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Thursday, 30 August 1928

The States' Debts

I am not in a position to give figures showing the debts of the States at 30th June, 1928. Those for 30th June, 1927, however, were: -

 

This debt includes a sum of £96,810,089 in respect of loans raised by the Commonwealth for the States, also Northern Territory and Port Augusta railway loans taken over by the Commonwealth. The debt of £679,223,572 is held as follows :-

 

The States' debt was incurred almost wholly in the creation of railways, water and other works and services of a revenueearning nature. After paying expenses in operating these undertakings, the net revenue available for the payment of interest was £19,065,522, or an average of £2 16s. 2d. per cent.

The State sinking funds at 30th June, 1927, amounted to £19,850,695.

The gross debt of the Commonwealth at 30th June, 1928, and the States at 30th June, 1927, omitting debt included in both Commonwealth and State debts, was £1,076,542,583.

Commonwealth Bank

The Commonwealth Bank is closely associated with the loan activities of the

Commonwealth Government. In addition to joining in the underwriting of loans, it acts as agent of the Treasury iu the flotation of new loans and in the conversion of maturing loans. During the year it shared in the underwriting of two war conversion loans amounting to £36,000,000 and £20,000,000 respectively.

The progress of the bank during the year lias been satisfactory. There has been a substantial increase in profits, whilst the reserves are being steadily strengthened and the business is expanding. The bank has progressed towards the desired position of a central reserve bank, and has given material aid in providing London money for Australian trade. The exchange rates have been maintained on a basis distinctly favorable to primary producers and during the year the variation in the rate has been trivial. An agency of the bank has been opened in New York, which will assist in the handling of Commonwealth loans raised in that centre.

During the twelve months ended 30th June, 1928, the profits of the Commonwealth Bank, excluding the note issue, amounted to £708,901, as compared with £600,963 for the year 1926-27.

Rural Credits

This department ' has materially . assisted in the marketing of primary produce. As the objects and activities of the Rural Credits Department have . become better understood, they have been more sought by the smaller organizations. Owing to the smaller wheat yield, less business has been done with the wheat pools, and therefore the turnover has not reached such a high figure as during the preceding season, but the number of the various classes of primary products assisted has considerably increased. At present, advances are made against arrowroot, broom millet, butter, canned fruits, pulp, cotton, eggs, egg pulp, maize, peanuts, wheat, wine, fortifying spirit, and wool. The usefulness of the Rural Credits Department has been amply demonstrated by the advantages to producers in placing their products on the market in an orderly manner and without undue depression of prices. By utilizing the capital of the Rural

Credits Department and obtaining advances from the general banking department of the bank it has been possible to meet all the business offering. The rate charged on advances, namely, 6 per cent, per annum, is considerably below the general ruling rate for overdrafts.

Note Issue Department

The profits of the Note Issue Department were £1,128,365, of which £846,274 was paid to the Consolidated Revenue Fund of the Commonwealth, while the capital of the Rural Credits Department was increased by £282,091.

Housing

Legislative effect has been given to the Government's housing scheme. As the Commonwealth does not desire to enter into house building in competition with the existing housing authorities, the Commonwealth scheme provides for advances for housing being made through existing authorities subject to those authorities complying with the conditions laid down in the Commonwealth law. The scheme is already in operation in the Federal Capital Territory, but some amendment of existing State legislation is necessary to enable State institutions to obtain advances from the Commonwealth Savings Bank, which handles the scheme. The necessary action will be taken in at least three States during the present financial year.

 

The estimated loan expenditure is £1,244,218 in excess of the actual expenditure for last year. Of this increase, Parliament House, Canberra, is responsible for £638,500, but as this amount will: be paid to the Federal Capital Commission, a corresponding reduction is made in the provision necessary for Capital Territory . works.

The estimated expenditure on War Service Homes is £1,047,417 in excess of the expenditure out of loan in 1927-28, The actual increase in expenditure on War Service Homes from all sources is estimated at £254,000. The balance of the increase, namely, £793,417, is due to the altered method of dealing with War Service Homes receipts. This will be explained fully when dealing with the general questiou of repatriation at a later stage.

The two increases mentioned total, £1,685,917, and as the net increase is £1,244,218, it will be seen that decreases in expenditure in other directions total' £441,699.

Provision is made for a total programme of £750,000 for the Federal Capi-, tal Commission. Of this amount,. £638,500 will be available when the Treasury pays to the Commission the cost of Parliament House, and £100,000 will be borrowed by the Commission from the Commonwealth Bank under authority already granted. The balance, namely, £11,500, is included in the loan estimates.

An amount of £4,400,000 is included in the loan estimates for loans for the States for development and migration, and an amount of £100,000 for loans for the North Australian Commission.

River Murray Works

The Commonwealth and the States have agreed to limit the programme of River Murray works during the next four years to the completion of the Hume Reservoir, the Lake Victoria storage, all weirs and locks from No. 1 (Blanchetown), to No. 11 (Mildura), and weir and lock No. 15 (Euston). The cost of these works is tentatively estimated at £3,500,000, of which £1,000,000 will be provided by the four contracting governments during 1928-29. ;

The expenditure on River Murray works during 1927-28, amounted to £1,000,000, the Commonwealth share being £250,000. The total expenditure to the 30th June, 1928, was £6,134,500, towards which the Commonwealth contributed £1,533,625.

Soldier Land Settlement

In presenting last year's budget I referred to the conference of Commonwealth and State Ministers held in July, 1927, at which the Government undertook to review the incidence of losses in connexion with soldier land settlement as between the Commonwealth and the States.

Mr. JusticePike was appointed to carry out this review, and make the necessary inquiries into the actual position.

A considerable amount of preliminary work had to be carried out by the States before the inquiry could be undertaken. It was necessary to make re-valuations in a great number of cases, and to prepare accounts to show the actual financial results of the settlement scheme. The preparatory work has been accomplished more quickly in some States than in others, and while Mr. Justice Pike has been able to carry his investigations to a certain point, he has been unable to complete the inquiry owing to the delay in some of the larger States. His report is expected in the near future.

I would add that the Government considers that any concession in the direction of sharing a greater portion of the burden of loss than the £10,000,000 which the Commonwealth has already undertaken, should be conditional on a satisfactory settlement of the problem as between soldier settlers and the State Governments. Such a settlement can be secured only by the States, as the Commonwealth is not in a position to deal with individual settlers.


Mr RODGERS (WANNON, VICTORIA) - Is it proposed to set aside an amount to meet such a contingency ?







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