House of Representatives
4 October 1906

2nd Parliament · 3rd Session



Mr. Speaker took the chair at 2.30 p.m., and read prayers.

page 6093

QUESTION

APPOINTMENTS TO THE HIGH COURT BENCH

Mr JOHNSON:
LANG, NEW SOUTH WALES

– I desire to ask the Prime Minister whether the Government have arrived at any decision with regard to the appointment of additional Justices of the High Court?

Mr DEAKIN:
Minister for External Affairs · BALLAARAT, VICTORIA · Protectionist

– I cannot yet make an announcement to the House, but shall be able to do so shortly.

page 6093

QUESTION

DIFFERENTIAL RAILWAY RATES

Mr BATCHELOR:
BOOTHBY, SOUTH AUSTRALIA

– I wish to direct the attention of the Minister of Home Affairs to the following passage in the evidence of Mr. J. F. Martin, of Adelaide, given before the Tariff Commission : -

I do not think Federation is going to hurt us at all when we get worked into it. The difficulty is to work into a lot of things. For instance, the railways kill us. I will giveyou an instance of unfair railway business. We can send a harvester from Adelaide to Ballarat for £5,but from the border, on our side, not a harvester is dropped. If we want to send a harvester across the border to Mantura, we have to pay £10. There are no harvesters used between Melbourne and Ballarat. Mr. Tait, the

Commissioner in Victoria, was toosmart for our Commissioner. We wanted the thing altered, and our Commissioner wrote to Mr. Tait, who consulted with the manufacturers in Victoria, and they said, “Oh, no.” We can send them by ship for a little less.

I should like to know whether the attention of the Minister has been drawn to the condition of affairs described byMr. Martin, and whether he considers that conditions so manifestly in restraint of trade should be allowed to continue ?

Mr GROOM:
Minister for Home Affairs · DARLING DOWNS, QUEENSLAND · Protectionist

– My attention has not been drawn to the statement quoted by the honorable member ; but, at the present time, we are an communication with the Victorian Railways Commissioners upon the subject of the rates charged by them. I have just received a reply from them, but we are making further inquiries with a view to obtaining the fullest information.

page 6094

QUESTION

DESIGNS ACT

Mr TUDOR:
YARRA, VICTORIA

– I wish to know whether the Prime Minister can inform the House when the Designs Act will come into operation ?

Mr DEAKIN:
Protectionist

– I shall be able to inform the honorable member within the next hour or so.

page 6094

QUESTION

CASE OF CAPTAIN CROUCH

Mr JOHNSON:

– I wish to know if the Vice-President of the Executive Council has, in accordance with his promise given yesterday, ascertained whether the Minister of Defence is willing that thepapers in what is known as the Crouch Surrender Case shall be laid upon the library table?

Mr EWING:
Vice-President of the Executive Council · RICHMOND, NEW SOUTH WALES · Protectionist

– The Minister of Defence, as the honorable member is perhaps aware, is just now extremely busy ; but he assures me that he will look further into the matter immediately the pressure of public business is relaxed.

page 6094

QUESTION

TARIFF AGREEMENT : COMMONWEALTH AND NEW ZEALAND

Mr JOHNSON:

asked the Minister of Trade and Customs, upon notice -

  1. In view of the unfavorable report of the Committee appointed by the New Zealand Parliament to consider the proposed Reciprocity Treaty, is it the intention of the Government to proceed further with the matter?
  2. If not, will the Minister at once discontinue the collection of timber and other duties levied in anticipation of the ratification of the treaty, and refund all amounts collected to date?
Mr DEAKIN:
Protectionist

– The answers to the honorable member’s questions are as follow: -

As the duties are now being collected under resolutions both in New Zealand and Australia, such collection will be continued until the matter is disposed of in the New Zealand Parliament. If the treaty is ratified by that Parliament before this Parliament is prorogued, a Bill to give effect thereto will be introduced, but should this Parliament prorogue before any definite decision is come to, the resolutions of this House will lapse, and duties will cease to be collected thereunder, in which case all such duties collected to date will be refunded.

See answer to No.1.

page 6094

QUESTION

METEOROLOGICAL DEPARTMENT

Mr CROUCH:
CORIO, VICTORIA

asked the Minister of Home Affairs, upon notice -

  1. Whether, in the Meteorological Department about to be established, it is proposed to retain the services of those local scientific observers who have previously assisted the State Astronomers?
  2. Is it intended to pay them for such services?
  3. How many “Second Class Observation Stations” are there in Australia?
  4. Is it proposed to hand over the careful and exact scientific observation work done at these stations to post-office employés or other public servants, and will they be remunerated for their trouble ?
Mr GROOM:
Protectionist

– The answers to the honorable and learned member’s questions are as follow: -

  1. The organization of the Department of Meteorology can only be determined after the appointment of the Meteorologist, and upon consideration of such report as he may present. It may be assumed that it will be necessary for him to follow the practice that prevails in all countries of accepting the services of voluntary observers in various parts of Australia. 2 and 4. No decision can at this stage be given as to payment for services of either persons outside or within the Public Service.
  2. Inquiry will be made to ascertain an answer to this question.

page 6094

QUESTION

QUEENSCLIFF CANTEEN CHARGES

Mr MALONEY:
MELBOURNE, VICTORIA

asked the Minister representing the Minister of Defence, upon notice -

  1. In reference to his reply to questions re canteen charges at Queenscliff on the 2nd inst., and his statement that the lists for 1905 and 1906 are attached, as such lists do not give the information desired) will he direct that there be produced complete lists of charges for all articles sold at the Queenscliff canteen in July, 1905, and July,1906?
  2. Are the two separate lists as set out in Hansard 1906, page 1533, correct?
Mr EWING:
Protectionist

– The information desired will be furnished to-morrow.

page 6095

CONSTITUTION ALTERATION (STATE DEBTS) BILL

In Committee (Consideration of Senate’s Amendments) :

Clause 2 -

Section one hundred and five of the Constitution is altered -

by omitting the words” as existing at the establishment of the Commonwealth, or a proportion thereof according to the respective number of their people as shown by the latest statistics of the Commonwealth,” and inserting in lieu thereof the words “or any part thereof “ ; and

by inserting, after the word “convert,” the word “ redeem.”

Senate’s amendments. -

After clause 1, insert new clause - “1a. The Constitution is altered by the ad dition of the following section : -

The powers of the Parliament relating to the public debts of the States shall extend to debts incurred since the establishment of the Commonwealth. ‘ “

Leave out clause 2.

Sir JOHN FORREST:
Treasurer · Swan · Protectionist

– I verymuch regret that the proposals of the Government, which were approved by this House, with regard to the amendment of section 105 of the Constitution were not agreed to bythe Senate. The practical effect of the Bill as it has come back from the Senate, is to eliminate from section 105 of the Constitution the words “ as existing at the establishment of the Commonwealth.” The section, if amended as proposed, would read -

The Parliament may take over from the States their public debts, or a proportion thereof, according to the respective numbers of their population, as shown by the latest statistics of the Commonwealth, and may convert, renew, or consolidate such debts or any part thereof.

It seems extraordinary that the House should be unanimously in favour of an important measure of this kind, and that in another place so much exception should be taken to its provisions.

Mr Wilks:

– Is not the Minister going to oppose the amendment?

Sir JOHN FORREST:

– No.

Mr Wilks:

– What will be the use of the Bill as amended?

Sir JOHN FORREST:

– I think that it will be of great use. At the same time, I regret that the Bill which was unanimously accepted by this House should not have found favour in another place. This is a purely financial matter, and all parties wish to carry out the spirit of the Constitution with regard to the taking over of the States debts with the object of effecting a considerable saving for the States, and firmly establishing the credit of the Commonwealth. This was one of the objects of Federation which was prominently placed before the people when the Constitution was being considered by the several Federal Conventions. As honorable members are aware, section 105 was very carefully considered at the Conventions, and, in view of the important part that it played in connexion with the acceptance of Federation by the people, no one would desire to ruthlessly or carelessly lay hands upon it. Honorable members will, of course, recollect that under the Constitution the Commonwealth was authorized to take over the States debts as they existed at the establishment of Federation. These debts amount tosomething like £202,000,000. The Bill as it is proposed to be amended by the Senate would enable us to do as we desire, namely, to take over, not only the debts as existing at the time that Federation was established, but those which have since been incurred by the States, and which represent an addition of £34,000,000 to the amount previously mentioned. This Bill will empower the Commonwealth to take over an additional£34,000,000 upon exactly the same termsas we are empowered by the Constitution to take over £202,000,000.

Mr Fisher:

– Or more.

Sir JOHN FORREST:

– Yes. The Bill, in the form in which it left this Chamber, contained power to take over, not only the debts which exist to-day, but those which may be incurred hereafter.

Mr McLean:

– Will the Bill, in its present form, enable the Commonwealth to take over debts which may be incurred hereafter ?

Sir JOHN FORREST:
Treasurer · SWAN, WESTERN AUSTRALIA · PROT; WAP from 1906; LP from 1910; NAT from 1917

– Yes, if Parliament chooses to do so.

Mr McLean:

– I do not think so.

Sir JOHN FORREST:

– I am satisfied. However, that matter is not so urgent as is the acquisition of power by the Commonwealth to take over the whole of the existing States debts. I do not think we should object to the form in which the measure has been returned from the Senate, even if it does not go so far as some honorable members would like, because at the present time we have power to take over States debts to the extentof £202,000,000, and theBill merely declares that we shall be empowered to take over an additional ^34,000,000 upon the same terras.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– What is the good of taking over that additional sum unless we can operate?

Sir JOHN FORREST:

– If the honorable member will defer his question until I have concluded my remarks, I shall be very glad to answer him to the best of my ability. I repeat that, under section 105 pf the Constitution, we have power to take over ^202, 000,000 of the States debts, and this Bill merely provides that we shall be empowered to take over an additional ^34,000,000 upon similar terms. I have prepared a short paper setting out the procedure that will be followed in the taking over of the whole of the debts, should this Bill become law, and be assented to by the people. That procedure would be as follows: -

  1. An Act of the Federal Parliament will be required to be passed authorizing the taking over of the whole of the States debts on a date to be named in such Act.
  2. From the date named the Commonwealth will become solely liable to the bond-holders for the annual payment of interest and sinking fund (if any), as well as for the redemption of the debts on maturity.
  3. From the same date the Commonwealth will occupy in relation to such bond-holders the exact position previously occupied by the States, and will have sole control of all operations for conversion before maturity, or redemption at maturity, as may be thought fit.
Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That cannot be done without the consent of the bondholders.

Sir JOHN FORREST:

– Surely it can.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It cannot.

Sir JOHN FORREST:

– Then the words of section 105 of the Constitution are without meaning.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The Commonwealth can convert the debts only when they fall due. It cannot do so whilst they are current.

Sir JOHN FORREST:

– If the honorable member will only permit me to proceed without interruption I shall be obliged. We do not intend to convert without the consent of the bond-holders, but we shall have to convert o>r redeem at maturity. We shall convert if we can make a reasonable bargain with the bondholders, but if not we shall have to pay them off when the loans mature.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The Treasurer says that the Commonwealth will be solely liable to the bond-holders.

Sir JOHN FORREST:

– I say that it will occupy the position which is at present occupied by the States. It is waste of time to be hypercritical over this matter.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– All we ask is that the Treasurer shall be accurate.

Sir JOHN FORREST:

– My statement is, I believe, strictly accurate. My paper proceeds -

  1. The designation of the State stocks will not be changed, but will remain as at present, namely, New South Wales stock, Victorian stock, Queensland stock, Sc., &c, and will not have the Commonwealth brand fully upon them, or bear the name “ Australian consols “ until conversion.
  2. The opinion expressed by the financial authorities consulted by the Treasurer in London that the Australian consols would in time, if not immediately, command a higher price than States stocks of the same denomination and currency, was based not upon any doubt as to the’ ability of the States to meet their existing obligations with regard to their public debts, but upon the advantage of having one uniform stock of large volume, in which transactions would be numerous for investment purposes, which would soon become more popular, and would consequently command a higher price.
  3. The Commonwealth will deduct each year from any amount to be paid to each State, the expenditure made on behalf of that State, for interest and sinking fund [vide section 87 of the Constitution), and if such amount is insufficient in any case, the difference will be paid to the Commonwealth bv the State (vide section 105 of the Constitution).

I have no fear that any amount which may be due to the Commonwealth by the States will not be paid. I believe they will be just as anxious to pay the interest on their public debts through the Commonwealth, as they are to pay them direct to the bond-holder. Further, the alteration may have a good effect in the .minds of some persons, inasmuch as the Commonwealth Treasurer - realizing that the States have a considerable amount of interest to pay to him upon prescribed dates - will do his best to make the amount as small as possible, and will do his best not to embark upon avoidable expenditure which would make the burden upon the States, in respect of the payment of interest, greater than was absolutely unavoidable. What does placing the “ Commonwealth brand “ upon the States debts mean ? It is an expression which was used by me in connexion with the scheme for solving the financial problems of the Constitution which I submitted to honorable members on behalf of the Government in the Budget speech. It may be said that for all practical purposes the brand of the Commonwealth is upon the States debts now, but, if this is so, the price does not seem to have materially increased in consequence. Nobody will suggest for a moment that the Commonwealth would permit anything to interfere with the solvency of the States. I can make that assertion with the greater freedom because I am quite satisfied that the States are fully able to pay all their obligations. Therefore, in saying that the Commonwealth brand is upon the States debts now, I am merely saying what the Constitution itself provides, namely, that the Commonwealth shall be the protector of the States.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Only a moment ago the Treasurer said that he did not intend to put the Commonwealth brand upon the States debts. What does he mean?

Sir JOHN FORREST:

– Imean that it may be said that, theoretically, but not actually,the Commonwealth brand is already upon the States debts. As soon as we take over these debts the Commonwealth brand will, legally and in reality, be upon them.

Mr Harper:

– Or as soon as we take over any part of them.

Sir JOHN FORREST:

– I am dealing with the whole of the debts. I know that public opinion is opposed to the Commonwealth taking over only a portion of the debts.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– What does “ take over “ mean ?

Sir JOHN FORREST:

– In this case it will mean the passing of an Act authorizing the taking over of the whole of the States debts from the date named in such Act. and from that date the Commonwealth will become solely liable to the bond-holders for the annual payment of interest and sinking fund, if any, as well as for the redemption of thedebts on maturity.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– And as to the bond-holders ?

SirJOHN FORREST. - The bondholders will not mind whether’ they receive their interest through A orB, so long as theygetit. It is generally supposed that as soon as the Commonwealth takes over the debts there will be alarge increase in the price of our bonds owing to the enhanced securitygiven by the Commonwealth, and that that increase will go to the bond-holder. My own opinion is that until the designation or nomenclature of the bond is changed there will be no great increase in its value. The reason why the financiers in London consider that Commonwealth consols will command a higher price than State stocks is not because the security offered by the States is not sound, but because of the advantage which will be conferred by the establishment of a uniform Australian stock of large volume in which transactions would be numerous for investment purposes. It has been said that the powers conferred by section105 of the Constitution are insufficient. All the arguments which I have heard advanced in regard to that point at conferences and elsewhere are to the effect that that section does not permit of the whole of the States debts being taken over by the Commonwealth. That seems to have been the principal difficulty. The Bill, even as amended by the Senate, will overcome that disability.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– It will not. The Senate’s amendment will prevent us taking over the whole of the debts.

Sir JOHN FORREST:

– The honorable member is absolutely in error. We should have to take over the whole of the debts at the one operation, but would not alter their designation until they had been converted. South Australian stock. New South Wales stock, and all other States stocks would remain as they are, except that the Commonwealth would pay the interest, and guarantee the redemption of the stock.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I doubt whether that would be a taking over of the debts.

Sir JOHN FORREST:

– I have no doubt whatever on that point. There is nothing in the Constitution requiring us, on taking over stock, to alter its designation. It would be improper, even if it were possible, for the Commonwealth to say to a holder of State stock, “ You are the holder of Victorian stock, and we are going nolens volens to take it from you and substitute Commonwealth stock for it.” Nothing of thissort is contemplated. The principal reason why action has not been taken during the last six years is that it was considered advisable that when we dealt with the debtswe should take over the whole of them.

Mr Glynn:

-I expressed that view at the Convention, but the right honorable member did not share it with me.

Sir JOHN FORREST:

– I fully recognise that if we could, for a considerable period, induce the States to cease borrowing on the London market, so as to enable our stock to become popular, and secure an enhanced price, a great advantage would be reaped. Whatever my opinion may be, the public opinion is almost unanimous that we should take over all the existing debts.

Mr Carpenter:

– Does the right honorable gentleman think that, if we did so, the States would cease borrowing?

Sir JOHN FORREST:

– At the Hobart Conference, the representatives of the States said that they would refrain from borrowing, except through the Commonwealth, on . the London market. Our great object is to take over the whole of the debts on the London market, and to gradually convert them into one Commonwealth stock. Two reports, which have been placed on the table of the House, indicate the pronounced advantage which would accrue to the States, even if in issuing new stock, we are able to raise it i per cent, better than the States. Such a saving, together with interest, would amount, in 1952, when the last loan would mature, to ,£27,000,000. Every one desires that this step shall be taken as soon as possible, and I have not the slightest doubt that we shall be able to borrow to much better advantage than the States, and to save more than J per cent. That is the view at which I arrived after discussing this question with the financial authorities in London. In these circumstances, therefore, I would urge upon honorable members the desirableness of our taking immediate steps to effect this great saving. Not one penny of the money so saved will go into the coffers of the Commonwealth.. The total saving will go to the States. I mention this fact to show that our sole desire is to act only as intended by the Constitution, and to improve the position of the States.

Mr Fisher:

– Would there be any harm in saying that the advantage would go to the people of the Commonwealth,?

Sir JOHN FORREST:

– No; the people of the Commonwealth and the people of the States are one. An attempt has been made to show that there is a difference between taking over ‘the whole of the debts at the one time, as we should have to do under the Bill as amended, and taking them over gradually, and net becoming legally responsible for them until each debt matures. Personally, I should favour the adoption of the latter course.. The designation of the debts would remain unaltered, but the Commonwealth would become responsible for them. Unfortunately, however, we cannot take them - over gradually. The members of another place seemed to be suspicious that more was. intended than was said. I can only say that there was no intention on the part, of the Government to do more than weindicated.

