House of Representatives
22 March 1945

17th Parliament · 3rd Session

Mr. Speaker (Hon. J. S.Rosevear) took the chair at. 2.30 p.m., and read prayers.

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Equipment - Releases

Mr. DEDMAN (Corio - Minister for

Post-war Reconstruction and Minister in charge of the Council for Scientific and Industrial Research). - by leave - On the 21 st March the honorable member for Deakin (Mr. Hutchinson) asked a question regarding statements by press correspondents concerning the supply of equipment to Australian troops in the islands. I have consulted the Acting Minister for the Army, and now state that the Australian military forces are fully equipped according to the establishment and equipment tables, which have been progressively expanded and brought up to date throughout the war, and particularly in the light of operational experience in jungle warfare. These equipment tables have been designed to save man-power, as well as lives which otherwise might be unnecessarily expended in operations against .the enemy. The provision by the Government for the equipment of our forces has no “ pinchpenny” basis. On the contrary, the best and most modern equipment for tropical warfare is being provided twice and even thrice, so that whatever contingency may arise the troops will have adequate reserves and replacements upon which to draw. The Government has spent millions of pounds for this purpose. The process of provision is a continuing one, based on twice-yearly reviews covering additional and replacement requirements of weapons, ammunition, engineering and other equipment of an amazing range and variety.

The first, and probably the most important, factor is that of terrain. It is quite impossible - and the critics in the areas concerned admit the impossibility - to use heavy mechanical equipment in much of the country through which our troops are now fighting, unless elaborate preparation has first been made for their passage through swamps and jungle. Even then, the troops preparing the way and operating the equipment would have to be preceded and protected by a mobile fighting screen of infantry. Thus, operations would be slowed down to a snail’s pace, and the original purpose would be defeated. Available equipment in the areas, therefore, must be used as it is at present - in maintaining, improving and steadily extending the lines of supply, which are essential to the support of the fastermoving infantry. For instance, in the swamps and razor-backs of Bougainville, where our troops in five months have recaptured one-third of the island by swift drives north and south, much filling in of swamps and cutting down of hills would have been necessary before heavy equipment could be moved forward sufficiently swiftly to be of reasonable value to our advance. Instead, that equipment has followed them up, helping to make roads and bridges to keep them supplied. Similar conditions exist in the Aitape area of New Guinea. As the Acting Minister for the Army (Senator Fraser) said in the Senate, if axes, shovels and picks have to be used, it is not because we do not possess the mechanical equipment, but because of the impossibility of putting it to effective use m the terrain in which the Australian forces are fighting. The correspondent who wrote from Bougainville stated the position correctly and pithily when he said : “ This sort of job could only be done the way it is being done, even though it is the hard way.”

One aspect of recent criticism that has to be borne in mind is the comparison between the equipment provided for the American forces and that provided for the Australian forces that have taken over in the same area. In .this connexion, the fact has to be remembered that the American forces were expected only to develop limited base areas and perimeters. Their orders were to seize bases, and to develop an airfield in each of them. They had lavish supplies of equipment with which to complete this limited programme, and did their work admirably. But had they been called upon to strike out of those perimeters and reconquer large areas of territory, as Australian troops have been doing for the last five months, they would have found their massive equipment of little value to their forward infantry; in this jungle warfare of mountain and swamp, as our troops know, the human element very often must be far in. advance of mechanical aid.

In the airing of recent criticisms, not enough has been said of the Australian achievements in circumstances equivalent to those which the American forces experienced in seizing and establishing their island perimeters. Australian troops, however, benefited by such circumstances in November last when a purely Australian base was established after the landing of an Australian force at Jacquinot Bay, New Britain. There, swiftly, competently and effectively, they carved out a base, making extensive use’ of mechanical equipment, and their headquarters area does not lose in comparison, with the American equivalent. Now, of course, the leading elements of that force are entering the primitive terrain of the Gazelle Peninsula, where use of mechanical equipment is. limited by the nature of the country.

Supplies and equipment havebeen moved forward to the maximum extent permitted by the shipping that has been available. Operations now in progress were, in fact, postponed for some time, because of the necessity to build up adequate supplies and reserves in the bases whichwe had occupied as a preliminary to the forward attacking moves. Extra shipments of heavy engineering equipment are being made to the greatest extent possible, so that stocks in the forward depots may be maintained at an adequate level. It is neither necessary nor desirable to recite in detail the position in regard to individual items of mechanical equipment.

Since 1942, the Australian Military Force has organized and equipped mechanical engineer units to meet our requirements’, so far as they could be foreseen. New units are still being equipped. Assignments of mechanical equipment from the United States of America have been satisfactory, but recently a large quantity has been diverted to American and Royal Australian Air Force formations to meet urgent requirements arising from the rapid progress of the Philippines campaign.

Large quantities of engineering equipment are now being produced in Australia. Tractors are practically the only equipment for which we are now dependent upon overseas consignments.

The present position has arisen from the problems and hazards of forward supply, which result from the sheer physical obstacles to the movement and use of heavy equipment in the territories in which operations are proceeding. The Commonwealth Government does not, and will not, neglect the needs of Australia’s fighting men.

Minister in charge of the Council for Scientific and Industrial Research · CORIO, VICTORIA · ALP

– I have made it in reply to a question.

Mr Menzies:

– But the honorable gentleman asked leave to make a statement.


– I understand that the Minister asked for leave to make a statement, not to reply to a question.


– Yesterday, an honorable member addressed a question to the

Minister for the Army, who is absent from Australia; and the Acting Minister for the Army is a member of the Senate. The question was based upon reports which had appeared in certain newspapers yesterday. I had seen those reports, and I advised the Minister for Post-war Reconstruction, representing the Acting Minister for the Army, to say that a statement on the matter would be made to-day; because it was inconceivable that the accusations in the reports could be dealt with except by exceeding the normal limits of an answer to a question. I have no objection to the matter being considered by the House. The Government has nothing to hide. I suggest that the Minister should table the statement, and I shall then move that it be printed.


– I lay on the table the following paper : -

Equipment of Australian Troops - Ministerial Statement


– That is beside the point.

Prime Minister and Minister for Defence · Fremantle · ALP

.- I move-

That the paper be printed.

As the motion cannot be debated before Easter, I ask leave to continue my remarks at a later date.

Mr Menzies:

– Is that equivalent to a motion for the adjournment of the debate ?

Mr Curtin:

– Yes.

Sir Earle Page:

– I rise to order. Is it competent for two motions to be tabled at the same time?

Mr Curtin:

– I have asked for leave to continue my remarks at a later date. If that leave be not granted, I shall speak now.


– The House is master of its own business.

Mr Archie Cameron:

– I submit, Mr. Speaker, that the right honorable gentleman did not make any remarks which could be continued. The tabling of a motion for the printing of a paper is not a speech, and I submit, therefore, the right honorable gentleman made no remarks within the meaning of the Standing Orders.

Mi-. SPEAKER. - I rule that he did. The House may, in one vote, decide whether it objects to the Prime Minister continuing his remarks at a later stage. That is quite clear. It is also clear that the House is competent to decide whether the paper should be printed. I put to the House the Prime Minister’s request for leave to continue has remarks and rule that leave has been given.

Leave granted; debate adjourned.

Minister for Health · EDEN-MONARO, NEW SOUTH WALES · ALP

– Oan the Minister for Labour and National Service say whether dairy-farming has been removed from the list of industries for which his department is permitted to recommend releases from the Army on occupational grounds ? If not, can he explain the letter sent to me recently by the Deputy Director of Man Power, in which, in reply to my request for the release of men to engage in dairy-f arming, he stated that the list of industries for which recommendations for the release of servicemen on occupational grounds can foe made had been revised by the Government, and that, therefore, he regretted that it would not be practicable for his directorate to approach the Army authorities in respect of applications from dairy-farmers. If the dairying industry has been removed from the list of occupations for which men may be released from the Army, will the Minister state the reason?

Minister for Labour and National Service · MELBOURNE, VICTORIA · ALP

– I am not aware of any alteration of the procedure in relation to the release of men from the Army to engage in primary production. Dairying is still in the category of industries in which men released from the Army may be employed. It would appear that there is a misunderstanding somewhere. The -number of men released from the Army for whom nominations have been submitted has nearly been exhausted. I shall make inquiries and supply an answer to the honorable member at a later date.



– The placing on the notice-paper of a - motion to print the statement made by the Minister representing the Acting Minister for the Army will prevent private members from discussing this matter until the Government provides an opportunity for them to do so. Therefore, I ask the Prime Minister, who will realize that the debate, in order to have any value for the Government, must occur promptly, to arrange for the subject to be discussed to-morrow, or immediately the House resumes after the Easter recess.


– It is most difficult for me at times- to observe the Standing Orders in replying to certain questions addressed to me without notice. The Minister representing the Acting Minister for the Army desired to reply to a question that had been asked yesterday. His answer, in his judgment and in my judgment, was a little longer than that which should be given in reply to a question. Therefore, I considered that he should ask for leave to make a statement, thereby indicating to the House immediately the more than normal length of his reply. If honorable members consider that that is not the right way in which to deal with the matter, we shall encounter another difficulty which will contravene the spirit of the Standing Orders. ‘The fact that the -reply may be long is not a reason for the initiation of a debate upon its merits ; some other course must be taken in order to enable an answer ito be debated. It is a rule of the House that a question must not contain matter which is argumentative, that a reply must not be controversial, and that no subsequent discussion may take place on an answer to a question.

Mr Spender:

– That has no application here.


– It should have application here. I have made arrangements, as the honorable member will no doubt appreciate from his previous ministerial experience, with the other leaders of parties regarding the order of business for this week, and I previously indicated to honorable members that after tomorrow the House will have a brief adjournment. Consequently, it will not be practicable for me to arrange for a debate on the subject to-morrow. As to whether the question should be debated immediately the House resumes after the Easter adjournment, that is a matter which I can best answer when I know the state of affairs the day before the House meets.

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– Is it permissible, Mr. Speaker, upon the proper construction of Standing Order 92, for any question to be put to any Minister which does not relate to the public affairs with which the Minister to whom the question is directed is officially connected, or to a matter of administration for which he is responsible? If it is not permissible, upon what grounds were the series of questions asked by the honorable member for Swan (Mr. Mountjoy), on the 15th March last, of the Attorney-General (Dr. Evatt), relating to Mr. Barclay, permitted by you? Does the practice of the House of Commons, as stated in House of Commons Manual of Procedure 1934, at pages 70 and 71 - (a) prohibit a question being asked as to the character or conduct of any person except in his official or public capacity; and (b) provide that a question, otherwise admissible as relating to public affairs, but which makes or implies a charge of a personal character, may be disallowed ? How long has such practice endured in the House of Commons? Is not such practice one which should be observed by this House, having regard to Standing Order 1, which provides that, in all cases not provided for by the Standing Orders, resort shall be had. to the rules, forms and practice of the House of Commons, in force at the time of the adoption of the Standing Orders, so far as they can be applied in the proceedings of this House ? When were the Standing Orders in their present form adopted? Have you any power to prevent the publication of a question which you rule as inadmissible, particularly if it reflects on the reputation of a private citizen? Will you prepare, and state for the House, a directive indicating the limits within which questions may be asked, having regard to the foregoing questions, and in particular indicating what provision, if any, exists in the practice of this House - (a) to prevent questions from being put to Ministers which vilify, libel or scandalize private citizens; and (b) to discipline any honorable member who asks such question?


– The honorable gentleman was good enough to let me have a copy of his questions during the lunch hour. They are very involved and necessitate, amongst others things, a ruling in interpretation of the Standing Orders. They deal with rather hypothetical matters, and, insofar as the Standing Orders are silent, they deal with precedents, both in this Parliament and in the House of Commons. Honorable members will agree, I think, that :the questions raise very involved issues, particularly the question in which the honorable member has invited me to give a directive indicating the limits within which questions may be asked. The provision of standing orders to deal with that matter has, I understand, frustrated the efforts of standing orders committees of this House up to the present. There is such a fine line of distinction between the privileges of the House, and how they ought to be exerted, and the right of freedom of speech, that I think honorable mem bers will agree that to attempt to answer off-hand such questions, which involve deep rooted principles, would be wrong on my ,part. A considerable amount of research will be necessary, but I undertake to make a statement on the matter at a later date, covering as many of the points raised by the honorable member as I think it is proper for me to answer.



– Yesterday, Mr. Speaker, I drew your attention to the growing practice of Ministers avoiding answers to questions on the notice-paper by adopting a certain practice which, in my opinion, may tend to whittle away the privileges of honorable members. I then drew attention to Standing Order 96a, which provides -

The reply to a question on notice shall be given by delivering the same in writing to the Clerk at the Table, and a copy thereof shall be supplied to the member who has asked the question, and such question and reply shall be printed in Hansard.

I now direct attention to an answer given by the Prime Minister this afternoon in reply to a question by the honorable member for New England. The Prime Minister stated that a certain question which the honorable member had placed on the notice-paper did not, in fact, appear on the notice-paper, and the circumstances surrounding its removal have prompted my question. The reason that the honorable member’s question is not on the notice-paper - it was an involved question - is that the honorable member for New England received the following reply on the 2nd March : -

This information is being obtained, and will be supplied to the honorable member.


– The honorable member has not been given that information, and in view of this growing practice on the part of Ministers, which is the cause of my complaint, he will probably never be given the answer.


– Order ! The honorable member is building up a hypothetical case as a basis for a question.


– I should like you, Mr. Speaker, to inform me whether such an answer constitutes a reasonable reply to a question? Is it an answer that can be accepted by the honorable member for New England as the final reply to his question upon notice? Should the honorable member’s question have been removed from the notice-paper?


– I am not in the position to interpret what was in the mind of the honorable member for New England when he asked the question, or what was in the mind of the Prime Minister when he answered it. But it was most improper for the honorable member for Richmond to repeat a question which he asked yesterday, and to base it on a conjecture that a certain other question will never be answered. To date, there is nothing to indicate that that fate will befall the question asked by the honorable member for New England.

At this juncture, I desire to inform honorable members that I have received from the Prime Minister a communication which has a bearing on the question asked by the honorable member for Richmond yesterday. The right honorable gentleman pointed out that in the House of Representatives on the 9th October, 1942, he said -

I desire to inform honorable members that instructions have been issued that final answers to questions upon notice, which have not been given before Parliament rises, are to be furnished by letter as early aspossible to the honorable members concerned. When Parliament re-assembles, the texts of replies which havebeen furnished by letter in the interim will be submitted to the House by the appropriate Minister with a view to their incorporation in Hansard.

I consider that, in view of that instruction which the Prime Minister gave to Ministers, honorable members in future should direct the attention of the House to specific questions that have not been answered instead of making extravagant statements that the omission of which complaint has been made to-day, is a growing practice.



– I do not wish to be over-persistent, but with every respect to you, Mr. Speaker, I should like to clarify what I had in mind when I asked a question previously. I should like to preface my question-


– I have heard the question twoor three times. In what way does the honorable member need to clarify it?


– On Friday last five questions were removed from the noticepaper. One of them was asked by the Leader of the Australian Country party, another by the Deputy Leader of the Opposition, another by the honorable member for Reid, two by the honorable member for Bendigo, and one by the honorable member for “Wide Bay. The only response to those questions was that an answer would be supplied. Is it proper for Ministers to answer questions in that way, and then remove them from the notice-paper?


– With respect to the retention of questions upon the noticepaper, regard must be paid to the shortage of man-power at the Printing Office. One notes, for instance, that the notice-paper has grown from four pages to six pages. Once an honorable member has placed his question on the notice-paper, and has received an intimation from the Minister that the question has been noted and will be considered later, I can see no good reason why the notice-paper should be cluttered up with it. For that reason, I entirely endorse the removal of such questions from the notice-paper; Despite the rather raucous laughter from members of the Opposition when I mentioned the shortage of man-power at the Printing Office, the fact is that great difficulty is being experienced in coping with the printing of parliamentary documents. I think ‘that .all honorable members will agree that no good purpose would be served in leaving questions of the kind to which he has referred on the notice-paper. However, I agree that if no notice has been taken by a Minister of a question on the notice-paper it should remain there.

Mr Anthony:

– And the ultimate reply is not published in Hansard.


– Whether the ‘ ultimate answer to a question will appear in Hansard is a matter of good faith, and I think that the assurance given by the Prime Minister in the past will hold for the future, namely, that answers not available by tie end of a sessional period and, therefore, probably too late for inclusion in the last number of Hansard for that period, will appear in the first subsequent number.

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Conversion to Power Alcohol - Assessment - *Stock Feed


– Will the Minister for Commerce and Agriculture state whether a large surplus of potatoes is expected this year, and, if it is, will he negotiate with the Department of Supply and Shipping with the object of converting that surplus into power alcohol by means of the plants which were erected for the purpose of dealing with surplus wheat.

Minister for Commerce and Agriculture · GWYDIR, NEW SOUTH WALES · ALP

– We do expect a surplus of potatoes this season. That is indeed fortunate. We are processing quite a considerable quantity in our dehydration plants to put into reserve for service use. 1 shall have an investigation made along the lines indicated by the honorable gentleman and if there should be sufficient surplus potatoes to convert into power alcohol that will be done.


– In view of the difficulties of disposal of the enormous crops of potatoes grown under contract this season, will the Minister for Commerce and Agriculture consider a variation of the provision for assessment in the ground of surplus production to allow of assessment in pits, in order to release land under potatoes for other crops as early as possible, and to release surplus potatoes for stock-feed


– I have been thinking along the lines indicated in the honorable member’s question. I consider that if the surplus production is not used in one direction we ought .to use it to advantage as stock-feed. I shall have the honorable member’s suggestion investigated.

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Land Settlement of Ex-Servicemen


– Has the Minister for Post-war Reconstruction seen an article in the Melbourne Herald of the 20th March referring to an investigation made by Professor G. S. Brown, Dean of the Faculty of Education, amongst servicemen, principally Royal Australian Air Force personnel, who expressed fear that they would be subject to similar disastrous treatment in respect of land settlement’ ar was experienced by returned servicemen after the last war? Will the Minister assure the House that the grave errors regarding land settlement made then shall not be repeated?


– I saw the statement in. the Melbourne press. If there are any fears in the minds of servicemen that after this war land settlement will be subject to the same disabilities as were experienced after the last war, that fear will shortly be removed. By arrangements made between the Commonwealth and the States, the States will undertake land settlement for returned soldiers. Three of the States will act as principals and three as agents for the Commonwealth. In the agreements that will be made between the Commonwealth Parliament and the State Parliaments in regard to these .matters, the Commonwealth will ensure that servicemen who settle on the land after this war shall not be loaded up with capital costs which make it impossible for them to earn a living. I assure the honorable gentleman that they shall not be subject to the same disabilities as were suffered by ex-servicemen after the last war.

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– Is the press report correct that the Prime Minister is considering an investigation of milk prices in the Sydney-Newcastle milk zone and that he does not intend to appoint any one outside the “ Commonwealth Service “ to conduct the investigation ? In view of the promise made by the then Acting Prime Minister (Mr. Forde) on the 13th November, 1944, to representatives of the Milk Zone Dairymen’s Council to appoint an independent accountant to examine the dairymen’s claims, which the council states was not done, will the Prime Minister appoint an independent accountant to investigate the whole position concerning the price paid to those milk suppliers with a view to making recommendations to the Prices Commissioner, thus honouring the Acting Prime Minister’s promise ?


– I understand that the then Acting Prime Minister (Mr. Forde) does not agree with the statement upon which the question is founded. The remainder of the question should be placed on the notice-paper.

Mr Abbott:

– It has been on the notice-paper several times in recent months.


– It is not on the noticepaper now.

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-Will the Minister representing the Minister for Trade and Customs cause prices order No. 1956 of the 15th February, 1945, to be reexamined from the point of view of ensuring that it shall not enable some grocers to overcharge and compel others to undercharge their customers? The prices order fixes the maximum prices that may be charged for groceries in country districts on the basis of the distance as the crow flies from Sydney. It is reported, and I vouch for the accuracy of the report, that nowadays very small, if any, quantities of groceries are transported by crow. The result is that this order pays no regard for the actual freight and cartage charges that have to be paid.

Vice-President of the Executive Council · WEST SYDNEY, NEW SOUTH WALES · ALP

– I shall refer the honorable gentleman’s question to the Minister for Trade and Customs.

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-Has the Minister for

Repatriation seen the report in the Age “ that another Commonwealth administration building is to be added to the numerous temporary war-time structures scattered around Melbourne “ for the Repatriation Department? Does the Minister think that this is necessary when the . War Service Homes Commission has not built twenty homes during the war period?


– Order ! The honorable member must not debate the question. He should be seeking information.


– And I am, incidentally, giving a little. Can the labour and materials that will be required for this new structure not he diverted to building war service homes?

Minister for Repatriation · FRANKLIN, TASMANIA · ALP

– It is true that we are to erect temporary offices in Melbourne for the Repatriation Department. It should be well known to the honorable member that we had to vacate the temporary building in St. Kilda-road, Melbourne, erected after the last war, to make room for the United States Army Head-quarters. When we moved we had a staff of about 250. We went into the premises of Melford Motors Limited, and we have a tenancy there until six months after the war ends if we wish to stay. But the premises are inadequate. We have tried unsuccessfully throughout Melbourne to obtain suitable offices. So we are going to put up a temporary building. Our staff when the war ends willbe, not 250, but about 700, so fast is it growing. With regard to the twenty War Service Homes-

Mr White:

– They are not being built.


– I know that we have not built them, but we have tried to do everything possible. The honorable member who has been making statements to the press about homes for exservicemen thinks that the war is over now that he has returned from abroad. We think of the lads still at the front doing the fighting, and the honorable member should do so as well.

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– Some time ago I made representations to the Minister for Health about the provision of nurses for various hospitals. Is the Minister for Labour and National Service able to informthe House what action has been taken to provide those nurses?


– The honorable member for Darling and other honorable members have approached me in connexion with the shortage of nurses throughout Australia. The Government has made inquiries in every direction with a view to obtaining the services of more trained nurses. Recently, it appointed a committee to ascertain whether there was any maladjustment as between the nurses attached to the fighting services and those serving the civilian population. A report received two or three weeks ago stated that the number of trained nurses in the services was greater than was expected. The committee has been asked to ascertain whether there is any waste in the civil administration, and whether any trained nurses are working in callings other than their own profession. A report is expected in a week or two, and in the meantime the man-power authorities are doing their best to obtain additional nurses.


– In view of the acute shortage of trained nurses in New South Wales, will the Minister confer with the State health authorities’ with a view to reducing the training period in NewSouth Wales from four years to three years as in all other States?


– The Minister for Health and Minister for Social Services has already had conferenceson this subject. I think that negotiations are still in progress. The difficulty mentioned by the honorable member is one of many which confront us in our endeavours to obtain greater uniformity throughout the Commonwealth. For instance, the New South Wales authorities will not accept a certificate in midwifery issued in Victoria. I shall confer with my colleague and inquire from him how far the negotiations have proceeded.

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– As the

Minister for Transport has indicated his intention to ascertain whether certain Australians who occupied seats in the parliamentary galleries yesterday travelled toCanberra by rail, and in view of the fact that Canberra is the seat of government, will he say whether he objects to Australian citizens coming here to listen to debates in which they are interested, and to see for themselves how the country’s affairs are administered? Does the Minister know that among those who occupied the galleries yesterday were representatives of wheatgrowers, dairy-farmers and banking institutions from other States besides New South Wales, and will he say whether, in his opinion, they were acting within their rights in coming here? If they were not, the only persons who would be eligible to attend to their duties here would be citizens of New South Wales.

Minister for External Territories · EAST SYDNEY, NEW SOUTH WALES · ALP

– The only portion of the honorable member’s question which affects the Department of Transport is that which asks whether certain persons who travelled by rail properly obtained priorities to travel interstate. When the names of the persons who were given priorities to travel interstate have been furnished to me, that matter will be investigated, and if, upon examination, it is found that priorities were issued on false grounds, appropriate action will be taken. Judging by some of the persons whom I noticed in this building yesterday, it would seem proper to refer their names to the Minister for Labour and National Service with a view to determining whether or not they are profitably employed.

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– Can the Minister for Post-war Reconstruction say whether any large overseas firm has submitted to the Government proposals for the manufacture in Australia of complete motor cars in the post-war years without the assistance of either a bounty or additional tariff protection?


– In the near future legislation on this subject will be before the House, and I shall then give the information asked for by the honorable member.

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Documentary Films


– Will the Minister for Information inform me whether it is a fact that considerable expense was incurred in preparing a colour film of the last Melbourne Cup, private photographers having been en- gaged to assist departmental technicians? Is it correct that afterthe film had been made for transmission to the United States of America, that transmission was banned by another Commonwealth department? By whose direction was the film made? What has been the total cost, and what use, if any, will now be made of the film?


-Offhand I am not able to give detailed replies to some portions of the honorable member’s question. It is true that a colour film was made of the Melbourne Cup. It is equally true that other films have been made of various aspects of Australian life. Recently, a film was made of a big cattle muster at Albury. Other films arebeing made of forestry activities, and of large sections of Australian workers in the various States. All those films will be collected for the purpose of compiling a library from which a number of documentary films may ultimately be made for display in Australia, the United States of America and the United Kingdom. They will be interesting to people abroad, as well as to people in Australia, as showing a complete view of Australian life. The filming of the Melbourne Cup to which the honorable member for Parramatta took exception, was made for several reasons. I have already mentioned one of them, but there was, in my opinion, another very good reason. The firm was made so that it could be shown to Australian fighting men in the battle areas, to enable them to see a pictorial representation of the Melbourne Cup even if they were not able to be at the race-course. I accept full responsibility for what my department does. We desire to film all aspects of Australian life that are acceptable to the great majority of Australian people. We have regard for the susceptibilities of some sections of the community, but we do not allow the prejudices of a few to over-ride the interests of the majority.

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– I ask the Minister for Air whether the Fleet Air Arm has applied to the Royal Australian Air Force for pilots? Does he know whether such applications were refused on the ground that pilots could not be spared from the Royal Australian Air Force? Will he facilitate the transfer of pilots who desire to join the Fleet Air Arm ?


– Representatives in Australia of the British Navy have discussed with representatives of the Royal Australian Air Force the question whether pilots for the Fleet Air Arm could be provided by Australia, but we have replied that we have no means of training pilots for that service. We have offered to supply such pilots if the British authorities will provide training facilities as they are the only authorities in Australia capable of doing so.

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– I ask the Minister representing the Minister for Supply whether it is a fact that the Government is assuming the ownership and control of the flax processing industry? If so, what sum of money is involved in the acquisition of mills, and what principles of policy are involved in the transaction?


– Discussions have taken place in connexion with this matter, and Iunderstand that certain decisions have been arrived at. I am not able to give offhand the exact nature of the discussions. I shall obtain the information sought by the honorable member.

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– Many country towns are unable to obtain an adequate water supply because their population is not sufficiently large to warrant the cost, of providing such a service. I ask the Minister for Works whether it is possible to revert to the scheme in operation some years ago whereby a town authority desiring to provide a water supply could obtain a subsidy of 331/3 per cent, of the cost from the Government, and an equal contribution from the State government? As an adequate water supply will encourage settlement in country towns, and thus offset the rush to the larger cities, will he do what he can to aid rural dwellers in the way I have suggested ?

Minister for Home Security · WERRIWA, NEW SOUTH WALES · ALP

– The provision of a water supply in country towns, and the conservation of water generally, are being considered by the Government in connexion with its post-war reconstruction plans. I shall see that the matter raised by the honorable member receives due consideration.

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– 1 ask the Minister representing the Minister for Trade and Customs whether he considers it equitable that the Vegetable Seeds ‘Committee should be exempt from prices fixed by the Prices Commissioner, particularly as the committee is empowered to prevent private merchants from selling at the official price, or at any other price? If not, will he take appropriate steps to correct this inequity?


– I am not able to say merely on what the honorable member has stated, whether the present position is inequitable. His statements require examination. I shall refer the matter to the Minister.

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– Oan the Minister for Commerce and Agriculture state whether farmers who take advantage of the Government’s invitation to grow wheat on land not previously registered for the growing of wheat will have any chance of obtaining supplies of superphosphate for use on such land?


– I have made it perfectly clear that no newcomers into the industry will be granted superphosphate, because only limited supplies are available and these are being distributed equitably between the various States. The wheat-growers as a whole understand that to be the position. Whilst newcomers into the industry will be welcomed, I repeat that in no circumstances will they be granted supplies of superphosphate this season.

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– ‘Can the Minister representing the Minister for Supply and Shipping tell the House whether there has been any improvement in the production of coal since the beginning of this year, compared with the corresponding period of last year? If so, can he indicate how soon existing restrictions on the use of coal can be removed ?


– Being no longer Minister for Supply and Shipping, I do not now receive daily reports of coal production. Therefore, I am not able to state offhand, the actual position. I shall endeavour to obtain the information today.

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– I understand that within the last year or so, an interdepartmental committee conducted an inquiry into civil aviation in Australia, with particular reference to the nationalization of airways. Will the Minister for Air table the report of that committee, prior to the discussion by this House of the hill which is likely to be introduced,’ this session, providing for the acquisition by the Commonwealth of interstate airlines? Further, did that committee recommend the nationalization of airways, and, if so, was that decision unanimous ?


– A similar question was asked during my absence from Australia last session, and the answer given by the then Acting Prime Minister was “ No “. My answer now to both questions asked by the honorable member for Richmond is “ No “.

page 782


Motion (by Mr. Dedman) agreed to -

That leave be given to bring in a bill for an act to provide for the re-establishment in civil life of members of the forces, for facilitating their employment, and for other purposes.

page 782


Second Reading

Debate resumed from the 21st March (vide page 759), on motion by Mr. Chifley -

That the bill be now read a second time.

Leader of the Australian Country party · Darling Downs

– This measure, revolutionary though it may be, i3 only consistent with the policy of the Labour party, and the basic desire of that party to convert Australia into a socialistic state. A. study of the bill reveals that there was every justification for the nation-wide alarm in recent months regarding the proposals of this Government in relation to hanking. Notwithstanding the repeated attempts of the more moderate Labour Ministers and their supporters to tone down this agitation, and to,mislead the Australian public into believing that there would be nothing alarming or revolutionary in the Government’s banking legislation, it is abundantly clear now that the intention of the Government is to implement in no uncertain manner the first step essential to the carrying out in their entirety of its plans for the socialization of the means of production, distribution and. exchange, namely the nationalization or socialization of banking and credit control. Actually, for many years past, the Labour party has endeavoured to pass sentence of death on the private banking institutions of Australia, and to gain political control of the banking system. The platform of the Labour party advocates first the socialization of industry by the extension of the scope and. powers of the Commonwealth Bank until complete control of banking is in the hands of the people; secondly, the nationalization of banking; and, thirdly, the abolition of the Commonwealth Bank Board, and so on. There is nothing to be gained by pointing out that that policy is consistent with the policy of the Labour party, and with its platform. Every man who stands for Parliament as a Labour candidate signs a pledge that he will work to secure the implementation of these fundamental principles of the platform and policy of the Labour party. That demonstrates the gulf that exists between the fundamental principles of the Labour party, and the principles to which those associated with the party now on this side of the chamber subscribe. It is a matter of socialization versus free enterprise. That is evidenced in no uncertain manner in the measures now before the House.

