Australian history Analysis

Interstate rivalry costly in times of crisis

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Divisiveness between the Federal Government and states and territories, in times of crisis, is not new (Image by Dan Jensen)

COVID-19 has brought into sharper focus the century-old rivalry between the Commonwealth Government and our states and territories.

The makers of the 'Australian Constitution' thought that after Federation in January 1901, political rivalries would become a thing of the past. The 'Constitution' was drafted not just with a view to abolishing domestic trade barriers but to strengthen representative democracy and promote the common "weal" or good.

Unfortunately, this aspiration has not always been met. Well before the current politicking over borders and states' powers, the issue bedevilled Australia's home front from 1914 to 1916.

In wartime, the ability to levy taxes and control prices are fundamental powers to keep a country solvent, fed and clothed, while enabling it to prosecute war. Shortly after the outbreak of World War I, the parliaments of all the states – excepting Tasmania – passed price-fixing legislation. The aim was to cap the prices of staples such as food, clothing, fuel and fodder.

At the Premiers' Conference in August 1914, it was agreed that uniform legislation should be passed by the state parliaments to control food prices and legislation in some form was introduced in all states. But, under pressure from various lobby groups, these regulations were amended to such an extent that the principle of uniformity was soon destroyed.

Two examples illustrate the situation early in the war. The Victorian Legislative Council adopted an amendment which would have made the working of that state's 'Prices of Goods Bill' difficult if not impossible. The Victorian Legislative Assembly refused to accept any amendment and the bill was twice returned to the Council.

After a month of controversy – which played to various groups within the electorate – the lower house decided not to insist on its amendment after all. The Tasmanian Legislative Council – which had a strong farmers' element – simply rejected the 'Necessaries of Life Control Bill' and the 'Foodstuffs Commission Bill'. Therefore, despite lower house support, no legislation was passed.

Before prices were fixed in the Commonwealth, huge profits were made through speculation in markets such as wheat and flour. The initial enthusiasm for a united effort to win the war soon waned.

The urgent need for the Commonwealth and the states to act together revealed serious weaknesses in the 'Federal Constitution'. Weaknesses such as the cost of seven governments; the imposition of interstate commercial barriers; state red tape in restricting all-important commodities exports and a tendency by some states to invade the federal sphere — exacerbated by state government appeals to the High Court and its decisions.

 Transporting wheat at the Mallee railway yards, early 1900s. Source: State Library Victoria

For example, it was a verdict given by the High Court which enabled the New South Wales Government to fix the price of wheat at three shillings per bushel below market value — a boon to profiteers, which in turn damaged morale and politicians’ credibility.

It was a mess which the Commonwealth only solved in 1916 under the provisions of the 'War Precautions Act 1916', which enabled it to take control of food prices from the state governments. It was only then that the Federal Government could play any part in fixing prices. Until then, it had neither the powers nor the bureaucracy to do it. The delay was costly.

Playing to home audiences and voters has been an enduring facet of Australia's political landscape.

It is unfortunate that parochialism has been so quickly and frequently resorted to in times of national peril, or when a uniform approach to social policy is required.

Dr Michael Tyquin is a military and social historian and author of A Bit on the Side: Price Fixing, Rationing, Profiteering and Black Markets in Australia and Britain, 1939-1945.


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