Mr. Speaker (Rt. Hon. W. A. Watt) took the chair at 2.30 p.m., and read prayers.
page 626
SYDNEY MINT
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– I understand that the Treasurer controls the coinage of all currency in the Commonwealth. Will he see to it that the Sydney Mint is given a fair share of the work i Last year, that mint showed a loss of £7,000 on working expenses because so large a proportion of the coinage had been given to the Victorian . Mint.
Dr EARLE PAGE: Treasurer · COWPER, NEW SOUTH WALES · CP
– I shall look into the matter.
page 626
QUESTION
TRADE RECIPROCITY WITH CANADA
DriedFruits.
Mr FOSTER: WAKEFIELD, SOUTH AUSTRALIA
– I ask the Prime Minister whether it is possible to proceed immediately with the consideration of a section of the reciprocal trade arrangement proposed to be entered into with Canada? I have in mind particularly the section covering dried fruits. Some other countries are trying to get in ahead of us, and the matter is of vital importance to this country.
Mr BRUCE: Minister for External Affairs · FLINDERS, VICTORIA · NAT
– Negotiations are still proceeding in connexion with the reciprocal trade treaty with Canada, and it is obvious, therefore, that I can say very little publicly with regard to it at this moment. I can assure the honorable member that if it were possible to make a start with the reciprocal arrangements by considering the treaty in sections, the Government would do so. The matter to which the honorable member has referred is vital to Australia, and one of the most important in connexion with the negotiations.
page 626
QUESTION
UNEMPLOYMENT
Mr COLEMAN: REID, NEW SOUTH WALES
– I ask the Prime Minister whether his attention has been drawn to pictures of starving unemployed receiving bread rations appearing in this . morning’s issue of the Sun Pictorial, side by side with a picture showing the arrival of immigrants? Is the honorable gentleman aware that similar conditions exist in New South Wales, and is he’ yet satisfied that there is an alarming amount of unemployment in Australia? If so, will he take steps to expedite the construction of various public works, including the building of Canberra, in order to afford relief in a critical situation?
Mr BRUCE: NAT
– I very much deprecate the asking of questions of this character. We have had a very, considerable discussion already in this House on the condition of unemployment in this country. I repeat, what I have previously said, that there is no undue or unprecedented amount of unemployment in Australia to-day. There is, as there will always be, some unemployment due to the ebb and flow of trade at different seasons of the year.. It will- be a very bad thing for Australia if the impression that this country is- menaced with a great wave of unemployment is created by what is said on the floor of this House.
page 626
QUESTION
PUBLIC ACCOUNTS COMMITTEE
Report on Expenditure on Air Services.
Mr. BAYLEY, as Chairman of the Joint Committee on Public Accounts, presented the report of the Committee upon expenditure on air services.
Ordered to be printed.
Mr MARKS: WENTWORTH, NEW SOUTH WALES
– I ask the Prime Minister whether he will have the printing of the report expedited in order that honorable members may have a chance of perusing it before they are asked to resume consideration of the Air Force Bill ?
Mr BRUCE: NAT
– No doubt the honorable member’s wishes in that regard can be met.
page 627
QUESTION
CONVERSION LOAN
Mr FENTON: MARIBYRNONG, VICTORIA
– I ask the Treasurer if it is his intention to treat old subscribers to the Conversion Loan in the same way as new subscribers? I understand that the honorable gentleman proposes offering more favorable terms to those who will contribute towards the proposed £21,000,000 loan than were offered to those who converted in the first instance. Will he give more liberal conditions to those who did convert?
Dr EARLE PAGE: CP
– I think the honorable member for Maribyrnong (Mr. Fenton) is under a misapprehension regarding the terms offered. The old subscribers will be treated with the utmost fairness, and will be allowed to convert if they so desire.
ADJOURNMENT- (Formal).
Sugar Control.
Mr SPEAKER (Rt Hon W A Watt: BALACLAVA, VICTORIA
– I have received an intimation from the honorable member for Herbert (Mr. Bamford) that he intended to move the adjournment of the House to discuss a definite matter of urgent public importance, namely, “ Sugar Control.”
On behalf of the House, I have made arrangements for an adjournment within twenty-five minutes to enable the Address-in-Reply to be presented to His Excellency the GovernorGeneral, and in view of this the honorable member for Herbert now wishesto withdraw his intimation and lodge it again to-morrow. I think this will meet the convenience of honorable members, as it will give them an opportunity of considering the matter he proposes discussing.
Mr Charlton:
– To-morrow is private members’ day.
Mr SPEAKER:
– That does not affect the position.
Mr Charlton:
– If such a course is followed objections may be raised.
page 627
QUESTION
BANANA CROP
“Bunchy Top.”
Mr J FRANCIS: MORETON, QUEENSLAND · NAT; UAP from 1931; LP from 1944
asked the Minister for Trade and Customs, upon notice -
What steps have been taken by the Bureau of Science and Industry to investigate the disease in bananas known as “ bunchy top “ ?
Mr AUSTIN CHAPMAN: Minister for Health · EDEN-MONARO, NEW SOUTH WALES · NAT
– The Director of the Institute of Science and Industry has recommended that the necessary funds be provided, and that recommendation has been referred to the Treasury, to ascertain whether such funds can be made available.
page 627
QUESTION
BUTTER IMPORTS
Mr CORSER: WIDE BAY, QUEENSLAND
asked the Minister for Trade and Customs, upon notice -
In view of the fact that his letter of the 15th June to me contained a statement that his Department had obtained a report from the Commonwealth Dairy Expert, in which it was stated that the expert was informed that one of the reasons assigned for the importation of butter from New Zealand was the use of Queensland timber, which was said to have in some cases resulted in wood tainting -
Is it a fact that Queensland hooppine has been used for very many years for butter boxes in tremendous quantities for Commonwealth and over-sea trades without any. such complaint having been received by the butter factories or exporters ?
Will the Minister cause inquiries to be made and take steps to have the statement as regards tainting refuted if found to be incorrect?
Mr AUSTIN CHAPMAN: NAT
– The answers to the honorable member’s questions are as follow: -
Yes.
Yes; inquiries are now being made as to the place of manufacture of the boxes complained of, and results will be communicated to the honorable member.
page 627
QUESTION
SULPHUR IMPORTS
Mr HILL: ECHUCA, VICTORIA
asked the Minister for Trade and Customs, upon notice -
Whether any sulphur other than the 500 tons admitted duty free for the Sulphide Corporation has been similarly admitted, or admitted at less duty than is provided under item 275 of the Customs Tariff 1921; if so -
by what provision was it so admitted; (b) to what extent was the duty reduced; (c) for what purpose was the sulphur imported; (d) by whom was it imported; (e) what was the quantity or quantities?
Mr AUSTIN CHAPMAN: NAT
– The answer to the honorable member’s question is as follows: -
Yes-
Tariff items 275 (A) (2) and 404.
As regards delivery under item 275 (A) (2) the reduction in duty was £2 10s. per ton, and as regards deliveries under item 404 the reduction was from £2 10s. per ton to 10 per cent, ad valorem, equalling approximately a reduction of £2 3s. per ton.
In addition to the 500 tons for the Sulphide Corporation, sulphur has been delivered under item 404 for the purposes and to the companies and in the quantities shown hereunder, Viz.: -
For ore concentration at Broken Hill- 1,043 tons - Broken Hill Prop. Co. Ltd. 1,218 tons - Amalgamated Zinc (De Bavay’s) Ltd.
This concession is a temporary one, and will be withdrawn immediately locally-produced sulphuric acid is available. The additional works and machinery are in course of erection at Broken Hill, and supplies of acid will be available shortly.
For the manufacture of superphosphate in South A ustralia - 844 tons - Cresco Fertilizers Co. Ltd., Adelaide. 917 tons- Wallaroo, Mr Lyell Co., Adelaide. 1,300 tons - Adelaide Fertilizers and Chemical Co., Adelaide.
