4th Parliament · 2nd Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
– I wish to know whether during the coming recess the Minister of External Affairs will give honorable members an opportunity to visit the Northern Territory with aviewto obtaining that information about its possibilities and requirements which, in the interests of the people of Australia, it is necessary that they should have?
– I purpose visiting the Northern Territory during the recess, and if there are honorable members who are prepared to give up their own time in accompanying me, the Government will be only too pleased to make arrangements for them.
-With reference to the statements made yesterday by a deputation to the “Victorian Minister of Agriculture, respecting the exclusion of Victorian potatoes from Queensland, is he in possession of copies of the Queensland regulations under which the action complained of took place, and, if not, will he endeavour to obtain copies, and make them available to honorable members for consideration in connexion with the Estimates?
-I have not seen the statement referred to, but similar complaints come from almost every State, the Queensland fruit-growers, for instance, complaining that Victoria applies to Queensland bananas a different inspection from that which she gives to Fiji bananas. I have inquired into many of these statements, and, as a rule, have found very little truth in them.
– Has the attention of the Prime Minister been drawn to a report in the Geelong Times of the 28th instant of an interview with Mr. W. L. Baillieu, Victorian Minister for Public Works, who has just returned from Great Britain. It is headed -
OUR CREDIT ABROAD .
Confidence of Investors, australia as an imperial factor.
Mr. W. L. Baillieu’ s Glowing Estimate. In the interview the Minister is reported to have said -
Australia was never better known in Great Britain than at the present time, and her de- tractors were mostly to be found within or emanating from her own boundaries.
Australia never stood higher in the Imperial world than it did to-day. It had a record worthy of imitation. He did not hesitate to say that some of the most clear-headed men in England were proclaiming that one of the safest places in the world for investment was Australia.It was certain that Australia offered to the investor a relatively steady condition of security which was not eclipsed, if, indeed, equalled, in the world.
– I have frequently to take exception to the reading of long extracts from newspapers by members who have risen to ask questions without notice. If long quotations were permitted, the time might come when it would be regarded as a right to read as much as a whole column as a preliminary to’ asking a question. The practice to which I take exception is not in keeping with the custom of Parliament, it being understood that questions without notice should relate to acts of administration or matters affecting the business of the House.
– I wish to ask the Prime Minister if his . experience in England was similar to that of Mr. Baillieu, and, if so, whether he will give us the benefit of it, with a view to restoring confidence among members of the Opposition.
– I have not seen the report in the Geelong “ Thunderer,” but 1 entirely agree with the sentiments expressed by Mr. Baillieu as reported in the metropolitan press. I am glad that the credit of the Commonwealth in the centre of the Empire is as high to-day as ever it was.
– No doubt the Prime Minister is aware that a memorandum from the Premiers of New South Wales and Victoria has been forwarded to him regarding the Savings Bank provisions of the Commonwealth Bank Bill. Will he make its contents known to the House at the earliest opportunity?
– I learn from the press that a memorandum on the question is coming from New South Wales. If it is not confidential, the House can be madeacquainted with its contents as early as possible.
Information from Manufacturers.
– In view of. the fact that some manufacturers object to answering the questions, a series of which has been sent out by the Department of Trade and Customs, will the Minister appoint a responsible officer to call on them, and obtain the information that he desires?
– Questions have not been sent out by the Department, but forms have been made available to manufacturers at the head office, and at the -office of every collector and sub-collector. On them are printed the statement that manufacturers who wish to have their replies verified can do so by making their wish known. I do not think that there can be any objection to posting replies to the Department, or that manufacturers need assistance in the filling in of the forms.
– As some manufacturers are reticent in regard to certain matters, fearing that information supplied would be used against them, or would leak out, will the Minister, if requested by any manufacturer, send a responsible; officer to him to collect the information that is needed ?
– If any manufacturer makes such a request, I shall be pleased to give it careful consideration, and shall probably comply with it.
– I wish to know, Mr. Speaker, whether your attention has been drawn to this statement -
Then (1909) occurred the great disappointment of Mr. Agar Wynne’s life. He confidently expected to be made Speaker. There were - to him - dozens of reasons why he should be granted this honour. In the first place, the Labour party to a man would have voted for him.
– Order ! Do I understand that the honorable member wishes to ask a question?
– Yes, sir. It is only a few lines - not a long paragraph - which I desire to read, as they reflect on members of the House.
– We on this side cannot hear what the honorable member is saying.
– The paragraph says -
In the first place, the Labour party to a man would have voted for him. As a big capitalist and a clever business man, it had happened that he had often been asked to accommodate Labour politicians with urgent loans. He has never refused, and that is why the average Labour man, whenever he mentions Agar Wynne’s name, stops to praise him.
– In what publication did this appear?
– It appeared in a character sketch of the honorable member for Balaclava in Melbourne Punch of the 2nd November. I understand that the sketch was written by Mr. G. M. Redmond, a member of the Argus staff.
– Order ! Will the honorable member ask his question?
– I want to know, sir, whether you, as Speaker, will inquire of the honorable member for Balaclava whether there is any truth in the statements made in the sketch ; whether Mr. G. M. Redmond wrote the sketch, and, if he did, whether you will suspend his licence to appear here as a press representative until he apologizes to this Parliament?
– I think that the honorable member is placing altogether too much importance on the matter. I saw the paragraph some time ago, but I thought that it was merely one of those things which are written from time to time without any meaning or particular purpose.
– I have just been asked by the Chairman of Committees, sir, whether Mr. Redmond is the man who asked for£5 for an article to appear in this newspaper.
– Order ! In the circumstances I advise the honorable member not to take any further notice of the article. If there is anything directly concerning members of the House, it will be my duty to make the fullest possible inquiry. I have no doubt that the honorable member for Balaclava can set the whole matter at rest if I make an inquiry of him. I promise to see him.
– I am not inclined, sir, to take reflections on this party lying down.
– Am I to understand, sir, that members of the House may be assailed in the press, that their characters may be impugned, and that relations between honorable members may be put in such a manner as to discredit the whole of the House, and yet we are to have no redress?
-The honorable member is not to understand anything of the kind. I do not think that any remark of mine would justify such a conclusion. If honorable members are assailed, or their characters impugned in any way, the House has the right to take whatever action it may desire. I cannot take any action without the consent of the House.
– I desire to ask the Prime Minister whether he, as leader of this House, will look into the matter reported by the honorable member for Capricornia, and, indeed, into other aspects of journalistic reflections on this House which are becoming too frequent altogether.
– Order !
– Will the Prime Minister cause an investigation to be made, and take such action as will redeem the position of honorable members and protect them from attacks of this character?
– I had not heard of the article in question until it was complained of here to-day. The remedy rests, I think, with the House. A motion of breach of privilege can be submitted if it is thought that any honorable members have been unfairly dealt with by the press. But I am one of those who take less notice than others of statements in the newspapers. Public men are frequently slandered, and the best way for them to answer their slanderers is to proceed with the discharge of their public duties in the best manner of which they are capable. Since the honorable member has drawn attention to this matter, I shall certainly ask for a copy of the newspaper, and read the sketch.
– It may be a dodge to increase the circulation of the newspaper.
– I am only concerned with the question of a breach of privilege which is raised.
– The suggestion is that Labour members will vote for a Speaker because they are granted urgent loans.
– I want to see the newspaper.
– I rise to make a personal explanation, because I have no desire to suggest a wrongful act without good and sufficient testimony. When I was speaking, the Chairman said something about and he informs me that he did not for a moment suggest that Mr. Redmond, of the Argus, asked him to pay £5 for the article concerning himself in the Melbourne Punch, but that some one from the Punch office approached him in his own room, and asked him if he would pay £5 to have his photograph appear along with the article.
– My attention has been drawn to a statement that was made in the House this morning to the effect that there had appeared in a newspaper published in Melbourne a paragraph setting forth that I had been in the habit of lending money to honorable members of the Labour party, and that some of them were under an obligation to me. I think it only fair to those honorable members that I should say that I have not been in the practise of my profession for something like five years; that only one honorable member on the Government side of the House is a client of mine ; that no member of the Labour party has ever asked me for a loan ; that I have never offered to lend any one of them money, and that I have not lent money to any one of them.
– Have you, sir, any objection to instructing the staff of the House to open all the doors and windows in the chamber? It is very stuffy at present.
– We can have the doors opened as far as possible, but there is a very hot wind blowing, and if the windows were opened the chances are that we would have hot air instead of cool air. There is no objection to having the doors open.
– I understand that the Minister of Trade and Customs is having a search made for a floating derelict in the track of ocean-going steamers on the Australian coast. Is he aware that another proud barque has come to grief through an apparent disagreement between! two captains, the name of the barque being The Fusion, and the captains, Messrs. Deakin and Cook? Will he have inquiries made to find out the particular rock on which this proud barque has come to grief?
– I shall be obliged if the honorable member will give notice of the questions.
– I notice that the paper which the Minister representing the Minister of Defence was courteous enough to table yesterday in connexion with the site for the Naval College does not include a report on the Tasmanian site. If such a report has been made, will he kindly add it to the documents already tabled?
– I will submit the matter to the Minister of Defence. As I understood him he had not the slightest objection to all the reports concerning sites being laid upon the table.
asked the PostmasterGeneral, upon notice -
– Inquiries are being made, and the desired information will be furnished as early as possible.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are -
asked the PostmasterGeneral, upon notice -
Is it his intention to adopt the recommendation of the1911 Conference of Post and Telegraph Associations, viz., that the following method of sending telegrams be made uniform in all the States : -
– The recommendation of the Conference referred to has not so far reached me. When it has been submitted it will receive full consideration; but, as it is set out in the honorable member’s question, the proposal would appear to be contrary to the service regulations attached to the International Telegraph Convention.
– Since giving notice of the questions standing in my name, and referring to the difficulties and grievances under which those engaged in the butter industry work in the London market, the Minister of Trade and Customs has informed me that the statement I desire to see is not in his office. I therefore beg to withdraw the questions for the present.
asked the Minister of
Home Affairs, upon notice -
– The answer to the honorable member’s questions is -
No such positions as those indicated have been advertised ; but if the honorable member refers to two positions in the Central Office of the Postmaster-General’s Department, it is intended to subdivide the work of that office into branches with officers in sub-charge. The proposal is that of the Government, and has been concurred in by the Public Service Commissioner. No duplication of duties is contemplated.
Motion (by Mr. Fisher) agreed to -
That leave be given to bring in a Bill for an Act to amend the Land Tax Assessment Act
In Committee (Consideration resumed from 29th November, vide page 3396) :
Clause 34 postponed.
Clause 35 -
– Part V. of the Bill, which we have now reached, deals with the establishment of a Savings Bank in connexion with the Commonwealth Bank. There has been a great deal of controversy, in Parliament and outside, as to advisability or otherwise of establishing a Commonwealth Bank; but recently the attack has been more confined to the proposal to establish a Savings Bank branch. It is the opinion of the Government, and my own opinion, that a Savings Bank is an essential part of the Commonwealth banking scheme. I cannot imagine how any injury can be caused to any one by the establishment of a Savings Bank branch. If there is any advantage in the general banking business, there is greater advantage attaching to the Savings Bank business ; and I cannot see that this proposal is in any way an attack on State rights and privileges. Neither the States nor the individual citizens of the States have anything to fear, in my opinion, from the inauguration of this new Savings Bank.
The economic advantages of the bank will be great, and there is no douBt as to the convenience that will be afforded throughout the Commonwealth. In the various Savings Banks very different methods of management are adopted. There are different rates of interest, and different aggregate amounts on which interest is paid.
– - And all the banks are eminently successful !
– Happily so; and we congratulate them and wish them continued prosperity. The arguments that are used against the establishment of a Commonwealth Savings Bank might be advanced in an old country where population and wealth were decreasing, but they do not apply to a young and vigorous country like Australia, where population and wealth are growing apace. It is a very high compliment to this Commonwealth banking scheme when we find the State Governments apparently in fear that the new bank will capture all the Savings Bank investments. It will do nothing of the kind within our lifetime. But if it does, it will only prove that a better economic machine to deal with the savings of the people has been provided - that greater economy and better management have resulted. After turning the matter over in my mind again and again, I must say, speaking deliberately, that I cannot understand the apprehensions of the States, or whence they arise. Why should the States think that this proposal of the Commonwealth Parliament, or of the Labour party, means an attack on State interests to their detriment and to the aggrandisement of the Commonwealth influence ?
– There is no issue of State rights.
– I am not speaking of State rights. I am merely speaking on the sentimental point raised by leading Ministers of Governments in the States. While the States are in the open against this proposal it is only fair! that the Government should make a moderate statement of their position. The question is being discussed in the press before any official communication has reached me. It was raised during an election in Victoria by a. responsible Minister in such a way that I would not deign to reply to it. The only duty that devolves upon me is to tell the people of the Commonwealth what we propose to do. We propose to have a uniform savings banking system managed by the Governor of the Commonwealth Bank, and free from political influence.
– More centralization !
– If centralization means that there will be a greater return given ta people who have money to deposit in the Savings Bank - mostly people who have very little to throw away, and whose savings represent the accumulated reward of their labour - surely they are entitled toit?
– There is an important “if.”
– The honorable member for Fawkner, who is as well advised’ as can be any other man in the House on a financial question of this kind, does not need the assistance of the honorable member for Echuca. However, what is the “if”? Supposing the local governing bodies of the States had instituted Savings Banks, would it have been regarded as anattack on those local banks if a State Government had started a bank of its own ? Certainly not. It would have been felt that the larger scheme would give the better results, with (advantage to ev)ery Savings Bank depositor in the State. And’ the same applies to the larger scheme of Federation. If the Commonwealth Savings Bank will enable depositors to obtainbetter terms, and the convenience of depositing or withdrawing money in any part of the Commonwealth, there will be greateradvantage to the public than even at the present time, with all State machinery and’ reciprocal arrangements. I should now like to give honorable members a list of theSavings Banks of Australia, with the rate of interest allowed by each. First, there is the New South Wales Savings Bank, which pays interest at 3 J per cent, up to £500. The Savings Bank of New South Wales - which is a different institution from the New South Wales Savings Bank - pays per cent, up to .£200.
– Are both institutionsbacked by the Government?
– That is a point uponwhich I was unable to get information. I know that one bank is controlled by the State, and is backed by a State guarantee, whilst the other is managed differently, but also has a State guarantee.
– I think that they now allow interest upon larger amounts than ^200.
– The New South Wales Government Savings Bank is a State bank with an absolute State guarantee, whereas the Savings Bank of New South Wales is conducted by private individuals, and is guaranteed by the State up to ,£50,000.
– And the State has a representative upon its board of directors.
– I take it that what the honorable member says is correct. The Savings Bank of Victoria pays 3J per cent, interest on deposits up to the first £100, and 3 per cent, on any excess up to ^250. The Queensland Savings Bank pays 3 per cent, up .to ^200 ; the South Australian Savings Bank pays z per cent, upon accounts closed during the year, and 3i per cent, up to ,£250 on accounts remaining open; the Western Australian Savings Bank pays 3 per cent, on deposits up to ^1,000; the Tasmanian Government Savings Bank pays 3 per cent, up to ^250; the Hobart Trustee Savings Bank pays 3^ per cent, up to £150 ; and the Launceston Trustee Savings Bank pays 3^ per cent, up to £I50. I” New South Wales, the Government Savings Bank is wholly guaranteed by the State. The Government may guarantee, to the extent of ^50,000, a loan raised by the Savings Bank of New South Wales to meet the demands of depositors. In Victoria, Savings Bank deposits are guaranteed by the State. In Queensland, a similar state of things obtains. In South Australia, Savings Bank deposits are not guaranteed by the State. In Western Australia, Savings Bank deposits are guaranteed by the State; and, in Tasmania, the State guarantees deposits in Government Savings Bank only. As regards payments on demand, I think there is a reciprocal arrangement between a number of the Government Savings Bank, but there is no such arrangement in regard to deposits.
– There is no reciprocal arrangement between Victoria and New South Wales.
– The note upon the paper which I have before me reads, “ Except in the case of the Launceston Trustee Savings Bank, reciprocity arrangements exist under which deposits made in one State may be withdrawn in another State. It is not possible, however, to make a deposit in one State for immediate credit in another State.” That is the position. The question which must present itself to honorable members is : “ Is it not time for us lt() establish a Commonwealth Savings Bank as well as a general Commonwealth banking system? “ To my mind, no other time will be more convenient - no other time will meet the conditions and necessities of the case - than the present. We should establish an institution to which people will go to transact ordinary banking business, and should they wish to make a Savings Bank deposit they should be able to do so without leaving that building. We ought to take to ourselves the full powers necessary to make this bank a success, not merely with the man who is trading with a general banking account, but with the individual who is setting aside, his savings for the purpose of enabling him’ to enter upon larger enterprises in the future, or of creating a reserve against illness or trouble later in life. So far from any fear on the part of the States being justified that this bank will steal the capital which is already invested in their Savings Banks, and a portion of which is now employed in Government utilities, I am of opinion that while it will get a share of the increased business that is going, and perhaps a larger share as time passes, that will not in any way embarrass the States financially, because representatives of the people in this Parliament will see that justice is done to every part of the Commonwealth in all its financial arrangements.
– Is not justice now being done by the States through their Savings Banks?
– Evidently the honorable member was not present in the chamber when I made my opening remarks. I am. now replying to the attack which has been made in the press and on the platform upon this scheme. One responsible representative man has stated that the Commonwealth was literally going to steal deposits from the State Savings to steal Others have urged that by this scheme we shall do great injury to the States. I say that we shall do nothing of the kind, and that the representatives of the people in this Parliament will see that the best interests of the Commonwealth are served by the legislation which we enact in this connexion. But I adhere to my original opinion that ultimately the proposed institution will be the great Savings Bank: If it does not prove to be that,’ it’s management will have utterly failed to -realize the economic conditions which, I; think, will arise under this Commonwealth Savings Bank system as ‘ against ‘ ;the : State Savings Bank system. -I! wish to say briefly, but emphatically, that this measure has not been framed with a view of placing the Commonwealth in a better position to the disadvantage of the States; Quite the reverse. It is intended to strengthen the financial position of the Commonwealth and the States, and, at the same time, give the people greater facilities and conveniences, and higher returns for their investments, when they think fit to deposit their money in this bank. It is the intention of the Government to keep separate accounts for the Savings Bank and the general banking business, so that every man will know exactly what is being done.
– There is no provision for that in the Bill.
– No, but I made a statement yesterday that provision would be made for it in the Bill.
– Separate accounts may be kept, and yet the money of one part may be made liable for the other.
– I think the Prime Minister said that one would not be liable for the other.
– I did not go so far as that.
– Then there is no advantage in providing for separate accounts, because they must be kept in any case.
– The question is whether the investments will be separate.
– I should not like to commit myself absolutely to that, but I will say that the accounts and earnings of the Savings Bank branch will be shown separately from the accounts’ and earnings of the other branch.
– Your promise merely means that there will be separate accounts. The important question is, Will the investments dealing with the moneys be kept separate?
– What is the difference? The Commonwealth stands behind the bank with an absolute guarantee against both branches. The suggestion now made is that the Savings Bank money should not be used for any purpose whatever in connexion with the general banking business. What advantage would that give us, or what protection would it give the people?
– It would simply handicap the bank.
– To relieve any apprehension, I will go so far as to say that if it is at all possible, every Savings Bank transaction and money investment will be shown separately in the accounts, so that there can be no misunderstanding as to which branchof the business is profitable. To say, however, that no money should be borrowed, for instance, by the general banking business from the Savings Bank, or by the Savings Bank from the general banking business would, I think, constitutea distinct weakness.
– That is all we want to know.
– In my opinion, it would also be wasteful. I make no pretension to banking knowledge, and when the honorable member, who has great banking knowledge and some experience, says that acertain thing must be done, I must merely put my own layman’s view of the question.
– We are only seeking to find out the intentions of the Government.
– I am always very grateful to the honorable member and’ others who endeavour to ascertain in that way what is in our minds. I appeal tohonorable members, and not from the national point of view as against the State point of view, to recognise that to enter only in part upon a banking scheme at the present time would be a weakness quite unworthy of the Commonwealth Parliament. I again say that, so far from this being an aggressive measure, or a measure designed to injure or cripple the States in any way, it is a proposition which will probably enable the Commonwealth to come to the aid of the States intheir financial difficulties during any time of trial and great need.
– It will be a bulwark of strength to them.
– Undoubtedly, as the honorable member for Maribyrnong says, it will be a bulwark of protection to them in any time of threatened financial disaster.
– Some of them havebeen very glad to borrow from the Commonwealth already.
– And I hope there will always be men in the Commonwealth Government and Parliament who will listento every complaint from them, and listen, indeed, to all reasonable statements by them, regarding their position, or any supposed acts of aggression against them, but none of those statements or assertions will divert the members of this Parliament one iota from their public duty, or prevent them from doing justice to the States, or even from helping them in their time of need. Whatever is said outside, we must hold to the larger idea and the broader mind. That falls to us as a duty. I hope that these provisions for the establishment of the Savings Bank will be passed through this House practically unanimously, and substantially as they have been brought forward by the Government.
– Would the Prime Minister indicate to what extent he is prepared to welcome the co-operation of the States in this particular section of the business ?
– This is not the provision where arrangements can be made for co-operation. Co-operation with the States regarding the bank generally would mean that the States would be called upon to take some of the responsibility as guarantors.
– Yes, but I refer to the Savings Bank section of the business.
– The Savings Bank section of the measure does not provide anything about the guarantee. Some honorable members seem to have it in their minds that, if . the States trade with their ordinary banking accounts with the Commonwealth Bank, it will give the States an interest in the bank. As a matter of fact, the States will trade with the bank only because they can trade better with it than with any other bank. The position that must be occupied by the Commonwealth and the States, in taking an interest in a concern, must involve the liability to risk. If the States are going to share in the profits, they must share in the risks, but this is not the time to develop that idea. I have said plainly and distinctly on behalf of the Government that we shall not only keep an open door, but shall be ready to discuss with the States any proposition that they can put forward for co-operation with us in this matter. This is not a bank that is going to start to-morrow, as honorable members know, and as the States know, or that is going to engulf the whole of the existing institutions.
– Hear, hear; there is not the slightest danger of that !
– Exactly. I do not want to refer again to the statement made opposite, or to the political controversy part of the question. The press have told us that the bank is bound to be an absolute howling failure. Some honorable members of the Opposition say the same thing. How in Heaven’s name then can it endanger the position of the States? Both views cannot be correct. I think that those who are too optimistic will probably be disappointed, and that those who are apprehensive of the gravest disaster will be pleased at the satisfactory result. That is my own view of what will take place. At any rate, this bank may well start as it is now, and if the States think fit, after maturely considering their position, and. the position of the bank, perhaps before this Parliament closes, or at any time thereafter, we can make in the legislation regarding the bank adjustments which will not only be satisfactory to trie Commonwealth, but will include the States as sharers in the responsibilities and guarantee, and also in a portion of the profits.
– Would the Prime Minister say whether the States will be interfered with in their use of the post-offices ?
– If I may express my own individual opinion - I am not speaking for the Government in this matter - I believe that it would not be possible for the Government to carry on two Savings Banks in the one office. I must use my common sense in this matter. It is not a question of aggressiveness. There are, of course, many post-offices at which there are not Savings Banks.
– Then the Prime Minister will wipe out the State Savings Banks.
– I am surprised at the honorable member saying that because the Commonwealth conducts Savings Banks at a number of post-offices that will wipe out the State Savings Banks. What is the position of the States? The States have all the school teachers ; they have all the police magistrates, and all the railway stationmasters. The Commonwealth has none of these agencies, as compared with the States. I believe the States of Australia to be far more virile than the honorable member thinks. I believe that these States, as long as it is economically safe and sound to do so, will proceed with their own banking business in their own way.
– Does the Prime Minister contemplate an early opening of these Commonwealth Savings Banks?
– I do. Of course that has nothing to do with me. It will be a matter for the Governor of the bank to decide. But, expressing my own opinion, 1 think that these two banking concerns should open at the same time. That is my own honest view. But as I have said, it is a matter that will be left with the man upon whose shoulders, and upon whose head, the responsibility of managing and governing this bank will rest after his appointment.
.- The first feature which appears to demand some notice is that as far as we are all aware no demand of a public character for a departure of this kind has been made from any part of the Commonwealth.
– Except by the electors.
– I am stating a factif it be not a fact I am open to refutation - when I say that there is no evidence of inch a demand. The one obvious impulse from which this proposal emanates is of a theoretical character. There has been a demand from some quarters for the nationalization of banking of all kinds. Its basis and justification have been the promise of huge gains to be derived by the Commonwealth. Now, that theoretically based ambition is quite different from the ordinary demand created by existing necessities which usually precedes legislation, especially legislation on these subjects. The reason why there has been no such demand is plain. Speaking almost without qualification, the existing facilities for the receipt of the savings of the people have satisfied the bulk of the community.
– Did not the honorable member say the same thing with regard to the land tax legislation?
– I have said nothing of the kind. There has been, I say, in the ordinary sense, ‘ no public demand ; no public complaint to justify this project. Consequently the task which the Treasurerhad before him was rendered much more burdensome than it would have been if he had been able to point to any serious defects in our existing Savings Bank system; if there had been losses, or even danger of loss, or if there had been alarm, or if there had been friction. There might, under other circumstances, have been all or any of those objections to the existing system. But they have not arisen. They do not exist. Therefore, it is perfectly true,, that if. this item had not appeared in the Ministerial programme for this session, ‘not a single voice of complaint could have been raised on any practical ground throughout’ Australia.
As I have said, the only justification offered by the Prime Minister is the plea that, at some distant date, owing to the enormous momentum imparted by the Com’monwealth, and by the success of its operations, this new bank must gradually grow to such an extent as, in one shape or other, ultimately to absorb the State Savings Banks. In the first place, it is to divide their business. We are to deprive them, at least, of their opportunity of growth. If so, it is not an unreasonable thing to assume, as the Prime Minister does assume, that with the great prestige and power of the central Government behind it, there may be a strong tendency in’ favour of the Commonwealth Bank. To what extent that will be at the expense of the State Savings Banks in any given time I am not in the least prepared to say. It is possible that the struggle may last far beyond our ken - far beyond any period for which we can be held directly responsible. But the fact remains that an element of competition ls about to be introduced, for which and as to which the only comments are of a prophetic character, and relate to a comparatively remote future. The institutions already established are, with, certain exceptions State-supported. In the case of the one exception, South Australia, there is no doubt as to what the attitude of the State Government would be if the institution established there were exposed to a serious run. We may take it that in fact every one of these institutions is already Stateguaranteed.
– One State has two Savings Banks.
– Yes, one of which is a Government bank, whilst the other one, I think, holds very much the same position as does the bank in South Australia. The State Governments could not afford to allow any of these banks to close or their depositors to suffer.
Whilst I am- on this point, I may make what may be regarded as a slight digression to suggest to the Prime Minister that it may be worthy of his consideration with respect to the whole of these provisions whether at the very initiation, while such a step can be taken without occasioning alarm or apprehension, some additional provision should not be made in this Bill, in the event at some distant date of some one or other of these - or it may be of other - financial institutions, whether in consequence of this new departure or for any other reason, being placed in straits. Under. those circumstances, of course, in one way the Government of the day is always free to follow its own course, taking its direct responsibility. But to-day there is no such contingency in view, and nothing that would justify the suspicion of such a contingency. It might, therefore, be worthy of the consideration of the Government whether there should not be some such general authority specifically empowering the Government of the Commonwealth, if it believed action to be necessary, to step in or cope with any banking cyclone that might appear in the neighbourhood. It is purely a suggestion for the future. This would not only facilitate Government action at such a time, but be a source of strength, since it might mitigate the severity of any such crash as that of the early nineties.
