16th Parliament · 1st Session
Mr. Speaker (Hon. W.M.Nairn) took the chair at 2.30 p.m., and read prayers.
Mr.BARNARD. - If the Minister for Munitions appreciates the value ofwireless broadcasting to the morale of the civil population, will he, in view of the difficulty of having radio receiving sets and services maintained throughout Australia, indicate what action is being taken by his department to ensure that supplies shall be made available in sufficient quantity to meet present-day needs ?
– I am wholly in agreement with the honorable member in regard to the advantage of maintaining wireless receiving sets, and the part that is played by wireless broadcasting in sustaining morale. There is a very short supply of the materials that are needed for the manufacture of sets. The demands of the services are so enormous that the manufacture of new instruments has had to be stopped in order that the materials available may be devoted to the servicing of the sets already held by the Australian public. It is considered that this will best serve the public interest. So soon as stocks of materials for this class of manufacture have been increased sufficiently an opportunity will again be afforded to have new sets produced. Meanwhile, repairs may be effected only under licence. Harshness will not be displayed in the granting of licences, but on the contrary every possible consideration will be given to the claims of applicants.
-I ask the Prime Minister whether he is aware that radio station 4BH, Brisbane, has raised many thousands of pounds in order to supply cigarettes to sick and wounded soldiers who are inmates of hospitals and that, because of the substantial reduction of the number of cigarettes made available to it, this company has been unable to fulfil the object for which the fund was inaugurated? I understand that representations in the matter have been made to the right honorable gentleman, and I have read protests concerning it that have been published in the Brisbane press. Will the right honorable gentleman sympathetically re-examine the position, in order to determine whether the request for an additional number of cigarettes may be granted?
– Is the matter one of’ duty or of stocks?
– I am not aware of the reason for the shortage of supplies. Will the right honorable gentleman examine the matter, and endeavour to make additional supplies available?
– I shall examine the matter.
– I ask the Minister representing the Minister for Trade and Customs whether wholesale tobacco merchants in Brisbane have refused to provide cigarettes for station 4BH sick soldiers’ organization? If so, will the Minister compel them to make supplies of cigarettes available to this organization in order to stop the political propaganda which is being used at present against the Government?
– The honorable gentleman has raised a very important matter which suggests that something suspicious is occurring in the distribution of cigarettes. If that be correct, the matter should be exposed. I shall make inquiries immediately.
– In view of the diminished danger of air raids will the Minister for Health give consideration to making available to the general public those beds in public hospitals in capital cities which are being held against an emergency ?
– No beds under the control of the Commonwealth Health Department are being kept empty for the purpose referred to by the honorable gentleman and I doubt whether beds under the control of the Health Department of New South Wales are, but I shall inquire of the Minister for Health in NewSouth Wales, Mr. Kelly.
– Having regard to the sudden disappearance of the Meat IndustryCommission, will the Minister for Commerce and Agriculture consider the granting to the Australian Meat Board of such additional powers as will enable it to discharge all the functions that were previously divided between it and the commission?
– I shall consider the matter.
– The Canberra Times this morning published the statement that the Cairns district had been declared a military zone, and that a regulation had been issued under the National Security Act by Major-.General Stantke to the effect that no persons other than those who were ordinarily resident within a radius of 60 miles of the Cairns post office immediately prior to the 1st January last shall either enter or remain in that area, and that persons other than permanent residents must leave it within 21 days. Will the Minister for the Army inform me why this action has been taken? It is also stated that those who desire to go to the area must first obtain a permit to do so. Will the honorable gentleman state to whom an application for a permit should be made ?
– This action was taken after very close investigation. It was decided that permits should be granted to all members of the armed forces, and to other persons whose employment is connected with the war effort, either directly or indirectly, to remain in the Cairns district. The prohibition is to apply not to those who have normally resided in the district, but to all those who wish to reside in it in order to be near relatives, some of whom are probably in the armed forces. Because of the difficulties of transport and of obtaining accommodation in hotels or guest houses in the Cairns area, a problem has arisen. I assure the honorable member that workers or residents of Cairns and district will not be adversely affected; but other persons who have gone there since the 1st January, and are not engaged in occupations connected with the armed forces, war industries, or other essential industries, will not be allowed to remain.
Tax and Interest Rates
– Will the Treasurer explain to the House the policy of the Government with regard to the taxing of deferred pay of members of the Commonwealth fighting services?
– Speaking from memory, I think the position is that 5 per cent, of the deferred pay belonging to soldiers is treated as taxable in the year in which it is received after discharge. I shall inquire more fully into the matter and make a statement later.
– Will the Treasurer give, publicity to the fact that compound interest at 3 per cent, per annum is paid by the Government on the deferred pay of soldiers? Few members of Parliament and soldiers are aware that that is so.
-Interest is paid on deferred pay. I shall have a statement prepared for submission to the House.
– Recently, I drew the attention of the Minister for the Army to the fact that a large residential hotel in the heart of the city of Sydney was turning away service men requiring accommodation, although, according to my information, accommodation was available there. I received from the Minister a reply which substantially bears out that information. The Minister says that the Hotel Arcadia - which is the hotel under discussion - contains 163 bedrooms capable of accommodating 204 persons, but only 106 of the rooms are available for the accommodation of servicemen or members of the public. According to those figures, 51 rooms are unused each night. The Minister says that, in his opinion, the hotel should not be taken over as a hostel for service men. Will he have a survey made of hotel accommodation in Sydney, because I have been informed that the Arcadia is not the only hotel which is refusing to book to the full extent of the accommodation available? Will the Minister consider setting up a bureau in Sydney to ensure that accommodation is made available to members of the public and the services ?
– Inquiries have elicited the fact that there is a shortage of hotel accommodation in Sydney, and that visitors and members of the armed forces frequently have great difficulty in obtaining suitable accommodation. Because of this acute shortage it was deemed unwise to take over hotels in Sydney for the use of the Army. It is a fact that at the Hotel Arcadia, and, I have been informed at certain other hotels also, the full number of rooms is not made available to the public because the hotels cannot obtain sufficient staff. A further investigation of this matter is being made, and the honorable member will be ;kI vised later of the result.
– Will the Minister for Commerce and Agriculture inform the House of the names of members of the expert committee which, as he stated on Friday last, has been selected to choose the sites of country wool storage and appraisement centres ? Will he also state what were the positions which those persons occupied in the community?
– Can the Minister for the Army state whether all the small boats which were taken over by the military authorities some months ago have yet been returned to their owners? What was the amount of compensation paid for the loss of boats or for damage to them ?
– I cannot say offhand what was the total amount of compensation paid, but I know that it was a substantial amount. I understand that all the boats were returned to the owners or, at any rate, that the owners were told that they must collect them at an early date. I shall obtain full information on the matter, and a reply will be furnished as soon as possible.
– Has the Minister for Commerce and Agriculture seen a report in the Sydney Morning Herald from West Maitland about the fixing of the price of broom millet? Can he say whether his department was consulted by Professor Copland before the price of this primary product was fixed? If not, will the Minister take action to have Professor Copland restrained from fixing the price of primary products without consulting the Minister of the department concerned, or the representatives of the primary producers? Will he ask Professor Copland, in view of the difficulties confronting the primary producers on the Lower Hunter, as pointed out in the newspaper report, to withdraw his order regarding the price of broom millet so far as it affects that area?
– I have seen the article referred to, but I do not know whether there was a discussion on the subject between the Prices Commissioner and any official of my department. I remind the honorable member that the Prices Commissioner is an independent authority over whom I have no control. However, at the first opportunity, I shall discuss the matter with him.
– I shall have an investigation made, and make a detailed statement to the House later.
– Has the Minister for Labour and National Service any information about a serious strike in the textile industry in Sydney? Reports indicate that one important factory engaged in the manufacture of winter garments for the troops has been closed down. What action has been taken, or will be taken, by his department to meet the situation?
– Trouble in the textile industry, which is recognized by the Government to be serious, is at present the subject of negotiation between representatives of the employees and the Department of Labour and National Service. 1 expect to be able to give to the House more detailed information on the matter on the motion for the adjournment of the House this evening, provided I have by that time received a report from the officer handling the matter.
Hostels in Brisbane and Sydney - compensation for surrendered Equipment.
– Has the Minister for the Army received a report of a survey of premises in Brisbane suitable for taking over as Army hostels? If so, has any decision been reached on the matter?
– A survey was made some time ago with a view to choosing a suitable building for additional hostel accommodation in Brisbane. The Army authorities selected a building called St. Oswald’s Hall, the property of the Church of England, situated on North Quay. For several weeks past renovations and alterations of the building have been in progress, and I understand that it will soon be opened for use. As soon as it is opened, the authorities will make a further survey with a view to discovering whether there is still a shortage of hostel accommodation for troops on leave. If there is, I shall give the matter my personal attention so as to ensure that adequate accommodation shall be provided.
Sir frederick: STEWART.Will the Minister for the Army inform the House of the reason for the delay in opening the new hostel for servicemen in Sydney? The Minister originally promised that the hostel would be opened months ago. Why has not that promise been fulfilled ?
– A fortnight or three weeks ago, I stated definitely in this House that I expected that the new hostel in Sydney would be officially opened in the middle of March. The latest reports indicate that, if the materials and equipment are delivered according to schedule, the hostel will be officially opened on the 6 th March. Honorable members will recognize that, because of difficulties in obtaining certain materials, I cannot state definitely when the hostel will be opened ; but Major-General Fewtrell, Major Finch, who is the architect, and a large number of tradesmen have worked most assiduously and efficiently to convert the nine-storied Mark Foy building into the finest hostel in Australia for men of the fighting forces.
– How many hostels were opened in Australia by the previous Government ?
– I am unable to give the information offhand, but I shall obtain the details for the honorable member. However, I know that no existing hostel for servicemen in Australia is the equal of that being established in Sydney.
– Has the Department of War Organization of Industry made a survey of accommodation for both civilians and service men in Brisbane? If so, will the Minister inform me who conducted the examination? Has the report, as mentioned in the press, been submitted to the Minister for the Army? If the Department of War Organization of Industry has already made the survey, is the Department of the Army still making investigations?
– I am not aware that the Department of War Organization of Industry conducted the investigation and, consequently, I am unable .to answer a part of the honorable member’s question. However, I shall make inquiries and inform the honorable member of the result.
– If it be held that the Tonking case covers all acquisitions by the Government under National Security Regulations, will the Minister for the Army provide facilities for the settlement of claims by persons who handed rifles, binoculars and other equipment to the military authorities, in order that they may receive adequate compensation for them?
– Machinery is already in operation to enable all claims made upon the Department of the Army to be dealt with promptly and equitably. If any claims are outstanding, and I cannot be expected to have a detailed knowledge of them all, if the honorable member will supply specific instances I shall be pleased to provide a reply within 24 hours.
– I desire to ask the Minister representing the Minister for
Trade and Customs the following questions concerning the newspaper, The Standard: -
– Order ! Statements and arguments are not in order, but honorable members have been given the privilege of stating shortly any facts necessary to explain or give point to a question. That privilege is being abused considerably, and I intend to restrain honorable members from making speeches when asking questions. If honorable members do not put their questions more tersely and with less propaganda, their questions will be liable to be disallowed.
– Does the Government propose to force the pool to supply newsprint from privately owned pool stocks for the printing of its official organ, or does at propose specially to import newsprint after having refused permission to others to do so?
– The honorable member’s long statement will be referred to the Minister for Trade and Customs.
– I ask the Minister representing the Minister for Trade and Customs whether his attention has been drawn to allegations that dealers in second-hand motor cars are evading national security regulations by (1) refusing to sell second-hand cars at prices determined by the Prices Commissioner unless each prospective buyer has another car to trade in, and (2) paying such low prices for such traded-in cars as enable them to make profits far in excess of those deemed fair and reasonable by officers of the Prices Commission?
– Order ! That question is an outstanding example of the offence for which I called the honorable member for Richmond to order.
– The Minister for Trade and Customs would be helped in examining this matter if the honorable member supplied to him specific examples.
– I ask the Minister for Supply and Shipping whether the Shipping Control Board has arbitrarily increased by 20 per cent, the freight rates on all green hardwood shipped from Tasmanian ports? Was a recent shipment of Huon pine from Tasmania charged for at the increased rate for hardwood instead of at the rate for softwood? As the price of timber is rigidly controlled, will the Minister say why the freight rates have been varied without the consent of the Prices Commissioner? In the circumstances, will the Minister arrange to have the amount that obviously has been collected in error refunded to the firm concerned?
– The honorable member has raised an important matter. If his question is based on fact, the prices fixed are thrown out of balance. This matter will be attended to immediately.
– In view of the damage done to the war effort and public morale by rumour-mongers, will the Attorney-General take such action against them as will make an example of them ?
– My department will look at the matter.
Validity of Regulations
– I ask the Attorney-
General whether the High Court’s recent decision in the case of the Apple and Pear Acquisition Board v. Tonking is likely to affect the validity of the wheat acquisition scheme, under which two rates of payment are prescribed for wheat, and the acquisition of other primary products?
– The honorable member for New England raised this matter. I am having a statement prepared for submission to the House to cover the whole matter. There is no question of the validity of the wheat acquisition scheme, but the question of compensation for wheat may require attention in the light of the Tonkingjudgment.
– Is it a fact that the Commonwealth Bank has instructed the trading banks to reduce all overdraft limits by 25 per cent., and, if so, have the following factors been taken into consideration: (a) the long delays experienced by business firms in receiving payment for government contracts; (b) the great amount of capital that has to be expended on raw materials; and (c) the increased disbursements on wages due to increases in the basic wage and by retrospective payments ordered by the Women’s Employment Board?
– I am unaware of the circumstances mentioned by the honorable member, but I shall have inquiries made and furnish a reply later.
– Will the Prime
Minister inform me whether the reproduction of comment on the working of the Australian censorship, published overseas by the Australian-born war correspondent, Noel Monks, has been prohibited within Australia? Does the right honorable gentleman believe that views published abroad on any aspect of the Australian war effort should be withheld from the people of Australia?
– I shall ascertain whether any of those articles has been censored, and the reasons for such action.
– Has the attention of the Minister for Labour and National Service been directed to a leading article in theSydney Daily Telegraph last Saturday entitled “ The Enemy on the Home Front”, which nine specific instances of strikes and industrial disputes were cited? As several of those disputes involved employees engaged on essential war work, will the Minister examine the cases and inform the House of the action taken in each of them ?
– I have been far too busy to read such an irresponsible journal as the Sydney DailyTelegraph. If specific instances of industrial troubles are brought to my notice - and they are brought to my notice frequently - they will receive prompt attention by the Department of Labour and National Service. I am pleased to be able to announce to the House that despite the volume of propaganda which appears in the press from day to day, fewer days are now lost as the result of stoppages than was the case when the previous Government was in office.
– Has the AttorneyGeneral’s Department yet taken action to consolidate the regulations issued under the National Security Act, as affecting each Commonwealth department?
– Under arrangements which were made recently, regulations will be consolidated and printed at threemonthly intervals. Naturally, this decision will impose a severe strain on the Government Printing Office, but the course was recommended by the Regulations and Ordinances Committee of the Senate.
– Will the Minister for Commerce and Agriculture prepare a statement for submission to the House showing all that he knows, and as much information as he can collect, about the appointment of the Director-General of Agriculture and the powers that that gentleman is supposed to exercise, in order to save me the trouble of dropping a large red-hot brick on Regulation No. 38?
– The office of DirectorGeneral of Agriculture was created after the Joint Committee on Rural Industries had on two occasions recommended it. His function will be to co-ordinate the planning of agriculture and the activities of all States during thewar period. The appointment of Mr. Bulcock, who possesses an extensive knowledge of agriculture, has been approved by all States, and his work to date has been outstanding.
– I ask the Minister for War Organization of Industry how many branches of trading banks have been closed since he assumed office, how many he expects to be closed during the next few months, and how much man-power has been released through the closing of bank branches?
– About 450 branches of trading banks have been closed. It is proposed to close several more, but the number will depend upon the estimate formed by my department of the number of branches necessary to serve the banking needs of the public. I have not personally closed any branches of banks. The trading banks agreed to a rationalization scheme prepared by my department, which provided for the closing of about 500 branches. The honorable member appears to be seeking to draw a distinction between action taken by me directly, and action taken by my department under the rationalization scheme to which the trading banks agreed. It is estimated that about, 6,000 labour units have been released from the banking industry, for the war effort, but I am not able to say what were the proportions of male and female labour affected.
– In view of the fact that under national security regulations workers who desire to purchase homes for themselves are required to act through a sub-department of the Treasury, I ask the Treasurer whether he considers such an organization necessary and whether he believes that vendors and purchasers alike should be required to apply to it before properties may be purchased? Does he consider that man-power is being saved by the present procedure? Has not the establishment of such an authority absorbed, rather than released, man-power? If these regulations are necessary, will the Treasurer consider granting an exemption in respect of properties not exceeding £1,000 in value?
– No sub-department of the Treasury has been established to deal with this subject. People are not prevented from purchasing homes to live in if they have no other place of abode, provided that the properties are available at reasonable prices. The regulations were not issued in order to save manpower, but in order to protect purchasers. Because of the demand for properties, prices were becoming inflated, and the purpose of the regulations was to ensure that home purchasers should not be called upon to pay unduly high prices for properties. I make it clear that no person is being prevented from purchasing a home for cash or on terms if he can obtain possession of it. for residential purposes for himself.
– What is the maximum amount at which a purchase may be made?
– The regulations provide that prices shall be reasonable. In New South Wales there is a valuergeneral to whom an appeal can be made, and I have no doubt that there is a public officer acting in a similar capacity in each of the other States. Persons who desire to purchase properties may obtaina valuation from an approved valuer, and thatis taken into consideration in connexion with the proposal.
– Is there not a provision that purchases may not be made at prices more than 10 per cent. above the valuation?
– Not necessarily.
Motion (by Mr. Beasley) agreed to -
That leave be given to bring in a bill for an act to provide for the validation of collections of duties of customs under Customs Tariff Proposals.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
The purpose of this bill is to validate up to and including the 2nd September, 1943, the collection of duties of customs under customs tariff proposals Nos. 7 and 8, of the 5th March, 1942, and the 2nd September , 1942, respectively. Honorable members will realize that Parliament has been busily engaged on many matters directly associated with the prosecution of the war and that a proper opportunity has not been available for a debate on these tariff proposals. Unless the proposals be validated by the 2nd March, 1943, authority to collect duty under them will lapse and the revenue will be seriously affected.