This concession is a temporary one, and will be withdrawn immediately locally-produced sulphuric acid is available. A plant costing nearly £100,000 is in course of erection at Port Pirie, and will be shortly completed. It is expected acid will be available in October or November next. The superphosphate companies in South Australia have already completed lengthy agreements with the Electrolytic Zinc Company to take the locally-produced sulphuric acid as soon as it is ready.
For the manufacture of superphosphate in Western Australia - 6,478 tons -
Cuming Smith and Co.
Mr. Lyell Mining and Railway Co.
In addition, small quantities have been . delivered free under Tariff item 275 (A) (2) for various purposes such as the manufacture of sheep dip, fruit sprays, treatment of evaporated apples, rubber manufacture, all of which required sulphur in the form of free sulphur, which is not produced in Australia.
See reply to (e).
dee reply to (c).
page 628
QUESTION
WIRELESS BROADCASTING REGULATIONS
Mr C RILEY: COOK, NEW SOUTH WALES · ALP; FLP from 1931
asked the PostmasterGeneral, upon notice -
Will he make provision under the Wireless BroadcastingRegulations for the protection of homing pigeons against destruction by contact with aerial wires by issuing a regulation making it compulsory that corks be fixed on the aerials every 18 inches - similar to regulations at present existing in England?
Mr GIBSON: Postmaster-General · CORANGAMITE, VICTORIA · CP
– Provision as suggested has not been made, as it is considered such a regulation is unnecessary. If, however, it is found to be necessary later on, a suitable amendment may be made. The English regulations in my possession do not contain the provision referred to.
page 628
QUESTION
MARBLE IMPORTATIONS
Mr FORDE: CAPRICORNIA, QUEENSLAND
asked the Minister for Trade and Customs, upon notice -
Whether he will have the provisions of section 8 of the Customs Tariff (Industries Preservation) Act applied to Italian marble importations both of rough and finished marble, with a view to fostering the marble industry in Central Queensland, which is at present reported to be practically at a stand-still, owing to the existing inadequate protection?
Mr AUSTIN CHAPMAN: NAT
– This matter was inquired into last year, when it was found that the landed duty paid price of Italian marble was not less than the wholesale selling price of Australian marble, under which conditions no dumping duty was chargeable. The position is again being inquired into by the Tariff Board, with a view to ascertaining whether any alterations have taken place that would justify action under section 8 of the Customs Tariff (Industries Preservation) Act.
page 628
QUESTION
AUSTRALIAN CURRANTS
Mr GABB: ANGAS, SOUTH AUSTRALIA
asked the Minister for Trade and Customs, upon notice -
Whether an offer of £14 per ton preference on Australian currants and raisins was made by the Canadian Government, on a reciprocal basis.
If so, has the same been considered by the Tariff Board?
Will the House be given the conditions, of such preference, with an opportunity to discuss the same?
Mb. AUSTIN CHAPMAN.- The answers to the honor able member’s questions are as follow : -
Yes; subject to reciprocal concessions.
Yes.
Yes; when the negotiations have been finalized.
page 629
QUESTION
STUD STOCK
Mr FORDE:
asked the Prime Minister, upon notice -
Is it correct, as reported, that the Right Honorable W. M. Hughes, speaking as Leader of the Nationalist party in the recent elections at Maryborough, Queensland, said: - “There is only one way of improving our herds, by breeding from high-priced animals….. The Nationalist Government will introduce legislation designed to assist the producers by defraying the cost of transportation and quarantine of stud stock”?
If so, in view of the definite promise made in the foregoing report, will the Prime Minister reconsider the decision of his Cabinet not to honour the promise made by the Leader of the Nationalist Government before the General Election ?
Mr BRUCE: NAT
– The answers to the honorable member’s questions are as follow : -
Yes.
The matter will receive consideration.
page 629
QUESTION
BOILER PARTS
” Staggered Heads.”
Mr GABB:
asked the Minister for Trade and Customs, upon notice -
Whether a decision has been made in regard to restoration of duty on “ staggered heads “?
If so, what is such decision?
Mr AUSTIN CHAPMAN: NAT
– The answers to the honorable member’s questions are as follow: -
Yes.
The decision makes” staggered heads “ liable to duty under Tariff item 178 (c) at271/2 per cent, or 40 per cent., according to origin.
page 629
QUESTION
AUSTRALIAN JAMS
Mr MACKAY: LILLEY, QUEENSLAND
asked the Minister for Trade and Customs, upon notice -
What is the percentage of Australiangrown fruits processed into jams and canned fruits for export?
What are (a) the estimated quantity of added sugar contents per pound of jam and canned fruits, and (b) the cost of such sugar?
Is it a fact that a rebate of import duty is granted by the British Government on all Aus tralian jams and canned fruits containing sugar produced in the British Dominions?
Mr AUSTIN CHAPMAN: NAT
– The information is being obtained.
page 629
QUESTION
TELEPHONE CABINETS
Mr.C. RILEY asked the PostmasterGeneral, upon notice -
Will he please state what special advantages are claimed by his departmental officers for the adoption of the box-pattern public telephone cabinets, in New South Wales; and
Whether he will consider the advisability of altering this type of cabinet so as to provide more comfort and convenience to the users of these public telephones?
Mr GIBSON: CP
– The answers to the honorable member’s questions are as follow : -
The use of the box pattern of public telephone cabinets in New South Wales is limited to certain special cases. Among the advantages of this type of cabinet are that it is suitable for exposed or lonely places, and prevents the cabinet being used for purposes other than telephone . conversations.
It is not considered necessary to alter the Department’s practice where the necessity only warrants the box pattern of public telephone cabinet being used.
page 629
QUESTION
IMMIGRATION
Mr CHARLTON:
asked the Prime Minister, upon notice -
Are the statements true which are reported to have been made by Mr. John Thomson, Nationalist member, Parliament of Western Australia, on his return from the United Kingdom, adversely criticising the actions of the officials of Australia House in connexion with immigration matters? .
Has he also noticed the report of the further statements of this gentleman that -
The warmest friends of the Premier of Western Australia could not wax enthusiastic over the type of immigrant at present reaching that State ; and
Documents . and reports which have reached Government officials in Perth indicate that large numbers of immigrants who apply at Australia House for selection are sent to these agents to have their papers filled in. In one month an agent put through 500 applicants and, presumably, collected from shipping companies a bonus of £1 on each?
Mr BRUCE:
– I have seen a report in the Melbourne Argus of 2nd July regarding; certain statements alleged to have been made by Mr. John Thomson, but am unable to agree with the opinions expressed.
page 630
QUESTION
FRUIT POOL
London Agents
Dr MALONEY: MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936
asked the Minister for Trade and Customs, upon notice -
When the fruit “ Pool “ for 1921-1922 was established, did the former Prime Minister (Mr. W. M. Hughes) notify to the other members of the “ Pool,” and, if so, on what dates, the policy of the Government as to the appointment of a sole . selling agency in London?
What were the reasons for the Government adopting this policy?
Has such policy been changed by the present Government, and, if so, when was any notification given to the members of the “ Pool “ prior to the abandonment of the former policy of the Hughes Government?
Have the States which are members of the “ Pool “ been informed of any change of policy, and have they approved of such change?
Who is responsible for the recommendation to change such policy?
What was such recommendation, and by whom and when was it made?
Mr AUSTIN CHAPMAN: NAT
– The information is being obtained.
page 630
QUESTION
COMMONWEALTH SHIPPING LINE
steamer “ fordsdale.”
Mr THOMPSON: NEW ENGLAND, NEW SOUTH WALES
asked the -Prime Minister, upon notice -
Whether his attention has been drawn to recent criticisms in the press, particularly the newspapers of New South Wales, concerning the naming of the Commonwealth -steamer Fordsdale?
Will he inform the members of this House who was responsible for the selection of the name Fordsdale, and the reason for naming the largest cargo vessel yet built in Australia after a small town in Queensland?
Will he soo that the names chosen for Commonwealth vessels to be launched in the future are of a typically Australian character?
Will he, whenever practicable, give members of the Commonwealth Parliament an opportunity of suggesting the names of vessels of the Commonwealth Line before such vessels are launched?
