6th Parliament · 1st Session
Mr. Speaker took the chair at 2.30 p.m., and read prayers.
Mr.BURNS presented a petition from certain residents of Gerringong, New South Wales, praying that the decision of the Minister of Defence that only “ dry “ canteens be allowed in connexion with the Expeditionary Forces be adhered to.
Mr. JOHN THOMSON presented a similar petition from representatives of the Presbyterian Church, Macleay River, New South Wales.
– With the leave of the House, I have a brief statement to make. I am pleased to be able to announce that the Australian and New Zealand contingents have safely arrived, and have disembarked in Egypt to assist in the defence of that country, and to complete their training there; and that they will go direct to the front to fight with other British troops in Europe when training is complete. Acting on the strong recommendation and advice of Lord Kitchener, the Commonwealth Government agreed to the Australian Imperial Forces being landed in Egypt for training, instead of in England. It was pointed out that to house Australian troops in tents in midwinter after a long voyage in troopships passing through the tropics and sub-tropics would be a very severe trial, and impose unnecessary hardships on the men. Lord Kitchener’s proposals were entirely due to his anxiety for the best possible conditions for the success of our Forces, in which he takes an especial interest.
– As it is stated that Great Britain has received adequate supplies of wool for Army and other purposes, will the Government remove at an early date the embargo on the export of wool to America, in order to relieve the financial position of Australia ?
– The statement to which the honorable member refers has been published on the authority of a Mr. Lansing, who is an American; it is not made with the authority of the British Ambassador at Washington. The action taken by this Government would, I am sure, meet with the concurrence of every honorable member if as fully seized of the circumstances as we are.
– Has the attention of the Prime Minister been drawn to the report in today’s newspapers of an attack made in Queensland by a German on a loyal Hindoo, and to the inadequate penalty of £2 which was imposed on the offender, who broke the Hindoo’s arm, apparently because he was a representative of a race now engaged in fighting the battles of the Empire. I ask the Prime Minister if he will instruct the Defence authorities to put this German, until after the expiration of the war, where he will not be able to indulge in the luxury of breaking the arms of loyalists at £2 a time, and if he will consider the propriety of giving to the injured Hindoo, until he is able to get to work again, an allowance at least equal to that given to interned Germans.
– I read in this morning’s newspaper the statement to which the honorable member has drawn attention. The case has been tried by the Courts of the country, and a penalty has been imposed. It seems to me that the penalty was quite inadequate for the alleged offence, but I hope that we are not going to try cases like these in Parliament. 1 ask the honorable member to put his question again, when we have had time to make inquiries concerning the case. It is not, however, the intention of the Government to use its Defence powers in the manner suggested, after a case has been tried by a Court.
– In connexion with the construction of steamers for lighthouse service, I wish to know if tenders were invited in all the States, and, if so, how many tenders were received ?
– Commander Brewis recommended the construction of four steamers, but my predecessor, the honorable member for Darling Downs, considered, after consultation with other officials, that three would be sufficient, at any rate, for a start. Accordingly, about March last, he asked for tenders for the construction of three steamers, and three or six months was allowed to tenderers, so that Australians might have time to make inquiries oversea as to whether they could obtain the materials necessary to construct the steamers here. The period within which tenders would be received had not expired when I took office. In all eight tenders were received. Only one was from an Australian firm, and it is to be accepted. The contract has not yet been formally signed, but, subject to the settling of some details, which I think will be satisfactorily arranged, Messrs. Poole and Steele “will get the contract.
– Is it understood that Messrs. Poole and Steele must manufacture the machinery for these vessels in this country, or are they to be allowed to import it?
– That will depend on the terms of the contract, but I understand that it is the intention of the tenderers to use Australian material wherever possible. The honorable member probably knows better than any one else in the House that certain materials for the construction of steamers cannot be obtained in Australia, but, wherever possible, Australian material will be used. It was for that reason that the Government tentatively accepted the tender of the Australian firm.
– In view of the fact that the Rev. David Crombie, of Vila, as a representative of the missionaries at New Hebrides, states definitely that the censorship exercised here does not permit of any Australian newspaper - not even a medical newspaper published in Melbourne - being sent to the New Hebrides, will the Assistant Minister of Defence make inquiries, and take steps to see that Australians in the islands shall not be deprived of the opportunity to read such publications?
– I shall have the matter inquired into with a view of ascertaining whether that which the honorable member suggests cannot be carried out.
– Has the attention of the Minister of Trade and Customs been directed to the fact, that since the declaration of war a German working at Burrenjuck has imported through the Customs a rifle and a thousand rounds of ammunition, some of the ammunition comprising dum-dum bullets ? Will the honorable gentleman make inquiries as to how such an importation came to be allowed?
– This is the first I have heard of the matter. I shall have inquiries made.
– It is quite correct.
– Is the AttorneyGeneral yet in a position to make any statement with regard to the military raid made on the offices of the Broken Hill Proprietary Company ?
– I regret very much that there should he this delay in dealing with so important a matter, hut I am not in a position to make a statement today. I shall be dealing with the matter again this afternoon, and hope to bring it to a conclusion, so that I may make a statement to-morrow.
– Will the Prime Minister state when it is proposed to introduce a Bill to provide for the creation of a Supply and Tender Board ?
– Other matters of urgency have been pressing on my attention to such an extent that the question raised by the honorable member has not been brought under my notice for some time. I am not at all averse to the proposal, and shall ascertain what can be done at an early date.
– The honorable member for Oxley asked me yesterday what was being done in regard to the selection of a site for a post-office at South Brisbane, and also with respect to a site for a post-office at Wynnum. I have now to inform him that the price asked for the site selected at South Brisbane is considered to be too high, and that the matter has been postponed for further consideration. As to the Wynnum postoffice site, provision is being made for it on the Estimates.
– Will the PostmasterGeneral inquire whether it would not be possible for his Department to apply to Melbourne the system which is followed in London, where the letters “ N.,” “ S.,” “ E.,” and “W.,” “E.G.,” and so forth, are regarded by the postal authorities as sufficiently indicating the part of the city to which letters are to be delivered. Will he ascertain whether the letter “ C,” or the word “ City,” could not be regarded a» a sufficient . address for any letter to b& delivered within the boundaries of Flindersstreet, Latrobe-street, Spencer-street, and Spring-street, while the letters N.,. S., E., and W. might be used to indicateNorth Melbourne, South Melbourne, East Melbourne, and West Melbourne?
– I shall inquirewhether or not the honorable member’ssuggestion could be carried out.
– Will the Minister of Home Affairs state whether it is not a fact that amended plans of theFederal Capital have been received by his Department, and approved and published ?
– I cannot say anything as to an amended plan of theFederal Capital. The position is that I am waiting for the finished plan, and when I receive it I shall be able to makesome progress.
– Will the Minister of Home Affairs state whether it is not a fact that a plan amended in the light of local conditions, and of local investigation by Mr. Griffin, was approved and published in one of the departmental schedules, and whether, further, it is not a fact that the particular plans to which he has just referred have been delayed owing to the fact that the Lands; and Survey Branch of his Department did not provide Mr. Griffin with contour surveys as early as he and the Minister himself, I understand, would have liked? There seems to be some confusion as to what .is meant by the word “plan.” The actual plan of the city has been approved.
– I am strongly of opinion that there has been no delay on the part of the Survey Branch of my Department. I think it would be a good thing if all the plans were numbered. I repeat that I am waiting for a finished plan, and when I get it I shall be able to get on.
– Arising out of the answer just given by the Minister, I desire to ask him from whom he expects to receive this plan - from Mr. Griffin or some one else?
– I expect to receive the finished plan from Mr. Griffin, and am anxiously waiting for it to be sent along to my office.
– Will the Minister of Home Affairs state whether it is not a fact that the plans of the Federal City have been so far advanced that certain streets and roads could now be laid out if the Government so desired, and employment thus given to workmen?
– I do not understand that that is the position. I think that it is in the interests of economy and of the proper building of the city that a finished plan by Mr. Griffin should be sent along to me. I am not prepared to say, however, that if the delay goes much further I shall not have to make a strong recommendation to my colleagues that I should be allowed to proceed without it.
– Is the Minister aware that there is no alteration involved, so far as the plan of the city site is concerned - that the alteration in question relates to the outskirts of the city, “where contour surveys were completed, I think, only last March ? Will the honorable gentleman look into the question, so that no injustice shall be done Mr. Griffin, and let us know the facts?
– I shall look into the matter. I have had requests for engineering and other surveys, so that we may have this finished plan. That being so, the honorable gentleman’s statement does not coincide with my knowledge of the matter.
– Is the Minister aware that the requests for engineers’ consultative opinions had reference to the type of sewerage and other instrumentalities to be availed of at the Capital, and had nothing whatever to do with the plan of the Federal City?
– That is not my impression. The impression I formed was that a thorough overhaul of everything in connexion with what had been done was required so that a proper finished plan could be prepared.
– I desire to ask the Minister of Home Affairs whether it is not true that all this delay is occasioned by the fact that his principal officer is residing several hundred miles away from his Department?
– That has absolutely nothing to do with the matter.
– I wish to ask the Minister of Home Affairs whether an amended plan of the Federal Capital has mot been published?
– I am not worrying about amended plan No. 1, No. 3, or No. 5. I am waiting for the finished plan.
– Will the Minister take steps to expedite the presentation of the finished plan ?
– Yes, I shall.
asked the Minister of External Affairs, upon notice -
– The answer to the honorable member’s questions are as follow : -
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Assistant Minister, representing the Minister of Defence, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister of Trade and Customs, upon notice -
In view of the high percentage of alcohol found in some of the so-called temperance drinks, in one instance as high as 3.7 per cent., will the Minister advise what percentage of alcohol is contained in the following : -
– The answer to the honorable member’s questions is as follows : -
The strength of ale varies considerably.
English ale, bottled and draught, usually ranges between 7 per cent. and 14 per cent. proof spirit. Some of the best known brandshave been found to contain between 7.6 per cent. and 12.4 per cent. of proof spirit.
Colonial ale recently analyzed con tained 8.3 per cent. of proof spirit.
Lager beer. A leading brand of imported lager beer examined recently contained 9.8 per cent. of proof spirit, while two local brands were found to contain 9.4 per cent. and 9.9 per cent. respectively.
Cost of Plant
asked the Minister of Home Affairs, upon notice -
Whether his Department has yet obtained the information promised by the Minister some days ago, namely, the total cost of plant purchased and ordered in connexion with the construction of the Port Augusta-Kalgoorlie Railway?
– I hope to be in a position to furnish this return to-morrow.
asked the Postmaster-General, upon notice -
Whether his Department contemplates the construction of postal stores in Adelaide of wood and iron; and if, in his opinion, such structures in capital cities ought not to be of brick or stone?
– Yes. The late Minister, after a personal inspection, decided that in the circumstances of this case a building of brick or stone was not required, and I concur in his decision.
asked the PostmasterGeneral, upon notice -
– These papers cannot at present be laid on the table, as Mr. Keohan has issued a writ against the Department.
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow : -
Mr. SPEAKER reported the receipt of a message from the Deputy of His Excellency the Governor-General recommending an appropriation for the purposes of this Bill.
Referred to Committee of the whole.
The following papers were presented: -
Elections and Referendums - Statistical Re turns in relation to the Senate Election and the General Election for the House of Representatives, 1914; and Summaries of Elections and Referendums, 1903-1914.
Elections, 1914- Statistical Returns showing the Voting within each Subdivision in relation to the Senate Election and the General Election for the House of Representatives, viz. : -
New South Wales.
Ordered to be printed.
Public Service Act -
Appointment of D. P. Davies, as Director of Navigation, Class A, Professional Division.
Debate resumed from 2nd December (vide page 1267), on motion by Mr. Fisher -
That this Bill be now read a second time.
.- When the House adjourned last night I was referring to the clause which empowers trustees to invest money in the Commonwealth Bank, and expressing the opinion that this is a provision which ought to receive the support of every honorable member. When the Bank Bill was before Parliament, I, amongst others, was under the impression that such investment of money was provided for, but we now find that that was not the case; and, therefore, the proposal of the Government is a very necessary one. The Leader of the Opposition has questioned the propriety of the introduction of this Bill, in view of his belief that no contentious measures were to be presented during war time. But I may say that I made no pledge in this regard to my constituents, and I am here to assist in the passing of as much good legislation as possible. Whatever the Leader of the Opposition may have understood, he ought to know now that the view I take is the view of a number of honorable members on this side of the House; and, personally, I am here to help the Government to pass any measure that is for the advancement of the interests of the people of Australia. We were reminded by the honorable member for Balaclava that the State Premiers had held a Conference, at which financial matters were dealt with; but we must also remember that we, as members of this House, owe no allegiance to any such body or gathering, and that it is only as a matter of courtesy that we pay any attention to their resolutions and conclusions. We are directly responsible to the electors of Australia; and I desire now to express the opinion that the State Governments ought, before now, to have taken steps to place their accounts with the Commonwealth Eank. I can see no concession on the part of the States in their offer regarding the Savings Banks, and I think that not only the State Governments, but all public bodies, whether or not they are assisted out of the public revenue, ought to make the Commonwealth Bank the medium of all their financial arrangements. The Commonwealth Bank was established for the purpose of securing the credit of Australia on sound foundations; for this, after all, is the very basis of trade, the gold reserve being a comparatively unimportant consideration. Without a sound credit, neither Australia nor any other country in the world could carry on. Therefore, the concessions proposed in the agreement, as made at the Premiers’ Conference, are worthless, to my mind. If the States were watching the people’s interests they would discontinue their present course of action, and transfer their accounts to the Commonwealth Bank, as the people expect the State Governments and all public bodies to do. I have no desire to labour the question, because I know that there is a wish on the part of members to finish up the business of the session . But in looking through the Bill, I see clauses having for their object the enlargement of the powers and capital of the Bank. I think we may look with pride on this institution, because I presume it is the only bank in the world that has started without capital, and returned a profit of £8,500 on the first year’s operations. In those circumstances, we should not cast any aspersions on its management, but should feel grateful that the Bank has been conducted with so much credit to the management and usefulness to the people of Australia. I hope that before the expiration of this Parliament further powers will be given to the Bank. It is not yet the national bank which the people of Australia expected, but it is quite evident that we are in a better position to-day to make it a truly national bank than we were when the original Act was passed. In the disastrous conditions brought about by the war, it has been proved beyond doubt that it is essential for the credit of Australia and the whole of the Dominions of the Empire that we should set up our Bank on sound national principles. I quite agree with the honorable member for Balaclava that the Bank is not quite a national institution. The gold reserve of Australia should be under the control of the Commonwealth Bank.
– And the note issue.
– That is another matter. The gold reserves should certainly be under better protection. There has been a shrinkage in the gold reserve in Australia, which nobody can definitely trace. A gentleman connected with one of the largest banking institutions in Australia told me recently that on that very day a customer had entered the bank, and demanded 1,000 new sovereigns, which were to go to the East. We all know that the value of the sovereign rises considerably, ls. 2d., I believe, when it reaches the East. We also know that there is a loss of about 8d. per sovereign resulting in transit and use. In England, when I was a boy, we never took a half-sovereign over the bank counter unless it was weighed, and if the sovereigns in Australia were weighed, we should find that there has been a remarkable shrinkage from their true standard.
– The result with notes is the opposite.
– A note may get rubbed and worn, but its value remains; but if anything is rubbed off a sovereign, its value is depreciated. This Bill is really not asking for increased powers, because many of us thought that the Government had these powers under the original Act.
– An increase of the capital to £10,000,000and the right to purchase another bank is surely an increase in powers.
– Those who agreed to the original Act quite expected that the capital would be considerably increased. I naturally thought that the various States would deposit with the Commonwealth Bank, and that all their operations would be conducted through that institution.
– That would have been done if the Commonwealth had not attacked and sought the death of the State institutions.
– When I addressed the electors on this matter, I was quite satisfied that the State Savings Banks would be taken over by the Commonwealth Bank. It is well known that if one State is the victim of misfortune, that fact affects the credit of the whole of Australia, and it is therefore necessary that the Commonwealth Bank should control the wholeof the financial arrangements of this country. That is the only truly Federal spirit in which we can conduct a Federal Bank.
– Does the honorable member think that the States would hand over £80,000,000 worth of deposits without being allowed a word in the management of the Commonwealth Bank?
– If the honorable member would follow closely the proposal, he would find that no such proposition was made. The Commonwealth Government did not ask that existing Savings Bank accounts should be handed over to the Commonwealth Bank, but they provided that 75 per cent. of the new deposits should be handed back to the States, and if the States required the remaining 25 per cent., it would be competent for the Treasurer and the Governor of the Bank to hand that balance over to them.
– That is not the whole story.
– I am only stating the proposals that were made, and I was as much interested as was anybody else in seeing that the States were not impoverished.
– That, also, presupposes the handing over of the accumulations of the existing banks. In other words, the existing banks were to be merged.
– Nothing of the kind was mentioned. There was no intention of interfering with the existing banking arrangements. To do so would have been foolish. There were two Savings Banks in New South Wales, one being under the absolute control of the State Government, the other being managed by trustees, although it was guaranteed. I well remember how the latter saved New South Wales, and the time when Sir George Dibbs went to the Barrack-street branch of the bank and put out his head and told the people that they need have no fear for the bank, as he, as Treasurer of the State, was behind it. I was with him at the time. That bank has done a great amount of good for the people of New South Wales.
– It was also to be merged.
