UNPRECEDENTED ACTION

Taranaki Daily News, 20 February 1932, Page 5

UNPRECEDENTED ACTION

NOT END OF DIFFICULTIES 11 DELIBERATE DISHONESTY” PENALTIES FOR BREACHES Rec. 10 p.m. Canberra, Feb. 19. As the Federal Labour Party as well as the Country Party gives the Bill fullest support an immediate passage of the measure is assured. Any attempt at obstruction 'Fill be supported probably only by the Beasley group of five.

The Government, however, realises this by no means spells a simple ending of the difficulties, legal and constitutional, which must be faced. For the first time since the federation, the Bill claims the right to the exercise of powers by the Commonwealth that have never previously been regarded as coming within the ambit of Federal administration. Ministerialists welcome the measure chiefly as an indication that the Federal Government is determined to act firmly to end the present situation in relation to the Commonwealth and New South Wales.

The Bill contains a provision for the enforcement of the payment to the Commonwealth of State revenues. Power is conferred on the Commonwealth to retain loan moneys borrowed for the State and by decision of the Loan Council the banks can be required to hand over to the Commonwealth moneys they hold or receive on behalf of the State.

Offences against the Bill are punishable ■ and where summary proceedings are taken the maximum penalty is a fine of £lOO or imprisonment for six months. Where an offence is prosecuted on an indictment the maximum penalty is a fine of £5OO or imprisonment for two years, or both. In moving the second reading of the Bill the Prime Minister, Mr. J. A. Lyons, said the measure was of a type never contemplated because it had been believed that all the Governments could be relied upon to stand up to their obligation. The whole financial structure, built up by financial agreements, would be undermined if it became possible for a State to refuse at any time to meet an obligation it had solemnly entered into. A dishonourable Government could bring disaster and disgrace upon a State and in the interest of the whole peqple of Australia it was desirable that this should be obviated.

“MUST PLAY THE GAME.” “We are forced to the conclusion that Mr. Lang will ignore his obligations as long as the Commonwealth is prepared to shoulder them,” Mr. Lyons added. “Unless the State is checked now it will let the rest of Australia carry its burden. In the interests of national finance and of Australian credit Mr. Lang must be made to play the game with the other Governments. He must be compelled to confirm his undertakings under the Premiers’ plan and he must be forced to meet his public obligations.”

Mr. Lyons said the total amount defaulted by New South Wales in respect to interest due between February 1 and February 4 of this year was £1,169,735. This included exchange on the necessary remittances and covered the whole of the oversea interest due by the State since February 1. Mr. J. G. Latham (Attorney-General) reviewed the occasions on which Mr. Lang had defaulted. This Bill was aimed at enforcing the. obligations already existing. Mr, Latham said that when the financial agreement between the State Premiers was drafted this sort of thing on the part of New South Wales was foreseen; accordingly very special power was conferred upon the Commonwealth. The Government of New South Wales had adopted the deliberate policy or practice of making agreements where benefit could be obtained and breaking them whenever it suited. Mr. Latham spoke of the seriousness of default but was subjected to interruption by the Beasley faction. The debate was adjourned until Wednesday. The Bill came as a complete surprise to the House. The Beasley group attempted to stonewall the introduction of the Bill when Mr. Lyons moved the adjournment of the Address-in-Reply debate. This led to the first

division, in. the new Parliament, the Government winning by 60 votes to 6, their opponents being the five - Beasleyites and a follower.

Senator Rae (Labour) bitterly attacked the Commonwealth Government in the Senate. He said New South Wales would not submit much longer to tyranny and would take positive steps to secede from the Commonwealth. He declared that instead of j.»ew South Wales living upon’ th© smaller States as was generally supposed the smaller States' were living upon New South Wales. ,

The Federal Government’s action, is the main topic of conversation in Sydney to-day. The Sun newspaper’s editorial concluded: “The community won- . ders whether it is now. seeing the real objective of the notorious Lang plan, which flowered in falsity and seems likely to bear its fruit in destruction and disaster.”

Mr. Lang has declined to comment on the Federal Government’s move, but it is understood he is taking legal advice. The dramatic developments in the Federal Parliament had no apparent effect on the Sydney Stock Exchange to-day except to restrict the turnover, which was below normal for a Friday. Commonwealth bonds were firmer all round.

The Insurance Deposits Bill mentioned in the Governor-General’s speech at the opening of Parliament was introduced in the Senate to-day and read, a first time. It forestalls Mr. Lang’s similar measure. It prohibits the State Governments from collecting deposits from insurance -companies, which must in future pay them to the Federal Treasurer either in cash or approved money securities.

INTEREST RELIEF SOUGHT OBJECT OF MR. BRUCE’S TRIP. AUSTRALIA OWING £78,800,000. \ ■ '' Canberra, Feb. 19. The Prime Minister, Mr. J. A. Lyons, in the House of Representatives indicated that one of the objects of Mr. S. M. Bruce’s mission to London will be to seek relief from the overseas interest burden. The. Commonwealth and State Governments had borrowed from the Commonwealth Bank, and through the Commonwealth Bank from the trading banks in Australia, on short-term securities £41,001,000 up to January 28 last. The Governments owed the Australian banks in London and the Westminster Bank £^7,825,000, making the total £78,826,000. Of that amount £31,751,000 was advanced between December 31, 1930, and January 28, 1932. The amount New South Wales obtained from the banks to December 31 last was £31,004,534.

Mr. J. R. Collins, financial adviser at London to the Australian Government, has arranged for the New South Wales interest payment to be available in New York tomorrow.

HOUSE OF COMMONS QUESTIONS.

“TREASURY ACTION NOT NEEDED.”

Rec. 7 p.m. London, Feb. 18. Questions relating to New South Wales stock were asked in we House of Commons to-night. Mr. O. Lewis (Con.) asked if the Secretary of the Treasury was aware that interest on certain New South Wales securities was in arrears, and what steps were being taken to remove them from the Treasury list or otherwise to w r arn would-be investors of the risks attending the holding of such securities.

Mr. E. Ramsden (Con.) asked whether' in view of the defaults the Treasury would lay the matter before the Ottawa conference with a view to agreeing to amendments to the Colonial Stock Act to meet such cases. Mr. W. Strussel asked if the Secretary of the Treasury under the powers defined in the Colonial Stock Act would obtain funds to pay interest where there had been defaults.

Major W. E. Elliot (Financial Secretary to the Treasury) answering, said: “I am glad to say I understand the necessary funds have now been made available in London. In the circumstances the need of action on the part of the Treasury does not arise. The stocks remain as before, as the interest has been paid.” ~ -