12th Parliament · 1st Session
Mr. Speak er (Hon. Norman Makin) took the chair at 10 a.m., and offered prayers.
asked the Minister for Home Affairs, upon notice -
– Replies to the honorable member’s questions will be furnished as soon as possible.
asked the Minister for
Trade and Customs, upon notice -
– Information is being obtained.
asked the Prime Minister, upon notice -
– The information is being obtained.
asked the Treasurer, upon notice -
– The information is being obtained, and will be furnished as soon as possible.
asked the Minister for Home Affairs, upon notice -
– I shall give consideration to the matters referred to by the honorable member.
asked the Minister for Trade and Customs, upon notice -
– Information is being obtained.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follows : -
Article 419. - Anybody who, by false representations disseminated intentionally among thepublic, by offers superior to prices asked for by vendors, by understandings between the principal holders of certain merchandise or commodity in order not to sell such merchandise or commodity, or to sell them only at a certain price, or who, by whatsoever fraudulent means will have caused the rise or fall of the price of merchandise, commodities, public bills, paper stocks, shares, securities, above or under the prices which would have been brought about by natural and free competition, will be punished by an imprisonment of not less than one month, not more than one year, and by a fine of from 500 to 10,000 francs. Moreover, the guilty persons may be put under police surveillance for not less than two years, and not more than five years.
Article 420. - The above penalty will be imprisonment of not less than two months and not more than two years, and the fine of from 1,000 to 20,000 francs, if these manoeuvres have been made on grains, flour, farinaceous substances, bread, wine or any other beverage. A police surveillance of not less than five years, and not more than ten years, may also be applied.
Motion (by Mr. Scullin) proposed -
That the House, at its rising, adjourn until 3 p.m. on Tuesday, the 14th April next.
– I understand that the House is to adjourn this afternoon at about 4 o’clock, and I protest against the loss of valuable sitting time at this critical period of the nation’s history. I doubt whether at any other time this Parliament has had more important legislation before it. Yet the closure was applied to the second-reading debate on the Fiduciary Notes Bill last night, thus depriving many honorable members of an opportunity to speak, and the House is to be adjourned to-day so that the supporters of the Government may attend a party conference to receive instructions. The position is intolerable.
– The Easter adjournment is being extended at the request of members of the Opposition.
– We have important business to transact, and it is a disgrace to this Parliament that it should this afternoon interrupt its business for nearly three weeks. Having regard to the critical economic position of the country, the disaster that has befallen the wheatgrowers, and the urgent need for action, I enter my strongest protest against the procedure being adopted by the Government.
– It appears to me that substantial economies could be effected if this House were to sit for five days a week; that should make for shorter sessions. The cost of transporting members, officials, and Ministers to and from the Federal Capital each week-end must be tremendous, and I believe that by sitting on more days a week for shorter sessions, economy could be effected without causing discomfort or inconvenience to any honorable member. I ask the Prime Minister to give serious consideration to this suggestion.
– I remind the honorable member for Swan (Mr. Gregory) that the Government had decided that the House should adjourn for only one week, and resume on the Wednesday following Easter Monday. But this Parliament includes members from distant parts, and requests came from all parties that the Easter adjournment should be extended so that those from distant States might have an opportunity to re-visit their homes and get in contact with their constituents. Accordingly the Government agreed to an adjournment for a little more than two weeks.
The suggestion by the honorable member for Darwin (Mr. Bell) is not new. But if Parliament were to meet on five days a week - except, in special circumstances - Ministers and officers would have little opportunity to attend to administrative business. Any honorable member who has had ministerial experience knows that. Again, it is not always desirable to shorten the sessions; it may be important that Parliament should continue at work. We are meeting the views of the honorable member for Darwin to some extent by proposing to meet on Tuesday, the 14th April, but I suggest that the greatest practicable economy will be effected by amending the Standing Orders to limit further the time of debate.
Question resolved in the affirmative.
Motion (by Mr. Scullin) - by leave - agreed to -
That leave of absence for one month be given to the honorable member for Hunter (Mr. James) and the honorable member for Melbourne Ports (Mr. Mathews) on the ground of ill-health.
Amendment of Covenant
– by leave - Last year a committee of eleven experts, appointed as the result of a resolution of the 10th - 1929 - Assembly of the League, drafted a series of amendments to Articles 12, 13 and 15 of the Covenant. A copy of the report of this committee was placed in the Parliamentary Library on the 20th June last year. This report was considered by the 11th Assembly of the League, and submitted to a subcommittee, which presented a somewhat different draft of the amendments. The Assembly decided to submit this new draft also to States members. The matter was discussed at the Imperial Conference, which decided to recommend to the several Governments for acceptance the amendments drafted by the subcommittee of the 11th Assembly. The Government has given consideration to the matter, and has decided to advise the Secretary-General of the League of Nations that it will give its support to the amendments proposed by the subcommittee, but that the ratification of such amendments, if adopted, will be dependent upon the entry into force of a general treaty for the reduction and limitation of armaments. For the information of members, I am having placed in the library a copy of Command Paper 3748, containing a selection of the documents dealing with the question from its inception at the 10th Assembly in 1929 up to the Imperial Conference.
.- by leave - The Prime Minister has informed the House that he proposes to intimate to the Secretariat of the League of Nations that the Government is prepared to accept certain amendments to the Covenant of the League. We are told also that acceptance of such amendments is. subject to the ratification of a treaty for the limitation or diminution of armaments. The Covenant is an important international document, any amendment of which, whatever its nature, should be submitted for the consideration of the House before its acceptance by the Government.
The following paper was presented : -
Naval Armaments - Bases of an Agreement with France and Italy for the limitation and reduction of certain Naval Armaments (March, 1 931 ) .
In committee: Consideration resumed from the 25 th March (vide page 626).
Clause 1 -
This act may be cited as the Fiduciary Notes Act 1931.
.- I move -
Tha t the word “ Fiduciary “ be omitted with a view to insert in lieu thereof the word “Reduciary “.
The CHAIRMAN (Mr. McGrath).The amendment, being outside the scope of the title of the bill, is out of order.
– On a point of order, I submit that it is not so. The word “ fiduciary “ implies that the proposed note issue will be based on confidence, and I desire an opportunity to show that, so far from inspiring confidence, this legislation will have a reducing effect.
– I rise to a point of order -
– Order !
– Mr. Chairman, I also rise to a point of order.
– The honorable member for Maribyrnong is out of order. He may not seek to take a point of order while another honorable member is on his feet.
– I was speaking to a point of order when the honorable member for Reid rose. If the honorable member for Maribyrnong may not take a point of order because the honorable member for
Reid was on bis feet for the same purpose, I submit that you were not justified in asking me to resume my seat when the honorable member for Reid rose.
– My point of order, Mr. Chairman, is that the honorable member for Angas was not in order in attempting to discuss the merits of the bill upon a point of order.
– I understood that the honorable member for Angas proposed to give reasons why my ruling should not be accepted by the Committee. I was prepared to listen to him on that point, but as he proceeded to discuss the bill I directed him to resume his seat-
– I was about to point out, chat the title of the bill suggests the idea that there is confidence behind the proposed fiduciary issue, and as I take a contrary view, I was endeavouring to show that the proper title should be the “ Reduciary Notes Act, 1931.”
– As the word “ reduciary “ is not to be found in a standard dictionary of the English language I am unable to accept the honorable member’s amendment.
.- I move -
That the word “ Fiduciary “ be omitted with a view to insert in lieu thereof the word “ Reductionary “.
That word appears in a standard dictionary, and on that ground, at all events, the amendment should be in order.
– The amendment is beyond the scope of the bill, and, therefore, I cannot accept it.
.- 1 move -
That the word “ Fiduciary “ be omitted with :i view to insert in lieu thereof the word “ Inflationary “.
This amendment, at all events, is within the scope of the bill.
– The amendment is out of order.
Clause agreed to.
This Act shall commence on a date to be fixed by proclamation.
.- I move -
That the words “ to be fixed by proclamation “ be omitted with a view to insert in lieu thereof the words “ twelve months from this date “.
I fully appreciate all that honorable members supporting the Government have been saying about its intention to assist our primary producers, and I hope that I shall have the opportunity to deal with that phase of the subject. Because of its effect upon the currency it would be wise to allow ample time for the people to understand what the Treasurer wishes to do.
– I cannot support the amendment. The phraseology of the clause follows similar provisions in other measures that have been passed by this Parliament, allowing the executive to declare, by proclamation, when the act shall come into force. This bill is an emergency measure. In its present form it is not acceptable to me, but I hope that, before it emerges from the committee, I shall be able to secure the adoption of one or two amendments which, in my opinion, will make it a better instrument to do the work of the nation. In the meantime, I should like the Treasurer to intimate the Government’s intention when the bill has been passed in another place. If the honorable member for Swan (Mr. Gregory) succeeds with his amendment, the act may not be proclaimed for twelve mouths, or perhaps not at all. In view of the vacillation and many changes in the policy of this Government, the act might never be proclaimed. If certain amendments which I hope to have included in it are not adopted, I should not care if it did not come into force; but if it is amended along the lines which [ indicated in my second-reading speech, I should like an assurance from the Treasurer that, immediately it has passed through both Houses, a proclamation will be issued fixing an early date for its commencement.
– It is the intention to proclaim the act as soon as the regulations and other necessary machinery for its administration can be prepared.
.- I support the amendment. The commencement of the act should certainly be delayed until the people have had an opportunity to sweep from office the Government responsible for its introduction, and to put in power a saner Ministry which will do the things necessary to restore confidence. Last night the honorable member for West Sydney (Mr. Beasley) declared himself to be a repudiationist, on the ground, mainly, that the burden of our war debts was intolerable. As statements of that kind must cause grave alarm, the earliest opportunity should be taken to correct the possible impression that the people of Australia ‘are behind the honorable member for West Sydney and his supporters. During the honorable member’s speech I stated, by way of interjection, that Australia’s war debt to Great Britain was not £560,000,000, as suggested by him, but £82,000,000. The honorable member said that he would deal with that phase of the problem, but I can find nothing in his subsequent remarks to justify his statement.
– The honorable member must speak to the amendment.
– I am endeavouring to show the necessity for delaying the commencement of this measure.If remarks such as those made by the honorable member for West Sydney are allowed to go unanswered, there will be a still greater flight of capital from Australia. Already people are transferring capital as quickly as possible. The rate of exchange clearly indicates what is happening. Therefore, the statements made by the Prime Minister (Mr. Scullin), the Treasurer (Mr. Theodore), and other honorable members supporting the Government should bo refuted, and provision should be inserted in the bill to delay the commencement of the act.
– The honorable member must address himself to the amendment.
– If you, sir, see no reason for alarm in such utterances, perhaps you will allow me to quote the opinion expressed by the Anglican Archbishop of Melbourne on this inflationary proposal ?
– I cannot allow a second-reading speech to be made on any clause of the bill.
– The clear intention of the Government is to water our currency. For that reason alone the commencement of the measure should be delayed as long as possible. The Minister for Defence (Mr. Chifley) said last night that the addition of £18,000,000 of fiduciary notes would not materially affect the currency. Is he aware that it will represent a watering of the currency to the extent of 40 per cent. ?
– The honorable member’s argument will be relevant when the committee is considering clause 5.
– The Treasurer, in reply to the honorable member for Werriwa (Mr. Lazzarini), promised to have the act proclaimed as soon as possible after the measure had passed through both Houses. I think that it would be more satisfactory to fix a definite date for the issuing of the proclamation. It is all very well to say that the matter will be dealt with as soon as possible, but those words leave room for delay. The bill should be dealt with as speedily as possible, and, if the Government is serious in its intentions, a definite date for its proclamation should be fixed. I therefore intend to move that, fourteen days after the passing of the bill through both Houses, the date of commencement shall be proclaimed.
Question - That the words proposed to be omitted stand part of the clause (Mr. Gregory’s amendment) - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . . . 4
Question so resolved in the affirmative.
Amendment (by Mr. Beasley) proposed -
That after the word “ proclamation “ the words “ such date being within fourteen days after the date of the assent to this Act” be added.
– This amendment will not improve the clause. Some time will be needed for the drafting of necessary regulations and getting the administrative machinery ready after the bill has been passed in another place. However, if the honorable member considers that this can be done in fourteen days, I am willing to leave the matter to the determination of the committee.
.- The Treasurer has light-heartedly accepted the amendment of the honorable member for West Sydney (Mr. Beasley) providing that the proclamation of the act shall issue within fourteen days.