I propose not to detain the Committee any further in regard to the supposed benefits anticipated from this scheme. When the Prime Minister spoke of the advantages of not being obliged to go with one’s deposit from one building to another, he alluded to a very trifling inconvenience. When, again, he made allusion to the savings of the small man being rendered perfectly safe by the establishment of a Commonwealth institution, he was aware, as we all are, that the savings of the small man are already absolutely safe. If they can be made more secure in any possible way that can be accomplished by measures quite apart from this new departure.
From a practical point of view, then, one fails to see how the existence of this bank will benefit appreciably any of the constituents of the existing banks. We are thrown back upon merely theoretical prophetic justifications as to the possibilities of public profit from nationalized finance; we have too little practical experience to make it worth while to attempt to suggest what the profits will be, if there are any.
One hope expessed by the Prime Minister is that the outcome of the passing of this measure, and the inauguration of its policy, will be to strengthen financially both the States and the Commonwealth. That will be more open for discussion when the representations understood to be in process of being made by the States are taken into consideration. The interesting feature is that in two instances, at least, those representations will be made by Ministers from the party represented by the Prime Minister and his colleagues.
– That hardly affects the question.
– It does. Those State Ministries, as members of the Labour party, must necessarily look at this question from what may be called the Labour point of view. Consequently it becomes evident that the proposal now being submitted by the Federal Labour party has not the indorsement of the Labour party in Australia. Apparently it represents the view of the Federal representatives returned by that party ; but it is equally clear that it does not represent the opinion of Labour members returned by the State electors to the State Legislatures. That being so, we are free fo regard this question without any imputation that the difference of opinion regarding this proposal is due to the difference between the principles of the Labour party and our own. The Labour party is obviously, one might say, ostentatiously, divided on this question. Possibly there may be divisions of opinion among members of the Federal Liberal party.
– There is a misunderstanding about the matter because we cannot be here and in our own States at the same time.
– Misunderstandings exist not only because of geographical divisions, but because the proposal is being regarded from different points of view. If the Labour party in the State Parliaments are satisfied with their local Savings Banks, and the benefits they confer upon the public, it is natural that they should say to the Federal Government, “ Why not leave them alone? Why inaugurate a departure that cannot give us greater satisfaction, and incur unknown risks?”
The Prime Minister put the position very pithily this morning when he challenged us to point to any contrast between the results of giving effect to the Govern- ment proposals, and the result of putting aside those proposals in favour of the existing system. One outstanding difference that stares us in the face, and is of the utmost importance, is that in the case of a State Savings Bank, the moneys locally raised are being locally invested by men of local knowledge. Under the new system, however, those moneys would be centralized under the control of the Federal Government, located in some one city of one State, and would be distributed from that centre. Some honorable members may think this a matter of indifference, inasmuch as any change that takes place owing to the investment in one State of money raised in another must still b*i for the benefit of the Commonwealth as a whole. While that has to be admitted, it may be a very serious matter in regard, first of all, to the discouragement, to that extent, of local investment, and also because of the absence of the intimate and very valuable local knowledge that is always brought to bear in connexion with the investments of the Savings Banks.
– And the same power to deal with land policy.
– That, without unduly elaborating it, is the broad distinction between centralized as against local administration. Localities, always apprehensive in this regard - jealous as they are. of the privileges of their municipal governments and other local authorities - are naturally apprehensive that in these circumstances they cannot be the gainers. They fear that there will be a tendency of the central governor to invest their money in great centres or enterprises, where his custodianship and oversight would be much easier and simpler, rather than to have it distributed, as it is at present, over a great number of investments, in every State of the Commonwealth, by institutions that do not look outside their respective borders. This contrast is so plain as to require only to be stated. It marks a very vital difference between the two projects. Regarding it from the stand-point of centralization as compared with the position wider local government, we obtain a very different result.
Then, again, the Prime Minister’s sanguine anticipations of the fruits that are to be gathered by this Savings Bank business appear to me to be practically unwarranted, since, at present, the whole policy universally pursued is to repay to the depositors in State Savings Banks practically all the profits on their loans beyond those set apart for the establishment of reserve funds. In each State, the rate of interest granted to depositors in the Savings Bank is the highest that those in charge find it possible to pay without incurring undue risk. The margin retained from the profits on their loans is the smallest consistent with safety. That being so, where is there room for improvement? Where is the scope for more savings? Where is the opportunity for more profits, that is for any profits sufficient to make any practical difference ? The circumstances in which the Commonwealth will conduct its Savings Bank business are the same, and its policy must be the policy that the State Savings Banks are adopting? The Commonwealth will have to pursue precisely the same course. It too must give the working man who puts aside out of his wages the largest sum that he can save the largest possible interest on his deposit consistent with safety. That being the case, it dees not appear that in Savings Bank business there is any such margin to go and come upon as will enable the Commonwealth Bank to grant better terms to borrowers, to make larger profits, or to have anything more to distribute.
There is one new departure to which the Prime Minister has himself very properly called attention. Contrary to what we understood to be his opinion, in the earlier part of the discussion on this measure, the honorable gentleman now states that the receipts from the depositors on the Savings Bank side, and those on the general banking side, are to go into a common fund. Consequently, Savings Bank moneys deposited with the Commonwealth Bank will be invested on the commercial side of the bank in its ordinary transactions. In common with several others, I seem to have misunderstood the remarks made by the honorable gentleman the other day. I understood that it was the intention that the Commonwealth Bank and the Commonwealth Savings Bank were to be kept entirely separate, so that the funds of the Savings Bank would be invested for the benefit of the Savings Bank side of the Commonwealth Bank, without any connexion with the ordinary business side of the bank. The Prime Minister has now stated that the money deposited with the Savings Bank may be invested in the current business of the bank. There it may earn a larger interest, since, as greater risks will be taken, greater profits may be made.
– That will depend on the Governor.
– Exactly; and also depend on the times, his judgment of the times, and many other tilings. This means the introduction of the inevitably speculative element which exists in all banking, where the payment for interest is measured by the risk run. Naturally, as the risks are greater the profits may be greater, so that there may be some slight increase of revenue on that side of the bank. Compared with the total business transactions, it will be but a slight increase, and we should require to look far beyond our own dme before we could see any substantial gain that could be relied upon to make any appreciable difference to the depositors. Taking all these matters into account, and confining ourselves within the area of reasonable forecast, it does not appear that the possibilities of advantage which have tempted the Government will be realized either in our time or soon after.
What, then, is the position in regard to the existing Savings Banks and their business? Surely it is simplicity itself. Here we have a series of public bodies undertaking in a publicspirited way the receipt and investment of the moneys of the community, with the object of giving back to their small investors all the profits that can possibly be made. There is no deduction from them except for the creation of the necessary reserve fund created in their interest, while even the proceeds of the reserve fund are devoted to the same end. Consequently, they are, as I have described them, practically philanthropic bodies. They are not out to make risky profits, but simply to get the best terms for those saving workpeople who trust their money to them.. No institution, not even the proposed Commonwealth Bank, has a higher object or a better method. If the State Savings Banks are being replaced, they are not being replaced by anything superior. On the contrary, they are being replaced by an institution which, in its ordinary banking business, will be exposed to temptations and attractions that do not enter the sphere of the State Savings Banks. While one would not be justified in stating that to be a source of grave peril, it certainly deprives the proposed Commonwealth institution of the absolute guarantees and security of the State Savings Banks. These are wholly managed for the benefit of their clients by a body of men who are barely remunerated for their labour, and who make the best possible use of the small savings of the people for the benefit of those who place them in their charge.
The difference in character of the policy formulated in this part of the Bill, as compared with the general banking part already disposed of by the Committee, is marked again in another way. In the ordinary business of banking into which, under the portion of the Bill already disposed of, we are about to enter, the Commonwealth will be competing with private capitalists and institutions, whose skill, intelligence, and knowledge is employed in making the best profits they can out of the public. There is no need for any apology for this. These private institutions are established to make all the profits they can, and to pocket as much as may be safe. Everybody realizes that. Consequently, when entering into the same sphere, although its very circumstances make it more hazardous and a source of greater anxiety, there need be no complaint on what might be termed the humanitarian or philanthropic side. But in this Savings branch of banking business there are different opportunities, demands, and circumstances. It cannot be conducted on higher lines or better principles than those on which it is at present being conducted in the different States. It is this that makes our intrusion, as I venture to call it, into this sphere, harder to justify.
At present the revenue received in the State Savings Banks totals a very large amount. That revenue is in each instance invested in the respective States in which it is earned. The Prime Minister repeated this morning what he said more than once in his speech upon the introduction of the measure, that he had no doubt but that the Commonwealth Bank will, at no distant date, supersede the existing branches of the Savings Banks of the States. The exact words the honorable gentleman used were -
I desire to say quite frankly that I think that the passing of this Bill will mean that there will be ultimately only one Savings Bank in Australia.
That result might be obtained in either of two ways, of which one has already been pressed upon the Prime Minister by others as well as myself, and will, I hope, have further consideration. It is the adoption of some scheme for uniting the Savings Banks of the States with that of the Commonwealth. This would require a Federal policy, maintaining local developments and interests, linking together the existing institutions, unifying them where there is more than one in any State. There would then be a co-operative partnership with the States, which would strengthen this bank, so as to guarantee to the public a continuance and extension of existing facilities. As a communication, presumably relating to some proposition of the kind, is now on its way from Sydney, it would be inopportune to dwell on the matter further. I trust that the Prime Minister will make the document available as soon as he can, and will not press forward proposals antagonistic to any development such as I have spoken of.
– Suppose the States decide not to co-operate, and to keep the field for themselves?
– They are entitled to do so in view of the time that they have occupied the field.. That is one choice.
– According to the honorable member’s argument, they are right in any case.
– They can claim fair play and consideration, on the ground that their institutions are not conducted for personal profit. Should they make overtures for what might be termed a federation of the Savings Banks, they should be welcomed, and every endeavour made to come to terms with them rather than create competition in this special field.
– The Prime Minister has promised that.
– We have yet to see what proposal will be made, and how it will be received.
– Are we to be controlled by the State Parliaments, with their Upper Houses ?
– We are here to transact Commonwealth business. The Upper Houses are answerable to their State electors.
– You cannot get away from historical facts.
– We have certainly so far given the representatives of the States cause for complaint, the Commonwealth in its recent transactions with them having exacted the utmost farthing. Acknowledging our obligation to pay for the transferred properties, the Ministry has treated them on a basis of 3 per cent. but when it has advanced money to the States it has been at the rate of3¾ per cent. That is one of several instances which show a want of recognition by the Commonwealth of the fact that the transformations under the Constitution are all to its advantage, and will be so more and more as the years go by.
– Has the honorable member in mind payment for the transferred properties ?
– Yes. I make this passing allusion to the matter because it is open to the representatives of the States to call attention to the fact that hitherto every new arrangement has been to the advantage of the Commonwealth and not of the States.
– Under the Braddon section the States were most liberally treated.
– The manner in which payment was made during the last period under the Braddon section was most unsatisfactory and unfair. By not proceeding at once to the establishment of a Commonwealth Savings Bank we shall not incur any loss, nor deny the people any appreciable benefits, because any new advantages to be obtained under the Bill, if there are any, will come only after a considerable lapse of time. Consequently we should adopt a generous attitude. It would be a fine thing if a satisfactory agreement could be arrived at with the representatives of the States in this regard. The present situation affords a better opportunity for such an agreement than has yet presented itself. Surely our union to encourage savings would be not only a happy augury for our future policy, but also an evidence to the electors whom we represent that we recall at every stage the fact that they have duplicate interests - their State as well as their Federal interest - and that we were cautious to sacrifice neither, to conserve both, and to unite in a common policy wherever possible, as in this particular instance. If such a common policy is natural, easy, fruitful, and in every way advantageous, it surely is in the conduct of such a business as a savings bank, a practical philanthropy, in which the object is to transfer the whole of the benefits obtained to the people, to all the people who are depositors. We have this tempting opportunity now before us. It will be a grave reflection upon some, if not upon all, of us, if we are not wise and magnanimous enough to bring that agreement about, and now.
.- I listened with interest to the remarks of the Leader of the Opposition, who, I take it, has placed before the Committee the whole of the case for his party against this portion of the Bill.
– As far as I can.
– The honorable and learned member has placed the case fully and fairly before the Committee. I do not think that the attitude he has taken up as an unreasonable one from any. standpoint. There is one thing which honorable members on each side ought to refrain from doing, and that is attempting to destroy the credit of this country. On the eve of an election, we had a so-called responsible State Minister endeavouring to create a panic among the depositors in the State Savings Bank by declaring that the Commonwealth was going to ruthlessly place its hand on the deposits. We have had a member of this House saying that the Commonwealth was going to raid the State Savings Banks. I am glad that the mouth-piece of the Opposition has not indulged in any language of that kind. I have never- taken ‘up that attitude. No matter how I may have spoken against a proposal, never have I attempted to decry any part of my country Or its credit. When I fought the selection of the site for the Federal Capital, I refused to join in the condemnation of Yass-Canberra because it was part of my country. In fighting any measure, we ought to refrain from making any statements which are calculated to destroy our credit or to create a feeling of unrest in the minds of the people. Whether this is a wise proposal or not - whether we are holding the balance truly between the States and the Commonwealth - it is plain that the only effect which the proposal can have, if it has any effect on the State Savings Banks, is by the voluntary action of the depositors. There can be no raid upon the deposits, or loss to the depositors. If any of these deposits are transferred to this branch of the National bank, it can only be done because the depositors feel that they will get a better deal. We are told that there will be an absorption of these moneys’ by the Commonwealth. I do not think that will take place. I believe that there will be a number of persons who will consider that their money can be better invested in the Commonwealth Bank. I expect that we shall get a very large share of the new business. I feel confident that all those who have been required to find an investment for the money which they could not place at interest in the Savings Bank will place their surplus, if not the whole of their money, »n the Commonwealth Bank. If a man has £1,000 in Victoria, and does not wish to deposit it in a private bank, he has to allow ^750 to lie idle in the State Savings Bank. I am satisfied that such depositors - - and there are many who have deposits lying idle - will transfer the money to the Commonwealth Bank, unless, of course, the States meet their requirements. On the other hand, it is open to the States at any time to provide for this demand. The Leader of the Opposition has made some attack on this proposal, but not one of a very serious character. The first point he made was that there . was no demand for the establishment of a Commonwealth Savings Bank. That is, I find, the first argument which is advanced against any measure. Were we not told that there was no demand from the country for a Commonwealth Bank, no demand for a land tax, and no demand for a note issue ?
– Nobody has argued that there was no demand for a land tax, because that was part of your programme.
– So is the establishment of this National bank.
– I admit that the honorable member for Flinders was not guilty of using the argument that there was no demand for a land tax, but some of his colleagues were. That has been the usual form of argument which has been advanced, but it can be put on one side. An argument used by the Leader of the Opposition which is worthy of some consideration is that under the present system State Savings Banks raise their money locally, and invest it locally. That is an argument which I think ought to be met. The point is that there is a danger of centralization or of the concentrating of all the investments in one spot in the Commonwealth. I will admit that possibility, but I would remind honorable members that that was exactly the argument which was used during the Federal campaign. The main objection which was urged against the Federation of the Colonies was that the central authority might centralize ; that it would collect Customs and Excise duties all over Australia, and might spend the money in one spot to the detriment of all. Has that been our experience of Federation? Has this Parliament utilized the funds of the Commonwealth for the aggrandizement of one part to the detriment of any other part ? Just as it can be safely trusted to consider the views and wishes of all in the big matter of raising millions by means of Customs and Excise duties, so it can be depended upon to exercise its discretion in this case. There is one thing about this proposal which troubles me, and that is she duplication of services. Why cannot we approach matters with a little more common sense, and have less duplication of services to the people? In almost every case the Commonwealth, instead of meeting the wish of the people for greater economy and fewer departments, has created another Department. Instead of having one Governor as people imagined when they voted for Federation, we have seven Governors ; instead of having one great Commonwealth stock we have still six States competing in the money market, and if the present Government had followed the example of the late Government we would have had a seventh borrower. The time has arrived when the Commonwealth should get into touch with the States in regard to not only the transfer of the State debts, but many other matters, such as the compiling and printing of rolls. We ought to do all in our power to give the people a more united service, and so save them tens of thousands of pounds rather than duplicate the services.
– I presume that the honorable member is going to connect these remarks with the subject before the Chair?
– Yes, sir. I am going to point out that this proposal makes another duplication, and that the only way out is in the promise definitely made by the Prime Minister, that he will approach, or is willing to be approached by, the representatives of the States with regard to not only this proposal, but the banking proposals generally. We are establishing, or proposing to establish, a Commonwealth Bank ; and I take it that there is a demand and absolute justification for providing the people of Australia with an institution of their own in which to do their banking business. A Commonwealth Bank would be incomplete without authority to establish a Savings Bank. As to the duplication of the services now being rendered by the States, that is a matter of adjustment, which I hope will be entered into by the representatives of the States and the Commonwealth in a purely Federal spirit. As to giving “ notice to quit “ in the case of the post-offices, it must be remembered that we are establishing a Commonwealth Bank, and that we cannot have part of the business done in one building and another part in another building - where we conduct the ordinary business we must also conduct the Savings Bank business. If “ notice to quit “ is given, it will not be because a Savings Bank is being established, but because a Commonwealth Bank is being established. If it is desired to establish a branch bank in the country, and the postoffice is a suitable place, “ notice to quit “ will be given, “even if the Savings Bank is not started.
– The Commonwealth may get notice to quit the premises now occupied at railway stations as post-offices.
– Notice to quit has already been given in the matter of telephone lines. Personally, I do not think there is any idea on the part of the Government of unduly harassing the State Governments. The Governor of the bank, knowing the wishes of both sides of this Chamber, will be very loath to give cause for any embarrassment of the kind. The question of centralization has been raised ; and, in my opinion, there is less centralization under Federal control than under State control. The Sydney influence and the Melbourne influence is not so great - though it is still great - in the Federal Houses of Parliament as it is in the State Houses of Parliament. When Federation was proposed, it was said that the postal facilities in the back country would be decreased owing to the fact that the Post Office would be controlled from one centre; but experience has shown that such facilities are greater under Federation than previously.
– In what way?
– In the way of extended services.
– The honorable member must not discuss that matter now.
– I am merely illustrating my point. The argument is that the handing over of the banking powers to a central authority will lead to a neglect of outlying places. My objection to centralization is not the economical concentration of the administration in the hands of one governing body, but the concentration of the services in one particular city to the detriment of the rest of the country. I rose more particularly to express my satisfaction that the case of honorable members opposite, as presented by the honorable member for Ballarat, is not a fear that the Commonwealth Bank is going to ruin the States Savings Banks.
– The honorable member doubtless heard the statement made by the Prime Minister this morning, that the man- agement of the Commonwealth Savings Bank will have failed unless it becomes a. monopoly.
– I did not hear that statement, but I take it that the management of the bank, and the negotiations between the Commonwealth and the States, will not be successful if, eventually, the whole of the savings of the people are not controlled by a central governing body. Federation will have failed if a larger number of services are not more concentrated than they are at the present time. Federation was instituted with a view to economy in the services rendered to the people. All those services which can be controlled more economically or efficiently by a central governing body should be undertaken by the Commonwealth. As I was saying, it is not now contended that we are going to raid the deposits in the State Savings Bank. It is admitted, I take it, that any change can only be the result of voluntary action on the part of the depositors in removing their deposits to a bankwhich they think gives them greater advantages.
– Honorable members cannot complain that I have done much to delay the pr ogress of this Bill. If I have refrained from addressing myself to other portions of the measure it is not because I am blind to some of the risks which attach to those provisions, but because it seems to me that the dangers depend more on the mode in which the Bill is administered than on the Bill itself. Now, however, we come to a part of the Bill of which that cannot be said. The provisions now under consideration, if they become law, must have certain effects ; those of us who think that those effects may be fraught with some danger have the duty of pointing out what that danger is. We are now dealing with the interests of what I was going to call a class of the people, though, as a matter of fact, the interests are those of practically the whole people of Australia, excluding that comparative minority who have the good fortune to be beyond the necessity of any Savings Bank. In listening to the Prime Minister on this Bill I have sometimes thought that he speaks more as a student than as one with practical experience in a most difficult business. The right honorable gentleman speaks as though it were a small matter to undermine or put aside a fabric, which has been built in halfacentury or more by the earnest endeavour of the people of Australia in the different States, and to substitute another structure by a wave of a wand, as happens in the Arabian Nights, and nowhere else, so far as my knowledge goes. I do not claim to have had much practical experience myself, though I have had some, in financial matters. I think, however, that if the Prime Minister had more practical experience of the difficulty that must be overcome in the establishment and progress of any financial institution hewould not speak with such undoubting optimism in favour of the proposal now before us.
– I do not think that the difficulties would have frightened the honorable member for Flinders very much.
– If the necessity existed I should shut my eyes to the difficulties, or find the best way to surmount them. The moneys of the depositors are already secured, inasmuch as the Commonwealth stands behind them, irrespective of whether they are controlledby the Commonwealth or by the States.This Commonwealth would not stand a single day if default were made in paying any of those deposits. But we are dealing not merely with the deposits in these Savings Banks, but with the rates of interest which will be paid upon them, and as to whichno consideration has been given by the Government. I am prompted to make a general statement of the position of the Savings Bank in Victoria, not because it is ahead of the Savings Bank in any of the other States, but because I am more familiar with it.
– It is not a better model.
– I think that all these institutions are eminently successful. But I am more familiar with the Savings Bank of Victoria, and consequently can speak with more authority of it. At the present time that institution is managed by a board of Commissioners who are thoroughly well trained in business methods and finance, and who have completed the building up of a financial institution which, I venture to say, is unsurpassed by any other in the world, not only in respect of the way in which it handles a vast amount of money, approximating£18,000,000, but also in that it obtains the very best results from the investment of its money, and manages its affairs with the least possible expenditure. I would remind the Prime Minister that when dealing with banking he is dealing with a subject in which success or failure results from small economies, from minute differences of percentage, and from a small percentage of difference in expenditure. InVictoria the Savings Bank is an institution which deals with the enormous sum of about£18,000,000, and does so on absolutely sound principles For handling that large sum and for returning a good interest upon it, its total expenditure is only 8s. 6d. per cent. That is a very small percentage indeed. Honorable members must recollect that it is not banking business in the ordinary sense which is done by this institution. It deals with a whole host of small accounts, and has to watch the interests of hundreds of thousands of small depositors. They deposit their money with it, and that money begins to earn interest from the very moment it is so deposited until it is withdrawn. When we consider these facts, we must recognise that an expenditure amounting to only 8s. 6d. per cent. evidences remarkable business management.
– The interest begins to accrue on the first day of the month.
– I stand corrected on that one point. Still, the daily calculations which are involved in regard to those accounts make for expensive management. But, as the result of the experience of half a century, and of the establishment of a number of branches throughout the country, the expense of management has been reduced to a minimum. All these branches, with the staffs and services which have been created, could not be called into existence by an Order in Council. They have been built up by the efforts of skilled men, extending over considerably more than a generation. In Victoria the Savings Bank has some seventy branches in which a man may deposit his money and withdraw it with just the same facility as he may deposit or withdraw it at the head office in Market-street, Melbourne. Then, the institution has 355 agencies in the post-offices. Obviously, it would be impossible to have branches in every small town, and, therefore, deposits may be made at post-offices, the postmaster simply making a record of the fact, keeping a carbon copy of it, and posting the original record to the nearest branch of the bank. This system has has been built up over a long period of years, and I say that even the Archangel Michael - I do not know whether he was familiar with finance - could not create it in a day.
– He was a failure.
– I am sorry that I should have mentioned one who should’ come under the ban of the Minister of Home Affairs. No matter what genius wem’ay obtain, I say that he cannot call intoexistence, either this year, next year, or within the next ten years, machinery for doing this work on behalf of the peopleanything like that which already exists in Victoria.
– The Savings Banks hadto start on a small scale.
– If the needs of the people were not as efficiently met asthey are, we should have to begin on a small scale, too. But my point is that there is no necessity for the proposed Commonwealth Savings Bank. Even if we weresure that we should be able gradually to supplant the States Savings Banks, as thePrime Minister says we should-
– I did not say that.
– I fully appreciate the Prime Minister’s statement that it is only by the voluntary act of depositors that any transfer can be made.
– Or by a State.
– But I proposeto show the incidents which will accompany that act on the part of depositors. I say that if we are not absolutely certain of success, this attempted substitution of the Commonwealth Savings Bank for the State Savings Banks is not an act of statesmanship, but one of political lunacy. Let me now come closer to the facts. I take Victoria as an illustration, and I start with the position, which was frankly admitted by the Prime Minister this morning, that we cannot have a Commonwealth Savings Bank and a State Savings Bank administered by the same postal officials. The accounts would be liable to be mixed up in all kinds of ways. Before I go further, let me say that I do not regard this as a question of State rights at all. I am not concerned about the State rights. I am concerned about the people who have, in the past, as it happens through the State agencies, built up for themselves this splendid piece of machinery The first thing that the establishment of the Commonwealth Savings Bank will do is this: The existing seventy-seven branches of the State Savings Bank in Victoria will become insufficient for carrying on the work.
More branches will be necessary. I consulted the officers of the Savings Bank yesterday, and was convinced by their arguments that they could not well carry on without increasing the number of branches considerably. They said they could still get a good deal of the agency work done, probably without any expense additional to whatthey pay the Commonwealth now.
– Do they pay the Commonwealth ?
– Yes, they pay the Commonwealth now, throughout the whole of Australia, £33,000 a year for the services of the post-offices. I am told that there will not be much difficulty in getting the agency work done, either by other banks, if there are any in the particular little towns or townships where agencies are required, or by some storekeeper or chemist, or possibly by making arrangements with the State authorities in certain cases. The agency work is not the trouble. They would have, of course, to have their agencies across the street when put out of the post-offices, but they would undoubtedly have to increase the number of their branches. It has been estimated that the increase of expenditure in connexion with enlarging their branches would amount in Victoria to, at least, £15,000 a year. Taking New South Wales, Queensland, and other States, which are much larger in area, and where, therefore, the necessity for branches to carry on the business is greater, it is estimated that, for the whole of Australia, an expenditure of £100,000 a year will be necessary to continue the same business by the addition of branches. I believe that these representations are not at all exaggerated. They are made by men whom I know personally, and whose carefulness I know. Honorable members are aware that one of the Commissioners of the Savings Bank of Victoria is Sir George Turner, an ex-Treasurer of the Commonwealth’. These, then, are men whose word is entitled to respect. They say that the estimated increase of expenditure throughout the whole of Australia will be £100,000 a year. I told honorable members a little while ago that the line is drawn very fine now. The margin is very narrow. If the depositors are to be paid interest at the rate of from 3 to3½ per cent. on moneys which are invested in the sound securities in which, under the law in the States, they must be invested, you must have an extremely small margin. After paying that interest and the expenses of working, the total margin of profit, at present, for the whole of Australia is £110,000. That money goes into reserve funds for the security of the depositors. This is a provision made, not for the benefit of the Government, but as an insurance for the safety of the people.
Mr.Scullin. - Will the extra provision of branches become necessary by the action of the Commonwealth Government?
