17th Parliament · 3rd Session
Mr. Speaker (Hon. J. S. Rosevear) took the chair at 10.30 a.m., and read prayers.
Criticism of British Delegation - United Nations Charter
– I address to the Acting Prime Minister a question based on published reports that the British delegation to the “United Nations Conference on International Organization has lodged what is described as a friendly and informal protest, arising out of criticisms of the British delegation, made to press representatives by the Attorney-General (Dr. Evatt). It appears from these reports that the statement of a protest having been lodged came officially from the delegation. It would appear also that the Deputy Prime Minister (Mr. Forde) was not consulted by his colleague in the action which that right honorable gentleman took. Will the Acting Prime Minister say whether such a protest has been received by the Government? Has the Acting Prime Minister had any report from the Deputy Prime Minister or the Attorney-General in regard to the episode? In view of the widespread concern which these reports have caused, will the right honorable gentleman make a full statement to the House?
– My attention was drawnthis morning to a statement which appeared in one of the newspapers published yesterday afternoon.
– It appeared in several of them.
Mr.CHIFLEY. - I have read only one. I have no knowledge of the incident.
– No protest has been received by the right honorable gentleman?
– I have not received an intimation of any kind from any party. The Deputy Prime Minister will be in Australia at an early date. I shall take the opportunity to discuss the matter with him. If he feels disposed to make a statement in the capacity of Acting Prime Minister, Ihave no doubt that he will do so.
– In view of the possible damaging effects on Empire relations, particularly confidence between the Governments of Australia and the United Kingdom, if the activities of the Attorney-General, as reported in the press, are correct, will the Acting Prime Minister despatch a cable to the AttorneyGeneral asking him for a statement on the subject? If any controversy has arisen on this matter, will the Acting Prime Minister endeavour to obtain from the Government of the United Kingdom the facts? The Acting Prime Minister stated that the Deputy Prime Minister (Mr. Forde) would arrive in Australia shortly, and, if necessary, would deal with the matter, but I remind him that this incident occurred after the departure of the Deputy Prime Minister from San Francisco.
– I have no intention of sending a cable to the AttorneyGeneral about the matter. I have no information about the subject, other than the statement that I read in the press, but if it is suggested that any inquiry should be made, I have no doubt that the Deputy Prime Minister, on his return, will examine the facts. In the meantime, I do not propose to go “fishing” for more trouble, or making more trouble. The newspaper report stated that some conversations had taken place behind closed doors, recalling to my mind the “ off the record “ talks that successive Prime Ministers have had from time to time with representatives of the press. Sometimes, subjects discussed at those meetings leak out.
– The Attorney-General’s statement was made to a press conference.
– The article which I read stated that one of the conferences took place behind closed doors. However, I do not propose at the moment to send any cable or to make any inquiries as suggested by the honorable member. I have found that if any trouble is brewing, it reaches me with lightning speed, I do not have to go looking for it.
– I ask the Acting Prime Minister whether the Government has received the full text of the new
United Nations Charter, to which Australia is a signatory? If so, will he inform the House why copies of the document were not made available to members of this House when it was made available to the press, in order that they might not have to rely upon newspapers for the text of this historic document? Will he arrange for the document to be tabled in this House, and will we be given an adequate opportunity to discuss it?
– A cabled version of the charter arrived yesterday morning. I have had no opportunity of going through it in detail, but I understand that its verbiage requires some alteration. The Deputy Prime Minister will be here shortly with an exact copy. I repeat my promise that an opportunity will be given for some discussion of the charter in this House, but that should be delayed until one or both of our delegates can be present. They would be more familiar with all the particulars than I could hope to be.
– We want non-official delegates here, too.
– Yes, Opposition and Country party members should also have the opportunity to have a discussion with those who represented them at San Francisco before the debate takes place. I shall recommend to the Deputy Prime Minister that an opportunitybe given to the House for some discussion of the charter. It is quite apparent that the adoption of the charter will require legislative sanction. That will enable a full debate, but as soon as possible one day, or, perhaps, two days, if honorable members work a little faster, ought to be set aside for a preliminary discussion. As to the latter part of the honorable member’s question, I shall arrange for copies of the charter to be distributed as soon as possible, probably early next week.
– Will the Acting Prime Minister state whetherone, Georghe Molnar, Sydney Daily Telegraph cartoonist, who lampooned this House in a recent cartoon, reached Australia in 1939 and was admitted as a Jewish refugee from Roumania? Was he given employment by the Common wealth Government, and naturalized in December, 1944? Is he still employed by the Commonwealth Government in the Munitions-Small Craft Construction Directorate? If not, when did his employment in that capacity cease? Did he, almost as soon as he had qualified for naturalization in Australia and had obtained the privileges of Australian citizenship, attack by cartoons published in the Sydney Daily Telegraph the parliamentary system of government in this country, and attempt to bring the national legislature into contempt? Is it in the national interest that recently naturalized persons from enemy countries shouldbe employed by the Commonwealth in important departments before they have a proper appreciation of the background of our democracy?
– I have no knowledge of the matters mentioned. If the implications contained in the questions give a true picture of the position, I certainly consider that the matter ought to be examined. The most that I can do at the moment is to ask the honorable member to place his questions on the notice-paper, so that I may have inquiries made and. reply to him later. re-establishment and employment bill 1945.
-Has the attention of the Acting Prime Minister been drawn to to-day’s press reports of a meeting of protest, held in the Sydney Town Hall last night, attended by 1,200 persons, and at which very strong comments were made in regard to the Re-establishment and Employment Bill ? Was the claim made that this legislation should be withdrawn and redrafted so as to conform to the draft legislation submitted to the Government by the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia? Will the right honorable gentlemen state whether the Government intends to withdraw it, and introduce amended legislation that will more nearly meet what ex-servicemen believe to be their requirements?
– I have not read the report to which the honorable member has referred. As to the second portion of his question, also, the answer is “ No “, with the qualification that, if it be found that the legislation should be amended in certain respects because it does not operate exactly as was intended, the Government will hare the necessary alterations made ; but it has no intention to withdraw or redraft the measure.
– Some months ago, I asked the Minister representing the Minister for Trade and Customs a question with regard to the restriction of imports from overseas, and at that time he thought that the restrictions should be lifted. Can the Acting Prime Minister make a statement as to the policy of the Government regarding the restriction of imports from Great Britain, the United States of America and other Allied countries?
– No doubt the matter was discussed previously with the Prim© Minister, although I am unaware of any particular conversations with him about it. I had a talk on the matter recently with the Minister for Trade and Customs, and he will make a special report to the Government regarding the importation of certain goods which cannot be manufactured in Australia, or which cannot be made here for some time, but which are required for essential services, such as transport. I am nOt in a position to make a statement on the matter immediately, but it will be dealt with by the Government at an early date.
– An announcement was published in the press recently that it is proposed to provide 40,000 tricycles, cars, scooters, &c., for Australian children for Christmas, and that the Commonwealth Government is considering diverting a private munitions annexe from war production to the manufacture of these goods. In view of press statements that the Government contemplates granting facilities for the manufacture in munitions annexes of toys for children for the Christmas season, will the Minister for Post-war Reconstruction at the same time enable established toy manufacturers to resume operations by removing the pro hibition of the production of these goods? These factories have an obligation, which they wish to discharge, under the provisions of the Rehabilitation and Employment Bill to reinstate former employees. Should the production of toys for Christmas be permitted in government and other munitions annexes, it will be impassible for former toy manufacturers to fulfil that obligation.
– I know nothing about any proposal to manufacture toyo in any government factory. It is true that, earlier in the. war, control of the manufacture of toys in private factories was established on account of the necessity to divert man-power and resources to more essential purposes. That control has worked very satisfactorily and has, indeed, resulted in the production of higher-quality toys than would normally have been made. This control, as with all other controls, is periodically examined by the Government to see whether any relaxation is possible. If any relaxation is possible now it will be made.
– “Will the Minister give me an assurance that he will not grant a permit for the manufacture of toys in any munitions annex?
– The question of whether I shall grant, a permit for the manufacture of toys in government factories does not arise, because I have no control over what is done in government factories; but I repeat that I have no knowledge of any such proposal.
– “Will the Minister for Munitions ensure that, before these establishments are used for the manufacture of toys, facilities shall be made available to manufacturers who have been making such’ toys for years so that they may be in a position to fulfil their obligations under the Reestablishment and Employment Bill to re-engage former employees who have been engaged in war service? Will the Minister take steps to ensure that the interests of returned soldiers in this industry shall be safeguarded, before munitions establishments arn used for this work?
– The answer to the honorable member’s question is “ Yes “.
Opportunities for Employment
– Recently in Sydney I have been approached by American servicemen who intend to apply for discharge from the American forces in Australia. Some have married Australian girls. Owing to the fact that we have passed legislation giving preference in employment to returned soldiers, they are wondering whether it will be possible for them to obtain employment in Australia. I should like the Acting Prime Minister to make a statement on the policy of the Government in connexion with this matter, in order that Americans who intend to settle in this country may know whether it will be possible for them to get jobs?
– The sections of the Re-establishment and Employment Act relating to preference in employment apply only to members of the Australian forces. The Government, however, in a White Paper, made a declaration of policy that jobs shall be provided for all who want them. On the basis of that policy, which I believe is capable of fulfilment, there should be employment for all who are willing to work.
Western Australia - Electricity Rationing - Man-power : Army Releases; Employment of Ex-Service- men.
– Is the Acting Prime Minister aware that the gestapo chief of the coal-owners has gone to Western Australia, and as he has not been appointed to any commission of inquiry, and has no interest whatever in the mines of Western Australia–
– The honorable member is volunteering too much information altogether. He must ask his question.
– Can the Acting Prime Minister say who is responsible for Mr. H. Gregory Forster travelling to Western Australia by aeroplane; who authorized the granting to him of a priority permit to travel ; and why is he allowed to cause disruption in Western Australia, which has a wonderful record of coal production, by inflammatory statements such as appeared in the West Australian of Saturday last? Seeing that the coalowners, or their industrial advo-. cate, Mr. Davis, has not gone to Western Australia, will the right honorable gentleman say who is paying Mr. Gregory Forster’s expenses to visit Western Australia in order to cause disruption in the coal-mining industry of that State?
– I do not know anything about the granting of a priority travel permit to Mr. Gregory Forster. On previous occasions, I have made it clear that every citizen of this country, whatever his political views, and whether or not he is regarded as an extremist by any section of the community, is entitled to the ordinary privileges of citizenship. The granting of a travel permit to Mr. Forster is a matter to be dealt with in the ordinary way by departmental officers; the Government does not interfere in such matters. I judge from the honorable member’s remarks that he has some slight aversion to Mr. Gregory Forster. As to the other parts of his question, I must confess that I have no knowledge that Mr. Gregory Forster has caused disruption in the coal-mining industry in Western Australia. If the honorable member will place on the notice-paper the other matters on which he desires infor mation, I shall see what can be done to supply it.
– In view of the disquietude of persons who are dependent upon electricity, both in Sydney and in central New South Wales country districts, owing to the threat of rationing, is the Acting Prime Minister able to make a statement to-day regarding the position of coal stocks and the possibility of rationing being averted ? About a week ago, it was announced that rationing of electricity had been deferred for a week, and people are now anxious to know whether rationing will be necessary next week.
– I have discussed the position with the Minister for Supply and Shipping on several days, and yesterday in particular. He considers that, providing that coal production has been maintained, it will be possible to carry on without rationing electricity.
I had not thought of the point mentioned by the right honorable member that rationing had merely been postponed for a week. I agree that we ought to make clear whether rationing will apply next week, or averted next week and the following week. I shall ask the Minister for Supply and Shipping to make a statement on the matter immediately.
– Is the Minister representing the Acting Minister for the Army aware that recommendations by the man-power authorities for the release of key men for the coal-mining industry - some of them men who have had five years military service - are frequently rejected by the Army authorities upon the excuse that the men are required in the Army?
– From time to time the Man Power Directorate recommends the release of men from the services for certain key industries, including “coalmining. However, in complying with these recommendations the service departments are circumscribed by decisions of War Cabinet and the Advisory War Council. The present intention is that 50,000 men should be released from the armed forces by December of this year. These men will be allocated to various essential industries, and the coal-mining industry, of course, will get its quota. However, I shall ask the Minister for Labour and National Service and the man-power authorities what can be done to secure further releases for the coalmining industry.
– Has the Minister representing the Minister for Supply and Shipping seen a report in this morning’s press that a strike has occurred at a New South Wales colliery because the reinstatement of an ex-serviceman who was a skilled miner was objected to by other workmen at the pit? Will the Minister have the circumstances investigated to ascertain whether the reinstatement of servicemen is being hindered in any way, and, if so, will he take some action in that regard?
– I have not seen the press report to which the honorable member refers, but I shall ask the Coal Commissioner to submit a report on the matter.
– In view of the fact that the report of the Secondary Industries Commission will have a great bearing on post-war employment and development, and as both employers and employees should know what is in it, can the Minister representing the Minister for Trade and Customs say when the Government proposes to table the report, so that honorable members and the public may become acquainted with its contents?
– I shall discuss this matter with the Minister for Trade and Customs.
– Can the Acting Prime Minister say whether the announcement in Monday’s press that Sir Norman Brookes, chairman of directors of Australian Paper Manufacturers Limited, told his company that consent had been given by the Commonwealth Treasury to the issue of 5s. debenture shares to the value of £2,250,000 is correct? If so, can he say whether that amount of new capital is to be used wholly or in part for the development of the company’s mills at Burnie, Tasmania, now, or in the early post-war years ?
– Usually, I do not discuss publicly the applications which companies make to the Advisory Committee on Capital Issues, or to the Treasury, for approval to increase their capital, or to issue debentures. In my opinion, those matters should not be aired in public, but should be dealt with departmentally. However, Australian Paper Manufacturers Limited made an application, which was considered by the Advisory Committee on Capital Issues, for permission to issue part debentures and part shares in order to provide sufficient capital for developmental works until 1950. The company has in prospect a large developmental programme. I considered that the amount sought in the application was rather large at the present time, but that the company should be given an opportunity to obtain sufficient capital for developmental works during the next three or three and a half years. After the matter had been considered by the
Advisory Committee on Capital Issues, I examined it in my capacity as Treasurer, and discussed it with the chairman of directors, Sir Norman Brookes, and with Sir Herbert Gepp. I accept the responsibility for having agreed to the issue that the honorable member mentioned. I did not examine the details as to where the developmental works are. to take place, but I shall endeavour to obtain that information for the honorable member. Although the development of the industry should be encouraged by the Government, I did not feel justifiedin granting permission, at this time, for the increase ofcapital for the long-range plan that the company had in view.
Effect on Rural Industries.
– Has the Acting Prime Minister read a statement in this morning’s press on behalf of Professor Copand warning stock-owners not to pay too high a price for sheep and cattle for re-stocking. As similar statements made on behalf of Professor Copland have appeared from time to time on the eve of his incursion into the field of pricefixing in rural industry, and his activities in the past in that sphere have caused much trouble to Labour representatives of rural constituencies, will the Acting Prime Minister warn the professor to leave the field of price-fixing in primary industry to persons who have practical experience in it?
– I have not read the article referred to by the honorable member, but I shall have inquiries made into the matter. With respect to the payment of excessive prices for stock, I should give the same sort of advice myself. The Minister for Commerce and Agriculture has brought to my notice instances of extraordinary prices paid for dairy cattle, andI have never been able to reconcile thestatementthat the industry is in a difficult financial position with the abnormalprices being paid for stock.
– There is no close season for “mugs?” anywhere.
Mr.CHIFLEY.-I shall peruse the article referred to by the honorable member.
– I preface a question which I desire to ask the Minister for Commerce and Agriculture by quoting the following extract from a letter whichI have just received from a farmer: -
I have on hand 1,600 bags of potatoes which the Government contracted to take at a certain price. So far I have only been able toget the merchants to take 100 bags off my hands.
In view of the fact that farmers have grown potatoes for the Government under contract, is it fair to leave the potatoes on their hands? I realize the difficulties confronting the Minister in this matter, but I ask him to inquire into this particular case at least in order to decide whether more potatoes cannot be taken from this farmer. I shall supply particulars of the case to the Minister.
– If the honorable member will give me particulars of the case he has mentioned, I shall place the facts before the Potato Controller, Mr. Foster, who, I am sure, will give immediate attention to the matter.
– I ask the Acting Minister for Defence whether consideration has been given to the issue of the Pacific Star to civil aviation pilots who have served in operational zones in the SouthWest Pacific Area? Are these pilots eligible for any other ribbon, or star, in recognition of service in this war zone?
– I am not aware that any decision has been made on the point raised by the honorable member. I shall make inquiries into the matter.
– Is the Minister representing the Acting Minister for the Army aware that youths eighteen years of age, who may never see service, and married men over 35 years of age with domestic responsibilities, some of whom are engaged in essential industries, are still being called up compulsorily for Army service? In view of the number of men already in the services and the needs of civil production, will the Minister inquire into the reason for continuing this policy, and also will he inquire whether Mr. Condé, who is investigating overstaffing in the service, will take evidence from rank and file members of the Army, from their parliamentary representatives and from members of the general public?
– It is true that limited numbers of men are still being called up for service in the Army. The committee which has been appointed by the Government, with Mr. Condé as chairman, is at present investigating Army establishments on the mainland. As the result of his investigations, Mr. Condé may make recommendations to the Government regarding the continuance of recruiting.
– This is not recruiting.
– Well, regarding the calling up of men for military service. However, I point out that some advantages are to be gained by calling up young men, who, perhaps, have no trade at their finger tips, in order that greater numbers of men with trade qualifications may be released, thus maintaining a better balance in our civil economy. I shall refer the matter to the Acting Minister for the Army in order to ascertain his views.
Shop at Eastwood.
-Has the attention of the Minister for Post-war Reconstruction been drawn to a report in the current issue of Smith’s Weekly that, although a family named Fitzgibbons, of Eastwood, New South Wales, gave a block of land to a soldier son for the erection of a produce and mixed goods shop, secured sufficient bricks and supplies of other materials, and arranged for the building to be erected by week-end labour, the proposal was rejected by an officer of the Department of Post-war Reconstruction? As the shop in question is intended for a serviceman on his release from the Army, will the Minister order an immediate inquiry with a view to enabling the man to be re-established in civil life?
– I shall not order an immediate inquiry; I shall make an immediate inquiry and communicate the result to the honorable member.
– Is it a fact that Sir George Julius, director of Imperial Chemical Industries of Australia and New Zealand Limited, is responsible for selecting technical and scientific personnel for Amgot, and is it a fact that no selections of industrial and scientific workers have been made from the Army Inventions Branch or the Ministry of Munitions?
– I have no information at all on this subject, butI shall obtain the facts for the honorable member.
Motion (by Mr. Ward) agreed to -
That leave be given to bring in a bill for anact to provide for the provisional administration of the Territory of Papua and that portion of the Territory of New Guinea no longer in enemy occupation.
Bill presented, and read a first time.
In committee: Consideration resumed from the 27th June(vide page 3739).
Clause 27- (1.) Where the Commonwealth Bank is satisfied that it is necessary or expedient to do so in the public interest, the Commonwealth Bank may determine the policy in relation to advances to be followed by banks and each bank shall follow the policy so determined.
Penalty : One thousand pounds. (2.) Without limiting the generality of the last preceding sub-section, the Commonwealth Bank may give directions as to the classes of purposes for which advances may or may not be made by banks and each bank shall comply with any directions so given.
Penalty: One thousand pounds.
Upon which Mr. Anthony had moved by way of amendment -
That all the words after “so” in subsection (1.) to the end of the clause be left out with a view to insert in lieu thereof the following words: - “in pursuance of its duties set out in section eight of the Commonwealth Bank Act 1045, the Commonwealth Bank may determine broadly the policy in relation toadvances to befollowed by banks bygiving directions as to the classes of purposes for which the advances may or may not be made by bank? and each bank shall comply with any broad directions so given, but nothing in this section iiia 11 be construed as empowering the Commonwealth Bank to determine policy with respect to thu amount or nature of securities taken by a bank against any advance made by it”.
– This clause is one of the most dangerous in this very dangerous measure; in fact the further we progress with the bill, the more dangerous the clauses become. In this instance the second mib-clause is worse than the first. But however much the clause terrifies the public, the different interpretations which Government members have given ro the committee would terrify the public a hundred times more. The Government has realized its difficulty of explaining away the real meaning of this clause, and after two Ministers had spoken on it in committee, the reinforcement of the honorable member for Dalley (Mr. Rosevear) was enlisted in order to stay the faltering ranks of Tuscany. Stepping down from his exalted position of Speaker, the honorable gentleman proceeded to draw red herrings across the trail. His idea was to divert attention from the wording of the bill. The red herrings of the Government are now so many as to be confusing. The thing that was worthy of note in the speech of the honorable member for Dalley was his contention that neither full employment nor a completely planned economy is possible in Australia. Government supporters have stated that the whole object of this bill is to create employment, but apparently all the Labour party’s talk on those lines is simply gulling the public.
Let us. examine the clause and try to discover its effect. It hands to an extraparliamentary body - the ‘Commonwealth Bank - the entire control and direction of national policy. That policy will be determined in secret by the Governor and the Treasurer without reference to Parliament or the public. The only way in which the people will know what policy is being carried into effect will be when the actual results become apparent months after it has been put into operation. Until the presentation of this legislation, government direction of national policy has always been through Parliament. Either legislation has been introduced, dealing with a special subject-matter to determine government policy, or the policy has been effected by means of taxation. The federal land tax is an example. That was an attempt by direct taxation to compel the subdivision of large estates. As an instance of imposing policy by indirect taxation, I cite the customs tariff and the sales tax. Another way in which it has been done has been by giving subsidies to certain industries to encourage them. But all those subsidies had to be handled by an appropriation by Parliament. They were all brought down to Parliament and its approval sought. If this bill is carried in its present form, then the policy determining what industries shall be established in Australia, how industry generally shall be controlled, and the ultimate development of Australia will be determined by government direction of investment, without any reference to Parliament. The illustration given by the Minister assisting the Treasurer indicates the lines on which his mind is working. The honorable gentleman complained most bitterly because a further £250,000 accommodation was not given to a wealthy cotton spinning concern that already had an overdraft of £750,000. He also complained that no accommodation would be given to picture theatre proprietors who were conducting a type of industry that ought to be encouraged. Should not the same argument be applied to the radio industry so that stations such as 2HD at Newcastle, recently taken over by the Government, might be assisted; or the hotel trade, or the dog and horse racing proprietary clubs, such as the Sydney Turf Club, which the New South Wales Labour Government has lately assisted with £1,000,000?
A Government Member. - That is not true.
– In the public interest an alteration of sub-clause 2 is obviously necessary. It deals with the direction of the classes of purposes for which money may be advanced. I propose to have the meaning of the subclause placed beyond doubt by means of an amendment which I have circulated.
I intend to move later for the deletion of sub-clause 2 and the insertion of a new sub-clause which will enable any bankto decline to accept new business of any sort which it considers it oughtnot to accept. It may be considered that television will supplant wireless broadcasting as we know it to-day, or picture theatres as a medium for the entertainment of the public. It might be possible under the bill for a bank to say that the margarine industry should be encouraged, and that the dairying industry should not. Under the clause as it stands, it would be competent for the Commonwealth Bank to instruct a privatebank that it must make an advance to a particular industry. The issuing of all these specific instructions is quite unnecessary to the functioning of a central bank. Its direct function is to control the volume of credit, not the class of advance that should be made. The declared objective of the Government is continually to cut away more and more the powers of the private banks, gradually skinning them until only the skeleton will remain. That would be most detrimental to Australian finance and development, because it would constitute a government monopoly of banking. The Bible says: “ In the multitude of counsellors, there is safety “. That is really what the royal commission recommended - that the central bank should advise, not determine and direct. Paragraph 621 of itsreport reads -
We recommend -
In order to promote a wise distribution of credit, the Commonwealth Bank should equip itself with all possible facilities for ascertaining economic trends in Australia and abroad, so that it can advise trading banks as to the directions in which it is desirable in the national internet that advances should be made.
The bill proposes that such matters may be “ determined “ by the Commonwealth Bank. That institution should obtain the full benefit of all the financial experience in Australia, gainedby several generations of men engaged in banking. There should be an outside honorary consultative council, consisting of the leaders of finance and industry, which would meet periodically to discuss with the Governor of the Commonwealth Bank and the Advisory Council national development in complete perspective. Then, any directions given under this legislation would be much more likely to be wholesome, salutary and to the ultimate good of Australia, than would reliance on the judgment of one man. Consultation often clarifies problems, and saves lives. In this respect, it could well save the financial life of Australia. The Commonwealth Bank and the Government would have placed before them the mass of information collated by the technical staffs of the banks, and the whole matter could be discussed and brought into proper perspective. Whether the committee was designated consultative or advisory, would not matter. The question arises as to what range might be covered by directions given by the Commonwealth Bank. Sub-clause 3 reads - (3.) Nothing in this sectionshall -
In practice, that might easily prove contradictory; because, under sub-clause 2 the Governor could prohibit banks from providing accommodation for an industry which the Government wished to nationalize. Having dried up the sources of financial support upon which such an industry relied, the Government could then acquire shares in it at a low cost through the agency of the Industrial Finance Department, and that would practically amount to confiscation of the undertaking. The alternative to being squeezed out would be for an industry to raise money on the black market, which is certain to operate if a monopoly in the making of advances is established, or to live entirely on its capital and reserves as long as it was able to do so. The public can be safeguarded best by deleting sub-clause 2. I agree with the honorable member for Fawkner (Mr. Holt) that in sub-clause 1 the word “ advise “ should be substituted for the word “determine”; and, if that be not possible, that the amendment of the honorable member forRichmond (Mr. Anthony) should be accepted, in which event there would be no need for subclause 2. The honorable member for Dalley (Mr. Rosevear) last night made great play on the word “ broad “ in relation to policy. Earlier, the honorable member for Warringah (Mr. Spender) had made even greater play on the word “ policy “, pointing out that, according to the dictionary, one could make “policy” mean anything. Neither “ broad “ nor “ policy “ is defined in this legislation. The High Court could define the one just as easily as the other. The important matter is, that the giving of a general direction should be within the province of the Commonwealth Bank. But it must be made certain that any directions shall not be so specific as the Minister assisting the Treasurer suggested in connexion with cotton spinners or picture theatres. Such matters should be left for discussion by a consultative council or individual managements. After all, individual managements are responsible to shareholders and depositors for wise and judicious use of the money entrusted to their care. Therefore, we should not merely delete sub-clause 2, but also make certain that, whatever may be the directions given, a private undertaking may be empowered to decline to make an advance to a particular individual. It is obvious that, if a bank considers that an industry is declining or an individual is not credit-worthy, it should have the right to decline to make an advance. It might be claimed that that would be possible under sub-clause 3. I have had advice from eminent lawyers that it would not.
