12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 2.30 p.m., and offered prayers.
– Will the Minister for Markets state what progress has been made with the inquiries for shipping space for the 10,000lambs now at the Newcastle abattoirs awaiting export?
– Immediately after the honorable member made representations to nic on this subject, I instituted inquiries of the shipping companies. As the honorable member is no doubt aware, abnormal slaughtering has taken place, and this has placed a severe tas on the refrigerated shipping space. However, everything that can be done to expedite the shipment of lambs from Newcastle will be done, and I am hopeful that the demand for shipping space will soon be met.
– The Sydney Morning Herald of to-day publishes the following telegram from Brisbane: -
The Timber Industry Advisory Committee to-day decided to telegraph the Prime Minister (Mr. Scullin) and the Minister for Customs (Mr. Forde) that it had Uren credibly informed that a shipment o[ about 3,000,000 feet nf timber left Vladivostock in June by the steamer Kin<i William, and Unit a further shipment was l’> leave there by the King John early this month.
The committee viewed with grant apprehension those importations, as it would mean that the committee’s objective - the rehabilitation of the Queensland timber industry - would be nullified if shipments nf Russian timber were allowed to come into Australia.
In view of the unemployment throughout the Commonwealth, particularly in tho timber industry, docs the Minister for Trade and Customs recognize the urgent necessity for taking definite action to prevent the landing of further shipments of Russian timber in Australia?
– The Government has already taken action that will obviate the danger which the honorable member fears. I stated yesterday, in reply to tha honorable member for Indi (Mr. Tones), that if any attempt is made to take delivery for home consumption of tho Russian timber brought to Sydney by the King Laid, security at the rate of 10s. per 100 superficial feet will bo demanded by my department, pending investigation by tho Tariff Board as to whether (ho anti-dumping duty should be applied to this cargo. So far it has been impossible to ascertain the invoice value of the timber. The importers have not been able to sell it, and inquiries disclose t that they are not able to quote a price for it, and that they have no further i shipments on tho water. The
Government has the matter well in hand, and the Australian timber industry need not be apprehensive). If we decide to impost an anti-dumping duty, Parliament will bc so informed.
– Did the Minister for Trade and Customs, in common with other Queensland members, receive a telegram from the Queensland Timber Millers Association complaining of the danger of further shipments of Russian timber, and asking that an embargo be imposed against such importations. If so, what arc the Government’s intentions?
– No such telegram has come to my notice. The position is being adequately mot by the action which the Government has already taken, and instructions have been issued to the Collector of Customs in Sydney not to give delivery of the timber now in port until he has consulted mc. The timber millers have nothing to fear. To impose an embargo against Russian imports before we have ascertained what will be the landed price of the timber might only lead to international trouble and retaliation. Such a course is unnecessary, because other aud more diplomatic action is being taken.
– A paragraph appeared in the Melbourne Argus of yesterday to the effect that Mr. . E. Quinn, the manager of the Hardwood Millers Association, has received information that another shipment of Russian timber and Russian foodstuffs is on iti way to Australia, and that a third steamer will leave Russia early this month with a large quantity of timber for this country. “Will the Minister for Trade and Customs institute inquiries and ascertain whether that statement is based on fact?
– Since the honorable member spoke to me about this matter yesterday, I have had inquiries instituted as to whether any further shipments of timber or any shipments of foodstuffs are at present on their way to Australia from Russia. Interim reports show that there are none ; but as soon as any definite information is available an announcement will be made.
– Has the Prime Minister (Mr. Scullin) read the following cablegram published in the newspapers : -
Taking Mr. Hoover at his word that thi mora tori u ja would become effective on ls, July, the Italian Government has advised the United States State Department that they are suspending debts due to Italy to-morrow by debtor nations. Presumably also Italy will discontinue the payments she owes to Britain and America.
In view of this alert resolve on the part of the Italian Government to serve its citisens, I ask the Prime Minister whether the Commonwealth Government proposes to take similar steps, or any other measures, for the cancellation of Australia’s war debt, or the temporary suspension of payments in connexion therewith?
– President Hoover proposed the suspension for twelve months of inter-governmental debts only. That applies only to the debts owing by one Government to another, and not to the war debt of any Government to its own people. The proposal has been accepted by the Governments of the United Kingdom and the Commonwealth, and the latter has intimated its willingness to forego the reparations that are due to it, and has accepted, with appreciation, the offer of Great Britain to defer for twelve months the payments due by Australia to it.
– Will the Prime Minister enter into negotiations with the various State Governments with a view to deducting weekly or fortnightly from the salaries of Commonwealth public servants, the unemployment relief tax; the deferment of collection to the end of the financial year causes a good deal of hardship?
– The Government is entirely in sympathy with that proposal, and has been investigating it for some time. It presents difficulties however.
– If the public servants volunteer to make the contribution weekly or fortnightly, will the difficulties be overcome?
– That is not as easy to arrange for as on the surface it seems; but the Government has not abandoned the idea. We have no definite knowledge of the salary of any officer until the end of the financial year. It may vary during the year; therefore, the amount to be deducted from each pay would have to be fixed arbitrarily in the first place, and adjustments made at the end of the year. This would involve considerable bookkeeping. The only means by which a State Government can impose an unemployment relief tax is by way of income tax, which can be imposed only on annual income. The Government realizes that hardship is occasioned when the amount is deducted in one sum, and is anxious to lighten the burden, if possible.
– Will the Minister for Trade and Customs (Mr. Forde) indicate to the House the number of British firms, such as Peek, Frean and Company, which have started manufacturing in Australia’ in competition with local firms, as a result of the recent tariff?
– If the honorable member gave notice of the question, I could supply him. with fuller information than I am* able to do impromptu. The Government’s tariff proposals have brought about the establishment in Australia, of at least twenty branch factories of wellknown British firms, involving a capital outlay of ‘£1,500,000. When fully developed, those new enterprises will provide employment for 3,000 persons.
– In to-day’s Sydney Morning Herald are reproduced copies of correspondence that passed between the Governor and the Premier of New South Wales (Mr. Lang) on the subject of honours.* An extract from one letter written by Sir Philip Game and dated the 16th December, 1930, reads -
I have had a wire from Lord Somers repeating one from the Dominions Office, asking whether you will endorse the Honours List U sent home while Mr. Bavin was Premier.
As Lord Somers was then the “ person administering the Government of the Commonwealth,” I wish to know whether the Prime Minister had any knowledge of that communication-, or whether he was consulted by Lord Somers in the matter ?
– I ask your ruling, Mr. Speaker, whether it is proper to ask the Prime Minister a question concerning a statement of the Governor-General, referred to in communications between Ministers and a State Governor.
-The question is in order.
– I was not in Australia during December, 1930, and have no personal knowledge of the matter. If I had knowledge of the contents of a communication between the GovernorGeneral or the Governor of a State and a Premier, I should not make them public.
– Is the Minister for Markets (Mr. Parker Moloney) aware that various farmers’ organizations in New South Wales, and notably one at Burrumbuttock, in his own electorate, are ‘ carrying resolutions in opposition to the proposed State Wheat Pool? Will the honorable gentleman make some statement to the farmers indicating to J;hem that the acceptance of the State Wheat Pool will be helpful to the establishment of the proposed Federal Wheat Pool ?
– I issued such a statement to the press last Friday, and it received considerable publicity, particularly in the district mentioned. I have been in communication with the New South Wales Minister for Agriculture on the subject, and he has made a statement, based on mine, to the farmers of that State.
– I did not see any statement by the Minister in the metropolitan press during the week-end. I do not think that great prominence could have been given to it. Will the Minister tell us what advice he gave to the farmers of New South Wales regarding this pool ? Did he make any reference to the proposal to establish a federal wheat pool?
– I issued a statement last Friday, which was circulated to a large section of the country press. I said in it that it was proposed to make provision for the establishment of a Commonwealth reheat pool, and that the
Wheat Marketing Bill would be reintroduced. I communicated with the New South Wales Minister for Agriculture, and he told me. in reply that he’ would issue a statement during this week to the same effect. I also took the opportunity to refute statements that are being issued at present as propaganda against the establishment of a compulsory wheat pool. A considerable amount of propaganda is being carried on in New South Wales at present that is typical of the propaganda that occurs whenever the establishment of a compulsory wheat pool is proposed.
– The Minister spends his whole time in propaganda.
– The propaganda largely emanates from the wheat merchants, and I am taking an opportunity of having their misstatements and misrepresentations refuted.
– Has the attention of the Minister for Health (Mr. McNeill) been drawn to a paragraph that appeared in the Melbourne Age of Tuesday last concerning the death rate in the City of Melbourne, which reads -
Whilst the report of the Health Officer, Dr. Dale, was being considered, Councillor Kent Hughes drew attention to the fact that the death rate for the city (10.11 per thousand) constituted a record for Melbourne.
In view of the fact that Dr. Dale has intimated that the health of the community is being prejudiciously affected by the insufficient quantity of the food supplied to the inhabitants of Melbourne, will the Minister make inquiries into the matter, and obtain a copy of the Health Officer’s report, so that honorable members may determine whether the present excessive unemployment and consequent scarcity of food for families are adding to the death-rate?
– I had not seen the paragraph referred to by the honorable member until he brought it under my notice. I shall cause inquiries to be made into the matter, and obtain a copy of Dr. Dale’s report, so that honorable members may have an opportunity to determine for themselves whether there is any special cause to which the increase in the Melbourne death rate may be attributed.
– Will the Prime Minister advise whether the name of the Minister for Defence remains on the notice-paper as a member of the Public Accounts Committee in error? If not, will he state whether it is customary for a Minister of the Crown to remain a member of a statutory committee?
– The Minister for Defence resigned from the Public Accounts Committee immediately upon bis appointment to the Ministry, and has already drawn attention to the fact that his name should not appear in the list of committee men.
Amendment of Regulations
– Will the Prime Minister inform me whether, pursuant to the’ provisions of the financial rehabilitation plan, the Government has amended any regulation with the object of effecting economies? If such alterations have been made, will the right honorable gentleman announce the effect of them, 30 that honorable members may know what executive action the Government is taking to give effect to the plan?
-The whole of the economies involved in the financial rehabilitation plan will he effected by act of Parliament. Some of the measures dealing with these matters are at present before the House. We hope, at a later hour to-day, to introduce another measure dealing with pensions, salaries,&c.
– Is it not a fact that the regulation dealing with the cost of living allowance to the Public Service has been altered with the object of making the reductions in this allowance retrospective? I should like to know whether any further alterations of regulations have been made with the object of giving effect to the proposals now before the House ?
– The alteration in the specific regulation to which the honorable member has referred was made by agreement between the Public Service Board and the Public Service organization with the object of bringing certain automatic cost-of-living reductions into operation on the 16th April, instead of the 1st July-
– The regulation was altered before that; I have checked the dates.
– The regulation was altered by agreement between the parties, in. order to bring the cost-of-living reductions into effect three months earlier than would otherwise have been the case… No other regulations have been altered so far as I know.
– Some time ago i directed the attention of the PostmasterGeneral to the fact that a large number of country people had had their telephones disconnected because they could not pay the rental. I ask the Minister whether his department will consider making provision for these people to have the use of their telephones during the current year, provided that they agree to pay the rentals and other charges after next harvest.
– I replied yesterday to a somewhat similar question. The position of telephone subscribers who are unable to pay their accounts has been given careful consideration. It must be self-evident that it is impossible, as a business proposition, to allow telephones to remain connected when there is no chance of the subscribers being able to pay their accounts. In cases in which subscribers have agreed to pay for current calls, the telephones have been left connected, and the arrears have been allowed to stand for the time being. The proposition of the honorable member is new to me, and I shall obtain a report upon it.
– Is the Prime Minister in a position to make a further statement regarding the progress that is being made by the conference of representatives of soldier organizations in regard to economies in war pensions? If any recommendations have been made, will the right honorable gentleman make them available to honorable members as soon as possible?
– Another report on this subject came to hand this morning, but I have not yet had time to read it. I hope to do so during the day.
– Will the Minister for Trade and Customs institute inquiries to ascertain whether goods being imported from Japan, India, Germany and Central Europe are being manufactured under slave conditions?
– Consideration will be given to the matter.
– I desire to know, Mr. Speaker, whether it is a fact that a contract for the supply of fuel to Parliament House was recently taken from the Department of Works and given to a private contractor without allowing the department an opportunity to review its prices? Were tenders for the supply of this fuel invited through the press? What is the difference between the price at which the Department of Works was supplying this fuel and the price at which the private contractor is now supplying it?
– I shall refer the question to the President of the Senate, who is the Chairman of the Joint House Committee, and hope to give an answer to the honorable member on the’ adjournment of the House this evening.
Disabilities Under Federation
– Since the inquiry by the Public Accounts Committee has been postponed, has the Treasurer any announcement to make to the House regarding Western Australia’s claim to a special grant from the Commonwealth because of its disabilities under federation ?
– The inquiry was withdrawn from the committee because it became apparent that the time was too short to obtain a report before the completion of the budget. In order not to cause inconvenience and loss to Western Australia, it has been decided to continue the grant to that State at the present rate of £300,000 per annum for a further six months, pending completion of the inquiry during that time.
– Is the newspaper statement correct that the taking of the census has been postponed until 1935? If so, does the Government intend to postpone the redistribution of federal electorates until such time as the census is taken, or is it intended to proceed with the redistribution at an earlier date?
– As reported in the press, the Government has decided further to postpone the taking of the census, in view of the financial position of Australia. The matter referred to in the second portion of the honorable member’s question is still under consideration.
– In regard to the agreement to be signed by the State Governments in connexion with the deb! conversion scheme-
– This is hardly the stage at which to ask a question regarding a measure now on the notice-paper for debate. The proper time for doing that is at some stage of the debate on the Commonwealth Debt Conversion Bill.
– The question that 1 desire to ask relates to an agreement to be signed by the State Premiers.
– If the honorable member can assure me that the question has no relation to legislation now before the House, I will permit it.
– I cannot do that.
Prohibition of Importation
– Has representation been made to the Minister for Trade aud Customs from Western Australia that he should prohibit the importation of Moroccan rock - which is used, particularly, in the manufacture of superphsphate - on account of the damage done by the fumes to vegetation? If so, have any steps been taken by the Government to prevent the importation of this article?
– Representations regarding many kinds of rock have been made to me, but none concerning Moroccan rock. If the honorable member brings the facts of the case under my notice, they will be considered.
– Has the Treasurer read, or has his attention been drawn to, the statement in the press that the Premier of New South Wales, Mr. Lang, had refused, in strong language, to endorse nominations for certain titles? In view of the fact that Canada, South Africa, and Australia are definitely opposed to the giving of titles, and in view of the paucity of funds in the Treasury, will the Minister give consideration to the introduction of a bill to impose a tax on the holders of titles?
– The matter will be considered.
– I understand that, following representations made to him, the Minister for Defence has drawn the attention of the Mosman Municipal Council to acts of vandalism being perpetrated at the St. George’s Heights Reserve. Since I have received information that the nuisance has not been abated, will the Minister make inquiry whether vandalism is still occurring in the locality mentioned, and, if so, take stronger action than merely sending a note to the Mosman Council?
– I shall look fully into the matter, and have inquiries made.
Parliament House Roof - Fire Brigade
– The honorable member for Melbourne (Dr. Maloney) has asked a number of questions regarding the roof of Parliament House. I am in communication with the Department of Works on the matter and shall advise the honorable member at an early date.
asked the Minister for Home Affairs, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Prime Minister, upon notice -
– I have caused inquiry to be made into the cost involved in preparing the information requested by the honorable member. As a detailed examination of the accounts of the various Commonwealth departments would be entailed, necessitating considerable expenditure, represented by the salaries, &c, of officers. I do not feel justified in authorizing the work to be proceeded with.
On the 1st July, the honorable member for Angas (Mr. Gabb) asked me the following questions, upon notice -
From information in the possession of the department,. I am in- a position to furnish the following, reply : -
From the 5th July, 1920, Mr. Hughes raised the scale to -
From the 1st July, 1926, the scale was increased by Mr. Bruce to -
On the 30th June, 1931, the present Government decided that the travelling allowance to Ministers shall be -
On the 1st July, the honorable member for Angas (Mr. Gabb) asked me the following questions, upon notice -
The information has now been prepared and is as follows: -
asked the Minister for Trade and Customs, upon notice -
Whether he has yet received any report from the Tariff Board with reference to requests for special preferential rates of excise duties upon petrol distilled from Australian shale oil; if so, will he make it available to honorable members?
– The report was recently received, but has not yet been given full consideration. It is not practicable to say at present when it can be presented to the House.
asked the Minister for Trade and Customs, upon notice- -
Will he inform the House to whom the Russian timber alleged to have been produced by slave labour has been consigned?
– The Russian timber recently imported per King Lud was consigned to the order of Russo Export Agency, Sydney.
Child Endowment - Allowances - War Pensions
asked the Treasurer, upon notice -
– Inquiries are being made with a view to seeing whether the information desired can be obtained without undue expense.
– On the 16th April, the honorable member for Corangamite (Mr. Crouch) asked the following questions, upon notice: -
I am now in a position to inform the honorable member as follow: -
– On the 30th June, the honorable member for Corangamite (Mr. Crouch) asked the following questions, upon notice : -
The following replies have been furnished by the Commonwealth Bank : - 1,. The trading books have no gold deposited with the Commonwealth Bank.
It mayexplainedthatsection60Kofthe Commonwealth Bank Act 1911-1931 provides, inter alia, that a gold reserve equal to fifteen per centum of the notes at present on issue must be maintained.
Motion (by Mr. Beasley) - by leave - agreed to -
That leave of absence for one month be given tothe honorable member for East Sydney (Mr. Ward) on the ground of ill health.
Thefollowing papers were presented : -
Transport Workers Act - Regulations amended - Statutory Rules 1931, Nos. 53. 58,64, 72, 73, 76, 77.
Correction of Division List.
– In the division taken yesterday in connexion with the closure motion for the second reading of the Commonwealth Debt Conversion Bill, the tellers inadvertently made an error. The name of the honorable member for Boothby (Mr. Price) should have been included in the list of those who voted for the Noes. The error has been rectified in the official record.
Tabling of Regulations.
Question - That Mr. Speaker do now leave the chair - proposed.
.- from the answer to a question that I asked this afternoon, with regard to regulations that can be made under various acts in order to give full effect to the financial rehabilitation plan, I understood that no regulations had been gazetted. Yet, according to the answer to a question subsequently asked by the honorable member for “West Sydney (Mr. Beasley), it appears that the regulations under the Public Service Act have been altered.
Mr.Scullin. - I understood that the honorable membeir was referring to economies under the present plan. The alteration of Public Service regulations had nothing to do with the present scheme, and was made prior to its introduction.
– I now suggest to the right honorable gentleman that when financial matters are dealt with by regulation, as soon as possible after the regulations have been gazetted - on the following day if possible - they should be laid upon the table of the House, so that hon- orable members may know exactly what economies are being effected under them, irrespective of the acts to which they may apply.
Motion (by Mr. Scullin) - put -
That the debate be now adjourned.
The House divided. (Mr. Speaker - Hon. Norman Makin.)
Majority . . 49
Question so resolved in the affirmative.
