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11. Chapter XI Getting Nearer Federation

A FEW days after my Budget Speech Sir Henry Parkes asked the House to suspend the Standing Orders in order that he might bring on a debate on the federal question.

In the course of his speech he paid a tribute to Mr. Barton, and especially admired Mr. Barton's way of viewing the Draft Bill. Sir Henry said: “He” (that is, Mr. Barton) “pointed out that the mere phraseology of a Bill, the mere framing of an instrument to be called on paper the Constitution of a country, was nothing; that it was the people who enjoyed it, and had the grit to breathe their spirit into it, which made it a Constitution fit for free men. And that is the case at all times and all over the world.”

This view is the only conceivable excuse for the course Sir Henry Parkes and Mr. Barton followed in not taking a stronger stand in the 1891 Convention against the representatives of the smaller states.

Such views appeared, and still appear to me, absolutely unsound, because any new Constitution should represent the nearest approach to perfection in principle and in expression possible. Evolution from the best provision is infinitely better than evolution from anything less than the best. That observation

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applies, I think, with the greatest possible force when the new system is to be embodied in a statute, governed by strict rules of construction, and to be interpreted in all cases by a court of law. No alteration would be possible unless four of the six states each showed a majority in favour of it, and even then there must be a majority in the total number of votes. It ought to have been obvious that there were vexed questions raising important issues between the smaller and the larger populations, and that upon these there was a necessity for a clear agreement on just principles. The men from the smaller States never lost sight of these considerations. If Sir Henry Parkes and Mr. Barton thought that nothing better could be done the course of events proved that they were mistaken.

In order to interfere as little as possible with the freedom of the Legislative Council, in dealing with the machinery part of our land and income tax proposals, I introduced that in a separate Bill, leaving the rates of the taxes for subsequent measures.

The Bill was supported in the Assembly by large majorities at all stages. But there was one incident which created a tangle of a very serious kind. It arose over the question of exemption. There were some supporters of the Bill who did not believe in exemptions from land tax at all. These members and the direct opponents of the Bill, when they voted together, created an awkward situation.

We adjourned until February 26th, 1895.

At my invitation, as the Premier of the senior colony, there was a Premiers' Conference at Hobart

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to give the Federal movement a fresh start. No better idea of the need of this could be conveyed than the description given by Mr. Deakin—I think in an interview—and which I saw in one of the pamphlets in the Royal Colonial Institute series:

“The workaday masses remain unreceptive and irresponsive. … Appeals to organise have been frequent. What is their net result? … We have raised no electioneering army, conducted no regular canvassing campaign. Have we even a volunteer company on which we can rely? Unquestionably what all Federalists are striving against is the inexhaustible inertia of our populace as a whole.”

The Premiers of the whole of the six colonies were represented. Two—those of Queensland and Western Australia—were rather doubtful. The other four were resolved.

We agreed upon a draft Bill to serve as a basis for legislation. The electors were to be asked to elect ten representatives from each Colony to meet to draft a Constitution.

A motion of want of confidence moved by Sir George Dibbs was defeated by 66 to 27.

During the progress of the Machinery Bill the member for Flinders, Mr. B. R. Wise, moved an amendment which would have killed our land tax, and the Government too, if it had been agreed to. What made the situation critical was that he had persuaded the Labour members to accept it, and some of my own supporters were in favour of it. The mover quite candidly gave me personal notice of his ideas, assured me of his friendly intentions, and urged me

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to accept the principle of his proposal, which was that amounts paid, or contracted to be paid, to the State for the purchase of land should be deducted from the assessment of value.

In New South Wales, a new country, all the land, of course, belonged to the State at first. When the free grant system ended Crown lands were sold by auction, both town and country lots, and during the long period that followed endless subdivisions of purchased lands took place. In such cases there would be no benefit from the concession. By a gross abuse of the systems dealing with Crown lands during the previous twenty years, enormous areas in the interior had gone to form great estates, and as the tax was on the unimproved value, to deduct the purchase money from that value practically set free from the tax the men who ought to pay the largest amounts. This, of course, would have reduced the whole scheme to an unjust absurdity.

Knowing the gravity of the crisis, I made a great effort to persuade the Labour Party to reverse their intention. Fortunately I succeeded, and Mr. Wise's amendment was defeated by 53 to 34 votes.

The only other critical stage in the history of our land taxes arose immediately afterwards on the question of exemptions. The Government favoured an exemption of £500. Some thought the exemption should be larger, some that it should be smaller, others that there should be none.

The effect of these various views was very curious, and developed a situation which might well have put us in a ridiculous position. Division after

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division took place in which each successive proposal was negatived. First, a £500 exemption which we favoured was negatived by a majority of 2, then £1,000 by a majority of 27, then £400 (which I proposed) by a majority of 1, then £650 by a majority of 22, then £550 by a majority of 31.

At this stage I had to take up a stand and make a final effort, proposing £475. I consider the attitude of Sir George Dibbs and the members of the Opposition in this case to have been most generous. Sir George, backed up by his followers—all bitterly opposed to the Bill—responded to my appeal, and saved me from some of my own supporters. The £475 was carried on division by 69 to 14.

Our Crown Lands Bill went to the Legislative Council on November 8th, after a division of 63 to 7 on the third reading, and the Land and Income Tax Assessment Bill went up on March 20th, after a division of 44 to 24 on the third reading.

