3rd Parliament · 4th Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
– In the Sydney Daily Telegraph of 29th ultimo, there appeared, under the headings, “Motor Smash,” “Collision with Telegraph Pole : Two persons badly injured,” an account of an accident which resulted from a, motor car running into a telegraph pole at Sutherland. The Shire Clerk of Sutherland has written to me a letter, in which he states -
This question, of the position of these poles has been brought under the notice of the Postal Department as far back as 1907, and some correspondence followed.
The Department sheltered itself behind the Commonwealth Act and absolutely refused to <lo anything in the matter, notwithstanding the fact that this Council offered to provide the services of two Maintenance men to assist under the supervision of the Departmental officers. These poles stand 15 feet from the road alignment, when the Council formed up the footpath and cut out the water-table the poles stand 3 feet out from the edge of footpath, constituting a danger to traffic, not merely at the corner in question, but right through the township and a particularly busy portion of the road. Will the Postmaster-General inquire into the matter, and ascertain whether this dangerous obstruction, which has already resulted in a serious accident to two persons, and has caused damage to property, cannot be removed ?
– Whilst it is the legal right of the Department to erect telegraph poles in any part of a public street, I do not think that that right ought to be exercised in a, reckless way, without regard to local convenience and local considerations. In several cases I have interposed, and have directed the removal of poles from positions in which they constituted an obstruction, without being necessary for public convenience. I have seen a report in reference to the case referred to bv the honorable member, and shall cause inquiries to be made with a view to ascertaining whether blame was attachable to any one, and whether anything can be done to prevent a repetition of the occurrence.
– I desire to ask the Postmaster- General a question in reference to the following paragraph, which appeared in. this morning’s issue of the Argus -
Brisbane, Thursday. - The contract between the Postmaster-General and the A. tj. S.N. Company for the carriage of mails between Brisbane and Cooktown and intermediate ports came to an end on Sunday last. The matter of a new contract has been under consideration for some time. The new contract was practically agreed upon to-day. The matter apparently came to a head when the company intimated that it did not intend to despatch the Bingera north this week, the contract having run out. Subsequently it was stated that the present service would be allowed to continue till the end of the year, but immediately thereafter some radical arrangements will be made. The Bingera will consequently sail for the north tomorrow. The new contract is for five years. The most important feature of the new contract is that the large steamers which leave Brisbane on Saturday will not be bound by the mail contract, and will not go past Cairns. Hitherto they have gone on to Cooktown.
I wish to ask the Postmaster-General whether the radical alterations referred to in that paragraph are being made by the’ contractors or by the Department, and what, if any, arrangements have been made to carry mails from Cairns to Cooktown, and thence northwards between the expiration of the present contract and the beginning of the year.
– Negotiations in connexion with this contract have been going on for three months. The Australian United Steam Navigation Company first demanded £24,700 for a new service, but, as the result of negotiations, I have entered into a new contract, under which we shall pay ,£18,450. The only difference between the old and the new contract is that the company will not be compelled to send large steamers to Cooktown. That town is to be served by an extension of the existing service from Cairns via Port Douglas.
– I do not think the Postmaster-General has quite followed my question. He told us that other arrangements have been made for the carriage of the mails from Cairns to Cooktown., but he did not say what those arrangements are. I suppose there is something in the contract in relation to the class, tonnage, and speed of the vessels.
– There are a. number of papers here, which it would take too long to read, referring to the matter. Instead of the big steamer going from Brisbane to Cooktown, there will be a smaller steamer service established between . Cairns and Cooktown.
– The same vessel will run to Cairns as at present?
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are -
asked the PostmasterGeneral, upon notice -
Service Act, an officer may be dismissed by the chief officer or the permanent head for an offence of a serious nature, or should the charge be referred to a Board ?
– The answers to the honorable member’s questions are -
The Public Service Commissioner has furnished the following information : -
Where the charge is admitted an officer may be dismissed on the recommendation of the chief officer or permanent head. In such case reference to a Board of Inquiry is not necessary.
No, further suspension is only necessary where the charge is referred to a Board of Inquiry.
The charge is laid by the Chief Officer, and the admission is required to be made to him.
asked the PostmasterGeneral, upon notice -
-Inquiries are being made, and the desired information will be furnished as soon as possible.
– In view of the fact that State debentures and stocks are issued in Australia free of income tax, I desire to ask the Attorney-General whether the inscribed stock or bonds in connexion with the proposed Commonwealth loan can also be issued free of income tax?
– The State laws deal simply with their own income tax. We have none, and the States cannot impose an income tax so as to affect our securities. I think that that was decided in the case of Osborne v. the United. States of America.
– Will the Minister of Home Affairs state whether it is true, as reported in the press, that he does not intend to do anything with regard to the establishment of the Federal Capital until he has advertised in Europe for competitive designs for laying out the Federal city. Further, is there any. truth in the rumour that he proposes to bank his fires and go slowly. If not, will he state what steps he intends to take at an early date to establish the Federal capital in the territory that has been set apart for the purpose?
– I certainly do not intend to bank my fires and go slowly. TheSurrender Bill has been passed by the Legislative Assembly df New South Wales, but I am not aware whether it has yet passed the Legislative Council. As soon as the matter has been completed I shall’ be prepared to deal with the whole question, and deal with it, I hope, effectively.
– I desire to ask the Minister of Home Affairs whether it is his intention to advertise outside Australia for plans for the Federal city beforeproceeding with the survey, and, if so, whether he intends to do that at an earlydate?
– The position put by the honorable member has received consideration, but has not been finally dealt- with. I shall do all I can to secure suitable plans for the Federal city.
– Will the Minister of Home Affairs, from the’ very inception, take definite steps to insure that everything pertaining to the Federal Capital shall, as far as possible, be essentially Australian? I refer to the timber, trie stone, and everything necessary.
– I am just as anxious as the honorable member, and, I presume, as other honorable_ members, to give Australian workmen and manufacturers the fullest opportunity in connexion with all our work. That is already the policy of the Department of Home Affairs, and I presume it will be followed in connexion with the Federal Capital.
– Will the Minister of Home Affairs say whether the report is true that he intends advertising be yond Australia for plans for the proposed Federal Capital ?
– I have already stated that that matter has been under consideration, but no determination has been arrived at.
Attendance of Cadets
– Can the Minister of Defence explain why so small an attendance is expected from Victoria in connexion with the Kitchener camps, which are to be held to enable Lord Kitchener to review our troops, and obtain some knowledge of their numbers and skill ? Further, I desire to know whether the cadets are to be excluded from those camps? If this is the present intention of the Minister, will he consider the advisableness of allowing the cadets to attend, so that the Victorian camps mav make a fairly good show ?
– I am unable to explain the reason for the great disparity between the figures for Victoria and those for the other States. My own impression is that some of the figures, in regard to the anticipated attendance at camps in the other States, are a little optimistic. I sincerely hope that they are not, and that the figures for this State are, on the other hand, a little pessimistic.
– The Minister of Defence has not replied to the second part of my question, as to whether or not cadets are to be excluded from these camps, and, if. so, why ?
– My honorable friend is aware that cadets do not go into training camps with seniors. That is to say,- we do not mix up the cadets with the seniors.
– Amend the Defence Bill.
– I do not see that the Defence Bill has anything to do with the point I am putting. I am speaking now of the Kitchener camps. I am afraid that the cadets cannot be sent to the camps together with the seniors, for the reason that we have not a double equipment. I have been considering for some time the best way to get them to camp, and the honorable member may rest assured that, whether they go or do not go into camp, they will turn out, and that Lord Kitchener will have a good look at them.
– In view of the importance of the camps which are to be established when Lord Kitchener arrives, I desire to know from the Minister of Defence whether there is any information in the Department which leads him to think there is any chance of employers being so unpatriotic as to try to interfere with their success ?
– None whatever, that I have heard of, and I sincerely hope there is no justification for any such idea.
– I wish to ask the Prime. Minister whether the Government have yet finally dealt with the report of the EngineersinChief in relation to the survey of a route for the transcontinental railway, and whether it is the intention of the Government to proceed any further with that work during the present Parliament.
– Owing to pressure of business we have been unable to take into consideration the course we shall pursue.
– I move -
That, for the remainder of the Session, unless otherwise ordered, the House shall meet, in addition to the present sitting days, on Mondays and Saturdays, and that the hour of meet ing each day shall bc u o’clock a.m.
Of course, I hope that this motion will apply only to the coming Saturday and Monday, and that we shall be able to close, at all events, by the middle of the week.
– How long is it proposed to sit to-morrow?
– I propose to ask honorable members to sit until the usual hour.
– Until n at night?
– If necessary.
– There ought to be plently of time to conclude the business without sitting so late.
– I make the suggestion for the convenience of honorable members from distant States, who have been asked to remain in Melbourne over this week-end in the hope that the business will be concluded before the end of next week. The last five or six items on the notice-paper, including Supply, Ways and Means, and so forth, are what may be described as formal, and will not, I think, occupy much time.
– Cannot we deal with the Parliamentary Witnesses Bill ?
– I am perfectly willing to do so, only it is rather a contentious measure. When the Naval Loan Bill has been dealt with, the measures down to the Conciliation and Arbitration Bill are not, in the ordinary sense of the term, contentious, and, having passed the Senate, they have only to be reviewed here. ‘
.- I had expected the Prime Minister to give an outline of the actual measures he desires to deal with before the .prorogation, and also a statement in regard to the proposal of the Government some time ago in connexion with what is called the new Protection. That is rather an old question, of some interest to the Parliament and the people. It was a settled part of the policy of the last Government of which the present Prime Minister was the head ; and, in my opinion, he pledged himself to the country when the Parliament was elected that, if Protection were given to the manufacturers and the capitalists, the employes also should have a share of the benefits. That part of the bargain has not been carried out; and I am sorry that the Prime Minister has not seen fit to make an explanation. Obviously, the Government have changed their ground on this matter. They are very ready to issue memoranda and reports on the question, and when the capitalists, powerful corporations, or the moneyed classes are concerned, they show the greatest alacrity in removing any difficulties of which complaint is made. We have seen that in regard to the telephone rates, and other matters, action was taken at once to afford relief, though nothing has been done to protect the workers. I understand that the Government will proceed with the Seamen’s Compensation Bill, the Conciliation and Arbitration Bill, the Lighthouses Bill, and ‘so forth; and I am of opinion that the Parliamentary Witnesses Bill might also find a place in the measures to be completed this session.
– I have no objection.
– lt would appear that some honorable members, if they had their own way, would sit on Sundays. 1 am quite ready to be here at any and all times to assist the Government in the business of (he country. I do not agree with the Prime Minister, however, in regard to the Estimates being merely formal business. At any rate, before the House rises I shall expect from the Treasurer brief statement showing clearly the financial position.
– Hear, hear.
– I am glad that the Prime Minister agrees to that idea.
– There is no change in the finances this year.
– There is an actual change in the expenditure. The Treasurer himself has told us that the expenditure is greater than the income.
– I showed the position in my Budget speech.
– But circumstances have changed since then.
– I do not think they have at all changed.
– In the Budget speech there was no reference to a loan of
– That does not affect the finances this year.
– The proposal to borrow was made only the other day, and I must say that I was astounded when I heard it. If the Treasurer is prepared to make such a statement as I have suggested, we shall be glad to hear it, but, if not, we shall have to seek some other means of obtaining the information.
– There are no secrets to hide.
– I am not saying that there are, and the’ Treasurer is evidently in a suspicious mood. I am only asking on behalf of the House and the public for a financial statement which will enable the electors to know the exact position of affairs. I regret that it is necessary to sit on Saturdays and Mondays ; but, at the same time, I am willing to assist the Government in every possible way to bring the business at an end, consistently with a reasonable discussion of the measures before us.
.- Are we to take the Prime Minister’s announcement as authoritative that we shall sit to-morrow night? 1 have an appointment then which I shall have to cancel, and I do not desire to find, after cancelling it, that we do not. sit. Can I take the Prime Minister’s announcement as definite?
– If we should be so unfortunate as to have to sit next Friday, I hope the hour of meeting will be made 1 1 o’clock ; indeed, I think that next session that should be made the hour for morning sittings.
– I have no objection to the House sitting tomorrow, but I think we certainly ought not to continue until to-morrow afternoon. If we sit to-morrow morning, and Monday, it will be all that is necessary, especially in view of the fact that since Tuesday we have been sitting about twelve hours a day. There is one matter on which I think we ought to have a definite statement from the Prime Minister. When the Leader of the Opposition spoke about new Protection, one Ministerial member interjected that it was practically dead through the fault of the Opposition. After the High Court had given its decision on the subject, the Prime Minister, speaking on the 20th October, 1908. said -
I do not intend to debate the question of the new Protection. I merely wished to show that it was, and is still, an essential part of the Government policy.
The right honorable member for East Sydney then interjected -
And one of the parts of which I thoroughly approve.
Apparently, the Prime Minister holds that view to-day, and the right honorable member for East Sydney, who, at that time, represented a very important section of the House, is in. accord with it, while it is well known that honorable members on this side agree with it, yet absolutely nothing has been done to push the question forward. One of the organizers for the Prime Minister’s party, speaking last night at Carlton, said that while Tasmania had no legislation on the subject no action was being taken upon it. The Inter-State Commission Bill- and itis a good job that it has not been passed, because it would be worse than useless - was debated in another place until the 14th October. It is significant that on the 19th October, I received - and 1 presume that all other honorable members did - a circular letter from the secretary of the Melbourne Chamber of Commerce indicating that the Council ofthat body had carried the following resolution -
This Council is of opinion that up to the present no necessity has arisen to warrant the introduction of legislation to create an InterState Commission, and also that if further industrial legislation is deemed necessary tne powers of the existing Federal industrial tribunal should be sufficiently enlarged to obviate the necessity of creating another, and at the same time very costly, Federal Department.
The writer added -
In forwarding you this resolution I am to express the hope that it will receive your most favorable consideration. - Yours faithfully, C. Hallet, Secty.
Since that time the Inter-State Commission Bill has not even been called on in another place. It has been moved down the list, and for the last three or four weeks has been just above the Navigation Bill, with which every one knows that the Government have no intention of dealing this session.
– The numbers are against the Inter-State Commission Bill in the Senate.
– Then why have not the Government the courage to bring it on, and let it , be defeated, instead of leaving it on the notice-paper, and pleading at the elections that no opportunity was given them to bring it on ? Since it was abandoned, the Senate in one week devoted only ten hours to Government business, adjourning on one evening about half-past five, and on another about half -past nine. Yet this Bill, which was previously, according to the Government, regarded as of some use to industrial workers, was not considered. When the Fisher Government were in office, honorable members then on this side said that they objected to a dissolution at that time because it was their intention to do something in regard to industrial legislation, but six or seven months have since elapsed, and nothing has been done. A very different course was taken in regard to the telephone rates, as the Leader of the Opposition pointed out, when the mercantile community were called upon by the Fisher Government to pay a fair return for the services which they were receiving. The matter was promptly shelved by this Government. The Postmaster-General stated distinctly that the Commitee of Investigation appointed by him was not going to shelve it, but this morning I received a reply from him that the Committee had cost over £1,500in about five months, whereas the report was to have been presented in three months. Does any honorable member think that that report will be handed in before the election? There are only two members on the Committee. It is all very well to say that one is a Government officer and that he is not costing the Commonwealth anything extra. If we have an officer who can be spared from his Department without extra cost, it shows that the service is overmanned, but I do not believe it is. Some one else’ must have been put in his place in the Treasury to do his work, and the Government must be paying for it.
– If the matter is properly arranged, his salary should be debited against the Committee.
– I do not know whether it is included in the amount specified in the answer given to me this morning, but I know that the cost of the Committee has been £1,519 up to the end of November. The othermember of the Committee is a private citizen, and there is sure to be a deadlock, with one man wanting to’ keep the work going. It is against human nature that a man should throw up a job worth a week to himself. Directly he brings in his report his job will be gone, and does any honorable member believe that he will expedite the business?
-i certainly do not think he will loaf on it. He is a very honorable, straightforward man.
-I do not think he will, but any honorable member who was in a similar position would consider it absolutely necessary to probe the question to the very bottom in order to ascertain what was done. We have heard complaints about the Postal Commission, but this Committee has cost more in five months than the Postal Commission cost in any twelve. We should be able to transact the business of Parliament without sitting for six days a week until11 o’clock at night, or later.
Several honorable members interjecting,
– I would point out that’ each and every honorable member can speak upon this question if he wishes, but he cannot do, so when another honorable member is addressing the Chamber.
– I did not know that !
– Order ! The honorable member for Dalley is out of order.
– I trust the Prime Minister will so arrange matters that we shall not have to sit to-morrow night.
– The remarks of the honorable member for Yarra are very pertinent. The fact that we have been sitting for twelve hours per day shows that we have been paying close attention to public affairs, which, of course, is our duty. But the strain imposed upon those who are here constantly is very great, and we could not stand it for long. However, the arrangement of business can be well left in the hands of the Prime Minister, who, I think, will see that we are not killed by too long sittings. The remarks of the Leader of the Opposition with regard to the finances were very much to the point. If the Treasurer would make a financial statement it would materially assist in the transaction of business. Sooner or later we shall be face to face with serious responsibilities Tor which no provision has been made. If the Treasurer keeps these matters at his fingers’ ends, I think he will be able to give us the information in round figures. He should, from time to time, advise the House as to our financial position when grave matters of expenditure are under consideration. We have recently been dealing with the expenditure of millions that must, ultimately, be financed out of revenue, and. at this period of the life of the Parliament, before we go to our constituents to give an account of our stewardship, the Treasurer should be able to give us an inkling as to the condition of the Treasury, especially in view of thegreat responsibilities which we have been instrumental in placing on the shouldersofthe Government. The right honorable gentleman should make that statement at an early period, so that we may show the country that we are really sound financiers, and have not been acting recklessly, but are prepared to meetthe responsibilities that will year by year accrue. There are, doubtless, many measures which the Prime Minister will have to drop, but, in another place there are a number of Bills to which Parliament has given a great deal of attention. One in particular is the InterState Commission Bill, which we had before us some years ago. At that time it was loaded with so much that was impossible that it had to be dropped, but the present
Government have brought in a Bill which reflects a great deal of credit upon them, and they should make an effort to pass it into law. Many questions must come under the attention of an Inter-State Commission. Every State is materially interested in questions that to-day are calling for attention and settlement, and many of which have been hung up for years waiting for such a body to deal with them. If the Government can put through this session one of the most important Bills that we are called upon under the Constitution to pass, it will be an excellent record for them and I hope the Prime Minister will not lose the opportunity. The question of new Protection is also involved. No one has more confidence in the Prime Minister than I have. He has written two minutes, and said a great deal upon the question. He made it a live question in Australia, although I am still to be convinced upon some phases of it. I think, however, that it is rather too late to expect it to be dealt with this session, although I should like to hear from the Prime Minister on the subject at an early period. He said previously that it was the complement of the Tariff.
– -What about the fact that the Labour party wasted all the time earlier in the session ?
– This is not the time to carp and cavil. We are on the eve of returning our commission to our constituents, and if any of us have advice or counsel of any value to offer I am sure the Prime Minister will make use of it. A hint is sometimes of great value to those who have responsibilities. The Prime Minister will shortly go before the country, and if he is still convinced that this complement to the Tariff should be passed, and if it is still the policy of the Government, he should insist upon the fact being understood by those sections of the, community who have called themselves Fusionists. I think something should be said on that question.
– Hear, hear.
– I am glad to hear the Prime Minister say that. He is a public man with a great reputation, and he made the question a live one.
– He buried it again.
– He created it, and he has not buried it. The memoranda which he wrote are on record, and I have yet to be convinced that he has gone back on his statements. On the contrary, I have seen indications that he is still of his first opinion, and his encouragement of my remarks makes me think that we shall yet hear something from him on this question.
– He does not intend to do anything in regard to it.
– I have always had confidence in the honorable gentleman. I challenge honorable members to read any statement in my speeches in this House, where I have sat for nine years, which reflect on his fidelity.
– Such statements are to be found in the honorable member’s letters to the Sydney Daily Telegraph.
– I am standing behind the Prime Minister, and shall be behind him in the country. I can take that position more conscientiously than can many of my friends. I am proud to occupy it.
– The honorable member does well to stand behind. He ought not to get in front.
– Only a big man could get in front of the present Prime Minister, in whom I have always had confidence as a conscientious politician. There are many things which he cannot do at the moment; but I believe that he will be faithful to the trust imposed on him by the terms of the agreement between the members of the combination which supports him. We know that he intends to say something more on this question. ‘ How far I shall be able to go with him in regard to any proposals that are made remains to be seen. I hope that the way will be made easy for us. Before the session closes, the Treasurer should say something on the subject of finance. Those who know the great work done by the Postmaster-General, when Chairman of the Tariff Commission, feel that he is a man who thinks before he speaks, and that what he says is the result of conviction. He has stated that an expenditure of £2,000,000 is needed to put the postal, telegraphic, and telephonic services of the Commonwealth in order. That really means that the expenditure is required to bring the service in the larger States up to the standard of that in the smaller States. I do not blame previous Postmasters- General for the present position. But the Department has been starved. The great reputation of Sir George Turner rests upon his proposal to borrow to put the Department of the PostmasterGeneral in order. Had it not been for that proposal, his reputation would disappear.
– -Why should we have borrowed, when we had plenty of money which we could have used ?
– New South Wales is such a large State, and its affairs have been so grossly mismanaged in’ the past, that its services are very inefficient. So, too, are those of Victoria, compared with the excellent services in the smaller States. But the Melbourne arrangements are more up-to-date than those of Sydney. The Treasurer should tell us how he intends to find the money for the necessary reforms in this and other Departments. _ I should like to amend the motion, by moving the omission of all the words after “that,” with a view to the insertion of the words “ it is expedient, in the best interests of the Commonwealth, that a system of efficient penny post within and beyond Australia be established.” That would give me an opportunity to bring forward a proposal with which I shall not otherwise be able to deal.
.- As I wish to encourage the Government in its belated attempt to do work, I shall not oppose the motion, though I question whether it be possible to effect good legislation in the short time remaining in connexion with the sixteen items on the businesspaper, of which nine are Orders of the Day for the second reading of Bills. Is it to be thought that there is no chance of discovering weaknesses in these proposals? Nearly every Bill which has been introduced has had to be amended on the motion of the Minister in charge of it, although it has been under consideration for weeks. The Government has hitherto done very little. It commenced by asking for three weeks in which to prepare a programme, which has been so departed from and ignored that it has been forgotten. Then it took a fortnight’s holiday to consult with the Premiers. During the greater part of the session the Senate has not had enough business to occupy it during two days a week. Now, when honorable members are tired of . everything, and desirous of asking the people to elect a new and better Parliament, the Govern ment proposes to rush on with businesswhich has been kept on the notice-paper largely for show purposes. Some of themeasures on the notice-paper are unimportant and without party significance. Indeed, the programme of the Government is noticeable for the big things which are left out. Of course, the Land Tax. Assessment Bill is an important measure, and should be passed’; but the Government has admitted its helplessness in regard to the imposition oi taxation. Canthat measure be passed in a day or two?” Or is it proposed to get everything through, by the application of the closure, shutting, all mouths, including those of the Government supporters? It is ridiculous and unfair to propose to do so much in the littletime that remains, because, when legislation is passed under such circumstances, amendments are sure to be required very soon afterwards. Even the cleverest menare apt to overlook matters which are seem by others who are not ranked so highly. They say that fools can sometimes teach wise men wisdom. The object of the Opposition this session has been to keep theGovernment at work. Whenever a sitting, has lasted to a late hour in the evening, the Government has been ready to adjournto next day. The Opposition has had to depart from its ordinary role, by tryingto force the Government to do work, and objecting to long adjournments and thesuspension of sittings at half-past 10 at night. At the very commencement of thesession, the press declared that the Opposition was ‘delaying business!, but the reverse was so patent that the statement is not now being circulated. The Government must take responsibility for the delays which have occurred. Having doneso little that the other House has not been kept supplied with business, Ministers now propose to deal with sixteen Orders of theDay here, get the measures to which they relate disposed of by the Senate, and’ finish .the session next week. I have only one other matter to refer to.
– Let us get to work.
– I am not preventing the House from doing so. I have not thesame faith in the Prime Minister regarding his adherence to new Protection as the honorable member for Robertson has. The subject seems to have been entirely forgotten by the honorable gentleman. It isone which should be dealt with by Parlia- ment. The Prime Minister, however, has failed to carry out the definite promise which he made as head of a previous Administration. Apparently, it is not proposed to keep it, although it should be kept in the interests of workers, manufacturers, and consumers alike. Minor matters should have been put aside for this big question. Of course, the subject would be dealt with in any Government proposal according to the views of the present Ministers, and therefore, perhaps, it is a good thing that they have not dealt with it. It is the duty of an Opposition to criticise, and when the present Minister of Defence was on this side, no Government proposal had any merit at all. We do not go so far as that. It is not creditable to the Government that this great measure has been dropped out of sight, and the electors will properly call us to account for our omission to deal with it. The fault is certainly not that of honorable members on this side of the chamber. The blame must rest with the Government. It has not attempted to do anything.
Motion (by Mr. Deakin) agreed to -
That the question be now put.
-The question is that-
– On a point of order.
– What is the point of order ?
– There was a distinct call for a division on the question, “ That the question be now put.”
-I put the question distinctly, and there was not the slightest objection when I declared the question resolved in the affirmative. There was no call for a division.
– I called for a division.
– I can only say that I heard no such call. There was no call for a division until I was in the middle of putting the original question. I assure honorable members that that is so. I cannot follow my own inclinations, and go back, because to do so would be to establish a very dangerous precedent.
– That has often been done where there has been any doubt.
– There is no doubt in this case.
– This is a double gag.
Original question put. The House divided.
Majority … … 14
Question so resolved in the affirmative.
– I understand from the honorable member for Wide Bay that a.t least half-a-dozen of his colleagues have informed him that they did call for a division.
– There were not halfadozen present.
– Order ! I trust that honorable members will allow me to deal with this question myself. I desire to state for the information of the Leader of the Opposition, and others who were not present at the time, that I put the question “ That the question be now put,” and that there was absolutely no call for a division at that time within my hearing. I declared the motion carried, and even then there was no call for a division. It was not until I was half-way through a statement of the main question that one or two honorable members said that they desired a division.
– We called before that.
-I trust that honorable members will allow me to state my own case. I accept the statement of honorable members that they called for a division. I do not doubt their word. I trust that they will accept mine.
– There was a great noise at the time.
-Order! I did not hear a single call for a division from any honorable member when I declared the motion, “That the question be now put,” carried. Had I done so. I should most certainly have followed the usual course, and have ordered a division to be taken. I trust that no thought that the Chair would conduct itself in a way that would be reprobated by honorable members on all sides will be allowed to enter the mind of any honorable member.
– On a point of order, did I understand you to say, Mr. Speaker, that you had nothing whatever to do with the application of the closure?
– That is not a point of order.
-If Mr. Speaker has nothing to do with it, will he inform me and other honorable members on this side of the House when we shall have the right to discuss in this Chamber matters of public importance? Surely I can ask you, Mr. Speaker, on a point of order, to enlighten me as to our position - as to how we aregoing to do our duty to our constituentsunder the regime of the present Government?