.- The right honorable member for Cowper (Sir Earle Page), in his opening remarks, misrepresented what I said last night, and I shall not allow his observations to pass unchallenged. He implied that I suggested last night that this clause would be used deliberately to withhold advances from, and thus stifle, certain industries, but I said nothing of the kind. I indicated the policy of the Government in the matter, which is to give to the Commonwealth Bank power to discriminate as to advances to certain industries as against others, in order to prevent a lack of balance in the economic life of the country. I said that this was to be done only when there we’re indications that private trading banks were doing what they had done on other occasions, when they had made advances to certain industries which were not so essential at that period as were others from which advances had been withheld. [Quorum formed.] The right honorable gentleman seized upon an illustration which I gave last night, and endeavoured to convince the committee that I had confused sub-clause 3 with subclause 2. He said that I had made a mistake, but I deny that. I used the simple illustration of an individual case to show what was happening in a general sense. There is no contradiction or confusion between sub-clause 2 and subclause 3. Sub-clause 2 relates to advances in a general sense. It may relate to primary production, secondary industries, water conservation, or any undertaking of that kind ; but sub-clause 3 provides that when the central bank has laid down a policy as to the purposes for which advances may be made, the hank cannot interfere in an individual case, or direct that Jones shall have an overdraft and that Johnson shall not.
– Suppose a person has more than one activity. He may be both a pastoralist and a garage keeper. How about the individual aspect there?
– If he wants an advance for the purposes of primary production, his case falls within that category, and he will get the advance for that purpose. No consideration arises as to interference with an individual. The right honorable gentleman who has interjected is splitting hairs. Sub-clause 3 has been inserted in the bill for the very purpose of preventing the bank from poking its nose into individual cases.
– Will the Minister qualify the point?
– The honorable member is at liberty to speak on the clause, but this is not question time. He comes into the chamber about one day in three weeks-
– That is unfair. He has been visiting his flooded electorate.
– I have said that there is no contradiction between subclauses 2 and 3 and that the bank will not have power to interfere and give direction as to overdrafts in individual cases.
– I have been deliberately misrepresented by the Minister at the table (Mr. Lazzarini). My absence from the chamber last week and the previous week was due to the fact, as I have already announced to honorable members, that a large part of my electorate has suffered devastation through floods. It was necessary for me to visit the flooded areas, and that is the only reason for my absence from the chamber. The Minister should not take an unfair advantage of an honorable member by exploiting his absence a3 he has done. This clause is more notable for what it does not contain than for what is found in it. In the committee stage of a bill it is usual for a Minister to answer inquiries, with a view to clearing up any points that may seem rather confusing, but, when I asked the Minister for an explanation, he replied, in effect, “ Get up and explain it yourself “. Tha,t is a cavalier way of treating an important matter like this. It is of great moment to people throughout Australia, in all grades of society, classes and occupations, to know exactly what clause 27 means. What the Minister has said is damaging and dismaying to the public at large. If the Commonwealth Bank decides to prohibit the trading banks from making advances to what he calls “ certain categories there can be no discrimination in those categories in favour of or against particular individuals.
– That is true.
– I am very glad to have the Minister’s admission of the truth of my interpretation, because it is extremely important. Suppose the Commonwealth Bank said, “ “We believe there is more wheat than is required to meet Australia’s commitments, and will allow no more advances to be made to the wheatindustry”. The Minister said that that means that every wheat-farmer in Australia will not be allowed a shilling advance from the banks.
– That is rubbish.
– Then I ask the Minister to clarify the position. He has already said that if the Commonwealth Bank decides that a certain category of persons shall not receive advances, every one in that category will be precluded from discrimination, favorable or unfavorable. That is what sub-clause 3 means according to the Minister. In very definite effect he said that no discretion would be allowed to the trading banks to decide whether Jack Jones, a wheat-farmer, should get an advance of a few pounds in order to do essential work on his farm as against someone else. The whole category will be excluded from further advances once the policy is put into force. The banks will have no discretion. That is extremely dangerous.
– That is all nonsense.
– I agree with the Minister for Information. It is the most nonsensical provision ever inserted in Commonwealth legislation.
– What the honorable member is saying is nonsense.
– No. The nonsense emanated from the Minister assisting the Treasurer less than five minutes ago, as will be shown by a reference to Hansard. I am simply taking what the official spokesman of the Government says is the meaning of this clause. Because of its obscurity and danger to Australian industries the clause should be put into a form which leaves no misapprehension in the minds of the people that depend on trading banks and financial institutions to develop their industries. It is an impossibility for any one authority to decide who should or should not get bank advances in the development of Australian industry. In the purchase of property of various kinds - land, stock, plant, houses and a variety of other things - we form a judgment on the facts as we know them. But how frequently do we err ? Sometimes our judgment is vindicated, but at other times we realize that there are factors that we did not take into account and that the property is worth less than we paid for it. The same principle applies on a larger scale to those given the task of deciding what industries in Australia shall or shall not receive advances. The supreme disaster that gives point to my argument was the error of judgment made by the
Government’s advisers about three years ago when they decided to recommend to the Government the disastrous policy of contraction of the wheat areas and limitation of wheat production. I do not criticize the advisers as such, because, on the facts, as they then saw them, their judgment may, in their view, have been sound, and I believe that they gave their advice sincerely believing that they were doing the right thing. It only goes to show the fallability of human judgment; that it cannot take into account all the unknown factors that may alter a situation. Now, as the result of that policy, Australia, formerly an exporter of wheat, has insufficient to feed its own people and stock.
– The honorable member has forgotten all about the drought.
– That is exactly the interjection I hoped for. So did the advisers of the Government forget all about droughts. It is those unforeseen and unprepared for things that cut across the path of the best-laid plans and throw them askew. It is quite true that they forgot about droughts. Australian stock are dying of starvation because there is no wheat with which to feed them. In my flood-devastated electorate thousands of head of stock are without feed. Their pastures were ruined. The stock-owners are at their wits’ end. I use that analogy in order to prove my argument that without totalitarianism a national control of bank advances is utterly impossible. I concede its possibility if everyone were stripped of the freedom that is our most valued possession. The Minister for Information (Mr. Calwell) has in his constituency hundreds of people working in the electrical trade.Is it supposed that he will quietly “take it” if he is told that the banks have said to the electrical trade, “You can have no further advances because your trade is no longer economic”. Would he take it philosophically if he saw hundreds of his constituents thrown out of work because of that policy? I doubt whether he would in a democratic system. No one would. The system proposed to be foisted on this country as the result of the operation of this clause requires complete regimentation.
– The primary producers of Australia were never better off than they are to-day under this Govenrment.
– I will not be diverted by the Minister’s interjection. The essence of this clause is that the Government proposes to try to develop an economy in which some one seated on the throne of finance will be the Czar of all the industries of Australia. To do the job properly he would have to be some one with more than the wisdom of Solomon.
– Is the honorable member opposed to the clause?
– I would delete the whole clause.
Mr.Clark. - But the honorable member has moved an amendment.
– Yes, but only because I cannot get rid of the clause altogether. My amendment endeavours to minimize its effects. I agree with the Leader of the Opposition (Mr Menzies) that the amendment is not what I would have moved if I had any hope of its acceptance - I would have moved for the deletion of the clause - but I thought that the amendment in its present form mightbe acceptable to the Government, in which event the disastrous effects of the clause would be minimized.
– The honorable member has moved an amendment prepared by the private banks.
– The Minister for Information seems to have psychic knowlege of the intentions and motives of members of the Opposition. If the clause be passed in its present form, the Commonwealth Bank will be empowered to instruct the private trading banks as to the industries to which advances may be made, and as to the classes of industries which are to be refused advances. That is not in the interests of the country, for it will have the effect of denying to many hundreds of thousands of young men and young women who will return to civil life after the war any hope of earning a comfortable living. If the state of affairs in the postwar period is to be what has been suggested by the Minister for Post-war Reconstruction (Mr. Dedman) there will be little hope of economic security for those who will engage in industry in the post-war years. They may find that the Government has decided that no more persons may engage in certain industries. For instance, a man who wishes to set up as a hairdresser may be told that no more hairdressing saloons will be permitted.
– Tommy rot!
– .That is what the clause provides. Perhaps the honorable member for Hume (Mr. Puller), who, I understand, is a mercer, would wish to see a state of affairs in which he would be guaranteed against competition.
– Only this week applications from two returned soldiers to open businesses in Gundagai were granted.
– That may be, but they were among the first of the men to return from the war. Should it be a case of “ first in, first served “ the poor unfortunate serviceman who sees the whole war out, and comes back after the cessation of hostilities, may find every avenue of employment in which he is interested closed to him. He may be told by the Minister for Post-war Reconstruction that he cannot engage in business as a solicitor, dentist, butcher or electrician.
The CHAIRMAN (Mr. Riordan).The honorable member’s time has expired.
Mr. CLARK (Darling) [11.501- - Clause 27 provides that the Commonwealth Bank may determine the policy in relation to advances to be followed by the private banks. That principle is sound, and has support from many quarters. Indeed, the amendment of the honorable member for Richmond (Mr. Anthony) is in accordance with that principle, for it seeks to provide that - the Commonwealth Bank may determine broadly the policy in relation to advances to be followed by banks by giving directions as to the classes of purposes for which the advances may or may not be made by banks and each bank shall comply with any broad directions so given, but nothing i” this section shall be construed as empowering the Commonwealth Bank to determine policy with respect to the amount or nature of securities taken by a bank against any advance made by it.
Under the amendment it is provided that no restrictions shall be placed upon the amount or nature of security taken against an advance. There is nothing in the bill to provide what the amend ment aims to accomplish. A customer of the bank .could receive an advance for primary production and tender as security broad acres, real estate, a picture show, an hotel or any other asset. Many of the proposals advanced by Opposition members have been supplied to them by bodies outside the Parliament and are designed in their interests. Honorable members opposite submit them to the committee without knowing what they mean. That is the position in respect of the amendment moved by the honorable member for Richmond. He has spoken against the very principle embodied in his own amendment. The honorable member for Fawkner (Mr. Holt) also foreshadowed an amendment which he said was recommended by the banking commission. He proposes to substitute the words “advise the banks as to the direction in which it is desirable in the national interests that advances should be made” for the words - determine the policy in relation to advances to be followed by banks and each bank shall follow the policy so determined.
That is all that is proposed in the legislation before the committee; the bank will be advised as to the policy to be adopted. The clause goes no further than to offer advice and to insist that the advice be accepted. The Government has no apologies for adopting the stand that it has taken. We have only to recall what transpired in the depression period of 1930 to justify this provision. In the report of the Commonwealth Bank Board for the period ended the 30th September, 1930, they stated-
Unpleasant as it may be, Australia has in front of her a very lean time - growing unemployment - this must become more evident before we begin to emerge from present economic conditions. While the seasonal outlook is good, and a vast improvement on last year, …
Although the seasonal outlook was good, Australia experienced a period of growing unemployment, and the associated banks which dominated the financial policy of the country, would not take any action to combat it. .
– What did the honorable member for Richmond do at that time ?
– He remained in his hollow log. The policy of the private trading banks during the economic depression was to restrict advances to primary producers, because they considered that primary production was not highly profitable, and, indeed, was rather dangerous for their investments during a period of low prices. A judgment of the Commonwealth Arbitration Court on the 22nd January, 1930, contained the following : -
Wool is now 8d. per lb. compared with le. Hid- per lb. in December, 1928. Wheat, which was fis. a bushel previously, is now worth at most about 2s. 2(1. a bushel at ports.
At that time, the private trading banks were not prepared to adopt a liberal policy with the object of assisting primary production. They declared that low prices for primary produce made such investments unprofitable. But the policy which this Government is prescribing in this legislation is that the Commonwealth Bank, as the principal banking institution of Australia, shall determine financial policy for the purpose of preventing economic depressions. We shall not have a repetition of the experience when Sir Robert Gibson, as the chairman of the Bankers’ Conference, informed the then chairman of the Australian Loan Council, Mr. Lyons, on the 13th December, 1930, as follows : -
The position has become so difficult that the banks have been forced to adopt a definite attitude and lay down principles that all advances ma.de to governments should be approved by the Loan Council and arranged for by that body as the central authority. Tt will, therefore, he the obligation of the Loan Council to determine t’ie amount of finance which shall be provided to each government -
This is the important point - in proportion to the total amount of treasury-bills which all the banks can see their way to discount at any given period.
Sir Robert Gibson issued his edicts under the old system, whereby the Commonwealth Bank, in collaboration with the associated banks, dictated the financial policy of the nation. They declared that they would provide only a limited amount of money, and that the several governments had to apportion it between them. They dictated the financial policy of Austraia, although the Scullin Government recognized that the economic depression, if not checked, would cause widespread unemployment and impoverishment. The release of substantial sums of money at that time, for the purpose of providing employment and stabilizing the primary industries, would have nullified completely the effects of the depression. But because of the policy adopted by the private banking institutions, thousands of businessmen became insolvent and tens of thousands of persons were unemployed. Those experiences must not be repeated.
This Government, which is responsible for the welfare of the people, proposes to empower the Commonwealth Bank to determine financial policy in the national interest. In the past, banking policy was based on the profit motive of the private trading banks. As a Government, we make no apology for giving this power to the Commonwealth Bank, and we expect that institution to use its authority in order to prevent depressions. The Government’s policy is sound, but if the people are not satisfied with it, they can change the Administration. In the past, the private trading banks have laid down the financial policy of Australia, and the people have had to suffer under it without being able to change the directors of the banks. The coterie who, in secure positions, dictated financial policy for their own personal gain, to the detriment of the welfare of the general community, have had their day, and they strongly resent its passing. But the people of Australia as a whole will not regret this legislation to place in the hands of the nation power over finance, which previously rested in the hands of vested interests.
Mr. WHITE (Balaclava) [12.2J. - One feature of this clause does not appear to have impressed itself upon the minds of honorable members opposite. To provide in legislation that the policy of the trading banks must be controlled by the Commonwealth Bank, and ultimately by the Treasurer of the day, is to perpetuate controls over commerce and industry. The anxiety of honorable gentlemen opposite -to prevent another economic depression is most laudable, but I remind them that a great deal has been learned regarding the way in which to deal with fluctuations in business. The Government’s policy of full employment is a grand ideal. Like the concept of international brotherhood, it is something to which we can all aspire. But, as a practical man, I submit that it is possible of attainment only in a slave State, or the confines of a gaol. Unfortunately, this Government is placing shackles on commerce and industry in the Commonwealth, in the hope that it will be able to continue to regiment them after the war. That policy will have dire results, because that kind of action dries up the springs of individual initiative and strangles individual enterprise. It will also scare overseas investors. The Minister for the Army (Mr. Forde), when in Great Britain recently, declared that Australia welcomed individual enterprise, and looked to private enterprise to expand. He added that British manufacturers were encouraged to establish factories in Australia. His remarks were acclaimed by his audience. But the right honorable gentleman did not tell his listeners that under the Government’s financial policy the banks may be prevented from granting to a manufacturer financial accommodation to enable him to develop his enterprise. I put it to any moderate-minded member of the Government that this legislation will do a great injury to Australia. Any one who is even slightly associated with business knows that if the Government places shackles upon individual enterprise, and hampers the expansion of private enterprise, dire results must follow.
– The private trading banks have not greatly assisted the development of Australia in the past.
– The Minister for Information (Mr. Calwell) has an obsession. The Minister is reminiscent of Don Quixote tilting at windmills.
– The banks are profitmaking concerns.
– Of course they are.
– And when they cannot make profits they are not concerned about national development.
– The private banks, like other private enterprises, work for profit. Profit is an incentive to efficiency. Where no reward is offered for labour, the standard of labour depreciates. But the private banks, which compete with each other, are not making abnormal profits. The Treasurer (Mr. Chifley) admitted that in the depression the trading banks made less profits than those made by other enterprises. In introducing unnecessary and foolish legislation of this kind the Government will do our native land great injury. The clause is absolutely unnecessary. It contradicts what the Deputy Prime Ministersaid in Great Britain, and what other Ministers have said when abroad. This provision will divert money which otherwise would be available for the development of the nation. It is very easy for a person with money to lend to become a rentier. This provision will hit severely those persons who have relied on their own resources and helped to make this nation what it is to-day. I exhort the Government to reconsider the clause and to omit it when the bill isbefore the Senate.
. -I move -
Thatall the words after “ may “ in sub clause (1.) to the end of the clause be leftout with a view to insert in lieu thereof the following words: - “ advise -the banks as to the directions in which it is desirable in the national interest that advances should be made “.
I foreshadowed my amendment whenI opened the discussion on the clause last evening. The committee has had a very interesting and full debate on certain aspects of the clause, and I hope that honorable members opposite who, perhaps, had not made themselves fully aware of the implications of the clause are now better informed in respect of it. At. the same time I should have welcomed a wider discussion from honorable members opposite as to what the clause can effect, because, although they support it, they do not seem to be aware of its effects, or what it is intended to achieve. The honorable member for Dalley (Mr. Rosevear) said that all my amendment would do would be to put us back into the old position, but my amendment represents a substantial advance on the practice which previously obtained. The Royal Commission on Monetary and Banking Systems was concerned with the fact that the Commonwealth Bank did not have an adequate information service on which it could give advice to the trading banks as to the general directions in which advances should be made; but the commission confined itself to recommending, first, that the bank should be equipped with the facilities to obtain such information, and, secondly, that the bank should advise the trading banks as to the general direction of advances. The Minister assisting the Treasurer (Mr. Lazzarini), when speaking on clause 25, after it had been pointed out that that clause did not give precise effect to what was claimed for it in the explanatory memorandum, said that it was the intention of the Government to adopt the meaning of the explanatory memorandum, and he promised that the clause would be re-examined to ensure that it had that effect. The explanatory memorandum claims that the clause will give statutory effect to the suggestionmade by the royal commission, but I should think that by now the Government itself is fully cognizant of the significant difference between the recommendation of the commission and the wording of the clause. Whilst the recommendation of the commission speaks of advice, the clause speaks of direction, and to the direction which the clause gives are attached substantial penalties for noncompliance. I point out to the Minister for Information (Mr. Calwell), who claims that amendments proposed by the Opposition are part of a brief on behalf of the private trading banks, that my amendment comes from no less authority than the Government itself as set out in its explanatory memorandum on the measure, and is supported by the Royal Commission on Monetary and Banking Systems. Therefore, if the Government is genuine in the statements it has placed before the committee it should have no hesitation in adopting the language of my amendment. I pass from the precise terms of the amendment to a consideration of the issues raised by the clause itself which the amendment seeks to rectify. I did not speak earlier in reply to honorable members opposite because T was awaiting the opportunity to discuss such statements on my amendment now before the committee. T shall confine my comments at this stage to the issues which have not, perhaps, been fully developed in our discussions up to the present. 1 shall deal, first, with the statement mad* by the honorable member for Dalley that the private trading banks in the past have determined investment policy.
– Docs not sub-claus* 2 achieve all that is desired by the honorable member?
– No; because sub-clause 2 still enables the Commonwealth Bank to give directions to the trading banks. For reasons which I shall develop later, my whole attack is against the power entrusted to the Commonwealth Bank to give directions as to the classes and purposes for which advances are to be made. The honorable member for Dalley said that the Government’s policy is a departure from past policy, under which, in hia view, the private trading banks themselves determined the investment policy of Australia. That reasoning is obviously fallacious. The trading banks have not determined investment policy. In the past, borrowers have directed investment .policy. With their own hard cash to risk, and their own experience on which to base their judgment, borrowers have sought accommodation from the trading banks in order to put into effect the programme which they have decided upon. It is not the trading banks that have laid down that policy. If one bank was not prepared to support a proposal made by a borrower, that borrower had the opportunity to go to other banks to obtain financial accommodation. Basically, it was the sound judgment and experience of the Australian borrower - in investments in either primary or secondary industries - which determined the industrial and commercial progress of Australia.
I come now to a most extraordinary consequence that will follow the adoption of this clause, framed as it has been by a Government which claims to be the opponent of vested interests. In my opening remarks, I pointed out that the effect of this clause would be to strengthen the established interests in this country and make it more difficult for new investors - the younger element of the Australian community - to enter fields of industry or development which have already been explored by older establishments and persons. It goes even further than strengthening the established position of those groups; it creates a situation in which they will be specially favoured in the further expansion of Australian economy. Under this clause the Government is able to direct the classes of purposes for which advances are to be made. It does not say anything about development by persons or companies who have cash and do not have to rely upon an advance from the bank. There is nothing in the bill to prevent a party with fluid resources - such as those in the wealthier groups - from developing industry in areas in respect of which advances are denied to the ‘ weaker clements. It would be a monstrous state of affairs for a democratically elected parliament to lay down a basis which would foster a further expansion in industry by the wealthier groups at the expense of those who were trying with weaker resources to establish themselves. Yet that will be an undeniable consequence if this provision is put into effect. I cannot believe that the Government is unaware of the consequences that must flow in the direction I have indicated. The only way to prevent that situation arising is for the Government to restrict the activities or capacity of the wealthier groups by controls in directions other than those provided in the bill. That would probably be by a continuance of the regimentation and control of manpower and materials which has operated during the war. I have given a picture of the two horns of the dilemma on which the Government is imposed by this clause.
The effect of the clause upon the community as a whole must be considered. The standard of living in Australia has been built up by allowing the demand of the community to determine whether development of industry should take place. Et was found profitable to supply the demands of the consumer, industry accepted the opportunity and the demand was largely fulfilled. That brought about a healthy state of affairs which should be continued in a true democratic community. If a politically controlled developmental policy is followed, and not one based on the demand which the community creates, what will billie result? First of all, the minority groups will suffer. Perhaps the Government may decide that it is not >> good thing for a community to have so many hotels or picture theatres or other means of entertainment and pleasure, and will lay down conditions as to what, the community should have. A political decision, based on majority support of government investment policy, might noi necessarily meet the needs or desires of minority elements which, in the past, have been able to look to private enterprise working within the law to meet their needs.
The TEMPORARY CHAIRMAN.The honorable member’s time has expired.
– The discussion on this clause has led honorable members away from the consideration of the fundamental principles of the bill. Members of the Opposition should look at tinmatter squarely and accept the position. Instead of doing so, it is apparent that they desire that the old order of supply and demand should be allowed to fight itself out. They stand for unrestricted competition in banking and every other commercial operation in the community, with no control and no attempt to bring about a balanced economy.
– That is a gross distortion of the Opposition’s views.
– I do not say that the Opposition members have been dishonest in the statements they have made, but they should frankly admit where they stand. For instance, no one could listen to the speeches of the honorable member for Richmond (Mr. Anthony) without coming to the conclusion that he believes in the absolute operation of private enterprise in banking and other commercial activities. The honorable member considers that these should be sacrosanct and free from any government restriction or control. No one suggests that the honorable member is not entitled to his views, but if he and his colleagues would frankly admit their position and allow a vote to be taken on the question of whether there should be any government direction other than advice, the atmosphere would be much clearer. The
Opposition does not want any change; it stands flat-footed and determined in the same reactionary position that it stood before the war of 1914-18. The time has passed when the Opposition should stand stubbornly on the question of whether there should be advice only. It should be willing to subscribe to a policy which would rid from the community the factors which could bring about a depression as bad as the last one and those that preceded it. We want to ensure that things that happened in the past will not happen in the future. Honorable members opposite arc not prepared to make any effort at all in that direction. They have a fear complex in regard to any change. They will not take a single step forward. Repeatedly, they tell us what evil things may happen if changes be made. Obviously they have little faith in the judgment, wisdom, and character of the Australian people. They say, “ The Government will not allow a pawnbroker to start in business; it “will not allow a man to make toys, or open a hairdressing saloon “. All these petty fears are out of place in the consideration of important legislation such as this. It is not necessary for Ministers to enter into the discussion of minor features of this legislation and so waste time as the Opposition is doing. We have devoted weeks and weeks of study to this measure. We consider that in its present form it is adequate for future needs, and will facilitate the implementation of a policy of full employment. Like students all over the world, we have come to the conclusion that the financial economy of a country must be dovetailed with the general economy. The Government’s White Paper on Full Employment and this legislation are dovetailed to save the people of this country from a recurrence of past evils. Honorable members opposite on the other hand, would leave things just as they are. They do not have any constructive suggestions to offer.
– The Government was not prepared to accept my amendment on the second reading of the bill.
– Most of the amendments that have been moved so far are aimed at eliminating the power of direction, and substituting the advisory system.
– The Government has not accepted the advice of the Royal Commission on Monetary and Banking Systems.
– Most of the recommendations of the royal commission are embodied in this legislation. Surely the Leader of the Australian Country party (Mr. Fadden) does not suggest that a government must accept all the recommendations of royal commissions that are appointed. I do not think that the recommendations of any royal commission have been embodied in legislation so fully as those in the report of the Royal Commission on Monetary ‘ and Banking Systems have been incorporated in this legislation.
– This legislation is contrary to the whole central theme of the commission’s recommendations.
– The royal commission was an excellent body of men whose politics could not be regarded as extreme. One of the commission’s most courageous recommendations was that as the banking institutions of this country had failed to curb the last depression in its early stages, the system should be changed in the future, and whenever there is a difference of opinion between the controlling authority of the bank and the Government, the Government’s policy should prevail.
The Government has decided that this legislation is necessary. When a former Labour administration relied upon the advisory system some years ago, its advice was not taken by the bank. It was informed by the then chairman of the Commonwealth Bank Board, the late Sir Robert Gibson, that if what was suggested were legal he would do it, but in the circumstances he could not do it. The Government is convinced that there will be another depression unless we establish financial machinery in this country to prevent it, and we intend to ensure that should the circumstances which existed on the occasion to which I have referred, arise again, there will not be any argument about legality. The necessary power will be in the act. That does not mean, however, that the power will be used in the manner suggested by the honorable member for Richmond (Mr. Anthony). Why does he assume that other Australian citizens will do evil things which he himself would not do?
– The Minister assisting the Treasurer (Mr. Lazzarini) made certain statements.
– That is childish. The honorable member is doing the people of this country an injustice. He is slandering the character of all responsible citizens of this country. Possibly, this legislation may never be implemented, but it will be on the statute-book in case it is required. The next decade will be the most dangerous period that this country and every other country have ever experienced.