– He says that he has no objection to it.
– Nothing of the sort!
– He has surrendered to the suggestion - I would not think of saying the direction, dictation, or instruction of the honorable member for West Sydney; that will happen to-morrow I understand. As the Treasurer has indicated that it will be necessary to draft regulations before the measure can come into operation, it is remarkable that he, the Minister responsible for the bill, should accept it in this casual manner.
– I have not accepted it.
– If the Treasurer is not opposed to it, he is yet not prepared to divide the committee against it. Has the Government no sense of responsibility in regard to the measure? The object of the honorable member for West Sydney is to determine that the act shall come into operation on a particular date, and the Treasurer apparently takes this attitude towards the proposal : “ Oh, well, we will proclaim the act, and if we are not ready, it will not come into operation. Matters can drift along until we have made regulations.” Of course, that would not be acting in accordance with the intention of the amendment. Therefore, we appear to have witnessed a remarkable exhibition of irresolution by the Government in relation to the bill.
.- Is it not time we stopped this tom-foolery? We are playing the game of politics. If this measure is to do what is intended of it, it should be proclaimed to-morrow. We must get down to tin-tacks. We should give the people of the Commonwealth some respite from the awful agony they have been enduring for the last three years. Apparently you are still going to play the game of politics, and with your tongue in your cheek, you say you are trying to save the country from ruin. You know you are only playing a game.
– I rise to a point of order. The honorable member for Adelaide (Mr. Yates) is not addressing the Chair.’ Throughout his speech he has been using the word “ you “.
– I am sorry if I have wrongly accused the Leader of the Opposition ; I withdraw the word “ you “ and substitute “ we “.
The CHAIRMAN (Mr. McGrath).The honorable member must address his remarks to the Chair. He may not address honorable members as “you” or “ we “.
– I was referring to all the members of this House. I have no desire to delay the passage of the measure. I believe that it may do some good. I want £20,000,000 if I can get it.
– If the people need £200,000,000, and if it is to be had, they should get it. I am not concerned about the amount; my object is to do something that will get us somewhere, and to do it immediately.
– Speak up!
– My voice is clear and resonant, and my enunciation fairly good. I am afraid that the honorable member for Warringah (Mr. Parkhill) has a weak mind.
-Who is talking tomfoolery now ? Let us get on !
– Will the honorable member for Fawkner (Mr. Maxwell) vote for the amendment that the act be proclaimed within fourteen days? I know what he will do; he will play off in a safe manner; but he generally lands on the side for which he has been elected. On one occasion he made a. mess of things, and defeated his own government. I wish to see the measure proclaimed as soon as possible. There should be no factious opposition. The Government is making a sincere attempt to deal at once with the financial crisis. I suggest that the bill be put through all its stages in the same speedy manner that during the war a loan bill for £58,000,000 was passed without even one speech being delivered on it. That bill was hurried through because it was known that it provided for interest payments.
– Order !
– I was merely comparing what took place in war time, with what is contemplated to-day. I urge that the amendment be agreed to, and the act proclaimed without delay.
– I so sincerely sympathise with the honorable member for Adelaide (Mr. Yates) that I should like to be able to give him some relief. I suggest to the honorable member that if he is sincere in his desire to have the act proclaimed, he has the means of giving effect to it. He has only to go to the honorable member for West Sydney (Mr. Beasley) and get him and the group of honorable members associated with him to insist on the amendment being given effect, and their instructions will be carried out. The Treasurer would throw up his hands with the same alacrity that he did a few minutes ago.
– I support the amendment moved by the honorable member for West Sydney (Mr. Beasley) that the act be proclaimed within fourteen days of its passage through both Houses of Parliament. The bill is an emergency measure to meet special circumstances. I have this morning seen, in this House, something which I never expected to see; I did not think that a speech by the honorable member for Adelaide on finance would ever bring smiles to the face of the Prime Minister.
– What a pity the bill cannot be made retrospective !
– It is a pity. A good deal has been said about makebelieve. Despite what the honorable member for Adelaide has said, the proclaiming of this bill would be make-believe. I strongly support the amendment, because I feel that, once the measure has been agreed to, it should be proclaimed without delay. Fourteen days is a sufficient period to elapse between the passing of the measure and its proclamation.
– The . abject surrender of the Government to the dictation of the honorable member for West Sydney (Mr. Beasley) clearly indicates its position. It might be found impracticable to give effect to the amendment moved by the honorable member for West Sydney; but so fearful is the Government of the Lang influence that it at once accepted the honorable member’s proposal. Evidently the Government will accept anything suggested by the New South Wales branch of the Australian Labour Party. What happened to-day is merely a repetition of what occurred a few weeks ago when the Government withdrew its candidate for the East Sydney electorate. It was afraid to run a candidate in opposition to the candidate backed by Mr. Lang.
– I rise to a point of order. Is the right honorable gentleman in order in referring to the East Sydney election ?
– The right honorable gentleman would certainly not be in order in discussing the East Sydney election at length; but he is not out of order in making a passing reference to it.
– I referred to the East Sydney election, because the real issue in that case was that which has now been raised iu this Parliament, namely, whether the Lang wing of the Labour party is to control this Parliament. That wing controls Parliament to-day. If evidence were required that the bill before us is only a placard, rather than something to be regarded seriously, we find it in the action of the Government in accepting a proposal which it knows is unworkable. The Government professes to believe that the bill is urgently needed, yet it knows all the time that, apart from the Minister’s second-reading speech in another place, nothing will be done with it in that chamber.
– If nothing more is done by legislators in another place than the right honorable gentleman suggests, I ask hi in whose dictates they will be following?
– Seeing that the honorable member for West Sydney (Mr. Beasley) is the dictator to the Government, I suggest that he is best qualified to answer his own question. It is evident that the Government is losing its control of this chamber. The last division showed 34 vote3 in support of the Government and 30 in opposition to it. The 34 votes which the Government received included that of Mr. Speaker. I suggest that if all honorable members who are opposed to the bill were in the chamber now, the measure, if passed at all, would be agreed to by only a very small margin. Those honorable members who dictate to the Government admit frankly that the bill is a sham and a pretence.
– The right honorable gentleman may be found saving the Government before long.
– I should like to have the opportunity to show whether I would save the Government or not. Only by the support of the group led by the honorable member for West Sydney, who regards this legislation as a sham and a pretence, has the Government been kept in office during the last fortnight.
– I rise to a point of order. Is the right honorable member for Cowper in order, seeing that he is not discussing the amendment before the committee?
– I ask the right honorable gentleman to confine his remarks to the amendment.
– There is no need for lue to say more on this matter; it needs no further elucidation.
– The amendment is more or less unimportant; it is one of those trivialities to which the honorable member for West Sydney and the group associated with him will confine themselves. As the debates on this and other measures proceed, those honorable gentlemen will inflate themselves and try to make themselves appear important.
– I ask the honorable member to confine his remarks to the amendment.
– The amendment, as I have said, is unimportant. It is for that reason that the honorable member for West Sydney and those associated with him are making such a fuss about it. But when it comes to » major issue, which might involve the defeat of the Government, those honorable members cleave to their one-time friends.
.- I congratulate the repudiation group on the victory it has gained over the Governmen. It must be humiliating-
– Order ! I ask the honorable member to speak to the amendment.
– The effect of the amendment, if agreed to, would be to provide the Government with further window-dressing material for its Easter conference.
– I rise to a point of order. Is it not time that these platform speeches ceased, and honorable members addressed themselves to the amendment before the Chair?
– I do not propose to keep on advising honorable members lo confine their remarks to the amendment. The honorable member for Balaclava (Mr. White) and any other member who may speak to the amendment must not make irrelevant remarks.
– The amendment, if agreed to, might have serious effects. It might even mean that the other legislation which the Treasurer (Mr. Theodore) said pivoted upon it will be brought forward. I hope that the vote, either on this amendment or on one of the other measures at which the Treasurer hinted, will mean the defeat of the Government.
Clause agreed to.
Clauses 3 and 4 agreed to.
Treasury Notes to an amount not exceeding Eighteen million pounds shall bc issued by the Board as follows: - . . .
.- This clause provides that treasury notes to an amount not exceeding £6,000,000 may be issued, as and when required by the Governor-General, for the purpose of the Wheat Act 1931. If this clause is agreed to, the Government will be bound to the proposal contained in that measure, which I understand is to be discussed this afternoon. The Government is well aware that there is no hope of the bill now before us becoming law.
– There is every hope of it becoming law. Why does the honorable member reflect on another place?
– I am not reflecting upon the Senate. The Treasurer is fully aware that it is not likely that a bill of this kind will be passed by that chamber. But I am keenly desirous that some of the promises made by the Government to the wheat-growers should be carried out. The wheat producers must be made to realize the position into which this country is drifting. It is absolutely necessary that some action should be taken to ensure that they receive assistance, but unfortunately, because of the legislation that is being introduced by this Government, restriction after restriction is being imposed upon them. In an article specially contributed by the Treasurer to the Mining Standard of the 12th March of this year, he made clear what his policy was. Although his language was vague, still it was abundantly clear that the desire of this Government was to obtain absolute control, not only of finance, but also of exchange, and, if necessary, to allow exports from this country only under licence. The Government now proposes to advance £6,000,000 to the wheat-growers by means of a bounty of 4£d. a bushel. The Treasurer in his article stated -
The producers who sell on the overseas market would be at a disadvantage unless they were protected through the exchange. It is therefore intended that the exchange rates should be allowed to go to a level commensurate with the disparity in the Australian price levels as compared with those overseas.
One would think from that statement that the Treasurer desires that the producer shall obtain the advantage of the real and true exchange, because he speaks of the producer being protected through the exchange, and of the exchange being allowed to go a certain level. He knows full well that without Government interference the exchange must go to a level which will truly represent the difference between the value of the £1 sterling and what will be the value of a £1 note in Australia when he has finished with his scheme. We are well aware that when the exchange was pegged, the exporter or producer in Australia obtained only £6 10s., the value of the exchange, but when the Bank of New South Wales broke away from the agreement the exchange rate rapidly rose to £30.
– This dissertation on the exchange is not in order.
– The object of the clause is to provide £6,000,000 for a special purpose - the relief of the wheatgrowers. I am showing that the whole scheme is illusory, and that there is no desire on the part of the Government to carry out its promises to the primary producers, because it knows perfectly well that the Wheat Bill, which is bound up in this legislation, will be rejected in another place. I am explaining the position of the wheat-growers, and I think I am perfectly in order in referring to the exchange.
– This clause does not deal with exchange.
– I am aware of that, but I am pointing out that this legislation is mere make-believe. The Government is trying to make the people believe that, if it is passed, the primary producers are likely to reap some advantage. Will the Treasurer deny that he stated that it might be necessary in the future to permit exports only under licence?
– If the exchange pool breaks down there must be some other form of control.
– Provision is made in this clause for assistance to be given to the wheat-growers under another bill. This is a fraud upon the whole community. The people are starving, dreadful tragedies are daily taking place, many men are becoming insolvent, and others are leaving their homes. We, on this side, have made suggestions which, if given effect, “would provide certain relief. Under this legislation there will be no hope of relief. It is a most damnable shame that the Government should stoop to this sort of thing.
.- I move -
That the word “ Eighteen “ be omitted with a view to insert in lieu thereof the word “ Thirty-eight “.
I move that amendment so as to give specific application to a decision arrived at by the Australian Labour Party conference which was held in Canberra last year. At that conference it was laid down definitely that £20,000,000 should be provided immediately by the Government for the relief of unemployment. The Government is now proposing a fiduciary issue of £18,000,000 of notes to be used for the rehabilitation of the wheat industry and for the relief of unemployment. I now ask the Government to stand to the decision of the governing body of the Labour party, which body is, according to the press, going to do its job in Sydney on Friday next. The conference which was held in Canberra nearly twelve months ago was controlled practically by members of Parliament, including the Prime Minister (Mr. Scullin), the Attorney-General (Mr. Brennan) and many other members of this chamber. They were parties to the decision that £20,000,000 should be raised for the relief of the unemployed.
– Will not a grant of £6,000,000 to the wheat-growers provide relief for the unemployed?
– That money will be used simply to meet overdrafts at the banks and to pay the accounts of the storekeepers. Not one pound of it will be used for the relief of unemployment.
The object of the Labour movement will not be achieved unless there is an issue of an additional £20,000,000.
