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Thursday, 22 October 1931

Mr ARCHDALE PARKHILL (Warringah) . - I shall not delay the House by making any lengthy observations on this bill. No honorable member in this chamber is more opposed to repudiation, or to compulsion, that I am; but, after all, the interests of the country are paramount. We have to consider the proposals in this measure from the point of view of justice to all classes in the community. The conversion loan was a magnificent success; 97 per cent, of our internal indebtedness has been voluntarily converted, leaving only 3 per cent., representing about £16,000,000, to be dealt with. In this legislation tho Government proposes that the holders of that amount of stock or bonds shall be deemed to have converted their holdings. Considering the matter from every stand-point, I can see no alternative to the Government's proposals, notwithstanding that they involve a measure of repudiation, which is, however, I think, merely a technical repudiation. [Quorum formed.] Although the conversion loan was dealt with on a voluntary basis, there was a general feeling that, in their own interest, as well as in that of the country, bondholders should convert their holdings. Throughout the campaign it was frequently stated that those who did not convert could not expect to be treated more generously than those who did convert. I listened with interest to the various proposals to deal with the amount unconverted, but I have not heard a practicable scheme propounded. The statements of persons who are in a position to know the facts make it clear that the country cannot pay the amount outstanding, though it has been suggested that money should be obtained from various sources to pay the dissentients. We cannot shut our eyes to the fact that there is a considerable amount of inflation going on at the present time. In the interests of the people as a whole, I have set my face against inflation; I shall not, therefore, be a party to inflating the currency for the purpose of paying off those who have not converted their "holdings. The further suggestion has been made that a loan should be raised to pay off those who have dissented. In my opinion, that is . not a practicable suggestion, for I do not think that the people of this country would be willing to subscribe to a loan for that purpose. We have also to consider the effect of such a proposal on the interests of those who have already converted. I blame, to some extent, those who conducted the conversion loan campaign for the fact that even £16,000,000 remains unconverted. At one stage the committee in charge of the appeal announced that advices had been received from various sources which ensured the success of the loan. The effect of that premature announcement was that some stock-brokers who were watching the position carefully advised their clients to dissent. It is probable that had the committee not made that announcement, a further £15,000,000 might have been converted. In these circumstances, I cannot see how we can allow the dissentients to be treated more generously than those who converted, especially when we reflect on the hardship which conversion means in many cases. I submit that our first consideration should be to meet, so far as possible, the needs of those who otherwise would suffer by reason of their patriotic action iu converting their holdings. My concern is chiefly for the small bondholders. I think it is clear from the statement of the Treasurer that the Government desires to do something to assist them. I make no complaint regarding the proposed treatment of foreign companies which temporarily put money into Commonwealth loans. They did so in accordance with an arrangement with the Government and the Loan Council.

From the inception of the campaign the conversion loan was regarded as a loan of sacrifice. Bondholders were asked voluntarily to accept a reduction of interest. If the proposals contained in this measure amount to a technical repudiation of our obligations to those who dissented, what shall we say of its effect on those who converted ? In justice to the 97 per cent, who agreed to accept the sacrifice demanded of them, I cannot see how we. can allow the other 3 per cent, to escape sacrifice. It was not a sacrifice on the part of 97 per cent, of the bondholders for the benefit' of the 3 per cent, who dissented. Nor can I see how it would be possible to pay them, other than by inflating the currency or raising a loan. In my opinion, the country cannot do more than this bill proposes to do. I admit that the position is unsatisfactory; but are not things in general unsatisfactory? We have been forced into a position from which we cannot escape. I desire to quote from the British Financial Times, which is probably the greatest authority in the world on finance.

Mr Gullett - Nonsense .'

Mr ARCHDALE PARKHILL - I forgot tho honorable member, who is probably a still greater authority. A recent statement in the Sydney Morning Herald contains a quotation from the financial journal in question, which sums Up my views on the matter. The Prime Minister gave it to 'the House.

I desire to revert to the position of the Government Savings Bank of New South Wales, which holds £1,000,000 worth of Commonwealth stock which has not been converted. 1 venture to ask whether the bank has been fairly treated in this matter. It holds about £30,000,000 worth of government stock which it has converted, and of that amount £3,S00,000 represents Commonwealth stock. The stock amounting to £1,000,000, which was not converted, matured on the 10th August, or about the time when the Commonwealth conversion loan was launched.

Mr Theodore - On the very day on which it was opened.

Mr. ARCHDALEPARKHILL.When the Government Savings Bank of New South Wales closed its doors, the Commonwealth Bank had advanced* to it £1,229,183, which it had paid out to meet necessitous cases while negotiations were proceeding as to -whether the bank should be taken over by the Commonwealth Bank or re-opened. I desire the House to remember that on that sum the Commonwealth Bank is charging the New South Wales savings bank 5 per cent, interest, which amounts to about £60,000 per annum, and that liability is a first call upon the savings bank's assets. Before it can do anything to assist needy depositors, who -are suffering most harrowing privations, it must pay the interest on the amount advanced by the Commonwealth Bank. It has been said that the State Savings Bank has not had any dealings with the Commonwealth Bank, but its credits with the Commonwealth Bank in its various accounts amount to just over £1,000,000, and it is not permitted to use that credit as a set-off against the £1,000,000 that it owes to the Commonwealth Bank. In those circumstances, I venture the opinion that there is a considerable volume of public opinion in New South Wales that the Government Savings Bank is being unfairly treated, and that it has a transcendent claim on behalf of the hundreds of thousands of its needy depositors to the redemption of the £1,000,000 worth of Commonwealth stock which it does not desire to convert. That amount would go a great way towards setting the bank on its feet again, and assisting tho depositors, "who have £00,000,000 locked up in the State Savings Bank, by giving them access to a portion of their capital. The release of that money would make a tremendous difference were it in circulation in New South Wales. It is surprising to me that the people of that State have been able to carry on in these circumstances. E have no desire to go near the State Savings Bank so long as it remains closed, because there one hears the harrowing statements of women and others who are suffering acutely because they are deprived of their money. These people expected never to be hard up, "but, owing to their money being locked up, they are unable to obtain a penny to meet their ordinary expenses. I urge the Government to endeavour to make available to the bank £1,000,000 in regard to the conversion, in order to relieve the position of these depositors. If that were done it would dissipate the feeling, which is fairly general in New South Wales to-day, that the Commonwealth Bank has been strangely indifferent to the sufferings of hundreds of thousands of persons who are not only depositors in tho State Savings Bank, but also citizens of the Commonwealth. The feeling i3 fairly general that the Commonwealth Government is more concerned in obtaining control of the State Savings Bank than in assisting it to carry on its operations. I am not at the moment arguing the question whether the bank should be taken over by the Commonwealth Bank, or whether it should be rehabilitated. I simply make an appeal to the Treasurer to endeavour to make available to the depositors who are in need, the £1,000,000 which has not been converted to the Commonwealth loan. [Quorum formed."]

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