In his policy speech in 1934, the right honorable member for Yarra (Mr. Scullin) made a statement which provides a very important basis for the consideration of this legislation. He said -

The Labour party proposes to continue the work of expanding ‘the Commonwealth Bank from where it was interrupted by the BrucePage Government in 1924. . . . Our proposal is to restore the management to a governor.

Then followed a declaration to which I wish to draw particular attention, because it demonstrates the material difference between the policy enunciated at that time, and the principles embodied in this measure. The right honorable member went on to say -

To guard securely against political control or private interference with the detailed working of the bank, a governor would be appointed for a fixed period, and removable only by vote of Parliament, as in the case of judges.

I emphasize again the material difference between that declaration of policy by the right honorable member for Yarra in 1934, and clause 22 of the Commonwealth Bank Bill, which states -

There shall be a governor and a deputy governor, who shall be appointed by the Governor-General, and shall hold, office during good behaviour for a period not exceeding seven years, but shall be eligible for reappointment.

In his policy speech in the same year, the then “Prime Minister, Mr. Lyons, made the following very pertinent observations : -

Mr. Scullin’s engine for crushing the trading banks is to be the Commonwealth Bank. The present board is to bc abolished and a single governor is to be appointed by the political caucus.

That is exactly what will happen should this measure be passed, with, of course, the very definite difference to which I have drawn attention, namely, that whereas the right honorable member for Yarra proposed that the governor should be removable only by vote of Parliament, as is the case with a judge, the present proposal is that the governor shall remain in office only while he carries out the wishes of the Government and measures up to its specifications of good behaviour. The late Mr. Lyons went on to say this -

It is contemplated that all Government business and that of all semi-governmental and municipal bodies is to be done by this institution, which is then to make short work of its private competitors by undercutting their service and interest charges by out-distancing them in credit expansion until it will stand in possession of the entire bunking field.

It was not the nationalization of banking that the right honorable member for Yarra sought, but, to use a phrase coined by the late Mr. Lyons, the “ politicalization “ of banking, which, of course, is the real intention of the present legislation.

The Labour party could not have chosen a more appropriate or favorable time than 1934 to try to convince the electors of Australia that banking reform was necessary. Australia had just emerged from a depression. The banks were being blamed for having caused it, and Labour propaganda of that type was being spread throughout the country. The party that sought a mandate from tl>« people to implement its revolutionary banking policy did so under the most favorable conditions. However, its policy was rejected by the electors, and its proposals for monetary reform went by the board.

The Australian Country party deserves considerable credit for the part that it has played in endeavouring to bring a’bout such monetary reforms as it considers to ‘be sound and desirable. The right honorable member for Cowper (Sir Earl* Page) was responsible for introducing the -Commonwealth Bank Bill in this House in June, 19-24, when he was Treasurer of the Commonwealth. Despite what may be said by . persons who are not competent to criticize that legislation, it established a firm foundation for -all of the advantages that have been enjoyed by the central banking system of Australia since that time. In July, 1934. the Country Party Association passed a resolution requesting the appointment of a royal commission to inquire into banking practice, credit systems, and long-term interest conditions generally, and the honorable member for Indi (Mr. McEwen) sponsored the resolution in this House to establish such a commission. The membership of the commission included the honorable member for New England (Mr. Abbott) as well as the present Treasurer. Notwithstanding the fact that, at the 1934 elections, the voters emphatically vetoed the Labour party’s policy of political control of banking, the party persevered and brought forward its proposals in a modified form at the general elections of. 1937. The present Prime Minister, who was then Leader of the Opposition, made the following proposals dealing with the Labour party’s monetary policy : -

  1. The operations of the Commonwealth Bank to be removed from and made entirely independent of private banking interests and free from sectional influences or constraint.
  2. The abolition of the Commonwealth Bank Board and the re-establishment of control as set up at the time the Commonwealth Bank was founded.

He also stated that statutory provision should be made for the banking business of all local government bodies- to be reserved for the Commonwealth Bank. However, the electors again rejected the Labour party’s proposals. In the same year, the present Treasurer, in his capacity as a member of the Royal Commission on Monetary and Banking Systems, made this statement in his minority report - .

In my opinion, the best banking service to the community can be given only by a banking system under national control. . . I am of the opinion that the trading section of the Commonwealth Bank should bc extended, with the ultimate aim of providing the whole of the services now rendered by private trading banks.

Those words show the definite intention of the Treasurer to eliminate entirely the functions of the trading banks. The Prime Minister said in Sydney on the 9th October, 1937, that the Labour party regarded the recommendations of the royal commission as a definite reinforcement of its policy and that it would give effect to all of the recommendations, if returned to power. I stress the significance of the words, “ all of the recommendations “. As this debate progresses, honorable members and the public generally will learn definitely whether the present proposals of the Government are designed to give effect to all, or even to a majority, of the recommendations of the royal commission. Although the Labour party came into power in October, 1941, it obviously waited for a favorable opportunity to introduce its banking control plans. In “June, 1942, the newspapers stated: that the Prime Minister had informed the Newcastle branch of the Australian Labour party that the Government’s banking policy could not be put into effect because the Government had not a majority in Parliament. When the honorable member for Warringah (Mr. Spender) raised the subject in thi3 House on the 3rd June, 1942, the Prime Minister made this statement -

We do not regard the nationalization of hanking as a measure which should be introduced during the war, having regard to our war commitments and the state of political parties.

Is the war over yet? Does the Government intend to prosecute a whole-hearted war effort, or is it to be led astray by diversions such as this? Its action in introducing thos measure is not consistent with that statement by the Prime Minister.

Mr Calwell:

– This bill does not propose nationalization of banking.


– No. It does worse than that; it proposes strangulation of private banking. On the 29th April, 1943, after declaring that the Government did not intend to socialize Australia during the war, the Prime Minister said -

Such interferences, restraints and adjustments as we make will be made only because they are necessary effectively to prosecute the war.

A few days later, the Minister for Transport (Mr. Ward) declared in Western Australia that banking and insurance would, ‘be nationalized if the Labour party had control of both Houses of this Parliament after the elections. I invite the Prime Minister to cite from his policy speech at the last election campaign ,one reference which gives warning of the Government’s intention to take the action which it is now taking. When replying to the policy speech which I delivered, the right honorable gentleman said-, on the 20th July, 1943 -

I put the Government’s position clearly when I say that we have not socialized Australia, and we do not intend to do it just because wu arc at war. That is a clear and unqualified declaration of government policy.

On the 18th August, 1943, he also stated’ -

I have this to say: The Commonwealth Government has no power to socialize any industry. I say further my Government has not socialized any industry. I say further my Government will not during the war socialize any industry.

In December, 1943, over four months after the election campaign, the Federal Conference of the Australian Labour party, meeting at Melbourne, directed the Government to proceed with the party’s banking programme. The proposed course of action was -

  1. That the provisions of the National Security (Wartime Banking Control) Regulations be resolved into legislation; (2) that the legislation secure (a) that the Commonwealth Bank is in complete control of the banking system; (6) that the Commonwealth Bank be subservient to the Government.

I particularly direct attention to the words, “ subservient to the Government “. During the referendum campaign, when the Attorney-General (Dr. Evatt) was asked whether the Government would take control of the Commonwealth Bank in order to finance its post-war programme, he said -

Yes. that is Labour’s policy, and now that the Labour Government is in power in both Houses it is going to carry it into effect.

Labour members have not been alone in their enthusiastic advocacy of the political control of banking. The Government’s chief economic advisor, Professor Copland, said this at the Summer School of the Australian Institute of Political Science held in Canberra in January, 1944 -

Certain industries either are or threaten to become socially dangerous monopolies. They are most “.public utilities” in the broad sense, and are suitable for immediate government control in that such control is not likely to result in reduced efficiency and -progress. Examples are the coal industry, insurance - excluding mutual life assurance - gas and electricity, broadcasting, airways and banking.

Yet in 1941, when Professor Copland was not associated with the Government, he wrote this in his famous essay What Have the Banks Done? -

In the controversies that have taken place in the last eighteen months there is sufficient evidence that political control of the currency would destroy confidence, and abolish reasonable checks to the issue of credit. We oan, therefore, only reap the benefits of a liberal banking policy if the control of the currency be freed from .political interference.

In the same essay, the professor also said t this -

Confidence in the currency has been sustained mainly because the .policy pursued was controlled by the banks and not by govern- ments. The chief criticism to bc made of the banks is that they have given too much and not too little credits to governments.

I have recited some of the political history that has led up to the introduction of this very important measure. It shows that the Australian Labour party has persevered with that fundamental plank of its platform with which it went to the people in 1934, namely political control of the banking system. It was rejected by the people in that year, and again in 1937. The state of emergency caused by the war made it unwise, if not unnecessary, to raise the matter again in 1940. In 1943, the Prime Minister gave the assurance on more than one occasion that nothing by way of socialization or nationalization would be done by the Government, at ‘least for the duration of the war.

A further important observation that must be made concerning this revolutionary reform is in regard to the manner of its acceptance and its likely effect upon us overseas. When it becomes known in greater detail, the reaction will be most detrimental to Australia, particularly in connexion with impending commitments. I recall that when I was endeavouring to rectify irregularities which had been allowed to continue in connexion with the National Debt Sinking Fund, the Secretary to the Treasury and other responsible treasury officials voiced great concern in regard to the possible adverse effect of any criticism on our conversion operations overseas. Evidently, when the Government proposes to assume .political control of the banking system, the likely effect upon our conversion operations is regarded as “being not nearly so important. Because the Government is apprehensive of adverse overseas reaction, it is sending the Secretary to the Treasury to London. If ever a time was inopportune for the introduction of such a revolutionary financial reform in Australia, it is at present.

Mr Curtin:

– The statement that the Secretary to the Treasury is going to London because of reaction caused by this legislation is a little ungenerous, and is not correct.


– That is not what I said. My statement was that he is going to London to explain the position and to assess the reaction. That is only my own opinion, which surely I am entitled to hold.


– The only reason for his visit to London is to take part in a conference in relation to surplus stocks of wool.


– That may be. If so, it is regrettable, because he should take the opportunity thoroughly to canvass the position to which I have referred. The Treasurer presented a very good case for a very unworthy piece of legislation. No one will deny his statement that “ A banking system must always be in process of evolution, continuously adapting itself to changing conditions “. But it is also true that such adaptability will never be achieved by legislation. On the contrary, legislation of so rigid a character as that now before the House is more likely to hamstring the Australian banking system than to give to it the additional flexibility which naturally should be associated with it. Indeed, the Treasurer himself has shown how the Commonwealth Bank has developed as a central bank since the act of 1924 was passed. The honorable gentleman traced its gradual assumption of central banking functions as these became necessary, and showed how the necessities of the economic situation in Australia had produced a central bank. Then, having stated that, in the four depression years, the bank had provided £90,000,000, including £35,000,000 overseas, to aid the Government, he claimed that “ it did not fully measure up to its responsibilities “. I submit that it was no mean achievement to provide over £22,000,000 a year, including £9,000,000 a year overseas, for a government whose credit was low at home and practically non-existent abroad. The Commonwealth Bank did that with the aid of a very loyal banking system. Had it resorted to the inflation demanded by the government of the day, a great deal longer than was taken would have been required to restore the credit of the Commonwealth. Critics of the Commonwealth Bank Board and of the Australian banking system do not realize the tremendous task which that board and system performed during the years of the depression. Commonwealth bonds dropped in July, 1931, to as low as 75 per cent, of their face value in Australia, which meant that investors regarded the risk of default as so high 1)hat they demanded an interest yield of more than 20 per cent, on short-dated bonds. Investors abroad, naturally, held an even lower opinion of our ability to pay. On Hie London market, 5 per cent. Australian bonds dropped to as low as £58, which meant an extraordinarily, high yield, whilst on the New York market Australian bonds changed hands at as low as £35, which meant an even greater interest yield. “What is more, money was cheap at that time in both London and New York. It was in such difficult times that the Commonwealth Bank provided the large suras mentioned by the Treasurer, and at an extraordinarily low rate of interest, the range being from 1^ per cent, to 4 per cent. Yet the Treasurer has claimed that the banking system did not fully measure up to its responsibilities! The honorable gentleman is numbered among the monetary theorists who airily claim that monetary policy can cure, and even prevent a depression. Presumably, he believes that the Commonwealth Bank should have prevented the world depression that occurred in 1929, from causes against which the far more experienced central banks of the old world could do nothing. Even the most biased critic will appreciate that the depression through which Australia passed in those years was world-wide, and was caused by circumstances over which we in Australia had no control. We have proof of that in the book written on the subject by Professor Copland, who gave basic and indisputable reasons as to the gravity and extent of the effects of the depression and our powerlessness in Australia to withstand it.

The Commonwealth Bank, which was created as a central bank, and which had at that time been in existence for only five years, was faced with a depression which played havoc throughout the whole world, and hit agricultural countries like Australia far harder than industrial nations. Yet two countries have been held up as examples to others because of their anti-depression measures. One is Sweden, an industrial country with which the depression dealt lightly, and the other Australia, which was hit much harder than the average, because it is an agricultural country. There can be nothing but admiration of the way in which the banking system of Australia, headed by the Commonwealth Bank as a central bank, steered this country through the depression. The Commonwealth Bank Board has proved a safeguard to our banking and currency system, and it has protected Australia against the exertion of political influence upon the financial structure. No other management of the bank could have done any better; in fact, it might have done much worse. The bank was a powerful influence in ameliorating the effects of the depression in Australia, and in restoring our credit both at home and abroad. The grave danger which I and other members of the Australian Country party see in this bill is that the avowed intention of the measure is to give to the Government increased power over the policy of the bank, and that can lead only to instability and lack of confidence. It is particularly regrettable that this measure has been introduced during the war, which demands tremendous sacrifices. Nothing could be more disturbing to confidence than political tinkering at the currency. Physical things such as money and employment must be backed by the greatest psychological factor, and that is confidence. The whole basis of our currency is confidence.

In a Commonwealth Bank Board so constituted as to be free from political pressure, Australia had a stabilizing factor which is now to be replaced by a governor who must do the Treasurer’s bidding; and the Treasurer will, I presume, still be responsible, not to the Australian people, and not necessarily to caucus, but will be dictated to in turn by the financial experts of the Australasian Council of Trade Unions and the Australian Labour party. Those are only some of the reasons why the Treasurer, even if he were not subject to the remote control of outside political influences, should not have absolute authority over the policy of the central bank. From my own experience as Treasurer, I know that there are times when conflict occurs between the immediate problems of the Treasury, which has to make ends meet in government accounts, and the ultimate interests of the country. I should say that any Treasurer who had power to give direction to a central bank would at times be faced with a strong temptation to solve his own immediate problems at the expense, in the long run, of the community.

We should not forget that the Treasury is the greatest operator on the money market, and will be a far greater operator after the war than it was before. That alone will give to the. Treasurer a powerful motive to look to his own political interests, irrespective of the party with which he is associated. I strongly maintain that that will make the currency policy of the nation, unfortunately and unwisely, the plaything of party politics, lt is quite proper that the Treasury should work in cooperation with the Commonwealth Bank, and that it should have a representative on the Bank Board. But co-operation is one thing, dictation is another.- There has never been a lack of co-operation in the past between the Treasury and the Commonwealth Bank Board. During my term as Treasurer, I always found it possible to work amicably with the board, and the present Treasurer has a board which should be entirely to his own liking, since his own appointees are in the majority. If a complaint could be made against, or a criticism levelled at, the Commonwealth Bank Board, it is, in my opinion, that it has been too liberal and generous to the present Government and its financial policy. The laudable principles set out in clause 8 of Part III. of the hill, which the Treasurer quoted during his speech, do not deceive any one. In fact, I am prepared to say that the rest of the bill is in direct contradiction of those sentiments, and they become entirely meaningless. The stability of the currency can never be guaranteed by a bank which is the tool of a political party. The maintenance of full employment can never be guaranteed by a central bank, because permanent full employment depends on other things than merely finding money, and particularly finding it by means of inflationary measures.

I take it that the third object, “ the economic .prosperity and welfare of the people of Australia “ is dependent on the two first-mentioned considerations, namely, a stable currency and the fullest possible employment, both based on the fullest possible confidence. The Treasurer was a member of the Royal Commission on Monetary and Banking Systems, and in several parts of his speech he sought to justify some of the more doubtful provisions of the bill by quotations from the commission’s report. In some instances, however, his case was not so convincing at it might have been. In the first place, he used the statement in paragraph 543 of the commission’s report as a reason for the abolition of the Commonwealth Bank Board.- The commission was of the opinion that the depression might have lightened, if the action which the board ultimately took had been taken earlier. I do not intend to dispute the commission’s view, but I draw attention to the fact that that did not, in the view of the commission, condemn in any way the board as an institution. In other words, the criticism was directed against the personnel of the board at the time, rather than against the board as such. Indeed, the commission recommended the retention of the board with only minor differences from the board as now constituted. In the second place, the Treasurer claimed that clause 9 gave practical effect to “ a recommendation of the royal commission “. The “ recommendation “ to which he referred, namely, paragraph 530, is not a recommendation at all; it is merely an expression of opinion by the commission, which was accepted by the chairman with reservations, and dissented from by Mr. Pitt. Even then, clause 9 of the bill differs in a vital respect from the banking commission’s view. The significant sentences in the commission’s report are -

In cases in which it is clear beyond doubt that the differences are irreconcilable, the Government should give the bank an assurance that it accepts full responsibility for the proposed policy and is in a position to take, and will take, any action necessary to implement it. It is then the duty of the bank to accept this assurance and to carry out the policy of the Government.

In the Commonwealth Bank Bill, however, clause 9 (3) reads; -

If the Treasurer and the bank are unable to reach agreement, the Treasurer may inform the bank that the Government accepts responsibility for the adoption by the bank of a policy in accordance with the opinion of the Government, and will take such action (if any) within ite powers as the Government considers to be necessary by reason of the adoption of that policy; the bank shall then give effect to that policy.

The commission contemplated that, before the bank should give way to the Treasurer, it must receive an assurance that -

The Government is in a position to take, and will take, any action necessary . . .

In the bill, however, the Treasurer need only inform the bank that it will “ take such action, if any, within its powers as the Government considers to be necessary “. Under the view taken by the commission,’ the bank should give way to the Government only if the Government has the full support, of Parliament. Under the bill, the bank is to be forced to give way to the Government, even if the Government faces a hostile Parliament. Mr. Pitt, in his dissent, quite rightly pointed out that confidence in the administration of the central bank is essential, and that the sacrifice of the independence of the board would involve loss of prestige.

The third point is that the Treasurer uses the banking commission’s comment in paragraph 139 of the report as a cloak to cover the general departure in the bill from sound principles. The commission, in this paragraph, said -

It is not expected that the regulation of the volume of credit in Australia could be achieved by a central bank which merely copies the methods appropriate to a different and much more highly specialized monetary and banking system.

He, therefore, leaves out the last sentence, which reads as follows: -

But it is possible to trace the development from 1929 of the Commonwealth Bank as a central bank, arid show how it has exercised its powers, without attempting to draw too clear a line of demarcation between powers which are normally considered essential to a central bank, and those which are not.

The Treasurer uses one paragraph, torn from its context and without its inconvenient last sentence, to cover extraordinary previsions which no banking commission and no banking expert would ever endorse. In fact, the two bills are not based on the recommendations of the royal commission at all, but on Mr. Chifley’s dissent from those recommendations. He states frankly in the second paragraph of his dissent on page 262 of the report that, in his opinion, no well-ordered progress can be made under a system in which there a,re privately owned trading banks. Nothing can be clearer than that statement, nor can anything be much clearer than that the Government, by means of these two bills, intends to kill the trading banks by slow strangulation. Straight-out nationalization would have been far more honest ; it would at least have meant compensation for the shareholders of banks, and some responsibility also for the employment of bank staffs, who are now likely to be merely squeezed out. of employment with no guarantee of re-employment in the profession in which most of them have spent the best years of their lives. It is quite clear from the Treasurer’s speech, and indeed from the (bills them.serves, that this is the object.

The Commonwealth Bank is one of the few central banks in the world competing with the banks it controls. There are arguments both for and against such trading activities.- If they are wisely used, they can be a powerful aid to banking control; if they are used as is intended by these bills, they can do incalculable harm. Obviously, a bank with freedom from taxation, and with authority for the complete control of credit policy could make business very difficult for the trading banks, if it set out aggressively to compete with them. But, in addition, the Banking Bill provides for “ special accounts “ into which are to be paid the present war-time deposits of the trading banks with the Commonwealth Bank, plus any further increase in the deposits of the trading banks above their 1939 level.


-Order! The honorable gentleman’s time has expired.

Motion (by Mr. Curtin) - by leave - agreed to -

That so much of the Standing Orders be suspended as would prevent Mr. Fadden concluding his speech without limitation of time.


– I thank the Prime Minister and the House for the consideration extended to me. Having regard to the nature of the special accounts, the uses to which they can be put, and the circumstances, they will be a powerful weapon in the hands of the private banks’ greatest competitor. The funds are to be paid into the Commonwealth Bank, and used by it, and they will be frozen as far as the owning banks are concerned. It must be remembered that the depositors will first look to the trading banks for those deposits, for which the banks are nothing but trustees. Consequently, the fact that the money ultimately finds its way to the Commonwealth Bank does not relieve the trading banks of their primary responsibility to the depositors.

If the Commonwealth Bank, whether of its own accord or at the dictation of the Government, so wishes, it can therefore deprive the trading banks of any new business whatever. That means that, with the inflation now in progress as a result of the war, and the further inflation likely to result from the Government’s rather extravagant programme of expenditure, which allows for no remission of taxation for some years, the trading banks will have a diminishing share of the banking business of this country. It can be, and will he, if I interpret the Government’s intentions rightly, a rapidly diminishing share. In effect, this policy means confiscation without compensation. Never before has that occurred in a British community. We usually pride ourselves on our insistence, on fair play. So far as I am able to glean, in no other country does a central bank possess both trading powers and this type of special deposits. Some have one, and some the other, but it is so obviously unfair to combine the two that no other country has attempted, to do so. The special war-time deposits were in a different category. They were designed to protect the community against excessive war-time inflation, and the hanks willingly agreed that the system was advisable in the emergency which then existed, and which will continue toexist until the conclusion of hostilities. I take some credit for the fact that I was able when Commonwealth Treasurer, to make this very desirable voluntary arrangement with the trading banks. That was evidence of what could be done by active co-operation, without resorting to compulsion. But until now the trading banks1 had a guarantee that those deposits would not be used by the Commonwealth Bank to take busi- ness from them. In other words, the voluntary deposits were a special wartime arrangement; and one of the conditions of the arrangement was that those funds should not be used to compete with, or to eliminate the trading banks. Some honorable members opposite may contend that this position will not be altered, as the funds will not be held in the trading department of the Commonwealth Bank. But the fact .remains that the trading department may expand its deposits as rapidly as it likes, without any obligation to pay the new deposits into the special accounts. Honorable members must not forget that deposits lodged in the Commonwealth Savings Bank will, in part, be available to the trading department.

The Industrial Finance Department offers another convenient avenue through which the funds of the trading banks may be used to compete with them. As the Commonwealth Bank Bill authorizes the Treasurer to make such advances to the department as he and the bank may agree, there is nothing to prevent him from borrowing any sum desired from the central bank department of the Commonwealth Bank with one hand, and lending it to the Industrial Finance Department with the other hand. Such a means of access to the special deposit accounts of the trading banks renders nugatory, as a safeguard against the unfair competitive use of these funds, the much-advertised clause 21 of the Commonwealth Bank Bill, which prohibits the keeping of the special accounts with the general banking division. In practical effect, this provision .is not worth the paper on which it is printed. With these funds potentially at the disposal of the Industrial Finance Department, it is no wonder that the Government reserves for itself the right to appoint the general manager of that department, instead of leaving his appointment, like that of the managers of other departments. in the hands of the Governor.

Apart from those considerations, the proposed new system has rather serious possibilities of financial instability. If a central bank becomes deeply involved in commercial transactions, its central banking functions will be impaired. In an emergency the central bank must be prepared to stand, by the trading banks. But if the central bank is involved in trading activities, it may lack the ability to render assistance and carry out ite functions as a -true bankers’ bank, except through inflation. However, I am not concerned with the effects On the trading banks alone. The future industry and trade of Australia will suffer from ‘the practical monopoly of new business in the hands of the Commonwealth Bank. In the past, Australian industry, primary and secondary, has had the advantage of a number of banks actively competing in order to give the best possible service and it will be hampered ‘by the disappearance of this system, which has served it for so long, and so well.

The policy of the trading banks during the depression has been widely criticized. Their detractors have even suggested that the banks created depressions, because they were able thereby, in some mysterious way, to increase their profits. No one who holds that belief can have examined the statistics of banking profits, which show clearly that banks fare no better than do other people during depressions. In Australia, banking profits dropped from nearly 8 per cent, in 1928 to 2$ per cent, in 1932. Not until 1936 did their profits reach 3 per cent. In those years, they drew on reserves which they had prudently created in good years for the purpose of tiding them over bad seasons. At this juncture, I find it opportune to emphasize what the Leader of the Opposition said last night, when he drew attention to the fact that the Treasurer himself, as a member Of the Royal Commission on Monetary and Banking Systems, agreed that banking profits should be limited to 5 per cent, on shareholders’ funds, or S per cent, on paid-up capital. Indeed, that amount of profit has never been reached, and under present conditions and with proper safeguards, it will not be reached. The Treasurer was of opinion that’ banking profits should not exceed 5 per cent but the maximum that has been reached since 1928 was 3 per cent. That is sufficient to answer critics who declare that the banks made undue profits out of the disabilities experienced by people during the depression.

If depressions were caused purely through monetary means, they would be easier to prevent. It is true that monetary policy plays a considerable part in a boom, and a depression will follow a boom as surely as night will follow day. The boom period must be carefully watched and controlled, because it is after the boom that the depression will inevitably come. In a boom period, monetary expansion occurs, though it follows public opinion rather than leads it. I do not claim that this covers all the facts, which are intricate enough to confound the financial authorities, and add to the proverbial disagreement among economists. Nor does it excuse the banks for any share that they may have had in undue expansion. The .banks must be controlled to a certain degree, but that should :be by proper and sensible central bank control, and not by a central bank in competition with trading banks, using their surplus funds. There is a mistaken notion that the Australian banks refuse loans to deserving clients. That does not “ square “ with ‘the known facts, and with the evidence taken by the royal commission. In the crucial year of 1930, bank advances actually increased from £257,000,000 to £280,000,000, principally because borrowers in trouble needed extra credit to tide them over. There was a decrease to £261,000,000 in the following year, but the cause was that some old advances were being paid off and new borrowers were few and far between. The banker’s problem was to find an outlet for idle money, which kept on accumulating during those years. Of course, there must have been cases in which clients felt they had been badly treated. In a, banking system with more than 3,300 branches it would be a miracle if there were not. But there were more cases of farmers being encouraged to stick to their farms than cases of foreclosure. The bank manager hates to foreclose, because he knows that any manager he can put on- a farm will not do as well as the owner, and from purely selfish motives the bank will try to keep the owner going.

The great difficulty in a depression is not that banks refuse to lend, but that there are no willing borrowers. Even Lord Keynes, who tends to overs tress the importance of monetary policy, recognizes this difficulty. The remedy is government spending in order to set money in circulation. In this direction there has been some criticism of the attitude of the Commonwealth Bank Board, which tended1 to be somewhat conservative. To a degree that might !be justified, but the board had its problems, the chief of which was the difficulty of means of payment abroad at a time when our credit in London was, as I had already pointed out, rather low. On the whole, the Australian banking system stood up well in the depression, certainly much better than the banking systems of many other countries whose economies were not hit nearly so hard. The banking commission’s only criticism was that “ along with other parts of the system the trading banks must bear some responsibility for the extent of the depression “, which, is vague enough to be no criticism at all. Monetary policy by itself will do nothing to cure depressions, and if this is the Government’s object with the two bills it is merely chasing a shadow.

The Treasurer also makes much of protecting the depositor against possible bank failures. He must have had his tongue in his cheek when he thought out that part of his speech, because he must have known that no trading bank in Australia has failed since 1893. In co-operation with the central banking system set up by the right honorable member for Cowper (Sir Earle Page) in 1924, they stood up to the depression years and, ironically enough, the only failure in Australia was the Government Savings Bank of New South Wales. It is, presumably, for this reason that the Auditor-General is required in clauses 49 and 50 of the Banking Bill to examine the books of the banks, and may be required to make special investigations. It may protect depositors against bank failures, but it protects neither depositors nor borrowers against the Government. The direction in sub-section 2 of clause 50 that accounts of individual customers shall not be examined is quite meaningless. It is obviously impossible to examine bank accounts without examining the individual accounts which make up the total.

I now turn to the power of the Treasurer through the Commonwealth Bank to control the lending policy of the banks. That is something -which concerns the whole community even more than it concerns the banks. This power exists at present under the security regulations, and is quite necessary in the war-time emergency. It controls our lives, and it is right that it should do so at a time when all our productive power must be diverted to the war effort. But, to subject a nation to such restrictions in time of peace has never been previously proposed by any government in a democratic country. It means that no finance can be granted for projects of which the Government does not approve. There is no safeguard in the provision that no direction must be given in respect. of an advance to any particular person. A regulation can be so framed that it will affect only one person or undertaking, although the regulation may purport to be general in its character.

Mr Dedman:

– That is far-fetched.


– Any one who is familiar with railway freights and rates knows what I say to be true. A special railway freight may affect only one person, although it is of general application.

