9th Parliament · 2nd Session
Mr. Speaker (Rt. Hon. W. A. Watt) took the chair at 3 p.m., and read prayers.
– I ask the Prime Minister are the Anglo-Soviet Treaties recently signed by the Prime
Minister of Great Britain binding on the dominions as part of the British Empire? Were the heads of the various dominion governments consulted regarding the treaties before they were signed by the British Government? Was there any definite understanding arrived at during the recent Imperial Conference with regard to the dominions having a voice in British foreign policy?
– As already announced in the press, two agreements were signed on. the 7th August by representatives of the British Government and the Soviet Union. Of these two agreements, one is of the nature of a commercial treaty, providing in general for most-favoured nation treatment in practically all matters of commerce. The other is a general agreement, dealing with matters pending between the two Governments, or their respective nationals, in regard to the validity of pre-war treaties, debts, compensation for damage to persons, and/or property, and other matters. In regard to these matters, no settlement has been arrived at, but provision has been made for negotiations between the parties interested. It must be noted that the agreements are concluded, not in the name of His Majesty the King, but on behalf of Great Britain and northern Ireland. In the case of the commercial treaty, provision is made for the accession of any dominion which so desires. The general agreement is, as I have said, of a conditionalcharacter, providing for subsequent agreements. A pledge has been given by the British’ Government to submit the two agreements to the judgment and amendment of the British Parliament. The dominion governments are not included in the scope of the agreements, and are therefore not committed.
Survey of Channel
– I wish to ask the Minister for Defence a question without notice. I may be permitted a little explanation before asking it. A little less than two weeks’ ago. I handed a telegram to the Minister asking that the Geranium, now making a survey of the Great Barrier Reef, should survey a channel said to exist directly opposite Townsville, in order that vessels coming from the East might come to Townsville direct without having to go nearly as far north as Thursday Island in order to get inside the Reef. I subsequently handed to the Minister a letter from the Townsville Chamber of Commerce, confirming the telegram to which I have referred, and mentioning the fact that a launch owned by a man who knows the channel said to be opposite Townsville, who is willing to pilot the surveying ship, was available. Authority was asked for the survey of this channel, and I ask now whether the Minister has given any attention to the matter?
– The matter has been referred to the commander of the Geranium, which is at present at Townsville. I believe it would be expedited if the honorable member’s Townsville correspondents would get “into direct communication with the commander of the Geranium and see what arrangements can be made.
Wah Service Disabilities
– I ask the Prime Minister whether the special commission of doctors recently appointed to investigate cases of disabilities duo to wax service has commenced its investigations! Does it intend visiting each of the states, and, if so, when is it likely to visit Tasmania]
– The commission has not yet met, but arrangements have been made for it to meet on the 8th September. As the honorable member is, no doubt, aware, the members of the commission were selected from all the states of the Commonwealth, and there has been some difficulty in arranging a date for its first meeting. The places it will visit, and the evidence it will take, will rest with the commission. It will, no doubt, go wherever necessary, and call whatever evidence it requires.
– As the Governments of Victoria and South’ Australia have not agreed to the proposal of the Commonwealth Government for the payment of a bounty to growers of Doradilla grapes, and as this is a Commonwealth obligation, has the Prime Minister any further statement to make with regard to the matter which may give some comfort to the growers of these grapes?
– I am much surprised to hear a member of the Federal Parliament say that this is a Commonwealth obligation. It is most distinctly a state obligation, and’ one with which we should not be concerned. Answers have been received from the Governments of Victoria and South Australia. They have not seen their way to agree to our proposal that they should bear half the expense. The matter has been further considered by the Cabinet, and I hope to be able to make, either to-day or to-morrow, an announcement as to the action we now propose to take.
– I ask the Minister representing the PostmasterGeneral, is it a fact, as stated in some of the daily papers .yesterday, that the Postmaster-General has stated in Great Britain that owing to the disposition of a number of nations represented at the Postal Conference in favour of universal penny postage, Australia may consider the advisability of withdrawing from the Postal Union.?
– I shall bring the honorable member’s question under the notice of the department at once, and give him an answer.
– I ask the Minister for Trade and Customs, in view of the fact that his predecessor promised in this House that a Board of Trade would be appointed in Western Australia, whether anything has been done in the direction of appointing such a board?
– The matter is still being seriously considered.
– Some months ago the Treasurer announced that an actuarial investigation was being made by some officers with a view to the amendment qf the Superannuation Act, The honorable gentleman told me last week that the introduction of the amending bill is awaiting the result of the investigation. I ask him what is the reason for the delay in supplying the information, and will he expedite the matter?
– The utmost expedition is being ensured in regard to this matter, which is very technical and difficult, As many actuaries as possible are already engaged in the work.
– According to press announcements, the relief expedition which was dispatched to succour the Douglas Mawson victims has taken more than a week to reach Point Charles, which is only 18 miles from Darwin. In view of the slow progress that has been made, I ask whether the Government is now prepared to accept a suggestion that I made some days ago that a relief party should be sent from the Katherine through to Boorooloola. The route that would be traversed is used every three weeks by the mailman.
– The relief expedition has made a little more headway than the honorable member suggests; but, apparently, its progress has been very slow. I shall immediately bring the honorable member’s question under the notice of the Minister for Home and Territories.
– The honorable member for Henty (Mr. F. Francis), last night, in Ballarat, charged the Labour party with disloyalty. I desire to ask him, through you, Mr. Speaker, whether it is a fact that he showed his loyalty during the recent war by remaining at home, and making a large fortune for himself 1
– The honorable member must be aware that his question is scarcely in order in that form.
– Is tho Minister representing the Minister for Home and Territories able to give the House definite information of the date on which he expects the Federal Parliament to assemble at Canberra? i
– I am afraid that I cannot do so.
Dismissal of Employees
– The Prime Minister promised me last week that he would investigate a complaint that a number of employees were likely to be dismissed from Garden Island and Cockatoo Dockyard. Is he yet able to give me any information on the matter?
– Immediately after the honorable member asked his question I requested that a departmental report on the matter should be furnished to me. I hope to be able to make a statement on the matter in the next day or two.
-On the 8th August, the honorable member for Richmond asked the following question, upon notice -
I told him that the information was being obtained. I am now able to furnish the honorable member with the following information : -
Employees in Electrical Engineer’s Department, South Australia.
– On the 8th August, the honorable member for Adelaide (Mr. Yates) asked the following questions : -
I promised that the information should be obtained. The following are the replies : - 1. (a) Permanent, 344; (b) temporary, 1,120. 2. (a) Permanent, 100; (b) temporary,60.
– On Wednesday last, the honorable member for Macquarie (Mr. Manning) asked that a report be obtained as to the alleged mortality of travelling stock in the Northern Territory, said to have been due to lack of water, aggravated by the non-installation at one well of machinery required, and ordered twelve months ago, and also the failure to have a fresh bore sunk in another locality. It is understood that the well mentioned is the one at Blood’s Creek, in South Australia, for the maintenance of which the Commonwealth Government is not responsible. The second matter is believed to relate to the bore at Charlotte Waters, the position in regard to which is as follows : -
During the year 1922, a new pump was installed at the old bore at Charlotte Waters, and other repairs to the bore were effected; but it subsequently transpired that, notwithstanding these repairs, a satisfactory service was not being maintained. Serious doubt having arisen as to the possibility of placing the old bore in a proper state of repair, and the question having been raised as to whether it would not be better to abandon that bore and sink a new one, the Works and Railways Department, in March, 1023, arranged with the South Australian Public Works Department to send a bore inspector to Charlotte Waters to thoroughly test and examine the bore, and to report as to what action should be taken to ensure the provision of an adequate supply of fresh water. The inspector reported that the casing had corroded to such an extent that, in his opinion, it was impossible to effect satisfactory repairs, and he recommended that a new bore be sunk. Pursuant to this report, which reached the Minister for Home and Territories on the 16th July, 1923, the proposal to sink a new bore, at an estimated cost of £4,550, was duly approved, and special provision made on the 1923-24 Works Estimates to meet the expenditure involved. The Esti mates having been adopted by Parliament, the Minister for Works and Railways, on the 19th September, 1923, authorized the work tobe put in hand forthwith. Tenders were called for by the Works Director, Adelaide, and about 20th November, 1923, the tender of Messrs. Johnstone Bros., for sinking a bore to a depth of 1,000 feet, was accepted by the Works and Railways Department. The wet season had meanwhile set in, and it was not practicable for work to be commenced immediately. Considerable progress has now been made with the sinking of the new bore, and it is expected that the work will very shortly be completed.
No official advice has been received respecting the alleged mortality of travelling stock referred to by Mr. Stefansson, but inquiries have been instituted in regard thereto. The honorable member asked, further, that the report made by Mr. Keith Ward last year on the question of water supplies be laid on the Library table. I have arranged for this to be done to-day.
The following papers were presented : -
Royal Australian Naval College, Jervis Bay, and Royal Military College, Duntroon. - Report by Professor Sir T. W. Edgeworth David, Major-General Sir C. B. B. White and Captain G. F. Hyde.
Ordered to be printed.
Advances to Settlers Act - Regulations Amended- Statutory Rules 1924, No. 114.
Customs Tariff (Industries Preservation) Act - Regulations - Statutory Rules 1924, No.99.
Invalid and Old-age Pensions Act - Statement for 1923-24.
In committee (Consideration of Senate’s amendments resumed from 8th August, vide page 3021) :
Clause 7 - “12b. - (1.) In each principal city of the Commonwealth specified by the GovernorGeneral, by notice published in the Gazette, there shall be a Local Board of Advice. “ (2.) A Local Board shall be appointed by the Governor-General, and shall consist of three members, at least one of whom shall, if practicable, be a Director. “ (3.) The members of a Local Board shall, (subject to this Act, hold office for two years and be eligible for re-appointment. “(4.’) Each Local. Board shall have power to examine the affairs of the Bank in the District specified in respect of it by the GovernorGeneral, by notice published in the Gazette. “ (5.) Each Local Board shall submit to the Board of Directors, at least once a month, a report in writing concerning the affairs of the Bank inthe District in which it exercises its powers. “13. - (1.) The Governor and the Deputy Governor shall beentitled to remuneration by way of salary at such rates as are fixed by the Governor-General. “ (2.) Each Director, other than the Governor, shall be entitled to remuneration by way of salary at the rate of Six hundred pounds per annum, or, if he is Chairman of Directors, One thousand pounds per annum, and each’ member of a Local Board shall be entitled to remuneration by way of salary at the rate of Two hundred pounds per annum.
Provided that a decision of the Board which affects the Note Issue Department of the Bank shall not be effective unless the Directors voting for it include two of the following Directors, namely, the Governor, the Director who is the Secretary to the Treasury, and the Directorsappointed in pursuance of paragraph (d) of sub-section (2) of section eleven of this Act.
Senate’s Amendment. - After section 12a insert the following new section: - “ 12aa.- (1.) There shall be a Board of Advice in London hereinafter called the London Board. “ (‘2.) The London Board shall consist of three members to be appointed by the GovernorGeneral upon the recommendation of the Board of Directors. “ (3.) The members of the London Board shall subject to this Act hold office for four years and be eligible for re-appointment. “ (4.) The duties and powers of the London Board shall be such as may be delegatedto it from time to time by the Board of the Bank.”
Motion (by Dr. Earle Page) proposed -
That the amendment be agreed to.
– This is an entirely new provision, which merits the close consideration of the committee. It is proposed that a board of advice shall be established in London, but no information whatever is given as to how it shall be constituted. The amendment inserted by the Senate will have a far-reaching effect. We are asked to appoint three officers to a board to control the London branch of the Commonwealth Bank. These persons will have large powers, and the committee is entitled to know for what reason they are to be appointed and what qualifications they must possess. It is also proposed that Australian credits in London shall be covered by a note issue here. The London Board will no doubt conduct that business, and have power to recommend the amount to be placed to the credit of banks or individuals in Australia. Trading banks and large firms here doing business with England will be able to obtain notes in Australia against security. We have not even been told what the security is to be.. If the amendment is of vital importance why was it not inserted by the Government when the bill was previously before the committee ? This is a money bill for which this committee is responsible. The London branch of the Commonwealth Bank is at present conducted by a manager and an assistant manager. Both these gentlemen prior to their appointment in London had a long experience in banking and financial transactions in Australia, and some reason should be given why the present arrangement in London should be superseded. Notes are to be issued to cover credits in London. The Treasurer should indicate how it is proposed to finance this year’s wool clip, which promises to exceed in worth that of last year - it may be £45,000,000 or £50,000,000 if the present high prices are maintained. But the high cost of shearing, freight and other charges may absorb almost two-thirds of the worth of the clip. This is the most dangerous amendment inserted in the bill. Since the war began, I have endeavoured to impress upon the Government the need for conducting the whole of Australia’s foreign loan business through the London branch of the Commonwealth Bank. Public utilities, public boards, State Governments, and the Federal Government would benefit if the Commonwealth Bank were used for raising their loans in London. The conversion of loans should certainly be arranged through its agency, and not through that of firms such as Sir Robert Nivison and Son. Years ago people used to abuse Rothschild’s system of finance, but even its disabilities could not compare with those suffered under the system now adopted by this Government.
– I point out to the honorable member that a discussion of Rothschild has no connexion with this debate.
– If this board is appointed in London and notes issued here against our credits there, the business of the bank will be greatly increased. We are touching only the fringe of finance, and as Australia’s production grows the greater will be our need for a satisfactory system of financing exports. I have read the speeches delivered upon this amendment in another place, and have not been very much enlightened. I do not know of any other British dominion which has adopted the practice proposed in the amendment, which appears to me to be a dangerous innovation. No argument has been advanced in support of it. Men who have been to London seem to think that the Commonwealth Bank does not get as much assistance from the Government as it should. That may be due to the influence of stockbrokers and other financiers. Those cute gentlemen entertain visiting Ministers at dinners and parties, adopting the boa constrictor method of slobbering over the victim before swallowing it. I do not think the Treasurer knows anything about the amendment. If he understands it, and believes in it, why was it not included in the original bill? I hope my protest against this proposal will incite other honorable members to pay some attention to these amendments. At any rate, I have done my duty by trying to mould the bill in the interests of the Australian people. The basis of the prosperity of any country is sound finance. To-day the whole world is suffering from a faulty system of finance, and I hope Australia will lead in the adoption of new and better methods.
.- In the interests of the Commonwealth and the bank it is desirable that any persons appointed to the board of advice in London should have some knowledge of Australian conditions. It is possible that persons may be appointed who have never been to Australia, but who, as members of the board of advice, will have opportunities of advancing personal interests.
– Why have any board in London?
– I am entirely opposed to the creation of a board of advice in London ; the Australian directorate should be capable of the general control and management of the bank: But as the Government appears to be determined to establish a London board of advice, I desire that it shall be so constituted that Australian interests will, at least, be recognized in such appointments. It would be very dangerous to appoint men unfamiliar with conditions in Australia to sit as members of a board in a city like London, where there are powerful financial interests to combat. Does the Government intend to restrict the selection of members of the board? Will it insist upon them being Australians, and having Australian interests? Will it make certain that they know something of Australian conditions? Perhaps it would be advisable, before I comment fur- - ther on these points, to give the Treasurer an opportunity to enlighten the committee.
.- The amendment, and others that will follow it, call for some explanation. The bill, as it left the House of Representatives, provided for local boards in different cities, and fixed the salary of the members of those boards at £200 per annum. The Senate’s amendments make provision for a board in London, and substitute the words “London board” for “local board.” There is no reference to the salaries of members of the board who are to receive such amount “as is fixed by the Governor-General on the recommendation of the board of directors.” The committee is asked to agree to the . appointment of a board before it knows the salaries to be paid. I want to know how much the members of the board will receive. For all I know, the amount may be £1,000 or £10,000 a year. The committee should not allow the bill to go through until it has been informed how much will be paid to the members of the board. If a board is appointed, the members of it should be Australians, who are thoroughly conversant with not only commercial and business interests, but also rural interests in this country. They should be appointed here, and sent to London, and after their three years’ engagement has expired, they should not be allowed to lose touch with financial, economic, industrial, and rural conditions in Australia. The type of men needed for the job cannot be obtained unless we pay big salaries. The Government must, if we agree to the amendment, appoint retired, wealthy Australians resident in London, or mediocre men who are not Australians, and can be manipulated by rival financial interests. Members of this committee are aware of the financial sharks that flourish in London; they are not necessarily Britishers, but are often international Jew financiers. It would be folly to expect nien receiving £200 or £300 a year to fight the international thieving Shylocks of London. I cannot understand the Senate, or any honorable member, endorsing such a proposal. If the members of the board are Australians, conversant with Australian conditions, and possessing financial ability, the Government will have to pay them £5,000 . or £6,000 a year ea.ch, making a total of £18,000 to £20,000 for the three of them. Unless the Government is prepared to spend that amount, the board will be worse than useless. Men paid only £200 or £300 a year will be the helpless playthings of the international financial groups that have their centres in London. I am opposed to the appointment of the board in any case, and particularly before the committee knows what salaries are to be offered to its members.
