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Friday, 30 July 1920

Mr RILEY (South Sydney) . -The loan of £25,000,000 which the Government are placing on the market will, I believe, be a success so far as the raising of the money is concerned, but I contend that the Government are borrowing on wrong principles. The Treasurer informed us that the bulk of this money is required for soldiers' homes and for the land settlement of soldiers, and bonds for an amount of £25,000,000 are being issued. Every penny of that amount must be taken from industry, in which it might be/ employed on reproductive work and in increasing business. Therefore the Government .are proposing -to remove from the avenues of industry and labour an enormous amount of capital. The Government are offering 6 per cent, interest for this money, and they have arranged that -any person who -takes up bonds to an amount equivalent to his present holding of old stock may convert the old stock, and receive 6 per cent, on it also. Thus a man who invests another £1,000 will, if he holds £1,000 worth of old 4$ per cent, stock, be able to draw 6 per cent, on '£2,000. It is possible that the Government will be called upon' in -that way to pay 6 per cent, on, not only £25,000,000, but on £50,000,000.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - That might 'be so if all the holders of old stock convert their stock as 'the honorable member suggests, but it will not pay them-to do that

Mr RILEY - If I hold £1,000 worth of 4-J per cent, stock and take up another £1,000 worth of new stock, I shall be receiving 6 per cent on £2,000.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - But the big holders will not get that.

Mr RILEY - There is no difference between the issuing of bonds and the issuing of Commonwealth notes for the purpose of raising money. At present the market is overstocked with Commonwealth bonds, and the stock is selling under par.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - Do not forget that a great deal of this money will be lent again to the States.

Mr RILEY - My suggestion is thai the Government should issue £25,000,000 worth of war service notes. In the ordinary course a soldier's cottage can be built in three months. At the end of that time the soldier occupies the house and commences the payment of interest and principal. If, for the purpose of this repatriation work, the Government issued a special war service note, as the payments came in from the soldiers the loan would be automatically redeeming itself. In this way money would be saved to both the soldier and to the Treasury, The war has exploded the .gold reserve theory.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - My word, it has not.

Mr RILEY - Great Britain and France had very small gold reserves in proportion to their note issues. Let us issue special .notes :for waT service homes as they are required, and, .as the homes are completed, and the repayments from the soldiers commence, the notes will gradually be taken out of circulation. Thereby we shall not only save the soldier from the payment of heavy interest, but .we shall .avoid taking an immense amount of capital "from the ordinary channels of commerce.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - This is a .proposal to build homes for nothing.

Mr RILEY - It will amount to that in time, because the Government will have the security behind the issue. The Commonwealth Bank - the finest institution of its kind in Australia - was established without any capital other than the credit of the Commonwealth. To-day there is about £55,000,000 worth of notes in circulation.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - The amount is only about £22,000,000.

Mr RILEY - If the amount is so small, that is another argument in favour of the issue of special war service notes.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - If we issued £50,000,000 worth of new notes, they would not remain in circulation.

Mr RILEY -No, but they would serve the Government's purpose. If the Government follow the old system of borrowing money at interest, thus taking capital from the avenues of industry and employment, they will not help the country, and the new bonds will merely help to depreciate the older stock. Under the system I suggest, so many thousand pounds' worth of notes would he withdrawn automatically every few months. That system has been followed elsewhere, and it could be adopted with advantage by the Commonwealth.

Mr Jowett - What provision does the honorable member propose to make for withdrawing the notes?

Mr RILEY - A house is built for £600 or £1,000. As soon as the soldier occupies it he commences to pay to the Treasury rent and principal. At the end of six months he has paid in, say, £20 or £30. Thousands of other men have done the same, and the Government then withdraw from circulation war service notes to the amount of the aggregate.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - In the meantime where are the notes, and who has them?

Mr Jowett - They are in circulation ; there is no difficulty about that.

Mr RILEY - The suggestion is worthy of the serious consideration of the Government. These specially ear-marked notes could be redeemed each year to the amount of the rent and principal that has been repaid.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Treasurer) - Where shall we find a lot of contractors who will accept these notes?

Mr RILEY - They will be legal ten der. War service notes will be no different from ordinary notes, but they will have their own identity, so that they can be gradually withdrawn. By this scheme the Government would make money, and I am sure that if the Labour party had an opportunity they would give it a trial. I move -

That the sum be reduced by £1.

I do this with the concurrence of the honorable member for Parkes (Mr. Marr), who forecast such an amendment. At the last general election the Government announced as part of their policy the honouring of the constitutional contract made withNew South Wales to establish the Federal Capital at Canberra.. The Prime Minister has since assured deputations that he is prepared to keep that pledge. Now is the best time of the year for building operations; if we wait until the Budget is brought forward, and the Estimates are approved, we shall have lost six months of the best portion of the year for building. The majority of honorable members are anxious that a sum of money shall be made available at once for commencing the erection of buildings and other works at the Federal Capital. I believe the Government are sincere in regard to this matter. The Prime Minister has given his promise, and I believe that he will fulfil it. My only fear is that the commencement of operations will be unduly delayed. At Canberra there are 1,000,000 bricks ready to be laid; there is £20,000 worth of timber lying idle, and there are complete water supplies and power and lighting services. When so much expenditure has been already incurred there, we are not justified in staying our hands any longer. The people of New South Wales have been long-suffering, seeing that the time specified was ten years, and that it is now twenty years since the Constitution came into operation. There is no doubt that the political life of this country is influenced by the city where the Seat of Government now is.

Mr Jackson - It will he influenced just as much at Canberra - if ever we get there!

Mr RILEY - That is not so, and I trust that members who believe in carrying out the compact will vote for the motion as an intimation that we wish to know what the intentions of the Government are. I voted for the construction of the transcontinental railway, and also for the payment of a lump sum to Tasmania, because I regarded these as part of the Federal agreement.

Mr Bell - Tasmania did not ask for any compact - Tasmania only got what it was entitled to. .

Mr.RILEY. - A previous representative of Bass made a great fuss aboutthe payment to Tasmania; and, in any case, New South Wales is entitled to have the Capital within its borders.

Mr Jowett - You want the Capital in Sydney.

Mr.RILEY. - No; our only desire is to carry out the Federal compact. In the Federal Territory there are 900 or 1,000 square miles of beautiful country, which, as soon as the Seat of Government is removed, will return a revenue. The whole influence of Melbourne and of certain members of this Parliament is bent on preventing the move to Canberra. I have here a report of the Public Works Committee on the proposed construction of a notes printing office, and the desirability or otherwise of placing that office at the Federal Capital; and it only shows the parochial spirit of those members who signed the document. It is pointed out that there are 211 employees in the printing office, and the report says that for their needs it would he necessary to erect 100 houses and two hotels; further, that for seventy single women, 100 cottages would be required. 'I notice that amongst the signatories there is not one New South Wales member. The report is signed by exSenator Needham and Senator Henderson, of Western Australia; the honorable member for Dampier (Mr. Gregory) - who is thoroughly antagonistic to removal to the Capital; the honorable member for Melbourne Ports (Mr. Mathews) ; the ex-member for Wimmera (Mr. Sampson) ; and the present Minister for the Navy (Mr. Laird Smith), of Tasmania. The only member of the Public Works Committee who voted for the erection of the building at Canberra was the ex-member for Moreton (Mr. Sinclair). How could we hope for a fair deal in such a matter from men with ideas so parochial? We have an opportunity on this Supply Bill to intimate to the Government that an early start is desired with the parliamentary buildings at Canberra; and I hope that honorable members will vote for the amendment.

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