After the Referendum on 17 November 1928, the Constitution Alteration (State Debts) Act 1928 (enacted on 13 February 1929) inserted Section 105A:
The Parliament may take over from the States their public debts, or a proportion thereof according to the respective numbers of their people as shown by the latest statistics of the Commonwealth, and may convert, renew, or consolidate such debts, or any part thereof; and the States shall indemnify the Commonwealth in respect of the debts taken over, and thereafter the interest payable in respect of the debts shall be deducted and retained from the portions of the surplus revenue of the Commonwealth payable to the several States, or if such surplus is insufficient, or if there is no surplus, then the deficiency or the whole amount shall be paid by the several States.
105A.-(1.) The Commonwealth may make agreements with the States with respect to the public debts of the States, including-
the taking over of such debts by the Commonwealth;
the management of such debts;
the payment of interest and the provision and management of sinking funds in respect of such debts;
the consolidation, renewal, conversion and redemption of such debts;
the indemnification of the Commonwealth by the States in respect of debts taken over by the Commonwealth; and
the borrowing of money by the State or the Commonwealth, or by the Commonwealth for the States.
The Parliament may make laws for validating any such agreement made before the commencement of this section.
The Parliament may make laws for the carrying out by the parties thereto of any such agreement.
Any such agreement may be varied or rescinded by the parties thereto.
Every such agreement and any such variation thereof shall be binding upon the Commonwealth and the States parties thereto notwithstanding anything contained in this Constitution or the Constitution of the several States or in any law of the Parliament of the Commonwealth or of any State.
The powers conferred by this section shall not be construed as being limited in any way by the provisions of section one hundred and five of this Constitution.
(Section 105 was also amended in 1910)
Source: Constitution Alteration (State Debts) Act 1928 (No. 1 of 1929). (NAA: A1559/1, 1/1929)
Insertion of this new Section 105A provides for financial agreements between the Commonwealth and the States relating to the public debts of the States and borrowing money by the Commonwealth and the States, and sets up the Loan Council.