House of Representatives
12 November 1957

22nd Parliament · 2nd Session

Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.

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– I ask the Prime Minister whether, if he persists in his refusal to table all the relevant documents and reports associated with the construction of the St. Mary’s filling factory, he will at least undertake to see that they are kept intact and safe for examination by a future government, and are not destroyed by a fire, similar to the one which occurred at the Commonwealth security head-quarters just prior to the general election of 1955.

Prime Minister · KOOYONG, VICTORIA · LP

– I will, of course, take the greatest possible care to see that these files are preserved, particularly as I appreciate the interest that the honorable member for East Sydney takes in these matters. I cannot help recalling that he once said that there was a file missing in the Department of Defence, and when a royal commission was set up to investigate the charge he refused to give evidence on the ground that he was protected by privilege.

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– Can the Minister for Trade say whether the Tariff Board has completed its inquiry into the timber industry? If the inquiry has been completed, when is it expected that the report will be available to honorable members?

Minister for Trade · MURRAY, VICTORIA · CP

– I understand that the Tariff Board has completed its public hearings on the evidence in respect of the application of the timber industry. It can be expected that some little time will elapse before the board submits its recommendations and findings to the Government. I should not think that that would be likely to occur until early in the New Year, but I cannot prophesy exactly how long the board will take to prepare its report. I appreciate the importance of the present inquiry to the timber industry, and I give an assurance to the honorable member that there will be no avoidable delay in dealing with the recommendations as soon as they come forward.

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– I ask the Prime Minister, who 1 think is the appropriate Minister, whether he has considered the statement of the Australian Academy of Science in relation to the dearth of scientific teachers in this country, and the need to deal with this national problem.


– I have read the report, which is a lengthy and very important one. 1 do not know whether the right honorable gentleman has seen it.

Dr Evatt:

– I have seen only the press report.


– I shall see that he has the full text of it. It is quite lengthy and, as I have said, it is important. There has been no opportunity yet to discuss it, but it will be considered by the Cabinet.

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– Is the Treasurer aware that on 28th August last the Australian note issue stood at approximately £386,000,000? Is he aware, also, that at the same time the value of Australian notes held by all cheque-paying banks was approximately £40,000,000? Does the Treasurer think that an entirely new note issue with a completely new range of colours for Australian notes may bring to light a large proportion of notes which have not seen the light of day for many years? Would this be of great assistance to the Taxation Branch?


– The honorable member was good enough to let me have the particulars of his question, and I have had the matter investigated in order to provide him with a considered reply. I am aware of the figures he has quoted. I would only point out that banks endeavour to hold the minimum number of notes consistent with demands likely to be made upon them. At any particular time, the great majority of notes is held by the public for its day-to-day transactions. It does not seem to me that the extreme administrative difficulty and inconvenience to the public which would be caused by the action suggested by the honorable member would be justified by the relatively minor advantages which might be gained. A point to be borne in mind is that existing Australian notes which are legal tender under the Commonwealth Bank Act could not, in fact, be recalled unless that act were amended for the purpose. The publicity inevitably attendant on such action would, of course, militate against the advantages which the honorable member has in mind.

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– Can the Minister for Immigration inform the House as to the action taken by the Government concerning the stranded seamen of the ship “ Rose Pearl “, which has been laid up in the port of Darwin for some months, pending its disposal for non-payment of debts and wages? As the total outstanding debts amount to £23,000 and the estimate of the ship’s worth is approximately £15,000, it is obvious that the seamen will not receive the wages due to them. I ask the Minister whether any negotiations have taken place with the American and Philippines Governments concerning the plight of these men and their dependants, and whether the payment of wages will have first call against moneys realized on the sale of the vessel. As many of these men are married and have families overseas to support, will the Minister take immediate steps to see that relief is afforded to them as they are now relying on the generosity of the Red Cross and the townspeople for food and shelter, pending the sale of the vessel?

Minister for Immigration · DENISON, TASMANIA · LP

– I cannot give the honorable member precise details of this particular case. I know that negotiations are proceeding with the agents and the shipowners, and I will let him have an up-to-date reply as to how far the negotiations have gone.