– Would it not simplify matters if we handed over the printing press to the Australian Labour Party for the indiscriminate printing of notes?
– The honorable member is not now in a law court defending criminals.
– I do not defend criminals.
– The honorable member has repeated that stupid statement “Why not hand over the printing press to the Australian Labour Party?” He suggests by innuendo that I am advocating the indiscriminate use of the printing press. If he makes that statement seriously he is either knave or fool. He either does not understand the position, or is deliberately trying to cloud the issue so that it may not be put plainly to the people. My suggestion goes further than simply to print £20,000,000 of new paper currency. The deflationary process, which has been taking place during the last three years, has depleted our currency not by £20,000,000 or £38,000,000, but by £60,000,000.
– Why stop at £60,000,000?
– Even if we inflated the currency by £60,000,000 we would not overreach the point at which the deflationary process started. I am not a financial drunkard like the honorable member for Darling Downs. He wants to drink until he lies incapable in the gutter, but I am a rational sober man. In moving this amendment I am endeavouring to give effect to the decisions of a body which is recognized by every Labour member in this House as the governing body of the Australian Labour movement.
.- We, on this side of the chamber, are opposed to the bill itself and the proposals originally submitted by the Treasurer (Mr. Theodore), and it can readily be imagined how strongly we oppose the amendment of the honorable member for Werriwa (Mr. Lazzarini). He desires to increase the note issue, not by £18,000,000 as is proposed by the Government, but by £38,000,000. According to the Treasurer that would be a good move; because, in the midst of bis speech on this bill, he quoted figures showing the increase in the currency of Prance. He showed that in 1926 40,000,000 additional francs were put in circulation, and that in 1930 the issue had increased to 76,000,000 francs. Then he proceeded to show, quoting figures for his purpose, that during those years the wholesale prices of commodities had fallen. Because of that, he stated, the people of Australia had nothing to fear from even a considerable increase in the currency; in other words, that no danger lay behind inflation. So as to disarm suspicion, the Treasurer was careful to mention the source from which he obtained those figures. He referred to the Monthly Bulletin issued by the League of Nations at Geneva. In the ordinary course of events any one aware of the impartiality of that body would not take the trouble to check the figures quoted by the Treasurer, but on examining that publication I find that the figures quoted by the Treasurer related to wholesale prices. The Treasurer (Mr. Theodore) and other honorable members know that wholesale prices have no bearing upon the cost of living. An increase or decrease in the cost of living is governed by retail prices. When I turned over the page of this report, as the Treasurer must also have done, and studied the figures dealing with the retail prices in relation to the cost of living during the same period, I found that in France, during those years, there had been an increase instead of a decrease in the cost of living. From what honorable members have read, or as a result of personal contact with those who have travelled Or lived in France during that period, they must know that, notwithstanding the apparent prosperity in France as a result of the general activity which followed the scheme of rehabilitation, great privation was experienced by the French people. The figures which the Treasurer should have quoted, but which he did not, because they did not suit his case, are these : In 1925 the index number was 390 as against 100 in 1914. In 1926 it increased to 485 and in 1927 to 525. At that time the stabilization of the franc was brought about - the exchange then changing from 25 to 125 to the pound sterling - so that for the next year a lower index figure, which would roughly be one-fifth of the former rate, was reached. In that year it was listed at 105 and in 1929 at 113. The last index figure - for 1930 - is given as 120. By inasmuch as the exchange makes 125 instead of 25 francs, as was formerly the case, equal to the pound sterling, the index figure must be increased proportionately, to make a fair comparison, and thus we get a retail index figure of 600 as against 485 in 1926. They are the figures which the Treasurer should have quoted in order to show the effect of an inflated currency upon the cost of living in France. The Treasurer quoted wholesale prices, which, for various reasons, fell at that time.
– He quoted only those figures which suited his case.
– I quoted the index numbers usually taken as a means of measuring inflation or deflation.
– If I were permitted, I would quote from Ilansard the figures which the Treasurer actually used in order to show that, in his opinion, there was no cause for fear. The people of this country fear inflation.
– I quoted the figures that are taken as an index of either inflation or deflation.
– The wholesale prices are no indication of the cost of living.
– They are the only figures used by economists.
– The retail prices only are taken into consideration in arriving at the cost of living. A similar situation existed in Australia two or three years ago in connexion with wholesale prices. When the large warehouse proprietors found that they were over-stocked with goods which they could not sell, they approached the banks for overdrafts to enable them to purchase new season’s goods, but they were informed that they must first realize upon the goods which they had in their warehouses. The merchants were anxious to purchase their spring stocks, but they did not wish to sacrifice the winter stocks which they were then holding, and for which reasonable prices could not be obtained. But in order to secure accommodation from the. banks, the merchants were compelled to sell their winter stocks at a greatly reduced price, which the retailers purchased and held for another six mouths, when they were put on the market. The wholesale prices at that time were no indication of the prices which the community had to pay. For the reasons I have given, I strongly oppose - even more strongly than I oppose thebill - the amendment of the honorable member for Werriwa (Mr. Lazzarini) to increase the amount provided in this clause from £18,000,000 to £38,000,000.
– I can hardly understand the object of the honorable member for Werriwa (Mr. Lazzarini) in submitting such an amendment. On numerous occasions the honorable member has twitted the Government which I am supporting with twisting on the question of note printing. I know that it was suggested by a Labour conference which sat in Canberra that an additional £20,000,000 worth of notes should be printed in order to relieve unemployment, but the Prime Minister (Mr. Scullin) showed how idiotic it was to inflate the currency unnecessarily to relieve unemployment as one cannot produce money merely by printing notes. The degree of inflation which we have at present is not doing any harm, although in reality more notes have been printed than can be used. At present £23,000,000 worth of notes is all that is needed as a medium of exchange, and if a larger number than is used were to be printed the community would not benefit. By increasing our currency and depreciating its value we could, of course, in certain circumstances, make enormous profits provided our paper currency was held overseas. For instance, if the Commonwealth had borrowed £40,000,000 inNew York, repayable in Commonwealth banknotes, and it so- inflated the currency that its £1 notes became worth only one shilling, that £40,000,000 could be redeemed by the payment of £2,000,000 in sterling, and the Government would thereby make a profit of £38,000,000. If we print and circulate more notes than are required for the ordinary financial activities of the country, our currency will be debased to our own detriment under existing circumstances. The right honorable the Prime Minister (Mr. Scullin), who understands the financial position of Australia much better than the honorable member for Werriwa, said that there may be no necessity to issue even £6,000,000 worth of notes to provide relief for the farmers. It is as difficult to explain the ramifications of finance as it is the nature of electricity. I have not sufficient command of the English language to do so. An attempt is made to explain electrical phenomena by using terms which are applicable to fluid substances. I propose to attempt to explain finance by comparing notes with individuals.
– I rise to order. The Chairman of Committees (Mr. McGrath) has already ruled that second-reading speeches must not be delivered at the committee stage. I submit that the honorable member for Eden-Monaro (Mr. Cusack) is making a second-reading speech on a subject irrelevant to this clause.
– I have been following the remarks of the honorable member for Eden-Monaro (Mr. Cusack) very closely. Up to the present, he has been dealing with the subject of inflation, which is relevant to the clause.
– I am endeavouring to show that the proposed additional issue of currency will be more than sufficient to meet our requirements. I would compare the proposed new issue, which I shall term “ Federal Fidos “ with what were once known as “Fisher’s Flimsies.” A “Federal Fido,” just printed, and clean and tidy, met a “ Fisher Flimsy “ in the safe of the Commonwealth Bank. The “ Fisher Flimsy “ was dusty and tied up with red tape in bundles with other £5 notes. The “ Federal Fido “ asked the “Fisher Flimsy” how long he had been there, and was told two years. “ But,’” said the “ Flimsy “, “ are you not also afraid that spiders will build in your folds?” The “Fido” replied that wellpaid men would see to that. Just then the dialogue was interrupted by a builder who came in to change a cheque to pay a carpenter. The “ Federal Fido “ went into circulation being passed over the counter by the teller. That transaction yielded 5s. in wages tax to the Lang Government.
– The honorable member is again disregarding the direction of the Chair.
– I am endeavouring to show that the additional currency proposed will be sufficient to meet our requirements. The £5 note will be retained by the carpenter until Sunday, when he will tender it to the garage proprietor in return for a supply of petrol to take him on a fishing trip. A tax of 7d. a gallon on the 10 gallons he will buy will yield 5s. lOd. to the Scullin Government for expenditure on Federal Aid Roads.
– I have already warned ,the honorable member. He must not disobey my direction. I ask him to discuss the subjectmatter of the clause.
– I am sorry that it is contrary to the Standing Orders to explain the complete formula and show how money in circulation yields revenue. It appears that whatever arguments I may adduce they will not be sufficient to convince certain honorable members that provision has already been made in this bill to meet the pressing needs of the farmers and the unemployed. If a farmer obtained a “Federal Fido,” and paid it into a bank, all that would happen would be the receipt by him of a notification that on the basis-
– Order! The honorable member is not dealing with the amendment.
– In my opinion, the proposed addition of £18,000,000 to the currency will not be necessary. The Prime Minister (Mr. Scullin) himself has stated that a large amount of it may not have to be printed. The “Fisher Flimsy” is a protege of Sir Robert Gibson, but the “Federal Fido” will be a Theodore protege.
The honorable member for Werriwa (Mr. Lazzarini) would be well advised to withdraw his amendment. If he insists upon the printing of more notes than are required, Australia will be flooded with paper that cannot be regarded as money. An honorable member who claims to know something about finance ought not to be guilty of such an act of folly. The mere printing of paper will not relieve the existing depression; what wc need is more credit.
– I am unable to accept the amendment of the honorable member for Werriwa (Mr. Lazzarini). The Government very carefully considered the measure before the plan of it was settled. The amount of the fiduciary currency was determined so as to furnish the means which the Government thought necessary to bring about a restoration of the purchasing power of Australia in sufficient measure to enable an appreciable amount of employment to be provided during the next twelve months. If the expectations of the Government are realized, the relief afforded, first to the wheat-growers, and, secondly, to those who are unemployed, will be fairly substantial. The amount of currency created under the bill will not be an exact measure of the relief that will be available to industry and to our unemployed people, but will furnish means whereby employment may be provided immediately on government works as well as by local authorities and in other undertakings. That employment, and the resultant wage payment, will create a new purchasing power, which, in turn, will set up a demand for labour in all kinds of businesses, industries, and activities throughout the community. It is confidently expected that that will lead to the employment of a vastly greater number of men than will be employed directly as a result of the operation of the measure. In these circumstances, the Government believes that in its present form the bill adequately meet the needs of the situation.
– I am much more strongly opposed to the amendment than to the clause itself. The proposal of the Government will reduce the value of invalid and old-age pensions and of the basic wage.
The TEMPORARY CHAIRMAN.Order! The honorable member will be out of order if he proceeds along those lines.
– It was my intention to show to what extent the various assets of the people of this country would be reduced by the inflation proposed by the Government.
– The honorable member can do that when the amendment hals been disposed of. The only question that he may now discuss is the effect of the amendment in contradistinction to that of the bill.
– I wish to show that the bill will effect a certain diminution in the income of the people to whom I have referred, and that to increase the inflation to the extent suggested will involve a reduction of the value of insurance policies, and other assets that are held by something like 5,000,000 people. This is entirely unwarranted, unjust and unjustifiable. The Treasurer (Mr. Theodore) himself, in a speech that he delivered at Ashfield, said -
It is not claimed that under this process a new form of wealth is created. Indeed, it is admitted that to some extent it is a mere redistribution of existing wealth. But it is claimed that private resources that are now sterile can be made to function, and that any monetary sacrifice involved in this policy, if it is wisely administered, will bc a general sacrifice to which all will contribute, either in reduced money values or in increased prices. Moreover, before any appreciable increase in prices takes place, there must bc such an active competition in buying as to provide that stimulus to all trading and business, which is so much needed throughout Australia today.
I ask the committee to observe that, in the first place, no new wealth is to be created by this measure; and that secondly, it will be a redistribution of existing wealth. How is existing wealth to be redistributed?
– I cannot allow the honorable member to continue along those lines. The question is purely one between inflation and greater inflation, to be argued from the stand-point of the honorable member.
