings of the commission are nearer to the truth than some of the speeches which we have heard to-day.

Senator UPPILL:
South Australia

– I should not have taken part in this debate but for the remarks of Senator Leckie, who seized on that portion of the commission’s report which declared that grants should be distributed not on the basis of disabilities suffered under federation, but on needs. I am, however, inclined to believe, that he disagreed with the ultimate finding of the commission that South Australia required £1,200,000.

Senator Leckie:

– I did not disagree with the findings of the commission.

Senator Duncan-Hughes:

– The honorable senator said that there were no disabilities; only needs.

Senator Leckie:

– That is in the commission’s report.

Senator UPPILL:

– The commission made a thorough investigation, and did its duty conscientiously. It approached the consideration of the problems involved with an unbiased mind, and admitted the difficulty of making a distinction between disabilities and needs. The South Australian Disabilities Committee which considered the second and third reports of the commission consisted of gentlemen of equal ability, and therefore its opinion is entitled to equal respect. The history of the federation has shown that the smaller States have suffered definite disabilities which demand consideration from the stronger States. This contingency was foreseen by the framers of the Constitution, and led to the insertion of what was known as the “ Braddon Blot “ which, for the first ten years, safeguarded the interests of the smaller States by ensuring the return to them of a portion of the revenue received from customs and excise. At the end of that period other provision was made, and in more recent years the Commonwealth Grants Commission has been entrusted with the difficult task of determining what amount of financial assistance is properly payable to the smaller States for disabilities which they have suffered under federation. “We who are familiar with the development of the mallee farming districts in South Australia and Western Australia know the handicap under which settlers labour owing to the increased costs of farm machinery due to the tariff policy of the Commonwealth. I am, however, sure that the great majority of the people appreciate the work which this Government has done to place all the States on something like an even footing.

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [9.25]. - in reply - I invite the attention of honorable senators to the fact that the third report of the Commonwealth Grants Commission consisted of 147 pages of close reading, and 5Q pages of appendices, and also that the. fourth report contains 101 pages of close reading and about 40 or 50 pages of appendices. This being so, I suggest to Senator Johnston and other honorable senators who have criticized the Government, that it is not responsible for all the arguments and conclusions contained in the commission’s reports. The Government does, however, accept responsibility for the amount of the grant recommended. Senator Johnston^ said that the commission refused to recognize that the tariff had placed a burden on Western Australia. An examination of the report will show that the commission inquired fully into the matter. In its third report, its comments on the effect of the tariff policy run to nine pages ; its f fourth report contains six pages of reasoning with regard to the hurden of the tariff. The commission admits that the tariff is a burden. On page 67 of the third report, it stated in paragraph 141 -

There is, however, one point of importance which has become increasingly clear. Whatever the burden of the tariff may be, it is much greater on Western Australia than on any other State. The subsidies to protected production per head, whatever their absolute amount or value, must be 30 per cent, greater for Tasmania than for Western Australia, and 60 per cent, greater for South Australia. If unsheltered industry bears a great part of excess costs, then Western Australia again must be most adversely affected, for unsheltered production in 1932-33 was £41 per head in Western Australia, -against £24 in South Australia, and £.18 in Tasmania. On both counts the adverse effects on Western Australia must be very much greater than on any other State.

In the light of that statement, how can Senator Johnston say that the commission refused to recognize that the tariff was a.burden on Western Australia ? The commission did, however, say that other advantages are a set-off against the burden of the tariff. After an examination of tariff costs, the commission stated, on page 68 -

We are taking these tariff costs tentatively as measuring substantially the net adverse effects of Commonwealth policy so far as tho States themselves are able to estimate them. Against them must be set the benefits from the allocation of Commonwealth revenue and expenditure, omitting special grants.

It appears then, without reckoning any benefit from exchange, benefits and burdens from federation almost balance for South Australia and Western Australia, while for Tasmania there is a net benefit of nearly £1 per head. It follows that no substantial part of the special grant received was made necessary by the effects of federation. We mayconclude that these States unfederated would lui ve been at least in the same financial difficulties as at present.

That policy was adopted by the commission in framing its third report, and a similar attitude is taken up by the present commission on pages 10, 11, 12, 49 and 50 of the fourth report. It is unfair to suggest that the commission did not take into consideration the effect of the tariff upon Western Australia; it has stated that the tariff is a burden which presses with greater severity on Western Australia than on any other State.

