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Wednesday, 12 October 1927

Senator MCLACHLAN - Has not the usual practice been followed in connexion with this bill?

Senator J B HAYES - The practice of which I complain has been carried out for some time; but if a practice is a baa one," the sooner it is altered the better. No head of a department will advocate a departure from the existing practice.

Senator McLachlan - To depart from it would unduly restrain his operations.

Senator J B HAYES - Not at all. But it would give Parliament the control of public money, and that is what we are here to do.

Senator MCLACHLAN - What does it matter whether portion of the money is to be spent at, say, Geelong, or somewhere else ?

Senator J B HAYES - The information should be in the bill. Why should not the representative of a district where a post office is to be erected, know the nature of the proposed building and its estimated cost? We should not be satisfied to leave those matters in the hands of the heads of departments. At present members cannot find out what proposed works are likely to cost.

Senator Andrew - The honorable senator suggests that the. schedule should contain a more detailed statement?

Senator J B HAYES - The information should be more definite; the details should be given in the schedule to the bill.

Senator McLachlan - Is it not possible, if that were done, that the department would be tied down to a definite amount it? respect of a particular work set out?

Senator J B HAYES - That is what I wish to see done. At present the department makes an estimate and adds probably 10 per cent, for contingencies. Why should it not be tie'd down to that amount? It has to make an estimate in order to arrive at the aggregate amount required. The only extra work entailed would be on the part of members of Parliament in examining the schedule.

Senator McLachlan - Is the honorable senator aware that what he suggests was* the practice formerly but that it was abandoned?

Senator J B HAYES - If it was the practice of departments to do as I suggest, I regret very much that it was abandoned.

Senator THOMAS (NEW SOUTH WALES) - If £(3,000 were set down for a work at Geelong and £4,000 for another work at Warrnambool, and if a department could not spend the full amount at Geelong, but required more for the Warrnambool work, would not both works be held up if the honorable senator's suggestion was adopted.

Senator J B HAYES - No, because if the full amount required for a particular work is not spent in one financial year, it can be expended in the next. These estimates, unlike the revenue estimates, are not submitted up to 30th June of each financial year. If the required amount were set out in the schedule it would be an extremely wholesome check on the department. Parliament should have an effective control over all expenditure..

Senator Ogden - Surely the honorable senator does not expect that ?

Senator J B HAYES - If we do not ask for it we shall not get it. As a rule, members of Parliament have not the faintest idea of the cost of certain work*. This is not because they are neglecting their duty, but because the information is not available to them.

Senator Andrew - What would happen if the cost of a work were underestimated ?

Senator J B HAYES - In that case the departmental officials would in the following year admit that a mistake was made and ask Parliament to authorize a further expenditure. We should then have an opportunity to ask for on explanation. I am not aware of the procedure in the Federal Parliament, but I know that what I am suggesting has been the practice in Tasmania, and that it has proved a wholesome check on extravagance. It is not derogatory to heads of departments to say that a certain amount of unnecessary expenditure is incurred in all departments; we know how difficult it is to check all items of expenditure. I have had some experience in this matter, and I know that I am on right lines in asking that Parliament should have a more effective control over expenditure. Therefore I commend my suggestion to the Government.

I have placed on the notice-paper certain questions with regard to wire-netting. I notice that there is an item of £100,000 for expenditure this year on that account. I have been asked over and over again by farmers why they cannot obtain netting, and I cannot tell them. There appears to be some difficulty between the Commonwealth and State Governments. I shall be glad if the Minister will make the necessary inquiries, and let me know what the trouble is.

The bill gives the Government authority to borrow money. I am aware that it is properly the prerogative of the Government to say where and' how money shall be raised ; but all honorable senators are entitled to make suggestions. For my own part I hope that the money to be borrowed - under this bill will be obtained overseas. At present it is extremely hard to raise money in the Commonwealth for the development of secondary industries and agricultural operations. If, therefore, the Commonwealth Government goes on to the local market, the difficulties of the position will be accentuated. At present we have a conversion loan to meet. It is being offered at a higher rate than was the case in connexion with the last loan; because whilst the interest rate is the same, viz., 5¼ per cent., it is being floated at a discount of 30s. per cent.

Senator Ogden - Is the Government asking for new money?

Senator J B HAYES -That is a debatable point. The issue price gives a return of £511s. per cent. in respect of the shortest term, and as the loan is free of State income tax, it is equivalent to nearly six per cent. I know it will be argued that, as it is a conversion loan, it does not matter whether or not the Government is asking for new money, because if someone takes £100 out of the loan, someone else will . put £100 in. That is true to a certain extent, as a considerable amount of loose eash will, no doubt, be invested in the loan, but it is likely that many stockholders will fail to convert, because they have hypothecated the money for some other purpose, probably for reducing their overdrafts.

Senator Thompson - What does matter is the difference in the rate of interest between the respective loans.

Senator J B HAYES - That is true. The Government is setting the pace. Industrial concerns and farmers generally have the greatest difficulty in securing money to carry on their enterprises.

Senator Reid - But could the Treasurer make a better bargain in the market at the present time ?

Senator J B HAYES - We have the soundest security in the world, and I believe the Treasurer can get all the money he wants without making the loan too attractive. It stands to reason that if investors realise that they can get practically six per cent. for money on what is acknowledged to be the best security in the world, industrial concerns and primary producers who are in need of accommodation to extend their operations, will find it more difficult to secure the necessary finance. I know of men who have the Greatest trouble in the world to get money, notwithstanding that their margin of security is. fully 50 per cent. of the amount asked for; and I believe that much of this difficulty is due to the policy of the Government in offering attractive terms for local money. It is much better to curtail borrowing altogether than to endeavour to obtain toomuch Government money in the local market. I have no knowledge that the Treasurer proposes to do this in respect of the sum to be borrowed under this bill, but I hope it is net his intention, because this is not a conversion loan - the money is required for the carrying out of certain public works. I think the terms of the conversion loan now being offered are too high, and certainly they are not fair to the people who put money in the last loan.

Senator Thompson - Does the honorable senator think that the Treasurer would get the money on the old terms?

Senator J B HAYES -If the issue price is not considered high, then it is equivalent to an admission that money is going up all round. Consequently industrialists and primary producers will have to pay more for their requirements, and as we all know, the f armers and pastoralists are not in a position to do that. If the Commonwealth is offering practically six per cent., other people will have to pay seven per cent. If the Treasurer intends to borrow money locally, he should take into account the positionof those who would be injured by that course, and make some provision to. allow them to get the money they require under the credit foncier, rural credits, or some other scheme. I wishit to be clearly understood that, although I may be criticising the financial policy of the Government, I am not doing so in a hostile spirit. I am speaking, as I think, in the interests of Australia.

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