– The Government is making it doubly dangerous.
– No. We are trying to protect this country against possible danger. In the immediate postwar years there will be a tendency towards extreme inflation, and to prevent inflation there will have to be some order in the community. That is the objective of this Government. If the people of Australia do not like this legislation, they will have an opportunity to put this Government out of office at the next elections; but if they hear some of the foolish and almost insulting remarks of honorable members opposite, I do not think there will be much likelihood of that being done.
. One cannot deal with this clause without bearing in mind the political philosophy of the various parties represented in this Parliament. The Minister for Labour and National Service (Mr. Holloway) is a little more candid than many other honorable members opposite. I had great respect for him recently when he stated plainly that he was, had always been, and would always ‘be a socialist. Being a socialist, he is working in a manner entirely different from that in which we on this side of the chamber are working. Naturally, he is aiming at State control of all spheres of industry. Last year, there was a referendum at which 14 proposals were put to the people’ of this country, although only two of them were really important. Had the referendum proposals been agreed to, the Government would have had all the control it desired over, industry in this country; but the people saw the “ nigger in the woodpile “ and defeated the referendum. However, there are ways of getting round a referendum, and one of them is through the monetary and banking systems. If this bill becomes law, with this clause in its present form, any Government of this country will have power to direct industry in whatever manner it wishes. The Minister for Labour and National Service accused the Opposition of advocating the eighteenth century policy of laisser-faire. We are not doing anything of the kind. The mere fact that people of the same political complexion as the Opposition developed central banking in this country is sufficient refutation of that assertion. Legislation enacted by the Bruce-Page Government led to the development of central banking in this country, and the primary function of the central bank was to regulate the rate of issue and volume of credit of the nation. This means that control of the enormous potentialities of the trading banks of Australia was placed in the hands of a public bank, presided over by a board of directors.
The Minister for Labour and National Service referred to the depression. It is extraordinary that every honorable member opposite tries to make it appear that Australia as a nation had a very bad record during the depression. The fact is that Australia’s record, particularly from 1932 onwards, was not equalled by any other nation. We made greater progress in providing employment and reviving industry than any other single country. I returned to Australia through the United States of America just after the 1935 budget had been presented in Australia. The first newspaper that I bought in New York had a great head-line across the top of the front page - “Australia Shows the Way”. In Chicago also the newspapers were pointing to Australia as the nation that was. bringing its people out of the trough of the depression. By their criticism of the conditions in Australia at nhat time, honorable members opposite seek to take advantage of a situation largely brought about by their own mistakes in order to bolster up this legislation, which will give them control over industry. The Minister for Labour and National Service has tried to give the impression that central bank credit was not created during the depression. In the financial year 1930-31, the combined deficits of the governments of the Commonwealth and the States amounted to about £27,000,000, and I believe that the estimated annual deficit for the following year was over £40,000,000. The central bank and the trading banks came to the rescue of the governments in that difficult period, when they were not receiving sufficient revenue to pay for services. During the depression, the value of £100 Commonwealth bonds in London was as low as £70, and that of Australian $100 securities in the United States of America was as low as $35 or $40. How could any creation of credit or political manipulation of banking rectify that position? Of course, Australia could have repudiated its debts, and, in fact, Mr. Anstey moved in the Labour caucus for such a step to be taken. The situation was saved by the raising of a loan, through the generosity and patriotism of Victorians more than any other section of the people. I have here some figures relating to employment during the depression. In 1931-32, 336,658 hands were employed in about 21,000 factories, with a pay-roll of over £50,000,000. By 1936-37 the number of hands employed had increased to 492,000, and the number of factories operating had increased -to 24,S95 with a pay-roll of over £82,000,000. In the following year, over 500,000 people were employed in our factories. That is a record of which any country should be proud. By 1937, our overseas position was splendid. Australian bonds were at a premium in London, and our dollar securities in New York had returned to par. Australia was prominent in the world. The United States of America adopted unorthodox methods at that time, but, when the war commenced, that country was not in as stable a position as was Australia.
– There were 10,000,000 unemployed Americans.
– That is so. 1 ask the Minister for Labour and National Service, who prates so much about the depression and what the banks did, whether inflation would have rectified the fortunes of those engaged- in our basic industry - the wool industry? When the depression occurred, Australia was exporting between 90 per cent, and 93 per cent, of its wool clip. In order to save the industry, a section of the Labour party proposed the printing of notes in order to raise prices to the 1929 levels. But, without any increase of world prices for our basic primary products, no benefit could be derived by increasing prices to the 1929 levels. The inescapable fact is that there had to be a reconstruction in Australia at that time, because the forces affecting our export trade were entirely beyond our control. If the country were experiencing similar conditions to-day, it might be advisable to take greater advantage of central bank credit than was done then, but the psychology of the nation during the depression had a fundamental effect on the actions of the government of the day. Had the Lyons Government pursued any further the policy that was pursued for the first two years of the depression by the Scullin Government, and refused to undertake any form of economic reconstruction, the nation’s position would have gone from bad to worse. When the Government decided to stabilize prices and balance budgets, the people started to marshal their resources, and the country emerged from the depression. Sub-clause 2 of clause 27 states -
Without limiting the generality of the last preceding sub-section, the Commonwealth Bank may give directions as to the classes of purposes for which advances may or may not be made by banks and each bank shall comply with any directions so given.
That means, that the Government may say that the potato growing industry, for example, has been conducted artificially because of war conditions and that, when the war is over, potatogrowers must be driven out of the industry by the withholding of advances. The Government will have power, through the Treasurer, to refuse advances to any industry. Sub-clause 3 states -
Nothing in this section shall - (a)authorize the Commonwealth Bank to make any determination or give any direction with respect to an advances made, or proposed to be made, to any particular person ;
Those two provisions are contradictory. If any person happens to be in a category from which the Government decides to withhold credit, he must be affected by the Commonwealth Bank’s policy. The honorable member for Fawkner (Mr. Holt) has pointed this out very forcefully. The Government has stated, in the explanatory notes to the bill, that it merely seeks to provide a general direction regarding the channels through which advances shall flow. If that is so, then the amendment moved by the Opposition should be accepted.
Sitting suspended from 12.45 to 2.25 p.m.
– Sub-clause 1 provides that where the Commonwealth Bank is satisfied that it is necessary or expedient to do so in the public interest, it may give certain directions. The public interest will be determined by the Commonwealth Bank, certainly, but after consultation with the Treasurer, because we have to remember that actually the Treasurer will be in control of the bank, and, should there be a conflict of views, the view of the Government will prevail. Therefore, in the final analysis, the Treasurer of the day could have the final determination of what advances should be made, and what primary or industrial development should take place in this country in the years following the passage of this legislation. He will be able to do that behind the back of the Parliament, because he will not be obliged to submit legislation to carry out his intentions.
The CHAIRMAN (Mr.Riordan).The honorable member’s time has expired.
– I support the amendment of the honorable member for Fawkner (Mr. Holt), because it follows much more closely the recommendations of the royal commission than does either the amendment of the honorable member for Richmond (Mr. Anthony) or the clause. Last night, the honorable member for Dalley (Mr. Rosevear), in reply to an interjection, made the extraordinary statement that bank deposits are the property of the public, not of the customers of the banks. He accused me of drawing a distinction between the two. The further the debate proceeds, the more frequently do Government supporters “let the cat out of the bag “, and the animal has to be chased around the chamber by the Minister assisting the Treasurer (Mr. Lazzarini) and other Ministers in order that it may be recaptured before the public realizes its characteristics. The ultimate policy of the Government was well expressed by the honorable member for Dalley last night. He deliberately and without any equivocation, stated that bank deposits belong, not to the customers of the banks, but to the public of Australia. That is a confirmation of the policy of the Government and its supporters for the socialization of the means of production, distribution and exchange. For many years, every Labour candidate has had to subscribe to that plank in the platform of his party. The honorable member for Dalley is worthy of commendation for having been so frank and blunt; but whether the depositors in trading banks and savings banks will be cheered by this gratuitous pronouncement is another matter. Most of them considered that their savings were secure, but they must now have serious doubts in view of that statement, and the freezing of the special war-time accounts of the trading banks in the Commonwealth Bank. The Government is setting itself up as the trustee of the public, and proposes to prevent trading and savings bank depositors from having the freedom to use their deposits in the manner they consider necessary. The Minister for Labour and National Service (Mr Holloway) said this morning that the banks had brought on the depression and had done nothing to mitigate it.
– Quite true.
– The honorable member for Hume, not having investigated the banking position with the meticulous care exercised by the royal commission, would have us believe that the trading banks caused the depression and did nothing to prevent it. Honorable members opposite remind me of a man who denied his leader at a time when the cock crew thrice, because the Acting Prime Minister (Mr. Chifley) appended his signature to the part of the report of the commission dealing with the impact of the depression and the action of the trading banks at that time. At paragraph 565, the commission stated -
At the outset of the depression, the trading banks, in the interests of their depositors and their own solvency, were forced by the general conditions and by the reduction of their London funds, duc to the fail in export values and the cessation of overseas borrowing, to adopt a policy of contraction which intensified the depression. As pointed out in another part of our report, there are limits to the powers of trading banks to expand or to contract advances. In the absence of a central bank they can, by concerted action, do more to restrain a boom than to lessen a depression.
Prom 15)32, the trading banks expanded advances, but the increase in cash reserves, which enabled them to do so, came in part from central bank credit, and in part from increases in London funds due to higher export prices. There is no justification for the view that the trading hanks, in order to enlarge their profits, deliberately expanded credit to produce a boom and then contracted so as to produce a depression. In their efforts to contract advances, the trading banks in some cases, caused hardship by forcing’ realization of assets and by refusing credit to some creditworthy borrowers, but there was little alternative open to the banks while their cash reserves remained low, and there is no evidence nf .a general policy of forcing the realization of assets.
That is what the Acting Prime Minister stated in 1937, when he signed that portion of the report of the commission.
Under this clause there -would be a complete restriction on the opening of any new business unless it was approved by the Governor of the Commonwealth Bank, who in turn must take his directions from the Treasurer or from the government of the day. I cannot understand why, because some gentlemen have won university degrees, they are regarded us having greater knowledge than others whose degrees have been won in the university of experience by their fight in building up their businesses. Often a monopolistic industry becomes inefficient and is open to challenge by a new and vigorous industry engaged in the same line of business. The competition of such an attack often results in the pro- duction of a better article at possibly a lower price than would be charged if the monopolistic industry were allowed to continue without competition. It may bc said by the economic advisers to the Government that there are enough business undertakings of a particular kind, and that others should not be allowed to compete with them. I am reminded thar some years ago the Dunlop Rubber Company bought out the Barnet Glass Rubber Company and the Perdrian Rubber Company, and it looked as though th Australian market for rubber tyres would bo shared between the Dunlop Rubber Company and the Goodyear Rubber Company of the United States of America. A monopolistic cartel appeared likely to be established to enable them to divide the market between them, but apparently one of the companies was nor so effective as it was thought to be and a new competitor appeared in Victoria under the directorship of Mr. Frank Beaurepaire, who founded the Olympic Rubber Company, which was able todefeat any possibility of a monopolistic cartel.
– What has that to do with the clause?
– The clause is so drafted that it would encourage monopolistic enterprises, and I was using as an instance the activities of some rubber companies in Australia in the past. Great hilarity is expressed by honorable members opposite because of some of the statements made by members of the Opposition, but we have referred to matters which are very tragic and real to the people concerned. The prevention of the establishment of new industries would affect particularly 600,000 or 700,000 members of the fighting services who have yet to be released. An idea is prevalent amongst servicemen that they will not be allowed to engage in any kind of business, or be permitted to borrow money from the banks in order to start in any business, except that which they followed prior to their enlistment.
– Where did the honorable member get that information?
– I received a letter yesterday from a soldier in northern
New South Wales, who asked me to ascertain whether that impression was correct. There may be no justification for the belief, but members of the services may easily get that impression when they read of a bill giving monopolistic power to the central bank, which could force them into certain occupations by denying them the right to take up any others. They will not have a right of selection and they could be forced into a business in which they did not wish to engage. Under this clause the ‘Commonwealth Bank could require all advances over a fixed amount to be submitted to it and it could make ite own decision with regard to them. It could determine the policy in relation to advances to be followed by the trading banks and each bank would be required to follow the policy so determined. The honorable member for Warringah (Mr. Spender) drew attention to the broad implications of the word “ policy “. The clause is like an open cheque, to be signed by the Parliament and made payable to the government of the day, which will be able to do whatever it wishes in shaping the policy of the Commonwealth Bank in matters in which the trading banks are concerned. I have no interest in those banks except as a borrower from one of them, but I am greatly interested in the treatment which the depositors receive.
– The honorable member’s time has expired.
.- The honorable member for New England (Mr. Abbott) has referred to a certain paragraph of the findings of the Royal Commission on Monetary and Banking Systems, and has made much of the fact that the Acting Prime Minister (Mr. Chifley) as a member of the commission, did not take exception to it, but the honorable member did not read the whole of the commission’s findings with regard to the trading banks. The opening words of the paragraph from which the honorable member quoted are: -
Along with other parts of the system, the trading banks must bear some responsibility for the extent of the depression. In the more prosperous times preceding the depression, they went with the tide and expanded credit.
Further on, wo find -
In their efforts to contract advances, the trading banks in some cases caused hardship by forcing realization of assets.
– I read that.
– The honorable member did not. The people will call the Australian Country party members to account when they realize that in this Parliament they have had the audacity to deny that the banks were partly responsible for the depression by forcing primary producers to realize on assets.
– I said that they were not wholly responsible.
– The honorable member for New England disclaims any personal interest in the private banks, but he, along with the rest of his party, has been fulminating against this legislation, on behalf of the banks, ever since it was brought down, notwithstanding that all over Australia organizations associated with, and branches of the Australian Country party have unanimously carried resolutions approving th* legislation. As far back as 1936, the Parliament of New Zealand passed legislation for the control of banking. Under the heading “Miscellaneous Amendments to Existing Acts “, .the Reserve Bank of New Zealand Amendment Act, in section 10, contains the following provision : -
It shall bc the general function of the Reserve Bank, within the limits of its powers, to give effect, as far as may be, to the monetary policy of the Government, as communicated to it from time to time by the Minister of Finance. For this purpose, and to the end that the economic and social welfare of New Zealand may be promoted and maintained, the bank shall regulate and control currency in New Zealand.
That is exactly what we are doing. Honorable gentlemen opposite have been stonewalling for several hours on this clause, and the amendment of the honorable member for Fawkner (Mr. Holt), who wants to emasculate the clause by proriding that the Commonwealth Bank may advise, instead of direct, the trading banks as to advances. His purpose is to enable the trading banks to escape carrying out the desires of the Commonwealth Government, because there would be no compulsion on them to accept the advice of the Commonwealth Bank, whereas the penalty provided for disobedience of a direction in this connexion is £1,000. The people realize that the monetary policy of Australia must be directed by the Commonwealth Government through the Treasurer and the Commonwealth Bank. The Treasurer is an elected representative of the people chosen by this Parliament to carry out ite financial dictates. In the right honorable member for Macquarie (Mr. Chifley), we have a sincere and capable Treasurer, determined, equally with all members of the Labour party, that Australia shall not again be cast into the depths of a depression and that the private banks, which, had they been willing, could readily have averted the last depression, shall play the part in the development of this country that they should always have played but neglected in the interests of the minority and to the disadvantage of the majority. Recently, in Brisbane, a bank manager admitted to me in conversation-
– What is his name?
– I shall tell the honorable gentleman or his leader (Mr. Fadden) in confidence afterwards. That manager admitted that the private banking institutions could have done more for this country in the depression. “ But “, he said, “ forget that and think of the future.” I said, “ That is just what our Government is doing to-day. It is thinking of the future and is ensuring that the dire happenings of the depression shall not recur “.
Mr. FRANCIS (Moreton) [2.50J.- This is one of the most dangerous clauses in a dangerous bill. It exemplifies the monopolistic instincts of the Labour party. Those instincts will be given full play under this clause. No government has destroyed small industry more than has the present Government. In this war, hundreds of small industries have <»one to the wall as the result of the Government’s policy. This bill will empower it to destroy more and more. The Government’s desire is to see established large monopolies which can be more readily nationalized than can thousands of small establishments. This is the weapon by which the Government intends to force nationalization of industry on the country against the people’s will. A British socialist economist once said -
Before a Labour government nationalizes any other productive industry, it should nationalize the banks. . . . With the banks in our hands, we can take over other indus tries at our leisure.
Obviously that is the very objective of the Government. The Royal Commission on Monetary and Banking Systems recommended that the government should advise the trading banks as to policy. The explanatory memorandum attached to clause 27 states -
This clause will give statutory effect to the suggestion of the Banking Commission (para graph 021) that the Commonwealth Bank should advise the trading banks as to the general direction of advances, without interfering with the granting of particular «dvances.
I ask honorable members to note that word “ advise “ and ask themselves how on earth the Government can claim that it i3 giving statutory effect to the commission’s recommendation when ii enacts that the Commonwealth Bank shall, not advise, but direct the trading banks with threats of a fine of £1,000. Under this provision, if a private bank wanted to help in the establishment of a new industry or in the development of an established industry, it could not do so without the approval of the Commonwealth Bank, which must first have the approval of the Commonwealth Government. Private industry has played a noble role in the development of Australia, but it could not have done so without the backing of the private banks. I do not doubt that individual cases of dissatisfaction with private banks’ actions could be cited - indeed, it would be strange if it were otherwise, because perfection is not to be found in any organization - but, all the same, with the assistance of the private banks, private industry has provided 80 per cent, of the employment that has enabled the Australian people to prosper. If private industry is to be deprived, as I fear that it will be, of that assistance as the result of the operations’ of thi, legislation, particularly this clause, we shall have, not the full employment that, tongue in cheek, Government supporter? promise so freely, but wholesale unemployment. The amendment moved by the honorable member for Fawkner (Mr. Holt) would rectify the failure of the Government correctly to interpret the recommendation of the royal commission. I do not believe for one moment that the Government is sincere in its protestations that it is giving effect to the recommendations of the royal commission; but if the Government really is sincere, it should, without further ido, accept the amendment. Proof that it is not sincere is afforded, however, by the fact that for noncompliance with the direction of the Commonwealth Bank a penalty of £1,000 is prescribed. Who ever heard of there being a penalty for non-compliance with advice? Hitherto industrialists, primary or secondary, and commercial men requiring money with which to establish or develop wealth and employment-giving enterprises in Australia, have applied to * bank of their choice - one of the associated banks or the Commonwealth Bank -and, if the bank has considered that he proposals warranted the risk, advances have been made. That system has worked in the general interest. Now it is intended that industrial operations shall be hamstrung by mass of prohibitions and restrictions, opening the 10or to socialism. The proposed regimentation will so restrict development of private enterprise that, instead of the much-vaunted policy of jobs for all espoused by honorable gentlemen opposite, we shall have unparalleled unemployment, because industry will be stifled and manacled, which is just what this Government desires in order that it may be able to implement its socialistic policy. Since the outbreak of war, many Australians serving in the fighting forces have been in various countries, where they have gained new ideas, which they will desire to put into practice in establishing new industries on their return to civil life. But, under this provision, the Commonwealth Bank may prevent the private banks from granting financial assistance to those men.
– It is not rot. Quite clearly last night the honorable gentleman, in two speeches, revealed that the policy of the Government is the regi mentation of industry. Honorable members who believe in private enterprisemust support the amendment.
Mr. SMITH (Wakefield) [3.1 J.Earlier, one honorable member stated that, during the economic depression Labour governments were in office in the Commonwealth and most of the States, and that they could have done a good deal more than they did to alleviate the distress that then prevailed in the community. I remind him that the position; was more difficult than he chose to reveal.. Although the Scullin Government was in. office in the Commonwealth Parliament, its control of national affairs was hampered and restricted by a hostile Senate., which prevented the Government from, carrying out a policy to check theeconomic depression. Had that policy been given effect, conditions in Australia would not have been nearly so serious a?they were. Again, Queensland is the only State that has not a Legislative Council. During the depression, a. Labour government was in office in South. Australia; but never in the history oi that State has a Labour government, really been in power. South Australia is controlled, not by the LegislativeAssembly, but by ten members of theLegislative Council. A similar state of” affairs existed in other States. Honorable members opposite have painted such doleful pictures of the possible effects of the Government’s banking legislation: that, if they were to see such pictures on canvas, they would probably be afraid.
– The honorable memberis misrepresenting us.
– It is not often that 1 address this chamber, but, when I do, 1 always speak the truth. I agree that” some of the dire results of this bill, which, honorable members opposite have forecast ,. could eventuate; but no sensible person controlling the affairs of the Commonwealth would contemplate doing theridiculous things that they have predicted. The police forces of the Commonwealth and the States could prosecute citizens for a surprising number of” offences, but they exercise their common, sense and do not arrest people for triflingbreaches of the law. Honorable members opposite cannot possibly believe their 0140 forebodings that the Commonwealth Bank: will prevent the associated banks from assisting primary and secondary industries. A fear complex has gripped them, particularly members of the Australian Country party. But their expressions of anxiety for the stability of the national economy arc not novel. The Advertiser, Adelaide, in a leading article in 1911 upon the original Commonwealth Bank Bill, stated-
Banks have played a largo part in the history of the country, but they have made mistakes, as was shown during the boom time and the disastrous period that followed the collapse of the boom. Those mistakes were, in essence, due to excessive confidence - advancing money on inadequate security ; and the shareholders and officials of the banks paid dearly for the blunders-
So opponents of the Commonwealth Bank admitted that blunders had been made before 1911 - and necessary precautionary alterations to the banking laws were effected. If there isa genuine demand for a Commonwealth Bank - and therehas been no sign of it - that demand proceeds from a section of the public who imagine that the institution will deal “ generously “ with them. Apparently, theretore, if the bank is to satisfy its most ardent advocates, it will precipitate a financial disaster -
That is what they are saying to-day - in which the fair fame of the whole Common wealth may be besmirched.
Honorable members opposite, in objecting to this legislation, are merely repeating the fears that were expressed in 1911. I am satisfied that when this bill becomes law,no government in future will attempt drastically to amend it. This morning, one honorable member complained that, under this bill, the Commonwealth Bank may prevent private trading banks from lending money to primary producers. It might have been better if the Commonwealth Bank had possessed and exercised that power in 1928 and 1929. Thousands of farmers produced more wheat than they could possibly sell, and the price was not adequate to cover the cost of production. The Commonwealth and State Governments were obliged to come to the rescue of many farmers threatened with insolvency. In South Australia, 3,000 farmers became bankrupt in a decade. If governments had not introduced legislation to restrain banks from foreclosing on their mortgages, the position would have been even more desperate. I support this clause, and believe that the people as a whole are satisfied that the granting of this power to the Commonwealth Bank will be in the national interest.
. -The Government and its supporters have very conveniently evaded the real issues raised in this discussion by honorable members on this side of the chamber. They selected a few of the more extreme illustrations which were put forward by some honorable members of the Opposition in support of their contentions, remarked, “ No man with any common sense would do the things that you suggest”, and dismissed the more compelling arguments. The Minister for Labour and National Service (Mr. Holloway) explained that this power may never be exercised,but that the Commonwealth Bank should possess it. If the power is likely to be used only in an emergency, why cannot the Government wait until the emergency arises, and then show to the Parliament the need for possessing the power and explain how it will be used? Why doe? this authority have to be placed in legislation? A similar provision does not exist in the central banking legislation of any other democratic country.
– The New Zealand act contains a similar power.
– The provision in the New Zealand act was explained to the committee last night. In any event,I do not consider that New Zealand, which is an admirable little country about the size of Victoria, should be held up as a guide to the way in which a large continent like Australia should be managed. None of the major democratic countries with a great and successful record of industrial, commercial and pastoral development, has found it necessary to use the powers which the Government has incorporated in this bill. That point has not been answered successfully by any honorable member opposite.
The second point which remains unanswered is this. I have said that one direct effect of this clause, if it be put into operation, will be to strengthen the already established interests at the expense of the weaker elements in the community. By using this power, the Commonwealth Bank may determine that advances shall be made only for certain classes of industry and purposes. That decision would restrict persons who desire to borrow money in order to develop those classes of industry, but would not affect other people who possessed ready liquid resources that would enable them to enter those restricted fields. Where shall we find people possessing those liquid resources? We shall discover .them in the wealthier or stronger groups in the community. They will be able to expand their enterprises at a time when the Government, which claims to be opposed to vested interests, is informing the financiallyweaker groups that financial assistance cannot be granted to them in order to enable them to expand. That is a remarkable position for this Government to take up. Already, in this young country, there has been too great a concentration of industrial strength in a few hands. Apparently, the Government intends to foster a development of monopolies and cartels to the exclusion of the healthy and active competition which would provide a check against exploitation of the community.
– The opposition to this bill comes from such interests.
– The Minister finds that easy to say, but he would find it very difficult to prove. We are trying to protect the interests of the -independent Australian citizen, regardless of vested interests or government interests which may be opposed to them. The application of this clause, as proposed by the Government, will inevitably cause a further concentration of power to exploit the people in the hands of small and wealthy groups of people. We do not want that to happen. The only practicable way to prevent this concentration of power is to establish a very strict control over man-power and materials. The Government has not yet announced whether that is what it intends to do. It is the only course that I see open to it, and I should like to know whether the Government has an alternative in mind. The Government has also failed to explain another point which we have raised. We have referred to the case of an individual, or group of individuals, who may have interests in a variety of activities, a not unusual state of affairs. Many men have investments in several kinds of activities. What will happen if such a group is told that it cannot have further advances for one of its business enterprises? Will it be prevented from transferring surplus profits from its other activities for the expansion of the line of business for which advances have been refused? The Government is likely to find itself in many predicaments if it proposes to lay down purposes for which advances shall be used in primary production. Many farmers engage in many branches of primary production. For instance, a man who grows wheat may also raise cattle or sheep, or conduct a dairy farm. If the Government says that it will not allow advances to be made for tho purpose of wheat production, who will police the expenditure by the farmer of the advances which he obtains for other branches of his farm production, in order to see that it is not diverted to wheat? The satisfactory application of this clause would be possible only in a community in which there was a continuance of the control system which has been instituted for the purposes of war. Honorable members on the Government side of the chamber have said that the banks have made blunders. That is true. All of us - governments, banks, and individuals - inevitably make blunders. However, one of the factors making for strength in our economy has been that, when one bank makes a blunder, its damaging effects are offset by the activities of rival trading banks. If one individual blunders, the community as a whole is not likely to suffer while other individuals are reaping the reward of sounder judgment. If the Government concentrates in the central bank the powers proposed in this bill, it may be able to achieve spectacular successes, but it will also experience spectacular and disastrous tragedies as the result of the misapplication of those powers.