– I do not wish to transgress the ruling of the Chair. The third point made by the Treasurer is that there may be a monetary sacrifice, either in reduced money value or in increased prices. The proposal of the Government is to raise prices to the 1929 level, and that will involve an increase of 14 per cent. It can be imagined, therefore, how greatly prices would be increased by an inflation of the currency to the extent of £38,000,000. No new wealth is to be created, but those who now have any wealth are to be robbed of it, so that it may be redistributed. The farmers are to participate in that distribution; in their case the amount advanced will be in the nature of a gift.
– The honorable member occasionally adduces an argument which refers to the amendment, but substantially he is not observing the ruling that I have given. I ask him to do so.
– I am not endeavouring to contravene the ruling of the Chair. If I am allowed to develop my argument I believe that I shall be able to demonstrate with transparent clearness that I am keeping within it. The point that I want to make is that, in the words of the Treasurer, no new wealth is to be created, but that there is to be a redistribution of existing wealth. Thus, there is to be a scaling down of the assets held by the people in the form of money in the banks, bonds, insurance, endowments, &c. They are to provide the £18,000,000, which is to be distributed as largesse to various sections of the community. The working man will “get it in the neck,” because he will have to submit to a rise of 14 per cent, in prices to bring these up to the 1929 level.
I wish to quote some statistics that I have worked out, with a view to showing the extent to which price levels will be increased on the basis of an addition to the currency of £18,000,000, or of £38,000,000, as proposed by the amendment. According to the Commonwealth Statistician’s Quarterly Bulletin No. 122, taking 1,000 as the weighted average of the retail prices of food, groceries and house rents, in the six capital cities for the five-year period 1923 to 1927, the weighted average in 1929, was 1,054; while in December, 1930, it was 919, a fall of 135 points. A reversion to the 1929 price levels would involve an increase of 14.5 per cent., which on the December retail level would be equivalent to a reduction of 2s. lO&d. in the - £1. Taking old-age pensions as an illustration, and assuming that £1 now buys 20s. worth of necessary commodities, the effect of the upward movement in prices would be to reduce the purchasing power to 17s.11/5d. The honorable member for Werriwa (Mr. Lazzarini) and his friends would scale down the value of an old-age pensioner’s income by a still greater sum! Assuming that prices increased in Australia without any corresponding rise in world prices, or an addition to the existing wealth of the Commonwealth, the basic, wage of £4 2s. 6d. a week in New South Wales would be reduced under his proposal by lis.
There is no escape from the fact that under these proposals no new wealth will be brought into the country. The Treasurer has said that there is to be a redistribution of existing wealth. Whose wealth will be redistributed? I answer that question by quoting the statement of the late Acting Prime Minister (Mr. Fenton). He said that there were some 4,500,000 persons in Australia with money in bonds, savings banks, friendly societies and insurance societies. Those are the people whose wealth it is now proposed to re-distribute. Money cannot be derived from any other source. This proposal is, therefore, a base attack upon the decent, thrifty people of this country. If the majority in this House will stand for this, another place will not, and, when the people outside have an opportunity to express an opinion upon it, they will not tolerate it for a single moment.
.- I regret that the Treasurer (Mr. Theodore) has not seen fit to accept the amendment, because I do not think it would do one little bit of harm. I do not think that the situation will be adequately met by the increase of the currency suggested in the bill. The honorable member for Warringah (Mr. Parkhill) has predicted that evil consequences will follow even the small increase proposed. I point out to him that, if it serves to stimulate production, it must necassarily lead to an increase of wealth, because every man profitably employed in a community adds to its wealth. To say that when £12.000,000 is applied to secondary industries and £6,000,000 to primary industries, the wealth of the community will not be materially increased, is absurd and irrational. Has an increase of currency hurt any one when previously applied in
Australia, as it was during the war, when 400,000 of the best of the wealth producers of the country were withdrawn from this country for the purpose of wealth destruction overseas? At that time it was not regarded as a crime. Speaking on the 13th June, 1924, the right honorable member for Cowper (Dr. Earle Page) said of the note circulation -
The peak issue of £59,676,000 was reached on 30th October, 1918. At the present time the total issue is £56,900,000. Here it may be noted that the Bank of England notes and the English treasury notes amounted to £512,000,000 in December, 1920, and to £437,000,000 in April, 1924. The flotation of big war loans in Australia, as in other countries, was rendered possible by the continual inflation of our note issue from £9,600,000 to £59,000,000 in April, 1924.
If the flotation of loans was made possible at that time by the inflation of our note issue, will a slight inflation not make flotations possible to-day ? We must bear in mind that, during the period referred to by the right honorable member, Australia was passing through one of the biggest droughts in its history.
– Does not the honorable member want the bill by 12 o’clock?
– I recognize no 12 o’clock arrangement.
– I trust that the Nationalists will not give the position away this morning, as they did last night.
– A few words more and I shall have finished. The inflation referred to by the right honorable member for Cowper was brought about at a time when, because of a drought, the nation might have been supposed not to be in a position to bear it. Why did it not affect savings bank deposits, insurance policies, and old-age pensions, or bring about the chaotic state of affairs in regard to fixed assets which the honorable member for Warringah predicts will be the result of the inflation now suggested? As a matter of fact, the country was never more prosperous than during the period when commonsense prevailed and we were utilizing our currency, not as much as we could have done, but to the extent of making it possible for the creditor element in this community to batten itself on the vitals of the nation.
– It was arranged that the bill should be disposed of by noon.
Motion (by Mr. Scullin) put -
That the question be now put.
The committee divided. (Chairman - Mr. McGrath.)
Majority . . . . 9
Question so resolved in the affirmative.
Motion agreed to.
Clause agreed to.
Clause 6: (Denomination of Notes).
The CHAIRMAN (Mr. McGrath).I definitely put the amendment.
– The honorable member must withdraw that remark.
– I shall not withdraw it.
– I name the honorable member for “Werriwa, and ask the Prime Minister to take necessary action.
– I ask the honorable member to withdraw the remark that he made. He can ask for the recommittal of the clause if there has been a misunderstanding.
– I withdraw the remark; but perhaps I may be allowed to say that we had no opportunity whatever of knowing that the amendment was being put. In my experience whenever there has been a misunderstanding the Chairman has always allowed a question to be re-submitted, so that honorable members could record their votes properly.
– I wish to inform the honorable member for Werriwa that I not only put his amendment in the form of the question “ that the word proposed to . be omitted stand to be part of the clause “ and declared it carried ; but I also put the clause to the committee. At the appropriate stage the honorable member may, if he desires, ask that the clause be recommitted.
– In regard to the point of order I wish to say that the circumstances in which the division was taken were such that honorable members did not know what they were voting on. A number of us were changing from one side of the chamber to the other, and we had not resumed our seats when the succeeding votes were taken. Proper procedure should certainly require that honorable members shall be in their seats and have an opportunity to know exactly what they are being called to vote upon.
– Honorable members had resumed their seats when I put the amendment.
– I wish to say that some of us were still passing across the floor. You, Mr. Chairman, may have thought that we had resumed our seats, but the fact is that we had not done so.
– On the point of order, I wish to say that as there appears to have been some confusion at the time the vote was taken, and as there was no desire to attempt to take a snap vote, the honorable member can move for the recommittal of the clause before the vote on the third reading is taken.
– I desire to make a personal explanation. Last night an arrangement was made between myself and the Prime Minister that if a full two hours discussion were allowed on the committee stage of the bill, no objection would be raised, at least by the Opposition
– By the Nationalist party !
– By the Nationalist party to the completion of that stage of the measure at 12 o’clock to-day. Unfortunately, full information of the arrangement was not communicated to all parties interested either before or after it was made. I consider, however, that I was bound by the arrangement in so. far as I was personally concerned. Consequently, I did not vote in the division, and certain other members of this party who were informed of the arrangement also refrained from voting.
– The Leader of the Opposition (Mr. Latham) has stated the position correctly. Last night, when the vote on the second-reading was taken, the question arose as to whether we should continue the sitting or rise until this morning. As most honorable members did not desire to continue sitting after midnight, having had a long and strenuous day, an agreement was made between the Leader of the Opposition and myself that the vote should be taken on the bill at 12 o’clock to-day, after a two hours’ discussion of it in the committee stage. We are only on clause 6 now, and some time will be occupied in taking the remaining divisions; so that the final vote will certainly not be taken until after 12 o’clock. I appreciate the fact that the Leader of the Opposition has honoured the arrangement he made.
– Did not the Prime Minister (Mr. Scullin) expect him to honour the arrangement?
– I did; and I appreciate the fact that he has done so.
– I think it is necessary that I should explain that I was not in favour of applying the closure to this debate, especially as I was one who had had an opportunity of speaking on the second reading of the bill. I think that ample time should have been given for every member to express his views on this important question. But when the Prime
Minister moved the closure motion, and my leader informed me of the agreement that he had made to limit the committee stage of the bill to two hours, I felt that I was obliged to vote for the motion.
– While it may be the usual custom to make arrangements of this character with the Opposition, it does not appear to me that they should be binding on every member of the committee.
– Does not the honorable member want the bill to be put through expeditiously ?
– I do; but in a proper manner. We do not want the steamroller practices that the Treasurer (Mr. Theodore) is adopting. When arrangements of this nature are entered into between the Opposition and the Government, they should not be used as an excuse for over-riding the rights of other members of the committee.
– I also desire to make a personal explanation. A bargain was made, and I voted to honour it. Arrangements of this nature should be honoured, even though there might be an opportunity to carry an adverse vote against the Government by breaking away from them. I am not prepared to take advantage of circumstances of that kind.
– As I was on my feet at the time that the closure was applied, I should perhaps make a personal explanation. I had intended to give notice of my intention to move that the length of speeches should be restricted. We listened for a long while to the Assistant Minister for Industry (Mr. Holloway).
– Order ! The honorable member must confine his remarks to a personal explanation.
– The vote was taken at 11.50 o’clock, although the understanding was that it should be taken at noon. When an agreement is made it should be honoured. I was not a party to it.
– I also wish to make a personal explanation on this subject. The Country party has always endeavoured to facilitate the passage of business in this chamber ; but I feel that it is due to us that we should be consulted when arrangements are under consideration to expedite business.
– I was unaware that there had not been such consultation.
– I wish to make a personal explanation. “With my leader I was a party to the arrangement that was made last night that the discussion during the committee stage of this bill should occupy only two hours. I was speaking to the leader of the Country party and his supporters, and asking them to call the division off in view of the arrangement that had been made, and did not know, until the Minister for Trade and Customs called out, that I had been named as a teller. I was, in the circumstances, obliged to record my vote.
– I accept the honorable member’s explanation.
.- I move -
That the following new sub-clause be inserted: -
Treasury notes shall hear the impress of the photographs of John Wren, William Mahony, Randolph Bedford, and “ Sugar “ Roberts in each corner-
– Order !
– and the impress of the photograph of the Treasurer of the Commonwealth in the centre of each note-
– Order ! Order!
The printed border of such note shall consist of the impress of Old Court whiskey bottles.
– I name the honorable member for Angas (Mr. Gabb) for disobedience to the Chair, and ask the Prime Minister to take the necessary action.
– I ask the honorable member to apologize for disobeying the chair.
– If I was called to order I was unaware of it. I did not hear the Chairman call me to order. If I have been named for disobeying the Chair, I apologize for my disobedience.
– The honorable member should be aware that when the Chairman is speaking courtesy requires that he should resume his seat. Even if he could not hear me he could surely see that I was speaking. I rule the amendment of the honorable member out of order on the ground that it is ridiculous and frivolous.
– I wish to discuss the ruling which the Chairman has just given.
– If the honorable member desires to move dissent from my ruling, he must give notice of his motion in writing.
Clause agreed to.
Clause 7 (Disposal of proceeds of issue of notes).
.- The committee is entitled to some information as to the meaning of this clause. Clause 5 provides that treasury notes to a certain amount shall be issued by the Commonwealth Bank Board. The bank board apparently first provides the notes, which are then to be issued, in some way, although they cannot be issued by mere distribution to the public. Clause 7 provides that the moneys derived from the issue of them shall be placed to the credit of a certain trust account. The notes themselves are not moneys derived from the issue of such notes. Accordingly there is to be some operation after the issue of the notes from which it is expected that money will be derived, and such money is to be placed to the credit of this trust account. We are entitled to some explanation of the mechanism with which this scheme is to be operated; it is not clear on the face of the bill. I also direct attention to sub-clause 2, which reads -
Moneys standing to the credit of the Fiduciary Notes Account and derived from the issue of Treasury Notes under paragraph a of section five of this act, may be invested by the Treasurer in Commonwealth securities.
