COMMON~-JU~LTflOr ~uSTR~~U~i

Fo~ ut~ot—~
 COMMONWEALTH OF AUSTRALIA4

THE CASE FOR UNION.

A REPLY
TO THE

Case for the Secession of the State

of Western Australia.

Prepared i’y a commillee con3isling of:

SIR ROBERT GARRAN, K.C.M.G., K.C. (formerly Solicitor.
General of the Commonwealth);
The Honorable i. I-I. KEATING (formerly a Senator foc—tle’~-
State of Tasmania):
WILLIAM SOMERVILLE (a memti~rof the Arbitration Court
of Western Australia): and
DAVID JOHN GILBERT (of Perth, ~VcsternAustralia).

Issued with the authority of the Go~’emment

of f/se Commonwealth of Australia.

Pñnted and Published for the GOVERNMENT oF the COMMONWEALTh of Ausra*u*

by L. F. JOUNSTON, Government Printer ha’ the Commonwealth.
898G.
 FOREWORD..

Primarily, this Case for Union is a reply to the Case for

Secession published by the Government of Western Australia.
A reply to that Case, however, involves much more than a
mere cliallengmg of the specific facts therein alleged, which, though
many in number, cover a very small part of the whole field of
vision.
The Case for Union, though its pages are fewer, takes a’widcr
sweep. it presents, so far as its brevity allows, a comprehensive
view of what Federal Union has already accomplished for the
people of Australia, and of what it bids fair to accomplish—not
only in helping the industrial development of the continent and
strengthening the powers of the people to cope with the difficult
social and economic problems of the day, but also in giving to
Australia a national outlook and an assured status in world affairs.
Whilst therefore the immediate purpose of the Case for Union
is to remove misapprehensions which seem to prevail in some
quarters and which are chiefly responsible for the present episode
of the secession movement in Western Australia, it contains much
matter of general interest to the prople of all the States, and not
elsewhere readily accessible, as to the working of the Federal
system in Australia during a third of a century; and gives concise
information, for instance, as to the relations between the Common-
wealth and the States, the effects of the Financial Agreement,
the operation of the Commonwealth tariff, the trend of judicial
decisions, and the national importance of~Commonwealth policy
in relation to such matters as the sugar industry, the gold-mining
industry, coastal shipping, and defence.
In short, this is something more than an answer to a. Case
for Secession ; it is an affirmative—and I believe an unanswerable—
Case for Union.

Prime Minister of the Commonwealth.

 TABLE OF CONTENTS.
P&OL
CHAPTER 1.—THE CASE FOR SECESSION .. .. .~. -. 9
So~ WORLD FACTS ThAT M~S’1’ BE PACED ... .. 0
TIlE BEARING OF ThOSE FACTS .. .. .~. 12
CHAPTER 11.—WESTERN AUSTRALIA’S RECORD OF PROGRESS .. .. 14
Sosis PIIENOMENAL Frournis .. .. .. .. 14
AGRICULTURAL AND PASTORAL Ex~ANsroN .. .. 15
MINERALS AND MANUFACTURE .. .. .. .. 15
S1JoDI~N DESCENT To PEssIMisli .. .. .. 18

CHAPTER 111.—WHY SHOULD WESTERN AUSTRALIA WISH TO sEcEDE:? .. 16

CHAPTER IV.—-THE FEDERAL CONSTITUTION AND ITS INTERPRETATION .. 17
IS THE CONSTiTUTION WhAT IT WAS? .. .. 17
111011 COURT DECISIONS .. .. .. .. 17
DISTRIBUTION OF l’OWEES .. .. .. .. 18
TilE DOCTRINE OF MUTUAL NON.TNTEIIPERRNCR .. 20
SECTION 02—INTERSTATE FREE TRADE .. .. 21
AN IMPARTIAL ARBITER .. .. .. .. 22
SECTION 1O~A OF TIlE CONSTITUTION .. .. .. 22
(FINANCIAL AOREEMFNT) .. .. .. .. 22
INDUSTRIAL ARBITRATION .. .. .. .. 24
TAXING AND SPENDING POWER .. ,, .. 25
DUMPING AND TilE INTERSTATE COMMISSION .. 26
AMENDMENT OF TIlE CONSTITUTION .. .. 27
COMMON WEALTH, STATES AND PEOPLE .. .. 25
PUSIIE!) AND CAJOLEL)” .. .. .. .. 29
hAS FE E)ERALISM FAILED IN AUSTRALIA? .. 30

CHAPTER V.—FINANCIAL RELATIONS BETWEEN COMMONWEALTH AND

STATES—
PAYMENTS TO STATES GENERALLY—
BRADDON CLAUSE AND PER CAPITA PAYPIENTS .. .. 31
WAR OBLIGATIONS .. ,. .. .. . ..

FINANCIAL AGREEMENT PAYMENTS .. .. .. 32

MAGNITUDE OF COMMONWIIALTIT LIABILITY .. .. 33
PAYMENTS TO WESTERN AUSTRALiA FAR.
TICULARLY—
SPECIAL GRANTS .. .. .. ,. .. 33
OIlIER GRANTS .. .. .. . .. .. 34
ROAD PAYMENTS .. .. .. .. .. 34
FINANCIAL AGREEMENT .. .. .. .. 34
hEAr, ..
RETURN TO STATE PER .. .. .. 34
TIlE WESTERN AUSTRALIAN BUDGETARY POSITION—
- SOURCES OP DEFICIT .. .. ..

ADJUSTING TAXATION.. .. .. .. .. 36
PURPOSE OF THIS CHAPTER .. .. •. 36

CHAPTER VI.—GENERAL BENEFITS OF FINANCIAL AGREEMENT .. .. 37

 .6

- - -Tabi. of Contonts—continu~d.
-

PAGE.
~CHAPTER-, - VlI.—THE COMMONWEALTH BANK AND WESTERN AUSTRALIA 38
SFRWnNO TEE RISKS .. - .. .. 38
MornuzA’no~io~Got~ AND TREASURY BILL FINANGI 30
EXOITANOE RATE .. ..
39
A O1~E~x~
BANK FOIl WESTERN AUSTRALIA 39
W~sT~Ic AUSTIIALLt AND TEE ExCHANGE RATE 40
E~&lmwYFn~ANcH .. .. 40
MISCELLANIIOUS SERVICES .. ., . - 40
CHAPTER VIII.—THE TARIFF .. ,. 41
“TuE GE~&TEsTBURDEN” 41
INCThZIIOR OF TAIIIFF .. 42
“Exoas~ Cosxs” ... .. . .. . * 42
UPIORT o~T&ni~~ .. - 43
PS1OPOErrON OF REVENUE AND- PROTECTIVE DUTI-~ 44
FAIIM AND INDUSTRIAL PRICES .. 46
G~~-ra
OP COSTS AND PRICES 47
RI~uovAL op SWtORARGES AND PRORIBITIONS
PBIMAOJS REDUCTIONS - 48
LoWEuSE PREFERENTIAL DirrEls 48
LYONS AND SCULLIN TANu~is 49
LYONS U4n BRUCE-PAGE TARm~S
Au INESCAPABLE CoNcLUSIoN 60
Two INfORMATIVE GRAPES 50
AU8IuA.u Pnio~sorrEu BELoW IMPoRT PARITY 52
A CAZDrNAL ERROR IN TIlE CASE 52
EXCESS COSTS ~VEONGLYESTIMATED 53
A FIOUBE TEAT CA~NoTSTAND .. ~. .. - 56
THE “BURDEN” ON PRIMARY PRODUCTION 57
Gooos THAT iiu~ FREE ..~ .. ... 57
QALVANJZED IRON, FENCING \VIRE AND WIRE Nrl’rT~a 57
AGRICULTURAL IMPLEMENTS .. .. 58
Dowuwnrn TREND OF AUSTRALIAN PRICES 59
AUSTjw~N,ARGENTINE, Sotrrlt AFRICAN AND N~wZEAt~ND
PIllaRs 59
AtisTiuLui~INDUSTRY -BENEFITS PRODUCER 60
PEIMAXY INDUSTRIES THAT ARE PROTECTED 60
WESTEzic SECONDARY INDUSTRIES. 62
A SECESSION DILEMMA 02
CHAPTER IX.—DUT1ES ON STATE GOVERNMENT -IMPORTS 63
War FISHE ENTRY IS NOT PH1~11TTRD 64
UNJUST TO PRIVATE ENTERPRISE.. .. - - 64
WURUE Dwrizs ARE WArVED .. . 63
Tna TEN L000sto!rivEs AND TIIIRTY.T*O BOILERS 65
- PERTH POWER STATION 05
CHAPTER X.—COASTAL SHIPPING - 65
- Puiu’osis 011 TIlE NAVIGATION ACT
• 05
- - VALUE OX COASTAL MAiuuIh - 66
- - FINDINGS 011 TWO BoAS.1DS OP INQUIR! ..

Exz~rIoNsFAVOURING Nonrn.WEST 67
 7
Table of Contents—continued.
PACE.
CHAPTER XI.—THE SUGAR INDUSTRY .. 67
FACTS NOT KNOWN OR Fonaoi’rHu 67
CONSEQUENCES OF WAR 65
CONFLICTING INTERESTS OF PRODUCER AND CONSUMER 68
How OVER-PRODUCTION CAME ABOUT 6,
EFFORTS TO EFFECT ADJUSTMENTS . -. 69
Two SIDES OF-A DIFFICULT PROBLEM .. 69
“WhEAT QUEENSLANDERS SHOULD FORGET AND AUSTRALIANS
I1EIIEMBEII” .. .. .. * 70
WIIAT TIlE SUGAR INDUSTRY MEANS TO “WRITE AUSTRALIA”.. 70
CHAPTER XII.—THE GOLD MINING INDUSTRY ~.. — 71
AN UNJUST INDICTMENT .. TI
COMMONWEALTh AID TO REVIVE TILE INDUSTRY 71
TIlE TRUTII ABOUT TIlE Gotn BOUNTY 72
EXE1flTION FROM INCoME TAX .. 72
CHAPTER XIII.—SOME MINOR MATTERS 73
CHAPTER XIV.—DEFENCE - .. . * .. 74
CHAPTER XV.—THE UNITY OF AUSTRALIA 74
Two EC0N0IIIO UNITS 74
“FOR Con HAS MADE lINE ONE” 75
DIFFERENCES OF ECONOMIC OUTLOOK ARE COMPATIBLE WITH
POLITICAL UNION .. .. 76
DiST~tNC1~s . . .. .. 76
TIlE CASE OF NOVA SCOTIA .. 7,
BORDER CUSTOMS hOUSES .. 77
CHAPTER XVI.—AFTER SECESSION—WHAT? .. .. 77
WhAT WESTERN AUSTRALIA WOULD LOSE . * 77
TILE SECESSION BUDGET .. 78
TILE COMMONWEALTh ESTIMATE .. . * 79
TIlE FINANCIAL REALITY—NOT A GAIN BUT A LOSS.. 51
- WESTERN AUSTRALIA’S CREDIT POSITION AS A
DOMINION - - .. .. .. 82
TIlE NEW DOMINION’S TRADING OUTLOOK 82
CHAPTER XVU.—SUMMAFIY OF WHAT THE FACTS DISCLOSE 83
CHAPTER XVUI.—SQME CLOSING WORDS .. .. .. .. - 85

APPEND ICES. -

APPENDIX I .—APPROX IMATE ALLOCATION AMONGSTTHE STATES OF RECEIPTS

AND EXPENDITURE .. .. 87
APPENDIX 2.—COMMONWEALTH AND STATES—PUBLIC DEBT 89
APPENDIX 3—-COMPARISON OF TAXATION ON VARYING INCOMES IN DIFFERENT
- STATES .. .. .. .. 90
APPENDIX 4.—GOODS OF SPECIAL USE IN PRIMARY PRODUCTION 91
APPENDIX 5.—PRICES OF GALVANIZED IRON ..

APPENDIX 6.—PRICES OF FENCINO WIRE .~ .. 93

 8

Tahie of Contents—continued. -

Appenthces—cont-inued.
APPENDIX 7.—PRICES OF WIRE NETTING . 94
APPENDIX 8.—PRICES OF SUNSHINE HARVESTER IMPLEMENTS .. - 95

APPENDIX 9.—SUNSHINE FARM IMPLEMENTS .. 96

APPENDIX IO.~.—8UNSH1NEFARM IMPLEMENTS—PRICES PRE- WAR AND IN 1934 97
APPENDIX 11.—PRICES- OF DUPLICATE PARTS OF THE SUNSHINE HEADER
- HARVESTER .. •. .~ 98
APPENDIX 12.—LIST OF - DUPLICATE - PARTS OF THE SUNSHINE HEADER
HARVESTER .. .. .. 99

APPENDIX I3.-~-COMPARISONOF PRICES OF PARTS FOR TRACTORS 99 -

-APPENDiX 14.—PR1CES OF DUPLICATE PARTS FOR PLOUGHS 100

APPENDIX 16.—PRICES OF COMPARABLE-FARM IMPLEMENTS IN NEW ZEALAND
AND AUSTRALIA .. .. .. .. .. -.
100
- APPENDIX 16.—FARM IMPLEMENTS.. .. .. 101

APPENDIX 17.—PRICES OF COMPARABLE IMPLEMENTS iN ARGENTINE AND

AUSTRALIA .. .. .. - 102
-APPENDIX I8~—’-PRICES OF COMPARABLE IMPLEMENTS IN CANADA AND
- AUSTRALIA .. - .. .. 103
APPENDiX 19.—TARIFF ITEMS WHICH PROTECT THE PRIMARY PRODUCERS - - 104
5 105
-APPENDIX 20.—SYNOI SIS OF A DEFENCE MEMORANDUM
 CIL&PTEII I.

THE CASE FOR SECESSION.

The “ Casa thr’ SCcess~on “, prepared by by the Stat.
a cOmmittee appointed
Parliament and iSsUed by the State Government the Petition to
in support of
Westminster, covers, With appendices, 489 octavo pages. It contains much detail
not all of which is strictly relevant; it gives a considerable place to the utterancee
of various ~ of prominence in the early stages of the Federation which,
however intercstjllg the constitutional student, liave~adoubtful application to~
to
the practical problems of the moment; and it incorporates many facts- relatng -
to the State generally which obviously are intended merely for the information-
of readers outside Australia. Nevertheless, regarded from the restricted standpoint-
of the authors, it is a comprehensive statement of grievances. The most -
pronounced cannot complain that in building reasons
partisan of tile authors’ views
fur IlatloIlal severancethey have neglected the things that are very small, however-
much another may deplore their iuimindluhiiess of the things that are very great.
The unbiased reader will note that the grievances from which .Western Australia -

is alleged to have suffered are, in the Case, reinforced by a host of other gri~vancee
from which the authors fear that Westerii Au~t-raIia will or. may “suffer “, “ “~

in hypothetical circumstances. -

We do not attempt Its this reply to (ICily o~belittle the real disabilities from- -

which Western Australia suffers-, and to which full, consideration is given later-
on; but that secession is the only relnedy, or is a remedy at- all, we completely
disahlos~.
Looking at the Case in the light of the broadest and most vital aspects of
Commonwealth and State relationship, we remark first upon its narrow and even
parochial conception and outlook. Nowhere does it reveal an Australian
consciousness or appreciation of the national advantages which have accrued and
-

must cotitinue to accrue through the Union, nor does it reveal an awareness of th.
significance to the Stat-e of the changes that have takeii place in tile world since
Federation Was inaugurated. - -

SOME WORLD FACTS THAT MUST BE FACED.

Before dealing with the State’s specific grievances as set out in Caso let us
consider some of these world developments. Federation was born when th.
South African war was just closing. The Empire emerged from that war with
enhanced Strellgtll and a (leepdfled sense of solidarity: Britain was in absolute
command of the seas. She was at i-ho zenith of her commercial and fInancial
power, and under her leadership the countries composing the British family
prospered and were secure. In particular, our young Commonwealth lay safe in her
Southern isolation without a cloud on her national horimn.
For a number of years these happy conditions continued, albeit those years
were witnesses of the war which-marked the rise of Japan to a predominant position
in the Eastern hemisphere. That was a world development of major importance,
and while it created n~difficulty for Australia at the time or since, it did involve
a -profound change in the distribution,of power and, influence to which Australia
could not be indifferent. - -

L~stercame the crash of the Great War in which the Australians, for the first
time, fought as one under the flag of the young Commonwealth, and over 60,000
of them—of whom a full proportion went from the State of Western Australia—
consecrated with their lives the common brotherhood of Australians. Had the
Commonwealth not existed, Australian participation in that wars not only in the
fighting line but in the provision of supplies- and munitions, could not have been
co-ordinated, and would not have been t-he great and effective effort that it was; -

and in all probability the shores of Australia would not have been exempt from
hostile attack. - - - -

It is imj)ossible to over-emphasize the significance to Australia of the changes -

wrought by the Great War. The War crashed Empires and remade the map of- - -

Europe and of much of the world outside Europe. It brought into being new--
 ii -

nations, altered forms of government and changed the distribution of national -

power. More, it unloosed new forces, scrapped settled doctrines, destroyed

seonomic systems and left a legacy of confusion of which the end is not yet.
The League of Nations, which was born of the war to end war, arid- of which
Australia is a member, although it has done much, has not realized, so far, the
larger hopes of its creators. It has not been able to prevent the withdrawal from
its membership of one great Power of Europe and of time greatest Power of Asia,
which is Australia’s ncighbpur ; nor has it been able to prevent military operations
on the mainland of Asia of vast international consequence. In the face of disarma-
ment discussions, which have extended over years, the principal nations are
preparing for more armament, with the result that the international outlook is
once more shadowed with forebodings. In the forefront of the changed position
stands the fact that Britain’s supremacy on the seas is no longer unquestioned.
If national unity was a defence desideratum in the period of greater shelter, surely
it is an imperative condition of maximum security in our vastly more exposed
situat-ion of to-day. That is the first world fact of significance to the Australia
of 1O34~
The second fact, little less in importance and of ~sharp domestic incidence at
the moment, is the world economic situation which is the war’s aftermath. It is
not necessary here to attempt to unravel the tangled causes which hnve upset the
international exchanges, pressed international trade into a shrinking jacket,
disturbed the balance of domestic industry and produced unprecedented loss of
wealth and employment in almost every country on the globe. It is sufficient
to note that the catastrophic fall in export prices, the breakdown of the established
mechanism of international trade, and the financial difficulties arising from these
conditions, forced upon all nations drastic readjusiments of their financial
structures.
Australia, with her large dependence upon the export primary industries and
her heavy indebtedness, felt the effects of price collapse earlier and more acutely
than most other countries The prompt and comprehensive efforts to affect the
adjustments necessary to meet that collapse, and the measure of success which
attended those efforts, were duo to the fact that Australia possess~da Federal
mechanism capable of ensuring the uniform co-operation of the States in a
continent-wido policy of a drastic and unprecedented character, and of carrying
that policy into political and financial effect. Thus Fedcr~tionsaved every
Australian State from internal breakdown. The States, separately, would not
havo had command of the means needed to cope with the extraordinary needs
of an abnormal situation.
Whilst the Federal action taken in co-operation with the States has had the
effect of averting time threatened disaster and steadying the internal position,
much more remains to be done before the economic balance is completely restored.
What this more shall be depends largely upon the degrees to which time difficult -

external problems of finance and trade prove tractable, and these problems can -

be handled adequately and effectively only by the national authority.

That this may be more fully understood, let us look broadly at some of the
outstanding aspects of the situation. The chief weakness of the Case in its
relation to present circumstances is its implicit assumption that we are still
living in the economic world of the prosperous twenties. All that has happened
as a result of the citastrophic fall in prices in the last five years of depression
is disregarded, and the Case is stated in terms which imply a natural return
after Secession to pre~dopression or normal” conditions, especially in the
“

sphere of time international exchange of goods and sOrvices. But w~have moved
far away from the prc-depression world, and such a return to the conditions
which then obtained, however devoutly to be wished, is now practically ceitan
never to be realized. -

The old freedom of international trade is gone, perhaps for ever. Trade was
never completely free even in Great Britain, but it-s regulation was kept
“ “,

within such limits as- to allow a reasonably wide interchange -of goods between
 - ii -

different national economies. Time system of protection to home production -was

in force in many countries, but was always compatible with the continuance of ~
-

large volume of international trade.

- Not only has the international movement of goods now been seriously curtail~d,
butt we are witnessing a recoil from the ideal of flnrestricte(j international trade
even by countries and individuals long attached to it. Mr. •J. M. Keynes the
eminent British economist, has remarked for example :—--“ Over an increasingly
wide range of industrial products, and perhaps of agricultural products also, I
become doubtful whether the economic cost of national self-suflicietiey is great
enough to outweigb the other advantages of gradually bringing the producer
and consumer within the ambit of the same national, economic and financial
organization.” The fact that Britain has abandoned her traditional policy of free
trade is surely a significant omen for Australia’s future.
Time big new factor which has to be reckoned with is the trend of opinion and
policy towards planning on a national scale. Economic planning is
economic
being increasingly advocated as an essential for the fullest use of the world’s
productive technique ; and, in the present state of the world’s affairs, it is
inevitable that it should follow national boundaries.
We have been familiar for many years with the planned economy of Soviet
Russia ; but Russia, while alone in -her particular experiment, is not the only
country in which planning has already made rapid strides. A similar form of
development has been taking plaee in Italy, and is now proceeding in. Germany
amid the irish Free State. A large body of opinions in the United States is
favorably disposed to economic planning. How far what has beets styled the
Roosevelt revolution” will actually take time United States along this road is
yet uncertain, but it is significant that attention h~is beets focussed almost -

exclusively on the internal situation, international trade questions for the time
having been relegated to the background.
In addition to the development of planning on the grand scale, we have to
reckon with conditions in most of time coumitries of Europe which are inherited
not from the schemes of enthusiasts for planning,” but from the desperate
“

attempts of harassed governments to secure their own primary producers against

the effects of the falling price levels of primary products during the depression,
and to provide new openings for their own unemployed. As is now only too
well-known, time results of these measures—which havo taken the form of increased
tariffs, quotas, embargoes, bounties, exchange restrictions and so forth—have
been increased production of foodstuffs and of certain other commodities in whi~b-
Australia, as an exporting country, is vitally interested. The very increases liz
production which have thus been brought about have contributed to strengthen-
already strong nationalistic desires to make each country as self-sufficing as
possible in time matter of foodstuffs and any other commodities in which sell-
sufficiency is- remotely practicable. -

The latest adherent to this economic policy, -particularly in relation to the

home production of foodstuffs, is Great Britain, the traditional borne of free trade
in thought and practice. Protection has beets definitely espoused as a national
policy by a National Government, and determined efforts are being misdo to foster -

and eneoura~e the British agricultural, ;dairying and stock-raising industries.

The Wheat Act of 1932 and the Agricultural Marketing Act of 1933 have already
brought into being a crop o-f schemes for subsidizing or protecting by tariffs and
quotas the production of wheat, oats, sugar, hops, milk and milk products,
potatoes, eggs, poultry, pigs, beef, veal, mutton and lamb. How many more
-

commodities will be brought into line, and how far home production will eventually
be expanded, it is as yet impossible to forecast. But the list is already impressive
enough, and the expressed imutent-ions of the British Minister for Agriculture are
strong enough, to raise very serious doubts as to the possibility of extending, or
even of maintaining, the existing British market for Australian primary produce.
 12
In regard to all this we are not concerned hero with praise or blame. What
we are concerned with is the prospect for the future. Whether we like or dislike
planning, whether we think national self-sufficiency as a world policy good or bad,
is not to the point. Time inexorable facts of the situation remain, and they indicate
the continued ascendancy and probable further development of ideas of national
economic self-sufficiency, at least for some time to come.
- THE BEARING OF THESE FACTS.
Tho bearing of these considerations on the secession issue is simple and direct.
Western Australia, above all States, is dependent on export production. It is
not necessary to quote figures in support of this statenient ; it is sufficiently
acknowledged, and even emphasized, in the Case presented. Paragraph 336 is
worth repeating:
Time trade and production tables which have been furnished in this
chapter significantly disclose that Western Australia exports almost two-
thirds of her total production. On account of its small population Western
Australia is not in a position to consume locally a large proportion of its
primary products, amid has, therefore, to rely on exports overseas to (lisposo
of time surplus. Hence, in respect of wheat-growing, which is time mainstay
of the State, it will be found that an overseas market has to be found for
90 per cent, of the wheat produced. Wool is also an important product,
apd practically the whole of the total wool-clip must be marketed overseas,”
The remarks in this paragraph come 4o the heart of the matter, for they portray
vividly the problem which Western Australia has to face in the future. If, as
claimed in the Case, Western Australia’s voice, as a State in the Commonwealth,
is small, how much smaller would that voice be, if raised by her, as an isolated
community, in world-bargaining for export markets!
It is impossible to read the future at all clearly, but it is certain that Western
Australia, as a predominantly exporting State, ‘is far more likely to be successful
in the struggle for markets if it faces a potenti~llyhostilC world with the backing
of Australia’s full national strength. If the markets that can be offered for
-

imported goods prove sufficient to provide an outlet for Australian exports, then
a population of 6,600,000 has more to offer than a population of 440,000. In the
outlets already provided Western Australia has now more titan her proportionate
~harc. If, as is possible, even reciprocal agreements are not enough, Australia as
a whole has still to remit abroad something over £30,000,000 sterling per annum
to settle her interest amid dividend obligations. It is to be expected, however, that
Great Britain, as practically our sole creditor, would accept our exports at least
to this amount, and there is no reason why Western Australia should not secure
a proportionate and possibly a larger share of the markets so provided.
Consider the position in which Western Australia would fimid herself if events
should prove these fears for the future of our export markets well founded. The
present plight of the wheat industry affords a good example of what might easily
happen on a magnified scale, not only in wheat, but in the case of many other
important export commodities. It is no longer sufficient to produce good wheat,
nor even to produce good wheat cheaply. It is necessary to find an outlet for
-

it, however cheap it may be. Low prices no longer necessarily provide atm entry
into international markets. It is indeed- a paradox of the present situation that
~-

wheat has been shut out of various European countries because of its very
cheapness. -,

Should the wheat situation be aggravated, and the same difficulties confront
other export commodities, it is ~rtain that Australia will have to plan a
-

re-orientation of her economy. Internal adjustments will, have to be made to

restore the balance disturbed by events in the outside world. To sonic extent
these will tend to come about naturally. Changes of industry from one class of
production to another and of labour from one class of employment to another
will be determined by time promptings of self-interest. Our experience in~thelast
 13
five years, however, strongly suggests that some positive direction and assistanie
during time process of re-organization will be necessary. Whatever form the
adjustments may take the problem will be too big to be solved successfully within
the boundaries of a State. The more dQpefldent a particular State is on the
production for export o these commodities, for wimich time international market
ha~shrunk, the greater will be the difficuthies of re-adjustment. The moral for
Western Australia is obvious. As a small isolated community she would have
little hope of coping successfully with problems of internal re-adjustnieiit to
world changes of the magnitude which must be envisaged.
The views expressed up to this point are perhaps based on a somewhat pessi-
mistic appraisal of time future of inteniationai trade-. It is submitted, however,
that the possibilities of its realization are not so remote that Western Australia
can aflord to ignore them. We have had plenty of evidence in the past few years
of the extremes to which international restriction cams go and little so far to support
the view that time situation is improving or likely to improve. The wheat industry
is still time black spot in our economy, but even now we are receiving hints that
our exports of wool may not automatically find the markets to which they have
been accustomed in the past. It is pertinent to suggest, therefore, that the time
is ripe for reviewing the old habits of thought in relation to economic questions.
For the new conditions a re-adjustment of mind is essential,~botimtowards thw
ever-changing world situation and towards the methods of internal adjustment
that it makes necessary.
The power and -the machinery to take the necessary action to meat the
changing conditions is possessed, and can only be efficiently possessed in Australia,
by- the Commonwealth with its continent-wide authority. We have already had
evidence of this in full mcasimre in the past few years. Trade agreements with
other countries within and without the Empire have been and are still being
negotiated. Currency agreements and shippimmg agreements fall into time same
category. Concerted financial operations in London have given far better results
than could have been achieved by independent States.
Common action has been possible in dealing with the special problems con-
fronting time wheat industry, and commomm action will doubtless be necessary to
implement sucossfully the recommendations of time Wheat Commission.
Instances could be multuplied in which the present trend of world affairs ha~
increased the need for and the scope of Commonwealth-wide policy. Much of
th~action taken has necessarily been experimental, but out of the imnprcmvisations
to meet changing conditions is gradually being built up a fund of valuable
experience for the future. It has this significant characteristic, however, that
-

much of it involves assistance to the Stat-es by the Commonwealth ; and it is this

characteristic which may prove most valuable to a State whose material prosperity
is based on industries some of which have an uncertain future.
This then is the broad position : A Commonwealth, founded 34 years ago,
under conditions of general repose, has been obliged, in its short life, to- meet two
national crises of the firsi magnitude—a world war and a world economic upheaval,
either one of which was a supreme test of the metal of its structure. That it hai
met them both in a manner which has compelled world attention surely justifies
confidence in its capacity to shoulder the greater national and economic responsibility
which the changes in the world now’impose.
Were it otherwise—were it the fact that the Commonwealth had failed the
State in groat emergencies or had developed weaknesses which engendered doubts -

as to its capacity to fulfil the supreme national functions in the time to come,
a State’s desire to withdraw from its place in the national framework would be
understandable even though its proposal fell, as now, in tho midst of world
confusion and uncertainty. But the authors of the “Case in their pro-occupa-
“,

tion with grievances which arise mainly not from the pact of Union, but from the
 14

incidence of particular government policies, leave these over-riding national

considerations out of the picture. That being so, time grounds they adduce lot
Secession must be considered in another relation and in another perspective.
Whatever weight may attach to timem~isclaims for adjustment within the frame-
work of Fcderatiomm~they fall absurdly short of justifying severance of the bond
which has ben time State’s salvation in time of trouble and the strongest guarantee
of its future welfare.

CHAPTER II. -

WESTERN AUSTRALIA’S RECORD OF PROGRESS.

If the foregoing national considerations are admitted to possess time importanee
which we have ascribed to time-rn, it follows that a plea for time dismemberment of
the national body must rest on the clear disclosure of a domestic condition so
~criously prejimdiccd by time Federal bond as to be insupportable. Furthermore
if such a parlous domestic condition exist to-day, as a rOsumit of Federation, it
would be reasonable to assume that it is not a sudden development after 30 years
of minion, but the outcome of a continuous process of adverse influence manifested
first in arrested development and later in accelerated decline. How does this
assumnption square with time imxmpression of Western Australia commonly held and
also with tim State’s realized experience as disclosed in its own official records ?-

For light on thi~point we cannot do better than turn to the State’s statistical
records and particularly to that most interesting pamphlet Cne hundred and
Four Year’s P-roqress compiled by the State Statistician and published by the
Governmnent of Western Australia in 1033. It was first prepared as a centenary
documnment when the State in 1029 was extending cordial invitations to all outside
its borders to conic and acquaint themselves with what had been accomplished
imi time first 100 years, and what the State bad to oiler to investors and new
home-makers in tIme years to come. Neither in this nor other of the abundant
~officialpropagamida can any reference be founèl to the “gravcimmjustice, great
hardship amid severo distress “ or other conditions endangering the whole
“

economic structure and social fabric of the State “—phrases whelm abound in the
Case. -

SOME PHENOMENAL F~GUR~S.

However, let us glance at the statistical record of achievement which is indeed
a phenomenal record. From the date of its foundation in 1829 to October, 1890,
Western Australia was a Crown Colony with a very slow rate of development.
When Responsible Government was proclaimed in 1890, time population had in some
61 years slowly advanced -to a total of less than 50,000 persons. The rapid
development incidental to the discoveries Of gold in the ‘nineties resulted in an
increase of population o about 130,000 in the ten years to the end of 1900, giving
Western Australia a total population of approximately 180,000 persons at the
date of Federation.
- This -period often years was so much influenced by-the gold discoveries that
its phenomenal progress furnished no guide to what the normal growth of Western
Australia might have been outside the Federation. Whether the growth outside
Federation would have been greater or less than was actually experienced inside
Federation it is difficult to say. At all events the progress actually recorded
was very satisfactory, the total population reaching 277,000 by the end of 1910;
331,000 by the end of 1920, and 421,000 by the end of 1930. The increase of
- population in Western Australia to the latter date under Federation thus represents

- 241,000, a figure very much greater than the total populationshe had accumulated in
 15

the first 70 years of her existence. There was thums in 30 years of Federation an
increase of nearly 134 per cent. in the population, representing an annual rate of
increase throughout of 2.87 per cent. This rate of. increase was not equalled or
even approached in the same period by any other Australian State. For
Australia as a whole time annual rate of increase for this period was only 1 ~82per
cent. It is thus evident that whatever effects Federation may have had on
We-ste-rim Australia, it did not prevent that State from adding to it-s population
at a rate much in excess of that experienced by the rest of Australia. In the
absence of specific evidence to the contrary, such a growth in population must
be accepted as evidence of relative prosperity. -

- AGRICULTURAL AND PASTORAL EXPANSION.

Thmere are, however, other important items of evidence, among which the -

facility with which Western Australia transferred from the role of a gold
producer to that of an agricultural amid pastoral State is prothinent. -

At the date of Federation, gold production was by far the most important
industry. At that tune the are-mm under wheat in the whole of Western Australia
was below 75,000 acres, yielding less of this grain titan was required for food and
seed. Western Australia was then drawing at least a third of luer bread
requirements from time Eastern States. By 1920 the area under wheat bad increased
to 1,276,000 acres, amid by 1930 to no less titan 3,950,000 acres. There has been
some decline during the depression, but the phenomenal increase in the period
1920—1930 will be found to have few parallels elsewhere. It was accompanied
also by a substantial rise in the average yield per acre. -

In other directions in the domain of agriculture Western Australia has also

shown marked development. For example, at the time of Federation she had little
more than 8,000 acres under orchards and vineyards, but according to the latest
figures avaiI~b1ethis area has grown to over 21~,000acres, a three-fold increase.
Other branches of agriculture have also shown marked evidence of development. -

In dairying production the rate of growth has been phenomenal. Western

Australia’s production of~butter in 11100 was 290,000 lb. In 1920 it had risen to
2,212,000 lb., and - by 1933 to 11,470,000 lb. I The number of pigs has doubled,
and the recorded production of bacon and hiuns increased from about 300,000 lb.
in 1900 to almost 4,000,000 lb. in 1933, - -

Progress has also been rapid in pastoral pursuits. Horses increased from
68,000 in 1900 to nearly 160,000 in 1932; cattle from 339,000 in 1900 to 857,000
in 1932; and sheep from 2,434,000 in 1000 to 6,533,000 in 1920 and 10,405,000 in
1932. These increases were accompanied by corresponding increases in such
pastoral products as wool, tallow, hides amid skins. Time production of wool alone
rose from 15,305,000 lb. in 1901 to 48,681,000 lb. in 1920, and as much as
51,308,000 lb. in 1932. . - -

- MINERALS AND MANUFACTURES.

In mineral production there have been no suôh markCd advances, though
coal production increased from 118,000 tons to 416,000 tons, amid silver production
from 28,7Q0 fine ounces to 43,700 fine ounces between 1900 and 1932. As
noticed elsewhere, however, the production of goldin Western Australia has declined
substantially since Federation. Production in 1900 was 1,414,000 fine ounces.
It reached its peak of 2,065,000 fine ounces in 1903; declined with the exhaustion
of the richer ore bodies until 1928 ; since when, under the influence of the
Commonwealth bounty, high gold prices and improved methods, it has been again
increasing. - -

It would have been physically linpossible for manufacturing production to

have expanded at the same phenomenal rate as primary production, hut -

nevertheless the value of the output which Was £4,478,990 in 1908 bad grown te
£12,353,353 in 1932. - - - - - - -
 - 16 - -

SUDDEN DESCENT TO PESSIMISM.

It is a great record, of which the people of Western Australia were genuinely
proud and in which the people of the whole of Australia greatly rejoiced, for it
was a record of expansion mainly within the Federation. Many thousands of
people and minammy millions of capital from the other States were concerned in it.
That the rate of expansion has slowed down in the last few years is due to the
faet timat Western Australia has suffered with the other State-s and with time rest
of the World under time universal cloud of depression. But it is dilTicult to reconcjlo
time broad material facts of the position and the hitherto buoyant and confident
attitude of the State with the tale of woe which is now released in the Case for
Sec2ssion. Even if it be contended that Federation lent no aid in the remarkable
progress referred to, it is surely clear that Federation did not retard it, and still
clearer that time State has not been re-due-cd to the condition of impotence and
privation which the authors of the Case would have the world believe is its present
unenviable portion. This tremendous fact in the foreground of our examination
prepares us to anticipate a search for the mice of grievance under a stack of
exaggeration. -

- CHAPTER HI.

WHY SHOULD WESTERN AUSTRALIA WISH TO SECEDE?

The Case as presented is an omnibus of grievances. Nowhere are the principal
grievances summarized or sifted out from a host of minor ones; but, from a
careful perusal of the whole document, we gather that the grounds really relied
on to support secession, and deserving of serious consideration, are as follows
(1) The State has suffered a general detriment through Federation for which
secession is the only remedy. - - -

~2) The State has been reduced tó a subservient position through the
whittling down of the essential Federal principle of~thcConstitution
- by High Court decisions and dirCct amendment.
(3) The State is left without adequate revenues for the conduct of its
services through the entry of the Federal Authority upon the fields
-

of direct taxation. - -

(4) The State’s primary industries have been burdened by the Federal
policy of protection, and its secondary industries retarded by the
- - - constitutional requirements of interstate free-trade.
- (5) -The State representation in the Federal Parliament is too small to
- influeneethe policy of Federal Governments which is dictated by the
majority in the more populous States. - -

(6) The State is so isolated from the rest of the Commonwealth by distance
and by the physical characteristics of the Continent as to be
-

naturally a separate economic unit with interests permanently

dissimilar from those of the rest of Australia, and therefore no basis
exists for common policy in matters of national concern. - - -

We shall examine these contentions to see whether all or any of them justify
Secession, and in doing so we shalt have-to refer to the various disabilities specifically
alleged, bearing in mind, however, that the Commonwealth Grants Commission
is also inquiring minutely into these disabifities with a view- to their measurement
and rc~nc~1y, - --~ - — - - -
 17

- CHAPTER IV. -

THE FEDERAL CONSTITUTION AND ITS INTERPRETATION.

IS THE CONSTITUTION WHAT IT WAS?
The Case contains many statements and suggestions that judicial decisiomis
of the I-ugh Court have almost invariably favoured time Commonwealth at time
expense of time States, to such an extent thmat time balance of time Constitution has
been. upset and time State rights declared by the Constitution have been made
nugatory. The following are samples of such statements :—
- - “In paragraph 104 of the Case it is said that during time thirty odd
“

- years of Federation, questions of the transfer of power from time Common-

wealth to the States have involve-cl ‘ considerable judicial interpretation,
generally speaking adverse to the States ‘. (It is true that in paragraph
- 135 the authors in an unguarded mnoment say that during the first nine-
teen years of the life of the Commonwealth ‘—which makes a large hole in
the thirty odd years of Federation
‘ the high Court consistently adopted
‘—‘

time view of time Constitution most favorable to the States ‘.)

In paragraph 134 of the Case it is said that “all or most of time
“

decisions of the- Hmgh Court as to the distribution of power between the

Commonwealth and the States have shown “a tendency to enlarge the
- powers of time Commonwealth at the expense of and to the disadvantage
of tho States “—and that some four-score case-s have thus been decided
by the high Court. -

In paragraph 135 it is stated that since the Engineers’- Case (to be

referred to later) the distribution of the powers between the Common-
“

wealth and the States as prescribed by time Constitution cannot now be

regarded as a clearly defined or comprehensive distribution of powers
atell
In paragraph 156 it is said that “Judicial interpretation by the High
- - Court and administrative activities by the Commonwealth have almost
entirely abrogated sections 100 and 107 of time Constitumtion” (which sections
provide that, subject to the Commonwealth Constitution, the Constitutions
-- of the States shall continue; and that every power of the Parliament of a
- - colony which becomes a State shall continue, unless it is by the Commnon-
wealth Constitution exclusively vested in time Commonwealth Parliament
or withdrawn from the State. - -

How remote the above -statement-s arc from time facts can be conclusively
shown.
- - HIGH COURT DECISIONS.
First for a few figures. There may have been -four-score judicial interpreta-
tions of the Constitution; but only a smnttil proportion of them have been concerned
with the distribution of power between Commonwealth and States. And they
have been by no means one-sided. In eighteen cases, -the whole or part of a
Commonwealth Act has been held to be invalid, as not coming within any specific
subject-matter of Commonwealth legislative power. - - -

Very seldom, in time High Court, has the validity of a State enactment been
successfully challenged on Constitutional grbuiids. Time-re are only eleven sue-u
cases altogether. Of these, four were cases of State- laws inconsistent with Federal
legislation on a Federal matter, and these, of course, were only declared invalid!
to the extent of the inconsistency. The other seven wore all bredchCs of section 92
~ the Constitution, as interfering with interstate free- trade-, or breacbe~of- section
90, as encroaching on the exclusive power of the Commonwealth to impose duties
of customs and excise. So far as We-ste-rim Australia is concerned, only one section
of one Western Australian Act has ever be-en declared invalid-by the High Coumi-t-~--.
and that was an Act passed long before Federation, which discriminatcd,~ihrcspcót
 - 18 -

of Colonial wine lice-noes, between Western Australian wine and wine from other
parts of Australia ; and was clearly, after Federation, in conflict with section 92
of the Constitution providing for interstate free trade (Fox v. Robbins,
8 C.L.R. 115). So that the picture drawn in paragraph 154 of time Case, of the
-

constant anxiety of Western Australian legislators as to whether their proposed

legislation will be invalid—the passage- of an Act with grave misgivings—tlie
challenge to the Act, and the knock-out blow delivered by time Court (“ The High
Court sits, and the country stands still “)—this picture proves to be entirely-
fanciful. In 34 years—one section of one Act! And that a pre-Federatiori an~
clearly “unfederal” section of which, after Federation, no defence was possible.
Surely, the mountain has brought forth something less than a mo~ise
But the statements as to the effect of judicial interpretations of the Constitu-
tion, and time-jr effect upon the States, are so sweeping and so misleading as to
warrant a closer analysis.

DiSTRIBUTION OF POWERS.
The basis of the distribution of legislative powers between Commonwealth
and State-s is shortly this :-‘---The Commonwealth Parliament is give-tm power to
make laws with respect to a certain number of specified subjects—most of thorn
contained in the 39 paragraphs of section 51 of the Constitution. As to a few
subjects (such as the power to impose duties of customs and excise, to raise naval
or military forces, and to coin money), the power of time Commonwealth Parliament
is made exclusive ; as to the other subjects, on which the Federal l’arliament
has power to legislate, the States continue to have concurrent power; that is, they
can still pass any laws they like as to those subjects, provided they are not incon-
sistent with Commonwealth laws. And as to all matters not included in any of
the specific subject-matters of Commonwealth power, time- Stat-es retain exclusive
power to pass laws (except for certain express prohibitions contained in the Con-
stitution), and the Commonwealth cannot interfere. -

Put shortly, the-n, there are three fields” of legislative power

“

(1) Specific subject-matters exclusively given to the Commonwealth (e.g.,

customs and excise). - - --

(2) Specific subject-matters given to the Commonwealth, but not

-

exclusively (so that the States retain- power to pass laws not
conflicting with Commonwealth legislation).
(3) The general residue of legislative power not comprised in the specific
matters given to the- Commonwealth, and therefore- remaining with
the States-(except for a few express prohibitions).
Out of the whole list of the- subject-matters of Federal legislation (except for
section 105k of the Constitution which will be dealt with separately) it is only
necessary, in this connexion, to refer to the following :—

Section- 51. The Commonwealth Parliament has power to make- laws for
the peace, order and good government of the Commonwealth with respect to—
(i) Trade and Commerce with other countries, and among the States;
(ii) Taxation; but so as not to discriminate between States or parts
- of States;
- - - - -

(vi) The ~navaland military defence of the Commonwealth and of the

several States . . . - -

(xx) Foreign corporations, and trading and financial corporations formed

within the Commonwealth; -

- (xviii). . . trade marks; - -

(xxxv) Conciliation and arbitration for the prevention and settlement of

industrial disputes extending beyond the limits of any one State.
Section 92. The Commonwealth Parliament has exclusive power to impose
duties of customs and excise. . -
 19 -

Now, the high Court has always interpreted simbjeet-matters of Common-

wealth legislative power strictly, and has held invalid mnany federal enactmuemits
which went outside them. - -

For instance, time Australian Industries Preservation Act 1906 was an Act,
p~5SC(l under the Comnmonwealth power to make laws in respect of “ trade with
other countries and! among tIme- States forbidding monopolies and unfair corn-
“,

petition in external and interstate trade. For time most part, it did not apply
to trade within a State—wlmmcli is not included in time specific legislative powers
of tIme Conmnionwcalth. But as time Commonwealth imas power to make laws with
respect to foreigmi corporations, and trading amid finamicial corporations formed
“

within a State ‘‘,provisions were irmserted in the Act to forbid monopolies and
uimfair comnpetition by such corporations in trade generally—-without a limitation
to external and interstate- trade. Time high Court held that this was invalid
that a law regulating the belmaviour of companies iii trade was not a law with
respect to companies, but a law with respect to trade, and not being limited to
external and interstate trade was beyond time power of the Commonwealth
Parliament (Iluddart Parker v. Moorelmcad, 8 C.L.R. 266).
Again time Commmmonwcc-lth Conciliation and Arbitration Act 190-i purported to
give time Commmmnonwealth Court, in ulealing with an industrial dispute, power to -

declare any condition of employnment determined by aim award to be a “common

rule of tIme induistry—bimmding not only on time parties to time dispute, but on the
“

industry its a whole. Time Court held that, under the specific power given to the
Comrmionwealtlm Parlianient, time Parliament had mmo imower to deal with industrial
disputes except by way of “conciliation and arbitration and that time declaration
“,

of a common rule was not conciliation or arbitration, bumt time legislative regulation
of industry, as to which the Commonwealth Parliament had no power (Boot Trade
Case, 11 C.L.R. 311). - -

In the Excise- Tariff 1906, the Comm6hwealth Parliament purported to impose

an excise duty on agricimltural machinery, but. to exempt goods manufactured
under wage-conditions which were “fair and reasonable-” as defined by the Act.
The Court lucid that timis excise duty was not in reality a tax, but a penalty for not
complying with wage conditions prescribed by time Commonwealth, which had no
power at all to regulate wage-s except by an industrial award ; and therefore that
the Act wa~invalid (Rex v. Barger, 6 C.L.I1. 41).
- Time power of the Commonwealth Parliament to make laws as to trade and
eommiie-rce is extended by section 98 of the Constitution to “Navigation and
Shipping “. It is clear that time framers of the Constitution intended this power
to include nnvigation and shipping witimin a State ; and accordingly time Navigation
Act 1911 (~nreliance- on American decisions) was drawn to include navigation
and shipping within a State. But the High Court lie-id that the Commonwealth
navigation power must be read with the samime- linmitations as time trade and commerce
power, and only covered navigation and shipping “with- other countries and
-

among the- States” (SS. Kahibia v. Wilson, 11 C.L.R. 689).