Message recommending appropriation reported.
In committee (Consideration of Governor-General’s message) :
Motion (by Mr. Theodore) agreed to-
That it is expedient that an appropriation of revenue and moneys be made for the purposes of a bill for an act to provide for the conversion of the internal public debts of the Commonwealth and the States, and for other purposes.
Resolution reported and - by leave - adopted.
Consideration resumed from the 1st July (vide page 3268).
Clause 10 (Conversion of securities of holders who do not dissent).
– It was my intention to move that this clause be struck out, because there would be no need for it if the amendment which I moved last night had been agreed to. As that amendment was not carried, however, I do not propose to take any action in respect of clause 10.
Clause agreed to.
The time within which dissent from the conversion of any existing securities may be signified to the Treasurer shall be -
fourteen days after the commencement of this act; or
.- This clause provides that the time within which dissent from the conversion of any existing security may be signified to the Treasurer shall be fourteen days after the commencement of the act; or a longer period may be allowed at the discretion of the Treasurer in the case of any particular holder. Paragraph 4 of clause 12 provides that when dissent is signified, it shall be necessary to send in to the Treasury the securities respecting which dissent is made, other than inscribed stock. Accordingly, in dissenting, the shareholder has to deliver his dissent together with his securities to the Treasurer, the Registrar of Inscribed Stock, or other officers, within fourteen days. There may be bondholders in many places in Australia who are not yet aware of these proposals, or even of those approved by the Premiers Conference. Even after this bill has been passed it will be quite a considerable time before those bondholders will become aware of its provisions, and therefore, I urge that the period for giving notice of dissent be lengthened. We are legislating for a continent, and we must consider the position of those citizens who do not live in and around the capital cities of New South Wales and Victoria. The residents of many places within the Commonwealth will have no knowledge of these proposals within fourteen days after the bill has been passed. It should also be borne in mind that most individuals do not keep their bonds at home; those who do are unwise. Most bonds held by the residents of this country are in the custody of some bank, and in that case it may be necessary for some correspondence to take place and proper authorization to be given before the procedure, some of which, as outlined in clause 12, is particularly designed to deal with the case of banks, can be followed. By fixing this unnecessarily short period of fourteen days we run the risk of causing misunderstanding and dissatisfaction which could easily be obviated by some extension of the time. What I have said is particularly important, having regard to clause 12 which requires securities other than inscribed stock to be sent in with the notice of dissent. I point out that until the securities have been sent in and have been exchanged for other securities no further interest is payable on them. Under clause 12 - we are not now discussing clause 12 but it is essentially connected with clause 11 -it is required that securities other than inscribed stock shall accompany notice of dissent, which must be given within fourteen days unless appeal is made to the Treasurer by a particular holder, and he convinces the Treasurer that there are special circumstances which entitle him to an extension of the term. I suggest that the term should be extended to four weeks. That is a reasonable term and would not interfere with the machinery of the conversion.
.- It would be unwise to alter the period which has now been fixed for giving notice of dissent. It certainly is not a lengthy period, but the notice that really has been given to the bondholders is ample because they are under notice now. There should be no excuse for any bondholder who does . not desire to convert his bonds not knowing that, before the 31st July, he must express his dissent in writing. There has been a great deal of publicity given to the terms of the conversion. Speeches on the subject have been broadcast throughout Australia, and that kind of publicity will continue. There is no excuse for the bondholder not knowing the condition of the conversion, unless he is in such a state of health that he is unable to read the newspapers or to listen to conversations.
– The bondholder’s wireless licence may have been cancelled.
– If a bondholder does not become aware of the conditions of the conversion either through the newspapers or by conversation with his friends in his locality, I do not know what kind of life he must lead. Such a recluse - there are not many of them holding bonds - would probably be prepared to convert his bonds.
– What is the objection to extending the term?
– It would delay the operation of the whole plan. The other measures will not be proc’ aimed until this legislation is proclaimed, and comes into operation. This period for the notice of dissent was discussed at the Premiers Conference and no objection taken to it.
– Would any delay affect the new securities ?
– No. If the issue of the new securities were delayed, say, for three weeks, that would not interfere with the payment of interest to the holders. If for some extraordinary reason a bondholder has no knowledge of the conditions of the conversion, and did not send in notice of dissent in time, the Treasurer is empowered to give special consideration to his case. The Deputy Leader of the Opposition stated that most bondholders place their bonds in the safe custody of the banks. If they do that they need only telegraph to a bank manager to put in a notice of dissent on their behalf.
It will be seen that in clause 12 notice of dissent must be sent to the Registrar of Inscribed Stock at the Commonwealth Bank of Australia, at Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Launceston, Rockhampton, or Townsville. There is, therefore, no necessity for the notice of dissent to be sent to, the Treasurer, and I move -
That the words “ to the Treasurer “ be omitted.
– Will the Treasurer explain paragraph c.
– It is difficult to imagine the special circumstances in which the Treasurer would be justified in allowing an extension of the term. A person living, say, in Central Australia, who had been informed of the conditions of the conversion too late to enable him to give notice of dissent in the prescribed time, might be given an extension.
– A bondholder might be sick.
– Paragraph c is designed to meet such special circumstances.
– Would the. Treasurer be prepared to extend the term- to 21 days?
– I prefer to leave the period as it stands, because no injustice will be done to any bondholder who desires to give notice of dissent. I hope that there will not be many such bondholders, but any who are now hesitating will have ample time to make up their minds, and, if they think fit, to give notice of .dissent. I have no wish to deprive any bondholder who does not wish to convert his bonds of a reasonable opportunity to give notice to that effect.
.- I protest against the proposed wholesale amendments of nearly every clause. Either there was loose thinking on the part of Ministers, or the original draftsmanship was faulty. The bill was printed only a few days ago, and now we are asked to embody in it in a few minutes pages of amendments. There has been in recent months too much evidence of careless draftsmanship. It is impossible in a few minutes to grasp the significance of some of the amendments; they may alter the whole structure of the bill. Progress should be reported, so that honorable members may have a chance to study the proposed alterations. I hope that in the future the draftsman will do his thinking before the bill is introduced into Parliament, instead of afterwards.
– I, too, am of opinion that the fourteen days allowed for notification of dissent is in- adequate. At all periods tens of thousands of Australians are travelling considerable distances from their homes. A resident of New South Wales may be for some weeks in Victoria, or Western Australia, and, as people do not carry valuable bonds with them, many will be unable to signify dissent within a fortnight.
– Does the honorable member imagine that any bondholder does not know that this conversion is proposed 1
– I imagine that the majority of them know what is proposed ; but they may not know when the legislation is actually sanctioned by Parliament, or what its precise requirements will be.
Some consideration should be given to special circumstances.
– Paragraph c provides for special circumstances.
– I hope that the interpretation of that paragraph will be generous in. respect of people who are absent from their homes. Members of this Parliament, for instance, have been in Canberra for two months, and may be here until the end of July. Their documents are lodged with the banks in their home towns, and they cannot ask the bank managers to go through their papers and send the necessary notification to the Commonwealth Bank. Thousands of others are at a similar disadvantage, and to them a grave injustice may be done if the time allowed for signifying dissent is too short. I understood the Treasurer (Mr. Theodore) to state that the Government does not propose to proclaim the companion measure to this bill until after the conversion has been accomplished.
– The honorable member misunderstood me. All the bills to give effect to this plan will co;ne ir.’.u operation by proclamation, and the delay in the passage of one bill will delay the operation of the others.
– One of the State Premiers stated that his Government would take no action to carry out the Melbourne conference scheme until the conversion had been accomplished, and I understood the Treasurer to say a few moments ago that the other measures forming part of the general plan will not be proclaimed until after the conversion operations.
– I said we shall not get the full benefit of the plan until the conversion is effected.
– Are all parts of the scheme contingent on the conversion?
– Yes; but all the bills will come into operation by proclamation immediately after they have been passed and assented to.
– I am glad to have the Treasurer’s declaration that all these measures will be proclaimed simultaneously. When the amendment now before the committee i3 disposed of I shall move that the period in which dissent may he notified shall be 21 days.
– I support the request that the time to be allowed for the signification of dissent shall be extended. The Taxpayers Association of Queensland, which has had an opportunity to study the bill, and the Treasurer’s second-read Li: j speech thereon, has telegraphed to me a request that, if possible, the fourteen days provided in the bill should be extended to 28 days, and that in respect of absentees the period should be eight weeks instead of six weeks. In Queensland, owing to the infrequency of the mails, it will be impossible for some bondholders to gain knowledge of this legislation and communicate with their bankers, or those who may be holding their bonds, within fourteen day 3; and if that limit is retained the Treasurer will receive increased requests for consideration under paragraph c. The extension of the time to 28 days, or even 21 days, and to eight weeks in. respect of absentees, would obviate a lot of trouble. The Treasurer will appreciate the posi tion of the people in the outback portions of Queensland.
Amendment agreed to.
Amendment (by Mr. Mackay) proposed -
That the word “ fourteen paragraph </ he omitted with a view to insert the word “twenty-one” in lieu thereof.
– I support the amendment, largely because of the infrequency of Ihe mails in the back country. Many people resident outback do not keep their bonds in their own possession, and will be unacquainted with the provisions of this legislation. They will expect their agents in the towns and cities to advise them, but the agents will not be able to communicate with their principals in time.
– The purpose of the bill is to bring about conversion., not to facilitate dissent.
– But provision is made for dissent, and I assume, therefore, that some dissent is expected. There will be people whose reasons for dissent will satisfy the Treasurer. I have &. number of clients who, I am convinced., will dissent, not because of lack ot patriotism, but because they have earmarked for other purposes money invested in short-dated loans which will mature next year. They cannot be expected to convert.
– All are expected to convert, and we must not lead people to believe otherwise.
– I am not attempting to lead people to believe that they are not expected to convert, but it is certain that not everybody will agree to convert. To bondholders in some districts even 21 days’ notice will hardly suffice.
.- It is true that in country districts mails are infrequent, but as the Treasurer may, under paragraph c, allow such further time as, on account of special circumstances, he may think fit, no injustice will be done by restricting the time to fourteen days. The Treasurer, knowing the situation of the dissentient and the mail services in his district, will be able to judge whether or not he is shirking his responsibilities. We might discriminate between the urban and rural population by prescribing fourteen days for one and 21 days for the other, but I do not think that is necessary.
– Iti order to shorten the discussion I accept the amendment.
– I cannot understand why the Treasurer should so readily accept whatever honorable members opposite suggest. He stated that he and his officers, after careful consideration of all relevant facts, had decided that a notification of fourteen days would be sufficient, and would do no injustice, because the proposed conversion is being notified to the public by newspapers and wireless broadcasting, and the information is being picked up by thousands of wireless receiving sets, and is being further disseminated by telegraphic and telephonic messages. Therefore, those interested will have no excuse for not being acquainted with the requirements of this legislation.
– The Treasurer realizes that the numbers are against him.
– The honorable member for Wimmera (Mr. Stewart) has correctly explained the reason for the Treasurer’s change of front. I remind the honorable gentleman that it does not look well for a Minister to present aa important bill, flood the chamber with voluminous amendments, which prove that the measure has not been exhaustively considered, and then practically on the first clause, surrender to the opinions of the Opposition, and, in effect, ask its members to write their own ticket.
.- I point out to the honorable member for West Sydney (Mr. Beasley) that even in a small, compact State like Victoria, 21 days will be insufficient time in some circumstances for bondholders to notify their decision. In my own electorate there are bondholders who live 100 miles from the railhead, and receive a mail only once a week. The honorable member for West Sydney stated that the matter was receiving ample publicity by being broadcast over the wireless. Broadcast speeches will not go into details such as the item which we are discussing. The bondholder will have to wait until he receives his mail before he learns full particulars, and probably it will take him some time to grasp what is meant, even after he has received his mail. I believe that 21 days is a very reasonable compromise between the original suggestion put forward by the Deputy Leader of the Opposition (Mr. Latham) and that embodied in the bill.
.- I point out that, even if the fourteendays’ term is retained, the interests of bondholders will be fully safeguarded, as the Treasurer (Mr. Theodore) is given discretion to extend the term if he deems that to be necessary. From the attitude which the honorable gentleman has adopted towards bondholders, by allowing them to convert voluntarily and generally spoon-feeding them, I venture the opinion that no hardship will be incurred by these individuals. After the emphatic way in which the Treasurer defended the term of fourteen days, and then his prompt surrender subsequently to the views of the Opposition, it appears to me that any of the provisions of the bill may be altered as honorable members opposite require. I advise them to go their hardest, and submit all the amendments that they want inserted; the Treasurer will meet them on every occasion.
.- I associate myself with the views expressed by the honorable member for West Sydney (Mr. Beasley) and the honorable member for Werriwa (Mr. Lazzarini). As will be observed from the alterations to the copy of the bill that is in my hand, my colleagues and I have been at some pains to amend this bill. It is likely that the voluminous amendments with which the Treasurer (Mr. Theodore) has inundated the committee may interfere with the careful drafting in which my colleagues and I have engaged. I know that the Treasurer is a very thorough man, and that his object now is to have the bill passed in as complete a form as possible. The honorable gentleman is also a man with a sense of humour. I am sure that he will not object to my saying that my colleagues and I are disappointed, as we believe that his sheaf of amendments does not anticipate our wishes by providing what we wish embodied in the bill.
Honorable members have listened to some tender expressions of solicitude on. behalf of the bondholders. No similar solicitude waa manifested in respect of pensioners and workers. There was no talk of giving them fourteen days in which to agree to a reduction of their pensions or wages. The Government is not to be congratulated upon the wholehearted manner in which it has departed from the ideals of the Labour party.
.- I do not know why our friends in the corner are so anxious to rub it in; why they should complain so bitterly about every action taken by the Government. Time after time, when the Opposition made an honest attempt to remove the Government from office, honorable members in the corner saved it.
I am glad that the Treasurer has accepted this amendment, even if the governing reason was that he realized that the numbers were against him. The fact that he espouses the truly democratic principle of deferring to the wishes of the majority should please honorable members in the corner. If laxity were allowed in the matter of signifying assent or dissent in connexion with the conversion, it would be found that a number of persons would hold off until it was announced how many had accepted and how many had dissented from the conversion. If a large number of bondholders dissented, many of the waverers would also dissent, under the plea either that they had not received proper notice, or that circumstances over which they had no control caused them to do so. A fortnight’s notice was given in connexion with the British loan conversions of 1822, 1844 and 1888.
– With regard to the 18S8 conversion, the passage of the bill was delayed, so that bondholders really had only 48 hours notice.
– The 1888 British conversion cannot by any stretch of imagination be compared with this one. I believe that a limit of fourteen days would inflict hardship on outback bondholders. Because of the financial position of the country the Postmaster-General’s Department has drastically cut down mail services in the outback. Where previously there were two deliveries a week there is now only one, while in cases where there was a weekly delivery, the delivery is now fortnightly. I think that the Treasurer was wise in accepting the amendment.
– Replying to the honorable member for Wimmera, if the Opposition is prepared to support this party in rejecting the proposal to reduce pensions, my colleagues and I are willing to co-operate with it in defeating the Government on that issue.
– I am not enthusiastic regarding the extension of the term of notification from fourteen to 21 days. The time of commencement does not operate until the act is passed, which is controlled by another place. At the same time, I do not desire my beliefs in the matter to be associated with those held by honorable members in the corner. They state that if the Opposition will oppose the Government on a certain issue, it will have their support. We have previously heard similar promises from that quarter. Honorable members in the corner were to accompany their leader, Mr. Lang, .to the southern States, and declared that they would not he in this chamber if a division were taken. That was contradicted by Mr. Jock Gardra, who instructed them to return to their places and save the Government. I know thai honorable members in the corner would not abide by any promise made by them to defeat the Government, so that it would be futile to ask for a division on the issue mentioned by them. The press recently reported the honorable member for Hunter (Mr. James), as having declared that he would not support the Opposition on any pretext if it meant the defeat of this Government.
– I give the honorable member an assurance that this party is prepared to co-operate with the Opposition in defeating the Government on the issue of reducing old-age and soldier pensions.
– Because the honorable members wants to wreck the scheme and the Commonwealth. I should want an endorsement of any such promise from Mr. Lang and Mr. Garden.
– Order! I ask the honorable member to confine himself to the amendment.
Amendment agreed to.
. Regarding paragraph b of clause 11, I ask the Treasurer whether he is prepared to extend the time of notification from six to eight weeks in connexion with bondholders who may be absent from the Commonwealth. If the shorter term is adhered to, it will involve absentee bondholders in considerable expense through having to cable their views on the subject.
– I regret that I cannot accept the suggestion of the honorable member for Brisbane (Mr. D. Cameron). Six weeks should allow ample time for persons abroad to signify dissent. With the improved means of communication which exist to-day between various countries it is hardly conceivable that any one would be unable to notify dissent within six weeks. Persons living abroad, who have bonds in Australia in respect of which interest and principal may become payable, would almost certainly leave a power of attorney behind them.
.- What is the definition of “holder”?” In clause 12 “ the bank or savings bank “ seems to be regarded as the holder. I think it will be admitted that the great majority of bonds held in Australia are lodged with a bank or savings bank for “ safe custody or as security “.
– Many bearer bonds are ‘ retained in private possession.
– In very many other cases, bearer bonds are “lodged” for safe custody or as security “ with a hank or savings bank”. Apparently even though the bonds are lodged with a bank or savings bank merely for safe custody, the new bonds to be issued in place of them are to bear the name of the bank or savings bank, which is absurd. I can understand that it might be desirable that the inscribed stock issued to replace bonds held by a bank or savings bank as security should bear the name of the bank; but surely that should not be necessary in the case of bonds held purely for safe custody. It seems to me that we should define “holder”, which, I presume, is intended io mean “ owner “ ?
– “Holder” in. this signification is intended to mean the owner of the bond. The term is frequently used in that sense. When we have referred to holders during this discussion we have almost invariably meant owners. 1 . do not think any difficulty will be created by the use of this term. “ Holder “ is intended to refer to the person who h;is the legal title to the bond.
Clause, as amended, agreed to.
Clause 12 - (I.) The dissent of tlie holder of any existing securities from the conversion of those securities into new securities niU3t be in writing identifying the securities to which the dissent applies, and addressed -
Commonwealth - to the Registrar of Inscribed Stock at the Commonwealth Bank of Australia at Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Launceston, Rockhampton or Townsville; and (ft) in the case of securities issued by a State - to the Registrar of Stock or principal officer of the Treasury of the State concerned. (2.) Where existing securities are lodged for safe custody or as security with a bank or savings banlf, tlie document signifying dissent must, instead of being addressed to a registrar or officer, be addressed by the holder to the bank or savings bank, and the bank or savings bank shall forthwith forward it to an appropriate registrar or officer mentioned in the last preceding sub-section. (3.) Where existing securities so lodged for safe custody or as security are not in the form of inscribed stock and dissent in respect of those securities is notified in accordance with this act, the securities shall be forthwith exchanged for Commonwealth Government inscribed stock in the name of the bank or savings bank concerned. (4.) Where dissent in accordance with this section is signified and the existing securities arc securities other than inscribed stock, such securities shall accompany the notice of dissent and thereupon bc exchanged for Common wealth Government inscribed stock conforming with the conditions of the existing securities in respect of duration, redemption, rate of interest and in all other respects; and, until the securities have been so exchanged, no interest shall bc payable thereon in respect of any period subsequent to the thirty-first day of July, One thousand nine hundred and thirty -one.