– I would point outthat our proceedings are governed entirely bv the Standing Orders, and that underthoseStanding Orders every provision is made for the conduct of business in the way that honorable members themselves have decided that it should be conducted.
– I rise to a point of order. You referred, Mr. Speaker, to the Standing Orders, and I desire to say, that I am a stickler for propriety in this Chamber and for respect being shown to the Chair. I wish to know if, while you are speaking or giving a ruling from the Chair, honorable members are in order in expressing approval of what you say or in making any comment whatever.
– There is no Standing Order affectingthe matter, but the custom invariably observed in properly conducted assemblies is that the Speaker shall be heard in absolute silence.
– Will you enforce that rule, sir ?
– I am afraid that if I were to enforce it I should have to inflict a large number of penalties. I assure honorable members that I desire ho expressions of either their approbation or their reprobation. All that I desire is that statements from the Chair shall be received with that respect to which they are entitled.
– I desire to say that I called out “ No “ when you put the question, sir.
– I also desire to say that T called out “ No “ when the question was being put, “ That the question be nowput.”
– I also beg to intimate that I called out, “ The Noes have it.”
– I also called out loudly, but, probably owing to the great noise in the Chamber, you,Mr. Speaker, did not hear me.
Bill returned from Senate without amendment.
In Committee (Consideration resumed from 2nd December, vide page 6793).
Clause 1. (Short title).
.- Perhaps this would be a convenient time for the Treasurer to make a statement regarding the draftsmanship of the Bill, and how far he proposes to amend it.
– Let us deal with each clause as it comes along.
– But this Bill, in my opinion, is most clumsily drafted.
– That is a matter for comment on the second reading.
– I understand that the Committee stage is for the discussion of details.
– That is so, but general principles must be discussed on. the second reading.
– At any rate, I suggest that this is a convenient time for the Treasurer to make a statement regarding the amendments he proposes to introduce.
– If the Treasurer makes a general statement of the amendmentshe proposes throughout the Bill, we shall have a second-reading discussion, and thus get no further forward.
Clause 2. (Definition).
A:lr. HEDGES (Fremantle) [11.48]- I ask the Treasurer to make it clear that the loan will be floated free of income tax, as is the case with the State loans. We have heard many times that the Commonwealth will be able to borrow on better terms than do the States ; but, if the loan is subject to income tax, we shall be placed at a disadvantage.
– I am glad that the honorable member has drawn attention to this question, and the impression I had regarding it has been strengthened by looking into one or two American authorities. It was decided in the case of Pollock v. the Farmers’ Loan Company in the United States, that income derived from municipal bonds are not taxable by the States, and, of course, the inference is that income derived from the bonds of Congress are not taxable. The same principle, I believe, applies here. At all events, the High Court so decided in the case of D’Emden v. Pedder, and subsequent cases. The Privy Council took a different view, but subsequently agreed with the High Court that we had power to permit this taxation if we liked. So long as we do not permit it, the States cannot, on the decision of the High Court, tax. The question cannot now go to the Privy Council, because the amending Judiciary Act of 1908 took away the original jurisdiction of the State courts in these matters. As the original jurisdiction is now in the High Court, the appeal must go to that Court, and not to the Privy Council. It would be a mistake to insert any provision in the Bill that is not necessary; besides being utterly useless, it would look like a discounting of our own powers.
Clause agreed to.
Clause 3 agreed to.
Clause 4 -
– Asthe honorable memberfor fremantle said just now, we have repeatedly heard, and from 110 person more emphatically than the Treasurer, that the Commonwealth can borrow on better terms than the States ; and yet, in the case of this, our first loan, the rate of interest is not exceeding 3½ per cent. That is the rate at which the States now borrow, and the clause is a candid admission that the Treasurer is afraid the Commonwealth will not be able to borrow under that rate.
– Some of the States have difficulty in borrowing at 3½ per cent.
– Up to the present, they have been able to borrow easily at that rate, and yet we have the Commonwealth now crying “ stinking fish.” It is a humiliating proposal, and I should like to hear the Treasurer sav that it is a necessary one.
– This clause is proposed because we do not desire to raise our loans much below par, or below par at all, if we can avoid it. It has been found by experience that it is better to raise loans at par, or below, than at a premium.
– Does theTreasurer think that he will be able to get the money at par, or anvwhere near par ?
– The rate of interest paid is altogether a question of price ; and the point raised is really not so important as the honorable member for Gippsland would seem to infer. The amount we receive per £100 is governed by the rate of interest, and if we make the rate 3 per cent., the amount we receive will all depend on the state of the money market. In such case, we would receive much less for every £100 of stock, and at 3½ per cent. a correspondingly greater amount. The question is, which is the more convenient rate for us to place in the Bill. The price a loan realizes, assuming thesecurity is good, is governed by the state of the market.If the market is good, and there is plenty of money available, we get a goodprice. If, on the other hand, there are wars and rumours of wars, and money is tight, we have to pay more for it. It does not follow that the best security will always obtain the better price, except at the same time, that is to say, the weakest State in the Commonwealth might get a better price to-day than the Commonwealth itself a year or two hence - all depends on the state of the money market.’ However, honorable members may be sure that the Government are not acting blindly in this matter; and we are advised that this is thebest rate to set forth in the Bill at the present time. If, as I have said, we make the rate 3 per cent., the loan will be raised at a discount, whereas at 3½ per cent., we shall get a good deal more per cent.
– Would this not be a good way to test the security of the Commonwealth ?
– I do not think it would test its security in the slightest degree. My idea is that the Commonwealth cannot expect at the beginning to raise’ money ora very much better terms than a solvent State does.
– Is not the first loan the most favorable one?
– I should say not.
– Are the assets not better?
– There could not be better credit, for instance, than that offered at the present time by New South Wales, which pays every penny of interest on the whole of its loans out of the proceeds of the works constructed with those loan moneys.
– The interest is fixed at 3½ per cent., because the Treasurer knows that the Government have spoilt the security of the Comonwealth.
– Doubtless the honorable member has had more experience in finance than others on this side ! At the same time, after considering the matter, we regard the rate of interest mentioned in the clause as the most advisable.
– The Treasurer’s statement is most misleading. He says that it matters not what rate of interest we insert in the Bill. We know, as a matter of fact, that the Commonwealth has greater taxing power than any one of the States. The utmost that any State can gain from the Customs and Excise revenue is 25s. per head, whereas, in the case of the Commonwealth, the amount is unlimited, and every source of income now open to the States is also open to the Commonwealth, lt will be seen, therefore, that the Commonwealth security is better than that of any one of the States, and must be so. A country like Australia never puts her securities in pawn. Our liabilities, sources of income, taxing powers, and private wealth are the gauge of the security offered, and the honorable member for Gwydir has rightly suggested that we shall never have a better security to offer than we have to-day. If we place the rate at 3^ per cent., I venture to say that we shall instantly depreciate every State security. For all practical purposes every State is solvent, and has ample security to offer, with, of course, the Commonwealth always behind it. If the rate at 3J per cent, be mentioned in the Bill, and underwriters are allowed to advise, and to say that they will take so much above par at that rate, the nomination of the stock is at once fixed at 3^ per cent. It would be better to keep the nomination at the minimum of 3 per cent., even if we have to take less than par, and I hope the Treasurer will have the pluck to do so. Should the Treasurer act on this suggestion, I shall feel inclined to support him.
.- Here we have the “first fruits of the financial policy of the Government - the first symptoms of the disease which is about to seize the Commonwealth. The Government have practically undermined the Commonwealth security, a security which in all countries is regarded as one of the greatest that any nation can offer for borrowed money - the security over its Customs and Excise revenue. The Government have undermined that by giving to the States a first mortgage over it to the extent of 25s. per head. Every lender of money will in future have to consider the value of the security which the Commonwealth has to offer in the shape of Customs and Excise revenue. It will be regarded as an unreliable value, which cannot be depended on with certainty for so long a period as thirty or forty years. Looking at the matter not from a party or political standpoint, but from a purely financial point of view, they will say that it is not a stable security, because no business man regards a second mortgage with favour.
– We are not limited to the security of the Customs and Excise revenue.
– We are to some degree, because not only have the Prime Minister and his party undermined that security, but the Prime Minister, in his speech when moving the adoption of the financial agreement with the States, said that although the Constitution allowed us to raise taxation from other sources, yet we did not intend to do so, because it had been arranged with the Premiers that they should introduce land taxation to make good the deficit which would probably be caused by the agreement. In saying that, he indicated that the Government were going to allow the State Premiers to control direct taxation, which is the other security that the Commonwealth ought to be able to offer to those from whom it may want to borrow money. ‘ Consequently, through the action of the Government there is also an embargo on the Commonwealth in that direction. We have first given a first mortgage on the Customs and Exciserevenue, and next the Prime Minister has given a promise that he will not interfere with the rights of the States to imposedirect taxation. By those two means wehave so reduced our security that it willbe impossible for the Treasurer to obtaina loan at anything like the rate of interest which the Commonwealth would otherwisehave been able to command. Yet theTreasurer tells us that it does not make any difference whether we put the rate of interest down at 3, 3J, or 4 per cent.
– The clause says- “ not exceeding.”
– We know what “not exceeding” means. Had not the Government undermined our securities we could” safely have specified in this Bill that the rate of interest was not to exceed 3 percent. We could have obtained a loan on those terms at par, and by that meanshave shown the States what we have contended all along - that the Commonwealthcan borrow more advantageously than they can. We could thus have proved to themthe wisdom of allowing the Commonwealthto manage all future loans, instead of the- Commonwealth having to enter into competition with the States in the money market. The present position is the first result of what the Government have done in the last few months. The Treasurer is now going to ask for a loan, with the-
Commonwealth simply on an equality with any State, and he is afraid that he will not get it at par. I should not be at all surprised if he obtained no more than ninety-six or ninety-seven, even at per cent. Why should we blame the money lenders if it is so? Owing to the action of the Government and of a majority of this House the security of the Commonwealth has been weakened to such an extent that the Commonwealth is practically handed over to the mercy of the Jews, who will be able, by arguing that our assets have been undermined, to justify offering money to the Commonwealth on less advantageous terms than they would offer it to the States. I never thought that at such an early period we should be afforded such a striking illustration of the fear of the Government of the results of their own action. The first sign of weakness is shown by the “Treasurer when he attempts to argue that the Commonwealth security is not as good as that of some of the States.
– I did not say so.
– The right honorable member said that the security of one State might be at par to-day, and to-morrow that of another, while next year they might both be below par. He also said that a State security might be more valuable than that of the Commonwealth, and vice versa.
– Not at the same time.
– But, according to the Treasurer, a State security might be more valuable than the Commonwealth security on the day that he goes on to the loan market. The Government have not only undermined the security of the Commonwealth, but have inflated the security of the States. When a State goes on the market to borrow in the future it will be able to point to the first mortgage given to it by the Federal Parliament for all time on the Customs and Excise revenue. The Commonwealth, on the other hand, will be able to offer in regard to Customs and Excise only an unreliable security, which must vanish if this Parliament does its duty to the country by bringing about effective Protection. The money lender, comparing the two securities, will say at once that that of the States is solid, while that of the Commonwealth is utterly shadowy. The Government have further increased the security of the States in regard to direct taxation. Under the Constitution we have the right to impose direct taxation for the needs of the Commonwealth. To-day our rights in that direction are not unimpaired as they were a few months ago.
– They are unimpaired now just the same.
Mr.WEBSTER. - The Treasurer knows that they are not. He knows that at the Premiers’ Conference it was understood
– It was not understood.
– I shall quote the Prime Minister’s speech to show that it was understood that the State Parliaments should not be interfered with in their right to impose land taxation. The Prime Minister went further, and said the State Parliaments were already proceeding to carry that into effect. Victoria is already introducing a laud tax in conformity with the undertaking then given.
– The Victorian Land Tax Bill was introduced before the Conference.
– It was not, and I challenge the right honorable member to prove it.
– The honorable member is quite wrong.
– I have the Prime Minister’s speech as my authority.
– The Prime Minister never said anywhere what the honorable member is. saying now. It is monstrous to say that we agreed with the State Premiers that they should introduce land tax proposals.
– I will not allow the Minister of Defence to distort my words. The Prime Minister said that the right of taxation lay with the Commonwealth, but that on account of the depletion of the revenue that was taking place by reason of the agreement, it had been understood by the Federal party that they should not. interfere with the right of the States to raise from land taxation the necessary revenue to make good that depletion.
– Does the honorable member mean by the Federal party or by the Conference ?
– I am speaking of the men who went to the Conference professing to represent this Parliament. They went away without any instructions, and came back with a compact binding this Parliament for all time.
– I do not follow the honorable member.
– It is impossible for the honorable member to follow anything logical. The Prime Minister said that the States are showing their bona fides in this matter by introducing land taxation. He referred to what has been done in the Parliament of Victoria; and, no doubt that of New South Wales will be asked to consider similar legislation, once the elections are over, and the party in power there is secure from the wrath of the people. But this action on the part of the States will undermine the security of the Commonwealth. The States will invade this avenue of taxation before we have an opportunity to exercise our constitutional right to do so. The Government does not intend to propose land taxation, and the States must do so if the - large country properties are to be burst up. Some one must introduce taxation on - land, and the States will do it as soon as possible. In this way our security will be diminished. The security which we have to offer from Customs and Excise revenue has already been diminished by the action of this Government to a degree that is humiliating to those who seek the welfare of this great country. When we are on the eve of great developments, progress is strangled by the action of those whose only consideration is the safety of their own political lives. Were I to talk for a week, I could not more emphatically indicate the feebleness of the Government position. The Treasurer is showing to the world that nothing would be gained by the transfer of the State debts to the Commonwealth, because the Commonwealth cannot borrow on more advantageous terms than the States. He asks to be permitted to borrow at the rate of 3$ per cent. He has not the courage to propose that the interest payable shall not exceed 3 per cent., and thus apply the touchstone to ascertain the feeling of the financiers of the world in regard to Commonwealth security.
– The States have borrowed at 3 per cent.
– I find from the official figures with which the honorable member has supplied me that, at that rate, New South Wales has borrowed £18,024,698, Victoria, £io,449,423> Queensland over ,£5,000,000, South Australia .nearly £6,000,000, Western Australia £7,356,000, and Tasmania about £750,000 ; or, in all, nearly £48,000,000.
– At what price was the New South Wales stock?
– At £86.
– I am not able to say on the spur of the moment what prices were obtained for these loans, but I question very much the statement of the honorable member for Corio, who, probably, has in mind some loan offered at a time of depression. The Treasurer, the Prime Minister, and other members of the Government, have from time to time declared that the Commonwealth, if the States debts were transferred to it, could provide for their extinction without cost to the community, by reason of the favorable terms at which it could borrow money. But those who lend money to nations are not fools. It is their business to investigate the security offered, to ascertain its stability, and whether it is mortgaged. The value of security is, of course, reduced by the encumbrances which are placed on it. No country in the world would have done what the Commonwealth has done in regard to its security. Practically we have to offer only about 25s. -per capita of the Customs and Excise revenue, and we are not sure that we shall continue to obtain so much from that source. A second mortgage is always an unreliable asset. It is the States which have given the first mortgage on the Customs and Excise revenue, and1 they therefore are in a better position to borrow than is the Commonwealth. They can offer solid security, while what we have to offer is such as financiers must consider will not justify them in lending their -money at as low a rate as they would lend it to the States. Tn raising its first loan, the Commonwealth should be in a position to offer its most valuable security, but those from whom we wish to borrow will remember that the money is to be spent, not on reproductive works, as- the loans of the States are spent, but to provide war ships which, after .1 very short period, will have no value at all. If the Treasurer can prove that this will be the most favoured loan, he will do what will amount to a miracle. No one can prove that a nation which borrows for non-productive works on security already pledged can get as good terms as would be given if it proposed to spend what it borrowed on reproductive works, and had a solid security to offer. The introduction of this measure has been the most striking incident of the session. I did not expect that the Government, after all that-
Ministers have said about the advantageous terms at which the Commonwealth can borrow, would have asked permission to raise a. loan at 3 J per cent. This action proves the fallacy of the arguments which they have put forward. They have parted with privileges which were ours under the Constitution, and which we had no right to sacrifice. We could have retained the whole of the Customs and Excise revenue, and applied so much as was necessary to purposes of defence. Instead of doing so, the Government has undermined our security, and improved the position of the States in competing with us on the London money market. The Commonwealth has been humiliated. Its importance has been made subordinate to that of the States. Those of us who have resisted these proposals have been gagged. We have endeavoured to prevent the thrusting on the people of obnoxious and pernicious legislation; but when we try to point out the evil of what is proposed, we are gagged, as criminals gag their victims to prevent their crimes from becoming known to society. I regret what has happened. I do not talk merely for the sake of talking, or to show how subtle I am in argument. I do not take pride in putting before honorable members what appears to be a convincing line of reasoning when I am not convinced myself. I do not bend mv intellect to the consideration of problems like this to convince honorable members, showing that I am not convinced mvself by voting for the course against which T. have reasoned. I support mv arguments with mv votes, and mv reasoning is true. The arguments which I have used on this occasion cannot be controverted, and. later, will be absolutely beyond cavil, because t’-e facts will then be evident to all. That is the kind of man we want in Parliament. We need to have in Parliament men who are prepared to say what ths mean, to determine what in their judgment is the right course to follow, mid, having arrived at a determination, to stand bv it. Men who pre constant! v backing out have no fixity of purpose, no desire to do their duty. They are prepared, so to sneak. to hand over to the hangman, at the behest of a party whip, the people whom they professedly desire to serve. I nm not going to do that. We have here the first fruits of the action of the Government and their supporters. Sooner than they expected, a just retribution is over- taking them. They have undermined the security of the Commonwealth and unduly inflated that of the States, leaving the Commonwealth, as a borrowing power, crippled and humiliated in the money markets of the world.. That is the result of the famous financial agreement, and the infamous compact which have made it necessary for the Government to ask this House to agree to a Bill to provide for the floating of a loan. The Treasurer is afraid to place this loan on the market at 3 per cent., because the security of the Commonwealth has been seriously injured for all time by the recent action of the Ministry.
.- In the desert of words through which the last speaker has just traversed, an interjection was made by the honorable member for Darwin to the effect that in his opinion the security of the Commonwealth was not equal to that of the States. As I know that the honorable member has studied financial questions to a certain extent - and he was able to show just now that the honorable member for Gwydir does not know- the difference between “par” and the price at which inscribed stock is sometimes purchased - I desire to reply to him. Although I am sure we all hope that the Treasurer will be able- to raise this money at 3 per cent., it is necessary that we should vest in him a discretion to pay, if necessary, a higher rate. I have here the latest quotations of the London money market in respect to English, colonial, and foreign stocks and shares, and I think that it will be found of interest. I do not suppose any one expects the credit of Australia to be very much better at present than that of Canada. The Canadian provinces have borrowed a good deal, but the Dominion itself has borrowed but little. I find, however, that on 29th October last the price of Canadian 3 per cent, stock was .£92$* On the same date the price of Indian 3 per cent, stock was £83!, New South Wales 3 per cent. £86, New Zealand 3 per cent. £86J, anr Queensland 3 per cent. £86J.
– From what is the honorable member quoting?
– I am giving the official quotations as published in the financial column of The Times Weekly Edition, whose authority cannot be disputed. New South Wales is undoubtedly the strongest, financially, of the States, and her inscribed stock is selling . at £86. When I interjected “£86,” as the price, qf New
South Wales stock, a few minutes ago, I was speaking, not to the honorable member for Gwydir, because I did not think he would understand the interjection, but to the honorable member for Darwin, who asked what was the present price of New South Wales 3 per cent. stock. I have here a list of the prices ruling for the stock of various strong nations, but I need make only one quotation. I find that Germany pays 3 per cent., and gets only £82½. Although Germany has a great Imperial Bank, to which the honorable member for Darwin, in dealing with the financial question, has referred on several occasions as an institution giving great financial strength to the country. I saw recently in a newspaper, and I regret that for the moment I cannot place my hands on the quotation, a statement to the effect that a fraction less than 4 per cent. had been paid on a joint German and Prussian loan of £25,000,000.
– Was the loan required for reproductive works?
– The object for which a loan is floated is of little importance to money lenders as long as they are sure that the interest will be paid regularly. and that the debt will be redeemed at the proper time.
– The rate of interest does not depend upon whether or not a loan is required for reproductive works.
– Quite so. I do not think honorable members would suggest that, whether a Commonwealth loan was for reproductive purposes or to provide for the construction of a navy, there would be the slightest repudiation or default in the payment of interest.
– Some of them would repudiate anything.
– The honorable member, of course, speaks for himself. The question of whether a loan is for reproductive or other purposes does not affect the money lender in England. Statements have been made regarding the varying credits of the States. I do not wish to call attention to the weakness of the present financial position of any State, but we have to recognise that, when money is wanted, it must be obtained on the best terms current among money lenders. I need only point out to the honorable member for Darwin and others who have been appreciating the credit of the States, that both New South Wales and South Australia have been paying 3¾ per cent. for money on the London market, and that any one may obtain across the counter at the Adelaide Treasury 4 per cent. bonds at par.
– Why these varying rates in respect of the stocks of the different States?
– I should not be in order in referring now to the question of the transfer of the State debts, but I trust that the Commonwealth will be able to take action, so that those varying rates will be superseded by a fixed rate. I am rather surprised that the honorable member for Gippsland, who is a lawyer, should have raised this question, since every solicitor has some knowledge of finance. He has referred to our having to pay 3½ per cent. for this loan. I should like him to recognise that if we pay only 3 per cent. interest, instead of 3½ per cent. interest, we shall probably be able to get, perhaps, only £86, or, at the most, £92, the price of Candaian stock at present. Is he prepared to see the Commonwealth pay only 3 per cent., and get £92 for its inscribed stock, or does he think it would be better to pay 3½ per cent., and float our loan at par? It would be far better, in the case of a naval loan, to face our current obligations within the period that has been fixed. As has been pointed out, ships have a limited life, and, since the vessels of the fleet unit may have to be renewed at the end of fifteen or sixteen years, it would be better for us to pay 3½ per cent. and float our loan at par, than to pay only 3 per cent. and get, at the most, £92 in respect of every £100 that we shall have to pay back fifteen or sixteen years hence.
– It works out in exactly the same proportion.
– The money lender fixes his own rate of interest by the amount at which he tenders.
– Does the honorable member for Robertson think that our credit will be better than that of Canada? If we fix the rate of interest at 3 per cent., it will mean that we shall borrow, perhaps, at £92, and that, fifteen years hence, we shall have to pay back £100.
– But we should save ½ per cent. now, so that the result in the end would be the same.
– If we fix the mini-. mum rate of subscription at £95, it is highly probable-
– That it will be refused.
– I appreciate the point which the honorable member is endeavouring to make, and it seems to me that, with a. sinking fund, it does not matter whether the price is 3 per cent, or 3^ per cent. The fund can be so regulated as to enable us to pay off the whole amount within the time fixed. If foi every £100 we got only £92 on the occasion of our first visit to the money market, the result to the credit of the Commonwealth would be very serious. It would be far better to raise the rate of interest, so as to be able to float our loan at par, than to fix it at 3 per cent, and obtain only £92 for it. Once stock is depreciated, it is difficult to secure a forward movement in connexion with it. I do not like the idea of borrowing, but if, because of urgent reasons, we required to float another loan, we should find that, having started at £92, it would be difficult to obtain a better price. Japan has recently been to the London money market in order to try to convert some 6 per cent, loans, issued at £90 in the war time, and was unable to do so.
– Japan offered 7 per cent, in New York.
– I accept the honorable member’s statement. I believe that Japan offered 7 per cent, for a conversion loan at £too, but did not succeed, simply because a start had been made with a 6 per cent, loan at £90. Even if we made the rate of interest 4 per cent., it would be better to issue our first loan at £100.
– The honorable member for Koo.yong, I believe, suggested that we ought net to limit the issue to inscribed stock, which is not popular in Australia, though it is, to some extent, in England. My own opinion is that it would’ be a mistake to issue only one class of stock. Money is very dear at Home, and we mav not be able to get all we require there, and have to appeal to the Australian people. Tn that case, I know that the Australian people will very much prefer debentures. If a man has a debenture, and wishes to raise money, he can for that purpose lodge it ft the bank ; but if he has inscribed stock he has to transfer it into the name of the bank, or some officer of the bank, and this has the effect of disclosing his business at a time when it may be inconvenient for him to do so. As to the point raised by the honorable member for Fre mantle, I am very doubtful whether the holders of our stock here will not be liable to income tax. The stock is not the property of the Commonwealth when it is once issued, but the property of the holder for the time being; and it is a question whether the States could not charge income tax if the stock or debentures were taken up by people in Australia. The whole of. the State loans are issued free of income tax; but that is provided for in the Act of Parliament under which the stock was issued. In our case, the income from the bond is the income of the holder, and not that of the State or a servant of the Commonwealth. I understand that the AttorneyGeneral holds a different view, and I do not press the , point ; but the Privy Council has not followed as closely as people think the decision in the case of McCulloch v. the State of Maryland,, because in the case of the Bank of Toronto v. Lambe, quoted in Quick and Garran, the Privy Council there held that, although the stock of the bank, where the charter had been granted to the bank itself, could not be taxed, the property of the bank was liable to the taxation of the State. The debentures when they have been parted with are, as I say, the property of the holder for the time being; and, therefore, I think it ought to be put clearly before the public and subscribers whether or not they are free of income tax. Otherwise there will be a doubt in the minds of subscribers : and this may prevent ‘ the Commonwealth getting full value for the stock.
– Have we constitutional power to exempt holders from income tax?
– That is for the Attorney-General to consider ; but, at any rate, a doubt has arisen, and we ought to be most careful in the matter. Another difficulty in presented in the fact that the security offered by the States is quite equal to, if not better than, that of the Commonwealth. The States have the railways, and, to all intents and purposes, the Customs and Excise duties, and if they offer a higher rate of interest, I doubt if our security will be on a par with theirs, even if it is not a great deal lower. The State of South Australia is issuing over the counter debentures at 4 per cent. ; and if we issue ours at 3 J per cent., it is only natural that investors should accept the higher interest.
– I think the interest in South Australia is 3! per cent.
– Even if the interest is only a point over ours, the investor will take the higher rate.
– We must consider the exchange that has to be paid as between Adelaide and here.
– I do not know that the exchange on the half-yearly cheque for interest would come to very much. The Victorian Government are issuing 33/4 per cent, stock over the counter free of income tax; and this, of course, would be accepted in preference toCommonwealth stock at 3½ per cent., the security, at the least, being equal. I do not know that we are going to see the high value on our stock that people have been talking about in the past. It is simply a question of the value of money ; and if the people can get a higher rate of interest from the States, they will take State stock in preference to Commonwealth stock. In recent issues of State stock in England, many people out here have been subscribers, notably in the case of Victorian stock; and this is a tendency that I should like to see encouraged.
– The exchange as between England and Australia is high.