In time Trade MarL-s Act 1905, provision was made for a so-called “Workers’ -

trade mark or union label registered by a worker or association of workers

“~ “ “,

to indicate that tIme articles to which it is applied are time production of that worker
or of members of that Association. The Court hçid that this was not a trade mark
in time ordinary sense of time term, and was not covered by the power of the Common-
wealth Parliament to make laws with respect to “trade marks” (Union Labet
Case, 6 C.L.R. 469).
Timese illustrations are sufficient to indicate that the High Court has
consistently held that Commonwealth legislation must be strictly confined to the
specific subject-matters assigned t~ the Conmmonweàlth, and Imas declined to
sanction any extended interpretation of those subject-matters beyond their-

natural meaning. -
 20
THE DOCTRINE OF MUTUAL NON-INTERFERENCE.
Apart from section 105A of the Constitution—the Financial Agreement
amendment, which will be dealt with later—the wimole charge that the Constitution
has by judicial interpretation been twisted against the- States re-ally seems to be
based upon the Engineers’ Case, 28 C.L.R. 129. That case is referred to, in the
Case for Secession, paragraphs 135, 136, in a very misleading way. It 15
described as “a revolution in the Constitution “, giving the federal powers an
unimagined range, and destroying the definite distribution of powers between
Commonwealth and States. A short explanation will show how fanciful and
unfounded this view is.
The story begins with the- celebrated case of d’Enmde-n v. Pedder, 1 C.L.R. 91.
Mr. d’Enrmdcn, a Commonwealth official in Tasmania, signed a receipt for hmi~salary
as the Audit Act of time Commonwealth required hum to mb. lie was convicted
in a State police court for not having affixed a twopenny State revenue stamp to
the receipt, in accordance with the State Stamp Duties Act. From such small
causes do great events spring! The ease- came on appeal be-fore- the High Court,
which quashed time conviction on two independent grounds. The first ground
(which is so obviously right that it has never been questioned) was that a State
-law purporting to impose a tax on the performance of an Act required by Common-
- wealth law to be- performed (in this case time signing of a receipt) was inconsistent
with the Commonwealth law requiring the receipt to be given. The second
ground—which is what all this trouble is about—is what is known as the rule or
doctrine of “ mutual non-interferenco “ as between Cominonwealtim and States,
namely, that it~is an implied term of the Constitution—nowlmere expressed in
words, but deducible fronm time whole instrument—thmat any attempt by a State
to interfere- with a Commonwealth agency or instrumentality in time performance
- of a Federal duty, and any attempt by the Commonwealth to interfere with a
State agency in time performance of a State duty, is unconstitutional and invalid.
Now the first timing to be noticed about this rule- of imiterpretation is that it
cuts both ways. It purported to protect the Commonwealth from State
interference, as well as to protecb the State from Commonwealth interference. In
this very case of d’Emden v. Pedder, it. was re-lied on by time Oonnmnonwealth as
a bulwark of federal power, and challenged by time- State as a subversion of State
rights. And now, in time strange whirligig of time, the reversal by the High Côtmrt
of this doctrine of mutual non-interference is denounced as destructive of State
rights, and an immeasurable extension of the power of tho Commonwealth I
The next thing to be noticed is that this rule of mutual mien-interference was
definitely disapproved by the Privy Council. It had bee-mm applied again by the
High Court to exempt the salaries of Commonweahth officials from State income
tax ; and the Privy Council held! that no such rule of interpretation could be -
deduced from the- Constitution (Webb v. O-uttrim, 1907, AO.81 ; 4 O.L.R. 3~5). -
The High Court, however, which is not bound by the Pt-ivy Council in
questions of distribution of power between Commonwealth amid States, continued
for a time to apply this rule of interpretation, but soon found that it led into great
difficulties. -

In the Railway Servants’ Case, 4 C.L.R. 488, the High Court held that State
Railway Commissioners were an instrumentality of the State Government and
therefore that the conditions of employment of State railway servamits could not -

be controlled by an award of the Commonwealth Arbitration Court.

So far so good. But in time- Steel Rails Case (New South Wales v. Commonwealth,
5 C.L.R. 818) the State claimed the right to import rails for the railways without
pnyment of Customs duty, on time ground that a duty on goods iimmported by a
State were an interference with a State instrumentality. The Chief Justice,.
however, pointed out that, if that contention were good, “it would be in the power
of the Stat~s,by becoming general importers of goods, seriously to impair and
indeed practically destroy the Customs revenue of the Commonwealth.” The
-

Court held, of necessity, that the States and their instrumentalities could not
claim - asa constitutional right, exemption from the payment of Customs duty.
 - - 21

- Many other difficulties arose, and at l~stthey all came to a head in time
Engineers’ Case (28 C.L.It. 129). Time State of Western Australia had establmsbe-d
certain trading concerns—factories and mills which were- owned by the State, but
otimcrwise were ordinary trading ventures. And time State-, under time doctrine
of mutual non-immterference-, claimed immunity for the-se enterprises from the
Commonwealtim Arbitration Act. Timis claim, the Court foummcl it impossible to
concede. Time position was analogous to that in time- Steel Rails Case ; to allow
the- claim would lmavc empowered the States, by extending time field of State
employment-, to wimittie away to notiming time- Commonwealth Arbitration power.
Time- Steel Rails Case and time Railway Servants’ Case were found to be- irrecommcilable.
Time Court could not differentiate time Western Australian trading concerns from
the New South Waies Railways, a-nd was forced to time- conclusion that the
Railway Servants’ Case had be-en wrongly decided, and that time attempt to read
into the Constitution an implied prohibition of mutual interference was a
mistaken one. They camne back time-re-fore to time view taken by time Privy Council,
that time Constitution must be read according to time plain sense of its words. The
State- Railways mmml time- State trading cone-eu-mis ~veroindumstrial enterprises, and
disputes between time-rn and time-jr employees were “industrial disputes within“

the ordinary mmiemuiing of the term.

Time- view now take-n, time-re-fore, is that time Constitution means just wimat it
says ; that time Coimmrnonwealth Parliament is limited to certain specific subject-
matters, beyoimd which it caimmiot go, but within wimich it is supreme without any
implied iimlmitations. Time State exclusive- field is immune from Commonwealth
interference, be-cause in that field Commonwealth action is null amid void. The
~ Commonwealth miceds ito protection from State interfere-ne-c, because where its
~ power is not exclusive- it is simpreme. A rumle- of mutual non-interfere-mice between
-, Commonwealtim and State- is as superfluous as would be a u-mile of mutual non-
~ interference between time e-icplmant and time wlmaie time- two live imi different elements.
Time Engineers’ Case, time-n, simply means timis ; that time- Conmmnonwealth
within tile- SCOJ)e- of its own subject-matters, is not subject to limitations inmposed
by time Stat-es. If the Conmrnonwealthm Parliament impose-s a tariff time State
Governments cannot claim a right to be exempt from it. If time- Commonwealth
Parliament passes laws to settle industrial dispute-s between employers and
employees, time States as employers cammnot claini a right to he excepted. But
the Engineers’ Case does not in any way enable time- Commmmonwe-alth to ste-p outside
- the specific subject-matters assigimed to it, or to trespass oxm time lie-id reserved to
the States. -
Moreover, it must be again pointed out, that, as the- old rule of mutual
non-interference emits both ways so does time new rule-of time Engineers’ Case. Th~
States stand to gain as well as to lose. The States are no loimger subject to any
imnplied doctrine that they nmust not interfere with instrumentalities of the
Comumonwe-nithm. Thus, for instance-, time salaries of Commonwealth officials are
not constitutionally exempt from State income- tax ; and so forth.
It is thus shown imow utterly misleadimmg are- sumchi statenments in the- Case for
Secession as that, as a result of time Engineer’s Case, time distribution of powers
between time Comnmonwealth and- time States as prescribe-il by time- Constitution,
4
cannot now be regarded as either clear or compre-imensive ; or timat time- decisions
of time high Court have almost abrogated sections 106 and 107 of time- Constitution
(which declare timat, simbje-ct to time- Commonwealth Constitution, time- Constitution
of eaclm State and the liouve-rs of time- Parliament of each State remain as they were).
The distribution is aui clear as before, indeed clearer ; be-cause- the specific matters
assigned to time Commonwe-aitim are now lie-Id to Imave time-jr natural meaning,
without time complication of- an artificial rule of construction, of very uncertain
extent, which limited the Commonwealth on one side, and the State-s on time- other.
- SecUon 92—I sterstato Freetrade.
-Section 92 of the Constitution is perhaps time one- while-h has give-n the- high
Court most trouble, and as to whicim its decisions are least satisfactory. After sonic
hesitation the Court came to the conclusion that this section in effect placed
 - 22 . -

interstate trade among the exclusive powers, and debarred time States from making
any laws for the regulation of- irmter-State- trade, even where the field had been left
clear by the Commonwealth Parliamne-nt.
Bimt there are many kinds of laws wimich, thoumghm not framed with the purpose
of hindering inter-State trade, may incidentally have that effect; e.g., laws for
regulating road traffic, and laws regulating time- competition between road amid rail
transport. The I-high Court has hel~Iin more than one- case that legislation of that
kind is within the comnpetence of time State- Parlinument. (Willard v. Re-u-son,
-

48 C.L.R. 316; Rex v. Vizzard, A.L.R. 1934, page- 16). It may be mentioned that
in the latter case, time Comnmmionwealth Gove-rnnmemmt immtervened for the pumrpose
-

of supporting time validity of time- State Act—an eloquent commentary upon the
charge made in time Case that time- Comnmnonwealtim consistently strives to enlarge -

ts jurisdiction at time expense of time States.

AN IMPARTIAL ARBITER.
From what has be-en said a-hove, it must be plain to every unbiased mimI
that the High- Court 1mm not been a one-sided arbiter of the Constitution. On
the contrary, it hums performed its difficult taskwithm skill, wisdom, and impartiality.
Its Judges were and are imunian, auni not infallible; they have differed amongst
themselves, and occasionally time- whole court has changed its view. But that is
only additional evidence-, if sue-h be needed, of their desire to imold an even balance,
to interpret—sometimne-s by trial and error—time- spirit of a Federal Constitumtion
which distributes the sum-total of political power between a central Govern-
ment and local Governments. - - -

It is manifestly contrary to fact to suggest, as is done in time Case, that time

Court has made of the- Constitution some-timing so different from what it was when
the six Australian colonies accepted it a generation ago, that aimy State has now no
question but to sever itself from the-union.
SECTION 105A OF THE CONSTITUTION.—(FINANCIAL AGREEMENT.)
The Case for Secession (paragraph 222), state-s that the unexpected
“

- interpretation” of section 105A of the Constitution has give-n the- Comnmonwealth

a power which “definitely attacks and undern-mines time sovereign and independent1
rights of the- States as self-governing, communities “. -

It can readily be- shown that this statement is a violent exaggeration and
distortion of the facts. -

In 1027 a Financial Agreement was made between the Commonwealth and the
States. It provided for a vast cpe-ration—the- taking over by time- Comiumonwealth
of the public debts of time States ; a-nd it provided also for time adjustment of the
financial relations of the Commonwealth and States in respect of those debts,
and the control by a Loan Council of future Commonwealth and State
borrowing. This agreement was afterwards approved by time- Parliament of the
Commonwealth and the Parliament of each State-.
It was recognized, however, that time agreement as a whole was outside the
powers of the Commonwealth, and wa-s unenforceable. Consequently it was a
term of the agreement that the Commonweahtlm would takô action to submit to
Parliament and to -time electors a specified amendment of time Constitution (which
now stands in the Constitution in the exact form in which it imas been agreed to by
all the governments and Parliaments as Section 105A), and, that time mmtin provisions
of the Agreement would not come into force unless the amendment of time
Constitution were made. The amendment was passed by the- Commonwealth
Parliament, accepted by the electors of each State, and received the Governor-
General’s assent on 13th February, 1929. - -

Section 105A empowers the Cpmmnonwealth to make agreements with the

States with respect to their public debts, including the taking over of the debts
by the Commonwealth, the indemnification of the Commonwealth by the States,
and the borrowing of money by the States and the Commonwealth. - -
 23

It also empowers time- Parliament to make laws for validating time Financial
Agre-e-nment already made-, and “for time carrying out by time parties thereto of any
such agi-cemnent “. Time Financial Agree-me-nt already made between time
Comnmonwealtlm and tIme State-s was duly vaiid~ted accordingly by the- Financial
Agreement Validation ilct 1929.
Section 10~Aalso declared thmat every such agreement “ simall be binding upon
the Comnmommweimlth and time States parties time-re-to, notwithst-andirmg ammytiming in
this Constitumtion or time Constitution of the several States or in ammy law of the
Parliament of the Conmmonwealth or of any State-.”
Subsequently New South \Vaics in breach of time- agree-me-nt defaulted seriously
and continumomumiy in time payments of interest due- to creditors overseas. This
default went to tii~root of the Financial Agreement, upon time carrying omit of
wine-li depended time financial stability and credit of time Commonwealth and of
each of time State-s. -

Time- Commonwealth Parliament had bee-n empowered by section 105A to make

laws for time carrying out of time agreement by time parties time-re-to ; amid it
accordingly proceeded to make laws for enforcimig periorimmance- by time- State-s
of their obligatiomms under time Agree-me-nt. Time sitmn-mtioa w-as exceptionally
critical, the attitude of time New South Wales Government was one of open defiance,
and tIme- laws pumsse(1 by time- Commonwcalt;ii Parhiamiient to deal with
the- immatter were designedly made drastic emmomighi to be effective. What they
really did was to provide for action in time high Court mind in Parliament against
a defaulting State, followed if necessary by e-xe-cmmtion, levied on time revenues of
time- State. The emergency nature of time legislation is indicated by time fact f-lint
it Wa-S expressed to rein mimi in force- Ior two years and no longer, it has now expired.
The High Court held that this legislation was valid, in view of time- power
expressly give-mm to time- Federal Parliamnemmt by section 105A of time Commstitmmtion,
to make laws for time carrying oimt of time 1~inancia]Agm-ee-imient by time- parties time-re-to.
It is absurd to suggest timat this legislation, passe-ri to compel a defaulting
Government to fulfil its obligations umnder tile- i~gre-eme-nt, attachs mmd “

undermmm~ncs time constitutional rights of time States. It might just as well he said
“

that time policeman on his be-at attacks arid uumdcrmine-s tIe liberty of time
“ “

citizen. lilt tlmat is put forward jim the- Case in this connexiorm amounts to rio
more timan a vague and formless fear of some-timing timat may possibly happen,
but wimicim never would happen except in extraordinary circunmstances.
It may be- mentioned that in time United State-s time question of time power to
compel a dcfaultiimg State- to fulfil its obligations has arisen, and time Supreme
Court has he-ft it in no doubt tlma-t power e-xi~f~ in tIme United States Constitution
to take-time necessary measures against a Stat.e\ Time State of West Virginia was
for maumy years in defamult to the- State of Virgini~to time extent of many millions
of dollars, in respect of a debt due under an agreement made by time former State
upon its separation from time latter. No actual e-nforcemen~ was eventually
necessary, -because, at time threat of enforceme-nt,.West Virginia provided for time
payment; but the- existence of the- power of enforcement is shown by the- following
comment by Willougimby (Constitution of time- U.S., 2nd Edition, p. 1440) upon time
Case of Virginia v. IVest Virginia, 246 U.S. 565 :— -

The Court, in its opinion, asserted squarely that, under time

Constitution, it had time- right to enforce its judgmmme-mlt by appropriate
remedies, even though time- application of such remedies might operate upon
time governmental powers of time- Stat-c. As to time nature- of the-se re-medics,
time- Court pointed out that Congress might specifically provide time-rn by
legislation, since time debt of We-st Virginia was founded iipoü a compact
between it and Virgimmia to wimicim Congress had given its approval; or the
Court might proceed upon powers which it already had.”
- The action taken by time- Commonwealth against New South Wales, thereiDre
so far from being an abuse of power was time appropriate action, take-n in an
emergency in the interests of the Commonwealth and of all the States. So far
 24

from bein~unprecedented, it imims its precede-mit iii the United States, from the
CommsLitutioui of which many of the primmciplcs of our Constitution have bce-ui taken.
As to timis interpretation of the Cormstitution being ‘‘ tmnexpected “, it was only
mmexpcrit-ed iii the sense that no one expected that circumstances ,n-ouiml arise -
whelm would call for the exercise- of this power.
Poe-s Western Australia seriously smuggest that the action taken against New
Soumtli \Vahes, to compel timuit State to imemforimi its obligations endnmmgers tho
iimdependence of Western Australia. amid makes it urgently necessary for \Vestern
A mustra!ia to “ cut time- painter.” -
It isnmtatcd in the Case that “ time Western Australian State Government did
not approve of the action of time Governmmment of New South \Vaies “. But no
anmiount of disapproval, not bmmckcd by effective action, would have secure-mi the
carrying outof time Agreement.
- Time outstanding imnportane-e of time Financial Agreement is dealt with in--
another paragraph. - -

- INDUSTRIAL ARBITRATION.
The power of-time Commonwealth to make laws with respect to “conciliation
and arbitration for the prevention or settlement of industrial disputes extending
beyond time limits of any one State- “is (if we- except the defence power) practically
tue only instance of a power whelm has bee-mi give-mm a much wider interpretation
than was apparently contemplated by the framimers. And time- reason, in time case
of both tbe industrial power and time defence power, is the same—the increased
scope and extent developed by industrial as by international warfare.
The Great War became a test of all the resources—military, financial, social
and economic—of the warring nations ; so timat the High Court found itself mutable
to declare that the fixing of time price of bread miglmt not comitribute in some way
to the winning of the war. In the same way, the marshalling of the forces of
employees and employers in national federations developed a new techrmiqmme in
industrial warfare, arid gave to the piiraso “industrial disputes extending beyond
time limnits of any one State a wider umieamiimig.
“

At time outset, time Court showed a tendency to try to limit the words “industrial
dispute “,and time words extending beyond time limits of any one State-
“ “,to
correspond with the industrial conditions existing in time nineties when the -

Constitution was framed. Bmuti time world refused to stay still, and the change in
conditiomis was too strong for time Commrt, and eventually forced it to an interpretation -
corresponding to the new order of things.
To be-gin with, objection was taken by employers to time registration, as an
organization of employees under time Federal Act, of the Victorian Coal-Miners’
Association, on time ground that a one-State organization could not be concerned
in a two-or-more-State di~pnte, It was contended that no dispute could come
before time Court unless both time employers amid the employees concerned were
in more than one- State. But the Court did not ne-ce-lit this himnitation, and upheld
time registration. Jumbunna Coal Mine v. Victorian Coal Miners’ Assoc~atmon,
6 C.L.R., 309. - -

Next, the Court made an attempt to limit the meaning of the words” industrial
dispute- by defining the criteria or requisites of a gemmuine dispute. A muajority
“

(Griffith C.J. and Barton J.) Imeld that time-re must be a real amid substantial dispute,
having some element for permanency, and that a dispute could not be created by a
mere formal demand and refusal of a new bog. Isaacs J., in,a dissenting judgment
that became-the basis of the later decisions of time Court, held that, while there
must be in fact a realdispute, it was impossible to lay down’any permanent criteria
of a dispute; the words “industria-l dispute must be read in time-jr natural sense,
“

withoumt limitation, a-nd- if a real dispute arose, it was immaterial how it had
originated. Exp. Allen Taylor, 15 (J.L.R. 586. -

- Finally, in- a series of cases, it. was laid down that a real dispute might arise
-

by time demand and refusal of a log. - -

 25 -

It was also commtenlcd. iim time 0mm-nv ve:mrs, that a two-or-nmore S~atesdispute
- could not arise in such an imid nstry as time bui ding trade, wlmere time prodmmets could
not be the subject of imit-er State competition, a-rid the- conditions of the industry
were local. Btmt time Court imeld, by a- mimnjority,thmat time-re- commld be a two-or—immure
States dispute in stmcim an industry ; t-lmat time required unity of time rhispute was not
a commercial unity affecting ‘eimiimlmmvem-s ommiy, but aim indmistrimml immut affecting
employers ntn(1 eimmployees alike. If the dispute itself was an Australian
dispute, It did not matter that an individual employer or ermmpiove-e operated in
one State only. Builders Labourers’ Case, 18 C.L.It. 224.
Time-sc decisiomms (mvithm time decision in the- Engineers’ case, already referred to,
that time Commonwealth Act binds a State wheim it is an employer in an industry)
have certainly give-mm the constitutionn-1 power waler scope tlmamm most-, at least, of
the framers probably contemplated. But it iS imy no means clear that time
electorates in Austrcha, or in Western Australia, tiismmpprove of this result. If
they do disappear. time Commmmmmommwealtlm po~vermay be curtailed by aim murmenmlzmment
of the- Constitution or the exercise of time power may be- curtailed by- law. But
whether they disapprove or mmot, time mmmmmttcr affords imo argummuelit for secession.
It is one which has lie-en time ~rihject of much political discussion throtmghmout
Australia, and a variety of legislative propo:$mmls ; a-nd if re-forum is necmied, reform
can be effected, either by ammiendmrmermt of time law or by ammmeuclmmmemmt of time
Constitution. - - - - -

- - TAXING AND SPENDING POWERS.

-

Ome of the reckless mid unfounded stuitemnents made in time Case (paragraph 100)
is that the separate existence and corporate- life of the States is tlmreatcmmed by
judicial interpretation of time- Constitution particularly iii relation to time taxing
powers and the spending powers of time States “.

It. may surprise readers of time Case to learn timat time-re has bee-n no judicial
interpretation at all as to time extent of time spending po%vers of time- Comnmonwe-alth
and tlmat time only de~isionas to time- extent of its taxing powers is one- against time
Conimommwealth, being a decision that time Conumumonwealtim Parliunmenmt has no
power to regulate, by penalties nmasqmierading under time cloak of taxation,
matters within time exclusive province of time States (I?. v. Barger, referred to
above). -. - - --

It has always bee-ri knowmi. and is clear on time face of time Commstitution, that
the taxing power of time- Commonwealth is unlimnitmmd as to subject-matter.
Complaint has of course- been made tlmmmt time Commommwenltim, in time exercise of
that power, has entered fields of taxmmtiomm which, it limm~ been suggested, ought to
have- he-en left free to the States—sue-it as imicome tax amid estate duty ta~r. As
to that, it is enorigim to reply tlmnt time Commommweaith did not enter either of these
fields until compelled to do so by time financial obligations entailed on it by the
Great War. Time Estate Duty Act was passed in December, 1914, and the tirst -
Incommue Tax Act in 1915. It -was for such emerge-mime-s mis timis th:mt it was
universally recognized by the framers of the Constitutioum that all fields of taxation
must be available to the Conmmonweaith. -

The suggestion (in paragraph 136 of the Case) thmat time- Financial Emergency
(State Legislation) Act 1932 indicates a probable extension of time Comnmimmonwenith’s
taxing powers -to- cover control of State taxatiom~ is quite groundless. The
preamble to that Act makes it clear tima-t it is founded upon time necessity, in “

view of the grave financial and- economic ermiergency existing in Australia to

- “,

“protect time revenues and credit, and the financial and economic stability of the
Commonwealth, by temporary inca-sure-s ~of an exceptiomual character Time
“.

particular danger that the Act was designed to meet passed away within 24 imours,
so that the Act never took effect, and the-high Court was never-called upon to
pronounce upon its validity. There is no reason to believe timat it could have
been supported by t}me-taxatioupower. It is true that, after the fashionof legal
pleading, the title of the Act calls in aid everytimimmg that could be thought of,
-
 26

on time- spur of the moment, as a possible support-—Taxation, Insurance, Banking,

Corporations, &e. TIme draugimtsman was evidently scratching round for a peg
on which to hang the Bil! ; bmmt Taxation was certainly a forlorn hopem The power
of the Commonwealth Parliament as to taxation is a power to make laws “ for
the pence, order aumd good govermmrnent of time Commonwealth” with respect to
Taxation, but so as imot to discriminate- between States or parts of States “.
It can hardly be questioned timat time-se words refer only to Commonwealth Taxation,
uniform throughout the Commonwealth, for Commonwealth ~~urposes, and do not
cover control of State taxation. Nothuumg in any decision of the High Court suggests
a doubt of timis ; and hide-ed time principles of interpretation laid down by time
Court make doubt impossible. -

DUMPING AND THE INTERSTATE COMMISSION.

It is stated in the Case- (para~raplm 157) that “ In. some cases where a
We-ste-rn Australian nmammuhi ctmmrcr has commenced business a-nd has, been carrying
it on successfully agaimmst iegitimnate competition from the Eastern States, the
competing manufacturers froum time Eastern States have resorted to the sporadic
dumping ‘ of their products into Western Austrmmhia in order to drive him out
of business.’’ Some particular-i im~support of this statement are given in Appendix
No. 46 of the Case, and tIme deduction is drawn timmtt Australian protection is
no protection to time local nmammimfaetmmrcr, exposed to relentless competition from
time powerful mannfaeturcrs in tIme Eastern State-s.
Similar statememmts ~m-eremade before the Royal Commission on the Finances
of Western Australia (192-1--25). The Commission was unable to investigate
fully time facts as to mmnfmmir competition, and made no definite finding thereon;
- but expressed time opinion that. the interstate Commission should be revived. A
majority of time C’omnnii~sionre-commeimded that a Federal Court be created, with
judicial power for time execution and maimute-nance of the provisions of time
Constitution relating to trade and commerce, and of all laws made thereunder.
That such dumping has occurred has been alleged and not disproved ; and
we shall assumne that time--re arc gcouumds for complaint. - -

Time Conimonwemmithm Paihimmiimeumt clearly has power, by virtue of section 51 (i)

of the Constitution re-biting to trade and comimierce among time- States, to control
unfair competition of time- kind described. -- - -

Moreover, section 101 of time Constitution provide-s that -

Time-re shall be an Interstate Commission, with such powers of adjudication

mmd admimiistratiomj as time Parliament dee-ins necessary for the -
execution amid nmaintciiaiice, within the Commonwealth, of the
prm-isions of this Constitimtiomi relating to trade and commerce, mmd of
all laws made time-re-under “.
The special purpose of time- Imiterstate- Commission, as contemplated by the
framers of time Constitution, u-as to control unfair discriminations and preferences
by interstate-carriers, especially State railways; and special powers were given to
it in this connexion. Emit it was anticipated that it might have a wider usefulness
n relation to time administration of interstate cOmmerce laws generally.
Time Inte~stateComminmission was dimly constituted by the Interstate C’o,nrnission
Act 1912. TIme Act charges time Commission with time duty of investigating
all matters which, in its opinion, ougimt in the pmmblic interest, to be investigatol-
affecting (inter alia) time prolitetion of and trade in commodities, time encouragement
of Australian imidustries and manmmfactures, the prices of commodities, and any
other matter referred to it by either house of the- Commonwealth Parliamnent. The
Commission was also declared to be a Court, with judicial power in relation t~
breaches of time- provisions of - the Constitution or of Commonwealth laws as ti -
- trade and commerce. For Sonic years it carried omit a number of investigationu
and made many reports; but in the Wheat Case (New South Wales v. Gomrnonwealt4
 • 27

20 C.L.R.- 54) in wimich it purported to exercise its judicial power, the High Court
held that the Parliament had no power to make time interstate Commission a Court,
or to give it judicial power. This left it as practically nothing but a standing
-

Royal Commission; and on the expiration of the seven-year term of office- of-- its
first members the Conmmonwealth Government did mmot make any further
appointments, and the Commission therefore lapsed.
It could be brought into being again by the appointment of Commissioners;
but of course the decision of the high Court that it cannot be given judicial power
still holds good, and under the Constitution as it stands time Commission could be
little more than an immvcstigating body, without effective power to deal with ammy
abuses that migimt be disclosed.
The Constitution, however, is capable- of amendment. If a clear expression
of opinion came from one or more States for sue-hi an amendment as would enable
the- Commonwealth Parliament to give the- Interstate- Commission the necessary
power, there is no reason to believe that such an amendmnent might not be made.
A matter sue-li as this clearly affords no ground for secession—especialiy as the
State hums not yet explored the remedies available within the Constitution.
AMENDMENT OF THE CONSTITUTION.
The Case summarily rejected the idea of any amendment of the Constitution
as an alternative- to Secession (paragraphs 572—577). -

The authors do not seem to deny the practicability of the Constitution being
amended; indeed, it would be hard to do so in view of the fact that it has already
been amended three times. But they allege that the Constitution cannot be
amended so as to remove- Western Australia’s disabilities; and they try to prove
this by a series of ingenious arguments, ‘which, however, are vitiated by ma-ny
fallacies, and which we proceed to examine.
They divide the disabilities suffered by Western Australia under Federation
into two c1asSe9~— -

(1) Disabilities suffered in common with all, the other States. -

(2) Disabilities peculiar to Western Australia. - -

Class 1, they say “-has arisen out of the unlimited and unrestricted exercise by
the Commonwealth of its taxing powers and spending powers. “As the Common-
wealth Government has always opposed any interference- with these powers, and
as an amendment has to be initiated by the Commonwealth Parliament, “it is
obvious that in practice any proposed amendment of the Constitution which is
resisted by the Commonwealth Government has no prospect of be-coining law.”
Now let us look at a few of the fallacies involved in this strangely confused
argument.
In the first place-, the alleged disabilities of the States are not said to arise
from the existence of the Commonwealth powers, but from their exercise by the
Commonwealth. It does not appear therefore that the ne-ed for amendment of
the Constitution necessarily arises, if the Commonwealth Parliament can be made
to limit its exercise of the powers.
Now the Commonwealth Government is dependent on time support of time
Commonwealth Parliament; and the Commonwealth Parliament is elected by
the people of the several States, and is dependent on their support. If, therefore,
the people of the States, or enough of the-rn to elect a majority in either House
of the Commonwealth Parliament, really want to limit the exercise of time-se powers
by the Commonwealth Parliament, nothing is more certain than that the
Parliament will limit that exercise, and wifl defeat any attempt by the Common-
wealth Government to extend it.
But, for the sake of argument, let us assume that there is—need for amendment
of the Constitution to limit the taxing or spending powers of the Commonwealth.
The Case assumes that because the Commonwealth Government has in the pa-st
 28 -

opposed any stmelm limitatioi~i,the Commonwealth Parliament in the future will

always oppose it. The same fallacies exist lie-re. If the people of the States,
-

or enough of them to elect a majority in both houses of the Federal Parliament,

really want time amendment, it will be introduced and passed, and the Common-
wealth Government will not be- able to prevent it.
Now let us look at Class 2, tIme disabilities peculiar to Western Australia.
The-se, we are told, arise- immediately omit of two fundamental principles of the
Constitution (umamely, interstate free trade arid uniform customs duties) coupled
with “ time settled fiscal policy of imigh protection definitely established by the
Commonwealtim “ ; amid also arise mediately out of Western Australia’s geographical
isolation. The Commmionwealtlm cannot mmmcmiii time Constitution so its to alter the
isolation ; will not amend it so as tO alter time two fundamental principles; and ia
not likely to alter the policy of higim protection, because it suits the Eastern States.
Let us assume timat \Vcstcrn Australia is not demanding the removal of its
geographical isolation but will be satislied if the “immediate “ cause of its
disabilities is removed. Now that cause, it is admitted, is not due to the two
fundamental principles (interstate free trade and uniform cimstoms) alone, and
would be removed if time fiscal policy of high protection were altered. The authors
of time Case say this is not likely to happen because the settled fiscal policy
“

of high protection suits time Eastern States, which comprise a majority of the
“

people of time Commonwealth, Now, he is a bold man who is prepared to prophesy,

in time present state of world aflairs ammd immternational trade, what fiscal policy
will suit, or will i)e mmdopted by, any country in time world. One thing that is clear
is that time aggregate exports from all time- countries in the wOrld must be equal
to the aggregate imports to every country in time world; because every export
from one country is (unless it is dumped into time sea) an import into another.
Time imports and exports of every commmmtry will have to be regulated in accordance
with this equation ; and witim time world turned protectionist and trying to increase
its exports and restrict its imports, it is rash to say that the fiscal policy of any
country is at present settled
“ “.

it can only be said, with regard to disabilities of Class 2, that if a majority of

the people of time States wa-nt either an alteration of the fundamental principles of
the Constitution or an alteration of the- fmscal policy of the Commonwealth
Government, they caim get it. . - - -- - .- -

Time authors of time Case assume flint Western Australia wants, and will continue
to wamit, a free-trade tariff; and timat the est of Australia wants, and will continue
1
to want, a higim protectionist tarifi.
Unless botlm of these propositions arc f-rue, their main argument for Secession
- breaks down entirely. And neitimer proposition has been established.
COMMONWEALTH STATES AND PEOPLE.
The Case is fnll of smiggestions of opposition between Commonwealth arid
States, as if the Comnmonweiultlm were a foreign country, and powers surrendered
to time- Cornmommwealtli were lost to time People- of tIme State-s.
It cannot be too frequently insisted that time-re is no such opposition. There
may be- opposition between - time Governummont of the Commonwealth and the
Gove-rnme-mut of a State-; but to a citizen of a State, who is also a citizen of the
Commonwealth, Commonwealth and States are- not in opposition, they are the two
halves that make up the whole of the- political rights of an Australian citizen.
At the Federal Conventio~iof 1897, a resolution passed at the outset of the
proceedings declared that the- purpose of Federation was “to enlarge the powe~
of se-if-government of time- people of Australia.” Sir Edmund Barton, in moving
the resolutions, said— -

“That is a proposition which, from the many -discussions that hays

taken place in public in various parts of the colonies, appears to havo bee~i
lost siglmt of. Time- idea of surrender see-ms to have occupied a large place
in the minds of the people. Federation really adds to the powers of self-
rzovernme-nt.”
 29

The people of Australia surrendered nothing; they merely transferred to a

national government certain powers which it was thought could be better dealt
with effectively, on a national plane. -

It follows that the- se-cession of Western Au~traliawould diminish the powers

of self-government of the people of Western Australia by depriving them of any
voice in the destinies of the rest of time continent as a whole.
One of the gm’eate-st obstacles to-day to- prosperity and time expansion of trade
is the devotion of nearly every country in the world of the- idea of “economic
elf~sufficicncy“, and time raising of higher and more impenetrable barriers against
8
international traik. Under these conditions, it se-ems the height of folly for a
member o~a continental unit to wish to cut itself off and become a new and
-

separate unit by itself—to fe-nec itself out from the- remainder of a continent to
- which at present it has free economic access.

“PUSHED AND CAJOLED.” —

Time Case states, on time autimority of Professor Slmann, that the leaders of
Western Australia were- “pushed and cajoled” into Federation “by two forces
of external origin “. -

So strange an assertion needs some ovidence to support it; and the authors
essay to supply the evidence.
The of external origin” was the people of the Western Australian
first “force
gold-fields, who were overwhelmingly for Federation; and so strongly so that
the gold-fields slogan was “separate or fe-derjmte “. The only reason for calling
these people- a force- of external origin is that—like so many other good Western
Australians—many of time-rn had originally come from the Eastern States. But
~ they had thrown in their lot with We-stern Australia, they were engaged in one
- of the most productive industries of the colony, they paid taxes and had votes;

-~ and it is hard t-o see- a reason for regarding time-rn as outlanders in this connexion.

~ They voted for Federation as citizens of We-stern Australia. The petrol in the
tank of a motor car is of external origin
“ “, but time force that drives the car
ij internal combustion. The people- of the gold-fields were as “internal” to
-: 5Western Australia—were as much part of Western Australia—as the people of
Perth. Moreover, one- fact seems to have- escaped the- notice of the- authors, though it
stare-s them in time face in-the pages of the- Case itself; the figures of the referendum
of July, 1900, shmow that if the- gold-fields vote is struck out altogether, there was -

~ still a majority in the rest of the colony in favour of Federation. A small majority,
it is true ; but a majority. So that time rest of the colony was not dragged at the
heels of the gold-fields ; it merely had its verdict more- emphatically confirmed.
The second “force of external origin “, we learn, was Joseph Chamberlain,
then Secretary of State for the Colonies. When the Governnme-nt of Western
Australia was unwilling to submit the Federal Constifution to time electors,
Chamberlain, in a despatch to the Governor~gave some fatherly advice :—
“I would now urge your responsible- advisers to consider earnestly
whether, in the best interests- of the colony as well as of Australia, they
should not make a resolute effort to bring the colony into federation at
once.” -

He gave some excellent reasons for this advice: That unless We-ste-rn Australia
joined as an original State, it would (on joining later) lose time temporary protection
offered by section 95 of the Constitution in the form of interstate tariff for five
years, and might not secure as large a representation in the Federal Parliament;
and there was also the agitation on the gold-fields to consider. Ho then repeated
his advice to Ministers, a-s ~fohlo~vs
:— -

“I would urge them to take an early opportunity of summoning

- Parliament and laying the position fully before it, with a view to ascertaining
- the wisimes of the people- as to entering federation “. - - -
 30

Surely, it is extravagant to des~rihethis advice from the Secretary of State

as pushing and cajoling “. Clmambe-rlain advised Western Australian Ministers,
“

and gave his reasons for advising the-rn, to submit the question of Federation to
the electors. Western Australia was a responsible colony, of ten years standing.
The Government was under no obligation to follow any advice tendered by. the
Colonial Office. We have benn told a few pages earlier in the Caso—
on the au imority of time same professor—that “ hmckily the grant of Responsible
Governmemmt freed the courage- of Jolmim Forrest from the curb of Westminster.”
And yet we- are asked to believe that J01111 Forrest was “ pushed and cajoled”
by a letter of advice from Downing-street. Is it not better, and more just to the
dead statesman, to believe that lie acted under an hone-st conviction that to
consmmlt the people- omm time qimestiomu was the might timing to do ? The events showed
that it was time right timimug and that tIme Government, in its opposition to
Federation, had been out of step with the people. -

Later on (paragrapim 153) time Case tells us that “the States—and particularly
the less populated Statcs—foummd themselves obliged to consent to the alteration
of time Constitution by time insertion of section 105A.” Why this suggestion of
coercion ? All time State Governments in conference with time- Commonwealth
agreed to the- amendment ; all the Parlianiemmts approved it ; time peoples endorsed
it. Surely the- authors of time Case ummder-estirnate time good sense of the people
of Western Aumstrahia, and their mammiimmess, wlmon they suggest that their votes
were due to coercion and duress. Time Government, time Parliament, and the
people voted for time amendment be-cause timey tlmought the amendment was
advantageoums and its acceptance wise-—a view which, as shown elsewhere, was -

abundantly justified.
We cannot refrain from observing that these suggestions of cajolery and
coercion strengthen the impression, which perusal of the whole case confirmis,
that it is written in a strongly partisan spirit, with an eye for one side of the case
only. - . -

HAS FEDERALISM FAILED IN AUSTRALIA? -

Many of the arguments in the Case have no special applicability to Western

Australia, but are directed, against time Federal Constitution in particular acd
the- Federal System in general. Amid the authors include one chapter entitled
“The failure of Federalism in Australia “. - -

By a curiomm~ irony, time authors arc compelled to rely, ior the material of
this elmapter, entirely upon time- writing of two gentlemen, Mr. A. P. Canaway and --
Mr. T. B. Ashwdrth, botim of whom are confirmed unifleationists. Mr. Canaway
is a unificationist of nearly 40 years standing, and predicted the failure of -
Federalism in Australia before Australia was federated. Both of them are -
strange witnesses to be put into time box in favour of disunion. The authors of -
the Case see this embarrassmg Ia-ct, and naively remark that “it is not beyond
the bounds of possibility “. that if these- two gentle-men read the “ Case” they
would concede “the desirability of two umnitary systems—one for Western -

Australia, and one for Eastern Australia “. This see-ms rather a slender hope on -

which to put into the witness-box, in support of a divided Australia, two advocates
of a unified Australia. -

The lengthy extracts from time writings of these two witnesses deal wholly
with theoretical objections to the Federal System as such : its complexity ; its
division of responsibility and vision; and point out the various ways in which -

a Federal union falls short of the perfection of a complete union. Their conclusion
is that Federation is unworkable in Australia. The answer to them is that ib
works. -

- The -fact is that Federalism is a compromise between complete union and

disunion, and has the usual defect of a compromise, that it does not completely
satisfy anybody. The people of the six colonies of Australia wanted union, and -
 31

did not want unity; and they- joined in framing and accepting a Constitution
under which they would be one- for national affairs, and six for local affairs. Under
that Constitution they have known both prosperity and adversity. To prove
that Federalism has failed, critics must simow either that it has retarded prosperity,
or cnlmanced adversity. They do neither. They take- all the gains for granted,
and ignore tIme-rn. But every reverse in fortune, to whatever cause due, they
ascribe to Federation. -
Another witness from whom, in paragraph 136, they quote (not quite
correctly) an isolated sentence in slmpport of time-jr contention that judicial
interpretation is sweeping Australia towards umnification, is Professor K. II. Bailey.
But Professor Bailey’s main conclusion, in time- paper to which timey refer, is that
time Fathers of Federation succeeded in the main objects of their endeavour “.
- His second coumc-lusion is
r1~lmat co’rnmunitics which establish federalism, i.e., which desire to
become one for some- purposes, but for most purposes to remain independent
—must ~neccssarily pay for that cherished independemmee- in the hard coin
of ‘ constitutional i)rObleflIS ‘—problems of rigidity, of (lemarcation, of
balance- of- aumthmority. Logically, indeed, federalism might seem to be
essentially impermanent and traditional—a ste-ge- in a transition from
complete- independence to complete- unity. Histom-ieally regarded, federalism
is seen to be a plant with a very tenacious life of its owmm. But eve-n more
than with other forms of government, that life has always to be
maintaimmed through contest.”
Professor Bailey was clearly not the right witness for time author of the Case
to cnh. S -

- — CIIAPTKR V.

FINANCIAL RELATIONS BETWEEN COMMONWEALTH

- - AND STATE. -

- - The Secession Case rests largely on the financial argument. The impression
~M ~ought to be Create(1 that the Conunonwenith draws revenues from Western
Australia witlmommt giving the State an adequate return. It will assist towards
a just appreciation of time position if we set out the pertinent facts in the history
of Commonwealth and State relations. -

- PAYMENTS TO STATES GENERALLY.

/ BRADDON CLAUSE AND PER CAPITA PAYMENTS.
For the- first ten years of Federation the Commonwealth, pursuant to time
Braddon Clause of the Constitution, handed back to the States three-fourths of
time net custonns and excise revenue. - S -

Jim 1909 tIme Commonwealth assumed responsibility for old-age and invalid
pensions thus relieving the States of that financial liability. This increase of
- Commonwealth obligation accelerated a chm~ngein the basis of allocation and
accordingly, on the expiration of the- l3raddon Clause in 1910, it was agreed
between the Cornmommwealtim and the States that; in lieu of three-fourths o time
net customs and excis~re-venue, time Comnmonwealth should pay to the State-s 25s.
- per head of population. - - -

In the first complete year of the new system time States ,received £5,824,000
as compared with £8,089,000 for the last complete year of time old system. Timis
sum was less by £2,265,000 but the- reduction was practically off-set by time
additional charge on time Commonwealthm of £2,150,000 for old-age- pemisions. Time
- 25s. per head was eormtinnme-d until 1927 although time Commonwealth bad time
power to vary paynments after 1020. -
 32

WAR GBLIGATI0NS.
Dmmring the period of per enpita payments time war had happened; and- this
catastrophe drasticahlj, altered the financial position. At the end of- June,
1914, the Commonwealth debt stood at £19,000,000. At the-end-of 1922 it had
risen to £361,000,000. Of this total, £333,000,000 was on account of war; the
sharge on reve-nmme for interest, war pensions and the multifarious repatriation
services the-n approaclmiag full development, was £31,000,000.
-

In the face of sine-h humge- war obligations it is useless to talk of the financial
relations of time Commonwealth and States as tlmough the war had never-happened.
Yet the We-stern~Australianargument in the- Case practically ignores the war and
its burdens. -

FINANCIAL AGREEMENT.
The war charges were but slightly reduced when the discussions opened which
ultimately resulted in the- adoption of the now famous Financial Agreement.
Summarized, time Agreement amounted to this :—
In lie-u of paying the State-s 25s. per head :—
(a) Commonwealth assumes responsibility for State Debts.
(bi Comnmnonwealth pays State-s £76 million per year- for 58 years -

as general contribution to interest on past State Debts.

