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Friday, 10 August 1906

Looked at from the stand-point of the people of the Commonwealth being the owners of these properties, and the Governments merely trustees, it would seem only reasonable that when a service is taken over from a State, the properties necessary for conducting that service should pass, as would properties in an ordinary change of trust, without any claim' for value by the first trustees. The States, however, urge with some reason that as there is a difference in the value fer cafiia of the properties passing with the services in the various States, it is necessary in equity to adjust that difference. Sir John Forrest's scheme of writing off the lowest fer cafiia value of the transferred properties of any State from the values of every State, and settling on the balance, properly met that claim. But the States also point out that they have borrowed money for much -of the transferred property, and it is only right they should be relieved of the debt, not merely above the fer cafiia equality, but the debt covering the whole value, which debt should become one of the Commonwealth, and cease to be a liability of the States. The desire of the States might be met without reducing the return to them, or increasing taxation, or straining the finances of the Commonwealth', by taking over debt, of the States, equal to the value of the properties, at the rate of ^1,000,000 per annum, and converting it, as State debts came due, into a special debt of the Commonwealth, till the full value of the transferred properties was covered. This would mean that as each sum of£1,000,000 was converted, the interest on it would come out of the share of the Commonwealth, not of the States, in the Customs and Excise revenue.

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