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Wednesday, 24 February 1932


Mr BRUCE (FLINDERS, VICTORIA) (Assistant Treasurer) . - This measure is of the greatest importance, because it gives effect to principles for which the people of Australia have declared. But before dealing with it I shall say a word or two in reply to the honorable member for West Sydney (Mr. Beasley), who is, I understand, a great supporter of Mr. Lang. He subscribes to what is known as the Lang plan, and is prepared to preach to the people of Australia that that plan shows the path to salvation. I suggest that if the people of this country are to be saved by the operation of that plan, we might have been told with a little more logic and less appeal to passion and prejudice, exactly what it means. The times are far too serious for us to appeal to passion; the means of existence of the people and everything that concerns them are at stake. We should, therefore, give them the facts, so that they may come to a proper determination of -the questions on which they have to pass judgment. The fair issue to be put to the people of New South Wales is whether they are desirous of repudiating the obligations that they have solemnly entered into; whether they wish it to be said to those who in all good faith trusted them, " We do not propose to honour our obligations to you " ; whether they are prepared to allow their State to appear as a defaulter in the eyes of the world, in order that they may enjoy conditions denied to their fellow citizens in other States because of the serious crisis through which this country is passing. I suggest that if we put the issue clearly, the people of New"* South Wales will indignantly repudiate the action of Mr.

Lang and the excuses with which he and his supporters defend it. To show the falsity of the Premier of New South Wales and his supporters, let me draw attention to what they have said of myself. Why does Mr. Lang say that I am the Leader of this Government when actually I am only an Assistant Minister? Why does he quote at great length statements which he alleges were made by me at the meeting of the Loan Council in Melbourne? Many of the statements that have been attributed to me by Mr. Lang and his supporters are false, and those that are not false are generally misrepresentations of what I said. But whatever I said at the meeting of the Loan Council was also said by the Prime Minister (Mr. Lyons) with equal, if not stronger, force. Yet we never hear from Mr. Lang of the statements of the Prime Minister at that meeting.


Mr Ward - The Prime Minister said what the right honorable member told him to say.


Mr BRUCE (FLINDERS, VICTORIA) - The position is too serious for suggestions of that character. The honorable member was not present at the meeting of the Loan Council, and is repeating only what he was told happened there. Why is it that we have heard from Mr. Lang nothing of the statements of the Prime Minister at that meeting? Why is it that the press which is supporting Mr. Lang has gone to the length of producing new, wonderful, and amazing allegations regarding the sinister and over-powering influence that I am supposed to exercise upon the Government? The answer is patent. The Prime Minister (Mr. Lyons) at the last election led his side to a victory unparalleled in Australia. He came into office with a greater measure of the trust and confidence of the people than was possessed by any previous Prime Minister. Mr. Lang and his friends know, therefore, that it is useless to say that Mr. Lyons is conspiring against the people, or is scheming in the interests of the capitalists. They know that that would not be believed, and that it is not safe to attack him. Therefore they have resorted to this propaganda against mc. I am not complaining of being attacked in this way. Mr. Lang and his supporters can say what they like without causing me any particular concern. They are trying to get the public to believe that I, a perfectly innocent individual, am one of the world's strong men, with the most abominable and vicious tendencies. They attack me in this way knowing that the people would refuse to believe any of their statements if made about -the Prime Minister. Of course, what they say is nonsense, and I do not propose to waste time in speaking of it further. The people will very soon awake to the absurdity of the whole thing.

I shall quote only one remark which the honorable member for "West Sydney (Mr. Beasley) attributed to me. He said that on some unspecified occasion, I said that I would " cut the tripe out of the workers ".


Mr Beasley - I said " out of everything ".


Mr BRUCE (FLINDERS, VICTORIA) - Splendid ! Apparently I did not limit myself in any way! Friends and foes were to be treated alike! Now, I express myself in certain ways at certain times, but I ask any honorable member of the House who knows me, or any person outside of the House who knows me, whether I would be likely ever to use such an expression, as "cut the tripe out of everything". If the honorable member cannot do better than that, he should remain silent.

