Australasian Extensions of Democracy

THE five colonies of the Australian continent, Tasmania, and New Zealand constitute seven practically independent commonwealths under the British crown. Australians and New Zealanders have therefore been able to develop their countries along their own lines, and have surpassed all other Anglo-Saxon nations in the number and variety of functions which the state is called upon to perform. It is with this matter I intend to deal, and incidentally I shall indicate some errors into which Mr. E. L. Godkin has fallen in an article published in The Atlantic Monthly for March, 1898.

First, then, we must note that the railways almost without exception, and all the telegraph and telephone lines, are in the hands of the community. In the few cases in which there is private ownership of railways, a particular line was demanded at a certain time, and the government were not then in a position to borrow the funds required for its construction. Western Australia has recently purchased the entire property of one of the two private undertakings in the colony.

A mass of sanitary and industrial legislation also has been placed upon the statute book.

Again, South Australia, Victoria, Western Australia, and New Zealand lend money to settlers at low rates of interest ; South Australia sells its wines in London ; Queensland facilitates the erection of sugar mills ; Victoria and South Australia have given a bonus upon the exportation of dairy produce ; South Australia, New Zealand, and Victoria receive the produce, grade and freeze it free of charge, or at a rate which barely covers the expenses; Victoria contributes toward the erection of butter factories ; Victoria and New Zealand have subsidized the mining industry ; and Western Australia has adopted a comprehensive scheme for the supply of water to the Coolgardie gold fields.

In all the colonies the national system of primary education is compulsory and undenominational. In South Australia, Victoria, Queensland, and New Zealand it is also free. In the other colonies fees are charged, which may be remitted wholly or partly if parents are unable to pay them. Assistance is given in most cases for the promotion of secondary, technical, and university education.

New Zealand and South Australia have appointed public trustees. New Zealand has long possessed a department of life insurance.

Finally, since my visit in 1897, New Zealand has adopted a system of oldage pensions. A pension of seven shillings a week is to be given to every person above the age of sixty-five years, provided he or she has lived in the colony for twenty-five years, and is able to pass a certain test in regard to sobriety and general good conduct.

Such, then, are the main lines of development in Australia and New Zealand ; and it is noteworthy that the colonies which are the most advanced — Victoria, South Australia, and New Zealand — escaped the forcible introduction of convicts which has undoubtedly been prejudicial to the others. In fact, South Australia and New Zealand were settled largely by immigrants specially selected by various associations in Great Britain.

Whatever may be the evils connected with the system, no desire for its reversal is to be found in the minds of Australians or New Zealanders, who are convinced that the benefits far outweigh the disadvantages. As an exemplification of the general feeling, I may point out that some years ago, in Queensland, a syndicate offered to construct railways upon the land-grant system. They proposed, subject to the receipt of large tracts of land, to connect the three main lines of railways in Queensland, which all run in a westerly direction, with one another and with the Gulf of Carpentaria. There can be no doubt that the construction of these railways would have led to a rapid increase in the population of Queensland. But, although the proposal commended itself to the ministry of the day, when the issue was put before the people at a general election, they returned a most emphatic verdict against its acceptance. They were not willing, for the sake of a temporary advantage, to alienate the lands of the country which might be of great value to future generations. Similarly, in 1898, the governments of New South Wales and Victoria, which, under an agreement with Great Britain, have a certain voice in the affairs of British New Guinea, declined to agree to a proposal that, for a fixed period, in order to promote the more rapid development of the country, an English syndicate should have the right of preëmption of unoccupied crown lands.

The various experiments which have been carried out by these colonies have owed their initiation to statesmen who have not been influenced by abstract theories. As practical men, they maintain that they have worked upon the natural lines of social and industrial development ; and they add that experiments may be tried more readily in countries in which the average level of education is high, because, should they prove unsuccessful, the common sense of the community will at once cause them to be discontinued.

Several concrete criticisms are made against the administration of affairs in Australia and New Zealand. We hear much said as to the excessive expenditure of those countries, and in some cases, no doubt, the criticisms are justified. Mr. Godkin has stated in these pages that the policy of the construction of public works was largely due to the triumph of labor in the Parliaments of Australia ; in this matter, however, he was misinformed. The truth is, most of the expenditure was authorized before labor had obtained parliamentary honors ; and even if that had not been so, if a strong desire for economy had existed in other sections of the community, it could have found expression in the upper houses, which, whether they consisted, as in some of the colonies, of members nominated for life, or, as in the others, of members chosen by electors possessing a property qualification, could have done much to prevent excessive expenditure. On the contrary, many members of upper houses rejoiced, as owners of land, in the execution of public works which would enhance the value of their property. During my studies in Australia, I found it to be undeniably true that, in past years, many of the Parliaments had constructed unnecessary public works, allowed the civil service to be packed with friends and relatives of those in power, and authorized roads and bridges almost at the whim of each individual member. But a great change for the better has occurred in this respect, which has been due partly to the financial crisis which prevented Australian governments from borrowing money to any great extent, partly to the revolt of the public conscience against such proceedings.

