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Thursday, 3 September 1959
Page: 901

Sir GARFIELD BARWICK (Parramatta) (Attorney-General) .- Probably the amendment that has been proposed by the Leader of the Opposition (Dr. Evatt) has been prepared in a fairly short time, and that, I hope, will excuse the oversights which it involves because, if one understands how borrowing is effected under our constitutional set-up, one will see immediately how inappropriate and impossible is the amendment.

Let me, first, point out that borrowing by the Commonwealth, except for certain particular purposes, is effected under the Financial Agreement, which is part and parcel of the Constitution, and which may not be altered except by the constitutional process that has been set out for amending it. Under the Financial Agreement there are two classes of permanent loans. I put on one side temporary loans. The first is loans that are borrowed for the States, and the second is loans that are borrowed for Commonwealth works. Where loans are borrowed for the States, they must be sought by the Commonwealth, because the Financial Agreement is mandatory on that point. It says that when the States have decided, through the Australian Loan Council, on the borrowing, on the terms of the borrowing, and on the locus of the borrowing, the Commonwealth shall borrow according to the mandate of the Loan Council.

During my secondreading speech on this legislation, I stated that this particular loan was for the purposes of the States, as indeed have been all loans for some time. This loan is truly a State loan, and it falls within that portion of the Financial Agreement which enables the Loan Council, as it has done, to determine that there shall be a borrowing, to determine the terms of the borrowing and to determine the place of the borrowing. The loan to which I am now referring cannot, under the constitutional set-up, fall within the purview of this House to say yea or nay.

The amendment that has been so blithely put forward by the Leader of the Opposition suggests that this Parliament shall attempt to do something that is truly not within its capacity, namely, to say that a loan which has been authorized indeed directed by the Loan Council shall not be made, although the Financial Agreement, which has been woven into our constitutional set-up, states expressly that when the Loan Council has determined upon a loan I am referring to loans for the States the Commonwealth shall make the borrowing according to the terms fixed by the Loan Council. Of course, also in cases of a borrowing by the Commonwealth for its own purposes, the Loan Council fixes the terms and conditions under which the borrowing shall be made. This Parliament has no authority, as it were, to ride in on the Loan Council and its determinations. This is a result of the Financial Agreement, and the amendments that were made to the Constitution when section 105a was included. This committee has been invited to do something which more likely than not is beyond its powers.

Mr Pollard - Is not the Minister saying that the Government may do something, but that the Parliament may not?

Sir GARFIELD BARWICK - No, I am not. That is the next point to which I shall move. All borrowing by the Commonwealth must be upon a statutory or constitutional authority. The Financial Agreement is regarded as itself an authority to borrow. That represents the necessary authority. In the case of loans raised for the loan programme, there is no need to seek separate and independent parliamentary authority. While the loans are going into the loan programme as authorized and dictated by the Australian Loan Council, the Financial Agreement is regarded as sufficient authority to the Government to borrow the money. As I point out, it is not only an authority under the Financial Agreement, but it becomes a duty.

The States did not enter into the Financial Agreement in order to allow this Parliament to determine that the resolutions of the States to borrow money should be vetoed here. That is the proposal contained in this amendment. It only needs to be put in that fashion to show how misconceived this amendment is.

Mr Daly - That is a new line.

Sir GARFIELD BARWICK - Of course it is a new line. But the important thing is to. know something about it.

Mr Daly - It is the Barwick line.

Sir GARFIELD BARWICK - I do not mind its being called " the Barwick line ". There is nothing' wrong with that line.

What I have said leads me into an answer which I was invited to give to the honorable member for Werriwa (Mr. Whitlam). If we look through the statutes we find that, in the case of the Swiss loan and the Canadian loan, separate statutory authority was obtained from this House.

Mr Whitlam - And in the case of the World Bank loans.

Sir GARFIELD BARWICK - Yes. The reason for the special statutory provisions in the case of the Canadian and the Swiss loans was that the proceeds of those loans were not going into the loan programme. Those loans went into trust accounts as will be seen from the terms of the acts themselves. As their proceeds were not going into the loan programme, an express statutory authority was needed and was obtained for them. Many other overseas loans have been negotiated and securities issued under the authority of the Financial Agreement. That has been done, not only by this government, but by the prior government.

In the case of loans from the International Bank for Reconstruction and Development, statutory authority was sought because that bank prefers to have a loan ratified by the Parliament. Out of deference to the Bank's wishes, those loans were brought specifically to the Parliament for statutory authority. But apart from those very special cases, the Financial Agreement covers the whole of what is necessary; for the ordinary loan programme, both in regard to authority and machinery for determining the terms, conditions, and the locality, as it were, of the borrowings.

Apart from those reasons, which I think are very cogent, for putting on one side this amendment, there is the question of practicality. In 1956, when the amendment was made to section 3 of the Loan Securities Act,, and section 6a. was inserted, there was a debate in this House in the course of which the practical need to have a provision such as the. present section 3 was explained. The House accepted the explanation and made the necessary adjustments.

It is. not feasible to bring to the House, either before the negotiations or in the midst of negotiations, the terms and conditions of the loan and the question of whether you will or whether you will not borrow. But if any loan is to be sought which is outside the Financial Agreement and outside any other statutory authority very often there are standing statutory authorities for borrowing the authority of the Parliament has to be sought. Ample opportunity is then afforded to members to place a limitation on where the loan is is to be sought. That is quite within the competence of the Parliament and there is no need for this amendment to secure that result The proposed amendment, of course, is general; it is not circumscribed. It. is not limited to loans which are outside the Financial Agreement. It covers them. For these reasons, both practical and legal, I suggest that the amendment is quite inappropriate andunacceptable.

The genera] question of borrowing overseas is surely not in debate or at issue here. The view of the Labour Party has been put again and again, and I suppose that everybody understands it. I am not going to debate it, but it can be epitomized in these words: When you need to expand in this country and you have not generated enough local capital to enable you to expand, you do not borrow overseas. That is taboo. You do only one of two things you do not expand, or you turn the printing press.

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