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Thursday, 22 May 1980
Page: 3121

Mr BRYANT (Wills) -I wish to clarify the position I adopted when I first spoke. I make it clear that I was talking about the amendments. I was referring to the proposed new section 25 which reads:

The Minister for Finance may, on behalf of the Commonwealth, out of moneys appropriated by the Parliament for the purpose, lend moneys to the Authority on such terms and conditions as the Minister for Finance determines.

The point I was making was that this is not what one would call commercial principles. The money appropriated by the Commonwealth in this case almost invariably comes from Consolidated Revenue. Therefore, it will not be repaid to the people who originally supplied it. It is equity capital invested in the Authority which belongs to the people. If it makes a 100 per cent profit, it can declare a dividend. If it makes no profit, it does not need to declare a dividend. If interest is charged, that commitment must be met whether or not a profit has been made. This is one of the greatest burdens imposed on public enterprise in this country.

The reason why I am raising this general question is that it happened some 20 years ago when there was an inquiry into the operations of the Post Office. It was recommended then that commercial principles or practices be adopted. It was capitalised for the period of its existence- at that time it was about 60 years- at about the $ 1 ,000m mark or perhaps a bit more. At that stage a notional interest was imposed upon it. This money was not borrowed and was never required to be paid back to anyone. The money was obtained from profits or out of revenue appropriated to the Post Office. If it was the General Motors Holden 's Ltd company- which has been built out of money appropriated from the customers, upon which that company pays no interest and in respect of which nobody has any equity or say at shareholders meetings- this continuing burden of interest would not have to be met. The great burden upon public authorities in this country is the notional interest imposed by what this Government chooses to call commercial principles. Nobody in private enterprise would call them commercial principles and so the public authorities end up in continual financial trouble.

Mr Bourchier - I think private enterprise pays that interest when it borrows moneys.

Mr BRYANT -No, it is equity capital.

Mr Bourchier - Private enterprise borrows most of it in the first place.

Mr BRYANT - No, it is appropriated in the Parliament.

Mr Bourchier - I am talking about private enterprise.

Mr BRYANT -I am talking about parliamentary appropriations. Loan moneys are not approved in here and appropriated to something. Moneys may be borrowed and applied in the general system. If honourable members look back through the history of the matter they will find that most of the appropriations that we have talked about in these instances are from Consolidated Revenue. In fact, in 1951 or thereabouts, the situation reached the stage that there was much more money in Consolidated Revenue than could be borrowed. The Commonwealth started lending this money to the States and set up a loan consolidation and investment reserve. The Commonwealth was paying to the States funds which had been appropriated through the taxation system. Then the Commonwealth loaded the funds with interest. This became a burden on the States tramways, riverways, sewerage systems and so on. That situation existed until some time in the late 1960s. There has been a gradual change in this general flow of funds. At various times in the last 10 years a larger percentage of funds- sometimes from borrowings- has gone to capital works. I do not have the figures to hand, but I would say that over the last six or seven years the great proportion of the money put into capital works has come from Consolidated Revenue, taxation and soon.

Mr Roger Johnston - Your idea of economics is to print money, that's all, isn't it?

Mr BRYANT -No, it is not. Mr Chairman, is it appropriate at this point to give an example from the field in which the honourable member is familiar?

The CHAIRMAN (Mr Millar (WIDE BAY, QUEENSLAND) -If the honourable member is developing his point he may proceed.

Dr Everingham - General Motors-Holden's.

Mr BRYANT - Let us consider General Motors-Holden's. It brought no money to this country at all. It borrowed ?2m from the Commonwealth Banking Corporation and ?500,000 from the Bank of Adelaide. The company paid that back, but it is now capitalised to the tune of around $2,000m. Where did that money come from? It came from -

Mr Roger Johnston - Profits.

Mr BRYANT -Profits. Where did the company get those profits? It has appropriated them from the customers.

Mr Roger Johnston - It is not appropriated from the customer.

Mr BRYANT - It was not appropriated from the customers who run around in Mercedes. It was appropriated from the ordinary Australians who buy Holdens. I will speak to the Chairman who is a much more intelligent person. In the last 30 or 40 years there has been a shift from equity capital raised through going onto the sharemarket in the issuing of shares to customer created capital; that is, it is money appropriated from the customer by excess profits. That company does not pay dividends and does not allow anybody to have a say in the matter. It does not pay interest. The honourable member talks about printing money. His friends, such as General Motors-Holden's, the BHP company and all the rest of them are doing this all the time. The Government has invested a huge amount of public money, through the benefit of the levy on fuel, in BHP-Esso and so on.

Mr Roger Johnston - You don't understand.

Mr BRYANT - I am sorry if I cannot explain the matter in simple enough terms to the honourable member for Hotham. Nobody will have the chance to do so next year because the citizens down there will wake up to him. I understand that he is a computer expert. I can understand that. If he has a decent sort of computer he does not need to think himself; he has never got into the habit of doing so.

I recommend to honourable members that they have a good look at the financing of public authorities in this way. I suggest that, not in any sense of criticism of honourable members opposite- they have to learn- but because they have to study the financing of public authorities and consider that matter against the financing of private business. The principles are totally different. In this instance we will load the Pipeline Authority with whatever the Treasurer (Mr Howard) chooses to be the notional rate of interest. It will either make a profit or it will not. The next thing to occur will be the Government's gradually edging the interest rate upwards. The Pipeline Authority will be running at a loss and the Government will sell it, just as it did its friend, the Commonwealth Brickworks.

Motion (by Mr Bourchier) agreed to:

That the question be now put.

Original question resolved in the affirmative.

Resolution reported; report adopted.

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