– The Opposition does not intend to oppose this bill, but I direct attention to an unsatisfactory practice that is developing in this Parliament in relation to the validation of tariff schedules. We realize that the Government must have revenue for war purposes, and we offer no objection to the imposition of the necessary customs and excise duties in order that justifiable revenue may be obtained from these sources; but I point out that unless we exercise care we shall cripple some of our industries and render them more or less incapable of playing their part in post-war reconstruction. I do not think that tariff schedules should be introduced unnecessarily, or that excessively high rates of customs and excise duties should be authorized. It is essential that we shall have an opportunity to debate this subject adequately in the near future in order that we may satisfy ourselves that these duties are adjusted on a basis which will allow of the reasonable development of our industries. I am aware that some of the schedules which the Government is now seeking to validate were introduced while I was Minister for Trade and Customs, but that very fact shows how necessary it is that we be afforded an opportunity at an early date to debate the whole subject I ask the Minister for an assurance that such an opportunity will be afforded us, and that we shall not be expected to validate tariff schedules indefinitely by this procedure. We must preserve the capacity of our industries to take their proper place in the post-war reconstruction period.
.- I ask the Minister for Supply and Shipping (Mr. Beasley) whether any trade agreements have been made with other nations that are likely to have the effect of reducing customs duties, and, consequently, of weakening the protection which some of our industries enjoy under the existing rates. I request that all trade agreements that have been made be submitted to Parliament without delay for ratification. I fear, from reports that I have read in the press, that there may be superimposed on our tariff certain trade agreements which this Government has made, or may contemplate making, with other countries which will have the effect of rendering many customs duties ineffective, and hindering the development of certain of our secondary industries. We must bear in mind that after the war we shall depend upon our secondary industries to help us to rehabilitate in civil life the members of our fighting services. I do not want the slightest interference with our secondary industries. I hope that no agreement will be made, and allowed to operate without being brought to this House for ratification. Will the Minister look into the matter immediately?
– in reply - I am mindful of the need stressed by the honorable member for Wentworth (Mr. Harrison) for the adoption, where possible, of the normal parliamentary procedure in connexion with measures of this kind. I am sure that he will agree that a discussion of some of the items would probably be inadvisable because of the existence of a state of war and the difficulty of determining the circumstances associated with industry. Nevertheless, I agree that an endeavour should be made to “ clean the slate”, in order that the normal procedure may be followed.
The point raised by the honorable member for Moreton (Mr. Francis) has deep significance.Recently, a statement was made in this House in regard to the accordance of most-favoured-nation treatment to one of our allies. I am not able to say off-hand to what degree that may interfere with the protection of our secondary industries. The honorable member stressed the need for a close watch on trade agreements, in order to avoid any impairment of the established policy of making this country as self-contained as possible. As a result of that policy, the country has capacity for a total war effort which it would not have had but for the development of secondary industries. I agree without any hesitation to bring his observations to the attention of the Minister for Trade and Customs (Senator Keane).
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. Beasley) agreed to -
That leave be given to bring in a bill for an act to provide for the validation of adjustments in duties of customs under Customs Tariff (Exchange Adjustment) Proposals.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This measure is incidental to the Customs Tariff Validation Bill. It proposes to validate, until the 2nd September, 1943, the exchange adjustment alterations made by Customs Tariff (Exchange Adjustment) Proposals of the 15th March, 1942.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. Beasley) agreed to -
That leave be given to bring in a bill for an act to provide for the validation of collections of duties of customs under Customs Tariff (Special War Duty) Proposals.
Bill presented, and read a first time.
.- by leave - I move -
That the bill be now read a second time.
This measure is introduced for the purpose of validating, until the 2nd September, 1943, the collection of special war duty under the Customs Tariff (Special War Duty) Proposals of the 5th March, 1942. The special war duty was imposed for war-time revenue purposes. For the reasons stated in connexion with the Customs Tariff Validation Bill, there has not been time to debate the proposals; consequently, validation of the collection of the duty by the 2nd March, 1943, is necessary in order to protect the revenue.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. Beasley) agreed to -
That leave be given to bring in a bill for an act to provide for the validation of collections of duties of customs under Customs Tariff (New Zealand Preference) Proposals.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This measure seeks to validate, until the 2nd September, 1943, the collections of duties under the Customs Tariff (New Zealand Preference) Proposals, No. 4, of the 5th March, 1942.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. Beasley) agreed to -
That leave be given to bring in a bill for an act to provide for the validation of collections of duties of customs under Customs Tariff (Canadian Preference) Proposals.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This bill provides for the validation of the collection of duties under Customs Tariff (Canadian Preference) Proposals of the5th March, 1942. The period of validation is the same as for the other proposals, namely, until the 2nd September, 1943.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. Beasley) agreed to -
That leave be given to bring in a bill for an act to provide for the validation of collections of duties of excise under Excise Tariff Proposals.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
The object of this bill is to validate until the 2nd September, 1943, the collection of excise duty under Excise Tariff Proposals Nos. 5, 6, 7 and8, of the 5th March, 1942, the 25th March, 1942, the 2nd September, 1942, and the 28th January, 1943, respectively.
Question resolved in the affirmative.
Bill read a second time.
.- Would it not be possible to adopt some procedure by which all these collections could be validated by the passing of one bill instead of having to pass a whole sheaf of bills every six months or so? If it lies within the power of Parliament to vary the procedure, then Parliament should take the necessary action.
– I am advised that, according to the Constitution, one taxation proposal only can be embodied in any one bill. Therefore, it is necessary to bring down a separate bill for each proposal.
Bill agreed to, and reported without amendment; report adopted.
Bill - by leave - read a third time.
Debate resumed from the 18th February (vide page 915), on motion by Mr. Chifley -
That the bill be now read a second time.
.- need hardly say that I feel very pleased that the Government has at last found it convenient to introduce this measure.
– The honorable member is not satisfied with its provisions, is he?
– No, not entirely. Although there has been delay in bringing this measure forward, it may fairly be said that there has been substantial justification for it. Very soon after the Government assumed office, Japan entered the war, and the menace to Australia became grave. For that reason, honorable members interested in mortgage banking were not insistent upon immediate action being taken, because they recognized that the time and ability of Ministers were fully occupied in other directions. We have been looking forward to this measure for a long time. Some years ago a mortgage bank bill was introduced into this Parliament, but after being before the House for a brief period it was placed away in cold storage and forgotten. It has been said that it was similar in terms to the present measure, but I cannot remember the exa<;t details of it.
A mortgage bank would be of great value to Australia, which is largely a primary producing country - though not entirely so, I am pleased to say. In the absence of some institution which can make long-term loans at a reasonable rate of interest, there can be no security for those engaged in the primary industries. I have been looking through various publications in order to discover what precedents exist in other countries for a mortgage bank or longterm rural credits. I find that England has a mortgage corporation which was really inaugurated by a combination of joint stock banks in that country. j quote the following from a publication called A Report on Mortgage Banking, issued by the Australian Wheat-growers Federation. Referring to the Agricultural Mortgage Corporation Limited, the report states -
Immediately the act was passed, steps were taken to set going the new mortgage institution, which, under the title of the Agricultural Mortgage Corporation Limited, was registered on the 7th November, 1928, with a nominal capital of £050.000 in £1. shares. Those were subscribed at par by the Bank of England, Barclays Bank, the District Bank, Blyn Mills mid Company, Lloyds Bank, Martins Banks, the National Provincial Bank, the Westminster Bunk, Williams Deacon’s Bank, and the Manchester and County Bank, i.e., all the leading joint-stock banks other than the Midland, which refused to participate in the scheme.
The first directors were Sir Harry Goschen (director. National Provincial Bank), Sir Otto Niemeyer (director of VickersArmstrong), Mr. J. H. C. Johnston (director of the Mercantile” Investment and General Trust), Mr. W. Gavin (director of Strutt-Parker [Farms]) and Sir George L. Borstow (director of the Anglo-Persian Oil Company) as the nominee of the Treasury.
This corporation makes loans to the farmers at 5 per cent, or 6 per cent, per annum, and the term of the loans is up to 60 years.
– What control has the Government ?
– The only control of the Government is its representation on the board -
So long as any part of the advances made to the company by the Government (through the Minister of Agriculture) remain outstanding, one of the directors must at all times be nominated by the Treasury, and no alteration may be made in the memorandum of articles of the corporation without the consent of the Minister of Agriculture.
In looking round for a precedent for cheap money for agricultural purposes, I found one, strangely enough, in France. After the last war, the Credit Agricole Mutuel was established on an annual grant of 40,000,000 francs from the Bank of France. That seems a big amount, but evidently the Bank of France regards it as a small payment for the privilege of controlling France’s banking, because the bank’s charter ha3 to be renewed from time to time by the Government of France. The interest rate charged on loans made for agricultural purposes is 8 per cent, per annum., but returned soldiers and civilians who suffered injury in the last war are required to pay only 1 per cent. That is a very low rate. Perhaps we could not expect such a low rate in Australia, but, at any rate, that is one precedent. I examined what is being done in the United States of America, but it is very hard to determine what rate of interest agricultural borrowers have to pay for their money. Various bodies control loans to farmers. Mainly the money is advanced to cooperative bodies, which in turn lend direct to primary producers. One authoritative American publication contains the following information: -
Kates of interest charged on new loans by the banks remained at lj per cent, for commodity loans, 2 per cent, for operating capital loans and 4 per cent, for facility loans during 1040.
I take it that those are the rates charged to the co-operative concerns, and that the farmers would have to pay more. The Canadian Farm Loan Board makes on first and second mortgages loans to farmers, and the terms upon which those loans are made are briefly as follows: -
Any person who is the owner of farm lands and whose principal occupation is farming and who is actually engaged in or shortly to become engaged in the cultivation of the farm he offers as security for the loan.
The applicant must have the necessary experience, ability and character to satisfy the board that ho will cultivate successfully the farm offered as security for a loan, and will be able to repay the loan made to him.
The interest rate is 5 per cent, per annum and 5£ per annum on arrears. I think that the term of. the loans is about 25 years.
– What is the honorable gentleman quoting from?
– I am quoting from the Canadian Farm Loan Board report for the year ended the 31st March, 1942. I have looked at the conditions in European countries and in the British Dominions. It is difficult to follow the conditions in European countries, because the various writers on this subject seem to be shy about stating the rates of interest that are paid, or they have difficulty in ascertaining what those rates are. It is interesting to note that in our sister dominion of New Zealand there is a mortgage corporation which is conducted on orthodox lines, with the Government owning half the shares and the public the other half. The rate of interest charged is 4^ per cent, per annum. I have given the foregoing information to the House in order that honorable members may make comparisons.
The report of the Royal Commission on the Wheat Industry enables me to estimate that every reduction by 1 per cent, of the rate of interest paid by wheat-growers would represent 3d. a bushel of wheat. I estimate that a reduction by 1 per cent, of the interest paid by dairy-farmers would amount to 1½d. per lb. of butter.
– Where did the honorable member obtain that estimate?
– It is authoritative. The saving to the wool industry cannot be computed accurately, but I consider that it would be nearly Id. per lb. Those figures are most illuminating, because they show the effect of interest upon the material welfare and prosperity of primary producers.
The capital of the Mortgage Bank Department will be £4,000,000. That figure has taken some honorable members aback, because they were not aware that the capital is not a real reflection of the amount of money which may be lent by the institution. As the. bill states, the Treasurer may make advances to the Mortgage Bank Department of such amounts and subject to such terms and conditions as are agreed upon between the hank and himself. That provision might involve hundreds of millions of pounds. This instrumentality will probably play a prominent part in the postwar period of reconstruction, and will, in all probability, be the agent for financing land settlement schemes and other vast projects. Consequently, it is vital that the rate of interest shall be low. On the ability of primary producers to maintain profitable production at a low cost depends our ability, if the present system of world trade is to continue, “to market our goods and compete with other countries. That, leads to the important question of what will be the conditions of world trade after the war, but I do not propose to discuss them at this juncture. T hos, considerations are implicit in the Atlantic Charter, to which the Allies have all subscribed.
Proposed new section 60abu 2 provides -
The Treasurer may, from time to time, under the provisions nf the Commonwealth Inscribed Stock Act 1911-1940, borrow money for the purpose of making advances to the Mortgage Bank Department under this section.
I do not like that provision. Implicit in it is the time-honoured principle of borrowing money for the purpose of relending it. The Commonwealth Bank possesses power to issue through the Mortgage Bank Department whatever money is required for the rehabilitation of primary producers. I see no reason why credit should not ‘be issued in order to release many “ frozen “ securities. That procedure would be- most advisable, because much of the credit so liberated could be utilized for financing war expenditure. The plan has everything to commend it. Money which is made available in that manner should be lent at a low rate of interest. That is the most important consideration in this measure. I was a member of the special committee which examined and reported upon this bill. The most important recommendation was the increase from £4,000 to £5,000 of the maximum amount that could be lent to a borrower. Members also agreed that the amortization rate should be 1 per cent., and that the period for the repayment of loans should be extended from 35 to 41 years. However, we could not secure unanimity regarding the percentage of the valuation of the property against which the bank could make advances.
– What rate of interest will be charged on loans by the Mortgage Bank Department?
– Although the rate is not specified in the bill, the Treasurer hoped that it would not exceed 4 per cent.
– Plus 1 per cent. for amortization.
– That is so. For my part, I should like the Government to accept a higher percentage of the valuation. For that reason, I am prepared to support one of the amendments which have been submitted for the purpose of increasing the percentage of advance.
– Which of the two amendments will the honorable member support ?
– I prefer the amendment designed to increase the percentage from 66 to 80 per cent. of the valuation of the property, although “ sound financial circles “, to use a hackneyed phrase, believe that 80 per cent. does not leave a safe margin of security. The objects of this legislation are to assist and stabilize primary industry, and some departure should be made from purely orthodox principles. An extension of the activities of the Mortgage Bank Department, even beyond the limits proposed in the bill, would be sound. The measure is now restricted to making fixed loans on property. In my opinion, provision should be made for granting seasonal and developmental loans to primary producers. That may not be a practicable proposition at the moment because of the difficulty of finding the personnel required for an instrumentality of this kind, and I shall not press for it at the present juncture, but I hope that the Government will adopt it so soon as the circumstances make it possible.
The special committee did not consider in detail methods of administration, but I have been associated a good deal with managers of banks, some of whom have retired, and I know that they are anxious to make available to the Mortgage Bank Department the benefit of their experience. The Government should accept the offer of their services. Many members of the staffs of trading banks are well equipped to deal with mortgage assistance to primary pro ducers ; but very few public servants have the necessary experience. The Commonwealth Bank has not many officers qualified to deal with the details of advances of this nature, for the bank is principally occupied, in its contacts with primary production, with the making of large advances to co-operative companies and other organizations in relation to the marketing of products on a large scale. That being the situation, I trust that every effort will be made by the Government to draw upon the experience of qualified officers of the trading banks. Unless that be done, I fear that we shall not achieve the success which we expect from this scheme.
– The Commonwealth Bank is not particularly sympathetic to . primary producers.
– The activities of the Commonwealth Bank are not so comprehensive as they were originally intended to be. I thank the honorable member for Bendigo for his interjection, for it reminds me of my intention to place before honorable members the policy of the Labour party in respect to certain aspects of banking. I do so in the hope that the Government will do more than it has done so far to implement that policy. Included in the banking policy of the Labour policy are the following declarations : -
The Commonwealth Bank to be developed on the following lines: -
A nation-wide trading bank handling the ordinary business of the community.
A savings bank performing the ordinary functions of such a bank; and
Acrédit foncier system for the purpose of providing advances to primary producers and home-builders.
In regard to the use of national credit the Labour party declares -
A national credit advisory authority will be set up to collaborate with the Government and the bank to plan the investment of national credit and thus utilize to the fullest extent the real wealth of Australia.
Objects to attain include -
To finance the building of homes and to adjust mortgages at present existing to present values by amortizing private mortgages and replacing them with loans issued under the authority of the Commonwealth Bank.
The passage of this bill will be a step in that direction. I bring to the notice of honorable members also some interesting statements made in 1939 by the present Prime Minister, which have some’ relationship to this measure. The right honorable gentleman said -
Everything in war must be paid for - not by reducing wage standards but by the use of the national credit… Because of a Labour government in the Federal Parliament, there is aCommonwealth Bank. It was created as a means for releasing national credit. But because Labour lost office the national bankhas been transformed by our opponents into a mere puppet of the private banks… As a requisite to national defence the Commonwealth Bank must have restored to it its original charter. When we are in power, we shall proceed to redeem the national bank from its slavery. The cost of war can be met without piling up huge debts, and without interest payments sucking our national life-blood. The Commonwealth Bank must, with a Labour government, work out a freer and fuller life for our people.
With those sentiments I am in entire accord. I hope that the Government will do something to give effect to them.
I wish now to bring to the notice of honorable members certain opinions expressed to me by persons having trading bank interests with whom I have been incontact. One such opinion, relating to the making of seasonal advances, reads as follows : -
It will be necessary to have a few country branches to serve as centres for the control of seasonal advances, as well as for the better control of, and contact with, borrowers generally. As an example of this a branch in each province would he sufficient for the whole of these various districts of the State. Those districts being centrally situated -would eliminate long-distance travelling in any direction, for interviews and inspection of crops, Ac., of those farmers requiring seasonal advances. These advances could be paid by cheque, in instalments, as required to keep the interest charge down to the borrower.
I shall not go into more detail on this subject, but I reiterate my hope that the Government will make the fullest possible use of the services of qualified officers of the trading banks, and of persons who have retired from active work but who are qualified to assist in implementing this scheme.
