12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 3 p.m., and offered prayers.
Hawthorn Telephone Exchange - Printing ofreport.
Mr. LACEY, as chairman, brought up the report of the Parliamentary Standing Committee on Public Works, together with minutes of evidence, relating to the proposed establishment of an automatic telephone exchange at Hawthorn, Victoria, and moved -
That the report be printed.
.- On a previous occasion I protested against unnecessary expenditure on the printing of reports which have only a limited interest. Last week, honorable members received copies of the reports of the Public Works Committee, together with minutes of evidence, relating to the proposed construction of a federal highway within the Federal Capital Territory, and cottages at Canberra. The cost of printing the former was £62, and the latter, £94. Earlier we had received the reports of the committee on the Brunswick and Hurstville automatic exchanges, each of which cost about £80, and the proposed erection of baths at Canberra. All these works are of purely local interest, and the printing of reports regarding them for distribution amongst honorable members is a waste of money. When I made my previous protest regarding this extravagance, the honorable member for Grey (Mr. Lacey), as chairman of the Public Works Committee, stated that reports and minutes of evidence were already in print before they were presented to the House, and that his motion to print them was merely formal. He explained further that as soon as the evidence is taken, it is printed and proof copies of it are distributed amongst the members of the committee. On inquiry of the Printing Committee, I found that these documents are always printed without reference to that body. At this time of financial stress, the expenditure of over £300 on the printing of five reports of merely local interest is unjustifiable. Apparently the fault does not lie with the chairman of the Public Works Committee, because the reports and evidence are already in type before he formally moves in the House that the documents be printed, nor can the Printing Committee be blamed, because the documents are printed before that body is consulted, but surely there is a stage at which this extravagance can be prevented. Some matters are of such general interest that it is desirable that printed documents relating to them should be available for distribution, but others have a very limited interest, and in the room of my own party I have seen the waste-paper baskets filled with documents, the printing of which has cost much money, but which honorable members have no need or desire to peruse. Some officer is responsible for this gross extravagance, and I shall take every opportunity to protest against it. I do notwish to show discourtesy to the Public Works Committee by refusing to accept its report, but if any honorable member will support me, I shall divide the House on the motion that is before it.
– I will.
– Very well. I shall call for a division on the motion in order to draw attention to what I consider an abuse.
– The remarks of the honorable member for Corangamite are generally approved by honorable members.
– Hear, hear !
– When I was a member of the Printing Committee, documents were submitted for its approval which had been already printed. Other large documents had been printed by order of the House without proper investigation. The Government has been scrutinizing the printing bill recently and has reduced it considerably. The House should not engage in a general debate on this motion without knowing what is contained in the report of the Public Works Committee. In order to afford honorable members a further opportunity to consider the matter I ask leave to continue my remarks on a future occasion.
Leave granted; debate adjourned.
Mortality - Distbibution of Surplus Military Clothing
-Has the Minister for Health (Mr. Anstey) seen a newspaper statement that the Chief Medical Officer in Sydney, Dr. Purdy, has stated that the death rate has increased owing to unemployment? Will the Minister take steps to remove the cause of unemployment?
– I have not seen the statement to which the honorable member refers. My answer to his second question is in the affirmative.
– In order that the assistance which the Commonwealth Government is giving to the unemployed may be impartially distributed, will the Prime Minister endeavour to obtain from each State statistics regarding the extent of unemployment in that State?
– Industrial statistics are collected by the Commonwealth Statistician and are published quarterly. If there is any special registration of unemployment by State authorities the Commonwealth will endeavour to get those particulars. But our main problem is, not to ascertain how many persons are unemployed, but to alleviate the distress which we know exists.
– Some time ago the Prime Minister (Mr. Scullin) intimated that it was the intention of the. Government to place certain surplus military clothing at the disposal of the unemployed. I desire to ask the right honorable gentleman if the Government intends to undertake the distribution of such clothing or whether applications may be lodged with the Government by benevolent and similar societies?
– As the honorable member’s question anticipates a question already on the notice-paper, I am unable to allow it.
– Is the Minister for Works aware that the condition of the Mascot aerodrome is such as to cause interference with the Brisbane to Sydney air service and inconvenience to travellers, and gives rise to doubt as to whether Miss Amy Johnson will be able to land there to-morrow? As the improvement of the runways has been authorized for some time, will the Minister state the reason for the extraordinary delay in proceeding with this work?
– On one or two occasions there has been a little difficulty in connexion with the landing and the taking off of aeroplanes of the heavier type, but it is not anticipated that there will be any trouble in this instance. A sum of £20,000 has been made available for carrying out certain work, of which £8,000 is to be spent in constructing a new runway, and the balance for the acquisition of additional land. The officers of the department have assured me that the work is being pushed on as rapidly as possible, but, owing to the fact that additional land had to be acquired, some delay has necessarily occurred. The department is doing its best; and the latest information I have received is to the effect that no trouble is anticipated in connexion with the landing of Miss Amy Johnson’s aeroplane.
– I desire to ask the Minister for Defence (Mr. A. Green) why a subsidy is being paid to the Adelaide to Perth air service when no such assistance is given to the Melbourne to Brisbane air service?
– The Adelaide to Perth and other air services were established by the previous Government , in order to aid civil aviation. The services from Perth to Derby, from Adelaide to Cootamundra, from Melbourne to Hay, and from Brisbane to Daly Waters were subsidized, as they were established with the object of opening up the back country, which was provided with poor means of communication, and where the business offering would not be sufficient to warrant the establishment of unsubsidized aerial services. The policy of the present Government is to subsidize such developmental services, but the amounts will be reduced each year. The service between Sydney, Newcastle and Brisbane was established by private enterprise, and I understand is paying well. It is considered that aerial services should be conducted on’ a commercial basis, wherever practicable, and it is the intention of the Government to cease to provide subsidies for such services as soon as possible.
– Will the Prime Ministerarrange with the Government of New South Wales to make available to honorable members copies of the report on the coal-mining industry?
– I have already asked the Government of New South Wales to make available a sufficient number of the reports to distribute among honorable members.
Revision of Statute. - Accession of the United States of America to the Protocol of Signature.
– On Friday last when I submitted a motion with respect to two protocols relating to the Permanent Court of International Justice, I intimated that copies would be available to honorable members. At the time I thought it practicable to have sufficient copies typed and distributed to honorable members, but as that cannot be done,I move -
That the following papers be printed -
Protocol for the revision of the Statute of the Permanent Court of International Justice dated, Geneva, 14th September, 1929.
Protocol for the Accession of the United States of America to the Protocol of Signature of the Statute, dated, Geneva, 14th September, 1929.
It is necessary that honorable members should be supplied with copies of these protocols, and as I have ascertained that it will be cheaper to print them, than to have them roneod I have submitted this motion. As motions for the approval of these protocols are already before the House it is unnecessary for me to discuss them further at this stage.
– Will the Prime Minister also include the covering report of Sir William Harrison Moore?
– On the score of economy I do not propose to move that that report, which is a lengthy document, be printed. There are copies which can be made available to honorable members if so desired.
Question resolved in the affirmative.
asked the Minister for Defence -
How many officers are included in the personnel of H.M.A.S. Albatross, and’ what number of each rank is included in such personnel ?
– The answers to the honorable member’s questions are as follow : -
Naval Officers. - One captain; one commander; four lieutenant-commanders; four lieutenants ; one engineer commander ; one engineer lieutenant; one lieutenant (E) ; one chaplain; one surgeon lieutenant-commander; one paymaster lieutenant-commander; two paymaster lieutenants; one sub-lieutenant; two commissioned gunners; one commissioned shipwright; one gunner; one boatswain; one warrant telegraphist; one warrant engineer; one warrant electrician; one schoolmaster; total 28.
Officers Royal Australian Air Force No. 101 Flight Attached toH.M.A.8. Albatross. - One squadron leader; one flight lieutenant.; two flying officers (including one Royal Australian Navy lieutenant undergoing instruction) ; three pilot officers; total seven.
asked the Minister for Home Affairs, upon notice -
– The information is being obtained, and will be conveyed to the honorable member as soon as possible.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
The commission recommended that the Commonwealth Government consider the advisability of appropriating the sum of £250,000 to provide -
The commission also recommended that the unexpended balance of the £40,000 originally appropriated under the Precious Metals Prospecting Act of 1926, be now appropriated for the purpose of rendering expert technical assistance through the States to the gold-mining and other precious metal industries. It further recommended that the taxation laws be reviewed with the object of giving assistance to the industry and that the Commonwealth Government, under special exceptional circumstances, consider co-operating with the States for the purpose of assisting financially in the development of gold-mining deposits of national importance. Full particulars of the recommendations are contained in Parliamentary Paper No. 237 of the 14th June, 1928.
asked the Prime Minister, upon notice -
Can he advise the House of the result of the meeting of the Committee of Experts, convened by the Economic Committee of the League of Nations, to inquire into the question of international regulation of whaling?
– I have been advised that the Committee of Experts met at Berlin on 3rd April last, and drew up a report which they have forwarded to the Economic Committee of the League of Nations. When copies of the report come to hand I will make them available to members.
asked the Treasurer, upon notice -
What were the profits of the Commonwealth Bank for each year since its inception?
– The information desired by the honorable member is shown in a return printed on page 1126 of Hansard of this year.
Cost of Office
– On the 29th May, the honorable member for Bendigo (Mr. (Keane) asked the following questions : -
The answers to the honorable member’s questions are as follow: -
Total Cost of Office of Governor-General since the Inauguration of the Commonwealth.
This expenditure includes salary ofthe Governor-General, maintenance of Government houses (rent, repairs, fittings, furniture, light ing, upkeep of grounds, &c. ), railway services and official expenses of Governor-General’s office.
Where a change occurred in the office of Governor-General in any year, the total expenditure for that year has been divided in proportion to the periods during which the office was occupied by the respective GovernorsGeneral.
The following papers were presented : -
Defence Act - Regulations amended - Statutory Rules 1930, Nos. 49, 50.
Immigration Act-Regulations amended - Statutory Rules 1930, No. 51.
Judiciary Act and High Court Procedure Act - Rules of court amended - Statutory Rules 1930, No. 53.
Petroleum Prospecting Act - Regulations - Statutory Rules 1930, No. 47.
Debate resumed from 1st May (vide page 1347), on motion by Mr. Theodore -
That the bill be now read a second- time.
.- This bill provides for the establishment of an entirely new bank, to be known as a central reserve bank. It is proposed that the bank shall be controlled by a board of nine directors to be appointed by the government of the day; that it shall control the note issue of the Commonwealth; that it shall have power to requisition gold and pay for it with notes, and that it shall conduct the financial business of the Government of the Commonwealth. It is also to have power to make unsecured loans to the Government of the Commonwealth.
Last week the Federal Conference of the Labour party was held at Canberra. The conference consisted of representatives of the Labour party from all the States of the Commonwealth. It considered the subject of unemployment, and a very interesting report of its conclusions upon this matter has appeared in the press. From that report, which was unanimously adopted, I read the following passages -
In Australia preventible unemployment has been aggravated by the restriction of credit due to present banking practice . . .
After referring generally to the necessity for subsistence relief and for a scientific treatment of the problem of eliminating unemployment, the report proceeds -
In regard to either or both of the foregoing, the restoration and freeing of credit is an indispensable condition. The Commonwealth Parlament, by reason of the fact that banking is within its legislative jurisdiction, should take all available means to establish the necessary credit . . .
Proceeding, the report states -
The provision of work depends almost entirely on freeing the credit resources of the country. As a first contribution in this direction, your committee considers that the Federal Parliament should find £20,000,000 which should be allocated among the States.
There are two points of view from which banking policy may be regarded. One point of view is admirably represented by this report, which recommends the utilization of the power to legislate on banking in order to provide a tremendous sum of money for the relief of unemployment. This bill is entirely in line with the policy of the. Labour party, which is based upon the view that the Government should control currency and credit in order to achieve political and social ob jects. Up to 1927 this policy was set out in the platform of the Labour party by declaring that one of the methods to be used to accomplish the socialization of industry, production, distribution and exchange was the nationalization of banking and of the principal industries. In that year, however, an alteration was made at the Federal Conference of the Labour party and the policy now reads-
Socialization of industry by . . . (6) The extension of the scope and powers of the Commonwealth Bank, until complete control of banking is in the hands of the people.
The platform still provides elsewhere for the nationalization of banking. The official policy of the Labour party in Great Britain runs along much the same lines and there is discontent among some of the more active members because the policy has not been put into operation in relation to unemployment by the Ramsay McDonald Government. Sir Oswald Mosley recently said -
Banking and credit are the key to the fortress of capitalism. Get possession of these, and we have them at our mercy.
The concluding paragraph of the report of the Federal Labour conference on unemployment takes the same point of view. It says -
Owing to the conditions under which the committee has had to work, it has confined its recommendations to the immediate problem of abnormal unemployment. It considers that the general problem is inherent in the existing economic system, the remedy for which is the realization of the policy set out in the objects and platform of the Australian Labour party.
This report has been received with a considerable measure of approval in Labour circles, and the Labor Daily, in referring to it, states that it represents au instruction to the Federal Labour Government. Under the federal constitution of the Labour party, resolutions carried in accordance with the constitution at a conference such as that recently held in Canberra -are binding upon the party as a whole.
At present it is impossible for the Labour party to carry out this policy. The note issue is now under the control of the board of the Commonwealth Bank, an independent body which was appointed, not by the present, but by the Bruce-Page. Government. Each year one member of that board retires from office. and consequently it is difficult for any Government, unless it is in office foi” a lengthy period, to obtain a board which is bound to carry out the policy of the Government. At present the Government is not in a position to dictate to that board with respect to any inflation of the note issue.
– Cannot Parliament alter that?
– If this bill is passed then this or any subsequent Commonwealth Government will be able, by appointing directors who believe in the policy of using banking for political purposes, to accomplish the’ desire expressed by the recent Labour conference. I take it that the bill is in accordance with the general policy of the Labour party in this respect.
The other view of banking policy is, perhaps, best represented by a resolution passed by the International Financial Conference, which was held at Brussels in 1920. It was attended by 86 persons, who were sent by their governments, not to represent the political views of the governments concerned, but because they were regarded as banking and financial experts. Thirty-nine countries were represented at that conference, and its resolutions were adopted unanimously. One of its most important resolutions was in these terms -
Banks, and especially banks of issue, should Vie free from political pressure, and should be conducted solely on lines of prudent finance.
The decision of the Brussels conference is, therefore, directly opposed to the policy of the Federal Government now in office. The view of that conference was that no political element should enter into the control of banks, and that the policy of banking should be conducted only with regard to financial considerations, and not for the purpose of achieving’ political or social objects. As the Brussels Conference pointed out, experience during and after the war has shown that political control of currency and bank credit inevitably ushers in an inflation of currency in order to bring about an expansion of credit. The conference reported that inflation of that character was the root cause of profiteering, and was inevitably associated with profiteering; that in flation necessitated constant readjustment between wages and prices, which was a principal cause of industrial unrest; and that by increasing prices it constantly increased Government expenditure and replaced legitimate, industry by speculation. Such a policy may bring about a temporary and fictitious prosperity, or may provide’ immediate relief from . such pressing problems as unemployment, but the ultimate result in every country in which this policy has been tried, has been disastrous to the people. Of course it is always said that a policy of inflation in order to deal with political or social difficulties can be properly safeguarded. We hear such phrases as the “ legitimate extension of credit facilities for the purpose of assisting industry,” and so forth. Experience, however, has shown that it is impossible to devise any safeguards which will operate effectively in the case of a government attempting to ease its acute political difficulties by, an increase of currency or bank credit.
The experience of the countries which have experimented in large issues of paper money has been disastrous. Honorable members are aware of the history of the assignats in France where an original issue of 400,000,000 francs was extended to 47^ milliards of francs, and the depreciation amounted to 99 per cent, in a period of six years. The sufferings of the people were acute and intense. The result of the policy of post-war inflation of currency in Europe was equally disastrous. In Russia it was in part responsible for the disintegration of society for a period. In Germany, Austria, Hungary and Poland the currency fell to a small fraction of its former value. France had difficulties to which I shall refer in another connexion.
– What happened in England?
– In England to a less extent there were difficulties as a result of both war and post-war inflation. Those difficulties always arise when currency is created without there being an equivalent production in wealth. In Russia, in 1921, prices were 80,000 times those of 1913, and in 1923, the rouble was worth one-millionth of the old rouble. Iri Germany at the beginning of 1923 the mark fell to one-twelfth of a thousand of its gold par value, and later, to even lower than that. The result of an increased issue of paper money in order to relieve suffering, has always been to increase suffering and distress in direct proportion to the extent to which the increase in paper money exceeds the increase in real wealth. When a government controls directly or indirectly the currency or credit of a country, the temptation to resort to the easy process of increasing the note issue is almost irresistible.
It will be said that in this instance there is no intention of departing from the canons of sound finance. The speech of the Treasurer, I concede, does not indicate any such intention. The bill, however, gives the opportunity and tha power, and the decision of the Labour conference, to which I have just, referred, provides what the Government will regard as political justification for departing from what I submit are the canons of sound finance. The terrible unemployment from which the country is suffering, may be regarded as providing sufficient excuse. It is, therefore, very important to examine carefully the proposals contained in this bill, because I believe that they afford every opportunity for embarking upon a very slippery and dangerous’ path. The speech of the Treasurer was general in its terms; it dealt largely with the general principles of central reserve banking. It did not in any way refer to the matters to which I have alluded. I think, however, it is important to bring those matters prominently before the House and the country in order that we may understand exactly what the policy of the Government is. For example, if the Government is prepared to say that it disagrees with the policy advocated by the Federal Labour Conference, that will certainly be a relevant fact and I shall be relieved to hear such a declaration. If, on the other hand, the Government believes in that policy and regards itself as bound by it, or at least, bound to carry it ‘out so far as it is able to do so, then it is obvious to all honorable members that fundamental problems are raised in connexion with this bill - problems much more important than anything indicated in the speech of the Treasurer in introducing it.
These proposals affect our whole financial system and have, therefore, a direct relation to the whole of Australian industry and commerce. The legitimate object of the establishment of a central bank is to bring about control of the monetary standard in order to’ maintain its security. Fundamentally, that is the object of a central banking system. Such a bank will control the note issue. Provision will also be made for some degree of centralization of banking reserves under the bank’s control. In other countries it is regarded as at least one of the functions of a central bank to control the money market by fixing the price of money. That is generally done by the reserve bank, or the bank which discharges the functions of a reserve bank, fixing the discount rate of commercial bills. The discount rate fixes the price of money in countries where there is an’ open bill market.