I come now to the merits of the case put forward in behalf of Mr. Lang. It is said that Mr. Lang will not pay the avaricious and rapacious bondholders, but will retain such money as he has to provide sustenance for the people, and to ensure that the fullest benefits shall be given to the workers. A tremendous appeal is also made in behalf of the widows and orphans, and those who are otherwise stricken. The suggestion is put forward that the only alternative to depriving these people of things which we all desire them to have is to refuse to pay rapacious bondholders.

The facts are that the particular bondholders who have been selected for the repudiatory activities of Mr. Lang are those of Great Britain and New York. I know something about the British bondholders. Because of the good name, honour, and integrity of previous governments of New South "Wales, the securities of that State are trustee securities in

Great Britain. The overwhelming majority of Australian stock in Great Britain is held by small bondholders in small amounts, mostly in trust funds, because they are trust securities. These trust funds are held for the very class of people in whose behalf Mr. Lang's appeal is said to be made - the widows, the orphans, and the helpless. It will be seen therefore that there is no merit whatever in this claim.

Another ground on which it is sought to justify the Lang policy is that the State money which ordinarily goes in the payment of interest is being paid in respect of war debts - a hideous and an abominable indebtedness which should never have been incurred. The answer to that claim of Mr. Lang is that New South Wales does not owe a single farthing in respect of war debts, the Commonwealth alone being liable for all the war debts of Australia. New South Wales borrowed the money in respect of which this interest is due for the purpose of building the great assets which have made that State what it is to-day. The money has been spent on the State roads, railways, harbour, and Other utilities which have contributed to its past prosperity. It is the. payments due in respect of the loans so used that are being repudiated.

Time will not permit me to deal at length with many things that the honorable member for West Sydney has said, but I must observe that either his protestations are not genuine or, if they are genuine, it is amazing that genuine protestations should be founded upon dishonest arguments, or argument's which the people using them should have enough intelligence to know are dishonest.

Let me refer briefly to Mr. Lang's position at the recent Loan Council meeting. It has been suggested that a vendetta is being relentlessly pursued against Mr. Lang, and that when he came to plead for a little help, because of the inexorable circumstances of his case, his plea was harshly rejected. It has also been suggested that Mr. Lang did his best to meet his obligations like an honest man, and that he has been refused further assistance because of vindictiveness on the part of the Commonwealth Government. The facts are very different. Mr. Lang defaulted in his payments last year, and remained in default for many months. Eventually he was so hard pressed that he attended a meeting of the Loan Council, and gave his solemn undertaking that from that time onward he would meet all his obligations for interest, and assume liability for the interest which had been paid on his behalf by the Commonwealth. He also undertook to conform to the conditions of the Premiers plan. Upon the giving of these solemn undertakings further financial assistance was granted to New South Wales. The extent of this assistance has run into millions of pounds - it has been far greater than the £500,000 for which he asked at the time. No one has been harsh with Mr. Lang. His manner of coming to the council now, after six months have elapsed, rather suggests to one's mind that he has worked everything for his own ends. The first default of Mr. Lang amounted to £6,000,000 altogether. Of that amount £1,500,000 represented moneys due to the State by the Commonwealth which were used to meet the debts which he had repudiated. But he has had for the benefit of his Government - not for the benefit of the people of his State, for he is disgracing iris State every day - further assistance to the amount of £4,500,000. Now he comes along without any apparent contrition, and without any sort of defence, and says that he must have further assistance if he is to honour his obligations. I point out that no one forced the Premiers plan upon Mr. Lang. He voluntarily agreed to it - whether honestly or dishonestly I do not know. But having agreed to it, he came to the Loan Council in January and said that he was £3,000,000 further behind, and that he wanted £3,000,000 in addition to the £500,000 that was then required for overseas interest. In the face of his own figures, prepared by his own officials at the time the undertaking was given to the Premiers Conference, he now tells us that he is down £3,000,000. It is in such circumstances that it has been suggested that Mr. Lang has not had fair treatment, that he has been hounded down, and that every man's hand is against him. If that is the position, all I can say is that Mr. Lang has done extraordinarily well.