In an ordinary bill, that would mean that stocks and bonds could be bought with the moneys standing to the credit of the fiduciary notes account. Is that the intention in this instance, or is it considered that “ Commonwealth securities” covers treasury-bills? If these notes are to be spent in buying securities - well, they are spent. How do the farmers get them? If, on the other hand, treasury-bills are included in the term “ Commonwealth securities “ why not say so ? The term “ Commonwealth security “ is well known in federal legislation. For instance, in clause 12 of the bill it is defined as meaning “ any treasury note issued in pursuance of this act “. It also occurs in the Crimes Act and in section 60q of the Commonwealth Bank Act the term includes “ an Australian note “. Of course, it is not intended that treasury notes shall be invested in treasury notes. Sub-clause 3 is couched in these terms -
Upon the raising of any loan for the redemption of the securities issued under the last preceding sub-section, the proceeds of the loan, after payment of the expenses of borrowing, shall be applied to the redemption of those securities-
I presume that that means treasury-bills and not Commonwealth bonds and stocks. The sub-clause continues - and those securities and Treasury Notes of an equivalent amount shall thereupon be redeemed and cancelled.
The initial words of the sub-clause appear to be based upon the view that sub-clause 2 contains authority for the issue of Commonwealth securities. I suggest that it does not. It provides that the Treasurer may invest money in Commonwealth securities; in any securities, presumably, which already exist. But sub-clause 3 is drawn up in such a manner as to suggest that sub-clause 2 conveys authority to issue securities. These matters ought to be cleared up and phraseology employed which will leave no room for dispute.
I call attention also to the distinction between the contemplated issues of treasury notes to the value of £6,000,000 and the issue to the value of £12,000,000. As to the £6,000,000, a loan, if and when raised, is to be applied to the redemption of the securities and the redemption and cancellation of the equivalent amount of treasury notes. That disposes of the £6,000,000 worth of notes. There is a distinction between the £12,000,000 issue as dealt with by sub-clauses 4 and 5, and the £6,000,000 issue as dealt with by sub-clauses 2 and 3. Subclauses 4 and 5 provide, among other things, that money representing the £12,000,000 worth of notes may be invested in Commonwealth securities, also that, when a loan is raised in respect of the £12,000,000, it shall be applied to the redemption of the securities. There is no provision for the redemption and cancellation of the notes as is the case with regard to the £6,000,000 issue.
– The notes having, in the meantime, been paid away for the securities.
– They are in circulation, but the £6,000,000 worth of notes are also in circulation to the extent to which the Commonwealth Bank does not make advances under clause 10. Apart from other objections which may be met by an improvement in the drafting of the bill, there is this point to consider. Provision is made for the redemption and cancellation of the £6,000,000, but none for the £12,000,000 issue, although there is a provision for the redemption of the securities in which the 12,000,000 notes have been invested. Apparently it is the intention of the measure that the £12,000,000 is to be a permanent inflation, whereas the £6,000,000 is to be redeemed and cancelled as opportunity offers. One has to associate that fact with the provisions of clause 11, which authorizes the raising of £12,000,000 to provide employment. I ask the Treasurer to explain the matter, in order that we may know what we are doing.
If the bill is passed in its present form notes to the value of £12,000,000 will be issued but not cancelled or redeemed, as the £6,000,000 issue will be. Authority will be given to borrow £12,000,000 for the same purpose as that for which the £12,000,000 note issue is provided. There is a possibility, if the loan can be raised by the Government, of having £24,000,000 available for the relief of unemployment. That may or may not be the intention of the Government. Possibly there are some aspects of the matter which I have not completely understood. I suggest that the matter is sufficiently important to warrant an explanation by the Treasurer.
[12.22].- The Leader of the Opposition (Mr. Latham) claims that he discerns discrimination between the issue of £6,000,000 and the issue of £12,000,000 in the provisions of sub-clauses 2 and 4 of clause 7. Sub-clause 2 provides that “Moneys standing to the credit of the fiduciary notes account, and derived from the issue of treasury-notes under paragraph a of section 5 of this act, may be invested by the Treasurer in Commonwealth securities.” A provision of a similar nature is provided with regard to the £12,000,000 issue, which is covered by paragraph b of sub-clause 4.
– The provision in subclause 4 is precisely on a parallel with that of sub-clause 2. Except in the matter of interest the two provisions are substantially identical. There is a difference between sub-clauses 3 and 5.
– Sub-clauses 2 and 4 are substantially, but not wholly, identical.. The honorable member will see that moneys may stand to the credit of the fiduciary notes trust account, and be held there pending the payment of any instalments for the purpose for which the money is required. Authority is given for these funds to be invested to enable them to earn interest, pending their use for the purpose for which the issue is established. Regarding “assistance to wheat-growers, provision is made for the payment of a bounty in certain circumstances, and also foi- advances through State authorities for the relief of farmers suffering from distress and hardship. Such payments may extend over a six-months’ period, and it is only right that there should be authority to invest the funds standing to the credit of the trust fund account.
– I do not challenge that.
– That adequately explains that part of the scheme. With regard to the authority to borrow, it is considered that within certain limits this can be used as a revolving fund. If, after the initial period of operation contemplated under the measure, the necessity continues to supply money in order to increase purchasing power, and to continue the employment upon public works of men who would otherwise be unemployed, and the Government can get upon the loan market, there is no reason why the fund should not be recouped, and those operations continued while the necessity remains. It is hoped that by the end of the twelve months’ period provided in the bill, the world economic situation will be greatly improved, and that we shall be able to get back to the more ordinary courses of employment through industry. But if the necessity for extra government activity continues, no one will deny the right of the Government to extend its activities rather than see men thrown on the unemployed market, so adding to our difficulties and perpetuating the distress which has created so much apprehension in recent months. I submit that the Leader of the Opposition (Mr. Latham) cannot raise a sound objection to the Government going upon the market and borrowing money in the way contemplated by clause 11. So far, the honorable gentleman’s argument has been based upon what he regards as the unorthodox manner in which the bill provides the Government with credit. The measure would not have been introduced had the banks been prepared to co-operate frankly and fully with the Government to ease existing conditions. Their indisposition to do so has made it necessary to bring down to Parliament the proposals that are embodied in the bill. The necessities of the case are its justification.
.- The bill contains no provision stating to whom these notes are to be issued. It does not provide that the bank is to present these notes to the Treasurer. They are to be issued. Presumably, the bank will not give them to the Treasurer unless he gives the bank something for them - I should say something in the form of treasury-bills. In that case treasury-bills will exist. As to the £12,000,000, there is provision for the redemption of those treasury-bills out of a loan, if “ Commonwealth securities “ means treasury-bills, but there is no provision in the measure for a revolving fund, and the AuditorGeneral has to be reckoned with in the matter. It is that gentleman’s duty to see that there is authority for the expenditure of every £1 of public money. Under the Audit Act, money that comes back to the Treasury goes into the Consolidated Revenue Fund, and there must be authority for using it for the purposes of a bill such as this.
– The bill provides authority to borrow, but, obviously, there will have to be a supplementary appropriation measure.
– The bill provide only for the raising of £18,000,000. A revolving fund of £10,000,000 might involve an expenditure of £100,000,000. The bill does not provide for a revolving fund. The Treasurer has not said anything with reference to the point that I made, that the measure provides for a £12,000,000 note issue, and a £12,000,000 loan, and for no redemption or cancellation of the £12,000,000 issue, though there is provision for the redemption or cancellation of the 6,000,000 notes. If the committee, being aware of those facts, passes the bill, it will at least do so with its eyes open.
.- The Treasurer failed to state where he intends to raise this money. He stated that it will be derived by the issue of treasury notes. “We have been told that those notes are money. “Why issue them in order to obtain money? According to the Treasurer and supporters of the Government, when these notes are issued, they will go to the treasury, to be lodged in the Commonwealth Bank to the credit of the Commonwealth, and while there the Treasurer will draw cheques on them. If he draws cheques on them, the notes do not go into circulation. Certainly the notes can lie in the vaults of the bank; but if that is to happen why issue them at all? Does the Treasurer contemplate selling these notes ? The bill provides that the moneys derived from the issue of treasury notes may be invested in Commonwealth securities. Does that mean that the Treasurer may go on the stock exchange and buy with fiduciary notes government bonds which are low in price and make a profit on them? I am certain that no broker will accept those notes in payment for any securities. The Leader of the Opposition has called attention to the fact that whilst the £6,000,000 worth of notes for the assistance of the wheat-growers may be cancelled, the £12,000,000 worth for unemployment relief are to be in everlasting circulation.
– Permanent inflation.
– That is so. I regret that I was not allowed to speak on the motion for the second reading of this bill. The issue is so important that every honorable member should have had the opportunity to speak, even if the House had to sit night after night.
Question - That clause 7 be agreed to - put. The committee divided. ( Chairman - Mr. McGrath.)
Majority . . . . 7
Question so resolved in the affirmative.
Clause agreed to.
Clause 8 agreed to.
Clause 9 (Cancellation of soiled or mutilated notes).
– Originally 1 had intended to oppose this clause, but I have decided that it may be useful. The notes will be “ soiled “ even before they are circulated, and this provision will enable the Government to cancel the whole issue.
Clause agreed to.
Clause 10 (Reduction of authorized issue of treasury notes in certain events).
.- This is one of the most objectionable clauses in the bill. It purports to leave the Commonwealth Bank Board to decide whether treasury notes shall be issued or not; but it contains a direct threat to the board that unless it lends to the Government all the money it requires under this legislation, it must issue treasury notes to the amount demanded by the Government. The clause illustrates strikingly the objectionable nature of this legislation.
Question - That the clause be agreed to - put. The committee divided. (Chairman. - Mr. McGrath).
Majority . . . . 5
Question so resolved in the affirmative.
Clause agreed to.
Sitting suspended from 12.47 to 2.15 p.m.
Clause 11 (Authority to borrow).
.- Clause 11 provides that the Treasurer may, from time to time, borrow money not exceeding £12,000,000, to be applied only for the expenses of borrowing and for the purpose of providing employment on reproductive works. This provision has nothing to do with the authority conferred in clause 7, sub-clause 5, of the bill, to raise money for the redemption of securities and the cancellation of notes. Any moneys raised in pursuance of clause 11 must be applied to provide employment, and cannot be applied to the redemption of securities, or the cancellation of notes. The effect of this provision is to authorize the expenditure of £24,000,000 in providing employment, £12,000,000 to be obtained by means of treasury notes, as provided for in clause 5, paragraphb, and another £12,000,000 to be raised, if the Treasury is able to borrow the money, under the terms of clause 11.
– The Treasurer did not make that clear in his speech.
– I doubt whether it is intended that that should be the effect of the clause. The bill specifically provides that money shall be raised in order to retire the £6,000,000 notes which are to be issued to assist the wheat industry, but clause 7 makes no similar provision in regard to the £12,000,000 for the relief of unemployment. We may he told that this is due to the absence of clear thinking and expression on the part of those responsible for drafting this measure. On a matter so important there should be clarity of thought, and clarity of language. It is useless for the Treasurer to say that the money to be raised under clause 11 is intended to be applied to the redemption of securities and the cancellation of notes, because the clause provides in the most explicit terms that it shall be applied to providing employment on reproductive works. The bill as placed before the House contains provisions which have never been explained, nor even alluded to by the Minister in charge, nor by any other Minister.
.- I think that the Leader of the Opposition (Mr. Latham) envisages difficulties that’ really do not exist, although I appreciate his calling attention to what may be an ambiguity in the bill arising from drafting difficulties. 1 recognize that the honorable gentleman has a penchant for pointing out weaknesses of that kind. It is true that clause 11 confers authority to borrow; but the honorable member is wrong, I think, in saying that I made no allusion in my second-reading speech to this authority. My impression is that I explained that the money so borrowed would be used as a revolving fund, not to increase the note issue beyond the stipulated limit, but to replenish, as opportunity offered, the fiduciary note fund in the Treasury. The Government would not have authority to spend more than the £18,000,000 originally stipulated without obtaining the consent of Parliament. The extra amount required would have to be placed on the Estimates, and approved by Parliament, in order to comply with the requirements of the Commonwealth Audit Act. No action which I could take in my administrative capacity could avoid that necessity.
– But this clause gives the Treasury power to borrow up to £12,000,000.