I do not minimize the danger to Australia and New Zealand of the willingness shown by British capitalists to advance large sums of money at a low rate of interest. There is, indeed, reason to fear that, with the partial renewal of prosperity, colonial treasurers are exhibiting again a tendency to extravagance. This, in my opinion, is a serious misfortune for the colonies. Colonial treasurers are tempted not only to seek popularity by the authorization of excessive public works, but to balance an unsatisfactory budget by charging to loans expenditure which should have fallen upon the current revenue. It would be well if general acts were passed defining exactly the purposes to which loans might be applied. Though they might be evaded by subsequent Parliaments, they would form a basis for the judgment of the more well-balanced members of the community. I shall show, when I deal with the charges of corruption, that the appointment of independent commissioners must prevent a repetition of the grosser evils of the past.

Let us consider briefly on what the various loans have been spent. The total indebtedness of Australia and New Zealand amounted, in 1897, to about £225,000,000. Out of that sum, £131,000,000 had been spent upon railways ; £3,500,000 upon telegraph lines ; £20,500,000 upon water supply and irrigation. In this way we get a total of £155,000,000, spent entirely upon enterprises that are or should be reproductive. Of the remaining £70,000,000, the greater part has been spent upon harbors, docks, lighthouses, defense works, and immigration. All these things, with the possible exception of the last, are legitimate subjects for expenditure, and for expenditure which may reasonably be charged to loans.

To return to the railways. We find that upon a total expenditure of about £131,000,000, the annual net return in 1897 was £4,135,000, which is at the rate of 3.16 per cent upon the amount expended. Now, it is true that the loans of Australia cost the various countries at the present time about 3.82 per cent in interest, and it is therefore clear that a small annual charge falls upon the people in connection with their railways. But in regard to this point we must note that, in the first place, the colonies can now borrow at three per cent, and, as their loans fall due, will be enabled thereby to replace them at a lower rate of interest. Again, there have recently been several bad seasons, during which a scanty rainfall, followed by prolonged drought, has enormously reduced the traffic upon the railways. Railways have also been built ahead of settlement, and any consequent deficiency in revenue is likely to be of a temporary character. Should the colonies combine, as is expected, in the form of a federal union, the federation would be able to borrow money at a lower rate of interest than any individual colony. Lastly, assuming that the bonuses and subsidies given by the various colonies for the production and exportation of commodities will continue, as has been the case in the past, to lead to their production in a greater amount, an indirect benefit will fall upon the community through the increased traffic carried over the state railways. Upon these various grounds we may conclude that the colonies have in their railways an excellent form of investment which will progressively give greater returns, and we thus find that three fifths of the total expenditure has been in a satisfactory direction. Victoria alone feels any considerable burden in the payment of the interest upon its loans; and even there, though the railways were constructed most recklessly, they yield a net return upon their cost of 2.75 per cent: but the colony suffers also from the fact that an extravagant belief prevailed at one time about the suitability of the country for works of irrigation, and that large sums of money were squandered in an unreproductive manner.

Another criticism made against the governments of Australia and New Zealand is that the countries are a hothed of corruption. This is a matter about which no one who has not been directly connected with their politics can form a definite opinion ; and all that a visitor can do is to weigh the general considerations, and, by intercourse with all sections of the population, seek to arrive at the truth. In one respect the politicians of Australia and New Zealand are above suspicion. During the whole time that I was in the country, I did not hear a single charge of personal corruption brought against a member of any of the houses of Parliament; and I venture to think that when we see a high-class press and a high-class judiciary, we may assume that the general tone of the community is a good one.

