Wales would gain by the distribution of her expenditure. She would gain half as much. as she would lose by that course only!

Mr. LYNE: I must differ from the hon. member, because in that respect I think we should lose also. The hon. member may think otherwise, but I must be allowed. to differ from his ideas. I think that under that proposal New South Wales would in every way lose considerably. Therefore, as far as that proposal is concerned, I admit, with the writer of this article, that it must be placed absolutely and for all time on one side. With regard to the proposal made by the Finance Committee, after a very great deal of discussion, and after the insertion of the word to which Mr. McMillan referred yesterday-the word "aggregate" as far as the estimate and the distribution of the customs and excise were concerned -I understood that that word had a great deal fuller meaning than it seemed to me Mr. McMillan gave to it yesterday. I should like to state what I conceive to be the meaning of that word; and I think it was I who had the privilege of moving its insertion. Before that word was inserted, the proposal was open to much the same objection as was the sliding scale of the Treasurers. But the word " aggregate" was intended for this purpose: that we should take the aggregate returns from all the colonies and pool them, and divide the total sum by the population.

Mr. WALKER: Including direct taxation! Mr. LYNE: No; but the customs and excise. Divide that by the total population, and on that get an aggregate amount of customs and excise for each individual throughout the whole commonwealth.

Mr. MCMILLAN: I said nothing about that!

Mr. LYNE: I said it at the time, and I understood from the chairman of the Finance Committee when the word " "aggregate" was inserted, that that was to be the effect of it, because we had some

difficulty in inserting two or three words to make my intention clear. If that were done, the effect would be this: Supposing that there is a total collection of £6,000,000 per annum from all the colonies, and supposing that the population is 4,000,000, it would leave the sum of 30s. per head, applicable to each unit of the popula tion. That would be the minimum that should be returned of the excess obtained by the federal treasurer from the various

states.

Mr. MCMILLAN : But that per capita distribution would exactly bring about the same thing!

Mr. LYNE: I do not think it would. I may say that, as far as I am personally concerned, I altogether object to the system of book-keeping which was proposed, and which was strongly supported by the hon. member, Sir Philip Fysh, and by other hon. gentlemen. I regard the posi tion we are in in this way: If we are to have federation, let us have it--let us have intercolonial free-trade-but, if you keep up a system of book-keeping on your borders for five years or, as was suggested by the Premier of New South Wales in the Finance Committee-for ten years, you might very nearly as well keep up your customs duties, for all the trouble and irritation that would take place. We must, if it is possible to do so, arrive at some-it may not be accurate distribution, but at some reasonable distribution, of the surplus that is likely to be obtained from the various colonies by the treasurer of the commonwealth, and I take it that the first idea-which, I think, emanated from the hon. member, Mr. McMillan-that you must, by some rough and ready method, fix some hard and fast sum—it may not be exactly accurate--to be returned to each state had a great deal in it to commend itself to hon. members of the Convention; but I think the idea of the Finance Committee in South Australia was the better one

that is, as I have said, to fix a certain sum per head of the population to be returned. I heard hon. gentlemen yesterday statein opposition very largely to what I heard them state on a previous occasion—that they were almost prepared to leave everything in connection with finance to the federal parliament. If hon. members are prepared to leave everything to the federal parliament, surely they might leave everything beyond a minimum of, say, 30s., or whatever it comes to, per head of the population, to be distributed as nearly approximately as they can possibly find out to the amount raised in each colony. It will have to be raised through the various cus toms entries, not intercolonial, but on the seaboard. I think that if something of that kind could be arrived at, and if we were to allow some power, some privilege, and some determination to the federal parliament as regards the balance of the surplus to be returned, we might come to some conclusion; but I do not think that it would be wise to leave absolutely the whole arrangement of this scheme to the federal parliament after the matter has gone away from this Convention. Are we to declare that we ourselves are impotent to come to any conclusion on this question? I take it that in the federal parliament there will not be abler men than are to be found here-abler financiers, and gentlemen competent to deal with matters of this kind.

Mr. SOLOMON: They will have a very much freer hand!

Mr. LYNE: They would have a very much freer hand, I grant; they would have a much freer hand to do injustice as well as justice.

An HON. MEMBER: And a knowledge of the circumstances of the hour, which we have not!

Mr. LYNE: They would have that also, if you gave them the power of distributing beyond a certain minimum; but I take it that every colony, and probably most of

all New South Wales, must see to it that there is some return from the federal treasury to the various state treasuries. An HON. MEMBER: If we trust them for £1 we can trust them for £2!

