Australasian Democracy Part 8

30. The relations of the commonwealth to the islands of the Pacific.

31. The control and regulation of the navigation of the River Murray, and the use of the waters thereof from where it first forms the boundary between Victoria and New South Wales to the sea.

32. The control of railways with respect to transport for the military purposes of the commonwealth.

33. The taking over by the commonwealth, with the consent of the state, of the whole or any part of the railways of any state or states, upon such terms as may be arranged between the commonwealth and the state.

34. Railway construction and extension with the consent of any state or states concerned.

35. Matters referred to the Parliament of the commonwealth by the Parliament or Parliaments of any state or states, but so that the law shall extend only to the state or states by whose Parliament or Parliaments the matter was referred, and to such other states as may afterwards adopt the law.

36. The exercise within the commonwealth, at the request or with the concurrence of the Parliaments of all the states concerned, of any legislative powers which can at the establishment of this const.i.tution be exercised only by the Parliament of the United Kingdom, or by the Federal Council of Australasia.

37. Any matters necessary for, or incidental to, the carrying {241} into execution of the foregoing powers or of any other powers vested by this const.i.tution in the Parliament or the Executive Government of the commonwealth, or in any department or officer thereof.

All matters not mentioned above, such as land settlement, railway construction, &c., are to remain vested in the Parliaments of the several states. Each state shall retain its local Parliament and have a Governor, who is to be appointed by the Crown, and communicate direct with the Crown as at present.

On the establishment of the commonwealth the control of the following departments will be taken over by the Federal Government, and the commonwealth will a.s.sume the obligations of any state or states with respect to such matters:--

Customs and excise.

Posts and telegraphs.

Military and naval defence.

Ocean beacons, buoys, lighthouses.

Quarantine.

There are to be seven Ministers of State, and their salaries will, in the aggregate, be 12,000 per annum. A Minister, within three months after being appointed to that office, must become a member of one of the Houses of the Federal Parliament.

All Bills having for their main object the appropriation of any part of the public revenue, or moneys, or the imposition of any tax, must originate in the House of Representatives. Bills imposing taxation must deal with the imposition of taxation only, and those imposing duties of Customs or excise must deal with duties of Customs or excise only. The expenditure for services other than the ordinary annual services of the Government must not be authorised by the same law as that which appropriates the supplies for the ordinary annual services, but must be authorised by a separate measure. The Senate can amend any Bills except those imposing taxation, or appropriating the necessary supplies for the ordinary annual services of the Government. With respect to these money measures, the Senate can, at any stage, return a taxation or appropriation Bill to the House of Representatives, suggesting that any provision or item therein should be omitted or amended, and the House of Representatives may, if it thinks fit, make such omissions or amendments with or without modifications. The Bill, in its {242} amended or original form--should the House of Representatives decline to adopt the suggestion of the Senate--will then be sent back to the latter Chamber, which may either pa.s.s or reject the measure.

The seat of the Government of the commonwealth is to be determined by the Federal Parliament. Until such determination the Parliament shall be summoned to meet at such place as the majority of the Governors of the states, or, in the event of an equal division of opinion amongst them, as the Governor-General may direct.

Before the Const.i.tution can be amended an absolute majority of both the House of Representatives and Senate must approve of the alteration, and it must then be confirmed by a vote of the people, a majority of the states being required as well as a majority of the people.

There is to be a federal judiciary, consisting of a high court of Australia, and such inferior courts as Parliament may determine. The high court is to consist of a chief justice, and at least four other judges, and is to hear appeals from the state courts and inferior federal courts. This appeal is to be final, except that in matters affecting the public interests of the commonwealth or of any state, application may be made to the Queen for special leave to appeal to the Privy Council. Uniform Customs duties are to be imposed within two years of the establishment of the commonwealth, and trade and intercourse throughout the commonwealth is then to be absolutely free.