The Treasurer referred in general terms to these and other attributes of reserve banking systems, but it appeared to me that he did not sufficiently consider the actual conditions existing in Australia at present. The question to be determined by this House is not the general abstract question whether the principles of central reserve banking are sound, but the practical question of whether, at the present time, it is desirable to establish a central reserve bank in Australia, and whether, if that be the case, the particular proposals now made should be accepted by this Parliament. I do not say that the Treasurer altogether ignored Australian conditions. He referred to the relation of the Commonwealth Bank to the proposed bank. The Commonwealth Bank has become a reserve bank in several of its attributes I suggest that the Treasurer did hot attach sufficient importance, not only to the general considerations to which I alluded at the beginning of my speech, but also to the present financial and economic position of Australia.
There has been, as the Treasurer has said, a great deal of inquiry, particularly in recent years, into the principles of reserve banking, and many reports and. works of authority are available to honorable members for the purpose of informing their minds upon this question. The conditions in different countries vary greatly, and it is quite impossible to apply a general principle in Australia, merely because it has received widespread acceptance elsewhere. It appears to me that many conditions in Australia are very different from the conditions of other countries in which reserve banks have recently been established.
One of the latest inquiries into this system was made by a banking commission appointed in 1926 by the Irish Free State. That commission consisted of a high banking authority from the United States of America, where there had been a considerable amount of recent experience in federal reserve banking, and other, men with extensive banking experience, including Mr. C. A. “B. Campion, for many years London manager of the Commonwealth Bank. The .commission, if not i he most recent, was “at all events one- of the most recent to inquire into this important subject, and since its report is relevant to the measure now under discussion, I propose to quote its references to a central reserve bank. It stated -
Almost at the outset of its deliberations the commission was brought face to face with the question whether to recommend the establishment of a so-called “ central bank “ for the purpose primarily of directing the note issue. This view appealed strongly to some members of the commission, but a practical consideration of it led to the feeling that at the present time it was not to be recommended as an immediate expedient. It is clearly true that the tendency in many countries has been of recent years toward the creation of central banks, and toward the retirement of private bank-note issues, their place being taken by central banknote issues. It would be easy to cite illustrations of this movement both from the British dominions and from Europe, and from the experience of countries in the Western Hemisphere. The Genoa conference recommended the creation of central banking institutions by countries desiring particularly to take steps towards a uniform and sound note issue, and at the same time to maintain control of their own financial affairs. As to this general question we call attention, however, to the following points: -
The Saorstat has to-day an unquestionably sound and satisfactory banking system. No one questions, the solidity of its banks or their ability to meet the demands of their customers.
Government business is being on the whole satisfactorily dealt with from the banking standpoint.
Banks are able to obtain either through their own offices in London or through correspondent banks there such access to a great money market as they may need from time to time.
There is no independent discount market in Ireland, and, in fact, apparently little market for bills of exchange outside the banks.
It would appear, therefore, that many of the conditions which often call very urgently for the establishment of a central bank are absent, while at the same time the conditions which render easy its establishment are likewise absent. While some members of the commission are of the opinion that the conditions which render such an installation feasible or easy are not likely to make their appearance in the near future, other members differ, but we are all of the opinion that they are not present at this time.
– What is the date of that report ?
– The commission reported in 1926.
– That was before Sir Ernest Harvey came to Australia?
– He arrived at a different conclusion.
– The four facts to which special reference is made in this report appear to me to have marked parallels- in Australia when one considers that the Commonwealth Bank is already discharging several of the functions’ of a reserve bank. Before considering more particularly these four points, I would emphasize these facts in the present Australian banking and financial system : Firstly, the note issue is already controlled by the Commonwealth Bank. This, surely, is one of the most important functions of a central reserve bank. Secondly, the Commonwealth Bank already acts as a clearing house for the trading banks. Thirdly, the trading banks have been co-operating in an increasing measure with the Commonwealth Bank, and now have nearly £13,000,000 on deposit with that institution. The Treasurer informed us that, one of the reasons for introducing this bill was that the trading banks had been hesitant about co-operating with the Commonwealth Bank, and had declinedto deposit any considerable portion of their reserves with it because it was functioning as a rival trading bank. The fact is, as I 1 have stated, that the trading banks have deposited some £13,000,000 with the Commonwealth Bank, Fourthly, provision has already been made in a bill passed this year for the control, by the Commonwealth Bank, of the gold reserve of the banks, and, indeed, of the gold assets of the Commonwealth.
When we consider the four points made by the Irish Free State Banking Commission in connexion with the banking position in Australia, we find that, as in the Irish Free State, Australia has unquestionably a sound and satisfactory banking system. There are in the Commonwealth, eleven principal trading banks with a total authorized capital of £77,061,238, a paid-up capital of £44.643,883, and reserves amounting to £34,066,880, while the reserve liability of shareholders is £29,789,021. The liabilities of the cheque-paying banks at the 31st March, 1930, were £337,944,817, and their assets totalled £414,737,140. These figures are taken from pages 58 and 59 of the latest quarterly summary of Australian statistics, published in March, 1930.
It has been stated that the private trading banks have been unduly restricting credit, and that for this reason it is necessary to revise our banking system. The facts, as disclosed in the report of the Commonwealth Bank for the year ended 31st December, 1929, are that at that date the deposits in the eleven principal trading banks and one or two smaller banks amounted to £321,701,1.07, and the total advances to £313,213,792. These figures include those relating to the operations of the Commonwealth Bank. A comparison of the deposits and advances of the trading banks for the last two years shows that the amount of deposits - not bearing interest - at the 31st December, 1927, was £123,154,246, and at the 31st December, 1929, £114,854,393. The amount of interest-bearing deposits at the 31st December,. 1927, was £179,516,234, and at the 31st December last it had increased to £206,846,714. The total of deposits as at the 31st December, 1927, was £302,670,530, and at the end of December, 1929. £321.701.107. The total advances at the same dates were, respectively, £271,963,383 and £313,213,792. It is difficult for honorable members to appreciate the sig nificance of these figures as I am speaking, but the point I wish to make is that the increase in deposits in the trading banks for the last two years has been £19,830,577, and the increase in advances over the same period has been £41,250,409. It is difficult to say, upon these figures, that the banks have not done their utmost, within the limits of sound banking practice, to meet the trading and financial requirements of the community. The banking position in Australia seems to be sound and satisfactory, and the banks appear, upon these figures, to be functioning properly in the general interests nf the community.
As to the second point referred to by the Irish Free State Banking Commission there has been no complaint, I understand, about the manner in which Government business has been handled by the Commonwealth Bank. There is already ample provision for the handling of the financial and banking business of the Commonwealth by the Commonwealth Bunk and it is being done satisfactorily.
The third point mentioned by the commission refers to access to the money market. The Australian banks have a very close connexion indeed with’ the London market. The difficulties which obtain at the moment have been alleviated by the passage of recent legislation, which has made possible the transfer of gold to London in order to meet liabilities there. It does not appear that the establishment of a central reserve bank would in any way assist the overseas exchange position beyond what can be done at present ; unless, indeed, by some means not disclosed, it is intended that the bank shall control the general overseas commercial exchange. But I hope that that is not intended. The bill does not provide for it, and the Treasurer did not indicate in his speech that it was intended to utilize the powers proposed, to be conferred upon this bank for that purpose. The reserve bank could act in regard to the Government exchange position; but it would be very dangerous to allow it to acquire a monopoly in dealing with international exchanges.
– We have no such power in the present bill.
– I understand that that is the intention. The fourth point referred to by the Irish Free States Banking Commission - and I am dealing with these points because the position in Ireland when the commission made its investigation was apparently similar to the position to-day in Australia - was that there was no independent discount market in Ireland, and, in fact, no market for bills of exchange outside the banks. The position is exactly the same in Australia. There is no discount market in Australia. The overdraft system, which is very flexible and convenient in many respects, has, up to the present, been preferred by the Australian people. The Treasurer, in referring to this aspect of the subject, distinguished between the bill system and the overdraft system, but it appears to me that he said the wrong thing about the overdraft system. He said -
With an overdraft there must be a definite term, a definite rate of interest, and a definite period) of repayment, and the transaction is confined to two parties.
Those are the characteristics of the bill system.
– But are not necessarily confined to that system. Bills are negotiable.
– Bills are negotiable instruments; but with a bill there is a definite term, a definite rate of interest, and a definite period of repayment.
– And the interest has to be paid whether the money is used or not.
– Those elements are absent from the overdraft system in which, generally speaking, there is no definite term.
– There is another element with regard to bills which, I think, has probably prevented the development of a bill market in Australia, and that is that bills are subject to stamp duty.
– That is the case. In the case of an overdraft, the obligation of the borrower is entirely to the bank, but in the case of a bill the borrower has to pay the person who presents the bill on. maturity. In the case of bills the liability for interest is fixed and known when the bill falls due. An ordinary overdraft can be called up at any time. Usually, the customer has to pay the regular rate of interest, which varies from time to time. It appears to me, therefore, that the Treasurer did not accurately state the distinguishing characteristics of the overdraft and bill systems.
The control of the discount rate is, in the case of England, a means of attracting or repelling gold, and of determining the price of money and the interest rate of the country. This system is not applicable to Australia at all, because the facts do not exist which would make it possible to apply it. The bill under consideration does not assist in any way towards the establishment of a discount market in Australia, and it isobvious enough that a central reserve bank cannot control the overdraft rates. The establishment of a discount market depends entirely on commercial and financial considerations. A discount market cannot be created by this bill, and in the absence of it the proposed central reserve bank could not control the price of money, which is one of the main objects of such a bank in all the countries where it has been established. The resources of the bank would not be sufficient to enable it to control the price of money by the purchase in the market of stocks in which it is authorized to invest. Accordingly, one of the main objects of a central reserve bank could not be obtained by this proposed bank.
It appears, therefore, that many of the facts which have lead other countries to establish central reserve banks are absent in Australia. The Commonwealth Bank is at present discharging several of the functions of a central reserve bank, notably with respect to the note issue and the control of gold. The possession of a considerable amount of the private trading banks’ reserves, up to £13,000,000, is largely due to the fact that it is acting as a clearinghouse. There are other circumstances which create certain difficulties. To one of these the Treasurer referred, namely, the fact that the Commonwealth Bank is a trading bank in competition with other banks. That, for a time, resulted in jealousy between the Commonwealth Bank and other banks; but that feeling has apparently almost entirely disappeared, as shown by the fact that the other banks have deposited about £13,000,000 of their money with the Commonwealth Bank.
– That was taken under the Gold Export Act.
– I assure the honorable member that he is entirely wrong. It arises largely out of the clearing house transactions of the Commonwealth Bank, and has nothing whatever to do with the export of gold. The gold that was taken for export has almost all been sent abroad.
It appears to me that development of the functions of the Commonwealth Bank would meet the needs of our present financial situation much better than the setting up, at this time, of a new and expensive institution. The aspect of the question which appears to me to be profoundly important at present is that it is not desirable that we should make so profound a change in our banking system as is proposed to be made at a time of- acute financial stringency which is affecting all classes in the community. We should do nothing to impair public confidence in the ability of the banks to meet legitimate demands. Honorable members have doubt less seen statements in the press, or they may have received communications from important public bodies, which have pleaded that the Government should delay the action it is proposed to take. I refer to representations by the Melbourne and Sydney banks, the Chambers of Commerce of Sydney, Melbourne and Brisbane, and the Wool Brokers’ Associations of Sydney, Melbourne, Brisbane, Adelaide and Perth, which have all counselled delay.
– I, do not remember any such communication from the wool brokers of Sydney.
– I will provide the Treasurer with a copy of the letter which has been sent to me by the Wool Brokers Association.
– I do not remember one coming from Sydney.
– I hand the Treasurer a copy for his information. I have no objection to the general principle of pen. tral banking, but it appears to me that most of the functions of a central reserve bank are already being performed io Australia by the Commonwealth Bank. I suggest that if the Government persists with this bill, a provision should be inserted that reasonable notice be given before the system comes into operation, so that the trading banks can make the necessary adjustments. A period of at least twelve months ought to be allowed. All parties recognize that it is very undesirable to cause any confusion or lack of confidence at the present time, and the proposals embodied in the bill appear to me to carry with them the risk of doing this.
Many questions will arise when we are considering the bill in committee, and I propose tq refer now’ only to a few of the more salient features of the measure. First, the management of the proposed bank is a matter of prime importance. The bill proposes that the bank shall be managed by a governor and eight other directors. The Governor is to be appointed for seven years and the eight other directors, also to be appointed by the GovernorGeneral, are to hold office for terms not exceeding three years. Clause 13 of the bill deals with this matter. The result will be that all the directors will be ap pointed by either this or some other government, and the eight positions may become vacant after three years. I am not objecting on the ground that the directors may be appointed by this Government in particular ; . I am dealing now with the principle of appointments by governments in general. A second provision in the bill is that the directors shall represent particular interests, those named being banking, commerce, labour, manufacturing, and primary production. All authorities upon central banking agree that it is of first importance that the management and policy of a central reserve bank should be free from political control, and free from control by the Government of the day. I have already referred to the resolutions on that subject of the Brussels Finance Conference of 1920, and honorable members will find the dangers of political control mentioned in every book on the subject.
The scheme for a central reserve bank, as outlined by the Government, does not appear to me to be satisfying the conditions which have been laid down by recognized authorities. Lel me refer to a well-known book on..central banking by Messrs. Kisch and Elkin. At page 20 of the latest edition of that book, the authors state -
Just because the decisions of the bank react on every aspect of the economic activities of the country, it is essential that its direction should be as unbiassed as is humanly practicable, and as continuous as possible. But clearly, if the bank is under State control, continuity of policy cannot be guaranteed with changing governments, nor can freedom from political bias in its administration be assured. In most economically developed countries the probabilities are that the national Government will be the largest individual customer of the local money market.
That is certainly the case in Australia, because of the financial operations of the Commonwealth and State Governments. The writers proceed -
In such circumstances it is evident that, if it also controls the administration of money market policy, it may easily find itself in an equivocal position where it may be called upon to decide between two courses, one of which may be immediately convenient to itself and the other conducive to the ultimate interests of the country as a whole.
Illustrations arc given which show the necessity of excluding governmental influence from the operations of a central bank. If this bill is passed the Government of the day will be in a position to appoint eight directors, as well as the Governor, and to dictate the policy of the bank. In the case of the existing bank all the directors were appointed by the late Government, so that it may well be asked how I can argue that in the case of a central reserve bank, the directors should not be appointed by governments. There is, however, one very important distinction between the board of the existing bank, and the board which it is proposed to appoint for the new bank. In the case Qf the existing bank, one director, and one only, vacates his office each year, and it is, therefore, impossible for any particular government to alter the whole policy of the bank by appointing a completely new set of directors.
– That is a detail which can be adjusted in committee.
– It may be. Secondly, it appears to me that there are obvious dangers in having the directors appointed as representatives of particular interests. It is a natural thing to do, perhaps, but ;it would, I think, be very undesirable that a director should consider that he was in office to represent the particular interest in respect of which he was appointed. The interests mentioned in the bill are those of banking, commerce, manufacturing, labour, and primary production. It is undesirable to have specific representatives of those interests as such, although banking stands in a different position from the others.
I have suggested that there are objections to the proposed system of control, and it may be asked whether I have an alternative to put forward. I suggest, first of all, that it is radically wrong to have government control, direct or indirect; secondly, that it is also undesirable to have representatives of special interests except, in a modified degree, in regard to banking; thirdly, that while a central reserve bank should be, in a sense, a bankers’ bank, it should not be controlled in the interests of the trading banks,, as might be the result if persons appointed to the directorate were directly associated with the trading banks. Finally, I submit that there should be some representation of the Government, and also some effective representation of trading banks, which supply the funds to enable the bank to operate.
So long as trading banks do not provide any of the capital of the central bank, it is, perhaps, difficult to justify their having a greater degree of representation than that accorded in the bill. In other countries, particularly the United States of America and South Africa, the trading banks provide part of the capital pf the reserve bank. I suggest that the same practice should be followed in Australia. Instead of the suggested capital of £2,000,000 being found entirely from the funds of the Commonwealth Bank, £1,000,000 should Ite provided by the trading banks in proportion to their capital, or their capital and reserves. A satisfactory basis of contribution could be arrived at. If the dividends were then severely limited to a maximum of 5 per cent, or 6 per cent, the danger of a central reserve bank being used in the interests of the trading banks would be largely met. I, therefore, suggest that an effective board of directors would be composed of, say, seven members, and should consist of the Governor, Deputy-Governor, the Secretary to the Treasury - these three directors to be appointed by the Governor-General in Council - and three other members, appointed by the trading banks, who would be shareholders in the central reserve bank. These three members of the board, however, should not be directors of any bank, or members of the staff of any bank. Section 15b of the present act contains a disqualification of that character in relation to the existing directors of the Commonwealth Bank; and I think that the same disqualification might very well apply to the directors of this bank. A chairman could be appointed by the other six directors. Provision could easily be made to meet any deadlock in regard to that appointment which might arise, as is done in the case of Amalgamated Wireless (Australasia) Limited. A board so constituted would provide the Government with proper representation, while not giving it a majority, and ensure that the banking interests, which would subscribe one-half of the capital, would be adequately represented. At the same time, a board so constituted would not be subject to the same objections that would exist if the directors themselves were associated with particular banks. In the case of some central banks it is providedthat no member of Parliament shall be a director. With all respect to Parliament I submit that it would be desirable if the Treasurer were to give an assurance that it is not proposed to appoint any member of this Parliament to this honorable office.
– If that assurance is required, it can be given.
– From the public point of view it would be a mistake to appoint any member of Parliament to the board.
– I agree.
– The second point to which I desire to draw attention is the provision of funds for the central bank. The bill proposes that £2,000,000 shall be taken from the Commonwealth Bank. To the principle underlying that provision I have no objection; but I suggest that the amount so contributed should be £1,000,000, and that the remaining £1,000,000 should be provided by the trading banks.