– I listened with a good deal of disappointment to the honorable member for East Sydney (Mr. “West). I knew that he and I differed on some features of the bill, notably as to whether the board of directors should consist of men appointed from outside or inside the bank, but I thought that we were agreed on the main principles of the bill. I was disappointed to find, not only that the amendment meets with his disapproval, but that the whole substance of the bill - its warp and woof - is not acceptable to him. The suggestion has been made that no legislation has ever been improved after leaving the House in which it originated. But the two Houses of Parliament meet to shed their wisdom on the various legislative proposals brought forward, and occasionally those proposals are improved in the second House. The Government thinks the bill has been improved by the addition of the provision for the appointment of a London board. The honorable member has said that there is no precedent for the Senate’s amendment, and that there are numerous banks in Australia that have not appointed London boards. Many of the principal banks in Australia have London boards. The Commercial Banking Company of Sydney, the bulk of whose shares are held in Australia, is essentially an Australian bank, but it has a London directorate con sisting of Mr. H. S, H. Guiness, chairman; Hon. H. S. Littleton, and Mr. L. W. G. Butler. Another Australian bank with a London board is the Australian Bank of Commerce. The National Bank of Australasia, although an Australian-owned bank, finds it ad,visable, in the transaction of its business, to have a London board. The Bank of New Zealand is a very similar institution to the Commonwealth Bank; it acts as a national bank for the Dominion of New Zealand, and is more or less a central bank for the New Zealand banking system. It has strengthened its position, and has taken steps to keep itself au fait with conditions in London, by appointing a London board of directors. The capital of the Bank of New Zealand was subscribed, partly by the Government of New Zealand and partly by private individuals. The arrangement is believed to secure the national interest and the private interests of the shareholders, and to be of general financial assistance to the Dominion. That bank has a London board. We consider the precedent a good one. We were impressed very much by the speech made by the honorable member for Boothby (Mr. Duncan-Hughes) when he raised the question, and if the bank is to function as we hope it will, and as the honorable member for East Sydney desires, as a national bank doing a great deal of work outside of Australia, it must be of considerable advantage to have the assistance of men in intimate touch with the financial life of London. An honorable member asked who are the Government nominees, and I refer him to the wording of the proposed new section. It provides that-
The London board shall consist of three members to be appointed by the GovernorGeneral, upon the recommendation of the board of directors.
The board of directors has yet to be appointed, and until a recommendation is received from it we cannot say who will be the members of the London board. I suggest to honorable members that the London board will be constituted of Australians resident in London - men with Australian interests. It is unthinkable that those who will be charged with the control of the bank in the public interest would do otherwise than recommend the appointment of persons having a knowledge of Australian conditions as well as of the conditions in England and in other countries. Honorable members can be quite satisfied that the board of directors of the bank will not deal with this matter in the manner suggested by the honorable member for Hindmarsh. The emoluments to be paid to the members of the London board are dealt with in a subsequent amendment, to which I shall not now refer, as it is not germane to the issue now before the committee.
.- The argument of the Treasurer is a very excellent one, and almost convinces me. My only difficulty is to understand why the reason he has advanced for the Senate’s amendment did not appeal to him before the bill was introduced. The bill was on the stocks for about two years, and yet during that time this valuable suggestion, and the excellent arguments in support of it, do not appear to have occurred to the Treasurer in any shape or form. However, the representatives of the local banks appear to have awakened to .the fact that it is necessary to have a London board for the Commonwealth Bank, and they impressed this view upon their agents in another place. The matter having been forced upon the Treasurer, the honorable gentleman accepts the argument in support of the position which he has been forced to take up. I find from the Bankers’ Record that a number of the private Australian banks have each an office in London, and to their directorates certain guinea pigs are appointed, who receive £200 a year or more out of the revenues of the banks. The position gives a man some standing in London. A man goes from Australia to England, and does not know what to do with himself. He calls upon the directors of a bank in London, and says, “Can you find me something to .do?” They say, “ Certainly ; we shall make you a director, and you can draw £500 a year from the revenue of the bank.” The Bankers’ Record gives a list of many gentlemen who are drawing these guineapig pensions. Pencil marks show that others have looked up the matter before me. The Treasurer might have argued in support of the proposal that quite a number of banks having hundreds of branches throughout Australia, have each an office in’ London, and this furnishes them with an -opportunity to appoint gentlemen to sinecures. He might have argued with equal force on the other side that English banks, such as the Union, the English, Scottish, and Australian Bank, and the Bank of Australasia, have between there 600 branches operating in Australia, but they do not go to the trouble of appointing Australians as guinea-pig directors of their institutions. Apparently no English gentleman is sent out here who is so poor that he must draw funds from the revenues of one of these banks as a local director. The Union Bank, which has 200 branches in Australia, has only one man in charge here. I understand that Mr. George Fairbairn is . the one man who in New South Wales acts for the whole of Australia. At one time there were three appointed, but the other two were evidently considered encumbrances. I do not think that the matter is worthy of very much more consideration. We know what the Government is going to do. We know what the private banks want. We know that their pressure has been applied, and that the Treasurer is now prepared to accept proposals and arguments to which he was previously opposed. He is now prepared to agree to the appointment of certain gentlemen to sinecures. They will be .merely pensioners on the bank, and no doubt so long as the Government lives it will keep them in their positions. We cannot at present prevent that. But the Government will not live for ever. There will be other Governments, and the bank will be an excellent institution upon which they can impose. their friends. It is proposed that the members of the London’ board shall hold office for four years, and shall be eligible for re-appointment. I think that the Government might have proposed that some, of these members should drop out after two years’ service, so that the party on this side might be given a chance. We are told that the duties and powers of the board shall be such as may be delegated to it from time to time by the board of directors, but no powers or duties will be assigned to it; all that the members will have to do will be to go along at the end of each month and draw their fees from the bank. Then they can stmt around in London society in the West End, and the emoluments they will draw from the bank will help to maintain them. If the Government wished to exclude this party in the matter altogether, -they might have proposed the appointment of the members of the London board for ten years or for life. Four years is rather a long time for us to have to wait before we can appoint any one to this London board, and I am afraid that the only thing left us will be to increase the number of members of the board. .
– The honorable gentleman does not expect that his party will be in power before the end of four years ?
– It is the surest thing on earth that we shall be in power before that time. I am, however, disappointed that the arrangement has not been made for the appointment of one or two of the members of the London board for only two years, so that another party might be given a chance to make appointments to the board. This will throw upon some future Government the responsibility of increasing the number of members of the London board, otherwise it will not be able to follow the example of the present Government, and enable some of its friends to draw pensions from the bank. The proposal will be of no benefit to the country, but it will enable the Government to appoint a few pensioners upon this national institution.
Motion agreed to.
Senate’s Amendment. - Leave out “ by way of salary at the rate of £200 per annum,” insert “ as is fixed by the Governor-General on the recommendation of the Board of Directors.”
Motion (by Dr. Earle Page) proposed -
That the amendment be agreed to.
.- We intend to vote against this amendment. The Government, after proposing definite remuneration to the members of the London board, are now proposing to permit the board of directors to make such payments as it wishes. We shall express our dissentby voting against the amendment.
.- The Treasurer (Dr. Earle Page), when occupying a. seat in the Country party’s corner, said a great deal about the need for responsible government and parliamentary control of the finances. He is now prepared to accept an amendment from another place to take the control of the funds out of the hands of Parliament and out of the hands of the Government, and permit a board to fix these salaries. The honorable gentleman should give some explanation of the reason why he is prepared to accept this amendment. The Government must take all respon sibility for it. All that we can do is to make our protest, and vote against it.
.-The safeguards provided in connexion with this clause are the same as those provided in connexion with the appointment of the governor and the deputy governor of the bank. The amount of pay is to be fixed by the Governor-General on the recommendation of the board of directors. This House has on several occasions expressed complete willingness to hand the control of the Commonwealth Bank over to a board of directors composed of men in whom we can have confidence. The amount of remuneration to be paid to the directors in London might very well be left to the board of management to fix, for it will more likely err on the side of economy than extravagance. It is quite possible that the board will decide to pay even less than the amount which the Government proposed should be paid to members of local boards. The members of the local boards, had they been appointed, would have had certain definite continuous duties to discharge, but the members of the London Board of Advice will be required principally to obtain for the Australian Board of Directors, at irregular periods, the best advice possible from financial experts in London. The interests of the country are well protected in the clause.
.- I am not satisfied with the Treasurer’s explanation. I do not think that we should be asked to rely upon the discretion of the directors in a matter like this, for we do not know who they will be. The Government saw fit to. fix the remuneration to be paid to the Australian local board members, and I can see no reason why it should not do so in this case. We are informed that Parliament will shortly go into recess. It is quite probable, therefore, that we shall have no opportunity to express our opinion upon the. appointments which the Government makes to the board. That makes it all the move necessary that the conditions of appointment shall be made as definite as possible. Our past experience of the Government has proved that it shows no hesitation in appointing to responsible public positions friends of the parties which it represents, and it will doubtless adopt the same policy when appointing the directorate of the bank. As the usefulness of the bank will, under its new constitution, depend entirely upon the directors, it is not reasonable to expect honorable members on this side of the committee to agree to the omission of what they regard as necessary provisions to protect the public interests. The Government has shown that it is quite prepared to appoint men to positions of responsibility irrespective of merit or, ability. I trust that the amendment will not be agreed to.
Question - That the Senate’s amendment be agreed to - put. The committee divided.
Majority . . 7
Question so resolved in the affirmative.
Amendment agreed to.
Consequential amendments agreed to.
The following amendment was also agreed to : -
Leave out “ the directors voting for it include two of the following directors, namely, the Governor, the director who is the Secretary to the Treasury, and the directors appointed in pursuance of paragraph (d) of sub-section (2.) of section 11 of this act”, and insert “six directors vote for it at a meeting at which all the directors are present, or five directors vote for it at a meeting from which any of the directors are absent.”
Clause 8 -
After section 16a of the principal act the following sub-sections are inserted : - “ (3.) The board shall consider and determine any appeal made to it under this section, and shall notify the appellant of its determination, which shall be final and conclusive.”
Senate’s Amendment. - Leave out sub-section (3.), and insert the following new subsections: - “ (3.) The board shall refer the appeal to an appeal board consisting of three members, one of whom shall be appointed by the board, and one of whom shall be elected by the officers of the bank in the manner prescribed, with an independent chairman appointed by the hoard. “ (4.) The Appeal Board shall consider any appeal referred to it under this section, and shall submit its report thereon to the board, which shall determine the appeal, and notify the appellant of its determination, which shall be final and conclusive.”
Motion (by Dr. Earle Page) proposed -
That the amendment be agreed to.
.- I move -
That the Senate’s amendment be amended by omitting the words “ the board “ at the end of the proposed new sub-section (3.) with a’ view to insert in lieu thereof : - “ by mutual agreement, or, failing an agreement, by the Governor-General in Council.”
This is a most reasonable proposal, and I hope that the Treasurer will show no hesitation about accepting it. To do otherwise would be to show that he has no proper sense of his duty towards those who will be expected to accept, without question, the decisions of the Appeal Board.
– Between whom will the mutual agreement be made ?
– It will be made between the representative of the bank and the representative of its employees. I have had considerable experience of the difficulties met with in electing independent chairman to wages boards. Our experience in the industrial world should surely guide us in framing legislation of this kind. We are asking that if the two members of the Board of Appeal are unable to come to an agreement, the GovernorGeneral in Council shall appoint an independent chairman who will act fairly and impartially on all matters’ in dispute between the bank and its employees. Is the Government prepared to accept such an amendment?
– -I regret that the Government is taking up an unreasonable attitude by refusing to accept an amendment that must surely commend itself to this committee. Although the Government is prepared to appoint a board of appeal, yet the bank is to be safeguarded by having a majority on that board of two to one. It is highly probable, though not certain, that the two members of the Board of Appeal will come to a mutual agreement. But if the two persons elected to the Board of Appeal, one representing the bank and the other the officers of the bank, disagree respecting the appointment of the chairman, the amendment proposed by the Government will not overcome the difficulty. Yet when the Labour party makes a reasonable suggestion, that in the event of disagreement an independent chairman be appointed by the GovernorGeneral in Council, it is not accepted. We cannot but come to the conclusion that the Government is setting up a board of appeal that will be prejudiced against the bank’s employees. These certainly will not look to that tribunal with any feeling of security, or that their interests will be safeguarded. This proposed board will be one of appeal in name only. As constituted, the bank has too much representation and its officers too little, and unless the provision is altered will not give satisfaction. The acceptance of my amendment will in no way affect the standing of the Government, but will ensure a fair and equitable judgment on all matters in dispute. I hope the Treasurer will agree to free the Board of Appeal of any taint of partisanship, and make it a body which appellants may approach with confidence.
– The honorable member for Hindmarsh (Mr. Makin) has a wrong impression of the manner in which the Commonwealth Bank will be controlled. Disputes will arise, not between the board and the employees, but between the executive officers and the employees. The board will be a paramount and supervisory body, and a court to which the employees may appeal from the decisions of the executive officers. The amendment proposes that the Government shall intervene in every dispute between the employees and the executive of the bank, and attempts to set up a principle that does not operate in connexion with the ordinary Public Service. A dissatisfied officer of the Public Service does not appeal to the Governor-General in Council, but to a board representative of the Service, the head of the department concerned, and the Public Service Board. The Government is prepared to agree to the chairman of the proposed appeal board being chosen by the mutual, consent of the representatives of the employees and the’ management. Failing mutual agreement, the nomination must be by the board of directors, which will have full control of the bank. The Government cannot see its way clear to accept an amendment which will require the Government to be continually intervening in the internal affairs of the bank.
.- The amendment is consistent, logical, and reasonable. The proposal that there shall be “ an independent chairman,” appointed by the directorate, is a contradiction in terms. The board of directors will have complete control over the employees in respect of appointments, dismissals, promotions, rates of pay, and other working conditions which are likely to be the subject of appeal. The proposal that the chairman of the Appeal Board shall be appointed by the board of directors is a startling departure from recognized industrial practice. A chairman so appointed would be beholden to, and dependent upon, the directorate. The honorable member for Hindmarsh, however, has asked that the chairman shall be a person mutually agreed upon by the representatives of the employer and the employees, and that, failing such an agreement, the Government shall accept the responsibility of making an appointment. The Treasurer drew a false analogy between the Public Service Board and the board of directors of the Commonwealth Bank. Although the Public Service Board certainly administers the Service, Parliament retains a good deal of control; but the Commonwealth Bank directorate will be an independent body, placed in absolute authority over the employees of the institution. If the board appoints as chairman of the Appeal Board a person who is not persona grata to the employees, they will have no confidence in it. They will believe that they are offered a right of appeal from Caesar to Caesar, and the object of creating the appeal board will be defeated. Satisfaction and efficiency can only be secured by removing all suspicion from the appointment of the chairman. Having had seventeen years’ experience of clerical workers, including bank employees, I understand fully the circumstances that may arise if the Government will not agree to the amendment suggested by the honorable member for Hindmarsh. The past relations between the management of the Commonwealth Bank and its employees have left much to be desired. The management deliberately victimized many of the employees who had thecourage and independence to join a trade union of bank employees. That victimization took various forms. I know of some officials, who had settled in New South Wales, and acquired homes there, who, because they had joined the union, were transferred to Tasmania or some other state. As a result of that policy the first attempts to form a union of Commonwealth Bank employees were practically defeated, and were renewed only because the employees recognized that without industrial organization they could do very little. Having regard to past experience, why does theGovernment propose this anomaly of an independent chairman appointed by the employer? Failing an agreement by mutual consent, let the Government accept the responsibility of appointing a chairman. The union that represents banking employees desires that the clause shall be amended in the way suggested by the honorable member for Hindmarsh, and as that will involve no drastic departure from a generally accepted principle, the union’s wishes should be respected. The Bank Clerks Union was formed as the result of the economic hardships under which bank clerks were labouring. Their wages were scandalously low ; they werevirtually the helots of industry.
– Does the honorable member suggest that the Commonwealth iBank employees were the helots of industry?
– When the bank employees organized they had to fight stubbornly to get recognition. The union had to expend thousands of pounds to get registration, and many more thousands of pounds to get an award of the Arbitration Court. Incidentally, certain of its members were victimized. Mr. Rawson, of the Bank of New South Wales, because he took an active part in union affairs, was transferred, I think, to Goulburn with reduced status. The union applied to the New South Wales Arbitration Court for Rawson’s reinstatement. This was. the first appeal of the kind. The associated banks briefed several lawyers, and the union spent many thousands of pounds in fighting the case on principle. Ultimately Rawson was reinstated by thecourt, and the award was practically the industrial magna carta of the bank employees. But for their success in that case victimization would have been more general. I do not suggest that the employees of the Commonwealth Bank were treated as badly as were those in the employ of the private banking companies, but they, too, have been victimized. Recently attempts have been made to intimidate them and to apply “ forcible persuasion “ to prevent them becoming members of. the union. Therefore, the acceptance of the amendment proposed by the honorable member for Hindmarsh is desirable. If the employees of the Commonwealth Bank refuse to go before an appeal board., presided over by a nominee of the ‘ ‘ bosses, ‘ ‘ they will have the right to take such appeals affecting internal matters between the bank and its individual employees before the Commonwealth Arbitration Court, and that procedure will involve the bank in expensive litigation and friction. That will not be in the public interest. The Commonwealth Bank should be a model employer, and provide every facility that would conduce to efficiency and contentment in the service.
– Does it not do so ?
– It has not done so in the past, because it has endeavoured to prevent its employees from joining the union.
– But does it not pay goodsalaries, and give good working conditions ?
– Yes, but it has interfered with the personal liberty of its employees, and liberty is more precious than money. It has been suggested that the bank has made the conditions of its employees slightly better in certain respects than those obtaining in private institutions, because it was part of the policy of the management to prevent them organizing industrially.
– Does the honorable member think that the employees should take advantage of the. concessions which the bank has given?
– Conditions which are yielded only because of outside pressure, and in order to discourage industrial organization are mercenary and immoral.
– That is a most extraiordinary statement. Because good conditions have been given by the bank they must necessarily have been given for sinister motives !
– It has been suggested that in order to discourage the employees from joining the union the conditions were improved in certain respects.
– What justification has the honorable member for such a statement?
