House of Representatives
29 May 1945

17th Parliament · 3rd Session

Mr. Speaker (Hon. J. S. Rosevear) took the chair at 3 p.m., and read prayers.

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Acting Prime Minister and Treasurer · Macquarie · ALP

by leave - I am sure the House will be interested in the result of the conversion loan which closed in London last Friday, the 25th May. In respect of £94,000,000 of London loans for which options of redemption accrued this year, the Government sought conversions to an amount of £60,000,000, and decided to repay and repatriate £34,000,000. These loans carried interest at the rate of 5 per cent, per annum; £29,000,000 represented Commonwealth debt, and £65,000,000 debts of the various States. I have received from the Australian High Commissioner in London, Mr. Bruce, the advice that conversion applications totalling £56,689,000 have been received. This represents 95 per cent, conversion and is an admirable result. The amount necessary to complete the conversion of the £60,000,000 will be provided by the Commonwealth Bank, which will also make available funds to cover the £34,000,000 to be repatriated. The new securities to be issued in London, and also securities to be issued to the Commonwealth Bank in respect of the amount repatriated, will carry interest at the rate of 3-J per cent, per annum. The aggregate saving of interest to the Australian governments concerned in the operation will be about £2,000,000 per annum, whilst the interest on the repatriated £34,000,000 will be payable in Australia instead of in London, thus avoiding overseas remittances to an amount of £2,700,000 sterling per annum. Never previously had a single overseas loan operation of such magnitude been attempted by any Commonwealth Government, and its highly successful conclusion is a matter for great satisfaction.

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Motion (by Mr.Chifley) agreed to -

That the House, at its rising, adjourn to to-morrow, at . 10.30 a.m.

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– Has the attention of the Acting Attorney-General been drawn to the remark by Judge O’Mara, when delivering judgment in the Ship Joiners Union case yesterday -

I do not propose to record and specific findings on the facts in evidence, which amounted to a criminal conspiracy.

Has he read His Honour’s statement -

There is uncontradicted evidence thatG. Anderson, of the Electrical Trades Union, and president of the New South Wales Trades and Labour Council, said, “We do not recognize the law - we can take no notice of the court - we can control the Government and wreck it and that E. Buhner, of the Building Workers Industrial Union, said,” Without regard to what the law says or what Judge Kelly says, or what Mr. Curtin or Dr. Evatt says, we are determined to crush the ship joiners and it shall be done.

What action, if any, is the Government taking to bring these men to trial, on the evidence of criminal conspiracy referred to? Are both Anderson and Bulmer members of the Communist party? Will the Acting Attorney-General give to the Parliament his assurance that the relationship of these men to the Communist party or the trade union movement will not influence the Government to stay proceedings against them?

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

– I have read the published report of Judge O’Mara’s findings and comments. I have had some difficulty in following His Honour’s comments. He began by saying that certain matters were not for the Trades and Labour Council but for the Arbitration Court. At a prior stage he had called Anderson and Bulmer before his court and examined them in relation to actions alleged to flout the authority of the court. His concluding statement was that he had no intention of recording any specific findings in connexion with the matter. I may not be viewing the circumstances in the correct light, but I find it difficult to follow His Honour’s line of reasoning in declining to record specific findings after he had called those persons before the court, had heard evidence from them, and had declared that the matters in dispute were matters for the court and not for Anderson or the Trades and Labour Council to determine.

Mr Harrison:

– His remark about the recording of specific findings was in regardto a criminal conspiracy.

Mr Menzies:

– The Minister’s legal advisers should not find it very difficult to place the right construction on His Honour’s remarks.


– That may be. I do not claim to have legal knowledge to analyse or cons true a judicial pronouncement in such matters; but I do regard myself as competent to apply to it the reasoning of the average person. It has occurred to me at times that a better situation would prevail if some persons would confine themselves to judicial questions, and would refrain from interference in political questions or questions that are outside the sphere of their influence and direction. From the outset of this case, I have found it difficult to decide the purpose which the court sought to achieve in connexion with. Anderson and Bulmer. As the Leader of the Opposition (Mr. Menzies) has suggested, perhaps it would be proper to ask the Solicitor-General to examine His Honour’s findings, and make whatever comment he considers warranted. To my knowledge, Anderson is not a member of the Communist party.


– I wish to preface a question to the Minister for Labour and National Service by directing the Minister’s attention to the terms of an award made by Judge O’Mara yesterday when delivering judgment in the Ship Joiners Union case. Judge O’Mara said -

The duties, obligations and restrictions imposed on employers and employees by this award are in addition to the National Security (Man Power) Regulations. Nothing in the award shall influence the Director-General of Man Powerin any matter relating to engagement or termination of employment.

I now ask the Minister: Has he taken any action to have withdrawn the instruction referred to in evidence before the court during the proceedings in this case, in which the Deputy Director of Man Power directed that man-power officers should fill vacancies for ship joiners, first by getting in touch with the Building Workers Industrial Union, and then, if employees were not available, the Ship Joiners Union ? Did this instruction continue to have effect after the Minister gave to me in this House an assurance that he personally had directed that there should be no discrimination in the selection of employees when they were picked up? If the Man Power Directorate’s instruction has been withdrawn, will he consider the reinstatement of Mr. Cheeseman, who resigned in protest against the instruction ?

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

– Dealing first with the honorable member’s reference to Mr. Cheeseman; so far as 1 know, Mr. Cheeseman did not resign because of any objection to the picking-up arrangements, but because he did not want to hold office any longer. As to the first part of the honorable member’s question, the Director-General of Man Power, Mr. Funnell. was subpoenaed to appear before the court. He told the judge what his policy in regard to picking-up labour was, and the judge took no exception to the scheme outlined. Mr. Funnell, therefore, left the court believing that the judge was satisfied with his policy. As to the part of the honorable member’s question relating to discrimination, I have to say that there is no discrimination.

Mr Harrison:

– I shall read the instructions given to Mr. Cheeseman.


– There is no discrimination. Men are taken in their turn; the man longest out of work is sent to the first job offering irrespective of the union to which he belongs.

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Military Rank


– During the debate last week on the Re-establishment and Employment Bill, the press referred to “Captain” Harrison, “Colonel” Ryan and “ Major-General “ Rankin in ite report of speeches by those honorable members. Will you, Mr. Speaker, direct that, if this practice is to be followed, members on this side of the House shall he referred to as-

Opposition Members. - Comrades


– As Gunner McLeod, Private Haylen, Lieutenant Pollard, Captain Dedman and Captain Chambers?


– I do not know whether the honorable member has asked the question seriously.

Mr Barnard:

– I am quite serious.


– The Acting Prime Minister has forestalled me. I refer the honorable member to .Shakespeare’s remark. “ What’s in a name? “

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Escape from Detention at Tamworth - Withdrawal of Long-service Troops.


– Has the Minister rep resenting the Acting Minister for the Army read in to-day’s press the statement that 100 mcn who were under detention at a camp in Tamworth had inarched out of the camp and had proceeded to the local newspaper office, where they had made for publication a statement of alleged grievances, in the camp? Will the Minister make a statement to-morrow in regard to the matter, and say what investigations are being made?

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

– I have not read the press statement referred to. I shall inquire into the matter, and should a statement appear to be necessary I shall make it.


– Is the Acting Prime Minister yet able to inform the House what action the Government proposes to take to bring about the release from the Army of long-service men?


– I cannot do so now, but I hope at a reasonably early date to make a statement covering this and other matters of the kind raised by honorable members.

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– Will the Minister for Post-war Reconstruction take steps to have permits readily granted for building repairs ordered by municipal councils in the interests of public health? Will he confer with the Minister for Munitions with a view to having the materials required released urgently in such oases?


– I do not consider it necessary for one to issue any special instructions to any department about the granting of permits for repairs to houses which have been ordered by local authorities.

Sir Frederick Stewart:

– Would approval be automatic in those circumstances?


– Almost. Application is necessary, but in all cases permits are granted. If I am supplied with evidence of delay in any particular case, I shall see that the permit is expedited. I shall discuss the availability of materials with my colleague, the Minister for Munitions, but I point out that galvanized iron, and roofing in particular, are in short supply. The Government is doing its utmost to ensure that increased supplies shall be made` available.

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– Will the Acting Prime Minister inform the House whether there is any foundation for the reports in the press that the Commonwealth is expected to advance two proposals at the next conference of Commonwealth and State Ministers, with a view to giving prices control some permanency? If so, are the proposals, first, that the States should cede price-fixing powers to the Commonwealth, following which price-fixing authorities would be established in the States, and, secondly, that the Commonwealth should submit the matter to the people by referendum at the next general elections? In view of the people’s emphatic declaration at the last referendum against continuing war-time controls into the peace, will the Acting Prime Minister ensure that this House shall be given an opportunity to record its views on any such proposals before they are submitted to the Premiers of the States?


– The agenda for the next conference of Commonwealth and State Ministers have not yet been prepared, as the Government has not yet considered the business to be brought forward. Personally, I consider that a law ought to be passed to provide against any skyrocketing of the prices of those good. which may be in short supply after the war. It is clear to everybody that unless, in the post-war period, some control be exercised, the public will have to. pay inflated prices for certain goods, and some of them will be essential goods. I should have thought that it was a matter for consideration by the States as to whether they should either refer the necessary power to the Commonwealth, or themselves undertake some form of >price control which would reduce the eviL There will be difficulty, of course, in six States having six separate controls of prices, and under such a system gross anomalies would arise. I think that the matter ought to be considered at the next conference of Commonwealth and State Ministers, but the Government has not yet determined its policy on this matter. Any proposed alteration of the Constitution involving a referendum would bc a matter for this Parliament to determine.

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– Has the attention of the Minister representing the Minister for Supply and Shipping been drawn to the numerous complaints being made by motor oar owners .about the inferior grade of petrol now supplied to petrol u.=ers? Will the Minister have inquiries made regarding the quality of the petrol now being sold?


– An announcement was made some months ago that the octane rating of petrol was to be reduced from 80 to about 70, which necessarily resulted in an inferior grade of petrol being supplied to the public. A subsequent announcement was made of a reduction of the price of petrol, but people probably thought that they derived little benefit from the change when the quality also was reduced. I shall have inquiry made regarding the matter, and a reply, will be furnished to the honorable member later.

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– Has the Minister representing the Minister for Trade and Customs read the report in this morning’s Melbourne press that a Commonwealth Minister had received information that two Sydney firms were suspected of being the principal agents behind Sydney’s pillaging and black marketing rackets ? If so, can the Minister give any information to the House on the matter, and say whether action is contemplated or possible against those firms?


– I have not read the report ; but if any member of the Government has proof of offences of the kind referred to by the honorable member, no delay whatever should occur in having those firms brought to justice. I shall follow the matter up, and see that the appropriate action is taken.

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– Has the Minister representing the Minister for Supply arid Shipping read the statement in the West Australian of the 25th May in which Councillor W. F. Sampson, of the Fremantle Municipal Council, stated that ships from the eastern States were arriving at Fremantle in ballast? Councillor Sampson said that the Fremantle Council had purchased 350 tons of road metal which had been carried as ballast in a ship. In view of the acute shortage of essential articles, such as refrigerators and tyres and tubes for bicycles, and the fact that merchandise to the value of thousands of pounds awaits shipping space, will the Minister have inquiries made into the allegations by Councillor Sampson, with a view to preventing a recurrence of the practice to which he directed attention?


– The honorable member mentioned this matter to me yesterday, and I considered it to be of such importance that I made inquiries about it. I am informed that not more than two vessels have been sent from the eastern States to Fremantle in ballast for the purpose of loading grain and fodder for shipment back to the eastern States. In view of the fact that the Australian proportion of berthage in Fremantle is limited to two general cargo ships, one coal-discharging ship and one grainloading ship, it is impracticable without wasting tonnage to load more vessels with general cargo than the port can handle.

The general cargo vessels cannot be discharged in Fremantle quickly enough to permit of having a vessel continuously in the grain berth. Hence it was necessary on two occasions to send vessels in ballast from the eastern States to Fremantle to load grain. It is a fact that a vessel discharged road metal in Fremantle, and that the metal was sold to the Fremantle Municipal Council. However, this vessel came under Australian jurisdiction only when it arrived in Adelaide from overseas with the ballast aboard. This vessel loaded general cargo and sheep in Adelaide for Fremantle.

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– “Will the Acting Prime Minister have a statement prepared indicating what Australia’s liabilities may be under the lend-lease arrangements with the United States of America? Will he also state whether accounts are kept of all the goods received from America and also of those sent from Australia under the reverse lend-lease agreement? What does the Government propose to do with respect to ultimate payment of any balance on either side?


– I shall try to have a statement prepared setting forth the present position. Several matters associated with lend-lease and reciprocal lend-lease are still outstanding, and will not be settled, I take it, for a considerable time yet. Certain goods, such as machinetools, have been supplied to this country under an agreement between Great Britain and the United States of America as to the price which the United Kingdom would pay. Although a general record is kept regarding all transactions, and of value also, in a general way, no definite accounting has been done regarding the amount of lend-lease aid received by us, or of the reciprocal lend-lease given by us to the United States of America. Each contracting nation undertook to supply the needs of the others to the- full extent of its resources, and that undertaking has been adhered to.

Mr Anthony:

– It is the ultimate distribution of the balance that I am. interested in.


– That has not yet been discussed.

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– Can the Minister in charge of War Service Homes say whether it is true that neither a man with four or five years of service nor the wife of a prisoner of war with four or five years’ service is eligible to apply for a war-service home, whereas a man discharged from the Army after serving only six or twelve months is eligible? If this is so, will the Minister see that the anomaly is corrected by legislation?

Minister for Repatriation · FRANKLIN, TASMANIA · ALP

– It is true that a man must be discharged from the Army before he is eligible to apply for a war service home. The wife of a prisoner of war cannot apply because her husband has not been discharged, and will not be discharged until after his release.

Mr White:

– Then the prisoner of war is at a disadvantage in comparison with the man who has served for only a short period ?


– Yes, but that is the law as it stands.

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– Has the Acting AttorneyGeneral noted the publication by His Honour Judge Drake-Brockman in the daily press of a letter ostensibly written by him to the Minister for Labour and National Service (Mr. Holloway) ? Is it a fact that members of the Bench of the Commonwealth Arbitration Court are entitled to the designation of “ Judge “, while the title “ Mr. Justice “ is properly applied only to members of the superior courts? If so, will the Acting AttorneyGeneral take steps to ensure that the judges of the Commonwealth Arbitration Court are instructed as to the title proper to their office, so that the public may not be disedified by the spectacle of some of those judges wrongfully claiming and publicly using an honorable designation to which they are not entitled? Is the publication in the press by a judge of a letter written by him in his judicial capacity to a Minister of the Crown before that letter has been received by the Minister in accordance with accepted ethical standards of judicial conduct?


– I did not see the letter to which the honorable member refers. It may be that there was a typographical error in its publication. I shall have the matter looked into. As for the letter which was written to the Minister for Labour and National Service, and published, presumably, without his consent, Judge Drake-Brockman may have had a reason for doing so, although it is not the usual practice. Perhaps it would be best for me to leave the matter to Judge Drake-Brockman and the Minister.

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Reduction of Milling Shifts - Offal Supplies in Queensland.


– Has the Minister received a request from the Queensland Council of Agriculture that three shifts be retained in Queensland flour mills? If so, will the Minister arrange that effect be given to that request, because of reports that the Commonwealth’s decision to reduce flour mill shifts from three to two will mean a severe curtailment of food for poultry, dairy cattle and pigs, and might even lead to the compulsory slaughtering of 1,500,000 poultry so that there may be feed enough for what stock remains ?

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

– It is true that I have received a protest from the Queensland Council of Agriculture about the reduction from three to two of the number of shifts worked in flour mills in that State. Only a certain quantity of wheat is available until next harvest, and it is proposed to eke out this quantity on a rationed programme. There will not, however, be any reduction of the quantity of stock feed available to users. Only 30 per cent. of milled wheat is available for stock feed in the form of offal, and it is proposed to make up in whole wheat for the loss of offal resulting from the reduction of the number of shifts worked in the mills.

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– In view of the reported statement by the right honorable member for Darling Downs (Mr. Fadden), that, had the Australian Country party’s fodder conservation plan been adopted, the production of food would not have declined, will the Minister for Commerce and Agriculture draw the right honorable member’s attention to a statement made in this House by the right honorable member for Cowper (Sir Earle Page) that the 1941 Premiers Conference rejected the Australian Country party’s fodder conservation plan after it had been accepted by the Australian Agricultural Council, and that the responsibility for the lack of a fodder policy rests with the States? Does he know of any reason why the Leader of the Australian Country party should contradict the statement so recently made to this House by the right honorable member for Cowper? Does the Minister interpret the statement of the right honorable member for Darling Downs as a demand that the States be dispossessed of their constitutional rights in regard to fodder production?


– This is the first time I have heard that the Australian Country party had a plan for food production. I shall look into the matters mentioned by the honorable member, and reply later.

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In committee: Consideration resumed from the 25th May (vide page 2144).

Clause 102 (Housing).


.- This clause relates to houses for members of the fighting forces, and is deserving of the fullest discussion. Every right thinking person in the community should rise in protest against the Government’s inactivity in this matter. The Government takes little or no interest in providing homes, notwithstanding that the Speech of His Royal Highness the Governor-General at the opening of Parliament, contained references to the subject. In a recent broadcast statement the Deputy Director of Housing in Victoria said that, in order to make up the leeway, about half a million houses were required in Australia.

Mr Dedman:

– How many houses were constructed when previous governments were in office?


– The position has gone from bad to worse during the regime of the present Government. Between 1939 and 1944 the War Service Homes Commission erected only fifteen houses, fourteen of which were for members of the First Australian Imperial Force. That means that for the 300,000 persons who have already been released from the fighting forces in this war only one home has been made available.

Mr Haylen:

– Is the honorable member opposing the clause?


– I am not satisfied with the present position. I want the exservicemen to have their own homes, but apparently the Government is indifferent to their needs. The Government has fallen down on the joh. I ask that instead of holding further conferences the Government shall take positive action to provide homes for members of the fighting services. If half the time that the bureaucrats now take in trying to find excuses for not building homes were devoted to obtaining materials and arranging for the construction of houses, many homes would already have been built. In Great Britain the housing problem has been tackled in a business-like way; homes have been brought from Norway, and materials have been obtained from all parts of the world. Houses are ready for men when they return from active service. In Canada the position is even better than it is in Great Britain. The application of the guillotine to the discussion does not permit me to give details of what other countries have done, but the inaction of the Commonwealth Government stands out in contrast to what has been done in other parts of the British Empire. No other government has fallen down on the job as the Commonwealth Government has done. This bill has been described as the charter of service men and women, but if the erection of one war service home in five and a half years is evidence of what they may expect, the prospects are not alluring. Any honorable member who does not urge the Government to provide homes for members of the fighting forces is guilty of a dereliction of duty. I urge that the present lethargic policy be discontinued, and that positive action be taken to provide homes for service men and women who need them. If a proper organization were functioning it would see that homes were built for the men before they obtain their discharges.


.- On a number of occasions I have referred to the need for a progressive housing programme. The information given by the honorable member for Moreton (Mr. Francis) was elicited from the Minister for Repatriation (Mr. Frost) in reply Jo questions which I directed to him. The Minister informed me that fifteen houses had been built by the War Service Homes Commission during the war, and that of that number, eleven were for soldiers of the last war and three for men who fought in the present war. There is no need to do more than quote those figures to show how deplorable is the present situation. I am aware that many difficulties exist, including a shortage of building materials, but in reply to a question which I asked recently I was informed that the Government was building stores at Broadmeadows and Tottenham at a cost of about £325,000. In their construction hundreds of bricklayers, carpenters, plumbers and other artisans were employed, whilst the materials used would have built thousands of homes. Li addition, the Government has commenced the building of a new arbitration court in Melbourne at a cost of about £60,000, and has decided to provide additional temporary accommodation for the Repatriation Commission in Melbourne at a. cost of approximately £80,000. Every one thousand pounds of those sums would build a home. In. this city, within a few hundred yards of Parliament House, a huge building, apparently temporary, too, is being erected for the Prices Branch. Prices control is necessary, but we believe it to be transient. I feel certain that that large expenditure is not warranted when people need homes so badly ns they do. More than 300,000 homes arc needed in Australia, and this is not a country which has been battered as Great Britain has been. If honorable members saw the cities and even the villages of Great Britain, they would realize what an immense housing problem it has. Millions of homes have to be built or repaired. I was told in an answer to a question that in addition to Government buildings in Australia only six houses had been destroyed and 100 damaged by enemy action. It seems that tb« Government has been unable to grapple with the problem. All honorable members have received pathetic letter* from returned servicemen who find no possibility of getting a roof over their heads. Families are compelled to live in single rooms in squalor. Single men cannot marry because they have no homes to take their brides to. A returned airman was tired of writing letters to land agents and brought out a roneoed circular which he sent to every land agent in Melbourne whose address he could find. This is a part of the text -

Have you a self-contained furnished or unfurnished flat, maisonette, house, half-house, caravan, house-boat, or Bourke-street tram to let for the wife and myself?

Living in a sleep-out is going to leave u* cold this winter, unless someone with a warm heart can help us with our housing problem.

We are n very refined quiet young couple without children and we are at present living with our aged parents in a small house. Th? only accommodation available in the house is a small sleep-out and we share the conveniences.

I have been with the Royal Australian Ait Force for the past five years, having served with the Royal Air Force as a member o’ air crew in the late stages of the Battle for Britain, being away in England and the Middle East for seventeen months. Soon after my return from England I was ported to Darwin and served a. total period of fifteen months at Darwin.

The writer is only one of many. It is of no use the Minister telling us about difficulties of labour and materials. The War Service Homes Commission is efficient - I am not blaming it - but I have ascertained that it has a director, sis deputy-directors, six architects and more than 100 employees, quite apart from about 40 on war service. It is officered almost entirely by men who served in the last war. They will do the job if the policy is laid down. The Government is to blame for not having laid down a policy. This omnibus bill devotes only a few words to the subject of housing of returned men. The Minister for Postwar Reconstruction (Mr. Dedman) said that homes were almost as important as jobs. I say that a home is equally important.. What disappointment greets men who have served their country in war for five or six years when they return to find that the Government has don*1 nothing to provide homes for them. Private enterprise cannot build, because the Directorate of War Organization of Industry, which is also controlled by the

Minister, has to approve of the issue of permits. Everyone knows what an inordinate delay takes place before the directorate makes a decision on an application. It takes three months to get an answer “ Yes “ or “ No “, and in 90 per cent. of the cases, the answer is “No”. Even if a man owns a piece of land he cannot build. To buy land one has to apply to the Treasury for permission. The War Service Homes Commission is not building. There is nothing more ludicrous in Alice in Wonderland. If circumstances were not so tragical, they would be comical. All this mammoth bill says about housing is contained in clause 102-

Part VIII. - Housing. (1.) The Minister may, on behalf of the Commonwealth, enter into an agreement with any State for the allocation of dwelling-houses amongst discharged members of the Forces, or classes of discharged members of the Forces, and other persons or classes of persons. (2.) In this section, “dwelling-house” means any building or part of a building occupied or intended to be occupied as a separate dwelling and constructed or purchased in accordance with any agreement between the Commonwealth and the State relating to housing.