The Treasurer has informed us that owing to man-power difficulties certain officials of the Commonwealth Bank do not consider it practicable or desirable at present to extend the scope of the mortgage bank department of the Commonwealth Bank beyond that set out in this bill. Seeing that so many branches of trading banks have been closed in country districts in conformity with the policy which the Minister for War Organization of Industry is administering, it seems to me that there should be many suitable officers and also business premises available to make the fullest possible use of such a department. Everything that can be done should be done to make this service of the utmost value to the primary producers, who, in the past, have found extreme difficulty in securing loans of the quality and continuity necessary to enable them to maintain their operations. Hitherto primary producers have been constantly faced with the need to renew short-term mortgages, and they have also had to bear in mind the possibility of refusals of renewals. Moreover, they have had to meet substantial financial expenses in connexion with such renewals as they have been able to effect.
In my opinion there should be linked with the mortgage bank department of the Commonwealth Bank some comprehensive form of composition of debts. In every country in the world where the capitalist system operates primary producers are in a position comparable with that of the primary producers of Australia. My reading of the publications of different countries on this subject reveals that in such countries periodical debt compositions and debt adjustments become necessary. That is inherent in the system ; consequently, it is inescapable in existing circumstances.
– What does the honorable member advocate in its place?
– In order to obviate the need for this recurring debt adjustment, land values should be pegged and rigidly controlled so as to prevent the speculative element from undoing whatever good may be done by measures such as this. The need for such action is well exemplified in what ensued when the price of wheat was increased recently. I can say from personal knowledge that in my electorate, following the advent of the improved scheme, there was a raising of the rents of lands in the possession of banks, insurance companies, and other lending institutions which are leased on an annual rental basis. By such means any benefit provided for the man on the land may be quickly offset. I have studied the report of the committee which made an investigation of the dairying industry. The committee, while advocating an increase of the price of butter, said that it will be necessary to take some steps to ensure that the benefits provided shall actually reach the persons for whom they are intended. In order to ensure this, the following recommendations were made : -
That the Government should consider such matters as -
fixing maximum values and possibly exercising other measures of control over the sale of dairy stock;
examining the possibility of pegging maximum land values of dairy farms;
Under the existing system, such protective measures may be implemented and made permanent in no other way. The only alternative would be a socialistic system, which is not contemplated by this Government, and was not favoured by any government which preceded it.
The position in relation to farm debts is very much the same in Canada as it is in Australia. The Premier of Alberta, Mr. Aberhart is, I believe, a very much maligned man, but he has achieved a great deal more than he has been credited with, and the fact that he has been able to retain office as Premier indicates at least that he has a majority of the people behind ham in what hehas attempted to do. On the subject of rural credits Mr. Aberhart made the following statement : -
It is essential that farmers should have access to adequately low-cost credit in order to produce efficiently - I mean both long-term and short-term credit. Though they have been moving in that direction in the United States of America we have nothing remotely approaching satisfactory credit arrangements for agriculture in Canada as yet.
Referring to debt adjustment, he said -
Closely bound up with the question of prices and proper credit facilities is the problem of farm debts . . . Given the means to meet their debt obligations our farmers would be scrupulously anxious to dischargetheir liabilities. I do not fear contradiction when I say there is no more inherently honest group of people in Canada than the farmers. But much of the huge debt burden pressing upon them at present is neither fair nor just - in fact it is crudely inhuman or devilish.
Much of these debts have been piled up as a result of causes beyond the farmers’ control and of exorbitant interest. Common justice demands that they alone should not be expected to shoulder this accumulated burden due to conditions which have already penalized them so heavily.
So I submit that there will have to be a proper and equitable readjustment and settlement of all farm debts .. . .
That indicates that the needs of primary producers are similar in all countries.
The bill does not specify an interest rate. That is a serious omission. The primary producers throughout Australia are looking to this Government to make a determined effort to give to them what they have been seeking, what it would be justified in giving, and what is possible, namely, a low rate of interest.
– What rate would the honorable member suggest?
– I intend to move, at the appropriate time, that the rate shall not exceed 3 per cent.
– That would be too high.
– That would, however, fix an upper limit to the rate. I hope that the committee will indicate in no uncertain way its adherence to the principle of a low interest rate for the primary producers, by supporting that amendment. Interest is an impost upon the majority of the community. The rates are too high and must come down.
Living conditions on the majority of farming properties are not comparable with those enjoyed by other sections of the community in the more favoured metropolitan areas. A little book which I received recently from New Zealand refers to what is known as the Malvern Report. It is written by Mr.Y. T. Shand, of Phillipstone, Christchurch, and it discusses the position of the farm labourer. This matter is closely related to one which the House discussed last week; because only by means of cheap money may a farmer have access to better conditions, and thus be able to improve the lot of his farm labourers. I quote the following: -
Just what is the farm labourer’s position in New Zealand to-day? Well, first of all he is a “ farm labourer” - a term implying in itself a sort of veiled contempt for being a farm labourer. Actually a good farm labourer is a highly-skilled technician - the real craftsman of the soil, who must possess more allround knowledge, intelligence and skill, than probably any other of the trained artisan class in New Zealand; and this is to boot the basic calling from’ which all other callings derive their being and power to function at all. And “ he is only a ploughman “, perhaps “ a farm labourer “. For him the Government with the full acquiescence of you and me devises a special minimum low wage, with longer hours at which he may be employed (and, if married, support a family) than any other calling, from the humblest unskilled town labourer up.
I mention that because conditions have been such that the farmer has never been able to give to his workers what they are entitled to. He has not been able to give to his own family the amenities and comforts which people in the city enjoy. If we can make cheap money available, and stabilize and guarantee prices, we would be able to bring about an era of prosperity in the rural industries such as they have never known before. I quote the following from the remarks of the Secretary of State for Scotland, Mr. T. Johnson : -
Any one who has ever considered social economy for the past century, must have been struck by one notable and outstanding fact. That is the miserable status and conditions, and the low wage rewards, given to the workers in the primary industries. Upon the labours of the workers in these industries depends so much of our national comfort; yet, while the rewards given to other classes in the community enabled them to achieve at least a moderate standard of comfort, somehow the workers in the primary industries have lived always on the border-line of insufficiency and penury. During the war, however, we have learned a lesson - at least, I hope we have learned it - the lesson of the criminal neglect and waste that has occurred in connexion with our agriculture. Never again must it be allowed to sink back into the condition in which it would be fairly and honestly described as a sweated industry.
Unfortunately, the primary producing industries are still, in large measure, sweated industries. We look to this measure and others like it for some relief, so that we may place the primary industries in Australia on at least the same level as the secondary industries. Having regard to their importance to the nation, they should be placed higher, but if we can even achieve parity with the secondary industries, if we can provide a decent standard of living for the farmer and for his workers, then we shall have done something which is long overdue, something which is eminently possible, and which must be done if we are to rehabilitate the primary industries and repatriate suitably those men who are now fighting for the security of the nation. I commend the Government for having introduced this measure. I hope that the Government will accept reasonable and practicable amendments, and that the bill will have a speedy passage through Parliament, and come into force at the earliest possible date.
.- This is a highly important measure. It has been promised by previous governments, and on one occasion a similar measure was actually introduced. In my opinion, the bill in its present form will be of little use to those for whom it is intended. Those who will be able to benefit under its provisions would have no difficulty in obtaining financial accommodation from existing financial institutions. The farming industry is so valuable to Australia that the National Government cannot afford to neglect it as it has been neglected in the past. Governments have had to provide assistance to farmers, but that would not be necessary if the primary industries were treated properly.
– Who neglected them? The honorable member’s party was in power for many years.
– The honorable member, among others, has helped to bring about the unsatisfactory position in which farmers find themselves to-day. I say without hesitation that Australia is predominantly a primary producing country. No less than 95 per cent. of the value of our exports is represented by primary products. If we destroy the primary industries as they are now being destroyed by rising costs of production at a time when our products must compete with those of low-wage countries, the primary industries will be brought to penury and ultimately to ruin. I hold the view that the primary industries are the most important in Australia, though there are those who hold that the secondary industries alone can save the country. The opinion was expressed by the right honorable member for Kooyong (Mr. Menzies) when speaking recently before a meeting of the Australian Industries Protection
League. His statement displays a deplorable lack of knowledge of matters which affect the welfare of the country. A newspaper report of his remarks is as follows : -
Development of manufacture offered the only real hoie of improving Australia’s urgent population problem, said Mr. K. G. Menzies, M.P., at the annual meeting of the Australian Industries Protection League yesterday.
Australia would either double its population in the next 20 years or it would disappear. It was a young country, exposed, and physically isolated, with resources crying aloud to be developed. There were plenty of people who would come here from old countries once they were satisfied they would find life and living, and we must create those conditions. The Australian people had seen during this war that the manufacturing industry had been our sheet anchor.
The “ drift to the city “ meant nothing to hun unless it involved slum aggregation, Mr. Menzies said. Thousands had come from rural industry, which never had paid a decent wage, and had discovered what it was- to live in the comforts, of a Melbourne suburb. He did not think they would be packing up their traps and going back to Horsham’ or Warracknabeal.
Australia must not go to the peace table in a frame of mind that we were hard-hearted protectionists, who would take everything we could get, nor must we go and say that the right way to bring heaven to all nations was to become free traders. If wo did that some nations would become extremely prosperous, but Australia would not be one of them.
Post-war reconstruction should not be left in the hands of people who thought only in terms of slogans. It was a subject which required close study by first-class minds if we were not to have a peace which would he worse than war. 1 ask honorable members to heed that statement. Since and before federation we have applied a policy of protection in order to develop secondary industries which even to-day cannot compete in overseas markets. I concede that some secondary industries have been of the greatest value to Australia, especially, under war conditions. We should have been in a sorry plight without the Broken Hill Proprietary Company Limited. The iron and steel industry is one of Australia’s grandest secondary industries. The woollen industry is also of immense importance. We should concentrate on natural secondary industries which can compete in other markets, but how does the right honorable member for Kooyong expect that we shall be able to expand our population when we continue to make goods which we cannot sell overseas? If we sell products overseas, the buyers, in effect, employ us and thereby keep us prosperous, enabling us to increase our population. We have, however, used the tariff in order to enable us to produce articles for sale to our own people at burdensome prices, which cannot be passed on by the primary exporting industries.
-hughes. - The honorable gentleman is right there, but he will admit that the iron and steel industry does export and sell its products in the world’s markets.
– Yes, but I am not unmindful of the fact that the then managing director of the Broken Hill Proprietary Company Limited, at the banquet which was held to celebrate the opening of the company’s works at Newcastle, said, “ We shall need no protection “. He was able to say that because, on its own merits, the Broken Hill Proprietary Company Limited would be able to convert raw materials into finished products and sell in the markets of the world. But I remember that, during the last war, calcium carbide, which we used to import at from £14 to £17 a ton, was manufactured in Tasmania and sold at £80 a ton. This could not be regarded as an industry worth fostering. I do not condemn secondary industries; rather do I welcome their establishment, provided they are of economic benefit to the country. I think that we should develop the woollen manufacturing industry on the lines of the industry at Bradford and sell its products overseas. I remember that the late Sir Henry Gullett, who was responsible for the development of certain secondary industries in Australia, lamented the fact that Australia was inadequately populated and that it had reached the stage at which, unless something were done to check the movement, our population would soon decline instead of increase. He wondered whether it was possible that we should ever effectively occupy Australia. If we are to do so, the primary industries of Australia must be maintained. The manufacturers of Australia cannot afford to allow the primary industries to die, because, if they do die, the secondary industries also will die.
The future of this country is wrapped up in the maintenance of primary production.
The term of 41 years for loans proposed in this bill should be adequate, but the .rate of interest is far too high. It has been announced that after the war £30,000,000 will be expended on the provision of social services on a non-contributory basis. If n on-contributory social services are a fair provision for the population at large, a rate of interest of 2£ per cent, for mortgages on rural lands should also be fair. Australia would lose nothing by it. The country should not seek to make a direct profit out of making advances to primary producers. The profit should be the indirect profit that would be derived from the maintenance of primary industries.
– The honorable gentleman is coming round to the policy of national credit
– The honorable member would issue credit without interest, and without increasing the national debt, and carry on the war.
– No private sources will provide money at 2b per cent, interest.
– Primary production is the one direction in which it would be wise to use national credit. The Treasurer preaches a different doctrine from that preached by the Minister for Home Security. The Treasurer says that the indiscriminate issue of Commonwealth Bank credit would be dangerous.
– Everyone knows that.
– A rate of interest of 2-J per cent, on mortgage loans would pay all managerial expenses and would not involve the country in any loss. When the prices of primary products have been depressed, the primary producers have had to come to this Parliament for assistance. They have been paid some few millions of pounds in bounties. That aid was visible. But when secondary industries are assisted the assistance is indirect and is not seen. It is stated that in order to give protection to secondary industries the cost of living in Australia is increased by £100,000,000 per annum. William Pitt said that lie liked to raise revenue by customs duties, because people did not know that they were contributing to the revenue when they bought things. The man who buys tobacco or beer does not know that half of what he pays goes into the exchequer in the form of excise. In normal times this country exports goods to the- value of £16 a head. Western Australia exports goods to the value of £3S a head. Melbourne or Sydney would not export 6d. worth a head. By what it sells overseas Australia earns its income. Our export trade helps to balance the budget by establishing credit abroad.
– What percentage of our primary produce is exported at a loss ?
– The farmers have always met world-wide competition in overseas markets.
– The Commonwealth Government has paid many bounties to primary producers.
– The farmers also have an excellent home market in Sydney and Melbourne.
– If the primary producers of Australia had been placed on the same footing as our secondary industries, they would not have been obliged to ask for bounties and other forms of financial assistance. They have “ carried the baby “ for years, but they are no longer able to do so. The primary producers have established the credit of this country. They rear families in their modest rural homes and are the mainstay of the country. Honorable members who represent metropolitan constituencies, surrounded with pleasures and privileges made possible by the work of the primary producers, do not understand the hardships that are endured by the man on the land. The right honorable member for Kooyong (Mr. Menzies) expressed doubt a3 to whether youths from Horsham and Warracknabeal would ever return to rural employment after having enjoyed the comforts of Melbourne. I point out that Melbourne would never have had any amenities if its industries had not been granted colossal protection against overseas competition. By forming combines, manufacturers are able to sell their goods at any price they choose, and that weight is borne by the producers of the real wealth, whose exports of primary commodities bring new money into the country. The lads from Warracknabeal and Horsham probably worked eighteen hours a day in all kinds of weather, and their efforts did not bring them the just reward which they were entitled to expect. Consequently, it will not be a matter for wonder if, on obtaining good positions in Melbourne, they are no longer interested in an agricultural career.
Australia must provide means for reestablishing people on the land. The limit of advance of which the bill provides would appear to be satisfactory under normal conditions. The honorable member for Swan (Mr. Marwick) has proposed that the percentage of the valuation oi the property against which the mortgage bank department may advance loans should be increased from 66$ to 70 per cent, whilst the honorable member for Richmond (Mr. Anthony) considers that the limit should be 80. But whether it be 70 per cent, or 80 per cent., much will depend upon the administration of this measure. Great flexibility will be required. If the bank operates under wise management, this legislation should have beneficial results. The personal equation will be most important. In addition, the persons responsible for the administration of the institution must be able to recognize whether a property is capable of providing the settler with a living. If it is not, the occupier would be better off on another holding. Even if a primary producer’s heart has been nearly broken by drought and low prices, he may still be capable of playing a great part in the development of this continent. All rural producers, particularly those engaged in the export industries, must be placed on a sound basis.- When the war ends, the position of Australia will be unsurpassed, because it is a great producer of food. For some years all available labour will find employment in producing food for the starving people of Europe and Asia. Consequently our primary producing industries must be geared to meet the enormous demands that will be made upon them. Twelve years ago, the Scullin Government adopted towards the primary industries an attitude different from that of the present Government. The right honorable member for Yarra (Mr. Scullin) launched a campaign to urge farmers to grow more wheat, because it was an asset. When the war ceases, every bushel of wheat that we produce will be an asset, to this country. The wisest course for the Government to pursue would be to knock this bill into shape and rehabilitate stricken farmers in order to return to them much of what has been taken from them in the past. The direct advantage of having 600,000 rural workers is beyond the conception of city dwellers; but they should never forget that if men on the land were to cease production, the cities would not be able to exist. If the bill does not provide for a lower rate of interest, and if it is not administered according to common-sense principles, this legislation will be of little value to the people whom it is intended to serve.
– What rate of interest does the honorable member suggest?
– I suggest that the rate should be 2£ per cent, plus § per cent, for amortization.
– If the honorable member for Wimmera (Mr. Wilson) had advocated a rate of 2-j per cent., the honorable member for Forrest would have urged the adoption of 2 per cent.
– That statement is unworthy of the. honorable member for Darwin.
.- The manner in which various members of the Opposition have approached this bill has been most amusing to witness. The honorable member for Forrest (Mr. Prowse) complained because the bill had not been introduced earlier, and declared that the farmers had been sadly neglected. He also pointed out, with justification, that the farmer is the mainstay of the country because he provides food for the rest of the community. Whilst that statement is true, the honorable member should not forget that the city dwellers provide a substantial market for primary products. I am not unmindful of the fact that I represent a constituency which consists partly of country people and partly of city dwellers, I am aware that the use of mechanical appliances and scientific methods in farming has made an enormous difference to farmers. More is being produced with less man-power on the farms to-day than at any time in the history of the world.
– And the farmers are making less money.
– That may be so, but there are many prosperous farmers in the community. There is usually an easily ascertainable reason for the failure of individual farmers. My complaint against the honorable member for Forrest (Mr. Prowse) is that he criticized all governments and spoke resentfully of an alleged lack of governmental action for the assistance of farmers, but did not mention that since the inception of federation the Labour “party has had the majority in both Houses of this Parliament for only about five years. The responsibility for failure to assist farmers must be laid, mainly, at the door of anti-Labour governments. Ever since the honorable gentleman has been sitting in Opposition he has been critical of the Labour party in respect of its policy for the assistance of primary producers, but his criticism is entirely unfounded. If governments are blameworthy, they have been governments supported by the honorable gentleman himself.
Let us look for a few moments at the history of this proposal. The establishment of a mortgage banking system in Australia has been under discussion for a considerable number of years. This bill has been introduced as the “result of the recommendations of the Royal Commission on Monetary and Banking Systems, which submitted its report in 1937. One recommendation of the commission was that a mortgage ‘bank or banks should be established to provide facilities for granting fixed long-term loans to primary .producers. This bill implements that recommendation. The establishment of a mortgage bank department of the Commonwealth Bank is integral to Labour’s plans for rural reconstruction.