– But the interest is paid in Australia. Surely the Treasurer would not propose to remit the interest to England, and have it remitted to Australia? There would not be much sense in paying two commissions, which could otherwise be saved. I assume that the Treasurer would do as has been done in the case of New Zealand, and pay the interest in Melbourne, Adelaide, Sydney, or Brisbane, or wherever required. If a large portion of the issue is taken up in Australia. I assume that the Commonwealth will have the common sense to pay the interest where the money has been lent. There is no advantage in forcing people to get their interest from England.
– It all depends.
– Would it not be tetter for Australian money to be put into private enterprise here?
– I do not say that it would not; but there is a large surplus this vear.
– The honorable member’s suggestion would force up the local rate.
– That may be. At the same time, I do not desire to see theGovernment “cornered”; and I trust that, when the loan is issued, they will keep out of the hands of the ring at Home, who are trying to throttle the Australian States. As a matter of fact, the States are pretty well in the hands of this ring, and it is difficult to get a loan floated unless it is underwritten. The credit of the Commonwealth ought to be quite good enough, without paying1¼ per cent, to the underwriters.
– I do not think it is possible to float a Commonwealth loan at 3 per cent, at par. Only lately the Pennsylvania railways borrowed£10,000,000 in Paris at par at 2½ per cent. Of course, that was because there is a Bank of France, where as small an amount as $8 can be rediscounted from any part of the world.
– If we had the bank advocated by the honorable member, we could get the money at 2½ per cent.
– Quite so. If we had our own national banking system., the Treasurer would not be forced into the market, because he could have an overdraft until such time as the market suited him. If we go into the market when all the nations of theworld are requiring money, the brokers instantly raise the rates. The primary financial obligation is the intelligent public regulation of credit and’ money movements. It is not good business to send the Treasurer into the world’s market to borrow for the Commonwealth on a mortgaged security ; and we must remember that our security is now mortgaged to the States. If the Commonwealth has not the power to issue this loan free of income tax, I have no doubt that our stock will sell at less than that Of New South Wales or Victoria. I would sooner go into the market with a view to the conversion of £50,000,000 or£100,000,000 of State stock, than to raise this loan of £3,500,000 on the terms mentioned, because these will fix a standard.
– Why not make the rat.3per cent. ?
Mr.KING O’MALLEY.- If that be done, the Treasurer must sell at a huge discount. .
– Not necessarilv.
– Even, now he will have to sell below par, probably at £o8 or£o8½ in the open market.
Sitting suspended from1 to 2.15 p.m.
.- I think we ought to have a quorum. [Quorum formed.’] The question of the rate of .interest to be specified deserves serious attention, seeing that Ave are about to embark on a new policy. What we are doing now may be taken for a considerable time as a precedent, and the Treasurer ought to have complied with the request of the Opposition by trying to justify his proposal to fix the interest at 3J per cent.
– The clause says ‘ not exceeding. ‘ ‘
– But in all human probability the maximum allowed will be the rate accepted by the Government.
– Not if we can do better.
– I recognise that if a lower rate of interest is specified as the maximum we may have to issue our stock at a lower price, but it is of the utmost importance that we should do the proper thing when beginning a loan policy. The question raised ‘by the honorable member for Fremantle this morning regarding the right, of the States to impose income tax on Commonwealth bondholders is of the greatest importance.
– We have the law on that question.
– But the AttorneyGeneral was not very emphatic about it.
– He has been emphatic to me.
– Then is the right honorable gentleman satisfied that the Commonwealth bondholder will be released from the necessity of paying State income tax?
– That is the AttorneyGeneral’s opinion.
– I am glad to hear it, because otherwise the position would be serious.
– If such a thing did happen we could easily rectify it. We could legislate the same as we are doing here.
– If it were found that we had not the constitutional power, we could not do it by ordinary legislation. It would require a referendum, and this is the time to provide for a referendum if it is necessary.
– We could arrange to give the bondholders more.
– Is that the way the Government propose to get over the difficulty ?
– I do not think that there is any danger, but the AttorneyGeneral will advise the Committee again if necessary.
– Will the Treasurer postpone consideration of the clause until the Attorney-General is ready to speak on the point?
– He has spoken. He says that to put it in the Bill would ho rather expressing a doubt which, in his opinion, does not exist.
– I hope the AttorneyGeneral is right, because it would be disastrous in our first essay on the money market to find our bonds quoted at less than State bonds. If that happened, it would effectively put a stop to any proposal by the Commonwealth to assume control of the State debts. Whilst I hold that it is wrong to embark on this loan at all for purposes that ought to be met out of revenue, it would do a still greater injury to the credit of the Commonwealth, if the States were allowed to impose income tax upon our bondholders. The effect would be disastrous, especially if the Commonwealth afterwards wanted to raise money by loan for reproductive works. I shall be glad to get a more definite assurance from the Attorney-General in regard to that question before the clause is agreed to.
– I move -
That the words “ and a half “ be left out. ‘
That would make the maximum amount of interest for this stock 3 per cent. The denomination of the first Commonwealth stock should, I think, be 3^ per cent. It will not make a fraction of difference in the amount of money that the Treasurer will get, for any man wishing to lend to the Commonwealth will instruct his agent how much below or above par to offer, knowing full well that he will only get 3 per cent, interest. I hope that, by adopting the amendment, we shall establish a system that will last for all time. I thoroughly agree with the Treasurer’s proposal that we shall inscribe our own stock, so that we may be at liberty to accept a £5 note from any man who wishes to lend it to the Commonwealth. The honorable. member for Dalley has pointed out, by interjection, that the period of the loan makes a great deal of difference. This is to be a short-dated loan, but in the future let us have inscribed stock, and let it be . interminable. If we start with inscribed stock at 3 per cent., we shall begin as we wish to continue. Probably, as this is a short-dated stock, limited to fifteen or sixteen years, the Treasurer will get so much more below par than if it were perpetual stock. My point is this. We should fix the rate of interest at 3 per cent., and provide for the inscription of the stock, so that any person who has money to lend may bring it along, whatever the amount, and have his name inscribed on our books as a creditor. The honorable member for Balaclava pointed out that if a man has bills on which he can get a lien from his bankers, without any one knowing, he is in an advantageous position, but, although the point is a good one, it must not be forgotten that there is no discredit in borrowing cash on the security of investments of this kind. Such a thing is commonly done in business. There is a a good deal to be said in favour of issuing short-dated bills, but circumstanced as we are, I think that what I propose will be better. Still, we should not pay more than 3 per cent. Indeed, it would be to the interest of the States to provide that the Commonwealth shall not borrow at a higher rate than that. It has been said that the assets of the States are better than those of the Commonwealth, but it must be remembered that their assets are our assets, too. The Commonwealth has wider powers of taxation than the States possess, in fact, unlimited powers. I hope that the Treasurer will agree to the amendment. It will not mean that the Commonwealth will suffer any loss.
– We shall lose perhaps £300,000 in cash.
– No doubt, for the offer of 3½ per cent, the Treasurer would probably get money at a price nearer to nar, that is, a larger sum would actually be lent to him.
– On that line of argumenc, we might fix the interest at 4 Der cent.
– Or at 10 per cent., in which case money would be offered above par.
– Such a rate is not usual.
– Of course, it is not.
– Let us get on with the business.
– The Government has brought on a very big. subject at the end of the session. I have done a little canvassing among honorable members on this side, who know as much about finance as the Treasurer does, and they are inclined to take the view which I am expressing. I think the Committee will be in favour of my proposal. If the Treasurer finds himself short of £250,000, he can make it up. The method of finance which he has adopted is juggling, so that he could easily arrange for , £250,000.
– I hope that the honorable member will not press the amendment. The Kill provides that the rate of interest shall not exceed 3½ per cent., and, of course, when we try to float the whole, or any portion of the loan, we shall, if we can do so to advantage, offer only 3 per cent. The provision is a usual one to have in a measure of this kind. Latitude must be allowed to the Government in providing for the flotation of a loan. We did not place this provision in the Bill without making inquiries on the subject, and have followedthe course which we have been advised to take.
– What was the advice?
– I suggested fixing the rate at 3 per cent., but we were told that it would be better to insert in the Bill the provision now under discussion. There are a great many difficulties in the way of getting money at the present time, all sorts of considerations, political and otherwise, affecting the situation. If the maximum rate of 3 per cent, were provided for. the loan in the present state of the market would have to be floated at considerably below par, so that we should lose probably £300,000.
– It would be better to go without the money. We are not hard up.
– The honorable member poses as a great financier, but how many transactions of a large character has he carried through?
– I have not been Treasurer of the Commonwealth.
– I am not only Treasurer of the Commonwealth ; I was for many years Treasurer of a State.
– When I am Treasurer. I shall have more knowledge than the right honorable memher has.
– I do not wish toget at crosspurposes withmy honorable friend, but in these matters, the wisest of us must take the advice of those with greater knowledge and experience.
– What? Go to interested persons ! To the money lenders ?
– The greatest financiers of the world are our advisers, and we shall not go far wrong if we accept their advice. My efforts will certainly be directed to obtaining the money at the lowest rate of interest which is possible.
.- The honorable member for Robertson has come to the same conclusion as I have. I intended to move to reduce the maximum rate of interest to 3 per cent.
– There is a long list of notices of amendments, but the honorable member did not give notice of this proposal.
– One might think that it was against the rules of the Committee to moye an amendment without giving notice. Notice was not necessary. The Treasurer tells us that if we fix the maximum rate at 3 per cent., we shall go against the advice of the Government experts, but we do not know who they are. In reply to the arguments of the honorable member for Robertson, he said that had the honorable member been Treasurer of the Commonwealth and of a State, he would have more knowledge of the subject, which was no answer. The State of Western Australia, of which the right honorable member was Treasurer, has borrowed something like £20,000,000, practically as inscribed stock, and over one-third of the amount was obtained at 3 per cent.
– I dare say I borrowed a large part of it myself.
– Because the right honorable member could get money at a reasonable interest.
– In those days, we could get money at 3 per cent, at par, and, on one occasion, at more than par.
– A State with a small population, and the last to have responsible government, has borrowed at par at 3 per cent, interest. Yet the Treasurer asks to be permitted to borrow on behalf of the Commonwealth at 3½ per cent. In my opinion, it is a misfortune for Australia that we should have thisloan proposal brought forward; but the Treasurer proposes to pay one-seventh more in interest than is being paid by the States.
– The States could not borrow at 3 per cent. now.
– No ; except at a large discount.
– If there is anything in the contention that the Commonwealth credit is better than that of the States, surely we should be able to borrow at 3 per cent., even in the present state of the money market. If we cannot, it is obvious that the credit of the Commonwealth has suffered through the bad administration of the Governments that we have had in power.
– The money market is not suitable for raising loans at the present time.
– The market is available to all the States.
– And we shall go to the market with a spotless character.
– We shall enter it, so to speak, without a character. We have no reputation as a borrower, but our reputation as a Parliament is that for nearly nine years we have been opposed, very properly, I think, to borrowing. This loan should rightly be placed on the market at 3 per cent. The honorable member for Mernda has based all his financial calculations on a 3 per cent., or 3 1/5 per cent., rate of interest on Commonwealth credit. If we float this loan at 3 per cent, or under, we shall do a service to the Commonwealth, even if we fail to obtain the aggregate amount desired by the Treasurer. I believe that. I do not claim to be a financier, although I have studied as far as opportunity has permitted the question of finance ; but I have observed that loans ata low rate of interest, if floated at as low as £85, appreciate much more readilv than do higher interest-bearing stocks floated almost at par. That is an important point to consider. Bv floating a loan at a low rate of interest, an enormous advantage is secured. That is to say, as credit improves, people are ready to pay a higher price than that at which the stock was sold in the first instance, and we are likely. later on, to obtain a better price. There is a general tendency for such stocks to run up to par, but buyers do not care to go much beyond nar, even in the case of stock bearing a high rate of interest. Even if that were not so, I should hesitate to consent to our placing a 3½ per cent, loan on the market. I should hesitate to consent to our placing on the market a loan at a. higher rate of interest than the lowest rate of interest at which anv State has borrowed. I ask the Treasurer not to try to use his majority to force this proposal through . the Committee simply because certain advice has been given bv experts. The Treasurer knows that, during my term of office, £2,000,000 net was offered to the Government at 3½ per cent., payable either here or in England, without any Parliamentary authority whatever.
– The honorable member left nothing behind him showing that that offer was made. There is no record of it in the Department, and no one knows anything about it. Mr. Allen, the Secretary to the Treasury, knows nothing about it.
– There is a letter in the Department in regard to the matter.
– The same people will not make that offer now.
– That is not the point. An offer of £2,000,000 was made by the associated banks.
– What for?
Mr.FISHER. - For the services of the Government.
– Was it not specially to enable the Government’ to present a
Dreadnought to Great Britain?
– It was for the services of the Commonwealth Government if thev intended to adopt a certain policy. But what does the right honorable member mean? He said a moment ago that the offer was never made ; that there was no record of it. He now says that the offer was made for a particular purpose.
– I tried to find a record of it in the Department, but could not.
– What kind of a Minister would speak like this? The right honorable member intended to suggest that my statement was doubtful, yet he now wants to confirm it.
– The offer may have been made to the honorable member personally. I do not doubt that it was made to him. All that I say is that there is no record of it in the Department.
– The right honorable gentleman will find a letter on the subject in his Department if he takes the trouble to look for it. Those who made the offer publicly mentioned itto representatives of the Sydney press.
– I do not doubt that. I only said that I could find no record of the offer.
– The only inference to be drawn from the right honorable member’s interjection was that he doubted my statement.
-I beg the honorable member’s pardon. I did not mean that.
Mr.FISHER. - After all, these are paltry matters. Since I have sat in Opposition I have witnessed incidents which I deplore. I have found Ministers informing honorable members of something which they have discovered in their Departments, and having questions put to them in the House in regard to them. My idea of Ministerial responsibility in such matters is that, if one’s predecessors have made mistakes, those mistakes belong to the past, unless they are subjected at the time to open criticism in Parliament.
– The honorable member backed upMr. Allen in a pretty stiff thing in the Department. I refer to the piano affair.
– The honorable member has interjected several times something that is wholly irrelevant to the question. I do notknow to what he refers. At page 849 of the Official Year-book of the Common wealth. No. 2, there is a statement showing that the following amounts have been raised by the various States at 3 per cent. : - New South Wales, £18,024,698 ; Victoria, £10,449,423 ; Queensland, £5,489,383 ; South Australia, £5,962,345 ; Western Australia, £7, 356,000. The total indebtedness of Western Australia is £20,493,618, so that over one-third of its total indebtedness carries only 3 per cent, interest.
– What are those stocks worth to-day ?
– I have not to-day’s quotations at hand.
– New South Wales 3 per cent, stock is worth . £92.
– That is not an extraordinarily low price at which to sell stock.
– The South Australian stock raised in 1896, on a Bill I drafted, was floated at over £100.
– I well remember when 3 per cent, stock was floated almost at par.
– New South Wales 3 per cent, stock was then £102.
– Is it not possible that an equally good money market will prevail in the future? Assuming that we float a 3½ per cent, loan at a little under par, what would be our position if the money market went to 3 per cent. ? We should find our stock appreciating to only a little over par, because there is undoubtedly a reluctance on the part of buyers to offer much over par.
– This clause provides that the rate of interest is not to exceed 3J per cent.
– -The Treasurer’s argument was that, it was necessary, according to expert advice, to issue this loan at 3J per cent. If he means that the rate of interest is not to exceed 3 per cent, he ought to vote for the amendment. Sir John Forrest.- If the amendment were carried, we could not go above 3 per cent, in any circumstances.
– Speaking generally, the authorities declare that it is best, in floating a loan, to get as near as possible to par. It is better to sell a little under par than over par if the rate of interest is higher than that usually offered in the money market.
– We could raise one instalment at 3
– Do the Government propose to raise this loan by instalments?
– I do not know.
– We have been told that the Government require the whole of this money within the next two and a half years. If the loan is to be floated in instalments, we shall make two separate visits to the market in two years in respect of the same loan. I doubt the wisdom of such a procedure. Out of the total indebtedness of Australia, amounting, on 30th June, 1908, to £243,335,489, practically £50,000,000 had been borrowed at 3 per cent. I hope that, notwithstanding the fear of war and aggression at the present time - notwithstanding the timidity of financiers generally in more than one country - war will be averted.. The commonsense of the people will. I trust, prevail, and the probability is that money will be cheaper in the near future than it has been for a long time past. For these reasons, I shall support the amendment.
.- Under ordinary circumstances, and were this loan by itself, 1 think the proposal of the Government might be considered reasonable and fair. I have always understood, from the Treasurer, and it has been generally understood in this House, that the day is. not far off when the Commonwealth will have to assume the debts of the States. The honorable gentleman himself, in this House, in 1906 and later, laid down the principle that Commonwealth finance should be based on the floating of a
Commonwealth stock at 3 per cent. That, no doubt, was in view of those operations which 1 have always looked forward to as one of the chief objects of Federation ; but I am afraid, from recent events, that that object has rather slipped into the background. I ask the Treasurer whether it is wise for him, in initiating borrowing on behalf of the Commonwealth, for this or any other purpose, to start with the nomination of 3J per cent. ? As I have already said, if this were an isolated loan, and not part of, perhaps, a series of financial operations, it would probably be quite right to allow the Government to decide at the time whether it was better to float at 3 per cent, at a discount, or at 3J per cent, at par, or nearly par. But I cannot for a moment believe that it will be beneficial to <his Commonwealth to start this first borrowing by setting forth that the Treasurer is at liberty to pay 3J per cent. It seems to me that that is beginning by striking a wrong note. I know what the difficulty, of the Treasurer is - he does not know the position of the money market. At present the money market is not favorable ; but I do not suppose that he intends to float his loan at once. There is no immediate necessity, because, in clause 5 power is taken ‘fu float short-dated Treasury bills. I apprehend that that is to enable the Treasurer from, time to time to issue, say, £500,000 on short-dated Treasury bonds, pending the floating of a loan at the most favorable opportunity.
– That is so.
– It might be better to have only the Treasury bills and no loan at all, unless we hope to make something by the transaction. The Treasurer is faced with the position that if he floats the loan at 3 per cent.* he may have to take something under par. That is a matter of the condition of the market j the two things are relative. If we go on to a bad money market, it does not matter whether the rate is 3 per cent, or 3 J per cent., there will be a corresponding difference between the one and the other. We ought, therefore, to leave that element aside. I am going to assume that the Treasurer, whoever he may be, will choose wisely, and go on the market at the best possible time. The difficulty of the Treasurer, I apprehend, is that he feels that, probably, £3,500,000 of bonds might not yield him more than 8 per cent, or 10 per cent, less than that amount. It has been said! here that the New South
Wales 3J per cent, stock is worth £92 just now, and that means 8 per cent, discount. Under the circumstances, the Treasurer would be short of the money he requires - he would not get £3,500,000. If he floats a loan at 3$ per cent, he may get about par, and that is his objective. Of course, that is one view of the question ; but in looking to the interests of our financial future, I ask the Treasurer whether it would not be better to fix the rate of interest for his great system of Australian Consols and stand to that, getting his loan, it may be, at a discount? It will not cost the taxpayer any more in the long run, because the financiers simply make a calculation and work matters out so that they get a certain rate of interest. If the rate is 3
– There will be less money to work on.
– Parliament can adjust that matter afterwards, if the money is short. I am placing a point before the Treasurer for consideration, not in any hostile spirit, nor with any desire to embarrass him. There are some matters I think that have escaped his attention, if I may judge from his remarks and explanations. This loan, I understand, _ is to oe a short-dated one, to be paid off in sixteen years.
– I do not know about the term of the loan - that is a question to be arranged. We shall have to consider what is best. Very short-dated loans are not favorably viewed.
– A very short-dated loan would not find much favour if issued at a premium, but a short-dated loan issued at a discount would have a very good chance. The Leader of the Opposition is perfectly right in saying that, according to his observation, loans floated at a discount show more tendency to appreciate than do loans floated at a premium. The reason - and it is a most potent reason - is that the trustees of estates, who are large investors in such funds - in fact, perhaps, the largest - are in the position that if they buy at a discount, the security, as the due date approaches, is constantly appreciating, because ,it will then be paid at the rate of 20s. in the pound. On the other hand, a security issued at a premium - -sa, one issued at 4 per cent at £110 - if there are only a few years to go, depreciates. Consequently, trustees would rather invest in securities which are under par, and are appreciating. The Treasurer tells us that he has been advised. When I am referred to a lawyer’s opinion, I always like to see the case that is stated to the lawyer before I can judge of the value of the opinion.
– I shall be very glad to show the honorable member.
– If I knew what the honorable gentleman’s questions were, I should be in a better position to judge of the advice given.
– I have told honorable members that.
– For instance, the Treasurer may have simply asked by cable whether it is advisable to float a loan at 3 per cent., or a loan at 3J per cent. - which would give the better return, and he more advantageous at the moment. In such case, he probably got the advice that 3J per cent, was preferable. But, from our stand-point, we have to deal with a very much wider question. We have to deal with the future of Australian finance, the foundations of which we are now laying. We shall have to borrow, apart from the State debts, for certain undertakings for which the Commonwealth has become responsible, and it would be a mistake, in my humble opinion, to start off with a rate of 3J per cent, under any circumstances. We had better, face the question of floating our loan at 3 per cent.,’ and accept the position that the money market at the time the loan is floated will accord to us. There is a great deal of nonsense talked about the rates of interest, and of discount, and so forth, as if these involved a question of the credit of the State or of the Commonwealth. It is not that at all, because the market conditions, above everything else, govern the position. If we put ourselves in the position that we have to go on the market at an unfavorable time, and we must have money, we shall have to pay what is asked. It seems to me that the Treasurer, without seeing exactly what the result of his actions may be, has had regard to one point only, that is to say, his’ object has been to get the best rate he could at the moment for the particular loan. But seeing that in clause 5 he takes power to issue Treasury bonds at such times as may be necessary, paying them off at such times as he stipulates, at 3
– That was in connexion with the taking over of the debts.
– But I fail to see how we are going to take over the debts on favorable terms. I admit the money market may favour us, and we may get a premium ; but the whole basis of the proposal was that there should be uniformity- one stock and one rate, to be known as the Commonwealth stock, lt seems to me that this Bill is a departure from that idea.
– It is not a departure actually.
– I do not see any necessity for a departure when the Treasurer seeks the power - a power which I am sure the Committee will give him - to float Treasury bills at 3J per cent. I would give the Treasurer the right to do that even up to 4 per cent., because it is a temporary arrangement. But the position will lie very different when it comes to the formal question of floating a loan. I was assuming that the loan would be shortdated* but the Treasurer now says he is not clear about that. This is the first borrowing upon the credit of the Commonwealth, and if the Commonwealth is going on to the money market it ought to go with an intelligent idea of what it means to do. Are we going to establish a Commonwealth stock as proposed, and stick to the one rate of 3 per cent., accepting the market rate as it arises, as the British Government does with its consols ? That is the idea that we ought to hold to. and the right honorable gentleman would do well to reconsider the matter. He ought to put * oer cent, into the clause and be content with his power to finance under clause 5 until such time as it may be prudent to consolidate his Treasury-bills, pay them off, and convert the whole” into a loan for whatever period he or his successors may desire it to run. But I say in all honesty, and simply with a desire to aid the Treasurer, that it will be a great mistake not to accept the amendment. *
– I am very much obliged to the honorable member for Mernda for the information he has given us. We, of course, listen to him with very great respect, because we know that he has had a great deal to do with these large operations. I. do not go back in the slightest from anything that I have written in regard to the conversion or consolidation of our loans, and I still adhere to my advocacy of a Commonwealth stock at 3 per cent. ; but when that was written and when the honorable member also put forward his views, things were not exactly as they are now. Those who invest in our stock, especially trustees, will prefer to have a discount stock. That goes without saying, as the money they invest will then be an appreciating sum as the stock matures. But the honorable member knows as well as I do that at the present time there are no Australian loans being floated at 3 per cent.
– Does the right honorable member mean no Australian State loans?
– But other loans outside of Australia are being floated at 3 per cent.
– I do not think so.
– The London County Council floated its last loan at 3 per cent.
– r-At 3^ per cent., and sold at £102 ; but they had the Bank of England behind them.
– They may get very much better terms, but the reason why we propose this loan at 3J per cent, is that we want to get something like par for the stock. As the honorable member for Corio pointed out, New South Wales 3 per cent, stock at present is only £86, or at the enormous discount of £14 per cent. I would point out to the honorable member for Wide Bay that since the £2,000,000 was offered to him the bank rate in England has been 5 per cent., although it is not so much now.
– Three months ago it was 2½ per cent. But the Government would not borrow any money just now?
– No, we should not. Things are not as they used to be in regard to money. It is dearer all over the world than it was. I am well aware that in the past 3 per cent, loans in Western Australia have brought par and more than par. I wish to explainto the honorable member for Wide Bay that when I said there was no record of the offer of the banks to him of £2,000,000 I in no way wished to imply that the offer was not made. I meant simply that he had told me that the records were in the Treasury, and that I made inquiry for them, but they were not forthcoming. The Secretary, I think, told me that he thought the offer was contained in a semi-official communication to the honorable member for Wide Bay when he was Prime Minister. I also understood that the offer was in connexion with the proposed gift of a Dreadnought to Great Britain - that the patriotic spirit of the moneyed people had prompted them to offer to lend £2,000,000 at3½ per cent, for the purpose, but my honorable friend has not told us that. The honorable member for Mernda told us what he would do if it were a special case, but that is exactly what this is. It is in no way connected with the conversion or consolidation of the public debt of Australia. It is a special loan for a special purpose, and with a 5 per cent, sinking fund, lasting about sixteen years, and perhaps much less with the amendment I propose to make. I propose to make an amendment so as to allow the Commonwealth to pay it off at any time sooner than sixteen years. It is therefore altogether a special matter, and not to be mixed up at all with the general question of the Australian or Commonwealth stock that we hope to institute in connexion with the conversion of the £250,000,000 odd that Australia owes. I have no intention of issuing the loan at a premium. It is neither advisable or economical to do so. We shall issue it either at par or at a discount, and the rate of interest will be regulated in order to arrive at that result. I only hope that we shall be able to institute a 3 per cent, loan. If I consulted only my own wishes I should say, “ Let us do so,” but, as the honorable member for Darwin says, anything like £14 per centum is a tremendous discount. This is what the honorable member for Mernda himself said on the 30th of October of last year -
The State Treasurers have, in my opinion, come almost to the end of their tether so far as borrowing in the local market at present rates is concerned. The day is at hand when they will have to pay an increased price. The interest rate has increased of late by fully½ per cent., and users of the money will have to pay that increase. Some people imagine that the increased rate is paid by the banks; but if the banks pay more for their money the people who use it have to pay more for it.
As the honorable member truly said, it is all a question of the state of the money market, and what could be done a few years ago cannot be done now.
– Not at this moment.
