AUSTRALIAN FINANCE.

Hokitika Guardian, 20 June 1927, Page 1

AUSTRALIAN FINANCE.

PRIME MINISTER OUTLINES NEW SCHEME.

(By Telegraph—Per Press Association.)

MELBOURNE, Juno 16. A eonlerenec of Premiers of the States and the Commonwealth to consider the financial relations between the Commonwealth and the 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 ho established with the obligation ol assistance definitely placed on the 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 tlu* balance. Properly safeguarded sinking funds will he established in respect to existing State debts, and new borrowing, s. The management of the debt

and future borrowings on behalf of the Commonwealth and the States will he vested in the Australian Loan Council, consisting of representatives of the Commonwealth and a representative of each State. This council is to he given power under a constitutional amendment. The scheme cannot operate without the amendment of the constitution which will involve taking a referendum. As this will fake a long time the Commonwealth proposes a temporary two years’ arrangement.

It is proposed that a sinking fund iff 7.6 per cent per annum on the net amount of the existing State debts, including debts due by the States to the Commonwealth, will he established under the new constitutional powers to provide for the extinction of those debts during a period of 58 years commencing July 1 next. During this period of 5S years the Commonwealth will pay into the sinking fund annually a sum estimated at 0808,000, which is equal to 2s (kl per cent on the net amount of the existing State debts. During the same period each State will j pay into the sinking fund annually aj sum equal to 5s per cent on the net! amount of its existing State debt. ; Regarding the new debt it Is pron e j

ed that a sinking fund of 10s per cent per annum on the total amount of the new loans raised for the States he established to provide for the extinction of such loans within a period of 53 years, the Commonwealth during the period of 53 years from the raising of each now loan for the States to pay into the sinking fund annually .a sum equal to 5s per cent on the amount of the loan. Each State during the 53 years after the raising of each now loan for the States is to pay into tho sinking fund annually a sum equal to 5s per cent on tho amount of the loan. Subject to the control of tho new Loan Council the Commonwealth will arrange for all future borrowings, including conversions, redemptions, and the consolidation of debt, the Commonwealth and the 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 the conditions. Loans for defence approved by the Federal Parliament onto he excluded from the operation of the scheme.

Mr Bruce concluded: “Under the Commonwealth proposals there is no necessity for any additional State taxation.” Air Lang, replying, said the proposals were not acceptable to New South Wales, and under them, before twenty years had elapsed. New South AY ales Would have to increase taxation by more than C 1,000,000.