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Wednesday, 13 April 1921


Senator E D MILLEN (NEW SOUTH WALES) (Minister for Repatriation) . - I ask leave to make a statement in connection with the papers, copy of Mandate and copy of the financial agreement with the British Government, which I propose to lay on the table, and at thecon- clusion of my statement to move that the papers be printed. (Leave granted.)

On the 17th September last in the House of Representatives, the Prime Minister (Mr. Hughes) announced the purposes in connexion with which it was intended that I should visit Europe. Those purposes included attendance at the Assembly of the League of Nations as Australia's delegate, the adjustment of certain financial matters outstanding between the British and Commonwealth Governments, the establishment in London of an organization to deal with immigration, and other matters.

Obviously, to discuss in detail all these subjects would make an undue demand upon the attention of honorable senators.

I propose, therefore, to confine my remarks to matters directly or indirectly associated with the Geneva Assembly and the financial agreement with the British Government, believing that parliamentary and public interest is mainly centred around them.

First, as to the financial arrangement with the British Government, honorable members know that, arising out of the war, the Commonwealth became indebted to the British Government partly in respect of loans obtained in the early days of the war and partly in respect of amounts owing for maintenance and transport of Australian troops. Under the latter heading there are certain items, aggregating approximately £5,000,000, which still await adjustment. They represent claims in respect of which accounts have not, up to the date of the agreement, been finalized. The .adjustment is being made by Mr. Collins, the chief Treasury official now in London, representing the Commonwealth, and one representing the British Treasury. But the agreement provides that the total as finally agreed upon shall form part of the capital indebtedness covered by this agreement- Against these claims the Commonwealth has certain counter claims, in particular some £500,000 in connexion with the detention of. Australian troops on the occasion 'of She Egyptian riots, and £200,000 in respect of the Molonglo Camp. It is, however, provided in the agreement that the settlement of any one item is not to be dependent on the settlement of any other. Each item will be dealt with separately and upon its merits, and, as finality is reached, included in the compass of the agreement itself.

Judging from press and other comments, some confusion appears to exist as to the total of the amount which has definitely been funded by this agreement. This, I think, arises from the belief held in Australia that the loans obtained from the British Government, totalling approximately £49,000,000, were already definitely funded, and that accordingly an agreement was only needed for the funding of the accounts arising in connexion with the transport and maintenance of our troops abroad. But no definite agreement as to the repayment of the former had been made. . In regard thereto it had only been arranged that what we have hitherto cabled " funded debt " should be repayable at a time to be agreed upon by the Chancellor of the Exchequer and the Treasurer of the Commonwealth. That left the Chancellor of the Exchequer in the position of asking for payment at any time he thought fit. As a matter of fact, he was under the impression, and appeared to .be justified in his belief, that portion, at least, of the amount owing should be repayable at very short notice. It appeared eminently desirable and business-like, therefore, that this portion of our indebtedness should be included in the agreement, thus substituting a definite for an indefinite date and method of redemption, and clearing up all our outstanding debts in the one transaction.

The central idea upon which the agreement is based is that an annuity of 6 per cent, of the total indebtedness shall be paid bv Australia to the Imperial Treasury. This annuity is to be devoted in the first instance to the payment of interest at the moderate rates of 3£ percent., 4£ per cent., and 5 per cent. The rate of 3i applies to the comparatively small portion amounting to £1,2:63,158. The rate of 4f per cent, applies to a total of £11,500,000, and the remainder of the principal, amounting to £74,218,900, wilt carry interest at 5 per cent. The difference between these interest rates and 6 per cent, will be devoted towards reduction of the principal, and will repay the whole in less than thirty-seven years.

There are two items to which I wish specially to refer. There was due to the British Government the sum of £570,000 for interest which had accrued prior to July, 1917. The British Treasurer agreed to include this in the funded debt, thus relieving Australia of the obligation of immediate payment. There was also owing, approximately, £4,000,000, being interest on the total indebtedness up to 31st March this year. The Commonwealth Treasurer had made provision for this on:the Estimates 1920-21, but owing to the adverse state of the exchange market, it would have been difficult, .and certainly very costly, even if possible, to remit this money to London at this juncture. The Imperial Treasurer has agreed to accept payment of this amount in bills at six and twelve months' date, by which time it is hoped exchange may become easier, or, failing that, that the Commonwealth will be able to make more convenient arrangements than are possible at present. This extension has been obtained without interest.

In considering this agreement I ask honorable senators to judge it as a whole, in which there was necessarily both give and take. Viewed as a whole, I submit it first eis evidence that the British Government, whilst struggling with its own financial burdens, has exhibited a very generous desire to render those of Australia as little onerous as possible. Secondly, I venture the opinion that the agreement is most advantageous to the Commonwealth. An arrangement under which it will pay only 6 per cent, to cover both interest and sinking fund, obtained too at a time when its own bonds are yielding investors up to 8 per cent, for interest alone, is one that I confidently hope will be regarded as satisfactory by Parliament and the country.

