CRISIS FOR LANG.

New Zealand Herald, Volume LXIX, Issue 21144, 30 March 1932, Page 9

CRISIS FOR LANG.

APRIL INTEREST. default expected. JTHE ENFORCEMENT ACT. CASE IN HIGH COCJIT. judgment reserved. rvTelepmrh" ll -'- Hon-Coryrisht. (Received March -9. 0.55 p.m.) SYDNEY. March 20. message from Melbourne states that the High Conr- to-day reserved judgment jn the case, in which the New South Wales Government, is seeking a declaration that ,he Financial Agreement Enforcement Act is ultra vires. Tasmania and Victoria have also intervened. • The Sydnev Sun states that if the- High Court upholds the Act the Lang Government will face the gravest financial crisis in its storm v career. April interest amounting to £1.000.000, plus exchange, falls due this week and default in payment is considered inevitable, The Canberra correspondent of the Sun ys that should the Federal Government decide upon immediate action it will be possible to issuo an attachment proclamaF- under the Enforcement Act within In hour or so of the High Court's decin There arc sufficient Cabinet Ministers'in Melbourne to constitute an execute council over winch Sir William Irvine as deputy for the Governor-Gen-eral, Sir Isaac Isaacs, will preside. legal argument. POSITION OF BONDHOLDERS. QUESTION OF WHO SHALL PAY. In the action before the High Court the State of New South Wales is s';ek-in-r against the Commonwealth a declaration that the Financial Agreement (Commonwealth Liability) Act and the Financial Agreement Enforcement Act are ID \Vith the Chief Justice, Sir Frank Gavan Dufiy, on the Bench are Mr. Justice Rich, Mr. Justice Starke, Mr. Justice Dixon, Mr. Justice Evatt, and Mr Justice McTiernan. Mr. Browne. K.C., and Mr. Berne (instructed by the Crown Solicitor of New South Wales) are appearing for New South Wales; Mr. Mitchell, K.C., Mr. Ham, K.C., and Mr o'Bryan (instructed by the Commonwealth Crown Solicitor) arc appearing for the Commonwealth: and Mr. C. Gavan Duffy (instructed by Messrs. Blake and Riggall i is appearing for the States of Tasmania and Victoria. At the hearing on March 22 Sir. Browne M id that the section of the_ Enforcement Act which the State of New South Wales considered should b e declared ultra vires was section 6. which provided that, after the resolution of both Houses of Parliament bad been passed, the Attor-ney-General should applv to the High Court for a declaration that the amount was due or that any part thereof was due. New South Wales submitted that section 6 and sections 7 to 13 were entirely outside the powers of the Commonwealth Parliament to enact. Apart from section 105 (A) there was no provision in the Constitution. The Chief Justice: I understand that. Mr. Ham does not admit that.

Mr. Ham: No. Mr. Justice Evait: Has the Commonwealth to pay the interest of bondholders if the State does not. pay it? Mr. Browne: Neither bound to pay it tor entitled to pay it. Rights of the Slates Pleaded. When the Court sat on March 25 Mr. Duffy sought leave for Victoria also to intervene. He said he had been instructed to submit, on Fehalt of Victoria, what he had previously submitted ori behalf of Tasmania —that Victoria was seized on the vital importance of having the agreement observed. It felt, however, that the provisions of the statutes which \Y-2re challenged were inconsistent with the Federal spirit. If it was found that the Commonwealth was given rights to make laws to carry out the Financial Agreement, it would require strong argument to show that it was {riven power to make laws to coerce the States. In the first place, it had obviously been thought, for some reason or another, that it was impossible that tho agreement should be permanently carried out without changes in the Constitution. He submitted that there should he very specific words before power of compulsive execution was given. The Chief Justice: Where should it stop before execution ? Mr. Duffy: Short of execution.

Mr. Justice Evatt: Is it execution? They call it execution and garnishee, but is it" such ?

Mr. Duffy: When the Auditor-General tas given a certificate and the two Houses have agreed to the resolution the Treasurer mav proceed. 1 submit that, if the power contemplated in this Act is to he granted, it should be granted in specific language. Mr. Duffy said that, under the Constitution. certain rights were preserved to ♦he States. Before the main power of tha States—that of dealing with their own revenues—was taken away or overridden by some Federal power, the richt to do so should be expressed in the language of (he Constitution. r I he States still lived and had their being as leparate entities, and the whole framework of the Constitution was constructed ° n that assumption. Case for Commonwealth Stated. Mr. Mitchell, for the Commonwealth, outlined certain features of tho Financial Agreement," which, he said, changed the aspect of the case. Mr. Justice Kvatf : You sav that the Commonwealth is bound to pay interest to each bondholder if the State fails. Mr. Mitchell: Yes; or alternatively to pay it to the States so that the States may pay jj, bondholders. In these eircnnistances the agreement, is inescapable. return for .these obligations the Commonwealth receives from the States a promise to pav jn'orest- and contributions to the National Debt Commission, the agreement involves the largest Amount of money ever dealt with in Anstralia. It involves the assumption of liabilities in excels of £700.000,000. I' Evolves both the internal and external £fhis of the States. Not only ha;, liafor debts been assumed, but there 15 responsibility tor their conversion, renewal, redemption, and consolidation. reason of these provisions all the eternal debt of Australia was recently tonierted, and so the Commonwealth heft/* chief debtor in a sum of The q .,r,tioi, arises whether ® Commonwealth is to take over all liabilities without any lights fc ans t those whose liabilities it assumed, v-'it a Kreernent oner, made is irrevocable ,',"s' le consent of the Commonwealth snd the States. Com "ion wealth. Mr. Mitchell contin" AVas kound ,r > make its confribtiSta] 5 s:r, king fund whether the Ij, 'I s 'defaulted or not. It received from pav ' a ' es 'hc:r promise that they would ths ri "'' r ' :iv contribuiions to ,l 'iorial Debt Commission. Ihe It V " ls inviolable and enforceable. I 0( j \ a Jj binding upon the Common wealth e States and the parties thereto.