– As the amalgamation of the two Savings Banks in New South Wales did not take place until a few weeks ago, that could not have been the case. The honorable member could not have properly understood the position, and is letting his imagination run. There are not those dangers in the Bill before us that honorable members opposite would try to make the people believe there are in it. If we are to have a truly national bank, the Bill should receive the support of every true Democrat. The Bank will be the only means by which the people of Australia can have that sound credit which will lead the way to prosperity; and there can be no sounder credit attained than by the Commonwealth Parliament having control of this national financial institution, with the honorable members of this House as its directors, and watching its interests on behalf of the shareholders. Our object should be to make the Bank as sound an institution as it can possibly be made. Therefore, I hope that this will not be the last measure submitted with the object of making the Commonwealth Bank a truly national bank, that will serve the best interests of the people of the Commonwealth. I hope that this Bill will pass.
.- We are now dealing with a matter of great importance, and I am sorry that the Treasurer is unable to be in the chamber to hear any suggestions that might prove of value. He has now a very good chance of converting the Commonwealth Bank into an institution which may be truly national, and worthy of Australia ; but there does not seem to be any present intention on the part of the Government to improve the Bill now before us. They seem to be intent on pushing the measure through in the form in which it has been brought down, simply taking another step in the direction in which they started a few years ago. In my opinion, the Bank has; been started in the wrong way. I haveno desire to say anything derogatory to the-, institution or its management, because I admit it has done a great deal ; but I contend that it could be built on a much, better basis, which, in a few years, would make it a much more important institution than it is likely to be by continuingon the lines on which it has been started-. I suppose that, as a bank, our institution is unique. I do not suppose that there is another on all-fours with it in any part of the world. If there is such another, it must be the only other of the kind. Had the Treasurer listened in the first instance to the advice given by the honorable member for Darwin, we could have built up a structure which would have proved superior to that we now have.
– Would the States have supported it any more than they support the present Bank ?
– If the States had been partners in the Bank, I believe that they would have done a great deal of their business through it, and thus we would have had a much bigger turnover from that source than we are likely to get under the present arrangements. If the Treasurer had not been in so great a hurry to achieve something in the shape of a State Bank, even if he had not accepted the scheme of a Federal Bank, he might have induced some people to become shareholders of an institution on the lines of the Bank of England, the. Bank of France, and other great famous world institutions. A bank formed on those-., lines could have had the Commonwealth! business, and could have operated as theBank of England operates. Very much food for reflection is to be had from the way in which the Bank of England has helped to tide over the tremendous collapse of credit and crisis in all mercantile affairs in Great Britain at the beginning of the war.
– The Bank of England had to fight its way just as the Commonwealth Bank has had to do, and had the same Tory opposition.
– I do not say that the Bank of England has not had its ups and downs. It occupies a much different position from that which it occupied a century or a century and a half ago. My point is that the Bank of England is managed by directors, whereas the whole of the business of the Commonwealth Bank is hauded over practically to one man. I have nothing to say against the governor of the Commonwealth Bank; he may be the best man for the position - I do not say whether he is or not; I have not sufficient knowledge upon the matter - but, in my opinion, we could do very much better by having a board of directors. The Treasurer had every opportunity of introducing such a system.
– That is what a company said on one occasion about the management of a Queensland station. They said that they could manage the property from Melbourne better than could a man on the spot.
-I cannot see the analogy. The board of management need not be in Melbourne. Certainly it could bo on the spot just as well as one man could be.
– You are falling into the same error as that company.
-The directors could be in Melbourne, or at the centre of affairs, just as well as one man could be. The establishment of the Savings Bank Branch of the Commonwealth Bank was a mistake. In the State Savings Banks there are millions of money splendidly handled by the State institutions, all the money raised in the different States being spent in those States on progressive development work; and as the bulk of the work of developing the land and settling people upon it still remains the duty of the States, it is only right that the State Governments should have the opportunity of investing the people’s savings in their own securities, thus striving to make each part of the Commonwealth progressive and inviting to settlers. I do not say that this work could not also be done if all this money were controlled by the Commonwealth Bank, but I maintain that better results can be obtained by the local savings being spent by local people, who understand the conditions of their own territory. Apart from that aspect of the case there is no need to have two institutions doing the same work. They are both supposed to be doing it for the people of Australia, and I cannot understand why many of our honorable friends opposite should think that the competition that has arisen between the Commonwealth Savings Bank and the State Savings Banks is a good thing for the people. If a high rate of interest has to be paid to the depositors in the Savings Banks, the people have to pay it. The position is that there is but one principal, that is, the people of Australia, but there are two agents, the Commonwealth Savings Bank and the State Savings Banks, dealing for that principal and doing the same work. One agent should be quite sufficient, and would save expense and eliminate the risk of creating unhealthy competition, such as that existing now, and proving such a serious handicap to Victoria, New SouthWales, or any other State that finds the Commonwealth entering into competition with regard to Savings Bank business. For instance, the managers of the State Savings Banks are compelled to raise the rate of interest, and to take larger single deposits than were previously permitted, or else go out of business altogether.
Mr.Fenton. - There are no complaints from Tasmania now.
– I do not say that there are. I do not say that it would be a bad thing if all the States handed over their Savings Bank business to the Commonwealth on the terms on which Tasmania has handed over her Savings Bank business. But there was no occasion for the Commonwealth to interfere with the Savings Bank business, which was being well managed by the State Governments in the interests of the people, and I complain of the duplication of machinery that was caused by the action of the Commonwealth. It is not too late now to hand back to the States the whole of the Savings Bank business on terms something like those mentioned at the Premiers’ Conference held not long ago, when the Premiers agreed that if all the Savings Bank business were left to the State Go vernments they would do a certain amount of their financial business through the Commonwealth Bank.
– The whole of it.
– That arrangement would have greatly increased the volume of business done by the Commonwealth Bank, and would have made the institution something like a real Bank. It would be a good arrangement to put into effect even now, but it seems unlikely that it will be put into effect, because the Government has given us no indication of its intentions to carry it out. The Prime Minister spoke of the Bill as if it provided for merely a few unimportant changes, but I do not regard the measure as unimportant. Clause 2 provides for the taking over of the business of other banks on such terms as may appear good to the Governor of the Commonwealth Bank, but the Treasurer of the day must approve. The people of Australia will have to stand the cost of any such arrangement, but only the Treasurer of the day and the Governor of the Bank will be responsible for it. Parliament generally scrutinizes keenly a proposal for the expenditure of £50, and it is our duty, when the Estimates are under consideration, to ferret out all the information obtainable regarding the destination of the money. In this case we shall have no information. The Governor of the Bank may make a good or a bad bargain. To my mind, the clause gives him too much power. We are entitled to know why this provision has been introduced. I do not suggest that the Governor of the Commonwealth Bank should be made to disclose to Parliament the secrets of the banking business of the institution, because I know that secrecy must be observed in the relations of banker and client; but I say that when we are asked to give such tremendous powers to the Governor of the Bank, we should know what is intended. It is asking us to draw a cheque in blank. I cannot see that there is any need for that. The Prime Minister, in introducing the Bill, might well have told us what his policy was to be in this matter. It is proposed to increase the capital of the Commonwealth Bank from £1,000,000 to £10,000,000. I do not object to the capital of the Bank being increased to any amount that may be necessary, but we should have been told why this increase is proposed, and we have had no information on the sub ject. If it is intended to provide money to buy out some existing banking corporations, I say that £10,000,000 will not go far towards paying for the business of many well-established banks. The proposal to establish branches of the Commonwealth Savings Bank in the Old Country is, to my mind, extremely paltry and mean.
– It is proposed to offer there a higher rate of interest than is being offered by the local Savings Banks.
– Yes. This is a poor, if not a contemptible, proceeding. What should we say were the British Government to establish banks here to gather in the savings of our people to be used elsewhere?
– Our people would like it if they could thus get more interest.
– Those lucky enough to have money to deposit might like it, but the bulk of the people would not like it. There would be no objection to the establishment in the Old Country of a branch to transact ordinary banking business, but it would be beneath us to establish there branches of the Savings Bank for the purpose of gathering in the small savings of the people. We ought to be above such an action. The Treasurer claims that the Bank has already power to do this, but his predecessor was advised by the AttorneyGeneral of the day that it could not be done. What is now proposed will not raise us in the estimation of our friends at Home, but it may give them the idea that we are trying to plunder them.
– I said that it must be stopped, and it was stopped.
– At any rate, it is intended to commence it again, and this Bill provides for it. What has recently taken place at Home provides a strong reason for making a new start with our Bank, so that it may become within a few years an institution worthy of the Commonwealth. I deprecate the statement that the Opposition wishes to destroy the Commonwealth Bank; our desire is to make the Bank a better institution.
– Has it not made good so far?
– Yes; but it could be made a much stronger institution. The States were not given an opportunity to come in until everything had been fixed up. Then a proposal was made to them which they had either to accept or reject, and the terms were not such as should have been offered to sovereign States, whom it was desired to take into a partnership. It would be better for the reputation of the Treasurer as a statesman, and for the welfare of the community, if we retraced our steps. We have now a chance to remodel the Bank. The Savings Bank business might well be dropped, and the Bank might be established on lines on which it would eventually grow into an institution resembling the Bank of England. I do not say that it would become as strong as that institution, the shareholders of which, like those of the Bank of France, work in conjunction with the Government, and have the credit of ‘the country behind them. When war was declared at the beginning of last August, the credit of Europe practically collapsed, but the Government extended the usual bank holiday to several days, and consulted with the authorities of the Bank of England, and with great financial experts, as to the best course to follow. It was decided that one thing that was necessary was a supply of currency, and that was arranged for. The British banks hold a tremendous number of bills, which usually they regard as almost as good as gold, but these bills then represented produce which was on the other side of the world, and trade was for the moment at a standstill. However, that difficulty was got over, and a moratorium was declared for a month. Thus confidence was reestablished, and the Bank of England and the Administration of the day secured one of the most brilliant financial successes that the world has ever seen. But the result was obtained only by the Bank and the Government working hand in glove. When they found it was necessary to have a supply of currency the Government agreed with the Bank of England to provide them with notes for 10s. and 20s. up to 20 per cent, of their deposits. These were not Bank of England notes, although the presumption was that they would be exchanged for gold on being presented to the bank. That was one step taken by the Government. Another was that as soon as Parliament met they declared a moratorium for one month, and in that way considerably relieved the tension. The most important step of all, however, was the arrangement that holders of between £200,000,000 and £300,000,000 of bills should be able to take them to the Bank of England and put them through, and that the holders of those bills should not be liable upon them. That was a great stroke of business, and had a tremendous effect in relieving the trouble then existing in London. These three actions on the part of the Imperial Government should supply the Treasurer of the Commonwealth with much food for reflection, and should convince him that he has now a chance to place the Commonwealth Bank in a much stronger position than it occupies to-day, or is likely to occupy if it continues on its present lines. Just before the last Federal election a manifesto was issued by the Labour party suggesting that the Commonwealth Bank had done a vastamount of good for the community.
– And the honorable member knows that it has done much good.
– I do not, nor does the honorable member know anything of the kind. On the outbreak of war, the Government could have said to the associated banks, “ The credit of the country is behind you. We are prepared to work hand-in-glove with you in any reasonable scheme to preserve credit and maintain confidence.” They could have done that, even if we had had no Commonwealth Bank, and could have achieved the same good results that were actually secured.
– Why was that not done on the collapse of the boom ?
– I cannot say why such a course was not followed on the collapse of the boom twenty or twentyfive years ago; but I am convinced that what was actually achieved in this respect after the declaration of war could have been secured just as readily had there been no Commonwealth Bank in existence. This should satisfy honorable members opposite that the Commonwealth Bank is open to much improvement. We are not here to uphold it on the one side, or to demolish it on the other. I was a member of this Parliament when the Bank was established, and can say that there has never been any desire on the part of the Opposition to demolish the institution.
– The Opposition had a good try to smash the scheme for its establishment.
– The honorable member will not find in “Ronsard any very hostile speeches.
– I have listened to them. I need not read Hansard.
– The trouble is that if a member -of the Opposition dares to make a statement that does not exactly fit in with the views of honorable members opposite, he is at once said to be hostile to their scheme.
– What about the vote that “was taken on the original Commonwealth Bank Bill ?
– I cannot recall the particular question on which a vote was taken in connexion with the Bill, but there was certainly no great hostility to the establishment of the Bank. Our speeches were directed to an effort to improve the Bill. Nearly every member of the Opposition said that there was room, perhaps, for a National Bank, but that the proposal of the Labour Government of that day was not the best that could be made. We made important suggestions for the improvement of the scheme, and cannot be held responsible for the failure of the Government of the day to adopt them. This is not a party matter, and the Ministry should be prepared to adopt any suggestion designed to improve the position of the Bank. The Commonwealth Bank is to benefit not a particular class, but the whole community, and it should transact national business. It should be a banker’s Bank; to hold the reserves of the other banks. It should be a trusted institution capable of coming to the help of any bank badly hit for the time being, but which ought not to be allowed to go into liquidation. The Bank as at present constituted is not likely to do much in that direction, but under a proper system it would, in a very short time, become such an institution as I have outlined. There does not seem to be much chance of securing the attention, let alone the serious consideration, of honorable members opposite to any proposal, however important, made by us. It is more or less a beating of the air to make any suggestion for the improvement of this Bill. I hope, however, that before it is too late the Government will make a serious effort to found a bank that will be worthy of the Common wealth. I should certainly like the Prime Minister to do away with the Savings Bank branch in London. It is a poor thing, not likely to reflect any credit upon us as a people. If we desire to have in London a bank to transact our own business and to meet the convenience of travelling Australians, let us establish there a branch of the general bank.
– We have. The Savings Bank branch is a mere excrescence.
– Then it is an excrescence that should be removed, and I hope that it will be. If the Treasurer is not prepared to alter the foundation principles of this Bank - if he is not prepared to widen its scope, to try to induce the wealthy element of the community to take shares in an institution built up on the lines of the Bank of England or the Bank of France - I would strongly suggest to him that he should at least try to enter into an arrangement with the States whereby, in consideration of our giving up the Savings Bank branch, they would transact all their business through the Commonwealth Bank.
– The late Premier of Tasmania said that that State had made a good deal with the Commonwealth Bank.
– I do not question that. If the Government are not prepared to hand back the Savings Bank business to the State in return for the consideration I have just suggested-
– Take the inevitable.
– I am trying to look at this matter from the point of view of the people. The competition now going on between the Commonwealth and State Savings Banks is detrimental to the public interests. The States and the Commonwealth are both agents for the one principal, and if they are not doing their best for that principal, then trouble must arise. If the Prime Minister is not prepared to hand back the Savings Bank business to the States in return for the States transacting their business through the Commonwealth Bank, then, by all means, let him try to enter into some friendly arrangement under which the Savings Bank business shall be carried on by the Commonwealth on the understanding that a certain guaranteed proportion of the moneys deposited will be available as before to the States for the development of their own territories. If the public suddenly formed the impression that the Commonwealth Bank was superior to the State Savings Banks, with the result that a rush took place on the latter, the position would be very serious from the stand-point of the State Treasurers, because much of the money deposited with the State Savings Banks is not available at a moment’s call.
– It is used by the State Treasurers.
– I do not object to that, as long as the money is properly invested. But if a sudden demand were made by depositors the State affected would inevitably suffer. The Government seem to regard it as beneath their dignity to make any ordinary bargain with the States, and to think that the States should accept the dicta of the Commonwealth, and consider themselves as greatly obliged by being allowed to deal with the central Government at all.
– The honorable member knows that that is a caricature of the position !
– I hope it will prove to be a caricature; but, so far as I can judge from my experience as a member of this House, it is not so. My honorable friends opposite are too fond of belittling the States, and setting the Commonwealth element as against the State element, when there ought to be nothing but harmony between the two instruments of government of one people.
– And that will continue while we have Legislative Councils representing a privileged few.
– I do not think that the Legislative Councils have much to do with the well-established Savings Banks, or that there is anything to prevent a satisfactory arrangement being made with the States.
– The people settled the question at the last election.
– If the Commonwealth Savings Bank is the best, and tlie people want that and no other bank, then by all means let the State Treasurers and the Federal Treasurer make the best arrangement they can in order that there may be one only. What I object to is the duplication of machinery for which the public has to pay. Business people do not employ two men to do the work of one.
– That is sometimes done in the honorable member’s profession - a solicitor and a barrister to do one job !
– That is because there are two sides to every* question.
– But it is against the law of the land in Victoria.
– In that the honorable member is mistaken. If the Treasurer will not accept the suggestion I have made, I think he ought to meet the Stat© Treasurers and endeavour to do away with the duplication of Savings Banks, thus enabling the people of Australia to have their business done in an efficient and economical way.
– The present arrangement is all right in Tasmania, is it not ?
– I do not think there, is anything wrong with the Tasmanian arrangement, though I must say that I have not been able to ascertain what the terms are. I understand that the reason the arrangement was made was that the Savings Bank business in Tasmania was not large enough to warrant the expense, on the part of the Government, of building extensive offices throughout the State.
– The real reason is that there is a sensible Government in Tasmania.
– The State Government realized that, under the arrangement with the Commonwealth, they would be guaranteed a large proportion of the receipts, and would thus be able to obtain the funds for local development work. My own opinion is that sufficient publicity has not been given to the terms of the arrangement with the Tasmanian Government; but this arrangement has, at any rate, stopped any cut-throat competition for the Savings Bank business of the people. Personally, I would rather see the Prime Minister hand back the whole of the Savings Bank business to the States, in return for the States’ ordinary banking business, the Commonwealth confining itself, to the establishment of a real national bank.
– I cannot refrain from saying a few words, in view of the manner in which the honorable member for Wilmot has spoken of the excellent deal made between the Commonwealth and the Government of Tasmania.
– It is only a temporary arrangement.
– Whether it be temporary or otherwise, it is working exceedingly well; and, at any rate, in Tasmania we do not see the State erecting costly buildings for the purpose of carrying on a Savings Bank business in competition with the central Government. Excellent terms, satisfactory to the Tasmanian Government, were offered by the Commonwealth, and their acceptance has resulted in considerable saving. Further, the Tasmanian Government, with more courage than has been displayed by the Government of Victoria or any other State, have transferred their State banking business to the Commonwealth Bank.