Mr Batchelor:

– Then why not giveanother place an opportunity to reconsider its decision.

Sir JOHN FORREST:

– We shall later on be able to consider that point. Although I favour the gradual taking over of thedebts of the States, I recognise that, having regard to’ our bounden duty, we should be prepared to accept the Bill as amended by the Senate, rather than allow the matter to remain in abeyance for another threeyears. If it were allowed to stand over, the probability is that new difficultieswould arise, and that much dissatisfactionwould be. caused. I am therefore prepared! to agree to. the Senate’s amendment, and to risk the chance of our incurring a slight loss as the result of the bond-holders being, able, between now and the date of the maturing of the loans, to secure an enhanced! price for their stock. I am not sure that it would be a bad thing for us if, as the outcome of some Stock Exchange convulsion, Australian bonds were increased in. value by 1 per cent, or 2 per cent. I should not care who secured the benefit of that increase; I should know that outcredit had been enhanced. In dealing with a question of this magnitude, we cannot afford to consider whether some individual may benefit to a small extent. The Constitution intends that the States debts shall be taken over, and we simply ask now that we shall be allowed to do that which the people as a whole demand of us; that ‘we shall be permitted to take over the total indebtedness, amounting to ^202,000,000, as at the date of Federation, as w.ell as the debts, amounting to ^31 ,000,000, since incurred. If we take over these debts, there will be nothing to prevent our holding out to bondholders the same inducement that we could offer them if we took them over piecemeal..

Mr Watson:

– That is hardly so.

Sir JOHN FORREST:

-We shall have control of debts amounting to ^236,000,000.

Mr Watson:

– As soon as we take them over the increased value_ will accrue to the bond-holders.

Sir JOHN FORREST:

– What I said was that we should be free to make arrangements with the bond-holders.

Mr Batchelor:

– As soon as we take over the States debts they become Commonwealth stock.

Sir JOHN FORREST:

– That is not so. The Commonwealth will become, liable to pay the interest and to redeem the stock, but the designation of the stock will not be changed. If we have Victorian 1884’s, Western Australian 1893’s, and so forth, the price obtained for them will not in my opinion be as good as that which would be obtained for one Commonwealth stock, which after thirty years would be interminable. . When we obtain command of the stock we can treat with the bondholders equally as well under the Bill as amended as we could under the original proposal. We could convert any of the debts of the States, and on their reaching maturity we might either exchange them for a Commonwealth stock, or pay them off out of a fund raised by the sale of Australian Consols. The only alternative to the acceptance of the Bill as amended bv the Senate is to defer dealing with this question for another three years.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The alternative is to secure the passing of the Bill as introduced.

Sir JOHN FORREST:

– How can we do that?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We might, at all events, try.

Mr Deakin:

– We are told that it is hopeless.

Sir JOHN FORREST:

– I should certainly prefer to see the Bill passed as introduced in this Chamber, but rather than allow the whole question to be shelved for another three years, I am prepared to accept the Bill as amended.

Mr Higgins:

– There is no urgency as to taking over the debts incurred since 1. 90 1. The Commonwealth at present has power to take over all the debts up to that year.

Sir JOHN FORREST:

– There is a large sum maturing next year, which was borrowed since 1901.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Only TreasuryBills.

Sir JOHN FORREST:

– Even Treasury Bills have to be met.

Mr Carpenter:

Mr. Bent does not wish us to interfere in regard to them.

Sir JOHN FORREST:

– I am opposed to anything being done which will have the effect of preventing a referendum on this subject for three years to come. If that result is to occur, let the responsibility be on another place. If the Commonwealth could borrow at J per cent, less than the average rate paid by the States, £1,388,000 would be saved by the conversion of the debts coming due in 1907.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– There is nothing in the Constitution to prevent that.

Sir JOHN FORREST:

– Still we should not be able to make arrangements with the States in regard ‘to their non-borrowing in London, and other matters, .about which it is desirable to come to an agreement. In my opinion, it is the desire of the people of Australia that the Commonwealth shall, take over the whole of the debts of the States, and it is to carry that desire into effect that the Government have moved in this matter. The present is the best time to deal with i’t. Let us not seek to put it off to “a more convenient season.” It must be remembered that we are merely asking that the question may be referred to the people. Parliament can do nothing in the matter until the people have agreed to an amendment of the Constitution which will allow the Commonwealth to take over the debts incurred since Federation, as well as those which had been incurred when the Union was formed. I would rather pass the Bill as the Senate wish to amend it than lay it aside altogether.

Mr Tudor:

– Why not re-insert the original provision?

Mr Batchelor:

– The whole Committee would support that course.

Sir JOHN FORREST:

– I do not think that the Senate would accept it, and the measure is too important to be wrecked.

Mr Batchelor:

– It will be wrecked if the original provision is not restored.

Sir JOHN FORREST:

– Then those responsible must take the blame.

Mr Watson:

– The responsibility for wrecking the present proposal would not be very much. It is not worth the paper it is written on.

Sir JOHN FORREST:

– Whatever is determined upon, we should use every endeavour, in the interests of the people of

Australia, to put the measure on the statutebook this session. I move -

That the amendments be agreed to.

Mr HIGGINS:
Northern Melbourne

– I was glad to hear the Treasurer say’ that he prefers the original provision to that of the Senate. I share with him the regret that any alteration has been made in the measure. There are two defects in the proposal before us. In the first place, it does not empower the Commonwealth to deal with debts incurred by the States after we have exercised the power of taking over the present debts. As I read the amendment, if in 1907 the Commonwealth took over all the debts incurred up to that time, it would not have power to take over any that might be incurred afterwards.

Sir George Turner:

– The Treasurer says that it would have the power.

Sir John Forrest:

– Is the honorable and learned member for Northern Melbourne sure on the point?

Mr HIGGINS:

– I am sure about nothing in law ; but as I read the provision there is not much doubt about it. In the second place, the Bill, as amended, will not allow us to take over the debts of the States in a piece-meal fashion, choosing and picking with regard to the state of the market, and the bargain that we can make. It is to this second defect that I shall ask honorable members to devote their attention for a few minutes. Under the Bill as amended we must take over all the debts of the States at one swoop.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Or proportionately.

Mr HIGGINS:

– That is true, but no Minister would think of taking over the debts in proportion to population, so that I put that proposal on one side as impracticable. The Treasurer has franklyannounced that if he had to administer the measure as amended by the Senate he would take over all the debts at one swoop. Under the Bill as it left this Chamber, the Commonwealth might take over such debts or such portions of debts as it might choose. A great deal would depend on. the state of the market, and the terms upon which a conversion could be made.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I think that the intention was to take over all the debts of the States as they became due.

Mr HIGGINS:

– Under the Bill as amended by the Senate, the Commonwealth could take over the debts of the Statesonlyunoflatu; it would not have power to take over one debt one year and another another.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does the honorable and learned member think that the Constitution empowers the Commonwealth to take over debts unless it is going to do something with them?

Mr HIGGINS:

– I do not; but I am not going to hang my argument upon that point. I think that the intention was that the debts should be taken over only for the. purpose of conversion or redemption. But I wish to steer a narrow course. The honorable member for North Sydney asked very pertinently when the Treasurer was speaking, what is the meaning of ‘ ‘ take over” ? The expression is a loose one; it is neither technical nor accurate, but merely a debating expression which, as such, was thrust into the Constitution by the Convention. I feel convinced that it does not mean that we can compel bondholders to accept the Commonwealth as their debtor in place of a State. There could be no intention to compel bondholders to accept a new debtor. As I understand the Constitution, the words mean that the Commonwealth puts itself under an obligation to the States to see that their debts are paid. To my mind, there is no need for the expression in section1 05. What was really desired was to give the Commonwealth the power to convert, or to pay off, the debts of the States; to say to the creditors, “ Here is your money,” or, “ Here is, our stock.” But as the words “ take over” have been used we shall have to work out our scheme by adopting the principle of faking over only at the time of conversion.

Mr Harper:

– Could we not determine by legislation to take over the whole or a part of the debts of the States ?

Mr HIGGINS:

– Of course, the bondholder might be got to agree to accept a new debtor.

Mr Harper:

– He would not come into the case; it would be an arrangement between the Commonwealth and the States.

Mr.HIGGINS. - The Commonwealth and the States could not arrange matters between themselves without reference to the rights of the bond-holder.

Mr Harper:

– They would not seek to interfere with those rights. If the ar- rangement were made, the bond-holder would have both the States and the Commonwealth as a security.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– So that he would get an advantage.

Sir George Turner:

– In any case, he will receive only his principal and interest.

Mr HIGGINS:

– I wish to accept the position, taking the words as they stand, and to put before the Committee as shortly as I can a view which I have held in regard to the subject for some years past. We should not take over any obligation unless we get something for it. The Commonwealth should not back the bills of the States unless it gets something for it. Two classes of considerations would induce bond-holders to agree to convert. In the first place, they would consider the benefit that would be conferred upon them bv having a large uniform stock for a longer term, and with a sinking fund provision in connexion with it. The advantage of a large uniform stock in a market like London - stock which would cover, perhaps,, £250,000,000 - must be apparent to any one acquainted with finance. Then there would be another consideration, namely, the Commonwealth backing, which would be 06 material advantage to the bond-holders, particularly in connexion with the sales of stocks. If the Treasurer is coerced into accepting the proposal of the Senate, we shall have to give our Commonwealth backing to the bond-holders for nothing. After all, conversion is a mere exchange. In place of a certain piece of property ‘held by A, you give him a certain other piece of property, but you do not, before you agree to the exchange, increase the value of that which you give to A.’ If two boys are swopping tops, it is not expedient for one boy to improve the other boy’s, top before he makes the exchange. We ought not to give away for nothing the Commonwealth guarantee in regard to the States debts. I wish to present a concrete instance or two in order that I may make mv point quite clear. From the list of debts supplied to us in connexion with the Budget papers, I find that a Queensland loan, amounting to £11.728,800. falls due in 1915. The loan carries 4 per cent., and the annual interest payment amounts to £469,152. If that interest charge could lie reduced bv I ner cent., we could save Queensland £58,644 per annum.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Not if Queensland could obtain the money for herself at 3^ per cent.

Mr HIGGINS:

– I am assuming that we could induce the bond-holders to take 3^ per cent, instead of 4 per cent, bonds at par. Other things being equal, if we could reduce the interest charge by per cent., we should save upon that Queensland loan £58,000 per annum.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The honorable and learned member means that that saving would be effected during the currency of the loan?

Mr HIGGINS:

– I am coming to that point. I am not shirking anything. The Joan referred to falls due in 1915. Suppose that when the loan was approaching maturity, that is, in 1912, we could convert it. Thos.e who have had more experience in finance will agree with me that it is by no means improbable that a large body of the bond-holders would be willing to convert three years before maturity. The advantage of obtaining bonds having a long term, a sinking fund, and the guarantee of the Commonwealth of Australia behind them, apart from the question of their forming portion of a large uniform stock, would attract a great many of a certain class of investors in London. Let us assume that in 1912 we could go into the market and give the bond-holders an opportunity to exchange their bonds for Common wealth 3^ per cent, stock. If the whole of the loan could be so converted, a saving of £58,000 per annum would be effected, and for the three years of the remaining currency of the original loan the saving would amount to £175.932. I say with confidence that, although it is not likely that we could, a long time beforematurity, make a big conversion, we could,, several years before due date, make. some;, if not large, conversions.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– We might be able to make one conversion to-day.

Mr HIGGINS:

– Yes. There are two classes of bond-holders. In the first place there are the speculators who buy for a rise, and, in the second place, trustees and so forth. There is a third class of investors who do not operate much at present in Australian bonds, namely, men of business, who use consols for the purposes of financing. Possibly, we shall be able to induce some of these last investors to deal in our bonds when we can offer them a lar ge uniform stock. It appears to be assumed that, under no circumstances, could we effect a conversion before the due date of the loans. I join issue upon that point.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The honorable member thinks we can effect partial conversions.

Mr HIGGINS:

– Yes; and a partial conversion would still give us a great advantage in the reduction of interest.

Sir John Forrest:

– The bond-holders may say “We shall wait because you will have to come to us directly.”

Mr HIGGINS:

– Yes; but in connexion with a loan of £11,000,000, there may be thousands of bond-holders. Some of these will, no doubt, say “We shall wait,” but those who hold the stock in trust for charities, or infants, and so forth, when they see that the Queensland bonds are falling due in three years, and that they will have to look out for some new investment, will perhaps say: “We should like to take even a lower percentage of interest in respectto a stock backed by the best security that Australia can offer, and having a term of thirty years, with no power of redemption even after the thirty years has expired, except upon certain notice.” Honorable members will agree that a number of investors would prefer a large uniform stock for a long term, with a sinking fund, and the Commonwealth backing, to bonds of £100 at par, bearing 4 per cent., but with only three more years to run.

Sir John Forrest:

– We might convert now.

Mr HIGGINS:

– No; there would be no power to do that under the present proposal.

Sir John Forrest:

– Yes; there would, if we took over the debts.

Mr HIGGINS:

– If, as the Treasurer proposes, in the year 1907, the Commonwealth took over the whole of the debts, including the £11,000,000 to which I have referred, and in 191 2 the Treasurer went into the market, and asked the bond-holders to convert their bonds falling due in 1915, they would say, “ Thank you for nothing. The Commonwealth brand is on our bonds already.”

Sir John Forrest:

– We contendthat they will say that in any case.

Mr Henry Willis:

– What would be the position if we paid them off?

Mr HIGGINS:

– The honorable member has not followed my figures. I am speaking of a conversion in 191 2, three years before the bonds fall due. The Treasurer could not pay off the bondholders in that year. Suppose that in 1912 the Treasurer wished to convert the loan to which I have referred, and mentioned the Commonwealth backing as a consideration which should induce the bond-holders to consent to the conversion, the latter would, if his present proposal be adopted, say, “ The Commonwealth backing is here already.” The Treasurer grasped this fact when he was in London. His memorandum contains the following passage : -

The financial authorities whom I consulted in London were unanimous in the opinion that it would be disadvantageous to place the Commonwealth brand on State stocks before conversion, as such action would prevent the possibility of any profitable conversion, and would be making to the existing holders a present of any increase in price caused by the additional Commonwealth security.

What is the Commonwealth brand? If I may judge from what the Treasurer has stated in his memorandum, he thinks that it is the word “Australia” - that unless we stamp “Australian consols,” or something similar, upon a bond, the Commonwealth brand is not upon it. May I suggest that there is more than one mode of branding stock, just as there is more than one method of branding sheep. Let us suppose that the big investors in London - who are very well advised - know that Western Australian, Tasmanian, Victorian, and New South Wales bonds are all liabilities of the Commonwealth - that the Commonwealth, by Act of Parliament, has incurred the obligation to pay those bonds - it will not matterto them whether they are Victorian 4 per cents., Tasmanian 4½ per cents., or Western Australian 3 per cents. They will know that they are Commonwealth stock.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– They will be secured by the Commonwealth guarantee.

Mr HIGGINS:

– Exactly. The Treasurer has stated that the Commonwealth brand is upon the States stocks at the present time. With all respect, I venture to dispute that statement. There is no legal obligation on the part of the Commonwealth, and the point at issue is, “ Upon whom does the legal obligation rest? “ If we agree to the amendment which has been inserted in this Bill by the Senate, the brand of the Commonwealth will be placed upon the States’ stocks. The point which we have to consider is not what we may think, but what will be thought in London.

Mr Fisher:

– The States’ stocks are approaching uniformity at the present time.

Mr HIGGINS:

– Quite true; at the same time, there are differences between the values of States stocks. The experience of years is that New South Wales bonds command a higher price than do Tasmanian bonds.

Mr Fisher:

– They are rapidly approaching an equality in value.

Mr HIGGINS:

– I am very glad to hear it. The Treasurer is perfectly right when he says that the Commonwealth backing will be better than any other backing. To my mind that is indisputable. We have to pay regard, not to what we know of these States - not to the fact that they are perfectly solvent, but to what others maythink, and Ave have to cater- for. their opinion. After all, the value of our bonds is a matter of opinion, and we have to meet that opinion as far as possible. When the bond-holders in London know that the States stocks are to be backed by the whole Commonwealth, .that provision has been made for the establishment of a sinking fund extending over a long term, and for the redemption of the loans after a certain period-

Mr Watkins:

– Do not the bond-holders know that the Commonwealth guarantees the States debts now?

Mr HIGGINS:

– No. Neither do we know that. There is nothing in the Constitution which binds the Commonwealth to maintain the solvency of the States. Let me give still another instance. In 1920, a Tasmanian loan of £5,206,500, bearing interest at 3 *</inline> per cent., will fall due. The annual interest charge upon that loan is £186,478. If by any means the Commonwealth were able to secure a- reduction of only 1 per cent, in that rate of interest, it would mean a saving to Tasmania of £25,000 per annum - a very material consideration. Fortunately. Tasmanian secuities at the present time are sound in the London market. But it should be recollected that we have passed through very severe crises, and that under present conditions there is no country in the world which is more liable to huge fluctuations than is Australia. The right honorable member for Balaclava had to steer Victoria through a most difficult period, and I recollect that he had to look closely at every item of expenditure in order to make ends meet. We all sincerely hope that we shall never again have to pass through such a severe crisis. Nevertheless, it is quite possible that we may have to undergo a similar experience. I have heard Tasmanians say with great emphasis that that State cannot stand the burden of taxation which is at present imposed upon it, owing to the loss which it has sustaine in its Customs revenue. Now, let us sup pose that in 19 12 the Common wealt thought it expedient to attempt to conver. the Tasmanian loan to which I have referred, or as much of it as possible. Surely at would represent a great gain to that State if the Commonwealth could reduce the rate of interest by even h* per cent. ? Assuming that we could not '(jet all the bond-holders interested in the loan to exchange their bonds for Commonwealth stock, we might induce a majority of them to do so. Of course, we all recognise that bond-holders will not exchange their security unless they receive in return something which is as good in the open market. What they would get in return in the case which I am putting would be a longer term for the loan, a uniform stock, a sinking fund, and the backing of the Commonwealth. We might advertise in London that all bond-holders interested in the Tasmanian loan of £5,000,000 odd which will mature in 1920. who wished to exchange their slock- for Commonwealth consols, bearing per cent, less interest for a longer term, might do so by application at the office of the High Commissioner before a certain time. That would be a most desirable result to bring about if we could accomplish it. But the Bill in the form in which it has been amended bv the Senate would not permit us to do that.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– Hear. hear.