In the meantime the local tariffs are to continue, but they will be collected by the Federal Government, and after deducting from the revenue received in each state the contribution of that state towards federal expenses, the balance is to be returned to the state month by month. During the first three years after federation the total annual expenditure of the Federal Government is to be limited to 300,000 for new federal expenses, and 1,250,000 for services transferred from the states. During the first five years after the imposition of a uniform tariff, the surplus revenue, after deducting the contribution of each state to the federal expenses, is to be returned to the states in the following way: Accounts of Customs and excise duties collected in each state are to be kept during the twelve months following the coming into operation of the uniform tariff, in order to ascertain, first the average net amount per head in each state, and next the {243} average per head for the whole commonweath. A sliding scale, extending over four years, is then to be adopted, in order to determine the amount to be returned. Where the average for a particular state for the first year is less than the general average, the per capita sum is to be increased by equal gradations, until, at the end of four years, it equals the general average. Similarly, where the average for a state is greater than the general average, it is to be gradually reduced to the general average. Then, at the end of the five-year period, all the states will be placed on the same footing, and will receive an equal sum per head from the federal revenue. This scheme of distribution is subject, however, to the important proviso that during the five years the aggregate amount returned to all the states in any year must not be less than the aggregate amount returned in the year immediately preceding the imposition of uniform duties.

Equality of trade is to be preserved throughout the commonwealth, and any law or regulation derogating from that principle is to be null and void. Parliament may appoint an interstate commission to execute and maintain upon railways within the commonwealth, and upon rivers flowing through, in, or between two or more states the provisions of the const.i.tution relating to trade and commerce. The commission is to have such powers of adjudication and administration as may be necessary for its purposes, and as the Parliament may from time to time determine, but shall have no powers in reference to the rates or regulations of any railway in any state, except in cases of rates or regulations preferential in effect, and made and used for the purpose of drawing traffic to that railway from the railway of a neighbouring state.

[1] "The Federal Council of Australasia," by the Hon. Alfred Deakin, _Australasian Review of Reviews_, February, 1895.

[2] Cap. iv., Clause 13.

[3] Cap. i., Clauses 54 and 55.

[4] "Notes on Australian Federation," by Sir S. W. Griffith.

Parliamentary Paper, Queensland, 1896.

[5] An article published in the Melbourne _Argus_ of April 26, 1897, and included with the kind permission of the London agents of that newspaper.

{244}

X

_SALIENT FEATURES OF THE AUSTRALASIAN DEMOCRACY_

Indirect effects of the discovery of gold--Causes of the financial crisis--The origin and extent of State Socialism--The thriftiness of the working-cla.s.ses--Labour Representation in Parliament--Parliamentary Government--Direct Taxation--Conciliation and Arbitration in Industrial disputes--Protection and its corollaries--The feeling towards Great Britain--General conclusions.

The enormous immigration of the fifties, due to the great discoveries of gold in Victoria and New South Wales, has caused Australia to become one of the most democratic countries in the world. Before that time the soil was held in large areas by pastoralists who, in the absence of opposing forces, would have formed themselves gradually into a strong landed aristocracy. But the miners, a cla.s.s of men who had shown their energy and determination by their readiness to travel thousands of miles in the search for wealth, introduced an entirely new element: they had thrown off their traditionary reverence for vested inst.i.tutions, they were able to earn high wages or directly to enrich themselves, {245} and they resented an a.s.sumption of superiority on the part of any section in the community. When, in the course of years, the mining industry began to wane, they swarmed into the towns and const.i.tuted an important link in the chain of causes which has swelled some of the capitals to their present unwieldy dimensions. Deprived of their means of livelihood, and indisposed for rural life, they clamoured for other employment, and were able, in several Provinces, to induce the Ministry to impose a protective tariff which artificially fostered the growth of manufactures. The protective tariff naturally increased the urban population, as did the undiscriminative system of State-aided immigration, the centralisation of all departments of the Government, and, in its ultimate effects, the construction of public works.

In a population of pastoralists and miners, engaged in pursuits which inculcate reliance upon individual efforts, it is somewhat strange to note the early development of a tendency towards State socialism; but I am inclined to think that, in this respect also, the discoveries of gold exercised a permanent influence, not only in the Provinces immediately affected, but throughout Australasia, from a tendency towards imitation. In the first years of Responsible Government British capitalists had a natural distrust of Australian securities, and declined to advance money except at a high rate of interest. But when they saw the phenomenal increase in the {246} yield of gold, and the large revenue obtained from the sale of lands, they overcame their scruples and displayed, during the twenty years which preceded the financial crisis, a readiness to grant loans to the several Governments which is believed by many to have been a great misfortune to their debtors.

