20th Parliament · 1st Session
Mb. Speaker (Hon, Archie Cameron) took the chair at 10.30 a.m., and read prayers.
– Can the Minister for Immigration inform me whether a conference has yet been held with the New South Wales authorities who were offered the right to’ adminster the distribution of homes built for British immigrant COal.mincrs at West Cessnock?’ Can he also state whether a report on the subject has been made?’ I might add that I. have to visit Cessnock at the week-end and expect to be inundated with requests for information about this matter.
– As I pointed out to the honorable gentleman earlier this week, these matters are now within the administration of the Department of the Interior. ‘ However, I am in a position to inform him that a representative of the New South Wales Government has been in Canberra this week to discuss with a senior Treasury officer some of the details of the arrangement. As I mentioned’ earlier in the House, I have no doubt that we shall be able to come to a satisfactory arrangement for the transfer of these homes to the control of the New South Wales Government, at which point, of course, it will be for that Government to determine who shall be the occupants of the houses. As soon as I aro in a position - or my colleague, the Minister for the Interior is - to give the honorable member more definite advice, it shall bc done.
– Is the Prime Minister able to state whether it is a fact that the office of the Australian High Commissioner in- London has discontinued the regular liaison meetings with the State Agents-General? As these regular meetings are necessary to co-ordinate Australian activities in London, will the Government press for a restoration of the former practice
– All I know about this matter is what I read about it in the newspapers last evening. I have had no advice on the point. On the newspaper reports, it seems to mc that it is not really a matter of terminating the meetings, about which I know the High Commissioner was very keon,, but perhaps not having them at precisely regular intervals. I shall find out whether there is any material change and advise the honorable member accordingly.
– I wish to direct a question to you, Mr. Speaker. As a member of the Joint House Committee, will you -ensure that a varied and representative stock of South Australian wines is available for service in the parliamentary dining-rooms ? For a long time, the dearth of these fine vintages here has been .a subject of surprise and adverse comment amongst honorable members. It seems a paradox that, whereas three-quarters of the Australian wine production comes from South Australia, only a few bottles ‘find t’heir way to the National Parliament.
– I assure .the honorable member that I shall investigate the matter, ‘particularly as he and I between us represent approximately 90 per cent, of the wine industry of Australia. If there has been any falling-down -on the part of the parliamentary refreshmentrooms in the supply of a reasonable range of wines to meet the tastes of honorable gentlemen, I shall certainly attend to the matter.
– My question is addressed to you, Mr. Speaker, and is supplementary to the question that was asked by the honorable -member for Angas. Is there any -special merit in the quantity of wine produced in South Australia measured against the -quality of wine produced in my own electorate of Riverina? Have you forgotten that “ gu-id gear gangs in sma’ buik “ and if so, is that not cause for regret?
– Order’! I could not hear the last part of the question.
– I shall repeat the question because it is of great importance. It is supplementary to the question that was asked by the honorable member for Angas–
– I heard the first part regarding quality. It was the last part that I did not comprehend.
– I should dearly like to repeat the first part, sir. Is there any special merit in the quantity of wine produced in .South Australia measured against the quality of wine from my own electorate? Have you forgotten that “:guid gear gangs in sma’ bum “, and if you have, is ‘not that cause for regret?
– I still cannot fully comprehend the last portion of the honorable member’s question, but I can assure him that if -he looks at the lists of prizes awarded to wines for quality at different shows, of the world, he will find that South Australia is on its own for both quantity and quality. That applies equally to both the political and parliamentary spheres as it does to wines.
– Having regard to the recent statement in the House by the Postmaster-General that his department showed a profit of more than £600,000 during the last financial year, will the honorable gentleman consider making a gesture to age and invalid pensioners, and also those entitled to full repatriation pensions, by granting to such less fortunate members of the community free wireless listener’s licences?
– Very generous concessions have already been made to age and other pensioners in connexion with radio licences. Those concessions are far more generous than any made ~by the previous Government.
– -For about three years I have been pressing the PostmasterGeneral to improve radio reception in various parts of my electorate, which covers approximately 13,500 square miles, or one-half of Tasmania. Not long ago -the Postmaster-General’s Departmentagreed to boost the power of the national stations in Tasmania and also to establish a new station at Queenstown. Is the Postmaster-General able to inform me when the department expects to be able to commence that important project ?
– The construction of a new -regional station at Queenstown has been approved, but the work must take its place in its appropriate order of priority because there are about fifteen places in Australia where regional stations -are required. Offhand, I am unable to indicate the position that the Queenstown station occupies on the priority list, but I think that it is reasonably high. The other commercial stations, as well as the national stations, in Tasmania have been authorized to increase their power considerably, in some instances by more than 300 per cent., and that improvement should ensure better reception for listeners throughout the State.
– Has the Prime Minister’s attention-
Mr. Calwell interjecting,
-Order! I heard a statement made by the honorable member for Melbourne (Mr. Calwell) which was distinctly unparliamentary. The honorable member .must withdraw it and make ;in apology.
– I made a certain statement to an honorable member.
– Order ! The statement was audible to me. The honorable member must withdraw it and apologize.
– I withdraw and ;i apologize
– Has the Prime Minister’s attention been drawn to a letter that has been sent to honorable members - I have received one myself and no doubt other honorable members have received similar letters - that more than 1,000 delegates from trade unions and other organizations will converge on Canberra next Wednesday from eastern States and South Australia in order to interview Ministers and private members ? In view of the extraordinary cost, probably about £20,000, that would be involved through transporting such a large number of people to Canberra, and through loss of wages, would it not be advisable to advise those concerned that a smaller representative deputation would be in the best interests of all concerned ?
– The honorable member is quite right about the cost of the movement of such a large number of persons. That money could certainly be more usefully employed. I do not think that any advice that I might give the persons concerned on this matter would be heeded, because the movement, so far from being a projected delegation from legitimate trade unions, is a purely Communist demonstration. We know all about it, and I am able to tell honorable members that it will be a Communist demonstration. It does not represent, and it will not produce, deputations which are designed to put forward legitimate parliamentary matters for consideration. It is a demonstration in force.
– It has no connexion, direct or indirect, with the Labour party.
– I did not say that it had. I shall be perfectly fair, and I agree with what the right honorable member has said. I say, and I am sure that honorable members opposite will agree, that this happens to be a purely Communist demonstration. So far as I am concerned, I shall ignore it. I pay no attention to these demonstrations, particularly when they come from the source that I have mentioned. I shall receive no deputation from these people. Ministers will not receive deputations from them, and honorable members generally would be well advised not to receive deputations from them.
– With reference to a letter that has been received by honorable members over the name of a person called Anderson, which advised that a large congregation of people will march upon Canberra for reasons which have already been referred to, I ask you, Mr. Speaker, whether it would be possible for you, in conjunction with the President of the Senate, to ensure that only a certain number of representative people shall be admitted to this building. By so doing, you would ensure that the situation which arose on a previous occasion when the King’s Hall was literally invaded, contrary to the general practice of parliamentary arrangements, will not occur again.
– I can assure the honorable member that I have no knowledge of a letter signed by the person to whom he has referred. I have been informed of the intention of certain people to visit Canberra. That kind of scheme is well known to us in the Parliament. It is the intention of the President of the .Senate and myself to admit none of them to the building of Parliament House for any purpose whatever.
Government Members. - Hear, hear!
– Is the Postmaster- General in a position to inform me when tenders will be called for the urgently needed repair and renovation of the post office at Albury?
– The repair and renovation of the Albury post office is considered by my department to be of very great importance. Arrangements are now in hand for the complete renovation and extension of the building to bring the post office into line with the requirements of a growing and important district. It is expected that the Department of Works will be in a position to call tenders for the work within the next few weeks. Many months have already been occupied in the preparation of plans and specifications.
– Will the Minister for Air, as an experiment, give consideration to the purchase of a small number of aircraft known as the jet jeep helicopter. It is a cheap low-performance helicopter and would be particularly useful for the prospecting of uranium with scintillometers.
– Order ! The honorable member may not make a statement when asking a question.
– I am now giving my reasons for asking my question. These machines would also be useful as training aircraft in order to familiarize Air Force personnel with new developments in warfare.
– The enthusiasm of the honorable member for Mackellar for uranium prospecting is well known, and I am sure that both the Air Force and the naval authorities would like to give him all the assistance within their power in pursuing that purpose. Already, the Air Force has allotted the only helicopter that it possesses for use in prospecting for uranium. Unfortunately, that machine, when on a flight from Wagga to Maitland, developed trouble and it has not been able to continue that work. The suggestion that the honorable member has made is worthy of consideration. Heli copters of new types are continually being developed. I shall ask the Air Force to examine the honorable member’s suggestion and to submit a report on the matter. I might point out that recently the Navy brought out the three Bristol Sycamore helicopters on the aircraft carrier, H.M.A.S. Vengeance. If the honorable member would like to make a flight over his electorate in one of those machines I shall be only too pleased to make one available for that purpose.
– My question to the Minister for Civil Aviation concerns Trans-Australia Airlines. As the adoption of proposals recently submitted by Australian National Airways Proprietary Limited would involve the exclusion of Trans- Australia Airlines from many of the most profitable air routes, and would result in a great financial loss to Trans-Australia Airlines which the Commonwealth would be obliged to meet, will the Minister state whether resultant loss to the Commonwealth will be one of the matters to be considered by the arbitrator who will be appointed to decide this dispute? If so, has the Australian Government the right to state a case to the arbitrator, and does it intend to exercise that right?
– The matters mentioned by the honorable member will be considered by the arbitrator.
– Will the Minister for Civil Aviation inform the House whether it is a fact that Trans-Australia Airlines, at an annual cost of about £50,000, provides its aircrews with special training through refresher courses to keep them-
Honorable members interjecting,
– Order ! The Minister is unable to hear the question and the honorable member for Watson is not assisting by continually inter jecting. Will the honorable member please repeat his question ?
– The Minister was not listening. My question is directed to the Minister for Civil Aviation. Is it a fact that Trans-Australia Airlines, at an annual cost of approximately £50,000, provides its aircrews with, special, training through refresher courses to keep them at a high level of efficiency and abreast of world developments in aviation? As this is a practice which should receive general approval, can the Minister state whether any similar schemes are sponsored by Australian National Airways Proprietary Limited? If not, does the Minister propose to take any action to see that this practice is generally adopted ?
– Naturally, the Government does not intervene in the affairs of private organizations. It does not direct them as to schemes that they should undertake or otherwise.
– Oh! Not even when safety is involved?
– Order! The honorable member for East Sydney must refrain from interjecting.
– Australian National Airways Proprietary Limited has 3,500 employees. They are all very proud of their organization. They are completely loyal to it and satisfied with it.
– Order ! I am afraid, that I shall have to return to the practice that I followed earlier during my occupancy of this Chair. If honorable members insist upon interjecting while questions are being asked and answered, they will not be called for a question.
– Will the PostmasterGeneral state whether it has been the practice for commercial airline operators not to load DC3 type aircraft engaged in passenger traffic to the limit prescribed for aircraft of the same type engaged, in the carriage of freight? Has Australian National Airways Proprietary Limited ever made an application to the Department of Civil Aviation for permission to increase the loading of passenger aircraft to the limit now permitted for freight aircraft? Is it a fact that the Australian Air Pilots Association, following a test of an aircraft loaded with sandbags to the increased loading figure, refused to agree to the change, and contended that a greater safety margin is required in the operation of. passenger aircraft than is. the case in respect of freight aircraft? Will the Minister give an undertaking that in all matters that affect the operation of aircraft, and the safety standards to be observed, the Australian Air Pilots Association will be consulted ?
– The honorable member is obviously attempting to damage Australian National Airways Proprietary Limited.
– Rubbish ! Answer the question.
– Australian National Airways Proprietary Limited completely adheres to the standards laid down by the Department of Civil Aviation for the safe flying of aircraft. Those standards are determined not only by the Department of Civil Aviation, but also by the aeronautical associations of the world, the respresentatives of which frequently meet in conference to lay down safety standards. The most recent of such conferences was held in Melbourne only a few weeks ago, when the representatives of fifteen nations met and revised the safety code. Australian National Airways Proprietary Limited and TransAustralia Airlines also observe very closely the requirements of the Department of Civil Aviation, the benefit of which is borne out by the fact that there was not a single accident in commercial aviation in Australia last year. Even the honorable, member- for Watson may travel on an aeroplane with a fair degree of confidence.
– Oan the Minister for Civil Aviation say whether it is a fact that since Australian National Airways Proprietary Limited, took over the management of Guinea Airways Limited, 80 members of the ground staff, including experienced engineers, have been dismissed!? Does he consider that such alleged economy measures, which appear to have been actuated by the profit motive and which must affect the efficiency and safety of air services in the area, are justified? If he agrees that these dismissals are not in the interests of safety, what action does he propose to take in order to have the position rectified.
– Members of the Opposition who have asked questions this morning of the type that, the honorable member has just addressed to me appear to- be perturbed that any airways organization should be influenced by the profit motive. Unless airways1 companies can operate profitably they will cease to exist, with the result that n©> service at all, or, at most, only a very poor service, will be provided for air travellers; Therefore, it is- necessary for any company, whether it be private enterprise or governmental, to operate at a profit. Trans’-Australia Airlines as a government organization, has strenuously endeavoured to fulfil that requirement. The disposition of the staff of Australian National Airways Proprietary Limited is a matter for the internal management of the company. I have no knowledge of the matters mentioned by the honorable gentleman. They have not been brought to my notice, and even if they had been, it would not be within my province to deal with them.
– An organized smear campaign.
– I rise to order. I ask for a withdrawal of that remark.
– I did not hear it.
– You must have heard it. You objected to an earlier remark that I made. I ask you to take similar action now.
– It. appears that the remark of the Prime Minister is offensive to the honorable member for Melbourne.
– If that is stated, I should like to repeat what I said so that you, Mr. Speaker, may be the judge.
– That is not a withdrawal.
– I shall repeat what I said. This morning, we have had several questions calculated to damage Australian National Airways Proprietary Limited. I made the observation, and I repeat it–
– I ask for the withdrawal of the remark.
– Order ! The honorable member for Melbourne will resume his seat.
– “Will you, Mr; Speaker, ask the Prime Minister to- withdraw the remark ?
– The honorable member will resume his seat.
– A series of questions have, been asked this, morning calculated to damage Australian National Airways Proprietary Limited. I, therefore,, made the observation that this was an- organized smear campaign _ against Australian National Airways Proprietary Limited. I repeat it.
– Mr. Speaker-
-I call the honorable member for Hoddle (Mr. Cremean).
– No; the, remark has not yet been withdrawn.
