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Wednesday, 26 October 1904

The CHAIRMAN - The honorable and learned member will not be in order in referring in detail to that notice of motion.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Then may I say, sir, that it would be an excellent thing if we could establish for financial purposes a nonpolitical tribunal, which would have the management of the whole of the debts of the different States and of the Commonwealth. We used to think that if the Commonwealth could in some way or other take over the debts of the States, by means of conversion loans, the money represented by the aggregate debts of the States would be obtained by us at a much lower rate of interest than that at which it is now obtained by the individual States. The data on which our expectation was based was the great difference exhibited between the value of the stock of the Dominion of Canada and that of the different States of the Commonwealth. I am bound to say, however, that, judging by the quotations published from time to time in the press, I do not believe that stock put forth by the Commonwealth to-day would realize any higher price than that of the States at the present time.

Mr Watson - Canada is in a better ptsition, and always has been, so far as financial matters are concerned.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - I do not think that our stoclc will ever reach the level which that of Canada enjoyed at one time. We might approximate to it, but at present we know that there is a difference of £10 per cent, between the Canadian 3 per cent, stock and that of the different States of Australia. The conditions are quite different, as we know; but supposing that we could have to-morrow a finance council, having under its control the management of the States debts' and those of the Commonwealth, there is no good reason to believe that the Commonwealth would be able to place even a conversion loan at a lower rate of interest than that now current with regard to State obligations.

Mr Watson - If we had control of the borrowing. I think we could.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) -It might be that this finance council would have some control over that matter.

Mr Hutchison - If the States could obtain their money at lower rates, they would borrow all the more.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - I do not believe that there is one of the States that would in any way curtail its right to borrow for its own purposes, or that would give the Commonwealth control over its borrowing power.

Mr Johnson - It would be very unwise if it did.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - That is the prevailing opinion, and even with all the advantages which the Conference received1 from the very full, fair, judicial, and informing statement presented to it by the Treasurer, I do not think that if it met again to-morrow tha States would agree to give the Commonwealth control of their borrowing powers, I do not think either, that any one of them could be persuaded to attempt to influence his State in favour of a curtailment of existing State privileges. I think, however, that the people themselves might be willing to further the Federal movement bv some such action.

Sir George Turner - Would the honorable and learned member advocate allowing the States to continue to borrow as freely as they, liked, after their debts had been taken over by the Commonwealth?

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - I am not speaking of what should be, I am commenting upon the existing state of public opinion in Australia, and am expressing the view that nothing will be done for some years in the direction of bringing about the conversion of the debts of the States into a Commonwealth debt.

Sir George Turner - Sooner or later the States will be forced by the condition of the London money market to allow the Commonwealth to lake over their debts.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - I should like the right honorable gentleman to succeed, but I wish to check any undue anticipations of success. If the financial position of the States becomes strained, the right honorable gentleman will do well to seize the psychological moment, to bring forward his scheme as a means for easing the strain. At the present time I do not think it will succeed. I welcome, however, the motion of which the honorable member for Kooyong has given notice, and I hope that, instead of a discursive debate on this subject, we shall apply ourselves to a distinct issue whether some such tribunal cannot be constituted which will lead to a more satisfactory arrangement in regard to our finances.

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