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Wednesday, 27 April 1932

Mr ROSEVEAR (Dalley) .-I am opposed to the bill. I do not anticipate that my vote will frustrate the Government's desire to. embarrass the State of New South Wales, but I intend to voice my protest against a proposal which, in my view, will cause more distress to the people of that State than would have been caused if the Government had endeavoured to adjust its differences with the State. It is only a month since the Financial Agreements Enforcement Act was passed by this

Parliament. At that time it was heralded as an effective measure to deal with the New South Wales Government, notwithstanding that the warning had been issued by honorable members who sit on this side of the chamber that no self-respecting State Government would stand aside and allow its revenues to be raided by the Commonwealth Government, or permit its functions to be usurped by another authority. The New South Wales Government has, in the interests of people of that State, successfully resisted by every possible manoeuvre, and every force at its command, all the efforts of the Commonwealth Government to raid the State treasury. So successful has it been in this direction that the Commonwealth Government has now found it necessary to introduce this amending bill to tighten up the provisions of the original act.

We were told when the original bill was introduced that time was of the essence of the contract, and that the ordinary legal procedure in this country for the recovery of debts was too slow for this Government; but the efforts which it has made to speed up the process of recovery have entirely failed. When the original enforcement bill was before us the extent of the default by the New South Wales Government was £900,000, but so ineffective have been the measures adopted by the Commonwealth Government to recover this amount that the default has now grown to £2,000,000. The Prime Minister has failed in his duty to this House in not divulging the amount which the Commonwealth has recovered from the revenues of New South Wales.

Dr Earle Page - What is the amount ?

Mr ROSEVEAR - I do not know; neither does the right honorable member, although such knowledge is necessary to enable us to take an intelligent part in this debate. We should have been told of the exact financial result of the efforts which the Government has already made to seize State revenues. The Prime Minister should have taken ns fully into his confidence in this respect. The plain fact is that all the efforts which this Government has made to seize State revenue have been frustrated by the New South Wales Government, and, in sheer despera tion, the Commonwealth Government has, in my opinion illegally, seized Government deposits lying in certain banks in New South Wales. We know very well that much of the money that has been so seized was obtained from revenues not prescribed in any proclamation at the time of its seizure. The Commonwealth Government has, therefore, exceeded its legal rights in this respect. It has been forced into such a desperate position that it has indiscriminately seized State moneys wherever and whenever it has been able to do so.

We have to face the fact, even though it may be unpalatable for some honorable members opposite, that this country, like other countries in the world, must review its financial position. We know very well that Australia, like many other countries, has been placed in an unfortunate and utterly impossible financial position. I contend that this country is entitled to the same consideration from Great Britain as foreign countries have received from her in the adjustment of debts. The honorable member for Gippsland (Mr. Paterson) made a plea for the holders of Australian stocks who reside in Great Britain, but he had to admit that we were still paying 6 per cent, for money which we had borrowed from Britain for war purposes.

Mr Cameron - He admitted nothing of the kind.

Mr ROSEVEAR - The honorable gentleman must know very well that the money which we are paying to Great Britain under a 6 per cent, contract is being paid to. America on a 3 per cent, contract, and that Britain is, therefore, making a 3 per cent. " rake off " from Australia. Yet, if a man dares to stand up in public and assert that Australia is entitled to the same consideration from Great Britain as she gives to foreign countries, he is howled down as a repudiator.

The right honorable member for Cowper (Dr. Earle Page) told us that he has always been in favour of a reduction in interest rates on overseas debts, but his statement to that effect this afternoon was the first of the kind that I or any member of any other political party had ever heard from him. The right honorable member was one of the first to denounce the Premier of New South Wales fifteen months ago when he first enunciated what is now known as the Lang plan. Those opposed to Mr. Lang at the Premiers Conference at that time adopted an alternative scheme, which they said would correct our ills. The Commonwealth and State Governments, apart from the New South Wales Government, have been experimenting with that alternative, which is known as the Premiers plan, for fifteen months, and only last week, at the Premiers Conference, they had to" admit that, as it stood, it had been a failure. They said then that the only hope for recovery for Australia was for her people to make additional sacrifices of the kind which have already been demanded, principally from the people least able to make them. It is true that the Premiers plan has effected certain economies in regard to our internal national debt. That being so, the logical action for the Government to take would be to call upon overseas bondholders to make a sacrifice similar to that which has been made by the Australian bondholders; but any one who dares to make such a suggestion is called a repudiationist. If a certain sacrifice can be required from our local bondholders, I can see no reason why a similar sacrifice cannot be required from those who hold Australian stocks to the value of £560,000,000 on the other side of the world. The right honorable member for Cowper (Dr. Earle Page) said that the Commonwealth Government could not call upon overseas bondholders to make such a sacrifice, because of the action taken by the New South Wales Government. He also observed that the New South Wales Government had made it impassible for the Commonwealth Government to negotiate with overseas bondholders. I challenge the Commonwealth Government to refute my statement that it has never been in favour of asking foreign bondholders to make a sacrifice similar to that made by local bondholders. It has always shelved this issue, and endeavoured to throw the blame back on to Mr. Lang. Yet if the Lang Government were removed from office tomorrow, the position would remain as it is. If this Commonwealth Government had had its way, the recent

