14th Parliament · 1st Session
Mr. Speaker (Hon.G.J. Bell) took the chair at 10.30 a.m., and read prayers.
– Has the Minister directing negotiations for trade treaties information proving the correctness or otherwise of the report that appears in to-day’s press to the effect that the international wheat agreement has been extended for a period of two years ? If the report be correct, can the honorable gentleman state the terms of the renewal?
– The Government has received no intimation of any such extension, and is of the opinion that it has not been made.
– Can the Minister for the Interior indicate what possibilities there are of voting power in this House being conferred upon the newly-elected member for the Northern Territory, failing which that honorable member intends, according to his own announcement, to resign in three months?
– Ishall await developments with a good deal of interest.
– I ask the Assistant Treasurer whether sales tax is charged upon sales of second-hand furniture and farm machinery. If it is, how many times can the tax be imposed? If repeatedly, may it not soon exceed the value of the goods, and, with each resale, cause undue hardship to be placed on the purchaser, there being no means of checking previous sales? Is the honorable gentleman aware that hardship is now being caused on this account, and will ne institute inquiries with a view to having the act administered more sympathetically ?
– The honorable member has raised a point of some complexity, with which I havehad to deal in correspondence that has passed between me and several honorable members, of whom the honorable member possibly is one, within the last few months. The question does not lend itself to an immediate answer because of the many qualifications involved. If the honorable member will place his question on the notice-paper, or write to me on the subject, I shall see that he receives a reply.
– Is the Minister for the Interior yet in a position to reply to the urgent representations that have been made to him on behalf of the Nedlands Roads Board, concerning the desirability of the Commonwealth assisting to maintain the road to the Swanbourne rifle range ?
– I am not yet in a position to give the honorable gentleman a definite reply, but the matter is receiving my attention.
-Will the Prime Minister indicate whether there is a prospect of the Government restoring the invalid and old-age pension to £1 a week prior to Christmas ?
-I have no hesitation in saying that there is no prospect of this action being taken before Christmas.
Speech of Right Hon. S. M. Bruce
– Yesterday the honorable member for Swan (Mr. Gregory) asked, upon notice, a question in relation to a speech, which was reported to have been made by the Right Honorable S. M. Bruce, High Commissioner for Australia in London, regarding Indian affairs. I have just received the following cablegram from the right honorable gentleman: -
Your telegram of 22 November, speech at Stoke-on-Trent. I did not make statement as reported. 1 did make a brief reference to India but that was solely because the question of India was mentioned when my health was being proposed. I indicated quite definitely that I could not express any view on the questions at issue, although they were of course of great interest to all parts of the Empire, but that I had no doubt the British Government and the British people would display thesame spirit of generosity and the same wisdom as had marked’ their relations with the self-governing dominions in the evolution of their aspirations. I need hardly say I have always been scrupulously careful to avoid any suggestion of intrusion in controversial issues of this kind.
– Will the Prime Minister give favorable consideration to the matter of establishing within Australia an institution devoted to the training of Australia’s fine young manhood, so that they may be properly qualified to sojourn in parts <beyond the seas, there creating, by the exercise of practical and scientific ability in salesmanship, markets for the disposal of Australian production, and so assisting to provide constant employment for the whole of our people?
– I undertake to give consideration to the matter raised by the honorable member.
The following papers were presented : -
Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - No. 31 of 1034 - Amalgamated Postal Workers Union of Australia.
Transport Workers Act - Regulations amended - Statutory Rules 1934, No. 140.
Motions (by Mr. Lyons). - by leave - agreed to -
That the Chairman of Committees shall on each sitting day during the absence of Mr. Speaker take the Chair as Deputy Speaker, and may perform the duties and exercise the authority of Mr. Speaker during such absence.
That during the unavoidable absence of Mr. Deputy Speaker, Mr. Speaker be authorized to call upon any of the Temporary Chairmen of Committees to temporarily relieve him in the Chair.
Bill brought up by Mr. PATERSON, and read a first time.
Debate resumed from the 22nd November (vide page 521), on motion by Mr. Casey -
That the first item in the Estimates under Division 1 - The Senate - namely, “Salaries and Allowances, £7,182”, be agreed to.
Upon which Mr. Beasley had moved, by way of amendment -
That the item be reduced by 10s.
– I feel that I should be ungracious did I not thank the honorable member for Griffith (Mr. Baker) for having included me last night in his long list of men who have been most successful in various walks of life, and have served Australia extremely well. Although I fear that my inclusion in that distinguished list is at any rate premature, I nevertheless hope that in time I shall have served Australia so worthily as to be entitled to mention in the same breath as many of those gentlemen to whom the honorable member referred. I trust that he will not think me discourteous if I do not engage in a debate upon their qualifications. I feel that it is the function of this National Parliament to discuss the problems of the whole of Australia, and not to glorify or villify individuals. Later, I may be able to deal with the honorable member’s rather amazing contention, that success in some walks of life disqualifies one from becoming a representative of the people in this Parliament.
I intend to deal with some of the obstacles confronting rural rehabilitation, but I fear that in doing so I shall incur the displeasure of the honorable gentleman who previously flattered me, for I shall speak as one having knowledge of the subject because of my experience as a farmer and grazier, and as a trustee for many widows and orphans. It would appear that, in some quarters, it is regarded as wrong for an honorable member to address himself to a subject of which he has knowledge; but I must take the risk of incurring the wrath of those who hold that view. In this debate, the problems of unemployment and rural rehabilitation have figured prominently; the former having been given the greater emphasis because, naturally, the misery resulting from unemployment is more apparent to honors able members than that which exists among the farmers. It may well be argued that if all who are now unemployed were given work at good wages the problem of rural rehabilitation, if not entirely solved, would be less acute. But, in my opinion, the converse is even a sounder argument, for I do not think that the unemployment difficulty can be solved until our primary industries have again been restored to prosperity. Employment is founded on the prosperity of the country generally, which, in the final analysis, means the prosperity of its exporting industries. For that reason, I submit that the first necessity is the restoration of prosperity to those industries. To such an extent have generalities been indulged in during this debate that a visitor might well have formed the impression that some honorable members imagine that, by the passing of legislation to declare rural industries rehabilitated, they would, in fact, be rehabilitated. The honorable member for Kennedy (Mr. Riordan)suggested that the Government should abolish unemployment. I fear that these problems will not be solved by any such display of legislative genius.