– Yes, that is what I am assured. The necessity for some additional branch of management is absolutely clear. If, then, that estimate of additional expenditure of £100,000 a year is correct, and the Savings Banks have now a net profit of only £110,000, the margin will be reduced at once to £10,000 a year on a capital of £60,000,000. Honorable members who know anything whatever about finance will recognise that a business involving the investment and management of a capital of £60,000,000 cannot be carried on with a margin of only £10,000 a year. It would not be safe. It would be entering the region of unsound and speculative finance, and imperilling the interests of hundreds of thousands of depositors. The result is that the interest paid must be lowered, and at that point the Commonwealth Treasurer come;; in, and says, “ If the States lower their interest the Commonwealth will step in and pay better interest.” I will deal with that in a moment. There is another side to the State Savings Banks which is of some importance. We established about fourteen or fifteen years ago a Credit Foncier branch in connexion with the Savings Bank of the State of Victoria for advancing money to small farmers and landowners. That has been eminently successful. It is true that there have been complaints from time to time, and there always will be complaints in connexion with such a business, that it has not adcanced money to the most necessitous cases. That is true, because it is not a Mont-de-piete. It cannot advance money except on security, and it cannot advance money to the most necessitous cases.
– It cannot advance as much as they want.
– No. Speaking from memory, it has now out the sum of £877,000. It has advanced altogether since its inception over £3,000,000, and it has done an enormous amount of benefit to persons whom it is to the interest of the whole of the people of this country to assist - small men who are endeavouring to better their positions. If the Commonwealth Savings Bank draws away depositors from the State Savings Banks, as the Treasurer says it will, what will be the effect? Honorable members will pardon me if I go a little into detail, because the whole thing is a matter of detail. It cannot be argued on broad principles; we must look at the facts. The money is obtained for the Credit Foncier by the issue to the public of debentures, the Credit Foncier branch being separate from the ordinary Savings Bank. As a matter of fact, although the Credit Foncier could always get the money from the public on practically the same terms as the Government get their money, because its debentures bear the guarantee of the State, it does not, as a rule, seek to get the public to take these debentures. It advertises for tenders, but it is not very anxious to get the public to take large quantities of the debentures. The reason is this : The bus; ness of the Savings Bank has always been so successful that there is a very large amount of additional money continually coming into the Savings Bank branch and requiring investment. That money is advanced by the Savings Bank branch to the Credit Foncier, with the result that the Credit Foncier gets money at a rate of interest quite appreciably lower than it would if it had to go out and sell its debentures to the public in the open market. That lower rate of interest enables them to advance to all these small people throughout the length and breadth of the country money at lower rates than would otherwise be possible.
– Where does the Closer Settlement Board come in?
– The Closer Settlement .Board has nothing to do with this matter.
– The Board makes advances to farmers.
– There may be other agencies, but I am not dealing with them If the Treasurer succeeds fa drawing away from the State Savings Banks any considerable proportion of this continuous stream of deposits, the immediate, result will be that they will not be able to lend out money on the cheap terms which now obtain. They must at once impose additional interest on the farmers and on the small land-owners. That is effect number one.
It is a side issue ; one of those things which I venture to think has been quite unforeseen by the Government in introducing this measure. I think I have shown what will follow whether the new bank is successful or not. I mean, of course, successful in earning as much interest and incurring as few losses as happens under the present system. The bank must always be successful in the other sense of the term. I quite agree with the honorable member for Corangamite that we ought never to allow to go from this House the slightest suspicion that there will be the remotest danger to any man’s money which is invested in the bank. What I mean is that the management of the institution should be such as will enable the same interest to be obtained, and the same interest to be paid to the depositors. I have pointed out that whether the Commonwealth Bank be successful in that sense, or not, the mere fact that it steps into the field will diminish the rate of interest which the Savings Banks can give to their depositors, and will indirectly compel them to increase the rates of interest charged to their borrowers through the Credit Foncier. The Prime Minister referred to rates of interest which are given by various State Banks. I followed him closely, because I had obtained figures from the same source. It is rather a remarkable fact that, in the different States, the rates vary somewhat, and the limits on which the interest is paid vary somewhat also. In every case where the limit is ^500 or over, the Savings Banks do not pay more than 3 per cent., because they cannot pay more. In New South Wales they pay 3J per cent, up to ,£300. In Victoria they pay 3.J per cent, up to .£100, and 3 per cent, on the excess up to ,£250.
– The honorable member’s statement applies as to rates, but not as to the aggregate amount going out.
– I am not referring to ‘the aggregate amount going out. I am referring to the fact, which the Prime Minister did. not appreciate, that you cannot do away with, or largely increase, the limit without decreasing the interest paid. The main object of the Savings Banks has always been to benefit the very small depositors, to benefit the man or woman who wants to make savings in a small way, not the person who wants to invest large sums of money. If you take away the limit altogether, you will enable the commercial man, or any man who has £10,000 or £20,000 lying idle, on which he wants interest for a little while but cannot get it anywhere else, to put it into this bank ; and to that extent you will diminish, the rate of interest payable to genuine Savings Bank depositors. That is a side issue, but it is a very important issue, as we shall find. The paper from which the Prime Minister quoted shows that if you want to pay interest to the poor man you must impose a limit, and not too high a limit. Otherwise you cannot pay such good rates of interest. Now, I have to ask the Committee to consider what, after all, will be the position of this new bank as a Savings Bank. I have pointed out that the success of the bank, in the sense in which I have referred to it, is always dependable, and must always depend, on small economies and minute percentages. The first thing that happens here is that this bank starts with a handicap of .£33.000 a year debited against it. That is the cost of getting possession of the post-offices.
– The bank will not take possession of all of them in one year.
– It may be spread over some years ; but, nevertheless, the handicap against the bank will be £^33,000 a year as a debit. It has to make that up before it gets anything.
– That presupposes that every present post-office used by a State banking institution will be closed to the State and used by the Commonwealth Bank ?
– As it will be. You cannot conduct a Savings Bank without branches. You cannot conduct a Savings Bank in Australia unless you bring the facilities of banking to people in the outlying districts. The way the Government propose to do that is by opening accounts in the post-offices and ousting the States from the post-offices. That is frankly admitted.
– Does not that ,£33,000 include the payments to officers as well as rent ?
– Precisely. The honorable member cannot think that we are going to get additional work out of the officers without paying more for it. If new work has to be done it will have to be paid for. That expense will stand as a debit to the bank. But let me come to a more important aspect. This is the first proposed
Savings Bank in the world, as far as I know - at any rate, the first in any British community, the first anywhere in Australia - that has ever started business without’ any limitation whatever upon the character of the investments in which it is to place its money.
– What about the Post Office Savings Bank in Great Britain?
– I do not know whether there is a statutory limitation upon the investments of the Post Office Savings Bank in Great Britain, because I have not looked into the matter, but I think the honorable member will find that the bank can only invest in Government securities.
– In consols, I think.
– Under our law in Victoria there are two or three kinds of securities in which the managers of the Savings Bank are authorized to invest, in certain definite proportions. They are Government securities to a certain percentage, first mortgages on land to a small proportion, and a third kind, which I forget for the moment. They are all absolutely perfect securities - gilt-edged. It may be asked, What is the necessity for limiting the class of securities in which a bank may invest its money if you have the security of the Commonwealth behind the bank? There is a very great fallacy contained in that question, though it is a fallacy which I admit that it is very difficult logically to put your finger upon. It has been recognised, however, in connexion with every institution of the kind that has been established that it is necessary, and the advisers of every Savings Bank in Australia having a Government guarantee have always thought it necessary to impose limitations as to the character of its investments.
– The Government guarantee is limited to a certain extent in some cases.
– Yes ; the Government guarantee in the case of one Savings Bank in New South Wales does not go beyond ^£50,000. That, however, is a semi-private bank, whereas I am speaking now of State Savings Banks. Under this Bill, there is no limitation whatever as to the character of the investments that may be made of the Savings Bank moneys. It was because of the absence of such a limitation that I asked the Prime Minister, while he was speaking, whether the moneys deposited with the Savings Bank were to go into the ordinary business of the general bank. It seems that they are. The depositors’ money is to be used in discounting commercial bills and so forth.
– Will not such matters rest with the Governor of the bank?
– Yes; but we have to remember that he is to carry on the ordinary business of a banking institution. There is no escape from the position. The money deposited with the Savings Bank will have to be used in the ordinary business of the bank. A National bank cannot be started with a capital consisting only of a borrowed million. It must have more money, and we find that it is to consist of the money paid in by depositors throughout Australia. There is no concealing that fact. Honorable members opposite may think that it is all right, and in one respect it is. There is no question that the principal will be safe, but is it sound finance from the point of view of a Savings Bank? Are we likely to be able to retain with security the rate of interest that will be offered at first in competition with the existing institutions? It will be possible to draw depositors away from the Savings Banks of the States to the Commonwealth Savings Bank only by offering them a better rate of interest or better terms than they can obtain from the present Savings Banks. How is that better rate of interest to be secured? Out of the profits of the bank? As a matter of fact, the profits of the business are already hypothecated under the Bill. They are to be divided between a reserve fund and a fund for the redemption of debentures. That being so, this better rate of interest cannot be obtained out of the profits. It would be a breach of the whole spirit of the Act to say, “ We are going to increase the rate of interest because the business is so profitable, and there is no need to pay off the debentures. We are going to increase our rate of interest to depositors in order that we may have no money with which to repay the Government.” No Governor would think of doing that. The Governor will have to make’ payments into the debenture redemption fund, and he must have a reserve fund. I ask honorable members to imagine the position of this new bank, controlled, as it will be, by one Governor, who will have to appoint a new staff drawn, it may be, from banks of different kinds, and starting without the kind of experience necessary for Savings Bank work. The new staff will be unorganized, and it must take some years to properly organize it:
Is it likely that an institution so situated is absolutely sure to enter the arena of ordinary commercial banking with absolute security of profit ? lt may do so, but is it sure to do so?
– Will not the prestige of the Commonwealth be worth something to the bank ?
– Not a bit, so far as a man who wishes to discount a bill is concerned. Such a man will go to the bank that will discount his bills on the best terms. Not even the prestige of the Imperial Government, nor the government of the universe, if it were possible to have it behind the bank, would affect him. A man invariably goes to the bank that will give him the best terms. If the bank is going to enter into this field of business the Governor may be extremely cautious, but he may be over-cautious. And herein lies the difficulty. You must have a man who will bring to bear in the management of the bank the kind of ability that is necessary for the investment of moneys in gilt-edged securities, but who also possesses to some extent initiative, and has courage in going into the business. These qualities vested in one man may lead to his making profits for the bank ; but they may also lead to his making losses. That is the whole position. He, so to speak, will be the bank, and as such will be subject to all the liabilities and dangers of the arena into which he enters in competition with all the other banks. The bank will enter that arena first of all as a new institution, with a staff that is only partially organized, and which will take some time to get into working order. I do not say that this bank will not be successful, but we cannot- assume that it will, and that it may not make losses. If it makes losses, what will happen? Neither the Parliament of the Commonwealth nor the Governor of the bank would permit it to go forth to the world that the National bank of Australia was partially insolvent. That being so, the Governor cannot afford to make any losses. That is his position. If he deals with the Savings Bank money - with the money of the depositors throughout Australia - that branch of the bank cannot afford to make any losses. It must never show a loss in the profit and loss account. Such a thing must be prevented, and the only way to do that would be to decrease the interest which the Governor pays the depositors. The depositors will not know until the difficulty arises that they are being placed in that position. They will not know that it is a case of “ Heads I win ; tails you lose.” You cannot take anything out of the profits which the bank may make, but the depositors may run the risk of having their interest decreased if the bank should happen to make a loss, or the rate of interest might be decreased, to prevent it making a Toss. That fact cannot be concealed by any kind of verbiage to which honorable members may resort. By linking the Savings Bank money with that of the general bank which you authorize to go into the ordinary arena of commercial banking with all the risks attendant to it, you are subjecting the Savings Bank money to the risks of that class of business. The guarantee of the Commonwealth is a guarantee as to the principal, and as I have repeatedly said, that will always be honoured. But so far as the interest is concerned, the return which will be given to these depositors in the future will depend upon the risk taken by the use to which the money is put.
– The rate of interest will be announced in advance each vear.
– The Governor of the bank will have to do that. There will always be the swing between the two - between the States Savings Bank and the Commonwealth Savings Bank. I agree with the Treasurer that the only compulsion on depositors with the State Savings Bank to transfer their accounts to the Commonwealth Savings Bank will be the inducement or temptation held out to them by the offer of better terms. I do not think, however, that it will be possible to offer better terms if we have regard to sound finance.
– Then there is no danger.
– And no business.
– If, however, the Governor is able to offer better terms there will be danger. What can be thought of a Treasurer who comes down to the House and says, “ Here admittedly is a magnificent institution or series of Savings Banks all over Australia doing this work, and doing it admirably. These State institutions are taking the money of the people and getting the best of terms, but we are going to bring into competition with them another institution that may or may not succeed in paying better interest, but which, if it does, will draw depositors away from those other Savings Banks.”
– The honorable member is a splendid pleader. If he were sitting on this side of the House I believe that he could argue just as well in favour of our proposal as he is now arguing against it.
– There is no easier criticism than the remark, “ Your argument is a good one, but I believe that you could argue just as well on the other side.”
Sitting suspended from. 1 to 2.30 p.m.
– I wish to summarize the observations which I have made. The proposed bank will start without capital, the sum of ,£1,000,000- being lent to it, on which it will have to pay about ,£35,000 a year in interest. No doubt those who now have money deposited in the branches of theState Savings Banks at the various postoffices will, on the establishment of theCommonwealth Savings Bank, transfer their accounts to it, partly because they are in the habit of doing their banking business at the post-offices, and’ it is not probable that they will go into minute calculations regarding interest. This will put a large sum into the hands of the Governor of the bank, and this sum will constitute the only real capital that it will have. In effect, the depositors in the Commonwealth Savings Bank will be shareholders in. the Commonwealth Bank. The principal deposited will be guaranteed by the credit of- the Commonwealth, but the interest paid on it wilt depend on the business done by an institution taking the ordinary risks of commercial transactions. The Prime Minister has said that if the Commonwealth Savings Bank does not offer better terms than the State Savings Banks it will not attract money from them, but is it possible that an institution started with a loan on which it will have to pay .£35.000 a year, and having an additional incubus of £33,000 a year, unless the Government subsidizes it by giving it the use of the post-offices and the services of officials free, can make substantial profits to begin with? It will be the duty of the Governor to open branches throughout Australia, and to staff them with the best material that he can get. Although the profits of our banks are considerable in gross amount, they are made on very small margins. He would be extremelybold who would predicate that an institution carrying on the ordinary business of banking under the terms of clause 7, discounting commercial bills, making advances by way of loan, overdrafts, and so on, would not incur losses. The staff will have to be got together from the present banks, and there may be a tendency for men not of the highest calibre, whose abilities are not thoroughly recognised by the institutions employing them, to find a place in the Commonwealth Bank.
– Those whose abilities are recognised have the road to promotion open to them now.
– It is very slow promotion.
– Except to those whose abilities have been proved. Is the Commonwealth Bank going to pay its staff more than the men now in private banking employment are paid ?
– Very likely.
– And is it also to : give them quicker promotion ? If so, how will it be possible for it under the circumstances to which I have drawn attention to show a profit at the beginning? The bank is to be administered by a financial genius who is to combine extreme caution with universal business knowledge, but no matter how strong he may be, he will be under the greatest temptation to take, not bad paper, but paper and security which are not of the very best. It is difficult to determine the line between good and bad business, between what is sound and what is not quite sound. The other banking institutions are likely to use the Commonwealth Bank indirectly as a dumping ground for their weaker securities, and the Governor must have exceptional strength of will to refuse, and omniscience to recognise, all the business that is offered to him that is not quite sound. I do not say that the operations of the bank will result in a loss.
– The honorable member is proving that.
– If the volume of business increases, and conditions remain favorable, it is highly probable that the bank will make a small profit ; but, if conditions become unfavorable, the Commonwealth Bank is more likely than any other banking institution to incur loss. Will any one here say that there may not be a loss? If there is a loss, those who must bear it are the shareholders, the depositors in the Commonwealth Savings Bank.
– And if there is a profit?
– They would not get it, as the Bill stands.
– The general community would benefit.
– The profit would go to the creation of a reserve fund, and the repayment of the £1,000,000 . advanced. It is conceivable that Parliament, in the event of the bank making a considerable profit, would amend the law to enable the Savings Bank depositors to benefit.
– To get the whole of it ?
– To get most of it. If the money deposited in the Commonwealth Savings Bank is to be used in a speculative commercial business, I think that Parliament will be ready to provide that those who have to stand any loss shall also share in any profit. But is this the sort of institution that should be substituted for the present Savings Banks? Are we going to say to those who have now money deposited at the post-office branches of the Savings Banks of the States, and invested in gilt-edged securities, “ We invite you to transfer your money to the Commonwealth Savings Bank, and thus to put it into a speculative concern which may incur trading losses”?
– Does the honorable member assume that the money deposited in the Commonwealth Savings Bank will be appropriated by the Commonwealth Bank?
– That is what the Prime Minister has told us. He stated that the accounts of the Commonwealth Savings Bank would be kept separate from those of the Commonwealth Bank, but I interjected that that was not the important matter. Of course, the accounts will be kept separate. The question is, Will the money be kept separate? and to that question the Prime Minister’s reply was that no undertaking could be given. The public should know that they are invited to transfer their money from the State Savings Banks, by whose management it has been safely invested, to the Commonwealth Savings Bank, which will make them shareholders in an institution carrying on ordinary banking business.
– They are not invited to do that.
– It is the Prime Minister’s reply to every objection that if the depositors of the State Savings Banks do not wish to transfer their accounts, they need not do so. I think that the transfer will be made in many cases for the reasons
I have given. No doubt the Commonwealth Savings Bank will offer for money on deposit the rates now paid by the State Savings Banks.
– The transfer will be made in order to get the best security.
– The transfer will be made, but the depositors will not understand, unless it is fully explained to them, the conditions under which they will place themselves in making it. The Commonwealth Savings Bank will not get much money unless it offers rates of interest as high as those of the States, and those rates are fixed in advance, usually, I think, for the period of twelve months. But if, because the Commonwealth Bank is not making a profit, the interest rates on deposits have to be reduced, what will happen? The depositors in the Commonwealth Savings Bank will retransfer their accounts to the Savings Banks of the States to get better interest, and the Commonwealth Bank will be suddenly deprived of a large part of its working capital.
– But the State Savings Banks will benefit.
– I see no advantage in that. I am arguing this matter, not on behalf of the Savings Banks of the States, but for the protection of the interests of their depositors who may transfer to the Commonwealth Savings Bank. I think I have succeeded in showing that their money will be exposed to risks to which it is not now exposed, being invested very largely in Government securities and first mortgages. I have refrained, as far as possible, from discussing what seem to me difficulties in regard to the Commonwealth Bank, arising not from defects in the Bill, but from possible misgovernment. I see in the provisions before us, however, a source of very considerable risk and danger to existing depositors. I have put forward reasons ; and I have a hope, though a very faint one, after what the Prime Minister has said to-day, that he may not be entirely closed to argument on a question of great complexity and difficulty.
.- The Committee are indebted to the honorable member for Flinders for his keen analysis of what he conceives will be the probable conditions surrounding this new departure. I take it that, with his trained judicial mind and high intelligence, he has given us the strongest case that can be made against the Commonwealth embarking on this Savings Bank venture. I listened carefully and with keen interest to all the honorable member said ; and, generally speaking, the difficulties he has pointed out may be admitted. But they are difficulties that the Governor of the bank will be quite as well aware of as any honorable member here. It is true, as the honorable member said, that any change that is made must come gradually, so far as regards the postoffice agencies of the existing Savings Banks. We were shown figures in order to prove that the contemplated change will increase the cost of administration in the present Savings Banks. It is admitted, of course, that the business of the two banks could not be carried out in one post-office ; and if the existing bants have to seek other accommodation there is no doubt that they will not be able to work their agencies as cheaply as they do now. That seems to be the only tangible point advanced by the honorable member. What we have to consider is whether corresponding advantages will be secured by the depositors; and I should have liked the honorable member to deal more fully with the disadvantages of the present system as set forth by the Prime Minister. One very’ general complaint is as to the limitation of deposits; but, personally, I recognise that the rate of interest must depend on the limitation. The average deposit in Australia is £35 16s. id., and the great bulk of the depositors receive interest on the whole of their deposits. There are, however, organizations and institutions who use the present Savings Banks, and would use them still more but for the limitation to which I am referring. The great friendly societies in Australia, number 4.33*; with a membership of 367,874 ; and those societies, together with many of the trade unions, would prefer to deposit their funds in the Savings Bank for the sake of the interest earned. ‘ The friendly societies’ total funds amount to ;£4.93l!°98, of which £4,700,797 is invested, leaving a balance of .£230,301 uninvested. These moneys are all contributed by the same working classes who deposit their money in the Savings Bank; and we must lie very careful to study their interest in any legislation of this sort.
– The friendly societies could easily earn as much or more interest by placing their moneys outside the Savings Bank.
– The uninvested £230,301 would very largely be deposited in the Savings Bank but for the limitation imposed. Whether the Commonwealth Savings Bank will be able to fix a limit of £1,000, as in Western Australia, or whether it will keep to the lower limit, is a matter, of course, for the Governor of the bank. We ought to note with satisfaction that there has been an increase of £2, 000,000 in the Savings Bank deposits ; and as to the suggestion of the honorable member for Flinders regarding hard times, we must remember that in a country like this, where the primary producers count for so much, we are largely dependent on the climate; and in any case all banks and financial institutions are similarly affected. In hard times, of course, the working man has no money to save.
– The friendly societies have.
– I am speaking of the friendly societies only as a factor in the case, and saying that they would use the Savings Bank more, even if there were a lower rate of interest with a wider limitation.
– Investment on mortgage would return a larger interest than could be obtained from Savings Banks.
– In discussing these matters Ave ought to eliminate all that is self evident. Of course, we cannot tell what the future climatic conditions will be, or whether our present prosperity will continue ; but we know that the bad conditions do not last very long; and in any case, as I have said, the Commonwealth Bank will be in no worse position than any other bank. Able as was the address of the honorable member for Flinders, there appeared to me to be a certain number of contradictions in it. I quite agree with the view he expressed that it will be a long time before the Commonwealth Bank, will do a very large business, or before it will be possible to pay a high rate of interest. The honorable member admits that if the bank does not pay a high rate of interest it will not draw business; and yet he argued as though it will detrimentally affect the existing institutions. Both these views cannot be correct. The, present Savings Banks have 1,838 agencies throughout Australia. There is not, however, an agency in every district; and here we have a field in which the Commonwealth Savings Bank could operate. It is admitted that if tlie Common wealth instituted agencies in places where the existing banks now have agencies, the resultant change would mean increased cost to the present banks. But supposing that to be so, is it sufficient to justify us in declining to meet certain needs that are not now met? People will not use the Commonwealth Savings Bank unless they obtain higher interest and better conditions ; and there is certainly room for improvement in the conditions relating to transfer. The Australian working class, owing largely to their intermittent occupations, are, perhaps, the most nomadic population in the world; and the facilities they have at present for using the Savings Bank are very meagre. We are told that transfers can be made now, but the depositor has to find another depositor who knows him personally, and can satisfy the bank authorities as to his identity. In ordinary banking any reputable townsman who is known to the bank authorities can identify a person who presents a draft, and so forth. The present system shuts out hosts of travelling people; and it is certainly not correct to say that proper facilities for transfer are afforded. The Commonwealth Bank, on the Savings Bank side, will probably be very tardy to interfere with the present banks, but no new institution can be established without affecting existing institutions more or less. There is no law passed which does not cause suffering to some one; and in every change a certain amount of reorganization is inevitable. I do not take a pessimistic view as to any immediate effects that this Commonwealth Bank will have on the existing banks, with which I should be sorry to interfere. But we must start some time with a bank that will eventually become the universal Commonwealth Savings Bank ; and it should be safeguarded in every way. The honorable member for Flinders spoke about the danger of depositors losing their money, although he had previously dwelt upon the fact that the guarantee of the Commonwealth was behind them, and that therefore they could not lose their deposits.
– 1 admitted it.
– I thought the honorable member lost sight of it in the latter part of his speech. I recognise the force of his argument that it would be unfortunate if the bank did make losses; but that only emphasizes our demand for efficient and careful management. I have realized all along that this institution, and especially the Savings Bank side of it, must go slowly; hence time will be given to adjust the relationships of the States. Those controlling the State Savings Banks will probably realize that it is advisable for them to put the whole of their business into the Commonwealth Savings Bank. If that were done it would wipe out all the difficulty of which the honorable member speaks, and would be quite a sensible thing to do. We should not discuss this matter on the assumption that the State Savings Banks are to continue to fight the Commonwealth Savings Bank as competitors. Seeing that the depositors are the controlling interest, representing as they do nearly one-third of the whole of our population, the question will be settled by them. They will demand the fullest economy in conducting the Savings Bank operations, and every one must admit that to have the whole business under one organization, such as the Commonwealth Bank - especially with the advantagesof the post-offices - would mean carrying it on far cheaper than can be done by a number of different State institutions. That is simply an exemplification of the universal lav/. Big concerns always succeed in crushing out smaller ones in every phase of competition. I am looking ahead to the time when common sense will dictate to the Stales that they should take advantage of the national machinery for carrying on this work. That is more likely to occur than that we should have any friction or any of the losses spoken of by the honorable member for Flinders.
– To do that the Commonwealth must absorb all the existing business.
– The more the Commonwealth absorbs it, of course, the further we shall go in that direction. Those who conduct the State institutions will recognise that it is their duty to do what is best for the sake of their depositors. The honorable member for Flinders spoke about their appointing agents among outside people, but these cannot be checked in the same way as can Government post-office officials. The Governor of the Commonwealth Savings Bank will adjust all the difficulties gradually. I am sure that no man appointed to that position would attempt to launch out at once by establishing branches of the Savings Bank in every post-office. He might meet demands for agencies as they were made, but there would be no rushing into the business. Time would be given to the present institutions, and I think the history of the Commonwealth justifies one in assuming that no hardship would be inflicted on anybody. Due consideration has always been shown by every Commonwealth Government to the States and State concerns, and of all the federations I think ours has worked most harmoniously with the States, in spite of occasional political talk about State rights. We must consider first and all the time the interests of the depositors, and we need have no fear that the Governor of the Commonwealth Bank will not give the existing institutions plenty of time to adjust their relationships. The quickest way, after all, would be for them to come in, although possibly there will first have to be State Premiers’ Conferences to discuss various phases. I hope they will understand that the Commonwealth has no intention to upset existing arrangements or to do anything detrimental to the interests of the million and a half of depositors who have their savings in institutions which so far have done very well. On the other hand, of course, no one can say that their general management could not be improved. The honorable member for Flinders had to admit that, if any existing private institution was in danger of repudiating its obligations, no Government could allow it to do so. One of the functions of a Government in a modern community is to prevent financial panics or the destruction of general credit, and admittedly the safest way to insure the stability of a banking institution is to put the guarantee of the whole Commonwealth behind it. These institutions are like every other line of life and industry. Those which have served their turn and done their work well have to give place to superior fabrics and superior organization. That was what must happen in Australia as the Federal or National powers are extended, and this is one phase of our complex civilization where an extension of the Federal power will be an advantage to the people. At the same time, no revolution should be attempted, and no effort should be made to hurt those that have done good work.
– In what way will the Federal Savings Bank be better for the depositors than the State Savings Banks?
– In the first place, I believe it can pay interest on a larger average sum, I do not say immediately, but eventually, because .of the greater economy that can be exercised in doing its business throughout the Commonwealth. In the second place, it will give greater facilities than exist now for the transfer of the money of depositors from State to State. The existing reciprocity arrangement has its limitations.
– Does the honorable member suggest that a monopoly will give better terms than a number of State institutions ?
– It is the universal law that monopolies can manufacture far cheaper.
– Then monopolies are a benefit to the public?
