FEDERAL FINANCE.

Dominion, Volume 1, Issue 188, 4 May 1908, Page 7

FEDERAL FINANCE.

-t BRADM CLAUSE, BONSOLIDATION OF STATE DEBTS. ' MB. DEAKIN'S SCHEME. V v v.-:. .. •, ' 1 ' / f • ' .OLD AGE PENSIONS ADDED. OT TELEGBAPn—rRES3 ASSOCIATION —COPYRIGHT. ' ; ...--Melbourne, -May l 2. The Federal Primo Minister, Mr. Deakin, and "Troasuror, Sir William Lyne, attended the' Premier's Conforonco. ' Mr;. Doakin outlined the Commonwealth ■ Government' proposals on financial questions. Referringto tho " Braddon blot, 1 ' ho de-' blared'.ihat 'financial, federation was intended to be,wal'.i- 1 Although temporarily postponed, psrhaps, by the operations 'of tho Braddon . clause*/tho federation of their finances should :be carried/as soon and as far as possible. NOT FUSION. ■This.^would-not mean fusion; on tho con- '■ ; ' trary,vit .had for some timo as a very desirablo thing that within certain : limits thero should bo as far as possible complete separation of the States' and Commonwealth ■ finance. / • ■' ; Tho, speaker urged that tho continuation of separate Stat© debts and tho creation of-new \' ; Stete l 'defe/.would,'prove expensive, and sug- ■ gosted that ono; Australian stock should bo • substituted ifor all existing stocks and floated at a fixed rata of interest. It was anticipated.,thattho price.of thatstook would bo reduced to a minimum. .Tho,Government's scheme, continued Mr. Deakin,. would bo found,to contain complete proposals as to present indebtedness and future'borrowings. ■ Amongst other things, it -..would..relieve .throo States from paying old age, ponsions. The full scheme would bo presented • next / Tuesday, when it would be ; {rabnlitted to tho Federal- Parliament. ' PUBLIC WORKS—FUTURE STATE LOANS. '/ :■' It J:is...unb(Bcially . stated, that the 'Federal . Government's; scheme, proposes -to . transfer ihe whole of tho State, debts to the Commonwealth, whilo tho States would retain the railways,and/Other public ivorka freo of debt. Future • State borrowing would - be made through a special commission, so as to inter-fere-,.as- little-; as -possible with. Stato I . initiative; the States to fiiid intercst on all • new,-.loans. .. . .. Tho..Premiors are disappointed at tho want tf. definiteness >.in. Mr.- Deakin's statement. , TWO HUNDRED MILLIONS INVOLVED. • . COST OF FEDERAL PENSIONS. Oneqf the keenest points of conflict between .' ■-.■ Commonwealth/and States, will be / the method .- of : future•State borrowing, which, •according to ; the, cablegram, Mr Deakm proposes to put into '; ■ ? :;hands-'of- ! "a special commission, 'so ,as •to '.as possiblo':.with State initiative. iTho Premier of ■'V ictona, Mr. Bent— on\whom.. wp. apparently fall the. mantle iof-' Air. .Garruthers as. leader, of the States' oppo-' . ■ Eition.—commented the other day on thesug- . .■ gestion /for'' " tho handing over ■of things .to a .trust." " Would the States," asks Mr. Bent, . be'^permitted,to*; undertake any '.development, work at'all, and to borrow locally, or would | they;,haye' to .go cap',';in; hand to the trust? If the: qilestionis tobo settled,' it appears to me v . that'.it,niiist at least, bei oh proper-and- reason-abloi-lines;. There appears to be a disposition .. iamongst/many -federal members to think that v.- they ,can., ride roughshod . over the States; but / if -the States .work together on fair lines, and eubnVit. a fair proposition to the public, I am ■ inclined to thmlc that these meihbers may be shown their mistake:" •. r.. v/ "...