Mr.Speaker (Hon. Archie Cameron) took the chair at 10.30 a.m., and read prayers.
LETTERS OF INTRODUCTION
Mr DEAN: ROBERTSON, NEW SOUTH WALES
– In view of the increased number of requests now being made to the Prime Minister by members of this House to supply letters of introduction to various people, will the right honorable gentleman circularize honorable members asking them, as nominators, to ensure the bona fides of the people whom they nominate for such letters? From my personal experience, I know that the Prime Minister is good enough to provide those letters on the recommendation of honorable members.
Mr MENZIES: Prime Minister · KOOYONG, VICTORIA · LP
– I venture to think that it is well known to honorable members that before they write in asking for such letters they should satisfy themselves in the matter. I am bound to tell the honorable member that I have no reason to think that that is not done. As he is aware, these letters are supplied as a privilege, and they ought not to be made available to persons who are not suitably recommended. That is why members of Parliament are responsible for asking for the letters to be issued.
EMPLOYMENT OF WOMEN
Dr EVATT: BARTON, NEW SOUTH WALES
– Representations have been made to me by quite a number of women’s organizations in relation to the International Labour Organization Con vention that dealt with the subject of equal remuneration for women workers who perforin work of the same value as that performed by males. As the convention was concluded a considerable time ago, will the Minister for Labour and National Service inform the House of the action that has been taken in relation to the matter or the action that it is proposed to take ?
Mr HOLT: Minister for Immigration · HIGGINS, VICTORIA · LP
– I shall have a reply prepared, which I shall make available to the Leader of the Opposition and other honorable members who may be interested in the matter.
– Will it be made available in the House?
– If desired.
Mr FREETH: FORREST, WESTERN AUSTRALIA
– Will the Prime Minister inform the House whether the Western Australian Government recently asked the Commonwealth for financial assistance to enable the provision of amenities on the Collie coal-fields?I remind the right honorable gentleman that last year the Commonwealth paid to New South Wales to provide amenities on the coal-fields, more than 4d. for every ton of coal mined in that State, but that less than lid. a ton was paid to Western Australia for that purpose. Will the right honorable gentleman assure the House that, if the Government intends to continue subsidizing the provision of amenities on the coal-fields at the expense of the taxpayers, financial assistance will bo provided by the Commonwealth on an equitable basis, so that no particular State shall be favoured?
Mr MENZIES: LP
– Insofar as the honorable member’s question relates to policy, I cannot deal with it now. I may say, however, that the Western Australian Government has asked for further assistance, and that matter has been the subject of inquiry and correspondence. In fact, the latest manifestation is now on my desk awaiting my signature. The honorable member may be assured that the matter is well in hand.
Mr JOSHUA: BALLAARAT, VICTORIA
– My question to the
Treasurer concerns the system employed by the Repatriation Department for the payment of war pensions. I have received a letter from an aged war pensioner who has great difficulty in calling at his post office each month to collect hU pension. He has asked that the department adopt the simple method of posting his monthly cheque to him. Will the Treasurer issue appropriate instructions so that war pensioners may receive their pension cheques by mail in the same way as age pensioners receive payments from the Department of Social Services ?
Sir ARTHUR FADDEN: Treasurer · MCPHERSON, QUEENSLAND · CP
– I shall have the proposal considered and will let the honorable member know what can be done to meet the request.
Mr FALKINDER: FRANKLIN, TASMANIA
– Yesterday I asked the Minister for Social Services a question in relation to the trend shown by official figures relating to certain categories of war service homes. I am certain that the honorable gentleman misunderstood the import of my question. By way of explanation, I point out that the figures that he supplied to me last week show that houses that are semiconstructed by the War Service Homes Division, in the sense that they are fully controlled by the division from the beginning of construction, have increased by 2,000,- whereas the number of new homes taken over has decreased by 500 and the number of old homes taken over has decreased by 4,000. Is the accent to be further placed in future on control of construction by the War Service Homes Division to the detriment of transactions in the other two categories?
Mr TOWNLEY: Minister for Social Services · DENISON, TASMANIA · LP
– I did .misunderstand the honorable member yesterday. I now realize that, when he referred to houses constructed by the War Service Homes Division, he had in mind houses that are built by private contractors on behalf of the division. The division has concentrated on a policy of building new homes in preference to the financing of. what might be termed estate agency transactions for the purchase of existing houses. It has done so for a variety of reasons. In the first place, it considers th’at it can help ex-servicemen and at the mme time improve the general housing situation by financing the construction of new houses. In the second place, the construction of new houses under the war service homes scheme helps to relieve unemployment. Therefore, I think that wo shall continue to concentrate on the building of new houses in preference to the purchase of existing properties.
Mr CURTIN: WATSON, NEW SOUTH WALES
– Will you, Mr. Speaker, give consideration to the broadcasting of our national anthem, Advance Australia Fair-
– What rot !
– Order ! This is not a matter for comment by honorable members at the moment.
– Will you arrange for the anthem to be broadcast immediately after the reading of prayers at the commencement of each day’s sitting of -this House? Do you not think that this action would generate national sentiment, would hare a beneficial effect on the outlook of the people, particularly the children, and would increase their appreciation of their magnificent country ?
-In matters of this sort I am the servant of the House. If the House secs fit to give me instructions, they will be carried out. Until that stage is reached, the present procedure of this House will not be altered.
Mr LUCOCK: LYNE, NEW SOUTH WALES
– Will the PostmasterGeneral say what plans are in hand for the provision of further regional broadcasting stations for country areas? How many such stations have been established by the present Government, and bow many were established during the eight years of office of the Labour Government ?
Mr ANTHONY: Postmaster-General · RICHMOND, NEW SOUTH WALES · CP
– Plans have been prepared for the establishment of about fifteen low-powered regional stations on the national network to serve, in the main, country areas in which adequate radio programmes are not available now. During the life of the previous Government, which was about eight years, eleven of these stations were established. During the last three years, this Government has established six.
Mr ANDREWS: DAREBIN, VICTORIA
– I understand that the Minister for Health has stated that the use of heroin in’ this country is to be either discontinued or seriously curtailed. Will the right honorable gentleman say when such instructions will be issued?
Sir EARLE PAGE: Minister for Health · COWPER, NEW SOUTH WALES · CP
– The Commonwealth has no constitutional power to specify the uses to which heroin may be put. We have removed the drug from the list of free life-saving drugs, and we have had discussions with official organizations of the medical profession in order to ascertain whether they can effect a reduction of its use.
Mr COSTA: BANKS, NEW SOUTH WALES
– Has the Minister for Immigration received requests from some sections of British immigrants that cooking facilities be provided in certain immigrant hostels? .Some of the British immigrants are not complaining about the standard of menus. They believe that it would be better if they had facilities to cook their own meals, so that they could eat the foods that they like best.
Mr HOLT: LP
– Suggestions of this kind have readied us from time to time from various hostels. We have made an experiment at the Gepp’s Cross hostel in South Australia, the modern construction of which lends itself to a development of this kind. I understand from the honorable member for Sturt that the scheme is working very successfully there. The committee that was established to consider the problems of British immigrants recommended that the practice .should not be adopted in a number of hostels, because it believed that a considerable fire risk would be created. However, the Chairman of the Immigration Advisory Council is going to inspect facilities at the Gepp’s Cross hostel, and we shall be guided to a considerable degree by the kind of recommendations that, he makes.
Mr JAMES: HUNTER, NEW SOUTH WALES
– My question is directed to the Minister for Immigration. By way of explanation, may I say that I have previously spoken and written to the Minister about this matter, and have also had some contact with the Minister for the Interior, who, I understand, is administratively concerned. The question relates to British immigrant mine-workers who were sent by the Government to the northern mining districts of New South Wales, and their living quarters at West Cessnock and Kurri Kurri. I have received no reply from you-
– Order ! The honorable member must address me.
– “Well, they have jumped the homes.
– Order ! The honorable member will resume his seat if he does not intend to abide by the Standing Orders.
– I have had no reply to my correspondence with the Minister, and mine-workers are now occupying the houses at a rental of £3 19s. 6d., which is far too great in comparison with other housing accommodation in the locality. Will the Minister visit Cessnock as soon as possible to inspect these houses?
– As the honorable member lias indicated, this aspect of administration comes within the jurisdiction of the Minister for the Interior, who is now dealing with it. As for the occupancy of some of the vacant houses mentioned by the honorable member, I point out again to him, as I indicated a week or so ago, that we are at present in negotiation with the Government of New South W ales with a view to that Government acquiring the houses. An official from New South Wales was in discussion with Mr. Goodes of the Treasury earlier this week. I hope that finality will be reached in the near future.
Mr CRAMER: BENNELONG, NEW SOUTH WALES
– My question, which i3 directed to the Minister for Social Services, relates to the reciprocal agreement between the United Kingdom and Australia about the payment of social services benefits. Is the honorable gentleman aw are that there a number of elderly people in this country who, although they are British subjects, are not entitled to receive social services payments in either Great Britain or Australia because they have resided for so long in other parts of the Empire? Will the Minister try to help these people when consideration is being given to the terms of the reciprocal agreement ?
Mr TOWNLEY: LP
– The reciprocal agreement between the United Kingdom and Australia will, as its name implies, provide for reciprocity. There will be an exchange of benefits between former residents of Great Britain who come to this country and Australians who go to live in Great Britain. 1 shall consider the matter that the honorable gentleman has raised, and see whether anything can be done to help the people to whom he has referred. I know that, in many instances, they are in great need.
Mr WILSON: STURT, SOUTH AUSTRALIA
– In view of the substantial fall of the cost of living in South Australia, which has resulted in a decrease of the basic wage there by 4s. a week, will the Minister for Social Services strenuously resist a suggestion advanced by the Labour party last year that the age pension be tied to the basic wage? If that were done, it might easily result in a fall of pension rates-
– I rise to order. This is a propaganda question. The honorable gentleman has deliberately falsified the position-
– .Order ! An honorable member must not accuse another honorable member of deliberate falsification. The honorable member for Melbourne has used an unparliamentary expression. It must be withdrawn.
– I withdraw the statement. The honorable gentleman is deliberately attempting to mislead this House.
– Order ! That is equally unparliamentary. The honorable member cannot charge another member with deliberately attempting to mislead the House.
– By making-
– Order ! The honorable gentleman will withdraw any imputation of deliberately misleading the House.
– I did so. I said he was attempting to mislead this House with a question which-
– Order ! The honorable member cannot impute a base motive.
– Is the honorable gentleman entitled to base a question on a false statement?
– I hope and trust that the House will never charge me with the duty of sorting out the falsity or otherwise of questions addressed to Ministers, because I am afraid that that would be a rather difficult task. I do not express any view on what members ask and only require that they shall comply with standing orders.
– You know this one is false,
– Order! The honorable member will withdraw that statement which is an imputation against the Chair.
– I withdraw.
– It is such a long time since the question was asked that I forget what it was about.
– .Order ! The honorable member for Sturt.
– In view of the substantial fall in the cost of living in South Australia which resulted-
– What substantial fall?
– Order ! The honorable member for East Sydney will remain silent.
– I will start the question again. ‘ In view of the substantial fall in the cost of living in South Australia which resulted in a drop in the basic wage of 4s. a week, will the Minister for Social Services strenuously resist the suggestion that was put forward by the Labour party last year of’ tying the age pension to the basic wage as such action might easily result in a fall in the age pension?
– I assure the honorable member that I shall adopt his suggestion.
Mr FITZGERALD: PHILLIP, NEW SOUTH WALES
– Is the Prime Minister aware that a member of the Australian fighting services in Korea is to be court martialled and charged with murdering an American soldier? This man is to be tried for his life and I believe that he intends to plead not guilty. Have adequate arrangements been made for the legal defence of this young Australian? If the Prime Minister has no knowledge of the matter will he investigate it immediately with a view to providing legal assistance?
Mr MENZIES: LP
– The honorable member need have no doubt about the defence arrangements which are always made under such circumstances. There will be no departure from the usual procedure. I am not familiar with the case but I shall obtain further information concerning it.
Mr DRUMMOND: NEW ENGLAND, NEW SOUTH WALES
– In view of the serious nature of the accident which occurred at Karachi recently, will the Minister for Civil Aviation inform the House what precautions have been taken to safeguard the air-travelling public in Australia? Can the Minister inform the House whether the record of air travel in Australia compares favorably with that of other countries of the world?
Mr ANTHONY: CP
– Air travel is probably the safest form of transport in Australia. I think that, during the last financial year 2,500 people have been killed in Australia in motor accidents and about 170 in rail accidents. In the same period, there has not been a single fatality in civil aviation. That is an outstanding record. The Department of Civil Aviation is charged with the duty of inspecting civil aircraft and it issues regulations which provide for the various safety measures which are employed by the. air companies. The department also provides various navigational aids, such as direction-finding equipment for use in bad and foggy weather and at night-time. Those aids are being kept as up to date as possible. The number of passengers carried by air in Australia was about 2,000,000 last year, the year in which, as I have mentioned, there were no fatalities. That large number shows the great use of Australian civil aviation facilities made by the public, and the great confidence that the public justifiably has in our air services,
Mr BEAZLEY: FREMANTLE, WESTERN AUSTRALIA
– Supplementary to the question asked by the honorable member for New England, I draw the attention of the Minister to the fact that when there was a failure by a Comet aircraft when taking off at Rome last year, no lives were lost because the aircraft landed in an open space near the aerodrome. On the latest occasion, however, the aircraft appears to have landed in a ditch. Because the higher speed of jet aircraft on taking off means that the margin for error is smaller than it is with ordinary aircraft, has the Department of Civil Aviation considered what the position will be in respect to aerodromes in builtup areas? Has it also considered the possibility of extending aerodromes in order to give a greater margin of safety when the faster types of aircraft are taking off?
– Consideration has been given to that particular matter by the Department of Civil Aviation, because of the anticipated arrival in Australia of Comet jet aircraft. The department has formed an opinion, which is supported by the relevant scientific calculations, that the principal aerodromes that would be used by Comet aircraft are adequate for the purpose.
Mr KEON: YARRA, VICTORIA
– In view of advances in the technique of rain-making, I ask the Prime Minister whether the Government has given any consideration to the difficult problems that may arise particularly in the event of drought? For instance, how can Victoria prevent New South Wales from commandeering the rain from clouds that are headed south during a time of drought and are being pursued by people in New South Wales. Will the Prime Minister give consideration to the establishment of a committee representative of the Commonwealth and the States, in order to draw up some charter regarding the rights both of States and of land owners?
Mr MENZIES: LP
HEALTH AND MEDICAL SERVICES
Mr TURNBULL: MALLEE, VICTORIA
– I sk the Minister for Health whether it is a fact that the amount a bed paid by the Commonwealth to mental hospitals is much less than that paid to general hospitals? If that is a fact, is there any reason for the disparity, and will the Minister give consideration to adjusting what appears to be an anomaly ?
Sir EARLE PAGE: CP
– The amount paid to the States on behalf of mental hospitals was agreed on by the previous Labour Government and the States on the basis that if a State would cease to. charge mental hospital patients for attention in such hospitals the Commonwealth would make good the amount that was thereby lost, which was about 10di or ls. a day. That arrangement is still in force.
Mr W M BOURKE: FAWKNER, VICTORIA
– Can the Minister for Health inform me whether any research is being conducted by his department into important aspects of industrial medicine, such as occupational diseases and other matters which affect the health of workers? If any work is being done in that connexion, are the results being made available to those members of the medical profession who make a special study of such subjects?