Of the treasury-bills issued in Australia on the 31st January, 1932, amounting to £40,820,000, Mr. Lang has had £18,320,000, or nearly half, the Commonwealth had £8,500,000, and the other States £14,000,000. On the strength of the promises he made to the Loan Council, which he has since broken, Mr. Lang has received £S,566,000 in treasury-bills since the 1st July last. The other States and the Commonwealth have received only £11,634,000. Our short-term indebtedness in London amounts to £37,825,000, of which Mr. Lang has had £12,969,533. There has been no vendetta against this gentleman. The fact that he has evolved this system of determined repudiation of his debts and of refusal to honour his obligations, has made it essential that every possible step shall be taken against him. Mr. Lang, personally, counts for nothing at all; but the principles for which he is standing must be resisted, for they are dishonouring the whole national life of Australia.

The burden of interest of debtor countries is one of the great problems which the world is being called upon to face today. Unless we face it and solve it, no one can predict what will happen. Australia, as a debtor country, is vitally interested in the solution of the problem, particularly because the present ruling world prices of commodities are making the position of primary producing debtor countries almost intolerable. The problem will not be solved by one nation refusing to honour its obligations and meet its debts. The world's troubles cannot be solved in that way. I believe that Australia desires to meet the situation in an honorable way by discussion, consultation, and agreement.

The honorable member for West Sydney (Mr. Beasley) was quite wrong when he said that Australia had accepted Mr. Lang's plan for overcoming our interest burden. We have carried out in Australia recently a great conversion loan which speaks volumes for the patriotism of our people. The huge amount of £540,000,000 was converted by the voluntary action of our people at a substantially lower rate of interest than had previously prevailed. In these circumstances, it ill behoves any Australian to decry one of the greatest patriotic efforts of national self-sacrifice which the world has even seen.

While 1 apologize to honorable members for having occupied, so much time in dealing with Mr. Lang's position, I remind them that that subject is linked with the subject-matter of the bill, for Mr. Lang's actions have forced the Government to bring dorm the measure. Before proceeding to discuss briefly the provisions of the bill, I shall refer to several matters mentioned in the speeches delivered to-day. It has been complained that the Government did not pay the interest due by New South' Wales on the very day it became due, and that, therefore, default occurred. I do not wish to argue at any length with the Leader of the Opposition (Mr. Scullin) about the period of time in which his Government and this Government met the circumstances which they had to face; but I suggest to him that the statement about four days which he made was not quite fair to this Government. We knew only on the Thursday at 6 p.m. that Mr. Lang intended to default, and the interest was due in London the very next day. In those circumstances, it was not possible for the warrants to be issued and the payment to be made on the due date. I remind the right honorable member that the payments made by his Government in behalf of New South Wales were not actually made on the due date, although the warrants were issued in London on that date. It is not possible for the banks to place the money in the hands of their clients on the very day that the warrants are issued. That, however, is a relatively small matter. When a man who, six months before, has undertaken to meet his obligations, gives no indication whatever until the night before certain payments are due that he does not intend to meet them, he creates an extremely difficult situation.

But even if it had been possible to pay the £500,000 in London the very next day, there still remained other factors to be considered. We have to remember that concurrently with asking for £500,000 to meet his interest payment, Mr. Lang informed the Loan Council that he would want an extra £3,000,000 to cover his deficit for the current year. In these circumstances, it was inevitable that if the Commonwealth Government had paid the £500,000 at once, the problem of finding money to meet other interest payments during the remainder of the year would recur on every day when payment became due. It was also necessary to consider what steps could be taken to recoup the Commonwealth for money so expended. It was quite obvious that the action taken by the previous Government of issuing writs and proceeding through the High Court would involve long delay, and afford little prospect of success within a reasonable time. The Leader of the Opposition brushed this aspect of the subject aside without much consideration. He also dealt very lightly with the point that there was a doubt as to the liability of the Commonwealth direct to the bondholders. The right honorable gentleman said that no man could have any real doubt about that.


Mr Scullin - I did not say there was doubt about the direct liability. I said that we were liable to the States under the Financial Agreement to meet any default by a State. I did not use the term " direct ".