The Treasurer states that the banking controls have worked well during the war. They have, but that does not say that they will >work equally well after the war, any mere than will the rest of the system of regulations under which we necessarily have to suffer in war-time. No one believes that man-power regulations will work in peace-time, except under a totalitarian system of . government. Nor will these regulations work in an entirely free economy in peace. War-time banking regulations work well enough because people realize that there is an emergency, and because they are supplemented by other regulations. People who normally borrow from banks have no reason to borrow because they cannot spend the borrowed money. No one can borrow to build a house, because no one is allowed to build. The few who borrow for industrial purposes have their requirements limited just as much by shortage of man-power and of materials as by banking regulations. Hence, once the war emergency is over these restrictions on borrowing will have an entirely different meaning. Our ability to reconstruct Australian industries, compete with overseas producers, and re-absorb the armed forces into profitable employment will depend entirely on the degree of enterprise shown by our producers, manufacturers and business men. and their success in increasing their efficiency. Costs are of little or no account in a war economy, hence the inefficiency which exists to-day, whether produced by wartime controls or otherwise, is obscured. Once international competition for markets returns, industrial efficiency will again become an important factor. Therefore, controls that militate against efficiency should be removed as soon as possible rather than being fastened permanently on the community by the present legislation. Efforts to restore efficiency will undoubtedly be impaired by attempts to subject business to the restraints of government regulation inherent in the proposed control of banking policy.

What will be the effect of this provision in the Banking Bill on post-war trade? The Commonwealth Bank will, presumably, administer policy decided upon by a Treasurer responsible to caucus. It will, therefore, be subject to political whims, but that is not all. A far more sinister aspect presents itself in the political wire-pulling to which the whole financial system can be subjected. To-day we have enough restrictions. The people put up with them because we are at war; but we shall not be able to continue them when the war is over. The Government was significantly answered at the- last referendum, when it endeavoured to secure a mandate to introduce banking reform. Surely history will teach the Government something. We are fighting this war to free ourselves and the people of the United Nations from the oppression of totalitarianism. It is our earnest desire that all the regulations and restrictions which are in force to-day because of war-time necessity shall be removed as soon as possible. When victory is ours and peace has come, are we to saddle ourselves permanently with the greatest basic control which has been imposed during the war, namely, the control of our monetary and banking system, from which all other controls spring? Are we to endanger our entire financial structure and the value of our currency? Are we to encourage these springs of inflation which already have been opened to some degree in the present emergency conditions? This legislation presents as great a threat to depositors with the banks as it does .to borrowers. Depositors now place their -money in the particular bank in which they happen to have confidence; but if all new deposits are to be skimmed off by the Commonwealth Bank, and through it by the Government, and used by the Government for purposes which it shall dictate, what wall happen to the confidence of new depositors who have been accustomed to deal with the private banks? To many people the alternative will be merely to hold notes, but that, of course, will require faith in the currency. If they lose confidence in both the banks and the currency, they will buy commodities rather than hold money or make deposits in banks in which they have no faith. That is the spring from which inflation flows. We are seeing a little of it now. At auction sales, individuals are paying fantastic .prices for junk which they prefer to money in which they have no faith. There are black markets on which one can buy rationed goods at incredible -prices - a course which also may seem preferable to holding money. We are all looking forward to the time when it will be no longer necessary to put up with such evils, but if the Government has its way, that time will not come during its term of office. Controls of the type embodied in these measures will make black markets an Australian institution.

I have spoken so far of the small depositor who has little option in regard to the use to which he puts his money; but what about the investor whose knowledge of finance gives him scope? He may have some of his money in bank deposits, and some in other investments from which he demands a higher rate of interest - or profit as the case may be - because he judges the risk to be greater. Individuals of this class may have a new outlet for their money which will amount to a black market in finance for industry, including finance for the primary producer. A man may not be able to set up a banking business because bp cannot obtain a licence to do so, but he can lend money on mortgages*, or take debentures or other securities without setting up as a banker. Possibly there is nothing inherently wrong in that. It is being done on a small scale now, but if it were to become a large-scale practice, it could result in the destruction of our banking system in favour of a system - if it could be so called - of independent lenders without experience in lending risks. Under these conditions money would become dearer to the borrower, and it could become dear to the lender, who would not be in a position to spread his risk as - a bank can. That spreading of risk made it possible for the Australian banking system to weather the depression, while the small one-town banks of the United States of America went down in thousands. The Treasurer may have something in contemplation to deal with the weaknesses to which I have drawn attention. I merely wish to emphasize that these weaknesses do exist because of the absence from the bill of essential safeguards. The large industrial concerns will not suffer, because if they tire of red tape they will be able to obtain their own finance internally, or they may go on the stock market for share capital. I am concerned with the primary producers, the small business men, and the tradesmen who cannot go to the stock exchange for their funds. Again I emphasize in all sincerity that the Treasurer should examine what appears to be an inherent weakness in this legislation. There are loop-holes which may provide a “ let out “ from the licensing provisions.

An .aspect of this measure which particularly concerns the Australian Country party and the rural community generally, and, as a consequence, the exporting industries, is the provision dealing with foreign exchange. Control of foreign exchange is divided into two parts in the banking bill. One part is contained in clauses 23 to 26, which provide that the Commonwealth Bank may require a trading bank to transfer to it any proportion of the bank’s “ excess” receipts of foreign cur- rency”. In certain circumstances, the Commonwealth Bank may sell foreign currency to a bank, but there is no obligation to do so. This arrangement is typical of the two bills which give rights to the Commonwealth Bank without imposing obligations on it. It is a somewhat dangerous trend in legislation which no doubt arises from arbitrary war-time measures. I cannot emphasize too strongly that this will lead to the authoritarian spirit of totalitarian regimes being transplanted to this country.

Let us now look at the possibilities of this section : We have in Australia a definite export season which lasts through the summer months. As a result, “ foreign currency”, which generally means sterling funds, held by the Australian banking system, reaches its peak about March or April. On the other hand, there is no such definite import season. Consequently, the drain on these reserves continues through the year, and the funds become depleted during the winter months, reaching a low ebb about September, when a new export season starts to build them up again. Therefore, it is possible for the Commonwealth Bank to deplete the sterling funds of the- trading banks by requisitioning “ a proportion “ of their funds at the end of the export season, or during that season, leaving them without funds to finance imports throughout the winter. It is true that the Commonwealth Bank may re-sell the funds to the trading banks under certain circumstances, but there is no obligation to do so. This clearly amounts not only to exchange control, but also to import control, and if one controls imports it is impossible to avoid affecting exports. We cannot expect other countries to take our exports if we refuse to take their goods. Ultimately,’ it will lead to the contraction of our trade with the rest of the world, which is entirely against the principles of the Atlantic Charter and against the mutual aid agreement to which Australia has consented. That is the last thing we want to do, since so much of our prosperity depends on our exports. In fact, the provisions of the bills go so far that one wonders why the Government is asking for the extraordinary powers embodied in clause 29 of the Banking Bill. However, it is easy enough to follow the reasoning involved. Just as the clauses involving control of advances may lead to a black market in internal finance, so this portion can lead to a black market in foreign currency, similar to those in Germany or Russia before 1939. We had such a black market in 1930 in Australia when the banks started to ration their London funds to importers, and the only thing that stopped it was a free sale of sterling at a higher price by the banks. When such black markets develop, two courses can be taken. The first is the logical one which the Australian banks adopted in 1931, and the second is the course which this bill prescribes. The second course involves repression of ordinary market forces and the creation of a still more artificial market. It is rightly foreseen by the Government that the provisions of clauses 23 to 26 may easily lead to a position in which further repressive measures will become necessary. In other words, this is another bureaucratic approach to post-war problems, and a measure of the kind which the people rejected at the recent referendum. These clauses are very thorough. They provide for regulations to prohibit not only ordinary buying and selling of foreign exchange for trade purposes, except with the permission of the Government, but also the transfer of securities and the import and export of goods, except under licence. This is a very important restriction which will affect the whole of our internal and external trade. When this provision comes into effect, as obviously it must, it will do a great deal to weaken Australia’s export marketing position. The Government has no right to expect to secure this power, and this Parliament has no right to delegate it to any government. There is only one emergency in which such restrictive powers may be needed quickly, and that is the emergency of war, when sufficient power is already in the hands of the Government. With good management of the banking system, no other emergency warranting the delegation of such power should arise. This Parliament will not be true to the trust which the people have imposed in it if it freely gives such great power to the Executive.

I now refer to the note issue reserve, a very important subject affected by this bill. The measure contains no safeguard regarding the quantum of notes that may be issued ; in other words, there is no safeguard against inflation. During the war, the note issue has increased from £47,500,000 in June, 1939, to about £190,000,000 when the latest figures were issued. The proportion of actual reserve to notes in circulation is now about 26 per cent. It was as high as 52 per cent, in 1929. The existing safeguards against the use of the note issue for political purposes, which can only result in inflation, are gradually being broken down. Up to the 1st July, 1912, the Treasurer was required to hold in gold coin, at least 5s. in the £1 of the total of Australian notes issued up to £7,000,000, and £1 for £1 in gold of any sum in excess* of that issue. As from that date, the Treasurer was required 1p hold in gold coin a reserve of not less than one-fourth of the amount of Australian notes issued. On the 19th June, 1931, the prescribed proportion of reserve to notes issued was laid down as follows: - 15 per cent, for the two years ended the 30th June, 1933; 18 per cent, for the year ended the 30th June, 1934; 21i per cent, for the year ended the 30th June, 1935; and 25 per cent, thereafter. On the 21st May, 1932, it was announced that the reserve could be held in either gold coin or English sterling. The Treasurer has . said that almost the whole of the reserve is now held, in English sterling. This bill will complete the whittling-down process. It makes provision for abolishing the reserve requirements. To assert that this procedure has been taken in accordance with the recommendations of the Royal Commission on Monetary and Banking Systems is a dangerous half-truth. Whilst the commission recommended the repeal of the statutory provision requiring a reserve, it also, in the next paragraph of its report, qualified that recommendation strictly by stating that the note issue should be limited by law to a fixed maximum which could be exceeded only by a stated amount with the consent of the Treasurer. The .commission’s recommendations were designed to make control of the note issue much more rigid than it had been before. Its obvious intention was to curb inflation and, as the result, safeguard the investments, bank deposits, and living standards of the Australian citizen - those products of his labour which had not been crystalized into material possessions but which were represented in fluid currency. With the abolition of all safeguards, the way will be open for the note issue to become the plaything of politics. The resultant inflation will be paid for by means of a cruel and unjust tax on the workers, the small investors, and the prudent insurance policy-holders. Where is the moral justification for taking by means of loan subscription a £1 note worth 20s., and repaying the debt, when it falls clue, with a £1 note which then will be worth much less than £1. Because of the dangers inherent in an unrestricted note issue capable of manipulation by enthusiastic but ignorant amateurs, such as the bosses of the Australasian Council of Trade Unions, this portion of the bill should be strongly condemned. It is certainly unacceptable to the Opposition.

The Treasurer did not give one sound reason for the Government’s proposed political interference with the existing banking structure, which has stood the test of time. The honorable gentleman has been intimately associated with banking for the last three and a half years, but he has been unable to offer any justification for the political control of banking provided for in this bill. Voluntary cooperation, on which much emphasis was placed by the royal commission, has been the basis of the satisfactory relationship which has existed between the central bank and the trading banks over the years. It is one reason why we survived the last depression. Nevertheless, the Government intends to destroy that spirit of co-operation and to impose upon the banking institutions regulations which will slowly but surely pave the way to complete nationalization of banking. It intends, by a slow but definite and thorough process, to usurp the functions of the trading banks. “ Socialization by strangulation without compensation “ is the slogan of the Government. One reason for this political interference and weakening of the banking structure, which has not been stated by the Treasurer, is that the Government recognizes that political control of the banking system is the key to the citadel of socialization. It intends to “ politicalize “ the banking system in order that it may then socialize industry. For the reasons which I have stated, the Australian Country party is definitely opposed to the dangerous proposals embodied in this bill. I, therefore, move -

That all the words after “That” be left out with a view to insert in lieu thereof the following words: - “ the Bill be withdrawn as a direction to the Government that it be redrafted, to provide, inter alia -

That the Commonwealth Bank Board be maintained in accordance with the decision and recommendation of the royal commission appointed to inquire into the monetary and banking systems in Australia.

) That the note issue should be limited by statute.

That the Commonwealth Bank be so constituted that each of its constituent parts shall be provided with separate management, and with whatever liaison as is necessary to ensure a co-ordinated policy.

That the Commonwealth General Trading Bank and Industrial Finance Bank be treated, insofar as their relationship to the Central Bank is concerned, in exactly the same way as other trading hanks.”

As it is intended that surplus deposits of the trading banks shall be taken over, surely common justice demands that the same conditions shall be applied to their great competitor, the trading department of the Commonwealth Bank!

Minister for Post-war Reconstruction and Minister in charge of the Council for Scientific and Industrial Research · Corio · ALP

– I have notbeen surprised at the general tenor of the speeches delivered by the leaders of the two Opposition parties. What has surprised me is that the leader of what purports to be a Liberal party should have had the temerity to advance such reactionary views as were expressed last night by the right honorable member for Kooyong (Mr. Menzies.). But we are accustomed to such actions by those who are opposed to the Labour party in the legislatures of this country. From time to time, they

Select for their own purposes such highsounding titles as “ The Liberal Party “ The Constitutional League “ and “ The Sound. Finance League “. In the guise of those high-sounding titles, which are deliberately , designed! to seduce the politically immature, they advance and propagate ideas which are the reverse of liberal, and are designed to make of the Constitution a dead thing rather than a living instrument of government, and propound financial policies which are the reverse of sound. There has come into my possession a communication which throws some light on the Sound Finance League, namely, an extract from a letter sent by the -manager of one of the trading banks to his chairman of directors in England.

Sir Frederick Stewart:

– Did the honorable gentleman obtain that document as the result of the exercise of censorship?


– This document came into my possession quite legitimately, and not through the censorship. It reads -

My idea is that something in the nature of an expanded “ Sound Finance League “ with a properly equipped staff, including a competent publicist and economist of note, should he heavily subsidized by the banks. This body would publish articles and broadcast them, through the .press everywhere, by radio, &c. It would enter into any controversy, newspaper or otherwise, and by extensive propaganda endeavour to educate public opinion.

Mr Holt:

– Does the honorable gentleman deny that that was obtained through the censorship?


– It did not come through the censorship. The letter continued -

The idea is that it should be purely in the national interests - our selfish interest is interlocked with this. The cost may be f 20,000 or £30,000 a year, or even more, but spread among the banks that is nothing if it means our survival as independent trading banks. It is noteworthy that the most outspoken attacks on the banks were made b)r Dedman, who has made some study of economics and finance. He should not be underestimated. The members of the Labour Government are quite equal to, if not more intelligently alert than, the average of the members of the late Government.

Mr Archie Cameron:

– I rise to order. The Minister has quoted from a certain document. Shall I be in order in requiring the production of that document?


– Certainly not.


– I turn from the Sound ‘ Finance League to the Liberal party. Let us study real liberal opinion in other countries. Mr. Mackenzie King, the Leader of .the Liberal party in Canada and also the Prime Minister of that dominion, has said this -

Canada is faced with a great battle between the money power and the power of- the people, a battle which will be waged in the next Parliament. I plead for a sweeping Liberal majority, in order to carry out my policy of public control of currency and credit. Until the control of currency and credit is restored to the Government, and recognized as its most precious and most sacred responsibility, all talk of the sovereignty of Parliament and democracy is idle and futile.

The legislation now before the House, which is opposed by the Leader of the Australian Liberal party, does nothing more than give effect to the policy outlined by the Leader of the Canadian Liberal party. I shall quote now from a statement by Sir William Beveridge, than whom there is no more famous Libera! in any country. He has said this -

The banking system must clearly fund ion in accord with the general financial policy of the State. This implies that the Bank of England should become in peace, as it is in war, an agency of the State, to give effect to the national policy, and with the Governor of the Bank formally appointed by the Government.

The legislation before the House, which is opposed by the Leader of the Australian Liberal party, does nothing more than give effect to tie policy outlined by that eminent Liberal in Great Britain, Sir William Beveridge. The Leader of the Opposition has expressed’ alarm at the effect that these proposals will have on the people of Australia, but, in my opinion, he is confusing the effect that they will have on the small minority which he represents with their effect on the community at large. In any case, I am never unduly perturbed at prophecies regarding what will happen in the future, because, if one casts one’s mind back over the events of the last 150 years, one will find that always, in any given 50-year period, ideas which were regarded as revolutionary, destructive and dangerous, have at the end of that period been accepted as evolutionary, completely orthodox, constructive and safe. Of no aspect of public activity is this more true than of finance. Those whom the Leader of the Opposition represents in this House have always been the calamity howlers. If we look back , to the inauguration of the Commonwealth Bank in 1911, we find that thepress and leaders of oppositions of that day were completely opposed to the establishment of that great institution. Here is an editorial comment which appeared in the Melbourne Argus in that year -

The whole scheme is conceived in idiocy. It constitutes the malicious use of public funds. There is not the slightest justification for it, and its failure is so much a matter of certainty that the whole position will be abandoned after a few months of inglorious experiment.

It is interesting, of course, to recall that “ old mother “ Argus was almost hoist with its own petard when, in the middle thirties, it was almost forced to close up its business. But to-day the Commonwealth Bank, which was belittled and decried at its inaugurationby the predecessors of those who oppose this legislation to-day, stands as a magnificent monument to the foresight and knowledge of the then leaders of the Australian Labour party.

Mr Bowden:

– Then why alter it?


– On the inauguration of the bank in 1911, the question was asked : “ Why alter the banking structure of this country?” But it was altered, and nobody would deny that the Commonwealth has largely benefited through the foundation of (the bank.

Those who profess to be financial experts, and those who are opposed to the Labour party in this country, have always opposed every proposed change in the banking system. That applies not only to so-called financial experts here,but also to those in other countries. In the middle twenties, the professional bankers and so-called financial experts in Great Britain advised the Government of the United Kingdom that a departure from the gold standard would be disastrous. Mr. Churchill himself has said that the advice then given to him by the so-oalled experts was bad in every sense. During the early and middle twenties, when the position in Australia was such that very high prices were received in the overseas markets for our exports, our London funds mounted to a high level. The financial experts of Australia evidently convinced the Government in which the right honorable member for Cowper (Sir Earle Page) was Treasurer that the correct thing to do was to borrow more money on the London market. The adoption of that policy merely aggravated the position obtaining at the time, and Australia had a surplus of sterling at its disposal. Much of what this country has had to suffer in the years from 1929 onwards was attributable to that policy of squandering money by borrowing it overseas at a time when we did not need it.

Mr Curtin:

– And importing from abroad vast quantities of commodities which we should have been manufacturing ourselves.


– Quite so. Another example of the bad advice given by socalled financial experts could be mentioned. It has been referred to in the speech delivered by the Treasurer, and is found in the report of the Royal Commission on Monetary and Banking Systems. Attention was drawn to the fact that the Commonwealth Bank ought to have taken earlier action than it did to alter the exchange rate. Failure on the part of the then Commonwealth Bank Board to take that action cost the primary producers of this country many millions of pounds.

Sir Earle Page:

– I was the only member of this Parliament who advocated exchange control in June, 1930.


– That may be so, but the right honorable gentleman did not domuch good to the primary producers.

Sir Earle Page:

– Because a Labour government prevented me.


– Since the banking system as it exists at present, except, of course, for war-time amendments, was responsible in 1931 for the infliction of tremendous losses on the primary producers, is it surprising that the 200 delegates to the recent conference of the Victorian Wheat and Wool Growers Association decided unanimously to support in their entirety the banking proposals now before the House? This rather brief summary of the highlights of banking policy over a terra of years proves conclusively that private banking interests have always been opposed to measures which have eventually turned out to be in the national interest.

I now turn to a detailed examination of the two bills which will determine how the hanking system of Australia will operate for many years to come. The approach made to these measures by the Leader of the Opposition was in no way constructive ; it was entirely destructive. He selected six aspects in which these bills would alter the present banking system. Had he been at all constructive, he would have set out to do what 1 propose to do, and said what structure of the banking system is, in his opinion, best suited’ to this country, but the very fact that he merely stressed the six aspects in which this legislation will alter our present system, clearly implies that the right honorable gentleman wants the Australian banking system .to remain as it is. I have already said that the royal commission condemned, in language very much too mild for me, the failure of the banking system in 1931 to measure up to its responsibilities. I say quite frankly that the present proposals of the Government in no sense mean socialization or nationalization of the banking system. I turn now to what I consider ought to be the structure of the banking system in this country. I consider that it ought to have at its apex a central bank, under which there should be functioning the various banks that undertake trading activities. The alternative would be, of course, to have only one bank undertaking the activities of the central bank and monopolizing the whole field of trading banks as well. That could perhaps be described as nationalization or socialization of the banking system. The Government has not selected that system, but proposes an alternative which it thinks is better fitted’ to this country. To leave the hanking system as it is would bo to have a structure in which the central bank would continue to engage in trading bank activities in which private banks also were engaged. Does the right honorable gentleman think that the system as it stands, with the central bank also undertaking trading bank activities, is the one that should continue in Australia? Apparently from his speech he does, because he did not indicate any alteration of the present system which he would make. I suggest to the House that, from the point of view of the trading banks themselves, it is a better proposition for them to have the activities of the central bank entirely separated from the trading bank activities of the Commonwealth Bank than to have the two combined as they are now.

I want to relate these two measures to the functions, powers and responsibilities of a government generally. The chief function of any government in any country is to ensure the welfare of the people it governs, and I do not believe that this Government should be inhibited from passing any legislation whatever, so long as it is within the constitutional power granted to it. It should not be inhibited from passing any legislation which in its opinion, as the representative of the majority of members of this Parliament, is in the interests of the community at large ; and these two measures are brought before the Parliament because this Government believes that they will be in the best interests of the people of Australia. It is true that the functions of the banking system impinge very closely upon economic policy generally. I am not one of those who believe that merely because you can control the monetary system, you can bring about a paradise in this or any other country. The real welfare of the people depends upon their skill and efficiency and the work and services that they perform. But it is true that banking .policy can he of great assistance in ensuring economic measures for- the welfare of the people, and can be an insuperable obstacle to the attainment of those objectives if those who control banking and monetary policy are opposed to the general economic objectives of the Government of the day. That is why I think that the most important part of the two measures now before the House is contained in Part II. of the Commonwealth Bank Bill. Part II. has been described as a charter for the Commonwealth Bank. I prefer to describe it as a directive issued by the Parliament representing the people of this country to an instrument - “ agency “ was the word used- by Sir

William Beveridge - to carry out the policy of the Government which, for the time being, represents the people of Australia. That immediately brings me to the point that I do not believe that the Commonwealth Bank, being, as it is, the instrument of the Parliament, set up by Parliament on behalf of the people, should have greater powers than the Parliament itself; but the leaders of the Opposition parties have said that the management of the Commonwealth Bank should be such that it could override, if it wished to do so, the desires and objectives of the government of the day. Why I consider that this directive, contained in Part II., is the most important section of these two measures is that it is intimately related to the general economic objectives of the Government, and I also think that it is intimately connected, too, with the prosecution of the war. It was said that the Prime Minister had made certain promises. What the Prime Minister did say in his policy speech at the last general elections was that the energetic prosecution of the war would have first place in the activities of his Government. That is true to-day. But wars are fought not only on the battlefields but also in the minds of men and women, and one reason why the people of this country, and of other countries that constitute the United Nations, have fought so well, is that they have a deep belief in the things For which they are fighting. One of those things is a “ new order “, in which there shall be freedom from want. This Government would have been recreant to its trustto those who are fighting our battles in many parts of the world, if it had not taken such legislative action as appeared to it to be appropriate for the purpose of ensuring, so far as it is possible for the Government of the Commonwealth of Australia to ensure, that for the Australian people in future there shall be freedom from want. This legislation is intimately associated with the promise which my esteemed leader, the Prime Minister, made in his policy speech at the last election.

Part II. of the bill sets out the objective at which the Commonwealth Bank shall aim in the discharge of its duties.

I shall read it to the House because it is extremely important. Clause8 provides -

It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed tothe greatest advantage of the people of Aus-. tralia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the Bank, will best contribute to -

The stability of the currency of Australia ;

the maintenance of full employment in Australia; and

the economic prosperity and welfare of the people of Australia.

Mr White:

– A platter of platitudes.


– I am not surprised to hear that remark from the honorable member for Balaclava. The first thing which I desire to ask members of the Opposition about this directive to the instrument which this Parliament is reconstituting to carry out its policy is, do they challenge the objectives set out in clause 8? If they do, let them say so, because the people of Australia will be very interested to hear whether the Opposition believes in the policy of full employment, economic prosperity, and the welfare of the people. If the Opposition agrees that those are appropriate objectives for the Government to have, and that this is an appropriate directive for the Government to issue to an instrument which it is reconstituting to carry out its economic policy, then my task in justifying and securing the passing of this bill will be easy. Every other part of these two measures can be demonstrated to be necessary to the carrying out of the directive given in PartII of the Commonwealth Bank Bill. I have not the time to cover all the parts of both bills, but I should like to refer briefly to some of them and to relate each of them to this directive which the Government is now issuing in order that its general economic objectives shall be given effect.

Mr Archie Cameron:

– This word “directive” sounds to me like something which one aims at some one else.


– The honorable gentleman, from his own military experience, should know the meaning of “ directive “.

Mr Archie Cameron:

– No, I do not. It is not an English word.


– It is. In fact, the central bank will act as a sort of generalissimo, under which other parts of the banking system will operate, and the generalissimo will be subject, as are other generalissimos, to the government which appoints him.

Part III. of the bill provides that the Commonwealth Bank shall act as a central bank, and members of the Opposition contend that the central bank should be independent of the Government. Banking practice in other countries is such that central banks are not independent of governments. In 1936 the then governor of the Bank of England, Mr. Montagu Norman, said -

The Government has only to make known its will, and the bank will carry out its wishes.

Honorable members opposite are always citing the Bank of England, and referring to its powers and functions. There they have the clear statement of a former governor of the Bank of England that he recognized that a central bank must be amenable to the wishes of the government of the day. Since 1936, the relationship between the Bank of England and the British Treasury has become even closer. The London Sunday Times, which is a conservative journal, commenting on the legislation now before this Parliament, said -

It merely gives statutory cognizance to principles which are a matter of tacit acceptance in Britain, such as the subordination of central bank action to government policy. The power it gives to the Commonwealth Treasurer is a frank recognition of the actualities pf modern government.

Part IV. of the bill deals with the general banking division. If members of the Opposition had their way, the Commonwealth Bank would become entirely a central banking institution, and .the trading division would be abolished. If the Commonwealth Bank is to act purely as a central bank, and that was the object of the Commonwealth Treasurer in 1924, the only way in which to give effect to that policy would be to abolish the trading division. “Undoubtedly, in the absence of the trading division of the Commonwealth Bank the private trading banks would be able to levy greater toll than they have done in the past of manufacturing and com mercial interests generally. I have just read a booklet which was sent to me not very long ago. I did not ask for it, but I found it to be interesting, and from it I take the following quotation from a statement by Mr. Samuel Courtauld, who is connected with Courtaulds Limited, one of the largest textile firms in the world : -

Manufacturers feel that financial institutions are paid too highly for the functions they perform, and that they frequently resemble bandits levying toll in a narrow defile through which all traders are bound to pass.

The toll that the financial institutions would levy on manufacturers and traders generally would be all the heavier if we did not have in this country a trading division of the Commonwealth Bank to ensure that when they were demanding too heavy a toll the trader or manufacturer could seek accommodation elsewhere.

Part V. of the Commonwealth Bank Bill deals with the management of the bank. The Government simply proposes to restore the management of the bank to what it was before it was changed by the right honorable member for Cowper (Sir Earle Page).

Sir Frederick Stewart:

– It does more than that ; it places the bank under the control of the Treasurer.


– I have already dealt with that aspect of the measure which is covered by Part II.; and I think that I have justified the action being taken in that respect. I repeat that since the bank is an instrument of the Parliament it should always be subject to Parliament through the government of the day which represents a majority in the Parliament.

Mr. -White. - Without any special knowledge ?


– I shall deal with that aspect shortly. The management of the bank is to be in the hands of the governor. The Leader of the Opposition said that what we propose to do is to put the bank under such management as will always make it amenable to the dictates of what he terms “ irresponsible people who represent the Labour party “. Since 1924, up to the present, the management of the bank has been in the hands of a board. Let us have a look at the members of the board in 1938, a year which I select at random. Here are some of them - Mr. A. F. Bell, managing director of Robert Harper and Company Limited; Mr. Drummond, a farmer and grazier; and Mr. Peter Tait, a grazier.

Mr White:

– They are good men.


– I do not say for one minute that any Minister or member of this Parliament could, to-morrow, take up the management of a branch of a trading bank; but I believe that the members of this Parliament have just as much knowledge of the general principles of banking as any single member of the Commonwealth Bank Board iii 1938 possessed. How did those men get their experience? I instance Mr. Bell, the managing director of Robert Harper and Company Limited. What does he know about banking principles and theory, simply by virtue of his being manager of that company?

Mr Coles:

– He was a very good man.


– He might have been a very good man in the application of principles, but he had no greater knowledge of the principles and theory of banking than the least-instructed member of this House.

Mr White:

– That is the Minister’s assumption.


– The Leader of the Opposition in his speech took a line which has been taken for a long time in this country. He said, “ I am not an expert in these, matters at all. I know very little about the technique of banking”. Yet, in his speech, he showed that he had considerable knowledge of the technique of banking. But that line of talk is a part of a general campaign to mystify the public, to persuade them to believe that there is something about banking which the plain ordinary man in the street cannot possibly understand. That is so much nonsense. It is perfectly true that the ordinary layman could not walk into a bank to-morrow and assume its management. He would need the experience gained by contact as a manager with his clients over a number of years. But there is nothing in the science of banking which cannot be learned and digested by the ordinary man in a very short time. When I look at the list of members of the Commonwealth Bank Board in 1938, I ask myself - Just what experience and knowledge of banking principles and theory did they possess? Mr. Drummond, was a grazier, and Mr. Tait a grazier.

Sir Frederick Stewart:

– Read on. What about Mr. Duffy and Bill Taylor?


– I am quite sure that Mr. Duffy knew more about banking principles and theory than any of the three gentlemen whose names I have mentioned. This is the curious part of this business; the Leader of the Opposition said that the management of the bank should be in the hands of experts.

Mr Curtin:

– To-day a man is a union secretary and to-morrow he becomes an expert; to-day he is a grazier and to-morrow he becomes a banking expert.

Mr Chifley:

– Another man is a polo player one day and the next day a banking expert on his appointment to the Bank Board.


– That is exactly the point I was about to make. Messrs. Bell, Drummond and Tait, prior to their appointment, were ordinary graziers or businessmen. They had no knowledge of banking principles or theory at all; but the moment they are appointed to the Bank Board they become experts.