– So has the Western Australian Government.
– I was not aware of that, and I am very glad to hear it. In this way a considerable sum in interest has been saved each year on the overdraft that the State Government is repeatedly compelled to have. The State Government are - I am speaking from memory - permitted to overdraw to the extent of £100,000.
– Without interest?
-Certainly not, but at a lower rate of interest than that demanded by the private banks. The Commonwealth Bank, without any favoritism, entered into competition with the private banks, and “ came out on top.” It is a pity that honorable members, purely for political purposes, should speak so disparagingly of the Commonwealth Bank - should speak so bitterly of it. The Leader of the Opposition, and also a gentleman of the financial experience and influence of the honorable member for Balaclava, have for purely political purposes made an attack on the Governor of the Bank.
– That is not so.
– I am not permitted to quote from Hansard, but, speaking from memory, I think the Leader of the Opposition said -
If the Governor of the Bank wishes to get £6.000,000 or £8.000,000 within his control, ho will say to the Treasurer, “ Come in and help me to get it.” But having once obtained it, he will show the Treasurer the door, and will have no more to do with him. There is nothing fair about a provision of this kind.
The honorable member for Balaclava told us that the Governor of the Bank is not a banker in the true sense of the word, because he is not a political banker. What does the honorable member mean by that? Does he desire to have the Bank placed under the control of politicians, and allow these men the opportunity to use their influence, not in the interests of the Bank, but rather to retard its progress? The honorable member for Wilmot, in this connexion, was made the recipient of so many promptings from the honorable member for Swan, the honorable member for Richmond, and others that he was practically converted into a gramophone.
– I never said a word about the Governor of the Bank.
– We all know that in any banking institution the power is practically wielded by one man, who is usually the managing director. The other directors are on the Board, because they are large shareholders, and it is very seldom that their advice is acted upon. No one knows this better than does the honorable member for Balaclava.
– I do not know anything of the kind in Melbourne banking.
– We had an illustration of this when the Bank of Van Diemen ‘s Land suspended payment, and it was then found that a couple of gentlemen had virtually controlled the bank. I cannot believe that the other directors thoroughly understood the position of affairs, or they would never have authorized the payment of a dividend a few days before the bank closed its doors.
– All this may be true of Tasmanian banking, but it is certain!) not true of banking elsewhere.
– The banks of Victoria, just about the same time, were in a much worse state than were the banks of Tasmania. Some Victorian banks were being conducted without any capital at all, and some very prominent men had to be sent to “gaol, a state of things that certainly did not arise in Tasmania. Of course I am not sufficiently conversant with the facts of the Tasmanian banking to know whether any of the directors there did or did not deserve gaoling. It is repeatedly asserted’ by honorable members opposite that the Commonwealth Bank has not accomplished anything of a useful character. Inanswer to that I unhesitatingly say that the Commonwealth Bank has saved the credit of Australia. But for the existence of the Commonwealth Bank there- would certainly have been a run on some of the private banks, and this would have resulted in their tumbling over like ninepins. The people knew that there was a Commonwealth Bank, which, if necessary, would come to the assistance of the private banks; and, therefore, they did not withdraw their money from any of the institutions. I do not know what was in the mind of the Treasurer the other day, but I understood him to say that the Commonwealth Bank had assisted private banks; and, at any rate, I feel sure that the Commonwealth Bank is to be thanked for the splendid position of the finances of the Commonwealth to-day. When war broke out, I was in a vast crowd in one of the Australian cities, and I heard a prominent business man there say, “ Thank God, we have the Commonwealth Bank.” I remind the honorable member for Balaclava that Mr. Barkley, the managing director of the Commercial Bank of Tasmania, when interviewed a short time ago by a representative of the ‘Daily Post, said that if a business man came to him to borrow £100,000 he would not be able to get it, though, of course, he would be glad to accept a deposit from him of such an amount; and he went on to say, speaking of the financial position generally, that we must remember that the private banks had the Commonwealth Bank to fall back on if the worst came to the worst.
– Will the honorable member analyze the funds of that Bank and say how it could possibly assist the country ?
– I am glad of that interjection. What do the funds of the Bank matter when the credit of the Bank is good?
– Credit is not money.
– The honorable member forCalare said last night that he had had sixteen years’ banking experience, but he was careful not to relate that experience. What is true banking? I could relate it as from my own practical experience, but let me refer honorable members to the greatest of all authorities on banking - one which every bank manager has to peruse before passing his examination. I allude to Macleod’s Theory and Practice of Banking. That authority says -
Suppose his customers pay in £10,000 to their accounts, then the money becomes the banker’s absolute property as a mutuum. In fact, he buys the money from his customers, and in exchange for it he gives them a credit in his books; that is, he creates a right of action against himself for an equal amount. This right of action, credit, or debt, in banking language is termed a deposit.
After such an operation his accounts would stand thus -
Liabilities. - Deposits, £10,000.
Assets. - Cash, £10,000.
Now, though his customers have rights of action against the banker to demand back exactly an equal quantity of money as they have paid in, yet persons would not place money with their banker if they meant to draw it out again immediately; just as no one would spend at once all the money he had. Nevertheless, some will want to draw out part of their funds; but if some customers want to draw out money, others will probably pay in about an equal sum. It may be said that, in ordinary and quiet times, a banker’s balance in cash will seldom differ by more than onethirtysixth part from day to day. So that if he retains one-tenth of his cash to meet any demands which may be made upon him, that is ample and abundant in all ordinary times.
If, then, in the above example the banker retains £1,000 in cash to meet any demands upon him, he has £9,000 to trade with; and it is just in the method in which bankers trade that so much misconception exists.
I ask the honorable member for Balaclava to note that -
It is commonly supposed that when a banker has £9,000 to trade with, heemploys it in purchasing bills of exchange to that amount, and that he receives a profit only on the £9,000; but that is a complete misconception of the nature of “banking.”
This is the misconception which the honorable member would like the people to have. What are the real facts? -
A “banker “ never buys bills with money in the first instance - that is the business of a bill discounter, or a bill broker.
The way in which a “ banker “ trades is this: He sees that £1,000 in cash is sufficient to support liabilities of £10,000 in credit, consequently, he argues that £10,000 in cash will bear liabilities to several times that amount in credit.
One of the most eligible methods of trading for a banker is to buy or discount good commercial bills. And he buys these bills exactly in the same way as he bought the cash, that is, by creating credits in his books or debts, or rights of action against himself to the amount of the bills - deducting, at the same time, the interest or profit agreed upon, which is called the discount.
A “ banker,” therefore, never buys a bill with cash in the first instance. He buys the bill, which is a debt payable at a future time, by giving his customer a credit in his books for the amount of the debt, less the discount, which is a right of action the customer has to demand the money if he chooses. That is, he buys a right of action, payable at a future time, by creating or issuing a right of action, payable on demand. And this right of action, credit, or debt, is equally, in banking language, termed a deposit, as the right of action he created to buy the money.
Supposethat the “ banker “ buys £40,000 of commercial billsat three months, and that the agreed upon profit was 4 per cent. Then the sum retained on the bills would be £400. Consequently, in exchange for bills to the amount of £40,000 he would create credits, debts, or rights of action against himself - technically termed deposits - to the amount of £39,800.
Hence, just after buying these bills, and before his customers begin to operate on their accounts,his accounts would stand thus -
Liabilities.- Deposits, £49,600.
Assets. - Cash, £10,000; bills of exchange, £40,000; £50,000.
The balance of £400 being his own property, or profit.
By this process the “banker” has added, or created, £39,000 in credit to the previously existing cash, and his profit is clear. He has not gained 4 per cent. on the £9,000 in cash, but 4 per cent. on the £40,000 of bills he has bought.
Therefore he shows as assets £49,000, as against £10,000 he first received in money. That quotation shows how misleading are the statements of honorable members opposite. A bank’s operations are all based on its credit, and when we see that the bank manager can inflate his assets to £49,000 on gold to the value of £10,000, we have an instance of what real banking means. That is the banking on which all the profit is made, and that is the reason why bankers do not like lending money on land. It is dangerous to advance money on land, because when there is a depression, the very time when money is required, the land depreciates in value and cannot be realized. The banker lays himself out to make his big profits by buying and selling paper with credit. The banking people do not like the world to know that; they prefer to mislead the people and keep the facts away from them. I think that Macleod is an authority who compares favorably with the honorable member for Wannon.
– I have not spoken yet.
– The facts being as I have stated them, cannot honorable members understand the fight that is taking place against this Bank? According to the latest banking return, the Bank of Australasia paid a dividend of 20 per cent. year after year. Speaking from memory, I believe it paid 14 per cent. last year, and many banks have consistently paid 10 per cent.
Mr.Watt. - On the original capital.
– Rightly so. Honorable members realize that once the people understand what banking is, and the possibilities of the Commonwealth Bank becoming a great national institution, they will be careful to bank with it.
– If it ever becomes a national bank.
– I believe it will. A great deal was said yesterday by honorable members opposite about the advances made by the Governor on mining ventures. The Governor of the Bank made no such advances. In the case of the Broken Hill Proprietary Company, the Commonwealth Bank put in its tender, and no doubt the company went to the institution from which they could get the cheapest money and the best conditions. They gave the Governor the right to underwrite the loan. That is all that was done, and the honorable member for Balaclava will bear me out in saying that there was ample security for the transaction.
– Yes; but that was not so in the case of the Hampden mine.
– I will deal with that in a moment. So far as the Broken Hill Proprietary Company was concerned, the Governor of the Bank made a fair deal, and the Commonwealth profited thereby. The help rendered to that company means continuous employment for a numerous body of men in Broken Hill. It means the development of a mine in Broken Hill, and that, in turn, results in prosperity, not only in Broken Hill, but throughout the length and breadth of Australia.
– It meant employment in Newcastle.
– At any rate, it meant development in Australia. The Governor had ample security for the money advanced, and he was justified in doing what he did.
– Those debentures were taken up by the public.
– Yes; the honorable member for Balaclava confirmed my statement that the loan was really underwritten by the Bank; the debentures were taken up by the public.
– So far as we have been informed, that appears to have been done.
– That was done.
– We have no information about the transaction, except the newspaper statement.
– In reference to the advance made by the Bank to a Queensland mining company, honorable members opposite would have the people believe that the advance was made on a mining venture, on ore not yet discovered. The fact is that the money was advanced by the Governor of the Bank on blister copper, which is as reliable an asset as gold. I am sure he did not advance right up to the full value of the copper, but he afforded the company a medium of getting money easily, and I hope cheaply, because cheap money means development of the country. That transaction means a profit to the Bank, and, in consequence, to the people of Australia. I hope that w© have heard the last of the misstatements about those advances.
– Does the honorable member know to what extent- the amount underwritten had to be lifted by the Governor of the Bank?
– I am not acquainted with those particulars, but I do know that the Governor of the Bank is so shrewd a business man that he is not likely to transact any business that will cause him a sleepless night. He has not to meet a number of directors, and to pay a 10 or 20 per cent, dividend to the shareholders, but he has paid better salaries to the men working under him than are paid in any other bank, and he has compelled the other banks to bring the salaries of their employes up to the standard of the Commonwealth Bank. To-day, the private banks are at their wits’ ends to retain their best men, who are all anxious to join the service of the Commonwealth Bank. I was rather amused by the comparison made by the honorable member for Robertson between the Commonwealth Bank and the Bank of England. There is no analogy between the two institutions, because the Bank of England is not a Government institution. The honorable member said that he would like to see our national bank become like the Bank of France. So would I. The Bank of France is the repository of all the gold that enters France; it has complete control of the gold reserve, and that is why France is in such an excellent position to-day. But that bank has been growing up for many years, and honorable members must re member also that France is a creditor, and not a debtor, country. France and England are the only two creditor countries in the world, and the advantage of that position has been made manifest in the great strain caused by the present war. That is why I am desirous of seeing this Bill passed. I realize that we are really providing the ground-work of a great national bank, that will become the safety-valve of the banking institutions of the Commonwealth. Such a bank will not allow any private institution to go into liquidation if it would better suit the Commonwealth to keep that institution going. That is the status to which the Commonwealth Bank is advancing. Yet the advocates of private enterprise and State rights - the little people who would never build up a nation or anything else - would like to see this great institution crushed - they would crush this institution as a national bank for that purpose. I am anxious to see the Commonwealth Bank become like the Bank of France, because then we should have a different state of things in Australia. I wish I could get honorable members opposite to read Hyndman’s Crises of the Nineteenth Century, which shows that under the commercial banking system the banks called in their money every ten years, paralyzing industry and causing numbers of big business firms to go under. Having a bank controlled by one man is a big advantage. Recently I asked a man in business why he banked with the Commonwealth Bank. He replied, “I am glad that I am able to bank with the Commonwealth Bank. You ask me the advantage of so doing. It is this - only one man knows my business; he is the manager of the Bank.” There are no big firms who have their representatives sitting on a board of directors in control of the Bank, watching carefully the establishment of small businesses, so that when the opportunity comes they may be crippled by a very easy process - simply a line, “ Please reduce your overdraft “ - coming along at a most inopportune time when a man imagines that he has ample credit at the bank, is stocked right up to the full, and cannot realize. That is repeatedly done. I hope that the Commonwealth Bank, once it becomes a commercial bank, will not follow that example. But the time should be. far distant when such a thing may happen in connexion with the
Commonwealth Bank, because its business will be so big that, for many years to come, it will not touch the matter of discounting bills to any great amount, accommodation bills in particular. We have heard a great deal from the honorable member for Eden-Monaro, and in the speech of the honorable member for Calare, about what the Commonwealth Bank should do in regard to advancing money on land. The honorable member for Calare has had banking experience. I ask him whether he was very anxious to advance money on land ?
– Nearly all of it was advanced on land.
– Not if the honorable member could have found better use for the money. Had he found the trade of the Commonwealth so great that lie could do more profitable business by discounting hills at three months, six months, nine months, or twelve months, than by lending money on land, on which he could not realize when he needed the money, he would have chosen the former course. The reason why banks are not anxious to lend money on land to-day is because of the difficulty of realizing upon the security. I do not know much about the operations of the Savings Banks in Victoria and other States, but I do know that in the State of Tasmania, when the Savings Bank was under the control of the State Government, there was no great anxiety to advance money to settlers. One could always get money at J per cent, cheaper from private institutions than could be obtained from the State bank run under the so-called Credit Foncier system. The object of State Governments is to secure the savings of the people, so that they can have easy access to money when they require it. Why do not they say straightforwardly that this is their main object in retaining the control of State Savings Bank funds? The Commonwealth Bank has offered to the States splendid terms. Speaking from memory, I understand that the Commonwealth Bank said to the State Savings Banks, “ You can keep all your old business, and we shall give you 75 per cent, of the new business.”
– That was not the proposal. In the case of Victoria, the State Treasurer had borrowed £10,000,000 out of the £22,000,000 on deposit with the
State Savings Bank, and the ‘ Commonwealth Bank said, “You can keep the £10,000,000, aud with respect to the accretion of deposits; the increase of business, 75 per cent, goes to you and 25 per cent, to the Commonwealth.” But there was another £12,000,000 of old deposits that was not ear-marked.
– That is practically what I have said. I cannot see that the Commonwealth Bank is entering into such great competition with the State Banks. I find that it is paying -J per cent, lower interest in many cases, and yet we find that the institution is attractive to the people of Australia. Why is it so attractive ? Because the Commonwealth Bank has liberalized the conditions of depositing money in the Savings Bank.
– The honorable member knows well that industrial unions can now get facilities for banking their money.
– That is so.
– They can carry on their businesses much more easily. There have been other improvements. The State institutions have also awakened and become most up-to-date, and now do more for the people. There have been advantages on those lines.
– Starr-Bowkett societies can now get 3 per cent, on their deposits.
– What advantages do the unions get?
– They can draw money by cheques, as would be the case with an ordinary bank, and they can do business all over Australia. The honorable member for Wilmot was altogether wrong in what he said regarding the branch of the Commonwealth Bank established in London. In my opinion, the object of having a branch in London is not to attract the deposit of the money of British workers. The object is to facilitate the exchange of money belonging to immigrants coming to Australia. Perhaps twelve months before they have an idea of coming to Australia these people may put their little savings into our Savings Bank in London, and have the opportunity of having it transferred to Australia much more easily.
– Could they not deposit their money in an ordinary Savings Bank in Great Britain ?