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– The Minister for Primary Industry is doubtless aware that there have been considerable uncertainty and fluctuations in wool prices this season. Can he say if this may be due to the uncertainty of the size of the wool clip, because some unofficial sources suggest a small decline of only 5 per cent., whereas many practical graziers believe the overall decline will be much higher, even up to 10 per cent, or 15 per cent.? As the statistical position of wool is very sound from the sellers’ angle, will the Minister, as a guide to buyers, have a new and accurate estimate published by the department for the current clip, and some long-range forecast made of the effect of the drought on the next clip?

Minister for Primary Industry · LOWE, NEW SOUTH WALES · LP

– The estimate of the national wool clip is made, not by the Department of Primary Industry, but jointly by the National Council of Wool Selling Brokers, the Australian Woolgrowers Council and the Division of Agricultural Economics, which division acts as an independent fact-finding authority. When a national survey is taken, the statistical records of the Commonwealth Statistician are used. Some time ago an estimate was made which they thought should be varied and the acting chairman of the National Council of Wool Selling Brokers, after consultation with the Australian Woolgrowers Council and a quick consultation with an officer of the Division of Agricultural Economics, stated that he thought there would be a reduction in this year’s clip of at least 5 per cent, as compared with last year’s clip. I understand that yesterday the president of the New South Wales branch of the Graziers Association stated that although he thought the total Australian clip would be reduced by 5 per cent., the New South Wales clip would be reduced by about Hi per cent. I agree with the honorable gentleman that this matter has to be looked at again. Therefore I instructed my department to have the matter taken up with the authorities that I have mentioned in order to see that another authoritative estimate is made. These authorities are collecting the information and it is hoped that they will be able to make another forecast about the clip early in December. With regard to the question as to whether long-term trends can be forecast, already I think it can be taken that next year’s clip will be substantially less than this year’s. But 1 shall try to obtain figures for the honorable gentleman and let him and the House have them.

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– I ask the Treasurer a question without notice concerning the different way in which station wagons are classified by the Commonwealth for the purposes of sales tax and by some States for the purposes of motor vehicle registration fees. As the right honorable gentleman knows, the Commonwealth regards station wagons as passenger vehicles, which attract a higher sales tax than commercial vehicles - 30 per cent, as against 16£ per cent. - while these States regard them as commercial vehicles for which higher registration fees are payable than for passenger vehicles. Will the right honorable gentleman consult with the States to see whether they and the Commonwealth can agree upon the one classification or upon some intermediate classification so that the manufacturers and purchasers of these very popular vehicles will no longer suffer the worst of both possible governmental worlds?


– The honorable member for Werriwa was good enough to acquaint me with the subject-matter of this question, and 1 have a reply prepared. Item 1 in the fifth schedule to the Sales Tax (Exemptions and Classifications) Act specifically includes station wagons among the classes of passenger-carrying motor vehicles which are subject to tax at the rate of 30 per cent. This classification is based on information to the effect that station wagons generally are designed primarily for the carriage of passengers, are built on a passenger car chassis with a view to providing the comfort of a passenger vehicle, and in some instances are more expensive than a sedan car of comparable power. In these circumstances, it is considered appropriate thai station wagons should bear the rate of tax applied to passenger cars.

Whilst it is true that station wagons are invariably classed as commercial vehicles under the registration law of New South Wales, and thereby are made subject to a higher scale of charges than applies to passenger vehicles, this is not so in other States There is no uniformity of approach to this problem in the several States. In three of the States, station wagons are registered principally as private passenger vehicles, and are subject to lighter imposts than those applied to commercial vehicles. However, if station wagons are, in fact, for commercial use, they may be registered as commercial vehicles and be subject to the higher rate of fee. In one State, no distinction is drawn between motor cars and commercial vehicles as regards the rate of charges to be paid.

It is not within the sphere of my responsibility to endeavour to bring about uniformity among the State laws in this matter. lt will be realized, also, that if Commonwealth sales tax law were amended to cause station wagons to be classified as commercial vehicles, this would be in conflict with the classification of such vehicles in certain States other than New South Wales. In the circumstances, I am unable to bring about that degree of uniformity which is desired by the honorable member.