Clause 10 provides that each trading bank shall lodge with the central bank 10 per cent. of its demand liabilities and 5 per cent. of its time liabilities. That means that over £20,000,000 would have to be provided by the trading banks as soon as the central reserve bank had been established. That, I submit, would place a severe strain upon their existing reserves.
– The amount would be about £18,000,000.
– I make it over £20,000,000. The provision of such a large sum of money by the trading banks might necessitate the curtailment of advances at a time when it would be dangerous to the community to call up existing overdrafts. The bill requires that each trading bank shall deposit portion of its reserves with the Commonwealth Bank. The amount is described as a percentage of deposits. If this requirement were immediately insisted on, those banks which have a large number of branches might find it exceedingly difficult to comply with it and at the same time keep sufficient till money for ordinary purposes.
– That a bank might not be able to comply with that provision only shows the necessity for a central reserve bank.
– I believe that all the banks operating in Australia are sound, but a bank which has a large number of branches requires much more free money for its ordinary day-to-day business than does a bank which has only a few branches. I do not know whether the amount of deposit would necessarily have to be paid in cash, or whether securities would be accepted.
– It would have to be cash.
– To provide so large an amount in cash would be to seriously weaken the reserves of the trading banks. The Treasurer said that it is immaterial whether this money is kept in the vaults of the trading banks or in those of the central reserve bank. I point out that there is this obvious distinction, that while the trading banks themselves hold their reserves they are able to use the money in case of need without paying interest on it ; whereas if the money is contributed by the central reserve bank they would receive it by way of advances, on which they would have to pay interest.
– The banks themselves regard it as necessary in the interests of safety to have a minimum of cash reserves. They cannot call upon their reserves for their ordinary daily transactions without endangering their position.
– These reserves are required only in special circumstances. It is intended that the central reserve bank should take only the still water at the bottom of the pool. The question is how much still water there is. Demand liabilities vary greatly as deposits increase or diminish. In order to avoid the 10 per cent, penalty provided in the bill, it would be necessary for a trading bank to keep considerably more than the prescribed percentage of average deposits in the central bank. In my opinion, this provision will mean that instead of 10 per cent, and 5 per cent., as mentioned in the bill, the reserves will be 12 or 13 per cent, and 6 or 7 per cent, for demand and time liabilities respectively.
– That could be met in the definition clause.
– As the Treasurer has stated his willingness to. reconsider the percentage of the reserves to be lodged by the trading banks, I suggest that they be 7 per cent, and 3 per cent., respectively, although I1 understand that in South Africa, to which reference has been made, the percentages are respectively 10 per cent and 3 per cent.
I desire now to say a few words about the powers proposed to be conferred upon’ the central reserve bank by clause 8. Paragraph b of that clause provides that the reserve bank shall have power -
To buy and sell in the open market in the Commonwealth of Australia or abroad, cable transfers, bankers’ acceptances and bills of exchange.
That is a general power to buy and sell bills of exchange. If that is not the intention, the paragraph should be redrafted, for as it stands it certainly gives a general power to buy and sell bills of exchange. Under this clause the reserve bank could issue bills payable otherwise than on demand by selling its own bills. All authorities agree that a central reserve bank should not have the power to draw, or to accept, bills payable otherwise than on demand. If it has that power there is the risk of its being involved in the ordinary activities of a trading bank handling the business of the community. A fundamental principle underlying a reserve bank is that ite assets shall be as liquid as possible. There is an element of risk in allowing a reserve bank to negotiate bills having a currency of any lengthy period. I ask the Treasurer to reconsider this provision in the light of my remarks.
Paragraph g of clause 8 empowers the central reserve, bank -
To accept money on deposit on current account and collect money for public corporations and others.
In those words power is conferred on the reserve bank, in general terms, to accept money on deposit on current account from any one. In his second-reading speech the Treasurer said that it was proposed to limit the deposits on current account to a limited class of persons. He mentioned banks, financial institutions, stock exchange firms, and trust companies. In order that the matter may be further considered, I point out that the bill contains no limitations as to the persons or companies from which the reserve bank may accept deposits. I certainly understood from, the Treasurer’s speech that it was his intention that this bank should be a reserve bank, not a trading bank in the ordinary sense.
– That is so.
– In that case, I take it the honorable gentleman will make any amendment necessary to carry out his intention.
One important proposal in the bill is that which entitles the reserve bank to make unsecured loans or advances to governments or to any authority constituted under the Commonwealth or a State. It appears to me to be a very dangerous provision. I can understand the desirability of allowing the reserve bank to make unsecured advances to banking corporations, because when a banking corporation is in difficulties, it is then that the reserves of the reserve bank are valuable. If the corporation were able to raise moneys on security it would probably be unnecessary for it to appeal to the reserve bank.
– That is the need for provision.
– Exactly, but I am unable to understand why power should be given to make unsecured loans or advances to a government - Commonwealth, or State - or, indeed, to make any loans at all to an authority constituted under the law of the Commonwealth or a State.
– It means a government authority.
– There are so many authorities constituted under our laws. The proposed wheat board is an authority which is now being set up by a Commonwealth law.
– The reserve bank would not make advances to the Wheat Board.
– I take it that it is intended that no advance will be made by the reserve bank to the Wheat Board, that the latter will deal only with the Commonwealth Bank.
– If it is intended that a shire council may obtain unsecured advances from this central reserve bank, it should be made clear. I think it objectionable. But the provision is particularly dangerous in respect to the power it affords to make unsecured loans to a government, especially if all the directors of the central reserve bank are appointed by that government. ./.1 experience of the Bank of France during recent years indicates the difficulty that may arise when a bank is able to finance a government in accordance with the desire of that government. I quote the following from the book written by Kisch and Elkin-
Developments in France between 1923 and 1925 also offer a striking example of the same phenomena - - that is the danger of excessive government influence -
The advances by the Bank of France to the Treasury were limited by law, the maximum having been raised from time to time as appeared desirable. During the war and in the following years increases became frequently necessary as the purchasing power of the franc fell and the exigencies of the Government increased. But even the enhanced power to borrow from the bank was insufficient to satisfy the needs of the Government. Acting under government compulsion, the bank eventually exceeded the legal limit for advances to the Treasury and published balancesheets devised to hide the fact. When the situation was made public, in April, 1925, the Minister for Finance admitted that the legal limit had been exceeded by 1,200 million francs in December, 1923, and that by the following June the excess had increased to 2,325 million. Early in 1925 the excess rose to over 3,000 million francs. This had inevitably involved further issues of paper currency, with the result that the volume of notes in circulation rose to 43 milliard francs, although the maximum issue had been fixed in 1920 at 4.1 milliard francs. There can be no question that the power of the Government to force increased loans from the Bank of France intensified the depreciation of the franc and contributed to the financial crisis that culminated in 1926.
I do not suggest that the following sentences are applicable, but perhaps it is fair to read them : -
Such extreme abuses of government power1 are, of course, only possible when a country has ceased to be on a gold basis. As long asconvertibility is maintained the worst evils resulting from government intervention in banking and currency control are avoided.
– I am afraid the quotation is hardly apropos; because the” bill does not give the Commonwealth power to obtain loans; it simply gives the bank the power to make loans. The decision rests with the bank.
– I agree that the clause does not enable a government to insist on an unsecured loan of any amount, ‘ but it does represent a statement of policy that it is one of the functions of this central reserve bank to make unsecured loans in some circumstances or other to a government.’
– At present, the Commonwealth Bank is financing a number of State Governments as well as the .Commonwealth Government, and is carrying some of the amounts on ‘ overdrafts which are in the nature of unsecured loans, but for which security could be issued to-morrow by the mere printing of treasury-bills.
– I recognize that any government may require overdraft accommodation, and I do not want to introduce any limitation which would prevent a Commonwealth Government or a State Government from financing itself sensibly in accordance with ordinary overdraft arrangements. [Extension of time granted.] Where all the directors of a central reserve bank are appointed by a government -of course honorable members will recognize that I am not referring only to the present Government - and have been chosen because the government thinks that they have sound banking and financial ideas, which possibly are the ideas of the government, there is an element of danger in a bill which provides that unsecured loans may be made to a government. This danger is avoided in other legislation dealing with central reserve banks. Provision is made in other countries for a limit to be imposed on unsecured advances made to governments. For instance, they must be repaid within a certain time, or they must constitute only a certain portion of the budget, and so forth; various methods are used to impose a reasonable limitation. What I fear is that any government in serious financial difficulty would have very strong temptation to go to the directors of our reservebank and point out, as could be done at the present time, that the amount of the gold reserve would legally entitle it to issue more notes than were at the time in circulation in the currency of the country. In one way or another pressure could be brought to bear on the directors to make an unsecured loan to the government to enable it to carry out some particular matter of policy regarded by Ministers as important. I hope the House will consider the desirability of imposing some limitation upon this provision, which will, however, not interfere with the legitimate overdraft requirements of a government.
I sum up by saying that it is in my opinion very doubtful whether it is wise to make such a great change as is involved in this measure at the present time of financial stringency; that great weight should be attached to the views of bankers and Chambers of Commerce, who all counsel delay ; that, in any event, political control is a grave danger in the case of a central reserve bank, or, indeed, of any bank; and that it is fundamentally important that the system of management should be modified to get rid of this risk. There are some provisions in the bill which are not necessary to enable the bank to discharge its legitimate functions, and I ask that they should be reconsidered. I have not yet referred to the future position of the Commonwealth Bank, because it has not been possible in the time available to deal with its proposed reconstitution. It is, I understand, proposed that it shall be in the ordinary sense, a State bank, that it shall occupy the same building as the central reserve bank, and that, the staff of the latter shall be chosen from that of the former. In my view every care should be taken to separate any Commonwealth central reserve bank from the Commonwealth Bank.
There should be no ground for the belief or suspicion that the Commonwealth has a banking chain - the Central Reserve Bank, the Commonwealth Bank, and the Commonwealth Savings Bank, all of which are co-operating against the trading banks. In my view, banking should be kept apart from politics, although there is a strong temptation to use banking legislation for political purpose. The bill in its present form permits political control of banking, and, therefore, should be adopted, if at all, only after radical alterations have been made in the provisions relating to management.
Debate, on motion (by Mr. Crouch), adjourned.
In committee (Consideration resumed from 30th May, vide page 2379)
Clause 5 -
Upon the execution of any agreement authorized by the last preceding section, there shall be payable out of the Consolidated Revenue Fund, which is hereby appropriated accordingly, such amount as is necessary for the purposes of the agreement.
.- I move-
That the words “ the last preceding section “ be omitted with a view to insert in lieu thereof the words “either of the last two preceding sections.”
Later I shall move the insertion of a new clause 4a to allow any State that is not an original party to the agreement to subscribe to it later.
.- I again ask that the Commonwealth shall accept full liability in connexion with the guarantee. I understand that Western Australia will not come into the pool unless its people are assured that they, as State taxpayers, will not have to bear any loss that may occur. The Commonwealth Government is asking the farmers to grow more wheat so that more may be exported and the trade balance may be thereby improved.
– The State Governments are making the same appeal to the farmers.
– If the pool makes a loss of 3d. a bushel the payment necessary to make that good will be equivalent to the bounties paid to other industries. New South Wales, which is the home of the iron and steel industry, is not asked to bear half the liability in connexion with the bounty on those products. There is a marked discrepancy between the conditions in the various wheatproducing States - Western Australia has a comparatively small home market and a good export trade, whereas New South Wales and Victoria have a large’’ local consumption and send comparatively smaller proportions of their wheat overseas. Because of these divergent conditions the Minister might well consider the desirability of the Commonwealth accepting full responsibility for the guarantee. The object of this legislation is to secure the best possible price for our wheat in the overseas market, and that is more likely to be achieved by one organization having control of all the wheat than by wheat from different portions of Australia being marketed in competition. If South Australia and Western Australia remain out of the pool and market their wheat overseas independently of each other and of the federal pool, undesirable and unnecessary chaos will result.
– Can the right honorable member give the Minister a definite assurance that if the Commonwealth accepts full liability, Western Australia will adhere to the pool?
– If the Government will accept my suggestion the chance, instead of being two or three to one against, will be fifty to one in favour of Western Australia joining with the other States. Any loss sustained by the pool should be borne by the whole of the people of Australia. The Rural Credits branch of the Commonwealth Bank has already advanced to the Wheat Corporation of Victoria 4s. a bushel, and in other States, 3s. 8d. Therefore the additional risk that the Commonwealth would assume by accepting full liability for the guarantee would be comparatively small.
– The Rural Credits branch is not advancing the equivalent of 4s. f.o.b.
– I understand that the 4s. is being advanced on wheat at the railway sidings.
– That is not so.
– If the farmers respond to the appeal to grow more wheat they should not, as State taxpayers, have to carry an additional liability. I am anxious that this scheme shall prove a success, and if the Minister will adopt my suggestion he will almost ensure that the pool will be adopted by all the States and the farmers; otherwise it may be rejected in two, and, possibly, three States.
– In answer to other members of the Opposition I have already said that I cannot agree to the proposal which has been made by the right honorable member for Cowper (Dr. Earle Page). All the wheat-producing States were represented at the Canberra conference, and this point was not stressed very persistently by the representatives of Western Australia.
– The propaganda against the pool had not developed then, but now a great deal of damage has been done by the liability that has been .oaron the States. r
– I admit that this point has been raised since, but only by Western Australia. The other four wheat-producing States recognize that the responsibility of increasing the acreage under wheat and getting the best price for the grain is not confined to the Commonwealth, and that any advantages which may result from the pool will be shared by them. They have their responsibilities.
– Have they not in regard to other industries also?
– Western Australia has a responsibility in connexion with this proposal as great as that of the other States. It will be to the advantage of that State to produce a large crop and market it successfully. The States are interested parties and should share ‘the risks as! well as the advantages. 0:her States’ recognize that. The Can i.’; iia conference made a special endeavour to conserve to Western Australia its geographical advantage which was claimed to be equivalent to %i. per bushel. Moreover; “Western Australia will share on a production basis- in the amounts paid into the equalization fund by the more populous States in respect of the higher ( price realized on the home markets.
– Is. that provided for in the bill?
– The Western Australian ‘delegates who discussed the matter at the conference were satisfied with the proposals then made and which are embodied in the- bill. Provision will be made that the amount received as a result of the higher price charged for wheat sold for local consumption in the eastern States, shall be paid in to the equalization fund. For instance if 13,000,000 bushels of wheat were used for local consumption in New South Wales and were sold at a price which exceeded the export price by ls. per bushel, the additional sum so received would be paid into the equalization fund for the benefit of those States not so fortunately situated after allowance was made to New South Wales for. any advantage that State enjoyed. Western Australia should be willing to co-operate with other States to assist in the formation of an Australianwide pool, but that will be impracticable if unreasonable demands are made, which if adopted would render the whole scheme unworkable. Western Australia cannot expect to derive all the benefits without incurring any risk in the event, of loss. If Western Australia was not assisted with the pool and the price obtained for the next season’s crop was 3s. 6d. a bushel the wheat-growers in that State would have to bear the whole loss, whereas under this proposal onehalf of the loss would be borne by the Commonwealth. The Government has gone as far as it can to meet the wishes of the Western Australian wheat-growers.
.- The Minister (Mr. Parker Moloney) lias been very positive in his statements which unfortunately are incorrect. He knows quite well that iti the equalization scheme provided for in the agreement the word “ may “ has within the last few days been substituted for the word “ shall “. That is a change with which the Western Australian representatives, who the Minister says are agreeable to the scheme, have not been acquainted. During my secondreading speech I pointed out that under this proposal Western Australia in comparison with the other States was likely to suffer most severely and it is now quite apparent that an ‘ endeavour is being made under this equalization scheme, if it is at all workable, to force the Western Australian farmers to come into the pool,
– The representatives of the wheat-growers in Western Australia attended the conference.
– That the honorable member is in favour of a compulsory wheat pool was disclosed by his attitude in connexion with .the proposal to provide for a ballot of the wheat-growers. When a proposal is submitted to grant financial assistance to other primary industries which can command a big voting power, both in and outside this chamber, there is never any suggestion that the producers concerned should provide one-half of the funds necessary to carry out the project. But in this instance the growers have to take more than a fair share of the responsibility. In the event of a loss of 6d. per bushel under this scheme the Western Australian Government would have to increase its taxation by at least 23s. 6d. per capita, whereas the additional taxation per capita in Victoria and New South Wales would be infinitesimal.
– Who would pay the loss if there were no pool?
– If the wheatgrowers of Western Australia, who have to sell their product at world’s parity, were permitted to purchase their requirements at a reasonable price, as the honorable member for Wimmera (Mr. Stewart) has often advocated, they would not be compelled to ask- for assistance. The legislation passed by this Parliament has robbed them of the opportunity of making a success of the industry in which they are engaged, and it is now proposed to drag them into a socialization scheme of this kind. It is easy for the Minister to contend that the proposed wheat pool will not be under government control, but in schemes of this nature the authority of the Government creeps in every time. The Minister would not have anything to do with it if the Government were not to exercise a controlling influence in its management. The bill provides that a majority of the board is to be elected by the farmers, but they will not control the pool. In South Australia and Victoria it will be found that on a board of seven, the Government will have four representatives and the farmers only three.
– Where is that provided in the bill?
– That will be the position, particularly in Victoria and South Australia, where Labour governments are in power. Provision has been made for the election of a committee, and a ballot should be provided for in the bill to determine whether the farmers are agreeable to a pool.
– But a ballot will be taken.
– That is not in the bill. The Minister is, however, justified in asking the committee to accept his word in connexion with the assurances given him. When the payment of Commonwealth money is involved, assistance may be given to some States and refused to others.
– Has the honorable member advised the Western Australian farmers to oppose the pool?
– I am against compulsion ; but if the farmers want a ballot I will not advise them not to hold one.
– Is the honorable member opposed to a ballot?
– I wanted a provision to that effect inserted in the bill, but the Minister would not accept it. When this proposal was under consideration a fortnight ago, I raised the question of appropriation in connexion with section 99 of the Constitution, and stated that when Commonwealth funds are made available all States should participate. If a government should receive less than the 4s. guaranteed, what will be the position of the wheat handled by a voluntary pool?
– What about the wheat that will be outside the pool ?
– I suppose it will have to go through the usual channels. If the Minister endeavours to prevent the export of wheat from Western Australia, except under conditions laid down by him, he will be confronted with serious difficulties. Western Australia will not continue to suffer very much longer.
– Is that a threat?