– I have read a considerable amount of the history of the Savings Banks of Great Britain. Once a man puts his money into the Commonwealth Bank he is sure of getting it back again; but is he sure of getting it back again from all of the Savings Banks of Great Britain? Honorable members will remember how the Penny Savings Bank went down, and how other banks failed. The Commonwealth Bank is not likely to fail. Hence we shall find quite a number of people depositing their money in the London branch of the Commonwealth Savings Bank. [ hope that honorable members who will follow me will be fair enough to tell the people candidly the true position. I am glad that the honorable member for Eden-Monaro i3 here with his pet scheme that the legitimate business of the Bank is the advancement of money to settlers. How much, I ask him, did his State do for settlers’! Certainly any advantages the Commonwealth Bank will offer to settlers will be taken advantage of ; but that class of work will be done side by side with the legitimate banking business, which will give the institution the profit that we wish it to have. The object of the Bill before us is to extend the operations of the Bank, which we wish should be done. When the original measure was before Parliament, honorable members now sitting on the Opposition benches said that we should have a Bank with capital. They asked why a measure should be brought down for a Bank with a paltry capital of £1,000,000, and why we did not have a true national bank; and yet when we are now endeavouring to establish a truly national bank we find those same honorable members bitterly criticising the proposal. The object of this Bill is to place the Commonwealth Bank on. a sound financial footing. I say emphatically that I do not know what private bank the Governor of the Commonwealth Bank proposes to take over, but I believe that the Treasurer and the Governor of the Bank have sufficient common sense to know that when they take it over they will do so at the request of that bank. Honorable members are not going to sidetrack me by their interjections. I have been in Parliament too long to be sidetracked by the honorable member for Wannon. Let me repeat that when these people offer their bank, the Governor of the Commonwealth Bank will go thoroughly into the working con ditions of that institution and its assets and liabilities, and when he purchases it, as I believe he will, as a business man, he will simply pay a fair amount for the bricks and mortar, and nothing for goodwill. It will have no good- will - if the bank had a good-will, these people would not wish to sell it - but immediately it is taken over by the Commonwealth Bank, when the Governor of the Commonwealth Bank is assured that there are sufficient assets to warrant a purchase, the institution will become a Commonwealth Bank, and a good-will will be at once created, equal to the good-will of any banking institution in Australia, seeing that the whole of the credit of the people of Australia is behind it. The people know this. Could there be a better credit behind a bank than the nation ? The other day it came to the rescue of the business people of Britain by standing behind the Bank of England. I have no time to go into the question of bills being re-discounted owing to the Government assisting the Bank of England, the matter referred to by the honorable member for Wilmot. Most of those bills were German, to the extent of £5,000,000, due by Bradford firms. Let the honorable member go out and tell the public that the Bank of England discounted £5,000,000 worth of bills, payment for which they may get from Germany at some distant date. I hope the day will be soon, but the bank has yet to get the money. Yet the honorable member comes down here and tells us these things. That sort of thing might do very well when the honorable member is addressing his electors, but it will not do in this House.
– I rise to a point of order. Is the honorable member in order in misrepresenting me in the way he is doing ? I can assure the honorable member that I did not say what he has represented me as having said.
– There is no point of order. The honorable member may make a personal explanation at another time.
– I listened most attentively to the speech of the honorable member for Wilmot, and I have given the impression that he left on my mind. If it was a wrong impression, I withdraw it. I should like to see the Bill go further. I should like to see it compel private banks to hold 40 per cent, of their, reserves in Commonwealth notes.
– Of their capital. That is the Canadian principle.
– Yes. The banks may remain loyal to the Commonwealth, and they may remain loyal to themselves, but for the Commonwealth to suddenly have to find gold for the notes held by the banks would be a disadvantage. But I wish to make certain, and that can be done only in the way I suggest. I am sorry that the Bill does not go further; but I am satisfied that its provisions will do much to make the Commonwealth Bank a national institution, whose value will be appreciated by all classes of the community. Honorable members opposite will then be afraid to criticise the Bank adversely, as they have been doing.
– By way of a personal explanation, I wish to correct the suggestion of the honorable member for Denison that I stated that the Bank of England, and the Imperial Government, had arranged to discount some £5,000,000 worth of bills for which German debtors were responsible in Great Britain. I said nothing of the sort. My statement was that great relief had been given to the business community, and to the banks, by the guaranteeing by the Government of between £200,000,000 and £300,000,000 worth of bills. That had a magical effect, and put an end to the paralysis of trade which had begun - the goods represented by the bills being on the other side of the world .
– I hoped that the Prime Minister would take the House fully into his confidence in regard to the Bill, and would explain whether its introduction was due to the fact that the Governor of the Bank finds himself restricted in regard to general banking business, and requires more capital. In the absence of explanation by the Prime Minister as to the reason for amending the principal Act, we must regard the Bill as a proclamation, or as an advertisement, that the Commonwealth is in the market for the purchase of a bank, to be paid for either by borrowing the money needed, or by the giving of an “ I.O.U.” Honorable members opposite, who- are incredulous as to the correctness of that statement, have not studied the Bill carefully. Clause 2 provides that a private bank may be acquired and paid for, either with debentures, or in cash, or partly with debentures and partly in cash, or in any such other manner as may be agreed upon. If it is not desirable to pay in cash, debentures will be issued which will become an obligation of the Commonwealth Bank. The most contentious point in connexion with this measure has, so far, been the management of the Bank. I do not propose to discuss the genesis or ethics of banking. All matters of that kind were settled when the principal Act was passed, and the Governor of the Bank was appointed, and empowered to enter into the wide field of general banking. It is not proposed now to divest him of any of his powers, and it is therefore idle to debate, at this stage, fundamental principles of banking. I am concerned with the effect of the Bill on the operations of the Commonwealth Bank, and on banking generally in the community. Clause 2, to which I have already referred, declares that -
The Bank may, with the approval of the Treasurer, enter into an arrangement with any other corporation carrying on the business of banking, for the purchase by the Bank of the assets of that corporation and for the transfer to the Bank of the business and liabilities of that corporation.
That, to my mind, is a declaration of weakness on the part of the Commonwealth Bank; a declaration that it has been unable to acquire sufficient business. No flourishing banking concern will allow itself to be taken over by the Commonwealth Bank. The banks that have survived past trials and that will survive the present crisis, and are prospering, will not be acquired by the Commonwealth Bank. Here is another view of the matter : The functions of the Commonwealth Bank may be said to be those primarily of a national bank, but if the Commonwealth Bank acquires the business of a private corporation it must enter into every channel and avenue of banking business. By empowering the Commonwealth Bank to acquire the business of a private banking corporation, we sanction as legitimate for the Commonwealth Bank every possible form of banking advance. But it has been said by honorable members opposite, and by the last speaker, that it is not legitimate for a national bank to advance money on land.
– I did not say that.
– The honorable member left upon my mind the impression that that is his opinion. He twitted the honorable member for Eden-Monaro with having a pet scheme for the securing of advances on land in the Federal Territory. If there is any kind of banking business that is believed to be improper for the Commonwealth Bank to engage in, honorable members, in empowering the Bank to take over the business of a private banking corporation, will authorize it to enter into that kind of business, as well as every other kind of banking business.
– The Commonwealth Bank is already making advances on land. I have taken a client there.
– The last balance sheet issued by the Commonwealth Bank does not give any information on the subject.
– Does it say that the Bank does not advance money on freehold property ?
– No; and I do not say that it does not. I know that the honorable member himself would not require an advance. Indeed, it is generally understood that he is in a position to make advances.
– I’ never indulge in pawn- broking.
– At any rate, if we empower the Commonwealth Bank to take over the business of an ordinary bank, wo sanction the transaction by it of all kinds of banking business. As I have said, I regard the provision which I have read as a declaration of weakness. Let us consider its probable effect. I ask, in tho first place, what institution would throw the whole of its staff on the rocks? The Commonwealth Bank is in the unique position of being able to select its staff from among the most skilled and able officers of the other banks. But it is not likely to acquire the business of a strong bank. If, on the other hand, it takes over the business of a weak bank, it must accept some of the weakest securities in the Commonwealth, and with the staff of that weak bank it must take over some of its less efficient banking officers. What kind of banking business is there that the Commonwealth Bank cannot do now, with the whole credit of the Commonwealth “behind it? Why should it find it necessary to acquire the business of a weak private bank, or even of a strong private bank?
– It is doing good business all over Australia.
– That is no reason why it should take over bad business.
– It will not do so.
– There is no institution that has not got some bad business.
– The Commonwealth Bank has not got much bad business.
– I do not think that it has. I think that it has done well on the lines on which it has operated, and neither here nor on the hustings have I railed against it. I believe that the Commonwealth Bank has engaged in legitimate banking operations. But business cannot be artificially acquired. To my mind, the amount of its capital is not the determining factor in a bank’s business.
– Ask the honorable member for Calare about that.
– I shall probably be able to prove my contention without the assistance of either the honorable member for Calare or the honorable member for Maribyrnong. Let us look for a moment at the position of the six leading banks doing business in Australasia - the Bank of New South Wales, the Bank of Australasia, the Union Bank, the Commercial Banking Company of Sydney, the Bank of New Zealand, and, say, the National Bank. These banking institutions have an aggregate paid-up capital of £11,998,220, and their business, or rather the assets of those banks, aggregates to-day £172,941,532. The Bank of New South Wales is the largest banking institution in the Commonwealth. It has a capital, all paid up, of £3,500,000, a reserve, including the last appropriation, amounting to £2,450,000, and a business of £50,845,720 a year.
– When the honorable member speaks of business, does he mean turnover, or assets?
– I am referring to the assets. Now let us look for a moment at the position of the Commonwealth Bank. Its total of assets, including those of the Savings Bank branch, which amount to £4,645,268, is £9,773,690. We may take it that, broadly speaking, the chief business done by this Bank is represented by the item, “ Bills dis- counted, loans and advances to customers, and other items due to the Bank,” which represents £1,392,084, and this with other assets totals £9,773,690. The capital of the Bank was fixed at £1,000,000, of which not one penny has been called up. The moneys in this Bank for the time being have the following disposition : - Coin, bullion, and cash balances, £2,670,446; Australian Commonwealth notes, £41,025; money at short call in London, £1,465,000; investments - British, colonial, and Government securities (face value, £2,887,944), £2,818,981; fixed deposits of other banks, that is to say, the private banks, £975,500. This last item clearly indicates-
– Capable management.
– It clearly indicates that the whole value of a bank as such lies in the completeness of its organization, by means of which it can sell money to the very best advantage, and that the Commonwealth Bank is unable - and I do not say this with any desire to speak harshly of the institution - to secure the necessary investments.
– This Bill will enable it to do so.
– It will give the Bank power to extend its organization.
– That is what honorable members opposite do not like.
– The Commonwealth Bank, in its general department, is unable,, and apparently afraid, to enter into competition with the private banks in large cities or towns, notwithstanding that it has behind it, as the honorable member for Denison has told us again and again, the credit of the whole Commonwealth.
– Enter into competition with, and perhaps break, another bank?
– That, apparently, is not a consideration that has weighed heavily with the Commonwealth Bank, or those behind it.
– Is not the fact that it has deposited moneys with private banks proof that the honorable member’s statement is not correct?
– No. We have the incursion of the Commonwealth Savings Bank into the domain of the State Savings Banks. While that incursion is quite legitimate, I personally disapprove of it. It merely means the introduction of another competitor into the same field of collection. It cannot increase by one penny the earnings or savings of the people. On the contrary, it must increase the cost of collection. As the honorable member for Balaclava has already pointed out, in Victoria alone it has increased the cost of collection to the extent of something like £30,000 a year.
– I thought that the honorable member believed in competition.
– I do not object to competition which can be advantageously entered upon, nor do I object to private competition ; but I do not think that it is within the province of the National Parliament to launch another competitor against the State Savings Banks, when the competitor cannot itself, so to speak, deliver the goods to the people. There may be about this proposal a political aspect, but with that I am not much concerned. The point that does concern me is that the Savings Bank branch of the Commonwealth Bank has seen fit to offer, as an inducement for the deposit of savings, interest at the rate of only 3 per cent, on all deposits up to £300, whereas the Savings Bank guaranteed by the Government of Victoria offers 3i per cent, on the first £100, and 3 per cent, thereafter on all sums up to £350. This clearly shows that the Commonwealth Bank cannot offer to depositors the advantage which a State Savings Bank is offering. When the workers of Victoria become alive to the fact that their earnings, deposited with the Savings Bank of this State, will to a great extent be invested in industries that will find employment for them in Victoria, where their homes and families are, whereas the same money deposited with the Commonwealth Savings Bank branch might be invested in. industries in some other part of the Commonwealth, they will know what to do. I do not advance this as a reason why they should not support the Commonwealth Bank.
– It is a very broad national spirit, is it not?
– The honorable member for Maranoa seems to regard as no virtue in me that which he claims as a virtue in himself. I asked him quite recently in what State he would prefer to work. He promptly replied, “ In Queensland, where my home is.” That i& exactly the position of the workers in
Victoria; they naturally prefer to invest their money in the State in which they reside. We should not attempt to invest the earnings of the workers of Victoria near the Gulf of Carpentaria, when that money, if properly invested, would probably find them employment in Victoria, where they live. Coming to the general business of the Bank - the honorable member for Denison said that there were advantages connected with it, and I am looking for them - we find that 3 per cent. is offered on moneys placed on fixed deposit for twelve months, and31/2 per cent. on deposits for twenty-four months. The private banks doing business in this State offer 31/2 per cent. on deposits for twelve months, and 4 per cent. on money placed on fixed deposit for twenty-four months.
– How does the honorable member account for money flowing into the Commonwealth Bank in such circumstances?
– Does not the Commonwealth Bank offer a better security?
– If so, that should be a very good reason why money should have flown into the Commonwealth Bank. But any attempt to artificially transfer the money and the business of Australia from one bank to another is not likely to succeed. Money is attracted to the places where advantages are to be secured. I have no objection to the capital of the Commonwealth Bank being increased, but it must not be forgotten that if it is increased to £10,000,000, as proposed by the Government, that money will be borrowed from the people in one of the most disadvantageous markets that we have ever experienced in Australia - at a time when the country is suffering from drought, as well as from war. The Commonwealth Bank is to be empowered to borrow £10,000,000 from the people at probably the highest rates of interest, and to lend it back to the people, although the private banking corporations at present have sufficient capital, not only to meet the needs of their constituents, but to enable them to do that which the Commonwealth Bank could not do - to lend, free of interest, as they are doing at the present time, £10,000,000 to the Commonwealth Government. I hope that the debate on this measure will do a great deal to dispel those high hopes and to remove those fine landscape pictures that members of the Labour party hitherto have put before the country. We were told by the Government and their supporters on the hustings on two occasions that the Commonwealth Bank would be able to make advances to the farmers at cheap rates, and to lend money to artisans to build their own homes. We now hear the honorable member for Denison declaring from the Government side of the House that the Commonwealth Bank should not make advances on the lands of this country.
– I said not to any great extent.
– I hope that the Bank will do so. I have been fairly intimate for some time with the business of making advances on land. It was my province, before I entered this Parliament, to tap the money market every year to the extent of from £750,000 to £1,000,000 in the shape of advances on land, and I have always preached to the farmer the doctrine : ‘ ‘ Borrow from the man who owns the money. He can lend it at a fixed rate, and for a fixed term, so that it is better to borrow from him than from a bank which is only a bailee, and can neither lend at a fixed rate nor for a fixed term.”’ While I have laid down that general principle, I hope that the Governor of the Commonwealth Bank will be able to invest a proportion of its funds in the direction of assisting the primary producers of Australia. The farmers of this country were induced to pin their faith to the establishment of the Commonwealth Bank by the promise that it would give them great assistance in their industry. If there be one form of investment with which I have never yet been satisfied it is the advances that have been made by the private banks to land -holders. I am aware of the liability of the banks to their customers. I am aware that whenever a demand is made upon them for money deposited at call it must be immediately met, and that the banks therefore are unable to, and do not, as a rule, lend for a fixed term, whilst they also refrain from lending at fixed rates, because of the fluctuations and vicissitudes of the money market. I am not one of those who favour the proposition that the Government should take each of the States into partnership in the management of theCom monwealth Bank. I hold that control and management are the dominant factors in the success of any enterprise, and particularly in the success of a financial institution. If the operations of this Bank are to be successful I think that its management must be purely national. I would suggest, however, that instead of having a one-man management of the Commonwealth Bank we should have a triumvirate - a management of it by three men. No one man is the repository of sufficient knowledge to become the absolute judge as to every form of investment.
– There is a. Governor and a Deputy-Governor.
– The DeputyGovernor acts only when the Governor is not available - it is the Governor who is supreme.
– Do they not consult one another ?
– The DeputyGovernor has no constitutional rights under the Act.
– Does the honorable member suggest retired politicians as di. rectors?
– I should certainly not suggest the honorable member after his speech to-day, nor would I suggest the Minister of Home Affairs, much as I may respect him personally. I remember the Minister of Home Affairs one night rising in his place, when in Opposition, and calmly telling the House and the country that the national wealth of Australia had increased in five years bv £1 50,000,000.
– Quite right.
– The honorable member went on to say that this increase represented the unpaid wages of the workers.
– After such a statement as that I would not suggest the honorable member as a director of the Commonwealth Bank. The honorable gentleman on that occasion went on to say that he had based his calculations on returns; but I point out to him that, in the case of a mine, for instance, shares appreciate not because of the gold won, or of the wages paid, but because those who understand feel that there is hidden treasure worth a certain amount. It is this which makes the public anticipate the share value, and it is an appreciation which may take place before much labour has been employed. The same remark applies to companies generally. ‘ The shares appreciate, not because of what has taken place in the past, but in view of the future earning power. I do not wish to obtrude my experience of business on the ‘House, but I know that the inspiring of confidence is the real kernel of banking. The Bank of New South Wales, with a paid-up capital of £3,500,000, is able practically to do double the business of any other bank. Why is this?
– How did that bank stand in 1893 ?
– It stood the stress.
– Backed up by the Government !
