Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Friday, 14 September 1928

Dr EARLE PAGE (Cowper) (Treasurer) . - (By leave.) - I move -

That the bill be now read a second time.

The agreement which the bill proposes to ratify is really the outcome of the financial agreement entered into between the Commonwealth and the whole of the States. That agreement provides that all moneys and securities standing to the credit of sinking funds on the 30th June, 1929, shall be transferred to the National Debt Commission, but that such a transfer shall in no way limit the power of a State to cancel any such securities before the 30th June, 1929. Under the financial agreement, the new sinking fund contributions are to be based upon net debts ; that is to say, upon the gross debts due to the public on the 30th June, 1927, less the amounts of the sinking funds held at that date. It was contemplated that the States would immediately apply their sinking funds towards the reduction of their debts and thus obtain the benefit of the consequential saving of interest. The majority of the States have already taken this action, their sinking funds having been invested in their own securities. Tasmania, however, occupies a different position, almost the whole of her sinking funds being invested in Commonwealth securities. Thus she could obtain the same immediate advantages as the other States only by the adoption of one of two courses; either she could sell the securities on the open market^- which obviously was most undesirable - or hand the bonds over to the Commonwealth. The Commonwealth has agreed that the amount of the bonds handed over -shall be offset against certain debts that the State owes to the Commonwealth.

Mr Scullin -^ What will be the position if the financial agreement is not validated ?

Dr EARLE PAGE - That would make very little difference in it. The Tasmanian debt will be reduced to the extent of the bonds that are cancelled; but the interest which is now placed to the credit of her sinking fund will be no longer obtained from those securities. This is purely a domestic question, which Tasmania must decide for herself, and she is satisfied that the course proposed will not prove hurtful to her.

Mr Scullin - The Commonwealth will cancel the debt and obtain the amount which now stands to the credit of the sinking fund?

Dr EARLE PAGE - That is so. From the point of view of the Commonwealth, the position will not be altered.

Mr RODGERS (WANNON, VICTORIA) - What will be the position of the Tasmania bondholders, who are relying upon the sinking fund eventually to discharge the obligation of the State, when those securities are surrendered ?

Dr EARLE PAGE - There is not to be any surrender, but merely a cancellation of debt to the amount of the bonds held. The advantage of the transaction to Tasmania is that she will not in future need to make provision in her revenue account to meet the interest on the bonds. The benefit in that direction will be something like £63,000 a year.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate.

Report adopted and bill (by leave) read a third time.

Suggest corrections