– Order ! The Minister has exhausted his time.

Motion (by Mr. Curtin) - by leave - agreed to -

That so much of the Standing Orders be suspended as would prevent Mr. Dedman concluding his speech without limitation of time.


– Instead of a Commonwealth Bank Board consisting of men who become so-called experts the day they are appointed to the board, the Government is setting up an Advisory Council. That is dealt with in Division. II. of Part V.

BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– And do the members of the Advisory Council become experts the day they are appointed?


– That is the point. The Advisory Council which the Government will set up will consist of experts. It will be composed of- the Secretary to the Treasury, who is obviously an expert in financial matters, the Deputy Governor, who also would be an expert, having been a banker all his life, an. additional representative of the Treasury who shall be an officer of the Public Service - he also would be an expert - and two officers of the bank who probably would have spent the greater part of their working lives in the service of the bank. There we have a committee of real experts and not merely men who are called experts immediately they assume office as members of the Commonwealth Bank Board. Therefore, I suggest that if the Leader of the Opposition insists that banking should be managed by experts, this, legislation gives effect to that principle.

Part VII. of the bill deals with the Note Issue Department. I have never believed in reserves to the note issue. In all my experience and. reading, I cannot recall one occasion on which those who put forward an argument in favour of reserves turned out to be right. I have two examples in mind : In 1931 there was a general election in Great Britain. The then Prime Minister, Mr. Ramsay MacDonald, went to the country, and the slogan of the opposing parties was, “ If you return the British Labour party to power, England will be forced off the gold standard, and we shall have no reserves to the note issue.” What happened? The Labour party was defeated, and the anti-Labour forces formed a government. Three months after assuming office, that Government did the very thing which its supporters had alleged would be done by the Labour party if it were returned to power. There was a similar occurrence in this country in 1931. The then Government led by my esteemed friend the right honorable member for Yarra (Mr. Scullin) advocated sending abroad all the gold which stood behind the note issue in Australia. But no; the opponents of Labour said that such action would be disastrous. However, shortly afterwards, when a government formed by anti-Labour forces was in office, all the gold was sent overseas and replaced by British sterling securities.

Mr Scullin:

– Now all fiduciary.


– That is so. Under the law as it stands now we have to hold 25 per cent, reserves against our note issue. That 25 per cent, can be held, and at present is being held, in sterling securities. There is a misunderstanding in the mind of the public in regard to the function of these reserves. Many people believe that the very existence of a reserve means that there is a limit on the number of notes that can be issued. They believe that so long as there is a reserve, the Government must hold sterling securities or gold in a certain proportion to the note issue, and therefore, that there will not be so many notes issued. That is a complete fallacy, because any government, so long as it has London funds at its disposal, can buy British sterling, securities to the limit of those funds, and on that basis, build up the note issue to four times the value of the sterling securities held. Therefore, the mere fact of there being a statutory reserve to the note issue does not limit the issuance of notes.

I point out also that the note issue is not a matter of very great importance in maintaining a stable currency, because the notes and the coins in the community only comprise a small fraction of the currency in that community. The vast bulk of the currency is cheque money, and the addition of £5,000,000 or £10,000,000 to the note issue makes very little difference. In fact, it makes no difference at all to the stability of the currency. The amount of the note issue is a consequence of the credit policy of the banking system for the time being. If the currency is being expanded through the banking system, as a consequence the note issue will have to be increased, and if the currency is being deflated, the note issue will be decreased. Therefore, the amount of the note issue is a matter of minor importance when considering the stability of the currency.

As I have said, I have never believed in having any compulsory reserve, and my views in that regard have been well put by an eminent business man in Great Britain, Lord Melchett, founder of Imperial Chemical Industries Limited. Referring to the British currency, Lord Melchett said -

The British currency is issued against £00,000,000,000 worth of land, roads, railways, wharves, buildings, warehouses, cities, towns, fleets, farms and factories, in this rich fair isle, and not against anything deposited in the vaults of any bank.

I could apply that statement to this country by saying, “ The Australian currency is issued against £8,000,000,000 worth of land, roads, railways, wharfs, buildings, warehouses, cities, towns, fleets, farms and factories in this rich fair continent:

Sitting suspended from 6 to 8 p.m.


– Part X. of the hill deals with the setting up of an Industrial Finance Department in the Commonwealth Bank. It has long been recognized that whilst facilities are available for big business to obtain financial accommodation for their undertakings, from time to time small entrepreneurs have experienced difficulty in procuring the financial assistance that they needed to carry on their enterprises. This, of course, is definitely related to the future prosperity and welfare of Australia, because those depend not only on the work that is engaged in by big undertakings but also on the initiative and enterprise of small undertakings, and of individuals who employ very little labour apart from that which is available within their own families. Therefore, the Government considered that it would be wise, in the interest of the country, to establish an Industrial Finance Department within the ‘Commonwealth Bank. Big industrial undertakings can generally secure accommodation from the trading banks, through the Stock Exchange, by means of debentures, and from trustee and insurance companies. But unless the individual or the small undertaking can provide substantial security, he or it often finds it difficult to raise capital that is needed for the expansion of the business. Therefore, the country will welcome the setting up of this new department within the Commonwealth Bank. This department was subjected to some criticism by the Leader of the Opposition. Whenever the Labour party in this country does anything, the Opposition immediately points out that it differs from what is being done in other countries. In the present instance, the Labour party is actually following a precedent established by anti-Labour governments in other countries. In the United Kingdom, the MacMillan Report of 1932 drew attention to this very aspect, and since that year the Bank of England, at which members of the Oppo sition always point with considerable pride, has set up two subsidiary companies to operate in the same way as the Industrial Finance Department will operate under the provisions which I am discussing. In the United ‘States of America, the Federal Reserve system is being utilized in war-time in order to do what is proposed by the bill in this regard. In Canada, an Industrial Department has been set up as a subsidiary to the Bank of Canada. In South Africa, an Industrial Corporation has been set up for the establishment of new industries on a small scale, and for the financial assistance of other small-scale industries which need it.

Mr Holt:

– Does the Minister say that those three countries have the same political policy as Australia?


– At the moment I am dealing, not with political policy, but with the setting up of an Industrial Finance Department - an instrumentality which will give effect to the general economic policy of the Government.

Mr Holt:

– Political policy.


– If the ‘ honorable gentleman considers that the assistance of small businesses, is political policy, his idea of what constitutes politics is different from mine.

I have completed the review that I wanted .to make of the different parts of the bill. The Leader of the Opposition warned the Government and its supporters that this legislation will mean that, at some time in the future, the Commonwealth Bank will be under the control of a government other than a Labour government. The right honorable gentleman appeared to consider that that is a reason for opposing the Government’s .proposals.

Mr White:

– That stage will be reached before long.


– The contingency to which the right honorable gentleman referred may be a long way off. I believe it to be highly improbable. The Government holds the view that, having been elected by a large majority of the people of this country, it has the right to put into operation its general economic policy, independent of, and not hamstrung by, any authority which the Opposition may wish to set up in order to frustrate its intention. The Government, and the party which sits behind it, have never had to resort to the practice of establishing authorities designed to prevent change. If we believe that a general economic policy is correct, we are prepared to shoulder the responsibility of putting it into operation. Unlike the Opposition, we are not prepared to set up an independent authority on which to lay blame should governmental activities prove to be not in the best interests of the people of this country. This measure represents a very big step forward in the path of progress.

There are only one or two features of the Banking Bill upon which I wish to make some observations. Provision is made bv clause 39 of the bill, for the Commonwealth Bank to control bank rates of interest. If there is one act of this ‘Government of which I am extremely proud, it is the reduction which it has effected in interest rates throughout the Commonwealth. The primary producers of Australia have been saved many millions of pounds ‘by the reduction of interest rates on mortgages. This is of tremendous importance from the stand-point of the general welfare and prosperity of the people of this country in the post-war years, because we shall then have to compete in the world’s markets against countries which, because of their geographical position and for other reasons, may be able to produce at a lower cost than will lie within our capacity. Interest is one of the components of the cost of any goods produced or services rendered, and anything that can be done to lower interest rates generally, particularly to the primary producers and small business people, must have a most beneficial effect on the general production of the country. Consequently, I thoroughlyagree with the action proposed by clause 39 of the Banking Bill, which will give to the Commonwealth Bank complete authority to control interest rates.

The next matter upon which I want to comment is the mobilization of foreign exchange reserves. The control of exchange rates is an important function of any central bank. There may come a time when, in the interest of the people of this country and on behalf of the Government, it will be necessary for the Commonwealth Bank to take possession of all the surplus London funds that will be available in the private banking system.

Mr Holt:

– Does the Government want to do that in peace-time?


– The alternative to doing that would be to tell the British Government and the British investors that we cannot pay the services debt which we owe to them. The honorable member would be the very last in this House who would say that we should repudiate the debt that we owe, and the services thereon.

The last provision to which I wish to draw attention i3 that which deals with special deposits of the private trading banks with the central hank. I want to make it perfectly clear - because very much has been made of this point by both the Leader of the Opposition and the Leader of the Australian Country party - that under the terms of these two bills it will not be possible for the deposits of the private trading banks with the central bank to be used in competition with the private trading banks. I give a categorical denial to the suggestion by both of those right honorable gentlemen that that will take place.

Mr Abbott:

– The bill will enable it to be done.


– The bill will not enable it to be done. The effect of clause 21 of the Banking Bill and clause 99 of the Commonwealth Bank Bill, read together, will be to make it legally impossible for those funds to be used’ as those two right honorable gentlemen suggested that they would be used. But I am more interested in this aspect of the legislation from the point of view of the effect that it will have on the general community, than from the point of view of its effect on the private trading banks. I relate these provisions specifically to one of the objectives mentioned in Part II. of the Commonwealth Bank Bill, namely, the maintenance of full employment in Australia. The Leader of the Opposition referred in his speech to that world famous economist, Lord Keynes. Undoubtedly, Lord Keynes has made a valuable contribution to the solution of the difficult problem of providing employment for the people. Lord Keynes has shown that full employment cannot be provided for the people of any country unless expenditure takes place on such a scale as to ensure its provision. This expenditure may be on private consumption goods, on private capital goods, on public consumption goods or on public capital goods, and the total expenditure on all of those four forms of production must be great enough to provide employment for every individual in the community who seeks work. Only through full employment can there be freedom from want, because, if we have unemployment in the community, some people will be suffering from want. It is essential, in order to secure the implementation in Australia of a policy of full employment, for the Commonwealth Bank to have control of the finances of the country, and of the policy of the private trading banks regarding the way in which they use their deposits. For that reason I believe that these provisions are among the most important in the bill. Full employment is one of the general economic objectives of the present Government.

Mr Holt:

– Of any government.


– I am glad to hear that, because it indicates that the Opposition is in full agreement with the charter set out in Part II. of the measure. It is not only necessary for the Commonwealth Bank, as an instrument of the Government, to be certain that the money expended from all sources on the four different forms of production which I have mentioned should be sufficient to give employment to all who require it; but, from the point of view of the welfare of the community, there should also be some power over the direction in which the private trading banks use the moneys which they have at their disposal. This will be particularly necessary in the years immediately following the cessation of hostilities, because during those years there will be a shortage of many kinds of goods and services which are urgently required by the people. If there were no control over the directions in which money was to be expended in the immediate post-war period, we should immediately find that private enterprise would be expending vast sums of money on types of products which were for the benefit of the wealthy who could afford to enjoy them, whilst the poorer sections of the community were going without the bare necessaries of life.

Mr Holt:

– Does that involve individual applications?


– The Treasurer himself has made it perfectly clear that all that the Commonwealth Bank is to be given power to do in these bills is to ensure that the general direction in which the moneys available in the private trading banks shall be used must conform with government policy. That does not imply interference with advances to private individuals.

I have a vivid recollection of an incident which occurred when I was a candidate for Corio at an election which was won by my predecessor, Mr. Casey. Geelong, in my own electorate, is a centre of the textile industry, and at one period in the history of that industry the private trading banks refused to make money available for the manufacture of blankets, although they were prepared to provide funds for the importation of blankets. This proves that the private trading banks have always exercised the power. of determining the form which that percentage of production for which they are required to make money available shall take.

Mr White:

– What bank did that?


– I cannot recall its name, but I think that honorable members will admit that I have never been guilty of making a statement in this House which I could not substantiate. My statement is based on remarks by an ex-Minister for Trade and Customs, Mr. Pratten, when visiting Geelong.

Mr White:

– That must be over 25 years ago.


– It is since the last war.


Mr. Pratten was a member of this Parliament as late as. 1927.


– He said that the textile industry in Geelong Bad been denied financial assistance from the private banks to carry on the manufacture of blankets, whilst those banks were prepared to make money available for the importation of blankets. If anybody should have a voice as to how the available financial resources are to be used, and as to the form which production should take in utilizing them, surely it should be the Government, representing the people of this country. It could do that through the Commonwealth Bank, if it chose to do so, rather than the private trading banks, which, if the function were exercised by them, would have power to control the destinies of the people. Therefore, there is every justification for the steps taken in the Banking Bill to ensure that the Commonwealth Bank shall be able to give directions to the private trading banks as to the genera] avenues in which their moneys shall be used.

I believe that when these bills are passed they will become a beacon, lighting the path of progress and prosperity. I compliment the Treasurer on the large amount of work which he has put into these measures. I proclaim that I am proud to be a member of the Government which has been privileged to introduce these bills. I am sure that they will prove to be -an instrument whereby future generations in. Australia will be able to secure freedom from want. To the degree to which we can bring that about, and to the degree to which other countries emulate our example in this regard, we shall help to mould a world which, 1 hope, will be free also from fear.


.- I see in the two bills before us serious and dangerous alterations of our tried and trusted banking system. I am not alone in entertaining that fear, because some hundreds of thousands of people to-day regard the happenings in this Parliament, and the introduction of these legislative proposals, with the gravest apprehension. I know that there will be loud hosannas and the banging of cymbals among monetary reformers who shower letters upon us, and advance financial theories. We have heard the theories of the advocates of the Douglas Credit system, who now masquerade under a number of other titles. If the Minister for Post-war Reconstruction (Mr. Dedman) had happened to be one of the disciples of Major Douglas, he could, not have presented a better case than he has for social credit, but those who have had experience of trade and commerce are well aware that there is no financial widow’s cruse that will give us money in plenty. They deplore the further hampering of private enterprise in the difficult task that -confronts us in the postwar years. The business world had reason to hope for a reduction of government restrictions and bureaucratic control, as the war progressed to a victorious conclusion ; but they see instead another step on the road to socialism, which is the path to serfdom of the totalitarian kind.

Mr Holloway:

– Cheer up !


– The Minister who interjects has not been in either Russia or Germany, but I have had that privilege. I know how those two countries controlled their currency, and did not leave the matter to those who understood finance. It was from the chaos following inflation in Germany that Nazi-ism arose. Honorable members talk glibly about socialism, although the Prime Minister (Mr. Curtin) is careful to evade that subject. We know, of course, that part of the policy of the Labour party is the socialization of the means of production, distribution and exchange. That party believes in the nationalization of banking and the abolition of the Commonwealth Bank Board. Another plank of its policy is the expansion of the bank’s business in competition with, that of the private trading banks in all suitable centres.

Government Supporters. - Hear, hear !


– I am glad of that applause. According to the policy of the Labour party the Commonwealth Bank is to engage in vigorous competition with the private banking establishments. It is to show the private banks- how to carry on banking operations.

The Prime Minister replied to the Leader of the Australian Country party (Mr. Fadden), who during his- election campaign, pointed out that there was danger in applying the socialist policy of the Labour party, as follows -

I put the Government’s position clearly when I say we have not socialized Australia, and we do not intend to do it just because we are at war.

That is a clear and unqualified declaration of government policy. He said something of the same kind about nationalization of the interstate airways. He said that they were not being socialized, that they were being nationalized. That is too Machievellian, too subtle for me. The ordinary citizen believes that they are one and the same. If the Prime Minister said that he was not going to introduce a socialist platform during the war - and I have evidence that he did; more was presented to-day by the right honorable member for Darling Downs - in view of this legislation he should not remain a member of the Government. If the leftwingers of his party have forced him into this he should not find a form of words to try to explain it away, but resign. I prefer the frankness of the left-wingers from whom we may hear to-night. Then honorable members will bo able to judge whether they are not after real socialism. That is what this legislation means. We heard the ponderous statements of the Minister for Postwar Reconstruction (Mr. Dedman) . who said, “ Why do you have a bank board on which there is a merchant, a grazier and a farmer and, I may add, the secretary of the Trades Hall, and he is a good representative. The Government intends to abolish the Commonwealth Bank Board and appoint in its stead a so-called Advisory Committee of civil servants. Stripped of all the small talk which the honorable gentleman indulged in, what the Government intends to do in these two pretentious bills is to abolish the note reserve in order that it may make “ whoopee “ with the note issue, go on an orgy of inflation, and abolish the Commonwealth Bank Board so that, instead of having people trained in commerce and understanding banking, it will have the Labour caucus in control. Look at the treasury-bench and any of the Government benches and see the “ authorities “ on banking who will decide Australia’s financial destiny after this legislation has been passed! These important points, and the fact that the Commonwealth Bank will go straight into competition with the private banks - and the Government intends to cripple them all it can - are the principal objectives of these bills. We can ignore all the lesser things. It is deplorable that the Government should bring down this legislation in war-time instead of giving those on active service overseas the opportunity at the next general elections to say whether they favour turning the people’s bank into a politician’s bank or a caucus bank. We can pursue it further. It becomes a crazy house that Jack built.

Mr Holt:

– “Jack” Curtin!


– That is the gentleman. The caucus controls the Treasurer who controls the governor of the bank. The governor has a so-called advisory council. The trade unions dominate the caucus and, I am told in reply to a question on notice that the Government recently sent a well-known Communist to Great Britain, paying his fare, to represent Australia. The Communists dominate the trade unions. There we have a pretty prospectus of Australia’s financial future. We have no lack of frankness in the Minister for ,WOrKS (Mr. Lazzarini), who was formerly the Minister assisting the Treasurer. He says, “ Let us take over complete control of the banking system “. He also declares that the banks are counterfeiting when they issue cheques. On his reasoning, no doubt, because the Hottentots or the Papuans do not use cheque books, we should not have them either; and he is one of the advisers within the caucus!

Mr Lazzarini:

– That is so much nonsense.


– It is nonsense! That is what I am trying to prove. In the Minister then we have a case of the “ one sinner that repenteth “.

Mr Lazzarini:

– The honorable member cannot present the case honestly.


– The Minister was going to send me a copy of his booklet on finance.

Mr Lazzarini:

– The honorable member would not understand it.


– Perhaps the Minister is right. At any rate, he declared that the banks are counterfeiting and he does not believe in the use of cheque books. But the Treasurer (Mr. Chifley) is a very sincere and earnest socialist. He has been most obstinately consistent in that respect. I was a member of the Government that set up the Royal Commission on the Monetary and Banking Systems.

Mr Calwell:

– The honorable member is sorry now.


– No. I hope that the people will read the report of that commission and see how hollow is the claim of the Government that it is implementing its finding. It is doing nothing of the sort. It is carrying OUt the socialist policy dictated to it by the powerful trade unions outside. The Lyons Government, having helped the country out of the depression, appointed the royal commission. I interpolate here that the depression was not caused by the private banks or the government of the day. World causes brought it about. It was a world-wide depression. We learnt a lot from it. The rise of the central bank is one result of what was learned from the depression. Australia made a quicker recovery than did any other country and, as it emerged, the Lyons Government set up the royal commission to investigate all the fallacious theories such as those expounded by the Minister for Works, other honorable gentlemen opposite, and many people outside. They may sincerely believe in their theories. We should not doubt their simple faith or their agreeable dreams, but, undoubtedly, many monetary theorists border on the eccentric. Nevertheless, every person who so desired had the opportunity to express himself before the royal commission. Included in the personnel were representatives of the community who we thought could assist the commission. We chose Mr. Chifley, the present Treasurer, who had just lost his seat in this House. He was appointed as the representative of the Labour party. I think that all will agree that it was a good choice. We appointed Mr. Abbott, the present honorable member for New England, to represent the Australian Country party. Generally, we had as good a. commission as could be chosen. I do not think that that statement will be challenged.

Mr Bryson:

– What did that Government do about the commission’s recommendations?


– I am glad that the honorable member is awake. I am coming to that. Throughout, the Treasurer consistently dissented from any declaration by the commission expressing satisfaction


with our present banking system. He was the only man in the regiment in step. Now the wheel has gone the full circle, and the good socialist who was opposed to all the others on the commission is now Treasurer of the Commonwealth and has the opportunity, although he was in the minority on the commission, to bring down the policy in which he expressed his belief, because it coincides with that of his party, and those who support it outside. There is good reason, therefore, to suspect that the proposed changes are merely a measure of socialist policy, not as yet going to the confiscatory extremes of the financial revolutionaries, but disguised as a reform and cleverly camouflaged to deceive the unwary, and leading to the same disastrous end. The Minister for Post-war Reconstruction talked about a new order. A certain man in Germany said something of the same kind. This talk of a new order when we have real difficulties in front of us is an endeavour to delude the people into thinking that merely by printing notes or creating credit, without more work and production, we can create prosperity in the community. It is an effort to delude the ignorant, but it will bring the country to disaster. Political financial control has always been disastrous. It ultimately leads to inflation. Currency inflation is an easier method of raising money than taxation or loans, or stimulating the country or the individual to greater work or thrift. Credit expansion is very like drug-taking in that, whilst an aspirin tablet may cure a headache, a pound of aspirin taken at once may destroy human life. Credit expansion becomes a vicious habit, and ultimately leads the addict to disaster. The unhappy state of affairs which will happen in Australia if this Government indulges in an orgy of inflation - and there will be nothing to stop that when these bills have been passed - is what only a Communist or a Nazi could applaud.

Mr Bryson:

– Rot!


– The honorable member for Bourke (Mr. Bryson) cannot understand. If that state of affairs came about every Communist would applaud. Can the Government deny that? I challenge the honorable member who interjected to denounce the Communist policy to-night. He would not dare. Honorable members opposite can stop their shouting. There is no Communist in this country who does not applaud this legislation. I know that there are some minds on the Government side which do not understand it, but I do hope that they will learn a little from this debate. I repeat that only a Communist or a Nazi could applaud the position which would prevail if our currency were unduly inflated. The honorable member for Bourke, whose voice is trying to drown mine, ought at least to read recent history. Does he not know the way in which the people of Germany were defrauded by the Government indulging in wilful inflation. German notes were not worth the paper on which they were printed. Inflation happened earlier in Russia. That is what could happen here. Individual savings would depreciate wherever they were kept. It does not matter where our savings are, whether we have them in a bank, in a hollow log, as the honorable member for Ballarat (Mr. Pollard), who so persistently interjects, would appear to have his, or in a jam tin buried in the back yard. If the Government abolishes the note reserve and begins to issue notes which compete with the notes already in circulation, without greater production and greater services, the first man to be cheated will be the working man, because his wages will buy less and less. At the outset there would be apparent some more or less fictitious prosperity, but the business man would find that he could restock only at abnormal prices. There would be stricter price-fixing regulations and a consequent urge to trade to a greater degree in black markets. That state of affairs would grow worse and worse. Honorable gentlemen opposite may say that this is a black picture, but some of them have never travelled far beyond their own back yards or lifted their eye3 beyond the boundaries of their electorates. Had they travelled in Canada and the United States of America, as I have recently-


– The honorable gentleman is not the only one who travels.


– Here speaks Columbus ! He has not even travelled sufficiently to find the Department of War Service Homes which he controls and persuade it to build homes for ex-servicemen. If he could be induced to go to San Francisco-

Mr Pollard:

– Or Balaclava.


– Yes, in Balaclava he would receive some enlightenment. If he went to ‘Canada and to the United States of America he would see the contempt with which our currency is held to-day. If a person tries to cash an Australian bank-note in Canada, he is greeted with hearty laughter. Canadians understand the dollar, or the £1 sterling, but one has great difficulty in cashing an Australian £1. I desire to see the Australian £1 return to the respectability of sterling. Why? Because there has already been a measure of inflation. This Government may embark on an orgy of untrammelled not issuing, because the various demagogues among them may, at the next caucus meeting, decide to print, say, £1,000,000,000, and there would be nothing to prevent them doing so. That remark causes inane laughter among honorable members opposite, but under the “ new order “, the Government must obey the dictates of caucus. Of course, they will not go to extremes immediately. There will be a gradual injection of notes into the currency, and. a gradual depreciation of the value of our money. That condition of affairs has occurred in other countries, and I picture it happening here. It is nothing but impertinence on the part of the Government to abolish the note issue reserve at a time like the present, because the war may continue for another year, or longer, and returned servicemen will receive gratuities and deferred pay in depreciated currency. That is a possibility; otherwise the Government would not be seeking these powers to-day. There is no urgency for this legislation. The Government should postpone these bills, and seek a mandate from the people at the next elections to reform the monetary and banking systems. At the referendum, the Government received a firm rebuff. Behind its sixteen points, interrelated so cunningly, was the socialist policy of the Government, and the people saw through the scheme. The Government would not dare to put it to the test to-day. If this legislation comes into operation, our currency may he broken. Honorable members opposite may boast that the Commonwealth Bank cannot be broken. Of course, it cannot be broken while the Labour Government has enough printing presses and sufficient paper, but the Government can break the country’s currency, and under this legislation, there is a grave possibility of it being broken.

Mr Calwell:

– Is the honorable member trying to start a run on the banks?


– The Minister and his supporters have already started it. They are several laps ahead, with the introduction of this legislation. If a run on the banks starts to-morrow, persons like the Minister for Information (Mr. Calwell) and the Minister for Transport (Mr. Ward), whose socialist utterances have brought the Government into such disrepute, will be responsible for it. Once confidence is shaken in the credit of a country, unemployment will increase. It is my desire to see everyone in employment. But employment cannot :be provided for all the people, when action is taken to reduce the purchasing power of wages. Unemployment will grow and recovery will be slow and difficult. The Government will not be able to “ unscramble “ this egg, and. worst of all, we shall stand discredited in the eyes of other members of the British Empire and the world generally. That is the prospect which confronts us.

This is the most important legislation that has been introduced in this Parliament since the outbreak of war. The whole fate of our currency, the purchasing power of the peoples and their happiness, depend upon the equitable working of our financial system. By disbanding the Commonwealth Bank Board and removing the note issue reserve, the Government is presenting to caucus an opportunity at any time to commit the country to extravagances, such as those which I previously mentioned.

Mr Lazzarini:

– The Government Savings Bank of New South Wales was closed for political purposes.


– Honorable members opposite are profiteers in disaster. No one has sung the sad song of the depression longer and louder than they have. A few days ago, the Treasurer told us how the depression had embittered him. Therefore, if I painted this picture in black colours, I did so for the purpose of making some honorable members, who have gaily accepted this financial scheme, think how wrongly it may be operated and manipulated-. Thousands of messages which are pouring in from the people convey a warning to the Prime Minister and his Government, even if they will not heed the warning that we utter. Mufti, which is the organ of exservicemen in Victoria, has commented on the Government’s banking proposals. That organization is non-political. Some honorable members opposite and some honorable members on this side of the chamber are members of it. Perhaps honorable members opposite have not read this comment. When they have heard it, they should take note. It reads -

Even to the Government one suspects that banking control will be something of an experiment. It is doubtful whether among those who are so strenuously advocating the step, there will be found many who possess the training and the ability to envisage its possibilities. For most, it will be a plunge into the dark, for good or ill.

Mr Pollard:

– The article is definitely political, and is opposed to the Labour party. The organization should be ashamed of itself.


– I am proud to be a president of a branch of the organization. The honorable member for Ballarat (Mr. Pollard) is a member, and will be able to make his comment on it later. The article proceeds -

The need for cautiousness is increased further by the apparent disparity in the value of the results of whatever action is taken. The potential loss seems to be greater than the potential gain.

That expression of opinion is moderate, but very thoughtful, and honorable members opposite should heed it. The article continues -

If one could venture to express a hope on such a contentious subject it would be that Australia may be fortunate enough before she takes the plunge herself to observe a similar experiment carried out elsewhere, so that there may be an opportunity of profiting from the experience of some other country to which failure may not be so disastrous. A country that has no urgent need to embark on dangerous experiments - that has always had a comparatively high standard of living, and that has, truth to say, had very little to complain of in the past, would bc foolish indeed to risk sinking a perfectly good ship in the hope of building a slightly better one.

Some honorable members opposite would not believe the truth, even if it appeared in the Gospel, but I shall read the views of the Life Officers Association, in the hope that the Government will mark some of the utterances. They are not made by members of political organizations. The article reads -

The association is deeply concerned with the views that have been frequently expressed by certain Ministers of the Commonwealth Parliament with regard to the political control of banking. It realizes that the Government must view with deep anxiety the risks of inflation in the post-war period, but from a sense of duty to policy-holders, the association feels bound to stress the dangers to which political direction would expose their savings. The Commonwealth Bank should be the centre of our banking system, should be protected from political interference and should be unfettered in playing its part in the protection ot the national economy; it should be free and impartial. This will be impossible if the bank is brought under political direction from any government.

I heartily agree with that view. The article continues -

These views the association holds very strongly irrespective of what party may happen to be dominant in Parliament. In other countries the political management of currency and credit in peace-time has led to serious inflation, with all its dire consequences, one of which has been the destruction of the value of life policies and the people’s savings generally. The safeguarding of the premiums paid by policy-holders is the first duty of every life office.

The life assurance companies have subscribed very heavily to Commonwealth loans. Because they are such big subscribers, they make this protest to-day.

Mr Lazzarini:

– Is the honorable member trying to “ knock “ the loan ?


– The Minister has already done that, with a fair measure of success. The article continues -

In view of the grave danger of inflation that would follow the political control of credit, the association trusts that wise counsels will prevail and that no government will assume powers dangerous alike to government and people. It is vital that both the Commonwealth Bank and the trading banks should discharge their appropriate functions free from the dangers inherent in political direc tion. Among the people’s savings that would be imperilled are the savings which, with confidence in ultimate values, are put into policies of life assurance. The present cash value of the investments of policy-holders amounts to roughly £350,000,000, of which over £100,000,000 has been subscribed to Australian war loans* - a notable contribution to the Avar effort, which on several occasions the Treasurer of the Commonwealth (The Honorable J. B. Chifley, M.H.B..) has gracefully acknowledged. The ultimate protection to be afforded to .present policy-holders for their security and that of their dependants is, in Australia alone, more than £700,000,000. The savings of policy-holders are essential for the well-being of the community in peace and war.

