The Secretary to the Treasury has asked for advice as to what authority is competent to arrange in accordance with section 30 of the Commonwealth Bank Act 1911 for the application of the Redemption Fund to the reduction of the public debt of the Commonwealth. It is stated that at the present time no money is owing to the Treasurer on account of moneys advanced to the Bank by him and that the Bank has not at any time issued any debentures or stock.

Section 30 of the Commonwealth Bank Act 1911 is as follows:

1. The net profit derived by the Bank shall be dealt with as follows:
1. one half shall be placed to the credit of a fund to be called the Bank Reserve Fund, and
2. the other half shall be placed to the credit of a fund to be called the Redemption Fund.
2. The Bank Reserve Fund shall be available for the payment of any liabilities of the Bank.
3. The Redemption Fund may be used in repayment of any money advanced to the Bank by the Treasurer, or in the redemption of the debentures or stock issued by the Bank, but if the Fund exceeds the amount of debentures and stock in circulation the excess may be used for the purposes of the redemption of any Commonwealth debts or State debts taken over by the Commonwealth.

As the section in question is silent as to the authority which is empowered to arrange for the application of the Redemption Fund for the redemption of Commonwealth debts, it is necessary to consider other provisions of the Act.

The scheme of the Act provides for the incorporation of the Bank (sections 5-6), which is managed by the Governor (section 11). Throughout the Act numerous powers are conferred and duties imposed on the Bank or the Governor. In a few matters the Act confers powers on the Treasurer or provides for the furnishing of information to the Treasurer, e.g.: section 10 (Treasurer may advance money to the Bank); section 18 (returns to be furnished to the Treasurer); section 19 (report of Auditor-General on accounts of Bank to be furnished to the Treasurer); section 20 (balance-sheet, with audit report, to be supplied to the Treasurer); section 23 (consent of Treasurer to establishment of branches outside the Commonwealth); section 24 (Treasurer's approval required to the appointment of Attorneys); section 32 (Treasurer's consent required to rules of the Bank); section 34 (Treasurer's consent required to the Government securities in which funds of Bank may be invested); and section 58 (approval of times, places etc. of issue of debentures).

In some other matters action or approval by the Governor-General is required, e.g. section 13 (fixing of salaries and allowances of Governor and Deputy Governor), and section 63 (power to make regulations).

Section 30 (3) of the Act provides for three uses to which the Redemption Fund may be put, namely:

1. repayment of money advanced by the Treasurer to the Bank;
2. redemption of debentures or stock issued by the Bank; and
3. redemption of Commonwealth debts or State debts taken over by the Commonwealth.

As regards (i), section 10 (2) provides that moneys advanced by the Treasurer 'shall be repaid to the Treasurer by the Bank', while as regards (ii), section 53 et seq. empower the Bank to issue debentures. It is clear, therefore, that though section 30 (3) is silent as to the authority which may arrange for repayment of moneys advanced to the Bank or redemption of debentures issued by the Bank, the authority which may make the necessary arrangements is the Governor. And this conclusion is strengthened by section 11 which provides for the management of the Bank by the Governor.

As regards (iii), section 30 (3) is likewise silent as to the authority which may arrange for redemption of Commonwealth debts, but, in my opinion, it follows that the proper authority to arrange for the redemption is the Governor. And this view is strengthened by the general scheme of the distribution of powers by the Act.

I do not think that the Governor-General has power under section 14 and/or section 63 of the Act to make regulations providing for the giving of a direction, or the authorising of any person to give a direction, imposing on the Governor the duty of providing for the utilisation of the Redemption Fund for the redemption of Commonwealth debts, or interfering with the exercise by the Governor of the power to provide for the utilisation of the Fund for that purpose.

[Vol 18,p.429]