I asked the Minister for Repatriation (Mr. Frost) to-day whether he was aware of the anomaly whereby a man who may have served four or five years but is still serving cannot make application for a war service home, whereas a man who may have served for only twelve months can, and thatwives of prisoners of war in Japanese hands and widows of men who have given their lives for their country, are not allowed to buy war service homes, probably because the latter are not regarded as good risks. He replied in the affirmative, and he gave no indication of any action to correct the anomaly. In New Zealand, where there is also a Labour administration but one which is awake to its responsibilities, a soldier’s widow can get a war service home. I ask the Minister to have the War Service Homes Act amended to provide that soldiers’ widows may purchase war service homes. The act was effective for the purposes of the last war, but it does not meet the needs that have arisen in this war. The act should also be amended to enable the wives of prisoners of war to purchase war service homes. Widows should be able to buy homes regardless of how long it will take them to complete the purchase. Surely, the Government has a responsibility to the children of such widows; in the event of death, the Government could perhaps waive the outstanding balance of the debt. Surely, the Government is not so ungrateful that it will not allow men on active service to have a stake in the country in the form of their own homes. Surely, just because a widow has only a small pension, she should not be disqualified from buying a war service home. It will probably startle all honorable members who have had war service to know that widows are disqualified. Anomalies obtrude as the war progresses towards its end. Widows and the wives of men who have had long service or of prisoners of war shouldbe able to obtain war service homes. I ask the Government to give that matter the most serious consideration. If it will lift the restrictions and allow private enterprise to build, homes will be produced. Recently, in Melbourne, a returned airman marched the streets with a sandwich-board saying that he could not get accommodation anywhere. Finally, a building contractor took pity on him, and, after having got a permit, built him a home on long terms. It was done quickly. The. Government should revise its restrictions. They are outmoded. The war in Europe is over, and many of the controls could be abolished. The restrictions on the building of homes are among the first that should be lifted. I do not want to reiterate what I have said before, but I have tried to got from the Minister a statement that the Government has a policy and will build so many thousand homes a month, according to its capabilities. We have the Department of Post-war Reconstruction producing grandiose proposals.The Bulletin published a very amusing article last week about the scores of economists and planners in that department. It is a regular planners’ picnic. It is not building homes, however. The Government of New Zealand has earmarked for servicemen 50 per cent. of the homes being built. A similar policy is supposed to he applied in Australia by the Commonwealth

Housing Commission. When I asked how many homes built by it bad gone to returned men, I was told that the information was not available. I assert, however, that very few have. Let the Minister for Repatriation, even if he is a junior Minister, stir up Cabinet and say, “We want homes, not plans”. Let him persuade the Minister for Post-war Reconstruction (Mr. Dedman) and any with sympathy towards the returned men to create a riot in the Cabinet and caucus in order to get things done. We hope that many of our men will have been demobilized in twelve months’ time, and they will become embittered if they find that the Government has been merely playing with them. Combustible human material of that description is dangerous. Unfortunately, the returned soldiers have been fooled for years, and they will know what to do with the men in public life who have deceived them. During the last five years the Government has failed to submit any kind of a satisfactory programme to meet the housing needs of the community. I hope that it will admit its past failures and attempt, now, to do something effective.

Minister for Repatriation and Minister iri charge of War Service Homes · Franklin · ALP

– T was asked during question-time to-day, why temporary offices were being built for my department in Melbourne. I replied some weeks ago to a similar question by the honorable member for Balaclava (Mr. White). We gave our offices in Melbourne to the American Army which urgently needed accommodation when the first American troops came to Australia. The departmental staff then numbered about 250, but, as everybody knows, repatriation staffs are growing everywhere. At present the Melbourne staff numbers 500 officers, and it occupies temporary quarters taken over from Melford Motors about six months after the war in the Pacific began. It is estimated that by the time the war ends we shall have a staff of SOO in Melbourne. Does the honorable member for Balaclava suggest that the Government, should wait till the war ends before it endeavours to obtain accommodation? The Hirings Administration has been doing its best to obtain accommodation, but it has failed. Other appropriate authorities also have been seeking accommodation in Melbourne, but they, too, have failed. The department has worked under very great difficulties in its existing quarters, and many officers have made great sacrifices in order to carry on their work. In view of the great and growing need for additional accommodation, I consider that the provision of the temporary offices is amply justified.

The honorable member for Balaclava has urged that soldiers still in the forces, or their wives acting on their behalf, should be allowed to apply for war service homes. That proposal has been under consideration ever since the end of the last war, but responsible authorities, aware, of all the facts, have never recommended its adoption. It will be readily recognized, for example, that a soldier’s wife might apply for a home in a situation of which the soldier himself would not approve. Soldiers desire to be on the spot to make a proper selection when they lodge their applications. When we settle a soldier in a home we want him to be satisfied to remain there for the rest of his days, if he so desires. I have done, and am still doing, everything possible to provide homes for returned soldiers.

Mr Abbott:

– How is it that the Government of New Zealand is able to build homes?


– The situation of New Zealand is very different from that of Australia. New Zealand is not the headquarters of the British Fleet, and troops are not entering the sister dominion a? they are entering Australia. The honorable member for Moreton (Mr. Francis) knows very well of the difficulty that I have had to arrange for the completion of the Kenmore Sanatorium. With other honorable members, I have done my utmost to expedite that work, but it has been a difficult job. I will not delude returned soldiers by telling them that the Government will build homes for them at once, when I know that it cannot do so, nor will I make promises to them that I know full well I shall not be able to honour. Recently the commission called for tenders for the erection of two homes in Sydney estimated to cost about £1,000 each. Only one tender was received and the price was £2,100 each. Do honorable members opposite suggest that the Government should load an additional £1,100 on to soldiers who desire homes, even if they have the money available?

Mr White:

– The homes can be built by private enterprise.


– Under the War Service Homes Act the Government is required to call for public tenders for the homes it needs, and the fact that only one tender was received on this occasion is a complete answer to the honorable gentleman’s interjection. The Government is of the opinion that satisfactory homes at reasonable prices are desired by the men and women who are entitled to them, and a tender at more than double the estimated cost is by no means satisfactory. I do not intend to deceive the soldiers by telling them that we can do things which we know very well we cannot do at present. The war is still raging in the Pacific and the continued arrival of naval and military personnel in this country to carry on the war creates difficulties for Australia in relation to housing which do not exist in New Zealand.

Mr Abbott:

– Is not New Zealand at war?


– It is, but the situation there cannot be compared with that in Australia.

Mr Abbott:

– Nonsense.


– The honorable gentle man’s interjection does not alter the fact. I give honorable members my assurance that everything that can be done to secure homes for soldiers is being done. As soon as it is possible to build homes at a reasonable price they will be built.


– Upon reading this clause I find it easy to understand why soldiers are not being provided with war service homes. Subclause 1 provides -

The Minister may, on behalf of the Commonwealth, enter into an agreement with any State for the allocation of dwelling-houses amongst discharged members of the forces or classes of discharged members of the forces and other persons or classes of persons.

It will be observed that “ other persons “ are provided for in this clause as they are provided for in the clauses relating to preference, re-establishment, and vocational training. The fact of the matter is that the Government is not doing anything for ex-servicemen as returned soldiers; it does not intend to do so. The clause has been designed to override exservicemen in relation to their housing needs. The position of ex-servicemen who need homes is clearly indicated in the following letter, dated the 24th May, 1945, which I have just received from Mr. C. V. Johns, of Vaucluse: -

I am enclosing a copy of a circular which I have mailed to every listed estate agent in the metropolitan area.

I have been trying for the lastsix months to find a place to live, but without success.

I have spent pounds in advertising and spent all my spare time in the quest, tramping the city and suburbs.

Rehabilitation can only remain a phrase when a condition exists which prevents a serviceman discharged from the forces from settling down to a normal civilian way of life with his family.

The business of picking up the threads of civil life is bad enough, but the added burden of frustration and despair in trying to find a home for one’s family is better imagined than described.

The letter which he sent to every estate agent read -

I am in urgent need of an unfurnished place to live, for myself, wife and child. I will pay to £2 10s.per week rent, and I can furnish excellent business, bank and personal references. Failing being able to rent a house or cottage, I am prepared to buy one (with vacant possession) to £1,250. There must be some one in this city of one and a half million people who is prepared to let or sell a flat or cottage. Perhaps that person is in your district. Will you help me to find that person I might add that I am a returned soldier of this war, with nearly four years’ service.

That is typical of the case of almost every ex-serviceman who did not establish himself in a home prior to going to the war; and even those who had homes and let them, cannot regain possession until the Government has fulfilled its promise to alter the Landlord and. Tenant Regulations. There should be a definite move towards the building of war service homes. The Government can enter into an agreement with, and make moneyavailable to, the States. It would appear that the Minister is not strongenough to impose his will on behalf of ex-servicemen. Although the housing of these men has reached only the blue-print stage, money and materials can be found to repair the head-quarters of the Communist party and buildings that are used for trade union purposes, erect other temporary buildings, and .provide staff head-quarters. The policy of the Minister is completely defeatist. The specific purpose for which this provision was designed is disclosed by the words “ other persons or classes of persons “. The housing needs of all other sections of the community will be met before the ex-servicemen will have any opportunity to obtain war service homes.


.- The outburst of the honorable member for Wentworth (Mr. Harrison) did not surprise me in the slightest degree. I should like to hear a constructive suggestion for the alleviation of the housing position in Australia, including the needs of exservicemen and their dependants. The hill empowers the Government to take certain action in conjunction with the States. Quite a lot has ‘been said about New Zealand. That dominion is in the happy position of having only one Government to administer its affairs, whereas, because of the defeat of the referendum proposals, the Commonwealth has to reach an agreement with the States before it can deal with certain matters. Unlike the honorable member for Wentworth, I have had quite a lot of experience in home construction, and the building trade generally. In South Australia, private enterprise is going ahead with the building of homes whereever possible. We are only a small nation in point of population, and we have been required to do a colossal job. Only recently, a3 I have pointed out on more than one occasion, £30,000,000 had to be set aside to provide facilities for the British Fleet. But for that, much more material and man-power would have been available to the various States for home building. The Government does not intend to sidestep its obligations in this or any other matter. When the time is opportune, I should like money for the building or purchase of homes to be made available to ex-servicemen at a very low rate of interest, and the rate should be reviewed from time to time, because even a reasonable charge should be capable of reduction when the circumstances became more favorable. A grand idea would be for the Government to institute a scheme of insurance, under which any home in course of purchase would become the property of a widow on the death of her husband. To-day, the widow is called upon to pay interest on the amount borrowed. There is very little Oregon in South Australia at the present time, and supplies of it cannot be obtained for roofing purposes. In 1940, when we had been at war for practically a year, the imports of timber in the rough state totalled 348,098,000 super, feet. The Commonwealth Statistician advised me last Friday that our imports of timber in the rough state during the last nine months have totalled approximately 54,738,000 super, feet, or about oneseventh of the quantity imported in 1940. This drop in imports must be held largely accountable for the shortage of this necessary material for housing purposes. There is also a shortage of galvanized iron. The result is, that in South Australia practically every house now being built will have a tile roof, which needs twice as much timber as an iron roof. I have a plan of a five-roomed house which, with deep drainage and a tile roof, could be built in South Australia for £850. Without deep drainage, and with a septic tank, the cost would be £10 less. It consists of a lounge room 12 feet by 13 feet, dining-room 12 feet by 12 feet, one bedroom 12 feet by 10 feet 9 inches, another bedroom 12 feet by 8 feet, kitchen 15 feet by 11 feet, bathroom 7 feet by 5 feet, laundry 7 feet by 6 feet, and water closet 6 feet by 3 feet. South Australia needs another 100 brickmakers. Class B2 men are being released to the brickmaking industry, but because of the very heavy nature of the work stronger men are needed. I have learned from the South Australian Housing Trust that tile hangers are required. If they were available, house-building could proceed at a much faster rate. Housing was a problem long before the outbreak of war. In South Australia, not one house was built in the metropolitan area under the Advances for Homes Act, between 1934 and 1938.

On the 23rd April, 1940, the then honorable member for Dalley (Mr. Mahony) asked whether the then Prime Minister (Mr. Menzies) intended to give effect to the promise made at the previous elections by the late Right Honorable J. A. Lyons that, if returned to power, his Government would introduce a Commonwealth housing scheme, and the reply given by the present Leader of the Opposition was -

All I can do is to remind the honorable member that this country is engaged in a war which will determine whether we will need homes at all.

That was the outlook of the Opposition in 1940. On the 19th May the honorable member for Darling (Mr. Clark) asked what advances have been made under the Commonwealth Housing Act 1927-28, and whether itwould be possible for building societies to secure advances from the Commonwealth through the respective State governments under the provisions of that act. The answer given to that question was as follows : -

Under the Commonwealth Housing Act 1927-1928, advances were made by the Commonwealth Savings Bank in 1929 to prescribed authorities as under -

Nine years have gone by, and if the Opposition had given attention to the problem of housing when it was in power the shortage would not have been so acute as it is to-day. Every man, woman and child in the community is not merely an economic unit but also a potential parent, and, as a nation is built on the basis of the home, the increase of the population will be determined, to a great degree, on the encouragement given to family life. In South Australia 100 additional men are required in the brickmaking industry. Owing to the shortage of iron the building industry is in need of tile hangers. If brick-makers were released from the services the building of houses would be speeded up.


– It is a sad commentary on the Government’s conception of relative values that, in a bill of 54 pages and 135 clauses, its ideas with respect to such an important part of the rehabilitation of servicemen as their housing are expressed in one clause of nine lines. But for the Government’s concern to include non-servicemen within the scope of this bill it would not be necessary to have even that clause, for all it does is to authorize the Government to enter into arrangements with the governments of the States in order to allocate houses amongst servicemen and other persons. It is unnecessary to include anything in the bill to provide merely for servicemen, because their needs are already adequately met in the War Service Homes Act, section 50 of which states -

The Commissioner may, with the consent of the Governor-General, arrange with the Government of a State or any State Savings Bank or any other prescribed institution to provide homes for or make advances to eligible persons upon such terms and conditions as are agreed upon, not being terms and conditions which are, in the opinion of the GovernorGeneral, less favorable to eligible persons than those provided by this Act.


.- The Deputy Leader of the Opposition, the honorable member for Wentworth (Mr. Harrison), waxed indignant about the lack of provision for ex-servicemen. He spoke about the housing of the staff of the Department of Post-war Reconstruction, but complained that no provision was being made for homes for servicemen. He knows that departmental staff accommodation has no connexion whatever with this clause. The honorable member for Parramatta (Sir Frederick Stewart) quoted a section in the War Service Homes Act, but honorable members do not need to be reminded of its existence. That act goes back a lot farther than the housing problem with which this clause deals. Some years ago the Social Security Committee, in a report to this Parliament, included the following table showing the estimated shortage of houses in 1939 : -

No reliable figures were available for Western Australia and Tasmania. The total estimated shortage for all States was 112,000.

Mr White:

– It has trebled since then.


– It has certainly increased at an alarming rate, and the honorable member knows the reason for it. We have been fighting the greatest war in history, and hundreds of thousands of our men have been serving with the colours. The honorable member for Boothby (Mr. Sheehy) mentioned the difficulty, due to the war, of getting supplies of timber, iron, &c, in South Australia. In 1928, the Bruce-Page Government brought down a housing bill which was duly passed through Parliament, but not one house has been built as a result of it - not even in the Australian Capital Territory, over which this Parliament has complete control. When I entered this Parliament in 1934, I took a great interest in Canberra, and was much concerned about the housing shortage. In this regard,I cannot give much credit to the honorable member for Balaclava (Mr. White) or the honorable member for Parramatta (Sir Frederick Stewart), who were both members of a government which might have done something about housing, but did not.

Mr White:

– We built 17,000 war service homes.


– The war service homes were built all over Australia, and they were built for returned soldiers. Probably every returned man who qualifiedunder the act obtained a home if he applied for it, but some of them lost their homes during the depression. The War Service Homes Act is a very good one, although the rate of interest is too high. In 1934, the shortage of houses in Canberra was estimated at 300. People were applying for houses, and could not get them.

Mr Daly:

– And there were thousands of men out of work.


– Yes, there were thousands of men out of work, and materials were plentiful. There is a shortage of probably 500 houses in Canberra at the present time. Had things been properly managed the unemployed could have been put to work and the houses built. As it was, the unemployed went hungry, and a great many people are now homeless.

Mr Harrison:

– That is a poor argument.


– It is a very good retort to the Deputy Leader of the Opposition (Mr. Harrison), whois always prepared to make a parade of the servicemen issue in the hope of gaining some political advantage. The honorable member knows that to be true. The responsibility for the present housing shortage rests, ultimately, upon the present Opposition parties, because they did nothing except talk about housing when they might have been doing something practical. Mr. J. A. Lyons, who was then Prime Minister, said during the election campaign in 1937 that he had a plan to expend £20,000,000 on home building. How many homes were built under that plan? Not one.I am not concerned with housing for returned soldiers only; I am concerned with providing houses for the whole community. This is a re-establishment bill, the purpose of which is to fit the exservicemen into a balanced community, and to provide them, as well as others, with decent homes. As soon as labour and materials become available it will be possible to build homes. In the report of the Social Security Committee on housing, there are references to the grave shortage of houses, and to the existence of slums in every city in Australia. The problem should have been tackled by previous governments when labour and materials were available, but little or nothing was done. The act which provided for the rehabilitation of the men who fought in the war of 1914-1918 was taken full advantage of by all who were eligible to receive war-service homes. In 1927 the Housing Act was passed, but not one house was built. Again, when the Lyons Government was in office, the sum of £20,000,000 was set aside to relieve the housing shortage, but not one house was built. Consequently, there is now an acute shortage of houses for both servicemen and civilians, but until war conditions make it possible to provide labour and materials, very little can be done to relieve that shortage.


.- If the Government were to provide a house for the honorable member for Bass (Mr. Barnard) an appropriate name for it would be “ Humbug House”.

Mr Dedman:

– The honorable member for Richmond would be at home in a house so named.


– I should not be welcome there. The honorable member for Bass told us that the problem now confronting servicemen who wish to obtain houses could have been solved ten years ago. Such a statement I regard as sheer humbug.

Mr Barnard:

– I did not say that the problem could have been solved ten years ago, but that if previous governments had carried out a housing programme when labour and materials were available, the situation would have been relieved.


– The honorable member was right when he said that the crux of the problem was the supply of labour and materials. The bill provides that the Commonwealth may make money available to the States for the construction of homes. It reminds me of what happened in connexion with fodder conservation. About two years ago-


– The honorable member will not be in order in proceeding far along that line.


– I propose to draw an analogy between what happened in connexion with fodder conservation and the Government’s proposals in regard to housing. About two years ago a sum of £250,000 was made available for fodder conservation, but to-day sheep, cattle and other stock are starving, and pigs are being destroyed because of lack of food.

Mr Williams:

– I rise to order. I submit that the remarks of the honorable member for Richmond have nothing to do with the clause before the committee.

The TEMPORARY CHAIRMAN.I. have already drawn the honorable member’s attention to the matter under discussion. So long as he connects his remarks with the clause he will be in order.


– I have already indicated that I intend to connect my remarks with the clause under discussion; I propose to draw an analogy between what happened in connexion with fodder conservation and what is now proposed in regard to housing. The setting aside of a sum of money for fodder conservation did not provide fodder to meet the conditions caused by the drought, and the appropriation of a sum of money for the building of homes would not of itself provide homes.

Mr Dedman:

– Would the honorable member have the Government cease its activities in the Pacific War?


– It is useless to submit a housing programme unless something is done to give effect to it. Both the honorable member for Boothby (Mr. Sheehy) and the honorable member for Bass put their finger on the weak spot when they referred to the need to have labour and materials available for the building of houses. What is the Government doing to make labour and materials available? For two years the housing problem has grown increasingly serious, until it is now acute. Notwithstanding that about half a million men now under arms are looking forward to the day when they will return to Australia and settle in their own homes, the Government refuses every application for the release of men to provide timber, tiles, bricks, and other materials required for the building of homes. If homes are to be built, the Government will have to allocate man-power to the industries which will provide the necessary materials. If there is to be full employment after the war, men must be employed in providing the timber, roofing materials and other requisites of a national housing scheme. Unless these materials are available when the men now in the services are demobilized, tens of thousands of men will have to wait not only for homes but also for jobs. So far as the results indicate, there has been no planning by the Government. If the war with Japan were to end within six, eight or twelve months, there would be utter chaos in the building industry. When the Government is charged with being recreant to its trust in the provision of homes for the people, it falls back on the excuse that the country is still at war. That is true, but it does not absolve the Government from the necessity to take action in advance of the cessation of hostilities. It is not a satisfactory alibi to say that half a million men are in the fighting services, because large numbers of them have been doing nothing for two years at Atherton and other places in Australia.

Mr Dedman:

– Would the honorable member like me to say where those men are to go?


– Even if the Minister did say so, the Japanese could do nothing whatever about it. Almost two years nave passed since the Prime Minister (Mr. Curtin) said that Australia was safe from invasion, yet the retention of large numbers of men in Australia would seem to indicate that any morning since then we might have read in our newspapers that Australia had been invaded.

Mr Haylen:

– Does the honorable member say that it was wrong to keep large numbers of men in Great Britain, awaiting D-Day?


– That is another story altogether. In my district and in other parts of Australia hundreds of thousands of men are in various camps. I know of an armoured division which has been in the same locality for two or or three years, with its members doing nothing whatever, and anxious to get back to the job of food production or house construction or various other jobs connected with the improvement of civil life.

Mr Dedman:

– Banana-growing.


– Not one man has come back to that industry. The Minister may try to discount it, but the responsibility is on him, firstly, as Minister in charge of the Directorate of War Organization of Industry and, secondly, as Minister for Post-war” Reconstruction. He cannot laugh it off. No excuse will save him from the wrath of men unable to get homes on their discharge from the forces because of the Government’s lack of foresight. If the Government is so earnest as it professes to be, it should do something. I have no doubt that it has the best of intentions, but the best of intentions are useless without action to put them into effect.


– I think the committee has strayed from the clause before the Chair and that it would do well to return to it. The clause states - (1.) The Minister may, on behalf of the Commonwealth, enter into an agreement with any State for the allocation of dwellinghouses amongst discharged members of the Forces, or classes of discharged members of the Forces, and other persons or classes oi persons.

That clause is necessary because, as the result of the defeat of the proposed transfer of powers to the Commonwealth, it can act only as an agent of, or in conjunction with, the States in the matter of housing. For that members of the Opposition have themselves to blame, because they persuaded the people to vote “ No “ in the referendum. The honorable member for Richmond (Mr. Anthony) was extremely vocal in his opposition to the transfer of the powers. The honorable member, rather irrelevantly, made reference to the provision of fodder through the Department of Commerce and Agriculture.

Mr Anthony:

– The non-provision of fodder.


– The Commonwealth Government has no direct powers in that respect either. It did undertake to make funds available to the State Governments for the conservation of fodder, but they turned -the proposal down. That is why the fodder was not provided. The Opposition’s successful campaign against the transfer of certain powers to the Commonwealth has made this rather cumbersome clause necessary. He who sows the wind shall reap the whirlwind. “ As ye sow, so shall ye reap.” Other Government supporters have pointed out the impossibility of providing la,bour and materials for a home-building programme and at the same time wage an all-in war. I agree, with the honorable member for Bass (Mr. Barnard) that had the homes that should have been built before the war, especially during the depression, been built, the housing shortage would not have been nearly so acute to-day. Some years ago, I asked how many homes had been built under the Commonwealth housing legislation, and I was told that none had been. None have been built since. No wonder we are short of houses. This Government is not blameworthy for the position. In 1934, when I entered this Parliament, this country was in the depths of the depression, with hundreds of thousands of men workless, although there was an abundance of credit and materials everywhere. Roth man-power and money ought to have been diverted to the provision of homes instead of being allowed to remain idle, the men drawing a miserable dole and inadequately boused. Before the war, there was a shortage of 300 houses in Canberra, where the Commonwealth Government has complete authority. The Opposition parties neglected, when they were in power, to provide even sufficient homes for Commonwealth public servants in the Australian Capital. Then was the timo to build houses, not during the war, when we need every available man to defend this country either in battle or in production. When this Government assumed office it found that the country was in an entirely defenceless state, by reason of the inaction of the previous Government. If there are not sufficient homes available immediately after the war for the men and women who will need them, that tragedy will be due in some degree to the inactivity of the previous Government. Provision is made in the War Service Homes Act for the building of homes for soldiers, and the clause now before the committee is designed to give the Government authority to negotiate for additional homes for additional classes of people in the postwar period.


.- This clause is intended to authorize the Government - to enter into an agreement with any State for the allocation of dwelling-houses among discharged members of the forces, or classes of discharged members of the forces, and other persons or classes of persons.

The discussion, however, has taken a considerably wider scope, and many matters relating to housing problems generally have been reviewed. Honorable members opposite have asserted that more houses should be available to the people. We can readily agree with that statement. They have said also that private enterprise could build houses. That might be so if the necessary building materials were available. But honorable gentlemen opposite appear to forget that we are still involved in a devastating conflict in the Pacific theatre, and much timber is still needed for war purposes. The timber industry of Australia has played a mighty part in the war effort. Millions of feet of decking has been made available, and an extraordinary quantity of other timber has also been provided for war purposes. General MacArthur has acknowledged the wonderful war effort of Australia, in which the timber workers have played a worthy part. Timber for building ships, storehouses, hutments and a hundred and one other things has been provided on an enormous scale. The railway authorities also have made heavy demands on our resources. Hostels and other establishments have been built for service personnel, and now that many more British servicemen have come here, additional demands are again being made upon our timber supplies. People who see large stacks of timber in various timber yards in the Commonwealth are apt to imagine that that timber should be released for civilian use, but practically the whole of it is awaiting shipment to some distant place for use in the war effort. A decision is necessary as to whether such supplies shall continue to be reserved wholly for war purposes in order that the war may be finished in the shortest possible time, or whether a portion of it could be released for civilian use, without damage to the war effort. I notice from” press reports that a re-allocation of materials and manpower has been made in the United States of America since the termination of the war in Europe. Whether such a re-allocation is desirable in Australia can be determined only by the members of the War Cabinet who have at their command the information on which alone a sound judgment can be formed. It may be that a good case can be stated for some re-allocation of man-power and supplies.