– It confers authority to borrow, but not to spend except in accordance with appropriations made by Parliament or on loans to States, public authorities, and approved corporations. If a programme of works has been begun, the Government cannot be expected to close down absolutely at the end of twelve months, especially if a large labour force is employed. The expectation is that when market conditions improve we shall raise money in the ordinary way with which to continue the work. Moreover, it would be necessary to obtain the approval of the Loan Council if State or Commonwealth loan programmes were to be varied by way of increasing expenditure on public works. The Commonwealth finances, in this as in other directions, are under proper control, and such control is not being set aside by this bill.
.- Special provision is contained in the bill for the cancellation of the £6,000,000 notes by means of loan money. There is also provision for raising £12,000,000 by means of treasury-notes, the money to be used to provide employment, but no special provision is included in the bill for retiring those notes. There appears to be no doubt that the bill as it stands gives the Government authority to spend £24,000,000 on providing employment.
.- If, as the Leader of the Opposition states, there is no provision in the bill for the ultimate retirement and cancellation of the notes issued for the relief of unemployment, it may be necessary to insert such a provision. I desire to point out, however, that there is no real necessity for such a provision. If, after the scheme has been operating, and the notes have been issued, the Government covers the amounts issued by means of loans raised in the market, the notes will return to the bank, and although they might not be cancelled, they would not be in use. That is what happens now in the ordinary course of events. There is no specific provision for the formal redemption of ordinary currency notes.
– Does the Treasurer imply that the bill as it now stands does not authorize the Government to raise £24,000,000 for the relief of unemployment ?
– I am now discussing the redemption of notes after they have performed their function. If it is necessary to insert in the bill formal authority for the redemption of the notes when they have performed their function, I shall see that the necessary amendment is made in another place. The omission of such authority, however, would not hamper the operations of the bill, nor would it lead to an additional £12,000,000 being permanently in circulation. No provision we could put in this bill would ensure the permanent circulation of notes. They would come back to the bank in the ordinary course of events, and would be held by the bank.
.- In his previous explanation the Treasurer has overlooked another point. The gist of his argument was that the parliamentary control of expenditure of public money was amply provided for, because expenditure could be undertaken by the Government only after appropriation by Parliament. I remind him that many appropriations have already been made, but the work for which money was appropriated has not been done because money has not been available. One such appropriation was that made for building the Red Hill to Port Augusta railway. It looked harmless at the time it was made, because everybody knew that no money was available to carry out that very extravagant work. If this bill becomes law, the Government, if it is fortunate enough to be able to raise real money by way of loan as well as putting debased paper currency into circulation, may have as much as £24,000,000 available for carrying out works for which appropriations have already been made. Apart from this, the Government could easily dispose of money by means of loans to the States, and I should be very much surprised if the appetites of the State Governments stopped short of £24’,000,000. Honorable members will, I think, agree that once the note issue is authorized, it will be spent very quickly. There will be no occasion for the Ministry of the day to bring before Parliament proposals for the further utilization of that portion of our currency. The manner in which the clause has been drafted discloses either a certain amount of cunning and knowledge of parliamentary tactics, or extraordinary obtuseness on the part of the responsible Minister. I am glad that the Treasurer has said that the point raised by the honorable member for Swan (Mr. Gregory) may have been overlooked inadvertently. If he is not prepared to put the matter right now, he should consult the officers of his department who, perhaps, are better informed than he is on this subject, and have an amendment inserted in the bill before it is hurried, for electioneering purposes, to meet its fate in another place.
.- The Leader of the Opposition (Mr. Latham) has just told us that the clause may authorize the flotation of a loan up to an amount of £12,000,000 independently of the fiduciary issue, and the Treasurer (Mr. Theodore), in his reply, did not make it clear that the Leader of the Opposition was either right or wrong. Possibly, owing to my lack of legal training, I assumed that the purpose of the clause was to enable the Government to borrow certain sums of money so as to provide security for the proposed fiduciary issue. The Treasurer has stated that the notes to the value of £12,000,000, to be expended on reproductive public works, will go into circulation and, in due course, be returned to the Commonwealth Bank. It will be a long time before they reach that institution, because we may be sure that they will soon find their way into the coffers of the associated banks to be used as a basis for cheque credits. Then when the Government approaches the local market for new money, all it will get will be cheque credits against fiduciary note deposits. This vicious financial principle is fraught with innumerable dangers to the community. In its final analysis the bill will merely extend the opportunities of the associated banks to make available credit based on the fiduciary notes. I am dissatisfied with the clause as it stands.
In his second-reading speech the Treasurer said that the bill represented a step in the direction of completely changing our monetary system. It does nothing of the kind. What the Treasurer should have said was that Australia is suffering a recovery from a financial spree, and is now paying the penalty. Instead of attacking the present capitalistic system, the bill is merely a stop-gap measure designed to perpetuate it, because the Treasurer admitted that as soon as the banks are in a position to lend money, the Government will enter the market to obtain it. The bill, therefore, will not make any alteration in our monetary policy. We shall continue to borrow, as hitherto, until Ave get a Government that is strong enough to deal drastically with our corrupt currency system under the control of the associated banks. It is evident that this Government will nol do that of its own volition. But the time is coming when the Commonwealth Government will he compelled to face the situation, otherwise the economic resources of this country will be dealt a smashing blow, from which it will be almost impossible to recover. Borrowing for the relief of unemployment must inevitably lead to further unemployment. Borrowed money may relieve a situation temporarily, but the economic disaster that has overtaken Australia has reached such dimensions that it will not respond to the usual palliatives that have been administered, from time to time, under the existing capitalistic system. We have reached the stage when this vicious system must be destroyed. The bill will not do that. The verbiage of the clause is calculated to cloud the issue. It is difficult to understand what it means, but it is obvious that the Treasurer hopes to be able to borrow another £12,000,000. I should not have objected if he had added another £12,000,000 to the amount of the proposed fiduciary issue. I was under the impression that the honorable gentleman subscribed to the policy of the party to which he belongs. That, as we know, is opposed to the continuation of the borrowing policy. If this clause does not mean that the Government intends to go on the loan market to create securities as backing for the fiduciary issue, what did the Prime Minister mean in his secondreading speech ? The Treasurer also made some veiled reference to this point, but I pay this tribute to the Prime Minister: in this House he says what he means. I cannot say the same of the Treasurer. Because of its obscurity the clause should be closely scrutinized before being accepted. The bill itself should be left with this House until after the Easter adjournment. It should not be hurried to another place where it may be defeated in five minutes. We are certainly entitled to a clearer explanation from the Treasurer than we have just had. Ambiguity of language is not calculated to ensure the speedy passage of any legislation. While I do not intend to vote against the clause, I think we should be more fully informed as to its meaning.
– I have never yet voted for any proposal to borrow money, and I hope I never shall. I stand for the principle that the credit of this country should be utilized for the benefit of the people. It cannot be denied that, under existing financial and economic systems, the credit of all countries is used by financial operators for their own advantage. Adherence to this policy has brought the Governments of all countries - high wage and low wage countries alike - into much the same position as that occupied by Australia to-day. I register my protest against the adoption of this clause. The events of the future will amply justify the stand which I am now taking. It is impossible to relieve the distress of the people without attacking the root causes of the present economic disease. The United States of America, the wealthiest country in the world, and a country which has full command of all the labour saving devices known to civilization for the production of wealth, numbers its unemployed by millions. The situation in that country is one of the strongest indictments we could find of the present capitalistic system. The percentage of unemployed to the whole population in the United States of America is greater than in Australia. Germany, Great Britain, and even Japan, are suffering in like manner under the existing capitalistic system. We are in our present trouble, not because we are not using the talents bestowed upon us by the Almighty, but because we have allowed the control of our financial and economic resources to pass from our hands into the hands of powerful financial institutions which now virtually dictate government policy. It seems to me that the clause under consideration was inserted in the bill merely to placate members opposite, so that they would allow the measure to pass.
– Then does the honorable member consider that this bill is not submitted seriously?
– The honorable member for Angas (Mr. Gabb) knows that the Prime Minister (Mr. Scullin) and the Treasurer (Mr. Theodore) are sincere in presenting the measure. They consider the inclusion of this clause to be a necessary precaution ; but I do not agree with them. However, for the purpose of trying out the bill, I am willing to let the clause go. The honorable member for Gippsland (Mr. Paterson) talks of borrowing “ real “ money. Surely he must realize that a big joke is being “ put over “ the people when it is suggested that they receive “ real “ money when a loan is raised. When a person, deposits a sum as a subscription to a government loan, he receives an equivalent, and the only amount by which his money is discounted is that taken by the present- day representatives of the money changers whom Christ drove out of the temple in Jerusalem. My position would be emphasized if government bonds were made legal tender. Bondholders would then have their money in their pockets, and the Commonwealth would undertake to pay them 6 per cent, upon it. When the Commonwealth Bank was established it was decided, on the motion of the honorable member for Bourke (Mr. Anstey), that £10,000,000 be placed to the credit of that institution, and upon that credit the bank operated at its inception. If that practice had been generally adopted, we should have had no national debt to-day. On one occasion, trade unionists in South Australia were induced to subscribe £1,000 to a war loan.
– I ask the honorable member to confine his remarks to the clause before the committee.
– I shall take another opportunity of referring to this yoke, which must be dragged from the necks of the people. I have placed on record my objection to the loan provision in this bill. I have indicated that loans do not provide real money, but merely work the old three-card trick of the financial sharpers of the ages.
– The honorable member for Adelaide (Mr. Yates) contends that governments ought not -to place loans on the market when they require funds to carry out their works programmes, or for any other purpose. A great deal of the honorable member’s argument was founded upon a recognition of the weaknesses of the monetary system. Any treasurer would readily agree to adopt a system which would dispense with the necessity for raising loans and paying interest, if he could obtain funds in some other way. If there were no private trading banks, and the whole of the banking system of this country were a nationally-owned service, such profits would be made, and such credits would be available for use by governments, that a considerable amount of finance could be used in connexion with public services without a great deal of cost by way of interest. If the banking institutions were nationally owned, many millions of pounds would accrue. The Commonwealth Bank has earned profits on its trading operations to the extent of £7,000,000. In the case of the trading banks, the people do not enjoy the benefit of the profits. If the entire banking services were nationally owned, the community would be saved a considerable amount in the way of interest that is now paid to private institutions for the benefit of their shareholders.
– The people would have to pay in another way.
– However that may be, the time has not yet come when we can refrain from going on the money market in the ordinary way. I know how costly this process is, and how extortionate the rates of interest often are; but, until a great change takes place in the control of banking and credit, we must continue the practice of issuing loans.
.- I venture to say that this clause presented great difficulty to every honorable member who carefully and critically read it, in deciding what was its meaning. The Treasurer (Mr. Theodore) was distinctly asked by the committee to explain what the Government meant, by the clause, yet he sat mute. One is driven to the suspicion that, as the lawyers would say, he sat mute of malice; that is, that he had some explanation, possibly, which he preferred not to put before the committee. I am confirmed in that suspicion after hearing the remarks of the honorable member for Werriwa (Mr. Lazzarini), who said that the explanation offered by the Treasurer was totally unsatisfactory. It seems to me that this is not a subject that ought to be discussed in an academic way. We are dealing with the practical question of the advisability of raising a certain amount of money in a particular way. We on this side of the chamber are charged with having no concern for the distressful condition of the wheat-growers and the unemployed. The speeches of the honorable members for Werriwa and Adelaide are those of earnest, honest and enthusiastic cranks, who think that every man that does not see eye to eye with them is either a fool or a knave. I suggest that those who differ from them are neither fools nor knaves. Does any honorable member believe that there is one among us who is unsympathetic with any section of the community that is in distress, or would fail to do his best to help any person in the Commonwealth who is out of employment to get a job? The problem we have to solve is how best to give that assistance.
We have it from the Treasurer himself that this bill, including the clause under discussion, is not necessary, and that it is within the power of the Commonwealth Bank and the associated banks to co-operate with the Government in coming to the assistance of those who are so badly in need of it to-day. To my astonishment no member has dealt with the extraordinary charge which the Treasurer made against that body of honorable men who occupy high and responsible positions as the managers of banks in Australia. He said that he and the Prime Minister (Mr. Scullin) had met those gentlemen, and had put before them certain proposals for the assistance of the Commonwealth. “ Having heard our proposals,” the Treasurer continued, “ they pretended to see in them something unsound.” That is a most serious charge to bring against a body of men occupying positions of great trust.
– I ask the honorable member to connect his remarks with the clause. .
– We are now considering a clause which deals with the advisability of giving power to raise a loan.