Mr BRUCE (FLINDERS, VICTORIA) - If the right honorable gentleman says that we owe it to the States to meet these payments, I entirely agree with him. There is no doubt whatever that the good name of the Commonwealth was at stake. Whatever may have been the exact legal position, there is no doubt that the Commonwealth had led every One to believe that it was liable to meet these payments. We had to make certain what the position was, and place it beyond all possibility of doubt. This doubt was not first raised, as suggested by the Leader of the Opposition (Mr. Scullin), when the Government introduced this bill ; it arose when Sir Edward Mitchell published his book on the financial agreement entitled What Every Australian Ought to Know, in which he said -

It is clear, however, that as regards all the State debts taken over by the Commonwealth under clause 1 of Part III. of the first agreement "as between the Commonwealth and the States," that language precludes the owners of those particular public debts, i.e., those borrowed up to 1st July, 1929, being able to enforce rights against the Commonwealth directly under that agreement. Their direct remedies remained against the States to whom they respectively originally lent.

The Commonwealth Government was not under direct obligation to pay the bondholders. I merely wish to make it. clear that there is another factor to be considered. On the occasion of the first default by New South Wales, the money was immediately paid, and everybody forgot the incident. The Government believed that in the interests of Australian credit it was better that the whole position should be made clear, and that was the reason for the action it took. The Commonwealth Government has now paid the money owing, but I do not think anybody has doubts as to who was the defaulter on this occasion, or how serious is the position when a State makes default.

Australian stocks to the value of millions of pounds have changed hands in the absolute belief that the Commonwealth credit was behind the indebtedness, and that the Commonwealth Government was responsible for the payment of the interest, and that matter is to be placed beyond all doubt. That will have a good effect upon Australian credit. Doubt on the subject would undermine our credit, and it is necessary that our credit should be built up as rapidly as possible, having regard to the maturing obligations that we have to meet abroad. A great deal is to be said for the suggestion of the right honorable member for Cowper (Dr. Earle Page). I imagine that the House generally agrees that it is of paramount importance that we should make it perfectly clear, in the interests of Australian credit, what our obligation is. While I give the right honorable member no undertaking as to what the Government will do in the matter, serious consideration will be given to the suggestion to separate this particular portion of the bill, and we will endeavour to obtain the unanimous support of all sections of the Parliament for it, with the object of giving to all who are interested in Australia, and are likely to seek a field for investment here, a maximum of confidence in this country, and in that way to improve our credit and the basis upon which we can raise money.


Mr James - What about feeding some of the hungry people ?


Mr BRUCE (FLINDERS, VICTORIA) - There is no more certain way of feeding the hungry than by giving an opportunity to those who are out of work to find employment, and no better means of bringing happy conditions back into the lives of the people than by restoring confidence in Australia, and showing investors that this is a country to which they can safely lend their money, thereby assisting in the development of new enterprises, and opening up fresh avenues of employment.

I agree with the Leader of the Opposition that there are two aspects of this matter to consider - the establishment of the responsibility of the Commonwealth, and the legal question how is the Commonwealth to compel a defaulting State to make payments due by it. I now propose to refer to the aspect which specially concerns the people of Australia, and I agree with the Leader of the Opposition that this matter too deeply affects the national life to warrant the intrusion of party politics. We must try to realize what the Financial Agreement really involves, and what the issue is that now faces this country. The position is serious, in that already a case of default in meeting oversea interest obligations has occurred in Australia. When the Leader of the Opposition was Prime Minister, he had to provide against repudiation by a State. He was entitled, I think, to believe in the good faith of the Premier of New South Wales, when the latter gave a solemn undertaking to honour his obligations; but subsequent events must have shaken everybody's faith in promises given by the present Premier of New South Wales.

The Financial Agreement is now a fundamental thing in the lives of the people of this country. It affects the whole of the national debt, running into over £1,000,000,000. It casts an obligation on the Commonwealth to meet that share of the debt which it has undertaken to discharge on behalf of the States, as well as its own debt, and casts on every State the obligation to meet its share of the indebtedness. We all believed, I think, that Governments could be relied upon to stand to their honorable undertakings, and although we are now disillusioned, I hope that the default by New South Wales will be an isolated case. Provision has been made to enable action to be taken, and the Government is taking the necessary steps under this measure to enforce observance of the Financial Agreement.