(c) Commonwealth pays £802,000 a ye-ar to Sinking Fund to extinguish
existing State Debts in 58 years.
(d) Commonwealth pays half the contribution to Sinking Fund to
wipe out mmew State-Debts in 53 years.
(c) Commonwealth pays an additional £160,000 (now £298,000 -with
exchange) a year in interest on transferred properties.
(f) Loan Council, consisting of representatives of Commonwealth and
States- to manage debts and conduct future borrowings,. is
permanently established.
This Agreement provided an immediate increase in payments by the Common-
-

wealth to time States of about-. £984,000 a year (to Western Australia, £89,000~i.
but what is more important, it carried the-constitutional assurance of permanency..
Apart from payments imnder the Financial Agreement, regular Commonwealth
payments to time States have increased under other headings, notably, special
-

grants anmd roads.

Let us compare payments by the Commonwealth to the States last year
with 1920—21 ~— - -

— - - - 1920—21. 1933-84.
£ £
Per capita payment .. ~. 6,600,000
Contribution for Interest- .. .. .. 7,585,000
Contribuition for Sinking Fund .. .. 1,290,000 -

Increased Interest on Transferred Pro-

perties . . - . . . S 160,000
Special Grant~to Western Australia,
-

-South Australia and- Tasmania .. 240,000 .. 2,130,000

Roads Grants . .-.- .. .. Nil .. 2,207,000

- 6,840,000 .. 13,372,000

Amount per head .. .. £1 5s. 4d. .. £2 Os. 3d.

- The annumal payments by the Commonwealth to the States have practically
doubled- in thirteen years despite the Commonwealth’s heavy burdens of the wal
and of old-age and invalid pensions. - - - -
 - 33 -

If to the payments set out in the table above we add the liabilities of invalid
and old-age pensions taken over from the States the comparison is
19Z0—2i. 1033—34.
£ £
Payments to States plus Invalid and -

Old-age Pensions 11,990,000

.. .. 24,335,000 ..

or an increased annual charge on the Commonwealth in thirteen years of almoet

£12,500,000.
MAGNITUDE OF COMMONWEALTH LIABILITY.
The magnittmde of Comrnoniweeith responsibility for fmnanmcing burdens common
to the whole of Austre.mha ms set out in the- following abbreviated summary of
Commonwealth expemmditure -

Major Services of an Inescapable Nature— - £

War Services .. .. .. .. - .. 19,000,000
- Payment-s to States .. .. - .. .. 13,500,000
Immva-hid and Old-age Pensions .. .. .. 12,000,000

Maternity Allowances .. . . - .. .. 300,000

Defence .. .. S... .. .. 5,000,000
mit-crest, Sinking Fund, and Exchange (other than wan-) 3,~00,000

or a total bf .. .. .. .. 53,300,000
All Otimer Services, including adnmimmistration of ordinary
departments ; not loss on the Post Office- and other business
undem-takings amid terrmtories; new works, bounties, and
- other charges - .. .. .. .. .. 5,200,000

nmakiug a grand total of .. .. .. 58,500,000

When, therefore, it is complained thimt taxation is high end that the difficulties
of State finance are considerable, time ummagnitude of the Comnmonwea-lth’s
responsibility for War, Defence, Paymne-nts to States, Old-age and Invalid Pensions
and Maternity Allowatices—-which together cost £50,000,000 a ycar—should be
‘iven the weight which properly attaches to the-mn in any discuission on Common-
wealth and State relatiommships. If this is done it becoimmes easy to mnmiderst-mmnd
why the Commonwealth requires to draw large re-venues from customs and excise
and also why it has been obliged to invade fields of direct- taxation which, before
the war, were left free to time States.

Pe~YMENTSTO WESTERN AUSTRALIA PARTiCULARLY.

having shown the extent of the Commonwealth’s obligations generally,
let us now consider the position as it applies to the Commumonwemmith’s dealings
with Western Australia in particular. -

SPECIAL GRANTS.
From- the beginning of Federation, Western Australia has, by reason of its
disabilities, been the subject of special financial treatment. During time- first five
years, in addition to its ordinary proportion ‘of the customs and excise revenue,
the State was allowed the proceeds of collections on imports from the otbmer States.
In 1910, when the per capita system was adopted, the special eircutmmst-ance-s of the
State were recognized by time provision of a special payment for a period of ten years,
commencing at £250,000 for the- first year and thereafter in sums dimnirmislmimmg by
£10,000, a year. In 1925—26 the grant was me-eased from £100,000 to £450,000
for that year, then fixed at £300,000 a year for the foJiowing six ye~mrs,imioreased
in 1932—33 to £500,000, and increased again in 1933—34 to £600,000. The-so grants
have aggregated over £6,000,000.
3985.—2 ‘ -
 34

- OTHER GRANTS.
In addition to these special grants, aggregating £6,000,000, the Commonwealth
assisted Western Australia by payments in the following connexioums :—~ £
Towards meeting losses on Soldier Settlement .. .. 1,478,000
(On equal sharing per head with the otimer States this
- would have bee-nm £1,030,000. Western Australia, there-
fore, received an addition of £448,000). -

Towards payment of Interest on State borrowings under the

Migration Agreement .. .. .. .. 740,000
Payrnoimts to assist wheat-growers .. .. . . i,i5~,ooo
Subsidies to air lines . . .. . . . , . . 407,000
Gold and other bounties .. .. .. .. 212,000
Relief of unernploymemmt .. . . . . . . 210,000

Total . .. .. .. .. .. 4,200,000

Adding these totals together we get a grand total of £10,200,000 as re-presenting

special Conurnonwealth payments to Western Australia from the commencement
of Federation to 1933—34, over and above the regimlar annual payments to Western
Australia in common with tIte other States. Other States, of course, received
certain grants also, buit relatively less than Western Australia.

ROAD PAYMENTS.
But this is not all. We must also note the Commonwealth grants to Western
Australia for road improvement. Such grant-s since 1926—27 have amounted to
£3,060,000, of which about £1,800,000 was contributed by the Stated of New South
Wales and Victoria. The basis of allocation gave special consideration to the
extent of Western Australia’s territory. If the distribution had been made on m
per head basis, Western Australia’s share probably would hardly have been more
than £1,000,000 for the period, instead of the actual sum of £3,060,000.

FINANCIAL AGREEMENT.
In the first year of the Financial Agreenmermt, 1927—28, Western Australi&
reoeived under the terms of that agreement £562,000, or £89,000 more than the
£1 5a. per head paid in the previous year. In the seven years the agreement haa
operated the aggregated increase over per capita payments was £508,000.

Return to the State per head,

Under the heads of regular payments—Financial Agreement, special granti
and road grants—the- Commonwealth in 1933—34 paid to Western Australia, ~
sum of £1,630,000. Compare this with previous years
1920-21, £570,000, equal to £1 14s. id. per head.
1924—25, £660,000, equal to £1 15s.’~d.per head.
1933—34, £1,630,000, equalto £3 14s. Od. per lie-ad.
In the last nine years the payments have mnore than doubled.
The figures showing the approximate allocation among the States of Common’
wealth receipts and expenditure from the Consolidated Revenue Fund for
are set out in the Commonwealth Treasury Statement given in Appendix I.,
page 87. From this statement it will be seen that the Comnmonwenlth expendmture
exceeded receipts for Western Australia by £3 17s. 7d. per head, for Tasmanmm
by £3 5s. lid, per head, and for South Australia by £3 2s. 8d. per head; whilst
the Commonwealth receipts exceeded expenditure for New South Wales by
£1 5s. per head, in Victoria by us. id. hier head, and for Queensland by 7d. The1
revenue to meet the excess exp~nditurefor Western Australia was raised mi~Ne~1
South Wales and Victoria.
 35 -

THE WESTERN AUSTRALIAN BUDGETARY POSITION.

We may now look at time bmmdgetary position. Western Australia, in the five
years prior to the depression, was in a better budgetary position than army other
State and its taxation per head was lighter than that of any other State,
except perhaps Victoria. Sir James Mitchell publicly said that dtmrimmg these
pre--dcpression years Western Australia enjoyed an almost care-free life.”
“

Since 1924 tho Budget results were as follows :—

Surpius. Deficit.
£ - £
1924—25 58,000
1925—26 99,000
1926—27 28,000
1927—28 26,000
1928—29 276,000
1929—30 518,000
1930—31 1,420,000
1931—32 1,557,000
1932—33 864,000
1933—34 (estimated) 75,000
THE SOURCES OF DEFICIT.
The increase in the deficit since 1929 was, of course, closely connected with
the depression. The Bmmdge-t position for 1932—33 may be simply expressed as
follows :— - -,
Details. Totil.
Revenue— - £ £
Taxation—including Hospital Tax 1,275,000
Commonwealth Contributions—.
Interest . . . 473,000
Sinking Fund 127,000
Special Grant 500,000
1,100,000

2,375,000

Expemmditure— £
Governmental—
Education 579,000
Police .. - 198,000
Medical and Charitable 476,000
Unemployment Relief 357,000
Other 707,000

* 2,317,000
Less receipts 812,000. 1,505,000

Net losses on loan services 1,734,000

- 3,239,000

Deficit for year - 864,000

Taxation, supplemented by Commonwealth assistance, was adequate to pay

ror ordinary Governmental services. The real financial difficulty here revealed
arises from the heavy losses amounting to £1,734,000 on loan Account.
 36

Compared with 1927—28 this loss has increased by over £1,000,000 arisin
mainly from land settlement and State trading enterprises. The capital of Stat,1
trading enterprises (shipping, meat works, impiement works and other) at 30t1
June, 1932, amounted to £3,553,000 and ascertained losses were £1,030,000. 0~
£10,000,000 a ient on Group Settlement £7,500,000, on tho estimate given by th,
1
Chairman of -the Agricultural Bank Board at an inquiry, are regarded si
irrecoverable. “As a result of unwise spending of borrowed money said ~h “

James Mitchell in his Budget Speech (1932—33) “We are- burdened with a heavy
debt.” -

The growth of that debt is shown in the table contained in Appendix 11-
From this it will be seen that the debt doubled in thirteen years and is £188 pet
head or more than 50 per cent. above the Australian average of £122 per head,
If semi-governmental indebtedness is added it is £192 per head; average for at
States; £132 per head; Western Australia being approximately 50 per cent. abov~
the average for all the States.
It is not our function to comment upon the State’s borrowing or spendin
policy, beyond noting the growth of time debt and the extent to which losses 011
loan services account for the State’s deficit.

ADJUSTING TAXATION. --

It is pertinent next to inquire what efforts Western Australia made toward

budget adjustment-. The Australian scheme -for financial rehabilitation, td whic~ -

Western Australia was a party, contemplated more or less uniform sacrifices iii at
the StateM in order J;o bring income and expenditure closer together and t-o provid
relief for the unemployed. One of the sacrificial measures took the form ii
emergency taxation. In the first year of the operation of the scheme the othef
States collected between them £9,000,000 in relief taxes with rates on itmcomei
up to is. in the But Western Australia in that year imposed no emergency
£.

taxation. Next year a tax of only 4~d.in the £ was imposed, but this ws
increased in 1933 and now ranges from 4d. to 9d.
In his Budget Speech (1932—33) Sir James Mitchell said :—
“I believe it is better to have a temporary deficit and wait bett~
times than to face increased taxation Our taxatiol
is lower than that of the other States
“.

The Premier spoke correctly. For four years up to 1933—34 Westen

-

Australian taxation—total taxation including emergency taxation—was the loweit

in the Commonwealth except Tasmania. -

Examination of the taxation schedules of the various States discloses that oe

-

incomes from personal exertion Western Australia is taxing below the average 01
incomes of £300 and over, below the average on incomes from property in every
ease, and below the average on company incomes generally. (See Appendix ~i

PURPOSE OF TH~CHAPTER.
The purpose of this chapter has been t~bring out simply the following points :—
That during the Federation period, on public financial account, th~
Commonwealth has paid to or for Western Australia a total sum largely ii
- excess of the total amount which it has received from the State in revenuet
That the growth of State indebtedness has been at a much heavier r&ti
than that of any other State. - - -

That the budget deficits which have embarrassed the State Treasury
‘in recent years are accounted for by the heavy losses on State loan service -

which were accentuated by the depression.

That for several years prior to 1934 the taxation per head in Weiten
Australia was the lowest of all the States except Tasmania. -
 37

CHAPTER YL

- GENERAL BENEFITS OF FINANCIAL AGREEMENT,

These facts of the general finfmncial relation of the Commonwealth to the
States having been gencrally set out, it is convenient to revert to the Financial
Agreement. The const~tut-ionaIimplications of that agreement have been dealt
with in an earlier chapter. What we have now to consider are the financial
circumstances attending the adoption of that agreement and the practical financial
effects which have-followed.
The agreement was proposed by the Oommonweiilth primarily to provide a
permanent basis of financial relationship with the States and to put an end to the-
yearly uncertainty which was a matter of much State concern. It was in advance
of any previous proposal in that it brought about, for the first time, the definite
linking of Commonwep~lth responsibility with State responsibility for all public
debts past and future. It meant not only that the Commonwealth backed the
credit of the States but it also meant that the Commonwealth bound itself to p~~y
off one-third of the state Debts which had been contracted and half of the new
State Debts which may be contracted in the future—an enormous obligation.
It was this central feature of joint responsibility which commended it to
acceptance by seven parliaments, and subsequently to a majority of the electors
in all the States and in time aggregate by three to one when it was submitted to
the vote of the people for embodiment in the Constitution. The referendum vote
was emphatic.
But to give finality and permanence to the basis of Commonwealth and State
financial relationships was not all. It was desired, in addition, to stabilize the
public credit of Australia. At the time when the discussions were in progress the
eredit of the States, and of the Commonwealth as well, was suffering from certain
adverse influences and did not stand as high abroad as did that of some other
dominions. The borrowings of the States had increased in the seven years 1920—27
by £244,000,000, while Commonwealth debt had increased in the same period by
£22,000,000, the total debts being £1,043,000,000 of which £515,000,000 was owing
overseas. The great increase of time State debts in particular had given rise to
misgivings in London which re-acted to the prejudice of all Australian securities
and those of some States in particular.
The Agreement sought to improve the position by substituting one borrowing
authority for seven; by placing the security of all Australia behind the past and
future borrowings of each ; by subjecting subsequent issues to orderly
management; and by providing) as a matter of constitutional obligation, adequate
sinking funds for the extinction ~ all-debts within definite periods.
The beneficial re~actions upon Australian securities which immediately
in the Constitution are current history.
followed the incorporation of the A~’reemen~
There was an approach to standaijization of values i -- home market, and -

London financial authorities heralde he change as a ~.h~ ntal reform which

improved the status of Australian i. - -~--i -

But the authors of thereform even more wise y an they knew. It is -

seldom that the value of a great measure of public policy has been so completely
vindicated by later events. The consolidation of Australian financial obligations
did not, of course, save Australian stocks from all the repercussions of the panic
which accompanied the onset of the depression, but it provided the fulcrum by
which one of the heaviest loads of the depression was lifted from the Australian
financial structure.
- -

Had all the debts of Auslralia been in their previous unco-ordinated condition,
the orderly conversion of all the internal obligations into a consolidated stock, -

bearing a lower rate of interest, would not have been possible, and the
recent conversions of £110,000,000 of the oversea debt, ii possible at all, could
certainly not have been accomplished with the same ease and with the same -

advantage in terms. The internal conversion was a saving to the Treasuries of

-
 38

the States of £4,300,000 a year and to the Treasury of the Commonwealth of

£3,100,000 a year or £7,400,000 in all. The two operations will save the Western
.Australian Treasury £451,000 a year in interest payments alone.
With sinking fund savings added the budget is eased £900,000 a year.
Considered from all angles the Financial Agreement has been an outstanding
development of the Australian Federal system. It has worked so far to the specific
~nancial advantage of every State in a period of unprecedented stress and it will
continue to work to time specific financial advantage of-every State and to none
more than Western Australia as relatively the most heavily indebted of them nil.
With a completeness that could scarcely have been foreseen the Financial
Agreement has, to borrow’the phrase.of U. II. Reid, quoted with approval in the
Case—” reconciled the financial wisdom of the Commonwealth with the financial
security of the States “.

The Case says (paragraph 154) that financially “ the States are- tied to the
chariot wheels ci the Commonwealth It might as truly be said that the Common-
“.

wealth is tied to the chariot wheels of the States. The Commonwealth, like the
States, is bound by the Financial Agreement and the decisions of the Loan Council,
which is representative of both Commonwealth and States. The real truth ii
that Commonwealth and States, who are all travelling iii the same direction,
have wisely agreed to ride in the same chariot..

- CHAPTER VII.

-THE COMMONWEALTH BANK AND WESTERN AUSTRALIA.

The chief Commonwealth financial instrumentality and the regulating factor
in the Australian banking system is the Commonwealth Bank of Australia. It is
acknowledged in the Case that the “growth and development of the Common-
wealth Bank is the outstanding feature of Australian finance “; but this admission
ia immediately followed by the suggestion that a State bank with control of the
note issue in Western Australia would enjoy a proportionate degree of development
and success. - -

SPREADING THE RISKS.

-It is probably truer of banking than of any other economic activity
-that “union is strength This is illustrated by the strength of barikitug
“.

systems in British communities as contrasted with the weakness of banks

in the United States of America. In British communities it is usual for
large banks to have branches scattered throughout the country, and this system
of banking prevails in the United Kingdom, Canada, Australia, and New Zealand.
As a result, risks are so spread that, in the event of industries in one- area becon~ing
embarrassed by low prices or bad seasons, the banks are able to call upon their
resources in the ~ of the country to assist industries in. that area.
In the- United Staj~~ merica, however, wing to Federal and State legislation,
the banks cannot~~fcattertheir act ‘s over a wide area, but each bank
-

operates within a~1~Vl~t~’and sometimes mm a city or town. The welfare of

the banks is, therefore, almost entirely de )endent upon conditions in the States,
cities, or towns, where they are located, if local industries suffer serious reverses,
the banks within the affected area are embarrassed, and often fail. This is part
ef the- explanation of the wide-spread banking failures in. the United States withia
zecent years. - —

The ability to rely for finance upon banks whose branches are scattered
all over Australia, gives a greater stability to Western Australian affairs than would
be possible if all finance were provided by local banks. It is true that trading
banks operating in Australia would probably have branches in Western Australia
-even if it seceded from the Commonwealth, just- as some Australian banks now have
branches in New Zealand. But, the Commonwealth Bank of “Australia, acting
-

-as a central bank, unffiea and strengthens the trading 1 anks.

 39 -

MOBILIZATION OF GOLD AND TREASURY BILL FINANCE.

There can be no doubt that had it not been for the Commonwealth Bank,
and its central baixkrng functions, there -would have been a serious bajiking crisis
- in Australia during the depression. The Commonwealth Bank mobilized the
gold reserves of the trading banks, in order to meet. an adverse balance of payment
overseas. At the same time it provided the trading banks with central banking
credit in lieu of gold, thus keeping their resources liquid, and preventing the
contraction of credit, which would otherwise have been inevitable. A-n examination
of banking statistics makes it clear that, in the absence of the Commonwealtji
-

Bank, and. the reserves which it placed at the disposal of the trading banks, the
contraction of credit in Australia would have beca so severe as to paralyse industry,
and undermine confidence in the banks themselves.
It was because of the strength and prestige of the Commonwealth Bank that
it was able to come to the assistance of the trading banks without in the least
undermining confidence, or causing panic or hysteria. Not only did the Common-
wealth Bank keel) the banking system supplied with liquid reserves, thus avoiding
a crisis in Australian banking, but it also prevented a crisis in Australian
Government finance. From November, 1930, to November, 1933, it was
impraCtieal)le for Governments to raise long term loans in Australia, During -

this time Government expenditure exceeded Government revenue, and the

difference was financed by Treasury Bills discoqnted by the Commonwealth Bank
and the trading banks. At first these bills were discounted mainly by the
Commonwealth Bank, but later, as the reserves of the trading banks became more
liquid, as a result of the actions of the Commonwealth Bank, they too discounted
Treasury Bills. To make the bills acceptable to the trading banks, the Common-
wealth Bank guaranteed their repayment on maturity. In all, tIme Commonwealth
Bank raised for the Governments £52,000,000 secured on Treasury Bills in Australia
and £34,000,000 secured on short term debentures in London. Of the £34,000,00~
advanced in London, nearly all was provided by the Commonwealth Bank. The
£52,000,000 floating debt in Australia was financed partly by the Commonwealth
Bank and partly by the Trading -Banks, but this was only made possible by the
guarantee of the Commonwealth Bank.
EXCHANGE RATE.
The management of the exchange rate by the Commonwealth Bank was
another service of the greatest importance to Governments and individuals in
Australia. In December, 1931, when the exchange rato~threatenedto fluctuate
-

violently, the Commonwealth Bank agreed to purchase all funds becoming available
in London at a rate of £125 Australian per £100 sterling. Since then the rate of
exchange has remained fixed at the purchase price announced by the Common-’
wealth Bank. In the absence of the Bank’s support, there can be no doubt that.
the rate of exchange would have fluctuated violently, causing great disturbance
to Governments, primary producers, merchants, and manufacturers.
A CENTRAL BANK FOR WESTERN AUSTRALIA.
In what way has all this affected Western Australia
? Had Western Aus-
tralia not been part of the Australian Commonwealth, the services of. the Common- -

wealth Bank as a central bank would not have been available. Western Aus-
tralia might have had its own central bank, but in strength and prestige it could
not have hoped to rank with the Commonwealth Bank of Australia. It would
have suffered from the same -defect as banks in the United States of America, in -

that it would have depended upon a comparatively narrow range of industries,

for the most part-scattered through an area the who’e of which might have been
affected, at the one time, by low prices for primary products or adverse seasonal
conditions. . - -
-In providing assistance for the trading banks and financing Oovernment~
and in managing the rate of exchange, the resources and strength of a central
bank, whose activities were confined to Western Australia, must of necessity
 .40

have been very much less than the resources and strength of the Comnmonwealth
Bank of Australia. It would have been more difficult for a small central bank
to provide the trading banks with central banking reserves in which- they could
have confidence, and it would have run a greater risk of creating panic or hysteria,

- WESTERN AUSTRALIA AND THE EXCHANGE RATE.

In managing the exchange rate, the task of a Central Bank of Western
Australia would have beeh very much more difficult than the task of the Common.
- wealth Bank of Australia. It is difficult to decide the proper rate of exchange
for an area exporting products subject to rapid changes in prices, and greatly
affected by seasonal conditions. .Time variety of exports from the whole of Aus.
tralia gives a greater stability to prices, and time area from which production comes
makes it possible to average out seasonal conditions, The task of the central
bank -is thus lightened. -Moreover, -with its greater resources, time Commonwealth
Batik of Australia is likely to be less affected by rapid movements of funds, than
a smaller central bank, iti the event of speculators believing that the rate of
exchange is either too high or too low. Difficulties of this kind have been ex-
perienced in the management of the exchange rate in New Zealand and South
-

Africa. - -

It is difficult to assess, in precise figures, the benefit which primary producers

in Western Australia have gained from tIme high rate of exchange in Australia,
but that they have gained very great benefits is unquestionable. Had the Aus-
tralian currency not been held below par, prices of primary products exported
oversèa would have fallen very much mOre than it would have been possible for
the producers to reduce costs of production. -

EMERGENCY FINANCE. -

It would be easier for the public to lose confidence in a small central bank
engaged in the task of financing Government deficits and loan expenditure, during
an emergency, by means of Treasury Bills or other central batik credit.
- 8o far as the present depression is concerned, not onl~rwould ‘the resources
and prestige of a central bank in Western Australia have been less than- those of
the Commonwealth Bank, but demands made upon it would have been greater. -

Out of the total amount’of Treasury Bills In Australia (£52,000,000) flO less
than £7,000,000 have been issued on behalf of Western Australia. One-seventh
- to one-eighth of the total of Treasury Bills has therefore been made available for
a population of only one-fifteenth of the total of Australia. -

Of the floating debts provided in London, Western Australia has also had
more than its share on a per capita basis. The Commonwealth Bank has made
available to it £3,000,000 in London, vthich is one-eleventh of the total for the
Commonwealth and all States of £33,625,000. -

If it is remembered how carefully the Commonwealth Bank has had to proceed

to prevent the development of hysteria in Australia, it will be realized how very
much more difficult would have been the task of a smaller central bank providing -

proportionately a very much larger sum to finance Government expenditure.

MISCELLANEOUS SERVICES~
The Commbnwealth Bank has provided other assistance to Governments, in -

which Western Australia has shared. In conjutiction with the Loan Council, it has
helped to float loans on the domestic market, ahd generally has taken action
calculated to revive confidence in Australian securities at home and abroad. It
has been successful in its efforts to reduce rates of interest, which has made it -

possible for Governments to borrow at lower rates. It seems improbable that

Western Australia could have reduced rates ~of interest on bank deposits and
- overdrafts, and on Government securities, as much as it has been possible to reduce
them by throwing the whole of the resources of Australia into the effort.
 41
The Commonwealth Bank has provided Governments with advice and
criticism, helping them to straighten out their financial affairs in a period of diffi-
culJy. - - -

The dangers to which a small isolated community is exposed in regard to

Governnient finance are well illustrated by the recent fate of Newfoundland, which,
having elected to stand out of the Canadian Union, found itself unable to stand
the financial stresses of the depression, and ha~had to renounce its Dominion status
and seek the financial assistanpe of the Dominion of Canada and of Great Britain.
Another important type of assistance which it is possible for the Commonw~alth
Bank to render, was illustrated when it re.opened the Savings Bank in New South
Wales, and came to the assistance of the depositors of the Western Australian
Savings Bank at a time when that Institution was in considerable difficulties.
In a less spectacular way the Commonwealth -Bank has rendered other good
services to Western Australia through its Rural Credits Department and Develop-
ment Fund, which have assisted Rural industriesand given practical encouragement
to research and development. - - -

To sum up—any central hank, trading or savings bank formed in Western

Australia will naturally have to confine its interests to a region depending upon a
small range of industries. Such regional banks must be weak- compared with
institutions which have branches scattered over a large area, and risks spread among
largely diversified interests. The Commonwealth Bankt acts as a central bank for
the trading banks of Australia, but could not perform this function 19r the banks
in Western Australia if Western Australia were not a member State of the
Federation. What effect would this have on the trading banks? Western
Australia could scarcely hope to devise a banking system which would be as
-

flexible or as strong as the system now functioning In the Commonwealth. This

system has proved itsolt capable of withstanding great shocks. The recent trouble
in Newfoundland illustrates the risks to which a small community Is subject.

- —~ -,
C) - -

CHAPTER VIII.

- - - THE TARIFF. - -

“THE GREATEST BURDEN”

The title of Chapter 12 of the Case characterizes “Australian Protection
and Interstate Free Trade” as Western Australia’s Great,cst Bu~den under
“

Federation and in Chapter 14 it is stated that

“

The main reasons by which His Majesty’s subjects in Western

“

- Australia are constrained to secede from the Commonwealth are. .

that the combined effects of an Australian protective customs tariff and

of free trade between the States of the Commonwealth, have inflicted grave
injustice, great hardship and severe distress upon the people of Western
Australia ; that the result of the combined effects of Australian protection
and interstate free trade are such as to have most seriously endarai~ered
- the whole economic structure and social fabric of the State; and that
adequate and necessary relief from the ill effects of Australian ~rot~ tion
and interstate free trade, as aforesaid, cannot be obtained by the .peoplo
- of Western Australia otherwise than by their withdrawal from the
Commonwealth.” - - - -
 - 42

The fact then that the tariff is cit-ed as supplying the main reason for
abandoning the Federal Union justifies its in examining the statements
and arguments of the Case in some detail. At the beginning it is perhaps well to
emphasize the obvious, ann point out that the tariff is a matter of political policy
which may and does vary from time to time in accordance with the expressed
will of the people and that, good or bad, it has nothing whatever to do with the
principle of Federation. Nor have we any concern with the abstract merits of
free trade and protection as such. That being so there are limitations to our
discussion of some aspects of this section of the Case, which is conceived in the SI)lrlt
of a freetrade tract, although it is permissible for us to repeat what we have said
in an earlier conriexion that free trade, whatever its merits, is no longer the working
doctrine of any country and that, whether we like it or not, we are now h-~ing
-

in a completely protectionist ivorld. What we can usefully attempt to do is to

point out where, in our opinion, secessionists are wrong in their facts and deductions.

INCIDENCE OF THE TARIFF.

Let us admit at once, and it always has been admitted, that the Australian
tariff policy does bear with more than average severity upon Western Australia.
It is much the most important in the category of disabilities and the State has a
justifiable claim for compensation on this account. It is denied, however, that
the real burden can be more than approximately measured in terms of money
with the data at present available to statistical experts. It is even more strongly
denied that the authors of the Western Australian Case have attempted to survey
the problem fairly and impartially. They have omitted salient facts which should
have been within their knowledge and they have submitted statements which are
patently at- variance with the facts, as we shall bring to light later in this chapter.
It is of some importance that we should remark, also, that many of the tariff
disabilities to which the authors of the Case lay special claim are suffered equally
by residents of other States. The main burdens of the tariff according to the
findings of the Australian Tariff Committee, are carried by export producers and
- those in receipt of fixed incomes, or, in the last analysis, by land values and fixed -

investment. Land suitable for export production is by no means confined

. --

exclusively to Westerii Australia, though admittedly export production is relatively --

more important .in Western Australia than in the Eastern States. On the other -

hand, fixed investment has probably borne a relatively greater share of the burden;
in the Eastern States. Probably the gross economic costs of the tariff are not --

very much greater per head in Western Australia than elsewhere, On the othei~ -

hand, with regard to the economic benefits of the tariff, the position is admittedly
much more favourable to the Eastern States. It is important to remember, -

however, that the benefits are only partly economic, and that in large measure~
they are concerned with the fulfilment of non-economic but worthy ideas which
are cherished by East and West alike.
- “EXCESS COSTS.”
Professors Gibhin and Brigden, in giving evidence before the Royal Corn.-
mission on the Constitution, said, with reference to the excess costs of local pro-
tected production :— -

“We regard these costs as subsidies paid by Australian consumers, -

- the benefits of which are gained almost entirely in the States where they
are received .The benefits we refer to are not economic bçi~iflts~
. . .

forthis would imply that protection imposes no costs upon the eominunity.”~
They also remarked, with reference to their allocation of costs and subsidie~:
between the States -

“It must be admitted

• - that the figures of gains and losse~
. .

- on account of the tariff, even if they are accurate, would not really be ~;
-

- - measure of actual gains or losses to the States, but only a rough indication
- -
 43

of their direction and soverity from the figures we have given,

. . .

no deduction can he made as to the exact amounts of compensating subsidis~

which might be offered to, or claimed by, the States which have suffered
from the working of the tariff.”
The memorandum in which this evidence was enibodied. is referred to in
Appendix W. of The Australian Tariff, which is reproduced in full in the Western
Australian Case. It supplies the answer to those who are too ready to assume
that the costs of the tariff to Western Australia are offset by equal and comnpon-
sating economic benefits to the Eastern States, and emphasizes the difficulties of
measurement involved in the problem.
There is probably no subject in the whole field of economics which bristles
with so many difficulties as the measurement of tariff levels, and of the excess
costs of local production carried on under the shelter of a tariff wall. Notwith-
standing this fact, the authors of the Western Australian Case, in their eagerness
to saddle f~deralpolicy with sole responsibility for the present economic diffioultio~
of Western Australia, have not hesitated to rush in where economists fear to tread.
Figures are given with prodigality, but unhappily their prodigality is not matched
by their accuracy or their relevance. Although they may occasionally contain
sonic truth, the fact that they lead, in mo.ny instances, to a serious exaggeration
of the burdens admittedly placed by federal tariff policy on Western Australia,
does not appear to have weighed with the authors of the Case. There is every
need, therefore, to examine their claims closely.
- HEIGHT OF TARIFF.
In paragraph 424, Tf or example, the following table is given showing customs -

duty collections as a percentage of the value of dutiable imp’orts :—

IMPori-rs OF MmicuANmsE INTO AUSTIIALIA.
(hn Mituoss o~L’s.)

Percent~tgsof
Tear. Free. Dutiable. Customs Duty. Duty on
- Dutiable Import~.

£ - £ £ %
1922-23 .. .. 43.7 87,9 22.6 25.7l
1923-24 .. . • 43 97.4 25.1 25.77
1924—25 .. .. 49.8 96.8 26.4 27.3
1925-25 .. .. 55.4 - 95.8 27.8 29.0 -

19~6-’37 .. .. 59,2 104.9 31.8 30.3.

1927-25 .. .. 53.2 93.7 29,8 - 31.8
1025-29 .. .. 53.6 89.6 29.5 32.9
1029-3.) .. .. 54 76.7 30.1 39.2
26 34.5 16.4* 475
1930—31 ..‘ .. -

18.9 25.8 14.9* 57.7

1931—32 .. ..

1932—33 .. .. - 24 32.8 16.8* 51.2

Plus the following Frimage Duty

igmo—~1 .. .. .. . • .. .. ,. £1.8 million,
i931—3Z .. ‘‘ .. .. .. .. £3.5 million.
11132—3-3 .. .. .. - .. -.. .. .. £4.8 million.

- It would be a reasonable inference, for those unacquainted with the nature

of the~flgures,that the height of the tariff had more than doubled in ten years.
Nothing of this sort has taken place, of course. The table itself is defective in
that imports are included at their English sterling values, and customs duties
at their Australian currency values. An even more serious criticism is that
absolutely no regard at all hiis been paid to the influence bi duties collected for
revenue purposes only, and e9pecintlly thoso at specific rates. Wheti impor~prices
are falling, the percentage of duty collected to the value of goods dutiable at fixed.
 - 44

rates per unit of quantity naturally rises, even when the rate~of duty are unaltered.
The eftect of taking these two factors into account is illustrated in the following
table compiled in the office of the Commonwealth Statistician. In this the
,ourrenoy values have been placed on a comparable footing (column B), and only
the six most important revenue items have been eliminated from the calculations
(columns C and D) :— -

PERCENTAGE OF DUTY ON DUTIABLE IMPORTS.

A n. C. B.
Yesx. As Given In After Converting After Eliminating Aft-er Adding
Western to Uniform Six Largest Prima,ce to
Australian Cue. Currencies, Revenue items. Column C,

1927—28 - .. .. 31.8 31.7 27.26 27.26

1928—29 - .. .. 32.9 32.7 28.09 28.09
1929—30 .. .. 39.2 39.1 - 32.17 32.17
1930—31 .. .. 475* 41.3* 28.12* 30.77
1031—32 .. .. 57,7* 45.0* 19.07* 25.59
1932—33 .. .. 51.2* 40.6* 20.97* 27.27
• Excluding primage duties. - -

The table -is illustrative only. Column C shows the percentage of duty
collected to the value of imports of protected goods and of some goods subject to
fairly low revenue duties. Pritnage duties have been included in column D, but
while to some extent protective in effect, they were primarily revenue in character,
and are even now being reduced as opportunity warrants.
It is not suggested that the above table provides a measure of the height of the
tariff, or of changes in its relative height from time to time. It does not. No -

table showing only the percentage of duty collected to value of imports will do
this, because the composition of any year’s imports as between high-rate and
-low-rate goods is constantly changing, and is affected by the height of the rates
themselves. The table is useful, however, in demonstrating the futility of the
methods used in the Western Australian Case, and the way in which apparently
straightforward statistics can be used to bolster up preconceived ideas.
PROPORTION OF REVENUE AND PROTECTIVE DUTIES.
The large proportion of customs duty collections which is revenue rather than
protective in character is set out in the following tables recently compiled by the
Commonwealth Statistician , - - -

STATEMENT SHowING
THE DIvISIoN OP CLEARANCES OF IMPORTS AND CusToMs
DU’rIEs INTO PROTECTIVE AND REVENUE CLAS~ES. (CLASSIFICATION
ACCORDING TO SCHEDULES FUItNISILED BY THE DEPARTMENT OF TRADE
AND CIISTOMS.)

Cirarauoe from— - Gross Duties- Coliected.(8)

United Eloldom. Other Countries. Al! Countries.

jten,, United Othet All -

~ King- Count- Count.

dom. - ties, rice. Ratio R,uio Thio
Amount, to Clear. Amount, to Clear- Amount, to Clear.
ance~. slices. ance,.
£A000. - ~000. ~OOO. £A000. % £AOtlO. % £A000, %
- - 1931-82.
Di able . * 4r5
3,288 6,714 968 28.8 1,4111) 44.4 2,428 86 2
- Revenue .. - $,785 17,303 26,087 1,424 16.3 11,832 68.4 13,268 60.5
-
Free goods
~liae) (s)1O,260 (a)12 441 23,267 .. .. ..

Total .. (u)22,420 (m)88,032 50,008 2,392 10.7 13,2112 40.2 - - 15,684 28.0

(a) Excluding Goods, Free Mo.lmportsd. and for ti,e of Commonwealth Onvernment, &c.
(b) Excluding Extra, Special, Primage and Industries Preservation Act iltitie,.
 - - 45 - -

STATEMENT SHOWING TEll DIVISION OF CLEARANCES OF IMPORTS AND CUSTOMS

DUTIES INTO PROTEcTIVE AND REVENUE CLASSES. (CLASSIFICATION
ACCORDING TO SCHEDULES FURNISHED BY THE DEPARTMENT OP TI1AD~
AND CUSTOMS.) -

Clearance from— GroSs Duties Col’ected.(b) -

United Kingdom, Other Countries. All Countrie,.

Item. United Other All
King. Count. Count. -
dom. rice, rice, Ratio Ratio Ratio
- Amount, to Clear- Amount, to Clear- Amount, to Clear-
slices, alice,. ancea.
- £A000. LAO®, £A000. LA000. % LA000. % £A000. %
. 1932—33.
Dutiable—
Protective 5,429 4,143 9,571 1,316 24.2 2,007 48.4 8,323 84.7
Revenue .. 10,182 20,989 81,711 1,020 15.9 12,484 59.5 14,104 46.2
Free goods
(Merchan-
dise) .. (a)14,253 (a)tS,369 30.122 .. .. .. .. ,. ..

Total .. (a)29,804 (a)40,501 70,864 2,937 9.8 14,491 85.8 17,127 24.6

(a) Excluding Goods. Free lte.linported, and to! use of Common-wealth Government, &o. -
(b) I~xcluding1~xtra,Special, Primage ailS Industries J’rcaervatlon Act DutIes.

It will be seen that out of total gross duty collections in 1931—32 of

£15,684,000, as much as £13,256,000 or 84 ‘5 per cent, was collected from revenue
duties. If primage were included with the revenue duties the percentage would,
of course, be even higher. Protective duties returned only £2,428,000 to the
Commonwealth Treasury. The latter alone were equivalent to 36 ‘2 per cent, of
the value of the goods on which they were collected, to only 7 ~4per cent, of the
value of all dutiable goods, and to only 4’3 per cent. of the value of all merchandise
cleared. The figures for 1932—33 tell a rather similar story. The tables have
unfortunately not been compiled for earlier yeara.

In discussing the increase in the tariff from 1913 to 1921 the-then Conimon-
wealth Statistician (Mr. Wickens) is quoted in the Case as saying (paragraph
419)— -

“(1) Taking in the case of the imports of 1913 a composite unit which
- had all been cleared for consumption within that year and in respect of
which the duty paid on such clearance would amount to £13,000,000 under
the then existing tariff, the same goods at the same import prices would have
paid under the tariff of 1921 (the Masey Greene tariff) duty amounting to
£25,000,000, representing an increase of 92 per cent. in the average duty
per unit of quantity.” -

From this the ~nwary reader might be led to believe that the Massy Greene
tariff of 1921 practically doubled the level of the 1913 tariff. Even if it had risen
- by 92 per cent.—the figure quoted from the Conznwnwealth Year-Book of 1922—
the absolute rise in the tariff level would not have been great, since the 1913 tariff
‘was itself very low indeed. But the c~uotationfrom the Year-Book does not
support even this conclusion. The opening sentence of the very paragraph from
which the quotation is taken states: “In a consideration of the Tariff changes in
relation to protection it is necessary to place such changes on an ad vak,renl basis
in order to show the increment to cost represented by the Tariff.” The estimated
rise on this basis between 1911 and 1921 is given on the same page of the Year-
Book as from 17-08 per cent, to 22 ‘46 per cent., i.e., a-rise of 32 per cent., not
-92 per cent. Why, for the purposes of a denunciation of Australia’s policy of
-

protection, the authori of th. Can should select an estimate prepared by the
 46

Commonwealth Statistician explicitly “for other purposes” only they can explain.
Incidentally they omitted to add the last paragraph on this same page of the Year-
Book calling attention to the subsequent substantial reductions in the duties on
fencing wire, wire netting, galvanized iron and tractors.
Again, in paragraph 420 of the Case reference is made to a document prepared
for the International Economic Conference of 1927, estimating the 1925 level of
the Australian Tariff as 145 per cent. of its 1913 level. The reference has very
obviously* been drawn from The Australian Tariff (p. 156), but the authors
of the Case are apparently not interested in the Tariff Committee’s further statenient
that: We do not endorse the flgure~quoted, and they are used as they wore
“

intended to be used, merely to illustrate the general position” (p. 158). Nor,
apparently, are they interested in the many qualifications expressed in the original
document, or the definite statement that : A large margin of error must be
“

allowed “ (p. 11). They neglect also to point out that, in the final summing up
in the original document, the 1925 tariff level of Australia was placed at a lower
figure than those of Spain, the United States, Argentine, Hungary, Poland and
Jugoslavia. Even for n~nufacturcd goods only, Australia’s tariff level wa~
exceeded by those of Spain, the United States, Poland and the Argentine (pp. 16—17).

FARM AND INDUSTRIAL PRICES. -

In paragraph 432, the authors of the Case have reproduced from the Circular
of the Bank of New South Wales for May, 1933, a graph purporting to show the
movement in Australiali farm and industrial prices from 1927 to the beginning
of 1933. On it is based a statement that” the burden of tile tariff on the unsheltered
industries has relatively increased.” The graph is not continued beyond 1%iarch~
1933, the very month in which the prices of primary products generally reached
their lowest levels. The very substantial rise in the following twelve months is,
totally ignored. In selecting for their purposes a circular twelve months old
they presumably were not cognisant of the following passage in the same Bank’s.
circular for October, 1933 :—
From time to time there has appeared in this Circular a graph of
‘Australian Farm and Industrial Prices.’ The publication of this graph
was discontinued because the data on which it was based were not entirely
satisfactory.” . -

The Commonwealth Statistician has also called attention to the misleading nature
of the indexes which were used to compile this graph.
No really satisfactory indexes have yet been compiled to depict the relative
movements of farmers’ prices and farmers’ costs. A graph has been included
below, however, which does give some idea of the position, The following notes- -

on the indexes should be read in conjunction with the curves to which they refer :—
PRIMARY PRODUCERS’ PRICES.
- Ezpoct Price.lndex fur Western Australia —This new index has been compiled by the Conimonwealtli
Ststistician. and includes the export parity prices of wool, wheat, butter, beef, lamb, tallow, currants, silver
lopper and gmd. weighted in proportion to their relative importance in Western Australia’s exports of 1932—~3.
PRIMARY PRODUCERS’ COSTS.
Indsx of &leefed Retail Prices, Perth—The Index Includod in the graph has been complIed by combining the
retail prices colie-cted iii Perth by the Commonwealth Statistician for groceries, clothing, manchester goods,
and household geer, three eroups giving a fair representation of the articles bought retail by primary producom.
Index of Wiokoale Pciees of lion-rural Comsncedties, ‘~ydn&t,—Th1sIndex Is compiled by the Government,
Statletielan -of Now South IVaics, and includes grocerIes, metals and coal, building materials, chemicals, cotton,
leather and lute goods. it ii not entirely satisfactory for the present purpooe, but has been included In default of
better information, -

mdcc of A~m-ievlturaland Pastoral Woge Rates, Western Australfa.—ThIs index Is complied by the Cons-
monwesith Statistician, it Is an unweighted average of eleven rates, of which four are “ predomth’ant” ratea
seven State Award rates, and five Gommonweait-h Award rate,,
hider o it’agea ~n Oolst-ninlng, Weote~Australia.—ThIs index has been specially -compiled from data
collected by tIme Commonwealth Statistician. It is an unweighted average of thirteen rates, all fixed by awards
of the State Court. -

* Si,icc an error in the documentary referencenumber Is repeated.

