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Tuesday, 2 October 1906

Senator WALKER (New South Wales) . - I had not an opportunity to speak on the motion for the second reading of this Bill, and therefore propose now to give my reasons for voting for the third reading. It is, of course, not a party question. The measure is perfectly free from all such consideration. Some of my honorable friends object to theBill being passed, because the present Parliament is practically moribund, and, therefore, intend to vote against it on that account. Personally, however, I think that it is a very useful measure. If one of the present provisions of the Constitution were carried out, it would mean that we could only take over debts for each State to a certain amount (per head of population. That would imply that we could only take over debts for each State to the amount of the debt of the State having the smallest indebtedness. As a matter of fact, the total indebtedness of Australia at present represents£236,680,739. The average rate of debtper capita in each State is as follows: - New South Wales,£55 13s. 9d. ; Victoria,£42 13s. 4d. ; South Australia, £74 3s.9d.; Queensland,£77 17s. 8d. ;

Western Australia, £680s. 7d. Tasmania, £51 6s. 4d. The average indebtedness of Australia, therefore, is £58 6s. per head, taking the population at 4,052,570. But as Victoria has an indebtedness of only £42 13s. 4d. per head, we could, under the provision referred to, take over debts only to the amount of£171, 000,000. Under this measure, we could take over the whole of the indebtedness of the States if we cared to do so. If we took over only £171, 000,000 we should still leave the States with£65,000,000 of debt in addition to future loans, over which the Commonwealth would have no control. Up to the present, the Commonwealth is going throughits infantile troubles. I suppose that young countries have complaints which are natural to their youth just as have the younger members of the human race. We all know that children are addicted to measles, whooping cough, and similar ailments. One of the infantile complaints of this Commonwealth has been the passing of too much legislation, interfering unduly, I consider, with the liberty of the subject. But I believe that in time that fault will be rectified. There is an impression in Great Britain that if we had a system of Australian Consols they would command relatively a better price than do the stocks of individual States. It is quite true that the state of the moneymarket at present is not favorable to a general Conversion Scheme, but if we do not in the present Parliament pass this Bill, we may have to wait three years longer before being able to do so. I therefore put it to honorable senators whether it is not a wise thing to give the Government power to formulate a suitable Conversion Scheme when the appropriate time arrives. Mr. Coghlan, in his able paper dealing with this subject, has stated that there is an impression that such a large scheme as is contemplated should not be put into operation until the money market in Great Britain has been favorable for something like two years. Supposing that assumption to be correct, how do we know that the two years would not elapse between the present time and the expiry of the next Parliament? Are we to wait three years before we pass a Bill enabling the Government to convert States' debts, and then possibly have to wait an indefinite time until the money market again gets into a favorable condition ? The Commonwealth, as we all know, has control over Customs and Excise duties. We are also aware that if it chooses to exercise its power, it is at liberty to impose direct taxation. Though I. for one, should be no party to the Commonwealth Parliament under ordinary circumstances exercising that power, still it is one which constitutionally can undoubtedly be exercised. The States at present are entitled to three-fourths of the net Customs and Excise duties raised and many States desire that the Braddon section shall be continued beyond 31st December, 1910. If the Commonwealth were to take over a substantial amount of the debts of the States, even though the States did not receive back three-fourths of the Customs and Excise revenue, they would surely have a sufficient guarantee against the Federal Government becoming unduly extravagant. I do not believe that there is any State in Australia that would repudiate its liabilities. I would not for a moment suggest such a thing. But the money market is very sensitive, and if investors see that one Government in this country, in addition to having control of Customs and Excise, has also power to impose direct taxation, the public liabilities of such a Government would appear to be a safer security than would the stock of any individual State. Because, after all, the first mortgage on the income of the country is in the hands of the Commonwealth Government, and investors would consider that there might be a danger in looking to the States for what is practically a second mortgage security. I do not suppose that any Ministry would think of putting forward a Scheme of Conversion without working in co-operation with the States. I support this Bill to give the' Federal Government power to institute a Conversion Scheme when the proper time, comes, not with the idea, however, of acting in opposition to the wishes of the States. But if the Federal Government can prove to the States that they would derive an advantage from a Conversion Scheme, doubtless the States would give their adherence to it. When I addressed the Federal Convention in Sydney, in 1897. the Imperial authorities had not accepted State obligations as trustees' securities. That has since been done. Therefore, the great advantage that I at one time thought the Federal 'Government securities would have over States Government securities has been greatly minimized. As a matter of fact, at the present time both State and Commonwealth indebtedness is in Great Britain a proper object of investment for trustees' securities. I am. disposed to think that Sir John Forrest's estimate of a saving of¼ per cent. per annum from the Commonwealth Conversion Scheme is not excessive. In fact, Mr. Coghlan evidently considers the estimate very low. He says that the average rate of interest on the debts of Australia at the present time is£3 14s. per cent.If Sir John Forrest's idea were carried out, and we were able to borrow at 3 per cent., we should realize a saving of 14s. per cent. But I believe that many of the States could themselves at the present time convert their debts at less than £3 14s. per cent. I consider, all things regarded, that Sir John Forrest, in taking credit for a saving of¼ per cent., was not putting forward more than a moderate estimate. Even with that saving.¼ per cent. on a total indebtedness of£236,000,000 would give a saving in interest of£590,000 a year.

Senator Sir William Zeal - We are going to save more than \ per cent, on our new loan in Victoria.

Senator WALKER - But the money market is at present in an extraordinary position.

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