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Thursday, 27 November 1941

Senator A J McLACHLAN (SOUTH AUSTRALIA) . - The object of this clause is to repeal section 45 of the principal act, and its effect will be to deprive companies of the benefit conferred under the conversion loans floated during the last depression period. Many arguments could be used in regard to the impropriety of this proposal. It has been suggested by a gentleman for whose honour and integrity I have the greatest respect, that this immunity from further taxation was given to individual bond holders, and, the bonds having now fallen into the hands of companies, the exemption should no longer apply. That is quite an erroneous view. In what direction are we moving to-day? Having in view that immunity from taxation many companies purchased these bonds at increased ratesbelieving that the return from them would be in harmony with returns from other Government securities. I have no wish to use words which may be regarded as offensive, but to me this proposal constitutes a breach of an undertaking given by Parliament, and it will react to the detriment of this Government and subsequent administrations.

Senator Cameron - Similar action was taken in connexion with the gold tax.

Senator A J McLACHLAN (SOUTH AUSTRALIA) -We all know that, but there was some justification in that case. In regard to these bonds a solemn promise was given by the then government in its prospectus; the Prime Minister of the day pledged his word. I notice how sensitive is the present Prime Minister (Mr. Curtin) about this repeal, and I do not wonder at it. He is attempting to evade the issue by saying that the matter was in the hands of investors, but that is not the position. No matter who the investor may have 'been, a promise was given that no further taxation would be imposed on. such bonds. If there is one thing which I would suggest to honorable senators above anything else, it is that in the interests of war finances and the finances of the Commonwealth generally, we should adhere to our promises, however onerous the circumstances may be. I do not know the currency of these bonds, but I contend that whatever the position may be, we should not break faith with the people who invested their money.

Senator Courtice - Probably the investors concerned will be quite willing to accept this proposal.

Senator A J McLACHLAN (SOUTH AUSTRALIA) -If they are prepared to forgo voluntarily the whole or part of the interest, in the same way as certain invalid and old-age pensioners in South Australia made a substantial voluntary contribution towards war funds, that is all right, but that has nothing to do with us. We should keep our own hands clean. We should not allow any government, whether it be of the political complexion of the one which is now controlling the destinies of this country, or not, to be charged with repudiation. If we do so, the people will be unable to accept the pledged word of a prime minister. I take a very serious view of this matter because of its effect upon our national finances. We should fulfil our undertakings however distasteful it may he. The time cannot be far distant when we shall be in a position to redeem these bonds.

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