Mr HIGGINS:

– I am very glad that the honorable member for South Sydney approves of what I am saying.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– I want the Bill as it left this House.

Mr HIGGINS:

– I can assure the Trea surer that if he would return the measure to the Senate in its original form, the members of that body would not be so unreasonable - when the position had been more fully explained to them - as to deny him the power which he seeks. I am thoroughly in accord with the desire of the Minister to get the measure passed. But I wish to get a Bill which will be useful. I cannot see anything particularly urgent in the matter of obtaining power to take over the £^31,000,000 worth of States debts which have been (incurred since 1900. We ought not to seek to amend the Constitution unless we have some very urgent and important reason for doing so. It is much more urgent that the Treasurer should be enabled to make use of the conditions of the money market, and to operate whenever he finds a suitable time for converting.

Mr Henry Willis:

– Under the Bill, would he not have power to convert those millions next year?

Mr HIGGINS:

– No. Assuming that we take over - as he now proposes - all the debts existing in 1907, when he wishes to convert them in 19 12, the bond-holders will say, “ No, thank you. We have your obligation to pay already. We look to you and not to Tasmania.”

Sir John Forrest:

– We should have to pass an Act of Parliament, and that would make the whole matter public property. Nothing of this kind can be kept secret, as legislation is necessary.

Mr HIGGINS:

– There is no occasion for an Act of Parliament to be passed specifying that any particular loan is to be taken over. Then I find that in 1916 South Australia has a loan of £8,646,545, bearing interest at 3 j per cent., falling due. The annual interest charge upon that, loan is nearly .£300,000. If the Commonwealth were able to reduce the rate of interest chargeable upon, it by i per cent., it would relieve South Australia of the payment of about £39,000 annually. My point, therefore, is that we must not take over the debts before conversion, because the mere act of taking them over will give them the Commonwealth backing. We should never back the States bills unless we can secure better terms - unless we can say to the bond-holders, “ If you wish to secure the Commonwealth backing we will give it to you, but it must be upon our terms.” If we do what the Treasurer proposes we shall be giving the Commonwealth backing to the States debts for nothing. He proposes that an Act shall be passed authorizing the taking over of the whole of the States debts on a date to be named in. such Act. That means a holus- bolus taking over of the debts. He further proposes that from the date named the Commonwealth shall become liable to the bond-holders for the annual payment of interest and sinking fund, as well as for the redemption of the debts on maturity. The honorable member for North Sydney saw the weakness of those proposals at once, and inquired how the Commonwealth would be liable. I think that the Treasurer means that the Commonwealth should become responsible to the States for the payment of their interest charges, as well as for the redemption of the principal when it falls due.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I think that the words of the Treasurer were that the Commonwealth would become “ solely liable to the bond-holders.”

Mr HIGGINS:

– What is to be done in these circumstances? The only proposal made by another place is that, in addition to the power to take over at the one operation £202,000,000, we should be at liberty to take over the debts, amounting to £31,000,000, incurred since Federation. What is the urgency so far as the transfer of the last named debts are concerned? We shall gain nothing. If the Minister caused the Bill to be restored to the form in which it left this Chamber for another place, we should have power, when the state of the market permitted, to take over loans, or such parts of loans, as we saw fit. In that event, some gain would be secured. My desire is that the Treasurer shall have a free hand. I have great confidence in his skill, and his capacity to deal with these matters. The closeness of the attention that he has given to them has provoked nothing but admiration from all sides. In order, however, to secure the passing of the Bill this session he is prepared to jettison the whole of the valuable cargo. If the Bill does not give us power to deal with each loan, and each part of the loan, it will be of no value.

Mr Henry Willis:

– Will it not give that power?

Mr HIGGINS:

– No. Under the Bill, as amended, by the Senate, the Treasurer has power merely to take over £233,000,000, instead of ,£202,000,000. I am in favour of the Commonwealth Parliament having power to take over the whole of the debts, but, at the same time, I do not think anything would be gained from the exercise of that power. I do not like the idea of our giving for nothing, this Commonwealth backing. If we give up this backing, we shall give up, for nothing, several millions of pounds. Everything will depend on the state of the market, and the tendency in London is for interest rates on stocks to fall. As funds come in from abroad, and wealth accumulates there, the tendency is for interest rates to fall.

Mr Harper:

– Many think that interest is likelyto rise.

Mr HIGGINS:

– That may be just now ; I am dealing not with the present, but with what is likely to happen during the next fiftyyears. I repeat that there is no urgency as to the taking over of the debts. If we could secure our object, whilst at the same time considering, as far as possible, the wishes of another place, we ought to do so. The amendment made by the Senate seems to me to be due to some theory of the niceities of drafting rather thanto a knowledge of financial matters in London and Australia. At the same time, I should not object to the adoption of the phraseology of another place if, by that means, we were able to secure the passing of the Bill substantially as it left this Chamber. I would therefore suggest that the wording of the amendment made by another place should be left as it stands, but that we should add to it the words - and to any part of the debts incurred, whether before or after such establishment, and without regard to the proportions prescribed by section 105 of the Constitution.

The amendment, as it stands, provides that the powers of the Parliament relating to the public debts of the States shall extend to debts incurred since the establishment of the Commonwealth, and to these words, I would add those I have just read.

Sir George Turner:

– Would not the honorable and learned member substitute for the word “since” the words “at any time after “ ?

Mr HIGGINS:

– I should have no objection, but I do not wish to alter the wording of the amendment, unless it is absolutely essential to do so. My proposal simply means the addition of certain words to the amendment; but it has been suggested to me that we should omit the word “ since.” and insert the words “ at any time after.” The provision would then read -

The powers of the Parliament relating to the public debts of the States shall extend to debts incurred at any time after the establishment of the Commonwealth.

That would still leave the proportionsprescribed.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It would still leave the proportions fixed under the Constitution.

Mr Deakin:

– It would give us the choice of a proportion or no proportion.

Mr HIGGINS:

– I am not wedded to any particular words. My only desire is to deal with the substance of the Bill. I shall look into this matter very carefully, and later on, unless an amendment is proposed by another honorable member, I shall submit one to the Committee.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I am surprised that the Government should be so ready to submit to an adverse amendment made by another place in a Bill of far-reaching importance. I am also surprised that the Treasurer should have displayed so much irritation when some pertinent questions were put to him from this side of the Chamber. We had no desire to break the thread of his argument; we simply wished to secure information which, at the moment, he appeared to be failing to give. Honorable members generally will admit that the financial proposals of the Government have been approached from an entirely nonparty stand-point. Every effort has been made by honorable members sitting in all parts of the House to assist the Treasurer in discharging the very difficult duty allotted to him, and it certainly would be unfair to say that the criticism applied to the proposals of the Government has a party complexion. The discussion of the question in this House has, so far, been carried on upon non-party lines.

Mr Deakin:

– Hear, hear.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– We have made every effort to assist, and not to obstruct, the Minister in dealing with this question, and that will be our attitude in the future. But honorable members have certainly a right to freely criticise such important proposals as these if they think it necessary to do so.

Mr Batchelor:

– Honorable members are only seeking to stiffen the back of the Minister.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That is so. The Minister to-day has been combating every argument that he put before us when he first submitted his proposals. If there was one point upon which he was clear at that time, it was that, according to his view, and to the view of the most expert financial authorities of Great Britain, we should not take over the debts until they fell due. He pointed out that, unless we adopted that course, the bond-holders alone would reap the advantage of the transfer of the debts to the Commonwealth ; that, if we sought to convert the States debts into Commonwealth stock before they fell due, we should run the risk of losing the profit which might otherwise be secured. The right honorable gentleman now departs absolutely from the wise attitude which he then took up, and urges us to agree to the adoption of a systemwhich he himself has declared to be faulty. A proposal to amend the Constitution is one that should not be lightly discussed, and we should not appeal to the people in regard to any of these questions unless we have good reason for doing so. As the honorable and learned member for Northern Melbourne has said, it is most unwise that, for the sake of securing the slight extension of our constitutional powers which the adoption of the Bill, as amended, would give, we should disturb the whole Commonwealth by taking a referendum. It is unreasonable that we should seek a referendum concerning a proposal which, if adopted, would still leave our powers, in this regard, almost as ineffective as they are to-day.

Sir John Forrest:

– That is surely not so. We could then take over the whole of the States debts.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The use of the word “ since “ in the amendment inserted by the Senate”, means that we should simply have power to take over the £32,000,000 of States debts that have been incurred since the establishment of the Commonwealth - that we should have power to take them over in addition to the debts existing at the time of Federation.

Sir John Forrest:

– That is a legal matter. I am of opinion that “ since “ in this case has the same meaning as “after.”

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– There is no necessity for the right honorable gentleman to view it in that light. “Since” means from the establishment of Federation until now.

Sir John Forrest:

– What is meant by “ now “?

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The time at which we pass the amendment. “ Since” cannot apply to the future.

Sir John Forrest:

– Reading the provision twenty years hence, “since” would be taken to mean the time that had passed until then.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– But the provision must be read from the time when it is passed. If an Act contained the date 1900, that date could not be read twenty years later as 1920.

Sir John Forrest:

– I think that the provision is a continuing one.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– In my opinion, the right honorable gentleman is wrong.

Sir John Forrest:

– I am satisfied that it is as I have stated. One of the meanings of “ since “ in the dictionary before me is “ from and after that time.”

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Admitting it to be so - though, to my mind, the meaning of the provision is perfectly clear - should we ask the people of Australia to vote for something the meaning of which is questionable ?

Sir John Forrest:

– I have not heard doubts expressed about it before to-day.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Since doubts have been expressed, we should not be asked to agree to the provision in its present form. The right honorable gentleman, when speaking, made some rather contradictory statements, which prompted requests for information. He said that the Commonwealth is to become solely liable to the bond-holders.

Sir John Forrest:

– I did say so.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– How can the Commonwealth become solely liable to the bond-holders unless the debts of the States are converted?

Sir John Forrest:

– We are going to take over the debts of the States.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– But the Commonwealth cannot become solely liable before conversion.

Sir John Forrest:

– Cannot we become solely liable for the payment of interest?

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Until conversion, the States will be, and must remain,liable to the bond-holders for the payment of interest. So long as the present bonds exist, the Commonwealth cannot be solely liable to the bond- holders.

Mr Knox:

– There must be a renewal of the bonds before the Commonwealth could become solely liable.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Yes. There must be a conversion.

Sir John Forrest:

– What is the honorable member’s point ?

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The right honorable gentleman, having made the statement which I have quoted, said, subsequently, that the bond-holders would not object to change the position. That was a contradiction. I presume that he intends to propose to the bond-holders that they shall agree to a conversion during the currency of their bonds.

Sir John Forrest:

– Not at all.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

-Then what did the right honorable gentleman mean ?

Sir John Forrest:

– That, as section 105 of the Constitution provides, the Commonwealth should pay the interest instead of the States.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The right honorable gentleman cannot take away from the bond-holders to whom the States are liable their claims on the States, though the bond-holders could, of their own accord, give up their present rights. But bond-holders do not voluntarily give up anything. They may be offered something as good as they have, or a bit better ; but, while they are satisfied, they will not make a change unless they get something for it.

Sir John Forrest:

– This is not worth arguing about. Section 105 of the Constitution says plainly enough, and it is the Jaw, that the Commonwealth is to take the place of the States in regard to payment of interest.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I should like the Treasurer to submit that opinion to the honorable and learned member for Northern Melbourne.

Sir John Forrest:

– The Attorney- General agrees with me.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The State of New South Wales has issued bonds to certain persons, and agreed to pay them a certain rate of interest. Does the right honorable gentleman say that this Parliament can pass an Act taking away from them their claim on the State for that interest?

Sir John Forrest:

– The Commonwealth instead of the State will pay the interest.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Can this Parliament take from the bond-holders of the States their claims upon the States?

Sir John Forrest:

– I am not prepared to say that; but section 105 of the Constitution enacts that the Commonwealth must pay the interest.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The Commonwealth cannot become solely responsible to the bond-holders of the States without their consent. If the Commonwealth becomes responsible at all, both it and the States concerned will be responsible.

Sir John Forrest:

– I see the honorable member’s point ; but there is nothing in it.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– If the Commonwealth accepts responsibility, it will mean that during the currency of many of the present State loans - for a period of ten, fifteen, twenty, or thirty years - the bond-holders will have a double security, that of the States and that of the Commonwealth.

Mr Harper:

– The Commonwealth will not be under any obligation to the bondholders, unless it assumes an obligation.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– At present it is under no obligation; but it can assume an obligation. The honorable and learned member for Northern Melbourne has pointed out what, in my opinion, is a fact : that after bond-holders have, for ten. twenty, or thirty years, enjoyed the security of the Commonwealth as well as of the States, they will have become accustomed to it, and, upon a Commonwealth loan being issued, will not be prepared to give more for at, seeing that they will then be offered only the Commonwealth security, instead of the Commonwealth and the State security. The attitude taken by the public in matters of this kind is largely one of development. They get accustomed to a certain state of things.

Sir John Forrest:

– I do not think that legally they will have the security of the States.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The States will continue to be liable.

Sir John Forrest:

– Not legally, under the Constitution. I stand by the law.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It is perfectly evident that we cannot take away from the bond-holder his claim on the State, though he can surrender it.

Sir John Forrest:

– The Constitution says that the Commonwealth must pay interest, and deduct it from the revenues of the States, which have to indemnify us for the payments made.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That is a provision for something which will take place after a conversion.

Sir John Forrest:

– I do not see anything in the honorable member’s quibble. Let us get on with the business.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Nothing in it ! It affects the whole proposal. The Treasurer’s attitude is most extraordinary. I am discussing an important part of this provision, and he says, “ There is nothing in it. Let us get on with the business.” The important advantages to be gained by establishing a Commonwealth stock are two. In the first place, one large consolidated stock takes the place of a variety of States stocks, and the public will be more ready to invest in such a stock; while, in the second place, the investor has, as a security, the solvency of the whole Commonwealth instead of that of a part. In making any conversion, those tendering for the loan are aware of these advantages. If they take up Commonwealth stock, they get a consolidated stock, and have the security of the whole Commonwealth, instead of that of a part. But if, prior to conversion, and during the currency of an existing debt, they are given, in addition to the security of a State, the security of the Commonwealth, they get accustomed to it, and when the conversion takes place, one of the inducements for offering a higher price for Commonwealth stock is wanting, and part of the effect which we desire to produce by conversion is lost. I agree with the honorable and learned member for Northern Melbourne that the use of the words “take over” in section 105 of the Constitution, is rather unfortunate. I doubt whether, without conversion, we can “take over” to satisfy the terms of the Constitution. We have to take over the liability to the bond-holder.

Sir John Forrest:

– How could we convert without his consent?

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– We could convert without his consent when the debts fell due; but his consent would be necessary to a conversion during the currency of the debt.

Mr Harper:

– The honorable member thinks thatthe Commonwealth cannot take over the debts until it can convert them.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I am not certain that it can literally. Of course, it can do anything with the consent of the bond-holders.

Mr Knox:

– The honorable member is not pressing this point as an obstacle.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It is a difficulty created by the amendment of the Senate. Under the original provision we could convert as the debts fell due without regard to proportion : but conversion becomes practically impossible when proportion is required.

SirJohn Forrest. - We need not take a proportion : we can take the whole.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It will become practically impossible to convert as the debts fall due if the amendment of the Senate is accepted. I am inclined to think that the words “take over,” in the Constitution, refer to a conversion.

Mr Groom:

– If so, how could the Commonwealth take over a proportion ?

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I think that it could not.

Mr Harper:

– The words apply in both instances, which show that they do not refer to conversion.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I am inclined to think that my interpretation is the correct one; but I do not press it absolutely. However, the Senate’s provision makes impossible theconversion of the debts as they fall due.

Sir John Forrest:

– Not if we take over all the debts at once. The intention is by an Act of the Federal Parliament to take over the whole of the States debts on a date to-be named. We will then have complete control over the debts, and will occupy in relation to the bond-holders the exact position previously occupied by the States, and will have sole control of all operations for conversion before maturing - with theconsent of the bond-holders - or redemption at maturing as may be thought fit.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– No doubt, the Senate’s amendment was made to prevent any State receiving undue favour. Suppose that next year a Victorian loan amounting to £4,000,000or £5,000,000 falls due. The Commonwealth says, “ We will convert that loan, and relieve Victoria to that extent.” Then, in the following year, when a loan contracted by Tasmania or Western Australia fell clue, it should not be able to say, “ In the present condition of the London market we are not prepared to undertake to convert this loan ; Ave will leave it to the State.” That is the intention underlying the provision in the Bill as amended by the Senate, making it necessary for the Commonwealth to take over the States debts proportionately.