I do not deny that some years ago there were distinct abuses connected with the civil services of the different colonies, and this is a matter which attracted Mr. Godkin’s attention. He makes one curious mistake. I had written in my book on Australasian Democracy that there were at one time twenty thousand persons, exclusive of railway employees, in the civil service of New South Wales, and Mr. Godkin, by an extraordinary slip, allowed the number to be published as two hundred thousand. But his principal error consisted in the fact that, while condemning the former state of things, he entirely failed to refer to the improvements which have since been effected. Had they come under his notice, they would certainly have caused a considerable modification of his argument. In describing these measures I shall take the case of New South Wales, not because its action has been unique or because matters there were in a particularly bad condition, but because it was in that colony that I had the opportunity to give the greatest attention to the subject. In 1888, then, as the reorganization of the railway administration had been rendered necessary by the excess of political influence, the absence of export control, and the construction of new lines without sufficient regard to the prospects for early remunerative traffic, the government passed a measure which placed all the railways and tramways in the country in the hands of a board of three railway commissioners, who were to be appointed by the governor in council. In order that the independence of these commissioners might be secured, they were given a fixed term of office, during which they could not be removed, except for misbehavior or incompetency, upon a vote of both houses of Parliament; and their salaries were charged to the consolidated revenue fund, which was permanently appropriated to the required extent. They were intrusted with the general management of the railways, and with the appointment (subject to the regulation governing entrance into the public service) and dismissal of all clerks, officers, and employees, whose salaries and wages, however, were subject to the vote of Parliament. Similar action was taken more recently in the case of the civil service, by the appointment of a public service board of three persons for a period of seven years, in the same way and with the same securities for independence as the railway commissioners. The board was charged with the duty of making a thorough investigation — which was periodically to be repeated — into the working of each department, and with fixing the number, grade, and salary of the officials. Future appointments and promotions were to be made by the governor in council upon a certificate of the board, subject to the regulations in regard to competitive examinations and the obligatory period of probation upon entrance into the service. It seems to me that the appointment of these independent commissioners is one of the most interesting facts connected with the development of democracy in Australia, and I maintain that there is nothing undemocratic in a system by which a democracy recognizes the dangers inherent in its rule, and divests itself voluntarily of some of its powers in the interest of pure and upright government.

Now, it was not to be expected that the commissioners would be able to remedy at once all the evils which had necessitated their appointment, or that they would be free from pressure at the hands of members of Parliament. Politicians are inclined to chafe at the restrictions which they have imposed upon themselves in their better moments, and the files of newspapers and parliamentary reports would show that the commissioners have had no easy or agreeable task ; but, in spite of obstacles, they have put down many abuses, and have earned the gratitude of Australians. That they have not immediately achieved the impossible does not in any way vitiate the value of the undertaking, or prove that the members of Parliament in Australia are any worse than the average of human beings.

I must protest against the tendency shown by so many people to judge the experiments carried out in Australia and New Zealand by an ideal standard which would not be applied to public men in any of the more individualistic countries. I do not maintain that there are no evils connected with the existing system of government in Australia. Even now, unfortunately, there is no adequate system of local government in New South Wales, and roads and bridges in many of the country districts are under the charge of the national government, with the inevitable result that pressure is brought to bear upon them by local members. In South Australia, Tasmania, and Victoria, no facts of a similar nature came to my notice. In New Zealand, the present ministry have been charged with misusing their power in the distribution of patronage. It was contended, for instance, that the police were largely under political management, and a committee was appointed which thoroughly investigated the matter. The existence of certain abuses was discovered, but a prominent newspaper, which is opposed to the government, admitted that they were not of a very grave character. Exception is taken also to the fact that the premier has accepted a salaried position on the board of a development company. Doubtless this action is to be regretted, but no suggestion is made that he has in any respect unduly favored the company with which he is connected, or relaxed the stringency of the mining laws. The difficulty of course exists in every new country that it is impossible to find men of independent means and leisure who will devote themselves to political life, and therefore it is not to be wondered at that ministers, whose tenure of office is uncertain, should seek positions which will secure to them a fixed income when they are relegated to private life.

As regards the length of time during which ministries remain in office, it is noteworthy that it has been extended since the financial crisis of 1893. In 1896 the ministries had all been in power for at least two years, and they have since been subject to no changes other than those resulting from the death or retirement of individual members. Hence we may infer that the people are realizing more and more the importance of continuity in policy, and that the representatives must have moderated their personal intrigues. Speaking generally, I am convinced that the ministers constituting the governments of Australia and New Zealand are of high personal character, and that state ownership of public services affords no greater opportunities for corruption than the distribution of charters and franchises to private companies. Nothing that I have seen during my stay in the United States has caused me to modify tny views.

