Free Trade vs Protectionists

The "bearded men" are fortunate they happened to shroud the history of Federation in a cloak of triumphalism. It has managed to hide their ineptitude for a century now. Their lost opportunities include a Bill of Rights, a High Court and a wet noodle of an informal Constitution amongst others. There was another battle lost, though this in the Commonwealth halls of Melbourne. It was an epic battle; New South Wales vs Victoria, George Reid vs Alfred Deakin - it was the battle between Free-trade and Protectionism.

The Schism Between The Colonies

Before Geoffrey Edelston poached the South Melbourne footy club to Sydney, and well before a Melbourne Rugby League team won the Grand Final, there was a deep divide between the colonies of New South Wales (NSW) and Victoria. Rail gauges were of different sizes, the colonies leveraged tariffs on each other, public holidays were on different days and there were even quarantine restrictions between them.

During the American Civil War, New South Wales had supported the north, while Victoria had supported the south. The inter-state rivalry between New South Wales and Victoria has a long history. It could even get petty. Phillip Knightly writes;

In 1878, New South Wales announced that it was considering changing its name to Australia. It claimed the right to do so because not only was it the first Australian colony .... but more native Australians had been born there than in all the other colonies put together. Victorians could scarcely contain their anger. If New South Wales did this, said on MP, then would the Victorian Premier rename his state Australasia? 'No,' said the Premier 'because then New South Wales might well call itself The Southern Hemisphere'.

When the first referendum for Federation was held, New South Wales did not achieve sufficient majority. One of the reasons was because the colony was free-market and all the others were protectionist. The NSW Premier, George Reid, was for Federation, but not really. he got nick-named "Yes-No" for his speech where he proclaimed there was not an advantage for New South Wales in Federation, but that he would be voting yes anyway.

George Reid

Reid was born in Scotland in 1845. He was age seven when his family emigrated to Melbourne as part of the gold rush. Reid worked his way through the public service in NSW, becoming a barrister and finally heading the Attorney-General's department in 1878. In 1880 he resigned from the public service and won election in Eastern Sydney for the NSW Assembly.

Reid was a tubby figure, an easy caricature for the Bulletin in the 1880s. Alfred Deakin wrote of Reid;

Even caricature has been unable to travesty his extraordinary appearance, his immense unwielding jelly-like stomach always threatening to break his waist-band, his little legs apparently bowed under it weight to the verge of their endurance, his thick neck rising behind his ears rounding to his many-folded chin. His protuberant blue eyes were expressionless until roused or half-hidden in cunning, and a blond complexion and infantile breadth of baldness gave him an air of juvenality.

Deakin wrote that during the Federal Conventions. Deakin was good friends with Edmund Barton. After the failure of the first referendum in NSW, partly because of Reid's lack of enthusiasm for it, Barton ran against Reid in the NSW Assembly electorate for Eastern Sydney. Reid won, but the margin was small enough that Reid got some amendments to the Federal proposals which led to NSW having a large enough majority in the next referendum for Federation to go through.

Anti-Labor

These three political figures would find their early Commonwealth political careers entwined, along with a new and influential political entity, the Labor Party. The Shearers Strike in rural Queensland would change the dynamic of Australian politics. When the Shearers were starved out of their camps, penniless and broken at the hands of the Queensland government, constables and militia; they decided to band together as a political group. It was the beginning of what we now know as the Australian Labor Party.

The fledgling Commonwealth Parliament hadn't devolved yet into the two party duopoly of Liberal and Labor. The anti-Labor factions included the Protectionists and the Free Traders. The protectionists were represented by Edmund Barton and Alfred Deakin, while the Free Traders were typified by George Reid. Initially this led to unstable minority governments, reliant on the constant demands of Labor for slim majorities.

As an example of the volatility;

Reid had serious reservations about the damage protectionist policies at the federal level would do to NSW's economy. Brian Carrol writes;

[Reid] likened free trade NSW joining the other five colonies, all Protectionist to varying degrees, to a teetotaller setting up house with five drunkards and leaving the question of beverages to be decided later by majority vote.

In the first elections of March 1901, candidates announced themselves as either Protectionist or Free Trade. The first Parliament ended up composed of thirty-one Protectionists, twenty-eight Free-traders and sixteen Labor members.

Reid did not get his majority and would not join a coalition with Barton and Deakin. The Protectionists established a minority government with Labor giving their support in return for concessions.