.- This clause deals with the manner of signifying dissent. Sub-clause 2 provides that -
Whore existing securities are lodged for safe custody or “as security with a bank or savings bank, the document signifying dissent must, instead of being addressed to a registrar or officer be addressed by the holder to the bank or savings bank, and the bank or savings bank shall forthwith forward it to an appropriate registrar or officer mentioned in the last preceding sub-section.
Tlie next sub-clause reads as follows: -
Where existing securities so lodged for safe custody, or as security, are not in the form of inscribed stock, and dissent in respect to these securities is notified in accordance with this act, the securities shall be forthwith exchanged for Commonwealth Government inscribed stock in the name of the bank or savings bank concerned.
Why are these provisions included in the bill? The effect of them is likely to be strange. Securities are frequently held for safe custody by safe deposit companies which do not know what they hold. The nature of securities held by banks for safe custody is also frequently unknown to the bank authorities, because the documents are locked up in boxes or chests. Yet, even in those cases, dissent must be notified to the bank, and the bank must forward it to the appropriate authority. Why should persons who lodge securities under lock and key be obliged to inform the bank of the nature of the securities? I do not think that people should be compelled to reveal their private affairs to the banks. Many institutions other than banking companies hold securities for safe custody. I have already referred to the safe deposit companies in this regard. Many insurance companies also hold securities for safe deposit. Trustee companies frequently hold securities astrustees, or as securities. Money lendersalso hold bonds as securities. I desire toknow, first, why these provisions are in the bill ; secondly, why they relate only to banks and savings banks ; and, thirdly, why they are compulsory, instead of permissive, in form?
On subsequent clauses the question will arise why new securities in the form of inscribed stock are to be in the name of the bank or savings bank. If such securities are lodged merely for safe custody, what is the object of directing that new stock issued in place of them shall bear the name of the bank or savings bank? Confusion is likely to arise in consequence of these provisions. A bank may hold securities to the value of £100,000 for a number of persons, and for all sorts of amounts. It may hold £200 worth of bonds for one person, £500 worth for another, £10,000 for another, and £5 for another. Apparently, if dissent were signified in respect of all these securities, the bank would become the registered holder of inscribed stock to the value of £100,000. In such a case how is protection to be assured to the small holder, who has £5 worth of bonds lodged with the bank, and how are his securities to be identified?
– In the case of bonds lodged for safe custody it is the practice, almost without exception, for the banks or savings banks to take out inscribed stock of an equivalent value to replace the bonds, which are, thereupon, cancelled. A customer can get bearer bonds returned to him subsequently if he wishes, for the banks will make the necessary arrangements.
– There are many bonds to which that would not apply, such as bonds issued by State governments. These would not be converted into inscribed stock, nor would any Commonwealth bonds lodged for safe custody.
– The provisions of sub-clause 2 and sub-clause 3 relate to cases in which dissent is signified. In the case of securities “lodged for safe custody or as security with a bank or savings bank” the holder is obliged to signify dissent, and the bank is required to forward the notice of dissent to the appropriate authority. The provisions of these two sub-clauses will not interfere with the rights of holders except to limit their right to continue to hold bearer bonds. This point was discussed during the second-reading debate on the bill. The necessity for the provisions arises from the practice of the banks of converting into inscribed stock whatever securities are lodged with them for safe custody. This is done to simplify bookkeeping, and to safeguard the bank as well as the customer.
– The Treasurer’s explanation of the provisions of sub-clause 2 and sub-clause 3 is unusual. Quite a number of persons whom I know have deposited their bearer bonds with the Commonwealth Bank for safe custody. They can go to the bank at any time and obtain all or any part of their bonds, less the coupons which have been detached. The bonds are kept in a cover, and when application is made for them this cover is produced, and the bonds extracted. How would this provision affect bonds locked up in a chest or deed box, and deposited with a bank? The bank could not convert such bonds into inscribed stock. In the case of bonds held for safe custody only; it seems extraordinary that a bank should have power summarily to obtain inscribed stock, not in the name of the owners of the stock, but in the name of the bank.
– -Would not a dissenting person demand the surrender of bonds held for safe custody?
– In a case where bonds are held for . safe custody, the holder may leave them with the bank, or take them away, because he may want to know what Parliament decides shall later be done with the bonds of those persons who do not convert and notify dissent.
– Those bonds must be converted to inscribed stock.
Mr. ARCHDALE PARKHILL.But if they are held for security, and the owner does not take them away, I do not see why they should be changed into inscribed stock in the name of the bank.
.- I am assured by the Assistant Secretary to the Treasury that the .honorable member for Warringah (Mr. Parkhill), is under a misapprehension. concerning the practice of the Commonwealth Bank with respect to bonds lodged for safe custody. The bank does not retain such bonds. It inscribes stock for a corresponding amount, and the bonds are cancelled. If the owner of the bonds wishes to have them returned, new bonds of the same description, and in the same series, are issued. That practice is carried out by almost every bank in Australia to-day. The inscribed stock is taken out in the name of the bank. The Savings Bank in a State like Victoria might have bonds to the amount of £100,000 lodged with it for safe keeping; but the safe custody account enables the owners of the bonds to be identified, and they can withdraw them at any time.
.- The innovation in this clause is the proposal to make it mandatory that new inscribed stock issued to a bondholder who happens to have deposited his securities with a bank shall be in the name of that bank. I think that the Treasurer, and the officials who have advised him, in their justifiable anxiety to prevent the evasion of income tax which has undoubtedly been practised to some extent by the holders of bearer bonds, are exceeding all reasonable pressure by seeking to force them to change their bonds to inscribed stock which is to be issued in the name of the bank. The Treasurer is showing a justifiable desire to prevent income tax evasion, by securing a register of the persons who have for various reasons declined to convert. Take the case of clients of the Commonwealth Bank, or of any other bank, who deposit bonds for security. I consider that it should be a matter between the clients and the bank as to whether that security is registered in the records of the bank as the property of the bank from whom money has been borrowed, or as the clients’ property. The fact that in the past, most of the banks, when Government stock has been lodged with them as security «r for safe custody have transferred that stock to the name of the bank, is no reason why that should have to be done compulsorily after the passing of this bill. Up to the present time, that has been a matter between banks and their clients. I know of certain inscribed stock that is held by private individuals and is registered at the Commonwealth Bank, the receipt being deposited for safe custody with the bank. I consider that it would be putting too much power in the hands of the private banks to make it compulsory for any client of a private bank, or even of a savings bank, who wanted to leave his security for safe custody, to change the title to the name of the bank. Take the securities which may have been held for safe custody by the Government Savings Bank of New South Wales. That institution, of course, is thoroughly equipped with an upt.odate book-keeping system, and I take it that there is no difficulty in tracingbonds that are held for safe custody, and that they can be withdrawn. But, at some future date - possibly ten years hence, or later - there may be trouble with another bank, and difficulty may be experienced in determining which securities are held by it purely for safe custody, and over which the creditors of the bank would have no lien, and those over which they would have a lien. At the present time, the clients of a bank have an option in the matter, and if they transfer securities to the name of the bank they do so at their own risk; but since the Treasurer seeks to put this extraordinary power in the hands of the banks, I think that there must have been an oversight. If he confines the compulsion to changing the title of a security from bearer bonds to inscribed stock, he will protect the revenue in the way desired. There is no necessity to grant the proposed additional power to an already powerful section of the community.
– The Government Savings Bank of New South Wales is now out of action in certain respects. Thousands of persons have built homes, and have financed them by lodging bonds with that bank. What position would they be Iti if the bank were called upon to convert those bonds into inscribed stock? Would the Commonwealth Bank take the responsibility of seeing that the homes were paid for? In some cases, homebuilders have obtained advances to the extent of 90 per cent, of the value of their bonds. They could not personally convert their bonds into inscribed, stock, because the bonds are in the hands of the bank as security. Will the Commonwealth Bank act as the agent of the Savings Bank of New South Wales in this matter?
.- I draw attention to sub-clause 4 of clause 12, which provides that holders who dissent must forward their securities with the notice of dissent, and, if they refuse to do so, no interest will be paid to them after the 31st July. What is intended to be accomplished by this provision? Why are new securities to he issued for the present securities? I am aware > that on several occasions the Treasurer has complained that large amounts have been lost to the Treasury through defaulting taxpayers, because of the fact that it is impossible to trace the owners of bonds. I welcome any proposal intended to tighten up the law in that direction ; but I would be glad to have a full explanation of the purpose of this provision.
– Referring’ to the point raised by the honorable member for Kooyong (Mr. Latham), I understand that the position as stated by the Treasurer applies to ali bonds lodged with the banks for safe custody, where the banks take full responsibility for their safe keeping. The honorable member for Warringah (Mr. Parkhill) mentioned the case in which bonds are’ placed in a box and lodged with a bank for safe custody, without actual identification of the securities contained in the box.
– Such bonds would be regarded for the purposes of this measure as being lodged for safe custody.
– The honorable member suggested that the bondholder would be required to deal with bonds so deposited with the bank. I take it that be would have to deal with those bonds as though he held them in his own house. It seems to me, therefore, that no difficulty arises in connexion with the clause before the committee. It would be impossible for it -to apply to the other cases, because the system would be unworkable. It would be necessary to break open the strong boxes, and the bill does not, and cannot, provide for that.
.- I agree with the last speaker in what he said about the deed boxes. A receipt is given for a deed box, the bank accepting no responsibility for the contents. I have received deeds for which I gave individual receipts describing them, but sometimes I have given receipts for boxes or envelopes without knowing what they contained.
– That practice would not be affected by this clause.
– No, but despite the Treasurer’s reference to securities, he will admit that his experience extends only to the Commonwealth Bank.
– I referred only to the Commonwealth Bank.
– As a solicitor, I may have had a more intimate knowledge of the methods practised by private banks in regard to securities and bonds than even the Treasurer has.
-^- I bow to the honorable member’s superior knowledge.
– It frequently happens that a receipt is brought in from a savings bank acknowledging the receipt of bonds: People do not, as a rule, like inscribed stock, and the banks do not insist upon it. Even the savings banks do not insist upon inscribed stock. They give a receipt, and the bonds are returned to the holders upon returning the receipt. A note is stamped on the receipt in red ink stating that the bonds will be returned only on the return of this acknowledgment.
– I have had experience of that.
– A great many bonds are lodged with banks, and never transferred into inscribed stock. Indeed, some banks have so many bonds lodged with them in this way that they charge i per cent, for holding them, and collecting ‘ the interest. They say that on the 15th of the month, when the interest is payable, they have to put on special clerks to clip the coupons. The National Bank is one which does not make such a charge.
– The Commonwealth Bank does not insist upon inscribed stock.
– I know that the Commonwealth Bank accepts and holds bonds. Inscribed stock is usually a shade lower in price than bonds, sometimes as much as ls. 3d. lower. Most people have a prejudice against inscribed stock, though for what reason I do not know.
I move -
That the words “ for safe custody or “, subclause 2, be omitted.
Some mortgagees transfer to their own names the securities upon which they haveadvanced money, but by so doing they render themselves liable to certain obligations attaching to the possession of property. I do not know what form of taxation is to be imposed on these bonds,, but if a bank, which has advanced up to- 90 per cent., as was the practice during the war, takes the securities in its own name, it may find that, with the responsibilities it incurs, it has no margin of profit left. For that reason, I do not think that Ate banks will be too ready tohave the securities in their own names. In some cases the banks do not like tohold, inscribed stock. One bank hasrecently been rushing a tremendousamount of bonds on to the market in Sydney and Melbourne. Its advances were so high in proportion to itsreserves that it had to “ secure itself in that way. Every broker knows that thishas been going on, and that the stock, market has been depressed in consequence. In the big city banks thousands of bondholders have lodged bonds for safe custody, and either clip the coupons themselves or get the banks to do it for them. If these bonds have to be transferred tothe banks, a great deal of trouble will be’ involved in putting them, through theinscribed stock books. The Treasurermust surely see the common sense of my objection. Bonds which- have been lodged merely for safe custody should not beincluded in this provision at all. If it is insisted upon, no bank will accept, bonds in the future.
– If the honorable member’s amendment were carried it would place some of the holders of bearer bonds in u very difficult position. They would not themselves be able to get their dissent lodged with the registrar within the specified time.
– Why not?
– Because the bonds lodged for safe keeping with many of the banks have been cancelled, and the i holders Gould not identify them without communicating with the bank, and putting the responsibility on the bank to enter dissent.
– I have bonds for which 1. have ‘a receipt, and neither the number or nature of those bonds has ever been changed.
– Only two banks, so far as I know, follow the practice of holding the original hearer bonds, and clipping off the interest coupons. The other banks do not hold the bearer bonds, hut take inscribed stock in their own names on behalf of the customer. The honorable member gave particular examples dealing with the savings banks of Victoria and elsewhere. I have communicated with the Loans Officer of the Commonwealth Bank, and have been informed that there is not one savings bank in Australia which actually keeps original bonds.
– If this matter were adjourned for a fortnight, I should be able to place before the Treasurer the actual bonds which I have lodged on ‘behalf of clients.
– I do not challenge the accuracy of the honorable member’s statement, but the transactions to which he refers may have been .carried out before this practice was instituted. I am going on the information .given to me by die .Loans Officer of the Commonwealth Batik, whose business it is to know. There is no point in the honorable -member insisting on his amendment, when he may thereby do a .disservice to the .bondholders. Even if the system I have referred to is in operation in only one bank, .a .bondholder .who has lodged securities in that bank would <not:be .able to send in notice of dissent, because he could .not identify idi em.
The honorable member for South Sydney (Mr. E. Riley), asked what would be the position in regard to the Government Savings Bank of New South Wales, which has temporarily closed its doors. No change is to be made in the manner in which that bank has managed its customers’ affairs. The bank still receives interest payments on behalf of its customers, and still pays over the amounts to them. It will carry on the same way as .other banks, and perform its necessary duties under this measure.
– Or return the bonds.
– Or return the bonds, as required .by customers. The honorable member also referred to paragraph 4 of the clause, stating that in his opinion it would be unwise to require bearer bonds to be given up.
– I asked why it was required.
– Lt must generally be recognized that a problem will remain for solution if any .considerable number of bondholders refuse to convert. In order not to give colour to the suggestion that this conversion is compulsory, or thai ar threat is held out, or that some kind of bludgeon is being kept in the background, I have refrained from asking honorable members to discuss what ought to be done with the unconverted holdings, but that matter will have to he dealt with if many bondholders refuse to convert. It is to enable that problem to be handled with greater facility should it arise, that the holders who do not convert are asked to give up their bonds in exchange for their inscribed stock.
– I wish to be enlightened on one point in regard to sub-clause 4, which reads -
Where dissent in. accordance with this section is signified and the existing securities arc securities other than inscribed , StOCK. such securities shall accompany the notice of dissent and thereupon be exchanged for Commonwealth -Government inscribed ‘stock -conforming with the conditions of the -existing securities in respect of duration, redemption, -rate of interest and in all o’ther -respects.
Clause 13, which seems to conflict with sub-clause 4 -of clause 12, reads -
The equivalent amount of new securities to be exchanged for an .amount of existing securities shall be based on a reduction of the interest rate on existing securities by twenty-two and one-half per centum, and shall, where necessary, be determined by actuarial calculation in the manner set out in the schedule.
If the bond that is handed in is to be the same in all respects as the new security issued in exchange, would the securities handed in by those who consent and those who dissent to conversion be the same as the new securities issued tothem ?
– That provision applies only to those bondholders who dissent, and, in their case, there will be no reduction of interest.
– If a £100 bond in a 6 per cent. loan maturing in 1932 is handed in, will the holder be given a new security in the form of inscribed stock similar in all respectsto the security handed in?
Mr.JONES. - Then the new security given to a bondholder who dissents will be different from the new security given to a bondholder who converts.
– The face value of the securities would be different.
– The clause states that the conditions are to be the same in all respects, and I should like that point explained.
– A bondholder who dissents will have issued to him in place of his bearer bonds, inscribed stock with the conditions of the security he surrenders, in respect of duration, redemption, rate of interest, and in all other respects.
– Until further orders.
– Until Parliament otherwise orders. I shall not attempt to prophesy what Parliament may do later with regard to those who dissent. I have some amendments to this clause. I move -
That the word “notified”, sub-clause 3, be omitted with a view to insert in lieu thereof the word “ signified “.
If this amendment is agreed to, the clause will conform with other references in the bill.
Mr.Beasley. - What other references?
– The word “ signified “ has been used in other clauses. In this case for some reason or other the word “ notified “ has been used, and it is now proposed to make this clause conform with the other provisions of the bill.
Amendment agreed to.
– I move -
That after the word “ concerned “, subclause 3, the following words be inserted: - “ conforming with the conditions of the existing securities in respect of duration, redemption, rate of interest, end in all other respects; and, until the securities have been so exchanged, no interest shall be payable thereon in respect of any period subsequent to the thirty-first day of July One thousand nine hundred and thirty-one.”
This amendment, if agreed to,will make sub-clause 3 conform with sub-clause 4. The honorable member for Warringah (Mr. Parkhill) asked whether it was right to use the word “duration” when some of the bonds dealt with may be interminable. Theamendment is designed to prevent the reference to duration from prejudicing in any way later on the conditions under which interminable bonds have been issued. Those conditions will apply to the inscribed stock issued in exchange for such bonds.
Amendment agreed to.
– I move -
That the following words, “ Where dissent in accordance with this section is signified and the existing securities are securities other than inscribed stock, such securities shall accompany the notice of dissent”, sub-clause 4, be omitted with a view to insert in lieu thereof the words “ Whereexisting securities, not so lodged for safe custody or as security, are not in the form of inscribed stock, and dissent in respect of those securities is signified in accordance with this act, those securities shall accompany the document signifying dissent.”
This amendment, if agreed to, will make the meaning of the provisionmore explicit.
.- I appreciate the object of this provision, but it appears to me that the clause is too cast iron in its character, because it requires absolutely that the securities shall accompany the notice of dissent. Is it essential that they should actually accompany the notice of dissent? Would it matter much if they were lodged subsequently, the same effects to follow as in the case of the securities accompanying the notice of dissent? This point is not particularly important, but I am considering the case of individuals who, because they cannot gain immediate possession of their securities, will not be able to send them within the prescribed time with the notice of dissent. I suggest to the Treasurer (Mr. Theodore) that when the bill is in another place consideration bc given to the- need to make this provision more flexible. I might mention that the post office will have to adopt special precautions during the period of conversion, and it may therefore be desirable to allow a little flexibility, because, otherwise, bondholders will feel afraid that unless they send their securities with the notice of dissent within the prescribed time, they will lose some of their rights.
– The reason for requiring securities to accompany the document notifying dissent is to prevent any misunderstanding or mistake as to the identity of the securities.
– And to establish the good faith of dissenting bondholders. I appreciate that fact.