I remind honorable members that the Commonwealth Bank was established by a Labour government in 1911. It is not a perfect instrumentality but, for a number of years, it operated satisfac torily. It became less effective after its constitution was altered by the BrucePage Government.
– The honorable gentlemen who composed and supported that Government do not want the ‘bank.
– That is perfectly true. The Labour party endeavoured unsuccessfully to prevent the Bruce-Page Government from tinkering at the Commonwealth Bank.
– The Bruce-Page Government hamstrung the bank.
– That is true, though I do not intend to indulge in a long dissertation on how it was done. In short, the Bruce-Page Government appointed a board of directors consisting of persons who could be trusted to prevent the bank from continuing to function in the interests of the whole community.
– That is not true.
– The honorable member’s contradiction does not alter the fact. I shall cite some passages from Jauncey’s book, Australia’s Government Bank, in order to show how the bank has been hindered from assisting primary producers. Jauncey, I understand, is an American.
– He was an Adelaide boy who went to America when he was about sixteen years of age.
– At any rate he returned to Australia years afterwards and wrote this book. In discussing rural credits in relation to the Commonwealth Bank, Jauncey says -
For fourteen years after the establishment of the Commonwealth Bank no legislation made special provision for the bank to assist farmers. Although one of the reasons for establishing the bank was to aid the farmer, it soon became apparent that the bank was not doing very much to transact business with farmers. Governor Miller in 1914 wrote to Andrew Fisher, leader of the Federal Labour party : “I do not desire to interfere in the lending out of the money to settle people on the land which seems to me to be a State matter, as they control the land laws “.
It will be seen from that statement that Sir Denison Miller did not advocate the lending of money by the Commonwealth to land-holders because he considered that that was a function of the State governments. Jauncey continues -
King O’Malley, in 1917, tried to amend the Commonwealth Bank Act to provide a rural credits department in the bank. On the 7th March of that year, in offering the bill in the House of Representatives, he stated that: The farmer is the foundation of the nation, and yet he pays the highest rate of interest tor his requirements, although he has the best security in the world. The reason for that in Australia is that we have not tried to meet the farmers’ necessities. I thought to get the Commonwealth Bank to assist him, but that institution is not yet performing what should be its greatest function, that is, operating a Rural Credits Loan Department. The existing savings banks, both Commonwealth and States, approved land banks and Credit Foncier institutions, could be utilized by the Governor of the Commonwealth Bank to grant loans to accredited farmers under uniform conditions authorized by the Commonwealth Treasurer.
Coming down to 1924 Jauncey says -
As the Nationalist Government favoured restricting the activities of the Commonwealth Bank, no legislation appeared on rural credits before that party in 1923 coalesced with the Country party. When the coalition introduced the bill of 1924, which dealt with central banking, the Government promised to afford facilities for granting rural credits in separate legislation at the earliest possible moment.
Honorable members will recollect that the anti-Labour Coalition Government in office in 1924 consisted of members of the Nationalist party, now known as the United Australia party, andof the Country party. Jauncey proceeds -
While the bill of 1924 was being discussed, the deputy leader of the Labour Opposition, Frank Anstey, moved -
That the Government should consider the advisability of extending the function of the Commonwealth Bank to provide for rural credits for the following purposes : -
1 ) To advance money on broad acres ;
To assist co-operative finance in primary and secondary production;
To assist in land settlement and development;
To establish a grain and fodder reserve against periods of drought.
The Government rejected the amendment.
I should not have referred to this history of banking legislation in Australia, and the part played in it by the Commonwealth Government, had it not been for the state ments of the honorable members for New England (Mr. Abbott) andForrest (Mr. Prowse), and others, in which they roundly criticized, the present Administration.
– I roundly criticized both this bill and that which was introduced by a previous administration.
– I did not utter one word in criticism of the Government. My remarks, unlike those of the honorable member, were constructive.
– So far, mine have been historical.
– They are not accurate in reference to what I said.
– The honorable member offered certain criticism, and complained that the Government had not introduced the bill earlier; yet the parties constituted by honorable members opposite did not proceed with a measure which they introduced, and one can only conclude that the reason was that they could not agree on its provisions.
I shall now endeavour to offer a few constructive remarks. The present system, under which trading banks and other financial institutions are in the main the instrumentalities for making finance available to rural producers, definitely works in favour of those institutions, often at the expense of the borrowers. Even my honorable friend from For- rest will agree with that. A detailed survey of the debt structure of the primary producers of Australia would reveal striking anomalies. It would certainly prove that many producers are hampered in their production, and especially in the development of greater efficiency, by financial ties. It is undoubtedly true that many farmers are the debt slaves of the community. Any alleviation of the position would be a step in the right direction. There is widespread need for such a system of long-term lending as the bill proposes, and it will be readily availed of by primary producers. There is abundant evidence throughout the country that the proposals of the Government will be warmly received by the man on the land.
Certain comment has been offered on the precautions which may be taken in the interests of the borrower as well as of the lender. Under the existing system the interests of the lender are well protected, whilst those of the borrower, including the development of his efficiency, are often seriously neglected, and in many instances are hampered. In this latter respect, one can envisage a closer relationship between the direction of actual production and the mortgage bank, in the interests of both the lender and the borrower. Such a relationship is desirable and, if well directed, will be of the utmost national value. In exemplification of such a relationship, I refer to the set-up in Tasmania. The Agricultural Bank of that State closely co-ordinates its work with that of the Department of Agriculture. I shall recite a short history of the deeds of this -very fine institution. The bank board consists of three members, the manager of the institution being the chairman. One member is a Commonwealth valuer of very wide experience, and the other is the Superintendent of Agriculture. A fourth, coopted member, is associated with closer settlement. This constitution provides for the control of not only the finances but also the activities of those to whom financial assistance is rendered. The whole of the field work in connexion with the bank is carried out by the Department of Agriculture. The State is divided into three divisions, each of which is in charge of an officer who attends to all the major projects of finance and agricultural direction. Under each of these divisional officers, from four to five district agricultural officers are responsible for the inspectional work and for advice in respect of rehabilitation programmes which are designed to safeguard the advances to individual settlers. When a farmer gets into difficulty, he immediately comes under the surveillance of an agricultural officer. As soon u? there are signs of drifting, or evidence that the farmer is in arrears financially, agricultural direction is proffered. Approximately 100 properties are now under the direct supervision of agricultural officers of the State department, who not only direct the financial arrangements, but also are practically in control of the production programmes. It is obligatory on all officers to submit frequent reports of the financial progress of each farmer, and also to budget for his anticipated expenditure and receipts. Receipts are always assessed on a conservative basis. Significant evidence of the success of the Tasmanian set-up is provided by the fact, that (he Public Trustee now transact.1! ali his business through the Agricultural Bank, and other banking institution? have shown a strong tendency to avail themselves of the assistance of the organization. A detailed investigation of ito activities would be well worth while. 1. do not know whether such an investigation was made by the committee which studied the provisions of the bill. Then: has been a tendency on the part of bank ing institutions in other States to establish a separate agricultural advisory staff. This indicates their appreciation of the need for some such direction. Obviously, full and proper coordination of agricultural advice cannot be expected independently of the State Departments of Agriculture, which arinormally concerned with production programmes. Lack of co-ordination between the financial institutions and the existing agricultural services not only leads tr> duplication, but , also frequently placet* emphasis on the financial aspect of a farmer’s problems rather than on his efficiency as a producer. If the proposed mortgage bank could be brought into closer relationship with Commonwealth agricultural policy, there is reason to believe that better relations could be established between the different State Departments of Agriculture and the bank. Under proper direction, this would ultimately lead to the solution of some of the most important national problems associated with rural industries. It is surely incongruous that many farmers should have to get into debt before they are able to obtain sufficient relief to place them on a more efficient basis. The whole system of debt adjustment tends to favour specifically the farmer who is in debt, and to neglect the one who is in dire need of assistance, yet, by dint of great effort, has remained solvent. That is an aspect of the matter which will need very careful handling in the future. The Agricultural Bank of Tasmania has been in operation for a number of years, and is beyond its teething troubles. I admit that it is easier to divide Tasmania into a number of small districts, because Tasmania itself is comparatively small. However, what has been achieved there indicates what can be done for the farmers elsewhere by an agricultural bank administered sympathetically on behalf of those whom it seeks to serve. Unless the right persons are placed in charge of the new mortgage bank, unless they view sympathetically the problems of the farmers and are prepared from the beginning to assist those who, while not insolvent, are yet in need of financial help, then the mortgage bank will probably fail of its purpose. lt is stated in the memorandum circulated by the Treasurer that -
Subject to this part, loans may be made by the bank through the Mortgage Bank Department, to any .persons engaged in farming, agriculture, horticulture, pastoral or grazing operations, or in such other form of primary .production as the bank thinks fit upon the security of a mortgage to the bank of an estate or interest in land in the Commonwealth used or to be used .primarily for farming, agriculture, horticulture, pastoral or grazing operations, or in such other form nf primary production as the bank thinks fit.
That provision is very wide, and I should like to know whether it is wide enough to permit the bank to make advances to persons engaged in the fishing industry. This matter was raised last week by the honorable member for New England (Mr. Abbott). I have been interested in the fishing industry ever since I have been a member of this Parliament, though I have not mentioned the matter much of late, because I recognize that it is impossible, under present conditions, to obtain labour or material for the development of the industry. However, had previous governments yielded to my persuasions, the fishing industry would be in a much stronger position than it is to-day, and would have been able to supply a larger ration of fish to our troops, as well as to the public.
– I cannot see how the fishing industry can be included under the provision quoted by the honorable member.
– That is the point on which I should like to obtain information. I maintain that fishing is a primary industry, just as much as is dairying or wheat-growing.
– The honorable member may appro priately suggest that the fishing industry should be covered by the provisions of the bill. He may indicate the amendment which he intends to move, but the proper stage to discuss the amendment at any length will be when the bill is in committee.
– For fairly obvious reasons, I do not desire to move an amendment; but I maintain that fishing is a primary industry, and that it should be assisted as such by the mortgage bank. By no stretch of imagination could any one argue that it is a secondary industry, and it has certainly been neglected for too long by all governments in Australia. The form of assistance necessary for it is the establishment by the Commonwealth Government of an efficient and properly equipped authority for the study of measures designed for the development of the industry.
– Can the honorable member indicate under what part of the bill assistance to the fishing industry might be rendered?
– I suggest that the authority is contained in the words, “ other forms of primary production as the bank thinks fit “ in proposed new section 60abv. As a matter of fact, I am prepared to divulge a secret. I whispered in the Treasurer’s ear to ask whether those words did in fact cover the fishing industry, and he told me, equally confidentially, that he thought they were designed to do so, but he was not sure, and would find out. I maintain that fishing, being a primary industry, should be covered by the bill. It has been neglected for years, but is capable of great development.
– Order ! I rule that the honorable gentleman can go into details only in committee. All he can do now is to indicate the character of his proposed amendment.
– I rise to order. The honorable member for New England (Mr. Abbott) elaborated at considerable length and with force his claim for the inclusion of oyster-growers.
– He said about two words on that subject.
– At least 200 words.
– I was not in the chair.
– In view of the fact that the precedent has been established, I think that it would be unfair to prevent the honorable member for Bass from developing his view that those engaged in the fishing industry should be included.
– Order ! The precedent created was bad. I shall not prevent honorable members from referring briefly to subjects related to the bill, but they must not go into details which, as in this case, can be more properly dealt with in committee.
– I bow to your ruling, Mr. Speaker, but I point out that one honorable member, speaking on this bill last week, said enough about the fishing industry to have his remarks published in the press and to cause a number of letters to be written on that subject to the Treasurer and to other members of Parliament.
The honorable member for Wimmera (Mr. Wilson) scored an excellent point this afternoon in reply to an interjection by the honorable member for Barker (Mr. Archie Cameron). I agree with the honorable member that there can be no doubt that the problems of the man on the land are basically due to inflated land values. Every time land changes hands its value becomes further inflated, and almost every land transaction is made on borrowed capital. No wonder many farmers are in serious difficulties. My mind travels back to the sordid experience of governments and returned soldiers alike after the last war, when land values were inflated beyond all bounds by the practices that were indulged in by some people. I hope that there will be no repetition of that scandal after this war. There will not be if the Labour party remains in office. I hope that this bill will be passed in order that a further legislative contribution may be made to the solution of the problems which beset primary producers.
– I suspect from what they have said that many supporters of the Government are not happy about this bill. Some of them dislike it because it is too orthodox and others, especially those who represent rural constituencies, because it does not provide sufficient assistance for their farmer constituents. Judging by what was said by the honorable member for Bass (Mr. Barnard), many honorable gentlemen opposite feel unhappy that they are unable to reply to the criticism advanced by the Opposition. I do not blame them, for that criticism is hard to answer. We have set out the history of the Commonwealth Bank and advanced general arguments on the purposes of the proposed mortgage department which will affect the farmer more than any one else. I have no bouquets to throw to the Government on this bill. I regard it as eminently unsatisfactory and I have no doubt that the large majority of the farming community regard it in the same light. Not many primary producers will gain any advantage from the provisions of this bill, and whatever advantage is gained by any of them will be very limited. The principles of finance in relation to primary production are accepted, and they provide a ready measure of how far this bill complies with requirements. Primary producers need money on long terms at a fixed rate of interest which should be the lowest possible rate. Cohen, an established authority, says -
In the long run agriculture works successfully only if loans are obtained at low rates.
– He knows his job.
– He does. The Department of Agriculture in the United States of America estimated some years ago that in any one year the output of agriculture was only 25 per cent, of the capital employed as against 100 per cent, in secondary industry. Therefore, the interest charged on borrowed capital is exceptionally important in primary production. Honorable members are doubtless aware of the degree to which interest enters into the cost of many of our capital investments, and production from them. It is estimated on unimpeachable authority that the interest on capital lent for building represents on an average 50 per cent, of the rent. The same thing applies in the primary industries. Statements have been made that 25 per cent, is the most that one can expect from the investment of £100 in primary industry. In my opinion, that figure is exaggerated ; it should be 15 per cent, or 18 per cent. The loan money made available to the primary producers represents a large percentage of the actual cost of production. The burden of interest rates is very considerable, and is an appreciable percentage of the costs. For chat reason alone, it is clear that money must be made available to our primary producers at the lowest possible rate.
Mortgage banking is not a new experiment. The practice, which has been in existence for hundreds of years, originated in Prussia towards the end of the eighteenth century. From that beginning, mortgage banks sprang up in all countries, even in Australia in recent years. Some of them are in the form of State banks, which compete with private banks, and others are conducted purely by private banks. Put the modern tendency in all parts of the world has been for the private banks to unite for the purpose of spreading the risk, and thereby safeguarding the interests of their investors. Figures have been produced in the United States of America showing how stable and secure these banks are. In 1929, the federal banks advanced on. mortgage to primary producers the enormous sum of $1,202,000,000, but foreclosures amounted to only $6,430,000, or 5 per cent, of the total advances. For 49 joint stock banks in the United States of America, only ,.85 per cent, of the total advances were the subject of foreclosures. The figures showing the position in France in 1928 are even more remarkable, the actual foreclosures being 02 per cent, of the advances. Those statistics disclose that the mortgage banking business can be made very secure either for the State or for private enterprise.
For money for primary production, Australia has relied upon two main sources, namely, private banks and pastoral companies. I shall not elaborate these points, because they have been covered by previous speakers, hut I mention them because they have some bearing on my argument. The banks and pastoral companies issue money on a short-term basis or at .call, and at varying rates of interest. The other source is financial institutions, such as insurance companies, or private individuals, lending the money on mortgage for a period. Such loans are not repayable at call. As the result of the operation of moratoriums, this source has dried up to a large degree during recent years. Investors are unwilling to lend money, because they do not know whether or when they will be able to secure repayment. Large amounts that have been lent have been lost to the mortgagees. As the trading banks are not able to lend money on long terms, it is clear that large gaps have been left in our economic system, and they must be filled by another instrumentality. In this instance, that instrumentality is the mortgage bank department of the Commonwealth Bank. From that standpoint, I welcome this legislation. If honorable members will compare this bill with the legislation introduced in 1938, they will find that the two measures are practically identical.
– That is not so. They differ materially on the most important points.
– On the essentials, they ore practically identical. One difference is that the legislation introduced in 1938 empowered the Commonwealth Bank to issue debentures. That provision has been omitted from the present bill. Another, difference is that the period of repayment has been increased from 3-35 years to 5-41 years. The third difference, which is fairly important, is that the legislation in 1938 imposed no limit upon the amount of money that might be lent upon the security; but the maximum amount of loan under the bill is £5,000. I am able to understand why the Government has nottaken power to issue debentures, because the Treasurer considers that money required by the public should be made available through the central bank. I follow that reasoning. What I am unable to understand is that if the Government is prepared to forgo a principle in raising money for the conduct of the war, it should not make an exception in the case of lending money to primary producers. From the point of view of the country, I consider that the bank should have power to issue debentures in such a maimer as would permit it to raise money from members of the public who are prepared to invest to help primary production. That procedure is followed by every mortgage bank in the world of which I know anything. It has two advantages: first, it allows the Government to tap the available money resources of the country for this purpose; and, secondly, it provides the investing section of the public with a good form of security. The lender always has power to withdraw his money without disturbing the borrower. Such debentures are among the principal market securities in the countries of issue. In Argentina, for example, about 60 per cent, of transactions on the Argentine Bourse are in cedulas or ordinary bonds issued by the Agricultural Bank. Such bonds are sometimes at a discount and sometimes at a premium.
– They are regarded as a valuable form of security.
– That is so, and it is true nol only of private investors but also of banks and financial institutions generally. The procedure that I have described is followed in England and also in Scandinavian countries. Of course it was also followed in Germany and France in. the old days. As we are experimenting - if I may so describe it - with a new financial institution, I can see no reason why we should not follow the practice of other countries which have established similar institutions. We ought to benefit by their experience.
– Are these agricultural bank bonds guaranteed by the governments?
– They are guaranteed by the security on which they are issued. In Argentina they are at a premium compared with ordinary government bonds.
– That was true also in Europe before the war.
– It is due to the amortization, which makes them a better security.
