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Wednesday, 23 November 1927

Senator CHAPMAN (SOUTH AUSTRALIA) - A fund , of £20,000,000 is to be established to set in motion the necessary machinery. It will consist of 50 per cent, of the new deposits in the Commonwealth 'Savings Bank, one-quarter of the repayments of existing loans, and of moneys borrowed, by the Treasurer. We have not been given an estimate of the first two sums, and it is difficult for us to judge what the amount will be. The Government ought to be in a position to place before us a complete statement.

In regard to the provision of one half of all new deposits for this purpose, we find that the State of Queensland handed over its savings bank business to the Commonwealth Bank on condition that 70 per cent, of the annual increase in deposits should he made available to it, and I understand that there is a similar agreement in regard to Tasmania. We see, therefore, that no great amount of money can be made available from that source. In regard to the 25 per cent, of the repayments of existing loans, the Treasurer lias stated that at the present time the amounts advanced by the Commonwealth Savings Bank as loans to municipalities and other bodies, total over £40,000,000. If these loans on maturing are not renewed, 25 per cent, of them is to be paid to the housing fund. We have already been informed that S5 per cent, of the Commonwealth Savings Bank deposits are invested in Commonwealth, State Government, and local governing bodies' securities. Here again it looks as if the local governing bodies are not likely to make many repayments to the savings bank. The probability is therefore that most of the money required for a housing scheme will have to be borrowed for the purpose. 1 frankly confess that if money had to be borrowed for a housing scheme, without due regard to other loan proposals, and with the slight safeguards provided in the bill for retaining parliamentary control over expenditure, I should not vote to give the Government authority to spend this huge amount of money. One reason for adopting that course would be the fact that the absorption of all this money for a housing scheme would leave less money available for other public works. For quite a ' long time we have heard the cry from various governments, and, indeed, from the people generally, that Australia must restrict its borrowing, and a Loan Council has been formed partly with that object in view. We are told that the money market is tight, and that only a certain amount of loan money is available. If that be so, it is our duty always to keep in view the loan requirements for developmental and reproductive works, which being more money into Australia and increase the standard of living here to the great benefit of the people of Australia. That, after all, is the only course which will stand the test of time. We have evidence that at present the States apparently cannot obtain all the money they need for reproductive works. I quote the following from the South Australian Register of 31st October -

Loan Estimates. - Although the Premier has not been advised finally by the Loan Council nf the amount that will be available, it is understood that if reductions have to be made i;lie departments will be asked to reduce their works later on. They have already been advised that the only works to be gone on with are those that will absorb the largest number of men. The Premier has decided that it is better to pass the bill and start works rather than wait for the Loan Council.

The Premier of South Australia hardly knows whether he can get all the money he requires for reproductive public works.

Senator Needham - Does he not get all his loan money through the Loan Council ?

Senator CHAPMAN - Yes ; but his requests have to be approved by the Loan Council. I understand that each year the States and the Commonwealth submit their loan requirements to the Loan Council, and if it is decided that the total required cannot be borrowed at a reasonable rate of interest, the amounts asked for by each government are reduced in a certain way provided by agreement.

Senator Needham - Is not that a wise provision ?

Senator CHAPMAN - I think it is. If we pass a bill authorizing an expenditure of £20,000,000 upon a housing scheme, it seems to me that we shall be handing over the sole control of the expenditure to the Government. , Australia is passing through a serious crisis. It has lost 20,000,000 sheep. The harvest in New South Wales is practically a failure, aud in South Australia it will be only up to half the normal yield. Farmers in all directions are asking for aid to carry thom over until next season. They want seed and superphosphates. The storekeepers cannot carry them over, because they in turn cannot get the money from the banks. Over 2,000 men have recently been discharged by the South Australian Railway. Department. They cannot be allowed to starve. If there is any time when we should go ahead with reproductive works, it is the present. The Royal Commission on National Insurance has recommended the' Government to use loan money for reproductive works in a time of financial crisis. We are now passing through such a crisis. To illustrate the advantage of pushing on with developmental works, I want to refer to what has been done in connexion with the Tod River reticulation scheme in South Australia. I want to prove that instead of spending money freely on house building, we should be spending whatever money is available on similar schemes. Where a. few years ago there was practically no wheat grown the Tod River reticulation scheme, by conveying water for a couple of hundred miles, has increased the wheat yield from 2,500.000 bushels in 1921-22 to 4,300,000 bushels in 1925-26.

The DEPUTY PRESIDENT (Senator Plain). - The honorable senator must connect his remarks with the bill.

Senator CHAPMAN - I want to point out that developmental schemes such as this, which has so developed a district that it is to-day producing oneseventh of the wheat of South Australia, and is affording a great deal of employment, are projects to which we should give our attention in preference to the expenditure of loan money on a housing scheme. The Government's ideal is good, but the amount of money to be devoted to a house building scheme should be limited by a regard for the amount available for reproductive public works. I regret that there will be little parliamentary control over the expenditure of this huge sum of money. Clause 7 provides -

2.   The housing fund shall consist of -

(a)   such proportion, not exceeding one- half of all increases in deposits over the total amount of the deposits existing at the commencement of this act, as, in the judgment of the commission, is available for investment by the commission in pursuance of this act..........