Sir EARLE PAGE:
– Medical research in Australia, for which funds are provided by the Australian Government, is under the direction of the National Health and Medical Research Council, which was established by the present Minister for External Affairs fifteen years ago, when he was Treasurer. That organization consists of representatives of the Commonwealth and the various States. Each year it selects for research certain subjects which frequently include matters such as those referred to by the honorable member. The results of such research receive general publication.
– On Tuesday, the Postmaster-General said, in reply to a question, that during the term of office of the Labour Government, the accounts of the Postal Department had shown an annual deficit of between £3,000,000 and £4.000,000 on several occasions. I have obtained from his own department a statement that shows that at no time during the nine years that the Labour Government was in office was there shown in the budget a loss on the Postal Department, except on two occasions when the loss was £1,000,000 in each of two years. In the next year - -
– Order ! The honorable gentleman is raising a debatable matter, and should come to his question.
– I am coming to my question, which is based on the PostmasterGeneral’s statement in the House on Tuesday. I am basing it also on facts that his department has handed to me. My question is, will the PostmasterGeneral apologize to the House and the nation for having given the Parliament information that is not in accordance with facts, with a view to misrepresenting the position?
– The PostmasterGeneral may answer that debatable question if he pleases.
– I shall give the PostmasterGeneral a little information about the matter if he needs it.
Mr ANTHONY: CP
– I do not need it. 1 have it in my head.
– I shall check the honorable gentleman’s figures.
– The Chifley Government handed over to the incoming administration a department that had been on a profit-earning basis in preceding years, but which showed a loss of £1,700,000 in the last financial year that it was under the Chifley Government. The honorable member for Melbourne may check these figures.
– But the PostmasterGeneral said on Tuesday that the loss had been between £3,000,000 and £4,000,000 a year.
– We had to accept the position that the department was losing money, and had to rectify that position. A profit-earning department had been reduced. by the preceding administration to a losing department.
Dr DONALD CAMERON: OXLEY, QUEENSLAND · LP
– Can the Minister for Health indicate to the House the nature of the resources and assistance that have been made available by the Australian Government to the Queensland Government in the campaign against tuberculosis ?
Sir EARLE PAGE: CP
– For the last three years during which the tuberculosis agreement has been ratified by the Queensland Government, 70 per cent, of the total amount of money that has been spent on the campaign against tuberculosis in Queensland has been found by the Australian Government. Capital improvements during that period have been effected entirely at the cost of this Government. A notable instance of such improvement is the Chemside Hospital, which is being established quite close to Brisbane and which, I understand, is estimated to cost more than £1,000,000.
Mr BERNARD CORSER: WIDE BAY, QUEENSLAND
– I preface a question to the Minister for Health by stating that I am informed that hearing aids in Australia cost approximately £50 each. This exorbitant price is claimed to be due to the existence of patent rights, the real value of the equipment being about £5. As the present price of hearing aids makes it impossible for pensioners to obtain them, will the Minister undertake to have investigations made overseas with a viewto securing hearing aids at a reasonable price? If that is not possible, perhaps his department might be able to secure the Australian manufacturing rights and have such equipment manufactured here, as was done in the case of artificial limbs for disabled ex-servicemen, and thus enable needy individuals to receive hearing aids at a just price.
Sir EARLE PAGE: CP
– This Government makes special provision in every capital city for the examination of young deafened school children and the supply of hearing aids to them where necessary. It is found that the aids are of most use when people are young. With old men and women they are not nearly so effective because of the extraordinary noises that sometimes occur when they are used. I shall examine the question of the cost of such equipment and let the honorable member know the results of my inquiries.
DAIRYRE SEARCH LABORATORY, HIGHETT, VICTORIA
Report of Public Works Committee
Sir PHILIP McBRIDE: Minister for Defence · WakefieldMinister for Defence · LP
– I move -
That, in accordance with the provisions of the Commonwealth Public Works Committee Act 1913-1951, it is expedient to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to this House the results of its investigation, namely: - The proposed erection of a dairy research Laboratory at Highett, Victoria.
The work proposed is designed to provide laboratory facilities and administrative, library accommodation, and so on, for officers of the Commonwealth Scientific and Industrial Research Organization required to carry out research into problems connected with the dairy products industry, which the dairy research section of the organization is being continually asked to investigate. The present laboratory premises used by the section are urgently required by the Division of Industrial Chemistry for that division’s research into minerals utilization. The committee has reported that as the production of dairy commodities must be rapidly increased, there is an urgent necessity to extend the work of the dairy research section, and that the laboratory should, therefore, be commenced as soon as possible.
The proposed method of construction is brick walls, reinforced concrete floors and corrugated asbestos cement roofing. The estimated cost of the project is £152,100.
The committee’s recommendation that reconsideration should be given to the desirability of providing internal access from the lower ground floor to the ground floor will receive attention in the preparation of the working drawings.
Question resolved in the affirmative.
COMMONWEALTH BANK BILL 1953
Declaration or Urgency.
Mr ERIC J HARRISON: Vice-President of the Executive Council and Minister for Defence Production · WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– I declare that the Commonwealth Bank Bill 1953 is an urgent bill.
Question put -
That the bill be considered an urgent bill.
The House divided. (Mr. Speaker - Hon. Archie Cameron.)
Question so resolved in the affirmative.
Motion (by Mr. Eric J. Harrison) proposed -
That the time allotted in connexion with the bill be as follows: -
to the end of clause 6, until 4 p.m. this day,
to the end of clause 10, until 5 p.m. this day,
remainder of Committee stage, until 11 p.m. this day;
for the remaining stages, until 11.15 p.m. this day.
Dr EVATT: Leader of the Opposition · Barton
– The House is considering a very important measure and because many honorable members did not have an opportunity to participate in the earlier stages of the debate, the allotment of time proposed by the Vice-President of the Executive Council (Mr. Eric J. Harrison) is quite unsatisfactory to the Opposition.
Honorable members interjecting,
– Order ! The crossfire of interjections must cease.
– After all, the Opposition has a case to put in regard to the bill and we want to complete it. The bill proposes substantially to interfere with the Commonwealth Bank and it contains proposals which are quite contrary to the recommendations of the Royal Commission on Monetary and Banking Systems, and are a negation of the promise by the Government that it would continue the trading activities of the Commonwealth Bank. In these circumstances, I submit that the proposed limitation of the debate should not be accepted by the House. If the “ guillotine “ must be applied to the bill I do not regard as unfair the proposed allocation of time as it relates to the various stages of the bill. My objection to the motion is that the time proposed for consideration of the committee stage of the bill is too limited, particularly in view of the fact that an amendment, which will be moved in committee, has already been circulated.
– Order ! The right honorable gentleman may not anticipate the submission of an amendment during the committee stage.
– I had no intention to discuss it or its merits. I am dealing only with the question whether the Government proposes to allow sufficient time for the proper consideration of the bill. I am entitled to point out that the committee will be called upon to consider, not only the bill as drafted by the Government, but also an amendment which has already been circulated. Whatever decision the committee may make in regard to the amendment it must be discussed. Therefore, on behalf of the Opposition I protest against the proposed limitation of time for the remaining stages of the bill. The Opposition will oppose this motion.
Mr ERIC J HARRISON: Vice-President of the Executive Council and Minister for Defence Production · WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– The Vice-President of the Executive Council, closing the debate.
Opposition members interjecting,,
– Order ! After the
Leader of the Opposition sat down, the Vice-President of the Executive Council (Mr. Eric J. Harrison) was the only member to rise.
– I disagree with that.
– The honorable member for Hunter (Mr. James) did not rise until I had called the Vice-President of the Executive Council.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– The Leader of the Opposition (Dr. Evatt) has claimed that under the proposed limitation of time for the remaining stages of the bill a large number of honorable members will have no opportunity to speak on it.
– Mr. Speaker, I move -
That the Vice-President of the Executive Council (Mr. Eric J. Harrison) be not further heard.
– Order! The honorable gentleman will not be in order in moving his motion at this stage.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– A tentative arrangement was made between the honorable member for Melbourne (Mr. Calwell), as Deputy Leader of the Opposition, and myself and it was based on the. practice that was followed by the Government of which the Leader of the Opposition was a member of allowing cognate bills such as the bill now before the Chair and the Banking Bill to be debated together up to the committee stage. If that arrangement had been adhered to, an opportunity would have been given to twice the number of honorable members to speak on the motion for the second reading than has been the case. However, when the honorable member for Melbourne was absent from Canberra oh Tuesday his leader reversed that tentative arrangement. I leave it to the House to say why the right honorable gentleman took that action.
– Order! The right honorable gentleman is now dealing with a matter that is not before the Chair.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– The Leader of the Opposition said that under the proposed limitation of time a sufficient number of honorable members would not have an opportunity to speak on important clauses’ of the measure. If he wishes to pose as a tactician, he will need to employ other than the bumble-footed methods to which he is now resorting. If he had adhered to the arrangement that his deputy made with me, twice the number of speakers would have been enabled to address themselves to this measure. But, now, the Leader of the Opposition rises and protests that the Government is not providing sufficient time to enable the House to debate the bill fully. I repeat that the right honorable gentleman himself proposed the restrictions about which he now complains; and I have no doubt that he did so in an endeavour to get back on his deputy. I merely wish to say that when an arrangement is made-
Opposition members interjecting,
– Order ! When the House is prepared to listen, I shall allow the Vice-President of the Executive Council to continue.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– I say to the Leader of the Opposition that when he appoints one of his colleagues to make an arrangement-
– Order ! The VicePresident of the Executive Council cannot canvass that matter.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– I shall pass over it, because all honorable members know to what I was about to refer. The Leader of the Opposition has said that if the “ guillotine “ is to be applied he has no fault to find with the allotment of times for discussion of the various clauses. His objection is that the total time to be allowed for the remaining stages is insufficient. He knows that if the arrangement that I had made tentatively with his deputy had been adhered to, the House would have been enabled to debate this bill and the Banking Bill for six full days, but, as I have said, he chose to limit this debate to two days. Now, he is complaining. He cannot have it both ways. The proposed limitation of time will be sufficient to permit 50 honorable members, using their full allotment of time, to speak on this measure in committee. Therefore, the protest made by the right honorable gentleman is so much party political propaganda in order to justify the action which he took to revenge himself upon his deputy.
– I ask for leave to make a statement.
– Is leave granted? government members.- No.
– Hitler is dead and Stalin is dying.
– Order ! There must be no reference to the honorable gentleman’s friends who are outside the chamber.
– May I make a personal explanation ?
– If the honorable member claims that he has been misrepresented, he has the right to make a personal explanation.
– The arrangements which I have made from time to time with the Vice-President of the Executive Council have not been final.
– Order ! In fairness to the honorable gentleman, I point out one matter to him. If he makes a personal explanation in which he refers to matters that I have prevented the VicePresident of the Executive Council from discussing, I shall be obliged to allow the Vice-President of the Executive Council, if he so wishes, to make a statement on them.
– The Vice-President of the Executive Council has put me on a hot spot, and I wish to make a personal explanation about exactly what did happen regarding the matters which the right honorable gentleman has canvassed. With or without your permission, Mr. Speaker, he has canvassed them successfully. I shall state precisely what happened. I saw the right honorable gentleman last week. We met, as is our custom, to discuss the business of the House for the week. He suggested that as the Commonwealth Bank Bill 1945 and the Banking Bill 1945 had been regarded as cognate measures in that year, it might be advisable to take the Commonwealth Bank Bill 1953 and the Banking Bill 1953 as cognate measures and have a full debate on either one or other of the two measures. I said that I would agree to that suggestion tentatively, but that I should have to report the matter to the Leader of the Opposition (Dr. Evatt), who would then consult his colleagues about it.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– I said “ tentatively “.
– Yes. The right honorable gentleman stated the position correctly up to that stage. I reported the matter to my leader, who consulted our other colleagues about it, and the Labour party then decided that the bills should be considered separately. We had a perfect right to do so. It is a right that any Opposition, regardless of the political party that constitutes it, possesses. That I should be pilloried because of something that happened in that fashion, and that it should be used as a basis for an attack on the Leader of the Opposition is quite unfair. Having made that explanation, I conclude by remarking that it is all I wanted to say when I asked for leave to. make a statement. I do not think that the remarks about Stalin and Hitler were quite in order.
Question put -
That the motion (vide page 578) be agreed to.
The House divided. (Mr. Speaker - Hon. Archie Cameron.)
Majority . . . . 15
Question so resolved in the affirmative.
In committee: Consideration resumed from the 4th March (vide page 568).
Clause 1 agreed to.
Clause 2 (Establishment and functions of Commonwealth Bank Board).
Mr JEFF BATE: Macarthur
– This is the vital clause of a bill which deals with one of the three vital issues on which, I believe, this Government was elected - banking. Clause 2 contains the machinery for constituting the General Banking Division of the Commonwealth Bank as a separate legal entity. But this new legal entity, the Commonwealth Trading Bank, is to take its instructions from the Commonwealth Bank Board. I voted for the second reading of this measure because I regarded that as the first vital step in the separation of the functions of the central bank and the trading bank. I believe the Government is correct in taking that first step. 1 believe also that the customers of the bank should be allowed to become accustomed to the separation, so that confidence and trust in the new bank may be fostered. The proposed amendments that I circulated are intended to empower the Government at any time, by administrative or executive action, to appoint a bank board, which could take over the direction of the Commonwealth Trading Bank and would not be responsible to the central bank. By that means there would be a complete separation of the functions of the central bank and the trading bank. ‘Under the amendments the presiding member of the board that I envisage would be responsible to the Treasurer, in the same way as is the Governor of the central bank board today, and, in the event of any dispute, the papers would be tabled in this House, in order to make the matter public in the proper way. My proposal would merely give the Government power to establish a board if it wanted to do so. A possible objection to the proposal is that the Government may not be able to carry out any special job. I hold - and I think other people hold also - that a special task such as providing funds for superphosphate production and housing could be undertaken, because the trading bank would still belong to the Government. As was pointed out during the second-reading debate, I believe that the complete separation of the banks would make nationalization more difficult in the future, and when the people became accustomed to them working smoothly and efficiently, the matter would no longer be a political issue. Furthermore, the present professional status of the employees of both the private banks and the Commonwealth Bank would be maintained. I consider that they have made a particularly fine contribution to the development of Australia. All acknowledged banking authorities adhere to the view that there should be a complete separation. When Labour introduced the Central Reserve Bank Bill in 1930 the Senate appointed a select committee to inquire into and report on its provisions. Paragraph 16 of the report of that committee contains thirteen accepted conditions and functions of a central reserve bank, as laid down by Sir Ernest Harvey of the Bank of England. He stated -
A central bank should not ordinarily compete with the trading banks for general hanking business.
That means there should be a separation of functions in order to allow the central bank to do its work properly. Sir Ernest Harvey also stated -
A central bank should not engage in trade nor have any interest in any commercial, industrial, or other undertaking.
I believe that, whatever happens to-day or later on, eventually there will be a central bank in Australia, completely divorced from trading functions. We are moving towards that end.
The honorable member for Fremantle (Mr. Beazley) quoted last night from a question that was asked by Mr. Chifley, and answered by Sir Ernest Riddle, during the enquiry by the Royal Commission on Monetary and Banking Systems in 1936 and 1937. I understood the honorable member to say that Sir Ernest had said that he thought that the activities of the trading bank could not be interfered with because it was joined to the central bank. I agree with the contention that there is interference with the efficiency of the trading bank and much more interference with the efficiency of the central bank, when they are tied together.