With their customary “ nose for news “ the members of the Opposition have seized upon housing as a profitable subject for discussion. They know that almost every person in the community is concerned about the shortage of housing. Many people, we all know, are living in tents, or garages, or storehouses, or other unsuitable places, because they cannot obtain bornes. We all will readily admit that everything possible should be done to ensure that homes will be available for discharged service personnel. The Government bias promised that consideration “will be given to a re-allocation of man-power and materials, and I hope that this promise will be fulfilled without delay. No effort should he spared in pushing forward “with an adequate housing programme. It may be that some timber supplies that are , being held for war purposes oan be released for housing, but I repeat that that decision can be made only by the War Cabinet which has a knowledge of all the facts of the war situation. Some honorable gentlemen opposite have referred to New Zealand’s war effort. It is true that that dominion has made a splendid war effort, but I remind the committee that General MacArthur has said that no nation in the world has made a more stupendous Avar effort than has Australia. No doubt New Zealand has contributed greatly to war successes, but I question whether the sister dominion has done half as much as Australia.

Mr Abbott:

– About 1,500,000 New Zealand people have provided two divisions.


– The honorable member for Richmond (Mr. Anthony) said that insufficient timber was being produced. I consider that we are producing sufficient timber, but that the allocation of it is causing a good deal of our trouble. So long as vast quantities of timber are demanded for war purposes, the shortage for civilian uses must continue. However, I appeal to the Government to review the timber situation. I understand that a serious shortage of joinery exists at present and that joinery has to be imported. Here again the war situation has to be considered, for insufficient shipping is available to transport all the joinery we need.

In the course of this discussion reference has been made to the financial obligations of ex-servicemen of the last war in relation to war service homes. Many men who obtained war service homes have reported that they have paid to the commission more in interest and rent than the amount of their original contract. One occupant of a war service home has said -

I borrowed £590; I have paid back £061 5s. I still owe them £259 lis. 7d. in spite of the fact that there is £72 19s. 4d. sinking fund to my credit.

Another man has made this statement -

On 4th February, 1928, I entered into my service home and the particulars of my rentbook up to 22nd April, 1944, are as follows: Total, as per repayments book, £973 7s. 4d., balance outstanding £739 Gs., arrears nil, amount of original loan £933 10s. 5d.

This man goes on to say that he is 64 years of age now, and is unable to work. Heaven knows how he is going to continue to meet his obligations. Under the present law, it takes the occupant of. a war service home 37 years to complete his payments and become the owner. This is too long. It should be possible so to arrange repayments that the occupant becomes the owner of the home in fifteen or twenty years.


.-.! should not have risen had it not been that members of the Opposition-

Mr Anthony:

– Had it not been thai the honorable member wanted to “ stonewall “ the bill.


– That is not so. I was anxious from the beginning that this hill should go through without resort, to the party tactics to which honorable members opposite have descended. I am confident that this is a. measure which will provide a fair deal for exservicemen of. this war. It amazes me that honorable members opposite should, in addressing themselves to clause 102 which relates to housing, have attempted to make party capital out of it. Not one honorable member opposite has placed before the committee a constructive idea on the subject. One might be pardoned for believing, while listening to them, that it was only necessary to wave a wand and thousands of houses would rise up over night. As a matter of fact, we must give the ex-servicemen economic security as well as provide them with houses. Honorable members will recall that many occupants of war service homes lost them during the period between the two wars. I am confident that the people recognize the difficulties which have confronted this Government during the war. They realize that the Government is doing everything possible to ease the burden of the war upon them, and that it will embark upon an active housing programme as early as it can. It will be necessary to release some men from the services before the housing programme can be commenced. Moreover, while defence works are in progress, it is difficult to get materials for homebuilding, but both labour and materials will be made available as soon as possible. We must remember that Australia is still at war. Honorable members opposite have said that in Great Britain the authorities have already embarked upon a housing programme. Such a programme is necessary in Great Britain where half the homes have been destroyed by enemy action. Moreover, with the end of hostilities in Europe, materials and labour have again become available in. Great Britain,but Australia is still actively engaged in the Pacific war, and until Japan is beaten we must devote our manpower and our resources to the prosecution of the war. Let us remember, also, that housing is not the sole responsibility of the Commonwealth Parliament. We can act only in co-operation with the States, and this limitation will continue until the Commonwealth Parliament is clothed with greater powers. Honorable members opposite have condemned the Government for the housing shortage, but the fact that there are slums in all Australian cities is largely the fault of honorable members opposite who are members of parties that were in power for most of the time that this Parliament has been in existence.

Wide Bay

– I move -

That the question be now put.

Government members opposite are deliberately “ stone-walling “ in order to prevent us from moving amendments which would be of value to ex-servicemen.


– Such a motion cannot be accepted during the operation of the guillotine.


.- The purpose of this bill is to provide for the re-establishment in civil life of members of the forces, and to facilitate their employment. The bill is, therefore, foundational in character. Each of the clauaes- - and there are 135 of them altogether - contains a central point of greater or lesser importance. Clause 102, which we are now discussing, provides that the Commonwealth may enter into agreements with the States regarding the allocation of dwellings. That is a wise provision, and it is the central fact of the clause. I submit, with great respect, that a general discussion regarding war service homes would be irrelevant, as the main, point of the clause is that agreements may be made between the Commonwealth and the States for the allocation of” d welling houses amongst discharged members of the forces, or classes of discharged members of the forces, and other persons or classes of persons.


.-I have no desire to stone-wall the bill, but I regard this clause as of great importance. The honorable member for Balaclava (Mr. White) stated a few minutes ago that if private enterprise were given an opportunity to build houses for the people it could do so. It has had an opportunity to do that for the last 30 years, but it has not built enough of them. The lack of housing throughout Australia is featured prominently in the press, and frequent references are made to the poor quality of the houses in which many of the people have to live. The Opposition’s attack upon the Government in respect of its housing proposals synchronizes with an attempt by the press to belittle the Government , in its efforts to re-establish ex-servicemen! in civil life. The Government must provide a plan for the reestablishment of service men and women on their release from the fighting forces, but neither the labour nor the materials required for the building of necessary houses is available at present. Honorable members opposite may claim that thousands of men now in the services could be released for work on the home front. There are numerous armchair critics who consider that they know how the members of the forces should be employed, but we must leave the decision of that matter to those best able to make it. Whilst honorable members on both sides of the chamber recognize the disabilities imposed by war, I regret that members of the Opposition try to make party political capital out of this bill.

Mr Bowden:

– That remark is unworthy of the honorable member.


– My opinion is based on observations by honorable members opposite during the discussion of this measure. Owing to the defeat at the last referendum of proposals for the granting of increased powers to this Parliament, the Commonwealth cannot undertake the building of houses; but, I hope that when money is made available to the States for that purpose, the system which has operated in the past in respect of war service homes will not be perpetuated. Men who fought in t he last war have been trying for many years to discharge their liabilities in respect of their homes, and they still owe about half of the original purchase price. I hope that the money to be advanced to the States for housing will be made available at cost, so that the interest charges shall be reduced to a minimum. Since we have been able to find the money required for the manufacture of the weapons of war, we should be able to advance money at low rates of interest to those who have given invaluable service to their country in the present struggle. Ex-servicemen should not be called upon to pay more than the actual cost of the homes provided for them. It would be deplorable if they found themselves burdened with a heavy load of debtthrough the piling up of interest charges which they were unable to meet, as happened in connexion with the war service homes erected after the last war.

Clause agreed to.

Clauses 103 to 105 agreed to.

Clause 106- (4.) Where any female or parent of a person who is a member of the Forces was wholly or partly dependent for his or her support on the pay of a member of the Forces but is no longer so dependent merely by reason of an allotment of pay made to that female or parent having been suspended, that female shall be deemed to be a female dependant of a member within the meaning of this section.

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

. -I move -

That sub-clause (4.) be left out, with a view to insert in lieu thereof the following sub-clause: - “ (4.) Where any female was wholly or partly dependent for her support on the pay of a member of the Forces, but is no longer so dependent merely by reason of an allotment of pay made to that female having been suspended, that female shall be deemed to bea female dependant of a member within the meaning of this section.”.

The reason for the amendment is that, by means unknown to me, a reference to parents crept into the original draft, and has to be deleted from the bill.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 107- (4.) If the person liable to pay the principal or purchase money is a widow of a member of the Forces who died while engaged on war service, the time for payment shall be postponed so that the payment shall fall due upon the expiration of the period of twelve months immediately following the date on which His Majesty ceases to be engaged in war.

Amendment (by Mr. Dedman) agreed to-

That, in sub-clause (4.) the words “ceases to be engaged in war “ be left out, with a view to insert in lieu thereof the following words: - “ ceases to be engaged in all the wars in which His Majesty was engaged at the date of commencement of this Part”.

Clause, as amended, agreed to.

Clauses 108 to 117 agreed to.

Clause118 (3.) Where the person protected is the widow of a member of the Forces who died while engaged on war service, the protection shall continue until the expiration of the period of twelve months immediately following the date on which His Majesty ceases to be engaged in war.

Amendment (by Mr. Dedman) agreed to-

That, in sub-clause (3.), the words “ceases to be engaged in war “ be left out. with a view to insert in lieu thereof the following words : - “ ceases to be engaged in all the ware in which His Majesty was engaged at the date of commencement of this Part.”.

Clause, as amended, agreed to.

Clauses 119 to 134 agreed to.

Clause 135- (2.) During the war, the regulations may provide for the repeal or amendment of, or the addition to, any of the provisions of this Act.

Leader of the Opposition · Kooyong

– This is a very remarkable clause. It falls into two parts. The first sub-clause provides that the Governor-General may make regulations not inconsistent with this act, prescribing certain matters. I take no exception to that; it is in common form. But sub-clause 2 then provides -

During the war, the regulations may provide for the repeal or amendment of, or the addition to, any of the provisions of this Act.

That is a provision which I have yet to see equalled. It is quite true that, under the National Security Act, power was taken to the Executive to make regulations inconsistent with other statutes. But that was for reasons of urgency, which were very well understood. Here, however, we have abill which has engaged the attention of this branch of the Legislature for some time. Almost every detail of it either has been discussed, or would have been discussed, but for the limitation of time. Therefore, to a degree at least, the bill is supposed to represent the considered judgment of this chamber. Yet the very last sub-clause of it gives to the Executive the power, at its own discretion, to alter every word of. it. As honorable members will clearly see, the Executive, whoever may compose it, in the period in question up to the end of the war, may do what it likes in regard to this statute. In other words, it may amend clause 4, dealing with definitions, by introducing within the scope of the legislation classes of people who are not now covered by it; it may, at its own sweet will, alter the conditions upon which preference shall be awarded ; it may, at its own discretion, alter all the benefits that are prescribed in the legislation. For the love of me, I cannot understand why such a power should be required.We have not been told at any stage the need for it.

Mr Clark:

– What sub-clause 2 provides could be done by National Security Regulations.


– The right thing to do would be to omit sub-clause 2, because it represents the complete abandonment of parliamentary authority. I do not begin to understand how any honorable member on either side of this chamber could be prepared to say : “ This is the bill as it leaves our hands. It will become an Act of Parliament, representing the will of the Parliament. But you, the Executive, may now proceed to alter any or every portion of it, according to your own discretion “. If that provision is to be written into the statute, then the Parliament might just as well close its doors; because, if this is to become a precedent, we shall occupy months in this place hammering out legislation, and, under this most extraordinary power, the Executive will then proceed to do exactly what it likes about it. It is all very well for the honorable member for Darling (Mr. Clark) to pretend to see something that is good in this provision. He knows perfectly well that, if he were a member of the Opposition, he would protest to high heaven against legislation of this kind.

Mr Clark:

– In my opinion the same thing could be done under the National Security Act.


– I put it very strongly to the Minister, that the right thing to do is to omit sub-clause 2. I should move to do that, but that, on the failure of the amendment, there would be no capacity to amend the sub-clause. If the Minister would accept an amendment to that effect, the problem would cease to exist. But if he is determined to retain sub-clause 2, then I put it to the committee that it should be followed by a new sub-clause. My reason is that, on the language of sub-clause 2, it is highly probable - to say the least of it - that any repeal or amendment of, or addition to, any of the provisions of this act, during the war, will continue in operation after the war. The power conferred by sub-clause 2 will not cease to operate at the termination of the war, because no time limit is placed on its operation.

Mr Spender:

– Prima facie, an amendment, once made, will continue to operate.


– As the honorable member for Warringah says, prima facie, an amendment will continue to operate even after the war. If the Minister would agree to accept an amendment to omit sub-clause 2, I should be content. But lest I should not have another opportunity, I move -

That, after sub-clause (2.), the following new sub-clause be added: - “ (3.) Any regulation providing for the repeal or amendment of, or the addition to, any of the provisions of this Act, shall, by force of this sub-section, bc repealed at the termination of all the wars in which Eis Majesty was engaged at the date of commencement of this Part, when the provisions of this Act shall continue in effect as if the regulation had not been made.”.

The fact that I am moving for the insertion of that new sub-clause is not to be taken as an admission on my part, or on the part of any other honorable member, that sub-clause 2 is in any respect defensible.

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

– I do not propose, to omit sub-clause 2, or to accept the amendment of the Leader of the Opposition (Mr. Menzies). I admit that, at first sight, sub-clause 2 appears to be rather a remarkable provision; but on further examination, it seems to me, the weight of argument is in favour of its inclusion. As the honorable member for Darling (Mr. Clark) has said, it would be possible to amend or repeal any portion of the act, or add to it by means of National Security regulations.

Mr Menzies:

– It would not. That is a complete illusion.


– I have had a lot of opinions about this bill, but I have been unable to get two barristers to give the same opinion. However, that is only incidental to my argument.

Mr Abbott:

– What is the Minister’s argument; will he come to the point?


– I have said that, in my opinion, the weight of argument is in favour of the retention of this clause. This is a comprehensive measure. It is, moreover, a most complex bill; it deals with administrative affairs which have never previously been dealt with in legislation submitted to this Parliament. In .the light of experience we may find that some of its provisions will have to be altered speedily in order to meet the circumstances of the moment. We are entering upon a period when the economic conditions of this country will be in a very fluid state; they may vary from week to week. Will any honorable member say that we can now be so all-seeing, so wise, as to provide for every contingency that may arise when the demobilization of the troops takes place? Part II., Division 4, relates to “ Modification of Conditions of Entry to Employment”. In that division the Government has set out the modifications which it considers ought to be made in order that returned servicemen may be re-established quickly in certain occupations. Although the Government has tried to make the measure flexible enough to cover every contingency that might arise in connexion with the reestablishment of servicemen, it recognizes that circumstances which have not been foreseen but which may have to be met promptly may arise. Should the Parliament then be in recess, would it not be wise to have the power to alter, amend, or repeal any provisions in this bill dealing with such matters, in order that matters which need urgent attention may be decided speedily?

Mr Menzies:

– That is a gross insultto the Parliament.


– It is the intention of the Government, either at the end of the war or immediately prior to the cessation of hostilities, to introduce a measure for the enactment of any of the regulations promulgated under this sub-clause, which the Government wishes to preserve.

Sir Frederick Stewart:

– In that case, why not accept the amendment?


– The amendment does not do that at all.

Sir Frederick Stewart:

– It contemplates the same thing.

Mi-. DEDMAN. - The Government does not intend that any regulations promulgated under this sub-clause shall continue after the war unless action to continue them is taken under amending legislation.

Mr Menzies:

– That is exactly what proposed new ‘3 provides, but it would kill the Minister to accept any amendment from the Opposition. He has a mind like concrete.


– I am pointing out that it never was the Government’s intention to allow these regulations to continue after the war unless they had first been embodied in amending legislation.

Mr Menzies:

– Why did not the Minister say so earlier?


– The Government promises to do that. I was told that it would not be possible to embody that intention in the bill.

Mr Menzies:

– Does the Minister take the responsibility of saying that his advisers say that the proposed new subclause cannot be inserted in this bill?


– No; that is not what I say. I was stating the Government’s intention. My advisers said that it was not possible to put that intention in this sub-clause. I am saying now what the Government’s intention is.

Mr Menzies:

– I do not believe that the Minister ever got such advice from senior officers of his department.


– The Government will give effect to any promises that it malices. In view of the intention of the Government to introduce legislation to amend this law, either at the end of the war or before that time, so as to make permanent any regulations which may have been made in the meantime under this subclause, I cannot accept the amendment of the Leader of the Opposition.

Mr Menzies:

– We might as well live in Germany.


– The explanation of the Minister for Post-war Reconstruction (Mr. Dedman) is not satisfactory.

Mr Menzies:

– It is childish.


– It is an insult to the intelligence of honorable members. We cannot accept the Minister’s explanation and at the same time stand up to our parliamentary responsibilities. Everything that the Minister has said regarding conditions changing before the end of the war can be met under the powers already possessed under the National Security Act. Sub-clause 1 of clause 135 covers anything that the Minister may have in mind to meet changing circumstances before the end of the war. Sub-clause 2 reads -

During the war, the regulations may provide for the repeal or amendment of, or the addition to, any of the provisions of this Act.

That means that any regulations made under sub-clause 2 will stand for all time as part of this act, so that there will be no need whatever for another amending bill to be introduced. Under sub-clause 2 the Minister will have power so to alter the act as to abrogate the decisions of the Parliament; and any amendments or additions which may be made will then remain in the act, and need not be ratified. If the Minister is sincere in what he has said about the intention of the Government, everything that he has in mind can be carried out under the amendment moved by the Leader of the Opposition (Mr. Menzies). The only conclusion that I can come to is that the observations of the Minister have been made in an attempt to hoodwink honorable members. We have had other examples of the abrogation of the rights of the Parliament. We know that from time to time the Government has consulted outside bodies in order to obtain their permission to introduce legislation. Those bodies have been given powers greater than those of the Parliament. That was done in connexion with the legislation to extend the area in which the Australian Military Forces could serve, and also in connexion with the AustralianNew Zealand Agreement. In another respect, the present Government is trying to make Parliament merely a rubber stamp to carry out the wishes of Ministers who are overseas. Whatever preference to servicemen is contained in this legislation, it will be of no avail if we agree, to sub-clause 2. Throughout the passage of this bill the Minister has shown the same unreasonable discrimination towards ex-servicemen as he has shown, between the honorable member for Reid (Mr. Morgan) and the honorable member for Bass (Mr. Barnard) ; the former he has abused for saying things with which he did not agree, and to the latter he has given a cigar when he has supported th<? M mister.


.-First, in regard to sub-clause 1, I refer to the serious omission of a penalty for a breach of the preference clause.

Sir Frederick Stewart:

– The honorable member voted against the amendment moved by the right honorable member for Darling Downs (Mr. Fadden).


– At the time,I thought there was provision for a penalty, but it appears that the only penalty provided for is in respect of a breach of the regulations. No law can be effective unless provision is made for its enforce: ment by a fine or imprisonment for a breach of the law. The Minister for Post-war Reconstruction (Mr. Dedman) ought to reconsider that matter and insert, in this clause, a provision whereby the Governor-General may make regulations prescribing a fine, imprisonment or both, for a breach of the regulations or the act. Otherwise, I am sure that the preference and employment provisions will be futile. When the bill goes to The Senate a provision should be inserted, perhaps not in the words proposed by the Leader of the Opposition (Mr. Menzies). I also agree that sub-clause 2 is capable of the interpretation placed upon it by him. The Minister has given an assurance that regulations made under this sub-clause will be only temporary, but that promise would not be binding on another government, nor even on this Government. I do not visualize a change of government, but it is possible. It has happened. We could have an anti-Labour majority in this chamber and a Labour majority in the Senate. The Executive could then alter the preference provisions without reference to Parliament. The Minister should also give serious consideration to that.

Mr.Clark. - Regulations can be disallowed.


– Yes, but that would not prevent them from operating for a time. I see no reason why the position should not be clarified. Time is against us now, but I think the Minister should clear the position by an amendment inserted in the Senate.

New England

– The Minister for Post-war Reconstruction (Mr. Dedman) said that at first sight this was a remarkable clause. I believe first sight is the best. People claiming second-sight are called fakirs; in this sphere they could be cunning deceivers of those for whom they are legislating. I believe this clause was inserted to enable the Minister to carry out his promise to the Trade Unions convention in Melbourne that although a bill to give preference to soldiers would be passed it would be made ineffective.

The CHAIRMAN (Mr. Riordan).Order ! The time allotted for the remainder of the committee stage of the bill has expired.

Question put -

That the amendment (Mr. Menzies’s be agreed to.

The committee divided. (The Chairman - Mr. W. J. F. Riordan.)

AYES: 16

NOES: 37

Majority . … 21



Question so resolved in the negative.

Clause 135, the remainder of the bill, and the new clause circulated by the Government agreed to; bill reported with amendments.

CirculatedNew Clause. - After clause 58, insert the following new clause: - “ 58a. A person shall not bo entitled to receive any assistance or benefit under any of the last three preceding sections if that person is entitled to receive the like assistance or benefit from the Repatriation Commission.”.

Leader of the Opposition · Kooyong

– I move-

That the bill be now recommitted toa committee of the whole House for the reconsideration of clause 75.

This is one of the clauses which could not be discussed because of the limitation of time. It provides -

The rate per week of the re-employment allowance payable to any person shall be reduced by the amount (if any) of -

any pension payable to that person or to any dependant of that person;

any allowance (including sustenance allowance) or workers’ compensation payable to that person or to any dependant of that person under any law of the Commonwealth or of a State or Territory of the Commonwealth; and

any amount earned or derived by that person from any permanent, temporary, casual or intermittent employment or occupation.

That provision is gravely discreditable to the Parliament because the effect of it is that if a man who is seeking a reemployment allowance under this legislation happens to be receiving a military pension or a pension in relation to some disability, the amount of such pension is to be deducted from his re-employment allowance. Consequently, if the clause remains in its present form an important principle in relation to service pensions and allowances will be completely set aside. The Government may not be interested in this matter, but the people of Australia will be greatly interested to know that the Government has introduced and forced through Parliament a provision the effect of which is that, whereas allowances in respect of payments received from a trade union, or payments received from a friendly society, will not be deductible from a re-employment allowance, an allowance which an exsoldier may receive because he has suf fered some disability in the service of his country will be deductible. The limited time available does not permit me to say much on the subject, except that this is a shameful provision and that it is therefore desirable that honorable members should be tested by a division to show where they stand in relation to it.

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

– I cannot, agree to the recommittal of the clause, for honorable gentlemen opposite would have had ample time to discuss it had they not, at an earlier stage, adopted stonewalling tactics.

Mr Menzies:

– I ask the Minister not to stonewall now, but to say whether he proposes to adhere to the clause or not.


– I oppose the recommittal of the clause and will give my reasons for so doing. Honorable gentlemen opposite wasted time in considering other provisions of the bill.

Sir Earle Page:

– I rise to order. Is the Minister entitled to accuse honorable members of having wasted time, seeing that the business of the House was in the charge of the Chair?


– The Leader of the Opposition (Mr. Menzies) has said that no time was available at the committee stage for the consideration of clause 75. The Minister is in order in stating why time was not available for the purpose.


– For hour after hour, lastWednesday, honorable members opposite discussed one provision of the bill.

Mr Menzies:

– It was a most important provision.


– That is perfectly true, but that was not a justification for honorable gentlemen opposite repeating the same arguments over and over again. On oneoccasion at least an honorable member took his second period of fifteen minutes in committee in order to repeat the identical arguments that he had used in his first fifteen minutes. Ample time was available at an earlier stage for the consideration of this clause. However, time is short now, and in order to show the insincerity of the protestations of the Leader of the Opposition on this matter, I point out that the provisions of clause 75 of this bill are exactly the same as provisions which appear in the Australian Soldiers’ Repatriation Act which was passed by Parliament after the last war, during the time a government supported by honorable gentlemen opposite was in power. The provision has remained in force throughout the period between the two wars. Honorable gentlemen opposite had many opportunities to alter it had they desired to do so.


– Order ! The time available for remaining stages of the bill has expired.