– That declaration is based on knowledge of the actual conditions. The amendment proposed by the honorable member for Hindmarsh is. eminently reasonable. As the bank is to have command of an immensely increased capital, which will enable it to extend its activities in many directions, it is essential to its welfare that it shall have a contented and efficient service. I ask honorable members opposite to take a common-sense view of this proposal. The honorable member for Corio (Mr. Lister) and the honorable member for Richmond (Mr. R. Green)’ sometimes take a broad view, and I hope they will assistus to induce the Government to accept the amendment, which means so much to those affected.
.- I intended to move an amendment that would make the clause read -
The board shall refer the appeal to an appeal board consisting of three members, one of whom shall be appointed by the board, and one of whom shall be elected by the officers of the bank in the manner prescribed, with an independent chairman mutually agreed upon by the other members of the Appeal Board and, failing such agreement, the chairman shall be appointed by the Governor-General in Council.
It is customary in many forms of agreements - share-farming agreements, for instance - to provide for the appointment of three arbitrators when there is a possibility of disputes arising. Two arbitrators are appointed, one by each side and they mutually agree upon a chairman. If they fail to agree, provision is made for the appointment of a chairman. There- never appears to. be any difficulty about the appointment. The chairman is generally a local lawyer, who knows the conditions and customs of the place. One difficulty that I can see is that the two members of the board may refuse to agree, and, as a. consequence, a large number of appeals will have to be heard by three members. If the general practice can be relied upon as a guide, at least 90 per cent of the appeals will be heard by three members. Each of the two members may try to support his own side. I cannot understand why we should give two out of three representatives to one side to- the dispute.
– The dispute would not be between the board and an employee, but between an executive officer of the bank and an employee.
– A board of directors lays down the conditions under which its employees work. For example, the Government could appoint, as a chairman, a member of the Public Service Board who. would be acceptable to both sides. As the Government owns the bank, it should have some say in the settlement of disputes within it. I cannot admit that the board of directors is not a party to a dispute, for it virtually employs the staff in the bank. It may be found that the chairmanship, of the board will be a full-time appointment, but I hope not. It would be a wrong thing to appoint a biased chairman. It has been said that the Government does not want to be “ mixed up “ in the matter, but it cannot be held that the Government would be “ mixed up “ in it by appointing an independent chairman.
– The discussion seems to have arisen owing to a misapprehension of the facts. The Senate’s amendment inserts two sub-sections in the proposed new sub-section 16b. If honorable members will look at clause 8 of the bill, they will see that they have quite misunderstood itsintention. The proposed new section, as agreed to by both Houses, reads - “(1.) Where an officer of the Bank is affected in his employment by the action of any authority of the Bank other than the Board, the officer may, within the prescribed time, submit in writing an appeal to the Board. “(2.) An appeal under this section shall state fully the action appealed against and the grounds of the appeal.”
The Senate proposes to add the following new sub-sections : - “(3.) The Board shall refer the appeal to an Appeal Board consisting of three members, one of whom shall be appointedby the Board and one of whom shall be elected by the officers of the Bank in the manner prescribed, with an independent Chairman appointed by the Board. “(4.) The Appeal Board shall consider any appeal referred to it under this section and shall submit its report thereon to the Board, which shall determine the appeal and notify the appellant of its determination, which shall be final and conclusive.”
The appeals will be against “ the action of any authority of the bank other than the board.” They may be against the action of an executive officer, the manager of a branch, or the Governor. The procedure under this clause would be the same as for classification appeals under the Public Service Act. The Public Service Act says -
The Board shall, as prescribed, consider the appeal in conference with a representative of the Permanent Head of the Department concerned, and with the appellant, or, if he so desires, with a nominee (who is an officer) of the Public Service organization to which the appellant belongs, or with an agent (who is an officer) of the appellant, and following upon such conference the Board shall determine the appeal.
That section provides for the appeal to be heard by a representative of the head of a department and a representative of the Public Service nominated by the appellant. The clause under consideration does not provide for a representative of the permanent head of the department. As the board of directors would nominate a representative, the senior officer or section that brought about the necessity of appeal would not be directly represented. When providing for the constitution of an appeal board for offences the Public Service Act states -
An Appeal Board constituted under this section shall comprise -
a permanent Chairman, who shall be an officer of the Commonwealth Service, and shall have the qualifications of a Stipendiary or Police Magistrate, and shall be appointed to the office by the Board of Com missioners, but shall not while sitting as the Chairman of an Appeal Board be subject to direction by any person or authority under this Act :
an officer of the Department to which the appellant belongs (not being an officer concerned in the laying of the charge against the appellant), appointed by the Chief Officer for the purpose of the particular appeal to be heard;
the officer who is the elected represen tative of the Division to which the appellant belongs in the State or part of the State in which he performs his duties or an officer appointed in pursuance of sub-section (6.) of this section.
The amendment of the honorable member for Hindmarsh seeks to bring the Government into the business, although it has nothing whatever to do with it. The honorable member for Hindmarsh proposes something which is not done in connexion with the Public Service. The position would be very difficult if the Government were to mix itself up with the internal affairs of the bank.
.- In moving his amendment the honorable member for Hindmarsh (Mr. Makin) was under no misapprehension. He understood what the Bill provided for and what honorable members on this slide desire. I agree with the honorable member for Richmond (Mr. R. Green) that we cannot dissociate the management of the bank from the board of directors.. Surely the board of directors is the management of the bank. If it is not, what is it?
– The bill does not say so.
– If it does not, that is simply because it is taken for granted. A dispute could arise between members of the staff and the Governor of the bank. The Governor is to be a member of the board of directors. He may have discussed some proposed change with the board, and the board may have approved of it. When the change is made it may lead to a dispute with the staff. The dispute is to be sent to the board of directors, which sends it on to an appeal board. The object of sending the dispute to an appeal board is that it may be decided by an independent tribunal. I want the committee to realize what was in the mind of the Government when it framed the bill as originally introduced. The bill, as passed by this House, in spite of the protests from this side, provided that the only appeal which employees of the bank would have was to the board of directors. We objected to that, but were unsuccessful. When the bill was sent on to the Senate an amendment was made there. What was the object of that amendment? It was to secure an independent tribunal other than the board of directors.
– That is not what the amendment says.
– I agree that the Senate only half performed its task. ‘ It might as well have left the bill as it was. However, we can see what the intention of the Senate was. It was to remove the appeal from the board of directors so that it should not be an appeal from Caesar to Caesar. No one would contend that the board of directors would be an independent tribunal, or that its chairman would be ah independent chairman. A dispute may conceivably, and in all probability will, be one in which the board of directors will be. implicated. It may arise out of a direction of the board to the Governor. This may be objected to and appealed against by an employee. The proposal of the Government is that the Appeal Board shall consist of one nominee of the employee, and two nominees of the board of directors. I give the Treasurer credit for being prepared to meet us part of the way, by agreeing to the appointment of an independent chairman by mutual agreement between the nominee of the staff and the nominee of the board of directors. So far, so good; but should a dispute arise between them as to who should be appointed chairman of the Appeal Board, who would decide that matter? We say that the Government should step in and decide it. The objection urged by the Treasurer that the Government should not be mixed up in the affairs of the bank is not a valid objection. We cannot avoid the Government stepping in at some point in the control of this bank. If honorable members will read the bill they will see that it contains provisions under which the Treasurer steps in in connexion with most important issues ; for instance, with regard to the issue of notes. In Victoria wages boards are constituted of representatives of employees and of. employers, who mutually agree to the appointment of an independent chairman.
They frequently disagree as to who should be chairman, and who appoints the chairman in such a case? He is appointed by the Governor in Council. This might occur in connexion with the constitution of a wages board in the boot industry or in the coal-mining industry, and should it be necessary for the Governor in Council to appoint the chairman of the board, the Government will not, therefore, be a party to the dispute or be mixed up in it in any way. The proposal from this side is based upon precedent. If any persons stand for the wages board system in this country they are honorable members opposite, who prefer it to the Arbitration Court system. Yet they oppose the appointment of an independent tribunal, based on the Victorian wages board system, to consider appeals in connexion with disputes arising in the service of the Commonwealth Bank. We can only suggest that there must be some motive behind the refusal of- honorable members opposite to accept the amendment, and that the motive is that the Appeal Board shall be merely a farce. They wish to get back to the provision of the bill as originally introduced, and defeat the intention of the Senate.
– I have said that we accept the Senate’s amendment.
– But in doing so the honorable gentleman is only fooling the country.
– The Senate’s amendment is simply a modification of the provision we made.
– It gives the board of directors control in deciding all disputes,while it pretends to do something different.
– The final determination must be left to the board.
– That is so, but one has to assume that the board of directors would not dare to go against the decision of an independent tribunal properly constituted. The. Public Service Departments are controlled by a board, but we presume that the Public Service Board would honour a decision of the Arbitration Court or of the Public Service Arbitrator. In just the same way we have a right to assume that the board of directors of the bank would honour the decision of a properly constituted tribunal.
– The officers of the bank can go to the Arbitration Court.
– The honorable member’s interjection shows the necessity for the amendment we propose. Officers of the Commonwealth Bank have been tyrannized over because they formed a union to enable them to get to the Arbitration Court. There is evidence of victimization in the service of the bank for no other offence than that of organizing a union to enable the employees of the bank to get to the Arbitration Court. If the Treasurer requires proof of that statement he has only to make an investigation, and it will be proved. That was not the ostensible reason for the dismissal of certain officers, but we know that it was the real reason. If the policy of the management of the bank continues to be the policy of its management in the past, and involves the victimization of officers because they join their own union, a victimized officer will, under the Government proposal, have no appeal except to the very board responsible for his victimization. I cannot understand the Government objecting to the very fair proposal that has been made. It is of no use to suggest that it is merely a question of regulations or of a. senior officer inflicting hardship upon a junior. The really big issue to be considered will be the policy adopted by the board of directors with regard to the formation of a union amongst the employees to enable them to approach the Arbitration Court.
– There is nothing in the amendment which will prevent them from doing that.
– That is so, but if the board of directors adopts such a policy as I have suggested, there is nothing in the amendment to protect employees, of the bank against it.
– The honorable member would give an independent chairman of the appeal board a power above that of the board of directors of the bank?
– Certainly, in the settlement of a dispute such as I have suggested. We now give the President of the Arbitration Court power over all the public utilities of this country. The chairman of a wages board is given control over the industry with which it has to deal. The argument of the honorable member for Corio (Mr. Lister) is one which we met twenty years ago when wages boards were first established in this state.
– The employees will still have the right of appeal to the Arbitration Court.
– I am speaking, of the attitude which the board of directors may take up in victimizing men because they form a union to enable them to go to the the Arbitration Court. That victimization has already taken place, and good officers of the bank have been cast out of its service-.
– That is only a statement. It cannot be established.
– If the Treasurer will make provision for an investigation into the matter we shall establish the truth of that statement. That is a challenge for the honorable gentleman to take up. If the honorable gentleman, as the responsible head of the department controlling the bank, will investigate the statement, evidence in support of it will be forthcoming without the slightest hesitation. The amendment of the honorable member for Richmond (Mr. R. Green) is only slightly different from that moved by the honorable member for Hindmarsh. We are not concerned as to who shall move a satisfactory amendment. If the honorable member for Richmond will do so, and thinks he can carry it, we shall be prepared to make way for him. The honorable member for Hindmarsh is not looking for personal kudos in the matter, but for an opportunity to see that justice is done to the officers of the Commonwealth Bank.
.- The discussion might lead some honorable members to believe that officers of the Commonwealth Bank are suffering great hardships. I believe that honorable members on both sides desire that the officials of the bank shall get fair play. I have no experience of the Commonwealth Bank, except as a depositor, though I have heard from some of the officers that they are harshly treated in many ways. But, whatever may have happened in the past, the bill provides for an appeal board to consider appeals by the employees. We have made provision for an appeal board for officers of the Public Service. The Public Service is governed by a board, the members of which are nominally the employers of the Service. The Commonwealth Bank Board, we are told, will also be nominally the employers of the bank. Thus the two institutions will be on all fours. It is proper, in those circumstances, that the Public Service Appeal Board and the Commonwealth Bank Employees Appeal Board should be constituted on similar lines. The Commonwealth Bank employees and the Commonwealth public servants both have the right to appeal to the Arbitration Court. If the motion is agreed to, the employees of the bank, like the Commonwealth public servants, will have the right to appeal to a board against any action, which they may consider to be unjust to them. The two services will thus be conducted on precisely similar lines.
Mr.Fenton. - That does not say that the existing practice is right.
– So far as I know, every public servant who has approached the Public Service Appeal Board has been satisfied with its decision. That is a strong reason why we should provide a similar body to consider any grievances which the Commonwealth Bank employees may have.
– But the two Appeal Boards will not be constituted on the same lines, if the motion is carried.
-I contend that they will. The Public Service Appeal Board is constituted in thefollowing way: - One member is appointed by the head of the department concerned, one by the employee or employees concerned; and the other by the Public Service Board. The same practice will be adopted in respect to the Commonwealth Bank Employees Appeal Board, if we agree to the motion.
– Oh, no; the Commonwealth Bank board of directors will practically have the right to appoint two members of the Appeal Board.
– The two services are not on all fours, for it cannot be said that the Public Service Board manages, say, the Defence Department or the PostmasterGeneral’s Department.
– If the Public Service Board does not manage the civil staff of the Defence Department, then I am ignorant of its duties.
– It controls the appointments, but has no administrative power.
– May I inquire from the honorable member who transfers officers from one. branch of the PostmasterGeneral’s Department to another, or from the city to the country?
– The Public Service Inspector in the state concerned, acting in collaboration with the board.
– That is a quibble. The Public Service Inspector is the officer of the board. This bill provides that the board of directors of the bank shall have theright to appoint three of their members as an executive body, and I consider that when an appeal is made, the executive will appoint one member of the Appeal Board, the employee or employees concerned another, and if those two representatives cannot agree upon a chairman, the full board of directors of the bank will appoint one.
– Why not provide for an impartial board?
– If a board such us that proposed by honorable members opposite is to be appointed for the Commonwealth Bank employees, a similar one should be granted to our public servants.
– And we should be agreeable to appointing it.
– Why not appoint the disputes committee of the Trades Hall?
– The Commonwealth Public Service Appeal Board has worked so well that no complaints have been made respecting its decisions, and we shall be well advised to constitute similarly the proposed Commonwealth Bank Employees Appeal Board.
– Hundreds of cases of dissatisfaction with the decisions of the Public Service Appeal Board are awaiting consideration.
– In all the years since the constitution of that board I have not known of a single case of dissatisfaction.
– I could give the honorable member a number of cases.
– The minority, in any matter considered by the Public Service Appeal Board, have the right to submit reports.
– But what is the good of them?
– I have known the Public Service Commissioners to act on minority reports more than once. When Mr. Duncan McLachlan was Commissioner he frequently did so.’
– Parliament exercises a greater measure of control over the Public Service Board than it will exercise over the Board of Directors of the Commonwealth Bank.
– I do not agree with that statement. If in the past the management of the bank has dealt harshly with its employees for their connexion with unionism, it has done wrong and has exceeded its rights. But the employees now have the right to approach the Arbitration Court, and if we give them the same appeal rights as public servants possess we shall be doing the fair thing. I feel convinced that the officers of the Commonwealth Bank would be well satisfied with a board constituted on the lines proposed in the Senate’s amendment. We must give the members of the Board of Directors of the Bank credit for possessing some common sense, and they will doubtless show it by appointing an independent chairman to any appeal board that may be constituted. The Government will not be so interested in the affairs of the bank as are the bank’s customers, and I cannot see any reason why it should have the right to appoint the chairman of an appeal board in case the parties concerned are not able to agree upon one.
– If the Government will be so detached from the management of the bank as the honorable member suggests, it would be all the more likely to appoint an independent chairman.
– Had I any evidence that the members of the Public Service were dissatisfied with the manner in which their Appeal Board was constituted I might be more favorable to the amendment, but for the reasons I have given I cannot support it. I realize that it is the duty of the Opposition to oppose Government measures, and I have no doubt that if the Treasurer had accepted every amendment to this bill that the Opposition has proposed he would have been asked to accept still more. I do not blame the Opposition for its attitude, but I cannot see the need for this amendment.
.- It is difficult to appreciate the position of the honorable member for Parkes (Mr. Marr). Although he tells us that he stands for an absolutely impartial tri bunal for the bank employees, he will not agree to an amendment which will attain that end. In cases where an .appeal board is necessary and the two members appointed by the employees and the board of the bank agree upon an independent chairman, no trouble will arise; but if they cannot agree, it seems to me to be an unreasonable proposition that the directors of the bank, having already appointed one member of the board, should have the right to appoint the chairman. It is quite conceivable that in many instances the representative of the aggrieved employee or employees, and the representative of the. board of directors of the bank, will not reach an agreement as to who shall be chairman, and in such cases it is only fair to provide that the chairman shall be appointed independently of both parties. If the board of directors of the bank have the right to appoint him, justifiable suspicion will arise as to his impartiality. The amendment has been moved in an absolutely non-party spirit, and it provides for exactly what the honorable member for Parkes desires, namely, an impartial tribunal .
– To show that honorable members on this side of the committee are not seeking kudos for their party in this matter, I am prepared, to withdraw my amendment and to accept the suggested amendment of the honorable member for Richmond (Mr. R. Green).
– I am glad of that, for it places beyond any question the sincerity of the! Opposition. The Treasurer could accept such an amendment without the slightest loss of prestige. Apparently he desires to prevent the alteration of even a letter in the bill, but I hope that he will not maintain that attitude.
– I am unable to understand why the Treasurer will not accept the amendment, for it is reasonable and is submitted in a non-party spirit. The consensus of opinion among the employees of the bank is that an appeal board constituted on the lines suggested in the Senate’s amendment would be “ loaded “ against them. The amendment at present proposed is designed to prevent such a- possibility. The honorable member for Parkes (Mr. Marr) stated that the bank would not really be managed by the board of directors, but «I point out to <him that the bill contains the following, provision : -
The bank shall be managed by a board of directors .consisting of *he .Governor and seven other .directors.