– Although my proposal may be considered a departure from the principles of the Labour party, I consider that We should establish this bank on sound lines.
– In the constitutions of the majority of mortgage banks, provision is made for the issue of bonds ranging from fifteen to twenty times the amount of the authorized capital of the bank. Such a provision was included in the bill introduced by a previous administration, but the amount was restricted’ to six times the authorized capital of the bank. The amount required for loans to primary producers is very large. In 1936, the trading banks in Australia had issued by way of loans a total of £125,000,000. In addition, loans to primary producers had been made by pastoral companies and private concerns. Therefore, some provision should be made along these lines.
My second point in regard to the general set-up of .the bank is that it is to be formed as a department of the Commonwealth Bank. I agree entirely with the honorable member for New England (Mr. Abbott) that it would be far preferable to establish the mortgage bank as an entity separate from the Commonwealth Bank, in order to centralize the control of mortgage bank business and enable the staff to obtain the experience which is essential in this class of institution. As the honorable member for Wimmera (Mr. Wilson) pointed out to-day, the business of the Commonwealth Bank is peculiar to itself; it deals substantially with the issue of large sums to various government instrumentalities, and the financing of different pools of primary produce. The Minister for Home Security (Mr. Lazzarini), who is also assistant to the Treasurer (Mr. Chifley), seized the occasion to take the honorable member for New England severely to task, and to accuse him of attempting to hand the mortgage bank over to private enterprise. I always thoughtfully regard statements that are made by persons in authority. Possibly because of my training as a soldier, I am inclined to accept such statements as being worthy of consideration. I should have thought that the honorable gentleman, whatever his financial experience may have been prior to his selection as assistant to the’ Treasurer, would at least have learned something of the ordinary technique of finance since he has held that position. I point out to him that the proposals of the honorable member for New England,. both of which I support, have no relation to any design to hand the mortgage bank over to private enterprise. The mere fact of establishing that institution as an entity separate from the Commonwealth Bank would cause it to remain under state control, subject only to the general supervision of the Commonwealth Bank. Every mortgage bank in the world issues debentures, and the only control given to the holders of them is that, in certain instances, a trustee is appointed, with limited powers in regard to the mortgage bank itself. Those powers come under three heads; they are - the trustee is authorized, first, to see that the bank complies with the regulations under which it has been established; secondly, that it keeps the issue of debentures within the limits allowed by the statute; and, thirdly, that the securities on which debentures and loans are issued are in accordance with the regulations.
That disposes of the first point, in regard to the general set-up of. the bank. In two more features, the bill differs from that which was placed before the Parliament in 193S. I consider that the period for which loans may be granted is too short. It is true that the parliamentary committee which examined the measure recommended, an extension of the term to 41 years, and that its recommendation has been adopted. The period might very well be lengthened still further. If we examine the mortgage banks of other countries in order to learn the periods for which loans are issued, we find that the Credit Foncier of France is authorized to lend money for periods ranging up to 75 years; that in Germany and England the maximum period is 60 years, and that the mortgage banks of other countries have similar periods. My reason for considering that a longer term than is proposed should be allowed, is that the cost of the loan to the borrower would thereby be reduced. I have taken figures from a report of the Agricultural and Mortgage Corporation of England for the year 193’6, when interest rates were a good deal higher than they are to-day, both here and there. For a loan to be redeemed in 60 years, the amount payable by the borrower, including interest, administrative charges, and repayment, was £4 15s. per cent. Interest and all other charges payable on a loan returnable in 40 years amounted to £5 8s. 4d. per cent., a difference of 13s. 4d. This represents a very appreciable economy to the borrower.
The third point upon which I wish to comment is in regard to the amount of a loan which the mortgage bank will be authorized to make. The limit to be granted to a borrower is to be £5,000. That is too small. There are many States in which it is exceeded. Whilst admitting that this institution should operate for the benefit of the small rather than the large borrower, I still consider that the amount could very well be increased to £7,500 or £10,000.”
A good deal, of comment has been directed, particularly from this side of the House, to the margin of security. The recommendation of the committee to limit the advance to 66f per cent, of the valuation has been adopted. That figure corresponds more or less with the percentage of advance laid down by similar institutions elsewhere. The general average in Europe is approximately 60 per cent. The limit is 50 per cent, in .Sweden, 50 per cent, by Credit Foncier of France, 60 per cent, in Denmark, and 66$ per cent, in Italy. Therefore, the extra advance proposed by the committee, and embodied in the bill, is reasonable and safe.
I here draw attention to a point which applies not merely to the limit of advance, but also to the whole bill. Is this bank to be run on business or on political lines? If it is to be run on business lines, it has to be conducted according to the business experience of this and every other country. If it be run on political lines, as many persons undoubtedly would like it to be, the margin of security will be lowered beyond the limit of safety, and loans will be granted irrespective of the worth of the borrower and possibly the value of his land. Therefore, it is of considerable importance that the institution should be properly based and be run on business lines. If it be kept under political control, or be subject to any political interference, political influence will be used in order to obtain loans which should not be granted.
In general, the chief feature which will disappoint all those who are interested in this bank is that the proposed rates of interest are too high. From what the Treasurer has said, it would appear that the charge will be the current rate of interest, plus 1 per cent, for administrative cost and a further 1 per cent, amortization. At present rates of interest, that would mean approximately 5 per cent., which is much too high. By orthodox methods, it could be considerably lowered - first, by increasing the term of the loan to 60 years; and, secondly, by reducing to reasonable limits the administrative cost which is now fixed at 1 per cent. If experience abroad be examined, it will be found that the Credit Foncier of France issues money at an administrative cost of .6 per cent.; in other words, a saving of 8s. on the amount of £1 proposed by the bill. A combination of these two methods would produce a saving of 13s. 8d. on the lengthening of the term of the loan, and 8s. on the cost of administration. This would reduce the burden of the loan to the borrowers to approximately £3 18s. per cent., which is not greatly in excess of the rate of 3 per cent, proposed by the honorable member for Wimmera. I commend these two proposals to the Government.
I have only one other comment to make in conclusion; that is, in regard to the purposes for which this bank is to be established. It is laid down that a loan may be made by the bank to any person engaged in farming, agricultural, horticultural, pastoral or grazing operations, or such other form, of primary production as the bank thinks fit. That provision is too restricted* A mortgage bank could usefully be employed to assist primary industries other than those listed in the bill. For instance, there might be added to the list poultry farm- ing, the fishing industry, afforestation, viticulture, and rural housing. The proposed new section mentions land used for pastoral and grazing purposes, but I have yet to learn the difference between a pastoral and a grazing property. To me, and to most other people, they are one and the same thing.
– Does the honorable member favour the making of loans on security other than freehold land?
– I think that the bank might lend money on the security of land held on long lease, as is done in other countries. The functions of the bank might at some future date be extended to permit it to lend money to persons interested in real estate in towns as well as in the country. I hope that before long we shall be able to embark upon an extensive housing programme. Much of this work will probably be done by means of government finance, but housing schemes are usually confined to the building of workers’ homes of comparatively low value. It should be made possible for the mortgage bank to lend money for the erection of houses other than those.
– The Commonwealth Housing Act of 1928 provides for the making of housing loans up to £1,800.
– I trust that the Government will consider the suggestions that have been made. We are now founding an institution which is likely to have an important influence on the economy of the country. Let us, therefore, build it upon broad and strong foundations.
.- I welcome this bill, despite its shortcomings, and congratulate the Government upon taking another step towards the fulfilment of the undertakings given by the present Prime Minister (Mr. Curtin) at the time of the last general election. In the past, successive governments promised to institute a mortgage bank; but nothing was done to honour those promises. I believe that this mortgage bank will play an important part in the development of the agricultural districts of Australia.
The anti-Labour parties were in power for many years. The royal commission which inquired into banking supplied a previous government with all the data necessary for the foundation of a mortgage bank; but, although that Government enjoyed a majority in both Houses of this Parliament, it failed to enact the necessary legislation to establish the bank. The Labour Government, despite its unprecedented pre-occupation with other affairs, has taken steps to found an institution which will give farmers and small wool-growers some much needed help in the long fight which they have waged against the high interest charges of the trading banks. In one of the first speeches which I made in this Parliament I appealed to the Menzies Government to establish a mortgage bank. In June, 1940, I said -
I direct the attention of the House to the failure of the Government to give any substantial relief to the wheat industry. In my opinion, relief could best be given, to that industry by the establishment of a mortgage branch of the Commonwealth Bank, as was recommended by the Royal Commission on the Monetary and Banking Systems. The wheat commission reported that the indebtedness of the farmers of Australia amounted to about £150,000,000, but I should say that they now owe f 200,000,000, the bulk of which is in short-term loans or on mortgage on which the interest rate is not less than 5 per cent., involving an annual interest bill of more than £10,000,000. The character of the debts subjects the wheat-farmers to the vagaries of the money market, with resultant insecurity to himself and his dependants. A mortgage bank which would take over those short-term debts and mortgagee in exchange for long-term loans would give security to the farmers, especially as, on a long-term basis, the rate of interest would be reduced from 5 per cent, to about 2i per cent., which would mean an annual saving to the farmers of about £5,000,000. I cannot understand why the Government has failed to set up a mortgage bank. Countless promises have been made on behalf of this Government and similar governments that effect would be given to the recommendations of the banking commission. Sir George Pearce, a former Western Australian senator, made such a promise in August, 1937, and the then Prime Minister, the late Mr. Lyons, repeated it a month later. The Minister for Commerce (Sir Earle Page) gave a similar .promise in October, 1938, and as late as May, 1939, the Prime Minister (Mr. Menzies) restated it. I urge the Government to fulfil these promises to the wheat-growers so that they may be rescued from the burden which is crushing them.
Honorable members opposite seek to make the public believe that they are the real representatives of the farmers, that they alone have the interests of the farmers at heart. I point out, however, that they had the opportunity to establish this much-needed mortgage bank, and that they failed to avail themselves of it. For the want of such a bank as is now proposed, farmers have had to walk off their land after toiling on it for years. I was born in the midst of a farming community, and I have lived in a farming district all my life. My work has been associated with the pastoral and farming industries. Many of my friends were encouraged by previous governments to take up land. The great cry of the right honorable member for North Sydney (Mr. Hughes), when he was Prime Minister, was “Produce! Produce ! Produce ! “ Men were encouraged to take up land in what are now called marginal areas. Then, after years of battling, they had to admit themselves beaten by high interest charges, and they walked off their farms. In my electorate in Western Australia one can drive for miles past abandoned farms. During the bad times in 1930 hundreds of men had to leave their farms and go on the dole. The honorable member for Forrest (Mr. Prowse) and the honorable member for Swan (Mr. Marwick) are well aware of this.
– The wheat harvest employment award is more recent history than that.
– That award involves a matter of a few shillings, but high interest rates cost the farmers millions of pounds. The award was made by a properly constituted tribunal under an independent chairman. For many years the union in Western Australia of which I was secretary did not go to the Arbitration Court. All its claims were settled at conferences at which both sides had equal representation. No witnesses were called. At the conference table we reached agreements which ensured industrial peace. The honorable member talks about the harvesters award when he knows that a debt of millions of pounds to private financiers is the cause of the worries of the primary producers. I admit that this measure has shortcomings, but it provides a nucleus which can be expanded progressively to meet needs as they arise. It will ensure that those who are prepared to pioneer this country shall be provided at reasonable rates of interest with the necessary finance, and that due consideration shall be paid to such adversities as drought, flood, and fire which men may face in establishing themselves on the land. The lack of a bank of this character has broken many hearts and caused many farms to revert to scrub in this country. Many men who have been driven off wheat farms could have switched from wheat to sheep, if they had been able to borrow for long terms money at low rates of interest. Many hundreds of square miles of now idle land in Western Australia would have been kept in production had the anti-Labour parties made full use of their opportunities and brought down legislation of this character. The history of the agricultural and pastoral industries of this country contains many dark pages because of the treatment of the primary producers by the private financial institutions. The private banks have had them in their grip. Charges of extravagance have been laid by their representatives against farmers in the outback because they have dared to have a wireless set or a motor car. It is not extravagance for a man whose property is 30 or 40 miles from the railhead to have a motor car. Otherwise how would he obtain his provisions?
– That i3 what motor cars are for.
– Yes, the people outback have a right to them. Why should they have to isolate themselves even to the point of not having a wireless set? Yet that is the attitude of the private banks when these men experience difficulty in paying their interest. One of the first aims in the post-war period must be to improve the lot of the men and women in the outback, who are producing this country’s wealth. Their burden is infinitely greater than that of people living in cities. It is time that we realized the value of the primary producer. Everything we have has its origin in the land. Certain honorable members of this Parliament are members of a party which claims that it alone represents the farmers. That party has failed in its duty to those who elected its members to Parliament, because for many years it had a powerful voice in the ministries which controlled this country, and failed to use that voice in the interests of the people its represents. If Country party members had not been recreant to their trust we should have had mortgage bank legislation enacted by this Parliament many years ago. This measure is not so liberal as I and other honorable gentlemen should have .liked, but the Ministry gave earnest consideration to it before introducing it. The transcending consideration to-day is the winning of the war, but this community must be kept intact, and to accomplish that we must maintain the pastoral and agricultural industries. This bill will help to do that, so I support it in the hope that when peace comes again this Parliament will take whatever action may be necessary to improve the bank in order that we may have happier homes in our outback areas.
.- There is no need for me to refute the statements made by the Minister for Home Security (Mr. Lazzarini) to the effect that I destroyed the functions of the Commonwealth Bank by the amending bill which I introduced in 1924. The facts published by the Commonwealth Bank itself in its annual reports completely disprove the honorable gentleman’s statements. To ensure that there should be no doubt on this point I asked the officers of the Commonwealth Bank to tell me exactly what was the position in 1922, the year before I introduced the amending legislation, compared with 1932 and 1942. I learned that the total assets of all departments of the bank were £134,000,000 in 1922, £248,000,000 in 1932, and £481,000,000 in 1942.
– They would have been five times as great if the right honorable gentleman had not interfered.
– In 1922 the Commonwealth Bank had 62 branches compared with 332 in 1942 - an increase by 500 per cent. The number of men working in the bank has increased from 1,800 in 1922 to well over 6,000. The fine buildings that the bank has erected in the country towns of Australia in the last ten or fifteen years show what progress it has made since it was remodelled. Nothing can alter these facts. It is. a pity that the Labour party has not acquainted itself with the published statements of the’ Commonwealth Bank, and it is a still greater pity that it is not acquainted with the terms of the Commonwealth Bank Act. If it were we should not have had brought before us such a bill as this.
– Why did the Government of which the right honorable gentleman was Treasurer not bring down a mortgage bank bill?
– It did, as I shall later point out. This bill does nothing that could not be done under the existing Commonwealth Bank Act as amended by me in 1924 and 1928. All this bill does is, as was eloquently and intelligently pointed out by the honorable member for Flinders (Mr. Ryan), is to limit the now unlimited powers of the Commonwealth Bank to lend money on land and help the farmers. Both the Commonwealth Bank and the Commonwealth Savings Bank under their existing powers can make advances of up to 100 per cent.. of the value of properties, for 1,000 years if they like. They can do anything at all within their discretion and they are not likely to be so foolish. But this bill will limit their functions in that respect. By the method of financing this mortgage bank the credit of the Commonwealth Bank will be destroyed and we shall find ourselves paying very much more for our money than is being paid at present. The mortgage bank will be completely subject to political control. The remodelled Commonwealth Bank has seen Australia through the worst depression in history and has enabled the financing of the war, one year’s expenditure on which is greater than the whole expenditure in the last war. I cannot understand how men who in their souls are patriotic should disparage an institution which has done such a tremendous job of work for this country, but honorable members opposite are always disparaging it. They go round with a look of woe on their faces as if the Commonwealth Bank were dead. To show that it is far from dead I cite the fact that it has grown to five times the size it was when I remodelled it. Let us look at the Commonwealth Bank Act and see what is the exact position in regard to lending on land. That unless this bill be materially altered in committee it will be a snare and a delusion to the man on the land. I regard the bill as an absolute sham. The country people are being defrauded. In committee something must be done about the provision of new capital, and to give the bank greater power and real independence without which the bank will be a mere pretence. Unless such improvements as I desire are made it will not be worth while discussing such amendments as increasing the term of loans or raising their percentage to 70, 80 or 90.
The Commonwealth Bank undoubtedly already has power to make advances on land. The section of the act under which that power is given to the bank was inserted in the original act by Mir. King O’Malley in 1911. I left it there unchanged when I had the act amended. Mr. O’Malley also inserted a provision in the 1911 act empowering the bank to raise capital by selling debentures. The sale of debentures terrifies the Labour party now; but that was the means of ‘ raising capital favoured by Mr. O’Malley, who is rightly acclaimed by honorable members opposite as the founder of the Commonwealth Bank. The Labour party is claiming that it is following his footsteps, but it is a long_ way off the trail. Under part II., section 7, of the Commonwealth Bank Act the bank, as at present constituted, has power to acquire and hold land on tenure and to make advances by way of loan, overdraft or otherwise. Under part IV., section 34 (1) (B), the bank may invest any moneys held by it on loan on the security of land or in any other prescribed manner. Under part V., section 35W, the Savings Bank may invest any moneys held by it in (1) loan on the security of land, (2) advancing money in accordance with the Commonwealth Housing Act 1927 for the purchase or erection of dwelling houses and for the discharge of mortgages on dwelling houses, and (3) advancing money for the erection of warehouses or storage facilities intended for the warehousing or storage of primary products, including the erection of plant for treatment to ensure their preservation and preparation for marketing.
The provision in the existing act is as wide as possible, although it is decried by honorable members opposite, merely because they have never taken the trouble to study and understand its contents. The act deals not only with land and houses but also with warehouses and factories. These powers enable the Commonwealth Bank at the present time to advance money, at its discretion, on land, the repayments to extend over 40 or 60 years.
In my opinion this bill restricts the existing power of the bank to make those advances, and in that respect it will do a great injury to primary producers.