The next day I moved the second reading of our Local Government Bill. The Municipalities Act of 1867 stood undisturbed on the Statute Book, with the result that only a small area was municipalised. Victoria, Queensland, and South Australia were a thousand times more advanced, because they had not left it to the discretion of their people whether they should tax themselves for local improvements or leave such matters to the public departments, to be paid for out of the national Treasury. This choice, as I have pointed out elsewhere, was left to the inhabitants of New South Wales—with the inevitable result.

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It was a heavy undertaking to propose at one and the same time a universal system of local taxation and national land and income taxes; but my colleagues and I felt that the foundations of finance and economy should be laid in a system of local government, which would develop the civic virtues of our people, inducing them to have some regard to prudence and good management by making them tax themselves.

There was nothing new in such desires. Every Government expressed the same views and professed the same zeal. But the undercurrents of our political life were always adverse. The “local member” was not keen, nor were his constituents, as a rule.

After carrying the Bill through Committee, Mr. Watson moved a new clause to abolish the system of the plural voting of property owners and to give a vote to each occupier.

This proposal went farther than any law then in existence in Australasia. In New Zealand and South Australia there was plurality up to six votes, in Victoria and Queensland up to three, and in Tasmania up to seven.

The new clause was carried in a small Committee by 31 to 25 votes. It made the passage of the measure in the other House impossible, and in order to prevent a gross waste of time we resolved to test the question whether a majority was prepared to adhere to the provision. I gave notice that I would ask the Committee to reverse the decision, or we would drop the Bill. The Committee, by 47 to 42, refused to drop the amendment, and the Bill was thus, at the

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last moment, brought to a sudden end, after all its other provisions had been substantially approved.

The Financial Statement I delivered on May 9th, 1895, was the most important of the series, because I then fully unfolded our fiscal policy. I defined our three greatest objects to be direct taxation, a measure to free industry by means of a short and simple tariff, and a thorough reform of the Public Service. I proposed a tax of 1d [?]. in the £ on the unimproved value of land. I pointed out that the tax, after allowing for exemptions up to £475, would not amount to more than 40s. in 11,000 cases, 40s. to £6 in 2,800 instances, from £6 to £18 in 7,400 holdings, from £18 to £40 in 5,800, and to sums over £40 in 1,600 cases only.

I proposed an income tax of 6d. in the £ with an exemption of £300, of which every taxpayer got the benefit.

We hoped by direct taxation and the reform of the Civil Service to prepare the way for a light revenue tariff of five heads, probably the shortest ever proposed.

Although we intended thus to remove at once the whole of the protective duties imposed by our predecessors, there were other duties which had been on our tariff for many years. These I proposed to remove by June 30th and the following year. There were some exceptions, which were to disappear in five years. The permanent tariff would be confined to spirits, wines, beer, tobacco and cigars, and opium.

Turning to the estimates of revenue and expenditure, I announced that the accumulated deficiencies

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on the old system of accounts up to December 31st, 1894, would be £1,322,000, and that the deficiency on the half-year following would be £240,000 instead of £280,000.

During the previous four months I only allowed £15,000 to be taken from the Advance Account; and my supplementary estimates did not exceed £37,000, of which £23,000 were for the unemployed.

I estimated the revenue for the first of the new financial years, from July 1st to June 30th, 1896, at £9,118,000, and the expenditure on the new basis, that of actual cash outgoings during the year at £9,062,000, an estimated surplus of £56,000.

On June 20th a crisis arose, owing to the conduct of the Legislative Council, which resolved, by a majority of 41 to 4, that the Land and Income Tax Assessment Bill should be read “this day six months.”

The taxation of land and income had often been approved by the Legislative Assembly, but no Government could ever persuade the Council to pass such measures. A large number were hit by such taxes, and the financial institutions with which they were connected were also affected. As the Councillors sat for life no power could shift them. When they threw out important taxation measures before, there was great indignation in the Assembly, but no Government had ever appealed to the people against their decision.

As we had as a Party taken to the country a policy of tariff reform and land and income taxes, and the electors had returned a large majority of members pledged to that policy, and as all our measures to give

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effect to that policy had also passed the Legislative Assembly by large majorities, the summary rejection of our machinery measure seemed quite unjustifiable. There was not even the excuse that the other House contained a majority of Protectionists, because few of its members belonged to the Protectionist Party.

When the news came to our House we were taking the second reading of the Bill imposing the income tax. I was asked to stop, but I refused, and the Bill was passed by a majority of 56 to 17.

On the Tuesday following the rejection of our Bill I made a Ministerial statement. I admitted that on the words of our written Constitution the Council could act as it had done; but there were certain vital, though unwritten, rules which had prevailed in all of the Parliaments within the Empire, and one of these was that the taxation of the people could only be moulded by their representatives. We had kept the taxing Bills separate from the Assessment Bill, so that the Council should have full right of amending the latter in Committee; but in throwing that Bill out the Council had declared war against not only the Legislative Assembly, but also against the verdict of the electors.

The Government felt that it could not accept such a humiliating and unconstitutional situation. It had therefore tendered certain advice to the Lieutenant-Governor, which His Excellency had been pleased to accept. I had advised a dissolution after certain measures of urgency free from party lines had been dealt with. I added that our advice had been accepted unconditionally.

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The dissolution, of course, did not disturb the seats of the Legislative Councillors. But it was extremely hard upon the Legislative Assembly, which had to face two elections in twelve months.

Our supporters, without an exception, applauded our decision, and cheerfully consented to the dissolution.

I closed with the statement that Ministers would first submit, and then take for the opinion of the electors, a Bill radically reforming the Constitution of the other House.