 47

1’
cm,
cm)

(t)
ci
,‘~

0
(5)

0)

0)
N
S
0)

0 0
0 0 0
0 N
 48
it is at once evident that this graph tells a very different story from the graph
reproduced in paragraph 432 of the Case, and now withdrawn by its original authors.
It does not show that the gap between primary producers’ costs and prices has
been closed, but it does indicate that the gap in Western Australia is very much
narrower than is commonly believed, and certainly very much narrower than the
authors of the Case have attempted to show.. ‘l’lio export price index shows a
decline of a little over 20 per cent, fr~imJanuary, 1928, to the present time. Over
tho same period the selected retail prices have fallen slightly less, and agricultural
wage rates to about the same extent. Other price~s,rather inadequately represented
by the Sydney index of non-rural commodities, appear to have fallen only by about
11 per cent. The index of wage rates in the gold-mining industry (which is, of
course, represented in the export price index) has fallen by only about 8 per cent.
As this index is based entirely on State Awards, and Agreements, the Eastern
States can hardly be held responsible for ith failure to decline in sympathy with
other wage rates and retail prices.
It is typical of the state of mind revealed elsewhere by the authors of the Case
that the very substantial tariff reductions made by the Lyons Government receive
only scant ond grudging admission. They maintain, also, that the present level
of the tariff is very much higher than it was under the 1928 Bruce—Page tariff.

REMOVAL OF SURCHARGES AND PROHIBITIONS.

One of the first acts of the Lyons Government was to commence the removal
of the special 50 pei’ cent. surcharges and outright prohibitions on imports which
the Scullin Government had imposed as a temporary emergency expedient to
restore the balance of payments. The balance having been restored, the special
duties were removed from twelvo items in May, 1932, and from further items in
September arid October of the same year. On and after the 9th of March, 1933,
the goods subject to special duty were restricted to a small group, none of which
Was of any importance in primary production; and this list was still further reduced
by the elimination of further items in October of last year. Of the 78 classes of
goods subject to outright prohibition of import, 43 were removed from the prohibited
list in February, 1932, and eleven more in May, 1932. In August of the same year
the remaining 24 items were removed, thus marking the end~of the system of
emergency prohibitions.

PRIMAGE REDUCTIONS.
Substantial reductions have also been made from timo to time in the primage
duty charged on goods used by primary, producers, and in many cases such goods
have been exempted altogether from primage duty. These reductions and
o’emptions have been of great benefit to primary producers. It is not necessary
to present their detailed history here, but reference will be made in. a subsequent
~sction of this chapter to the extensive list of goods used in primary production
which are at present entirely exempt from primage, orsubject.to the low rate of
4 per cent.

LOWERED PREFERENTIAL DUTIES.

Quito inconsistently the authors of the Case complain bitterly of the effect
of the current rate of exchange in improving the competitive position of Australian
manufacturers, but remain practically silent on the greater benefits It confers on
export producers. They are ‘unable to ignore, of course, the action of the
L’ommonwealtli Government in giving effect to the Tariff Board’s recommendations
 49

designed to remove the protective incidence of exchange and prilnage, but they
attempt to depreciate even this great contribution to the objective of a more
moderate tariff. The immediate effect of the legislation passed to give effect to the
Board’s recommendations was the lowering of all protective ditties tinder the
British Preferential Tariff by a quarter at the duty or an eighth of the value for duty,
whichever was the less ; and the reduction, of primage duty on the same items
from 10 to 5 per cent. ‘rue number of itenis on which duties were so reduced
amounted to the large total of 839, the reductions on account of both duty and
primage ranging up to a maximum of 17~~ cent. ad valorcnt. The Minister
for Customs remarked at the tune that this ropres~nted the greatest single “

contribution directed toward the encouragement of British trade by any

government since 1907.” As a comment on the methods pursued by the authors
of the Case it is necessary merely to quote their observations on this statoment
(paragraph 412)
The contribution is more apparent than real, and the Minister’s
statement serves merely to emphnsize tile entire absence of any previous
contribution at all, and the absence of any real merit in the proposals for
which so much credit has been taken.” (Black type ours.)
Th addition to the major reductions to which attention has already been called,
there have been otl]Cr reductions of the tariff duties and Some increases. A complete
account of the alterations, even in the last few years, would serve only to confuse
the reader. A much clearer picture of the net results of all the alterations can
be given by comparing the existing tariff rates with those ruling (a) under the
Scullin tariff and (b) under the Bruce-Page tariff of 1928.

(a) LYoNs TARIFF COMPARRD WITh TIIR SCULLIN TARIFF.

(i) British Pr6ferential.—Excluding the reductions in primago duty, but
taking into acc~ountthe exchange adjustment, the reductions total 891, and those
charged at ad valorem rates show an average reduction of 13~per cent. Only
twenty items were increased, the ad valorem increases averaging 11~per cent.
Six of the increased duties were revenue duties, and the whole of the remaining
fourteen increases were supported by Tariff Board recommendations.
Of the protective duties in the British Preferential Tariff, 90 per cent. have
been reduced. Of all the items in this Tariff, 50 per cent. are now lower than
they were under the Scullin British Preferential Tariff.

(ii) GeneraL*_~.Again excluding primage duties, the reductions total 193,

those charged at ad valorem rates showing an average reduction of 24 per cent.
On the other hand, while 410 items were increased, the average ad valorem increase
was only 7 per cent. Of the total of 410 increases 386, or nearly all, were due to
the application of the preferential formula agreed to at Ottawa. Of the remainder,
sixteen were supported by Tariff Board recommendations, and the remaining
eight were revenue duties. On the whole it is safe to maintain that the present
General Tariff is lower than the Scullin Government’s General Tariff.
It will at once be evident that the Lyons Government has made very sub-
stantial reductions in the duties applicable under the Scullin Tariff. The
,reductions are, in fact, entirely without parallel in recent times. Suh8tantial as
they are, however, the authors of the Western Australian Case are not prepared
to ailow them any weight at all. They state categorically in paragraph 418—
“There is no possibility of the existing tariff being reduced so as to bring ahou~
an effective reduction to the level of, or lower than the measure of protection which
existed at the time of the tariff of 1928”
* There are 355 sets of duty included in TsriiT Item 174, relating to items which were previously admitted
under Departmental Dy-laws, and which are now -peciflcally mentioned in the TartS. From the TartS a~pc~t
these really represent reductions, although they have been accompanied by an increase of 6 per cent. in the
Oenecat TarUl rates In order to conlply with the prefeeputlat formula of the Ottawa Agreement.
 50

The reductions made in the existing tariff as compared with the Scullin
tariff provide a sufficient answer to this assertion. The answer can be strengthened
by considering the level of the existing tariff in relation to the Bruce-Page Tariff
.of 1928.

(b) LYONS TARIFF COMPARED wIra TilE BRUCE-PAGE TARIFF.

Ii) British PreferentiaL—Excluding primage duty, but taking into account the
exchange adjustment, the reductions total 592, and those charged at ad valorem
rates show an average reduction of 8 -8 per cent. The duties on 351 items were
increased, the ad valorem increases averaging 114 per cent. Seventy-seven of the
increased duties were revenue duties, 39 were imposed by the Scullin Government
and have not yet been reported on by the Tariff Board, and. two were imposed
for special reasons. The whole of the remaining 233 increases were supported by
Tariff Board recommendations.
(ii) GeneraL*_The General Tariff of the Lyons Government is admittedly
higher that the General Tariff of 1928. Again excluding primage duties, the
reductions total 611, those charged at ad valorem rates showing an average reduction
of 3O~per cent. On the other hand, there have been 753 increases, the average
ad valorem increase being 124 per cent. It is important, however, to notice the
reasons for these increases. Of the total of 753 items—
Three hundred were supported by recommendations of the Tariff Board.
Sixty-two made were by the Scullin Government and have not yet been
reported upon by the Tariff Board.
Two hundred and ninety-four were due to the application of the preferential
formula agreed to at Ottawa, in exchange for the valuable privileges
granted by Groat Britain to Australian primary producers.
Eight were imposed for special reasbns.
Eighty-nine were revenue duties (additional to those included above).

AN INESCAPABLE CONCLUSION.
The inescapable conclusion from these analyses of the tariff is that the
4xisting rates of duty are very much lower than those ruling under the Sculhin
Tariff ; and, as far as the British Preferential Tariff is concerned, possibly lower
than the Bruce-Page Tariff of 1928. While the General Tariff is admittedly higher
than the Bruce-Page General Tariff, the cause of the increase has been very largely
the desire to extend the preferential margin in favour of British manufacturers.
Added costs from increases in this margin are uosts of preference rather than
costs of protection, and preference has been extended solely with a desire to assist
Australian primary producers in securing markets for their exports in Great Britain.

TWO INFORMATIVE GRAPHS.

The comparisons given above, white they attempt to demonstrate scientifically
what the authors of the Case have been content to deny without proof, are not
particularly easy to present in summary form, As a supplementary indication
of the extent to which the protective rates of the British preferential tariff have
been reduced, the two following gra,phs have been prepared. The first relates to
the British Preferential Tariff and the second to the General Tariff. In each
graph a comparison has been made between the rates payable eu the 376 protective
items or sub-items subject to ad valorem duties (excluding composite and alter-
native rates) in 1933. and the rates payable on, as far us the classification permite,
the same ‘commodities under the 1928 tariff. It is unfortunately not possible to
compile data on a similar basis for the protective duties chargeable at fixed and
composite rates, but the sample of 376 items (in a total of 839) should afford a
fairly adequate picture of the getieral position.
* &. footaot~aa pap 49,
 51

Tariff
t~9of
Items
400 — I I I •

350
1/
500

250
1~’
200 I
I
150 I.

moo
50
• 5% ~ I I I I I I I I
C
RATE or DUTY

x3.UTISH PREFERENTIAL TARIFF—

PROTECTIVE AD VALOREM RATES OF DUTY 1928 AND 1933.
Cumulative number of items at or bdow th~r~tesindicated on the horizontal scale.,

/
/
/
I,
‘S

I
/
150

too /
— —
no /
——
C ~“1’ I
5% • 0%- ~$/..2O”/..25%-30%.35%.4O/,45%’ 5~%•55%.
RATE or DUTY

GENERAL TARIFF—
PROTECTIVE AD VALOREM RATES OF DUTY 1928 AND 1933.
Cumulative number of Itemna at or below the rate, indicateden the horizontal scale,
 52

The vertical scale on the left of the graphs indicates the number of items or
sub~itemswhich were chargeable at or below the rate stated on the horizontal
scale. In interpreting the graphs, it should be noticed that a shift of the curves
to the right indicates that duties have been raised, and a shift to the left that
duties have been lowered.
From the graph for the British Preferential Tariff it will be seen that, although
the two curves for 1928 and 1933 have changed slightly in shape, the curve for
1933 is distinctly to the left of the curve for 1928 ; indicating that, on these items,
the present tariff is below the level of the Bruce-Page Tariff of 1928. In the graph
for the General Tariff, which covers the same items, the position is reversed, the
1933 curve lying well to the right of the 1928 curve. As has already been
explained, however, this is largely due to the application of the Ottawa preference
formula, and to the preference granted by the exchange adjustment on British
Preferential protective items.

AUSTRALIAN PRICES OFTEN BELOW IMPORT PARITY.

The authors of the Western Australian Case fall into another very grave error
by assuming that the Australian manufacturer almost invariably takes full
advantage of the protection afforded him by the tariff, whatever the level of that
protection may be. In paragraph 428, for example, they state-~---
“In respect of Australian manufactures, experience has shown that,
with certain exceptions, the price of such goods is invariably fixed at a
- figure just below the ultimate price that is, or would be, payable for an
imported article of a similar nature.”
Similar assertions are made in paragraph 470, in particular relation to the
prices charged for the equipment used by wheatgrowers and pastoralists. Special
attention will be given to the prices of agricultural machinery at a later stage.
In the meantime let us examine the validity of the general assumption that the
prices of Australian manufactures, and hence the “excess costs” of local produc-
tion, are always up to the maximum limit s~tby oversea prices plus duties and other
landing charges. -

A CARDINAL ERROR IN THE CASE. -

-This assumption is well illustrated, along with a number of other serious

errors, in the table shown in Appendix 63 to the Case. It is an ambiguous table,
in more senses than one, but the most important f~atureof its ambiguity is the
uncertainty as to what it purports to represent. In paragraph 702, it is heralded
as a measure of the “minimum” amount of “customs duty which (without any
further burden upon the people of Western Australia) would have been collected”
on interstate imports by an independent State of Western Australia in 1931—32.
At the foot of the table itself, however, a note attempts to make it “clear that
the excess cost of £2,140,620 which consumers in Western Australia pay in this
• connexion is not a contribution to the revenue of the Commonwealth, but is the
price Western Australia pays to support the secondary industries of other States.”
That is to say, in the text it is given as a minimum measure of the revenue that
could be raised from these goods without raising their cost to the consumer, and
in the Appendix as a measure of the “excess costs” of Australian manufactures.
Unfortunately the table (even if the patent error of using English currency values
in one part, and Australian currency values in the other part of the calculations
were corrected) does not measure either of these things.
The values of certain of the interstate imports included in the table have
already been increased by the payment in the Eastern States of customs and
primage duties (and possibly some excise duties) either on the completed articles or
on their raw materials. As a measure of excess costs
“ “,therefore, using that
term in its geiierally accepted meaning, the table is defective, on one count,
 53

because part of the £2,140,620 is (or would be, if the table were correct in other -

rcsr ects) “a contribution to the revenue of the Commonwealth.” As a measure

of p01cm tial customs revenue, however, the table is not defective in taking these
duties rito account (provided, of course, they are not duplicated elsewhere in
the secession budget “).
“ -

Both as a measure of potential customs revenue and as a measure of

costs” it is, however, defective in a number of other very important respects.
Let us continue to discuss it, therefore, as a measure of excess costs,” with the
“

reservation that, for revenue purposes, Western Australia should be credited

with any contributions to Commonwealth revenue which may be incorporated
in the prices of interstate imports.

- EXCESS COSTS WRONGLY ESTIMATED.

Attention has been called above to an inaccuracy resulting from the failure
to convert English currency values to Australian currency values in a part of
the table. This error was admitted by the Western Australian representatives’
in evidence before the Commonwealth Grants Commission, and revised tables
were submitted for 1931—32 and 193233. It would perhaps be fairer to the
Western ~Australian Case to take these corrections into account. In what fo’lows,
therefore, reference is made to the revised table for 1932—33, which shows total
“ excess costs” of £2,091,391.
In discussing this table in evidence before the Commonwealth Grants Com-
mission, Dr. Roland Wilson, the economist attached to the Statistician’s I ianch
of the Commonwealth Treasury, submitted that it provided no measure of the
excess costs” paid by Western Australia on its interstate imports. He said—
The ~undamental objection to the table is its assumption that the
“

goods (valued at £8,370,113) imported from other States could have been
imported from overseas for LA. (8,370,113—2,091,391) ; i.e., LA. 6,278,722
or £ stg. 5,022,978. That this is not true will be evident from a considora-
• ~ tion of the following facts -

“Because of the current rate of exchange it would be open to Aus-

• ~ trahiv.n manufacturers to charge LA. 6,278,722 for certain aggregate of goods
(of given type and quality) costing £ stg. t,,022,978. Because of the duties
i~

charged on these goods it would be open to them to charge a further sum

~-

of (let us admit for the moment) LA. 2,091,391, or LA. 8,370,113 in all.
- The table, by setting down LA. 2,091,391 as the excess costs” of Au~-
“

~ trahian manufactures implies that the sterling value of the LA. 8,370,113’
~ of the interstate imports wculd have been only £ stg. 5,022,978, and hence
assumes that Australian manufacturers did in fact take full advantage
,of the high exchange rate to increase their prices by 25 per cent., and did
take full advantage of the opportunities afforded to them by the tarifi
and primage duties. Both assumptions are at variance with the facts,
according to the findings of the Tariff Board and the views expressed by
the authors of Time Australian Tariff. They agreed that in the case of
• many local manufactures prices were much lower than the prices of corres-
ponding imported goods., Since that time competition between local
• manufacturers has becomi~more ilitense and costs of production have
-

been lowered. . . . -

“If this be true, it follows that the cost of overseas goods similar to
those imported into Western Australia from the Eastern States would
have been greater than £ stg. 5,022,978 or LA. 6,278,722. how much
greater it is impossible to say, but even a proper application of the methods
used in Time Australian Tariff, tentative as they wore, would give a very
much smaller amount for excess costs” than LA. 2,091,391.”-
“
 54

In support of this opinion we submit the following statements from the

authorities cited above.
The authors of The Australian Tariff, after (hiscussing the difficulties in the
way of measuring excess costs with any degree of accuracy, proceeded to
“ “

make an estimate, the first step in which consisted of dividing home-produced

goods into three roughly equal groups. They then stated (paragraph 77)—
We suggest, therefore, for a rough! estimate, that time excess cost of
home-produced goods for each of these classes may be taken to equal the
following proportions of time duty on corresponding imports— -

Class (a) the full amount df the duty on corresponding imports.

Class (b) half the amount of the duty on corresponding imports.
Class (e) one-third of time amount of the duty on corresponding
- imports.’’
The Tariff Board, in its Annual Report for 1930—31, stated (p. 22)—
The shrinkage in the ‘~nationaldividend, which necessitated these
• re-adjustments, is also for~inga reduction in the selling price of nianu-
factured products. Buying can only be maintained in proportion as prices
are reduced to meet time lower purchasing power of time pm~biio
It is frequently’argued that a reduction in time Tariff would not reduce
prices and that this can be done only by reducing local costs. Time Board
has full know ledge that very many manufacturers base time prices of their
• commodities, not on the price of imported goods but on tue cost of pro-
duction. Tho Board knows that many protected industries sell their
goods at prices well above those of imported goods, after paying duty.
Furthermore, the Board realizes that many manufacturers are making
strenuous efforts to reduce prices still further.”
In its Report on Adjustment of Protective Duties to compensate for the Effects
of Exchange and Priniage in April, 1933, the Board stated
“In fact, some of the- more natural of Australian industries can now.
function under cover of time protection afforded by the exchange alone,
for instance, many of the products of the iron and steel industry arc now,
being sold at prices which are either less than or competitive with the
existing duty free landed cost of imported goods.
- “it is recogmu~cd that in many efficient industries the price of the
output is fixed by local competition or on production costs, and is much
below time price of imported duty paid goods In others,
however, there is a definite tendency for prices to creep towards the cost
of imported goods.” -

‘imtinuing his evi(lence to the Commonwealth Grants Commission, Dr. Wilson

The ilmaccllracy of the figure arrived at in the table presented by

Western Australia is made sufficiently evident by an examination of the
methods by which it has been prepared, and the fallacious results to which
mhey lea-din particular instances. -

“-The weighted average rate of duty collected on each class of oversea

mimports into Western Australia (calculated on Australian values) has been
- m~sumedto apply directly to similar classes of interstate imports. That
to say, it has been assumed that an equivalent duty (at the full rate)
m1r’~ndyincluded in the price of the interstate imports. This has beemf
i’~i’ despite time big disparity between the relative quantities of different
rfieies coming within a given group of oversea imports and the same
‘roe p of interstate imports, a disparity which makes it impossible to assume
 55

that, because certain duties were collected on all oversea goods of a par-
ticular class, corresponding duties would apply proportiommntely to inter-
state goods within the same class. Iii addition, no allowance has been
made for excise duties paid on locally-produced commodities.
“The odd results to which the method leads may be seen from con-
sidering the calculations for three of the groups :— -

(a) Foodstuffs qf Ve-getabte Origin.—Nearly half of these interstate

imports were accounted for by sugar, on which the excess
costs aro admittedly high. In 1932—33 about 17,200 tons of
sugar were imported into Western Australia, and confection-
ery and jams and jellies were also big items. It would be
difficult to calculate the excess costs on this group, as a
wimolc, with any accuracy, but the calculations in time table
are disarmingly simple. Forty-four per cent, is the figure
used in the process. It is very largely determined by time
fact that tea, constituting about two-thirds of the oversea
imports in this class, but quite negligible in interstate imports,
bore a high ravenue duty of 4d. pet lb.
(5) Tobacco.—The enormous suni of £421,657, plus a share of
primnage duty, is set down as representing the excess cost
of tobacco. It has been asserted by a member of the Com-
mission that well-informed Australian manufacturers con-
vinced the Tariff Communittec that the price of manufactured
tobacco in Australia, after nmaking allowance for duty, is
no higher than it is in England, and that there is no added
• cost in manufacture due to tIme operation of time tariff. Thig
was not denied in evidence by Mr. Wiison, and it is in con-
- sonance with views held by responsible officers of the Depart-
ment of Trade mmnd Customs. Any excess costs -of tobacco
must, therefore, he himitited to the locally-grown leaf. Time
amount of locally-grown leaf used, in Australian factories in
1932—33 was approximately 4,800,000 lb., out of a total of
about 23,000,000 lb Time average price paid in. that year
for locally-grown tobacco was 2s. hi. per lb., n~against an
average value of is. 12d. for imported unmnanufactmi~ed
tobacco. The excess costs may titus be put roughly at is.
per lb. or a total of £240,000. Mlocatcd on a population
basis, this would make the excess cost borne by Western.
Australia in 1932—33 about £10,000. Actually, it is less
than timis, as \Vestern Australia shares to mm small extent in
the subsidy to locally-grown tobacco. These calcuiations
are very approxiniate, but they show a- rather different result
froimi the £421,657 PIUS prmmage set out in the Western Ans- -

trahian table.
(o) Spirituous amid Alcoholic Liquors.—The calculations set out under
this head are almost equally unsound. The bulk of the
interstate imports consist of ales, beers and wines, on which
duties are relatively light. Time table assmnnos, however, that
these products are protected by a duty of l47~per cent., a
result obviously attributable to the fact that spirits, which
are subject to a very higim revenue duty, form the bulk of
Westermm Australia’s oversea imports. Iliad time excise duty
been ttm.ken into account, the percentage would. have been very
greatly reduced, as time proteative margins between customs
duties and excise are very much less than thecustotna duties
on spirits. They are negligible in the case. of ale and beer,
 56

and though wines are not subject to excise, the local manu-
facturers do not take anything like full advantage of the
customs duties. It is difficult to estimate what the actual
excess costs paid by Western Australia amount to, but they
cannot possibly be more than a small fraction of the sum set
- out in time table.
- “In the two groups of ‘Tobacco’ and ‘Spirituous and Alcoholic
Liquors’ alone, time assumed duty amounts to nearly £600,000 out of the
total of over £2,000,000, and of this £600,000 only a very small fraction
represents excess costs
‘ ‘.If corrections were made throughout time other
groups, substituting time actual amounts by which Eastern manufacturers
have taken advantage of the tariff for the irrelevant percentages in the
table, it is certain that the total for excess costs would be very greatly
reduced. It is difficult to say by what precise amount in the absence of
the relevant facts, but the table as it stands is certainly grossly overstated.
“A few minor points of criticism may be added. There is a difference
between the Australian values (converted from sterling) on which Customs
duties are imposed on oversea imports, and the Australian values of goods
of Australian manufacture on which the £2,091,391 has been calculated,
Time latter include in many cases, primage and revenue duties on raw
materials which do not form a part of ‘excess costs’, In addition, the
column in the table headed ‘Duty Collected ‘is inflated by reason of the
fact that the column headed Oversea Imports plus Duty’ does not include
‘

primage, whereas the column headed ‘Interstate Imports’ does include the
-

influence of primage. Again, the value of goods of oversea origin imported

into the Eastern States and transferred (as imported) to Western Australia
has been included in the value of interstate imports. For all these reasons.
the excess costs are further inflated.
‘ ‘ -

“In addition to overstating the excess costs,’ nothing is set off against
‘

them for the benefits which Western Australia herself receives from the
/, tariff, by way of subsidies to the production of her own interstate exports,
(
some of which are sold under the protection of the tariff duties.”
In addition to those mentioned specifically above, there are many Australian
industries in which competition is very keen and efficiency vpry high, particularly
those producing foodstuffs and articles in common use. The more limited demand
arising from reduced purchasing power has made the competition even more
intense. The several successive good seasons in Australia have resulted in unusually
large production of primary products, and it is reasonable to suppose that the prices
at which foodstuffs are sold in Australia are not, as a general rule, very much
influenced by the tariff. The prices in these circunmstanees are probably as iow
as will permit the industries to carry on, and in some cases they are declared to be
below the current costs of production. In this connexion, it is worth noticing
that interstate imports into Western Australia in 1932—33 included “Foodstuffs”
(other than sugar) valued at £1,128,940.
In the industries manufacturing ready-made apparel, underclothing, hosiery
-

arid boots, competition is widespread and intense. It can be reasonably accepted

• that for this reason these industries cannot take full advantage of the protection
available. ~Pheinterstate impo’rts into Western Australia in 1932—33 included
“Apparel “valued at £1,524,576. -

- - A FIGURE THAT CANNOT STAND.

It is of interest to note that the authors of the Case themselves adni~itthat
-

this” problem as a whole is impossible of an accurate solution.” Neverthelesm. they

have been foolish enough to put forward this estimate of over £2,000,000 as a
probable minimum, and suggest over £2,800,000 as a probable maximum. The
 57

latter figure has been produced by methods rather similar to, but even more
inaccurate than those followed in estimating time £2,000,000. From the evidence
already adduced, there can be no possible doubt that even this lower figure is
greatly overstated. It would require a most detailed and exhaustive investigation
to discover to what extent the value of interstate imports is raised by reason of the
tariff. This has never been undertaken, and it is doubtful whether sufficient statis-
tical data are available to permit of even an approximately a,ccurate solution.
This should be kept full~yin mind in a consideration of the budgetary position in
which Western Australia would find herself if she were separated from the
Commonwealth, a question to which we address ourselves in a subsequent chapter.

- THE “BURDEN” ON THE PRIMARY PRODUCER.

Let us now endeavour to get as clear a picture as we can of the nature and
extent of the direct burdens imposed by the tariff on the primary producer. Our
first task is to ascertain what items in the requirements of primary producers are
on the free list or subject to only small revenue duties. The complete list is given
in Appendix 4, but attention may be called here to some of the more important
items. -

GOODS THAT ARE FREE. -

Excluding agricultural machinery, which will be discussed in more detail later,

the following goods are admitted free under both the British Preferential and the
General Tariffs : hessian and jute piece goods ; corn and flour sacks ; bags, sacks,
packs and bales for corn, chaff, potatoes, coal and wool ; calico for bag-making
(under by-law); nicotine and derris spraying preparations ; sulphur, superphosphates
manufactured within the British Empire from Empire phosphates ; manures, n.o.i.
undressed timber from New Zealand for any purpose ; vegetable parchment ; linseed
for oil and cake manufacture (under by-law) ; seeds anti nuts ; compressed fodder
sacks ; certain crude oil engines (under by-law). In addition to these articles, -

rock salt comes in free- under the British Preferential Tariff and at only 20s. per
ton under the General Tariff ; while undressed timber for cases is also free under
the British Preferential Tariff and dutiable at only Is. per 100 superficial feet under
the General Tariff. Other Articles which are free under the British Preferential
- Tariff and dutiable only at tO per cent. under the General Tariff are rabbit nets and
netting, dog traps, and vermin traps, n.e.i. - -

Taken together, these items enter very largely into the working and handling
costs of agricultural, dairying and pastoral production. Fertilizers, bags and sacks,
wool-packs and case timber are particularly important items. The tariff certainly
- is innocent of any contribution to the “ burden” in these respects. -

Important items of mining requirements on the free list arc mining explosive~;
-

timber for underground purposes (under by-law); and the following articles coming
under the British Preferential Tariff; pneumatic drill-making and sharpening
machines, the larger types of dynamo electric maclihmes, hollow drill steel bars
(under by-law), mmd locked coil rope (under by-law). -

It may be added thatpractically all items of concern to primary industry in1

general, whether free or dutiable, have been exempted from priniage duty.

- - - - GALVANIZED IRON, FENCING WIRE AND WIRE NETTING. -

Let u~now inquire into the position of those three very important commodities
which figure so largely in the Case, galvanized iron, fencing wire and wire netting.
Galvanized iron pays a duty of 90s. per ton under ~the Britj~shPreferential -

Tariff, plus 10 per cent. Primage duty, which on a ton of 26 gauge of ‘Orb quality “

amounts to from £5 19s. Sd. to £6 3s. lOd, per ton. The duty paid landed cost
 58 -

in Australian currency ranges from £26 9s. 9d. to £28 12s. Id. The Australian
price is £22 is. 7d., showing a margin of from £4 2s. Id. to £6 4s. 6d. in favour
of the Australian manufacturer. This margin is just about equal to the duty
charged. In New Zealand, where there is no local industry and no duty other
than 3 per vent. primage, the landed cost to the importer is from £22 5s. 4d. to
£23 16s. 3d. per ton, or up to LI Bs. 8t1. more than the ruling Australian price.
The amount of duty payable tinder the British Preferential Tariff on a Ton
of 8 gauge galvanized fencing wire is 39s. The duty-paid landed cost in Australian
currency of British wire is £19 16s. 8d. The Australian price is £15 l3s. 4d., or
£4 3s. 4d. less than the price of imported wire including all charges. If a comparison
is made between the Australian price and the c.i.t.e. import price without duty,
the margin infavour of the Australian manufacturer is still £2 4s. 4d. If we make
a comparison with New Zealand, where there is no local manufacture and no duty
other than 3 per cant. primage, we find that the landed cost to the importer is
£17 7s. lid, per ton, or LI 14s. 7d. per ton more than the ruling Australian price.
Similar comparisons for 10 gauge wire show much the same results.
In the case of wire netting, which is manufactured in Western Australia,
there is no specific duty under the British Preferential Tariff, but the clauses of the
Industries Preservation Act have sometimes been invoked against dumping.
This is no- longer the case. The comparison is therefore made with the duty-free
-

import prices of British netting of the gauges and meshes in general use, Here the
Australian prices show an advantage if from 6d. to LI 7s. 4d. per mile.
Details of the comparison for those three items will be found in Appendices
5, 6 and 7. The important fact to he noticed is that in the two instances whore
duties are operating the local manufacturers’ prices are well below the duty-paid
landed costs of similar goods of United Kingdom origin, and also below the prices
in New Zealand, where duties are not operating. In all three cases, the local
manufacturers’ prices are at least as low as the duty-free landed coats of similar
• goods, and in two cases, well below even these figures. Exchange has, of course,
been taken into account in computing the landed costs of imports; but where
the local manufacturers arc taking no advantage of the duties, time tariff can hardly
be blamed for any reflection in their selling prices of the effects of exchange. In
any case, it is only fair to remember that exchange affects manufacturing costa
- to some extent, and that fall advantage is not always taken of the opportunity
afforded by the exchange rate to raise prices.

- AGRICULTURAL IMPLEMENTS.
Turning now to agricultural implements and machinery, we find that there
arc not very many-on the free list. There is, however, a number of not unimportant
aids to production which are admitted free under the British Preferential Tariff
and at only 10 or 15 per cent, under the General Tariff. These include: cotton
gins; handworked rakes and ploughs combined; hay tedders; lucerne bunohers;
maize harvesters; maize binders; threshing machines; winnower forks; hand-
- worked cultivators and drills; chaficutter knives ; cream separators; sbee~
-

shearing machines, hand pieces; discs for agricultural implements; -mould board
plates in the fiat; and traction engines (under by-law).
With these exceptions, agricultural machinery and appliances are- subject t~
protective duties. It is relevant to notice, however, that these duties have not
been increased since they were imposed in 1921. Any complaints about the rising
level of the tariff since that period can therefore have no relation to the duties on
agricultural implements and machinery. Moreover, the primary producer is
concerned less ~withthe nominal rates of duty than with the extent to which
manufacturers may have taken advantage of them to increase the prices of the
Australian products.
 59

-Tn examining this question, we select the items of farm machinery of most
concern to the wheat-grower, and thus of most concern to Western Australia.
This also happens to be a field in which Australian manufacturing enterprise is
-thsplayed at its best. Australia has been the pioneer in the evolution of broad-
acre tilling and harvesting machinery. The stump-jump plough, the stripper,
the ever-improving harvester, and other notable implements designed primarily
for local conditions—time use of which has made wheat-growing profitable on
millions of acres of Australman lands and added~scores of millions of pounds to the
national income—are the products of Australian inventive genius. Many of
these designs were copmed by manufacturers abroad and subsequently offered
for sale in Australiati markets in competition with the Imome-produced articles.
Under the protective system the agricultural implement industry has grown to
large dimensions but there is no evidence to show that this growth has been at
the expense of the primary industries which it serves, Following an inquiry
in 1924—25 the Tariff Board found that the apparent cost of the duties was equal
to a s’hade under one-seventh of a penny per bushel of wheat. “ It may be safely
said, therefore,” runs time report, “that the tariff on agricultural implements
is imposing no burden on the primary producer.”
As these lines are being written, the Tariff Board is again inquiring into the
bearing of the Tariff on the agricultural implenment industry, and its report will
presumably set out fully the facts as they exist at present. In the meantime,
we have had access to much of the evidence submitted to the Board on comparative -

prices of farm implements and machinery.

- DOWNWARD TREND OF AUSTRALIAN PRICES.

Since the peak period of 1921, when prices of all goods were at high levels,
Austndian manufacturers’ prices have been on the downward trend. Particulars
of the prices of sixteen important items are given in Appendix 8. Those show
that machinery-whicir could be bought for cash at Maylands or Fremantle (Western
Australia) in 1921 for £1,222, cost only £886 in 1931, £879 in 1933 and £855
in 1934.
According to evidence furnished to the Tariff Board, for the purposes of the
current inquiry, the prices for duplicate parts have advanced by only 21 per cent.
since pre-wnr times. “ The advances were 10 per cent. in 1917 and 25 per cent.
in 1920; the reductions were 15 per cent, in 1928, 7~per cent, in 1931 and 5 per
cent, in 1933 . . . this gives an (average) increase of 2~ per cent. from
pre-war years up to the present time “. Relevant particulars submitted to the
Tariff Board are set out in Appendices 9 to 12,

AUSTRALIAN, ARGENTINE, SOUTH AFRICAN AND NEW ZEALAND PRICES~

More illuminating, however, is the comparison of prices charged in Australia,
and the prices paid in other countries for machinery of the same or similar
descriptions. (See Appendices 13 to 18.) In Now Zealand, where duties are
not charged on the articles listed, the price for a 6-ft. reaper and binder with
transport and sheaf carrier is £86 15s. compared with £68 5s. in Australia. Horse
mowers and horse. rakes are also cheaper in Australia. In South Africa-
fifteen comparable implements are priced at figures In every instance much higher
than in Australia, In Argentine, the most direct competitor of Australia in
wheat production, prices in all instances are higher. In Canada comparable
prices for some implements are a little higher and for others a little lower, but on
the whole, the difference is trifling. -
 60

When we came to prepare the prices in Australia of home manufactured and

imported implements we find that the price of the imported article is always
considerably higher, though reductions in the Australian prices have always been
followed by reductions in the importers’ prices. The following table will illustrate
the movements :— - -

19~4. 1930. 1933.

Au~traIlan Au,trallan AustralIan

Maiiufac- I.H.c, Manufac- 3.11.0. Manufac- 1.110.
turere. turer,. - turers.

£ s. d. £ a. d. £ a. d. £ s. d. £ a. £ a. ~.
Reap.r and BInder, 6-ft. .. 77 0 0 92 0 0 88 5 0 72 0 0 68 5 76 0 0
Mower— -
41-It, (Auet,) . . - .. 33 5 0 .. 33 5 0 ,. 31 4
4k-ft. (1.11.0.) .. .. • . 34 s o . . 34 5 0 •. 88 0 0
Hay Rake, 91t. .. .. iS 0 0 20 10 0 10 0 0 20 10 0 16 11 21 10 S
crejn and Fertilizer Drill— -
16-disc Aust.) ,. .. 60 10 0 ., 64 2 6 .. 58 19
15-dlec 1.11.0.) .. .. .. 70 0 0 .. - 72 5 0 .. 613 0 0
Spring Tyne Cultivator with
Fore-carriage, 6k-ft. .. 23 0 6 32 15 0 24 14 0 28 10 0 24 17 28 10 S
Single Row Planter with Per-
ummze.r .. .. .. ., .. 810 1076 71 960
Due JJa,row with pole, 10 discs - -
a 16 Inches .. .. 17 11 0 20 0 0 13 6 0 18 2 6 12 S 16 2 I
Diamond harrow 4 seetlona
with bar .. .. .. 8 6 3 9 10 0 6 3 6 7 19 0 5 15 5 17 S
1st Disc Plough, 2-furrows .. 24 14 0 31 7 0 20 3 13 29 10 0 21 18 29 10 5

Net cash prices In all cales.

- AUSTRALIAN INDUSTRY BENEFITS PRODUCER.

-

It is claimed, moreover, by the Australian firms that their implements arc of

sturdier make. Another important point to notice is that where importers have
to compete with Australian manufacturers in the Australian market they quote
lower prices than are charged for comparable implements in other markets on a
free trade basis. Hence the Tariff Board’s observation—
“There should be taken into consideration time fact that Australian-
made implements are sold cheaper in this country than imported implements
in New Zealand or Argentine, so it is only reasonable to assume that if there
were no implement industry here the farmer would also be paying a higher
pric~for implements.” - -

Whether, in the circumstances of to-day, the tariff protection afforded is

greater than it need ho is for the Tariff Board to determine, but on an impartial
survey of the facts it is scarcely to be denied that the existence of a vigorous
Australian implement industry has acted as a safeguard against thó charging of
unjustifiable prices by oversea manufacturers. The Australian farmer, in regard
to both the quality and the price of his machinery requirements, is as well off as
the most favoured of his oversea competitors and appreciably hotter off than some.
Whatever may be the dispersed costs of the tariff’ which the primary industries
-

bear, it cannot be said that the direct costs of the tariff on the wheat-growers’ plant
are appreciable. In this connexion, the extravagance of the contentions put
forward in the Case is completely demonstrated.

• PRIMARY INDUSTRIES THAT-ARE PROTECTED.

We may now leave the question of costs and inquire how far it is true, as
suggested in the Case, that the primary industries derive no benefit from the-tariff;
or, if there is benefit, that it does not extend to the primary industries of Wester~i
Australia. - - - - - -

The fact that~hitherto, Western Australia has been so largely concerned

with the production of wheat and wool—commodities which have no tarifi
- protection—has given rise to the impression that the protective policy is concerned
 - - 61

mainly with secondary industries, and that primary industry has benefited only
incidentally. The fact is that the range of duties protecting primary production
is quite as extensive as the secondary range. That this is so may be seen from
the long list of duties set out in Appendix 19.
By way of revealing the attitude of mind of the authors of the Case towards
protection of primary products, it is perhaps well that we should here make a
few quotatioas from their volume :— -

In paragraph 400 we read— . -

“By means of the ‘Paterson Butter Scheme’, promoted in Eastern

Australia by time Deputy Leader of the Federal Courmtry Party, by whose
name the scheme is known, but in which the Western Australian dairy
farmers have refused to participate, the export of butter overseas has been
subsidized to the extent of 4~d.per pound. A duty of Gd. per pound, which
keeps New Zealand butter omit of the Australian mimarket, enables the butter
industry t-o exact from Australian consumers time money necessary to pay
that subsidy. The high price thus artificially created led, to mm abnormal
growtim in the production of butt-er, whicim, together with the recent fall in
prices, has broimglmt about time collapse-of the Paterson Scheme. ‘I’he omlue
methods prevail in other industries, e.g., sugar and dried fruits.”
And again in paragraph 453—
“ Turning to primary industries, other than wheat, an(l wool and gold,

it will be fomid that although the Con~momiwealthprotectionist policy has

embraced some Australian primary producers, inasmuch as there himis been
created for their benefit an Australian market at an inuiatedprice, e.g., the
sugar, time drIed fruits, the wino, the rice, and the butter industries, ‘little,
- - if any, of such benefits have accrued t-o the producers in Western Australia,
the mujority of whom are wheat-groweL~ and pastoralists The main
commodity which enjoys such a benefit ni this State, viz., butter, is an
insignificant percentage of the total production of the State. In fact, like
the sugar industry, the benefit of protection involves a net loss t~the State.”
While it is true that most of the items set out in- time schedulo are not at
present produced extensively in Western Australia many are, all can be, and
no doubt the majority of them will be produced in the years to come. Dairy pro(lucts
are conspicuous in this connexion. Despite the somewhat contemptuous reference
to the dairying industry contained in two of the above quotations, butter
production which has made astonislling strides in Western Australia within recent
years, reached last year the large output of 11,500,000 lb. Cheese production
-

is still in its beginnings, but it is increasing. and will increase further. Bacon and
ham production is increasing and there is room for large expansion. Taking it
as a whole, the dairying industry is looked to as the chief means of developing
the extensive lands of the South-West. Fruit-gro~vixmgin Western Australia,
which has expanded its acreage three-fold in 30 years, has a bright future, and
generally speaking has some advantages over the same industry in the Eastern
States in respect of export. Production of some varieties of tropical fruits such
as pineapples and bananas, has begun in the North-West under shelter øf the
tariff and there is no reason why it should not gradually develop. Tobacco-
growing, which has made a promising experimental start, may possibly grow
to considerable dimensions.
It is unnecessary to particularize further. The point to be made is that the
development of these and other lines of primary production, up to the present,
baa been achieved tinder shelter of a tariff which not merely prevents imports
from beyond Australia, but ensures the Australian market to the limit of tt~
capacity to Australian producers as a whole. It is true that Western Australian
producers are not so well placed to take full advantage of what the general
Australian market has to offer as are those nearer to the larger centres of population.
Nevertheless experience shows that the markets of Eastern Australia do otter a
valuable outlet for certain Western products, and that market will become more
 62 -

-important as population in the Eastern States increases. On the other hand,

the factor of distance gives the Western Australian producer a decided advantage
in the markets of his own State, and the extent to which he can exploit that
advantage is directly dependent upon his productive efficiency. It is, therefore,
-

not correct to say that the tariff confers no direct benefits upon primary
producers in Western Australia so far as their immediate home market and time
larger Australian market are concerned ; amid it is an exaggeration to say that
the tariff is any. serious detriment to them so far as the export market is
concerned.
WESTERN SECONDARY INDUSTRIES.
Of more substance are complaints of time tardy development of secondary
industries in Western Australia. Taking the number of factory employees in
-

relation to population, Western Australia had, in 1907—09, only 80 per cent. of the
Australian average. In 1928—29, the State still bad 72 per cent., but only 61 per
cent. iii 1932—33. TIme decline, in the last four years, has been due very largely to
the long continued depression. Nevertimeless it -must be admitted that the
development of secondary industry in Western Australia has not been as rapid as
in the other States. The benefits of the tariff, so far as manufacturing is concerned
have mmot been equal in their incidence, and here is to be found what is perhaps
the chief disability which it is the function of the Commonwealth Grants Commission
to measure. Justly viewed, however, it is a disability which arises primarily from
the relative smallness of population which precludes time establishment of those
industries which require a large turnover to enable goods to be produced at
reasonable prices. This is a disability which, in different degree; militates against
the profitable establishment of -certain desired industries elsewhere in Australia-.
But it is a disability which will become less with time, just as it has become
gradually less, to the point of extinction, in some of the outlying States of America,
where development, at first cohflned to primary industry, has assumed a more
-balanced form as population increased. -

- - -A SECESSWN DILEMMA. -

This brings us to the question of- the alternative tariff policies open to Western
Australia if she were separated from the rest of the Commonwealth. It is
impossible to say whether the people of Western Australia would like a low revenue
tariff or a high protective tariff. The authors of the Case, however, have (somewhat
uncertainly) made up their minds for them. They state, for example, in paragraph
-676—
“ . . . from the economic view-point Western Australia desires
- to secede in order that she might thereby escape from the burden of the
Commonwealth fiscal policy of protection, and institute a low tariff, which
will be more in keeping with the economic requirements of the State.”
The authors have apparently been forced to this view by a recognition of the
-difficulties of efficient secondary production for such a limited market. Admissions
of these natural bars to the development of manufacturing activity are to be found
throughout the Case. In paragraph 457, for example, it is stated—
his very limited local market makes it impo~sib1efor him
(the Western Australian manufacturer) in most cases, to sell profitably at
prices which will compete favorably with the prices (high though those
prices may be) at which the manufacturers of the Eastern States can sell
by reason of the benefits derived by them from mass production for an ex-
tensive local market.”
In paragraph 678 there ~sanother reference to— -

commodities which cannot be economically manufactured

in the State and which are required by the consumers in Western Australia
at a low cost.” —
 63

Despite sucim frank admissions of the real reasons for the relatively slow
development of manufacturing industries, the authors of time Case cannot quite
give up the idea that they would be better off outside the Commonwealth no matter
whether they had a high tariff or a low tariff. This view is expressed clearly in
the following quotation from the Case, which smmppiies its own refutation in the
passages we have taken the liberty of emphasizing (paragraphs 471—2)—
Western Australia is geograplmicaily isolated from the Eastern States,
and if Western Australia bad remained out of Federation and had she
burdened her primary industries by erecting around the borders of the State~
a tariff wall as high as that which to-day surrounds Australia, she would at
least imave had all the compensating advantages of that tariff wall, no matter
how ill-conceived and illusory it may have been. Industries similar to the
hot-house industries of Melbourne and Sydney—the Great Australian
Industries ‘ as they are called in time Eastern States—would then have
flourished in Western Australia, and would have provided employment for
tue urban population of this State. The farmers in the Western Australian
wheat belt and the population on the gold-fields would then have been able
t-o look to Perth and other centres in Western Australia, instead of to’
Melbourne and Sydney, for avenues of employment for their sons and
daughters there would Imavo boon greater opportunities for the native born
of Western Australia, and a more extensive home market for the primary
‘

industries would have been established, It may be that the system might
have crashed sooner or later ; but even so, the position then could hardly
have been worse than it is at the present time. -

The provisions of the Constitution, which have forbidden and still

forbid Western Australia from adopting such a system of State protection
have reacted and are reacting so as to deprive Western Australia of those
benefits which she would gain from a policy of high protection for this State.”
It seems, therefore, thmat the authors of the Case, in spite of their general
optimism respecting time results of secession are pessimistic and uncertain as to the
benefits to be derived from any kind of tariff which a seceded Western Australia-
might adopt.
Their dilemma is a real one. If the State adopts a highly protective tariff its
population is too small to enable it to reap the full advantage. If it adopts a low
revenue tariff its secondary industries, and also many of its lirinlary industries,.
will be worse off than they are declared to be now.