– Yes, so long as they do not go for exorbitant profits. We are not opposed to monopolies, if we, that is, the people, are the monopolists. That is what this business will inevitably become in time - a monopoly owned by the whole community. The bigger and better organized a business is, the better work can be got out of the employes by employing them for their full time; and, in a banking business, where profits are made on discounts and the general handling of the money volume, the bigger the business, the greater the chances of profit. This thing will not come in a day, and I am not one of those who are so optimistic as to expect it to spring up suddenly. I believe the Savings Bank side of the bank will have a big share of the business as soon as the bank gets under way, and a great deal of that will come from sentiment, because the national spirit is undoubtedly developing in Australia. The sacrifice of personal interests to uphold a principle is one of the elements of the world’s progress, and I am sure it will not be absent in Australia. At the same time, the business advantages, in the way of better interest on larger sums, will come in later on. I am convinced that in a few years this bank will meet the needs of the depositors in a way that is impossible at present. If it does that without hurting the present organizations, I believe it will fulfil the aim of the Governor of the bank, when he is appointed, as well as of honorable members of this House.
.- The Prime Minister and all members on the Ministerial side have assured us that there is no intention to embarrass the States financially by interpolating the Savings Bank business- in this Bill. I should very much like to know where the Commonwealth Savings Bank depositors are to come from if they do not come from the people who are at present depositing in the State Savings Banks ?
– Many of the deposits will come from large financial institutions, because there is to be no limit.
– That class of depositors would probably be catered for in a special branch. The great point to be considered is whether the Commonwealth Savings Bank will interfere with the State Savings Banks which are now so ably conducted. I feel that it is going to cut right across the stream of money which now flows into the State Savings Banks, and which does such splendid work when it flows out of them again. The Treasurer of New South Wales is reported in this morning’s newspapers to have said that if the idea is persisted in it will certainly rob his Savings Bank and deprive him of money to carry out the public works of the State. That is a grave situation. The money put into the New South Wales Savings Bank is lent to the Government, and used by them to construct public works. As the result of the passing of this measure the Commonwealth may use that money in other directions, and the New South Wales Treasury, being starved, may be unable to carry out the public works of which that great Stateis so urgently in need. The Minister of Public Works in New South Wales has pointed out that the State Savings Bank largely assists the Treasurer of New South Wales in carrying out public works, and he fears that one result of the establishment of a Commonwealth Savings Bank will be to deprive the State of that source of revenue, and possibly to cause a discontinuance of great public works. Coming nearer home, we know that a Credit Foncier system has been established in- connexion with the State Savings Bank of Victoria. The bank from time to time offers debentures to the public, and takes up any portion of the issue which, is not taken up.’ As a matter of fact, the greater part of these issues has always been taken by the Savings Bank, and the money so obtained is loaned at 6 per cent. - per cent, representing interest and 1½ per cent, a sinking fund - to struggling farmers, and also to people anxious to build small homes for themselves. The system is exceedingly valuable.
– And one of the most, successful.
– Quite so. It is one of the most valuable features of the work of the State Savings Bank. If, however, we rob it of its financial support by establishing a Commonwealth Savings Bank, the position will be serious.
– The Victorian State Savings Bank has a wide margin to work upon ; it has only £1,000,000 invested in debentures out of a total of something like £15,000,000.
– I have been looking to the Credit Foncier system to overcome the present difficulty in regard to high rentals. Many of my constituents have complained to me that their rentals have been enormously increased, and I have advised them to avail themselves of the Credit Foncier system to secure their own homes.
– A man must be able to put down a deposit.
– Most of those who have spoken to me on the matter have been in a position to put down a small deposit, although they have not had sufficient money to build, without assistance, a home of their own. If we cut off the supply of money from the States Savings Banks that are doing this class of business, we shall put a stop to this valuable work. These two illustrations show the danger of the Commonwealth proposal to the struggling poor of Australia.
– It will not necessarily put a stop to that system. Money transferred from the State Savings Bank to the Commonwealth Savings Bank will still be available for investment.
– My point is that if we cut off the supply from the State Savings Bank we shall do the struggling poor of the community a great injury, while we shall also possibly put a stop to public works in New South Wales.
– Does the honorable member think that the establishment of the Commonwealth Savings Bank will really put a stop to the public works of New South Wales?
– The Minister of Public Works in New South Wales has said that it might have that effect.
-I should like to have his own statement and not merely the statemen contained in a newspaper paragraph.
– A communication was made to the press by the Minister himself. Although I believe that I am a reasonable man, I can find no sufficient reason for interfering in this way with the State Savings Banks. They are doing a splendid work, yet we are going to interfere with them very seriously. The Prime Minister has admitted that we shall deprive them of the use of the post-offices, which are now utilized as branch offices ; but it has been said that it will be possible for the State Savings Banks to carry on business at railway stations in the country. I should like to know whether the honorable member for Calare, and the honorable member for Darling think that such a proposal would meet with the approval of their constituents. Railway stations in their electorates are very far apart.
– Even if we rejected that part of the Bill which provides for a Savings Bank Branch of the Commonwealth Bank we should still require to use the post-offices in connexion with the business of the ordinary bank.
– The Prime Minister said that we could not have two different banks carrying on business in the one office. Another honorable member suggested that perhaps police stations might be used for State Savings Bank work. The police, however, have enough to do without being called upon to transact Savings Bank business. It is obvious that if we pass this clause we shall seriously embarrass the Savings Banks of the States. In doing that we shall do something that is absolutely, reckless. These are practically my only objections to the proposal that Savings Bank business shall be undertaken by the Commonwealth, but they are certainly very grave objections. It is a source of wonder to me why the Commonwealth Parliament should be constantly trespassing on State domains.
– This is not a trespass; we have a mandate from the people to deal with banking, and the power is given to us in the Constitution.
– I know of no mandate from the people directing the Commonwealth to enter upon Savings Bank business. There was, perhaps, a mandate for the establishment of a National Bank, and I should have no objection to the establishmentof such a bank on proper lines. Under this clause, however, we shall cover ground already well occupied by the State Savings Banks. The Prime Minister said that the Government had no desire to embarrass the State Savings Banks, and if this clause is to be adopted, I should like to see inserted a new clause providing that should there be an enormous diversion of deposits from the State Savings Banks to the Commonwealth Savings
Bank, the Governor shall be required to lend a certain proportion of the money so obtained to the State Savings Banks that are now doing such admirable work. My fear is that we shall have a cessation of the Credit Foncier system, and possibly a cessation of public works in several of the States if the clause be passed as it stands. My proposal would avoid any dislocation of business. It would also do away with the fear which must be entertained by the authorities of the State Savings Banks that their income will be endangered, and that they will have to resort to drastic measures - possibly to call in their advances - in order to keep going.
– It will not be necessary, because the Commonwealth is deeply- interested in maintaining the solvency and well-being of the States.
– That is all very well so far as the States are concerned, but the State Savings Banks have separate interests. I am afraid that the Commonwealth Savings Bank, by diverting from the Savings Banks of the States money that is now deposited in them, will seriously interfere with the Credit Foncier advances in Victoria. and with the lending of local capital in New South Wales and other States for the carrying out of useful public works. By investing their funds in this way, the Savings Banks of the States are doing good work, and my suggestion is that a clause should be inserted to the effect that the Governor of the bank shall be compelled to lend to the Savings Banks of the States sums similar to those taken from them, so that the splendid work now being done may be continued.
– Does the honorable member think it well to invest the Savings Banks money in non-productive works such as many of the New South Wales works are? He would not say that expenditure on roads and bridges is reproductive?
– It is reproductive, because it opens up the country.
– I am sure that every such work isreproductive, at any rate indirectly. In my opinion, we should construct railways and carry out immigration schemes in advance of settlement. There would be no risk in doing what I suggest, because the insolvencyof the Savings Banks of the States is not to be contemplated, they having the credit of the State Governments behind them.
– The honorable member is not now discussing clause 35.
– The honorable member for Parkes has handed me a statement showing how the funds of the Government Savings Bank of New South Wales are invested. As it may be of interest to the Committee, I shall read it.
At the 31st December, 1909, the liabilities of the Government Savings Bank amounted to £13,391,222, of which £13,303,421 represented deposits, and £1,559 balance of profit and loss account. The reserve fund and other liabilities amounted to £86,242. The investments made 00 behalf of the bank, and other assets, including accrued interest, were as follows : -
If the deposits of that bank were diverted to the Commonwealth Bank to any considerable amount, it would curtail the advances to settlers, which are very necessary in a State like New South Wales, and prevent the lending of money to the Government for the carrying on of public works,
– The Commonwealth institution will be able to do what the State Savings Banks now do.
– Not without a considerable disturbance of the existing arrangements. Why should we transfer the management of this business from bodies in which the public have had confidence for years to a new set of men who can only win that confidence in time, and may invest the funds of the Savings Bank in such undertakings as the Western Australian or transcontinental railway? I have no doubt that honorable members desire the continuance of the. Credit Foncier system and the carrying out of Government works with local capital. Then why not put into the Bill a. clause which will enable it to be done?
– It is an excellent thing, too, that money should be spent where it is raised.
– Yes. The Bill creates an enormous centralizing system, whereasthe tendency all over the world is to decentralize in domestic matters. Ireland has for years been clamouring for Home Rule, and Scotland and Wales are now coming into line, and England wants to manage its own affairs. The arrangement provided for in the Bill will be a good one for the man living at headquarters, but not for those in distant parts of the continent. If the deposits of the Savings Banks of the States are reduced, the splendid work which has been done by those institutions must be discontinued.
.- The Prime Minister this morning promised the Committee that he would let us know the contents of a memorial relating to the Bill then on its way from Sydney. As I understand it has now arrived, I ask him, in the interests of the discussion, to make us aware of its contents.
– The memorial has just arrived, and I shall be glad to read it to honorable members. It is as follows -
Sydney, 29th November, 1911.
The Right Hon. Andrew Fisher, P.C., M.P., Prime Minister of the Commonwealth of Australia.
On behalf of the Governments of New South Wales and Victoria, we desire to inform you that, viewing the contemplated establishment of a Commonwealth Savings Bank with the deepest anxiety, we have, as the result of a conference held this morning, come to the conclusion that it is a matter of paramount urgency that, at this stage, we should press upon your Government the grave objections which present themselves to any immediate determination of this matter.
It is our desire to emphasize certain features of this important proposal, which, in our judgment, indicate that its immediate adoption will act inimically upon the depositors in Savings Banks, and most seriously affect the financial interests of the Governments of the several States.
Summarizing these positions : We would urge that the establishment of a Commonwealth Savings Bank would result in the duplication of system and control ; in the division of capital and of profits ; in the reduction of the public facilities and possibly of interest to depositors; in increasing expenses and possibly in adding to interest on loans. Most important of all, it would lead inevitably to the embarrassment of the Governments of the States in the carrying out of their policies of internal development.
So far the electors have not been consulted in the proposal to hand the Savings Bank over to Federal control. In the authorized programmes of parties in the last election the idea of a Savings Bank Branch of the Commonwealth Bank was not brought forward. The failure of the States to act no doubt leaves the general field of banking open to Federal operations; but as all the States have established Savings Banks with great success, and apparently to the complete satisfaction alike of depositors and of the general public, we urge upon you that operations in that sphere will be only an unnecessary duplication of existing State activity.
In view of these weighty reasons and of the near approach of the Premiers’ Conference, we would urge that final action on this measure be postponed until the grave considerations here put forward may be discussed by the heads of all the Governments concerned, and a course of action suitable to all, and preserving the interests of all, determined upon.
We are assured that the Premiers of the remaining States warmly concur in the above views, and that, moreover, they would have been present at this morning’s conference but for the exigencies of time and the pressure of business at their respective centres.
We have the honour to be, Sir,
Your obedient servants, (Sgd.) JAS. S. McGOWEN,
Premier of New South Wales. (Sgd.) J. MURRAY,
Premier of Victoria.
Telegrams have also come from Queensland and South Australia. I think I have faithfully fulfilled my part of the contract. The Premiers have set their arguments before us ; but this is not the place for me to answer them.
– This discussion seems to be a comedy of “ much ado about nothing.” There is no necessity, so far as I can see, for the present scare; and the suggestions now laid before us are merely a convenient method of throwing dust in the eyes of the people. The establishment of this Savings Bank will be largely, if not entirely, in the hands of the Governor of the bank ; and the type of man we intend to obtain will have a just appreciation of the circumstances. He will know of the work that is done by the State Savings Banks; and, therefore, there appears to me no reason to delay the passing of the Bill. It would not be in accord with the dignity of this Chamber to lay . aside a piece of legislation which has been expected for years, simply because there is to be a Premiers’ Conference early next year. We are told in the memorial that in the case of the New South Wales Savings Bank, for instance, the funds have been used for public works. I am not going to say whether that is a good or a bad practice, but my own opinion is that Savings Bank funds should not be used for such a purpose, or only to a very limited extent. It would, in my opinion, be sound policy on the part of the Governor to use a moiety of the deposits in ordinary investments in property and land, as some of the Savings Banks do now. We cannot escape the necessity of creating, either by this Bill, or by some other means, a Commonwealth Savings Bank. Not very long ago honorable members opposite were very loud in their questions as to what the employes of the Government in the Capital Site area were going to do with their savings. I notice this afternoon that there is the silence of the grave on this matter, and I ask where is the honorable member for Moreton or the honorable member for Lang ?
– I am here; and the honorable member shall hear from me shortly.
– At any rate, that has nothing to do with the case before us.
– A case was clearly made out by honorable members opposite that some provision should be made for the savings of the Federal employes in the Federal Territory - men employed on the railway and other works. Have we to go cap in hand to their majesties the State Premiers and ask to be kindly allowed to have branches of their Savings Banks established? We might have the Premiers tossing up to see who should have the honour of doing the work for us, but the probability is that they would decline to have anything to do with us at all. Even if honorable members opposite had the power to defeat this measure, it would not be long before they would be clamouring for a bank for the use of the people I have referred to. Of course, when honorable members are holding a brief any yarn will do.
– So it seems !
– The honorable member has given us a certain amount of information about the technique of banking, but he knows no more about real banking than a donkey knows about geometry.
– I know more than the honorable member does, anyhow.
– I do not think so. My premise is that a Commonwealth Savings Bank is a matter of necessity; and even the “ man in the street,” much less such a man as the Governor of the bank will be, would recognise that there is at present’ a tremendous field covered by the Savings Banks of the States. It is unthinkable that one of the ablest men in Australia, as the Governor of the bank will be, will utterly ignore the whole of the requirements in connexion with the Savings Bank business of Australia.. This morning the. honorable member for Flinders said he did not know of any existing Savings Bank created upon the lines upon which this bank was to be created. I interjected a’ reference to the Post Office Savings Bank in Great Britain, established under Mr. Gladstone’s Act. The honorable member for Balaclava’ interjected that the money of that bank was invested in consols. I was a small boy when that Act was passed, but it created enough excitement amongst those older than myself to excite even my interest. I had no recollection of the British Government making any provision of that sort in an Act. I’ have here the Act carried through by the late Mr. Gladstone, which received the Royal assent on 17th May, 1861. Its fundamental principle has never been- altered from that day to this. Its provisions show that both . honorable members were incorrect. It is not generally known - because even the press of Melbourne1 were absolutely at sea in their criticisms the other day - that the conversions effected by Goschen were done by means of the savings of the British people in the Post Office Savings Bank, and could not have been done without them. The Act empowers the Postmaster-General of Great Britain to authorize his officers at certain given places to collect the savings of the people, and to return them on demand. I do not know who had to do with the framing of the measure now before the Committee”, but they have undoubtedly left the door open to a big possibility in the direction in which the old Mother Country has gone with such great success. I should like to point out to honorable members opposite that the late Mr. Gladstone was recognised as one of the first financiers of the world, and I doubt whether his reputation can be beaten by any of them. I have yet to learn that it is surpassed by any modern financier. Sections 5, 6, and 7 of his Act provided -
All moneys so deposited with the PostmasterGeneral shall forthwith be paid over to the Commissioners for the reduction of the National debt; and all sums withdrawn by depositors, or by parties legally authorized to claim on account of depositors, shall be repaid to them out of the said moneys, through the office of Her Majesty’s Postmaster-General.
If at any time the fund to be created under the authority of this Act by the investment of the deposits shall be insufficient to meet the lawful claims of all depositors, it shall be lawful for the Commissioners of Her Majesty’s Treasury, upon being duly informed thereof by the Commissioners for the .reduction of the National debt, to issue the amount of such deficiency out of the consolidated fund of the United Kingdom, or out of the growing produce thereof ; and the said Commissioners of Her Majesty’s Treasury shall certify such deficiency to Parliament.
The interest payable to the parties making ‘ such deposits shall be at the rate of Two pounds ten shillings per centum per annum, but such interest shall not be calculated on any amount less than One pound or some multiple thereof, and not commence until the first day of the calender month next following the day of deposit, and shall cease on the first day of the calendar month in which such deposit is with-, drawn.
It is as well that loose statements such as those made this morning should be contradicted at the time. I have shown that, under an existing British Act, the savings of the British people, amounting to many millions of pounds; are practically transferred to the Commissioners of the National debt, who have to transfer them back again on demand, any deficiency being made up from the Consolidated Revenue fund. _ T hope that, within the next ten years, similar Commissioners will be appointed in Australia. They could go into the market and buy stock without it being generally known. That certainly ought to be done, because, if a big operation is taking place, and everybody knows- of it, up goes the price.
– But using the savings to liquidate the National debt is different from using them for general banking business.
– It is; but, of course, this is a new country, with’ different conditions, and, therefore, we cannot keep foot and foot, so to speak, with the Old Country in everything we do. We have no National Debt Commission and it would simply be a monstrosity to put a clause of that character in this Bill. The honorable member for Ballarat said this morning that there had never been a demand by the public for this proposal. At any rate, there has been a demand sufficiently strong to place the honorable member for Wide Bay at the head of the Government, with an ample majority behind him. Personally, I have been a good deal responsible for the proposal appearing on some Labour platforms for the last twenty years. 1 have been a strong advocate of it ever since I have been on this side of* the world. It is, therefore, to me no new question. Let honorable members look at the matter fairly. When the Governor of the bank is appointed, he must be cognizant of existing facts, and he is sure to have many informal talks with the Treasurer. An open door is left for the States to come in to-day. Never mind about longwinded documents. You can carry on a memorandum war for ten years, but if you really want to settle a question, the best thing to do is to sit down and talk it over, and throw your memoranda under the table. If the State Premiers, instead of using their efforts for the purpose of defeating this measure, would consider, when the measure is passed, that there is an open door for them, and ask the Prime Minister to meet them, and discuss what can be done, it would be a practical method of settling the whole question.
– They are top fond of airing their State rights.
– A good deal can certainly be done for the purposes of platform work. If they can only frighten the Australian people into thinking that we are going to run away with all the money in Collins-street, it will be a big thing for the party on the other side. Whether it is true or false will, of course, be a matter of no importance to them; but when we come to the hard facts of the case, we find that there is no idea of endangering the investments of the public iri the Savings Banks. We have had full accounts of the Victorian Savings Bank system, which is evidently a remarkably good one so far as it goes, but are all the States in the same position? It does not do to individualize, but will any honorable member tell me that the whole of the Savings Banks throughout the Commonwealth are in anything like the condition that they are said to be? I have no reason to doubt the very thoughtful and able speech of the honorable member for Flinders. Victoria has a Credit Foncier system attached to its Savings Bank. As a rule, I should say that that was a pretty dangerous policy, but it seems to work very satisfactorily here. Let us take the case of South Australia, which has a Savings Bank, and also a State bank, the latter being really a Credit Foncier or land bank. The late Mr. Kingston was anxious that the new Credit Foncier should be part and parcel of the Savings Bank. 1 and others supported him, but we were defeated by the Conservative party. They would not have the Credit Foncier attached to the Savings Bank, and they would not have the guarantee of the Crown behind the Savings Bank. The Prime Minister was probably a little surprised at the attitude recently taken up by the South Australian Government towards the proposed establishment of a Commonwealth Savings Bank. I could make a pretty good guess at the facts. The first protest came from the Treasurer, my friend, Mr. Vaughan, against the Commonwealth interfering with the Savings Bank, but on whose initiative did he take that step ? He took it at the instance pf the chairman of the Savings Bank, Mr. W. H. Phillipps, who is also the president of the Employers’ Federation. That gentleman is very respectable and honorable ; but he is a representative of the crowd of men who refused to consent to the guarantee of the Crown being attached to the State Savings Bank, and objected to the Credit Foncier system being associated with that institution. When we find that the protest comes, not from investors, but from the chairman of a bank, what are we to think? The rate of interest paid by Savings Banks is fixed usually with an eye upon the rate of interest paid by the ordinary banks. There has been a material improvement in the mode of investing the savings of the people in our Savings Banks during the last twenty years, but previously Savings Bank investments, for the most part, went into private financial institutions. It was for that reason that the Savings Banks were largely encouraged. In some cases the Savings Bank system was supported because of an honest belief that it would work in the interests of the people, whilst in others it was supported ostensibly on that ground, but really in the interests of private financial institutions. Owing to the influence of public opinion, a great improvement has taken place, as I have sai’d, during the last twenty years. There was a Savings Bank in one of the States - I shall not refer to it by name - which had, I think, something like £750,000 invested in a big bank in NewSouth Wales, and when the great banking crisis took place, that Savings Bank would have lost its money if it had not been for the action of Sir George Dibbs in making the notes of the bank a legal tender. I shall not mention any names, but it is well known that that bank had a very narrow escape. I do not doubt for a moment that the Crown would have come to the assistance of the Sayings Bank in question, and would have seen that the various depositors in it got their money back ; but this incident serves to show that the Savings Banks of the States are not surrounded, as some would have us believe, by a veritable Garden of Eden. As a matter of fact, they have been the happy hunting-grounds of the private banking institutions. In many cases they have been mere auxiliaries of those institutions, and, to my mind, a good deal of the opposition that has been offered to this proposal to-day has been due to the fear that the Commonwealth proposes to operate on the happy hunting-grounds of the private banking companies. I do not think there is any reason for the fears that have been expressed. There can be absolutely no occasion for any scare. The position, so far as the Commonwealth and the States are concerned, can be readily settled by means of a friendly conference between the State Premiers when the Bill is passed. I hope that the Governor of the bank will see that the funds are invested in the best possible way, to enable this institution so to act as to steady the interests and credit of Australia. He will have a splendid opportunity. What Gladstone did with his Savings Bank this man will be able to do with the Savings Bank of the Commonwealth. Provided that we get a good man, who thoroughly understands his business, all will be well. I recognise that there are not many great financiers in Australia, neither have we many statesmen. During the great banking crisis of 1893, only one public man grasped the situation; only one Treasurer throughout the length and breadth of Australia - Sir George Dibbs - realized what it was necessary to do. Had there been more of his kind the ruin and disaster that befell many Australians would not have happened. There were many unsound banks, but there were many that were sound, and which, with proper assistance, could have weathered the gale.
.- We are indebted to the Prime Minister for having laid on the table of the House the memorandum received by . him from the State Premiers.
– From the Fremiers of only two States.
– In the closing paragraph’ of that memorandum it was stated by the Premiers that they were sure that they were taking this action with the concurrence of the Premiers of the other States.
– It is an easy matter to state in a memorandum something that is not a fact.
– The memorandum has been airily brushed aside by the honorable member who has just resumed his seat ; but I think that it will be found to embody the views of the people of practically the whole Commonwealth, and that it is not to be so lightly dealt with. The Premiers emphasize the point that this proposal will very seriously inconvenience the States, and that is a matter that should receive the serious consideration ofthe Prime Minister and his colleagues. The proposal to establish a Commonwealth Savings Bank must seriously interfere with an institution in New South Wales which is of the greatest value in settling people on the land. It is most important that closer settlement should be promoted in every State, and in connexion with the Savings Bank of New South Wales we have what is known as the Advances to Settlers Branch, which has done an enormous amount of good in promoting settlement. I am proud to say that I assisted in placing on the statute-book of New South Wales a Land Act, one of the provisions of which is that, if a group of not less than three persons agree to purchase an area of land at a certain price, and on certain conditions, it may approach the Government, who, through a branch of the Savings Bank, may advance the whole of the purchase money.
– Ninety per cent, of the purchase money.
– Practically the whole of the purchase money is advanced.
– How often has that system been operated upon?
– The people are largely availing themselves of it. Anything that interferes with the State Savings Bank will interfere with the Advances to Settlers branch, and so affect closer settlement in New South Wales. In the same way, the Credit Foncier system, which is of much assistance to settlers in Victoria, may also be affected injuriously. This will undoubtedly interfere with land settlement, and the memorandum to which I have referred, shows that the State Premiers share that view. It is significant that not only members of the Liberal party in this Parliment, but Labour Premiers in the different States, in this respect, voice practically similar sentiments. The views expressed in the memorandum are views that have been expressed by Liberal members of this House during the ‘debate. There must surely be something in our objection. In these circumstances, it cannot be said that members of the Liberal party are opposing this Bill merely because it has been introduced by a Labour Government. The success of the Commonwealth Bank will depend largely on the calibre of the man appointed to the position of Governor. Shall we be able to obtain in Australia a thoroughly competent man? Our leading financial experts are already employed, and have been, for the greater part of their lives, in the existing financial institutions. In all probability, a banker who is not at present employed in Australia is not a firstclass man.
– Does not the honorable member think that a man would give np his present employment for a better job? …
– That means that the Government will have to offer a better salary than is received by the general manager of any bank. If we give larger salaries than are paid by private banking institutions the cost of the up-keep of the bank must be increased. We should have to pay a very high salary to the Governor if we paid more than is received by the general manager of the Bank of New South Wales, or the general manager of the Commercial Banking Company of Sydney. If we do not obtain a thoroughly competent man, the bank is likely to suffer losses. Although I do not claim to know as much about banking as does the honorable member for Flinders, I do not share his view that any loss made by the bank would have to be made good by reducing the rate of interest to depositors in the , Savings Bank branch. A reduction of’ interest would be absolutely fatal to the bank, because depositors would immediately withdraw their deposits, and return to the State Savings Banks. I am satisfied that it will be found necessary to continue the rate of interest offered at the outset; and it seems to me that if a loss is suffered, the Governor of the bank will take advantage of clause 10, and obtain advances from the Treasurer to replenish his funds. If a demand were made for an advance under that clause, the Treasurer could not refuse it. Losses might accumulate until the bank, in the ordinary course of events, would practically become insolvent. We know, however, that the Commonwealth would never allow it to become insolvent, so that depositors would be absolutely safe. The Commonwealth itself - or, in other words, the whole of the people - would have to make good any loss that occurred. Those who deposit money in the Commonwealth Savings Bank will be few in comparison with the total population, but to save them from loss the whole community will be taxed. I shall not take advantage of the Commonwealth Bank, either by borrowing from it or by depositing money in the Commonwealth Savings Bank; but, in common with the great bulk of the community, I shall be taxed to make up the losses incurred by it, and to prevent those who benefit from its -operations from being injured.
– Similarly, when a Government guarantees the solvency of a bank, it undertakes to tax the whole community for the- protection of those doing business’ with that bank.
– The whole community will be made responsible for the transactions of the proposed bank. At the pre-‘ sent time the private banks give 3J per cent, for fixed deposits for a term of years, and advance money at rates varying from 5 to 5! and 6 per cent., according to the value of the security offered, and the state of the money market. The Commonwealth Bank, if it is to obtain a share of the banking business of the community, must give equally favorable terms to its customers. Can it do so? The private banks have grown from small beginnings as the population has grown, but they have been, and are, controlled by keen and experienced business men, who know how to turn everything to advantage. Were the private banks to be crushed out of existence, the result would not be what honorable members opposite think, though, of course, inci’dentally, a great many comparatively poor persons, holding each a few bank shares, would be ruined. I am sorry that time will not permit me to deal with this subject more fully, but I hope that the Prime Minister will not airily brush aside the memorial from the Premiers of the States, and will give their objections serious consideration. The substitution of the Commonwealth Savings Bank for the Savings Banks of the States will do great injustice, not only to many private persons, but also to the general public, and to the Governments of the States.