Mr BRUCE: NAT
– The answers to the honorable member’s questions are as follow : -
Yes.
The general manager states that he followed the usual practice in naming various classes of steamers alphabetically. In the selection of a name for the “ F “ class steamer mentioned, what was considered a suitable locality was taken from the Postal Directory.
It isnot known what is meant by a name of typical Australian character, but the honorable member can rest assured that, in the selection of names, Australian localities will be chosen.
This is not considered advisable, but the general manager will be glad to receive any suggestions which may be forwarded direct to him.
page 630
QUESTION
MISS ETHEL CAMPBELL
Free Railway Pass
Mr BAYLEY: OXLEY, QUEENSLAND
asked the Prime Minister, upon notice -
Whether he will grant a pass on the railways, for the period of her stay in Australia, to “ The Durban Angel,” Miss Ethel Campbell, in recognition of the splendid work she did amongst the Australian troops who called at Durban?
Mr BRUCE: NAT
– If the request is made, the Commonwealth Government will follow the practice usual in similar cases, and approach the State Governments.
page 630
QUESTION
NEW STATES
Amendmentof Constitution
Mr THOMPSON:
asked the Prime Minister, upon notice -
Whether certain letters have been received from the Governments of New South Wales and Queensland, inviting the Commonwealth Government to take action to bring about - the amendment of the Constitution- in order to facilitate the creation of new States in New South Wales and Queensland?
If so, what action, if any, has the Commonwealth Government taken to comply with the suggestions or -proposals made by the States referred to?
Mr BRUCE: NAT
– The answers to the honorable member’s questions are as follow: -
Yes.
In both cases the respective Governments were informed of the action it was necessary for them to take to comply with the requirements of the Constitution.
page 630
PAPERS
The following papers were pre sented : -
Lands Acquisition Act -
Land acquired at Merrylands, New South Wales, for Postal purposes.
Railways Act - By-laws Nos. 25 and 26.
War Service Homes Act -
Land acquired at Orange, New South Wales.
page 630
COMMONWEALTH SHIPPING BILL
In Committee (Consideration of GovernorGeneral’s message) :
Motion (by Mr. Bruce) agreed to -
That it is expedient that an appropriation of revenue be made for the purposes of a Bill for an Act to provide for the establishment of a Commonwealth Shipping Line and for other purposes.
Resolution reported.
Standing Orders suspended, and resolution adopted.
Ordered-
That Mr. Bruce and Mr. Groom do prepare and bring in a Bill to carry out the foregoing resolution.
Bill presented by Mr. Bruce, and read a first time.
page 631
NATIONAL DEBT SINKING FUND BILL
In Committee (Consideration resumed from 3rd July, vide page 595)..
Clauses 10 and 11 agreed to.
Clause 12 (Time for making payments).
Mr CHARLTON: Hunter
.- The clause provides that the Treasurer may make payments into the National Debt Sinking Fund at any time during the financial year. Seeing that the Bill provides for annual contributions to the fund, surely the payments should be made as early as possible in the financial year. The Commission might be able, if it had money in hand, to take advantage of favorable circumstances, but might be prevented from doing so if the Treasurer was not disposed to make the annual payment until perhaps ten or eleven months after the commencement of the financial year. Why is it left to the Treasurer to make the payments whenever he likes during the financial year ?
Dr EARLE PAGE: Treasurer · Cowper · CP
– The Treasurer of the day will be the Chairman of the National Debt Sinking Fund Commission, and the clause is so worded that payments may be made at such times as the Treasurer may determine, having regard to the condition of the revenue. The matter must be left in his hands, because he is responsible for the whole of. the finances of the Commonwealth. It would be inexpedient and possibly detrimental to the interests of the Commonwealth to fix a definite date for making the payments.
Clause agreed to,
Clause 13 agreed to.
Clause 14 (Merging of Loans Sinking Fund into National Debt Sinking Fund).
Mr FENTON: Maribyrnong
I think the Treasurer (Dr. Earle Page) promised yesterday to inform the Committee of the amount of money already in the Loans Sinking Fund, which, by the passing of this clause, will be merged into the National Debt Sinking Fund.
Dr EARLE PAGE: Treasurer · Cowper · CP
– The amount standing to the credit of the Loans Sinking Fund is £2,270,000, of which £968,000 has been invested in new loans.
Clause agreed to.
Clause 15 agreed to.
Clause 16 -
The Commission shall purchase at par all Commonwealth stock and bonds accepted by the Treasurer in payment of probate and succession duty, and, if surrendered before the date of maturity, all Commonwealth stock inscribed in the name of the Public Trustee.
Mr GABB: Angas
.- I move-
That the word “ par “ be omitted,, with a view to insert in lieu thereof the words “ current market rates.”
I propose this amendment, because I am opposed to the Government doing anything to encourage those who try to avoid payment of taxation. As I said when speaking on the second reading, executors of estates very often purchase stock at £92, and with it pay succession duties at its face value of £100. It may be objected that this is not the proper time to raise the question, but if this amendment is accepted, it will, I take it, be an instruction to the Treasurer and the Treasury officials that cannot be lightly regarded. I do not wish honorable members opposite to imagine that I am advocating repudiation. If this amendment is carried, I shall move a new sub-clause providing that where a testator held bonds before death, they shall be accepted in payment of dutyat their face value. My object now is to reach those who endeavour to dodge taxation in the way I have indicated. A second reason why I submit this amendment is that I desire the Commission to have full freedom to do the best it can with the funds intrusted to it. As between the Treasurer and the Commission, I would rather leave such matters to the latter. I quite expect that those honorable members who represent big interests will oppose this amendment, but I consider it my duty to submit it.
Mr WHITSITT: Darwin
– I trust the amendment will not be accepted, for the simple reason that trustees and executors have no legal right to trade in bonds until probate is granted .
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– I regard the amendment as a very fair one. If bonds are bought by executors at ?95, and tendered at their face value of ?100 in payment of duty, the Government is at a loss of ?5, and it is only fair that for such a purpose bonds should be taken only at their value on the market. Executors of estates and others are much inclined to “ get at “ the Government in this and other ways, and it is for the Treasurer to protect the revenue. It is quite right that where a testator has invested in bonds, these should be accepted in payment of duty, but the advantage should not extend to others.
Progress reported.
Sitting suspended from 3.5 to 3.45 p.m.
page 632
GOVERNOR-GENERAL’S SPEECH: PRESENTATION OF ADDRESSINREPLY
Mr SPEAKER (Rt Hon W A Watt:
– I have to report that, accompanied by honorable members, I waited upon His Excellency the Governor-General and presented to him the Address-in-Reply to his Excellency’s Speech at the opening of Parliament, agreed to by the House on the 22nd June. His Excellency was pleased to make the following reply:-
Mr. Speaker and Gentlemen, ;
I receive with much pleasure the Address which has been adopted by the House of Bepresentatives in ‘ reply to the Speech which I delivered on the occasion of the opening of the second session of the ninth Parliament of the Commonwealth, and desire to thank you for your expression of lovalty to His Majesty the King.
“NATIONAL DEBT SINKING FUND BILL.
In Committee: (Consideration resumed) .
Dr EARLE PAGE: Treasurer · Cowper · CP
– The honorable member for Angas has proposed as an amendment that Commonwealth stock and bonds, accepted in payment of probate duty, need not be taken over by the Sinking Fund Commissioners at par.- I remind honorable members that the prospectuses of the Commonwealth loans have contained an unconditional promise that stock and bonds would be accepted at par in payment of probate duty. That promise was inserted to make the bonds more easily negotiable, and thus encourage people to subscribe to the loans. The only effect of the proposed amendment would be to embarrass the Treasury,’ because whatever the Sinking Fund Commissioners may do, the Treasury is bound by the terms of the prospectuses to accept such stock and bonds for probate (purposes at par.
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– Cannot Parliament amend those conditions?
