PM Transcripts

COMMONWEALTH TAXING POWERS
REPLY BY THE PRIME MINISTER THE RT. HON. R. G.
MENZIES, IN THE HOUSE OF REPRESENTATIVES, ON
WEDNESDAY 21ST OCTOBER, 1959
MR. BIRD: Has the Prime Minister noted the remarks of the Victorian
Premier, Mr. Bolte, to the effect that the Commonweal th
Government had financially throttled the States by using taxing
powers that it no longer had the right to retain? In view of
the seriousness of this statement will the Prime Minister arrange
for a debat7e in the House on Commonwealth-State financial
relationships and also on the charge made by Mr. Bolte that
through the power of the purse the Commonwealth dictates State
policy in most subjects.
MR. MENZIES: I noticed a report in the press that the Premier of
Victoria had had some critical remarks to make which, unfortunately,
were based on remarks attributed to me Awhich I had not
made. In a speech in Melbourne I pointed out that there is a
paradox in Australian public opinion, I did not refer to
States or State Governments. I said that the paradox was that
whereas every time there was a proposal to increase the powers o:.
the Commonwealth Parliament, the people found it possible, and
indeed necessary, to vote yet the very people who opposed
the granting of such powers would next day perhaps be on a deputation
to the Commonwealth Government to ask it to accent financial
responsibility for a matter that lay within the pcier of
the States. I thought that was paradoxical. I an a federalist
and I believe in the division of powers, but I pointed out that
I thought there was a little strange and incohsistent thinking
on that matter. Some newspaper was kind enough to say that I
had criticized the States for wanting to retain their powers. I
said nothing of the kindø
As to the question of the States retaking their direct
taxing powers, I remind the honourable member that in March
of this year we had a conference with the Premiers, I had promised
such a conference in the course of my policy speech and ve
had a very long, careful and valuable discussion on this very
problem. The upshot of the discussion was that certainly four
States exhibited a complete want of desire to be asked to raise
their own taxes and to live on the proceeds of those taxes, I
pointed out to them Ithink honourable members "-ill ? agreo ith
me that you cannot have a hybrid system in Australia, Either
the States have their taxing powers and exercise them I have
always said that in principle we think that is right or they
do not, but the idea of the Commonwealth raising taxes under a
uniform system in four States and abstaining from raising taxes
for State purposes in two States is not only financially absurd
but I would doubt very much whether it had any constitutional
justification. The result of this very long discussion was as 1
have indicated. The Commonwealth's attitude remains the same,
When the State Governments say that they would like to have
their taxing powers back on suitable terms that have been indicated
to them by me on repeated occasions, we will be most
happy to engage in negotiations to help to produce that result,
In the meantime it is quite beside the point for any individual
State to attack us for retaining scmething against the ,; ill of
the States, I point out that 66 per cent of the States I knov
it is nice to put these things in terms of percentages in
March, 1959, did not want direct taxing powers handed back to
them.