Wie know quite well that the board of directors will lay down conditions of .employment, and that the Governor, the Deputy Governor) and the managers in each of the states will receive their directions from the board, ,and will be subject to its dictation. The bank’s general policy will be decided by the board, which will -be in the position of an employer. No doubt the Senate had very good intentions when it framed its amendment, but the .establishment of .an Appeal Board, .comprised of three -members, .one member -and the chairman appointed ‘by the board of directors, and the other by -the officers, will be most unfair, .because it will give two representatibes to -.the management, .and only one representative to the employees. This cannot .result in “harmonious’ relations “between the management and the employees. The amendment proposed by the honorable member for Hindmarsh (Mr.. Makin) provides that in .case .of dispute the chairman -shall be appointed by mutual ‘agreement between .”tike two parties, and failing that, by the ‘GovernorGeneral in ‘Council. “The honorable member .by offering to -withdraw his amendment ‘in favour of a -similar ‘One proposed by the -honorable member for Richmond (Mr. R. ‘Green), showed that lie was acting fairly, and .that he did not want to gain .any political kudos for .his party. This party, so long as the Commonwealth Bank employees receive fail- ‘treatment, is willing to leave with Government supporters any credit that may be obtained from moving the amendment. In another place, when the bill was discussed, a certain honorable senator suggested numerous amendments which were inspired ‘“by the private banks. They were passed by the Senate, and are now being accepted by the Treasurer. Yet -he strongly opposes :an amendment that is designed to meet the requirements of thousands of “employees of the Commonwealth iBank. I as”k .the honorable member for Richmond not to be persuaded ‘by the Treasurer -to withdraw his amendment. On -the l7th July, -last, I brought up in this House “the alleged victimization of certain ‘Commonwealth IBank employees because of their -efforts to ‘form in Brisbane :a :branch of the United Bank Clerks Association among -Commonwealth Bank” employees,. I shall not quote those .cases now ; I merely point out that after the branch was formed in Brisbane, according to the Brisbane press, a high official of the Commonwealth Bank arrived there -and Convened a meeting of the employees, at which he suggested that they should, .refrain from joining the association,, and instead should form a guild of employees within the bank. The employees also, received a circular from Mr. Kell, the Act-ing Governor, advising them not to form a union to be affiliated with the United Bank Clerks Association. The Brisbane *Daily Mail, commenting on this -matter, published the following statement : -
A number of conditions of employment /of the Commonwealth Bank officials in Queensland are considered ‘by the employees to be harassing and unfair, and consequently considerable .dissatisfaction exists. A call is made for an abnormal amount of night work, for which the employees receive no payment, nor (even meal allowances. . . . -While the -matter of salaries was .an important phase of the association’s work, there were other matters of more pressing importance, and the question of the security of tenure by’ the prevention of the instances recurring of employees being .arbitrarily dismissed >at a moment’s notice, with no right of appeal, was a most vital one.
The immediate outcome of these circulars, :said Mr. -Laidlaw, was -the issuing ,of a circular (by the Acting Governor of the Commonwealth Bank .(Mr. Kell), advising the staff not to join the association, but to form a separate guild. The only result has been that increased numbers of the employees have become .officers .of the association.
That statement clearly shows that employees were not given that freedom and consideration to which they are entitled. There were also statements made of dismissals and transfers -of those who took a prominent part in union affairs. . “That showed the necessity for a fail’ .Appeal Board. “When 1 brought this matter up in the House, the Treasurer promised to investigate -it. He com- municated with the Acting Governor of the bank, who replied that the grievances .had been .grossly exaggerated .by agitators, no doubt for a purpose. It could not .be ‘expected that a man giving such -a reply would mete -out justice to -the shank’s .employees, .and ,yet he, under the Senate’s amendment, will be one of the -board of directors, having the power to «appoint to the Appeal ‘Board one representative, and also the chairman. The employees, having only one representative, will at times lie unfairly treated with impunity. The Commonwealth Public Service Board is differently constituted, since it does not directly control such de- partments as the Postmaster-General’s Department, the Treasury, and the Defence Department. That board exercises a supervision over staffs, organization, and procedure in the different departments, but does not interfere to any marked extent with the official heads of those departments. The board of management of the Commonwealth Bank will take a much more active part in the management of the bank.
– The Public Service Board and the awards relating to the Public Service come under the review of this Parliament.
– That is so. Under the Public Service Act, honorable members have certain rights which, if necessary, will be exercised. But the control of the Commonwealth Bank is to be handed over to a board of directors beyond political control, really a board of autocrats, able to deal with employees as it thinks fit. It is no use asking when too late for a properly constituted Appeal Board. The opportunity is at hand. The bank officials are justified in their agitation for equal representation with the management on the Appeal Board. I hope that the honorable member for Parkes (Mr. Marr) will support the amendment, and rid himself of the belief that the bank’s employees will be receiving justice under the Senate’s amendment.
– I did not make that statement.
– The honorable member said that there was no need for any further amendment, such as the one proposed by the honorable member for Hindmarsh.
– The honorable member is making a mistake.
– The honorable member wrongly said that the Public Service Board controls the Post Office, the Defence Department, and the Treasury. It certainly deals with staff matters, but not with the direct administration of those departments. No direct supervision of administration is exercised by that board, as the departmental heads are responsible.
– Under the Public Service Act, the Arbitrator has power to make awards.
– Evidently the honorable member for Parkes has overlooked that fact. Commonwealth Bank employees have been victimized because they sought to form a union. For helping their fellow workers, they have been termed agitators, and in certain cases, I am informed, transferred to other centres. This form of victimization will recur if the employees do not have on the Appeal Board the same representation as the management. I have been asked by one of the employees of the Commonwealth Bank, who was taken over from the Queensland savings bank, to ascertain whether all rights that accrued to the Queensland savings bank employees were safeguarded in the bill. It was pointed out that these rights were not directly mentioned in the bill. I have made inquiries, and even the Acting Governor is not quite sure about the matter. His letter to me reads -
With reference to the amending bill (Commonwealth Bank), will you be kind enough to turn to clause 16 (a), covering certain privileges that are to be conserved to officers who have been transferred to the bank’s service from other services, e.g., state or government savings bank of New South Wales or Queensland. As far as I can understand, no specific recognition of the rights held by officers of the Queensland Government savings bank is embodied in the clause mentioned, and it seems to me very necessary that these should be safeguarded in the same measure as any other body of officers similarly affected. In the agreement between the Treasurer of Queensland and the Governor of the bank, these privileges were retained to us, so that I assume that with any fresh legislation they will be automatically included, but it will make the situation much clearer to the hundreds of Queensland men affected if they see their rights properly protected under the clause put in the act for the purpose.
An assurance by the Treasurer that the rights of these men are protected under the bill will make it unnecessary for me to move an amendment in that direction. These employees were taken over when the Queensland savings bank was merged into the Commonwealth Bank. The employees who were transferred should certainly know whether their rights will be preserved. If the Treasurer will give me an assurance, I will be satisfied. I ask the Treasurer to accept the amendment moved by the honorable member for Hindmarsh. It is a reasonable amendment, seeking only equal repre- sentation on the board of appeal for the employees and the management. No Appeal Board constituted as suggested by the Senate’s amendment, loaded as it would be against the men - two representatives for the management and one for the employees - would suit the minority party in the dispute.
.- As that paragon of virtue who has just resumed his seat has made so many deliberate misstatements-
– I object to that statement being applied to the honorable member for Capricornia. It is quite unparliamentary .
– I ask the honorable member to withdraw the statement.
– I paid the honorable member for Capricornia a compliment.
– The honorable member for Hindmarsh does not think so.
– Let the honorable member for Capricornia rise and object to it.
– The honorable, member for Hindmarsh considers the remark offensive, and 1 ask that it be withdrawn.
– I object to any member saying that another honorable member made a deliberate misstatement.
– I repeat it. The honor- . able member for Capricornia made a deliberate misstatement about something I said.
– Mr. Chairman-
– The honorable member for Parkes is in order in using the words “ misleading statement.” He would be out of order if by usingthe word deliberate he implied that another honorable member was a deliberate liar.
– Do you, Mr. Chairman, rule that the statement of which I complain is in order ?
– It is not out of order. If the honorable member desires to object to my ruling, he must do so in the usual way.
Motion (by Mr. Makin) put -
That the ruling of the Chairman of Committees - that the words applied to the honorable member for Capricornia, namely, that he made a deliberate misstatement, are in order - be dissented from.
The committee divided.
Majority … … 10
Question so resolved in the negative.
Amendment (Mr. Makin ‘s), by leave, withdrawn.
Amendment (by Mr. R. Green) proposed -
That after the word “ chairman “ proposed new sub-section 8 in the Senate’s amendment the words “ appointed by the board “ be omitted, and the following words inserted in lieu thereof : - “ mutually agreed upon by the other members of the appeal board, and failing such agreement, the chairman shall be appointed by the Governor-General in Council.”
Me. Forde. - We- will take your- ruling as a precedent,, andi, if necessary, use the expression every- time we think honorable members, opposite are not speaking; the truth.
.- The Treasurer (Dr. Earle- Page) directed attention to the fact that the Appeal Board” would deal with appeals against “;any authority of the bank other than the Board.”” I’ admit that the board of directors may not be a party to the appeal, but would be indirectly interested-, as the management is responsible to the board of directors for its actions and treatment of the staff. Consequently, there can be a loading of- the1 dice- against the employees if the- board of directors- appoints two representatives on the Appeal’ Board. Sub-sec^ tion 4 of the proposed new section provides that the- board’ of directors’ “ shall determine the appeals” and* be- the- final arbiter. The board of’ directors” appoints employees, and may take their positions away from them, and my amendment will not alter that It has: already been agreed that the- board: ©J directors shall appoint one member of th» Appeal Board, and that the employees abaft- appoint another member. The- Government has agreed to the appointment of a- chairman mutually acceptable to- the two’ other members of the Appeal Board1. No- matter who- the chairman may be, or where he may come from, if the two- other members of the Appeal Board agree to his appointment, the Government will not object. If, however^ the two members of the board’ cannot agree upon the appointment of a chairman, the Government says that the board of. directors, which already has one representative, shall have another, making, two out of three. I do not agree with that. The argument that the appointment of a chairman by the Government would lessen the prestige of the board of directors is answered in proposed new subsection 4”,. which leaves the finals decision with the board of directors..
.- Some honorable members on this side of the committee seem to find’ a difficulty in understanding the attitude of honorable members opposite. Supporters of the Government profess to be anxious to establish an appeal court from which the employees of the bank may. expect to get justice,, but when we. submit an amendment to secure justice for the employees, those honorable members, as supporters- of the Government, refuse to accept it. Personally, I can see’ no difficulty in explain, ing their actions, for while they may be prepared: to see justice done to the- employees, they remember- that, historically, as a political party and a government, they represent those- who have always refused te give any rights to ordinary employees. That has been* their con<sistent political policy, and to-day they feel’ it incumbent upon them1 to uphold ifr. It is quite pleasant to me to observe that there are exceptions. The amendment,, in the first place> was- moved by the honorable member- for Hindmarsh (Mr. Makin).,, who gave way to the honorable member for- Richmond- (Mr. R. Green-). It is refreshing to- find that even on the other side some honorable members say that justice should be provided for the employees- in every case. They have so much- regard for justice that they say that even ordinary employees should have some prospect of securing it, for it stands bef ore any so-called political policy that? their party has- fashioned and followed in the past. There is a great principle involved in the amendment. When we set up an appeal court f or employees the first quality it should have is that of being free from prejudice. The members of it, and especially the chairman, should be free from any suspicion ofbias. The nearer we get to that the better the Appeal” Board will be. In all appeals there is a conflict between two. parties. Each side has its own representative, and it is desirable that the third party - the chairman - should be a man who is not concerned! in the. dispute, is absolutely independent and maybe expected to administer justice impartially. For those reasons we, on this side, stand for the appointmentof independent chairmen on all Appeal Board’s, for only by that meanswill the appellant beable to secure justice. I challenge honorable members opposite to deny that the carrying of the amendment will provide a fairer appeal court than will be provided if the proposal of the Government is accepted. Even the honorable member for Parkes (Mr. Marr) will not deny that we ought to strive to get the fairest possible board in. all cases. Why, then, will not honorable members accept; the amendment? I want to know that, and the bank employees will want to knowit also. So far, no honorable member has stated why he will not accept the fairest possible appeal court. The chief argument of the honorable member for Parkes seemed to be that theCivil Service had no appeal court that was absolutely fair, and since we had not given a just appeal court to theCivil Service, we should not give one to the bank employees-
– I did not say that. I said that the Government’s proposal in the bill provided for an Appear Board similar to that existing in, connexion with, the Public Service.
– The honorable members went farther than that; and challenged honorable’ members on this side to show that there was any dissatisfaction in the Public Service with the Public Service Appeal- Board. Honorable members are not very familiar with the Civil Service if they think the Appeal
Board gives- satisfaction. The employees accepted it as the best they could wring from a hostile Government, but they are by no means satisfied with it, because they know that it does not always give them justice. The honorable member challenged us to cite cases of dissatisfaction or injustice.Iam not going to mention cases, but I could, on the spur of the moment,citethree or four, and I have heard honorable members ref er to a number of others in which the appellant was dissatisfied with the decision of the board for the reason; generally, that the chairman was not independent. I consider that there was great harshness and injustice in several cases that have come within my personal knowledge. It is surely a poor argument to say that because we have not given absolute justice to the civil servants we should not give it to the Commonwealth Bank employees. The Government professes tobe very anxious to provide the appeal court, but the test of its sincerity liesin thekind of court it is prepared to create. If it is prepared to set up the fairest possible court; we on this side will say that it. is absolutely sincere; but if it creates a court that is an appeal court in name only, its sincerity will be doubted. I. shall not say that honorable gentlemen opposite are making “ deliberate misstatements,” but. I shall say that they are prepared to set up an appeal court in. which the employees of the bank can have no confidence. We are asking, the Government not. to sacrifice in any way the interests of the bank or of the people, but to. consent to the establishment of a tribunal whichwill do justice to the employees of the bank. It is said that. the. employees can go. to the Arbitration Court and that there is therefore, little or no need for the appointment of an Appeal Board. I. point out that the Arbitration Court seldom deals with matters of administration; classification,, promotion- and so on. It will not deal with matters of internal administration, and it is in. connexion with these very matters that conflicts are likely to arise between the. employees of. the bank and its authorities. There is, therefore, room for- the two tribunals.
– That is recognized in the state and federal public services, and also in the railway services.
– That is so. There is room for the work of the Arbitration Court, and also for the work of an Appeal Board. We think that it is necessary that there should be a. court to which the employees of the bank may appeal, and from which they can expect just decisions. The “employees of the bank also think such a court of appeal necessary. Honorable members on the other side apparently do not think that any tribunal of this kind is necessary. I ask them to accept the amendment of the honorable member for Richmond, and agree to the appointment of an Appeal Board consisting of a representative of the employees, a representative of the directors, and a chairman who will be entirely independent and without prejudice.
.- I rise to reply to one or two statements made during the debate which I regard as unfortunate. It has been suggested that there is an analogy between the Public Service Board and the proposed board of directors of the Commonwealth Bank.’ I rise to say once more that there is no analogy! between them. The board of directors of the bank will have complete control over its employees. In the case of the Public Service this Parliament exercises certain powers and authority. Furthermore, by the Arbitration Public Service Act of 1920 the officers of the Commonwealth Public Service are allowed to appeal to an independent appeal body known as the Public Service Arbitrator. They can bring before the Arbitrator individual cases involving matters of principle. I submit that the assertion of the honorable member for Parkes (Mr. Marr) that the Public Service Board has brought about contentment in the Service as a result of its administration and its power to decide appeals, is incorrect, more particularly in view of the events that are taking place at the present moment.
– I did not say what the honorable member has attributed to me. -
– Then I must have misunderstood the honorable member. The fact remains that there is a considerable amount of dissatisfaction in the Public Service at the present time, and organizations concerned have had to state individual cases to the Public Service Arbitrator in order to secure justice. For the purpose of illustration, I mention the case of a Mr. Glanville, who was refused accrued seniority rights because he resigned from the Service to go to the war. He appealed to the Public Service Arbitrator to give him an award whereby he could secure the rights to which he considered he was entitled. The public servants have in the Public Service Arbitrator a tribunal that, enables them to secure satisfactory redress for their multifarious grievances. The employees of the Commonwealth Bank have the right to go to the federal Arbitration Court, but any one who has anything to do with arbitration cases, knows full well that the courts usually refuse to do more than prescribe a minimum wage unless the circumstances are so strong that more liberal action is necessary. The authority of the Public Service Arbitrator is not limited in any way. The employees of the Commonwealth Bank, however, will find that the Arbitration Court acts within a limited jurisdiction fixed by itself as well as by statute. It will not interfere with internal classification, promotions, gradations, and so on, but, as a rule, will only prescribe minimum wages. This makes it all the more necessary that there should be an independent tribunal to which the employees of the bank may appeal. The amendment, if agreed to, would give the proposed Appeal Board a certain amount of respect, and would enable it possibly to do some useful work. Honorable members on this side have shown a non-party spirit in agreeing to the amendment moved by the honorable member for Richmond (Mr. R. Green), and I trust the Treasurer will accept it. The fate of the Government will not depend upon the amendment, and it would not be embarrassed by its accceptance.
– The honorable member need not worry about the embarrassment of the Government, because the amendment will not be carried.
– That will be very unfortunate, because I believe many honorable members on the other side, although* they claim political freedom, would be prepared to vote for the amendment if, to use a term they apply to us, they were not “ Caucus driven.”