– The honorable member for Fremantle did not say anything of the sort.
Mr JEFF BATE:
– One of the most vital things in Australia to-day is the regulation of credit. I believe that the central bank is getting towards an effective regulation of credit. But if the Commonwealth Bank Board found that it had to do something about special accounts or to take something away from the private trading banks, and at that time its members were worried about a trading bank difficulty, the minute they tried to carry out their job they would suffer from an “inhibition. Because of its split personality, the board could not give a correct decision. In the buying or selling of securities, or the regulation of the note issue, the central bank would find itself in conflict with its own interests in its own trading bank. Eventually, they should be separated completely, because their separate and clear-cut interests will grow away from each other. Reserve banking practice all over the world shows that separation has been manifestly successful. England and America are good examples. As I said before, the amendment that I have circulated seeks to give the Government power to do this at a later date.
The TEMPORARY CHAIRMAN (Mr Bowden: GIPPSLAND, VICTORIA
– Order! The honorable member has not yet moved his proposed amendment.
Mr JEFF BATE:
– I have circulated the amendment but in view of the fact that I have been advised that it will not be agreed to I propose to withdraw it. I believe that I have achieved my purpose, which was to draw attention to the most important need for the eventual separation completely of the functions of the Commonwealth Bank and the Commonwealth Trading Bank. When one is in a fight to achieve something worthwhile, although he may lose the first round, he can then bring the matter up at every opportunity.
– I rise to order! Is the honorable member entitled to speak to a proposed amendment that he has not moved ?
The TEMPORARY CHAIRMAN:
– Order ! The honorable member is entitled to speak for ten minutes on any subject related to this bill.
Mr JEFF BATE:
– I have been speaking to the clause under consideration, and referring to an amendment that I have circulated. I make it clear that I intend to keep up the fight to achieve this eventually. I believe that separation will come, and I shall do everything in my power to bring it about.
Dr EVATT: Leader of the Opposition · Barton
– As the Chair has taken notice of the existence of a proposed amendment that has been circulated but not moved, I suppose that it will not be out of order for me to refer to it. Had the amendment been formally moved, I would have expressed the view that it would be strongly opposed by us. The substance of the amendment that the honorable member circulated but failed to move clearly indicated the intentions of a considerable number of honorable members on the Government side of the chamber. The bill provides that a connexion shall be retained between the trading bank and central bank activities of the Commonwealth Bank, through the Commonwealth Bank Board. That association will not be terminated. However, had the proposal of the honorable member for Macarthur been accepted, there would have been a complete separation of the ‘Commonwealth Trading Bank from the central bank. The whole plan of the Government then would have been revealed more openly. That plan, as we see it, is that the general business activities of the Commonwealth Bank shall be segregated from the central bank notwithstanding the fact that they have been intimately connected with the conduct of that bank for 40 years. The General Banking Division of the Commonwealth Bank is to have a new name. Some people see little significance in that proposal, but I consider it to be of great importance because inevitably it will affect the business of the Commonwealth Trading Bank and will confuse depositors. The honorable member for Macarthur has revealed, perhaps unconsciously, the inescapable consequence of the Government’s proposals which, in his view, do not go far enough.
The honorable gentleman’s comments on the evidence given by Sir Ernest Riddle, the Governor of the Commonwealth Bank, before the Royal Commission on Monetary and Banking Systems, needs drastic correction. The truth is that the report of the commission has not been quoted accurately in this discussion by any honorable member on the Government side of the chamber, including the Treasurer (Sir Arthur Fadden). The Treasurer quoted from paragraph 577 of the report, but he read only the last sentence of that vital paragraph. I shall quote the earlier portions of the paragraph, which are of the utmost importance -
Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should do both. Through its trading bank activities it possesses powers of competing with the trading banks which can be exercised as and when required. Similarly, its saving bank activities add to its ability to regulate the volume of credit and enable it to compete, if necessary, with the State savings banks. We are of opinion that the use of its trading bank activities as an adjunct to central banking policy is in keeping with its central bank functions and is to be approved.
That clearly conveys an express recognition by the commission of the necessity for continuing the trading, or general business, activities of the Commonwealth Bank as an essential and integral part of its functions. It cannot mean anything else. However, lest there be any doubt about the matter, I refer honorable members to paragraph 521 of the report, which states -
The present structure of the Commonwealth Bank, consisting as it does of a central bank with trading bank powers and a savings bank, is, in our opinion, essential to the efficient exercise of its functions as a central bank.
In other words, the commission firmly held the opinion that the present structure of the Commonwealth Bank should not be altered. But that structure is now to be altered. Therefore, I say that this Government has virtually torn up the report of the royal commission. Although its members held varying political views and entertained different theories on the subject of financial and monetary reforms, they were unanimous on that point.
This measure will strike two serious blows at the Commonwealth Bank. First, it will strike a blow at the Commonwealth Bank as the central bank, because the General Banking Division at present carries out some of the functions of a central bank, as the report of the royal commission clearly states. Secondly, it will strike a blow at the general business of the bank. The General Banking Division will be separated from the central bank, though not entirely divorced from it because a link will be retained through the Governor and the Commonwealth Bank Board. The General Banking Division will become the Commonwealth Trading Bank and will cease to be part and parcel of the central bank. The honorable member for Fremantle (Mr. Beazley) has quoted striking statements that were made by Sir Ernest Riddle when he gave evidence before the royal commission. Mr. Chifley asked the following question: -
I)o 1 understand that, if you did have funds available you would not make an advance to a customer of another bank nor allow him to transfer his business to you ?
Sir Ernest Riddle replied ;
There is no definite undertaking that we will not do it, but as a general rule we will not.
Later in his evidence, Sir Ernest Riddle confirmed that statement in answer to questions asked by the chairman of the commission, Mr. Justice Napier, Mr. Abbott, and other members. Therefore, it is true that, while the Commonwealth Bank was managed by a board, its General Banking Division was not permitted to compete with the private banks although the board had no authority from the Parliament to restrict the bank’s activities in that way. The statute of 1945 made active competition a duty of the Commonwealth Bank, hut this measure will render the execution of that duty practically impossible.
The clause that the committee is considering, and allied clauses, provide that the Commonwealth Trading Bank shall be established as an entirely new entity. It will take over certain assets and liabilities, but, for practical purposes, it will have to start afresh and make its way against the competition of the private banks. However, it will be hamstrung from the outset. The Government’s proposals for the crippling of the people’s bank in this way are completely opposed to all the findings of the royal commission on the subject of fair competition. This Government does not want to have fair competition between the Commonwealth Bank in its trading activities and the private banks. It wants to hinder the Commonwealth Bank, just as the Commonwealth Bank Board did formerly. There is no doubt that, when this Government talks of promoting fair competition between a great public utility and private interests, it means that it will do everything possible to prevent the successful management of the people’s asset. That is evident, not only in relation to the Commonwealth Bank, but also in relation to other public utilities. We have seen what the Government has done to Trans-Australia Airlines. That is a successful government utility. I do not criticize the rival private airline, but the clear fact is that the private airline was not able to withstand competition from Trans-Australia Airlines. Therefore, the Government intervened in order to make the conditions of competition more favorable to the private enterprise than to the Government airline. It has departed from the idea of true competition and has established a statutory combine or cartel under which everything associated with the activities of the two major airlines is controlled, Routes and fares are now controlled and there is no competition. In this bill, the attack upon the people’s assets is more indirect and perhaps more sinister than it was in the case of the airlines.
The proposal that has been discussed by the honorable member for Macarthur indicates the true intention of many Go- vernment supporters. The honorable gentleman has been publicly supported outside this chamber by the honorable member for St. George (Mr. Graham), the honorable member for Evans (Mr. Osborne), the honorable member for Mitchell (Mr. Wheeler) and other members of the Government parties. They have failed to come forward to support his proposal, but they have clearly revealed their intention to weaken the Commonwealth Bank again. I repeat that this measure will weaken the bank in two ways. It will weaken the central bank and it will weaken the General Banking Division, or the Commonwealth Trading Bank as it is to be known in future.
The TEMPORARY CHAIRMAN (Mr Bowden:
– Order ! The right honorable gentleman’s time has expired.
– I ask for your ruling Mr. Deputy Chairman. If an honorable member involves the Commonwealth in the expense of printing proposed amendments are the proposed amendments then in the possession of the committee? Must they be moved by the honorable member concerned, and can they be withdrawn only with the permission of the committee? If that be not the position, do you consider that this is a matter that might be considered by the House, in order to prevent public money from being wasted upon the printing of amendments which honorable members indicate that they propose to move, but which they do not proceed with? Could some method be evolved by which an honorable member who involved the Commonwealth in the expense of printing proposed amendments could be compelled to meet that expense himself if he failed to proceed with them?
The TEMPORARY CHAIRMAN:
– I do not think there is much substance in the point raised by the honorable member for East .Sydney (Mr. Ward). I rule that a proposed amendment is not in the possession of the committee until it has been moved.
Mr WENTWORTH: Mackellar
– Whenever I hear the Leader of the Opposition (Dr. Evatt) quote from the report of the Royal Commission on Monetary and Banking Systems, I am reminded of the saying that the Devil cites the scriptures for his own purposes. Paragraph 669 of that report seems to me to be the vital paragraph upon which the remainder of the report depends. It contains the following passage : -
The view of the Commission, as set out in Chapter V., is that the most desirable hanking system in the present circumstances of Australia is one which includes privately-owned trading banks. The system which we contemplate is one in which a strong central bank regulates the volume of credit, and pays some attention to its distribution.
All of the recommendations of the commission were based upon the assumption that the private trading banks would continue in existence, and that there would be no centralized monopoly of credit. But that is not the objective of the Labour party. The objective of the Labour party is to have only one bank. It is easy for the Leader of the Opposition to say, as he has said in this chamber, that nationalization is a dead issue. It is not a. dead issue. It is simply “ playing possum “. The High Court has ruled that this Parliament has no power to nationalize banking by direct legislative action. That is a fact, just as it is a fact that the Labour party tried to do so. When that legislation was before the High Court, Senator Armstrong - I shall be corrected if that is not the right name, but it was a senior Minister of the Chifley Government - speaking at Goulburn said, “ We are ingenious men. There are other ways of doing this besides a simple act if the court should rule the act invalid “. We know that the members of the Opposition are still set on the nationalization of banking. If they cannot achieve it by direct legislative means, they will endeavour to achieve it by indirect administrative means. They have boasted that they will do so. That is in keeping with their character, and it is what they are doing at this moment. The requirement that all banks shall be nationalized has not been removed in any respect from the constitution of their party, to which they are subservient and the mandates of which they are here to carry out. Do not let them hope that they can conceal their real intentions by fair words, by taking a sentence here and a sentence there from the report of the royal commission, and by glossing over the fact that their objective is to destroy the whole of the foundations upon which that report was built.
It is with some regret, a regret that is shared by other honorable members on this side of the chamber, that I say I do not think that this bill will go very far towards preventing the nationalization of banking by administrative action. I, for one, wish it went further. Although I agree that the honorable member for Macarthur (Mr. Jeff Bate) could scarcely have moved his proposed amendment with effect, I join with other honorable members on this side of the chamber in saying that I hope that at some time in the future further action will be taken to erect a bulwark against the administrative designs of the Labour party in relation to the complete nationalization and centralization of banking. I do not say it is possible to give any effective guarantee that the nationalization of banking will not be achieved by administrative action, because nothing in an act of the Parliament can be protected against a future Parliament. The only safeguard against socialism is to keep the Labour party out of office. I think that we should be doing wrong if we were to give the public any impression that this measure will, in any effective manner, protect our banking system from administrative nationalization, which is the basic policy of the Labour party.
The Minister for External Affairs (Mr. Casey) has said that the measure goes a. little way in that direction. It does, but only a very little way. It would be unfair to say that it went no part of the way, but if it aroused in the public mind an illusion that any effective safeguard had been created, it might, to that degree, do harm rather than good. The small protection would not confer a benefit commensurate with the loss occasioned by an illusion- of safety. This measure, good though it is in certain respects - and it will have my support because of those good features - might have provided a greater safeguard against bank nationalization than it actually does. I do not know whether I should go further than that. I have described the measure to myself some times, not as the Commonwealth Bank Bill, but as the Coombs Consolidation Bill. Perhaps that is an unfair criticism in some respects, because the measure will improve the existing situation, but no substantial improvement of the situation is possible by legislativemeans while there is a possibility of the re-election to power in this Parliament of a party that is devoted to the nationalization of the banking system as the first and vital step in its road to complete socialization. I do not want to give any one the impression that I do not think some features of the bill are good, but I want to go on record as having said that I do not think it will confer upon the banking system of Australia much protection against those people who are out to socialize that system by administrative means, having failed to do so by a direct legislative method of attack.
Mr TOM BURKE: Perth
.- The honorable member for Macarthur (Mr. Jeff Bate) foreshadowed an amendment, the effect of which would be completely to separate the proposed Commonwealth Trading Bank from the Commonwealth Bank. The honorable member, having embarked upon a course, is not lightly diverted from it. In the past, having moved or supported a motion, the honorable gentleman has even voted against the Government which he supports. So from his unexpected action in withdrawing his motion this morning we must deduce that some moves have taken place behind the scenes. After having prepared his proposed amendment in reneod form he had it printed by the Government Printer for presentation to the committee only this morning, he stated that he wanted to withdraw his amendment. Then he said that this would not be the last of the proposal and that he would push on with it until it was accepted.
Without being suspicious, there is only one reason we can deduce for the action of the honorable member. I believe that he has been told by the Government that it would be politically unwise to move his amendment at present. This is not a popular measure. It is a measure at which the people of Australia look with apprehension, and it might have a bad effect, from the Government’s point of view, on the elections which are to be held in South Australia and Queensland on Saturday. It might also have a similarly bad effect on the Senate election which is to be conducted shortly. So the honorable member has been told not to force his amendment to a division and that when the electoral storms blow over and there is peace and quiet again consideration will be given to his proposal. I believe that the honorable member has been prevailed upon by promises of further consideration of this matter. No doubt he has the assurance that if the Government is so fortunate, and Australia so unfortunate, that the Government will be returned to office at the next general election his proposal will be given effect. With elections pending in two States and a Senate election in May the Government does not dare to proceed with the proposal of the honorable member for Macarthur. It is certain that private persons dominate the thinking of this Government. This action will serve as a stark warning to the people of Australia that the Government does not believe the statements that it has made about the Commonwealth Bank but supports the move of the honorable member for Macarthur. There will be a real prospect of the honorable member’s proposal being given effect in the tragic circumstance of the Government’s being given a new lease of power.
The honorable member for Mackellar (Mr. Wentworth) said that the bill did not go far enough. In effect, he supported the honorable member for Macarthur as other honorable members opposite supported him. But the honorable member for Mackellar did not want to frighten the electors. He did not want to tell them his real purpose and that of the Government. He said, in effect, “We might frighten the people of Australia into returning a Labour government. So let us hide our fell purpose, disguise our motives, deceive the people and avoid telling them our real objective because they might elect a Labour government again.” There is no doubt that the people will elect a Labour government at the first opportunity. I invite the Government to test the confidence of the people by holding a general election at the time of the Senate elections in May. Opposition members have sought to find out why the Government has introduced this bill at such a time as this. The bill will do no good. It will do some harm and it foreshadows the real intentions of the Government. One of those intentions is to weaken the Commonwealth Bank’s power to compete with trading banks, and the bill will have that immediate effect although it will not do so over a period of ten or twelve years. The Government’s other intention is to try to deceive the electors. It wants the cry of “ socialization “ again to stampede the people.