The political and unremunerative railways of Victoria, which have been discussed in the chapter dealing with that Province, could not have been constructed but for the easy access to large funds. Another aspect of the question has been emphasised in an article published by the Sydney _Bulletin_[1] which, however much an Englishman may demur to its Republican principles, must be admitted to be an authority on Australasian topics. A strong plea is put forward for the necessity of defining by Act of Parliament what kind of works should be charged to loan-moneys, and what should be charged to revenue. The advantages, it is contended, will be threefold; the attention of the country will be drawn to the matter; the Loan Estimates go through so rapidly that very few people are aware how the thing is worked. The lender will know the destination of his money, and all treasurers will be placed on a level, whereas, at present, "the dishonest treasurer who makes a surplus by using borrowed money for road repairs and all manner of other ordinary expenditure is a heaven-born financier, while the honest one who doesn't is driven out of {247} office, either for having a deficit, or for increasing taxation, and is a failure either way." Official figures are quoted for New South Wales in order to prove that during the years 1885-1890, which covered the flotation of several loans, surpluses and deficits alternated as the treasurer was or was not able to dispose of borrowed funds. Indirectly, of course, many of the public works which do not produce a direct revenue may be of financial benefit to the State, through an increase of population and the encouragement of settlement; but it is a hazardous principle to borrow money for their construction.

Equally dangerous for Australia was the more recent excessive eagerness of the British capitalist to invest his money in Australian commercial undertakings, as, according to the Victorian Year Book,[2] a publication of the highest merit, "there is no doubt that the feverish financial activity that preceded, and ultimately led to, the Australian financial crisis primarily arose from the enormous influx of British capital--far in excess of the legitimate requirements of the Colonies--for remunerative enterprises. This influx was probably the result of the large amount of attention that for some years prior to 1888 had been directed to these Colonies, which were brought into prominence by such events as the pa.s.sing of the first Federal Council Act by the Imperial Parliament in 1885, the Colonial and Indian Exhibition held in London in 1886, and the Imperial {248} Conference in 1887; it was also much stimulated by the lowering in 1888 of the interest on the British Public Debt, and _pro rata_ on other first-cla.s.s British securities. The first indications of this were noticeable in the marked rise in the prices of all Colonial Government securities which occurred just after Mr. Goschen's notification of his scheme for reducing the interest on the National Debt of the United Kingdom, in March, 1888. Such securities, however, being of limited extent, the superabundant capital was forced into private channels, which led to the growth of co-operative enterprise on an unprecedented scale--through the medium of joint stock companies--which commenced prior to, but probably in antic.i.p.ation of, the conversion of the British Public Debt, and culminated in the United Kingdom, as well as in Australia, in the same year. Owing to this increasing compet.i.tion for Colonial Government securities, and the consequent fall in the rate of interest thereon, the Colonial Governments were tempted to, and no doubt did, borrow in excess of their immediate requirements, although this was not recognised during the period of general inflation; but a.s.suming a portion of the Government loans to have been unjustified, far worse was the condition of the large private investments, chiefly in joint stock companies, many of which supplemented their resources by deposits--equivalent in some cases to as much as three times the paid-up capital--which had been drawn, by reason of the high rates {249} of interest offered, from all sections of the community, both in England and Australia. Between the 1st of January, 1887, and the 30th of June, 1893, but for the most part in 1888, 1,154 companies with a paid-up capital of no less than 28,436,500 (subscribed capital 54,300,000) were registered in Victoria alone, and of these, 397, with a paid-up capital of 9,469,000 (subscribed capital 19,526,000) are known to have become defunct, to say nothing of numerous others, of which no information has been furnished to the Registrar-General." The crisis was most acute in Victoria, but its effects were felt largely, and are still felt in calls upon shareholders, in other Provinces. In conclusion, while British capitalists are still chary of industrial investments, they appear to be willing to meet the Australasian Governments in their resumption of applications for loans.

The danger is accentuated by the tendency towards State socialism, the origin of which I had begun to discuss before this long digression.