– The honorable member cannot reply now to something said in the second-reading debate.
– If I am not at liberty to recall the speech of the Treasurer in debating the second reading of the bill, it will be impossible for me. to show the full significance of the clause. The Treasurer himself has said that under the present monetary system the banks have the power, if they have the will, to give the Government all the assistance that it desires, and that because the banks pretended to see difficulties in the way - difficulties which had no real existence - the Government has introduced this present proposal. That being so, it is not my intention to discuss the question of inflation or deflation. The Treasurer has said that it is the unimaginative banker who stands as an obstacle in the way of the people of the Commonwealth to-day. As I am not permitted to discuss this subject at length, I content myself by saying that I am perfectly satisfied that the people of Australia would sooner have the direction of their financial affairs in the hands of the unimaginative banker than have it in the hands of the highly imaginative and not always over-scrupulous politician.
.- Clause 11 is the most remarkable clause that has ever been inserted in a measure, and apparently it is quite separate from the other clauses of the bill. This is the first time in my experience - and I cannot find any precedent for it - that this Parliament has been asked deliberately to authorize the expenditure of some £12,000,000 without there being attached to the bill a schedule of proposed works. Sub-clause 2 reads -
The amount borrowed shall be issued and applied only for the expenses of borrowing and for the purpose of providing employment on reproductive works -
for which appropriations have been made by any act; or
) by means of loans to the States or to local governing authorities, or to other corporations approved by ‘the Governor-General.
Accordingly, any loan that may be made to a body outside the Commonwealth Government will not be subject to the control of this Parliament.
– We must have the appropriation in addition to the parliamentary authority.
– There will be parliamentary authority as far as the Commonwealth is concerned under paragraphs a and b of sub-clause 2. Loans to local governing authorities or to other corporations may apparently be made quite independently of the States. I should like to know whether such loans would be under the direction of the Loan Council.
– There is nothing in the bill to that effect.
– There is no necessity for that.
– The Treasurer knows that at present there is no statutory authority to bring any loans made to local governing bodies or other corporations approved by the GovernorGeneral under the control of the Loan Council. There have been negotiations between the various State Governments and the Commonwealth Government for an alteration of the Constitution to provide for such statutory control, but at the present time it does not exist. Loans to bodies outside of the State do not come within the purview of the financial agreement which was validated by this Parliament. There may be a kind of gentleman’s agreement so far as the Loan Council is concerned in regard to this class of loan, but an agreement of that kind would not be binding at any future meeting of the Loan Council, which body could rescind any motion previously carried by it. This is a most extraordinary bill. It provides the machinery first, and there seems to be no co-ordination about it at all. It is difficult to ascertain how these moneys are to be put into circulation. The term “ Commonwealth security “ appearing in one clause seems to have an absolutely different meaning when it appears in another clause. Then we find that apparently an unspecified amount of money may be spent in various ways. That is making a travesty of legislation, and I hope that honorable members will reject the measure.
– The honorable member for Adelaide (Mr. Yates) was rather scathing in his remarks concerning the members of the Opposition, and their comments on this proposed loan expenditure. The honorable member dislikes clause 11, under which the Government proposes to raise £12,000,000. The bill also provides for a fiduciary issue of £18,000,000. The honorable member, who made the most noise in condemning the Opposition for its past support of loan measures, supported this bill at the secondreading stage. We on this side opposed the second reading of the bill and we now oppose this clause which the honorable member dislikes.
The right honorable member for Cowper (Dr. Earle Page) need not take too seriously the proposals under this bill. After all, when we look” at this clause we find that it is in keeping with the intention of the bill. It is a window-dressing scheme seemingly providing for an expenditure of £6,000,000 for the relief of the wheat-growers, and £12,000,000 for the relief of the unemployed, for whom the Opposition are supposed not to have any consideration. Then, in case we dislike the fiduciary issue, clause 7 of the bill gives the Government power to borrow £18,000,000. If that is opposed, the Treasurer, under clause 11, is empowered to raise £12,000,000, also for the relief of the unemployed. If we take the Treasurer seriously we may be inclined to think that he will borrow all this money, but he has admitted that the bill will not pass the Senate, and, in consequence, we are likely to have an appeal to the country. He knows that in discussing this measure we are only wasting time. He is actually making no provision for the wheat-growers or the unemployed. This legislation is being used as a means to tickle the ears of the electors so as to obtain their support at the next election. No honorable member would oppose the borrowing of money provided that a list of the proposed works to be constructed out of the loan were attached to the bill. But for all we know this Government may propose to assist, by means of this legislation, the Lang Government in its refusal to honour the financial obligations of New South Wales. It may be that this money is to be used to raise a red army or for some other ridiculous purpose. At least we are entitled to know what part of this proposed expenditure is to be used for relief works. This bill is nothing but window dressing in anticipation of the next election. It was admitted by the Treasurer himself when in Brisbane a few days ago, that nothing would come out of this measure.
– I am surprised that the members of the Country party should oppose the bill, because its object is to assist the wheatfarmers of this country and the unemployed in the metropolitan areas.
– This clause has nothing to do with relief works.
– The honorable member is always building bridges.
– I rise to a point of order. The honorable member for South Sydney (Mr. E. Riley) has referred to the assistance that it is proposed under the bill to give to the farmers. Clause 11 contains no reference to that subject, and I ask you, Mr. Chairman, to rule that he is out of order in discussing it.
The CHAIRMAN (Mr. McGrath).I would point out to the honorable member for Swan that the honorable member for South Sydney (Mr. E. Riley) had just commenced his remarks. The clause opens up a big subject and I, therefore, have allowed honorable members a little latitude.
– The general complaint on this side is that the currency of this country has been unduly curtailed, and that the banks have refused to release credits ; but I understand from the Treasurer that the banks are prepared to give credit provided that there is legislative authority for it. Therefore, this Government is now asking for legislative authority to expend £6,000,000 for the relief of the farmers, and £12,000,000 on reproductive works for the relief of the unemployed. Surely honorable members should be unanimous in supporting this bill, since it proposes to give some measure of relief to the community. They should rise above party spirit. This legislation, if passed, must have a beneficial effect upon Australia.
– The honorable member is only pulling his own leg.
– The honorable member for Swan has too long been pulling the leg of his own party. I cannot understand the honorable member’s opposition to this measure. We should rise above party spirit when our country is in distress. I shall vote for the measure and am prepared to go to the country on the issue.
.- I object to clause 11 because I consider that it is merely a hypocritical suggestion to the people that in addition to the £18,000,000 fiduciary issue provided for in the bill, an additional loan of £12,000,000 may be raised. The Prime
Minister, in a cablegram received only in November last, said -
I know and share members’ feelings regarding the sufferings of the unemployed, but the destruction of our credit will spread that suffering tremendously. Brennan and Moloney concur.
How can this Government now bring forward such a ridiculous proposition as this bill? A little while ago we heard the honorable member for Werriwa (Mr. Lazzarini) move an amendment that the fiduciary issue be increased from £18,000,000 to £38,000,000. He is, evidently, a wholesale inflationist, whereas the Government is merely in the retail line. Any inflation constitutes a watering of our currency, and results in a depreciation of the value of pensions and wages. The loading of an additional £18,000,000 worth of notes on to our present issue of £45,000,000 will mean the watering of the currency to the extent of 40 per cent. The honorable member for Werriwa (Mr. Lazzarini) ought to be able to realize that that will mean a diminution of 8s. in the old-age pension.
There is a moral side to this question. The Anglican Archbishop of Melbourne, speaking in that city recently, said -
There is the problem of inflation. It sounds attractive. We want more money-
The CHAIRMAN (Mr. McGrath).Order ! I am not concerned with what has been said by the archbishop. The honorable member must confine himself to the clause.
– Probaby if it were a statement by Dr. Mannix, you would view the matter differently.
– Order ! The clause relates to borrowing, not inflation, and that is the subject with which the honorable member must deal.
– Under the authority given by the clause, the Government will have carte blanche to borrow £12,000,000, irrespective of the amount of the fiduciary issue. This is a watering of the currency, and is as miserable and despicable as the watering of milk intended for infants. I hope that, even at this late stage, the clause will be withdrawn.
– I desire a ruling from the Chair as to whether it is competent for this clause to appear in the bill. It has no connexion whatever with a fiduciary currency, but is designed solely to enable the Government to borrow a certain amount. If it provided that the moneys so borrowed should be applied to the redemption of a fiduciary currency, it would have some connexion with the purpose of the bill. I submit that it is an excrescence. The short title of the bill reads, “ This act may be cited as the Fiduciary Notes Act 1931”; and the full title is, “A bill for an act relating to the issue of a fiduciary currency.” The titles of some bills have added to them the words, “ and for other purposes,” but that is not so in this case. I submit that the clauses of a bill must conform to its title, and that any clause that has no relation to a fiduciary currency has no right to appear in this bill.
– I rule that this clause is in conformity with the other provisions of the bill.
.- I hope that the Treasurer will state clearly and unequivocally whether he is seeking authority to raise only £12,000,000 by means of a fiduciary note issue, or also an additional £12,000,000 by way of a loan. The bill, as drafted, confers the double authority. Does the honorable gentleman intend that this clause shall merely provide the machinery for the raising of a loan to discharge the fiduciary note issue?
.- I can see no justification for this clause, unless it is intended that it shall provide the machinery for the raising of the loan referred to in sub-clause 5 of clause 7. The Treasurer has informed the Leader of the Opposition (Mr. Latham) that the bill provides for the expenditure of only £18,000,000, but he has not admitted that under clause 11 the Government willbe authorized to raise an additional £12,000,000. That £12,000,000 is entirely unconnected with the purposes of the bill, and there will be no need to raise it unless it is to be expended under some other authority already granted. The honorable member for Wakefield (Mr. Hawker) has referred to other acts authorizing the expenditure of certain sums of money, such as the Red Hill to
Port Augusta Railway Act. He, rightly, wanted to know whether the money raised under this clause would be expended upon such work. The clause distinctly states that the amount borrowed shall be issued and applied for the purpose of providing employment on reproductive works. We have been told that that is the object of the fiduciary issue. Therefore, it cannot be denied that the bill purports to provide £12,000,000 by a fiduciary note issue and £12,000,000 under this loan provision for expenditure upon reproductive works and the relief of unemployment. If it is necessary to have a machinery clause to operate the provisions of sub-clause 5 of clause 7, it should be equally necessary to have a machinery clause to raise the loan referred to in sub-clause 3 of that clause. We are entitled to a clear statement by the Treasurer (Mr. Theodore). Are we to conclude that he is not acquainted with the provisions of the bill, or that it means something which it does not state, and that he has not referred to in his speeches upon it? Or are we to assume that he refuses to make any reply because, as the honorable member for Wide Bay (Mr. Corser) has alleged, it is merely a window-dressing measure, and he is withholding, information upon it with a view to making the first announcement on the hustings.
Question - That clause 11 be agreed to - put. The committee divided. (Chairman - Mr. McGrath.)
Majority . . . . 6
Question so resolved in the affirmative.
Clause agreed to.
Clauses 12 to 24 agreed to.
.- 1 move -
That the following new clause be inserted: - J3a. On and after the thirty-first day of December One thousand nine hundred and thirty-one no person, institution and/or association of institutions other than the Commonwealth Bank of Australia shall operate a cheque currency system.
Penalty: Imprisonment for fourteen years.