The TEMPORARY CHAIRMAN (Mr Bowden:
– Order! This is not a second-reading debate. The committee is dealing with clause 2 of the bill.
Mr TOM BURKE:
– I realize that.
The TEMPORARY CHAIRMAN:
– The honorable member has done sufficient electioneering.
Mr TOM BURKE:
– The honorable member for Mackellar spoke on these matters. When the 1945 banking legislation was before the House I pointed out, as a spokesman for the Government, that the legislation originated in the crisis of the ‘thirties. Had that crisis not occurred and had the Australian Government not been defied by banks, private and government, the legislation would never have been placed on the statute-book. Whilst the trading banks accept the direction of the central bank and accord with Government policy there is no fear of their being nationalized. It is when they refuse to accept that direction that the private banks run the danger of the control that governments have had to impose on them and of even greater controls. The matter was dealt with by G. D. H. Cole, the English economist, who said that the trading banks in England would remain private trading banks as long as they liked to act as if they were nationalized and accept the direction of those competent to decide - the Treasurer and the central bank which, in the
United Kingdom, is the Bank of England. The Australian Labour party has developed its policy over the years. Its purpose has been to ensure that Australia’s natural resources are used and that the Australian economy is developed in such a way as to create the least dislocation and bring about the maximum good. The Labour party has never sought to do anything that would not increase the good of the people, but final assurances are needed. The private banks cannot be traded out of business by the use of section 48 of the Constitution as the Minister for External Affairs (Mr. Casey) alleged. They can be nationalized only by an amendment of the Constitution and there will be no intention to nationalize them if they accord with Government policy.
Sir ARTHUR Fadden:
– Who will decide that?
Mr TOM BURKE:
– The Treasurer was never very alert in his handling of bills in this House and he is getting worse. He asks, “ Who will decide whether the banks accord with Government policy ? “ Obviously, the government of the day will decide that. Unfortunately, the present Government has had the power to make such decisions in recent times and it has ruined the Australian economy and aggravated the problems of both private enterprise and Government enterprise. It is from the actions of governments such as this that private enterprise is in danger. Encouragement to export has been given and then cut off. Finance has been expanded and then contracted. The fits and starts of this Government’s policy have been the greatest blow ever delivered to private enterprise.
The TEMPORARY CHAIRMAN:
– Order ! The honorable member’s time has expired.
Mr ANTHONY: PostmasterGeneral and Minister for Civil Aviation · Richmond · CP
– The speech of the honorable member for Perth (Mr. Tom Burke) is notable for its omissions rather than for its content. He said a great deal, but he did not mention the fact that the objective of the Labour party, as confirmed by the la3t triennial conference of the party in Adelaide last January, is the socialization of industry, production, distribution and exchange, and the socialization and exchange, and also of banking. The triennial conference did not alter that objective by one iota, so it still stands as the Labour party’s policy.
– Hear, hear !
– I rather admire the honorable member for East Sydney (Mr. Ward) because he is one of those honorable members opposite who still proclaim the real objective of the Labour party, whilst the Leader of the Opposition (Dr. Evatt) and the honorable member for Fremantle (Mr. Beazley) try to disguise it in words. I admire the honorable member for East Sydney for being at least consistent. The honorable member for Perth has said that the banks arc safe now because of the Australian Government’s lack of constitutional power to nationalize them. He did not say, however, that the triennial conference df tb, Labour party, to which I have referred, carried a resolution to the effect that if Labour gets back into office it will hold h referendum to amend the Constitution -
To provide such powers as are necessary for effective government in the interests of the people.
That would mean, in effect, that all the instruments of propaganda-that are available would be used by the Labour party, if it regained office, to persuade the people to amend the Constitution so as to permit the nationalization of banking. Constitutions can be altered by persuasion. If the Labour party succeeded in having the Constitution amended it would have a charter as wide as the seas to do anything that it liked with the banks or with any industry. In order to camouflage the Labour party’s objective, the honorable member for Fremantle, the schoolmaster of the Labour party– ‘
The TEMPORARY CHAIRMAN (Mr Bowden:
– Order! I remind the Postmaster-General that I prevented the honorable member for Perth from indulging in a second-reading speech at this stage. The statements that the PostmasterGeneral is making have no relation to the clause now being considered by the committee. Certain statements are made in an amendment, to which an answer is allowed to be given, but beyond that I intend to ask the committee to adhere to the subject-matter of the clause, or we shall never get through. I shall therefore rule against any continuation of propaganda or electioneering speeches.
– Very well, Mr. Temporary Chairman, I accept your ruling, but I considered that it was necessary to reply to the statements that the honorable member for Perth had been allowed to make. This clause provides for the separation of the functions of the Commonwealth Bank into two divisions, to be carried on by the central bank andthe Commonwealth Trading Bank. So far as we on this side of the chamber are concerned this is not a matter of protecting the trading banks or of injuring the Commonwealth Bank. It is a matter of providing freedom for fair competition in the industries and enterprises of the nation. It is meant not only to preserve the trading banks, but also to preserve the trading bank activities of the Commonwealth Bank. In the last two or three years the subsidiary divisions of the Commonwealth Bank have shown an improvement of business. Under this Government advances made by the bank’s Rural Credits Department have increased from £14,700,00Q in 1950 to £39,300,000 in 1952. That increase is a clear indication that no restriction has been placed on the Commonwealth Bank to prevent it from doing this most important class of business. It is an adequate answer to people who say that the Government has endeavoured to hamstring the bank.
I am an admirer of the Commonwealth’ Bank. I believe that it has performed a most useful service for Australia, but I believe equally that the trading banks have performed an extraordinarily useful service for the nation, and that the people of this country ought to have a choice in relation to who is to be their financier when they require financial accommodation. It could be a most serious thing if there were only one authority that a. person might approach for loan accommodation and if rejection by that authority of the application meant that the last door had been closed. The very essence of freedom is that there should be a choice.
– All this is a bit wide of the subject-matter of the clause.
– No, it is not. I am talking about the trading bank activities of the Commonwealth Bank. It is essentia] that every person should have an option of going to another bank if the first bank that he has approached for financial accommodation refuses to make it available. The clause provides for the Commonwealth Bank to be divided into two sections, one of which will be the central bank and the other the Commonwealth Trading Bank, both of which will be controlled by the Commonwealth Bank Board. It ought to be clear to everybody that it is not the function of a central bank to engage in day-to-day trading activities with retail stores, manufacturing industries, farmers, and so on. The job of the central bank is to be there as a bulwark of the credit of the country, so that if any bank should get into difficulties through its assets not being liquid enough at any particular time, it would have available to it the resources of the central bank to help it to meet its obligations or overcome its temporary problems. This bill will give effect to this function of the Commonwealth Bank. On the one hand will be the central bank and, on the other, completely separate from it, will be the Commonwealth Trading Bank, which will, operate on equal terms with private trading banks. 1 do not say that it will operate on less advantageous terms. The terms will be competitive terms. If the Commonwealth Trading Bank wants business it will have to go out after it as the trading banks have to do. That, indeed, is the essence of enterprise in this country. When a housewife does not like the meat supplied by one butcher she can go to another butcher, but if there is no other butcher near, because the law prohibits one from operating in the vicinity, then she has to take what the only available butcher cares to sell her.
The TEMPORARY CHAIRMAN.Order ! The Minister’s time has expired.
Mr CREAN: MELBOURNE PORTS, VICTORIA · ALP
-In addressing myself to clause 2 of the bill, I note how we are now departing from the essential unity that formerly characterized the Commonwealth Bank in all its activities. The degree of that departure can be gauged by reference to section 9 of the Common wealth Bank Act, as it appears in the 1945 legislation. That legislation was amended recently by the act which reconstituted the Commonwealth Bank Board, thereby intruding a second body, which was given power to determine policy into the affairs of the bank. The appointment of the Commonwealth Bank Board segregated the functions of the bank, in the ordinary sense, from those of the Commonwealth Savings Bank. The legislation now before the Parliament attempts to go further. The clause with which we are dealing contains the kernel of the change, because it is the one that proposes to set up the new section, the trading bank section of the Commonwealth Bank, and to segregate it from the Commonwealth Bank as a central entity.
To date, nothing has been suggested by the Government to indicate how the functioning of the bank as a trading bank has proved unfair in its competition with the private trading banks. If as the Government claims, it wishes to put the bank on the same footing as the private trading banks, in my opinion the Government should seriously consider the wording of proposed new sub-section (3.) of section 9. I shall read those words in order to indicate that the Commonwealth Bank, in its trading functions, is to be asked to do things that the private trading banks are not asked to do. In that sense, at least, there will be discrimination. The relevant words of the sub-section are as follows : -
The Board shall, in determining the policy of the Trading Bank, determine that policy in such a manner as not to conflict with the policy of the Commonwealth Bank in relation to the Commonwealth Bank acting as. a central bank.
So far, no evidence has been adduced to indicate that, in the past, conflict arose between the trading section of the Commonwealth Bank and the central banking functions of the bank, but if it is envisaged, that conflict may arise, and if this proposed change is to be made in the name of fair competition, why does not the Government go farther and give to the Commonwealth Bank Board overriding powers as far as the private trading banks are concerned if, in the opinion of the board, such banks act in a manner which conflicts with the policy of the
Commonwealth Bank acting as a central bank? To use the simile adopted by the Postmaster-General (Mr. Anthony), if the Commonwealth Bank determines that certain advances shall not be made by its trading bank division on the ground that such advances will conflict with the policy of the central bank, is it right, from the point of view of the community, for persons who are refused advances in those circumstances to be able to go farther along the street to the National Bank of Australia Limited, the English, Scottish and Australian Bank Limited or the Bank of New South Wales, and have implemented a policy which the Commonwealth Bank considers to be in conflict with its policy as a central bank? I suggest that we should be logical about this matter. If there can be danger of conflict in relation to the trading bank functions of the Commonwealth Bank, surely there can also be danger of conflict in respect of the trading functions of the private banks. Yet this legislation makes no attempt to regulate that kind of thing.
The. Government claims that the Commonwealth Bank, as a trading bank, is to be placed on the same footing as every other bank. That is not true. It is hypocrisy to assert that it is so. An honorable member opposite, who is a little more courageous than his colleagues, has gone so far as to circulate amendments to the effect that in his opinion this legislation does not go far enough. Honorable members on this side of the chamber feel that the legislation goes too far. The Government says that the bill will really do nothing but place the private banks and the Commonwealth Bank on an equal footing as far as competition is concerned. The members of the Opposition are suspicious of that claim and suggest that a careful reading of the words of this clause should be made. If that is done, it will be seen that the clause proposes to regulate the actions of the Commonwealth Bank in its trading division. No evidence has been adduced to indicate that, in the past, the Commonwealth Bank has suffered because it has not previously had this split personality. The Government proposes that henceforth the two sections of the bank shall think in separate terms instead of as an entity. After all, in the past the Common- wealth Bank Board did not have to say, when implementing the general policy of the bank, “Is this a central bank function, a trading bank function or a Rural Credits Department function “ ?
The more the Government attempts to make this kind of dichotomy and to intrude the powers of the board between the various functions of the bank, the more difficult will it become to secure the essential co-ordination that is necessary in a country such as Australia. If the great words of the Commonwealth Bank Act to be implemented, banking must function in the interests of the people as a whole, not only in the interests of a few individuals.
I challenge the Government’ to show that it is being consistent, at least in connexion with this proposed new subsection (3.) It is evident that the Government proposes to be most inconsistent in that it will apply a sanction to the Commonwealth Bank, as a trading bank, which does not apply to the private trading banks. It is, therefore, hypocrisy to suggest that the separation is to be made in the interests of fair competition. I suggest that the Government should seriously consider redrafting or deleting this sub-section, because it has never been demonstrated that there has been conflict between the two sections of the bank. If it is feared that conflict may occur in the future, surely such conflict will not be restricted merely to the trading section of the bank but could also apply to the private trading banks. Perhaps another section should be added to the bill with the object of regulating the functions of the private trading banks, so that if,, in the opinion of the Commonwealth Bank Board, the policy being pursued by those banks conflicts with the policy of the Commonwealth Bank as a central bank, the statute will also be obligatory as far as they are concerned. Consistency at least would be achieved if the same set of conditions applied to the two sets of bankers.
The TEMPORARY CHAIRMAN (Mr Bowden:
– Order! The honorable member’s time has expired.
Mr WILSON: Sturt
.- I support the bill and the clause now before the committee because I am opposed to the Labour party’s policy of the nationalization of banking. The bill, and this clause, will make it more difficult for a future government to nationalize banking by indirect means. I have always believed that the people should be free to choose where they will transact their banking business. There should be fair and free competition between the trading activities of the Commonwealth Bank and the private trading banks. I believe in private enterprise, and I believe that this country will progress just as long as private enterprise is allowed to remain active. I remind honorable members that 75 per cent, of the people who are employed in Australia are employed by private enterprise. The whole of the taxation paid in this country is paid by private enterprise, and it is out of that revenue that our great social services are maintained. Therefore, it is obvious that we should do everything possible to prevent people who have designs on the system of private enterprise from carrying out their socialistic and nationalistic schemes.
The TEMPORARY CHAIRMAN.Order ! I have already given a ruling that in this debate honorable members must adhere strictly to the clause before the committee. The clause now before the committee deals with the powers of the Commonwealth Bank Board in relation to the Commonwealth Trading Bank.
– The clause provides for the separation of the trading functions of the Commonwealth Bank from the functions of the central bank. The Government, by separating the trading activities from the other functions of the Commonwealth Bank and placing them under a separate authority, will make it more difficult for a future government to introduce a policy of nationalization by indirect means. Therefore, the object of this clause is to ensure free competition, and to protect private enterprise from nationalization and socialization. I personally wanted to see even greater safeguards provided than are incorporated in this measure, but I do perceive that this bill will go a long way towards protecting private enterprise from those who are determined to socialize the industry and commerce of this country.
During the last 30 years there has been a great development in the credit structure of almost every country of the world. Central banking is of fairly modern vintage, and it has developed, as have most of our -great reforms, stage by stage. I believe that the central or reserve bank should be a banker’s bank, designed for the sole purpose of regulating the flow of currency and directing that currency into proper channels. The first objective of a central bank should be to gain the complete confidence and trust of the people and its customers. The customers of the central bank are the trading banks, and will include the proposed Commonwealth Trading Bank, the State trading banks and the private trading banks. I do not believe that there will be complete confidence between the central bank and the trading banks unless the Commonwealth Trading Bank is separately incorporated - and that is provided for in this measure - and unless the Commonwealth Trading Bank is controlled by a separate authority. However, I consider that we shall have to provide that the Commonwealth Trading Bank will have its own board of directors which will be entirely separate and distinct from the board of directors of the central bank. From the time that situation is brought about we shall get complete confidence and trust, and the whole system of federal and private banking will work as an integrated whole.