Dr EARLE PAGE:
– We cannot alter that contract ; it is part of the terms upon which the public were induced to subscribe to the loans. Moreover, the Sinking Fund is protected by the provision that in respect of all bonds cancelled a payment of 5per cent, shall be made to the fund. The clause as drafted is a proper one. The suggested amendment would not affect the Sinking Fund.
Mr FENTON: Maribyrnong
. -Manyrichpeople, now deceased, were too lacking in patriotism during their lifetime to subscribe to Commonwealth loans, and it is quite likely that those who are administering their estates are following the same policy. The executors or lawyers or others, who control the estates of such deceased persons, finding they are required to pay ?10,000, ?15,000, or ?100,000 as probate duty, purchase Commonwealth bonds at ?95 or even ?91. The bonds are paid into the Treasury in payment of probate duty, and are accepted as worth ?100 each.
Dr Earle Page:
– That is done under a definite contract which the amendment will not alter.
Mr FENTON:
– The amendment isso drafted that it will provide an opportunity of exposing the practices I am describing. Although the Treasurer professes tobe careful of every penny of Commonwealth funds he is prepared to perpetuate a bad arrangement made by his predecessors. We have no objection to bonds ‘bought by a person during his lifetime being accepted at par value in payment of probate duty on his estate.
Mr Austin Chapman:
– They mustbe accepted.
Mr FENTON:
– Yes. But we object to executors of men who, in their lifetime, were too mean to contribute a penny to the Commonwealth loans, buying up Commonwealth bonds and paying off £100 of probate duty with stock that cost them, perhaps, only £91.
Mr Austin Chapman:
– The amendment will not alter that condition.
Mr Mackay:
– The fact that the bonds cost the executors only £91 does not occasion any loss to the Commonwealth when it accepts them at par in payment of probate duty.
Mr FENTON:
– But the Commissioners to be created under this Bill will be required to pay the Treasury £100 for such bonds. Why should not the Commissioners ‘be able to go on the market from time to time and purchase bonds at current rates?
Dr Earle Page:
– That power is given in succeeding clauses.
Mr FENTON:
– Yes. But the Treasury may accept in payment of probate duty bonds of a face value of £500,000, but worth in the open market many thousands of pounds less. Yetthe Commissioners are required to purchase those bonds from the Treasury at par. It is distinctly wrongs to bind the Commissioners in that way. If past Treasurers made a bad bargain there is no justification for perpetuating it. Let the Treasury bear its own burden, and not shift it to the shoulders of the Commission. If unreasonable conditions were promised to those who took up Commonwealth, stock it is time they were withdrawn. It will be remembered that we said that these loans should be free from Commonwealth income tax, but we now are agreed that it is undesirable to continue that practice, because huge sums are paid to loan subscribers every half year by way of interest, and the Commonwealth is unable to tax those sums.
Mr Whitsitt:
– The Labour party were responsible for the first war loan.
Mr FENTON:
– I do not care who was responsible for it. As we grow older we should become wiser.
Mr Whitsitt:
– It was silly of the Labour Government to make the firstloan tax free.
Mr FENTON:
– I am prepared to to agree with the honorable member, but I say that it is equally silly to pass in this Billa clause to provide that bonds which have been bought at £95 shall be accepted by the Treasurer at their face value of £100. We should not tie the hands of the Commissioners under this Bill. Under this provision, the Treasurer may be cheated out of £5 on a £100 bond. That is not fair, and if we made a mistake in the promises given upon the floating of these loans, it is about time we rectified that mistake. The amendment should be agreed to. It would liberalize, the Bill, untie the hands of the Commissioners, and -be of great advantage to tha taxpayers of this country.
Mr BLAKELEY: Darling
.- I hope that the Treasurer will not persist in the attitude he has adopted, for the reason that obviously a wrong will be done to the people if the clause is agreed to as it stands. The amendment submitted by the honorable member for Angas (Mr. Gabb) embodies a wise provision, and, notwithstanding the assertion of the Treasurer that it would violate, an obligation entered into by the Commonwealth, it should he carried. The Treasurer states that there is an obligation towards those who hold our bonds. I grant that there is such an obligation to the original holders of the bonds. No honorable member on this side has any desire whatever to repudiate the obligation of the Commonwealth towardspeople. But there has been trafficking inthese bonds, and the amendment, if agreed to, will enable us to deal properly with cases in which trafficking has taken place - not dishonestly, but as a good business proposition. Solicitors and trustees of estates have been carrying on this trafficking for years past. If “ A “ purchases bonds at £98 in the ordinary course of investment, and when he dies they are included in his estate, no one would object to their being accepted at par. What we object to is that he should not take up bonds until it is expected that he will shortly die, and should then purchase them at £91 or £92, knowing that in ten or twelve months, or in four or five years, they will be worth £100. The Treasurer, by accepting the amendment, could provide against trafficking in bonds to the loss of the Commonwealth. I object to people who hold bonds for which they did not subscribe out of a sense of patriotic duty, but which they purchased - as a business proposition, being given the same advantage as original holders of bonds. The Treasurer has not dealt with this phase of the question. He dealt with the obligation to original holders of bonds, and we agree that that obligation should be honoured, but, in the case of trafficking in bonds, the Commonwealth Government should take action to protect the people. I hope the Treasurer will accept the amendment. We look to the honorable gentleman for the proper protection of the people’s interests. Under the clause as it stands, a hardship will be imposed upon the people of Australia in order that wealthy people may make money out of the Commonwealth, which they should not be allowed to make.
Mr LAZZARINI: Werriwa
.- The Treasurer (Dr. Earle Page) has pointed out that the sinking fund would not suffer, because 5 per cent, would be paid into the fund on all redeemed bonds. Honorable members on this side are thinking, not only of the money that goes into the sinking fund, but of the people who have to find the money to pay interest on these bonds, and to pay whatever will be paid into the sinking fund. If the Treasurer will agree to the amendment, and in this way can get £100 for £92, he will have to tax the people of the country 5 per cent, only on £92, instead of £100. This will cut both ways. The honorable member for Angas (Mr. Gabb) clearly indicated that he did not intend that his amendment should apply to original holders of bonds. They should be given the benefit of all promises made to them. When Sir Joseph Cook was Treasurer, I asked him why he did not go on the market and buy war bonds for £92 or £93 instead of acceptingbonds at par. His reply was the same as we have heard by interjection this afternoon, that the Commonwealth lost nothing by. the action he took. It is obvious that if £100 is paid by the Commonwealth for a bond quoted at £95 it is bad business, because the buyer loses £5. Treasury bonds are gradually getting more into the hands of the large investors, who probably did not put a penny into the war loans when the bonds were issued, but who, when the market fell, saw an opportunity to make a good deal by purchasing them. The very fact of a lot of Commonwealth securities being on the market causes a slump, and if the Treasury would purchase them at the market rate it would tend to stabilize the bonds. The amendment has everything to recommend it. Its acceptance ‘ would not jeopardize the interests of the Commonwealth in any way. All that could be said against ‘it would be in favour of conferring a privilege upon big investors and people who probably failed to subscribe to the war loans.
Mr GABB: Angas
.- The only argument advanced by the Treasurer (Dr. Earle Page) against the amendment seems to be a weak one. He bases the defence of his position on the prospectus that was originally issued ; but I ask him if the prospectus was intended to encourage the executors of estates to purchase bonds on the open market, and ten-‘ der them in payment of probate duty. Certainly it was not. There was an agreement between the original purchasers and the Government, and I am quite prepared to have a sub-clause inserted for the protection of those investors, but I do not wish the Committee to play into the hands of executors of large estates. I do not. expect the amendment to be carried, because I feel sure that the Government which sold the Commonwealth Woollen Mills will again look after the interests of “ big business” on the present occasion.
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– I hope that the Treasurer (Dr. Earle Page) will reconsider his decision. The pledge was given to the original subscribers that the bonds would be repurchased at par, and it should be fulfilled.
Dr Earle Page:
– No alteration in this Bill will affect the Treasury in that respect.