Premiers Conference would have agreed to a further attempt towards the solution of our present difficulties, which would have made the position infinitely worse than it is to-day, for the Premiers were invited by the Commonwealth Government to agree to the enforcement in Australia of conditions which would have reduced our workers to the level of coolies, and this would have been done solely to satisfy the demands of foreign bondholders.

The honorable member for Gippsland (Mr. Paterson) is, I admit, good at figures; figures, it is said, do not lie; but sometimes the compilers of figures are not as careful in their work as they might be. The honorable gentleman, for instance, said that the average amount received by British holders of Australian stock was only £50 per annum. No doubt in arriving at that figure the honorable gentleman massed in one total all the individual shareholders in life assurance companies which hold bonds, all the members of friendly societies who hold bonds, and all the individual bondholders. By this process, he was able to get such a huge number of- stock holders that the calculation showed that the average income of each from Australian sources was only £50. But such juggling with figures will not get us anywhere. The honorable member ought to have told us the exact means by which he arrived at his finding.

While all this furore is going on, we are told that the credit of Australia and of all the States is being damaged. It has been said that as long as New South Wales fails to meet her interest commitments, we shall be unable to borrow money. One honorable gentleman asked how we could hope to borrow money abroad if we did not pay our debts. Let me remind the House that the capitalists of Great Britain and France are squabbling greedily among themselves for the right to invest their money in Russia, although Russia has repudiated her debts to the extent of £960,000,000, and owes to Great Britain alone on moneys borrowed from her both before and during the war no less a sum than £260,000,000. In spite of this fact, the British Government did not seize the Russian wheat which was shipped to Great Britain and sold there for1s. per bushel, while the wheat of the Australian farmers was left rotting at our railway sidings. We know very well that machinery manufacturers of Great Britain were quite prepared to send their products to Russia in order to enable that country to adhere to her 5-year plan, notwithstanding that the avowed object of that plan was to wreck the social system of every other country of the world. It cannot be denied that whether a country has repudiated its debts or not, the investors of other countries are quite ready to lend it their money or trade with it if lucrative rates of interest are offered. What becomes of the argument, therefore, that because the New South Wales Government has repudiated its obligations to bondholders it is impossible to borrow money? The fact that because New South Wales has taken this action, the other States and the Commonwealth are not able to borrow, and the financial position of the country has become chaotic, is only additional evidence that the other States and the Commonwealth have been carried on the back of New South Wales for many years past.

It has been said that unless the New South Wales Government is prepared to join the Commonwealth Government and the other State Governments in their financial rehabilitation plan, the financial structure of Australia will collapse; but that argument cannot be substantiated. This was shown by the happenings at the recent Premiers Conference. It was trumpeted forth from that conference that if all the States would accept a new Premiers plan, or a second instalment of the original plan, the Commonwealth Government would be prepared to raise a loan of £10,000,000 for the relief of unemployment. When the Premier of New South Wales left the conference, having stated that he was not prepared to commit his Government to such an undertaking, the promise of £10,000,000 was reduced to £3,000,000, thereby indicating clearly that £7,000,000 of the amount originally proposed to bc borrowed was to be raised on the assets of New South Wales. Honorable members opposite laugh, but they will find it difficult to give a different explanation. To say the least, it is significant that the amount proposed to be raised fell con- siderably. as soon as Mr. Lang left the conference. Later, when the Victorian Government also refused to accept the proposal of the Commonwealth Government, it became doubtful whether even £3,000,000 could be obtained. The happenings at the Premiers Conference make it clear that the o'ther States, even in these times of depressed finances, are living on the credit and assets of New South Wales.

The right honorable member for Cowper (Dr. Earle Page) said this afternoon that Australia cannot emerge from its financial difficulties so long as the assets of New South Wales arc severed from those of the rest of the Commonwealth. Of what value arc the assets of New South Wales if that State, as has been alleged, has no credit? It is. clear that .this legislation is being directed against the Lang Government because it has proposed for the whole of Australia a policy of--

Mr Abbott - Dishonesty.