CHAPTER IX.

DUTIES ON STATE GOVERNMENT IMPORTS.

WHY FREE ENTRY IS NOT PERMITTED.
- The constitutional propriety of- levying duties on goods imported for use by
State Governments has been dealt with in a previous chapter. We shall hero
consider the practical implications of the policy. To begin with it should be obvious
that if State Governments hmad a riglmt to import what they cimose without duty the)
whole purpose of a tariff, whether for revenue or protection to home industry,
would be jeopardized. A similar right to import duty free would be claimed, either
directly or through the State Governments by nil public bodies, semi-governmenta’
 - 64

and municipal, and no limit could be set to the importation by a State Government
duty free of goods for use or consumption by its citizens generally. This would not
only violate the principle of the Constitution that taxation shall be uniformly
imposed, but it would make impossible any reliable forecast 9f customs
revenues.
Not only would time tariff policy be involved but also time Empire preferences
accorded to time United Kingdom, non-self-governing colonies, Canada amid New
- Zealand, under existing agreement-s made by time Cormimomiwealth with the
Governments of those ceuntries. It would be quite illogical to maintain ~a
preference in aid of the producers in those countries against foreigners,, whilst o~
the otimor Imand nullifying the protection afforded by the Tariff against, say, United
Kingdom, Canada and New Zealand.
The Commonwealth, although, of course, not itself liable to duty on imports
does not use this freedom to defeat its own tariff polic~’. Where tenders for
Commonwealth requirements are submitted by both importers and horns
manufacturers, the home tender is compared with the full-duty-paid landed cost
of the imported article and if it is lower than or approximately equal to that of
the importers, other conditions being equal, it is invariably accepted.

UNJUST TO PRIVATE ENTERPR!SES.

If State Government imports were admitted duty free, irrespective of whether
or not competing goods were produced in Australia, confusion and injustice would
arise as between public and private enterprises. Should time private manufacturer
imave to pay duty on his raw material, and time State Government not have to do so,
time private manufacturer would be at a disadvantage in comparison with the
Government workshop. If the raw materials were produced in Australia the
finished products of the private manufacturer would still be at a disadvantage i5
many instaimees as compared with finished goods imported by time State Government
- duty free.
Government institutions and rofreshment rooms are very large consumers
of primory products and, if freedom to import without duty were conceded, the
benefits of the tariff policy would be denied to producers. Time principal primary
products most likely to be affected are timber, fruit, butter, fish, meats and
~egetabies. - -

- WHERE DUTIES ARE WAiVED.

Where goods of a class or kind are not being produced or manufactured i~
Australia, adequate provision exists in time Tariff Act for the admission of these
goods under Departmental by-law irrespective of whet-Imer they are required by
State Governments or private enterprise. Generally speaking, if the Minister
- for Trade and Customs is satisfied that the particular goods required are not being,
or could not be, commercially manufactured in Australia, admission under Customa
by-law is permitted. Many millions of pounds worth of goods, very largely
articles of plant, are admitted under by-law annually. Moreover these by-laws
have been operated extensively in favour of goods imported by State Govern.
mexmts, and such large plants as those required by time Victorian State Electricity
Comm.issibn’s power scheme, Tasmanian Government hydro-electricity scheme
New South Wales Government’s Bunnerong electric power station and Western
Australian Government’s East Perth power station have bee-n so admitted, It
is maintained by the Customs Administration that, at all times, applications for
tariff concessions from State Governments are viewed sympathetically, and dealt
with liberally, but the Commonwealth Government could not allow the free im~
portation of goods for a State to affect adversely the industries of Australia. The
Commonwealth must ensure that the tariff policy adqpted by the people is applied
uniformly to all parts of Australia and to all classes of the community. Practically
- it is only to this extent that Customs Duty is required to be paid by State Govern-
ments upon their importations. -
 65

THE TEfl LOCOMOTIVES AND THIRTY-TWO BOILERS.

In the instance, specially mnentiormed in the Case, of 10 locomotives and 32 -

boilers which Western Australia wished to import in 1924, the request to

waive the duties was refused because locomotives were being built in Australia—
they were even built in the Western Australian Governmnent workshops. It is
true that the reason advanced for wishing to import was that the Western Aus-
tralian Government workshops and other Australian workshops were Itmhly
occupied at the time and that traffic requirements were urgent. In the official
correspondence a strong point is made of the fact that the cost of the imported
goods, duty paid, was less than time Australian tender price. Looking back on
this particular transaction, we think there is something to be said for the view
that, in all the circumstances of the case, the Western Australian application
might have been granted without serious detriment to the Australian industry.
Time building of locomotives for the cqjmipmcnt of State Railways has long
been an established industry in Australia, and as a general rule it would be im-
possible, without serious consequences, for the Minister to ignore this fact because
of temporary difficulties in one State. A further submission was made by Western
Australia that the locomotives and the duty thereon were paid for out of loan
moneys, but it is fairly evident that in applying the tariff provisions a distinction
could not reasonably be made between goods purchased from such moneys amid
goods paid for from other sources.

PERTH POWER STATION. -

The suggestion is made in the.Case that the plant required for additions to
the I’erth Power Station of an estimated value of £400,000 would be liable to a
duty estimnated at £90,000. In this instance Western Australia was informed
that admission under by-law would be allowed of certain specified portions of time
plant, forming the greater part of the installation, and that admission under
by-law of the balance of the plant could not be granted until definite evidence
was furnished that local manufacturers in Western Australia, or elsewhere in the
Commonwealth, wore unable to supply the same. -

-4 -

C
I-
_________________________________

/ ChAPTER X.

COASTAL SHIPPING.
- - PURPOSE OF THE NAVIGATION ACT. - - -

The policy of reserving coastal shipping to ships on the Australiami register,

under Australian control and complying witim Australian labour standards, is linked,
in the Case, with the general policy of protection and is cited as one of time specific
grievances of Western Australia. If time operation of time Navigation Act entails
some disability upon Western Australia because of the Stat-c’s distance from
Eastern centres, and the himitntlox~sof interstate land transport facilities, it is
now the function of the Commonwealth Grants Commission to measure the extent
of this disability and allow for it.
Any disability there may be is over-emphasized and, as happens in most of
the Secession contentions, no allowance is made for the off-setting advantages
which accrue to time State through hnving at command the services of established
- lines of improving ships, comparable witim the best of ocean liners in passenger
and cargo facilities and running to frequent and dependable scimedules. -

2933.—3 - - - - - -
 66
VALUE OF COASTAL MARINE.
- -

Every nation with an extended coastline aims at establishing its own coastal
marine, and every nation so circumstanced extends a measure of protection to
the operation of that marine within its own territorial waters. The United States
of America is a notable example. In the case of Australia the policy of building
up an efficient coastal marine was related to the -general policy of defence. It
is obvious that to a nation with a continental coastline of 12,000 miles—greater
than that of any other nation in the World—and with capital centres as far distant
as Perth is from, say, Sydney, a mercantile marine service is an indmspensablo
-

adjummct to the naval arm. It is equally obvious that such a marine must conform
not only to certain standards of passenger and freight requirements but also,
in respect of its personnel, to the standard of wages and conditions which prevails
for Australian industrial life as a whole.

FINDINGS OF TWO BOARDS OF INQUIRY.

A Royal Commission inquired into the operation of the Navigation Act in
relation to all the States in 1924, but, of its seven members, only two (one of
whom represented the Albany district in the Federal Parliament) found that
Western Australia had been adversely affected. These two suggested that the
primary producer should be allowed to use oversea. ships but that, in order still
to protect local shipping, tariffs should be imposed on freights and fares. This
suggestion was considered impracticable and in any case only differed in degree
from the protection already afforded by the Act to local shipping.
A more detailed inquiry was made by the Tariff Board in 1929 when every
phase of t-he question received attention. As the conclusions have ,genernl appli-
cation -and are opposite to the conditions prevailing at the present time we Quote
the relevant portions of the report.
In regard to cargo the Board found
- - - (i) That the amount of coastal trade done by overseas vessels prior to
the 1st July, 1921, was very small. (That the proportion was
something like 2 per cent. of the total trade seemed to meet with
general agreement.)
- (ii) That the overseas vessels plying regularly around the Australian coast
- anticipate handling very little cargo even if the restrictions are
removed.
Representatives of the interstate shipping Companies expressed the
~fear that if the coastal provisions of the Navigation Act were withdrawn
-spasmodic competition would arise from tramp vessels and other overseas
vessels which would seek freights on the Australian coast when there was
a shortage of freights elsewhere. -

“ The Board fully recognizes the possibility of competition from tramp

vessels, which would, no doubt, result in lower freight rates while they
were operating on the coast. The competition, from its spasmodi.’ nature,
- would tend to cause fluctuations in rates and make them unstable.
Stability of rates is an advantage to shippers, but, apart from this, it is
not unlikely that the competiton from the overseas vessels would, result
in the interstate vessels having to increase their rates by reason of the
decreased tonnage carried, and the ultimate outcome would be that, on the
average, rates would increase rather-than decrease. - -

it seems certain that the available cargo

fleet can meet all the demands of the Australian coastal trade for the
immediate future. If the Australian coast should be thrown open to over-
seas vessels, thus distributing the trade between a greater number of boats,
- - the cost of carrying cargo must increase and the position will become worse
rather than better. The fact that the tonnage available has only been
 - - - 67

partially used, coupled with the low earning capacity of the interstate
shipping, renders it imperative that no action should be taken that will
make the position more difficult for the Australian companies.
“As the position is at present there is an implied obligation upon
the Australian interstate shipping. companies to maintain an adequate
service around the coast of the Commonwealth, and the Board’s inquiry
- indicates that this obligation has been fulfilled so far as cargo is concerned.
If, however, it is made possible for oversea boats to enter the trade and
carry a proportion of cargo available from time to time, it must tend to
throw boats out of commission and the ultimate result will be that the
services of those coastal ports that offer comparatively small business will
be neglected.” -

At this inquiry, evidence was tendered to show that if the overseas steamers
were to engage in the coastal trade -the earnings of the trans-Australian railway~
(which already hoses about £140,000 a year) would be reduced by some £32,000 a
year, and the earnings of the Western Australian railways by about £13,000.

- EXEMPTIONS FAVOURING NORTH-WEST.

The Act provides for the issue of permits to oversea ships to carry passengers
and cargo in case of emergency or where the local service is not adequate to the
local requirements. The Commonwealth administration has always permitted
oversea ships engaged in the Fremnantle-Singapore trade to carry passengers,
produce, and stores between Fremnantle and ports in the North-West of the State.
Recently time State Government made proposals for the restriction of these permmt~
but, after close investigatioim, the Commonwealth Goverament decided to continue
the services with some slight adjustments of itineraries to facilitate alternation,
as far as practicable, between the pernmit vessels and those of the State-owned
line. In them negotiations it is significant that the Municipal Councils, pas-
toralists and traders of the North-West of Western Australia urgently appealed
to the Commonwealth Government to resist the proposals of the State Govern-
ment.
Australian Coastal Shipping has grown to be one of the very valuable Aus-
tralian industries and imow represents a capital investment of £10,000,000. The
official returns show that iii 1932—33 it supported a sea personnel of 8,536 mer-
chant officers and seamen and gave considerable other employment on shore.
Its benefits are distributed. -

CIIAPTER XL

THE SUGAR INDUSTRY.

FACTS NOT KNOWN OR FORGOTTEN. -

Considered purely in its fiscal aspect the sugar enibargo, i.e., the-prohibition
of importation into Australia—is a debit to Western Australia and to other States
as well, and we make no attempt to deny the fact or even minimize it. But this
is not to admit that the treatment of the sugar position in the Case is either corree~
or fair. The statements and contentions in that document we can comment
on later. At the moment we think it desirable to explain certain phases of the
sugar policy which do not appear to have boon understood by the Socessionista.
 68

Sugar is peculiar in that it seems always to have been a “problem” industry

whether it was based on beet, as in Europe, or on cane, as in the tropmcs. Its
production everywhere has been associated with special bounties tr tariiTh, or
special regulations; its marketing has been the subject of successive international
conventions; and never in its fluctuating history has it been more subject to
governmental intervention than at the present time.
When Federation was established, 86 per cent, of Australian sugar was grown
in Queensland by black labour, a-nd the industry had reached considerable de-
velopment. The first aim of Commonwealth policy was to eliminate black labour.
This was done by imposing duties of £6 per ton on imports of cane sugar, afl(I £10
per ton on imports of beet sugar. There was also an excise duty of £3 per ton
(afterwards increased to £4) on all Australian raw sugar, of which duty a rebate
equivalent to £2 per ton (afterwards increased to £3) was granted t-o g~owersin
respect of sugar produced entirely by white labour. The effect, Of these arrange-
ment-s was that white-grown sugar had a net protection against foreign cane sugar
of £5 per ton, and against Kanaka-grown sugar of £3 amid later of £2 per ton. B~r
1910, all Australian sugar was white-produced and in 1913 the excise was abolished,
When war broke out, the price of Australian raw sugar was around £15 per ton,
and the normal Australian production was still substantially less than the full
Australian requirements.

CONSEQUENCES OF WAR.
Under war conditions, world prices sharply rose and in 1915 the Commonwealth
Government foui-md it necessary to prohibit both e~portsand imports and assume
complete control expressly jim time interests of Australian consumers by ensuring
adequate supplies at reasonable prices. Tim home price for raw sugar was’
advanced to £18, but the crop was short and the Government had to import
123,145 tons of inferior sugar at an average price of £20 2s. 3d., exclusive of
Customs duty. Tn 1916 time local consumption price which had been 3d. per lb.
was advanced to 3W. per lb. to cover import losses, and t-lme Government imported
73,981 tons at £21 is. 3d. per ton wit-bout duty. In 1917, owing to rising costs
of production due to war conditions, the price of raw sugar was advanced to £21
per ton. No imports were necessary that year owing to a carry-over from the
previous crop. In 1918, the Australian crop fell short by 57,038 tons, which had
to be imported at £22 2s. Sd. per ton. The year 1919 witnessed a further fall in
production and in that and time year following the Government was obliged to
import 221,795 tons of raw sugar at prices ranging from £44 Os. 2d. to £60 19s. Gd.
per ton. During this period refined sugar was from 8d. to Is. 2d. per lb. in England
and Amerwa and up to Is. 6d. in Europe, with supplies in all cases severely rationed.
The Australian consumer, o,n the other handy had had his refined suga,~at 3d. part
of the time and at 3~d.the rest of the time.

CONFLICTING INTERESTS OF PRODUCER AND CONSUMER. -

In 1919 and 1920 tIme Con~rnonwealtimGovernment was paying £80 per ton
and upwards for foreign raw sugar and its losses from selling that sugar to local
consumers so much below world prices were approximately £6,000,000. To avoid
future loss, and also to recoup the loss already incurred, time Government in March,
1920, advanced the net, wholesale price for refined sugar to £46 per ton and the
retail price to Gd. per lb. This retail price was reduced to Sd. per lb. in November,
1922, by which time the losses on foreign sugar had been overtaken. In June
1920, the price to the producers for raw sugar was increased from £~1to £30 Gs. Sd.
per ton for a period of three years. At that time, both consumer and producer
prices in Australia were still a long way below “freétrarle prices. The advance
“

of £9 Os Sd. per ton was large, but it ha4 time twofold object of compensating, in
a measure, for the marked deprivations caused by time controlled prices which
‘ruled hitherto, and of giving an impetus to expansion of production. - -
 69
HOW ~VER.PRODUCTION CAME ABOUT.
-The policy did something towuirds the first end and completely accomplished
the second. There was soon a large increase in production. In 1923, when the
Sugar Agreement was renewed for a further two years, the world’s “ tree-trade
price was nearly on -a parity with the reduced price for raw sugar, viz., £26 per
ton, granted under that agreement, which permitte~1 of a further redu~tioaof
the retail price to 43d. per lb. From 1923, time Commonwealth Government
- - handed over the commercial control of the business of. purchasing raw sugar,
refining and distribution to the Queensland Government, which made time arrange-
ments with the Colonial Sugar Refining Company Ltd. and the Millaquin Sugar
Company Ltd. to refine ~nd distribute on fl~edschedules of charges. By 1925,
the position was that the world’s price of raw sugar bad fallen to about £12 per
ton. A prolific season in Australia had piled up a surplus of 227,000 tons which
had to find an export outlet. A fresh agreement continued the price of £20 net per
ton for raw sugar for local consumption and the consumer price of 4~d.per lb.
At the same time it was provided that there should be a rebate of £6 Ss. itt. per ton
on refined sugar used by fruit processors, which was equivalent to a reduction of
12s. per ton off the value of raw sugar. ‘ -

EFFORTS TO EFFECT ADJUSTMENTS.

When the Agreeiient came tip for review in 1931 the deprension was upon
us and there was wide-spread agitation for reduction. The $eullin Government
had appointed a Committee of Inquiry which sub’nitted a majority and minority
report. The majcrity -which included one of tim Commommwenlth representatives
and the fruit-growers’ representative, recommended the continuance of the
embargo for five years and a continuance of time price for three years, subjecT to a
contribution of £315,000 a year to the soft fruit-s imudustry in lieu of the former
-rebate of £(i 5s. Id per ton to fruit-processors, worth £170,000 per i~nuum. ~
minority ~f three (the other Commonwealth representative a-nd the representatives
of manufacturers and housewives) also recomnmeimded a further live years of
- embargo on imports, but proposed a reduction of £2 us. Sd.. per ton (Fl. per lb)
for the first two years and action to reduce over-production.
The agreement was r~ncwech.for five years, at existing prices for the first
-

three years to be reviewed, at the end of that period, in the terms of the majority
report. Shortly aft-cr this renewal, the Australian financial rehahilitmutiomrscheiue
for reduced interest; wages, prices, &e., was adopted mind .this circumstance
helpe~Jthe Lyons Government, after several con1erenco~with the sugar producers’
executives, to persuade the industry to accept a voluntary reduction in price
less than half-way through the three years’ term of fixed prices. The redac~d
prices then introdace I, viz., £23 lOs. for raw sugar and 4d. per lb. retail for r~fin~d
sugar, were extended until A~agust,1936. ~l’hocontributi ~n to the soft [nuts
industry was also reduced to £200,000 per annum.
It should be mentioned that the Commonwealth sugar policy has always
provided for the Australian sugar contained in all goods exported from Australia
being supplied to the manufacturers at the world’s parj~typrice.
TWO SIDES OF A DIFFICULT PROBLEM.
That, in rough summary, is the tangled story of sugar on the price -side. On
the production side it has another story just as tangled and presenting problems
of great complexity and peculiar difficulty. The present position is that sugar
is over-produced and the large surplus has to -be disposed of in a glutted world
market at sacrificial prices. The problem is on all fours with that of wheat.
During the war some 50,000,000 acres of wheat-growing land in Europe was thrown
out of production and, under the impetus of ‘demand at high prices, a compensating..
- acreage came into production in couatries outside Europe. When wheat-growing
- returned to normal proportions in Europe the total world production was so large
• that the import markets could not absorb it rapidly enough, prices fell a-nd the
 70

accumulated surplus kept them down. In the same way, during the war, the
beet lands of Europe went out of production and tropical cane lands caine in to
take their place. Now that beet production has been restored there is an excess
of cane and beet sugar and the market is at zero. -

“WHAT QUEENSLAIIDERS SHOULD FORGET AND AUSTRALIANS REMEMBER.”

Under the auspices of the Queensland Government, inspired in 1925 by the
Commonwealth Prime Minister, there is a process of “rationalization “— of -

adjusting production to consumption—slow as the process must inevitably be

in an industry which represents a capital investment of some £50,000,000 of
capital and employs some 140,000 people. Boom-time costs of sugar production
cannot be adjusted to ruling prices in a night any more than they can in the case
of wheat production, and there is not the grazing alternative as there often is in
the case of wheat. ‘There is this to be remembered also. The period of control
prices during the war, and for some time after, deprived the Australian sugar
producers of a sum computed by the Queth~s1andStatistician at £15,000,000—
possibly an outside figure but not much overstated. That was the sugar
producers’ gift to the consumers of Australia. If, in excess prices since, the
consumers have paid much more than this simm the producers have not fattened
on it; for they have received only the average pool price and the depression levels
which have ruled for the export surplus have brought time average price down to
points at which costs are covered ‘only on the most-favoured farms and losses
are incurred on the less-favoured. At bottom, therefore, the sugar problem
is a war legacy just asthe wheat problem and the butter problem are war legacies.
If there had been no war we should not have had either the one or the other of
them. -

It is in relation to this background, therefore, that the problem of sugar,

as so many other present-day problems of primary industry, must be considered
and it is precisely this relationship which the authors of the Secession Case
consistently ignore. Even so, the face value of their statements require discount.
In the first place it is manifestly unfair to compare costs on the basis of world prices
which are the lowest in history, lower even than the costs of black labour
production, and which cannot permanently continue. Even so, the estimate of
£400,000 as the excess cost is considerably overstated, and no allowance is made for
the savings during the boom price period which, on the Customs figures, -would
be £800,000 for Western Australia alone. The incidence of the policy on the
local fruit proces~orand jam manufacturer is also incorrectly stated. The~local
-

manufacturer obtains his sugar at the same price as the eastern manufacturer,
and on all export products he receives the advantage of world parity for the sugar
contents. -

- WHAT SUGAR MEANS TO WHITE AUSTRALIA.

Above these fiscal considerations is the national one. Sugar from the beginning
has been linked intimately-with the vital national plank of a White Australia.”-
“

It has occupied this position because it provided the most convenient means of
testing the capacity of me~of our race to pursue a laborious form of industry in the
tropics under conditions of life compatible with the general Australian living
-

standard. That test has had a triumphant result as is shown by the fact that
Australians, many of them of the third generation, continue to work and thrive in
districts scattered along a 1,500 miles tropi3al coastline. itre we to say that this
demonstration has less ~‘aluefor Australia as a whole because it has chanced that
the first development of the industry has been in the tropical areas of the East
instead of in the tropical north of theWest? Arewe to say that its national value
to Australia as a whole, and to Western Australia as part of ~t ustralia, does not
transcend the quite problematical gains which the authors of the Case ens~isage as
the result of unrestricted trade with Java, a country with one of the lowest industrial
living standards in the world, which already has a very favorable balance of trade
with the State. - -
 — 71

CHAPTER XII.

- THE GOLD-MINING INDUSTRY.

- AN UNJUST INDICTMENT. -

A section of,.thc Case is devoted to the gold mining industry and in this, as in
so many other instances, the indictment of the Commonwealth is extravagant and
unfair.
Paragraph 446 reads—.
“Such has been the burden of Australian protection upon the Western
- Australian gold mining industry, that that important industry would have
almost ceased to exist had it not been for the revival caused by the rise of
- the price of gold in recent years.”
Time plain truth is that the burden of protection even supposing it to have
“ “,

been twice the burden it is said to Imave been, it could not explain the decline in
Western Australian gold production prior to 1928. Time main cause of the decline
was the exhaustion of time richer ore bodies and the fact that profitable continuance
of work on the lower grade bodies called for the adoption of improved methods of
mining and treatment. Relatively to return the costs were too high, but the factors
in cost were many, and t: r11 charges, in the casd of the established mines, were by
no means the most impo:t ~rmt. This is conpietely demonstrated by the great fall
in costs which have since followed the introduction of new methods in the- two
largest mi~csof the State and in th~imines that are fohlo~singtheir example.

COMMONWEALTH AID TO REVIVE THE INDUSTRY.

The Commonwealth, through the Development -Commission, contributed at
least part of the impetus to this improvement by concentrating attention on the
crux of the problem of cheaper production. But Commonwealth action extended
much further by the passing of the Gold Bounty Act in (930, providing for a bounty
of LI per fine oz. for all gold produced in excess of the total average production
--for the three previous years. That bounty was provided chiefly on the representations
- of Western Australian interests and, although it was applicable to all the States,,
It was given with particular regard to development in Western Australia. The
re-action to it in Western Australia was as expected and intended. With the
assurance that it gave of a profitable margin on low grade ore, even at the price of
gold before the rise, interest in gold-mining revived, prospecting -was stimulated
and established mining companies were encouraged to undertake the large-scale
re.organizations and improvements essential to the most economic production.
Contemporaneously with this the Commonwealth came to the financial
-

assistance of the \Viluna Gold Mines Ltd. at a very critical stage of its existence by
guaranteeing a bank loan of £300,000 to enabh~it to complete its modern plant.
The Company’s capital was nearing exhaustion and it was unable, at the time, to
raise more. The Company’s representative (Mr. H. E. Vail), in presenting his case
for assistance, pointed out that the Commonwealth support, in the form of a
- guarantee for £300,000, would give the English investing public confidence to
subscribe the further £250,000 required to complete the Company’s undertaking.
Mr. Vail further said— - - -

- “It is acknowledged that the cost of preparing the mine and equipping
it for 40,000 tons is enormous, but I justify the expenditure with the
assurance that we arc pioneering mining methods not previously em-
ployed in Australia. It is recognized by all those familiar withgold-mining in
Australia that there are millions of tons of ore which only requiro ~ reduced
cost of production to restore gold-mining to the high position of the principal
 primary production of the State that it enjoyed in the best days of the
Coolgardie and Kalgoor]ie gold-fields. That our efforts will be successful
there can be no doubt wlm~itever,and, following our success, interest will be
revived in goki-miniug, and many mining centres throughout Australia
which are now mere remembrances of the early days will again blossom mto
prosperous mining centres. -

Already thc Lake View and. St-ar Company have recognized that the
adoption of imiodern mining and treatment methods will be the salvation of
- their group of mines at Kalgoorhie, and have commmtted themselves to a -

policy involving an expenditure of over £1,000,000.

What applies to the Lake View and Star and Wiluna mines will be
followed by other companies in Australia, and in complying with my request
for assistance you wit? be granting to mining generally a concession of
enormous value.
Time output of gold from time first unit of the Wiluna plant will amouiit
to approximately, £60,000 per month, and as soon as the Lake View and Star
have increased their tonnage from time present output to 40,000 or 50,000
tons per month, from these two properties alone the output of gold from
Western Australia will be approximately double its present figure.
1 combine these two mines in my argument, as the financial interests
supporting both Wilumia amid Lake- View ventures are identical.”

THE TRUTH ABOUT THE GOLD BOUt~ITY.

When the bounty was passed the exchange was at £l0~and the Australian
mint price of gold stood at £4 us. Gd. per fine oz.orGs. 7d. above par. In time follow-
ing year the rateof exchange rose to £130 lOs. and time mint price of gold In Australia
was £~Os. id. per oz. Then under stress of time financial ciisis, and in e~nlormnmLy
with the general measures adopted. to deal with it, all bounties ore marked for -

reduction. The Gold Bounty, accordingly, was lowered to lOs. per oz. with the
provision, however, that it would increase Is. per oz. for every 3 per cent. fall mu
the exchange rate. When in 1932, the price of gold rose to £7 7s. 3d, or £2 iSa. 3d.
per oz. above what it was when the Bounty Bill was passed, the Government of the.
day could not ~ustiIy the continued payment of the bounty and suspended it, but -

‘provided that it would automatically begin to apply again in accordance with the
- previously prescribcd exchange scale, when the price of gold receded to £5 English
ci~
L5 lOs. Australian. That is time position to-day and. it is a position with which
both local and Imondon mining interests havc’exprcssed themselves as well satisfied.
Thesuggestion iii the Case that the suspension of the bonus was a breach of contract
is wholly w~justmfled. When thin bounty was first under consideration, the Minister
introducing the bill expressly stat-ecl that the Government reserved the right of
review in the event of nn abnormal rise in the exchange- rate.

- EXEMI~TIOItFROM INCOME TAX. -

Tha Commonwealth has dealt handsomely with the goM-mining industry which
is now in the most-favoured posItion of all industries. it not only provided the
necessary fillip when the industry was at its lowest, hut it ha-s also given, by
legislation, a liberal margin of assurance for the future in the event of gold prices
falling below £5 lOs. per fine oz. in Australia, and it has furthermore added to the
attractiveness of mining investment by exempting from taxation incomes from
this source. -; - - - -

Those are- the facta. In the face ed them, the statements in the Caá that the
Commonwealth authorities have lacked, sympathy with the gold.nmining industry
and, seem to have regarded it as not worth maintaining arc inexplicablo. The
persons engaged in the industry would certainly give them no countenance.
 7.3

CHAPTER X1II.

SOME MINOR TV1ATIERS.

Under this title and a sub-title -of other disabilities” are grouped a number
of what are described as disabilities. The tremitment is prolix and the section
is followed by long -slipporting notes uontmtining th~vie~vsof various individuals,
and there is much r ending of ground already covered. What seems to CM to
be time more important are treated elsewhere. As to deal with the rerri*iuder
in detail would lengthen our task unduly, we think they will be auf~cientlycoveted
by a general refereneu~ -

Some point is made of tb-c-growth -of the Commonwealth Pubtic Service, time rates
of pay of its senior officers and theoveilappiug of services and duplication of staffs.
We arc not in u position to -conipure tim relative -growth of the Commonwealth
Service wit’mi that of the State services generally or with that of the State of
Western Australia -and we could serve no imefut purp~s~ in oommenting on certain
differences in salary range. tt -is sufficient to observe that the salaries in either
case are cletermined by Arbitration. As-un -instance of overlapping and dimplication
the Comnmnonwealth Health services nrc mentioned in particular -and the implication
is that the State Health Department could perform all ‘the duties that require to be
done. No evidence is advanced in -support of this implication and there is much
evidence to the contrary. Time reqtuireoients to-day are by no means the -same as
they were in the pre-federation period. It has been necessary for the
Commonwealth -to ussnm-e -such national responsibilities -as the clevelopmen~of a
continental systeni of q~iarantiueto replace the disconnected systems of local
quarantinq eviousfy in operation, the observation of certam international treaties,
1
the obligations to the League of Nations, the development of the manufacture of
serums, vaccines, and other biological products, the training of medical and other
officers for work iii the Territories accepted. under mandate and other tropical
territories within the-continent and to pursue other public health matters of national
scope. The national responsibility in these matterseunnot be devolved and if
it could be shown that certain of the work -could be carried out by &ate Health
officers as deputies for the Commonwealth it is work additional to what those
officers now do and would call for staff additions.
Much, howevcr, of the health work now done by. the Comnionwealt}i could
not be done conveniently or economically by the State. The work done by the
Commonwealth institution at Kalgoorlie for the investigation of miners’ complaints
is a good instance in point. Neverthelcs~it is work from which the reopic of
Western Australia derive great, if unrealized, benefit.

- Whether, in other directions, there are instances wherc Commonwealth officers

are performing duties which could -be more econoinmeally 1ierformned by the States
or vice versa we do not know. In this connexion, however, we may point to
taxation services and electoral services 115 instances where the duties for both
Commonwealth and State are performed by Commonwealth officers with satisfaction
to both authorities. The question, however, is one of detailed admninistrmttivo
adjustment and general statements upon it from outside are of little value.

Much of the rest is largely vague ex’premiOa ed dissatisfaction, and thepersistent

recurrence of the expression burden ‘, in trivial connexions, prompts ,us to
“

suggest that throughout the tase this word is somewhat overworked.

 - 74

CHAPTER XIV.

- DEFENCE. -

The statements and contentions of the Case in relation to the paramount

question of Defence are discussed in an authoritative memorandum prepared by
the Commonwealth Committee of Defence, which is given in Appendix 20, page l0~.
To this memorandum we direct special attention. It deals with time question not
merely in its local but also its Australian and Imperial aspects, and in addition to
being critical it is informative; It shows that the Secessionist conception of
defence is inadequate that neither the facts of the present position nor the
general obligations and requirements of defence are properly stated ; that the~
value - and compass of the Australian defence organization are not correctly
appraised ; and that an organization to give a comparable security to Western
Australia and provide at the Sa~i~Ctime a standard section in the general scheme
of Imperial Defence is beyond the capacity of a small isolated population, either
pliysi~illyOr hnanc iall~-. It explains wh defence expenditure cannot be deter-
mined by merely local considerations 011(1 also why division of time naval establish-
ment in o East and \Vest units, at first- contemplated, was not carried omit.
As the complete tiieinoranduin is available for referenle in later pages we need
do no imiore here than quote the Board’s significant corichimsiotis
To mecapitimlate iii brief the conclusions in the Parts relating to each
Service, the smession of \Vestermm Australia and its proposed Naval Policy
~vçul~lbe a retrograde step from the aspects of ummity, co-operation, adequacy
- of the share- of the burden, and security.
- On Land Defem-o, the case for secession displays an inadequate ap-
preciation of the prima ipie of Impem-ial Defence that it is the f)rllflary -
responsibility of time Self-governing Dominions to provide for their own
local defence. Timp capacity of the present Army Organization for the
- defence of Western Australia is under-rutei and an incorrect conclusion
reached on the defence of this State against invasion. The same observa-
tions apply to the potentialities of the Air Force, notwithstanding that
its great mobility would enable rapid concentratioa to be made at any
- threatened point. - -

In regard to the Munitions Factories being in the East, the answer to

-

• the crtiticismn is that their location has been governed by considerations

of their defence and proximity to sources of raw materials and labour.
The East-West railway in an assured means by which an Army could be
supplied from the Ea-t.
~The Commonwealth’s Civil Aviation Policy has extended considerable
benefits to Western Australia by the subsidized routes that have been
opened up and the provision made for aerodromes and landing grounds.
Considerable financial obligations would fall on the Western Australian
Government to maintain these facilities under secession, and two Civil
Aviation Administrations would complicate the free movement of air
transport when the world ti-end is towards minimizing the existing barriers.”

- - CHAPTER XV. -

- THE UNITY OF AUSTRALIA.

“TWO ECONOMIC UNITS.”
- The Case attempts to justify-secession on the ground that Australia consists
of “two economic unit-s “—East and West, corresponding to two geographical
units separated by a “natural barrier a sea of solid ground
“—“ “. -
 75

“East is E~stand West is West “—Kipling is conscripted to suggest the

existence of a physical barrier between the East and West of Australia so
insurmountable that “never the twain shall meet “.

“The great Australian Peneplain!” This formidable name is borrowed

from the geologists to suggest an uninhabitable, impenetrable desert that
-

interposes its vast bulk between the East and the West and forbids their intercourse
for ever. -

But these uninhabitable regions have a knack of shrinking. The first -

mariners who sighted Western Australia thought it “a desolate and dangerous

land.” The early settlers in Sydney thought settlement beyond the Blue Mountains
impossible. in South Australia extension in a Northerly direction was thought
hopeless, and a definite line was drawn to mark the limit. Dry farming methods
and water conservation have pushed farming beyond that limit, and pastoral
occupation hundreds of miles farther -still. In Queensland, permanent occupation
by white settlers was long despaired of ; but to~dayNorthern Queensland of the
third generation is thriving, and compares favorably witli the people of any part
of Australia in health and expectation of life.
In Western Australia, history is likely to repeat itself, In the West, the early
settlers declared that farming beyond a fe~vmiles east of Northam and York was
impossible; and only a short while since, the single authority upon whom the
Secessionists rely for their~gloomy picture of time Great Australian Peneplain
declared the impossibility of permanent occupation of thousands of square miles
of what is now known to be good agricultural and pastoral land. If the first
- miners of Leonora or Laverton or Cue or Wilma had been told they were in good
pastoral country their comments would havo been more forcible than polite.
Ellective occupation of the Great Australian Desert” is extending from all
“

sides, and will extend, Its development may at- any moment be accelerated by
-i mineral discoveries. - - - —

The fact of an arid interior to the continent of Australia, and the limitations
~ that nature has imposed thereby, are undeniable facts. That Western Australia
~ suffers a degree of-isolation therefrom is also a fact, but it is a fact the importance
~ of which can easily be over-estimated, and has been vastly over-stated by the
~ authors of the Case. And the factors that make for isolation are vastly outweighed -

~ by the factors that make for union. No one who looks the facts squarely in the
faee can doubt the essential unity of Australia in relation to the world outside.

- “FOR GOD HAS MADE HER ONE.”

To ~ee the geographic unity, one has only to look at the map
“~ForGod has made her one; completeshe lies
- Within the unbroken circle of the skies, - -

find round her indivisible the sea --

-Breaks on her single shore.” - - - —

- Her people are one— S

“bound by sacred ties - - -

- Of one dear blood, one storied enterprise.” -

Her situation in the world of nations is one; the lone great outpost of ~cstern
civilization in the eastern hemisphere. -

The phrases—-” one people, one destiny “a nation for a continent, and
“,

a continent for a nation “—are not merely rhetorical clap-trap; they are vital
expressions of essential realities. Compared with these fundamental truths, -

the minor dIfferences and -isolations are trivial and accidental. -

 D!~FERENCESOF ECONOMIC QUTLOOK ARE COMPATIBLE WITH POLITICAL UNION.
- That there are differences of economic outlook between different parts of a
continent nearly as large as Europe is no matter for surprise~ The same is true
of much rnore.cornpaet countries. There are differences of outlook, in England,
between the industrial and the agricultural areas ; there are differences of outlook
everywhere between city and coumntry, between motmntaimi, valley and 1)laifl
between sea-board and hinterland. But these things, of themselves, do not justify
political separation. -

- What they do justify is the choice of Federal Union, instead of Unification

Union for affairs that belong in commnon to all Australia, and a separate Governmmment
for local affairs. But complete separation, after all these years of unity, after
- all that Australia has achieved, and that Australians have suffered together—
the divorce of a nation, that, young though it is, has, in the prophetic words of the
Preamble to the Constitution, been indissolubly united—is unthinkable. After a-il,
it is not any “-difference in economic outlook “ between East ami West that is
responsible for the slow devetopmne,nt of Western Australian secondary industries, but
time inescapable laws of economics. In the last analysis this slow (leVetopluieflt is
due, not to Australian protection and interstate freetrade, but to the relatively small -

local population in Western Australia. The same factor still operates in Eastern
Australia against the establishment of certain industries. It is- a disability which
will lessen with the passing of the years, and which in the- mneantime must be takea
into account in the relations between Western Australia and the Commonwealth.
Time case is paralleled in the United States, up to 50 years ago, by the complaints
of time States in the south and west against the manufacturing States of New
England ; but to-day it would be bard to find any traces of such eomnplaints—
and harder still to find a sane American who would suggest. that difference in
stagea of materiai development could ~umstifybreaking up the Union.

S DISTANCES. -

Time authors of the Case speak of great distances that divide Perth from
Canberra. Well, distances in Australia are great. They are great wmthin Western
-

Australia itself. But I~crthis not much further from Sydney than San Francisco
is from New York, or than Victoria (British Columbia) is from Montreal—indeed,
by sea it is much nearer—even since the construction of the Paniuna Canal.
Here again we find a parallel in the United States. There too, in the early days
similar complaints were heard. Even before the distant West- was developed,
the distance of the southern States from Washington, and the difference in
“economic outlook” between north and south, was loudly declared from every
political platform in the Southern States, and, long before time slavery question
became acute, cries of secession rent the air. But the United States of
“ “

America have remained muted, and have prospered beyond the dreams of their
founders, because, despite differences of outlook and interest, they had so much
in common.
- THE CASE OF NOVA SCOTIA.
In the early days of the Dominion of Canada the Province of Nova Scotia
had a sense of grievance not unlike that of Western Australia to-day. Time fiery
eloquence of John Howe had persuaded the Province that it had been tricked into
a uniomi which would destroy its independence and hamper its progress. (Time
Federal proposals bad not been submitted to the people, as they were in Western
Australia). The provincial assembly passed resolutions in favour of secession;
a delegation was sent to lay petitions before time Throne ; the whole Province
seemed behind time movement. But the flame subsided audi flickered out. “The
steady growth of a wider national life slowly but surely destroyed this sentiment,
amid time has now finally drawn a veil over the wimole dangerous and futile
movement “.Progress of Canada in the Century, by V. Castell Hopkins, W. & II. -

Chambers, Ltd., London (1902), page 420. - -

 77 - -

If the plea of distance is to have weight as between Western Australia and

Eastern Australia, how will it be denied weight within Western Australia itself,
for instance as between Swan and Kmmnbcrley, as between Perthu amid the eastern
gold-fields and pastoral country I It is safe to sa~ithat if Western Australia were
to secede froni the Commonwealth, it would- not be bong before at beast two vast
districts would secede from Western Australia I If, under the shelter of a Western
•Austrahian protective tariff, secondary industriesare to develop in Western Austraila,
cannot time prophetic oar hear already time protests of the miners amid the farmers
out-back, that they are being “tied to the chariot-wheels “of Perth manufacturers T
If Western Australia is a different economic unit from time East, the north-west
and the ca~terngold-field areas are equally different economic units from Perth
and the south-west.

BORDER CUSTOMS HOUSES. -

One of the things that led men to think of Federation was tli~irksomeness,
the expense, and the obstacle to free intercourse due to the existence of customs-
houses along time inland frontiers between the States. These barriers were
- inconsistent with those great facts—time real unity of the continent and of tlm~
people. For 34 years they have been levelled to time ground.. If-time secession of
Western Australia were accomplished they would have to be re-erected, amid a
thousand miles of a line of longitude will have to be policed.
Modern means of transit by rail, motor-car and air will be developed and
extended. With border tariffs, the old pre-federal friction and disharmony will
be brought back ; and witlm motor and air transport, traffic across the border-line
will be tenfold more difficult to commtrol. In the far north especially, with the
ports of Wyndhani and Darwin at no great distance on either side of the border,
illicit traffic in liquor, tobacco, &e., will be increasingly hard to police, and will
necessitate expensive Oustomus patrol for a long distance sommtb. “From all
division let our land be free.” - -

- CHAPTER XVI.

AFTER SECESSION—WHAT? -

Division Four of the Case is devoted to a discussion of the “Consequences

of Secession “—the consequences to defence, the economic relations with Eastern
Australia, the British Empire and the outside world and the finance~~f Western
Australia and the Commonwealth. -

- WHAT WESTERN AUSTRALIA WOULD LOSE.

After secession, supposing it to be accomplished, Western Australia would
assume sole responsibility for the servicing of ith share of the Commonwealth
debt~for the annual payment of war pensions, invalid and old-age pensions and
maternity allowances v,nd for the upkeep of the various services now carried on
in Western Australia by the Commomiwealth—post and telegraphs, radio, customs,
quarantine, lighthouses, the western section of the Trans-Australian railway,
and defence. It would receive certain revenues now collected by the Commonwealth,
but would lose the Commonwealth backing of its public eretht In both th~Australian
 - 78 -

and oversea loan markets, the Commonwealth payments towards Interest on the
State debt, the Commonwealth contribution of one-third to the repayment of debt
contracted prior to 1927 and the Commonwealth contribution of one-half towards
since 1927 and all future debt. It would
the repayment of further debt ~ontracted
lose the services of the Australian Loan Council in the management of debts under
the Financial Agreement, and it would forfeit the prestige that Agreement has
built up for Australian credit, particularly in the oversea markets. It would lose
the services of the Commonwealth Bank in the control of currency and exchange,
and in financial accommodation through the Treasury-bills system and otherwise,
which has enabled Western Australia to carry on essential services during the period
of depression. It would lose its position in the money markets of other States,
which have largely financed its public works in recent years. It would lose special
Commonwealth money grants and road grants. It would also lose the right to send
its products into the Australian market free of duty, and it would lose the
Commonwealth gold bounty which, though suspended at the moment, automatically
operates again if gold should fall below £5 lOs. per fine oz. in Australia. As
against these deprivations, Western Australia would be relieved of her share of
the expenditure on Commonwealth central services.
It is not possible to compute accurately time gains and losses which would
follow severance, as it means comparing something which exists with something
which does not yet exist, and as no one knows what a seceded Western Austraha
would do or would not d~,any attempt to forecast the financial outcome, if it
must be made, rests largely on assumptions and surmises. -

THE SECESSION BUDGET. -

The Secession Budget, which is a prominent feature of time Case, is not a true
presentation of the positiomi on a yearly basis. Takimig the figures for 1931—32
as the basis, it sets down the financial gain to Western Australia at time impressive
figure of £2,332,000.
This figure is certainly, misleading. Time special Commonwealth grant, which
will be lost, is set down at £300,000, whereas for 1933—34 it was £600,000. The
Commonwealth Road Grant of £348,000 is simply ignored on the ground that -

- Western Australia, after .secession, wdiild not continue this ex~enditimreon roads.
In that case Western Australia would haveS neither the roads nor the money.
The liability for war pensions to be taken over is shown at £482,000, but pensions
actually paid by the Commonwealth in Western Australia in 1931—32 cost
£731,000. The cost of servicing a large amount of debt incurred solely for
Western Australia is ignored. Administration of the services taken over and of the
new services which would have to be created is put down at £150,000. This figure-
is far below actual costs in• Western Australia, excluding Central Office
administration, not to speak of the cost of the new services which would be -

necessary if Western Australia assumed the external responsibilities incidental to

Dominion status. - - - - -

Above all, there is the greatly exaggerated figure of £2,140,000 duty assumed
“

to be included in the cost” of goods imported from the Eastern States. This is
based on fallacies and duplications which have been fully exposed in the chapter
on the Tariff. As this matter of prospective Customs and Excise revenue is
-

important, however, we may pursue the matter a little further.

