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Wednesday, 17 February 1932

Mr LYONS - My Government has been endeavouring to obtain from the Premier of New South Wales (Mr. Lang) information that would enable it to make the payments due. We have asked for a definite statement as to the amount due, and the amount that the State is able to make available, so that the Commonwealth Government may make arrangements for the payment of the balance, but we have been unable to obtain a satisfactory reply from the Premier of New South Wales. We recognize that this position cannot be allowed to continue, and that the default of New South Wales must not be per mitted to become the default of the Commonwealth. In the circumstances, I have only this morning notified the Premier of New South Wales that my Government proposes to go ahead in the matter. I think that it will be well for me to inform honorable members of the text of the telegram that has been sent to the Premier of New South Wales. It is as follows. -

On 10th February I advised you that in the interests, of Australian credit, Commonwealth Government had decided to make arrangements for payment as soon as possible on behalf of New South Wales of overseas interest due beginning this month in respect of which Government of New South Wales had defaulted. I advised what amounts Commonwealth understood were due and asked you to confirm same. I also asked what contribution your Government was prepared to make towards paying overdue interest. On 13th February, I gave undertaking sought by you that Commonwealth would not without consent of State use or suffer to be used any reply to my telegram of 10th February in evidence against State in any pending or future litigation. To date I have not received reply from you. In view of my announcement on 10th February that Commonwealth Government would make arrangements for these payments on behalf of New South Wales as soon as possible, Commonwealth Government cannot longer waitfor reply from you and has now decided to carry out immediately its undertaking to pay on behalf of New South Wales the overdue interest. This payment will be made on basis of information now in possession of Commonwealth. My Government however is still desirous of ascertaining precise details of payments overdue by New South Wales and what contribution your Government can make towards those payments and desires that your Goverment should make this information available immediately subject to the undertaking given in my telegram of 13th February in that regard.

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