Clause8 gives a certain amount of discretion to the commissioners, and I trust that they will pay due regard to the immediate necessities of reproductive works. Doubtless the merits and demerits of every application for an advance will be considered by them. The Treasurer has stated that no loan will be raised for the purposes of a housing scheme without reference to the Loan Council. There seems to be some safeguard in that also, because the States who are represented on the Loan Council will have some voice in determining the total amount to be borrowed. I think, however, that the Commonwealth Parliament should have some further control than that which is now provided in the bill. I am a new senator, but my reading of the bill is that by passing it we shall give the Government authority to spend £20,000,000, and that is the end of the matter so far as Parliament is concerned.

It is necessary for the States to amend their legislation before they can avail themselves of this money. Clause 9 of the bill provides -

An advance shall not be made by the savings bank to an authority until the commission 'is satisfied -

(a)   that since the passing of this act the powers of that authority in relation to housing have been increased so as to extend in respect of that advance the existing facilities provided under the housing schemes of that authority in order to cover the matters hereunder specified (if the existing powers are not sufficient to cover those matters), that is to say -

(i)   by providing for the purchase of dwelling houses ;

(ii)   by providing that the maximum amount which may be lent by the authority to any one person shall be One thousand eight hundred pounds, and shall be ninety per centum of the valuation made, by or on behalf of the authority, of the property in respect of which the loan is made; and

(iii)   by omitting from the existing schemes any provision which excludes from the benefits of the schemes a person in receipt of an income (as determined by the authority) not exceeding Twelve pounds . per week; and ... .

Senator Needham - Is not that a dictatorial provision ?

Senator CHAPMAN - No bank would advance up to 90 per cent, without some guarantee, and I cannot see any bank advancing up to that amount without the guarantee of the States. The South Australian Advances for Homes Act gives the Government power to make advances to persons of limited means to provide homes for themselves. It contains the following provisions -

3.   This act, and the fund constituted by this act, shall be administered by the Board of Trustees of the State Bank of South Australia.

4.   The bank shall .... be paid by the Treasurer of the State out of the fund, as consideration for the administration, .... an amount equal to15s. per cent, of the total balance of the advances.

8.   A fund is hereby constituted to be called the "Advances for Homes Fund." .... The Treasurer shall set apart to the credit of the fund such loan moneys as are from time to time provided by Parliament for that purpose.

This means that the Government of South Australia takes the risk. The State bank simply carries out the work on a commission basis. The New South Wales act of 1913 provides, in section 15-

There shall be a special reserve fund of the bank to which shall be carried any profit or loss arising from transactions under this part. Any deficiency in such fund at the end of any financial year of the bank shall be made good from the consolidated revenue fund upon such deficiency being certified to by the commissioners.

It seems to me that in expecting the States to amend their legislation so as to take advantage of the Government's housing proposals, we are asking a good deal. It appears to be a very good scheme for the Commonwealth Savings Bank, which will receive

Ahigh rate of interest for its advances. At present it has a considerable sum of money invested in Government and municipal securities at low rates of interest. Under the housing scheme, the rate will be higher, and so from that point of view the scheme will be a good bargain for the. bank, especially as the State Governments will take the risk. We have been told that the State authorities were Consulted. Special reference was made to the proposed advances for the erection of warehouses and storages. It is stated that the State Ministers were consulted. These advances are to be made under a clause in the Commonwealth Bank Act, and not from the Housing Fund. It is regrettable that more information is not being furinished as to the attitude of the State Governments towards the scheme. The billwas amended in another place, and further amendments may be made in this chamber. Possibly an outline of the scheme was before the State authorities, and was generally approved, but if certain of the States do not amend their legislation they may be placed in an invidious position, because there will be a general demand that as the money is available they should take advantage of it, when, as a matter of fact, it might not be desirable, in the opinion of a State Government, to amend its legislation as provided for in this bill. I see in this provision the possibility of friction between the Commonwealth and the State

Governments. There are many matters to be considered in the amending of the State acts. The rates of interest and conditions governing advances vary in the different States. In Queensland, the rate of interest on advances is fixed at 5 per cent. ; in New South Wales it is 6 per cent.; in Victoria, 61/4 per cent.; in South Australia, 6 per cent. ; in Western Australia, 51/2 per cent. ; and in Tasmania 7 per cent. It may be difficult for the State Governments to bring their legislation into line. Other provisions also have to be considered. In South Australia, preference is given to an applicant with children. This bill provides, also, for an advance up to £1,800. This means that the various State authorities will be expected to take greater risks than is allowable under their own legislation, and they may not feel disposed to do that. In my judgment, an advance of 90 per cent, is unduly generous. I agree with the Government's ideals, and I approve of the bill ; but the measure should contain provisions to safeguard the position of the various States in case some of them may decide not to take advantage of it. Under this measure it will be possible for a man with £200 to buy a £2,000 house. I question the wisdom of encouraging any person with only £200 to aspire to the purchase of a house of that value, because he may be tying a millstone round his neck that will burden him for a long time. The bill should not come into operation until at least four of the States have agreed to amend their legislation. That would bo something of a safeguard, and would not put a State in an invidious position. I commend the Government for having introduced the bill. In committee I hope that amendments will be made along the lines which I have indicated.

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