– - The problems will not be solved unless a start is made to do so.
– Our best start is to consider one by one the obstacles in the way of recovery. I cannot entirely disagree with those Opposition speakers who have claimed that the present high prices of government stocks are not due wholly to confidence in the present Government. Confidence has been restored because Australia has followed the path of honesty; but I readily admit that the present abnormal prices of government stocks, and the willingness of investors to lend money to governments at low rates of interest, are evidence of other things as well. When I heard it suggested by one honorable member that the present high price of government stocks is evidence of lack of faith in private enterprise, -I thought that it was amazing reasoning, and therefore made a comparison between the low-level prices of 1931 and the prices on the 15th of this month of a representative group of shares in industrial concerns as quoted on the stock exchange. I found that whereas during that period the price of government stocks showed an average increase of over 35 per cent., the increases in the cases of the companies selected were -
The average increase was over 165 per cent.
– That list merely shows that the holders of those stocks have done well, while others have starved.
– It confirms what we on this side contend.
– If I were to argue superficially, I might say that those increases prove that confidence in private enterprise is four times greater than in government loans. I shall not adopt that attitude, however, for I agree with the honorable member for Fremantle (Mr. Curtin), that it is not altogether a healthy sign; it shows a lack of confidence somewhere. It is our duty to find the causes, and remove them. One cause is the unwillingness of investors to lend money on mortgage. Indeed, that avenue for investment has almost entirely closed. A solicitor whose principal business is the preparation of mortgage contracts and the finding of suitable investments for people with money, told me recently that e could not remember when he last prepared a mortgage contract, because of the unwillingness of investors to lend money on mortgage to farmers.
– Most of that work is now done by land agents.
– The Government should recognize that there can be no satisfactory scheme of rural rehabilitation until there is a greater willingness to lend money to the farming community at lower rates of interest than are now charged. If the confidence of investors in farm mortgages is to be restored, the State governments must revise their legislation dealing with moratoriums and relief to farmers. In saying that, I am not attacking the State governments for having in«troduced such legislation. In my opinion, it was necessary in the abnormal circumstances due to the depression to introduce measures of that kind in order to prevent unfair advantage being taken of the plight of the farmers. That class of legislation has, however, not operated as was anticipated, because it has almost entirely removed the Tights of the creditors. That effect is, perhaps, more the result of the administration of the legislation than of the legislation itself. There has been a tendency to regard the term “ creditor “ as being synonymous with “ Shylock “. I realize that in drawing attention to this aspect of the subject I am liable to be misinterpreted and accused of having no sympathy with the farmer in his difficulty. That is not the case. I mention it only because, if we are to help the farmer, we must restore confidence in lending money on mortgage. In order to illustrate the operation of the legislation providing for moratoriums and relief to farmers, I shall cite three cases. These are not in any way connected with the trustee company with which I am associated. It would be most improper for me to refer to the private business handled by the company, even though I did not mention names. Two of the cases to which I shall refer were brought under my notice in my electorate, the third relates to a returned soldier friend in New South Wales, and I shall deal with it first. Immediately after his return from the war, he began farming in the Riverina district, and between 1919 and 1928 managed, by great industry and living most frugally, to build up an equity of about £3,500 in his farm. In 1928, he decided to sell his farm and obtained a satisfactory price for it. The consideration included £3,500 in cash. He was among the fortunate few to effect a sale for a large percentage of cash. He decided to look round before reinvesting his money, and did not buy another property until 1930. In the meantime, he had spent about £500 of his capital on living expenses and a trip, and he used the other £3,000 in part payment for another property, and on plant and stock. He found that the new farm was somewhat larger than he thought he could handle efficiently by himself, and subsequently sold it at a profit of £1 an acre. But, unfortunately, for him, the sale was made on a very small cash deposit. Later, he bought a closer settlement block, which he hoped to stock on the interest and instalments received from the sale of his second farm. But no such payments ever reached him. The man to whom he sold the property - a not very efficient farmer - found that he could not possibly carry on at a profit, and after about a year, he did not bother even to fallow the land. The returned soldier, a little later, took action to recover the farm, but was not successful. From then on the occupier of it allowed the property to go to rack and ruin, and at the end of three years, the returned soldier was given re-possession. But the farm was then in a hopeless state of neglect, and it was not possible for him to get any return in the first year because the land had not been fallowed. The interest on the first mortgage had then grown to such large proportions that he could not carry on and was rendered destitute.
– What is the deduction from that illustration?
– That the creditor should be given some rights, and that man after man is being ruined by this legislation, because it is not achieving the purpose for which it was intended. Where one man has obviously failed, two men are again and again ruined because of the way in which this legislation is operating.
The second case to which I shall refer is similar. A man sold a dairy farm for £6,500, receiving only £1,000 in cash, which did not cover the value of the stock and plant. He purchased another property, but was unable to obtain either interest or instalments from the sale of his first farm, and it was on these that he was relying to maintain and improve his new property. The farmer who bought the first property did not work it properly and let it depreciate, while the original owner, having bought the second farm on the assumption that he would have his interest and instalments to help him through, became destitute because these instalments were not received. It will be seen, therefore, that the men who were supposed to receive protection from this moratorium legislation are not actually benefiting from it. In fact, the reverse is often the case.
– But surely a creditor is always protected by the moratorium legislation, at least to the extent of his interest.
– That is not so. I am referring to this subject, not because it is in the power of this Parliament to alter the legislation, but so that the representatives of the Government, in discussing rural rehabilitation with the representatives of the State governments, may see that adequate steps are taken to preserve the rights of creditors.
