{"id":"C1925A00006","name":"States Loan Act 1925","slug":"states-loan-act-1925","collection":"act","jurisdiction":"commonwealth","status":"repealed","isInForce":false,"actNumber":"6 of 1925","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":3122,"registerId":"commonwealth-C1925A00006-current","compilationNumber":null,"startDate":"2026-03-30","status":"Repealed","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"States Loan Act 1925","content":"STATES LOAN.\n\nNo. 6 of 1925.\n\nAn Act to authorize the raising of Moneys to be loaned to the States and for other purposes.\n\n\\[Assented to 13th July, 1925.\\]\n\nBE it enacted by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—\n\nShort title.\n\n1. This Act may be cited as the States Loan Act 1925.\n\nAgreements with States.\n\n2. The Treasurer of the Commonwealth may enter into an agreement with the Treasurer of any State, providing—\n\n(a) for the borrowing by the Commonwealth, on behalf of any State, of such amounts as are declared by that agreement to be necessary for the general loan purposes of that State, and have been or may be authorized by the Parliament of the State up to the thirtieth day of June One thousand nine, hundred and twenty-six;\n\n(b) the terms and conditions upon which loans may be made to the State under this Act;\n\n(c) for the conversion into a Commonwealth loan, or for the redemption, of any State loan falling due on or before the first day of July One thousand nine hundred and twenty-six; and\n\n(d) the terms and conditions upon which the conversion or redemption of any State loan may be effected.\n\nAuthority to borrow moneys.\n\n3. The Treasurer may, from time to time, under the provisions of the Commonwealth Inscribed Stock Act 1911–1918, or under the provisions of any Act authorizing the issue of Treasury Bills, borrow-moneys to such amounts as are specified in any agreement made in pursuance of section two of this Act.\n\nApplication of moneys.\n\n4. Moneys borrowed under this Act shall be issued and applied only for the expenses of borrowing, and for making loans to the States and redeeming State loans in accordance with section two of this Act.\n\nPower to make advances to States pending raising of loans.\n\n5.—(1.) Pending the borrowing of moneys in pursuance of this Act, the Treasurer may, from time to time, advance to the States out of any moneys in the Commonwealth Public Account, sums not exceeding the moneys which may be borrowed in pursuance of this Act.\n\n  \n\n(2.) Any moneys so advanced shall be repayable to the Commonwealth from the proceeds of any loan raised in pursuance of this Act after the moneys have been advanced.\n\nConversion of State securities into Commonwealth securities.\n\n6. The Treasurer may, for the purposes of any agreement made in pursuance of this Act, convert into a Commonwealth security any State security falling due on or before the first day of July One thousand nine hundred and twenty-six.\n\nPrincipal moneys and interest charged on Consolidated Revenue Fund.\n\n7. The principal money of any security issued in accordance with this Act or the States Loan Act 1924 and the interest thereon shall be a charge on, and payable out of, the Consolidated Revenue Fund, which is hereby appropriated for the purpose.\n\nRegulations.\n\n8. The Governor-General may make regulations, not inconsistent with this Act, prescribing all matters which by this Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to this Act.","sortOrder":0}],"analysis":{"summary":{"complexity_score":2,"scope_assessment":{"changed":false,"description":"This Act is a narrow, time-limited financial instrument — and it stays exactly that throughout its 8 sections. It does not expand beyond its original stated purpose of authorising Commonwealth borrowing on behalf of States for a defined period up to mid-1926. There is no evidence of scope creep: no amendments are visible in this version, no new classes of persons or purposes were added, and the legislation is entirely consistent with its long title ('An Act to authorize the raising of Moneys to be loaned to the States and for other purposes'). The reference to the States Loan Act 1924 in s.7 suggests this was one in a series of similar annual or periodic measures, each tightly confined to its own financial year window."},"complexity_factors":["Only 8 sections in total — very short legislation","Minimal defined terms — no interpretation section at all","Very few cross-references, and those present are simple (e.g. reference to Commonwealth Inscribed Stock Act 1911–1918)","Linear structure with no nested conditions or exceptions to exceptions","Conditional logic is straightforward — advances are contingent on borrowing authority, conversions are date-limited","Fixed date thresholds (30 June 1926, 1 July 1926) simplify rather than complicate scope","Regulations power in s.8 is a standard boilerplate clause adding negligible complexity"],"plain_english_summary":"## States Loan Act 1925 — Plain English Summary\n\nThis is a short, century-old piece of Commonwealth financial legislation that allowed the Australian Government to act as a **financial middleman** between international money markets and the individual States.\n\n### What does it do?\n\n- **Authorises the Commonwealth to borrow money on behalf of the States.** Rather than each State going to the market separately, the Commonwealth Treasurer could strike deals with State Treasurers and raise funds centrally, then on-lend (lend on) those funds to the States.\n- **Sets a time limit on the borrowing.** The amounts borrowed had to be authorised by the relevant State parliament, and the arrangement covered loan purposes up to **30 June 1926** — making this a short-term, one-off measure tied to a specific financial period.\n- **Allowed the Commonwealth to \"convert\" existing State debts.** If a State had its own loans (securities — essentially government IOUs) falling due by **1 July 1926**, the Commonwealth could swap those out for Commonwealth-issued securities. This is called **conversion** — replacing old debt with new debt on potentially better terms.