– I regret that the honorable member for North Sydney, who seems a champion of the little State- righters, could not find time to make out a stronger case. I am in no way antagonistic to the Governments pf the States, and desire that the States shall participate, not merely in the establishment of the proposed Savings Bank, but also on reasonable terms in the Commonwealth Bank itself, which is to be a national concern. The argument of the honorable member is that, as the Premiers of the States are opposed to the Commonwealth doing Savings Bank business, the proposed bank cannot be a success, because of the State competition with which it will be met, and that the loss incurred in its working will have to be borne by the general taxpayer. He by no means proved that statement. Were the purpose of the Government that set out by some critics with a view to create a scare, I should not support the proposal. That great organ of Liberalism, the Sydney Daily
Telegraph, speaks of it as the “Savings Bank Grab,” and it has been referred to in similar terms in this chamber by honorable members who, being in closer touch with Federal politics, have no warrant for such language.
– Is not what is proposed a grab ?
– No. If it could be shown that it is a grab, I should try to prevent it.
– Is there need for what is proposed?
– Yes, as I shall endeavour to show. The Daily Telegraph, in a leader published yesterday, says -
The determination of Mr. McGowen and his colleagues to resent the seizure of the Savings Bank business of the States by the Federal Government under its national banking enactment is one that enlists the cordial appreciation and active support of all parties of the House - and adds that -
It would be well that, for the time being, all party lines be obliterated.
What great importance is attached to this proposal, when an Opposition journal can suggest the obliteration of party lines in a political arena where the proceedings have recently been characterized by extreme bitterness. The party it supports is counselled to sink its differences with the Government, and forget its complaint about the way in which a gentleman named Willis conducts the business of the House. I say that there is no grab.
The obligation has been placed on the party to- which I belong to establish a National bank, ari institution which will be national as not even the Banks of England, France, and Germany, which do so much of the work of the Government of those countries, are. The bank would not be national in the full sense, of the term if it did not provide for Savings Bank business, though it is to this provision that members of the Opposition, and some members of State Parliaments, are objecting. What is there to prevent an institution of this character being established and the States co-operating with the Federation to have it conducted in the best interests of the whole community? Some honorable members seem to argue as though the Commonwealth were distinct from, and. antagonistic to, the States - as though the Commonwealth were some foreign power. The Commonwealth represents the people of Australia generally quite as much as do the States. Each State represents only a section, whereas the Commonwealth represents that section plus all the other sections. Anything detrimental to a particular section will inevitably be detrimental to the whole of the people, and anything detrimental to the people, as a whole, must seriously affect the people of a particular State. There is no warrant for saying that the Labour party propose to launch on any scheme, be it a Savings Bank, a land tax, or a note issue, with the idea of doing injury to the people of the States, or any particular State ; honorable members on this side are animated by no such desire. In this community there are those who possess wealth, and those who possess none, or very little; and honorable members on this side are here to consider the interests of the “have nots “ as well as the interests of the “ haves.” They present legislation to advance the interests, not of any section of the community to the detriment of the great mass, but the interests of the whole of the community, whether wealthy or poor. I have taken some little part in legislation directed to the establishment of State Banks. When I entered politics, some seventeen or eighteen years ago, practically the only institution in the nature of a Savings Bank in my own State was what is known as the Savings Bank of New South Wales. There was a subsidiary bank known as the Post Office Savings Bank. The Savings Bank of New South Wales was, and is, hedged around by most stringent restrictions. First of all, the amount that a customer may deposit is limited, so that the Savings Bank only deals with small sums that the private banks do nod consider worth bothering about. Practically, as soon as a customer comes along with a fairly large sum, the doors of the bank are shut on him, because he is not allowed any interest. Then, in the matter of investing the deposits in the way of loans, the Savings Bank prefers, not to deal with individuals, but to proceed on what are called “safe” lines. Therefore, the money is lent to private banks; and one result was that, when the crash came, in 1893-4, a great deal of the money of the small depositors was locked up, and in danger of being lost.
– The honorable member is not justified in saying that the money was liable to be lost.
– It was until the Government came to the support of the bank. As a matter of fact, the Government had to come to the support, not only of the Savings Banks, but of the other banks, and by its guarantee restore that public confidence which, for some reason or other, had been lost, thus enabling the financial institutions, over a long period, to meet their obligations. At the present time deposits on interest are admitted up to £250, so that customers are practically told to take any money over that amount to some other bank.
– The financial crisis showed more than anything else that a Government Bank is just as susceptible to panic as is any private bank.
– I fail to see that. The Savings Bank of New South Wales was not a Government Bank, and had no Government guarantee behind it.
– It has a Government guarantee to-day.
– That Government guarantee was the outcome of the action taken by Sir George Dibbs, the then Premier, to restore public confidence.
– At that time, the bank was run by trustees appointed by the Government.
– The guarantee is limited.
– And the support given by the Government to-day is a limited support.
– And yet the Government appoints all the trustees.
– The Government have a say in the nomination of the trustees; but, once the trustees are appointed, the Government have nothing further to do with the management. There are other limitations imposed on the depositors in the matter of withdrawals, and of operating at a distance from the bank. In this respect, facilities are lacking which are offered by private banks, and which could easily have been arranged for by the Savings Bank.
– To complete his statement, the honorable member ought to say that the Savings Bank of New South Wales always paid J per cent, more interest than did the private banks or the Post Office Savings Bank.
– I have no desire to do an injustice to the Savings Banks, which serve a very useful purpose, although that purpose might be more completely and better served. According to Knibbs, the New South Wales Government Savings Bank pays 3 per cent, up to £500 ; the Savings Bank of New South Wales, to which I have referred more particularly, per cent, up to £200 ; the Victorian Savings Bank, 3^ per cent, on the first £roo, and 3 per cent, from £101 up to £250; the Queensland Bank, 3 per cent, up to £200; the South Australian Bank, 2 J per cent, on accounts closed during the year, and 3^ per cent, up to £^250 on accounts remaining open; the Western Australian Bank, 3 per cent, up to £1,000; the Tasmanian Government Savings Bank, 3 per cent, up to £250 ; the Hobart Trustee Savings Bank, 3 *</inline> per cent, up to £150; the Launceston Trustee Savings Bank, per cent, up to £150. We are further told by
– Reciprocity in paying in. The honorable member desires to deposit the same £1,000 in two banks.
– Not at all. Under the Bill now before us, there will be no State boundaries; and the disadvan tages I have pointed out will be removed ; the Commonwealth Bank will be national, and available to the whole people.
The Commonwealth, wisely or unwisely, has assumed control of large territories in which it is the local governing authority. Besides the Federal Territory, there is Papua, and also the great Northern Territory, which we hope to see developed in the near future, and so peopled as to make us more secure than we are at present. Unless we legislate in the way proposed, I do not see how people resident in those Territories are to be provided with Savings Banks ; and if for no other purpose this part of the Bill should be adopted. The States have large institutions that have done and can do good work, but there is no reason why they should not join with the Federal Govern- ment to bring them all under one management.
There is actually competition amongState Banks to-day in more than one State. In New South Wales we had originally the Barrack-street Savings Bank which was regarded as a Government institution. In addition, we had the Advances to Settlers Bank on the Credit Foncier system, the Post Office Savings Bank, and a small Savings Bank in the public schools.. Sir Joseph Carruthers, when Premier, introduced a Bill to amalgamate them all under one central management, but the protests made by those interested in the Barrackstreet Savings Bank induced him to eliminate it from his proposal.
– Does not that show that the people do not want this sort of thing ?
– I do not think it does. It shows that there already exists in the States the very competition that is being decried here. Apparently, both banks are operating in New South Wales with a certain degree of success, but it would have served the interests of the people much better if effect had been given to Sir Joseph Carruthers’ original idea. Whilst it is not necessary that there should be strong feelings of opposition because a number of banks under Government control are competing with one another, it would certainly be very much to their interests and the interests of the people of the Commonwealth if they were consolidated, with a consequent simplification instead of duplication of banking arrangements, and a lessening of expense. The very able addresses delivered from the other side of the chamber have left the position just as it was before. Honorable members opposite admit that if the States agree to come into the Federal Bank it will be much better, but they practically say that if the States prefer to stand out, the Commonwealth should go by the board. They would sooner see Commonwealth interests sacrificed to State interests. I am not prepared to go to that length. I want to see a substantial National bank established. I believe that if the Commonwealth takes the initiative, and its bank proves a success, the States, which now regard the movement with apprehension, owing to their little State prejudices, and therefore will not do it justice, will ultimately see the wisdom of joining forces with the Commonwealth and obtaining the benefits of the National bank for themselves and for the community as a whole. I am glad to see, therefore, that the Prime Minister has left an open door for the States to come in, if not immediately at least in the future. I hope that, when better judgment prevails, the States and the Commonwealth will join together in conducting one united Savings Bank for Australia.
.- The arguments of the honorable member for Calare and the honorable member for Corangamite are largely in favour of doing away with any kind of duplication, and centralizing the control in one authority. The whole effect of the Savings Bank provisions of the Bill is to duplicate control, at least in the large centres of population throughout the Commonwealth. To pass an Act of a purely Commonwealth character, and then ask the States to make proposals for admission is to expect something that stands a very poor chance of happening. If you want seven parties to become partners in a bank, you should take them into your confidence, and discuss the whole matter with them before finally fixing the lines of the scheme. It seems out of the question to expect the States to come forward afterwards and ask for terras, once the ‘Commonwealth has exercised its powers to establish a bank. They might do so, but the probability is that they will not. As I said, on the second reading, it is our duty to exercise our constitutional power to establish a national bank in order to preserve continuity of credit and confidence. I have no fault to find with that proposal. In establishing a national bank we are establishing an institution which is new to Australia, but these Savings Bankclauses set up a central institution that will enter into direct competition withexisting institutions in every State. No necessity has been shown for this step, nor has it been proved that the Commonwealth Savings Bank will make better provision than is already made for the. people’s savings. I can see no gleam of hope of the Commonwealth Savings Bank, offering better facilities or higher ratesof interest to depositors, but I can see a strong prospect of the Commonwealth taking away from the people of Australia magnificent opportunities of developmentarising from the investment of a considerable portion of ‘that money. The arguments of the honorable member for Flinders and the Leader of the Opposition arean unanswerable condemnation of this part of the Bill, and absolutely destroy any claim of usefulness or necessity that hasbeen put forward for it. The honorable, member for Flinders clearly showed that, if these provisions are embodied in the Bill, and the bank is run on business lines,, free from political influence, the most helpless class of the community - the small investors who have placed their savings in the Government’s hands for safe keeping - will run the risk of having to accept a lower rate of interest than would be possible if they were not involved in the success or failure of this institution.
– They need not put their money in this bank unless they like.
– That is another matter. People will place their savings only in institutions which offer them proper facilities, and which are secure. Of course, the question of security does not arise in this argument, because both theCommonwealth Savings Bank and theState Savings Banks- will be absolutely secure. Our ‘protest is that this part of the Bill will practically destroy institutions that are already State-owned, or, with one exception, State-guaranteed. It will give the people nothing that is not already provided for them, and it will destroy the machinery that is already being used by the States to make advances of small sums to small producers throughout the Commonwealth. That is a businesswhich the Commonwealth Parliament has. no constitutional power to undertake.
– This Parliament has full power under the Constitution.
– lt has no power to introduce a system of land settlement on easy terms and by advancing small sums to settlers who have just gone on the land. This is a Bill for an ordinary banking institution. The Credit Foncier system in Australia to-day lends money to small holders for lengthened terms, such as no ordinary banking institution would offer. That system of cheap money, with long terms of repayment is organically associated with the question of land settlement. Any one who has travelled over this enormous continent must be convinced that its future prosperity and safety depend upon this question of land settlement. But the State Parliaments alone have power to settle the people on the land ; they alone can pass laws governing the disposition of their Crown lands, and the re-purchasing of estates for closer settlement; they alone can dovetail into their land policy a policy of cheap loans to settlers, with a view of securing success; and upon them, also, is cast the duty of providing for irrigation and carrying out public works of various kinds for developmental purposes. I believe that it is the duty of this Parliament to develop those functions which we consider necessary to give effect to the national will, and to endeavour to discharge the great duties cast upon us in a way that will tend to the best interest of the people. But, in connexion with this Bill, we are making an attack upon institutions that have already proved of immense value to the community, without attempting to substitute for them anything that can tend to improve the existing system. That is one of my grounds of complaint. It would be just as reasonable for the Commonwealth to take over the control of the police, the railways, and the education system of the States, as it is for it to attack the State Savings Banks, which have done such excellent service. Figures have been quoted showing the great success that has attended the operations of the Savings Banks throughout Australia, and we are proud of the enormous accumulations of capital made in connexion with them. The funds accumulated in these banks amount to no less than £54,000,000, which is equal t0 £36 l(>s. *d- per depositor, or _£i2 per head of the population ; and I contend that the success of these institutions has been due to the facilities which they offer to small depositors to deposit their savings. The various post-offices throughout Australia have been the chief agencies in the building up of these enormous funds. The honorable member for Flinders stated this morning that the Savings Bank Commissioners of Victoria said that if the postoffice agencies of this State, totalling 350, as against sixty branch offices, were taken from them - as the Prime Minister admits they must be, if the Commonwealth system is to be a success - it will be necessary for them to find other agencies. The honorable member said that they indicated that perhaps storekeepers,’ chemists, or other business people might be induced to carry on these branch agencies. I am satisfied, however, that practically no business would be done by private individuals acting as agents for the State Savings Banks, whilst there was a Commonwealth Bank being conducted by Government officials in the local post-office. The business of the State Savings Bank branches would be absorbed by the Commonwealth Savings Bank conducted in the local post-offices. It has already been stated that no less than £7000,000 have been invested by the Savings Banks throughout Australia in mortgages, on broad acres and by way of loans to small shopkeepers and small houseowners. Reference has also been made to the slight cost at which the business of the Savings Banks is conducted. Representatives of Victoria are more familiar with the system operating in this State ; but it is largely common to the whole Commonwealth, and we know how far it has succeeded in carrying out the purposes for which it was created. We know how carefully the deposits of the bank have been husbanded, . and with what caution the investments have been made by the Commissioners. Sixty per cent, of their funds have been invested in State securities that can be used to develop the country, whilst the investments in respect of freehold mortgages have amounted to something like 15 per cent. In the returns for the last twelve months in respect to the Victorian Savings Bank we have a very valuable lesson. The operations of the Credit Foncier system for the financial year 191 1, consisted of advances amounting to £139,000 on broad acres - advances made for the most part to small land-holders - and of no less than £124,000 in respect of small shop properties and houses. The average loan to farmers amounted to something like £42 2 per borrower, so that it will be seen that the small men are for the most part benefited by the operations of the system. Small householders and shop-owners have also availed themselves largely of the Credit Foncier system associated with the Victorian Savings Bank during the last twelve months, the average loans to them amounting to £274 per borrower. The granting of loans to shopkeepers and small householders is a comparatively new feature of the system, and I am sure it must be dear to the heart of men like the honorable member for Maribyrnong. At the present time an average of no less than thirty-five loans per week are being granted to enable people to build homes for themselves, the average amount per week lent in this way being something like £10,000.
– It is a piece of Socialism in which I rejoice.
– I should like to know what provision there is in this Bill to take the place of such a valuable and beneficent system. What power have we under the Constitution to establish a system such as this, which assists not only the settler on the land, but the shopkeeper and the householder with a few pounds to secure money just as advantageously as can a man who, with a gilt-edged security, goes to a bank to negotiate a loan for £10,000 or £20,000. The honorable member for Corangamite this morning in a speech that savoured very much of unification, indicated that he believed that a system of undivided control would be far more valuable if we could only inaugurate it. But view this proposal as we may we must admit that after all it means only a duplication of an existing system; that we shall have the two systems oper ating throughout Australia; that the State Savings Banks, by the establishment of the Commonwealth Savings Bank, will be robbed of most of their opportunities of obtaining that capital which has been so valuable in opening up the resources of the Commonwealth. The attack on the Savings Banks of Australia, which is now being made by this Government, is without justification. It cannot be shown that it is likely to result in any improvement of the existing system. On the contrary, the Opposition have been able to point out that it must be disadvantageous to the producing interests of the community. It will also destroy that system of local control to which the Leader of the Opposition so effectively referred this morning. We are proud of the fact that the money deposited with our Savings Banks is locally controlled by Commissioners who understand their business, and who, for the most part, lend it out for State reproductive works in the shape of advances to small land-owners and people carrying on business as shopkeepers in a small way, as well as to tne man anxious to obtain a little home for himself. The question has been thoroughly debated, and it seems to me that in the light of the strong protest that has been made by the Premiers of Victoria and New South Wales in a memorandum, in which they say that they have the concurrence of the Premiers of all the States, the Government should hesitate even at this, the eleventh hour, to take a step which if it does not destroy, must tend at least to largely minimize the value of these State institutions. It has not been shown that there Is any necessity to encroach upon their domain. Shylock says -
You luke my house when you do take the prop
That doth sustain my house.
And if the Commonwealth deprives the State Savings Banks of the Post Office agencies, through which “they have been transacting business so successfully, they will take away the chief means by which these great institutions have been enabled to do a most useful work for the people of Australia.
.- I move-
That Schedule A to the Customs Tariff 1908-1910 be amended as hereunder set out, and that on and after the first day of December, One thousand nine hundred and eleven, Duties of Customs be collected in pursuance of the Customs Tariff as so amended.
By inserting in the heading to Schedule A the following provisions : - “ Whenever any goods are composed of two or more separate parts any part though im ported by itself shall, if so directed by the Minister, be dealt with under the item applicable to the complete goods. “ ‘ Non-spirituous ‘ means free from spirit or containing not more than two per cent. of proof spirit. “ Spirituous ‘ means containing more than two per cent. of proof spirit.”
Of the 124 amendments, nearly half are merely formal, involving alterations neither of policy nor of rates of duty. They are proposed to remove anomalies, assist interpretation, make the intention of Parliament clear, insure uniformity, and remove difficulties of classification. During the debate on the Address-in-Reply and since, the Government, the Customs Department, and myself have been criticised for asking manufacturers desiring increased protection to reply to certain questions set out in a form obtainable from the Collectors and Sub-Collectors of each State; but over 100 replies were obtained. Honorable members will be supplied with a memorandum showing the alterations proposed to be made in the principal Act, but I shall briefly refer to the alterations of importance. We propose to amend schedule A by inserting the following provisions : -
Whenever any goods are composed of two or more separate parts, any part imported by itself shall, if so directed by the Minister, be dealt with under the item applicable to the complete goods. “ Non-spirituous “ means free from spirit or containing not more than 2 per cent, of proof spirit. “ Spirituous “ means containing more than 2 per cent, of proof spirit.
The two latter paragraphs are inserted merely to prevent the repetition of the definitions which they contain in respect of every item affecting non-spirituous and spirituous liquors. As to the first paragraph, section 140 of the Customs Act of 190 1 provides in respect of dutiable articles that the duties on parts may be assessed at the same rate as the whole article, but there is no such power in respect of free articles. A printing machine being on the free list, its integral parts, provided they cannot reasonably be manufactured in the Commonwealth, should also be free of duty ; but the Department thinks it right that parts which are also used on dutiable machines should be dutiable, the integral parts still coming in free. The next alteration of importance is in respect of item 54, preserved fruits and vegetables being made dutiable at the same rate as pickles, sauces, chutneys, and similar productions. In 1906 the importations of preserved fruits and vegetables were valued at £27,000, and had increased in 1910 to ,£50,000, although Australia, of all countries in the world, ought ‘to be able tb provide preserved fruits for its people. It exports a large quantity of fresh fruit, and it is reason- able to give to those engaged in preserving fruit the same Protection as is enjoyed by the pickle-making industry. I have endeavoured to ascertain, in regard to each item of which an amendment is proposed, the importations and the condition of the employes in the Australian industry affected. One manufacturer who complained of the low wages paid by his competitors in other parts of the world was asked for his authority, and replied: “From John Burns, London, to John Norton, Sydney “ ; and when we desired him to be more definite, we ascertained that, although he asserted that the wages paid elsewhere were from 4d. to 6d. an hour, he could give no further information. I may say that the replies received from manufacturers have been, treated as strictly confidential. No other Minister has seen them, and only two or three officers of the Department. In Victoria, the making of pickles and sauces is an industry coming under a Wages Board. Queensland’s importation of preserved fruits comes chiefly from Eastern countries. She imports a large quantity of preserved pineapples from Singapore, although her own pineapples are going to waste. We propose to amend item 106 so that woven coat-hangers and labels, which are now dutiable under item 108 at 30 and 25 per cent., shall be dutiable at 40 and 35 per cent., because during the last two or three years several jacquard looms have been imported, employing skilled workers who had to be brought from other countries, and we think the industry should be protected. Another important amendment affecting item no relates. to the duties on natural birds and wings. Under item 134 these are dutiable at 25 and 15 per cent. ; but it is proposed to make them dutiable under item no at 30 and 25 per cent., to discourage a practice - which is believed to offer temptation to the cruel treatment of birds. The exportation of Australian birds and wings is prohibited, as is also their importation, should they have been exported without the knowledge of the authorities.
– If there is a fairly general request from honorable members for their prohibition, ,the Ministry will give effect to that suggestion. At the present time handkerchiefs are rated at the same duty as piece-goods. As a large portion of the material for making handkerchiefs is defined by pattern or selvedge for cuting up, and cannot, therefore, under the footnote to item 123 be classed as piecegoods, the raw material is charged at the same rate as the completed article. It is proposed to insert a new item 123 (h), and make patterned cotton and linen piece-goods for cutting for the manufacture of handkerchiefs and serviettes dutiable at 5 per cent., and free, the same as .the plain cotton or linen material, while the made-up article will be dutiable at 25 and 20 per cent.
– It should be 40 and 35 per cent.
– The Government have carefully considered the matter, and I believe the Protection proposed is a fair one. The manufacturers were able to compete in a small way with no Protection; and the alteration, it is believed, will give them a fair margin. The next item I have to deal with is 123 (f), which embraces flannelette. Honorable members are aware that flannelette is considered by many authorities to be a very dangerous material. It has been stated at inquests that flannelette burns like a textile that has been dipped in alcohol ; and an opinion has been expressed that its importation ought to be prohibited. The honorable member for Capricornia, when the Tariff was being discussed in. the Senate in 1902, moved that it should either be prohibited or loaded with such, a heavy duty as would discourage its use for wearing apparel. Experiments have been carried out in England, with a view to ascertaining whether there cannot be manufactured a flannelette which is noninflammable; and the information that the Department has from analysts and official sources at Home is that a non-inflammable material is being manufactured. It is proposed to subject inflammable flannelette to a duty of 25 and 20 per cent., and noninflammable flannelette according to a test prescribed by departmental by-laws to a duty of 5 per cent., and free. This leaves the non-inflammable flannelette for those who desire to use it at precisely the same rate of duty, as hitherto, while that which is regarded as dangerous will have to pay the higher rate.
– The worst feature is that flannelette is sold for flannel.
– Many persons consider that because flannelette has a woolly surface it contains a certain amount of wool, whereas it is entirely composed of cotton.
– It is a very useful material.
– That I admit, and that is the reason it is admitted. According to our information from the British Board of Trade, non-inflammable flannelette is being manufactured practically as cheaply as the other, and if we can do anything to discourage the use of the dangerous material we should do so.
– And especially safeguard child life.
– Quite so. The next item to which I will refer is 141 (c), “ Lamp and gas stoves for heating and cooking,” at 20 per cent., and this it is proposed to omit. This will have the effect of bringing these lamp and gas stoves under manufactures of metal, which are dutiable at 30 and 25 per cent., whereas at present the duty is 20 per cent. The stove manufacturers complain that they are being undersold; and we have the fact that the imports have increased from £41,000 worth in 1908 to £57,000 worth in 1910, an increase of £16,000, or about 33 per cent. We now come to item 148, which includes refrigerators. It was intended that the duty of 25 per cent, should apply to refrigerators used in butter factories and similar places. It has, however, been held, though not at the wish of the Department, that “refrigerators” cover the ordinary ice-safe used in the household. It is, therefore, proposed to insert the words “ other than for household use,” which will have the effect of bringing the ordinary ice-chest under the heading of furniture, and liable to a duty of 35 and 30 per cent. These ice-chests are more simple in construction than many articles of furniture manufactured here; and, as the employes are under a Wages Board, and we produce the necessary timber, there is no reason why the articles should not be turned out by our own workmen.
– What is the importation ?
– This item is not separated in the statistics. Honorable members will see that with 444 items, some of which, as in the case of metals and machinery, are cut up into thirty or forty sub-items, it is impossible to have separate statistics. However, the officers of the Department do their best to keep Mr. Knibbs supplied with all the information necessary to enable him to compile his handy and useful volume. I should like here to emphasize the necessity there is for perfecting our Statistical Department, so far as home productions are concerned. We can tell to £i how much metal and machinery has been imported - whether locomotives represent £50,000 or ,£500,000 - but we cannot tell the value, except in one or two very large industries, of the manufactures in Australia. As I said when a private member, we shall be fighting practically with our hands tied behind us until we know the proportion the home production bears to the total consumption in Australia. The next item to which I will direct attention is cutlery of all kinds, which is subject to a duty of 15 and 10 per cent..
– What about seeddrills?
– Hand-worked seed-drills will be put on the free list with handworked cultivators. It is proposed to delete the item of cutlery of all kinds, and to insert in its stead the following item - 153. Cutlery, n.e.i., Forks, Spoons, and Knife Sharpeners, including silver-ferruled or plated articles, but not including any article otherwise partly or wholly made up of gold or silver . . . ad valorem^ 15 per cent, and 10 per cent.
At the present time knives and forks are admitted at one rate and spoons at another, with the result that the ordinary knife, fork, and spoon usually presented to children has to be separated in order to fix the duty. Very often there is a band of silver as thin as the finest tin, and it is felt that such articles should not be penalized when the ferrule is practically of no appreciable value.
– What about item 157 - tanks ?
– It is proposed to omit the whole item of tanks, which at present are admitted free, and to insert the following instead - 157. Tanks not exceeding 400 gallons in capacity, whether imported or as containers of goods . . . free.
In one case a tank was imported of 30,000 gallons capacity; and the Department consider that Parliament never intended that such tanks should be- admitted free. The tanks that Parliament had in view were the ordinary square tanks of 200 to 400 gallon capacity; and hence the alteration. It is proposed to omit item 169, “ Mixed metalware and plated-ware for household use not otherwise specified,” the duty on which at present is 25 and 20 per cent. The importations in 1906 were ,£192,000 worth, while in 1910 they were ,£251,000 worth. Under this item the finished article was admitted at a lower rate than the raw material, the duty on which, as manufactures of metal, under item 170(a) was 30 per cent. We were thus practically giving an advantage to those who did the work outside Australia; and the proposal is to make plated-ware subject to the same duty as the raw material.
– Then the manufacturers will now have no duty to help them?