The third case to which. I draw attention relates to an elderly couple whom I met at Koo-wee-rup during my election campaign. They said to me: “We have always supported your party, but we do not feel inclined to continue supporting it because of the iniquitous effect of the farmers’ relief legislation that is operating in Victoria.” I did not inform them that this measure was placed upon the statute-book by the Hogan Government, for I felt that any party in power at that time would probably have introduced similar legislation. These people told me that during their long married life they had gradually cleared, drained, and improved a farm on the Koo-wee-rup swamp area, and had brought it into profitable production. As some honorable members opposite say frequently when referring to old-age pensioners, this couple had borne .” the burden and heat of the day “. They then decided that they had reached an age when they were entitled to retire, so they leased their farm. The lessee, however, subsequently took advantage of the farmers’ relief legislation and refused to pay rent. The old couple are unable to obtain the old-age pension, because, theoretically, th«y possess capital amounting to between £3,000 and £4,000.
They are practically destitute at Kooweerup, and see the person who has leased their farm drive into the town every week in a motor car, purchase the provisions he - requires, and then drive home again. Interest is not even being paid on the first mortgage. The old couple arc, therefore, in the unhappy position of not only being destitute, but also of seeing the fruit of a lifetime’s battling evaporating because the unpaid interest on the first mortgage is month by month obliterating their equity.
I ask the representatives of the. Government to take cases of this kind into earnest consideration when they discuss rural rehabilitation with representatives of the State governments. The words “ creditor “ and “ Shylock “ are not synonymous. Many people say that if this moratorium legislation is not interpreted as it is at present, large areas of land will go out of productivity. That, however, is absurd. In most cases, people who have leased or sold properties, and are not receiving any interest payments or instalments of capital, would be prepared to go back on the properties and work them themselves. No trustee would resume a farm unless he knew that he could sell it, or in some way keep it in productivity and make a profit out of it. In the days before the depression, and before this moratorium legislation came into operation, and so caused a loss of confidence in farm property as security, a farmer could readily borrow money at a rate of interest about 20 per cent, in excess of the rate charged for money lent to the Government. To-day, the difference between interest rates on mortgages and those on government loans is 50 per cent. This is almost entirely due to lack of confidence in the security offered by mortgagors. I appeal to the Parliament, the Government and the people of Australia generally to face this problem courageously and honestly. In most cases the people in this position are retired farmers or widows or orphans of farmers. I know that in the suburbs of every capital city of the Commonwealth are many people who are in destitute circumstances because they retired, hoping to live on the proceeds of a lifetime of toil and thrift but cannot obtain payment of any of the money due to them. I could appeal in their interests; but I am attacking the problem from another angle. It is essential that the farmers shall be able to obtain money at a reasonable rate of interest to enable them to carry on their operations.Frequently people have come to me, partly, I suppose, because I am a member of Parliament, and partly, also, because I am on the board of directors of a trustee company, and have said, “ We have such and such a debt on our property. If we could only borrow a certain amount of money at a reasonable rate of interest to repay that debt, effect necessary repairs, and liquidate certain other debts that have accumulated during the depression, we could carry on. Can you tell us where money can be obtained at a low rate of interest for these purposes?” I have had to reply that I did not know. To-day trustees do not feel that they can lend money on broad acres unless a particularly giltedged security is offered.
I do not think that I owe honorable members an apology for having occupied their time with a subject which, strictly speaking, is not a concern of this Parliament. I am fortunate in not having any particular interest in the matter, either as a mortgagor or as a mortgagee, except in my capacity as a trustee; but I can see the urgent need for action along the lines I have indicated.
In conclusion, I wish to refer briefly to the quaint contention of the honorable member for Griffith (Mr. Baker), that it is quite wrong for members in this House to have interests in any other walks of life. On that basis, probably only one member of the House would be entitled to retain his seat. I refer to the honorable gentleman who had the misfortune to be unemployed when he was elected. In my opinion the great majority of the people of Australia feel that membership of this Parliament should not be entirely confined to professional politicians, and that persons who have a practical knowledge of other phases of our national life are better qualified to represent their fellows than are those not so equipped. The honorable member for Griffith referred to the fact that many honorable gentlemen on this side of the House have succeeded in their walks of life, implying apparently, that they were thus disqualified from having any say in the governing of this country. I take the opposite view. 1 understand that the honorable member was secretary of a public service union. I hold that that experience is a qualification for a seat in this House, because of the intimate knowledge he must have gained of the problems of the Public Service, and presumably of unionism generally. And other sections of the community also are entitled to be represented by men who have acquired knowledge as a result of practical experience in particular spheres.
– I was not secretary of the union and I resigned from the service in order to enter this Parliament; I did not hold two jobs at the one time.
– Possibly that was the law of the union.
– No; the Commonwealth Constitution precludes a member of Parliament from holding any office of profit under the Crown.
– One of the foremost criticisms directed against the National Capital is that when members are elected to this House they are inclined to lose touch with the activities with which they are normally associated in private life. I agree with that objection. Coming to Canberra, it is very difficult for honorable gentlemen to keep in touch directly with the business and practical life of the nation. Everything we do to keep Parliament in touch with public opinion and the practical affairs of the community will be so much to the good. I am opposed diametrically to the views expressed by the honorable member for Griffith. When I was invited to stand first for the Warrnambool seat in the Victorian Legislative Assembly, and later for the Flinders seat in , this Parliament, the arguments advanced by those who approached me were that I was qualified by a fairly wide knowledge of the practical life of the community. Because of that knowledge I felt that I was in a position to endeavour to render some service to the country and I accepted the invitations. The honorable member referred to my membership of a club with which I. am very proud to be associated, and, of which curiously, my only criticism is that its members generally do not take a sufficient interest in the public life of this country - an opinion which I have expressed both in and out of that club. The honorable gentleman suggested that I have an appalling disqualification for membership of this Parliament, in that I am a director of a trustee company, which looks after the interests of widows and orphans. The honorable member would have done complete justice to me if he had referred to the further fact that I was for sixteen months in prison. Possibly, in his view, that is a better qualification than my other experiences; at any rate, it would establish a bond of sympathy between me and at least one other member of this House. I conclude by reiterating my view that the more honorable members associate themselves directly with the practical business of Australia the better it will be for the people as a whole.