The bill is not a vindictive measure, and every party in the House should cooperate to devise a serviceable instrument, at the same time protecting and safeguarding all the rights of the States which are members of the federation. The Government is prepared to consider suggestions, and it desires the co-operation of honorable members, because this bill should be an instrument to ensure that obligations will be met, while at the same time there should be safeguards making tyranny impossible under it.

The Leader of the Opposition says that he is quite prepared to support the Government in any proper steps it may take to make New South "Wales pay, and is in favour of proper judicial measures to that end. I welcome that statement, and I hope that the right honorable gentleman will see his way to support this bill. He has, I think, taken a somewhat exaggerated view of what it would do. I shall therefore deal with some of his criticisms upon it. He asked why this measure had been introduced when we might have proceeded by action in the High Court. My answer is that the last Government endeavoured to proceed by High Court action; but probably no one knows better than the Leader of the Opposition that the progress made during a period of nearly five months was rather discouraging, and the hope of a speedy determination by that means is remote. An ordinary action in the High Court involves tremendous delay in the obtaining of the decision; but a judgment in the matter is essential, and it is necessary to get rapid action. The Government has started an action in the High Court, and it can proceed with it concurrently with the legislation now before the House, but experience has shown High Court action to be a very slow process. The next point taken by the Leader of the Opposition was that in any case the delay would be as great under the method the Government now proposes to adopt as in a High Court action, but I think that that is not so. The Auditor-General's certificate is to be regarded in a High Court action as prima facie evidence of the amount owing by a defaulting State. That would relieve the Commonwealth Government of the necessity to prove the exact sum owing by a

State.The last action showed that the establishment of such a figure is an almost impossible task, and involves most serious delay. Making the AuditorGeneral's certificate prima facie evidence would eliminate a great part of the procedure that would otherwise be necessary.


Mr Scullin - Is there authority under the "Financial Agreement to do that?


Mr BRUCE (FLINDERS, VICTORIA) - There is authority under this bill. The right honorable member's next objection is that the constitutional validity of the proposed action can be challenged, and that that would mean tremendous delay. I contend that it would not result in any considerable delay. A State can challenge the Commonwealth's action, and the Commonwealth will put no obstacle in its way. Is it not a little startling to find the Premier of a State, not only repudiating his indebtedness, but also placing every difficulty in the way of proving that a certain sum is owing by his State, and even sending telegrams to this effect - " Yes, I will give you information, but you must not use it in evidence against me in any proceedings." I do not think that the enormity of the offence of such conduct has been realized. I assure anybody who supports the opinions of this gentleman that, if it is desired to challenge the constitutionality of the measure, the Commonwealth will not put any obstacles in the way. In fact, we shall do everything in our power to facilitate the matter, and to have a decision reached. Therefore, little delay should be occasioned by efforts to determine the constitutional position.

The next point made by the Leader of the Opposition (Mr. Scullin) was that the Commonwealth is proposing to constitute itself both judge and accuser. I do not know exactly what he meant by that, but I presume his idea was that the Commonwealth is constituting itself accuser by saying to the defaulting State that it owes the money; and then it constitutes itself judge by declaring, as a matter of fact, that the money is owing. That, however, is not the position at all.


Mr Scullin - Is that not the position under clause 6?


Mr BRUCE (FLINDERS, VICTORIA) - No. It is not true that we are usurping the functions of the High Court. "We are not constituting ourselves judge and accuser, because we have laid it down that it is first necessary to obtain a certificate from the AuditorGeneral that the money is owing. It is not true to say that the High Court is being ousted. After we get the certificate of the Auditor-General, we proceed under clause 5 to obtain a judgment of the court. Therefore we are not usurping the official function. The final say rests with the judiciary, which must declare whether or not the money is owing. The Leader of the Opposition will probably point out that that may .be so under those sections of the bill up to clause 6, but that under clause 6 power is taken to proceed with the collection of the revenue of a defaulting State without waiting to obtain a declaration from the High Court. In reply to that I point out that the High Court can still be brought in in regard to the constitutionality of the law, the amount owing by the State, or on the motion of any taxpayer if he is prosecuted for failing to pay his taxes. In any case, the Government has no objection to an amendment being inserted in the clause that a declaration of the court must be sought within a reasonable period. That would remove any doubt which may exist in regard to the position.