– At any rate, the alteration puts them in a very much better position. The next item is: “ 170(c) Articles made of aluminium for household use, free,” and “ (d) Articles to be used as kitchen utensils. made of cast iron, tinned or plain, free.” We propose to omit those paragraphs, and insert the following paragraph in their stead: - “ (d) Kettles and kitchen cooking utensils (but not including stoves) of cast iron (tinned or plain), aluminium, or nickel, free.” Under the old Tariff a -great number of articles, such as aluminium picture frames, which looked a lot better than many dutiable picture frames, aluminium soap dishes, and other things, came in free as “ articles made of aluminium for household use.” That was not intended. We, therefore, distinctly specify that only kitchen cooking utensils shall be free of duty. I wish to direct attention also to item 177(g). At the present time generators for direct coupling to steam turbines are subject to a duty of 5 per cent, under the general Tariff, and free if imported from the United Kingdom. It is proposed to strike that paragraph out ; those articles will then fall under 177(a) or 1 7 7 (b), according to the horse-power. There is no justification for admitting them at a different rate of duty from the ordinary generators. The importations amounted to £17,726 worth in 1908, and ,£11,894 worth last year. I draw attention to item 178(a), under which, at present, electroliers, gasaliers, and chandeliers are subject to a duty of 20 per cent. This is another case where the finished article was at a lower rate of duty than the raw material. The raw materials have come in as “ manufactures of metal “ or “ brasswork,” at rates of 30 and 25 per cent. The importations under item 178(a) in 1908 were £32,000 worth, and in 1910 ,£28,000 worth. ‘ Honorable members will notice that, in item 172, brass work and gun-metal work for general engineering and other trades are rated at 30 and 25 per cent., respectively. It is proposed to subject the finished article to the same rate as is placed on the raw material, and not leave those who are making it at a disadvantage, as they are at present. One item which caused a great deal of discussion during the consideration of the last Tariff was that relating to gas meters. After a great struggle between the other Chamber and this House, gas meters were left at rates of 5 per cent. and free, in the interests of the gas companies, and the gas companies alone. It was not to the advantage of any other person in the community, because the gas companies take good care to keep their meters under their own direct control, no doubt, as honorable members have said, in order that they may go as rapidly as possible. It is proposed to alter this item so as to make parts of gas meters 5 per cent. and free respectively, subject to by-laws, by which the exemption may be restricted to such parts as are not made locally, and to subject the finished articles to duties of 20 and 15 per cent. respectively, according to the place of origin. The importations in 1908 were £30,000, and in 1910 £35,000 worth. In the 1903 Tariff, which was supposed not to afford as much protection as the Tariff of 1908, gas meters were subject to a duty of12½ per cent., although I admit that the parts were dutiable at the same rate. The 1908 Tariff took a step backward so far as gas meters were concerned, but it is now proposed to give themakers a greater amount of protection.
– The Minister does not expect me to support these increases of duty, I hope.
– I understood the honorable member for Ballarat to say the other night, “ We want these things done.”
– He was not speaking for me.
– An alteration of wording has been made in item 234, paragraphs f, g, h, andi, relating to oils, although the rates of duty are not altered. The effect of the re-arrangement will be to protect the edible oils of Australia. Owing to improvements in the process of refining, certain vegetable oils are entering into competition with edible oils, and the olive oil industry of South Australia, in particular, is suffering. We propose that certain oils shall be treated in such a fashion as will give a greater amount of protection to the industry which is in existence in the Commonwealth. In item 268 it is proposed to insert the words “ and granite, “ after the word” marble, ‘ ‘ in paragraph a, which reads as follows - “ Marble, unwrought, including rough or scabbled from the pick, ad valorem, 10 per cent.” The importations of granite are not separately shown. The alteration, which will make unwrought granite subject to a duty of 10 per cent., will be an advantage to quarrymen and others engaged in the granite trade of Australia.
– The Minister was against that item in the Tariff.
– I have no doubt that in a Tariff comprising over 440 items, we shall on this occasion find other reversals of form. It is proposed to increase the protection on the wrought marble and granite from 30 to 35 per cent. I come now to item 273 - vinegar. At present; vinegar is dutiable at 6d. per gallon if produced from malt grain or fruit juice, and at 2s. per gallon if produced from other material. The analyst states that it is absolutely impossible to tell the one vinegar from the other. It is proposed, therefore, to impose an all-round duty as follows - “ Vinegar containing not more than 6 per cent. of absolute acetic acid, per gallon,1s.” That alteration will mean that the industry will not suffer, because, as it has been impossible to tell the one vinegar from the other, I believe the importers have been bringing in at the lower rate vinegar which should have paid duty at the higher rate.
– What will be the duty if vinegar contains more than 6 per cent. of absolute acetic acid?
– That is” still provided for in the old Tariff. On reference to sub-items 273 c and d, it will be seen that provision is made. The next item of importance relates to the timber duties. It is safe to say that the debate upon the timber duties caused more excitement than that on any other item in the Tariff. In order to assist the butter factories to get their butter boxes at a cheaper rate, the following item was then inserted : - “ 303b. New Zealand pine, undressed, of all sizes, per 100 super feet, 6d.” We now propose to substitute for that, the following : - “ b. New Zealand white pine, undressed, for butter boxes, in sizes not less than 9 inches by¾ inches, nor exceeding 12 inches by 2 inches, but not. cut to shape, subject to Departmental by-laws, free.”
-Will this include fruit cases?
– Fruit cases come under another item. It is proposed to make them dutiable. Almost any timber is suitable for the manufacture of fruit cases, but any timber will not do for butter boxes.
– It is about time you did something for the butter industry.
– I have been trying to do my best for the butter industry ever since I have been in office. The importations of New Zealand kauri and white pine amounted in value to ,£314,000 in 1906, and to £415,000 in 1909. New Zealand white pine had, under the late Tariff, an advantage which no other timber enjoyed. It could come in cut to any size or practically any shape, at 6d. per 100 super feet.
– You included kauri in those . figures.
– Yes, because the two are not separated in the statistics, but the principal importations are white pine. Timber generally is not dealt with in these alterations, but we now place New Zealand pine upon practically the same footing as every other timber, except, as to the limited provision already quoted. Previously the whole of it obtained an advantage, simply because of the use of the white pine as a butter-box timber. Passing to the next timber item, 303d (2) - boxes have been imported into Australia practically complete, all they required being to be put together. Recently, 100,000 cases, in shooks, as they are called, were imported from Sweden.
– What sort of cases?
– I cannot say positively, but I believe they were cases for condensed milk.
– And orange cases?
– I am not sure as to that. The honorable member for Corangamite brought under my notice a case of this character, in which the timber was brought in, cut to shape, and ready to put together. It is to meet such cases that it is proposed to add to item 303(d) words providing for a duty of 4s. per 100 super, feet in respect of timber undressed, “ cut to size, for making boxes.”
– That duty is to be placed on fruit cases?
– Certainly, if they are imported practically made up ; but cases made here with our own timber will be in a different position.
– Why does not the honorable member apply that principle to timber for mining purposes f
– It is not proposed to rip open the whole Tariff. I may say, in passing, that the Department has not received from a manufacturer of boxes any Tariff schedule in regard to this item. I am prepared to indicate every item in respect of which Tariff schedules have been sent in. Even, before I took office as Minister of Trade and Customs, it was found that conditions that were a danger to our own industry were prevailing, and we propose, in such cases, to make necessary alterations in the interests of the people, regardless of whether or not any Tariff schedules have been forwarded to the Department.
– This is the complete Government policy?
– I think that the schedule I am now submitting constitutes as much as we shall be able to deal with in the two or three days that can be devoted to the consideration of the question before Christmas.
– The honorable member can count on six weeks being occupied in the consideration of this schedule
– The next item to which I desire to direct attention is one that will probably interest the honorable member who has just interjected. I refer to “ Item 342 - Talking Machines.” At present all such machines are free. It is now proposed that those under ,£5” in value shall continue to come in free, but that all exceeding that value shall be dutiable. Under the existing Tariff importers have been introducing large record cabinets which were practically articles of furniture. 1 saw one between 5 ft. 6 in. and 6 ft. high, about 2 ft. 6 in. in length, by 2 ft. wide, which was fitted with shelves and cupboards for records, and really constituted a handsome article of furniture. There is no reason why such cabinets, and the cabinets into which the actual machines are built, should not be dutiable like any other article of furniture. We, therefore, propose that gramophones, and other talking machines, including cases imported with them, not exceeding ,£5 in total value, shall be free, but that all others shall be dutiable at 35 per cent., and 30 per cent., the unassembled metal parts of talking machines, exclusive of horns, being free. I am pre- pared to listen to any argument in favour of the reduction of the maximum fixed by us in respect of these talking machines, but the cases or cabinets, to which I have referred, are practically articles of luxury, and should be dutiable as ordinary furniture. The next item of importance to which I desire to direct attention is item 350, which we propose to amend by adding a new sub-item in respect of rubber tires and tubes. Hitherto the duty has been 25 per cent, in respect of the general Tariff, and 20 per cent, preferential duties. It is now proposed not to make an alteration in the rate of duty, but to include, as an alternative, a fixed duty of is. 6d. per lb. in respect of the general Tariff, and is. 2d. per lb. in respect of the British preferential Tariff. These fixed duties will be, as nearly as possible, the equivalents of the ad valorem duties. As honorable members are aware, we have had some trouble in connexion with the motor trade, and more particularly in regard to the value of tires and motor-car parts. If we have fixed rates as an alternative to the ad valorem rates, we shall be able to deal with imports of rubber tires and tubes just as equitably as we can do at present ; and the position will also be improved, inasmuch as the man who is prepared to pay duty on his imports according to the proper value, will pay no more than he has to do at present, whereas the man who tries to get the better of the Department by means of invoices in which these goods are undervalued, will have a check placed upon him. Another item that will interest honorable members relates to leather manufactures. I refer to item 352. At present we have a duty of 25 per cent, in respect of this item, and it is proposed to increase that rate to 30 per cent, in respect of the general Tariff and to 25 per cent, in the case of British imports. An alteration is also proposed in respect of harness saddles. We have not received a Tariff schedule from any manufacturer in regard to them but representatives of the Saddlers Union, which extends all over Australia, waited upon me, and pointed out that harness saddles were imported at such a rate as to practically make it impossible to manufacture them here, and to compete with the imported goods. We now propose to impose as an alternative the ad valorem duties of 30 per cent, under the general Tariff, and 25 per cent, under the preferential Tariff, a fixed duty of 6s. and 5s. respectively, whichever rate returns the higher duty.
– Will that apply to harness saddles of every kind?
– There is a great variety of such saddles.
– That is why we propose an alternative duty. The bulk of our saddlery imports come from Great Britain, but some classes of leather work are imported from the United States of America. I would next direct attention to item 356, in which it is proposed to insert a new subitem, making news printing paper, “ subject to departmental by-laws,” free. Under the present Tariff, such paper comes in free, but it is proposed to make its free importation subject to departmental bylaws, because a great quantity of paper now coming in free on the ground that it is to be used for printing purposes is really being used as wrapping paper, and for other purposes, to the detriment of other items in the Tariff. Parliament has already decided that printers are to have their news printing paper free of duty - although I do not think they should - and whilst we adhere to that decision, we propose to provide for the admission of such paper free, but subject to departmental by-laws, so that we may be assured that paper coming in under this sub-item is not used for other purposes. Complaint has been made by people interested in the fruit-trade that the paper which they use for wrapping-up apples - and which, I dare say, is used also for wrapping up other fruits- is dutiable, and that they receive no corresponding advantage. It is therefore proposed to make such paper free. Then, again, under item 356 (k), strawboard is now dutiable at is. 6d. per cwt. It is proposed to increase the duty to 2s. per cwt. under the general Tariff, leaving the duty at is. 6d. per cwt. in respect of imports from the United Kingdom, so that there will be a preference of 6d. per cwt. In 1909, our imports of strawboard totalled 3.. 730 tons; whilst in 1 9 10 the imports had increased to 4,532 tons. On the other hand, the local output in 1909 totalled 2,590 tons, and in 1910 had increased to only 2,675 tons.
– Is the local manufacturer of strawboard working full time?
– The only strawboard mill here - I refer to the Broadford mill - was burnt down about last March ; but I believe that it has again commenced operations. Another firm is also commencing the manufacture of strawboard. I may say, for the information of honorable members, that this particular item does not refer to the ordinary box-making board, so that it will not penalize boxmakers. The board most used by the ordinary box-makers is covered by another item, with which I shall not deal at present.
– Is all apple wrappingpaper free?
– At present, duty is charged on the cut paper; but to meet the wishes of a deputation interested in the fruit-growing industry, which was accompanied by the honorable member and other parliamentary representatives, we propose now to make all apple wrapping-paper free under by-law. I come now to item 380 - Vehicles. No alterations are proposed except as to motor vehicles, which are dealt with in another item. At present there are some eight or ten sub-items under this heading in respect of which the same duty is payable, but we now propose to group them all under the one heading.
– Will the grouping have any different effect, so far as the duty is concerned ?
– No. The important alterations relate to sub-items (j) and (k) of item 380. Those are sub-items, under which bodies for motor lorries, waggons, and motor cars are dutiable at 35 per cent. and 30 per cent., while chassis for the same are dutiable at 5 per cent., imports from the United Kingdom being free. This item, owing to its wording, has caused the Department more anxiety, and given it more work, than all other items in the Tariff put together. Honorable members are no doubt aware how what are known as the motor cases originated. Chassis from the United Kingdom being free, and the tires and bodies of motor cars being dutiable, some importers resorted to the practice of increasing the value of the parts that werefree and decreasing, for tariff purposes, the value of the parts that were dutiable. If, for instance, a motor car worth £400 were imported, the chassis being worth £300, the body £60, and the tires £40, importers anxious to defraud the Customs would show the total value correctly at £400, but would increase the value of the chassis, which is free, from, say,£300to£350,and make a corresponding reduction in the value, for Customs purposes, of the body and tires. Under the new item it is proposed to allow parts of chassis, or wheels when unassem bled, but not including tires, to be dutiable at 5 per cent. under the general Tariff and free in the case of imports from the United Kingdom ; to make the chassis, not including tires, dutiable at 15 per cent. and 10 per cent. ; and to leave the bodies for motor cars, lorries, and waggons dutiable as at present, at 35 per cent. and 30 per cent. I have left until the last what, perhaps, are’ two of the most important items. I refer to those relating to pianos and to vessels and dredges. Under the existing Tariff grand pianos are dutiable at 30 per cent. and 25 per cent., while other pianos are dutiable at 25 per cent. and 20 per cent. It is now proposed that pianos shall be subjected to precisely the same duties as other furniture, which is dutiable at 35 per cent. or 30 per cent., according to the country of origin.
– There is a big piano factory in the Minister’s electorate.
– That fact has not influenced me in dealing with this item. I dare say that there are some manufacturers in my electorate who will be disappointed when they find that their industries are not dealt with in this schedule.
– We have now reached the hour, at which it is usual to suspend the sittings for dinner, but I understand that it is the wish of the Minister to complete his speech before the sitting is suspended. Is it the pleasure of the Committee that he have leave to do so?
Honorable Members. - Hear, hear!
– One important distinction between the manufacture of pianos and the manufacture of general furniture is that, in tha first case, none but the most highlyskilled tradesmen are employed, whilst certain classes of furniture, which are protected by the higher rate of duty, are largely manufactured locally by Chinamen. In the local piano-making industry no Chinese are employed, whilst the proportion of men to boys employed is larger than it is in any other factories that I have visited. I do not hold a brief for any manufacturer, whether he be a manufacturer of pianos or anything else, but I wish to put the plain facts before the Committee. We now propose that grand pianos shall be dutiable at £14 or £12, according to the country of origin, or ad valorem 35 per cent. or 30 per cent. In the case of upright pianos, the duty is to be £7 or £6, or ad valorem 35 per cent, and 30 per cent. Those who have purchased a piano know that it is impossible to obtain an instrument under £40, and the lower fixed duties are in respect of the ordinary class of piano.
– Why is a distinction made between pianos and other musical instruments?
– Because a piano is more an article of furniture than is any other musical instrument.
– What about organs ?
– I am prepared to consider a suggestion that the duty on organs be increased. At the present time some very cheap types of pianos are being imported. Importations are even being made from Japan, but under this proposal the cheap rubbishy piano will have to pay practically the same duty as will a good instrument. In this way we shall be able to assist a most deserving industry. The only other item to which I propose to refer at this stage is a new one - item 392 - under which it is proposed that duties of 30 per cent. or 25 per cent., according to the country of origin, shall be imposed on dredges and vessels of less than 400 tons register.
– I do not think there are many ship-building yards in Australia, other than the Government dock yards.
– That is immaterial. We can build dredges locally, and those who decide to import them, instead of having them made in Australia, should be required to pay duty to the amount that would have been expended on wages had they been constructed here. The anomaly of the present position is that a complete dredge may be imported free of duty, whereas an engine or any piece of machinery required for a dredge is dutiable. We can build these vessels here. The Latrobe, which has a gross register of 426 tons, and the John Nimmo, the tonnage of which is about four times greater, were both manufactured here, and quite a number of such vessels have been constructed in Australia. Whilst all dredges will be dutiable, as to vessels other than dredges, only those not exceeding 400 tons gross register will come under this proposal. Many vessels up to that size have been imported from time to time, but we believe that the men engaged in the shipbuilding industry are as much entitled to protection as are those employed in any other industry. It is for that reason that we propose this new item. I have only to say, in conclusion, that I shall be pleased to supply to honorable members any information that does not appear in the papers that have been circulated. It is not the intention of the Government to proceed at once with the consideration of the Tariff, and I submit this resolution now in order that honorable members may have an opportunity to study the schedule before being called upon to deal with it.
Sitting suspended from6.39 to 8.15 p.m.
.- The introduction of the proposed amendments at this stage of the session is, in itself, an indication of their character. During the past two years repeated demands have been made for a revision of the Tariff in the full and true sense of the word, but for reasons of its own the Government has not undertaken it, and even now holds out no hope of it. Last year, what might be termed departmental corrections were brought forward, and the present proposals are of like character. They include the readjustment of duties, the reduction or increase of rates affecting items of minor importance, adaptations, and variations, evidently dictated by departmental experience, their object being the removal of contradictions and the correction of defects. I do not belittle, and shall not oppose, this necessary work, since it makes the Tariff a better instrument, and may have to be undertaken from session to session. But the Protectionist public of Australia, and particularly the Victorian section, will be profoundly disappointed on learning that the second session of this Parliament is to conclude without a thorough revision of the Tariff such as they believe to have been urgently needed from the first day.
Beyond that even those who, for one reason or another, are opposed to Protection must regret that there is no evidence of the adoption of better methods. These proposals seem good so far as they go. But we have been asking in vain for that fuller information which is essential. The Minister has been forced to admit that he cannot say, in regard to certain goods, what the value of the local manufacture is, or the proportionate incidence of the duty.
– We know the value of the importations inevery line, but except in a few isolated cases we do not know the value of the locally-manufactured goods. Mr. DEAKIN. - That confession of ignorance has been repeated for several years, but no systematic and comprehensive effort has been made to put an end to the lamentable state of affairs. It is not too late for the Government to take this very important matter into consideration and act.
– The Minister of Home Affairs is doing so.
– To satisfy the public a new organization or board is needed.
– The Statistical Department could do the work.
– That Department satisfies the object of its creation in providing, among its multifarious information, a general view of the advance or retrogression of the industries of the State. But what is required is an independent expert board, consisting of two or three qualified persons who would devote the whole of their time to examining, in the minutest degree necessary to achieve useful, practical results, the various problems which present themselves to our Legislature. I have always favoured the association of such a body with the work of the Inter-State Commission, so that it might have the widest field of usefulness, but am content to suggest now what might be denominated a Tariff Board. Its business would be to study from the inside and the outside the working of our Customs and Excise duties, so as to ascertain the causes of the rise and fall of prices, bringing all the data under the microscope for political and economic study, and subsequent action by Parliament. Until such a body is appointed we shall have confessions like that just made by the Minister. The Government which takes this necessary step will earn the gratitude of the whole community.
I take it that the several instances quoted by the Minister are fair samples of the amendments now proposed. There are comparatively few cases in which rates have been raised.
– More than half of the amendments mean the increase of rates.
– Merely, I understand, by way of adjustment and alteration of definitions, articles being taken from one item to be placed under another. None of our great industries are affected, unless we include the alteration of the duties on pianos and dredges. A few others may be important in minor degrees, but the rest seem to relate to items affecting, at most, mere branches of trades. We have not yet anything like a perfect classification, which, in association with a study of values, prices, and the inter-relations of our industry and commerce, is both urgently needed and most important. Until the country has a settled policy for an Administration thoroughly informed in regard to the inter-dependence of our industries, we must have frequent Tariff amendments, and all of them partial, temporary, and unsatisfactory. They cannot be termed Tariff revisions. They are not worthy of the name.
We have in this country the opportunity to study many of our industries while in the germ, so as to carefully watch and assist their development. We can determine the relation of one industry to another, and of one group of industries to another group, having regard to questions of employment, wages and hours, standards of economic production, and efficiency in workmanship.
To provide for the scientific study of those questions is a task which it is not yet too late for the Government to undertake; besides that, one more opportunity to use that knowledge will be afforded to us next session. I trust that there will then be a fundamental revision of the Tariff necessary to bring it right up-to-date. The appointment of a body such as I have again and again suggested, which will obtain that precise and exact social and industrial information for which we have now to search through many contradictory statements, is an essential preliminary. If the opportunity be taken, the last session of this Parliament can be made one of the most memorable in the history of this country.
– I propose now to report progress.
– Surely the Minister is not going to stifle discussion. It would be a good thing for the country to have an opportunity to decide this question.
– There will be no stifling of discussion. The schedule was introduced this afternoon to enable honorable members to know what was proposed. The debate will be resumed next Tuesday or Wednesday.
– So that there may not be a misapprehension in the minds of the members of the Committee, or of my constituents, I wish, at once, to dissociate myself from any approval of this attempt to re-open the Tariff and impose higher duties.
– When the debate is continued next week, will it be confined to the proposals of the Government, or range over the whole Tariff?
– I take it that that is a question that will be settled by you, Mr. Poynton, or whoever happens to be Chairman when it arises.
In Committee (Consideration resumed, vide page 3488) :
Clause 35 (Establishment of Savings Bank).
.- I desire to remove an impression which one or two speakers have endeavoured to convey. The honorable member for Flinders gave us a carefully-reasoned speech, and he was followed by one or two others ; and,
Tunning through their criticisms, more particularly of the provisions dealing with the : Savings Bank, was the contention that it will deprive the man on the land of opportunities to obtain money to develop his holding. When the honorable member for Wimmera was ‘speaking, 1 interjected that this Bill gave the Commonwealth Savings Bank ample power to do all, and a great deal more, than the State Savings Banks are doing now. It has also been contended that there is some doubt as to our constitutional power to deal with this matter. To fortify myself on that point, I have consulted Quick and Garran, and that work leaves no doubt in my mind that the Commonwealth Parliament is entitled to deal with banking in all its phases. In the memorandum read by the Prime Minister this afternoon, we areassured by the Premiers that the institution of this Savings Bank will deprive them of the opportunities to obtain money necessary for Governmental purposes. In view of that statement, I should like to know what the Government of New South Wales pay to the trustees of the Savings Bank for the use of this money ; because it would almost appear that they can obtain funds to deal with as they like without any payment whatever. One or two unfortunate references were made to the investment of money by the State Savings Bank in New South Wales. We learn that one of the debtors is the Municipal Council of Sydney, to the tune of about £180,000. By interjection, I stated that the whole of this money is not utilized for reproductive purposes. I pointed out that some of it is spent on roads and bridges ; and in the £180,000 is the cost of that white elephant of Sydney, the Victoria Markets, which the New South Wales Go vernment endeavoured to unload on tne Commonwealth. There is no ground for the cry that this Bill will rob the State Governments of their rights ; but if the Government of New South Wales, for instance, were deprived of the opportunity to obtain money from the State Savings Bank, would the man on the land be unable to get assistance? The Government of New South Wales are taking from the man on the land, every year, over £1,000,000, and, instead of using that money in repurchasing lands now in private hands, they use it for general revenue purposes.
– I must ask the honorable member not to discuss that matter.
– I am simply following the honorable member for Flinders, who laid particular stress on these points. T desire to show that there is no ground for the fear that the man on the land, for whom he appeared so solicitious, will suffer from the establishment of the Commonwealth Savings Bank. I deplore this constant claim of State rights’ as against the Commonwealth. There Seems to be at all times an endeavour on the part of those opposing the Bill to fight for the States as against the Commonwealth Parliament.
– We contend that no improvement will be effected by the establishment of this Savings Bank.
– If the bank is going to be so bad for the people as honorable members opposite would lead us to believe, why should it be feared by the honorable member for Flinders and the honorable member for Wimmera? Why should the establishment of the bank be feared by the States ?
– Where is the necessity for the bank?
– The honorable member for Wimmera was not so frank as was the honorable member for Flinders, who said that he was satisfied - though he gave no reasons - that the mere establishment of the Commonwealth Savings Bank would cause the people of Australia to give it preference over a State Savings Bank.
– Because the Commonwealth can provide facilities in connexion with the Post Office.
– That was only a portion of the argument. In any case, the post-offices are part of the Commonwealth machinery, and are worked by Commonwealth officers, who have been loaned, so to speak, to the States for the purpose, of earning revenue for the sole benefit of the
States. Who can say that it is unfair for the Commonwealth to create a bank to do certain work and utilize the services of Commonwealth officers?
– Can the honorable member show how the people will be advantaged by the establishment of this bank ?
– There is no difficulty in doing that. When one Government is acting for the whole of the country, there can be effected economies impossible when the control is in the hands of six Governments with competing interests.
– Would the honorably member apply that to the Government itself ?
– It is applied.. Here sits the Government of the Commonwealth of Australia acting for the whole of Australia !
– Why not absorb all the State Governments?
– This is neither the time nor the place to discuss that question. The first argument we hear is that the establishment of this bank will deprive the States of revenue: but that is met in two statements made by the Prime Minister. First, the right honorable gentleman said that he is prepared to receive any proposal from the State Governments to give them a co-operative interest on a fair and equitable basis ; and secondly, in reply to the Leader of the Opposition, that not only is he prepared to await their proposals, but he is willing to approach them in order to prove that this Bill is not .introduced in antagonism to the States. We hear continually of the rights of the States; and. I do not deny that there are rights which should be conserved. But what about the rights of the Commonwealth ? We are here for the express purpose of doing the best we can, not for one State, but for the whole country, irrespective of whether we please one State or another. As to the alleged loss nf revenue, New South Wales has other and ample means to recoup itself for any loss, even if the whole of the Savings Bank business comes into the hands of the Commonwealth.
– On the London market?
– If I entered into that question, I should be called to order by the Chairman. I have stated publicly where they can go, and I have no doubt where they will go, irrespective of this matter. Great stress has been laid by some speakers on the other side on the probability of the Bill absolutely destroying the Credit Foncier of Victoria, and the Advances to Settlers Bank of New South Wales. Where will the destruction come in ? The funds of the Advances to Settlers Bank are limited, the amount to be advanced is limited, and there are a considerable number of other restrictions. If those banks were not available, and the Commonwealth Bank, apart from the Savings Bank part of it, were in existence, people could get from it loans on as good terms, or better terms, than they have ever got from the State banks. I call particular attention to the two clauses in the Bill which invest the Commonwealth Bank with considerably more powers than any of the Associated Banks of Australia have to-day. What is being done by the Credit Foncier and the Advances to Settlers system could be as well or better done by the Commonwealth Bank. Either the honorable member for Flinders or the honorable member for. Wimmera said that if the savings of the people were taken away from them, the State Governments would have no other means of resuming large estates by purchase, cutting them up, and givingthem to small settlers. I wondered at. the time whether that statement was made seriously. It really could not have been, considering that some .States follow’ the very unwise policy of borrowing money to purchase estates and cut them up, and at the same time utilize money which they receive from selling the land - the gift of the Almighty to the .whole people - for« ordinary revenue purposes from day to day. While I am a member of .the New South Wales section of the Commonwealth Parliament, and am prepared to ‘ do my duty by my constituency and my State at all times, I am equally prepared to do my duty by the whole of the people of the Commonwealth. In that regard, I put the interests of the whole above the interestsof the part; and as this is a matter that affects the whole of the people of Australia, I shall hail with satisfaction any arrangement that can be made for the State and. Commonwealth Governments to co-operate, so long as the States are not given a dominating power. While, however, . documents such as that received by the Prime Minister to-day, are sent to, the Commonwealth Government by State Premiers, with an assurance that every Premier in the Commonwealth will take up the same position, and if that position is to be tenaciously adhered to. there can be no hope of their co-operating with the Commonwealth Government. This document does not amount to a request; it amounts to an absolute demand.
