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Wednesday, 21 April 1915

Mr FISHER (Wide Bay) (Prime Minister and Treasurer) . - I have stated many times, both in the House and in Committee, that there is no intention on the part of the Government to reduce the gold reserve to 25 per cent., but that, on the contrary, we shall maintain a working margin of about onethird. The Commonwealth would have had a larger gold reserve than it has at the present moment if we had required the last two monthly instalments of the banks' loan to be placed in the gold reserve. It was my own view, however, that this was not necessary, and we have left the gold with the banks without any attendant disadvantage to the Commonwealth. I should have pleased the honorable member for Angas, no doubt, if I had allowed these amounts to go into the gold reserve in the Commonwealth Treasury instead of allowing the gold to remain with the banks.

Mr MASSY-GREENE (RICHMOND, NEW SOUTH WALES) - But to get that additional gold reserve from the banks, would not the Treasurer have been forced to issue additional notes?

Mr FISHER - The honorable member is aware of the differential proportions, and will not forget that I am dealing now with the question of percentages. In effect, if we had not adopted this course, we should have strengthened our gold reserve in proportion to the amount that we have left with the banks. I do not think there is the slightest need to be apprehensive about the present note issue or its prospective increase. No financier of any standing with whom I have had to deal has put before me any view of serious danger. I promise honorable members opposite, however, that when such a situation arises I will take steps to apprise them of it. I do not think it is wise to discuss the matter ; but I wish now to say that any honorable member, whether he is a member of the

Opposition or a supporter of the Government, who wishes to ascertain the whole of the facts, may obtain them from the Treasury. If I were to speak every day for a month, I could not give honorable members all the details, and I think this is the better course to pursue.

Mr Watt - Will the Treasurer tell us what proportion of the £10,000,000 arranged for with the banks has been lodged in gold?

Mr FISHER - £3,000,000, as shown iii my statement.

Mr Watt - Has there been no increase since that statement was made? Is the amount to-day £3,000,000?

Mr FISHER - That is so. The next monthly instalment will come in as usual. I rose chiefly, however, to say that the whole Parliament will be taken into the confidence of the Government in respect of this and all big financial matters. What is more, we have no objection to securing the assistance of the whole of the best minds in Australia in dealing with these financial matters during the war crisis. No financial crisis has yet arisen, nor is there any prospect of one if I am properly advised, and I am speaking now of advice other than that of the officers of the Department. I appeal to honorable members not to make statements concerning these matters without first asking me for the whole of the particulars relating to them. I can say no more in this regard. It is not known to the general public that the Commonwealth is in a singularly good position in another respect. It is stated that the Commonwealth has great debts. As a matter of fact, however, it has no debts. On the transferred properties we have, of course, to pay interest to the States; but all the investments of our note trust fluids are bringing in interest amounting approximately to from 3£ per cent, to 4 per cent, or a little more.

Mr Joseph Cook - But every note is a promise to pay.

Mr FISHER - I hope the right honorable member will grasp the point I am seeking to make. We have an annual income from the investment of our Trust Funds that is not paid into the Consolidated Revenue. It is a separate and distinct Trust Fund which is accumulating. On the other' hand, we are debiting ourselves with interest on the money expended out of these funds on public works, although not one penny is paid by way of interest to any outside person or body.

Mr Watt - What is to be done with that accumulation ? What is to be its destination ?

Mr FISHER - It is to pay off the national debt of Australia.

Sir John Forrest - What does the accumulation now represent?

Mr FISHER - Roughly speaking. £600,000.

Mr Watt - The Treasurer said a moment ago that we had no national debt. He now says that this accumulation is to pay off the national debt.

Mr FISHER - I excluded the transferred properties from that statement.

Mr Joseph Cook - The Treasurer means that the Commonwealth has no debt that is an obligation on its revenue?

Mr FISHER - No. We have no real debt in this case, because our public works are constructed out of Trust Funds which are earning interest, and we are debiting ourselves with interest on moneys so expended, plus a sinking fund. We pay the interest to ourselves, and place it to the credit of a Trust Fund, whilst we "also pay a \ per cent, to a sinking fund designed to wipe out the whole of the principal.

Mr Watt - This is all very wise, but why not call it a capital debit instead of a national debt?

Mr FISHER - There is a very marked difference between borrowing from other countries and borrowing from ourselves, on our own credit. The Government take no great credit to themselves for what has been done in this regard. We merely say that we established these funds, and I think that Parliament ought to be pleased with our action. So far as I am aware, no other country has adopted the same course.

Sir John Forrest - Lending to the States is very profitable to the Commonwealth, when it merely gives them notes.

Mr FISHER - It is very profitable to the States. They are obtaining money-

Sir John Forrest - Notes.

Mr FISHER - They are obtaining money from the Commonwealth which, to the best of our belief, will not cost them more than £4 2s. 6d. per cent.

Sir John Forrest - But the Commonwealth is only giving the States Commonwealth notes. It is not lending gold to them, and I think the rate charged is rather high, seeing that the loan costs us nothing.

Mr Watt - Some of it does cost something.

Mr FISHER - At the best, Australia merely gets credit in London, when she borrows; she does not get gold, nor does she want it. We all want credit, not here, but in London, in such circumstances, so that we need not trouble on that score.

Sir John Forrest - The Commonwealth Treasurer has £18,000,000 there.

Mr FISHER - If the right honorable member examines the statement I have read, he will see that the States have had £7,950,000.

Sir John Forrest - In London.

Mr FISHER - They can operate in London, and they are very glad to have money there.

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