– Of course, we may be able to get even better terms in the future than we have in the past, but it is problematical. I ask the honorable member for Mernda, to use his own words, to treat this matter as a special loan for a special purpose, with a special sinking fund and a very short date, and in no way connected with the big project which he has had in view, and with which I have also had something to do. When we deal with the larger question it will probably be with long-dated or interminable loans. Our idea is that we shall have some option as to the date when this loan will be capable of being paid off. We shall not arrange that it shall be paid off at a certain date. We shall arrange that a certain number of years shall elapse, and after that, a certain number more years during which the Commonwealth would have the power to redeem the loans, giving us time to think about it, instead of doing what I regret to say, has been done in many cases in Australia previously, resulting in £20,000,000 of loans falling due at one time, and so making it very difficult to finance the re-arrangement. This matter has not been done by myself of my own free will. It has been done after consultation, after taking the best advice, and placing most fully before those who are advising us in London our desire to have a 3 per cent. loan. The result has been that, without saying that we shall have 3 per cent, as a maximum, we say, “ Not exceeding 3½ per cent.,” in the hope that we may be able to arrange to get the money at 3 per cent.
– I listened very attentively to the honorable member for Mernda ; but the whole of the debate so far seems to have been in defence of the lender. We are troubled, not about the lender, but about the borrower. I am opposed to this loan out-and-out ; but now that we have gone in for it, I do not want to see the Treasurer crippled. Would the honorable member for Mernda like to see Commonwealth 3 per cent, consols quoted daily in the newspapers all over the world at about £85? The world will not bother about the 3 per cent, part of it, but will note that the first issue of Commonwealth stock is quoted at a tremendous discount.
– British consols are only worth £82.
– But the interest on them is only about 2J per cent.
– Two and a half .per cent.
– But when you pay your brokers, there is nothing in them. On the other hand, the world will see New South Wales stock quoted at £98 - I am not referring to the currency or the rate of interest - and other New South Wales stock at £104, and what effect will that have on the credit of the Commonwealth ? The Commonwealth, as it is,” is in an infinitely worse position to borrow money than any of the States, because half its security is eternally mortgaged to those States. It is, therefore, no use tq talk about a Commonwealth 3 per cent, stock. The London County Council, to which the honorable member for South Sydney referred, has the Bank of England behind it. It floated a loan of £1,000,000 recently at 3J per cent., but it obtained £1,020,000 for it, while New South Wales, floating a £1,000,000 loan at 3 J per cent, at the same time, got only about £95. The difference was that New South W ales, with infinitely superior security, received less than the London County Council to the extent of £65,000 or £70,000 in the million. The other day the Argentine Republic went to London for £5,000,000, while Brazil was wanting £6,000,000 or £7,000,000. Chili is also going into the money market of America, and, if she fails in New York, will go to London.
– The South American States have repudiated at times.
– Their credit now is as good as that of Australia They are constructing great works, and their populations are growing. There is no doubt about the securities of the Argentine, Chili, or Brazil, since the failure of Baring Brothers. In addition, all the municipalities are wanting money. I, therefore, suggest to the Treasurer that he should float this loan in Australia. I would sooner pay 4 per cent, to Australian lenders than 3 per cent, to European lenders, because the former will spend theinterest again in the country, and havesomething to invest in other securities. If we borrow in London, we must pay brokerage and other charges, which will takemoney out of the country. The honorablemember for Wide. Bay spoke about Australia floating loans at 3 per cent., but theconsols of the great British nation, bearing, interest at the rate of 2 J per cent., stand’ to-day at only 82 or 83. The London County Council floated its sh Per cent, loan when the market was glutted’ with money. At certain seasons of theyear, as I know, having been a banker, the bankers of the world send millions of pounds to London to buy foreign paper. This money is let out on call, because it must be ready when applied for. At these seasonsyou can get money almost at your own price. But when a great deal has been> recalled again, money becomes very scarce. Unfortunately we have no Australian banking department which would carry our credits until money had become cheap. The Treasurer may have to go into the market when money is very dear. The question- is, must the Treasurer float the loan, offering 3 per cent., at 94 or 95 or some fixed” amount, or at what he can get? If he offers 3 per cent., he must discount at £70,000 in £1,000,000, which, on a loanof ,£3,500,000, means a discount of £245,000.
– Offering 3 per cent., we could not get money at .£93.
– I am sup. posing that we could do so. Every one has spoken of the ‘ wonderful Australian credit, and I do not wish to cry it down. Allowing for the discount I have spokenof, the Commonwealth would receive in. cash only £3,255,000, on which it would, have to pay £3 4s. per cent. In additionit would be responsible for the repayment of £245,000 which it had not got. That in the aggregate would be equivalent to paying 3J per cent, on the loan, of which there would be £245,000 which we could not use. The honorable member for Mernda took the position that it would be better to borrow at an immense discount. But when one is going into an investment, and needs money for the enterprise, he is not benefited by borrowing at a low rate of interest, if he has to submit to a discount- which prevents him from using a large part of what he nominally borrows.
– The honorable member for Mernda spoke about standardizing.
– I am bearing that in mind. I would standardize by commencing at si per cent. It is better for -our stocks to be quoted above par at 3% per cent, than below par at 3 per cent. If the Treasurer borrows at 80, £5, or 90, the stock will stand at that price, and will be quoted at the same rates as those of other countries with similar securities. I desire that the Australian stock, whether it be inscribed, in debentures, or in bonds, shall not be quoted at less than the Canadian, South African, Chili, or Argentine stock. Mexico has a population of 18,000,000 souls, and her Government has bought 52 per cent, of the interests in the consolidated railways of the country. But it cannot borrow for less than 3J per cent, and below par. The honorable member for Mernda convinced me that I am right in regard to my proposals for an Australian banking system when he urged the Treasury to issue short-dated bills. What are they tout an overdraft at 3J per cent. ? If the debate does no other service, it will do good in getting honorable members to think about thi* subject.- If we had a postal banking -system, the Treasurer would be able to get an overdraft, and need not trouble about borrowing until money was cheap. ‘He could wait his opportunity. To-day if he gets an overdraft from the local banks at a high rate of interest, they will call upon him to reduce it within thirty-six hours, just when he cannot do so. If the Treasurer made up his mind on the subject, he would establish an Australian bank within a week. The Constitution gives to the Commonwealth the right to deal with finance, and makes it the financial boss. Section 51 empowers us to borrow money on the public credit of the Commonwealth.
– It gives us only the same powers in respect to borrowing and taxation as the States possess.
– The States cannot charge income tax on Commonwealth stock. I have heard this question argued in the Supreme Court of the United States. I used to take a great interest in the Courts at one time, because I thought of becoming a lawyer. We are empowered, too, to deal with banking other than State banking ; and also with State banking extending beyond the limits of the State concerned, the Incorporation of banks, and the issue of paper money. What are we discussing but a proposal to issue paper money? What is paper money but a promise to pay?
– This is not paper money.
– We propose to give promises to pay on a specified date ; paper money is merely a promise to pay on demand. The United States currency rests on bonds, just as the currency of the Bank of England rests on the bonds of England. The reason why the United States 2 per cent, bonds are so high is that the circulating medium of the great national banks, of which there are over 5,000, rests on those bonds.
– -Does the honorable member mean to say that the Federal bonds are not subject to State income tax in America?
– They are not, to my knowledge. If my recollection serves me rightly, a great case was fought in the United States in regard to the right of the State of Louisiania, after the war, to tax United States bonds. I forget what the decision was, but there was nearly a riot because of the act of that southern State in setting up its independence. My point is that the States have no constitutional power to tax Commonwealth stocks or debentures. I may be in disagreement with the AttorneyGeneral
– No; the honorable member is right.
– I am glad to hear that I am in agreement with the Attorney-General, who is a sound constitutional lawyer.
– The honorable member should speak slowly and seriously, and some honorable members would think a lot of his speech.
– Surely because a man has had a certain training, and does not express opinions in funereal style, he is not to lose his rightful position amongst his fellow members. I come into this House, not to say that other honorable members are bad, but to show that the arguments of my opponents are unsound. Why should people say, “ It is only King O’Malley ! “ or “ It is only Billy Wilks speaking.” If I were Treasurer, would they say that I had not the ability for the office, although I had the necessary training? I venture to say. that no one in Australia has ever had’ a finer banking training than I have had. There is no other man in Australia who entered a bank as a ledger clerk, and within three and half years was its credit man. I trust that honorable members will not vote for this amendment, because I do not desire to see Australian credit sacrificed. Many years ago I lived in London, and I know something of the brokers and business of that great city. Does any honorable member think that if we went into the market with “a. 3 per cent, loan, and at the same time a 3I per cent, security was placed on the market by the United States, the money-lenders would be induced by patriotic motives ‘to give the preference to Australia? New York city, which has a population of 4,500,000 - as against a population of 4,300,000 for the whole Commonwealth - is selling her bonds at 4 per cent., and Morgan’s Banking Company will not touch one of them at a lower rate. New York, the richest city in the world, the home of great insurance corporations and other fiduciary institutions - New York the second city in the world, and the centre of the great railway companies of the United States, Canada, and Mexico, has to pay 4 per cent, on her bonds, and issues them at a little below par. In the circumstances, shall we be able, successfully, to put a 3 per cent, loan on the market merely because we’ happen to be partners with England? I hope honorable members will make no mistake in regard to this matter. I do npt wish to see Australia sacrificed on the occasion of the first issue of a Commonwealth security. There are some trustees who have the control of millions, and the trouble heretofore has been that the States have always done business through the banks. The banks know the investors, and we know only the banks. In days gone by, when a State loan was maturing, the investor would say to the banker, “What do you think about renewing “ The banker would say at once, “ Wait a day or two, and we will see what we can da There may be some little perquisites floating about.” That is business all the world over. Boodle knows no patriotism. Are honorable members aware that in 1812 the bankers of Boston would not lend the United States of America a penny ? They stopped discounts, and “broke” many business men in Boston, because they were opposed to the war of the right of search which Maddison was carrying on against England. They sent millions of dollars into ‘Canada for the purchase of British securities, and to feed British soldiers who were burning property on the frontier. There is no patriotism in boodle. As soon as England became involved in a great war, gold flew from her, and she had to crush Napoleon with paper money. As soon as Napoleon was crushed the gold came out of its hiding place, and proceeded once more to run the country. I ask honorable members to recognise that there is neither patriotism nor sectarianism, in money.
– Are there not greenbacks in America?
– Yes; over £60,000,000 worth, and they are worth 20s. in the pound. There is also a large issue of silver certificates worth 20s. in the pound, and not redeemable in gold. Notwithstanding the position which my leader has taken up, I trust that honorable members will reject the amendment.
– - I desire to make a few observations with regard to the question of taxation on which information has been sought by several honorable members. Before doing so, I should like to say that the honorable member for Darwin need not think we are not pleased to listen to him merely because in giving us solid blocks of wisdom, as he so often does, he lifts us, by his keen sense of humour, out of the dulness of many a debate. In fact, my knowledge of him, both as a member of this Parliament and as a member of the Parliament of South Australia, leads me to think that it may well be said to him -
Thy voice with grace divine endued Brings with its sweetness no satiety.
His capacity of speech .is absolutely proof against the closure. I’ say this because I appreciate the help he is giving the Government in opposition to the suggestion that we should not stand by the proposal to make 3J per cent, the limit in connexion with this loan. In 1896, when a South Australian Consolidation and Conversion Act was passed, provision was made in it for the payment of a rate of interest not more than 3 per cent. The stock was floated at over par, and New South Wales 3 per cent, stock in the same year was about £102. The general principle is that.it is well always to float as near as possible to par. These transactions depend upon reputation, and the reputation of our indebtedness will be determined not upon the true value of the transaction, but upon the indebtedness per head, and the total volume. If you float at much under par the people look at your total indebtedness, and the indebtedness per head, which must then necessarily be greater, whereas the true indebtedness; measured for the same period, is the same whether you float at 3I per’ cent., about par, or at 3 per cent., and at £92, as in Canada. We may shortly be taking over the State debts as part of the financial proposals of the Government, and we shall need to have a standard stock. It would be very injudicious if our standard stock were 3 per cent., and to bring the State stocks, on conversion, into line with our stock, we had to float at a discount, and, therefore, more stock, and. so increase the volume of the indebtedness of the States as the conversions _ became due. On the question of exemption from taxation I am quite certain that it is not necessary to insert a provision in the Bill as suggested, but if honorable members think that it would give a better appreciation to our loans, there is no reason why we should not insert after clause 13 a clause providing that Commonwealth securities, and the income derived therefrom, shall not be subject to taxation by the Commonwealth or a State. The excuse for inserting such a provision would be that if we imposed an income tax without exempting our bonds from that tax, the . Commonwealth tax would have to be paid upon them. I am certain, however, that a State income tax could not possibly -touch our securities. The question has been decided in America, and there has been nothing to the contrary decided bv the Privy Council. The principle is stated by McClain on Constitutional Law in the United. States. At page 129 he writes -
Thus a State cannot tax lands or buildings belonging to the Federal Government, nor can a State without the permission of the Federal Government tax as property, the bonds or currency issued by the Federal Government though owned by private individuals.
He goes on to show that Congress could, of course, by Act permit such taxation. In the case of Weston v. City Council of Charleston, it was decided that a tax imposed by the law of any State of the United States, or under the authority of such a law, on stock issued for loans made by the United States, was unconstitutional. That decision was referred to in the leading case upon this question, the case of Pollock v. Farmers’ Loan and Trust Co. There it was held that a tax on the income from United States securities was a tax on the securities themselves, and equally inadmissible. It will thus be seen that according to the United States decisions a State can neither tax the Federal securities nor income derivable from them. The honorable member for Balaclava, in his very clear statement of the position, referred to the decision of the Privy Council in the Bank of Toronto case. That case, however, did not reverse the decision of the United States Courts - it did not reverse the position. I do not think that the arguments of counsel before the Privy Council would be accepted by the lawyers of the United States. What they contended was that the security, or the income derivable from the security, could not be taxed if the bank were chartered under the corporation law of Canada - that, because the bank was incorporated under a Dominion law, the securities were immune from taxation. It was held, however, in the United States that the bank was immune because it was an instrument of the Government, and not because it was ‘ incorporated under any Act. There is a mighty distinction between the two positions ; and, therefore, nothing said by the Privy Council in that case touches the American case. I have already referred to what has been decided in Australia in D’Emden v. Pedder, and other cases.
– The AttorneyGeneral is satisfied that these bonds will be free from taxation?
– I am; but if the Committee desires, a clause may be inserted as a sort of notification that the bonds are free from State taxation.
– I do not wish to interpose in this battle of financial giants’, more than to make a suggestion to the Treasurer, which he may, from “ his great regard for the responsibilities of his office, be inclined to accept. It seems to me that we ought not to bind the hands of the Treasurer at some future date as to the terms on which the loan is to be floated. The clause provides that the interest shall not be more than 3J per cent. ; but if we fix any limit, it is only, speaking generally, a peculiarity of human nature that the Treasurer will he more inclined to go to the limit than he will if he has to make the best bargain he can and be responsible for it to Parliament. We are not proposing to float the loan now, but only as the money is required. If the Treasurer, two or three years hence, finds that he has the responsibility of submitting to Parliament the best bargain he can make, he will work much harder than he would if he had authority to go to $1 per cent. I therefore suggest that we should fix no limit in the Bill. After all, it is not the Treasurer, but his financial officers and advisers here and in London, who control the matter.
– This would be part of the work of the High Commissioner.
– Of course. I suggest that the persons responsible at the time will be more competent to decide as to the terms and rate of interest than honorable members of this House, however eminent they may be, who are not seized with the peculiar situation that may have then arisen. I suggest that the Treasurer should make a bold bid for the responsibility of his office, and strike out the limitation. If it were a limitation simply expressing confidence or otherwise in the particular occupant of a particular office, honorable members might have some diffidence in introducing such a question to the Chamber ; but that is not the position. This limitation will undoubtedly affect to some extent, great or small, the value which Australia is going to get out of these financial arrangements. If the amendment of the honorable member for Robertson, which, I think, limits the Treasurer still further than his own self-imposed limitation, is defeated - as I hope it will be - I shall move to strike out the limitation altogether, not because I have implicit trust in the heavenborn financial, genius of the present dr any other occupant of the Treasurer’s position, but purely because I feel that if we give them a free hand our responsible officers will be better qualified to deal with some future financial situation than the members of this House are at the present time.
– I listened with great interest to the speech of the honorable member for Darwin. The honorable member complains that his utterances on financial questions are sometimes not received with the attention they deserve; but I should like to say that I always listen to them, and have done so’ with the greatest pleasure on this occasion, and, further that any lingering doubts in my mind were dispelled by the remarks he made. I think that, on the whole, the argument put forward by the honorable member for Mernda has a good deal of weight. We all desire to see .the first Commonwealth loan floated at 3 per cent, if possible ; and,, no doubt, the Treasurer will endeavour to> give effect to that desire. But I cannot help thinking, with the honorable member lor Darwin, that we may have to borrow this money under circumstances which, if we insist on 3 per cent., may place us in theposition of having to accept a discount of, perhaps, 14 to 16. per cent. This, I agree, will do our reputation more harm in themarkets of the world than the fact of our issuing a short loan at 3J per cent. Thereis a good deal in the suggestion of the honorable member for Wentworth. Why should” we impose any limitation ? Is it usual todo so?
– It is usual.
– But it is not always done.
– State Treasurers float loanswithout consulting Parliament.
– I cannot remember a casewithout a limit.
– I do not desireto suggest any unusual course; but I cant well conceive certain circumstances arising,, though I sincerely hope they will not,, when we might have to get the money suddenly, and could not keep within 3J per cent. However, I do not desire to press; that point unduly. I merely rose to saythat weighing the disadvantages on bothsides, I am rather inclined to think that the possibilities of danger from a very large discount on our first loan, outweigh those of floating this loan - which after all is only a special loan for a special purpose - at a somewhat higher rate than we should liketo see. As to the income tax, I am entirely in accord with the Attorney-General ‘sexposition of the law. I may suggest, however, that the object could be achieved” - the minds of our creditors could be disembarrassed of all idea that they were subject to income tax - by some notification tothat effect on the stock certificates. As a matter of fact, the brokers and those whoadvance the money seldom ever troublethemselves about the Act of Parliament, which does not disclose the conditions that are really inquired into.
– The brokers are themasters of the situation.
– Primarily so; but they have to depend ultimately on their clients. The actual moneys which we shall’ be able to obtain must ultimately depend on public opinion and the reputation of our Commonwealth funds. It may not be usual 4o state on the stock certificates that they -are not subject to income tax, but I think that would be the most effective way of meeting the situation.
.- If the Government were committed to the flotation of this loan at once I should be quite at one with the honorable member for Flinders. But, if we provide in the Bill that the interest shall not be more than 3$- per >cent., we give an indication of our idea of what future interest should be. The honorable member for Darwin is perfectly right in saying that we may have to take a dis.count, but I do not consider that that is necessarily so at this stage. As I have said before, I would allow the Government, under the Treasury Bonds clause, to go up to 4 per cent., if necessary, in order to get money on the best terms for the time being, with a view to ultimately floating the loan under favorable circumstances. I remind the Committee that the Government are not compelled to float this loan until the market is favorable,1 and that, if in the future it should be found that 3 per cent, is too low, it would be quite easy to introduce a short Bill raising the rate to 3$ per cent.
– Parliament might not be sitting at the time.
– These things are not done in an hour, but will be fully considered. It is to be presumed that the High Commissioner and the Treasurer will be in constant communication as to the prospects of the market. I understand that the advice received by the Government is that there will not be as low a rate for money as in the past, for some considerable time to come and, if that is made quite clear, then, as I say, a short Bill could be passed. Parliament would then have the satisfaction of knowing the exact condition of the market. It seems to me inconsistent with sound business principles to start off by providing for a rate of interest which we do not desire to pay, especially when we are under no compulsion to obtain the money at once, machinery being provided for obtaining funds for temporary purposes. However, if the Committee take another view, I have no desire to embarrass the Government ; but if we fix a rate of 3 J per cent., we shall, in my opinion, seriously hamper our future financial arrangements.
– I shall accept the suggestion to make the rate not exceeding 3 per cent.
.- As one who is personally against all borrowing, I have listened with a good deal of interest to this discussion. Now that the Bill has reached its present stage, we should endeavour to make it as perfect as we can. The brokers of London certainly know as much about this business as do any honorable members ; and we have been told by the honorable member for Mernda, who. is a successful business man, that the whole question is one of choosing the opportunity. I am very glad that the Treasurer has intimated his intention to act on the suggestion made by the honorable member. The Treasurer, in accepting the amendment, has come to a very wise decision in the interest of the Commonwealth.
– My desire and the desire of the Government has always been to float this loan and commence our borrowing at 3 per cent. We were influenced to place “not exceeding 3 *</inline> per cent.” in the Bill by reason of our advice from London. 1 quite recognise, however, the value of the arguments advanced by the honorable member for Mernda and others, and perhaps it is inadvisable to place a 3
– Ought we not to have the advices received from London on the subject placed before ‘us?
– -They are confidential. We recommended 3 per cent., and they advised 3J per cent. At the same time I am willing to take the risk.
.- Many of - us are pleased at the decision of the Government, which I believe is a step in the right direction. Not only will it mean saving money to the Commonwealth, but it will save the credit of the Commonwealth to begin with. It will be anomalous for the Commonwealth even in the present state of the market to be seeking money at 3 J- per cent., when £50,000,000 has already been borrowed by the States at 3 per cent. The Treasurer cast some doubt - unwittingly, as he admitted afterwards - on my statement that £2,000,000 had been offered by the banks to the Fisher Government at par, here or in London, at a time when the money market was as timid as it is at present.
– What was that in connexion with ?
– In connexion with the defence of Australia, and, of course, the financing of the Commonwealth. I presume that this Bill is also connected with the defence of Australia, but that happened at a time when numbers of people were saying that Great Britain was on her last legs. Some of those who are interjecting now said that unless we went to her . aid and strengthened her in the North Sea, there was a probability of the whole fabric of the Empire - money, credit, and everything else - disappearing.
– Who said that?
– It was said by the honorable member among others. These, however, are other times and other circumstances.
– The only point is - where is the record of that offer in the Treasury? I could not find it.
– It is there. I have communicated with Mr. Allen, and received a reply from him communicated by the honorable member for Boothby, in which he states that he remembers the letter quite well, and is looking up the record.
-He told me there was no record.
– Was he in any doubt about the letter being there?
– He said he thought it was a private letter to the honorable member.
– I do not think it is among mv papers. I think it will be filed somewhere. If the Treasurer has no doubt about the offer having been made, why did he challenge mv statement?
– Because the honorable member told me that it was on record.
– So it is. and the two principal banks in Australia published their letter in the Sydney papers. It is, therefore, on record there also. Mr. Allen read thi* letter, and mv recollection is that he brought it to me. If it is not on the file I hope we shall be able to hunt it up. At any rate it showed the credit of the Commonwealth at that time, and I hope that that credit is no worse now with the present Government in power, because the money market is better now than it wasthen.
– That was for a Dreadnought, was it not?
– It was for the defence of Australia. The Minister of Defence is very anxious to put in a word about the Dreadnought, but does he know that that was to be Australian money offered as a gift to Great Britain, whereas this proposal of the’ present Government is to borrow three and a half million-, pounds, presumably from Great Britain, and bring it here? That is quite a different thing. What has taken place today shows clearly the necessity of taking steps to enlighten the Government on these matters, and I am very glad indeed that they have agreed to reduce he rate to 3 per cent. If it is discovered afterwards that the money market forbids their floating the loan at 3. per cent., a wise Parliament, should it think it prudent to borrow, will no doubt give them, or any other Government which is in power, authority to borrow at a rate which is practicable for the time being.
.- I am sorry that the Treasurer has agreed to the amendment. It limits his powers. Previously he had power to borrow at 3 per cent, and up to 3½ Per cent. Now he will go on to the market at 3 per cent., knowing that the 3 per cents, of New South Wales, the most financial of the States, are at only 86, and those of Canada at 92. If we are only to get 92, it will simply mean that we must go back to clause 3, and take authority to borrow £4,000,000, instead of £3,500,000.
– We must get £3.500.000 net.
– Then it will be necessary to go back on the clause which limits our loan to £3,500,000. I deeply regret that the Treasurer has accepted the amendment when he has received support from all round the Committee, even from the honorable member for Darwin, for his original proposal for 3 J- per cent. He is tying his own hands in accepting 3 per cent. He said that if he could not get the money at 3 per cent, he would appeal to the new Parliament for authority to give 3I per cent., vet the very reason why the Prime Minister was able to in- fluence the House so much yesterday was his statement that we could not wait six months, but must get the money now. The honorable member for Wide Bay has said that financial conditions in England are better now than they were when he was in office, but the discount rate of the Bank of England was z to 3 per cent, for the whole of the time that the Fisher Government was in power, and is now up to 5 per cent. It has gone from 4 to 5 per cent, within two months. If 3J per cent, is struck out, I would rather that nothing was put in its place, as the honorable member for Wentworth advised, so as to give the Treasurer an absolutely free hand, but it is foolish to go to the London market with a demand for a loan at 3 per cent. It is essential that we should succeed with our first loan. I think the Minister is taking the advice of those who want to wreck the Bill, to wreck this loan, and to wreck the Australian Navy. He is accepting the proposals of men who are enemies to the whole idea. Their hope, of course, is that impossible conditions will be made which no Government can honorably accept, and that by some chance the country may speak against the proposal, so that those then in power may try ‘ to block this loan for all they are worth. I am for an Australian Navy. I am not one of those who say they favour a navy, but do all they can to defeat practical methods of bringing it about. We hear men on both sides of the House state that they are in favour of an Australian Navy, and the idea of the Government is to adopt practical methods of bringing it into existence, whereas the idea of the Opposition is to put into the wheels all the cogs that they can in order to destroy the scheme.
.- It is with gratification that I find that the Treasurer has given way on this matter, because I am satisfied that this is the proper step to take. It would have been a disastrous mistake for us to issue our first loan at the high level of 3$ per cent. If we had left the 3 J per cent, provision in the Bill the London financiers would have regarded it as expressing the will of Parliament, and any negotiations bv. the Treasurer to obtain a lower rate would have been quite futile. I’ have always thought that our borrowing for all purposes should be on a 3 r>er cent, basis throughout, and my calculations have been based upon that as a maximum. It is far better for us to appreciate our loan values. A discount will, of course, be inevitable if we float at 3 per cent., but it will be better to find our stock appreciating up to par than to have it at a higher rate, and oyer par, but not appreciating. I did not speak on the matter before, because I felt that the Prime Minister had consulted the Home authorities, and that they had advised 3
.- I ask the Minister whether, in view of his sudden change of front, he will communicate with the authorities to whom he has referred to ascertain approximately the discount which would have to be paid on a Commonwealth loan floated under existing circumstances at 3 per cent.
– How can they tell ? Mr. KELLY. - They cannot speak with absolute certainty, but those whose business it is to underwrite loans have as great a knowledge as that of the honorable member, and the additional advantage of being on the spot.
– Does the honorable member desire that our first loan should be underwritten ?
– I presume that it will be floated through the underwriters, as almost every loan is. If it is not underwritten, the financial advisers of the Commonwealth in the Old Country will consult those who generally do this underwriting, to ascertain the best time for floating the loan. I suggest that the Treasurer should ascertain from his experts in England approximately how much under par a 3 per cent, loan would probably be floated at under existing circumstances, so that the information may be available when the Senate comes to deal with the Bill.