The Leader of the Opposition has referred to the action of the Federal Reserve Bank in the United States of America, in 1937, which had the effect, almost overnight, of causing a business recession, and the honorable member for Richmond (Mr. Anthony) has referred to the policy of restricting wheat production. If the central bank is to issue directions as to the classes of purposes for which advances are to be used, it must consider itself to be in a better position to do so than the men who are prepared to risk their capital, accumulated over years of banking activity and a lifetime of study of the business, and who are, therefore, vitally interested in its success. It must also have an enormous staff to conduct the inquiries necessary to decide whether industries are over-developed or underdeveloped. It must be able to gauge public demand, which has regulated the supply of goods and services by private enterprise in the past. The political decisions which will be necessary may, while serving the interests of a majority, deny to minorities in the community certain opportunities, rights and standards to which they have become accustomed and to which they are entitled. I should not like to see such a great responsibility passed over in a general way to the Commonwealth Bank. In the final analysis, the bank will have to make the decisions, because we have been repeatedly told that political control, through the Treasurer, will mean wise guidance of the Treasurer by the Governor of the bank. We should not surrender to a banking institution the power to determine policy on social problems of this kind. This bill will hand over to the bank and its staff of economic consultants the power to determine what the public wants and what it shall have forced upon it. The soundest test of such matters in the past has been the demand expressed by public opinion. Therefore, this clause, as it stands, should be eliminated from the bill.
The most desirable thing is for the central bank to tender advice to the trading banks from time to time. That can bc achieved by the adoption of the amendment which I have submitted. No other democratic community has found it necessary, in the interests of progress, to hand over to a central banking organization the powers provided in this clause. The amendment contains provisions for advice to be given to the trading banks. Such advice would not be lightly received by the trading banks, because such tremendous powers are given to the central bank in other parts of the bill that any private bank which disregarded its advice would soon find itself in administrative difficulties. Therefore, I say that my amendment does not provide for a reversion to the old state of affairs, as was stated by the honorable member for Dalley (Mr. Rosevear). My proposal is progressive. It will involve the closest c-operation between the trading banks and the Commonwealth Bank, and it will allow the Commonwealth Bank to exercise a considerable degree of persuasion on the trading banks in regard to their policy. It does not involve the element of legal compulsion, which would prevent the banks themselves from making decisions in the light of their own knowledge and sound judgment, and which would prevent individual borrowers and groups of borrowers from deciding how their business development should take place. It will be useful for the central bank to exercise a general supervision over banking. It can draw the attention of the trading banks to tendencies which it may consider to be unsafe, and the trading banks will not be neglectful of its advice. The amendment does not provide for the compulsion which is proposed in the clause as it stands and which,, if fully applied, will involve an indefinite continuance of war-time controls. The committee has had a full discussion of the clause, and I hope that, since its implications have been clearly revealed, my amendment will be accepted.
.- 1 direct attention to two arguments which have been put forward this afternoon by honorable members opposite. The honorable member for Fawkner (Mr. Holt) has unwittingly proved what I pointed out last night, namely, that the real effect of the adoption of the amendment would he that nothing would be added to the bill. As a matter of fact, a great deal would be removed, and only meaningless words would be inserted in lieu. The honorable gentleman was at great pains to point out the enormous amount of work that would be involved in collating the information that would make it possible for the Commonwealth Bank to formulate a general banking policy in order to direct the activities of other banks. However, he admitted that exactly the same survey would have to be carried out if his amendment were agreed to.
– The private banks have their own economic staffs.
– But then there would be too many cooks. One of his primary objections to the clause as it stands was that the amount of work involved in a general survey that would enable the Commonwealth Bank to give an intelligent lead to the trading banks would entail anenormous amount of research by a very large staff. But he finished his speech by saying that the Commonwealth Bank could make a general survey anyhow, and make representations to the other banks in order to obtain their co-operation.
-Why not deal with my remarks about strengthening the already strong vested interests in Australia? That is an important consideration.
– Those comments have no force as a condemnation of the the bill. Vested interests are growing stronger under existing conditions. There is not the slightest doubt that there are vested interests in the country which can finance their own projects and which are, in fact, doing so to-day. To the degree to which they are able to do so, they release whatever credit is available through the hanking system to others who need that credit. Therefore, nothing in this bill will alter existing practices in any way. I now refer to statements made by the honorable member for New England (Mr. Abbott), who has posed as a champion of the banks, with regard to the issuance of credit to individuals. The honorable gentleman does not know the first thing about the bill. Last night I drew attention to the difference of opinion which existed between him and the Leader of the Opposition (Mr. Menzies). The honorable member for New England, as usual, drew a morbid picture of the sad fate that awaited our returned servicemen when they desire to establish themselves in business after demobilization. He said that the provisions of this clause would prevent the hanks from lending money to such individuals, and his state ment was faithfully repeated by another banking authority, the honorable member for Moreton (Mr. Francis). The fact is, of course, as both honorable gentlemen could have ascertained by reading sub-clause 3, that special provision is made that -
Nothing in this section shall -
authorize the Commonwealth Bank to make any direction or give any direction with respect to an advance made, or proposed to be made, to any particular person.
Those words are perfectly clear. The Commonwealth Bank is specifically debarred from interfering in regard to advances to “ any particular person “.
– That is rot. If the Commonwealth Bank does not approve of a transaction, it can nullify it.
– Evidently the honorable gentleman is unable to understand plain English. The Minister assisting the Treasurer (Mr. Lazzarini) was taken to task last night by the Leader of the Opposition because provision was not being made to enable the bank to interfere in respect of advances made orproposed to be made to “ any particular person “. The “ sob stories “ of the honorable member for New England are so much moonshine. The honorable gentleman has spoken more frequently than any other honorable member during the discussion of this bill, but on almost every occasion he has quoted passages from the report of the Royal Commission on Monetary and Banking Systems or from the statements of some longhaired professor. I intend now to quote statements in the report of the royal commission to which the honorable gentleman subscribed. I direct attention to paragraph 556 -
Along with other parts of the system, the trading banks must bear some responsibility for the extent of the depression. In more prosperous times preceding the depression they went with the tide and expanded credit.
The honorable member for Fawkner has told us that the delicate mechanism of the banking system must not be touched by unskilled fingers, but the honorable member for New England, the champion of the private banks, signed that statement, to the effect that, without rhyme or reason, the private banks were parties to. inflation prior to the depression and that they “went with the tide”. The report proceeded -
There was then no Central Bank to guide their policy-
Now the honorable member is complaining because the Government is proposing to appoint a guide. The report goes on - but even in its absence, the banks might have taken concerted action which would have helped to check the boom and thereby have lessened the extent of the depression.
This clause provides that -
Where the Commonwealth Bank is satisfied that it is necessary or expedient to do so in the public interest, the Commonwealth Bank may determine the policy in relation to advances to be followed by banks…..
In 1937, the honorable member for New England was praying for such guidance, but now that it is being provided he is condemning it. The honorable gentleman has completely misunderstood the purpose of the clause, for he has said that the banks will not be permitted to make advances to “any particular person “ whereas, in fact, the bill provides that the Commonwealth Bank may not interfere with the banks when they are doing that very thing. The report of the royal commission continues -
In their efforts to contract advances, the trading banks in some cases caused hardship by forcing realization of assets and by refusing credit to some creditworthy borrowers.
That statement refers to the private banks, whose cause the honorable member for New England is supporting so strongly. The honorable gentleman cannot, or will not, see that this clause specifically provides that the banks may make advances to “ any particular person”. The report also states -
No doubt it was essential for the banks, having regard to their position, to check advances, but it would have been better to have done this by discrimination between customers and restriction, -without raising the rates.
It will be apparent from the extracts I have read that the honorable member for New England has changed his ground considerably since 1937, for his arguments to-day do not square with the statements to which he appended his signature then.
The honorable member for Fawkner has stated that the Government is attempting, in this clause, to obtain power to direct policy continuously in relation to tha distribution of credit and the making of advances, but the clause provides that the bank shall do this only when it - is satisfied that it is necessary or expedient to do so in the public interest.
Clearly the Commonwealth Bank will intervene only when it considers it necessary to do so.
– In an emergency case?
– The honorable member may put it that way. The point is that “the bank may intervene when it considers it necessary in the public interest to do so. It is quite improper of honorable gentlemen opposite to assert that the Government has in mind a continuous direction of advance policy by the bank. Action will be taken when it is necessary to do so in order to prevent a repetition of the anarchist banking procedure of the pre-depression years when, as the banking commission stated, the private banks “ went with the tide “ and applied a policy which accentuated the evil effects of the depression.
.- The honorable member for Dalley (Mr. Rosevear) has twisted the views expressed by the honorable member for New England (Mr. Abbott) and, in my opinion, has removed from their context certain statements in the report of the Royal Commission on Monetary and Banking Systems, to which the honorable member for New England subscribed. That commission was appointed by the Lyons Government to investigate the problems of our banking system, and I consider that the honorable member for New England, as a member of the commission, did valuable work for the country. No one who was associated with trade and commerce during the depression years could truthfully say that the banks, as a whole, did not try to safeguard the country from the evil effects of deflation. As they were operating on a competitive basis, and not in concert, it was certain that they would do so. A bank here or there may have acted with undue conservatism.
– The report refers to “the banks”, not “a bank”.
– Most of the banks were reasonably liberal in the accommodation granted to their customers, whilst at the same time doing their best to safeguard the interests of the whole community. The Government is attempting, under this ‘bill, to establish a government monopoly which is the worst kind of monopoly. It has already obtained the approval of its big majority to its proposal to abolish the Commonwealth Bank Board and the reserve held against the note issue. Now it is seeking to strangle the private banks. It is sheer nonsense to contend that the effect of clause 27 will not be to limit advances ; and the provisions of subclause 3 do not alter that general effect. The Government is endeavouring to obtain power to direct the manner in which advances shall be made to persons engaged in both primary and secondary industries - no doubt with the object of hampering private enterprise, although many persons engaged in private enterprise are credit-worthy borrowers. The financial system of British countries has proved to be sound. In Australia during the depression years the only bank failure was that of the Government Savings Bank of New South Wales, whereas in the United States of America, where the central banking system is not well founded, thousands of banks suspended payment. The central banking system did not function well, and the American private banks were not founded on such enduring foundations of good will as are those in Great Britain and Australia. Yet the Government gaily brings down a revolutionary measure containing restrictive provisions. The object of providing that the Commonwealth Bank may not decide, even in its own administration, to whom advances may be made or refused, is to enable the Government to engage in business enterprises. What it is now doing in the financial world it will do later in the trading world. That has been instanced in multifarious ways during the war. This is merely another step in the complete regimentation of the community and should be repugnant to all democrats. I am astonished that the Government has not at least promised to give further consideration to the matter with a view to giving effect to any proposal found to have merit. Members of the Opposition have not adopted the role of advocates of private banks or propounders of party policy, but have been imbued with the idea of doing what would be best for the community as a whole. The clause should be defeated.
.- The honorable member for Dalley (Mr. Rosevear) claimed that there is nothing in the clause to prevent the banks from making advances to any individual. I point out to him that under sub-clause 2 they may be prevented from making advances to classes of borrowers. I look to the future, when the members of our armed forces will be returning to civil life. The Commonwealth Bank or the Treasurer (Mr. Chifley) will be empowered -to instruct the private banks not to make advances for any specified classof business, not even for purposes of housing. The policy of the Government, applied through the directorates of War Organization of Industry and Man Power, has been to force men to return to the positions that they held prior to enlistment. Thousands of men who formerly were in the unskilled labour class and have been taught a trade in the services may wish to have employment in an engineering establishment or in the motor industry, but the Commonwealth Bank or the Government may decide that it is not in their interests to allow that to happen. Thousands of office workers may wish to engage in the pastoral industry or the agricultural industry, and the Treasurer of the day may decide that the interests of the Government would not be served by permitting them to do so. The power will exist to prevent the banks from making advances. Why should men who have fought for this country be prevented from taking up the avocations they choose? No Treasurer, who may owe his position to a political accident, should have the power to prevent a man who has fought for his country from engaging in any avocation of his choice. The Government may have a “ wild cat “ scheme of social services, and may use in the purchase of votes money that should be applied to the reestablishment of ex-servicemen. That definite danger exists under sub-clause 2. I hope that the amendment will be accepted.
.- This is one of the most important clauses of the bill, and I can understand why honorable members opposite are resisting it so strongly. The provision which has aroused their strongest protests gives to the Commonwealth Bank the power to decide what advances1 shall be made by private banks. Thus the control of the financial system, as we know it to-day, is being taken from the private banks and given to those who are best qualified to exercise it and) accept responsibility for their actions. The present system has been in existence for years. On very few occasions have the private banks made decisions for the benefit of the whole of the people. They cannot be blamed on that account. Their object is to ensure profits for their shareholders and the successful functioning of their institutions1. On the other hand;, the duty of the Government and the Parliament is to legislate for the good of the whole of the people; consequently, they must have control of the financial system. Representatives of the private banks have stated many times that those who control finance virtually control the Government. Every imaginable objection has been urged, against the clause, which seeks to place on the Parliament the responsibility for the control of financial policy in this country. I have heard at least five members read paragraph 621 of the report of the royal commission, although one reading of it would have been sufficient to inform us of what it contains. Opposition members have claimed that the Government has departed from the recommendations of the commission. I am not concerned as to whether it has or not. My sole aim is to ensure that full control of the financial system shall be given to Parliament. If the royal commission did. not recommend that, I am not interested in its advice. I have read that it recommended that the Commonwealth Bank should “ advise “ the private banks in regard to advance policy. I agree that it should do so. But there should also be provision to compel the private banks to accept the advice given. Without that, the clause would not be worth the paper on which it is printed. The amendment of the clause in the way proposed would enable the private banks, to accept or reject any advice that might be given to them. Opposition members are arguing according to the instructions they have received from those whom they represent. The financial institutions of this country have hitherto had control of finance, and thus have been able to dictate to governments, but that position will no longer exist when this legislation has been passed. However strenuously the Opposition may resist, it will not be able to prevent the passage of the bill, with the result that the Parliament, which represents the people, will have control of finance and be able to use it in the interests of the whole community, not merely a handful of shareholders of a few private banks. The honorable member for Bendigo (Mr. Rankin) introduced the subject of the re-establishment of ex-servicemen. That has no connexion with the clause. He claimed that the Commonwealth Bank may instruct the private banks not to make advances to ex-servicemen. That is the most ridiculous of the many stupid statements that have been made during the debate.
– I did not say that.
– The honorable gentleman claimed that the Commonwealth Bank could instruct the private banks not to advance money to ex-servicemen who might wish to engage in occupations different from those they had previously followed. He might as well have said that the Commonwealth Bank could instruct the private banks not to advance money to politicians of to State governments. It could be said with equal truth that the Commonwealth Bank may instruct the private banks to advance money only to ex-servicemen. That would be just as sensible. The Opposition can raise all sorts of “ Aunt Sallys “ and then knock them down. One would not think that this was a deliberative assembly of men supposed to have sufficient intelligence to. legislate for the people, when matters not worthy of a junior debating society are brought before it. The honorable member for Balaclava, has been on the verge of tears about half a dozen times in painting a doleful picture of what may happen if this clause be passed, but his only purpose is to raise bogies. We are not after any one’s head. We are trying to do a job for the people. The honorable member for Bendigo and other honorable members opposite have received their instructions from the private banks. They have even been’ handed amendments to move and told what to say, but so muddled are they that often they apply their supplied notes to the wrong amendment. Their purpose is to hold up this legislation. In order to do so they are ceaselessly repeating worn-out arguments and filling in time by reading the clause again and again, and having frequent recourse to the recommendations of the Boya! Commission on Monetary and Banking Systems.
– The honorable member is the thirteenth government supporter to spaak on this clause.
– I may be, and there may be a fourteenth, but this is the first time that I have spoken, whereas the honorable member for Fawkner has spoken at least three times. So my claim that the Oppostion is merely stone-walling- stands. I am prepared to join in, because, sooner or later, we shall reach the stage of exhaustion and I am willing to accelerate that. If the Opposition wants a fight, I will give it all it wants. Stone-walling will not prevent the passage of the clause or the operation of the bill. The Opposition’s tactics are deliberately designed to prevent the Parliament from doing what it was elected to dp.
.- I resent the imputation that we are merely stone-walling. This is possibly one of the most important clauses in the bill, because it gives to the Treasurer the power to direct the industrial development of Australia. It is a power to be found in totalitarian countries where the only people of importance are the politicians and the bureaucrats, but surely not a power that should operate in a democracy. Both the honorable member for Dalley (Mr. Rosevear) and the honorable member for Bourke (Mr. Bryson) talked about the private banks having in the depression refused advances to credit- worthy people, and the honor able member for Bourke implied that it would be ridiculous to think that the Commonwealth Bank would refuse advances to ex-servicemen. We do not know what its policy in that respect will be, but it is- idle to think that every returned soldier who approaches the Commonwealth Bank for an advance will get one. The history of this Government’s financial dealings with returned soldiers does not augur very well for their chances, for the honorable member for Wentworth (Mr. Harrison) recently, in answer to a question upon notice, received some disquieting information. He asked -
How many men discharged from this war have applied for the maximum of £250 for rehabilitation purposes under the Australian Soldiers Expatriation Act, and bow many have received it’
The answer was -
Two thousand one hundred and ninety-four applications for advances for business plant, stock or live-stock have been received up to the end of March, 1045, of which 756 were approved, G42 refused.
So it does not seem that returned soldiers may expect much from the Commonwealth Bank. My principal reason for rising was to deal with the accusation that in the depression the private banks refused advances to creditworthy citizens. Doubtless there were cases in which advances were refused. Doubtless, too, there were good reasons for the refusals. The banks had to maintain their solvency. At that time the Commonwealth Bank had the power to inflate in order to enable the trading banks to expand credit, but who was in charge of the Commonwealth Bank at that time? None other than Sir Robert Gibson who, on the expiration of his term at the end of 1929, was re-appointed Governor of the Commonwealth Bank by the Scullin Government. I believe that the right honorable member for Yarra (Mr. Scullin) acted in good faith. He realized that the ‘Commonwealth Bank needed a sheet anchor. Most of the distress of those times arose out of the later meddling with the bank by the Government.
– In what way does the honorable gentleman connect his remarks with the clause?
– I ani dealing with advances and replying to the honorable member for Dalley and the honorable member for Bourke. In order to find the truth as to the policy of the private banks in those days, so as to controvert both honorable gentlemen, one needs to refer to the Australian banking statistics. In the March quarter of 1929 total deposits in the trading banks amounted to £288,657,585; total advances, £257,398,111; and cash reserves, £55,182,364. In 1931, however, total deposits had fallen to £262,124,048. Total advances had advanced to £261,239,096. Cash reserves had fallen to £48,658,943. It is important to note that from 1929 to 1934 advances increased by £23,000,000 whilst in the same period total deposits expanded, by a mere £2,000,000. Over the period cash reserves declined by £7,000,000. Is it any wonder that, with declining cash reserves, the banks had to refuse accommodation to some people? In order to learn why it was impossible to make advances to certain credit-worthy borrowers it is necessary to look at the statistics relating to advances. In the March quarter of 1929, private advances stood at £239,191,046; government advances £18,207,065, and total advances £257,398,111. The corresponding amounts for the March quarter of 193>2 were £224,895,458, £36,670,784 and £261,566,242, respectively. It is important to note that, whereas total advances advanced by £4,168,131, private advances declined by £15,295,188, but government advances increased by £1S,463,619, more than 100 per cent. The reason why private borrowers could not get all their requirements from the banks was that the governments, principally the Commonwealth Government and the Lang Government in New South Wales, were demanding all the available accommodation. ‘That is the true picture.
The honorable member for Dalley said that the central bank should play a determining role in fixing the advances policy of this country. No one on this side claims that the Commonwealth Bank, as the central bank, should not exert a very direct influence on advances, but we say that it should function in conjunction and co-operation with the trading banks. Until the Commonwealth Bank Bill becomes law we shall still have a board of directors controlling the Commonwealth Bank. That board consists of men chosen from different walks of life. They bring to the board room a wealth of industrial, commercial, and agricultural experience. Soon that board will be abolished- and. the power reposed in it will be transferred to one man, the Governor of the bank, who, in his turn, will be subservient to the Treasurer of the day. He will be the supreme authority, but he will be a superman if he can gauge with the slightest degree of certainty what will take place in all branches, of activity in this country. He will have certain advisers but I doubt whether they will be so well informed as are members of the Commonwealth Bank Board. There we have the difference. The Commonwealth Bank Board represents different phases of this country’s activities. It works in conjunction with the trading banks, which possess a vast knowledge of industry generally, because the day-by-day- contact of their managerial and other representatives with their clients enables them to have an. unrivalled knowledge of industrial trends. All that set-up is to be abolished in favour of control by one man ‘ subservient to the Treasurer of the day. Under this legislation, the Governor of the Commonwealth Bank may determine whether a certain industry shall progress or stagnate. No wonder honorable members on this side of the chamber have devoted a good deal of attention to this matter, because any .branch of industry in Australia may be affected ! Unless the Governor approves of the granting of financial assistance to an industry, its activities will be hampered.
The honorable member for Fawkner (Mr. Holt) showed clearly that this clause will assist wealthy, established enterprises, and will restrict the operations of less fortunately placed companies. The Governor of the Commonwealth Bank may direct that advances shall not be made to a certain industry. It is futile for honorable members opposite to declare that that decision will not affect citizens as individuals, because they will be affected if they are engaged in the class of industry which the hank has decided not to assist. Some industries, which may not be vitally important to the welfare of the country, make reasonably large profits and are constantly expanding. One of those industries may be well established, and possess substantial reserves. Because of its reputation and status, any invitation it extends to the public to take up new shares will bc quickly accepted. That well-established company will not suffer from the Governor’s direction, but a less wealthy industry will be seriously affected by it. Consequently, this provision is in favour of substantial enterprises, but will hamper struggling companies. Many of the great inventions were made by men in humble circumstances. If they had not possessed spirit and initiative, our present industrial development would not have been possible.
– Order ! The honorable member has exhausted his time.
.- If any doubt had existed previously as to where honorable members opposite stood on this matter, and whether they were serving the interests of the people or vested interests, that uncertainty has now been dispelled. They accused the Government of being dominated by caucus, but the strenuous efforts which they have made on behalf of their real masters, and the bitterness of their remarks, convince me that they have been threatened with a “ big stick “ from time to time. The clause shows clearly that the Government, in insisting upon the retention of this clause, desires to ensure the welfare of the people as a whole. To that end, the Commonwealth Bank is charged with-the direction of national financial policy. In turn, the bank will be subject to the direction of the government of the day, as representing the people as a whole. Experience has shown that in times of crises, the direction of financial policy must not be left to vested interests. What would be the attitude of the management of the Commonwealth Bank to the control of policy? Would it be along the lines followed by the private financial institutions, which place their own profits and assets before the national interest? Would the Commonwealth Bank, particularly in a crisis, finance speculative enterprises or luxury trades? Would it be concerned with high profits and a high rate of interest? Or would the Commonwealth Bank be concerned solely with maintaining economic stability, and the prosperity of the people as a whole? Honorable members know perfectly well what the bank would do. I recall the disasters that have resulted from control of financial policy by private institutions. In fact, international financial groups have controlled the national economy of Australia and other countries in previous crises. An admirable summary of matters raised in this discussion is contained in a book entitled The Politics of Plenty, by H. Norman Smith. One extract reads -
Mr. Winston Churchill is a witness to whom most people will lend respectful attention; and Mr. Churchill has testified how “the highest financial experts “ .(and what financial expert in London could be higher than the Governor of the Bank of England?) persuaded him when he was Chancellor of the Exchequer in. 1925 to take a step - the return to the gold standard - which produced disaster for British industry. Seven years later - on April 21, 1932 - the House of Commons was discussing the first regular Budget after Great Britain in. 1031 had been forced to discontinue the, calamitous experiment of tying its industry to the gold standard; and Mr. Churchill, by# that time free from the responsibilities of? office, said : “ When I was moved by many arguments and forces to return to the gold standard I was assured by the highest experts that we were anchoring ourselves to reality and stability, and I accepted their advice. I take for myself and my colleagues of other days whatever degree of blame and burden there may be for having accepted their advice. But what has happened? We have had no reality, no stability.”
The TEMPORARY CHAIRMAN.Order ! I ask the honorable member now to relate his remarks to the clause.
– Financial experts of international renown have visited Australia from time to time to advise us regarding the conduct of our affairs. One of those experts said that the Australian people should “ stew in their own juice “. As this book points out, Mr. Montagu Norman, one of the leading financial experts in Great Britain, was vitally wrong. The extract continues -
Mr. Churchill’s implied reflection on the Governor of the Bank of England was mild compared with the sweeping censure handed out bya Conservative M.P. and former Minister of the Crown, Mr. Robert Boothby, who wrote in his book, The New Economy, published in the autumn of 1943 - “ In every major aspect of his policy Mr. Norman has proved to be wrong. He was wrong over the American debt settlement. He was wrongin returning to the gold standard. He was wrong in clinging to gold at an untenable parity of exchange. He was wrong in giving his support to a policy of industrial restriction at home. He was most fatally wrong in allowing money to be poured into Germany during the 1920’s and in giving financial support to the Nazi Government during the 1930’s.”
My first objection to the system of bankcreated debt-money - that it gives undue power (call it a “hegemony” if you like) to persons who are not responsible to any elected body - seems to have ample support behind it - and from people who are not undistinguished. Evidently in this country our supposed democracy is more apparent than real.
– I rise to order. I sub- mit that the passage which the honorable member is reading is not related to this clause.
– What the honorable member is now reading is in order.
– The extract proceeds -
No wonder Mayer Anselm Rothschild, founder of that illustrious house, wrote at the end of the eighteenth century : “ Give me control of a nation’s money and I care not who makes its laws!” The same sentiment has been expressed less classically and more colloquiallyin the form of a limerick -
The people still go to the poll,
And think theyhave final control;
But really they dance
To the tunes of Finance,
Consoling themselves with the dole!
Experience has shown that such a policy must be abandoned in future. Finance must be controlled by an independent representative authority, which will direct it in the interests, not of international financiers, but of the nation as a whole. The people will be the real masters of the situation, and direct their own destiny.
Question put -
That the words proposed to be left out (Mr. Holt’s amendment) stand part of the clause.