If honorable members opposite do not note the comments of an association which represents all the principal life assurance offices in Australia, they will heed no portents at all. There is a real danger. I ask honorable members opposite to accept the word of those who handle the life assurance policies of breadwinners, widows, and children. Their savings are in peril.

Some honorable members see in the Government’s proposals for banking reform a few laudable ideas. I do not admit that there are any. To any one who may be so misguided as to believe that these proposals are reforms, I address the following question : First, has the Commonwealth Bank not been able to cope with its functions as a central bank? Secondly, have the trading banks not cooperated with the Government, and served the needs of commerce? Thirdly, in what way will the people benefit from the Government’s proposals? As I stated earlier, if the Commonwealth Bank Board is abolished, a caucus vote may debase our currency overnight by inflationary financial proposals or budget balancing. It is easier to balance the budget by printing bank-notes than to strive for economy and work a little harder in government departments in order to achieve an honest balance and which will not depreciate the value of the Australian £1. The Prime Minister and the Treasurer wanted to know how the Australian £1 is regarded abroad. We know, to our cost, that £10O in Australian currency will buy only the equivalent of £66 before the war. The commercial community knows the position, and that is why life assurance companies and non-political bodies like the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia are protesting against these bills. Let honorable members opposite obtain the opinions of small businesses regarding the Government’s proposals. I do not ask them to seek the views of monopolists. I have no time for monopolies.

Mr.Frost. - They have a lot of time for the party to which the honorable member belongs.


– The Minister for Repatriation (Mr.Frost) flatters me. I have least time for a government monopoly, because that is the worst monopoly of all. But, under this measure, the Government is attempting to establish a monopoly of banking. Every honorable member has been advised of the result of the Gallup poll which has been taken on these proposals in all industrial electorates, including East Sydney and Werriwa. That poll showed that in East Sydney and elsewhere, on an average, 93 per cent. of shopkeepers are opposed to the Government’s banking proposals. That fact can be checked. If those people have voiced that opinion, government control of hanking cannot be said to be a purely political matter, because the people among whom the poll was taken belong to various political parties. If they are alarmed over their business prospects, the Government should take heed. The business community supports the present banking system because it is founded on generations of commercial experience, and attention to the needs of customers. There is competition between the various trading banks, and such competition is one of the most important features of the present system. It enables customers to make a choice, whereas the Government proposes to establish a monopoly of banking by people who are never tired of inveigling against monopolies. Without experts to control the bank, the institution will be at the mercy of political supporters of the Labour party. The royal commission in its report stated -

page 813



The view of the Commission … is that the most desirable banking system in the present circumstances of Australia is one which includes privately owned trading banks.

The system which we contemplate is one in which astrong central bank regulates the volume of credit, and pays some attention to its distribution. We are satisfied to leave the distribution of credit to privately owned trading banks, working for profit, but regulated in the manner indicated in our recommendations. A strong centralbank, publicly owned, but not dominated by the desire to makeprofit, will exercise the necessary control over the activities of the trading banks, and the organization of these banks on a profitmaking basis will conduce to efficiency, while the area of choice afforded to borrowers will be greater than if all banking were nationalized and brought under one control. We think that in this way the national interest will best be served.

I should add that the Treasurer opposed that view, but it was supported by all of the other members of the commission. I am convinced that the present competition among the private trading banks is the salvation of the trading community. To-day, we have nine private trading banks in Australia. When I and other servicemen after the last war were refused accommodation at one bank, or did not receive satisfaction as a customer of one bank, we could at least transfer our account to another bank. That was my experience when I found the advance policy of our bank too rigid. But let us envisage the position that will exist under a government dominated banking system. We can imagine what will happen. We can picture the queues of those meeting overdrafts, the filling in of forms, and the delays that are inseparable in the public’s dealings with government departments to-day. Does any one imagine that he will receive personal sympathy from a government banker? The government banker, like many of our civil servants to-day, may be enthusiastic about his job; but the fact remains that satisfactory service is not always given in a government system. In every country town, the local banker knows every business personality in his district, and he pays particular attention to the problems of customers. Of course, if the Minister for Transport (Mr. Ward) applied for accommodation to a government banker he would probably receive a good hearing because his views on socialism are well known.Can we not imagine what would happen if a powerful coal-miners’ union, which now does just as it pleases, were refused an overdraft by a government-controlled bank? Would such an organization take such treatment lightly? Can we not envisage the large numbers of disappointed applicants, too indigent constituents, who have been ref used accommodation at other banks, immediately rushing, the government-controlled bank for an advance? And should they be refused accommodation, can we not imagine the deluge of letters which will pour in to members of Parliament asking them to take up their case with the government bank manager in a particular district? This measure will abolish a system which has operated in British communities for generations, because the fact is that private banks cannot stand up perpetually against a government bank which can tax its competitors out of existence, and can charge any interest rate because it does not care how much it loses, or how many bad accounts it may have on its books. On the other hand, such bad debts fall directly upon the private trading banks under our present system. And as the Government now has over £30,000,000 in overdue or bad debts on its books in respect of arrears of income tax, one can readily imagine that a government-controlled bank will have very many bad accounts. Indeed, one can reasonably ask whether a government bank will seriously press every one of its customers to pay up. Those are points which the Government should consider seriously. Political wirepullers will importune the government bank for consideration while other more worthy people are given scant consideration. Such a bank cannot carry on in the fair-competitive spirit that prevails in the present banking system. It is possible that men with initiative, capable of helping immensely in the development of primary and secondary industries in this country, who would ordinarily obtain finance from private trading banks may be prevented from obtaining similar accommodation from a governmentcontrolled bank, and consequently will invest their money in other countries. Those possibilities must be taken into consideration.

It is proposed to establish an Industrial Finance Department of the Commonwealth Bank, but that is a minor matter compared with the Government’s proposals to abolish the Commonwealth

Bank Board and the currency reserve. One can easily imagine all the disabilities that will prevail in the proposed Industrial Finance Department. That department is to be empowered to lend money and to buy and sell shares. Apparently, it is to have a stock exchange of its own ; and one can imagine how the stocks will go up and down as the result of government interference. As finance is the corner-stone of commerce, these proposals will affect the future of every industry. Therefore, these are the most vital measures that have been introduced into this Parliament for many years. It is obvious that the Government has not given sufficient consideration to these measures. It has’ been .pushed into this matter by egregious supporters like the Minister for Transport, who, I understand, is to speak in this debate to-night. The people may then judge whether the objective of the Government is to .protect the people, and whether these measures are the harmless banking reforms as suggested by the Minister for Post-war Reconstruction.

Misleading catch cries and shibboleths are wildly indulged in by supporters of the Government’s proposals. One of the most misleading is the clamour that the Commonwealth Bank should be a people’s bank. Honorable members- have seen much literature along those lines. The Commonwealth Bank is a .people’s bank to-day. It- is owned’ by the people, and controlled- by a board appointed by the Government and representative of the different sections of the people to whom it is responsible through the Parliament. [Extension of time granted.] The Government’s action will make the bank a politicians’ bank; and, regardless of the brand of politics of those who control it, a politicians’ bank is unstable because it lacks skilled- management. The present banking system maintains national equilibrium, but once it is placed under the control of a Treasurer who is bound to obey the whims of caucus, chaos will result. The Government was rebuffed when it sought these powers at the recent referendum. If it put these measures to the test of an election, there is no doubt that the electorate would defend the people’s bank aud the people’s savings by disapproving of such political piracy and ejecting the Government from office.

The Commonwealth Bank has valuable and necessary functions to perform as the nation’s central bank. It was not founded as such. Neither was the greatest of all central banks, the Bank of England. But. this trend has been found to be vital to our economic life in order to regulate the volume of credit distributed by the trading banks. Already the Commonwealth Bank has played an important role in that respect. It has more power than the Bank of Canada, or the Bank of New Zealand. It has fulfilled the functions of a central hank. It issues currency and performs general banking and agency services for the Commonwealth Bank; it is the custodian of the cash reserves of the trading banks; it acts as a banker’s bank by clearances between the banks ; and it controls the volume of credit in accordance with the needs of the community. It can carry on commercial banking, and, should it wish to do so, ruin the private trading banks, which have played so important a part in the commercial life of the community. Honorable members opposite have said that the private trading hanks have plundered the people. The Minister for Information (Mr. Calwell) has said that the shares of private banks are unusually high. There has been a good deal of misleading propaganda on that point. I hold no brief for the private banks. I believe that during the depression some, but not all, of them were too conservative in their methods. However, the fact remains that during the depression the trading banks in this country made greater advances available than in any corresponding preceding period. The Treasurer himself has admitted, on page 267 of the royal commission’s report that-

During the period 1931-35, the trading hanks have not made unduly high profits; their total net income represented an average of 7.58 per cent, on capital and 4.1 per cent, on shareholders’ funds.

If a comparison be made with all other classes of investment during the war years, as the Commonwealth Bank’s Statistical Bulletin shows, the private trading banks made a smaller profit in almost every other kind of investment, averaging only 3.4 per cent, on shareholders funds, which is considerably below the average of the profit of trading banks in Canada and Great Britain. Had the private banks transgressed by making excessive profits, or by allowing excessive credit, they could have been disciplined without disaster by the Commonwealth Bank varying the discount rate, or the interest rate, or by taxation, or by using the trading bank powers of the government bank in tax-free trading competition. To-day, the trading banks are restricted by many controls which they voluntarily put forward to the Eadden Government. These controls were made law by the present Government. Under these controls, the private trading banks undertook not to expand advances from increases in investable funds; to place all investa’ble funds at the disposal of the Commonwealth. Bank; to agree to any interest variations; and, generally, to obtain the concurrence of the Commonwealth Bank in the purchase of securities, or subscriptions to loans. To-d’ay the banks are hedged in with controls which make every advance to a man buying a business or seeking to manufacture or import certain types of goods, subject to the approval of the Commonwealth Bank, whilst all assets over the daily average of August, 1939, must be lodged in a special account with the ‘Commonwealth Bank in accordance with a plan approved by the Treasurer. I am endeavouring to prove that there is no need for revolutionary legislation such as that now before the House. The banks are controlled, very effectively at present. We all realize that these restrictions and regulations have to be suffered during the war years, and I believe that the trading banks, being efficiently and prudently conducted, will endure; but it is the proposed perpetuation in peace-time of these regulations, with additions, that is alarming. Trade and commerce will be hampered unnecessarily, opportunity for expansion and development will be lost, overseas trade and migration will be hindered, and our prestige impaired if such regimentation is to continue. The plight of any demobilized serviceman who wishes to establish himself in business can well be imagined if he has to face the waiting and obstruction of various government departments. Even if he succeeds in getting through these entanglements he will then have to overcome such a “ pillbox “ of resistance as the Commonwealth Bank. In the near future there will be introduced into this House a bill to deal with the rehabilitation of ex-servicemen. At present these men are facing great difficulties. They are passed from department to department and finally in desperation have to take any old job that is offering. Imagine their disgust when they find themselves unable to obtain homes or businesses. It is easier for he Government to divert these men to he man-power authorities as hewers of wood or drawers of water, or to government employment, than to allow them to exercise their initiative in private enterprise operating on a profit motive. Such form-filling and control resembles closely the regimentation of the individual under the Nazi pre-war system and would be intolerable and repugnant to us in a British democracy.


– That department could be conducted more efficiently by private enterprise, although I do not suggest for a moment that that should be done. It lends itself more to Government control. Honorable members opposite who continue to parade that institution as a perfect model of organization believe apparently that the Government should also take over other undertakings such as the private banks, which have quite different functions.

The Treasurer has not shown any good reason for the proposed changes in the Commonwealth Bank. The position to-day is difficult enough without disorganizing and jeopardizing every aspect of business from the biggest enterprise down to the smallest shopkeeper, and depreciating wages, savings and life assurance policies of the people. The note issue has been expanded 600 per cent, since the beginning of the war; our national debt has almost doubled, and of a total of £343,000,000 worth of treasury-bills, 99 per cent, have been issued under the Labour regime, including £84,000,000 during the past year. I quote these figures from a speech of the Leader of the Australian Country party, who is a former Prime Minister and Treasurer, and who states that many millions of pounds of trust funds have been invested in treasury-bills. In answer to a question which I asked last week I was informed that £7,500,000 had been expended in an endeavour to produce an Australian tank. Not one tank was completed or saw service. That is an example of government enterprise. These are the people who would manage the banks. This Government’s record of mismanagement and waste is a deplorable one, even allowing for the extravagance and inefficiency associated with war conditions. Who knows to what the Commonwealth Bank is already pledged? Who knows what works have been promised in this or that electorate to be financed by the note issue? Is it feasible to believe that this inefficient and perplexed Government will not continue to resort to the drug-taking habit of bank credit, until ultimately a disastrous overdose drives the nation to the purgatory that Russia and Germany knew? It would be too much to expect any governor of the Commonwealth Bank or any group of civil servants to stand up to a Treasurer driven to reckless extremes by a caucus unacquainted with commerce. Their jobs would depend upon their willingness to carry out the Government’s wishes. Disaster in such a case would be greater than any single bank failure, which can create only limited ripples. If a government bank fails, and it is the only bank, the damage will be too enormous to contemplate. We all know what happened when the State Savings Bank of New South Wales failed during the last depression. Bank books were advertised in the press daily for sale at a large discount; yet this Government proposes to assume a monopoly of banking and run that great risk. To those who may be inclined to take the matter lightly, I say that serious mistakes are likely to be made. Why then, in such difficult days, when all the energy and enterprise of the people is needed, not only in Australia, but also to help other countries less fortunate, should this dangerous experiment be tried?’ All the dictates of common sense are against it, and only the theorist, the Douglas Credit enthusiast, the Socialist and the Communist will applaud. Stripped of all special pleading and specious reasoning about the profit motive, this is nothing but an instalment of State socialism, introduced by a socialist government. This is what the present Treasurer said before the Royal Commission on Monetary and Banking Systems in 1-93 6 -

In my opinion, the best service to the community can he given only by a banking system for which the profit motive is absent, and thus in practice, only by a system entirely under national control.

That statement is to be found on page 263, paragraph 6, of the commission’s report. Is any further evidence needed ? The socialist who dissented throughout that inquiry, and with whom the depression, though past, has become an obsession, has power now to turn this country into a socialist state, and is seeking to implement his theories. The matter is one which concerns us vitally. Actually, it is a veritable bridgehead to the totalitarian state, for through control of banking, all other industry and the lives of the people can be controlled. I charge the Government with using the emergency of war to carry out a policy repugnant to our freedom-loving British people. This is being done behind the backs of the best of our citizens, many of whom are fighting to protect the very principles which this measure seeks to destroy. The nation will never forget this injustice and it will know on whose heads to place the blame.

Prime Minister and Minister for Defence · Fremantle · ALP

– The Leader of the Australian Country party (Mr. Fadden) has moved an amendment and I have to say, as he probably expects, that the Government will not accept the amendment, but will endeavour to defeat it, with a view to passing this measure through the second reading and subsequent stages.

The Leader of the Opposition (Mr. Menzies) appears to be opposed to all the ideas that are implicit and explicit in these measures, but he has not attempted in any way to do other than indicate a completely negative attitude towards the Government’s proposals. The Leader of the Australian Country party, in his amendment, has expressed the chief feature of his objections to the bill, and strangely enough that amendment makes no endeavour to exclude from the bill the points upon which the Leader of the Opposition apparently finds his most substantial basis of disagreement. There is nothing in the amendment which seeks to take away from the Government the authority to have its will reflected by the bank in respect of certain major matters of national importance. Presumably, the Leader of the Australian Country party accepts the responsibility which the government of the day must undertake for monetary policy. The Leader of the Opposition drew attention to the fact that the Royal Commission on Monetary and Banking Systems had certain observations to make upon this point and indicated how the difficulty should be overcome in the event of a disagreement between the bank and the Government. He went on to say that he did not even agree with the conclusions which the royal commission reached. So, in effect, whereas the Leader of the Australian Country party does acknowledge - to what degree I shall not attempt to state - the obligation and duty of the government of the day to have its will reflected in respect of monetary policy, the Leader of the Opposition holds the view that monetary policy is not the responsibility of the Government, but must be left entirely to the discretion of the bank, presuming the bank be managed by a board. I take it, therefore, that in any emergency, if something had to be done, the right honorable gentleman would expect Parliament to be summoned to amend such legislation as already operated. We have rather a curious political system. During the speech of the Leader of the Opposition last night, I ventured an observation that it was rather curious, holding the views which presumably are held by those who do not agree with the point of view of the Government and its supporters, that a bill to establish a federal reserve bank in this country failed ‘ to pass through this Parliament, for the purpose of that measure was the distinct separation of the control of the credit or central bank functions of a government bank from the trading bank functions. But curiously, if one looks at the history of this matter one sees this extraordinary state of affairs : The predecessors of honorable members opposite were opposed to the establishment of a ‘Commonwealth Bank as a bank, regardless of whether it was to be a central bank or a trading bank, or was to have a savings bank department. As a matter of fact, the student will be interested to discover the most vehement criticisms of the proposals which the Fisher Government brought down in 1911 for the establishment of the Commonwealth Bank, were directed against the savings bank functions of that bank, although, of course, most extraordinary statements were made in regard to the provisions generally - statements which have had a curiously similar echo in the speeches delivered in this chamber yesterday and to-day. According to the then Leader of the Opposition, Sir Joseph .Cook, a depression of the currency was expected if a government bank were established. Currencies have depreciated all over the world as a result of a variety of circumstances which I need not attempt to summarize now. The Australian £1 stands for stability comparable with any currency in the world. It is true that during the last war there was some depreciation of its value, but we did not then have anything like the control over prices that has been exercised during this war. One has to acknowledge freely that all parties grow in wisdom as the result of experience. “When war broke out the Government which was led by the present Leader of the Opposition recognized the necessity for a series of controls to be imposed upon the private enterprise of this nation if the country was to be spared a plunge into chaotic and uncertain conditions ; and so various controls were instituted. It will be recalled that between 1914 and 1929 the world underwent a transition from war to peace and that many difficulties were encountered. One has only to keep them in broad outline to be convinced that, as the present struggle is of much larger dimensions globally, and has necessitated a greater concentration upon the war, and therefore a greater interference with the civil administration in each country, the transition from war to peace, which 1 hope we should be undertaking before long, will have far graver features, and will demand the exercise of. greater authority by governments, and, one hopes, more wise decisions by governments, than marked the transition from war to peace after the war of 1914-18. In the period following that war agreements between governments dealt with such matters as reparations, and the resumption of trade. It was discovered, however, that reparations in kind had the effect of grieviously worsening the economy of the nation which received the goods, and that the payments which certain countries had to make to other countries caused the recipient nations to suffer more than did the paying nation. As a consequence all kinds of adjustments were sought in the peace which followed the war; but the character of those contractual relationships could not stand the pressure of the economic conditions which they aggravated, and in some respects, developed; and so we had a make-shift state of affairs. It will be recalled that, regardless of the law the Bank of England at that time underwent a complete revolution in its relationship to the Government of the United Kingdom. I need not traverse what occurred, or make more than passing reference to the number of missions sent by the Government of the United Kingdom to various countries. It is sufficient to say that bankers, as well as trusted high officers of State, including leading Ministers, visited other countries from time to time. Nevertheless, the world continued to go from had to worse. That happened because countries which had grievous physical needs had not the purchasing power to satisfy those needs. As a consequence, many countries were led to pursue a policy of economic salvation, regardless of what happened to the rest of the world. Tariffs were raised everywhere, and reliance upon its own economy became increasingly essential, although not desirable to each country. That was the only expedient open to the governments of various countries if they were to survive. In Europe, where the great masses of the consumers are located, where also most of the world’s problems have their origin, and where many factors affecting peace or disorder in the world exist, many countries did not have the resources to give purchasing power to their people, and consequently those countries were driven more and more to develop their own resources. Out of that state of affairs grew a certain amount of monetary derangement including the hoarding of gold, the variation of the exchange rate, and the instability of the currency. At the same time, there grew, quite naturally, a school of students who studied the monetary aspects of the general problem. I want it to be clearly understood that while I have accepted as essential the freeing of monetary policy from sectional authority, and have stated that it seems a little silly - I say that with all respect to those who differ from me - that while the Government of a nation is held responsible for the defence of the nation it should not have any authority over the public credit policy of the nation-

Mr Abbott:

– Would the right honorable gentleman interfere with the generals of an army all the time?


– No ; but almost every day the honorable member disagrees with me because I do not interfere with them. He knows that the commission of which he was a member would never have been necessary if it was not thought that changes in the law in respect of banking in Australia were considered desirable.

Mr Abbott:

– That is perfectly true.


– No changes in the law have yet been made as the result of that commission’s report, although it made a number of recommendations.

Mr Abbott:

– The bill before us does not give effect to those recommendations.


– From the time that that report was submitted to the Parliament until the present Government came into office there were, I should say, many opportunities available to previous governments to give effect to all, or some, of the recommendations of the Royal Commission on Monetary and Banking Systems. Is not that true?

Mr Abbott:

– Some of them were carried out, I understand.


– The honorable member understands that some of them were carried out! In 1911 the anti-Labour Opposition opposed the establishment of the Commonwealth Bank; in 1930, it was opposed to the establishment of a federal reserve bank; to-day, it is opposed to the legislation now before the House, which the Government proposes to place on the statute-book. In the future governments will have to associate with one another more than in the past, and I know of no way in which purchasing power can be given to a country except as the result of a monetary agreement between countries. If such agreements are not to be carried out by central banks as the result of government decisions they cannot be given effect and the world cannot be served or saved. On the contrary, the world, will again experience a repetition of all the evils and mistakes which characterized post-war reconstruction following the war of 1914-18. I believe in nations acting in concert. The only political provision in this bill is that in its central banking policy the Commonwealth Bank should have regard to the declarations which the Government will make through its Treasurer from time to time. That is all.

Mr Menzies:

– It is a big thing.


– The honorable member for New England (Mr. Abbott) does not trust the present Government.

Mr Abbott:

– I trust the right honorable gentleman a lot.


– There is no trust of the present Administration by honorable members opposite, and as a consequence, they refuse to accept the declaration of the Government that what the law provides ‘will be done. The honorable member for Balaclava (Mr. White) said tonight that if the trade unions or the coal-miners made demands for an overdraft from the central bank, those demands would be met.

Mr White:

– The right honorable gentleman promised the coal-miners pensions for nothing.


– That is not true; I did not promise them pensions for nothing. I told the coal-miners that, provided a certain quantity of coal was produced in a given time, I would introduce legislation providing for pensions. The quantity of coal mentioned was not produced, and, accordingly, I intimated to the miners federation that the legislation would not he brought forward. I repeat that I did not promise them something for nothing. It is characteristic of the honorable member for Balaclava to misstate what I said. I believe that in certain aspects of legislation the authority of the Government must be final. The Government is answerable to the Parliament for the discharge of its responsibilities. The Leader of the Australian Country party believes in the continuation of the Commonwealth Bant Board. The board consists of a number of persons chosen by the government of the day. They may have had no previous experience of banking, but after their appointment the nation is expected to be guided by them. In my opinion, the proposed arrangement is at least as good as the present state of affairs. I go further, and say that I believe that experience will prove it to be better. Therefore, I favour the abolition of the Commonwealth Bank Board, because I cannot imagine that the governor of the bank and the advisory authority to be selected in the way that the hill sets out, will be less competent to deal with matters of major policy than is the present board. The other aspects of the legislation are in line with the existing regulations. The Leader of the Opposition says that they should not .be perpetuated. If this legislation be not passed, six months after the war there will be unloosed in this country such a flood of purchasing power that inflation will become a certainty.

Mr Menzies:

– Will this legislation stop that?


– I say that the special deposit fund ought to be maintained until such time as it is thought wise to disburse it.

Mr Fadden:

– The banks have agreed to that.


– Then why object to putting it in the bill?

Mr Fadden:

– They agreed to allow it to be there.


– They could have withdrawn that letter the next day.

Mr Fadden:

– The Government proposes to make the arrangement permanent.


– The arrangement in respect of that special deposit fund is such that it ought to be perpetuated. The size and character of the fund are matters which can be dealt with according to changing circumstances from time to time. Unless effective action be taken now, six months after hostilities have ceased war gratuities will lose much of their value.

Mr Abbott:

– Why does not the Government adopt the recommendation of the royal commission in respect of special deposits ?


– The circumstances to-day are different from what they were when the report of the commission was tabled. The honorable member proposed a note limit of £60,000,000.

Mr Abbott:

– I am referring to special deposits.


– Changed circumstances have produced a state of affairs different from what the honorable member contemplated. I say to the Parliament, and therefore to the country, that this legislation is of the same nature and for the same purpose as was the legislation introduced in 1911 by my distinguished predecessor ; I say, too, that the Labour party’s record in respect of monetary control, and the preservation of the savings of the people and the protection of their deposits, is conclusive evidence that we on this side who represent the poor are more interested in preventing inflation than are the members of any other political party.

Debate (on motion by Sir Earle Page) adjourned.

page 820


Second Reading

Debate resumed from the loth March (vide page 661), on motion by Mr. Chifley -

That the bill be now read a second time.

Minister for Post-war Reconstruction and Minister in Charge of the ‘Council for Scientific and Industrial Research · Corio · ALP

– The purpose of this bill is to repeal the Motor Vehicle Engine Bounty Act 1939 and the Motor Vehicles Agreement Act 1940. The Government has brought down this legislation primarily because it believes that cheap and reliable motor transportation, for both persons and commodities, is a basic necessity under modern conditions. As I shall show, it has found these acts, by their very existence, a serious obstacle to plans for development of an efficient and progressive industry making motor vehicles in Australia. Motor transportation is particularly important for Australia, in which population is unevenly distributed, and the railway systems were designed to serve special conditions which no longer predominate. Indeed, our prospects of decentralizing manufacturing industry depend very largely upon adequate motor transport being available to fill in the gaps in our railways network. “War-time conditions, too, have shown clearly that the prosperity and well-being of primary producers require that motor transport shall be readily available. Because of the vast distances involved, and the consequent isolation of rural communities, the Australian countryside is particularly dependent on it.

It is the .policy of the Government to encourage the local manufacture of motor vehicles. That policy is based on the overriding importance of motor transportation to the future prosperity and development of Australia. In the number of vehicles per head of population, Australia in 1940 ranked equal with Canada as the third most highly “ motorized “ country in the world, having one motor vehicle to every eight persons. In those circumstances, we cannot run the risk that in the future sufficient motor vehicles may not be available for our essential needs. The last five years have shown that, in time of dire emergency, the problems of overseas production and shipping space may make it difficult to import vehicles. In mentioning this, I pay a tribute to all who have helped to supply our needs during the present war. Even in peace-time, however, the importation of sufficient vehicles is by no means assured. Our export income, from the proceeds of which we must pay for imports, is subject to sudden and largely unpredictable fluctuations. We have no guarantee that the overseas demand for our staple exports will be sustained permanently at levels to which we have been accustomed in the past. With so much in the way of raw materials which, in any event, have to be imported, it is only prudent that we should endeavour to become beholden only to our own resources and enterprise for the production of this essential item of our transportation system. Complete manufacture of the entire vehicle may not at first be practicable, but our aim should be to achieve it as soon as possible. Moreover, the Government looks to a developing and expanding automobile industry as the keystone that will consolidate the industrial structure that we have built up during the war. With its important ancillary units producing components and spare parts, the motor industry will provide an attractive opportunity for the enterprise and vision of Australian industrialists. At the same time, it will provide suitable and productive employment for many thousands of skilled workers from trades newly expanded or established in Australia during the war.

In proceeding with its plans to establish the manufacture of motor vehicles in Australia, the Government has been confronted with a serious obstacle which it inherited from an earlier administration. I refer to the Motor Vehicles Agreement Act 1940, which grants a monopoly to Australian Consolidated Industries. Until this legislation has been repealed, the motor industry in Australia will remain in a state of confusion and uncertainty regarding its post-war prospects. I am sure that honorable members opposite will agree with me that this proposed monopoly, like all ‘ monopolies, represents the very antithesis of the drive and enterprise which will be necessary to establish successfully this important manufacturing venture in this country. I do not wish to reflect particularly upon the company which would be the beneficiary under the legislation which the Government is now proposing to repeal. It is my firm conviction, however, that to grant a monopoly guaranteed by act of Parliament would not be the way to create a flourishing and self-reliant industrial enterprise.

Mr Menzies:

– The honorable gentleman considers that it is far better to have competition?


– I have no objection to a government monopoly.

Mr Menzies:

– I thought that there would be a catch.


– That method of approaching the problem seems to me to indicate a fundamentally defeatist outlook on the whole subject, as though the Government which originally sponsored the legislation to be repealed had said to itself : “ Here is an industry which cannot succeed in Australia. Let us, therefore, single it out as something unique, and give to it a status that will mark its basically inferior position. Let us give to it a legally established monopoly of production.” Needless to say, I believe that this negative approach was fundamentally unsound - so unsound, indeed, as to jeopardize its prospects from the start. Perhaps that was the intention; I do not know. The fact remains that the giving of public privilege to private interests is a device quite foreign to Australian traditions, and one which savours of the days in other countries when monarchs sold to private friends the right to exploit their peoples, or Ministers were accustomed to disburse similar privileges for a suitable consideration. Furthermore, events have shown that the repeal of this restrictive legislation was necessary as a first practical step to the post-war establishment of this important industry - not as a claimant on the public revenue, but as a self-reliant unit of Australian enterprise.

I shall now inform the House of the detailed circumstances which have convinced the Government that these acts should be repealed. The possibility of developing locally the manufacture of motor vehicles was one of the first matters to which the Secondary Industries Commission gave attention after its appointment in October, 1943. Several members of the commission were well acquainted with the engineering and other manufacturing capacity which had been developed in Australia during the war. Despite the fact that the monopoly and bounty legislation had not the desired results, the demands of war did bring about the manufacture, entirely within Australia, of powerful diesel engines and of aeroplane engines much more complex than those required for motor vehicles. Even before the war, an extensive motor body-building industry had been firmly established in this country. Knowledge of these important developments, encouraged the Secondary Industries Commission in its belief that the manufacture of a complete motor car or truck would present no insuperable technical problems. In regard to the economics of the proposed industry, pre-war statistics strongly suggest that the Australian market for motor vehicles was steadily expanding, and that there is no reason to suppose it will be saturated even when purely war-time deficiencies in motor transport have been made good. There is a good prospect of the demand being adequate to ensure a market corresponding to an economic volume of local production. In the light of these considerations, the Secondary Industries Commission took an early opportunity to interview representatives of the various motor vehicle interests in Australia. In these discussions, the interested parties displayed their willingness to examine sympathetically the advantages of undertaking manufacture in this country, and to consider ways and means of establishing the industry in Australia. Invariably, however, the discussion centred on the restrictive effects and discouraging implications of the acts of 1939 and 1940. It was affirmed that a subsidy to engine manufacture was unnecessary, since experienced manufacturers do not regard the engine as the most difficult unit to produce in Australia. The grant of monopolistic privilege could, of necessity, benefit only one firm. No matter who that firm might be, such privilege would work in practice to the detriment of interests which could reasonably claim to have established already an important motor vehicle industry in Australia. The Secondary Industries Commission then made a detailed examination of the technical and economic problems associated with developing the motor vehicle industry, with a view to recommending the lines upon which this development might proceed. At every turn, however, the provisions of the engine bounty and agreement acts were found obstructive.