The earliest concessions for the construction of railways were granted in New South Wales in 1848 and 1853, but the companies were unable to carry out their undertakings, owing to the scarcity of workmen caused by the rush to the goldfields, and the Government stepped in and completed the railways out of public funds. This a.s.sumption by the State of a function which had been delegated to private enterprise, coupled with the growing confidence of the British investor and the elasticity of the revenue, {250} both from the Customs and from the disposal of land, which had been accelerated by the rapid increase of population, appears to have convinced the political leaders of the advisability of the Governmental extension of the railway lines. They were enabled to carry out this policy without difficulty, as the bulk of the electors were engrossed in material pursuits and did not trouble themselves about political issues. In Victoria three short lines of railways were constructed during the fifties by private companies, but were subsequently purchased by the Government, which thenceforward monopolised the construction of new lines. Why Victoria and the other Provinces should have decided in favour of State owners.h.i.+p and management of railways I am unable to explain, except upon the hypothesis that they were influenced by the example of New South Wales, that they wished to open up the country more quickly than would otherwise have been possible, and that they were tempted by the funds at their disposal in surpluses of revenue over expenditure. Then, the railways having in many instances preceded population, it was necessary, if the lines were not to be unprofitable, that special steps should be taken in order to promote settlement. This was done, partly by the offer of land upon favourable conditions, partly by the payment out of the National Exchequer of all the expenses of Local Government.

In New South Wales this state of things still prevails in many of the rural districts; in {251} the other Provinces _pro rata_ subsidies are paid to the Local Authorities, but are limited, in some cases, to a fixed term of years. The Local Bodies have had no spontaneous evolution; they are the creation of the Central Government, they are supported and controlled by it, and look to it for a.s.sistance whenever they are in financial difficulties. It would seem that, accustomed to State railways and to dependency upon the State in their local affairs, Australasians have been led insensibly to magnify the efficacy of its intervention and to welcome every enlargement of its sphere of action.

The protective tariff appears to have had a similar effect, unless it is to be regarded as a mere coincidence that South Australia, New Zealand, and Victoria, which alone are avowedly Protectionist, have authorised the widest extension of the functions of the State.

Throughout Australasia all parties in the several Parliaments are agreed on the principle of the State owners.h.i.+p of railways. In Victoria and Queensland the railways are entirely in the hands of the Government; in New South Wales and South Australia they are so with some trifling exceptions; in Tasmania, Western Australia, and New Zealand a few private lines have been authorised because it has been advisable, in the interests of settlement, that they should be constructed, and the Governments have been unable or unwilling to undertake further financial obligations. The recent action of Western Australia may be mentioned in evidence of {252} the prevalent feeling, it having taken advantage of its improved credit to purchase one of the private lines. The waterworks of the capitals, also, are national or munic.i.p.al property; but other munic.i.p.al monopolies, such as gasworks and tramways, are mostly in the hands of private companies.

The railways of Australasia are worked, as far as is consonant with national interests, for the direct benefit of producers, who, as has been seen in the chapters dealing with individual Provinces, have been the special object of the paternal solicitude of their Governments.

The various efforts in this direction may briefly be recapitulated.

South Australia, Victoria, Western Australia, and New Zealand make advances to settlers at low rates of interest; South Australia sells its wines in London; Queensland facilitates the erection of sugar mills, and is proposing to establish depots in London and the provinces for the receipt and distribution of its frozen meat; Victoria and South Australia have given a bonus upon the exportation of dairy produce.

These Provinces and New Zealand receive such produce, grade and freeze it free of charge or at a rate which barely covers the expenses.

Victoria has given subsidies towards the erection of b.u.t.ter factories; Victoria and New Zealand have subsidised the mining industry; and Western Australia has adopted a comprehensive scheme for the supply of water to the Coolgardie Goldfields.

The above brief summary shows that action by {253} the State for the promotion of enterprise has met with approval in Queensland and Western Australia as well as in the Provinces which have adopted the widest extensions of the franchise. It maybe noted, however, that Sir Hugh Nelson, the Premier of Queensland, is an individualist at heart, and consents to extensions of the functions of the State unwillingly upon a conviction of their necessity; while, in Western Australia, Sir John Forrest is a strong advocate of State socialism, and opposed to private-enterprise in any matter which is of the nature of a monopoly.