■ ■f. . , The Braddon:,clause-rclause 87■ of the-Con-Btitution—wmch is the centre of the financial contrbversy.provides that during a. period of tenf years after tho establishment of the Commonwealth (that "is, .till. 1910) and thereafter until the Parliament otherwise provides,/of the net' revenue of-, the .Common wealth .from duties :• of-.Customs .and. excise -not more than onefourth, shall be applied annually by the Commonwealth towardsMts expenditure; the balance shall:, be paid to the soveral States, or applied' towards the payment of interest-on • debts; of the several States taken • over by' the Commonwealth. • • ' . . //• Government -. has ' for ■ a < long- 1 .-.time, ■ ■•and 'so . far ■ ■■: unsuccessfully, been-.endeavouring to,find a>basis, satisfactory to tho States, .for. doing away with the refund of'ithe thred-foufths of/revenue, by taking over the. s Stats 1 debts. Mr. .Deakin now baits his Proposals -not,-only with tho taking over of ebtsilbut'mth .Federal old-'ago'pensions.' The ; Feaeral;'. old-age;;.pensions .are", evidently intended: tosupplantthose now " paid by .'three of ithe'/States/i'According'-.td an/'estimate'made in • i 1905./ by the Government statistician, Mr. W. ,- Hall,the'cost of ,a Federal , sohome, if based on'/the /New- South Wales rates, would be ; .; -i 1,476,000 per annum. '> ' • Last year, a,/scheme bearing the endorsement of the/Deakin Government was submitted by . . the then- Acting. Prime Minister, and the Treasurer, Sir John Forrest, to the Confer- • . ence of>Premiers -at Brisbane. Briefly, tills ' / scheme; ;■ for 10 ' years .after the expiration of the,Braddon section of tho Constitution, in 1930,' the States would receive a fixed payment from Customs- and excise duties, based - upon three-fourths of the net revenue during the five vears preceding December',. 1910. \lf' the "three-fourths of- the .revenue received! from/ this-sourco in anv year exceeds the fixed sum. to ;.bn. paid to the States, the ' / Commonwealth' -would pay to the States such excess.; on' 'a, per/'capita basis. The Common- ,. .to''havo* tho bright,: however, ./to • raise;' 1 additional 1 :/,Customs-." and exciso , revenuo . : ':, fpri'sp'ecific purposos,i- and earmark -the whole lof . that- -revenue for - such purpose; subject 'to ■i-' the I ;;'conditionl*:, that ; any/- sum'.; notV actually' ,spent':in Buch specific.purposes should bo returned (to. the States. Accompanying this was 'a proposal. for talcing/ over tho wholo of the ■' States/I'debts^.(including:.'those, incurred since i federMion) in /successive,; operations as , they matu^d.'';,The, conference accepted with modifications ,the':prbppsals of Sir John* Forr.est with " regard;'to Customs' and excise revenue; but 'they.'declined to hand over tho States' debts. . .Commenting on tho-deliberations of last year's '.'-"conference; the "Sydney Morning Herald" remarked: "TJiei time has arrived for us.tb\realisethat if .the .finances of'.our con-; tinent'-jare'/ to be kept in a healthy condition they-.'must -be taken out. of ; the hands of six disunited/ Treasurers and placed into'those of . the .Treasurer of. the Commonwealth, aided . possibly. by an advisory council,' consisting' of the „ best trained ' experts obtainable. ..' Our maturing debts require skilful handling.. Between' n6w-and toS, that-is, during, the' next six / years,'- ,w. have loans to the .amount ;of , 533,972;771 'which' will 'have .to bo redeemed , or ' converted. "Those/who'havo followed the vagaries L ofjthe London money: market of late know.'how easily unskilful handling might land us into hoavy financial loss. , . If the Commonwealth Government carries out its constitutional -right to tako over 202 millions sterling of .State , indebtedness, and then, allows tho Braddon clause to lapse by effluxion of time in 1910, we believe that tho States will soon' see the -wisdom of allowing it to tako over tho balance of the debts as well as solo charge of: tho larger financial operationsi in which, ihey . may': become involved."