– I am hopeful and anxious for the advance of the Commonwealth Bank; and the Prime Minister, and the Government generally;’ would do well to meet the oft-expressed wishes of the banking and financial community that its management should be broadened. I do not favour the idea that every State should have a share in the management, because it seems to me unwise to divide responsibility in that way. I do, however, earnestly suggest the appointment of a triunevirate of the best bankers to be obtained in the Commonwealth, to determine policy, fix the lines of advances, review rates of interest, and so forth. I humbly forecast that the Commonwealth Bank will never get the people’s money and business while it offers per cent, less than the private banks are prepared to pay. For sound reasons I do not desire to see a war of rates. The cash reserves of banks are often employed where, in my judgment, they ought not to be. For the most part they are used in acquiring British Consols, Government debentures, and so on, and ‘ are thus made earning factors; but I suggest that the Government should not be pigheaded in the matter, and set their face against the will of the people. This Bank should be so extended as to become the repository of the confidence of the people ; and, in view of the fact that it has the wonderful backing of the whole of the country, the Government would be- well advised to accept an amendment in the measure before us. It is not my province to introduce an amendment in management of the kind I foreshadowed, but I suggest that, while retaining absolute control, sharing it with no State, no one man can sufficiently inspire the confidence of the people to induce the necessary inflow of money. After all, banks are the domicile and home of money. There are various forms of advances, from consols to straight-out advances on land, securities, discounts, and so forth, according to the nature of the risk; and private banks, so far, have engaged in all. Judging by the profits, or the absence of profits, in the case of the Commonwealth Bank up to the present, I take it that it has not adopted some of the more lucrative forms of advances; but it is to the credit of the Governor that his balancesheet for the past half-year shows a profit of £8,093. This still leaves a debit, on the whole of the operations of the Bank since its inception, of £36,995. At this early stage of the Bank’s history, however, we should not make too much of the fact that it has not amassed wealth. It is always difficult to take business out of its usual channels, and it must be still more difficult to take ordinary business away from the private banks. First of all, the capital of the banks is held by shareholders, whose particular business it is to see that their particular bank is successful, and there is no doubt they will fight hard before they will consent to lose their business. As a matter of fact, the private banks are offering advantages that the Commonwealth Bank cannot offer; but I hope there will be no feeling of disappointment because the progress of the Bank has been slow up to the present. It will be necessary to go very cautiously along the banking field in order to obtain new business; but such business may easily be got if the Government carry out their intention to acquire some bank that has not been made a success, and has made advances on securities of the sort found in some of the weaker institutions. I shall not labour the question further, except to express the hope that before the Bill passes we shall have a clear statement from the Prime Minister as to the intentions of the Government, and of the Governor of the Bank, in regard to the acquiring of any other bank - that we shall be told whether they have any particular institution in their minds. In my judgment, the Commonwealth Bank has nob the staff, the organization, nor the means to ascertain the value of assets held by any other bank. The Minister of Home Affairs chuckles, but I may point out to him how banking business is usually extended. There is a head office, and branches are formed throughout the country in the charge of managers. Through these branches, and also, of course, through the head office, advances are made in connexion with almost every form of business. Periodica] inspections of the branches are made in order to ascertain whether the business is being conducted on safe lines; and I ask whether there is any honorable member who can tell me that the inspectors view all the properties on which advances are made ? I repeat that the Commonwealth Bank has not the organization by means of which it could assess the true worth of securities of another bank, nor could it possibly acquire a sufficient staff to enable it to do so.
– For the simple reason that the cost would make it absolutely impossible to acquire the business of a bank except at an enormous premium.
– How do the private banks arrive at the value of securities?
– I thought I had explained that.
– That is exactly what the honorable member did not explain.
– I told honorable members that the system was for managers to make advances in the country.
– And for inspectors to inspect the accounts; but the honorable member did not say that the inspectors inspected the properties.
– On the contrary, I say that they do not.
– Therefore, I say that the Commonwealth Bank has not the staff to enable it to check the advances of every manager in every town and hamlet. t
– Could the Commonwealth Bank not get the staff?
– Where is it to get the staff for the work of such inspection, if, for instance, it were to acquire the Bank of New South Wales, with all its branches and securities? Would it be humanly possible for the Commonwealth Bank to lay before the House a statement of the assets and business, in detail, of the
Bank of New South “Wales cheeked, and to have every one of the securities inspected ? The Government are entering on dangerous ground if they attempt to take over securities that the Commonwealth Bank cannot see or inspect. If a banking company were anxious to dispose of their institution to the Commonwealth Bank, the managers would see that all reports sent to the head-office were of the most flattering nature; and I repeat that it would be humanly impossible for the Commonwealth Bank to provide a staff to check all the advances in sufficient time.
– Does the honorable member suggest that the private banks lend money without any valuations of properties?
– I do, beyond that of their managers. I suggest that *the system, which I know well, is for the managers of branches to make advances. Very often an inspection may be made by a country manager; but country managers are not the best judges of the value or quality of land.
– How are valuers got to agree as to the value of a property?
– That, I think, is beside the question. In my statement, there is no suggestion of more than one inspection, namely, that by the manager of the bank. If the honorable member means to ask how we are going to get the valuer of the Commonwealth Bank to agree with the manager of the local bank as to what is the true value of a security, I say that that is one of the difficulties which the Bank and the Government will be confronted with when taking over the assets of another institution. One can hardly get two men who will agree on the basis of a valuation. Each often proceeds on a different basis.
– Do you suggest that a bank advances up to the full value of the land ?
– Did I ever make such a statement?
– You led us to believe that.
– I may have led the honorable member to believe that, but no other honorable member.
– To what extent do the banks advance money on land ?
– There is no fixed proportion in regard to . advances by banks, but trustee companies lend up to 60 per cent, of the value of land. Today you could not get from banks, or even trustees companies, an advance of more than 50 per cent, of the value of land. During a good many years I have learnt a great deal about acquiring advances for farmers, and I have probed almost every financial institution in Melbourne - trustee companies, insurance companies, and solicitors in charge of trust funds-
– And did you ever get an advance without a valuation?
– Certainly , from a bank.
– Then you are a lucky man.
– Take the position of a bank manager in a town like Horsham. He knows that there is to the north of the town, say, 50,000 acres of land of a uniform value. A customer of the bank requires an advance on land in that direction, and the manager knows that the land varies in value from £8 to £12 per acre. It is very unusual for the manager of the bank to make an inspection of that land, but I will say further that it is most unusual for a man who wants a large advance on land to get it from the banks at all, for the reason that there is no, continuity about an advance from a bank, and there is no guarantee that the rate, of interest will be uniform throughout a . lengthy period. On those grounds I have . spent no end of time in preaching to tha’ farmers that they should borrow, not from the banks, but from the man who* owns the money, and can lend it for a fixed term ; the banks are only custodians of the money, and can lend it only while the owners wish it to remain in the hands of the bank9.
– Abolish the middleman every time.
– No. The Assistant Minister of External Affairs has travelled through this world for a good many years, and no one knows better than he the value of the middleman. In any class of business in the city that the honorable member may choose, the middleman will buy and sell him every day in the week. If there is one man in Victoria to-day who is an expert at his calling it is the middleman. He is the man who probes your markets and finds your customers. I am very pleased that, through the interjection of the honorable member, it falls to my lot to say a word on behalf of the middleman, against whom honorable members opposite are always raising their voices-
– This is very interesting, but I would like the honorable member to connect his remarks with the Bill.
– I am doing so; inasmuch as the middleman is the person who is concerned in securing advances from the Commonwealth Bank for its clients.
– The honorable member had better confine his remarks to the second reading, and not enter into too much detail.
– I think I might be permitted to say a word about the man whose general commission is to procure money from the banks on behalf of clients.
– The honorable member must not follow that course.
– I regret that I am not allowed to continue those remarks, because I was about to state a few facts which might enlighten the Assistant Minister of External Affairs. I understand that it is a well-established article of his creed to try to get rid of the middleman, who is so elusive that he cannot be caught. However, I do not propose to further criticise this measure. I hope it will be the privilege of honorable members of the Opposition to have the amendments which they will submit at a later stage seriously considered. I refer particularly to the very important question of enlarging the Bank. So far as I am personally concerned, given good management - by which I mean management that does not rest entirely with one man - I believe the operations of the Bank can be extended with great advantage to the community. It is almost unnecessary for me to say, as has been said by other honorable members on this side, that, personally, I do not know Mr. Denison Miller, and, therefore, I have no feeling against him. I believe he is a capable and efficient officer; but I also believe that he would be much strengthened in his position if he had associated with him two other sound bankers, who would help him to inspire the people with such confidence that money which is at present withheld from the Bank would go into its coffers, and <so finable the institution to discharge larger and more general functions on behalf of the people.
– I hail with pleasure this amending Bill, which will lead to an expansion of the facilities at present provided by the Bank. Judging by the remarks of honorable members opposite, we have arrived at a very happy stage in the Bank’s history, because every one of those honorable members who has spoken on this Bill has expressed himself favorable to the establishment of an institution such as the Commonwealth Bank. If we can depend on everything honorable members say, there seems to be a desire on their part to extend the functions of the Bank, and to see its resources increased. What strikes me about their attitude is that they seem to be accepting the institution because they have got to accept it. Wedid not hear much talk from honorable members of the Opposition about an institution such as the Commonwealth Bank during the long years prior to the establishment of the Bank, when the private banking institutions were wreaking such disaster amongst the settlers, whom to-day honorable members would have us believe they are most desirous of benefiting. There appears to be a sudden veneration in the minds of Opposition members for the struggling settlers; but, as the representative of a constituency similar in every way to the electorate of Wannon, I can assure the House that my experience has been no different from the experience of many others in regard to the treatment meted out by the private banks. I have met many farmers, not only in my own constituency, but in other country constituencies, who have a very sad tale to tell of the manner in which they were treated during the long years they were at the mercy of the private institutions prior to the Commonwealth Bank coming into existence.
– Has the Commonwealth Bank relieved the situation ?
– It has most decidedly done so. The honorable member for Robertson yesterday repeated the statement made by the Leader of the Opposition that the Commonwealth Bank lias no resources, and has not been able to go to the assistance of anybody in any way during the present crisis. I say that is not correct. We were asked today, as we were asked yesterday, by several honorable members what the Commonwealth Bank has done to relieve anybody at the present juncture, and I answer by asking another question - What would be the position to-day if the Commonwealth Bank were not in existence?
– That is your only answer.
– Let us imagine what would have happened, and what the position of many struggling people would have been, if it had not been for the steadying influence which the Commonwealth Bank has been able to exercise during the present crisis. We need only look back to the crisis of 1893, when the private banking institutions went smash, and ruined a great many industrious people. What was wanted at that time was an institution such as the Commonwealth Bank, which could exercise a steadying influence. The honorable member for Wannon has practically agreed with that contention, and if this institution, with the national credit of Australia at its back, is not calculated to have a steadying influence on the financial market, I do not know what is.
– Its capital is not large enough to give it a steadying influence.
– I base my statement on what has happened in the past, and I say ‘that at this juncture many people would be asked to reduce their overdrafts, and in other ways the strings would be tightened by private financial institutions, if it were not for the steadying influence which the Commonwealth Bank is exercising.
– How has it exercised that influence?
– The honorable member need only look at the position which people in the country were placed in before the Commonwealth Bank was brought into being. Direct proof of the truth of my statement was supplied by the remarks of the honorable member for Oxley yesterday. It is a matter of general knowledge that the Commonwealth Bank and the Bank of England were the only two Banks that did not take advantage of the moratorium, when the other Banks practically closed their doors for a month.
– There is nothing in that, because the business of the Commonwealth Bank is so small.
– Is it not a fact that when the war broke out a moratorium was declared during which debts need not be paid ?
– The Bank of England had very little trouble. It had three days in which to consider the position.
– I understood that the period was much longer. The fact remains that the London Branch of the Commonwealth Bank and the Bank of England were the only banks that did not take advantage of the moratorium in Great Britain.
– Do not talk like that. The Commonwealth Bank had no resources there.
– I remember a similar period in Victoria, in the time of the Patterson Government, when the private banks closed their doors and debts were not paid.
– Some of the banks closed their doors in 1893.
– I think that they all did so.
– No. The Bank of Australasia and the Union Bank did not close their doors.
– I believe that the only bank that did not close its doors was the Bank of New South Wales, and that institution could only remain open because of the fact that Sh George Dibbs, who was Treasurer of New South Wales at the time, had made notes legal tender in that State; or, in other words, had brought the security of the State to back the note issue. That the national credit had to be brought to bear to relieve the situation was an argument that was advanced for the establishment of a National Bank. .However, we have got past that stage. I simply refer to this period of crisis to show that there is justification for the .establishment of the Commonwealth Bank; but, judging from the remarks of honorable members opposite, we are now all agreed that there should be an institution of the kind in Australia. In a time of crisis we need an institution which will have a steadying influence, and we have it better when such an institution has the national credit at its back, just as has been the case of the Commonwealth Bank in the present crisis. The honorable member for Calare yesterday picked up the balance-sheet of the Commonwealth Bank, and proceeded to show, to his own satisfaction, at any ate, that it was losing £30,000 on its business. Such a statement should not be allowed to go unanswered. It is true that during the first half-year of the operations of the Commonwealth Bank the balance-sheet showed a debit balance of some £40,000; but that was because certain initial payments, which were as necessary in the establishment of this institution as in the establishment of all such institutions, had to be provided for, and though they were charged to the expenditure account, the assets that should have been shown as a set-off to that expenditure did not appear in the balancesheet.
– They are shown in the Bank premises account.
– I pointed out to the honorable member yesterday, by way of interjection, that the fittings and furnishings, and other items, did not appear in the balance-sheet that he was quoting.
– Yes; they come under the item of £38,000, opposite the Bank premises account. I told you that yesterday.
– I also referred to other items, such as the purchase of land. The expenditure in this direction is shown, but the asset is not shown as a set-off against it. The heavy expenditure incurred in the first halfyear was non-recurring expenditure, which, as an honorable member points out, should have been charged to capital account, and. not to profit and loss.
– It is never charged to profit and loss.
– During the next half-year, when all these incidental expenses were out of the way, there was a profit of over £1,000. I have gone to the trouble of securing a copy of the balance-sheet of the Commonwealth Bank which the honorable member read to the House. I wish to read the profit and loss account.
– I read it yesterday.
– The profit and loss account at the end of the last financial year shows the exact position of the Bank with regard to the profits made. It is as follows: -
Profit and Loss.
To amount from last account, £45,080 3s. 3d.; reserve fund,- : redemption fund, - ; £45,089 3s. 3d.
By profits for half-year ended 30th June, 1914, £8,093 8s. Sd.; balance carried to next half-year, £36,995 14s. 10d.; £45,089 3s. 3d.
There was an actual profit of £8,093 on the half-year’s transaction. That the Bank in the second six months of its operations made a profit of over £1,000, and in the last six months a profit of over £8,000, is sufficient answer to the argument advanced that the Governor of the Bank is not making it a success; and it is fitting testimony to the work he is doing. I have already said that the day is past when justification for the existence of an institution such as this need be advanced. I have a copy of the Insurance and Banking Record, which shows the business of the private banking institutions of Australia prior to the establishment of the Commonwealth Bank, and the profits made by them. One or two honorable members who spoke yesterday spoke very lightly of those profits; but, according to this publication, in the year before the Commonwealth Bank was established the associated banks made a profit of £2,512,348 on a total paid-up capital of £19,000,000. In other words, they made a profit of131/2 per cent. During this debate several honorable members have said that these profits did not exceed 6 per cent. ; but the figures I have given from this publication, whose statements may be accepted as final, are a complete answer to that assertion.
– We have produced actual tables showing a profit of 7 per cent., taking into account reserve funds.
– What are the reserve funds but undistributed profits? Estimating the profits of the associated banks on the paid-up capital is perfectly fair.
– The price paid for Bank shares is very often three times the face value - the £10 share may be worth £30, which fact alters the percentage that the shareholder receives.
– If a man chooses to pay £30 for a £10 share, it is his own lookout. The real profit of a bank must be estimated on its paid-up capital.
– I have some other figures that appeal to me. In the year I have referred to the amount on fixed deposit with the associated banks was £74,000,000, and the amount on deposit at call was £55,000,000. I believe that the amount now on deposit in the associated banks at call - usually known as current account - is £62,000,000. That money is put in the banks by people who can take it out at call, but the remarkable fact is that if people go to the banks for an overdraft they are charged as high as 7 per cent, to get a little of their own back again.
– That is not correct.
– It is absolutely correct. The trading capital of a bank consists of the difference between their coin and bullion and their liabilities, and the margin between the two is represented by paper; really it is public confidence or bank credits. The banks have not only been in the habit of lending the money deposited on current account, but, as every one knows, they have also been in the habit of creating credits extending beyond their deposits, and thus have made huge profits, amounting, as pointed out, to 13^- per cent, on their capital. Yet the remarkable thing is that the people who create that public confidence are charged as high as 7 per cent, if they wish to arrange for overdrafts. Prior to the establishment of the Commonwealth Bank these private institutions were charging their customers, not the 6 per cent, spoken of yesterday by the honorable member for Balaclava, but as high as 8 per cent., and 8
– Not to people who had deposits in the banks.
– I am not one of those referred to by the honorable member for Balaclava as looking upon the Commonwealth Bank as the last word in national banks. I shall not be satisfied until the Bank makes provision, amongst other things, for the establishment of an agricultural; department,, by means of which struggling settlers and other people in the country can secure accommodation in a legitimate way.
– If they have the security they can get accommodation now. There has been no refusal when the security has been there.
– Honorable members opposite chide members of the Labour party with having broken their promises to the people in the country. They say that when the Commonwealth Bank was launched we anticipated - I repeat now, that we do anticipate - that the time was not far distant when the Bank would be able to assist in a larger way those legitimate settlers who are the real backbone of the country.
– It has done nothing so far.
– To expect a comparatively new institution to do everything in a day is a ridiculous idea. The Bank has done very well. It is showing a profit on its business, but I shall not be satisfied until I see a real agricultural branch established in order to provide a credit for the agriculturists. I agree with the honorable member for Wannon in everything he said in that regard, but in no. way have honorable members deceived any one in the matter. We cannot expect too much from a young institution. The time will come when the Commonwealth Bank, backed up by the national credit, as is the case to-day, will do great work in this connexion. I repeat the statement that I made previously, that the Commonwealth Bank is doing excellent work. I give a flat contradiction to the remark that it has not been able to help anybody. The Bank has had a steadying influence during the present crisis. Without it we might be now in a position similar to that in which we were in 1893.
– Look at the balancesheet of the Bank. That shows what it has done.
– Yesterday the honorable member tried to prove that the Bank was making a loss, although really it is making a profit.