New South Wales and Tasmania have not hitherto followed the lead of the other Provinces. This tendency is one of the most marked of recent years, and received a strong impetus from the financial crisis of 1893, which burst the bubble of a fict.i.tious prosperity and compelled attention to the strenuous development of the resources of the soil.

It is likely to lead to closer relations between the Provinces, from the appreciation of the fact that the exports of one Province, if unregulated and allowed to fall into disrepute, may prejudicially affect the interests of the whole continent.

As regards the intervention of the State in the direction of industrial legislation, the Governments of Western Australia and Tasmania have had little cause to take action, in the absence of crowded centres and of manufacturing activity; but New South Wales, Victoria, Queensland, South Australia, {254} and New Zealand have placed stringent Factory Acts upon their Statute Books. Measures have also been pa.s.sed, largely under the influence of Labour Representatives, dealing with the liability of employers, the regulation of mines, the protection of shop a.s.sistants, and other matters affecting the welfare of the working cla.s.ses. Upon their enactment complaints have been made of undue interference with employers; but the administration is now, in most cases, carried out efficiently and without unnecessary friction.

Indirectly, the various Provinces have, through their schemes of public works, exercised considerable influence upon the demand for labour and have, upon the completion of the more important undertakings, been subject to continual pressure with the object of inducing them to authorise special works for the benefit of those who have been deprived of their livelihood. New South Wales, indeed, and, to a lesser extent, Victoria, have almost admitted an obligation to provide work or rations for the unemployed. In Victoria the tension has been relaxed by the formation of the Labour Colony of Leongatha, at which the dest.i.tute can obtain temporary subsistence. Australian politicians, generally, were appalled by the undeserved misery which resulted from the cessation of public works and from the financial disturbances, and, under the stress of humanitarian motives, failed to temper their humanity with discretion, and initiated a policy of {255} indiscriminate a.s.sistance from which, once entered upon, it has been difficult for them to draw back. The formation of village settlements in all the Provinces except Western Australia was based upon the necessity for special efforts in the face of the prevailing distress. Australians have never been able to regard the unemployed as a necessary factor in their economic system. The ordinary problems of pauperism have been felt acutely in Australasia and have been met in somewhat similar fas.h.i.+on in the different Provinces. Dest.i.tute children are, in most cases, boarded out; the aged and incapable are provided for in Benevolent Asylums. In Victoria, New South Wales, and New Zealand a movement has recently arisen for the adoption of a system of old-age pensions, which has had no appreciable results in the former Province, but has led in New South Wales to the appointment of a Parliamentary Committee which reported favourably and suggested forms of additional taxation by which the necessary funds might be obtained, and in New Zealand to the introduction of a Ministerial measure which sought to establish the general principle and left to the House the elaboration of the financial details. The Bill was accepted on its second reading, but in Committee an amendment was carried against the Government to the effect that all persons above the age of sixty-five, irrespectively of their means, should be ent.i.tled to receive a pension. An Act was, however, subsequently pa.s.sed of which the {256} object is to ascertain the probable cost of a pension fund. All persons of the age of sixty-five and upwards, who have resided in the Province for twenty years, imprisonment being reckoned as absence, and are not possessed of an income exceeding 50 a year, are ent.i.tled to apply for a pension certificate which will be issued to them upon the verification of their claims, and will be regarded as conclusive if a pension fund be established hereafter. The success of the Government at the recent elections renders it probable that the matter will shortly receive attention. In neither of the Provinces in which the subject has been discussed is it proposed that the pension should be earned by previous contributions; it is to be offered as a free gift in recognition of the services which every worker must have rendered to the community.

To conclude a superficial summary of the functions undertaken, or likely to be undertaken, by the State in Australasia, it may be mentioned that the State system of primary education is in all the Provinces compulsory and undenominational. In South Australia, Victoria, Queensland, and New Zealand it is also free; in the other Provinces fees are charged but may be remitted, wholly or partly, in the case of the inability of parents to pay them. There are no signs that the advocates of grants in aid of denominational education are gaining ground; in the direct reference to the {257} electors taken in South Australia they were defeated by a large majority, and have equally little chance of securing subsidies to religious bodies.