Mr. LYNE: I think that the state treasurers would be in a much safer position if they knew that they were to receive a certain sum back from the federal government. I cannot close my eyes to the fact that the whole, or nearly the whole, of the trouble on this question is caused by the present fiscal policy of New South Wales. I do not wish to drag into this debate any fiscal issue; but I say that, with our fiscal policy of the years 1893, 1894, and 1895--even with a 10 or 15 per cent. tariff—we could come much nearer to this question in a much shorter time than we can on the present occasion. If hon. gentlemen will look at the figures that have been submitted by our Statistician, and by his assistant since he has been away, they will see that the whole trouble is based on the absence of any reliable or approximate information in regard to importations into New South Wales, to be brought here under a uniform tariff of customs duties. I, therefore, think that our trouble at the present moment is attributable to a large extent almost wholly-to the fact that we have not such a fiscal policy, to some extent, as they have in the other colonies. How are we going to get over that difficulty? We proposed at the Adelaide Convention to go back to the years 1893, 1894, and 1895. We took those years to get over the difficulty to which I am referring. In those years we had a low tariff in the shape of 10 or 15 per cent., but under that tariff we had a certain customs revenue, which brought us a little nearer to the position the other colonies are in at the present time, and therefore at Adelaide we at once took those particular years to try and assimilate the returns that had to be made and the amounts that would be

collected from the various states. I altogether cast on one side the idea-so assiduously put forward by our Statistician, and I think also by the Premier of New South Wales-that if you take as the basis all the importations into this colony under our free-trade tariff, and put on the top of that basis the tariff of Victoria, or of any of the other colonies, you will get a certain result. That, it must be patent to every hon. gentleman, is an absurdity. As the hon. member, Mr. Deakin, very rightly. said yesterday, as in Victoria, with the increase of duties and with the decrease of duties, the rise and the fall of the importations was marked, so it would be in New South Wales. With an increase of duties under a uniform tariff, we would have a decrease of importations, and probably an increase of the local manufactures in our colony, which was also referred to by the hon. member, Mr. Deakin, yesterday, when he pointed out that the consumption of the people was perhaps not less in Victoria than in New South Wales, but that the result of a protective tariff decreased the importations, and increased the local manufactures, which fact was not taken into account at all. Under those circumstances, with an alteration in our tariff, we would necessarily have such a result, and, instead of getting over £3,000,000 return in this colony, as suggested by some of the figures that I have seen-£1,000,000, or £1,500,000, or £1,250,000 more than any other colony-that would probably be brought down to the sum which we in New South Wales received in 1893, when, I think, we obtained about £2,500,000 or £2,600,000 through the customs. That was before the effect of the 10 per cent. duty was felt in this colony. Our importations during 1894 and 1895 decreased to about £2,100,000, mainly because of the manufacturing which was induced in our own colony. With the application of a reasonable tariff-and I do not wish it

to be imagined that the tariff under the federal union would be a prohibitive one -our imports would decrease, and probably, with our present population, we should obtain somewhere about £2,500,000 a year through the customs. On these figures we must base our calculations if we are going to come nearer to federation at the present time. I say that there is no insurmountable difficulty to be got over in meeting the other colonies. For these reasons, I think that the statement made in the paper to which I have referred, is absolutely erroneous. I go further than that, and I say that I do not think this colony will allow this important question, which so vitally affects the financial interests of the community, to be left entirely to the federal parliament. I am satisfied that this colony, if it accepts any constitution bill at all, will require the laying down of some definite lines, at any rate so far as the minimum return to be obtained. I was pleased to hear the statement made by my hon. friend, Mr. McMillan, on this question yesterday. We all know that he is a freetrader, just as everyone in this colony knows that I am a protectionist. But Mr. McMillan recognises that there will be, and can be, no union without a uniform customs tariff-I be lieve a very strongly protectionist tariff. He stated yesterday that that tariff must be fair, and that this colony, together with the other colonies, must accept it. So far as that goes, I think that the people of this colony would be quite prepared to take such a tariff, whatever it might be, and to leave it to the federal parliament to deal with finally. Some of the extreme free-traders do not, and would not, agree to anything of the kind; but that such a thing must come there can be no doubt. If anything so absurd should take place that it did not come, what would be the result? The result must be that, without your customs tariff, the whole of your

revenue, or nearly the whole of it, must be raised by direct taxation. The states would have the power to raise revenue in that way, and the commonwealth finances would at any rate have to be supplemented by direct taxation. But I ask any hon. gentleman if in his sane senses he believes that the people of these communities would agree to wipe away all customs duties except such as are in force in New South Wales at the present time, and to apply direct taxation in two or three different forms? One reason why I feel that we should come to some decision upon the minimum to be returned is that if the states do not get a return from the federal treasurer, each state will be crippled to a very large extent in carrying out its local work. I may be permitted to say to the hon. member, Mr. Deakin, that one part of his speech was not quite so strong as the rest of it, and that was where he said, "Let the federal parliament deal directly with the expenditure of the surplus." He instanced Dubbo and Goulburn as two places where the federal parliament might expend money directly without allowing it to filter through the hands of the state. I interjected at the time that that was approaching unification, and I think it would be, because if you are going to destroy your states by taking away the money they should receive, and put them in such a position that they cannot raise revenue, except by direct taxation of a very heavy character, you must bring them so low that you might as well have unification, everything being managed directly by the commonwealth government and the system of shires and boroughs being extended all over the continent. I think that the proposition of the hon. member, Mr. Deakin, to expend money upon ordinary work in the shape of roads and bridges

