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Thursday, 3 November 1921

Senator E D MILLEN (NEW SOUTH WALES) (Minister for Repatriation) . - In answer to the point raised by Senator Pratten, I may explain that our public indebtedness will be increased by £2,000,000. The Bill authorizes the borrowing of £5,000,000, £3,000,000 of which, will be devoted to redeeming existing debts, and, therefore, the increase in our public indebtedness will be £2,000,000.

Senator PRATTEN (NEW SOUTH WALES) - But we will have extra assets.

Senator E D MILLEN (NEW SOUTH WALES) - The money, will be devoted to public works.

Senator PRATTEN (NEW SOUTH WALES) - Quite so.

Senator E D MILLEN (NEW SOUTH WALES) - I heard an interjection that circumstances existing at the moment should be a warning against further public borrowing. No one likes to borrow; but I venture to say that in a country such as Australia borrowing is inevitable unless we desire to remain stationary. I do not wish to suggest that we should launch out into lavish borrowing, even if that were possible; but it would be extreme folly to shut down, on borrowing in a country clamouring for development in almost every districtWhen we speak of our public indebtedness we ought to remember the valuable asset we have against our liabilities. Take' our railways as a case in point. Whether or not they would to-day realize the amount of money which has been borrowed to construct them, no one would suggest that Australia has not benefited by carrying such a debt for the. construction of railways, which have really been our life-blood and one of our main aids to progress. Unless more private money is available for developmental work than there appears to be, it becomes essential for the State to borrow for this, purpose.

Senator Duncan - Then the more we owe the: wealthier we are !

Senator E D MILLEN (NEW SOUTH WALES) - If. every £1 we borrow returns more than £1 in assets, the more we borrow the richer we become. It is not a question of whether borrowing is right or wrong,, or advisable or inadvisable, but whether the money we borrow is wisely expended. Every honorable senator at some time or other has asked for increased postal facilities ; and it is absurd to ask the taxpayers this year to pay for postal facilities which will last for fifty years. Therefore, if many works of this kind are wisely undertaken and proper supervision exercised over the expenditure of the money, we are helping ourselves by expending it on reproductive works'.

Senator Prattenreferred to the question of raising money outside the Empire. I doubt whether any one in Australia wishes to do that ; certainly the Government do not. The Treasurer (Sir Joseph Cook) has very accurately voicedthe sentiments of the Government in deprecating borrowing from any country outside the Empire; but I would not like to let loose the idea that, in consequence of the demands which may be made on private capital for investment within Australia, we ought not to borrow outside the Commonwealth. If that policy were to be adopted, and it should happen that the

London, market were closed to us,, a veryawkward position might arise;

Senator THOMAS (NEW SOUTH WALES) - America might lend the money at a lower rate.

Senator E D MILLEN (NEW SOUTH WALES) - Apart from the question of terms, I submit that if Australian financiers find it more profitable to invest capital in developing, pastoral properties, factories, and other such undertakings, instead of lending it to the Government, and' at the same time London is unable or unwilling, we might be confronted with the position of asking ourselves whether we should not borrow outside the Empire. But no. one wants that.

Senator PRATTEN (NEW SOUTH WALES) - I am not quite sure whether it may not. pay to adopt the inevitable.

Senator E D MILLEN (NEW SOUTH WALES) - That can be considered should the necessity arise. Whilst I am . disinclined to favour borrowing outside the Empire, circumstances may arise which might make it desirable. It is safe to say that in existing circumstances it is not.

Senator THOMAS (NEW SOUTH WALES) - Something may arise to necessitate it.

Senator E D MILLEN (NEW SOUTH WALES) - A hundred things might arise; but at present I am totally opposed to such- a proposal. This loan will be floated within the Empire.

Senator Duncan - What rate of interest was paid on the Treasury bills being redeemed by the flotation of this loan ?

Senator E D MILLEN (NEW SOUTH WALES) - These bills were floated at different rates of interest. They are not permanent investments, and have been taken up largely, by the balances arising from revenue accounts which have to be repaid. It has been a. means of utilizing unexpended balances and getting money at a comparatively low rate of interest. The time has now arrived when these balances have to be paid back with the money authorized by this Bill.

Senator Prattenmust be aware that it has never been the practice to include the rates of interest in a Bill,, and the reason is obvious. If we go to London, and negotiate with financiers as to the terms and conditions it might be. found impossible to float a loan, at the rate specified in the measure. On the other hand, if the rates stated were- more favorable than the market demanded, financiers would insist on securing the maximum rates. In the past, this has always been left to the Government and their financial advisers to secure the best terms possible in the circumstances. This measure merely follows the established practice, which, I venture to say, experience has justified.

Question resolved in the affirmative.

Bill read a second time.

In Committee :

Clause 1 agreed to.

Clause 2 -

The Treasurer may from time to time, under theprovisions of the Commonwealth Inscribed Stock Act 1911-1918, . or under the provisions of any Act authorizing the issue of Treasury bills, borrow moneys not exceeding in the whole the sum of £5,000,000.

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