Mi-. SPEAKER.: - I want the House to consider seriously the matter that is now before me. It is not my province, as I understand it, to make a decision on a matter of this description. It is customary in this House for an honorable member who objects to a statement made by another honorable member to insist that it be withdrawn. Therefore, I have to ask the Prime Minister to withdraw the remark to which the honorable- member for Melbourne has objected.
– I rise to order. I remind you, Mr. Speaker, that this matter has come before the House before. O an application by me some months ago. you specifically ruled that,, on occasions such as this, it was for you, as Mr. Speaker, to decide whether words to which objection had been taken were offensive. I ask you to apply that ruling in this case.
– Unfortunately for the Minister, I have applied that ruling this morning. A remark which I think was not audible to some honorable members was. heard by me. I did not repeat the words, but I ordered the honorable member who used them to withdraw and apologize to the Postmaster-General. I feel, in the circumstances, that the Prime Minister will comply with the usual rules and withdraw his remark.
– I rise to order. I have been in the Parliament for a long time-
– Too long.
– Order !
– I quite agree that it is much- too long. Anyhow, I have been here a long time. It is a novel idea to me that, during the whole of that time, it has been sufficient under the Standing Orders for an honorable member to say that he is offended by a statement in order to justify a direction that it be withdrawn. If that were so, all political comment in this chamber would become impossible. All some honorable members would have to do would be to say, “ I find the words are offensive “.
– The Prime Minister has not objected to the practice previously.
– On the contrary, I have had my views on the matter for a long time. I do not believe that such a position is in accordance with the Standing Orders of this House, which relate to unparliamentary expressions and to remarks, which in the view of the Chair, are clearly personally offensive to some honorable member. I have made a remark which I regard as fair comment. It will be an ill day for this Parliament when statements may be made by honorable members when they are asking questions and remain incapable of answer by the head of the government to which they are directed. Therefore, I submit that there is no authority in the Chair to direct the withdrawal of this statement.
– I rise to order. The Prime Minister said that an organized smear campaign was proceeding from the Opposition side of the chamber, in other words, a conspiracy. That was a deliberate charge by the Prime Minister of conspiracy in order to injure a member of this House. Such a statement, I submit, would be held to be unparliamentary at any time. I assume that you, Mr. Speaker, have ruled that it is unparliamentary, and that it should be withdrawn.
– Is the objection to the word “ organized “ ?
– I object to both words. “ Organized smear “ is a deliberate charge of conspiracy. It is completely untrue.
– I rise to order. I have addressed a question to you previously on precisely the point that is now under consideration. A number of contradictory rulings’ have been given by the Chair on this matter which, I consider, should be resolved. You will remember, Mr. Speaker, that you undertook to bring the matter before the Standing Orders Committee at one stage. You ruled from the chair at one time that remarks relative to a political party could not be considered offensive within the terms of the Standing Orders. Other contradictory rulings have been given from the chair. I believe this is a most serious matter which should be referred to the Standing Orders Committee, not in relation to any particular incident, but in relation to the general principle of the application of the Standing Orders. As I have said, contradictory rulings have been given from the Chair and even by yourself, sir, as Speaker.
– I am well aware of the difficulty that arises in relation to questions of this description. The honorable member for Mackellar has referred to a previous incident in which I refused to insist on the withdrawal of an allegation against a party. This morning, if I understand the position correctly, the allegation is not against a party but against certain honorable members who have asked questions of the Minister for Civil Aviation. Therefore, there is a distinction. However, the matter is entirely within the competence of the House. If the House believes my decision to be wrong, the Prime Minister may adopt a well-known course of action, but he must adopt it now if he intends to do so.
– In the meantime, he must withdraw!
– In the meantime, having regard to what has fallen from the Leader of the Opposition, I withdraw the word “ organized “.
– I ask for a withdrawal of the whole expression “ organized smear campaign “.
– With infinite respect, I decline to withdraw.
– The position now is that the Prime Minister has declined to withdraw the words “ smear campaign “. I point out that the right honorable gentleman’s remark was out of order because he was not the Minister to whom the question was directed. It was one of those interjections that I have tried to keep down - very ineffectively, I am afraid. The position from my point of view remains unaltered. The Prime Minister must either withdraw or he must move dissent from my ruling.
Motion (by Mr. Menzies) proposed -
That Mr. Speaker’s ruling be dissented from.
– The remark made by the Prime Minister (Mr. Menzies) was, as Mr. Speaker has said, disorderly, and I submit that the ruling is correct. Although it is embarrassing for the Prime Minister to be called upon to withdraw a remark, I remind the House that it is almost a daily occurrence for Mr. Speaker or the Chairman of Committees to request an honorable member to withdraw something he has said. I submit, therefore, that the ruling should be upheld. The Prime Minister’s interjection was disorderly and offensive and it is within the jurisdiction of the Chair to nsk that it be withdrawn.
.- It is quite clear, of course, that the Prime Minister has the numbers to overturn us.
– Order ! The honorable gentleman must not reflect upon a vote of the House.
– We can assume that the Prime Minister will have sufficient, support for his motion. It is quite clear that offensive remarks by honorable members opposite will be supported by a majority Government vote. The example has been set by the Prime Minister himself.
– As the questions involved in this incident were directed to me, I think I am able to assess to some degree the nature of the campaign that has been conducted, and therefore, the justification for the description given to it by the Prime Minister. Last night, I used the words such as the Prime Minister used this morning, but I was not called upon by the Opposition to withdraw them. I said, in effect, that- there was a smear campaign against Australian National Airways Proprietary Limited.
– I rise to order. As one of the questioners involved, I ask for a withdrawal by the Postmaster-General. My questions were asked in the interest of the safety of the travelling public.
– Order ! The honorable member will resume his seat. He is completely out of order.
– Last night, when I described this smear campaign as objectionable propaganda, no objection was taken by any members of the Opposition because they realized that that was the truth. During the last several weeks Ihave scarcely been asked a. question about civil aviation matters, but this morning I have been asked five or six questions, all directed at a private company, and all designed to damage that company. I therefore consider that the Prime Minister, or any other honorable member on this side of the House, is entitled to describe such propaganda in the only way that it could bc described, and that is, as a smear campaign.
.- Perhaps, in the first instance, I could put the Postmaster-General (Mr. Anthony) right about why a withdrawal was not asked for when he made some reference to a smear campaign. I have always regarded it as an absolute waste of time to ask the Postmaster-General to withdraw an insulting remark.
-Order! _The PostmasterGeneral is not the subject of discussion. Dissent has been moved from the Speaker’s ruling. The PostmasterGeneral does not enter into it.
– The Minister has earned a name, which I am not permitted to mention in this debate, for the inaccuracy of his replies.
– Order ! I repeat that the honorable member for East Sydney (Mr. Ward) cannot discuss the Postmaster-General. He is not the subject of the motion. I am the subject of the motion, and it is only my acts that are under discussion, nobody else’s.
– It is rather peculiar that the Prime Minister (Mr. Menzies”) should offer objection to this particular practice, which he said is improper, merely because on this occasion he happens to be the person affected. As the member who first raised a number of these matters on the motion for the adjournment of the House last evening, I assure you, Mr. Speaker, that I directed a question to the Postmaster-General this morning because last night he evaded the issues that were raised.
– Order ! The debate on the adjournment last night cannot be discussed on this motion. This is a motion of dissent from my ruling.
– Although I have disagreed with you on many other occasions, Mr. Speaker, for once I consider that you are right. I believe that there have been occasions when rulings by the Chair have retarded normal debate in this House. There have been many requests for the withdrawal of ordinary comment which, in my opinion, have restricted debate. I believe that you are right on this occasion. In the past, the Government, by reason of its superior numbers-
– Order ! The honorable member cannot canvass decisions of the House.
– I am not doing so. I am trying to convince the House that it should support your ruling, Mr. Speaker, because of the practice that has been invariably adopted, at least during the regime of the present Government, when members of the Opposition have been asked to withdraw expressions which, in my opinion, were not unparliamentary and should not have been withdrawn. To be consistent, as the Parliament has followed this practice for so long, I cannot see any reason why, on this occasion, your ruling should be dissented from.
.- I hate having to vote with you, Mr. Speaker-
– Order ! The honorable gentleman does not vote with me.; I remain here.
– I hate having to vote in support of your ruling, but I have a choice of two evils. I am going to vote in your favour. You have asked the Prime Minister (Mr. Menzies) to withdraw his remark, but the right honorable gentleman has not withdrawn it. You gave him an opportunity to withdraw or submit a motion that your ruling be dissented from. Every other honorable member who has offended against your view of the relevant Standing Orders in such a matter as this since you have been the Speaker has been obliged to withdraw. If he did not do so he was named. I believe that you have not acted impartially in giving the Prime Minister an alternative.
– Order ! The honorable member must not impute partiality to the Chair. He must withdraw that statement.
– I withdraw the statement and say that you have acted inconsistently. I do not think that you are entitled to do so under the Standing Orders. Nevertheless, I want to hear a withdrawal by the Prime Minister and, if I vote for the right honorable gentleman’s motion, I shall vote to defeat the object in support of which I rose to speak. Therefore, I shall have to vote for you, Mr. Speaker. It will be the worst vote that I have ever given.
– Those honorable members who have spoken so far in this debate have ignored what I believe to be a very important point of parliamentary practice that is embodied in the motion of dissent from Mr. Speaker’s ruling which has been proposed by the Prime Minister (Mr. Menzies). There are two aspects of this matter which I think should be stressed. The first one, which was raised with you in the course of earlier discussions, Mr. Speaker, is the question whether Mr. Speaker, as a matter of practice, accepts an intimation that some remark is offensive to a member as automatically justifying the ‘Chair in demanding a withdrawal of that remark. Whichever way honorable members opposite may vote on this motion, I say unhesitatingly that most members of this Parliament would not regard such a situation as satisfactory. As the Prime Minister has already pointed out, the practice would merely have the effect of stifling legitimate criticism and defeating proper debate on issues that arise in this place. Consequently, I believe that the rights of private members of this Parliament are fully upheld if an honorable member, having heard a remark which he considers to be personally offensive to him, draws your attention to the remark, has an opportunity to state, if he wishes to do so, why in his judgment it is offensive, and leaves it then to your discretion, as the custodian of the rights of members and the dignities of this chamber, to decide whether or not that remark should be withdrawn. I believe that that is a position which all members of this Parliament would be willing to support. One reason why your ruling is being challenged on this point is that apparently you have not been prepared to accept that responsibility. A withdrawal of certain words has been requested. You have offered no view to disclose whether or not you consider that the words themselves are offensive and should be withdrawn on that account.
The second aspect is the text of the statement itself. The Prime Minister, relating his remarks to proceedings which had taken place in .this House last night and to a series of questions addressed to the Minister for Civil Aviation this morning, made the comment that this was an organized smear campaign. It may be that this comment was made in the course of an interjection which, as you have said, was disorderly, but no objection was taken by you or by anybody else to the fact that the remark was made by interjection, and it is not an unusual practice for interjections to be made in this place. Therefore, we come back to the actual language employed by the Prime Minister. The right honorable gentleman has said, following the statement made by the Leader of the Opposition (Dr. Evatt), that he is prepared to withdraw the word “ organized “. In other words, he has accepted the statement of the Leader of the Opposition that this was not an officially organized campaign launched by the Opposition .party as- such, but he has retained the words “ smear campaign “. He contends that in his judgment - and he is’ entitled surely to express a belief on such matters - certain honorable members opposite have the deliberate intention of damaging Australian National Airways Proprietary Limited by the manner in which they present questions in this place. The phrase “ smear campaign “ is frequently used, not only outside this chamber but also inside it, to describe a course of political conduct. It is a phrase which we have heard repeatedly in this place, which has a well-accepted meaning, and which, within my own experience at any rate, has not been the cause of objection by honorable members on either side of the “ chamber. In view of those circumstances, we say, with very great respect, that on both aspects of the matter your ruling is wrong and should be dissented from.
Motion (by Mr. ERIC J. Harrison) put -
That the question be now put.
The House divided. (Mk. Speaker - Hon. Archie Cameron.)
Majority . . 15
Question so resolved in the affirmative.
Question put -
That Mr. Speaker’s rulingbe dissented from.
The House divided. (Mr. Speaker - Hon. Archie Cameron.)
Majority . . 15
Mr. Bryson. - Mr. Speaker-
– Unless the honorable gentleman has a serious point of order he should not speak. He should not turn these proceedings into a burlesque.
– It is a serious point of order from my point of view. In the event of this motion being carried, will the Prime Minister be exempt from the Standing Orders of this House?
– Every occasion will be dealt with on its merits.
– Mr. Speaker, do you notice that the Temporary Chairmen of Committees are dumping you? Will there be a chance for the honorable member for Watson now?
– In the event of this motion being carried, will I receive the same privilege as the Prime Minister is receiving ?
– Order ! If the honorable gentleman has the numbers, he will.
Question so resolved in the affirmative.
– Before the House proceeds with its business, Mr. Speaker, I think it might be appropriate if I said, on behalf of all of us, how deeply we regret the tragic happening that has taken place in the family of the Clerk of the House, and we hope that you will convey to him, and to his wife, our very deep sympathy.
– I deeply appreciate the Prime Minister’s intervention, Mr. Speaker, and I support the request that he has made to you. I was deeply shocked by the news of Dr. Green’s death.
– As probably the member of the House who was best acquainted with the Clerk’s son, I should like to associate myself with the remarks of the right honorable gentlemen. I spent many years with Brian Green, first at school in Canberra, and later at the University of Sydney. I was deeply shocked to receive the news of his death when the House rose last night. His parents have the deep sympathy of us all.
– The House may rest assured that I shall carry out its wishes in this matter.
– I lay on the table the first report of the Joint Committee of Public Accounts on the Supplementary Estimates 1951-52.
Ordered to be printed.
Debate resumed from the 19th February (vide page 133), on motion by Mr. Menzies -
That the bill be now read a second time.
– This measure is, in some respects, even more important than the Commonwealth Bank Bill which the House passed last night. In some important respects the measure will weaken the operation of certain safeguards against inflation that were inserted into the banking legislation at the instance of the Chifley Government. The origin of safeguards is to be found in the wartime action of the Curtin Government in 1942. As a matter of fact, the principle embodied in the legislation and the regulations was agreed to by the Treasurer (Sir Arthur Fadden), when he was presenting his Government’s budget towards the end of 1941. He was content with a proposal that the private banking system should make an agreement with the Government under which a proportion of the surplus investable funds of private banks would be paid into a special account with the Commonwealth Bank, the purpose being to prevent a secondary creation of money or, in other words, secondary inflation to a degree that would be ruinous to the people and also - and I think the Treasurer said so at the time -to put a reasonable curb on the profits ofthe banks about which, at that time, there had been a certain amount of strong criticism. Looking at the position in 1941, the Curtin Government thought it was sufficient merely to have an agreement which could not be put into operation, and therefore regulations came into force under the National Security Act. In effect, the operation of those regulations was continued by the 1945 banking legislation of the Chifley Government. That portion of the present law has, therefore, been in operation, in substance, from early in 1942 until the present time. We have thus had practical experience of it.
