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Thursday, 3 March 1932

Mr SCULLIN (Yarra) (12:50 PM) .This clause should be omitted, for many reasons. The honorable member for Martin (Mr. Holman) considered that its provisions were invalid, and the same opinion lias been expressed to me by other legal practitioners. The clause cuts right across the Loan Council procedure, and is unnecessary; in fact its inclusion in the bill would make the legislation of this Parliament look rather ridiculous. The Financial Agreement provides that the Loan Council may raise moneys and allot them among the various States. By a unanimous agreement, the moneys may be allotted as the Loan Council may determine, but in the absence of unanimity they must be 'allotted according to a certain formula. It would be extraordinary if the Loan Council, after allotting certain moneys, issuing treasury-bills in respect thereto, and requesting the Commonwealth Bank to cash the bills, then seized the money in satisfaction of a debt incurred* through the default of a State. A much more simple procedure would be to make no allotment to the State in default. That was done by the Loan Council during the regime of my Government. I do not know whether an allotment was refused in respect of money for public works, but moneys for the purpose of meeting revenue deficits were certainly withheld from New South Wales. I submit that if moneys may be withheld after allotment there is no need to make an allotment. I cannot imagine any loan moneys being allotted to a State which has declared that it does not intend to pay its interest bill. A State which would make that declaration would more likely also refuse to repay any principal due by it.

Mr Lyons - Such a State would take anything that it could get.

Mr SCULLIN - No application was made for the allotment of loan moneys to New South Wales while that State was in default last year.

Mr Maxwell - In that event these provisions would be inoperative.

Mr SCULLIN - Their inclusion in the bill might lead to an attack on the validity of the measure, and so jeopardize all its provisions.

Dr Earle Page - Unless there is unanimous agreement by the Loan Council any moneys raised are automatically allotted to the States.

Mr SCULLIN - I repeat that no money was allotted to New South Wales by the Loan Council while it was in default last year.

Mr Lyons - But the New South Wales representatives did not attend the Loan Council meetings during that period.

Mr SCULLIN - That is so, but they had the right to do so at any time. I suggest that although the Loan Council must sanction the issue of Commonwealth treasury-bills, for the purpose of giving effect to its decisions, it rests finally with the Commonwealth Government whether the bills will be actually issued or not.

Mr White - Did -not the Scullin Government withhold other moneys that were due to New South Wales while the State wa3 in default?

Mr SCULLIN - Yes; and that was a proper procedure. It seems to me to be ridiculous for the Loan Council to allot moneys, for the Commonwealth Treasury to issue bills, and for the Commonwealth Bank to cash the bills, only for the Commonwealth Government to seize the cash in the event of default by a State. Why go to all that trouble? I shall oppose this clause because I think it is unnecessary.

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