The bill should ensure the independence of the mortgage bank department, because the outstanding feature of the Commonwealth Bank, which has been responsible for the success of the institution, particularly since 1924, is that it has always remained independent of political control. One reason why the bank has been accused of refusing to accept transfers of accounts from other banks is that, being a Government institution, it must exercise the greatest care in making advances. If it were to treat one client more favorably than another it- would immediately be accused of being actuated by political prejudices. At all times, the bank must be impartial. One of the principal amendments, which I introduced in 1924, placed the bank under the control of an independent board of seven directors, each of whom is elected for seven years. As the directors retire in rotation, continuity of control is preserved, and the Government must go to the country at least twice before it can completely alter the policy of the bank. Thus the electors have two opportunities to declare whether they approve of the policy before the personnel and character of the Commonwealth Bank Board can be completely changed. Unfortunately, though not intentionally, the bill attacks that principle of independence which has been so valuable in building up the Commonwealth Bank to its present stature. Andrew Fisher, King O’Malley and I studiously refrained from talking any action which would give to the Government any control over the bank by virtue of advancing unlimited money to it.
In 1924 I introduced legislation for thu purpose of increasing the capital of the bank to £20,000,000, and I provided means whereby the Government could make a special grant of £6,000,000 to enable the bank to function more efficiently. When I established a rural credits department, I provided for an advance of not more than £3,000,000 to be made by the Treasury. That sum is only one-thirtieth of the amount which has been advanced by the rural credits department of the bank in connexion with the orderly marketing of primary produce. The purpose was that the Bank Board, not the Government, should have the final word in policy. This bill, however, gives to the Treasurer unlimited power to advance as much money as he likes, when he likes, out of loan raisings. This is an extraordinary provision, because the Labour party has always advocated the use of national credit. Has the Treasurer forgotten that the Commonwealth Bank has complete control of the note issue? When I was Treasurer I transferred the control of the note issue from the Treasury to the Commonwealth Bank in order to make the institution independent of the Government of the day. The Treasurer now proposes to make available to the Commonwealth Bank money raised from loan, and the anomaly is that the bank will first have to raise that money. The proposition is too absurd for words. The legislation which was introduced by a former Treasurer, Mr. Casey, in 1938, treated the Commonwealth Bank as if it were a real thing. It provided that the Commonwealth Bank could make advances on a business basis to the mortgage bank department. Surely that is the proper way in which to deal with the matter. If this provision in the bill be accepted it will mark the beginning of the end of the Commonwealth Bank and of Australia. The central banks of other countries have failed through the adoption of such insidious methods of political interference. Inflation is caused by the Government obtaining control of finance. I shall vote for the motion for the second reading of the bill in the hope that this provision will be amended in committee. If it is not, I shall oppose the motion for the third reading of the bill, because this provision will destroy the credit of the Commonwealth Bank and prove a menace to the farmingcommunity. This provision is most dangerous and, if retained, .will be most costly to the community at large.
The honorable member for Wimmera (Mr. Wilson) pointed out the difficulty of raising money on the open market at a low rate of interest. The answer has been given by the honorable member for Flinders (Mr. Ryan), who cited many instances of the successful functioning of the system of raising capital by debentures, the security being the land, which is recognized as being the best security in the world. This method has been adopted with conspicuous success in Argentina, Holland, Denmark and France, to mention only .a few countries. “When Germany was fighting its way out of the horrors of inflation it tried all sorts of methods without success until it anchored its currency to the fundamental values of the land. Only then did Germany begin to attain solvency. Anybody who proposes that the Government should raise loans to advance to the central bank, which controls the note issue, is no friend of the fa imer.
– The farmers were paying high rates of interest when governments supported by the right honorable gentleman were in office.
– Legislation which I introduced provided £12,000,000 for the purpose of farmers’ debt relief, free of interest, to assist distressed farmers.
– Why did Governments supported by the right honorable gentleman force the farmers into that position?
– The Scullin Government was responsible for that. Time after time the Labour . party opposed proposals for the introduction of a flour tax aud the fixation of a home consumption price for wheat. The United Country party has always done its best to assist the farmer, though it received little encouragement from the Labour party.
The primary object of a mortgage bank should be to enable farmers to purchase their farms, and to enable tenants to buy on terms that will give to them an assurance that they will not be dispossessed because of bad seasons and low prices. The bank should be designed to enable them to pay off their capital . debt steadily by regular instalments. Interest should be fixed at a low rate for the whole period of the contract, and no extra charge should be made for the renewal of mortgages. In addition, there. must be no uncertainty in the mind of the farmer as to whether he will be able to secure the renewal of his mortgage. Under those conditions, the farmer will be able to make progress with an easy mind in the knowledge that he will own the improvements that he makes.
– What rate of interest does the honorable gentleman suggest?
– If the rate is fixed at 3 per cent, farmers will begin to see daylight. But that rate of interest will never be possible unless the capital of the bank is raised by debentures and agriculture made prosperous.
– That rate of interestis still too high.
– If it be excessive, the Government must provide a subsidy for the cost of living for the purpose of enabling the farmer to obtain reasonable prices for his commodities. The only way in which to obtain cheap money for agriculture is to make agriculture prosperous. When that is done agriculture will become a magnet for investment, and competition will arise among lenders instead of among borrowers.
– When did the righthonorable gentleman think of those things?
– I have believed them all my life. That is why I have been returned so consistently to this Parliament, and why the Labour party has been in Opposition for so many years.
Like the honorable member for New England (Mr. Abbott), I consider that the period of repayment should be at least 60 years in order to enable the amortization rate to be as low as possible and thus reduce the annual charge to a minimum. By that means, interest will be reduced by one-half per cent. The second object of the mortgage bank department should be to set a standard that will reduce the existing mortgage rates and improve the conditions of producers. This general improvement has been in my mind for many years during which I have advocated the establishment of a mortgage bank.
– The trouble is that the right honorable gentleman has kept those ideas in his mind and did not give effect to them
– The legislation which I introduced in 1924 and 1928 gave effect to them. Unfortunately, the Treasurer has not heeded my advice that 80 to 90 per cent, of the deposits in the Commonwealth Savings Bank should be devoted to the purchase of homes and farms instead of being invested in Government loans.
– Why did not the right honorable gentleman remember that?
– I did. In 1928 the then honorable member for Dalley, Mr. Theodore, was responsible for having the Savings Bank Bill recommitted, and the provision for independent control eliminated. The measure in that form is still on the statute-book, and, if the Government wished to do so, it could make the Savings Bank independent. By the mere issue of a proclamation, the bank could also, if it, wished, make available from the savings bank branch of the ‘Commonwealth Bank large sums of money for the purposes of the new mortgage bank department. It was only because the legislation was in its present form that the Commonwealth Bank was able to take over the Savings Bank of New South Wales after it had been practically destroyed by the Lang Labour Government in that State.
– It was party political propaganda that destroyed it.
– I ask honorable members not to interject. Ministers should set an example.
– We. should make it possible, in this legislation, for the trading banks to help the Commonwealth Bank to make the proposed mortgage bank department a success by themselves following the example in giving, longterm farm advances
– So that, is what the Opposition desires !
– I again appeal to Ministers not to interject, but to assist the Chair to conduct the proceedings of the House in an orderly manner.
– We should do everything possible to make our landed industries a magnet for investments. That is our most important need in these days. At present money is being loaned by the banks only on call, or on such short terms that it is practically on call. That makes it impossible for farmers to obtain the financial accommodation in the way that they need from the conditions of their industry. For that reason I urge honorable members to do everything in their power to make the granting of long-term loans practicable. We should draw upon the resources of the trading banks.
– The trading banks could lend money on long terms now if they desired to do so.
– But they must be able to secure capital. My contention is that the methods that have proved successful in other countries should be applied in Australia. We once prided ourselves on being leaders in social and political reforms, but apparently, in financial practice, honorable gentlemen opposite are prepared to take a rear position, for it seems that they will not agree to the adoption of mortgage bank practice which will make possible the release of the maximum amount of capital for the assistance of farmers. If debentures could be issued to the public, I believe that when peace arrives ample money would bc- forthcoming for the purposes of this bank. In our 1938 bill, provision was made for a capital fund of £4,000,000, which could be increased to six times that amount by the issue of debentures, with first mortgages as security. In some other countries the capital of mortgage banks may be increased by 20 times by means of the issue of debentures. No limit is placed on the Bank of England in respect of the issue of debentures under the Agricultural Credits Act. In the last analysis the number of mortgages determines the amount of money that can be made available for this purpose. We marry the capital raised to the need as it arises.’
I was chairman of the Loan Council for seven years, and I know something of its procedure. I fear that unless the Treasurer is careful he will find it impossible to get the money he needs for the purposes of this bank. Honorable gentlemen are fairly well aware of the procedure of the Loan Council. The various Treasurers attend the meetings with the intention of securing certain sums for what they regard as indispensable needs, but they frequently leave the council meeting with only one-half of the amount that they wished to obtain, because the council expressed the opinion that the market could not sustain loans for the full amount desired. If the Commonwealth Treasurer were to make an application to the Loan Council for, say, £15,000,000 for mortgage bank purposes, it is quite probable that he would be granted not more than £5,000,000. That would be a serious state of affairs for the programme of the mortgage bank. But that kind of thing has happened frequently. I. remember that in 1925 the Victorian Treasurer had to forego the whole of his requirements for the Yallourn electricity scheme, although that was the most reproductive public work in Victoria at that time, and this delayed its final completion a couple of years. On another occasion, the Commonwealth Government could not, over several years, get the money it wanted for the purposes of its £12,000,000 rural debt adjustment scheme. With the possibility of such decisions by the Loan Council, I consider that it is highly desirable that the operations of this bank should not in normal times be subject to control by that body. It should be entirely independent, as other private raisings are. It will be remembered that only about two years ago, when the present Leader of the Opposition (Mr. Fadden) was Treasurer he applied to the Loan Council foi £500,000 for the purpose of establishing a Commonwealth fodder conservation scheme, but the State representatives said, “No, we will not allow that item; you can cut it out “. That’ is the only occasion on which I have known a whole item to be eliminated in that way. That action by the States was taken six months before the worst drought that has ever struck this country, and Australia was greatly handicapped in consequence of the council’s decision.
I appeal to the Treasurer, therefore, to give earnest consideration to the proposals that I am making. The decision on this point should not be governed by party considerations. I am sure that all of us desire this bank to get a good start. If the Treasurer is frank with us, he will tell us that he does not think that he has a chance of obtaining for the purposes of this bank even £5,000,000 of the forthcoming loan of £100,000,000. I do not think that he will get a penny from that source. That money is needed for the war effort, and the people would resent any attempt to divert any portion of it to any other purpose. 1 cannot see that any harm could possibly follow a decision to allow debentures to be issued in order to help in the financing of this mortgage bank department. From every point of view, the proposal is entirely reasonable. A sum of £4,000,000 would give the bank a fair beginning, but surely we must have some adequate means of increasing the capital fund. If the Government insists on retaining the financial scheme set out in the bill without any amendment whatsoever it will be the most ludicrous decision I have ever known. We all know that investors dislike having to put all their eggs into one basket. In my opinion, people with money to lend will welcome an opportunity to invest some of it in mortgage bank debentures, if the way is opened for them to do so. Investors invariably allocate some of their money to industrials, some to Government stocks and some to other available securities, and I can see no justifiable reason for refusing to place mortgage bank debentures on the market. The experience of other countries should guide us in this matter. Plans which have proved successful abroad could hardly prove unsuccessful in Australia.
– Will the right honorable member say at what rate he thinks such debentures should be offered?
– During the absence of the Treasurer from the chamber, the honorable member for Flinders (Mr. Ryan) stated that similar debentures issued for the purpose of the mortgage bank in Argentina were offered at -i per cent, or J per cent, less than ordinary government loans. Before the war, mortgage bank stock was purchased by investors in Germany, Belgium, France and Denmark on much the same basis. Moreover, there was an international market for such stock. Germany escaped the worst horrors of inflation only by linking its currency with land values. I believe that if we were to organize our mortgage bank department on such a basis as would permit debentures to be issued, we should find substantial overseas investments being made here in such stock.
– Surely we do not want that.
– I am amazed to hear a Minister of the Crown make such a remark. Is it not vitally necessary to our progress that we shall encourage the investment of overseas capital in this country? How else are we to utilise our undeveloped lands? How else are we to enable this country to overcome the turmoil of war and its aftermath? I have just returned from Great Britain and America, and in both countries I found an intelligent appreciation of the fact that money must be made available for developmental purposes in China, India, Africa and Australia. There was a realization too that living standards in undeveloped overseas countries must be improved in every possible way. Transfers to Australia of capital from England and America - the only countries in which money is available - will be necessary for our rehabilitation. I am sure that the Treasurer appreciates the value of the establishment in this country of branches of the great electrical companies, the Goodyear Tyre Company and the Kellogg Company. Such establishments must ultimately greatly ease the exchange position.
– We shall tie ourselves up to international financiers.
– Is not the whole world tied up inextricably in every way at present? Our soldiers are fighting on practically every theatre of war. Any one who says that we should not tie ourselves up with the rest of the world is surely a madman. We do not want isolationists here. There were isolationists enough in the United States of America at one stage, but the attack by the Japanese on Pearl Harbour cured isolationism in America. It seems that nothing short of a similar catastrophe in Australia will cure some people in this country of isolationism.
We must make our landed industries the magnet for investments. We must do everything possible to encourage people from abroad to settle in Australia. I am not asking honorable members opposite to surrender any cherished Labour principles in suggesting that debentures should be issued by the mortgage bank department of the Commonwealth Bank. I invite the attention of honorable gentlemen opposite to section 9 of the Commonwealth Bank Act 1911, which reads -
The capital of the Bank shall be One million pounds, and shall be raised by the sale and issue of debentures in pursuance of this Act.
Part 6 of that act also provides for the issue of debentures. It may surprise some honorable members to learn that that part of the act has remained practically unaltered since it was first enacted. There can be no doubt that Mr. King O’Malley contemplated the raising of money for bank purposes by the issue of debentures if capital were needed. His intentions are, in fact, inscribed in that measure. I can well remember that when the Commonwealth Bank Act was first passed it was regarded by the Labour party as the last word in financial practice, but apparently some honorable gentlemen opposite now consider that it is out of date. Douglas social credit talk about debentures has shaken their confidence in the principles of the Commonwealth Bank Act, but we must face realities. Other countries have not been frightened to issue debentures for aiding land industries. The Commonwealth Bank Act makes provision for the issue of debentures to an amount of £10,000,000’. ‘ Has that lost us the ba.nk? In ordinary businesses, it is the shareholder, not the person by whom debentures are held, who exercises control; the debenture-holder has a voice in it only in the event of the concern being wound up. Is Australia to be wound up? Not if the man on the land be given a decent deal.
– The right honorable gentleman has taken a long while to arrive at that conclusion.
– All the legislation passed by this Parliament to give a .decent deal to the farmers has been introduced by me. I cite the homeconsumption prices for butter, wheat, dried, canned and fresh fruits, and meat. The honorable gentleman appoints to boards men of inexperience, instead of those who have had experience, and says, “Look what a wonderful show we have made “. The organization that I was instrumental in having established has been running smoothly from its inception. Throughout, there has been producer-‘control. Our achievements were gained despite the opposition of the Labour party in this Parliament, and they will be held notwithstanding anything that that paity may do. At present, we must emulate Great Britain, which, despite the war, is making the conditions of the farmer more remunerative than they were previously. The British Treasury intends to control the cost of living and make it reasonable. That is a function not of the farmer, but of the general taxpayer. Every primary industry in this country must be made profitable and attractive. When that state has been reached, we shall have no difficulty in raising money by the methods that I have proposed. We must ensure that the means at our disposal are sufficient to provide a continually expanding asset. There will then be a repetition of the huge growth that has been made, by the Commonwealth Bank since
I was responsible for the alteration of. its constitution twenty years ago. During that period, its capital has increased from £248,000,000 to £421,000,000. Does the Treasurer believe that in the nexl twenty years he will be able to divert £200,000,000 from loan funds for use by this mortgage bank? Of course not. The only possible system is that which was incorporated in the bill introduced by a previous administration. Let us make that alteration in committee; consequential alterations could then be made in other directions. Otherwise, this bill will not be worth anything, because the effect of it will be to limit the existing power of the Commonwealth Bank to make unlimited advances for unlimited periods to people on the land.
.- Several years ago the late Sir Henry Gullett, the then honorable member for Henty, referred in this House to the right honorable member for Cowper (Sir Earle Page) as the most tragic Treasurer that the Commonwealth had ever had. The speech of the right honorable gentleman to-night proves that he -is still tragic. I have never heard such piffle in my life as his statement of what he had done in connexion with the Commonwealth Bank. While I sat on the Opposition benches, I quoted a statement by the late Sir Ernest Riddell, then Governor of the Commonwealth Bank, who had fo administer its affairs under the altered conditions. I have not that statement with me at the moment.
– Of course not; it does not exist.
