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Thursday, 8 December 1960

Mr WHEELER (Mitchell) .- It is passing strange that the Opposition, whose duty it is to oppose, supports this measure. Indeed, the honorable member for Hindmarsh (Mr. Clyde Cameron) expresses the pious hope that it will not be a temporary measure at all. No doubt this bill does appeal to the Opposition as, naturally enough, any legislation with a socialistic association meets with the support of honorable members opposite. If I were the Treasurer, I would regard the blandishments and the softsoap of the honorable member for Hindmarsh with a great deal of suspicion.

I wish to refer to the amendment proposed by the honorable member for Wentworth (Mr. Bury). It seeks to remove one of the many anomalies which will undoubtedly occur as the result of the passage of this bill. The object of the proposed amendment is to prevent the retrospective operation of this legislation. As presented, the bill provides for deductibility of interest on borrowing where the contract for the borrowing was entered into before 15th November. The proposed amendment merely seeks to extend that concession to interest on moneys borrowed subsequently to that date for the purpose of financing commitments which were entered into before 15th November. In other words, the commitment is there and the company has entered into the contract. The company would have committed itself by contract prior to 15th November to an expenditure for the purchase of a capital asset to be delivered or constructed after that date, intending to arrange the requisite borrowing after that date, but prior to delivery or completion of construction. That is fair enough. It is a reasonable business transaction. The company enters into an agreement, and wishes to arrange finance on that agreement.

A company that has entered into the agreement finds that the interest on the money borrowed under the contract is not deductible. Thus, this measure has a retrospective operation. The avowed intention of the Government is that the bill should not have a retrospective operation, and this proposed amendment ensures that the intention of the Government is carried out. The proposed amendment is a logical part of the structure of the sub-section into which it is proposed to be inserted. It is fair and equitable, it removes the remaining element of retrospectivity in the bill, and is thus consistent with the Treasurer's public statements. Therefore, it warrants the support of the committee. 1 support the amendment.

I turn now to clause 4, which deals with excepted interest. This clause contains provision for the exclusion of a number of companies, including pastoral finance companies. I have no objection to pastoral finance companies being exempted, but I believe that a good case can be made for the extension of the provision to other companies. Under this bill, the pastoral finance companies are the sacred cows of our financial structure because they are deemed to provide some assistance to rural development whereas, in effect, these companies work on an extended credit system. It is admitted that they advance money to primary producers, but I point out that a condition of advancing the money is that it shall be a charge upon the proceeds from the wool clip, the wheat crop and so on. They then proceed to enforce on the borrower a condition that he will buy everything possible from the trading section of the pastoral company. From then on, it is usual for the borrower to buy anything ranging from tractors to whisky, stallions to bantam roosters, theatre tickets, refrigerators and consumer goods of every description through the trading organization which is owned and controlled by the pastoral finance companies. He is tied up completely, and the small amount devoted to development is offset by the trading activities of the company.

What is the difference between this extended credit and hire purchase? After all, when they force the borrower to trade through them, the pastoral finance companies are engaging in a form of hirepurchase business.

Mr Malcolm Fraser (WANNON, VICTORIA) - They are not forced.

Mr WHEELER - If you borrow from a pastoral finance company, or other financial institutions, what opportunity have you to refuse? In any case, it often suits you because you have no money anyway, and they provide you with the finance to trade with them. What virtue have these pastoral finance companies over the ordinary hire-purchase company which devotes a fair amount of its funds to housing? Should not a set-off in interest be allowed on funds so employed, even if they are financed by note issue?

T wish to make a proposition. I know it will not be considered, but at least it will be placed on record. I suggest that these companies should be entitled to a set-off of interest on the proportion that their loans for home building and housing advances bears to their total loans for the period. In other words, these companies should be able to claim a set-off of interest on funds devoted to such worthy projects as housing. This would be an incentive to devote funds to housing, and divert them from the purchase of motor cars, if the purchase of motor cars is considered to be an evil at the the present time. To support my argument I mention that Direct Cash Orders Limited, a company which has already devoted £1,000,000 to housing, has announced that it will be unable to continue to advance money for this purpose if the projected legislation is passed. Cambridge Credit Corporation Limited has announced that they will be obliged to slow down on the financing of housing under the Government's proposal. If housing is a problem - and, heaven only knows, it is - the Government should encourage finance to be devoted to it through these companies in the way in which I have suggested.

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