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Tuesday, 30 September 1902

Mr SALMON (Laanecoorie) - I cannot agree with those who assign as a reason for their opposition to the proposal of the Government that borrowing operations can be better undertaken by the individual States than by the Commonwealth. I have always been under the impression that loans could be raised very much more advantageously by the Commonwealth than by the integral States of the union. Indeed, one of the reasons why a large number of people voted for federation was that under it there would be an opportunity of funding the States debts, and thus saving a large sum of money in interest. Of course, that result could only be achieved if the credit of the Commonwealth was greater than that of the States composing it.

Mr G B EDWARDS (SOUTH SYDNEY, NEW SOUTH WALES) - Keep the list clean till then.

Mr SALMON - I am not now dealing with the question of the advisability of borrowing, but with the argument, which has been used by some honorable members that, bv raising loan moneys, the Commonwealth would be impairing the ability of the States to borrow under better conditions. I am not of that opinion at all, but I am opposed to the proposal of the Government. In this connexion, I do not intend to repeat the arguments which have been used, but I cannot refrain from emphasizing one which was advanced by the honorable and learned member for South Australia, Mr. Glynn, and which was first brought under my notice by one of the best financiers in Australia. That argument is that if the Commonwealth Government goes upon the money market for a small loan of £1,000,000, it will probably establish the price to be paid for any future loans for a considerable time. That is an aspect of this question which deserves most careful consideration at the hands of honorable members. We must realize that this loan, if floated, will not command anything like the price at which Canada can command money in the British market to-day. There is no reason in the world why the Commonwealth should not occupy just as good a position as does Canada, and it is only precipitancy in rushing upon the market for a small sum under unfavorable conditions that will hamper our future operations in the direction of funding the debts of the various States, and thus securing a large saving in the amount of interest that is annually sent by Australia to other parts of the world. Under the circumstances, it is well that we should pause. I do not think it is necessary that the States should go upon the money market to borrow. In those States where it is absolutely necessary that certain works should be undertaken, means will be found to pay for them out of the ordinary revenue. But, in going through the schedule to the Loan Bill, T was struck by the number of works which are not absolutely necessary, and which need not be carried out for very many years to come - works such as the undergrounding of the telephone wires.

Sir Malcolm McEacharn - The sooner that is undertaken the better.

Mr SALMON - That is so ; but is the Commonwealth to borrow money to undertake it ?

Sir Malcolm McEacharn - The adoption of that system would result in an increase of revenue.

Mr SALMON - I quite agree with the honorable member for Melbourne that its adoption would probably result in an increased revenue ; but that revenue would' not be anything like sufficient to justify us in borrowing money at the present time to carry out the work. The States would not be inconvenienced if a large number of the works enumerated in the schedule were deferred - say for ten years - until the Commonwealth reached the position to which the Attorney-General made reference this afternoon. Opposed as I am to perpetuating a principle which in the State Parliament I always condemned - the principle of borrowing - I do not feel that I have any reason to alter my attitude on this occasion. Indeed, I feel that the present position of the States furnishes a very strong argument in favour of maintaining that attitude.

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