Mr. Godkin believes that “ the growing paternalism, the sedulous care of the business interests of the masses, will end by diminishing self-reliance and increasing dependence on the state.” His belief is not borne out by existing facts. It is true that distributive coöperation has not become popular, owing partly to the migratory habits of people who inhabit a new country, and partly to the unwillingness of workmen who are in a prosperous condition to trouble themselves about infinitesimal profits. As regards coöperative production, it is to be found in butter and cheese factories, where the farmer who conveys his produce to the factory may also be a shareholder, and at the end of the year may receive a dividend on his shares and a bonus on the milk supplied, in addition to the established price. But of the general attitude of the working classes we can form a better opinion by looking at current statistics.

We find that, in spite of bad times, the number of depositors in the Australasian savings banks rose from 742,000 in 1891 to 895,000 in 1895, and the total amount of deposits from £19,000,000 to £26,000,000. Victoria and South Australia, which were followed closely by New Zealand, had the largest number of depositors in proportion to population, 29 and 24 per hundred respectively, and Queensland and New South Wales the highest average amount of deposits. In the three colonies, therefore, in which the paternal action of the government is carried to the furthest extent, we find the widest diffusion of an important exemplification of the spirit of thrift. I am far from suggesting a relation of cause and effect, as the amount of savings must depend largely upon the rate of wages, the abundance or scarcity of employment, the cost of living, and many other factors; and I merely point out that the policy in question does not appear to have deterred the working classes from individual efforts. They have also invested largely in friendly societies: South Australia takes the lead, with a membership exceeding one in ten of the population; Victoria comes next, with one in fifteen ; New Zealand has the largest amount of funds per member. Again, in 1895, the average amount of insurance per head of the population in Australasia was £20, the average sum insured per policy £285, and the average number of policies per thousand of the population 70. In the United States not more than 23 per thousand were thus insured. Statistics as to the number of freehold properties have not been completed for all the colonies, but New Zealand and Victoria have respectively 91,500 and 184,500 separate assessments of land. Considered with reference to total populations of only 700,000 and 1,175,000, these figures supply an additional reason for denying that Australians depend largely upon the state.

We may consider also the incidence of taxation. Is it such as to promote individual enterprise or to retard it? Let us take the case of South Australia and New Zealand. In South Australia direct taxation takes two forms. There is an income tax at the rate of four and a half pence in the pound up to £800, and of sixpence in the pound above £800 of taxable amount resulting from personal exertions, and at the rate of ninepence and one shilling in the pound respectively on incomes from property. Incomes between £125 and £425 enjoy exemption on £125 of the amount. Again, there is a tax on the unimproved value of land of one halfpenny in the pound up to, and one penny above, the capital value of £5000. We thus see that South Australia encourages work by placing a lower tax on the income which is derived from personal exertions, and at the same time encourages people to develop their estates, because the greater the amount of improvements which they have carried out, the smaller will be the proportion of the total capital value upon which the tax will be levied.

Similar taxation is to be found in New Zealand, and includes both a progressive income tax and a tax on land values which is more highly graduated than that of South Australia. The ordinary land tax is at the rate of a penny in the pound on all freehold property of which the unimproved value exceeds £500; between £500 and £1500, exemption is allowed on £500; between £1500 and £2500, the exemption decreases by one pound for every two pounds of increased value, being exhausted at the latter amount. Should the value exceed £5000 a graduated land tax is also levied, which rises progressively from half a farthing until it reaches twopence upon estates of the unimproved value of £210,000 and upwards. All improvements are excluded from the assessment of the taxable amount. They are defined to include “houses and buildings, fencing, planting, draining of land, clearing of timber, scrub, or fern, laying down in grass or pasture, and any other improvement whatsoever, the benefit of which is unexhausted at the time of valuation.” If the owner of the property is dissatisfied with Lhe assessment of the government, he can call upon them to buy it of him at their own valuation. In only one case has such an extreme step been taken ; and it is pleasant to find that it has resulted in an annual profit of nearly five per cent upon the outlay, and that the land which formerly gave employment to a few shepherds is now occupied by a large number of thriving settlers. I may add that when the government deem that an estate is not being developed as it should be by its owners, they are authorized by statute to purchase it — by negotiation if possible, otherwise at a price paid by an impartial tribunal — with a view to its subdivision into small holdings suitable to the requirements of the community.

This system of taxation, it will be said with some truth, is based upon the teachings of Henry George. He traveled in Australia and New Zealand, and was listened to with attention; but, while he looked to the ultimate absorption of the whole unearned increment, his hearers in the antipodes dissociated themselves from his conclusions, though they appreciated the value of his premises. Consequently, while accepting his principles, they did not hesitate to exempt small properties from the tax, and to increase its rate progressively in relation to the amount of the unimproved value. It was hoped by those in New Zealand who imposed income and land taxes in the place of the former property tax, that they would tend to promote the subdivision of large properties. Not that Australians or New Zealanders have any objection to wealthy men as such. They have no objection to the man who becomes wealthy by developing the natural resources of the country in a legitimate manner. The man to whom they object is he who becomes wealthy by control over monopolistic enterprises, or by the possession of large tracts of country which he does not develop, but holds until the advancement of the community shall have given to them an enhanced value.

