DEBT
CONVERSION AGREEMENT
No.14 of 1931
An Act to
approve an Agreement between the Commonwealth of Australia of the First Part
and the States of New South Wales, Victoria, Queensland, South Australia,
Western Australia and Tasmania, of the Second, Third, Fourth, Fifth, Sixth and
Seventh Parts respectively, relating to the Conversion of the Internal Public
Debts of the Commonwealth and the States.
[Assented
to 30th July, 1931.]
Preamble.
WHEREAS
by section one hundred and five a
of the Constitution it is provided that the Commonwealth may make Agreements
with the States with respect to the Public Debts of the States, including (inter alia)the consolidation, renewal, conversion, and redemption of those
debts: And whereas it is further provided by the said section that the
Parliament may make laws for the carrying out by the parties thereto of any
such Agreement:
Be it therefore enacted by the King’s
Most Excellent Majesty, the Senate, and the House of Representatives of the
Commonwealth of Australia, as follows:—
Short title.
1. This
Act may be cited as the Debt Conversion
Agreement Act 1931
Commencement.
2. This
Act shall commence on a date to be fixed by Proclamation.
Approval of
Agreement
3. The
Agreement, a copy of which is set forth in the Schedule to this Act, is
approved.
THE SCHEDULE.
DEBT
CONVERSION AGREEMENT.
Agreement
made the twenty-first day of July One thousand nine hundred and thirty-one between the Commonwealth of Australia
(in this Agreement called the Commonwealth) of the first part, the State of New South Wales of the
second part, the State of Victoria
of the third part, the State of
Queensland of the fourth part, the
State of South Australia of the fifth part, the State of Western Australia
of the sixth part, and the
State of Tasmania of the seventh part (each of the parties of the
second, third, fourth, fifth, sixth, and seventh parts being in this Agreement
referred to as a State, and the expression “the States” in this Agreement
meaning where the context so permits or requires all of such parties):
Whereas
by section 105a of the
Constitution it is provided that the Commonwealth may make agreements with the
States with respect to the public debts of the States, including (inter alia)the consolidation, renewal, conversion, and redemption of such
debts:
And
whereas at a Conference between Ministers of the Commonwealth and
Ministers of the States convened in Melbourne on the twenty-fifth day of May,
1931, it was resolved, as part of a plan for establishing the financial
stability of the Commonwealth and of the States, that a conversion should be
arranged of the internal public debts of the Commonwealth and of the States and
the following conditions were provisionally agreed upon as recommendations by
the Conference to the Australian Loan Council, namely:—
General
Conditions.
1. Holders
of all existing securities to be invited to convert their holdings into new
stock—conversion to apply to all securities the holders of which do not dissent
as prescribed by Commonwealth law.
2. On
conversion all existing securities to be subject to a general reduction of
per cent, in the interest yield provided that holders of 3,
, and
per cent, stocks who acquired such securities prior to 4th
August, 1914, shall not have their interest reduced below 3 per cent.
3. New
securities to be restricted to three flat rates of interest, viz., 4,
and 3 per cent., and
to be spread over ten (10) fixed maturity dates as follows, subject to the
Government having the right to redeem in whole or in part at any time after
31st December, 1950:—
Period—Years.
| Rate of Interest per cent.
|
7....................................................................................... | 4 and
3
|
10.......................................................................................
| 4
|
13.......................................................................................
| 4 and 3
|
16.......................................................................................
| 4 and
|
19.......................................................................................
| 4
|
22.......................................................................................
| 4
|
24.......................................................................................
| 4
|
26.......................................................................................
| 4
|
28.......................................................................................
| 4
|
30.......................................................................................
| 4 and 3
|
4. The new securities to be Commonwealth
securities, and to be in the form of bearer-bonds, debentures, or inscribed
stock, &c, as at present.
5. The
equivalent amount of new stock to be determined by actuarial valuation after
taking into account the interest rate and date of maturity of each existing
security, and after allowing for the general reduction of
per cent, in the interest yield.
6. Existing
securities (£450,000,000) now bearing interest at
per cent, and over to be converted into 4 per cent, at a
premium. As a general rule each holding to be spread equally over the ten
maturity dates, but special arrangements to be made to consolidate small
holdings on conversion.
The Schedule−continued.
7. Existing
securities (£45,000,000) now bearing interest at 5 per cent, to be converted,
at option of holder, into
per cent, stock at
par, maturing in sixteen years, or 4 per cent, stock (at a discount).
8. Existing
securities (£61,000,000) now bearinsg interest at less than 5 per cent, to be
converted, at option of holder, into 3 per cent, stock maturing in seven years
and thirteen years (at a premium), or into 4 per cent, stock (at a discount).
9. To
facilitate the issue of new securities, all fractions below £10 to be paid off
in cash, subject to holders being entitled to contribute cash to make up the
next higher £10.