– I support the amendment. I have been very much interested in the speeches delivered by the honorable members for Flinders (Mr. Fairbairn) and Martin (Mr. McCall). One cannot help being impressed by some statements made by honorable members opposite because so few of them make any statements at all. I agree with many of the views expressed by both these honorable gentlemen, but I am in total disagreement with other views which they have expressed. My complaint against the honorable members I have mentioned is that they talk all around a subject without getting down to the basic facts. For instance, they have expressed sympathy with the unemployed people of this country. The honorable member for Flinders candidly admitted that the rural industries were in a bad position, and suggested that if we could put the unemployed back to regular work at good wages the problem of rehabilitating our rural industries would be solved. The logical deduction from that statement is that the honorable gentleman should be voting with honorable members on this side of the House, because he would then be supporting proposals designed to put the unemployed back to work, and thereby rehabilitating the industries which he directly represents.
The honorable member for Martin appeared to be largely in sympathy with the views expressed by members on this side regarding the need for tackling the problem of unemployment. He said that this was a very difficult and far-reaching problem, that it was one of the fundamental causes of the economic trouble in Australia and elsewhere, and that it could not be solved by any revolutionary methods. Every honorable member on this side of the House agrees that the problem is immense and cannot be solved overnight by any short, sharp, revolutionary process. No economic revolution in the history of the world has yet been brought about by a short and sharp, or, in fact, by any, process. The honorable member went on to say that the present economic system should be changed by a process of gradual evolutionary reform, and added that he agreed with members on this side that some change was imminent, and that no economic progress could be made in this country unless new methods were adopted. But after expressing those views, he made no suggestion to the Government as to how it should make a more direct effort to bring about the reforms which he and his fellow members admitted to be necessary. After declaring that he was in sympathy with any effort that might be made to improve present conditions, he said that Australia economically was in a better position than any other country. In a sweeping statement he declared that Australia’s unemployment position had improved to a greater extent than that of any other country.
– I said the percentage of improvement was higher here than in any other country.
– The honorable gentleman declared that our . unemployment position was superior to that of any other country, but he qualified that statement by quoting figures to show that the margin of improvement had been greatest in Australia.
– And that is correct.
– Both statements made by the honorable gentleman are incorrect, though they are based on the figures supplied by this Government to the International Labour Office at Geneva. Those figures represent only members of trade unions who are registered as unemployed, and we must remember that the membership of those organizations has decreased by tens of thousands during the depression because of the fact that unemployed men could not pay their union dues, and, becoming unfinancial, were struck off the register of members. Thus these figures represent only unemployed men who are still financial members of those organizations, and the percentage of unemployed members steadily decreases as the evil of unemployment grows, and the necessitous members leave the organizations. Those who drop out of the unions are not covered by the returns sent to the Commonwealth Statistician. However, incomplete as these returns are, they do not reveal Australia’s unemployment position in comparison with that of other countries as favorably as the honorable member suggested. In March, 1933, the percentage of unemployed in Australia was 26.5, and in the corresponding month of 1934, it was 21.9. In Canada for the months of May, 1933, and 1934, the percentages of unemployed were 24.5 and 19.1 respectively. In Sweden the percentages for May in each of these two years were 24.8 and 20.2 ; and in the United States 25.8 and 19.9 The margin of improvement in the United States was 5.9 as compared with 4.6 in Australia, whilst the total percentage of unemployed in the United States of America was 19.9 as against 21.9 in Australia. The percentage of unemployed in the United Kingdom, which the honorable gentleman surely cannot overlook in any comparison such as this, was 20.4 in May, 1933, and 16.3 in May, 1934. I invite the honorable member to compare that drop with the decrease in Australia for the same period. In Germany the percentage of unemployment in June, 1933, was 26.9 and in the same month of the following year, 13.6, which represents an improvement of 13.3 per cent. These figures are taken from official returns supplied to the International Labour
Office in Geneva, which is recognized by authorities in all countries to be the best equipped office of its kind in the world, and the only international machine in existence which enables us to make reliable comparisons of this nature. These figures do not bear out the sweeping statement made by the honorable member for Martin that Australia’s unemployment position to-day is the best in the world and that our margin of improvement for the latest period for which figures are available has been the greatest. I quote these figures, not simply for the sake of splitting straws, but because it is necessary to correct the general statement made by the honorable member. Even though we have reduced our percentage of unemployed to 21.9, surely no honorable member can see in that figure reason for gratification. The fact that 21.9 per cent, of our people are out of employment should inspire us with a more earnest desire to deal effectively with this problem. The honorable member has given a good deal of consideration to economic problems, and I hope that he will be able to assist the committee by informing its mind upon the best methods to adopt in attempting to solve them.
I agree with his statement that we cannot solve our financial problems by any short and sharp revolutionary method. I concur in his opinion that we should adopt progressive, evolutionary methods. The honorable member, however, does not assist the Opposition to force the Government to carry out the policy which he advocates. He hides behind certain statements which he has made to excuse the Ministry’s inaction. For instance, in speaking against the proposals of the Leader of the Opposition, he said that the Commonwealth Bank could not assist in solving our financial problems, and that the more flexible we made our currency system the more difficult would those problems become. He went to Russia for an illustration, though he could have quoted an authority nearer home. He misrepresented the situation in Russia. Though we know little about that country, some learned writers and economic students have informed us of the methods adopted there for obtaining credit. They agree that the Russian Government has raised credit from the workers themselves, and gives them 10 per cent, interest for the loan of their money. If we are to be fair, we must consider the background of the situation in Russia as compared with that in Australia. Russia is facing the problem of a scarcity of commodities, while Australia, curiously enough, has a superabundance of them. Wage-earners in Russia receive more money than they can spend, because their great experiment has not yet reached the stage at which it will be possible for them to enjoy a standard of living as high as their wages would permit. So the Government issues bonds to the workers, who give back portion of their wages, and, as I have already indicated, they are receiving interest as high as 10 per cent, upon the amounts loaned to the State. Whether they will ever collect that interest remains to be seen. The Government of Russia raises this credit by its internal system of exchange. Sir Basil Blackett, who still sits on the Board of the Bank of England, recently told the public that his own conscience would not be satisfied if he did not make it known that a fundamental alteration of our monetary system was necessary, and that countries such as Australia, which are more or less self-contained, could, by making their internal currency more flexible, tackle the problem that confronts them, and relieve the people of the misery they are now experiencing. Surely an authority such as he was worth quoting rather than the experiment in Soviet Russia. The reason why speakers are fond of referring to the Russian experiment is that the mind of the world at large has been, and still is, largely prejudiced against that country, and to quote the Russian situation is to condemn the methods adopted there.