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– I ask the Minister for Primary Industry whether there is any difference in the restriction of fishing beyond the three-mile limit off the coasts of various Australian States. Whether there is or is not a restriction on the west coast of Australia, can anything be done to stop fishing for crayfish outside the three-mile limit there in the spawning season, when more fish are being taken than in the legal season inside the three-mile limit, as this is a definite threat to the future of this great dollar-earning industry?


– The first part of the honorable member’s question concerns a matter of such a technical nature that I cannot give an answer immediately. I shall obtain an answer for the honorable member and let him have it. As to the second part of the question, concerning the taking of crayfish in spawn, I understand that the Western Australian Government has prohibited this practice, but that its legislation applies only within the three-mile limit. The matter has, therefore, been raised with the Commonwealth, and consideration is now being given to the question whether the Commonwealth Fisheries Act should be amended to prohibit the taking of crayfish in spawn outside the three-mile limit. I understand that the Western Australian Government is taking what precautions it can take, because it is prosecuting those persons who land in Australia after having gone outside the three-mile limit and taken crayfish in spawn. This matter is currently receiving attention by the Department of Primary Industry, and I will be only too happy to inform the honorable member when a decision is made to bring down an amending bill.

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– Has the attention of the Prime Minister been directed to the comments made recently by the Minister for National Development at the annual convention of the Federation of Co-operative Housing Societies, to the effect that trading banks were making fewer loans for housing, that life assurance companies also were giving less financial support to the building of homes, and that the decline in the number of houses built during the past twelve months was causing the Commonwealth Government concern? If the Prime Minister agrees with the comments of the Minister, what does he propose to do to correct the position?


– I have not seen the full text of my colleague’s statement, but I shall obtain it and have a talk with him about it. If something useful emerges, I shall make it available to honorable members.

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– I address a question to the Prime Minister, in his capacity as Minister in charge of the Commonwealth Office of Education. Will he have prepared for the information of honorable members a schedule showing the number of undergraduates who entered, and the number of persons who graduated in, each faculty in each of the Australian universities, in each year since the war?


– I do not suppose this is a job that could be done very quickly, but I will arrange for it to be done, because I think the information might prove to be very valuable.

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– I direct a question to the Treasurer, following on previous inquiries and correspondence concerning the inclusion of the islands of the Furneaux group in Bass Strait in Zone B for taxation assessment purposes. The Treasurer will remember that I have directed his attention to this matter, personally and by correspondence, over a number of years. I ask him whether he has further considered the request and is in a position to say when appropriate action will be taken.


– The zoning system and the rates of taxation applicable to different areas are under constant review by the Government. The honorable member’s question raises a matter of policy which will come up again for consideration on the occasion of the next review of income tax laws.

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– Has the

Minister for Primary Industry seen reports of conflicting statements reputed to have been made by himself, by spokesmen for the United States of America and by spokesmen for South Africa concerning the export from Australia of merino rams to those countries? If so, has the Minister any comment to make on the matter?


– I was hopeful that the honorable member for Melbourne, who made a somewhat scurrilous statement in Melbourne yesterday about this matter, would have been in the House to ask this question. He was in the House earlier, but has now disappeared. First of all, may I state emphatically that the embargo on the export of merino rams from Australia still exists. It is true that, in the two relevant instances, the embargo was lifted for special scientific purposes, and that the rams exported were not to be used for commercial purposes. I repeat that the embargo still stands. I have already stated that the three rams exported to the United States of America are now dead. They were exported under an agreement made, I think in writing, between a professor who was vice-president and Dean of the College of Agriculture, in California, and the Australian authorities. I have no reason to think that the agreement was broken. So far as South Africa is concerned, the agreement was made with the High Commissioner for South Africa in Australia. Subsequently, a letter of confirmation was received from the then Minister for Agriculture in South Africa. Only one of the rams exported under that agreement is still active. The other three are not. I have received from Sir Ian Clunies-Ross, in the last few days, advice that the effect of the exported rams on flocks in the United States and South Africa would be, to use bis own words, “ completely negligible “.

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– I ask the Prime Minister whether he recalls that, on 19th September of last year, he stated -

It is certainly not my intention at this stage to announce a new (defence) policy . . . and that, on 4th October last, he stated -

The whole purpose (of a conference with the defence chiefs) will be to have a complete revision from top to bottom of the ideas underlying the defence programme in the light of circumstances now existing in the world.