The commission accordingly decided that it had. no alternative but to recommend that those acts should be repealed.

Mr Menzies:

– Is this a report by the Secondary Industries Commission?


– No.

Mr Menzies:

– Is there anything in writing that we could see? What the honorable gentleman has been telling us about the report of the Secondary Industries Commission would be of great value to us.


– I shall see what can be done in that regard. About the middle of last year, Cabinet appointed a sub-committee, under the chairmanship of my colleague the Minister for Trade and Customs (Senator Keane), to examine the whole subject of establishing motor vehicle manufacture in Australia. The commission was able to advise the sub-committee that the results of its inquiries up to that time made it reasonably confident that, if the acts were repealed, a number of the chief motor interests in this country would be prepared to submit proposals for the development and extension of motor vehicle manufacture. In view of this advice, Cabinet accepted the sub-committee’s recommendation that the engine bounty and agreement acts should be repealed, and that all parties interested should be requested to submit proposals for the Government’s consideration.

Mr Menzies:

– Has the Secondary Industries Commission formed any view as to how many firms or companies could produce motor cars in Australia economically, or any estimate of the total payment to be divided between them?


– I believe that it has formed tentative views in those matters; also, that outside industries interested in the manufacture of motor vehicles have made estimates of the potential market in Australia.

Mr Menzies:

– If the commission has formed even a tentative view, it would be of great assistance to all honorable members to know what it is; because, after all, the commission has made an inquiry in connexion with the matter.


– I shall ascertain whether or not any information which would be of assistance to the Opposition is available as the result of the investi gations of the commission. The confidence of the commission that the principal firms in the industry would react favorably to this decision was not misplaced. Australian representatives of firms with North American affiliations proceeded almost immediately to the United States of America and Canada to interview their principals. Concurrently, the Australian representative of United Kingdom interests returned home for consultations. The Secondary Industries Commission was also in direct contact by cable with several motor vehicle manufacturers in the United Kingdom. Australian firms also have indicated their interest and possible intention to engage in the industry. All of this has confirmed Cabinet’s view that notice of the Government’s intention to seek repeal of these acts would be followed by proposals from the industry itself.

The Government has already received one specific proposal for the local manufacture of motor vehicles and another is on the way. Still others have been notified as almost ready for submission. The Government knows for certain that there will be at least three proposals from overseas interests, including one from a film with interests in the United Kingdom. Proposals from purely Australian firms have been prepared and are expected to be received in the near future. The specific proposal already received comes from the well-known firm of General Motors-Holden’s Limited. With the consent of the House, I shall incorporate in Hansard (vide Addendum, page824) the correspondence relating to this proposal.

Mr Holt:

– Does the company agree to this information being made available generally ?


– Yes. I understand that the second proposal is now nearly ready, and will be examined and reported upon by the Secondary Industries Commission. The second proposal comes from theFord Motor Company of Australia Proprietary Limited, whose worksare at Geelong. Discussions on which the commission is now engaged seem likely to lead to a third proposal being submitted. I am confident that these two proposals, which have yet to be placed, before the Government, “will prove equally worthy of the detailed and sympathetic consideration which the Government is giving to the proposal which has already been received.

The proposals which I have mentioned are sufficiently definite to warrant my assuring the House that the repeal of the Motor Vehicle Engine Bounty Act and the Motor Vehicles Agreement Act will be followed in due course by the establishment of a sound and progressive motor manufacturing industry in Australia, not in the hot-house atmosphere of subsidized monopoly, but under con.ditions favorable to efficiency and enterprise. If those acts are not repealed, we cannot expect the parties concerned to implement their proposals. I believe, however, that if this bill is enacted the prospects are bright for the expansion of motor manufacturing in this country after the war.

page 824


3rd February, 1045.

Dear Sir,

Your letter of 5th January, 1945, relative to the establishment and development of the motor car manufacturing industry in Australia, addressed to the Chairman of the Secondary Industries Commission, has been placed before me by the Minister for Postwar Reconstruction. It is a communication of very great importance in the development of secondary industry in Australia, and it is with duo appreciation of that that I have read it. It is to be regarded too as a valuable contribution to the future defence of Australia. Likewise, it is a practical token, after no doubt an exhaustive survey by disinterested authorities, of confidence in the future and stability of Australia.

In your letter you outline certain broad premises and you indicate certain conditions and provisions upon which your proposals are founded. As many of the questions raised have already received the consideration- of the Government I am able at once in respect of many of them to give the desired advice and assurances. In several cases further consideration will be necessary and I will comment only upon these at this time.

As a preliminary I can say authoritatively that it is the intention of the Government to ask Parliament to repeal the Motor Vehicle Agreement Act and the Motor Engine Bounty Act. With reference to the question of the ownership and origin of capital, I should be interested to have details of what your firm proposes. You may be assured, however, that the Government would not discriminate in any way against General Motors-Holden’s in the enterprise under discussion because of the origin of capital and the nationality of ownership.

The following comments are reade upon details of your proposals: -

  1. Type of Vehicle to be Manufactured. - It is felt that the industry itself is best qualified to decide as to type. Your proposal would conform to the intentions of the Government.
  2. Price Objective. - .Without attempting to determine an appropriate purchase price, it is felt that your conclusions are sound according to Australian conditions.

It is noted that your proposals do not contemplate any subsidy, and that they are based upon the Customs Tariff rate prevailing in 1939; but see my reply under 7 (d) below.

  1. Manufacturing Rights, Licences, Services, &c. from General Motors Corporation. - Noted. The practical evidence of the interest and support of General Motors Corporation in the proposals of General Motors-Holden’s Limited is appreciated. It is an assurance of confidence in the country and success in the venture.
  2. Utilization of . Australian Industrial Resources. - It is noted that General MotorsHolden’s will make full use of existing production facilities in Australia and docs not propose to duplicate such facilities which can economically provide needed items.
  3. Timing of the Undertaking. - Noted. You can be assured that the Government will support the undertaking so far as is practicable.
  4. Decentralization. - As you are aware, decentralization of secondary industry is foremost in the Government’s policy because it is believed to be necessary for defence, and should promote an expansion of home consumer markets for the products of secondary industry. The Government is aware also that your company has taken a lead in decentralization, and will not willingly surrender that lead. Your proposals as to the means best designed to attain the objective appear reasonable.
  5. Investment. - The amount of additional investment involved in the proposal is noted. You have requested specific assurances upon certain points, and my observations upon these follow -

    1. This proposal ‘by General MotorsHolden’s Limited provides an acceptable basis for a plan under the Government’s programme for manufacture of motor cars in Australia. If the proposals outlined in your communication are effectively implemented and within a reasonable period result in the production of a complete car, the Government will not itself engage in motor car manufacture. The Government offers its manufacturing resources, however, for employment according to the conditions outlined in your communication under reply, and it reserves the right similarly to offer its manufacturing resources to other motor car manufacturers upon equivalent conditions.
    2. It is the Government’s intention to treat uniformly all firms submitting plans for the manufacture of motor cars in Australia; this is, of course, subject to existing obligations of the Government, e.g., in respect of Imperial preference on imported constituents.
    3. General Motors-Holden’s Limited will be free to enter into the production of any kind of automotive unit.
    4. It is impossible for the Government to undertake to give notice or warning of changes in the tariff. Such changes are necessarily secret until they are presented to the Parliament. It is generally the practice of the Government, however, where changes are concerned, in a protective duty, to have the matter fully investigated by the Tariff Board before changes are made. General Motors-Holden’s would have full opportunity, as would all interests affected in presenting their views to the Board.

Circumstances may conceivably arise which would make it impossible for the Government to adhere to this practice in all cases. The Government would, of course, always take into account the possible effect on employment and production in Australian industry of any tariff change contemplated.

  1. The Government will give earnest consideration to any specific request for temporary import of special components under tariff sub-section 404a.

In its consideration, it will be influenced by the circumstances of the individual case and by its opinion of the progress being made by General Motors-Holden’s towards complete manufacture in Australia.

  1. (i) The desired first refusal will be given.

    1. Subject to the disposals policy which may be formulated, General Motors-Holden’s Limited will have a full parity with all other purchasers of government-owned property. It is explained that the disposals policy may provide that the manufacturers or accredited importers of proprietary machines and equipment shall have a prior right of purchase and a concessional price where they prove that it is their ordinary business to deal with such property. This, however, will not provide any advantage or disadvantage as between one manufacturer and another engaged in the same production.
    2. Upon the submission of specific cases, the Government will give earnest consideration to the terms upon which it can facilitate the importation of plant and equipment for thepurposes of your proposals. In the approved cases it will facilitate the provision of exchange.
  2. The Government is prepared to give full and sympathetic consideration in all cases where inequalities arising from freight charges are placing the Australian manufacturer at a disadvantage or may do so. It will do everything possible to obviate such disadvantages, but it is evident that it is a matter of prolonged investigation.
  3. General Motors-Holden’s Limited will be free to participate in the market for imported units on the same conditions as will apply to other importers of motor vehicles in the same classes and from the same countries of origin.
  4. The facilities required for travel and transport and for allocation of manpower, together with’ foreign exchange, will be granted priority to the fullest extent practicable commensurate with the necessities of the war effort.
  5. The Government will give earnest consideration to the incidence of the undistributed profits tax in relation to the proposals of your communication. As a general survey of Commonwealth finance will be involved, the time to be occupied in investigation may preclude an early decision.

It would prove of value both to yourself and to the Government if you could discuss issues raised in your letter and this reply with the Chairman of the Secondary Industries Commission, Mr. H. F. Morris, and the ControllerGeneral of Customs. I have asked Mr. Jensen to arrange such a discussion. Following this you may wish to discuss the matter with the Minister for Post-war Reconstruction. Meanwhile, I thank you for the promptness with which you have taken up the invitation of the Government and prepared a plan. I would like to make a public statement about your proposal at an early date. I shall be glad to be advised whether you would concur in such action.

Yours sincerely,

JOHN CURTIN, Prime Minister.

  1. J. Hartnett, Esq., O.B.E.,

Managing Director,

General Motors-Holden’s Limited,

Fishermen’s Bend,

Port Melbourne, Vic.

General Motors-Holden’s Limited, Melbourne. [Confidential.] 5th January, 1945.

The Chairman,

Secondary Industries Commission,

Ministry of Post-war Reconstruction,

Degraves-street, Melbourne, Vic.

Dear Sir,

The Comptroller-General, Department of Trade and Customs, in his letter of 5th October, invited the company to submit a proposal for the manufacture in Australia of motor vehicles, including chassis and engines which was followed by his letter of 28th October advising that all proposals were to be submitted to you. On 1st December, wc sent you a brief communication advising of our interest in the matters dealt with in these letters. We should like now to lay before you an outline of our proposed plan, together with a summary of the conditions which wc regard as necessary to its successful accomplishment.

It is our interpretation of the situation, drawn from public statements by the Prime Minister and Government officials, that it is the intention and desire of the Government to encourage the establishment and development of the motor car manufacturing industry in Australia on the broad basis of free enterprise and private initiative, and that it is not the intention of the Government itself to engage in this industry.

It is our understanding from the letter of 5th October that existing discriminatory legislation, particularly the Motor Vehicle Agreement Act and the Motor Engine Bounty Act will be repealed. We understand further from a recent statement by the Minister of the Treasury that the origin of capital and the nationality of ownership of enterprises engaging in such manufacturing activity are not regarded as a basis for discrimination in any form.

The proposal contained herein is based on the foregoing broad promises.

We now have pleasure in submitting our proposal whereby General Motors-Holden’s is prepared to proceed immediately to undertake the manufacture of motor vehicles in Australia, including chassis and engines, subject to certain provisions and conditions contained in this letter.

  1. Type of Vehicle to be Manufactured. - We would undertake to manufacture in Australia a five-seater sedan car and related utility which would be specially designed for the economic and operating conditions of Australia.

Such design is not predicated on any type previously in production in any country but will he of a specification to expressly cater for the Australian requirements.

Whereas there have been available to Australian buyers in the past only chassis designed to meet the economic and operating conditions applying to such countries as Canada, England aud the United States, by specially designing a car for Australia as we propose to do, the product will better fill the needs of the country.

  1. Price Objective. - General Motors-Holden’s Limited recognizes the importance to the Australian economy of dependable transportation and that the wider use of automotive units will depend not only on quality and low operating cost but likewise on low initial purchase price. In fact the achievement of the volume required for the development of a successful manufacturing undertaking by General Motors-Holden’s Limited will depend on these same factors.

The objective of General Motors-Holden’s Limited is to manufacture Australian motor vehicles in the low-price group to sell competitively with imported vehicles without subsidy aud without increase in the customs tariff rate prevailing in 1939.

  1. Manufacturing Rights, Licences, Services, &c, from General Motors Corporation. - Arrangements have been made which will enable General Motors-Holden’s to procure from General Motors Corporation manufacturing rights, including processes, drawings, specifications, and other technical data. The services of General Motors Corporation engineers in specialized branches will be .made available to General Motors-Holden’s and General MotorsHolden’s Limited engineers will have access to General Motors Corporation factories in the United States, Canada and England to observe and familiarize themselves first-hand with manufacturing methods and processes. Such assistance and advice from General Motors Corporation will ho continued to assure General Motors-Holden’s of a constant flow of technical information on the latest developments of automotive design, manufacture and research.
  2. Utilization of Australian Industrial Facilities. - The production of low-cost automotive units is dependent not only on the efficiency of the automobile manufacturer but also on the availability of dependable low-cost sources of supply for raw materials and finished components. General Motors-Holden’s will make all possible utilization of existing production facilities in Australia for the purchase of its requirements, not only as regards raw materials provided by basic industry, but also accessories, finished components and subassemblies from secondary industry.

General Motors-Holden’s does not propose to duplicate existing Australian manufacturing facilities which can provide such needed items in satisfactory volume, of suitable quality, and at a cost sufficiently low to assure that low cost for the complete vehicle will be attained.

  1. Timing of the Undertaking. - Under favorable conditions, it will require approximately two years from the decision and agreement to proceed, until Australian-.made motor cars are in production. In thus indicating a two-year development span it is assumed that the Government will give the undertaking the fullest possible support at all stages.

It will take considerable time to design and prove experimental models, complete the production engineering and planning, design and make tools and dies, procure and instal machinery and equipment. During this period a large investment will be accumulating, which cannot be operated on an earning basis until the start of production.

Ci. Decentralization. - General MotorsHolden’s will be faced with an important consideration pertaining to it3 extensive body and sheet metal fabricating plant located at Woodville, South Australia. It is believed, however, that this location meets the’ Government’s objective of decentralization of industry. General Motors-Holden’s favours the continuation of this phase of manufacture in South

Australia since it provides added efficiency by concentrating similar operations at one location with experienced skilled labour available. The same advantage of concentrated operation and the resultant efficiencies of mass production are planned by manufacturing and assembly operations on the engine, transmission and other mechanical parts at the Melbourne plant.

By initially dividing the manufacturing as between South Australia and Victoria, a fair division of activity will be achieved, slightly favouring South Australia. It is worthy of mention that, with sheet-metal work for a completecar being carried out at the Woodville factory, a considerable amount of new industry will be introduced into that factory since a large proportion of the chassis is sheet-metal work.

Many items of supply and manufacture will be procured at various locations within the Commonweal th and since these items, representing a considerable proportion of the car, will be purchased from such manufacturers, t his will aid considerably in distributing the work and bring about decentralization.

  1. Investment. - Additional to the already large investment, it is estimated that the undertakingwill require an additional investment by General Motors-Holden’s of approximately £ A.2,500,000.

Since the proposal is submitted in response to the Government’s request to undertake complete motor vehicle manufacture and because of the dimensions of the undertaking, assurane from the Government is required on the following points: -

  1. This proposal by General MotorsHolden’s shall be accepted by the Government as fully qualifying under its programme for Australian motor car manufacture, and it is not the intention of the Government itself to engage in this industry.
  2. General Motors-Holden’s does not request that any special advantages be extended to them. On the other hand, they do request that any or all advantages extended to others shall be equally applicable to them.
  3. It is believed by General MotorsHolden’s that an efficient automotive industry, providing low-cost satisfactory quality transportation to the Australian public, can best be established under free competitive conditions.

Accordingly, General Motors-Holden’s will not be restricted from the manufacture of any type of passenger car, truck, bus or any other type of automotive unit, as General MotorsHolden’s may desire to undertake from time to time, and under the same conditions as may be accorded to other manufacturers.

This recognizes that any other concern will be equally free to enter into manufacture of any type under the same conditions as are accorded by the Government to General Motors-Holden’s.

Our calculations supporting our entering this field of manufacture are predicated on the pre-war rates of duties, primage and tariff applicable to the importation of motor vehicles without any additional tariff protection, without increase in customs tariff rates and without subsidy. It is therefore asked that the Government will give fair notice and warning of any changes contemplated under any heading of the tariff as applicable to the automotive industry and wherever practical will give General Motors-Holden’s an opportunity of conferring with the Tariff Board and government officers reviewing such matters.

  1. Certain accessories and components will not be available from Australian industry at satisfactory low cost, quality or in adequate volume to complete the Australian manufactured vehicle. Preliminary estimates indicate that such items will not exceed 5 per cent. by weight of the complete vehicle and that the landed cost of such items will not exceed 10 per cent. in value of the list price of the complete vehicle. For such items the Government will give favorable consideration to the importation free of duty and primage and make available the necessary exchange.

Likewise a condition may arise where volume and quality of certain components and accessories from Australian sources do not meet production requirements. In such cases, in the interest of the advancement of the programme, the Government will give favorable consideration to temporary importation on a favorable basis.

Legislation already exists, and is frequently employed, to accommodate this request within the tariff sub-section 404a.

  1. General Motors-Holden’s proposes to obtain, as far as practicable, its requirements by purchase or lease of government-owned equipment which may be made available. Accordingly, it is requested that the Government will -

    1. Extend to General Motors-Holden’s first refusal to purchase or lease all items of government-owned equipment at present in use or installed in any of the General MotorsHolden’s plants.
    2. Offer for sale or lease all governmentowned applicable material and equipment, machine tools and production supplies declared by the Government as available for disposal, to General Motors-Holden’s on as favorable a basis of prices, terms and conditions as to any other interested purchaser; and that advice of availability for disposal will be given to General Motors-Holden’s concurrently with advice to any others.

Where suitable machinery, equipment, tools, &c, cannot be obtained locally either from the Government or local manufacturers that the Government will give favorable consideration to importation of such items free of duty, primage and sales tax, and make the necessary exchange available.

  1. The freight and charges in moving Australian raw materials, assemblies and subassemblies purchased from outside suppliers and similar charges on outbound finished and semi-finished product to the points of consumption, place the Australian manufactured product at a disadvantage as compared with the imported product which may be landed at any of the principal ports of Australia at the same ocean freight rate.

It is requested that the Government will make available promptly, its policies and plans relating to freight equalization in view of the important effect of these policies and plans upon the General Motors-Holden’s undertaking.

  1. General Motors-Holden’s will continue its pre-war type of business of importing chassis on the same relative basis as any other importers. General Motors-Holden’s by reason of undertaking the manufacture of an Australian motor vehicle will not be restricted in participating in the market for imported units under free competitive condition’s.
  2. The planning and engineering of this undertaking will require -

    1. 1 ) Travel of Australian personnel to the United States, Canada and England and travel of American, Canadian and English personnel to Australia.
    2. Transport for experimental and developmental material, sample components, and the like between the United States, Canada, England and Australia.
    3. Man-power for allocation to General Motors-Holden’s and to their suppliers.

It is expected that the approval of this proposal will carry with it suitable government priorities, allocations and foreign exchange necessary for these purposes.

  1. General Motors-Holden’s Limited plan to finance part of the cost of the proposed manufacturing undertaking by reinvestment of profits.

Under present tax laws, profits remaining and undistributed to shareholders, after payment of income tax, super tax and war-time company tax, are subject to an undistributed profits tax of 10 per cent.

General Motors-Holden’s Limited submits that the operation of this tax is an unwarranted penalty where the reason behind such non-distribution is the furthering of an industrial project which has been initiated by the Government and requests that the Government give favorable consideration to its repeal. where such funds are reinvested and employed in the business.

We are appreciative of and honoured by expressions received from government authorities commending General Motors-Holden’s for the contribution made to the Australian war effort. Believing in the industrial future of Australia, we desire to continue and expand our participation in Australia’s industrial development. We hope that our proposal presented herewith will receive the Government’s favorable consideration. We shall be happy to furnish any further information which may be required.

Yours very truly,

  1. J, HARTNETT, Managing Director.

Debate (on motion by Mr. Menzies) adjourned.

page 828


Fishing Industry - Bullock Pool - Meat Industry : Supplies to Great Britain ; Rationing - Man-power : Releases of Service Personnel - Housing - Motor Tyres and Tubes - Primary Production Disabilities - Banking Legislation - Sydney Graving Dock - Quarantine: Destruction of Dog - Potatoes - Australia’s War Effort - Political Research Society Limited.

Motion (by Mr. Chifley) proposed -

That the House do now adjourn.


– On the18th March, 1944, a scheme for communal fishing was submitted, I understand, to the then Minister for War Organization of Industry (Mr. Dedman) by the Ex-Naval Men’s Association of Australia on behalf of discharged members, mostly residents of Western Australia. I do not suggest that the scheme was practicable, nor that it would be acceptable to honorable members on both sides of the House; but a letter from the Director-General of Post-war Reconstruction, Dr. Coombs, on behalf of the Minister, with regard to the suggested scheme will hear a little examination, because it discloses some alarming features of government policy. In that letter he said that 9,000 fishermen were engaged in “ on shore “ fishing around Australia before the war and that this number could bereduced after the war. He referred to the possibilities for expansion in trawling, and considered that, in the main, trawling was more than fully exploited, and that it was intended to restrict trawling operations. Those men previously in the industry, he said, intended to take up all options likely to be available. Later, the Director-General made the further strange comment that the ex-naval men’s suggestions couldbe put into operation only at the expense of existing personnel. That was in May, 1944, and up to the present, I understand, no action has been taken.

I pass on to a statement made recently in the Senate by the Minister for Trade and, Customs (Senator Keane), who, as Minister representing the Minister for Post-war Reconstruction in that chamber, stated that he had -been advised that the scope of expansion of the fishing industry was very limited, and that any vacancies would be filled by soldiers returning to their pre-war jobs. He made no mention of the representations of the Ex-Naval Men’s Association, and no observation that might encourage its members to believe that they would receive consideration in the expansion of the industry. He added that there was need for the development of a co-operative system to handle the fishing industry and its associated services. Did the Minister for Trade and Customs mean that existing fishing interests would be forced by the Government to combine, and that a monopoly would be granted to them? Does the Government intend to restrict fishing to those already engaged in the industry? I desire to know how far this industry will be developed, and who will develop it. Will ex-naval men, other ex-servicemen, and ex-seamen be given an opportunity to do that? The industry is a lucrative one, and is capable of considerable expansion. In the light of the statements by Dr. Coombs and the Minister for Trade and Customs, will the control of the industry repose in aliens? I shall refer to a newspaper report on this matter in order to show how far aliens have entered the industry, and the failure of the Government to use this industry for the post-war rehabilitation of ex-servicemen. It was reported three or four months ago that, at a meeting of fishermen at Tweed Heads, New South “Wales, it was decided that the Prime Minister (Mr. Curtin) should be approached with a view to rescinding national security regulations preventing aliens from engaging in .fishing off the coast. The voting was 20 to 1 in favour of the regulations being rescinded. In the Sydney Sun of the 11th December, 1.944, it was reported that -

Aliens or naturalized British subjects of enemy origin need not hold permits now to be afloat in fishing vessels or other small craft in Australian waters other than north of latitude 26 degrees south and waters adjacent to Western Australia.

That means that aliens who may have been interned when our naval men were fighting our country’s battles on the high seas are enabled to return to fishing off the coasts of Australia. But, according to the statement of the Minister for Trade and Customs it is most likely that Australian ex-naval men who wish to enter the fishing industry will be debarred from doing so unless they were engaged in that vocation before the war. Last year Bear-Admiral Muirhead Gould said that it was of major importance to the defence policy of this country that only trusted men, preferably naval reservists, be permitted to engage in fishing around the coast of Australia. So, obviously, this matter has a defence angle. Yet, according to the statements of the Minister and the representative of the Department of War Organization of Industry, ex-naval men are to be precluded from taking any part in the development of the industry and aliens, are still to he permitted to fish off the coast of Australia. It is well known that naval reservists are really the backbone of the naval establishment in times .of peace so they should not be black-listed in any way by the Government in the development of this industry when the war ends while aliens are allowed to carry on unfettered. It is interesting to note the type of men that the Government is trying to protect. In the 25th report of the Federal Taxation Commissioner, tabled last week, under the heading, “ Questionable returns “, included in the cases in New South Wales were those of a fisherman who understated his taxable income by £2,044, and another fisherman who understated his taxable income by £1,022. I refrain from giving their names, but they are in the report. The Commissioner stated that they were cases in which there was “evidence of evasion considered to be due to unreasonable carelessness in the circumstances “. Those men were heavily penalized. I again direct attention to the fact that they are men of the type that the Government is protecting in this industry to the exclusion of ex-naval men who have rendered a great service to the country. They have protected the fishing industry for men who are not only evading taxation in the country of their adoption but are, at the same time, taking full advantage of the conditions preserved for them by the lives, blood and sweat of those ex-naval men. To say that the fishing industry is fully established is plain nonsense. Our .fishing ground® are highly prolific but hardly touched. I know of an ex-naval man from the Old Country with an excellent fishing background, because all his forebears were fishermen, who is desirous of residing in Australia and of being allowed to enter the fishing industry in order to take advantage of all the development that will come to it after the war. I want to know the Government’s attitude to men of his calibre because they would be desirable migrants f rom the Old Country. They know that the fishing grounds of Australia are such as to give them a unique opportunity to establish themselves here. . Yet it would appear that the Government’s attitude to mcn of their calibre who wish to take up fishing in Australian waters is that they are to have no opportunity at all. It cannot be said that the market is adequately supplied. If the statement by Dr. Coombs that the number of men in this industry prior to the war can be reduced when the war is over were correct one would assume that the market was adequately supplied; but that is not so. Quantity fishing in Australian waters is in its infancy and authorities who say that the industry has great prospects are legion. If the market is ready, as it is, as honorable members will see if they study the prices of fish, every step should be taken to develop the industry. I invite, honorable members to look at the prices fixed by notice in the Commonwealth Gazette on the 7th July, 1944, when the price of blackfish was fixed at 3s. 3d. per lb., flathead and john-dory 3s. 6d., and schnapper 4s. 3d. Can anybody say that the market is adequately supplied? At those prices how many can afford to huy fish? Why is it that fish is the dearest commodity in Australia and the cheapest in almost any other country? Indeed, fish is the staple diet for hundreds of millions of Asiatics, whereas it is a luxury, at prevailing prices, in this country of some 7.000,000 people. Let us examine the export possibilities of this industry. We know that America is prepared to take almost unlimited supplies of canned fish as, indeed, are Asiatic and European countries. At the Unrra conference held recently at Lapstone, representatives of Eastern countries made it perfectly clear to our representatives that they would take any quantity of fish that we liked to send to them. We promised Unrra goods, financial aid and services to the value of £12,000,000, and only 10 per cent, of that amount was to be in currency. I am inclined to think, after the latest statement from the Pood Controller, our commitments to Unrra in respect of food cannot (be met; but here we have a unique opportunity to establish the fishing industry.


– Order ! The honorable member’s time has expired.

Minister for Commerce and Agriculture · Gwydir · ALP

– Reference was made recently by the’ honorable member for Barker (Mr. Archie Cameron) to the movement of stock from the Kimberleys to Queensland, and for the information of the House, I give the exact numbers of stock moved, the numbers lost in transit and details as to the various destinations where the cattle are now depastured -

The cattle on hand as at 31st January, 1945, were depastured as follows : -

There have been further losses by deaths, of 51 head.

Yesterday, the honorable member for Wentworth (Mr. Harrison) and the honorable member for Fawkner (Mr.

Holt) referred- to the supply of meat to the United Kingdom. The al’location from Australia to the ‘British Ministry of Pood, during 1944 was 154,700 tons. Shipments and deliveries against that allocation totalled 152,800 tons, comprising meat in the fresh-frozen, canned and dehydrated1 forms. All deliveries were effected .before the 31st December, 1944. Shipments are made at the direction of the British Ministry of Food, but are on the Ministry’s account, and form a part of the allocation to the Ministry of Food by the Commonwealth Government. They include shipments on “War Office account and shipments to outports. In addition, the Commonwealth Government arranged shipments of meat totalling 1,900 tons against Naafi orders, which were sponsored by the British Ministry of Food. British Admiralty demands during 1944 were, met in full. As a matter of fact, actual deliveries to the Admiralty were in excess of the quantities originally allocated. For security reasons, the figure involved cannot be shown, but deliveries represented substantial tonnages. The total shipments to the United Kingdom, including the Ministry of Food, <Naafi, and the Admiralty, were 179,400 tons against the allocation of 177,700 tons. Allocations to the British Ministry of Food and to the Admiralty during 1945 are practically the same as 1944, namely, 176,800 tons. This is in accordance with the promise given by the Prime Minister (Mr. Curtin) to the Prime Minister of the United Kingdom, Mr. Churchill, that the Commonwealth Government would make available to the United Kingdom during 1945 the same quantities of meat that were made available to it during 1944. It will be noted that shipments on the Admiralty account and on behalf of the British Ministry of Food are made by the Commonwealth Governmentaccording to the wishes and at the direction of the two instrumentalities mentioned. Details of quantities actually shipped this year against the 1945 allocations to the Ministry of Food and to the Admiralty are not available, but the aggregate quantity accounted for to the end of the first week in March would :be not less than 28,000 tons. Shipping .was made available ‘by the

Government of the United Kingdom during 1944 to move the tonnages available, and it is not expected that any difficulties will he experienced regarding the allocations already approved in respect of 1945. Should it be decided, because of the developments in the world meat position, that greater quantities of meat will be provided by Australia for the Government of the United Kingdom, that Government will be asked to provide the additional refrigerated tonnage necessary to transport the meat from Australia to the destinations nominated. Normally, export shipments of mutton and lamb from Australia are reduced considerably during March and April and cease during May, June and July. This year, continued adverse seasonal conditions in the southern States will cause a cessation of shipments earlier than usually happens, while the delayed beef season in Queensland also will result in a reduction of the quantities of beef available for export during April, May and June. Supplies of pig meats are expected to (be evenly spread, and quantities will be made available for shipment at regular intervals. Regarding dairy produce, full information was furnished on the 21st February, and the 1st and 2nd March in reply to questions upon notice.