Sir John Forrest:

– That is, if you do not take over thewhole of the debts, and the intention is to take over thewhole.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I am giving a reason why the Senate probably inserted the amendment. If thewhole of the debts are not taken over, the responsibility in connexion with them is to be assumed in a proportionate amount,without discrimination as between State and State. Of course, that is impossible in practice. Honorable memberswho say that “ take over “ must mean a certain thing, because anything else is impossible, are in a difficulty, because the Senate leaves the phrase “ take over,” and makes an impossible proposition, namely, that the debts, if converted as they fall due, must be taken over proportionately. When we alter the Constitution, we should amend it to make it as effective as possible in the interests of the States and of the Commonwealth. There are a sufficient number of difficulties in the way without our adding to them. We desire to remove the difficulties, and to make everything as simple and as easy as possible, not for the benefit of the Commonwealth only, but for that of the States as well. If it is not for the benefit of the States that their debts should be transferred, there is no necessity for the provision in the Constitution. If it would be of advantage to the States to have their debts transferred to the Commonwealth, the easier and simpler we can make the process of transfer the better. It is now proposed to put before the people, not a complete and effective proposal, but one that will be hampering to the same extent as the present provision in the Constitution, except only as regards £33,000,000. We ought not to attempt to submit a question of such importance to the electors in an incomplete form. Rather than do that, I would send the Bill back to the Senate in the hope that a reasonable alteration might be secured. If we could not induce the Senate to look at matters from our point of view, it would be better to refer the whole question to the people by special referendum after both Houses had been able to agree to an effective provision.

Sir John Forrest:

– The proposed amendment will merely extend the power conferred upon us at present.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– Yes. Rather than refer this very faulty proposal to the people, we should endeavour to embody in the Constitution a provision similar to that foreshadowed by the honorable and learned member for Northern Melbourne. I agree with honorable members who say that the word “ since “ should be removed from the amendment. If it is retained, it will have the effect of providing that the present powers of the Commonwealth in regard to the States debts shall be extended only to the debts incurred between the establishment of the Commonwealth and the present time. The Minister admits that the true meaning of the word is a matter of opinion.

Sir John Forrest:

– I think it is all right in the place it now occupies.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– I think that we should be certain as to the meaning of the terms used before making an appeal to the people. We should appear very ridiculous if, after the people had acceded to our request, it was found that the provision made was not sufficient for our purposes.

Mr Higgins:

– “ A stitch in time saves nine.”

Sir John Forrest:

– What is the difference between “since” and “after”?

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The word “since” means from the establishment of the Commonwealth until the present time”; “at any time after” means at any time after, whether before now or after now. The word “since” applies to something that has taken place after some event, but before the period at which the word is used. I think that the attitude assumed by the Treasurer in the first instance was the proper one. He gave us the strongest reasons for taking a position in which he had the support of a number of financial authorities in London. I think that he has made an extraordinary and unfortunate departure in asking us to accept something which he previously declared to be faulty and undesirable. I admit that towards the close of a session a good deal has to be done in the way of compromise, but in a matter that is to.be referred to the whole people we ought not to accept terms which will not enable us to deal with it in what we conceive to be the best manner. This is too big a question to be trifled with, and rather than support a compromise such as that now proposed, I would prefer to postpone the whole matter until we can arrive at a more reasonable conclusion, and obtain from the people a more thorough and effective means of meeting the requirements of the Commonwealth.

Mr KING O’MALLEY:
Darwin

– I was amazed to hear the Treasurer, who cheered me through my speech upon the Budget, make such a complete surrender as he has done upon this im- portantquestion. On the former occasion he was very firm in his determination not to make a free gift to the bond-holders of the advantage arising from the Commonwealth guarantee, but to secure any bene- fits or profits that might arise from the conversion of the States debts for the taxpayers of Australia who have to pay the interest. Now he seems to be thoroughly scared, and’ prepared to take anything he can get, so long as a referendum is arranged for. I think that it would be detrimental to the -interests of the taxpayers of Australia to adopt the proposal made by the Senate. We have to consider the taxpayers who earn the money to pay the interest on our debts, rather than those who hold our bonds after having received a good bonus for accepting them. If we are empowered to take over the whole of the States debts, and they are transferred to us, we shall, long before the time for conversion arrives., practically attach to all the loans the Commonwealth guarantee. The man who asks you to back a promissory note tells you that it is only a matter of form, but on many occasions I have had to pay up six or seven months after having attached my signature. If this is only a matter of form, why should we bother about the States debts at all? The moment we take over the debts the Commonwealth guarantee will be behind them, and, as the honorable member for North Sydney has suggested, the bond-holders will sneer at us when we ask them to consent to a conversion. The Commonwealth would be tied hand and foot, whereas the bond-holders need not negotiate with it. I am firmly of opinion that the moment the Commonwealth takes over these debts, or is empowered to take them over, it will be found that the bond-holders will not negotiate with us. They can continue to negotiate with the States if the latter will give them better terms, and still the Commonwealth guarantee will be behind the debts for all time.

Mr Fisher:

– And it ought to be.

Mr KING O’MALLEY:

– I do not deny that, but I hope that the honorable member will not give the European bondholders cause to think that this House is composed of fools. I am perfectly willing that the Commonwealth should guarantee the States ‘debts, but I want to secure for the States the advantage of any appreciation in the value of their bonds as the result of the operation.

Mr McWilliaMS:

– But we shall have to pay only the face value of the bonds.

Mr KING O’MALLEY:

– If the Commonwealth guarantee were not behind the debts of the States, the former would be able to go into the open market and purchase State bonds when money was cheap, handing over the savings thus effected to the States. But the moment the Commonwealth backing is behind the debts, the position will be similar to the guarantee of Rockefeller behind an ordinary individual. The bond-holder will not then be in a hurry to convert. What I desire to know from (he Treasurer is how he is going to effect the saving which he anticipates in the interest charges?

Sir John Forrest:

– The Commonwealth will be able to borrow money cheaper than the States can upon the maturity of the loans.

Mr KING O’MALLEY:
DARWIN, TASMANIA · ALP

– O’MALLEY- Let us suppose that a bond-holder has£10,000,000 invested in Australia, upon which he is receiving 31/2 per. cent, interest from the States. If the Commonwealth guarantee be given for the payment of that amount, is the bond-holder bound to accept 3 per cent, interest from us? Can he not say to the State, “ I intend to have either 31/2 per cent, or the cash “ ?

Sir John Forrest:

– No. We would pay him off when the loan matured.

Mr KING O’MALLEY:

– Are we not bound to give him 31/2 per cent, if he wants it?

Sir John Forrest:

– No; we can pay him off.

Mr KING O’MALLEY:

-Does the Treasurer say that the guarantee of the Commonwealth is not behind the States debts from the day that we take them over ?

Sir John Forrest:

– I do not think that our guarantee will increase the value of their bonds very much until they have the Commonwealth designation.

Mr KING O’MALLEY:

– To whom will the bond-holder look for payment?

Sir John Forrest:

– To the Commonwealth.

Mr KING O’MALLEY:

– Will the State be relieved from all responsibility?

Sir John Forrest:

– I think so.

Mr KING O’MALLEY:

– I am of opinion that the Treasurer is labouring under a terrible delusion. The Senate has amended this Bill in such a way that I should like the Treasurer to explain how the Commonwealth could take over a Tas- manian loan of£ 1,000,000 if there were no loans falling due in the other States?

Sir John Forrest:

– It is only if we do not take over the whole of the States debts that we must fake over a proportional part of the debts of each State.

Mr KING O’MALLEY:

– I am opposed to taking over the whole of the debts. 1 want to be able to deal with this question in the same way that private business men deal in their daily transactions. I have no love for the bond-holder. He has the best advisers in the world when he is negotiating, and he has the States at his mercy. I well remember an occasion, many years ago, when Canada was floating a loan in London. I went to one of the principal investors there, and he said to me, “ Hold back for a day or two, and we shall force the Treasurer to raise the rate of interest by½ per cent.” We did hold back, and the late Sir John Macdonald, from fear that his loan might fail, raised the interest by½ per cent. My whole heart goes out, not to the bond-holder, but to the man who earns the money with which to pay the interest. I warn the Treasurer that he will have to face angry electors if he persists in the course which he is now pursuing. The honorable member for North Sydney has very properly asked, why should we amend the Constitution merely for the purpose of empowering us to take over the whole of the States debts? Unless an amendment be introduced into the Bill, under which the Treasurer will have power to negotiate and to take advantage of the fluctuations of the money market for the benefit of the taxpayers, I shall vote against it.

Mr KNOX:
Kooyong

.- I think that the question of the transfer of the States debts to the Commonwealth is one into which it is unnecessary to import any party feeling whatever. It is very desirable that every section of the House should listen dispassionately to any suggestions which may be submitted with a view to solving this intricate problem. The Treasurer has himself to blame for the discursive character of this debate. In the course of his remarks, he introduced quite a number of subjects which were unnecessary to its proper consideration.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– It takes a lot of reasons to explain a “climb down.”

Mr KNOX:

– I think that the right honorable gentleman might have dealt with the subject from the broad stand-point of the reasons which have induced him to recede from the position which he formerly took up. Upon the motion for the second reading of the Bill I pointed out that we were surrendering a very great safeguard which was conferred by the Constitution, and which prevented any partiality being exhibited towards any individual State. The Treasurer interjected that there was nothing in my contention, and proceeded to urge reasons why the Bill should be accepted in the form in which it was submitted. I feel that many of the difficulties which have been experienced in dealing with this matter are directly due to the limitations imposed by the Constitution. But the time has arrived when this great problem should be satisfactorily solved. The time has arrived when we must appeal to the people to give us the power to work out an effective scheme. I regret very much that this Bill should have been amended in this way by another place, and rather than that an incomplete proposal should be submitted to the people - a proposed amendment of the Constitution which would not satisfactorily remove the restrictions by which we are beset in dealing with this question - I shall vote against it. A Conference of States Premiers is to be held in Melbourne next week, and possibly, as the outcome of it, a satisfactory arrangement may be arrived at between the States and the Commonwealth. If we ask the people to grant an amendment of the Constitution which will still limit our power to deal with this question, we shall fool them.

Sir John Forrest:

– Thenthe Convention fooled the people.

Mr KNOX:

– I object to the extraordinary attitude taken up by the Treasurer, who holds that the Commonwealth should at once take over the debts of the States, and that the individual States would thereupon be relieved of all responsibility in regard to them. I cannot imagine how my right honorable friend can justify such a proposal, except by some mental jugglery to which he is usually a stranger.

Sir John Forrest:

– I spoke only of the law.

Mr KNOX:

– We might go so far as to say that the Commonwealth Parliament could pass a law by which it repudiated the debts, or that a State Parliament might do so. But I cannot imagine why the right honorable gentleman should support such an extravagant proposal.

Sir John Forrest:

– The honorable gentleman should read Quick and Garran on this question.

Mr KNOX:

– I am taking a commonsense view of this phase of the question.

Sir John Forrest:

– And I dealt with it from the legal stand-point.

Mr KNOX:

– Does the right honorable gentleman think .that the Attorney-General would support his view?

Sir John Forrest:

– He would say what I have said.

Mr KNOX:

– I trust that he will be induced to speak to the question. We should make ourselves ridiculous in Great Britain if we proposed by an Act of the Commonwealth Parliament-

Sir John Forrest:

– An Act of the Imperial Parliament.

Mr KNOX:

– It is ridiculous to suppose that by an alteration of the Constitution we are going to alter the relations between the holders of the bonds and those who have issued them.

Sir John Forrest:

– So long as the bond-holder is paid, what does it matter if the relations are altered?

Mr KNOX:

– A contract was entered into with him, and if we altered it in any way-

Sir John Forrest:

– We should not do so.

Mr KNOX:

– We should. We should change the parties to the obligation.

Sir John Forrest:

– No, we should merely change the paymaster.

Mr KNOX:

– We should change the security.

Sir John Forrest:

– No.

Mr KNOX:

– In other words, we should release the States. My own view is that if the Commonwealth proposes to accept responsibility for the debts, it cannot, without the consent of each individual bond-holder, place the holders of those stocks in a new position.

Mr Fisher:

– Quite right, too. That is the basis of all contracts.

Mr KNOX:

– The Treasurer, in suggesting that it is possible for the Commonwealth Parliament to interfere with_ any such contract, has enunciated a. highly dangerous doctrine.

Sir John Forrest:

– Why press that point? The honorable member should consult his solicitor.

Mr KNOX:

– It is absurd that any heat should be imported into this debate. We all have only one object in view, and are expressing our honest convictions as to the best course to be adopted. My desire is that we shall secure such an amendment of the Constitution as will enable us to arrive at a satisfactory solution of the States debts question. ,1 maintain, as I have done before, that the restrictions placed upon us by the framers of the Constitution are such as to make it very difficult to arrive at a satisfactory arrangement.

Mr Fisher:

– It was an oversight.

Mr KNOX:

– That is so. I think that the framers of the Constitution were under the impression that one of the first acts of the Parliament would be to take over the States debts existing at the establishment of the federation. I hardly think they believed that we should allow six years to elapse before attempting to do so. They recognised that one of the principal objects of the Union was the transfer of the States debts to the Commonwealth, and they believed that we should speedily address ourselves to this important matter. Instead of doing so, however, we have been dealing with a number of minor questions, and allowing that which needs to be dealt with by capable and experienced men to remain in the background. Another suggestion made by the Treasurer was that the word “ since” in the Senate’s amendment could be read as meaning “ at any future time.” He held that, under the amendment, if we took over the debts now existing, we should have power twenty years hence to take over the debts then since incurred. Surely, that is a construction which nine out of ten persons would not place on the word. Why quibble over a word?

Sir John Forrest:

– Who has been quibbling ?

Mr KNOX:

– The right honorable gentleman has been unusually petulant this afternoon. If there is any doubt about the desirableness of using this word, why should we not substitute for it one that will not impose limitations?

Sir John Forrest:

– I do not object.

Mr KNOX:

– Our desire is to submit to the people a proposed amendment of the Constitution which the humblest and least informed can understand. I shall feel constrained to support such an amendment of the Senate’s amendment as will enable us to deal with the debts either in part or as a whole. I trust that the Committee will decline to accept the amendment made by another place. The difference of opinion existing between the States Governments, as well as between the two Houses of the Commonwealth Parliament, only tends to confirm my view that we need, as I suggested two years ago, to appoint a competent experienced body to deal with these matters. Had my proposal been carried out, much of the present difficulty would have been avoided. The Committee which I suggest should be appointed would assist the Parliament to frame a scheme that would be in the interests alike of the States and the Commonwealth. I fail to see why there should be any difficulty in dealing with a matter in which every one is equally interested. The Commonwealth will not secure any substantial gain by taking over the debts of the States ; the States themselves will benefit by the transfer. The suggestion which has emanated from some quarters that only the Commonwealth will gain is, I think, a false one. I hope that the Committee will see that, whatever proposal is put before the electors, it is unequivocal and plain, and, if acted upon, will be effective. In the provision coming from the other Chamber, there are limitations which I think will prevent the satisfactory solution of the great question before us, which deserves serious attention, and ought to be dealt with without further delay.

Mr HARPER:
Mernda

– It must be admitted that the debate has ranged over a considerable field, and that a good deal of what has been said would have been relevant in a discussion as to the particular means to be .adopted in settling the details of the financial arrangements between the Commonwealth and the States. But the immediate question before us is an amendment made in the Bill by the Senate. I join with other honorable members in regretting that this alteration has been made. In my opinion, honorable senators might well have accepted the view which we put before them. Personally, I am convinced that no practical method pf taking over the debts will be found until we determine to take over the whole of them. A study of the question has made it apparent that no means excluding the taking over of any portion of the debts of the States will be found practicable. We have heard a good deal about, a difficulty in connexion with the taking over of the debts arising from the value which it is assumed will be given to the States stock when it becomes known that the ‘Commonwealth intends to convert. The honorable and learned member for Northern Melbourne spoke very strongly on that point ; but I think that he was in error. I cannot see how the Commonwealth can suffer if it determines to take over the debts of the States as they fall due, or earlier, as circumstances may dictate. Suppose, for the sake of argument, that we determined to exercise the power given to us by the Constitution. Immediately we took over £5,000,000 or £10,000,000 of debts, it would be known in England that we must take over the whole of them. But that knowledge would not cause us to lose anything in connexion with the transaction. The honorable and learned gentleman further pointed out that our hands are tied in this matter, that the taking over provided for in the Constitution practically means that we cannot take over until we are prepared to convert, and that if we cannot convert we cannot take over. How would it be possible to deal practically with the debts of the States if that were so? Victoria has a loan of £4,000,000 falling due next year. Although we might have determined to take over the debts of the States as they fell due, that State might nevertherless be uncertain as to whether that debt would be taken over, and would have to make arrangements to meet the contingency of the Commonwealth not taking it over. In dealing with the subject in detail, the fears which possess some honorable members’ minds are seen to be groundless. If the Commonwealth determined to take over the whole of the debts of the States, and made itself responsible at once for the payment of interest, neither it nor the States would lose a shilling. Those who have advanced money -to the States are quite content with the security which they possess.

Mr Wilks:

– But if the Commonwealth made itself responsible for the debts of the States, it would improve that security.

Mr HARPER:

– If a security is as good as it can be, it cannot be improved by adding another security to it. A bond-holder would not accept 3 J per cent., or even £3 19s. o’d. per cent., in exchange for a 4 per cent, bond merely to get the additional security.

Mr King O’malley:

– If there is no difference in securities, why can the United States borrow money at 2 per cent. ?

Mr HARPER:

– At what discount?

Mr King O’Malley:

– The stocks are at a premium of 112. As a matter of fact, they return only1¾ per cent. to buyers.

Mr HARPER:

– The honorable and learned member for Northern Melbourne referred to a Queensland 4 per cent. loan falling due in 1916. That loan is quoted in the Economist of the 25th August at from£101 to£102, while another Queensland 4 per cent. loan, falling due in 1924, is quoted at£106 - a difference of between £4 and£5.

Mr Fisher:

– The average price of Queensland 4 per cent. loans in London on the 27th of last month was £105 10s.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– The honorable and learned member for Northern Melbourne referred to a Queensland loan falling due in 1915.