Mr. Godkin seems to believe that it is the policy of the Australian governments to spend money continually on “ relief works,” and to keep large bodies of men in the permanent employment of the state. This is an incorrect view of the situation. A vast majority of the public works were carried out because they were regarded as serving the best interests of the community ; in very few cases were they dictated by the desire to provide employment, or undertaken upon the initiative of the trades-unionists. I found, during the course of my travels in Australia, that the Australian workingman has no sympathy with the loafer; he has no sympathy with the man who will not seek employment for himself, but expects the government to support him ; and one of the most hopeful signs of the day is that, with the help of the representatives of labor in Parliament, Australian governments have done much within recent years to mitigate the excess of population in the large towns, and to replace the unemployed upon the land. Of course mistakes have been made. In some cases settlers have failed through lack of agricultural knowledge ; in others, on account of the barrenness of the soil. In South Australia, the village settlements, which were avowedly started as an alternative to relief works, have been only a modified success. In New Zealand, village settlements have produced very satisfactory results. But, whether the experiments be actually successful or not, it is surely a good thing that the governments of Australia should do their best to turn the loafers of the towns into independent members of the community.

Such weakness as has been shown in the past may be due to the fact that the Australian is much more humane in his feelings than the Englishman. We in England have become accustomed to the idea that the vast mass of the working-class population in old age will be obliged to seek relief from the parish, and, without much remorse, we compel many of them to end their days in workhouses, where they are treated as prisoners. In Australia and New Zealand, a similar condition of things has never been regarded with equanimity, and a distinct line is drawn between the ablebodied and the aged. In Victoria, a labor colony has been established, with the entire support of the trades-unionists, to which the unemployed may be sent, and at which they receive, at a very low rate of wages, a course of instruction in agricultural pursuits which enables them subsequently to obtain private employment with farmers or others. In New Zealand, I found a very strong feeling among trades-unionists that it would be to the interest of the workingmen themselves if a penal colony were established, on the lines of those which exist in Germany, to which loafers might be sent, and at which they would be compelled to work, with the alternative of starvation.

So many charges have been made against the governments of Australia and New Zealand that I have thought it well to answer at some length those which seem to be most current upon the subject. As to the benefits which are obtained by the general population, they may be summarized in a few words. Let me assume that I am a New Zealander. In that case, I live in a country which is governed in the interests of the people, and not in the interests of monopolists, as England is largely governed in the interests of the ground landlords ; I live under an equitable system of taxation, the burden of which is in proportion, as far as possible, to the pecuniary capacity of the taxpayer. If I am anxious to settle upon the land, I can rent or buy land on favorable terms from the government. Owing to the existence of a vast number of freehold properties, I can be certain that no revolutionary measures will have any chance of acceptance, because so large a section of the population has a direct interest in the soil, and is likely to be conservative in the best sense of the word. As an owner of land or as a leaseholder, — assuming that I have carried out improvements upon my property, — I can borrow money from the government at a low rate of interest. If I am an urban worker, I have the benefit of stringent laws which protect me from abuses, whether I work in a factory or in a shop. Whether I am an employer or a workingman, I feel confident that there are not likely to be any violent disturbances in trade, because I am in a country in which, owing to the compulsory arbitration law, there has been no strike or lockout for a period of four years, and all industrial disputes have been amicably settled. If I want to insure my life, I go to the government, and I know that they can give me the best security. When I make my will, if I have no friend whom I can trust or no friend whom I wish to trouble, I can put my property with entire confidence in the hands of the public trustee. Finally, if I am living as an upright citizen of my country, though a poor man, I need have no fear of a miserable old age, because, when I have reached sixty-five, the government will give me a pension of seven shillings a week; and in the meanwhile I shall save as much as possible, in order that my own modest means, as a supplement to the allowance which I shall receive, may enable me to obtain something beyond the mere necessaries of life.

I do not assume that these reforms are undoubtedly or even probably applicable to different conditions existing in the United States ; but, as proposals for any extension of the functions of the state in this country are so often met by a vivid portrayal of the evils that have resulted in Australia and New Zealand, I have thought that a candid and impartial statement of the facts may not be without interest to American readers.

H. de R. Walker.