NATIONAL DEBT

Hokitika Guardian, 30 November 1932, Page 8

NATIONAL DEBT

AUSTRALIA’S SINKING FUND.

HOPE'S NOT REALISED

SYDNEY, November 27

Although in'the nine years of its existence the Commonwealth Debt Sinking Fund has been responsible for the reueirij/oion of £cO,O.O,oGV ot Australian PU'/iic Debt, the bright, hopes which animated- its founders have not bedii .realised.- They foresaw . the extinction of the National Debt .in less than a century, as a result of its Ojieratihns.- Actually new 'additions to the’ Public Debt' during the .pAiiqd of .the fund’s existence have Lefeii more than three times as great as the:.subtractions made by the Commission’s efforts. . -i

Last yoar the Commission ■ obtained £7; 230,000 to pay off public debt, but figures in the annual report show that during the same period the debt funds increased by more than five times the amount • More than 1100 millions is now owed ■ by' the Australian Governments. A definite plan is now guiding the Commission's.operations, and with a return to balanced Budgets', it ma; hope to overtake the additions being made to the debt and begin the big task of reducing it. t Regarding the Ccmmonwealth debt, provison is made for'the redemption Of the Post Office; debt in 30 years by means of nn annual contribution from revenue at the fate of 30s per cent. ' STATE DEBTS. On .other Commonwealth Public Debt the-annual contribution is at the rate l of 10s per 1 cent;; which wi.~s. designed 1 to . redeem. the debt in 50 years from

1123. Sinking fund contributions for State debts are in accordance with the Financial Agreement. On the debt existing to June 20th. ; 1927, the annual contribution was 7s 6d par .cent., of which 2s 6d is payable by the Commonwealth and os by the States. These contributions are calculated to redeem the old debt in 58 years. On State debts created since 1927, the annual contribution is 10s. per cent, of which half is provided by t)ie Commonwealth, andhalf by the States. These contributions are designed to extinguish the new debt in 53 years from the’ date of its creation. HOW FUNDS ARE USED. The Commission does not accumulate

its funds with the object of' paying off large loans ; on their maturity, but, so far as possible, expends its income in the ye'af in which the money in> received. The’ funds expended by the .Commission last year wer© used to re.purchase, or to redeem, Commonwealth and State securities. This will bring ’about practically the same result, as • if the Commission’s-funds: accumulated . at compound interest. The advantage of this plan is. that it is unnecessary for the Commission to have in its l possession large holdings of investments. Since 'file Commission was set urn iin 1923, its total receipts for Commonwealth debt amount to £38,428,087. And sine© the establishment of the sinking fund for State debts, it has received £17,135,355. Altogether its receipts total £55,563,'442. In addition revenue amounting to £15,580,138 has been (appropriated and used for debt redemption.