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§ 404. “If.....the Duty on Any Goods Under this Section is Higher than the Duty Imposed by the Commonwealth.”

Without this provision, it might have happened in some cases that a preference would be given to goods imported from abroad over similar goods produced within the Commonwealth. To prevent this, it is provided that in such a case the duty collected under the federal tariff shall be on the higher scale. The result is that, notwithstanding sec. 51—ii., a federal law with respect to taxation may, in effect, discriminate between the State of Western Australia and the rest of the Commonwealth.

Financial assistance to States.

96. During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides405, the Parliament may grant financial assistance to any State406 on such terms and conditions407 as the Parliament thinks fit.

HISTORICAL NOTE.—An objection raised both to the contribution basis and to the population basis of distributing revenue was that they altogether ignored the needs of the States, and would result in some States getting back more than they wanted, whilst others would get back less. In fact, all the alarming forecasts of the need of an excessive tariff had arisen from the assumed obligation of increasing the contributions of the “necessitous” States—an unfortunate epithet which, when first used, meant the States to whom a high tariff was a necessity, but which was twisted by critics into a supposed confession of bankruptcy. These considerations had led Mr. R. M. Johnston,


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the Government Statistician of Tasmania, to propound an “Inopimeter Method,” or basis of distribution according to needs. “If there be any surplus to return let it be distributed on the basis of the Inopimeter Method—that is, to distribute such surplus on the ascertained proportion of the percentage which each State's loss of income caused by abolition of the local tariff and excise bears to the corresponding aggregate loss of the six colonies.” (Federal Finance: Observations on the Difficulties of the Problem, R. M. Johnston, 1897.) As a general system of distribution, this scheme had no chance of adoption—the fear in New South Wales being that it would be worked for the benefit not of the neediest, but of the greediest States. However, there was a strong feeling that there ought to be some scope for mitigating the strict severity of the mathematical basis of distribution laid down in the Bill. Accordingly, at the Melbourne session, Mr. Henry proposed the following clause:—“The Parliament may, upon such terms and conditions and in such manner as it thinks fit, render financial aid to any State.” This was supported by a few members, but was generally objected to as being too indefinite, as making the Commonwealth a “rich uncle” for the States and casting a slur on their solvency, as opening the door to continual applications for “better terms,” and as being a disastrous commentary on the efficiency of the financial clauses. It was contended on the one hand, and stoutly denied on the other, that by necessary implication from the nature of the union the Commonwealth would have power to come to the assistance of the States whenever necessary. A limitation to five years was suggested, but eventually the clause was negatived. The proposals which then followed, by way of amendments to the West Australian clause (see Notes to sec. 95), were all based on the Tasmanian idea of distribution according to needs, or “net losses,” but they were all rejected. (Conv. Deb., Melb., pp. 1100–22.)

Premiers' Conference, 1899.—In New South Wales there were forebodings of the necessity, under the draft Bill of the Convention, for a high tariff—deduced sometimes from the basis of distribution, sometimes from the Braddon clause. At the Premiers' Conference the clause as it stands was inserted as a part of the financial adjustment; partly as a compensation to the smaller States for the amendment in the Braddon clause, but chiefly to meet the difficulties that might be caused, in the first few years of the uniform tariff, by the unyielding requirements of the distribution clauses, and to remove any possible necessity for an excessive tariff.

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