Minority Governments and Coalitions

The gap in members between the Protectionists and Free Traders continued to get smaller, in 1903 there were twenty-six Protectionists, twenty-five Free-traders and twenty-three Labor members. In April 1904, Labor was able to vote against Deakin, de-stabilising his minority government and leading to the establishment of the Chris Watson Labor government.

Up until this point the Protectionists and Free-traders had been opposition parties. But the Watson government had shown that there was a re-alignment in the Australian political system to Labor and anti-Labor. The Deakin protectionists stepped aside and formed a coalition with the Free Traders. George Reid became Prime Minister.

Reid survived the six month recess, but when Parliament returned: Deakin and Watson combined to remove Reid. The Free Trade Party was unable to enact any free-market legislation. From that point on the Protectionists became the dominant anti-Labor party. Deakin entrenching the Protectionists through a minority government with Labor support. Deakin joked that his most important phrase was, "Yes, Mr Watson".

Reid and Deakin did not get along, and there was no unified anti-Labor party until Reid retired from federal politics. Joseph Cook took over as head of the Free Traders and the Deakin Protectionists and Cook Free-traders combined into the Fusion Party - with Deakin leading it. This would later be the foundation for the first Liberal Party.

Protectionism

The inability of George Reid and the Free Trade Party to gain a majority government meant that Australia would pursue protectionist policies - policies which lasted until the 1980s. In 1901 the only federal revenues were from tariffs, the federal government getting their finger in the income tax pie did not come until 1942 and the John Curtin government.

The political thirst for protectionism was to continue through Hughes, to Lyons, to Curtin, to Menzies to Fraser. The first government to return to the economic liberal policies of the New South Wales colony was the Hawke government.

Did this protectionism hurt? In World War I, the United States and Canada industrialised, sufficiently to challenge Europe as the centre of the worlds economy. Australia's protected commodity markets meant that the industrialisation of World War I passed us by. In the 1930s we were left with government subsidised factories in an attempt to industrialise. World War II found us with our pants down as home production could not match our needs.

Conclusion

I have often remarked that the failure of Australian Federation is the failure of NSW. There was the chance there to create something as innovative and potentially as wondrous as the US Constitution was in 1787. NSW was the most powerful colony in Australia, politically and economically. It was the hotbed of Republicanism and free-markets in Australia.

But NSW was not able to influence the conventions toward a republic. Nor was it able to gain a majority in early parliament to make free-traders the dominant anti-Labor party. Sadly it was the Deakin style of monarchical federation, protectionist economics and minority politics that won.

cam
cam: Deakinism: Is Alfred Deakin Australia\'s most influential politician ? Is what we call Federation really a Victorian federation (not a NSW federation?). The US Republic is a Madisonian Republic, should we be calling Australian Federation a Deakinist Federation?

I reckon there might be a case there.

cam
siento: Protectionism - Why Australia has some industry.: Other than the UK, which industrialised before other countries, every other country that has industrialised and created high tech industry has been protectionist.

Once industries have been established free trade can be allowed, but even then governments need to be very careful to keep incentives for industry around.

The dramatic econmic rise of East Asian countries has been largely protectionist. It is interesting to talk to people about trying to sell things in Japan.

Arguably the American Civil War could be seen as a battle between the protectionist North, who wanted to bolster their industry, against the free trade South who wanted cheap industrial goods from England.

Sweat shop factories can be created by others with expertise in countries that have built it up, but free trade doesn\'t create much else. Capital is inherently more mobile than people.

Government subsidies and the careful creation of conditions that allow businesses that do more than hang out people\'s washing to flourish are critical.

When discussing the Australian Military we frequently refer to how Australia needs to create it\'s own. This is a form of subsidy or protection.

The major black mark against the Howard government  is that they rolled back the export enhancement programs and sunset claused research (CRCs) that the Hawke Keating government had set up and that led to double digit growth in Australia\'s exports. Now the balance of trade is coming to haunt the Coalition.

They have adopted with respect to economic development the same economically orthodox system that has led to New Zealand\'s decline.

Today both free trade and protectionism are outdated. Government incentive\'s with research funding and tax incentives coupled with export enhancement programs are better. But in the past, protectionism led to the creation of industry.

Thankfully Australia had protectionist economics.
Scrymarch: Paul Kelly: ... of the Australian, made a similar argument.  He called Deakin\'s combination of protectionism, immigration controls and the monarchy the Australian Settlement.

