Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 3 March 1932

Mr BRUCE (FLINDERS, VICTORIA) (Assistant Treasurer) . - It is absolutely necessary that the Commonwealth Government should have power to deal with moneys that have been allocated to States by the Loan Council. In normal circumstances the Loan Council meets prior to the commencement of the financial year, to determine, among other things, how much money can reasonably be raised to meet the programmes submitted by the Commonwealth and the States, and a .unanimous decision is come to concerning tho allocation of the amount available. The figure for the present year was approximately £9.000,000. The money was raised by issuing treasury-bills, which were discounted by the Commonwealth Bank, and the different States received instalments of their allotted proportions. Upon the dissolution of Parliament in November last, an arrangement was made with the Commonwealth Bank to continue the payments until January, when a new government would be in power. Tho bank then agreed to finance a loan programme on the basis of that formulated for the first eight months of the year, and to find the necessary amount, some £2,100,000. That money had already been allotted to the States by a unanimous decision of the Loan Council, which could not be reversed other than by a further unanimous decision. Obviously, it was impossible to obtain the consent of New South Wales to such a reversal.

The- Leader of the Opposition asked whether it was necessary. *f or the Commonwealth Government to issue treasurybills, intimating that the Commonwealth need not borrow the money. The Financial Agreement provides that if the amount desired can be borrowed within the terms that the Loan Council lays down, the Commonwealth Government shall make reasonable efforts to raise it. There was no question of the Commonwealth being under no obligation to obtain the money. Further, New South Wales had to receive its due proportion of whatever amount was raised, in accordance with the original allocation. It is obviously a stupid position which provides that a State government that had declined to pay its interest commitments, land probably will not repay the capital, must receive its proportion of any further moneys raised. This clause gives the Commonwealth Government power to retain any such moneys that come into its possession on behalf of a defaulting State.

The right honorable gentleman also raised the point that the State of New South Wales would not claim this money. Appearances go to prove that that State would not hesitate to claim the money, for in its counter-claim to the writ that has been issued by the Commonwealth Government it makes a claim for the whole of its instalments for the balance of the year, on the ground that they are moneys that the Commonwealth is under an obligation to pay over to the State.

Mr Scullin - Does the right honorable gentleman believe that if this legislation were passed and enforced the present Premier of New South Wales, knowing that the Commonwealth would take them, would accept liability for those treasury-bills ?

Mr BRUCE (FLINDERS, VICTORIA) - He would try to avoid that, if possible. It is necessary to determine whether the moneys were raised on behalf of the Government of New South Wales in accordance with the determination of the Loan Council; if they were, that government is liable in respect of them.

Mr Scullin - If the Government of New South Wales does not accept liability this provision takes nothing from it. The Commonwealth would merely be raising a loan for itself.

Mr BRUCE (FLINDERS, VICTORIA) - There is more than that in it. It is necessary to have a provision of this sort in the bill so that the Commonwealth will not find itself in the position of having to make these payments to the Government of a State which is actually in default.

Suggest corrections