– A few months ago I said that I would consider whether secession would not be better for Western Australia. I trust the Minister will give consideration to my suggestion, that if Western Australia decides not to come into this scheme provision should be made through the voluntary pool for the proportion paid to the farmers in other States to be paid to the farmers of Western Australia.
When the schedule is under consideration it is my intention to move an amendment to clause 13 of the agreement to place the liability of the guarantee upon the Commonwealth. It is possible that the principle in this case may not apply in the interests of Tasmania, Western Australia, and South Australia, as those States may not come into the pool. Unless they were in the pool they would derive no benefit from the guarantee, and their taxpayers would have to contribute to any payment resulting from it. In spite of that I believe that when a principle suits the otherf ellow it ought to be generally applied, even by those who usually expect to apply principles only when it suits them. Only the other day the Acting Minister for Trade and Customs (Mr. Forde) actually gave expression to the principle for which we are contending when introducing a bill to make available to the cotton industry an enormous subsidy which is to be taken out of the pockets of the taxpayers and consumers. I have not the quotation with me at the moment, but it is apparent from Hansard that the honorable gentleman contends that it is not the responsibility of a State. Government to pay to an industry something tantamount to a bounty. The Commonwealth Government applies the principle in connexion with bounties granted to the iron and steel and other industries that are helped by the tariff, but when it comes to the wheat industryit shuffles half of the liability on to the taxpayers of the wheat-growing States. It is improper to make such discrimination. This Government, which is the recipient of Commonwealth taxation, should have the responsibility of providing financial assistance when it has to be granted to an Australianwide industry.
.- This clause, which provides for the appropriation of money upon the execution of any agreement with the States, is something like the wheat conference itself. It would be all right provided that it had the concurrence of the States concerned. Earlier in the year the Prime Minister, in a definite and unqualified statement, declared that the whole of the wheatgrowers would be given an opportunity to participate in a ballot to decide this issue. Now it appears that the wheat-growers of my State cannot have a ballot, unless the Government alters the bill to provide that the States shall not be called upon to pay one-half of any loss that may be incurred in the guarantee. The Western Australian Government now realizes that when assistance is given to an industry that might be helpful to that State, it is asked to pay half the cost, but when it concerns assistance to New South Wales, Victoria or Queensland, the Commonwealth Government provides the whole of the cost. The Western Australian Governmentbelieves that there should be observed a proper federal principle in the matter, and it asks this Government to act as it has done with regard to bounties and protection given to other industries. To-day the Minister stated that he is adamant; that the Commonwealth itself will not undertake the guarantee. That negatives the promise made by the Prime Minister. This action of the Commonwealth in utilizing the assistance of the eastern States to coerce Western Australia to become subject to the regulations that it will prescribe, is courting trouble, and is a grave mistak. I invite the Minister to be frank in the matter. The majority of my electors are interested in the wheat industry, and I wish to see their best interests preserved. I ask the
Minister whether the wheat-growers will derive the benefits of exchange under this proposal.
– One hesitates before deciding to vote for this clause. I recognize its necessity if the agreement is made with all the States, but I realize that the Minister is placing too much importance on the conference that he convened. I am aware that three men came from Western Australia to attend that conference in an endeavour to inaugurate a pool, but I think that even they will admit that they had no mandate from the growers on the subject.
– What other bodies represent the growers in Western Australia?
– The Primary Producers Association and the executive of the Wheat Growers Association.
– The Primary Producers Association is only a political organization.
– I sent invitations to those bodies.
– Those gentlemen had no opportunity to consult the wheat-growers as to whether they wanted a pool or otherwise. Still the Minister claims that they know all about the wants of the wheat-growers. The Prime Minister stressed the fact that the wheat-growers would be consulted and would have a vote, yet the very circumstances of this bill indicate that that promise is not likely to be honored. That conference spent less than half a day in coming to a conclusion in the matter.
– It spent the best part of three days debating the subject.
– It would be interesting to know how many hours were actually occupied in its deliberations. The mere fact that so many amendments are found necessary to the bill indicates how crude was the work of that conference. I urge that something should be done to enable the wheat-farmers to be consulted in the matter. They may be unanimous with regard to the importance of a compulsory pool, but consider that the only way that it can be inaugurated is by the Commonwealth undertaking the guarantee. The whole of the taxpayers of the Commonwealth would then bear the cost, as has been done with every other assisted industry.
.-I have already pointed out that clause 5 involves the appropriation of large sums of money for a period of three years, and for a further period if the Commonwealth and State Governments entering into the agreement choose to continue it. The Minister stated that every consideration was given to the desires of Western Australia, and drew attention to a slight advantage that that State enjoys from its geographical position. That advantage is very slight indeed, amounting, probably, to about¾d. a bushel. To counteract that it is proposed to allow Queensland to continue to enjoy its local advantage of 6d. a bushel, and New South Wales to retain the advantage that it now enjoys of something approaching 6d. a bushel-
– Actually it is about 2d. a bushel.
– I believe the claim is that.it is greater. It is definitely something more than the advantage enjoyed by Western Australia. All those considerations should be set aside and the whole of the States placed on the same footing, irrespective of what people pay for wheat locally consumed. The Minister has stated that those States which are large exporters and small consumers of wheat will be given the advantage of any extra price that may be charged for local consumption. My scrutiny of the bill fails to locate any such provision, and I ask the Minister to assist me. It cannot result from the use of the word “equalization.” It is difficult to determine exactly what is meant by that term, and I am not by any means satisfied by the Minister’s assurance, particularly in view of his action in regard to ballots. When announcing the project the honorable gentleman definitely assured the people of Australia that a ballot would be held, and he repeated that assurance when introducing the bill. Now, there is to be no ballot.
The CHAIRMAN (Mr. McGrath).The honorable member is not in order in alluding to the ballot in connexion with this clause.
– The subject is associated with the promises given by the Minister. His failure in that respect makes me sceptical in regard to his assurances about “ equalization “.I have given notice of an amendment that I shall move, if the Commonwealth will not undertake its proper responsibility in connexion with this matter.
– I am not very strongly in favour of the idea of the Commonwealth taking over the whole of the liability of the losses that will undoubtedly take place as a result of this bill. If that were the intention the “ equalization “ clauses would have to be recast. Obviously they are framed to meet the case of the States with respect to the amounts that they will have to contribute under the scheme. There does not seem to me to be very much reason why the States should have the right to appoint their own boards if the Commonwealth took over the entire financial liability of the pool. In the circumstances there seems to be no reason why the Commonwealth should not appoint boards in each of the States to carry out the pool as a Commonwealth undertaking.
– The guarantee is only one factor in the whole pooling scheme.
– It is by far the most important factor.I am confident that if it were, made apparent that there would’ be no guarantee, there would be no eagerness on the part of the States to participate in the pool.
– Is the honorable member aware that on the last occasion when New South Wales conducted a ballot for a wheat pool nothing was said about a guarantee, yet 62 per cent. of the growers voted in favour of the pool - a State pool at that.
– That was quite a different proposal from this. I still insist on the view that the promised guarantee was a great factor in inducing the farmers to countenance this proposal. If the Commonwealth takes over the entire responsibility of the pool there will be no check upon the conduct of State pools. I am, therefore, not strongly in favour of the Commonwealth being: solely responsible for the guarantee.
.- With the contention of the honorable member for Wakefield (Mr. Hawker) that the Commonwealth should logically carry the whole responsibility for the guarantee in connexion with this proposed pool, I fully agree, and, if the Commonwealth Government sees fit to take over the full responsibility for the scheme, I shall have no objection; but there are two reasons which may logically be given for a departure from the principle of the Commonwealth alone guaranteeing this pool. The first, which was raised by the honorable member for Warringah (Mr. Parkhill), is that this is a State as well as a Commonwealth pool.
– Does not that apply generally ?
– Not to a similar extent. If the States are not to bear some responsibility, there is the danger that the State board might not operate the pool so economically and efficiently as it would otherwise do.
– There will not be much efficiency in any case.
– I disagree most emphatically with the honorable member’s contention that there must necessarily be inefficiency in connexion with a compulsory pool, and I think that his contention can be disproved. The second reason i3 that the four States that have already agreed to take a ballot have not demurred in the slightest degree about accepting the responsibility for 50 per cent, of any loss. On general principles the views of honorable members representing Western Australia are sound, but their arguments regarding the ballot and other matters are woefully weak. If no ballot is taken in Western Australia that will be the fault and the responsibility of the State Government and not of the Commonwealth Government.
.- There is a great deal in the contention of honorable members representing Western Australia that any loss on this scheme should be borne entirely by the Commonwealth. I fail to see why we should make a special case of this industry. If there is a loss on the wheat pool operations, we shall have to give to the industry what practically amounts to a bounty. T1.ip States which are benefiting from the whip bounty - South Australia, Victoria, and to a lesser extent, New South Wales - do not contribute to it. That is paid in the form of excise by the wine consumers of Australia as a whole. The bounty on galvanized iron is confined solely to New South Wales, but the Government of that State has not been asked to contribute half of it. It is paid out of the Com monwealth Consolidated Revenue. It is apparent that the Government is endeavouring to drag in the States so as to make them share the responsibility for a scheme to increase the price of bread in Australia.
– That is not so.
– It is. The bill throughout savours of political trickery. This legislation, so soon as it is given effect, will substantially increase the price of wheat for Australian consumption, and in turn the prices of flour and bread. This Government is now attempting to make the States share the responsibility of the odium that will inevitably fall on it as the result of rigging the price of bread in this country. If the Minister, at a later date, would put into either the bill or the schedule a provision to the effect, that, notwithstanding this pooling arrangement, wheat required for milling within Australia, whether for home consumption or export, shall be sold at London parity prices, and that any loss on the sales shall be met out of Consolidated Revenue, I should not object so much to the States bearing a share of the responsibility, but under this provision, as it stands, the Commonwealth Government is simply endeavouring to drag in all the States so that they may share the responsibility for what will before long be the most hated piece of legislation that this Parliament has passed.
– I cannot join with the honorable mem’ber in his contention that the wheat bill has been introduced for political purposes. As a supporter of the bill I am hoping that a sufficient number of States will join in the scheme to make possible the introduction of the principle of pooling. To that end the Commonwealth should make the bill as attractive as possible to the States, and the suggestion that the Federal Government should accept the entire responsibility for the guarantee is, therefore, reasonable. The pool is in all respects a Commonwealth scheme. The Government has asked the wheat-growers to produce more wheat not for consumption within Australia, ,but for export, so that we may, to a large extent, rectify our adverse trade balance. The Commonwealth alone should be responsible for the guarantee, because the handling of exports is entirely a Commonwealth matter.
Mr. MORGAN (Darling Downs) ‘5.28] . - I have listened to the discussion on the proposed amendment with some degree of interest, and I rather shave the view that the Commonwealth, since it has been responsible for the introduction of this legislation, should accept the full financial obligation. The domination of the Commonwealth, in the event of it bearing the whole financial obligation would, however, imperil the wheat pools that arc operating successfully in several States. That is a factor that those representing the wheat-producing States will have to consider in discussing this legislation If the central government assumes full financial obligation, it may also assume full administrative obligation, and whether that would be acceptable to the States in which pools are successfully operating, is open to doubt. If Western Australia does not take a poll, the responsibility will be entirely upon Western Australia, and the farmers of that State will deserve all that may be coming to them.
.- I regret that the Minister has not given sympathetic consideration to the proposal that the guarantee should be regarded as a Commonwealth responsibility. If he could accept this principle, one h alf of the difficulties with regard to the acceptance of the scheme, particularly in the country, would disappear. It would make all the difference in the world to Western Australia. The Minister appears to be entirely at variance with the view expressed by his colleague, the Acting Minister for Trade and Customs (Mr. Forde) a week or two ago, when Wc were discussing the Cotton Industries Bounty Bill. The Acting Minister for Trade and Customs strongly opposed an amendment moved by an honorable member on this side, to the effect that Queensland should share financial responsibility for the cotton bounty. He took the view that i! should be the sole obligation of the Commonwealth. It seems to me that, if it can be argued that the Commonwealth should be solely responsible for the payment of a bounty on cotton - an industry confined to one State - the paying of this guarantee should similarly be a Com. monwealth responsibility in connexion with wheat-growing, an industry that is Australia-wide in its ramifications. If the position were reversed - if the Government proposed, in connexion with the wheat pool, to make the guarantee a Commonwealth responsibility because wheat is produced- in all States, and in connexion with cotton, the production of which is confined to Queensland, that it should bear equally, with the Queensland Government the financial responsibility - one could understand the attitude of the Government. There is another matter to which I desire to direct his attention. It seems to be understood that if, under this proposal, a State does not sign the agreement and make itself responsible for onehalf of the guarantee, the wheat-growers of that State will not participate in the pool. . This provision is to be found in the .schedule. Is there any reason why the schedule should not be amended to permit of a State becoming a partner in the pool without being a participant in the guarantee?
The CHAIRMAN (Mr. McGrath).The honorable member will have an opportunity to discuss that aspect of the. scheme when the committee is dealing with the schedules.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 6 (Borrowing of moneys).
– I should like to have some information from the Minister on this clause. Subclause 1 provides that the Treasurer may, from time to time, under the provisions of the Commonwealth Inscribed Stock Act. or any act authorizing the issue of ‘treasurybills, borrow such moneys as are necessary ro supplement the funds of the Commonwealth Bank for the purpose of making payments due under this scheme. The financial responsibility may be enormous, and what is more important, the sum required may have to be raised within a few weeks. In a financial transaction of such magnitude the committee is entitled to know what steps the Government proposes to take to raise the money - whether it will be by means of a loan in Australia or overseas, and whether it will be necessary to receive the approval of the Loan Council. I do not know if the committee realizes the immense sum which may be involved. Assuming that next season’s wheat crop amounts to 170,000,000 bushels and that 20,000,000 bushels will be held for seed, the Commonwealth will be called upon to pay the guarantee on 150,000,000 bushels delivered at railway sidings, the bulk of which will, no doubt, be delivered immediately it is,. hai1 vested. In .that event, the, Government will be called upon to find probably £20,000,000 or £30,000,000 within ‘eight or ten weeks. The magnitude of this transaction might embarrass a government that was called upon to honour the guarantee. I am not suggesting that the money will not. be found, but I should like to know what steps the Government proposes to take to. get it.
– It is possible that a large sum will be required to finance the pool, and that the payments will be made within a period of three months from the commencement of the harvest season. I sub;mitted the scheme to the Commonwealth Rank authorities and they agreed that there would be no difficulty in financing the guarantee in respect of a 200,000,000 bushel crop. The clause indicates the steps which the Government may take to raise the money.
– What will te the total amount required?
– That will not be known until the crop is realized. It may be argued that the private banks will not co-operate with the Commonwealth Bank in financing the scheme. We are not anticipating any difficulty in that respect. The honorable member for Henty (Mr. Gullett) has asked what steps the Government proposes to take to raise the money. The clause gives the Treasurer authority to issue treasury-bills, if that course should be considered necessary, and the money placed to the credit of the Commonwealth Bank for the sole purpose of financing the pool. When the wheat is sold, the treasury-bills will be retired. Similar authority to raise money is given under the Australian Soldiers’ Repatriation Act) the Commonwealth Bank Act, the Seat of Government Administration Act, the Grafton to South Brisbane Railway Act, and the Development and Migration Act.
– But never for an amount so large as will be required under this measure.
– I am merely indicating to the honorable member what steps may be taken by the Government to finance the pool. Again I assure him that the bank authorities do not anticipate any difficulty.
.- I do not think that the Minister has appreciated the main point at issue. A very large sum - estimated to be between £20,000,000 and £30,000,000- has to be provided, in the first instance by the Commonwealth Bank, for the purpose of making the payment of 4s. a bushel for the wheat at railway sidings. Insofar as the ready resources of the bank will enable it to finance these payments, this provision in this clause - which gives the Commonwealth Treasurer authority to borrow such sums as may be necessary to supplement the funds of the bank -is unnecessary. The amount that may be required for this purpose is unknown at present, but whatever the amount required may be, it will have to be borrowed by the Commonwealth, and the matter will, therefore, come within the terms of the financial agreement, for it will be part of the loan programme of the Commonwealth. Is the Minister able to say whether all the States will agree to the Commonwealth raising this amount? Under the Financial Agreement the Commonwealth has unlimited power to borrow only for defence purposes; in reject to all other borrowing it must obtain the consent of the Loan Council. If the Commonwealth Bank itself, or jointly with the other banks, can raise the money there will be no need for this provision; but if not, it appears that the Loan Council will have to be approached.We should have a definite assurance from the Minister that the Loan Council would agree to this proposal before it is put in the bill. So far we have been given no indication whatever that the council has even considered this aspect of the subject. It is true that the money required will be outstanding for only a comparatively limited period, for as the wheat sales proceed money will become available from subsequent sales; but we should be given an undertaking, either that the Commonwealth Bank can arrange to finance the scheme, or that the Loan Council will agree to give the Commonwealth Treasurer authority to raise any money that may be required for the purpose. In the absence of any such assurance the committee should hesitate before agreeing to the clause.
– This is a provision to enable the Commonwealth to borrow within the law.
– Quite so, and a highly relevant law in this connexion is the Financial Agreement, which requires that, apart from borrowing for defence purposes, the Commonwealth or the States shall secure the unanimous agreement of the Loan Council before entering upon the money market for any purpose. The Financial Agreement provides that the money raised shall be distributed in certain proportions. We desire to know whether the council is agreeable to money being raised for this purpose.
– The meaning of the clause is, on the face of it, perfectly plain. Under the scheme of this bill the Commonwealth Bank will finance the operations of the Wheat Marketing Board. If, in the course of its financing, it finds it necessary to draw upon other funds it will have power under this provision to call upon the Treasurer of the Commonwealth to issue short-dated treasury-bills. There is nothing unusual in such a provision. It appears in many statutes and was inserted in many measures by the previous Government. During last year my predecessor in office, the right honorable member for Cowper (Dr. Earle Page) made a temporary issue of treasury-bills in London.
– But to raise £20,000,000 by that means in a few weeks is a different matter.
– It would be serious if the whole amount were raised in a few weeks ; but it cannot be seriously suggested that that is intended. It is probable that there will be no necessity to issue these bills; but it is reasonable that the power to issue them shouldbe granted in order that the Commonwealth Bank might protect itself and be able, if necessity arises, to temporarily replenish its funds. To suggest that £20,000,000 should be raised by shortdated treasury-bills on the Australian market would be absurd. It is probable that no temporary accommodation of this kind will be required; but it would be unwise to pass the bill without this provision. If the issue of these short-dated bills should, in the opinion of the authorities, benecessary, they will be issued; but otherwise no action is likely to be taken under this provision.