– If a general notice were received that a bondholder did not intend to convert his holdings, and he then went on to describe the nature of his securities, that information would be too vague to be acted upon, and possibly injustice would be done to a bona fide bondholder who wished to dissent. So that there can be no misunderstanding, we are providing that the securities must accompany the notice of dissent. The Deputy Leader of the Opposition (Mr. Latham), has suggested that this clause should be made more flexible. If the Government can devise means of doing that, an amendment to that effect may possibly be moved in another place. In any case I undertake to consider the suggestion.
Amendment agreed to.
– Is it intended under this provision to issue only inscribed stock and not bonds?
– No. It is intended to issue to bondholders who convert their present holdings, a class of security which would be issued under the ordinary Com.monwealth loan acts, such as inscribed stock or bearer bonds. The restriction of the exchange of securities for inscribed stock applies only to those who hold bearer bonds, and dissent from conversion. In that case they must exchange bearer bonds for inscribed stock. In all other cases the bondholders may, if they so desire, obtain bearer bonds.
.- Will it be possible for holders of bonds to exchange them for inscribed stock, or vice versa? I do not know whether there is any provision made for that, but I suggest that seeing that the bondholders are likely to have their stock converted for long periods of from seven to thirty years, they may change their minds as to what is the most convenient security for them to hold. For instance, many people who expected to draw their money this year or next year, will be disappointed, and they may decide that bonds, being more negotiable, would be preferable to inscribed stock.
– The only restriction placed upon holders of securities who convert will be when for the period for registration the books are closed to enable the officials to attend to the preparation of new registry books and the whole of the business connected with the conversion. But the ordinary facility for surrendering bonds in exchange for inscribed stock will apply as it does now in respect of outstanding loans. A person who holds inscribed stock may convert into bearer bonds. That facility will exist in respect of the new stock.
– Clause 5 deals with the precise conditions.
Clause, as amended, agreed to.
Clause 13 - (1.) The equivalent amount of new securities to be exchanged for an amount of existing securities shall be based on a reduction of the interest rate on existing securities by twenty-two and one-half per centum, and shall where necessary be determined by actuarial calculation in the manner set out in the schedule to this act:
Mr. RIORDAN (Kennedy) [4.581. - When I was speaking on the second reading of the first bill, which dealt with the agreement between the Commonwealth and the States, the Minister for Markets (Mr. Parker Moloney) asked me to suggest an alternative to the proposed reduction in pensions. At that time I said that I thought that a reduction in the interest rates would bring about a saving greater than that proposed by a .reduction in -the old-age and invalid pensions and soldier, pensions. I have since ascertained that a reduction .of 1 per cent, in interest rates would effect a saving greater than is now proposed by means of a reduction in old-age and invalid pensions and soldier pensions, and in the maternity bonus.
– The honorable member is suggesting that we substitute 40 per -cent, for 22-J per cent.
– We are faced with a national crisis, and the operation of the -Government’s plan will, according to the experts, bring about more unemployment. It is, therefore, likely that next year this country will be faced with a position similar to that now existing. From the 1st July, the interest on savings hank deposits, which include the savings of the workers, has been reduced by 1 per cent. The Queensland branches of the Commonwealth Savings Bank have paid in the past 3£ per cent., and the latest reduction will bring the interest rate to 2-i per cent. Government should set an example by making money cheap. One of the handicaps which industry has experienced in recent years has been the high rate of interest. The prices of commodities other than money are subject to fixation, either artificially or hy the state of the market. Wool-growers, for instance, have to accept the market price for their commodities ; they cannot charge for it what they choose. The fixation of money prices is within the power of Parliament. A reduction of the rates of interest on the internal public debt to a flat rate of 3 per cent, would effect a further saving of £5,600,000. We are told hy the experts that unemployment relief this year may cost Australia £13,000,000. The two items combined total £18,000,000, which if expended in the stimulation of the gold-mining industry would do much to provide work for our people, and would relieve the exchange position, because we could pay our debts overseas with gold. Many low grade shows in Queensland could be profitably worked, and I suggest that married men who are out of work could be organized by the Australian Workers Union into mining divisions, to operate under the direction of govern ment mining experts, whose salaries have continued, -notwithstanding that they are almost idle because of the stagnation of the industry. Married men, on starvation rations, and others receiving an allowance of 6s. or 7s. .a week would gratefully accept this form of assistance, and, if supplied with tools, rations and equipment, could make more than the basic wage by working mines on tribute. Although the price of lead to-day is lower than at any other previous time within my recollection, the Mount Isa mine is still operating. So, also, is the Chillagoe mine. The Nationalist Government in Queensland declares that it is losing slightly on the operations at Chillagoe, but that it is one of the best enterprises in the State. I agree with that. I never thought that Chillagoe should be closed down. The mines at Chillagoe, Herberton and Irvinebank, give direct employment to more than 1,200 men. The losses on these operations may at a casual glance seem big, but the mere sustenance of these men in idleness would cost at least as much. I move -
That the words “ The equivalent amount of new securities to be exchanged for an amount of existing securities shall be based on a reduction of the interest rate on existing securities by twenty-two and one-half per centum, and shall where necessary be determined by actuarial calculation in the manner set out in the schedule to this act”, sub-clause 1, be omitted with a view to insert in lieu thereof the following words: - “STew securities shall be exchanged for an equivalent ‘amount of existing securities and such securities shall be at a uniform rate of three per centum per annum”.
That is in conformity with the proposal by the Government a few months ago to control bank interest rates. Had that bill been enacted a rate of 3 per cent, would have been fixed. The Government also proposed that income from interest should be subjected to a special tax of 4s. 6d. in the £1 at the source, but that was rejected. My amendment will achieve what the Government sought to do. I have no animus against bondholders, many of whom subscribed to Commonwealth loans at the request of governments.; hut a patriotic appeal is being made to all citizens to make some sacrifice, and those who have fixed money claims should be glad to facilitate the restoration of Australia to normal conditions, so that our people may he employed instead of living like blacks in camps on the dole. If Captain Cook were to return to earth, and stroll about La Perouse, and other unemployment camps, he would be ashamed that he had discovered Australia; certainly, we have made very poor use of the continent that is in our possession. At Mareeba, in my electorate, all the tobacco that Australia requires could be grown. The electorates of Wide Bay and Capricornia could supply Australia’s needs of cotton. We cannot continue to tax foods, primary production, and secondary industries to feed armies of idle men who are willing and anxious to work. The Government must admit the right of every individual to employment, not merely to sustenance. Professors Shann, Copland, and Giblin said that their responsibility was to suggest a means of providing sustenance for the unemployed next year, and not to devise means of providing employment. The present system of taxing and spending without commensurate production is similar to the policy adopted by the banks in recent years. Governments and banks bave been spending their surplus money on non-productive works. In the cities and large towns huge bank buildings have been erected, and I read recently that £137,000,000 had been spent on buildings in Sydney during the last few years. Nothing has been done tq stimulate primary production. If the taxation of food and industry is increased, we shall destroy primary production and force the whole of our population into the cities.
The CHAIRMAN (Mr. McGrath).The honorable member’s time has expired.
– The honorable member for Kennedy (Mr. Riordan) considers that the reduction of interest proposed in clause 13. is inadequate; apparently, he does not realize the extent of it, for he has suggested that it be increased. If a person holding 6 per cent, bonds, maturing in 1938, agrees to convert, he will receive 4 per cent, consolidated stock, some of which will have a currency of 30 years. This clause does not mean that over the whole period of 30 years the bondholder will receive a rate of interest 22^ per cent, below the 6 per cent, he is now enjoying. It means in effect that the holder of 6 per cent, bonds will be subjected to a reduction considerably greater than that. The extent of the reduction over the whole period will be an average between 22-J per cent, during the currency of the old bond, and 33-J per cent, over the additional period in the new loan.
– In making the actuarial calculation account is taken both of the existing interest rate and the date of maturity. The holder of a 6 per cent. £100 bond maturing in 1938 will receive a new bond equivalent to about £104 3s. 6d.
– I realize that. If the position of a mau who holds a 6 per cent, bond maturing in 1932 is contrasted with that of a man who has a 6 per cent, bond maturing in 1938, it is found that the former is at a disadvantage, as he receives a premium of a little less than £1 per £100, while the latter receives a premium of a little over £4. The point that I am trying to make is that while the interest rate will be a uniform one over the whole period, the return will be the same as if a bondholder sustained a 22^ per cent, reduction in the rate of interest over a certain number of years, and received interest at the rate of 4 per cent, for the remainder of the period. Though the rate throughout will be uniform, it will not give to the bondholder a result that is 22$ per cent, less than he is now receiving, over the whole period. In the majority of cases the sacrifice will be greater than that. If the bondholder who now possesses 6 per cent, bonds were to suffer only a 22£ per cent, drop throughout the whole period, where would the difference come in between bondholders with 6 per cent, bonds maturing in 1932, and others with 6 per cent, bonds maturing in 1938 ? Obviously they would be treated on the same basis. These actuarial calculations are necessary for the reason that I am trying to elucidate. A man who has 6 per cent, bonds maturing in 1932, will receive, spread over the whole period of the new loan, a trifle over 4 per cent., a drop considerably below 22$ per cent., whereas the holder of 6 per cent, securities running almost up to half the period of the new loan, will receive a somewhat better return, because he has the right to a reduction not exceeding 22$ per cent, over the years during which his present bond would normally continue.
The honorable member for Kennedy (Mr. Riordan) spoke on behalf of oldage pensioners, suggesting that their pensions might be left intact if the reduction in the rate of interest were made even greater than is contemplated. Quite a number of old people have, by denying themselves, succeeded in amassing a modest competence, in order to avoid having to claim an old-age pension. During the second reading of the bill, I gave an instance, and, as the Treasurer was not there in the chamber, I shall repeat it. It is an actual case, of which I have full particulars, an old couple who had accumulated £2,000, and invested it in Commonwealth bonds in the State savings bank. As a result of the proposed 22½ per cent. cut, their income will drop from £98 to £’76 per annum, leaving them with about 29s. a week. An old couple in receipt of the old-age pension of £104 per annum will be subjected to a reduction of 12½ per cent., which will reduce their income to £91, or 35s. a week. So that the thrifty couple who made an effort to provide for the declining years of their lives will be at a disadvantage as compared with those who have no other means of existence but the old-age pension. It would be absolutely unjustifiable to do something that will involve a greater sacrifice on their part. I do not propose to move an amendment to rectify the position, as I know that it would need to be specially considered by the Government, but I suggest a way out of the difficulty. “Would it not be possible, where it is clearly proved to the satisfaction of the Treasurer, or his deputy, that a bondholder has a total income of less than the present old-age pension for man and wife, to issue to such person sufficient additional bonds in the new loan to ensure that his sacrifice in interest would at least be no greater than that of a pensioner? That would ensure that his sacrifice would be no greater than that made by a person on the old-age pension. Another suggestion is that such a bondholder should be permitted to redeem his investment at its face value on the present maturity date.
The CHAIRMAN (Mr. McGrath),The honorable member’s time has expired.
.- I ask the Treasurer to reconsider the limitation that applies to stocks purchased prior to August, 1914. In his secondreading speech the honorable gentleman stated -
The holders of 3, 3½, and 3¾ per cent. stocks, who acquired such securities prior to August, 1914, will be asked to convert without making any sacrifice which will bring the return below 3 per cent. When the stock is held by recent purchasers, however, no provision of that kind will apply and the 22½ per cent. reduction will be effected.
– Even on the 3 per cent. stocks?
-Yes. The honorable member must see the justice of that. Some of the present holders of the 3 per cent. and 3½ per cent. stocks may have bought them at as low as £55, and the effective return may be C per cent. Unless such holders are subject to the reduction they will constitute a specially favoured class.
I submit that the reason advanced by the Treasurer is that because those persons bought bonds at a low rate, returning them 6 per cent., they should be excluded from the provision, while those who lent their capital to the States for over 30 years at 3 per cent. should, in future, receive £2 6s. 6d. per cent.
– The original holders of this stock will not be asked to convert at a rate that will bring them down below 3 per cent., but those who have bought since August, 1914, will receive only £2 6s. 6d. per cent. August, 1914, was fixed, because since that date no government loans have been issued at less than 4 per cent., and, therefore, those who held bonds at that time may be presumed to be original bondholders.
– The Treasurer made it clear in his speech on the rehabilitation plan that he was against the constitution of “ a specially favoured class “. If the honorable gentleman will look at the prices paid for 3 per cent. bonds since 1914, and as far back as 1924, he will see that they touched £70 and £72. In the Argus of the 15th June a return was published which shows clearly that all bondholders will not be affected in the same way by the conditions of the conversion loan. It is shown that 5½ per cent. 1931 bonds which were bought on that date for £77 10s. - and which are now £78 10s. - will give the holder a return of £8 9s. 6d. per cent. for seven years. After the expiration of that time the fortunate owner will receive an additional return of £20 of his capital. Why should distinctions he made between different classes of bondholders?
– What is the honorable member advocating ?
– I am advocating that steps shall be taken to avoid the constitution of “ a specially favoured class “. Either those who have bought bonds since August, 1914, should be excluded, or those who are now able to obtain a return of 8½ per cent. under this scheme should be obliged to stand on the same ground as all other bondholders.
– All persons who have bought bonds since 1914, and who still hold them, will be obliged to accept a. reduction of 22½ per cent.
– My point is that it is unfair that people who hold 3 per cent. bonds should have to accept £2 6s. 6d. per cent., while people who have bought certain other bonds at a heavy discount will be able to obtain up to £8 9s. 6d. per cent. These people should be compelled to satisfy the Treasurer that they paid the full £100 for bonds which are of a nominal value of £100, otherwise there will be no equality of sacrifice. Let me give the details of a specific case which came under my notice.Four years ago a person whom I know bought bonds of a nominal value of £300 for £216, or £72 per cent., which have returned him £15 per annum. I am not making an appeal for a special case ; I mention these details only because they have come directly under my notice. The return to this bondholder under the conditions of the conversion will be only £16 6s. per annum. I would not mind so much if all bondholders were in the same position, because then there would be equality of sacrifice; but it is unfair that people with money can go on the market to-day and buy bonds under conditions which will yield them 8½ per cent. That kind of thing surely cannot be justified. I sincerely hope that the Treasurer will give some consideration to the representations that I am. making. The people who hold 3 per cent. bonds will be obliged to convert into stock having a currency of 31 years, and yielding only £2 6s 6d. per cent., whereas people who speculatively go on the market now and buy stock can obtain a return of 8½ per cent.
– Those people take a speculative risk.
– That may be true, but we shall create a specially favoured class if we allow certain individuals to draw high rates of interest while others are compelled to accept a very low return.
I wish to refer for a moment to the terms of the agreement in the Debt’ Conversion Agreement Bill, which relate to the matter which we are now considering. I understood the Deputy Leader of the Opposition (Mr. Latham) to say that he had been consulted by the Solicitor-General in respect of this agreement. I am amazed, therefore, to find in paragraphs 4 and 13, the dreadful words “ et cetera.” If any words ever came under complete condemnation because of their indefiniteness, these words did about ten days ago, when the Deputy Leader of the Opposition criticized them. Yet, this legal heresy is being carried into this agreement.
– The words “ et cetera “ do not appear in the bill.
– It is in the agreement, and it should not be there. If ever I had to fight this agreement in a law court I should be able to show that those who signed it would not be bound by it.
.- The honorable member for Kennedy (Mr. Riordan) has proposed an amendment which would have the effect, if carried, of making a further reduction in the interest returns of bondholders. The honorable member, and some others who hold similar views, appear to think that a reduction of 22½ per cent. in the interestreturn will not mean much sacrifice or hardship to those who have lent money to the Governments of Australia, which have spent the money so that the people are now enjoying the fruits of the expenditure of that money. For this reason, I shall read extracts from a few of a very large number of letters sent to me on this subject. I shall not mention the names of the writers, but the extracts will show that this reduction of interest rates will press very heavily upon a self-respecting and thrifty, if poor, section of the people.
– Many people are being placed in an extremely difficult position, and it is infamous.
– The first extract I shall quote is as follows : -
May I draw your attention to my own case (one of thousands). My wife and self, both aged and, invalids, have £1,000 in inscribed stock and £050 out on mortgage returning on inscribed stock £54, and on the mortgage £45, the total, £90, representing our sole income. Cannot something bo done for such as us? Our income for two will be reduced under the tax to £80 10s. and we will be worse off than pensioners and on account Of holding property, not eligible for pensions.
Of course, these people will soon find out that they can sell their property, spend the proceeds of the sale, and then become eligible for a pension.
– The case quoted by the Deputy Leader of the Opposition is almost analogous to one that I quoted.
– The next letter from which I shall quote puts the case of the writer and his wife. He says -
We scratched and saved about £1,500, and both being patriotic, we decided to put £1,000 in the February loan of 1930 at 5* per cent., and when the last loan in November was so urgently required we were still anxious to assist, so we ventured another £300 in that one, and as I was in work at the time we thought we would be able to struggle through until the loan became due in March, 1932. But since putting in the last £300 I have been put off work and haven’t earned one penny this year up till now, nor don’t think I have any’ chance of doing so either as I am nearly 07 years of age and so very many voting men being unable to get anything to do . . .
He then went on to deal with his family circumstances. I shall now quote from the letter of a professional man who says-
In my own case, having lost nearly all my professional income by the causes stated above, the only money my wife and I have to live on is £119 7s. fid. per annum which is interest on money saved in small sums by my wife and invested from time to time in Commonwealth securities. This amounts to £2 os. lid. per week gross. From this sum we have to deduct 10s. per week for interest on money still owing on mortgage for’ our home purchased in better times. We have also to deduct 8s. per week for municipal and water board rates, and 2s. per week for electric light and gas. This leaves us £1 5s. lid. per week to provide food, clothing, medical atten dance, &c, for both of us. Now comes the proposal to reduce the interest on. our loan investments, which only average a little over 5£ per cent., to 4 per cent., reducing our net income by 12s. per week. This only leaves us 13s. lid. per week for our keep. I am 78 years of age and my wife is a little younger, and if this reduction is insisted upon I see nothing ahead of us but an old people’s home, the old-age pension, or starvation.
Finally. I shall quote from a letter sent to me by a widow whose sole income is derived from the investments of her husband. It reads as follows : -
If the bondholders agree to the conversion to 3 per cent, or 4 per cent., what guarantee have they that proper reductions will bc made in the public expenditure, or, perhaps, those reductions will be only for a year or so, while the bond interest reduction will bc permanent.
I know that honorable members have similar letters. It is suggested that an insufficient and insubstantial contribution is being made by bondholders under the reduction of 22$ per cent, in interest ; but the bondholders are not the money lenders of horrific aspect that some honorable members would have us believe. Large numbers of them are among the best of our own people.
I shall refer to only one other letter that I have received. It gives the case of a man aged 66 years, who has a wife of the same age. He worked until he was 61 years old, owns his own house, and has investments amounting to £1,480, including a current hanking account, from which he meets his living expenses. Last year the interest received by him was £82, and he used up £85 of his capital, leaving £167. His estimated interest this year is £80. The 20 per cent, reduction will, therefore, cost him £16, and he still has about £1,300. Let me read the following paragraph from his letter : -
It would be quite easy and pleasant to take a trip home, dissipate the capital, come back and apply for the old-age pension, yielding £104; but my dictionary defines pauper as “ One supported by charity, or by some public provision “ and this does not appeal to me.