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– An amending Act overrides an existing measure to the extent of its inconsistency with it. I regret that the Attorney-General (Mr. Groom) is not present. There should be no difficulty in arranging that where the holders of bonds are not the original holders the bonds should be accepted, not at par, but at their market value. If persons were made aware of such a condition when they entered the market, there would be no injustice done to them. Rather than press the clause through Committee, might we not postpone it for the present?
Dr Earle Page:
– The Government are bound, no matter whatever this Committee does, to accept bonds and stock at its face value.
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– No doubt, the original purchasers are entitled to par value, but where’ investors have bought bonds with a view to making money out of them, this Committee should take action to protect the financial interests of the Commonwealth. I venture to’ say that any legal man could easily draft a provision that would protect the Commonwealth without inflicting hardship on a single bondholder.
Mr GREGORY: Swan
.- Are not honorable members opposite raising objections in the wrong place ? Although the conditions applying to bonds tendered in payment of probate duty may need amendment, this is not the proper time to do anything. The Treasurer, under another Act, is compelled to accept bonds in payment of probate duty.
Mr Fenton:
– Not under another Act.
Mr C RILEY: COOK, NEW SOUTH WALES · ALP; FLP from 1931
– Under the loan conditions.
Mr Gabb:
– We are trying to protect the Commission.
Mr GREGORY:
– I am not sure whether the obligation to accept bonds in payment of probate duty was imposed by a Loan Act or by a special Act dealing with ‘probate duties. At any rate, the Treasurer is compelled to accept the bonds, and, having done so, the Commission should also accept them at par.
Mr Lazzarini:
– Does the honorable member argue that the Treasurer is compelled to’ accept these bonds in connexion with the sinking’ fund ?
Mr GREGORY:
– No, but in payment of probate and succession duties, and having provided for that, surely it is wise to accept them on the same basis in connexion with this fund.
Mr Blakeley:
– Does the honorable member approve of the custom which has arisen ?
Mr GREGORY:
– No. There is a good deal in what has been suggested by honorable members opposite, as it would be very unfair if the executors of a deceased person, whose estate was worth £100,000, purchased bonds below par and handed them over at par in payment of probate and succession duties. But an amendment of this clause would not affect the position. What is needed is an amendment of the Probate and Succession Duties Act. Whilst the Treasurer is compelled to accept, at par, bonds in payment of probate and succession duties they should be accepted at par as payment to the fund to be established under this measure.
Mr PROWSE: Forrest
.- An amendment in the direction indicated would weaken the Bill. I quite agree with the opinion expressed by the honorable’ member for Swan (Mr. Gregory), that if there is an anomaly in another Act it cannot be rectified by amending this clause. Honorable members appear to have lost sight of the fact that the Government have made themselves responsible for acceptance, at par, of the bonds issued, and sooner or later, irrespective of the price at which they may have been available at intervening periods, they will have to redeem them at their full value. Although wo are dealing with this phase of the question under this Bill, Parliament has already passed an Act under which bonds are accepted at par. If a mistake was made, it was in allowing the payment of probate and succession duties to be made on the par value of bonds; but that has nothing to do with this provision. What is the law at present must stand until amended.
Mr WEST: East Sydney
.- The honorable member for Forrest (Mr. Prowse) contends that if a mistake has been made in another Act it should be perpetuated. Reference has been made to the sharp practices adopted of some persons, and because honorable members on this side have criticised such actions, it is suggested that we are adopting an unreasonable attitude. When the succession and probate duties were under discussion in this House some years ago I endeavoured to carry an amendment somewhat similar to that indicated by the honorable member for Angas (Mr. Gabb). Those living in Sydney and other large commercial centres are aware that there are men living on the business of trafficking in stock, and who are robbing the taxpayers whenever the opportunity offers. They are really tax dodgers, and I am surprised at the honorable member for Forrest supporting such actions. In Sydney and elsewhere there are men who, whenever a wealthy person dies, go to the Supreme Court and ascertain the value of the estate, arid then on behalf of the executors’ solicitors, make arrangements with Mr. Palmer, Mr. Willis, or some other gentleman dealing in these securities, to purchase bonds at, say, £95, and then dispose of them to the Government at £100. Honorable members on this side are fully aware of what is being done, and if these sharp practices can be prevented the liability of the taxpayers will be reduced. The honorable member for Angas (Mr. Gabb), and the honorable member for Maribyrnong (Mr. Fenton), have brought under notice a defect in the Bill which is worthy of consideration. In a few years the market value of loans may decline,, and in that event why should individuals, and not the Government, get the benefit ? The man who is dead will not trouble about it. The amendment is wise, sound, and logical, and members of the Opposition ought to be commended, even by the Treasurer, for proposing it. If the executors of a deceased man have to make a payment to the Treasurer of £3,000, and if .they do it by means of bonds purchased at £94 per £100, revenue is lost to the extent of £180. I put a few hundred pounds into war scrip, and paid face value. Why should the executors of a deceased man, who did nothing during the war but make profits by doubling rents and profiteering in goods, be allowed to evade payment of probate duty by buying bonds at less than par? This clause is another unsound financial proposal which has emanated from the Government. It would be easy for the Treasurer to say that a clause would be framed to meet the views of members on this side. Whether he does this or not, members of the Opposition will have the satisfaction of knowing that they have done their duty.
Mr PATERSON: Gippsland
.- If members of the Committee were discussing a Probate Duty Bill the arguments of members of the Opposition would be relevant, but it appears to me that we are occupying time discussing something which should be the subject-matter of another Bill. The amendment, even if agreed to, would not abolish any privilege which those paying probate duty would otherwise get, for the reason that the Treasurer must accept Commonwealth bonds at par in payment of pro bate duty. The clause merely provides that the Treasurer shall be credited with an equal amount when handing the money over to the Sinking Fund Commission. It seems to me that we have got the clause a little out of perspective, and are discussing points which properly have relation to a Probate Duty Bill, and not to the Bill under discussion.
Mr MANN: Perth
.- I agree that bonds should not be purchased for the deliberate purpose of avoiding payment of probate duty, but I cannot see that the obligation already entered into can be cancelled. I understand that probate duty is paid under another Act, the provisions of which have a bearing on the matter under discussion. If that Act is altered in the future to provide that the Public Trustee must accept bonds only at their market value, instead of at their face value, the Sinking Fund Commission, if compelled to buy at par, would be at a disadvantage. I suggest that the difficulty could be overcome by adding the words “ at par “ after the words “ accepted by the Treasurer,” so that the clause would read -
The Commission shall purchase at par all Commonwealth stock and bonds accepted by the Treasurer at par in payment of probate and succession duty.
This would maintain the present position, and, should the Estates Duty Act be altered to achieve the end desired by members of the Opposition, the Sinking Fund Commission would still be protected.
Mr. FENTON (Maribyrnong [4.32].- I think the Treasurer (Dr. Earle Page) might take an example from previous Treasurers who, when an anomaly in a Bill, whereby the revenue would be depleted, has been pointed out to them, have undertaken to submit the necessary amendment. If the Treasurer would make such a promise the honorable member for Angas (Mr. Gabb) would, no doubt, be willing to withdraw his amendment.
Mr Gabb:
– Such a promise would meet only half the case.
Mr FENTON:
– I admit that. If the amendment is not accepted by the Committee, will the Treasurer be prepared to accept an amendment to strike out the word “ shall “ and insert “ may “ in its place ?
Mr Mann:
– The object of the clause is to protect the Public Trustee. The alteration of the -word. ‘ ‘ shall “ to “ may “ would not do that.
Mr FENTON:
– I believe in the responsibility being placed upon the proper shoulders. If the ‘ Treasurer is prepared to accept bonds in payment of probate and succession duties-
Dr Earle Page:
– Whether the Treasurer wants to accept bonds or not is beside the question; he must accept them for two reasons, because an Act of Parliament says so,, and because a definite contract has been entered into.
Mr FENTON:
– Does such an undertaking apply to men who, not having taken any part in subscribing to war loans, buy bonds when they see their death looming ahead, so that, through their’ executors, they may once more “ get at “ their country by evading payment of portion of their probate duty]
Dr Earle Page:
– The contract “ holds so long as the bonds are current.
