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Thursday, 22 October 1931

Mr THEODORE (Dalley) (Treasurer) . - The intention is to repurchase the bonds at full face value from those who require their money for their own maintenance, or to meet definite and immediate obligations, the withholding of which would impose a hardship upon them. The National Debt Commission was faced with the difficulty that under the act which governs its -proceedings a definite obligation was placed upon it to employ all its funds to the best advantage of the national debt - normally to buy at market price, except in respect of matured bonds, which can be redeemed at full face value. The bonds under consideration are not redeemable in that sense, and must be purchased. The commission represented that unless it were given statutory authority it would be committing a breach of trust if it applied its funds to the purchase of bonds at a higher price than that ruling in the open market. That is why Parliament is being asked to give to the commission power to use its funds for the purchase of bonds at their face value. The honorable member for Swan (Mr. Gregory), suggested that the relief to be afforded by the National Debt Commission to bondholders should not be limited to £2,000,000, but that, in addition, funds already allocated for the purchase of bonds on the market should be applied to the relief of cases of hardship. The honorable member, therefore, proposed that the clause should be amended to give a mandatory instruction to the commission. The commission is set up under a specific statute, which gives a statutory undertaking to bondholders that the sinking fund will be managed in a certain way by an independent body. It would be unwise to interfere with that.

Mr Gregory - The course I suggest would not destroy the value of the bonds.

Mr THEODORE - The commission manages the sinking fund in respect of all loans, overseas as well as internal, and we -should be careful not to create any misapprehension amongst bondholders at home or abroad. I call attention to the personnel of the commission, nearly all the members of which hold office, ex officio - the Chief Justice of the High Court, the Governor of the Commonwealth Bank, a representative of the State Governments, who at present is Mr. Pitt, Under- Treasurer of Victoria; the secretary to the Commonwealth . Treasury, the SolicitorGeneral of the Commonwealth, and the Commonwealth Treasurer. The honorable member for Swan questioned the wisdom of ear-marking £100,000 a month for purchases on the market. The commission realizes the extreme need" to provide the maximum amount of funds for the relief of cases of hardship, aud, taking that fully into account, allotted this £100,000 a, month for market operations, but limited the allocation to three months, at the end of which the commission will meet again and further consider the matter. If it is thought then that further funds should be allotted, even to the exclusion of purchases on the market, I have no doubt that the commission will act accordingly.

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