The committee divided. (The Temporary Chairman - Mr. G. W. Martens.)
Question so resolved in the affirmative.
.- I move -
That sub-clause (2.) be left out with a view to insert in lieu thereof the following subclause: - “ (2.) No bank shall be compelled to make any particular advance.”
I do so in order to preclude the possibility that any hank may be forced to make advances against security which is not regarded as being perfectly satisfactory. I have previously explained the necessity for this provision, and I shall not labour the point.
– We know that the Government desires to control banking, but this clause provides a means by which it can ruin the private banks. It provides for political control of the inner working of those institutions. Therefore, I support the amendment. Surely the private banks, with their many years of experience, can be trusted to decide for what purposes they will make advances. The bill already provides for government dictation to the banks in that certain governmental establishments and borrowers indebted to such institutions will be forced to conduct their business with the Commonwealth Bank. It would not be fair to impose this further restriction on the trading banks. They are entitled to exercise some discretion in their own internal management. By reason of their financial interests in the private banks, the people control the greater part of the hanking business of the country at the present time. This clause will only serve to drive the private banks to their own ruin. The Minister assisting the Treasurer (Mr. Lazzarini) knows that, when a former Labour government wanted to distribute £250,000 to the unemployed on one occasion, he himself voted against the proposal because the relief was to be given only to certain classes of people who were supporters of the Labour party. He objected to preferential treatment. He must be aware, surely, that this bill will provide for preferential treatment of certain classesof people. The private banks may be directed to make advances for certain classes of purposes against unsatisfactory security. This will cause a great deal of trouble to the banks, which will not be consulted in regard to the decisions made. The bill will enable the Commonwealth Bank, not only to decide the nature and volume of advances and to fix interest rates-, but also to determine the purposes for which advances shall be made. That will mean that the decision will rest with whatever party happens to be in. power. It is a dangerous provision.
.- Like all other amendments which have been submitted by the Opposition, this amendment is designed to destroy completely the meaning of the clause, and, of course, the Government will not accept it.
.- I support the amendment. The necessity for it is apparent when we recall the speech made by the Minister assisting the Treasurer (Mr. Lazzarini) earlier in the discussion. The clause is designed to compel private banks to make advances to individuals at the behest of the Commonwealth Bank. The Minister cited the case of a friend of his, a cotton spinner, who had an overdraft of £750,000 from one of the private banks, and whom the Minister considered tobe ill-treated when the bank refused to advance a further £250,000.
– I did not say £250,000. Read Hansard.
– At any rate, the man wanted more than £750,000. The Minister said that he deserved a further advance, and, in fact, indicted the bank for not having given the accommodation. Under this clause, it is conceivable that the Minister assisting the Treasurer, as Treasurer in some future government, might direct an unfortunate bank to increase the advance made to such a man to whatever amount he asked. We do not know the reason why the cotton spinner was refused a further advance by the bank, but we assume that the security which he offered was considered to be inadequate. It appears that under this clause, anybody who has an influential friend in the Government, and has a huge overdraft, can secure further advances beyond the value of his security by means of a direction given by the Government to his bank. If the Minister will assure us that such things will not be done we shall be happy, but we shall be happier still if this amendment is accepted so as to make such an occurrence impossible.
Question put -
That the clause be agreed to.
The committee divided. (The Chairman- Mr. W. J. F. Riordan.)
Question so resolved in the affirmative.
Clause agreed to.
Clause 28 (Limitation on purchase of securities).
– This clause provides that the banks listed in the First Schedule of the hill shall not, without the consent in writing of the Commonwealth Bank, purchase or subscribe to securities of the Commonwealth or a State, or any authority of the Commonwealth or a State, or securities of any local governing bodies in Australia, or securities listed on a stock exchange in Australia. The limitation in relation to government and semigovernment securities is related, I suppose, to the Government’s general control measures, though it seems to me to be unnecessary; but I wish to know why a limitation should be placed upon the use of shareholders’ funds for the purchase of securities listed on a stock exchange. There can surely be no justification for this provision. Why should a shareholder in a bank be prevented from using the money he has invested in a bank for the purchase of securities listed on a stock exchange? In my opinion, this provision is another limitation of the liberty of investors.
– A person who has invested in bank shares may sell his shares and invest the money otherwise if he so desires.
– But why should a shareholder who has invested his money in a bank be debarred from buying securities on the stock exchange with his own capital if he wishes to do so? I consider that this limitation is quite unjustifiable.
– The provisions of this clause are already operating under the National Security (War-time Banking Control) Regulations.
– I doubt whether there is a restriction in regard to securities listed on a stock exchange.
– There is. The Government considers that it is desirable that these limitations should be continued.
– Why should not shareholders’ funds be available to a bank for the purchase of stock exchange securities ?
– The Government considers that it would be inadvisable to allow the banks to engage in such trading without first obtaining the consent in writing of the Commonwealth Bank. Honorable members opposite may say that that isunsatisfactory, but it is the policy of the Government.
– I direct attention to the fact that parliamentary endorsement of this clause will mean a continuation of the regimentation of the banks which has operated during the war. Not only does the Government intend to curtail the activities of the private banks by pegging their transactions in certain respects at the level of 1939, and by controlling advance policy, but it is also now taking steps to limit the right of the banks to purchase securities listed on the stock exchange. The explanatory note of the Treasurer on this clause states explicitly that this provision will, in effect, continue the operation of the National Security (War-time Banking Control) Regulations. I agree with the Minister assisting the Treasurer (Mr. Lazzarini) that the three points mentioned in the clause are included in the regulations. But why should controls that were imposed at a time of grave national emergency be continued in the post-war period? No attempt has been made by the Government to justify such continuation. We have been told, baldly, that the control will be retained. The libertyloving people of Australia have been looking forward optimistically to the withdrawal of war-time restrictions, but they must realize that the Government is proposing to maintain many controls which, in our opinion, should be abandoned, and this is one of them. The restriction was an inescapable necessity in the gravest days of the war, but that necessity no longer exists.
.- The opposition to this clause is much the same as has been offered to other clauses. I should like to know whether the Treasurer (Mr. Chifley) is aware that private banks have stated in a circular that they are prepared to spend from £20,000 to £30,000 yearly in educating the public against this legislation. I have also wondered whether the Treasurer is aware that finance from that source is assisting the Liberal party to-day ? Although I do not profess to be an expert on banking, it seems to me that the clause has been drafted with the object of safeguarding depositors’ funds. Paragraph c relates to securities listed on Australian Stock Exchanges. The provision is similar to practice in other parts of the world. The Leader of the Australian Country party (Mr. Fadden) has claimed that war-time controls are to be carried into the peace years. I do not think anybody denies that the Government is carrying into the post-war years a part of the banking policy which the Labour party has always enunciated. I cannot see any reason for keeping the matter a close secret. Under this provision, private banks will not be able to gamble with depositors’ funds on the stock exchange. To me, the provision is an excellent one.
– It is highly immoral.
– It is essentiallymoral and quite legitimate. The Opposition has to earn the contribution which the private banks make to its funds. The whole of its arguments are taken from-the brief supplied by those institutions. This legislation is a part of the policy of the Labour party. The object is to protect the public against the exploitation that has been practised for years. Objection has been taken to the adoption of the 1939 level. Why should not 1939 be adopted as the base year? The war was not in progress until the end of that year, and there was a certain degree of prosperity in the country.
.- This is a most extraordinary clause. The Minister has defended it on the ground that already it is operating under National Security Regulations. In his statement is to be found something which the people of Australia are slowly beginning to realize, namely, that this Fascistminded Government intends to keep Australians in a strait-jacket of war-time regulations right into the peace period. Very wisely, the people last year rejected the Government’s referendum proposals, thereby indicating their belief that an Australian Parliament, which is always liable to have a Government such as that which now occupies the treasury bench, should not be entrusted with the powers that were then sought. Yet, under this legislation, controls that have operated during the war period are to be continued in the future! I was interested in the description by the honorable member for Bass (Mr. Barnard) of the tremendous, one might almost say motherly, affection of the Government for depositors in the trading banks. Their funds are not to be invested in the securities of the Commonwealth, State, or a first-class local government authority, or in other gilt-edged undertakings. The Macmillan Committee, which investigated the monetary systems of Great Britain, probably was one of the best-balanced committees that had ever inquired into the subject. On it was the Honorable Ernest Bevan, one of Britain’s leading
Labour men. Neither he nor any other member of the committee protested against the methods by which the “Big Five “ banks of England invested their funds. It is interesting to note that the Australian trading banks have used these types of investment as an interest-earning medium less than have the British banks. In Great Britain at the time of the Macmillan inquiry, 65 per cent, of the assets of the “ Big Five “ were in investments, and only 35 per cent, inadvances to clients. In Australia, 33 per cent, of the total assets were in 1937 held in cash and investments, and the remainder in advances. As Australian banks have never exploited investments, I cannot understand why a provision of this sort is being enacted. When the mind of the Government is completely distorted by conditions due to the war, which are entirely different from those obtaining in peace-time, legislation that is to operate in the post-war period should not be enacted at this time. Neither the Minister nor the explanatory notes can offer any better reason for the perpetuation of the provision than that it already exists in war-time regulations.
.- This clause proposes to continue controls that ought now tobe lifted. In the United Kingdom, Canada, and the United States of America, the control of many activities has been relaxed. Yet the Government intends to harass the trading banks, and make their trading conditions more difficult. I hold no brief for the trading banks. In banking practice to-day, when an advance is made security of some kind is offered. Frequently, it is in the form of shares. The clause provides that a bank shall not purchase or subscribe to securities that are listed on stock exchanges in Australia. A memberof the public may lodge shares as collateral security, but this says that the banks shall not hold those shares. Where do the banks stand? This is just a further instance of the harassing tactics proposed to be employed by the Government in order to hamper the trading banks’ activities.
– Clause 28 provides that a bank shall not purchase or subscribe to securities. That has no relation to the lodgment of shares as security for an advance.
– I accept the Minister’s assurance.
Clause agreed to.
Clause 29- (1.) Where the Governor-General is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth, or in order to conserve, in the national interest, the foreign exchange resources of the Commonwealth, he may make regulations, not inconsistent with this Act, making provision for and in relation to the control of foreign exchange and, in particular, but without limiting the generality of the foregoing, for or in relation to -
– I move -
That, in sub-clause (1.), after the word “ he “, the following words be inserted : - “may declare a state of emergency after submission to Parliament and “.
If the amendment be carried the subclause will read -
Where the Governor-General is satisfied that it is expedient to do so, for the protection of the currency or of the public debt of the Commonwealth, or in order to conserve, in the national interest, the foreign exchange resources of the Commonwealth, he may declare a state of emergency after submission to Parliament and make regulations, not inconsistent with this Act, making provision for and in relation to the control of foreign exchange, and, in particular, but without limiting the generality of the foregoing, for or in relation to -
Thereunder is a list of things in relation to which the Governor-General, which means the Government, may make regulations. I propose to return to that later. This clause confers upon the Executive, to the exclusion of Parliament, powers under which the Government could be viciously dictatorial; The provision cuts right across the Atlantic Charter and the Mutual Aid Agreement. The Executive could, by means of this clause, without reference to Parliament, contravene our tariff policy. No definition is given of the circumstances in which the GovernorGeneral may satisfy himself that it is expedient to make regulations for any of the purposes prescribed. That is why it is necessary that that power should be exercised only in a state of emergency declared by the Parliament. As drafted, this obnoxious and dangerous clause removes from the hands of the elected representatives of the people in this Parliament and transfers to the Executive power, by regulation, to alter our whole economic system, both external and internal, because, under it, imports and exports could be subjected to all sorts of restrictions never contemplated by the Parliament. What far-reaching consequences this clause could have will be seen by honorable members when I recite with appropriate comment the list set out in the clause of all the things in relation to which the Governor-General will have power to make regulations-
I do not think I need gobeyond that to show the power that the Government proposes to take unto itself to control our international trade. Under that provision all our great exporting industries upon which our prosperity depends could be adversely affected -
That sets up a monopolistic control over foreign currency, which will adversely affect the trading banks -
That enables the restriction of transactions -
There we have an absolute requirement for the sale, which means the purchase by the Commonwealth Bank, of foreign currency, but no obligation on the Com monwealth Bank to sell foreign currency to the trading banks -
If such powers are needed by the Government it should bring down a bill specifically drafted to confer them upon it, and should not adopt this hole-and-corner method. In the explanatory memorandum the Treasurer says -
Since the outbreak of war exchange control has been operated under the National Security (Exchange Control) Regulations, supplemented by action under the Customs Act.
Under war conditions these controls are necessary, but not in peace-time, particularly in view of the fact that the people of Australia, in no uncertain voice, told the Government that in no circumstances did they want continuance in peace-time of the war-time restrictions. Yet that is the principal purpose of this clause.
– Banking was not included in the referendum submissions.
– Nothing else matters much when the Government has full control of the monetary and banking system. The design of the banking legislation is the achievement of the first plank of the Labour party’s platform - control of the means of production, distribution and exchange. In order to achieve that the Labour party must have control of the monetary and banking system.
– The memorandum continues -
This has been necessary to ensure that the foreign exchange resources of the nation are used primarily to further the war effort and for essential civil purposes. It is hoped that after the war or. at least after the post-war transition period, exchange control will be unnecessary.
Why not then bring down a bill for a. specific period to give to the Government the powers now sought in this clause in order that the country may know what is proposed? Our staple industries will be at the mercy of the Executive if this clause should be carried without the qualification for which my amendment provides. Our great exporting industries have to sell their products on world markets. We can do what we like in controlling prices inside the 3-mile limit of this continent, but there our power ends. Unless the committee is willing that this country shall pass from democracy into totalitarianism, it will carry my amendment.
– I strongly oppose this clause, which has all the trappings of exchange control that the Fascist nations of Europe used to employ. The only provision missing from the clause at present - I have no doubt that it will be inserted later - is one providing for the censorship of the overseas correspondence of citizens. It will be essentia] to appoint an army of “ Peeping Toms “ to pry into letters sent overseas and received from overseas by citizens in order that black marketing or illegal dealings in exchange may be detected. This clausecuts completely across the Bretton Woods Agreement concerning which Professor Melville commented -
The other major obligation which membership of the fund would place upon us is not to impose exchange control except to prevent capital movements.
But capital movements are not mentioned in this clause, or in the explanatory memorandum. Among the draft articles of the Bretton Woods Agreement are the following: -
The purposes of the International Monetary Fund are -
To promote international monetary co-operation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.
To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
Despite the Bretton Woods Agreement, and the statements made by the representatives of this Government at that conference, this bill contains provisions relating to foreign exchange which contravene the agreement.
– This Government has not endorsed the Bretton Woods Agreement.
– I am aware of that fact. But we know that the Government, when the other Powers put the screw on it, will do as it is told. The fact has been drummed into our ears ad nauseam ever since the beginning of the United Nations Conference on International Organization at San Francisco, that Australia is one of the small nations of the world. Australia, we are told, has only a small voice, and, led by the Minister for External Affairs (Dr. Evatt), it has gathered around it the waifs and strays among other small nations. But I emphasize that Australia is not a small nation, but a part of a great Empire and depends for its prosperity on unrestricted external trade. This clause enables the Governor-General to make regulations in relation to -
Those restrictive powers will put Australian traders, including primary producers, into the most effective economic strait-jacket that they have known since federation. Paragraph d reads -
Requiring any person who has power to sell, or to procure the sale of, any foreign currency to sell, or procure the sale of, that foreign currency as prescribed;
That will not be a great incentive to foreign countries to establish factories in Australia. Addressing audiences in Great Britain, Australian Ministers have emphasized the desirability of manufacturers transporting their machinery and operatives to Australia. But when those manufacturers are informed of the. provisions of this bill, they will not establish factories in this authoritarian country, where the Government is concerned principally with keeping business people in strait- jackets. When the slightest economic ill wind is experienced, the Government will promulgate the most drastic regulations that the world has known since Mussolini and Hitler issued their exchange control restrictions in Italy and Germany. Paragraph / reads - nic prohibition of the importation or exportation of goods unless a licence under the regulations to import or export the goods is in force; . . .
As applicable to primary producers, thatparagraph is the most woeful and wicked provision ever incorporated in Commonwealth legislation. Primary producers have never forgotten their bitter experience when the Scullin Government placed an embargo on the export of sheepskins, which were left to rot in the stores.
– I rise to order. I submit that the honorable member’s references to sheepskins are outside the scope of the clause and the amendment.
The CHAIRMAN (Mr. Riordan).I ask the honorable member for New England to address his remarks to the clause and the amendment.
– I rise to order. Paragraph / of this clause deals with the prohibition of the importation or exportation of goods unless a licence under the regulations to import or export them is in force. Therefore, I contend that the honorable’ member for New England is entitled to refer to the export of sheepskins under licence.
– The Chair has already given its ruling.
– My reference to the act’ion of the Scullin Government in placing an embargo on the export of sheepskins was an apt illustration of the restrictive measures that the Government could take under paragraph /. I regret that my words annoyed honorable members opposite. They do not like to be reminded that the ill-considered action of the Scullin Government had most disastrous results for the owners of those sheepskins.
Under this clause, all exports may be restricted or held up. This provision will result in a pegged rate of exchange, which may be completely out of relation with the parity purchasing power of other countries, to which Professor Gustav Cassell referred in his Quantitative Theory of Money. That may take place to the detriment of the exporting industries of Australia. We hope that in future our trade with other countries will grow, that our steel industry will find a market in India, and that our wheat and dairy products will be purchased by India, China and Java. But under this ‘provision the primary producers of Australia may be denied, as they were denied by the Scullin Government during the depression, the full value of their products in terms of Australian currency, because the exchange may be tied down. One lesson which the great economic depression taught was that as prices rise employment rises proportionately. For example, during the depression, the price of copper in Australia declined to £60 a ton. Under the influence of the raised exchange rate, the price rose to between £70 and £80 a ton, and the number of employees in industries directly associated with the use of copper increased by 15 per cent, or 20 per cent.
As I stated earlier, this clause will place the exporting industries of Australia in a strait-jacket. In my opinion, this clause should be defeated, and the exchange rate in Australia should be controlled, except in war-time, by natural influences of the market, so that the primary and other exporting industries may provide full employment and expand their business with other countries.
.- The honorable ‘member for New England (Mr. Abbott) whipped himself into a frenzy in an endeavour to hide the absence of any reasoned argument to support his statements. What he and the Leader of the Australian Country party (Mr. Fadden) have forgotten is that Australia is a debtor nation. If the
Government does not have access to foreign exchange other persons may be able, from time to time, to control foreign exchange, and the Government may then be denied the right to obtain it for the purpose of meeting its ordinary commitments overseas. The power to control exchange, which is provided in clause 29, is most necessary to Australia as a debtor nation. In the economic depression in the early thirties of this century, to which the honorable member for New England frequently refers, the banks did not force up the exchange rate to £130. The factor responsible for it was n-n influence on the outside market. The banks were not able to control that influence, and the market for foreign exchange developed outside their control. Ultimately, the banks were forced to accept a rate of £130.
– The exchange rate was increased by the Bank of New South Wales.
– That is not correct. A new market in foreign exchange developed completely outside the normal channels.
– And the Commonwealth Hank would not follow it.
– The bank had to follow it in order to obtain the foreign exchange which it required. That was during a period of currency shortage. Then the Scullin Government imposed necessary restrictions in order to prevent Australia from defaulting on its overseas obligations., and to enable foreign exchange to accumulate. The honorable member for New England, in direct contrast to the opinions that he expressed as a member of the Royal Commission on Monetary and Banking Systems, has assumed the role of champion of the private trading banks. They refused to support the exchange rate because they had to buy at £130 and if the rate had been stabilized at a lower rate or had returned to parity, they -would have lost the difference between the stabilized rate and £130.
– The honorable member believes that the exchange rate should return to parity.
– I do not.
– The honorable member for Calare (Mr. Breen) advocated it.
– As a member <of the royal commission, the honorable member for New England pointed out that the trouble in Australia had been that the banks had “borrowed short and lent long”. I believed that the honorable member would make a valuable contribution to this discussion, as he did as a member of the Royal Commission, but instead of doing so, ho has consistently criticized the bill. Now he claims that everything which the private trading banks have done is right, and that everything which the bill contemplates is wrong. His attitude has. greatly disappointed me. On the Royal Commission he put his finger upon the real weakness of the Australian banking system, namely, that the hanks had borrowed money on short call and had lent on securities of a type which prevented them from liquidating their assets at short notice. Now, the honorable member adopts an attitude contradictory to the views that he expressed as a member of the royal commission. The bill which seeks to correct some of the weaknesses in the banking system - weaknesses of which the honorable member was previously aware - finds no merit in his eyes. I contend that this measure contains provisions, which are. vital to the credit of Australia, in its position as a debtor nation, whereas the United States of America, for instance, is a creditor nation. On one occasion, when the currency of the country was short, what might have been termed a “black market “ compelled the private trading banks and the Commonwealth Bank to raise the exchange rate. When the currency became plentiful, the private trading banks refused to buy the currency that was available. I quote from a book entitled the Australian Price Structure, 1932, by Shann and Copland-
The trading banks, or some of them, adopted the attitude that they were not prepared to support the exchange rate unless the Commonwealth Bank undertook to purchase all surplus exchange from them, or in other words insisted on the Commonwealth Bank undertaking to find any loss incurred through a falling exchange market. The Bank Board suggested that the difficulty might be overcome by a co-operative arrangement between the Commonwealth Bank and the trading banks on a pooling basis, each bank to share in any loss accruing from lowered rates upon a predetermined factor. This proposal was not acceptable to the trading banks as a whole, and the Commonwealth Bank therefore decided, so as to prevent a complete collapse nf exchange, to determine the rate of exchange itself, from time to time, and buy or sell all exchange offering at these rates.
So, had the private hanks been left to handle exchange, there would have been a collapse. For the reasons which I have stated, these are vital powers which should be available to the country in an emergency. The suggestion by the Leader of the Australian Country party (Mr. Fadden) that the powers should not be exercised without recourse to Parliament is completely wrong.
– -Of course not.
– That is not very intelligent.
– That is what a Fascist Government would say. The honorable member even looks like a Fascist.
– I heard the honorable member say something about Fascists. If he were responsible for his utterances in this chamber, as he is responsible for his actions outside it, I should ask him to withdraw the remark. However, he goes to such lengths in his demonstrations and utterances in this chamber that I am completely unperturbed by what he says. For the reasons that I have stated, I consider this to bo a vital power. In the light of our experiences during the years of the depression, we cannot trust the private banks to uphold the exchange ru te when exchange is surplus overseas, nor can we leave it under the control of individuals, or groups of individuals, who may corner exchange when it is needed for the discharge of our overseas indebtedness. The power is certainly wide, but I do not object to a power being given to the Parliament of the nation. That is preferable to conferring an arbitrary power on some individual who is beyond the reach of the people. Unless this power be given to the Parliament, it will have the opportunity to evade its responsibility to the people. But, having the power, if it fails to exercise it in a responsible manner, the people will have the final decision as to how long it will remain in charge of the affairs of the nation. No doubt we shall hear further diatribes against this provision, but I shall not answer them, because honorable members opposite are apt to rise and comment on any statements, no matter how correct, merely because they are pursuing an obstructive policy. They seize on any contribution to the discussion from this side of the chamber as an excuse to continue their delaying tactics. These proposals are necessary. I have no fear that they will be abused, because the members of this Parliament are responsible to the electors, and no safeguard that the electors have is so valuable as the power of recall - not even the power to appeal to the High Court against any threat to their rights, because the High Court itself is only a creation of the Parliament. The clause is necessary, though far-reaching, because at any time the powers it provides may be desirable, and in fact vital, to the interests of the people. I have no doubt that, if any government should abuse the powers conferred upon it by the clause, it would be speedily and appropriately dealt with by the people.
.- The honorable member for Perth (Mr. Burke) apparently has an abiding faith in bureaucracy and very little confidence in Parliament, because he is quite willing, as a member of the docile majority on the Government side of the chamber, to give powers to that bureaucratic instrument of government, the Commonwealth Bank. The granting of these powers to the bank will take out of the hands of Parliament the right to control our export and import policies. He slavishly says that the granting of these powers is satisfactory to him, and by inference he suggests that Parliament is of no account as an instrument of the people. Whenever a democratic parliament has slipped by degrees from its proper position as the mouthpiece of the people until it has become merely the instrument of some form of dictatorship, whether Fascist, Communist or Socialist, it has done so as the result of the neglect of private members supporting the Government. This is a case in point. I remind the honorable member that the explanatory memorandum circulated by the Government says that these powers are to be used only in times of emergency
It is hoped thai after the war or at least after the post-war transition period, exchange control will be unnecessary.
The Government itself hopes that it will not have to use these powers. Clause 29 provides that, where the GovernorGeneral is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth, or in order to conserve, in the national interest, the foreign exchange resources of the ‘Commonwealth, the powers provided may be exercised. Therefore, those powers are intended to be exercised only in times of emergency. But, at such times, Parliament should be the authority to advise the Government, not the Governor of the Commonwealth Bank and his consultants. I agree with the honorable member for Perth to the extent that I can visualize a situation in which it might be necessary to take the action provided for in the clause.
– What if the situation arose when Parliament was not meeting?
– Parliament would have to be assembled to deal with the situation, because that is its job. It would not take long to call Parliament together, and, in any case, such emergencies do not arise overnight but develop gradually. Parliament would have ample time in which to do the job. I repeat that there is a distinct possibility of these powers being needed, but all of them may not be needed. There may be other factors not now envisaged which will have to be discussed at the appropriate time. As the result of our present export trade position, with the loss of many markets due to wartime and other conditions, our import trade may be so great as to outweigh the value of our exports. As a result, we shall have a lop-sided economy, and various corrective measures will have to be taken. I repudiate the proposal that control of our import and export trade should be handed over to a dictatorial body, which is not required to bring before Parliament even such proposals as might overturn the financial and economic structure of the nation. Honorable members who agree supinely to the handing over of such powers are selling out their responsibilities to the people. We have seen how such powers can be. abused. Certain regulations intended for one purpose have been used for entirely different purposes. Consider the restrictions on the entry of aliens to Australia. They are subjected to a language test in which, although they may be Englishspeaking, they may be asked to bake dictation in German, Russian or any other language of which they have no knowledge.
– The honorable member’s party did a lot of that sort of thing.