Dealing with the problem of the utilization of our national resources, in order to release credit, and make possible a freer exchange of goods and commodities, a committee of experts was appointed by the Southampton Chamber of Commerce in June, 1933, to inquire into what was described as the economic crisis. After fully investigating all the causes and effects of unemployment, and the consequent losses in world trade, the committee stated -
Thus from whatever angle it ia viewed, we have tha situation of widespread industrial stagnation with producers, capable of production, and millions in want of the very thing which can be produced in abundance.
Ou the prima facie evidence, the fault in thu economic system lies in tic machinery responsible for the transfer of goods from productive industry and individuals of the community.
This link between production and consumption is money. In order that it should function smoothly the quantity of money should always be sufficient to provide the community with the purchasing power to have access to the goods and services available.
As creation of money by the banking system can be effected” as and for any purpose they consider desirable, it would seem that a power nothing less than the control of the entire economic activity of the nation is vested in a private monopoly.
The aim of the Labour party is to change this private monopoly, which naturally functions in the interests of its own shareholders, to a national monopoly owned by the people, which would function in the interest of the whole community.
The honorable member for Martin went on to say that we should do more harm than good if we tried to carry out what he styled the wild-cat proposals of the Opposition, in order to use the Commonwealth Bank to supply the credits necessary for public works, by means of which the unemployed might be put back to work. The Assistant Treasurer (Mr. Casey) stated a few days ago that the Commonwealth Bank, if it desired, could advance the whole of the £15,000,000 which the Government requires. By borrowing this money in the usual way, half of the amount to be raised will have to be paid back to the lenders in interest and expenses ‘before the date of the maturity of the loan. In answer to a question, the assistant Treasurer said that there was nothing to prevent the Commonwealth Bank from providing the credit if it wished to do so.
– I said that it could, in a technical way, because the Government would do nothing to prevent it.
– Quite so. I inferred that there was nothing to prevent the bank from meeting the financial requirements of the Government.
– Except a desire to avoid blatant inflation.
– The supply of all the financial needs* of this country through that institution would not involve blatant inflation. In the last speech that was broadcast by him to the people, the late Sir Robert Gibson made a statement which will probably be historic, though it was practically a reiteration of a remark made by the late Sir Denison Miller, the first Governor of the bank. Sir Robert Gibson felt that a financial panic was developing, and that the private banks would probably find themselves in difficulties if some assurance were not given to the public of Australia. After pointing out that the Commonwealth Bank was as safe and sound as a rock, he said -
People of Australia, the Commonwealth Bank can meet any demand which is placed upon it by ite customers. The bank will never close ite doors so long as the nation its eli stands.
The Assistant Treasurer knows that Australia occupies a high position in the eyes of the money lenders of the world. So long as I can remember, the order in which the nations have been placed, from a credit point of view, has been “ Great Britain, Canada, Australia.” This country has never been lower than third on the list. So long as we have had a Federal Arbitration Court, I have been making that statement in defence of the honour, integrity and stability of Australia, and it was always accepted by the judges of the court when the assertion was made by legal men, on behalf of employers, that Australia’s credit was not high. The Leader of the Opposition (Mr. Scullin) and other honorable members on this side have repeatedly explained why the Commonwealth Bank does not issue credit for the Government, and thus earn interest for the people of Australia to assist further in providing work for the unemployed, instead of the money being returned to the pockets of private individuals. Of course, I attach no blame to a director or private shareholder of any bank for trying to obtain all the business possible. The Opposition has declared time and again that the Bruce-Page Government hamstrung the Commonwealth Bank, and altered ‘the policy originally laid down, under which the bank was to operate fully and freely in the interests of the people of Australia, That original policy which was quite satisfactory, was continued until 1924, when the Bruce-Page Government amended it and the Commonwealth Bank, which was a real people’s bank, became what it now is, a private banker’s bank. Mr. Riddell, the Governor of the Commonwealth Bank, who accompanied the Commonwealth delegation to Ottawa in 1932, and also visited other parts of the world, expressed the opinion that the Commonwealth Bank Board should consult with other banking experts in order to obtain as much information as possible for its assistance in carrying on the work of that institution. I have no fault to find with that attitude; it is quite a proper one. But Mr. Riddell, while in London, made a further statement which I think some people in this country regretted, since it was quickly suppressed by the Australian press, although it appeared in the English newspapers and the Sydney Sun. It is reported that -
Addressing- a meeting of the Fellows of the Royal Empire Society at a luncheon in October, 1932, Mr. E. B. Riddell, manager of the Commonwealth Bank, stated that, although the Commonwealth Bank continued to conduct general business, that side of its activities was not pushed. The trading banks had bren advised that if they lodged their reserves with the Commonwealth Bank they would not be used in competition with the private banks for ordinary business, “ and that promise,” said Mr. Riddell, “ had been faithfully observed “. Moreover, the Commonwealth Bank’s policy was not to take advance business from private banks even with its own money-
Not with the reserves of the private banks, but not even with its own money. He went on to say -
When a customer of a private bank asked th’c Commonwealth Bank for accommodation the Commonwealth Bank undertook to ininvestigate his position, and, if satisfied that he was entitled to the accommodation, the private banks were, and are, notified and informed by the Commonwealth Bank that if they were prepared to do the business, they, the Commonwealth Bank, would withdraw from the negotiations. If not, the Commonwealth Bank would make the advances.’ In nearly every case, said Mr. Riddell, the private hanks made the advances.