In my view, it was partly as a result of those safeguards - particularly the special deposits system - that, at the end of the war, and even after the period of post-war reconstruction and rehabilitation of ex-servicemen, the economy of the country was regarded by practically every internationally recognized expert as sounder than that of any other country in the world except New Zealand. The profits of the banks had been effectively stabilized. They had not been cut down. That had been one result of the system of special deposits. But above all, the problem of credit control to curb inflation had been tackled and largely solved by the machinery contained in the 1945 act, the object of which was to return to the Commonwealth Bank the surplus investable funds held by the private banks. The primary source of such funds in the community was the enormous governmental expenditure in connexion with the war effort, and direct payments to exservicemen and contractors. A thousand and one items created what was then a record expenditure for this country. The use of treasury-bill finance was absolutely essential at that time because although taxation was increased considerably and loans successfully raised, there had to be issues of central bank credit by means of treasurybills. “What is this Government doing now? A flexible .formula is contained in the present .law, and has been there for eleven or twelve years. The present Government ba£ worked under that formula for three years. Instead of sticking to .it and administering it in a .proper manner with ;i view to the general welfare, a new, complicated formula ,is now put forward. Nevertheless, the Government is forced to admit the correctness of the action taken by the Labour Government in 1945 in connexion with the special -accounts, which are to be continued, although the proposed formula alters the precise amount that is to be paid in. The amount is to ,be calculated on the basis of deposits, whereas, as the .law .stands at present, it is calculated on the basis of assets, a portion of which must be paid in. The present system, which was introduced by Mr. Curtin, and with which the names of Mr. Chifley and Mr. Scullin are also closely associated, has worked successfully on the whole. I think it is only fair to say, also, that the names of other honorable members of all parties during those critical years of the war are also associated with that system which was approved by the leaders of the present Government parties. I refer to the .opinion which the Prime Minister (Mr. Menzies) expressed recently that there is no cause to believe that the Commonwealth Bank has used its powers under the act otherwise than to promote the welfare of the community and to carry out its -responsibility as a central bank. We can, therefore, start from the fact that a system has been long in use and has proved successful. 3% at can -be demonstrated by reference to one or two authorities, which I shall mention in a -moment. Nevertheless, the Government proposes - not immediately after attaining office but just before the holding of -an important .Senate election - to change the system. That, of course, is not merely .a coincidence. I ido not wish tO:go into ‘the matter fully because we all know that, in contrast with the position ‘that obtained twenty years ago, “honorable members of all parties in the B-ouse now recognize that the profession or trade of banking differs fundamentally from all other trades and services. The functions of banking in the .modern community are no longer only to supply and distribute money in an orderly manner, but .also to ^create money. In support of that statement’ I need only refer to works that were queried when they were written but which are now accepted as expert opinion on the subject, such as those Of Lord .Keynes and Lord McMillan.
The banking system of this country has, as its pivot, the Commonwealth Bank of Australia, which is the central bank. That bank has, as an auxiliary, apart from its independent contribution to competitive trading, its -own trading division. On the successful functioning of the Commonwealth Bank depends the economic welfare of ‘the people, the stability of the currency, and the success of the private trading banks, the fate of
Which is wrapped up with that of the Commonwealth Bank. Four points are dealt with in the 1945 act. They are, first, the advance policy, concerning which directions may be given by the Commonwealth Bank to the trading banks; secondly, the regulation of interest rates .in banking; thirdly, and most importantly, the regulation of investments by the trading banks in Government securities, treasury bills, and stock .exchange securities ; and fourthly, the lodgment by the private banks, from time to time and as required by the Commonwealth Bank, of their surplus investable assets in ‘ special accounts with the Commonwealth Bank. - that is, the special accounts’ system.
The 1945 legislation has never been openly attacked ‘by this Government. It has never gone to :the people and criticized the legislation. Indeed, the -act was endorsed by the people at the general election of 1946. There have been one or two -aspects of criticism of it, but never a -real -attack. It is that legislation which is now challenged by the Government. Instead of openly repealing it, the
Government is attempting to subvert it in a number of respects. Let us consider advance policy. Temporarily, that policy has been discarded. The separation of the general business section of the Commonwealth Bank from the central bank will further cut down the positive part which the Commonwealth Bank can play in the economy; for instance, when it. is necessary to expand credit. My colleague, the honorable member for Ballarat (Mr. Joshua) referred to that matter recently in the House. Supposing that the Commonwealth Bank desires a greater release of credit by the private banks. It may issue a direction to that effect, but it cannot say how much credit is to be released, because that is practically impossible. Through its trading bank, it may set the machinery in motion to carry out that policy. The Government recently altered a part of its advance restriction policy, but did it at a time when the private banks could do nothing because they did not have money to lend. However, interest rates are a more important matter than that. The Treasurer announced in his budget speech last year -
The Common-wealth Bank does not wish to take further action to fix maximum rates.
He therefore indicated that the trading banks would fix interest rates. This Government is responsible for handing over to the private banks one of the most important parts of central banking practice. That is the fixing of interest rates. The power to regulate interest rates is of the very essence of central banking. This measure openly surrenders to the private banks the control that has previously been exercised by the Commonwealth Bank. Nobody will notice that that power has been handed over by the method of repeal, unless he considers the legislation very carefully. ‘ However, it is quite apparent that this bill will surrender control over the private banks which the Commonwealth has exercised in relation to the holding by the private banks of government securities, treasury-bills, and the like. But this legislation has been anticipated. From June to December, 1952, the holding of treasury-bills within the private trading banks of Australia increased from £35,700,000 to £136,700,000. Therefore, this Govern ment permitted the private banks to increase their holdings of government securities by more than £100,000,000. Apparently the power to do that is not sufficient for the Government, because the present legislation indicates that the private banks may increase their holdings of such securities provided they have the consent of the Treasurer or the Commonwealth Bank. The private banks have had that consent, and are now holding about . £136,000,000 worth of treasurybills. Their holdings of other government securities increased in the same period from £66,600,000 to £79,200,000. In other words, about £120,000,000 worth of interest-earning assets have passed from public to private hands in six months.
With the passing of those assets has passed from public to private control the vital power to create additional money. But the Banking Act of 1945 was designed to keep such a power in close check in order to prevent secondary inflation. These securities are not only interestbearing and profit-making in themselves, but are a. source of further activity and loans by the private banks. I do not think that it is known to the public that such a large sum of money is involved in the passing of these securities to the private banks, because the information was only recently extracted from the Government by a question asked in this House ,by the honorable member for Melbourne Ports (Mr. Crean). It is one of the recognized techniques of modern central bank practice that the buying and selling of government securities can be used by the central bank, especially in time of difficulty, to regulate the volume of credit. It is difficult to operate in that way in Australia, where there is no money market similar to the London market, but that power will be completely nullified if the private banks have considerable holdings of basic securities because they can hold them as profit-making assets as long as it suits them in their business.
The additional £120,000,000 worth of assets obtained in so short a time as six months has very considerably increased the annual profits of the private banks. I cannot give the exact figures, but the interest rate of shortterm treasury-bills has also been very conveniently increased by the present Government from three-quarters of 1 per cent, to 1 per cent., and the interest rate on gilt-edged securities has been increased from 3£ per cent., as it was in the time of the great Chifley conversion and new loans, to 4£ per cent, to-day. The private banks, through this legislation, will be put in an infinitely better position than before from the viewpoint of profit-making. Of course that increase of interest rates has been to the greatest disadvantage of thousands of small investors who put their money in war and security loans and then discovered, after this Government’s action, that their value had fallen by 10 per cent, or more.
The most important key to central banking control is undoubtedly the effective regulation by the central bank, through the special deposit procedure, of the surplus funds of the private trading banks. That key has been used effectively for eleven years, but now a new key has been suggested. There is no evidence whatsoever that the new key will be as effective as the old. If I were satisfied that the new formula would do the job in the same way as the old formula, and that power would be exercised by the Commonwealth Bank with wisdom and discretion, much could be said for the proposed innovation. However, I believe that it cannot possibly be accepted, having regard to the important departure that it makes from the present statute.
I now come to perhaps the key point of the Prime Minister’s speech. This was the dramatic note, the almost melodramatic note in his speech. He said that there was an enormous new liability which faced the central banks last year. In that connexion he mentioned a sum that exceeded £500,000,000. I suggest that the Government should be the last to use that argument. In June, 1951, the amount in special accounts with the Commonwealth Bank was £570,000,000. The present Government was in office, and it was responsible for the figure that I have mentioned because it had the ultimate control of the Commonwealth Bank. There has not been one point of difference between the Commonwealth Bank and this Government since it has been in office. The Government planned that everything in connexion with banking would be brought before the Parliament for decision, but the actuality has been that nothing has come to the Parliament. All decisions have been made between the Government and Commonwealth Bank Board.
Five hundred and seventy million pounds was the sum held in special accounts at June, 1951, and the present Government was responsible for that figure. There was no threat to call up that money, because it was already in the accounts of the Commonwealth Bank. By October, 1952, the figure had been reduced to £157,000,000, which is a reduction of £413,000,000 in that period alone. That was a reduction of fourfifths of the enormous sum mentioned by the Prime Minister. Because it was responsible for the reduction of the special accounts by £413,000,000 this Government created the very situation which it now states is a prospective menace. That is, it reduced a large sum to a small sum while the statutory provision remained the same, and thus in a sense created a new liability. The Prime Minister’s suggestion that a Labour government would, under the Banking Act 1945, call up the maximum amount due to the special accounts, is a sheer gratuitous insult. There is no justification for it, considering the history of the special accounts. Other operations are proceeding behind that government facade. That is the tune that is being played to the public, but I believe that the public will perceive the reality behind them. The public will have regard to the careful management of these accounts by Mr. Chifley. Labour’s just dealing with all sections including the private banks, and its successful solution of banking problems.
The public should compare the wise administration of the Chifley Government with the blundering fits and starts administration of the present Treasurer. This political chimera, that a Labour government might enforce the liabilities of the banks to pay into the special accounts, is no more real than that other figment of the imagination that the people would suddenly demand to be paid over the counter the’ £1,110,000,000 that they have deposited in the banks. Theoretically it is possible that the people might desire to draw out their money, but the Commonwealth Bank stands behind the private banks, and consequently a disastrous run on the banks could never occur. The suggestion that a Labour government, in order to embarrass the private banks, would call up moneys to the maximum of their liabilities under this elastic and flexible formula, is just as absurd as that all the people should want to withdraw all their money at the same time. I invite honorable members to compare the Government’s administration of the speck- 1 account- with the administration of them under a Labour government. The report of the Commonwealth Bank for 1919 stated at page HU -
The central bank has been able by making calls to banks’ special accounts to draw off from the banking system a considerable part of the additional cash arising from war-time finance and the growth of overseas funds and to immobilize it, thus preventing its use as a base for secondary inflation. At the same time, the central bank has recognized that thu re-establishment and expansion of peace-time industry would make legitimate demands on bank finance and that the banking system hari to be left with sufficient liquid funds to enable it to make necessary advances. Accordingly, between July, 1945, and July, 1948, only about 45 per cent, of the increase in assets during this period was, in fact, called to special account.
That was what the Labour Government did. The power was there, but it was administered wisely to prevent secondary inflation and at the same time give private banks a reasonable opportunity to assist industrial and national development. Itis no use talking of what a Labour government would do. I have shown what a Labour government did, in fact, do. The Australian system has been recognized as sound by financial authorities throughout the world. For example, I shall quote the following passage from Central Banking in Undeveloped Money Markets by Dr. S. K”. Sen.’ He stated, in writing of the Australian system -
That the system is highly flexible cannot lie doubted. There is. in the first place, some flexibility on a month-to-month basis introduced in the post-war years . . There is, next, some flexibility on the yearly basis. Each year since the end of the war, the central bank has taken different percentages of the increase in deposits to the special accounts, determining its policy on the basis of a number of factors. During the waT, as the Government poured large sums of money into the economy through the issue of treasury bills, the Commonwealth Bank pursued the policy of freezing the major portion of the increase in bank assets. At the end of the war, in September, 1945, the Government succeeded in stabilizing the issue of treasurybills; the Commonwealth Bank immobilized only 37.4 per cent, of the increase in deposits in the special account. Similarly, in 1947-48, the bank took up a small percentage of the increase in deposits (only 25.S per cent.). Next year, as the rise in export prices threatened the country with the danger of inflation, the Commonwealth Bank, besides retiring £A.85,000,000 worth of treasury bills, froze 87.7 per cent, of the increased deposits in the special account. The percentage of increased deposits taken up in the special account has thus been varied in different years, and funds have been released at rates determined by the Commonwealth Bank. There is also flexibility in the use of this method in relation to each bank
I invite honorable members to contrast the actions of the Labour Government on treasury-bills, as cited by the author of the book, with the actions of this Government which mouths so much about treasury-bills. The book contains figures relating to banking profits after the system was introduced by the Labour Government. They show clearly that the profits of the banks before the war averaged 4.2 per cent., based upon shareholders’ funds, and they gradually rose until 1949 when they were 4.7 per cent. The author of the book regards the system as a valuable check on the fixing of a reasonable profit. Secondly he gives great praise to the effect of the special accounts system upon the Australian economy. He said that it had operated more efficiently than the systems in New Zealand or South Africa.
I have mentioned these facts to show that the Labour Government administered the system carefully and solely in the interests of the community, with no desire to injure the private banks, but with a definite mandate and a duty to protect the public against inflation. The crucial question is whether this Government has proved the necessity to alter the present statute. It fixes a maximum for the special deposits that should be called up. It is not the statute that has caused the difficulties of the present Government. They have been caused by this Government’s administration of the statute. In place of the existing maximum, the Parliament is asked to give blanket endorsement of a complex formula which tie Prime Minister did not explain but upon, which te has circulated a memorandum. It is extraordinarily difficult to follow the formula in detail, and I do not intend to speak upon that matter on the second reading in. any detail. Whose formula is it.? Who is the author of it? Has it been prepared by the board of the Commonwealth Bank or the Governor? Was it the work of the Treasurer or the private banks? We do not know. Without condemning it outright, because we have not all the facts.; I emphasize that we must know how the formula will work. Honorable members cannot possibly accept a formula like that without knowing all its aspects and who is putting it forward. Is it true that the Government has received a number of suggestions? Why has it put this one forward? No case has been made by the Government for an alteration of the present law or to assure the people, as the Parliament must do, that the power will be exercised in every case solely in the interests of stabilizing the currency and without the slightest intention of injuring the private banks. The principal questions are whether the Government intends to prevent secondary inflation and whether its proposals can be regarded as reasonable control of the profits of the private banking system. The House is entitled to a full disclosure of the relevant reports so that honorable members may know who is the true author of this formula, whether his opinions are correct and what facts support them. The formula must be justified by the true author or authors before we can possibly accept it.