The whole justification of this bill is that it is required to deal with extraordinary and abnormal circumstances. These circumstances have to do with governments. Let us consider the position of the Commonwealth Government. After all, this is the supreme law-making authority in the Commonwealth. I agree that we cannot determine in this Parliament matters which should be determined by the judiciary, but we can legislate in every direction inside the powers conveyed under the Constitution. I agree that this is a novel, and, if you like, an extreme form of legislation, but the times demanded it, and circumstances have warranted it. There has to be some remedy. I remind the Leader of the Opposition that the Auditor-General comes into this matter. He is an independent official appointed by Parliament. After a certificate has been obtained from the Auditor-General, it becomes necessary to have a resolution passed by both Houses of the Parliament endorsing the certificate, and in order to protect the judicial side of the matter in so far as is necessary, it is required under clause 5 that a declaration of the court that the amount is due and payable shall be obtained. The constitutionality of the law may be challenged at any time, and this affords protection to the taxpayer.

The Leader of the Opposition asked why the Government did not establish its debt, presumably by High Court procedure, obtain a judgment of the court for the money, and then allow the court to enforce the judgment. An examination, of the position shows that if a Premier of a State is defiant, it would be almost impossible for the court to enforce the judgment. I do not wish to pre-judge what may happen, but we have to look at the matter as reasonable men. We have heard the burning declaration of a gentleman who speaks for a particular group in New South Wales as to how they will resist. Does any one think that they will stand quietly by, after having declared that not one penny shall go to the bondholders that is needed by the widows and orphans, and see that money attached by the Commonwealth? They would fight to the last ditch, and there would be no means of enforcing the judgment of the court. [Leave to continue given.~\ Therefore, the Commonwealth having, after tremendous delay, obtained judgment, it would be faced with the problem of enforcing it. I say without any hesitation that, when that point was reached, the Commonwealth would "have to do practically what is sought to be done by this bill. Some such means would have to be adopted in the face of the attitude of defiance which has been taken up by the representatives of New South Wales, who have broken their promises and repudiated their obligations. Force is out of the question in the case of the Commonwealth and a great State like New South Wales. The only point upon which there has been any difference of opinion between the Leader of the Opposition and the Government is whether or not it is proposed in this bill to supersede the judiciary. I have pointed out that it is not proposed to do this. Therefore, there should really be no difference between us at all, but the Leader of the Opposition has exaggerated the position as he has seen it in reading the bill.

I come now to the method by which the judgment of the court may be enforced. I assume that the declaration of the court has been made, and everything pertaining to the judiciary is in order. "We know, I think, that any attempt to put in a receiver would be resisted. The Government has been faced with the problem of dealing with a situation of this kind without provoking civil violence, to which the Leader of the Opposition referred this afternoon. To put in a receiver to take the money, or to resort to any physical means of seizing the revenue of the State, would be a very difficult procedure, and probably would eventually lead to violence. Therefore, it is proposed that this Parliament shall declare by resolution that certain revenues ordinarily payable to the State shall be payable by the taxpayer to the Commonwealth. That is, the Commonwealth shall intercept the revenue before it get's into the hands of the State. It has been suggested that we should do nothing in the way of attacking the unfortunate taxpayers of New South Wales in respect of the crimes or sins of the Government of that State. I endorse that view. We must see to it that we do nothing of the kind. I believe, however, that there is no danger of any injury being done to the New South Wales taxpayers. It has been said that, as this measure is certain to be challenged, nobody in New South Wales will pay any taxes at all. I am not sure that that will be the position. It may be that an amendment is necessary in this bill to indemnify taxpayers against loss should the Commonwealth fail in its proceedings to recover the money from a defaulting State. It may be necessary for the Commonwealth to undertake to repay to the taxpayers the money which it has collected from them should the proceedings under this measure be declared unconstitutional. However, I believe that there are a great many patriotic taxpayers in New South Wales who have sufficient regard for the honour and good name of the State to come forward and pay their taxes voluntarily, nor would they, I believe, suffer any injustice.

