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THE FEDERAL BUDGET.
The Commonwealth has now been in existence
for nearly 21 months what is federation
costing us? This question is really
important, but there is a wide divergence
between the replies given to it by the
Federal Treasurer, Sir George Turner, and
the Treasurers of the States. In Victoria,
for example, it is stated that the cost of
federation amounts to between £500,000
and £600,000. Sir George Turner ridicules
this estimate, and asserts that for eighteen
months the total charge to be made against
the Commonwealth does not exceed
£140,000. Mr. Butler, again, reckons that
in 1902-3 federation will add £60,000 to
our public liabilities, and he expects an
early increase to £100,000 per annum.
There is no doubt that these estimates, too,
would be disputed by the Federal Treasurer.
The expenditure of the Commonwealth
falls into two' great classes - first,
the new outlay directly attributable to
federation; second, the cost of the transferred
departments. The Convention still
mate of the former was £300,000 a year,
and that limit has not yet been reached ;
but it would be positively alarming if it
had been, considering that a great part of
the machinery of federation-such as the
High Court, the Inter-State Commission,
Berthas still to be erected. The estimate
of new expenditure for the current financial
year is £295,473, an increase of C&^üOO j
on the total for 1901-2, so that we may expect
an early demonstration of the fact
that, as confidently stated in these columns
at the time, the Convention estimate
was too low. Mr. Butler fears that the
advance will continue till it reaches at least
£400,000 per annum, of which the South
Australian proportion, payable on the population
basis, would be about £-10.000.
State Treasurers profess the greatest
anxiety, however, concerning the transferred
departments Customs, posts and
I telegraphs, and defences, as regards which
I their complaint is twofold, that on the one
hand revenue is being imprudently given
away, and that on the other expenditure is
being unnecessarily increased. The public
have compensating advantages for loss of
State revenue when such articles of universal
consumption as tea and kerosine are
cheapened by the remission of duties, or
when postal and telegraphic rates are
lowered. But extravagant management
imposes an unrelieved burden. Sir George
Turner pleads not guilty to this charge,
and he certainly makes a strong point in
his protest against the fallacious assumption
which vitiates so many State estimates of a
-'issues of ít}dei'Rüpa-'.ti-fttt,tóe sxnejicU,
ture on departments was at a settled rate
when the Commonwealth took them over.
The truth is that many of the, increases
against which bitter complaint is made are
due to the State legislation under which
the departments are worked. To give one
instance Victoria by special enactment
provided for increased salaries for public
servants; and another illustration may be
found in the fact that the increments of
salary chiefly in the postal and telegraphic
department which will add £3,628 to the
expenditure debited against South Australia
in 1002-3 are payable under the
State law. Our Government have
introduced a Bill to stop automatic
increases of salary to officers in receipt of
more than £150 per annum; but apart
from this, it is feared by Mr. Butler that
the greater liberality of the Commonwealth
to public servants will eventually
result in the State departments losing their
best officers. The Federal Public Service
Act. which has yet to come into operation,
is the cause of serious apprehension. Mr.
Butler believes that it will raise expenditure
by about £100,000 per annum, of
which this State will have to hear about
£10.000. The federal estimate of the increase
likely to be caused by the minimum
wage provision is £36,000, or only £3.600
for South Australia; but that provision
is only one of several tending to enhance
the rate of outlay. Sir George Turner con-
fesses to an advance of £245 000 in the cost
of the departments generally. He insists,
however, that the Federal Government are
not to blame. The various ways the State
Governments have made this additional expenditure
necessary, and in the circumstances
the Commonwealth Ministry cannot
he affirms, reduce their estimates.
Nevertheless, as Sir Frederick Holder
points out, there will be a determined
effort in committee to. reduce
the cost of defences, which is growing at a
serious rate. Reasonable economy in the
military establishment of the Commonwealth
is all the more necessary if, as is
proposed, the naval subsidy is increased by
£100,000 in the near future.
Sir George Turner hopes to receive from
the uniform tariff in 1902-3 the sum
£S,S30,OC0. which-large as it is does not
nearly suffice to provide for the needs of
States that, like Queensland, have been
greatly dependent on their Customs and
excise revenue. The amount per head
raised by import and excise duties varies
considerably in the different States. Western
Australia, with a population in which
the proportion of adults is high, is a large
consumer of the commodities which yield
the greatest revenue, and in 1901-2 the Customs
and excise receipts amounted in that
State to £5 19/15 per head. South Australia,
partly because her consumption of
intoxicants is small, partly because protection
has made her less dependent on the
outside world for manufactured articles,
and also, no doubt, partly
because of diminished purchasing power
through drought, raised the lowest amount
per head last year, viz., £1 17/2, as against
£2 55 in New South Wales, £1 17/10 in
Victoria, £2 C/7 in Queensland, and £1
18/10 in Tasmania. A return showing the
States' revenue for eighteen months before
federation with that for the same period
since it was established gives South Australia
credit for an increase of £66,499, but
against this there is, of course, the State
contribution to new federal expenditure
and the increased cost of transferred departments.
The advance of outlay in connection
with posts and telegraphs alone
amounted to £32,723 last year. Taking
the Commonwealth as a whole, Sir George
Turner budgets for a Customs and excise
revenue in 1902-3 of £9,055,000 (including
the Western Australian special tariff), an
increase on last year of £150,000, and for
receipts from posts and telegraphs to the
amount of £2,455,104, an increase of £60,000.
Thus he expects an aggregate revenue of
£11,510,104. The estimated expenditure
consists of £295,473 for the new departments,
an increase of £35.000, and £3,629,291
for the transferred departments, an increase
of £16,500; making a total of
£3,924,764. After allowing for some arrears
of expenditure from last year, the balance
returnable to the States will be £7,501,787.
Owing to the changes made in the tariff,
and to other causes, all the States! will receive
less than they did in 1901-2, and the
shortage in the case of South Australia is
estimated at £43,028. Customs and Excise
are expected to yield £18,696 less, and posts
and telegraphs £8,000 less, while increases
of expenditure in salaries and new works
account for the balance of the deficiency.
The Federal Treasurer's figures include the
Northern Territory, but so far as can be
seen they justify Mr. Butler in reducing his
estimate of revenue to be returned by the
Commonwealth. Sir George Turner proposes
to borrow a million for new works, of
which about one-half would be raised
1902-3. If the States Governments carried
out the works, the money would certainly
be borrowed; and effect could not be given
to the well-meant proposal of some federal
legislators to provide the funds from
revenue without seriously adding to the
financial embarrassment of the State.
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