The hard cases to which I have referred indicate what is happening in Australia at the present time. Let us recognize that very real sacrifices are being made by bondholders. Nobody can fairly suggest that the majority of them are rich, or, in any sense, Shylocks; they are persons who, in response to appeals by governments, have lent their money for governments to spend for the benefit of the people as a whole, as that benefit has been determined by Parliament.
The proposal before lis is one for a permanent reduction of interest. I regard this plan, as the Government has placed it before us, as one indivisible scheme, containing several provisions dealing under a number of heads with Government expenditure. While the interest of the bondholders is being reduced permanently, the reductions made by legislation in other items of expenditure are not being affected, as a matter of legislative action, in a permanent way. I will scrutinize with, great care any proposal forreinstatement in other directions, unaccompanied by some advantage to those of our citizens who have lent their money to the Commonwealth Government. It is, perhaps, easy to avoid saying this ; but put it to all honorable members that this is one indivisible scheme, and I suppose that all of us, except those who regard bondholders as Shylocks, are supporting it reluctantly and with regret. -V cut is being made under all the heads of this scheme, and it will be the duty of this House to see that, in any restoration in any direction in the future, fair play is meted out to all those who will suffer as the result of this scheme, regard being paid to all the circumstances which may exist at the time. For the honour of our country, I hope that when future appeals are made to restore what is now being taken away, it will be remembered that each reduction was recommended and justified on this occasion by reason of the fact that it was accompanied by the other reductions.
– I support the amendment submitted by the honorable member for Kennedy (Mr. Riordan), who suggests that the interest rate should be reduced from 4 per cent, to 3 per cent. I have listened with interest to the remarks of the Deputy Leader of the Opposition (Mr. Latham) when dealing with the bondholders, and [ could produce as many letters as the honorable gentleman has brought forward, and these would demonstrate with equal force the plight of the invalid and old-age pensioners and prove conclusively that they are entitled to special consideration.
– I have such letters, also.
– I have not the same facilities that the honorable member enjoys for dealing with his correspondence, and, therefore, I have not the letters under my notice at the moment. But I could speak as fervently regarding the claims of the pensioners as the honorable member has spoken concerning the section on whose behalf he has addressed the committee.
– I was speaking on behalf of the whole of the people.
– The honorable member said not one word concerning those to whom I am referring, but devoted the whole of his time to the bondholders. The people for whom I am speaking, the pensioners, should be protected from this wanton attack upon their small incomes. The representations made by the Deputy Leader of the Opposition accord with his usual expressions of opinion in this House, and show that he has little regard for the section of which I am speaking. It has been suggested by the honorable member for Kennedy that, if his amendment is agreed to, it will prevent an inroad being made on the income of the pensioners because it will provide by other means the amount required to balance the budget. According to the figures published by the Treasurer, the amount to be taken from the invalid and old-age pensioners and war pensioners is estimated to be £3,350,000, while the sum to be arbitrarily deducted from the wages of public servants is £1,700,000. Under the proposal of the honorable member for Kennedy for a further reduction of 1 per cent, in the interest on our internal debt, which amounts to about £556,000,000, the amount received will be equal to that which it is proposed should be saved under the two headings mentioned, and it will be unnecessary, according to the honorable member, to reduce the incomes of the pensioners. Not only is it proposed to reduce the pensions of aged and invalid persons and widows by 2s. 6d. a week, but a radical change is indicated in the conditions under which these pensions are to be paid. While it is true that full particulars with respect to this matter have not been supplied, it could be gathered from the remarks of the Treasurer (Mr. Theodore), in introducing the bill, that a drastic change is to he made. I have had a table sent to me by a pensioner showing how his 17s. 6d. a week will be spent when this plan is put into operation. After having perused it no honorable member will dare suggest that 17s. 6d. a week is sufficient, with prices as they are to-day, to meet the needs of an aged or infirm person who depends upon the pension for his means of livelihood ? To those who support the proposal, I recommend that they try to live on that amount themselves.
It is argued by the Government that, owing to the fall in the cost of living, 17s. Gd. will purchase as much as could be bought for 20s. a few years ago. The best answer to that can be given by those who will have to make the 17s. 6d. do what £1 is doing to-day. Their circumstances are entirely different from those of the bondholders. The statement was submitted to the country several months ago that the Government proposed to impose a tax of 3s. 6d. in the £1 on interest to enable it to balance its budget. It was then shown by the publicity department that price levels had dropped by 25 per cent, between 1925 and 1930, and it was contended that the holders of the majority of the bonds that must now be converted had received the benefit of the reduction in price levels, over the past six years, and should therefore, be subjected to a corresponding reduction of their interest or some form of special taxation. Viewing the matter from that angle, no real sacrifice will be involved in the reduction of the average rate of interest from 5$ per cent, to 4 per cent. It would be interesting if the Treasurer would inform honorable members just how the Premiers Conference arrived . at its decision to make 4 per cent, the rate of interest payable. What arguments, if any, swayed the representatives at the conference, or was the decision arrived at in a purely arbitrary way?
– The decision was arrived at with the consent and concurrence of Lang.
– I deny that.
– Why not call him the Premier of New South Wales.
– Because he does not represent the people of New South Wales.
– Anyway, we are not going to be bullied by that crowd over there all the time.
The CHAIRMAN (Mr. McGrath).Order !
– It is the other side which is doing the bullying.
– I name the honorable member for Hunter (Mr. James).
– A lot of badinage has been flying back and forth across the chamber, but I am sure the honorable member for Hunter did not intentionally or maliciously disobey the Chair. He must recognize the need for apologizing, and allowing the committee to get on with its business.
– Why should I apologize? Those on the other side are bullying more than we are.
– The Chairman can deal with other offenders later.
– Very well then, I withdraw the remark I made.
– I wish the Treasurer would inform honorable members what were some of the arguments which induced the Premiers Conference to fix the new rate of interest at 4 per cent.
– It was not decided, in the first place, to fix the rate of interest at 4 per cent. It was decided to adopt a proposal for the reduction of interest rates by 22$ per cent., and it was found that this figure, applied to existing rates, worked out in such a way as to make 4 per cent, a convenient rate to adopt.
– I am not satisfied with the Treasurer’s explanation, but let us pass on. How did the conference decide upon the other cuts which were agreed to? For instance, by what process of reasoning did it decide to cut oldage and invalid pensions by 12$ per cent., returned soldiers pensions by 20 per cent., and the salaries of public servants by 20 per cent.? We should not forget that a reduction of 12$ per cent, over the whole of the pension payments will work out at more than that amount for thosepensioners who will continue to receive pensions after the conditions have been altered as is proposed. Many who are now receiving pensions will cease to receive them, and they will be cut out altogether.
– That matter can be discussed when the bill dealing with it is before the House to-morrow.
– The amendment of the honorable member for Kennedy (Mr. Riordan), if agreed to, would make it unnecessary to interfere with pensions. He believes, and I agree with him, ‘that there is no need to make such a reduction.
– The honorable member’s time has expired.
– I oppose the proposal advanced by the honorable member for Kennedy (Mr. Riordan). I associate myself with the opinions expressed by the honorable member for Gippsland (Mi Paterson), and the Deputy Leader of the Opposition (Mr. Latham), regarding the hardships which will be inflicted upon certain classes of bondholders by the operation of the Government’s conversion plan. I am quite prepared to admit, also, that old-age pensioners will suffer under the scheme, and I propose to have something to say regarding them when the bill dealing with pensions comes before the House. The measure now before us, however, does not affect pensioners at all. That I do not now speak -on the subject of old-age and invalid pensions, or of soldiers pensions, must not be taken as an indication that I have no sympathy with the persons who will be affected. I refrain at this stage, because such a discussion would be outside the scope of the bill now before us. The sob story of the honorable member for West Sydney (Mr. Beasley), with which he was incoherently regaling the committee when his time expired, was entirely irrelevant. Evidently the honorable member cannot bear to listen to anything in defence of the rights of any section of the community other than that of which he styles himself the specially delegated champion. As a matter of fact, there are other honorable members in this House who have much more sympathy with the underdog, and have given more proof of it, than has the honorable member for West Sydney.
I should be glad to hear the Treasurer explain later exactly how the 22$ per cent, reduction of interest rates will work out. My opinion is that the actuarial calculations have been so made that a bondholder’s interest will be reduced by 22$ per cent, during the period between the date of conversion and the date on which his bonds would have ordinarily matured, but that his holdings will, after that date, become, in effect, part of a forced loan at 4 per cent. The reduction of interest in the case of a man now holding 6 per cent, bonds will, after the present date of maturity, be, not 22$ per cent., but 33$ per cent. It has been argued that the calculation has been made in such a way as to make the reduction work ot at 22$ per cent, over the whole period of the loan; but I cannot see the force of that argument, when it cannot possibly be known upon what date or dates a particular individual’s bonds will mature. It cannot be known whether those bonds will mature in 10, 20, or 30 years nor can I see how it will operate in regard to tax free loans. T am concerned with the situation in which the small bondholders will find themselves. I believe that the Treasurer is endeavouring to do a fair thing by all classes of the community, but it has been proved conclusively that grievous hardship will be inflicted upon many persons if the proposals are put through in their present form. Indeed, it would be better for many small holders to realize their assets, and apply for the old-age pension at once. No one in this House believes that such a course would be in the interests of the country. Some of these small holders have, by the exercise of stern and rigid self-denial, acquired a competency upon which they hoped to live for the remaining years of their lives, and it is not right that they should be deprived of what they have worked for so hard. Australia may be in difficulties, but our plight is not so bad that we cannot do the right thing by these deserving people. I join with the honorable member for Gippsland, and the Deputy Leader of the Opposition, in asking the Treasurer and the Prime Minister to consider the plea put forward, and to ensure that even-handed justice is meted out.
Mr. BERNARD CORSER (Wide Bay) [S.0”. - I shall support the bill and the proposed reduction of interest rates as disclosed in the table submitted by the Treasurer (Mr. Theodore). Naturally I am opposed to the amendment of the honorable member for Kennedy (Mr. Riordan), which provides for a reduction in the rate of interest to 3 per cent, in connexion with this proposed loan conversion. If that amendment were agreed to, it would bring about a 50 per cent, reduction in interest payments on 6 per cent, bonds, and that would undoubtedly have a seriously detrimental effect upon some. The honorable member for West Sydney (Mr. Beasley), who is the leader of the Lang group in this chamber, referred to the proposed reduction in pensions, which is really not now under discussion. He claimed that the pensioners, whom no honorable member wishes should suffer undue hardship, are to have a greater reduction in their payments than the bondholders. That claim cannot be substantiated. We are agreed that there will be anomalies under this scheme, and that the small bondholders will have their interest payments reduced by 22$ per cent, will bear a greater burden than the pensioners, who are to suffer a 12$ per cent, reduction in their pensions. The honorable member for West Sydney and his colleagues claim to be the guardians of the unemployed, who are suffering more hardship than is any other section of the community, yet they are prepared to inflict a heavy burden upon the small bondholders. I have with me a letter from a railway worker in my electorate. He claims that his present income is £85 per annum, £78 of which is derived from his investment in war bonds at 6 per cent. The honorable member for Kennedy proposes to reduce the interest on that investment to 3 per cent. The honorable member for West Sydney would confiscate all wealth, if, by so doing, he could bring about the destruction of the whole fabric of government and the trade and commerce of this country. Had he and Iris colleagues the opportunity, they would not hesitate to bring about revolution in this country. This railway worker in vested his savings in war bonds so that in his old-age he could keep his wife and daughter. Both his wife and himself would be eligible for a pension had they not saved during their lifetime to secure a competency for their old-age. Perhaps after hearing these particulars, honorable members in the Ministerial corner will be prepared to give an intelligent vote, and refrain from acting at the dictation of the Communists who are controlling the Australasian Council of Trades Union to-day. Those honorable members came to this Parliament to carry out the bidding of the Communists to bring about as early as possible a financial debacle in Australia. Had this aged railway worker not saved some money during his lifetime, both he and his wife would be in receipt of a total pension of £104 a year instead of receiving as at present an income of £85, £78 of which represents interest on war bonds. Yet individuals who claim to represent the section of the community requiring assistance would take away from these aged people practically 50 per cent, of their small income.
– I rise to a point of order. The honorable member for Wide Bay has referred to individuals. I understand that the Standing Orders require him to refer to the members in this chamber as honorable members.
The ACTING CHAIRMAN (Mr. Francis). - The reference of the honorable member for Wide Bay was collective, not individual.
– If . the proposals of those honorable members who have been referred to collectively were given effect, the income of the small bondholder to whom I have referred would be reduced to £39 a year. The honorable member for Kennedy has suggested a reduction of 50 per cent, in interest payments.
– That is not enough..
– I have already stated that the honorable member and his colleagues wish to confiscate all wealth, homes, factories and farms. That is the policy of all members of the Lang group. It is time that the Government and the community took action to counteract the insidious influence of the communistic- section of the ; community. It is time that we rid Australia of this black spot. By a gradual process honorable members in the ministerial corner are instilling their doctrine into the minds of the people. The members of the Lang group constitute a menace to Australia,, and they should be dealt with by this Parliament and the country generally. If the Government sees fit to take action, in this direction. I shall do my utmost to assist. Honorable members representing the Lang group have made a villainous attack upon the small bondholders, who, in contributing to war loans, have already made a sacrifice, and are now to carry a burden greater than that which the pensioners are being called upon to bear. I regret the decision to reduce pensions. The aged railway worker, to whom I have already referred, is well aware of the present financial difficulty of Australia, and he sympathizes with the Government ; but he hopes that some scheme may be devised which will permit him to use a portion of his capital from year to year to enable his family to live at least in the degree of comfort enjoyed by old-age pensioners. We should do the fair thing to every section of the community, whether it be the bondholder, the pensioner, or any one else. To some degree we have to look for the success of this loan to the small investors. We are, therefore, not entitled to place an oppressive burden upon them.
– I hope that the amendment of the honorable member for Kennedy (Mr. Riordan) will be carried by the committee. We have heard much this afternoon about the poor bondholder, and one honorable member has accused the honorable member for West Sydney (Mr. Beasley) of talking sob-stuff; ‘but T have never heard worse sob-stuff than that which fell from the lips of the Deputy Leader of the Opposition (Mr. Latham) this afternoon. The greatest disservice that the Government could do to the poor bondholder would be to redeem his bonds. If his money were returned to him he could not get 2 per cent, for it in any other investment.
– Most of the bondholders would take the risk.
– Not many of them. If the whole of 1 the internal debt were repaid the lenders would look in. vain for an opportunity to re-invest it. Therefore, the Government can do no better service to the bondholders than to keep their money, and pay for it a reasonable rate of interest. Anybody studying this legislation, and the plan of - which the reduction of interest is part, must know that its effect will be to whittle down wages and commodity prices, with the result that in time 3 per cent, will have the same purchasing power as 6 per cent, has to-day. The members of the Opposition have adopted a new battle cry, “ Tell us your alternative “, which they repeat like cockatoos on a perch. The honorable member for Kennedy has submitted a very good alternative. The Government proposes, under this plan, to save £5,050,000 in respect of war pensions, old-age and invalid pensions, and the maternity allow,ance. By reducing interest to a fiat rate of 3 per cent., instead of the rates proposed by the Government, an amount of £5,500,000 can be saved. That is sufficient to maintain the present expenditure on the social services I have mentioned, and still leave to the Treasurer a balance of £450,000. That is a practical alternative which will hurt nobody. The opponents of the amendment have indulged in much talk about the unfortunate persons who have invested a few hundred pounds in government bonds. The very phraseology of the letters quoted by the Deputy Leader of the Opposition betrayed that they had been dictated by some person or organization, and were not genuine. I remind the committee that the bill makes provision for necessitous bondholders to be paid off.
– The bill does not provide for paying them off.
– It gives to the Treasurer authority to pay them off at his discretion.
– No ; it gives authority to bring them on to the early dates of maturity.
– Later an amendment will be submitted which, if carried, will empower the Treasurer to pay off these bondholders immediately, and. an amendment to be moved when another related bill is before us will indicate how he can obtain the money required for that purpose. All those who have invested a mere £2,000 in war bonds could be paid off readily. The mock sympathy expressed by some honorable members for the “ poor “ bondholders leaves me unmoved. That and similar pleas to save the skins of wealthy investors are as old as the hills. Although hardship may be caused in individual instances, the Treasurer has stated that the national debt, including the war loans, represents, not the savings of the people, but the profits of industry. The reason why government loans are so popular i3 that they provide an investment for excessive profits that could not be advantageously re-employed in the industries which yielded them. If interest is reduced to a flat rate of 3 per cent., the further reduction of 1 per cent, will not affect the savings of the poor; it will apply almost entirely to profits extracted from the workers and consumers duringthe war, when the wool and jam industries, particularly, flourished to such an extent that in one year their profits exceeded the total cost of their machinery and plant. Government securities were the only investments available for those surplus profits. If the financial necessities of the nation require that incomes shall be attacked, the accumulated profits of industry should be the first to receive attention, because a revival of industry can be brought about only by Australia’s restoration to a sound economic basis. Therefore, the extra 1 per cent, which i lie honorable member for Kennedy (Mr. Riordan) seeks to save the public treasury will be a very cheap insurance premium to be paid by the capitalists and industrial magnates. For that reason I strongly support the fixation of a flat rate of 3 per cent.
– How does the honorable member propose to treat existing 3 per cent, bonds?
– That rate is reasonably low, and if there are any bonds bearing interest at 3 per cent. - I understand there are not - they will be untouched.
– Even if they were bought for £60?
– The price at which the bonds were bought on the market is not the concern of the Government.
– They may be yielding 6 per cent.
– When loans were floated at 3 per cent, price levels were correspondingly low. The 5 per cent, and 6 per cent, bonds were floated at a period of inflation as a result of war expenditure; prices were rising, and interest rates rose in sympathy. Now the Government, with the assistance of the Opposition, is adopting the retrograde policy of lowering prices, wages and pensions, and the reduction of 5$ per cent, and 6 per cent bonds to 3 per cent, would merely make such securities conform to the economic level to which the Government proposes to depress Australia. I can see no reasonable objection to the amendment, and I hope that it will be carried. It must be understood that the purpose of it is to obviate the proposed reduction of old-age, invalid, and war pensions, and the maternity allowance.
.- All those who have the well-being of Australia at heart will agree that the plan which emanated from the Melbourne conference is essential to Australia’s financial and economic recovery. There is room for adjustment of the details in the various measures, but honorable members should support the general scheme. Some of the honorable gentlemen who have participated in this debate have sought to create the impression that the bondholders are vultures and cormorants that are preying on the community. That is not so; the majority of bondholders are persons of small means. The Deputy Leader of the Opposition (Mr. Latham) cited cases in which bardship would be entailed by a reduction of 22$ per cent, in the rate of interest. As an example, I shall quote the following letter from an old couple in my electorate. It reads -
My husband is a cripple, having met with a severe accident. The small compensation that he got, and the little we had saved, we put into bonds for which, according to promise, we should have received 8s. 6d. per week each, although we refused an offer that would have given us 10s. a week each. We thought more of our country than ourselves. Now we are tied up for an indefinite period with no other income. It is an awful shame, as my husband is between CO and 70 years of age.