Question put -

That the bill be now recommitted to a committee of the whole House for the reconsideration of clause 75.

The House divided. (Mr. Speaker - Hon. J. S. Rosevear.)

AYES: 17

NOES: 38

Majority . . . . 21



Question so resolved in the negative.

Report adopted.

Bill read a third time.

Sitting suspended from 6.8 to 8 p.m.

page 2193


Second Reading

Debate resumed from the 22nd March (vide page 820), on motion by Mr. Chifle y -

That the bill be now rend a second time.

Upon which Mr. Fadden had moved by way of amendment -

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

  1. 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.
  2. That the note issue should be limited by statute. (3.) 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 ensurea co-ordinated policy.
  3. 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 banks.”

.- I have the honour to belong to a profession which realizes the need for the change which the march of circumstance and the progress of invention throughout the world bring. I therefore approach the matter of banking reform in a constructive way, as I did in 1924 and 1930. The records of Hansard will show how, on both of those occasions, I tried to make the proposals fit existing conditions, and prepare for the future. I regret that a decision of caucus precludes me from making my special knowledge available to the House and tha country, especially as in 1930, as the result of an interesting and constructive debate, Mr. Theodore, the Labour Treasurer, accepted many of our amendments, and his bill was finally carried in this House without division on the second and third readings.

Mr. Theodore, on the 1st May, 1930, said on the second reading of the Central Reserve Bank Bil] -

The principal obstacle in the way of such (central banking) development was the attitude towards the Commonwealth Bank of the private trading hanks. They declined to deposit any considerable portion of their reserves with it. because they realized that such reserves might be used to further its active competition with them. One cannot blame the managers and controllers of the private banking institutions for that attitude, They realized that in the Commonwealth Bank they had a competitor of tremendous power; and it was unreasonable to .expect them to strengthen that competitor by handing over to it large proportions of their reserves. A great many commentators on the Australian banking system have pointed out that the Commonwealth Bank cannot function properly as a central reserve bank while it is in active competition with the private banks. The present Government, recognizing this, has brought down the measure we are now discussing.

He went on to say -

We must, however, recognize the rights of the private trading banks, and if we want a central reserve bank in Australia it must be an institution separate from the Commonwealth Bank. This bill proposes to set up -such an institution.

Mr. Theodore was quite definite as to what should be done to overcome this injustice. He proposed, as did the then Leader of the Opposition, Mr. Charlton, in 1924 when I introduced the bill that constitutes the present form of the Commonwealth Bank that -

The trading banks shall deposit 10 per cent, of their demand liabilities and 5 per cent, of their time liabilities with the central reserve bank; in other words they will deposit 10 per cent, of the amount of their current accounts and 5 per cent, of the amount of their fixed deposits with it. Therefore, at the outset the central reserve bank would have a minimum reserve of approximately £20,000,000, of which between £16,000,000 and £18,000,000 would represent deposits made by the trading banks and the balance would be made up of amounts to the credit of current accounts with the various governments doing business with the banks. The Commonwealth Bank would be included with the trading banks; the Savings Banks would not bo so included. The Commonwealth Bank will be under exactly the same obligation as the other trading banks to keep a proportion of its reserves with the central bank.

At this stage of world affairs, there is no place in the Commonwealth or any other parliament for the old “Back to 1912 Brigade”, or in this discussion for the old Labour lie that my reforms in 1924, which increased the powers, functions and strength of the Commonwealth Bank, ruined it. There may be a place for this brigade in our lunatic asylums with those who converse with reincarnated Napoleons, Caesars and Queen Besses, or on the Yarra bank, or in the Sydney Domain.

The figures which illustrate the growth of the ‘Commonwealth Bank prove that the charge that it was destroyed by the Bruce-Page Government, when it was given central banking powers and functions, is unfounded’. The belated conversion of the Treasurer (Mr. Chifley) to my view of the necessity for a strong central bank is seen in the statement in his speech, “ The principal function of the Commonwealth Bank must be to fulfil its responsibilities and duties as a central bank “. The first sentence of the explanatory memorandum of the Treasurer is - “ The main purposes of the bill are (a) To strengthen the central banking functions of the bank.”. Shades of the stalwart Labour opposition of 1924 will arise from their graves, since their whole contention was - as Labour propaganda has been ever since - that the Commonwealth Bank was destroyed by being given central banking functions. The fact is that it has not since ceased to grow. It is the most active “ destroyed “ creature that I have ever seen. In truth, it is a very lusty, growing child as these figures show -

The Rural Credits Department, which I established in 1925, had lent £125,000,000 for the orderly marketing of primary products until the beginning of this war, and the department has since advanced an additional £225,000,000 for this purpose. Another measure of vitality is the fact that, whereas in the last war *the Commonwealth Bank acted as agent for the Government to raise £18S,000,000 in loans, in this war it has raised over £1,500,000,000 by means of loans, treasury-bills, and advances. In fact, the board created by me has, during the present war, earned the highest praise from the Government for the manner in which it has discharged its obligations. It has met the wishes of the Government 100 per cent, and, in grateful thanks, is now having its head cut off.

I had better nail down, at once, the lie that the Commonwealth Bank, in some mysterious way, by manipulating the note issue, enabled the trans-Australian railway to be built and most other public works in Australia to be carried out, with money obtained free of interest. The stark fact is that, until I gave the Commonwealth Bank Board control of the note issue in 1924, the ‘Commonwealth Bank had nothing whatever to do with the note issue, which was entirely .controlled by the Treasurer. The Treasury control of the note issue in Labour banking legislation was always a sore point with Mr. King O’Malley, who fought strenuously against it, and for its transfer to the Commonwealth Bank. This legislation, in effect, gives to the Treasurer practically complete and sole control of the note issue.

The history of the Commonwealth Bank,’ the actual statements of the Treasurer in introducing this bill, and authoritative figures dispose completely of the Labour parrot cry that the abolition of the Commonwealth Bank Board, and unfettered political control of the note issue and of banking by the Government, would prevent all monetary ills.

Immediately after the last war, when the Commonwealth Bank was under the control of a Governor, and the note issue was in the hands of the Treasurer, Australia passed through two very acute periods of monetary tension in quick suc cession. Although money was not particularly hard to obtain, in Australia in 1920, this country, with large commitments to meet in Britain, found that it had to pay an excessive amount to remit money, and, in many cases, it was impossible to effect remittances at all. Our credit was seriously impaired, and it was difficult to get the equipment necessary to rehabilitate the country and build up new industries. In 1922, while there was still a Governor in sole control of the Commonwealth Bank, the exchange position was entirely reversed. It became impossible to transfer to Australia moneys realized by the sale of Australian products abroad, or moneys raised abroad for Australian development. The money market became so tight in Australia that it was very hard to get money for desirable purposes. The rate of interest for governmental loans greatly increased, and, automatically, the rate of interest on private loans also increased. The reason for the changes which I made in 1924 with regard to the Commonwealth Bank and its control was to give to the bank power to overcome such difficulties in the future. . This it has done very ably, in all the circumstances which it had to meet. The recorded facts of history show that those reforms of 1924 enabled the immediate crisis to be handled, ensured expansion of the Commonwealth Bank itself, and strengthened the whole banking structure into a symmetrical, and well-balanced system of central banking, without interfering with existing functions of the Commonwealth Bank.

Those reforms substituted for one-man control the management by an independent board, its members retiring on a seven-years’ rotation plan, were drawn from all representative interests in the Commonwealth. The Commonwealth Bank was made the keystone of the financial arch of Australia and the pivot of Australian banking by making it a bank of issue, deposit, discount, exchange and reserve. To this end the note issue was, for the first time, placed under the control of the board of the bank. The board was given power to fix and publish its discount rate. The Commonwealth Bank was given resources to make this discount rate effective by the legal provision that all banks should use the Commonwealth Bank as a clearing house and settle all balances between them by cheques drawn on the Commonwealth Bank. This necessitated every bank keeping cash funds with the Commonwealth Bank. These to-day total over £200,000,000. The capital of the bank was, at that time, increased to £20,000,000. All banks were required to furnish full statistics on a uniform basis to the Commonwealth authority. The bills now before the Parliament maintain all these reforms, except that of an independent board. This the Treasurer replaces by an advisory council completely subservient to the government of the day and at the same time makes other dangerous changes.

The parrot cry of the Labour party over the last twenty years has been that the trading banks have strangled the Commonwealth Bank. The manner in which this alleged strangulation has taken place by the trading banks putting their funds in increasing amounts on deposit with the Commonwealth Bank illustrates that it has been an internal rather than an external process. In 1923, private individuals had £9,500,000, the trading banks £5,882,000 and State and Federal Governments £14,000,000 on deposit with the Commonwealth Bank. In 1944, the position of the Commonwealth Bank was that private depositors had £136,000,000, the trading hanks £223,000,000, and governments £219,000,000 on deposit. Whereas, immediately prior to the passage of the Commonwealth Bank Act of 1924, the trading banks’ deposits were the smallest of the three types of deposits, to-day they are the greatest. Throughout the war, the trading banks have given 100 per cent, co-operation to the Government. They have made a special voluntary arrangement to limit their profits and to freeze in the Commonwealth Bank special deposits due to increased war expenditure, as was set out in the Fadden budget of 1941. This voluntary arrangement was afterwards incorporated in a National Security Regulation .by the present Government, to make the voluntary act of the trading banks look as if it had been done under duress. For this good work and 100 per cent, co-operation, the trading banks also are to have their heads cut off by the Government’s legislation in grateful thanks.

In this debate I shall try to propose reforms that will ensure progress over the next twenty years. But before dealing with any change at all, I should like to make this point : In this distressed world, with so many things hopelessly out of joint, it is wise and prudent to hold firmly to those organizations which have functioned, or are functioning well, and to concentrate our energies on reforming those aspects of our political and economic machinery which are obviously not working satisfactorily. Our banking machinery has operated very well during the strain of war years. Therefore, revolutionary change is not indicated by the facts of the case. The Commonwealth Bank already belongs, and has always belonged, to the people. All of the arguments of the Minister for Post-war Reconstruction (Mr. Dedman) on this point are therefore wide of the issues of this bill. Those issues are whether the people, through their parliamentary representatives, should determine the control and policy of the Commonwealth Bank by a proper legal charter, or whether .the Government of the day should be a’ble to over-ride its control and determine its policy at the changing whim of caucus. Before dealing in detail with the proposed changes, I wish to state as I shall later show, that the changes provided for in the banking measures now before the Parliament, go far beyond changes of mere banking structure. They threaten the lives and liberties of present and future generations and the future of our representative institutions.

The war has taught Australia that it needs more people for its defence and security. At the very least 20,000,000 people are required to hold this country. From where shall we get them? Our natural increase is not enough. Statisticians say that we shall be fortunate if Australia gets an extra million people in the next 30 years from its natural increase. Therefore, we must attract migrants in order to obtain the additional 12,000,000 we need. Migrants will be attracted only if amenities are offered to them equal to those they now enjoy. The provision of such amenities involves expenditure of large sums of money. I pointed out in Parliament a few weeks ago the need for the expenditure in the next ten years of at least £100,000,000 on a continuous programme of electricity and water supplies. This expenditure must be additional to ordinary expenditure by governments on housing, schools, hospitals, railways, and other similar services. Australia can get money sufficient for all these purposes only if we have a continuous, settled financial policy that would give confidence both to local and overseas investors. Confidence is, and must always be, the ultimate basis of all borrowing. Changes in our monetary system should, therefore, be gradual and evolutionary, not revolutionary. They should be based on reason and experience, not on catch or parrot cries, or twenty years’ old prejudices.

The necessity for changes should be shown clearly and unmistakably before being made. The changes should conform, if possible, with standards generally recognized throughout the countries from which we hope to get people and capital investments. I am disappointed that, in his second-reading speech, the Treasurer did not tell the Parliament and the country the whole story of war finance in Australia. This story would have shown how the present financial system had stood up to that strain and the defects that became evident. By such a story, he might have been able to give some justification for changes in our banking system. When I reformed the Commonwealth Bank in 1924, I gave its history in both war and peace finance. I gave instances showing where the system had worked well and of where the system had broken down, and I gave reasons for the changes I made. These changes, according to the Treasurer’s quotation of my 1924 speech, established banking practice in Australia for the last 21 years. That policy enabled, by the confidence thus engendered, a huge monetary war effort to be made that challenges comparison, relatively, with that of any other country. Now, without any valid reason, the Treasurer abandons principles which have hitherto been universally recognized as essential to the maintenance of confidence, and seeks to establish a political financial dictatorship outside the control of Parliament. Here are four examples of this -

  1. The statutory limitation on the growth of the note issue is to be removed.
  2. The Treasurer can reverse the expert policy of the bank without reference to Parliament.
  3. The Treasurer can direct the use of deposits, both in private and government banks, without reference to Parliament.
  4. The Treasurer is given power to prohibit by regulations the import and export of any goods.

The Banking Bill gives to the Treasurer power to prohibit by regulation, without previous inquiry by the Tariff Board, the import or export of any article. As Parliament may not be in session, such regulations cannot be disallowed and incalculable damage may be done in the meantime, as was the case in connexion with the embargo on sheepskins during the depression.

An independent Commonwealth Bank Board, with its members retiring in rotation every seven years, is to be replaced, on the plea of necessity of control by experts, by a governor who is to hold office subject to good behaviour, and an advisory council of civil servants. On this council the governor, though chairman, has no vote; but, when a policy has been determined by its expert opinion, the Treasurer may direct a reversal of that policy without bringing either his direction or the reasons for this extraordinary action before Parliament in any way. Surely, when the Government insists so much on the value of expert control in these highly technical and important matters, the Treasurer should be compelled, before any change is made, to bring down for the consideration of the Parliament, both his direction and the reasons that impelled him to jettison his own appointees’ advice. I shall move in committee in that direction.

The bill provides that the Treasurer may direct the manner in which deposits are to be used. It is laid down in the Constitution that the Treasurer may not disperse the proceeds of taxation or of public loans except by appropriation of the Parliament ; yet it is proposed to give him authority to dispose of the people’s savings without even having to obtain the consent of Parliament.

This proposed set-up, and especially this usurpation of the functions of the Parliament by the Executive cannot engender that confidence in investors on which our whole future must rest. It cannot even give lasting confidence to the party in power as it will some day be the party out of power. 2To real reason has been given for the political control of the whole banking structure, or for the removal of the present safeguards against inflationary action. The Government has taken into a garage its banking motor car needing slight repairs, such as the fixing of the wind-screen wiper, and brings out the car with its foot and hand brakes taken away, as well as all the low gears, and with the throttle of the accelerator bent so that the car can travel only at full speed ahead, in top gear, with the engine racing towards the abyss of destruction.

The history of the existing Australian banking machinery shows there is no justification for political interference. The banking reforms needed are quite different from those proposed. I believe all necessary reforms could be carried through Parliament unanimously, and the acute division of the nation, which these proposals must bring about, could be avoided in war-time.

Despite Australian adherence to freer international trade under the Atlantic Charter, clause 29 of the Banking Bill makes possible a closed Australian economy, more rigid than the German pre-war system. In war-time, or in periods of acute emergency, temporary provisions of this nature may be necessary, but they should be brought in by special legislation. These provisions are now proposed to operate in peace-time. The changes made by this legislation are successive steps that can lead to inflation without any parliamentary control to check them. The establishment of this political fiscal dictatorship will place at the unrestrained whim of the government of the day, not merely the taxes levied on the people of Australia, but also the savings of every individual wherever deposited - either in government or private banks.

Through the Treasurer, caucus, dominated by the outside organizations of its militant trade unions, can direct the investment of these deposits; can determine the industries in which they are employed, and, then, by an embargo on imports and exports essential to the progress of these industries, can, if it so desires, through outside influence and behind the back of Parliament, destroy those industries.

By the removal of the existing limitation on the note issue, for which the bill provides, the Government declares, in effect, that the sky is to be the limit. The Treasurer is to be given complete authority in this regard. He can override the decision of Parliament. There is to be no limit to the note issue and no reserve against the notes issued. Thus there will be no obstacle to inflation.

Let us look at these steps in their order : The first is the abolition of an independent Commonwealth Bank Board. The constitution of this board ensured continuity of a banking policy arrived at after consideration of the widest points of view. This was secured by two features of the board. The first was that the board consisted of the Governor of the bank, the Secretary of the Treasury and six other members appointed for their special knowledge of agriculture, manufacture, industry and finance. The second feature was that those members were each appointed for seven years, but their terms of office did not coincide - each one retiring in a separate year. This arrangement gave an opportunity of appointing first-class men to the board, ensured representation of very widespread interest, secured continuity of policy, and ensured that any radical change of outlook of the board must - as the Constitution provides a general election every three years - be voted on ‘by the people as a whole before being permanently adopted.

During the 21, years that the Commonwealth Bank Board has been in existence, the appointments to it have been so satisfactory, that governments of various political complexions have consistently re-appointed members of the board originally appointed by preceding governments. Thus, Mr. Duffy, originally appointed by the Scullin Government, was twice re-appointed by succeeding governments. Sir Claude Reading and Sir Robert Gibson were also re-appointed for further terms.

The Government proposes to eliminate this board, not on the ground of its inefficiency, or because it has not done a good job - the Government admits that it has done an efficient and patriotic job and has met the wishes of the Government on matters of major policy - but on the extraordinary ground of difficulty in finding suitable appointees in the future’. I n place of the board, the control of the hank will be in the hands of a Governor and an advisory council consisting of the Deputy Governor, and .Secretary of the Treasury, two other public servants and two nominees of the bank. That is to say, it narrows its choice of persons available to fill the position of directing the bank to servants and members of the staff of the Commonwealth Bank instead of availing itself of the most suitable members of the community. Both the Governor and the Deputy Governor are to be appointed by the Treasurer. They will have no security of tenure. They should, at least, have as secure a .tenure of office as have judges. The advisory council is to be composed entirely of public servants or bank officers who will be entirely dependent on the Treasurer for their promotion and the success of their careers. On this extraordinary advisory council, the Governor will not have a vote. He, apparently, cannot be trusted. The Governor is to be a dog which the Treasurer wall keep to bark, while he does the barking himself. The subordination of the Governor to the Treasurer is more explicitly set out in clauses 9, 22 and 27 of the bill. Clause 0 sets out that “ The bank shall, from time to time, inform the Treasurer of its monetary and banking policy”. An endeavour will be made to reach agreement. If unable to reach an agreement, the Treasurer may inform the bank that the Government will accept responsibility for adoption by the bank of the Government’s policy, and the bank shall then give effect to that policy. To ensure that the Governor shall be in the pocket of the Treasurer, clause 27 provides that “ The Secretary of the Department of the Treasury and the Governor shall establish a close liaison and shall keep each other fully informed on all matters which jointly concern the Department of the Treasury and the bank”. The Secretary of the Treasury also will have a seat on the advisory council.

The importance of this close liaison and the effect of this political control are especially significant in connexion with the abdication of parliamentary control of the monetary and fiscal policy of Australia, including the prohibition of the importation or exportation of goods. Clause 29 of the Banking Bill sets out, inter alia, that -

Where the Governor-General is satisfied that it is expedient so to do he may make regulations making provision for and in relation to the control of foreign exchange and in particular for or in relation to the prohibition of the importation or exportation of goods unless a licence under the regulations to import or export the goods is in force.

That is to say, the Treasurer can, without reference to the Parliament at all, impose import and export embargoes at his sweet will. Surely, any emergency sufficiently great to necessitate the exercise of this extraordinary power which may destroy whole businesses, or even whole industries, not solely amongst Australian citizens but also in friendly trading countries, is sufficiently great to justify the immediate calling together of Parliament to ratify such action.

During the depression, extraordinry action in Parliament was taken by the Commonwealth Government in this connexion. Under the exercise of the tariffmaking power, a tariff schedule or an embargo operates immediately it is laid upon the table of Parliament, so that no time is lost in bringing it into effect. The time necessary to prepare and adjust in the Treasury or the bank such drastic proposals cannot be less if they are to be imposed sanely and wisely than the time necessary to summon Parliament. In f act, in times of such emergencies, Parliament should be sitting continuously.

Associated with this extraordinary power for the Treasurer to act behind the back of Parliament, is the policy which provides for his indirect control of the advances by the Commonwealth Bank and of each trading bank. This power not only determines the general policy of advances, but may also direct the class of purpose for which advances may, or may not, be made by banks. Despite the. Treasurer’s statement that he is trying elsewhere in the Banking Bill to protect depositors, this legislation gives to the Government of the day, control of the deposits of individuals whether they be placed in the Commonwealth Bank, government, banks, or private banks. Insofar as deposits in the Commonwealth Bank are concerned, they are to be controlled by the Governor who, in turn, will be controlled by the Treasurer. He is controlled by labour caucus which, in turn, is controlled by outside trade union organizations and executives. Under this power, the deposits of private banks also, are at the mercy of the Commonwealth Bank and the same string of controllers. After this legislation is passed the control will be in the hands of those whom I have mentioned, without reference to Parliament. It surely is an anomaly that the individual savings of the people should thus be placed at the mercy of extra-parliamentary control when the Constitution provides that the expenditure of revenue obtained from taxes and loans raised by the Government must, in the last analysis, be controlled by the vote of Parliament. Under this legislation, the savings of the people are to be placed in a much worse position, insofar as control by the owners is concerned, than the taxes which the same people have paid, the control of which has passed from them. The Banking Bill specifically removes from the control of the trading banks, in the special accounts section, the control and use of approximately £200,000,000 of deposits which the customers of trading banks have lodged in the course of their ordinary business.

Before dealing with the Government’s justification for this second form of control of the trading banks, I wish to mention the next step towards the danger of inflation in the elimination of any limit to the amount of the note issue, or any reserve of gold or sterling, or other in- ternational exchange value for the note issue. Insofar as the issue of notes is concerned, the Government has said that the sky is the limit. The amount ot currency is to be entirely at the direction of the Governor of the Commonwealth Bank, who will be under the special political control of the Treasurer for that particular purpose. Most central banks have some form of limitation of the issue of notes. Sometimes it is an upper limit above which the Government and the Governor cannot go without special enabling legislation. That was suggested by the Royal Commission on Monetary and Banking Systems. Most countries, however, provide for a fractional reserve of gold or sterling, or something that can be converted into international exchange, which determines the total volume of the currency that can be issued.

When the Commonwealth Bank was constituted, every £1 note had to be backed by a gold sovereign. Then the backing became one gold sovereign for every four £1 notes. Later it was changed to provide that the reserve could be either sterling or gold, or very liquid securities of international standing. In future there will be neither limit above nor reserve beneath our note issue. Therefore, there is no real obstacle to any measure of note inflation that may be desired by the government of the day without reference to Parliament.

Two proposals in this legislation are pertinent to this position. They are, first, the statutory establishment of these special ‘ accounts in their present form and amount, and secondly, the grouping together, under the control of the Governor, of a central reserve bank, the general trading banks, the Rural Credits and Mortgage Departments and the Savings Bank. Though the Industrial Finance Department is to be placed under a general manager, to be appointed by the Treasurer, the Commonwealth Bank will be given power to make advances to the Industrial Finance Department up to £1,000,000, and the Savings Bank to be permitted, under clause 98 of this bill, to make unlimited advances to the Industrial Finance Department, according to the decree of the Governor of the Commonwealth Bank. As regards the grouping of all these banking establishments under the direct or indirect control of the Governor of the Commonwealth Bank, I have only this to say: That, if it were difficult, as the Treasurer says, to find among men engaged in manufacture, agriculture, finance, and commerce, six men qualified to co-operate in the management and direction of the Commonwealth Bank, it must be a much more difficult task to find a super-man capable of carrying such a terrific load for he must handle fluid, semi-fluid, longterm, and short-term securities, and control the central bank and all these other subsidiaries, or excrescences.