Sitting suspended from 6.80 to 8 p.m.
– I am sorry that the Treasurer cannot see his way clear to accept the amendment, but he will find that many of the so-called middle-class workers - to use a much-abused term - are favorable to it. As a large percentage of its supporters come from that class, the Government is undoubtedly riding for a political fall. It should at least give these workers a “ fair go.”
– It is doing so.
– I differ from the Treasurer on that point, and I am at a loss to find reasons for the attitude he has adopted. However, after the next election, the Labour party will have an opportunity to amend the measure.
Question - That the amendment (Mr. R. Green’s) be agreed to - put. The committee divided.
Majority … … 5
Question so resolved in the negative.
.- Will the Treasurer now inform honorable members whether he is prepared to give effect to the suggestion he made earlier in the debate to provide for mutual agreement in the appointment of a chairman ?
– I interjected that the Government would take steps to constitute an appeal board as follows : - One member to be selected by the officers of the bank; one, by the board of directors, and a chairman mutually satisfactory to them. I give an undertaking that that will be done. I do not think it is necessary to alter the Senate’s amendment to provide for it.
– I suggest to the Treasurer that he can hardly make certain of giving effect to his proposal unlesshe amends the Senate’s amendment.
– I give a definite undertaking that that will be the Government’s policy in appointing an appeal board.
– How can the Treasurer undertake to do something in defiance of a legislative enactment? He should amend the amendment.
– If that will be more satisfactory to honorable members I shall do so. I move -
That the Senate’s amendment be amended by adding after the word “ chairman,’’ in new sub-section 3, the following: - “chosen by mutual agreement between the other two members, or if those members fail to agree,”
That will make the sub-section read as follows: - (3.) The board shall refer the appeal to an appeal board consisting of three members, one of whom shall be appointed by the board, and one of whom shall be appointed by the officers of the bank in the manner prescribed, with an independent chairman chosen by mutual agreement between the other two members, or if those members fail to agree, appointed by the board.”
Motion agreed to.
Senate’s amendment, as so amended, agreed to.
Senate’s amendment,inserting after clause 11 the following new clause, agreed to- “ 11a. Section thirty -four of the Principal Act is amended by omitting from sub-section (2.) thereof the word ‘ Governor ‘ and inserting in its stead the word ‘ Board.’ “
Sectionsixty oof the Principal Actis amended byomitting the word “ Board “ and inserting in its stead the words “.Note issue Department.”
Senate’s Amendment. - After the word “amended,”insert “ (a) andat the end of the clause add - “and(b)byadding attheend thereof the followingproviso : -
Providedthat Australian notes shall notbe issued tothe Bank without the approval of the Treasurer.”
Motion (byDr. Earle Page) proposed -
That the amendment be agreed to.
Mr.WEST . (East . Sydney) [8.14]..- When the Labour Government first asked Parliament togive controlof the note issue to the “Notes “Issue “Board,the Opposition, which included some of the honorablemembers whoaresupporting this Government, attacked the proposal violently. Itwas saidthatgrave danger threatened the financial stability ofthe country. I ranastonishedthatwithin a few yearsthehard thingsthat were then said have been forgotten. Boththe Labour Government ofthat day and its supporters were -held upto ridicule throughout the country.It was said that more rascals wereassociated with that Government thancould be found anywhere else in Australia among the same number of men. The Government nowpropose toplace the note issue underpolitical control,because notes will not be issued without theapprovalofthe Treasurer. Ido not see the danger from this practicethat is imagined by some persons. I know very well that whentheLabour party gains the Treasurybench, the note issue will not lay dormant if a useful purpose canbe served by increasing the circulation. Unfortunately the amendment proposedbythe Government is designed to serve certain individuals and not the general community.Theboard of directors., when requiringan issue of notes, will apply to the Government for it. If the bill is passed there will “be nothing to prevent the government of the day from applying tothe Commonwealth Bank for a loan of £6,000,000 to construct, say, the northsouth railway. The interest charged on the loan could be used to reduce the debt, and -to prevent ‘inflation. Notes to the value of the debt redeemed couldbe destroyed each year. In a few years the debt would thusbe wipedoutaltogether. The noteissue should be used unstintingly for national purposes. We are told that the reason for this innovation is the difficultyofexchange, ‘but it is not so. The truereason is that since . 1.914 the liabilities of certain banks have grownconsiderably. At that time the liabilitiesofprivatebanks were £168,000,000; to-daytheyare £312,000,000. Without those liabilities there would be no need for an alteration inthe present note issue. Any one who has closely watched the banking journals and the daily newspapers must know, that pressure has been brought to bear upon the Government by banks which have incurred large liabilities, andwhich consequently fear loss of business owing to not being able to satisfy -their customers’ requirements to thesame extent asbanks whose liabilities are not so great.Before the Commonwealth took over the note issue, the franks received the benefit of the loss ofnotes by fire and other means. There was a greatdisparity between the number of notesissued and the number accounted for. The Labour Government maintained that the country should receive the benefit of the loss of notes, and that was one of the reasons why theCommonwealth took over the note issue and made notes legal tender,. The Government must be responsible for the bill, as no opportunity is givenfor its amendment. The directors appointed to the board will beunder political influence. Their only credentials willbe their intimacy with politicians. The placing of the noteissue under politicalcontrol is an evidence that the finances ofAustraliaare not beingmanaged in thebest interests of the people. The note issue should be used for the constructionof public works. The “interest payments on such a loan would in a few years wipe out the total debt. I amnottheoriginator of this idea. It was carried out in the islandof Jersey or Guernseyfor the erection of market places.I am not a pessimist, but I foresee that unless the utmostcaution is exercised Australia’s financial position will soonbevery serious. The policy of” safety first “should be applied to our finances. The Common- wealth has £410,000,000 worth of deadweight, debt’ which returrns no interest, and the proposal to issue notes to the private banks willnot wipe out that lia- bility. I have been a candid friend of the Government in regard to finance; and my criticisms havebeen admittedby commercial men to be sound. Some banks are pressing theGovernment to consent to the issue of more notes but others which have been more cautious in the acceptance of liabilities, are not so much in need of such assistance. I hope that, notwithstanding theGovernment’s misconception of the functions of a national bank, some good will come out of this institution. To-day Australia’ is li ving on credit, and all the talk about a return to a gold currency’ is so much nonsense. The vaults of theUnited States of America are filledwith gold which was sent there to restore the exchange balance between America and Europe. But of what use is all that gold to the American people ? If investing the Treasurer with power to veto the issue of notes to the Commonwealth Bank does not mean political control of the no te issue,I do not understand the English language.
– Will the Treasurer explain the meaning of this amendment.
,. - It was felt in some quarters that a provision should be inserted in the bill which would prevent the bank issuing an undue amount of notes to itself and’ so causing” inflation. Therefore, the amendment providesthat notes shall not beissued to the bank without the approval of the Treasurer. That will practically ensure that the central bank shall not use the note issue for general bank purposes in competition with the private banks.
– The Treasurer may only approve or disapprove of a proposed issue; he may not initiate an issue?
– That is so. This is a safeguard’ against the Bank using the note issue’ to extendits own business to the detriment of the public by causing unnecessary inflation.
.- Originally theCommonwealth Bank and the noteissuing authority were distinct; there could be no issue of notes without a. deposit of security, and no discrimina- tion between the Commonwealth Bank and private institutions. In future; the note issue will be controlled by the direc torateof the Commonwealth Bank, and these is to be discrimination between that institution and the private banks. The board- of directors may issue notes to the private banks without any restriction by the Treasurer; the amount of the issuewillsbe entirely within the discretion of the board.
– But notes canbe issued to the private banks only against definite ‘security
– If there is one institution in the country that has definite security to offer, it is the Commonwealth Bank. It, like the private banks, can receive additional notes only after depositingthe requisite security. If both private banks; and the national bank have security to offer to the issuing authority why should not they have equal rights? What would the Treasurer say if, following a change of government, the restriction upon the issue of notes tothe national bank were withdrawn, and the issue of notes to the privatebanks were forbidden, no matter how good the securitythey offered without the approval of the Treasurer?” This amend- ment involves the direct applicationof political influence to the noteissuing authority, and,so long as the private banking institutions can; exert political pressure, it will be directed against the Commonwealth Bank. No matter what security the national institution has to offer, it is to be prevented from issuing notes to itself without the approval of the Treasurer, lest it compete unduly, with the private banks in order to obviate this unfair discrimination,. I suggest that the amendment Be altered to read’,. “ pro-viding thatAustralian notes shall not be issued to any bank without the approval of the Treasurer.”
– Will not the Treasurer accept that suggestion?.
– I prefer to Bear more discussion upon it.
.- The clause in the original bill amended section. 60o of the principal act. That section reads -
For any Australian notes required by- the. bank on deposit or for the. purposes: of its. ordinary business, the bank shall make to the Note Issue Department- payment, or shall give credit to the board, upon the same terms,and conditions as those applicable to any other bank.
The bill proposed to strike out the word “ board “ and insert the words “ Note
Issue Department.” The amendment of the Senate adds the words “ provided that Australian notes shall not be issued to the bank without the approval of the Treasurer..” “The bank” means, of course, the Commonwealth Bank. The original bill provided for notes’ to Joe issued to the Commonwealth Bank and the private banks on the same conditions. It is stipulated in section 60 o that the Commonwealth Bank shall not” obtain notes until it has deposited the same security as is required from private banks, but a discrimination is now proposed, for in the case of the Commonwealth Bank the approval of the Treasurer is required. If there is any discrimination, it should be the other way about. The argument has been put forward that there should be no political control of the Commonwealth Bank. There can be no argument against political control of the private banks, but there is an argument against political control of the Commonwealth Bank. The amendment of the Senate provides for political control of the Commonwealth Bank, and no control of private banks. I do not know whether the amendment of the Acting Leader of the Opposition (Mr. Anstey) will fit in with the section, but it embodies a desirable principle. What justification is there for altering the original law?
– The honorable member’s purpose would be served by voting against the amendment of the Senate.
– We could do that, but we are here not merely to record our votes against the Government, but to do what is right.
– Voting against the Senate’s amendment would have the same effect as voting for the amendment of the honorable member for Bourke.
– I believe it would, because the principal act stipulates that the private banks and the Commonwealth Bank shall be on the same footing. The argument used in the Senate was that it was desirable to prevent the board of directors of the Commonwealth Bank from issuing notes to themselves. That is a sound argument, and it is met by the provision in the principal act that the Commonwealth Bank can only receive notes by giving credit to the Note Issue Department upon the same terms and conditions as are applicable to other banks. If the directors of the Commonwealth Bank would issue notes to themselves without security, they could issue them on the same terms to private banks. The Government ought to agree either to oppose the Senate’s amendment or to accept the amendment of the Acting Leader of the Opposition.
– It is not intended to discriminate against the Commonwealth Bank ; the endeavour is to serve the public interest. If the Commonwealth Bank was a central bank, purely and simply, there would be no need for any restriction on its note issue, beyond that provided in the act, and notes would be issued against certain classes of security, such as gold, Commonwealth Government and British Government securities, and trade bills. But as the Commonwealth Bank is at the same time a central bank and a trading bank, there is some justification for a fear that notes may be issued to the trading part of the bank in such excessive quantities as to interfere with the central banking part of the business. In that way the central banking part might be prevented from functioning properly in stabilizing banking. The Senate’s amendment is reasonable, but I am not in love with the way the limitation is made. If any honorable member can suggest a better safeguard, I shall be prepared to accept it.
– Can the Treasurer say why the consent of the Treasurer should be obtained for issuing notes to the Commonwealth Bank, and not for issuing notes to private banks?
– If the Commonwealth Bank was doing only a central banking business I would not accept such a limitation, but as it will be in the future both a general and a central bank - a bank of banks - some safeguard will be needed to ensure that it shall gain and keep the confidence of the trading banks. That is why the Senate’s amendment has been accepted by the Government.
.- I feel sure that the Treasurer (Dr. Earle Page), if left to himself, would not endorse the Senate’s amendment. The section in the principal’ act is sound, and was accepted by members of all .parties at the time. The Nationalists, who were then in opposition, protested that the Labour party would discriminate in favour of the national bank as against private corporations, and in order to remove that objection it was expressly stipulated in the act that there should be no discrimination. The principle of no’ discrimination has been accepted as sound. Is there any justification for discriminating between one institution and another, or between one individual and another? Every institution in the country, whether national, municipal, or private, should have the same privileges in obtaining national currency for securities lodged. It is proposed to destroy that principle at the very root. The Senate’s amendment is not based on equity or morality, but on the principle of private profiteering. It is designed to protect the private banking corporations, and the Government has accepted it without any pretence of justification. The only plea put forward in support of this outrageous proposal is that the bank will be a general bank, a central bank, and a bank of issue. These will be three distinct departments, and they will be managed by three distinct authorities, who are to be appointed. The men who will be entrusted with the management of this great institution, and will handle millions of public and private money, should be honest men, capable of acting with fairness and equity to all. The Government’s justification for the Senate’s amendment is that they will not act in accordance with the principles of equity, and will not exercise good judgment and wisdom, but will issue notes without proper security. There is no justification for that assumption, and no justification for the amendment, which is an outrageous discrimination between a national institution and private corporations,- to the detriment of the national institution. There is only one safe principle to lay down, and that is that whoever can offer security to the issuing department should be able to obtain the equivalent in notes. If the Commonwealth Bank is to continue to exist as a general bank, it must be given the same privileges as private institutions; it must be able to go to the Note Issue Department and present its securities in the same way as any other bank. It is not suggested that the manager of the Bank of Australasia, if he deposited securities and received £1,000,000 worth of notes, should be subject to interference by the Treasurer. Who will be the guardian of the nation in that case ?
– Does the honorable member think that the Treasurer would intervene to the disadvantage of the Commonwealth Bank?
– No, but the Government evidently imagines that the men it will appoint to conduct the institution will do so to the detriment of the nation, or of corporations or individuals in it. It is imagined that they will be so incapable that it will be necessary for the Treasurer to act in the role of guardian of the public interests. It is evident that the manager of the trading branch of the Commonwealth Bank will be seriously handicapped in the conduct of its business if he is not placed on the same footing as, say, the manager of the Bank of Australasia. The Government might as well discriminate between two private banks. It might direct the Commonwealth Bank to issue notes to” the Bank of Australasia while forbidding it, without the approval of the Treasurer, to issue them to the Bank of New South Wales. Upon what basis can the Treasurer assume that the . Note Issue Department would issue notes properly to the Bank of Australasia, and improperly to the Bank of New South Wales. I assume that the department of issue will be quite distinct- from the other departments of the bank - as distinct as the bank of issue in the Bank of England is from the other departments of that bank. The whole thing is a bare-faced discrimination against the Commonwealth Bank in the interests of private banking corporations. It is a bare-faced attempt to place the Commonwealth Bank at a disadvantage as compared with the private institutions. If honorable members on this, side were in power to-morrow and proposed to reverse: this proposal and enact that no’ notes should be issued to any private bank without reference to the Treasurer of the country, a howl of indignation would go up from supporters of the present Government against a proposal to discriminate against the private banks in the interests of the national bank of the country. It would be said that it was an attempt to drive private banks out of business. I warn honorable members opposite, and also the private banking institutions of this country, that they are in this matter making a rod for their .own backs. We know the force that is behind the Government. Principles are being embodied in the bill which would be denounced as odious by the ‘Kepi esentatives .of the priMate-banks if they were embodied in ra Commonwealth Bank Bill proposed -by the Labour (party. Honorable members opposite and ‘those by whom .they ,are being n canoed in ‘this matter may find -these principles extended -against .themselves. There aree two courses which w.e -can take .in .the matter. W.e can, in :the first .place,, -vote against the -Senate’s amendment, and that we shall .do. Under , the .exis’ting act it is .provided that :there shall be no discrimination ‘betw>een .private -banks and -the ‘.Commonwealth Bank, and that all private banks .shall have .the same privilege as the national bank of the country of .access to the note issue on the “basis .of security. It is provided that the Commonwealth Bank shall en joy no .privilege .in this connexion which is .not also enjoyed by a private :hank. This .has been <the law for years- .in ;this country, but it is .now .proposed -to alter it, and to .establish discrimination “in the interests of private banking ‘corporations .and .against .the Commonwealth Bank. The object is that .the Commonwealth Bank shall be .’handicapped. I ha,ve proposed,, -as an amendment,, .the substitution of the word “.any “ far the word “ the “ in the .Senate’s amendment, and T ask -honorable members .to vote for .the principle that there .shall be no discrimination ‘between the banks in connexion with the “issue .of nates .on security. “Honorable .members on this side say that notes should .not be .issued to any bank without the approval of .the Treasurer. ‘That will practically continue the law as it stands. L .ask honorable members to support .my amendment, which will ,give no .privilege to the Commonwealth .Bank which is not given to a- private institution, and will give none to .a private institution that is not .given .to .the Commonwealth Sank. The .Senate’s .amendment, .if carried,, will give a special privilege Jio -private banking .corporations, .and -w.e ,shall -vote against that. I move -
That the .Senate’s amendment ‘be amended by substituting “ any “ .for “the” -before >the word “ Bank.”