\n- **Permitted short-term advances to States.** While waiting for the borrowed money to actually come in, the Treasurer could front the States cash from the **Commonwealth Public Account** (the government's central bank account), to be repaid once the loan proceeds arrived.\n- **Charged repayments to the Consolidated Revenue Fund.** The principal (the original amount borrowed) and interest on any securities issued under this Act were guaranteed to be paid from the Commonwealth's main revenue pool. This gave lenders confidence they would be repaid.\n\n### Who does it affect?\n\n- **The Commonwealth and State governments** — it governs the financial relationship between them for this specific borrowing period.\n- **Holders of State government securities** — their existing State loans could be converted into Commonwealth loans.\n- **Indirectly, Australian taxpayers** — the Consolidated Revenue Fund (funded by taxes) was pledged as the backstop for repayment.\n\n### Why does it matter?\n\nThis Act is an early example of the **Commonwealth centralising Australian public debt management** — a process that accelerated through the 1920s and was formalised by the **Financial Agreement of 1927** and the creation of the Australian Loan Council. It reflects the post-World War I push to rationalise Australia's fragmented State-by-State borrowing, which was seen as inefficient and costly. Historically, it shows how Federation-era financial arrangements were gradually knitted together under Commonwealth control."},"issue_detection":{"absurdities":[{"type":"other","section":"Section 2(a)","severity":"medium","reasoning":"The number reads 'One thousand nine, hundred and twenty-six' with a rogue comma after 'nine', breaking the numeral into two fragments. While context makes the intended date obvious, as a matter of strict legal drafting the expressed date is malformed. This is almost certainly a typographical error in the original enrolled Act, but in strict construction it creates genuine ambiguity about the operative deadline.","confidence":0.9,"description":"The phrase 'One thousand nine, hundred and twenty-six' contains a stray comma mid-number, rendering the date '19,26' — a year that does not exist. The intended date is 1926, but as drafted, the provision is textually nonsensical."},{"type":"impossible_compliance","section":"Section 5(2)","severity":"medium","reasoning":"Section 5(1) authorises advances 'pending the borrowing of moneys', implying a temporary bridge. Section 5(2) exclusively routes repayment through loan proceeds. If the loan is never raised (e.g., market conditions prevent it, or Parliament does not appropriate further authority), there is no statutory obligation or mechanism for the State to repay from any other source. The Act creates an advance with a repayment condition that may never be triggered, effectively making the advance irrecoverable in that scenario.","confidence":0.75,"description":"The repayment mechanism for advances is circular and practically unworkable: advances made from the Commonwealth Public Account are only repayable 'from the proceeds of any loan raised in pursuance of this Act after the moneys have been advanced.' If no loan is ever successfully raised, or if raised loan proceeds are insufficient, there is no alternative repayment pathway prescribed — leaving the Commonwealth with no legal mechanism to recover the advances."},{"type":"other","section":"Section 8","severity":"low","reasoning":"A standard boilerplate regulation-making power is included, but scanning every operative provision (ss. 2–7), none of them use the words 'prescribed', 'as prescribed', or 'as may be prescribed'. The power therefore has no operative hook within the Act itself — it can only rely on the residual 'necessary or convenient' limb, which is a very thin basis for any substantive regulation.","confidence":0.85,"description":"The regulation-making power is entirely hollow: it authorises regulations 'prescribing all matters which by this Act are required or permitted to be prescribed', but no provision anywhere in the Act actually requires or permits anything to be prescribed. The Act is self-contained and makes no reference to regulations or prescribed matters in any operative section."}],"contradictions":[{"severity":"medium","section_a":"Section 2(c)","section_b":"Section 6","confidence":0.78,"description":"Section 2(c) provides that an agreement with a State Treasurer may include conversion or redemption of State loans falling due 'on or before the first day of July 1926', making conversion contingent on a prior agreement. Section 6, however, grants the Commonwealth Treasurer a unilateral power to convert any State security falling due by the same date 'for the purposes of any agreement' — implying the agreement need not yet exist, or that the power is independent of agreement formation. The two provisions create ambiguity as to whether agreement is a precondition for conversion or merely a subsequent rationale."},{"severity":"low","section_a":"Section 3","section_b":"Section 4","confidence":0.65,"description":"Section 3 authorises borrowing of 'such amounts as are specified in any agreement made in pursuance of section 2', tying the borrowing power strictly to agreed amounts. Section 4 then directs that borrowed moneys be applied to 'expenses of borrowing', which are not themselves specified in any agreement under section 2. This creates a minor tension: borrowing to cover borrowing expenses may technically exceed or fall outside the amounts 'specified in the agreement', meaning the expenses of the very act of borrowing may not be authorised by the agreement that triggers the borrowing power."}]}},"importantCases":[],"_links":{"self":"/api/acts/states-loan-act-1925","history":"/api/acts/states-loan-act-1925/history","analysis":"/api/acts/states-loan-act-1925/analysis","conflicts":"/api/acts/states-loan-act-1925/conflicts","importantCases":"/api/acts/states-loan-act-1925/important-cases","documents":"/api/acts/states-loan-act-1925/documents"}}