This bill will provide many safeguards against future nationalization. It will prevent the Commonwealth Trading Bank from wiping out its competitors by entirely unfair means. I believe that the ideal banking system for Australia is one in which the Commonwealth and the State trading banks and the private trading banks will all carry on business under fair and just competition, all controlled by separate boards of directors and all separately incorporated. Under such a system the people would have a choice of going to the Commonwealth Trading Bank, a State trading bank or a private bank. We would preserve the system of private enterprise and free competition and preserve also a very important right to the individual - the right to choose his own bank. That is the privilege that the Labour party tried to take away from the people, and it will, quite obviously, again attempt te take it from the people if it ever again achieves power in this country. Even if we cannot prevent a socialist-minded government from nationalizing the banks, we can make it as difficult as possible. This measure deserves the support of every honorable member on this side of the House, because it makes it very difficult for a socialist-minded Treasurer to bring about the complete socialization or nationalization of the banks. In the future a Labour Treasurer will not be able to use the Commonwealth Trading Bank as an instrument to destroy the private banks in the way that he could have used it under the present act. It is one thing to attempt to introduce measures through democratic parliamentary legislation, but it is quite another thing to carry out a socialist policy without legislation at all. We must endeavour to prevent a future government from carrying out its socialist policy, not according to the will of the people or by the democratic means of parliamentary legislation, but by the dictatorial means of a socialist-minded Treasurer exercising power under a certain act to destroy any competitors with the government organization.
The TEMPORARY CHAIRMAN:
– Order ! The honorable member’s time has expired.
Mr JOSHUA: Ballarat
.- I desire to devote the time that I have at my disposal to an examination of proposed new sub-section 3 of section 9, which was clearly and correctly designated by the honorable member for Melbourne Ports (Mr. Crean) to be the kernel of the bill. Undoubtedly, it is. The objectives of the Commonwealth Bank are now entirely consistent with those objectives that were laid down by the Royal Commission on Monetary and Banking Systems as the proper functions of a central bank. They were quoted by the honorable member for Sturt (Mr. Wilson) and also by the honorable member for Mackellar (Mr. Wentworth). The royal commission stated, in fact, that in its opinion, a central bank was one that controlled the volume of credit and paid some attention to its distribution. Later it stated that it considered that a trad ing bank should be an integral part of tie central bank. Obviously a trading bank is a positive instrument for carrying out the policy of the central bank. If the central bank has to pay some attention to the distribution of the volume of credit, it must have a method of doing so. Honorable members should get down to earth a.nd be practical. If the central bank, which carries out the policy of the Government, desires to encourage industry or a certain section of the community, it should do so. That could be done by exhorting the trading banks to do all that was best in the interests of the community. It is easy to conceive that certain types of business might not be attractive to the trading banks. What could the central bank do in such a case to implement the Government’s policy? It must swing into action and state that if the proposition is unattractive to the trading banks, the Government’s bank will make the advance on such terms as the Government wishes. The general division of the Commonwealth Bank is the positive instrument for carrying out the wishes of the Government.
– It would be compelled to undertake unattractive business?
– If the trading banks did not wish to take the business because it was unattractive to them, the people’s bank should make the required assistance available. By their own free choice, the people will accept the opportunity that is thus open to them through the people’s bank. I direct the attention of the committee particularly to proposed subsection (3.) of section 9 of the bill and I shall read it again. It is so important that we should keep it in mind continually. It states -
The Board shall, in determining the policy of the Trading Bank, determine that policy in such a manner as not to conflict with the policy of the Commonwealth Bank in relation to the Commonwealth Bank acting as a central bank.
Can anybody imagine the trading bank section having any other policy than the policy of the central bank? That could not possibly happen. The Governor of the Commonwealth Bank is responsible for co-ordinating the policy of the bank. If the manager of the Commonwealth Trading Bank told the Governor that he was following a different policy, he would be directed to put it into line with the policy of the Commonwealth Bank. The policy of the Commonwealth Trading Bank and the Commonwealth Bank as the central bank are completely inseparable. The implication in the section to which I have referred that there might be some difference of policy is absurd. This measure is one of the poorest pieces of legislation that has ever been submitted to the Australian Parliament. That is the - reason why it has caused confusion and a split in the ranks of honorable members on the Government side. The honorable member for Petrie (Mr. Hulme) has said that the trading bank should be separate and have its own method of government.
Sitting suspended from 12.45 to 2.15 p.m.
– There cannot be any conflict of policy between the Commonwealth Trading Bank and the Commonwealth Bank because, in view of the findings of the Royal Commission on Monetary and Banking Systems, the conception of the Commonwealth Bank to which we and, I believe, every other honorable member subscribe, envisages the control by the bank of the volume of credit issued and some supervision of its distribution. The bank must use its trading bank activities as an instrument for distributing credit. The objects and policies of the Commonwealth Trading Bank must be in line with those of the Commonwealth Bank itself. It is because of this implied conflict that confusion exists in the minds of Government supporters about this bill. Almost every one of them has repeatedly expressed a desire that additional provisions be inserted in the measure. The honorable member for Macarthur (Mr. Jeff Bate) circulated a proposed amendment the design of which was to separate the trading activities of the bank from its other activities and to give the Commonwealth Trading Bank a different charter and different objectives from those of the Commonwealth Bank. Upon reflection the honorable member somewhat hastily decided not to submit the amendment. The honorable member for Petrie (Mr. Hulme), in his second-reading speech, also referred to the need for the complete separation of the trading activities from the other activities of the bank. He said that he could not see how both could exist side by side. The honorable member for Sturt (Mr. “Wilson) contended that the Commonwealth Trading Bank should have its own board of directors. Obviously Government supporters realize that the legislation is bad and that it will not succeed. Of course it is bad. Indeed, it is the poorest piece of legislation that has ever been brought before the Parliament. The conception of a trading bank division of the Commonwealth Bank that is pretty clearly in the minds of Government supporters is a division devoted to profit making rather than the great objectives of a people’s bank. They cannot conceive of any other objective. Our conception of the Commonwealth Bank is an institution that controls the volume and distribution of credit. It can best do that by ascertaining the volume of credit which the people require. If they require advances in certain parts of the country for certain purposes and at certain rates of interest, it is the duty of the bank to see that they get it as far as it is within the power of the Commonwealth Bank Board to provide it. The bank must be a positive instrument for carrying out Government policy. There are many negative instruments for the maintenance of our economy on a sound level, such as advances and capital issues controls; but we must also have positive instruments for giving effect to Government policy. How can we prevent the establishment of a milk bar economy unless we have positive instruments to enable us to do so? The trading activities of the Commonwealth Bank provide the necessary positive instrument for that purpose.
The TEMPORARY CHAIRMAN:
– Order ! The honorable member’s time has expired. Is it the will of the committee that clauses 2 to 6 be considered together ?
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– I thought that you, Mr. Temporary Chairman, would have invited the committee to consider clauses 1 to 6 together.
– The only reason why that procedure was not followed was because of the foreshadowed amendment that had been circulated in the name of the honorable member for Macarthur (Mr. Jeff Bate), which related only to clause 2. I am sure that it will meet with the convenience of the committee if clauses 2 to 6 are considered together.
Clauses 2 to 6 - by leave - considered together.
Mr BIRD: Batman
.- I oppose the provisions of clauses 2 to 6 for a variety of reasons. I oppose clause 2 primarily because its intention is to split the Commonwealth Bank into two parts. Such a move can be characterized only as an attempt to weaken the structure of the bank. I was very interested to hear the remarks made by the honorable member for Macarthur (Mr. Jeff Bate) in support of the circulated amendment which he failed to move. The only sin of which the honorable member was considered guilty by the Government was that of rashness in foreshadowing an amendment at a time when the discussion of the measure had been restricted by the guillotine. This is not the first occasion on which the Government will be able to get its own way after two bites of the cherry. It is the intention of the Government to rush this bill through and, if it gets away with it, to give effect to its true purposes by the introduction of a later measure. We had an example of that practice in connexion with the abolition of the land tax. The Government did not abolish the land tax in one fell swoop. First, it proposed to increase the statutory exemption from the tax from £5,000 to £S,750. During the discussion that ensued, supporter after supporter of the Government urged that the tax be completely abolished, but no move was made by the Government to do so until later when legislation was introduced into the Parliament to that end. The Government is following a similar practice in relation to the legislation now before us. It is merely angling for the support of the people at the forthcoming Senate election and if, by some miracle, it obtains that support, it will undoubtedly introduce amendments to the legislation which will incorporate the amendment foreshadowed by the honorable member for Macarthur which by then will have become the accepted policy of the Government. The bill as it is drafted is merely an indication of things to come. The Government is now only taking its first bite of the cherry. If its candidates should miraculously obtain a majority of the votes at the forthcoming Senate election it will take a second bite by introducing an amending bill which will embody the amendment foreshadowed by the honorable member for Macarthur. Many courageous Government supporters have openly stated that, in essence, they support the contentions advanced by the honorable member for Macarthur, but they have been persuaded to hold their hand by the wise old heads sitting behind the Government who realize that at this juncture such a move would be politically unwise. Consequently they are prepared to agree to clause 2 as it is printed.
The provisions of clause 2 ‘will serve no useful purpose as far as the Commonwealth Bank is concerned. Government supporters have stated that these provisions will prevent the Commonwealth Bank from competing unfairly with the private banks. Since the measure was introduced, I have waited anxiously to hear those honorable members cite one concrete instance in which such unfair competition has occurred. Having regard to their spontaneous desire to abolish the present set-up, I should have thought that they would be able to support their arguments by digging up at least one instance in which the Commonwealth Bank, because it is also the central bank, has acted to the detriment of the private trading banks. So far, they have failed to do so. In view of that fact, one cannot believe that the bill has been introduced for the purpose for which Government supporters have indicated. On the contrary, this measure represents, in fact, the first nail in the coffin of the trading bank facilities of the Commonwealth Bank; and I have not the slightest doubt that if the Government parties obtain a majority at the forthcoming election for the Senate they will waste no time in driving more nails into the coffin. The honorable member for Sturt (Mr. Wilson) claimed that these provisions would make it more difficult for a future Labour government to nationalize the banking industry. At present, if the people desire that the industry should be nationalized they can approve, at a referendum, a proposal to alter the Constitution to enable the government of the day to take such action. The Australian Labour party, as a democratic party, will always abide by the decisions of the people. But this measure cannot in any way be regarded as being a means of preventing the nationalization of the banking industry by a future government. It has been introduced deliberately for the purpose of commencing the destruction of the Commonwealth Bank as a trading bank. The Government hopes by a gradual process to destroy the strength and prestige of the bank as a trading bank until, ultimately, it can be said that the bank is not serving any useful purpose and, consequently, should be abolished. That is the long-range plan of the Government in introducing this measure.
The Australian Labour party contends that the Commonwealth Bank was established primarily in. order to ensure that effect shall be given to economic policy in the interests of the community as a whole, and, as it is at present constituted, the bank possesses the requisite power to enable it to fulfil that task. The separation of the trading bank functions from the central bank will render the central bank impotent. The latter will be unable to implement central bank policy effectively if it is deprived of its trading bank activities which now provide it with a means of implementing such policy directly. We know that in the past the private banks have, in concert, adopted common practices and policies with respect to the making of advances and the release of credit through overdrafts. It could quite easily happen that at some time in the future, the common policy of the private banks could be diametrically opposed to that of the central bank. In such circumstances, the latter would be unable to give effect to its own policy if it were prohibited from engaging in trading bank activities. There can b?. no doubt that the Commonwealth Bank has proved to be fully effective under the present set-up. This measure can do nothing but impair its effectiveness in that respect. In any event, I regard with suspicion any comment that members of the Liberal party make with respect to the Commonwealth Bank. Down through the years, they have’ damned it with faint praise. They have accepted the fact of its existence because they realize that the people of Australia support it wholeheartedly. Government supporters in, their heart of hearts detest the institution, and are prepared to resort to any method to destroy it short of perpetrating an act of cold-blooded assassination. The committee should reject the clauses now before the Chair and thus enable the bank to continue to operate in the public interest. It is a monument to public enterprise and is doing a first-class job for the community.
The TEMPORARY CHAIRMAN:
– Order ! The honorable member’s time has expired.
Mr WHEELER: Mitchell
.- I shall address myself to proposed new section 21 which is covered by clause 6. It deals with the profits of the proposed Commonwealth Trading Bank. I regret that I shall disappoint the honorable member for Batman (Mr. Bird), who complained that no Government supporter had produced one instance of unfair competition on the part of the Commonwealth Bank with the private trading banks. Clause 6 makes provision for the distribution of the net profits of the trading bank. Normally, the net profits of any commercial venture are generally referred to “net profits after taxation”, and such profits are arrived at after all claims on its income have been met. Apart from costs of materials and wages, the usual manufacturing and trading costs and administrative charges, the heaviest charge against the income of an ordinary business concern is taxation. It is significant that this clause in dealing with the net profits of the trading bank does not refer to such profits as “net profits after taxation”. Therefore, the Commonwealth Trading Bank is still to be left completely free of tax, particularly company tax. I shall at once anticipate the argument which honorable members opposite, no doubt, will be quick to advance to the effect that a tax upon the trading bank would be a tax upon the Government itself because any profit earned by the bank would be paid to the Government as provided for under the clause. Whilst that may be so, private trading banks, nevertheless, are obliged to pay heavy company taxation. Therefore, if the Commonwealth Trading Bank is to he exempt from company tax, it is idle for any honorable member to say that in such circumstances there can be fair competition between it and the private trading banks. Any concern that enjoys taxfree privileges must have a tremendous advantage over competitors which are obliged to pay tax.
Neither this Government nor any previous administration objected to the levying of tax in respect of the Government’s majority shareholding in Amalgamated Wireless (Australasia) Limited, or its shareholding in Commonwealth Engineering Company Limited. It is also interesting to note that Trans-Australia Airlines, which is completely owned by the Government, is obliged to pay taxation as is its main competitor, Australian National Airways Proprietary Limited. I accept the fact that under recent legislation Trans-Australia Airlines was obliged to pay tax as a means of placing that organization on equal trading terms with private airline companies. I believe that the same principle should have been applied under this measure to the trading bank activities of the Commonwealth Bank, and insofar as the bill fails to do that, it gives an unfair advantage to the Commonwealth Bank over its competitors. I should have thought that if the Government followed the right course in obliging Trans-Australia Airlines to pay tax, it should, in order to be consistent, make provision under this measure to tax the trading hank activities of the Commonwealth Bank and so place the bank cn the same basis as the private trading banks. Last night, the honorable member for Grayndler (Mr. Daly), in his usual tedious and inconsistent manner, pointed to the profits of the private trading banks. I trust that his socialistic outlook will permit him to be sufficiently logical to recognize that before those profits were arrived at the income of the private trading banks was subject to taxation, that is, even before the shareholders received any return on their investments in those institutions. For example, last year, the Bank of New South Wales, to which the honorable member fondly referred, paid in tax the sum of £1,750,000 which was two and a half times greater than the amount that was distributed to shareholders of that bank. The National Bank of Australasia paid £900,000 in taxes, or approximately double the amount of £470,000 distributed as dividends to the shareholders. If we proceed along this course, we find that the dividends received by shareholders are also taxable, and that the private banks and their shareholders, so far from being the villains in the piece working against the democracy, as socialist members opposite contend, contribute in no small degree to the welfare of the community. If honorable gentlemen opposite, in conformity with their true socialist feelings, believe in the welfare state, I ask them, how they anticipate that they will be able to introduce their socialist order when there is no taxpayer. Surely they do not believe that Australia is another Utopia, where everybody gets something for nothing, and nobody makes any contribution by way of taxes or other means towards the benefits.