– Exactly! I agree with the Minister on that point. That is the danger of giving this kind of power to a bureaucratic body. The Opposition parties did such things, and the Government party may do so, too. If the present Opposition parties are returned to office in the future - and God knows who may be required to handle these powers - they may again behave in an arbitrary fashion. Therefore, as a representative of the people, I am not prepared to hand these powers to any government, whether it be formed by my own party or by the Labour party. We have a duty to the people whom we represent, to take action in a crisis in the light of existing conditions so as to preserve the interests of the people. I see a great deal of danger in this clause, but I am not so much concerned about that danger as I am about the diminution of parliamentary authority. It is disgraceful that the large majority of Labour party representatives in this chamber should be prepared to sell out their heritage without doing any original thinking. I say this deliberately: The Government is not prepared to face the crisis which it anticipates, and it wants to pass responsibility onto the Governor of the Commonwealth Bank and his officers. It is selling out its rights.
Sitting suspended from 5.59 to 8 p.m.
Declaration of Urgency.
– I declare that the Banking Bill 1945 is an urgent bill.
Question put -
That the bill be considered an urgent bill.
Question resolved in the affirmative.
Allotment of Time.
Motion by (Mr. Chifley) proposed -
That the time allotted in connexion with the bill he as follows: -
for the remainder of the committee stage, until 12.30 p.m. tomorrow.
for the remaining stages until 12.45 p.m. to-morrow.
– I regret that the Acting Prime Minister (Mr. Chifley) has taken this drastic action. The Opposition has good grounds for objecting to this procedure. We object to it because, by implication, it charges us with having obstructed the passage of the bill. We consider such a charge to be absolutely unwarranted. This is one of the most important bills that honorable members will have to consider this session, and Opposition members have applied themselves with diligence to the consideration of its intricate clauses. Two of the clauses are particularly important, and when they have both been disposed of there should not be great delay with the remaining clauses. The first of those two was clause 27, which the committee has already passed.
– The honorable member must confine his remarks to the question as to whether the time proposed to be allotted is sufficient.
– I am discussing that question, sir. Clause 29 is the other important one to which attention will need to be devoted. Three Ministers and fifteen Government supporters addressed themselves to clause 27, and you, sir, descended from the Olympian heights which you usually occupy in order to participate in the discussion.
– Order ! I hope that the honorable member is not seeking to evade my ruling.
– I am not, but I submit that I am entitled to press the point that Opposition members have not obstructed the passage of the bill. I consider also that I am justified in referring to the importance of the two clauses that I have mentioned. In my opinion, the use of the “guillotine” is quite unjustified. It is regrettable that the Government should seek to force important legislation through the House by this means. If the discussion in committee had been per mitted to take its normal course we would have probably passed the bill within the time proposed in the motion. This measure cannot be described as urgent since the National Security Regulations amply cover present requirements. The grounds of urgency, which are the justification, if there can be any, for the use of the “ guillotine “ should not have been advanced.
– Order ! The honorable member’s time has expired.
– I join with the honorable member for Fawkner (Mr. Holt) in protesting against the application of the “guillotine” to this bill. I agree that within the time proposed to be allotted the remaining 31 clauses of the bill would probably have been disposed of without the adoption of this procedure. However, the Government has seen fit to make use of the “ guillotine “ and we consider it our duty to protest against it. Honorable gentlemen opposite have been stone-walling their own bill.
– Order ! The right honorable gentleman may not pursue that line of argument.
– I agree with the honorable member for Fawkner, also, that the element of urgency cannot be admitted to exist in regard to this measure, for practically everything that the Government proposes to do under the bill is now being done under National Security Regulations, and may continue to be done thereunder until after the war. This bill is so important that the Government is quite unjustified in curtailing the discussion of it in this manner.
.- I also regret that the Government is applying the “ guillotine “ and is thereby depriving honorable members of the Opposition of the reasonable opportunity to which they are entitled to discuss such an important measure. Had an approach been made to the Opposition on this subject an arrangement might have been made by which the bill could have been passed within a specified time. However, the Government seems to be intent on bludgeoning its legislation through the Parliament. By the adoption of this procedure, it is robbing the Parliament of the right to he regarded as a deliberative assembly. Honorable members opposite have learned, no doubt, of a meeting which was held in the Sydney Town Hall last night to protest against the passage of certain legislation which was agreed to by the Parliament recently and to which the “ guillotine “ was applied, so that many of its important clauses could not be discussed.
– Order ! The honorable member may not discuss that subject.
– Honorable members opposite may regard the application of the “ guillotine “ as justified, tout the general public will realize that the Government is adopting quite unwarranted tactics. As the elected representatives of the people in a democratic community, we are entitled to a full opportunity to discuss the legislation which the Government introduces.
-Order! The honorable member must confine himself to the question as to whether the time proposed to be allotted for the consideration of the bill is sufficient.
– I- was referring, by way of illustration, to the unjustifiable application of the “ guillotine “ on another occasion recently. The Government has the numbers to force this motion through the House, and I have no doubt that with the aid of its “ cheer leaders “ and football barrackers it will do so, and we, on this side of the chamber, are unable to do more than utter our protest. This, of course, is the hey-day of the Government and it is doing its best to fasten socialistic fetters on the people while it has the numbers to enable it to do so, but the time is coming when its opportunity will have passed. The adoption of this procedure is absolutely undemocratic, but because the Government has the support of a certain number of trade unionists’, the socialists in the community, and the “ Commos “, it seems to think that it is justified in using the “ guillotine “ as a means of placing this socialistic class legislation on the statutebook. But the time is coming when honorable gentlemen opposite will be swept from the treasury benches and when (heir socialistic legislation will be removed from the statute-book. I protest strongly against the application of the “ guillotine “ to this measure, which cannot, by any stretch of the imagination, be regarded as urgent.
.- The action which the Acting Prime Minister has taken is timely and justified. The honorable member for Fawkner (Mr. Holt) has admitted that the time proposed to be allotted for the consideration of the remaining clauses of the bill would probably have been adequate. Personally, I consider that adequate time is being allowed. There is nothing unusual in the adoption of this procedure. The “ guillotine “ has been used by Governments of all political complexions. The honorable member for Balaclava (Mr. White) said that if an approach had been made to the Opposition an arrangement might have been made. I emphasize the word “might”. In my opinion the Government is taking the right course. The discussion which already has taken place leaves little further to’ be said; consequently, the remaining clauses of the bill can easily be passed by 12.30 p.m. to-morrow. The Government will then have an opportunity to proceed with the other business on the notice-paper. The warning of the honorable member for Balaclava that the Government will be sorry, does not cut any ice. The Opposition is protesting too much on that score. The honorable member for Balaclava claimed that the people are awaiting an opportunity to sweep the present Administration from the treasury bench. Is not that what his party desires? Why, then, should it protest?
.- I protest against the application of the “ guillotine “ to this bill, which is one of the most important of the measures with which this Parliament has had to deal for a considerable time. If the time devoted to clause 29 is equal to that devoted to another clause, the proposed allotment for the remainder of the committee stage will be hopelessly inadequate. On one clause, fifteen Government members spoke.
– Order ! The honorable member may not refer in the House to what happened in committee.
– I am establishing that the proposed allotment of time will not be adequate for the discussion of the remaining clauses unless a different procedure be adopted. If the Treasurer (Mr. Chifley) cannot devote more time to advising the committee in regard to the contents of the measure, the discussion will be prolonged. The Minister assisting the Treasurer (Mr. Lazzarini) has not been able to afford any help, and in consequence the committee was engaged on one clause for six hours.
-Order ! I have ruled that the honorable member may not deal with what happened in committee.
– Unusual features have been associated with the committee stage, and if they are repeated, much more time than is proposed to be allotted will be needed. An unusual feature has been the three speeches made by Mr. Speaker on one clause. In my experience in this House, I have never known aspeaker-
– Order ! The honorable member is again dealing with what occurred in committee. Under the Standing Orders, he is not permitted to do so.
– I have never known either the present or any other Speaker to make three speeches in committee on one clause.
– Order !
– Because of abnormal happenings, the importance of the bill, and the reaction of all honorable members to it, ample time for the discussion of the remaining clauses has not been proposed. There has never been a hill, one clause of which has been discussed by so many honorable members, including Mr. Speaker.
– Order ! If the honorable member persists in disobeying my ruling, I shall ask him to resume his seat.
– There never has been a bill on which honorable members have had less help than has been given by the Minister. The different provisions must be explained, if honorable members are to be enabled to decide the important issues that arise. I protest vigorously against this curtailment of free speech. In this democratic institution, no honorable member should allow to pass the opportunity to protest against thisfilching of the liberties of the elected representatives of the people. I should have no objection to the application of the “guillotine” in a national parliament with a membership as large as that of the British House of Commons, because without it the government might not he able to complete its business. Nevertheless, adequate time for discussion should he allowed. Lack of discipline on the Government side of the House has led to an encroachment on time that Opposition members should have had.
– The honorable member’s time has expired.
Motion (by Mr. Fadden) agreed to -
That the question be now put.
Question put -
That the motion (vide page 3829) be agreed to.
The House divided. (Mr. Speaker - Hon. j. S. Rosevear.)
Majority . . 20
Question so resolved in the affirmative.
In committee: Consideration resumed.
.- Clause 29 should be divided into two parts, one dealing with the ordinary conditions that operate in peace-time when there is not a crisis, and the other applying only in an emergency. In the absence of such sub-division, I support the amendment, which provides that these provisions shall operate only during an emergency. Paragraph / deals with the prohibition of imports and exports. In my view, this should be the subject of separate legislation, and should not be embodied in a bill of this nature. I remember quite well that when, in 1930, the right honorable member for Yarra (Mr. Scullin), then Prime Minister, brought down proposals for the prohibition of certain imports and the regulation of other imports, he appealed to the leaders and members of all parties to support him, and claimed that he would be greatly assisted by a unanimous expression of opinion in the Parliament. This he received. This can have a boomerang effect in damaging our national economy in’ three ways. First, it can provoke retaliation by good customer countries. Secondly, it can damage the local industrial field and cause a great loss of production and increased unemployment. Thirdly, it can wipe out an individual manufacturer or a class of industry. Any action to prohibit export and import should, therefore, be taken only after the most careful examination of its probable effect on the Australian industrial field and on friendly countries. The damaging effects on our production economy are cumulative. Friendly customers will not buy our exports. So we shall not be able to sell them, and we shall be no better off as regards increased foreign exchange. If local industry cannot import raw materials or partly-manufactured or essential goods, which are the constituents of manufacture and which we do not produce, our productive power will be greatly lessened ; the community’s purchasing capacity will be reduced and unemployment increased. If the import of an essential machine or an indispensable constituent, such as carbon black for rubber manufacture, is prohibited, the prohibition can destroy the single manufacturer or the whole industry dependent on it. It is very likely in these days, when we have to compete against massproduced goods from overseas, that the local manufacture of each of those commodities will be confined to one manuturer. If industry were disrupted through action under this clause, hundreds and perhaps thousands of Australian men and women would be thrown - out of work. The depression taught us some very sharp lessons in this regard. One typical action damaged both the Australian internal economy and our relations with other countries. An export duty was placed on sheep-skins in December, 1930. The immediate effect was to lower the price of sheep in the market, already very low, by 6s. a head. That action put out of commission a whole district in France which for scores of years had been using our sheep-skins for manufacture.
– Order! The honorable member is not entitled to debate that question.
– I am not debating it; I am citing an instance of the damage that can be caused internally and externally by unwise interference with our import and export trade. On the 4th March, 1930, the then Minister for Trade and Customs (Mr. Forde) brought down a measure providing for the refund of all the duty paid under the previous provision and repealing the duty from that time on. The prohibition of quite small lines of articles from France at that time, the value of some amounting to only £200 or £300 at the most, caused such resentment in France, that it repudiated an order for £2,000,000 of wheat which was already in store for export. For years France had been annually buying about that, quantity of wheat from Australia, but since then it has not bought one bushel from us. It was the extension of that process throughout Europe that brought about the autarchy in which all sorts of extraordinary exchange control and other financial devices were imposed in the different countries, with such deleterious effects that international resentment gave rise to the events which were the prelude to the great war in which we are now engaged. In 1936, when I visited Leicestershire, I found the most intense hostility to Australian goods, because of our prohibition in 1930 of the importation of Leicester specialities such as boots and shoes. I was told by the townspeople that whereas we had formerly sold to them £500,000 worth of our products they had not bought £1 worth since. When I explained that the prohibition was not d>ue to hostile intent but to the extraordinary circumstances in which Australia had found itself, they said that they were sorry, but the fact was that our action had resulted in terrific unemployment amongst them from which it had taken many months for the district to recover.
It is obvious, therefore, that the power contained in this clause to prohibit import or export should not be exercised simply by means of regulations. Regulations must be approved or disallowed within fifteen sitting days of the meeting of Parliament, but regulations could be introduced at the beginning of a long parliamentary recess and, before Parliament met again to consider the regulations and, perhaps, to disallow them, irretrievable damage might have been done. I have always urged that, instead of imposing general prohibitions on imports of all kinds, we ought to discriminate in favour of our best customers. The method proposed by the Government is like removing an appendix with a broad axe instead of a scalpel. We should exercise import control in a discriminatory fashion, giving preferential treatment to those countries .with which our trade relations are friendly, especially those that buy more from us than they sell to us. A blanket prohibition, as envisaged under this clause, could do the gravest harm and should be imposed only in periods of national crisis. In an emergency Parliament could be hastily summoned to deal with not only this matter but every other aspect of the crisis. Indeed in a crisis Parliament, should sit almost continually. In order to instance what harm can result from ill-conceived prohibition of imports, I cite English sanitary ware, the prohibition of the importation of which had disastrous results. About 8,000 people engaged in handling the ware were thrown out of work overnight because the whole commercial mechanism was bludgeoned out of existence. I urge, therefore, that the Government give full consideration to -this matter. I think the appropriate authority to deal with imports and exports is the Department of Trade and Customs; the responsibility should not be given to the Treasury, merely because the matter of foreign exchange is involved. The Department of Trade and Customs is the department which has to do with the. international trade relationships of this country. There ought to be two provisions, one to meet a crisis and the other the more or less normal conditions in which there will be ups and downs but plenty of time in which to arrive at the proper decision. Again I press upon the Government the position of the Australian manufacturer of commodities, ingredients of which must be brought from overseas. Carbon black for rubber goods again suits my purpose as an example. Then there is the position of the manufacturer who needs new machines or new parts for existing machines, which must also be brought from overseas. The principle of subclause 3 of clause 27 is that there shall be no interference with any individual account in a trading bank. The principle of non-interference with individuals should be carried into this clause if the Government insists that this clause shall remain. However, I emphasize that this is not the bill under which such procedure should be provided for. Any action of the nature contemplated ought to be taken only after consultation between the Department of Trade and Customs, the Department of Commerce and the Treasury, so vital are the issues involved. No one disputes that after the war the only way in which we shall have any hope of lasting peace is by the maintenance of friendly international trade relationships. Anything calculated to cause resentment against Australia in customer countries can result in nothing but evil consequences, not only to Australia, but to the world in general. My final words of counsel are that for many years Australia has had good friends abroad among the men who handle its exports. Our foreign relations will not be enhanced by reckless executive action which Will destroy their enterprises at one blow.
– Before dealing with the amendment moved by the Leader of the Australian Country party (Mr. Fadden), I wish to place on record the whole explanatory memorandum on this subject. Although I asked the right honorable gentleman to read it all, he did not, and the honorable member for Richmond (Mr. Anthony) read only parts of it. lt reads -
Since the outbreak of war, exchange control baa been operated under the National Security (.Exchange Control) Regulations supplemented by action under the Customs Act. This has been necessary to ensure that the foreign exchange resources of the nation are used primarily to further the war effort and for essential civil purposes. It is hoped that after the war or at least after the post-war transition period, exchange control will be unnecessary. Nevertheless, our overseas resources may not always be sufficient to meet nur normal exchange requirements and it may at times be necessary to control movements of capital. Thus there may be a need for exchange control after the expiration of the National Security Act.
Exchange control is a complex matter which, to be effective, requires to be set out in considerable detail; accordingly, it is proposed to give power to the Governor-General to make regulations in relation to the control of foreign exchange where he is satisfied that it is expedient to do so for the protection of the currency or of the public credit of the Commonwealth.
The right honorable gentleman has submitted an amendment providing that an emergency must arise before the provisions of this clause shall have effect. But this clause is designed to prevent an emergency. When the portents of danger are seen, these provisions will be put into operation.
– This clause will apparently prevent depressions and emergencies. Soon it will perform the “hat trick “.
– Honorable members opposite have stated that the depletion of the London funds was one of the causes of the last economic depression in Australia. If the Government discovers that the exchange position, or the condition of London funds, is becoming dangerous, this clause will be invoked for the purpose of preventing an emer gency. The clause will not be used arbitrarily every day. The Leader of the Australian Country party contended that, when necessary, the Government should declare that a state of emergency had arisen, and obtain the approval of the Parliament for corrective proposals. He expressed the fear that things would be done behind the back of the Parliament. Honorable gentlemen have repeated that cry ad nauseam. Unless the Government has a majority in this chamber, it cannot govern. This Parliament, at any time, may defeat the Government if it commits an act that the majority of members do not support. I have known that from the bitter experience of twenty years in opposition. The Opposition can protest, and that is its function, but the Government with a majority can do what it wishes whether the Parliament is in session, or recess.
– According to that contention, the Parliament is valueless.
– I said the same thing many times when I was in opposition. As I stated, this clause is designed to prevent an emergency. While the Labour Government is in office, sanity will prevail. The Treasurer must satisfy Cabinet and caucus before he takes any serious action under this legislation. I cannot accept the amendment.
.- I hope that the committee will discuss this clause very thoroughly. I accept the view that occasions arise in the life of every country when economic circumstances may make necessary some control over the movements, of exchange. One can appreciate the desire of a government, regardless of its political beliefs, to prevent the occurrence of any abnormal developments which will make necessary the restriction of the free movement of foreign exchange. But I ask that the Parliament shall express a very firm opinion on this matter, so that those who will administer this power shall be under no illusions as to our belief that foreign exchange restriction shall not impose an economic limitation upon the capacity of traders to trade, nor a severe restriction on the liberty of the private citizen. To me, the latter is, if anything, the more important aspect of the two. 1 say that because in recent years we have had presented to us all too vividly the painful experience of people in European countries where this kind of control has operated as a continuous process. We have seen it operate there, not merely an economic control, but but also as a control for deliberate political purposes. This control was employed to assist, by the exchange made available, those who were politically in favour. It was used to restrict the profits of those who were not sympathizers of the administration. We have seen it used in. those countries to restrict opportunities to travel, to prevent the importation of literature, and to ensure that only those traders able to give practical and political support to the government which had seized power were able to get adequate supplies of overseas exchange. With those lessons before us, any democratically elected Parliament would be neglectful of its responsibilities if it did not express its strong conviction that these provisions must be regarded as emergency provisions, and should place no undue restriction upon the right of free Australians to use their resources in their current accounts for purposes of travel, importing literature, and trade. Their purpose should be the prevention of movements of large bodies of capital at a time when the country was in the throes of an economic crisis. According to the explanatory memorandum, it would appear that that is the attitude of the Government and its advisers, and I rise to emphasize that point to-night.
One may confirm the view which I have stated here by reference to the official documents presented to the Parliament relating to the United Nations Monetary and Financial Conference held at Bretton ‘Woods, in the United States of America. I do not intend, to-night, to discuss those proposals in detail, or to indicate either support or disapproval of them. That task lies ahead of this Parliament. But I direct attention to paragraph 22, on page six, dealing with the ban on exchange control. It reads -
The other major obligation which membership of the fund would place upon us is not to impose exchange control except to prevent capital movements.
Capital movements “ in this instance do not refer to every-day transactions, as when people require exchange to enable them to travel abroad or for normal business purposes. In banking circles, “ capital movements “ refers to abnormal transfers of capital from one country to another because of some economic dislocation or crisis which may have arisen. These documents point out that one of the major obligations accepted by the countries which participated at Bretton Woods was not to impose exchange control except for the purpose of preventing capital movements in the sense that .1 have indicated. The documents continue -
Import restrictions, however, are permitted and could be used to reduce the drain on our external funds, although they would have this effect only after the lapse of some time after they had been applied. We could probably protect our balance of payments reasonably well by this .moans and by appropriate action against capital movements, lt would, of course, be to our advantage that other countries would be unable to block payments for our exports to them.
The view of the nations, whose representatives assembled at Bretton Woods, was that this control over capital movements should be handled rarely, and as an emergency dictated, but apart from that, exchange control should not be imposed. That attitude should be adopted by this and succeeding Commonwealth Governments, and I sound the warning now of what happened in other countries where, as the result of bureaucratic processes, these controls have been imposed, with increasing severity and with the consequences which I have mentioned.
That type of control is operating in Australia to-day. It is true that it functions under National Security Regulations, and the understanding may be that, with the expiration of the National Security Act, the controls will be lifted in their present form. But that is only an assumption which we make, rather too lightly, perhaps, because the experience of the operation of controls during the last war, and the experience which we have already had of the difficulty of removing controls imposed during this war, when the necessity for them would appear to have been removed, indicates how difficult it may be, when the day arrives, to reverse the processes which have been operating for so long. Many of the causes which led to the imposition of existing wartime controls have disappeared. For practical purposes, we are back to where we were before the war. But a practice has developed, as the result of the imposition of those controls, which makes so much more difficult a return to the former situation. Interests of various kinds are created which become vocal and vehement when it is suggested that the controls must be removed. Therefore, the Parliament should watch with the utmost vigilance, not only the insertion of this provision as a permanent section of an act, but .also its administration in future.
The right honorable member for Cowper, a former Treasurer, referred to an extremely important provision, paragraph / of sub-clause 1, and I understand that the honorable member for Balaclava (Mr. White) proposes to move that it be left out. Having had many years’ experience as Minister for Trade and Customs, the honorable member for Balaclava will be able to submit to the committee facts which will enable us to discuss the matter with a better informed mind than we might otherwise bring to it at this stage. I emphasize the necessity for this Parliament to watch closely and continuously the operation of this clause. This sort of thing has been regarded by thoughtful people in European countries as one of the most powerful political weapons that can be placed in the hands of any administration. I do not suggest that the Government wants to use it wrongly, and I know that a government formed from the Opposition parties would not do so, but we are not dealing now with actions that may be taken to-day or to-morrow. We are putting into permanent legislative form a power which can be used, in a way which has proved painful to the people of other countries. I support what the Leader of the Australian Country party has said about the dangerous potentialities of the clause.
.- I intend at a later stage to move an amendment to paragraph / of sub-section 1. The entire clause is unnecessary and dangerous. Foreign exchange is already controlled under National Security (Ex.change Control) Regulations, which will operate for the duration of the war. This is not the time to bring down restrictive legislation: Great Britain, the United States of America and Canada are still engaged in the war against Japan, yet they are easing all kinds of controls.
– Only easing them.
– Yes, but they will ultimately abolish them. Why is this Government now adopting the outmoded ideas of totalitarian countries? Under this bill we shall become a nation of robots, and everybody in the community will be regimented like the inhabitants of the totalitarian countries, which have brought so much trouble to the world. Is it fear of unemployment that drives the Government? Supporters of the Government constantly refer to the depression period.
– The Opposition will never live that down.
– No, because the chorus of Government supporters will be constantly reminding us of it.
The CHAIRMAN (Mr. Riordan).Order ! I ask the honorable member to deal with the clause.
– Employment has a very direct relationship to exchange. If the Government believes that it will frighten the Australian people by wringing its hands and bleating about what happened a decade ago, it is mistaken. It is a fact that conditions were bad during the depression, but they were world-wide. In 1932, unemployment represented 30 per cent, of the membership of the trade unions alone. That was the time when a Labour Government went out of office, having failed to improve the position, although it had taken some measures which we applauded, such as the rectification of the trade balance. The Lyons Government which succeeded it, immediately took commonsense measures to provide employment. It did not enact anything restrictive like this bill, but called upon the initiative and enterprise of this British people.
– The honorable member must not debate the depression. He may make only passing reference to it.
– I am answering certain arguments of Government supporters. By 1938, unemployment had been reduced to only 8.6 per cent., and that was brought about without the use of legislation of this kind. Over 250,000 people had been taken into employment in factories and over 3,000 new factories had been established. I was a member of the Government at the time, and so I know something of the facts. This Government is so imbued with socialistic ideas that it considers that it must continue to bring down socialistic measures. The Government should call a halt to legislating in that way. I agree that exchange must be controlled in a time of emergency. Great Britain did so; it realized on all of its securities throughout the world. However, the state of emergency which gave rise to that action has eased now. The Government will be faced with great problems in the transition from war to peace conditions. Men are being dis-. charged from the services at an accelerated rate and they will want employment. The greatest employers are the private industries, not the Government. At the moment unemployment is as low as 1.1 per cent, of trade union membership. Why?
– Because we are at war.
– Because about 800,000 people are in war employment. However, the Lyons Government in 1938, even with light taxation, reduced theunemployment figure to 8.6 per cent., which is almost normal. Barely has any country reduced unemployment to less than 5 per cent. Even with 1.1 per cent, of unemployment, and 665,000 trade unionists, there must he nearly 7,000 people unemployed in Australia to-day. Why become panicky, and bring down a socialist measure to control exchange and everything that is imported or exported? That is what will be done under this clause. Paragraph / of subclause 1 relates 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.
Why hamper the already harassed business community? Under its war-time powers, the Government has established a Department of Import Procurement - a grand, euphonious name - and this organization compresses all the business of the nation through a governmental bottle-neck. There was a time when the need for that organization was urgent, but the urgency is rapidly decreasing and we should be able to dispense with many restrictions. While this is being contemplated - because the Government has promised more than once to reduce war-time controls - the Government brings down a measure which will regulate every item of import and export. When moving the amendment which I have foreshadowed-, I shall speak at greater length on the trade aspect. However, the export of sheepskins has been mentioned. A Labour government on that occasion imposed a tax on the export of sheepskins, but withdrew it almost immediately because of the clamour that arose. The Lyons Government took many measures to regulate trade by means of the tariff laws, which are the proper instrument for such regulation. The tariff laws can be used to protect .the country’s living standards against the competition of cheap labour countries. The Lyons Government tried to make trade treaties with the United States of America but, having tried unsuccessfully for ten years to break down that country’s restrictive tariff of ls. 5d. to ls. lOd. per lb. on Australian wool, we took action by implementing a trade diversion policy. I am sorry that we had to fall foul of our American cousins, but we pointed out that there had been a discrepancy of £180,000,000 over ten years in the trade balance of the two countries and that, in the preceding year of 1936 alone, the difference had amounted to £10,000,000. Therefore, in order to draw attention to Australia’s position, we prohibited the importation of a number of articles from America and placed quotas on others. If honorable members will read Hansard for 1937, they will see that protests were made by’ members of all parties against those measures. However, that action achieved some diversion of trade from America to Great Britain, and some acceleration of trade within Australia. It also had the disability of harassing the community and, as Minister for Trade and Customs at the time, I made it clear that I hoped that the measures would be temporary and that we should soon revert to straight tariffs instead of quotas and prohibitions. Nevertheless, ten years later this present Government introduces a banking bill containing commerce proposals which are quite unnecessary. All the powers required by the Government reside in the Customs Act.