– The statement was made in London, and was to the effect that the Commonwealth Bank could not establish a branch where the facilities already provided were sufficient to meet the banking needs of the district; nor could he make advances to persons who desired them, no matter what assets they possessed, if private banks were prepared to make them. In my electorate, if a man approached the manager of the Commonwealth Bank for < a loan, he was asked to name the bank at which he had his account. When this information had been disclosed, the manager, having satisfied himself of the solidity of the applicant’s position and the value of his assets, would communicate with the manager of the private bank and inform him that, unless he was prepared to make the advance which had been sought, on the assets available, the Commonwealth Bank would have to undertake to make it. With due respect to the right honorable member for Cowper, I affirm that branches of the Commonwealth Bank would have been established in many parts of Australia where they are not now established had it not been for the limitations placed upon that institution by him. Some years ago, I was asked by the residents of Gordonvale to endeavour to have a branch of the Commonwealth Bank established in that town. An investigation proved that there was justification for the request. The late’ Sir Ernest Riddell, as Governor of the bank, sent to me the stereotyped reply that the number of private banks operating in that area was sufficient to provide all reasonable banking facilities. Yet the only institution established there at that particular time was the Commonwealth Savings Bank, which functioned in the post office. There were agencies of two private banks, which have since established branches. Representatives from the city of Cairns attended to do business at them for half a day on different days of each week. When I made my request, the Bank of New South Wales and the Queensland National Bank were immediately advised of the position. Both of them have branches in Gordonvale to-day, but the Commonwealth Bank has not a branch there. The present Governor of the bank, Mr. Armitage, was in favour of its establishment, realising the need for it in that centre; but the allegedly non-political bank board was not prepared to agree, because, in its opinion, reasonable banking facilities already existed. Therefore,’ what the right honorable member for Cowper tried to get away with is so much “hot air “ and “ bosh “. His remarks were applauded by honorable members opposite. What did he do? The Country party and the United Australia party coalition, which maintain on the public platform a sham division that does not exist in reality, had a majority in both houses of the Parliament. The right honorable gentleman said that the Treasurer (Mr. Chifley) has merely to proclaim the provisions enabling the Commonwealth Savings Bank to invest its deposits in the mortgage department, and everything will be well. If that is all that is necessary to enable houses and farms to bc purchased, why did he not do it in this Parliament when he was Treasurer? He has never had any intention of doing it, because it would interfere with his wealthy friends. I am amused when I hear honorable members proclaim their desire to assist the farmer. I recall that when Mr. Theodore, as Treasurer, introduced a bill to authorize the issue of fiduciary notes to an amount of £18,000,000, of which £6,000,000 was to be devoted to the assistance of the wheatgrowers, the gibe was made by the honorable member for Grey, then Senator Badman, that the farmers were being urged to “ grow more wheat “. They were. The Government of that day intended to do the right thing by the farmers, through the instrumentality of the Commonwealth Bank. What happened? In the Senate, two members of the Country party - the particular friends of the farmers - defeated the measure, on the ground that it would mean inflation, and would lead to the damnation of this country. The late Prime Minister, Mr. Lyons, declared in this House that he would never be a party to sending gold out of the country for any purpose, because on the day on which that happened the credit of the country would be gone. Yet, within two months of Mr. Lyons becoming Prime Minister, the then right honorable member for Flinders Mr. Bruce, who is now High Commissioner for Australia in the United Kingdom, introduced a bill to amend the Commonwealth Bank Act, and subsequently all the gold in Australia was sent abroad. I never heard Mr. Lyons say that that action had resulted in the ruination of the country. We know that it made no difference at that time or since. When he was member for Corio, Mr. Casey described the Senate as a place where old gentlemen browse in their beards. Those honorable gentleman called Sir Robert Gibson to the bar of the Senate to tell them whether the export of £5,000,000 worth of gold in order to enable us to meet our obligations overseas would endanger Australia’s credit. He told the Senate thatsuch an action would not have that effect, and, provided Parliament took the responsibility, he would get on with the job. The kind of talk indulged in by our opponents is too stupid for words. The honorable member for Forrest declared that the Harvester award had ruined the primary producers. On one occasion when the late Mr. Percy Stewart was speaking in this House on the price of wheat and the difficulties confronting the farmers, I asked him whether the farmers would be able to meet their obligations even if they had no wages at all. to pay for harvesting, and he replied that they could not do so. Unfortunately, he spoke the truth. I admit that because of the poor quality of the land on which many farmers are growing wheat it would be cheaper for the Government to buy them out, and pension them off. In the meantime they are entitled to assistance from the Government. Honorable members opposite have raised the old bogy of inflation in respect of the note issue. I vividly recall the publicity that was circulated in this country when the late Andrew Fisher brought down the original bank bill. Many cartoons were circulated with the object of demonstrating that that legislation would mean the ruination of this country. All of us remember the catch cry of “ Fisher’s flimsies “. The late Sir Joseph Cook, when a member of this House, depicted a worker standing on a street corner with a £1 note in his hand looking for someone who would give him 5s. for it. No one exchanged a £1 note for 5s. at that time. I am certain that Sir Joseph Cook never parted with one of the despised “flimsies” for less than 20s. Such criticism is piffle. The reason why the Scullin Government urged the farmers to grow more wheat was that we could most quickly produce that commodity for export in great quantities and would thus be enabled to meet our overseas commitments. Some honorable members have described the farmer as the backbone of the country. I do not altogether agree with that view, because the primary producer would not prosper at all were it not for the industrial workers in the cities who provide the best market for primary products. Any country which does not encourage its farmers will fare ill. The right honorable member for Cowper indulged in much glib talk. He cried, “Read my speeches”. The farmers will not grow fat on that fare. The fact remains that the right honorablegentleman failed to do anything for the farmers when governments of which he was a member were in office. The late Sir Henry Gullett had good reason to describe him as the most tragic Treasurer Australia has ever had. The right honorable member may have had nightmares as the result of thinking constantly of what he could do to help the farmers; but actually he did nothing in that direction. Many governments which have depended upon the support of .the Country party have been in office since federation, but they did nothing for the farmers. The right honorable gentleman said that the primary object of a mortgage bank should be to enable the farmer to huy his farm. Why did he not assist the farmers to purchase their farms when he had an opportunity to do so? The reason for his failure is clear. Had he done so, the wealthy supporters of the Country party and the governments which members of that party have consistently supported in this Parliament would have lost their interest at rates of 7 per cent, and 8 per cent, on the money they had loaned to the farmers. The bill does not meet with my complete approval. I had hoped that thu Government would make available finance to the farmers on the basis of freeing them of debts which now hamstring them. Honorable members opposite contend th- . insufficient money is being made available under this measure. At the same time they, and the right honorable member for Cowper in particular, have criticized the Government for pouring out so many millions as to cause inflation to the degree that ruined Germany’s economy. Honorable members opposite must think that our people are children. Inflation will not result until the volume of money in circulation exceeds the value of our total production, or unless we cannot produce sufficient to meet our overseas commitments.- “When the Scullin Government assumed office it inherited an adverse trade balance of £33,000,000. Within 22 months it had converted that debit to a favorable balance of £33,000,000. Yet honorable members opposite still say that the Scullin Government was out to destroy the country. I recall that the right honorable member for Yarra (Mr. Scullin), before he became Prime Minister, warned the Bruce-Page Government that we should be confronted with disaster unless we maintained our London funds in credit. If the farmers cannot obtain justice from a Labour government they are not likely to obtain it from a government of any other political colour. In Queensland the farmers are better off than in any other State. With the exception of a period of three years, Labour has been in office in that State since 1915, and I am confident that it will remain in office for a very long time to come.
– No other party can win an election in Queensland because Labour has jerrymandered the electorates.
– The Moore Government, in- collusion with the Leader of the Opposition in this House, did all the jerrymandering. That Government eliminated nine electorates of which eight had been represented by members of the Labour party. Any party can win an election in Queensland or anywhere else provided it has a sound policy notwithstanding any jerrymandering of electoral boundaries. I repeat that the primary producers have nothing to fear from a Labour government. In Queensland the farmers exercise a greater measure of control over the commodities they produce than is the case elsewhere. They have been given that advantage not by the Country party but by the Labour party. The record of the Labour Government in Queensland will stand the closest scrutiny. It has achieved much in the interests of both the industrial workers and the farmers. No other government in Australia has attempted to do for the primary producers what the Labour Government of Queensland has actually done. From the right honorable member for Cowper we heard a lot of noise that meant nothing. He was for years a Minister of the Crown. For some of that time he was Treasurer, and at other times he was Acting Prime Minister, yet he made no attempt to do for the farmers those things which he now says should be done. To listen to the piffle talked by the right honorable gentleman is enough to make an honest man sick. He does not represent the prima. y producers any more than do the other honorable members opposite. They represent big business and vested interests. Like the honorable member for New England (Mr. Abbott), they do not represent the farmers, but only those who farm the farmers.
.- The right honorable member for Cowper (Sir Earle Page) reminded me while he was speaking of a man defending himself against a charge in a court of law. , He appealed for support from honorable members on his own side of the House, and he made observations concerning those who sit on this side. He tried to justify the attempt of .the Government of which he was a member to strangle the ‘Commonwealth Bank in 1924. He claimed that the amendment of the Commonwealth Bank Act on that occasion, which handed the control of the bank to a board comprising in the main representatives of private financial interests, was designed to improve the bank, yet as he went on he convicted himself out of his own mouth, and made it plain that he was the representative of those who would farm the farmers - particularly, the banking and financial institutions. He claimed that it was due to his action as Treasurer that’ there were now in many country towns throughout Australia fine buildings erected by the Commonwealth Bank, and that those buildings were monuments of the progress of the institution. I point out, however, that the bank has progressed, not because of anything done by the governments of which he was a member, but in spite of what those governments did. To-night he admitted that ‘the Commonwealth Bank was doing splendid work in financing the country’s war effort, just as it financed the war effort of 1914-18. He claimed credit for effecting certain improvements to the Commonwealth Bank Act, but was compelled later to admit that it was really Mr. King O’M’alley who was responsible for the best feature of that legislation. By the amendment of the Commonwealth Bank Act in 1924 the control of the bank was taken from the governor and given to .a board on which sat the representatives of the private banks. This board instituted the policy of restriction which was designed to strangle the bank, but in spite of this the bank has progressed because the people of Australia are behind it and wish it to be what it was first intended to be, namely, the people’s bank, not a bankers’ bank. The Commonwealth Bank Board must go.
The right honorable gentleman said that there was really no need for this bill; that already the Commonwealth Bank Act enabled the bank to lend money to primary producers. That is true, but the catch is that the Commonwealth Bank will not accept a transfer of a mortgage on land unless the private bank to which a farmer has already given a mortgage is prepared to consent to such transfer. The Commonwealth Bank will not make advances to primary producers who are already in the clutches of some other financial institution. That is the effect of the policy of the “ tragic treasurer “.
I support this bill, which was framed by a committee representative of all parties in the House. It does not contain everything that I should like it to, but I realize that we are passing through dark days, and there will be an opportunity later to amend the measure. At least it is a beginning, and when we consider it in conjunction with the Government’s programme of social improvement, we realize that the Government is laying the foundation of a policy which will bear fruit when the war is over. A mortgage hank is necessary to the primary producers. For too long have they been compelled to borrow on bankers’ mortgages money repayable on demand. The right honorable member for Cowper said that the Government should try to induce the private banks to establish long-term loan deposits. “Why should the Government do anything of the kind? Evidently, the private banks fear the establishment of this mortgage bank. The capital of the new bank is to be only £4,000,000, but the Coin mon wealth Bank itself was started on less than that. The right honorable member for Cowper said that the mortgage bank would fail. There were plenty to say the same of the Commonwealth Bank when it was first established. The opponents of the Commonwealth Bank made sarcastic references to “ Fisher’s flimsies “ ; yet the Commonwealth Bank flourished. Again we are hearing similar cries, but the mortgage bank also will flourish and be of great assistance to the primary producers. This bill is not all we desire, but it is a start, and it will provide an institution to which the primary producers will look, .particularly in the postwar period, for assistance that they sorely need. The prosperity and progress of this country will depend in the future, as it has depended in the past, on primary production. After the war, wartorn Europe will be looking to this country for food, and the mortgage bank will help men to stay on the land to produce it. It will thereby render great service to this country. Notwithstanding the fact that the anti-Labour parties have occupied the treasury bench for most of the years of this federation, it was not until 1938 that, as a bait to the electors, they brought down a mortgage bank bill. That is as far as they went. The measure remained on the notice-paper until it expired by the effluxion of time. It required the advent of the Labour Government for the primary producers to be assured that they would be rescued from the net woven about them by the private financial institutions. Honorable members opposite are full of platitudes about the need, for higher returns to primary producers; but they have neglected the really important consideration, namely, the load of debt under which the primary producers are struggling. The Commonwealth Bank is able now to finance the marketing of primary products. This Government has decided that the bank shall also have the power to finance the production of goods which it markets, and that is one reason why this bill should be supported. The honorable member for Wimmera (Mr. Wilson) contrasted the debt position of Australian primary producers with the way in which, primary production is aided by advances of money in other countries. I believe that we should ensure that money shall be available to the primary producers at the lowest rate of interest for the longest possible term,’ because, for many years, until our secondary industries have developed sufficiently, our future will depend entirely on the maintenance of primary production. Whatever shortcomings time may reveal in this measure will be removed by the Labour party, because I am confident that that party will remain in power for a great many years. Reference has been made to the fact that the capital of this bank will be £4,0.00,000. In view of the fact that the primary producers owe about £600,000,000, a capital of £4,000,000 would appear .to be a drop in the ocean, but the Commonwealth Bank itself was established with a capital of only £1,000,000, and therefore, at the outset, at any rate, the amount which is to be provided for the mortgage department should be adequate. It is the duty of Australia to provide banking facilities for primary producers. In some of the States such facilities have been established ; but it is the responsibility of the Commonwealth to do everything it can to provide assistance to those who grow our foodstuffs. This bill is a ‘ worthy companion of the social service legislation which will be brought down to help another deserving section of the population.
– I am by no means enamoured of this bill; but it will have my support. I think that it will be anything but a strong child, owing to its troubled birth, and I doubt whether it will ever have the lustiness that the honorable member for Kennedy (Mr. Riordan) thinks it will have. Nevertheless, I’ wish to be fair, and, in my view, some of the faults found by Opposition members may prove to be virtues. It would be impossible to bring down a bill devoid of virtue?. At any rate, taken clause by clause, this bill compares more than favorably with that which was introduced by our government in 1938. The times, however, are not comparable. When our bill was brought down, conditions were much brighter and the financial marker was not nearly so tight as it is now, when hundreds of millions of pounds are demanded for the prosecution of the war. If the Parliament had passed that bill introduced in 1938, the mortgage bank would have had a much better chance of survival than it will have under this legislation. It is clear that, in bringing this measure forward now, the Government is not entirely sincere. I am prompted to make that remark by the fact that the Minister for War Organization of Industry (Mr. Dedman) told me, in answer to a question to-day, that he had closed about 500 branches of banks and that he hoped to close down more. That man is a public enemy. He has done infinitely more harm to the farmers by closing those banks than this bill will do good, even if it does become a lusty child.
– Why blame the Minister for War Organization of Industry for the policy of the Ministry?
– The Minister said that he was responsible. All my life has been spent in country districts, where the banks which he boasts about closing flourished for the benefit of the people. The Government has succeeded, so he says, in closing 500 branches of banks throughout the Commonwealth, but it has done much more than that. It has practically closed the interest of those banks in the country districts, and, as the mortgages which have been advanced by the private banks mature no more money will be forthcoming from them to the settlers. The latter will not be able to get financial assistance because many a day will elapse before the new mortgage bank can fill the gap. This puny child, which the Treasurer has produced to the House, will have to be a very old man before it can make the advances which have been made by the trading banks that the Government is closing up. The amount of damage that has been done to the men on the land by the action of the Government in relation to the trading banks is incalculable. In this banking business I look upon the Government as public enemy No. 1. The bank manager in a country town knows the business of his district. If it. is a wheat district he has some knowledge of wheat, and similarly with districts producing wool and other commodities. He becomes acquainted with the various men on the land, hp knows what their land is worth, but, above all, he knows the character of the men and what they are worth in themselves. Very often advances are made because of the good character and special capacity of the man on the land, and the ‘ confidence which the bank manager has that he will make good, and not merely on the value of the- land itself. The closing down of these private institutions has been a calamity. In travelling round Australia with Labour members, I have arrived in country towns with them, and seen them look at the fine buildings of branches of the trading banks with hostility. They have told me that when in office they would close them up. One Minister says that the Government has closed 500 of them and will close more, whilst another minister says that it will not be satisfied until it has closed them all. Which is telling the truth? Is the Government going to close up all the trading banks, and is this bill a step towards “ Socialism in our time ? “. It is my firm belief that that is the object which the Government has in view, and therefore I take no particular interest in the passing of the bill. I doubt the honesty of the motive behind it. The Minister for War Organization of Industry informed the House that from the 500 trading banks that the Government had closed 6,000 man-power units were released, an average of twelve people from each hank. I represent a very big area and I assure honorable members that not one bank that has been closed in Eden-Monaro employed so many hands, although a good many banks have been closed up in my district. The Minister wanted those 6,000 people for war purposes, and we . understood that that was the Government’s object in closing the ‘banks. Now the Government says that it is going to open a mortgage bank. Was that the real reason for closing the trading banks? ls the new bank to be run with the same number of hands as the Commonwealth Bank has to-day, or are some of the 6.000 units released from the trading banks to be used? I challenge the accuracy of the Minister’s statement in that connexion, because of my knowledge of country banks. The Minister has done more than close 500 banks. Including agencies, the number closed is nearer to 2,000. In some districts there is a bank in a country town, and ..agencies in three or four villages round about. If the bank in the centra] town is closed the agencies have to close too, but those apparently are not included in the Government’s figures. The private trading banks have done wonderful work, although the members of the Labour party have a grudge against them, and look upon them as unprincipled money-making institutions. Nearly all the people who own the shares, as the bank lists show, are from the middle and lower classes of society. Many of them are widows. Others are middle-aged or elderly people who hold a few shares which they have inherited. Very few are what honorable members opposite call bloated capitalists. The value of their shareholdings is being gradually taken away by the Government. As the trading banks are closed up the available sources of capital are being infinitely reduced for those farmers whom the Labour party pretends now to be so anxious to serve. From the time of the founding of the first hank in Australia in 1817, the private banks have a very fine record. They have helped Australia to make the great strides that it has made to date. I give the Commonwealth Bank all its due, but there were banks in this country 100 years before it was born, making advances to settlers, most of whom succeeded. If those who borrowed money had not succeeded, the banks would have failed, and Australia has a very clear record as regards bank failures. We came through the 1929 depression practically without any. The banks tried to assist the poorer farmers and struggling settlers, many of whom were enabled to survive, but in the great depression in America scores of banks failed. Our banks came through, and the middle-class people, who constitute the majority of their shareholders, were able to carry on their businesses. All the aims of the bank proposed in this bill are most desirable. Many people in my electorate are watching this debate, because they are most anxious for the bill to be passed. They have been waiting for this mortgage bank; but they do not know the clauses of the bill as we do. They think that there will be a low rate of interest. I believe in a low rate of interest, and I am not satisfied with the 5 per cent, proposed by the Government. I do not consider that the Government should extend the term of the loans to 60 years. The bill is liberal enough in making the term 41 years. If a farmer or grazier cannot make a success of his land on money borrowed at low interest for 41 years, he must have mistaken his avocation. It would be better to put somebody else on his land, and send him droving or bullock driving. The limit of £5,000 for advances is too low, and many people will want more. The supporters of the Government say that the bill is a step in the right direction, and I am prepared to let it go at that. I did not rise to condemn the bill, because I see virtues in it. My main objection is that the Government is trying to make living room for the new bank by cutting the trading banks out. It is a cruel and wicked thing that the Government has done. Nothing so tragic as the ifr. Perkins controlling of the trading banks by the Government has happened in this country. I have travelled round Australia with the honorable member for Wimmera (Mr. Wilson) and have discovered that he has many virtues which other people do not know of, but, like the baby in the Pears’ soap advertisement, he wants one thing, and he will not be happy until he gets it. The one thing that he has set his mind upon is a mortgage bank, but the bank which will be created by this bill will be absolutely useless to him and hi? constituents. If he thinks that a bank with a capital of £4,000,000 will make advances up to 70 per cent, to settlers in the Wimmera district he is very much mistaken. This bank will do what the Commonwealth Bank and all the trading banks have always done. If there are three or four applicants, one offering a security of 60 per cent, of the value, another 80 per cent., and another 90 per cent., the man who will get the loan will be the one who offers the best security, and he certainly will not be the unfortunate settler in the Wimmera district.