The letter speaks for itself. Yet honorable members in the corner persist in disseminating the class bitterness that they preach in the Domain, and to which they owe their position in this chamber, in an endeavour to make people believe that the bondholders should be the only persons to make sacrifices. The Repatriation Department, which has in trust sums of money belonging to orphan children, the dependants of returned soldiers, mental cases, and so on, has invested £500,000 in Commonwealth bonds, which will be subject to this reduction. The honorable members to whom I have referred appear to be unaware that some Australian bonds bear interest at rates as low as 3 per cent.,
Hi per cent., 3$ per cent., and 3$ per cent. Many citizens subscribed to those loans years ago, and they have received those low rates of interest over a long period of years. They have not had the benefit of the increases that a beneficent Arbitration Court gave to the workers. Yet those honorable members in this chamber who support Mr. Lang cry that the bondholders should be penalized still further. If that were done it would result in more small bondholders having to apply for the old-age pension, which would defeat the object desired. The amendment moved by the honorable member for Kennedy (Mr. Riordan) merely seeks to draw a red herring across the trail. It will do nothing, except waste the time of the committee. I hope that the vote will be taken without further delay, and that the Treasurer (Mr. Theodore) will investigate the case of the class of bondholders to which I have referred, to see whether it is not possible to eliminate some of the hardships that they will suffer under the scheme as is stands at present.
.- I do not agree with the honorable mem’ber for Balaclava (Mr. White). I consider that it is an infamy to reduce 3 per cent, bondholders to a rate of £2 2s. 6d. per cent. The greatest enemy of Mr. Lang could not accuse him of desiring to do that. Incidentally, it is becoming more and more apparent that Mr. Lang was the dominating person at the Premiers Conference, and that gradually his ideas are being adopted by his political opponents. Recently there were shown at the Victory Theatre, St. Kilda, which is in the heart of one of Melbourne’s fashionable suburbs, the likenesses of those who participated in the Melbourne Premiers Conference. Only one man received the plaudits of the audience - Mr. Lang. Honorable members may accept that for what it is worth.
I am against the reduction of the basic living wage. The real wealth of a country is the food that it produces. Fortunately, God has not afflicted Australia with a famine. We have more food than we can consume. Rather than proceed with this infamous proposal, I should prefer that we ration our food supplies throughout Australia, as was done in Great Britain throughout the war, when even the very wealthy could not buy more than a certain amount of meat, butter, flour, sugar, bread and other necessaries. The whole of our private and public income could go to the Treasury to enable Australia to honour its obligations to its overseas bondholders.
I foster no hatred against bondholders. I know that many who invested all that they possessed in the £28,000,000 conversion loan are now in a precarious position. The sacred pledges that were made by the accredited representatives of Australia have been vilely broken. It is no use saying that that is not repudiation. I asked one of the best legal authorities of Melbourne his opinion on the subject, and he’ said, “ It is nothing but repudiation. I also add that it is daylight robbery.” He and others put their money into that loan actuated only by the desire to help the country. I know one old lady who put £500 into the loan. She said to mc, “Doctor, how is that they broke their word. Did they tell me the truth when they persuaded me to buy their bonds ? “ I replied, “ My dear, you must form your own judgment.” I believe that Mr. Lyons and his colleagues thought that they were telling the truth.
The Deputy Leader of the Opposition referred to those who have invested in property, and who are still eligible for the old-age pension. My secretary, who is also secretary to the Nail Makers and Wire Makers Union, and who has been made a magistrate and a commissioner of the Supreme Court in order that he may help “me carry on my work in connexion with ‘ alcoholics, told me that, from the 1st January, 1930, to the 27th December 1930, 1,761 cases pertaining to pensions were dealt with by my office, and that from the 1st January, 1931, to the 30th June, 1931, 1,145 similar cases came to my rooms and were attended to. It will, therefore, be understood that we have had some experience in this matter. My secretary and I find, on investigation, that a married couple, each receiving the old-age pension of £1 a week, will be reduced by 2s. 6d. a week, and that, if they have a house valued at £800, they will be allowed an exemption in respect of £500 of its value. From the remaining £300 they are permitted to deduct £50 for pension purposes, which leaves their joint possession at £250. That means that the pension of each will be reduced by £12 10s. per annum, or 5s. per week each. So that, with the prospective weekly reduction of 2s. 6d., they will each lose 7s. 6d. a week. I can find nothing in the plank of the Labour party’s platform to countenance such an iniquity. That platform is as plain as are the Ten Commandments of God, and I have never found the man or woman who could truthfully say that any of those planks will do injury to man, woman, or child. Certainly that platform makes no provision for the reduction of .a paltry 3 per cent, to £2 6s. 6d. per cent., as is contemplated in the schedule of this bill. If I am not paired I shall gladly vote for the amend- “ ment of the honorable member for Kennedy, because it seeks to do justice to those who are already most cruelly stricken. Speaking from a long experience pf political life, I say that a mau who can vote for a rate of interest below 3 per cent, is not endowed with a kind heart.
.- I support the amendment for the’ reason that it indicates a way of placing the burden of sacrifice upon the shoulders of those who are best able to bear it, and of lifting it from the shoulders of the unfortunate war pensioners, old-age, and invalid pensioners, and wage-earners, who are least able to be~r it. The honorable member for Kennedy (Mr. Riordan) has shown that if his amendment is adopted a saving of approximately £5,500,000 will be made. The anticipated savings in pension payments of all kinds from the carrying out of the Premiers’ Conference resolutions is £3,350,000, and the expected savings through the wage-slashing proposals agreed to at the conference is £1,700,000, making a total of £5;’520,000. I mention wage-slashing because I do not stand for the reduction of wages in any way whatever. The amendment will effect a saving of only £20,000 less than the savings anticipated from other objectionable economies that have been proposed, such as invalid and old-age pensions, soldiers’ pensions, and wage cuts.
When the Deputy Leader of the Opposition (Mr. Latham) was speaking I really thought he was weeping out of sympathy with the poor bondholders. I felt like handing him a napkin to dry his tears. But surely no one can suggest that the poor bondholders will suffer to anything like the same extent as the old-age, invalid, and war pensioners. The honorable gentleman quoted letters from poor bondholders. I wonder whether he has received any letters from poor invalid and old-age’ pensioners. If he has not, I have. I do not propose to read any of them, but will place the cold, clear facts before honorable members. One pensioner, who wrote to me, set out in detail how she spent her 20s. She paid 8s. for a room with a stove in it - it was the cheapest room of the kind that she could get. She went on to itemize her expenditure, for bread, meat, tea, sugar, milk and other necessary food until the whole 20s. was gone. Then she asked the question, “ What am I to do for clothes?”
– I remind the honorable member that clause 13 is before the committee. He is not in order in discussing at length the position of pensioners.
– You allowed other honorable members a great deal of latitude, Mr. Temporary Chairman.
– The honorable member must not reflect upon the Chair.
– I am trying to give reasons why the bondholders should not be allowed to go free while pensioners are being’ called upon to make heavy sacri- fices
– The honorable member may make passing reference to the position of pensioners; but he must connect his remarks with the clause before the committee.
– I rise to a point of order. I submit that the amendment of the honorable member for Kennedy is designed to reduce the interest rate in order to effect a larger saving so that our pensioners may not be so severely attacked. It is consequently necessary to discuss the position of the pensioners in dealing with the amendment.
– The honorable member for Hunter will be in order in making passing references to die position of -pensioners.
– I ask honorable members to consider how different the position of the bondholder is from that of the widowed mother whose only son was killed on active service, and who is now obliged to live on a pension of £1 per week. In many cases, the sole income of such persons is £52 per annum, whereas even the poor bondholders over whom some honorable members have almost shed tears to-night have an income of £79 per annum from bonds alone.
-.- That is the income of a man and his wife.
– Some of the persons te whom reference has been made this evening have £2,000 of capital behind them. The honorable member for Gippsland (Mr. Paterson) himself admitted that the persons to whom he referred could not obtain a pension because they owned property. Such people are in an excellent position compared with the pensioners. Many pensioners get only 10s. per week; and these also will be subjected to a reduction of 20 per cent. If the amendment is agreed to, the honour of Australia will be saved to some extent, and so will the honour of certain honorable members on this side of the chamber, who are supposed to be Labour men. We will have kept our promise to the soldiers that the injured would be adequately maintained. It is a remarkable thing to me that these proposals are being supported principally by honorable mem- bers opposite; though they have beenintroduced by a so-called Labour government. No support for these proposals comes from the followers of theGovernment, only silent votes cast with their heads bowed Avith shame. They know they are- opposed to Labourprinciples. That is1 a scandalous position. It is time some honorable members- took their courage in their hands, and resisted the heinous proposals which the Government is making for the reduction of pensions and wages. Some time ago when the present Deputy Leader of the Opposition was advocating certain economy proposals in this chamber, I said that he would reduce pensions if the opportunity presented itself to him to do so, and he denied it. His exact observations in this connexion are recorded in Hansard. While the Government is submitting these proposals and thereby splitting the ranks of its own party, honorable members opposite are laughing in their sleeves.
If the Treasurer (Mr. Theodore) desires to save the honour of the nation and fulfil the promises made to the men who enlisted for war service, let him accept the amendment The men who went away to fight for us were promised that, if they returned to Australia, everything possible would be done for them. They were told that if they came back crippled they would never be left in need. Those promises have been broken as easily as the proverbial piecrust. The people who invested their money in war bonds, and exploited their fellows during the war, must not be touched. Their investments must remain intact, and they must still be paid interest at the rate of 4 per cent. The soldier who fought for his country, and was prepared to give his life for it if need be, is being obliged to suffer a serious reduction of income while the bondholders are being scarcely touched.
But let us get away from the poor bondholder for a while. Let us think, not of the man who, apart from other investments, has an income of £79 per annum in interest from bonds, but of the big companies such as the Citizens Mutual Life Assurance Company, which took up £6,000,000 worth of bonds in one lot. It seems to have been forgotten that if the amendment is agreed to these big bondholders will make their sacrifice as well as the small bondholders. The case of the small bondholder is being used as a cloak to protect the big bondholder. Honorable members opposite can weep for the small bondholder, but they say nothing about the large bondholders who have bled this country white. These people could very well afford to say “ The country’s debt to us has been paid in the blood of the flower of our manhood. The sacrifices made on the fields of France, Flanders and Gallipoli, are a complete satisfaction of anything that the country may owe us. We want no further interest for our money”. If they adopted that attitude, they would not even then be showing a quarter of the patriotism of the boys who went abroad and gave their lives for their country. These people could, if they would, show a real patriotism at this time by forgoing the interest on their bonds.
.- The Deputy Leader of the Opposition (Mr. Latham) said that hardship would be inflicted upon the small bondholders if my amendment were agreed to. But the large bondholders would also be called upon to suffer. I agree with the experts and economists who say that the banks shall undertake the responsibility of paying off the small bondholders, when their money falls due. A good deal has been said about the sacrifice involved in this reduction of interest; but who can tell what the interest rate will be when our different classes of bonds mature? The Bank of England rate is dropping steadily and our savings banks are reducing their interest rate to 3$ per cent, as from the beginning of this month. Interest rates are not merely falling ; they are collapsing. In any case, I ask the Deputy Leader of the Opposition, the honorable member for Warringah (Mr. Archdale Parkhill), and the honorable member for Gippsland (Mr. Paterson), what sacrifice the bondholders will make in comparison with the sacrifice of the pensioners? I admit that the thrifty man who has invested his savings in Government securities may feel the pinch ; but there arc other thrifty persons in the community, who have invested their savings in other directions with the object of developing industry. There is, for instance, the man who goes out into the back country prospecting. Possibly he strikes a small deposit, builds himself a home and works his mine. Through being thrown out of work he has had to draw upon his savings in the bank, or his house has been mortgaged. He has not made application for the old-age pension until he has exhausted the savings of a lifetime. A man with £1,500 in a savings bank, and receiving interest at the rate of 3$ per cent., is not in as favorable a position as a person with £1,500 invested in bonds returning 5$ or 6 per cent. The Deputy Leader of the Opposition (Mr. Latham), unfairly described the old-age pensioners as paupers. The hurling of such insults as that at those who are unfortunate enough to require the pension, does not strengthen the case put forward on behalf of the bondholder.
In submitting my amendment, I recognize that the bondholder is entitled to the same protection and treatment that the Government can give to the rest of the community; but, in this national crisis, he is appealed to on patriotic grounds. A reduction in the interest rate to 3 per cent, would result in a reduction of the interest charged to the primary producers. The rates that they are now forced to pay are causing them to dismiss their employees, and this swells the ranks of the unemployed. What have the banks produced in the last ten or fifteen years? The profits of the Commonwealth Bank, and the Government Savings Banks have been used largely in erecting great buildings in Sydney and other capital cities and towns. If those who object to the Government’s plan are to be described as unpatriotic, I am prepared to be classed within that category, because I am not willing to allow those who are now suffering because of the great sacrifice made by them during the war period, to he sacrificed again by the so-called patriots of to-day, who are ready to reduce drastically the expenditure on social services, including invalid and old-age and war pensions, but are not game to tackle the real problem. The experts and the economists have attempted to side-track it.
Despite all the proposed reductions of expenditure, and the increases in revenue from taxation, has any government made a move in the direction of creating employment? Heavy reductions in expenditure have been made in South Australia by the Hill Government, and in Queensland by the Moore Government: but they are providing less money for relief works. Prior to the war a Labour government passed legislation that has proved most beneficial to the Commonwealth. It must be admitted that the Commonwealth Bank saved Australia millions in the flotation of loans for war purposes. Much could he done to relieve unemployment by fostering gold-mining and other mining activities, which are increasing in almost every gold-producing State. A government which spends money by way of doles for the sustenance of the unemployed, resembles a man who puts his savings on “ certainties “ at a race meeting - no productive results from the expenditure. The action of political parties since 1919 in buying the votes of the people, was almost certain to result in the present financial collapse, because of the mad orgy of spending, to make government parties safe. A huge loan was floated in 1919 to provide the war gratuity, and most of the recipients had to sell their bonds at a sacrifice. A great portion of the £17,000,000 provided for war service homes was spent in the purchase of land from a favoured few in different States, under circumstances that will not bear investigation. Similar waste occurred in connexion with soldier land settlement, through returned soldiers being placed on unsuitable land.
The TEMPORARY CHAIRMAN.The honorable member’s time has expired.
Question - That the words proposed to be omitted (Mr. Riordan’s amendment) stand part of the clause - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . . . 39
Question so resolved in the affirmative.
.- Sub-clause 2 of this clause is as follows : -
Securities which have been issued with optional dates of redemption shall, for the purposes of the calculation under this act, be deemed to mature upon the latest date in respect of which the option of redemption of the securities may be exercised.
This sub-clause appears to me to be confusing in the light of sub-clause 2 of clause 14, which states -
New securities issued in exchange for taxfree securities shall conform with the conditions of the existing securities in respect of duration, redemption and date of payment of interest.
Reading those two provisions together, it would appear that the new securities issued for tax-free securities are to be issued for a period identical in duration with that which at present applies to them. Some of these tax-free securities are interminable. What is to be the position with regard to new securities issued under this scheme? Are there to be any interminable securities after the conversion scheme has been carried through?
– Yes. Interminable securities will remain as before, and an amendment will be made to clause 14 to make that clear.
Clause agreed to.
Clause 14 - (1.) On the conversion of existing tax-free securities, the interest on the new securities issued in exchange therefor shall be free of Commonwealth and State Income Tax until the original date of maturity of the existing securities. (2.) New securities issued in exchange for tax-free securities shall conform with the conditions of the existing securities in respect of duration, redemption and date of payment of interest:
Provided that new securities issued in exchange for existing tax-free securities maturing on or before the thirtyfirst day of December One thousand nine hundred and thirty-four, shall mature upon the original date of maturity of the existing securities and upon that date shall be reconverted into new securities at par and bearing interest at four per centum per annum, maturing on the fifteenth day of November One thousand nine hundred and forty-one, and the interest thereon shall be subject to Commonwealth taxation to the same extent as the new securities (other than securities free from Commonwealth and State Income Tax) referred to in section twenty of this act. (3.) New securities issued in accordance with the provisions of the last preceding subsection shall be issued only in the form of inscribed stock. (4.) Notwithstanding anything contained in this section the holder of tax-free securities may elect to convert such securities into new securities of the kind referred to in sections eighteen, nineteen and twenty of this act.
– I move-
That the words “ until the original date of maturity “, sub-clause 1, be omitted with a view to insert in lieu thereof the words, “ for the original period of duration “.
This amendment is necessary, because the present wording of the clause would not be appropriate to interminable securities, and this clause applies only to such securities.
.- This clause deals with tax-free securities, and provides that on their conversion the interest on the new securities issued in exchange for them shall be free of Commonwealth and State income tax for a certain period. Clause 20 of the bill provides, generally, that new securities issued under the scheme - other than the new securities covered by clause 14 - shall be free from further Commonwealth income taxation, and from any income taxation by a State. The interest from certain securities is at present subject to unemployment tax. In Victoria, for instance, certain securities, hitherto taxfree, have recently been made subject to unemployment tax, which is, in effect, a tax on income. What I want to know is whether it is intended in clause 14 that tax-free securities are to be subject in the future to income tax in the form of unemployment tax. I direct the attention of the Prime Minister (Mr. Scullin) to the fact that the Government has circulated an amendment to clause 20, designed to remove any doubt as to whether securities covered by that clause would be subject to unemployment tax.
– Is it proposed that such securities shall be free from unemployment tax?
– I presume that that is the object. The amendment states that -
Inthis section income tax includes any tax imposed in respect of income.
If clause 20 were allowed to remain in its present form it would be possible for a State Government to circumvent the intention of this legislature by imposing taxation under another name than income tax. The Government is prepared, and, I think, rightly, to remove the possibility of such action being taken, and I, therefore, ask the Prime Minister to take similar action in respect of tax-free securities covered by clause 14. If it is right for the matter to be put beyond doubt in respect of securities issued under the general scheme, then, a fortiori, it ought to be done in respect of tax-free securities. Otherwise a degree of protection would be afforded to the holders of ordinary securities which would not be extended to the holders of securities covered by clause 14.
– There is no objection to that. It is a mere change of words, and the object is to cover both interminable and other securities. We could not use the term “ date of maturity.”
