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Thursday, 16 October 1952

Senator McKENNA (Tasmania) (Leader of the Opposition) . - I wish to explain why the amounts credited to the fund in 1943 were not used in the way suggested by Senator Henty. At that time the country was at war and was marshalling every physical and material resource for war purposes. In fact, some hundreds of millions of pounds of central bank credit were used. I do not think that criticism can be made of the fact that the fund was not then invested to the best advantage. Earlier to-night I referred the Senate to a book in which the author argues against the investment of the fund, even in the way that I am suggesting. He claims that the insurance fund in England is not in the position of an ordinary private trustee fund. If honorable senators willlook at that book they may obtain more light than I 'have thrown on the subject to-night.

On the "x" plus "y" theory propounded by the Minister for National Development (Senator Spooner), who briefly favoured us with his presence, the proposition that I put was that if the Government was permitted to raise a certain amount of central bank credit this year the proceeds of that raising might be diverted, by way of the National "Welfare Fund, to meet a corresponding amount of internal treasury-bills before the money found its way to support public loans. If that is accepted and practised by the Government it will not involve any " x " plus " y " proposition at all. It will mean that the one amount of central bank credit, to which the Government is committed this year, will do two jobs ; it will clear internal treasury-bills before it finds its way to public loans to support the works programmes of the States. The idea is to kill two birds with the one stone. A real security will be put into the National Welfare Fund, to enable the fund to earn a much better rate of interest, and at the same time, the loan market will be supported.

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