..- I shall ,SUpport the amendment moved -by the Acting Leader <of -the ‘Opposition (.Mr- -Anstey). If ‘.the committee required any proof that the hand =©f the associated banks is in the bulk of ‘the vital amendments which have come from the :Senate, it .can .be found in -the amendment now ;under .consideration submitted by the representative of the associated banks im another .place. 3f there -was one thing that -rang true in the r-.ema.rks of ; the Treasurer in .-his attempt to justify the ‘Senate’s amendment, after many conferences with .many gentlemen ^behind the .Speaker’s chair., it was .that the .associated banks .did .-not want it, .and considered it against their interests, He did B»t >say ,so an so many words, .but ie might just as -well have done so. He -told ais .that the .bill .was originally .introduced -without the proviso which nas come from the .-Senate. He said there >wa3 no Attempt to discriminate against the Common-wealth iBank, but that some .safeguards .are necessary because the .Commonwealth .-Bank is more than a central bank. If it were ,only -a grand clearing house of the .associated banks, >we know .that these .would be no necessity for this provision, .because t* would never .be -a -claimant for .notes. If .the Government turned the Commonwealth Bank into merely ,a central bank, it .would do only discount -work tas a clearing .house .for .the other .banks, -and would not .require notes. It is preposterous to .say that .because -the Commonwealth .Bank is also a .trading bank, it for .that reason must .be discriminated against, and the Treasurer .must , ha,ve the right to say whether it .shall .have .the notes for which it asks, irrespective of .the security it offers. The’ idea which the proposal conveys to my mind is that those who are -responsible ‘Tor it are determined that the ‘gentlemen who are -to be appointed to the board ‘tff directors -of ‘the Commonwealth Bank shall (function in the interests of the .associated (banks, or., if they <do -not, that the Treasurer :shall make them -do so. There .must be some reason .’for .the Treasurer’s refusal ito accept the .amendment ,of the .Acting Leader of the Opposition. :The honorable member “for Darwin **(Mr. Whitsitt,) is .at this moment in conversation with the Treasurer. “I can quite understand why the honoraBle member wants a conference with the “Treasurer on this matter. I :hope the ‘Treasurer -will -whisper the right thing in ‘his ear “in ‘order to ‘secure the ‘honorable member’s ‘vote. He -wants three or four -sovereigns put away for every note issued, ‘and T wonder how -the Treasurer is going to -induce the honorable -member to swallow the amendment.
I shall be very much surprised if he does 88 3?he Treasurer,, in support of the Senate’s amendment, says that it is necessary ito* -keep the faith <of the associated banks. Why should we worry about the faith <of the associated banks-? They live on the faith of the people, and on nothing else. There .is .hot a private .banking institution in the world which must -not close ato doors .-and .go -bankrupt -on the day the public loses faith in it. The Treasurer .did -not give one legitimate reason for refusing to .agree .to the amendment .moved from this side. He says that we oan achieve our purpose hy voting against the Senate’s amendment. We know that we cannot, by .ourselves, carry the .amendment moved by the Acting Leader >of the ‘Opposition in good faith, and in the hope that it would ‘be accepted by the Government It is .unnecessary for the Treasurer to remind -us that he has a brutal majority behind him,, because we know .-his strength. We -thought ‘that .the honorable gentleman would admit the reasonableness and fairness of -our .amendment. Its ‘fairness impressed him so much that he found it necessary to have ‘five or six consultations with gentlemen ‘behind the Speaker’s chair. I “believe that if he had had no one to -refer .to he would have accepted it. 1 have often protested against gentlemen who are not members of this House moulding the legislation of this Parliament by telling ^Ministers what they .ought to do. .The Minister in charge of this bill should be able to say whether or not he is prepared to .accept the .substitution of .the word “ any” for the word “ the “ in .the Senate’s .amendment without half-a-dozen conferences with gentlement who are not members of this House. I hope our amendment will- foe accepted, because the Senate”’s amendment is fraught with grave .danger,, not only to the Commonwealth Bank, but also to the general financial arrangements of the nation.
..- I have listened to many .debates in this chamber, but newer -with more .amusement and amazement than to the fight put -up by honorable members of the Opposition against the Senate’s amendment now under consideration.. Their attitude on this amendment is absolutely inconsistent with that which they adopted .on the amendment which we -considered -on Friday, dealing with the constitution .of -the hoard .of directors. Honorable members opposite then .contended that -the -men who anight he appointed to the directorate would not act properly. Mow,, .when we are considering an .amendment which would restrict the powers of the directors of the bank, in a way which I candidly admit I do not think advisable, honorable members opposite -contend that the restriction is unreasonable, ‘because It is impossible to imagine that the men who would “be appointed ‘to the board -of directors of the Commonwealth Bank would so far abuse their trust as to issue -notes without security. I remember that in my young days we were sometimes asked .to demonstrate certain problems of Euclid by the reductio ad absurdum method. That .seems to me to be what -the Acting Leader of the -Opposition -has just attempted to do. He considered the Senate’s amendment to be absurd, land moved his amendment to show how .absurd it really is. The note issue -department of the bank should not be under any .control by the Treasurer, but should he able to issue notes on .acceptable securities to either .the Commonwealth Bank .or ihe private banking .companies.
– The amendment was moved to prevent discrimination -between the Commonwealth .and private .banks.
– I think it was moved to show .the absurdity -of a provision ‘which will permit the note issue department of tike bank to issue notes freely to private .banks, .and yet ‘oblige it to obtain the sanction -of ‘.”Kbe Treasurer before it -can -issue them to the Commonwealth Bank. The Acting Leader of the ‘Opposition hopes that -both his amendment and that of the Senate -will he defeated.
– That is a deliberate misstatement.
– I shall not be drawn off the trail by a remark d£ that kind. I trust that the Treasurer will yet reconsider his position .and ask the committee to reject the Senate’s .amendment “The Commonwealth .Bank should be placed on exactly the same footing as the private hanks in regard to the issuing of notes.
– That as what we want.
– It is difficult to understand the honorable member for Werriwa, for he said a few minutes ago that he -wanted the other hanks to ma placed on the same footing as . the Commonwealth Bank with regard to the issuing of notes. The Senate’s amendment should be rejected.
– That will suit me.
– I realize that. Surely we can trust the members of the board of directors of the bank not to abuse the privilege which they will have of issuing of notes. They will be men of integrity. Doubtless the Senate amended the clause to remove any possibility of the directors, in a time of financial stringency when the bank was sorely pressed, yielding to the temptation to take an easy way out of their troubles by issuing notes for the use of the bank. I do not think that it is at all likely that they would be tempted to do such a thing. I am certain that the present Acting Governor, whom I have known for many years, would not think of doing it. The Treasurer will do well if he asks the committee to reject both the amendment of the Acting Leader of the Opposition and that of the Senate.
.- The Acting Leader of the Opposition did not move the amendment for the purpose of having it defeated, as suggested by the honorable member for Macquarie (Mr. Manning). Had he done such a thing he would have been unfaithful to his duty. The -Labour party is here to do business and to protect as far as it can the bank which it established. I heartily agree with the principle which is at the basis ‘of the amendment. Its object is to hold the Treasurer responsible for any inflation of the currency. If it is adopted it will restore to Parliament a proper measure of control over the note issue. I assert without fear of contradiction that nothing can so seriously affect the wellbeing of the community as currency inflation. It may be said that the note issue will be placed under political control if the amendment is agreed to. I admit that the Treasurer would have a measure of control, but he would not have the power to initiate a movement for the inflation of the currency. All he would be able to do would be to give his approval for or against it. The power of initiation would rest with the note issue department of the bank. But while I agree with the general principle that the Treasurer should have some control of the note issue, I certainly do not agree with the Senate’s amendment, which will make discrimination between ‘ the Commonwealth Bank and the private banking companies inevitable. I can quite understand the attitude of the honorable member for Macquarie. Some weeks ago he delivered an address in this chamber which indicated his strong desire to inflate the currency. In view of all the circumstances I shall vote for the amendment of the Acting Leader of the Opposition, but if it is defeated I shall be compelled to vote against the Senate’s amendment, for the reason that I am entirely opposed to discrimination between the Commonwealth Bank and the private banking companies. It would be absolutely unjust to the Commonwealth Bank for us to agree to such a thing. “We should rather be doing everything possible to promote the interest of our bank, for in the last half-year it has made available £60,000 of its profits for the reduction of the national debt. Honorable members will fail to do their duty if they do not stand up for the bank and assist it in every possible way.
.- I do not see the need for the Senate’s amendment. I certainly do not favour any discrimination between the Commonwealth Bank and the associated bank in the issuing of notes. Not a single note “should be issued to any institution unless the issuing authority is given gold security for it. We should have an equivalent in gold for all our notes, and until we have it we cannot claim that we are financing on sound lines. Of course, there is some virtue in printing notes. It provides work for the printers. The £1 note issued by the Commonwealth has the following promise on it: -
The Treasurer of the Commonwealth of Australia promises to pay the bearer £1 in gold on demand at the head office of the Commonwealth Bank of Australia.
As a matter of fact, a note without proper security behind it is only worth the paper it is printed on. Honorable members must recognize that they cannot get money out of nothing, norcan they get it off a printing press. Certain individuals in Australia have been offering millions of German marks for sale for 5s., but the paper is worth nothing at all. The only real object in issuing notes is to save the wear and tear on gold. Notes are lighter to carry, and more easily handled than gold, but as currency they are only valuable in the degree to which they are backed by gold. The Government recently borrowed another 5,000,000 £1 “ flimsies.” I would like to know why it has done so. If it needed more money it should have obtained it from the surplus. I sincerely trust that we shall deal with the business of this country seriously, and not. imagine that we are wealthy simply because the banks have a lot of printed paper in their possession. Our industries and finance generally can only be stabilized by a return to the gold standard. I hope that the control of the note issue will be entirely .removed from the Treasurer. The’ banking companies know best what currency they require, and we shall do well to provide that notes shall be issued only in the degree to which gold is available as security for them. I am not in favour of issuing one note either to the Commonwealth Bank or to the associated banks, unless they have the equivalent in gold. I trust that the Treasurer will withdraw the amendment.
– Honorable’ members on both sides have spoken on this amendment. I have explained the reason why it was inserted by the Senate, and I have already indicated that the safeguard given may not be the best that could be devised. It has the disadvantage of practically putting the Treasurer in perpetual control of the note issue, as every matter concerning the issue of notes by the Commonwealth Bank would have. to be brought before him. A suggestion has been made by the Acting Leader of the Opposition (Mr. Anstey) to alter the amendment to provide that Australian notes shall not be issued to any bank without, the consent of the Treasurer. If that amendment were carried, not merely the first issue of notes, but also all subsequent issues by the Commonwealth Bank to other banks would have to be approved by the Treasurer. In view of the general concurrence of opinion expressed by honorable “members, the Government is willing to negative the Senate’s amendment. This will also negative the amendment suggested by the Acting Leader of the Opposition.
– I do not know whether it is the fear of the responsibility that will be thrown upon the Treasurer that has caused him to come to this decision, but, if the general principle of the amendment is fight, I see no reason” to prevent him from substituting the word “ any “ for “ the,” thus making the provision apply to all banks. We as the custodians of the people must look after them for good or for evil. Nothing can be made more an instrument for ill, so far as the community is concerned, than the inflation of currency. By the withdrawal of the Senate’s amendment no control in any shape or form will be exercised by this Parliament, and I regret that the Treasurer has seen fit to withdraw the amendment.
.- -It seems to me that the Treasurer does not understand the position. If he takes my advice he will report progress, so that he may obtain further information.
.- I hope that the Treasurer will not negative the Senate’s amendment. I do not agree with the amendment proposed by the Acting Leader of the Opposition. I suggested, in my second-reading speech on the bill, the amendment now made by the Senate, and because of my efforts it was introduced in another place, and is now before this committee. This provision will not cause discrimination between the banks, but is intended to put all on the same basis. At present other banks cannot obtain notes except under the control of the Notes Issue Board, but the Commonwealth Bank can, under the- bill as originally drafted, issue to itself notes without any control.
– On no security?
– Of course the value of the security would have to be considered.
– Does the honorable member consider that there would be one estimation for private banks and another for the Commonwealth Bank?
– The idea of the amendment is that the Commonwealth Bank shall not be allowed to issue notes to itself without any restraint, and, to put it on the same basis as other banks, the approval of the Treasurer has to be obtained. The Commonwealth Bank Board is the sole authority for the issue of notes, and is a law unto itself. The amendment entails a reasonable safeguard by providing that the Commonwealth Bank shall not be allowed to issue notes without restraint. The amendment prevents rather than encourages discrimination. On the other hand; the amendment proposed: by the Acting Leader of the Opposition is to increase discrimination, becauseifwere made the private banks could obtain notes only with the approval of two institutions - the bank and the Treasury.. There is a difference between the Commonwealth Bank acting as a check on other banks and acting to facilitate its own operations. I trust that the committee will not negative the Senate’s amendment.
. -The honorable member for Perth (Mr. Mann) stated that the object of. the amendment was to put the Commonwealth Bank on the same basis as the private banks.He told the committee that under the existing act there was no control over the Commonwealth Bank in the issue of notes, but there was control over the private banks. He is entirely wrong. If the honorable member reads the act he will see in section60o that the Commonwealth Bank can. obtain notes only under the same conditions as private banks-.. The amendment that was introduced in the Senate at the hononable member’s instigation was to enable private banks to get their notes without any reference to the Treasurer at all..
– Notes were obtained under the same conditions when the Notes Issue Board and the Commonwealth Bank were two institutions. Now those institutions are combined.
– Exactly the same position exists now.
– That is not so-.
– The- honorable member does not seem tobe able to distinguishbetween the general branch of the Commonwealth Bank and the Board of directors of the Central Bank. If those in control of the general branch of the Commonwealth’ Hank require notes, they apply to the Notes Issue Department just as do the managers of privatebanks. Under the principal act they have to lodge with the Notes Issue Department the same security as private banks. That is the last to-day. The Senate’s amendment proposed that the Treasuser of the day should act asa brake upon the operations of the Commonwealth Bank, and should give a free hand to private institutions. I am glad that theGovernment has decided not to allow such a discrimination. Even if the interpretation of the honorable member for Macquarie (Mr. Manning) of this party’s amendment were right, I regard it as only f air to defeat a proposal by reducing it to an absurdity: A reductio ad absurdum is certainly not a ridiculous way of defeating an argument. It has been tried, and” proved very effective on many occasions,, and not ineffective on this occasion. Our amendment was. moved, not for the purpose of. defeating, the Senate’s amendment, but with the object of putting upon private banks the same restriction as was placed on the Commonwealth. Bank. The position’ as stated by the honorable member is not correct. The law now provides that the Commonwealth Bank cannot secure notes under better conditions than private banks.
Amendment (by Mr. Anstey), by leave, withdrawn.
Senate’s: amendment negatived.
Senate’s Amendment. - After clause 16 insert the following new clause : - “ 16a. After section sixty o of the Principal Act. the following section is inserted : - 60oA. The Board may issue Australian: notes to the Bankor to other banks in Australia in exchange far money or securi- ties lodged with theLondon branch of the Bank.’ ‘”
Motion (by Dr. Earle Page) proposed’ -
That the amendment be agreed to.
.- This, I should say, is the most vital amendment inserted by the Senate.. It provides that the board may issue Australian notes to theCommonwealth Bank or to other banks in Australia in exchange for money or securities lodged with the London branch of the bank. When the bill was before the Senate a long discussion took place. Honorable senators championed the cause of the private banking institutions. An amendment was moved that held up the bill. It was to the effect that the whole question of exchange and foreign credits should be referred to a commission of investigation. It was probably a very sound proposition, because noquestion requires investigation andelucidation. more than that of London credits. Al- through statementshave repeatedly been made that our credit in London is £40,000,000 or £50,000,000, yet any one who examines the trade statistics between Britain and Australia, compares the imports and exports; and estimates the amount, of interest that we have to pay on our public debt will arrive at a debit of something; like £15,000,000 instead of a credit of £40,000,000. Every one who has made an examinations of the figures says that the amount standing to our credit in London is about £40,000,000, but no one has ever come down to this chamber with any concrete evidence that such a credit is in existence. That credit may be realor it may be mythical, but, having regard to the excess of imports over exports, if it exists it is certainly a f ast disappearing quantity. During the last four years the balance of trade has been against Australia’ to the amount of probably £40,000,000.
– And yet the exchange rate is against the exporter..
Mr-: SCULLIN.- We are in the anomalous position that the exchange rate is in our favour; but it iskilling local industries, and handicapping: the export of primary products. Some investigation should be made by a competent authority to prove that Australia has real and tangible credits in London against which notes can be issued. Surely it is the responsibility of the Government to ascertain what those credits are..
– The honorable member should take into account also the excess of Bawra exports, plus borrowings abroad ..
– Yes, and I would add the expenditure of Australian tourists abroad which would more than counter-balance the expenditure of foreigners touring Australia.. Taking into consideration all. these factors, the balance of trade is against us.
– The favorable balance of trade is against us; that is why the credits are in London.
– But the creditsin London do not amount to £40,000,000. I donot say that we have not a creditin London, but if we have there is something radically wrong with the figures that have been presented to this Parliament. However,. I rose mainly to relate the history of this amendment, and: to protest against then Government’s acceptance of it.. When the bill left this chamber it contained no proposal for the issue of Australian currency against foreign credits; that involves a financial revolution.
– The board has that power al ready.
– The Treasurer (Dr. Earle Page) made the same statement on Friday last; yet the Senate saw fit to hold up the bill for weeks in order to insert an amendment to give that power. The action of Government supporters, the champions of the private banks, in holding, up the bill until the Government brought down an amendment to do what the Treasurer says the board already has powerto do is significant. It means simply that the purpose of the amendment is not to give the board power to issue notes against foreign credits, but tor instruct it to do so.
-It does not mean that.
-.- If it does not meant that it means nothing.
– Hear, hear !
– All the parade in the Senate, the satisfaction expressed by Senator Greene and others when the Government agreed to the amendment, and the approval of the private banks, would go for naught if the amendment merely gives the board a power it already possesses. I admit that the original act gives the board power to do what the amendment purports to empower it to do. Why then do I oppose the amendment?. Because the conditions under which it is introduced carry an instruction to the board. I invite- the attention of honorable members to the statement made in the Senate on the 23rd July by Senator Crawford- -
I desire, on behalf of the Cabinet, to announce that the Treasurer (Dr. Earle Page) to-day met the representatives of the banks, who submitted a proposal that an amendment should be made in the bill to provide that the board shall have the power to issue notes to the banks- in- Australia against securities or notes held by the banks in England. The Government has agreed to accept the amendment, and representatives of the banks have expressed themselves as satisfied.