What fools they would have been if they had not advanced the accommodation. Surely this statement proves that, as has often been said by the Leader of the Opposition and other members of our party, the Commonwealth Bank, instead of being a people’s bank, as it used to be, is purely a bank for the private banks. I would go further and say that the Com.monwealth Bank, according to Mr. Riddells own statement, is using portion of the revenues of the country to prosecute inquiries into the securities offered by those who want accommodation, and is then handing over to the private banks the results of its investigations. That is not right. Whether the policy of leaving certain business exclusively to the private banking institutions is right or wrong, will the Assistant Treasurer or any one else suggest that the policy of the bank is not the policy of the Government itself? The policy of the bank is, and ought to be, the policy of the Government. The Commonwealth Bank operates in the interests of the people and the only means by which the people can make their desires known is through the Parliament itself. The Government of the day, through this Parliament, conveys <o the Commonwealth Bank what it believes to be the correct interpretation ot the people’s mind.
– There is no direction.
– Then why did it after the policy laid down by the original governor of the bank?
– The Commonwealth Bank Board laid down its own policy under the act of 1924.
– But the Nationalist government appointed the board.
– Further evidence that the statement of the Assistant Treasurer is not quite correct is that when the Scullin Government was in office - it was never in power - it tried .to do what we suggest the Ministry should do to-day in order to seriously tackle the unemployment problem. The Scullin Government reached the conclusion that no inroads could be made on the unemployment problem unless it could get from the bank £20,000.000 for public works, and it suggested that £12,000,000 of that amount should be spent in tackling the unemployed problem. It was in agreement with the statement made to-day by the honorable member for Flinders that if we put the unemployed back to work and so created a demand for goods and services in this country, the rural industries would thus be rehabilitated. But when the Scullin Government tried to raise that money the Governor of the bank and the board, generally, replied that the accommodation could not be provided. Later on they qualified that announcement by saying, in effect, to the Government, “ You put through Parliament legislation that will unloose our hands, and make it legal for us to do what you ask us to do and we will do it.” The late Sir Robert Gibson did not say at any time that it was impossible to do what was asked of the board. He indicated the policy of the board, and suggested that if the necessary legislation were passed the board would do what was asked of it. The necessary legislation was passed by the House of Representatives. A majority of the members of this chamber elected by the people of Australia determined that the powers of the board should be made more elastic so that they might do this necessary thing; but in the Senate the bill was thrown out. That shows that political interference was brought into play - there was a political refusal on the part of the Nationalist majority in the Senate to allow the Commonwealth Bank Board to do what a majority of honorable members in this House believed to be necessary. I am convinced that no thinking person believes that the policy of a government bank is not determined from time to time by the Government of the country. I do not mean to suggest by that that the Government of the country interferes with the ordinary administration of the bank’s activities, nor indeed with the management of the bank itself. That, we say, should be left to experts just as Sir Basil Blackett, a director of the Bank of England, in his work entitled “ Planned Money “, wrote : “ The management of the bank left to experts? Yes, but the policy of the bank should be determined by tha Government of the country.” In other words, he says that the ordinary everyday book-keeping records of the bank’s operations should be left to experts, but that the determination of policy has been left too long to experts.
– Was Sir Robert Gibson’s refusal to make the advance referred to by the honorable member based on the ground that it was not a sound proposal?
– No, the reason given was that the existing legislation did not sanction it and he could not do it.
– What legislation?
– Legislation which, itwas claimed, tied his hands in regard to an increased note issue.
– Only in respect of a gross inflation.
– No, a reasonable increase of the note issue.
– In reply to the honorable member for Fawkner (Mr. Maxwell) the only objection raised at the time was that the board could not release any more credit having regard to the old requirement of a gold backing. He said it had strained its power, in that regard to almost breaking-point, and did not feel disposed to release any more unless Parliament gave it the necessary permission to do so.
– That is so. He said he would put eur proposal into operation if the Parliament passed, it.
– If directed to do so.
– No, if empowered by the Parliament to do so. Had that legislation been passed he would have issued an additional £18,000,000.
– The psychology of the bank is undoubtedly created by the Government of the day. The Nationalist party which was then in opposition to the Scullin Government created a fear that we might extend the power of the Commonwealth Bank Board, and that the hank might get into difficulties. Mr. Bruce and Mr. Latham said on several occasions, in answer to questions, that the Bank Board had already strained its power to the uttermost limit, and when the Labour Government, endeavouring to secure revenue to enable it to cope with the unemployed problem, suggested that we should send portion of our gold reserve to London and make a profit on its sale there, Mr. Latham, Mr. Bruce, the honorable member for Henty (Sir Henry Gullett), and others of the then Opposition, said that it would be a dangerous step to take. Yet within three months of our request they unanimously agreed to ship £15,000,000 in gold to London, and although it had been said that not another note could be released in Australia, because the limit had been reached, the Bank Board immediately left £15,000,000 or £20,000,000 of notes without any gold backing whatever as a result of sending gold to London.
I have quoted a statement made by the Governor of the Commonwealth Bank while in London, but not in any critical spirit. I have no criticism to offer regarding Mr. Riddell, for I think he is an excellent governor. He conducts the business of the bank in a very efficient manner, but under the hidebound policy laid down by the Bruce-Page Government in the interests of the private banking institutions. He can only administer the policy that is given him to administer, and in carrying, out that policy he is making it impossible for the Commonwealth Bank to make credit available to deal with this problem in the only sensible way. I suggest to the honorable member for Martin (Mr. McCall) that he cannot derive any satisfaction from having proved that the actual unemployment figures are only 20.9 per cent. I believe that the percentage is much higher, but if there are 20 per cent, unemployed surely the time has arrived when we should try to put back to work 15 per cent, or 16 per cent, of that 20 per cent. If we did not desire to do that solely because of humanitarian considerations^ - solely to relieve distress and misery in the homes of the breadwinners - we should at least be prepared to do so from purely selfish economic reasons, since it is the only way by which the prosperity of this country can be revived. The honorable member for Martin argued that because banks are stuffed with money, because there is more money available than ever before to those who want to borrow, because there is a record amount of money available at a record low rate of interest, confidence has been restored.