Damn I knew I should have bought that $3 discounted Centenary of Federation reprinted biography at Bookworld.
cam: I dont think Reid was absolutist about it: None of them really are. IIRC Japan made the step to modernization and industrialisation while having open markets. They wanted to become protectionist but got locked into some pretty nast trade deals. With the US IIRC. I will have to go and look it up.

The Japanese industrialisation came off the backs of those that couldnt say no. Daughters of peasant farms supplied the sweatshop labor. In England during the industrial revolution it was women and children too.

One of the reasons why the world wars led to massive industrialisation was because of constant government investment and government basically indenturing labor (national emergency and all that).

I will have to read more on George Reid, and find out how free-market the Free Trade Party was, or whether the free traders and protectionists were like our current Liberal/Labor and represent the same side of the same coin.

cam
cam: Huzzah for Amazon:

And also huzzah for the US having \"everything\". Three books are now rubbering their way across the great paved expanse of the American mid-west to my door;

Got the Hayden book as Botsman seems to be pretty impressed with Hayden\'s view of the GG. Will read and make up my own mind on it.

I really must do some Deniehy, Vosper, L. Lawson guest posts.

cam

The Initial Schism Between Liberal and Labor

The early elections at the federal level were three cornered contests between the NSW free traders, the Victorian protectionists and the first organized political party in Australia: Labor. The NSW and Victorian contingent were not the tightly disciplined parties that we see today, they were more amorphous in the loyalties, but were of similar class, social standing and ideology. The Victorians, led by Alfred Deakin, and Labor, led by Chris Watson, agreed on many common political principles; protectionism, restricted immigration, unemployment benefits and minimum wages. After numerous minority Victorian Protectionist governments, propped up by the support of Labor, finally the Deakinists split with Labor for good. Judith Brett argues that the reason for the schism wasn't policy, but instead principles of party organisation.

Protectionists to Liberals

The early years of the American Republic were dominated by the Virginian Presidents of Washington, Jefferson, Madison and Munroe. They set the tone for what was a Virginian Republic. Australia carries a similar legacy, the Victorians under Deakin dominated Federation and the early years of parliament, achieving a Constitutional Monarchy of limited but not complete independence. NSW was republican and free trade, yet the monarchist and protectionist Victorians set the tone of what Australian government would be. Immigration took seventy years to remove, the protectionist economy eighty years - and we are still working toward making Australia a constitutional republic.

Deakin manoeuvred the NSW Free Traders out of holding government by forming a minority government with Chris Watson's Labor government . Minority government is relatively volatile in a parliamentary system, as shown below. George Reid was Prime Minister, but held government only for a recess period, as soon as parliament convened he was unable maintain his majority.

Joseph Cook is an interesting Prime Minister, and represents the organisational split between Labor and Liberal well.

Joseph Cook Cook was born in Staffordshire in England to a coalminer. Cook left school to work in the pits at age nine, and by age twelve his father died in an industrial accident. Cook supported his family, later becoming a preacher, a railway worker and then a unionist. He married a school teacher who's family had already emigrated to Australia. The Cooks followed soon after, settling in Lithgow. Once settled, he soon became involved in Unionism again, and in 1891 Cook won election in the NSW Legislative Assembly as the Labor member for Lithgow. Two years later he was the leader of the NSW Labor Party.

Labor had grown in electoral popularity as an outgrowth of the Shearer's Strikes in rural Queensland. There workers and unions decided political power lay through the hands of parliament. In Queensland Labor regularly collected more than a quarter of the vote, and was able to claim to having the world's first Labor government in 1899.

In NSW, Labor success was almost instant, with the Labor Party in 1891 winning thirty-five seat and the balance of power in the NSW Assembly. But the inexperienced Labor members were quickly wedged over a fiscal issue which split the free trade and protectionist Labor representatives. The caucus was decimated, and the thirty-five members for Labor was quickly reduced to seventeen.

This led Labor to establish a far more disciplined caucus. Labor believed the only way it could wield power in parliament was by a united front to any opposition through absolute party power. For the Labor representatives there was a conundrum for them, did they represent their electorate, or the labor movement. The caucus took that decision out of their hands at the 1894 Labor Conference which required all Labor candidates and representatives to sign a pledge, "to vote in the house, as a majority of the party, sitting in Caucus, has determined."

Joseph Cook refused to sign the pledge, stating;

.. the pledge destroyed the representative character of a member and abrogated the electoral privilege of a constituency.