If the board already had the power, and I admit it did, why did the Treasurer meet the representatives of the private banks on.23rd July; and consider the proposal that emanated from them? And why did they express satisfaction with his promise to insert an amendment giving the board of directors an authority which everybody asserts it already has? Because the amendment is- more than an authority ; it is an instruction to the board that it must issue notes against securities in london - a policy which the old Notes Issue Board refused to adopt.
– The amendment does not necessarily mean that; it merely removes ambiguity.
– The representatives of private banking interests do not employ their political agents to hammer at the doors of Parliament for weeks merely for the purpose of removing ambiguities.
– Does the honorable member quarrel with the principle of the amendment ?
– I object to the method by which it was introduced, and to the putting into an act of something that is already there. If the board has power to issue notes against London securities, with what object is the amendment inserted ?
– To have the notes so issued.
– This is an interference with the discretionary powers of the board. It will regard itself as having been instructed by Parliament to adopt this policy.
– The honorable member is reading the amendment as if “shall” instead of “may” were employed.
– In the circumstances in which the amendment has been made “ may “ does mean “ shall.” As the, representatives of the Government in the Senate admitted that the amendment was brought forward as a result of consultation with the representatives of the associated banks, I have a perfect right to interpret “may” as meaning “shall.” Consider Senator Greene’s statement -
Senator Foll is to be congratulated upon having moved his amendment, as it has been responsible, at all events, for the announcement made this evening by Senator Crawford. It is what the banks have been advocating for a considerable time; it is a principle which the Notes Issue Board has ‘ steadfastly, and, I think, wrongly, refused to recognize.
Honorable members can see that the whip had been cracked. The question is not whether the principle involved is sound or unsound, but whether the note issuing authority is to be dragooned by an amendment inserted in these circumstances, and purporting to give a power which, already exists. “May” does mean “shall” in these circumstances. What a somersault the Treasurer has turned! In his able and informative speech in moving the second reading of the bill he said -
The next proposal to be noticed is that notes -should be issued to the banks in Australia by the Notes Board, and that the board should take from the banks in exchange an equivalent amount of credits in London. Now this proposal is usually put forward in Australia in a somewhat loose manner. For example, we are not told how long the Notes Board is to hold this credit, and whether or not the Notes Board is to take the initiative in the disposal .of its London money.
Now that the Treasurer has adopted the principle that had been advanced “in a loose manner,” does he intend to tighten it up? And will he answer the questions which he asked of the persons who were responsible for putting forward the proposal in a loose manner? Of course, he was referring to the present Minister for Trade and Customs (Mr. Pratten), who was at that time an independent critic of the Government. The Treasurer essayed to explain the amendment to the committee on Friday last, but did he answer the questions he had put to his colleague, the honorable member for Martin - “ How long is the Notes Board to hold its credit? Is the Notes Board to take the initiative in the disposal of its London money?” He said not a word in answer to his own interrogations. What is the note issuing authority to do with its London credits? Is it merely to hold them as securities, or will it take them over permanently ? These are problems’ that the Treasurer has not elucidated. He said on the 13th June -
Suppose that . . . the banks demanded notes from the central bank in exchange for £10,000,000 of London credits. In such a case, it can scarcely be doubted that the banks would build credit on those notes.
That meant that if the banks received £10,000,000 “worth of notes they could on that basis of cash build up a pyramid of credit to probably five times that amount. The result would be that not merely £10,000,000 would be added to the local currency, but cheque money manufactured by the banks would further add to the means of payment by from £20,000,000 to £25,000,000, according to the Treasurer’s estimate. The honorable gentleman went on to say -
Undoubtedly an increase to that extent would have an appreciable effect upon prices, including the cost of labour. Then our secondary industries would receive a setback, because it would be cheaper to import than produce locally. . . . Danger would, have been done to our industries, with consequential unemployment.
The Minister for Trade and Customs said it was quite sound, but the Treasurer said it would have these awful consequences - that it would destroy our secondary industries, and would bring about consequential unemployment. The Treasurer went on to say -
The central bank ‘ must not be directed to provide exchange at any particular rate or to issue notes for English money.
It “must not be directed” to do it. If the amendment of the Senate, framed after consultation with the banks’ representatives, who expressed themselves as satisfied, does not add to the powers of the board, it at least “ directs “ the board. The Treasurer went further, and emphasized his point in the following words : -
Unfettered discretion must be given to the central bank in order that disturbances shall be avoided.
What is the object of the amendment? The Treasurer explained the Senate’s amendments last Friday. His explanation was that the board already had the power, and ought to continue to have it. That was how he tried to camouflage the question. If he was employed by a business firm, and told his employer at the end of the week that he had only done what had been done before, he would get the “ sack.” There is, no doubt, a great significance in the amendment. Senator Massy Greene said that the Notes Issue Board steadfastly resisted the proposal, and it is, no doubt, put into the bill for that reason, and as a direction to the board. Yet the Treasurer says the board should have “unfettered discretion.” He further said -
The real cure, both of exchange troubles and currency shortage, if it exists, lies in a return to the gold standard.
There has been a good deal of talk about the gold standard, but that is not the question now. It is certain, however, that the amendment goes a long way from the gold standard when it provides for issuing notes against foreign credits. The Treasurer also said -
The board of directors of the central bank will decide how far they shall- safely go in the issue of notes for additional growth of trade requirements.
Then why the amendment? On the 15th May the Minister for Trade and Customs (Mr. Pratten), who was then a private member, spoke on the subject, and said -
The British banking system has been framed, designed, and carried out for decades in order to swell British exports of manufactured goods and to facilitate the importation into Britain of raw materials. This policy has been grafted upon Australia by the British registered banks operating here, and’ the Australian registered banks are compelled to follow suit in order to protect their interests.
That explains why the Treasurer said it would affect our secondary industries if the private banks were allowed to have their own way. The Minister for Trade and Customs has supplied the Treasurer with an answer, but he went further than that, and said -
I am afraid it is almost too late, in view of the rush of imports, to hope to salvage much, if any of the excess credits Australia has owned in London within the last twelve months.
The Minister had carefully studied the question, and he made a very lucid and able analysis of the financial position at that time. It is against the disappearing credit to which he referred that Australian currency will be issued - against a credit the existence of which has to be proved. The reply will, no doubt, be that although the notes will be issued against disappearing assets, new assets will be created. What does that mean? The proposal to issue notes against foreign credits is to relieve Australia of a temporary difficulty, but when further goods are sold in the London market to redeem the notes, there will be inflation.
– Will not the net result be rather a diminution of imports?
– When the notes are issued, the private banks will build up a superstructure of credit upon them. They will finance the exports of wool and other goods from Australia, and thus will build up more credits in London. If we issue notes to the amount of £8,000,000, and credits are created to finance £80,000,000 worth of exports, we shall have £80,000,000 more of credits in London. Will that relieve the situation ? How are those credits to betransferredto Australia ? Will the bank issue more notes against more London credits? The Treasurer hasnot said how thesituation will berelieved. If thehonorable member -for Darwin, who advocates the issuingof a note only whenthere as asovereignbehind it, can swallow thisamendment-
Mr.Whitsitt. -i cannot.
– -I do not say that we should havea sovereign foreverynote issued; thatis an absurdproposition.It is possible to inflate the currency by an over -issue ofgold;but agold currency would be automaticallyregulated, to someextent, ifgold were allowed to be exported. Thereis much loose talk in blaming the note issue for high prices, and I am inclined to thinkthatcause and effecthave been confused. Prices soared in America where there was -more goldthan theyknew what to do with. My opinionis thathigh prices were due to the operations of war profiteers, who took advantage of the goods shortage to raise prices, andthecurrencyhad to be increased tomeet the greater volume of trade. If prices are increased the currency must be increased.High prices were more the cause of the increased currency than theincreases currency wasthe cause of highprices. If notes are to be issued againstcredits andwealth, Isuggest that they should be issuedagainst creditsand wealth inthiscountry. To solve the problem of foreign exchanges, we must do more manufacturing in this country, provide a biggerlocal market for ourproduce,and import less in manufactured goods. Ibelievethat onlyanexpert investigation can prove whether wehave any real assets in London against ‘which -to issue currency.Itis proposedto take awayfrom theNotes Issue Boardthediscretionary powerthatthe ‘Treasurer has always said it should have. The amendment wields thebig stickof politicalinfluence. Unless that is so, ithasnosignificance,sense, or meaning,and there was no meaninginthe Senate holdingupthebilluntil an agreement had been made withthebanks. Ifthe amendment is notadirection ‘or instruction fromParliamentto thebank. it might , aswell bewithdrawn .Ifitis an instructionordirection as I maintain it is andas the evidencegoesto show, it is political influenceoftheworstcharacter exerted byaGovernmentthat says it isremoving thebank frompolitical in fluence.
– The speechof the honorable memberfor Yarra(Mr. Scullin) is interesting, because the -accusation has been levelled at the Government that the bill was framed -by the private banks, who haddictated every line, and crossed every “ t “ and dotted every”i “ . of it. Now we learnfrom the honorable member that it was ‘held up in the Senate because it ‘did notmeet with the wishes of the private banks. Both those statements cannot betrue,and, in fact, neither of themis true. Ishould like to mention exactly what took place at -the meeting between the representatives of the banks and myself. The general managers of the banks in Sydney and Melbourne intimated to me thatthey would like to discuss some portions of thebill with me while it was still in the Senate. I said Iwould discuss it with them if they would come tothe House.I met them, and theysaid that therewas onething they would like tohave made quiteclear.. Theytold methatthere was a considerable diversity of opinion among bankers as to whether theNotes Issue Board had power to issue notes against securities held in London. I said that was an easy statement to answer,because the ‘Commonwealth “Bank Act made the position perf ectly clear. I told themthat it was unfortunate ifthe provisions of the act had notbeen properlyunderstood by everybody, and that therewas no objectionto making the powers of the bank quite clear in theamending bill. All the amendmentdoes isto say that notes “may” he issued to the Commonwealth Bank, or other banks in Australia, in exchange for money orsecurities lodged withthe Londonbranchofthe Commonwealth Bank. The amendment makes the position clear, is in no sense an instruction, and confers no additional power. The honorable member for Yarra did not attack its principle, and in my second-reading speech, I dealt withthe subject at greatlength.I pointed out that thepower existed, and that it was a power that the bank should exercise. I said that,for the exercise of thatpower, thereshouldbe in chargeof the bank a boardwith a wide knowledgeof finance, and Australian and world affairs.I said-
Considerationof thesepossibilities willshow that the Central Bankmustnot be directed to provideexchangeat any particularrate or to issue notesfor English money.,and vice versa, up to any amount which thebanksor the public may “apply for. Unfettered discretionmustbe givento theCentralBank,in orderthat disturbances shall be avoidedas far as possible.
Thereisnothingin thisamendment which suggests anything but anunfettered discretion given totheboardto deal in theway proposed. Allthattheamendment does is toremove a certain ambiguityof expression inthe present act. The power to dealwiththis matter iscontained in section 60 Iofthe existingact, which says - (1.) Part of the moneysderivedfromthe issue of Australian notes or acquired on the transfer ofthe Australian NoteIssuefrom the Treasury,shallbeheldbytheBoardin gold coinforthe purposesof thereserveprovidedfor in section sixtyKof this Act, and the Boardmay investthe remainder or any partthereof -
Thatis thegeneral powerwhichtheNotes Boardhas hadever since 1920.It is worthnoting that, although theNotes Boardhas had thispowerall thistime,it hasneverexerciseditinconnexion with UnitedKingdomsecuritiesor trade bills. Oneoff the reason’s whythiscentral bank is beingconstituted at present,and is being given controlofthe note issue,is to enable these powerstobeoperated more satisfactorily andcontinuouslythan has beenthecaseupto thepresent.The NotesBoardhas felt itself more or less out of thestream of bankingand finance, and has felt thatit could exerciseamuch morebeneficialinfluencein thecommunity at large, and especially in the control of finance, if it were in aposition to usethe securities itholdsin this way to meetexchange conditions.Theway in which the provision wouldact is quitedifferent from what thehonorable member for Yarra suggests.Hesuggeststhatnotes would be issued in Australia for securities in London, and thatthe banks would immediatelybuild up credit onthat, andsub sequently build up creditagain inLondon,andwould socreatean increasing pile of credit. That isnot whatwould takeplace. Theboard would take steps tosell its securities to ensure thatthereshouldbeno inflation.Itis because it hasnotbeen an aposition to dealwithsecurities in this way thatit hasbeenmoreorlesshampered in the past. This provision is partandparcel of the central banking system, andwill enable the bank to make itssecurities liquid,instead of immobile, as they are at present.
Mr.Fenton. - Why all this trouble if, as thehonorable gentleman says, the power isalready providedforin the act.?
Dr.EARLE PAGE.- This is proposed merely to remove any ambiguity in the existing act. ‘The way in which the provision wouldoperateis evident from the report of the imperial Conference debates andresolutions.In dealing with the BritishTreasurer’s memorandum relating to the question of exchange, the report says -
Tinder the presentconditions, when the sterling resources of the South African or Australianbanks are inconveniently enlarged or diminished, theyneednot restore them (as they had to with the gold standard) by expanding or contracting credits; they had the alternative of -quoting sterling at a discount or at : a premium.Theproblem issimply to avoid resorting tothis alternative.
The best method is torely on acentralbank of issue. A central bank of issue can effect the exchange in either or both of two ways. It mayundertaketo issue its notes against sterling, and convert thembackintosterling at a fixed rate, and/ orit tmay itselftake measures for expanding or contractingcredit as the state ofthe exchanges mayrequire.
In the resolutions carried by the Imperial Conference, thematterwas dealt with in this way -
That wheredifficultieshavearisen in regard to exchange between certain parts ofthe Empire and between such parts and the (United Kingdom- (a.) The position couldbe ameliorated if the note issuingauthoritieswereto accumulate sterling assets and to undertake to exchange their local currencies for sterling, and vice versa.
This measure might be further developed and assisted by the creationof centralbanks and by mutual cooperation, asrecommendedby the GenoaConference.
Themethodswhereby these sterling assets wouldbe accumulated and used would prevent inflation or theevil results which the honorable member forYarra predicts.
– This all contradicts what the honorable gentleman said in his second-reading speech.
– No; it is absolutely in consonance with what I said in my second-reading speech. I made it perfectly clear that unfettered discretion should be given to the central bank in order that disturbance might be avoided as far as possible. All that the amendment does is to make the position absolutely clear.
.- The honorable member for Yarra (Mr. Scullin) intimated that it was the influence of the banking corporations that prompted these suggestions. The Treasurer says that that is not so, and that this provision was not in the bill as originally introduced. I am not blaming the Government in the matter. It is up to the Government to do as much as it can for its friends. If people will not help their own, who will help them ? If the present Government does not look after its friends now it will never have a chance to do so later. In connexion with a public matter recently, I desired “ the support of one of these gentlemen, and submitted to him a certain proposal. He said, “ This is very fine, but I should like some changes made.” I said, “ Very well; I think we can come to terms; I shall strike out what you object to and put in what you want.” A few days later, he said he had given further consideration to the matter, and that there were one or two paragraphs he would like to have omitted and a few items he would like to have inserted. I then said that I would accept everything he had suggested. A few days still later, he came to me with a third request, and I said, “ That’s the end of it.” But so far as the Government is concerned there is no end to the pressure of the banks. When this bill was originally introduced the private banks made a suggestion, and as they opened their mouths and had them filled they have come again and again for further supplies. I said on a previous amendment that the private banks were making a rod for their own backs. They are doing the same thing in connexion with this amendment. They are laying down fundamental principles. It was formerly a principle accepted and fought for in this House that the note issue must have’ a gold backing. That has gone by the board.
The principle now accepted, put forward by the banking corporations and formulated by the Government in this bill, is that notes can be issued not on the basis of gold, but on the basis of paper securities, whether they be deeds, bonds, or bills for goods in transit. The Government endorses this new principle, and should any Government propose an extension of it the present Government and its banking friends outside will have no right to object. The third principle laid down by the amendment is that we shall not only issue the national notes on paper securities held within our own borders, but we may issue them based on securities held thousands of miles away from this country.
– That has been in the act for four years; it is not new.