– I did not.
– Here, said the honorable member, in effect, is a sign that the Government has brought Australia back to stability - here is evidence of restored confidence in the country. Surely the most casual student of economics must know that it is one of the surest signs of lack of confidence when business people will not invest in industry a penny more than they can avoid, and because they will not do so the money must be put into cold storage. Is it not obvious that industrialists who have money to invest would not be rushing in to subscribe to the government loan, which is returning such an abnormally low rate of interest, if anything better were offering? If there were any life in business, or any demand for goods and services, business people and capitalists would not put their money into the loan when, by re-investing it in business, they could make it earn anything from 6 per cent. to 15 per cent. The Government has failed to make out a case that confidence has been restored in the community. When I speak of the restoration of confidence, I do not refer to such confidence as may be felt or professed by individuals like the PostmasterGeneral or the Attorney-General, but to a general feeling of confidence amongbusiness people who are out to make profits by the investment of their money. We find that such people, instead of re-capitalizing their profits in their businesses, are putting it into cold storage by buying government bonds, which represent one of the safest investments in the world.
– Does the honorable member suggest that there is less demand for goods and services to-day than there was two years ago?
– No; there is a slight improvement which, so far as Victoria is concerned, is largely due to the extraordinary infusion of money into business as a result of the Centenary celebrations.
– There has been a definite revival in New South Wales.
– Surely that is due largely to the improved price which has been obtained for wool. There is no sign, however, that the problem of unemployment has been solved, or is even on the way to solution. Indeed, it cannot possibly be solved as we are going on. The Government is waiting in the hope that the unemployed army themselves will consume the surplus of products, when all the time it is the existence of that surplus which is keeping them unemployed. The Government is waiting for a miracle, which, in the very nature of things, cannot happen.
– It all depends on export values, and the party to which the honorable member belongs has done its best to depress those values.
-If the unemployed have to starve until all the countries of the world throw down the trade barriers which they have erected, the outlook is pretty hopeless. I admit that there arc some small signs of improvement in Victoria, but the improvement is only temporary, and I am afraid that after the Centenary celebrations are over there will be a slump that will be worse than before. In hundreds of thousands of homes there was unanimous agreement with Judge Foster, of Victoria, when he said that hell is here and now.
.- I support the amendment moved by the honorable member for West Sydney (Mr. Beasley), because I think it is essential that something more should be done at the present time to relieve unemployment. I have listened carefully tothe debate so far asit has gone. One of the most interesting contributions to date is that of the honorable member for Martin (Mr. McCall), in which he tried to justify the existing social and financial system, although that system has admittedly been responsible for the most appalling poverty and distress. He said that he believed in a system of social evolution, but I remind him that he belongs to a party that is for ever trying to sprag the wheels of progress. He must admit, as a student of economics, which I take him to be, that the introduction of machinery into agriculture and industry has resulted in the displacement of human labour, with the result that there are all over the world millions of people out of work and starving because production ‘has been made so easy. Surely he will admit that our social and industrial system must be reconstructed. If we continue taxing one half of the population in order to keep the other half in idleness, we will always have discontent. The only way in which the present position can be remedied is to break away from the old system, and go boldly forward as a first step for a reduction of the hours of labour. The party to which the honorable member for Martin belongs, however, supports an increased number of working hours, and has signified its approval when applications have been made to the court in order to bring this about. If the working week were lengthened by four hours, it would mean that one worker in every twelve could be dispensed with.
– I did not say that I was in favour of increasing the number of working hours.
– Nevertheless, the honorable member supports a party which believes in that principle, and also believes in the reduction of wages as a means to bring about prosperity. It has been demonstrated that, when the purchasing power of the workers is reduced, the demand for commodities is lessened. Other nations have broken away from the old tradition, and I do not refer only to Russia. In the United States of America a new system of credit control has .been introduced, and the policy inaugurated by the President there was recently endorsed by an* overwhelming majority of the people.
The honorable member for Riverina (Mr. Nock) seems unable to appreciate the unfortunate plight of the unemployed. He lives in a district remote from the industrial centres, and all he can think of is the troubles of the wheat-growers. He even has the audacity to advocate in this House the imposition of a flour tax, which means a tax upon the bread of the workers, and particularly upon the bread of the unemployed. He suggested, when the tax was imposed by the last Government, that the proceeds of it Should be distributed to all wheat-growers, whether they were in necessitous circumstances or not. The honorable member is himself a wheat-grower, and yet he uses his position in this House to try to secure for himself a share of government bounty to which he is not entitled. I say that a man who is prepared to do that is not fit to represent the people in Parliament. The honorable member does not know what hunger is. He has never suffered hunger as have many honorable members on this side of the House. Indeed, I doubt whether any honorable member on the other side of the House has endured hardship as we know it, or has mixed with the poorer sections of the community. ‘
I have tried over and over again to induce the Government to adopt measures which would help towards the relief of unemployed, yet only the day before yesterday I was told’ by the Prime Minister (Mr. Lyons), in answer to a question, that I had never brought forward a concrete proposal for government assistance to an industry for the extraction of oil from coal. I said at the time that Hansard would prove otherwise. Honorable members who have followed the proceedings in this House must admit that I have repeatedly placed before this House proposals for assisting the Lyon brothers to produce oil from coal on a commercial basis. 