Those who signed the pledge returned as Labor members, while the twelve who would not sign, including Cook, returned to the Assembly as Independent Labor representatives. From this point on the Labor Executive only chose candidates who signed the pledge. Cook was not hard done by and became the Postmaster-General in George Reid's Free Trade government.

Joseph Cook in 1909 managed to reconcile the NSW Free Traders with Deakin's Protectionists when they banded together to oppose Labor. Cook led the first Liberal Party Government, and was the Prime Minister at the outbreak of World War I. Cook's other claim to fame was getting the Governor-General to agree to the first double-dissolution election.

Liberal and Labor Sitting in a Tree ... K.I.S.S. Oh Gee

The early governments in Federation were minority ones, led by Alfred Deakin with Labor support. But in 1910 Labor achieved the first majority government, polling nearly 50% of the vote. This left the Protectionists and Free Traders in a bind. Labor was politically disciplined, electorally popular and leaned toward the socialist side of politics. Since the Protectionists and Labor shared many policies, such as economic protectionism, unemployment benefits,minimum wages and restricted immigration, Deakin had hoped that Labor would get absorbed into the Protectionists.

The leader of the Free Traders (and Anti-Socialists), George Reid did not get along with Deakin, and there could be no union between those parties while Reid and Deakin led them. In 1908 Reid retired from federal politics and his able deputy, Joseph Cook took over. At this point the parties combined to form the short-lived Fusion Party, which was then replaced by the Liberal Party.

Traditionally the formation of the Labor, anti-Labor duopoly at this point is looked at in class terms. However Judith Brett argues, that is was not class that caused the Protectionists and Free Traders to set aside their policy differences, but instead party organization. Brett writes;

The insurmountable barrier between the Deakinite Liberals and the Labor Party was not Labor's policies not its attitude toward the state, but the nature of the party's organization: the demands which it made on its members to subordinate their own views and judgements to the collective will of the party and the implications this had for parliamentary government.

The problems Labor's organisation posed for the Liberals was particularly apparent in Labor's hostility to alliances. Labor simply refused to play the parliamentary game as it had hitherto been played, and parliamentary leaders found themselves stalled at every turn as they tried to put together workable majorities in the usual way.

Essentially Labor changed the way politics was done at the State and Federal level. With the establishment of the Liberal Party (as opposed to the Fusion Party), the Liberals, led by Deakin wrote down their party planks. To differentiate themselves from Labor they included a plank which originally said that the Liberals opposed the caucus methods of the Labor Party, but this was changed to one that asserted;

... all representatives of the people should be directly and solely responsible to the people for their votes and actions.

With this statement, it is easy to see why the ascension of Joseph Cook to lead the Free Traders made it easy for them to join in union with the Protectionists. Cook had years earlier left the Labor Party on the same issue. Judith Brett argues that the line the Deakinist Liberals were not prepared to cross, was the one where individuals subordinated their freedom of judgement and integrity of conscience to the iron discipline of the party organisation.

cam
Scrymarch: Alfie and Tommo: Jefferson and Deakin are parallel figures in a few different ways.  Both were literary men, and poets, with wide interests, but published little in their lifetime.  Both were introverts of a sort who played the part of reluctant politicians and reluctant party leaders, but at the same time spent most of their lives in politics and were continually sought out for office by their colleagues.

Both were radicals with respect to ends but the dramatic difference between Alfie and Tommo was in means; reformist and revolutionary.  Oh, and facial hair.

Good thing Deakin didn\'t own slaves, eh?
cam: Deakin didnt mind there being no bill of rights: it gave the federal government \"latitude\" when it came to the Chinaman. Australia sorely lacked a Madison. When Washington and Adams were President (and Hamilton Secretary of the Treasury), Madison led Congress. During Jefferson\'s terms he was Secretary of State, and the he was the next President. The US Republic is more a Madisonian Republic than a Jeffersonian one. But Jefferson was more eloquent with the pen, and nastier campaigner.

Probably the closest thing Australia had to a Madison was Andrew Inglis Clark or Henry Higgins. Clark did too many disappearing acts and Higgens wasnt powerful enough to push forward alternate systems like the Swiss Canton.