– Is the honorable member in order in stating that I said yesterday that the Commonwealth Bank was making a loss ? I said that it was making a profit.
– The honorable member rose to a point of order, and proceeded to make a personal explanation, which was not only irregular, but also highly disorderly. A member who is speaking ‘may not be interrupted with a personal explanation. There will be an opportunity to make a personal explanation when the honorable member for Indi has finished his speech.
– I do not desire, to misrepresent any honorable member. During the last half-year the Commonwealth Bank made a profit of £8,000; but the remarks of the honorable member yesterday conveyed a different impression. I wish now to say a word or two in reply to the objection of honorable members opposite that the management of the Commonwealth Bank is in the hands of one man. Every speaker from the opposite side has had a gibe at the Governor of the Bank. The most effective answer to their criticism is that the Governor is making a profit by the Bank’s operations. I never felt more
Satisfied thai the right thing was done in the arranging of the terms of the Governor’s appointment than I was when I heard the right honorable member for Swan speak the other day. Every word he uttered showed that he is against the Bank, lock, stock, and barrel, and that the institution would have stood a good chance of being wiped out were it not for the fact that the Governor has a fixed tenure of office.
– And that the electors did their duty at the last election.
– Yes. What is the difference between the management of the Commonwealth Bank and that of a private bank 1 Private banking corporations have their boards of directors but is it not a fact that all questions vitally affecting a private bank are decided by its general manager? I do not know that bank directors have any more important duty to perform “than the drawing of their fees, a duty in which they never fail. The general manager of a bank is, in all cases, the final authority in regard to its affairs. That, I believe, is’ universally recognised. What are the facts regarding the constitution of the Commonwealth Bank? The Commonwealth Bank Act makes provision for periodical audits of the Bank accounts by the Auditor-General, who must report to the Treasurer. We are better off than we should be were the Bank controlled by a board of directors, because the AuditorGeneral’s report is placed before Parliament, and if anything is wrong, Parliament can rectify it. If control by directors is essential to the success of banking, why is it that such disaster overtook the private banks in 1893? Why did not their directors so manage the private banks as to avoid trouble at that time?
– The Governor of the Commonwealth Bank could not avert such a catastrophe without the aid of the Government. The Governments of the States came to the assistance of the private banks in 1893, as the Commonwealth Government would come to the assistance of the Commonwealth Bank.
– The Governments of the .States saved the private banks in 1893,
– And would come to their assistance again, if necessary.
– As the Governor of the Commonwealth Bank is making a profit, why should we change the management of the institution? I see no reason for making a change when all is going well. The people of Victoria, indeed, the people of Australia generally, cannot have much relish for the directorate system of control after their experience in 1893. I am satisfied that much of the blame for the banking disasters that have overtaken Australia can be laid at the door of our bank directors. In 1893 money was sent out from London, and the banks were told ‘ to put it into advances. There is a strong impression in the minds of many persons in Victoria that some of the directors of the banks obtained much of this money on very flimsy security. Land values were inflated, money being cheap, but when the people at Home, being alarmed, called up their money, the crash came. The directorate system did nothing to save the situation. On the other hand, it was largely responsible, in my opinion, for what occurred. Honorable members opposite have had a good deal to say against the Commonwealth entering into Savings Bank business. The honorable member for Balaclava, when speaking on the subject here in this chamber, did not go so far as he went on the hustings, when, as Premier of Victoria, he was trying to damage the Labour party in the eyes of the electors. I have ringing in my ears some of the remarks he made from the public platform. He said that there was an attempt to lay ruthless hands on the savings of the poor, and that what was being done by the Labour party was robbery of the worst kind. The honorable gentleman did not go so far as that here, because he knew that he would be unable to justify such statements. Of course it is the poorer members of the community who chiefly use the Savings Banks, but I have yet to learn that the honorable member for Balaclava and others of his party have much real concern for the poor”. When the Federal Land Tax Bill was under consideration, those who opposed the Labour party’s measure professed to be greatly concerned, not for the land-holders who had property valued at more than £5,000, who would have to pay” the tax, but for the poor widows and others who would not come within its operation. In the same way, they are now professing great concern for the poor who use the Savings Banks, .and they would have us believe that their real concern is not for the interests of the banking corporations. A good deal of capital is being made in country constituencies of the Savings Bank operations of the Commonwealth Bank. I ask in what way has the Commonwealth Savings Bank unfairly competed with the Savings Banks of the States ? Will any honorable member opposite say that the Commonwealth Bank had not a perfect right to enter into Savings Bank business? Not one of them could contend that there has been any violation of the Constitution in that. Can any one say that those who desire to deposit their savings in the Commonwealth Savings Bank should not be allowed to do so, and should not have the security of the Commonwealth credit? Does any one who has deposited money in the Commonwealth Savings Bank worry about its safety ? On the contrary, do not depositors know that they can withdraw their money at any time, and that they have full security for it? It is not proposed to chase people into the Commonwealth Savings Bank with a big stick. Whatever money is deposited there is deposited voluntarily. Who will say that the people ought not to avail themselves of the Commonwealth Savings Bank?
– The Savings Banks of the States give the public greater advantages than are given by the Commonwealth Savings Bank.
– When the establishment of a Commonwealth, Savings Bank was mooted, the Victorian Savings Bank increased the interest on deposits at first by J per cent., and later by ^ per cent. ; but it was not until the Commonwealth competition was feared that that was done. But for the establishment of the Commonwealth Bank depositors with the State Savings Banks would be in the same position as before - they would be receiving half per cent, less than they are obtaining to-day for their money. I am unable to understand why there should be any objection to the Commonwealth Bank doing legitimate business, in accordance with the Constitution, in this way. I do not see why men and women should not be afforded an opportunity to have J;he national credit behind their savings. No compulsion is applied. The Commonwealth says, in effect, to the people, ‘ ‘ You may deposit your money with the Commonwealth Savings Bank or with the State Savings Bank.” -Who shall say that the people should be denied this opportunity?
– But does it not mean the duplication of expenses?
– If any complaint is to be made in that respect the blame should be laid at the door of the States, who have gone to the expense of erecting palatial bank buildings to supply a want already supplied by the Commonwealth, which, by means of its post-offices all over the continent, is able to provide full Savings Bank facilities.
– Does the honorable member suggest that the States should have gone out of the business?
– My concern is for the people, and my desire is that those who want to deposit their money with a Savings Bank shall have the best security and be able to get their money when they want it. The Commonwealth is providing these facilities, and is exercising its functions properly.
– Do not the Government of Victoria do the same through their Savings Bank?
– Yes. I have not one word to say against the Victorian State Savings Bank; but who has the right to deny the people this extra facility if they desire it? Whilst it is true that depositors with the Victorian Savings Bank have the security of the State behind them, I do not think that can be said of all the State Savings Banks.
– It is true of the Savings Banks of New South Wales and Queensland.
– But I do not think that the South _ Australian Savings Bank is backed by’ the State, credit.
– It is not.
– Then I think the honorable member for Wannon will agree with me that the fact that some of the States provide a State security for the savings of the people while others do not is a good argument in support of the Commonwealth entering into the business and providing a national security. There is another phase of State Saving Bank business concerning which there is some misapprehension. It has often been said that there has been an undue clashing of the Savings Banks of the Commonwealth with, those of the States. I have always maintained that if that be so the fault must be laid, not at the feet of the man who is usually blamed - the Treasurer of the Commonwealth - but at the feet of the State Treasurers, who rejected the offer he made. That offer, I understand, was that in respect of all new business credited to the Commonwealth Savings Bank the State should have the first claim on 75 per cent., and an equal share of the remaining 25 per cent.
– The first part of the honorable member’s statement is correct, but there was no definite promise regarding the remainder of 25 per cent.
– The honorable member agrees with me that the promise applied to at least 75 per cent, of the new business.
– Yes, excess of deposits over repayments.
– I do not wish to make a misleading statement, but I understand the offer was that the States should have the first claim on 75 per cent, of the new business and an equal share of the remaining 25 per cent.
– That is not so.
– I regret that the Treasurer is not present, because I should like the matter to be cleared up. But, even assuming that the offer applied only to 75 per cent, of the new business, it is quite evident that the Treasurer of the Commonwealth cannot be blamed for any clashing that is taking place.
– The condition was that the States were to go out of the business - to hand it over to the Commonwealth Bank.
– I fail to see why we cannot claim that the people would be better off if such an arrangement were made. Their position at all events would be no worse than it is to.day. I wish now to refer to the distinctstatement that has been made by the right honorable member for Swan, as well’ as other members of the Opposition, that there is no justification for a Commonwealth Savings Bank. A complete answerto that assertion is supplied by the increased business which the Commonwealth Savings Bank is doing from month to month. I have the complete returns for the year ending June, 1914, as published in bulletin No. 33 of Australian Statistics. I find that the increase in State Savings Bank deposits during that period was a little under 11 per cent., whereas the increase in Commonwealth Savings’ Bank deposits amounted to over 73 percent.
– The honorable member,, on reflection, will recognise that his comparison is unfair.
– I am making it on a percentage basis.
– Make the comparison in pounds, shillings, and pence.
– The* honorable member would surely not expect me to do that. The State SavingsBanks have been in existence for years,, and their business has been firmly established, so that it would be unfair to compare them in the way suggested with a comparatively new institution. The percentage basis is- the only fair comparison, and it affords a complete answer to those who say that there is no justification for the Savings Bank branch of the Commonwealth Bank. In conclusion, I wish to say that I do not plead guilty to the soft impeachment of the honorable member for Balaclava, who declared that we on this side of the House viewed the Commonwealth Bank at present constituted as the last word in national banking. I am not among the number who do. I welcome this amending Bill, because I see in it something that will increase the resources of the Commonwealth Bank and make it a more useful institution. But it does not, except to a very limited degree, meet my expectations of what the Bank is destined to be. To every promise that I made to my constituents when the Commonwealth Bank was launched I hold to-day, and I contend that nothing that has been done by the
Commonwealth Bank violates any pledge that I or my colleagues have made. I repeat now what I said on the hustings, that I look forward to the day when there willbe established in connexion with this Bank an Agricultural Department that will be able to give facilities to those who are doing the pioneering work of Australia, and who are really the backbone of the country. I look forward to the creation of such a Department to assist our people on the land. I also hope that the day will come when the note issue will be controlled by the Commonwealth Bank. That, I believe, is the wish of every honorable member on this side. I desire, further, to see branches of the Bank established throughout the length and breadth of Australia, so that the people may be afforded full opportunity to do business with it. Its business has grown, and will grow, as opportunities are given for extension throughout the country.
– There is a risk if we try to take it off its legs.
– I repeat the statement that this Bank is destined to do everything that we promised for it, and I believe that the day is not far distant when it will. It certainly has had a steadying influence in the present crisis. It has the national credit at its back. The Leader of the Opposition said, during the last election, “ The Commonwealth Bank has no resources. It has not been able to assist any one.” My answer to him is that it has behind it the national credit of Australia. I believe it will fulfil all the functions for which it was established, and I ask honorable members opposite, who say that it has not achieved all that we claim for it, to remember that it is but a comparatively new institution, that it has not yet had a chance to do all these things, but that it has beengoing along very well, and if it continues in the same direction, I think we may rest satisfied that within a very few years it will be exercising all the legitimate functions of a truly national bank.
– I desire to make a personal explanation. The honorable member for Indi, in the course of his speech, asserted that I stated yesterday that the Commonwealth Bank showed a loss of £36,000 on the year’s transactions. I made no such statement. What I said was that the aggregate loss of the Commonwealth Bank since its initiation was £36,000.I have before me the Hansard report of my speech, and shall quote from it the particular passage in question. It reads -
I can settle that argument at once, because the following are the exact figures -
I then quoted the figures -
Profit and Loss.
To amount from last account, £45,089 3s. 3d. ; reserve fund, - ; redemption fund, -; £45,089 3s. 3d.
By profits for half-year ended 30th June, 1914, £8,093 8s. 5d.; balance carried to next half-year, £36,995 14s. 10d.; £45,089 3s. 3d.
– The honorable member for Robertson complimented the honorable member for Darwin, and said he would indorse that honorable member’s view of a national bank. To that extent I agree with the honorable member for Robertson; and I think every honorable member will agree that, if any one is the parent of the Commonwealth Bank, it is the honorable member for Darwin, who laid his scheme so clearly before the Labour Conference as to secure its approval and acceptance as part of the party programme. Be that as it may, I regret that the honorable member for Wilmot, as an argument against the establishment of a branch of the Commonwealth Savings Bank in London, pointed out that it would enable the poor people of England to obtain a larger interest on their savings. That argument I regard as scarcely a fair one, because if the people at Home can, on their small savings, obtain a higher rate of interest from the Commonwealth Bank than from any other financial institution, they must not be blamed for taking advantage of the opportunity. If there is anything in the argument, one might well ask why the several States, in order to attract deposits to their Savings Banks, offer a higher rate of interest than does the Commonwealth Bank. However, this is too great a question to be regarded from a party point of view; and I do not desire, by any remarks of mine, to cause honorable members opposite to so regard it. At any rate, the public are reaping a benefit from the present position. Depositors in the State Savings Banks, who cannot obtain interest on more than £350, may, on accumulating that amount, put any further savings into the Commonwealth Savings Bank, and thus obtain a return on a total sum of, I think, £650. Without impugning the motives of the associated banks, I may say that there was a widespread feeling in Victoria that the State Savings Bank declined, until comparatively recently, to pay interest on a larger sum than £250, in order to compel people to use the private banks.
– Hear, hear ! That is so.
– At any rate, that was my opinion, and I have had no evidence that induces me to alter it. I should like leave to continue my remarks on a future occasion.
Leave granted; debate adjourned.
Bill returned from the Senate without amendment.
Mr. SPEAKER reported the receipt of messages from the Deputy of His Excellency the Governor-General transmitting Estimates of Revenue and Expenditure, and Estimates of Expenditure for Additions, New Works, Buildings, &c, for the year ending 30th June, 1915, and recommending appropriations accordingly.
Sitting suspended from 6.28 until 7.£5 p.m.
– This is the second Parliament since I made my last Financial Statement on the 1st of August, 1912. The result at the end of the financial year preceding that date was that the Commonwealth possessed an audited cash surplus of £2,261,673.
The Budget of the right honorable member for Swan intervened in the following year, 1913. Owing largely to the double dissolution of the Senate and the House of Representatives, the general elections, and tho outbreak of the greatest war known to history, the delivery of this
Statement has been unavoidably delayed to a very late period in the financial year.
At this eventful time in our history, a clear and simple statement of the financial affairs is due to the people of Australia.
The revenue for the financial year 1912- 13 was £21,907,084. The expenditure for that year was £21,525,452. The accumulated surplus at the 30th of June, 1913, was £2,643,305. -
The revenue for the financial year 1913- 14 was £21,740,423. The expenditure for that year was £23,161,327. The surplus was, therefore, reduced by £1,420,904.
I estimate that the total revenue for the current financial year 1914-15 (inclusive of the surplus balance of £1,222,401) will amount to £24,495,401.
The total estimated expenditure for the year is £37,583,715.
The estimated total deficit is £13,088,314.
Included in the gross expenditure of £37,583,715 is an amount of £11,742,050 which it is estimated it will be necessary to spend on the obligations of the Commonwealth of Australia as an integral part of the British Empire in connexion with the present war.
If this extraordinary expenditure be deducted from the gross expenditure, it leaves a net ordinary expenditure of £25,841,665. The estimated deficiency will then amount to £1,346,264.
It should be pointed out that this position could have been avoided had money which is being expended on new works and buildings out of revenue been charged to loan.
The total estimated expenditure under this head for the current year is– £4,303,870- an increase of £1,004,288- over the expenditure on new works and buildings during the year ended 30th Junelast.
The total estimated expenditure including £11,742,050, special expenditure on account of the war, is, as stated previously, £37,583,715.
The estimated revenue is £23,273,000. Adding the accumulated surplus of” £1,222,401, we have £24,495,401 available for expenditure, leaving a deficit of £13,088,314.
This deficiency will be made up by a. loan from the British Government to the- amount of £10,500,000, and by the issue of Treasury-bills in aid of revenue to the amount of £2,588,314.
The loan which the British Government will advance to the Commonwealth, to which I shall afterwards refer, amounts altogether to £18,000,000, but as it will be paid over at the rate of £1,500,000 per month, commencing on the 15th of December, we shall receive during the financial year only the amount which I have mentioned, viz., £10,500,000. It is proposed that the Treasury-bills in aid of revenue to the amount of £2,588,314 shall be purchased by the Australian Notes Fund.
With regard to the revenue, it is intended to raise £1,000,000 by imposing probate and succession duties. I feel sure that this form of tax will be accepted by the country as a fair and reasonable one to be imposed during the war.
It is intended to impose these duties on all deceased estates with net value exceeding £1,000.
On estates ranging from £1,000 to £2,000 the rate will be 1 per cent, on the excess over £1,000, and on each £1,000 of taxable value thereafter there will be an increase of l-5th per cent.; culminating in a rate of 15 per cent, on estates with a taxable value of £70,000 and upwards.
The rate at any point up to £70,000 may be ascertained by dividing the number of thousands of pounds in the estate value by 5 and adding 1. Thus the rate on an estate of £50,000 would be - 50
The estimated revenue from this source is £1,000,000.
It is proposed to secure additional revenue from land tax by increasing the rate of tax and widening its incidence - to include certain classes of Crown leaseholds now exempt from Commonwealth taxation. The graduated method will be retained, but the increase in rate for each succeeding £1 of value between £5,000 and £75.000 will be l-15,000ths of Id. instead of l-30,000ths of Id., as at present. The maximum rate on estates valued at more than £75.000 will be 9d. in the £1. On all taxable estates there will be an exemption of £5,000 unimproved value. The total estimated revenue from land tax will be £2,700,000.