– I say that it is a principle which the honorable gentleman is putting forward, and he will have no ground of objection if to-morrow we should build on the principles he is now formulating. If the honorable gentleman can operate this principle in the interests of private banking corporations, he cannot object if to-morrow we .are in a position to do so and apply the principle in the interests of the nation. The Treasurer has formulated a principle that we may issue Commonwealth notes not merely upon securities within Australia but also upon securities held thousands of miles away, and entirely outside the jurisdiction, of the Commonwealth Government. The proposal is based upon the ground that there are immense securities held overseas. I have tried to obtain a few facts on the matter. I noticed the other day in one of the newspapers the statement made that there is no means of obtaining any sound knowledge as to the amount of securities or the amount of credits we have overseas. I direct the attention of the honorable member for Martin (Mr. Pratten) to this matter. He made a speech recently on the subject of the international problem relating to exports and imports. I find, according to the record, that during the last four years we imported to this country goods to the value of £498,000,000, and exported goods to the value of £528,000,000. This gave us over the period of four years an excess of exports to the value of £30,000,000. These four years included 1920, our peak year for exports, but if we leave out 1920, and take the figures for only 1921, 1922, and 1923, they show that our exports during those three years amounted in value to £378,000,000, and our imports to £399,000,000, an excess of imports amounting to £21,000,000. If these figures tell the truth we axe in debit, and not in credit overseas. It has been most remarkable to hear that this country is in credit overseas. It is said that we have no means of knowing what our credit overseas is, but I say that there is a means of knowing. If one looks at the Bankers’ Record, issued by the banking corporations, he will find that it shows the balance-sheets of the various banks and their oversea credits, as well as their credits in Australia. I find from this publication that in 1914 the private banks of this country had overseas’ credits to the extent of £55,415,000. These consisted of trading accounts, £33,565,000; gold, £14,205,000; Government notes, £2,033,000; or gold and notes to the amount of £16,238,000. Government securities represented £4,427,000. Bank premises overseas were valued at £501,000, and notes and bills of other banks accounted for £684,000. The liabilities of the banks overseas amounted to £29,471,000. This gives a surplus of assets over liabilities overseas of £26,000.000. In pre-war times the banks had enormous assets overseas. In 1920 the surplus of assets over liabilities was £48,000,000. The assets were given as £120,000,000, and the liabilities as £72,000,000. That was the peak year. In 1921 the surplus of assets over liabilities had fallen to £26,000,000, but in J 922 the assets were £101,000,000, and the liabilities £57,000,000, showing a surplus of assets over liabilities of £44,000,000. The liabilities for 1923 were as follows: Debts due to banks, £51,145,000; gold, £4,704,000 ; Government notes, £27,002,000 ; Government securities, £21,363,000; bank premises, £520,00.0; notes and bills of other banks, £1,110,000; total, £105,844,000. The liabilities amounted to £61,105,000. The surplus of assets over liabilities was, therefore, £44,000,000. We can see from these figures that the position is not so serious now as it has been, for it is better than it was in 1921, and as good as it was in 1922. When this proposal was first put forward it was strongly criticized by the Treasurer (Dr. Earle Page). Doubtless he ob tained advice from the members of the Notes Issue Board, who furnished him with the reasons against it which he used when replying to the arguments advanced by the honorable member for Martin (Mr. Pratten), prior to his appointment to the Cabinet, in support of the proposal. He said -
As to the suggestion that existing London credits should be adjusted by the liquidation of Government debts there, it is necessary to point out that the money at credit in London is private money, and its owners are not willing to hand it over to the Government as an investment.
Of course they are not willing to let the Government use it for the public benefit; but as soon as there is a possibility of getting the Government, through the Commonwealth Bank, to advance them money in Australia on the strength of it, they are all in favour of letting the Government have the use’ of it. He went on -
Suppose the banks demanded notes from the central bank in exchange for £10,000,000 of London credit. In such a case it can scarcely bc doubted that the banks would build credit on those notes.
That, of course, would be their object in getting the notes. The Treasurer went on -
The result would be not merely that £10,000,000 had been added to the local currency, but cheque money manufactured by the banks would further add to the means of payment in Australia.
That is to say, that if the Commonwealth Bank issued notes to these private institutions on the strength of their London securities, they would build up a huge superstructure of credits, and instead of paying 3 per cent., 4 per cent., or 5 per cent, on the money advanced to them, they would really be paying only 1 per cent, or li per cent. The Treasurer also pointed out that they would use their cheque currency to still further serve their ends. In describing what would occur he said -
We shall be taking only a moderate view of the possibilities if we suppose that the means of payment in Australia were added to by £20,000,000 or £25,000,000.
So that instead of having only the £10,000,000 granted to them by the central bank on the security of their London credits, the banks would really have available £25,000,000 worth of currency.
Ite does not need any stretch, of the imagination to- believe- that they, would, increase this amount to £50*000,000. The Treasurer, pointed- out’ that, this would have a disastrous- effect upon the. country.. He said -
An increase to that extent would- have- an appreciable effect upon, prices, including the cost of labour.
Notwithstanding the- opinions, that he then expressed - and I remind honorablemembers that the speech from which I- am quoting was- delivered only a few weeks ago - he is now proposing the very thing that he then resisted. The representatives’ of the banking- corporationshave called upon, him, and- they have.- led him to agree to the* scheme. Another reason the’ Treasurer- gave- for: not previously doing what he- now. proposes to. do- had-, relation! to our. secondary- industries. He said -
Our secondary; industries would! receive a> setback, because it would be cheaper to import* than to produce locally.
That- means that the import craze would, receive”- still further- encouragement. Bte went on as follows” : -
In this illustration I have supposed that the I.on don credit! transfered; would’ amount to £10,000,000,- but in reality no. one could safely forecast what would be the amount. Even if.’ it were less, the tendency towards increase of imports would be just as I have described.
Eventually the exchange- would turn theother way. round owing- to increased- imports, but in; the, meantime- damage would, have been, done to our industries, with, consequential, unemployment.
Even these reasons did not satisfy theTreasurer, for he pointed” out that there was really no need, or at least. no pressing, necessity, why notes should’ be issued against securities’ in London. The Treasurer’ might have said a good many other things in this’ connexion.-,, but I do not propose to’ supply- hrs omissions. It is sufficient for my present; pm-pose to point out that, whereas when- he moved the second reading or this bill’ he was opposed” to> the proposal! that notes’ should be issued against securities held” in London for the substantial, reasons^ which. I- have quoted,. he= is» now favorable? to- it. Bute he kas’ not given1 us- & single’ reason: in explanation of his al’tered” attitude. The banking, companies are not. in- a serious; position.”,, for they have been, able to- increase their dividends:. I regret that the honorable member for Boothby- (Mr ..DuncanHughes) has: left” the) chamber., for I< have some definitions of “ will,” from) Roget.’s Thesaurus:, which. I intended, to quote, for his special, benefit. I shall have: to, quote them in his absence.. They are. as follow: -
Pleasure, wish, mind1;’ frame of mind”; &c…… think fit, determine, &c. (resolve).
. of one’s, own accord, free. will. . .
There- is’ no justification’ for the* demands of the- private banking corporations, and1 the strongest argument any opposition could1 furnish- against the amendment comes from the mouth of the Treasurer’ himself. In his recent budget speech-, in one statement after another- he showed clearly that there was no justification for the amendment. While the Treasurer pointed out” that the increase would: amount to £22,000,000 in. one” year; 1 shall show what the private banks’ have done, of recent years. In 1916 they had’ £58,000,000 in gold, and they issued* credit to the extent of no less than- £r96,000-,000’. Although their gold reserve nas. now been reduced to about £50000,000, yet- in one form or another the investments of the private, banksamount to,, roughly, -g300j06o,000. With the aid of. Commonwealth notes, which, are as good as gold,, the private banks have raised, a superstructure of credit of over £100,000,000 in a few years. But its. base is getting weaker day by day. They need to replenish it; and: they are going to- do it at the- expense of the nastion. This. Government proposes to advance to. the. banks additional notes. But a business man or any other, member, of- the community in. need> of financial accommodation, no- matter how good his securitymay Be, may nob go. direct to- the Commonwealth. Bank,, but must mortgage his securities to trie private banking corporations, and pay the interest that they levy.. After that the private banks- will take the securities lodged by- members of the public,, deposit them with the. central bank,, and receive notes- in. exchange. In consideration! of.- those notes- the banks may, build up their credits, and- exploit, the. country.. Who> is. now proposing to- load. Australia with additional7- taxation.? Unfortunately, the- revenue- that will come from, the increased taxation; will. not. flow into* the- coffers of thee public; treasury/,. but. into the Commonwealth. Bank… The increased profits. will be= for the- privatecorporations;, and! this-, will, constitute a. further levy upon’ the productive, capacity. of the country.. Yet the Government asks -why -production .is crippled., instead of studying ‘lie interests of (the (private banks the Government should make money cheaper, and .make more currency ;available to all who have ‘security to -offer. All should be given an opportunity to go to the national institution. Instead !of laying down the principle that what is good enough for the private individual -should be .sufficient security *f or the -nation itself., and .instead of providing cheap :currency for the small -producers, the Government, by .its proposal, will enable ;a :few bank shareholders to make ‘enormous profits. Whatever liabilities or obligations the private institutions have, the> .nation must, under the Government’s proposal, -carry the responsibility. It as an outrageous proposition. _It does not represent “ government “o’f the people by the people for the people,” but government rial the interests .of -the great capitalists -of Australia. ‘-Therefore, the Labour party is distinctly opposed to .the amendment. It is not wedded to the gold fetish. Time and again it has affirmed that Government notes issued on good security are as good .as gold itself. W-e say that the notes should be issued in the interest of -all sections. I ‘‘hope that our attitude will be an intimation to the banking corporations -of this country that when the Labour party gets into power it will affirm what is .good credit -for the Commonwealth -Bank is also good credit for the -whole of the people.
.- I <was rather interested, if not amused, by the -remarks -of the Treasurer -(Dr. Earle -Page) as to the ‘reason -why the amendment is proposed. He told us that there ‘was .some doubt ais to -whether ‘(he Notes Issue Board had -power to issue notes >on securities in London,. ‘and ‘that the banking institutions ‘themselves ‘had intimated to him at ‘some -private ..conference that, feeling their position rather insecure, they desired some definite action to be taken. A remarkable feature is that for the last sis months there has been .a .controversy in the daily press of Australia concerning the note issue. Not one of the authorities that has written from the point of view :of .the associated banks .has -contended that there .is any doubt -whatever as (to the Dower -of , tale board .to issue notes .against .London securities. .It was .contended that -the board had ‘that ‘.power, -and -some of the .’articles even went ;so far as to .abuse it for mot issuing more :notes. .An .attempt was even made to intimidate it by the -threat of -a ^financial crisis. The Notes Issue Board resisted the intimidation by -the ‘associated banks and their supporters, but /now the intimidation -comes (direct ‘from the .Government’. Its direction to the Notes Issue Board is that notes must -be issued against credit in ‘London. I was rather surprised at the: interjection of –the Minister for Trade -and ‘Customs when the ‘honorable member for Yarra was speaking: -He said before obtaining Ministerial rank that ‘the issue of -these notes against securities in London was calculated to reduce imports into this country. How -are these credits to :be finally transferred? Even -SE the Notes Issue Board issue notes against securities ‘-in London, those credits must be -transferred here at ‘some future -Sane, and there is mo other means of doing this than by £he importation -of goods. This is an innovation in ‘banking business ‘either in the interests of the private banking institutions or in ‘those of the nation. Notes axe .to be issued against securities .outside Australia .over which this Government has no control. Not ‘.only is (the force of -the banking’ institutions itD toe used, but the whole legislative and administrative force of the Commonwealth Government is to be used to liquefy Australian frozen securities in London. If this *would tin .some -way assist -national development, those -who are now advocating the step would toe loud in -their denunciation .of it. Some few weeks ago .1 was accused .in this chamber rand outside of wishing to issue notes against wheat find other commodities. That was not (correct. I stated -that *M .notes ‘were issued -against, say, wheat, -it -could be consumed, and the “notes would, still be .in circulation. Even if notes are issued against securities in London -and their »va’lue 5n imports is received from ‘over-seas, there is no provision in -the hill for the cancellation df tha notes to ‘the value of -the goods arriving. “The inflation of the currency will remain. Honorable members “have a vague idea of how these credits were .established. They have accrued -to the associated banks by their making -sums -of money available here to exporters of our products, and to some extent by discounting bills of exchange. The Minister for Trade and Customs, when a private member, told us that in one industry in which he was engaged he had to sacrifice £3 for every £100 worth of goods sold abroad. If that applied generally, the bankers, by giving credit here for £97, would receive a credit in London of £100. I wish to know whether the bankers are to get £100 notes for their £100 security in London, for which they paid £97 in Australia, thereby obtaining a “ rake off “ of at least £3 in every £100, in addition to what they otherwise get. Taking £3 for every £100 of the millions to be issued, honorable members will gain some idea of the first “ rake off “ that the associated banks will get at the expense of our primary producers. We are told that from £10,000,000 to £20,000,000 worth of notes may be issued. The banks will not only get £3 in every £100 clear profit by reason of the action of the Government, but the million of notes issued will inflate the currency. If the amount is £10,000,000, the banks will multiply credit by three, four, or five times that amount. If notes representing £30,000,000 are issued, the banks will get the benefit of 5 per cent., 6 per cent., 7 per cent., or even 8 per cent, on £150,000,000. If the economic and industrial conditions of Australia make it necessary for us to have more currency, and the Australian nation can cope ‘ with another £10,000,000, £15,000,000, or £20,000,000 of currency, there is no need to go to England for it. The security is here, and the Government can get the benefit of a loan free of interest for the time being, if for national development and to prevent unemployment. There is another side to the question. We are to-day almost at an economic stand-still. Not 5 per cent, of this money which will be brought from England will go into anything but capitalistic production, thus making the economic burden harder to bear. That is where inflation and deflation come in. If £10,000,000 is spent in this country to assist in capitalistic production only, there will be inflation in two ways, and inflation of the worst possible kind. The financial institutions will get hold of the money and lend it out to people who will use it in connexion with big profit-making concerns. In every way its effect will be detrimental. It will hold up, instead of assisting, production. I rose to register my protest against this proposal, which is one of the worst put forward by the Government. We have had many boodling schemes introduced in the interests of the capitalists, who stand behind this Government, but this is the most daring of them all. Its effect on the nation will be greater than all the rest put together. This proposal can only be viewed with alarm, not only so far as the Commonwealth Bank is concerned, but in the interests of the nation.For that reasonI am opposed to the proposition.
.- I am opposed to this amendment on principle. I am opposed to issuing notes against anything but gold. I therefore move -
That the Senate’s amendment be amended by leaving out the words “ money or securities “, with a view to inserting in lieu thereof the word “ gold “.
The proposed’ new section would then read - 60oA. The Board may issue Australian notes to the Bank or to other banks in Australia in exchange for gold lodged with the London branch of the bank.
I trust that the Government will accept the amendment without discussion. To issue notes against anything but gold is to create mythical values. If we issue notes against produce, we find that that produce is perishable. Notes should be issued against something which is tangible. Gold is the only standard of exchange recognized by the sane nations of the world. My amendment is moved in order to give effect to what I consider is the only sound and sane basis of currency on which any nation can exist, namely, gold.
Mb. F. Francis and the War.
Motion (by Mr. Bruce) proposed -
That the House do now adjourn.
.- At question time to-day the honorable member for Ballarat (Mr. McGrath) asked some questions, through you, Mr. Speaker, in connexion with a speech which I made at Ballarat last night. I think that it is only fair that I should have an opportunity to answer those questions. I did not mention, or refer to, the Labour party during my speech. The people to whom I referred were the disloyalists and the bolshevists. If the honorable member for Ballarat is prepared to accept the responsibility for saying that the Labour party comes within either of those classes, that is his concern, and not mine. If that is his opinion, it is certainly not mine. In view of the question he asked about my loyalty, and my war service, it is only fair that I should be allowed to state that although I am not able to wear the returned soldier’s badge, I volunteered for service five times. I have certificates to prove that statement, and I also have a reject certificate and a reject badge. Those certificates and that badge relate to the last great war. I have no desire to boast, but I must answer the questions that have been asked. I did everything possible to provide comforts and necessaries for the troops and their dependants.I offered my home, which was suitable for the purpose, as a hospital for returned men, and I offered to equip it at my own expense. I also provided many workmen - carpenters and others - to make comforts, such as crutches and stretchers, for the men.. I paid for that out of my own pocket. I also contributed to all patriotic funds, and in many other directions did everything that it was possible for me to do to further the interests of members of the Australian Imperial Force. I provided motor cars and drivers to take men from hospitals for rides in the country.
– I desire to raise a point of order. I object to this Parliament being used as an advertising agency for the honorable member for Henty. The newspapers are open to him at advertising rates.
-I think the Acting Leader of the Opposition knows that he has not raised an effective point of order.
– In reply to the last question of the honorable member for Ballarat, relating to the huge profits I am said to have made during the war, I can assure him, the House, and the country, that the war was to me a disadvantage from a business stand-point. I am making this statement because I regard it as most unfair for an honorable member to accuse me of not taking part in the war when I did my very best to do so. If any of the references I have made to disloyalty or bolshevism have anything to do with the honorable member for Ballarat, and if he desires to apply them to himself, that is no concern of mine.
Mr.McGRATH (Ballarat) [11.14]: - I regret that the hour is late; otherwise there are a lot of things I could say in reply to the honorable member. As it is, I shall reply to him only briefly. He said he did not apply the terms “ disloyalists,” “ bolshevists,” or “ anarchists “ to members of the Labour party. He attended a gathering of an ti -Labourites, who call themselves the Protestant Federation, and every utterance there was against the Labour party. The honorable member for Henty, in his speech to that gathering, complained of the want of unity between the two wings of the Government-the Nationalist party and the Country party. He said, “ Why cannot we get Mr. Bruce and Dr. Page to work unitedly? Supported by a united party, those two great men could effectually combat the forces of bolshevism and anarchy.” If he was not referring to the Labour party, then I guarantee that his hearers of last night will be disappointed when they read his speech of to-night. There is no doubt that they honestly thought he was referring to the party that they expected him to denounce. There is no doubt that we were included in the denunciation, which came very ill from the honorable member. He may have volunteered to go to the war, but a number of others volunteered also, and took care that they did not pass. I do not know that he has any medals for the South African War, and he and others at that gathering had no right to say anything about the disloyalty of the Labour party in Ballarat. He could not have gone to a worse place to make such utterances. Out of seven seats in the State Parliament five are held by returned soldier Labour representatives, while I, another returned soldier, hold the Ballarat seat in this House. I resent his remarks, but as he has seen fit to make an apology, I accept it.
Question resolved in the affirmative.
House adjourned at 11.17 p.m.
Cite as: Australia, House of Representatives, Debates, 13 August 1924, viewed 22 October 2017, <http://historichansard.net/hofreps/1924/19240813_reps_9_108/>.