Honorable members should recall how the special accounts came into existence. They did so because, as a result of the issue of treasury-bills and extraordinary war-time expenditure, money flowed into the private banks. That continued until the end of the war, but the Labour Government reduced the value of outstanding treasury-bills between 1945-46 and 1949-50 from £345,000,000 to £125,000.000. That reduction of more than “ £200,000,000 took place during a period of full employment and maximum expansion. There was no occasion then for putting central bank credit into the banking system in order to. carry out its essential functions. Obviously money issued in that way finds its way back to the banks. If the trading banks could, have utilized the claims on the Commonwelth Bank or the Government, they would have lent more money, purchased more assets or reduced liabilities with probably disastrous results to the war effort and the national economy. The special accounts system was devised to limit and control secondary inflation and also to act as an indirect regulator of profits. As a result a portion of the increased assets of the trading banks was neutralized just when withdrawals from the special accounts took place from time to time in the manner illustrated by the report of the Commonwealth Bank and the authority that I have quoted, never involving 100 per cent, but sometimes up to a very high percentage. This involved the transfer of purchasing power, a matter that required very careful watching in the interests of the stability of Australia and of the private banks as well as the Commonwealth Bank. The amounts in the special accounts began to increase in May or June, 1951, when the level reached £575,000,000. The present Government must accept responsibility for that figure. Here we must look back on the most tragic budget in the history of this Government to find the genesis of the run on the special accounts which reduced the amount of £575,000,000 in June, 1951, to £157,000,000 in October, 1952. The Government argued that its sudden cut in imports was devised to safeguard overseas funds. That is a part of the truth. The whole truth is that it was the policy of the Government which led directly to the gigantic drafts on overseas funds which had in part been carefully built up over the years by the Chifley Government. In 1950-51, the value ‘of exports rose to £960,000,000. That was, in itself, a warning of what might happen. In the same year the funds held abroad by the Australian banking system increased to nearly £600,000,000. As the banking’ system made money available to importers to utilize these overseas funds, so the Government should have seen that the release of overseas funds was kept under supervision in an ordinary manner. What did the Government do? It actually permitted and encouraged some private banks at least to participate in flooding the country with imports by releasing credits held in the special accounts. Goods were coming into the country that were not wanted by the importers who brought them here. When import restrictions were applied importers began to black market their right to bring goods into the country. These disastrous economic results followed because special deposits and overseas funds that were completely under Commonwealth control were not properly administered.
There is a definite relation between the tremendous rise in imports and the fall in special accounts which culminated in the withdrawal of £212,000,000 from special accounts in the three months April to July, 1952. But for the almost reckless manner in which the Government allowed the private banks to draw on special accounts and provide almost unlimited money for their importer customers the import crisis would not have occurred or it would have been comparatively minor in character. As the report which I have mentioned clearly shows, Mr. Chifley was threatened with a similar situation. Seeing the situation that was developing at that time and the rapid increase that was taking place in overseas funds, Mr. Chifley watched the matter very carefully and avoided a crisis. It is fair to say that these difficulties came upon us, not because the existing statute was wrong, but because it was unwisely administered by the Government. Although the banks have profited from the release of special accounts, a fear has been engendered by the fact that special deposits decreased from £5-75,000,000 in June; 1951, to £157,000,000 in October, 1952.
The Prime Minister made great play on what he called “the enormous uncalled liability” which faced the banks last year. I remind the right honorable gentleman that it is an uncalled liability only in the Pickwickian sense. How does the record of the Government compare with the record of the Chifley Government in regard to these special accounts ? In 1949, the Government promised that it would restore value to the £1 and get rid of inflation. Only a few days ago, in Sydney, the Minister for External Affairs (Mr. Casey) said that the Government had not kept its promise to put value back into the £1.
– That is quite untrue.
– I am quoting from a report that was published in the Sydney Morning Herald. If the right honorable gentleman would like to have a copy of the report I shall furnish it to him. He has not denied that he made the statement. I shall furnish him with a copy of the report and he can correct it if it is wrong.
Mr. Curtin interjecting,
– Order ! I am sure that the Leader of the Opposition does not need the assistance of the honorable member for Watson (Mr. Curtin).
– The relation between the so-called flood of imports and the acquisition of money with which to pay for them can be seen by a study of the monthly movements of the value of imports and the level of the special deposits. With the consent of honorable members, I incorporate in Hansard the following statement : -
The statement shows the definite relation between the tremendous rise in imports and the fall in special accounts which culminated in the withdrawal of £212,000,000 in the three months, April to July, 1952. The import crisis was caused by the failure of the Government to ensure that the special accounts were drawn upon only in a prudent manner in the national interest. The extent to which the private banks were able to provide accommodation for importers can be seen by the increases in advances made by the trading banks. In May, 1951, advances totalled £1,291,000,000. By September, 1952, they . had fallen to £1,054,000,000. The depositors with the private banks had been able to draw enormous amounts with the result that the total advances issued by the trading banks rose from £496,000,000 in May, 1951, to £682,000,000 in September, 1952. The large amounts advanced by the trading banks largely increased the volume of money in circulation much of which was spent on unessential imports as some importers have since realized. As the honorable member for Fremantle (Mr.’ Beazley) pointed out in a recent speech, the flood of unessential imports brought to Australia was gigantic. Incidentally, over a period of five months deposits fell by £200,000,000, while advances rose by almost exactly the same amount. Why has the Government in its new formula shifted the basis for calling up to special accounts from increase in assets to increase in deposits? The House is entitled to be furnished with that information. As all honorable members are not technically qualified to obtain it for themselves, the Government should make available the reports of the experts, particularly as it says that the Parliament should decide this matter. Why will it not do so? The Government now proposes that payments to the special accounts shall be made on the basis not of the surplus investable assets of the private banks but of their deposits. The important point is that deposits increase only after inflation is actually on the way.
I turn now to the last problem. What has happened to the money that has been withdrawn from the special accounts? That is a fair question, but the Government has failed to refer to it. It has failed to prove that the relief thereby granted to the private banks was entirely necessary. They may have required a partial measure of relief. However, it was not necessary for the Government to provide relief to the degree that it did during the period in which this country was being flooded with imports. Furthermore, if such relief were necessary during that period in which, at the same time, our
London funds were falling, why has not the Government recalled some of that money now that those funds have again increased? I admit that some of that money has been recalled, but the amount involved has been insignificant. Members of the Opposition desire to be informed more fully on those matters before they will give their assent to this measure. But what information have we been able to discover by our own efforts? The Government released from the special accounts a sum of £400,000,000, but now it holds up its hands in horror and talks about enormous uncalled liabilities. The Government must bear responsibility for the fact that they are enormous.
– Who owned the money?
– It was owned by the private banks. The honorable member for Sturt (Mr. Wilson) should not pretend that he is as simple as he looks. Does he object to the system of special accounts under which money that belongs to the private banks is lodged with the central bank ?
– The right honorable gentleman is suggesting that the banks never owned that money.
– I have never made such a suggestion. What I have suggested is that it is necessary in the interests of not only the private banks themselves but also the community that the system of special .accounts should be continued.
I direct the attention of honorable members to the latest official figures published in the Statistical Bulletin of the Commonwealth Bank. They show that from October, 1951 to December, 1952 total deposits of the private banks decreased from £1,179,000,000 to £1,147,000,000. That means that the liabilities of those banks to the public fell by £32,000,000 in that period. During the same period, cash and notes held by the private banks increased from £56,000,000 to £79,000,000 or an increase of £23,000,000. At the same time, treasury-bills held by the private banks increased from £23,000,000 to £136,000,000, or an increase of £113,000,000. I am endeavouring to find out the destination of the moneys which the private banks withdrew from the special accounts. Supposedly, those moneys were withdrawn in order to finance imports, but much of it has gone elsewhere. [Extension of time granted.) That is an important and relevant matter in respect of the special accounts. Holdings of government securities by the private banks increased from £68,000,000 to £79,000,000, and advances by the private banks have increased from £594,000,000 to £638,000,000, or an increase of £44,000,000. Overall, the liabilities of the private banks decreased by £32,000,000 whilst, at the same time, their disposable assets increased by £191,000,000. That means that of the amount of £400,000,000, which had previously been immobilized in the special account, over £200,000,000 has been freed. Ostensibly, that was done to save the private banks from embarrassment, but, in fact, that sum has been put away or invested by the private banks. In other words, the private banks were not in need of all of that sum for the purpose of carrying on their ordinary business. They invested a substantial proportion of that amount. Simultaneously, there has been a shifting of control of public money to the private banks, which became tens, of millions of pounds better off, whilst the position of the government and of the great majority of the people has worsened. Under this measure, the Government proposes to stabilize the position of the special accounts as it exists at the moment. Under the new formula the central bank will not have power to deal with a recurrence of secondary inflation, but, at the same time, the private banks will be enabled to a considerable degree to regain their old power of control over the public processes of finance, which, at present, is exercisable by the central bank.
I should like the Government to state clearly whether, during the last fifteen years, the private trading banks have held treasury-bills to the value that they hold them to-day. Of course, they have not; although they may have held a small proportion. Similarly, the holdings of other government securities by the private banks have increased, and rates of interest have been increased. No doubt, the private banks will invest the money that they withdraw from the special accounts in other quarters in which the rate of interest will be satisfactory to them. I believe that there has been an agreement between the private ‘banks and the Government to increase interest rates. I also believe that the Commonwealth Bank has been directed by the Government to control and manipulate the buying and selling of various securities through the Commonwealth Bank with the one purpose of forcing up interest rates. -Of course, if high interest rates prevail it will be impossible to ensure full employment. Mr. Chifley laid down that principle, and it has been accepted by Beveridge and all the other authorities. The rate has been increased from 3 J per cent, to 4-J per cent, within a short period. This further transfer of assets to thu private banks in the way that I have described is most significant. The relevant figures are most important, but I do not think that they are widely understood.
We come to a position where the condi– tions governing advance policy are still prescribed by statute, but the Government has said, in effect, “Well, we cannot do anything about that. The private banks are prepared to deal with that aspect “. A statement to that effect was made on the eve of the Flinders by-election. But, at the same time, the private banks say that they have no surplus funds, and, therefore, cannot increase their lending capacity. Hitherto, it has been necessary for the private banks to obtain the consent of the Commonwealth Bank, or of the Treasury, to make advances. The object of that provision was to prevent the banks from having securities on which they could elevate a new system of advances and again cause secondary inflation. In that respect, absolute power was provided under the 1945 act, but that power was never exercised absolutely. The figures that I have cited are startling. They show that the private banks have withdrawn an amount of £200,000,000 from the special accounts. Those banks do not require anything like that amount for ordinary purposes of business. The fact is that the bulk of that money has been invested. Government securities are the basis of advances and lack of adequate control of advances must cause secondary inflation. For that reason, the
Opposition opposes this measure. I submit that the present system has worked reasonably well, and I emphasize tha the provisions governing advance policy must be administered most carefully as they were administered during the regime of the Chifley Government. The flood of imports did not begin while the Chifley Government was in office.
How can we be expected to accept a formula when we do not know anything about its origin? It is obvious that the Prime Minister has been presented with a formula, and has circulated a memorandum to show how it works. I know how it works mathematically, but I should like to know how it works economically and financially. Suppose a crisis was developing, and the Government needed to call in a substantial portion of the assets of the banks. This, formula would prevent it from doing so. The Parliament would have to be summoned, and it would be too late before the appropriate action could be taken. There must be flexibility, and technical safeguards. I shall not object to them.. I should not think it right that something should be done suddenly without proper notice to, and consultation with the banks; but to ask us to accept the formula which limits and restricts instead of being flexible is to expect too much.
I ask the Government to tell us the names of those behind the Government who are responsible for the abandonment of the old formula and the recommendation of the new formula. Did all the private banks, or only some of them put forward the proposal? Does the Commonwealth Bank Board or the Governor of the bank approve it? Is it not right that we should be given some information about these matters? But we are merely told, in effect, “ Here is a formula which i3 not so severe as was the old one. We ask you to accept it “. We require more information about the matter, and we shall not be satisfied until it is given to us. Until a proper inquiry is conducted by the Parliament, if necessary, or some other authority, we shall be ill-advised to destroy a system which worked smoothly and effectively throughout the Chifley Government’s term of office and which has been given recognition and praise throughout the world by economists of all shades of political and national opinion.
The old formula is to be abandoned. What is the reason for that decision? On behalf of the Opposition, I am entitled to demand that the Government give the Parliament some information about this matter. In a period of economic danger, will it not be a shackle upon the Commonwealth Bank, the duty of which is to protect the currency of the country, irrespective of any considerations of private profit?
-(Hon. Archie Cameron). - The House is dealing with the Banking Bill 1953, which is closely related to the Commonwealth Bank Bill 1953, the consideration of which was completed last night. Twenty-four honorable, members participated in the second-reading debate on the Commonwealth Bank Bill 1953. Eleven of them were Government supporters, and thirteen of them were members of the Opposition. It is my intention to give preference in the call to those honorable gentlemen on each side of the House who did not have an opportunity to speak on the Commonwealth Bank Bill 1953. I understand, from remarks which have been made to me in my room on some occasions this week, that there is a feeling that I am bound to accept a list of names put before me by the Whips. That is not so.
– It is wrong, too.
– I am not bound by such lists. I never have been so bound, and I never will. If it is apparent to me that a certain point of view has no chance of expression by honorable members whose names are on the Whips’ list, I shall call honorable members who wish to express that view, regardless of the Whips’ list. I regard these lists as very useful guides, and I welcome them, but I assure honorable members on both sides of the House that I am not bound by them.
Mr. McMahon rising at the table,
– The Minister for the Navy (Mr. McMahon) took part in the second-reading debase on the Commonwealth. Bank Bill! 19;5;3.. Do.es he demand his right, to speak now-?’-
-j:t. - i do. not criticize your statement, Mr. Speaker, as a point- of view, but i suggest that it may be wiser to allow- the usual authorities on either side of’ the House to consider- your comment abou,t the need’ to allow- honorable members who- wished to speak on- the Commonwealth Bank Bill’ 19.53, but did not have an- opportunity to do so, the first opportunity- to- speak on the B’anking Bill 195’3. We- may then be able to resolve- the matter- ourselves. However-, i do not- object- to your, idea. i am- sure that it is the result- of your concern for fa-ir-ness, but 1 am afraid that the Minister for- the Wavy. (Mr. McMahon) and i are- in the- same position. Both- of’ us spoke on the- Commonwealth Bank Bill 1:953,, and i- have- now- spoken- on the Banking- Bill 1953.