10. The
interest on the new securities to be free from the present Commonwealth
super-tax of
per cent., and from any further taxation which may be imposed
by the Commonwealth or by any Stato, but to be subject to other existing
Commonwealth and State taxes.
11. Where
overseas trade money has been temporarily invested in short-term securities,
because of exchange difficulties, the holders to be given the right to convert
into a short-term new security, subject to other conditions similar to the main
conversion.
Special
Conditions Applicable to Tax-Free Securities.
12. Tax-free
securities with definite dates of maturity—
(i)
Holders to be invited to convert into new securities subject to the general
reduction of
per cent, in the
interest yield, with the proviso set out in clause 2 above.
(ii)
Holders of tax-free securities who so convert to be given new securities at the
reduced rates, such securities to be tax-free only until the existing date of
maturity.
(iii)
The new securities issued to replace the tax-free securities maturing in 1932,
1933, and 1934 to be re-converted on maturity dates into 4 per cent, securities
maturing in 1941, on the same basis as other conversions into the new 4 per
cent, issue.
(iv)
The new securities to replace all other tax-free securities to retain their
present maturity dates.
13. Tax-free
securities which are “Interminable,” “Redeemable at option of Government,”
&c.—
Holders
to be invited to convert into new securities, subject to the general reduction
of
per cent, in the
interest yield, with the proviso set out in clause 2 above, the general
conditions attaching to the new securities to be the same as those attaching to
the original securities.
Government
Securities Held by State Savings Banks.
14. Dates
of maturities of securities held by the State Savings Banks to stand, if so
desired by the Treasurer of the State concerned, on samo conditions as
conversion issue.
Treasury Bills.
15. The
rate of interest on Treasury Bills taken up by the banks in Australia to be
reduced to 4 per cent., and all other questions in relation to the Bills to be
settled by the Loan Council in consultation with the banks.
Loan
Council.
16. The
terms herein set out to be regarded as recommendations by the Conference to the
Loan Council, which it is to be understood is at liberty to modify any details
of the plan, and to settle all details not included above:
And
whereas the said conditions with certain modifications have been
embodied in a Bill for an Act to be known as the Commonwealth Debt Conversion Act 1931 which has been passed by both
Houses of the Federal Parliament and is ready for presentation to the
Governor-General for the Royal assent and is hereinafter referred to as the
said Act:
And
whereas there have been incorporated in the said Act additional
provisions deemed to be convenient for carrying out the said conditions as so
modified as aforesaid:
Now
this Agreement Witnesseth:
1. This
Agreement shall have full force and effect, and shall be binding on all the
parties, when it is approved by the Parliaments of the Commonwealth and of the
Stages.
The Schedule—continued.
2. The
Commonwealth is authorized to arrange and effect a conversion, on the basis of
a twenty-two and a half per centum reduction of interest, in accordance with
the terms and conditions of sections three, eight, and ten to twenty-two
inclusive, of the said Act, of all public debts of the States the liability for
which has been assumed by the Commonwealth under the Financial Agreement
hereinafter mentioned and the interest and principal of which are payable in
Australia, and of all public debts of the Commonwealth (including borrowings by
the Commonwealth for or on behalf of a State under the said Financial
Agreement) the interest and principal of which are payable in Australia. The
said sections of the said Act shall be binding upon the parties hereto as part
of this Agreement.
3. The
Commonwealth will take the necessary action to submit to the Federal Parliament
any legislation necessary to carry out or give effect to this Agreement.
4. So
far as the provisions of this Agreement may not be in accordance with any
provisions of the Financial Agreement between the parties hereto, dated the
12th day of December, 1927, the provisions of this Agreement shall prevail.
5. Subject
to the last preceding clause, the provisions of the said Financial Agreement,
and the undertakings and obligations of the Commonwealth and of the States
therein contained, shall apply to the public debts after conversion in the same
manner as they applied before conversion.
Signed
by the Prime Minister of the Commonwealth of Australia for and on behalf of
the said Commonwealth in the presence of— G.
L. CAMPBELL.
| J.
H. SCULLIN.
|
Signed by the Premier of the
State of New South Wales for and on behalf of the said State in the presence
of— C.
R. CHAPMAN.
| JOHN
T. LANG.
|
Signed by the Premier of the
State of Victoria for and on behalf of the said State in the presence of— H.
A. PITT.
| E.
J. HOGAN.
|
Signed by the Premier of the
State of Queensland for and on behalf of the said State in the presence of— G.
W. WATSON.
| A
E MOORE
|
Signed by the Premier of the
State of South Australia for and on behalf of the said State in the presence
of— S.
R. WHITFORD.
| LIONEL
L. HILL.
|
Signed by the Premier of the
State of Western Australia for and on behalf of the said State in the
presence of— L.
E. SHAPCOTT, J.P.
| JAMES
MITCHELL.
|
Signed by the Premier of the
State of Tasmania for and on behalf of the said estate in the presence of— E.
PARKES.
| J.
C. McPHEE.
|