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Tuesday, 30 September 1902


Mr GLYNN (South Australia) - I am sorry I cannot in this matter agree with my honorable colleague from South Australia,, Mr. Poynton. We have pulled together in connexion with a good many other things, but I cannot assume a position on behalf 0t South Australia in the Federal Parliament,, which I should have repudiated as a member - of the State Legislature. For the last five, or six years there were several of us who, in. the local Parliament, were determined to. put a stop to the borrowing which has been too frequently resorted to during the last fifteen or twenty years. It remains for us now to be somewhat consistent with the policy to which we gave expression in the local Legislature. Nor do I share the fears expressed by my honorable colleague as to the effect upon South Australia if we reject the proposed Loan Bill. I do not think there was very much fight in the Treasurer's speech upon this point. The right honorable gentleman seemed, in making the proposition, to be balancing all the pros and cons pretty fairly. His speech was somewhat like a proposal of marriage made by some bachelor who was praying Providence all the time that the woman would reject his suit.


Sir George Turner - I spoke as strongly as I could in the Budget speech.


Mr GLYNN - I read the speech through. I know that a considerable amount of emphasis may be given to political statements, if the speakers are exceedingly desirous that they should succeed in, what they propose ; but I noticed a certain weakness and lack of warmth in that part of the Treasurer's speech in which he asked honorable members to take up the Loan Bill again. I do not share the fears of the honorable member, Mr. Poynton, as to the effect upon South Australia of throwing this class of items upon revenue, because federation has left South Australia pretty well off. The Treasurer's statement of last week showed that, after deducting the new cost of the federation in 1901, we returned to South Australia £35,000 more from Customs than that State received in the year prior to federation. In other words, -that State really made a profit in that year as against the year 1900. By deducting the per capita cost - and that is the way I take the Treasurer's speech, and I think his figures bear me out - from the total net revenue, there was 'still an excess of £35,000 returned in 1901 as against that State's receipts in the last year under the old regime.


Sir George Turner - That excess has come down to £13,000 this year.


Mr GLYNN - I was going to say that this year the excess comes down to £13,000, but it is still a profit in 1901-2 as against 1900, the year prior to federation.


Sir George Turner - No; there is a loss of £21,000 this year as compared with 1900.


Mr GLYNN - Is the right honorable gentleman quite right in saying that of 1 902-3 ? I think he said there was a minus entry of £20,000 ; but we know that in the previous year, 1901-2, there was a profit of £13,000, and it seems to me that the new cost of federation this year, on a comparison with the Customs of 1900, will be something like £8,000 to South Australia. That is to say, allowing for increased Customs receipts, that the estimate for the current year will be only £8,000 as against an estimate of about £35,000 in the 1897 Convention. I say therefore that, no matter in what way we take it, federation has really left South Australian finances in a pretty sound condition. Therefore 'we are not called upon in a petty matter of this sort, an expenditure for all States of £500,000, to follow, at the very outset of our political life, the wretched ' example which the States have- followed for the last twenty years. As regards the method of apportioning this money in case we borrow it, I point out again that South Australia comes out pretty well in the transaction. If honorable members from South 'Australia will look at page 65 of the papers presented last week by the Treasurer, they will find that, of the £174,000 to be paid out of revenue for new works, an expenditure of £20,000 will take place in South Australia, but her contribution per capita will be £3, 6 8 8 less than that. There we have one example of the financial effect upon that State of the application of the principle of paying per capita in connexion with expenditure from revenue. In other words, there will be during the current year an expenditure of £20,000 in South Australia as against a per capita contribution towards that expenditure by that State of £16,417. So that if we throw the whole of the public works expenditure upon revenue, instead of £174,000 of it, and apply the same principle to the whole, we in South Australia shall actually gain by the transaction, because in respect of our share of the total we shall pay less per capita than the expenditure necessitated in that State this year.


Mr Higgins - The honorable and learned member is speaking only of South Australia, because her gain may be our loss.


Mr GLYNN - I am speaking merely as to the effect upon our position, because there has been a good deal of unnecessary timidity displayed in relation to the State finances under federation, and a good deal of unjustifiable criticism against the policy of the Federation, and its effect upon local finances. I think it is our duty, as we are perhaps more interested in the figures applicable to our own States, to submit a fairer representation of the effects of federation. As regards the method of debiting this money, if the loan should be floated, I think the suggestion of the Treasurer is a very fair one, and can be constitutionally carried out - instead of debiting the lot per capita, that it ought to be regarded as transferred expenditure. I know it is very difficult to say under what category some of this expenditure should be put; whether, for instance, switchboard expenditure should be regarded as transferred expenditure or new expenditure.


Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - The Treasurer says " transferred expenditure."


Mr GLYNN - The right honorable gentleman since the Loan Bill was introduced settled the doubt, as regards switchboard expenditure, by regarding it /as transferred expenditure, and throwing it upon revenue. But he can with the same liberal and fair construction of the terms of the Constitution regard, for instance, as transferred item 26 in the Loan Bill - construction and extension of telephone lines, and item 27 - construction and extension of telegraph lines.


