§ 440. “Their Public Debts as Existing at the Establishment of the Commonwealth.”

The Parliament, when it takes action under this section, will have two alternatives open to it; either to take over the whole of the debts of all the States, as existing at the time of the establishment of the Commonwealth, or to take over from each State a certain definite sum per head of its population. If it chooses to adopt the latter course, it may fix the per capita indebtedness to be taken over at any amount up to, but not exceeding, the per capita indebtedness of the State whose per capita indebtedness is lowest. In other words, all the possible alternatives may be expressed thus:— If the public debt of each State is divided by the number of its people, we get the per capita indebtedness of each. The result, taking the figures for 1900 (Coghlan's Statistics of the Seven Colonies, 1900, p. 25) is as follows:—

  ― 925 ―

Colony.  Public Debt.  Indebtedness per capita. 
£  £  s.  d. 
New South Wales  65,332,993  48 
Victoria  49,324,885  42 
Queensland  34,349,414  70 
South Australia  26,156,180  70  16 
Western Australia  11,804,178  66  11 
Tasmania  8,413,694  46 
Total  £195,381,344  £52  10 

The minimum indebtedness per head of population is that of Victoria, £42 4s. 6d. Adopting the “proportional” alternative, the Commonwealth may take over from each State any amount per head that may be decided upon, up to £42 4s. 6d. Beyond that sum the proportional plan cannot go, because no greater amount can be taken over from Victoria; and if it is desired to take over a larger amount, the only way is to take over the whole of all the debts.

It should be observed that in calculating the indebtedness per head, though the amount of the debts is taken as at the establishment of the Commonwealth, the population is taken from “the latest statistics of the Commonwealth” at the time when the transfer is proposed. The powers given to the Commonwealth, if the whole debts are not taken over at first, may be exercised from time to time; that is to say, if a proportion less than the maximum has been taken over at one time, a further proportion may be taken over at another; or the whole balance may be taken over.

This section gives no power except with regard to debts “as existing at the establishing of the Commonwealth.” After the establishment of the Commonwealth there is nothing to prevent the States continuing to borrow on their own credit; but there is no provision in the Constitution to allow the Commonwealth to assume liability in respect of such subsequently incurred debts.

The question arises whether, in the event of any debt of a State falling due and being renewed before the debts are taken over, such renewed debt can be taken over by the Commonwealth under this section. It is submitted that it can; and that the effect of the words “as existing at the establishment of the Commonwealth” is to fix the amount of the debts which can be taken over, and not to identify the particular contracts of debt existing at that time.