-The right honorable gentleman has his rights as the Leader of the. Opposition, and the Minister- has, his rights.
– The. fact that you have reminded the Minister for the Navy that he spoke on the C’ommonwealth Bank Bill 19:53 and asked1 him whether he wished to, exercise his right te, speak, on the Banking Bill 1.95.3 is a complete departure, from your earlier rulings about the list, of names supplied tq you… Wo lists are. supplied to you bearing, names of Min.is.ters. They rely on their- rights by virtue, qf the fact that a-re are sitting- at. the taMe.
Mi’-. SP-E4KEB,- Or-der !’ T.he right honorable gentleman is quite, wrong..
– HARRISON.- The names, of Minsters.: are not oft the lists supplied tQ yo.u,.: I repeat that. . J%. it cOrrect or incorrect ?
– I 3,-epeat . that, the right honorable gentleman is. quite wrong The names pf Masters.: .ase. given to, me.
-I do not know w,hat the Whips d’o,. but T point out-‘that the Government does, not submit, a list pf speakers. Ministers ave asked to take their place at the table.-. andi,i as.-is;. their sigk.1), address the House, when;., they receive, the), call’. The Whips-,; if: they .haste included the names, of Ministers, on-, their lists, have done -so. of their own volition, like- Minister for -the Wavy, who is sitting at the table, represents the views– ofl the (Government; and it- is the wish’ of the Government that he address the House on this.- measure.
– Very well.
– I am sorry to inter*“-up.t the Minister,, but. I think:, that I’ should clarify my position as. the. Government WhiP. I had the- names of seventeen honorable members, on, this side of the House who wished to. speak on one or other of the ba.Bk.ing,. bills. It, was obvious that all of them could not speak on those measures, within the time, available, audit was. not desirable that all pf them should do so, because it, appears, that w? are running;; acut of. argument on this subject- I approached a number of honorable, members- this, morning an;d asked them whether they desired, to- speak on the Banking. Bill 19.53.. With the exception of the honorable member, for Balaclava. (Mr. Joske), w-ho will be the next speaker from this, side- pf the House, I. have, not fo,und one honorable member who is eager to. speak: at this moment. Therefore, from anr point- of view,, Ave ase glad that a Minister isi ready to. speak at this time..
-. - I have noted your- comments, Mr. Speaker-, about the- Whips’ lists. May I ask you> whether yow will tell the Ho.use the names’ of- honorable members who- have complained to. yo.ii about calls from the- Chair?1 Do they come from the Government on Opposition side5, or from b.oth- sides, of the. House? I point out: in defference, to. you,, sir-, that when, the late Mr-., J., B.. Chifley -w,a,s, the Leader of the Opposition, you- indicated that you were.i prepared: t© call honorable members from the; floor o ‘ the House as you saw- them rise, inr their places;, and in accordance with what was the generally accepted practice. But yow alao made; -it clear that -il yo.u called; anr honorable member Bad ‘he jockeyed- f»-a favorably position, you: would not see h-iaa. again in that, debates Your may recollect -that, you mentioned that you thought, in, -fairness to- honorable members,’ that, it wo.ul.d probably be- preferable, if a lists were submitted, . sp that - honorable members would know when they were to speak. I should like .you to say whether you intend in future to call honorable members at random or to restrict the call to the leaders of the three parties and the Vice-President of the Executive Council (Mr. Eric J. Harrison) or can we take it that the arrangement is at an end, and the field will be open to allcomers ?
– The recollection of the honorable member for Grayndler (Mr. Daly) is perfectly clear, and I agree with it. However, during the debate on the Commonwealth Bank Bill 1953 earlier this week and on a previous occasion during another debate, I was approached in my room by some honorable members from both sides of the House about the calls from the Chair. The House should understand clearly that, whilst I am quite satisfied to be guided by the Whips’ lists, if it comes to my knowledge that certain honorable members are being precluded from speaking, I shall exercise the rights that I possess as Mr. Speaker. I am not, and I never will be, bound by any Whips’ lists, but I welcome them as a guide. The VicePresident of the Executive Council (Mr. Eric J. Harrison) referred to the position of Minister. The Government Whip can assure him that Ministers’ names appear regularly on his lists, of speakers from both parties who constitute the coalition. If the names of Ministers have no right to be on the Whip’s lists, that is not my. affair. It is a matter between the VicePresident of the Executive Council and li is chief officer.
– I take this opportunity to protest against the practice of submitting lists of speakers. I have been a member of this chamber for longer than has any other honorable member on this side of the House, and I know that the procedure was changed ‘ when you, sir, became Speaker. The present system is most unsatisfactory indeed, particularly when the proceedings of the Parliament are being broadcast. The Vice-President of the Executive Council (Mr. Eric J. Harrison) has made quite clear that, in his view, Ministers have a prior right to receive the call, even although their names are not on the lists that have been submitted to the Chair. But when do
Ministers usually rise? They rise at the “ peak “ hour - the 8 o’clock session. They insist on being “ on the air “. . The result is that an ordinary rank-and-file member like myself has little chance of receiving the call at broadcasting time. I tried to speak on the Commonwealth Bank Bill last week, but I was not given an opportunity to do so just because I did not smooge to you, Mr. Speaker, or to the party Whip to have my name put on the list. I object to lists, and I shall continue to object to them. I shall not go to the party Whip, to you, sir, or to anybody else. I consider that I have as much right as any other honorable member to receive the call when I rise. That was always the custom in this Parliament before you were elected and adopted the list system. No previous Speaker that I know of ever sanctioned that system. It is grossly unfair. I may be denied an opportunity to participate in a debate merely because you do not like the colour of my hair.
– There is no need for the honorable member for Hunter to try to be offensive. The list system has operated in this House at least since I became a member of it nearly nineteen years ago.
– It must have been a secret.
– If that is so, the honorable member for Hunter must have been the only one who did not know about the secret. To my own knowledge, members of the party to which he belongs exercised their opportunities under the list system. I hope the honorable member will realize that the Minister for the Navy is not now speaking at eight o’clock.
– It seems desirable in discussing the motion now before the House to remind honorable members of the subject of this debate. In spite of the concluding and apparently chance remarks of the Leader of the Opposition (Dr. Evatt), he did not give honorable members a lead on the subject matter of the Banking Bill and therefore of this debate. The Banking Act has three purposes, and I believe that the House should be aware of them, because only by examining the bill against the background of the act can one judge whether the proposed amendments are valid and acceptable. The first object of the bill is to regulate the business of banking; to regulate the general activities of the trading banks. Its second purpose is to safeguard the interests of the depositors. I have not heard that fact mentioned by any honorable member opposite, and I doubt whether many honorable members of tha House know that one of the great and important functions of a central bank should be to protect the rights, interests and assets of any member of the community who has saved a little money and deposited it with one of the trading banks. It is extraordinary that, in the whole of this debate, nobody has worried about poor Mr. John Citizen. Nobody has worried very much whether his savings are to be protected or whether he is to be regarded as a worthwhile member of the community. The third purpose of the bill is to protect the currency and public credit of the Commonwealth and that, I suggest, is one of the main functions of a central bank. It must protect the currency to ensure that its value should not be depreciated too rapidly, and that the public credit should be maintained. In other words it must make sure that the public credit is so high that people will be prepared to invest in Commonwealth bonds and securities. I return now to the argument advanced by the Leader of the Opposition that the new formula for ascertaining the percentages of the deposits of the trading banks that are to be deposited with the central bank, will weaken the safeguards against inflation. Quite frankly I do not think that the right honorable gentleman knew what he was talking about. It is unfortunate that in this country, particularly on the Labour side of politics, the belief has grown that central bank activities can be used to control inflation completely. Obviously, if that were so, inflation would have been controlled in this country since 1945. The mere fact that it could not be controlled indicates that banking alone cannot control inflation and, indeed, that banking is not the main weapon with which to try to control it. Recently, some articles have been written by Professor Swan, of the Australian
National University, and Dr. Kurt’ Singer, which examine in a most realistic manner the real causes of inflation. I venture to suggest that the cure for those causes lies outside the banking system. I shall not attempt to argue whether the analyses made by Professor Swan and Dr. Singer are correct. They argue that the real causes of inflation were the action of the Commonwealth Court of Conciliation and Arbitration in increasing the basic wage by £1 a week, the rapid rise of export prices for primary products and the secondary effects of that rise within Australia, and the increase of the price of imports. To argue that by central bank action alone the problems of inflation can be overcome is, in my opinion, so much nonsense.
The Leader of the Opposition asked why the formula had to be altered. The simple answer is that the existing formula has proved defective. Why was it defective ? It was defective because there was a huge uncalled liability on the trading banks, amounting to £482,000,000. In other words, an arbitrary government could say to the trading banks, “ We want £482,000,000 worth of your liabilities or deposits. Pay that sum or we shall put you into liquidation “. Surely it is obvious that, with this tremendous outstanding liability, the present method of calculating the sum which the Commonwealth Bank could call up from the trading banks is defective. The Commonwealth Government is determined that this outstanding liability should be cancelled and a more reasonable and responsible formula introduced.
The Leader of the Opposition went on to ask who had devised the new formula. He wanted to know whether it was the Government’s formula or the Trading Bank’s formula. As one member of the Government who took an intimate part in these discussions and who participated in every discussion from the beginning, I say it is the Government’s formula, approved by the Governor of the Commonwealth Bank and by Treasury officials. I think the Leader of the Opposition tried to prove in some occult fashion that outside influences had determined the new formula. I repeat that the formula was drafted’ by the Government, in close consultation with Treasury officials and has been approved by them and by the Governor of the Bank, and I think that they regard it as an effective and proper means to control the special deposits mechanism. That answers the right honorable gentleman’s second question.
Thirdly, the Leader of the Opposition wanted to know why the formula had to be changed. I did not think it would be necessary to answer that question a second time. The Prime Minister (Mr. Menzies) made it perfectly clear in his second-reading speech that, for a good reason, it was necessary for the Government to take action to protect not only the rights of Mr. John Citizen and the trading banks, but also the public credit of this country. This Government was driven to take action because it realized that it could not trust some future arbitrary Labour government to deal fairly with the trading banks. If the interests of the saving section of the community and the vital interests of the trading banks were to be safeguarded, it was essential that the Government should take action to ensure that such a government could not drive the trading banks out of existence and seriously prejudice the rights and assets of the saving section of the community.
The Leader of the Opposition, when dealing with the advance policy of the trading banks, stated that the Government had weakened the power of the central bank to control advance policy. Obviously, he was under a misapprehension. It is perfectly true that the advance policy directives that were issued under the National Security acts during the last war have been cancelled, but that did not remove the reserve power of the Commonwealth Bank to issue advance policy directives in future should it consider that action to be appropriate. Professor Giblin, in his recent book on advance policy directives, stated, that this power was related, not to the normal powers of the central bank, but to a reserve power to be exercised in case of emergency. The principal act contains a provision to enable the Commonwealth Bank Board to re-introduce advance policy directives should it, in an emer- gency, and in its wisdom, consider such a course desirable. That power has not been affected by this bill.
The Leader of the Opposition asked whether, in view of the fact that so much money had been withdrawn from the special accounts, the policy in relation to the calling up of money, and placing it to the credit of the special accounts, would be employed in the future in case of need. There is a simple answer to that question. If the right honorable gentleman had studied the record, he would have realized that the policy of the Commonwealth Bank is to call up money when it considers that course desirable. Only a month ago £30,000,000 was called up to special accounts within two weeks, and a further amount of £30,000,000 has been called up recently. If the Commonwealth Bank thinks that it is desirable to call up moneys, it will do so. It has, in fact, called up about £60,000,000 in recent weeks.
Finally, I come to the last question raised by the Leader of the Opposition. He stated that, under the control of the central bank, there were four instruments for exercising central bank policy. Apparently . the right honorable gentleman missed the one dealing with the mobilization of foreign exchange, and he overlooked the necessity to protect the rights of the depositors and the saving section of the community. Why does the Leader of the Opposition want the old formula retained? Why will he not accept a formula that has been approved by the Government, the Governor and. the Commonwealth Treasury, and which is designed to give a reasonable measure of security to both the trading banks and the depositors? Probably his reason is that under the old formula. as the Prime Minister has pointed out, the trading banks could bo driven out of existence by the arbitrary action of a despotic government, or a piqued man, or an individual who has a grudge against them and is determined to drive them out of existence.
Do not let it be said for a moment that all members of the Opposition have given up their banking nationalization proposals, because only yesterday the honorable member for East Sydney (Mr.
Ward) said in positive terms that in the long run, perhaps in his lifetime, the trading banks would be nationalized.
Sitting suspended from 12.^5 to 2.15 p.m.
– Shortly before the demands of the stomach triumphed over the claims of democracy, 1 was discussing the contentious problem of the formula by which the Commonwealth Bank determines the amounts to be called up from the private banks for lodgment in their special accounts. I explained that the old formula was to be changed because the powers enjoyed by the Commonwealth Bank were far too wide. Under the direction of an irresponsible Government, the bank could misuse those powers. Uncalled deposits amounted to £482,000,000 at the time when the Government decided to act. Those deposits could have been called up, if an arbitrary government had been in power, with the result that many borrowers would have been forced to repay their advances. Such a course of action would have caused an economic holocaust. Therefore, the Government decided that the huge uncalled deposit liabilities of the trading banks should be wiped out. The Leader of the Opposition asked why the present formula should not be retained and argued strenuously against the Government’s proposal. He can have only one reason for wishing to retain the present system. He knows that, under it, far more deposit moneys than are needed can be called up.
The motive of the right honorable gentleman is not hard to find. The Prime Minister has explained that the private banks can be destroyed by three methods. The first of these is the legislative method. However, as members of the Opposition know, the High Court of Australia and the Privy Council have determined that this method is unconstitutional. The second is the administrative method. Through the use of this weapon, the powers and the effectiveness of the trading banks can be whittled away little by little until, in truth, they cease to exist. The honorable member for East Sydney (Mr. Ward) declared clearly yesterday that, in his opinion, the trading banks would be nationalized in the long run.
– Order ! The Minister must not deal with discussions that took place in committee yesterday.
– You have allowed a fair degree of latitude in this debate, Mr. Speaker.
– Order ! The honorable member is suggesting that I have allowed speeches made in this chamber yesterday to be discussed during this debate. I have not been asleep. [Quorum formed.’]