A lost oppurtunity that still hasnt been fully unravelled. I think the Australian public is going to have to recognize that the bearded men, not so much got it wrong, but didnt get it right.

cam
Felix the Cassowary: Alternatives?: Regarding that Swiss Canton comment... Were their serious proposals for alternatives to the original Federal structure? Could you elaborate on them?
cam: Charles Kingston: Kingston I believe submmitted a draft constitution that included Swiss style referenda in it. Clark\'s initial draft of the constitution also included a Bill of Rights, but Grifffiths took it out. Two years ago when I was in AU, I went to National Library trying to find Clark\'s draft constitution, but they didnt know what I was talking about, and couldnt find it. IIRC UWS Campbelltown has a copy of it. I will probably be back in Au later this year, so will try chaasing it up again.

Higgins also wrote a book in 1899? criticising the constitution. I will chase up the name of it for you.

cam

Deakin On Responsible Government

The Senate has the entire transcripts of the Australasian Conventions which took place prior to Federation. This was where most of the aspects of what form of government Australia would take were trashed out. There were competing interests, philosophical and provincial. Alfred Deakin was one of the most influential of the participants, and ultimately got his way in most things. There is an interesting exchange between Deakin and Baker on responsible government and constitutions.

From the transcript;

Deakin: If you are about to make this change you should go further. You should either not make this change, which is out of harmony with our existing institutions, and cannot be brought into harmony with a constitution in which there is responsible government rooted in a popular chamber; but if you do take this step, you should at once, and boldly, adopt bodily those foreign constitutions to which you have gone for precedents.

If you want the Swiss Constitution, take the Swiss Constitution; if you want the American Constitution, take the American Constitution; but do not attempt to mix them with the British Constitution.

To Deakin responsible government embodied that nearly all legitimacy for sovereignty and action came from the lower house where the executive and legislative mingled. Deakin seems to believe that lower house being a People's Chamber , and having popular support, is the only place that rights and the level of allowed liberalism can be suitably determined. This is a very paternal and elitist view.

Baker replies to Deakin asking why not an Australian constitution?;

Baker: Why cannot we have an Australian constitution?

Deakin: I have not the slightest objection to having an Australian constitution; but an Australian constitution that was begun by setting aside the political experience of the civilised world would have a poor chance of doing any good.

Any constitution that is built up must be built on the experience gained of other constitutions in other parts of the world.

Barton: To what experience of federal constitutions is the hon. member appealing?

Deakin: I am appealing in the first instance to the fact that there are radical distinctions between the American Constitution and those of these colonies.

The radical differences are, that in America the executive is separated from the legislature; that the two chambers and the executive work all three independently; that, although the whole three are often, if not at war, entirely at issue, there is provision for carrying on the government notwithstanding.

There is no such provision in the constitution which is sketched here. Here your responsible government is to be made responsible to the representative chamber.

Deakin is unable to see Australians as being able to innovate the constitutional or political system beyond what already exists. This is probably why our constitution is pretty crappy by world standards - missing out on even the most basic innovations of the enlightenment. Peter Botsman devoted a book to its shortcomings .

In Deakin's vision of responsible government we see where it comes into conflict with Republicanism. To republican philosophy, rights are inalienable and outside the domain of the legislative and executive authority. Deakin makes no such distinction, claiming that the responsible nature of the executive cabinet and the fear of elections are enough to ensure that rights are not trampled.

Australia has a pretty poor history in this regard, and the constitutional structure chosen at federation carries some of the blame.

Deakin continues;

Baker: We have not agreed to responsible government yet!

Deakin: It is in this sketch; and if hon. members depart from the sketch let them do so on rational grounds. If they are about to take a new constitution let them take one of which we have some experience, and not a hybrid-something from the Swiss, something from the British, and something from our own.

They are taking irreconcilable elements that cannot be made to work in harmony.

If hon. members desire to adopt the Swiss Constitution, let them adopt it. There they have no dissolution of the popular chamber, the government is elected from the two chambers, and the system forms a consistent whole. It may be worthy the consideration of the Convention whether we should or should not adopt that consistent whole.

It may be worthy of consideration whether we should not adopt the American Constitution with perhaps a little amendment. But what I wish to say, in answer to the hon. and learned member, Mr. Barton, is that to introduce the American Senate into the British Constitution is to destroy both.

Ironically, the Australian Senate, which later became a proportional system, has been one of the few checks and balances on the House of Representatives responsible government's excesses.

It is fashionable to claim we are a republic already, but responsible government and republicanism come into conflict in several areas of political structure. Deakin's words emphasise these differences.

