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Wednesday, 25 February 1942


Senator A J McLACHLAN (SOUTH AUSTRALIA) - I have no reason to doubt it. I am able to speak with freedom on this matter because I happen to be one of the fortunate ones. On a certain stock exchange, for instance, 10s. shares paying 5 per cent. are still selling at 3s. That is what tie people think of them. When this regulation was mooted I was approached to sell those shares for 4s. I did not do so. But from this instance alone, honorable senators will realize the effect of this regulation. The particular company involved is not a prosperous concern ; its reserves are bad. Large concerns with big reserves are allowed to earn 4 per cent. on the whole of their capital. Probably, such concerns can go merrily on; but what is the position of the unfortunate preference shareholder? [ am not criticizing the Government on this matter; it was rushed through and there it is. Take8 per cent. shares in concerns like Australian Consolidated Industries Limited, Broken Hill Proprietary Company Limited, Australian Paper Manufacturers Limited, or a brewery. What do sellers get for 8 per cent. preference shares? A couple of pounds, perhaps. The buyer believes that the concern will probably accumulate more reserves and he will probably get 5 per cent. on his money some day. He is looking ahead. Under this regulation, however, what is the investor going to get? He is going to get 2 per cent instead of 4 per cent. In view of these facts, does not Senator Brown realize that there will be a shrinkage. I suggest that the honorable senator look at the stock sales effected immediately after this regulation was promulgated. He will see that there was a shrinkage of investments in giltedged securities to an amazing degree. I do not propose to refer to those other happenings which all of us engaged in the commercial life of this country know about. It was the immediate effect of this regulation that induced the Prime Minister to make his statement. I am sure that we do not want to embarrass the Government, but I implore it not to take risks with things that matter. I. cannot conceive that politics were involved in this instance, because such a procedure will obviously destroy the source from which the Government obtains revenue. I welcome the gesture made by the Minister this afternoon. Fromhis remarks I understand that the objectionable regulations have been placed on the table of the Senate, and that the Leader of the Opposition will be asked to appoint representatives on a committee similar to that which was appointed to review the budget.

Let us ensure that even-handed justice shall be meted out to our people; but at the same time let us resolve to do nothing that will re-act unfavorably on the revenue of this country. I sayagain to the Government that there is no need for panic or alarm. Our forebears at Home have taken a much more devastating gruelling than we shall ever be called upon to face in this country. They were practically unarmed after Dunkirk, and incapable of resistance. If the German monster had moved on at that moment we may not have been in the position we are to-day. However, he halted; and during that brief period the people of Britain armed themselves so effectively, and used their , air force with such brilliant strategy, that they defeated subsequent attacks by Germany in the air and in the Atlantic. There can be little doubt that those attacks will be renewed. However, the valiant efforts of our Russian allies preclude their immediate renewal. I welcome the inclusion of China which stands for peace, and, I believe, for liberty, among our allies. I believe that we should use the vast man-power of China and of India to the utmost. In regard to India, I echo the sentiments expressed by the Minister for Information : We must make every endeavour to bring the people of that great nation into linewith us. Whatever the difficulties may be, surely there is genius enough' in the British Empire to find a formula of government which will be satisfactory to the people, of that great dominion.







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