This Government might well ponder how it expects . private enterprise to flourish in competition with governmentsponsored enterprises which, from the outset, have such a favorable advantage because they are not obliged to pay taxes. It remains to be seen whether it is possible to devise any conditions under which privately owned concerns can compete with government-owned institutions. Competition can be fair only when the government of the day is determined to see fair play; but fair play can never happen under a socialist administration. The socialist enterprises usually find the path of free competition too tough for them, so they are forced to use their own powers, associations and contacts with the Government to hamper private competitors, and, in time, put them out of business. In that direction, the Commonwealth Bank has certainly had a most favorable start on its private competitors.
Then again, the Commonwealth Bank is not obliged to pay income tax or rates. It is true that it is the custom of the bank to make a voluntary contribution to local government authorities, but I point out that there is a marked difference between a contribution on a voluntary basis, which may be suspended at the will of the contributor, and a definite obligation to pay rates. Such an obligation should be placed upon the Commonwealth Bank. It is idle to talk of free competition when those circumstances exist. I consider that the same policy should be applied in this matter to the Commonwealth Bank as was applied to TransAustralia Airlines under the Air Navigation (Charges) Act 1952. TransAustralia Airlines is obliged to pay not only income tax but also sales tax on its trading, in common with its private competitors.
– We are not at a football match now. I am endeavouring to state my case as clearly and fairly as I can. The Commonwealth Bank, in the computation of its net profit, does not pay taxes. I have cited the example of the Bank of New South Wales, which paid taxation amounting to £1,750,000 last year, and the National Bank of Australasia, which paid in tax double the amount that it distributed to its shareholders as dividends. In my view, this state of affairs does not approach the essence of free competition. A system of healthy competition would ensure that every bank would have its chance, on its merits, to get whatever share of business was available from the public. I believe that only the true spirit of competition can give the public their requirements, which are service and efficiency. My conception of free competition does not embrace a system whereby one concern arrives at a net profit by the easy route of not paying taxes, whilst its competitor is obliged to reach the same goal by the hard way of paying taxes.
Mr CLAREY: Bendigo
.- The speech of the honorable member for
Mitchell (Mr. Wheeler) amazed me. I thought that he would endeavour to place a correct construction on Part IV. of the principal act, and would state the real intention of the legislation. However, he has chosen to tell his own story that places the whole position in an improper light. Under this amending legislation, the amount of taxation which is being paid by the Commonwealth Bank to the Government exceeds the taxes that are being paid by the trading banks. In actual fact, a greater burden is placed upon the Commonwealth Bank by this legislation than is placed upon the private trading banks with which it is engaged in competition. The Commonwealth Bank and the private banks meet their tax obligations from their profits. The tax liabilities of the private banks are between 7s. and 9s. in the £1 on the profits made from their trading activities. Under this amending legislation, the Commonwealth Bank will be shackled and hamstrung in that it will be compelled to pay from its profits an impost at the rate of 10s. in the £1.
We have heard a great deal in the course of this debate about fair trading and the necessity to ensure the maintenance of fair competition. We have to bear in mind that this legislation will impose considerable hardship upon an institution that is to become a small bank compared with the long established and soundly entrenched private trading banks. The latest report of the Commonwealth Bank of Australia issued on the 30th June, 1952 indicates that the capital of the bank is. £4,000,000 and its reserve fund £2,405,000. In other words, its funds for trading purposes amount to £6,400,000. Yet that bank has to compete with a number of trading banks, the combined shareholders’ funds of which for the purpose of trading and competing with the Commonwealth Bank are £70,000,000. However, honorable members opposite speak of the necessity for legislation to enable a group of financial institutions with capital amounting to £70,000,000 for trading purposes to compete fairly with the Commonwealth Trading Bank with a capital of £6,400,000. In addition, a regular impost on profits of 10s. in the .£1 is to be paid to the national debt sinking fund. In those circumstances, the statement of the honorable member for Mitchell that the private trading banks will suffer unfair competition from the Commonwealth Trading Bank is a clear indication that he either does not understand the bill, or is deliberately placing upon it a construction that is not true and correct.
Much has been said in this debate about the functions of the Commonwealth Trading Bank. I think the honorable member for Petrie (Mr. Hulme) expressed admiration of the provisions of the bill in relation to that matter. Proposed new section 18 (1.) reads as follow : -
It shall be the duty of the trading bank to develop and expand its business.
The honorable member claimed that as a consequence of such a provision, the Government was doing something in respect of the Commonwealth Bank that no previous administration had attempted, and that that was an indication of the Government’s intentions towards the bank. The inclusion of those words will destroy the whole purpose of the Commonwealth Bank. Its only duty will be to extend its business; but, in section 8 of the principal act, the functions of the bank are described in this way -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this act and the Banking Act 1945, in such a manner as, in the opinion of the bank, will best contribute to -
the stability of the currency of Australia ;
the maintenance of full employment in Australia; and
the economic prosperity and welfare of the people of Australia.
This legislation will separate the trading bank entirely from the Commonwealth Bank of Australia, and the Commonwealth Bank, instead of having the very important function of assisting in the development of Australia, ensuring full employment, and carrying out the other obligations to which I have referred, will be charged only with developing and expanding its business. That apparently is a matter on which honorable members opposite take great credit to themselves. All I have to say that if the bank does not develop and expand its business a little more rapidly than it has done during the last three years, its future will be very . bleak indeed, because practically no expansion has taken place under the regime of this Government.
The number of branches established in the last three years has been negligible.
Mr ERIC J HARRISON: WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– The Government has nothing to do with that. That is a matter of bank policy.
– Section 9 of the principal act empowers the Treasurer to do this and that, and to override the board if he so wishes. Surely, if the Treasurer has power to veto policy decisions of the Commonwealth Bank Board, and to give instructions to the Governor about the policy of the bank, honorable members opposite can gain little by telling us that the Government cannot insist, through its Treasurer, that a certain policy shall be given effect. We have heard a lot in the last couple of days about the necessity for fair competition between the General Banking Division of the Commonwealth Bank and the private trading banks, but up to the present nobody has shown that, as a consequence of the existence of the Commonwealth Bank in its present form, and particularly the association between its trading bank and central bank activities, difficulties have been put in the way of the private banks. There is no evidence that the profits of the private banks have diminished, that their business has contracted, or that their activities have been prejudiced in any way. Indeed, all the investigations that one is able to make indicate that the private banks are flourishing, their assets growing, and their business expanding. Yet we are told that we must pass this legislation in the interests of fair competition ! In what way has competition been unfair in the past? In what way have the private banks suffered as a consequence of the activity of the Commonwealth Bank? Until the Government can answer those questions it cannot justify this legislation. Everybody is eager to see the Commonwealth Bank progress. It has progressed in the past in spite of very fierce competition from the trading banks.
The TEMPORARY CHAIRMAN:
– Order ! The honorable member’s time has expired.
Mr WARD: East Sydney
.- As this debate proceeds, it becomes more and more evident that Government supporters are concerned not with whether the new system will be of benefit to the community generally, but with whether the private bankers are being treated fairly. At least that confirms an opinion that has been held and expressed by Labour members for many years. We have always believed that the anti-Labour parties represent private financial institutions in this Parliament and merely mouth phrases designed to capture votes when they speak of the welfare of the community. Throughout this debate, not one honorable member opposite has been able to show that the public will benefit as the result of the change proposed by the Government. In fact, the honorable member for Sturt (Mr. Wilson) made a remarkable statement. He said that the Government’s purpose, and of course his purpose^ was to make things more difficult for a future socialist government. In effect, he intends, by the use of powers that the Government possesses, to make it more difficult in future for the will of the people to be given effect to in this Parliament. I thought that the Government parties believed in democracy. If this is a democracy and the people decide at the ballot-box that they want to be governed by a progressive Labour party, to which some honorable members opposite refer as the “ socialist party “, no member of the Government side has any right to put obstacles in the way of the will of the people being given effect to. Therefore, the argument advanced by the honorable member for Sturt was very peculiar indeed.
Mention has been made of the need to permit people to choose their own banker, but of what real value is that choice when all the private banks are working to a common policy? My criticism of the Commonwealth Bank is that in the past, it has not taken advantage of its position to give more favorable treatment to various sections of the community. I am more interested in the benefit that the people generally could get from a progressive banking policy than with how this measure will effect the dividends of the private banks. There is no necessity for the Commonwealth Bank to earn profit? because all profits merely go back to Commonwealth revenue or build up the bank’s reserves. There are no private shareholders in the Commonwealth Bank, and therefore that insti tution does not have to worry about paying dividends as the private banks do. 1 am sure that most Australians would be interested to hear Government supporters say whether they believe that the facilities of the Commonwealth Bank should be used, for instance, to finance the construction of homes at a rate of interest sufficient only to cover the cost of issuance and administration, and certainly not exceeding 1 per cent, or 1& per cent. The Commonwealth Bank could do that, but it is not permitted to do it.
I am not very much concerned about whether there is to be one bank board or two hank boards. The present Commonwealth Bank Board is dominated by individuals who seek to favour and protect the interests of the private financial organizations. Therefore, whether we have one hostile board or two hostile boards, is not important. The real issue is whether there should be a board at all to restrict the activities of the bank. Members of the Australian Country party are supposed to be concerned with the welfare of people who live in country districts and of rural industries generally ; yet, in discussions such as this, their only concern seems to be that there shall be what they refer to as fair competition between the Commonwealth Bank and the private banks. What do they mean by fair competition? To-day the Commonwealth Bank would be able, if it were permitted, to make available cheap money, not only to home builders and home purchasers, but also to people in rural communities who want to expand their activities in order to increase production. The Government would regard an attempt by the Commonwealth Bank to discharge its services to the community at a rate of interest lower than that charged by the private bankers as unfair competition. The Government proposes not to have fair competition. It proposes to have no competition at all. It wants to sabotage the Commonwealth Bank. If the Commonwealth Bank were permitted to develop in the way that was envisaged by the Labour Government that established it many years ago, country people, home purchasers, and home builders, who require financial accommodation to-day, could get it at a greatly reduced rate of interest. But the Commonwealth Bank has never been allowed to undertake that kind of business because, it was argued, that would be unfair competition with the private banks. Prior to the abolition of the Commonwealth Bank Board by the previous Labour Government in 1945, the board refused to permit the Commonwealth Bank to take any new business from the private banks, and the board did everything possible to sabotage the bank. The attitude of honorable members opposite towards the Commonwealth Bank is not’ different from that of their predecessors many years ago, who opposed the establishment of the Commonwealth Bank. Supporters of the Government cannot claim- that the Commonwealth Bank has been a failure, or that it is an inefficient organization. Therefore they cannot advance any substantial reason why it should be completely destroyed. They have no acceptable reason to place before the Australian people why that course ought to be pursued. The position was similar in relation to Trans-Australia Airlines, which is a successful government undertaking, however one cares to examine it. The Government has adopted a different method of attack in this instance. It proposes to sabotage the Commonwealth Bank. Honorable members opposite believe that if they can eventually get the Commonwealth Bank into such a position that it can be represented to the public as an inefficient organization, one that is not operating at a profit, they will be able to sell it - as they would readily sell TransAustralia Airlines to-morrow if they thought that the public would endorse their action - and it would be readily absorbed by the private banking structure. I believe that the Government has exposed quite freely its intention.
In reply to Labour’s contention that the Commonwealth Bank has not been allowed to develop the PostmasterGeneral (Mr. Anthony) cited the progress that has been made by the Rural Credits Department of the bank. But he did not tell the public and members of the committee the business handled by that depart, ment of the Commonwealth Bank is business that the private bankers have never wanted. The Rural Credits Department has given to the community a service that was never provided by the private banks. Now the Government claims that its decision to permit a continuance of the department is a generous gesture. This exposes completely the purpose of the private banks. To-day the private banking institutions are not prepared to give service to the community unless they can derive a very high rate of profit for doing so. Therein lies the difference between the Commonwealth Bank and the private banks. As theCommonwealth Bank has no shareholders, it is not worried about the payment of dividends. I invite succeeding Government speakers to pay attention to this aspect of the matter, instead of talking about alleged unfair treatment of the private banking interests in this country. Let them say a word in favour of improving the banking facilities available to the Australian public. I should like them to explain why they claim that it is not possible and practicable for the Commonwealth Bank to make funds available for home building and home purchase at a very low rate of interest. Of course it is possible! The Commonwealth Bank has been compelled in the past to charge the same, or almost the same, rate of interest as that- charged by the private banking institutions, because the Government considered that the charging of a lower rate would constitute unfair competition. It has been said that the rate of interest charged by a bank is determined, to a degree, by the risk that the bank takes. If a great risk is involved the bank charges a high rate of interest to cover itself against any possible loss. I point out that in the construction of homes in this country there is no possible risk of loss, because the homes are constructed under the supervision of the officers of the bank. As soon as they are constructed they are occupied by tenants and begin to be revenueproducing, and money goes back to the bank either for the purpose of cancelling out the debt or of making possible the provision of further credit for home purchasers and home builders.
The TEMPORARY CHAIRMAN:
– Order ! The honorable gentleman’s time has expired.
Mr WENTWORTH: Mackellar
– In view of the statements that have been made by the honorable member for East Sydney (Mr. Ward), I shall remind the committee of some of the facts of this matter. He implied that we should not trammel the people. I remind the honorable m.ember that the former Labour Government tried to monopolize, centralize, and nationalize the banking system without any mandate from the people. The result of the subsequent general election proved that that action was in entire contravention of the popular will. It is because of Labour’s reputation in this connexion that we have to be on our guard. Although the Labour party could never again attempt to nationalize banking by legislative action it could, perhaps, if it gained office in the future, do so by administrative action. It is that kind of back-door nationalization against which we are trying to guard. The honorable member for East Sydney asked why the Commonwealth Bank cannot issue unlimited credit. Of course it could, but if it did so it would cause higher prices and inflation in the community. That inflation could be held back only by checks and controls such as are dear to the hearts of honorable members opposite. But let me remind them that such checks and controls, if continued - and they must be continued, as a logical sequence of socialization - they lead to the black market. The logical sequence of that course would be the development of the black market on a colossal scale, because of the severity of the controls that would have to be imposed to keep down inflation. We have seen the logical development under such conditions. The Australia Labour party would become the Doyle Labour party, which is the kind of thing that honorable members opposite perhaps desire. Whether or not they desire it, it is the inevitable consequence of the kind of policy that they espouse. Many honorable members opposite have protested against even a small degree of separation of banking functions. They fail to see that that is desirable both for the purpose of increasing the efficiency of the central bank as a central bank, and increasing the efficiency of the trading bank as such. It is perhaps a little late to remind them that all authorities on banking believe that the central bank should not carry out trading functions. For example, the governor of the South African Reserve Bank has written in these terms -
A further requisite of a real central bank is that it should not, to any great extent, perform such banking transactions as accepting deposits from the general public and accommodating regular commercial customers with discounts or advances. It is now almost generally accepted that a central bank should conduct direct dealings with the public only in such forms and to such extent as, in the circumstances of the particular country, it considers absolutely necessary for the purpose of carrying out its monetary and banking policy. If a central bank has a large commercial banking business, such operations might come into direct conflict with its functions as the banker’s bank, the lender of last resort and the controller of credit.
Honorable members opposite have made a great play with the recommendations of the Royal Commission on Monetary and Banking Systems that was held in 1936 and 1937. I refer them to paragraph 581 of the report of that royal commission, which contains this passage -
. the most important powers of the Bank arise from ite . . . ability to buy and sell government securities on the open market, and from its trading activities.