Mr HARPER:

– There is a Queensland 4 per cent. loan falling due in 1915, which stands at between£101½ and £102, another falling due in 1916, which stands at between£101 and £102, and a third falling due in 1924 which stands at £106. Loans which are at a premium tend to fall as the period of their redemption approaches ; so that a loan which, ten years hence, might have stood at £110, might be even slightly below par within two or three years of its due date. All that would happen if we determined to take over the whole of the debts of the States would be that the Commonwealth would be in a position to arrange to meet these debts as they fall due, either by redeeming them in cash or by offering consols. The honorable and learned member for Northern Melbourne and the honorable member for Bland overlooked the fact that if States stocks rose in value, Commonwealth consols would do so, too. The better the Australian credit, the higher would be the price of our consols, and the nearer they were to par, the more satisfactory would be our arrangements. I could discuss some of the other points that have been raised to-day, but I do not think it is necessary to do so. As I said before, owing to my conviction that we must deal with the whole of the debts of the States, I would have been prepared to accept even the amendment of the Senate; but I intend to propose amendments which I think will meet the views of honorable members who entertain certain doubts with regard to the practicability of the proposal. This is merely a permissive Bill. Even if we obtained the power that we are seeking, it would not follow that we should be tied down to any particular mode of using it. We desire to secure a permissive right, and leave the next Parliament to deal with the details of the question as they may think best in the public interest. In order to meet the views of honorable members who think that we ought to have greater latitude than is afforded us by that part of section 105, which deals with the taking over of a portion of the States debts, and which every one agrees is absolutely unworkable, I propose that we should omit the word “ since,” and substitute the words “ at any time after.” Then I propose to add after “ Commonwealth “ the words “ and to any part of the public debts of the States.”

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– That would have the same effect as the Bill in the form in which it was sent to the Senate.

Mr HARPER:

– To some extent it would ; but not altogether. I think that it is an improvement.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– It would have absolutely the same effect.

Mr.HARPER.- No, it would not; but it would give us greater latitude than we possess under the Constitution. If the Senate refuse to adopt the provision in the amended form, the onus will rest upon them. It would be most unfortunate if this Parliament were brought to a close without having taken the steps necessary to refer this question to the people for settlement. The Commonwealth ought to have power to deal with the States debts during the first session of the next Parliament. There should be no delay. It is absolutely necessary to adopt an effective plan that would prove acceptable to the States, and we must have the permissive power to take over the whole of the debts. So convinced am I upon this point that I would have accepted the Senate’s amendment rather than lose the Bill.

Mr Deakin:

– That is our position.

Sir John Forrest:

– I am willing to accept the amendment of the amendment.

Motion, by leave, withdrawn.

Motion (by Mr. Harper) proposed -

That the Senate’s amendment inserting a new clause be amended by the omission of the word “since,” with a view to insert in lieu thereof the words “ at any time after,” and by adding the words “ and to any part of the public debts of the States.”

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– This is not the first time that cer- tain means have been devised to enable the Government to climb down. I feel certain that if the honorable member for Mernda had been the Treasurer upon this occasion the discussion which we have heard this afternoon would not have assumed such proportions’ as it has. The honorable member has taken a business-like view of the whole question. He has given it special study, and has brought exceptional ability to bear upon it. He knows what he is speaking about, and has put the question very succinctly before us. Honorable members on this side of the Chamber have frequently been accused of factious opposition ; but when this measure was first brought down we had the spectacle presented us - no doubt a very surprising one for honorable members on the Treasury benches - of an almost united Opposition rallying to the support of the Government in respect of a definite proposal for the settlement of one of the most troublesome questions with which we have had to deal. By the aid of that support the Government were able to pass the Bill through this House with the full statutory majority. Then the measure was transmitted to the Senate, and altered in such a way that not only members of the Opposition, but the majority. of honorable members on the Government benches, including the Treasurer, considered that the powers deemed to be requisite in dealing with this great financial problem would be seriously diminished. The Treasurer, in his introductory remarks upon the Senate’s amendment, expressed the deepest regret that it had been made; but at the same time indicated that he was prepared to agree to it. Very little inducement is offered to independent oppositionists to rally to the support of the Government on a ‘great measure of national importance, when Ministers prove so weak as to give way before the first breath of opposition, and make not the slightest effort to carry out their original intention.

Sir John Forrest:

– The honorable member is not aware of all the difficulties with which we have had to contend.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– I am as well aware of them as is the Treasurer. I Ic-ow also that much greater difficulty would be experienced if we accepted the amendment, proposed by the Senate. It would be like breaking a fly upon a wheel to submit the proposed amendment to the electors. It would be ridiculous to bring the whole machinery of the referendum into operation in order to secure an amendment of the Constitution which would confer upon the Government of the Commonwealth very little more power than they already possess. I shall certainly not assist Ministers to obtain the assent of the statutory majority to the amendment proposed by the Senate, because I am firmly convinced ‘ that the consolidation of the States debts is not to be satisfactorily accomplished unless we have a wider measure of power, and a greater sphere of operations than is provided for under the Constitution. I am prepared to support the amendments proposed by the honorable member for Mernda; but it would have been much simpler for the Government to stand by their original Bill. In endeavouring to solve the difficulties connected with the States debts question one business man after another, one trained financier after another, has been defeated by the anomalous position of the equation placed before him. No solution has been suggested that would come within the four corners of the Constitution. The conclusion unanimously arrived at is that something will have to give way before this question can be dealt with in such a. manner as to avoid giving rise to serious trouble or inflicting injustice upon some of the States. We were told that the whole cost of Federation would be met by the saving of interest effected when the States debts were consolidated. And although the cost of Federation now amounts to something more than was anticipated, we should still be able to save a sum more than equivalent to the extra burden of expenditure that has been imposed upon the people. When we came face to face with the question of effecting this saving, it was clear] v demonstrated that we must have larger powers. After looking into this question, I have arrived at the conclusion that the consolidation of the debts should form one of a vast number of financial operations which will have to be, carried out with the one. object of settling the financial relations of the States and the Commonwealth. Among these will be the taking over . of the Northern Territory, and, possibly, the construction of the transcontinental railway - a work which the Treasurer, and verv properly so, has so much at heart. This is one of the works that I should like to see carried out, but in the present financial muddle we can hardly approach the consideration of it. If we want to do anything of a practical character we must deal with the whole of the financial problems which immediately confront us, and make each of them a factor in the equation. It is necessary that the Commonwealth should have not only the fullest powers with regard to the taking over of the States debts, but that it should be in a position to secure all the financial advantages derivable from the taking over of any part of the debts of a State without reference to other States. That is to say that if it be possible for the Commonwealth to effect a saving by taking over a portion of the debt of Victoria, it should not wait until it could take over a similar portion of the debt of every other State. We ought to empower the Treasurer to buy a single £100 bond of any State whenever he thinks it will be to the advantage of that State and of the Commonwealth to do so. The Bill in the form in which it left this Chamber clothed the Treasurer with ample power in this connexion. But in the Senate it has been emasculated, and the power which it was proposed to vest in him has been very much restricted. Under the amendment of the other Chamber the power conferred upon him is insufficient to accomplish anything. If it be said that its object is to safeguard States rights, my answer is that it is inconceivable that any Government or any Treasurer would consent to operate in such a way as to inflict injustice upon any State. We need to vest the Treasurer with the widest power to enable him to deal with this intricate problem. If the Government do not adhere to the Bill in its original form, I shall not assist them to obtain the statutory majority necessary to insure its passing. The amendment of , the honorable member for Mernda fully meets all the objections which I have urged. In effect, it brings us back to the position that we occupied when the Bill left this Chamber. If the Government do not adopt the straightforward course of returning the measure to the Senate in its original form, I shall support the proposal of the honorable member for Mernda. Though I believe that he is acting in the interests of the Government, he is the one honorable member above all others to whom we may fairly look for some light in dealing with a complicated question of this kind. I am glad thathe has evolved an amendment which will enable the Government to escape from the false position which they have taken up.

Mr FISHER:
Wide Bay

.-I quite agree with the honorable member for South Sydney that it is necessary to vest the Treasurer with large powers to enable him to deal satisfactorily with this question. I am clearly of opinion that when the Commonwealth takes over the State debts it must assume . responsibility for the whole of them. Further, I hold that for some time after the debts have been taken over, there should be a settled policy, so far as the borrowings of the States are concerned. If the Commonwealth assumes the whole responsibility of the States debts at a period to be specified in an Act passed by this Parliament, the States Governments ought to agree not to borrow upon any outside market for a period of years. Some condition of that sort seems to be an absolute necessity. But we have not yet arrived at that stage. The question immediately under consideration is the possibility of altering the Constitution to enable a future Parliament to legislate for the taking over of the whole of the States debts. I trust that the Government have not deferred action in this matter until it is too late. If theyhave, the responsibility will rest primarily upon them, because this is a, matter withwhich honorable members are exceedingly anxious to deal. I should now like to address myself for a few moments to those who believe that if the Commonwealth takes over the whole of the States debts, it will by its act confer a large benefit upon the bond-holders. In my opinion that idea is an erroneous one. I have heard no argumentwhich would tend to show that any considerable appreciation in the value of those stocks would result. It has been urged that if the Commonwealth security were at a premium, the Commonwealth Government might be able to negotiate for the purchase of State bonds at a price between that at which the Commonwealth security stood and that at which the States securities stood. But, as I pointed out upon a previous occasion, the States of the Commonwealth are six members of one family, each of whom have first-class securities. If they enter into a combination for a specific purpose, and have only one security, that security will not possess advantages other than those which are represented by the amalgamation of their several securities. The advantage derived would be due to the one denomination of their bonds. Undoubtedly that will prove a great advantage.

Mr Harper:

– In ten or twenty years it will make alot of difference.

Mr FISHER:

– Yes. It has been contended by the honorable and learned member for Northern Melbourne that the securities of some of the States possess a greater value than those of others. I interjected at the time that one of the happiest features of Australian securities is that they are all good. But since the establishment of the Federation the financiers in the old country, without making any noise about it, have been making those securities approximate more nearly to an equal value. They are beginning to recognise that they are Australian securities, although they belong to the several States. In support of my statement that the securities of the States are daily approximating to an equality of value, I would invite the attention of honorable members to the following table, which sets out the market price of those securities in London on the 27th of September last: -

Mr Henry Willis:

– Does the honorable member think that the existence of the Labour Party has had anything to do with the low price of New South Wales stock ?

Mr FISHER:

– I would remind the honorable member that whilst the Labour Party were in office all our securities slightly improved. I do not say that the improvement was due to the fact that we were in office, nor do I say that it has been due to the establishment of Federation. There is nothing to warrant the approximate uniformity of the price of States stocks of certain denominations, except the fact that the people recognise that the security is an Australian one. That being so, the argument of those who say that we ought not to take over the whole of the debts at the one operation, since the present bond-holders might secure some hypothetical advantage, falls to the ground. It is a very unlikely contingency. I take a Commonwealth view of thequestion, and hold that the scheme submitted by the honorable member forMernda is the best that has been presented to the House. We should at once take over the whole of the States debts, and at the sametime, controlling as we do the Customs and Excise revenue, should discharge the true duties of a national Parliament. I presume that the Constitution places it beyond doubt that the States must provide the money necessary to pay the interest on their stocks. Without any amendment of the Constitution, we have power to require them, to make good the interest payments on debts taken over, and it is our duty to take action as soon as we possibly can. I hold, however, that the Commonwealth will not, and ought not, to allow any State security to fail - that in the event of a calamity happening to any one State the Commonwealth would be bound to come to its assistance, and to see that its obligations were met. The Constitution already provides for that being done. We have power to give financial assistance to a State, and thepeople of any State have power to hand over the whole or any part of their revenue or debts to the Commonwealth. The Commonwealth Parliament, I am satisfied, would never allow any State debts to be repudiated. That being so, it is unlikely that holders of States bonds would be ready, as the honorable and learned member for Northern Melbourne has said, to accept in exchange for them Commonwealth bonds of a lower denomination. It is absurd, for instance, to think that the holders of 4 per cent. State securities would be prepared, merely for the sake of obtaining a Commonwealth bond, to sacrifice interest representing a total of over £40,000. It is inconceivable that any honorable member should come to the conclusion that people would be prepared, merely for sentimental reasons, to exchange State for Commonwealth stock. Different people have different minds.

Mr.Joseph Cook. - Judging by the attitude of the Treasurer, some people have different minds at different times.

Mr FISHER:

– I think that an interjection made by the Treasurer was misunderstood by honorable members.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– He has told us today that it would be a proper thing to do that which he denounced only a few weeks since.

Mr FISHER:

– From an interjection made by the right honorable gentleman, I and others were led to infer that he considers this Parliament has a right to interfere with the contracts made by the States with their bond-holders. The right honorable gentleman told me subsequently that he did not intend to say anything on which such a construction could be put. I understand that we can take over the responsibilities of the States with regard to their debts, but that we have no right to interfere with any bond-holder who may think fit either to hold his security until it matures, or to give it up some time before it does so. We have no power to break any contract, and that being so, the bondholders are not likely for sentimental reasons to forego any of their existing rights. I think that the consideration of this matter was delayed until too late in the session, and that the passing of the Bill has thus been endangered. I am prepared to accept even the amendment made by the Senate. I am ready indeed to agree to any reasonable amendment of the Constitution, so that those who are returned to the next Parliament will be clothed with full power to deal with this great question in a way in which they ought to have been able to deal with it long ago.

Mr HENRY WILLIS:
Robertson

– I dealt very fully with the States debts question on the motion for the second reading of this Bill, and am somewhat surprised that the Government are ready to accept an amendment made by another place which must tend to reverse the very policy which they then announced. The Senate desires to retain in the Bill the words which this House considered would impose an impracticable condition. The amendment which has been moved by the honorable member for Mernda, and accepted by the Government, will, I think, satisfy the Senate, since it will show that our real desire is that the Parliament shall have power to take over all or any proportion of the debts that may have been contracted up to the present, or may be hereafter contracted. The honorable and learned member for Northern Melbourne and the Attorney-General had in view an amendment similar to that proposed by the honorable member for Mernda, and to put the position in a nut shell, I think that our desire is to stand by our former decision. The honorable and learned member for Northern Melbourne dealt very elaborately with the advantages that would accrue to the Commonwealth if it were permitted to take over the States debts a few years before they matured. He urged that persons having large sums invested in Australian stocks would not be willing to convert those stocks until a year or two before they reached maturity, notwithstanding that we might offer themCommonwealth stocks that would continue in perpetuity. If he were familiar with the views expressed by experts in England, he would know that it is not likely that holders of States stocks will be willing to convert them unless they derive some advantage from the conversion. That is the view set forth in the memorandum issued by Mr. Coghlan, the Agent-General of New South Wales, and Sir Edward Hamilton, who was UnderSecretary of the Treasury when England’s great conversion scheme was carried out, has expressed a similar opinion.

Mr McWilliams:

– Why should they be prepared to convert unless some advantage is offered them?

Mr HENRY WILLIS:

– That is the point. They know that their existing security is ample and sound, and if they had any doubt on the point, they would need only to consult the financial authorities in order to be reassured. I am in favour of the Commonwealth taking over at the earliest possible moment all the debts of the States. We ought to open a register of converted stock, so that any person who desired to exchange his present holdings for Australian 3 per cents. might be able, without inconvenience, to do so. No man who held 4 per cent. bonds current for thirty years would take 3 per cent. bonds for them, providing he knew his security to be sound. To encourage his consent to a change, we should have, as Sir Edward Hamilton says, to offer him an inducement. The inducement which I would offer would be the cash value of his 4 per cent. bonds in 3 per cent. bonds.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– What does the honorable member mean by the cash value of 4 per cent. bonds?

Mr HENRY WILLIS:

-The cash value of 4 per cent. bonds in 3 per cent. bonds would be 3 per cent. bonds for the amount of the holding, plus the capitalized value of 1 per cent., at compound interest, for the currency of the stock.

The advantage of this arrangement would be that it would make a certainty of having Commonwealth 3 per cent, stock in perpetuity. Under the scheme of the honorable and learned member for Northern Melbourne, the best we could have would be a 3A per cent, stock, and we should have to pay -j[ per cent., or some other high percentage, to the financiers of England for underwriting and converting, with the further loss by issuing below par, which may approximate to the 4 per cent, formerly paid. I am in favour of taking over all the debts at the earliest moment practicable, and would be ready to register and inscribe loans for any amount. If a person holding 4 per cent, stock wished to convert, I would give him 3 per cent, bonds, plus the equivalent of 1 per cent, in cash, if he choose to take it, though in all probability he would prefer to take extra 3 per cent, inscribed stock in substitution. I did not know that this matter would come on to-night, and have, therefore, not got with me a good deal of actuarial information which had been prepared for me by my son Hastings. An enormous advantage would be gained by every State of the Union if the plan which I suggest were adopted. The cost of conversion and other financial charges comes to a very large sum in the aggregate, and tins expense could be saved for all time. The honorable and learned member for Northern Melbourne concluded his speech by making an excellent suggestion, which was that we should take over all the debts of the States according to the Treasurer’s original proposal. It is believed by many, if not by the Treasurer himself, that that part of the Constitution which provides for the taking over of a proportion of the debts of the States, according to the respective number of their people, as shown bv the latest statistics of the Commonwealth, is impracticable, and an amendment has been submitted to get rid of the difficulty, which I think will meet the case. However, as we shall have an opportunity to go more fully into the matter at another time, and as there was an exhaustive discussion during the Budget debate, I shall not say anything more at present.

Mr CULPIN:
Brisbane

.- The framers of the Constitution regarded the taking over of the debts of the States by the Commonwealth as something which ought to be done, and I agree with honorable members that the sooner it is done the better. But, in my opinion, in this matter we shall make haste by going slowly. The proposal of the Government relates to two distinct matters, which must be considered separately. In the first place, they wish to empower the Commonwealth to take over all the debts of the States incurred up to the present time. The second part of their original proposal was to empower the Commonwealth, if it is deemed desirable, to take over from time to time only so much of the debts as it may be convenient to deal with. If the amendment of the Senate be agreed to, however, the Commonwealth, if it does not take over all the debts of the States, will be obliged to take over a proportion - according to the respective numbers of their people us shown by the latest statistics, as the Constitution originally provided. The Senate’s amendment also provides -

The powers of the Parliament relating to the public debts of the States shall extend to debts incurred since the establishment of the Commonwealth.

Upon which the honorable member for Mernda has moved a further amendment to insert the words “ at any time after “ instead of the word “ since “ I cannot see my way to vote for that proposal. Any one of ((he States may ‘borrow extravagantly after the taking over of its debts by the Commonwealth, and I should strongly object to the ‘Commonwealth making itself liable for those further debts. I am willing that the Commonwealth should be empowered to take over all debts which have been incurred up to the present time; but I do not think that it should be able to take over future debts.