.- I oppose clause 14, because it embodies a principle which should not apply to the flotation of loans; I refer to tax-free bonds. I know that the Prime Minister will say that we have entered into a solemn contract, and that any breach of it would be repudiation. But that argument has long ago gone by the board, because the whole of this legislation is a repudiation of solemn contracts. The bondholder is to suffer as little as possible, and I was not surprised when the Prime Minister accepted the suggestion of the Deputy Leader of the Opposition (Mr. Latham) to make it doubly clear in this clause that the bondholder is not to suffer further taxation. I shall oppose the clause, and call for a division upon it. The Deputy Leader of the Opposition and the Deputy Leader of the Country party (Mr. Paterson) are no longer able to refer, as they have previously, in sorrowful tones to the poor bondholder, who has a return of only £74 or £75 from his investments, because, allowing for exemptions, there is no tax on such an income. Bondholders who are in receipt of incomes sufficiently small will be exempt from both State and Federal income taxation. The time has come when all returns from investments in loans should bear both Federal and State income taxation. Persons holding giltedged securities should not be in a sheltered position. One patriotic citizen who puts £1,000,000 into this loan will receive a guaranteed income of £40,000 a year free of income taxation. Instances were cited by the Commonwealth Treasurer and the Premier of New South Wales at the Premiers Conference of incomes of from £10,000 to £20,000, free of income taxation. Under this loan conversion those incomes will continue to be free of taxation for four or five years hence - this at a time when every Treasurer is at his wits’ end to make ends meet. It is against the canons of decency to permit these huge incomes to be free of income taxation, at a time when the country is in dire need. I hope that other honorable members will vote against this clause, so that all incomes from investments in this conversion loan will bear both Federal and State income taxation. I intend, also, to oppose clause 20, under which it is proposed to free bondholders from future taxation, a principle which I consider to be extremely vicious.
– I shall support the honorable member for Werriwa (Mr. Lazzarini) in opposing this clause, so that all income from loans may be subject to both Federal and State income taxation. It is remarkable the extent to which the Government, aided by the Opposition, is prepared to go in order to protect those who are. well able to protect themselves. All the most intricate aspects of the law seem to have been brought into this argument in defence of the large bondholders. They have the means with which to employ the best legal brains to assist them in their transactions ; it is also obvious that they have at their disposal the services of members of the legal fraternity in this chamber, and, what is more unfortunate, they have secured the assistance of the Labour Government. As the honorable member for Werriwa has pointed out, the Deputy Leader of the Opposition (Mr. Latham) is no longer able to put up a plea for what he called the unfortunate small bondholders, for the reason that their incomes are not sufficient to be taxable according to this clause. The Opposition is now out to help those who are making profits from these securities, and have lived in the lap of luxury for many years. No one knows what the future holds in store by way of taxation, but it is grossly unfair that those who cannot defend themselves must carry all the burdens of taxation, while the wealthy bondholder is to be protected as is proposed under this new clause 20. Any honorable member representing directly the great mass of the people who is prepared without protesting to allow this clause to pass, is not honouring his obligations to his constituents, because it will mean that they will have to carry the entire burden of any future taxation of income. I hope that other honorable members will join with the honorable member for Werriwa in opposing this clause.
– The arguments of the honorable members for Werriwa (Mr. Lazzarini) and West Sydney (Mr. Beasley) are really beside the point. There are in existence at present bonds to the value of £556,000,000 of which bonds to the value of about £90,000,000 are tax free.
Those bonds were issued under a prospectus that guaranteed that they would be free of income taxation both Commonwealth and State. We are now asking the bondholders, whether their bonds be taxable or tax free, to convert into new stock which will return 22½ per cent. less interest. We are asking the tax-free bondholders to bear exactly the same burden as those who hold taxable bonds; no more and no less. We are retaining for the tax-free bonds the same immunity from taxation as now exists, but we are asking the bondholders to accept a bond which will return them22½ per cent. less interest. If we placed additional taxation upon them, we would undoubtedly commit a breach of contract. That is surely not the intention of this Parliament. The whole idea of theplan is that, so far as possible, each section of the community must make an equal contribution in this national crisis. That idea is being carried out in this bill. We are preserving the guarantee that bonds will be tax free as hitherto, but we are asking the holders to convert their holdings into bonds showing a reduced return of22½ per cent. There will therefore be no differentiation between one class of bondholder and another.
.- It is argued in support of the proposed reduction in interest rates that there has been a considerable fall in the cost of living. Surely any fall in the cost of living would benefit the bondholders as much as it does the other sections of the community. I could never see the justice of a principle that allows income from bonds to be tax free, while the income of the primary producer is, at a certain point, allowing for exemptions, subject to heavy taxation. All income, from whatever source, should be taxable. In this time of crisis we are having a sort of spring cleaning, and now is the time to place our taxation system upon an equitable basis. We should not throw the main burden of taxation upon the man on the land. I admit that many of these loans were raised tax free during the war, but there was the backing of the nation behind the investment. The overseas money market was closed to Australia during the war, and the Note Issue Board came to our aid. To-day, only one section of the community, the shareholders and bankers, have the right to draw upon the Note Issue Department. If I had security to the value of £100,000, and I wanted to raise £50,000, the bank would accept that security and charge me7 per cent. or 8 per cent. on the loan. I would be given a cheque book by means of which I could draw on the bank, but the bank would have the right to draw upon the Note Issue Department at 4 per cent.
– On its assets.
– My security would be the bank’s assets. What I am stating is borne out by well-known Australian banking and financial experts. I am surprised that the Premiers agreed to allow any class of bond to remain tax free.
– Is the honorable member surprised that Mr. Lang agreed to that?
– I am stating the case from the point of view not of Mr. Lang or any other individual, but of the people whom I represent. Any system under which bonds are tax free, is unjust. It has been stated that certain loan prospectuses guaranteed that bonds would be tax free, but only last November we issued a prospectus for a loan of £28,000,000 at 6 per cent. The then Acting Treasurer (Mr. Lyons) was warned that Australia could not afford to pay that rate, and was advised to ask the banks to underwrite such amount as the bondholders would not convert at a lower rate of interest. He insisted upon approaching the market, and although he said then that the bonds would be as good as gold, he is to-day a party to the repudiation of them. The workers subscribed more money to that loan than to any previousflotation; they responded to the plea of a Labour Acting Treasurer, although he was ignoring the directions of his party. To-day he leads the Opposition, and Ls advocating a breach of the undertaking he gave on behalf of the Commonwealth that subscribers would be paid 6 per cent. If all income from bonds is not made taxable now, and the prices of primary products do not increase, this Parliament will be taking measures next year to remove the exemp- tion from income tax, and the bondholders will be forced to agree in order to save their principal. Therefore, after allowing a reasonable exemption, we should tax all income, from whatever source it is derived. I have no sympathy with repudiation ; people should pay their debts and honour contracts, but the Prime Minister has told us that the financial position of the country is such that pensioners must either suffer a 20 per cent. reduction or risk receiving next month only 12s. in the £1. That warning is equally applicable to the bondholder. If the credit of the nation collapses he too will be paid only 12s. in the £1. Wages are to be reduced on account of the fall in the cost of living. As lower costs will increase the purchasing power of money, the bondholder also can suffer a reduction of income without being relatively worse off than he was when he acquired his bonds. This bill provides a good opportunity to withdraw the exemption of certain income from taxation. But the Government has thrown the bill on the table, and said, in effect, to honorable members, “ Take it or leave it “. The taxpayer pays 112 members of this Parliament to legislate for the welfare of the country. Regardless of the political consequences, I am not prepared to submit to dictation by any man, and I intend to oppose the continued immunity from taxation of incomes beyond a prescribed minimum. The statement that the taxation of bonds which were issued tax-free would be repudiation is humbug, because by the introduction of this conversion plan we are repudiating the terms of every current loan in Australia. The Prime Minister has said that this has been necessitated by the collapse of the market for primary products; but for the last twelve months the Labour party has been declaring that a change of monetary policy was necessary in order to put more money in circulation. Such proposals were denounced as inflation, but to-day the Bank of England, and various European countries, are admitting the need for an expansion of credit. Australia is lagging behind, and meanwhile our people are starving. I am afraid that to allow income from bonds to continue to be free of taxation would be to permit comfortable investors in the cities to benefit at the expense of people who are working and producing in the hot, outback portions of Queensland and other States.
.- The principle embodied in this clause is opposed to Labour ideals. But, unfortunately, the Labour party in this chamber has sold out, lock, stock and barrel, to the Opposition.
– Does not the honorable member know that the Leader of the Labour party in New South Wales accepted this principle?
– If he has done so, he is just as big a traitor as the Treasurer (Mr. Theodore). I shall not follow either of them. The exemption from income and unemployment taxation of interest derived from bonds cannot be reconciled with the reduction of pensions and wages.
– But even the holders of tax-free bonds will suffer a22½ per cent. reduction of interest.
– Yes; but the balance will be free of income tax. Any man who votes to exempt from income tax people who never knew want or hunger is a criminal. Supporters of such a proposal cannot claim to be true representatives of Labour. As far back as August last the Deputy Leader of the Opposition (Mr. Latham) put forward similar proposals, and to-day a so-called Labour government is acquiescing in allowing people who have plenty of money to escape taxation. Before the Melbourne conference my colleagues and I declared that we would not support a reduction of wages and pensions. That was the “ office “ to the Prime Minister and the Treasurer to get the co-operation of the Opposition to ensure that this plan will be adopted. The Leader of the Opposition was invited to the Premiers Conference. There are good fellows in tEe Labour party, but they have violated some of their principles in order to be loyal to the Treasurer, and now they are helping wealthy insurance companies, which have invested millions of pounds in bonds, to escape income taxation. I hope the committee will reject the clause.
Question - That the amendment (Mr. Scullin’s) be agreed to - put. The committee divided. (Chairman. -Mr.mcgrath.)
Majority . . . . 46
Question so resolved in the affirmative.
Amendment agreed to.
Amendment (by Mr. Theodore) agreed to -
That the following new sub-clause be inserted: - (1a.)For the purposes of the last preceding sub-section, the original period of duration shall -
.- I move -
That the following new sub-clause be inserted: - (1b) In the first sub-section of this section ‘ income tax ‘ includes any tax imposed in respect of income.
Those are the words that it is proposed to insert in clause 20, notice of which amendment has been given.
– The Deputy Leader of the Opposition (Mr. Latham) was good enough to notify the committee of the real intention of his amendment. It refers to the collection in the various States of what is known as the unemployed tax.
– Or of any similar tax.
– No doubt, honorable members fully appreciate the necessity for the imposition of this special tax in the various States. It is regrettable that circumstances should arise in Australia to make such taxation necessary, but the least that might be expected is that all sections of the community that are in a position to do so should subscribe as liberally as possible towards the sustenance ofthose who are unfortunate enough to be out of employment. This provision is deliberately framed to relieve such people from what is a proper obligation. My colleagues and I are thankful to the Deputy Leader of the Opposition for expressing his real intention in this matter. The division on this amendment will be of vital interest when honorable members appeal to the people, as it will disclose who stood for, and who voter] against, providing sustenance for the unemployed.
Question - That the amendment (Mr. Latham’ s) be agreed to - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . 42
Question so resolved in the affirmative.
Amendment agreed to.
Amendment (by Mr. Theodore) agreed to -
That after the word “ sub-section “, subclause (3), the following words be inserted: - “ (other than new securities bearing interest at 4 per centum per annum) “.
Question - That the clause, as amended, be agreed to - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . 44
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clause 15 - (1.) New securities issued in exchange for existing securities held by a Government Savings Bank shall mature upon the original date of maturity of the existing securities if the Treasurer of the Commonwealth or the State concerned and the Savings Bank so agree, but otherwise shall be subject to the provisions of this Act. (2.) A Government Savings Bank in this section means any of the following institutions, namely: - The Commonwealth Savings Bank of Australia, the Government Savings Bank of New South Wales, the State Savings Bank of Victoria, the Savings Bank of South Australia and the State Savings Bank of Western Australia.
.- I move -
That after the words “ Western Australia “, sub-clause (2), the following. words be inserted “ Hobart Savings Bank and Launceston Bank for Savings “.
In Tasmania there is no Government Savings Bank, but there are two banks for savings, namely, the Hobart Saving Bank and the Launceston Bank for Savings. The object of the amendment is to give a similar concession with regard to holdings of government securities to these banks to that granted to government savings banks. The Tasmanian savings banks were established under the act known as 12 Vic, No. 1, 1845, and in every respect they function as State savings banks. They are, in fact, trustee banks. The members of the executive draw no fees, and the whole of the profits go to the depositors. The balance-sheet of the Launceston Bank for Savings shows that it has £859,866 invested in Commonwealth stocks. The object of the clause is to ensure that the new securities shall mature upon the original date of maturity for existing securities. It would be very inconvenient if the Hobart and Launceston banks were compelled to convert their holdings into securities the maturing date of which might be 30 years hence. [Quorum formed.’] I hope that these banks will have extended to them the same concessions as are proposed for the savings banks in the mainland States.
– Although it may appear strange to the honorable member to hear me say so, the circumstances are not precisely the same. The securities to which this clause will apply are securities which relate really to what may be termed the domestic financing of the State governments which have State savings banks. The securities which such institutions hold are in the main different from the securities held by the Launceston or Hobart savings banks, inasmuch as they are not listed or dealt with on the stock exchanges. They are chiefly securities held by the savings banks under an arrangement with the State Treasurers, and, in effect, represent loans made to the State Governments. Although the Commonwealth Savings Bank is referred to in sub-clause,. 2, the. securities held by it would be’ chiefly securities in respect of loans made, not to the Commonnwealth, but,’ to State- Governments, but I am, not .sure that the bank holds any considerable portion of such stock. This concession as to the maturity date of the new securities will be made only in cases in which the Treasurer of a State or the Treasurer of the Commonwealth, and the authorities of the savings banks concerned desire it, for the purposes of convenience, in domestic finance.
Motion (by Mr. James) negatived -
That the question be now put.
.- I am sorry to delay the committee, but I am not quite satisfied with the explanation of the Treasurer (Mr. Theodore). He has said that the clause will apply only to those State institutions mentioned in the clause which have lent moneys to State Governments at low rates of interest for the purpose of financing certain State enterprises; but he does not appear to be quite sure about its application to the Commonwealth Savings Bank in respect of certain classes of security. It would be exceedingly inconvenient if the Hobart and Launceston banks had their securities converted, and the maturity dates fixed, possibly, 30 years hence, seeing that all deposits are practically at call. I hope that the Treasurer will postpone consideration of the clause to see whether effect can be given to my suggestion.
. - The point raised by the honorable member was fully discussed at the conference, together with other questions of a like nature. These questions were referred to a committee of the undertreasurers, in which the Government of Tasmania was represented. Having considered this particular matter, the committee made the proposal which is embodied in the bill. In amplification of what I said a few minutes ago, I may add that the securities held by the State savings banks and by the Commonwealth Savings Bank are, to a large extent, the result of domestic financing as between the Governments and the savings banks. Many of the securities now held by these institutions were issued under concessional terms as to the rates of interest, that is to say, they were issued at a lower rate of interest than that applied to securities issued to the public or to private savings banks like the Launceston Bank for Savings or the Hobart Savings Bank. The securities held by those banks were issued at current rates of interest, and are not entitled to concessional treatment under this clause.
Clause agreed to.
Clause 16 agreed to.
Clause 17 -
Notwithstanding anything contained in this Act, new securities issued to a Bank in Australia in exchange for existing Commonwealth Treasury Bills shall be discounted at the rate of four per centum per annum and shall be subject to such other conditions as the Australian Loan Council determines.
. - I move-
That the words “Notwithstanding anything contained in this Act, new “ be omitted.
The clause provides the conditions relating to treasury-bills held by banks to cover government overdraft accommodation. Provision is made that these bills shall not be converted, but a new rate of discount is provided for them. They come into the general scheme of rehabilitation, without new securities having to be issued in place of the ‘existing securities.
Amendment agreed to.
.- I move-
That after the word “Bills,” the words “ existing at the commencement of this Act “ be inserted, and that, at the end of the clause, a new sub-clause be added as follows: - “ (2.) The other provisions of this Act relating to the conversion of existing securities shall not apply to such Bills.”
– What does that amendment mean?
– The new subclause refers to the hills held by the banks in Australia against overdrafts. These are treasury-bills, which mature from month to month; they are not ordinary government securities. We provide for them in a different manner from the outstanding government loans. We ask that the rate of discount be reduced from 6 per cent. to 4 per cent.; but the other provisions as to conversion do not apply to this class of security.
Amendment agreed to.
Clause also verbally amended, and, as amended, agreed to.
Clause 18 (Rates of interest on new securities).
Amendment (by Mr. Theodore) agreed to-
That the following new sub-clause be added: - “ (2.) In the case of existing securities mentioned in sections fourteen to sixteen inclusive of this Act, which are converted into new securities, the rate of interest shall, except where otherwise provided, be reduced by twenty-two and one-half per centum.”
Clause also verbally amended, and, as amended, agreed to.
Clause 19- (1.) Except as otherwise provided in this Act, new securities shall be redeemable at par as follows: -
Provided that the Treasurer shall have the right to redeem in whole or in part at any time after the thirty-first day of December One thousand nine hundred and fifty such new securities as are expressed to be redeemable after that date’ . . . (2.) For the purposes of paragraphs (a.) and (c) of the last-preceding sub-section, the amount of new securities issued in exchange . .. shall … as nearly as practicable be allotted equally among the several dates of maturity:
Provided that, in the case of the conversion by any one holder of any amount of existing securities not exceeding One thousand pounds or on the conversion of securities held by trustees, the Treasurer may approve of the issue of securities being allotted over a less number of maturity dates. . . .
.- I move -
That the words “ after the thirty-first day of December One thousand nine hundred and fifty such new securities as are expressed to be redeemable after that date “, paragraph (a), be omitted.
I intend to move subsequently that at the end of paragraph c, the following words be added: -
Provided that the Treasurer shall have the right to redeem in whole or in part at any time.
Throughout this bill there has been a display of excessive solicitude for the bondholders, and a callous disregard of other sections, such as pensioners and wageearners, to an extent that justifies us in believing that the Treasurer should have power to act in the direction which will be indicated by the second amendment that I shall shortly submit.
– The amendment is vital, and I cannot accept it. Its effects would be to make the new securities redeemable at any time at the will of the Administration, if it had the means for paying off any portion of the outstanding debt. I presume that the honorable member intends that the Treasurer should have the right to redeem the whole, or any part, of outstanding loans. The question of redemption dates was gone into carefully, when the details of the scheme were being settled at the Mel. bourne conference. The first proposal was that the new securities should have a currency of twenty years, and be redeemable at the will of the Government at the end of ten years; but it was seen that that would impose tremendous obligations on the country for the future, if the whole of the outstanding public debt, and any new debt that might be incurred, had o be redeemed within the next twenty years. It was, therefore, suggested that the right of redemption should be given in 1950, except in certain special cases in which redemption may take place at an earlier date. But in order to have a workable scheme, which will be fair to the bondholder and reasonable from the point of view of the Government, certain maturity dates have been set down, commencing in seven years’ time, for the bulk of the loans, and extending over different periods until as late a date as 30 years hence. There is a general right of redemption after twenty years. It is not likely that the country will be in a position to effect any large redemption at an earlier date, except as regards those loans which will mature on the prescribed dates, nor would it be advisable for the Government to do that, unless there were a considerable decline in the interest rate in succeeding years. It is unlikely that the Government would desire to redeem at an earlier date than is provided for in the bill.
– This matter is of considerable importance. The Treasurer’s (Mr. Theodore’s) argument depends for its force entirely upon whether interest rates will, in fact, tend to fall. It was contended by one of the experts that they would fall. I have always understood, from the ideas expressed by the honorable gentleman in regard to the monetary policy that, it was desirable to adopt, that that was his opinion.
– Yes; but they would have to fall very considerably to reach the 4 per cent, rate established in this bill.