The reason given by the Treasurer for impounding the special deposits of the trading banks to the amount of 200,000,000 is that if they are not frozen and controlled by the central bank, their use will rapidly lead to inflation. Ko provisionals made in the legislation, however, to prevent the central bank from lending these huge frozen deposits of the trading banks to its fresh rivals in the field, the Industrial Finance Department, and the general trading section. The position is roughly this : The deposits are now used by the Government, and the Commonwealth Bank would hold treasurybills and Government bonds against them. When they are being repaid the logical way out for the Commonwealth Bank would be to sell Government securities in the open market to the amount to which withdrawals are made. That would extinguish bank deposits to approximately the same amount and would be a powerful brake on any inflationary tendency. The only other way would be to issue new currency, either notes or bank deposits to the amount of the withdrawals, or a portion of that amount, which would obviously be inflationary. The only reason for such action would be to leave the bond market free for new government loans. The whole matter, therefore, resolves itself into the question of whether the Government and private enterprise can both get their requirements in the post-war period and, if not, whether the Government should have priority over private enterprise. Priority over investable funds is an easy method of security priority over labour and raw material resources. The deposits do in fact provide a neat piece of machinery for freezing out private enterprise. That appears to be the Government’s reason foi instituting this form of control which will enable it to have a free market for the large expenditure apparently contemplated in the post-war period. As soon as the war is over and it becomes possible to obtain all the commodities now unprocurable because of rationing and war-time shortages and conditions, there must be some expansion of trade, expansion of deposits and expansion of advances. If, as this legislation indicates, the deposits and corresponding advances of the trading ‘banks are to be fixed at the 1939 level, other governmental institutions must supply the urgent need for accommodation. In other words they will provide it from the money of the depositors of the trading banks which has been deposited with the Commonwealth Bank. I believe that a government trading bank alongside private trading banks provides a good check on private trading banks and, converse^-, that private trading banks provide a good check on a government trading bank.

Banking practice universally applies three criteria to determine a credit-worthy borrower. These three standards are (1) The personal factor; (2) the potentialities of the enterprise; and (3) the security offered. The order of these three principles is important. Most bankers would agree with the order I have named. Some might feel inclined to give the first two equal importance, or perhaps, even put the potentialities of the enterprise before the personal factor, but all would put the security offered in the third place. The reason is very obvious. No bank which cherishes its reputation cares to be associated with foreclosures. The security is taken in case of accident, since banks must protect their assets in the interests of their depositors, but no bank wants to take over a security - its work is not to run a business or property, but to lend money. Unfortunately, in any government trading bank, and this would apply both to the general trading bank and the Industrial Finance Department, the government servant is not so free as is the servant of a ‘private institution to discriminate between borrowers on the basis of personal factors. In a government institution a definite rule must be laid down insofar as the margin of security is concerned. It will be noticed that in practically all of the Government’s banking legislation, as in the Mortgage Department of the Commonwealth Bank or in connexion with housing, a definite margin is stated in the law. No servant of a government bank can afford to give one man an 80 per cent, advance because he thinks well of his personal character or business capacity, and another, with the same security, only 50 per cent. There would immediately be suggestions of political partisanship or favouritism. This aspect does not arise in the case of private banks. They must take their losses with a grin and bear them. Losses of a public institution ultimately become known to the public. This difference tends towards rigidity. I feel that a governmental institution, by reason of its tax-free capital and its immunity fromtaxation generally, is already placed in a sufficiently favorable position vis-a-vis trading banks to overcome this handicap. Competition by trading banks after allowing for this preferential position for the government institution, will be all to the good of the community and will keep all banks, whether governmental or private, alert to the needs of the nation. If I had time, I would show how much less generous this measure is with regard to the use of savings bank and rural credits department funds than the existing legislation, but I shall deal with that in committee.

Therefore, I urge the Government to turn from the reactionary path it is taking; to retain the liberality of existing measures; to preserve the machinery which has stood so well the test of war strains; to carry out in war-time only those reforms which experience shows are urgently necessary; to maintain the supremacy of Parliament over policy; to avoid placing too tight a legislative strait-jacket on our monetary system; and to allow sufficient elasticity for its evolution along the lines our national genius may lead.

Mr. WARD (East Sydney - Minister for Transport and Minister for External

Territories) [8.45]. - One would imagine from the speeches of Opposition members that the Government proposes by its banking legislation to interfere with the working of. a machine which was functioning satisfactorily, hut I do not agree with that view. What the Government proposes to do is what all those who voted “Labour” at the last general elections expect it to do, namely, commence to implement its financial policy. I find myself in the position where I must heartily support this measure and the Banking Bill, but that does not mean that I am not somewhat disappointed that the Government is not prepared to go much farther in the implementing of that policy than is provided for in these measures. The Leader of the Opposition (Mr. Menzies) and his colleagues have claimed that they are not concerned about the shareholders in the private banks, and that what they were concerned about is the effect that this legislation will have on the people. The Leader of the Opposition having impressed that upon the House, then devoted his whole time to telling us how unfairly we were treating the private banks, and that we were forcing them out of operation by a process of strangulation. I do not desire to spend much time replying to the right honorable member for Cowper (Sir Earle Page), for it is sufficient to say that those who read his speech will know why one of his colleagues called him “ the tragic Treasurer “. However, the right honorable gentleman did refer to the Atlantic Charter, and it is significant that his only reference to it was that it provided for freedom of trade amongst the countries of the world. He said that by the use of> these powers the Government might strangle trade and make it impossible for the terms of the Atlantic Charter to be adhered to. The Atlantic Charter contains other provisions. It provides that the peoples of the world shall be given freedom from want and freedom from fear. Those two provisions can not be implemented in this country unless the democratically elected Government of Australia has the power to determine financial policy in order that it may make possible a policy of full employment. Early in the war, the Menzies Government, which had left this country defenceless, wanted the workers to respond to the call to arms and to make great sacrifices. That Government promised that in return for those sacrifices we were to have a new order when the war ended. In a speech early in the war, the right honorable gentleman said that he did not expect that we should ever return to the conditions that had existed before the war. Members of the Opposition have now forgotten those promises and have rallied at the call of their real masters to protect the citadel of reaction. They are -citing all the terrible deeds that the Government could do if it misused the powers that it proposes to take under these measures. “We could do terrible things under legislation already on the statute-book if we desired, hut we do not. What we desire to do is to use our powers beneficially for the people. We want to ensure that members of the forces when they are demobilized and workers in war industries when they are discharged shall have, not so much the preference that the Parliament has been debating during recent weeks, and which will be unnecessary, but the right to full employment. The right to live entails the right to work. That is why we need this banking legislation. Honorable gentlemen opposite have argued that economic security cannot be obtained by financial reform alone. We admit that, but economic security in this country cannot be obtained without financial reform. The Government, therefore, must be placed in a position to implement its financial and economic policy. I agree with one point that the Leader of the Opposition made, though I do not consider that he really believed it. The right honorable gentleman said that these bills should be examined in order to ascertain the effect that they would have on the Australian public. It is wise, at this point, however, to examine the state of affairs in this country and throughout the world prior to the war, in order to see whether this great banking machine that honorable gentlemen say so much about, really acting efficiently and achieving the results that the people desire. No one can but admit that the problem of world starvation prior to the outbreak of the war was a problem not of production but of distribution*. We do not desire to return to the days when some people in different parts of the world welcomed droughts, blights upon the land, and misery among the people, because these conditions ensured the disposal of past surplus production on the world’s market.

Mr. Mynor Taylor, chairman of the United States Steel Trust, declared, in 1933, before the American Senate Finance Committee that “ an abundance of all things is our greatest menace “. So we find that the right honorable member for Cowper was a great advocate of the International Wheat Agreement under which the acreage sown to wheat in this country, and in other parts of the world, was- restricted at a time when millions of people were starving or in want. Yet honorable gentlemen opposite desire to preserve an economic arrangement which had such baneful effects. According to Mr. Cordell Hull, former United States Secretary of State, nearly 80 per cent, of the 2,000,000,000 people in the world in the pre-war period, were living below the poverty line. Lloyd George, describing conditions at the outbreak of the war of 1914-18, said that 12,000,000 people in England were worse fed, worse housed and worse clothed than they would have been in a prison or a workhouse. In 1936, about 4,000,000 people in England existed on an average of 4s. a week. These are the conditions to which honorable gentlemen opposite desire to return.

The right honorable member for North Sydney (Mr. Hughes), who is associated with the parties opposite, made the following remarks in an address which he delivered to the Millions Club in Sydney a few months prior to the 1937 general elections - 40 per cent, of the 2,000,000 children in Australia, of and under school agc, were suffering malnutrition ; 800,000 children were in a state of ill-health, due to the lack of nourishing food.

That appears to be the kind of thing that honorable gentlemen opposite wish to perpetuate.

It must be admitted that one of the chief causes of crime in this country, and in other parts of the world, is not that people are naturally criminally inclined, but that they are forced by poverty into a life of crime. Mr. G. S. Shepherd, when retiring from the position of Chief Stipendiary Magistrate in Sydney in 1936, said, from his desk at the Central Police Court, according to the report of an interview which was published in the Sydney Sun -

The principal cause of crime, great and small, is poverty. That is the big thing which 26 years on the Bench has shown me. In nearly every case I have handled in that time there has been the one great reason - a man has done something because he had no money. Kill poverty and you kill crime.

The most tragic cases I have ever had to handle - the ones that moved me most - are those of men who never had a chance. Brought up in a criminal environment and chained by poverty, they go astray, but the fault is not altogether theirs.

The Labour party intends to change that state of affairs in this country. Let us examine what lies ahead of the average citizen unless great economic changes are made. In an advertisement published recently in many newspapers in Australia by the Australian Mutual Provident Society the following statements were made : -

Applying the law of averages we infer that the following will be true in 40 years hence. Of every 100 healthy men now 25 years of age-

One only will be wealthy;

Four will be well-to-do;

Five will still be working for a living;

Thirty-six will be dead; and

Fifty-four will be dependent on relatives or charity.

That is the “ new order “ which the reactionary elements have in store for the boys who defended this country at the risk of their lives and who will shortly be returning to us. The Government has laid it down in the Commonwealth Bank Bill now before the chamber that -

It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers . . .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.

What is wrong with those general principles ? What the Government is proposing, in fact, is that, in order to develop this country by the full use of its natural resources, they shall be responsible for financial policy. According to the Leader of the Opposition that is all wrong, and that no change of control is necessary or advisable, but the right honorable gentleman supported his case by only one authority, and not a very good one at that. I shall give a few authorities to support the argument for a new financial system. The late President Wilson admitted, in 1911, that “financiers are more powerful than the nominal rulers”. Many years ago Meyer Rothschild, father of the House of Rothschild, who founded the great chain of Jewish banking houses, the most powerful financial empire the world has ever known, said -

Permit me to issue the money of a nation and I care not who makes its laws.

Mr. McKenna, former British Chancellor and chairman of the Midlands Bank in England, said -

They who control the credit of a nation, direct the policy of governments and hold in the hollow of their hands the destiny of the people.

In the light of these statements how can it be said that any country with similar banking systems is functioning under a democratic form of government?

The late Mr. Ramsay MacDonald, a former Prime Minister of England, said on one occasion -

Finance can command the services of every stream that runs to turn the wheels of industry and can put fetters on the feet of every government that is in existence.

You think that the Bank of England is a national institution . . . the Germans think theReichbank is a national institution . . the French think the Bank of France is a national institution . . .

And the truth - the truth is they are all controlled by a group of international financiers whose one interest in life is Power - Power to rule the World!

Mr Anthony:

– Did the Minister get these extracts from the Reader’s Digest ?

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

– I can quite understand the alarm of honorable gentlemen opposite as they hear the views expressed by the authorities that I have already cited. Here is an opinion expressed by Sir Vincent Vickers. After 22 years as a director of Vickers Limited, a director of the Bank of England, and a deputy lieutenant of the City of London, he published a series of articles which appeared in the Sydney Daily Mirror. In one article which appeared on the 24th October, 1941, he wrote -

Unless we can contrive to design and establish an improved and reformed financial system, which is the first essential towards a new and better economy in our own country, no satisfactory outcome of the war is possible.

It would have been wise to have expended some of our energies in strengthening our home defences by placing democracy in an impregnable position under a money -machine managed and controlled by its government and worthy of the public confidence.

I hold views which the London press would not publish. Let us recognize that great social change is coming to this country also, and that a serious social upheaval, even in this country is not impossible; that prompt action only can ensure that the future shall bring reform and not revolution …

Already in England, whilst the Pacific war is still being waged, workers are demonstrating against unemployment. The conservatives in the House of Commons, like the honorable member for Richmond (Mr. Anthony) and other honorable gentlemen in this chamber, are saying to the workers, “Well, you have had a very good spin over the last few years “ thus indicating that conservatives in this country, as well as abroad, can see ahead only greater depressions, greater armies of unemployed and misery and degradation for the workers. It is to prevent that kind of thing that the Government is seeking to implement its banking policy.

It is true that the abolition of the Commonwealth Bank Board is provided for in this bill. Honorable gentlemen opposite say, “ That is to establish political control “. I deny that statement. The Commonwealth Bank Board was established by the right honorable member for Cowper, who having once tried with the utmost of his power to cripple, destroy and restrict the operations of the bank, has now become its champion. In our opinion the board has operated to the detriment of the people. Following the establishment of the Commonwealth Bank Board in 1924, the rates of interest for the financing of primary production began to rise. In the 1924-25 season, the primary producers had to pay £7,000.000 in bank charges, compared with £3,000,000 in the previous season, which preceded the establishment of the board. The farmers of Western Australia formed a voluntary pool and made an unsuccessful application for financial assistance to the Commonwealth Bank and the private banks. The private banks wanted to impose impossible conditions upon them. Eventually, financial accommodation was secured from the Co-operative Wholesale Society of England, which paid the money to the London branch of the Commonwealth Bank. That bank arranged with the private banks for its transmission to Australia. The cost of shipping 4,000,000 bushels of wheat to England was approximately ls. a bushel, yet for merely transmitting this money from England to Australia the charges of the private banks were equivalent to 3£d. a bushel, or a total of £60,000. Yet the right honorable member for Cowper would try to convey the impression that the Commonwealth Bank Board has been responsible for assisting the people of this country, including the primary producers whom he claims to represent in this Parliament! In 1936, when the private banks raised the interest rates on fixed deposits, similar action was taken almost immediately by the Commonwealth Bank, under the direction of the board. Regarding that incident, the Melbourne Age on the 25th March, 1936, had this to say -

Whether the reasons are sound or not, the fact that impresses and startles the community is that in matters of such vital importance, the federal Government can be a mere cypher, and the great institution which is owned by and acts for the people - the Commonwealth Bank - instead of making policy, is forced to follow a course dictated by others. The weakness is due directly to the present federal Ministry’s abdication of its power and evasion of its responsibility.

The right honorable member for Cowper was a member of that Government. The newspaper went on to say -

If the National Government deliberately excludes itself from all participation in the making or changing of monetary policy, obviously it cannot govern, except in a secondary degree.

It should be clear that the decision of the present Government to abolish the Commonwealth Bank Board is a wise one. Let me remind the right honorable member for Cowper of what that, board did as late as 1940. The Sydney Metropolitan Water, Sewerage and Drainage Boardwas then carrying out very important works, and needed financial aid in order to continue them, but the Commonwealth Bank, under the direction of the bankboard, turned it down. Some very caustic comment was made on that action. One newspaper commented -

The Com mon weal th Bankhas refused the Water Board’s request for overdraft accommodation of £500,000. Works such as Warragamba and the southern and western suburbs sewer may have to close down.

The Commonwealth Bank will give overdrafts to new industries, and to businessmen not nearly so secure as the board.

It will thus be seen that while the Commonwealth Bank Board was refusing to make advances for national works, it was prepared to grant financial accommodation to undertakings that were not half so secure. It has been argued that the Commonwealth Bank must be under the control of experts. When members of theCommonwealth Bank Board were appointed, they were transferred from commerce and industry, and had had no practical experience of banking operations. According to honornable members opposite, they immediately became banking experts. Let us consider some of the predictions of “alleged” financial experts in the past in order to measure their judgment in financial matters; It will be remembered that for years so-called financial experts and economists assured us that Germany could not finance a. major conflict and that Italy was certain to be crippled financially by its Abyssinian adventure. History has, unfortunately, shown how untrue this proved to be. When trade slumps and there is a depression, the economic wizards say that theunemployed constitute a tremendous problem. While they are talking in terms of. doles and relief work, war breaks out, and there is no longer talk of a money shortage. It is ridiculous to say that the contention that theCommonwealth Government should be responsible for financial policy is unsound and, in practice, would prove to be injurious to the pepole of this country. Opposition members argue that under this legislation the Governor of the bank will be subject to the domination of the

Treasurer, who, in turn, willbe subject to the domination of the Government caucus. All that I can say to the people of. this country is that a Labour government is a democratic body elected! upon a popular franchise and, therefore, it merely gives expression to the will of the people. By way of comparison, let us examine the history of the negotiations which the party opposite has conducted with the private banks. I recall that in 1938 it brought down in this Parliament a banking measure which was suddenly dropped. It was supposedly a measure to give effect to certain recommendations of the royal commission that had been appointed in. 1935 to inquire into the monetary and banking systems in this country. The then Treasurer, Mr. Casey, had a secret meeting, not with the elected representatives of the people, but with private bankers. This is what the Sydney Morning Herald of the 31st March, had to say -

The Federal Treasurer, Mr. Casey, said last night that the meeting of bankers over whichhe presided in Sydney, had been very useful. There had been a very frank exchangeof views, But obviously he could not divulge the nature of the discussions. The conference was arranged to discuss the report and recommendations of the Royal Commission on Banking, with the object of assisting the Federal Ministry in framing amending, bank ing legislation.

Yet objection is taken to the present Labour Government conferring with the members of its own party who are elected representatives of the people, before deciding the form of its legislation! They raised no objection to a government of their own political colour discussing with private bankers and financial institutions amendments which it proposed to make to the banking- law. That there was some basis for the fear then expressed by Labour members is shown by this statement which was published by the Sydney Morning Herald on the 7th April of that year -

The Federal Cabinet has agreed to compromise on certain of the recommendations . of theRoyal Commission on Banking, to meet objections by the private banks to the form of the new banking bill.

The members of that Cabinet were prepared to amend their legislation at the behest of those in control of the private financial institutions of this country. The private banks have recently indulged in a good deal pf propaganda, with the object of arousing in the minds of the people the fear that in some way this measure will be used against their interests. Fortunately, there are some persons in responsible positions who are not falling for that propaganda. The Archbishop of Perth is reported to have said -

The circular of the National of Australasia is protesting rather too violently. . . The banks are so closely allied to each other that they are virtually a monopoly, and I find it hard to see why they should be considered more disinterested than the popularly elected representatives of the people in Parliament.

The circular of the National Bank of Australasia is very interesting in one respect. It stated -

The public generally are advised that permanent rigid government control over the banking system, which means control over the people’s money, would permanently give the Government vast powers over industry and substantial control over the individual.

Clearly, this would place in the Government’s hands a powerful control, not only over industry as .a whole, but over the economic and financial ambitions of every individual.

We do not deny that this legislation gives great power to the Government. But that power is to-day vested somewhere, and if it is not to be placed in the hands of the Government, is there not the admission that it is possessed by those who control the private banks of this country? The Leader of the Opposition skipped over the 1893 hank crisis, but it is important to examine how the private banks treated their depositors in this period. He tried to excuse the failure of the private hanks and their subsequent actions by saying, “ We have gone a long way since then. We had no central ‘bank at that time “. He tried to show that what happened in 1893 could not happen now. The theme of the opening portion of his speech was the fact that the depositors and the public must be protected. But what were the reconstruction plans of the private banks in 1S93? The Royal Commission on Monetary and Banking Systems made no close examination of this problem. It mainly provided statistical data, but in paragraph 216 of its report it stated -

The aggregate deposits of the banks which suspended payment at the dates of suspension amounted to £68,500,000.

The depositors of these banks were requested, and by force of circumstances compelled, to agree to an extension of time for the repayment of the amounts owing to them. There was much similarity between the proposals made by the banks, though naturally they varied in detail. In some instances depositors were given an option to convert part of their deposits into preference shares, and in others were compelled to do so. Deposit receipts were issued for the balance. These were payable by annual or half-yearly instalments, the first in most instances about five years after the date of reconstruction or re-arrangement.

That meant that those who had deposits in private banks had to wait up to five years before they could obtain the repayment of any of the moneys entrusted to the banks by them.

Mr Calwell:

– -Some of them have never recovered their money.


– That is so. The report of the royal commission further stated -

However described, all these interminable securities had two features in common. The first was that they were payable only at the option of tlie bank; the second, that the low rate of interest fixed was not subject to revision. In effect, this converted them into fixed capital, entitled only to a low rate of interest. The conditions described are open to adverse criticism on the ground of rigidity. The rate fixed may have been fair at the time and in the circumstances, but it became definitely inequitable in later years when higher rates of interest prevailed and the banks concorned earned large profits.

Mackay, in his standard work, The Australian Banking and Credit System, has this to say at page 143–

Of the banks which closed their doors, three did not open for business. Those that did open again suffered a varying fortune. Some were able to pay off depositors within two years, others were not so fortunate as this and did not shake off the burden for some years. The National Bank of Australia Limited managed to be free by 1000. But the majority of the banks found that they had overestimated their earning capacity and had to seek modified schemes of arrangement from their creditors (depositors). Quite a different type of modified scheme was sought by the Commercial Bank of Australia Limited. Realizing, in June, 1896, that it could not fulfil the terms of its original scheme of reconstruction, the repayment of deposits was reduced, the calls on shareholders were deferred, and a new company, called the Assets Trust, was formed to liquidate the assets of the bank.

I shall now deal with one or two of the reconstruction arrangements following the closure of a number of private banks in 1893, and whose failure was not as the result of government interference, because on that occasion it was only action on the pant of certain of the State Governments which prevented the complete collapse of the financial system. The Commercial Bank of Australia Limited had current and fixed deposits amounting to £10,000,000. That bank suspended payment in April, 1893, and remained closed for over a month. The sum of £3,000,000 was impounded and capitalized in the form of preference shares. Deposit receipts were issued for the balance. The customers were promised a gradual repayment of the deposit receipts, but it was not until 1914 that all deposits were finally paid. Some of the depositors were waiting for their own money for 21 years ! During that period, overdrafts were called up and the banks went into possession of some very valuable properties. The market conditions were such that it was not possible to make sales at a figure which would clear the overdrafts. .Seized properties were held by a company called the Assets Trust, until the market conditions improved. When values recovered and sales were effected, hig sums of money were realized upon these properties, but the dispossessed borrower from the bank got none of it.

The National Bank of Australasia Limited, of which Mr. McConnan is chief manager, and who has been voluble in his condemnation of the Government’s proposals, suspended operations in 1893, and its scheme of reconstruction provided for £306,000 of depositors’ money to be capitalized in the form of preference shares, deposit receipts to be issued for the balance. I understand that the hank still holds the amount of deposits converted to preference shares, so that that hank has not paid to the depositors the money they had entrusted to it when the bank closed its doors in 1893.

The English, Scottish and Australian Bank Limited had a reconstruction scheme which is of considerable interest.

It reconstructed by converting £1,000,000 of the depositors’ money into 4 per cent, debentures, and £2,000,000 was converted into 4£ per cent, perpetual preferred inscribed stock. Deposit receipts were issued for the balance. In 1896 the bank, which, has an English registration, was able to get sufficient influence in London to have a special act passed in the British Parliament reducing the interest payable on the perpetual inscribed stock from 4-J per cent, to 3 per cent. Efforts have been made from time to time to secure a more equitable adjustment, but the London directors qf the bank resisted the agitation and the Australian dispossessed depositors got nowhere. For many years this bank paid its London shareholders dividends ranging from 10 to 12$ per cent., whilst retaining compulsorily the deposits of its Australian customers and paying them an average interest rate of 3^ per cent. Mr. B. J. Parkinson, a Melbourne solicitor, was deputed to proceed to London to interview the directors of the bank on behalf of the dispossessed depositors. He met with no success and the following is an extract from a letter which he received from the London manager of the bank: -

To ask shareholders to give up rights to which purchase of shares legally entitles them, in the interest of people who have no possible claim on them, is not, it appears to the board, a reasonable business proposition, and I am sure that the board would never agree to be a party to it.

The protest from the Australian depositors was supported by the Australian Mutual Provident Society, the Grand United Order of Oddfellows, National Trustees Limited, the Australian Natives Association and the Perpetual Trustee Company Limited. The Bishop of Newcastle lent his support, and the late Sir Josiah Symon, K.C., of Adelaide, who sat at one time as a member of the Senate, wrote to the people concerned in the agitation in the following terms : -

I thoroughly agree with you that it is the duty of the directors in the present overflowing prosperity of the bank, paying its shareholders 12^ per cent., to raise and give to the debenture and stock holders a more just participation in the profits, which are largely due to the small rate of interest, which for the last five and twenty years, has been paid upon depositors’ money represented by the debentures, &c. In fact, as you point out, for all these years, the bank and the sharehol ders have had the benefit of all this depositors’ capital without fairly paying for it, and it must be remembered also that the contribution of the deposits in this way was compulsory upon the depositor.