The development of the money market in Australia was very narrow, and without access to open market operations the bank may not have been able to keep the requisite control over the volume of credit. That was merely temporary. It related to 1936 and is now a thing of the past. The circumstances which then might have differentiated the position of Australia’s central bank from those of other central banks have disappeared as a result of the greater maturity and the growth of our entire financial structure. Honorable members opposite should read the report of the royal commission carefully before they quote from it, and they should quote the relevant parts.
I have suggestions to offer to the Government in relation to two minor matters with which clause 6 deals. Proposed section 22a provides for the possible amalgamation of the Commonwealth Trading Bank with other trading banks. Such an amalgamation may become desirable in the course of time, but I believe that the procedure should be hedged around with precautions because, should the Labour party gain power in the future, it may try to cut down the private banks one by one by forcing them to amalgamate with the Commonwealth Trading Bank. I hope that the Government will consider amending this provision so as to guard against a possibility of that kind. The proposed section states -
The Trading Bank may, with the approval of the Treasurer, enter into an arrangement with any other bank .
I suggest that it should be altered to read as follows : - 1
The Trading Bank may, with the approval of the Treasurer and the consent of both Houses of the Parliament, enter into an arrangement with any other bank .
There is a danger that a future Labour government may take advantage of the proposed section in order to nationalize banking by back-door methods. At least the sanction of this Parliament should be obtained before any such procedure is put into effect. I hope that the Prime Minister will give consideration to the suggestion. My second suggestion refers to proposed section 19 (6), which applies to certain transfers of money as additions to the capital of the Commonwealth Trading Bank. It provides that the capital of the Commonwealth Trading Bank shall include such sums as are paid to it in pursuance of sections 15 and 47 of the present Commonwealth Bank Act, neither of which will be amended by this measure. It might be better to provide that the profits to which this provision will apply should be paid to the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department instead of to the Commonwealth Trading Bank. At present, these profits are distributed between the General Banking Division, the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department. This method has been logical up to the present because such profits have accrued to the Commonwealth Bank Reserve Fund as a result, to some degree at any rate, of the operations of the General Banking Division. This measure will eliminate the General Banking Division and will establish the Commonwealth Trading Bank. In the changed circumstances, the profits might be paid, with more justice and logic, to the Bura.l Credits Department, the Mori - gage Bank Department and the Indus trial Finance Department. I have not had an opportunity to consider the implications of the provision in detail, but I believe that my suggestion is well worthy of consideration.
I repeat that authorities all over the world agree that a central bank functions best when it has no trading bank appanage to poison its relations with other trading banks. The trading bank functions can be more efficiently performed when the trading bank functions as a separate institution.
The TEMPORARY CHAIRMAN.Order! The honorable member’s time has expired.
Mr COSTA: Banks
.- The Government has announced that the purpose of this bill is to make socialization more difficult of achievement than it would he otherwise. If we refer to statements that were made by the present Prime Minister (Mr. Menzies) during the 1949 election campaign, we find that the right honorable gentleman announced that he, himself, was a socialist. Yet the Government still continues to proclaim its fear of socialization ! The Labour Government in 1947 introduced legislation that was designed to nationalize our banking system. The validity of that legislation was challenged in the Hight Court and before the Privy Council, which, in 1949, held that the Government did not have power to nationalize banking. The Labour party has accepted that decision. The late Mr. Chifley said, in 1949, in a speech on banking, that, if any industry operated against the best interests of the people, he would have no hesitation in nationalizing it so that the Government could operate it on behalf of the people.
– Did not the present Prime Minister say the same thing?
– He made a somewhat similar statement during the 1949 election campaign, when he said to a gathering of 2,000 people at Norwood, in South Australia. -
If you read my policy-speech, you will find that that is our policy.
He referred to Mr. Chifley’s policy. He continued -
We stand for freedom, not exploitation, and if you can show me some monopoly business operating to the detriment of Australia then I, as the leader of a non-socialist party, would not hesitate to socialize it to-morrow morning.
The policy speech delivered by the right honorable gentleman at the outset of the 1949 election campaign included the following declaration : -
We approach the problem of government ownership and control not as a problem of theory but as one of common sense and hard practical fact. There aire certain public utilities of an essentially monopoly kind, not suited1 to competitive enterprise and not requiring the stimulus of competitive selling, which we willingly accept as government instruments.
According to that pronouncement, the joint policy of the Liberal party and the Australian Country party is in agreement with the policy of the Labour party. But, for some reason, the Government and its supporters now declare that they are afraid of socialization and attack members of the Opposition on the ground that they are socialists. I presume that they have in mind the approaching State elections in South Australia and Queensland. However, when the numbers go up in those States, we shall find that their propaganda has had little effect upon the people.
The Government is planning to destroy the people’s bank, hut it is in two minds about the best way of achieving that result. The honorable member for Mackellar (Mr. Wentworth) would deliberately destroy the Commonwealth Bank outright without any “beg pardons “. However, the Government has decided that the best plan is to put hobbles on the bank so that it will be partially destroyed. That is a dangerous policy, because the Commonwealth Bank has proved itself to be a great instrument for the good of the people. Its value to the nation has been demonstrated over and over again during two world wars and during the period when the Labour party was in power after World War II. An examination- of the annual report of the Commonwealth Bank for 1951-52 will show how it has worked in the interests of the people. The honorable member for Mitchell (Mr. Wheeler) said that the Commonwealth Bank, like the private banks, should be obliged to pay taxes. That is utterly ridiculous. The, report states -
The aggregate net profit of the Commonwealth Bank, including the Note Issue Depart ment and the Commonwealth Savings Bank, after making provision for contingencies was, in round figures, £8,465,000. This compares with £7,300,000 last year.
The report goes on to explain how the profits of the bank have been disbursed. They have gone to the people as a whole. The profits of private banks go to a comparatively small number of people, and quite a few of these people do not even reside in Australia. If all banks in this country are to be placed upon the same level, let the private banks be placed upon the level of the Commonwealth Bank and let the people have their profits.
I am certain that the Commonwealth Bank has never been allowed to compete fairly with the private banks. The history of the bank shows that boards and managements have never devoted any great energy to the task of developing it so that it could compete properly with private banks. There is no branch of the Commonwealth Bank in many fair sized country towns in New South Wales, although there are branches of at least two private banks. In Barraba, there are branches of the Bank of New South Wales and of the Commercial Banking Company of Sydney Limited, but there is no branch of the- Commonwealth Bank. A similar position obtains in other towns such as Bingara, Boggabri, Bogangate Boolaroo, Bombala, Bundanoon, Bangalow, Branxton, Byron Bay and Berry. The Commonwealth Bank has never been allowed to function in fair competition with private banks. When it was controlled by a hostile board, or by a board consisting of bankers, it was prevented from paying the same rate of interest to depositors as was paid by the private banks. The object of the board was to discourage depositors from using the Commonwealth Bank so that’ it would be unable to function properly as a trading bank. If this bill is passed and the trading bank and central bank functions of the Commonwealth Bank are separated, there will be a great danger that a similar process of strangulation will be applied to the Commonwealth Trading Bank. It will be permitted to pay only 3-J per cent, interest upon deposits, fixed and otherwise, but the private banks will be allowed to pay 4 per cent. That happened previously, to the detriment of the development of the Commonwealth Bank. Its assets remained stationary, but the private banks were able to attract more depositors and, therefore, were able to lend more money.
I believe that the Government of this country should have complete control of our banking system so that money can be used in the best interests of Australia and loaned to important industries at the lowest possible rate of interest. Our economic system has had to carry the burden of our banking system for a long time. Private banks, not only in Australia but also throughout the world, have been bludgeoning industry for far too long. When any one wishes to establish a new industry or to increase production, he can obtain the necessary money only by paying an exorbitant rate of interest for it to private bankers. That is not in the best interests of the nation. I believe that the Commonwealth Bank should be strengthened, not weakened, as it will be by this bill.
The TEMPORARY CHAIRMAN:
– Order ! The honorable gentleman’s time lias expired.
Mr DRUMMOND: New England
– I rise only to deal with some obviously inaccurate statements that were made by the honorable member for Banks (Mr. Costa). He said that any real competition between the Commonwealth Bank and private banks has been suppressed. To support his contention, he stated that there were no branches of the Commonwealth Bank in many country towns and villages. That is an interesting approach to the question, especially to myself, because the honorable gentleman referred to a number of places which are very well known to me. Some of them are in my electorate. He informed the committee that there is no branch of the Commonwealth Bank in Barraba, although there are branches of the Bank of New South Wales and of the Commercial Banking Company of Sydney Limited in the town. Let me say that they are very old-established branches of those banks. The honorable gentleman advanced an interesting argument, but when we analyse it we find that it will not hold water. In Barraba, there is no branch of the National Bank of Queensland, the Commercial Bank of Australia Limited, the English, Scottish and Australian Bank Limited or any Victorian bank. Probably that is true also of the other places to which he referred. If there is any substance in the honor able gentleman’s contention, it could be argued reasonably that the Government has adopted a policy of suppression in relation to some private banks and has prevented them from entering into competition with the Bank of New South Wales and the Commercial Banking Company of Sydney Limited. The truth of the matter is that the only active suppression of that kind of which I have knowledge occurred during the war, when the government of the day, a Labour government led by Mr. Curtin, insisted that, as far as possible, the banks should rationalize their services and decrease their staffs by closing down much needed branches in certain places. That policy was also implemented during the regime of the Chifley Government. In a State electorate that I used to represent, it had the effect of disturbing considerably the banking operations of some of my constituents, because they discovered that the branch of a certain bank that had operated in, say, Dorrigo, for a long time had been closed and that they had to use the .branch in Bellingen, which was about 20 miles away, and could be reached only by a road that was not very good. In time of war, that kind of thing was not unreasonable. I do not think any one is entitled to suggest that the banks did not attempt to co-operate to the full with the government of the day by releasing for war service as many of the members of their staffs as they possibly could. All that I want to do is to show the fallacy of the argument that the honorable member for Banks has advanced in support of his contention that the present Government parties have been guilty of sinister action in regard to the Commonwealth Bank. I do not want to prolong my contribution to this debate by referring at undue length to the subject of socialization. The contention of Opposition members that they accepted the decision of the Privy Council that the Australian Government did not have the constitutional power to bring about bank nationalization has been adequately answered by various Government supporters including the Minister for Social Services (Mr. Townley), who quoted the honorable member for Melbourne (Mr. Calwell). Other Government supporters have quoted Labour party members who have said emphatically that they would achieve by administrative means what they were prevented from achieving by the ordinary processes of legislation. As long as bank nationalization remains an integral part of the platform of the Labour party honorable members opposite are pledged to its achievement. The honorable member for Melbourne himself said that the Government should have control of all finance. If the Government gains control of all finance it will have control of the whole of the country’s industry. The authori ty that controls finance will be able in the final analysis, to turn the screw whenever it wants to. It is inevitable that the Government must bring pressure to bear in times of crisis and take certain action that would not have been advisable in time of peace. But if any government is given complete control of finance it will be in a. position to squeeze any section of the community that differs from it in the way mentioned by Marx and Lenin and other Russian Communists.
Proposed new section 21 (2.) states -
The Trading Bank may, from time to time, transfer from the Commonwealth Trading Bank of Australia Reserve Fund to the capital of the Trading Bank such sums as the Board determines.
In every other provision the imperative is used. The words are “ The Trading Bank shall “ ; but in this case the words are “ The Trading Bank may “. I wonder whether that is a misprint. Why should the trading bank have an option under the provision I have quoted, which is not given to it elsewhere? I do not think that that was intended. There are other cases in the bill where the word “ may “ is used for obvious reasons because the exercise of discretion is desirable. But it seems to me that if the controllers of the reserve fund are to be able to place the Commonwealth Trading Bank on the same footing as any other trading bank the imperative should be used in this provision. In other words the Commonwealth Trading Bank should have no option but to comply with the board’s direction. Since the intention of the bill before the House is to place the national trading bank on the same basis as private trading banks I ask the Prime Minister to consider whether more complete effect could not be given to the Government’s intentions by the moving of a minor amendment when the bill is before another place.
Mr WARD: East Sydney
.- Honorable members opposite continually charge the Labour party with the intention of implementing sections of its policy by stealth. It is quite true that the nationalization of private banks is still the policy of the Labour party, as the honorable member for Mackellar (Mr. Wentworth) said when he quoted from the constitution and platform of the Australian Labour party. But it is also true that the Labour movement has no intention of giving effect to any item of its policy against the wish of a majority of the people of Australia. The position at this stage is as I shall now announce it. In 1947, the Labour Government introduced legislation which provided for the nationalization of private banks. That legislation was challenged, first in the High Court and then before the Privy Council. When it was challenged in the High Court, even the High Court judges were not” unanimous in their opinion that the Parliament did not possess the power to nationalize. It is interesting to note that the Chief Justice himself dissented from the majority viewpoint that it was not within the power of the Commonwealth Parliament to nationalize the private banks. But the majority decision was against the government of the day and an appeal was lodged with the Privy Council against that decision. The decision of the High Court was confirmed by the Privy Council. The present position is that the two authorities have declared, if only by majority decision, that the Commonwealth Parliament has insufficient existing power to nationalize private banks. But if on some future occasion the matter were again submitted to the people by referendum and a majority of the people, having had the matter explained to them fully by the Labour party, in their wisdom decided to support our proposal, do honorable members opposite who claim to be democrats contend that that decision of the people should not be given effect to? In my opinion the Labour party has no intention of proceeding in any other way to implement its policy. I am of the opinion that the banks will eventually be nationalized because the majority of the people will realize the good sense of voting for nationalization. But that is the only way in which nationalization will be effected by the Labour party.
The policy of the Labour party i.s known and the method by which it proposes to give effect to its policy is known. The Labour party proposes to act by constitutional methods. Bank nationalization cannot be an issue at the forthcoming Senate election because the constitutional barrier remains. It cannot be an issue at the next federal elections because the same barrier will be there. But it is perfectly true that a Labour government of the future could resubmit the question to the people by a referendum. Those facts expose the attitude of honorable members opposite, because although they claim to be democrats they do not want the people to make the final decision. They are prepared to defend the privileged position of private financial interests and bankers, regardless of the Constitution and’ the will of the people. The honorable member for Sturt (Mr. Wilson) said that his party wanted to make it as difficult as possible for any future Labour government to proceed with its policy of socialization. If the honorable member for Sturt claims to be a democrat why should he want to create difficulties for a government which ha? been elected by the majority of the people? The parties opposite claim that, having been elected with a majority, they are entitled to implement the policy that they enunciated. Of course, we know that the Government parties have one policy at election time for public consumption, so as to win support for their candidates and another policy, their real policy, which they never announce to the people. They know that if they had told the people during the general election campaign what they intended to do, they would never have been able to secure a majority in this chamber. This Government represents the private finan- cial institutions of Australia. It believes in the right to exploit the people and the right to make exorbitant profits. Whenever its supporters believe that the citadel of private capital and finance is in any real danger every one of them, no matter what contrary opinions he may have expressed during an election campaign, rushes to defend it. They all fall into line. As I said earlier to-day, they are not concerned whether any change in the banking system is in the interests of the general community. All they are concerned about is whether the interests of their private financial backers are endangered, and whether they can still ensure that those backers will continue to ‘ enjoy their present privileged position.