Sir George Turner - Yes, but the difficulty is that those which we took over will have to pay on a per capita basis, while those which we are constructing now will pay on a revenue basis.


Mr GLYNN - I do not see that it makes any difference ultimately.


Sir George Turner - Ultimately the States will have to pay on a per capita basis.


Mr GLYNN - What does it matter? There is very little difference between such an item as a switchboard and items 26 and 27 in the Loan Bill under the head of South Australia, because they can very well be said to be part of the maintenance of the department as it was transferred. Maintenance includes something more than what is ordinarily regarded as repairs. Even additions to the military force are regarded as maintenance, though I admit the construction that the additions might be regarded as new expenditure is a plausible and fair one. Where we have these points of doubtful construction, we ought to -adopt the wise, sensible, and fair policy, which is to regard the' item as transferred expenditure, because then the whole expenditure in the State - no more and no less - will be debited to the State. We shall get rid of the inequalities which were pointed out by the 46 a 2

Treasurer when he said that if it were dealt with as new expenditure, some States would contribute more than the total expenditure therein. If it is regarded as transferred expenditure, the matter is comparatively simple, because each State will then be debited with the exact amount spent therein during the current year. Surely we ought not to be afraid of spending £44,000 out of the revenue of South Australia. I should prefer not to go in for the expenditure at all just now than to sanction at the very outset of our career this pernicious policy of including in a Loan Bill some of these small items. We ought not to be afraid of casting on the revenue of the current year a little additional burden to the amount of what is really urgent of £44,000, in view -of 'the very much greater question of setting an admirable example to the financiers of the States. Look at the question of our indebtedness which has been so well dwelt upon by the honorable member for Bourke. According to w»e Treasurer, we have a public indebtedness of £208,000,000. The securities for this amount are the very assets that we are now going to mortgage again. Federation has' not added a single acre of ground or a single personal asset, except in the way of greater efficiency from combination, to the sum total of the resources of the States. Still we. are asked to enter the lists in competition with the States, and to raise for these particular purposes a federal loan on the security of the very same assets which now are somewhat pressed by the enormous burden of debt which rests upon them.


Mr Mahon - Is not that an argument for all time against raising any Commonwealth loan ?


Mr GLYNN - No. It is an argument for scrutinizing a petty loan of this sort. It is. not an argument against loans which are needed for the conversion of State debts - big transactions involving millions which would increase the reputation of our solvency. Surely to go into the English money market at the very beginning of our career, and .to ask for a petty loan of £500,000 when we have a revenue of about £11,000,000-


Sir George TURNER - But we are not going to do that ; it is to be a local loan.


Mr GLYNN - Is not that -much worse? If it is offered locally, what will be the effect? Shall we get the money at less than 3½ per cent. at par? It is not likely we shall. So that we are going to set the value of our local solvency before the whole world at 3½ per cent., while Canada can borrow in the English market, at a little less than par, for 2¾ per cent., and in 1898 did borrow at 2½ per cent. We are actuallygoing to mark the value of our securities at 3½ per cent. at par, and I defy the Treasurer, at the present time in Australia, to get money at less than that rate. . It is an extraordinary thing that Canada can borrow money in England at about 2¾ per cent. at very nearly par. If we go there for a loan of £500,000 - the sum total is made of a number of equivocal little items - we shall be injuring the reputation for solvency and the good financing of the Commonwealth at the very start of its career, and we shall not get the money for 2¾ per cent., or probably 3 per cent., at par, whereas if we borrow the money locally we shall be setting up a value of our assets or security, which is measured by the interest we shall have to pay.


Mr Mahon - Would it not deteriorate State loans also?


Mr GLYNN - It would have an effect upon them. Let the federation wait until it is asked to offer a loan of three, four, five, or six millions to convert State debts, or some clearly reproductive outlay for which revenue is inadequate. Doing that will be evidence of something which will attest our solvency, which will increase our reputation for solvency, because it will relieve by reconversions some of the burden, of State interest. We ought to be most careful not at the very outset to decide that the States are in such need that small sums of £10,000, £15,000, or £20,000 cannot be charged against the revenue of the current year. The whole of the amount need not be spent in the year. The Treasurer said in his speech that about £500,000 was the total sum which he expects to spend. If that is so, the burden will not be cast on the revenue of this year ; it may be spread over two years. Surely it is within the competency of the Treasurer to arrange such expenditure aswill throw only two-thirds, or perhaps half, the burden on the revenue of the current year. Ifthat is done the States will not feel very much the burden of the greater responsibility. I ask honorable members once and for all to put their foot down, and say - " Unless the loan is one that is needed for conserving our finances or debts, or cannot possibly be avoided, we decline in the very first session of the Federal Parliament to set an example against which we have all been crying out in the States for the last five or ten years."







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