We agree entirely with the statement in paragraph 701 of the Case that— -

“Various circumstances make it quite impossible to calculate with

any degree of accuracy the amount of Customs and Excise duties which
would have been collected in Western Australia had she been free and
independent during the year in question. Commonwealth Customs and
Excise duties, like sales tax, may be paid in one State while the goods
subject to the duty are sold in another.” - - -
 - 79 - -

We do not agree, for the reasons previously given, with the methods used to
estimate prospective Customs and Excise revenue. The secessionist estimate
(for 1931—32) is as follows :—
£
“Actual collection of Excise on Western Australia’s m~nu-
factures and Customs Duty on Imports from Overseas 1,670,000 ..

Duty assumed to be included in cost of Imports from Eastern

States .. .. .. .. ..2,140,000 ..

Total Customs and Excise .. .. .. 3,810,000”

This amount purports to be the toti-il collections that would have been muncie—
if, during the year in quest-ion, Western Australia had been
free and mnependent and had eflected tarifi and supplementary arrange-
meats mdeatical with that of the Commonwealth so that tAme cost to the
consumers of interstate imports would have been unchanged.”
We are prepared to grant that iii some way a method, difficult and complicated,
might be devised for diverting the present excess cost-s into time State Bu(lget,
‘ “

- withommt adding to the total cost to the consumer of all imports, the figmires required
would then be— -

Customs collections on oversea imports at present consumed in Western

Australia.
Plus Excise collections on all goods consumed in Western Australia.
Plus Excess Costs” of goods of Eastern manufacture inported from the
“

Eastern States.
Minus Excess Costs” of goods of Western Australian manufacture
“

exported to the Eastern States.

With regard to Customs and Excise
“ it is to be noticed that actual
“,

- collections within time State understate the amount that is paid by Western
Australians. For this reason there should be allocated to Western Australia a
share of the total Commonwealth collections on a population basis.
With regard jo net excess costs it is impossible to make an estimate
even in round ftg~res,as we have ireviously shown conclusively. 1mm what follows,
therefore, we shall temporarily ignore prospective revenue from this source,
returning to it, however, at the end of our consideration of the” Secession Budget.”

THE COMMONWEALTH ESTIMATE.

As against the hypothetical and quite unreliable Secession Budget nresented
in the Case we submit the following sta~ementcompiled from figures based in the
Revenue and Expenditure of the Commonwealth for the year i932-~3:3, which
goes as far as it is at present possible to go in putting the approximate position
without resorting to questionable assumptions and surmises. Ami indication is
given in the margin as to the basis on which the revenue and expenditure has been
allocated. It gives \Vestern Australia credit for a much larger share of exis~ing
Customs and Excise revenue than is allowed for in the Case. It also credits the State
with £620,000 as thc proceeds of Sales Tax, a much larger share than that assumed
-in time Case. It assumes that the State’s proportion of the War Debt is on a
population basis and war pensions on an actial basis. It assumes also that no
more is expended on Defence although, as is later shown, this sum is very far below
the amount necesSary for an independent defence organization of any value, But
it eliminates altogether any charges dehitable as the State’s share of Canberra,
the Commonwealth Parliament, oversea representation, and the purely central
administration, although this includes some expenditure which, probably, would
have to be made up by a separated State.
 80

The statemnent, based on Commonwealth Treasury figures, is as follows

EFisEc-r OF SECESSION ON WESTERN AUSTRALIAN FINANcEs BASED ON lll32~3
TRANSAcTIONS. -

- — . Notes. -

Additional Revenue previously collected by

Commonwealth—
£
Customs and Exciso 2,184,000 Population basis; includes over £500,000
of duties—mainly Excise—on gooUs from
other Statee
Sales Tax 620,000 Popimlation basis. The amount actually
collected in \Yestern Australia was
£543,000
Direct Taxation .. .. .. 621,000 Actual £450,000 pius share of Central
Office collections on basis ol State Office
assessments. This probably overstates
the credit by at least £50,000
Othcr Revenue . . * . .. 120,000 Approximate share of services taken over
On basis of present taxation the correspond.
3,64.5,000 ing figure would now be at least £100,000
1cs~
Less amount appropriated for cx~
pondituro in subsequent years .. 229,000 This is part of an amoumit accumulated to
30th June, 1934, Irons which the Common-
wealth proposes to grant £2,000,000 to
the States (lVest Australia, £133,000) and
to earmark the balance for Defence

3,316,000
Deduct Commonwealth pay-
ments which would
cease— £
Coimtribution for interest 474,000
Contribution for Sinking
FLmd 127,000
Special Crant 500,000 In 1033—34 the gm’ant was increased to -

£600,000
Road Orant .. .. 369,000
1,470,000

Daiance (available towards expencli’

turo that would -be taken over) .. 1,846,000

Additions! Expenditure—
Invalid and Old-age Pensions and
Maternity Allowances . 686,000 Actual
War Pousion~ . . . - 668,000 Actual
Bounties . . . 89,000 Actual
I’ost Office—loss after charging
additions to plant 39,000 -Approximate result according to Troasury
~ecounts ; if plant cdditjon~ were pro-
vided from loan and interest charged on
total capital, the loss according to Postal
accmmtaney would be about £50,000
- Departhiental exponditimre—Wostern
Australia ., .. .. 204,000 Actual. This does not include any shi~roof
Central Administration for which some
added cost would be necessary
• I~t~rcst,
Sinking Fund and Exchange
on Works Debt inourred solely
for the benefit of Western Australia,
e.g., Migration Loans, Public
Works, Wheat Bounty, &c. 180,000 Approximate
Dcfcimco . 237,000 Population basis. But Defence expendi-
ture is being incrense(1 by pmmrelmaso of a
new cruiser, &e., and the proportion now
a popuhstioii basis would bo £400,000
War Serviccs—Intcrest, Sinking
Fund, Repatriation, &c. 714,000 -l Population basis
 81

E~rxcvOF SECESSION ON WESTERN AusTiu~rjt~-&FINANORS BA~E~ON

1932—3~J TRANSACTIONS—CO7ItIflUCd.

Notu.

AddItIonal Exp8flditur$—cont0ts~ed.
£
Trans-Australian Railway—half share - -

of loss after charging interest and

Sinking Fund .. . - * * 70,000 If interest charges arc assessed on capital
- costa furthmer~100,000svould have to be met
Reliof to Primary Producers .. 491,000 Actual
3,307,000
Deficiency to ho made good by further
taxation .. * * * 1,551,000

THE FINANCIAL REALITY—NOT A GAIN BUT A LOSS.

There is no item of expendture in this statement which did not directly benefit
Western Australia. On the other hand revenue items do not underestimate the
revenue derived from the State. If it came to actual bargaining there might be
some variation—some would perhaps go up and others come down. On the whole
the statement may well be acceptedas the nearest approach tothe financial realities
of Secession that it is possible to obtain at present. Perusal of the marginal notes
will indicate that if the items err they err iii uhderstating the loss of State revenue.
The statement is a striking testimony ofthe financial benefits Western Australia
receives from the revenue of the Commonwealth based on 1932—33 transactions.
That net benefit amounts to £1,551,000—a benefit which would be lost in the
- event of secession. -

As against this direct loss of £1,551,000 under secession Western Australian

revenue would gain something by the imposition of certain customs duties on
goods from other States. We have already credited Western Australia in the
statement with £500,000 of duties—mainly excise on these goods. The important
question now is : what additional duties—above the £500,000—could Western
Australia raise on these or similar goods from overseas without increasing prices
to tonsurn~Tsin Western Australia.
in the Case it is admitted that the answer to this question cannot be calculated
with any degree of accuracy. Nevertheless a figure of £2,140,000 is set down
to measure the excess costs” of goods from other States based on 1931—32.
“

In evidence on behalf of Western Australia before the Commonwealth Grants

Commission the excess costs” for 1932—33 were estimated at £2,091,000.
“

We have already given unanswerable reasons in our comments on the Tariff

stating that this estimate of excess costs” is greatly exaggerated. As we have
“

shown, it is based on assumptions which are unjustifiable and it contains

duplications. For instance, on tobacco alone it has already been shown that the
“excess cost” could not be more than £16,000, whereas the estimate was given
as £421,000 plus primage—an overstatement of about £450,000. Clearly,,
therefore, the figure of £2,000,000 must be rejected even by the ‘Sesessionists
themselves as worthless for calculating the position of the Secession Budget.
it- is not possible to say, without long and searching investigation, what
more—additional to the £500,000 already allowed in the statement—Western
Australia could collect on these goods without increasing cost to the consumers,
but all the indications are it would be considerably below even the £1,551,000 of
direct loss that Western Australia would incur on the items specified in the above
statement. -
 82 -.

The Financial realities of secession may therefore be summed up thus :—

(1) On taking over services now carried out by the Commonwealth for the
direct benefit of Western Australia there will be a loss to the State
Treasury on a conservative estimate of £1,500,000.
(2) Against this, Western Australian revenue could benefit by the imposition
of certain additional ‘duties on goods from other States. This gain is
riot in the least likely to amount to £I,500,000.
(3) A seceded Western Australia would therefore have to increase taxation
by the amount by which such duties fell short of £1,500,000.
(4) Even then the cost of interstate imports to consumers would not be lower
than they are to-day.
This completely dissipates the mythical benefit of £2,332,00~put forward in
the Case. it is not a question of estimating what Western Australia would gatn
financiaUy by Secession ; it is a question of placing a reliable figure on what
Western Australia must inevitably lose.

WESTERN AUSTRALIA’S CREDIT POSITION AS A DOMINiON.

Tine assertion in the Case that- tine credit of \Ve~ternAustralia after Secession
would be as good as it is now with the (2oninmrnwealth backing is, at this stage,
capable of neither proof or disproof. No one is in a position to say definitely
how a money market would view Western Australis, a~a lone borrower, until
the experiment is tried, it is true that in tine period of boom borrowing, prior
to the adoption of the Financial Agreement, Western Australian securities stood
as high as those of any of tI.e States and better than some but it is scarct-ly
necessary for us to point out that those days of easy borrowing are gone and
there is little likelihood that they will soon return. To c~peetthat a corrunuulty
of 440,000 people, carrying the territorial responsibilities of a third of the continent
could oiler a secu’ity in a selective and fastidious oversea money market, comparable
with that of the Commons~ealtb, is surely to indulge in optimism at the expense of
commonsense. As a separate Dominion, Western Australia would approach the
money markets under a two-fold disability—firstly of having broken away
from tine Financial Agreement and sec-’ndly of having already a debt of nearly
£200 per head—a debt on which there are great annual losses. Until the time
comes, if ever it does come, when free tending by Great Brit~inis resumed, the
best loan market available for Western Australia is that provided by the
Commonwealth. in this market, -Western Australia, under the FinancialAgreement,
is entitled to participate on the same terms as every other State and also as the
Commonwealth itself. If Western Australia were separated from the Common-
wealth this privilege, as we have already said, would, be lost, arid even if the new
Dominion subsequently had access to the Australian money market, its issues
could be entertained only after the requirements of internal borrowers had been
covered. In the face of the very obvious facts of the situation as applying to
loans, either oversea or in Australia, it would be surprising indeed if the cheery
expectations of the authors of the Case are shared by any reasonably competent
financial authority.

THE NEW DOMINION’S TRADING OUTLOOK. -

The assumption that a” free Western Australia” would have great advantages
in the development of trade with~countries within and without the Empire is
not less speculative. For the purposes of the contentions in this part of the
Case the authors take it for granted that the new Dominion would adopt a low
revenue tariil designed to help arrangements favorable to primary industry and,
inferentially, to disregard the interests of secondary industry.
 83

Whether, in view of the present world trend, such a tariff would be practicable
we cannot say, hut in view of the heavy financial requirements of tine new dominion
it could not be low. Moreover, there is no sure ground for the prediction that
-it would not be designedly protective. It is one of the grievances emnphasimd
in the Case that, under the present system, the growth of secondary industry in
Western Australia is unsatisfactory. In the Eastern States, the enthusiasm
-

for the development of secondary industries, lies always been associated, with
the large population centres ; and as in Western Australia the proportion of city
to country population is about the same as it is in the East, it is not unreasonable
to suppose that ideas of industrial development there would run on similar lines
and eventually find expression in a Western Australian tariff with definite
protective features, and wholly unlike that envisaged in the Case. In that not
improbable contingency time burden of protection might even assume a more
“ “

terrifying aspect after Secession than is attributed to it now, with tho Common-
wealth tariff as the offender,
But, however, this might be, there is little ground for the expectation that -

Western Australia, as a separated cominunity, would be able to make trading

arrangements more advantageous to the sale of primary product-s that tine State
can now do within the Commonwealth. Certainly Western Australia could not
do so in respect of wool and, it is very difficult to see how it could do so in respect
of wheat or dairy products or fruit. Ii~so far as export trade in the future is
governed by reciprocal agreements—and in this respect the future is full of
uncertainty—the communities that will gain most arc those with the most to offer
in the way of return market opporfunities, and, as pointed out in earlier chapters,
the Commonwealth market of over 6,500,000 consumers is surely a better
bargaining counter than the single Western Australian market with less than
~00,000 consumers. In this respect also, we submit, the parochial film seriously
obscures the vision of the authors of the Case to the larger realities.

- CHAPTER XVII. -

SUMMARY OF WHAT THE FACTS DISCLOSE. -

Summarized, the results of our inquiry into the facts are as follows
(I) Western Australia, on balance, has not suffered detriment through
- Federation. For the 30 years prior to the depression the State
recorded greater relative increases in population and production
than any other State, and since the depression it has suffered no
more hardships than any of the other States and less than some.
(2) It is not true that the State has been reduced tG a subservient position
by the whittling down of the essential Federal principle of the
Constitution by High Court decisions and direct amendment. The
rights of the State originally embedded in the Constitution remain
intact. -

~) The Financial Agreement has been of very great benefit to Western

Australia. It has afforded substantial relief to- the State’s budget
and provided t or Commonwealth guarantee of its past and future
debts and a substantial Commonwealth contribution to the
- repayment of these debts. It also has enabled Western Australia
-

- to finance her requirements oh the best terms possible in the money

~marketof the other States. -
 - 84

(4) The Commonwealth’s entry into the fields of direct taxation, as also
its heavier levies through the revenue sections of the tariff, was
unavoidable because of the magnitude of its responsibility for
financing war services and invalid and old-age pensions now
amounting to over £30,000,000 a year.
(5) From the beginning of Federation, Western Australia, by reason of
acknowledged disabilities, has been the subject of special financial
consideration. Over and above the regular annual payments to
which it was ordinarily entitled as a member State of the Federation,
Western Australia has received monetary grants and reliefs amounting
in all to £10,000,000. Its budgetary difficulties are mainly due
to losses on enterprises financed from loan money—losses that have
been accentuated by the depression conditions which have affected all
other States in common with Western Australia.

(6) The Commonwealth tariff has not had an oppressive incidence to the
degree claimed in the Case. The general increase in the cost of
goods to consumers is much loss than assumed, and the direct charges
- of the tariff on the plant and other working requirements of the
primary producer are inconsiderable.
(7) The tariff confers direct benefits on most lines of primary production
other than wheat and wool~and the Western Australian producers
- of. those lines share in the benefits equally with the producers of
similar lines in other States. -

(8) The prohibitions anti duty increases imposed under emergency conditions
in 1931 have, with few exceptions, since been removed. Primage
on nearly all imports affecting the primary industries have since
been removed and there have ~been. substantial reductions of duties
on many items of the Birtish Preferential Schedule.
(9) The Navigation Act imposes no serious disability on Western Australian
shippers. The existence of an efficient coastal service running to
regular schedules confers general benefit and is a necessary part of a
national transport system. -

(10) The charges resulting from the sugar embargo are high, but they are
part of the price which has to be paid for the preservation of the sugar
industry, which has an important relation to development of the
tropics and the maintenance of the policy of a White Australia.
There are, moreover, special features of the sugar position which
apparently are not generally understood, but which definitely connect
it with the dislocations resulting from the war. Sugar, which enters
into the manufacture of export goods, Is obtained by the Western
Australian manufacturer at world parity price. -

(II) The charge that the voId-mining industry has been prejudiced through
Commonwealth policy is disproved. The contrary is true, that the
Commonwealth bestowed especial attention upon the gold-mining
industry when that industry was at its lowest point, and by direct
financial assistance to a notable Western Australian mining enterprise
by providing a bounty on new gold production, encouraged effort to
-

revive the industry. Under this encouragement much new capital

and labour had been sot to work even before the phenomenal increase
in the price of gold gave the industry further impetus.
 85

(I?) There is ne substance in the contention that Australia falls naturally

into two economic units of East and West with opposing interests
which are incompatible with political union. Any differences of
economic interest between different parts of Australia—differences
which must exist in every Large country in the world with diversified
pliysical characteristics and which exist within Western Australia
itsehf—are enormously outweighed by the common economic interests
of Australia in relation to the outside world.
(13) There is no justification for the suggestion that Western Australia
does not derive the full measure of lienefit from the Commonwealth
Defence System, and authoritative reasons are given why Western
Australia, as a separate community, could not adet~uately provide
for the defence of its extensive territory even at relatively great
cost.
((4) Western Australia suffer-s no grievance which cannot he redressed or
compensated for within the framework of Federation, and all the
grievances assembled in the Case do not constitute a ground for
secession.

CHAPTER XVIII. - -

SOME CLOSING WORDS.

In the foregoing chapters, we have been more concerned to set before the
fair-minded reader the essential facts of the position existing between the Common—
wealth and Western Australia than to present a detailed reply to the multitude
of assertions and arguments put forward in the Case. We have clone this because,
we feel that much of the prejudice which has inspired the movement for separation
rests very largely on misapprehension. We have acknowledged the existence of
certain disabilities, but we have differentiated between those disabilities which
are claimed to arise out of the Federal Constitution and those which arc inescapable
or which result from the political policies of various Governments.
We have endeavourcd to show that the Views expressed in the Case as to the
effect of High Court- decisions and -the Financial Amendment in the Constitution --

are mistaken, and that there is, in fact, no trend towards unified control. We have
givenreasons for~tlmeview that the Constitution stands to-day where it always
did, as the embodiment of the Federal principle which assigns definite and separate
powers to Commonwealth and State and protects each in the full exercis~ofthose
powers. - -

In our treatment of specific grievances arising from -Governmental policies we

have striven to correct erroneous statements and to point out unsound inferencei’;
and in respect of the Commonwealth Tariff, which is claimed to be the main subject
of grievance, we have tried to mak~clear that its general burden on the community
of Western Australia has been exaggerated and that its direct and specific burdens -

upon primary industry are slight; whi1st.~on the other hand, we have called
attention to some of its benefits which are ignored in the Case.
We have sought to show that even if Western Australia’s grievances were as
la claimed, they would, taken together, still afford no sufficient reason for~thic
serious backward stdp of secession from the Australian Commonwealth. Wo
have demonstrated that secession would bring, ifot gains but losses, and that, as a
small isolated community, Western Australia would be handicapped in bargaining
for its share in world tradc and could not provide either efficient Home Defence
or perform an adequate part in the general scheme of Imperial Defence.
 86 -

To these recapitutations we now add a few closing words. It Is not part of

our function to comment on the constitutional propriety of Western Australia’s
action in presenting a Petition tç Westminister praying for the dissolution of a
Federal union which the Act of Union declared to be indissoluble or to hazard
“ “

any opinion as to how such a Petition should be dealt with. But we must comment
upon the extreme seriousness of a first step which, if it led on to the goal in view,
would mean the partition of a Continent and the dismemberment of a Nation. No
more serious action on the part of a community, short of armed attack, is
imaginable, and we find it difficult to believe that its full seriousness has been
appreciated by those responsible for the secessionist agitation. That the
movement has proceeded thus far without provocative incidence and with no moro
acerbity than customary attends an ordinary political discussion, is fortunate
but this should not blind us to the potential gravity of the procedure.
Western Australia has great obligations to the Conimonwealtli, and these
obligations could not he absolved by any declaration of intention to secede.
Secession would not only weaken Western Australia, but, by placing a third of
the Continent outside the Commonwealth, it would weaken Australia. Other
very important considerations apart, it is vain to imagine that the Commonwealth
could view such a contingency with complacency.
Secession, then, is not a question for Western Australia only, and this is the
paramount fact which needs to be kept in mind by readers of the Case for
secession and of this Reply.
What shall we say of them who, being in the common-wealth, feeling
a sore greevous unto them, and easie to be amended~sought not the romedie,
- but have increased tile griefe I “ - -
 87 -

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 89

APPENDIX No. 2.

COStMONWEALTH AND STATES—PUBLIC DEBT.

At 30th Common- States New South Qii~oni. South Western TaICtnC’nIt,

~%III14. W4IC1tII. Total. WIIOL V1ct.orl~, Au,CtrallA. AaltraUo..

£000. £000. £000. - £000, £000, £000. £‘OOO. 2008.

191! 113,020 278,485 100,053 02,820 48,540 29,440 26,283 11,349
191* 17,079 200,202 106,170 84,497 53,1105 10,148 30,276 11,506
tot’ 10,082 320,251, 110,605 (17,815 53,405 23,564 34,420 12,205
- 37,429 345,081 127,735 74,cos 57,341 25,081 37,023 13,133
i~i~ 98,394 358,689 180,514 78,448 58,733 37,655 09,140 13,009
181.1’ 158,690 375,419 118,158 80,2110 61,825 30,616 40,054 14,078
1918 2704455 895,251 152,005 81,242 (13,583 40,257 42,301 15,260
joll 207,031 397,471 147,194 83,394 65,253 42,637 43,091 15,302
i~zI 359,439 425,902 159,650 88,275 70,152 44,272 46,822 16,630
1921 357.3 37 470,879 175,083 97,315 79,745 50,92e 49,039 18,772
1922 364,840 519,538 1110,858 109,0911 83,691 56,020 04,960 21,945
11122 858,509 540,078 197,930 118.502 88,005 01,549 58,485 22,438
1924 361.984 588,323 224,179 120,046 90,561 66,138 62,7(36 21,711
1928 302,073 801,064 215,331 128,445 96,389 72,588 64,401 23,804 —

1926 3711,079 634,062 222,14~ 137,178 101,835 78,684 70,005 24,2 13

1027 374,209 669,272 233,452 144,192 105,099 86,741T 70,659 24,130
1928 880,382 714,421 226,200 355,122 111,527 90,851 76,270 24,445
1821 285,2111 718,808 267,701 153,829 112,742 92,881 69,337 22,315
1036 880,515 720,042 208,356 153,559 112,012 92,014 71,194 22,307
1931. 395,316 759,720 285,587 103,798 132,094 09,722 76,565 22,884
1032 808,885 788,943 805,588 167,676 115,912 100,794 79,708 23,265
193* 296.607 807,852,, 314,065 160,235 114,531 102,902 -83,815 23,595

DEBT PElt HEAl) OF POPUL&TIOL

& a. 8. £ a. 8. 2 s. d. £ e. d~ £ a. 8. £ s. d. £.,d. £ ad.

1918 S 8 11 59 18 3 57 8 1 46 6 7 70 7 5 09 12 5 87 010 00 0 4
1912 1 10 10 61 10 7 58 8 I 48 3 II ‘111 (3 3 .88 18 6 1301! 6 591211
1914 - - * 17 8 64 15 Ii 62 0 9 47 U 1 81 4 11 75 13 5 109 811 63 1 6
1911 7 10 2 611 (3 8 07 12 5 32 4 4 02 7 2 78 17 4 313 3 0 07 4, 9

191, -. 1*13 1 72 11 4 69 1 2 55 10 (1 U 13 4 88 2 & 120. 0 7 711811

101? -‘ 3! 2 4 76 2 1 72 11 7 56 1.8 It QCt U (3 ICC I It 1. 70 8 I
191$ 53 15 8 78 14 2 78 12 4 37 1 10 90 32 10 89 6 3 1107411 77 7 4
loll U 13 0 76 12 13 73 14 7 III 11 8 90 4 7 01 0 2 13613 9 7437 1
1112, -, 65 14 1.3. 79 10 11 77 4 8 52 7 11 93 14 1 91 4 4 14110 2 79 319

1921 65 9 4 86 5 5 03 4 10 03 7 4 104 0 11 102 8 7 14617 1 881010

192! -. 65 III 0 93 7 9 88 11 0 69 0 1 309 19 0 113 ‘2 5 16019 0 1023110
102*- ~. 62 19 4 ‘46 3 1(1 89 19 1 13 14 11 110 5 5 119 12 0 1661511 104 8 8
1924 0! 5 9 101 7 6 00 1.9 4 78 15 1 110 15 4 125 15 7 172 8 6 110 930
1921 00 19 3 101 7 0 03 18 8 70 17 5 114 13 1 134 10 13 17219 7 11113 2

1112$ 62 14 7 101 37 & 04 15 8 80 19 0 118 4 8 142 3 10 18313 4 114 4 6

192? 00 10 0 103 0 2 90 5 4 83 10 0 020 7 0 153 9 11 380 3 8 114 4 7
192* 6071 113 11 7 304 3 0 88 12 8 323 13 2 159 0 5 18619 11 114 4 6
102$ 00 4 10 112 12 10 10519 2 8(5111 (1 121 3 0 102 5 8 164130 103 1 4
1930 18 1? 7’ 111 13 0 100 2 8 86 0 9 122 15 7 101, 11 10 106176 10130
1931 . - 0014 4 118 12 9 111_ 15 7 01 0 5 120 18 4 171 8 11 177 2 6 10212 0
593! 60 32 11 120 3 30 118 10 4 92 04 11 ItO 6 11 174 7 1 1825 0 10215 3
1931 19 16 11 122 1 10 120 14 11 92 19 5 320 10 10 177 2 4 19063 101138
 90

APPENDIX No. 3.

COMPARISON - OF TAXATION ON VARYING INCOMES IN DIFFERENT STATES.

Man’iud man, wi~oand one child.

Income of. £200 £300 £600 £1,000 £2,000 £5,000

Tax. Tax. Tax. Tax. Tax. T.~

£ £ £ £ £ - £
(a) Personal Exertion.
New South Wales .. 8 12 34 69 184 686
Victoria .. ,, 3 5 20 61 165 5.36
Queensland. - ‘ .. 5 - 12 45 120 329 1,397 -

South Australia .. 3 12 39 ‘ 83 217 917

Wostern Australia - - 4 9 30 68 183 808
Tasmania . - .. 3 7 24 53 156 638

Average .. 4 10 33 77 200 - 814

- (h) Property.
NewSouthWales .. 8 12 37 ‘78 221 891
Victoria .. .. 3 6 28 08 252 788
Queensland.. .. 5 12 54 152 355 1,397
South Australia .. 5 17 55 112 275 1,062
Western Australia .. 4 0 35 68 183 808
Tasmania ,. .. 3 7 26 68 223 038
Average .. 5 - 10 39 96 251 931

As regards Company taxation, the following - has been supplied by the Commissioner of
Taxvtioll, South Australia

Taxable Income. . £1,000 £1,000 - £5,000 £10,000 £20,000

Tax. Tax. Tax. ‘ - Tax. Tai.

£ £ £ £ £
New South Wale* ., 154 512 037 1,875 3,750
Victoria.-. .. .. 94 282 470 - 941 1,881
Queensland -.. .. * * * $ * -

South Australia .. ., 83 406 937 - 1,875 3,750

Western Australia .. 97 291 ‘ 484 968 1,937
Tasmania .. .. 102 340 - 590 1,221 2,471
Average for five States 106 307 685 1,370 2,768

Not on comparable baai~.

 - 91

- APPENDIX No. 4.

0001)8 OF SPECIAL USE IN PRIMARY PRODIJCTr0N ADMIrJ’ED FREE UNDER -

J3JIITIS!1 l’REFElIENTIAL TARIFF AND, IN MOST CASES, FREE ALSO UNDER

GENERAL TARIFF.
Tbe following tariff items (other than machinery) are of benefit to the primary producer
British (Ienerae
rrererentlal
‘rarli!.
TarllT.
Rock salt, brown, light brown, pink or clark red Free 20s. per ton
Calico for hag-making, as prescr~beclby Departmental
By-laws .. .. Free Free
hessians, and ,Tuttl piece goods ,, , - -. Free — Free
flags, sacks, packs, bales for corn, chaff, potato, coal
and wool corn and flour sacks., Free
Nicotine and derris spraying preparations Free Free
Sulphur .. .. Free Free
Timber undressed in Sizes not less than 4 inches in
width and not less than 3 inches in thickness for
the manufacture of boxes Free -. Is. per 100
sup. feet
Undressed timber produced in New Zealand Free Free
True vegetahie parchment, in sizes hot less than 8
niches x 38 uiiclies or its equivalent . Free Free
Manures— -

Superphosphatca manufactured within the British

Empire from rock phosphates produced
within the British Empire including any tern-
tory administered under mandate by any
part of the British Empire Free Free
Manures ri.e.i, .. ., .. .. Free - - Free -

~ Mining Explosives .. .. .. .. Free 6 per cent.

~ Timber undressed, viz. :—
£Z Douglas Fir in sizes 12 inches x 6 inches (or its .

equivalent) and over for use underground for

W mining purposes, as prescribed by Departmental
By-laws .. .. Free Free
c~) Drill-malcing s-nd sharpening machines, pneumatic,
-~ for mining dm16 Free 15 per cent.
~ Dynamo Electric i~laehincs—
IL Alternating Current Machines--.-
Other (including axciters, if any, im.
ported with or for use therewith)—
F.xcoe(hmig 025 horse-power . - - Free 15 per cent.
- Direct current and universal machines—
Other— -

Exceeding 20 k,w. .. . . Free - 15 per cent.

Filter Cloth for Mines .. Free • - 10 per cent.
Under Tariff Itefli 404, bars, hollow drill steel, are admitted free (British Preferential
Tariff~,15 per cent. (General Tarifi) for use in the manufacture of drills used in rock-drilling
machines. - - S

Under Tariff Item 33S(A), Locked Coil Rope as used in mines for hauling heavy loa(ls Is
admitted free (British Preferential Tariff), 10 per cent. (General Tariff).
It may be added that “Machinery and parts thereof for use lilt-he mining Industry” have
been exempted from payment of pm’image duty.
Agricultural and other machinery and implements, including dairying implements are
exompt from primage duty. Bags, sacks, packs and balos for corn, flour, wool, &o., calico - -

and hessian for hag-making, dips, washes and drenches, fertilizers, manures, potash for use -

- as fertilizers, rabbit poison, stud stock, wire netting, barbed wire, plain fencing wire, fibres
for use In making bOnder twine, rock salt, and other aide to primary industry are exempt from
prunage.
 92

APPENDIX No. 5.

PRICES OF GALVANIZED IRON (PER TON).

Au~t~alttsn
S ~ in
British Iron eqoivalent faetnrors favour of
to Lysa~hts16 gauge FOB. C.I,F. C.LT1.~. itato of ,Ameimut C.IY.E.
r~r~c~~
“Orb “ quality. Duty. of duty. ~ndduty, average Aust.~aiian
‘°~~°°‘
dI~counto! tacturers,
6f percent.
as wharf.

To— £ a. ci. £ a. ci. £ a. ci. £ a. d. £ a. -d. £ a. ci. - ! i. a. £ I. ci,

Australia., .. 1330 0 ISIC 0 ~O 10 0 4 10 0 -819 8 28 U 8 22 7 7 4 2 1
To 15 7 0 17 18 6 22 8 1 p111910 0 3 10 28 12 1 .. ii 4 0
per cent.
prilnage ~ .
New Zealand .. 1317 9 17 2 0 21 17 0 3 percent 0 8 4 22 5 4 22 7 7 0 2 3
Argentine
To
..
To
15 7
13 5
15 2
0
0
0
1813 6
1-1 18 0
10 12 5
23 7 0
18 15 0
18 11 0 ..
:: 0 9 3
..
..
2310 3
..
..

..
1 8 8
..
..

N0TE.—Tho abovo figures are based on information received from Londoa dated 23rd
November, 1933. The prices ofAustralian galvanized iron have been reduced mis follows:—
£e.d.
Not price cx -wharf—January, 1932 .. ,. .. 26 2 2
February, 1932 •. .. •. 25 3 7
March, 1932 .. .. .. 24 4 11
September, 1932 .. .. . - 22 17 0
May, 1933 ,, .. 22 7 7
• The reduction sinco January, 1932, is 14.3 per cent of price ruling at that date of ItL7 per ..nt.
of present price. The price to-day is less than it has been since 1915.
 93

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 - 95 -

APPENDIX No. 8. - - -

PRICES OF SIJNSITTNE Fi’iRM IMPLEMENTS IN 192], 1931, 1933 AND 1934.—NET

CASH PRICES—DELIVERY AT MAYLANI)S OR FREMANTLE.

— 1021. 1931. 1933. 1934

£ 8. ci. £ a. ci. £ a. ci. £ a. ci.

6-ft. Stripper Harvester .. .. 167 0 0 122 6 4 118 6 3 115 II) 9
8-ft. Stripper Harvester -. ,. 209 0 0 155 12 3 151 2 6 145 15 3
6.ft. Reaper m~cn1Binder ., - . - lOS 0 0 77 10 3 76 10 9 76 10 9
16-row Disc Drill, Grain and Fertilizer .. 86 9 0 67 13 9 67 15 3 67 15 3
Combined Drill and Cultivator, 16-row . . 100 14 - 0 77 3 3 77 0 6 77 0 6
Combined Drill and Cultivator, 20.row .. 120 13 0 88 8 11 87 10 2 87 10 2
Light Drill Harrows, 4.-iection .. .. 5 11 8 4 3 7 4 3 10 4 3 10
Chaffcutter, Stationary No. 4A~, with
Short Elevator .. ., - - 45 2 6 32 10 9 32 3 6 29 19 8
Chailcutter. Portable,
with Short Elevator 55 2 0 45 12 0 44 17 0 39 19 6
Spring Tyne Cultivator, 30.tino ., 48 9 0 35 4 0 36 11 3 33 3 0
—~
Lucerne Renovator, 12-tine .. .. 30 17 6 19 17 2 20 9 6 20 9 6
C--) Low Wheel Cultivatnr, 13-tine -. 21 17 0 14 17 10 14 17 5 14 17 5
(3
Stump Jumi Disc Cultivating Plough, -

10-disc ,. . .. - - 76 19 0 54 3 0 54 2 3 50 14 0
Stump ~JumpMonldboand Plough, long
boards, 5-f urrow .. .. -. 83 2 6 56 S 2 57 10 6 58 1 3
Light Set Disc Plough, 2-furrow .. 33 14 6 22 (1 6 23 8 0 22 8 6
Diamond Harrows, 4-section set .. 12 7 0 5 17 4 6 0 11 (1 0 11
Pulley Equalizing Yokes, 8.horso set -. 20 18 0 7 0 0 7 0 0 - 7 0 0
1,222 18 8 886 14 1 879 12 7 855 0 3
(143) (1U3~) (103) (100)

Per toil. P~rton. Per ton. Per ton.

Freight rate, Melbourne to Premnantle— £ a. ci. £ a. ci. £ a. ci. £ 8.
Cased ,. - .. -. 1150 1180 1180 1180
- Not cased .. - - 200 1180 1180 1180
Harbour Trust Charges 010 1 010 1 010 1 010 1

Weight. - Weight.
cwt. qrs. lb. cwt. qrs. lb.
6-ft. Stripper Harvester 31 0 0 33 1 0
8-ft. Stripper Harvester 41 0 0 44 3 7
 96

APPENDIX No. 9. -

- . SUNSHTNE FA1I1~IIMPLEMENTS.
R~nuiyrxo~s
IN PItTCES IN ArSTI’.AIJA sri~c~
1920 (wIrEN TAP.IFN WAS INCR~A~1ID).

l’rlco In 1920. ~riro In 1934. DocreasO. - I~e~ose.

- £ a. ci. £ a. ci. £ .o. ci.

Stripper Harvest-er, 8 feet .. .. 1.7 10 0 136 10 0 51 0 0 27
Header Harvester, 8 feet .. .. 237 10 0 144 17 0 92 12 3
Reaper and Binder, 6 feet .. ,. 95 0 0 68 5 I) 26 15 0 28
Grain and Fertilizer Drill, 16 hoe .. 75 1 (1 52 13 0 22 8 0 2~
Grain and Fertilizer Drill, 16 disc .. 79 15 0 57 0 9 22 15 3
Combined Drill. 16 row x 33 tine .. 92 12 0 65 16 3 26 16 3 21
Chaffcutter, 3-knife, 9}-inch mouth - -. 32 15 U 20 19 3 11 16 3
Spring Tyne Cultivator, 25 tine .. 38 19 1) 27 6 0 11 13 0 31
Sundereut, 10 disc .. .. .. 72 4 1) 47 15 6 21 8 6 34
Eunstar Single Furrow Plough, with knife
coultor arid wheel .. .. . - 7 16 9 6 5 4 111 5 20
StumpJump Mouldboard Plough, with long
hoards, Sfuri-ow .. .. -. 77-18 0 53 12 6 24 5 6 31
Lip Socket Plough Share -, B” -. 0 5 0 0 3 4 0 1 8 33
Plough Disc, 23 inches . . - 1 12 0 - 0 16 6 0 16 0 41
Sunnie Disc Plough, 3 furrow, with l~cavy
wheels .. .. -. -. 41 6 6 27 0 0 14 0 0 34
Sunrise~Stump~JnmpDisoPlotrgh,5furrn~v06 19 6 44 17 0 22 2 6 31
Diamond Harrows, with bar, 4 section .. 11 8 0 5 11 2 5 16 10 51
Stump Jump Harrows, 6 section, with bar
and 2.20-inch wheels -- -. 23 5 0 14 16 11 8 8 7 86
1,141 19 9 77412 3 367 7 0
 - 97

APPENDIX No. 10.

SUNSIIINE FAIUI iMPLEMENTS~-PRlCI~S I’11E-WA1~ AND IN 1934.

Nirr CAsh PRIOES TAhtaN raosi TIII~ VRJOI1 ICOOKS or~vcrx~SeNsunre IIAlw~srim \Voa~s
114 1914 ~cu iii 1933—34.

— 1914. Weight. 1933-34. Weight. Increase. lncreasç,

£ a. ci. lb. £ ~. ci. lb. £ 8. ci. %

StrippcrHarvester,Sfeet. - 113 0 0 4,2513 136 10 0 5,023 23 10 0 - 21
Grain and Fertilizer Drill,
16 hoe .. . - 41 10 0 1,680 52 13 0 1,876 11 3 0 27
Chaffeutter, No. 2X, 3-knife,
9~-iochmouth .. 20 0 0 616 20 19 9 672 0 19 9
High Wheel Spring Tine -

Cultivator, 25 tine .. 24 0 0 1,064 27 6 0 1,141 3 ~ 0 14

Stump Jump Mouldboard
Plough, 5 furrow, long
boards -. .. 41 10 0 1,764- 153 12 6 1,827 12 2 6 29
Sunrise Stump Jump Disc -

Plough, 5 furrow ~. 41 0 0 2,128 44 17 0 2;310 3 17 0 O~

Diamond Harrows, 4 sect ion -

sotwith bar .. .. 5 17 -6 299 5 11 2 308 0 6 4* 5*

Stump Jump Harrows. 6
section ~ct with two
wheels, 20 inches -. 11 15 0 728 14 iS 5 184 3 1 5 26
Wood Swinglotrees, 4-horse -

~et .. .. 2 10 0 116- 2 18 6 140 0 8 6 18

Tote1~ .. ..3012 13 12,651 359 4 4 14,081 68 110 10 -

• Decrease,
- It will be seen that, in every case, the linpiement sold to-day is heavier than the
corresponding item of pre-war times, the average incrcace in weight being 11 per cent. Worked
ont at pence per lb., the price belore the war was 5.7d. per lh.’~while to-day it is 0.ld. per lb.
This is an increase of only 6~per cent. This percentage reflects the real adv~ucein the period
under review.
1
No~ric—Theabove are the on y types made before tho war which are ~t1l1made at Sunshine.
April, 1934.

3985.—4
 98

APPENDIX No. 11. - -

PRICES OF DUPLICATE PARTS OF THE SUNSHINE HEADER HARVESTER, WHICH

HAVE BEEN CONSIDERABLY REDUCED SINCE TIlLS MACHD~EWAS FIRST
MAI)E IN 1917. -

l’art No. Do~ctIptIon. 1017. 1933.

-
-~ 8. d. £ s.d.
11. 9 . Segment .. .. . .. .. 6 ~ 0 4 15 6
11. 10 .. Pinion .. .. .. .. .. 0 17 0 0 10 0
B. 15 . - Cast for Roller Bearing .. . - .. 0 8 0 0 4 9
B. 22 .. Pinion for Drum Shaft ‘ .. .. .. 0 5 8 0 4 4
R~52 .. Bevel Wheel .. . - - - .. .. 0 10 o 0 8 6
B. 53 . Bevel Pinion -. • .. .. 0 7 6 0 4 9
B. 59 - - Pluminer Block . - .. .. 0 7 9 0 5 9
11. 72 .. Bearing -. . - .. .. .. 0 4 0 , 0 3 2
B. 84 .. Sprocket . - -. .. .. .. 0 6 6 0 5 9
11.324 .. Bracket for Segment . - .. .. .. 0 4 0 0 3 10
R.361 .. Comb Tooth - - -. .. . - .. 0 6 6 0 4 0
11.389 . - (~earRail, nearside .. .. .. .. 1 15 0 1 6 3
B.43S .. Spring for B. and L. Gear - .. .. 2 10 0 1 8 8
R.-171 .. Spoke for Main Wheel .. . .. .. 0 4 9 0 3 10
R.476 . Axle for Front Wheel .. . - . - .. 0 7 0 0 6 3
11.483 . Gear Spindle, front .. .. .. .. 0 15 0 0 12 0
11.501 - ,. Roller Bearing . - .. .. .. 0 9 0 0 7 ~
11.550 .. Riddle (top) Wheat .. .. .. .. 1 10 0 1 0 0
11.714 .. Thresher Bar .. ,. ., .. 0 10 6 0 4 9

PRICES OF DUPLICATE PARTS OF THE SUNSHINE REAPER AND BINDER, WHICH

HAVE BEEN SUBSTANTIALLY REDUCED SINCE THIS MACHINE WAS FIRST
MADE IN 1921. -

Part No. DescriptIon. 1921. 1933.

£ s.d. £ s.d.
SA. 43 l - -
with ~. Packer with Cap .. .. .. - .. 0 9 3 0 7 0
SA.46 I ~ ~
SA. 60 ‘. Sprocket for Drive Wheel -. .. . -- 2 0 0 1 15 9
SA. 71 .. Bevel Wheel - - .. ., .. .. 0 15 0 0 12 3
SA. 72 .. Sprocket for Clutch Wheel .. .. .. 0 8 0 0 7 3
SA. 88 ,. Bevel Pinion -. .. . - . 0 6 0 0 4 7
SA. 100 .. Hanger for Drive Wheel .. .. 0 15 0 0 10 0
SA. 194 .. Knife Head .. -. ., ., - , 0 5 0 0 4 1
SB.1117 .. Truss for inside cross Sill .. ., .. 0 18 9 0 8 0
SB.1l07 .. )3’rame for Rear Elevator .. .. .. 0 16 3 0 9 6
SB.1266 . Back Sill for Platform .. .. .. .. 1 13 3 0 16 9
811.1267 .. Finger Bar .. .. .. .. .. 2 15 0 2 3 0
811.3028 .. pitman , - - .. ., - - .. . - 0 5 3 0 3 10
SB.3047 .. Pole -‘ .. .. .. .. 1 7 6 1 1 6
SA.4002 - .. Lower Elevator Canvas .. .. . - 2 15 0 2 2 6
811.4007 Transport \Vheel -. . - . - .. 2 5 0 1 13 3
SB.40l4 .. Conveyor Roller -. .. .. 0 13 3 0 10 9
811.4017 - - Finger .. .. - .. .. .. 0 -3 0 0 2 5
811.4019 .. Knife, complete, plain .. .. .. .. 113 6 1 - 7 0
911.4034 .. Knotter Hook Complete .. .. .. 0 11 0 0 10 0
SB.4038 . - Roller Bearing -. -. .. .. 0 8 3 0 5 9
SB.4051 ,. Bearing for Sprocket Wheel .. ~. .. 0 6 0 0 5 3
 99 -

APPENDIX No. 12.

LIST OF DUPLICATE PARTS OF THE SUNSHINE STRIPPER HARVESTER WHICH

ARE NOW SOLD AT LOWER PRICES THAN IN PRE.WAR YEARS.

- SoiU In 1914 1’~,~ ~1

Part No. Desct1pti0~. or earlier ~
at,—

£ s.d. £ 8.d.
79A .. Spur Wheel for Fan .. .. .. .. 0 o 0 0 8 6
91 .. Crank I’m and Shaker Ball .. .. .. o lo 0 0 7 3
183 .. Holier Bearing . - .. .. .. 0 7 0 0 7 3
183c .. Case for Ilollor Bearing . - .. .. o 0 o 4 ~
11.208 .. Segment .. .. .. .. .. 2 15 0 2 12 6
11.209 .. Pinion .. .. .. .. .. 0 8 6 (3 ~ 0
F.300 .. SpindloforMainDrive- . .. .. 0 15 0 0 10 9

REDUOTION TN PRICE OF PARTS FOR THE COMBINED DRILL AND CULTIVATOR,

- SINCE THEY WERE FIRST LISTED IN 1018.

Part No. - Description. - Pxiee In 1018, PrIce In 1933.