Wide Bay

– I desire to bring to the notice of the Government a few matters of great concern to our people. The health and well-being of many people are being seriously affected by -the determination of the Government to maintain rigid control of institutions which were provided to assist in the defence of Australia. Primary producers have experienced great difficulty in securing the release of servicemen to assist them on their farms, but the position will he greatly aggravated as the result of an alteration of governmental policy. A few days ago, I received the following letter from the Deputy Director-General of Man Power, Brisbane: -

I regret to advise that no further recommendations for the release of serving personnel are being made by me at this juncture, as the release of serving personnel hae been temporarily suspended. If and when it is decided to continue these releases to essential industries your request will receive further consideration.

That letter provides evidence that within the last few days the Government has altered the already-stringent conditions which governed the release of personnel from the Army to engage in work in essential industries. My complaint is not only loss of production, hut that the health of men, women and children, particularly on dairy farms, is being affected by the acute shortage of labour, and this latest decision of the Government will aggravate many sad cases. For example, one woman who has six children, the eldest aged nine and the youngest aged seven months, has sought the release of her husband from the Army. The application was strongly recommended by the man-power authorities under the original conditions, but the Army authorities continually rejected it because the man was stationed in an operational area. Since then, he has been transferred to Brisbane, and before this latest decision of the Government, would probably have been permitted’ to return to his home. A man who had been wounded on two occasions in the last war, and is sick to-day, has sought the release of one of his two sons from the Army, because he is unable, without assistance, to continue to work the farm. The man-power authorities recommended the release but the Army authorities rejected it. Another man, aged 70, has worked for five years a farm which belongs to one of his two sons. The man whose release was sought, served in the Middle East. The other son is also in the fighting forces. The Department of the Army refused that application, although the manpower authorities had approved it.

Another serviceman, aged 36 years, who is now classified B2, and has three years’ military service has been refused release. His wife has been compelled to close their dairy farm as she could not manage it without assistance. The cows are now being milked temporarily at another dairy farm. A woman, with a sick child., is trying unaided to conduct a large country store. A big petition has been signed by the residents of the district asking for the release of her husband, so that the store may remain open. The husband has been reclassified B2. Unless he is released, the wife will be obliged to close the store in order to devote her full attention to her sick child. Hundreds of instances of hardship have been brought to my notice, but the latest decision by the Government will mean that no further releases will be considered by the manpower authorities. The seriousness of the position becomes intensified when we remember that the release of many of these men was previously recommended by the man-power authorities. I have no complaint against the Army officials in Brisbane, because their decisions are governed by conditions laid down by the Government, which make it necessary for them to reject applications. The stereotyped reply which one Army officer gives to applications is as follows : -

It is advised that a recommendation for this soldier’s release has been received by head-quarters from Man Power, but has been turned down.

On another occasion, I declared that 200,000 persons should have been released from the services twelve months ago. According to a statement in the official publication of the Department of Information, Facts and Figures, on the 28th October, 1944, enlistments in the fighting forces of Australia totalled 963,000. Of every ten men between the ages of 18 and 35 years, eight had enlisted in the services. When this country was threatened with invasion, that may have been absolutely necessary, but to-day our role has changed. We must supply food to Great Britain and the liberated countries. The tide of war has receded from our shores, and the Government must release men from the services for the purpose of producing more food. Primary production is languishing. I shall now refer .to housing. The Minister, in a reply to a question by me to-day, stated, “ I can state definitely that any family without a home in Australia will be granted a permit by my department”. That statement is not correct. I cite the case of a man who is living with his wife and two children in one room whilst their furniture is stored under the house. ‘That man’s application for a building permit has been rejected. I shall revive many similar cases, and supply the particulars to the

Minister. In view of our governmentcreated acute man-power position, and the large number of men in the armed services, it is disgraceful, that the Government should at this momentbuild great bombers and other, machines which, to-day, are being rejected as obsolete by. our Allies overseas. While we are doing this, 110,000 workers in Great Britain are engaged in repairing buildings, and they have already repaired over 500,000 homes. Yet, a man, with his wife and family, is forced to live in one room, his application for a building permit being rejected on the ground that requisite man-power and timber cannot be spared. We are failing to provide adequate housing, not only for our own population, but also for migrants who will come to this country. This is in strange contrast to the policy adopted by the authority controlling the Taronga Park Zoo in Sydney. That authority has made complete plans for the importation and housing of an additional number of wild animals. The management of that zoo has outlined a comprehensive importation and building programme in respect of wild animals, and it has already initiated that programme. The secretary of the zoo is reported ito have left for South Africa to supervise the transport of wild animals from that country to Sydney; but there is no Australian official overseas supervising the selection of migrants to be sent to Australia. The Taronga Park Zoo authorities are planning to import elephants, gorillas, rhinoceroses, hippopotami, giraffes, and zebras. One report dealing with this matter states that all now enclosures, which will be built as soon as labour and materials are available, will be as near as possible to the animals’ natural habitat. A start has been made with three new rhinoceros houses, while applications for homes for human beings already here are being rejected. The seal pool will be rebuilt with cream tiles, so that people can watch the seals’ antics under water. Yet, we cannot house women and children in this country and applications for essential building permits are rejected on the ground that no labour is available for that purpose. Has any one yet suggested that houses containing bathrooms with cream tiles should be provided for any of our returned men and others? The Government might take heed of the initiative displayed by the authorities of the Taronga Park Zoo so far as its housing and migration policies are concerned. I suggest that they secure their assistance in formulating a policy for migration and home building for human beings.

Applications^ for motor car tyres and tubes are still being rejected., and the position is becoming worse. It cannot be said that the demand for tyres in Europe enters into consideration of the position in this country, because the necessity for tyres in Allied countries of Europe is becoming less pronounced daily. However, large stocks of tyres are still held in warehouses in this country under the control of the Army, when it is obvious that large numbers of tyres, and much of the petrol held for defence purposes when we were confronted with invasion, will not now be required for defence purposes. On what islands can tyres be used extensively? These commodities should now be made available to the public in urgent cases. Recently, large stocks of tyres were destroyed when one of the many stores in Sydney bulging with stocks of this kind caught fire. I cannot sufficiently emphasize the seriousness of the present position. Only a few days ago I had brought to my notice the case of a farmer who could not work his tractor because he could not obtain a small front wheel tube. He had been given urgent first priority by the rubber control authorities in Brisbane, but when he applied for the tube he was told that none of that particular class was available. When I made representations on his behalf, I was given the same answer. I was informed that there were twenty such cases held by one firm. Yet, on coming to Sydney I discovered that large quantities of those tubes were held in stores in Sydney. . This man had not been able to plough his land for six weeks, and, being deprived of the use of his tractor, he could not work his pumps, or harvest his crops. He was unable to obtain one tube for his tractor tyre, although large quantities of the class of tube lie required are stored in Sydney. Eventually the authorities supplied the tube. An official statement setting out the number of less-popular sizes of tyres for which permits were not issued during October, 1944, on the ground that they were not obtainable from manufacturers’ local warehouses, shows that while no applications were rejected in New South Wales, Victoria, or Tasmania, 71 were rejected in South Australia, 131 in Western Australia, and 1,348 in Queensland. [Extension of time granted.) During the period I have mentioned, 1,348 applications for tyres in Queensland were rejected because no such tyres were held in local warehouses. That was not the case in other States. The tubes and tyres to which I now refer were of older models, generally used by farmers on old cars which had been converted into utilities to carry out routine work on farms, or dairies. The position in Queensland with respect to tyres is causing much suffering as well as loss. I shall now mention the case of an aged spinster, and the reasons given for rejecting her application for tyres. I am sure that the details will horrify honorable members. Her application was rejected because of the extreme shortage of supplies brought about by the demands of war. This statement is a lot of rot. I repeat that the stocks of these commodities which were built up when we were threatened with invasion will not now be required for defence purposes. Like the vehicles which the Army commandeered and are now rotting in vehicle parks, those stocks are deteriorating. This woman, in her application for a permit to purchase two tyres, stated -

  1. I am semi-crippled with arthritis in the spine, and consequently am unable to walk long distances.
  2. I am constantly and continuously under medical supervision.
  3. My residence is situated li miles from the Gympie post office. One i of a mile from the P.O. would be my nearest shopping centre.
  4. Grocers and local butchers do not make country deliveries.
  5. My home is definitely isolated. fi. I live there alone. It is extremely hard to procure the services of a domestic for a country home, and, up to date, it has been impossible.
  6. I am 07 years of age, and my present state of health does not permit me to walk long distances, thus preventing me from attending to the purchases of groceries, meat and other necessities. I have lived there for 50 years, and the last fifteen years being spent there alone, and in this case of isolation, my car is the only dependable means of reliable transport that I possess, and if tyres are not made available to me in the immediate future, my position will be one of a very distressing nature.

Honorable members will agree that this is one case in which hardship should be alleviated. Surely in instances such as this, the authorities should dispense with the usual stereotyped reply that tyres are required for the Army and so on. Dairyfarmers are in the same position. Many of them are unable to use their cars because tyres are not available. The same disability is being experienced by other members of the general public carrying out essential work, such as estate agents, machinery agents, and repairers of motor cars and farm machinery. Some of these people are trying to carry out their work on a petrol allowance of only 15 gallons a month. These war-time regulations affect many industries, but their effect is most marked upon primary producing industries. Farmers are unable to obtain spare parts for their machinery. I have had brought to my notice the case of a farmer who bought a tractor three years ago. Later it broke down and he has been unable to use it since because he cannot obtain parts for it. He has been informed that it takes fourteen months under lend-lease, and nine weeks by ordinary commercial channels, to secure spare parts from America. “This man blames the lendlease authorities for his predicament, but I am more inclined to blame the regulations which do not permit the manufacture of these parts in Australia. I trust that these regulations will be modified soon, and that there will be an adequate supply of such appliances as refrigerators, which are essential for sick people living in the heat of Queensland, and of windmills bore casing, and water piping used in providing water for stock. These materials are in short supply because owing to the man-power shortage they cannot be manufactured in this country. Yet we are building up more Government departments and arranging for thousands of men and women to take a man-power census. We are told that plumbers cannot be released from the Army and that the services of garage engineers and blacksmiths cannot be mad a available to help primary producers. Farmers who cannot get petrol are told to use horses on their properties, but they find that they cannot even buy rasps used in shoeing horses. Wire netting is not available to protect land and crops against birds, marsupials and rabbits. When a farmer goes through the long routine necessary to register even a pea rifle, he finds that his supply of .22 ammunition is limited to 50 cartridges a year - one a week, with a holiday of a fortnight. How a primary producer can be expected to destroy rabbits, marsupials and other pests on his property with only 50 bullets a year I cannot understand. These bullets are used in rifles called up for home defence. Were no bullets manufactured for their use? There was no invasion, so where are they? Naturally, we are very concerned also about the secondary industries of this country, and the rights of Australians working in those industries. These people must and shall have fair working conditions; but whereas a minimum wage is prescribed for workers in secondary industries, in rural pursuits, all that has been fixed is the maximum payment for primary products. That is the reason why I complained recently that farmers had been forced to sell beans on the Sydney market to the Government at ls. a bushel. Obviously, this state of affairs cannot continue. It is true that a subsidy is being paid to dairy-farmers, but that was made necessary by the pegging of the price of butter. Had the price of butter not been pegged it .might be 2s. 6d. per lb. to-day instead of ls. 5d. or ls. 6d., including the Government subsidy. In effect, all that the Government did was to prevent an increase of the price of butter, and then to give back to the dairy-farmer in the form of a subsidy a little bit of what he was denied by that restriction in the interest of a policy of cheap food. Whilst the dairy-farmers are thankful for that subsidy, it is merely a recognition of the fact that had it not been for wartime restrictions they would be receiving a much higher return for their products than they get to-day. The State rail ways are charging primary producers high freight rates for carrying primary products to the markets. Due to war conditions, these transport undertakings are making millions of pounds more than they ever made before, and I ask the Government to take some action to secure a reduction of freight charges, and thus ease the burden of country people by ensuring to them a more reasonable remuneration for their products. I hope sincerely that these matters will be considered by the Government and that action will be taken to alleviate the conditions to which I have drawn attention.


.- There are two matters which I wish to bring to the attention of the Government. One is a matter which was mentioned earlier to-day, namely the conditions in the fishing industry of this country. I was interested in the belated concern expressed by the honorable member for Wentworth (Mr. Harrison) for certain people engaged in this industry. The fishing industry is one in which I have been interested1 for a number of years. In fact, almost ever since I have been in this chamber, I have endeavoured to pursuade governments to take some action to deal with this industry on a national basis. On a num!ber of occasions I have drawn attention to the great potentialities of this industry in Australia, but administrations formed by the parties now in opposition held the view that the development of the fishing industry was a matter for private enterprise. It is all very well now when man-power is scarce and many difficulties arising from the war have to be overcome, to talk of Commonwealth assistance for the development of the fishing industry. This move is just a belated recognition of the claims made by this industry when man-power and materials were available. I have every sympathy with the people in whom the honorable member is interested-, but we must approach this matter realistically, and remember that he and other supporters of previous, governments did nothing to assist the industry at a time when they had every opportunity to do so.

I wish to refer again to a matter with which I dealt on the motion for the adjournment of the House last night, namely, the publication of a certain resolution supporting the Government’s banking proposals carried by the Victorian Wheat and Wool Growers Association a few days ago. The managing director of the Melbourne Herald has attempted to refute the statement which I made yesterday to the effect that the Sun-Pictorial did not give full publicity to this resolution. In the country edition of the Sun-Pictorial the resolution was published, but in the second edition the report of the deliberations of the conference was deliberately reduced to approximately one- third of a column. In the city edition the report of the proceedings was compressed into a paragraph of a little over one inch in length, under an insignificant heading. It is useless for the managing director of. the Melbourne Herald to attempt to justify the withholding from the public of the resolution of the conference. I make those comments in the hope that the Minister for Information (Mr. Calwell) will give publicity to these decisions because of their importance to this country.

Barker · ALP

– There is, I understand^ available in Sydney to-day an official document, containing a description of the Sydney graving dock as well as photographs of the Prime Minister “(Mr. Curtin), the Minister for the Navy (Mr. Makin) and the Minister for the Interior (Senator Collings), who have had some association with that undertaking. In order that the record may be complete I propose to quote from a speech by the present Prime Minister when he was Leader of the Opposition in 1940. On the 28th May of that year he is reported in Hansard, pages 1366-7, as having said -

The building of a dock to accommodate capital ships has been talked about for years, but no steps were taken to PUt. the work in hand. We are now told that we are to have such a dock. I have not been able to read at all closely the report of Sir Leopold Savile, and I have yet to discover in what way this dock can be related to Australia’s war effort at the present juncture. Its construction will take three years. True, the work will employ a vast army of men, but the great proportion of them will be unskilled. I speak subject to a second thought on this matter. Unless the war lasts for more than three or four years, of what earthly use will that dock be in relation to Australia’s war effort? That is something which ought to be examined by the members of this Parliament. I know that the newspapers of Australia will swallow the proposal as a demonstration of the acceleration of Australia’s war effort. So long as something new is being done, they seem to think that that is evidence of additional vigour. I do not. Unless the dock would definitely contribute within the next year or two to the maximization of the forces that we can employ against those that are likely to be opposed to us, there are other needs to which we might apply ourselves with greater advantage. If I am offered means of helping to defeat an enemy if the enemy will only wait for three years, I prefer to spend the money on the organization of land forces, on the improvement and acceleration of our contribution to the Empire air scheme, and on the purchase of ships if we are unable to build them ourselves - because ships are indispensable.

In the course of his speech I interjected -

I think that the honorable gentleman will find that his second thoughts are better-

The then Leader of the Opposition continued -

They may be. The honorable gentleman will admit at least three years will elapse before the dock can repair a battleship, unless - and and I am not above suspecting him of it - he propose to build the dock in a year and to conscript labour for that purpose.

That is a delightful string of pearls. When the right honorable gentleman is playing his part on Saturday next in connexion with .the opening of the dock he should indulge in some introspection and reflect on the statements which I have just quoted. About the same time the Minister for the’ Interior (Senator Collings), as reported in Hansard of the 30th May, 1940, page 1545, said-

Our leader in the House of Representatives (Mr. Curtin) has expressed exactly the opinion voiced by Senator Fraser this evening. We do not deny the need in Australia for a graving dock capable of accommodating capital ships but we do say that, at this juncture, there is no evidence that we can afford to spend £1,000,000 as a first instalment on what will be a costly undertaking, which, however valuable it may be at some future dato when completed, cannot possibly be of immediate value in our war ‘effort.

There is such a thing as chickens coming home to roost. I suggest that the Prime Minister should have a copy of his speech with him when he invites certain people to take part in the ceremony associated with the opening of the dock next Saturday. His Royal Highness the GovernorGeneral should be acquainted with what this great military genius, who saved Australia at the last elections and fought his war on “ the Brisbane line “, thought about this undertaking! If ever there was an instance of the right honorable gentleman completely misunderstanding world affairs his statement which I have read to the House ‘provides it. There are other matters to which I should like to refer to-night, but 1 shall not spoil this beautiful string of pearls even by adding a diamond.

Monaro · Eden · ALP

– I rise to refer to the killing of a dog al the Abbotsford quarantine station on the 12th March. It may be said that in these days of earth-shaking events, when there is great suffering and sacrifice on every hand, the killing of one dog does not matter much, and should not concern this Parliament, but I do not think that that view should be accepted. I believe that in this country there are still many thousands of people who resent any unnecessary exercise of administrative power, and that even in these days, when so many human lives are being sacrificed, there is still a capacity for indignation at the senseless killing of any creature. 1 do not know whether the killing of this dog was, or was not, justified, but I do know that in every State wide publicity has been given to the incident, and that the action taken ha3 been described as senseless and unnecessary. I have endeavoured to obtain an official statement on the matter by placing a series of questions on the notice-paper. To-night I have been supplied with replies to those questions, but they do not answer the points raised. Briefly, the facts, which are now officially admitted, are that the dog in question was the property of an ex-serviceman, Mr. James Moody, of St. Peters, who had five years’ service in this war, and that the dog was the official mascot overseas of the 2nd/lst Machine Gun Battalion, 6th Division, Australian Imperial Force. It had been with that battalion in the “Western Desert, Greece, Crete, Syria, Palestine and Egypt, had survived the sinking of a transport, and had recovered from shrapnel wounds. Admittedly, it was brought into Australia illegally; but that was three years ago. Its presence in Australia illegally came to the attention of the quarantine authorities only recently, I am informed, subsequent to its owner having made it available for exhibition at a patriotic function to raise funds for the Red Cross. I have been told by the department, however, that that was not the sole source of the information which it had about the animal. A point that I raised in my questions was, whether or not the dog was suffering from any disease which necessitated its destruction, and the answer was that it had not been certified as suffering from any disease. Before being delivered to the quarantine authorities, it was examined by a recognized veterinary surgeon, Mr. Kimber, who kept possession of it for some time, and pronounced it to be entirely free from disease. Under the Quarantine Act, the destruction of an animal that has illegally entered Australia is not obligatory. On the contrary, the act specifically provides that if an animal which has illegally entered Australia is shown to be free from disease, it may be returned to its owner, who can be subjected to appropriate penalties for his illegal act. The department had no proof, after three years, that this animal had illegally entered Australia, apart from the voluntary admission to that effect by its soldier-owner, in an attempt to save its life. He delivered it up only after he had received official assurances that if it were free from disease it would not be needlessly destroyed. On that point, I asked whether Mr. King, of the Agricultural Department, and Mr. Spiers, in charge of the Quarantine Station at Abbotsford, had assured the owner that the dog would not be needlessly destroyed, and I received the reply that the department had not authorized either of the officers mentioned to give such an assurance. That the assurance was given, is not denied. I also asked -

Does the act set out that an animal illegally imported need not be killed, and can be released if free from disease? If so, was consideration given to that aspect?

The answer was -

Yes, consideration was given to that aspect.

I further asked whether or not the dog’s history, and the wishes of the members of the battalion - who, in all those years, had become deeply attached to it - had been considered in any way before the decision to destroy it was made. The answer was, “ Yes, consideration was given to this aspect”. As the owner wrote to the Director of Quarantine, voluntarily offering to suffer any penalty which might be considered appropriate for having illegally imported this animal, and had received from Government officials the specific assurance that it would not be destroyed if he handed it over and it was found to be free from disease; as it was a pet, and the mascot of an Australian Imperial Force battalion which had covered itself with glory in the war, in consequence of which its members were entitled to some consideration; as it was admitted to be entirely free from disease ; and as the act, far from requiring its destruction, specifically provides that an animal free from disease may be returned to its owner, who can be penalized, I fail to see what reason moved the Quarantine Department to insist on its destruction, and to give to its soldier owner only five minutes’ notice of that intention. I ask that some official answer shall be given on these points.


.- Yesterday, I had occasion to bring to the notice of the Minister for Commerce and Agriculture (Mr. Scully), by way of a question, the limitation that has been placed on the deliveries of potatoes by potatogrowers in Victoria. I asked the honorable gentleman to give consideration to a more generous extension of the deliveries, and he was good enough to say that he would have investigations made and’ acquaint me of the result later, adding that the situation in regard to potatoes in this country to-day is very favorable. “When I asked him, by way of interjection, to whom it is favorable, he replied : “ To the Government.” I am not quite certain that it is favorable to the Government. It certainly is very favorable to the people of Australia, because, for the first time in quite a number of years, there is to-day a surplus of potatoes for human consumption. “Whether or not it is favorable to the Government will depend entirely upon whether or not the action which it takes in regard to the disposal of production is reasonable. Unless action be taken soon, a situation most unfavorable to the growers will develop. I raise the matter now in order to impress on the Government the importance of taking early measures to ensure that injustice shall not be done to the growers in the coming season. Under the conditions which obtained last year, a very great injustice was done to quite a number of growers, and they suffered considerable losses. I shall give one example of what occurred last year ; it is typical of a large number of cases that came to my notice. A man who had had 40 years’ experience in the growing of potatoes had had no loss until the end of last year. He had under lease an area of 100 acres, of which 70 acres was planted with potatoes. “When I saw him in June last, his estimated total production of potatoes was 300 tons. By that time he had dug 1,200 bags, equivalent to about SO tons, of which only 25 tons had been accepted by the Government in the two months prior to my seeing him; and from the beginning of the season, only 70 tons had been accepted. He had no quota for the ensuing month, and no prospect of disposing by any means of the balance of the 300 tons in the ground or in stacks on his property. The 1,200 bags had been dug for six weeks. The bags were rotting, the potatoes were going bad, and there was no prospect of deliveries being made. During the growing season, this unfortunate man had incurred expenses totalling £900. The whole of his balance, with the exception of £200, had been expended, and he was more or less pledged to defray expenses which he had incurred in the digging of his potatoes and in arrangements for the subsequent lot to be dug. I took up the matter with the Minister, and received from him a reply which, on the whole, was reasonably satisfactory. I suggested that there were two alternatives. Either increased deliveries of potatoes should be allowed or some payment should be made to the growers to compensate them for losses sustained. I received the usual courteous reply from the Minister, who said that he would give consideration to an increase of the quota. I believe that the quota was increased, and that the grower to whom I referred was able to avoid bankruptcy. In reply to the request for an advance I received the following reply: -

No suggestion was made that the Government should finance growers to carry them over the period of restricted marketing. In this respect it is thought that one of the functions of the trading banks is to supply credit for primary producers pending the marketing of their products.

It is true that the trading banks, and even the Commonwealth Bank, are prepared to make advances against products which will be marketed, and would therefore provide security for the advance, but there is no possibility of a bank making an advance in respect of a commodity which will not be marketed.

I have brought this case to the notice of the Minister because it is one of a large number which came to my attention last year; but I hope that no similar cases will arise in the ensuing season. The growers throughout Australia have responded well to the request of the Government that more potatoes should be grown. A record acreage has been planted with potatoes, and I understand that the crop will be a record one. Growers in my district are now being told that their deliveries must be limited to eight bags an acre monthly. At that rate fifteen months will be required to clear the crop now in the ground.

Mr Scully:

– Have the growers rereceived a written notice to that effect ‘(


– I have been told so. The potato standards have been raised. Potatoes formerly placed in the first grade are now classed as second grade, and therefore the situation facing the growers is very serious.

Mr Scully:

– Does the honorable member claim that the grading is different this year from last year?


– I am told that the standard this year has been made higher than before. I hope that some action will be taken by the Minister to improve the position of the growers. I offer three suggestions. The first is that the Minister should consider whether a more generous delivery quota could be granted. Consideration should also be given to the selection of potatoes for various standards, so that the highest standard would not be too high. My second suggestion is that as there appears to be an excess of potatoes for human consumption, and as potatoes make good feed for stock, some relief could be given by directing that excess potatoes should be used for that purpose. I know men who are buying potatoes for stock-feed at £3 a ton. Since the Government claims that it cannot provide wheat for the feeding of stock it could use surplus potatoes for the purpose, and give to the growers a subsidy to make up the difference in price. My third suggestion, which was also made to-day by the honorable member for Darling (Mr. Clark), is that any surplus potatoes still remaining, after requirements for stock-feed and human consumption have been satisfied, should be diverted to distilleries for the manufacture of power alcohol. I urge that action be taken by the Government at once, before further damage to the industry is done.


.- 1 draw the attention of the House to certain statements by that extraordinary gentleman, Colonel McCormick, the American isolationist, who has criticized Australia’s war effort. I make these remarks more in sorrow than in anger. Some time ago Colonel McCormick made derogatory statements about our war effort, and, finding that the bulk of American opinion was not in his favour, he decided to use the Chicago Tribune and his satellite newspapers to advance his claims. The latest example of the outbursts to which we have become accustomed from that isolationist is contained in a cablegram from New York which was published on Friday last, and which appeared in Fort Wayne Sentinel, Indiana. It stated that while United States troops were fighting “like mad men “ on Pacific Islands, Australia calmly demobilized a. percentage of its soldiers and sent them back to factories. I am glad that the Minister for Information (Mr. Calwell) is present, because that criticism has been effectively answered by the New York office of his department ; but it has created a feeling of anger in the breasts of Australians that this isolationist who at times flourishes in the middle west of

America is constantly making false statements against one ally or another. Australia has never thought of itself as a little nation, because in the light of cold statistics it has, in proportion to its population, produced a war effort equal to that of any major nation.

As long as Colonel McCormick continues to make these unjustifiable attacks on our war effort, I shall continue to resent and refute his statements. We have no apology to make to the great United States of America, and I am sure that Colonel McCormick is a most unrepresentative citizen of that country. I understand that he acquired the rank of colonel because he galloped up and down the Mexican border in some American war of the past, but, as far as modern politics and military strategy are concerned, he lives in a little glass tower in Chicago remote from the world, and disseminates isolationist propaganda which is as dead as the dodo. Australians should not hesitate to tell our American friends that we are proud of our war effort, and that we are a vigorous, if only a numerically small, nation. In a census showing American susceptibility to publicity, 46 per cent, of the people interrogated did not know that the Americans had been driven out of the Philippines. Our job in convincing those people of the extent of our war effort will be rather difficult, but the Department of Information has done good work in that direction. The record of Australian troops in New Guinea leaves nothing of which Australia need be ashamed, and nobody realizes that more than General MacArthur. The invincibility of the Japanese soldier was first challenged by from 2,000 to 3,000 Australians at Milne Bay. He was defeated and worsted on the Kokoda trail by no more than 4,000 of our men. They were ill equipped, but they had the indomitable spirit of the fighting Australian. To every one who feels that our numerical strength is an indication of our war effort I say that, although our people number only 7,000,000, in the last 150 years, this country has been very war wise and has been blooded in war inasmuch as we have sent five expeditionary forces, from the Boxer Rebellion:, now ancient, mouldy history, to the war in which we are now engaged. Any “ tank town “ journalist or newspaper, such as the Port Wayne, Indiana, News-Sentinel with the temerity to suggest that Australians have pulled out of this war is living in heathen darkness. I appeal to the Minister for Information to try to tell the backwoodsmen of America that the war effort of this country, man for man and woman for woman, compares with that of any other allied country. Because of the physical courage and ingenuity of its people, Australia has made a war effort equal to the best in the world. I wish some statistician would look into this to establish what amazing things we have done. Because we are young we are diffident and a little shy about taking credit, but this country, in its 150 years of existence, has made tremendous contributions to the cause of democracy’ and freedom, and should be above criticism. The American conception of us is not entirely the fault of the American people because, on the other side of this chamber, we have honorable members whose eyes are focused on the shining star of some European country and cannot see what has happened here. The Americans must take their news from the current news sheets, and they have been given an inaccurate picture of Australia. We have the spectacle of the honorable member for Balaclava (Mr. White) who, I regret, is not here now, because I would be happier in saying, what I am about to say if he were here, who trembles with fear at everything done by this Government. He is a political spinster who sees a “ Red “ under the bed every night. He is afraid of the Australianism resurgent in this country. Opposition members talk about the lack of equipment of the Australian forces and about alleged unsatisfactory conditions in New Guinea. Yet, in the same breath, they talk about our operations being only a case of “ mopping up “. Surely only one thing can be true! Either we have defeated the Japanese in the islands and had a miraculous escape from invasion, for which we should, pay tribute, or there is a grave imminent danger from the Japanese. Honorable members will see how dangerous and1 un-Australian are these statements by the Opposition members. The American newspaper correspondents, not so conscious as we are of their insignificance, cable the remarks to their newspapers and thence misunderstanding in America of the Australian war effort arises. I adjure American correspondents to listen to honorable members on this side of the House so that they shall know what we have done and are doing and have an accurate picture of Australia’s war effort. There is a policy of isolationism in America and there are isolationists.

Mr Holt:

– There were some here a few years ago.


