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§ 392. “During the First Five Years.…and Thereafter until the Parliament Otherwise Provides.”

This section provides for the distribution of the surplus revenue during the second of the three periods marked out by the Constitution (see secs. 89, 94). The characteristic of this period is that there is now a uniform tariff for the whole Commonwealth, and absolute freedom of trade between the States (with the temporary revenue-protecting exception in the second paragraph of sec. 92). Secs. 90 and 92, whose


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operation has been suspended “until the imposition of uniform duties of customs,” are now in operation, and the commercial unity of Australia is an accomplished fact.

This is the period during which the financial provisions of the Constitution will be put to their first and severest test. So long as each State retained its own tariff, the disturbance of pre-existing conditions was slight; the basis of revenue and expenditure in each State was very much as it had been during the old provincial regime, except for the inconsiderable item of new federal expenditure, borne in proportion to population. But now the provincial tariffs have disappeared; customs taxation throughout the Commonwealth is on a uniform basis; and each State must accordingly regulate its budget, both as regards local expenditure and local taxation, to the new circumstances. The difficulty of establishing a common tariff has been the “lion in the path” for many years, and its final establishment must inevitably be followed by extensive financial rearrangements.

This period has a minimum duration of five years; and at the expiration of those five years it will still continue until the Parliament, under sec. 94, has substituted some other basis of distribution. The expiration of the five years does not annul this section, but merely annuls its sanctity as a constitutional provision, and makes it alterable by the Parliament, subject of course to the provisions of sec. 94.

Any disagreement between the Houses on the question of the new basis will not leave the Commonwealth without a financial system, but will merely prolong the operation of this section.

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