The only difference between this new clause and the printed notice of it which has been circulated is that I have inserted the word “ private “ after the word “ thirty-one “. If the clause is agreed to a new definition will need to be inserted, otherwise it will be meaningless. My reason for moving for the inclusion of this clause is that I wish to give effect to the third plank of the Labour party platform, namely, the nationalization of banking and credit. We have talked for many years in this chamber about the note issue, the operation of the loan system, and national finance generally, but nothing has ever been done to interfere with the operation of the cheque pound system. That, of course, would involve an attack upon the whole banking system of the Commonwealth. It must be realized that the real currency of this country is the cheque pound. Economists and financial authorities the world over have declared that where the cheque system operates, the cheque inevitably becomes the currency of the nation. Mul- hall, the famous British statistician, said, in 1SS7, that 97 per cent, of the currency of Great Britain consisted of cheque pounds, and only 3 per cent, of it of banknotes and gold, silver, and copper coins. The banking statistics of Australia show that the cheque pound is the currency of this nation, and that notes and other forms of currency are required only for till money and small change. The whole of our financial business is done by the cheque pound, and this has consequently become our currency. Currency may be defined as the instrument of the economic exchanges of the nation. It does not matter what that instrument is, so long as it is effective as a means of economic exchange. A stick, or any other piece of wood, could just as easily be the instrument of economic exchange as gold or any other metal. To show that the cheque pound is really the currency of the nation, I point out that the associated banks of Australia last year held in their possession only £47,000,000 of legal currency, though through their clearing houses in the capital cities of the Commonwealth alone they made available credit to the extent of £2,018,000,000. This figure does not take into account the £300,000,000 which they loaned to government institutions, or the huge volume of deposits which they could redeem to only a small extent if they were called upon to do so. The legal currency of the country should not be operated by private institutions or individuals; and as the cheque pound is the currency of the Commonwealth, the control of it should be removed from these institutions. It is an accepted principle of government, whether the form of government be despotic or democratic, that the currency of a country must be controlled by the government of it. We know very well that no person, though he be ever so wealthy, is permitted to mint a penny, a three-penny piece, a florin, or a sovereign, or to print a banknote. This can be done only by the authority of the Government. Therefore the banker of to-day, in operating the cheque pound system, has, by a revolutionary process, usurped the prerogative of the Government. I argue that the Government can only resume the exercise of that prerogative by taking control of the cheque pound system. Only when this system comes under the control of the Government can it be said that the Government is in control of the currency of the country. It would, of course, be useless to attempt, to bring the provisions of this new clause into operation :i i mediately, for the Government has not the facilities or the organization available at the moment to undertake the service which is being performed by the associated banking institutions; but I believe that it would be possible by the 31st December to create the necessary organization for this purpose. If the Government earnestly desires to give effect to the third plank in the Labour party platform it can do so by extending the operations of the Commonwealth Bank in the way I have suggested. It may be argued that buildings of a suitable character are not available for this purpose ; but they could easily be obtained in the cities and large towns of the Commonwealth, and office accommodation could be made available for the purpose in the post office buildings in the smaller villages of our country districts. The Government could make provision for the establishment of a branch of the Commonwealth Bank wherever it was needed. I do not intend, as some honorable members opposite have suggested, to make money orders or postal notes legal currency. My only object in suggesting that part of the post office buildings should be made available for the transaction of banking business, is to overcome a practical difficulty. There is nothing novel in my suggestion. It is possible under the laws of Germany and Italy to frame regulations to exclude private banking institutions from operating in certain districts. I believe that this is also true of France. The Governments of those countries have authority to compel certain industries to conduct all their operations through the national financial institutions. The acceptance of this new clause would lead automatically to the operation of the cheque pound system by the nation for the nation, whereas to-day it is operated by private institutions. The Government could assume the responsibilities of the private banking institutions to their depositors, and the private institutions would be obliged to close their doors. I urge honorable members to vote for this new clause, because it will restore to the nation the usurped prerogative of the control of the nation’s currency, and enable the Government to make the credit of the nation available to the people. It will also make possible the raising of money without the flotation of expensive loans through private banking institutions. These loans are based on the fraudulent cheque-pound system which the banks are offering. If my proposal is adopted the Government will be able easily to obtain money for expenditure on public works, and without incurring a heavy load in interest debt. The credit so obtained could be gradually cancelled by the proceeds of taxation, which, under our present system, go to the payment of interest, but which, under my system, would go to the redemption of debt. If the control of the cheque pound system were assumed by the Government, the credit necessary for the conduct of public works could be gradually redeemed, although the works created by the credit would remain for the benefit of the people. I expect all the members of the Labour party in this chamber to vote for this new clause. I do not expect honorable members opposite to do so, for I expect nothing but foolishness from them. The members of the Labour party signed a pledge prior to their endorsement as Labour candidates that they would do their utmost to put into operation at the earliest possible moment the third plank of the Labour party platform, the nationalization of credit and banking, as well as the other planks of it. Here is an opportunity for them to redeem their pledge. I am tired of seeing the planks of our platform being used as political placards. It is time that we ceased our academic discussions of these principles, and did something to put them into effect.
.- I support the new clause. It will be opposed only by those who are willing to allow the existing financial system to remain unchallenged, or by those who are accustomed to the idea that, by dealing with the cheque pound system, as proposed by the mover of the clause, we shall place the effective control of the country’s currency in the hands of the Government. “With the development of the banking and cheque system people became more and more accustomed to depositing their gold and notes in the banks, and meeting their ordinary business obligations by the use of cheques. That in its turn gradually placed in the possession of the bankers a greater amount of coin than previously, because of the money deposited the proportion demanded in cash by the public was comparatively small. Before the war it was considered safe for the banker to keep £15 of cash for every £100 deposited. This system has enabled the bankers to entrench themselves in the position they now occupy. If we examine the actual banking procedure when £100 is deposited, we obtain some knowledge of the background of the present distressed condition of Australia. Against the original deposit of £100 an average of £15 of legal tender must be kept in the till, leaving £85 available for loan to another customer. It is true that the borrower might demand his loan in cash, but the average of 15 per cent, applies to him no less than to the original depositor; therefore, the bank keeps in cash, only £12 15s. of the £85, leaving £72 5s. available for loan to a second borrower. Of that amount the 15 per cent, margin, is £10 17s., leaving £61 8s. available for loan to a third borrower. So it goes on until each £100 of original cash deposited gives to the financier a margin of business traffic amounting to £666 13s. 4d., of which £100 is due to the depositor, and £566 13s. 4d. is owing to the bank by the borrowers. By processes which we consider fraudulent the original £100 has been manipulated by the bank in such a way that it has created a debt of £566 owing by thepublic to the banker. The mover of the amendment quoted some arresting figures regarding the extraordinary margin of operations possessed by the bank under the existing cheque system. To the statistics quoted by the honorable member I add the following: In 1927 ten of the principal London clearing banks had current deposit and other accounts amounting to £1,704,789,546. Against that they held in coin and notes and balances with the Bank of England a total sum of £195,886,110. The ratio of cash to current and other accounts was only 11.5 per cent. If the Government is sincere in its challenge to the existing financial institutions, if it really believes that cur rency should be controlled by the State, the amendment should meet with the approval of every one of its supporters, and also, I trust, of a majority of members of the Opposition.
Question - That the proposed new clause be inserted - put. The committee divided. ( Chairman - Mr. McGrath.)
Majority . . . . 56
Question so resolved in the negative.
Proposed new clause negatived.
Title agreed to.
Bill reported without amendment.
Motion (by Mr. Beasley), agreed to -
That the bill be recommitted for the reconsideration of clause 2.
In committee: (Recommittal).
Clause 2 -
This Act shall commence on a date to be fixed by Proclamation.
Amendment (by, Mr. Beasley) proposed -
That the following words be added: - “ such date being within fourteen days after the date of the assent to this Act “.
.- Apparently the Government proposes to accept this amendment. It only goes to show that the Government knows quite well that the bill will never come into operation, because no responsible government of average intelligence would otherwise accept an amendment of this character.
Amendment agreed to.
Clause, as amended, agreed to.
Bill reported with an amendment.
Reports - by leave - adopted.
– I move -
That the third reading be made an order of the day for a later hour this day.
– I object to leave being granted.
– Surely the motion must be in order. It is merely the customary motion fixing the time for taking the third reading.
– The motion is to the effect that the Treasurer have leave to take the third reading of the bill at a later hour this day.
– I object to that. The Standing Orders lay it down that a matter of which notice of motion has been given cannot be discussed the day on which notice is given.
– It is necessary that leave be obtained if the third reading is to be taken on the same day. It is permissible, however, to move the suspension of the Standing Orders, pursuant to contingent notice, if leave is refused.
.- I invite your attention, Mr. Speaker, to Standing Order 182, which stipulates that when a report is finally adopted a later day shall be fixed for consideration of the third reading. That is the practice generally followed. On this occasion, however, the Opposition is prepared to fall in with the Government’s wishes.
Motion (by Mr. Scullin) agreed to -
That the Standing Orders be suspended to enable the third reading of the bill to be taken this day.
Motion (by Mr. Theodore) agreed to -
That the third reading of the bill be made an order of the day for a later hour this day.
Assent to the following bills reported : -
Post and Telegraph Rates Bill.
Wine Export Bounty Bill 1931.
Message recommending appropriation reported.
In committee: (Consideration of Governor-General’s message) .
Motion (by Mr. Theodore) agreed to -
That it is expedient that an appropriation of revenue and moneys be made for the purposes of a bill for an act relating to the issue of a fiduciary currency.
Resolution reported and - by leave - adopted.
Motion (by Mr. Theodore) agreed to -
That the bill be now read a third time.
.- by leave- In 1926, Parliament approved of a grant of £300,000 a year to Western Australia for a period of five years, which terminates this year. The Premier of Western Australia has submitted a request for a grant of £450,000 a year from the 1st July next, and the Government has invited the J oint Parliamentary Committee of Public Accounts to examine this request, subject to the following terms of reference : -
Inquire into and report upon the following questions : -
Whether the State of Western Australia is subject to special disabilities arising out of federation and affecting the finances of that State.
Whether the State of Western Australia enjoys special advantages arising out of federation and affecting the finances of that State.
Whether any such special disabilities exist which, after taking into account -
any such special advantages; and
estimated shortages or surpluses as at 30th June, 1931, in the Revenue Accounts of the Commonwealth and of each of the States, justify financial assistance being granted to the said State under section 96 of the Constitution ; and
If it is found that the grant of financial assistance is so justified, the amount of financial assistance which should be granted, and the period, commencing on the 1st July, 1931, which should be covered by the grant.
The Government proposes to deal with the question of financial assistance to South Australia, Western Australia, and Tasmania, in conjunction with the budget for next year, and it desires to have the benefit of the committee’s recommendations on a common plan. It has, therefore, invited the committee to examine the request of South Australia, and to review its recommendations relating to
Tasmania, subject to terms of reference identical with those now set out for Western Australia. The committee has been asked to submit its recommendations for the three States simultaneously and not later than 31st May next.
. -I move -
That the Schedule to the *Customs Tariff* 1921-1930 be amended as hereunder set out, and that on and after the Twenty-seventh day of March, One thousand nine hundred and thirty-one, at nine o'clock in the forenoon, reckoned according to standard time in the Territory for the Seat of Government, Duties of Customs be collected in pursuance of the *Customs Tariff* 1921-30 as so amended (in lieu of the duties specified in Tariff Proposals). That in this Resolution " Tariff Proposals " means the Customs Tariff Proposals introduced into the House of Representatives on the following dates, namely : - 21st November, 1929 ; 11th December, 1929 ; 19th June, 1930 (other than Proposal imposing special duty of Customs) ; 9th July, 1930 ; 25th July, 1930 ; 5th November, 1930 ; and 3rd December, 1930. That the Duties of Customs hereunder set out shall be deemed to be an amendment of the Customs Tariff Proposals introduced into the House of Representatives on the 19th June, 1930, within the meaning of the second paragraph of the Resolution introduced into the House of Representatives on the 19th June, 1930, imposing a special duty of Customs. That, excepting by mutual agreement or until after six months' notice has been given to the Government of the Dominion of New Zealand, nothing in this Resolution shall affect any goods the produce or manufacture of the Dominion of New Zealand entering the Commonwealth of Australia from the Dominion of New Zealand. By omitting the whole of Prefatory Note (2) and inserting in its stead the following Prefatory Note:- " (2) " Proof " or " Proof Spirit " means spirit and gazetted substitutes therefor of a strength equal or equivalent to that of pure ethyl alcohol compounded with distilled water so that the resultant mixture at a temperature of 60 degrees Fahrenheit has a specific gravity of 0.91976 as compared with that of distilled water at the same temperature." By omitting the whole of Prefatory Note (7) and inserting in its stead the following Prefatory Note : - " (7) Unless the Tariff otherwise provides or the Minister otherwise directs, any goods composed of two or more materials shall be deemed for the purpose of classification to be composed wholly of the material of chief value in the goods, provided that when the respective materials are of equal value the goods shall be deemed for the aforesaid purpose to be composed wholly of the material that would make the goods liable to the higher or highest rate of duty.' By adding a new Prefatory Note (11) as follows : - Whenever goods are composed of two or more separate articles, even though such. articles are specifically mentioned in the Tariff, the Minister may classify the goods under such item or items as he directs."
Cite as: Australia, House of Representatives, Debates, 26 March 1931, viewed 22 October 2017, <http://historichansard.net/hofreps/1931/19310326_reps_12_128/>.