1 have been bringing this matter up time after time for the last five years. The Scullin Government sent a Minister to inspect the Lyon brothers’ operations, and officers of the Council for Scientific and Industrial Research also conducted investigations. The Government of New South Wales set up a committee to investigate the claims of these men, and the committee was satisfied that oil could be produced in commercial quantities by the process they were operating. At present they have only a small plant, but if more capital were available they could install a larger one, and produce on a commercial scale. The report of the State committee recommended that the Government should make a grant to the Lyon brothers for the carrying on of their work. This was done, but it was not sufficient, and it was expected that the Federal Government would also provide assistance. Recently, there has been much talk of the hydrogenation process of extracting oil from coal, although the Lyon brothers have proved the success of the low temperature carbonization process. The Government formed the opinion that the hydrogenation process had advantages over the low temperature carbonization system, and we were compelled to wait nearly twelve months until an opinion had been obtained as to the efficacy of the plant erected at BillingtononTees. Fully eighteen months have elapsed since representations were first made to the Commonwealth Government in this matter, but nothing has yet been done. A deputation which consisted of persons from as far north as Muswellbrook, Scone and surrounding districts waited upon the right honorable the Prime Minister (Mr. Lyons) and the Minister in charge of development (Senator McLachlan) at Cessnock in March of this year. The arguments adduced by the members of that deputation were so strong that the right honorable gentleman felt that some action should be taken immediately. Furthermore, the visit of the Prime Minister to the Northern coalfields gave him an opportunity to see the deplorable conditions under which the people in that part of New South Wales are living. It was stated that in Greta, which has a population of 2,000 persons, the stationmaster, the schoolteacher and the police officer were practi cally the only persons with permanent employment. In West Wallsend, which has a population of 4,000 persons, there were only about 100 in permanent work. In towns such as Cessnock, Kurri Kurri and portions of Newcastle, concerning which the honorable member for that district can speak more authoritatively, the depression has been felt most acutely. In the Newcastle and Hunter electorates business is practically at a stand-still owing to the marked decrease in the demand for coal, due to the fact that power is developed by other means. The only hope for the industry, therefore, is the extraction of oil from this mineral. In these electorates there are about 20,000 persons unemployed. Although the depression may be lifting in some districts, the condition of the coal-mining industry is not likely to improve. This is due largely to the fact that power is now developed by internal combustion engines and hydro-electric plants to such an extent that the demand for coal as a means of producing power has practically ceased. That being so, attention must be devoted to some other means by which this industry can be rehabilitated. If, as scientists have informed us, the supply of well oil may become exhausted in from 20 to 50 years and we are to rely upon the present methods of transport, some other source of production must be discovered. Provision should be made, not only for the re- quirements of the present generation, but also those of future generations. In Germany experiments are being conducted on a process similar to that introduced by the Lyon brothers, two Australian chemical engineers who should be given every encouragement. Apparently the Government has not much confidence in the Australian people, because it is relying upon the efforts of persons on the other side of the world. The Lyon brothers, who have expended a considerable amount of their own capital and have devoted a good deal of energy in .the development of a process which the Government is not prepared to encourage, are endeavouring to make Australia independent of overseas oil supplies. The European situation is not at all re-assuring and we are informed by some authorities that before long there may be war in the Pacific. I do not believe that any honorable member favours war; but if trouble should arise in the Pacific, we should not have to depend upon other countries for our oil supplies upon which our transport system depends so largely.
– The honorable member thinks that in the event of war in the Pacific, we should be in a position to fight?
– We should be in a position to defend ourselves. I am not one of those who advocate war, but if I should get into company where punches are being swapped, I am likely to swing a few rights and a few lefts to defend myself. It is unfair of the Prime Minister to say that I have never submitted a concrete proposal to the House in connexion with the coal industry, because from time to time I have dealt at length with the hydrogenation process of extracting oil from coal, and also with that of the Lyon brothers. I know nothing concerning the former, but I have been closely associated with the work undertaken by the Lyon brothers in my own electorate. I am suggesting that their process should be adopted, also the hydrogenation process, for there is scope for both if the requirements of Australia are to be met, not from a parochial view-point, but with the sole object of providing employment for those who are dependent upon the coal-mining industry. As well oil to the value of £18,000,000 is imported annually from other countries, which purchase very little from Australia, we should endeavour to produce our own supplies, and in that way become independent of other nations. Dr. A. C D. Rivett, who went overseas on behalf of the Government, reported against the Lyon brothers’ process, because he claimed that from every ton of coal treated there would be a residue of 13 cwt. of coke, which could not be utilized economically. He pointed out even that in Great Britain, where there are huge iron, steel, and other industrial works, the problem of absorbing the accumulation of coke would be acute. But the Lyon brothers contend that by a simple adjustment of the carburetter a motor vehicle could be driven on gas produced from coke under catalytic treatment. Demonstrations in this direction have been made before representatives of the Council for Scientific and Industrial Research and Senator Daly, when Minister for Development in the Scullin Government. They have also shown that in addition to utilizing oil obtained from the coal the gas from coke could bestored in gasometers, and used in connexion with town gas supplies and also for generating electricity supplies far more economically than under the existing methods of transporting coal to separate plants.
– Motor vehicles are already being driven with gas produced from mallee stumps and ordinary firewood with which coke could not compete.
– It would be more economical to use coke than it would be to purchase firewood.
– I move -
That the House do now adjourn.
The Attorney-General (Mr. Menzies) has already intimated to honorable members that after next week the House might be asked to meet on four days a week instead of three. It is now fairly definite that the House will meet on Tuesday of the week after next.
Question resolved in the affirmative.
House adjourned at 12.31.
The following answers to questions were circulated: -
Public Service: Queensland Postal Officers.
– Inquiries are being made, and a reply will be furnished as early as possible to questions asked by the honorable member for Kalgoorlie (Mr. A. Green) in regard to the proposed new issue of postage stamps.
– The answers to the honorable member’s questions are as follows : -
– The answers to the honorable member’s questions are as follows : -
e asked the Attorney-General, upon notice -
Ib it the intention of the Government to introduce an amending bankruptcy bill this session?
– It is not possible at . present to indicate whether such a bill will be introduced this session.
Relief Works fob South AUSTRALIA Keswick Military Resereve
E asked the Treasurer, upon notice -
– The answers ito the honorable member’s questions are as follows : -
Cite as: Australia, House of Representatives, Debates, 23 November 1934, viewed 22 October 2017, <http://historichansard.net/hofreps/1934/19341123_reps_14_145/>.