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Tuesday, 20 October 1931


Mr JONES (Indi) .-This bill cannot be regarded other than as a measure of repudiation. I have always opposed repudiation, and I am sure that the proposal now before us is repugnant to every honorable member who holds that contracts should be sacred. When the Debt Conversion Bill (No. 1) was before the House, I supported an amendment moved by the Deputy Leader of the Opposition (Mr. Latham) to make provision for necessitous cases, particularly small bondholders who from patriotic motives invested their savings in early maturing securities. . I am pleased that the Treasurer has incorporated in this bill provision for such cases. Their needs should have received attention in the original act, but this measure of justice even at this late hour removes some of my objections to the bill. We are told that the cost of the conversion loan was £50,000. I assume that the cost of the action to be taken under this proposal will not be so great. I venture the opinion that had only 50 per cent. of the bondholders voluntarily converted, this proposal for compulsory conversion would still have been introduced.


Mr Paterson - It would have been more necessary then.


Mr JONES - What was the need for incurring a cost of £50,000 when all the time the Government had the compulsion card up its sleeve? I said of the original bill that it implied compulsion, and that it said in effect to the bondholder, " Come down or I shall shoot." The bill now before us is a loaded gun, to shoot down those who would not voluntarily convert.


Mr Gabb -inever thought any Australian government would adopt such a policy.


Mr JONES - The spirit of repudiation is repugnant to every honorable member; but desperate ills demand desperate remedies. Australia is in a serious plight, and no other practicable remedy has been suggested. I agree with what the honorable member for Angas (Mr. Gabb) said in regard to the preferential treatment of overseas traders. Why should they receive preference over necessitous bondholders within the country?


Mr Theodore - Certain moneys belonging to overseas firms, which had accumulated owing to the rationing of exchange, were temporarily invested in Australian securities, and special provision for them was made in the conversion plan adopted by the Premiers Conference, and subsequently embodied in the legislation of this Parliament.


Mr JONES - Had not the Government power to deal with the holdings of overseas traders as it dealt with other stock?


Mr Theodore - No, because special provision was made in the conversion loan for the money temporarily invested by overseas traders.


Mr JONES - I had £600 in early maturing bonds, and I intended to apply it to the purchase of a farm. Now I shall be unable to get the money for that purpose. My £600 was as im- portant to me as their millions of pounds are to the overseas traders.


Mr Theodore - But the Premiers Conference made arrangements with the Loan Council for the investments of the. overseas traders to be dealt with in this way.


Mr Coleman - Is there any reason why these traders should receive preferential treatment?


Mr Theodore - Yes; because their holdings represented money that was needed for trade. The rationing of exchange, not the rate of exchange, caused the accumulation of the money in Australia, and it was temporarily invested in government securities.


Mr JONES - I recognize that the course which the Government has adopted is unavoidable. As the honorable member for Forrest (Mr. Prowse) said, had not a large percentage of the bonds been converted the securities would have been almost valueless. By converting voluntarily, bondholders were securing their own capital. It would be unfair to allow those who dissented to profit at the expense of those who voluntarily converted. It is a case of " One in, all in." It is not pleasant for me' to have to vote for this bill, but the country was in such a desperate financial position that some reduction of the burden of public debt was essential. Our national income had decreased considerably and we had tremendous obligations to meet. If our income is 3d. and our expenditure 6d., we must obviously become bankrupt if we do not reduce expenditure. This nation was fast drifting into that position, and some drastic action had to be taken.







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