Mr FENTON:
– I am surprised that the Treasurer should shut his eyes to such glaring anomalies, which simply permit and encourage trafficking and gambling at the “ death knock “ with the bonds of the Commonwealth. An assurance was given to persons who purchased bonds when loans were floated, or perhaps at a later period, that they would be accepted in payment of estate duty; but for the Government to permit others, who take up bonds at the last moment, to so use them is to connive at defrauding the public revenue. There are certain people in every State capital who, when they read of the death of some wealthy person, offer to purchase, for a commission, bonds with which the probate duties may be paid.
Mr Watson:
– Striking out the word “par “ will not obviate that.
Mr FENTON:
– It is well known that when certain of the war loans were floated compulsion was threatened in order that wealthy people, and those in control of valuable estates, should not evade their duty to assist the country financially.
Mr Watson:
– What is your suggestion ?
Mr FENTON:
– I suggest that the Treasurer, as other Treasurers have done in similar circumstances, shall give an undertaking that at the earliest possible moment he will introduce legislation to remove these anomalies. The Treasurer, however, says nothing, but, apparently, takes the view that he has no power to act in the manner suggested, although he has the care of the public finances. Such an amendment of the law would, I believe, receive unanimous support as an honest effort to make people pay their just dues. Why should the Treasurer be allowed to lay this mandate on the Commission ? Why place difficulties in tlie way of the Commission? I remind the Treasurer that from the Corner where he himself used to sit the warmest approval is given to the suggestion that he should promise to introduce at the earliest opportunity such legislation as I have suggested.
Mr LATHAM: Kooyong
.- This clause refers to probate and succession duties, but I think I am right in saying that there are neither under the law of the Commonwealth, and that the Treasury does not accept bonds’in’payment of such duties. There is an estate duty, which is distinct in character as well as in name, from a proba’te and a succession duty, and, therefore, I suggest that the clause as drafted will not achieve the object intended. So far as I know, there is no law of the Commonwealth which enacts that bonds shall be accepted at their face value in payment of duty, but there was the clear and definite undertaking in prospectuses which became a contract with the bond-holders, not that the bonds subscribed for by a holder would be accepted in payment of duty on his estate, but that all bonds would be accepted at their face value in payment of estate duty. There was a contract, not that the subscriber’s bonds would be accepted, but that any Commonwealth bonds would at all times be accepted from anybody at their face value in payment of duties. This condition largely affects the market value of the bonds, and an alteration of it would involve a repudiation of a definite promise and- undertaking. Many members of the Committee think that the promise was foolish, just as very m’any think that an error was made when the interest on certain loans was made free of taxation. But the undertaking having been given, it must be observed, and no amendment of this clause can affect it. The only way in which it can be withdrawn is by passing a special measure to provide that the Government shall not be bound by any undertaking given in the Commonwealth Loan .prospectus. I doubt whether this Committee would be prepared to pass legislation of that character.
Dr EARLE PAGE: Treasurer · Cowper · CP
– I am prepared to accept the amendment suggested by the honorable member for Perth (Mr. Mann) that the words “ at .par “ be inserted after “ accepted “. If that amendment be made, and legislation such as was outlined by the honorable member for Kooyong (Mr. Latham) be enacted subsequently, the clause will !be perfectly in order. The contention of the honorable member in regard to the use of the words “probate and succession duty” is strictly correct, but it has ‘become customary to use those words in our legislation, and, so far as I know, they have not been questioned hitherto. The -whole of the argument intimated by the honorable member for Angas (Mr. Gabb) is beside the question. A definite contract was made on the prospectuses that bonds would be accepted at par in payment of probate duty, and no matter into whose hands the bonds “fall the contract persists, and must be honoured ‘by the Commonwealth. When the Treasurer transfers those bonds to the Sinking Fund, and they are cancelled, he has to pay the Commissioners 5 per cent, on the face value of the stock.
Mr Prowse:
– Will not the Treasurer agree to the suggestion made by the honorable member for Kooyong to make the wording of the clause strictly legal?
Dr EARLE PAGE:
– In order that’ there may be no ambiguity about the wording of the clause, I suggest that it be postponed.
Clause postponed.
Clause 17 agreed to.
Clause 18 (Investment of National Debt Sinking Fund). -
Mr GABB: Angas
.-Clause 17 provides that the Commission may apply the National Debt Sinking Fund in purchasing or redeeming any Commonwealth securities, Or in redeeming any other portion of the debt, and that repurchased or redeemed securities, shall not be reissued, “‘but shall be cancelled.” The clause now before the. Committee seems to contradict the preceding clause, for it provides that the Commission may invest any money standing at the credit of the fund in the purchase of securities, “ and may at any time sell such securities.”
Mr Paterson:
– Look at sub-clause
Mr GABB:
– That sub-clause says that the Commission shall invest moneys only, if it is more profitable so to do than to purchase or redeem Commonwealth securities. It is hardly likely that it will be profitable for the Commission to dispose of Commonwealth bonds, and buy up other bonds, but even if there should be a possible benefit to be derived from that policy, it is debarred by the definite provision in clause 17 that Commonwealth securities, when purchased, shall be cancelled.
Dr EARLE PAGE: Treasurer · Cowper · CP
.- Clause 17 and 18 deal with two different matters. The former sets out the exact purposes of the Sinking Fund, and states that securities which have been repurchased or redeemed shall not be re-issued, but shall be cancelled, and the amoun<t of the debt reduced accordingly. Clause 18 deals with the investment of funds in the possession of the Commission. It may not be wise, at a particular time, to redeem a debt and cancel it, and the Commission is given power to invest money when greater ‘ benefit will accrue to the fund by so doing. This provision is inserted in the interests of the fund’ rather than of the Treasurer. There may be occasions when, owing to high market prices or the imminent maturity of bonds, it will be better for the Commission to invest the funds at its disposal than to employ them in the redemption of stock.
Mr Mann:
– Will the Commonwealth pay double interest on money so invested ?
Dr EARLE PAGE:
– No. The 5- per cent, interest provided for in clause 9 applies only to bonds that are cancelled.
Mr Mann:
– When the Commission is buying, it must state whether the pur- chase is for the purpose of cancellation or investment?
Dr EARLE PAGE:
– Yes.
Clause agreed to.
Clauses 19 and 20 agreed to.
Postponed clause 16 -
The Commission shall purchase at par all Commonwealth stock and bonds accepted by the Treasurer in payment of probate andsuccession duty, and, if surrendered before the date of maturity, all Commonwealth stock inscribed in, the name of the public trustee.
Upon which Mr. Gabb had moved -
That the word “ par “ be omitted with a view to insert in lieu thereof the words “ current market rates.”
Question - That the word proposed to be omitted stand part of the clause - put. The Committee divided.
AYES: 34
NOES: 21
Majority . . . . 13
AYES
NOES
Question so resolved in the affirmative.
Amendment negatived.
Amendments (by Dr. Earle Page) agreed to -
That after the word “ accepted “ the words “ at par “ be inserted.
That the word “ and,” line 3, be left out.
That the words “ and estate “ be inserted after the word “ succession “.
Clause, as amended, agreed to.
Title agreed to.
Bill reported with amendments.
Standing Orders suspended.
Motion (by Dr. Earle Page) proposed -
That the report be now adopted.
Mr WEST: East Sydney
.- I move -
That the Bill be recommitted for the reconsideration of clause 18.
Sub-clause 3 of clause 18 provides that, the Commission may invest any moneys to the credit of the Fund by placing such moneys on deposit in any bank. The opinion is gaining ground very strongly in this country that all financial transactions of the ‘Commonwealth Government should be carried out through the Commonwealth Bank. I do not wish to go into the history of the Bank or to refer to the proposals which sooner or later must be considered by this House to extend its powers. Honorable members know that the time will shortly arrive when the Commonwealth Bank must be lookedto to perform . many functions which it does not at present perform. I desire by the recommittal of clause 18 to give honorable members an opportunity to provide that all transactions under this Bill shall be carried out through the Commonwealth Bank. We have agreed to the appointment of Commissioners of the National Debt Sinking Fund, who will fee servants of the people, as we are ourselves, and I propose that we should instruct those Commissioners to conduct our financial affairs solely through the Commonwealth Bank. I know that honorable members on this side, and a great many on the other side also, agree with my contention that the financial affairs of the Commonwealth should be carried on through this Bank.