Mr Harper:

– The whole thing can be fixed up after the matter has been referred to the people.

Mr CULPIN:

– I think that we should be content to take over the debts incurred up to the present time. Personally, I should not mind very much if the Commonwealth took over only the debts incurred prior to Federation.

Mr Harper:

– We are not now considering any scheme for the taking over of the debts, but merely a proposal to ask the people to alter the Constitution to enable Parliament, if it is thought desirable, to deal with the existing debts.

Mr CULPIN:

– I am quite aware of that. I am inclined to vote against the proposal to allow the amendment of the Constitution in this particular. I believe that the Commonwealth, in taking over the debts of the States, will increase the value of the stock and bonds now current, and that this increase of value will go to the bond-holders. The right honorable member for Balaclava has stated that this increase in value would amount to between £4,000,000 and £9.000,000. I think that it would be better for the Commonwealth not to take over any debts until it was in possession of funds to a moderate amount; and I am .not in favour of precipitate action. I shall certainly vote against the proposal to allow future debts to be taken over.

Sitting suspended- from 6.2S to 7.45 p.m.

Mr GLYNN:
Angas

– There are very few subjects which present more scope for difference of opinion than the question of dealing with the States debts. We have heard a great deal about the possibilities of adding to the security of the bondholder bv the transfer of the Sta’tes debts to the Commonwealth. At the very best, the whole of the assets would be taken over with. the whole of the debts. As a matter of fact, we shall not take over the whole of the assets. What the Commonwealth has to offer by way of security is the power of taxation - a power which the States also possess, except so far as Customs and Excise duties are concerned. In the proceeds of even the latter class of taxation, the States have an interest. They have, in addition, a number of tangible assets such as are not possessed by the Commonwealth. Even if the whole of the assets of the States were transferred, together with the whole’, of their liabilities, no additional security would be given to the bond-holders. There might be some advantage in the transfer of 1 Lability from one State to another, but to the extent to which one State might part with, what I may call its solvency to another State, it would weaken itself. There is not the remotest possibility of the States repudiating their debts. In view of our exceptional recuperative powers, there is not the shadow of a doubt that the States will ever fail to -discharge their liabilities to the fullest degree. The security offered by them must be regarded as of the highest character when it is considered that they have assets representing about _£ 1 80,000,000, which, to a large extent, would reproduce the capital expended upon them. By amalgamating the assets, and at the same time amalgamating the liabilities of the States, we shall not, as a matter of balance, add a tittle to the security afforded by the whole. One State must be weakened to the extent to which it gives a portion of its security to others. There may, however, be some fancy advantage in having a stock of a uniform “character, but this change cannot be brought about for many years to come. We shall have to earn a reputation for greater solvency, and by our administration and better financial management engender greater confidence in our ability to payup at any moment. I find it difficult to estimate the value of that greater security, because I regard the security of the States as sufficient. There will be no advantage in the transfer of the debts from the States to the Commonwealth, so far as security is concerned, except so far as purchasers may prefer to deal in a uniform stock. Some reference has been made to the wonderful benefits that would accrue from the Commonwealth taking over the whole of the debts at once. Referring to the proceedings of the Federal Convention, I find that I expressed some doubt with regard to the anticipations as to the wonderful increase that would take place in the value of Australian securities the moment that Federation was accomplished. The Treasurer was as sanguine then as he is now. When I asked the members of the Convention whether they were quite sure that the Federal security would be regarded as better than the security offered by the States, the right honorable gentleman made an interjection in the affirmative. He had a very rosy idea of the probable results of the conversion. In all cases of conversion, there must be give-and-take conditions. Compensation must be given for the surrender of the higher rate of interest during the unexpired term of the bond. I remember endeavouring to impress upon the members of. the Convention the desirableness of making provision similar to that now proposed to be inserted in the Constitution. I said : -

Let us see what will be the effect of passing clause 9S. That clause provides that existing public debts may be taken over either partly or altogether. The words “ existing at the establishment of the Commonwealth “ have been taken from the Canadian Act. At all events, they are in the Canadian Act, and they are applicable there, but not here. In Canada the whole of the debts were taken over at once, and therefore it was perfectly right to say thai the existing debts should be taken over. If you are to limit the debts to be taken over hereafter to the existing debts of the Commonwealth, you may subsequently find yourselves in this position : That you will be unable to take over any new debts incurred by the States, or to take over debts the character of which has been varied.

I could not impress upon the members of the Convention the. desirableness of making the necessary amendment, and hence we are driven now to amend the Constitution in the direction which the Convention thought was unnecessary. With regard to the appreciation of securities, nothing conveys a better idea of what is likely to happen than a comparison of the various stocks. The French stocks running fdr terms, approximately the same as German stocks, are higher by 8 or 10 per cent. (.because the French people have a greater reputation for thrift, and also owing to the fact that there have been large deficits in the German Budget of late. Of course, there is no doubt about the capacity of the Germans to meet their liabilities, but the public take into account considerations’ such as I have mentioned. At the time of the Federal Convention, the New South Wales 3 per cent, stocks had a market value very little below that of the Canadian stocks bearing a similar rate of interest. Canada has been developing her resources very largely of recent years. During the last three or four years she has brought under agricultural settlement 13,000,000 acres, an area larger than the whole of the cultivated lands of Australia. She has settled 80,000 additional people upon the soil during the same period. Apart from the impetus that has recently been given to settlement in Canada, it must be ‘ remembered that the Dominion has an exceptionally large sinking fund. One quarter of the total annual outlay in connexion with the debt is represented bv contributions to the sinking fund. The aggregate liabilities of the Dominion and the provinces is less than £80,000,000. In view of these facts, taken in conjunction with the circumstance that the stock is of uniform character, it need not be wondered at that the Canadian 3 per cents stand at £98 or £99 at present. When we have got beyond that period of pessimism and cavilling through which we, like the United States of America, have to pass, we may experexpect that our reputation for capable administration and financial management will give our stocks an enhanced value. In 1794, Washington’ was obliged to send troops to prevent a threatened insurrection against the Union in Pennsylvania. The spirit of secession was manifested in many forms until, in 1828. President Jackson had to declare that if any attempt were made to repudiate the Customs duties, he would have to call out the troops to protect the revenue. The anti-Federal spirit was manifested, in one form or another, until the war of secession, when the States, having passed through the splendid crucible of a great national crisis, were welded together in sentiment and affection as well as by the parchment bond. I am doubtful if we can, under the Constitution, substitute the security of the Commonwealth for that of the States. The honorable member for Northern Melbourne stated that it could not be done, and that is a matter upon which there is room for difference of opinion. I find, by reference to the Annotated Constitution of the Commonwealth, that Messrs. Quick and Garran say -

The effect of the transfer will be to substitute the credit of the Commonwealth for the credit of the States - to make the Commonwealth the. debtor to whom the bondholders will have to look, and to release the States from any obligation to the bondholders, imposing on them instead an obligation to indemnify the Commonwealth for the amount of principal and interest.

That is not in accordance with the opinion of the honorable and learned member for Northern Melbourne. He now says that the debts should not be taken over in proportion to population. I find, by reference to the Convention debates, that he was the very member of the Convention who moved that that provision should be inserted in the Constitution. I am afraid that now that the Bill has been tampered with by the Senate, objection may be urged to its passing, owing to the fact that we have not properly done our work. If we wish to take over the whole of the debts of the States - a proceeding of which I doubt the policy - how are we to do it properly, if we cannot give the security of the Commonwealth - if, as the honorable and learned member for Northern Melbourne says, that the taking over does not mean the substitution of one security for another? In the Canadian Constitution they substituted the Federal for the provincial security because thev expressly declared that, after the transfer of the debts, the provinces would no longer be liable, but that the whole responsibility would be undertaken by the Dominion. They also adopted a method which, I think, should have been followed bv us, namely, that of pooling the debts. I endeavoured at the Convention to induce the representatives to consider a motion to that effect. In Canada, the Dominion Government took over the whole of the debts, and all the assets which related to the debts, and which were specially capable of . being seized in connexion with them -the principal asset being the power of taxation. In almost every case, the bonds’ were directly chargeable against the Consolidated Revenue, and that was the principal security in addition to the assets in the shape of railways and Crown lands. Where the indebtedness of a province was greater per head than the average indebtedness of the whole of the provinces, it was only fair that that province should be debited with the excess; but where the indebtedness of a province was less than the average that it should be credited with the difference. The whole of the debts- were at once taken over by that operation. That is the plan which I venture to think we ought to have adopted. To that end I moved in the Convention -

That the existing public debts of the States shall, be taken over by the Commonwealth at the date of its establishment, and the interest thereon shall be a charge on the consolidated fund. Each State shall indemnify the Commonwealth in respect of the amount by which its debts exceed the average amount of the debts of all the States, after such debts have, for the purpose of ascertaining their- relative values, been reduced to and expressed in a debt pf the average currency and rale of interest of the debts of all the States. The Commonwealth shall be deemed to be indebted to a State in the amount so ascertained by which the reduced debt of the State is less than the average amount of the reduced debts of all the States.

The objection was raised that, by adopting the scheme which I have outlined, we should be making a present to the bondholders of the increased value of the Federal security. Experience has taught us how much that increased value is worth. Had that scheme been adopted, Victoria would have been credited with some £5,000,000 or £6,000,000, and South Australia, which was with Queensland at the top of the “list, from the stand-point of its indebtedness would have been debited with an amount of ,£7.000,000 or £S, 000, 000. In other words, that would have represented the excess of its capital indebtedness over the average indebtedness of all the States. T do not wish to pursue the matter further, -but as we are walking so much in the twilight I thought that I would make mv contribution to the general confusion. I cannot see that there” is the remotest good to be derived from passing the Bill in the form in which it has been returned from the Senate. In addressing i meeting some time ago, the honorable mem ber for Bland made a verv valuable suggestion, namely, that the Commonwealth ought to be empowered to take over any portion of the States debts. Very proper lv the Government included a provision to that effect in the Bill as it was originally introduced. That provision, which was the chief merit of the measure, has been struck out bv the Senate. I understand that the Government intend to accept the amendment of the honorable member for Mernda, which will practically restore the Bill to its original form, although its phraseology will be less explicit. The proper course for us to adopt is to take over so much of the debts of the States as will absorb annually an amount equal to the surpluses which have been returned to the States during the past five or six years. At the same time. I would allow the States a share of the Customs revenue hereafter, because there is no reason why thev should not participate in its greater buovancv. If we adopted mv suggestion we should take over about £r 20,000,000 worth of the debts of the States as they mature. .We might have to take over an additional £10 000. 000 or ^”15,000,000. in order to pay for the transferred properties.

Sir John Forrest:

– Not so much as

£15,000,000.

Mr GLYNN:

– I know that estimates were made ranging from ,£10,000,000 to £12.000.000. and I am sneaking on thf basis of the old figures. My point is that we cannot gain anything bv adopting any policv other than that of taking over the liabilities of the States to the extent of the sum that we ought annually to return to them.

Sir John Forrest:

– We cannot do that.

Mr GLYNN:

– We cannot do it unless we adhere to the Bill in. the form in which the Government introduced it. T shall vote against the amendment of the Senate.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Like the honorable and learned member for Angas, I presume that I may add a little to the general confusion that prevails upon this subject. In saying that.

I do not suggest that his speech added to the confusion. Far from it. There is no honorable member who throws more light upon any subject to which he addresses himself than does the honorable and learned member for Angas, and nobody is able to present an historical view of any matter in the same complete manner that he does. I have been privileged to hear most of the speeches delivered this afternoon, and I confess that I am glad to see the Treasurer - after all the fuming and petulance which he exhibited - come round to a reasonable frame of mind, and accept an amendment which completely stultifies the attitude which he adopted earlier in the day.

SirJohnForrest. - I thought that the honorable member was going to make a non-party speech.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– What is a party speech?

SirJohn Forrest. - Abuse.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– This afternoon the Treasurer abused me for half-an-hour in the most ill-tempered way, and refused to listen to any interjection, no matter how pertinent it might be. I am afraid we are wasting time in discussing this Bill. Had we accepted the amendment of the Senate - as the Treasurer proposed - we should have stultified our previous action. In like manner, if the Senate agrees to the proposal which we are likely to send up to it, its members will be stultifying their previous action.

Mr Johnson:

– It is a question of stultification whichever way it goes.

Mr.JOSEPH COOK. - I take leave to doubt whether the reconsideration which the Senate will give to this measure will amount to very much. I think that the action of that Chamber in returning the Bill with the amendment that it made was intended to be a polite way of administering to it its quietus for the session. I hope that I am mistaken. I shall be glad indeed if the Senate accepts the amendment of the honorable member for Mernda, which will have the effect of restoring the Bill to its original form, except that its verbiage will not be nearly so explicit as it was. However, I take it that we are serious in the matter of seeking further power to take over the debts of the States, and therefore the obligation is cast upon us by every constitutional means to try to achieve that end. I differ entirely from the Treasurer as to what would be the effect of taking over the debts under the conditions which he outlined this afternoon. His speech was a complete contradiction of his Budget declaration.

Sir John Forrest:

– Will the honorable member explain in what way it was a contradiction ?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I shall be glad to do so. In his Budget the Treasurer told us -

The financial authorities whom i consulted in London were unanimous in the opinion that it would be disadvantageous to place the Commonwealth brand on State stocks before conversion, as such action would prevent the possibility of any profitable conversion, and would be making to the existing holders a present of any increase in price caused by the additional Commonwealth security.

This afternoon the right honorable gentleman declared that by taking over the States debts we should obtain an additional security for ourselves, and he further informed us that we should be able to take over those debts without placing the Commonwealth brand upon them.

Sir John Forrest:

– I said that they will not have the Commonwealth brand upon them until they become Australian stocks

Mr.JOSEPH COOK. - I say that the moment they are taken over the Commonwealth brand will be upon them. It is not the Treasurer who will out that brand upon them, but the bond-holders.

Sir John Forrest:

– It is upon the States debts now, and it has not changed their price.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– It is not upon them now. It would be upon them if we made ourselves liable for the payment of the interest, and established a sinking fund for their redemption. The Treasurer wishes to draw a distinction between the branding of stock in a responsible and legal sense, and branding it in a nominal sense. My own impression is that we had better adhere to the position which we took up on a previous occasion. We then arrived at the conclusion that it would be a great mistake to touch the States debts unless we could confer some advantage upon the States. Everybody is agreed that to nut the Commonwealth brand upon them before the period of conversion or renewal would be to make a present to the bond-holders of whatever appreciation in the value of the stocks might result from our action.

Mr Fisher:

– I do not agree with that view at all.

Mr.JOSEPH COOK.- The honorable member may not agree with it, but that is the opinion of every financier in London whom the Treasurer consulted. We must pay some attention to the views of these experts.

Sir John Forrest:

– The honorable member has misunderstood me.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The language is explicit enough.

Sir John Forrest:

– What does the honorable member mean by the term “ placing the Commonwealth brand on the States stock “ ?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Taking over the debts of the States, and making ourselves responsible for them.

Sir John Forrest:

– When we convert them ?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– What does the right honorable gentleman mean by the expression “ taking over the debts’ of the States”? He says he means making ourselves responsible for the interest, the working of the sinking, fund, and the redemption of the loans as they mature.

Sir John Forrest:

– Even loans so treated would still bear the States brands. They would be known as the Victorian “ threes,” and so forth.

Mr.JOSEPH COOK.- Whatever they might be called, we may rest assured that the keen financiers of London would know what they really were. They would know that another body with a presumably better credit had stepped in and taken over the responsibility in respect of them.

Mr Fisher:

– How can the credit of the Commonwealth be better than that of the States when it represents only an aggregation of their securities?

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is a question which does not relate to the Bill now before us. The assumption is that the Commonwealth must have a better credit than the States. That is the view of all save those who wish to make an excursion into purely academic regions.

Mr Fisher:

– I admit that the one denomination would be an improvement.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-Quite so. There is no accounting for the opinions of the people, but we know that the views of bond-holders make themselves felt in the variations on the Stock Exchange. That being so, we have to take account of the variations in the minds of those who hold our stocks, whether there is any reason for them or not. I am one of those who consider that there is solid reason at the bot tom of the belief in a Commonwealth appreciation over and above the State credit. I believe that we shall eventually have an improved credit, althoughI doubt if there will be an immediate improvement. Certainly no improvement will be effected by the mere empty act of taking over these debts without our being able to do anything with them. We ought to be able to take over the whole of these debts, not for the purpose of immediately dealing with them, but in order that we might try. if possible, to assume responsibility in respect of the whole London indebtedness. If we began at that point, and cut the connexion between the States and the London market, we should immediately begin to make a better credit. The rest would be very easy. I should like to ask the Treasurer how, supposing he obtained the power to take over the whole of the debts, he would make himself responsible for the total interest bill in respect of them. We have not enough money to meet the interest bill.

Sir John Forrest:

– I pointed out in my memorandum that if the amount at our disposal were insufficient in any case, the difference would be paid to the Commonwealth by the States.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Who says that the difference will be paid by them?

Sir John Forrest:

– We find that provision in section 105 of the Constitution.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That section provides that “ the deficiency or the whole amount shall be paid by the several States.” But to whom would it be paid? I doubt whether the Treasurer would be able to say to the States, “ Under this section you must hand over the money to me.”

Mr Harper:

-It might as well be paid to the Commonwealth as direct to the creditors.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The right honorable gentleman would be on safe ground if on obtaining this power, he proceeded to deal with the debts by converting or redeeming them at maturity.

Sir John Forrest:

– That is what we propose to do.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– But, under the Bill as amended by the Senate, the Treasurer would, not be able to do anything of the kind.

Sir John Forrest:

– I should.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– How could the right honorable gentleman do so? If a Victorian loanof £5,000,000 fell due, he could not do anything with it under the. Bill as amended by another, place without taking over a per capita proportion of the debts of the other States.