The Government regards this as a national bill. We should all consult together in order to safeguard the interests and rights of everybody, but, at the same time, make the measure effective to ensure that, in the future, every one will have to stand up to his obligations. It was suggested by the Leader of the Country party that the Commonwealth might obtain the money owing by a defaulting State by attachment of the railway revenue. I can see considerable difficulty in the way of such procedure, because the railway revenue is collected all over the State. After all, the railways provide service for the money paid when it is paid, and I am not sure that it would be a good thing to attach the railway revenues as suggested. However, I do not brush the suggestion aside, nor say that it is beyond consideration. That issue, however, does not really arise under this bill. It would become relevant in considering the motion brought down under this provision to determine what revenue was to be attached. If it were decided that railway revenue should be seized, it should be remembered that ultimately all revenue is paid into a bank in the State, and there are powers under this measure to attach any moneys coming into the hands of any bank on behalf of a State. Consideration of that matter may be deferred for the present. The Government has examined every possible method of collecting moneys due to the Commonwealth, with the minimum of dislocation and inconvenience to the unfortunate people of the State concerned; the last thing we desire is to punish citizens of the State for the crimes and misdemeanours of the individual who is Premier of the State for the time being.

The Leader of the Country party suggested that provision should be made in the bill that a preliminary to any proceeding against a State should be the assent of a majority of the Loan Council Again, I am not prepared to state the attitude of the Government, beyond promising that it will consider such a proposal if it is suitably worded. The Government cannot entertain any amendment that would transfer from this Parliament to the Loan Council the right to determine whether action should be taken against a defaulting State. But it will be prepared to consider whether the Commonwealth's right to recover from any

State would be prejudiced by providing that this method would be operative if, after consultation with the Loan Council, the majority of the States expressed agreement. The proposal is difficult of determination, but I have indicated my view of it.


Mr Beasley - Of course the right honorable gentleman is not Prime Minister.


Mr BRUCE (FLINDERS, VICTORIA) - I have been trying to make that clear. The honorable member seems to have suffered some delusion on the subject, but I hope that this final evidence will convince him of his error. The proposal I have mentioned might well be regarded as safeguarding the States against any unwarranted and unbalanced action by a Commonwealth Government, and as such it is well worthy of consideration.

The suggestion has been made that a similar safeguard is required against the possibility of a thoroughly dishonest and disreputable Commonwealth Government choosing not to honour its obligations. The obligation of the Commonwealth is to receive moneys from the States and apply them to meeting the services of State debts. A government claiming to be actuated by high and humanitarian motives might go to the extreme of receiving moneys from another government and not applying them to the use for which they were intended. If I could see any safeguard against such a possibility, I would be prepared to adopt it, because action which once appeared inconceivable has been proved by the event not to be so. Mr. Lang applied for per capita payments amounting to £243,000 on the day before they were due to him. The Financial Agreement provides that such money shall be applied By a State Government to the payment of the interest on State debts. Because of the relations existing between the Commonwealth and State Treasuries, the £243,000 was paid to Mr. Lang a day in advance. He has kept that money. When the head of a government can be guilty of such dishonesty, we would be wise to insert in the bill any safeguard that can be suggested. But so far the Government has not been able to evolve a provision which would be a protection against the deliberate stealing of money paid to a government for a particular purpose and not utilized for that purpose.

The object of this bill is to ensure that in future the solemn obligations of governments shall be observed, or, in default, a ready and certain method will be available by which the defaulter may be compelled to live upto his undertakings. It seeks to provide that in no circumstances will there be any taint of dishonesty and repudiation in connexion with the public obligations of Australia. I hope that the House will regard the bill as a non-party measure, designed not merely for a passing emergency, but for all time. We have to face the necessity of having machinery to ensure that the Financial Agreement shall continue, backed by sanctions that will guarantee the meeting of all obligations. The Government invites the co-operation of all sections of the House in an endeavour to do justice to all, by protecting the rights of the Commonwealth, the States and individual citizens, alike.

Debate (on motion by Mr. Forde) adjourned.







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