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Tuesday, 8 March 1904

Mr CULPIN (Brisbane) - The proposals set forth in the speech delivered by the Governor-General are, in the main, verymuch in agreement with those I should desire to see carried out ; but whilst most of them are of such a nature that I should like to support them, there are, singularly enough, two items in regard to which I am very much in accord with the honorable member who has just resumed his seat. Several honorable members have referred to a certain alliance which has been suggested ; but in the Governor-General's Speech, the Government have proposed an alliance between two of their offspring, which I consider would be unfair and improper. I refer to the association of the proceedings for taking over the States debts with a proposal for a Commonwealth system of old-age pensions. The establishment of a Commonwealth system of old-age pensions would involve an annual expenditure of about ^1,500,000, and it is remarkable that that proposition should be coupled with a proposal which would secure a very large profit to certain persons. If honorable members refer to the report of the Treasurers' Conference, which has been placed in our hands, they will see, at page 16, a statement that the mere taking over of the States debts by the Commonwealth would at once increase the value of the stock by a minimum of 4 per cent, and a maximum of 9 per cent. That would be the inevitable result. Nine per cent., or even 4 per cent., on some £230,000,000 represents a very large sum. The debts of the States amounts to about ^230,000,000, and the present market value of the stock is about ^200,000,000; so that as soon as we entered upon the work of taking over the States debts we should give the holders of trie stock a profit of from 4 to 9 per cent. ; or in other words, a sum of from ^10,000,000 to ^20,000,000. Surely we must realize that it would not be right to put so large a sum into £he pockets of certain persons, merely for the sake of providing pensions, amounting to 500,000 a year, for unfornate men and women in the Commonwealth. Such a proposal would go beyond that which we desire to carry out. It must also be remembered that the Commonwealth would derive no advantage from taking over the States debts, unless we were prepared to go on borrowing. We have to take care that our credit abroad is good when we. are ready to commence borrowing. If we do not enter upon a policy of borrowing, it is not a matter of very great importance whether the stocks of the States are at £io or £90, or £100 or more; but when we propose to enter the money market it is essential that we should have a very good name. I believe that, at present, the intention of this House is that the Commonwealth should not enter upon a system of borrowing, but that we should wait and see whether we cannot avoid having recourse to such a policy. But I desire to point out that there is a way out of the difficulty. For the last eleven years there has been a Treasury note system in operation in Queensland, and the adoption of that system by the Commonwealth would provide a sum of from £8,000,000 to £10,000,000, which would be available as a loan fund. The Queensland issue amounts to £1,500,000. It is indorsed by the Government, and although a cash reserve is_maintained by the Treasury, so that the notes may be paid on demand, the calls made on it have been very limited. A duty of 10 per cent. - an impost which is practically prohibitive - is imposed on bank notes, and it seems to me that if a similar scheme were put into force by the Commonwealth, a very substantial profit would' be secured. It would, at all events, provide a reasonable basis, and give us sufficient to work upon for the time being. We should try to do something of that sort rather than float fresh loans. It has been stated that the Canadian system of banking is a better system than is ours ; but, under the Canadian system, whilst they issue Dominion notes, they still permit the banks to issue their own notes. One advantage which the Government secure under the Canadian system is that they require that 40 per cent, of the reserves of the banks which are used to cover the Bank notes must be in the Dominion notes. The Government secure that 40 per cent., and these notes are available for circulation, and are & legal tender. I think the Queensland system of Treasury notes is very much to be preferred to the Canadian system, because it is carried out directly by the State, and not indirectly through the banks. Under the Canadian system, for every £40 issued by the Canadian Government in notes, they give the banks the privilege of issuing £100. The Queensland system, under which the Government issue the full amount in their own notes, and so secure all the benefit, is preferable. There is one other matter to which I should like to urge attention with regard to the note system, and that is this : In Queensland, when the banks require notes, one-third of the amount must be paid to the Treasurer in cash, whilst upon the other two-thirds of the value of the notes supplied, a charge of 2 per centis made. In my opinion, instead of allowing the banks to use Government notes at such a small price, it would be better to adopt a scheme under which the Commonwealth could use its notes up 10 a certain fixed amount, and pay for the construction of public works with them. I believe that that would be a better scheme to adopt than to enter upon any more loans. I am one of those who intend to vote against any proposal to bring forward any fresh loan' business at the present time. Another reason why it is better that Government notes rather than the notes of private banks should be circulated in the way I suggest, is that according; to Coghlan's statistics, I find that the total liabilities of the banks of -Australia amount to £117,000,000 j whilst their capital and reserve funds amount to £26,000,000, so that before we could say that there would be enough money to meet the Bank notes issued by the private bank note system, we must find for the banks of Australia the large amount of £143,000.000. Against that the assets of the banks, according to Coghlan, amount only to £135,000.000, leaving a balance against the banks of £7,123,000. That is to say, that if the Australian banks were to-morrow to turn all their.assets into gold, in order to pay off their liabilities, some persons would have to go £7,123,000 short. In my opinion, these figures supply another reason why we should not allow the banks to issue notes when we might have a proper Commonwealth note system such as is in force in Queensland. The Queensland plan has been in .operation now for eleven years, and is working well, and it only requires a little modification to supply a system which would help us largely in our work. Although, under the Canadian system, private banks issue their own notes, there isnot the risk there which we have.. The liability and capital of the Canadian banks are about covered by their assets, and' they are, in that respect, in a better positionthan are the Australian banks. I think I" have given good reasons why we should, as: a Commonwealth, issue notes for ourselves, and use them in a fair way, rather than allow the banks to have a note issue ; and I hold that the adoption of such a system would be preferable to allowing the Commonwealth Government to borrow money. With regard to the preferential trade proposals, we are told in the speech that if approved they will secure to us an immense and reliable market. That .may be so ; but how about the factories established in India by gentlemen who have run away from the Lancashire operatives to establish their businesses in that country? Are we to treat those people as a branch of the British Empire? I presume that they may be considered in that light, and, if so,.

I say that any preferential trade that may be approved should not be of such a nature as to allow those people to come in for a share of it. Although they are our brother Britishers, I strongly object to the nations of India competing in the benefits of the proposed preferential trade, owing to their low standard of living. 1 think we should set our faces against any proposals which would give them the benefit of any preference at alt. We have in the speech a proposal for a bonus for the establishment of the iron industry. In Queensland we have had a bonus voted for the establishment of a cotton industry, and what was the result? People set to work to manufacture cotton, and when the bonus was earned, no more cotton was manufactured. The bonus proposed must, therefore, necessarily be a perpetual bonus if the industry is to be kept going by private persons. In my opinion, instead of a bonus being provided for the establishment of the iron industry, it would be much better that we should devote a fair sum to the establishment of a State iron industry. Another point to which I should like to make reference is the proposed, amendment of the Electoral Act. I am sure there is room for improvement in the Act. Its administration in Queensland has not been just what we should like to see. Electors within half-a-mile of polling places have been allotted to districts the nearest polling places for which have been three mile's from their residences. This has happened in the case of at least two divisions in Queensland. Something is wrong when such a thing can take place, and I should like to see such a state of things altered as soon as possible. Statements have appeared in the press to the effect that certain questions have never been before the electors. I do not know what questions are meant, but in Queensland a certain question was decidedly before the electors. That question was not - "Will you support the Ministry?" or "Will you support the Opposition?" but "Will you support the Labour Party ?" and the people answered - "Yes."

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