Sir John Forrest:

– Not. at all. We should have to take over the whole of the debts, and deal with them as they matured.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– What would the Treasurer do when he had taken them over ?

Sir John Forrest:

– Pay the interest annually, and convert them, or else redeem them, selling Commonwealth stock for the purpose.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I doubt whether the right honorable gentleman could do anything in that direction. The debts should be taken over when, the Government proposed to begin to redeem or convert them. We should keep our credit for whatever it is worth until we wish to use it for States stocks.

Mr Johnson:

– What about all the States assets which are the foundation of the security ? Are they to be taken over ? Sir John Forrest. - No.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– After all, we have the great asset - we have control of the Customs and Excise revenue, and other powers of taxation. All this discussion, however, is quite apart from the Bill itself. We are now seeking merely the power to take over these debts, and that power should be a complete one. The limitations imposed by the Constitution, which experience has already shown to be unwise and irksome, ought to be removed. The Senate say that thev must remain, and the Treasurer proposed at first to try to operate within those limitations. I hope, however, that the amendment moved by the honorable member for Mernda will be carried and accepted bv another place. I have heard it rumoured that the Treasurer himself suggested the amendment. Whether he did or did not it cannot be denied that the honorable member has done the Minister a good service. This is not, and ought not to be, a party matter in the strict sense. No other question has a tithe of its importance to the States and the Commonwealth. Until it is settled we shall have constant difficulty and irritation, and we shall not even begin to realize the possibilities of Federation. It seems to me that it is vital to the whole of our functions, and is the one outstanding matter pressing for settle ment. Every honorable member, no matter what his political views may be, must realize the importance of this question, and I am glad that the Treasurer is going to make another effort to secure the complete powers without which I think he will not be able to deal satisfactorily with this question.

Motion agreed to.

Amendment inserting new clause, as amended, agreed to.

Amendment leaving out clause 2 agreed to.

Reported that the Committee had agreed to the Senate’s amendments with amendments.

Ordered -

That the report be considered at a later hour.

page 6125

PATENTS BILL

Second Reading

Mr ISAACS:
Attorney-General · Indi · Protectionist

– I move -

That the Bill be now read a second time.

This is practically a Bill to amend section 29 of the Patents Act of 1903. An amending Bill was before the House last session, embodying other provisions in addition to those in the measure now before us. These provisions were, not, if I remember rightly, much contested, though the others were. The Patents Act of 1903 consolidated, so far as that could be done, the laws of the States relating to patents. Section 29 provides that -

Applications for patents may be lodged at the Patent Office immediately “after the Commissioner is appointed, notwithstanding that this Act has not then commenced -

Under section 7, it was to commence “on a day to be fixed by proclamation “ - and all applications so lodged shall have priority as prescribed, and the lodging of an application under this section shall have the like effect as the lodging of an application after the commencement of this Act, but any patent granted pursuant to the application shall be dated as of the day of the commencement of this Act.

That section provided for the lodging of applications for patents immediately after the appointment of the Commissioner, to be arranged and dealt with as soon as the Act commenced. But difficulty has been caused by the words - and the lodging of an application under this section shall have the like effect as the lodging of an application after the commencement of this Act.

Section 67 enacts that a patent shall be sealed as soon as may be - and not after the expiration of sixteen months from the date of application, or such further time as is prescribed, or as the HighCourt or the Supreme Court allows.

The High Court or a Supreme Court could not extend the time except while it is running on; the timehaving expired, there would be nothing to extend. Some months elapsed between the appointment of the Commissioner and the commencement of the Act, and doubts have now arisen as to whether the applications lodged during that period should be regarded as having a full sixteen months from the date of the commencement of the Act, or as having only six or eight months, the possibility being that in the latter case certain persons have, in the confusion of getting things into working order, lost their rights.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does it take so long to register a patent ?

Mr ISAACS:

– I am not now concerned with the merits of particular applications; but considerable time may be expended in complying with the requirements of the office, in order that it may be known whether an idea has been anticipated, and what is the effect of an alleged anticipation. If any fault is to be found, itmust he found with Parliament for not making its meaning clear. The point at issue might be settled by litigation, but that litigation would be costly and uncertain, and we conceive it to be the duty of Parliament not to let any one suffer by reason of the ambiguity of its laws. Clause 2 provides that-

The Commissioner, or on appeal from him the Law Officer, may, in relation to any application for a patent made under section twenty-nine of the Patents Act 1903 : -

extend the prescribed lime for doing any act or taking any step, and

revive any application for a patent or any proceeding in relation thereto which has lapsed by reason of an omission to do any act or take any step within the prescribed time.

Mr Harper:

– Why limit the operation of the measure to section 29 of the Patents Act?

Mr ISAACS:

– Because it is only in that section that Parliament has used ambiguous language.

Mr Fisher:

– There are othercomplaints.

Mr ISAACS:

– Yes, regarding the operation of other provisions in the Act; but they have not arisen because of the phraseology of the Act. We endeavoured last session to pass legislation dealing with what may be cases of injustice, but we are not in a position to advise Parliament as to whether it would be better to leave things as they are or to make alterations. Some inventors, because of some slip of their own, or of some misreading of the law, not due to its phraseology, may have omitted to lodge their applications in time, or to properly follow them up.

Mr Glynn:

– I understand that the congestion of business in the office has delayed the acceptance of applications.

Mr ISAACS:

– That may be so; but it we extended the time in all cases we might do great injustice to the public. Companies and individuals may have acted upon the supposition that so-called “ inventions “ were no longer the property of the alleged patentees, and may have embarked capital in enterprises, behaving that they were free to use them. These persons might be put in a very difficult position if Parliament were now to replace what had become public property in the hands of private individuals. However, I am not at present it a position to say on which side the balance of justice would fall. We have limited the Bill to the amendment of one section of the Act, with a view to correcting, without doing an injustice, an ambiguity for which Parliament is chargeable. We provide that -

The prescribed time for doing any act or taking any step may be extended under this section although the time has expired.

The powers of the Commissioner or the Law Officer under this section may only be exercised on applicationmade to him by the applicant for the patent within six months after the commencement of this Act.

Where any application for a patent has been revived as aforesaid, and a patent has been granted pursuant thereto, then, if any proceeding is taken in respect of an infringement of the patent, no damages in respect of any such infringement prior to a notification of the revival of the application, published in the Gazette or the Official Journal of the Patent Office, shall be awarded.

If any person has used a patented article prior to the notification in the Gazette, he will not be liable for damages for an infringement of the patent, although in law there will have been no lapse of time between the application for and the granting of the patent.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– But he will not be allowed to continue to use it.

Mr ISAACS:

– Not after the notification. He will then be in the same position as if there had been no lapse. But we have no wish to make persons tortfeasors by retrospection. In view of the discussion last session, and of the small amount of time now at our disposal, we have limited the Bill to an. amendment about the justice of which there can be, so far as we are aware, no doubt.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Attorney-General has stated that one reason for the introduction of the Bill is the delay which occurred in bringing the Act into operation, and that all sortsof misconceptions and mistakes were possible in the administration of a new Patents Act consolidating the Acts of the States. Under these conditions we ought to deal leniently with any defects that have arisen, either through inadvertence, ignorance, want of time, or opportunity on the part ofthose interested an obtaining the registration of patents. There were some very debatable provisions in the measure of last session, and as these have been eliminated, andthe Bill is really a validating measure, we should not hesitate to pass it. I do not see why we should not extend the scope of this amendment to the whole of the provisions of the Act, and do our best to remedy any injustices that may have arisen. In any case, I shall support the Bill.

Mr GLYNN:
Angas

.- Personally, I think that the Attorney -General ought to extend the operation of the Bill. I have been informed by some patent agents that several applications which were received after the Act came into force, and which therefore did not come within the operation of section 29, were not considered in sufficient time to enable a patent to be issued within sixteen months of the time the application was made. In such cases, of course, a patent could not be granted. Under section 48, unless the complete specification is accepted within twelve months of the date of the application, or such further time as is prescribed, except in the case of an appeal having been lodged against the refusal to accept, the application lapses. The specifications have to accompany the applications, and unless the specifi cations are considered within twelve months, the applications lapse. I hear that the trouble has arisen owing to the congestion of business in the Department. If applications have not been considered through the inability of the Department to cope with the business, it will be very unfair to make the applicants suffer.

Mr Isaacs:

– The section which the honorable and learned member has quoted says, “ or such further time as is prescribed,” beyond the twelve months.

Mr GLYNN:

– Then why has not the time been extended to enable the applications to be dealt with?

Mr Isaacs:

– With regard to section 29, the idea was that the applicant should have sixteen months from the commencement of the Act, and apparently some of the applicants, thinking that they had a good many months to run, did not think of asking for an extension of time.

Mr GLYNN:

– There must be something in the complaints of the patent agents, because representations have been made to other honorable members as well as myself by a number of patent agents of high standing, to the effect that applications were made after the Act cameinto force, and that they have not been dealt with because of the stress of business in the Department. They say that now there is no help for them, and presumably therefore the time has not been extended. It would appear that there has been some neglect on the part of the administration, and, if so, a reform should be brought about. Provision is made in section 54 that after the acceptance of a complete specification, and until the date of sealing the patent, the applicant shall have the same rights and privileges as if a patent had been sealed on the date of the acceptance of the complete application. That section enables an applicant to take action for an infringement of patent rights, although the patent has not been granted at the time of the infringement, but the Bill providers that he is not to take action with respect to any infringement prior to the notification of the revival. An infringement might take place after the application had been made, and before the lapse of the application. Had the specification been accepted at the prescribed time, the applicant would be entitled under a possible construction of section 54 to take action for infringement, but if it had not been accepted within the prescribed time would not be entitled to sue for any infringement. That seems to me to be unjust. I think a patentee should be granted the right of action in respect to infringements prior to the notification of the revival. In connexion with the administration of the Patent Office, requests have been made that the register of patents shall be kept up to date in the branch offices in the various States, as in the case of the head office in Melbourne. I understand that the records can be written up from the Commonwealth Gazette in each State by a clerk in four or five hours per week. Persons who have to make searches for patents in the various branch offices have togo through the Gazettes, and hunt up all the applications, whereas at the central office they have only to look up the record that is kept up to date. Why the Department should want to centralize all the conveniences in Melbourne I do not know. I trust that the Minister will see that the convenience I have indicated is provided.

Mr FISHER:
Wide Bay

.- As the Attorney-General has pointed out, this amendment has the narrowest possible scope. It is quite true, as some honorable members have indicated, that complaints have been made to the effect that injustice has been done owing to neglect or oversight on the part of officers, and, no doubt, we can provide the remedy for any mistakes that have been made by the officials. If, however, we attempted to arrange for a general indemnity in respect to all errors that may have been made, we should find ourselves placed in a very embarrassing position. Something should be done to rectify mistakes that may have been made by our officials. In cases where it is proved to the satisfaction of the Crown Law officers that patentees have been placed under disabilities owing to the action of the officers of the Patent Department, every effort should be made to put matters right.

Mr Isaacs:

– That would be analogous to repairing a mistake made by Parliament itself, and I have drafted a clause which would have that effect.

Mr FISHER:

– I think that we may safely extend the scope of the Bill in that direction, and endeavour to do substantial justice to all.

Mr KNOX:
Kooyong

.- I am glad that the suggestion of the honorable member for Wide Bay has been accepted by the Attorney-General. When a measure of a similar character was under consideration last session, it was represented that certain hardships would arise in cases of accidental omission, or through inability to comply with the necessary conditions owing to want of time and other circumstances. For example, many mistakes were made owing to the great confusion which arose owing to the sudden change that was made from the varying conditions previously existing in the States. I am quite sure that the Attorney-General merely desires to do what is right in this matter, and I am sure that he will do his best to remedy any errors of omission that may occur.Surely the Attorney-General will admit that, in the multitude of interests which exist, there is a possibility of applicants being honestly unable to comply with the requirements of the Act. Of course, everybody will favour the granting of whatever powers may be necessary to meet cases in which there is the slightest indication of a desire to abuse privileges. I should like the Attorney-General to consent to the omission from clause 2 of the words “ section 29 of.”

Mr Isaacs:

– I have a special clause prepared which deals with general errors and omissions on the part of officers of the Patents Office.

Mr KNOX:

– Surely the applicant for a patent deserves consideration. I know from patents attorneys in Melbourne and Sydney that a feeling exists that many of their clients are labouring under an injustice. They are reputable men-

Mr Isaacs:

– I do not question that.

Mr KNOX:

– The Attorney-General knows that a more reputable body of men than the patent attorneys cannot be found.

Mr Isaacs:

– But they represent only one side of the case.

Mr KNOX:

– I merely wish to create a power to remedy obvious injustice.If errors have been made in the Department by trained officers, surely it is only natural to expect that a great many errors will be made by applicants who are unfamiliar with the provisions of the new Act. Let the Minister decide whether their applications are bonâ fide or not.

Mr Isaacs:

– The honorable member is suggesting that we should take away public rights.

Mr KNOX:

– I do not suggest anything of the kind. I merely wish to remedy public wrongs. Very glaring cases of injustice exist.

Mr Isaacs:

-If those cases are brought under the notice of the Government the injustice will be remedied next session. At the present time, however, we are absolutely in the dark.

Mr KNOX:

– Have not those cases been brought under the attention of the Attorney- General ?

Mr Isaacs:

– No; but they are not in my Department.

Mr KNOX:

– I urge upon the AttorneyGeneral the desirableness of remedying the condition of things which I have described.

Mr RONALD:
Southern Melbourne

– I shall strongly support the elimination of the words suggested by the honorable member for Kooyong, because it is quite evident that by doing so we shall not deplete the Act of any of its powers.

Mr Isaacs:

– After an application for a patent has proceeded, would the honorable member extend the time for opposing it ?

Mr RONALD:

– Certainly.

Mr Isaacs:

– Then no patentee would be safe.

Mr RONALD:

– We cannot possibly rob the Act of any of its powers by the excision of the words suggested. With that amendment, I think that the Bill ought to commend itself to the good sense of the House.

Question resolved in the affirmative.

Bill read a secondtime.

In Committee:

Clause 1 agreed to.

Clause 2 -

  1. The Commissioner, or on appeal from him the Law Officer, may, in relation to any application for a patent made under section twenty-nine of the Patents Act 1903 : -

    1. extend the prescribed time for doing any act or taking any step, and
    2. revive any application for a patent or any proceeding in relation thereto which has lapsed by reason of an omission to do any act or take any step within the prescribed time.
  2. The prescribed time for doing any act or taking any step may be extended under this section although the time has expired.
  3. The powers of the Commissioner or the Law Officer under this section may only be exercised on application made to him by the applicant for the patent within six months after the commencement of this Act.
  4. Where any application for a patent has been revived as aforesaid, and a patent has been granted pursuant thereto, then, if any proceeding is taken in respect of an infringement of the patent, no damages in respect of any such infringement prior to a notification of the revival of the application, published in the Gazette or the Official Journal of the Patent Office, shall be awarded.
Mr KNOX:
Kooyong

– I hope that I shall not be obliged to submit an amendment to this provision.

Mr Isaacs:

– I have prepared a clause to cover the errors of officers of the Department.

Mr KNOX:

– Why should it be limited to officers of the Department? To put myself in order, I move -

That the words “ section twenty-nine of,” lines 3 and 4, be left out.

Mr ISAACS:
Attorney-General · Indi · Protectionist

– If the honorable member’s amendment were carried, I should not be prepared to proceed with the Bill. I am sure that he is actuated by the very best intentions, but his proposal would open the door to such doubt and difficulty that patentees would not be safe. Whilst nobody would for a moment question the bona fides of the gentlemen to whom he has referred, it must be recollected that there is another side to the case which he has presented. If any instances of injustice exist, they should be brought under the notice of the Government, and I am sure that next session means will be found for remedying them.

Mr KNOX:
Kooyong

– I have no desire to press this matter, and I am sure that the Attorney-General realizes that I merely wish to do justice. Accordingly, I ask leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Mr ISAACS:
Attorney-General · Indi · Protectionist

– I move -

That the words “ the Gazette or,” lines 26 and 27, be left out.

That will allow of a notification of the revival of any application being published only in the Official Journal of the Patent Office.

Amendment agreed to.

Clause, as amended, agreed to.

Mr ISAACS:
Attorney-General · Indi · Protectionist

– I move -

That the following new clause be inserted : - “ 1 . Where, owing to any error or omission on the part of an officer of the Patent Office any application for a patent, or any proceeding in relation thereto, has lapsed, or any act or step in relation thereto required to be done or taken within a certain time has not been so done or taken, the Commissioner may -

extend the time for doing the act or taking the step ;

permit the act to be done or the step to be taken.

The prescribed time for doing any act or the taking any step may be extended under this section, although the time has expired.

The powers of the Commissioner under this section may only be exercised on an application made to him by an applicant or party within one month after the applicant or party has or might, with reasonable diligence, have become aware of the error or omission, or in cases where the error or omission occurred before the commencement of this Act within one month after the commencement of this Act.

A notification of each application under this section shall be published in the Official Journal of the Patent Office, and any person may, as prescribed, enter opposition against the granting of the application.

An appeal shallbe to the Law Officer from any decision of the Commissioner under this section.

Where any application for a patent has been revived and a patent has been granted pursuant thereto, then, if any proceeding is taken in respect of an infringement of the patent, no damage shall be awarded in respect of any such infringement occurring prior to a notification of the revival of the application published in the Official Journal of the Patent Office.”

Mr GLYNN:
Angas

.- I think that the clause is a very good one, but I would point out that it will apply to the future. Perhaps it may be advisable to make it so apply, but it is not necessary to do so.

Mr Isaacs:

– If it is just now it will be just always.

Proposed new clause agreed to.

Bill reported with amendments.

Standing Orders suspended, and Bill passed through its remaining stages.

page 6130

PUBLIC SERVICE (TELEGRAPH MESSENGERS) BILL

Mr GROOM:
Minister of Home Affairs · Darling Downs · Protectionist

– I move -

That this Bill be now read a second time.