– It is proposed that only Commonwealth treasury-bills shall be issued. Why should the State treasuries be exempt from issuing bills, seeing that they are to be responsible for half of any loss?
– It is proposed to issue Commonwealth bills because these would be the most convenient security for the Commonwealth Bank. No good purpose would be served by allocating the amount that might be necessary to the different States that are parties to the pool and obliging them to issue State securities to the amount required. That is a matter of convenience.
The Leader of the Opposition has questioned whether the raising of this money would need to be referred to the Loan Council. I am not quite sure that it would be necessary to refer to the Loan Council the provision of temporary accommodation of this character.
– In my opinion the council would have to be consulted, under the provisions of paragraph 6 of the agreement.
– I do not know whether that is so or not. If it were necessary it would, of course, be done; but I question whether such temporary accommodation would need to be referred to the council, lu any case the facilities for referring such a matter to the council are easily available, and I do not think that any government would consider it good policy to even attempt to evade or ignore the council in such a matter. Clause 6 is a necessary part of this measure and it would be unwise to delete it.
.- I should like an assurance that any loss that may be incurred in connexion with this pool will be met out of Consolidated Revenue and not out of loan funds.
– The loss, if any, will be a charge against Consolidated Revenue.
– As to the point raised by the Leader of the Opposition, it appears to me that there would be no very great danger in passing this clause if the Rural Credits Department of the Commonwealth Bank is left as it is; but an amending bill brought down’ a few days ago provides for the removal from the principal act of the power of the Rural Credits Department to issue shortdated debentures against marketable products, such as wheat, in actual process of sale. That provision was inserted in the act to meet just such a contingency as we are now considering. It enables the bank to cover a period of two, three or four months - the peak period in the marketing of a product - by issuing short-dated debentures. I believe that when we come to discuss the Commonwealth Bank Bill, the Treasurer will agree to retain the rural credits provisions for the sake of the additional power they give in the matter of financing operations. If that is done, the need for using the power in the clause now under consideration is not likely to arise. When in 1923-24 the question of the Commonwealth guaranteeing a price for wheat arose, I went to the trouble of taking out the exact amount that .would have been required from the Rural Credits Branch of the Commonwealth Bank had it been in operation. I found that on the actual transactions of the Victorian Wheat Board in the sale of 15,000,000 bushels, the peak amount it would have been necessary to find was £2,750,000, but for one month only. For the whole seven months over which the advances would have been made, it would have ranged from £100,000 to £2,750,000.
.- The statement of the two Ministers about this matter of finance must add a good deal to the anxiety of the people who are not clear, first as to the way in which money is to be found for the big initial payment, and, secondly, whether it is to be found at the expense of other industries when credit is most strained. The Minister in charge of the bill has spoken of the possibility of a very big sum of money having to be found during the ten weeks or three months in which the harvest would be delivered. In previous pools, a good deal less has been required, but that was undoubtedly due to the fact that payments were spread over the whole year as the wheat was marketed. It was, strictly speaking, a revolving fund. In this case, however, a big sum of money is to be found within ten weeks Or three months before a large proportion of the wheat can possibly be marketed or before a large proportion of it can reasonably be sold forward. On this account the Minister is making provision by which the Government can approach the Australian Loan Council for help. Before it does so, it is likely to put pressure on the banking system of the country, and is likely to secure temporary accommodation from the banks for quite a considerable proportion of the amount needed for the guaranteed payment to the farmers. That being so, the credit available for other industries must to some extent be disorganized and that at a. time when the banks are considerably pinched and when some of them will be just recovering from the serious readjustments they will be obliged to make in finding the percentage of deposits they will be expected to place in a central reserve bank. For these two things to fall upon the delicately adjusted and, at the present moment, pretty fully extended, credit system of the business of Australia, must lead to the greatest anxiety on the part of the wheat-growers as to whether they are going to receive the 4s. promptly for the coming harvest.
Clause agreed to.
Clause 7 - (1.) For the purposes of this act there shall be an Australian Wheat Board. (2.) The board shall consist of one member . . as the representative of the Commonwealth Government, and one representative of each State, which has entered into an agreement with the Commonwealth in the form in the schedule . . . (3.) The member appointed as the representative of a State shall have been selected . . by a body of persons constituted … by the law of that State.
Amendments (by Mr. Parker Moloney) agreed to -
That after the word “ schedule,” sub-clause 2, the words “ or an agreement authorized by section 4a of this act” be inserted.
That the words “a body of persons,” subclause 3, be omitted with a view to insert in lieu thereof the words “ an authority “.
.- Subclause 5 provides that State representatives on the board shall hold office for the period for which they are appointed. I suggest that, as the State laws will almost certainly contain provisions requiring State representatives to vacate their offices on State authorities in the event of absence for a certain time, illness or incapacity, and as the Commonwealth legislation is superior to any State legislation on the same subject, it would be safer to insert after “ shall “ the words “ subject to the law of the State which they represent.” This bill says that a member of the board is appointed for one year, whereas State legislation may say that he is to hold office on a State authority for a year in the event of such and such a thing not happening.
– Does the honorable member think that the clause will not give the power to the State authority ?
– It is open to question. In the event of an acute difference of opinion on the board, a cantankerous member may contend that, although the State legislation says that the Minister may remove him from office, the Commonwealth legislation declares that he holds office for the period for which he is appointed, and that is one year. If the federal legislation declares that the State representatives on the board, which is a Commonwealth Board, constituted by Commonwealth legislation, shall hold office for one year, then no provision of any State legislation can remove them. If the State legislation provides for removal, for misbehaviour or anything like that, it is desirable to provide that the law of the State, referred to in sub-clause 3, shall apply in the case of illness, incapacity or anything like that. I hope the Minister will consider the matter and, if necessary, insert at a later stage the amendment I suggest.
– I promise to do so if I find that it is necessary.
Clause, as amended, agreed to.
Clause 8 agreed to.
Clause 9 verbally amended and, as amended, agreed to.
Clause 10 agreed to.
Clause 11 -
.- The chairman of the board is elected by the members of the board. He may be a representative of the Commonwealth or a representative of a State. I wantto know what is likely to happen if the chairman ceases to be a member of the board in some other way than by resignation or death.
Sitting suspended from 6.14 to 8 p.m.
– No provision is made for the chairman ceasing to be a member of the board excepting by resignation or death. I therefore move -
That after the word “dies,” sub-clause 2, the words “ or ceases to be a member of the board “ be inserted.
– I accept the amendment.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 12 (Meetings of the board).
.- Sub-clause 4 makes no provision for a deadlock at a board meeting. As it is possible that only three States, Queensland, New South Wales andVictoria, will agree to the formation of the pool, there will probably be four members of the board, in which case, should two members be in favour of a proposal and two against it, the matter could not be decided. Sub-clause 6 provides for a question being postponed to a subsequent meeting in the case of a deadlock when one or more members are absent; but there does not appear to be any provision to meet the case of an equality of votes when all the members of the board are present.
. - The position pictured by the honorable member for Wakefield (Mr. Hawker) might arise on any board when the voting is equal.
– It might arise if there were five States in the pool.
– There are two ways in which the position can be met. We can either give the chairman a deliberative vote as well as a casting vote, or leave these matters to settle themselves - probably at a future meeting of the board when the voting may not be equal. I think that it is undesirable to give the chairman two votes.
Clause agreed to.
Clause 13 agreed to.
Clause14 - (1.) Theboard may constitute agencies of the board in such places as the board thinks lit. (2.) Each agency shall consist of such num ber of persons as the board from time to time determines, one of whom may be appointed, by, and may hold office during the pleasure of, the Governor-General, and the others shall be appointed by, and shall hold office during the pleasure of, the board. (3.) Each agency shall keep the board ad vised as to current prices of wheat and as to other matters relative to the disposal of Australian wheat, and generally act as the agent of the board in accordance with the directions of the board.
Amendment (by Mr. Parker Moloney) proposed -
That after the word “ places “, sub-clause 1, the words “ and for such purposes “ be inserted.
.- The amendment by the Minister is somewhat far-reaching. Would it not be well to ensure that the purposes for which agencies may be constituted shall be purposes in accordance with this bill?
– The board could not authorize any agencies to do more than the board itself is empowered to do.
.- Neither the board nor its agents can do more than this bill empowers them to do. I think the position is amply safeguarded.
Amendment agreed to.
Amendment (by Mr. Parker Moloney) agreed to -
That sub-clauses 2 and 3 be omitted.
Clause, as amended, agreed to.
Clause 15 - (3.) An officer appointed under this section shall not be entitled to compensation for any termination of his employment howsoever arising. (4.) Subject to this section the salaries and conditions of employment of officers appointed in pursuance of this section shall be as prescribed.
.- Although sub-clause 3 is similar to the provisions of many other statutes, I suggest that it is much too wide. The purpose of the clause is to make it clear that an officer of the board shall not be entitled to compensation when his office is abolished, or when, in accordance with the terms of his employment, he is dismissed. In other words, his employment is not to be on the same basis as that of a public servant. But the clause as printed appears to cover even cases of Wrongful dismissal. It might happen that an officer appointed under contract will be wrongfully dismissed by the board, having regard to the terms of that contract. He should not be deprived of his right of action for wrongful dismissal. The intention of the clause is not to deprive him of that right, but to prevent officers from having a claim for compensation when retrenched.
– An officer should have a right of action if the terms of the contract have been disregarded.
– That is so. I am sure that the committee does not want to deprive men of their right of action in the event of wrongful dismissal. I therefore move -
That the following words be added to subclause (3.) : - “except in the case of wrongful dismissal.”
– The effect of the amendment moved by the Leader of the Opposition (Mr. Latham) might be to incite officials to wrongful action. If this clause is left as it is, there will be nothing to prevent the board from dealing generously with its officers whose services are terminated. Most boards deal generously with their employees in such circumstances. I do not want the board to be involved in costly litigation.
– There is not much danger of that.
– I am reminded that Bawra incurred heavy expenses in litigation, with the result that the dividends to the wool-growers were greatly reduced.
– An officer who is wrongfully dismissed should have some right of action.
– I agree that the words “wrongful dismissal” suggest unfair treatment; but I submit that the usual phraseology to meet such cases would be better than that now suggested.
– I agree with the Leader of the Opposition (Mr. Latham) that men wrongfully dismissed should not be prevented from taking action for compensation. I therefore accept his amendment.
Amendment agreed to.
Amendment (by Mr. Parker Moloney) agreed to -
That sub-clause 4 be omitted.
Clause, as amended, agreed to.
For the purpose of enabling the board effectively to control the export, and the sale and distribution after export, of Australian wheat, the Governor-General may, by Proclamation, prohibit the export from the Commonwealth of any wheat except in accordance with a licence issued by the Minister (or by any person thereto authorized in writing by the Minister) subject to such conditions and restrictions as are prescribed after recommendation by the board to the Minister.
.- This is one of the most important clauses of the bill. To a great extent, the whole scheme hinges on it. It enables the Governor-General to prohibit the export of wheat from the Commonwealth, except in accordance with a licence issued by the Minister or other authorized person, subject to such conditions and restrictions as are prescribed after recommendation by the board to the Minister. This clause controls the export of wheat, while clause 18 controls interstate trade in wheat. In regard to clause 16, the question arises whether, in the circumstances actually existing in Australia today, it is possible to make the scheme work effectively by the control of wheat in relation to export and interstate trade. The Minister may have in his possession the details of the carry-over wheat - the wheat at present existing in Australia unsold - and may also be able to form an estimate of the quantity of wheat which will still be in the hands of its owners or other persons at the beginning of the next harvest, when the question of the sale of the pooled wheat will arise. I understand that according to recent prognostications there will be a considerable amount of wheat carried over to next year. All the States have not legislation enabling them to control the sale of such wheat, and if it is impossible to control the sale of wheat carried over from previous seasons, what is going to happen to the local market?
– There will be no control over it unless the State Government? agree to pass the necessary legislation.
– That is so. It will be necessary for them to pass legislation enabling them to acquire the wheat as was done in the case of dried fruits. Under an arrangement with the Commonwealth Government the State Parliaments passed legislation enabling them to acquire dried fruits, and that legislation was upheld after litigation. I understand that in Western Australia there is sufficient wheat carried over to provide for the home consumption requirements of that State for two or three years.Ialso understand that for some months past a very considerable quantity of wheat has been held in New South Wales in the hope that the price would rise. Unfortunatelv, that expectation has not been fulfilled.
– The total carry-over for Australia is estimated at a little over 30,000,000 bushels.
– If that wheat is not to be subject to control, it will be free to compete in the intra-state market with the pooled wheat for home consumption requirements, and it will be impossible to control the price of pooled wheat. As I understand that one of the great merits of this scheme is that Australians may be charged a higher price than is charged to persons overseas, the whole thing must break down unless there is some provision of which we have not been informed for controlling the carry-over wheat.
– That wheat is not. really in the growers’ control.
– It is in the control of persons who can dispose of it as they think fit, and much of it, indeed, is still held by the farmers themselves.
– What is the average price the growers received for that wheat?
– Much of it has not yet been sold. Some of it is in the hands of merchants, who are holding it on account of the growers, for whom it will eventually be sold. It is really immaterial whether it is in the hands of the. farmers, the banks, or the merchants.
– There is also a large quantity of wheat held by voluntary pools.
– That is so. There is no pool in New South Wales, but there are pools in some of the other States.
– In view of the fact that the advance made to the growers in respect of the held-over wheat is 4s. a bushel or more, and that certain charges have to be met as well, will any practical question of competition arise?
– I do not think that the facts are as the honorable member says; but even if they are, it would not affect the position. Indeed, it might aggravate it. The wheat will have to be realized ; it cannot be kept indefinitely. It must be put on the market, and perhaps it. will have to be sold at a loss. Wheat is not a permanent and indestructible commodity. If any pressure arises from the uncertainty of market conditions it may stimulate a quick clearance. It is impossible to ignore this large quantity of uncontrolled wheat, and I should like to hear from the Minister how it is proposed to deal with the situation, and whether the State Governments understand that in order to make the pool effective they must bring in legislation to control the carryover wheat if the owners are not prepared to place it for disposal with the pool authorities.
– I move-
That after the word “except” the words “ wheat exported by the board or wheat exported “ be inserted.
If this amendment be accepted I shall then move that the words “ subject to such conditions and restrictions as are prescribed after recommendation by the board to the Minister” be omitted.
.- As the clause now stands the Minister may, after the board has made a recommendation regarding regulations, make up his mind as to whether he will accept the recommendation or not, and, if he thinks fit, reverse the board’s decision. This objection would be removed if the word “ upon “ were substituted for the word “ after.”
.- The honorable member for Wakefield (Mr. Hawker) has given notice of an amendment the effect of which is to delete this clause altogether, and I think that amendment should be dealt with now. I shall oppose clause 16 in its entirety unless an assurance is given that no attempt will be made to control the export of wheat from States which have declined to come into the pool.
– The effect of this clause is to modify the power already held by the Minister under the Customs Act.
– I want to modify that power still further. I want Parliament to express its opinion as to whether we are to have ministerial control over the export of wheat from States which refuse to have anything to do with the compulsory pool.
.- This clause would be all right if all the wheatproducing States were certain to join the pool, but if, for reasons outside their control, the growers in any State are not able to participate in the pool, any undue pressure brought upon them will naturally cause serious interstate trouble. I ask the Minister to consider that phase of the matter.
.- The Minister has not attempted to reply to the very important point raised by the Leader of the Opposition (Mr. Latham). This clause provides for the prohibition of exports except in accordance with licences issued by the Minister. Will the large quantity of carry-over wheat be refused an export licence? If it is to be used for Australian consumption outside the pool it will prevent the board from receiving the increase in price to provide against the probable loss on exports. It would be unjust to expect the States to bear all the risk. The matter is important enough to have been debated by the Canberra conference, but I have been informed that a good deal of its time was occupied by morning and afternoon teas and luncheons, and that very little time was given to discussing the merits of the scheme. It is quite clear that the conference could not have given full consideration to the scheme contained in the bill, because much of what is now before us represents the Minister’s second thoughts since he explained the bill. I am told that the carryover wheat will amount to 30,000,000 bushels, and we should have some understanding as. to whether it will be taken into the pool, and, if so, at what price, or whether the holders, be they growers, millers, or exporters, will have a free hand in disposing of it? The Minister has said that this will require State legislation, but if the matter was discussed at the Canberra conference, the honorable gentleman must know what is in the minds of the State Ministers. The matter is too important to be brushed lightly aside.
– The honorable member for Lilley (Mr. Mackay) has said that the carry-over of wheat from the present season may be 30,000,000 bushels. That is merely guesswork, for he has no means of estimating the quantity. But in any case, the bill relates only to the wheat of the 1930-31 season, and the Commonwealth can deal only with interstate and export trade. The bill does not affect the carry-over from 1929-30; that is entirely a matter to be dealt with by the States.
.- I have been informed by the representative of one of the biggest co-operative selling agencies in Australia, that after the local market is satisfied the carry-over will amount to 30,000,000 bushels. What is to become of it? We understand that if there is to be a loss on the export of pool wheat, it will be passed on to the consumers in Australia. If there is no control over the 30,000,000 bushels of carry-over wheat, and it cannot be exported, it will have to be sold in Australia, and that will mean the failure of the pool in its first year of operation. If, on the other hand, the pool is ex pected to take over that wheat, the financial responsibility of the Commonwealth will be considerably increased. This problem should have been dealt with by the Canberra conference, but I am told that that gathering was hurriedly convened and that its business was rushed through.
– That is not correct.
– The honorable member was the chairman appointed by the Minister to preside over the conference.
– I was not appointed by the Minister.
-I understand that the honorable member and another gentleman were candidates for the chairmanship, and that, the voting being equal, the honorable member received the casting vote of the Minister for Markets and Transport.It is obvious that, if the carry-over wheat is not to be exported, it will compete with the 1930-31 crop, and will add considerably to the difficulties of the pool.
– That is a matter for the State Governments.
– Is the Minister relying on the State Governments?
– This is their function.