£ 8. ci. £ a. ci.
N.507 4~Point for Flat Tyne 018 008
N.532 4~Point for Fluted Tyne 020 008
- N.t308 6~Point for Flat Tyno 023 0 0 10
N.848 6~Point for Fluted Tyno 026 0~0 9

APPENDIX No. 13.

COMPARISON OF PRICES OF PARTS FOR TRACTORS IMPORTED DUTY FREE WITH

PARTS FOR AUTO HEADER MADE IN AUSTRALIA.

Imported. . Autr~flanMade.

- £ s.d. £ &d.
Clutch Release Shoe .. .. 0 0 3 Clutch Release Shoe .. . - 0 8 0
Univeraal Joint - . .. 1 19 6 Universal Joint - -. .. 0 15 0
Spring Hanger Crank .. - .~ 0 11 6 Beater Crank .. .. .. 0 7 3
Radius Rod Ball Cap .. . 0 2 4 Ball Socket .. . - .. 0 0 0
Starting Pin -. .. ‘ ., 0 1 6 Starting Pin . - . . - 0 0 ~
 100

APPENDIX No. 14.

PRICES OF DUPLICATE PARTS FOR PLOUGHS RESPECTIVELY IN NEW

- ZEALAND AND AUSTRALEA.

Difference In
Part. New Zealan d Price. Australian Price. favour of Australian
Farmer.

£ a. ci. £ s.d. £ s.d.

I’.202 .. .. . - - - 1 3 4 0 19 6 0 3 10
P.353 .‘ .. .. .. 110 0 148 056
P.1019 .. .., - - . - 1 5 I) 0 13 0 0 11 6
P.1072 .. .. .. .. 1 5 6 0 13 13 0 12 0
P.2893 .. .. .. .. 1 1 0 0 15 8 0 5 6
P.354 .. .. . - - - 0 11 4 0 8 6 0 2 10
P.892.. 0. 039- 00I~
.. .. .. 05
P.1381 .. .. .. . - 0 10 0 0 5 6 4 0
P.880 .. .. . - - .. 4 15 0 2 2 0 2 13 0
P.885 .. .. .. .. 43 8 1178 260
P.7331 .. . .. .. 2 0 0 0 18 6 1 1 6
P.9757 .. .. .. . - 3 18 0 1 15 0 2 3 0
P.580 .. .. - - .. 2 -15 0 0 19 6 1 5 6
P.2890 .. .. . - ,. 1 15 0 0 12 6 1 2 6
P.9777 .. .. - - .. 2 15 0 1 5 0 1 10 0
P.10551.. .. .. .. 3 17 (1 - 1 17 6 2 0 0
1’.10552.. .. - - .. 4 7 0 2 2 6 2 5 0
P.3685.. .. . . 19 8 120 078
P.881 -- .. .. .. 017 6 0 6 6 011 0
P.27574.. .. .. . - 0 16 13 0 6 6 0 10 0
P.6005 .. .. .. .. 3 0 0 1 5 0 1 15 0
P.9535A.. . - .. .. .4 10 0 2 0 0 2 10 0
P.846 -. .. .. .. 0113 6 0 7 0 0 9 6
P.846o .. . - .. .. 1 2 0 0 8 6 0 13 6
49 19 10 24 9 9 25 10 1
= 51 per cent.

The table covers identical parts.

APPENDIX No. 15.

PRICES OF. COMPARABLE FAR~~tIMPLEMENTS IN 1033 RESPECTIVELY iN

NEW ZEALAND (IMPORTED—DUTY FREE) AND IN AUSTRALIA (AUSTRALIAN
MADE).

- Price In (lalnth
Au~trallan
Price in
Now Zealand. - Autralla. Farmer

- - £ 8. ci. £ a. d. £ 8. d.
Reaper and Binder, 6 feet, with transport and sheaf
carrier .. .. . -. .. .. 86 15 0 68 5 0 18 10 0
One-horse Mower, 34 feet cut .. .. . - 27 5 0 28 6 6 0 18 6
Two.horse Mower, 44 feet cut .. -. .. 33 2 6 31 4 0 1 18 6
Two-horse Mower, 5 feet eut .. .. .. 34 2 8 31 13 .9 2 8 9
Horse Hay Rake, 8 feet .. . - .. 17 1 6 15 12 0 1 9 8
HorsoHay Rake, 9 feet -. .. .. 18 1 0 10 11 6 1 9 6

Above prices are taken respectively from the price books of the Massey Harris Company,
Christchurch, New Zealand, and the Sunshine Harvester Works, Sunshine.
April, 1034. -
 101

APPENDIX No. 16.

FARM IMPLEMENTS.—NET CASH PRICES OF COMPARABLE ITEMS,

RESPECTIVELY IN AUSTRALIA AND IN SOUTH AFRICA.

Psircas La AUeTie&Lrs. PIucZS is Sotru AFaICA—AueusT, 1933.

Taken from the Price l3aok of the Senehine Taken from the Price Books of Malcumess Ltd., Ifeat Londoni,
harvester Works, 1031—34. and Massey harrIs Ltd., Durbsn.

- — Australian — African Autralian

currency. - currency. eurrenoy.

- £ s, d. £ s. d. £ s.d.
Sunshine, 3-furrow LightSet Sunshine, 3-furrowLight Set
Disc Plough with scrapers 29 9 11 Disc Plough with scrapers 42 0 0 52 10 0
Sunshine Single Row Planter Planter’s Friend Single Row
with Fertilizer 8 0 11 Planter with Fertilizer . - 000 11 6 0
Sunshine, 12-row Disc Grain Sunshine, 12-row Disc Grain
and Fertilizer Drill 40 10 0 and Fertilizer Drill 07 0 0 83 15 0
Sunshine, 14-row Disc Grain Sunshine, 14-row Disc Grain
and Fertilizer Drill 5113 6 and Fertilizer Drill 70 0 0 87 10 0
Sunshine, 16-row Disc Grain Sunshine. 16-row Disc Grain
and Fertilicer Drill 57 0 9 and Fertilizer Drill 75 0 0 03 15 0
Sunshine, 8 ft. Hay Rake -. 14 12 6 Champion. Sit. Hay Rake 15 0 0 18 15 0
Sunshine No. 3, M.H. Disc Massey Harris, No. 3, Disc
Plough, 3-furrow -. 34 7 5 Plough, 3-furrow 37 10 0 46 17 6
Sunshine Power Lilt Tractor Massey Harris Light Tractor
Disc Plough, 3-furrow Disc Plough, 3-furrow 49 0 0 61 6 6
(Sunquest) . - 44 17 0
Sunshine Disc Ham-row, Massey Harris No. 15 High
8 discs ~ 20 in. (Sun. Frame Diso Harrow,
king).. 12 13 6 - 8chiscsx20in. 17 0 0 21 5 0
Sunshine Folding Disc Har- Massey Harris No.5 Folding
row, IS di~e.s~ 18 in., Disc Harrow, 18 discs x
with transport (Sunfield) 270 0 18 in. 30 0 0 37 10 0
Sunshine No. IS Scaffler . - 3 8 3 Massey Harris No. 18 Scuffler 317 6 4 16 10
Sunshine Orchard Spring MaWsey Harris No. 14
Tooth Cultivator with Orchard Spring Tooth
Forecarriago, 9 tine 14 2 0 Cultivator with Fore.
carriage, 9 tine 15 6 0 1816 0
Sunshine, 6-ft. Reaper and Massey ilarris, 6-ft. Reaper
Binder, wit-h transport and Binder, with transport
truck and sheaf carrier 68 50 truck and sheaf carrier.. 66 10 0 8326
Sunshine, 1-horse, 34 ft. Champion, 34 ft. mower 25 0 0 31 5 0
mower 26 06
Sunshine, 2-horse, 44 ft. Champion, 44 ft. mower .. 28 0 0 35 0 0
mower 31 40
 102

APPENDIX No. 17. -

PRICES OF COMPARABLE IMPLEMENTS IN ARGENTINE AND AUSTRA~LTA.

The Argentine prices are taken from printed price lists for 1931, issued by the Argentine
agency for one of the largest implement manufacturers in the United St-sites of America and
the Australian prices are from the price list of a leading Australian manjifa-eturer. Not a-U
lines sold iii Argentine - are comparable, but nine have been selected which are definitely
comparable, and more used widely in both countries.

- - Net Cash to Farenons

for Delivery at—

- - Buenos Aires. Melbourne.

- £ ..d. £ s.d.
Reaper-Thresher (Header-Harvester) 10 ft. cut, engine-functioned 495 0 0 338 1 8
Reaper and Binder, 8 ft. cut, with sheaf carrier and transport truck 91) 18 6 92 7 8
Mower, 44 ft. cut - .. .. . - .. . - .. 30 5 4 31 7 0
Hay Rake, 8 ft. x 25 teeth (Argentine) . - .. .. 16 1 4 -

hay Rake, 8 ft. x 30 teeth (Australia) .. -. .. .. .. 15 6 11

Double Furrow Mouldboard Plough, with circular coultcrs .. 34 11 6 20 13 3
rhree-furrow Disc Plough .. .. . - . - .. 43 18 3 28 0 6
~2-rowDisc Drill a lift. (Argentine) -. .. .. .. 69 18 8
10-row Disc Drill a 111 ft. (Australia) .. . - . . ., ., 71 8 0
l.sectionsi Diamond Harrows x 80 teeth .. .. .. 6 18 0 5 6 7
- - 70811 7 602 0 7

The difference in favour of the Australian farmer is £194 2s. or 32 per cent, -

In the Argentine there was a revenue duty of 10 per cent.

 103

APPENDIX No. 18. -

PRICES 0? COMPARABLE FARM IMPLEMENTS IN CANADA AND IN AUSTRALIA.

(Net cash prices in 1933 in each case. Taken from the price lists of the Massey
Harris Co. Ltd., Cancula, and the Sunshine Harvester Works, Australia.)

5
— - Canada. Australia.

- 8 £ a.d. £ s.d.
6-ft. Reaper and Binder, with transport truck and sheaf
carrier . - .. - .. .. .. 250.50 on 62 12 0 68 5 0
34-ft. Mower .. -. .. .. .. 89.00 22 5 0 20 0 6
44.ft. Mowor -. -. .. .. .. 96.00 = 24 0 0 31 4 0
8-ft. Hay Rake .. -. .. .. .. 50.50 on 14 2 0 14 12 6
64-ft. 15-tyno, Spring Tooth Cultivator -. -. 90.50 on 22 12 6 ..
64 ft. x20 tyne .. .. - - .. .. --. 23 8 0
8-ft. 17.tyne, Spring Tooth Cultivator .. .. 112.00 on 28 0 0 ..
84 ft. a 25 tyne .. .. .. .. .. .. - 27 6 0
No.8 Core Cultivator .. . .. .. 103.50 on 25 17 6 24 7 6
3-section set Diamond Harrows .. .. .. 20.75 on 5 3 9 4 1 6 -
4.scction set Diamond Harrows .. 28.00 on 7 0 0 5 11 2
No. 3 Disc Plough, 3-furrow .. .. .. 171.50 on 3~i 7 0 34 7 3
No. 2 Scuffler with Depth Regulator .. .. 14.75 on 3 13 9 ..
No.? .. .. .. .. .. .. .. 3 10 9
No. 8 Scuffler .. .. - . - .. .. 14.75 3 13 1) 3 8 3

S Oon,erston $4 O0 e9uals £1 AustralIan.

April 1034.
5
 104
- APPENDIX No. 19.

- TAREFF ITEIIS \VH[CFI PROTECT TILE PRL\TARY PRODUCERS.

Present Rates
1021—30 Rates.
flem. Coeds. ~— -________
(12th July 1933).

B.P.T. G.T. - I.T. B.P.T. o.T.

18 Tobacco Leaf, Unstenimed—

For Cigarettes or Fine Cut Tobacco
per lb. 2s 2s. 2s. 5s. 2d. fis. 2d.
For Tobacco other than Fine Cut
per lb. 2s. 2s. 2s. 3s. 3s.
For Cigars .. .. per lb. 2s, (3d, 2s, (3d. 2s. (3d. 2s. 2s. (3d.
N.E.I. .. . . per lb. 5s. 4d. 5~.4d. us. 4d. Ss. (3d. 8s. Gd.
28 •‘l
29 ~ Sugar .. P rohibited Prohi bited.
*0J -

83 Animal Foods .. per rental 2~. 2s. 2s. 2s. 2s.

36 Arrowroot—
Packed for household use per lb. 14d. lId. 14d. lId. 14d.
N.E.I. .. . . ~ lb. Id. id. id. ld. id.
~7 Bacon and llama .. per lb. 3d. - 4d. 4d. 3d. 4d.
40 Broom Corn Itlilet and Rice Straw
per cents! 8s. 8s. 83. 83. 88.
41(A) Butter and Cheese
Butter Substitutes under ~ per lb. Od. 64d. 7d. Gd. 7d.
By-law J
43 Chicory—
Raw .. -. .. P°~ lb. 3d. 3d. 3d. 4d. 4d.
Ground: in liquid form or mixed
with other substances., per lb. Gd. Gd. Gd. 7d. 7d.
46 Egg Albumen, Dry .. per lb. 2~. (3d. 3s. Od. 5s. 2s. Gd. ~.

47 Egg contents, being yolk and albumon

combined, dry .. ~ lb. Ia. 4d. is. 8d. Is. 8d. is. 4d. is. 8d.
49 Egg yoik, dry - - - - per lb. is. ls. is. Gd. is. is. Gd.
50 Eggs, in ~heIl .. - - per doz. Gd. Sd. Od. Gd.. Od.
51 Fish, viz. :—
Fresh, smoked or dried or pro. -

served by cold process.. per lb. id. Id. 14d. Id.. ljd.
Preserved in tins, &c.~
Salmon .. .. per lb. id. lId. 2441. Id. Gd.
Crustaceans .. . - per lb. Id. lId. 24d. 24d. 4d.
Sardines .. . - per lb. Id. lId. 24(1. Id. 3d.
- Other.. .. .. per lb. lii. 1~d. 24d. Id. 24(1.
Potted or concentrated .. ad val. 25% 25% 23% 25% 421%
N.E,I. .. .. per cwt. 5s. (3s. Os. Ga. 6s..
Oysters, fresh, in the shell per cwt. 2s. 2s. 2s. 2a. 2s.
52 Fruits, fresh— per c ontal
Bananas .. .. per lb. Id. Id. id. 2s. 6d. 8~.-4d.
Citrus .. .. per lb. 4d. id. Id. jd. Id.
N.E.1. .. per cental 3s. 65. Os. 35. Oms.
53 Dried Fruits other than date-a and figs From From From
per.lb. 3d. 3d. 3d. Gd. Gd.
to to to
44d. 44d. 4jd.
54(A) Fruits and Vegetables preserved in
- liquid or partly preserved or
pulped—
(1) Quarter-pints a-nd smaller
sizes .. .. per doz. - 9d. -is. is. 3d. ii. 3d. is. 9d.
(2) Half-pints and over quarter. -

pints .. . . per doz. ls. 3d. is. Od. 2s. 2~.Gd. 3s. Gd.
(3) Pints and over Iia!f.pints -
per doz. 2s. Od. 3s. Gd. 4s. &3. 75.
(4) Quartsan~doverpintsperdoz. Gs. 7s. Gd. 8s. 6d. lOs. 14~.
(5) Exceeding n quart per gal, is. Od. 2a. Gd. 3s. 35. 4s. 3d.
(6) When preserved in spirituous -
liquid, additional duty to
bepaidotiliquid pergal. 30s. 21e. 31s 30s. 31s.
 10~
APPENDIX No. 19—continued,

1921—30 Rat~. Present ha-tea

(12th July, 1933).
Item. Coeds. -

O.T. O.T_

54 (b) Asparagus Tips—

(1) Half-pints and smaller sizes -
per doz. 3a. 4s. 55. 4s. Ge.
(2) Pints and over half-pints
per doz. 4s. Os. 7s. (3d. Ga. Sd. 9s.
(3) Quarts and over pints
per doz.. 5a. 7s. (3d. 8s. Gd. lOs. 14s.
(4) Exceeding a quart per gal. is, Pd. 2s~.Gd. 3s. 3s. 4s. Gd.
57 Grain and [‘uho not manufactured—
\Vheat . . per contal Free 2s. 2s. Free 2~.
harley .. per contal 2s. 2s. 2s. 2a. 2s.
Maize . - per cental 2s. (3d. 3s. 3s. Gd. 2s. Gd. 3s. Sd.
N.lf.I... per cemmtal Is. Gd. l~. Gd. is. (3d. is. Gd. is. Gd.
58 Grain and Pulse, manufactured— -

Bran, l’ollard and Sharps

per cental is. Is. Is. 3d. Is.10. 3d.
Wheaten Flour per ceatal Free 2s. Gd. 2s Gd. Free2s. Gd.
1~- 2~d.
Cornilour - .. per lb. 2d. 2d. 2d ~ packodli
Ihousohold use).

-
N.E.i. not packed for retail sale
per lb. 4d. 4d. Id. 4(1. Id.
op Hay and Chaff .. .. per cwt. is. is. is. is. Is.
GO Herbs—
I)ricd, not medicinal .. per lb. 4d. 4d. Gd. 4d. Gd.
61(o) Honey .. .. .. per lb. 14(L 2d 2d. 14d. 2d.
Gl(a) ,Jama and Jellies .. .. p~t~ lb. 3d. 3d. 3d. 3d. 3d.
62 Hops .. .. -. pci- lb. Gd. Od. is. Gd. Is.
04(a) Lard an! Edible Fats, n.o.i. per lb. id. lId. 2d. - 3d. 4d.
64(6) Lard Oil . - .. per lb. Id. lIt!. 2d. Id. 2d.
70 Macaroni and Vermicelli .. .. Id. 2d. 3d. Id. 3d.
72 Malt .. .. per rental Ga. Os. 7s. (is. Is.
74 Meats, poultry and game—
J!resli or Smoked .. per lb. 2d. 24d. 21d. 2d. 21d.
Potted or concentrated .. ad va!. 30% 35% - 40% 30% 50%
Preserved intins or other airtight
containers .. . . per lb. 2d. 2d. 24(1. 3d, Gd.
Preserved by cold process per cwt. 2d. 2d. 3d. 2d. 3d.
N.E.I. .. . . per ewt. 5s. Os. Os. Gd. Os. Os. Gd.
75 Milk and Cream— -

Preserved, Condensed, Concentrated,

Poptooizc’d ann Frozen per lb. 2d. 2d. 24(1. 2d. 21d.
1)ried Milk .. . . per lb. 3d. 4d. 4d. 3d. 4d.
Malted Milk . . . . per lb. Gd. 7d. 8d. - Gd. 8d.
78 Nuts, Edible—
l’eenuls, unshelled .. per lb. 2d. 3d. 4d. 2d. 4d.
Unshelled, n.e.i. .. per lb. 2d. 2d. 3d. 2d. 3d.
Almonds------
Unshelled .. .. per lb. n2d. 2d. 3d. 4d. Gd.
Kernels .. .. per lb. 4d. 4d. Gd. Gd. Gd.
80 Onions .. .. .. P°’~
ton £6 £6 £6 £8 £8
82 1’ickle~,Sauces, Chutney.—
(A) Quarter-pints and smaller sizes
p~i~doz. Di. Is. is. 3d. is. 3d. is. lId.
(a) Half-pints and over quarter-
pints . .. per doz. Is. 3d. Is. Gd. 2s. 2s. Gd. 3s. Sd.
(c) Pints and over half-pints
per doz. 2s. Gd. 3s. 6d. 4s. Os. 75.
(D) Quarts antI over pints per ioz. Ss. 7s. Gd. 8s. lOs. i4e.
(E) Exceeding a quart anti not cx-
ceeding a gallon per gal.-- Is. 8d. 2s. Gd. 3s. 2s. lid. 4s. 3d.
(r) Exceeding a gallon .. pee. gal. is. 6d. 2s. 4d. 2s. i0d. 2s. Di. 4s. it!.
83 Potatoca .. .. per cwt. 2s. Gd. 2s. 6d. 2s. Gd. 2s. Gd. 2s. Cd.
 106

APPENDIX No. 19—continued.

Present
(12th Rates
JaIy, 1933).
192130 Rat~.
Item. Goods.
33.P.T. O.T. I.T. 13 P.r. O.T.

84 Rennet—
Liquid, not packed for household use
ad val. 15% 20% 25% 15% 25%
Rennet—other .. . - ad val. 25% 30% 40% 25% 40%
86 Rice— per lb.
Uncleaned .. per cental 3s. 4d. 3s. 4d. 3a. 4d. id. Id.
N.E.1. .. per rental Ga. Cs. 68. 14d. 14d.
91 Seed— -

92 Hemp and Rape per rental Os. 68. 7s. (3d. ~s. 7a. Cd.
93 Canary, not packed for retail sale
per rental 6s. Ge. 7s. (3d. 12s. iSo.
Cotton, Ka~pokand Sesame
per cental 45. 48. 48. 45. 4~.
Lucerne .. . - per ~b. Gd. Gd. lId. (Sd. 9d.
99 Straw -. .. - - per ewt. is. Is. I~. is. is.
101 Vegetables (excepting Tomatoes)
Dried, Drysalted, Concentrated,
Compressed, or powdered ad val. 20% 25% 30% 20% 30%
102 Vegetables, n.e.i. per cental 2s. 2s. 2s. 2s. 2s.
104 Beeswax . - .. per lb. It!. id. i4d. id. 41d.
291 Timber.. -. Various—See Tar if Item.
428 Wattle Bark .. .. per cwt. 3s. 38. 38. 38. 30.
429 Wattle Bark Tanning Extract
ad yal. 20% 20% 25% ~0% 25%
432 Cotton, Raw—
Linters .. .. per lb. Free Free Free id. lId.
Other.. -. .. per lb. Free Free Free 3d. 3d.
~,33 64. Is.
Wool Tops - .. .. per lb. Free Free Free
and ad va-I. 20% 20%
 APPENDIX No. ~.

SYNOPSIS OF A MEMORANDUM
?ZZPA~ZDliT ?~I -

COMMONVIEALTH COMMITTEE OF DEFENCE

IN REFERENCE TO CHAP’Ifl~22

OVTHZ

WESTERN AUSTRALIAN CASE FOR SECESSION.

(“THE DEFENCE CONSEQUENCES OF SECESSION,”)
 CONTENTS SHEET.

P,&wr 1.—A StTMMABY OP CIGtTALN PrnNCrPLK8 o~Iursatu.z. ~o A~8~n~,jA~

~
1. Introduction .. .. ., .. .. .. .. 113
2. National interests to be protected .. -. .. .. ..
- 3. A summary of certain principles of Imperial and National Defence.. .. 113
(a) Defence of sea-borne trade .. .. .. .. .. ii~
(b) Defence against invasion .. .. .. .. ..

(c) Defence against raids .. .. .. .. 113

(d) Preservation of internal security . - .. .. .. 114
(e) Protection of the rights of British citizens in foreign countrie. ..

(f) Empire co-operation and expansion of effort ., .. ,. iu

(g) The implementing of Treaty obligations .. .. .. - ii’~
PARr 2.—Foaaccrx Po~io IN ReLATIoN To AUSTItALLs.~DmtlEseeli Pouoy—
4. Foreign Policy .. .. .. .. .. .. .. - 114
Paar 3.—NAvAL DmcvmzNcE— -‘ -

~5. Substance of the Wcstern Australian case .. .. , ,. - .. 115

6. The part of the Navy in Australian Defence .~ - .. .. .- iz&
7. The amount of Australian Naval expenditure . - .. -. .. - ii~
8. The Naval vote that Australia can afford .. .. .. -. us
9. Reversion to the Naval contribution arrangement and Its Implication. -. 116
10. The Henderson and Jeliicoe Reports and the present Naval Organisation .. 117
11. General conclusion on Naval Defence .. .. .. ., - - 118
Psivr 4.—LA1SD DwPENmz— -

12. Substance of the Western Australian case .. ‘ . - ., . - 118

13. The part of the Army in Australian Defence .. .. ., .. 119
14. The Army Organization and Distribution ,. .. ,, •,

15. The training of leaders and staff n ~, .. .. .. 120

16. Pro-vision of the necessary equipment and stores for’the Army to function .. 121
~ 17. General conclusion on Land Defence .. .. ., . .- .. 122
P~wr5.—Am Dsri~zeeE— -

18. Substance of the Western Australian case . - .. .. ..

10. The part of the Air Force in Australian Defence .. .. .. 122
20. The distribution of the Royal Australlan Air Force .. .. .. 123
PAST C.—M i-moss Surrav Oa-OANIzATI0N—
‘, 21, Substance of the Western Australian rose .. .. -. .. 123
22. The part of the Munitions Supply Organization in Australian Defence - -. 124
23.- Location of Munitions Factories and their relation to Defence of Western
Australia .. - -.. - .. .. ,. .. 126
PAnT 7.—CrvlL AVIATIoN— - -

24. The North-west Air Service and its cost to the Commonwealth .. ,, 125
25. The East-west Air Service and its coat to the Commonwealth .. .. 125
26. ProvisiOnnand maintenance of aerodromes and landing grounds .. .. 125
27. Facilities and subsidies for Aero Clubs.. , - .. .. .. 126
28. The effect of secession on Civil Aviation in Western Australia and the Corn.
monwealth .. . - .‘. - - - .. .. .. 126
PArr 8.—OEi~n~LCoNcLusIoN— -

29. The economic benefits of Defence expenditure ., - .. .. .. 121

30. General conclusion .. .. .. .. .. .. -. 127
PART 1.—A SUMMARY OF CERTAIN PRINCIPLES OF IMPERIAL AND
AUSTRALIAN DEFENCE.

I. INTRODUCTION.
‘[‘lie Western Australian case opens with a paragraph (No. 645) on the subject of mlependcnee
upon Britain, The statement that British diplomacy and time British Navy are time basis of
Australian security is fully endorsed. ‘l’ho case for secession and the rejoinder therefore both
have a common starting point, and they hold in view a similar ohjectivo—the attainment of
national security. The argument accormlingly resolves itself into au examination of time means
of attaining the objective. ‘limo present Australian Dcfcncc Policy and organization isa carefully
planned pert of a co-ordinated scheme of Empire defence, and it is necessary to vxemnin~th~
repercussions on the defence of Western Australia-, the security of the rest of Australia, and
Australia’s part in Imperial Defemice. It will he shown that the strength uf Western Australia’s
defence under secession would be greatly weakened, that the security of the rest- of Australia
would consequently he prejudiced, and that Australia’s part in Imperial Defence would not
be as effective a contribution as at present.
It is necessary in the examination of the Western Australian case to state and keep in
mind a summary of certain principles of Imperial and Australian 1)efence as criteria with which
tho case should conform. The adoption and the extension of the idea would mean the
multiplication of the difficulties of Imperial co-operation, a-nfl the creation in Australia of
problems of co-operative action where they are at present non-existent.

- 2. NATIONAL INTERESTS TO BE PROTECTED.

Interests to be protected may be classified as follow
Seaborno trade.
Territorial integrity—defence against invasion.
Territorial integrity—defence against raids.
Preservation of internal security.
Protection of the rights of British citizens in foreign countries.
-
In addition, there have to be considered—
Expansion of war effort.
-The implementing of Treaty obligations. -

3. A SUMMARY OF CERTAIN PRINCIPLES OF IMPERIAL AND NATIONAL

1)EFENCE.
Whilst peace may be stated as the pro-eminent desire of the Empire, and its foreign policy
is whole-heartedly directed to such end by the pursuit of international co-operation, the
maintenance of peace roust ho compatible with time preservation of British interests. Though
policy is the instrument which endeavours to ensure the maintenance of national i~tercstsin
peace, the efforts of another Power to ira-peril them by thwarting ,llritl~hpolicy uncy result
in war against the aggressor. In order to furnish a determent against aggression, it is mmccussary
for policy to be reinforced by defence forces which provide for the military security of the
interests at stake. The following is a summary of certain principles of Imperial and Australian
Defence -

(e) Defence of seabo,-ne tra-de.—Nmvval forces are required for the defence of sea-borne
trado on tho ocean routes and in local waters such as la-mull ails and coastal routes~
with air co-operation in narrow waters and for reconnaissance and oliservation.
For the operation of these naval forces adequately defended bases on the trade
routes aro essential, and conversely a means should exist for the (Jestrimetion
of enemy base-s from which the enemy may attack trade. All parts of tho Empire
have a vital interest in the maintenance of sea-borne trade and in tb~provision
and maintenance of the forces and bases necesspry for its security.
(b) Defence-against invasion.—The provision of sea.power for the defence of scaborne
trade simultaneously furnishes the first lino of defence against invasion Imy
sea-borne land or air forces. Supplementary to sea-power, the army organization
provides for a Field Army as a deterrent against invasion, and thu Air Force
organization for aircraft for co-operation.
(c) Defence against raids.—Supplementary to sea.power as a general defence against
raids by naval forces, or seaborno land or air forces, tho Army and Air Force
organizations provide for the defence of vital localities by means of— -
(i) Artillery and anti-aircraft artillery defences amid garrisons;
(ii) Military foree~su11i~ient to &leal with landing parties where such operations
ceo feasible; -

(iii) Co-operation of aircraft.

 - 114

iSecure bases from which the Navy can operate are also available to the mercantile
marine as ports, havens, and place of assembly for convoy. In addition to their
- provision at nnval bases and important ports, fixed defences are necessary for
those centres whose destruction might be carried out by raids, aiim! whose loss
would compel submission or imperil the capacity to offer resistance.
(d) Preserratioa of int”rnal •security.—lzm advanced societies, time civil police is sufficient
to maintain internal security, but, in less civilized tevritorie~where the greater
part of time imopulnitiOii is, hi varying degree, subject to aim outbreak of the prinmitive
passions, armed forces amy be rom mnired.
1
(e) Protection of the rights of British citizens in foreign countries.—The forces provided
for national security a-nil their reserves mire normally suflicient for the settlement
- of these cases.
(f) E-nmpire co-operation and expansion of elfort.—TIme plan of imperial Defence ~mrovidcs
for the organization amid oxpammsion by each [mart of the Empire of its resources
for its own sccunitv, in pursuance of the pmin~ipIe that its local defence is tho
primary Tvspofls1hmlit-y of reich l)wniniomn The con-i-elation of these individual
efforts is the basis of co-operation in Imperial Defence, time plans of which cover
the naval, military, air, munitiomis supply and economic and financial aspects
of preparedness. ‘jim mohility of time forces of I-lie Empire is essential to make
this eu-operation eticitive, and ability to move by semi is provider! by adequate
naval strength and seemmi-ely defended bases. ‘lime full immobility of Air Forces is
de~meiidenton aim lam penal dma-ui of landinmg grounds mm imd lIyiug boat anchorages.
(~)Time i-otpleineatimmg of’Ireuly otligations.—As Treaties mu-c mmrrangcments b~ means
of which interests are safeguarded, time conmnmitnmcmmfs imisolved in thoz-nm have a
close relation to imational defenco. ‘l’he Covenmmnt of time League imposes on all
Members, obligations which they may be called upon to implement by military
action, and though no sp~eialprovision beyond time forces for national security
- is necessary, the liability of time obligation cannot be overlooked.

PART 2.—FOREIGN POLICYIN RELATION TO AUSTRALIAN

DEFENCE POLICY. -

4. FOREIGN POLICY.

The only reference in tho case for secession, to the part of Foreign Policy in time pursuit
•f peace arid security is in paragraph .645 that “it is British diplomacy . . . . which
ha~assured to the peopic of Aistralia their imeacefUI Occupation of this great and glorious
country “. This praise and gratitude for the part played by Britain as the senior partner of
Empire in the conduct of Foreign Policy, and for the world-wide diplomatic- representation
that is at the service of all Govcrnmnients of thu Empire is fully endorsed. In regard to Foreign
Policy, however, the I)ominiomms have long since emerged into that independent, hut responsible
Status, which was defined in 1026 as “in no way subordir-mate one to another in any aspect of
their domestic or extorns~affairs.” Autonomy would therefomo entail for Western Australia
the provision of an organization for the study of Foreign Policy in order that its Government
may have at- its disposal adequate advice on wide-u to make decisions of fmmr.resching importance
and to express its view in the Councils of Empire on qunstions qf vital interest. One example
will serve to illustrate the existence of definite Dominion viewpoints on questions of Foreign
Policy. Groat Britain, but not the Duminions, is a sigimatory of time Treaty of Locarno under
which she may be called upon to implement time guarantees ~he has given to certain European
States. Great Britain’s comnnitnwnts may, therefore, have far-reaching reactions on the
security of time Empire and time interests of Dominion~dictate time need for a continuous
study of the whole field of Foreign Policy.
To fully safeguard itself, Western Australia would, therefore, be confronted with
duplicating the following Conmnmonsvealthi organizations :—
Department of External Affairs.
Foreign Affairs Liaison Office, London.
The Defence aspect would of course be covered by the Western Australian Defence
Department, which would be established on secession.
- Finally, Western Australia as arm autonomous State ~~ouldbecome a Member of the League
of Nations like the other Domninions. This inivolvcs duties and respommaililities, and machinery
must be provided for the study of th~wide range of questions invnmls-enl, as an important
corollary to these obligations is a voice in the decision-ms relating to them. One of the
commitments—the implementing of sanctions under. Article 16 of the Covenant—has already
been mentioned. - At present, the one representation of the Commonwealth is arranged for
the Annual Assemblies, and the Labour Conferences at Geneva-. Under secession, Western
Australia would presumably require its own representation. In addition, it would be necessary
to duplicate time Commonwealth’s League of Nations Oi}lce at Australia House.
 115

PART 3.—NAVAL DEFENCE.

- ~.SU13STA~CEOF THE WESTERN AUSTRALIAN CASE.
‘time substance of the Western Australian case on naval defence is as follows
(a) II is muir-a-ted by inference that Australia’s naval expenditure is more than ~h.
can afford. (Paragraph 656.)
tb) (I) As mm separate Dominion, Western Australia could not be moore unidefenided, or
moore vulnerable or exposed to any greater damiger than she is to-day. (Yarn.
graph 675 (d).)
(il) For anvthing more than local defence against raiders, a s~parnmted Western
Australia would then, as now, “ be in time same position as othmcr parts of the
Empire, plans for tlmo defemico of which in an cmnergoncy devolve upon time
Imperial Authorities.” (l’mmracrapli 675 (e).)
(iii) “ It is time Bmitishi Navy which has assured to time people of Australia their
peacefmit occupationm of this great nod glorious country.’’ (l’armm-gn-aph 645.) -
‘iv) Western Australia’s commtrii,utimn to Navel lie-fe-mice is to be aim arrange-merit for a
sloop to he based on Frenmautle together with consideration of thin construction
of time Cockbmmrn Sound base. (l’aragraph 673.)
(.) Under time l[emmdomson and Jellicoim re-port-s the Royal Australian Navy fleet was to be
in two Divisions, one based on Sydmiey arol the other on (Jockbmnrn Sound
(1%Testern -Australia), ‘limo Cockhmirn Sound base has lie-en abminmmJon~~Ia-mimi no
ships are ~Lationed at Western Australian ports. (Paragrmiphis 646—652 and
paragraph 675 (b) amid (c).)
6. TIlE PART OF TILE NAVY IN AUSTRALIAN DEFENCE.
In the principles outlined iii Part I, it was indicated that nia-ymil forces for time defenc# of
~aabormmetrmmde a-ne also time firet line of defence mtgainst invasion by seabon-ne laud, or air forces,
and a general defenmce against raids by naval forces or sea-borne land, or air forces.
The following is th~present strength of the Royal Australian Navy
ins Commission—
Cruisers—Canberra (Flagship) and Australia.
Flotilla Lemsder—mStuarl.
- Destroyers—Two “ V “ Class.
Survey Ship—Moresby.
Ia .Re~erve—
Crmmisers—Bri-sbane a-nd Adelaide. -
Seaplane Can-icr—Albatross.
Depot Slmip—I’enguin. -

Flotilla Leader—A nzac. - -

Destroyers—Two “V” Class and five “S “ Class.

Oiler—Kurumlma. -. -

7. THE AMOUNT OF AUSTRALIAN NAVAL EXPENDITURE.

In paragraph 656 of the \Vest~rnAustralian ease the following statem.ent from the Report
for 1930 of the inspector-General of time Military -Forces is quoted :— -

“Owing to the ummavoidablo overhead charges in conmmexion with time maintenance

of a separate Navy, it appears to be a question we-Il worth consideration as to ivimether
time method of Australia’s contribution to sea defe-rmco is not more costly than she can
afford.”
The two suggestions from tins statement are— - -

(a) That the thu-mn Naval vote of £2,107,101 was more than Australia eouhl afford for
— Naval I)efence.
(6) That, owing to overhead administrative costs, the autonomous Royal Australian
Navy shouhi be abandoned a-nd time earlier contribution arrangement w~thitime
British Government reverted to.
8. THE NAVAL VOTE. THAT AUSTRALIA CAN AFFORD.
In regard to the amount of the vote for Naval Defence. it is the policy of the Commonwealth
Government “to provide the maximum contribution Australia can afford.” (Policy Speech
of Minister for Defence, 25th September, 1933). The annomimit of the vote considered excessive
in the Western Australian case is £2,107,191. Time highest Naval vote was £5,054,176 in 1026—
27 and the vote f.r 1933—34 is £1,905,238. -
The case for secession is, however, facing two ways on the amount of naval expeumditure.
it wa~noted in sub-paragraph 5 (c) above that it is argued that time noim-fulfihmnemut of tho
Henderson and Jellicoe schemes has deprived ~Vestern Australia of a naval base amid ships.
It will be shown later in dealing with these schemes that financial considerations mainly, amid
also other considerations, precluded this. Therefore time Western Australian criticism really
demands a larger and not a smaller vote, Similarly in sub-paragraphs S (b) above, empl’nsis is
laid on British naval strength as the primary meanus of defence of Australia. Nothing should
therefore be done to impair Australia’s part in-Imperial Naval Defence, yet it will be demon-
strated in the next paragraph that Western Australia’s proposed Naval Policy under secession
 116

would be a retrogressive step in regard to Australian Naval Defence. it is certainly innconsist.oimt

for a State while seekiimg a greater ulegrco of amutonomumy and independence in uric direction to
pursue a policy in a-not-her direction mvhich would increase its dependence on 1;ritain for
security. Time self-governing status of a 1)ominion becomes a masquerade if it assumes the
dependent and tutcimsry position of us Crown Colony.

~. REVERSION TO TIlE NAVAL CONTRIBUTION ARRANGEMENT AND ITS

IMI’L EL’A’i’lONS.
The second suggestion which follouvs by deduction from time quotation in paragraph 7
is that, owing to the overhead charges inn eonumexiomm with time maintenance of time Royal Australian
Navy a-nil time amount of time Naval Vote, tine immetbod of Australia’s contribution to navel (lefmumee
should be by reversion to time contribution arrangement with time Uuited Kingdom Government
which precede-il time estabhehmcumt of time Royal Australian Navy. -

The present Naval l’ohicy ha~be-cnn deveiope-d after coincide-ration of notional opinion and
aspirations by various Australia-nm Guvi~rnxnermtswide-hi have hr 1 at their disposal the - advice
of time United Kingdom Govenmrmremit- and tine Adimnirndty. it has contimnumed to receive the
endorsement of Australian mubhe nhninlionn generally as a national policy, and represents an
1 a-nil responsibilities of a sehf.governiumg Doumminion. ‘I’bo answer
acknowledgment of time duties
to the c-are for reversions to time naval contmibmmtioni arranugomenmt is to outhino briefly the
historical basis of Naval J)efsnce hum Australia, to show time evolution of time present l’oliey,
and to indicate its part jim Imperial Naval 1)efeuiee.
In pre-Fu-nleratioim days, sonic of time States niaintaineml a State Naval Force hint \Vestern
Australia was the oumly State that had riot at sonic timimo a riaval force of its own. An arrangement
for a mimmimmumu period of ten years, lion-ever, had boon entmnrnf into between the United
Kingdom Government and time State Governmenmts about 1891) for time mninitemuance of ships on the
Australia-mi Station additional to the normal 1l~alNavy Sq nadromu. The State Governments paid
to time Unmited Kingdom Government interest on time capital cost of the ships amid a suni for annual
maiimtenaoce. l’lme m-sximumn total commtribmmtionm was £126,000, amumi the Western Aumstrahan
share in time tenth year oIl a populatioum basis was £4,816. ‘I’he agreenmemmt eoimtinued with the
Commonwealth after Federatiomu but it was renmewed ivitim some alterations iii 1903, the Common-
wealth’s contribution being fixed at a nmumximnunn of £200,000.
At time Imperial Conference, 1909, the Commonwealth Government submitted a proposal
for the establishment of a Royal Australian Navy, anmd the following extract is quoted :—
“ Whereas all time 1)omimmiouis of time hlritisim Empire might to share in time most

effective way in time bum’demm of maiumtiminimmg time permanent naval- supremacy of the
Empire:
“Amid whereas this Government is of opinion that, so far as ~‘sumstrahia is concerned.
this object would be best- attained by encoimragom~mmt of naval development in thi~
country so timat people of Comnmonwealtim will bee-nine mm people efficient at sea a-nd
thereby better a-lila to assist- United Kirmgmlom with men as well as simips to act in eyncert
with time other sea forces of the Empire
“Time views of time present Government, as a basis of co-operation and mutual
understanding, are herewith mmuhnnitted :— -

(Then follou-s an ormtline of the basis proposed for the establishment, control.
administration, and training of the ROyal Australian Navy, and for Imperial Naval
co-operation)
The iVanul Agrcsnwnt Act 1012 amended time Act of 1903 by providing that it could be
arranged from time to tie-ne with time United hcingdonmu Govcrnmnemmt for the reduction of the
Royal Navy Squadron on the Australia-ni stat-ion and also time subsidy, time final payment of which -
was made mi 1912—13. -

Since 1909, Australian Naval Policy has been consistently governed by the principles
then laid down. Tho closest co-operation has be-eu maimitained with the United Kingdom
Government, and the method of contributing to Imperial a-nil Australian naval sceuurily by
means of a- Royal Austrslian Navy has received time fullest emudorsement of time United -
Kingdom Goverumment and its advisers who Imave outlimied the following phases for time develop.
went of the Empire Navies :—
No. 1—Respomisibihity i-s assumed for local defence and the training of personnel for
a seagoing force is be-grin. -

- No. 2—I’articipation in defence on time high seas as opposed to local defence is aseumed
by obtaimming one or Inure seagoimig ~imipsfrom Britain.
No. 3—Local defence is supplemented by the I)ominion providing manning and
controlling a seagoing squadrorm for its home station. -
No. 4—In additionm to local defence, and a squadron for the home station, the Dominion
provides part of the general schemo of Iinperimi.I Naval Defence.
Australia with the present strength of the Royal Australian Navy is at Phase 3 of its naval
development. To revert to the contribution arraimgement would be a retrogressive step and one
contrary to the general expression of Australian opimmion. Furthermore, it would not be
consIstent with the Indapondent political status of a seIf.governing dominion of Western
 117

Australia’s resources. Western Australia’s intention to rely more absolutely on British naval
strength for security and “to arrange for a naval sloop to be based on Fnemnantk” is
inconsistent with its pohitical ambitions and a weakening of the present degree of Australian
naval security. Useful timonmgh sloops may be for their particular functions, vessels of this class
arc not ~ubjoot to limitation under the Naval Trcatmes, a-mini \~estern Australia would not be
shouldering any of the burden of Tmperial Naval I)e-fence that is represented by the Empire’s
quota of Iighthng ships. On time contrary, the Western Australian effort wouuld represent a
dispersion of the limited financial sources available to Australia for its part in Imperial Naval
Deferico, and the nnaintenancc of the present strength of the Royal Australian Navy would
press more heavily onn tIme remaining States. -

Turning from the political aspect, the strategical and admimmistrative features of a separate
Western Australian nan-al effort are considered, mmmi the examination also embraces time security
aspect of f-ho socesmuiomi complaint that the naval forces and estahuishmnenuts are loc~tcd in the
East, and no slmips arc based in the \Vest. The noum-fnmlhiiment of recommumndations in the
Henderson and Jeihicoe reports in their relation,to ~m’mesternAustralia are referred to later.
hi Part 1, co-operation was mentioned as a fundamental principle of Imperial Defenee
and by this is implied time unity of strategical plans of the Empire’s naval strength and ita
direction in war. As time Singapore Base and the naval strength of the Empire are time keystone
of time naval defence of British interests in the Pacilic mmmcii Indian Oceans, it foihmiws that the
naval security of Western Australia, or any other pumrt of the Commonwealth, (hOOS not rest
on time localization of forces in the region concerned. On the contrary, Imperial co-operation
and unified direction imply concentration and moLiuity. Th~ same considerations of
co-operation, unity, and strategical dispositions apply to the Comnuonuwealtim’s own naval efforts,
and its dismemberment inito independent State uniite would be a dispersion of strength a-nd
an absolute weakening of the Commonwealth’s contribution to imperial and Australian naval
security. The email strength of the Royal Australiamm Navy has precluded its distribution
between Eastern and We-stern Squadromms for strategical, trmdmmimig, and administrative remisons
and the priority of other demands of security, over the pron ision of base facilities in Western
Australia. As a safeguard against- co-operation riot beimig forthcoming from Western
Australia, the security and trarle of the rest of Australia and imperial inteuests would require
that any Act of Secession would have to provide for time u-ight to use the ports of Fremantie,
Albany and G~aldton.
Tho provision of personmnei for time small Naval Force timat a Statci could mnaintaimm presents
two alternatives both of while-li have uinsatisfaetory features. If time conitu-ibution basis were
adopteil by Wostermi Austiahia, time personnel would be Royal Navy, in which event the local
proprietary interest of public opinion and eonsequemmt prestige woulml not be developed, or if it
is a locally recruited a-nd anioniumistered Force, the State mnust duplicate the Conmmmonmwcalth’s
aulnninistrativo organization and also its educational and training establishnienuts, or have its
personnel educated and traimmed, in Britain. ‘lime Commonwealth character of the Royal
Australian Navy is carefully safeguuarded by time equal facilities grarmted to all States to share
in the service. Nonmmnations are made from all States to the Naval College for cauhet minhshipmon
and recruitment timat is Connmonmweaitlm wide is aimed at for the re-stings.
The incidence of expeniiiiture imm relation to the locatiomm of th~Navel Forces in the east
of Australia is dealt aitlu mm l’art Sum a gemmeral ma-miner coverimmg all se-rn ic-es.