– It would be impossible to say now what rate will be obtained when the loan is floated.
– That is why I desired the Minister to have a free hand in the matter. Apparently he wishes to be tied up.
– I do not . remember any measure of this kind giving the Treasurer a free hand.
– It does not necessarily follow that it has not been done, or that it would not be wise to do it. This is the Conservative reasoning which it. is usual to hear from the honorable member and his party, though when it comes from members on this side, it is spoken of as Toryism.
– I shall make inquiries later. It would be of no use to ask now.
– It has been stated that the borrowing of this money is an extremely urgent matter. If it can be put off until next session, we might as well consider some other means of getting what we need. I realize the gravity of the situation, because the credit of Australia is not to be lightly treated. But I. do not think that any honorable member is any sort of financial authoritv, apart from his business affairs : and therefore I suggest that before the Bill is passed the Treasurer should consult those who are in this business at the world’s business centre, to ascertain how> we shall stand.
– I shall be glad to make inquiries.
.- I have now obtained copies of the letters to which I referred alittle earlier. They are as follow : -
Bank of New South Wales,
Sydney, 23rd March,1909.
The Hon. the Prime Minister of the Commonwealth of Australia, Melbourne. .
I have the honour to inform you that I am authorized by the directors of the Bank of New South Wales and the Commercial Banking Company of Sydney Ltd., to say that if the Com. monwealth. Government decides to add a battleship to the British Navy as a gift from Australia, these banks will be prepared to provide in London, as an advance to the Government of the Commonwealth, the necessary funds either in one sum for the purchase, or in instalments for the building as may be required ; such advance would be repayable, at the convenience, of the Government, in London, within, say, six months after the close of the next session of the Commonwealth Parliament, and’ would carry interest at the rate of 3½ per cent, per annum, payable half-yearly.
I have, &c,
Charles K. Mackellar,
To that I replied -
I have the honour to acknowledge, with thanks, the receipt of your letter of the 23rd inst., intimating that if the Commonwealth Government decided to add a battleship to the British Navy as a gift from Australia, the Bank of New South Wales and the Commercial Banking Company of Sydney will be prepared to provide in London, as an advance to the Government of the Commonwealth, the necessary funds, to carry interest at 3½ per cent. The Government have decided to take no action in the direction of giving a battleship, but the generous offer of the banks is greatly appreciated.
– I did not doubt the honorable member’s statement.
– If the honorable member reads the Hansard report, he will find that that is the only construction which could be placed on his words.
.- I compliment the Treasurer on having given consideration to the views which have been expressed, and upon recognising the force of the arguments in favour of the amendment. At the same time, I am sorry that the Ministers did not show a desire to take a similar course earlier in the session. Had they done so, we should have got better legislative results.
Amendment agreed to.
Clause, as amended, agreed to.
Clause s -
Amendment (by Mr. Fisher) agreed to -
That after the word “ currency “ the words “ not exceeding five years “ be inserted.
Clause, as amended, agreed to. Clause 6 -
The principal amount specified in any inscribed stock, and the interest thereon, shall be charged on and payable out of the consolidated revenue fund…..
Amendment (by Sir John Forrest) proposed -
That after the word “ stock “ the words “ Treasury bond, debenture or stock certificate to bearer “ be inserted.
– I presume the Treasurer wishes to provide for the giving of any form of security that may be acceptable.
– Exactly. The amendment is necessary in view of the wording of other clauses.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 7 -
Inscribed stock shall be redeemable at par at such time or upon such notice as may be fixed in the order of the Governor-General creating the stock, and interest thereon shall cease on the date at which the stock becomes redeemable.
.- I move -
That after the word “ time “ the words “ not later than sixteen years from the issue thereof “ be inserted.
As the clause stands, it would be open to the Treasurer to issue a long-dated loan, if he so desired..
– At the end of sixteen years the sinking fund will have accumulated to a sum which will redeem the loan.
– As the Bill is drafted, it will be at the discretion of the Treasurer to say how long payments to the sinking fund shall continue. After ten years the Treasurer of the day might determine that there was a sufficient amount in the sinking fund.
– I propose to amend clause 8 by omitting the words “ which with interest will, in the opinion of the Treasurer, be.”
– We must deal with the Bill as we find it. I think, therefore, that the clause should be altered as I propose.
T4-451- - The honorable member’s proposal would not be a good one. It is proposed to amend the succeeding clause so that it will provide that there shall be paid into a sinking fund an amount at least equal to 5 per cent, of the loan moneys raised, until there is to the .credit of the fund a sum sufficient to redeem the loan, with interest added. When the contributions to that fund cease, a sum equal to the amount of our indebtedness will stand to our credit in it. That being so, I see no reason why we should now fix the term of the loan. It is unusual to do so.
– But this is an unusual loan.
– I recognise that, but I repeat that it is not usual to fix in a Loan Bill the date at which the loan shall mature.
– Very often a date is fixed, after which the Government may have the option of redeeming the loan.
– The usual course is to provide that after a certain number of years the loan shall be redeemable at any time on notice. That has been done in Western Australia, Victoria, and South Australia, and has been found to work well. The practice of naming a fixed time at which a loan shall mature, which was followed for a long time in some of the States,” is very unsatisfactory. Under such a system a loan may mature in the face of a very bad market, or several loans may mature during the same year. Honorable members will find that State loans amounting to something like £20,000,000 fall due in one year. We shall fix as short a time as possible, after which the Government may have the option of redeeming the loan. In Western Australia and South Australia twenty years have been fixed. I believe that on one occasion a shorter period was fixed, and that the Government had to revert to a longer period. Investors do not like to give to a borrower the option of paying off a loan at any time. They desire to know that they have made an investment for a certain number of 3’ears, and my experience leads me to believe that to fix too short a period is to inconvenience investors. The desire of the Government will be to make as short as possible the term after which it will be optional to pay off the debt. I think it unnecessary to fix any term in this clause, seeing that we provide in the next that there shall be an annual payment into a sinking fund equal to 5 per cent, of the amount of the loan. I propose when we reach the clause in question, to move an amendment providing that the payment into the sinking fund shall be “ at least “ 5 per cent., so that in good times we may be able to increase the payment.
– I propose to ask the Committee to insert the words “ not less than.” I think they are better than the words “ at least.”
– The AttorneyGeneral has suggested the insertion of the words “ at least.”
– It does not matter much one way *or the other, save that the words “ at least “ are more emphatic.
– How long will it take to redeem the loan on the basis of a 5 per cent, payment to the sinking fund?
– Sixteen years, provided that we are able to invest the money to the credit of the sinking fund at 3! per cent. We may not, however, be able always to do that. I think that the Leader of the Opposition might well consent to allow the clause to pass without being amended as proposed by him. I cannot say at present what is the best course to pursue. We shall have to consult those who are more conversant with the . matter, and to have regard to the market.
.- This is the crux of the whole matter. I take it that this loan is to have a currency of fifteen or sixteen years.
– It will be as short as possible.
– From my point of view this Bill means that or nothing. It is the intention of the Government to float a short-dated loan ; the whole liability is to be met within a certain period. That being so, we should set out in the Bill itself what is to be the currency of the loan.
– Supposing we could get a better price for a long-dated loan?
– The Government ought to say that, whatever may be the price that it is possible to secure for a long-dated loan, this is not an opportune time to float one. The loan is to deal with a specific kind of property. The vessels of the fleet unit have only a life of eighteen years, and if the loan extends beyond sixteen years we shall have nothing, to show for it.
– At the end of the sixteen years we shall Have to our credit in the sinking fund a sum sufficient to redeem the loan.
– If that be so, then the whole of the loan - both principal and interest - will be paid off. Why, then, does the Treasurer desire a longer-dated loan?
– Because it may not be convenient to pay it off. The sinking fund will have to be invested.
– That is a question of policy. The statement of the Prime Minister was that this loan was designed to cover a particular purpose, and the Treasurer would be well-advised if he consented to limit it to a term of sixteen years.
– We ought to have the option to pay it off after a certain time. We might not be able to float a loan for a very short date. We might not be able to float a loan for sixteen years on good terms. We might be told that we must fix a longer period in order to be able to get a good price.
– The Treasurer has agreed to a proposition to reduce the rate of interest to 3 per cent, on the understanding that, if it be discovered later on that the loan cannot be financed at that rate, the Government of the day will appeal to Parliament for further power. Sir John Forrest. - The power for which we ask is given by every Parliament. It seems to me that the honorable member can trust no one.
– This loan is not for a public work in the ordinary sense of the term. It is not to be expended on a public work that can be repaired from time to time, and its capital value maintained. The Honorary Minister said that the life of these vessels would probably be about fifteen or sixteen years.
Colonel Foxton. - Eighteen years is the life of a battleship.
– We are assuming that none of these ships will meet with disaster.
– We cannot guarantee to invest the sinking fund moneys at 3J per cent, so that it may take more than sixteen years to pay off the loan.. If we could not invest them at 3 J per cent., we should have to pay off the loan before we had accumulated the necessary amount in the sinking fund.
– That is not a good defence for the right honorable member’s proposal. The Treasurer has indicated that he is prepared to accept an amend- ment, which I suggested last night to the Attorney-General, providing that the payment to the sinking fund shall be not less than 5 per cent per annum. If he finds that a payment at the rate of 5 per cent, will be insufficient to liquidate the debt in sixteen years, he will be able to increase the amount.
– We may not have the necessary money.
– If the Treasurer cannot find the money some one else will have to do so. This is not a matter for party feeling, and all that I ask is whether or not this is to be a loan for sixteen years.
– It is not a loan for sixteen years. Everything depends upon whether or not we can accumulate the money in that time.
– As the Bill was originally drafted, the right honorable member could have floated the loan for any term he pleased. By suggesting that we may not have the money accumulated in the sixteen years’ period, unless we can invest at 3½ per cent, the amount to the credit of the sinking fund, the Treasurer is destroying the Government’s case. If we cannot invest our sinking fund at a
Tate of interest which will enable us to liquidate both principal and interest within sixteen years, the Government have made a mistake. The whole of the revenueis behind them, but the declaration that the Treasurer is making is really that the Government would be unable to pay more than 5 per cent, per annum into the sinking fund.
– The honorable member ought to have floated a few loans, and he would then be able to appreciate the difficulty. He ought to have had some little experience.
– The Treasurer has not applied his mind to this question. Mv amendment has nothing to do with the floating of loans.
– I cannot accept a proposal to limit the period to sixteen years. I would accept a limitation of twenty years.
– I am sorry that the Treasurer will not accept my amendment, because it goes to the principle of the Bill.
– Nothing of the sort.
– The principle of the Bill is that the debt shall be liquidated at the end of. sixteen years. I cannot understand the Treasurer’s reasoning.
– I cannot consent to a term of less than twenty years.
– This is a loanredeemable in sixteen years; and if the Treasurer is not prepared to increase his contribution to the sinking fund he is defeating the policy of the Government.
– We wish to be on the safe side.
– The whole resources of the Commonwealth will be available for the sinking fund; and I regard a period of twenty years as illogical and absurd. If we consent to a term of twenty years, the Government will see that the loan does not mature until then.
– Whatever is prescribed in the Bill will be the term of the loan.
– Although we provide that the term shall not be longer than twenty years we may be able to redeem the loan in ten or fifteen years.
– A period of twenty years is, according to the honorable member for Brisbane, actually two years longer than the life of the whole of the assets to be purchased.
– It is not usual in such Bills to prescribe, any term, because a great deal depends on circumstances. At the same time, I am quite willing to make the term twenty years, and to provide that at the end of, perhaps, a dozen or fifteen years, it shall be optional to redeem the loan on giving twelve months’ notice. This will enable us to take advantage of the market at any time during the last five or six years. If the loan had to be redeemed on a particular date, we might have to meet a hostile market.
– But the money ought to be in hand.
– We have to keep in view the contingency that we may not have the money in hand. We knowhow the value of money fluctuates ; and I am only desirous to be on the safe side and to leave the Government at liberty to do the best under the circumstances.
.- Surely the Treasurer does not mean that it is not usual in a Loan Bill to fix a time for maturity ? I do not remember, except in the case of interminable stock, any Loan Bill without a limit.
– There is always a limit, but it is not fixed in the Bill itself.
– What the Treasurer has in his mind is that the term, generally speaking, is longer than that now proposed.
– I believe only two States have interminable stock.
– At least 75 per cent, of the money borrowed in Australia is for a limited period.
– There is generally an option.
– There may be a proviso that, after half the period has elapsed, the Government may, on giving sufficient notice, liquidate the liability; but that is in the case of loans not specifically associated, as this proposed loan is, with a sinking fund. The Committee have altered the rate of interest to 3 per cent., which, as the Treasurer knows, will buy less capital than would a rate of 3J per cent. ; and the 5 per cent, payment to the sinking fund is on the actual money received.
– I take it that the 5 per cent, is on the whole £3,500,000.
– I intend to suggest an amendment making the contribution to the sinking fund 5 per cent, on the total amount of the debt for the time being.
– Clause 8 provides that the contribution to the sinking fund shall be 5 per cent, on “the amount of the loan moneys raised,” and I take it that the “loan moneys raised” will foe the amount received.
– That is my opinion, though others do not take the same view ; and, as I SaY, I intend to suggest an amendment.
– With the reduced rate of interest, the Government cannot expect to receive so much as they would with the rate at 3$ per cent.
Mr. Harper. They may do so.
– But it is not likely.
– The intention is that the 5 per cent, shall be on the whole of the amount, and the amendment suggested is that the clause be made to read “ the amount of the loan moneys authorized to be raised.”
– Here we have evidence of how hurriedly this Bill has been drafted. In any case, I do not see the utility of the proposed extension of the term of the loan to twenty years. As clause 7 stands at present, reading it in conjunction with clause 8, it would have been possible for the Government to make a forty years’ stock, and for the Treasurer, with the powers in the original draft of the Bill, to have expressed the opinion, as soon as he had about a million and a half in the sinking fund, that that amount would, in forty years, be sufficient, with compound interest, to pay off the indebtedness. That is the weakness of those two clauses, and, therefore, I propose by way of amendment to add. after the word “ time,” in clause 7, the words ‘ 1 not later than sixteen years from, the issue thereof. ‘ That means that the stock shall be redeemable within sixteen years after issue, and no later. The Treasurer suggests twenty years as a compromise.
– What object would the Government have in keeping the loan on longer than was necessary ?
– It is not a question of object. My whole point is that it should be a loan, for the term of the usefulness of the ships bought with it. The Government and Parliament ought to say that the loan must not extend a day longer than the period of usefulness of what they are purchasing. I ask the Treasurer’s attention to this idea, and if he will not admit the correctness of it, I shall have nothing further to say : the whole of the resources of the Commonwealth will be in the possession of any Government that has the control of Commonwealth affairs during those sixteen years.
– It will be shorter than that, with the option.
– Then, why make it longer? Why ask for the loan of moneywhich may not be repaid until after theships bought with it have become absolutely useless? That will not improve thecredit of the Commonwealth. Accordingto the Admiralty, the usefulness of thevessels does not extend for longer thaneighteen years at the outside ; and, therefore, in suggesting twenty years, the Treasurer is going too far. It is weak of theTreasurer to insist upon that period ; but, if he is determined, he can have it so far as I am concerned.
.- TheTreasurer’s persistency on this matter isnot justified.
– I am giving way ailalong the line.
– The right honorablemember must admit that the Bill has been drawn in a very hasty manner, seeing that it is not in conformity with what he intended or what Parliament desired. Surely, therefore, he will be open to reason. If the money accumulated in the sinking fund, with interest, is not sufficient to redeem the-
Joan in sixteen years - the life of the unit - the Treasurer of the day will have the whole of the revenue of the Commonwealth at his command, and can draw upon it for whatever is necessary to wipe off the liability within the life of the ships. Even the calculations of the Admiralty may not be reliable, and it may prove that the ships become obsolete in less than eighteen/ or even sixteen, years. The Leader of the Opposition takes up a safe position in asking that the life of the loan should be limited to the life of the ships, because it is a loan, not for reproductive works, but for perishable goods. In this matter, we are dealing with a totally new phase of Australian borrowing, and have a right to expect the Treasurer to safeguard the interests of the people. At the end of sixteen years, we should be able, if we thought fit, to purchase more modern vessels with the money. 1 appeal to the Treasurer to accept the amendment, and let us get on with the Bill.
– The Treasurer of the day may say that he will pay the loan off before sixteen years.
– Why not impose upon the Treasurer the obligation of paying it off before the unit becomes useless ?
– Let the Government of that day see to that.
– We should make provision for it now, in conformity with the promise of the Government.
– Under clause 6 the Consolidated Revenue is liable if the sinking fund is not sufficient.
– But the Treasurer -wants to make it liable only when twenty years have expired. We say that the life of the loan should be fixed in accordance with the life of the ships. An offer of twenty years is no compromise, because it is out of harmony with the general scheme. I appeal to the Treasurer to use that tact which has characterized him of late, and accept the amendment.
.- I do “not think that there is very much in the proposal of the Leader of the Opposition. We have prescribed that 5 per cent, is to “be nut aside for a sinking fund.
– We are going to make it “at least 5 per cent.”
– That will work out in this way : Assuming that the Treasurer’s calculations are correct, he would in fifteen or sixteen years have three and a half millions in hand, and when the bonds fell due he would be able to meet them - that is, if he made it a sixteen years’ loan.
– 1 want to make the loan coincident with the life of the ships.
– When the time comes to float the loan it may be found that more advantageous terms can be got for a thirtyfive years’ loan, with the right to pay off after fifteen or twenty years, than for a sixteen years’ loan. It would be well to have that power, and then the Treasurer of the day, if he had the money to meet the loan, would be able to avail himself of the option to cancel it. We must pay some attention to the conditions under which investors like to put out their money. They may regard a sixteen years’ or twenty years’ loan as too short, and prefer a thirty five years’ loan. The Leader of the Opposition wishes to secure that this money, if borrowed beyond the term, shall be paid oft when the ships have ceased to be useful, and that the money which has been saved up shall not be misapplied.
– It cannot be misapplied.
– It may be desirable, as a financial transaction, to .float a loan for thirty-five years, with the right of repayment at the end of twenty years, in which case the Treasurer of the day, having money in hand, will avail himself cf the most favorable opportunity. Having the security of the sinking fund, I do not think that there is any need to make the proposed limitation, because that would tie the hands of the Treasurer, whoever he might be.
.- There is one phase of this question which seems to be lost sight of. The money is to be borrowed for the construction of a naval unit, whose value will soon quickly disappear. Consequently, the asset should be written down, with a view to wiping it off completely within sixteen years. Before that time, the vessels which we now propose to build must be replaced bv another and a stronger fleet. It is a mistake, therefore, not to bear that in mind.
– We mav find the money for the new fleet out of current revenue.
– We must be guided bv what we know of things as they are. We know that Treasurers never like to increase the burden of taxation, nor to make arrangements very far ahead, if to do so would necessitate the raising of additional revenue: The replacing of the unit, and increasing its strength, will probably involve further borrowing; hence the justification and need for a sinking fund, which must be safeguarded, so far as that is possible.
– The object of the Leader of the Opposition is to insure that the sinking fund shall be applied to the payment of the loan.
– I support the proposed limitation of the Leader of the Opposition.
– I think that it would strengthen the credit of the Commonwealth.
– In my opinion, this expenditure should, if possible, be provided out of revenue; but, as that may not be done, we should do what we can to force the Government of the day to make the sinking fund sufficient for the repayment of the loan at the earliest date possible, with a view to providing for the replacement of the disappearing unit. That will not be done in any one year. I have nothing to say regarding the statements of the honorable member for Mernda about the terms of the loan; but it must be remembered that what we are dealing with is not a loan for reproductive expenditure, but one for a navy which will quickly become obsolete, and for whose replacement we shall soon have to provide. It will be a good thing to make the payment to the sinking fund S per cent. That will improve our credit. The Treasurer has stated that if he had the management of this affair, he would try to pay off the loan within, say, twelve years; but he wishes for a margin of time which will give him the opportunity to take advantage of a favorable money market. He and the Leader of the Opposition differ as to a period of four years. It seems to me that the sixteen years’ period would be the better to adopt. Some of the admissions of the Treasurer by way of interjection appear to justify the need for great care in making certain that the sinking fund shall not be tampered with.
– That is done in the Bill.
– The Government should have money to provide for the new unit by the time the old one became useless, and the earlier we start to make that provision the better. If we are going to take our share of the burden of defence, we must provide in the future for a larger unit than that now proposed. I hope the Treasurer will not insist upon a twenty years’ period for redemption.
– The most advantageous arrangement in con nexion with the floating of loans is to fix a date after which they may be redeemed on twelve months’ notice. That is now the practice followedby nearly all the States of Australia. It is not merely a convenience to the borrower, but also benefits the lender, because it gives fixity for a certain period for his investment. The Commonwealth will not obtain so high a price for a short-dated loan as for a long-dated one, because lenders generally desire to invest their capital for a long period. If the Treasurer really desires to redeem this loan within sixteen years, he should provide for its redemption on the1st January, 1926, or at any future date of which the Government may give twelve months’ notice. I think that the loan should be redeemed before that date.
– We shall give the Treasurer full option of redemption earlier.
– A needy Treasurer would not take advantage of such an option. In my opinion, the loan should be redeemed within the lifetime of the ships on which the money is to be spent, which will not be as long as the Treasurer apparently assumes. An able writer in McClure’s Magazine says in a recent article -
It is appalling how rapidly the, most expensive of modern fighting ships become obsolete. I visited recently the vast armada that assembled in the Thames for public inspection. More than 150 modern engines of war of every description they numbered, and they cost theBritish nation more than three hundred million dollars; and yet within two or three yearspractically three-fourths of this fleet will be obsolete. This, too, despite the fact that the oldest battleship in the great double line fivemiles in length was launched only eleven years ago.
This man knew what he was writing about, and I think the inference is that the vessels of the fleet unit will have to be replaced long before sixteen years have expired.
– And the sixteen years estimate is on the basis that no disaster will overtake them.
– Quite so. It is quite possible that one or two of them might bedestroyed in a conflict, and we have alsoto remember that they will be subject tothe ordinary perils of the sea. A considerable percentage of vessels that go to sea never return. I should be inclined to say that we ought to provide that thisloan shall be redeemed on1st January, 1922, or later, subject to the Government of the day giving the holders of the stock; twelve months’ notice. That would mean a twelve years’ period.
– How much later would the honorable member go?
– I should provide that the whole loan shall be redeemed within sixteen years, but that it shall be optional to commence to redeem it at the end of twelve years. Evidence is accumulating that the life of the vessels of the fleet unit has been overestimated. A prudent man is always on the safe side, but the Treasurer appears to have seized upon the maximum life of these vessels in proposing that the loan shall have a currency of sixteen years. I suggest, therefore, to the Leader of the Opposition that he so amend his amendment as to provide that this loan shall be redeemable on1st January, 1922, or later, up to 1926, on the Government giving twelve months’ notice of their intention to redeem.
– That is practically what my amendment proposes.
– I think not. If my suggestion were adopted there would be imposed upon the Government of the day a certain measure of compulsion to redeem the loan at the end of twelve years, whereas under the amendment as it stands they need not redeem it until sixteen years have elapsed. I make this suggestion because I think that the Treasurer has overestimated the life of the ships, and that in all probability twelve years will be the term of their existence.
– Sixteen years is the basis of the sinking fund.
– The currency of that fund will be affected by the rate of interest at which the Government are able to invest the moneys to its credit. The Treasurer’s calculations as to the time that it will take to accumulate in the sinking fund a sum sufficient to redeem the loan are quite correct. The point that I wish to make, however, is that the currency of the loan should be shortened. Under my proposition the whole loan would have to be redeemed at the end of sixteen years, but it would be compulsory for the Government to begin to redeem it at the end of twelve vears.
.- I do not think that thereis a great deal involved in this question. Whilst we are alive to the fact that the vessels of the fleet unit will become obsolete, we have to remembar that we are dealing with a Loan Bill, and simply desire to secure that within reasonable limits the money accumulated in the sinking fund shall be properly applied. I suggest to the Leader of the Opposition that he amend his amendment by substituting for the word “ sixteen “ the word “ twenty.”
– “ Not later than twenty years.” That would do very well.
.- I do not favour the wider limitation suggested by the honorable member for Mernda, but I presume that it is the best that can be got. I agree with the honorable member for Coolgardie that it would-be better to fix a shorter period, but whereas he would make the loan repayable in twelve years instead of not later than sixteen years, as proposed by me, the Government wish to make it repayable within twenty years. I must make a virtue of necessity, and ask leave to amend my amendment by substituting for the word “ sixteen “ the word “ twenty.”
– Will that clearly provide for the option?
– We shall provide for that in the prospectus.
Amendment, by leave, amended accordingly, and agreed to.
Clause, as amended, agreed to.
Clause 8 - (1.) Frorn and after the first day of July, One- thousand nine hundred and twelve, and until there has been accumulated an amount whichwith interest will in the opinion of the Treasurer be sufficient to redeem the loan at maturity, there shall in each financial year be paid out of the Consolidated Revenue Fund into a Sinking Fund an amount equal to four per centum of the amount of the loan moneys raised under this Act, and the Consolidated Revenue Fund is hereby appropriated accordingly. (2.) The Sinking Fund shall be available only for the purpose of the repurchase, or the redemption at maturitv, of any Inscribed Stock, Treasury Bonds or Debentures. (3.) Inscribed Stock or Treasury Bonds repurchased out of the Sinking Fund shall be dealt with as prescribed.
– I desire to know why it is proposed that payments to the sinking fund shall not commence until1st July, 1912. I understand the suggested reason is that the vessels of the fleet unit will not be built before that time, but I think that we should’ commence to make provision for the repayment of the loan as soon as we get the money. We shall have to. make progresspayments in respect of the contracts for thebuilding of the vessels, and under the financial agreement which this Parliament has; sanctioned, but which has not yet been sanctioned by the people, we shall have during the next two or three years a very considerable increase of revenue.
– And we shall want it all.
– We shall, and our necessities will be greater in the succeeding years. I ask the Treasurer to seriously consider whether we ought not to commence to pay into this sinking fund as soon as we float the loan.
– We shall not have had the whole of the money before ist July, 1912. The usual custom is to commence to pay into a sinking fund as soon as the whole of the money has been received.
– I do not know that there can be said to be any usual plan with respect to the creation of a sinking fund for the redemption of a loan obtained in instalments. We shall have to pay for these vessels by instalments, and the Treasurer will have to borrow to meet those instalments as they become due. We may have to raise £500,000 this year, and the same amount next year.
– We shall need j£ 1, 5 00, 000 next year.
– It would be better finance, and throw a smaller burden on future years, to face this obligation as soon as we received the money. I am rather afraid that unless we face the obligation of creating “this sinking fund as soon as we get the money, we may offer a pretext for further postponing its creation.
– The Act would not allow us to do that ; although we could, of course, repeal it.
– I recognise that, but it would be wiser to adopt my proposal.
– It will be in the prospectus.
– I do not think it would be practicable to repeal any part of the Act which also formed part of the prospectus. It would be far more satisfactory, however, to be able to show our creditors in other parts of the world that we had made provision to repay their money from the time that we received it.