The question will naturally arise as to what additional annual amounts will need to be provided to enable us to discharge our debt in the terms of tEe agreement. Provision was made in the last Estimates for the amount due as interest, and as the agreement requires also a sinking fund, it may appear at first sight as if we shall need to raise an additional amount to pay this sinking fund. But I would point out that we are already providing a sinking fund of \ per cent, in respect of our total indebtedness in accordance with the Sinking Fund Act. That Act empowers the Treasurer too repay out of the sinking fund any moneys borrowed from the United Kingdom.

It will, of course, be for the Treasurer", upon a review of our entire financial position, to present proposals to Parliament in this regard, but I submit it is entirely in keeping with that clause, that the amount due as sinking fund under this agreement should be drawn from the statutory sinking fund already being provided in the annual Budget. If this course is approved, it will follow that no substantial addition need, be made to the amount provided in last year's Estimates.

I turn now to that historic gathering at Geneva - the initial meeting of the Assembly of the League of Nations. When we review the tragedy of six years of war, from' which the world has emerged in a pitifully shattered condition, and under the burdens of which it is doomed to struggle for many years to come, and when we learn, as we do almost daily, of increasing armaments, of those international differences, misunderstandings, and jealousies, inflammable material which a spark .may ignite, .we can well understand the earnestness, the pathetic hope with which all nations matched the inaugural meeting of the institution designed to minimize the chances of war, and to substitute friendly adjustment for the arbitrament of the sword.

Australia, like other nations, is deeply concerned in all that affects the primary purpose of the League. But Australia, also, like other nations, has certain direct and immediate interests which she ig" entitled to consider, to protect and to advance. I want to say quite frankly that I interpreted my mission in that way. At the same time, it is a source of gratification to me, as it will be to honorable members, that my efforts for the furtherance of Australian interests did not constitute any hostility to, or impairment of, the fundamental principles or purpose of the League.

There were two matters of outstanding concern to Australia, which, when I left for Geneva, it was thought highly probable would form the subject of discussion, viz., what is known as the Racial Equality Amendment, and the Mandate for late German Possessions in the Pacific. Honorable senators know that, at the Peace Conference, the representatives of bur neighbour and Ally, Japan, had submitted an amendment to the covenant, which they interpreted as. a recognition of the equality of all races, but which Mr. Hughes regarded .as constituting an impairment .of Australia's national policy. That amendment was carried by a substantial majority (11 to 6) ; but President Wilson*, who was in the chair, held that as it was .a matter of internal or domestic policy, the amendment' could not become operative in the absence of unanimity. The Japanese delegate then intimated that Japan could not accept that decision as final, but would revive the question at a later time, when she considered it opportune to do so. This attitude was entirely frank, and to it no possible exception can be taken. In view of that declaration there was every reason to anticipate that Japan would raise the question at Geneva, in which case I could have taken up no other stand than that adopted by the Prime Minister on the earlier ' occasion, and to have placed before the Assembly the reasons which make it impossible for Australia to consent, willingly, to any reversal of its present policy. However, the necessity for this did not arise. Viscount Ishii announced in the Assembly that, while maintaining the justice and reasonableness of its cause, Japan refrained from making any concrete proposal as to the question of racial equality, but - I direct the attention of honorable senators to his words - would " patiently bide the time until the opportune moment will present itself."

This action on. the part of Japan brought me considerable relief, as I was, and am, under the impression that if the Assembly had been called upon to record a vote, its decision would have followed that of the Peace Conference. As- it is, an opportunity is afforded for further consideration of the matter, an opportunty that, it may be assumed, "will not be lost sight of by those charged with the responsibility of discussing the renewal of the Anglo-Japanese Alliance. The delay also encourages the hope that in the meantime the nations represented on the League may become better acquainted with, and more appreciative of, the principles upon which Australia's policy is based. Australia desires to live in complete amity with Japan, a desire strengthened by association during the war, but full and cordial co-operation will always be difficult so long as this question remains an active one. Leading Japanese statesmen have quite recently expressed the opinion that as Japan's policy becomes better known, Australian fears will disappear. I, too, believe that good would result from" a wider mutual knowledge, the one people of the other, and I indulge the hope that as Japan comes to recognise that our policy, is designed to secure the continuance of our national existence, and not as an unfriendly act, towards her, and is not based upon any suggestion of inferiority-, she will yet find it possible by an open acceptance of that policy, to remove the only barrier to a complete understanding between the two peoples.

I come now to the Mandates. Let me first sketch the history which has already grown around them. Article 22 of the Covenant deals with the Mandates, and divides into three classes the ex-German Possessions. Paragraph 6 of that Article specifically places the Pacific Islands in the third or- what has become known as the C class. To the terms of that Mandate I shall refer directly. Before leaving Paris, the Prime Minister was assured that Australia would receive a Mandate for the islands south of the Equator, except Samoa, for which New Zealand was indicated as the Mandatary, and that this fact would be immediately published. That assurance was given on 7th May, 1919, in the following letter to Mr. Hughes: -

The attached agreement was readied this afternoon at a meeting between Mr. Lloyd George, M. Clemenceau, President Wilson, and M. Orlando, and will be published at once.. (Signed) M. P. A. Hankey,







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