Of the total estimated revenue, viz., £23,273,000, the principal items are-
The total estimated expenditure for the current year is £37,583,715. Deducting from this amount expenditure consequent upon the war, viz., £11,742,050, of which a statement appears on pages 64 and 65 of the Estimates, we have an amount of £25,841,665 as the ordinary expenditure for the year, as compared with £23,161,327, the expenditure of the preceding year, showing an increase of £2,6S0,33S. The principal items of increase are -
The principal items of decrease are -
When I returned to office in the. middle of September of this year, the financial position generally was critical, and there was much apprehension and fear in all circles in regard to it. At a Conference of all parties convened by my predecessor, the right honorable the Leader of the Opposition, subsequent to the breaking out of war, but prior to the general elections, a unanimous agreement was arrived at that the financial resources of the Australian note issue should be utilized to assist in financing the States, the banks, and the Commonwealth.
Finding the position unsatisfactory, I immediately invited Sir Alexander Peacock, as the available representative of the States, to meet me, and made him acquainted with the position, and made certain proposals, which I desired him to communicate to the Premiers of the States.
I also communicated with the representatives of the associated banks here, with the same object in view.
It was then obvious that the Commonwealth was not in a position to find the necessary money to finance the States, together with its own war and other expenditure, without resorting to the London money market. After negotiations, it was agreed between the Commonwealth and the States, that the Commonwealth should act for the States, and guarantee with them a loan of £20,000,000 to be raised in London.
It was soon discovered that the state of the money market was so unsatisfactory that, although terms were quoted, I could not recommend them as acceptable.
During further negotiations it became known that the British Government would lend the Commonwealth money to pay our war expenditure. It was the desire of this Government that we should not borrow for war expenditure during this financial year, but yielding to the pressure of the situation, and with a view to strengthening the financial position of Australia generally, I requested the British Government to include in their war loan £18,000,000 for the Commonwealth. and it cheerfully assented.
We have since been advised that that money has been raised for the Commonwealth, and that it will be available at the rate of £1,500,000 per month, commencing on the 15th instant.
Associated with that transaction was an agreement made with the associated banks whereby they should give to the Commonwealth £10,000,000 in gold for Australian notes. In undertaking this financial transaction, I impressed upon the banks’ representatives that, as Treasurer, I should require their assistance, and they, recognising the national emergency, cheerfully agreed to render the Government every possible aid in their power. It should be clearly understood that the £10,000,000 advanced by the banks will be redeemed at the close of the war.
These arrangements made it possible for the Commonwealth to make available to the States, at a low rate of interest, having regard to the state of the money market, a sum equal to the amount the Commonwealth itself had borrowed from the British Government.
The terms and conditions of the loans to the. States were embodied in an agreement, of which the following is a copy: -
Commonwealth of- Australia to raise moneys for its own purposes, hut such rate not to be less than four (4) per centum per annum.
It was with great reluctance that I gave up the cherished hope of financing our war forces on sea and land in the Pacific and in Europe during this financial year, from revenue, but that wish had to be sacrificed in order that we might be enabled to render needed financial help to the States.
The immediate effect of this transaction was that it relieved financial apprehensions in all circles in Australia, and provided means of giving employment to many of our own people that would not have been possible otherwise.
Attention will naturally be concentrated on the provision made for naval and military expenditure. The amount provided for special war expenditure, £11,742,050, is considerable, but the Government has recognised that a supreme effort by the Commonwealth i3 called for by the present war, and it is prepared to use its whole resources in men and money in order to give the greatest possible aid to the Mother Country in the hour of her need.
Defence: Naval. - As regards the Naval side of our defences, the following particulars may be found to be interesting:
Royal Australian Naval College. - Provision has been made to enter thirty cadet midshipmen on 31st December, 1914, which will bring the total number of cadet midshipmen at the Royal Australian Naval College up to eighty-seven.
The College buildings at Jervis Bay will shortly be ready for occupation, and the College will be removed from North Geelong to Jervis Bay in January.
Necessary provision has been made on the Estimates to meet the cost of transferring the College.
Provision is made for a full year for the crews of the following ships : -
H.M.A. Submarine AE 2.
H.M.A. Torpedo boats-.
Provision is also made for portion of the year for torpedo-boat destroyers Torrens, Swan, and Derwent.
In addition, the necessary sea-going personnel for H.M.A. Naval Establishments, Garden Island, and Naval Depot; Williamstown, are provided.
Provision is also made for officers and men temporarily appointed to the seagoing Forces for the period of the war.
The gunboat Komet, recently captured from the Germans, has been re-named Una, and placed in commission as one of H.M.A. ships.
In regard to Naval Reserves, provision has been made for boys who passed from the Senior Cadets to the Adult Force on 1st July, i.e., boys attaining the age of eighteen years in 1914, making a total number of Senior Cadets of 1,776 provided for.
The large increase in the vote is to provide for calling up the Reserves for duty during the war, also examining officers (pilots) and officers of the Unattached and Retired Lists.
In regard to signal stations and examination services, the increase is consequent upon the war necessitating the examination services being put into operation at eight defended ports in the Commonwealth.
The large increase under the vote for the maintenance of ships and vessels is principally due to the war necessitating the ships of the Fleet being constantly at sea, also expenditure in connexion with hire of Fleet Auxiliaries, i.e., colliers, supply ship, hospital ship, oil ship. &c.
Of the sum of £750,000 provided on Estimates for Fleet construction, £500,000 is to meet payment of balance of cost of ships of the Fleet Unit and
Fleet Auxiliaries, and £250,000 towards new construction of a light cruiser, as to the type of which the Admiralty is being consulted.
The Royal Australian Navy has played an important part in the war. The coasts of Australasia have been guarded from attack by the enemy’s cruisers; all the trade routes to Colombo, Singapore, the Pacific Islands, and America have been kept open, and not a single merchant vessel has been captured in our waters.
Ships of the Royal Australian Navy, together with Military Expeditions, have taken possession of all German possessions in the Pacific, and the Royal Australian Naval Reserves, reinforced by crews from the destroyers, successfully attacked the wireless station near Rabaul.
Our ships have assisted in the convoy of the Australian Expedition to Europe, and the first page of our sea history has been inscribed with the well-fought action of the Sydney and Emden.
Position in the Pacific. - Experience during this war supports evidence gathered in time of peace that modern efficient sea defence in the South Pacific is essential for the safety and general welfare of His Majesty’s Dominions. It is yet too early to give a definite expression of opinion on the subject, but there are indications that the greatest utility and service can be attained with central control and a large degree of local executive authority in these distant outposts. It is the hope of this Government that the day is not far distant when the sister Dominion of New Zealand, whilst maintaining its identity unimpaired, will be more closely associated with the Commonwealth of Australia in the creation and maintenance of effective defence in a common sphere of action.
One effect of the war will probably be to bring us new duties and obligations in the Pacific. We can hardly hope that our problems of government will be fewer or less difficult than they have hitherto been, but it is hoped that the Governments of the Dominions will give to each other, without loss of time, opportunity for a full and frank exchange of views upon these matters of the highest national importance.
Defence: Military. - As regards the Military Forces, the following information has been supplied by my colleague, the Minister of Defence, whose position has been, as honorable members will admit, an exceedingly onerous one: -
Aviation. - The value of aviation from a military point of view having been fully demonstrated in the present war, a sum of £14,430 has been provided for the Central Flying School at Point Cook, as compared with an expenditure of £3,071 during 1913-14. This will enable thirtysix officers to be trained in aviation per annum, instead of twelve, as originally proposed. It is also intended to undertake the construction of flying machines locally, and the necessary staff has been provided for that purpose. A sum of £7,700 has been included under Additions, New Works Estimates, to purchase the equipment and material required in this connexion, and also a sum of £19,885 to cover the cost of erection of additional buildings.
Royal Military College. - During the first six weeks of the present financial year there were 147 Cadets in residence at the Royal Military College, which is practically the full establishment. Of this number, fifty-seven have since received commissions in the Australian Imperial Expeditionary Forces, and thirteen have returned to New Zealand to join the Dominion troops for active service abroad, thereby reducing the number of Cadets in training to seventyseven. This number will be increased to 122 in February next, when a quota of forty-five Cadets will be admitted to the College, ten of whom, it is expected, will come from New Zealand.
Factories. - The various Government factories have been fully employed during the year, and a large quantity of military stores manufactured.
Cordite Factory. - The cordite factory has cost £147,940 to 30th June, 1914, of which £103,227 ia invested in land, buildings, and plant, and £19,195 is the value of stores of raw material, &c, on hand. The maintenance of the factory to 30th June, 1914, cost £77,460, and product to the value of £75,148 was turned out during the same period. Eighty-four persons were employed at the close of the financial year, and. wages paid during 1913-14 amounted to £11,636. The factory is now working at full capacity, and is able to meet all requirements of cordite for small arms ammunition.
The Small Arms Factory has had £359,873 expended upon it to 30th June, 1914, and, of this, land and buildings account for £64,384. Machinery and plant amount to £128,455, and stock on hand is valued at £46,462. The previous Labour Government approved of an extension of plant by one-third, and this machinery has since been installed, and is now being brought into operation. The total cost of working the factory to June of this year amounted to £120,572. The employes numbered 374 at the close of the financial year, and wages for 1913-14 were £45,000.
The factory has for some time past maintained a satisfactory output of service rifles and clips for small arms cartridges.
The total cost to 30th June last of the Clothing Factory was £37,900. The value of the land, buildings, and machinery on the same date was £23,654, while raw material on hand was valued at £62,290. £355,360 was expended in maintenance, and clothing to the value of £328,633 was manufactured. Wages for the year 1913-14 amounted to £34,369; and 439 persons, comprising 84 males and 355 females, were employed at the end of the year. The factory now carries out the manufacture of most of the clothing required by the Naval and Military Forces, as well as a large quantity for the Postal Department. The quality of the work is considered to be superior to any hitherto supplied, and the cost compares very favorably with prices paid to contractors. £46,805 has been expended on the Harness, Saddlery, and Accoutrements Factory to 30th June, 1914, and land, buildings, and plant are valued at £11,357, while raw material and stores to the value of £15,000 are on hand. The cost of operations amounts to £146,476, and goods to the value of £145,509 were manufactured. One hundred and sixty-eight persons were engaged on 30th June last, and, for the financial year 1913-14, wages to the amount of £22,626 were disbursed. The bulk of the harness, saddlery, leather equipment, and canvas work used by the Defence and Postmaster-General’s Departments is supplied from this source.
The erection of buildings for the Woollen Cloth Factory at Geelong is ap proaching completion, and the machinery and power-plant are now being installed.
The Woollen Factory has cost £91,517 up to 30th June, and an additional £100,750 has been provided on this year’s Works Estimates. £20,000 has been provided for the purchase of raw material, &c, in preparation for commencement of manufacture about July of next year.
Excluding the Woollen Cloth Factory, which has not yet commenced operations, the various factories have cost the public the sum of £592,518, and the land, buildings, and plant in use are valued at £331,077, and stores at £142,947. £699,868 has been expended in operating the factories, and product to the value of £613,790 has been manufactured. Wages to the amount of £113,631 were distributed during 1913-14, and there were 1,065 persons employed at the close of the year.
The estimated expenditure upon the’ Military Forces for 1914-15, exclusive of additions, new works, miscellaneous expenditure, &c, is £12,254,490, of which the sum of £10,607,500 is provided to meet expenditure due to the war. The balance, £1,646,990, represents an increase of £108,446 on the actual expenditure under the corresponding Votes of the previous financial year.
A sum of £228,950 has been provided under the head of Administrative and Instructional Staff, as compared with an actual expenditure of £178,337 during 1913-14.
This increase is partly accounted for by the fact that a number of instructors who were attached to and paid as members of the several permanent units in 1913-14, have now been provided for as members of the Instructional Staff. It has also been found necessary to provide for an increased number of instructors; and, in addition, the clerical staffs at district head-quarters have been strengthened. Under Contingencies, the raising of the allowance of Area Officers with three years’ satisfactory service, from £150 to £180 per annum, necessitates increased provision.
The amount provided for the Permanent Units for 1914-15 represents an increase of £10,703 upon the actual expenditure for the previous year. A considerable saving is being effected under the Royal
Australian Field Artillery owing to a great number of the men having enlisted for service abroad, and the consequent decision to maintain one permanent battery only instead of three until the men return. This saving is, however, more than counterbalanced by the fact that since the outbreak of the war recruiting has been commenced, and endeavours are being made to bring the other permanent units up to their full establishment, which, of course, means increased expenditure.
Increased provision to the extent of £7,417 has been made for the Ordnance Department, to provide much needed increases in staffs. A system of reorganization is now being put into operation in New South Wales, and will be extended to the other States as circumstances permit.
The amount provided for universal military training for the current financial year is £755,032 in excess of the actual expenditure during 1913-14. Of this sum £650,000 is the additional amount required to pay the Citizen Forces called out for home service, and is included in the total war expenditure. The balance is principally required to pay and clothe the 1896 quota of Senior Cadets who pass into the Citizen Forces during this year.
Of the sum of £271,600 provided for camps, &c, £160,500 represents the additional estimated expenditure in connexion with the mobilization camps for Citizen Forces called out for home defence, and forms part of the total expenditure due to the war.
The amount provided for ammunition this year is £88,000 less than the expenditure for 1913-14. This is due to the fact that certain further supplies will not be obtainable before the 30th June next, and that a proportion of the small arms ammunition available for purchase will be required for the Expeditionary Forces, and will, consequently, be paid for from that vote.
The sum of £9,800,000 included in the Estimates is intended to cover all expenditure in connexion with Expeditionary Forces raised for service abroad, up to 30th June next, and is based on the assumption that the present war will continue during the remainder of this financial year, and that, approximately, 42,000 troops will be despatched during this period.
The above amount is made up as follows : -
In all, 10,700 officers and men have been mobilized during the war - 22,373 officers and men have already been sent to the front, and 16,500 of all ranks are now in training for service abroad. There are also 6,800 in training for home defence.
It is expected that 13,000 will leave Australia during the current month, and that 3,000 in addition will be despatched every two months. All men offering for enlistment are being trained and equipped.
It has been suggested that we should send a number of men to England, with the view that they could be trained and equipped by the British Government, but we are rendering far more effective assistance by sending only drilled and equipped soldiers.
Postmaster-General’s Department. - Last year, for the first time in its own history, and, I believe, in the history of any Postal Department in the world, a complete balance-sheet was issued, showing the position of the PostmasterGeneral’s Department as a business concern as at 30th June, 1913. A similar balance-sheet for the year ended 30th June, 1914, is now in course of preparation, and is expected to be ready during the latter part of this month.
The position, as disclosed by the last balance-sheet, showed a loss for the year of £221,756 16s. 8d. on the telephone service, and a Committee has visited various States with the view of ascertaining the cause of the shortage. Their report is now in course of preparation. The telegraph service also showed a shortage. These deficiencies were only to he expected, in view of the extremely low rates prevailing here in both services as compared with other places where conditions are anything like similar.
The business of the Department con.tinues to expand, and no effort is being spared to make the service as efficient and up-to-date as possible. This involves, of course, considerable expenditure, particularly in regard to lines and equipment.
The wireless telegraph section of the Department shows a loss on working, but against this must be placed the valuable service already rendered to the mercantile marine in connexion with shipping casualties, and the invaluable assistance
The total amount appropriated by Parliament for Loan Funds is £5,770,002. The total expenditure to 30th June last was £4,003,067, leaving a balance of appropriation available of £1,766,935.
It will be necessary, in the future, that more of the expenditure for permanent public works shall be defrayed by means of loan. This is a proper policy as far as reproductive works are concerned.
– When we were last in office, we expended, on what might be regarded as reproductive works, some it has been able to render in the present crisis in many directions.
Proposals are under consideration which, it is hoped, will both increase the popularity of the service, as well as place it in a position to balance its revenue and its expenditure.
The extension of wireless telegraphy in the inland service of the Commonwealth is a matter to which it is hoped to give practical effect as soon as the present crisis has passed.
Loan Expenditure. - Returning again more closely to the subject of finance, it will be necessary, before the adjournment, to ask Parliament for additional appropriation for Loan Expenditure.
The following statement shows the Loan Expenditure 1913-14, and the estimated Loan Expenditure 1914-15: - “
millions of pounds that we could well spare out of revenue, and left a balance of some millions. Were the revenue today more than sufficient to meet actual normal expenditure, this Government would pursue the same policy. In time of war, we shall meet the situation as men ought to meet it. Here I may intervene with, a statement of. the position of the Governments of Australia in the matter of loan expenditure, because in some quarters there seems to be quite a misapprehension of the supposed burden resting upon the people because of the large expenditure of borrowed money in this country.
Loan Expenditure of States and Common wealth. - The loans raised by the States have been, I believe, on the whole, wisely expended; and the railway and other works constructed by means of them will prove, in the end, to be most profitable undertakings. It is interesting, in this connexion, to see that in the year 1912-13 the net earnings available for the payment of interest on State loans amounted to £8,517,029, whilst the total interest payable was only £10,789,246. The following table shows the purposes for which the loans were expended by the States and by the Commonwealth. The loan expenditure by the States, up to 30th June, 1913, was as follows: - ‘
The Commonwealth loan expenditure to 30th June, 1914, was as follows: -
The net amount earned during 1912-13 from works constructed out of State loans was as follows: -
Net revenue (i.e., earnings available for the payment of interest) : -
The interest on State public debts at 30th June, 1913, was £10,789,246.
The earnings are 20 per cent, or one-fifth less than the interest payable. If private companies were conducting these railways, that shortage of one-fifth would be wiped out in one year, and a profit of twofifths, for which the people would have to pay, added to it.
– The right honorable member is like Saul among the prophets.