– I understood that the amendment would “cover that. I refer to the words “ from the issue thereof.”
– IRVINE.- No; the clause provides that the payments to the sinking fund are to commence “ From and after the ist day of July, One thousand nine hundred and twelve.” Those words ought to be left out. If they were, as soon as the bonds were issued, there would fall upon the Treasurer the obligation to commence to provide for the redemption of the loan.
– As we borrowed the money ?
– Certainly. The Treasurer will borrow a substantial sum at one time. Supposing the honorable member put £250,000 on the market, it would become obligatory upon him at once to pay into the sinking fund a sum equal to 5 per cent, on that amount.
– To pay into the sinking fund in proportion to the amount borrowed ?
– Precisely. That is what would happen if these words were omitted.
– I do not think it worth while.
– It would be a wholesome rule to adopt in connexion with this or any other loan.
– The practice to which I have been accustomed is not to create a sinking fund as soon as’ the first instalment of a loan is raised, but to make the initial payment into it within four years after the first issue. That gives time to construct the works to which the loan relates. We have not gone so far as that in this case. We propose to start to create the sinking fund two and a half years hence. The idea was that the vessels of the fleet unit would then be built, that the new arrangement would have come into force, and that we should then be able to commence paying into the sinking fund at the rate of not less than 5 per cent, on the whole of the loan, whether we had borrowed the whole or not. It may be that we shall not have borrowed the whole amount on ist July, 191 2, but whether we have or have not, under the clause as it stands, we shall have to commence on that date to pay into the sinking fund a sum equal to 5 per’ cent, per annum on the total amount of j*£3>500>000- We considered this matter very carefully, and thought it better to adopt this course rather than to make payments into the sinking fund in respect of instalments.
– This will mean a sudden jumping up.
– But, knowing that the obligation has to be met, we shall provide for it. Probably I was influenced by the plan to which I had been accustomed, but, at the same time, I think that it is not an unreasonable one.
.- It is a pity that the Treasurer cannot see his way to accept the suggestion of the honorable member for Flinders, because it appears to me to be one most business-like and judicious. I think, however, that I can see a reason why the Treasurer does not desire to start a sinking fund until 191 2. If I remember rightly, that is the year in which the ships will be completed, and when we begin to receive the £250,000 a year from the British Government - the money which the honorable member for Brisbane told us is to pay the interest and sinking fund. However that may be, I think that the Treasurer ought to accept the suggestion of the honorable member for Flinders.
.- During the second-reading debate I addressed myself to the absolute necessity, if we are not initiating a permanent system of borrowing for naval defence, of creating a war chest or trust fund into which we shall every year, out of revenue, place a sum for the replacing of the ships and material when they have ceased to be efficient. Let that fund be on the basis of the amount proposed to be raised now, namely, £3,500,000. It is quite true that the ships of this unit will still be comparatively efficient as ships of their class eighteen years hence, but it is not true that they will be, as they are now, top vessels in their respective classes. They will require to be superseded, if Australian defence is to be as well looked after then, in proportion to foreign power, as it is to be now. Therefore, I suggest that, in addition to the sinking fund, it will be necessary to provide a trust account into which at least one-tenth of the capital value of the vessels, namely, £3,500,000, shall be paid every year from revenue.
– In addition to the sinking fund?
– That will require a lot of money.
– It does not matter what the cost is. We have to consider the safety of the country.
Sir -John Forrest. - We shall have to raise the money.
– It can be raised if necessary by extra taxation, although I trust extra taxation will not be found necessary.
– That is what I mean.
– I think the Treasurer is. overlooking the fact that at the end of sixteen years the sinking fund merely pays back the debt, and that the ships will thenbe no longer of any value. If we follow a haphazard method of finance we shall have to borrow again in order to replace the ships ; and that is what, I am sure, we alldesire to avoid.
– We shall have tothink the matter over. The honorable member does not want us to do anything now, does he?
– I think we ought to have an assurance from the Minister on the point.
– I can promiseto consider the matter.
– Such a provision is essential if we are to have anything like decent financing. I have no desire todivide the Committee prematurely on a question of the kind, but we must do something in this direction, unless we are going to commit ourselves for all time to a pernicious system of borrowing for naval purposes.
– There should be such a provision made, but in another scheme altogether.
– I agree that that would be preferable; and all I desire is to get some sort of assurance from the Treasurer that he recognises the necessity for a fund of the kind.
– I have taken no part in the defence debate since I wastreated so handsomely by my friends opposite the other day ; but as to that treatment I make no sort of complaint at this time. I am heartily in sympathy with theobject that the honorable member for Wentworth has in view. I go further and say that, if we are going into this undertaking on a business footing, we must be prepared’ to renew this unit out of the ordinary revenues of the country. I am firmly of opinionthat we shall not only have to renew this unit by that time, but that we shall alsohave to very materially increase our total’ war strength.
– Make another visit to “ my uncle “!
– I hope there will be no more visits to “my uncle.” I do not agree that we are going to borrow for any future unit we may have to provide. We shall have to increase our naval strength if we are to meet the International exigencies which promise in the near future, and we shall have to meet the cost, as other peoples do; or, in other words, we shall have to tax ourselves. But, with the Leader of the Opposition, I think that that time is not now.
– I do not ask that provision should be made in this Bill; a Ministerial statement will satisfy me.
– Is the Minister of Defence going to put the black ensign, with the three balls, in the centre of the fleet?
– Both the honorable member and myself desire that Australia shall have a fleet, but I am afraid that the plan he suggests for obtaining the vessels would only result in postponing their building. It is only the urgency of the matter that reconciles me to having a loan for war purposes ; and I hope that this is the last time we shall have to appeal to the House and the people for a similar authorization. Of course, we cannot speak dogmatically or prophetically, because everything depends upon the international situation. It may be that in the future we may have to proceed on emergent lines, and I am not sure that I would not be justified in saying that we are proceeding on emergent lines now, because I do not regard the international situation as satisfactory from any point of view. It is just as well to be prepared, and, therefore, we have to get this fleet into being at the earliest possible moment on such terms as offer now. That is the reason we ask for authority to raise a loan. In my opinion, the proper time to make a financial adjustment on a business-like footing will be, perhaps, a couple of years hence, when our present subsidy to the Mother Country will cease, and we, with full naval responsibility, begin to receive the contribution from the Imperial Government. That will be the right time to begin to put our house in order for the future, and, as suggested by the honorable member for Wentworth, initiate a war chest to enable us to build further units. In the meantime, we had better get this Bill put into operation at the earliest possible moment.
.- It is refreshing to hear the Minister of Defence indicating what the Government will be prepared to do two years hence, but it would* be more interesting to be told where the proposed war fund is to come from. The Minister of Defence hopes that this will be the last time we shall go to the money market for the purposes of defence, and tells us that it would be wise to inaugurate a war fund by putting aside a sum equal to 10 per cent, on the present loan.
– Did I say that?
– The honorable gentleman agrees with the honorable member for Wentworth, and that is the suggestion that honorable member made for meeting the increased expenditure on an improved fleet. The sinking fund at 5 per cent, means .£175,000 a year, and the proposed war fund of 10 per cent, would mean an additional £350,000, making in all £520,000 out of the revenue of the Commonwealth. Are we to understand that after the elections, and in two years’ time, the Minister will be prepared to consider the advisability of imposing direct taxation in order to meet the additional liability of £350,000? Is that the reason why this afterthought of the Minister is not embodied in the Bill as it could and should have been, if the Government were honest in their desire to replace the unit?
– That is to say, we cannot be honest and bond fide unless we prepare for all futurity in this Bill.
– the honorable gentleman does not answer me with such interjections ! If the Minister thinks that the honorable and right thing is to create the suggested war chest, it ought to be created to-day. But something is going to happen before two years hence. I am thankful, however, to hear that in two years time the Government will be prepared to come down with proposals for direct taxation in the shape of a land tax. We are told that the Government do not desire to borrow; and, if that be so, direct taxation is the only other source from which the money can be obtained. The Leader of the Opposition said he thought these matters might be brought forward in separate measures, but that is just what the Government want. Direct taxation could have been, and should have been, proposed instead of this measure, if the Government had not been afraid to go to the source of revenue which ought legitimately to bear the strain of providing this unit. I thank the Minister of Defence, and I thank the clever little mem- ber for Wentworth for his kindly intervention on this occasion, because it now becomes evident that this Government, after another term of office, ‘will be prepared to defray the cost of the scheme out of taxation imposed on the landed monopolists and other wealthy people who expected the Government to save them.
– I should, be .sorry if the Treasurer lost sight of the suggestion of the honorable member for Flinders. The clause says that the payments into the sinking fund shall begin “ from and after “ the ist day of July, 1912. That means that they will not really start until the ist July, I913- The phrase used should be “on and after.” I understand that the Treasurer is following a Western Australian practice, but that practice has been generally adopted because loan money has usually been used for reproductive works which would give some return in two or three years’ time. In this case we start our borrowing, and start our redemption, at a certain time after the date of the first issue. Of course, we could not begin to make payments to the sinking fund during the current financial year, because our finances are already overburdened, but in the next financial year we ought to pay towards it an amount proportionate to the amount borrowed in that year.
.- We ought to adopt some suggestion similar to that of the honorable member for Flinders. As soon as we get any of this money, the sinking fund ought to start in proportion to what we have raised. At any rate, by the ist July, 191 1, £2,000,000 will have been raised, according to the Treasurer’s own statement, and yet under this clause the sinking fund will not have started. There is no reason why the sinking fund based on that amount, or even on the whole amount, should not start from the ist July, 1911, because we expect in that year, on account of the new financial agreement, to have a revenue larger than our immediate requirements. It would be a fair compromise to insert that date. We are all anxious that not only 5 per cent., but as much above it as possible, should be paid in, so why not start the fund as soon as possible?
– Very well ; let it go.
– Then I move-
That the word “ twelve “ be left out with a view to insert in lieu thereof the word “ eleven.”
.- I agree with the amendment, but it would be much more logical to make the sinking fund start “ from and after the receipt of any moneys raised under this Act.”
Amendment agreed to.
Amendment (by Sir John Forrest) proposed -
That the words “ which with interest will, in the opinion of the Treasurer be “ be left out.
Mr. W. H. IRVINE (Flinders) [6.24J. - I understand that the object of the amendment is that the .accumulation shall go on until the total amount of money borrowed is reached, without any calculation of interest.
– Yes, it is to go on until the £3,500,000 is accumulated.
Amendment agreed to.
.- I move -
That the words “ an amount equal to four “ be left out, with a view to insert in Heu thereof the following words : - “ which shall be vested in the President of the Senate, the Speaker of the House of Representatives, and the AuditorGeneral of the Commonwealth, who are hereby constituted trustees for such purpose, to be applied by them as hereinafter provided, an amount not less than five.”
This will make it mandatory for not less than 5 per cent, to be paid to the sinking fund, which will be under the control of the three trustees I have mentioned.
– Are they to invest it, and do all things necessary?
– Yes; I think it would be a very wise provision. The trustees I have named will be well able to administer the fund. Clause 12 of the Bill gives them power to invest the money in inscribed stock, or Treasury bonds, or Government securities of any State, or on deposit in any bank.
– What is the objection to sub-clause 2 of clause 8 ?
– It would be a mistake to limit the trustees to the purposes specified in that sub-clause.
– Even without the amendment the sinking fund cannot be used for any other purpose than those specified there.
– The whole point is that no Treasurer ought to have a sinking fund of this kind in his keeping. That will be acknowledged by all of us who have had experience of the treatment of sinking funds in the States. 1 admit that the Commonwealth Treasurer’s hands will be largely tied by this Act, but wisdom and experience tell us that it would be much safer to place the money in the hands of trustees.
– They would not be as competent to look after it as the Treasurer of the Commonwealth.
– The Treasurer cannot get away from the fact that my proposal is the safest course, and has always worked better wherever it has been tried. We ought to make a start on sound ground. Sitting suspended from 6.30 to 7.45 p.m.
– I propose to make the rate of interest at least 5 per cent. It seems to me that it would be better to consider as a separate clause the proposal of the honorable member for Wide Bay for vesting the sinking fund in certain trustees.
– I see no objection to that.
Amendment, by leave, withdrawn.
Amendment (by Sir John Forrest) agreed to -
That the word “four” be left out, with a view to insert in lieu thereof the words “ at least five.”
Amendment (by Sir John Forrest) proposed -
That the words “ amount of the loan moneys “ be left out with a view to insert in lieu thereof the words “ sum of Three million five hundred thousand pounds authorized to be.”
– I understand that the Treasurer desires to provide that the full amount of the loan authorized by the Bill shall be charged with a sinking fund, even though it may not all be actually raised.
Amendment agreed to.
.- I suggest the substitution of the word “ purchase “ for “ repurchase “ in sub-clause 2. On the ist July, 191 1, there will be money to the credit of the proposed sinking fund, but the whole of the inscribed stock may not have been issued. If the clause is left as. it is, it will not be possible to invest that money in inscribed stock. To do .so, it would be necessary to sell the inscribed stock and repurchase it.
– The word “ purchase,” can be substituted for the word “ repurchase “
– Then, I move-
That the word “ repurchase,” sub-clause 2, be left out, with a view to insert in lieu thereof the word “ purchase.”
Amendment agreed to.
.- Subclause 2 makes provision for redemption at maturity; but I think that the Treasurer should have power to redeem before maturity if he thinks fit to do so.
– It will not make any difference if the words “at maturity” are struck out.
Amendments (by Mr. Crouch), agreed to-
That the words “ at maturity,” sub-clause a, be left out.
That the word “ repurchased,” sub-clause 3, be left out, with a view to insert in lieu thereof’ the word “ purchased.” _ Amendment (by Sir John Forrest) proposed -
That the words “ be dealt with as prescribed,” sub-clause 3, be left out, with a view to insert in lieu thereof the words “ bear interest until redeemed, and such interest shall form part of the sinking fund.”
.- I do not see much objection to this proposal, but it differs from that of the honorable member for Wide Bay, who wished to provide for cancellation.
– I think that what I propose is better. The bonds will be held, and be interest-producing.
– I am inclined to think the Treasurer is right. When a bond has been cancelled there seems to be no legal justification for paying into the sinking fund interest on the amount which it represented. I have no doubt that the Leader of the Opposition had a reason for using the language he proposed, and very likely it was that he thought the interest on the main issue should be continued, even although some of it were redeemed, and that the money so used should go into what might be described as a war chest, in the event of the sinking fund being more than sufficient to redeem the balance. It seems reasonable, however, to say that when a bond has been cancelled there should be no charge in respect of interest upon it, and I think that the Treasurer’s proposal will make that clear.
– This is the practice followed.
– No doubt. But if the honorable member for Wide Bay’s object was to build up a fund for future necessities, it will not be met by the Treasurer’s proposal.
Colonel. Foxton. - The amount, after all, would only be small.
– I do not think it would be very large, and as there seems to be a consensus of opinion that the amendment proposed by the Treasurer will meet the position, I shall not object to it.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 9 and 10 agreed to.
Clause 11 -
Any person who is entitled to invest money upon any security of the Government of a State may invest such money in any Commonwealth security, but nothing in this section shall be taken to authorize a trustee to apply for or hold a Stock Certificate to Bearer unless authorized to do so by the terms of his trust.
.- I ask the Attorney-General to agree to the omission of this clause. We have no power under the Constitution to deal with trusts and trustees, and, therefore, this clause might mislead a layman and lead him to think that he had under it an authority which we could not possibly give him. I mentioned the matter to the honorable member for Flinders, who agreed with my view, and suggested that I should put it before the Committee. We have no power to declare in what investments trustees shall invest. That is purely a matter of State law.
– I noted the same point.
– I marked it as soon as I read the clause.
– I am glad that the honorable member has brought this matter forward. I struck out two or three other clauses in the first draft of the Bill for a similar reason, believing that the matters with which they dealt depended upon equity rather than upon our power of legislation. This clause was inserted lest there might be discrimination as regards the stock in which trust money should be invested. It can do no harm.
– Discrimination by whom?
– If there were inserted in a trust a provision that the trustees should not invest in Commonwealth stock, I doubt very much whether, in view of this clause, that provision would be valid. Our powers may be wider than we think they are.
– If there were a general authority under a trust to invest money, would the trustees have a right to put it into Commonwealth stock?
– I appreciate what the honorable member for Gippsland has said. If, however, there were inserted in a settlement here a provision that the trustee should not invest in Commonwealth stock-, I think this clause would override that provision, otherwise it would amount to a discrimination by a person against the Commonwealth, as regards the particular stock in which money should be invested. That is the only reason why I think this clause ought to be allowed to remain. No great harm will be done, however, by omitting it.
Clause 12 -
Moneys raised under this Act and moneys belonging to the Sinking Fund may be invested in Inscribed Stock or Treasury Bonds or in the Government securities of any State or on deposit in any bank or in any other prescribed manner.
.- I should like to have an explanation in regard to this clause. It provides that moneys raised under this Act, or, in other words, the money raised for naval purposes, may be invested in inscribed stock, Treasury bonds, or the Government securities of any State.
– We must invest the sinking fund as quickly as possible, so as to make it reproductive, and if Commonwealth bonds were not available, we might desire to invest it in the bonds of a State.
– I could appreciate that point if this provision were limited entirely to the sinking fund; but it relates to all moneys under this Bill. It would be far better to use the money in paying off our own debts instead of investing it in the bonds of a State.
– We might have a good deal of money in hand for some time before we had to pay it away.
– Then the Commonwealth Treasurer is going to invest such money in the Treasury bonds or the inscribed stock of a State? He is going to take the risk of investing money raised for a specific purpose in stock that may rise or fall, according to market fluctuations. I should allow this money to be placed on deposit in a bank, but if it were invested in the inscribed stock of a State, we might not get the whole of it back.
– We might lend it to a State for six months or a year.
– At all events, I think we should limit the investment of money in this way to Treasury bonds. Under the clause as it stands, the whole sum of £3,500,000 might be employed in buying up the debts of a State. I think that we should at least strike out the words “ inscribed stock or.”
– I think the clause is satisfactory as it stands.
– I shall not press my objection
.- I do not like the words “or in any other prescribed manner.” The clause provides a sufficient means of investment without that vague provision.
– The regulations will have to be approved by Parliament. ‘
– The words in question simply make the provision a little wider.
– I think that they are altogether too wide. It is all very well to say that the regulations would have to be approved by Parliament, but we know that such regulations are rarely looked at. Specific investments are set forth, but the effect of the declaration is practically nullified by the use of the words “or in any other prescribed manner.”
– I do not think the retention of the words is very material, but we wish to be able to invest this money well.
– Quite so; but even if these words be struck out, it will still be open to the Treasurer to invest the money in inscribed stock, Treasury bonds, the Government securities of anv State, or on deposit in any bank.
– In South Australia one can obtain 3½ per cent, on deposit with the Government.
– That would be a Government security.
– The South Australian Government would take the money on deposit. However, I do not object to the words being left out.
– I move-
That the words “ or in any other prescribed manner “ be left out.
– I do not know what the Government contemplates by the use of the words “or in any other prescribed manner.” There can be no objection to the rest of the clause. Inscribed stock, or the Treasury bonds of any Government are about the most liquid form of security one could have; but I do not think it necessary to retain the words which the honorable member for Gippsland proposes to omit.
provision for trustees at all, and I do not think it is necessary to omit these words. In connexion with the National debt of England, there has been a special provision since the close of the eighteenth century for trustees of money set aside for the redemption, not of a particular loan, but of all loans then existing. Similarly, under some of the State Acts, there is a general provision for the redemption of the National debt, and for setting aside so much revenue for the purpose. In those cases there are trustees. There are some cases in which there are trustees for a single loan, but they are exceptions. As this Bill is not based on the trustee principle, we have inserted the words “ in any other prescribed manner,” so as to allow a greater latitude to the Treasurer than there would be in the case of official trustees. If we inserted a clause as to the appointment of trustees, it would be better to strike out these words, but if not there is not much harm in passing the clause as it stands.
.- The Attorney-General seems to think it would be more necessary to restrict the power to invest these moneys in the event of trustees being appointed than it is when the Treasurer has carte blanche.
– The Treasurer is directly responsible to Parliament.
– And so will the trustees be directly responsible to Parliament. Surely the trustees will be persons over whom Parliament can exercise some influence? However, I understand that the Treasurer is agreeable to those words being struck out.
Amendment” agreed to.
Clause, as amended, agreed to.
Clause 13 agreed to.
Clause 14 -
Every person who, with intent to defraud, forges or utters, knowing it to be forged -
any Commonwealth security ; shall be guilty of an indictable offence.
– I think that the comma after the word “ utters “ ought to be removed, and placed after the word “forges.” Any person who forges a Commonwealth security will certainly be aware that it is forged, whereas a man might utter a forged security in ignorance of the fact.
– The honorable member is quite right, and the suggested amendment will put the clause in proper English.
Clause amended accordingly and agreed to.
Clauses 15 to 18 agreed to.
– I move -
That the following new clause be inserted : - “ 13a. Commonwealth securities and the income derived therefrom shall not be subject to taxation by the Commonwealth or a State.” 1 am pretty confident that Commonwealth securities and incomes are not taxable by a State under the Constitution, and that it does not matter, therefore, whether the clause be inserted or not. At the same time, the desire has been expressed by some honorable members that some such provision should be made. I may say that it will not amount to a mere declaration, because it will exempt not only the securities from State taxation, but also from Commonwealth taxation, the latter not being provided for in the Constitution. The honorable member for Flinders has very properly pointed out that we should not be content with a clause of this kind, but see that a more direct notification is given to the subscribers.
.- When this matter was under discussion .this morning the Treasurer, on the strength of an opinion expressed by the AttorneyGeneral, stated that Commonwealth securities under the Constitution were not liable to State taxation. If that be so, a clause of this kind is unnecessary and if the AttorneyGeneral be wrong, the provision will not improve our position. _ Mr. Glynn. - The honorable member is right up to that point, but he overlooks the fact that the clause will also exempt Commonwealth stock from Commonwealth taxation.
– The question whether we desire to exempt Commonwealth securities from a Commonwealth income tax is one that is not involved in the discussion to-night. I have often heard the Treasurer declare that he did not anticipate an evil, but waited until it arose.
– This is practically only a placard in order to ease the people’s minds.
– It may at some time be considered necessary, in the interests of good government, to impose a Commonwealth income tax, and the question may arise whether or not those who are receiving a return from Commonwealth Treasury bonds are not fair subjects for taxation.
– If Commonwealth securities are subject to a Commonwealth income tax, it will only mean that we shall have to pay an increased rate of interest.
– If ever we have a Commonwealth income tax, that will be the time to deal with the matter.
– That is exactly what I contend.
– In regard to the States we are only declaring what is the law now.
– Why should we give exemption to Commonwealth bondholders from a possible income tax?
– Remember that the States exempt their own stock, and that if Commonwealth stock is not also exempt, we shall be handicapped.
– The proposal of the Attorney-General opens up a very serious question, which was not contemplated at the earlier stages of this discussion.
– I think that the honorable member for Kalgoorlie is taking rather an unfair view of the situation. So far as the States’ income taxes are concerned, any clause we put in the Bill will not affect the question, but exemption from a. Commonwealth income tax is certainly not covered by the Constitution, and we ought to make our intention perfectly clear. If we issue stock with the possibility of a Commonwealth income tax, -we may have a difficulty in floating our loan at a satisfactory price. It will probably mean that, in order to obtain a small tax, we will have to pay an inordinate price for the money we borrow. As the Treasurer says, this clause is to some extent a mere placard so far as the States are concerned ; but that is not so in regard to a Commonwealth in: come tax.
– Does the honorable member think that Commonwealth bondholders should be exempt from any possible Commonwealth income tax?
– I certainly do, because it is in the interests of the Commonwealth to obtain our loans at the cheapest rate.
.- If Commonwealth stock is subject to taxation by the Commonwealth while the States’ stock is exempt from taxation by the States we shall certainly place the State stock in a better position than our own. In such case the stocks of the States will obtain higher quotations in the money markets than the Commonwealth stock. The reason is obvious - the investor will buy the stock which - the security, being almost equal - gives him the best return for his money. While I agree with the Government in this matter, I dissent from the view put forward by the honorable member for Mernda, that the securities obtained by Commonwealth bond-holders should never in any circumstances be taxed. I decline to subscribe to that doctrine. At the present moment Government stock can be bought in the Australian market at a price which yields very nearly 4 per cent. Now there are some industries and private property in this country which are not yielding any higher rate of interest than that. If a man invests £20,000 in land, he can be taxed as high as we like, but if he invests the same amount in Commonwealth stock, we expressly declare by this proposal that he is to be exempt for all time.
– Exactly; because we want to get the money cheaply.
– I admit that if we were a continuous borrower in the markets of the world, it would be foolish not to make the provision; but we do not intend to be a continuous borrower, and therefore a small impost upon Commonwealth stock would not materially depreciate it. It could only operate against Commonwealth stock whenever the Commonwealth wanted to float a new loan. A man putting his money into Commonwealth stock should not be in any better position, so far as taxation goes, than the man who puts his money into any other security.
– Why do the States exempt bond-holders’?
– Because the States are continual borrowers. There is nothing immoral or illegitimate in leaving this provision out of our Act ; for if any extraordinary contingency arose, the man who held our bonds, and whose security the people of this country would be protecting bv taxing themselves, ought as a matter of equity to bear his share of the burden.
– It only applies to this one loan.
– But the right honorable gentleman is setting a precedent which may be followed with other loans. In any case his interjection does not vitiate my contention that we ought not to place people who take up our bonds in a better position as taxpayers than those who in vest in other securities. The fact that we give them the security of the whole Commonwealth for the repayment of the money is a very big inducement to them to invest in Commonwealth stock. Everything, of course, depends on ability to pay the interest and repay the principal whenever it is due, and that is why Government bonds carry less interest than other investments.
– So much of the proposed clause as deals with State taxation is absolutely and entirely, inoperative. I have strong objections to this Parliament embodying in an Act something which is beyond its powers, and effectual simply as a placard. That part of the provision means nothing. I agree with the Attorney-General in the view he takes of the Constitution. The Constitution itself, without any Act of ours, prevents the State authorities from imposing taxes upon the interest derived from our bonds, and, therefore, no such provision as this, so far as regards the States, is at all necessary. With regard to the Commonwealth, the argument of the honorable member for Coolgardie, when analyzed, will be foun’d to be applicable to a somewhat different state of affairs, although I agree with him that, where you are making laws for taxing the community by a form of income tax or other direct taxation, you ought not to exempt any class of the community from it. For that reason, such a provision as this in an Income Tax Act would be really out of place. If in passing an Income Tax Act we exempted all holders of bonds or other Government securities from the tax in regard to the interest derived from those securities, we should be benefiting all those people who had already obtained existing Government securities, and appreciating their securities unnecessarily. We should be placing them in a better position simply for the purpose of enabling us to get somewhat better terms for any securities that we might issue in the future. That would be an illogical and unnecessary mode of applying this provision. It seems to me that this is the Act in which that policy ought to be introduced, if we wish to introduce it at all, because we have not hitherto borrowed, and the provision would not apply to any other securities than those dealt with in this Act. All that we would sav would be that, as a part of the bargain with the new creditors, we give them security against any existing or future taxation by the Commonwealth on the interest on their bonds. If future borrowers believed in every case that we were going to impose only the limited rates of income tax usually imposed for ordinary revenue purposes, it would not matter very much, but when we borrow many people in other parts of the world, who are ignorant for the most part of our conditions, may be distrustful of things that they know nothing about, and distrustful of this Parliament. They may be apprehensive that our process of taxation will be carried much further than we know it will be carried. It may, therefore, be of great advantage to relieve their minds entirely from apprehension as to future taxation. The place where we ought to put in the exemption from taxation is in the Bill which creates the security, as one of the elements of the new contract which we invite people to enter into with us. At the same time, we ought not to include the exemption in a general taxation measure, because if we do, we thereby exempt a whole lot of people who have no particular reason or cause to be exempted. While, therefore, supporting the Treasurer as to the major part of the proposal, I ask the Attorney-General to reconsider the question of including the reference to State taxation.