Mr SPEAKER (Rt Hon W A Watt:
– Order ! The honorable member is not in order in discussing the merits of the amendment he desires. He may only give his reasons for the recommittal of the Bill.
Mr WEST:
– I am not able at this stage to enumerate the advantages of the proposal I intend to make, but I believe that it is ‘the opinion of the people generally that all the Government’s financial business should be done through their own Bank, of which all the members of this House are shareholders.
Dr EARLE PAGE: Treasurer · Cowper · CP
– I regret to find it necessary to oppose the recommittal of the Bill for the purpose suggested by the honorable member for East Sydney (My. West). The reason is that it is unnecessary and impracticable to do what he suggests. Under -the Bill it is provided that the Governor of the Commonwealth Bank shall be one of the members of the Commission. It is not our intention that anything shall be done under this Bill through any other bank if the Commonwealth Bank is available. Honorable members are aware that the Commonwealth Bank is the bank of the Federal Government and practically the whole of the financial work of the Government is done through that Bank. I point out that much of the Fund will be located at times at places where there may be no branch of the Commonwealth Bank. If the honorable member’s suggestion were adopted it might on occasion be impossible to take advantage of favorable opportunities for the investment of these funds in, say, New York, India, or other places. The amendment which the honorable member has expressed his desire to move , would unduly restrict the opportunities for investment of these funds. Honorable members would be well advised to leave the matter in the hands of the Commission they have themselves provided for in the Bill.
Mr LATHAM: Kooyong
.- Unless the Treasurer can explain a difficulty which has occurred to me, and which has been referred to by honorable members on the other side, I would ask him to consent to the recommittal of clause 18. Sub-clause 2 of clause 17 provides that-
Repurchased or redeemed securities shall not bere-issued, but shall be cancelled, and the amount of the debt shall be reduced accordingly
Sub-clause 1 of clause 18 provides that -
Subject to this section, the Commission may invest any moneys standing at the credit of the National Debt Sinking Fund in the purchase of any securities of, or guarantees by, the Government of the United Kingdom, or the Government of the Commonwealth, or the Government of any State, and may at any time sell such securities.
As I understand the matter at present, I find it very difficult to reconcile these two provisions - one saying that if a Commonwealth security is purchased by what is called repurchase, it shall be cancelled, and the other saying that such a security may be sold. It may be that there is some explanation of the apparent inconsistency, but at present I am unable to find it.
Dr EARLE PAGE: Treasurer · Cowper · CP
– I regret that the honorable member for Kooyong (Mr. Latham) did not hear me make’ a detailed explanation of these provisions. Clause 17 deals with quite a different matter from that dealt with in clause 16.
Mr SPEAKER:
– Order ! The honorable gentleman has already spoken.
Mr FENTON: Maribyrnong
.- I regret that the Government are unable to agree to the recommittal of clause 18. The National Debt Sinking Fund is going to benefit to the extent of one-half the profits of the Commonwealth Bank, and, in the circumstances, it is but right that all possible Government financial business should be done through that Bank. The Treasurer (Dr. Earle Page) has said that it may be necessary to invest these funds in some part of the world where there is no’ branch of the Commonwealth Bank, but the circulars issued by the Bank from time to time contain a long list of agencies, including the finest hanking institutions in all parts of the world. As the Bank will materially assist the Fund for the extinction of the national debt, honorable members shouldbe unanimous in the desire to see that all the financial -business of the Government is done through that institution.
Mr WHITSITT: Darwin
.- At times the Commonwealth Bank may have more money available than it can profitably invest, and it is reasonable to give the Commission power to place money standing at credit of the National DebtSinking Fund elsewhere at a higher rate of interest than might otherwise be obtained. The Commonwealth Bank cannot transact all Commonwealth business.
Mr Mahony:
– It can.
Mr WHITSITT:
– Then why has it not been instrumental in renewing or redeeming all Commonwealth loans ? Because sufficient capital was not available. Private banking institutions have ‘ been in existence a longer period than the Commonwealth Bank, and have taken a considerable time to secure the business which Lhey now handle. The Commonwealth Bank will undoubtedly grow, but it is possible that occasions may arise when it may have more money on deposit than itcan satisfactorily place. In these circumstances I trust the motion of the honorable member will not be agreed to.
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
. -I trust the Government will not persist in objecting to the recommittal of the Bill, because until that is done we cannot fully discuss the point raised by the honorable member for East Sydney (Mr. West). If the Treasurer (Dr. Earle Page) will allow the Bill to be recommitted, and will submit an amendment tothe effect that all the business possible shall be handled by the Commonwealth Bank, it will satisfy honorable members on this side. One half of the profits derived by the Commonwealth Bank are to be placed to the credit of the National Debt Sinking Fund, and if business is done through private banking institutions the profit of the Commonwealth Bank will consequently be reduced.
Question - That the Bill be recommitted - put. TheHouse divided.
Ayes . . . . . . 24
Noes . . . . . . 36
Majority . . . . 12
In division -
Mr SPEAKER:
– No.
Question so resolved in the negative.
Report adopted.
Bill read a third time.
page 641
COMMONWEALTH SHIPPING BILL
Second Reading
Mr BRUCE: Prime Minister and Minister for External Affairs · Flinders · NAT
– I move-
That the Bill be now read a second time.
The measure provides for handing over the Commonwealth Shipping Line and the Cockatoo Island Dockyard to a Board. A Bill dealing with the transfer of the Line to an inde- pendent Board was introduced into this House some time ago, but was not proceeded with. The whole position was considered at very great length in November, 1921, and, after a full review of the circumstances, the House clearly expressed the opinion that the Line should bc retained, but it was quite apparent, from the attitude then adopted, that honorable members were of opinion that an alteration should be made in the method of control. I do not propose to review the history of the Line from its inception, as a full statement of the financial position of the Line at 30th June, 1921, and its transactions to that date, was given in the course of the debate referred to. I wish, however, to refer very briefly to the circumstances in which the Line came into existence, and the benefit it has been to Australia. The vessels which formed the nucleus of the fleet were purchased in ‘ 1916. Honorable gentlemen will remember that that was the period when the German submarine campaign first began to assume an intensive character. As a result of that campaign Great Britain waa forced to employ the greater part of her shipping tonnage in supplying her imperative needs in connexion with the war. Ships were needed for the transport of troops and munitions of war, and for carrying the food supplies of Great Britain and her Allies. It became apparent that Australia, owing to her isolation, and her great distance from the markets of the world, would soon be placed in a position disastrous to her primary producers, and the country as a whole. In those circumstances the then Prime Minister, Mr. W. M. Hughes, when he was in England, purchased fifteen ships, which were known as the “ Austral “ boats. For them the Government paid £2,052,000. The submarine campaign ‘continued, and its effects became more serious. In those circumstances, the ships that had been purchased were able to render invaluable services to Australia. The 1915-16 wheat harvest was coming to hand, and this country had a large quantity of exportable goods which, but for the Austral line, could have been moved from Australia only with the greatest difficulty. Owing to the increasing pressure exercised by the German submarines, a shipbuilding campaign was commenced all over the world, and ships
Mr. Bruce.
* * j were constructed of wood, concrete, and almost anything that it was thought would float. Australia, in conjunction with other nations on the Allied side, took her part in trying to supply the tonnage imperatively required at that time. I would remind honorable gentlemen that that was the reason why the Government first went into the shipbuilding business, for the impression is abroad that shipbuilding was regarded as a field for Government activity, and was sought out and desired by the then Government. The facts were quite otherwise. Shipbuilding in Australia was commenced in order to try and help Australia and the Allied cause generally by producing more shipping for the prosecution of the war and the transport of Australia’s surplus produce overseas.