– The Federal Government have been responsible for that by introducing the Bill without consulting them.
– Why should they consult the States?
– If you want cooperation, you must have consultation first.
– Who was consulted, in the first place, as to whether this Parliament should .have the power or not? It was the people of Australia, who are the masters of the State Governments and of this Government. They gave a mandate, by agreeing to the Enabling Bill which formed the foundation of the Constitution, that the Commonwealth Parliament should “deal with all- phases of banking. That power” has been ten years in existence before being put into operation.
– - Does the honorable member agree that the States should be invited to come in as partners after the Bill is passed?
– I have no objection to the States being taken into consideration and getting some benefit ; but if I am asked whether there should be an equal partnership, with the States holding a dominating power by reason of their numbers, I say “ No; the Commonwealth Parliament must retain the dominating power.” There is no necessity, in debating a matter of this kind, for honorable members to repeat, apparently for parly political purposes, that the poor man on the land is to be destroyed. Honorable members opposite who have been criticising this measure had not the courage even to take a vote upon the second reading.
– This side is not attacking the principles of the bank.
– The critics of the measure have sp managed it that at the next election they will be able to say, “ We did not vote against the Bill.” They voted, however, for an’ amendment which would have destroyed the Bill, and since then practically three-fifths of those who have criticised it have played upon that one string about the poor man on the land being destroyed, and the poor man in the town not getting any more help from the Government.
– Do you think he should be ignored ?
– He should not be, and the Federal Government, because they think he should be better protected, and his interests more, carefully conserved, are going to give him opportunities under this measure which he has never yet got under any State measure. The honorable member knows in his heart that this bank, whether in its Savings Bank or general jurisdiction, would have saved many a poor man who has been driven off the land by private banks. The Government want to save that class of. man on the landThe ordinary man- who goes to a bank for assistance, and gives the deeds of his house as collateral security, knows not the moment when they will be called up. The whole position was given away by the honorable member for Flinders when he frankly stated that, if the Commonwealth Bank is created, he has no doubt that the people of Australia, will give it their confidence and business in preference to theState banks. Why will they do so?
– Because it will offer better facilities.
– No. The honorable member for Flinders admitted that it would not be because the Commonwealth would give greater interest to depositors or chargeless interest to borrowers, but because the people of Australia of all classes would have greater confidence in a bank with the whole resources of .the Commonwealth behind it,, than they could have in a bank operating only in a State, and with only the resources of one State behind it. That has been the position with regard to the note issue, and it will be the position in regard to this bank, in spite of all attempts - to create strife between the State and Commonwealth authorities. I had hoped to hear the Prime Minister speak after receiving the memorandum from the State Premiers. I do not know what is in his mind, but from my knowledge of him, and my thorough trust in his word, I am sure that this Parliament may safely leave the matter with him, in view of his previous statement that he would not only receive approaches from the States, but, if necessary, in order ,to bring about harmony, would approach the States. The people -of .the Commonwealth may also safely leave it at that.
– That is the position I take :up.
– The memorandum really asks for delay. No harm would be done if the Bill were passed to-night.
Afterthe assurance given by the Prime Minister, and now repeated by him, cannot this House trust him, and trust the Governor of the bank, when he is appointed, to keep the door open for the States, as long as there is any possibility of a workable agreement being Come to.’’ There is therefore no reason for delay. The principal object of the Bill is the establishment of a general Commonwealth Bank. The Commonwealth Savings Bank can be established at any time afterwards. The machinery at present being utilized by the States can go on as at present. Only when an agreement is arrived at, or when there has been a failure to arrive at any agreement, and the necessity is forced on the Commonwealth of establishing its own Savings Bank, will there be any necessity for transfer or interference. I hope that during the rest of this debate we shall hear no more about the damagethat is to be done to the poor man on the land, or the poor washerwoman, who, according to the honorable member for Parkes, would be ruined by her shares in the ordinary banks depreciating in value. Let us deal with this proposal on a higher plane. We have to consider the interests, not of any one section of ‘the people in Victoria or New South Wales, but of the people of Australia as a whole. I hope that the Bill will pass. Although my knowledge of land settlementand of commercial matters generally is as wide as is that of most honorable members, I have no misgivings in regard to these provisions, and I welcome this Bill because I see in it opportunities for all classes of the community to secure benefits which it is impossible for them to obtain from either the Associated Banks or the existing Savings Banks.
– I desire to call attention to one or two points that occurred to me while honorable members were discussing this question this afternoon. Figures are sometimes rather wearisome, but, in a matter of this soft, we ought to come as quickly as possible, as the honorable member for Flinders said, to the actual accounts and details. I quite agree with the honorable member for Riverina that in dealing with this Bill we ought not to be affected by any question of the possibility of injury to farmers in connexion with it. I do not think that the Victorian Credit Foncier system offers better terms than are obtainable from other institutions.
– It does, so far as small amounts are concerned.
– The position under the Credit Foncier system is no better., and no worse, than it is in connexion with the Savings Bank. I do not believe that any of these institutions offer money at a lower rate of interest than that at which it can be obtained in ordinary circumstances in the market. For that reason, my objections to the Savings Bank provisions of the Bill are not affected by the possibility of some farmers being unable to get better terms in the future than they have been able to obtain from some of our local institutions. The Savings Bank provisions of this Bill really do not raise the question of advances on landed security. I have here a return up to 30th September last in respect of all the Savings Banks of Australia. It shows that, at that date, the total funds were £54,587,059 and that of those funds only £5,54179 had been advanced on landed securities. As a matter of fact, some of those figures cover banking premises. In other words, out of a total fund of £54,587,059 the investments on mortgages total only £4,541,000, so that it is really only the matter of the rate of interest to the borrower on landed securities that should affect our opinion regarding the desirableness of these Savings Bank provisions. Taking the total of these investments, we find that £37,043,253 is invested in Government stocks, bonds, and municipal debentures. These figures imply that if the Commonwealth Government enters upon Savings Bank’ business, it will not be in order that the farmer may obtain his money for a lower rate of interest than at present. As a matter of fact, they show that the scope of advances on land by these institutions is very small, and I could show that it has been diminishing. There is a very small proportion lent on landed securities for the simple reason that not many of these investments of a sound character are now offering.
– They cannot get the money out in that direction.
– No; because as we go on, the rate of interest falls, and the rapidity of our development of the best class of land also eases off. I have here the figures, not for the whole of Australia, but for South Australia, and, taking the returns for certain years, we soon arrive at the actual position. In 1887, for instance, the total amount of depositors’ balances, or, in other words, the total funds of the South Australian Savings Bank, were £1,581,100, whereas last year they were £7,4*1,710. The amount lent on mortgage, which is the class of security they have always been seeking, was £698,813 in 1887, and only £1,630,362 in 1911. In other words, the proportion invested in landed securities has gone down considerably since 1887. I have the returns foieach year: and if honorable members choose to examine them, they will find that the proportion has gone down year after year as our settlement has developed.
– And mortgages have been paid off during the good years.
– Exactly. At the present time the farmers in some of the States do not want advances.. In South Australia, they are paying off mortgages in all directions, and are not taking advances either from banks or private lenders. In fact, in South Australia, at present, money on a good landed investment cannot command more than 4 per cent., or 4^ percent. I do not think the average obtained on good security is much over 4 per cent. In 1887, the position was different. The rate of interest charged by the Savings Bank of South’ Australia on mortgages’ was then 6’ per cent., whereas it now charges 4^ per cent, and 4,^ per cent. The reason may be gathered from the fact that the deposit rate in 1887 was 5 per cent., whereas it is now 3J per cent. I wish honorable members to recognise that the fair inference to be drawn from these figures is that, if these Savings Bank provisions are retained in the Bill, the result will be either to make the Commonwealth Bank a means of borrowing from the people by giving depositors a certain rate of interest, and investing the money so obtained in their own bonds, or to interpose another instrumentality between the lenders and the States. Is not that borrowing? Do the public understand that the Savings Bank )ranch ( of the Commonwealth Bank is to be instituted as a means of issuing bonds in exchange for advances from the people, just as the States have been doing?
– That is an inescapable phase of the proposal.
– That is so. The Commonwealth Government is asking the people to allow it to borrow from’ them. That simply means that we shall have to invest the money in the bonds of the States. What advantage will that confer on the people of Australia ? What advantage will be gained by interposing the Commonwealth between the depositors, as the lenders in this case, and the various State. Governments in their financial operations? I can see none. The Savings Bank branch of the Commonwealth Bank is not intended to aid agricultural development; it is to be purely and simply a means of either borrowing money for Commonwealth purposes, instead of paying our way, in accordance with what I believe is the true principle, out of revenue, or imposing another instrumentality between the borrower who lends to the States at the present time and the States themselves. What rate of interest is the Government likely to give depositors in the Savings Bank branch ? The South Australian Bank gives 3J per cent, which is practically the best rate. The amounts in respect of which a less rate is paid are too small to affect the question. Let us look at Savings Banks in other countries. The rate given on deposits by the Postal Savings Bank of the United States of America is only 2 pei cent., whilst the rate given by the Post Office Savings Bank of the United Kingdom is 2 J per cent. In Canada, the Savings Bank, whicli is conducted through the agency of the Post Office, pays 3 per cent.. That institution furnishes us with a case iri point. It is a Dominion Savings Bank, and is conducted through Government instrumentalities, yet the rate of interest on deposits is only 3 per cent., as against 3^ per cent, in South Australia. As a matter of fact, it was shown by the report of the American Commission that depositors prefer the private banks as against the Government Banks in Canada. The reason why the United States of America Postal Bank was established last year was’, as stated in Congress, that there was a failure of many Savings Banks in connexion with the smash of 1907. I think that between 1902 and 1909 133 Savings Banks had failed in the United Stales of America ; and, in the circumstances, it was thoughtwell to establish a Postal Savings Bank, with Government security behind it, in order to allay anxiety. In France, the Savings Bank deposit rate is only 2^ per cent., whilst in Japan, for special reasons, 4.2 per cent, is paid. At present, in Japan high rates have to be paid on loans. In Austria, the rate is 3 per cent. ; in Hungary, 3 per cent. ; and in Sweden, 3.6 per cent. There is nothing in the rates given by Savings Banks in other parts of the world to justify the impression that the Commonwealth Savings Bank will give much better rates than are obtainable under existing coilconditions in Australia. Why should we interfere with the private banks ? The Savings Bank of South Australia was established in 1848. In the original Act,, I think there was a provision that stock to the extent of ,£10,000 should be guaranteed. by the Government. That guarantee was never asked for,, and the provision as to Government guarantee was removed from the Act in 1875. Until recently, it has been managed, on absolutely voluntary lines. Sir Henry Ayers, who had been chairman of the Savings Bank from its inception in 1 848, when examined before the South Australian Banking Commission in 1888, said that they did not want any Government guarantee ; they preferred not to have one, because the existence of such a guarantee put them on their mettle to see that their funds were invested upon undoubted securities. I have mentioned that the rate on advances is from 4) to 4^ per cent., and borrowers are allowed to pay off by instalments as low as £10. There are other conditions which are quite as. favorable as is any Credit Foncier system in any part of the world.
– They give practically the same extended terms as the State Bank.
– Yes; but they do not take the payments in instalments of principal and interest. They give very favorable terms, however, such as the right to pay off after six months’ notice, and after a year the right to redeem by instalments of ;£io and upwards. I ask the Government on what grounds of expediency or necessity it proposes to interfere with the banks of the States, which offer to the public conditions as fair as can be given, and whose efficiency must be impaired by this action, because they will be no longer able to get their business done through an agency charging only 6s. per cent, in £1,000,000? It is possible for them, acting on the mutual principle, to make a slight profit each year. The Commonwealth Bank will not be run on the mutual principle ; it will be part of the general banking system of the country. There will be no separation of the funds of the Savings Bank, so that the depositors in it must suffer in reduction of interest for blunders that may be made in the management of the Commonwealth Bank. The State Savings Banks now. get their work done through the Post Office agencies at a very small percentage on the business transacted, and in South Australia pay only a small amount for management - £100 a year to five or six directors. The actual profit is small, because of the total income last year, which was ,£282,000 odd, on’)’ £x9>179 was carried to the reserve fund, and there were, in addition, two small expenditures in connexion with the officers’ retiring fund and the fidelity guarantee fund. I have the accounts of the bank for the past twenty-five years, and it may be said that the margin of profit is not more than ,£5,000 or ,£6,000 a year, the benefits going wholly to the depositors. The Commonwealth Government is not likely to make much money from its bank j but the depositors in the Commonwealth Bank will run the risk of a reduction in interest should losses be incurred.
– I was prevented from speaking on the second reading by an arrangement between the leaders of each party for the closing of the debate, but I wish to say a. few words regarding these provisions. No serious attempt has been made by any Ministerialist, from the Prime Minister downwards, to show that there is a. need for the establishment of a Commonwealth Savings Bank, .or that there is anything wrong in the management and control of the Savings Banks of the States. On the contrary, it is admitted that they serve the public thoroughly and well. It has not been contended that the management of the Commonwealth Savings Bank would be better, or would give any advantage to depositors ; in short, no reason has been advanced for the establishment of the Commonwealth Savings Bank. Nor have we been told what is to be done with the money deposited in it. There has been no statement of policy. The measure was introduced in the usual slipshod fashion characterizing the introduction of measures by the present occupants of the Treasury bench, and what information we have gained has been dragged from them piecemeal. But underlying the speeches of honorable members opposite is the evident desire to make the public believe that the Commonwealth Bank will lend out money at lower rates than those now charged, and will give to depositors higher rates than they can now obtain from the Savings Banks. That that is likely no sane person will believe, without much more convincing statements than we have yet- heard, unless “ wild-cat “ speculation is to be indulged in, with its attendant dangerous risks. Evidently the aim is to take another step in the direction of Unification and Socialism, which is one of, the objects of the Labour platform. As the honorable member for Angas has pointed out, they see in this proposal an easy method for borrowing from the public without seeming to borrow, thus getting behind the non-borrowing plank of their platform. In this way they hope to be able to carry out a number of the “ wild-cat “ socialistic schemes which are so dear to their hearts.
– The other day the honorable member suggested the expenditure of £300,000 on a socialistic scheme.
– There is no suspicion of Socialism in the laying out of the Federal Capital. The honorable member feels that he is in perilous company.
– The honorable member for Lang is not too well pleased with the company in which he is.
– I admit that, under some circumstances, I am uncomfortable; but I have to choose between tyranny, restriction, and oppression on the one side, and freedom on the other, and my choice is always for freedom. No doubt I have the sympathy of some honorable members opposite. The Prime Minister was to-day in receipt of an important communication regarding these Savings Bank provisions from ihe Premiers of the States; at least, it was signed by the Premiers of New South Wales and Victoria, and concurred in by those of the other States. It was due to the Committee that he should make some statement as to the Government’s intentions - whether the communication affected its attitude in regard to the establishment of the Commonwealth Savings Bank. But the paper was flung on the table as a bone might be flung to a dog. We were practically told that we might take it or leave lt; that we might master its contents, but were to know nothing of the Prime Minister’s mind in regard to it. It was certainly a discourteous way to treat the Opposition and the Premiers. As the honorable member for Riverina intimated, we are entitled to a statement from the Prime Minister as to how the Ministry regard this communication.
– The Prime Minister read the document to the Committee.
– Something more was due to the Committee and to the Premiers. Surely, when a document was sent by the Premiers of sovereign States in protest against a proposal of the Government affecting the State finances to a very serious extent, it was required that the
Prime Minister should do more than read it to the Committee. Surely it was his duty, as a matter of courtesy and right to this Committee and the State Premiers, to make some statement as to the attitude of the Commonwealth Government?
– -Did the honorable member wish to see the Prime Minister in his room ?
– Perhaps the Prime Minister saw honorable members in their room, which was more to the purpose, and may explain the reason for the right honorable gentleman’s singular silence. Perhaps one reason for the absence of any statement - apart from any orders issued by their Caucus masters - is that members of the Ministry are not clear in their own minds as to what they desire, or what the object and effect of the establishment of this bank will be. We have had various conflicting statements from the Ministers on the subject, and some of these I shall read. The Prime Minister in his second-reading speech said -
I desire to state quite frankly that I think the passing of this Bill will mean that there will ultimately be only one Savings Bank in Australia.
From that declaration it is clear that it is intended to absorb the Savings Banks of the States with or without the consent of the State Governments - that, in the absence of any amicable arrangement, it is the intention to enter into active competition and endeavour to absorb all the business. The Prime Minister further said -
My individual opinion is that the advantages of the Commonwealth Savings Bank will be such that probably in addition to securing new depositors it will obtain some of the money’ now deposited in the State Savings Banks.
Here is a declaration that an attempt is to be made to divert deposits from State Savings Banks to the Commonwealth Bank. Again: -
I am not advocating the transfer of deposits from the State Savings Banks to the Commonwealth Savings Bank, but 1 think that in the evolution of things that will be the inevitable result of the establishment of this institution.
This emphasizes clearly the intention to grab the State Bank’s business -
I think it is impossible for two Savings Banks to be carried on in the same post-office.
From these declarations it is clear that, by hook or crook, the deposits in the Savings Banks are to be diverted into the coffers of the proposed bank in order that they may be utilized for the purpose of
Commonwealth borrowing, thus evading the non-borrowing plank in the Labour platform. There can be no other reason for this grab” of the deposits, as it is correctly styled by some leading newspapers. Some criticism on this proposal was offered by the Leader of the Opposition, and he raised a storm of indignation in the mind of the Attorney-General, who promptly denied that there was any intention of this kind on the part of the Prime Minister or the Government. The Prime Minister made the statement I have quoted on the 15th November, and on the 22nd the AttorneyGeneral, referring to the criticism of the Prime Minister’s speech by the Leader of the Opposition, said -
I would remind him, however, that it is for the Governor to say what Savings Hank business shall be done. If he considers that the Savings Bank depositors should be catered for he will provide a Commonwealth Savings Bank, but be is not directed to do so in the Bill. He is merely to undertake the business of a general banker.
The Attorney-General here tries to convey the impression that the Savings Bank part of the business is a mere after consideration - that the main purpose is. general banking; and that it will largely be within the discretion of the Governor of the bank whether, at any time, the Savings Bank is established. As against that, however, we have a subsequent declaration by the Prime Minister, which is a flat contradiction of the assurance of the AttorneyGeneral. The Prime Minister, in reply to a protest from the Premier of South Australia, spoke in most unequivocal terms. He said -
Regret unable to agree to omit Savings Banks provisions from Commonwealth Bank Bill, as the establishment of a Commonwealth Savings Bank is an essential part of the Government’s policy-
Here we have the Prime Minister declaring that a Savings Bank is an essential part of the Government policy, although the Attorney-General had previously said that its establishment was to be at the, discretion of the Governor of the bank. Which of these two gentlemen are we to believe? They so flatly contradict one another that it is impossible both can be right. The Savings Bank proposal is either an essential part of the Government’s policy or it is not. The Prime Minister declares it is ; the AttorneyGeneral declares it is not. This is beqoming quite a familiar occurrence with the present Government. The Minister of Home
Affairs subsequently went over to Sydney, and gave a still further variation. Speaking on the 26th of the month, he said -
There is no idea of the Commonwealth Bank absorbing the savings of the States.
How does that read in conjunction with the declaration of the Prime Minister that in the evolution of things’ there must inevitably result the establishment of only one Savings Bank in Australia. The Minister of Home Affairs went on to say -
It is not proposed to interfere with the State banks in any way. All they were attempting was to secure a great co-operate banking system between the States and the Commonwealth.
When we read those statements, so utterly at variance one with the other, we may be pardoned for having some doubt as to whether the Ministry really know their own minds. Or whether there is. a deliberate intention on their part to mislead Parliament and the people. We are entitled to ask that they shall, at least, confer and ascertain each other’s views in order that, whatever their own individual views may be, they may speak with one voice on the floor of the House and on the platform outside. It is simply ludicrous to read these conflicting statements, and reflect that they come from members of the Cabinet who are supposed to know their own policy as a Cabinet, even if they do not know the mind of each on some other, perhaps, less important subjects. At any rate, such conflicting statements must give rise to much confusion in the public mind. People outside cannot understand what the Government are driving at, unless, of course, they read between the lines and draw their ownconclusions, recognisingthe underlying policy of the party generally, and realizing that it is necessaryfor the Government to hoodwink the public in orderthat they may attain their Socialistic ends. The State Savings Banks have been and are doing very successful work indeed, especially the Savings Bank in New South Wales. That bank has assisted farmers and settlers ; and on that point I have a few figures of particular interest at this juncture. During the five years of the existence of this bank, the Commissioners; have granted assistance to no fewer than 2,682 farmers and settlers, with anaverage of £349 per head, aggregating nearly £1,000,000. That is certainlynot a. bad record, for it shows that the- bank, under State management, has been doing very useful work.. There was also created in New South Wales an Advance to Settlers Board, which has been in existence some eight years, during which time advances have been made to 6,432 persons, the amount totalling £683,308. It will be seen that the farmers and settlers of New South Wa.les have, through the Government Savings Bank of New South Wales, and the Advances to Settlers Board, received assistance amounting to something like £1,617,192. Last year, at the instance of the Wade Government, another Act was passed with the intention of promoting closer settlement and still further assisting settlers. Under it, advances could be made up to about 95 per cent, of the total purchase money. 1 do not think settlers could be assisted to any greater extent by the proposed Commonwealth Savings Bank, which will also have the disadvantage of not being so closely in touch with the people as the State Governments and State Savings Banks are. The honorable member for Flinders showed the utter fallacy underlying the whole proposal, and any impartial listener would admit that he absolutely knocked the bottom out of it, and particularly out of this part of the Bill. After his speech, the Government would have been well advised to throw the Bill under the table and go on with more important Federal business, instead of seeking to undermine the stability of State financial concerns. The State Savings Banks are now practically Federal in their operations. We hear a great deal about the national aspect of these proposals. The word “ national “ seems to roll off the tongues of some honorable members as if it were a word almost as blessed as “ Mesopotamia.” The idea of the word “national “ has become fixed in their minds because they are always thinking in the groove of Unification, which implies Nationalism. They forget that we are not a national, but a Federal Assembly. We are a Federation of the States, and we should think of this matter and other matters Federally, and not nationally. To call this a National Parliament, or a National Committee, is a misnomer. Honorable members opposite are desirous of obtaining the ultimate goal of Unification, and the underlying policy of this Bill is another step in the direction of Unification and Socialism; the intention being that the funds of the bank shall be applied to the attaining of those objects. Of course, hon orable members opposite would not dream of alarming the public by stating so; but any one who knows the ramifications of their operations, the general trend of their ideas, and the fact that no reason has been given -for the establishment of the bank, must be aware that, underlying this proposal, is the idea that it will be another step in the twin directions of Socialism and Unification. To show that the operations of the State Savings Banks are Federal in their character, let me quote the following, from a statement by the Commissioners of the Government . Savings Bank of New South Wales regarding the operation of the reciprocity agreement in the last financial year -
The transactions amounted to ^269,883, of which sum ,£162,929 was credited here to depositors from other States, and ^106,954 was remitted to our depositors in other States. The principal importance of this lies in the fact that it establishes a continuity in the savings of the depositor, and encourages in his new surroundings the habit of thrift, evidenced by the fact of his having an account in this or a Savings Bank in another State.
Therefore, the State Savings Banks, being Federal in their operations, can serve all the purposes which any Commonwealth Savings Bank can possibly serve, to meet the convenience of depositors, and serve them more satisfactorily. They also have their agencies throughout the States. The State Savings Banks of New South Wales had, in June 1910, no fewer than 1,838 agencies. It is, therefore, closely in touch with the people all over the State; and, so far as New South Wales is concerned, there is absolutely no need, on any pretext, for the Commonwealth to step in and establish a Savings Bank in competition with those which are doing such excellent work there already. The aggregate deposits in Savings Banks amount to between £50,000,000 and £60,000,000, being distributed, in 1 910. as follow: - New South Wales, £20.150,574; Victoria, £15,417,888; South Australia, £6,791.320; Queensland, £5,622.986 ; Western Australia, £3,481,764; Tasmania, £1,652,968. I believe the total sum is now close on £60,000,000, which, of course, would be a handy little amount for the Federal Government to lay its hands on to carry out a number of the schemes it has in view. A Government of this kind is always able, to spend plenty of money ; although the question of raising money in less prosperous times would, perhaps, present a problem which it would not be able to face with equanimity. The Savings Banks are a source of considerable assistance to the State Governments and to municipal bodies, which borrow largely from them. Gut of the deposits in the State Savings Banks, there has been invested in Government securities no less a sum than £37,792,189; and there has been invested from the same source in municipal securities, the sum of £3, 198,879, making a total of nearly £40,000,000. If these funds are absorbed to any considerable extent by the operations of the Commonwealth Savings Bank, the State Governments and municipal institutions will be greatly embarrassed by being deprived of the sources upon which they now draw for certain of their needs. We have already taken a large amount of revenue from the States under our new financial arrangements, and it would not be a wise policy for the Commonwealth to unnecessarily disturb their financial operations further. We have plenty of sources of revenue, and have ample revenue for all current expenses. We might well leave to the States the sources of revenue which are already in their hands, without showing a spirit of greed which is unwarranted by necessity, and without displaying an insane desire to grab hold of money wherever we happen to think . it can be seized with impunity. I trust that this matter will be reconsidered, and attention paid to the protest of the State Premiers, as embodied in the memorandum laid on the table this afternoon. I hope, also, that the Prime Minister will have the courtesy to announce to the Committee the attitude of the Government on the question. If he does so, he will be at the same time paying a due meed of courtesy and respect to the authors of the memorandum. Some notice ought to be taken of it by the Committee, and I hopethat, even at this late hour, the Prime Minister will make a statement on the subject.
– It is somewhat remarkable that the enthusiasm at first displayed by honorable members opposite in defence of this Bill has almost died away. Some of their speeches were a mere pretence to defend the Savings Bank provisions of the measure, and there appeared to be very little heart behind them. Indeed, I have a suspicion that a considerable number of honorable members on the Ministerial side would be delighted if this part of the Bill were eliminated. I, for one intend to oppose it as vigorously as possible, and, whilst I have nothing to say against the general principle of a Commonwealth Bank, conducted on proper lines, I shall certainly vote against the third reading of the Bill if the provisions for running a Savings Bank branch as a competing institution with the people’s banks in the various States are retained. As you know, Mr. Chairman, the people’s bank in South Australia is, above all other institutions, the pride of the citizens of that State. It has been built up with great care and energy by men who have devoted practically a lifetime to the work, and, until recently, absolutely without fee or reward. As an instance of the hold that it has on the people of South Australia, one need only mention that more than one-half of the entire population are depositors with it. We have, in this measure, another evidence of the growing desire of a section of the Commonwealth Parliament to encroach upon the privileges of the States, and, in this instance, to do so without any justification. I have not heard a word in earnest justification of the principle embodied in the clause under consideration. This is not a proposal to meet a public need that exists in any sense whatever. The Savings Bank branch of the Commonwealth Bank will simply be another competing institution operating side by side with institutions existing to-day, and maintained in the very highest order of efficiency. We shall be duplicating the cost of management, so far as this part of the business is concerned, and therefore, as a matter of course, we must reduce the rate of interest that we are able to pay to the people who invest in the State Savings Banks.