Yet the private banks have the audacity to say to the people: “Write to your member of Parliament and protest against any Government interference with private banking institutions”. My advice to the electors is to ask their bank managers the following questions : -

Did your bank suspend payment dur ing the 1893 bank crisis?

What form of reconstruction did it adopt in order to re-open for business?

Under the terms of the reconstruction, how long was it before depositors were able to gain access to the amount of money represented by deposit receipts?

Did your bank have to seek political aid to give effect to this reconstruction ?

If so, would you regard this as “political interference”?

It has been stated that only one bank in Australia has closed its doors since the banking crisis of 1893, namely, the New South Wales Government Savings Bank. As a matter of fact, the Labour party and the Labour government of New South Wales which was in power at that time have nothing to be ashamed of in connexion with the closing of that bank. It was due to political agitation by anti-Labour interests, which were prepared to sacrifice the depositors for party advantage. The Royal Commission on Monetary and Banking Systems, in paragraph 357 of its report, had this to say about the closing of the New South Wales Government Savings Bank -

An examination of the Bank’s position shows that its assets were ample to meet its liabilities, although it had insufficient liquid assets to meet the entirely exceptional demands made upon it. The failure does not reflect discredit upon the Management of the Bank. The cause of the failure was political rather than financial, and the responsibility must be borne by those whose conduct created apprehension in the minds of the depositors. When the bank was compelled to close its doors, it had millions of pounds’ worth of government securities in the vaults. As the result of a political campaign, a run on the bank began in

September, 1930, and we know the result. The late Sir Robert Gibson, who was then chairman of the Commonwealth Bank Board, did not immediately hasten to assure the depositors that there was nothing to fear. The Commonwealth Bank Board was anti-Labour in its sympathies and was not prepared to take action to prevent the destruction of the Government Savings Bank of New South Wales. Therefore, Sir Robert Gibson withheld his appeal until the bank had been compelled to close its doors. Then, when the run threatened to extend to other banks, including the Commonwealth Bank, Sir Robert Gibson broadcast the following statement: -

The fact of the matter was the Government Savings Bank of New South Wales was in a perfectly sound position. There was no good reason why it was compelled to close its doors.

He pledged the Commonwealth Bank’s support to any bank which might find itself in jeopardy as the result of abnormal withdrawals and stated that there would be no hesitation in using the printing press to print all the Commonwealth notes necessary to meet in full all claims made by depositors upon the banking system. Had he made that statement before the Government Savings Bank of New South Wales closed its doors the run would have stopped. However, he did not do so, and the bank was closed, because he and others like him wished to destroy a Labour Government.

Mr. McConnan, in a reply to critics of the hanks, said -

Banks did not refuse to lend in the depres- . sion. As a matter of fact, in their effort to assist recovery, they lent to the point of danger. They took a risk in the national interest, and it worked.

Now let us see just what the banks did. Here is what the Royal Commission on Monetary and Banking Systems had to say-

The trading banks must bear some responsibility for the extent of the depression. In some cases they caused hardship by forcing realization of assets, and by refusing credit to some credit-worthy borrowers.

Here is one case which Australian Country party representatives always fail to mention when they are speaking of the record of the private banks during the depression. It is the case of the late Lieutenant Gordon Wilkins, formerly a member of the New South Wales Parliament for the district of Bathurst. This is what he said -

Twenty-two years ago I left the Wellington district to do my bit for Australia, and after three years on the other side, came back minus a leg.

Still a young man, I set out on a new battle - the battle of life, to provide a home and living for myself and family, I received a pension of £2 10s. a week. Remember that, because I propose to tell you what can happen to a soldier’s pension when the banks get their grip on a man. By dint of hard work, I managed to build up a prosperous business in my home town.

By 1930 I had assets worth almost £30,000. My liabilities were £14,000. But the farm was paying well, prices were satisfactory, and [ was quite satisfied of my solvency.

I had a property of 1,035 acres in the Wellington district freehold and Court of Probate title of which 400 acres was under wheat, 10 acres under lucerne, and the balance of excellent grazing country. It was valued at £5 10s. an acre and on it I had a comfortable little home. In Wellington itself, 1 built up a large garage, one of the largest ir tho central west. The building and plant was valued at £5,800. Then, with the depression sales fell off, so I borrowed everything that I could, to keep my business going.

I went to my bank manager. Previously he had urged me to accept an overdraft, so that I might extend my business. By 1930 that overdraft amounted to approximately £2,500, but it was well covered by my assets. But now the depression was on us and the bank was a different proposition. It slogged me day after day. 1 realized on everything 1. could, and reduced the overdraft to £2,060. The overdraft was secured by a mortgage on the land and buildings, and, in addition, was supported by a guarantee of £1,000 entered into by two guarantors, being jointly and severally liable. This was what is known as “ personal covenant “.

In 1931 the Lang Government introduced its Moratorium Act and the bank found itself unable to foreclose or call up the security. The Moratorium Act did away with the “ personal covenant “ and freed both my coguarantor and myself from the guarantee. But in spite of the moratorium I still kept my interest payments going. I did not want to evade any obligation. I was a member of the Country party and had been their candidate at a number of elections. I did not want it to be said that I was taking advantage of Lang’s moratorium in any way, so I did not claim any protection in the way of its benefits.

Of course, I know that many of my fellow farmers were claiming the protection of the moratorium, but being loyal to the Country party, I thought it was my job to get in and attack the Government.

Rather than claim the protection of Lang’s Moratorium Act I went into voluntary liquidation in February, 1932.

So the bank came in and took possession of the land and buildings under its power of mortgage. It cleaned me up. I had lost my business, but there still remained the matter of £1,000 guarantee under the “ personal covenant “.

If I had taken advantage, of the Lang Moratorium Act at that time, I would have been a free man. I could have taken advantage of the “ personal covenant “ and walked out ready to start all over again. Instead of that, I decided to fight Lang and accept all the obligations of the guarantee. I went into the Bathurst electorate in the 1932 elections, opposed Lang and defeated Gus Kelly, the sitting Labour member.

I was satisfied that all the party propaganda that was coming up from Sydney was the truth. I was still satisfied that the banks would give me a fair go, and as soon as the crisis was over would allow me to get back to where I was before.

About the middle of 1932, Mr. Martin, Minister of Justice in the Stevens-Bruxner Government, brought down a bill to amend the Moratorium Act. On reading it I discovered that if it was carried it might mean that the bank could penalize me for not having accepted the benefits of the Moratorium Act the previous year. I was not the only one affected. There were other members of the Government also disturbed over its possible effects.

After discussing it with other members of the Country party as well as the United Australia party, we felt that something would have to be done to protect the interests of the farmers and country business men who would be affected.

So I went to Mr. Martin and told him that I could not support the bill in its present form and that for the first time I would be forced to cross the floor and vote against him. He was very disturbed and told me he would inquire into what I had told him. I put all the facts of my own position before Mr. Martin, telling him that this bill would put me in an impossible position.

Mr. Martin came to me next day and said: “ I have the assurance of the associated banks that any guarantor who is brought back under the provisions of the bill will suffer no hardship. In fact, they will be treated sympathetically and justly on the merits of” each case”. So on this assurance I went into the House and voted for the bill.

Yet the bill was no sooner operative than my co-guarantor and myself received notices from the honk’s solicitor, calling up the guarantee. They had a legal weapon ami they proceeded to flog me with it. I had helped to give the bank the whip and they were using it.

When Lang had told us about the interlocking of the banks with the overseas financial groups and how they were dominating the affairs of the Country party and the Government, I had not believed him. In fact, 1 laughed at the suggestion. But now, to ray sorrow, I was to find it was only too true.

I went straight to the Minister of Justice, Mr. Martin. He promised me that he would sei- the representatives of the banks.

To my surprise, I received a letter from the Minister in which he declared: “In my judgment you are both liable under the guarantee, but the thing is to make the best arrangement possible under all the circumstances.”.

It was agreed that I was able to pay £100 ii year off the guarantee and also pay current interest on the balance of the debt. I figured the interest out at approximately £125 a year, which means that I was forced to pay £255 a year. With the rent and my military pension of £2 10s. a week, I could just about do it.

From the beginning of 15)34, the bank collected my war pension. I merely filled in my signature, the order, receipt and declaration, and they filled in the rest and collected the pension.

I went over to the other side, lost my leg, and yet the bank was quite prepared to accept the paltry £5 ls. a fortnight that my country was paying me. (Mr. Hughes was the Minister for Repatriation.)

As far as the bank was concerned 1 was only an item in their ledger.

I carried the arrangement through 1034, 1035, and half of 1930, honouring my word a* well as voting with the Government on every occasion.

In May, 1935, I went up as a Country party member for Bathurst, still believing that the bank would honour its latest undertaking.


– The Minister’s time has expired.


.-In tl,e speech of the Minister for Transport (Mr. “Ward) rather than in the careful and guarded speech of the Treasurer (Mr. Chifley) in moving the second reading of the bill we have the real policy of the Government in regard to banking. The Minister for Transport said that, he was horribly disappointed with the bill which purported to implement the financial policy of the Labour party. He went on to say that although he regretted that Labour had not gone further towards the achievement of its policy, he regarded the bill as a first step. The Minister made clear what is behind the Government’s proposals in this bill.

Mr Chambers:

– The Minister . for Transport did not say that he was horribly disappointed with the bill. That is an untruth.


– The Minister said that he was disappointed that Labour had not gone further with the implemen tation of its policy, but he regarded its banking legislation as a first step in that direction. The proposal of the Government aims at the socialization, confiscation, and complete political control of banking. The Minister for Transport wants to see a monetary revolution, with the Commonwealth Bank made subservient to the Government. If his ideas be given effect, every industry in this country will suffer ; and because industry is the greatest employer of labour, all persons engaged in industry will suffer. The reckless Minister who has. just resumed his seat dictates the financial policy of the Government, despite the protestations by the Prime Minister (Mr. Curtin) at the last elections, as well as during the referendum campaign, that banking and insurance would not be nationalized. The Government has received no mandate from the people to introduce this legislation. Labour was elected on the understanding that party political measures would noi be introduced during the war.

Mr Calwell:

– This is a national issue.


– The Government was returned to power, not to introduce party legislation, but to devote its energies to winning the war. The present attitude of the Government, particularly of its least responsible members, is in sharp contrast to the pledge given by the Prime Minister that there would be no socialization of industry during the war. I shall quote from the report of the Prime Minister’s speech- - “ The prosecution of the war is the paramount and over-riding obligation of the Commonwealth “, said Mr. Curtin. Denying that the Government had attempted to socialize Australia, he added, “ We do not intend to do it just because we are at war . . . Such interferences, restraints and adjustments as we make will be made only because they are necessary effectively to prosecute the war “.

Shortly after the Prime Minister made that statement, the present Minister for Transport, who was then Minister for Labour and National Service, sneaking in Western Australia, said that banking and insurance would be nationalized if Labour obtained control of both Houses of the Parliament after the elections. When that statement was referred to the Prime Minister, the right honorable gentleman stated that it had not been made with the sanction of the Cabinet. Asked whether the Government considered itself bound for the next three years to the programme defined in his policy speech, the Prime Minister said that it would be so bound. He said that unequivocally. Yet, despite that promise, we have before us proposals for the socialization of banking and of insurance

Mr Calwell:

– This is not socialization.


– The interjection of the Minister for Information (Mr. Calwell) will not deceive the people. The Minister for Transport, to whom the people of this country look to for a clear statement of government policy, has made clear the intentions of the Government. He has told us to-night that this bill is only a first step in the implementation of ‘the Government’s policy. The Government has broken the pledge without which it would not have been returned to office. To-night the true policy of the Government has been revealed; the Minister has let the cat out of the bag. Speaking at Epping in January last he said that there was no disagreement among members of the Government in matters of policy, including the elimination of the private banking system. According to Storecraft, out of about 15,000 business men in Victoria, including small shopkeepers, grocers, and others to whom a questionnaire was sent asking for their views on the Government’s hanking proposals, a firm of licensed auditors has certified that 93 per cent, opposed them. A similar result would be obtained in respect of almost every industry in this country.

The basis on which the original Commonwealth Bank was formed was that the hank must be free from political control.

In his first official address at a bank function, the then Labour Prime Minister, Mr. Fisher, said -

This institution is now established as a going concern. It will stand upon its merits and must not be subjected to political influence, either in support or derogation of it. It is now quite outside the political arena . . . Banking is not a political matter.

Mr. King 0’Malley. who claims to have been the founder of the bank, made it his first provision that the bank should be “ absolutely free from political control “. The late Sir Denison Miller also made this freedom his one condition when taking over the first governorship. Mr. James Kell, who was Deputy Governor under Sir Denison Miller and succeeded him as Governor, summed up the basis of the bank’s’ success admirably in November, 1923, when he wrote -

The Bank though State-owned, is in no sense a political institution. The Governor by statutory enactment was placed beyond the influence of Ministers and parties; so that, though Governments have changed, the Bank has been able to proceed uninterruptedly with its work on the widest National basis. It will be noted that the relations between the Commonwealth Bank and the private banks have always been most’ friendly, and this opportunity is taken to express appreciation oi the cordial co-operation of the latter during the severe crisis through which the world has passed in recent years.

On the 23rd July, 1943, the Prime Minister made his election pledge in these terms

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 we are at war. That is a clear and unqualified declaration of Government policy.

No amount of equivocation can read into that pledge any meaning other than the words plainly state. In December, 1943, the Federal Conference of the Australian Labour party held in 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 (War-time Banking Control) Regulations be resolved into legislation.
  2. That the legislation secure (o) that the Commonwealth Bank be in complete control of the banking system; (ft) that the Commonwealth Bank be subservient to the Government.

I particularly direct attention to the words “ subservient to the Government “ in. the light of the bills now brought down by the Labour Government, as directed by the Australian Labour party convention. The avowed intention of the Commonwealth Bank Bill is to give the Government greater power over the policy of the bank, which can only lead to instability and lack of confidence. Nothing can be more disturbing to confidence, especially during war-time, than political tampering with the currency. The outstanding characteristic of the bills is that what is proposed is not banking reform but a monetary and banking revolution. Principles accepted the world over as fundamental to a sound monetary and banking system are defied. The principles upon which the Commonwealth Bank on the one hand, and the Australian note issue on the other, were established by a previous Labour Government are being ignored. It is not sufficient to say that the present Labour Government may be wiser in its generation. The fact still remains that no other government in the world - with one exception - has attempted to ignore long-established principles; nor, as far as we are aware, does amy other government anywhere in the world contemplate doing so. The one possible exception is Soviet Russia. But there the monetary and banking system has to serve a basically different kind of economy from our own. Is it the intention of the Government to use the revolutionized monetary and banking system to convert our economy into an economy of the Russian type? That, after all, would be in complete accord with the policy to which every member of the Government and every one of its supporters are pledged in writing. If that is the case, let the Government be honest with the Parliament and say so. If it is not, why are such revolutionary financial changes to be foisted upon us at all? Why is it intended to impose upon us a banking system which has been described by the sober London journal, the Financial News, as establishing a control “ rather more complete than that prevailing in Nazi Germany “ ? I ask honorable members to reflect on the fundamental departures, not only from “ the trend of banking development in all civilized countries “ - to quote the London Financial News again - but also from the principles and practices, first laid down by the Labour Prime Minister responsible for the act we are now asked to sweep aside, and subsequently followed by the first Governor of the Commonwealth Bank and every governor and chairman since the bank was established. The most farreaching innovation is that the Commonwealth Bank is to be made subservient to the Government. “Subservient to the Government”, significantly enough, are the words expressly used by the last Federal Conference of the Australian Labour party in its instructions to the Government. It is also of major significance that these instructions were issued four months after the last federal elections, when not a word was uttered by any responsible Government spokesman which would give the slightest indication that any such proposals’, as we now have before us, were even remotely contemplated. But subservience to the Government was the last thing the late Mr. Andrew Fisher hoped to see. “ The bank”, he said, “will stand on its own merits and must not be subjected to political influence.” “ It is “, he added, “ quite outside the political arena.” That is where the bank’s founder wanted it kept. That is where it has been kept until to-day.

Shortly before Sir Denison Miller, the first Governor of the bank, died, his deputy, Mr. James Kell, wrote -

The bank though State-owned is in no sense a political institution. The Governor by statutory enactment was placed beyond the influence of Ministers and parties; so that, though governments have changed, the bank has been able to proceed uninterruptedly with its work on the widest national basis.

So the independence of the bank continued even when, with the provision for the bank to develop into a fully functioning central bank, a board of directors was appointed. To those who say that the appointment of a board was a departure from the principles followed under Sir Denison Miller, let me point this out. When the Commonwealth Bank was given its first central banking responsibility, namely, the transfer of the note issue from the control of the Treasury in 1920, Sir Denison Miller himself accepted the view that that responsibility was the work of a board and not a single man. The Note Issue Department of the bank was then placed under a board, of which Sir Denison Miller, as Governor of the bank, became a member. The principle of board control was continued when, in 1924, legislative provision was made for the bank to accept ail the responsibilities of a central bank. Throughout, there has been no departure from the original intention. The ultimate control of the bank, whether under a single governor or a board of directors, remained free from government or any other outside interference. Those who controlled the bank remained subject only to this Parliament.

The second revolutionary change now contemplated is the removal of any limitation on the note issue - that is to say, the people’s currency and the value of their savings in whatever form those savings might be. Not only is there no limit on the authority immediately responsible for issuing notes, but even that authority is not free to exercise the wisdom which such an authority should possess. At all times, decisions can be over-ridden and actions directed by any government in office. Contrary to what the Treasurer’s introductory speech would imply, the Royal Commission on the Monetary and Banking Systems clearly expressed the view that there should be a statutory limitation on the note issue. Any divergence from that limitation should he a matter for consideration and approval by the Parliament. This, again, is a departure not only from monetary principles accepted everywhere as far as I have been able to discover - even in Russia - but also from the principle laid down by the Labour Government responsible, for the establishment of the Australian note issue. That Government laid down a statutory limitation in the form of a minimum percentage gold reserve. Since then there has been a variation from a reserve of gold only, to a reserve of gold and/or sterling. But the principle has never been challenged until to-day.

The third fundamental departure from the trend of banking development in all civilized countries is the instruction that the Commonwealth Bank shall “ develop and expand “ its general banking business. For the soundest of reasons, most central banks throughout the world stand aloof from the business of general banking altogether. In the case of those few central banks which, for good reasons, find it necessary to engage in some general banking business as an aid to effective central banking, their general banking activities are regarded as subordinate to their central banking business.

Central banking was hardly contemplated, at least in Australia, in Mr. Fisher’s day, but evidence is available to show that he would have approved the form that the Commonwealth Bank has since taken. In introducing the first Commonwealth Bank Bill in 1911, he uttered these significant words -

It (the Commonwealth Bank) will ultimately become the bank of banks rather than a mere money-lending institution.

The “ bank of banks “ ! Not a bank merely competing with other banks, not a bank with such power over other banks that they would be mere agencies or satellites, but the “ bank of banks the central bank “ responsible for regulating the volume of credit while the trading banks are responsible for distributing that credit amongst different industries “. Those are the words of the Royal Commission on Monetary and Banking Systems. They express clearly what should be the Commonwealth Bank’s place. They express also what Mr. Fisher, in his day, was able only to hope.

That leads me to the fourth fundamental departure from what was intended by the Commonwealth Bank’s founders, what was the view of the royal commission - at least all the members of it except the present Treasurer - and what is an accepted principle of sound banking everywhere. The relationship between the central bank and the trading banks should be one of close co-operation, the leadership of the central bank being founded on the confidence of the member banks of the system within it. The proposal that the Commonwealth Bank should have statutory power to determine the lending policy of the trading banks is fundamentally in conflict with established principles. It is of no use to talk about these extraordinary controls being intended for use only in cases of emergency. There is no such indication in the proposed legislation. The trading banks will be constantly working under this sword of Damocles. In any case, I submit, very forcibly, that emergency acts are the responsibility of this Parliament.

We have no right to delegate this responsibility to this . and subsequent governments in advance. In the emergency of the depression this Parliament was not slow to act. It did not always act along the lines the government of the day wanted. Indeed that is why these enormous powers over the monetary and banking systems - which, of course, mean almost corresponding powers over the whole economy - are now being sought.

The people have never authorized this Government to seek these powers. They have never authorized this Parliament to yield them. There is practical certainty that, in any case, they will not be required before the elections next year. In no circumstances, therefore, can this Parliament, if it still regards itself as the custodian of the democratic rights of the people, accept these proposals at this juncture.

The nationalization of banking is the first step to the socialization of industry. The real reason for this proposed change is to be found in the fact that Labour regards nationalization of the banking system as the first step towards complete socialization.

Some people may suggest that the nationalization of banking is simply an attempt to gain control of an essential service, but that is not the case. Advocates of nationalization are mostly extreme socialists. Lenin, addressing the Bolshevik Conference of April, 1917, said. -

We are all agreed that the first step in this direction (i.e., .towards communism) must bc such measures as the nationalization of the banks. Let us put into practice these and similar measures and we shall see. We cannot at once nationalize the small consumers’ concerns - i.e., one or two wage workers- - or place .them under a real workers’ control. Through the nationalization of banks they may be tied hand and foot.

In his book, Preparing for the Revolt, Lenin said -

It is essential to proceed immediately with the nationalization of the banks, insurance Companies, and .the most important branches of industry. . . . One State bank as huge as possible, with branches in every -factory - this is already nine-tenths of the Socialist apparatus.

Mr. C. H. D. Cole, the famous British socialist economist, claims that -

Before a Labour government nationalizes amy other productive industry, it should nationalize the banks. . . . With the banks in our hands, we can take over other industries at our leisure.

Mr. Lang, of whom the slogan was coined, “ Lang is right “ and who had a great supporter in the present Minister for Transport, speaking at the Metropolitan Labour Conference in Sydney, in February, 1933, said - .

You must remember that there are always first steps. You must socialize credit first. The other things will come later. If you want to go through a door, you must have the key first. Socialization of credit is the key.

Labour’s policy of nationalization cannot even be excused on the ground that it is an experiment. Nationalization has been tried and has failed dismally. In the United States of America and Canada nationalization has resulted in the loss of many millions of pounds. Queensland is the last State in the Commonwealth which should contemplate adopting any scheme of nationalization, for Labour’s nationalization policy as put into operation in the acquisition of cattle stations, butcher shops, fish shops, and other commercial undertakings, has cost the taxpayers millions of pounds. Every socialized industry has failed.

Mr Spender:

– Did any of them pay ?


– Some did for a little while, but in the end even the socialist hotel failed.

The essentials of banking are simple. On the one hand the banks borrow money from those who have it to lend, and on the other hand they lend money to those who can use it and who have some security to offer. They seek to make a profit on the transaction, like any other dealer. When one deposits money with a bank he expects to get it back in due course. “When a bank lends money to a trader, the bank, in turn, expects to get it back in due course. The banks are rightly careful not to lend money on wild-cat schemes, because they need to get their money back in order to pay depositors.

Labour promises to make money available freely. This is a bait to catch the unwary, and a pertinent question which depositors should ask is whether the single bank Labour -plans would lend their money without the security which bankers to-day consider to be necessary in order to protect themselves and the depositors. Labour’s promises of easy money must mean that the depositors’ money would be subjected to undue risk or that inflation would be practised under nationalization. Any one who has observed the pressure which the Trades Hal! officials exert upon the Parliamentary Labour party will have no doubt that nationalization of banking would mean inflation. The Federal Labour party, when in office, deliberately endeavoured to inflate the note issue. Germany and Prance are recent examples of the great evils which arise from inflation of currency. It reduces purchasing power, and does great harm, particularly to wage earners and pensioners. The present system protects the wages, savings, pensions and insurance policies of the people. It is clear that inflation would make it more difficult, if not impossible, for the primary producer to compete with other countries with lower production costs which have no political interference with the currency. Nationalization of banking, and socialization of credit, do not mean only what those words imply. Nationalization would mean that all our industries - banking, farming, mining, shipping, &c. - would be taken away from the people who now own and control them, and would be placed under political control. This would really mean complete socialization, and would bring into force the Russian system of government. It is inconceivable that people who have farms, to obtain which they have worked hard and deprived themselves of many things for years, the owners of homes which are their castles, or the people who have saved for years and accumulated small sums to meet their requirements in case of adversity, will wish to hand their property to a government. It has been proved time and again that governments cannot manage businesses as efficiently as private enterprise.

These notices, which appeared in the Sydney Morning Herald when repudiation and confiscation had closed the State Savings Bank of New South Wales, bear eloquent testimony to the tragedy of Labour’s financial policy -

September 9. 1931. - Government Savings Bank Book £430. Sell for £260.