Senator Johnston, who raised the question of advances, should realize that the Government is merely asking Parliament to authorize the payment of the grants to the States set out in the bill. The grant of £575,000 to Western Australia is not less than the grant of last year, as stated by Senator johnston, but actually £75,000 more. It is true that, in assessing the amount, the commission has treated £136,000 as an advance, but that does not affect the amount of the grant Senator Marwick should understand that the Treasurer of Western Australia will receive from the Commonwealth £575,000, and if the Western Australian

Government elects to use £136,000. of that amount in the direction suggested by Senator Marwick, there is nothing to prevent it from doing so. There is no need for the Commonwealth to earmark the £136,000 for any specific purpose.

I remind honorable senators that the present commission is not the same commission that compiled the third report. It is true that it accepted some of the bases laid down by the previous commission and extended them in some directions. I remind Senator Johnston, who grudgingly admitted that the present commission has introduced the area factor, which is an advantage to Western Australia, that had that factor not been taken into consideration, the grant would have been less. That is ohe direction in which the commission has advanced. It has recognized a disability which was not recognized previously. A subsequent commission may take up the work of this investigating authority, and form its own opinion on future grants upon the evidence submitted from time to time. It will not be bound by the conclusions of previous commissions, but it will be foolish if it is not guided by them. Any one reading the third report must admit that it is one of the most valuable documents on Australian finance that has been produced in the history of federation. I have read many similar, reports, and have no hesitation in saying that the information it discloses on the subject is of greater value than any previously submitted to this Parliament.

Senator Marwick:

– It is very useful.

Senator Sir GEORGE PEARCE.The fourth report also is a very valuable document. Future governments or commissions will not be bound by the reasons or arguments contained in those reports, but future commissions would be foolish not to take advantage of all the information gathered in the course of these investigations. In justice to the commission, I should like to say that I do not think that any of its members has an axe to grind. All three are conscientious men, definitely striving to do justice to the parties concerned. No one can say that the claimant States did not have full opportunity to present their cases to the best advantage. The men who prepared the cases for the claimant States were competent officials. South Australia had the assistance of the UnderTreasurer, the Auditor-General and Mr. Pickering, all of whom are competent to place the position of that State fairly before the commission. The representatives of the States collected a mass of evidence and also appeared before the commission, and it will be seen that there must have been a full investigation of the position of all claimant States. The Government is merely asking Parliament to pass judgment, not upon the reasoning and conclusions of the commission, but upon the amount of the grants tobe paid.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

page 382

WAR PENSIONS APPROPRIATION BILL 1937

Second Reading

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[9.42]. - I move-

That the bill be now read a second time.

This is the usual measure submitted to Parliament for the purpose of appropriating from Consolidated Revenue Fund an amount to be paid into a trust fund to meet expenditure for war pensions at the rates already determined by Parliament. The annual rate of expenditure on war pensions is approximately £8,000,000. The total amount appropriated by Parliament to date for this purpose is £144,000,000, and the expenditure to the end of August, 1937, will be approximately £142,000,000. At the present rate of expenditure, the balance of approximately £2,000,000 will soon be exhausted. It, therefore, becomes necessary to appropriate a further amount to maintain the regular payments to war pensioners.

Senator BROWN:
Queensland

– I do not intend to oppose the passage of this bill, which provides for the appropriation of revenue for the purpose of war pensions; but I take this opportunity to bring under the notice of the Government the case of a blind soldier.

Senator Sir George Pearce:

– This measure does not deal with the rate of pensions.

Senator BROWN:

– I realize that, but perhaps I may have an opportunity to state briefly the facts of the case.

The DEPUTY PRESIDENT (Senator Sampson). - The honorable senator must connect his remarks with the subjectmatter of the bill.

Senator BROWN:

– I intend to do so by showing that some of the money appropriated for war pensions should be paid to Charles Edward Kruger who is now blind. He saw service at Gallipoli, and while on the Peninsula he complained of eye trouble which caused him severe suffering. After his return to Australia he made further complaints. On his discharge from the Australian Imperial Forces he was granted a full pension for abdominal trouble, but that pension was later reduced and finally cancelled. Four years later he had to be admitted to Rosemount Repatriation Hospital, and consideration was first given then to his eye condition. He was referred to Dr. Lockhardt Gibson, the repatriation eye specialist in Brisbane, who reported that the eye condition did not indicate syphilis. The case was considered by the commission and a pension was refused. This unfortunate man battled on without assistance for several years, and on making a further appeal for a pension he was eventually sent again to Dr. Lockhardt Gibson for examination and report. Dr. Gibson attributed the loss of his right eye to the effect of sand and gravel blown into the eyes by an exploding shell; he attributed the loss of the right eye to war service. In 1924 Mr. Kruger was given a pension for the loss of the right eye. In 1928 he reported that the sight of his left eye was affected, and he was again sent before Dr. Gibson, who said that although the loss of sight in the right eye was due to war service, the defective vision in the left eye was due to age. In 1932 he again appealed, and, after examination, Dr. Gibson reported that in spite of no acknowledgement of syphilis and negative Wassermann tests, the condition of the left eye was almost certainly due to syphilis. The position then was that, while the commission accepted the loss of the ‘sight of the right eye as attributable to war service, and -paid a pension accordingly, the partial blindness of the left eye was regarded as due to syphilis and therefor not pensionable. Some months later the left eye became almost blind and Mr. Kruger again appealed to the Repatriation Commission. The commission referred the case to Sir James Barrett, who said that it could not be admitted that the condition of the left eye was attributable to war service, and, without further ado the commission not only rejected the claim in respect of the left eye, but also cancelled the pension payable for the loss of sight in the right eye.

In 1925, Sir Neville Howse, then’ Minister for Repatriation, replying to a question asked by Mr. Cameron, now Sir Donald Cameron, in regard to war pensions paid to one-eyed returned soldiers, said -

More recently provision has been mode to increase this rate of pension if the sight of’ the other eye should become defective, and with regard to the degree that it has done t>o. This means that if there should lie complete loss of Bight in the other eye at any time from any cause whatever, the ex-soldier will be granted a pension at the highest rate of £8 per fortnight.

In view of that statement, unless the policy of the Government in this respect has been altered since, a pension should have been granted to Mr. Kruger for the loss of sight in the remaining eye. Subsequently, Mr. Kruger made an appeal to the War Pensions Entitlement Tribunal but it was disallowed on the ground that his condition was attributable to syphilis. That tribunal, which is composed of laymen, asked that a provocative Wassermann test be given, but on medical advice, and also on the ground that he had never had venereal disease in his life, Mr. Kruger refused to have the test applied. ‘ I doubt the moral or legal right of the Entitlement Tribunal to suggest, such a drastic course, because it appears that there must have been a doubt as to the origin of tho trouble, and Mr. Kruger should have been given the benefit of the doubt as provided by the Repatriation Act. With a view to having his case reopened Mr. Kruger was medically ex amined by Dr. Wallis Hoare, one of Brisbane’s leading eye specialists, who reported as follows: - night eye blind. Left eye blind. As to the incidence of the optic atrophy the right eye appears to have been affected in 1 1)10, the left eye some years later. While, of course, this fact does not exclude’ syphilis, it certainly excludes injuries to the skull as a cause. The fact of a Wassermann teat proving negative docs not preclude the fact that a person may have had syphilis. Consequently, while there is nothing to prove that the optic atrophy is not of syphilitic origin, there is equally nothing to prove that it is. There does nut appear to be Anything definite in the case .to warrant one saying this or that is the attributable, cause and one is forced to the conclusion that, like many other cases of primary optic atrophy, the origin is obscure and no attributable cause can be definitely assigned.

This report apparently did not carry much weight with the Entitlement Tribunal as Mr. Kruger was again refused a pension. This unfortunate man enlisted in the early part of the war, and he says he was then, a healthy, fit bushman, and had lived a clean moral life. There was no question of inherited disease, and he is firmly convinced that the war was responsible for his blindness. He is a respected member of the Partially Blinded Soldiers and Sailors’ Association of Australia, and is a married man with a wife and five young children. I appeal to the Minister to inquire into this case and to see that justice is done to this unfortunate man.

Senator Sir GEORGE PEARCE (Western Australia) [9.50]. - The honorable senator of course realizes that I have no knowledge of the particular case which he has mentioned. There are two tribunals dealing with claims for pensions by returned soldiers, the Entitlement Tribunal and the Appeal Tribunal, both of which are composed of returned soldiers. The man to whom the honorable senator referred has the right of appeal to both the tribunals, and it can only be assumed that his appeal has not been upheld. However, I shall bring tho honorable senator’s remarks under the notice of the Minister for Repatriation.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

Senate adjourned at 9.53 p.m.

Cite as: Australia, Senate, Debates, 1 September 1937, viewed 22 October 2017, <http://historichansard.net/senate/1937/19370901_senate_14_154/>.

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