– The Minister cannot evade his responsibility in that way. This Parliament is asked to accept liability for a considerable sum of money, and this bill should be framed as carefully as possible. Apparently the Minister will give no assurance regarding the carry-over wheat.
– What does the honorable member suggest should be done with it?
– I submit that it must be taken into the pool if the scheme is to be effective. I am afraid the Minister has not yet realized the importance of this matter.
.- Whilst it is true that this Parliament has no power to deal with carry-over wheat in a State, we have to bear in mind that that carry-over wheat may have the effect of nullifying the pool during its first year. Unless State legislation is passed to control it, the competition of carryover wheat in New South Wales will make it difficult for a higher price to be charged for pool wheat for homeconsumption, and that will seriously affect the finances of the scheme. This point should have been provided for in the agreement. Before Victoria, which will have a very small carry-over, is asked to share the financial risks of the pool, and before the taxpayers of Tasmania are required to share the risks of the guarantee, we should have some assurance that the State Governments will take steps effectively to deal with this season’s surplus.
– Why does the honorable member assume that the holders of carry-over wheat will undersell pool wheat?
– Even if there is no underselling, the competition of carryover wheat with pool wheat on the local market will mean some displacement of pooled wheat from the local market where it might obtain the additional price which is relied upon to make good the loss on the export trade.
.- There is no doubt that the carry-over wheat will have to be acquired if the pool is to function satisfactorily. The Minister is quite right in saying that this Parliament has no power to acquire carry-over wheat held in the States.
– But it could be included in the agreement with the States.
– Yes. Difficulties will certainly arise if the carry-over wheat is not controlled in some way. For instance, speculators may set to work between now and the commencement of the pool to acquire this wheat. I understand that the quantity involved is between 30,000,000 and 32,000,000 bushels above that required for local consumption between how and the harvesting of the next crop. That is equivalent to another year’s supply for local consumption ; but the quantity involved will depend largely upon the trend of the market. If the price falls below 4s. the tendency will be to hold on, and speculators will endeavour to acquire supplies in order to sell it for local consumption purposes at a higher price. On the other hand, if the market rose above the guaranteed price the problem to be faced would not be great, because those who were holding wheat would dispose of it under licence in order to prevent its acquisition by the pool. The real difficulty is in connexion with the possibility that it may not go overseas. Although the States will have to grapple with this problem it may be wise to provide in this measure that the guaranteed price of 4s. shall apply, not only to the first crop harvested after the adoption of this scheme, but also to the carry-over wheat. I submit that the difficulty could be overcome by adding to clause 11 of the schedule the words, “ the wheat of the 1931 season and such other wheat as may be prescribed.” The Minister has been twitted because of the numerous amendments which have been circulated, but we should recognize that this is a very complex problem. If we were dealing with a subject over which the Commonwealth has complete legislative power it would be simple; but the Commonwealth in this instance has to deal with five States, the interests of some of which are diametrically opposed to each other. Amendments have also been suggested as a result of representations made to the Minister by wheat-growers’ organizations, whose wishes he has endeavoured to meet.
.- The Minister (Mr. Parker Moloney) should realize the significance of making effective provision in this bill for the carryover wheat. Those supporting the bill have said that it will be of advantage to the wheat-growers, that those selling wheat for local consumption will be benefited, and that the price of bread in Australia will not be increased. On the other hand this scheme will be futile if a large quantity of free wheat is to be available in Australia. The Minister should not treat this matter so lightly and suggest that that is a matter for the States. If it is the intention of the Government to assist the wheat-growers, provision must be made for acquiring the carry-over wheat.
.- During my second-reading speech I dealt with the subject under discussion, and pointed out the great difficulties there would be in making provision for carry-over wheat . against much of which advances have been made. In New South Wales there is a great deal of apprehension in regard to this matter as at the end of this season there may be at least 5,000,000 bushels on hand in that State. It would be unfair to provide for pooling the whole of the wheat in the Commonwealth without making some provision for dealing with wheat which is unsold at the end of this season. This matter can only bo effectively dealt with by including the carryover wheat with the next season’s crop, and possibly the position could be covered by amending the definition of wheat by providing that for the purposes of this agreement wheat carried over from any season prior to 1930-31 shall be deemed to be wheat of the 1930-31 season.
– Does the right honorable member mean that the guarantee should apply to all carry-over wheat?
– Yes, from the date on which the pool is actually established, which I understand is to be in November. The carry-over wheat should be dealt with by the pool. Some definite pronouncement should be made, as it would materially affect the attitude of farmers on this question.
.- I trust that the Minister (Mr. Parker Moloney) will endeavour to clear up the matter of the carry-over wheat, which presents an exceedingly difficult problem. The whole financial side of the proposed wheat pool is exceedingly vague, and becomes more so because of the difficulty which is now presented. We have been told the States must find the money for the carry-over wheat. That is exceedingly unfair, and must seriously prejudice the prospects of the scheme being endorsed by any State which has a considerable carry-over. Although I am opposed to the measure, and this aspect does not concern me very much, I do not wish to see it passed in an unsatisfactory form. We have just been informed by the right honorable member for Cowper (Dr. Earle Page) that at the end of this season New South Wales will have a carry-over of approximately 5,000,000 bushels, which will throw on to that State the responsibility of finding £1,000,000 in order to bring that wheat into the pool. Apparently, the Commonwealth Government wishes to have no responsibility in this regard. The intervention of this problem seems to indicate that the Government has not given sufficient consideration to the proper financing of the scheme. We are not quite sure where the £20,000,000, or whatever amount is to be found by the Commonwealth to purchase this season’s crop, is to be obtained, and it now becomes apparent that an additional few million pounds will have to be raised by the State Governments to finance the carry-over wheat. I trust that the Minister will clear up this matter.
.- The flour-millers and their employees have already joined in an agitation with the object of acquiring and gristing all the grain they can obtain before increased prices become effective. I have before me the report of a joint deputation from the flour-millers and flour-millers employees, which waited upon the Minister of Agriculture in Victoria seeking the inclusion of a provision in the bill to give Australian millers the right to’ purchase wheat at London parity prices from day to day for the export flour trade. In a report of that deputation the following appears : -
We understand the Prime Minister has made a statement to the effect that there will not be any increase in the price of bread in Australia consequent upon the enactment of the Wheat Marketing Bill; and to help in the successful fulfilment of this prediction we ask that conditions will be provided whereby it will be possible for flour mills to carry on their customary three shifts per day running, and thereby, in addition to all the foregoing advantages, keep our four-mill workers in employment and keep down the price of flour, and consequently bread.
It is evident that it is their desire to acquire carry-over wheat for gristing, and to a degree defeat the object of the pool. This is a matter which the Minister has apparently overlooked.
– I submit, Mr. Crouch, that the discussion in connexion with the carry-over wheat should be on clause 1 of the schedule.
– This clause provides that the Minister may prohibit the export of carry-over wheat. The present intention is to export the surplus; therefore, this is an appropriate occasion on which to discuss the subject. I submit that the honorable member for Gippsland cannot succeed with his point of order.
– I think that the discussion on the amendment is in order, for the reason that wheat referred to might mean any carry-over wheat which may not necessarily be exported.
.- I hope that the Minister will give some indication as to the policy of the Government concerning the carry-over wheat, even if he must maintain a golden silence upon its general policy in regard to the bill. Suggestions have been brought forward by two influential members from, big States that the Commonwealth Government should extend its guarantee to wheat carried over from last season in addition to that from this season’s crop. I trust that the Minister will indicate that it is not the intention of the Government to dip its hands further into the pockets of the taxpayers of the smaller States, which cannot afford to come into the pool, merely to provide a spoon-fed price for the other States concerned.
– I suggest that we might discuss this matter when we come to clause 1 of the schedule.
Amendment agreed to.
Amendment (by Mr. Parker Moloney) agreed to -
That the words “ subject to such conditions and restrictions as are prescribed after recommendation by the board to the Minister “ be omitted.
.- I propose to move -
That clause 16 bo omitted with a view to insert in lieu thereof the following new clause - “ For the purpose of enabling the board effectually to control the export and the sale and distribution after export of wheat produced in States which are parties to an agreement in the form in the schedule, the Governor-General may by proclamation prohibit the export from the Commonwealth of any wheat produced in those States except in accordance with a licence issued by the Minister or by any person thereto authorized in writing by the Minister.”
The effect of the amendment, if carried, would be to confine the power of issuing a proclamation under this act for the control of wheat to those States which accept the pool. It would leave the other States free to indulge in trade in wheat. It is most important that there should be no restriction on the States which dp not become parties to “the pool. If the Minister’s amendment to the following clause is carried it will mean that the conditions under which licences will be issued for the export of wheat will be decided by the Minister upon the’ recommendation by the board controlling the pool. It would be grossly unfair to restrict the trading of the States which were not enjoying the benefits of the guarantee and which were not in the pool. My amendment would not in any way weaken the effective control of the pool.
– We question that.
– I fail to see how wheat exported by pool or by merchants in Western Australia, South Australia, or any other State not a party to the pool, could affect its working, and I hope that the Minister will accept my amendment.
– Of course I cannot accept the amendment.
– Why “of course”?
– For obvious reasons which I am sure honorable members appreciate. The board that will be appointed will undertake the control of wheat for interstate trade and for export. The honorable member for Wakefield (Mr. Hawker) suggests that that control should apply only to those States in the pool. The honorable member knows perfectly well that occasions may arise when the control board might deem it advisable, for the proper carrying out of the functions of tie board, to do certain things in the interests of the control of wheat. It might be necessary to hold a quantity of wheat over, or in some other way to regulate the control in order to obtain the very best results. It is impossible to allow uncontrolled States to destroy the purpose for which the board is formed; to the detriment of the controlled wheat. I do not think any honorable member will seriously contend that a State remaining out of the pool should be allowed to stultify the activities of the Control Board. When the Commonwealth undertakes a control, it must be spread over the whole of the States.
It is impossible to differentiate in the matter. I believe that it would be unconstitutional to do what the honorable member suggests. It would be most improper to allow a minority of the growers to destroy the activities of a pool operating in favour of the majority. In the circumstances I cannot accept the amendment.
.- I listened in amazement to the Minister’s resistance to this amendment. By his resistance the honorable gentleman practically declares that it is the intention of the Government to coerce States into this pool. He says to those States, “Whether you take any interest in this or not, if three States come into the agreement, we will control your wheat.” That action is without precedent in this country. The Minister endeavours to prove that if three States become members of the pool, they necessarily will represent a majority of the wheat-growers in Australia. That I challenge. The vote necessary to form a pool in any one State need not be carried by a majority of the wheatgrowers in that State. It is only necessary that a majority of the farmers who vote shall be in favour of the pool. In all probability a minority vote may bring some States into the agreement. The proposal of the Government may, therefore, mean that a minority of the wheatgrowers of the Commonwealth will control the remainder. The proposed compulsory wheat pool was bad enough when it depended upon a bribe of 4s. a bushel to the farmer, but it is worse when in addition there is the threat of coercion that your wheat will be taken out of your hands whether you interest yourself in the pool or not. To oppose . this amendment, however, is but to beat the air, because the Labour members always vote with the Government. The Minister’s attitude is to me most amazing.
.- This proposal to coerce the farmers into the pool is iniquitous. We have always prided ourselves on the freedom that we enjoy in this country, yet. under this measure the farmers will not be allowed to do what they like with their own wheat. As the Deputy Leader of the Opposition (Mr. Gullett) has pointed out the farmers in perhaps two of the chief wheat-growing States in the Commonwealth may decide against the pool yet under this provision they will be forced to join it, because under no circumstances will they be allowed to dispose of their wheat outside of the pool. This provision, if given effect, will restrict more than does any previous legislation the freedom of the wheat-growers of Australia.
.- The speech of the Deputy Leader of the Opposition (Mr. Gullett) was made in a vicious party spirit, and it is not my intention to follow his example. If the amendment proposed by the honorable member for Wakefield (Mr. Hawker) is not, on the face of it, invalid, there are such serious grounds for believing it to be so, that it would indeed be folly on the part of the committee to accept it. The amendment, as framed, appears to apply to some of the States and not to all of the States of the Commonwealth, and under those circumstances it involves an infringement of section 99 of the Constitution, which states that the Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to any State or part thereof over another State or part thereof.
– Which States would be preferred under the amendment?
– It is not exactly a question of specifying which States would be preferred. Some States, might on a fair construction of this amendment, be preferred. The other States might be subjected to some detriment or discrimination. Therefore, it would be folly for this committee to adopt the amendment in a form which may be taken as an attempt to vest in the authority established under this statute the power to prohibit the export of wheat from some States of the Commonwealth. Such a power must be conferred in respect of the wheat of all the States. For these reasons I submit that this committee would be ill-advised to accept the amendment.
.- The effect of this amendment, if carried, would be to destroy the whole purpose of the bill. It would definitely wreck the pool because it would render its successful operation impossible. The honorable member for Wakefield (Mr. Hawker) suggested that it would be grossly unfair if merchants were not allowed to engage in foreign trade. These wheat merchants have always been bitter and implacable opponents of co-operation among primary producers. On every occasion they have done their utmost to obstruct and destroy voluntary pools, yet in the literature that they have circulated throughout this country they have piously stated that they have no objection to voluntary pools. It is definitely known that the merchants have on various occasions endeavoured to destroy the pools by under-cutting prices. They have gone even further than that. The firms of Darling’s and Bunge’s are members of the Australian Wheat Merchants Association, and if this amendment is carried they will be able to engage in foreign trading. In March and April last those two firms, in order to depress wheat prices, circularized the millers of the United Kingdom, including two of the largest buyers of Australian wheat - Messrs. Spillers and Bakers Limited and Joseph Rank Limited - calling attention to the number of cargoes of unsold Australian wheat that were afloat for Europe. The cargoes referred to belonged to the various voluntary pools and had been shipped because the freight had been engaged, although, owing to the depressed state of the market, it had not been sold. The intention behind the action of the wheat merchants was to depress further the price of wheat held by the Australian pool. These firms were, at the moment, off the market, and most of the wheat of which they were in possession was held on storage for the farmers. On another occasion the firm of Bunge’s informed buyers of Australian wheat in Italy that that season’s Western Australian wheat was of low quality. That rumour, which was entirely false, had to be contradicted by the Minister for Agriculture of Western Australia. That firm was at that time advising Italy as to the quality of Australian wheat, and obviously its intention was to injure the voluntary pool. Furthermore, these two wheat firms are in charge of the propaganda which has been circulated throughout Australia, and which is being freely used by members of the Opposition, who talk so glibly of the freedom of the farmer.
– The honorable member wants to increase the price of bread against the worker.
– The honorable member is the champion of the wheal merchants, and he is endeavouring to disguise that fact by expressing solicitude for the unfortunate consumer of wheat. At the present time an agitation against the pool is being staged in every State. Meetings are being held in isolated centres which are opposed to the pool. The paid agents of the wheat merchants, accompanied by representatives of the city press, attend meetings that have been called by the opponents of the pool. They come from far and near in motor cars, and at these little centres resolutions are. passed that the meeting is against the compulsory pool. Then, in the columns of every newspaper of Australia, an announcement is made that at a meeting at such and such a place the farmers, by a majority of so many votes, decided against the federal wheat marketing legislation.
– How the honorable member fought against the ballot in the bill!
– The honorable member is making a statement that is quite untrue.
– I ask that the honorable member for Wimmera (Mr. Stewart) withdraw his statement that what I said was untrue. It is most offensive to me.
– I ask the honorable member for Wimmera to withdraw his statement.
– I withdraw unreservedly; but-let me say that the honorable member for Swan (Mr. Gregory), in saying that I had fought against the right of the growers to take a ballot, when he knew full well that I had said that the farmers should have the right by ballot of expressing an opinion on the pool, made a statement that is untrue, and I ask that he withdraw it.
The TEMPORARY CHAIRMAN.I ask the honorable member for Swan (Mr. Gregory) if he made such a statement.
– I said that the honorable member for Wimmera had opposed the ballot, and had voted against it when the division was taken.
– I shall play the honorable member for Swan at his own game. He made no such statement. What he said was that I had done my best to deprive the farmers of the right to take a ballot. That statement is misleading and offensive to me, and I ask that it be withdrawn.
The TEMPORARY CHAIRMAN.As the honorable member is now on his feet he has an opportunity of correcting the statement of the honorable member for Swan.
– When I endeavoured to do so, I was asked to withdraw. ‘ The point that I am making is that the amendment, if carried, will permit the wheat merchants to continue to obstruct, oppose, undercut and destroy the wheal pools of Australia. For that reason honorable members should unhesitatingly reject it.
.- The honorable member for Wimmera (Mr. Stewart) has asserted that honorable members who are opposing this bill - which I consider is coercive legislation - are acting in the interests of three- or four wheat merchants of Australia. That assertion is too contemptible to deny.
– Who made such a
St) 9,1)601 Silt ^
– Certain honorable members have insinuated that honorable members on this side are working in the interests of the wheat merchants. If that is not the inference to be drawn from their remarks, then I do not understand the meaning of the English language. Honorable members opposite have no idea of the difficulties with which the farmers in Western Australia are confronted. They do not realize how the cost of living has been increasing from year to year, and how difficult it is for the pioneering settler to make ends meet. It is most unfair to suggest that we who speak for them are working in the interests of a few merchants and wheat speculators. Agricultural development in Western Australia is proceeding rapidly. Before long that State will, I believe, be producing more wheat than all the other States put together, and I remind those honorable members who represent, in the main, metropolitan constituencies, that the industrial conditions of their people would not be so good as they arc but for the fact that the primary producers of this country are prepared to work long hours against enormous difficulties. I am advising the farmers in my State against joining the pool. The Minister, prompted, no doubt, by the Attorney-General, has suggested that the amendment is unconstitutional. When I spoke the other night I asked whether, under section 99 of the Constitution, the Government could provide a guarantee for a ‘certain section only of the community. That section states that the Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof. I should, however, add that if the farmers of Western Australia do not come into the pool they will, in a sense, be enjoying a preference, because they will be free to market their own produce. The Minister has declared that he will not accept the amendment. I contend that if Western Australia does not join the pool the Minister will have no authority to prevent the farmers in that State from marketing and exporting their product under their own organization. Paragraph xxxvii of section 51 of the Constitution provides that the Parliament shall, subject to the Constitution, have power to make laws with respect to, among other tilings -
Matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred or which afterwards adopt the law.