October 7, 1931. - Government Savings Bank deposit £2,000. Would accept 12s. 6d. in the £1 nett.

Nationalization means socialization. Socialization means communism. All of these are retrograde and disastrous policies. Their adoption would bring in their train indescribable misery and suffering. They would crush ambition, kill enterprise and stifle endeavour, and as a people we would deteriorate rapidly. There is nothing in these banking proposals which will aid the prosecution of the war. There has never been any suggestion that Australia has been in real need of money to finance its war commitments. The existing hanking system has stood up to the test of experience. The deposits of the people have been made available to the Government, and in spite of its wild and reckless policy every loan floated has been fully subscribed. The Government undertook at the last elections that if it were returned to power it would confine its attention to the winning of the war. This legislation is a stab in the back of our fighting men, 90 per cent, of whom will be dependent on private industry for re-employment in civil life after demobilization. The knowledge that the home front is divided on such an important issue must undermine the morale of those who are fighting for their country. The Government has no mandate for this legislation. The Prime Minister gave an unqualified pledge of which this is a complete and gross repudiation. The Government was elected on the understanding that it would not indulge in socialization during the war and it must ascertain the wishes of the electors before proceeding further with these measures. If, as the Opposition believes, there is no urgency, the matter should be postponed and be made an issue at the next general election. If the Government wishes to consider itself democratic, and does not want to wait until the next elections, it should proceed by way of referendum. Is it afraid to do so? The Government’s proposals were defeated at the last referendum and probably they would be defeated again if another were held. As I mentioned earlier, a recent Gallup poll showed that 93 per cent, of grocers and other small business men in Victoria are opposed to these two bills. A similar result would follow the taking of other Gallup polls.

I wish to emphasize what I regard as the dangers of this legislation. It is intended to abolish the Commonwealth Bank Board, and to force the Commonwealth Bank to compete actively in tradingbank business. Close co-operation between the Commonwealth Bank and the Government is necessary if the monetary system is to work smoothly. This will be possible only if the central bank i3 so constituted that it will be independent of the Government. The central bank must be able to frame its policy in accordance with the broad economic interests of the country as a whole, and should guard against giving undue weight to the budgetary problems of the Treasurer of the day. What must be avoided is making it easy for a Treasurer to balance his budget by dint of pressure on the central bank. In that way lies national financial collapse. The Commonwealth Bank’s task of controlling the note issue, and regulating the volume of credit, is essentially that of maintaining a high and stable level of economic activity. This means that it must be on the look-out for, and know how to check, incipient booms and depressions. It is not a task for a politician who is subject to political pressure from various groups and must always have one eye on the next elections, but it is essentially one for men of expert knowledge, training and experience. It should, therefore, be placed in the hands of specialists, controlled and guided in matters of broad policy by a board consisting of men of sound judgment and a variety of experience of various, phases of Australian economic life. The existing system provides such control - at least, it would if the spirit of the Commonwealth Bank Act were observed. It may be questioned whether all the Labour nominations to the board can be considered to have been made in that spirit, since two recent appointees can scarcely be said to have had the experience contemplated by the act, which provides that its members, other than the Governor and the Secretary to the Treasury, shall be nominated by the Government, as vacancies occur, from “ persons who are, or have been actively engaged in agriculture, commerce, finance or industry “. Members of the board are appointed for long over-lapping terms. This means that the long continuance of a policy distasteful to an incoming government is impossible’. But it also means that an opportunity is provided for the expression of the views of the minority, and that a check is provided on extremist views. The reasons why a central bank should be free from political domination are widely recognized, and have been repeatedly stressed by writers on central banking. . I n the first place, the Government is the central bank’s largest customer. It cannot, at. the one time, be both banker and customer, without a clash of interests arising at some stage; and it may then have to choose between what would be the best policy to pursue in the longrange interest of the country, and what would best suit its own immediate budget- .ary convenience. Secondly, if the central bank is too closely linked with the Government, sudden changes of the party in office may mean sudden reversals of banking policy, with all that that implies of disorganization of the economic structure of the community. Thirdly, as the credit policy pursued by the central bank affects vitally the whole economy, it is essential that it should be determined on sound principles and without bias, and not be made the plaything of party politics. Fourthly, the lesson of history is that political control of the currency almost inevitably leads to currency depreciation and » inflation. Where no check is provided by maintaining the independence of the central bank, a government finds it difficult to resist the temptation to excessive credit, creation. Finally, if the central bank comes under political control, the door will be opened to corruption. Instead of credit being provided according to the soundness of the proposition or the creditworthiness of the borrower, the criterion may soon become his ability as a wirepuller or his willingness to bribe.

The general experience throughout history has been that where men’s livelihood depends on the decision of a public authority, there will be corruption. Professor Alfred Marshall says -

Corruption seems generally to have increased when there has been much money to be gained by political influence.

Professor Marshall’s point is that policies involving control of industry have always reacted on the moral character of the administrators, and have induced them to use their authority for private gain. The real point is that any monopoly will have this drawback. A monopoly is always a law unto itself, whether it is a. private or a public monopoly. A public monopoly which rests on a foundation of law is always a more perfect monopoly than any private undertaking can be, because competition with it is excluded by law. A private monopoly always faces the danger of competitors arising if it imposes too much on the public. It also has to contend with the danger of public indignation, which results in legal restriction of its power to exploit the public. A government monopoly is in no such clanger. The public unfortunately will stand a great deal more in the way of abuses from it than it would from a private undertaking.

Where a public monopoly exists, as will happen under this measure, there is generally corruption, which in some cases becomes extremely serious. The difficulty is always that the individual has to go to the public authority either to buy its goods, or to seek its services. One of the worst modern examples is that of Germany, where permits had to be obtained to get most things, even foodstuffs and footwear. It was always possible in Nazi Germany, before the war, to get what one required by paying a small secret commission to the man who had the power to issue permits, and the amount of the commission varied with the importance of the request. Nazi leaders grew extremely rich by these means, and even the rank and file of the Nazi party, who were either themselves public officials or could “ pull strings “, derived substantial incomes purely from the needs of the civilians. There is no reason to suppose that we can avoid this evil in Australia. We have it with us now, and not only in black markets. Under this form of hanking control it would unfortunately’ be easy for such corrupt practices to creep into ‘ the whole of our industrial system. The Commonwealth Bank will, under this bill, control the lending policy of the whole of the banking system.

It will be able to say that one industry may have money and another may not. The opportunities for corruption under such a system are obvious.

There is a further danger to the worker, as well as any other individual, in the proposed regulation of the lending policy of the trading banks. Regulations can be made so complicated that they allow a man or a firm in a given industry all the finance he requires, whilst his competitor may be entirely excluded from financial assistance. Commodities that compete are not always of the same nature. It would, for instance, be easy for the Commonwealth Bank to place a restriction on apple-growers, or prohibit further advances to banana-growers, thereby aiding one group of competitors in the fruit market against another. In fact, regulations for the control of advances could be used to control almost every industrial activity, and to push the individual around just as much as he was in the totalitarian countries. There is indeed every opportunity for totalitarian control, which is entirely opposed to our democratic ideals and which can be extremely dangerous to the freedom of the individual. Control of bank lending may not achieve this by itself, although it may go dangerously close to it, but the time will come when the Government will have to supplement the present controls by others, because once control has been established in a community it inevitably has to be supported by other controls until freedom is a thing of the past. Even the banking controls alone can lead in a large measure to manpower control. If we control the means by which men live we also control the men. The Government is, in fact, going very close to getting through these bills the control over the lives of the people which was refused them in the recent referendum, and the recent statement by the Attorney-General (Dr. Evatt) that “ the time has passed when people can choose their own employment” may easily become a fact. Supporters of the Government have been fond of saying that they want to make the Commonwealth Bank a people’s bank. It is a people’s bank now and the proposed legislation, if passed by the Parliament, would make it merely a politician’s bank.


.- The speech of the honorable member for Moreton (Mr. Francis) had a familiar ring, because it was consistent with the propaganda spread from time to time during recent months on behalf of the private banking interests. He followed in the footsteps of previous Opposition speakers and endeavoured to raise the bogy of inflation. Their remarks are not in conformity with the experience of other countries and the statements of prominent economic advisers throughout the world. Apparently, honorable members opposite are content to live in the past. The present banking systems have failed to keep pace with the advance of civilization and .the march of technological progress. Members of the Opposition have suggested that any interference with the banking institutions would bring ruin and virtual slavery to the people, but a glance at recent history shows the hardship which has been inflicted upon the masses of the people during times of depression. We know what has become of the savings of the people and of their business interests under the system of private banking. The general approach to this problem by the Opposition appears to have been merely to arouse fear on the part of the people regarding the legislative proposals of the Government which it has always endeavoured to engender when elections are pending. Although the predictions of honorable members opposite have proved to be unjustified, they resurrect their parrot cry from time to time, and try to stampede the people into action, which is against their best interests. We should examine the history of the banking institutions of the world, and consider their functions and purposes. The primary function of a banking institution is to assist in utilizing the resources of the country. How well that function has been performed in the past is realized by recalling the experience of the peoples of the world in economic depressions.

The Leader of the Opposition (Mr. Menzies) said that in our banking legislation and in our financial reform we have groped our way forward. That is true, but while scientific discovery has been used in the development of trade and industry, the banking system has lagged behind. Private banks have used every means at their disposal to prevent - the introduction of a scientific banking system. Throughout the years they have sought to surround the working of the banking and monetary systems with an air of mystery and secrecy. We are told that banking is far too delicate a thing for governments to control ; that any talk of banking reform will create a lack of confidence, and result in the loss of the people’s savings, and even of their liberty. When other sections of the community have been forced to do this or that according to the will of the Government, the banks have been asked to fall into line. They have retained their domination over industry, and over the lives and well-being of the people. I have no hesitation in saying that I am in favour of the nationalization of the banking system of Australia, and I believe that other countries, after the war, will also have to tackle this problem. We cannot afford to have an antiquated banking system if we are to solve the problems which lie ahead of us. Ranking, by its very nature, is a public utility, as was recognized by the Royal Commission on Monetary and Banking Systems, which was appointed by the Lyons Government in 1935, and which reported in 1937. The commission stated that the banks were a semipublic utility, and, therefore, should conform to certain standards, and obey certain directions of the government of the day. I believe that, because of the power which the banks exercise over the property and lives of individuals, they must be under government control. Banking, of its very nature, is a virtual monopoly. It cannot be carried on without agreement among the banks not to compete against one another as to rates of interest, and such an arrangement removes almost every element of competition as we know it in business. The setting up of clearing houses is the final step in the trend towards monopoly. Existing banking legislation provides for the licensing of hanking institutions, and would-be newcomers to the field would find it difficult to gain an entry. Honorable members opposite have said that the banks are not responsible for economic depressions. They suggest that depressions have about them something supernatural - that it is impossible to avoid the cycle of a boom followed by a depression. Discussing this point, Mr. R. Gr. Hawtrey, high official of the British Treasury, a Fellow of the British Academy, and a lecturer of economics at the London University, said - hi the nineteenth century and up to 1914 the trade cycle was accepted in a spirit of fatalism. Economists, unwilling to admit that it could be merely a monetary disease, surrounded it with an atmosphere of mystery. A systematic study Of the art of central banking reveals unmistakably the manner in which credit regulation causes unemployment. The common factor of pre-war and post-war experience is the intimate association of the “ State of Trade “ with the enlargements and compressions of the consumers’ income and outlay effected by the banks. If this fundamental casual sequence were generally understood, the public would hardly acquiesce in the central banks, proceeding from their position of complacent detachment, to generate depression, unemployment, bankruptcy, budget deficits and defaults with all the” resulting political and social convulsions, while government after government is broken, because it can neither stem the flood-tide of ruin, nor even provide tolerable palliatives to alleviate the consequences.

The primary function of the banking system should be to keep prices stable over long periods, and to avoid recurring booms and slumps. Honorable members opposite are always threatening us with the danger of currency inflation if we suggest that the banking system should be reformed. Here is what Mr. Hawtrey has to say on the subject -

Hardly any emergency short of war or revolution can impose such a strain on the national finances, as to seriously threaten inflation.

That is true. Inflation has caused loss and suffering, but this suffering has been more than matched by the suffering brought about during periods of deflation, which are of all too frequent occurrence. Mr. Hawtrey pointed out that inflation in Germany was brought about by a series of events which could not. have failed to break down any economic system, no matter how well planned. At the time inflation occurred in Germany, deflation was raging in Great Britain and the United States of America.

Honorable members opposite maintain that Part II. of the bill, that which provides that if the Governor of the bank and the Treasurer are unable to agree, the will of the Government must prevail, amounts to political interference in banking. I maintain that the Government must, in fact, govern. The point must be determined whether the government of the day shall maintain its right to give instructions to the instrument of its own creation, or whether that instrument shall dominate the government and Parliament. Professor Frederick Benham, in his book Economics, states at page 367-

It may happen, however, that the Government and the central bank do not agree upon policy. … If the Government cannot be persuaded to change its attitude its will must ultimately prevail.

The bank must be subservient to the Government which has been elected by the people. We have heard a great deal about the bureaucracy which has been created during the war, and how it has been given power which sets it above Parliament. The suggestion that any bank should be beyond the control of the government would establish a superbureaucracy. The Royal Commission on Monetary and Banking Systems made recommendations which will be given legislative effect when this bill becomes law. The only member of the commission who had any substantia] reservation was the chairman, who said -

I have no doubt that the board must subordinate its own to the considered policy of the Government. If it does not, the system of independent control is plainly unworkable, and must break down.

But although it may be difficult to contemplate the circumstances in which the board may be justified in acting otherwise, I am not” prepared to say they could not arise.

He claimed that if the Government imposed certain conditions which the banks refused to carry out. the system of independence would break down. Honorable members opposite claim that the object sought by the Government in this bill could be achieved by co-operation with the banks. They do not tell us that it has been impossible to get that co-operation in the past, and that it is not likely to be forthcoming in the future. When the banks are in a position to charge high rates of interest, they will not be likely to work in cooperation with governments or any authorities which might reduce their profits. I have already quoted certain views of Professor Benham. I shall now quote him again -

In addition to open market operations and changes in its bank rate, a central bank can exert its influence by making its wishes known to the financial houses. It usually has great prestige, so that it is often heeded. But it will seldom succeed in inducing banks and other financial firms to forgo for long profits which they could make, quite legally, by disregarding its desires.

That is a situation which has had to be faced in the past, and will have to be faced in the future. Writing of the years 1914-18 i in Great Britain, Kisch and Elkin in a book Central Banks, with a foreword by Mr. Montague Norman, said -

  1. but had there been a variance of opinion between the two authorities, the Government, with its exceptional war-time responsibilities, must, in the last resort, have been empowered to enforce its will.

Every authority and every government has recognized that, in the final analysis, the government must be the determining authority, and that no banking institution, whether government or private or semi-governmental, can be placed above the government of a country, or placed in a position in which it can sabotage the policy of the government as decided by the elected representatives of the people. In reply to Mr. Pethick Lawrence, in the British House of Commons, the Chancellor of the Exchequer said -

No doubt in regard to issues of the very highest importance in the last resort the will of the Government of the day must, with the sanction of Parliament, be made to prevail.

That is the question. The Royal Commission on Monetary and Banking Systems pointed out that the government of the day is the authority to which is given the power to make decisions and to do all things necessary for the fulfilment of the functions with which it, is entrusted. As that power is vested in the Executive, it should be in a position to say to all banking institutions what long-term policy shall be pursued. That does not mean dictation of the day-to-day policy of such institutions. It is interesting to read that one member of the commission was not satisfied with the activities of the hanks and the methods by which they increased their profits. The present honorable member for New England (Mr. Abbott), a member of the commission, questioned one of the witnesses closely as to the rebate system. He pointed out that the rebates arranged under an agreement which had been entered into between the banks and the shipping companies were returned not to the primary producers, the owners of the produce, but went to the bankers who financed the operations of the farmers in conveying their wool to Great Britain. The Leader of the Opposition said that central banking was a comparatively recent development. That is so. The Bank of England was established in 1694, and since then there have been no major developments in the form of banking. Banking institutions have grown slowly and have failed to keep pace with the needs of the modern world. As the right honorable gentleman said, we have blundered and groped our way forward. He regarded the right honorable member for Cowper (Sir Earle Page) as the father of central banking in Australia. The right honorable member for Cowper himself thought that he was entitled to the credit. The Commonwealth Bank has stood the tests through which it has passed, and to-day it is firmly established in the community. The additional powers conferred on it by legislation passed in 1924 were quite insufficient to enable it to fulfil the functions of a central bank. A central bank must have power to dictate to other banks what the rate of interest shall be, and should be able to curtail their activities in certain directions. It should he able to limit their’ lending in boom times, and to expand their lending in times of depression. The traditional functions of the banks have been open market operations and the use of the hank rate. There must be more control of investments and provision to direct investments into essential channels in an orderly manner, instead of by the harsh amd unsatisfactory methods which have operated in the past. When the hank-rate is raised, it is supposed to restrict lending and discourage borrowing, but in boom times it does not have that effect. The immediate result is to increase the profits of the banks. The first impact is upon the essential needs of a country. It is true that the basic needs return the smallest profit to investors; investment in luxury lines gives greater profit. When the interest rate is raised, it makes its impact first on the primary producers whose marginal profit is small. It limits credit in the place where it should not be limited, and places very little restriction where ‘ profits are high. Investment on luxury goods should be curtailed when only limited credit is available. My main condemnation of the present banking system is that bankers have failed to learn the lessons of the past. Even before the Christian era there were depressions, and they were met by the same methods as are employed to-day. In the first century before the Christian era Rome suffered from a great depression. It was only stemmed by the largest creditor in Rome agreeing not to call in advances and, in fact, to lend more. That proved to be sound economy. Experience has shown that when a depression is developing banks should diversify their activities in order that, if one branch is declining, they may exploit another instead of withdrawing large amounts of credit and thereby bringing the financial structure tumbling about their ears.

Mr Anthony:

– Is it not the borrowers who determine that by not making applications for loans?


– The honorable member’s interjection reminds me that in a depression it is claimed that a low rate of interest will begin an upward rise to normal conditions; but that is far from the truth, because we find that the banks are incapable of coping with the situation that they have brought about. The Minister for Transport (Mr. Ward) to-night quoted the opinions of two eminent bankers that the depression had developed beyond the control of the banks. That, demonstrates the inefficiency of the bank-rate as a check on a depression. We know that, regardless of the interest rate, in a depression the people are deterred from borrowing because industry is stagnating and the profits necessary to enable repayment are not earned. There are two faults in the present method of providing additional credit by private banks. In the first place, before persons are willing to engage in activities they must be assured that they will return profits, and, in the second place, even if additional credit is made available, there is no certainty that the banks will expand credit, but may, instead, use it to build up additional reserves against deposit liabilities. That brings me to the question of a central bank. The Royal Commission on Monetary and Banking Systems recommended -

Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should do both.

The Opposition points to the Bank .of England as the ideal pivot of the banking structure of any country. It engages in substantial banking activities. In depressions it finances various bodies to enable reconstruction and it will do so again after the war. The MacMillen Committee on Finance and Industry recommended that not only was that proper but also that the Bank of England should amalgamate the note issue with its general banking business. It felt that there was no real need to have a division of interests in that regard and said that, in fact, division might prove a weakness. The general banking business of the Commonwealth Bank is necessary, not only because it supplements other measures by which it can influence the policy of trading banks, but also because it can compete with them and in fact force them into action. I admit that there is a danger that, if it did that, its liquid cash reserves might be drawn off to build up the reserves of the private banks. Therefore I regard as important the provision that not only shall the Commonwealth Bank seek business, but also that governmental and municipal bodies shall bank with it. We are told that that is coercion, but it is rather foolish, in a country like this, that government and municipal authorities should bank with private banks when, in fact, the result of their paying interest to the Commonwealth Bank is reduced taxation, because the profits of the Commonwealth Bank go into Consolidated Revenue, thus benefiting these organizations of government.

Sir Frederick Stewart:

– What about the income tax paid by the private banks?


– That is relatively small compared with the profits that they have made and the hug© reserves, many of them secret from their shareholders, that have been amassed. The people of this country have had to pay interest at uneconomic rates. The rates charged have been as high as 7 or 8 per cent, on farming properties. If the Australian Country party considers that private banks should he allowed after the war to impose whatever rates of interest they like upon the farming community and others, it will lose the few remaining shreds of confidence which the farming community used to have in it, and the repercussions will be felt at the next general elections. ! come now to the management of the Commonwealth Bank and the substitution of an advisory council for the Commonwealth Bank Board set up in 1924 by the right honorable member for Cowper (Sir Earle Page) when Treasurer in the Bruce-Page Government. I can see advantages in a board) but none whatever in such a .board as that appointed by the Government at that time. It will be admitted, surely, that an institution of the character of the Commonwealth Bank, which can and does affect the whole economic life and the welfare of the people, should be managed by people with a technical knowledge of banking, ibo ability to assess trends and to be able to estimate what a certain policy will result in if applied, and should not by a board consisting of men chosen for their knowledge of’ industry and commerce. The method of control proposed iti this legislation is far wiser. The right honorable member for Cowper claimed that the changes which he made endowed the bank with wider powers, but they only resulted in the bank being deprived of the initiative to search for new business. The progress that it had been making was stultified. Mr. R. G. Hawtry also said - it is not the independence of the central hank, but its technical competence, an insight that will gain a hearing for its protests.

That is undoubtedly the case. If, at any time, a board is necessary, it must be a full-time, salaried hoard consisting of men chosen for their knowledge of finance and banking. Their interests must be in and their allegiance to the institution that, for the time being, they are managing. There is little doubt that management by a governor, who will have at his command the most competent persons available in a community as advisers, will be much more satisfactory than management by a board, such as has directed the affairs of the bank in the last few years.

I come now to the contentious subject of the note issue. Honorable members opposite have claimed that the proposals of the hill in regard to the abolition of the note issue reserve will have dreadful consequences, but this policy was recommended by the Royal Commission on Monetary and Banking Systems. The policy has also been recommended by very many financial experts and economic advisers. The argument that gold is necessary as a cover for notes has no substance behind it; a reserve of securities may have some advantages. Gold, as we all know, is entirely unproductive, whereas securities yield their return in interest. Professor Caiman, Professor of Political Economy of the London University, has this to say in his book, Money, at page 87, in regard to cover -

Buried in cellars it might as well be under the sea in the Titanic, or under the ground in the Transvaal.

Yet to such lengths of absurdity does the worship of cover go- that cases have been known in which the issue of inconvertible currency have actually increased the issue in order to buy cover with the addition.

The professor also states in his book, Modem Currencies, page 71’ -

The belief that a hoard of gold can influence the value of notes, merely bcause it is called “ cover held against them “ is a gross superstition. Whether it can bc exorcised by reasoning seems doubtful, and it has so far successfully resisted ridicule. We can only hope that abandonment of the superstition may come at last from further repetition of the universal experience that “ cover “ which is not to bc touched by the profane hand of man, is absolutely useless for the purpose it is supposed to fulfil.

Mr. R. G. Hawtry, in his book, Hie Art of Central Banking, touches on the subject of a reserve against the note issue in the following comment: -

The bank ought not to be restricted foy a law limiting its fiduciary issue or requiring a minimum proportion of its note issue or of its demand liabilities to be covered by gold or even by gold and foreign exchange.

There is, therefore, a very strong presumption in favour of complete freedom from reserve restrictions.

If it be claimed that there should be a fixed proportion of gold held against the note issue, there is also surely some justification for the claim that there should be a cover on behalf of the depositors, in respect of whom there is a more real liability than there is. against the note issue.

I referred earlier in my speech to what. 1 believe to be an essential power, in any central bank, to regulate the policy of advances and investments. The royal commission reported, in 1937, that the Commonwealth Bank should be in a position to advise the trading banks as to the extent to which it is desirable in the national interest that advances should be made. It also stated that the Commonwealth Bank should be in a position to indicate the industries which should be encouraged to expand and those which should not be so encouraged. The commission reported -

We do not suggest that the Commonwealth IBank should interfere in any way with the granting of particular advances by trading banks, but rather that it should advise as to the general direction of advances.

Professor Cannan, at page 88 of Modern Currencies, says -

After all, bankers ure not, even in the opinions of monetary experts, supermen who can be trusted to exercise despotic powers over rates of interest wisely. The infirmities of bankers may have had something to do with the slump in 1029-31, which might never have appeared if it had not been for their predeliction for accumulating unnecessary gold.