Mr ROSEVEAR - Is the honorable member for Gwydir (Mr. Abbott) prepared to use the same term regarding the actions of the Governments of France, Italy; and Belgium? I remind him that those countries had their international debts adjusted only when they said " Thai is all we are prepared to pay; not a penny more ". It has been said that neither here nor in Great Britain can Ave legislate to reduce the interest on our overseas debts. All that we can do in that connexion is to negotiate with the bondholders in other countries. If they are not prepared to negotiate, the only thing left for us to do is to follow the example of France, Italy and Belgium, in which case Ave shall find that, regardless of constitutional difficulties, they prepared to adopt a. reasonable attitude.

Mr Holman - Those countries delivered their ultimatum to other governments, not to bondholders.

Mr ROSEVEAR - Should the time arrive when Australia will refuse to pay more than the country can afford to pay,

Ave shall probably find that those who, for the last fifteen months have been loudest in denouncing the Lang Government for adopting a policy of alleged repudiation, will, like the right honorable member for

Cowper, be the first to claim to be the originators iti Australia of the proposal to reduce international interest rates.

Even the Prime Minister himself has admitted that the legislation which this bill seeks to amend has failed. The honorable gentleman said that, even were the Commonwealth to receive all the revenue that is covered by the various regulations which have been gazetted, the position would be that by the end of June next New South Wales would have repudiated to the extent of £5,000,000 more than that amount. The right honorable member for Cowper- also said that he was not in favour of financial juggling. It is well known that he was not a success as a juggler of finances. Even a fellowMinister in the Bruce-Page Government once described him as "Australia's mo3t tragic Treasurer ". Although the right honorable gentleman does not favour juggling with the finances, he is not averse from increasing the exchange rate against Australia. It is strange that during this debate the exchange rate has not previously been mentioned, although of the sura of about £920,000 originally claimed by the Commonwealth from New South Wales, £240,000 represented exchange. The right honorable gentleman would further increase the exchange rate against Australia, and, as a consequence, the burden of debt as a means of enabling us to meet our obligations! Honorable members opposite say that the policy of the Lang Government, if persisted in, is likely to bring about, the downfall of Australia, and they urge that an appeal to the electors of New South Wales should be made. In my opinion, an election in that State would not alter the existing position, notwithstanding that the opponents of Mr. Lang claim that his removal from office would put everything right. But what would be the position if the Lang Government were returned with a majority? The silence on the Government side is most noticeable.

Mr Lane - We are prepared to chance that.

Mr ROSEVEAR - Does the honorable member for Barton (Mr. Lane) agree that the endorsement by the people of New South Wales of the Lang policy by a return of the Lang Government should automatically bring about the resignation of the present Federal Government?

Mr Maxwell - The return of the Lang Government would brand the electors of New South Wales with the same mark of dishonesty that is now associated with the Government of that State.

Mr ROSEVEAR - We are faced with a problem which neither an election in New South Wales, nor legislation of thi"! character can solve; and, therefore, it. seems logical that the Federal Government, instead of fighting the Government of New South Wales, should be prepared to meet that Government at least half way in an attempt to effect a settlement of the difficulties which now divide them.

Mr Lane - Is that a firm offer?

Mr ROSEVEAR - It is a suggestion. No good whatever can come of this legislation. Almost before the ink on this amending bill is dry, the Government of New South Wales will evolve some means of defeating the Federal Government. That will probably mean the introduction of further legislation to overcome those difficulties; and so the fight will continue ad infinitum. Undoubtedly, New South Wales failed to meet its interest commitments abroad.

Mr Gibson - And at home, too.

Mr ROSEVEAR - The Government of New South Wales has, it is true, been charged with repudiating its liabilities in Australia; but we' must remember that that Government faithfully carried out its obligations to the local bondholders until the Commonwealth Government so harassed it that that was no longer possible. The Federal Government and its supporters must accept their share of the responsibility for New South Wales not meeting its obligations to the local bondholders. Notwithstanding the present attempt to tighten- up the existing legislation directed against New South Wales, the Government of that State will find some loophole in it. lt. is strange that honorable members opposite appear to have little or no knowledge of the amount of revenue which the coercive legislation of the Commonwealth has diverted from the Treasury of New South Wales to that of the Commonwealth. Only by knowing the effect of that legislation can wo form an opinion regarding the effectiveness or otherwise of the measures taken to meet the situation which has arisen. Members supporting the Government, particularly those representing NewSouth Wales constituencies, should satisfy themselves as to the effect of the legislation already passed before assisting to place on the statute-book further measures to injure their State.

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