– My prophecies have generally proved correct.
Australian Note Fund. - I come now to the Australian Note Fund, and other Trust Funds. On the 30th June last, Notes Funds amounting to £5,860,000 were invested in Government securities and fixed deposits in the Commonwealth Bank. The annual rate of interest then being earned was £210,285. On the same date, the general Trust Funds of the Commonwealth were invested to the extent of £1,055,672, and the annual rate of interest then being earned was £33,374.
Between 1st November, 1910, and 30th June, 1914, interest on investments of Australian Notes has amounted to £577,975. Against that, the expenses of the note issue amounted to £82,123. leaving a net addition to the Notes Fund of £495,852. It may be pointed out here that the interest earned by notes moneys is not credited to the general revenues, but accumulates at compound interest, so as to increase the assets of the Notes Fund.
Between 1st July, 1910, and 30th June, 1914, the General Trust Fund investments earned £173,936 in interest, which was credited to the general revenue. It will be seen that in the last four years, moneys controlled by the Treasurer have earned interest totalling £669,788, after deducting all expenses.
In 1914-15 the Notes Fund will purchase Treasury-bills from the Treasuries of the Commonwealth and the States, and the consequent large issue of notes will result in a total earning of interest by the Notes Fund in 1914-15 of about £420,000. Adding this amount to the accumulation of interest already referred to, viz., £495,852, there will be a total credit of £915,852. From this there must be deducted about £30,000 for ex- penses in 1914-15, leaving a net accumulation of interest at the credit of the Notes Fund amounting to £885,852.
The amount of interest likely to be earned by investments of the General Trust Funds in 1914-15 will be about £55,000.
The Sinking Funds established by the Commonwealth for the redemption of its public debt had at credit on 30th June last, the following amounts, viz. : -
Of this total, £74,500 was invested in Commonwealth Inscribed Stock.
The total note circulation on 30th ultimo was £16,S29,637, while the gold reserve amounted to £7,098,697, which is equal to 42.18 per cent, of the circulation.
Under the arrangement made by the previous Administration the following sums have been advanced in Australian* notes to the States: - Victoria, £243,000; Western Australia, £243,750; making a total of £486,750. The total amount of notes issued to these States was £649,000, but as they lodged gold amounting to onefourth, or £162,250, the net ‘amount of the advances was, as I have stated, £486,750. The interest payable is at the rate of 4 per cent. To banks, since the war began, we have issued notes totalling £362,000, but as they lodged gold coin amounting to one-third, or £121,000, the net advances are £241,000. The rate of interest is 4 per cent. It has been necessary also to advance notes to the Commonwealth Treasury to the extent of £3,695,000. The Notes Fund will be credited with interest at 4 per cent. As previously stated we are to advance £18,000,000 to the States, but the only advances made up to the present are one of £350,000 to the State of Victoria, and one of £100,000 to the State of South Australia. It is expected that the rate of interest will be slightly more than 4 per cent. I may inform honorable members that we have not yet obtained from the Chancellor of the Exchequer a statement enabling us to say what the actual cost of the Oversea
Loan is, but we expect soon to receive a statement on the subject. The general impression we gather from communications received from responsible authorities is that the cost will be only slightly over 4 per cent.
– That will govern the rate of interest charged the States for the other money advanced to them?
– Subject to the one condition that I have stated previously, namely, that if it costs the Commonwealth more to raise an equivalent amount the States, as agreed by them, shall bear the burden. The whole transaction was, of course, a mutual, co-operative one, and however our views may differ in party politics, I think we must all agree with this arrangement.
– It is cheap money.
– I can assure the honorable member that it is the best available.
Commonwealth Railways. - The construction of the line from Kalgoorlie to Port Augusta is being pushed on with, and out of the whole distance of 1,063 miles, 28H miles of rails have been laid. A large number of men are employed, and it is expected that in the coming year a large additional mileage will be laid.
In the Northern Territory a line is now being built from Pine Creek to Katherine River, 54 miles in length, and a considerable quantity of the necessary permanentway material is due to arrive at Port Darwin. Plate-laying will be put in hand shortly. This work is being pushed on with to enable cattle to be brought to the meat works, which are now under erection at Port Darwin, as well as to assist in the general development of the Territory, and the line will eventually become a portion of the North to South Transcontinental Railway, of which a further section of 65 miles is now under survey.
In Papua it is proposed to construct a line from Port Moresby to Astrolabe.
A trial survey has just been completed from Jervis Bay to Canberra, a distance of 150 miles, and a trial survey of 11 miles from Canberra to the boundary of the Federal Territory in the direction of Yass, where it meets with a similar survey, which has been carried out by the New South Wales Government, from Yass to that boundary.
In spite of the severe drought which has just occurred in South Australia, considerable traffic is developing along the eastern portion of the Kalgoorlie-Port Augusta Railway which has been constructed, and there is every reason to believe that, with better seasons, this traffic will largely expand.
Uniform Railway Gauge. - In connexion with the question of the uniform railway gauge, it has to be remembered that the geographical situation of Australia is such that the effective military defence of the continent is divided into several distinct spheres.
A concentration of the defence against an aggressive enemy into one such sphere might result in an unhindered occupation by that enemy of any of the others, unless means be” provided for swift and adequate transport of a decisive force of troops from one sphere to another.
The Government, therefore, considers that a pressing need exists for strategic railways and a uniform gauge linking up the various States of the Commonwealth.
Several propositions to attain that end have been placed before the Premiers of the various States in conference. The matter has also engaged the serious attention of the War Railway Council.
At a Conference attended by representatives1 of the Commonwealth, New South Wales, Victoria, and South Australia, which I convened in Melbourne on Monday last, the following decision was unanimously arrived at: -
After consideration of the reports of the War Railway Council and other important information furnished by the Commonwealth Ministers, the Conference was greatly impressed, and clearly recognised the necessity and urgency for greater facilities for transport on existing and other proposed railways for the effective defence of the Commonwealth, and that the matter would be further considered early in the new year.
Had I time I should like to dwell on this matter, because, in my opinion, there should be no more delay than is necessary for men with ordinarily reasonable minds, after they are made acquainted with the facts, to decide what they are to do.
– The right honorable gentleman will find before he is through that our method was the speediest.
– My method is to do what is necessary if nobody else will do it, and my friends behind me will see that it is done. The time for talking and delay has practically ended.
– We expect to know how it is to be done.
– In reply, I may say that when necessity arises, or danger is approaching, is the time to begin work, and not talk about it.
– What about the constitutional power.
– We shall risk that. I am in no doubt, so far as defence is concerned.
– That is all right, but there is something more than defence.
– The common sense of the people of Australia will settle that later on.
Federal Territories. - Under the previous Labour Administration, a design for the laying out of the Federal Capital City was adopted, and immediate steps were taken to project the design on the ground, with the object of proceeding systematically with the work. The late Government stopped the surveys, and re-opened the consideration of the first premiated design under the competition, which had been superseded by the approved design. The author of the premiated design was engaged by the late Government, and is still engaged on the preparation of an amended design, which is awaited, and which will receive consideration when submitted. Meanwhile the works connected with the water supply and main sewer, which are outside the city area, and cannot interfere with the City design, are being proceeded with. These are indispensable for the purposes of the large number of workers who will be engaged there later on.
In addition, the erection of brickworks, the installation of an electric power plant, and the construction of a storage reservoir for regulating the flow of the upper waters of the Queanbeyan River, is being carried out.
The invitation for competitive designs for Parliament House at Canberra has been withdrawn for the present, and the advisableness of encouraging Australian architects to compete under amended conditions is being considered.
A general land policy for the Territory is necessary, and will be dealt with as early as practicable.
Active operations for the improvement of the public estate in the Territory are being pushed forward; amongst other matters, afforestation is receiving special attention.
For the services of this year, the sum of £270,000 has been provided.
In the Northern Territory, I regret that I am unable to report that any substantial addition has as yet been made to the permanent white population. The construction of the railway from Pine Creek to the Katherine River is proceeding. When completed, it is expected to be of material assistance in the development of the pastoral and mining industries.
The installation of an up-to-date tin concentrating plant at the Marranboy field is approaching completion. All the reports received concerning this field indicate prospects of considerable richness and permanence. The development of several promising mining shows owned by private companies has been interfered with through difficulty of obtaining capital under present conditions.
The Government is proceeding with the work of boring for water on the main overland stock routes.
A number of the Northern Territory pastoral leases have recently changed hands, and there are indications of the introduction of considerable fresh capital to be expended in improvements.
An attempt is being made to introduce the dairying industry on the Daly River. A number of cows have been purchased and supplied to settlers in that locality, and a small plant is being erected.
Messrs. Vestey Brothers, the private firm which has undertaken to construct extensive meat works at Darwin, have made a start on buildings. It is understood that they propose to instal a temporary arrangement for killing and refrigerating, so that the export of frozen meat may be begun early in the coming year. The permanent buildings, which will cost upwards of £100,000, will probably take at least twelve months to complete.
– That is the minimum; I understand the cost will be £200,000.
– I have to rely on information, and I am told that the cost will be upwards of £100,000. Those who know most about Government. Estimates understand that when the word “ upwards ‘ ‘ is used, there is usually a substantial addition.
In Papua, the work of development of the plantations is proceeding, though not so fast as could be wished, owing to difficulties created by the war in regard to capital.
Work has not yet been commenced on the proposed railway from Astrolabe to Port Moresby, partly on account of the necessity for obtaining further reports from engineers, and partly on account of the uncertainty created by present financial conditions as to the development of the mining properties on which the proposed railway would depend for the greater portion of its’ traffic.
The process of extending the influence of the Government in outlying regions is proceeding slowly, but, on the whole, satisfactorily.
A valuable report on the oil-fields has been- presented by Dr. Wade, the expert who was brought from England to advise regarding the prospects of petroleum in the Territory. It is encouraging in its nature, and the Government has decided to proceed with the systematic development of the field. Dr. Wade has accepted the position of general manager, and will take up his duties early next year, when he has completed certain investigations now being undertaken by him in his private capacity for the State of South Australia.
Murray Waters. - As to the Murray waters, the agreement arrived at, which will be carried out by the Commonwealth, is that a representative of the Commonwealth shall be chairman of the Commission, and that the Commonwealth shall give statutory effect to the agreement as soon as the States have passed their Acts in accordance with the agreement.
Transport of Products. - While there has been no shortage of markets for our products occasioned by the war, it has been demonstrated that there is a shortage of transport space owing to the use, for other purposes, of a proportion of the shipping which ordinarily trades with Australia.
So far as the vessels are concerned that have been utilized bv the Defence Department, the Government has arranged that all available refrigerated space has been made use of for the purpose of carrying our products overseas.
Bounties Encouragement. - It is proposed by the Government to bring in a Bill to continue the iron bounty for a longer period. It is hoped the time is not distant when the power to nationalize the iron industry will be given to the Commonwealth.
Land Settlement. - The root of most of our troubles is the limit which has been placed upon land settlement in this great continent. It is hoped and believed that the measures we propose to pass will not only increase the production of our manufacture, but will also greatly aid and add to the primary products from our lands.
Encouraging Industries. - The safety and welfare of this country very largely depend upon these primary products.
This great war has brought it home to us more than ever that our secondary industries are hardly less nececsary if we are to maintain our independence and prosperitv and govern ourselves in our own way.
Tariff. - The Government has taken the earliest opportunity of introducing an amendment of the Tariff in accordance with the policy of the party placed before the people at the last elections.
It is regretted that the result of the investigations by the Inter-State Commission was not available for the assistance of the Minister.
The action of the Commonwealth in introducing the Tariff amendment is not singular, as the Governments of Great Britain and Canada have, since the outbreak of war, taken action in that direction.
– For revenue purposes ?
– Does the honorable member desire us to take action only for revenue purposes?
– No; I think you are in a different position.
– Then we agree.
– Except that the position is not similar.
– If the honorable member for Balaclava will kindly look up the Canadian schedule his mind will be refreshed on the point of the Protective incidence.
Prospects of the Season. - Next to the war, the most important consideration for the people of Australia at the present time is that of the season. The Commonwealth Meteorologist takes a very hopeful view of the weather prospects. Honorable members seem amused; but when I require information I ask the men whom we pay as experts to give it. Unhappily, a large number of people who live in Australia have a very unfortunate way of exaggerating every trouble and difficulty that comes on the country; and a small drought is often magnified into a national calamity.
– This is not a small drought, I can tellyou !
– Does the Prime Minister call this a small drought? Australia never saw the like before !
– There is an assertion ! And this is the sort of thing that is cabled to other countries!
– Other countries know the fact.
– I believe it is true.
– It is good spicy news to send oversea, and people who never read a word about our prosperity see the messages, and believe them. On this point I can speak from myown experience. I came to this country in consequence of reading the official reports of Governments, and not in consequence of what I saw published in the press. Had I had to rely on what I read in the press of Australia, I should never have thought of coming here. As a matter of fact, so far from the present being the greatest drought we have ever had, it is not to be compared with that of 1901-2-3. I am not minimizing present conditions.
– The drought is very much worse in the West than ever before.
– There are exceedingly bad patches, and we are all sorry for it.
– Bad patches I There are no good patches !
– The honorable member is destroying the whole effect of any statement I may make. There is more land in Queensland than in New South Wales, Victoria, and the settled part of South Australia put together.
– Surely the right honorable gentleman will acknowledge that the best of countries will have a bad season occasionally ?
– I ask honorable members to cease these interjections. The Budget is a most important statement at all times, and every member of the House, as well as the outside public, has a right to hear it in silence.
– I thank you, Mr. Chairman, but I was very glad to get that exchange of views. I desire to have the matter cleared up, because I have lived in more than one continent in my time. To continue my remarks from the point at which they were interrupted, the Commonwealth Meteorologist points out that past records show that periods of extreme dryness were not very prolonged, but soon gave place to increased rain activity - also that the frequent development lately of tropical depressions, each of which has been associated with rain, is a hopeful sign for the summer season. November records in Western Australia exceeded the average considerably; over all South Australia, south from Lake Eyre, there was an excess, also over most of the western half of Victoria. New South Wales had rain everywhere in excess of the average, except on the northwestern slopes and plains, the south tablelands, and in the Riverina. Useful amounts fell on the Queensland Downs, also in Tasmania.
I have also received from the Premiers of the various States, to whom I telegraphed, their valued opinions as to the prospects of the States during the next twelve months. The Premier of New South Wales informs me that the general situation in that State is satisfactory; that there is no unusual unemployment or distress; that agriculture, with the exception of wheat-growing, is in a flourishing state; that a large increase in the area under crop for wheat is expected next year; that shipping difficulties, especially in connexion with the coal trade, are being reduced; that employment in the manufacturing industries has been considerably reduced owing to the war, but that the numbers of men displaced are not greatly in excess of the number absorbed for the Expeditionary Forces and by the Government’s developmental activities; and that by steadily continuing public works the Government has utilized the services of nearly 5,000 additional men.
The Premier of Victoria reports that the State has been seriously handicapped by the drought, but that, owing to the establishment of large storages, the extension of the channel systems, the installation of pumping stations, and the provision of artesian water, the effect of the drought has been much mitigated; that to meet, as far as possible, the curtailment of employment arising from the war the State is pushing on as rapidly as possible with works and buildings.
The Premier of Queensland reports that, with the exception of tin mining, the condition respecting principal industries is normal; the prospects of dairying and farming generally are good ; that, with the exception of the wool, which brings greatly reduced prices, Queensland is not seriously affected by the war.
The Premier of South Australia reports that his State is suffering severely from drought, and, indirectly, from the war. Seed fertilizers and, where necessary, fodder and flour are being supplied by the Government to farmers, as it is expected that there will be a large harvest next year. Nobody objects to hear that, I am sure.
The Premier of Western Australia also reports that conditions are affected by the drought and the war; that efforts are being made to crop as large an area as possible, and that a large yield is anticipated next year; that gold-mining is in a healthy state; that, apart from slackness in coal, copper, and lead production, conditions are fairly normal.
The Premier of Tasmania reports that a considerable shortage in wheat and in meat is probable, owing” to drought, but that thu loan from Commonwealth will enable the State to tide over its difficulties, and hopes that, with good seasons, the State will soon recuperate after the war.
In conclusion I desire to add that we have reason to feel proud of the position we occupy as a Dominion protected by the
Mother Country and by the organization of the Empire from disaster such as might have befallen any small nation during a Titanic war like that in progress throughout the world at the present time. Geographically, we are as far removed from the centre of the war as we possibly could be, but in these days we do not escape the effects of the war from either an economical or a physical point of view by remoteness from the centre of disturbance.
I am sure that I express the opinion of every honorable member of the House when I say that we hope this war may be soon brought to a successful end, an end that will assure that every nation, whether it be large or small, desiring to live in its own way and develop its own resources in peace for the happiness and welfare of its people, will be allowed to do so without aggression from a larger and more powerful country. I repeat again, and I feel that I speak for all parties, that whatever sacrifice it is necessary for us to make in association with the Mother Country and our Allies, to whom we are greatly indebted - our Allies both in the East and in theWest, because we are with them as we are with the Mother Country in this world mission - the people of Australia, even if they have little difficulties and troubles, will recognise that not in the history of the universe, so far at it is known to us, has ever such a world’s crisis happened. We ought to be pleased with what we have already been able to do, and with the work that has been done so efficiently by those who represent us on land and on sea. We shall continue to send help in men and money to the Empire to the extent of our whole resources.
I now move -
That on and after the third day of December, One thousand nine hundred and fourteen, at Four o’clock in the afternoon, Victorian time, duties of Customs be collected as hereinunder set out in pursuance of the following Tariff : -
Cite as: Australia, House of Representatives, Debates, 3 December 1914, viewed 22 October 2017, <http://historichansard.net/hofreps/1914/19141203_reps_6_75/>.