The rule of thumb used by the bankers in the past has not been satisfactory. It has resulted in sudden cycle of booms and slumps. Proper attention has not been given to the necessity to employ the idle resources of the nation in the national interest. I consider that it is essential that the central bank should have the power which the Government now proposes to vest in the Commonwealth Bank. That institution should be authorized to indicate the manner in which investments should be expanded or contracted. This does not mean, as the Treasurer pointed out in his speech, that the Government, as a general rule and at all times, will interfere with banking policy. It is, however, fundamental to wise government that the Executive shall have power to direct investments. No government, unless it is prepared to abdicate its right to govern, should allow such a power to remain in the hands of private bankers. A government, better than any other authority in the community, can exercise judgment on developments that are necessary to the welfare of the great mass of the people as against the fortunate few.

I come now to the subject of deposits. The provisions of the bill in this regard are in accord with the findings of the royal commission. In this connexion the Macmillan Committee on Finance and Industry stated at page 157 of its report -

We recommend that the Loudon Banks should aim at the maintenance on the daily average of each three-monthly periods of an amount of cash in bank notes and balances with the Bank of England of not less than 10 per cent, of their deposits.

Thu main reason for expecting the banks to keep reserves above the minimum for daily convenience is no longer primarily the safety and solvency of the banks themselves, as it was in former times, but the necessity for providing the central institution with adequate resources wherewith to manage the monetary system and safely furnish the member institutions with those conveniences for rapidly liquidating earning assets upon which the latter depend.

The procedure laid down is in my opinion a wise one. The adoption of that policy will, without doubt, have a salutary effect on inflation tendencies.

I draw attention, now, to the provisions of the bill which require the trading banks to make statistical information available to the Commonwealth Bank. All private banking institutions should be obliged to publish balance-sheets that are intelligible to the general public. As things are, I have no hesitation in stating that the balance-sheets of the trading banks would defy analysis by any accountants. Through the years we have been taught to believe that high finance is the mystery of mysteries. The international financiers have exercised a kind of black magic, and they have encouraged the belief that they and their institutions are above the control and beyond the power of governments. This attitude must be abandoned and I am glad that the Government is taking steps to ensure that all hanking institutions will be obliged to reveal their true financial position.

I welcome the introduction of this legislation. I believe that its provisions are largely in accord with the general desires of the community. Undoubtedly the Commonwealth Bank should be strengthened and developed. For this purpose trained men and women will be required. The only source from which they can be obtained at present is from the trained staffs of the private banking companies. The Treasurer should go as far as he can towards giving a definite assurance that if the staffs of the private banks desire to enter the employment of the Commonwealth Bank and, by loyal co-operation, help to build up that institution so that it may provide more fully for the development of this country and the well-being of its people, the conditions will be made attractive to them. Their services will be needed, and our responsibility to them is no less than that which we have to any other section of the community. I know that the Treasurer has stated from time to time that every facility in that direction will be provided. In the post-war years, there will be strains and stresses that have not previously been experienced, and if the Government is unable to control the finances of this country there will be, not the inflation suggested by honorable members opposite, but ruin and bankruptcy, which any administration will be powerless to combat. We shall see unemployment and want throughout the community, and the dissipation of the savings of men and women in their efforts to maintain themselves while struggling to obtain work. The dreadful scenes of the past will be repeated. We have been told that we are fighting this war in order to make the world a fit place in which to live. If we do not pass this legislation, and control the private banking institutions, there is no certainty that the plans we have made and the schemes we have laid for the rehabilitation of ex-servicemen and the development of this country, can be given effect. I welcome the bill, and am confident that it will be warmly acclaimed throughout the country.

Debate (on motion by Mr. Spender) adjourned.

page 2225


Australian ARMY: Releases; Case of Private H. C. Cornish - Footwear.

Motion (by Mr. Chifley) proposed -

That the House do now adjourn.


.- Last January, I received a letter from a constituent in connexion with his son. In the course of it he said -

I wish to bring under your notice a recent decision of the Universities Commission re the release of- , rejecting his application for release to continue his law studies, on the grounds he was not a full-time student.

While doing a job for his country he graduated in economics and completed his second year in law, which was interrupted by his military service some three years ago. When he was called for the Army he had a first-class chance of passing with honours. Students with not half his qualifications have already been released.

Surely, Mr. ‘Daly, such a class-conscious decision against the sons of working people, only have to be brought to the knowledge of a Labour government to be revised. His only sin is that prior to the war he had to work in the day-time and then go to the University at night; therefore, he is graded a part-time student by the university.

My son has had two years’ service in combat areas, and is desirous to complete his studies as a full-time student.

It seems by the decision of the Universities Commission that only the sons of wealthy parents may hope to reach the higher education at the university.

Following representations to the Minister for the Army (Mr. Forde), I received from him in March a letter which said -

Advice has been received that the Universities Commission has given consideration to his application but it is unable to recommend . . release.

In a letter to Senator Ashley in connexion with the same matter, the Minister for Post-war Reconstruction (Mr. Dedman) said -

I have discussed- case with Professor

Mills, the chairman of the Universities Commission. Professor Mills has informed me that the application was considered very carefully in the light of the principles which have been .determined in such cases. The commission carefully considered all the circumstances and not only the fact that the applicant has been a part-time student prior to enlistment. In fact, Professor Mills informs me that probably the deciding factor in regard to- was that he was already a graduate in economics.

Those are the grounds on which the application was rejected. In the light of additional evidence that has come to band, I ask for the re-opening of the ease. A letter received from a person closely associated with the selection of these students, lias been banded to me by th young man’s father. It says -

Your application was one of these. We made a strong recommendation that your application should he granted, and, of course, your academic record with us was a good one - several of your papers reaching honours standard. All this was pointed out and when your application was refused, Professor Williams interviewed Professor Mills on the matter (along with two or three others). The answer given in your case was that there was a general rule that graduates could not be released unless they were taking a combined course (i.e., arts and law and had thus graduated in arts during first year law). You were a graduate in economics and thus were ruled out. … I think you should point out - what, no doubt, is the case - that you took economics as a prelude to law, as I know many mcn are advised to do this, since a knowledge of economics is very useful in the profession. Your length of service is too a strong argument - although the commission docs not seem as impressed with that as we are.

This young man, I submit, has fulfilled every condition that is necessary to qualify for release from the Army in order to attend the university. For some reason, he has been denied the opportunity - which I am advised has been given to others who have not his qualifications - to resume his studies at the university. Hi3 academic record prior to enlistment was brilliant. It would appear that one big drawback is that during his military service with the Australian Imperial Force he had the initiative to graduate in economics. Another factor is that prior to enlistment he was a part-time student. His father has pointed out that he could not afford full-time studies at the university, and had to work in the day-time in order to maintain himself. His chances of completing his studies should not be jeopardized by reason of the fact that he had to maintain himself by working in the day-time, and thus could be only a part-time student. My advice is that servicemen with inferior qualifications who have graduated in . economics, have been released and are continuing their studies at the university. There may have been discrimination against this young man, probably quite unconsciously. I ask the Minister representing the Acting Minister for the Army to look into the matter, with a view to doing justice. Probably, he could not resume his university studies at this late period of the academic year ; but his case should be kept in mind, and the matter of his release should be considered when the next releases are being made of men who wish to attend university courses.


.- I bring to notice the case of Harold Charles Cornish, Private V49213, son of an exsoldier who gave that kind of useful inconspicuous service which has gone so far to build up the reputation of servicemen throughout the “world. His private place of residence is 256 Bell-street, East Preston, Victoria. The soldier has been found guilty, so I am led to infer - for the ways of courts-martial are peculiar - of absence without leave. He may even have been found guilty of desertion; certainly not desertion in face of the enemy, or without good cause - for in my opinion he had excellent cause, namely, being a man on active service when he is physically quite unfit for it. I am very anxious to have his case dealt with by the Acting Minister for the Army, or by the Minister for the Army himself should he return to Australia before the release of the soldier, which we hope will not be the case. Three months ago Cornish was sentenced by courtmartial to two years’ detention. He is a sufferer from more physical ills than fall to the lot of the average man. “When he was three years old he fell into a bucket of nearly boiling water which resulted in a continuing injury and scored lines across the small of his back and his buttocks, which I have seen and which necessitated years of treatment in the Children’s Hospital. He is completely deaf in one ear, and has a twisted arm that has been fractured at least half a dozen times, and which prevents him from using a rifle. He has been temporarily blind since he was struck by a stone thrown by a fellow scholar : it severed an artery and caused blindness extending over a considerable period. His sight is now defective, and has been continually so. Under the name of Charles Grant, the surname being his mother’s maiden name, he was discharged as unfit for military service. There is no record that the court-martial took any account of that fact. It may have done so, but its deliberations were partly in secret, according to the ways of courts-martial. Its recommendations finally had to be confirmed by some mysterious higher authority, before which I did not appear, and they were made to a military body, or officer, before whom no argument took place. Our exhibits have not been returned to us : I refer particularly to the discharge for unfitness which I put in as evidence before the court-martial at the request of the soldier and his parents. Apparently, it has been confiscated. It is true that the soldier was absent without leave for a considerable time, and it may be that he received a longer sentence because of the fact that I appeared for him. His absences arose from his long-continued protest against being kept in the service for which he was quite unfitted medically, and in respect of which he had actually received a discharge. It is true that he received it under a name to which he was certainly not entitled, but that should not be held against him as a very serious offence. The practice is commonly resorted to for the purpose of getting into the service, rather than out of it. It is obvious that all these conditions and the man’s physical defects called urgently for specialized treatment. His lack of hearing, his twisted arm and his defective eyesight called for it. It is not surprising that the parents are indignant that his case should be left to the perfunctory examination of a medical officer who naturally and necessarily takes cases in the mass and may conclude that a soldier is “ swinging the lead “. This man recently married and his wife and parents wish to give him specialized treatment. A doctor looks at him casually with others, especially as he has the stigma of having been convicted for absence without leave. That places him at a grave disadvantage. It is common in these cases to say that the sentence will be reviewed at some time in the more or less distant future - that is, reviewed subject to good conduct. It is equally common, however - and I say this with knowledge - to declare that the prisoner’s conduct at the time of the review, according to the person charged with the duty of reviewing it, has not been such as to warrant leniency. I know that that has been most unfairly done in one or two cases. I have heard of such cases, and notably when the soldier’s conduct has been exemplary. That is the point where the military authorities completely override the Executive Government. I submit, therefore, that having regard to this soldier’s state of health, and the fact that he is, in my view, obviously unfitted for service, a lenient view should be taken of his irregular conduct in parting from service for the reasons which I have mentioned. Inasmuch as he has been discharged from the Army, as I understand he has, he should also he discharged from custody, because no useful purpose can be served by his further detention. This is only one case of many, but it is the one which has first claim on my attention. This is a matter of ministerial responsibility rather than one for the military authorities, and I hope that the Minister will take a firm stand in regard to it.


– I desire to draw attention to the poor quality of material used in the making of children’s shoes and boots sold in South Australia. Some time ago, I produced in this House a pair of shoes the soles of which had worn out after a fortnight’s use by a boy ten and a half years of age. ‘I was told on that occasion that, as the shoes carried no brand, nothing could be done in the matter. After I returned home, I bought for 12s. lid. another pair of shoes with nailed soles, and I have here the receipt for the payment. On the 5th May, exactly three weeks after the date of purchase, I had to take the shoes to the cobbler to be repaired. It is evident that leather is available of a better quality than was put into shoes, because the sole which the cobbler puts on lasts for months. People with large families must find it very hard to keep their children shod when the quality of footwear is so bad. I know that the quality of leather has improved since control has been exercised by the Government, but the quality of footwear sold in South Australia is still very bad. I hope that something can be done to improve it.

Question resolved in the affirmative.

page 2228


The following papers were pre sented : -

Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - 1945 -

No. 25 - Commonwealth Public Service

Artisans’ Association.

No. 26 - Commonwealth Public Service Artisans’ Association.

No. 27. - Commonwealth Public Service Clerical Association and others.

Lands Acquisition Act - Land acquired for Commonwealth purposes -

Eagle Farm, Queensland.

Eagle Farm (Meeandah), Queensland.

National Security Act -

National Security (Emergency Control) Regulations - Orders - Military powers during emergency (2).

National Security (General) Regulations - Orders -

Taking possession of land, &c. (27).

Use of land (2).

Regulations - Statutory Rules 1945, Nos. 70, 71.

House adjourned at 11.24 p.m.

page 2228


The following answers to questions were circulated: -

Country Telephone Services.

Medical Practitioners.

Meat Industry : Portland Meat Supplies.

Mr Beasley:

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

  1. Yes.
  2. A beef quota of two bodies weekly has been tentatively granted.
  3. No.
  4. Two bodies of beef weekly.

Post-war Re-establishment: Quotas for Small Businesses.

Commonwealth Disposals Commission : Army Huts; Surplus Army Vehicles.

Mr Harrison:

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

  1. Have all vehicles considered surplus by the Department of the Army been handed over to the Disposals Commission for resale?
  2. How many vehicles were released to the Disposals Commission, and on what dates?
  3. Is it a fact that the Army has a number of vehicles that are not being used, and that they are depreciating through being left out in the open?


Mr Chifley:

– The general question of migration to Australia is at present receiving the consideration of the Government and an announcement with regard to the matter will be made as early as possible.

United Nations Conference on International Organization : Power of Veto.

Mr Chifley:

– The answers to the honorable member’s questions are as follows : - 1 to 5. The so-called “ veto “ power arises from the voting formula agreed on at the Yalta conference for the making of decisions by the Security Council of the United Nations Organization for peace and security. This formula, as adopted by Great Britain, the United States of America, the Union of Soviet Socialist Republics, and China for presentation to the conference at San Francisco, provided that the Security Council should make its decisions as a generalrule by an affirmative vote of seven out of its eleven members, all five permanent members concurring. The only exceptions were that -

  1. in procedural questions decisions should require an affirmative vote of any seven members, and
  2. that in attempting peaceful settlement of any dispute, or when considering reference of a dispute to an approved regional body, the parties to such a dispute, whether great powers or not, should not vote.

Discussion of the Yalta formula at the British Commonwealth meeting at London prior to the San Francisco conference revealed objections by several delegations to some aspects, especially if the formula were taken to permit any one of the great powers to veto examination or peaceful settlement of a dispute to which it was not a party.

Explaining the Australian attitude as presented at San Francisco the leader of the Australian delegation, the Right Honorable F. M. Forde, declared in his speech at the plenary session - “ The term ‘ veto ‘ is not altogether a happy one. In relation to sanctionsit means only this: that if the world organization is to exercise economic or military sanctions against an aggressor, which, of course, involves acts of war, its leading members must act unitedly or not at all. But the very considerations which are appropriate to enforcement action by the greater powers are out of place in relation to the settlement of disputes by means of conciliation, arbitration or by other pacific means. In such cases - which are covered by Chapter VIII.aof the Dumbarton Oaks proposal’s - the Security Council should be empowered to act by the proposed majority of seven without the requirement of the approval by each and every one of the five great powers. I think that this point of view is implicit in the Yalta formula, which in relation to Chapter VIII.a, prevents a power which is party to a dispute from voting at all.”..

Any subsequent proposals made byDr.Evatt on this matter are in conformity with this viewpoint.

The general lines of policy now being applied in detail by the Australian delegates at San Francisco were approved by the Australian Government after the Australia - New Zealand Wellington Conference last November and were laid before the House in a statement tabled by the Minister for External Affairs on the 30th November, 1944.

Further general information will be found in the documentson the United Nations Conference on International Organization which are being circulated to honorable members.

Land Settlement of ex-Servicemen : Wheat Production.

Mr Scully:

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

  1. I understand that a number of properties are being considered for ex-servicemen land settlement by the New South Wales Government, but I am not aware of the details or of the methods being employed to acquire these properties. No proposals for settlement have yet been received by the Commonwealth Government from the New South Wales Government in terms of the agreement reached at the conference of Commonwealth and State Ministers in October of last year.
  2. I understand that some private subdivision has taken place but it is not possible to obtain details at the moment. It should be mentioned that the responsibility for selecting and earmarking areas suitable for exservicemen rests with the States which then submit proposals to the Commonwealth Government.
  3. Yes. 4 and 5. This is a matter of policy which will be determined when the question of continuation of the wheat stabilization plan under peace conditions is under consideration.

Broadcasting : News Services

Mr Fadden:

n asked the Minister repre senting the Postmaster-General, upon notice -

  1. With reference to the statement of the Minister for Information that the general manager of the Australian Broadcasting Commission, Mr. Moses, acting entirely on his own initiative and without reference to his commissioners or the Postmaster-General, told the Federation of Commercial Broadcasting Stations that they would have to pay £9,000 a year for the commission’s news service and acknowledge it three times a session, is it a fact that a meeting of the commission was held at the end of January, 1945, at which Mr. Moses submitted proposals covering the suggested agreement with the commercial stations for such a news service, and received the endorsement of the commission?
  2. If so, in view of the fact that Mr. Moses is unable to make a statement in the House, will he afford him the fullest opportunity to give his account of what took place?
  3. Will the Minister table the proposals submitted by Mr. Moses to the commission at the meeting referred to in paragraph1 ?
Mr Calwell:

– The PostmasterGeneral has supplied the following answers : -

  1. I have no knowledge whether any such meeting as thatreferred to by the right honorable member was held.
  2. See answer to. No. 1.
  3. The Australian Broadcasting Commission is an independent body, free from political control, and it is, therefore, not within my province to table any documents submitted to any meeting of the Australian Broadcasting Commission.

Federated Ironworkers Association : Position of Mr. Nourse

Mr Archie Cameron:
Postmaster-General · BARKER, SOUTH AUSTRALIA · ALP

n asked the Minister for Labour and National Service, upon notice -

  1. On what date did a Mr. Nourse take up duty as secretary of the Ironworkers Union in Adelaide, and on what date was he engaged?
  2. Was he released from a protected occupation for this purpose; if so, on what date and on whose recommendation?
  3. Was he called up for military service upon ceasing to be engaged in a protected occupation; if so, what was his age and medical classification ?
  4. If his medical classification was A1 or A2, why was he not sent on active service, and who decided that he should not be sent? 5.Have any other unions in South Australia been refused A1 or A2 men as secretaries or organizers?
  5. If so, how does the case of Mr. Nourse tally with that of other persons similarly situated?
  6. Did ironworkers threaten to stop work if Mr. Nourse was obliged to fulfil the military duty demanded by the law?
  7. Will he table the papers on this case?
Mr Holloway:

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

  1. The Deputy Director-General of Man Power, Adelaide, was informed on the 27th November, 1944, that W. Nourse had been elected as full-time organizer of the Federated Ironworkers Association. An explanation was asked for by the Man Power Directorate and they were informed Nourse had been temporarily released by the Railway Commissioner and the union secretary did not think it was necessary to secure permission for a temporary engagement. As leave was granted on the 11th November, 1944, it is assumed he was engaged on that date.
  2. Nourse was released by his employer. See date in answer to No. 1. The railways are a protected undertaking.
  3. Nourse was called for medical examination and classified Al. He is 32 years of ago, married with four children.
  4. The Army issued notice of call-up for the 10th May. I have asked the Directorate of Man Power to allow Nourse to go back to his previous employment in the workshops if the Commissioner of Railways agrees.
  5. Yes, several unions and the South Australian Labour party head office were refused permission to engage men of military age and all employed elderly men.
  6. Men are wanted , for railway work. Therefore, Nourse has been offered a chance to go back to his previous employment. He will not be treated differently from others.
  7. No.
  8. I have no papers in Canberra and trust that the honorable member will be satisfied with the above answers to his questions.

Tennant Creek

Mr Archie Cameron:

n asked the Minister representing the Minister for the Interior, upon notice -

Has any decision been reached in reference to the (a) provision of a water supply, (b) provision of electric power, (c) re-opening of the gold-fields, and (d) restarting of a public buttery, at Tennant Creek if

Mr Lazzarini:
Minister for Home Security · WERRIWA, NEW SOUTH WALES · ALP

– The following answer has been supplied by the Minister for the Interior : -

  1. Recent advice received from the Administrator indicates that the water supply is working satisfactorily.
  2. £2,000 has been spent during the present financial year on the provision of a limited service now operating to Government buildings and in the construction of foundations for a power-house. A further amount of £4,400 has been included in the draft estimates for next financial year. This is intended to cover the cost of the completion of the powerhouse, the installation of lighting sets now at Alice Springs, and the extension of the mains. The ultimate scheme is intended to service the remainder of the town.
  3. There has been no embargo on goldmining in the Tennant Creek area.
  4. No decision has been reached with regard to the restarting of the government batteries.

Canberra: Re-employment and Housing of ex-Sevicemen.

Mr Francis:

s asked the Minister representing the Minister for the Interior, upon notice -

  1. Are returned soldiers who are waiting to interview the man-power officer in Canberra accommodated on forms outside the building, and obliged to stand when answering this official’s questions?
  2. Are these the same forms that were used by applicants for the dole during the depression years?
Mr Lazzarini:

– The following answer has been supplied by the Minister for the Interior : -

  1. No.
  2. No.
Mr Francis:

s asked the Minister representing the Minister for the Interior, upon notice -

Is Canberra exempt from the returnedsoldier preference clauses of the housing regulations?

Mr Lazzarini:

– The following answer has been supplied by the Minister for the Interior : -

I have some doubt as to which particular housing regulation the honorable member is referring.If he is referring to the National Security (Housing and Accommodation) Regulations, I can inform him that Canberra has not been specified as an area to which those regulations apply.

If, on the other hand, the honorable member is referring to the National Security (War Service Moratorium) Regulations, the answer is that Canberra has not been exempted from the provisions of those regulations.

Commonwealth and State Finances: Public Debt; Note Issue; Treasurybills

Mr Archie Cameron:

n asked the Treasurer, upon notice -

What was the amount of (a) the public debt. Federal and State, (b) the total note issue, (c) the total reserve against the note issue, (d) the notes held by the public and

  1. the treasury-bills in circulation or on issue on (i) the 3rd September, 1939. and (ii) the 20th May,1945?
Mr Chifley:

– The answer to the honorable member’s question is as follows : -

  1. Total note issue: 4th September, 1939, £49.275.214, and 21st May, 1945, £186,243,625.
  2. Total reserve against the note issue: 4th September, 1939, £16,029,604, and 21st May. 1945, £50,856,350.
  3. Notes held by the public: 4th Sep tember, 1939. £36,170,767. and 7th May, 1945, £169,196,507.*
  1. Bank, treasury-bills and debentures issued to replace; treasury-billa, included in public debt -

Dispute at Lysaghts Limited.

Mr Chifley:

y - On the 23rd and 24th May the honorable member for “Wentworth (Mr. Harrison) and on the 25th May the honorable member for New England (Mr. Abbott) asked mo questions regarding disputes at Lysaghts Limited, in Newcastle. In some of these questions it was suggested that the rights to reinstatement of ex-servicemen were being prejudiced and that the exservicemen were being embarrassed by factional squabbles. The facts are that there have recently been two distinct disputes at Lysaghts Limited, the first of which concerned a matter of reinstatement under the provisions - of the National Security (Reinstatement in Civil Employment) Regulations, and - the second of which was consequent upon the reinstatement of an employee, but has, in fact, nothing to do with the rights of returned men. The first dispute commenced on the 14th May, when nightshift workers in one mill stopped work, refusing to work with an ex-serviceman, E. J. Baker, who had been reinstated by the company. As a result of this dispute, Mr. Justice Cantor visited Newcastle, and on the 17th May he issued a judgment to the effect that the company had acted properly and in compliance with the regulations. Following this decision, the night shift resumed work that night. As a result of Baker’s reinstatement, however, the man who had been employed in Baker’s position and a number of others had to be moved to different jobs. In the course of this reshuffle a dispute arose on the matter of seniority, and a further stoppage of work occurred in another mill on the 16th May. Mr. Justice Cantor subsequently visited Newcastle again, and on the 24th May gave a decision on this matter of seniority. There was no new strike on the 24th May as suggested by the honorable member for New England. In view of the fact that the man concerned has been reinstated and the men in his mill have returned to work, no question of embarrassment arises, as implied by the honorable member for Wentworth. Mr. Justice Cantor’s decision safeguarded the rights of the returned man in this case, but I repeat the Prime Minister’s assurance that the Government will take all possible steps to ensure that there shall be no victimization of ex-service personnel and that their undoubted reinstatement rights shall be preserved.

Cite as: Australia, House of Representatives, Debates, 29 May 1945, viewed 22 October 2017, <>.