– That may be so. But it is at least a policy of doubtful wisdom to close the door on the right of the Commonwealth to redeem, if such a contingency should arise. No doubt the matter has been considered very carefully; but much can be said both for and against the suggestion that the right to redeem should be given to the Commonwealth at an earlier date.
I should like the honorable gentleman to explain to the committee the principle upon which it is proposed to adjust or allocate the new bonds at the different dates of redemption set out in the bill.
– It would be advantageous to the Government to have the right to effect a redemption at a date earlier than those provided in the bill; but if that right were taken it would only be equitable to give a similar right to the bondholder. That is to say that if, under this scheme, we were to provide for a right of redemption exerciseable by the Government commencing, say, five years hence, a corresponding right ought to be conferred upon the bondholder to demand repayment if the conditions were favorable to his being paid off. Apart from this conversion scheme, he now has the right to be paid off at certain earlier maturing dates. “We are inducing him to come into a conversion scheme that pushes the maturity date in some cases 25 years beyond the existing maturity date. In view of that, it would be unreasonable for us to enforce against him so potent a right, which might be to his disadvantage. It would be revolutionary if government loan rates were brought down to the 4 per cent, established by this bill. “With the re-establishment of general confidence that may be achieved ; but, if such a thing is accomplished it will be a revolutionary change, and we shall be fit subjects for congratulation.
– The bondholder would not be able to congratulate himself.
– That is what I am afraid of. If the suggestion of the mover of the amendment were given effect, the bondholder would be in a still worse pickle. The country’s creditors should at least be given consideration. We ought not to regard them as people who are utterly disentitled to consideration. An endeavour has been made to strike a fair bargain in this matter.
In reply to the second point raised by the right honorable member, I may say that an endeavour will be made to consolidate in the seven-year, ten-year, and thirteen-year terms, those holding an amount of stock not exceeding £1,000 in value. The balance will be distributed evenly over the ten separate dates provided in the bill. It is expected that £360,000,000 worth of stock will have to be distributed over the whole of the dates, making an average of £36,000,000 in respect of each maturity date. In the three earlier maturing dates we shall be able to accommodate additional stock, and that ought to enable us to consolidate in those earlier dates all the small amounts held in the country.
– I- could understand the arguments advanced by the Treasurer (Mr. Theodore) if we were approaching this matter from the stand-point of a general prolongation for another nineteen years, without any attempt being made to alter the stupid and muddled system of finance which operates at the present time. Such an argument doubtless will be readily accepted by honorable members opposite. But I cannot for the life of me understand its being “ put over “ by a government, or any member of it, that claims to have been elected on the platform of the Labour party, and that has subscribed to both the spirit and the letter of its policy, to “extricate this country from the principles of capitalistic finance. The Treasurer has approached the matter from the point of view that there is to be no alteration of the existing system of finance for at least nineteen years. This is the direct negation of what is known as the Gibbons plan ; yet the Treasurer at one time seriously put forward that plan, and fought strenuously for its acceptance. I want to make sure that, if and when the people of this country return a real Labour government to the treasury bench, there will not be an opportunity for any one to say, “Here is a contract that has been solemnly entered into for nineteen years, and you dare not break it, unless you are prepared to repudiate sacred obligations.” I say unhesitatingly that I would break such contracts ruthlessly in the interests of the people of this nation, in order to extricate them from the economic chaos in which they are floundering. Not only this country, but the whole world, is at liberty to know where I stand on this matter. The system of capitalistic finance is dishonest and dishonorable from beginning to end; it is based on fake, fraud, and dishonesty. The amendment leaves the door open for a future government to end that system for all time. I want this proposal to be agreed to so that a government imbued with true Labour principles may be able to go on with its programme for making the Commonwealth Bank the only financial institution of its kind in Australia. It would then be able, by means of its cheque credits, to pay off the bondholders without doing any damage to the country. The Treasurer’s own statements, however, show that he can see no course in front of him’ but to perpetuate the present capitalistic system of finance for at least another nineteen years.
– The honorable member has an obsession.
– I have not, and the Treasurer agreed well enough with my opinions when he was trying to force the Gibbons plan through.
– I mean that the honorable member has an obsession against me.
– I have not. I supported the proposal which I now make long before it ever came under the notice of the Treasurer. It received general support in the Labour caucus when we were the bold lions in Opposition; but now that the Labour party is in power, evidently it can do nothing except what the bankers and financiers allow it to do. The Government’s proposal will, if agreed to, close the door for at least nineteen years against any attempt to put into effect the Labour party’s financial policy.
– In seven years’ time at least £50,000,000 of securities will mature; in ten years another £50,000,000 will mature, and in thirteen years still another £5.0,000,000 will mature.
– Does the Treassurer mean that if the Government’s plan is accepted, it will have the right to pay off £50,000,000 at the end of seven years?
– And after ten years it will have the right to pay off another-£50,000,000,
– Then why put this provision in the bill?
– After 30 years, we shall have the right to pay off the whole if we can.
– In reply to the right honorable member for North Sydney (Mr. Hughes), the Treasurer said that it was necessary to give some protection to the bondholders, which was why the period of nineteen years had been fixed.
– We have the right to pay off that portion of the loan which will mature in seven years, and at the end of ten years we shall have the right to pay off a further amount.
– Ten years is too long a period, so far as I am concerned, and so is seven years. I contend that if the Government wished, it could, after one or two years, pay off the bondholders in the form in which it received their money. The Treasurer says that the Commonwealth will not be able to pay the money. If he is convinced of that, what harm can there be in inserting the provision I propose? Apparently, the Treasurer believes in his heart that it could be done. I ask the committee to accept this proposal, under which the conversion terms will remain as at present, but there will be a reserve power in the hands of the Treasurer to redeem the bonds at any time.
– Does not the honorable member think that the bondholders should have the right to obtain their money when they like ?
– The bondholders are to be given the option to come into the scheme or stay out as they choose.
– Well, it is their money.
– If the bondholders agree to convert, on the conditions which I propose, they do so with their eyes open, and it is only reasonable, I suggest, to ask them to accept the terms I have outlined.
.- Reference has been made to the difficult position in which small bondholders will find themselves owing to the postpone ment of the repayment of their principal if they convert under the provisions of this clause as it stands at present. I have placed before the committee some examples, to which I could add almost indefinitely, of the hardships that will be caused to some of the smaller bondholders. The earliest date of maturity provided in this clause is 1938. I am aware that, according to the proviso to sub-clause 2 of the clause, the small holders may be allotted to early dates, but the earliest of those dates is seven years hence. Would it not be possible to provide earlier dates of maturity in the case of really small holders? It ought to be possible, for instance, for holders of bonds up to £50 to be paid off earlier than 1938 ; then, in the subsequent year, holders bf bonds up to £100 might be paid off, and another year might be fixed for the redemption of bonds up to £500. As the bill stands the only discretion allowed to the Treasurer is a discretion between dates of maturity, which begin in 1938, seven years from now. [Quorum formed.] I intend to propose the following amendment: -
That after the word “ dates “, second occurring, sub-clause 2, the following be inserted: - “ Provided that in the case of the conversion by any one holder of any amount of securities not exceeding £500, the Treasurer may approve of the issue of securities in exchange therefor redeemable at par on the 15th day of December, 1934, or on the 15th day of December, 1935, or on the 15th day of December, 1936 “.
That amendment would allow the Treasurer a discretion to’ redeem bonds under £50 in 1934, bonds under £100 in 1935, and bonds up to £500 in 1936. I am thinking of the small bondholders, and I am asking that a degree of flexibility be put into the scheme to enable the Treasurer, if funds are available, to redeem the bonds held by these people. The present earliest maturity date is 1938, which will be hard on some small holders. Of course, I know that they can sell their bonds, but many of them are concerned about this point I am stressing. The additional flexibility, I suggest, would not interfere with the scheme, because it would all be at the discretion of the Treasurer. I am thinking particularly of the small holders who invested in the £28,000,000 conversion loan last December, for two years, in the expectation of getting their money back in 1932. Even under the amendment I suggest, the redemption date would be postponed until 1934. When the amendment moved by the honorable member for Martin (Mr. Eldridge) is disposed of, I shall submit mine for the consideration of the committee.
.- During the debate there has been a tendency to place upon honorable members of the group to which I belong the responsibility of trying to do something to the detriment of Australia, whereas the object of my amendment, which is intended to be followed by another, is to give the Commonwealth a greater power of public benefit than it already possesses. It is to give it a determining voice in the matters covered by clause 19. We say, frankly, in answer to our opponents, that, in our opinion, the people of Australia at the present time are faced with only one of two options. They must either challenge the existing monetary system, or, by not doing so, thus regarding it as static, allow an acknowledged condition of drift and stagnation to continue until unemployment and human destitution reach such a stage that the people, law-abiding as they are, must ultimately be driven to that point of desperation at which flesh and blood will not be able to tolerate it any longer, and there will be active and violent revolution. We are working in the direction of preventing such a possibility in Australia. We are, consequently, working in the interests of Australia. We are told that to challenge the existing system is to do something evil which will interfere with the stability of the country. This is said at a time when, if there is one thing more eloquent than another in this country, it is that the existing monetary system has not stood for stability but has, every day, and in every way possible, shown that it can continue only to the detriment of the whole community. We consider thatby the amendment proposed we are doing something in strict conformity with the platform and policy of the Australian Labour movement, and that the amendment is necessary, especially when considered in the light of the further amendment which I propose to move.
Question - That the words proposed to be omitted (Mr. Eldridge’s amendment) stand part of the clause - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . . . 35
Question so resolved in the affirmative.
.- The further amendment that I foreshadowed depended’ upon the acceptance of the one which has just been defeated. I must, therefore, abandon it.
.- I move -
That after the word “dates”, second occurring, sub-clause 2, the following be inserted: - “ Provided that in the case of the conversion by any one holder of any amount of securities not exceeding £500, the Treasurer may approve of the issue of securities in exchange therefor redeemable at par on the loth day of December, 1934, or on the 15th day of December, 1935, or on the 15th day of December, 1936 “.
I have already stated the object of the amendment.
– The amendment cannot be accepted, because of the tremendous amount of stock and the aggregate value involved in this conversion. I am assured by the Treasury officers that holdings not exceeding £100 would probably aggregate £100,000,000, and that holdings not exceeding £500 would aggregate £50,000,000. If that is so, the amendment, if accepted, would make the operation of the conversion too inconvenient. The Under-Treasurers and the experts who formulated the plan of maturity dates, did it with the deliberate intention of allowing a reasonable breathing space from conversions for the Commonwealth during the period of rehabilitation and restoration. We did not want to be clogged up with heavy maturities in the early years of the period during which we hope to progress towards prosperity. In the circumstances, I hope the Deputy Leader of the Opposition (Mr. Latham) will not press his amendment.
. I understand that the amendment proposes an earlier redemption of a certain class of security than is provided for in this measure. That being so, and as it to some extent meets our views, we intend to support it.
Question - That the amendment (Mr. Latham’s) be agreed to - put. The committee divided. (Temporary Chairman - Mr.keane.)
Ma jority . . . . 2
Question so resolved in the negative.
.- Reference is made in the proviso to this clause to securities held by trustees. Some trustee companies hold millions of pounds worth of government stocks in separate estates, and I ask for an assurance from the Treasurer (Mr. Theodore) that it is the intention to regard such stocks as separate holdings for the purposes of this provision.
– For the purpose of exercising discretion as to the manner in which allocations will be made, individual trusts will be regarded as separate holdings, although they may be under the control of the one trustee.
Clause agreed to.
.- I move-
That clause 20 tie omitted with a view to insert in lieu thereof the following new clause: - “20. - (1.) Notwithstanding anything contained in the Taxation of Loans Act 1923 or in any other act or State act, the interest derived by any person in any financial year from new securities exchanged for existing securities (other than interest which in accordance with the provisions of section fourteen of this act is free from Commonwealth and State income tax) shall be free -
from any income tax payable under a law of the Commonwealth to the extent by which the total amount of tax which but for this section would be payable in respect of that interest exceeds the amount of income tax which would have been payable in respect of that interest if income tax had been imposed upon the taxable income of the person in that year in accordance with the provisions of the Income Tax Acts 1930 (other than section seven a of that act) ; and
from all income tax under the law of a State. “ (2.) In this section ‘income tax’ includes any tax imposed in respect of income.”.
Those who frame our taxation laws have had many years of experience, and are guided by the weighty decisions of the High Court and other tribunals, and, therefore, they are able to frame our legislation in such explicit and straightforward language that there can be no ambiguity as to what is intended. The proposed new clause illustrates that. I understand that paragraph a of the proposed new clause is now absolutely watertight.
. - When this measure was first introduced clause 20, which relates to interest on securities being free from further taxation, was comparatively clear. There was, indeed, some danger of this Parliament being brought into disrepute through its proceedings being understood by the common people. That has, happily, been prevented by this latest effort of the Parliamentary Draftsman. It was my good fortune to serve for a considerable time in partnership with the learned gentleman who is responsible for the framing of the new clause, which is in such a form that no one, it appears to me, can understand it. If it means anything it means that, notwithstanding anything contained in the Taxation Act, these securities when converted shall be free from income taxation payable under any law of the Commonwealth other than under section 7a of that act. The rest is merely verbiage, and introduced for purposes which are incomprehensible. An act was passed in September last - in effect the last turn of the screw - providing for a surtax of 7$ per cent, on the 15 per cent, previously imposed. We are now to understand that in order to sweeten this bitter pill the Minister is to give the poor bondholder the satisfaction of knowing that he is to be treated in the matter of taxation as if this did not mean anything at all. Apparently he is liable to the provisions of Section 7a which provides that a tax of 7$ per cent, shall be imposed.
– Clause 20 is subject to exactly the same objections that were raised in connexion with clause 14, and for that reason it is not my intention to repeat the arguments used against that provision, but I shall call for a division, and vote against the clause, as I am opposed to the issue of tax-free bonds.
Mr. THEODORE (Dalley- Treasurer) was thought to be ambiguous. The phrase, “ shall be . exempt from any income tax under the law of the Commonwealth further or in a higher degree than the taxes other than further taxation specified in the last preceding paragraph levied on existing securities”, was used. The Commissioner of Taxation, who has naturally had long experience of the administration of our income tax laws, and of the attempts made to misinterpret them-
– Did he draft the new clause ?
– He suggested the necessity for this new provision, which is to render immune interest on other than tax-free securities from any increase in the tax which was in force under the laws of the Commonwealth prior to the special taxation levied last November at the rate of 7$ per cent, or ls. 6d. in the £1. That tax will not apply to converted Government securities, but the property rates imposed prior to the new taxation passed in November will continue.
– - What about the 7$ per cent ?
– That comes off.
– If that is what tho clause means, words have lost their meaning.
– I give the right honorable gentleman the definite assurance that that is what it is intended to mean. Matters of this kind must he left in the hands of expert draftsmen and the legal officers who frame the amendments of our taxation laws.
– I should like the Treasurer (Mr. Theodore) to proceed further with his explanation on the subject of tax-free securities. When discussing an earlier clause the Deputy Leader of the Opposition (Mr. Latham) suggested an amendment to make the clause even more watertight. Will this clause give to tax-free securities the same immunity as was proposed by the Deputy Leader of the Opposition (Mr. Latham), and will that immunity extend to taxes that may be imposed by the States?
– Will it exempt the bondholders from unemployment relief taxation?
– In those circumstances, my colleagues and I must maintain the attitude we adopted on an earlier clause. The bondholders should not be exempt from burdens that are to be borne by all other sections of the community.
Question - That the amendment (Mr. Theodore’s) be agreed to - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . . . 34
Question so resolved in the affirmative.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 21 to 25 agreed to.
– I move-
That the following new clause be inserted: - “ 24a. - ( 1 . ) Notwithstanding anything to the contrary contained in any law in force in the Commonwealth, or in any Territory under the authority of the Commonwealth, every trustee in the Commonwealth or in any such territory is hereby expressly authorized and empowered to convert; or to withhold signification of dissent from the conversion of, any existing securities into new securities. “ (2.) No action, suit or other proceeding shall be commenced, prosecuted or maintained against any trustee upon the ground of any action taken by such trustee to convert any such existing securities or upon the failure by such trustee to signify dissent pursuant to this act. “ (3.) For the purpose of this section, trustee ‘ means any person or company appointed by act of parties or by operation of law or authorized by any law in force in the part of the Commonwealth or in the territory in respect of which the expression is used to act as trustee in that part or territory, and includes any director or officer of any such company and any person acting in any fiduciary capacity. ‘.
The purpose of this new clause is to give authority to trustees in Commonwealth territories to convert certain securities. The new clause protects them with respect to their rights and obligations.
Proposed new clause agreed to.
.- I move-
That the following new clause be inserted: - 24b. - (1.) Registries of stock shall, from the commencement of this act until the expiration of six weeks thereafter or until such earlier date as is specified by the Treasurer, be closed as regards all transactions in respect of stock,other than transactions required for the purposes of this act. “ ( 2. ) In this section, ‘ stock ‘ means any stock issued by the Government of the Commonwealth or of a State. “.
This clause deals with the closing of registries. It enables registrars of stock to close their registries for six weeks after the commencement of the act in order to enable the transactions relating to the conversion to be carried through.
Proposed new clause agreed to.
Schedule verbally amended, and, as amended, agreed to.
Preamble and title agreed to.
Bill reported with amendments; report - by leave - adopted.
Bill - by leave - read a third time,
Motion (by Mr. Theodore) proposed -
That the House do now adjourn.
– The honorable member for Hunter (Mr. James) this morning asked certain questions with regard to an alleged fuel contract for Parliament House. I have received the following reply from the Chairman of the House Committee: -
A contract for the supply of fuel has not been let, but a trial order for three months’ supply has been given to Mr. A. M. Sweetnam, of Canberra. This trial order was notgiven without allowing the Department of Works an opportunity to review its prices.
The Director-General of Works was aware that quotations were being submitted both by the Controller of Stares and by Mr. Sweetnam, and, in fact, informed the Secretary of the Joint House Department thathe considered thelast prices quoted by the Controller of Stores were too high, and requested that no action be taken until further intimation from him.Nofurther intimationhas been received from him, and it was deemed advisable to give a trial order to Mr. Sweetnam.
The latest of several competitive quotations by the Department of Works was -
Coal, £216s. per ton delivered, less 2s. per dozen for bags.
Coke (30 to 33 bags to the ton), £3 4s. per ton delivered, less allowance for bugs.
These prices were quoted on condition that assistance was given by the Joint HouseStaff in unloading and stacking, and no intimation was given that prices would vary according to the market.
The prices being paid for the trial order to Mr. Sweetnam are as follow: -
Coal - Newcastle, from one colliery, guaranteed quality, supplied and delivered in bags, £2 12s. per ton.
Coke - (34 bags to the ton), £35s. per ton.
No assistance is required from the Joint House Staff in unloading and stacking, and an undertaking has been given by Mr. Sweetnam that if the market prices of coat and coke vary, bo will make due allowance in bis accounts to the Joint House Department.
Question resolved in the affirmative.
House adjourned at 11.46 p.m.
Cite as: Australia, House of Representatives, Debates, 2 July 1931, viewed 22 October 2017, <http://historichansard.net/hofreps/1931/19310702_reps_12_130/>.