– The great objection is that there is no facility for long-term loans.
– If a mortgage bank is to be of any help to settlers on the land, it must lend money at a low rate of interest.
– What rate has the honorable member in mind?
– About 2$ per cent. After all, the land is a national asset and belongs to the people. Some good will result if we can keep settlers profitably employed upon the land, but if we place a millstone around their necks by charging a high interest rate, we shall defeat our own purpose. A town with a population of 2,000 usually has three or four banks, but those institutions could not carry on unless people were borrowing money from them, using it to good advantage, and paying it back to the lenders. Like the country, storekeepers and other business people, the banks fulfil a useful purpose, and a man who tries to destroy them is public enemy No. 1. I hope that the bill will become law, but I have doubts about it.
.- Lt ig not an unkind criticism to say that this is not a bill of a revolutionary kind and is not intended! to be so. Being a bill for an act to amend the Commonwealth Bank Act, the hallmark of approval has been bestowed on it by the Commonwealth Bank itself. The idea underlying Hie assistance presumed to be given to pastoral and agricultural interests by this measure rests upon fairly well-established banking and business principles. I have no doubt that the advances foreshadowed under the measure are to be made with due regard to the needs of the borrower, on the one hand, and the prudent financing of the lender, on the other. No radical change is made or sought to be effected by the bill. Its success will depend upon the spirit in which it is administered by the responsible authorities. If the rate of interest be kept low, and not greater than that recommended by the honorable member for Eden- iIona.ro (Mr. Perkins), and if the term of the loan is liberal, in the discretion of the bank and according to the needs of the borrower in each case, possibly the proposed bank may serve quite a useful purpose. But, if it be assumed that this measure is for the purpose of helping all the lame ducks upon the land who have become incorrigibly faulty in their gait over the years, and that it is designed not for the purpose of making healthy farming still more healthy, but to make possible the continuance on the land of those who have been struggling against adversity that they have not been able to overtake, this department of the hank is likely to be a. burden on the taxpayer, and is not likely to do a real service to the genuine farmer, the pastoralist or any other of the groups of persons mentioned. The bill is intended to assist those carrying on agricultural, horticultural, pastoral or grazing operations, or engaged in such other form of primary production as the bank thinks fit.
The honorable member for Bass (Mr. Barnard), thought that fisheries might be roped in for assistance through the medium of this measure. Another honorable member said that poultry-farmers could be helped by means of the bill. I cannot think of any investment more peculiarly precarious than fishing, nor can I conceive of any occupation less suitable to serve the purpose contemplated by the promoters of this proposal than that it should be used to assist the doubtful occupation of fishing and the backyard poultry-farmer in procuring wheat for his fowls.
– Is not fishing a primary industry?
– It may or it may not be, but it is not covered by the terms of this bill.
– The bill provides thatadvances may be made to assist any form of rural production.
– Perhaps it will be as well for honorable members if I clarify the position. The bill provides that-
Loans may be made by the bank through the Mortgage Bank Department to any person engaged in farming, agricultural, horticultural, pastoral or grazing operations, or in such other form of primary production as the bank thinks fit, upon the security of a mortgage to the bank of an estate or interest in land in the Commonwealth used or to be used primarily for farming, agricultural, horticultural, pastoral or grazing operations or in such other form of primary production as the bank thinks fit.
Advances can be made only to the industries enumerated and to such other primary industries as come within similar categories. Fishing, in my opinion, definitely does not do so. There is another objection to the inclusion of fishing. The bill contemplates that the security offered shall be a defined interest in land. On that ground, too, fishing definitely does not come within the scope of the measure.
– I had the advantage, Mr. Speaker, of hearing you rule to that effect earlier in the debate. I had mentioned fishing only as an example of a hazardous industry. I did not consider it to be within the scope of this measure. Having heard your second ruling on the subject, I take my stand with new courage. It is important to remember that this bill deals with landed interests. I have not the slightest doubt that, in the administration of this measure, the bank authorities will not depart from principles which it has already applied in many parts of Australia. It will insist that the security for a mortgage shall be -
In other words, in order to attract a moment’s consideration from the bank, security will need to be a defined interest in land. Moreover, the bank will need to consider the position in relation to any existing mortgage. It follows that if a considerable part of any advance proposed to be made by the bank will need to be used for the purpose of discharging an existing mortgage, less money will remain in the hands of the borrower for the purposes of development. I have no doubt but that the bank’s advisers will be experts in land appraisement, and will take into consideration the reasonable prospects of borrowers of overtaking their indebtedness under the longer term, and easier conditions as to interest, that will apply to mortgage bank loans. The bank will need to be satisfied that borrowers will have a reasonable prospect of overtaking their debt during the period of the loan, and that, in the meantime, they will be able to carry on successfully their agricultural, pastoral, or dairying operations. Unless the bank satisfies itself on these points the whole purpose of this measure will fail. It would be of no use for the bank to offer generous terms to borrowers who had no prospects whatever of making a success of their undertakings or of repaying the money lent to them. We all are well aware that some dwellers upon the land become in veterate in their loyalty to properties which probably have been in their families for many years. Notwithstanding infinite difficulty, such men, on the principle that “hope springs eternal in the human breast “, expect that some time, by some means, perhaps by the raising of additional loans forlarger sums or on easier terms, they will be able to overcome their difficulties, whereas an intelligent third party, who brings a calculating eye and a fresh appraisement to bear upon the situation, knows perfectly well tha t the owner of the property will never be able to extricate himself from his difficulties. The bill is not for the purpose of taking over “ hopeless cases “ ; its object is to promote healthy and successful farming and to purchase land often much too dear. Unless it will do that it will serve no useful purpose. The honorable member for Richmond (Mr. Anthony) was indignant because the advance is to be only twothirds of the valuation, but in my view that is by no means an illiberal limit. Indeed, the limit is better than can usually be obtained from trading banks or trustees; it is better than is now obtainable in normal circumstances from the Commonwealth Bank. If the honorable gentleman wishes to be a bad friend and an unwise counsellor to those engaged in primary industries, the best thing that he can do is to advise them to overload their holdings with excessive borrowing which neither they nor generations of their grandchildren will be able to repay. If he really wants to befriend them, the worst thing that he can do is to assist them to burden themselves with excessive interest. I listened to the honorable member for Forrest (Mr. Prowse), and I have no quarrel with his observation regarding the trials and tribulations of primary producers. The honorable member himself is a shining example of an individual who has succeeded in primary production, and I congratulate him upon his achievement. I agree with those who urge that the rate of interest should be as low as it can be made. If the primary object of the measure is to make successful farming still more successful, it would be a good thing for the nation if the primary producer could, in fact, obtain money for developmental purposes and necessary improvements entirely free of interest. That would be a good thing, not only for the farmer, but also for the whole community. If instead of being driven to the necessity of embarking on the terrible scourge of war we had been in a position in a time of continued peace to advance almost unlimited millions of pounds free of interest to assist primary production, we could account ourselves a rich, successful, and progressive people. I agree that it is not unreasonable to charge at least the costs of administration. Summarized, my views are that the bill, although useful in extending the terms on which money may be obtained, is not a radical departure from the existing Commonwealth banking practice, as already under the existing law we have a rural bank department. However, if money can be supplied to the farmer for production and successful farming at a low rate of interest - the lower the better - and if the term of the advance can be extended, thereby making the burden lighter, then the bill will serve a good purpose. But it will not be in any sense a radical departure from the existing law. Nor, in my opinion, should it be. Under the existing capitalist system, which I presume must continue at least until that happy period of post-war reconstruction arrives, I apprehend that the amount to be advanced by way of loan to any individual applicant must have a proper and prudent relationship to the working value of the land. Moreover, consideration must be given to the applicant himself - whether he be an efficient farmer, grazier, dairyman, or other form of primary producer.^ The nature of the land, the encumbrances, if any, upon it, must also be taken into account. If the bank is to be as successful in aiding those who grow wheat as the honorable member for Wimmera (Mr. Wilson) wishes it to be, as an oldfashioned money lender, the bank should proceed cautiously on well-trodden lines, as a lender of money, and must pay due regard to the need to get its money back, together with a moderate rate of interest.
– Although I do not pose as an authority on banking, I have made some long speeches on banking in the past, but I shall not make a long speech tonight. I agree with the honorable member for Batman (Mr. Brennan) that the measure before us is not particularly revolutionary. Nor do I think that it will be of as great value to the people who may be thought likely to be assisted by it as some people imagine. I still hold the view which I have held for many years, that the proper function of the Commonwealth Bank is that it should act as a bank of reserve, and that trading operations can be left to the trading banks which carried on the banking business of this country before the Commonwealth Bank was established. The portals of the head office of the Bank of New South Wales bear the caption, “ Established in 1817 “. It does not require very much imagination to think of how much that institution must have done between the time of its foundation and the time of the establishment of the Commonwealth Bank. My principal objection to the measure is that it is in a sense a form of nationalization. It may be only a moderate form of nationalization, and I do not particularly object to it; but it is, undoubtedly, an instance of the war being used as an excuse for bringing into gradual effect the nationalization of banking. Other examples of this tendency have been disclosed in the last year or two in the manner in which country branches of trading banks have been closed and the staffs, so I understand, transferred or to be transferred to the Commonwealth Bank. It is grossly unfair to take advantage of the war to deprive trading banks of expert officers for the purpose of strengthening the staff of the Commonwealth Bank. The honorable member for Wimmera (Mr. Wilson) made that clear this afternoon when he pointed out that the Commonwealth Bank in itself had no experts on rural matters on its staff, and, therefore, it would be well advised to obtain such experts from the trading banks. There can be no excuse for depriving the ‘ trading banks of those specialists in order to strengthen a bank that will work in opposition to the trading banks. I have no great opposition to the bill. Some honorable members on both sides of the House make the mistake of believing that the liberalization of the terms proposed in this measure will result in the provision of large sums of money for distribution to persons who in some cases are not particularly solvent. I take exactly the opposite view. The greater the accommodation that is granted, and the smaller the margin of safety in advances, the more certain it is that only the best clients and the more reliable farm lands will be accepted. Therefore, in voting for greater liberalization we shall, in a sense, restrict the operation of the bank. It is obvious that if the bank be permitted to advance up to 80 per cent, of the valuation of the security, the controllers of the mortgage bank department will be extremely cautious in making advances to clients. There will be very little chance for the man who is really in financial difficulties, and for that very reason desires to obtain money. It is instructive to note the suggestions for liberalization that have been made in this chamber during the last two days in the course of this debate. I have made a note of them. As to the period of repayment of loans, the minimum has been increased from three to five years, and the maximum has been increased from 35 to 41 years. The honorable member for New England (Mr. Abbott) has forecast an amendment to increase that period to 60 years.
– Why not?
– I consider that most of the .proposals in the bill are reasonably safe. But the increases suggested will make them unsafe. Borrowers will simply not be granted the money. The amount that may be lent has been increased from £4,000 to £5,000, and the honorable member for Flinders (Mr. Ryan) in his, in many ways, excellent speech suggested that the maximum should be raised -to £7,500 or £10,000.
– Why not?
– For one thing, the adoption of the honorable member’s proposal would reduce the number of borrowers by one-half. Another increase is that the mortgage bank department shall be permitted to advance money upon, not 60, but 66§ per cent, of the valuation of the security, but the honorable member for Richmond (Mr. Anthony) suggests that the limit should be 80 per cent. Why not make it 100 per cent, while we are about it? The rate of interest is undisclosed, but I understand from the speech of the honorable member for Wimmera that the Treasurer said that he hoped that the rate would be 4 per cent. The honorable member for Wimmera forecast an amendment to fix the rate at 3 pea- cent., plus amortization at the rate of 1 per cent. Then the honorable member for Indi (Mr. McEwen) suggested that industries other than agricultural should be included in the bill, and that wageearners and self-employed persons should be granted advances to enable them to build and own their homes. To cap it all, the honorable member for Bass (Mr. Barnard) suggested that the fishing industry should be covered by the bill. It is not my custom to compliment the Government very often, but I consider that, apart from this attempt in war-time to introduce a form of nationalization, the bill in its present form is reasonably prudent and cautious.
– The honorable member’s support to the measure will make the Treasurer suspicious of it.
– When so many honorable members are anxious to liberalize the provisions of the bill, the Treasurer may not be sorry to find one honorable member a little more conservative than the others. It is futile to apply remedial measures such as advances against high percentages of the value of a security at low rates of interest when the basis upon which the farmer at present operates is so unsatisfactory. The activities of the present Government, and particularly of the Minister for Commerce and Agriculture, have infinitely increased the difficulties of the man on the land compared with the position eighteen months ago. Whether it be meat, wheat, dairy produce, apples, barley or firewood, and even wool in respect of appraisement, the whole position has been made almost chaotic by the controls introduced by the Minister. It all comes back to the fundamental question that if we promote the secondary industries which are supported by Government intervention and tariffs to the displacement of primary indusiries, we can expect nothing other than that the primary industries will deteriorate and often become moribund. What is the use of applying remedial measures when the real cause of the trouble is so m uch more deep-seated ? What is the use of talking a.bout post-war reconstruction and settling men on the land when for some years every branch of primary industry has gone steadily back? How can we justify putting large numbers of men on the land when they have very little prospect of making a success of the venture?
Debate (on motion by Mr. Calwell) adjourned.
Friday26, February 1943.
The following bills were returned from the Senate without amendment or requests: -
Loan Bill 1943.
Customs Tariff Validation Bill 1943.
Customs Tariff (Exchange Adjustment) Validation Bill 1943.
Customs Tariff (Special War Duty) Validation Bill 1943.
Customs Tariff (New Zealand Preference) Validation Bill 1943.
Customs Tariff (Canadian Preference) Validation Bill 1943.
Excise Tariff Validation Bill1943.
Motion (by Mr. Chifley) proposed -
That the House do now adjourn.
[12.1 a.m. ). - The honorable member for Par- ramatta (Sir Frederick Stewart) to-day asked a question regarding stoppages of work which have occurred at a number of New South Wales textile mills, and I promised to make a statement concerning the position on the motion for the adjournment of the House.
Great dissatisf action has existed in the textile industry for some time, because of the following reasons : -
With regard to (1) : This has been the subject of investigation by the welfare division of the Department of Labour and National Service, and every effort is being made to improve the conditions of employment in this industry.
The question of the wages paid tinder the textile award has been before the Arbitration Court, and I understand that the taking of evidence has concluded. The present stoppages have occurred because of the belief of the employees that the time for reaching a decision by the court in this case has been unduly prolonged. I am pleased to say that I have received the information that the court will most likely be dealing with the textile workers’ case to-morrow, and that it is hoped that there will be an early resumption of work in all the mills affected.
The stoppages have occurred against the advice of the union officers, who have done everything possible to maintain production in this important war industry. A very serious view is taken by the Government of this defiance of the officials of the union by a large number of textile workers. The Government cannot too strongly stress the importance of the work that is being carried out in this industry, and of the harm that will be done to its war plans by the loss of this essential war production.
Question resolved in the affirmative.
The following papers were presented : -
Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - 1943 - No. 7 - Victorian Public Service Association; Public Service Association of South Australia; and Tasmanian Public Service Association.
Australian Soldiers’ Repatriation Act - Regulations - Statutory Rules 1942, No. 505.
Dried Fruits Export Charges Act - Regulations - Statutory Rules 1943, No. 16.
Lands Acquisition Act - Land acquired for Commonwealth purposes -
Wallaroo, South Australia.
National Security Act -
National Security (Emergency Supplies) Regulations - Rules - South Australia.
National Security (General) Regulations - Orders -
Taking possession of land, &c. (318).
Use of land (4) .
National Security (Land Transport) Regulations - Order - No. 13.
National Security (Maritime Industry) Regulations - Order - No. 36.
Superannuation Act - Regulations - Statutory Rules 1942. No. 549.
House adjourned at 12.3 a.m. (Friday).
The following answers to questions were circulated: -
d asked the Minister for Commerce and Agriculture, upon notice -
– The administrative position of Secretary of the Department of Commerce and Agriculture is now and will continue to be at Canberra. Mr. Murphy, the Secretary of the department, has been in Melbourne in connexion with the activities of the Rural Reconstruction Committee, of which he is a member and the head-quarters of which are in Melbourne. His duties are such that normally his time is spent in Melbourne, Sydney and Canberra. Mr. Murphy, on medical advice, is at present on leave, and Mr. H. Thomson, Assistant Secretary of the department at Canberra, has been appointed Acting Secretary during his absence.
Australian Army: Recruiting.
e. - On the 12th February, the honorable member for Cook (Mr. Sheehan) asked the following question, without notice : -
I ask the Minister for the Army whether the recruiting for the Australian Imperial Force has been discontinued? What are the present activities of the Australian Imperial Force recruiting committees?
I now desire to inform the honorable member that the activities of the various Australian Imperial Force recruiting committees have been suspended in view of the universal call-up, and the method of allowing, all recruits an opportunity of enlisting in the Australian Imperial Force as soon as they have been called up and accepted for service with the Australian Military Forces.
Cite as: Australia, House of Representatives, Debates, 25 February 1943, viewed 22 October 2017, <http://historichansard.net/hofreps/1943/19430225_reps_16_173/>.