STATE FINANCES

Southland Times, Issue 20206, 17 June 1927, Page 7

STATE FINANCES

COMMONWEALTH SCHEME PUBLIC DEBTS TO BE TAKEN OVER PROPOSALS FOR PAYMENT OF LOANS (By Telegraph—Press Assn.—Copyright.) (Rec. 11.5 p.m.) Melbourne, June 16. The Conference of Premiers of the States and Commonwealth to consider financial relations between the Commonwealth and States has commenced. Mr. Bruce, outlining the scheme proposed by the Commonwealth, said the only reason actuating the Commonwealth in the present action was the feeling that it was essential that the present basis of financial relations should be established with the obligation of assistance definitely placed on tiie shoulders of the Commonwealth. He then submitted the Commonwealth scheme which provides for the Commonwealth to take over the whole of the public debts of the States and apply £7,584,912 annually from its revenue towards the payment of interest charges, the States to contribute the balance. Properly safeguarded, sinking funds will be established in respect to the existing State debts and new borrowings. The management of debt and future borrowings on behalf of the Commonwealth and States will be vested in the Australian Loan Council consisting of representatives of the Commonwealth and representative of each Staton this council to be given power under the Constitutional Amendment. The scheme cannot operate without the amendment of the Constitution which will involve the taking of a referendum. As this will take a long time the Commonwealth proposes a temporary two years’ arrangement. It is proposed that a sinking fund of 7/6 per cent, per annum on the nett amount of the existing State debts, including debts due by the States to the Commonwealth, be established under the new constitutional powers to provide for the extinction of those debts during a period of fifty-eight years, commencing July 1 next. During this period of fifty-eight years the Commonwealth will pay into the sinking fund annually a sum estimated at £BOB,OOO, equal to 2/6 per cent, on the nett amount of existing State debts. During the same period each State will pay into the sinking fund annually a sum equal to 5/- per cent, on the nett amount of its existing State debt. Regarding the new debt it is proposed that a sinking fund of 10/- per cent, per annum on the total amount of the new loans raised for the States be established to provide for the extinction of such loans within a period of fifty-three years, the Commonwealth during the period of fifty-three years from the raising of each new loan for the States, to pay into the sinking fund annually a sum equal to 5/- per cent, on the amount of the loan and each State during the fifty-three years after the raising of each new loan for the State to pay into the sinking fund annually a sum equal to 5/- per cent, on amount of the loan. The Commonwealth will arrange for all future borrowings including conversions, redemptions and the consolidation of the debt, the Commonwealth and States to submit to the council their loan programme for each financial year. The council will then determine whether the amount of the loan programme is available on the money market at reasonable rates and conditions, loans for defence, approved by the Federal Parliament, to be excluded from the operation of the scheme. Mr. Bruce concluded that under the Commonwealth proposals there was no necessity for any additional State taxation. Mr. Lang, replying, said the proposals were not acceptable to New South Wales and under them, before twenty years had elapsed, New South Wales would have to increase its taxation by more than £1,000,090.—A. and N.Z.