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Thursday, 21 May 1936

Senator Sir GEORGE PEARCE (Western Australia) ('Minister for External Affairs) [4.42]. - I move -

That the bill be now read a second time.

This bill is designed to implement the forecast on this subject contained in the budget speech in September, 1935. The Treasurer then said - "As a result of further investigation into means whereby the Commonwealth can assist in the .problem of relieving unemployment, at has been decided, subject to satisfactory arrangements with the States, to make provision from revenue for an amount of £100,000 in 1935-36, to be used in the form of contributions towards interest and sinking funds on loans for the public works of local authorities.

It is known that many local governing bodies are debarred from proceeding .with public utility schemes by reason of the consequent debt service being beyond their rateable capacity. It is hoped that, as a result of consultation with the State governments, a scheme can be evolved under which, with joint help on the above lines from the Commonwealth and State governments, a number of such public utility proposals may be undertaken, with consequent amenity value to country districts as well as absorption of men who are now unemployed."

The measure in its present form has been drafted, following considerable correspondence and discussion with the State governments, which have signified their general agreement with its provisions. The proposal originated in an endeavour by the Commonwealth Government still further to assist the employment position. It has become yearly more difficult to help the States in this most important aspect of public affairs, by making capital grants to the States from loan moneys, owing to the fact that the Commonwealth Government's share of loan moneys available reduces the amount of moneys directly available to the -States for their own purposes. Capital grants by the Commonwealth to the States from loan moneys mean in reality little more than relief to the States of interest and sinking fund charges. It was, therefore desired to adopt some plan whereby the

Commonwealth could extend further effective help to the States in respect of employment along new lines.

The annual grant to the States will he £100,000 for a period of ten years, beginning with the present year 1935-36, and will be for the purpose of subsidising interest and sinking funds on certain of the loans raised by local public authorities for public works purposes. The other principal provisions of the present bill are -

1.   That the State governments will select the works which are to benefit by the Commonwealth subsidy.

2.   That the State governments will make contributions towards interest and sinking fund on these works to at least the same amount as- the Commonwealth grant, or a capital contribution of an amount conveying the same relative relief.

3.   That the States need not disburse the grants received in the year of receipt, but may pay such grants year by year into a trust fund and draw on such fund as may be necessary to meet the increasing annual subsidies, as new local works worthy of such assistance are approved and started.

4.   The works shall preferably he in country districts, and furthermore, preference is to be given to works which will employ most labour.

The bill represents a new method of providing increased employment over what it is hoped will be a wide area. Normally, local bodies outside the capital cities cannot offer such good security, and so cannot borrow on such' good terms as the great metropolitan local bodies. The provisions of this bill will put selected local bodies on a considerably improved basis, and it will be possible for public works, such as water and sewerage, gas, electricity, public hospitals, &c, which could not otherwise be put in hand for years ahead, to be undertaken in the near future. The bill will consequently make possible an appreciable degree of decentralization of public works expenditure, which hitherto hasbeen largely concen trated in or about the capital cities. Loans raised by local public bodies, under- the benefits of this bill, will provide an attractive field of investment, with adequate provision for meeting the service of the debt for many years. Indeed, in a. great number of cases, the whole of the life of the loans will be covered. The annual amount of £100,000, provided for in the bill, will be allocated to the States on the basis of their relative populations as at the 30th June, 1935, and will be as follows : -


These amounts may seem somewhat small but they do not include capital payments towards relief of interest and it should be noted, also, that the States will contribute an equal amount. On this basis the expenditure should be fairly considerable.

Senator Collings - Is there an agreement between the Commonwealth and the States as to the terms upon which the grants are being made?

Senator Sir GEORGE PEARCE - I understand that there is an agreement.

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