That provision seems to be somewhat vague. I am under the impression that it conflicts with section 99. The Government may be able to prohibit the export of wheat except under licence in those States which become members of the pool, but those States which remain outside the pool will be at liberty to dispose of their produce through their own organizations. I feel strongly in regard to this matter, because the wheatgrowers in Western Australia have to contend against heavily-increased costs of production from year to year, and we all know the market for wheat has been declining steadily for some time. Nobody can say what will be the price next year. All that we are asking for the farmers ofWestern Australia is freedom to manage their own affairs. Because of high freight charges due to the operation of the coastal provisions of the Navigation Act there is not the slightest chance of wheat grown in Western Australia being marketed in the eastern States.
– The honorable member supported a government that passed precisely the same kind of legislation in regard to dried fruits.
– In that . case, the whole of the people engaged in the industry agreed to the scheme.
– All the States that produced dried fruits accepted the proposal, otherwise we should not have introduced the measure.
– It is possible that South Australia will not join the pool. All I am urging is that before any State joins the pool an absolute majority of the wheat-growers in that State should be in favour of it. Surely honorable members will agree that if a farmer invests all his capital in land and gives his attention to the business of wheatgrowing, he should not be forced into a pool unless an absolute majority of farmers in his State are in favour of that course. I believe absolutely in the liberty of the individual, except where it interferes with public policy.
– Did not the honorable member support the bill under which waterside workers are licensed ?
– I fail to see what the licensing of waterside workers has to do with this proposal, although I remember that during the war waterside workers refused to load wheat for export unless the price was reduced for home consumption. The honorable member for Wimmera (Mr. Stewart) has urged that if Western Australia stands out of the scheme the effectiveness of the pool will be impaired. I fail to see how that would interfere with the marketing of wheat by the Australian Wheat Board.
– I am not so much afraid of the Western Australian pool as I am of the influence of private merchants.
– They would be operating in conjunction with the voluntary pool in Western Australia. The farmers in Western Australia believe also that if they retain control of their own wheat they will be able to obtain better wheat charters than will be possible under the Commonwealth scheme.
– I should very much like to see Western Australia come into the pool so as to give the scheme a good trial.
– Wheat-growing is developing rapidly in that State. There is no doubt that unless the people there are crushed entirely by the high cost of production we shall, before long, be producing more wheat than the whole of the eastern States. But they are working against enormous odds. I should like some honorable members to visit the farback country in Western Australia, and see for themselves what our producers are up against. They would then be prepared to show a little more consideration for those who are doing the real pioneering work of this country, and perhaps a little less consideration for those engaged in industrial operations under the more favorable conditions in our cities.I should like them to remember, also, that developmental work in New South Wales. Victoria, and South Australia was done when labour and materials were much cheaper than they are to-day. Prices have increased in some cases by more than 400 per cent. over pre-war costs. I assure honorable members that the diffi culties of Western Australia under federation are very real, and demand earnest consideration. The meeting held in Perth only the other day may be taken as evidence of what the people are thinking. They have become so disheartened by the policy of this Government that there is not. the slightest doubt that if the Commonwealth continues to treat them as it has treated them in the past nothing on God’s earth will prevent them from seceding from the federation.
.- I support the amendment moved by the honorable member for Wakefield (Mr. Hawker). I fail to see how the operations of the pool can be interfered with if one State stands out. No one will suggest that if the 500,000 bushels of wheat produced in Tasmania are marketed outside the pool, it will affect world parity. It does not follow that if Western Australia or two of the smaller producing States do not join the pool it will detrimentally affect the operations of the pool. The Minister gave two reasons for opposing the amendment. One was that the wheat marketing board might wish to take some action such as the withholding of wheat from the market. It is amusing that any one should suggest that the withholding of any of our wheat from the market could effect world’s parity. I cannotpossibly see how the operations of the pool could be adversely affected if certain of the States had liberty of action in regard to their wheat. The Minister and the honorable member for Parkes (Mr. McTiernan) suggested that this amendment would be unconstitutional because it would involve discrimination between the States. Yet we have been told by the Minister that though the guaranteed price for wheat might be available in one State and not in another the act would be perfectly valid. Surely that is a good example of inconsistency. To refuse to pay the guaranteed price in certain States and to pay it in others is surely to discriminate. Whether this amendment is agreed to or not, it will not affect the interstate movement of wheat. That is a subject in which I am particularly interested and I propose to move an amendment in regard to it when clause 19 is before the committee. I do not know that the Navigation Act is likely to have any effect on the situation, as suggested by the honorable member for Swan (Mr. Gregory), but I do know that the wheat-growers in certain States, who will not be given an opportunity to express an opinion in regard to this scheme, should not be restricted in their business. If they are so restricted, it will be grossly improper. Such a vicious practice was never contemplated by the framers of the Constitution. It is absolutely necessary that freedom of action shall be preserved to the various States if goodwill is to prevail among them. In the last few weeks, we seem to have been doing our best to bring the interests of the different States into conflict. I shall support the amendment.
.- It has been said by the Minister and the honorable member for Parkes (Mr. McTiernan) that the amendment, if agreed to, would be invalid by reason of the provisions of section 99 of the Constitution. That section reads -
The Commonwealth shall not, by any law or regulation of trade, commerce or revenue, give preference to any one State or any part thereof over another State or any part thereof.
So far as I am aware this section has never been interpreted by the High Court, although judgments have been given in regard to section 51 (ii) which reads -
The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to -
ii ) Taxation ; but so as not to discriminate between States or parts of States.
It is easier to determine whether there is discrimination than whether there is preference. Where there is preference, it should be possible to point to the State or part of a State which has been preferred to the other States or parts of them. Although section 99 has not been interpreted by any authoritative tribunal, it would be reasonable to construe it to mean that a law should not be passed which would give a preference to an identified State or part of a State over any other State or part of a State. It should be possible to indicate what preference has been given, and where. It would be difficult to say with certainty that this amendment would give a preference to any State. The question of a part of a State does not arise here. I foresaw that questions of this nature would arise and when clause 2 was under discussion, I asked whether that clause, which provides, in effect, that if three States execute an agreement it shall come into force in those States but not in the others, would not be considered an infringement of section 99. I was told that as the whole scheme was open for acceptance by all the States, it would depend upon the States themselves whether they accepted it, and that, therefore, the legislation would not discriminate between the States. The object of the amendment now before us is to allow the Commonwealth to impose restrictions upon exports from States which accept the scheme, but not upon States which do not accept it. The discrimination, or preference, that would be brought about by . the ‘ amendment, therefore, would depend upon the decision , of the States to enter the scheme or not.
– This amendment is more likely to cause discrimination between the States than any provision in the bill.
– Section 99 does not mention discrimination, but only preference. In my opinion, exactly the same considerations apply in this case as in the case of clause 2, to which I referred earlier in the debate. I have said quite frankly more than once that I regard section 99 as very difficult. It is a mystery to me in some of its applications, but so far it has not caused any difficulty in connexion with Commonwealth legislation. To summarize the position, it seems to me that if the answer which the Minister gave me in regard to the point I raised on clause 2 was sound, namely, that the discrimination, or preference, depended upon the State and not upon the legislation, it is an effective answer to the objection which he has raised to this amendment.
– I hope the amendment will be agreed to. It is not as if the States were being given a free and untrammelled offer to participate in this scheme; there are penalties attached to the offer. By participating in the scheme a State may involve itself in a heavy expenditure which it may think it cannot afford. The offer is, as a matter of fact, an offer with a threat. The States are being told that if they will not become parties to the scheme, not only will they be denied the guaranteed price, but they will also be denied the right to sell their wheat except under the terms and conditions fixed by the wheat-marketing board. At the same time other producers, as taxpayers of the Commonwealth, will be expected to help to meet any loss incurred in the operations of the pool in the other States. Such proposals are calculated to develop unfriendly relations between the States. I am at a loss to understand how the .Minister can claim that he is being guided by democratic principles. He has suggested that he believes in majority rule; but he seems to be anxious about a majority in only three States.
The interests of the wheat-growers in the other States- are of very little concern to him. I was very surprised to hear the speech of the honorable member for Darling Downs (Mr. Morgan). . He is supporting this measure because he knows that .his State, not being an exporting State, cannot possibly suffer any loss. But Western Australia is in quite a different position. On two occasions she has exported more wheat than all the other States put together. It is true that Western Australia has been made an offer to participate in the scheme, but only if she is prepared to contribute towards half of any loss that may be incurred. She may consider that she cannot afford to take that risk. Although the Prime Minister assured us that the wheatgrowers would have a chance to vote on the pool proposal it is clear that the growers of Western Australia will not have such a chance. Even though Western Australia might feel inclined to enter the pool it will be debarred by this condition. The wheat-growers of Western Australia would resent very strongly the passage of legislation which would have the effect of imposing a penalty upon them.
– If the honorable member’s State comes in a ballot of the farmers in that State can be taken.
– My objection is that the Government’s offer might, if accepted,involve Western Australia in a loss of £500,000. As a matter of fact, Western Australia has paid millions of pounds to assist industries in other States. Now, when it is proposed , to do something for an industry in which Western Australia is interested, a condition is attached which will debar her from accepting, and the wheat-growers of Western Australia will be prevented from exercising a vote on the proposal.
.- I listened with interest to the remarks of the Leader of the Opposition (Mr. Latham) on the amendment moved by the honorable member for Wakefield (Mr. Hawker), and it appeared to me that there lingered in his mind some doubt as to the amendment being constitutional. As a layman, it seems to, me that provisions which are entirely Commonwealth in their scope, such as those relating to the export control and interstate control of wheat, must be regarded as Commonwealth measures, and must apply to all the States or to none. The agreement, if adopted by only three States, would involve State legislation which need apply only to the particular States interested.
– There is nothing in the bill requiring further State legislation, but only execution by the Governments of the States.
– Nevertheless, additional State legislation in certain States is implied. It seems to me that we would put ourselves in an impossible constitutional position if we passed export control legislation and interstate legislation which applied to certain States exporting wheat, and not to other States. The guarantee is, in a sense, or at any rate may become, a bounty. It will amount to a bounty of the difference between what the growers obtain for their wheat and the 4s. guaranteed by the Government. When granting a bounty a Government may lay down conditions with which a State must comply before it is entitled to receive the bounty. If Western Australia is not willing or able to conform to any condition laid down she may be regarded as not having qualified to receive the bounty. The condition in this case is that the States shall provide an amount equal to that provided by the Commonwealth Government. I take it that the main point of objection to this clause is whether a State should be coerced into accepting export and interstate control without its producers having been consulted. I have sympathy with those who say that before this scheme is put into force the growers should have an opportunity of voting upon it, and I have prepared an amendment which, if accepted, would achieve that object. I move as a further amendment -
That the following words be added to the clause : - “ Provided that control by licence of wheat exported from a State which is not a party to the agreement shall be conditional upon a ballot of growers having been taken in that State by the Commonwealth or State Government concerned, and that the affirmative vote in such ballot shall, when added to the total affirmative vote cast in the ballots of other States, comprise a majority of the total votes exercised in the Commonwealth.”
It will be noticed that I do not suggest that there should necessarily be an affirmative majority in the individual States in connexion with export control and interstate control. I take the view that as this is Commonwealth legislation dealing with the control of wheat exported from the Commonwealth, and with interstate control on a Commonwealth basis, a majority of the wheat-growers should be a Commonwealth majority without consideration of geographical boundaries. That is the attitude which the former Government took up in connexion with control measures. I have worded the amendment so that it shall apply to any State which is not a party to the agreement. I take it that Queensland may become a party to the agreement without a ballot being taken. In the event of this amendment being accepted I propose to move a similar amendment to the clause which deals with the regulation of interstate trading in wheat.
The CHAIRMAN (Mr. McGrath).The further amendment moved by the honorable member for Gippsland will be the first to be put from the Chair.
– Although I listened attentively to the honorable member for Parkes (Mr. McTiernan) who endeavoured to show that the amendment proposed by. the honorable member for Wakefield was unconstitutional, his arguments were surrounded by so many “ ifs “ and “ buts “ that it failed to convince me.
– Is the honorable member convinced that the amendment is constitutional ?
– Yes, in the absence of sound argument to the contrary. The honorable member for Wimmera (Mr. Stewart) suggested that every argument advanced against the bill is advanced with a desire to destroy the pool. That is ridiculous. I entirely dissent from the view that, irrespective of the rights of the citizens of this country, or of any protest on their behalf, nothing is to be allowed to stand in the way of the establishment of the pool. The honorable member for Wimmera attacked the wheat merchants of this country.
Ministerial Members. - Hear, hear!
– I remind honorable members sitting behind the Government, that the .wheat merchants are pursuing a perfectly legitimate occupation, and I assume that, so long as they keep within the law, they are entitled to do so. The speech of the honorable member for Wimmera to-day was a repetition of his speech of Friday last. He said that meetings were held to stimulate opposition to the pool, and he narrated the steps taken in connexion with those meetings. But he did not disclose that anything unlawful had been done. The very fact that the meetings were advertised shows that no holeandcorner methods were adopted. Surely those persons in the community who are not in favour of a pool are entitled to arrange meetings in opposition to it. The holding of such meetings is a legitimate way of ascertaining the views of farmers and other citizens in regard to a most important matter affecting the Commonwealth. It is said that farmers’ co-operative societies throughout the country will receive the agency fees in connexion with the sale of wheat if the pool is established. That is not so. These so-called cooperative societies are, in reality, trading institutions whose shareholders, in many instances, are not farmers. They are not different from such firms as John Darling and Son, Bunge’s, Dalgety and Co., and others. Most, of the fight that is going on regarding the pool is for the loaves and fishes connected with it. There is a great deal of rank hypocrisy in the talk concerning the wheat merchants. These so-called co-operative societies are, figuratively, breaking their necks to get the agency work which otherwise might get into the hands of the merchants. If the wheat-growers were to receive some of the profits from the agents’ fees, there would be some justification for the claim that these societies are co-operative. But when we reflect that those who will get the benefit from the pool are simply shareholders in these companies, not necessarily farmers, graziers or pastoralists, we see that these companies are not different from the wheat-trading firms. I protest against this continued railing at the merchants of this country as though they were doing something unfair. If the wheat farmers of Western Australia say that they do npt want their produce to be dealt with by the pool - if citizens of the Commonwealth, who, by the sweat of their brow, and their frugality, obtain possession of a commodity, it is unjust for any pool or section of the community to attempt to take charge of that commodity and handle it without regard to those who produced it. Yet that is what this bill means. I favour the proposal of the honorable member for Wakefield (Mr. Hawker). Failing its acceptance, I shall vote for that of the honorable member for Gippsland (Mr. Paterson).
.- I am prepared to support either the proposal of the honorable member for Wakefield or that of the honorable member for Gippsland. This’ discussion has at least enabled the committee to ascertain the true attitude of the Minister towards those States which do not want the pool. The Minister said that it was to be solely a farmers’ pool; that there was to be a ballot of the farmers; and that if they did not want the pool, it would not be forced upon them. But it is plain now that he wants to push the pool through, by coercive measures if necessary. The Minister hopes to get two of the four wheatgrowing States to agree to the pool. He will then compel the farmers of the rest of Australia, however unwilling they may be, to join the pool or be deprived of the guarantee. He threatens to prevent them from selling their wheat. I tell the Minister that the farmers of Western Australia will not be driven into his scheme by any attempt at compulsion, and that they will defy him to prevent the export of their wheat.
– I cannot accept the amendment by the honorable member for Gippsland (Mr. Paterson). If there are three States in the pool it is necessary for it to have control of export for many reasons. They have been advanced over and over again. If a State stood out, wheat merchants and others in it could easily spoil the operations of the pool. The question at issue is whether it is right or wrong to have control of export in order that the pool may function properly in the interests of the States that are in it.
– If we do not control the export we might as well not have the pool.
– Exactly. If a State is so opposed to the pool that it will have nothing to do with it, it is very obvious that the farmers, if they have a chance to say so by ballot, will not agree to have any control over export. What is the use, therefore, of taking a ballot? Assume that there are enough farmers in the State to vote against the pool and so destroy it by making export control impossible: What would the other States, who have agreed to come into the pool, and have export control and interstate control, have to say when they found that as u result of the vote taken in another State their export control was made impracticable? The amendment is opposed to the usual logic displayed by the honorable member for Gippsland. On many occasions he has made eloquent speeches showing the absolute necessity for control ‘of export, and no one knows better than he does from his many years of association with various boards that one State could destroy the whole functioning of a board set up by other States. The great point is that if we agree that it is necessary to have control over export and interstate trade for the purpose of bringing about the orderly marketing of wheat in the pool, we should do nothing to jeopardize it. I must oppose the amendment, because one State cannot be placed in the position of being able to jeopardize a very essential feature of the whole, principle of orderly marketing.
.- The Minister (Mr. Parker Moloney) has told us many times that the bill may be wrecked if all the States are not controlled, and if one State has the right to export at will; but I should like to draw his attention to another aspect of the matter. If there are three States in the pool their operations will he on selfish lines, and, as is not improbable, prejudicial to the interests of any State standing out of the pool. Western Australia if it stood out of the pool would have no representation in the control, yet its whole fortunes in respect to its wheat would be handed over to the three States in the pool. If it came to a question of which wheat should reach the market at a certain time - that of Western Australia or that of one of the States in the pool - we know what would happen. It is most extraordinary that the export of the wheat of a State should be taken entirely out of its hands without its having any representation in the control of the matter. The whole thing is unthinkable, and I cannot understand why the Minister persists in it.
.- The amendment moved by the honorable member for Gippsland (Mr. Paterson) may afford the wheat-growers of Australia their only opportunity to take a vote on the pool, and the only opportunity to give effect to the Prime Minister’s promise that the growers would be consulted in the matter. The Minister for Markets and Transport (Mr. Parker Moloney) asks what would be gained by taking a vote of the farmers in a State that does not come into the pool. I have already indicated that without consulting the farmers a State might turn down a pool involving it in a liability of hundreds of thousands of pounds. The Minister says that one State may wreck the others. If majority rule is to hold, there is no way by which the taking of a ballot will enable one State to wreck the others. A majority may wreck a minority without doing great harm. There is greater possibility of harm being done when a minority can wreck the majority which it is possible to do under the Minister’s scheme. If a vote is taken of the dinkum wheat-growers the Government will have something solid to guide it. We are told that the pool is to be a Commonwealth affair. The wheatgrowers are dispersed all over the Commonwealth, and I cannot understand why the Minister wishes to divide them by State boundaries. It is intolerable that the Federal Wheat Board should have control over the export of wheat of a State that does not wish to join the pool. The amendment moved by the honorable member for Gippsland is in accordance with the professions of the Minister that the pool is to be controlled by the growers, and the Government’s refusal to accept the amendment will disillusion many people.