This is a short measure designed to extend the retiring age of telegraph messengers from eighteen to twenty; years. It provides for the repeal of section 10 of the Post and Telegraph Act 1901, under which the retiring age is fixed at eighteen years, and declares that -

Every telegraph messenger shall on attaining the age of eighteen years cease to be employed in the Public Service unless before attaining that age he passes an examination to be prescribed.

Every telegraph messenger who before attaining the age of eighteen years passes the examination so prescribed may be allowed to continue to be employed in the Public Service as a telegraph messenger until he attains the age of twenty years when he shall (unless he has previously been transferred or promoted to some other office or position in the Public Service) cease to be employed in the Public Service.

The Bill also provides that an annual examination shall be held. This extension of the retiring age is proposed on the recommendation of the Public Service Commissioner. The present position is that, in the absence of any vacancy in the service, these messengers must retire on reaching eighteen years of age, and many efficient lads, who, the Commissioner considers, would be suitable for the service, are thus compelled to leave it. It is proposed that they shall be permitted to remain in the service until reaching twenty years of age, provided they have passed an examination of a practical nature better designed to test their qualifications. It will be a practical examination, securing to the service the more efficient of these lads, and, at the same time, it will render unnecessary many of the examinations and appointments that now take place, and the writing of executive minutes in connexion with the reappointments. Telegraph messengers now enter the service between the ages of thirteen and sixteen years. They are appointed as the result of a competitive examination in the first instance, the subjects being handwriting, spelling, and elementary arithmetic. If they do not pass in all these subjects, but secure half marks in handwriting and spelling, theyare allowed to act as messengers, but are not entitled to promotion until they have passed a fresh examination including the whole three subjects. The Commissioner anticipates that, in actual practice, all who pass the practical examination to be prescribed will be provided with positions before they attain the age of twenty, so that the Bill will prevent hardship being suffered by those whose merits entitle them to consideration.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Does he say how many boys he hopes to absorb?

Mr GROOM:

– Having regard to the increased age limit, he considers that the service will be capable of absorbing those who pass the examination, as they will only be the best boys.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The increased retiring age will not afford additional opportunity for appointments.

Mr GROOM:

– It will extend the time during which they will be eligible for promotion. Under the existing system, examinations are continually being held, and there are so many lads under the age of eighteen years that there is no possibility of their all being absorbed in the service. Since 1st January, 1903, examinations have been rendered necessary in 720 centres to fill vacancies caused by the retirement of telegraph messengers, and no less than 4,531 boys have been examined for appointment. If this Bill is passed, it will have the effect of reducing the number of examinations; and I ask the House to agree to it as a fair and reasonable proposal.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am not going to oppose this Bill, but I doubt if it will have the effect that the (Commissioner anticipates. The trouble is that the opportunities for appointment in the service do not multiply fast enough to enable these boys as they grow up to be absorbed. I doubt whether the position will be improved by retiring lads when they reach the age of twenty.

Mr Mauger:

– Difficulties must arise in either case.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am not sure that this Bill will cure the difficulty.

Mr Mauger:

– A lad of eighteen is fit for nothing when he is sent out into the world after spending some years in the employ of the Department.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– And his chances of fitting himself for some other calling will be still further prejudiced if the age be increased from eighteen to twenty. Those who were transferred were allowed under the original Act to remain until they reached the age of twenty or twenty-one, and the same practice prevails in the Railway Department, where young men of twenty-one, being no longer juniors, are cast adrift, as there are no senior duties for them to fulfil.

Mr Groom:

– Under this Bill, a lad would have a better opportunity of securing a permanent appointment.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The trouble is that there are not sufficient vacancies in the service to absorb all these lads.

Mr Wilks:

– If we do not retire them until they are twenty years of age, it will be impossible to apprentice them to any trade.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is so. A lad of eighteen has a chance of being apprenticed, but that chance is a poor one in the case of a lad of twenty. If the Commissioner thinks this course desirable, well and good ; but unless he can increase the avenues of employment he will, under this Bill, only increase the difficultes of the Department, and inflict a still greater injustice on the boys.

Mr. DUGALD THOMSON (North Sydney [9.28]. - I would remind honorable members of the evils that were brought to light when the original Bill was under consideration.

Mr Groom:

– In New South Wales there was no examination.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– The difficulty arose not only in New South Wales, but in some of the other States.

Mr Groom:

– In Victoria there was at one time no age limit.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That is so; and the number of messengers was far in excess of the vacancies offering for their permanent appointment.

Mr Groom:

– Some of these messengers in some of the States were over thirty years of age.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That is so. Some of them were married, and were receiving salaries altogether inadequate for the maintenance of their families.

Mr Groom:

– There were married men employed as messengers, and receiving only £60 a year.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– There were men having family responsibilities, who received only youths’ wages. The present difficulty may be accentuated by this proposal to increase the age limit. No one wishes to see boys of eighteenturned adrift, but the service cannot possibly absorb all the lads. If the retiring age be extended to twenty years, these youths will be less fitted to follow any other calling, and even if they pass the examination, they may not succeed in obtaining permanent appointments. The Commissioner apparently hopes by the examination to so largely reduce the numbers as to be able to absorb all the successful candidates. If the examination is so stiffened that comparatively few can pass it, it may be higher than the examination which’ candidates for more important positions have to pass. That would be unjust.

Mr Groom:

– It will be a practical examination.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– While I do not wish to oppose the measure, I wish to direct the attention of the Minister to the difficulties of the case. What is to happen is that a large number are to be discharged at eighteen as at present, and of those who are retained a considerable proportion may be sent away at twenty, when they will be more unfortunately situated than if they had left the service at “eighteen. I am doubtful whether the Bill may not make the position worse than it is.

Mr Mauger:

– It would not be fair to use the examination as a method of blocking appointments.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It would be a method of selection.

Mr Fisher:

– There is no possibility of more being employed after the Bill passes.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– That will be so after the first two years, when the absorption will be at the same rate as at present. The successors of those who pass the examination within the next two years will be in no better position than are those now in the service. I think that the difficulty, which I admit to be hard to deal with, is not sufficiently met by the Bill, and my experience in connexion with State services prevents me from assenting very readily to the proposal that the discharges shall take place at twenty instead of at eighteen.

Debate (on motion by Mr. Deakin) adjourned.

page 6132

QUESTION

CONSTITUTION ALTERATION

Motion (by Mr. Deakin) proposed -

That the report be now adopted.

Mr CULPIN:
Brisbane

.- When speaking in Committee, I pointed out that there are three proposals in regard to the taking over of the debts of the States. The Commonwealth may either take over only those which had been incurred at the date of the Union, for which the Constitution already provides, or it may. if the Constitution is altered, as originally proposed, take over the debts incurred up to the present time, whilst the Senate’s amendment gives power to take’ over both those incurred at the present time and those that may be incurred in the future. I am in favour of the taking over of the debts incurred at the date of the Union, and am not averse to taking over as well those incurred between then and the present time ; but I altogether object to the taking over of future debts. Still, as this is not a Bill providing for the taking over of the debts, but merely allowing the people to say whether Parliament should be empowered to deal with the matter. I do not propose to vote against it, but will allow the electors to decide by referendum, as proposed.

Question resolved in the affirmative, those voting being -

Mr SPEAKER:

– There are thirty-nine ayes. The Bill therefore passes with the statutory majority.

page 6132

PAPER

The Clerk laid upon the table the following paper -

Part return to an Order of the House dated 28th September, relating to the promotion of postmasters to the grade of their offices.

page 6132

ADJOURNMENT

Order of Business : Butter Grading : Mr. W. J. Hallam

Mr DEAKIN:
Minister of External Affairs · Ballarat · Protectionist

– So far as I am at present acquainted with the progress of business, I think that the honorable member’s suggestion will be well worthy of consideration. To-morrow we have the South African preference resolutions and two little Bills to dispose of. I move -

That the House do now adjourn.

Mr KENNEDY:
Moira

.- I desire to direct the attention of the Prime

Minister, in the absence of the Minister of Trade and Customs, to a matter of some importance. Some of the regulations under the Commerce Act apply to the export of butter, and I desire to state the position as it has been represented to me, and to mention certain facts for which I am prepared to vouch. When the regulations were about to be drafted, the Minister convened a conference of persons engaged in the export trade and of butter experts, which was held in Sydney. When the provisional regulations were drafted they provided for two .methods by which butter could be exported. Under one method’ what was known as a compulsory grade mark was required, whilst under the other method the exporters furnished a certificate in writing bearing a number corresponding with that appearing on the box containing the butter intended for export. All these arrangements were agreed to. Those who accepted the compulsory grade mark did so under Part V. of the regulations. Those who did not wish to have their produce graded accepted the alternative of the certificate in writing, which was supposed to give particulars as to the percentage of preservatives, casein, water and colouring matter contained in the butter. The exporters and the Department were agreed as to the conditions that were laid down. Some time afterwards, however, when the regulations were being put into shape, the exporters were told that they would have to supply the exact percentages in each case. Instead of merely stating that the butter contained not more than 3 per cent, of this, or that, or the other, they were required to supply particulars as to the exact proportions. A number of the exporters, accompanied bv myself and other members, waited upon the Minister, and, as the result of the interview, it was agreed that merely the maximum percentages should be indicated on the certificates. All parties were then satisfied, and those who were engaged co-operatively in the shipment of butter, and upon whose account I am principally concerned, thought nothing further would be heard of the matter. But since the publication of the regulations, which were supposed to come into force on the 1st of this month, information has been conveyed to the exporters that the certificate, which they understood was to be in writing, must be stamped on the boxes. I wish to know from the Minister whether he can give such information as will satisfy those immediately concerned, and enable them to carry on their export operations without interruption. I believe that the instruction which has been issued is due to some misinterpretation of the Minister’s order, and I trust that the Prime Minister will see that matters are set right, and that an important industry is not unduly interfered with.

Mr G B EDWARDS:
SOUTH SYDNEY, NEW SOUTH WALES · FT

– As this may be my last opportunity, I should like to refer to the case of Mr. Hallam, a young telegraph operator in Tasmania, who has done some excellent work in connexion with the Department. I asked for the papers relating to his case some three weeks ago, and I had hoped that they would be available long before this, so that I could speak with more assurance on the subject. I have taken a great deal of interest in the case of this young man, because he appears to me to have displayed singular technical ability. I am informed that about eight years ago, of his own initiative, he erected a Marconi apparatus in Tasmania, and was able to hold communications with an incoming Russian vessel. This talented young officer was sent to Western Australia to initiate a long-distance telephone system there, and he also installed the condenser system. Later on “He performed similar work in Queensland, and the honorable member for Maranoa has frequently made reference to the value of the services rendered by him. The honorable member for Coolgardie, who was at one time Postmaster-General, has also publicly acknowledged the very valuable services « rendered by Mr. Hallam. I have brought this case under the notice of four successive Postmasters-General, each one of whom has told me that some public recognition should be made. Two of the Ministers told me that they were sorry I had mentioned the case, because they had fully made up their minds to deal with it. But nothing has been done. I recently saw a notification in the Commonwealth Gazette, which indicated that for all the services rendered by this promising young officer, which have been acknowledged over and over again, he has been granted a gratuity of ,£25, and is being retained in the very subordinate position which he has occupied for a considerable number of years. I think that where our public servants show such diligence and special aptitude, and do valuable special work outside of the ordinary routine, some greater recognition should be given to them. I know that thepolitical heads of the Department say that nothing can be done in consequence of the matter being under the control of the Public Service Commissioner, and I suppose that if we were to see the Public Service Commissioner he would tell us that it was a case in which Ministerial action was required. I think that something should be done, and I take this last opportunity to appeal to the PostmasterGeneral to suitably recognise the signal ability of this young officer.

Mr WILSON:
Corangamite

.- I wish to emphasize the remarks of the honorable member for Moira, who has referred to a matter of great importance and urgency. The regulations relating to the grading of butter have been see-sawing about for the last six months, and the exporters, who are now approaching the busiest time of the year, do not know where they are. I was at a recent meeting of representatives of those engaged in the co-operative marketing of butter, at which an attempt was made to bring expert information before the Minister, and to induce him to bring into operation a workable set of regulations. It was then agreed that the certificates issued by the Department should be numbered, and certificates should be sent home with the shipments, and that numbers corresponding with those on the certificates should be placed on the boxes. The Minister promisedthat that reasonable arrangement should be carried out, and all the exporters ask is that the question shall be satisfactorily settled at once. I am very glad that the honorable member for Moira mentioned the matter, because it is one of very great importance.

Mr McWILLIAMS:
Franklin

– I have never been able to understand the want of action of successive PostmastersGeneral in the matter referred to by the honorable member for South Sydney. Mr. Hallam, who occupied a somewhat obscure position in Hobart, devoted the whole of his time to certain experiments. If he had applied his ability and energy to furthering his own fortunes, and had secured the patent rights of what was practically his discovery, instead of handing over the whole results of his work to the Department, he would have occupied a very different position. The work he did in Western Australia saved the

Government many thousands of pounds. Up to the present, however, his services have not been recognised. It is discreditable to the Government that, after four years of waiting, this officer should be granted the magnificent gratuity of£25. If I were in his place, I should decline to accept it. I sincerely hope that the Government will yet see their way clear to grant him a sum which will be commensurate with his services to the Commonwealth.

Mr Watkins:

– What has he done?

Mr McWILLIAMS:

– He discovered a method of applying the condenser system, which practically revolutionized it, and made a success of what would otherwise have been a failure.

Mr MAHON:
Coolgardie

.- Although I do not know Mr. Hallam personally, I wish to bear testimony to the excellent work which he performed in the Department, and to say that he did very useful work in Western Australia. The improvements which he recommended did not find favour with electricians there, who questioned their efficacy. But upon an appeal being made to the PostmasterGeneral, that gentleman directed that experiments should be carried out, and, as a result, Mr. Hallam established telephonic communication between Coolgardie and Lake Way, a distance of 250 miles, thus conferring an immense convenience on the residents of those places. As the result of his discovery, wherever there are telegraph lines the people are able to enjoy, to a limited extent, the benefits of telephonic communication, thus saving time and money. It was Mr. Hallam’s success in Western Australia which induced the Department to apply the system so generally throughout New South Wales and Victoria. I think that the Postmaster-General might fairly consider the claims of this officer. Certainly that has not been done upon the Estimates. I submit that the Department, instead of passing him over with an inadequate gratuity, ought to reward this man of genius with a substantial advance in the service. By so doing, we should make it evident to the rest of the officers that a good man, who puts brains into his work, will secure such substantial recognition as he would obtain outside. The Government might very well take a leaf from the book of the business and professional classes, who, if they have an employé of special capacity, push him on, instead of keeping him back until his seniors die off. Not only in the matter of salary, but also in that of position, the Postmaster-General might very well decide to grant Mr. Hallam a very substantial advance.

Sir LANGDON BONYTHON:
Barker

– By way of personal explanation, 1 wish to say that I intended to vote in the recent division. When the bells Tang I was upon the Senate side of the building, and did not hear them, otherwise I should have entered the Chamber, and, of course, have recorded my vote with the “Ayes.”

Mr AUSTIN CHAPMAN:
Postmaster-General · EdenMonaro · Protectionist

– I nave endeavoured to obtain the information asked for by the honorable member for South Sydney, but, inasmuch as it has to be forwarded from distant States, I have been unable to do so up to the present. I fully recognise the good service which has been rendered by Mr. Hallam and another Tasmanian offi- cer, who was his colleague. As a matter of fact, we have already given Mr. Hallam a larger share of responsibility, and a small increase of salary. But I intend to bring his case, and that of the other officer to whom I have referred, before my colleagues, with a view to ascertaining whether we ought not in some way to recognise the good service which they have rendered to the Commonwealth. I quite agree that where officers devote themselves to the service, and are men of genius, they ought to receive some substantial recognition in the way of promotion. Immediately an opportunity offers, in the interests of the Department - apart from considerations of common justice - we propose to do something for Mr. Hallam. Bearing in mind the strong representations which have been made to-night, I promise the honorable member for South Sydney that I will bring this matter under the attention of my colleagues.

Mr Wilks:

– Is not the PostmasterGeneral sorry that the honorable member for South Sydney is quitting parliamentary life?

Mr AUSTIN CHAPMAN:

– If there is one other reason which would prompt me to give generous consideration tohis request, it is the fact that for the present, at all events, it will be the last he will make. I happen to be a personal friend, as well as a political opponent of the honorable member, and I desire to say that, notwithstanding his present determination, I still hope that he will again be seen in this House taking part in our deliberations.

Mr DEAKIN:
Minister of External Affairs · Ballarat · Protectionist

– So far as I am acquainted with the matter which was mentioned by the honorable member for Moira, his statement as to thecirumstances surrounding the framing of the regulations under the Commerce Act is quite accurate. At the last moment, however, there has been a misunderstanding between my colleague and the honorable members who have spoken. The honorable member for Moira has referred to the stamping of butter boxes under Part V. instead of under Part III. of the Act. It is evident, from what he said, that the intention of the Regulation has not been made clear. As the Minister himself - in reply to a question the other day - expressed his anxiety that the introduction of this new form of control should be made as considerate as possible, I take it that his remark will cover cases of misapprehension of this kind. The Department is now preparing an addition to the regulations which will enable effect to be given to the principle of concession which he has laid down in this, as well as in other cases.

Mr Kennedy:

– Is it imperative that the information which is embodied in the certificate under Part III. of the Act shall be stamped upon the boxes?

Mr DEAKIN:

– As I understand the position, that is where the difference of opinion has arisen. The honorable member contends that what is to be stamped upon the box is the number only, and that the particulars are to be embodied in the certificate bearing the same number, which is to accompany it. The understanding of the Minister was that this was to be done only under Part V. of the Act, and that under Part III. the information embodied in the certificate should also be stamped on the box. As therehas been a misunderstanding, the Minister admits that it is desirable that steps should be taken to allow the view which is entertained by honorable members to be adopted, at all events experimentally and for a sufficient time.

Question resolved in the affirmative.

House adjourned at 10.12 p.m.

Cite as: Australia, House of Representatives, Debates, 4 October 1906, viewed 22 October 2017, <http://historichansard.net/hofreps/1906/19061004_reps_2_35/>.