– We are doing more than that - we are shutting out the State Savings Banks from the facilities they now enjoy for carrying on their business.
– We are not only proposing to enter into competition with the State Savings Banks, but we are taking from them an instrumentality which they have enjoyed ever since the institution of Savings Banks in the several States. By so doing, we shall place them under a very serious handicap. It is only about seven or eight years ago since the trustees of the South Australian Savings Bank erected magnificent premises - premises so extensive that the people thought they would be sufficient to meet its requirements for the next fifty years. Already the. growing popularity of this bank is such, however, that even these immense new premises do not afford sufficient room to handle its business.
– This is not a compulsory measure.
– But it is a competing measure for which there is no justification. The growing business of the Savings Bank, not only in South Australia, but in other States, is such that -the trustees have had to extend their operations in country districts, partly, in some cases, for the better transaction of their operations, but, so far as South Australia was concerned, because such extensions were an absolute necessity. In their enlarged premises in the city of Adelaide, the trustees had no room to handle the business from every part of Australia. They have, therefore, found it necessary to erect costly structures in different’ parts of the . State, where the country business is centralized, only the more important and condensed returns now finding their way to Adelaide.
– Remember the wonderful time South Australia has been having for some years.
– I. hope that Australia, as a whole, will long continue to enjoy such good times. Mr. Spence. - The good times in South Australia show what a Labour Government can do.
– If the Labour Government could continue the seasons we have enjoyed during the last six or seven years, I should be prepared to keep them in office. If it had not been for the bountiful seasons we have had, however, the Labour Government would have - ruined South Australia long ago. Are honorable members opposite, who profess to represent the workers of the community, going to give the people more interest on their deposits with the Commonwealth institution than they are obtaining from the State Savings Banks ?
– Give notice of that question.
– The honorable member would require a very extended notice.
– No. It should not be difficult to give better interest than is being paid in South Australia.
– The Savings Bank of South Australia is paying 3J per cent., but if this part of the Bill comes into operation, the people will get considerably less. If the Federal Government imagines that, because of its national character, it will be able to do, through this bank, a bigger business, and so return a bigger rate of interest to depositors, how is it that that has not been the experience of National Savings Banks in other countries ? The Postal Savings Bank of the United States of America pays only 2 per rent, whilst that of the United Kingdom gives only 2^ per cent, on deposits. If the Federal Government put this portion of the Bill into operation, and deprive the various State Savings Banks of the use of the post-offices, the State institutions will have to make other provision for carrying on their business. If they have to do so, then they will be unable in future to pay $h per cent, on deposits, and their inability to do so will lie at the door of honorable members of the Labour party, who are not prepared to leave a magnificently managed institution alone. There is another point to be considered. These institutions, whicli came into existence in some cases over seventy years ago, are carried on to-day by highly trained scientific men. Not only have they attained the very highest efficiency in the conduct of this class of banking business, but it is the only class of banking business to which they have to devote their energies. If a Savings Bank business is to be incorporated with the general banking business, for which this Bill provides, the Savings Bank branch will be but a subsidiary consideration, and, in all circumstances, cannot possibly have that careful and concentrated management which obtains in connexion with the existing Savings Banks. The State Savings Banks are doing safe business under very efficient management, but if that class of business is merged with the general, banking business under the Commonwealth scheme, it will have to stand its chance with the general fortunes of the bank. If, in the general business, losses are sustained, the Savings Bank branch will suffer in common with the ordinary bank. The honorable member for Grey stated in this House last week that he felt that this proposal would not only operate injuriously against the people generally, who are depositors with the State institution, but that it would enter into unjustifiable competition with the State Bank of South Australia, which carries on a branch of business similar to that conducted under the Credit Foncier system in Victoria, by the Advances to Settlers Branch of the Savings Bank in New South Wales, and bv a similar institution in
Western Australia. Can any honorable member justify, at this juncture, interference with the excellent work which is being clone in connexion with land settlement, and the development of our primary industries by these several State organizations ? I know a good deal of the operations of the South Australian institution, which has been in existence for many years. In the earlier part of its career, the management cost more than it does to-day, when its machinery is running smoothly, and is fully occupied. It is conducted by expert men, who have had a lifelong experience of the lands in every district in the State. The first step taken in connexion with the management of the State Bank of South Australia was to secure the highest and most competent officer in the Crown Lands Department, and thereafter a second officer, who was also one of the most efficient and most experienced men in the Crown Lands office, was added to the staff, because it was recognised that their experience eminently qualified them to deal with the work of making advances on mortgage to farmers and settlers. They knew the character of the country and the value of the land. Their experience was of the highest service, enabling them to promote the safe conduct of that banking institution. For whom? Not for the rich people, not for the big landholders, but for the small settlers in the outlying districts. These remarks apply also to similar institutions in the other States.
– According to the honorable member for Angas, the farmers are going elsewhere to look for accommodation.
– He did not say that. He said that there was not the same amount invested in mortgages ; but that is because during the last seven or eight years within the rainfall areas the seasons have been so good that the mortgages have been paid off. In districts newly brought under settlement, the farmers are absolutely dependent on the assistance of the institutions of which I am speaking. Yet the members of the Labour party - the professed friends of the poor farmer - wish to set up an establishment which will compete against them, and make their conditions worse 1
– The farmers will get cheaper money from the Commonwealth.
– I do not think so. In their heart of hearts, honorable members opposite would like to put this part of the Bill into the waste-paper basket. It will take them a long time to justify their proposal for crippling State institutions that have been a God-send to the poorer settlers. Those who represent farming constituencies will be very sorry for their share in this business. They are compelled, by the operation of machine politics, to do something that they do not believe in.
– The honorable member did all he could to prevent the establishment of Savings Banks in South Australia.
– The (Honorable Alfred Catt is the father of the State Bank of South Australia, but the man who advocated it most on the floor of the House was the first Speaker of this Assembly, Sir Frederick Holder.
– He did not have the honorable member’s assistance.
– Next to him, no man addressed more public meetings in support of the State Bank scheme. It is because I know the value of the institution, and what the farmers think of it, that I speak so earnestly in its defence, and shall do what I can to minimize the t attack upon it. The Labour party is not responsible for this boon to the settlers in outlying districts, though some of them supported the scheme. I ask them to stand by their child. If the Savings Banks of the States are crippled, most harm will be done in outlying, sparsely-populated districts. In the metropolitan areas and big country centres there will not be much interference, but it will be impossible for the State Savings Banks, when deprived of the post-office agencies, to do much for outlying districts.
– Did not the Prime Minister say that there will be the police courts?
– I wish he would say something definite. He told us that the door was open for co-operation, but a moment afterwards he said that he intended to pass the Bill as it stands. I feel strongly on this question, and shall speak strongly on it, not only here, but elsewhere, for many a day to come, and within the next two or three years the saddest people in Australia will be the guilty parties opposite.
.- The honorable member for Riverina early in the evening asserted that the Commonwealth Savings Bank will do more good than the existing State Savings Banks. But let us put the statement to the test. The State Savings Banks deposits amount to about £3.000,000, and their depositors number nearly one-third of the population of the Commonwealth, whereas the proposed bank is to start business with 000, 000, which is to be lent to it at the rate of 3J per cent., so that it will have to meet an interest charge of ,£35,000 a year. To say that a weakling institution such as it will be can do more for the country than those which have been brought into existence and fostered by the Governments of the States, is an insult to our intelligence. The capital and reserves of the Associated Banks amount to £30,000,000, and the Savings Banks, of course, cannot compete with them in regard to ordinary commercial business. But the whole of the money of the State Savings Banks is used to earn interest for their depositors, whereas the money of the depositors in the Commonwealth Savings Bank will be used for the working of the general Commonwealth bank, and they must share its risks. They are not likely, therefore, to be in anything like as good a position as the depositors of the existing institutions. Ministerialists profess to be opposed to all forms of combine and monopoly. Yet the Government are shaping this Bill with the direct purpose of establishing a banking monopoly. The speeches from honorable members opposite indicate a great hope that the proposed bank will take the place of the whole of the other banks, and that they intend to use all the powers at their command to attain that end. In spite of this, the Minister of External Affairs asks whether competition is not the soul of trade.
– Is it, or is it not?
– Certainly it is.
– Then why object to a competing bank?
– Because the competing bank has for its object the annihilation of competition- the setting up of a bank under Socialistic conditions, which will mean the monopolization of all the banking business.
– Are the State banks not Socialistic?
– It would certainly be a great deal more to our advantage to have the competition amongst the State Savings Banks than the monopoly of a Common.wealth Bank.
– But we are told that there is not competition, but reciprocity, amongst the State Savings Banks.
– The honorable member for Corangamite, in a most admirable speech, said that what was troubling him was the cost incidental to the establishment of the Savings Bank agencies, seeing that it would involve a large, increase in the number of Government employes. The honorable member, however, qualified his remark by saying that, of course, when the Commonwealth ejected the States from the postoffices, the States would be able to utilize the railway stations, schools, police stations, and so forth.
– I think the honorable member must be quoting some other speaker than myself.
– If I do the honorable member an injustice I apologize, but that is the impression I received from his remarks. The honorable member for Capricornia pointed out that, if the Savings Bank deposits were taken into the general banking scheme they would, in many cases, be invested in business enterprises, with the inevitable result that, from time to time, the Commonwealth Bank would find itself compelled to take over various mercantile and manufacturing concerns. The honorable member raised the point whether that was within our Constitutional power; but th’e Prime Minister pointed out that the. taking over of businesses in this way would be only temporary. It often happens, however, in private banking, that businesses so acquired have to be carried on for many years ; and it is difficult to say what our position would be under those circumstances. If the Savings Banks deposits are transferred into the general banking branch, and a serious loss takes place, there will be a very sorry hope of the depositors receiving any considerable interest. Up to the present we have always regarded Savings Banks as instituted specially for the benefit of the working classes and of people not financially strong, and one reason why a comparatively high interest has been paid is that the deposits have been limited, thus preventing men of large means using the bank. The Labour party, who profess to have the interests of the working classes at heart, are now trying to substitute, for institutions which are run for the benefit of people of moderate means, an institution which will cater for people of wealth. If this bank were established, and I sold a property for ,£1,000, I should be enabled at once to deposit that £1,000 at interest; and, altogether, it appears to me that this is a measure which will have the result of “ buttering “ the fat ox. If people are enabled to deposit large sums at interest, it will prevent the poorer section of the community receiving such a high return as they otherwise would. This is a very serious blot on a. Bill introduced by what is termed a Labour Government, the members of which pride themselves on acting in the interests of the poorer classes of the community. The measure shows that there is not a spark of genuineness in the protestations of honorable members opposite. If they are acting in the interests of the men of wealth, why not say so ? If they are against the poorer classes of the community, and the institutions which have been a source of profit to those classes, why do honorable members opposite not say so? They ought to come out in their true colours, and not pose as the party particularly responsible for the welfare of the poor. At this late hour, I shall only express the hope that, before the measure is finally passed, the Government will seriously consider these proposals, which make for the undoing, and not the betterment, of society.
– I understand, that the debate is to close to-night, and I desire to make a final protest against the way in which the’ Government are proceeding with the business. They are proceeding as they have proceeded with all other matters having to do with the States ; that is, with a minimum of consideration for them and an utter disregard of consequences. I should be the very .last to subordinate National functions to State, functions, but in a Federal system there are reciprocal obligations. While we expect the States to pay. proper respect to the National Government, we ought to pay proper respect to the States. If ever there was a case for consultation, it is a case of financial transactions, in which both the Commonwealth and the States are interested. However, we are taking the course which is bound to inconvenience and hurt the States in many ways. The Prime Minister says that in all probability there will ultimately be only one Savings Bank, and that two Savings Banks cannot be conducted side by side in the same post-offices. We may take it, therefore, that the State Savings Banks must go. Their dislodgment from the post-offices is to take place as soon as possible, for the Prime Minister last night told us that the Government proposed to start the Commonwealth Bank at an early date. Therefore, the State Savings Banks must find other quarters, and betake themselves to other modes, of conducting their business. To use the word the Prime Minister used, they are to be “ disadvantaged “” in their business, and in their method of conducting it. I wonder how we should like a retaliation, or rather, let me say, a reciprocation on the. part of the States. What if the States said to us, “ You are dislodging us’ from your post-offices; please take your postal business from our railway stations, and do. it yourselves somewhere else “? I wonder what the Postmaster-General would say then. He would find himself in such difficulties a,s he has not found himself in before. What if they said to the Commonwealth, “ Take your telephone bureau out of our station-yards, and off our State premises ; look after those things yourselves ‘.’ ? We use State agencies almost every day of our existence to carry on our Federal functions. How should we like to be treated without consultation, as weale treating them with regard to these agencies ?
– There is no analogy.
- It is a perfect analogy. We depend upon the policemen of the State to do our electoral work and to collect our statistics. If the State said, “ Do your own electoral work,” we should be at a great disadvantage and inconvenience. Every . Minister knows the tremendous possibilities that lie wrapped up in any reciprocation by the States to us of the treatment which we are giving them - and for what reason?
We cannot promise that we shall do any better for the people who invest their small savings in these banks than the States are doing for them. We promise them no better terms and no better security, because no honorable member opposite would have the temerity to say that the State- security is not ample for all purposes. The only reason for which we are doing it, so far as I can find, is to utilize the small savings of the people to form a basis and background for our general banking operations, which, if they are going to succeed, are going to be more or less risky. Therefore, these funds, contributed by small depositors for the sake of security first, last, and all the time, are to be embarked inthe risky business of general banking - athing never contemplated in the idea of a Savings Bank. I see no other object for what is being done, and no other object has been propounded. It has not been sought to prove that any advantage can come tothe man who invests his small savings in the Commonwealth Bank. The Government, in an uncourteous way, without consultation, and without paying the States the compliment of giving them notice of what they intend to do, simply say to them, “ While we expect you to keep on with all your agencies, doing our work from year to year, laying us under a compliment to you, we intend without rhyme or reason to dislodge your Savings Banks from our post-offices, and disadvantage your operations, in order to embark the savings of the people in the risky general banking business which must be undertaken by our central bank, if it is to be successful.” That is the position in a nutshell. I never knew a case in which a business which is excellently done, and about which no word of complaint has been made throughout the whole of this debate, which has been more wantonly interfered with. There are many urgent things of a national character waiting to be done by this National Parliament. There has not been a scintilla of a reason shown, for the course proposed to be taken. The only illustration that has been furnished as showing the possibilities for depositors is the unfortunate one, so’ far as depositors are concerned,’ of America, where, I believe, the bank has been so successful as to pay 2 per cent, oh deposits. If that is what the Prime Minister -has in his mind with regard to Australia, his Savings Bank is destined to be a failure. It will not encourage in the people that thrift which has always been the fundamental idea of a Savings Bank, and it will further tend to embitter the relations between the States and’ the Commonwealth, as to a matter upon which there should be the heartiest co-operation and the utmost cordiality of feeling. I hope the Government, even if they get their Bill through, will hesitate before they start the Savings Bank business. They should let .well alone, get on with their own general bank, cultivate the States, and get their business and cooperation in the general banking business. That would be a sensible thing to do. It would make for the stability of their own operations, and guarantee them ultimate success, but the way to do that is not to metaphorically slap the States in the face, and take from them agencies and facilities which have .worked for the common good and for the good, in particular, of the investors in the existing institutions.
.- I hope the Prime Minister will take a note of serious, statements published in to-day’s
Argus, and do his best to remove the utter misapprehension that appears to exist in the minds of the authorities of the State of New South Wales. According to the report in the Argus, in the New South Wales Parliament last night, Mr. Wade, the exPremier, urged that “every step should be taken to protect the New South Wales depositors from being compelled to transfer their deposits to another bank.” That is an extraordinary statement from a man who ought to be careful about what he says. The wildest speech from the Opposition benches in this Parliament has never attributed any such intention to the Commonwealth. Then Mr. Waddell, an exTreasurer of the State, made the statement that “ deposits in the State Savings Banks’ at present amounted to about ,£16,000,006, about £13,000,000 of which had. been used by the Government on railways and other works. If the Government were called upon immediately to repay all those deposits, it would be placed in a serious position.” It is much to be regretted that an ex-Treasurer should attempt to create alarm amongst depositors in that unnecessary and unjustifiable way. The whole of the debate in this Chamber, and the statements made over and over again by the Prime Minister, show that there is no justification for any such alarm, and no ground for fearing interference with the State Savings Banks in any way. I should not have taken notice, even of those two gentlemen’s, utterances, but for the fact that the Premier of New South Wales has joined with the Premier of Victoria in sending to the Prime Minister a memorandum containing statements, perhaps not so distinct and decided . as those, but, at any rate, pleading that there is great danger to the financial stability of the States, and generally following out the same idea. Evidently, there is, in that State, a total misapprehension, which is apt to create serious and unjustifiable alarm among depositors and others, and should be removed.
.- It is very much to be regretted that whenever a proposal is made in this Chamber by any Government to exercise some of the national functions which have been conferred upon this Parliament by the Constitution, the Opposition invariably raise the cry that they are interfering with, the functions of the States, and that they have no right to do anything until they have approached the States, and obtained their consent. I strongly dissent from that view. It is our duty to discharge the functions which have been conferred upon us without consulting anybody at all.
– I thought it was our duty to do those things which we can do better than can the States.
– It is our duty to do those things which the Constitution empowers us to do, and I assume that the public of Australia thought we could do them better than could the States when they conferred that power upon us. In reference to the establishment of the proposed Commonwealth Savings Bank, it is surprising that we should be told that the institution will be an unmitigated failure. If that be so, now can it harm the State Savings Banks which we are informed are so exceptionally good? On the other hand, we are assured that the establishment of the Commonwealth Savings Bank will inflict disaster, not to say ruin, on the people of Australia. Wiho is going to control the institution which it is proposed to create? In the first place, the power we are asked to confer upon the Governor of the bank to establish a Savings Bank is an optional power. This is a clause which prevents the exercise of political influence. No dictation from the Treasurer is possible. Responsibility will rest with the Governor. He may establish this Commonwealth Savings Bank if he thinks fit to do so. He is the individual to whom we intrust the responsibility of giving effect to the whole of this great banking scheme, and, therefore, it goes without saying that he must be possessed of exceptional qualifications. Yet we are asked to believe that of his own motion he will be such an egregious ass as to do that which will confer no good upon the Commonwealth Bank, but will inflict the utmost harm upon the State Savings Banks. I cannot believe that any man fit to be appointed to the office will establish a Commonwealth Savings Bank which will do no good to the Commonwealth Bank, but will inflict an enormous amount of injury upon the people of Australia, I am critical to trust to his wisdom in the matter.
.- The honorable member who has just resumed his seat prefaced his remarks with a phrase which he frequently uses, namely, “It is very much to be regretted.” There are a number of things which are very much to be regretted; and one of them is that, when the independent member for Gippsland has to make up his mind upon a ques tion as to which there is a difference df opinion in his constituency, he invariably seeks to address himself to it after everybody else has spoken.
– Will the honorable member address himself to the clause?
– I am endeavouring to do so with your assistance, sir. But if you compel me to speak at greater length than I desire, it will not be my fault. If the honorable member for Gippsland had desired materially to assist in this discussion he would have spoken earlier when it would have suited the convenience of honorable members to have contested his views. Quite a number of observations which he made prove the profundity of his inquiries into this subject. For instance, he asked, “ What will it matter to the State Savings Banks if the Commonwealth Savings Bank fails?” Does he not know that the whole structure of banking is reared upon credit, and that if a failure occurs in any branch of banking, that credit is injuriously affected? Replies, such as this, could be made to the whole of his remarks. But he has chosen, as usual, to speak at the tail-end of the debate, when it does not suit the convenience of honorable members to answer him.
– Even if they could do so.
– I do not think there would be any great difficulty in that direction. Honorable members opposite would not be so warm in their defence of his observations if they did not realize that my statement is absolutely true. Upon all questions upon which there is a burning difference of opinion the honorable member for Gippsland invariably speaks late, and he usually throws his pearls of wisdom amongst those who are nearest to him - which is in opposition to a Scriptural injunction. The debate which has taken place upon this clause has already lasted a considerable time, and traversed the whole subject ; consequently I shall content myself, before resuming my seat, by asking the Prime Minister what steps he proposes to take to give effect to the promise which he made on the first clause of the Bill to render the funds of the Savings Bank immune from any demand which otherwise might be made upon them to cover losses which may accrue to the general banking business. He said that he did not want to have two separate corporations, but that he would guarantee that the funds of the Commonwealth Savings Bank should not be levied upon by the creditors of the Commonwealth Bank to meet any deficiency which it might be called upon to face. What steps does he propose to take to give effect to that promise ?
– I have no recollection of having made any such promise as the honorable member for Wentworth has outlined. I promised that the accounts of the two banks should be separately kept, and with that object in view I now move -
That the following sub-clause be inserted : - “ (3) Separate accounts shall be kept by the bank in respect of the Savings Bank business of the bank, and for that purpose any receipts or expenditure of the bank referable to both ordinary business and Savings Bank business shall be allotted in such proportions as the Governor thinks fit.”
.- The amendment submitted by the Treasurer does not cover profits, but merely provides what must be provided in any case for the ordinary conduct of the bank’s business. I seem to recollect some undertaking on the part of the Prime Minister to go further than that.
– I am bound to say that I must have been misunderstood.
.- I think the Treasurer stated that he would take steps to see that the deposits in the Commonwealth Savings Bank would be protected from any demands which might otherwise be made upon them to cover any losses which might be sustained by the other branch of the Commonwealth Bank. The amendment will not accomplish that object.
– I think so.
– One side of the bank’s business is more risky than the other. The one thing which is tangible, and can be got at, is the deposits in the Savings Bank. Under the Bill, the creditors of the general bank can sue the bank as a whole for the recovery of their debts. Is this fair to the Savings Bank depositors?
– May I point out that the greatest safeguard to the funds of depositors in the Savings Bank must be to allow this side of the bank the same freedom of investment as is allowed in connexion with a general banking business? To restrict the investment of the funds paid into the Savings Bank would be to the disadvantage of the depositors. This is a much better proposition, and it accords with what I had in my mind’ when I made my promise.
.- The profits derived from the Savings Bankbranch of the business will, of course, go to pay the interest on Savings Bank deposits. There is no provision in the Bill - and what the Prime Minister has moved does not provide - that any losses made on the general banking business shall not reduce the interest paid to Savings Bank depositors. That cannot be provided for unless the funds of the two institutions are separated in the Bill. They are not separated at present. Unless they are, the depositors in the Savings Bank always take the risk which I have pointed out.
Amendment agreed to.
Question - That the clause, as amended, stand part of the Bill - put. The Committee divided.
Majority … … 14
Question so resolved in the affirmative
Clause, as amended, agreed to.
Clauses 36 to 52 agreed to.
Clause53 (Commonwealth officers may act as agents).
– As this is the last clause in this section of the Bill, I should like to know what provision is to be made to keep the promise for an open door which has been referred to?
– I never promised to insert any clause providing for an open door. My promise to the House is that there shall be an open door for the Government of the Commonwealth to meet the Premiers of the States and discuss matters with them, in order that arrangements may be made, if possible, to protect our interests and theirs.
Clause agreed to.
Clauses 54 to 64 agreed to.
Postponed clause 34 agreed to.
– I move -
That the following new clause be inserted : - 17A. - (1.) No member of the Commonwealth
Parliament shall recommend or submit, except in the Parliament of the Commonwealth, any business to the Governor or officers of the Bank. (2.) The Governor shall report half-yearly to the Treasurer of the Commonwealth any infringements of the provisions of this section, and the Treasurer shall within seven days of the next sitting of the said House lay upon the Table of the House in which the offending member sits a statement showing the nature of the business and the influence sought to be brought to bear thereon by the said member.
I should like to have this clause inserted after clause 17, in the general banking provisions of the Bill. The object of the clause is apparent on its face. It will serve two purposes. In the first place, it will save honorable members from the temptation, which will be a constantly recurring one, to act in some cases, with the best intention no doubt, as agents for their constituents in connexion with their negotiations with this bank.
– Will the honorable member explain, if he can, why I should be robbed of my rights as a citizen because I am a member of Parliament?
– Under this clause the honorable member would be placed in exactly the same position as an officer of the bank. I propose that it should be inserted after the clause prohibiting an officer of the bank from borrowing from the bank.
– It is an unmanly thing.
– I do not know why the honorable member for East Sydney should express so much heat. Is the honorable member dying to act as an agent for his . constituents in this business? If that is his ambition, I say, without hesitation, that he is unfitted for a seat in this Chamber.
Under this Bill members of both Houses of this Parliament will be in the position of a board of directors of the bank. We shall be the only authority empowered to closely scrutinize and examine its affairs. As directors having the power to influence the bank, I take it that, in the name of common decency, we should see that we are not placed in this false position. It is not a question of taking away any of our rights, but of properly regarding the duties of our trusteeship to the people of Australia, who will expect us to act honorably as the directors of the bank in our capacity as members of Parliament, and not to seek popularity in our electorates by recommending business of our constituents to the bank, which may not be profitable business.
– I am glad I did not go to college.
– It is a pity the honorable member did riot go to college, if that is the view which he holds of his public responsibilities. I desire a division on this proposed new clause all the more because the honorable member for East Sydney has shown so much pique on the question.
– I am a man, which is more than the honorable member is.
– I am not a. man because I wish to prevent members of Parliament exercising political influence in the affairs of this bank ! I am not to receive decent courtesy from the honorable member because I desire that members of this House should have a decent regard for their responsibilities, and should behave with decency in the discharge of their public duties. I want the honorable member, who has interrupted me so insultingly, to record his name on a division list, so that his constituents may know that he wishes to interfere with the management of this bank and to recommend business to it which will not be profitable to the bank.
– The honorable member would rob a man of the chance to borrow ?
– That is dealt with in the succeeding clause, which we can discuss when we come to it. I do not wish to delay honorable members at this hour, but I do desire to have a division on the clause.
– If I thought for a moment that the absence of this clause from the Bill would in any way encourage the -exercise of political influence in connexion with the operations of the bank, I should certainly accept it. I do not, however, believe that the bank will be in any danger from political influence without this clause, and, therefore, I cannot accept it.
Question - That the proposed new clause be added to the Bill - put. The Committee divided.
Majority … … 19
Question so resolved in the negative.
Proposed new clause negatived. Mr. KELLY (Wentworth) [11.31].- I move -
That the following new clause be inserted : -
The proposal that no member of the Commonwealth Parliament shall deposit any money in the Commonwealth Bank is the only one that may give rise to any surprise; but, as a matter of fact, a person in the position of a director of . a bank could, if he saw fit to do so, abuse his position, and, perhaps, get his money taken on such favorable terms as to enablehimto make a profit on it. If honorable members would agree to the proposed new clause, subject to the omission of that sub-clause, I should be very happy to move it in that amended form.
Question put. The Committee divided.
Majority … 19
Question so resolved in the negative.
Proposed new clause negatived.
Title agreed to.
Bill reported with amendments.
Motion (by Mr. Fisher) proposed, by leave) -
That the report be adopted.
.- There is one thing which I think the Prime Minister might arrange to have done in the Senate. He undertook to do it at the Committee stage in this Chamber ; but, apparently, he forgot about it. Clause 13 provides that the Governor and Deputy Governor shall be paid sucK salaries and travelling expenses as are fixed by the Governor-General, and that their salaries shall not be reduced during their continuance in office. The right honorable gentleman accepted a proposal not to reduce the travelling expenses as well.
– Yes. The matter will be attended to in the Senate.
Question resolved in the affirmative.
House adjourned at 11.40 p.m.
Cite as: Australia, House of Representatives, Debates, 30 November 1911, viewed 22 October 2017, <http://historichansard.net/hofreps/1911/19111130_reps_4_62/>.