– The powers that will be vested in the central bank under this bill will enable the bank to function efficiently and will be efficient for all its purposes. Why, then, does the Leader of the Opposition Avant the Commonwealth Bank to retain the vastly greater powers that .are now vested in it? The simple answer is that he is fully aware that one of the methods of nationalizing trading banks is that of employing surreptitious administrative controls. The trading banks can be driven out of existence gradually by unfair competition forced upon them, through the Commonwealth Bank, by a dictatorial government. That is why the right honorable gentleman wants to retain the existing powers. The Opposition would not reject the recommendations of the Government, which are based upon the advice of Treasury officials and other technical experts, unless it had some hidden reservations. It intends to abuse the powers of government in order to implement its banking policy if it gains power again in the future. Honorable members opposite are not striving for greater efficiency in the conduct of the Commonwealth Bank. They merely want to be able to crush the private banks.
The Leader of the Opposition asked why the Government had decided to change the basis of computing the amounts of the special accounts of the private banks with the Commonwealth Bank. He complained that the figures had been determined previously by calculating a percentage of the assets of the banks and that the Government now proposed to adopt a formula based on a percentage of their deposits. The truth is that special deposits with the Commonwealth Bank always have been computed on the basis of deposits and liabilities, not on the basis of assets. The method proposed by the right honorable gentleman would be impracticable. The usual way of deciding how much of a bank’s funds should be called up is to calculate a fixed percentage of the total amount that has been deposited with it by savers. The Commonwealth Bank always has used this method. It has never based its calculations upon the total of assets represented by mortgages. There are good reasons for this.
There is one very important provision in the bill that should be examined and explained. The intentions of the Government in introducing the measure were, first, to make certain that the people’3 trading banks - the banks financed by the people themselves with their savings - were protected, and secondly, to ensure that those banks could not be driven out of existence by unfair means. Therefore, the main purposes of the bill are, first, to wipe out the large uncalled but callable liabilities of the trading banks, and, secondly, to establish an effective mechanism by which surplus deposits can be called up in the future. Let me touch briefly upon another matter. What, after all, is the peoples’ bank ? How do the trading banks operate? Surely every honorable member will concede that the trading banks are the peoples’ banks, because they can operate only if the saving people in the community take their money to a bank and deposit it there for safe keeping. The bank pays them interest upon their money, and, in turn, it can lend money to other customers, protected by mortgages or other forms of security. When we hear the honorable member for East Sydney mouth the phrase, “ The people’s bank “, we must ask ourselves what he is talking about. The savings of the people are deposited in the trading banks. Therefore, in logic, those banks are the representatives and trustees of the people. This Government has a solemn obligation to protect their rights as trustees of the people, and to ensure that no government will be able to get its hands upon the people’s savings and abuse them in the interests of its political philosophy. The statements made by members of the Opposition about the people’s bank are political mumbo-jumbo and humbug. The trading banks are the trustees of the assets and money of the people. Consequently, they must be called the people’s banks.
Under the existing legislation, the trading banks could be nationalized by administrative means. The Government could, if it so desired, call up uncalled liabilities of over £482,000,000. It is proposed that those huge uncalled liabilities shall be wiped out.
– The Government is making provision to nationalize the trading banks now under amalgamation.
– I do not follow that remark. I shall not attempt to reply to it, because there have already been too many interjections in the course of my speech. The intention of the Opposition is to prevent an immediate answer to the speech of the Leader of the Opposition. Under the old formula, a base date was taken in 1945. If, after that date, people saved their money and placed it to the credit of their accounts with trading banks, the whole of those savings could be called up. As I have said before, the sum that can be called up now is £482,000,000. The Government proposes that a new formula shall be adopted. The proposal is that the base date shall be a date late in last year, and that a sunn of about £200,000,000 shall be taken as the base sum. If, after the base date, there is an increase of savings voluntarily deposited with the trading banks, only 75 per cent, of that increase will be liable to be called up. Under the new formula, there will be a reserve of deposits which the trading banks will be able to use to expand their business.
With a view to preventing tremendous uncalled liabilities from accumulating in the future, the Government proposes that in September of each year a large proportion of the uncalled liabilities shall be cancelled. The proposal is that each year a calculation shall be made of the average deposits in August of that year, and that after that date only up to 10 per cent, of that sum will be liable to be called up. Each year there will be a new commencing date. Each year, with the exception of a sum based on 10 per cent, of the average deposits in August of that year, all callable but uncalled deposits will be wiped out. The effect of the measure will be to protect the trading banks, which stand between the people and the Government and a Commonwealth Bank directed by an arbitrarily minded Government. The people’s trading banks will have a charter that will permit them to continue to exist and protect the people. No longer will they have hanging over their heads tremendous uncalled liabilities that could be called up. They will have ample opportunities to expand their businesses.
I think that the bill represents a reasonable and responsible effort by the Government to give effect to the will of the Australian people. I remind the House that, in the past, whenever a Labour government has attempted to interfere with the people’s trading banks, it has come off second best. The speeches of members of the Opposition have indicated that the Labour party is determined to nationalize the people’s trading banks. I believe that that intention should be made clear to the people, so that they can decide whether they want the reasonable measure of security that will be afforded by this bill or wish to throw themselves to the mercy of the wolves opposite.
.- The Minister for the Navy (Mr. McMahon) made a speech of the type that we expect from honorable members opposite. It was akin to electioneering propaganda, and was dominated by an alleged fear of nationalization. The weakness of the Government’s argument is apparent when one realizes that this legislation could be altered by any succeeding government. No matter what this Government does, another government put into power by the people could alter its legislation. If there is any fear of bank nationalization now - and I declare that there is no ground for such fear - this measure will do nothing to allay it. The remarks of honorable members opposite about bank nationalization were completely absurd.
Statements about the necessity to defend the thrifty persons in the community, the people who save .their money, come rather inappropriately from the Minister, because everybody knows that this Government has robbed almost every bondholder in the country of from 30 to 15 per cent, of the value of his bonds, and that money deposited in savings banks, in the people’s bank and in every other bank is now worth only half as much as it was when a Labour government was in office. The Minister said that the Leader of the Opposition (Dr. Evatt) had not addressed himself to the bill. That remark proved that the honorable gentleman did not understand the bill. But I can forgive him for that, because the second-reading speech of the Prime Minister (Mr. Menzies) upon the measure was a masterpiece of camouflage and evasion. The right honorable gentleman dragged red herrings across the trail and made the real purpose of the bill obscure. I do not blame honorable members opposite for being so unwilling to speak on the bill, because I know that they do not know what it is about.
During the course of the Prime Minister’s speech, the honorable member for Lalor (Mr. Pollard) asked a very simple question. When the Prime Minister was speaking about the huge uncalled liability of £428,000,000, the honorable member for Lalor asked, “How did that come about ? “ The Prime Minister gave him a stereotyped reply that he had handed to the press last December. He said that the 1945 Banking Act was the reason for the huge uncalled liability. But acts of parliament do not create uncalled liability. There are not criminals because there are crimes acts, but because some one decides to break the law. Obviously, the answer that the uncalled liability was caused by the 1945 banking legislation was an evasion. It was one of the crafty answers for which the Prime Minister is famous. I told him at the time, by interjection, that it was not caused in that way. I asked him why the liability had not been called and he gave a display of impatience. He lost his temper and treated us to a little ancient history. What is the real answer to the question? How was the uncalled liability caused and why was it not called? It was not called because of the Government’s spending policy. The only Minister who acknowledged that fact was the Minister for Labour and National Service (Mr.
Holt.).. He .saM tha.t the liability wai caused: by tha Government’s spending policy, under; which, the f funds, of tradingbanks, were reduced. This simple ques-ti.012. was evaded! by, the. Primp- Minister because be did npt wan.t. to, mak* it. dew that the Government should accept responsibility for what has. happened-.
Let us examine the disastrous policyof the Liberal party and the Australian Country party. The great spending policy of these parties swung into action as soon as they gained office. In the last financial year- the Government spent £1,150,000,000. There has been unemployment in the textile mills and in every other- industry. The building industry fell to. pieces. Resources such as plant and machiner y lay idle all other- the country. The Government’s spending- policyproduced difficult conditions from which we are still suffering. It eventually resulted in the imposition of import restrictions, which caused further dislocation i,n the, manufacturing industries because of the lack of raw materials. The Government’s; spending- policy has resulted in between 100,000 and 20.0,p.Q.Q, people in this country being unemployed. We need to have it firmly in our minds that the uncalled liability cannot be attri-hu.ted to.- the- 1945 banking legislation, and th-at it did n.°t remain uncalled, for the- purpose of saving the banks or the importers- from bankruptcy.
The Government’s policy was designed to benefit its supporters and nobody else. In the balance sheets of importing companies., it mav be seen that many of them made profits representing over 10.0. percent, of their capital in one. year’s trading. The Government’s policy was a good polley for- them. It was not too, bad for the banks either i The value of goods imported between. May, 1951, and May, 1952, waa $1,071,0,00,0,00, which, is equal to-. £8,56,000,000 of sterling currency. The bank.s sold that currency and. made
X per- cent, profit on it. They made £8,570,000 on that deal. Most’ of the good* imparted into this, country are imported on. 6.0-da.y bills bear lug about 4 per- cent, interest. Some bills are pay-, able. on. demand, tut two-thirds of them a,ro 60^^ Wills. The use of those bills nested another- £4,45,0,0,0,0 foi’ the banks, In, other words, they made £14,0,00^000 in one year’s. tiding, under the Government’s, speeding policy-.. In the previous year, they- ma.de.. £10,000,000. B,ut in. the la.st year of the. Chifley? Government’s term of office they made only £7,500,000 The- Government’s, spending policy has benefited th.em bv nearly 100 per cent. It is necessary to hear- these fa.cts, in mind in view, of the- Prime Minister’s refe.refl.ee to a. banking- policy being- in stupid, a.nd mischievous han,d,s be.oau.se banking policy- in; the last, three; years has b.een i& very stupid mi mischievous hands.
The- P’rinia Minister referred to the matter of uncalled liability almost with a, sob in. his voice. He said that, it was hanging over the he&d.s. pf the banks like a sword. He had spoken, <jo, bank managers; on the subject and f found that they were very depre*ed. This, uncalled liability wa.s ea.used: % his own Government, If it is a sword, it is a. sword that has. been forged; by the interests, behind the. Government with the Prime Minister acting a,s chief striker. We need to d.o a little common-sense thinking about this uncalled liability- in, order to understand its nature. The uncalled, liability is necessary to, any banking system in. order to control the amount pf money invested in private, enterprise.
– What other- banking system has it?
-Order !- The, Minister for- the Navy (Mr. McMahon) has addressed the Hpu.se.
Mi JOSHUA. - It has been admitted by Government members that they welcomed the creation of the uncalled liability- and consider that it ought to be embodied in our- banking, system. I agree with them. It is designed to. control investment in private enterprise. It must be remembered that there are, two main divisions of investment - the investment of the Government in great enterprises for- the benefit of the people,, and private investment. It is. necessary at times to control private enterprise in. order- that government enter-prises might have an opportunity- to progress. The uncalled liability is one of the means of controlling- investment, in private enterprise. Other means include capital issues Control, interest rates, and advance con*trols. Rut the uncalled liability is one of the most important controls. Let examine how these controls have been, abused by the liberal and Australian Country parties. The capital issues control was removed as soon as. the Government came into office but the Government quickly found out its mistake and, clapped it back on again.. The advances control was conveniently altered last year in order to- suit the friends, of the Government. It is off for them but it is on for everybody else. The power to fix interest rates has been handed back to the private banks. The Government has tinkered with the uncalled liability in a very obscure way, which honorable members opposite cannot understand, in order to meet the wishes of bank directors. These are further illustrations of the stupid and mischievous acts of the present Government which is not entitled to accuse any other government of functioning hi a stupid and mischievous way.
How much should the uncalled liability be? This is a simple question but no Government supporter has tried to answer it. In 1945 Mr. Chifley decided that the uncalled liability should he equal to 100 per cent, of the increases in the bank’s assets. Economists, a few Government supporters, a lot of Opposition members, bankers and departmental officials know that that is the greatest amount that can be called up without affecting the banks to such an extent that they would not be able to carry on their business. The banks were all functioning under that provision in 1945 when the banking legislation of that year was brought down. If they increased their funds then the increase was liable to be called up. They could continue to function under those terms, and it is clear proof of Mr. Chifley’s sincerity and desire to maintain the banking structure that he did not prescribe a much greater amount that might be called up. As the Leader of the Opposition has pointed out, the Labour Government at no time called more than 45 per cent, of the full amount that it might have called up.
It has been stated on this side of the House, and every honorable member will acknowledge the truth of the statement, that it is constitutionally impossible to take advantage of the powers now on the statute-book to put the private banks out of action. If that were attempted th& banks would have a valid claim before, the courts, with which they would succeed,, and would be able to obtain considerable damages. The Labour Government’s administration of the provisions relating to uncalled liabilities proves that,, right from the start, it had a. desire for fair play,, and that it always recognized the constitutional safeguards provided to protect the community-.. It also proves that the- Labour Government used common sense throughout; and all this, nonsense that is. being talked about a Labour government in the future making use of existing powers to put private banks out of business is absolutely ridiculous.
The proposals contained in the measure are extremely involved. Aa the Leader of the Opposition has pointed- put, up impartial inquiry has been held- In some circumstances, there would be, very little power left to the Government, to control the spending of bank money. Ear example, in September the adjustment of the uncalled liability j whatever it. may be at that time, will be. reduced to 10 per cent, of’ deposits in the banks, p.r- a sum pf £115,000,000. It is doubtful if that amount would be sufficient for the Government’s purposes, especially as that amount might be reduced, apart from government action, if we had a bad season and deposits were low. The Government would not be able to control the position as it would want to. The automatic adjustments of uncalled liability provided for in the bill are unscientific. The amount to be called up should be based on keen appreciations of the economic outlook from time, to time. If we are to make such appreciations we must know what the Government’s economic policy is. Hew, otherwise, are we to gauge how the formula will work? “What is the good of instituting a formula without knowing- what will be its effect in the next twelve months? The Qq-i vernment’s spending policy was not made known to the people. I have examined the Governor-General’s Speech and the budget speech pf 1951, and have found there only a few scrappy references to the Government’s economic policy,
-The honorable member- would not understand it even if he read all about it,
– I think I should understand it better than -the VicePresident of the Executive Council (Mr. Eric J. Harrison) could understand it. The public was not taken into the Government’s confidence, but the interests behind the Government were well in its confidence. I think that we should closely examine the Government’s probable future economic policy. Judging by outward signs we can obtain some idea of it. Nobody can deny that there is a serious proportion of unemployment in the community. That is an indicator of what the Government’s economic policy is likely to be in the next year. There are unused factory resources lying idle. They are another indicator of the Government’s probable future policy. When the Royal Visit takes place next year we shall not have a lot of Italian immigrants marching along the streets making demonstrations. Oh, no ! They will have to be got to work before then, and things will have to be brightened up. There will be a general election next year, and everything is going to be brightened up for that too. These are all indicators of the Government’s future policy. As the Leader of the Opposition pointed out, there are also clear indications of that policy in the liquidity of the banks. Banking figures show how the spending policy was financed by the borrowings made by friends of the Government. The Government conveniently altered the advances control policy to suit its friends, and the spending policy was financed to the tune of millions of pounds that was raised by borrowing. Thursday issues of newspapers containing huge advertisements of huge retail stores like the Myer Emporium show what has happened. Myers will sell anybody anything for a deposit of 10 per cent., and the balance to be paid over the next eighteen months. Of course, in that eighteen months money will be going back into the banks and their liquidity will be greater. Everybody knows that the amount of money in the till rules the degree of liquidity. All these things indicate an expansion of the money level in the next twelve months and an increase of bank loans. The Government is going to give the com munity a blood transfusion to brighten it up before the election. The banks will be able to fix the interest rate, and will increase loans and will do extraordinarily well out of it.
