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Tuesday, 29 September 1942

Mr SPOONER (Robertson) .- It is quite evident that the honorable member for Melbourne (Mr. Calwell) entirely misunderstands the bill. If he had read clause 3, he might have found it unnecessary to speak. The clause reads -

The Treasurer may, from time to time, borrow, under the provisions of the Commonwealth Inscribed Stock Act 1911-1940, or under the provisions of any act authorizing the issue of treasury-hills, moneys not exceeding in the whole the amount of £200,000,000.

The honorable member has jumped to the conclusion that this bill authorizes the Treasurer (Mr. Chifley) to go on the market and raise £200,000,000 from the public at such rates of interest as may be determined from time to time.

Mr Calwell - Interest has to be paid on treasury-bills.

Mr SPOONER - The honorable memher cannot shift his ground. Notwithstanding the fact that he is a former Treasury official, the honorable member needs to have the provisions of the bill explained. I shall not for the moment state my attitude except to say that I shall support the bill, as, of course, one must support any bill which the Government introduces for the purpose of war finance. Clause 3 authorizes the Treasurer, if he chooses, to raise the whole of the £200,000,000 by means of treasury-bills issued through the 'bank and not one penny from the public.

Mr Calwell - Interest has to be paid on treasury-bills.

Mr SPOONER - The honorable member is trying to shift his ground. He condemned the system of , borrowing on the open market at interest and advocated the use of central bank credit. This procedure is not so difficult when all is said and done. If the Government desires to borrow from the public, it may issue Commonwealth inscribed stock or Commonwealth bonds in return for investors' money corresponding to the face value of the inscribed stock or bonds. The Government undertakes to pay to the investing public the rate of interest agreed upon and to observe the conditions of the loan prospectus. If the Government borrows from the Commonwealth Bank - the central bank - it issues treasury-bills, which are discounted by the bank. The bank pays to the Government the face value of the treasury-bills. Whether the money be obtained from the pu'blic or the bank, it is nevertheless borrowing, and it constitutes a liability on the Commonwealth, which I ask the honorable member for Melbourne not to forget. This bill gives to the Treasurer power to raise this £200,000,000 by either method or by both methods. The Government has announced that it will place upon the market a loan of £100,000,000, of which £23,000,000 will he for conversion of an existing loan and £77,000,000 new money. When the Government has raised that £77,000,000 of new money, as we all hope it will - we shall all get * behind it to ensure that it shall - it will still have to raise £223,000,000 before the end of next June in order to finance the deficit of £300,000,000 by which it is estimated that expenditure will exceed income. It may well be that the excess of expenditure over income will he £320,000,000 or £330,000,000, and, in that event, there will be so much extra to raise before the end of the financial year. This .bill authorizes the Treasurer to supplement, by means of treasury-hills,. the £77,000,000 of new money which is shortly to be borrowed on the open market. The bill deserves and cannot get other than the support of the Opposition. But I express now the fear that I expressed during the budget debate, namely, that the Government may be compelled before the 30th June next to raise through treasury-bills a larger amount of money than is wisely proportionate to the amount of its needs during the current year. Money raised on the open market will draw to the Treasury some of the money, the huge expenditure of which is embarrassing the Government and the country, but money raised from the central bank will mean the placing in circulation of money which has never been in circulation before, and that will swell the already huge expenditure fund. I shall not repeat the story 1 told in my speech during the budget debate. I merely rose to correct the honorable member for Melbourne (Mr. Calwell) and to state that, if there were any objection to this bill, it would be on the score that in giving to the Treasurer authority to raise £200,000,000 it empowers him to raise from the bank a larger sum than is wisely proportionate to the amount of the Government's needs during the current year. If this bill authorized the Treasurer to raise £150,000,000 on the open market and £50,000,000 through the central bank, there would be less objection to it from my point of view, although that would still represent an inordinate use of the nation's inner resources. This bill empowers the Treasurer to raise the whole £200,000,000 through the central bank - I know that he does not intend to do so - and is open to criticism on that score, but not on the score alleged by the honorable member for Melbourne.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

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