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Wednesday, 27 March 1985
Page: 925

Senator MacGIBBON(7.18) —I wish to take a few minutes of the Senate's time on the adjournment tonight to talk about a few minor administrative matters relating to Commonwealth Government inscribed stock, colloquially known as 'Aussie bonds'. I am not reflecting in any way at all on the Government in bringing this matter forward. The administrative procedures come from the Treasury and I imagine that they were put in place by the previous Government. For all I know, they might reach right back into the depths of antiquity in Australian Treasury practice.

The first point I raise is the nature of the scrip certificate that one receives when one buys Commonwealth Government inscribed stock. It comes on a very light piece of paper, which is roughly square and pale green all over. The details on it, the name of the purchaser and all the other information, are just typed on in ordinary typescript. It is quite at variance with the appearance of the stock certificates that are issued by public companies in precisely similar circumstances. The Commonwealth Government certificate is a different shape, it looks totally different and instead of being a solid piece of parchment it is a very flimsy piece of paper. It is very easy for it to be overlooked and not recognised for what it is, a scrip certificate. I would imagine it is reasonably easy for it to be forged. I think that there are checks and balances against that insofar as the certificate cannot be negotiated for cash. Anyone who wishes to cash this stock has to do so through the register in the appropriate way. I think that changing the form of the certificate is a simple administrative procedure which could and should be undertaken.

The second point I raise in relation to these stock certificates is that if one buys a block of $1,000 worth of bonds and for some reason one sells $500 or $600 worth, one applies through an unambiguous channel to redeem that stock. But the important point is that the Commonwealth Government does not call back the scrip certificate. In other words, if that certificate is made out for $1,000 or for $100,000 and $500 worth is sold, the certificate is not altered. That is markedly at variance with the procedure of holding stock in a public company. If one holds $500 worth of BHP shares and sells $200 worth, one must surrender the old stock certificate and have a fresh one issued, endorsed with the balance of $300. Because of the way in which these certificates are drawn up they have the potential to be mislaid, leading to an unnecessary degree of confusion for their holders. That would be easily avoided simply by changing the practices in the Treasury.

The other major concern I have relates to the payment of interest. Until about a year ago, all one received was a Reserve Bank of Australia cheque in the mail. At present, at the six-monthly intervals when interest payments are due holders get a Reserve Bank cheque, and a perforated part, or counterfoil, is attached to it. It is a plain white piece of paper containing some very sparse, typed information. From memory, it has on it 'Commonwealth Government Inscribed Stock', the date on which the cheque is issued, the series rate, the principal amount, the interest and a few things like that. Most importantly, it does not have on it the name of the person to whom the cheque is payable. Again this provides the potential for people to overlook these interest payments when it comes to filling out their annual tax returns. This is particularly the case for elderly people or people filling out tax returns for them. This little counterfoil, which does not look in any way like the counterfoil that one receives with dividend payments from public companies, could easily be mislaid or overlooked.

I request that the Minister for Finance (Senator Walsh) take up the matter with the Treasury so that a more substantial form of stock certificate is issued to stock holders, so that certificates are recalled when part of the stockholding is sold and so that a more detailed counterfoil is issued with the six-monthly interest payments. If it is not too great an expense, I think it would be reasonable to request that the Treasury issue an annual statement of interest payments, because it is a matter of law that such payments must appear in taxation returns as part of the income received by stock holders.