Question - That the words proposed to be added be so added (Mr. Paterson^ further amendment)-put. The committee divided. (The Chairman, Mr. McGrath).
Majority . . . . 23
Question so resolved in the negative.
.- The Minister has stated that, if Western Australia is free to dispose of its own wheat, the pool will be destroyed. I ask him to tell the committee something more of his intentions regarding those States which do not subscribe to this scheme. Are we to understand that, if South Australia and Western Australia, which produce between 70,000,000 and 80,000,000 bushels of wheat, resist the coercive proposals of the Government, their export trade will be prohibited except in accordance with licences issued by the Minister ? The Minister should give the committee some idea of what is proposed with respect to the export from such States. Will the
Central Wheat Board control export or will the Minister, if he may be generously disposed, allow the ordinary conditions to apply ?
– If not less than three States agree to come into the scheme, the board can control the overseas and interstate shipments of wheat from such States as are not associated with the pool.
– Such wheat will be under the control of the Wheat Board.
– The board will have the power to exercise authority in that respect if it should consider it necessary. If States which are not in the pool endeavour to prevent the orderly marketing of wheat, the board has a reserve power which can be exercised should the occasion arise. That reserve power may never be used.
– Is the wheat grown in the Federal Capital Territory to go into the pool and be paid for at 4s. a bushel?
– Do I understand that if only three States come into the pool the movements of export and interstate wheat from those States which are not in the pool will be controlled by the board?
– TheBoard will have the power, to control the overseas and interstate trade of such States.
– It will have the reserve power to control the movements of overseas and interstate wheat produced in States which arenot represented on the board ?
Clause, as amended, agreed to.
Clause 17 - (2.) A licence under this section shall, subjectto this section, be for such period as is specified in. the licence and shall be granted upon such terms and conditions as are prescribed. (3.) Where the Minister is satisfied, on report by the board, that any person, to whom a licence under this section has been granted, has contravened or failed to comply with any term or condition upon which the licence was grantedthe Minister may cancel the licence.
Amendments (by Mr. Parker Moloney) agreed to -
That the words “ granted upon “, sub-clause 2, be omitted with a view to insert in lieu thereof the words “ subject to.”
That after the word “ prescribed “, sub-clause 2, the words “after recommendation by the board to the Minister” be inserted.
.- Sub-clause 3 reads-
Where the Minister is satisfied, on report by the board, that any person, to whom a licence under this section has been granted, has contravened or failed to comply with any term or condition upon which the licence was granted, the Minister may cancel the licence.
Clause 19 provides that - (1.) Any person who - (a.) exports wheat from the Common wealth in contravention of any proclamation under this act; or
Penalty: One hundred pounds.
The cancellation of the licence for the movement of wheat is, generally speaking, a more serious penalty than the imposition of a fine for an alleged contravention of the terms of the licence. The Minister may cancel a licence if he is satisfied that there has been a contravention but a person cannot be fined unless he has in fact contravened the terms of the licence. I am aware that a similar provision has been inserted in other acts, but this is the first occasion on which the point has been raised under this measure. In order to protect the rights of private individuals I move -
That the words, “ Where the Minister is satisfied on report by the board that any person to whom a licence under this section has been granted has contravened or failed “, subclause 3, be omitted with a view to insert in lieu thereof the words, “ If a person contravenes or fails.”
The cancellation of a licence should depend upon a contravention of the terms of the licence, and not merely upon the Minister being satisfied that there has been a contravention.
– It may not be discovered that the terms of a licence have been contravened until after the wheat has been exported.
– It would thenbe too late.
– That is why a fine is imposed under clause 19.
– The fine applies in the case of contravention, but there may be a fine and also cancellation. The object of the cancellation of the licence is to ensure that a person shall not be allowed to continue to operate under a licence. He can also be fined for an offence under the licence. A contravention can occur only after a licence has been granted, and in connexion with the actual handling of wheat.
– There must be a licence for each transaction.
-A licence may be granted to cover a certain quantity of wheat that is being shipped from one State to another. That quantity may be sent in several parcels. There may be a contravention of the law by sending the wheat to a State to which the licence does not apply. Accordingly, there is scope for the application of sub-clause 3 in the case of a licence for a particular quantity of wheat. The point that I am making is that the cancellation of a licence may be a most serious thing. It may stop a man’s business.
– It was pretty tough on the waterside workers.
– As a rule, the honorable member’s interjections are relevant. The cancellation of the licence of any person to engage in any occupation is a very serious thing, and it is intended to be a serious thing, if that is any satisfaction to the honorable member for Fremantle (Mr. Curtin). But it is much more serious in this case than a fine would be, and the action should not be left entirely to the discretion of the Minister. It is not relevant even under clause 19. Under that clause it does not matter what the opinion of the Minister is. From a purely departmental point of view, it is a very fine thing to have the opinion of the Minister definitive, but it is unfair to make it conclusive against the rights of citizens. Reference was made to the Transport Workers Act. Care was taken in that instance to provide for an appeal to a court. The matter was not left to the opinion of a Minister or an official. I put it to the committee that a reference to whatever may have been done on previous occasions does not provide a sufficient protection for the rights of citizens in this instance.
Mr.Blakeley. -Will not the Minister have to be convinced in exactly the same way under the honorable member’s amendment ?
– No. He will act if he considers that there has been a contravention. His act will be legal if there has been a contravention, and illegal if otherwise. Every honorable member ought to support my proposal. As amended the sub-clause would then read -
If a person contravenes or fails to comply with any term or condition upon which the licence was granted, the Minister may cancel the licence.
– I cannot accept the amendment. It provides that if a person contravenes any term upon which the licence was issued he shall be subject to certain punishment. It would be necessary to prove, probably by application to a court, that be was guilty of the alleged act.
– Not at all.
– It would not be possible otherwise to prove that he had committed the offence. I remind the Leader of the Opposition of the present reading of the sub-clause - “Where the Minister is satisfied, on report by the board, . . . “
That board will be appointed to carry out the intention of Parliament; it will be a practical authority to decide whether there has been any contravention of the licence. It will advise the Minister on the subject, and I submit that its finding would be conclusive enough to justifiy his taking action.
– I respectfully suggest that the Minister and honorable members should read a book, recently written by the Lord Chief Justice of England, Lord Hewart, entitled The New Despotism. There they will see an examination of methods of legislation which deprive citizens of their rights by subjecting their interests to the discretion of a political Minister or to administrative tribunals, without any appeal to a court of law.
.- I submit that the explanation of the Minister is not satisfactory. The honor able gentleman has sought to shelter himself behind the alleged infallibility of the board. That board is to be composed of people interested entirely in the wheat and flour of the pooling States. Naturally, in dealing with licences of people in other States, it will be violently biased. The most intemperate way in which honorable members supporting this bill have spoken about anybody trading in the open market plainly indicates what extreme prejudices are likely to be held by the type of people who will be elected to the board. If the Minister is going to shelter himself behind the recommendations of the board, the clause is very much more dangerous than it would be if the matter were left to his decision. Ministerial decisions of this nature, which are the very essence of the new despotism to which the Leader of the Opposition (Mr. Latham) has referred, ought to be resisted by every honorable member who has any consideration for the rights of the ordinary citizen.
.- The amendment moved by the Leader of theOpposition (Mr. Latham) will not dethrone the new despotism, but will still leave it within the power of the Minister to cancel licences. This new despotism will still be vested in his hands. The amendment will not prevent any of the mischievous consequences which have been so liberally suggested by honorable members opposite. The clause as it stands is honest and frank and really provides for the procedure which would be adopted if the amendment of the Leader of the Opposition were carried. Surely the honorable gentleman does not suggest that the Minister should make personal inquiry to ascertain whether any licensee has contravened or failed to comply with the terms and conditions under which his licence has been issued. It would be idle and absurd to suggest that. Even if the amendment were carried the Minister would have to rely upon the reports of the authority to whom the responsibility of these matters was entrusted, and the authority, in this case, would be the board. For those reasons I do not see any point at all in the suggestion that this amendment, if carried, would stabilize or strengthen the new despotism.
Clause, as amended, agreed to.
Clause 18 agreed to.
Clause 19- (1.) Any person who -
Penalty: One hundred pounds. (2.) Any wheat which is exported in con travention of any proclamation under section sixteen of this act shall be deemed to be a prohibited export within the meaning of the Customs Act 1901-1930 and the provisions of that act shall apply in like manner as if the proclamation prohibiting export had been issued under that act. (3.) Except as provided by the regulations -
Penalty: One hundred pounds. (4.) Any wheat which is, or is in process of being, carried in contravention of this section, shall be forfeited to the King.
Amendment (by Mr. Parker Moloney) agreed to -
That, after the word “seventeen”, paragraph (b). sub-clause (1.), the words “or section eighteen “ be inserted.
.- I move-
That the word “One”, sub-clause 1, be omitted with a view to insert in lieu thereof the word “Five”.
– What is the reason for the increased penalty?
– In most of our legislation relating to marketing boards there is provision for penalties. I admit that the penalty of £500 in this case is larger than that applying to other export control legislation; but it is certainly not excessive in view of the magnitude of the transactions that will take place, particularly if there is a harvest of 200,000,000 bushels of wheat. It might easily happen that a person would be prepared to pay a fine of £100 if, by contravening the provisions of this measure, he could gain a substantial monetary advantage.
.- The Minister’s explanation is most unconvincing. The board may deal in transactions involving millions of pounds, but the persons to whom licences are issued are not likely to do so.
– They may.
Mr. ARCHDALE PARKHILL.That is most improbable. If this amendment is carried a penalty of £500 will be imposed upon any one who contravenes or fails to comply with the terms and conditions of these provisions. He may commit a trivial offence.
– The maximum penalty is £500.
– There is no mention of a maximum penalty.
– Under the Acts Interpretation Act, £500. would be the maximum penalty.
Mr. ARCHDALE PARKHILL.The explanation of the Minister is quite unconvincing, and I fail to see why the penalty should be altered.
Amendment agreed to.
Amendment (by Mr. Parker Moloney) agreed to -
That the word “ One “, sub-clause 3, be omitted with a view to insert in lieu thereof the word “Five”.
.- I. move -
That sub-clause 3, as amended, and subclause 4 be omitted.
These sub-clauses, as amended, read - (3.) Except as provided by the regulations -
Penalty: Five hundred pounds. (4.) Any wheat which is, or is in process of being, carried in contravention of this section, shall be forfeited to the King.
Ihave stated already that I question the validity of the provisions contained in these sub-clauses. Section 92 of the Constitution states that trade and commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free. I assumed, naturally, that the words meant that there would be complete freedom between the States, but according to a judgment of the High Court they mean that no State shall have power to give preference in trade or commerce to its own people. I am interested naturally in the effect of these provisions on the State which I, with certain other honorable members, have the honour to represent in this chamber, and I object to the extension of the vicious principle contained in clause 16.Under this clause the Minister, on the advice presumably of the body controlling wheat in possibly three States’ only, will have power to prevent the movement and sale of wheat the product of some other State, until the whole of the wheatunder the control of’ the Wheat Board is disposed of.
– The honorable member supported a Government which included this provision in some of its legislation.
– It would not be useful, at this stage, to discuss measures that were introduced and passed by the previous administration. I should have thought that the Minister would be prepared to support the provisions of this bill without excusing its faults simply because some previous government had introduced legislation containing similar provisions.
– I supported the principle incorporated in other legislation.
-Itwould be improper, I submit, for members of the board or the
Minister acting on the advice of the board to prohibit the sale of wheat, because that’ will be the effect of this clause if it is agreed to, the product of a State outside the pool, until the whole of the wheat in the hands of the pool was disposed of. It is a vicious principle, and it would be improper for this Parliament by legislative act to give such power to one section of the wheat-growers. I shall be very much surprised if any honorable member on this side supports it. I can understand supporters of the Government voting for it, because they believe in preferences to their own supporters, and in compelling workers to join unions outside and inside the Public Service; but if I may judge from the attitude taken up by honorable members on this side towards all proposals of this nature, they will vote for my amendment. The people of Tasmania are interested to the extent that, if the operations of the pool result in a loss, they will have to pay their share; The small quantity of wheat produced in that State cannot affect the business of the pool in any way because, as I have already explained, Tasmanian wheat is not used largely for breadmaking purposes. The bulk is utilized by biscuit manufacturers and for feed purposes. Practically the whole of the wheat consumed in Tasmania, approximating 1,000,000 bushels per annum, is drawn fromthe other States. Whatever happens it is clear that Tasmania will be called upon to pay something without reaping any benefit from this legislation. Any loss resulting from the pool will have to be made good either by a payment from the Consolidated Revenue or by increasing the price of wheat or breadfor home consumption. In view of the decision on a previous clause I hardly expect to succeedwith my amendment, but I intend to divide the committee, and I shall expect all honorable members on this side to support me. In this way we will voice our protest against power being given to any interested section of the community to control the product of the people in another State.
Mr. PARKER MOLONEY (Hume-
Minister for Markets and Transport) [11.20].-I feel sure that the committee will not agree to the amendment. All that the sub-clauses seek to do is to impose a penalty upon any one who contravenes the terms of the licence relating to the interstate movement of wheat. Precisely the same provision appears in the Dried Fruits Export Control Act.
– But all the States are in that scheme.
– The honorable member for Darwin did not raise his voice in opposition to the principle when it was submitted to Parliament in connexion with the dried fruits industry. “We have had an example recently of the necessity for a provision of this kind. A person in South Australia offered some resistance to the operations of the Dried Fruits Export Control Act and the matter had to be taken to the High Court to be settled. The whole system of interstate trade would fail if a provision of this kind were not in the bill.
.- How will this provision affect trade between the Riverina and Victoria? How is it proposed, to get over the difficulty of rushing down Riverina wheat to Victoria?
– If the practice did not conflict with the terms of the licence there would be no trouble.
– The Minister omitted to mention in his reference to the Dried Fruits Export Control Act that that measure was agreed to by all the States ; but in any case I object to the provision. It is a wrong arrangement. There is a revulsion of feeling throughout Australia against the handling of commodities under the method of that act. The Minister did not reply to a single argument advanced by the honorable member for Darwin who rightlyobserved that Tasmania will not be a party to the wheat pool and is not interested in the business except to the extent that she will suffer penalties in respect of any loss that may be incurred. I hope that the amendment will be agreed to.
.- I support the amendment. There is all the difference in the world between introducing a provision of this kind into a wheat marketing bill which is not applicable to all the States and into a measure like the Dried Fruits Export Control Act, which applies to all. exporting States and was asked for by them. A number of the States do not desire to market their wheat through a compulsory pool, and it is probable that two of the principal wheat exporting States will not be parties to the scheme. It appears to me that this bill has been introduced simply for the benefit of two or. three States, and without giving any consideration whatever to the welfare of the other States.
– I cannot see my way clear to support the amendment. The principle involved in the clause has been endorsed previously by this Parliament. As the Minister has said, it is in the Dried Fruits Export Control Act. It appears to me to be essential that some control should be exercised by the board over interstate trade. We have heard a good deal about the difficulties of Tasmania, and the position of Western Australia has been described ad nauseam. In defence of my attitude, I remind honorable members that the wheat-growers of Queensland have, in the past, been penalized through the dumping into the northern parts of that State of flour manufactured in other parts of Australia. That demonstrates clearly the need for giving the board power to control interstate trade, so that the interests of one State may not be prejudicially affected by the actions of other States. We hope that wheat-growing will become an important industry in Queensland, but it is necessary to protect our wheat-growers, and the board should have that power.
.- There is no analogy between the Dried Fruits Export Control Act and this bill. In connexion with the former commodity all the States accepted the pooling principle, but in connexion with wheat some of them are to be coerced. I was surprised to hear the honorable member for Darling Downs take such serious objection to the sending to Queensland of a. little flour from the other States, when the cost of maintaining another industry in Queensland is 18s. per head for every man, woman and child in the Commonwealth. This sort of coercion is not, likely to assist in cementing the bonds of the Commonwealth. I shall support the amendment.
Question - That the sub-clauses proposed to be omitted stand part of the clause as amended (Mr. Bell’s amendment) - put. The committee divided. (The Chairman, Mr. McGrath).
Motion (by Mr. Scullin) proposed -
That the House do now adjourn.
– I understand that it is proposed to float immediately another Commonwealth loan of from £7,000,000 to £10,000,000 at something less than 6 per cent. in terest. The details of the loan are to be supplied to the press. I think that this House is entitled to information on that point. The Treasurer might make a statement regarding the amount of the loan, its terms, and its purpose.
– I have here some deferred questions which I propose to answer.
– I rise to a point of order ! Is the Minister in order in bringing on new business after 11 o’clock at night?
– The. Minister is not bringing on new business. If he were, I should rule it out of order. The Minister is merely taking advantage of the adjournment to answer some deferred questions.
– On the 30th May, the honorable member for Moreton (M. Francis) asked the following questions, upon notice -
As the answer is somewhat lengthy, I ask leave to have it incorporated in Hansard.
– The answers are as follow : -
On the 30th May the honorable member for Adelaide (Mr. Yates) asked the following questions, upon notice -
I am now in a position to supply the information sought. As the statement is somewhat lengthy and includes a number of figures I ask permission to incorporate it in Hansard.
– I object.
– The information is as follows : -
On the 29th May the honorable member for Wentworth (Mr. Marks) asked without notice, if the policy of preference to returned sailors was being observed in connexion with the forced resignation of certain ratings in the Royal Australian Navy. He referred to a letter he had received whichset out that certain submarine ratings who had seen service had been dismissed while others who had had no active service had been retained. I am now in a position to inform the honorable member that the policy of preference to returned sailors, other things being equal, is being observed by the naval authorities. If the honorable member will furnish particulars of the cases he refers to, the cause of their discharge will be ascertained.
Question resolved in the affirmative.
House adjourned at 11.45 p.m.
Cite as: Australia, House of Representatives, Debates, 3 June 1930, viewed 6 July 2017, <http://historichansard.net/hofreps/1930/19300603_reps_12_124/>.