Republicans seek to balance the powers of the differing arms of government and hold them in check so they cannot devolve into tyranny or selfish kleptocracy.

These require that the constitution carry checks against executive and legislative tyranny. It also requires that the legislative, executive and judicial be balanced in their powers. Dispersed as much as possible across as many individuals as is possible without paralysing good governance.

Republic comes from the latin Res Publica which means the public space. Accountability for government comes from its actions, output and machinations being entirely in the public sphere.

Thomas Playford and the Constitutional Conventions

Deakin marked Thomas Playford from South Australia as a confederate. Deakin can be pretty nasty in his book to those who didn't share his views or competed with him; ie George Reid , so it might be good to check from the 1891 debates what Playford did actually foresee in the Australian Constitution.

Playford was reasonably active at the 1891 convention, chiming in, and interjecting, on several subjects. His opinion on the Senate was that the states should appoint Senators;

This is a point on which we can consult the experience of America, where exactly the same clause has worked for 100 years. I have never learned that they desire to alter their mode of electing senators.

It is a great deal better that we should say distinctly that the parliaments of the colonies should elect the senate in the way they have said it in America, than that we should leave it to the different states to decide the manner and mode of elections.

If the states decided the question we might have a considerable amount of difference in the mode. We know that the American system has given eminent satisfaction; but we have no means of knowing whether the system proposed by the hon. member, Mr. Kingston, would give equal satisfaction.

If the hon. member wishes to carry out his idea, certainly he should not strike out the words he proposes to omit, for this reason: you must provide some mode of election of the senators so as to give the different states an opportunity of deciding how they will elect them, because through some obstinate lower or upper house in some of the states a deadlock might occur, and they might not be able to decide in time for an election on any particular lines. Consequently there would be no persons chosen to represent the state.

The hon. member would, therefore, do better to leave the words as they are, fixing this mode "until the states otherwise direct." I would very much like to give the states the power to decide as to the manner and mode of electing senators if I thought it would be productive of good results; but with the experience of the United States before us I do not think we can do better than to adopt their form of election.

So he was for the American style of appointed Senate. The US Senate is now elected in the same manner as the Australian Senate as multi-member seats divided by state but back in 1891 it was appointed by the states.

Playford engaged in the debate over how electors would be determined for the house. He stated that the type of election be uniform across all states, rather than each state manage the elections locally. Which suggests a federalist approach to the house.

Playford has an exchange with Gillies over limiting the rights of federal government to interfere, or even make legislation repugnant to the states. Gillies seems to be arguing for states rights, or a more restrictive federal constitution, but uses - horror - women's suffrage to make his point. I am not sure if Playford is goading him in the following exchange, but he does say;

Mr. PLAYFORD: Cannot the hon. member trust the federal parliament?

Mr. GILLIES: We are not speaking of trusting the federal parliament. We might as well say, "We need no provisions in the constitution that will limit their power or tie their hands in any way."

What the hon. member practically contends for is that the federal parliament shall be given a constitution in blank, so that it can do what it likes, without any limitation whatever to its powers. That is the meaning of his interjection.

Mr. PLAYFORD: They will represent the people!

Mr. GILLIES: We will trust the federal parliament on the grounds and on the provisions contained in the constitution.

What is the meaning of the words "state rights" if they do not mean that certain provisions are to be inserted in the constitution which will control the federal parliament, which the hon. gentleman would have us trust implicitly?

His idea is that we should absolutely pass over to the federal parliament the rights of all the states individually, even of the smallest of them. If that were done, we could swamp them tomorrow simply because we had a majority.

It appears that Playford is for the Westminster style of responsible government in the lower house with popular franchise.

Limits on Legislation

One of the points debated was that the federal government should be limited in the area of taxation to tariffs and excises. Playford argues for unlimited Commonwealth taxation for the reason of free trade;

We are not considering, at the present moment, what responsibilities we will take over from the several colonies.

The question we are considering is the power we will give to the parliament of the commonwealth in the matter of taxation; and so far as my reading extends, no commonwealth in the world has existed, or can exist, without possessing unlimited power of taxation.

It is so in the case of the United States, in the case of Canada, and also in the cases of Germany and Switzerland. If you take away the general power, and draw the line at customs and excise duties, then those who believe in a free-trade policy will have no hope whatever of being able to give effect to that policy.

We want the people of these colonies to be perfectly free so far as taxation under the commonwealth is concerned to decide what form or mode of taxation they will adopt for the raising of the necessary revenue.