– It is not of the slightest use.
– It is only to make the point clear.
– It does not even do that.
– Was not the case decided when the State of Victoria taxed the allowances of Federal members?
– That was a question as to whether, under the Constitution, the States had power to tax Federal instrumentalities.
– Is not this the same question ?
– It is the same question in this sense : the question is whether the States have, under the Constitution, power to do it. If they have that power, our putting this provision in will be merely a childish and fatuous attempt to prevent them doing something that they have the power to do. If, on the other hand, they have not the power under the Constitution to do it, our saying that they shall not do it does not make the slightest difference. The provision should, therefore, be left out. I regret that we have got too much into a way of thinking that it does not matter what we put into an Act of Parliament, on the ground that even if it is bad it can do no harm. We ought to regard the Acts that we pass with a little more care and responsibility.
– Onereason which has not been mentioned why it may be, perhaps, better not to include the provision regarding State taxation, is that if we were wrong in our opinion about the matter, the bond-holders might ask us to indemnify them to the extent to which the States taxed them. I quite agree with the honorable member for Flinders, for that reason, and also for the reasons which I gave this morning, that the reference to the States should be struck out. I am sure that, under the Constitution, they cannot tax the interest on our bonds, whether we declare it here or not. I, therefore, ask leave to amend the new clause by leaving out the words “or a State.”
.- The Attorney-General has admitted that there is a doubt. The point is that the bonds will not be the property of the Commonwealth, but of the individual who holds them, and the Court may hold that a State tax on them is not a tax on the property of the Commonwealth.
– If so, we cannot prevent it by any provision in this Act.
– But we can compensate the bond-holder. I suppose that in any case two taxes - State and Commonwealth - could not be collected on the interest on the same bond. I point out to the Attorney-General that many things which we think have been finally settled in this House are afterwards upset in the High Court, and I should like to see this matter made perfectly clear, so that when the loan is put on the market, people may know under what conditions they are purchasing Commonwealth stock. There is also another reason. I have frequentlyheard it stated in this Chamber that the Commonwealth can manage the whole of the finances of Australia much better than can the States ; and it would put us in a very bad position if we found that, in our first loan, we were not offering the people conditions as good as the States offered. The States have declared that income tax shall not be levied on their bonds and securities, and if we wish to put our loan on the market under the best conditions, we’ should make it clear that income tax will not be levied on the interest paid to our creditors.
.- I think that the clause should be negatived. In my opinion it will not materially affect the loan. Those who advance money on Government security do it to obtain interest on their capital, just as they invest money in anything else, and there seems to be no reason why they should escape the income taxation which other investors have to pay. The public works which are necessary for the development of the country, and make life convenient and pleasant, must be paid for. It is only by levying taxation that these advantages can be provided for the people. Consequently, those who pay taxation cannot be regarded” as suffering a loss. They are merely charged the cost of undertakings by which they benefit. In the English market the proposed condition would be of no advantage at all. We cannot guarantee that our bondholders living abroad will not be taxed on the interest which we pay to them. As a matter of fact, in England investors have to pay heavy income tax. So far as the market is concerned, I see no reason why an investor in Government stock should have an advantage in regard to income tax over other investors. Such a differentiation would be unfair, and,, in my opinion, would not materially affect the price at which we could borrow locally.
Amendment agreed to. Proposed new clause, as amended, agreed to.
Amendment (by Sir John Forrest) agreed to -
That the following new clause be inserted : - “ Sa. The Sinking Fund shall be paid to the President of the Senate, the Speaker of the House of Representatives, and the Secretary to the Treasury of the Commonwealth, who are hereby constituted Trustees for that purpose to be invested and applied by them as in this Act provided.”
.- I move -
That the following new clause be inserted : - “ This Act shall commence on a day to be fixed by proclamation after approval by majority vote of the electors of ‘Australia voting by referendum.”
I move this amendment on behalf of the honorable member for Cook. A short time ago the members of the Government party were asking us with great fervour to trust the people. It seems to me that they might well be consulted regarding these financial proposals.
– We want to provide for the construction of an Indomitable.
– If the Government wishes to commence the construction of the new fleet at once, its word will be sufficient for the builders.
– We must have legal authority.
– The Government has embarked on a financial policy for which it has no authority from the electors.
– That has been said over and over again.
– It has been- said before, but will bear repeating. The Government have not received the sanction of the electors for this proposed . naval loan. As we are going to the country very shortly, this issue might well be submitted to them. The Treasurer has shown a, good deal of consideration towards Opposition proposes this afternoon, and if he wishes to crown himself with glory, he ought to accept this one. , Nothing can be added with advantage to what has already been said on this subject. This is the first time in our history that a Commonwealth Government has admitted its inability to meet its obligations. . In my opinion, the people are ready to pay increased taxation to provide for the construction of the proposed fleet. Believing that to be so, and knowing that the policy of borrowing was not once mentioned at the last elections, I think that the Government should show its sincerity in regard to trusting the people by submitting this proposal for their sanction.
.- If the proposed new clause be carried, we shall have a triple referendum - the financial agreement, the State debts question, and the loan question. The Government have paid the electors the compliment of saying that they can deal with so complicated a question ‘as the financial agreement, and that they are competent to form an opinion regarding the proposal to transfer the debtsof the States to the Commonwealth. This is a much simpler matter. It is, however, a contradiction of the financial agreement. In asking the public to ratify the financial agreement, we ask it to authorize us to bind the Commonwealth to pay to the States for all time a certain sum out of the Customs and Excise revenue. Having done that, we are now showing that we cannot afford to hand back to the States the sum agreed upon, because we have to bor- row to pay for a fleet. I should like this loan proposal to be taken before the people, because it would enable me to show my electors how iniquitous the financial agreement is. The three proposals should be put before the people together.
– That is precisely what we intend.
– But if Parliament passes this Bill as it stands, the proposed loan will be floated, unless the coming Parliament repeals our legislation.
– The honorable member would not vote for the reference of the Capital Site question to the people.
– That is not a financial question. This proposal affects the whole community. If the loan is floated, they will have to provide for the payment of interest and sinking fund through the Customs and Excise. I shall support the amendment.
– I hope that this proposal will be agreed to, and that the loan will not be floated until the public have sanctioned it. I am not in favour of referring complicated questions to the electors, but this is a very simple one. All parties in the House have declared against borrowing, and now, at the end of the Parliament, it is proposed by the Government to raise £3,500,000 by loan. The adoption of this proposed new clause would give the people an opportunity to say whether they were prepared to pay the taxation necessary to provide for the efficient defence of Australia, or preferred to allow the Government to go into the money market for that “purpose. It would not interfere with the “Building of the Navy. We have been assured that only . £500,000 will be required for the purposes of the” naval scheme up to the end of June next. The elections will be held early next year, and the Government will know as soon as the vote has been taken, what they are to do. Ifthe Loan Bill is approved by the people, they may take steps at once to raise this money. On the other hand, if it is rejected by the people, that will be a declaration that thev are prepared to provide the necessary money for the construction of the Navy Bv means of taxation, and it will be for the new Parliament to determine what form that taxation shall take. At the worst there could be only a slight delay and I certainly approve of theproposed new clause.
.- I should be glad if the Government would accept the proposed new clause, for I think it only fair that a referendum should be taken. The general election will take place shortly, so that the adoption of this proposal will not inconvenience the Government. If there is any question that ought to be referred to the people, it is this. I regret that the House has committed itself to the policy of borrowing, for I believe that it will be a bad thing for the nation. Manypeople will vote for the Fusion Government candidates, although they are opposed to this Loan Bill. Unless this proposed new clause be carried, they will feel that they can show their disapproval of this policy only by voting against the Fusion candidates, and supporting candidates of the Labour party, and rather than do that many of them will swallow this policy. If a referendum were taken, every elector in Australia would have a direct opportunity to say direct whether he approved or disapproved of a Commonwealth loan policy, and would be free at the same time to vote for his own party candidate. Some honorable members opposite have already stated publicly that our refusal to support the proposal to take a referendum on the question of the financial agreement meant that we had gone back on one of our platform planks. That is not so. We are anxious, however, that this question should be submitted to the people, and if the Government really believe in. trusting the people, thev have in this instance an opportunity to do so. I shall support the proposed new clause.
Question - That the proposed new clause Be inserted - put. The Committee divided.
Majority … … 12
Question so resolved in the negative.
Proposed new clause negatived.
Bill reported with amendments.
Motion (by Mr. Deakin) agreed to -
That the Standing Orders be suspended to enable the remaining stages to be passed without delay.
Bill read a third time.
Bill returned from Senate with amendments.
– I move -
That this Bill be now read a second time.
Honorable members are aware that the Surplus Revenue Bill which became law on the 13th June, 1908, defined the manner in which the surplus revenue of the Commonwealth should be dealt with. It was agreed by the State Premiers at the recent Conference that if the financial agreement were accepted, the Commonwealth Treasurer should have, as an aid to his large expenditure for old-age pensions, the right to expend during the present financial year, £600,000 out of the three-fourths of Customs and Excise revenue to which the States were entitled. The basis of the contribution by the States out of their threefourths of this amount, £600,000 was agreed upon by the Premiers, namely, 3s. per head of the population of the States of New South Wales, Victoria, and Queensland, in which States old-age pensions were being paid, and 2s. per head from the States of South Australia, Western Australia, and Tasmania. The Bill amends the Surplus Revenue Act of 1908, so that the understanding with the Premiers can be carried out, providing that the people approve of the financial agreement. This Bill will only take effect in the event of Constitution Alteration (Finance) Bill being accepted by the electors and assented to by the Governor-General, and in the further event of the excess expenditure of £600,000, or part thereof, being incurred. The effect of this Bill will be that the excess expenditure, instead of being debited to the States per capita, will be debited in the proportions agreed on by the Premiers. The last clause of the Bill is also conditional on the passing of the Constitution Alteration (Finance) Bill. It repeals the Surplus Revenue Act of 1908, which belonged to the bookkeeping system, and which will be terminated by the Constitution Alteration (Finance) Bill. Honorable members will see that this Bill will have no effect unless the people by referendum approve of that Bill; and if they approve, the present measure is necessary for the reasons I have stated.
.- Do I understand that New South Wales, Victoria, and Queensland will contribute more per head towards the , £600, 000 than will the other States? .
– Yes; that was agreed to by the Premiers.
– We are here as a Federal Parliament, and not simply to ratify what the Premiers have done. The proposal is that New South Wales, Victoria, and Queensland are to pay 3s. per head, because there have beenold-age pensions in those States, while South Australia, Western Australia, and Tasmania are to pay only 2s. per head because they have been neglectful of their duty in the past.
– That does not affect us.
– It affects the fair play of the thing. I have no objection to the Commonwealth having £600,000 with which to help to pay old-age pensions, in view of the fact that we are taking over the responsibility in this connexion ; but it seems to me a little unjust to New South Wales, Victoria, and Queensland that they should have to pay more, simply because they have done their duty to the aged poor.
.- So far as I can see, there is no necessity for this Bill. It cannot possibly come into operation until after the referendum ; and we cannot suppose that the Treasurer pro-‘ poses to use this , £600,000 before he knows whether the financial agreement is approved by the people. It seems utterly absurd to pass a measure which mav not come into operation at all ; and I point out that there would be plenty of time to legislate after the next Parliament meets.
– We shall want the money before the end of the financial year.
– Parliament will meet before then.
– It may not.
– According to the Constitution, Parliament must meet before the end of the financial year ; and I suggest that the Bill be withdrawn for the present. In the early part of the session, the Treasurer told us that there would be a deficit of , £r,2oo,ooo, and that in order to make good the shortage, he proposed to issue Treasury-bil ls. After the Premiers’ Conference, however, we were informed that the Premiers had agreed to pay the Commonwealth £600,000 towards the cost of oldage pensions, and that, therefore, there would be no need for Treasury-bills. In the circumstances, are we to presume that the Treasurer is going to spend this money before he knows whether the people will ratify the financial agreement?
– Then why is the money required?
– Otherwise it will go back to the States, as part of their threefourths of the revenue.
– According to the Treasurer’s own showing, there is no necessity for the Bill. I may remind honorable members of the peculiar fact that when Parliament does meet it will be with the old senators, although new senators have been elected. I am surprised at the Treasurer introducing a Bill of this kind at this stage of the session.
.- I understand that this Bill is simply to complete the agreement which was come to by the State Premiers themselves. We do not know exactly when the elections will be held, but, if at the beginning of April, the writs cannot be returned within three weeks or a month, and Parliament need not meet until thirty days later, which brings us pretty well to the end of June.
– The Government will be very anxious for Parliament to meet.
– The honorable member for Kennedy has supplied a very strong reason whywe should not meet earlier in the fact that the new senators will not be able to take their seats until the end of the financial year. I am sure honorable members do not desire to be called together simply to pass this Bill. I see no clause in the measure which makes it conditional on the referendum being carried in favour of the agreement.
– What about sub-clause b of clause 2 ?
– That sub-clause reads - “ The excess expenditure “ means the sum, ii any, over and above one-fourth of the net revenue of the Commonwealth from duties of Customs and Excise for the financial year ending on the thirtieth day of June, One thousand nine hundred and ten, which the Commonwealth, in pursuance of Constitution Alteration (Finance) 1909, applies in that year, out of the said net revenue, towards its expenditure for the service of that year.
I thought the honorable member for Kennedy was referring to clause 4, but that simply provides for the repeal of the Surplus Revenue Act 1908, if the amendment of the Constitution is approved by the electors. The Bill merely votes the £600,000 which has practically been given to us by the State Premiers.
– It was not given by the State Premiers. It is conditional or. the vote of the people at the referendum.
– It is conditional on the Finance Bill being carried at the referendum, and we cannot legally spend the money until that Bill is carried. If it is not carried, this Bill will be so much waste paper. On the other hand, I do not want to see Parliament called together too early simply because it is necessary to vote this sum of , £600,000 before the 30th June of next year. We are asked to vote the money now in anticipation of the Finance Bill being carried.
– Therewas nothing in the meagre report of the proceedings of the Premiers’ Conference to lead any one to believe that such a proposal as this would be brought forward, or that any differentiation would be made between the amounts which the States would have to contribute to make up the £600,000.
– The 3s. and 2s. per head arrangement is published in the report.
– I do not think that any such arrangement was made public ‘until this week. Apparently we are getting the secret history of the Conference bit by bit. We learn to-night that the States which have already provided old-age pensions are to pay more than the others, simply because they have taken action first.
– They agreed to do it.
– That does not matter. The Premiers were never authorized to agree to it, but some of them would have agreed to hand over the whole lot, so long as they obtained the other part of the agreement. That is what they were working for, and this was merely the bait.
– Here is the agreement, and the provision to which the honorable member refers appears in it. The agreement is a public document, which has been on the table of the House for some time.
– Then I think nearlv every other honorable member missed that point, as well as I did, when reading the agreement. It is very unfair that some States should have to pay more per head than others. Why should an inhabitant “of New South Wales have to pay 3s., and an inhabitant of South Australia only 2s. ?
– -Because the oldage pension system has been in full swing in the ohe State, and has not got into proper working order in the other.
– That is all the more reason why the States that have been neglectful of their duty should pay the larger amounts to make up for their past derelictions.
– They are not accustomed to the expenditure.
– Whether they are or not. we should not differentiate in this way. The Bill should not be persevered with, because it cannot possibly come into operation until after the next general election. I have no doubt that it will be used at the referendum as a lever. People will be told that unless they vote for the Finance Bill they will upset one of the Acts passed by the Federal Parliament.
– It cannot be used for that purpose.
– But it will be. I guarantee that the people will be told that unless they vote for the financial agreement, part of the money which ought tobe available to pay old-age pensions will ha.ve to go back to the States.
– It will have to go back to the States.
– The Treasurer confirms what I have been saying. Old-age pensioners will be told that they will not get their pensions for some months unless they vote for the financial agreement. I very much regret that the Treasurer has brought the Bill forward. There would have been ample time to introduce it after the election.
Honorable members interjecting.
– Order. I am rather surprised at this method of conducting a second-reading debate, and I ask honorable members on the Ministerial side to allow the honorable member for Yarra to proceed.
– The Treasurer should at least grant an adjournment of the debate until to-morrow morning, as many honorable members are away attending engagements which they entered into before they knew the House would sit to-night. Otherwise, the second reading will be carried, the Bill will be put through Committee, and sent up to another place, before they have an opportunity of dealing with it. The Treasurer has the numbers behind him, and I suppose feels sure that he can force the Bill through, in spite of all that we may say. We are told that if we do not pass it we shall be keeping back the Seamen’s Compensation Bill, the only measure brought forward by this Government that is of any interest to the workers. Everything else that would benefit the workers has been pushed right down the noticepaper. The Government say “ Give us this Bill, and we will give you . something else afterwards.” We have no right to proceed with this measure in the dying hours of this Parliament, seeing that, in all probability, a majority of those returned to the next Parliament will be against the financial agreement entered into at the Premiers’ Conference.
I must confess that when I saw the Bill to-nightI had some apprehensions, first as to whether it would not, if passed, enable the financial agreement with the Premiers, or some portion of it, to be brought into effect before that agreement is sanctioned by the people, and, secondly, whether it might not be used as an argument at the referendum why that referendum should result in one particular way. If I thought that it would have either of those effects, I should not only vote against it. but also use any influence that I possess to prevent such an extremely improper measure being passed ; but, on looking into it, I found that it really cannot have either effect. Clause 4, which is the only express clause, provides simply that the Surplus Revenue Act 1908 shall be deemed to be repealed if thf Finance Bill is approved by the elec- tors at the referendum, but I would point out to the honorable member for Nepean and others that the other clauses have no subject-matter on which they can operate until the Finance Bill is made law by the sanction of the people.
– This is speculative legislation.
– In one sense it is conditional legislation, and consequently quite unusual, and requires to be carefully scrutinized before we pass it. For that reason I am endeavouring to scrutinize it now. It can operate only upon those moneys specified in clause 2 as “ the excess expenditure,” which is defined as being -
The sura, if any, over and above one-fourth of the net revenue of the Commonwealth from duties of customs and excise for the financial year ending on the thirtieth day of June, One thousand nine hundred and ten, which the Commonwealth, in pursuance of Constitution Alteration Finance)1909, applies in that year, out of the said net revenue, towards its expenditure for the service of that year.
The Bill referred to there is the Bill which has to receive the sanction of the people, and unless that Bill passes there is no “ excess expenditure.” If there is no excess expenditure, there is nothing whatever on which this Bill can operate. The honorable member for Yarra suggested that the Bill might in some way be used as an argument to induce the electors to sanction the financial agreement with the Premiers on the ground that old-age pensioners would otherwise be in some manner deprived of what was coming to them. But that argument could not honestly be used. It would be an absolutely dishonest argument, and could so easily be met and refuted that it would recoil on the heads of those who used it. In fact, it could be used with just as much force in regard to the financial agreement itself as it could be used in regard to this Bill, and to my mind it would have no force in either case. Personally, I should have preferred that this legislation should have waited until we were in a position to deal with it in the ordinary way - until we had the powers that would enable us to pass it. Conditional or prospective legislation, dependent upon powers which we do not possess at the time we pass it, is very unusual, and is justified in this case only on the ground of convenience. I do not think we ought to take any great exception to it in this instance, because no honest argument can be based upon it that could induce any elector to vote in favour of the financial scheme.
– Then why do the Government want to rush it through?
– It may be a matter of considerable convenience.
– Whether the Bill is passed or not, the argument referred to could be used.
– That is so, and for that reason it will have no additional force through this Bill being passed.
– So long as it is understood.
– It will be the duty of all of us to make the position clearly understood when the proper time arrives. For my part, I express a very fervent hope and wish that the Bil] may never become operative.
– I should be much better pleased if the views which have been expressed by the honorable member for Flinders had been presented to the House by the Minister. We could have accepted them as an assurance that the Bill will not be used in the manner suggested by the honorable member for Yarra. Although the honorable member for Flinders can find reasons why it should not be so used, we know that, in the present state of politics, we have reason to fear that it will be so used.
– Just as it might be said, “ If you do not ratify the financial agreement, the payment of old-age pensions will be stopped.”
– That will probably be said to the electors to induce them to vote for the agreement,. though it will not be a legitimate argument to use. I would be more satisfied had the honorable member’s presentment of the case been made by a Minister.
– I personally adopt everything that the honorable member said.
– I am glad to hear that. As the case was put by the Minister who moved the second reading of the Bill, it was not indicated that it was not open to any one to use such an argument as that mentioned.
– He said that it might be argued that if the agreement were not passed, there would be no money to pay for old-age pensions.
– The Bill has nothing to do with that.
– It will be used as a justification for that argument.
– Then, why has it been introduced? We are anticipating what the electors may do. Should they refuse to ratify the agreement, our legislation will be useless.
– We shall have wasted our time in considering the measure.
– Yes. It is a wrong thing to ask a dying Parliament to legislate in this manner. The Bill should be kept back until the electors have voted on the financial agreement.
– This is hypothetical legislation.
– It is not right to endeavour to anticipate the will of the electors in this way. The measure will be used to place on the electors a moral obligation to vote in a certain direction. Why, because an imaginary line divides New South Wales from South Australia, should those on one side of it be asked to contribute £3 per head out of the States’ surplus revenue, and those on the other side £2 ? The arrangement is not an expression of the Federal spirit. The Treasurer seems to think that it is sufficient that the Premiers have agreed to it.
– That New South Wales is being called upon to pay £3 per head and South Australia only £2 is an argument against the financial agreement.
– The Premiers arranged for this allocation among themselves.
– What is the position of honorable members in the matter ? I was sent here to look after the interests of my electors.
– The honorable member has no mandate from his constituents regarding this allocation.
– No; because fhe matter has come up since the last election. But I cannot shirk my responsibility because the Premier of New South Wales has agreed to this unequal allocation. I do not see the need for the Bill. It could verywell be kept back until we know the decision of the electors.
.- It must be admitted that this is a very unusual piece of legislation. I should like to see the Bill kept back until the result of the referendum is known. That, I trust, will render it unnecessary. If the Government desires to pass it now, we should have a clear and authoritative statement from the Minister that its passing will in no way affect the payment of old-age pensions.
– It could not do so.
– It could not fairly be argued that it would do so; but we know what arguments are used at times.
– We should like an authoritative statement from the Minister to be published in Hansard.
– That is exactly my view. The Government ought to put the position beyond question. We know howeasy it is to misrepresent. Misrepresentation may be dishonest ; but people are not alwayshonest.
– This is merely a technical measure, having no such meaning as has been read into it. It was prepared two or three months ago, immediately after the Premiers’ Conference, and has not been touched since. It is a measure drafted by the Law Department to carry out the intentions of the Premiers’ agreement. The draftsman says of it that its effect will be that the excess revenue, instead of being debited to the States per capita, will be debited on the proportions agreed to by the Premiers. The Premiers agreed that the money should be taken out of their three-fourths of Customs and Excise, because they felt that they owed an obligation to the Commonwealth, since they had been releasedfrom certain expenditure. If money does not come to us from this source we shall have to obtain it from some other source.
– The Bill will have no effect unless the people sanction the financial agreement ?
– Certainly not.
Question - That the Bill be now read a second time - put. The House divided.
Majority … … 11
Question so resolved in the affirmative.
Bill read a second time.
In Committee :
Clause 1 agreed to.
Clause 2 (Definition).
– As there appears to be a slight misunderstanding in regard to the interpretation that can be placed on this Bill, I wish to say in the clearest terms that neither the passing nor the rejection of this Bill will affect the payment of old-age pensions. Old-age pensions will be paid whether the Bill be passed or rejected.
Clause agreed to.
Clause 3 -
Out of the amount expended by the Commonwealth in the financial year ending on the thirtieth day of June One thousand nine hundred and ten for the purpose of old-age pensions, an amount equal to the excess expenditure shall, in lieu of being debited to the several States in the manner provided by the Surplus Revenue ‘Act 1908, be so debited to the several States that the capitation in the case of each of the States of New South Wales, Victoria, and Queensland shall be to the capitation in the case of each of the States of South Australia, Western Australia, and Tasmania, in the proportion of three to two.
.- I do not think it fair that New South Wales, Victoria, and Queensland should suffer a deduction of 3s. per head as compared with a deduction of only 2s. per head in the case of the other States, having regard to the fact that the old-age pension system is now a Federal one, and that pensioners in all parts of the Commonwealth are under the same law. Because those three States have been paying old-age pensions for years it is proposed that they shall contribute more to this fund than shall the other States which neglected to provide for such a system. I move -
That all the words after “be,” line 8, be left out.
If the amendment be agreed to, the allocation will be in accordance with the provisions of the Surplus Revenue Act. I fail to see why the States which have been paying old-age pensions for some years should be penalized.
.- I intend to support this amendment, believing that it is well that the people should know at the present juncture how the Premier of New South Wales, in his anxiety to secure the acceptance of the financial agreement, was prepared to sacrifice the interests of his State. It is well to emphasize this point, for it will be useful in the coming fight.
-The honorable member is a State Righter !
– The honorable member who called so loudly for State Rights is neglecting the rights of New South Wales in this matter. I believe in the uniform treatment of all the States. Because the Parliament of New South Wales saw fit to pass humanitarian old-age pension legislation some years ago, it is proposed to penalize that State. We ought to let the public know how Mr.” Wade, at a secret Conference, had regard for the interests of the people of his State. I am glad to find a Labour man in the Federal Parliament standing up against him. If Mr. McGowen and Mr. Holman, members of the Labour party in the State Parliament, instead of saying “ditto, ditto” to Mr. Wade, were to oppose him, they would be surprised at the support they would receive. The Labour party in the New South Wales Parliament have failed to avail themselves of a good opportunity to push ahead.
– The honorable member thinks they ought to go ahead.
