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Thursday, 3 December 1914

Senator PEARCE (Western Australia) (Minister of Defence) . - I beg to lay on the table of the Senate Estimates of Revenue and Expenditure for the year ending 30th June, 1915, together with the Budget-papers, and in doing so I move -

That the papers be printed.

I understand that, in accordance with the practice which has previously been followed here, I am at liberty to make a general statement in regard to the information that is contained in these papers.

In order to lay before honorable senators the financial position of the Commonwealth, I propose to go back to the year 1912-13. The revenue for that year was £21,907,084, the expenditure £21,525,452, and the accumulated surplus on 30th June, 1913, was £2,643,305. Tho revenue for 1913-14 was £21,740,423, and the expenditure £23,161,327. The surplus of the previous year was reduced by £1,420,904. The estimated revenue for 1914-15, inclusive of surplus of £1,222,401, is £24,495,401. The estimated expenditure is £37,583,715, and the estimated deficit £13,088,314.

Senator Millen - Does that include new works?

Senator PEARCE - It includes everything. Included in the gross expenditure of £37,583,715 is an amount of £11,742,050 for war expenditure. Ji this extraordinary expenditure be deducted from the gross expenditure it leaves a net ordinary expenditure of £25,841,665, and de- ducting from that the estimated revenue, we get an estimated deficit of £1,346,264.

Senator Bakhap - That would have been the ordinary deficit?

Senator PEARCE - Yes, leaving out the war expenditure. A sum of £4,303,870 out of this estimated expenditure is to be spent on new works and buildings - an increase of £1,004,288 over that of last year. As regards the general deficit, it will be met by a loan from the British Government of | £10,500,000 and by the issue of Treasurybills to the extent of £2,588,314. The British Government have agreed to loan us £18,000,000, at the rate of £1,500,000 per month, beginning on 15th December of the present year. "We shall thus receive during the financial year ending 30th June next, £10,500,000 from this source. As regards the £2,588,314 worth of Treasurybills, these will be purchased by the Australian Notes Fund. It is intended to raise £1,000,000 by way of probate and succession duties. As regards the details of revenue, they are as follow : - Customs and Excise, £14,261,000; post-office, telegraphs, and telephones, £4,566,000; land tax, £2,700,000; probate and succession duties, £1,000,000; coinage, £200,000; Kalgoorlie to Port Augusta railway, £132,000 ; interest on general Trust Fund investments, £55,000; lighthouses and light dues, £60,000 ; balance defence fund trust account, £50,000; Northern Territory, £44,000; repayment of States' proportion of pensions, £4S,000; Defence - sale of stores, &c, £30,000; patents, £22,000 ; Capital Territory, £18,000 ; other items, £87,000; total, £23,273,000. The total estimated expenditure for the current year, namely, £37,583,715, is made up as follows : - Deducting from this amount expenditure consequent upon the war, namely, £11,742,050, of which a statement appears on pages 64 and 65 of the Estimates, we have £25,841,665 as the ordinary expenditure for the year, as compared with £23,161,327, the expenditure of the preceding year, an increase of £2,680,338.

Senator Millen - That is an increase over the actual expenditure of last year?

Senator PEARCE - Yes. The principal items of this increase are as follow : - Invalid and old-age pensions, £220,735; maternity allowances, £55,010 ; interest on sinking fund, Commonwealth inscribed stock, £98,785; interest on Treasury-bills in aid of revenue, £40,000; interest on Treasury-bills for loan purposes, £35,000 ; Belgian grant, £100,000; surplus revenue to the States, £135,751; interest on properties transferred from the States to the Commonwealth, £95,410; Defence Department (exclusive of additional expenditure consequent upon the war), £493,820; lighthouses (maintenance), £55,968; electoral office, £43,296; Public Works staff, £11,906; railways, £185,157 ; works and buildings (maintenance), £43,877; administration of Electoral Act, £10,810; Commonwealth elections, £63,781 ; Postmaster-General's Department, £207,125; additions, new works, and buildings, £1,004,288. The principal items of decrease are: Sugar bounty, £149,244; Manufacturers Encouragement Act, £43,130.; British Association for the Advancement of Science, £14,338; Northern Territory, £13,826; advertising resources of the Commonwealth, £36,979.

As the result of the Conference with the State Governments, we have agreed to loan the States an amount of £18,000,000. Associated with that transaction was an agreement made with the Associated Banks whereby they should give to the Commonwealth £10,000,000 in gold for Australian notes. In undertaking this financial transaction the Treasurer impressed upon the banks' representatives that he should require their assistance; and they, recognising the national emergency, cheerfully agreed to render to the Government every possible aid in their power. It should be clearly understood that the £10,000,000 advanced by the banks will be redeemed at the close of the war.

Senator Bakhap - It is to be without interest for one year, is it not?

Senator PEARCE - That is so. These arrangements made it possible for the Commonwealth to come to the aid of the States, and to lend them, for their Public Works purposes, at a low rate of interest, having regard to the state of the money market, a sum equal to the amount the Commonwealth itself had borrowed from the British Government. The terms and conditions of the loans to the States were embodied in an agreement of which the following is a copy : -

1.   The Treasurer of the Commonwealth hereby engages to lend to the applicant States, and they hereby agree to borrow from the Commonwealth, for loan expenditure during the next period of twelve months on their public works, which have been authorized by the Parliaments of the said States, as follow : -


2.   The money to be available as above in London, and in Australia through the Commonwealth Bank of Australia, and the amounts borrowed to bear interest, which shall be payable by the States from the dates the money is made available to them, the rate of interest to be that which, including all charges, it costs the Commonwealth of Australia to raise moneys for its own purposes, but such rate not to be less than four (4) per centum per annum.

3.   The States engage not to borrow otherwise during a period of twelve (12) months from this date, except for renewals of existing loans falling due. The States may, however, sell Treasury bonds over the counter to an amount not exceeding sales in a normal year.

4.   The States shall issue to the Commonwealth inscribed stock bonds, or Treasurybills for such periods as may be arranged with the Federal Treasurer, for the sums borrowed.

That practically is the agreement entered into between the Commonwealth and the States relating to this matter.

I have already quoted the war expenditure at the sum of £11,742,050, and, dealing with the Defence expenditure generally, I will give a summary of what is contemplated, as showing the justification for an increase of the normal Defence expenditure.

Royal Australian Naval College. - Provision has been made to enter thirty Cadet Midshipmen on 31st December, 1914, which will bring the total number of Cadet Midshipmen at the College up to eighty-seven.

The College buildings at Jervis Bay will shortly be ready for occupation, and the College will be removed from North Geelong to Jervis Bay in January.

Senator Lt Colonel O'Loghlin - Are these Cadets all Australians?

Senator PEARCE - Yes.

Senator Lt Colonel O'Loghlin - Are there no New Zealanders?

Senator PEARCE - No; the New Zealanders have not yet come in. Necessary provision has been made on the Estimates to meet the cost of transferring the College.

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