The attempt of honorable members to whip up again, and play on, the fears of the people, will probably not be as effective this time as it was on the last occasion, because I cannot imagine any farmer in New England being worried about whether or not the private banks have been affected by the operation of the Commonwealth Bank if he is able to get financial accommodation from the Commonwealth Bank at a lower rate of interest than that at which he could formerly obtain it from a private bank. The same applies to people who live in working class areas. If they get financial accommodation at a lower rate of interest from the Commonwealth Bank than they could get it from a private bank, they will not be worried about this question of bank nationalization to which the honorable member referred. As a matter of fact it is rather interesting to note that the great bulk of the people’s savings to-day is not in private banks, but in Government Savings Banks, a,nd the depositors have not been prejudiced in any way by having their money in such banks. Government supporters, however, attempt to create, in the minds of the public, the illusion that the people’s savings could be transferred, under a Labour government, from a private bank to Government banks. The fact is that most of those savings are already in the Government bank. The general public has no direct interest in the private trading banks which would be affected by any nationalization of the banking system.
The honorable member for New England (Mr. Drummond) attempted to demolish the argument advanced by the honorable member for Banks (Mr. Costa), and referred to a town called Barraba, in which, he said, there were some private banks, but there was no branch of the Commonwealth Bank. He said the fact that some private banks had no branch in that town indicated that there was no basis for the argument advanced by the honorable member for Banks that the Commonwealth Bank had not been permitted to expand and develop in competition with the private banks to the degree intended by the Labour party. What the honorable member for New England omitted to mention is that there is no competition between the private banks, which rationalize the banking industry by agreement, sharing out districts among themselves and deciding in which districts branches of the various private banks shall be established. The only existing competition in Australian banking is between the private banks and the Commonwealth Bank. What Government supporters have endeavoured to do by the exercise of their power in this Parliament is to restrict the Commonwealth Bank’s competition with the private banks. The honorable gentleman referred to the war period, when it was necessary to rationalize industry. He talks about the co-operation of the banks with the government of the day. All I can say is that he does not know what he is talking about, because, in actual fact, when the country was in desperate need and wanted to conserve its man-power-
The TEMPORARY CHAIRMAN:
– Order ! The honorable gentleman’s time has expired.
Mr MENZIES: Prime Minister · Kooyong · LP
– I wish first to mention several points to which reference has been made. The honorable member for New England (Mr. Drummond) raised a question in relation to the proposed new section 21 (2.) which reads -
The Trailing Bank may, from time to time, transfer from the Common wealth Trading Bank of Australia Reserve Fund to the capital of the Trading Bank such sums as the Board determines.
I point out to him that there is no anomaly there, because the Common wealth Trading Bank will be under the control of the board, and therefore the whole problem of what should be done with the reserves will be a problem that the board has to determine, and the result will be exactly the same whether the word “ may “ or the word “ shall “ be used, because the operative words are “such sums as the Board determines “. It may determine none, it may determine a great deal, or it may determine all. The whole thing rests on a discretionary power.
The honorable member for Mackellar (Mr. Wentworth) raised two matters. He had been good enough to discuss them with me before the committee stage had been reached, and all I want to say now is that, whilst on each of the two points I am far from being satisfied that what he has suggested is the right thing to do, each of them merits some further consideration, and I am quite agreeable to having that consideration given to them before the bill goes to another place.
I turn now to the speeches that have been made during the debate, particularly by the honorable member for East Sydney (Mr. Ward) and, to some degree, by the honorable member for Banks (Mr. Costa). I am beginning to think that the honorable member for East Sydney is one of the most reactionary members of this House - and I use the word “ reactionary “ with due consideration - because he has not, in my experience, developed a fresh thought on this problem over the last 25 years. He has a few little catchwords in his mind, and he thinks they are an admirable substitute for thought, and that is, after all, characteristic of the tory and reactionary all over the world. What has he in his mind ? First of all he said that the Commonwealth Bank had been frustrated, that it had never been allowed to develop its business, and, in particular, that it had never been allowed to do all it should be doing in relation to the housing of the people. Those are fine mouth-filling statements to make. The only trouble about each of them is that it is utterly untrue. Because the honorable member has never troubled to catch up with any new facts of the last 25 years he is living on the slogans of a quarter of a century ago. On Tuesday the . Treasurer (Sir Arthur Fadden) answered a question on notice by the honorable member for Wilmot (Mr. Duthie) about the Commonwealth Bank. I do not propose to read all of his answer, because it has been in the possession of honorable members, although the honorable member for East Sydney has not read it. I merely point out that the number of accounts, including deposits bearing interest, maintained with the General Banking Division of the Commonwealth Bank rose from 257,982 in April, 1949, to 372,870 in April, 1952. So, to say the least of it, and I use the most courteous possible terms, it is a fairly bold statement to make that, in face of an expansion of that order, the General Banking Division of the Commonwealth Bank has been frustrated. The honorable member for East Sydney could hardly have selected a more unfortunate example than housing on which to base an argument that the activities of the bank have been frustrated, because the record of the Commonwealth Bank in respect of housing loans is a first-class record. The bank has devoted a great deal of particular attention to the needs of the people in relation to housing, and has been encouraged to do so by the present Government. The fact is that the advances made by the General Banking Division of the Commonwealth Bank for buildings and home buildings represent 29 per cent, of its portfolio, as compared with 10 per cent, in the case of the ordinary bank. I do not say that critically, because there is a limit, in ordinary banking practice, to the amount which you should have in your portfolio in a particular form of investment. But the Commonwealth Bank, which he says has been frustrated, denied and ordered about, has 29 per cent, of its advances in the form of advances for building purposes as against 10 per cent., which is the average percentage in the case of ordinary banks. For the second time, the trouble with the honorable member is that he has not caught up with what may be called the facts of life.
The next point that he made - and this is so old that it should have been dead and buried years ago - was to this effect : Why could not the Commonwealth Bank, as it would under a proper government, find money for housing at 1 per cent.?
Well, he had eight years in which to do so. Is it not odd how this virtue, which lay dormant for so many years, bursts into lovely flower a few years later? He did not do it. Why did he not do it?
– Because he was not the Treasurer.
– Exactly. For the third time to-day I am indebted to the honorable gentleman for a most frank statement. The Treasurer was the late Mr. Chifley, who had some sense of responsibility in respect of central bank credit. As the honorable member now tells us, his late leader, on whose reputation he has climbed into Parliament time after time, was against him, and that is why it was not done. Of course, Mr. Chifley knew, as every sensible person in this chamber knows, that to talk about’ the Commonwealth Bank merely inventing new capital for all kinds of purposes and pushing it out at what the honorable member is pleased to call “ cost of issue “, is the most fantastic notion in the world. I am amazed to find that my friend, the honorable member for Banks, to whom I usually listen with respect, seems to be a little touched - I hope not permanently - by the same illusion, this strange idea that there should never be any shortage of capital in the world, because as long as there is a central bank, capital can be produced. It is, perhaps, desirable to say to honorable members - and I wish it were known all over Australia - that at the recent economic conference in London, about which the honorable member for Melbourne Ports (Mr. Crean) was good enough to put a question to me the other day, eight governments of the British Commonwealth were represented by every conceivable variety of political thought. Yet not one person at that conference was heard to say, when we were discussing the question of how we were to secure more capital for development, “ That’ is quite simple. As long as you have a central bank there is no problem about capital. Just write a cheque on the central bank and get the money from it. If there is not enough in the till, the bank will print it for you.” That is a beautiful simplification of the problems affecting the capital requirements of a country.
Compared with a great many of the men present at that conference, I consider myself the merest apprentice in such matters. Some of the ablest minds in the world sat around that table and discussed how to obtain the capital needed in the various countries. Every one of them said, “ Let us start- off with this proposition : Unless we are going to destroy the value of the currency, and unless we are going to produce an inflation that is completely beyond control, first we must produce capital in our own countries, from our own savings.” This is not any “ wild cat “ conception of finance. It is first necessary to produce capital from savings in one’s own country. Then, if it is possible to do so, capital can be obtained from the savings of people in other countries, because that is all that overseas borrowing amounts to. Yet this old and tattered, disreputable and ruinous doctrine that as long as there is a central bank it is only necessary to say, “ How much do you want- £300,000,000 or £400,000,000? “ is still trotted out. I speak in such lofty figures because theycharacterize these bogus financiers on the other side of the committee. There is not to be found among them a soul who understands these matters. They then contend that, having obtained that money from the Commonwealth Bank, the Government should serve it out at 1 per cent, on what, we are now so frankly told, is the Ward formula but was never the Chifley formula.
I do not need to elaborate these matters overmuch, because everything that has been said by honorable members opposite in the course of this debate has been said in the light of a complete piece of nonsense, financially and economically. However, if one goes behind all the oddities and eccentricities to which I have been referring, the really interesting thing is that there are very many people in Australia, in the ranks of the supporters of both my own party and the Australian Country party, who would like this legislation to go further. There is no mystery about that. There is great variety of opinion on these matters. On the opposite side of the committee are those who appear to think unanimously along these lines : “ You fellows are going so much too far with this legislation that you are setting out to destroy the Commonwealth Bank”. What the Govern- ment has been doing - and what I hope a sane government will always do - is to pursue some planned course in this matter. The last thing that we propose to do is to destroy the Commonwealth Bank. The figures that I have cited are the best evidence of the vivacity of that institution under our general political control. On the other hand, if we can help it we do not propose to allow the trading banks to be destroyed.
Two or three honorable members opposite to-day made a virtue of necessity and said, almost with washings of the hands, “ Of course, we tried to nationalize the banks by statute, but that attempt was challenged in the High Court and we were beaten - but only by a majority “. Incidentally, I thought the latter remark was an interesting observation. They continued, “ The case then went to the Privy Council, which decided that the High Court was right. Therefore, that ends the matter. The last thing we would do would be to overrule the Privy Council “. Of course it is ! Honorable members do not need to tell us that. There is no virtue in saying that they have accommodated themselves to the decision of the Privy Council, but there is great value in trying to prove that the Privy Council decision, and primarily that of the High Court, was to the effect that the thing could not be done by statute in the form that was then adopted. Nothing whatever was said about the fact that the decision does not inhibit a Commonwealth Government administratively, in the exercise of valid laws, from squeezing the banking system out of existence. And not a word has been said by honorable members opposite to indicate that they are pledging themselves not to use their administrative powers to achieve, by a different route, the goal that was barred by the High Court and the Privy Council. Of course they cannot give a pledge on that. To-day we have heard the most sickening, unctuous remarks made by the Opposition abouttrusting the people. I have been informed to-day, by the honorable member for East Sydney (Mr. Ward), that honorable members on this side of the House do not trust the people. That comes singularly well” from a member of a party which, without a mandate, brought down a bill to nationalize banking and rejected an amendment that was moved by the then opposition to the effect that the legislation should not operate until after the matter had been determined by the people. Such are the democrats of the Labour party. This Government, when it assumed office, discovered a state of affairs in which, under a valid law - not the act of 1947-, but the valid act of 1945- the trading banks had accrued liabilities of £540,000,000 to the central bank. By administrative action, any government could have put the private banks out of business in 24 hours.
– I rise to a point of order. In view of the fact that the Government, acting on the Prime Minister’s (Mr. Menzies) instructions, by the application of the “guillotine”, has restricted the debate on this particular matter, I ask you, Mr. Temporary Chairman, whether there is any action that can be taken under the Standing Orders to prevent the Prime Minister from stone-walling the debate and thus preventing any reply being made to his misleading statements ?
The TEMPORARY CHAIRMAN:
– Order ! The Prime Minister is in order.
– I am glad to know that the honorable member for East Sydney is in such hilarious form that, having treated the committee to twenty minutes of nonsense, he now resents having to listen to twenty minutes of good sense. However, I understand him well - I would not like to say that I know him - but I have seen him for many years and I know his methods of provocation. He is not unaware of the clock. This Government inherited banking legislation under which any government, by administrative action in respect of the Commonwealth Bank, which was then under the sole control of the Treasurer of the Commonwealth and in which therewas no Commonwealth Bank Board and no statutary provision for reference of disputes to this House in relation to a matter so elementary as the special deposits lodged with the Commonwealth Bank by the trading banks, could have destroyed the trading banks.
Mr Tom Burke:
– That is not correct.
– Every schoolboy and every child knows that what I have said is perfectly correct. The interesting thing to realize about this matter is that the honorable member for East Sydney, when confronted by that position, let the cat out of the bag. He would not content himself by saying, “ We are not going to try to overrule the Privy Council’s decision without going to the people “, because he knew that it is the administrative weapon which can be most deadly.
– A minute to go.
– It takes only a minute to say this, comrade. The honorable member for East Sydney stood up and said that bank nationalization was still the policy of the Labour parly. Therefore, the cat is now out of the bag. Bank nationalization is still the policy of the Labour party. Why is the Labour party now opposing this legislation? Because it knows that unless the legislation is altered as we are proposing to alter it, Labour may some day get into office with a weapon in its hands to give effect to its policy. In that event honorable members opposite need never refer to the people, because they will be taking administrative action, and when a general election comes along in due course they will be able to say, in the phrase of the honorable member for Melbourne (Mr. Calwell), “ Once we have scrambled the eggs you will never be able to unscramble them’”.
Mr TOM BURKE: Perth
.- The Prime Minister (Mr. Menzies) has paid a tribute to the honorable member for East Sydney (Mr. Ward) because instead of answering his arguments he has misrepresented them. The honorable member for East Sydney said nothing about the number of houses that have been built, or the extension of the Commonwealth Bank-
The TEMPORARY CHAIRMAN.Order! The time allotted for the consideration of clauses 2 to 6 has expired.
Question put -
That clauses 2 to 6 be agreed to.
The committee divided. (The Temporary Chairman - Mr.
Mr ERIC J HARRISON: Vice-President of the Executive Council and Minister for Defence Production · WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944
– I move - [Customs Tariff Amendment (No. 7).]
That the Schedule to the Customs Tariff 1933-1952 be amended as hereinafter set out, and that, on and after the sixth day of March, One thousand nine hundred and fifty-three, at nine o’clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Customs be collected in pursuance of the Customs Tariff 1933-1952 as so amended.
That, without prejudice to the generality of paragraph 1. of these Proposals, the Governor-General may, from time to time by Proclamation declare that, from a time and date specified in the Proclamation. the Intermediate Tariff shall apply to such goods specified in the Proclamation as are the produce or manufacture of any British or foreign country specified in the Proclamation.
That on and after the time and date specified in a Proclamation issued in accordance with the last preceding paragraph, the Intermediate Tariff shall apply to such goods specified in the Proclamation as are the produce or manufacture of a British or foreign country specified in that Proclamation.
That any Proclamation issued in accordance with paragraph 2 of these Proposals may, from time to time, be revoked or varied by a further Proclamation, and upon the revocation or variation of the Proclamation, the Intermediate Tariff shall cease to apply to the goods specified in the Proclamation so revoked, or, as the case may be, the application of the Intermediate Tariff to the goods specified in the Proclamation so varied, shall be varied accordingly.
That in these Proposals, unless the contrary intention appears - “ Proclamation “ mean a Proclamation by the Governor-General, or the person for the time being administering the government of the Commonwealth, acting with the advice of the Federal Executive Council, and published in the Commonwealth of Australia Gazette ; “ the Intermediate Tariff “ mean the rates of duty set out in the Schedule to these Proposals, in the column headed “ Intermediate Tariff “, in respect of goods in relation to which the expression is used.