Sub-clause 5 of this clause is not needed, because it will merely perpetuate the powers which are already possessed by the Division of Import Procurement. The Government has not only handcuffed the commercial community under existing regulations, but also has forged fetters for it in this bill. If the Government has any doubt as to whether it is acting wisely, it should refer the matter to that capable body, the Tariff Board, and let it give an opinion on the exchange position, as it has done before. It could also refer to the Secondary Industries Commission, which has presented a fine report on the development of secondary industries. The Government is blindly introducing totalitarian legislation providing for further regimentation of business, when many shops and factories are already working short hours because of lack of man-power and materials. Housing is hampered, and manufacture is controlled by a department which will not allow any new item to be produced or a single item to be imported without a permit. This bill will merely superimpose a fresh layer of restrictions on those which already exist. Et is hard to believe that the Government can be so foolish as to do so at this time of upheaval, particularly in view of the bad example of the control of exchange in Germany, where there was an absolute autocracy.
– Can the honorable member not be more cheerful?
– The honorable member for Herbert can afford to look cheerful, because he has never looked beyond the confines of his own electorate or the interests of the Italians in that district. It is a pity that he will not study the economy of his own country, instead of docilely following where the Government leads.
– ‘Order! I ask the honorable member to deal with the clause.
– The honorable member for Herbert (Mr. Martens) chatters away like a cockatoo, because he never has an idea to offer in this House; he persistently interrupts. The Government includes these provisions merely because somebody has told it that they will be valuable as further controls over private industry. It is making Australia safe for bureaucracy, having forgotten about democracy. It should remember that it is supposed to be the government of all the people, not just of the socialists in the trade unions and the departments, where the planners and others seem to dominate it. What members of the Government may say is immaterial, because the fact is that they are definitely committed to a socialistic policy. Every member of the Labour party in this chamber has signed a pledge, to support socialization of all the means of production, distribution and exchange, and this bill is evidence of that fact. Do honorable members on the other side of the chamber deny having signed such a pledge? They would not dare to do so, because they would immediately be expelled from the Labour party if they did. The Government’s followers support this socialistic legislation like a lot of deaf-mutes, or docile sheep, and they do nothing to assist private enterprise - the free men who will defy the industrial bullies and the caucus. I should not speak so strongly if honorable members opposite did not interject in such an inane and fatuous way.
– What has the honorable, member done with his comrades? They are not in the chamber to hear him speak.
– The term “ comrade “ is more applicable to the Government side of the chamber. As one who has had long experience as a Minister in control of the economic destiny of the country, I urge honorable members opposite to study these matters intelligently and to think for themselves. They should not accept socialistic proposals merely because they emanate from such gentlemen as the Minister for Transport.
– ‘Order ! The honorable member’s time has expired.
.- After listening to the rantings of the honorable member for Balaclava (Mr. White) about totalitarianism, socialism, communism and the caucus, I am not surprised that he has been deserted by all the members of his party. The honorable gentleman condemns the Labour caucus frequently, but he never remembers to tell us that the caucus of his own party expelled the right honorable member for North Sydney (Mr. Hughes) and the honorable member for Warringah (Mr. Spender) because, in the dark days of the war, they did the right thing in the interests of the country by remaining members of the Advisory War Council. The honorable member for Warringah is :i member of the liberal party of New South Wales, but is not a member of the Liberal party in this Parliament!
– Order ! I ask the honorable member to confine his remarks i<> the clause.
– All the matters dealt with in this clause are covered by National Security Regulations at present, but the Government, in its wisdom, considers that they should be given the force of legislative enactment. Honorable gentlemen opposite have seen fit to select from the clause for special criticism, the provision relating to foreign currency and foreign exchange. The clause provides, among other things, for-
The prohibition of .the importation or exportation of goods unless a licence under the regulations to import or export the goods is in force.
The honorable member for Balaclava, who was formerly Minister for Trade and Customs, knows that power exists in the Customs Act to prohibit imports under certain circumstances. The purpose of the Government in including this provision in the bill is to ensure that if :i time of emergency should arise it will be possible to prevent international financiers and importers from ruining our prospects of successfully meeting the situation. The operations of international financiers had a great deal to do with the unemployment that existed in this country during the depression and in the years that followed it. Those financiers gambled in Australian stocks and securities while the men of this country walked the streets looking for work, and their wives and children practically starved. It is obvious to everybody that the power provided in this clause will remain dormant so long as the exchange position overseas is satisfactory, but if an emergency arises, or if the prospects of an emergency should appear, the Government will be able to take effective action to meet the situation. Among other things it will be able to prevent the importation of luxury goods and to regulate trade so that we shall deal with countries which purchase our products, or with countries which supply goods that are essential to our economic welfare. In short, the purpose of the clause is to protect the economic structure of the Commonwealth. Any regulations issued under this clause will be subject to endorsement by Parliament. This Government was returned to office with an overwhelming majority on the policy it submitted to the electors. That policy included measures for monetary and banking reform. Therefore it would be ridiculous if the Government did not seek to put its policy into effect. I am sure that in certain circumstances the people would favour the restriction of imports of luxury goods.
Mi-. ANTHONY (Richmond) [9.20].- The apprehensions of honorable members of the Opposition concerning the purposes of this clause were strengthened by the remarks of the Minister assisting the Treasurer (Mr. Lazzarini) who, in explaining the intentions of the Government, left us with the impression that he considered that the Governor of the Commonwealth Bank and his advisers could by some magic prevent an emergency from arising, or, if it did arise, overcome it. It was suggested to us also that if an emergency arose the same individuals could remedy it without trouble.
– That is a distortion of what I said.
– The Minister read the explanatory note on this clause furnished to us by the Treasurer (Mr. Chifley), and then said that if an emergency arose it could be dealt with effectively. He went so far as to say that an emergency could be dealt with before it occurred.
– I said nothing of the kind. I said that a situation could .bc prevented from assuming the proportions of an emergency.
– I did not pretend to give the Minister’s exact words, but what he has now said by interjection indicates that I expressed his meaning. The faith of honorable gentlemen opposite in the ability of public officials to prevent an emergency or to rectify conditions of emergency is rather pathetic. Honorable members on this side of the committee contend that any condition of emergency should be dealt with by this Parliament. We may hope to stave off the evil day, but if it overtakes us we should deal with it in the Parliament. No one denies that power should be provided to control imports and exports and foreign exchanges. Honorable gentlemen on this side of the committee, however, contend that the power to do so should be exercised by the Parliament itself and should not be delegated to any outside authority. If discrimination in relation to trade becomes necessary the Parliament should exercise it. That is the democratic method. The power of this Parliament should not be delegated to any outside body. It is our responsibility to take measures to protect the economic structure of the country. One of the alarming features of the discussion of the Government’s banking measures has been the utter contempt which some honorable gentlemen opposite have shown for our Parliamentary institutions.
The purpose of the amendment of the Leader of the Australian Country party (Mr. Fadden) is to ensure that if an emergency arises, or if the possibility of an emergency appears, the Parliament shall be consulted immediately. Unfortunately, we do not know what may happen in the post-war period. We do not know what markets will be available to us. Some of our former markets have completely vanished, and it may take us a long time to rehabilitate other markets which may still be available to us. We may have to determine with which countries we shall trade. We should face the possibility that our London funds may be, at times, insufficient for our purpose, and we may be forced to take strong measures to meet the situation. These are only some of the facets of the economic problems of the future, but what I have said is surely sufficient to indicate the need for Parliamentary consideration of the subject. In a democratic community the Parliament is representative of all sections of the people and of all shades of opinion. Within the Parliament there is assembled a reliable cross-section of public opinion. The Leader of the Australian Country party is asking, properly in my opinion, that the Parliament should be consulted because of the important fact that it is representative of the whole community. We cannot afford to live on what may prove to be a vain hope that we shall be able to forestall disaster. We should be in a position te take active measures to that end. It should be the prerogative of the Parliament to determine whether exports shall be restricted or not, and whether we shall trade with this country or some other country - with France, for example, or perhaps even with Japan, in the years after the war. That is all that the amendment provides for, and I cannot understand why honorable- gentlemen opposite object to it. The collective wisdom of the Commonwealth does not reside in the members of one political party, nor does it reside in the Governor of the Commonwealth Sank or the Treasury officials or other public servants whom he may be able to assemble to advise him. If the Government desires to do the proper thing, it will accept this amendment and so ensure that in the event of any emergency arising, or of the possibility of one arising, Parliament shall be consulted. For that reason I trust that the amendment will be accepted.
.- There is little doubt that these restrictions may be required during certain periods. The right honorable member for Cowper (Sir Earle Page), in a lengthy dissertation, argued that paragraph / should not be embodied in this legislation, but should be inserted in the Customs Act. As the honorable member for Griffith (Mr. Conelan) pointed out, the Parliament has the power, under the Customs Act, to issue a regulation in the terms of this provision. The only effect of the deletion of the paragraph would be to make it necessary to have two regulations instead of one regulation. An emergency might arise so suddenly that the position could deteriorate before the Parliament could be assembled. In an earlier speech, I stated that an exchange market had developed outside normal channels; in fact, that there had been speculation in Australian exchange. That was due to the fact that exchange was in short supply, and normal obligations were arising at an early date. Thus the speculator had a reasonable probability of being able later to sell at a profit the exchange that he had purchased. That is one of the practices which this provision is designed to combat. It is, of course, quite wrong for any country to allow speculation in exchange, and thus do detriment to itself or impose a greater burden on the Government in the discharge of its liabilities overseas. If a higher rate of exchange is allowed to exporters, in effect, that is a subsidy to producers; but if the rights of the producers are purchased by an intermediary, the effect is that the speculator makes a profit on the deal. So, in the course of normal business, if currency is in short supply or the overseas exchange is not sufficient to meet commitments, any speculator can gamble in Australian exchange. This provision will enable the Government to prevent that In the course of legitimate trade, heavy imports may deplete the Australian overseas exchange which for a period may not be sufficient to meet commitments. Therefore, this power is necessary. It is true, as honorable members on both sides of the committee have claimed, that the power will not and should not be exercised except in a grave emergency. But if it did not reside with the Government, a grave situation could easily arise when the Parliament was not in session, causing great harm to be done to Australian overseas exchange and credit. The arguments of the honorable member for Balaclava (Mr. White) have been repeated so often that they have become tiresome. On two occasions, I have heard him say that all of us are socialists at heart. That is in conflict with the terrific scare that he raises from time to time. One can only suppose that he tortures himself with all sorts of bogies that he conjures up, and endeavours to make party political capital out of some activity in which the Government has been forced to engage during the war. From its inception, the Labour movement has fought constantly for the rights of the Australian people, and, indeed, the people throughout the world. It is rather stupid for honorable members opposite, who undoubtedly represent a class different from the working class, to claim that the Australian Labour party would support or tolerate restriction of the free- dom m of the people. I take strong exception to this constant reiteration by the honorable member for Balaclava. If the appropriate circumstances do not arise, the Government will not use the power conferred by the clause. Finally, I repeat what I said earlier this evening - the people would promptly and adequately deal with any government that misused its power when it next appealed to them.
. The honorable member for Perth (Mr. Burke) has criticized the right honorable member for Cowper (Sir Earle Page) for having claimed that the powers conferred by paragraph / could be used under the Customs Act, and has contended that that would mean duplicating a regulation. The honorable member emphasized in the strongest way the war complex, and revealed the thought that is uppermost in the minds of himself and his colleagues - that National Security Regulations will be carried forward into the peace period for as long as it is possible to continue them. He should not forget that any proposals made under the Customs Act in peace-time would have to be brought down to the Parliament in a Customs schedule for validation. He also spoke of the raising of the exchange rate, as though it represented a subsidy that was paid to producers, and added that he did not mind the producers being given a subsidy but would object to speculators making a profit by the purchase of exchange rights. I point out to him that frequently in the depression, when rights to overseas funds were sold in the black market in Australia, the producer not only received a higher rate for his bills, but also obtained a higher price for his goods on the market, because he sold his rights to the overseas funds which those goods produced. The purchaser of those rights may have wanted to obtain funds overseas to import goods to Australia. He may not have made a profit, but he secured funds with which to make necessary imports when he might not have been able to obtain through normal channels. The honorable member for Perth and other Government members are supporting to-night what, in my view, is just as vicious as was the international gold standard when it was operating fully in 1925. The honorable member will recollect that under the gold standard when prices in one country were out of relation to prices in other countries, the tendency was for gold to flow from the higher priced country, and for that country’s internal credit base to be contracted. The country which lost gold was forced by the contraction of its credit base to damp down business activity and reduce wages, the effect of which, if preventive steps were not taken, was to cause a period of depression. The international gold standard maintained prices in all countries practically in relation one to another. A considerable fall of prices reacts with terrific violence on countries which may have raised their standard of living somewhat above that of other countries. A young, sparsely populated1 country like Australia was enabled to give to its people a standard which older countries could not give. On that account, it attracted adventurous people as migrants in the early days. The honorable member for Perth has claimed that a rise of the exchange rate really means the payment by the Government of a subsidy on the amounts paid overseas to meet commitments on loans. In the worst days of the depression, many of us fought outside this Parliament for what we claimed was a true rate of exchange, one approximating more closely to the outside market than one which was pegged at too low a rate. I speak feelingly, because the policy is one with which I entirely disagree. The bill provides that the exchange rate of this country must be strapped down, and moved only in circumstances of the direst necessity. I agree that there should not be an exchange rate that fluctuates from week to week or month to month. Short term fluctuations can be avoided, so long as London funds are controlled. The exchange rate must be related to the purchasing power parity of the currency. If it is strapped down, and no notice is taken of different purchasing power parities in other countries, devaluation or a fall of prices in other countries will be reflected and have a most deadly effect in one’s own country.
– Actually, the only thing the currency in different countries has in common is the name.
– That is true. Some persons believe that because the name of the Australian note is “ the pound “, and the name of English sterling also is “ the pound “, the two currencies are the same, and parity ought to be preserved. That is wrong. It is infinitely better not to go to the extreme of causing poverty and distress by adherence to the fetish of maintaining an exchange rate that is out of relation to the true purchasing power of the two currencies. For that reason, the matter ought not to be dealt with by regulation, as the clause proposes. I admit that, in time of war, or of great price changes outside this country, it is necessary to have a regulation of some sort, but it should1 be brought to the Parliament and discussed, so that the government of the day may be seised of the views held by all interests in the Commonwealth. If that is not done we shall have exactly what happened in the depression, when the Scullin Government believed, as many did at that time, that if the exchange rate moved very rapidly to about 125 per cent., it would mean that the Government would have to find an extra £10,000,000 to meet its overseas commitments. It did not realize that just as a tariff was needed to prevent the entry of goods, another means was needed to force goods out of the country so that the exporting industries and, in turn, the secondary industries, might again flourish and provide employment. I invite the honorable member for Perth (Mr. Burke) to examine the base metal prices for that period, particularly the prices of silver, copper and lead, and the indices of employment at Broken Hill and in the copper-producing mines of Australia. Those statistics provide a striking example of how, as internal prices rose, copper, silver and lead were exported from the country, increasing employment in the mines on the one hand and helping to rectify the London funds position on the other. The general result was that, although the Government had to pay out £10,000,000 more in respect of its overseas commitments as the result of the pegging of the exchange rate at 130, it struck a good bargain, because internally it was relieved of considerable commitments in respect of unemployment relief payments, in addition to which the increased exports built up the London funds with which necessary imports could be bought. The Royal Commission on Monetary and Banking Systems expressed its belief that the exchange rate had been kept too low for too long. It said that there was little danger of the exchange rate reverting to parity after Sir Robert Gibson and the Commonwealth Bank Board had reduced it from 130 to 125. It said that the only danger was an accumulation of London funds, but pointed out that that would have a balancing influence. This country is in a. peculiar economic situation in that it is subject to droughts and floods, and is dependent on world prices, and it therefore needs considerable London funds to balance bad years with good.
.- This clause introduces a principle which we have discussed more than once in this House, namely, the extent of which this Parliament is delegating to outside authorities the power to legislate. The matter on which most discussion has centred to-night is the provision in paragraph / enabling the Governor-General to make regulations for the prohibition of importation and exportation of goods. That is clearly a legislative function which this Parliament should not allow to pass out of its hands. If, indeed, it were a fact that this exact power is conferred upon the Executive by the Customs Act, I would not be deterred from expressing that view. But nothing is farther from the truth. The Customs
Act does provide for a limited delegation of power to the Executive to make regulations. Section 50 provides that no prohibited import shall be imported and the maximum penalty prescribed for a breach of the regulation is a fine of £100. A large number of prohibited imports is specified. Section, 52 provides that the importation of other goods may be prohibited by regulation. There is a vita] distinction between that provision and this provision. Section 52 of the Customs Act is a machinery measure designed to cover a limited number of classes of goods, the importation of which may be prohibited by regulation. The maximum penalty is only £100. This clause, however, is not a machinery clause but one of the most vital instruments of policy. That is proved by the fact that the penalty prescribed is a fine of £5,000, or imprisonment for a period not exceeding five years. To what length is this Parliament prepared to go in bestowing power on outside authorities when it bestows the power to imprison a man for five years for proved breach of a regulation which that outside authority thinks is a right regulation ? It is of no use to say that regulations come before this Parliament for approval or disapproval, because, as I have pointed out several times previously, very often the objectionable feature of a regulation is hidden in some small subregulation which may pass unnoticed, because it has not been invoked, for some considerable time after the period within which it may be disallowed. I, as a lawyer, .and other honorable members know that that is so. This provision cannot be related to the regulation-making power conferred by the Customs Act, the only purpose of which is machinery, because this clause contains a vital principle in that it divorces from the Parliament the authority to legislate on a matter bearing on the employment of the people. Parliament may as well be closed if we are to continue this practice of delegation of authority. All that the Parliament is becoming is a place in which honorable members are given time to talk but not to act. I have endeavoured to pursuade back-benchers opposite, as I am a backbencher on this side, to defend to the utmost the legislative authority of the
Parliament, but they pay no heed. Surely they see how vital it is that the Parliament should preserve its right to decide Whether a penalty of imprisonment for five years shall be imposed for the breach, not of a legislative enactment; but of a imer-c regulation conceived by some one outside and never even debated by the Parliament. I am coming to the conclusion that the Parliament has little function in this democracy. All that private members can do is talk to the press or broadeast their views. As a deliberative assembly we have long since ceased to exist. We do not legislate; we give power to legislate.
The two particular subject-matters of this clause, apart from that vital principle, are the power to control foreign exchange and the power to prohibit the importation and exportation of goods. Recently, Professor Copland, the economic adviser to the Prime Minister, dealing with -varying economic conditions in other parts of the world in relation to Australia, said that if you want to maintain a high level of employment in Australia, there are several vital factors which must be considered. One is capital expenditure by governments. The second is current expenditure by governments. The third is capital expenditure by individuals. The fourth is current expenditure by individuals. The fifth is foreign exchange. As to the first four, I can advance my views. We can control them, inside a closed economy, but .this is not a closed economy, and you cannot get a high level of employment unless you can take strong action in regard to foreign exchange, if the first four matters do not produce the result you seek. You may have to impose a quantitative restriction on the importation of goods. If that fails, you may have to increase the rate of exchange. That vital policy affects economic development and the lives of individuals. I have fixed views on the rate of exchange. It should be in accordance with the power of the currency to produce staple goods. The rate of exchange in Australia bears little relation to the rate of exchange in other countries. As one who has travelled, I say that you can purchase more for your pound in Australia than you can purchase with its exchange equivalent in -very many other countries. The r.ate of exchange in this country does benefit exporting industries, and it should be remembered that we are a -debtor nation. But are these things not -to be brought before the Parliament for determination Are they to be determined by some one in the Commonwealth Bank or the Treasury? The importation and exportation of goods are vital matters in the economic development of a country. In this clause we are surrendering the control of that policy to some one else. Time and time again, I have directed the attention of honorable members to the abuse of the regulation-making power. The power of Parliament to disallow regulations is not a reality. To honorable members who say, “ But the Parliament Government must go to the people every three years.”, my answer is that a regulation can do a great deal of harm in three or four months. Bit by bit our power to decide matters vital to our constituents is being filched from us bv the Executive. I can only hope that ultimately honorable members -on all sides will revolt and assert the right of the Parliament to do the job it was elected to do. Why should not the Parliament claim that it should have the power to do what is contemplated in this clause? The mere elimination of paragraph / would not satisfy me, because my objection is to the whole provision permitting the Governor-General to legislate by regulation. I would be satisfied by a provision that no regulation should be effective unless approved by the Parliament within a reasonable time. That would meet emergencies and would reserve to the Parliament the vital function of discussing and deciding policy. Unless that power is preserved for the Parliament I see no use in the Parliament meeting at all.
.- The honorable member for Warringah (Mr. Spender) has said very forcibly and pithily what we have been arguing in respect of this clause. I come back to it only to make three particular points which have occurred to me as the discussion has proceeded and to confirm by way of actual illustration that, this power which we are giving to the Executive under paragraph / is one which this
Parliament should never allow itself to be dispossessed of. My first comment is that, in clause 30, which deals with gold, there is the provision - (2.) Whore the Governor-General is satisfied that it is expedient so to do, for the protection of the currency or of the public creditor’ the Common.wealth, he may, by Proclamation, declare that, this Part, or such of the provisions of this Part as are specified in the Proclamation, shall come into operation, and this Part, or the provisions so specified, shall thereupon come into, operation.
The- opening of that clause i.s identical, with the opening of clause 29 but honorable members will see that in respect of the gold note issue the Government has adopted a. different, procedure.. It is prepared to accept the position that that should, be an abnormal proceeding and that a proclamation would be necessary before the part should take effect, and when it is no longer deemed expedient to continue the provisions of the part, a proclamation will bc issued terminating its operation. That is treating on an emergency basis Mie- provisions relatingto gold, a-nd I see no reason- in principle or in practice why the provisions relating to foreign exchange should not also be placed on that emergency basis.
T regret that the honorable member for Perth (Mr. Burke), departed from; his customary level-headedness to make the1 statements that he did about members of the’ Opposition representing different classes of people from- those- whom he represents. I invito him to tell us how many of the 8(1000 electors whom- the honorable member for Balaclava (Mr. White) and I. each represent are not included in the term, if properly understood, of “ working people “. Coming from him, the statement is all the more remarkable, because, in my recollection as a member of this Parliament, the. class of person, as he puts it, which we represent is the class of person which successive honorable members for Perth have represented. I can give to him some actual illustrations of how the power which we are transferring to bureaucracy under paragraph / is- being used in practice. I have with me three sets of correspondence which reached me from my own constituents early this year, and I have offered to make them available to the Minister for Trade and Customs (Senator Keane), so that he may see for himself that they are accurate statements of the facts. I shall read to the committee extracts from each of them so that honorable members may see for themselves the arbitrary manner in which the war-time equivalent of this paragraph is being used and how the proper responsibility of the Parliament for tariff matters can be taken away from it so stealthily by processes of this kind. The first letter, dated the 8th February, 1945, was written to me by a Melbourne importer. It reads -
On. the 5th January, 1045,. I was informed by my principals that they could now, with the Board of Trade’s sanction, offer E.P.N’.Sspoons and forks to clients, in. Australia.
For obvious reasons, the quantity available was subject to limitations. I at once applied to the Division of Import Procurement for :« licence to import and was referred to the Controller of Utensils- rend Appliances, who refused, sponsorship on the grounds thai “ local production was sufficient for war-time needs “.
I have, under date (5th February, 1945), received a letter from the Division of Import Procurement stating, “ The’ issue of licences foi; these goods is suspended for the present. When the position has been clarified, immediate steps will’ be taken to notify you of the licensing aspect”.
Despite the statement of the Controller,, the trade well knows that local production is not by any means meeting the demand. Therefore, since the goods cannot be regarded as non-essential, and thus a proper subject for restrictive measures, the department’s decision necessarily takes on the character of an embargo for the protection of local manufacturers.
That was not an isolated instance. The second letter, dated the 26th February, reads -
It is advised that your application was referred to the Ministry of Munitions for sponsorship and the Director of Machine Tools and Gauges has now replied to the effect that as these goods are available from local production, sponsorship could not be afforded these goods as essential imports.
The third! illustration is contained in a letter dated the 24th April, as follows : - . . We are greatly perturbed by the action; of the- Import Controller and the attitude adopted in regard to goods available from England that we have sold on behalf of our oversea principals for quite a number of years-. We consider the attitude taken up by Mr. Fraser dining the writer’s recent interview that he was not prepared to issue permits for any product in competition with Australian goods when supplies were available
The writer omitted a reference to his opinion of the attitude of the officer concerned, hut what he means is clear.
Those three instances show that, by ae use of the powers available, the Division of Import Procurement has made an arbitrary determination on what is normally a subject of tariff policy. [ am completely in favour of the production of goods in Australia by local manufacture, and we have established in this country a tariff policy which gives reasonable and adequate protection to efficient Australian industries. But it is a very far step from tariff protection to an arbitrary departmental embargo, and ti at is what has taken place in the instances that I have mentioned. In those illustrations, honorable members have a practical demonstration of the manner in which this clause may be used to thwart the will of the Parliament, as laid down in its tariff schedules. As was pointed out earlier by the right honorable member for Cowper (Sir Earle Page), a government determined to foster secondary industries at the expense of primary industries could, by the application of paragraph /, damage the prospects of our primary exporters in their overseas markets.
I agree with the statements of the honorable member for “Warringah (Mr. Spender). We do not meet our requirements merely by deleting paragraph /, obnoxious though it may be in itself. Nor do we meet them entirely by other amendments that have been suggested, but the amendment submitted by the Leader of the Australian Country party (Mr. Fadden) does at least mean that the matter will be brought before the Parliament. Therefore, it should be accepted.