The record of the Line’ was set out very clearly in the debate in this House in November, 1921, and I do not think that there were at that time any critics who did not admit that the Line had rendered very great service” to Australia. The question at issue was, What should be done in the future? There were three alternatives before the House - the Line could be sold, it could be continued on its existing basis, or it could be handed over to a separate control. There can be no question but that the view of the House was that the Line should be continued under a separate control freed from political influence. The Government now propose to give effect to that view.
Grave doubts were expressed at that time as to the probable financial results of the operation of the Line during the few following years. The world was in the throes of a very severe shipping slump, and, naturally, the Australian Line suffered with every other line. In the year 1921-22 there was a very large loss on the working of the Line, and the estimated result for the present year also shows a very severe loss.
Mr E RILEY: SOUTH SYDNEY, NEW SOUTH WALES · ALP
– Does the Prime Minister’s remark refer to the .whole of the Government ships, or to the Bay Line only?
Mr BRUCE:
– To ‘ the whole of the Government’s ships. The actual figures for the year 1921-22 show that the excess of gross expenditure over gross earnings was £548,100. To that has to be added interest, which amounted to £130,397, and depreciation, taken on a basis of 5 to 10 per cent., according to the character of the vessels, which totalled £493,072. The net result for the year was a total los3, including interest and depreciation, of £1,171,569. For the present year, 1922- 23,- the estimated result is as follows: - Excess of gross expenditure over gross earnings, £516,800; interest, £360,000; and depreciation, £749,350; making a total loss of £1,626,150. It will be noticed that the excess of gross expenditure over gross earnings is smaller for the year 1922-23 than for 1921-22, although the total loss is very much greater. I shall explain the reasons for that before I sit down. The estimated gross loss for 1922- 23 is nearly £500,000 more than the actual loss for 1921-22. Those figures are, of course, very alarming at first sight, but I suggest to honorable members that they are not nearly so serious as they appear to be. There are many reasons why such a large loss ‘should be shown.
I propose to deal with the different factors which have contributed to bring about the loss experienced by the Line in the last two years. During the period with which we are dealing, the shipping world suffered from a disastrous depression such as had never previously been experienced in the history of shipping. The situation arose from the cessation of war; the return of the millions of troops to their respective countries; the consequent “release of tonnage, and the trade depression which followed shortly after Peace was declared. There was a heavy increase in the amount of shipping available, and, at the same time, a heavy decrease in the tonnage to be lifted. Owing to the world’s circumstances at the present time, and the prevailing stagnation of trade, much less carrying is required than was necessary in pre-war days, and, as a consequence of the intensive efforts to increase the world’s shipping during the war, there is a larger amount of shipping tonnage available than is necessary to meet the world’s requirements. The value of shipping, therefore, has been materially affected. I do not propose to weary honorable gentlemen with a long list of depreciated values, but I shall cite one example. In March, 1920, a new 7.500-ton cargo steamer was worth £258,000. In June, of 1922, a new steamer of the same character was worth £62,000. These values have nothing whatever to do with construction costs; they are occasioned entirely by the immense amount of idle tonnage. In June, 1921, there were 2,500,000 gross tons of British shipping tied up in British ports, and 30,000 officers and men of the mercantile marine were unable to find employment. That condition of affairs continued through the year 1922, and it is only within the last few months that a better outlook has arisen. The effect of these circumstances, which were even more pronounced in other parts of the world, on shipping values can be readily imagined. There are indications that the future will be a little brighter than the period I have been reviewing.
A further indication of the serious position in the shipping world during the last two years is to be found in the fact that many shipping companies, which were formed in Great Britain when abnormal freights were being earned, have not only lost their capital, but, when wound up, have owed to their ‘banks two, three, and even four times as much as the value of the assets upon which the banks had advanced the money. All the old established shipping lines, notwithstanding their strong reserves, have had to . refrain from paying dividends, or have paid them by drawing on reserve accumulated over many years. I wish honorable members to bear these facts in mind when they are considering the financial results of the operations of the Commonwealth Line.
Another factor which I wish to bring under the notice of honorable members is that a great part of the Commonwealth Government’s shipping tonnage is quite unsuitable for the trade in which it has been employed. That was brought about by reason of the fact that, under the pressure of war circumstances, Australia attempted to build ships - not only attempted, but succeeded in building very good ships, which bear creditable comparison with those produced in other parts of the world, both as to their character and cost. They are not, however, suitable for the overseas trade in which the Commonwealth Government Line is engaged, and consequently have contributed very materially to the losses experienced by the Line. There was a direct loss of £168,618 in 1921-22 on the working of the “ D “ and “ E “ boats, which were built in Australia, and taken over by the Line. If interest and depreciation are added, the total loss on those boats for that year is £448,893. For the year 1922-23, it is estimated that they will lose, on their ordinary working expenses, £186,900, which, with interest and depreciation amounting to approximately £320,000, will make a total loss for the year of £506,900. That is a very great proportion of the losses to which the line has been subjected. The next point is that the figures I have given include interest and depreciation charges. Those naturally have been quite abnormal owing to the high values at which the ships were ..taken over, and they have not yet been written down to their present-day values. For example, the interest on the excessive valuation of the ships for the year 1922 amounts to £130,397, and in 1923 to £360,000, and the depreciation on the excessive valuation involved a loss in 1922 of £493,072, and in 1923 a loss of £749,350. It must be remembered also, when considering the circumstances of the Line, that the ships are on the Australian register, and are subjected to certain charges that ships on the British register have not to meet. Wages, victualling, and repairs cost approximately twice as much. However, I do not propose to deal with the figures in that connexion, because under the Bill the ships will remain on the Australian register, and we shall not be relieved of those charges in. the future.
This Bill proposes to hand over the Commonwealth ships to a Board, which will dispose of unsuitable tonnage. It is clearly hopeless to continue our efforts to run vessels which, as I have shown, involve tremendous losses. What we require for Australia is a line with tonnage suitable to our trade, a line which can be conducted on a reasonable basis of expenses, and will give1 an indication of what are proper freights to be charged by other lines. It is proposed, therefore, that one cause of a great deal of the loss, namely, the unsuitable tonnage which the line has had to carry, will be removed when the transfer is made to the Board. Next it is proposed to write the line down to presentday value so that there will not be an excessive burden of interest and depre- ciation. The vessels which the Commonwealth Board will retain will be on a valuation that places them in fair competition with any other well conducted lines, and there is no reason, under these circumstances, why they should not earn reasonable interest on the money invested. Two of the principal causes of the loss during the last two years will, therefore, be eliminated under the Bill.
To bring home to honorable members how much those interest and depreciation charges amount to, I may say that, on the present valuation of the line, interest and depreciation for one year amounts to £1,428,510. When the line has been written down in the manner proposed, the burden will be reduced to £420,265. In the case of the “ Bay “ and the “ D “ and “ E “ vessels, and of several of the others, we have had a valuation made by first-class ships’ valuers, and on the basis of that valuation the Government ara handing the ships over to the Board. We have not had valuations made of some of the older ships, but the price at which they are to be handed over to the Board has been determined by sales that have taken place of tonnage of the same character, with the same period of life, due regard being paid to all the circumstances, including cost of survey, &c. The ships are all shown in the schedule to the Bill. The value of each ship is not set out, only the total value of the whole being shown. It is impossible to state in a schedule or elsewhere publicly what valuations are set on the various vessels. A great number have to be disposed of, and we cannot let any prospective buyer know exactly what our valuations are, but any reasonable information that honorable members desire confidentially will, of course, be at their disposal.
The present position is that the book value of the whole of the ships is £12,766,58S, and it is proposed to write that value down to £4,718,150, a depreciation of £8,048,43S. I agree that at first sight these figures are appalling, but I venture to say that if honorable members permit me to put before them what has happened to other countries, they will come to the conclusion that there is nothing excessive in the amount to be written off.
Cite as:Australia, House of Representatives, Debates, 4 July 1923, viewed 22 October 2017, <http://historichansard.net/hofreps/1923/19230704_reps_9_103/>.