The Hon. A. DEAKIN: I did not mean that. I did not suppose that the federal parliament would spend money upon objects

outside its powers under the Commonwealth Bill. The federal parliament takes over certain departments, and must expend money upon them. It might build a post-office at Dubbo or at Goulburn.

Mr. LYNE: Yes; but the hon. member cannot think that all the surplus revenue of the commonwealth would be absorbed in the building of post offices.

The Hon. A. DEAKIN: Of course not! Mr. LYNE: That only brings me down to the bed-rock of the argument which I was using, that the surplus should be returned to the states, and that the distribution of the money coming originally from customs duties should be made by the Treasurers of the various states. What I say is that a minimum of something like 30s. per head should be fixed. I do not fear the trouble which is anticipated as to what will take place in the immediate future.

The Hon. A. DEAKIN: It is the Canadian practice to return so much a head!

Mr. LYNE: Yes; but even with the Canadian practice, as was stated by the hon. member yesterday, there is trouble, because the Treasurers want more than the minimum. How much more would that trouble arise if the commonwealth treasurer was not called upon to return anything at all? I can only offer the sug gestion that a minimum of something like 30s. a head should be fixed. That would not take a high tariff to raise.

The Right Hon. Sir G. TURNER: Suppose a minimum is fixed according to the customs receipts instead of at so much a head?

Mr. LYNE: I have not analysed that idea; but the moment you perfect your commonwealth arrangements you lose all your intercolonial trade. We may obtain a great deal from Victoria during the first few years after the establishment of the commonwealth. At the present time, nearly the whole of the machinery which

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is used in our southern and south-western districts comes from Victoria. I was at Wagga Wagga the other day, and one of the leading agents there told me that, with the exception of one plough which had been obtained from Hudson Brothers, nearly the whole of the machinery obtained this season in the south-western district had been manufactured in Victoria. The south-western portion of this colony is deluged with Victorian manufacturesnot only with Victorian machinery, but with other manufactures as well. I cannot see how you could arrange matters if you simply kept a record of the imports from outside. Otherwise the idea of the right hon. member might very reasonably be carried out. I think that it will be patent to him that there would be trouble in that respect. The trouble would be in the same direction as has been anticipated for the system returning so much per head. The probability is that New South Wales would import a great deal more during the first five or ten years than any of the other colonies, and that we should not get a full return from that. I do not wish to reason in this particular direction; but I hope that the Finance Committee will take the matter into consideration, and that they will not leave the provisions in the bill in the state in which they are at the present moment. There is one matter to which I desire to refer, and that is a statement which fell from the lips of the hon. member, Mr. Holder, yesterday. He stated yesterday that he would be prepared to leave this whole question to the federal parliament if he knew how the commonwealth was going to be constituted; in other words, if he knew whether we were going to have equal state rights. That is what he must have had in his mind at the time. He regretted that the discussion upon state rights had not taken place before this discussion took place. The hon. gentleman said still further as a

reason for that, that he knew that the Victorian finances were much in the same straits as were those of the smaller colonies, and that, therefore, those colonies could depend upon Victoria's assistance in seeing justice done. Now, I took particular notice of the statement made by the hon. member, which means that it does not matter about New South Wales, so long as the other southern colonies get Victoria to help them in the matter of equal state rights. A number of hon. gentlemen stated at a previous meeting of this Convention that there was nothing in equal state rights; but surely there is something in it when we find such a statement as that to which I have referred emanating from such a high authority as is the hon. member. I regret that the clauses dealing with equal state rights were not considered before these clauses were con sidered, because New South Wales would then have known what she was to expect if that question were to be dealt with as it is dealt with by the bill at the present time. I cannot indorse the idea that it would be a wise thing to leave this matter entirely to be dealt with by the federal government. I am of an entirely different opinion. This colony has more to lose than have all the other Australian colonies put together upon this and upon every other question. I have always been in favour of dealing with the question of state representation upon a population basis; and before there is any commonwealth it will have to be dealt with on that basis.

The CHAIRMAN: I think the hon. member is wandering away from the financial clauses.

Mr. LYNE The hon. member, Mr. Holder, was permitted to refer to the same question yesterday!

The CHAIRMAN: The hon. member referred to it, but he did not discuss it. Mr. LYNE: I do not desire to discuss the matter. I simply quote the reference