I do not think that this policy of increased spending will stop at a fair thing. It will be like the Government’s previous financial moves, and will be carried too far. It will be carried to the point of inflation and then, of course, when the Government goes out of office a Labour government will inherit from it a state of inflation. What chance of reducing the rate of interest, has a government which has to institute unpopular deflationary measures? There is no doubt in the mind of any one who examines the future that the Government has a carefully worked out scheme by which the banks, as well as other friends of the Government, will make millions of pounds at the expense of the community. The public ought to be told what the Government’s intentions are. There is no reason why, if a government has to make economic adjustments, certain people should be able to cash in on them. The Government could quite well have maintained the banks in a prosperous condition, and the people could have had the advantage of a lower discount rate. I contend that the Government should take steps to ensure that interest rates will be reduced, because the banks are going to be more able to lend money, and if the total of loans is to be increased then there should be a corresponding reduction in the interest rates. That is elementary. In addition, if there is to be more money spent the Government should ensure that it is spent in the right way. For instance, it should institute special loans for housebuilding. There should also be a proper allocation of funds .between the various governments, and private enterprise. The Government should be much more frank with the people about its future economic policy than it has been. Proposed new section 22b reads as follows : - (1.) The Commonwealth Bank shall, from time to time during each financial year, inform each bank, in confidence, of the increase or decrease which, in the judgment of the Commonwealth Bank, is likely to occur during that financial year in the aggregate of - the Australian deposits, and in the aggregate of the Australian liquid assets, of all the banks.
When that provision is law the Government will be compelled to tell the banks in confidence what its financial policy is. But the measure contains no provision to say that the Government must tell the people what its economic policy is and what the future holds for them. With such information the banks can set about organizing matters so that they can come out of it to the best advantage. But what will happen to the little man? He will be like the unemployed men who came to me in November, 1951 and said to me, “ We are out of work because our mill is not open “. They did not know anything about the economic policy of the Government, but they knew how it had affected them.’ I contend that this proposed new section should be struck out-
There are other provisions in the bill which arc very important and which are quite untenable to any one with an ounce of common sense. For instance, Part VI. which deals with statistics, provides that the Governor of the Commonwealth Bank, who collects statistics for the good of the community, shall not divulge their nature to the Commonwealth Trading Bank of Australia. He must study them himself, but, when, for instance, the general manager of the Commonwealth Trading Bank of Australia comes to him and tells him what the policy of the trading bank is to be, although the Governor may know that that policy will not meet the requirements of the community, he must say, nevertheless, “ You go away and do it, old chap. I am the Governor of the central bank. I have no interest in that That is ridiculous. If the Governor of the Commonwealth Bank is obliged to collect statistics, surely it is his duty to make use of them. In every State of the Commonwealth, statistics are collected in connexion with transport systems. If the Transport Department of Victoria, for instance, knows that a great many passengers are conveyed each year by omnibuses which travel beyond Heidelberg, it takes advantage of such information and extends the tramlines to compete with the omnibuses. The State authorities take advantage of such statistics.
Sub-section (2.) of proposed new section 49 provides that reports of the Auditor-General shall bc made only on the recommendation of the Commonwealth Bank Board. That means, of course, that they shall be made on the recommendation of the Government, because the policy of the government and the policy of the bank will be one and the same. The effect of this position will be to muzzle the Auditor-General. Bank directorates must obey the laws of the land or take the consequences. I do not see why the Auditor-General should not be allowed to. say what he thinks in these reports on certain banks. Under the present legislation, the AuditorGeneral is required to report if he thinks that the operations of banks are likely to endanger the economy in any way, but under the proposed legislation 1”; is to be muzzled and not allowed to do so.
In conclusion, I wish to deal with what the Prime Minister (Mr. Menzies) has referred to as the “enormous benefits” which the banking legislation introduced by his Government confers. According to the right honorable gentleman, those benefits include the appointment of a board of directors of the Commonwealth Bank, in the form of the Commonwealth Bank Board. I suggest that that is not a benefit at all. The board merely replaces the Treasurer (Sir Arthur Fadden). Of course, in the circumstances, that may be considered a benefit, although I cannot see that it is an enormous one. The right honorable gentleman, in referring to “ enormous benefits “, was merely playing with words.
The establishment of the Commonwealth Trading Bank of Australia, which the Prime Minister regards as another enormous benefit, is ill-founded. The whole conception of it is wrong. The charter which sets out the policy of the bank is something which honorable members on the government side of the House cannot understand, and they have said so. There is great doubt concerning the policy which the bank will pursue. It is to be provided with an inadequate amount of capital and out-of-date rules. It will be a weak instrument for carrying out government policy. Another enormous benefit to which the Prime Minister referred was the release of the trading banks from their uncalled liabilities. All that that will do will be to mess about with a position which was perfectly clear and fair to the banks. I do not think that any honorable member on either side of the House could honestly vote for this legislation which, in my opinion, should be rejected by the whole Parliament.
Mi-. JOSKE (Balaclava) [3.0].- Let us examine the main purposes of this banking legislation. First, it proposes to provide and maintain a strong central bank. In addition, it proposes to maintain the private banking system and to prevent a socialist monopoly of banking. It also proposes to maintain a strong Commonwealth Trading Bank. All those are excellent purposes, and the bill is well adapted to provide for those purposes. The criticism which has been directed at the measure has not been aimed at any of its main purposes. Indeed, so far as the second purpose to which I have referred is concerned, the Opposition has endeavoured to-day to run away from the idea of a socialized banking monopoly, although it knows that such an objective is a part of its fundamental policy.
Let us deal with the first purpose to which I have referred : The maintenance of a strong central bank. The object of such a bank is to stabilize the national economy, in order to prevent financial crises, as far as that is possible, to release credit when the circumstances require that to be done and, equally, to tighten up credit when necessary. The economy of one nation is necessarily affected by th, economy of other nations. Alterations or jolts which occur in the economy of a particular nation seriously affect the economy of other nations. In an economic sense, we are indeed one world. What may be done overnight in a certain country may have a serious effect upon our country. One of the objects of a strong central bank is to look ahead and, as far as possible, to provide against occurrences in other nations which may affect our economy. That cannot always be done. An excellent example of that failure has been provided within the life of this Parliament, when, suddenly, the English export markets Wel , closed to English manufacturers. Practically overnight, we found that we were in the midst of a complete dumping of English goods into this country. That could not have been foreseen. One of the purposes of the central bank, in such circumstances, is to proceed, in conjunction with the Government, to smooth out such jolts or inequalities which upset the national economy, and to do so as expeditiously and effectively as possible. That has been achieved in this country. Because of the serious problem of inflation, followed by a decline in overseas funds due to the import trouble to which I have referred, and also to the fall in wool prices, we were in the midst of what might have been a major crisis. As a result of the close co-operation between the Australian Government and the Commonwealth Bank - and we have the word of the Leader of the Oppositon (Dr. Evatt) in the House to-day that the Government and the bank have been working closely together, in complete harmony - a serious economic depression was avoided. We are once again on the high road to prosperity.
For the first time for many months the Leader of the Opposition made no mention to-day of the word “ depression “. Last year, and earlier this year, he was constantly harping upon the word. Indeed, he was so obsessed by the subject that he almost led us to believe that he prayed for a depression. Now that we have mounted the high road to prosperity once again, solely because of iiic Government’s policy in regard to central banking, we do not hear anything in the nature of depression talk from the right honorable gentleman. Instead, of that, his main line of attack is directed at the private system of banking. The Leader of the Opposition said to-day that there had been too great a release of credit through the private banks in recent months. It is true that during the last twelve months there has been a considerable release of funds from the central bank through the private banks, and a much greater flexibility of the advance policy of the central bank. Consequently, private banks have been enabled to provide funds for their customers and to ensure that there shall be sufficient money in the community to provide employment, healthy manufacturing industries and progress in the general business of the country. That release of funds was attacked by the honorable member for Ballarat (Mr. Joshua) as a misuse of financial power by the Government. He said that it was a wrong thing. On the contrary it is perfectly proper for the central bank to release funds to the private banks at a time when those funds are badly needed in the community. It is really amazing that while the Leader of the Opposition has been attacking the release of funds so that more money will be made available to the community, he has made many speeches, both inside and outside the House, in which he has vigorously advocated the release of more credit. However, he does not want credit to be released from the central bank; he want3 credit to be issued by a flood of treasury-bills - a thoroughly bad financial practice.
This measure will enable the central bank to carry on in the same way as in the past. The strength as well as the weakness in .the central banking system of this country is that the bank works in close conjunction with the Government. That principle was accepted in the report of the Royal Commission on Monetary and Banking Systems, but it is still questioned by some people. The strength of the relationship between the Government and the central bank lies in the fact that a government that is able to take a long view, and has its feet well on the ground and its head not too far in the air, will operate the central banking system well and faithfully; but a government whose financial policy contains the cardinal principle that credit should be expanded by the wholesale issue of treasurybills will gravely endanger our financial structure. Fortunately for this community, during a recent period of serious economic crisis we had the present Government working in close alliance with the central bank.
The legislation before the House aims at the establishment of a strong Commonwealth Trading Bank, and in order to have such an institution we must have a bank which has the confidence, not of a part of the community, but of the whole of it. The report of the Royal Com mission on Monetary and Banking Systems and the legislation of this Parliament accept the principle that the Commonwealth Trading Bank shall have the right to compete vigorously with private trading banks. However, any such competition must be on a fair basis. This Government stated quite clearly during the general election campaign of 1949 that it would maintain the trading activities of the Commonwealth Bank, but on terms of fair competition with the private banks. The only way in which we can have fair competition between the Commonwealth Bank and the private banks is for the Commonwealth Trading Bank to be made subject to the same liabilities and obligations as are the private trading banks. That is, the Commonwealth Trading Bank must be made liable to contribute to the special accounts and fulfil the other obligations that have been imposed on private banks. Unless that be done, according to the proposal in the present legislation, the competition cannot be fair, and the confidence imposed by the whole community in the Commonwealth Bank cannot be maintained. Competition certainly cannot be fair if there are obligations on one side and none on the other. Under the present system it is possible for the Commonwealth Bank to apply the reserve funds of the private banks under its control to the extension of its own trading business-
– That is completely ridiculous.
– Any honorable member who says that my statement is ridiculous is not conversant with this subject. Surely every honorable member in the House realizes how, under the present legislation, the Commonwealth Bank can trade at the expense of its competitors. Moreover, I suggest that that is what will occur under a socialist administration. Indeed, there have been suspicions that it has been done in the past, but I shall say no more about that. To have a strong Commonwealth Bank which enjoys the confidence of the community and is able to compete fairly with the other banks, we must adopt the provisions of this bill. We must make sure that there will be nothing improper going on behind the scenes.
It is curious that the Labour party at one time had no objection to the separation of the trading functions from the central banking functions of the Commonwealth Bank. In 1930, a Labour administration introduced a bill to make such a provision. If it was right in those clays why is it wrong now? Is it that the great Labour men of past years were not as great as they seemed at the time? Recently, the late Mr. Scullin has been much eulogized in this Parliament. His government introduced the bill to which I have referred. Mr. Scullin was a great leader of the Labour party, and, later, an elder statesman of the party, but he perceived that there was no harm in the separation of these two functions of the Commonwealth Bank. What has happened since his time to cause the Labour party to see so much peril in a division of activities? It is a fundamental principle that a central bank should not compete with the private trading banks, but it is also true that in its report the Royal Commission on Monetary and Banking Systems did not accept that principle. It is unusual for a central bank to trade, but the board justified it on the basis that until that date in 1936, the Commonwealth Bank had not entered into active competition with the private trading banks. Because it was a central bank which traded but not in actual competition with the trading banks, an exception was made in its case to fundamental banking principles. Since then the law has been altered. It is the law that the Commonwealth Bank shall enter into active competition with the private trading banks as a matter of policy. Once that position is reached, it is against fundamental banking principles to allow the central bank to have trading powers. Secondly, it is ‘ necessary to form a separate corporation for the trading functions of the Commonwealth Bank. If that is not done, all confidence in the Commonwealth Bank and the central banking system will disappear entirely.
It is said that the Government has produced this legislation just before an election. The bill is designed to provide for the prevention of a socialist monopoly of banking. The policy of this Government is to prevent socialism and to do away with socialistic government enter- prises so far as it can do so. When the Government formulated its policy, it prepared one that would stand, not for three months, but for three years. It was a policy that was to be carried out progressively during the life of the Parliament. Step by step, the Government has been disposing of socialist enterprises and refusing to apply socialistic principles. Therefore, no matter what legislation comes before the Parliament at this time, the Leader of the Opposition could still say that -it was being introduced because an election was approaching. The truth is that the Government has been making important progress, step by step, towards its objectives. It has now reached the proper stage to take the action that it promised with regard to banking. It is a fortuitous chance that there should be a Senate election just ahead.
Perhaps it is fortunate for the Government that that should be so, because the Opposition has stated definitely where it stands with regard to banking. Socialistic monopolistic banking is still the main plank of the Australian Labour party platform. One of the main purposes of this legislation is to maintain a private banking system and to prevent a socialistic monopoly of banking. When this Government came to office, it promised to terminate a move towards a socialistic monopoly of banking and prevent its recurrence. The banking legislation of 1945 leaves the way open for the disappearance overnight of the private banks and their replacement by a government monopoly. It is idle for the Leader of the Opposition to state that his party would not attempt to do that. He has said, in effect, that an assurance along those lines can be accepted without any reservations. If there is legislation on the statute-book that enables banking to be socialized, this Government must remove it because it is pledged to do so. It is not bound to accept the assurance of the Leader of the Opposition on this matter. He was Attorney-General in a Labour government when it produced the banking legislation that enables a socialist monopoly of banking to be established. In removing that provision, the Government is acting according to its election pledge. It is also enabling the ordinary citizens of the community, for whom the honorable member for Ballarat (Mr. Joshua) has expressed so much concern, to choose their own bankers, and go where they like for a financial advance with confidence. The Government is protecting the staffs of the banks whose positions were in jeopardy from the socialist banking proposals.