.- The honorable member for Warringah (Mr. Spender) should be congratulated for his trenchant and timely criticism of these provisions. He has shown how this clause will completely override customs practice and the whole trade of the country may be restricted by it. A prohi bition is placed upon the importation and exportation of goods, except under licence. In those circumstances, what avails it to have a tariff at all? So far as I am aware, during the war, tariff matters have not been discussed in this Parliament, so that the tariff which is supposed to be operative to-day is controlled entirely by regulations. The Government intends to make it so inoperative that it will allow the Division of Import Procurement to perpetuate its present day practices. The honorable member for Fawkner (Mr. Holt) has given recent instances of the arbitrary actions of the division. Application must be made to it for approval to import any goods. Nol the Parliament nor the Government but departmental officials have decided that certain manufacturers shall not be permitted to import certain materials. Do Ministers support those practices? A perpetuation of those conditions will be possible under this clause.
The young member for Perth (Mr. Burke) sought to read me a lesson. 1 have always listened with interest to his speeches, and sometimes his contributions to the discussion have been worth while. But he tried to tell me that in these discussions we must not mention socialism or totalitarianism. He is very “ touchy “ about those subjects; but socialism or totalitarianism could be introduced under this clause. I remind that young man that the electorate of Perth has always been represented in the past by gentlemen who have espoused the cause of Western Australia. If they considered that the customs tariff was in any way detrimental to the interests of that State, they were immediately up in arms against it. Yet the honorable member, who has a little academic knowledge, declared thai this clause would prevent trafficking in exchange. He shut his eyes to the hardships that, will be inflicted upon the trader by the continuation of bureaucratic control. His predecessors in thi? chamber made every endeavour to ensure that the tariff was not, by-passed in that manner. The honorable member sought, by a personal attack on me, to ignore those facts. If he had listened attentively to my speech he would have known that I referred to the trad? diversion policy of the Lyons Government. Possibly he has never heard of it. If he has not, he should read the debates that took place in this Parliament on that subject. During the economic depression, Australia encountered grave difficulties, and the honorable member need not have harped on them. We who were members of this Parliament in those days, took our responsibilities very seriously. We tried to provide employment for the people, and succeeded in doing so without depriving them of their rights. But this Government, by legislation, will take away the liberties of the individual. Even a small shopkeeper in Perth or Kalgoorlie will not be permitted to import or export goods without official approval. The penalty for a breach of this provision is particularly harsh. But the honorable member is prepared to tolerate it. On more than one occasion the honorable member for Warringah has declared that this Parliament has ceased to be a deliberative assembly. This evening he was able to make that fact clear to the honorable member for Perth, who talks so academically at times. I hope that the electorate of Perth will read this discussion, and realize that the honorable member is of no value to his constituents, his State or the Commonwealth.
– The honorable member for Balaclava is of no value to his constituents.
– I have represented Balaclava for sixteen years. I bore the attacks of all tariff reformers, whether they were prohibitionists, high protectionists or free-traders. I studied proposals for assisting industry, not for any political advantage that might accrue to me, but in the national interest. The customs tariff of the Commonwealth, arising out of the Ottawa agreement in 1932, is now to be by-passed by this clause, and particularly the iniquitous paragraphf. I hope that it will be rejected.
– I direct the attention of the Treasurer (Mr. Chifley) to paragraph h of subclause 3, and inform him that I intend to submit an amendment. My proposal is not made for political purposes, andI hope that the honorable gentleman will recognize the force of my remarks. The paragraph permits penalties to be imposed not exceeding a fine of £5,000 or imprisonment for a period not exceeding five years for any offence under the regulations made under the clause. I am sure that the Treasurer will agree with me that such things should not be permitted without close supervision by Parliament. I do not, for the purposes of my proposed amendment, object to regulations being made in respect of any of the matters mentioned in clause 29, but I resist the vesting of power in outside officials to impose penalties affecting the liberty of individuals, without Parliament having the right to confirm or reject such decisions.
– That is done under income tax law.
– That does not relate to penalties like these. In any event, assuming the right honorable member to be right, I wish he would stop appealing to what has been done in the past. I seek to establish a principle as a guide to future actions. The amendment which I propose to move will be as follows: -
That the following new sub-clause (3.) be added : - “(3.) Any regulation made pursuant to subclause (1.) shall cease to have effect unless confirmed by a resolution of Parliament within fourteen days of its meeting next after its making.”
If the period stipulated is considered to he too brief, I shallbe agreeable to increase it to 28 days. My real purpose is to vest in this Parliament a measure of control over the imposition of penalties affecting the liberty of the people. The Treasurer can accept my amendment without in any way affecting the validity of the measure.
Question put -
That the words proposed to be inserted (Mr.
Fadden’s amendment) be so inserted.
The committee divided. (The Chairman - Mr. W. j. F. Riordan.)
Majority . . . . 15
Question so resolved in the negative.
– I move -
That, in sub-clause (1.), paragraph (a), the word “ fixing “ he left out wilh a view to insert in Heu thereof the word “quoting”.
Although this appeal’s to be a small amendment, it is vital. The Commonwealth Bank may fix the rate of exchange at which it is prepared to buy or sell sterling currency. If that rate be out of relation with the- market rate, it willbe deprived’ of the chance to obtain the funds which it requires. The bank will have to conform with the outside market rate. As the clause stands, the hank may fix a rate of exchange which is in no way a true rate in relation to the purchasing power of the two currencies.. This matter has been thoroughly discussed, and I shall not elaborate it further.
– T move -
That paragraph (/) of sub-clause (1.) be left out.
I shall not repeat my arguments except to emphasize the extraordinary danger that a measure of this sort may create international friction. Such drastic action as is proposed should never be taken without a full inquiry by the Tariff Board and- consultation with the Department of Trade and Customs regarding the nation’s external trading arrangements. It is very easy to- prohibitimports by regulation, but it is very difficult to remove the bad impression created by a dislocation of trading arrangements, which the countries affected regard as an insult. If this matter is to be considered in relation to the monetary system, any proposed prohibitions of imports should be dealt with by Parliament. The power should not be left in the hands of the Treasurer.
.- Had the right honorable member for Cowper (Sir Earle Page) not submitted this amendment, I should have done so. This is the most revolutionary clause that has ever been included in any legislation. It will break down a practice that has been continuously followed in the Commonwealth. Normal tariff procedure will now virtually cease to exist through the insertion of a clause in a banking bill. This will perpetuate a form of government control which is already exercised by a department established for war purposes. The Government will abdicate to the- bureaucrat and will invite retaliation by other nations. It will encourage black marketing and smuggling, because the dire penalties provided in the clause for the slightest breach of any import regulations will not achieve what the Government desires. This proposal is too serious to be put into effect. It should be considered apart from all party feeling. It will involve the overriding of tariffs.. I hope that the amendment will be agreed to.
– I support the amendment. A provision of this kind should not be ineluded in a banking bill. The right to prohibit the importation or exportation of goods by regulation already exists. This has a- direct bearing upon the trade policy of Australia, particularly in relation to primary products. The exercise of the powers provided in the clause could lead to all sorts of disastrous repercussions on our export industries, as well as on our internal economy. For these reasons, I strongly oppose the retention of the paragraph which the right honorable member for Cowper (Sir Earle Page) has moved to omit. The powers: proposed should not be handed to the Executive. They should be a matter for specific consideration by Parliament should the need to exercise them, arise.
Question put -
That the paragraph proposed to he left out (Sir Earle Page’s amendment) be so left out.
The committee divided. (The Chairman - Mr. W. j. F. Riordan.)
Question so resolved in the negative.
.- As the Government is not prepared to exclude paragraphf of sub-clause 1, in its entirety, I move -
That, in sub-clause (1), paragraph (f). the following words be left out : - “ unless a licence under the regulations to import or export the goods is in force.”
I object strongly to the concluding words of the paragraph. I believe that they are contrary to the intention of the clause inasmuch as if the holding of importation and exportation licences is to be enforced,, the power of the Governor-General to implement the clause will be negatived, and the bank maybe prevented from taking action. My main objection to the paragraph is that it envisages the continuance of the obnoxious system of import and export licensing. Australia will have to develop its export trade after the war. Buyers coming to this country may find that goods are available to them on terms equal to those operating in other countries,but if they have to go through the tedious process, of obtaining an export licence, they will place their orders in some other country. There is no need for the system of export licensing to be provided for in this measure. It could be far better dealt with by the Department of Trade and Customs.
– I move -
That the following new sub-clause be added: - “ (3.) Any regulation made pursuant to sub, section ( 1 .) hereof shall cease to have effect unless confirmed by resolution of Parliament within fourteen days of its meeting next after the making of the regulation.”.
That means that any regulation would cease to have effect unless within fourteen days after the next meeting of Parliament, it were confirmed by Parliament. I think I am correct in saying that paragraph h of sub-clause 1, gives the regulation-making authority not merely power to fix a maximum penalty of £5,000 or five years’ imprisonment, but also power to impose such a penalty for the proved infringement of any regulation. Little comment is needed to draw attention to the extraordinary powers being givenby this clause to people who are in no way responsible to the electors. If the Acting Prime Minister considers that the form of my amendment in any way impedes the Government, but is prepared to concede that the ultimate responsibility for these matters rests on Parliament, I suggest that my amendment be altered to read -
Any regulation made .pursuant to sublection (1.) hereof shall cease to have effect unless confirmed by resolution of either House of Parliament within twenty-eight days after its next day of meeting.
The important principle I am fighting for is that Parliament shall be the ultimate determining authority.
– I cannot quite appreciate the great danger in this clause which appears to be troubling the mind of the honorable member for “Warringah (Mr. Spender). In the first place, regulations relating to this matter have to be made by the Governor-General. That means that Parliament can disallow them. Secondly, whatever penalties are imposed must be imposed by a court.
– They would not be - that is the point.
– A person could not be sent to gaol by an official.
– If a person commits a breach of the regulation, the regulationmaking authority can decide that he is liable to a fine of £5,000 or imprisonment for five years.
– That is not my interpretation of the clause, and I examined it carefully with the AttorneyGeneral (Dr. Evatt). I certainly do not consider that under this clause an official could fine an offender £5,000 or commit him to prison. Surely that is not suggested.
– I hope not! The best thing to do is to delete the clause and be safe.
– The Governor-General can prescribe the penalty.
– The court will impose the penalty.
– That is not so, and there is no provision for an appeal to a court.
– Is it suggested that an official could send an offender to gaol?
– In effect, yes.
– That is nonsense. The only authority that could commit anyone to prison is the court. I shall examine the remarks of the honorablemember for “Warringah, but my interpretation is that regulation may be made by the Governor-General and will besubject to disallowance by Parliament. The penalty has to be imposed by the court, which is a judicial authority. Right of appeal is also provided. When the honorable member for Warringah was speaking, I interjected that under the income tax law the Income Tax Commissioner has power to impose penalties, but there is the right of appeal. A similar right will obtain under this clause. In my opinion the clause is perfectly fair, and I do nor propose to accept the amendment.
.- According to the honorable member for Warringah the Governor-General, by regulation, may prescribe a penalty of fine or imprisonment for a breach of one of the regulations made under this Part. He can say that the penalty shall be £1,000 or three years’ imprisonment or any specified penalty up to the maximum. The only discretion a court would then have would be to decide whether or not a breach of the regulation had occurred. If the court was satisfied that a. breach had been committed, then the penalty prescribed in the regulation would be applied by the court. My interjection that an official could, in effect, prescribe the fine or term of imprisonment is, under these circumstances, correct. All the court has to do is to determine whether a breach has been committed.
– The Acting Prime Minister stated in reply to the honorable member for Warringah that similar provisions concerning penalties were contained in the income tax law.
– I said that the Income Tax Commissioner could impose penalties.
– But all such penalties are in the nature of a fine. For a first offence a fine is imposed under the Income Tax Act. That is distinct from a penalty in the nature of double tax for subsequent offences. The person fined has a right of appeal to the High Court, but that is not the case under this clause. As a layman I do not pretend to be able to discuss the legal aspect of the matter, but the penalties provided are distinctly different from those in the Income Tax Act.
.- The Acting Prime Minister (Mr. Chifley) said that he was not aware that an official could impose a fine. I remind the honorable gentleman that the Collector of Customs in each State can do so.
– He could not commit a person to prison.
– Minor offences such as smuggling are dealt with by the Collector of Customs, who imposes a fine, and the penalty is not harsh, but under this clause it is both harsh and undemocratic. A fine of £5,000 or imprisonment for five years for a breach of the import or export laws would override the procedure of the Department of Customs. There is a great deal of merit in the suggestion of the honorable member for Warringah (Mr. Spender). This provision could be carried to ridiculous extremes. The price-fixing regulations were framed with good intent, but how have they operated? In the Riverina recently, a case occurred in which a grocer at Holbrook sold a packet of cheese for a penny more than the fixed price and was fined £25. That was ridiculous. A trader in Canberra who sold a small article for1s. more than the fixed price was also fined £25. An honest mistake by an exporter or importer may be punished with tremendous severity, on the recommendation of an official. The matter might well be reviewed.
Question put -
That the sub-clause proposed to be added (Mr. Spender’s amendment)be so added.
The committee divided. (The Chairman- Mr. W. J. F. Riordan.)
Majority . . 16
Question so resolved in the negative
Question put -
That the clause be agreed to.
The committee divided. (The Chairman- Mr. W. J. F. Riordan.)
Majority . . . . 18
Question so resolved in the affirmative.
Clause agreed to.
Motion (by Mr. Chifley) proposed -
That the House do now adjourn.
.- I take this opportunity to inform the chairman of the Rationing Commission, the honorable member for Henty (Mr. Coles) that it is estimated that goods representing. 500,000 ration coupons are held up awaiting delivery in the premises of four Brisbane wholesalers and manufacturers. Mr. G. W. Kennedy, president of the Brisbane Chamber of Commerce, said that the number of coupons would be considerably larger if the stocks of other Queensland wholesalers were taken into account. He also stated that the goods were urgently needed by the public and that retailers had insufficient coupons to take up the goods. The Brisbane Chamber of Commerce has been very concerned for some time about the insufficiency of clothing coupons in the hands of the Brisbane public. The chamber believes that if attention is not given by the Government to the position immediately, the Queensland public will be prevented from purchasing garments and materials available. Unless coupon ratings are eased or some items are eliminated from rationing, stock will be frozen on the shelves of retailers, wholesalers and distributors, and manufacturers will be unable to continue producing rationed goods because they will be unable to sell them. There is an urgent need to lift or modify clothes styling restrictions. Otherwise much undesirable clothing will continue to be produced and, finding its way into trade channels, will eventually prove waste of man-power and materials. The Commonwealth Government has only to take a common-sense view of the position, especially as service clothing requirements must shortly be substantially reduced..
– The services still have to be clothed and fed.
– The honorable member knows that our troops are fighting in the tropics and no longer require woollen underclothing. Mr. Kennedy said that the Government must remedy the trouble so that the public maybenefit from the goods available and so ensure that manufacturers will be able to continue in production and thereby prevent unemployment. I appeal to the Minister representing the Minister for Trade and Customs and the chairman of the Rationing Commission to remove this anomaly, as I understand that it has been removed in the southern States.
.- I understand that other Queensland members have received from the president of the Brisbane Chamber of Commerce a letter similar to that received by the honorable member for Moreton (Mr. Francis). The honorable member for Griffith (Mr. Conelan) and the honorable member for Maranoa (Mr. Adermann) have already drawn my attention to this matter. The honorable member for Moreton advised me that he intended to raise it in the House. I have not had time to get very much information in the way of documentary proof, but I can speak from memory. The matter of coupon capital for traders has given the Rationing Commission a good deal of work and thought from the inception of rationing. The difficulty in Queensland particularly arose before last summer’s delivery of seasonal goods. Owing to organization for war, the distribution of woollen underwear particularly was very late for delivery in the winter of 1944, and in September and October the question of insufficient coupon capital was brought before the
Rationing Commission. At that time the matters mentioned by the .honorable member for Moreton and the introduction of household linen into the rationing scale were mentioned particularly by country traders. At that time the commission granted to deputy directors the power to give to traders an opportunity to take up seasonal goods where it could he shown that stock was lying dead on i heir shelves, or where they had purchased stocks of manchester in excess of those held at the introduction of rationing. The matter has again cropped up this year’ for two reasons. The first is the carrying on of the B coupons to the 15th November next, which carried forward an unexpended coupon demand which in former circumstances would have expired by the 30th June. That is an unknown quantity, but there is a definite demand which was not taken up. A slackening of Army orders has .increased the supply of knitted goods available to the civil community, banking up to a certain extent goods in factories and in wholesalers’ establishments.
Whenever the commission acts, somebody always reports to the press immediately afterwards. The speech of Mr. Kennedy was made on the 2.6th June. The commission considered the question of the coupon capital of traders in May because of the falling off in the recovery of coupons by traders in April and May, anc! the commission gave a ruling which was conveyed to the trade through the usual channels. A trade circular was issued, and it was published in the trade magazines that coupon advances would he made to traders where they made application to the deputy directors showing they legitimately had insufficient coupon capital to take up seasonal, lend-lease, or other goods. I have before me a circular, of the Master Drapers and Traders Association of Victoria, which is one of the associations through which the commission disseminates information, and it is dated the 21st June, advising its members of the accommodation which will be granted by the commission to traders.
– What accommodation!
– Where the need for coupon advances arises. The circular states that the need for coupon advances may arise because of abnormally low stocks held in 1942, low rate of turnover during the initial 1942 coupon-free period or where insufficient coupons. prevent a trader from purchasing special allocations, such as lend-lease goods, or where the trader has insufficient coupon capital to take up seasonal goods. The commission must ask the trader to establish his bona fides in the matter so that there shall not be an “open go” for black marketing.
– This matter was raised by the Chamber of Commerce at Ipswich.
– -The commission works in close contact with the retail and wholesale trade and the manufacturers in watching market trends, and is advised as to the trends as early as possible. We have to make a check throughout Australia as to whether the trend is general in order to ensure that the supplies shall be constant, and, when we are sure of the facts, we act as quickly as possible and with the approval of the trade. We have .a good advisory committee in Queensland with whom we have worked since the inception of rationing. I am surprised that Mr. .Kennedy’s remarks have been made without consulting the advisory panel connected with his own organization. A second and very important point was raised by him with regard to the purchasing power of the coupons in the hands of the public to take up the increasing stocks of goods coming forward, particularly in respect of knitted goods. The first reductions by the commission were made following VEDay, and Circular TTo. 25, dated the 1st June, notified the trade that reductions would be made on knitting wools and hosiery, and knitted wear of some kinds on that date. A fortnight later the commission made further reductions of the coupon rating on piece goods and knitted underwear of all kinds. The total coupons in the hands of the public number 900,000,000 a year. That is a considerable number. Queensland would hold about 15 per cent, of that total, or 135,000,000 coupons, which means a weekly consumption of goods representing about 2,600,000 coupons. Mr. Kennedy’s complaint refers to 500,000 coupons., or about one-fifth of a week’s supply of goods, which is not a large quantity. But it is serious for the traders holding those goods. We have granted the right to retail merchants to approach the authorities for more coupon capital if they desire to lift those goods. Mr. Kennedy says that there are Insufficient coupons in the hands of the public to lift the goods. The reduction of coupon ratings by the commission this month amounts to eleven coupons a head of the population of Australia, plus a L5 per cent, reduction of the coupon rating of piece goods. That represents a purchasing power in Queensland of 11,000,000 coupons. There is a possible banking up of goods representing 1,000,000 coupons. That establishes the fact that the commission has not been at all dilatory in the matter. In fact, it is ahead of the complaint, and it has attempted to be ahead of complaints throughout the administration of rationing. The only way in which that position can be maintained is by working in close co-operation with the trade. The difficulty is a temporary one, and we hope it will correct itself in the very near future. The reductions which had already been made had been circularize’! in the trade and published in the press before Mr. Kennedy made his speech drawing attention to the matter. Some of the reductions anticipated his remarks by four weeks and others by two weeks. Therefore, the commission and the Government have no case to answer on the ground of not having met the position as quickly as it arose.
.- 1 direct attention to the practice of calling up for Army service youths of the age of eighteen years, particularly in rural areas. We are all optimistic enough to believe that there is a likelihood of peace being declared in the Pacific war theatre within twelve months. The rural areas have already been drained of labour, and [ direct attention to the case of Ewin Hamley, of Dingee, whose father has a mixed farm of 800 acres, on which he has 40 cows. The father is an old man and relies on his only son to assist him, but the youth was called up and ordered to report on the 4th July. That boy has been reared on the farm and is as good as any man. Moreover, no one can be obtained to take his place. The Government should take a serious view of calling-up young men who are working on the land, particularly, as it has undertaken not to send lads under nineteen years of age into operational areas.
– Is this youth working full-time in primary production 1
– Yes, on his father’s farm.
– ‘Since 1942, no omworking full-time in primary production has been liable for call-up.
– This lad has Iven ordered to report on the 4th July.
– Some one has made h mistake.
– Has the honorable member approached the local manpower officer?
– The lad himself has been to the man-power officer; but apparently that officer has not taken any notice of instructions received from the Minister.
– Had the honorable member telephoned the national service officer, he could have had the matter fixed in two minutes, instead of wasting the time of the House.
– Why did not the honorable member approach the Minister?
– Why should I do so? I know that numbers of youths of eighteen years of age are being calledup. If that is done in one case, it i* possible that it is being repeated all over Australia.
– The honorable member would have got better results had he approached the Minister instead of wasting the time of the House.
– I do not consider that I am wasting time.
– Has the honorable member supplied information which would enable this youth to be identified? I shall be surprised if he has not raised a mare’s nest.
– The telegram which I received came from his father. Possibly the man-power authorities have overlooked the instructions issued to them. In view of the hardships which people engaged in rural industry have suffered during the drought, and the possibility that they may now get some return for their labour the withdrawal of this lad from his fathers’ farm is utter stupidity. I hope that the Minister will look into the matter and take appropriate action immediately.
Question resolved in the affirmative.
The following papers were pre sented : -
Lands Acquisition Act - Land acquired for Postal purposes -
Nannup, Western Australia.
National Security Act -
National Security (General) Regulations - Order - Control of automotive spare parts (No. 4).
National Security (Munitions) Regulations - Order - Declaration of certain items to be munitions.
National Security (Prices) Regulations - Declaration. - No. 155.
Orders - Nos. 2072-2112.
House adjourned at 11.24 p.m.
The following answers to questions were circulated: -
n asked the Minister representing the Postmaster-General, upon notice -
Mr.Calwell. - The Minister for Trade and Customs has supplied the following answers: -
y asked the Minister representing the Minister for Trade and Customs, upon notice -
– The information is being obtained.
n asked the Acting AttorneyGeneral, upon notice -
Will he see that National Security (War Service Moratorium) Regulation 30 (2.)is amended so that the additional protection previously afforded to member’s of the forces and their dependants under the original National Security (Landlord and Tenant) Regulations is continued under the consolidated regulations to come into operation on the 2nd July, 1945?
– The amendment referred to by the honorable member is being gazetted to-day.
Miss H. J
n asked the Minister for Labour and National Service, upon notice -
– Investigation into the matters raised by the honorable member is being made and replies will be furnished at a later date.
n asked the Minis- ter for Commerce and Agriculture, upon notice -
Mr.Scully. - The answers to the honorable member’squestions are as follows -
n asked the Minister for Transport, upon notice -
– The answers to the right honorable member’s questions are as follows : -
y. - On the 20th June, the right honorable member for Darling Downs (Mr. Fadden) asked me a question concerning a report compiled by a war agricultural committee on certain aspects of food supplies. In reply to inquiries which were instituted’ as a result of the right honorable member’s question, the New South “Wales Department of Agriculture has furnished the following advice : -
The question probably relates to a resolution adopted by the Campbelltown District War Agricultural Committee on the 27th April, 1945, the text of which was transmitted to the Executive Officer, District War Agricultural Committee, Sydney, with a request that the matter should be taken up with the Director of Marketing and, in turn, brought to the notice of the Minister for Agriculture, New South Wales. Action was taken as requested, and the secretary of the Campbelltown District War Agricultural -Committee was advised on the 25th June, 1045, to that effect. A copy of the report of Chief, Division of Marketing,, was also furnished to him, together with the Minister’s comments. In all the circumstances, i feel that the position will be clarified by the despatch to you of - (o) copy of resolution, (6) copy of letter from Secretary, Campbelltown District War Agricultural Committee, transmitting resolution, (o) copy ‘ of report furnished by Chief, Division of Marketing, (d) copy of department’s reply.
Upon receipt of the reports referred to I shall examine them immediately.
Would Youth Conference : Australian REPRESENTATION ; International Youth Committee.
asked the Acting Primp Minister, upon notice -
y. - Information is being sought as to the nature of the proposed conference, and a reply will be furnished to the honorable member as early as possible.
– On the 12th June, the honorable member for Kalgoorlie (Mr. Johnson) asked a question relating to the possibilities of the north-west of Western Australia, particularly the Kimberley district, in connexion with soldier settlement and post-war development generally.
I now inform the honorable member that, in the course of a communication, recently addressed to me by the Premier of Western Australia concerning the development of northern Australia, it was indicated that for some time past the Western Australian Government had been carrying out extensive investigations into the possibilities of further settlement in the Kimberleys. It is understood that most of the field work has now been completed and that the State Government will, in due course, submit proposals for this region. The Commonwealth has taken keen interest in these investigations, and has assisted the Western Australian Government by placing certain service facilities at the disposal of the survey parties. The question of- arranging for an all-party parliamentary delegation to proceed to Western Australia with a view to inspecting. and reporting on. the district concerned, as suggested by the honorable member, could well be deferred until the results of the present investigations are available and until the Western Australian Government has formulated its proposals for this area.
Re-establishment : University Students.
y. - On the 15th June the honorable member - for Balaclava (Mr. White) asked a question in regard to the position under the Commonwealth reconstruction training scheme of discharged servicemen who, prior to the war, were attending universities as part-time students.
I now inform the honorable member that, as was the case after the last war, the purpose of the training scheme, is to compensate the ex-service man and woman for training opportunities missed because of war service. Accordingly, if a full-time training course has been interrupted, the person concerned may resume full-time training under the scheme, while if a part-time training course has been interrupted, he may receive parttime training benefits. coal-mining Industry : Production Target.
– On the26th June the honorable member forWentworth (Mr. Harrison) asked a question concerning the production of coal and inquired what would be the minimum requirements of coal for the second half of this year.
I now inform the honorable member that, based on consumption over the past two years, it is estimated that Australia will require approximately 7,000,000 tons of coal to meet requirements during the period stated.
Cite as: Australia, House of Representatives, Debates, 28 June 1945, viewed 22 October 2017, <http://historichansard.net/hofreps/1945/19450628_reps_17_183/>.