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Tuesday, 25 September 1906

Senator FRASER (Victoria) . - I entirely agree with what I have heard of Senator Drake's remarks. In my opinion, there is no immediate need for an amendment of the Constitution in the manner proposed, and it would be a most dangerous step to take under present circumstances. I am mixed up in money matters a great deal, dealing in debentures in both London and Australia, so that I know a little about the subject, and it is my firm conviction . that Victoria and the other States can borrow more cheaply than the Commonwealth could borrow. Australia is booming, financially. Its prospects were never brighter. I could give ample reasons for making that statement, and would not exhaust them if I spoke for an hour. When their loans mature, the States will be in a position to redeem part of them with Australian capital. Victoria has already taken such action, and is prepared to continue it. That is the sensible and best way of inspiring confidence in our debenture- holders in England and elsewhere. Our credit will improve enormously if we repay part of our loans as they mature, and borrow locally. What little has been done bv Victoria and New South Wales in that direction has already given great confidence to the English lender. But it would be a mistake to attempt to redeem before the date of maturity, except when money is extraordinarily cheap, and a dear market is expected to follow. Such occasions are very rare. I do not remember any of late years. The Federal Government will* do an injustice to some of the States if it provides for the taking over of the States debts, and nothing is to be gained by doing so at the present time. Let the States deal with their own debts. They are more interested in the matter than we are. If we take over the existing debts, and the States go on borrowing, we shall have to take over more debts later on. Victoria, however, will be able to pay off £[2,000,000 during the coming year.

Senator Playford - And the honorable senator does not agree with Senator Drake that the Bill has been introduced by the Government to assist Victoria.

Senator Macfarlane - Let us stand by the Constitution.

Senator FRASER - I agree with thehonorable senator, that- we should stand by the Constitution. I do not think that any saving would be made if the Commonwealth took over the debts of the States, because they can borrow as cheaply as, if not more cheaply than, it can. Some of the States have borrowed very largely. The indebtedness of New, South Wales, for instance, is ,£86,000,000 or £[87,000,000, though that will amount to nothing if her present rate of development continues. But some States have borrowed very largely and others very lightly. As the population of Queensland or Western Australia, or even Tasmania, increases, so its debts win proportionately become lighter. The debts of the smaller States will be made light bv bringing farmers from the old country, settling them upon the land, increasing the output! and thus making themselves strong financially. That is the true way te proceed.

Senator McGregor - Have we a large "area of land upon which to settle immigrants ?

Senator FRASER - There are millionsof acres available in Queensland alone.

Senator McGregor - But the honorable senator was speaking of Victoria.

Senator FRASER - There is plenty of land available in Victoria and New. SouthWales. It is altogether too late in the session to deal with this important subject. It would not be doing justice either to the subject or to the States to pass the Bill. Moreover, before the matter is dealt with here, the Premiers and the Treasurers of the States ought to be brought into consultation with the Prime Minister and the Treasurer, or the Government of the Commonwealth with regard to the conditions. It is not proper to ignore the States Premiers in a matter in which they are deeply concerned. They are taking a much keener interest in the subject than we are, and are acting with great caution. The Premier of Victoria has taken action already. I (have no doubt that when the Victorian loan of £4,000,000 falls due at least £2,000,000 can be paid off by the people of the State. At the present time the local banks are full of .money. The banks in Australia are now lending money in London.

Senator McGregor - I thought the Labour Party had driven it all away?

Senator FRASER - I am quite sure that they have not attracted money here..

Senator Millen - The fact that the banks are holding money shows that people are not investing.

Senator Stewart - The banks have sent the money to London for fear that it might be stolen by the Socialists.

Senator FRASER - I am not dealing with that view of the question. At the present time money is dearer in London than in Australia. That has been the case on and off for years past. Therefore our debentures will sell better in Australia than in London. A few years ago I bought ^£8,000 worth of debentures in London by a cablegram from a bank here, made a saving of about i£ per cent., and saved the exchange on my produce going Home. That is being done at the present time, and it can continue to be done. The banks are investing their money abroad, and not here. The discount rate is 4 J per cent., which is J- per cent, over the Bank of England a:ate. Does not that tell a tale? Does it not show that there would be no use in going to London at the present time either to redeem or convert? It would be the very worst time to go there. Let us rely upon our own resources. Even if we in Victoria pinch a little when the next loan becomes due, and pay one-half of the £4,000,000, we may save \ per cent, interest, and not J per cent., as the Government has estimated. I do not believe for a moment that there would be any saving effected if the Bill were passed. ' It was ant ici Dated that when the Federation was established there would .be as great a saving effected in Australia as in Canada, but in this regard, unfortunately, things are not the same here as in Canada.

Senator Stewart - They are better here.

Senator FRASER - In Australia we (have a better country, and more production. Canada cannot be compared with Australia in the matter of production. In the. interests of the States I cannot support the

Bill, much as I should like to do so if I could see my way clear.

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