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Thursday, 3 April 1941

Senator DARCEY (Tasmania) . - This clause empowers the Government to issue £50,000,000 in the form of treasury-bills, and I shall be interested to learn whether the Treasurer (Mr. Fadden) proposes to use that method to raise the money. A treasury-bill is an undated IDU, which is issued by the Government. Recently the general manager of the Bank of New South Wales deplored the fact that treasury-bills in London returned only 10s. per cent., whilst the Commonwealth Government paid 35s. per cent, for the same accommodation in Australia. At any time, a treasury-bill can be presented to a bank and converted into cash. The banks, however, place treasury-bills in their cash reserves, and lend to the Government ten times the amount which they represent. Briefly, that describes the treasury-bill " racket ", and no Minister will venture to deny it. I am not concerned as to how the money will be expended, but I should like to know how it will be raised. Does the Government propose to float a loan on the open market and invite subscriptions from the public? The general manager of the Bank of New South Wales, in praising the loyalty and patriotism of the private banks in the present crisis, declared that they had subscribed the whole of the £20,000,000 of the first war loan. I ask the Government whether that statement is correct. The committee has the right to be told by the Government how it intends to raise this £50,000,000. Paragraph 504 of the report of the Commission on Monetary and Banking Systems says that the Commonwealth Bank can issue interestfree money. I pointed that out earlier to-day, and when it was questioned I referred to paragraph 530 of the same report. The chairman of that commis sion was a high constitutional authority and a judge of the Supreme Court of South Australia. That paragraph states, in effect, that ultimately Parliament is responsible for the control of finance and for the good government of Australia. The report of the commission states that if at any time there is any difference of opinion between the Commonwealth Bank Board and the Commonwealth Government as to the policy of the board, a free and frank discussion should take place. Should their opinions still be irreconcilable, the Government must take the full responsibility and tell the Board how to act. If the Government wants £50,000,000, it needs only to apply to the Commonwealth Bank Board for credit to that amount. Any one with any financial knowledge at all knows that no money raised by the methods proposed in this bill ever reaches the Treasury. All that the raising of a loan implies is that the Treasury has the right to draw cheques. That is how this country is financed. 1 strongly protest against this £50,000,000 being raised through any channel other than the Commonwealth Bank.

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