– The (honorable member has my sympathy in his own political isolation. He and his colleagues are frozen to the Opposition benches. I repeat that we have made a most remarkable effort, considering our age and population. Russia has many millions and America a tremendous aggregation of people. With 7,000,000 people we have done in the military and industrial fields a job which has not been excelled in any other country. Take for instance what was done, by our militia force on the Kokoda Trail. If honorable members read the history of the Kokoda battle published by the Department of Information, they will see that a force there was called “the Maroubra Force “, I think because it was made up of Sydney battalions. If we are fortunate enough to be able to send our publications abroad, I commend it to Colonel McCormick and every .one else overseas who has not a proper picture in his mind of what we have done. We must sympathize with the United States of America because 46 per cent, of its population did not know that the Philippines had been captured by the Japanese. Blame for the misconception overseas of the Australian war effort must also be shared by that section of the Australian press which publishes everything derogatory to it. The star in that respect is the Sydney Bulletin, that faded old journalistic jade in the pink wrapper. If ever there were a shabby old tabby of the press, it is the Sydney Bulletin. The stuff it prints is deplorable. It plays up the old staff major and the old tory in a most detestable way. We have the same sort of thing in other newspapers, which modesty compels me not to name as I have been associated with them. They must take their share of blame for the bad publicity that the nation of Australia is receiving. This should be met with a forthright statement that we are very proud of our war effort and of the Government that made it possible, because we have done a tremendous task well, and we should cultivate a little more pride in it. The isolationists in America pander to the pro-German element there. There is a disposition to concentrate on New Guinea in this propaganda, and I am worried about it. Whatever is the outcome I hope that, Atlantic Charter or no Atlantic Charter, New Guinea will remain with us after the war, because it has been stained with the blood of Australian men who died for it. I for one will not be caught up by specious phrases as to whom New Guinea belongs. We should have no diffidence in that respect. I know that we are a young nation, and in some respects callow, but we must develop Australianism to the point where we can defend ourselves and enlighten other people who doubt us. Our 7,000,000 people have done a marvellous job in marshalling their resources of men and materials to a degree equal to the best in the world.

Minister for Information · Melbourne · ALP

– Earlier tonight the honorable member for Bass (Mr. Barnard) referred to a question which he asked me yesterday about the black-out or alleged black-out by the Australian press on the resolution passed by the Wheat and Wool Growers Association of Victoria in support of the Government’s banking legislation, and he commented on the fact that Sir Keith Murdoch has objected to my statement. I received an urgent telegram from Sir Keith Murdoch to-day. He is not a friend of mine, but he is one of my best supporters. He supports me by arranging for the editors of the numerous journals he controls to write leading articles in opposition to the views that I express and the principles for which. I stand, and, in that way, endear* me to the mass of the Australian people and strengthens my hold on the premier seat of Melbourne in this important Parliament. The telegram which I received from the distinguished knight reads -

Sun News-Pictorial and Adelaide Advertiser published under good headings resolution of Wool and Wheat Growers Association supporting Government banking legislation Age and Argus published so did many other Australian newspapers Will you please correct your misleading statements in House of Representatives yesterday stop. - Keith Murdoch.

The facts are that I did not mislead, nor even attempt to mislead, the House yesterday.What I said was correct, because I have had a check made, and I find that the Melbourne Age published the decision of that conference in all editions under good headings. The Melbourne SunNews Pictorial, as the honorable member forBass (Mr. Barnard) reported, published one-third of a column in its country editions giving a report of the resolution of the conference, and in an obscure place in its city edition it condensed into eleven lines all that the conference said and did. The Melbourne Argus published a report of two and a half inches in its country edition, and nothing in its city edition. The Sydney Morning Herald, as it admitted in a foot note on its report on the question and answer in. the House yesterday, did not publish anything at all in its early editions, because it claimed that it had received the report too late for publication. That is difficult to understand, because the decision was made by the conference in Melbourne hours before the Sydney Morning Herald went to press. It did publish fourteen lines in its last edition. Therefore, it is difficult to believe that Sir Keith Murdoch can be in earnest when he said that the report of the proceedings of the conference was published under good headings in the newspapers which he named. I have no misleading statements to correct, and I consider that the evidence supports what I have said.

Yesterday seems to have been a bad day for roe in regard to questions, because I was also asked a question by the honorable member for Martin (Mr. Daly) concerning a new and strange organization known as the Political Research Society Limited. I made a reply which incurred the displeasure of a gentleman in Sydney named Mr. Brian Doyle. Mr. Doyle sent to me the following telegram -

As executive officer with Political Research Society assure you your strictures completely unfounded stop New society is non-political and therefore regret your action in making it party political issue stop I am member no political body stop Respectfully request you clear me personally and society from charges of yesterday in statement to-day. - Brian Doyle.

I accept Mr. Doyle’s statement that he is not a member of any political party, and that he is a person who has no strong political affiliations; but I cannot give a clean bill of health to the society to which he belongs, nor absolve other members of the society from any stigma of being opposed to the Australian Labour party, which constitutes the Government of this country.

Mr Holt:

– Is it a stigma to oppose the Australian Labour party?


– Doubtless the honorable member for New England (Mr. Abbott) considers that it is a distinctly honorable thing to belong to the Australian Country party. He is entitled to his views, but he cannot describe the organization of which he is a foundation member as a non-political body, when he himself is such a strong political partisan. The same can be said of Mr. W. G. Wentworth, who was a candidate forthe electorate of Wentworth on behalf of the “ old guard “ at the last elections. One would have thought that the honorable member for Wentworth (Mr. Harrison) whom he opposed was associated so closely with the “ old guard “ as to have its support, but the “ old guard “ found some one who was even more closely associated with them, and threw their support behind Mr. Wentworth. He was not successful. Now, he has become a foundation member of a new political research organization, and has the temerity to claim that it is a non-political body. The third member who is named as one of the foundation stones of this great new edifice which is being erected in this country, is Professor F. A. Bland, one of the most conservative minds in Australia. He is oneof the last of the “ State-righters “ - a gentleman whose hostility to every Commonwealth government and to the whole federal system is notorious. He has a particular hostility to this Government. He is one of those gentlemen who wants to claim that this organization is a non-political body. Mr. Doyle appears to be an innocent abroad. If he wants to be accepted as a person without politics, he should keep out of political organizations. In any case, he should remember that people are judged by the company they keep. If he throws in his lot with the die-hard tories of this country, he must accept whatever odium is attaching to them.

I thank the honorable member for Parkes (Mr. Haylen) for the tributes which he paid to the New York office of the Department of Information, and I shall be happy to convey to the officers there his and my appreciation of their efforts. If the department had more money, we could answer more effectively the calumnies of Colonel McCormick and the few people in the United States of America who attempt to decry the part played by Australian forces in this war. I subscribe, as I am sure every other member on this side of the House does, to the sentiments uttered so eloquently by the honorable member for Parkes in defence of Australia and the Australian war effort, and pay tribute to the enthusiasm andzeal with which he breathed that spirit of Australianism which is so necessary to ensure the survival of this country in future.

It may seem poetic justice that I, who, on former occasions, took full advantage of the motion for the adjournment to bring matters of interest to my constituents before the House, should have to wait so long this evening to make these observations. But I am sure that when the matters raised are brought tothe notice of the respective Ministers, honorable members will have reason to feel satisfied with the attention given to their requests.

Question resolved in the affirmative.

page 843


The following papers were presented : -

Defence Act - Regulations - Statutory Rules 1045, No. 33.

National Security Act - Regulations - Statutory Rules 1945, Nos. 36, 37.

House adjourned at 11.39 p.m.

page 843


The following answers to questions were circulated: -

Mr Smith:

asked the Prime Minister, upon notice -

  1. Is it a fact that large numbers of experienced State government officers who were loaned to the Commonwealth in the early days of the war for essential service, chieflymen between 35 and 45 years of age, are still in Commonwealth employ and are becoming increasingly concerned about their future status and prospects?
  2. 1b it a fact that many of the men chosen for loan to the Commonwealth were specialists in different spheres, and have been serving in administrative spheres as Commonwealth accountants, area controllers, industrial officers, stores officers, and the like for periods exceeding, in many instances, five years?
  3. Is it a fact that these men have gained wide experience of Commonwealth regulations and (practices, and have become valuable officers? If so, is it the (present or ultimate intention of the Commonwealth to transfer them to permanent Commonwealth employment, or to invite them to accept such employment?
  4. If this is not the intention and they will have to be retransferred to State employment, will the Commonwealth take such action as may be in its power to ensure that, when their Commonwealth service has been completed, they will return to the State service without loss of status and without disadvantage as to promotions that may have occurred in the State service during their absence on essential Commonwealth work?

Sunflower Seeds

Mr Fadden:

n asked the Minister representing the Minister for Trade and Customs, upon notice -

  1. Does the Government intend to fix the price of sunflower seeds?
  2. If so, what will be the fixed price and when will it be gazetted?
  3. What was the ruling average price last season?
  4. Has an investigation been made into growers’ costs of .production of these seeds?
  5. If so, (a) who made the investigation? (b) what were his qualifications and experience with regard to this commodity? (o) what was the text of his report? and d) in what areas was such investigation made?

    1. If no investigation has been made, will he arrange for one to be made by a competent authority prior to the gazettal of a fixed price’
Mr Dedman:

n. - The Minister for Trade and Customs has supplied the following answers : -

  1. Prices have been fixed.
  2. The following prices were gazetted on 20th March, 1945:-
  3. The maximum price fixed last season was -
  4. Growers have been given every opportunity to present data concerning their production costs.
  5. Necessary investigations were made by officers of the Prices Branch skilled in price control procedure and in examination of problems relating to primary production. The reports are confidential, but cover investigations made in all main growing areas.
  6. See answer to 5.

British Ex-servicemen.

Mr Harrison:

asked the Minister representing the Minister for the Interior, upon notice - 1.Can a British serviceman, honorably discharged whilst serving in Australia, remain in this country?

  1. If he may remain subject to certain requirements, what are these requirements?
Mr Lazzarini:

i. - The Minister for the Interior has supplied the following answer : -

Yes,he would be very welcome to remain, subject to the usual conditions that he satisfies the Immigration authorities that he is in sound health and not likely to become a public charge. If he is suffering from any disability due to war service, the case would receive full consideration after investigation.

Hydro-Electric Power: Clarence River Scheme.

Mr.Francis asked the Prime Minister, upon notice -

  1. . Has he seen the following statement, appearing in the seventh report of the State Electricity Commission of Queensland: - “ Coal supplies have decreased still further during the year, and reserves have reached a very low level. In addition, the quality of the coal used (in Brisbane particularly) has further deteriorated, and has increased the difficulties experienced by the two Brisbane power-stations in meeting the demand.

During the year, under the aegis of the Commonwealth Coal Commission, a Fuel Economy Campaign ‘Committee was formed, consisting of representatives of the gas and electricity utilities in Brisbane. the Mines Department and the commission, with the object of effecting economies in the use of gas and electricity, and thanks to the co-operation of the Allied Defence authorities, as well as the Commonwealth and State government departments, it has been possible to relieve the position to some extent. However, the continually increasing demands which must be met for defence and essential service purposes and the decreasing supplies which the authorities are receiving, will make the position more and more serious as time goes on, and eventually it may be necessary to impose restrictions on consumption.”?

  1. Will the Government give early consideration to the scheme for enlisting the water power on the Clarence River for electricity power for southern Queensland and for the northern district of New South Wales, as recently expounded in the House by the right honorable member for Cowper?
  2. Would such a scheme extend the life of the coal mines of southern Queensland in addition to providing electric light and power and increasing industrial and rural development of those areas?
Mr Curtin:

n. - The answers to the honorable member’s questions are as follows : -

  1. My attention has been drawn to the statement referred to by the honorable member.
  2. The right honorable member for Cowper submitted the Clarence River Gorge hydroelectric scheme to my colleague the Minister for Post-war Reconstruction and his suggestions for a full investigation of the scheme are at present being examined.
  3. One of the proposals included in the scheme submitted by the right honorable member for Cowper is to convey power to Brisbane. As electric power provided in Brisbane at the present time is steam-generated, presumably the use of water-generated power would extend the life of the coal mines of southern Queensland’. Whether electricity from the Clarence River scheme could be used to provide light and power as well as to increase industrial and rural development in southern Queensland is a question which cannot be answered until the potentialities of the scheme have been investigated.

High Court Sittings in Western Australia.

Mr Burke:

asked the Acting AttorneyGeneral, upon notice -

  1. Is it a fact that the High Court of Australia is unable or unwilling to sit in Western Australia for the duration of the war, and that as a result litigants are involved in additional expense in the presentation of a case outside the State?
  2. If so, as the High Court’s action will result in a saving of administrative costs, will he agree to meet the additional expenditure incurred by litigants due to the hearing taking place in another State?
Mr Beasley:

y. - It is not a fact that the Justices of the High Court are unable or unwilling to sit in Western Australia for the duration of the war. By Rules of Court published in the Commonwealth Gazette on the 16th November last, sittings of the High Court in the various capital cities were fixed for 1945 with a proviso that no sittings will be held in any registry in which there is not a substantial amount of business. The High Court will sit in Perth on the 5th September next if there is a substantial amount of business set down for hearing in the Perth Registry.


Mr Bernard Corser:

r asked the Minister for Post-war Reconstruction, upon notice -

  1. . Has he seen the report in a Brisbane daily newspaper of the 14th March in which Alderman Howard, a member of the Brisbane City Council, is stated to have said that many people in Brisbane were without homes because they could not obtain a government permit?
  2. Has he seen Alderman Howard’s further statement that recently the Department of War Organization of Industry gave permission to speud £30 on a weatherboard building, with concrete floors, galvanized iron roof, shower room, and electric lighting for a racehorse?
  3. If the facts are as alleged by Alderman Howard, will he inform the House of the whole of the circumstances associated with the matter?
  4. What action has been taken by the Commonwealth Government to meet the housing problems of Queensland? 5. (a) What plans, if any, has the Government for the construction of houses in rural areas of Queensland, (6) have any houses yet been erected?’

– The answers to the honorable member’s questions are as follows : -

  1. I have seen the press statement referred to. I can state definitely that any family without a home in Brisbane or elsewhere in Australia would be granted a permit by my department. 2 and 3. I have seen the press statement referred to. I have arranged for inquiries to be made, and will furnish the information asked for as soon as possible.
  2. The Commonwealth Government has reached agreement with State governments under which the latter are erecting permanent homes through their State housing authorities. In the case of Queensland, 940 houses have been allotted for erection by the State Advances Corporation. At the 21st February, 35 of these homes had been completed, and 109 were in the course of. construction. These are dispersed as hereunder -

In addition to the homes being erected under the above war housing programme, permits are being issued by my department to persons providing their own funds and who are without reasonable accommodation. The number of permits issued is dependent entirely on the materials and man-power available for the construction of homes. My department is making every endeavour, in conjunction with the Man Power Directorate, to ensure the greatest possible allocation of resources to house construction, in order that the number of permits may be increased and more houses built. During the six months ended the 31st December, 1944, 654 permits were issued bymy department in Queensland to erect new houses. These were dispersed as under -

My department is taking a close interest in the progress of the construction of the houses for which permits have been granted and obtains information from each permit holder at regular intervals. Permit holders are encouraged to acquaint my department with any undue difficulties they may encounter in obtaining labour or materials and every possible assistance is given in these cases. A review at the end of January of the progress being made with the houses for which the abovementioned permits were granted revealed that 100 of these houses had been completed, and 292 were in progress. These were dispersed as under -

My department also grants permits for alterations, additions and repairs to residential buildings for the purpose of preserving existing accommodation, and in. many instances providing increased living space in existing buildings. During the six months ending the 31st December, 1944, 1,347 permits were granted in Queensland for this purpose to a total value of £188,435. During the first two months of the present year, 222 permits have been granted in Queensland for the erection of new houses and 373 to cover work on existing residential buildings,I fully realize that the total numbers of houses at present being built in Australia are inadequate to do more than meet only the most urgent cases of need. As soon as present heavy commitments allow. and it is hoped this will be in the very near future, it is the Governments intention to see that much greater allocation of resources is made available for home building in Queensland and elsewhere in Australia.

  1. The Commonwealth Government has so far not undertaken the erection of permanent homes for the civilian population. As I have indicated previously, it has made arrangements for the State governments to carry out this work through their Statehousing authorities. The question as to where within the State these houses shallbe erected, whether in metropolitan, provincial or rural centres, has been largely a matter for the State Government to decide. Under the housing agreement the allocation of houses between metropolitan and country areas will be a matter for Commonwealth and State collaboration.

Repatriation : Employment of Ex-servicemen ; Living Allowances

Mr Francis:

s asked the Minister for Repatriation, upon notice -

  1. Is it a fact that returned soldiers who have been discharged from the Army for a period exceeding twelve mouths are not eligible for the free grant of £10 from the Repatriation Department for thepurchase of tools?
  2. Is it a fact that hundreds of discharged soldiers who have either gone into or been directed to essential war industries, and whose employment in such industries will probably continue for the duration ofthe war, are excluded from the benefit referred to in paragraph 1 ?
  3. If so, with a view to enabling all discharged servicemen to return to civil employment, will be direct that the limitation clause shall not operate during the war?
Mr Frost:

– The answers to the honorable member’s questions are as follows: -

  1. No time limit is prescribed in the regulation, but a grant is at the discretion of a deputy commissioner, and, in order to ensure thatapplications are lodged with reasonable promptitude, the commission encourages discharged members of the forces to make application within twelve mouths of discharge. Where, however, a member’s war disability has prevented him from making an earlier application, he may apply at any time - more than twelve months - after discharge. However, even where disablement is not a factor in the delay, the deputy commissioner determines each case on its merits.
  2. No. Where men are engaged on work of national importance, they are considered tobe precluded, through forces beyond their control, from making application within the twelve months’ period referred to above.
  3. See the answer to No. 2.
Mr Harrison:

n asked the Minister for Post-war Reconstruction, upon notice -

  1. . How many instances are there where exservice men and women who have embarked on university courses have abandoned them because the living allowance granted under the Government’s rehabilitation scheme was insufficient to keep them?
  2. How does the living allowance paid under the rehabilitation scheme compare with that paid to other students under the Commonwealth subsidy scheme?
  3. Is the allowance paid at present sufficient; if not, is it contemplated that the living allowance to ex-service men and women will be increased?
  4. Are students who are accepted under the rehabilitation scheme permitted to accept parttime employment in order to increase their emoluments ?
  5. If not, does this rule also apply during the four and fifth years of study when any assistance received fromthe Government is in the form of a loan?
Mr Dedman:

– The answers to the honorable member’s questions are as follows : -

  1. No cases have been reported of ex-service men or women having abandoned university courses because of insufficient living allowance.
  2. Allowances under the Reconstruction Training Scheme for full-time training are -

In addition, fees are paid and grants for books made, up to £10 a year, and for instruments up to £20 a year.

Rates under the Universities Subsidization Scheme are -

An additional grant for books and instruments up to £10 is allowed.

The above subsidies are paid only incases where the “adjusted family income” does not exceed £250 per annum. The adjusted family income is arrived at by subtracting from the combined income of the student and his parents £50 for each dependent child who was under sixteen at the end of the previous financial year. The student is not regarded as a dependent child for this purpose. The amount of assistance is reduced by £5 4s. per annum for every £10 by which the adjusted income exceeds £250. The allowances under the Reconstruction Training Scheme are more liberal than those under the University. Subsidization Scheme.

  1. With fees paid, and other grants made by the Commonwealth, the allowances are considered sufficient. The matter is, however, kept under constant review.
  2. As trainees should be encouraged, in their own interests, to concentrate on their studies, the Central Reconstruction Training Committee has decided that full-time trainees shall not take part-time employment except in special circumstances. The Universities Commission investigates all applications for permission to engage in part-time employment, and where they are satisfied that the employment will not be detrimental to the student’s studies, approval is granted. Trainees are, however, permitted to accept employment in vacation and ear/i up to £2 a week without any deduction being made from their living allowance.
  3. The rule about employment applies to all years. The important consideration is whether the part-time employment suggested will or will not be detrimental to the student’s studies. This question is determined by the Universities Commission.
Mr Daly:

y asked the Minister representing the Acting Minister for the Army, upon notice -

  1. How many Australian prisoners of war have been repatriated from European war camps ?
  2. How many men have been, discharged from the Army on their return ?
  3. How many repatriated prisoners are still in the forces?
  4. On what grounds may an ex-prisoner of war apply for his release from the services?
Mr Dedman:

– The Acting Minister for the Army has supplied the following answers : -

  1. The number of members of the Australian Military Forces recovered from European prisoner-of-war camps is 1,476, com-‘ prising 52 officers and 1,424 other ranks. These figures include prisoners repatriated under the Geneva Convention, escapees, and liberated prisoners. 2 and 3. Separate statistics are not maintained in connexion with these matters, but it can be stated, in general terms that recovered Australian Military Forces prisoners df war are still serving except those whose discharge has been authorized on medical, compassionate, occupational, or other grounds such as would apply to any serving soldier.
  2. No distinction is made between an exprisoner of war and any other member of the Australian Military Forces in regard to the grounds on which discharge from the Army may be granted, but on arrival in Australia all repatriated prisoners of war are automatically medically re-examined. An exprisoner of war may apply for discharge on occupational, compassionate or medical grounds, and the same criteria would apply as in the case of the ordinary serving soldier. As a special case, all prisoners of war recently recovered from the Japanese transport were given the option of discharge. But this does not apply to other prisoners of war. In accordance with the requirement of article 74 of the Geneva Prisoners of War Convention 1929, that no repatriated prisoner shall be employed on active military service, prisoners repatriated under the Geneva Convention are not posted to the Northern Territory, New Guinea, or to any operational area outside the mainland of Australia.

Royal Australian Air Force: Field Allowance

Mr Harrison:

on asked the Minister for Air, upon notice -

  1. Is it a fact that the field allowance paid to Royal Australian Air Force officers operating out of Darwin area has been withdrawn and that some officers have been asked to refund amounts up to £50?
  2. Is it the policy of his department that current entitlements should be reduced as the means of adjusting the alleged overpayments?
  3. Is it a fact that airmen operating from New Guinea over similar, and in some cases, less hazardous targets, are being paid the field allowance, and that, whereas Army officers at Darwin receive the allowance, it is being withheld from Air Force officers in the latter area ?
Mr Drakeford:

– The answers to the honorable member’s questions are as follows : -

  1. In the. absence of the names of the officers concerned, it has not been possible to trace the cases referred to by the honorable member. If their names are furnished, their cases will be investigated.
  2. If inaccurate payments are made to a member of the Royal Australian Air Force, he is called upon to refund the’ amount iiivolved. If he is unable to make the refund, the amount overpaid is recovered from him by instalments from current entitlements.
  3. When field allowance was approved for the Australian Military Forces, both within and outside Australia, and. for the Royal Australian Air Force outside Australia, it was stipulated that, when field allowance was paid, the provision and maintenance of mess gear and equipment would be the liability of the members concerned and would not be a charge to public funds. The provision of mess gear and equipment was favoured in preference to payment of field allowance to members of the Royal Australian Air Force in Australia, for the following reasons: -

    1. That standardization of equipment and adoption of satisfactory types were desirable.
    2. That the policy whereby members paid for mess equipment and gear was unsuitable and inconvenient because of the numerous interstate and intra-state transfers of personnel.
    3. That the payment of field allowance mightoperate unfairly in the case of many officers who might be transferred on a number of occasions to new, unequipped units and called upon each time to contribute towards the cost of mess equipment.

Service in New Guinea was classified as service outside Australia and members were paid field allowance, but became liable for the provision and maintenance of mess gear and equipment. Members at Darwin have not been paid field allowance and consequently are not responsible for the provision and maintenance of their mess gear and camp equipment, which is met from public funds.

Australian Army: Reinforcements

Mr Francis:

s askedthe Minister representing the Acting Minister for the Army, upon notice -

  1. Is it a fact, as stated in a Sydney weekly paper on the 3rd March that although it has been claimed that reinforcements by a machine gun unit are needed, 113 highly trained Al Australian machine gunners are being used as labourers by an Army works company in Brisbane?
  2. Is it a fact, that three months ago, these men were loaned to the works company for one month to do urgent wharf labouring work, and, although they have repeatedly applied for release for front line duty, they have been kept idling away their time in a Brisbane camp?
  3. Will he give the House a full explanation and take such action as will remove the reported impression that the men were being used as cheap labour?
Mr Dedman:

– The Acting Minister for the Army has supplied the following answers: -

The posting of reinforcements to the units where they are most needed is essentially a military matter, and I am assured that the action taken in this case was in the best interests of the service. The works company referred to has an important operational role and the only suitable personnel available were posted to it to bring the unit up to strength. The position regarding reinforcements for machine gun units was satisfactory and is still satisfactory. Pending the movement of the works company overseas it was engaged in handling a large quantity of material being shipped for overseas requirements.

The widely varying operation situation from time to time and the acute shortage of manpower in the Army necessitate frequent readjustment in the duties on which personnel are employed. These readjustments are aimed at ensuring the maximum economy in performingthe multitudinous tasks of the Army and are decided upon after careful consideration of numerous factors which can be fully appreciated only by the responsible Army staff’s.

Quarantine: Destruction of Dog

Mr Fraser:

r asked the Minister representing the Minister for Health, upon notice -

  1. Was a dog owned by an ex-serviceman, Mr. James Moody, of 28 Silver-street, St. Peters, and which had been the mascot overseas of the 2nd/lst Machine Gun Battalior, Sixth Division, Australian Imperial Force, killed by official order at Abbotsford Quarantine Station, on the 12th March, 1945 V
  2. Was the dog certified to be suffering from any disease; if so, by whom and what disease?
  3. As the dog had been smuggled into Aus tralia in contravention of the Quarantine Act was the killing of it mandatory by the act?
  4. Does the act set out that an animal illegally imported need not be killed and can be released if free of disease? If so, was consideration given to that aspect?
  5. Has the department ‘any reason to doubt the truth of the owner’s contention that the dog had accompanied the 2nd/lst Machine Gun Battalion through the Western Desert, Greece, Crete, Syria, Palestine and Egypt, and that the troops were deeply attached to it?
  6. Were the dog’s history and the wishes of the soldiers considered in deciding whether it should be killed or spared?
  7. Does the act provide that the owner shall be given 48 hours’ notice of the carrying out of a decision to kill an animal illegally imported? If so, was that done in this case, or was the owner given five minutes’ notice by telephone? 8. (a) Had the dog already been in Australia for three years when the Quarantine authorities ordered that it be delivered up to them ; (b ) did knowledge of the dog’s existence and history come to the authorities only because its owner had acceded to a Red Cross request to permit it to be displayed?
  8. Were assurances given the owner that the dog would not needlessly be destroyed by (a.) Mr. King, of the Agricultural Depart- ment, and (b) Mr. Spiers, in charge of the Quarantine Station at Abbotsford?
  9. Before the dog was killed did the Director of the Division of Veterinary Hygiene in Canberra receive a letter from the owner, accepting full responsibility for bringing the dog into Australia stating his willingness to face any charges and to pay any penalty imposed? If so, why was this offer not even acknowledged?
Mr Holloway:

– The answers to the honorable member’s questions are as follows : -

  1. Yes.
  2. No.
  3. No; animals illegally imported shall be disposed of as the Minister directs.
  4. Yes; consideration was given to this aspect. 5-. The department did not make such extensive inquiries as would be necessary to establish the truth of the statements referred to. False statements are- frequently made in respect of animals illegally imported.
  5. Yes.
  6. The act does not provide that 48 hours’ notice shall be given. 5. (a) As the animal was illegally imported the department- has no exact knowledge- of the date of importation - if is stated that the animal has. been in Australia nearly three years; (6) No.

S>. The department did not authorize either officer mentioned to give such assurances.

  1. Yes; it is pointed out that the owner of the dog was confessedly guilty of a deliberate breach of the law and was therefore liable to legal proceedings. The law was made, and has been enforced for 36 years for the protection of the people and the animal industries nf Australia. The department cannot condone an offence of this serious nature merely because the offence has remained undetected or because it is ultimately admitted by the offender.


Mr Fadden:

n asked the Acting AttorneyGeneral, upon notice -

  1. Is the manufacture and/or use of dichlordiphenyltrichlorethane (known as D.D.T.) the subject of letters patent in Australia?
  2. If so, what are the names of the owners of such patent rights?
  3. Do such patents (if any) cover both the manufacture and use of D.D.T.?
  4. Do such patents (if any) preclude any other individual or company from the manufacture of D.D.T. or the use thereof ? 5-. Is D.D.T. being manufactured in Australia under such letters patent; if so, by whom ?
  5. Have any applications been made by other individuals or companies for a licence under such patents?
  6. If so, what was the result?
Mr Beasley:

– The answers to the honorable member’s questions are as follows : - 1, 2 and 3. No letters patent have yet been granted in Australia for the manufacture or use of the substance known as D.D.T. An application for letters patent is not open for public inspection until it has been accepted and the acceptance has been advertised or, in the case of a convention application, twelve months have elapsed since the application was made in the convention country. At the present time one application relating to D.D.T. is open to public inspection. This application was lodged on 13th April, 1044. by J. R. Giegy S.A.A. of Basle, Switzerland.

  1. The effect of letters patent is to grant to the patentee the sole right to make, use, exercise and vend, the patented invention. The patentee may, however, grant licences, in which case the licensees may make, use and exercise the invention subject to the terms of the licences.
  2. I am not aware whether D.D.T. is being manufactured in Australia. 6 and 7. As letters patent have not yet been granted, the question of licensing does not arise at this stage. In any case, if a. licence were .granted, it would be granted by the patentee and as registration thereof at the Patent Office is not obligatory, the Commonwealth would not necessarily know of its existence.

Postal Department.

Mr Calwell:

l. - On the 14th March, the honorable member for Herbert (Mr. Martens) asked a question regarding the possibility of taking mails across the Burdekin River by boat to prevent delay.

The Postmaster-General has supplied the following answer : -

The quantity of mail matter for places in North Queensland, affected by the present abnormal flood conditions, is considerable and great difficulty, with possible risk of loss, would be entailed in ferrying such mail matter across the flooded Burdekin River. Recent advices indicate that the flood waters are receding and the railway authorities are hopeful that measures can be introduced for the transportation of mails to suitable points on the Ayr side of the river, pending the completion of repairs to the damaged railway bridge. In the meantime, all first-class mail matter for places north of Home Hill is being conveyed by air between Brisbane, Townsville and Cairns, from which places the mails are being redespatched without delay.

Cite as: Australia, House of Representatives, Debates, 22 March 1945, viewed 22 October 2017, <>.