If you limit the power of the commonwealth in the way suggested, those who hold free-trade views will never be able to give effect to them.

That is a very federalist view, and one that has led us to vertical tax imbalance today.

There is another interesting exchange on the federal government under-writing state debts;

Mr. THYNNE: The colonies are now proposing to give away this security, and the consequence will be, as suggested by the hon. member, Sir Harry Atkinson, that any one of the colonies being unable from misfortune to meet its engagements with its creditor, the federal parliament will of necessity and duty be bound to come to the rescue and take the responsibility upon itself.

Mr. PLAYFORD: There is no harm in that!

That exact situation nearly led to Civil War in Australia in the 1930s when the Premier of NSW, Jack Lang purposely defaulted on loans in order to negotiate better interest rates. The problem was that federal government had under-written those loans, and the Prime Minister, Joe Lyons had no intention of paying NSW's debts.

Before The Governor, Phillip Game dismissed Jack Lang, NSW and the federal government came within an angels breath of open civil war. The Lighthorse was moved to protect Canberra from the NSW police force - who had rifles, steel helmets and armoured cars. There were also federal and state militia forming all over the place.

A hidden part of Australian history that does not get talked about much.

Water and Rivers

Playford's views on the federal government stepping in over water rights has a state focus, especially downstream states. Though Deakin and Playford had an exchange over water conservation (irrigation) in which Playford replied to Deakin;

Leave that to the states!

The Senate Again

I think Playford's speech on the Senate on April 6th gives an understanding as to what those involved in the Constitutional Convention thought the difference between Confederacy and Federation is;

I have been very much astonished in listening to the views put forward by some hon. members. We have been deliberately told that unless we give equal powers to the senate we go for unification [Confederacy], and that if we do give equal powers to the senate we go for federation.

That is a most absurd statement. Hon. members well know that it depends upon the power which you give to parliament whether you take power from the senate or not, and not as to the distribution of that power between the two branches of the legislature.

It is not a question as to whether you distribute powers this way or that as regards state rights; but it is a question as to whether you take from the states certain powers and give them to the parliament.

We are now discussing, not the taking of powers from the states, but as to how we intend to distribute the legislative powers of the commonwealth between the two houses-the senate on the one hand and the house of representatives on the other; and the question of unification or federation does not come in.

It will be just as much a unification, even if the senate have very small powers compared with the other house, if you take away the powers from the states, and give them to the central parliament as a whole; and it will be as much a federation if they leave large or small powers.

The question of unification has nothing to do with the point at present under discussion. The hon. member, Mr. Thynne, asked me one question which I will attempt to answer. Responsible government, he asserted, could adapt itself to any circumstances.

I will ask the hon. member does he know where responsible government has ever adapted itself to the circumstances of two co-equal houses? Nowhere in the world.

I suppose the hon. member has read history sufficiently to enable him to know that in England we never obtained responsible government until the coequal power was taken from the House of Lords.

At one time, in fact, that House had greater power than the Commons; but we never obtained responsible government in the mother country until the power of the House of Lords was taken away and lodged in the House of Commons.

I hold to the opinion I have previously expressed on this point, that I believe you cannot carry on responsible government satisfactorily with two absolutely coequal houses. That is an opinion which I have expressed from the first.

I have also expressed myself to the effect that personally I have not the slightest objection to ask the people of this great continent to agree to a commonwealth in which the two houses shall be coequal, and in which the executive shall be elected by the two houses in the same way as is done in Switzerland.

I find, however, in speaking to hon. members on this subject, that there are very few who agree with me. Even a number of those who are in favour of coequal powers being given to the senate will not go in for doing away with responsible government.

Therefore, so far as this question is concerned, it seems hopeless to argue upon it. I hold to the opinion that responsible government cannot work satisfactorily with two houses coequal in power.

Another point, upon which I wish to say one or two words, has reference to the statement which has been made to the effect that without equal power the small states will be ridden over rough-shod by the larger states that, as the last speaker stated, the smaller states will be practically at the mercy of the larger states.

Will any intelligent man take up this proposed constitution bill and examine the proposals contained in clause 55, and tell me that the smaller states will be at the mercy of the larger states?

First, they have equal representation; secondly, they have equal powers on all matters, excepting money bills, relating to the ordinary annual expenditure on the ordinary service of the year, and dealing with taxation. They have the power of amendment in regard to all but two classes of money bills-the power of absolute amendment coequal with that of the other house.

