OUTCOMES: TARIFFS

On 16 September 1902, the Customs Tariff Act was passed. The Act introduced the Australian Commonwealth's first uniform tariff, signaling a compromise between Protectionist and Free Trade policies. With land full of mineral wealth (and a strong local movement against WA even joining the Australian Federation), John Forrest, the Western Australian Premier, had been able to bargain for tariff reduction to be phased in for WA. Sir Edward Nicholas Braddon, Premier of Tasmania, argued for a clause that forced the Commonwealth to return to each State 75% of customs and excise (including tariffs) collected in that State. That left 25% to cover federal costs. Opponents of the 'Braddon Clause' called it the 'Braddon Blot'.

THE FIRST TARIFF

The fiscal policy of the Commonwealth has been determined from the beginning by the conditions of union. Before 1900 every colony had its own tariff, and each was financially dependent, although in varying degrees, upon its Customs receipts. One of the chief impulses towards union was the desire for a common tariff. No. colony, however, had been willing to surrender its revenues from Customs without a guarantee that it would receive at least an equal amount from the Commonwealth. A calculation of the total receipts of the six States from Customs duties on over-sea goods, showed that after deducting the new charges in respect of the Commonwealth, there would remain a balance, on the assumption that the Commonwealth tariff would return a corresponding amount sufficient to insure each State against serious loss. Accordingly the Constitution contained the provisions which have been already referred to in the chapter dealing with finance, directing the Commonwealth to return to the States three-quarters of whatever sums they received from Customs duties, in certain prescribed proportions.

The financial obligations towards the States, which the Constitution imposed upon the Commonwealth, explain its first tariff (Nov. 4th, 1901). Roughly speaking, these required a revenue of six million pounds. Out of this the new charges in respect of the Commonwealth were not expected to exceed £300,000-a sum of 1s. 6d., per head of the population. The balance, after discharging the expenses of the services which the Commonwealth took over from the States (e.g., Post Office and Customs), was to be returned to the States according to the provisions of the Constitution. The situation was further complicated by the existence in every State of industries which owed their existence to protective duties, and had to be preserved. To this extent the new tariff was intentionally protective, but in other respects it was a compromise between the high duties of Victoria and the lower duties of New South Wales. The range, however, was still sufficiently high to be incidentally protective to many industries, and a great expansion of manufactures followed. Several new industries were also started by American and English firms, which had hitherto consigned their products to agents. New channels were opened by these means in many directions for the investment of capital and the employment of labour.

(The tariff had the same effect in establishing industries in the Commonwealth which had previously been conducted abroad as Mr. Lloyd George's Patent Act has had in attracting industries to Great Britain.)

B. R. Wise, The Commonwealth of Australia, Pitman, London, 1909, pp. 247-8.