– When the honorable gentleman was on the other side of the House, he lost no opportunity to put in a good word on behalf of the Opposition, and I am surprised that other Opposition leaders have not taken a lesson from his tactics. As the result of their adoption he has not done badly. If the Minister of Defence would start a night school for the’ training of
Oppositionists, I should be his first pupil. If I were not a loyal Fusionist I should like to be assisting the Opposition at the present time. When the big guns of the House, such as the honorable member for Mernda, and the honorable member for Flinders, are appealing to the people to reject the Constitution Alteration (Finance) Bill, they will be able to point out that the State Premiers did not arrange for this payment upon a uniform basis. I shall take care to point out to the people of New South Wales that is. per head has .been filched from them. Had the secret Conference let that fact be known the people of New South Wales would have been up in arms. I shall be able now to. pose just as well as the Minister of Defence, as one who is looking after the interests- of New South Wales. Because the New South Wales Parliament saw fit to provide for the payment of old-age pensions for some years prior to the system being made a Federal one, that State is to be penalized to the extent of is. per head of her population more than the other States who failed to do their duty in that respect. It is good business to put that fact on record. It will be very useful during the coming struggle.
– This matter ought’ to engage the very serious attention of honorable members. The statement made by the Treasurer does not afford a sufficient justification for this inequitable procedure as between State and State. The spirit of the Constitution is that all States shall be treated alike, and yet under this Bill it is proposed that New South Wales, Queensland and Victoria, who provided for their aged poor for a number of years, shall suffer a special deduction from the amount returnable to them as compared with those States who” neglected their duty in that respect and left to private individuals the support of their aged poor. Those States are to receive a concession to the extent of £1 out of every £3 appropriated for this purpose. If this Bill _ were based on justice and equity, a special concession would be made to the States which have been paying old-age pen sions. It is our Bounden duty to see that this injustice is not perpetrated. This Bill is for the purpose of financing the payment of old-age pensions, not merely in the States where the system was in force prior to the passing of the Commonwealth. Act, but in those States which failed to pass such humane legislation. This is a national matter, and my contention is that the States who initiated a humane piece of legislation are being financially punished. It is no reply to say that Mr. Wade has agreed to this proposal. That gentleman was speaking only as Premier of aState without any legal status to determine this matter, which is one entirely for this Parliament. We cannot transfer to Mr. Wade the odium for any injustice done to the people of New South Wales, Victoria, or Queensland ; and my intention is to support the amendment. This Bill is the introduction of a vicious principle of differentiation, which is sought to be justified by a reference to the agreement of the Premiers. The danger is, however, that if we pass this measure, it may betaken as a precedent, and I can conceive quite a number of cases in which differential treatment might be justified on similar ground.
– We wish to have this Bill passed to-night.
– The Minister of Defence is very interested all at once; but I wish he had interested himself sooner, in order to prevent injustice to New South Wales and other States which have borne the burden of old-age pensions,
.- I regret the decision of the Treasurer to force this Bill through to-night. The effect will be that Victoria will have to pay £60,000 more than States which did not take upon themselves the obligation to pay old-age pensions.
– And how much is Victoria saving by the transfer of old-age pensions to the Commonwealth - about £500,000 ?
– I understand that Victoria, in the year before the old-age pensions were transferred, paid ,£270,000 ; and it must be remembered that as new expenditure the old-age pensions will be calculated per capita. I should like .to know from the Attorney-General whether it is in accordance with the Constitution that a person living in one State may be called upon, under a Bill of this kind, to pay more than a person who lives in another’ State. To illustrate how the Bill will work, I may point out that the Treasurer, who is, perhaps, one of the wealthiest members of the House, the honorable member for Darwin, and the AttorneyGeneral will, under this Bill, pay only 2s. whilst I and others, simply because we happen to live in Victoria, will have to pay 35
– Tasmania kept its aged poor.
– No more than did any cither State prior to old-age pensions. Under the Victorian Old-age Pensions Act, children had to contribute towards the maintenance of their parents.
– And so they ought to.
– In my opinion the Victorian Old-age Pensions Act was not just in that respect; and, in any case, it is inequitable that people who were thus taxed, should now be called upon to pay more than the residents of other States under this Bill. I shall vote for the amendment as a protest against the distinction made.
– The honorable member for Yarra seems very ‘anxious in regard to the contribution to be paid by Victoria, evidently being under the impression that the State is going to lose largely under this arrangement. But does the honorable member know that Victoria will gain about £150,000 per annum? I hope that the honorable member, when he goes before the electors, will inform them of this fact.
Question - That the words proposed to be left outstand part of the clause (Mr. Thomas’ amendment) - put. The Committee divided.
Majority … 13
Question so resolved in the affirmative.
Clause agreed to.
Clause 4 agreed to.
Bill reported without amendment.
Motion (by Mr. Deakin) proposed -
That the Standing Orders be suspended to enable the remaining stages to be passed without delay.
.- I should be glad if the third reading of this Bill were not taken to-night, because there are several honorable members absent who did not know that it was to come up for discussion. Of course, if the Prime Minister does not see his way to grant this request, I shall not press the matter to a division, but I think he might endeavour to meet me in this matter.
– This Bill is purely consequential, and cannot have any force or effect unless the people indorse the financial agreement. If the people do indorse the agreement, this measure is required to give effect to its terms. I hope the honorable member will not press his request.
Question resolved in the affirmative.
Motion (by Sir John Forrest) proposed -
That this Bill be now read a third time.
– The Minister of Defence might take us into his confidence to the extent of informing us from whose pockets the large sum of £150,000, which he said this Bill would save to the people of Victoria, is to come.
– I beg to refer my honorable friend to the Budget papers, where he will find all particulars.
.- Itis only fair that we should have the information from the Treasurer. If any one speaks courteously to that right honorable gentleman, he gets a courteous answer, which is not always the case with the Minister of Defence. Will the Treasurer state who makes up the £150,000 which theMinister of Defence has told us that Victoria is to gain? Victoria must get it at the expense of somebody else. It does not come from the clouds.
.- I shall be only too glad to give the honorable member the information if he will ask the question to-morrow morning. I cannot carry all these particulars in my mind.
Question resolved in the affirmative.
Bill read a third’ time.
– I beg to move -
That this Bill be now read a second time.
I think for sturdiness of character, patient endurance of adverse conditions, unselfish devotion to duty, and the knack of doing well his appointed task, the seaman is second to none. None of us, I trust, has become so affected by the cynicism that sometimes comes with public life, as to be incapable of doing justice to the sailor - the handy man of modest bearing and proverbial courage, often as poor in material as he is rich in manly resources, one of the few men still left in these limelight days who are true to the finer traditions of a class, and who, with a spirit trained to fortitude in the riot of the elements, can answer without hesitation to the last call of duty. I think, after that, I might descend to dry matters of law. Honorable members who, as members of Parliament, are assumed, although they may not often be found, to be omniscient, will, perhaps, pardon me if I refer to one or two, to them, truisms as regards the law of seamen’s compensation and employers’ liability generally, as a sort of preliminary refresher to their memories. The general law is that a person is liable for his own negligence or the negligence of his servants. He is liable to’ the general public who come upon his premises at his invitation on the business with which he is concerned. In the case of Priestly v. Fowler, decided in 1837, it was held for the first time, and it came somewhat as a shock even to lawyers, who very seldom can be shocked at anything, that the principle of liability for the negligence of one’s servants did not apply where the negligent act was that of a fellow servant, because it was laid down by those wiseacres of the law that, by entering into common employment, a’ man had voluntarily incurred all the risks incident to it, and, therefore, became a voluntary contributor to his own injury. That almost reminds us of the theory of Rousseau, that human society is based upon a contract, and, of course, all the risks incident to it, on the same principle of reasoning, would apply right through -society. The doctrine of common employ ment, then, meant that wherever a mar* was injured by his fellow servant of the same grade, and under the same master, the master was not responsible. That principle was extended even to this length, that miner and overseer, or foreman and workman, were supposed to be in the same grade for the purpose of the doctrine of exemption. the law also enabled the employer to make an arrangement with an employe” to contract himself out of any liability. ‘ About 1880,. for the first time a remedial Act was passed in England, recognising in certain cases,, and to a limited extent, the old principle which was supposed to have beenthe law before 1837, when the case of Priestly v. Fowler was decided - that a master should be responsible for his ownnegligence or the negligence of his servants even in the case of common employment. This Act provided that in five cases the master should be responsible, those five being, to put them shortly, these - where the injury occurred through some defect in the works, machinery, or plant ; or throughthe negligence of a superintendent ; or of persons to whose orders the employe” was. bound! to conform ; or to some defect in the bylaws or instructions; or, in the case of railway companies, to the negligent management of trains* points, and signals. Under this Act, and subject to a limit as to the amount that could be recovered, the old law was restored. No exception was made by this in connexion with employes, but the exception which drew them out of the general principle that fastens negligence upon themaster was modified in the particular cases mentioned. I say that ^because some thought that that Act was a concession to employés. It was nothing of the sort. All that it really amounted to was a restoration to some extent of the law as itwas supposed to be. prior to 1837. However, in the particular cases mentioned, where the employer would be responsibleunder the Act, any defence that was openat law in cases of negligence where therewas no common employment, could be employed as a defence in actions arisingthrough common employment. The result was that in many cases the Act was found’ really not to cover, or very much help, theemploye’s, and in 1897 a Workmen’s Compensation Act was passed which, in certain specified cases, and in certain defined_ industries, declared the principleof liability apart from negligence. In> fact, it was an Act based upon in- surance of the employes. In 1906 the principle of that Act was extended to all employments of manual labourers, where the employment was not merely casual, and also to injuries caused through what are called industrial diseases - injuries not caused in the ordinary sense by accident, but through some disease brought on through the nature of the employment. It applied, then, to all cases of master and servant employment. I do not use those words in any invidious sense, but they are the words that correctly interpret the meaning of the Act, which applied where the workman was engaged in manual labour at wages that did not amount to more than £250 a year. The only exemptions made were casual employes, police, outworkers, and the naval and military forces. Seamen were included ; the pilot was included ; the captain was excluded by the £250 limit in most cases, and also in some cases the engineer. This Act practically meant compulsory insurance in all except a few occupations. I think that is a very humane principle, called for by the industrial .conditions of a highly’ complex society. In most cases in the colonies prior to Federation, and in some cases after Federation, the Employers’ Liability Act of 1880, which was not based upon insurance, was adopted. In the case of two or three of the colonies seamen were included within that Act, although not to the full extent that they are included in the English Act of 1906. They were included in the South Australian Act where the accident occurred in port. When the Navigation Conference sat in London in 1907, it recommended that seamen should for all purposes be included within the purview of the Employers’ Liability Acts, or any Act based upon the principle of workmen’s compensation - that is, any Act based upon the principle of the English Act of 1906. This Bill is based upon that Act. A special provision is made by it for seamen who are engaged in the coasting trade of the Commonwealth. Some of our seamen are covered by State Acts, and we are now making provision for ‘Cases which that legislation cannot reach. Every seaman engaged in the coastal trade of the Commonwealth comes within the scope of the Bill. The measure is comparatively short, some of its provisions having been struck out in the Senate. The limitation of £250 was struck out, as was also the provision exempting those engaged in fishing occupa tions from the application of the measure, and another provision which allowed benefit schemes of equal value to that under the measure to be substituted for it. The discussion of the details of the Bill are best left to the Committee stage. Provision is made for the payment of compensation on death or total or partial incapacitation. Generally speaking, if a man is killed, his family may obtain compensation up to the measure of his earnings for about three years, or £200, whichever is the larger amount. The total recoverable in case of death is not to exceed £500, the original provision being £400. Compensation for total or partial incapacitation runs up to 50 per cent, of the average earnings during the twelve months preceding the accident, and is not to exceed 30s. per week, while certain allowances are provided for. The assessment of the compensation is in some cases to be made by_ arbitration, and in others to be determined by a Court., The measure gives an optional remedy to those who are injured, who may take proceedings in a court of law or on arbitration. Compensation in case of death is to be paid to certain dependents, who are not to Be excluded from the benefits of the measure by illegitimacy. Of course, in other cases payments must be made to the injured man himself. No substantial amendment will be proposed by the Government in Committee, but there are one or two technical amendments which are necessary to make the provisions of the measure in certain respects more consistent.
.- I think I may guarantee, on behalf of the Opposition, that no serious objection will be raised, to the passing of .the Bill in the shortest time possible. It .is apparently an honest endeavour to place the seamen, who follow a hazardous calling, under conditions similar to those enjoyed by employes on land, by entitling them to compensation should they be injured. While in Committee an examination will be made of some of the clauses, generally speaking, we shall facilitate the passing of the measure.
.- I compliment the Attorney-General on the unusual course which he adopted in commencing his speech on the second ‘ reading with a peroration embodying a panegyric on the sailor. As he likes a literary quotation, and mentioned Rousseau, I will give him a German one. It was a saying of Goethe that if you want to know which is the ripest cherry, ask the boys or -the blackbirds. I have been associated with” sailors for years, and if you want to know anything about seafaring men, ask those who have been associated with them.
– Is the honorable member the small boy or the blackbird?
– Some persons’ vanity makes them like to be spoken of as big men; but 1 am content to be referred to as a small boy.
– Like all small boys, the honorable member gets his finger into every pie.
– I do not get much for myself, but am pleased to get this legislation for the seamen. The honorable member for” Kalgoorlie spoke of the pleasure which he felt at the introduction of the Bill. He would have had more reason to be pleased had it been accompanied with the Navigation Bill, which our seamen should have received long ago at the hands Of this Parliament. The VicePresident of the Executive Council made a powerful speech in introducing the measure in another place, and good old salts like Senators Guthrie and Turley gave it their benediction. When sailors have indorsed the measure, it comes to us with a good recommendation. Mr. Crouch. - From the sailors’ point of” view.
– It may be regarded as well recommended from the people’s point of view, too. In New -South Wales, compensation for injury was allowed to seamen under the Employers’ Liability Act while they were in port, and within a limited distance from the coast. The measure is an extension of the principle of the Workmen’s Compensation Acts. It provides that when injury or death results from accident, seamen or those dependent on them shall be entitled to compensation. It was only in 1006 that Great Britain passed an Act of this kind. Prior ‘to that, Germany, Italy, Spain, Belgium, Holland, and Denmark had passed similar legislation, and in Denmark and Holland that legislation covered those engaged in the fishing trade as well as seamen. Australia is only following the example of Europe in this matter. . The Government are to be complimented upon the conversion of the Honorary Minister, who, a few years ago, in Queensland, was bitterly opposed to legislation of this character. I am glad that his association with other Ministers has converted him to more liberal views.
– The honorable member might have left that out. He has gone out of his way to give a man a dig.
– I am only showing that I take a close interest in all matters of legislation. According to Voltaire, the consideration of petty circumstances is the tomb of great things. I present that quotation to the Minister. I rejoice in the conversion of his colleague. I hope that the (Fusion Government will not stop at this advanced legislation, but will, in the next Parliament, again bring forward the Navigation Bill, and have the assistance of the Honorary Minister in getting it passed. As I can best serve the interests of the seamen in my electorate by shortening my remarks, I shall not sa.v more than that it is very creditable to the Government that this measure has been introduced by them.
.- I hope that you will permit me, Mr. Speaker, to put on record the expression of my pleasure that the Ministry has seen fit to introduce this Bill. I could wish that the Attorney-General would speak equally well of sailors ‘when they become politicians. The measure is a tardy recognition that seamen are human beings, and are entitled to the same consideration as is paid to those employed on shore. The Bill is capable of improvement, but as the session is near its end, and we have received an unmistakable intimation from the Government that amendments are not desired, and may result in the defeat of the measure, I hope that they will not be moved. The Bill having been considered bv the Senate, requires only the consent of this House to make it law. Much as we may desire to improve it. attempts to do so at this stage may result in its benefits being lost by the seamen, whose interests we have at heart. I am very grateful to the Ministry for its introduction, although it does not meet all the requirements of the case.
Question resolved in the affirmative.
Bill read a second time.
In Committee :
Clauses 1 to 4 agreed to.
Clause 5 (Compensation for personal injuries to seamen).
– On behalf of the honorable member for Herbert, who is keenly in- terested in seamen, and holds a very important position in their organization, but is, unfortunately, too unwell to be present to-night, I move -
That after paragraph d of sub-clause 2, the following paragraph be inserted : - “ Notwithstanding anything contained in the preceding paragraph should any person entitled to compensation under this Act die in any public institution leaving no dependants, then such institution shall through its officers be entitled to receive compensation to the extent of a sum not exceeding Twenty shillings per day for every day or part thereof during which such injured person remained an inmate of the institution.”
I hope that the Governmentwill accept the amendment. The desire of the honorable member is that, should a sailor be injured and taken to a hospital, or some similar public institution, and die there, the authorities shall be able, in the event of his leaving no dependants, to recoup the cost of his attendance by charging his employers at the rate of 20s. a day, instead of making his care a burden on the charity of the community. Of course, where there are dependants, the compensation will go to them, and the institution which has looked after the injured man will have its claim on them. I trust that the Attorney-General will accept this proposition.
– Whilst I sympathize with the honorable member in his desire that the claims of these people should be recognised, I have to point out that this Bill deals only with seamen who suffer injury in the course of their employment, and that this amendment would be altogether irrelevant to it.
.- I should like to ask the Attorney-General whether he can see his way to agree to the excision of the words, “ if not settled by agreement,” in paragraph 3. Those words leave a loop-hole by which the settlement of a difficulty may be deferred for weeks, if not months. The honorable gentleman will probably know that under the Workmen’s Compensation Act of South Australia, where there is a loop-hole to suggest a settlement by agreement, of any difficulty arising in relation to an accident, endless delay occurs, because one party to the dispute does not desire an agreement of any kind, and invariably puts various difficulties in the way of a settlement. The omission of these words would not interfere materially with the wording of the clause, and it seems to me that the Senate would accept such an amendment. If, however, there is a danger of the clause being interfered with because of the omission of these words, I shall not press my proposal.
– I hope that the honorable member will not press his request. The words to which he objects are only in the nature of a declaration that people may make an agreement. They do not prevent a sailor or his representatives taking advantage at once of the compulsory provisions of the Bill. If there is no agreement the party has a remedy at law. These words will not compel a seaman to wait for any term before taking action.
Clause agreed to.
Clause 6 - (1.) Proceedings for the recovery under this
Act of compensation for an injury shall not be maintainable unless notice of the accident has been given. . . . and unless the claim for compensation has been made….
– I move -
That the words “ time when she was last heard of,” line 8, be left out with a view to insert in lieu thereof the words “ date when she is deemed under section 12 of this Act to have been lost with all hands “ be inserted.
Those words are used in clause 12, and I think it well to bring the two clauses into line. This is a purely technical amendment, and will also bring the clause into line with English legislation.
.- This is a proposal to bring the clause into conformity with clause 12, and I am inclined to think that it will be an improvement.
– It will mean that the Bill will have to be returned to the Senate.
– I was about to ask the Attorney-General whether he thinks it advisable to proceed with an amendment of this kind, which is not of material importance, and the acceptance of which may endanger the Bill.
– It cannot possibly endanger the Bill. The amendment was really asked for by the Board of Trade, but I think it will be better also for the seamen’s representatives.
– I think that the one phrase is almost as indefinite as the other, but if the Attorney-General can give the Committee an assurance that the Bill will not be endangered by being returned to the Senate with this amendment, 1 shall not object to it.
– It cannot possibly be endangered. I think the amendment will be advantageous to the seamen’s representatives. The words “ the time when she was last heard of “ are very indefinite.
– The honorable member is probably right. The only question is as to the effect which the passing of this amendment may have on the fate of the Bill.
– I cannot conceive that it will affect the fate of the Bill.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 7 to 17 agreed to.
Bill reported with an amendment.
Motion (by Mr, Glynn) agreed to -
That the Standing Orders be suspended to enable the remaining stages to be passed without delay.
Bill read a third time.
Motion (by Mr. Joseph Cook) proposed -
That the House do now adjourn.
.- I presume that it is not proposed to sit after 6 o’clock to-morrow evening.
– We shall adjourn a little earlier if possible.
– The Prime Minister said this evening that we should meet at11 o’clock to-morrow.
– And adjourn at 4 p.m.
– I think it would be better to sit on until 2 p.m., and then adjourn.
– Oh, no. Let us adjourn either at1 o’clock or meet as usual in the afternoon.
– I desire also to ask the Minister of Defence what business the Government propose to take to-morrow.
.- I desire to allude to a matter to which I was not allowed to refer this morning. On that occasion I wished to compliment the Government on their desire to push on with business and upon the work that they had accomplished. In the early stages of the session they were attacked by an obstructive insect, but soon got rid qf its sting, and they are to be complimented in the main on having passed some useful and interesting legislation. But the people of my electorate are deeply concerned at the failure of the Government to pass legislation with respect to the new Protection. I was the first member of the late Opposition, when sitting on that side of the House, to declare myself a believer in the policy of the new Protection. When the honorable member for Ballarat introduced that new economic principle 1 immediately subscribed publicly to it, although many of the members of his present Ministry who were then sittting in Opposition with me were bitterly opposed to it. I am glad to see them now associated with the honorable gentleman who proposes to make the policy of the new Protection a cardinal feature of his platform. When I announced my acceptance of the principle I received a rather severe roasting at the hands of some of my colleagues who are to-day members of the Ministry and advocates of that policy. I think, however, thatwe ought to have somethingmore than a mere advocacy of it. We ought to have an instalment df new Protection legislation. The Inter-State Commission Bill, which deals incidentally with the matter, has been abandoned, apparently, in another place. Many honorable members voted for the new Protection, believing that it would enable the Tariff to be of assistance, not only to manufacturers, but to their employes and the consumers generally. Those of a Radical turn of mind, although Free Traders, were willing to renounce their fiscal faith when it was shown that under the policy of the new Protection, benefits could be given, not merely to a few manufacturers, but to the workers and consumers. I was a Free Trader because I did not think that the whole community should be taxed for the benefit of a few manufacturers, but I immediately subscribed to a policy which would extend the benefits of the Tariff, not only to manufacturers, but to their employes, securing for them better wages and improved conditions of labour, while at the same time conserving the rights of the consumers. As pointed out previously, the employers and manufacturers have not been neglected, while the workers, who have had to bear the increased cost of the necessaries of life have been put on one side. I am told that the Prime Minister even yet may be prepared to do something this session ; but, as a Radical on this side, I say that the Government’s neglect in this matter is a disgrace. I hope we shall have some strong intimation from the Government as to their intentions.
– A referendum is necessary.
– The Leader of the Opposition is quite right; it is of no use to tinker with the matter.
.- I see that in consequence of the lamentable coal strike it is proposed that the churches shall abandon their night services in order to save the gas. This is a very serious matter, because, what will happen if the people, who usually go to church, aredriven into the unlighted parks? It is time that something was done, in the interests of morality, to terminate the strike ; and I desire to know whether the Prime Minister has decided to take any steps, and, if so, what?
.- Some comment has been made upon the number of men likely to attend the Kitchener camps, and it has been stated that the Victorian figures are underestimated. Personally, however, I think that the figures are overestimated. I should like the Minister of Defence to make some new arrangement as to the date, so that the Kitchener camp may fit in with the ordinary Easter camp.
– I only wish that could be done.
– The difficulty is that, after seven or ten days’ shutting down of factories at Christmas, it is rather difficult for the ‘ men to give another ten days, however willing the employers might be. I know one factory where, if a second holiday were taken, the billets could not be kept open. As to the number attending, if in Victoria the Minister gets anything like 25 per cent, it will be very good under the circumstances. I understand it is suggested that Lord Kitchener will take charge of the camps, while a District Commandant will take each side, and, if anything will attract men the novel sight of a Commandant in charge of troops ought to attract a large attendance, for this, I should say, is about the last matter on which the Commandants have any knowledge. Such an event would add to the jollity of the country, and a fair number would turn out to see the joke. I know that there is the highest official disapproval of the system under which Lord Kitchener is to be used.
– I know that the proposals are not approved in his Department by persons whose advice is worth consideration. If Lord Kitchener had gone through the district commands and organization, and spent a certain amount of time at Head-quarters, he could have done good work, and could have seen all that was necessary in a camp in two days.
– Lord Kitchener’s itinerary is already pretty well fixed and cannot be altered. I only wish it were possible for him to be at the ordinary Easter encampment. We cannot have two camps, and if the one he attended were held for only two or three days, it would cost almost as much as an eight days’ camp, because the bulk of the expenditure is on transport. I am afraid that, inconvenient as it may be for some of the troops, we must go through, with the present arrangements. With the exercise of a little selfdenial on the part of some employers, there ought not to be much trouble in having a good camp, so far as numbers are concerned. With regard to the question put by the honorable member for Dalley in connexion with the new Protection, I am afraid that there is not much chance of our being able to get the Inter-State Commission Bill through this session, as we should very much like to have done.
– It is perfectly useless for the purpose for which it was introduced.
– There is his answer for the honorable member for Dalley.
– But what about the referendum ?
– This Government is not in favour of such a referendum as the Leader of the Opposition has proposed. I hope that statement is quite plain.”
– The Government are not in favour of trusting the people to express an opinion on the subject of industrial legislation.
– The Government are not in favour of such a referendum as that proposed by the Leader of the Opposition. That is to say, they are not in favour of the Commonwealth taking over the whole of the industrial power of the States.
– They are not in favour of protection for the workers.
– We say that it is not necessary to do that in order to protect the workers. I hold a very strong opinion on the point, as the Leader of’ the Opposition is aware.
– Are the Government in favour of the new Protection?
– The honorable member for Dalley now has his answer. It is impossible to pass the Government proposal for new Protection in this Parliament in consequence of the uncompromising and bitter opposition and repudiation of the Leader of the Labour party in this House, amongst others.
– Has the Government not a majority without us?
– Unfortunately in the Senate, as in this House, there are one or two of the Government party who have a way of going on their own, and the honorable member who interrogated me on this subject is a very fair example of them. The honorable member for Dalley exercises his own individuality very freely.
– And I do not object to others doing so.
– The Minister says that because the Opposition object the Government are unable to carry certain measures.
– The proposal is a sham, and the Government knew it.
– Has the honorable member anything else to say ?
– The Inter-State Commission Bill is but a sham for the purpose for which it was professedly introduced.
– We will leave it at that. That is the answer to the honorable member’ for Dalley. I hope the honorable member is satisfied.
– I do not want the answer of the Leader of the Opposition. I am asking for the Minister’s reply to my question.
– I should have thought that in a matter of this sort the views of the Leader of the Opposition would have very great weight with the honoable member. I am trying to explain the reason why we are not able to proceed with that measure this session. We have not sufficient strength to carry it through the
Senate as we should like to do. The reason for that is the uncompromising opposition of my honorable friends opposite and their confreres in another place.
– The Labour party opposed the Constitution Alteration (Finance) Bill, and yet the Government carried it in the Senate.
– Am I saying anything that is incorrect ? If not, why these angry interjections?
– There is no anger ; there is only sympathy for the Minister.
– I suggest to the honorable member for Gwydir that he should interrogate the Prime Minister tomorrow on the question of the strike. For the rest, I wish to say that 1, for one, feel deeply obliged to my honorable friends opposite for the splendid way in which they have worked to-day. I hope they will come again to-morrow in the same mood. Th’ey have done well to-day, and I am very much obliged to them. The business for tomorrow will be,first of all, the amendments made by the Senate in the Defence Bill, and then the Estimates.
Question resolved in the affirmative.
House adjourned at 11.30 p.m.
Cite as: Australia, House of Representatives, Debates, 3 December 1909, viewed 6 July 2017, <http://historichansard.net/hofreps/1909/19091203_reps_3_54/>.