Moreover, by preventing the socialization of banking, the Government is safeguarding the whole community from socialization. Lenin and many others understood that once banking was socialized, the socialization of the whole community quickly followed. That is fundamental. Honorable members have been told by the Leader of the Opposition that, of course, that was never likely to happen. If that is so, why is the socialization of banking still a part of an important plank of the Labour party’s platform? The Leader of the Opposition holds his office for an indefinite time, but apparently that plank is to be a part of the Labour party’s policy permanently. It has been there for years. This debate has indicated that there is great discontent behind the scenes on the Opposition side. Some of the right honorable gentleman’s supporters have expressed sentiments the opposite to his own. The Leader of the Opposition has said that a socialist banking monopoly will never happen in Australia, but his party tried to make it happen before. The right honorable gentleman, who was then the AttorneyGeneral in a Labour government, and the Prime Minister of the day, the late Mi-. Chifley, decided overnight that they would have a monopoly of banking.
– We have accepted the High Court’s decision.
– The statements that have been made in the House in this debate give the lie to that claim. By mere administrative action, which could take place overnight, the Labour party could stultify and ruin the private banks. It could put them out of business through the provisions of the 1945 act that the Parliament is now altering. That is why there is so much consternation on the Opposition side because that is being altered. The Opposition has shown great vindictiveness towards the private banks which have served this community well and faithfully over the years. By and large, the private banks have done a wonderful job for Australia and, as a result, the country is now in a sound financial position. We now have a great many things for which we should be thankful to the private banks. We should be happy to pay for the benefits that we enjoy. I do not subscribe to the belief that we should be able to get anything for nothing.
– Talk about the people for a change!
– I cannot understand the philosophy of the honorable member for East Sydney (Mr. Ward), who has just interjected.
– The honorable member will not be here for much longer, so he need not worry about that.
– Order !
– It is only because the principles of this bill are in conformity with accepted Government policy that it is so vehemently opposed by Opposition members. The Leader of the Opposition has said, in effect, “Oh, the Government proposes to wipe out £500,000,000 of uncalled liabilities. There have been releases of much more than that amount over a long period “. Of course, there have been heavy releases over the years. As the banking system of Australia has been in operation for a long time there must necessarily have been heavy releases over a long period. If, overnight, the Government called up to special account the whole of the uncalled liability of £500,000,000 - and honorable members will recall that the Labour Government made an overnight decision to socialize the banks - it would mean the end of the private banking system.
.- During the last two or three days we have listened to many opinions on banking generally. The Government’s stated reason for bringing this legislation before the House and its actual reason for so doing are as wide apart as the poles. The Government’s motive in introducing the legislation is obvious. The Government, having lost the confidence of the people, and realizing that it is in its dying days, is interested solely in placating its wealthy supporters and ignores the welfare of the people whose interests it was elected to protect, lt has made no attempt to prove that the existing .structure of the Commonwealth Bank and its relations with the private banks are unsatisfactory. The country is entitled to know why the Government proposes to interfere with the banking structure of Australia in this way. As we have not been told the real reasons for the introduction of the legislation we are entitled to draw our own conclusions on the subject. We are forced to the conclusion that this legislation represents the pay-off to interests which made it their business to defeat the Labour Government in 1949. Why should the Government interfere with the special accounts of the private banks? When the so-called terrible Labour Government was in office it carefully protected the economy of Australia and it ,did nothing to interfere with the legitimate business of the private banks. This Government, which has been in office for three years, appears to believe that it lias a. divine right not only to legislate for immediate needs but also to tie the hands of future governments. The speeches of honorable members opposite have made that clear to us all.
The Minister for the Navy (Mr. McMahon) asked why the Opposition desired to have greater power over banking. The Opposition is satisfied with the banking legislation now on the statute-book. It does not desire that the government of the day should have additional power over either the Commonwealth Bank or the private banks. The question posed by the Minister is indicative of the negative mind of Government members who have participated in this debate. The Government itself, and not the Opposition, should answer the question, because it is the Government. and not the Opposition, that seeks additional power over banking in this bill.
The honorable member for Balaclava (Mr. Joske) laid down three fundamental objectives, which he said were inherent in the legislation. The first is the desire of the Government to provide a strong central bank. That is a laudable objective, with which the Opposition entirely agrees and to which it has given practical expression since it first established the Commonwealth Bank 40 years ago., and in later years when it proposed the establishment of a central reserve bank. We agree with the honorable member for Balaclava that the existence of a strong central bank is essential to the preservation of the banking structure of Australia. But such a central bank is already in existence and is doing an excellent job for Australia. Indeed, it will do a much better job if it is left unfettered by legislation of the kind now before us. Accordingly, this legislation is not necessary for the attainment of the honorable member’s first objective. The second objective mentioned by the honorable member is the retention of the private banks and their protection against the depredations of some future socialist government. The honorable member is afraid lest somer awful Labour government of the future will establish a government monopoly in banking. Let us consider the history of the private banks which the Government is so eager to save. What has been their attitude to the institution of a private bank monopoly? The number of private banks has been reduced in recent years, not a.s the result of government interference, whether by a Labour government or an anti-Labour government, but by the banks themselves, which have gone all out for a private monopoly of banking. In the last two – three, years bank amalgamations have taken place throughout the Commonwealth. After all, the private banks do not need any help from this Government to prevent the establishment of monopolies in the banking industry. Indeed, if we are to be guided by the amalgamations of private banks that have taken place within recent years, the policy of the private banks is basically monopolistic in character. For how long will the Commonwealth Trading Bank, proposed to be set up under this measure, divorced from the reserve bank and from the Commonwealth Savings Bank, and after its name has been changed and its prestige damaged, be able to compete with the seven private banks that still remain ?
– That still remain? Is that a threat?
– I am informed that there are now only six private trading banks. Some years ago there were twenty -of them in Australia, hut their numbers have been reduced as a result of amalgamations. Therefore, the private trading banks do not require this .Government to tell them anything about monopolies. I repeat that monopolistic control is the basis of their longrange policy. Whenever it suits the financial interests .of their shareholders, more amalgamations will be effected and we shall then see a full-blooded monopoly established in’ the banking industry. Yet, Government supporters profess that they desire to see a comparatively insignificant Commonwealth Trading Bank operating in opposition to the private banks which, as we know, work in concert. Can any honorable member imagine the private banks inviting the Commonwealth Trading Bank to join their circle ? The policy of the private banks is applied even in ordinary business circles in small towns. If, for instance, a baker sets up ?n business in a town and sells bread at a price below that at which other bakers in the town sell their bread he very soon finds that his supplies of flour are cut off. The other bakers combine to drive him out of business and, for that purpose, enlist the aid of the local chamber of commerce, or a body of that kind. Representations are then made to the flourmiller and the newcomer is soon made to realize that he will be squeezed out of business if he does not toe the line with the other bakers. Much the same fate will befall the Commonwealth Trading Bank which it is proposed to set up under this measure. The new organization will be divorced from the reserve bank and will be unable to compete effectively with the private trading banks. No one knows that better than Government supporters do, but, unfortunately, they are concerned with the interests, not of the community, but of the private banks, which are controlled by their political friends.
The Minister for the Navy declared that one of the main objects of this measure is to safeguard the interests of depositors. No need has .arisen since the bank crash in the ‘nineties for any government to take action to pro*tect the interests of depositors with any bank. The private banks which could not meet their commitments to depositors at that time, were the forerunners of the existing banks for which .Government supporters now display great concern. The fact is that the State parliaments possess . sufficient powers to ensure that the resources of any bank that receives a charter to operate within its boundaries shall be adequate to enable it to meet its liabilities to its depositors. This measure has little relation to realities. Government supporters have said that the difficulties which they claim this measure will enable the private banks to meet have resulted from the administration .of Labour governments, that it is now necessary to make alterations in the banking system to enable it to meet the increases of wages and of the prices of imports and exports. At the same time, Government supporters have the effrontery to tei] us that the main justification for the introduction of this measure is to tie the hands of future governments in relation to banking. Surely, they realize that variations in economic conditions, production and price levels throughout the world, which directly affect an exporting country like Australia, are liable to occur from time to time and that in such circumstances the Australian Government will need to possess adequate control of the banking system in this country to enable it to meet such developments. Labour governments in the past have used their power in respect of banking only for that specific purpose.
Government supporters have contended that under the 1945 act the private banks have been unable to operate effectively. That contention is disproved by reference to the financial columns of the press which disclose from time to time the distribution of dividends of up to 20 per cent, by the private banks. Of course, those institutions would much prefer to be allowed to invest in more profitable spheres the deposits which they are now required to lodge in the special accounts with the central bank. The money which the private banks withdraw from those special accounts will be used to buy government securities and to earn higher rates of interest. All members of the Opposition may not be trained economists or’ financial experts, but my colleagues and I have been reared in the hard school of experience. During the depressionwe found it necessary to get to the root of some of the jokes that the private banks played at that time at the expense of the nation. Therefore, we have no difficulty in discerning the real motive of the Government in introducing this measure. Its purpose is to tamper with the people’s bank, which has done a good job for Australia, in order to benefit the private trading banks and to enable them to earn increased profits. The results of recent State elections show that the Government has lost the confidence of the people. It is on the toboggan, and it will be only a matter of months before it collapses. In such circumstances, the Government has acted despicably in introducing this measure, which will be to the detriment of the people.
Debate (on motion by Dr. Donald Cameron) adjourned.
Motion (by Mr. Eric J. Harrison) proposed -
That the House do now adjourn.
– The Minister for External Affairs (Mr. Casey) informed the House earlier of the forthcoming visit to Canberra of M. Letourneau, who is the French Minister in charge of relations with the Associated States of Indo-China, and said that provisional arrangements had been made for him to address a meeting of members of the Parliament on Wednesday next. I point out that the hour at which it is proposed that the meeting shall take place will clash with the time at which weekly party meetings are usually held. I take this opportunity to suggest that it might be possible to arrange for the meeting to take place at a different hour so as to give members of the Opposition a full opportunity to hear such a distinguished visitor. I do not know whether Mr. Speaker will be in charge of the meeting.
– Opposition members do not wish to lose the opportunity to hear the distinguished visitor.
.- The dis tinguished Minister from France, M. Letourneau, was due to arrive in Sydney early next Sunday morning, but his plane is delayed, and he will not arrive until early next Monday morning. Consequently, one day of his unfortunately short visit to Australia will be lost. His programme is a very tight one. He was to have spent Sunday in Sydney and Monday in Melbourne, where he was to meet the Minister for Defence (Sir Philip McBride) and myself and the chiefs of staff. He is due to arrive in Canberra about 2 o’clock on Tuesday afternoon. Arrangements have been made for him to come to this chamber, and it is hoped that Mr. Speaker will invite him to take a seat on the floor of the House. The remainder of Tuesday will be occupied with essential engagements. I approached the Leader of the Opposition (Dr. Evatt) with a view to ascertaining whether all members of the Parliament could assemble to meet the distinguished visitor at 11 a.m. on Wednesday and hear him speak of the great French efforts in Indo-China and the condition of SouthEast Asia as a whole. Unfortunately, Opposition members have their own arrangements, which they do not feel in a position to alter. The Liberal party and the Australian Country party have set aside one hour of the time usually allotted to their joint meeting on a Wednesday to enable them to meet the French Minister. I am afraid that it will not be possible to make any other arrangements for him to address honorable members that day.
– At what hour will the meeting be held?
– At 11 a.m. He will also meet members of the Foreign Affairs Committee for a short time and will lay a wreath on the Stone of Remembrance at the Australian War Memorial. I do not wish to interfere with the programme of the Opposition, but the right honorable gentleman may be able to arrange to set aside some of the time usually allotted to its party meeting on Wednesday, as members of the Liberal party and the Australian Country party propose to do, to enable his colleagues to meet the visitor. I agree with the right honorable gentleman that we should not lose the opportunity to hear the story of the position in Indo-China from the man most intimately concerned. I appeal to the right honorable gentleman to endeavour to make the arrangement I have suggested.
– by leave - The distinguished French Minister, is to visit the chamber at 2.30 p.m. next Tuesday. Is it possible to arrange for him to address the House for half an hour from that time? In any event, I shall discuss the whole position with members of the Labour party, because I am eager to hear the visitor express his views on various matters of importance.
– This matter is outside the scope of my responsibilities. However, if honorable gentlemen on either side of the House think that I can do anything to facilitate a meeting, I shall be only too happy to oblige them.
Question resolved in the affirmative.
The following papers were presented : -
Customs Act - Regulations - Statutory Rules 1953, No. 13.
Egg Export Charges Act - Regulations - Statutory Rules 1953, No. 12.
Naval Defence Act- Regulations - Statutory Rules 1953, Nos. 14, 17, 19.
Public Service Act - Appointment - Department of the Parliamentary Library - A. Nolan.
Quarantine Act - Regulations - Statutory Rules 1953, No. 15.
Spirits Act - Regulations - Statutory Rules 1953, No. 16.
Supply and Development Act - Regulations - Statutory Rules 1953, No. 18.
House adjourned at 3.50 p.m.
The following answers to questions were circulated: -
r asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows : -
z asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows . -
d asked the Minister for External Affairs, upon notice -
Will he make available details of the adjustments, dated July, 1952, of salary and allowances for journalists made by the department, in connexion with the Colombo plan, covering India, Pakistan and other nationals in this country, under the headings of scholars, senior fellows and junior fellows?
Mr. CASEY - The answers to the honorable member’s questions are as follows. -
The adjustments made in July, 1952, in respect of the stipends Colombo plan training were as follows: - Scholars and junior fellowswere granted an increase of £100 per annum, bringing their stipends to £460 and £040 per annum respectively. Senior fellows were given an increase of £30 per annum, bringing their stipend to £806 per annum. These allowances are considered to be quite adequate. In addition, all students required to spend portion of the winter months in Australia were to be granted in future a clothing allowance of £40. on arrival. Other trainees - were to be granted a clothing allowance of £20 on arrival. These determinations were made effective from the 1st July, 1852. They did not apply specifically to journalists, although at that time there were some Colombo plan trainees studying journalism in Australia.
Cite as: Australia, House of Representatives, Debates, 6 March 1953, viewed 22 October 2017, <http://historichansard.net/hofreps/1953/19530306_reps_20_221/>.