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Tuesday, 20 October 1931

Mr WHITE (Balaclava) -The honorable. member for Gippsland (Mr. Paterson) put up a very good case for paying off dissentient bondholders. In my opinion that is the only honorable thing that can be done. If the members of a firm were called together and asked to save their business by making a financial sacrifice, and some refused to do so, the aim of their colleagues would be to buy. put the dissentients. It wouldbe necessary to get, rid of the selfish dissentients, and to help those who were prevented by poverty from making the desired sacrifice. That is the procedure that the Government should follow. It has appealed to the people of Australia to convert the Commonwealth's total internal indebtedness, and .there has been a splendid patriotic response, 97 per cent, of the bondholders having converted. 1 believe that had the matter been handled more swiftly, and with a better realization that a sacred contract was involved, the percentage of conversions would have been even higher. Some £16.500,000 remains unconverted. Australia has to find the money to convert that amount, even if it has to pay over an extended term. The honorable member for Gippsland pointed out that it may be done through the sinking fund, and he advanced figures to prove his contention. In the past, Australia has enhanced its prestige by its splendid efforts.- If this compulsory conversion is insisted on, its fair name will be besmirched. T regard' clause 4 of the bill as a" statute of repudiation that we are asked to support. It reads -

Notwithstanding anything in the Debt Conversion Agreement or in the Commonwealth Debt Conversion Act 1931 contained, every holder of existing securities which have not been converted into new securities in accordance with the provisions of that act shall, notwithstanding that any holder of those existing securities may have signified or may signify dissent, be deemed to have made an application in accordance with section nine of that act for their conversion into new securities, and they shall he deemed to be so converted accordingly -.

Provided that nothing in this section sim!! apply to Commonwealth Treasury bills issued to a bank in. . Australia with the approval of the Australian Loan Council or to securitiesissued with the like approval to such a bank in exchange for such bills.

That is the most damnable clause that has ever been before an Australian Parliament. I cannot support that dishonorable proposal. If agreed to, it will stand against Australia in just the same way as would the action of a man who compounded with his creditors. For all time Australia would be regarded as the nation that had repudiated.

In his second-reading speech the Treasurer referred to many of those who had failed to convert as people who demanded their pound of flesh. He declared that they were actuated by selfish motives. I received a letter this morning from a small bondholder who lives in my e'le'ctorate, whose case must bc typical 'of hundreds of other Australian bondholders. It reads -

When the loan was launched by Mr. Lyons last year my husband had £500 in the bank, which he knew he needed in two years to pay off a mortgage on which he is paying ti* per cent, interest. He could have paid off this mortgage and saved by it, but through me, I am sorry- to say, he put the £500 into the loan and since the Government appealed for conversion, we got into communication with the owner of this property, which we are paying off (which is empty, and in a bad state of repair) to see whether she would accept Government bonds, and she refuses to do so as she needs the money. We also need the money to help to do something to the property so that it could be let, and thus bring in some return. We notice what Mr. Theodore has to say about people standing for their " pound of flesh ". My husband was away doing his bit in France along with many others who have sacrificed their health, while Mr. Theodore was standing for "his'' pound of flesh.

I am glad that the Treasurer has inserted in the bill some provision to meet cases of hardship. That is an act, of fairness that should apply to those who have converted as well as to those who have not. It will be very difficult to decide which are hardship cases. A man may have held bonds to the value of thousands of pounds, and converted" all but a few. Yet it would be a hardship to him if he were compelled to convert those remaining few, as he might have to find money on a given date.

The dissentient bondholders must be paid off. It is incomprehensible to me that overseas traders should receive special consideration. Surely Australian citizens Should have preferential treatment, if there is to bc any. [Quorum formed.] Much' of the money invested in bonds held by overseas traders is for goods imported into Australia, for which payment was not sent abroad because of the very high rate of exchange. The Government proposes to come to the rescue of persons holding those bonds, whose purchases of bonds were not made so much from patriotic motives as in the case of the Australian bondholders, but for convenience and speculative reasons. That will mean a further flight of capital from Australia, and place those people in the position of being preferred to those in Australia who have not converted their holdings, perhaps because of hardship. I want a better explanation from the Treasurer than that given by him as the reason why these people should receive over £1,000,000 as preferential bondholders.

The honorable member for Gippsland (Mr. Paterson) suggested one method whereby money might be raised to pay off these bondholders. There must be other alternatives, and I suggest one. The Government informed the Commonwealth and associated banks that it needs £3,000,000 to provide a bounty on wheat, and it was agreed that the money should be provided contingent on the price of wheat remaining below 3s. a bushel. As the price of wheat has risen to 3s. a bushel it is unnecessary to use that money for the purpose. I am alive, as every other honorable member must be, to the deplorable plight of the wheatgrowers. They must be kept on the land. Yet their position is incomparably better than that of the workless man in the city. They can at least grow their own food and have abundant fuel. It would be rare to find an instance of a primary producer starving. The unemployed town dweller is faced with nothing but black despair. He has no position to go to, and he cannot grow what he needs for his sustenance. Therefore, he and his family are forced to accept the government dole. In the circumstances I consider that the proposal to grant a bounty on wheat is merely vote buying, a device which will make many question the sincerity of the Government.

Mr Prowse - The wheat-farmers have received no sops in the past.

Mr WHITE - For many years they were paid 4s. a bushel for their wheat. Prices have fallen throughout the world. So have wages. The wheat-growers are faced with a situation such as confronts everybody else. I agree that they must be kept on the land, but I contend that this vote-catching proposal is unnecessary. That £3,000,000 could be used to a better purpose if paid to dissentient bondholders. Now that the price of wheat has risen to 3s. a bushel it is quite possible that the banks will not agree to make the money available for the purpose contemplated by the Government. At the same time, the Government proposes to introduce a wheat bounty bill at an early date, which indicates that it intends to apply pressure to the hanks.

Mr Prowse - What .about the pledge that has been given to the wheat-growers?

Mr WHITE - I am not responsible for that pledge. I regard the proposal from a business point of view. The Government cannot afford to pay this amount. I support the proposal of the honorable member for Gippsland, and ask the Treasurer and the Government to give earnest consideration to raising the necessary finance for paying off dissentients, irrespective of whether they were actuated by selfish motives, or their reason was poverty. I shall vote against the bill if a division is taken.

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