10. THE HENDERSON AND JELLICOE REPORTS AND THE I’RESENT NAVAL
ORGAN1Z~T1ON.
Dissatisfaction is expressed in the cese for secession with the non-attainment of the
strengths recommenried in the Hcmmclerson and Jellicoe reports which would have enabled
ships to be statiommed in Western Australia after provision of thonecessary base facilities.
The Henderson report was made in 1911, and the ,Jeihieoe report in 1919. The former
proposed a prognammun of capital expenditure of £40,0(J0,ht0 at the pro-war price level and
contemplated a fleet of ö2 mmhuims. Time annual naval vote necessary for recurring charges in
1933—34 was estimated at £4,’i94,000. On time prcsemmt price level index this would hue £6,543,810.
It is to be noted that the fetal Defence Vote for 1033—34 is £4,246,016.
The Jellicos report recommended a fleet of 4)) ships. The capital expenditure was
considerably reduced but tho ultimate maintenance expenditure was £4,557,280 or £4,119,660
on the present price index. -

Certain important considorations must be bernie in mind in regard to these reports. In

the first place, they were time reports of technical advisers to the Government, and the decisioa
as to the extent to which timey were adopted rested with it. becomidly, as the aulvice of the~o
eminent Admirals was sought as naval experts, the relation cf time c-eel of their reeomnmaondationmj
to the Budget capacity of the Commonwealth was a matter of Government finaumeisi poiicy.
Changes in circumstammcos since the date of the Henderson report in particular are another
factor to be allowed for. The occurrence of the Great \n ar witim its aulded burdens of war debt
and repatriation expenditure radically altered the Budget position. There hiss also been the
development of the Sinapore Naval Base arid the growth of importance of Darwin. The
 118 -

.onsequence ofthe financial aspect has been that the limited amount available for naval detenee
has been absorbed in maintaining the Royal Australian Navy Squadron at a mine-h lesser
strength than that envisaged Lmy the reports. As stated earlier, its small size hiss precluded
Ito distribution between Eastern amid Western Divisions for strategical, training and
administrative reasOns. In so far as image facilities are concerned, these at Sydney were taken
over from the Royal Navy on tho emitablishment of the Royal Australian Navy a-nd the new
- develo mnne-nt has been confined to the Training Establishment at Phinders ani oil storage and
1 facilities at Darwin.
fueiiing

The whole fleet and base resources contemplated in time reports would be welcomed by any
(7overrunment res monsibie for the naval soeuirit~ of the Cornnioruweaith and any naval officer
1
entrusted with carrying time Policy into effect, but time fact is that the vote has not perunitted
their pron’isionm and the Gevernmumenmt, on time advice of its naval experts, has allocated what has
been available to the provision and mnainmtenance of time Sqiumuironm that has been possible, it
may be added that no den-elopmcnt in time Naval Policy of the Commonwealth take-s place
without the advice of the authmrn-itmes in Britain being sought and it was they wimo recunimonded,
in view of all the considerations referred to, that time developmnemmt of Cockburn Sound as a
repair port bc abandoned.

11. GENERAL CONCLUSION ON NAVAL DEFENCE.

In a sumnnarizeml coneluision on time miaval aspect of time W’estern Australian case, it may
be said that, though an implicit trust is indicated in llritisiu scaiuower to afford time greatest
degree of see-unity that can be expected, tIme-re is an inmmmiequmate a~qureciatiomiof both time extent
and manlier of fullulhing tho part tu, lie playeni by a self-govermuimig Aumstmmuhaum State in Imperial
Naval Defence. \Vestern Australia, as a-mm exporter of prinlai-y puodmmnts wimoso main markets
are on time other side of time world, is vitally interested in time protection of commerce on the
world’s trade routes. The mmaval stronugtli that sufegmmarmis tho free niovement of semi-ben-no trade
is also time first line of defence against iumvasiomm and a general defence against raids. The
criticisms of the existing Naval Policy of time Commonwealth are uunsounmd, and the Policy to be
adopted upon secession would be a retrograde step 1mm Imperial amid Australian Naval I)efenco
from the aspects of unity, co-operation, adequacy of the sharo of timo burden, and security.

PART 4.—LAND DEFENCE.

12. SUBSTANCE OF TIlE WESTERN AUSTRALIAN CASE.
The substance of the Western Australian ease on la-lid defence is as followg
(a) The adherence of Western Australia to thmo Federation for rCasons of defence, is
not a va-lid argoment against secession as time Indian Statutory Commission
which recommended the separation of Burma from Immdia has saul
(i) “If both I aiim and Bmmrnma are to look to a common source for protection
they may surely do so as separate political entities
(ii) “For anytimimig more than merely local defence against raiders, Bun-ma
would be in the same position as other parts of time Empire, plane for
the defence of which in an emergency devolve upon-u time Imperial
- authorities.” (l’aragraphs 670.)
(b) The main army strengtim is located in time Eastern States and could riot defend
Western Australia agaimist invasion.
(Paragraphs 671 amid-675 (b) to (e),)
(o) A further quotation m— - - -
Moreover, it may fairly be said that separated mis tlney are by more than
2,000 miles, the people on the Western Australian coast and the people on the
Eastern Australian coast are not domestically interested in each other’s local
defence,” (I’aragrimpli 672.)
(d) The stremmgth of time military forces located in Western Australia in 1932 was less than
at the time of Federation. -
- (Paragraph 675 (a).)
(e) Time Coast Defences are obsolete for defence against raids,
- - - , (Paragraphs 673 and 675 (4)
 119

13. TIlE PART OF TIlE ARMY IN AUSTRALIAN DEFENCE. -

In the principles outlined in T’art 1, it was indicated that, supcienlentary to seapower
as the first line of defence agaimmst invasion, time Array organization provides for a lie-Ic! Army as
a deterrent to such aggression. The Army organization also provides for local defemice against
r&ds, vital localities being defended by means of artillery defences and garrisons, and covering
troops for operations against landing parties. Through such organization the means also
oxist for Austrahia to play her part in Imperial co-operation. -
The case for secession has quieted from time Comrnonivealth Year Book arm imistorical~outljn~
of the deveiupmemut of rmiihitarv forces, Time chief landmarks were time initroductiomu of umuiversal
training in 1911, its suspension and reversion to the volmmntary system in 1929, and the
re-organuization on a l)ivisional basis in 1921. Time organization adopted in 1921 a-s time result
of the report of the Semuior Olhicers’ Conference provides for— -
2 Cavalry Divisions.
4 Infantry l)ivisionms. -
Certain troops require-nh for local defence amounting to a Fifth Division.
The personrmel required for Coast Defences and garrisons,
Army and Corps Stalls and troops, and auxiliary troops.
- The following wi-re also laid (lOWn in their order of priority by the Senior Officers’ Confereaoe
as the principles for time devi’lopnment and maintenance of time above organization -

- (a) Time traimmmrmg of leaders and staff, -

(b) Time provision of time necessary equipment and stores to enable the Am-my to function.
(c) The training of time rank annh file.
It is in time light of the above organization and principles as the basis of’an Army Policy
for the defence of Australia that this aspect of time case for secession is examined.

14. THE A1VmIY ORGANIZATION AND DISTRIBUTION.

- The Army Organization is the t~ommonwca1th’srecognition of the principle of Imperial

Defence that it is the primary responsibility of each part of time Empire to provide for its own
local defence. - S

Time references of the Indian Statutory Commission to Burma overlook the factor that relief
to a ~iartieular area is likely to be forthcoming more rapiuhly from a central authority charged
with time protectioum of the wimole area, than fromn~a separate utdnuinistration as an ac~of
co-operation. The comparison has another vital difference in that the defence of India and
Burma is provided for by both local forces and British troops, the United Kingdom
Governmnemmt having time fimmal responsibility for time security of these territories. Iii the
reference to Burma being “in the same position as other parts of the Empire, plans for the
defence of which in an emnergemley devolve upon the Imperial authorities “, the terni “other
parts of the Ennpire” cannot correctly relate to time Self.govermming Dominiomus, for their
Governments are solely responsible- for timeir Defence Policies and their General Staffs for the
preparation of the plans for timeir local defence, though the fullest co-operation exists with the
United Kingdom-n Government and its general stall,
In regard to the statement that tue main army strength is located in the East and could
not defend Western Australia against invasion, it is clammed thattho local defence of Western
Australia is incomparably stronger with the existing Federal organization than anything
Western Australia could devise by taking over the part of time organization located in that
State. Under Federation, time strength and resources of the East aro available for tho defence
of the West and their pr~remmtlocation is an inescapable fact of the distribution of the population
and the natural resources of tIme country.
As a separate Dominion, Western Australia has neither the population for an army large
enough for its adequate miefence, nor the secoumdary industries and raw materials for supplying
it in. the field. The munitions factories have been locatcd in their present sites after fufl
consideration of their defence and proximjty to sources of raw wisteria-Is and labour, a-nd the
East-West Railway is the means by which an army could bum kept supplied from the East. To
establish similar munitions factories in the West would be a costly duplication and a diversion
of funds from more needy demands of Australian security.
Acceptance of an unauthoritative opinion on the time necessary for time transfer of troops
from the East to the West has led the advocates of secession imuto unsound conclusions on defence
against invasion. The General Stat! do not accept the opinion that it would take three months
to send one division from the East. As time time for mobilization would ho the same wlmether
the troops were raised in the West or time East, the argument must obviously relate only to the
time for transportation. Time General Staff’s piamis and time-tables are mmocessarily-secret, but
It can be said that, with time existing resources of time Commonwealth East-West Railway and
using only one train a day, the opinion that has been qmmoted is very wide of the mark. fly
special measures, the time can be even more greatly reduced, whilst with a standard gauge
railway linking the East and the West, the - minimum period would be attained. The
 120
construction of tim East-West Railway was part of time Federation compact, amid it is of vital
strategical imumportamice to \Vesteuum Australia. It provides a-mm assumed umme-aims of cunmcenitration
in time \%‘est should the strategical situation require it, and of mainmtaimminmg tIme flow of
rciumtorcemenmts and supple’s. It is mint vuulnmm’rabkm fm-nm time sea mind would riot be affected by
fluctuations inn the naval situmatinumi which, even in-i time case of a raiding cruiser or armed
merchiamitnian, can helm! imp tie’ niovemaont of all shippimug. Time break of gauge occurs iii the
\Vest as uve-il as in cuustcrnu Aumstm-alia anud mmusifermity is more likely to be achieved whilst Western
Australia is part of time Connuumozmwealth as time East-~VestRailway is primarily a Western
Australian interest.
Time final observation on invasion is that time \Vestern Australian case is disposed to put
all its eggs in one basket, for if time enem’n’ has sumfficient eonmmmnmmmud of time sea to triune-sport his
invading forco to Australia and safeguard its lines of comnutmnmication, it will ho ohuviuims that
Australiamm waters will be el~sed to British slopping. IVe-shrim Australia’s sole hope of army
resistance wnmmld be by rminforucniemmt from hand and aim- fore--cs from time East. To quote from
the Minister’s Policy Sue-ecu of 2m~thm September, 1933
Sbmommld an enemy cttempt a large scale attack or invasion of our shore-s, thmenm it
is on time Army and time manhood in the mass thmat we must depend to drive off time invader
if the co-operation of time snaini British Fleet is not available.’’ -
In regard to the relation of seapower to inivasioum, it has been dc’mnonstrateui under Part 3, Na-va-i
Defence, that tine proposed policy of Wustern Australia under secession would be mm retrograde
stop in Imperial and Aostralianm Naval l)efemice a-nd security.

15. TIlE TRAINING OF LEADERS AND STAFF.

Time first principle of Army Policy was state~to he the training of leaders and staff. As a
brain and diu-eeting force for their Armies, Britaimm and time Domninions have created Geumcral
Stalls whose fuumctions a-re to plan, organize muu~Ilead, Close co-operation is maintaimmed between
the General Stalls of time Empire to ensure stammdardizmmtion of organization, tramming and
equipment. -

The training of leaders and staff has a very direct n-e-latiorm to the question of strengths on
which the Westerns Amustrahiaum case raises comparisons between 1901 and 1932. In the three
pri~eiplesof Army Policy outhiumc-d ca-u-her, time traininug of time rank amid file wa-a placed last in
order of priority and so that provision might be niade for time t-rainmiung of leaders a-mud stall and
for time acquisition of tine necessary equipment amid store-s for the Army, a ,-cduetion in the
str~hgthof personnel was manic with time iimtromlumctiomi umf time Divisional organizatiomm lEaving
- noted this underlying quest-ion nmc prinme-iple’, it is important to observe a contrast between the
- two periods used in time Western Auistrmulizmnm case to appreciate that time basis of conmparisun is

not purely numerical. 1901 is most favorable to Western Amustraiia- owing to the patridtic
spirit aroused by the Doer Wmmr, time demipmsteii of commtiimgents to Sommtlm Africa, and the formation
of new mnouumted umuts. 1932 is unfavorable to tine Commonwealth owing to time ecenommmnc
depression and m-et-renchmment in time Defi~imceServices following time reduction of time Vote to
assist in establishing Budgetary equilibrium. Time Defence expenditure irm 1931—32 was the
lowest since 1901—il. It is relevant therefore to introdmmco strength figsmres for cert-aium other
years for a truer comparisons, amid time following are quoted
Year.
- TralmilnR Strength. Sent to War. -

1901.. .. .. . - 2,283 .. 551 in South Africa

1918,. .. .. .. 6,333 .. 32,000 Great War
1929.. .. -. .. 2,600
1932.. . - .. .. 1,715
1934.. , - .. . - 1,739 - -

In comparing relative strengths, it is necessary to differentiate bet~veenpermanmm’rit soldiers

and citizen soldiers, and tIme 1)isarmamemit Coumferenee has laid dowmm a “ man days” formula to
enable comparisons to be made bet-we-ens the Au-my sti-engths oftime-se types of sohulicra. Applying
this formuula, time following more effective comparison is reacimed :—

Permnaneumt Forccs~ - Total Numbers Eftectivo Totals

CitIzen of i’ernmumnent en “mmmmmfl-mlay” basis
Year. Forces, amid Citimen him euhmilvalent
Omcers. Other ltsnk-s. Tot-an. Forces. CitIzen SoldIers. \

l9Ql .. - 4 38 42 - 2,241 2,28.3 - 3,519

1932 .. 13 102 - 115 1,600 1,715 5,098
1934 .. 13 124 - 137 1,602 1,739 5,769
 121 -
1932 shows nun increase of niae officers, 8-f other ranks Permanent Forces, and a-n equivalent
increase of 1,579 citizen soldiers, whilst mm 1934, the increase is mmmc utIle-era, 8(1 other ranks
Permanent Forces, a-nil an equivalent inmcrcaso of 2,250cutizen soldiers. The nmumbers of
troops specially responsible for coast defence are more striking, viz. :—
Year. Strength. Increase.
1001 -. .. .. .. .. .. 28
1932 .. .. ,. .. .. .. 60 .. 32
1934 .. . - .. .. .. .. 82 .. 54
In regard to the st-rcnmgths of leaders ammd staff, there were in 1901 two officers on the
Head-quarters Stall, whilst ca-elm battalion or time equivalent of mu Light horse Regimezit had
but one Staff Sergcaumt Major Immstruietor, anmI this instructor mu some eases luau to train both
infantry amid mnoumnmted inifamitry, perfomrn clerical work and general aulnministratiomu, In 1934
time lie-ad-quarters Staff ionusists of eight officers, two of whom are Staff College graduates,
whilst ca-elm battalion or regimnemmt has arm adjmitant amid three instructors, the majority of the
officers having been trained at great expense to the Coxnmouiwealtim at the Royal Military
College.

A comparison of time IVest Amistralban organization at the disposal of staff and leaders for
military operations shows that in 1901 Westc’rn Australia haul some garrison artillery, two
batteries of obsolete he-mi artillery, four companies of mnounteul inufantry and five battalions.
but no proper head-quarters for time-se units to function as a force in time field, wimilst essential
ancillary units and services were uuon-existemmt. In 1931, Western Australia has a properly
trained head-quarters Stall, a-mi artillery brigade, liglmt horse regiment and imoad-qumarters, an
infantry brigade lie-ad-quarters, together with new and essenutial unmits sue-h as fortress company
engineers for Coast Defence Lights, &c., field company eumgineers, signals for inter-communica-
tion, field ambulance anul army service corps units, Thmmms We-stern Australia now has a fore.
capable of operating and maintaining itself in the field, wimereas in 1001 this was riot possible.
For time efficiency of an army, certain permanent educational and training establishments
&re necessary. The Stall Corps offucers of the Australian Army are drawn from time Cadets of
time Royal Military College, which is open to youths from a-il States of the Commonwealth.
There are also the Army Seiuools at wimicim courses are conducted. All these estabhiuiunnente
represent e-onsidorablo capital outlay for builulings a-nd equipment, in addition to which there
is time anmnual expenditure for stall and general mnaint-ona-uice. Time requirements of secession
would presumably be satisfied oumly by similar establishiments, the cost of which would be out
of proportion to the streumgtiu of the force thmcy would serve. -

It is also the practice to maiumtain abroad a certain number of officers at special courses
and on exchange duty to keep the Australian Army abreast of developments amid to facilitate
co-operation and time standardization of organization, training a-nd equipment. A special
liaison staff iii also necessary at Australia House for handling Departmental matters in London.
As the range of course is win-ic and time arnms of the service numerous, n largo organization ha.
the resources for this work and time knowledge gummed is at time disposal of the whole of the
Commonwealth. A small organization sue-li as time force- of Western Australia coulul only obtain
similar informatiomi at a relatively greater and obviously duplicated cost.

i~.PROVISION OF THE NECESSARY EQUIPMENT AND STORES FOR THE ARMY

TO FUNCTION.
The provision of the necessary equipment mmiii stores to enable the Army to function is
the second principle of Army Policy.
In 1901 Western Australia had
Coast Defence.—Three 6-in. Mk. VI Guns on Barbette Mountings at Albany capable of
- firing two reminds per minute and no guns at Fremantle.
Field Artillery—Six 9-pounder muzzle loaders two 15-pounder DL.
In the report for 1901, time Commandant, Western Australia, stated :— -
“I must again point out time unsatisfactory state of the armament of time~e two
batteries . . . . The 9-pounder RJuI.L. are and have been for a long time, obsolete
and utterly unsuitable for field batteries in these days.”

He also referred to the lack of smut-able drihl halls for traiuuing, and insufficient rifle range
acoommodation to permit of time Annual Musketry Course being carried out, whilst attention
was drawn to the very inadequate reserve supply of small arms ammunition and rifles.
Reference was also made to the lack of harness for time field artillery and to the difficulty of
obtaining suitabio harness for the limbers of tho 9-pounder muzzle loaders at Albany.
 122

At present there are four 6-in. Mic. VII guns at Fremnantlo (capable of firing seven rounds
per minute), together with defenucc electric lights, whilst coca-sure-s are in ha-rid to provide a
more powerful armament. The statements in paragraphs 673 and 675 (a) of the Western
Australian case that time-se guns “howe only been fired with a half charge” and a-re obsolete
are incorrect. On the contrary, timis type of gun forms the secondary armament mm the most
modern British forts and is also used mis time only armament in certain British defemmded ports.
The Field Artillery is fully equipped withm niodern fielul guns, including reserves in
mobilization stores, whilst liberal provision hiss been made for drill ha-U amid barrack accomnmnO-
dation for thmo forces.
Sufficient reserves not only of small arms and rifles, but also of other essentia-l mobilization
stores are- he-huh, whilst even if an eumemny power gained naval supremacy in the ii~dia-nOcean,
the Ea-~t.westRailway provides a means of supplying Westerni Australia from time- mmmnuituon~
factories in time Eastermu State-s.
An important consideration in any comparison extending over two such widely separated
periods is the ulevelopment in beth the quantity and variety of th equipment anmd armament
of the army and time heavier Cost ermtailed in its provision. The experience of the Great War
and the (levelopment of science have greatly extended the rango of war material, examples of
whlclm ame tanks, tractors, wireless tuIegraphiy and telephony, anti-aircraft artillery, sound-
locators and anti-umircraft searchlights, sound ranging, and aruti-gas numjuuipcnemmt. The trend
of time- qrganization of time mode-rum army is towardis emmtirely mechanized format-ions anmi units,
the mcchmaneization of the tran~pumrtof cavalry, artillery, irmfmmntry, mumid othor units, mud the
increase of macimino gun and artillery strengthm. -

17. GENERAL CONCLUSION OF LAND DEFENCE.

The case for secession displays an inadequma-te appreciatioum of time priumciple of Imperial
Defence that is the primary respommsibihty of time Su’if-governiumg Donminionu to provide for
their own local defence. Ac a- rcsumlt, tIme capacity of time present Arnusy organization for the
defence of Western Australia- is jmmmuler.rated amid a wrong eonmclusiomm reached on the defence
of this State against invasion, whereas a correct appreciatiozm of time separation shows that
Western Australian security from tlmis danger is far greater under Federation than if the
State- were separated.
In regard to time comparisons between time State- Forces at time time of Federation and the
Commonwealth Forces now located in Westerum Australia, the latter are greater in strenugth
and immeasurably superior in organuization, staffs, arr~ameiit,euluipment mini stores. Under
the Commonwealth there a-re at time disposal of time Arnny. whose fummetion is time- dde-nice of the
whole of Australia, edmicationmal amid traimuimug establisimments, amid resources for maintaining
co-operation amid standardizatiomu with time Bi-itisim Army which could only be provided by a
separate State at a relatively gm-eater and obviously duplicated cost.

- PART 5.—AIR DEFENCE. -

- 18. SUBSTANCE OF THE WESTERN AUSTRALIAN CASE. -

The substance of the Western Australian ease on Air Defence hs as fohlow~:—

(a) The strength of the Royal Australian Air Force is ctntireiy located in the Eastern
States. (Paragraphs (1137 amid 675 (b).) - -

(b) As in the ca-tn of time Army, it is presumably assumed thatthe forces in the Eastern
States do not provide any security for Western Australia. Accordingly “a-us a
separate Dominion, Western Australia could not be rime-re undefended, or more
vulmiera-ble or exposed to any greater danger than she is to-day.” and a nucleus
of an Air Force is proposed for Western Australia upon secession. (Paragraphs
673 and 675 (d) and (e).)

10. THE PART 0]? THE AIR FORCE IN AUSTRALIAN DEFENCE.

In the principles outlined in Part I., it was indicated that time Air Force assiststhe Navy
in the defence of sea-borne trade l)y co-operation in narrow waters and by reconnaissance acid
observation. It also has its role in conjunctuon with the Navy and Army in defence against
- invasion, and possesses great striking power against convoys or landing operations, particularly
owing to land-based aircraft operating at a considerable relative advantage over the
carrier-borne aircraft of time enemy. In co.operation with the Army, the Air Force also provides
for the defence of vita4 localities against raids.
 123

Time present organization of the Royal Australian Air Force is as follows :—

Ilead-q uarters, Melbourne, Victoria. -
No. 1 Flying Traiimiuig School. Point Cook, Victoria. -

No. I Aircraft Depot, Laiertomi, Victoria.

No. I Squadron, La-~-erton,Victoria. --

No. 3 Squadron, Tlichmomuui, New South Wales.

No. 101 (Fleet Co-operation) Flight (at present ba-saul at Richmond, New South Wales).

20. TIlE DISTRI13IJTION OF THE ROYAL AUSTRALIAN AIR FORCE.

Sir John Saimond furnuisimeul a report on Air Defence to the Commonwealth Government
in 11328 and it was adopted as time basis of the- Government’s polmey. 1-he- endorsed the hines on
which tkm~Air Force had Lee-n estabhie-hed, and submitted a schmenme for its fimrtlme-r development.
The first steps in time organization of time Air Force bmave been time provision of thio Ce-mitral
Administration, Fhyimir~Training School, mind Aircraft l)opot, a-md the organization of the- immitial
units in priority of importance. Timese establishments aunt unmit~are in the East because- of
considdrations of stratecy, mini! co-operation witlm time Nave-I a-mimi Military forces. Time Saimond
repoct proviuins for the nnciermnmenitionmod units in We-ste-rem Australia-, but-, owing to the-
occurrence of the depression, amid the reduction of the I)ofence Vote, it has been imjuessiblo
to make provision for their fornmnmtioim as a capital expenditure- of £1,070,340 arid an ammumual
roe-Imrring oxpenditure of £255,417 is involved:
(a) Citizemm Air Force Squa(lron, Perth. -

(b) Flyimug Boat Flights, Albanmy Area, with the- necessary siipways, &c.

The ma-irs considerations a-nd conclusions re-ga-i-ding time- defemmce and security of Western
Australia- under Fe-die-ration and as a- separate dominionu which were outlined in Part 4 relating
~!to the army apply also to the junirt played by the Air Force, except that far gre-miter emphasis
~must lie laid on the mobility of time- nmir forces in time- East. This nnobility will enumble units based
u—in Eastern States to rejumforce- time Western Australian unit-s in from two to three days, so that
~a rapid concentration of all Air F’orce units could be effected in any threatened area. It is to
this reid thmat time aerodromes a-nil handing grounds between the We-stern and Eastern States are
~- being nmaintained. -

Should Western Atustrahimu ostahulislu a nucleus Air Force of its own, th~same probleuns of
c~cducationmaIa-nil training estabhisimmemente-, and resouurr’t’s for keeping a-breast of developments
~abroad and maintaining co-operatiomu a-nd standardization with the Royal Air, Force will arise
as outlined in the- parallel case of the Army.
A feature of the case for secession is the claim that the strengthm of the defence of Western
~- Australia at the time of I’edormttionu was gueate-r time-n at present. It is important to note that
~. the- Royal Australian Air Fe-rco is a new factor which dee-s not appear to have imeerm given its

due weight in the comparison. -

Civil Aviation -as a juoteetial source of air strength, and time- Commonwealth’s assistanco
towards its devoiupcnent in Western Australia are dealt with in l’urt 7.

- PART 6.—MUNITIONS SUPPLY ORGANIZAflO~.

21. SUBSTANCE OF TIlE WESTERN AUSTRALIAN CASE.
- The substance of the Western Australian ca-so is as follows ~— -

(a) The munitions fume-tories are located in the eastern States, (Paragraph 675 (b).)
- (Li) Owing to the- concentration of the Forces and Defence establishments in the East.
they do not provide- any security for Western Australia. (Paragraphs 072 and
076 (d) and (a).) -
 124

22. THE PART OF THE MUNITIONS SUPPLY ORGANIZATION IN AUSTRALIAN

DEFENCE.

In‘accordance with the primiciple of Australia’s responsibility for its own local defemico, time
following Munitions Supply Organization has been estrmbiisimcd in Australia, the slum of
£3,200,000 be-tug invested therein
Clothing Factory, South Melbourne—
LTnmiform d-iotiming aiol headgear for time Naval, Military, and Air Force-a, other
Comnionu-caith ann State Departments a-nd public bodies.
Explosives Factories, Maribyrnong, Victoria—
Small arms eordite amid fuulminma-te of mmmercury.
Cordite and ca-onion cartridges for guns up to a-nd humeluding 6-inch. -

‘l’rimuitrotoluoi.
An-re-plane dope.
Am-otomne distillery and recovery plant.
Detonators.
Filling such (high explosives and shrapnel), bombs, depth clmarges and mine-s.
Filling fuzes amid primers.
An-mmu,mition Factory, Footscruy, Victoria— -

Brass cartridge cases for 18-pounder and 4.5-in. Q.F. ammunition.

I’iisos and primers. -

Metal connpoumemmts of Q.F. ammunition.

Brass foundry and robhiump ~muihl.-
Small anTis ammoummitioum (.303-in. and pistol).
Brass, copper and nickel sheets and re-us. -

Ordnance Factory, Maribyrnong, Victoria— -

- 18-pounder Q.F. gumms, carriages and vehicles.

45-inm. hmowitzem-s, carriage-s amid vehicles (to be added later).
1,500-ton press forge a-mimi lie-at treatnmeimt shops. -

Woodworking shops.
Shell and projectile factory up to 8-in, shell.
- Toolroom for production of tools a-nil gauges. - -

Small .4 rena Fee-tory, Li/hyow, Icew South IVales—

Service rifles and barrels for rifle clubs.
Vickers machine gums. - -

Chargers for .303-in, cartridges.

Machine tools.
Various sinai! tools and metal part8 for other departments a-nd the trcvle.
Chemical Laboratory, Maribyr-umong, Victoria—
General chemical analysis -amid research imm regard to contra-ct supplies. for defence
purr se-s.
Cimeroical examination, stability tests, bahliitics, &c., of explosives amid
ammunition.
Investigation of inventions, he. -

Chemical, microscopic ann matallographie examination of all cIa-sees of metals,

fuels, he.
Standards of measurement, design and examination of gauge-s and precision and
sciomitific inistruniemits. - -

Examination and testinig of optical instruments, optical computations, spectogra-phie

analysis and refractometry.

Icmspec’rxoN BmUNOII.
The inspection Branch is charged with the examination of all classes of munitions during
manufacture to ensure suitability for time Military Service. When requested, it performs
similar functions for Naval and Air Services.
A section lies been formed to ensure that correct specifications and aea-lod ~arnples for
stores manufactured in Australia are obtained and kept np-to-date- for issue to manufacturers.
At Wakefield, South Australia, proof and recovery ranges for test and proof of field
artillery guns and ammunition are established.

- Pa-IracurAL Se-arty Orricans’ COrirMITTEJe.

This Committee with its subordinate committees is responsible for framing supply
preparations to meet the requicements of tJie services and the civilian population in an
enmorgomicy. -
 125 - -

23. LOCATION OF MUNITIONS FACTORIES AND THEIR RELATION TO DEFENCE

OF WESTERN AUSTRALIA.
It ha-s be-en demonstra-teni sunder Parts 3, 4 maid 5, relating to Naval, Land and Air Defence,
that tho seenmnity of western Australia under Federation is greater than it woimlel be- as a
se-panmito Dominion. Time relation of time Mummitions Supply Orgamiizaticn was considered when
dealing with the suppiy of munitions for the Araml, and it was expleucud that the location of the
munitions factories had been govcrrmed by considerations of timeir defence and proximity to
souse-os of raw materials and labour. it wmus also observed that the East-West Railway was anm
assured means by which an army could hi leopt supplied from time East. fri the event ofsecession
and the e~ta-bhiilmmnent of local forces, Western Australia would be hue-ed with awkward
alternatives. If rohianco were placed on supplies from overseas, there- woumhd be time risk of
interruption or cessation in wins. 0mm tIme other ma-nd, stocks might lie ac-cumiiuilatcd in poe-ce,
or the- Munitions S’tmpply Organization might be duplicated, both of which we-mild ho costly
arrange-monte, particumlnrly in the- latter case- as thu peace demands would bo relatively small
to time productive capacity. -

PART 7.—CIVIL AVIATION.

24. TIlE NORTH-WEST AIR SERVICE AND ITS COST TO TILE COMMONWEALTH.
It has been tho policy of successive Comnmonwealtim Governments since 1020, to make
substantia-l a-nmmuai appro~uriationsjut aid of civil aviation. Westorn Australia has been allotted
a- ce-musielorabte share in tins devclopniouit pcegramcne and many of its conimunmitics hmai-o derived
benefits from tIme Conmmonuvealtlu’s aviation policy. Time l’en’thu-Wynduiaun weekly air sorvice
is the outstamudimug ilhuustu-ation, mis the rmortlm-west eo~stof Western Australia was se-lected a-s
the route br tlmo first (experimental) air service to be estmablisimed in the Conumonmwoalth, a
service, with Geraldton and J)orby as tlmo terminals, being inmaugun-ated in December, 1921.
Traverving coastal districts lacking in rail facilities and uk-penile-nt for their eornnnunications
and arneumitics on a counparati\-oly infrequent steamship service, th~~service imnnediately
became imopuilar, and, its passongem-, iimail and freight loadings were so satisfactory that it~
operations quickly passed the experimental stage. Later, the- route- wa-s oxteimuled to Perth
in the- south and %Vyndhianu in time north. -

In a(ldltie-n to thie heavy cost of establishing and unaintaimuing tine long chain of a-erodromea
a-nd emergency handing grounds necessary for the- safe and regular operation of tlii~service,
the Commonwealth (lom-ermiment paid, tinning the tweis’o years onded 31st l)ccemnbon, 1033,
subsidies of a total of £2~4,730. Against this expenditure, flue sum of £37,428 was collected
by the Postnmaster.Cenernl’s Departmu-nt in respect of air mail sure-barges, the- net subsidy
cost of the se-evicts over the period in question being approximately £247,302.

26. THE EAST-WEST AIR SERVICE AND ITS COST TO THE COMMONWEALTH.
In 1929, with the threo-foinl purpose of further aiding the develoimment of Australian air
transport, accelerating the transmission of overseas mails, a-nd improving the- cx,istin
communications between Western Australia and the Eastern States, the- Commonwealth granto
a contra-ct br the maintenance of a weekly air service betwoeum Perth a-mid Adelaiulo. With
the a~~istance of the Connnnonmwe-alth subsidy, the- contractor’s operations over this route since
Juno, 1920, bus-re- be-oh so successful that the service hess now bocemo self-supporting. During
the five-year contract period ended ‘2nd April, 1034, the Commnuifiwealth’s subsidy payments
for this service a-mounted to £180,058. After deducting payments of air mail surcharge- fees
collected by the Postmaster-General’s Department, the net subsidy cost of the service was
£147,998. -

20. PROVISION AND MAINTENANCE OF AERODRQMES AND LANDING GROUNDS.

The provision and maintenance of adequate ground facilities is u.n essential part of any
regular air transport system. In general, this responsibility is accepted by governments.
 126

In Western Australia some 53 aeroml-romes and emergency landing grounds have been
acquired a-nd/or leased by the Commonwealth which has also borne the- cost of their initial
preparation a-nd annual maintenance in fit condition for regularuse by aircraft. The approximate
expenditure for them period 1921 to 1933 hiss been £

- Purchase and/or rental of sites,. .. 7,500

Preparation and maintenance costs (including drainage and other
improvemcnt~) . . . . . . 65,000
Bmuildings - . . . . . - . . . 1,550

Total 64,050

It is estimated that maintenance of time aerodromes and emergency landing grounds on

the Perth-\Vyrmdimamn a-mimi I’urtlm-Forrest routes will iumvolve time expenditure in the future of a
minimum annual sum of £3,000, Ammy imicrease in the nuimber of ac-rociromnes provided, or any
enhargmmosent or other major improvement of time existing grounds will, of course, involve
expenditure additiunal to this estimated annual rnai~tcnaneecharge.

27. FACILiTIES AND SUBSIDIES FOR AERO CLUBS.

In Australia, as in the t7umited Kingdom a-nd the other Dmninions, the Acre Climb movement
has been granted govermuiemit meid in order to provide facihitie~for members to acquire and
practise- the art of living. With f-lie assistance of gift a-nd learn tis-ing equipment, cash sunbaitimes
and free muse- of governunent aeroulronie-s and hangar accommodation, Acne- Club flyiumg tramming
sections have bee-n pros-ibm! in all States of time Comnmouiweueitlm.
In Westermu Australia, Commonsvealth oxpenulitunre for this purpose has totalled £6,640
during time pen-iod 1st Jammea-ry, 1930, to :31st December, 193:3. Unifier mts present agreement
with the- Commonwealth, the Acro Club of Western Australia is enabled to earn up to a
maximum of £900 per ammnumn in subsidy ammd bonmus payments.

28. THE EFFECT OF SECESS EON ON CIVIL AVIATION IN WESTERN AUSTRALIA

AND THE COMMONWEALTH.
- It is a reasoniable assumpt-ionm that time-it experience of time Conmmonmvenlth’s Civil Aviation

Policy has given to time people of \‘,‘estern Australia a full ni’alizatiomm and appreciation of a
progressive policy 1mm a iuhase of transport that is undergoing a quick clevebopmoimt. Its
advantages are particularly eviulerit in the Perth-Wyndimammi Service which it is proposed to
extend to Katherine in time Northern Territory in order to ensure fur %Vestcrn Australia- a-
satisfactory couinexion to the- overseas air service wimicle is to be inaugurated mi I)ecember,
1934. - -

A~the than huts not yet a-rrived when this sen-vico ca-n be operate-cl on a se-If-supporting
bs~is,it would be for the Western Austn’aliaum Goven-unment to consider, in time- event of Secession,
whether rue-cl to what extent it would give financial support to thus important air line.
Obviously tim Commonwealth could not in such ciremumeta-nees continue to accept the entire
financial responsibility for providing this facility and time ground organization necessary for
its safe operation. - -

Similarly, if for defence or other reasons the Govermmment of Western Australia wished to
retain time Aero Chub’s flying training movement on otherwise to develop civil fiyimg in l~s
territory, time cost of so doing would, in the event of secession, be aim amiditional eisa-n-go to that
Government’s annual a-via-tie-mm appm-opnia-tion.
Whilst the valimiity of some aspects of Commonwealth legislation in regard to aircraft a-nd
air navigation may be subject to some wmcertainty, in view e-f the absence of an express power
- under the Comistitutioms, the consensus of opinion appears to be entirely in favomir of complete

and effective Federal control, subject possibly to time- provision of safeguards against interference
or unfair competition with State transport systems. Experience has shown, moreover, that
the essential supervision of ~ivil flying in Western Australia can be- obtaimmed at relatively low-
cost under a- system of single aulnunistrative ccuntrol, which emnbmaces all aircraft operating
througimout the Australia-n Continent and Territories. - -

In the event of secession, control of aviations in Western Australian would become- the
responsibility of the local Government while-lu would have to create a scram-ate- administrative
and technical organization, the annua’ cost of while-i’ conld miot but be high in relation to the
nutr ber of aircraft a-nd personnel likely to be enmpioyed in Western Australia for se-me time to
come. Time niew Government,- if grammted Dominion status, would no doubt dosire to secure
represenutation on the Internatiomial Convention of Air Navigation and this would involve
further administrative and financial responsibilities. -
 127

~l~hccreation of a soparate Stato.with its independent aviation utile-ministration, could not

but raise difficulties in regard to aim- navigation ope-natiomma between Westerum Australia and the-
rest of thuo Commonlwe-a-ltli. Such traffic would probably have to he treated as initermuational
tm-attic bringing in its train those- anneyinmg and hindering formalities while-lu cannot be entirely
avoided where trade- a-iiuh people- pass from time temm-itory of one Governiment to that of another.
It would be unfe-rtumiate- were timere imposed on the geogra~uimiemuladvise-ta-gems of Australia a-nd
the scope they uivo to air tramisport, an lt(luiministnative barmier of this natumro. 0mm time contrary,
the world tm-emma for facihitatimug avimmtiorm is in tIme reverse mlinection,~opiionin se-mime countries
extending even to time internationalization of civil aviation.
The argumemmts him favour of time desirability a-nih need of a single control of civil aviation
throughout the Commonwealth are- consiuhered to be of projuonderating weight.

- PART 8.—GENERAL CONCLUSION.

29. TIlE ECONOMIC BENEFITS OF DEFENCE EXpENDITURE.
A fmmrthor point 1mm the cumse for sc-cession is the- tine von spread of time dcfeneo expenuditure over
the- States owing to time distribution of time forces. We-stem-n Australia’s complaint is that
the defence expenditure in that State is not equal to her per ealuita “ quota, annul, aim a
consequence, the eastern States derive undue econcunmie benefits. (l’anagraphs 673 mind 675 (d).)
\Vlmemm the distribution of time stremmgth of the- Du-fe-uice- forces a-nd eiutablisiinme-uits, a-much their
relation to the seeuiity of \V-stenmu Anustrahin was dealt with tinder cachi service, it was shown
that their location wuus governed by strategical comiside-ratiuns, by time distribution of time
populatiomu, w)uieh was thmo source- of tile man.puwe-r for the- Citizen Fete-es, and, in tIme macc of the
munitions factories, by their proximity to supplies of Iabommr unit raw material. ‘l’hc-~~ factors
a-re paramount a-nd eden umo elasti-ity for army ne-ulistnitutionm of the expcinmditure. flail the
Defence Vote is ah~orhedby pay a-nd allowances of personnel there is also the expenditure
inciulc’ntetl to their training, and, after ahlowimug for other eape-nuliturc uhomniciled by looutionu~uch
a-s works, or by Be-mire-em of supply such a-s expenditure alum-mud, the place in wide-h time re-ma-infer
is expended hinges largely on the- question of price under time competitive- system of tenders -

employed by the- Department. -

The soluition proluOSe(i by Western Australia is the orgamuiza-tioum of separate forces by

applying to their upkeep an a-mount equial to her “ per ca-pita “ qimota of the- Cummmmmonwcalth’e
De.fenuc-o expenditure (~2~2.0(t0).Time l)efenee expenditure in \Vostermm Australia in 1932—33
(which wins oven iou-or than 1931—32, time previous low record year since 1910-22) wa-s £01,476,
but it ha-s lie-en clearly shown that thiim does not i-e~,re-sc’ntthe value of Western Austra-hia’i
stake- in the- Australia-mn Du-foumc-e organization not’ time ce-st of lien security, mis the- whole of the
Defence resources of the Commonwealth e-xist for time- deft-mice of all parts of Australia. When
dealing with time indiviuhual services, it was observe-cl tlma-t Western Austrumlia receives benefits from
the head-quarters athmimuistnatiomis, establishments, a-nd reiommrees, which at present serve the
whom of the- Commonuwoalth. Them oxperienee e-f the Defe-imi-o J)epartmnommt ha-im indicated an
irreducihmie minimnuum below winch administrative costs cannot fall without vitiatinug important
- parts of the orga-nizatiorm, and it is an axiom that the spread of overheauh costs varies aecormhfng
to their ratio to the size of the- organization admnimmistemx-d. A Commommwealth E)efemmcu
Organization therefore- provides, at time minhmunm cost, cc-rtairm rc-soturces and a-ds-a-ntagcms while-h
could only be reproduced by’ an inumlividua-i State at a re-la-tim-ely greater and a- ccrtaini
duplicated ce-st. lt ca-n confidently be asserted that Western Australia eotmld not establiim
a se-pa-rate orga-nizationi fturnishing a parallel degree- of efficiency and security from the- vote
proposed.
Finally, the roquiremonts of National Defence a-nd -the Budget position of the
C~tnmonwealtha-nd State-s ulenmand tho seruimulous observance s.f time dictates of true economy,
which in Defenice expenditure is the- attainment oftho nuaximmum st-ctmrity from time vote available-.
Any duplication would ho a dispersion of the limited resomirces that the tKxable capacity of
the- pcople of the Commonuve-aithi i_s nblo to provide for national security. -

30. GENERAL CONCLUSiON.

To recapitulate in brief the conclusions in the parts relating to each service, the secession
oi Western Atustralia and its proposed Naval Policy would ha a retrograde- step from time-
- aspects of unity, co.operation, adequacy of the share of the burden, and security. - -

On the hand de-f~nee,the case of secession displays an inadequate appreciation of the principle
of Imnpenial Defenco that it is time primary responsibility of the self-governing donuinmions to
provide for their own local defence. Time- capacity of time present Ak-my Organization for the -
defence- of Western Australia is underrated amid use- incorrect conclusion reached on time- defence
of this State against invas-iomm. The same observations apply to the potentialities of time Air
Force, notwithstanding that its gm-eat mobility would enable rapid concentration to be made
at any threatened point. -
 - 128 -

In regard to the munitions factories being in time cast, the answer to time critici-sm is that
their location has boon governed by consiuleratioums of their defence a-nd proximity to sources
Railway is an assured means by which an army
of raw iuiatcnials and labour. Time E.-sst~~Vest
oould be Imept supplied from thu east.
The Comnxmmonwea-lthi’s Civil Aviatiomm Policy has extemideul considerable benefits to \Voatorn
Australia by time subsidized routes thmmmt have- boon opened up and time provision made for
&mrodrozumes arid lammdiug grourmuls. Considerable firmanmcia-l obligations would fail ann tie- Western
Australia-mm Gom-ermument to maintain time-so faimilities under secession, and two Civil ~4vlation
Admimmistra-tiuns would complicate time- free movement of a-sr transport ~vhien the world trend is
towards uoiuiinnizng time- existing ba-triers.
To sumun up, time streumgthi of Western Australia’s defense-c uniTer secossion we-mid be greatly
~-eakened, tlte security of time rc-st of Australia would consequently be prejumuliceti, and
Austrahia-’s part itt Imperial Defeuic-e woulmh unof be- as etfectivc a eonmtribution as at present.
It wouhml profit Western Australia little to guilt the whole world of political autonomy, and, at
t~esame tune, prejudice the basis of its national security.

By Authority: L. Y. J0UNB-rolc, Commonwealth Governmezit Printer, Qsnb*rsa.