With regard to those two particular classes of bills, they have a right to suggest to the other house amendments in any clause or parts of a clause. The Constitutional Committee have adopted precisely the mode adopted in the colony of South Australia, where it has been in force for between twenty or thirty years.

We have worked under that system for between twenty or thirty years. The upper house have the right to make suggestions, and those suggestions-taking the case as showing how the system would work if it were adopted for the commonwealth-have been as respectfully treated and considered by the lower house as any amendment which has ever been made in connection with any bill.

They have been quietly and intelligently debated in the lower house; they have been agreed to either with or without amendment, or disagreed to, as the case may be, and they have been sent back to the legislative council precisely in the same way as is proposed here.

Ever since we made the compact in consequence of the claim of the Legislative Council in South Australia to coequal powers with the House of Assembly in dealing with money bills, except as regards initiation-ever since we entered into that compact, nearly thirty years ago, we have never had the slightest trouble with regard to the working of the compact.

It has worked in the most harmonious manner, and, so far as the Legislative Council is concerned, I have never heard a single member of that body-and I have been in the Parliament since 1868-utter a wish that the compact should be broken in any way, though in the Lower House a late treasurer brought forward a motion only a year or so ago to the effect that we should break the compact between the two houses because it gave the Legislative Council too much power.

With the right on the part of the senate, in the first instance, to veto any measure brought before it; with equal powers in respect to all proposed laws, except those imposing taxation, and appropriating the necessary supplies for the year, which the senate may affirm or reject; with a right to insist that any bill dealing with new taxation shall be so subdivided that only one subject at a time can be dealt with-with the senate possessing all these powers, and with the immense preponderance of votes which the smaller colonies will have in the senate, how can any man in his senses say that the smaller colonies need have any fear whatever of being overridden in the legislation of the country if this proposal is adopted? I fail to see any such danger.

I try to look at the matter with a dispassionate eye. I try to look at it from the standpoint of a smaller colony, being myself a representative of a small colony.

I think I can foresee as well as any member here what the course of legislation is likely to be, and I have come to the honest conviction that if these clauses are carried the senate will have all the powers they ought to have, and that to give them any more power would be injurious to the interests of the commonwealth.

The people of the community as a whole must rule.

You cannot get away from that, and if you do not provide that this shall be to some degree, at all events, the effect of your legislation I fail to see how it will be possible to induce the larger colonies to come into the federation.

I shall support the clause as it stands in preference to the amendment. I desire to say that I do not agree with the amendment of the hon. member, Mr. Wrixon. As to the bugbear that has been raised, that the smaller colonies are going to be overridden, and their influence destroyed by the larger colonies, if we do not give the senate equal power with the house of representatives, I contend that that is a mistake.

It is a myth; it does not exist, and will not exist if the constitution is adopted in the form now proposed.

I am a bit confused by it, but it seems the point of contention is should the Senate have equal power, and if they do, it is a Confederacy?

Sounds like some wedging was going on in Deakin's book and at the convention. Since the Confederacy lost the US Civil War to the Union (federalists), I guess confederacy in the convention was being equated to weakness and other negative human passions.

Playford seems to believe in the Westminster style where the will of the people comes through the House, while the states moderate against federal excess through the Senate. That seems typical small state thinking in a federation.

I thought it interesting that he alluded to an election of the President in the Swiss manner by both houses. We often forget how influential the Swiss Constitution was during federation; it and the US Constitution pop up constantly.

After that speech by Playford he spends the next series of debates defending himself and the history of the South Australian Legislative Council.

Interestingly Dibbs argues that if the Senate and House cannot agree then they should use the Norwegian method and meet as one house until they have thrashed it out. This is similar to the system Victoria uses today.

Playford's vision of state's rights also included the state appointing their own Governors, rather than the monarch doing so.

Conclusion

I think Deakin painting Playford as a confederate is unfair. I suspect it was more a result of trying to wedge a small colony representative who was more concerned with the rights of small states getting swamped in a federal system by NSW and Victoria. Deakin is also known for being less than gratuitous toward his political competitors.

Playford seemed to be for a strong Senate that represented the states and could act as a limit on federal power. He was for responsible government and a uniformly elected popular house. The US system at the time had an appointed Senate and was no less federalist for it.

I think this was Deakin playing politics, rather than historian in his book.

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