Will the right honorable gentleman reconcile for the House those two statements, which came so close together? Will he state what progress has been made in this revision of the defence programme from top to bottom? When will a statement about the results of the revision be made?


– I do not understand that it is the purpose of questions without notice to produce argument about statements that have been made. I have made a series of statements in this matter. As it happens, all those statements have been completely correct.

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– My question is directed to the Minister for External Affairs. Did the right honorable gentleman, whom we all are very glad to see back in his place in the House, when in Djakarta recently, have conversations with members of the Indonesian Government concerning Dutch New Guinea? In view of the war-like remarks of the Indonesian Foreign Minister, and the recent statement of the Indonesian Ambassador to Australia, is the Indonesian Government quite clear as to the views of the Australian Government on this issue, and also as to where the sympathies of the Australian people lie?

Minister for External Affairs · LP

– Unfortunately, I did not have an opportunity to break my journey in Djakarta on the way back from my recent trip. But I had the privilege of seeing, and talking at considerable length with Dr. Subandrio, the Indonesian Foreign Minister, in both New York and Saigon, and I think that I can assure the honorable member and the House that the Indonesian Government is in no doubt about Australia’s attitude on the question of Dutch New Guinea. I put that beyond all doubt. I have been following the various statements that have fallen from the lips of Indonesian statesmen in recent times, and, at various points along the route, 1 endeavoured to make what seemed to be appropriate replies on behalf of the Australian Government.

The matter of Dutch New Guinea is likely to arise in the relatively near future in the United Nations in New York. We have not taken any distinct attitude in respect of the date on which the debate in the First Committee of the United Nations should occur beyond saying that we are ready and willing, although reluctant, to discuss the matter - for the third or fourth time - at any time that is suitable to members of the First Committee. In general, I can say that there is no doubt whatsoever about the attitude of the Australian Government in this matter, and that is well known to the Government of Indonesia. As to the remarks that have fallen from the lips of Dr. Subandrio in recent times, I have said, and I repeat, that I think that the demonstrations that took place in Djakarta recently were almost certainly promoted by the Government of Indonesia. I discount the various statements of Dr. Subandrio, which have been variously interpreted as possibly forecasting the use of force, because I believe that they represent merely enthusiasm of the moment which, I think, will not help the Indonesian Government in the consideration of this matter at the United Nations.


– By way of a supplementary question, as this matter is to go before the General Assembly of the United Nations, I ask the right honorable gentleman whether he will arrange for something that I have previously sought from the Prime Minister, and which was tentatively agreed to pending the return of the Minister for External Affairs from abroad - a general debate od international affairs, with special reference to Australia’s position in the Pacific and South-East Asia, so that the matter can be discussed in a more satisfactory way by the House, and in greater detail than is possible by submitting questions without notice on the subject and receiving answers to them.


– I have had a word with the Prime Minister on the question of a debate on international affairs generally, and

I understand his attitude »nd that of the Leader of the House is that such a debate can be arranged, although it may not be within the next ten days or a fortnight.

Dr Evatt:

– But before the United Nations deals with the matter?


– Well, before the United Nations has finished dealing with it, at any rate.

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– My question is directed to the Minister for Primary Industry. Is it a fact that at a recent meeting of the International Whaling Commission a move to increase the take of hump-backed whales in the Antarctic was defeated? Has this action, which was strongly supported by Australia through its representative on the commission, prevented the occurrence of a situation which could have adversely affected Australia’s coastal whaling? Is it also the intention to maintain unaltered the quota for whales on both Australia’s whaling coasts for the next season?


– The answers to the three questions asked by the honorable gentleman are: First, yes, largely as a result of action taken by the Commonwealth’s representative, a move to increase the number of hump-backed whales that might be taken was defeated when the matter was raised before the International Whaling Commission. Secondly, I am glad that this happened, because Commonwealth authorities think that the number of hump-backed whales now taken is about the optimum which can be taken without considerably depleting the catch in future years. As to the third question, the season has only recently ended, and the facts are now being collected. I will shortly be able to state the catch for the next season.

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– Is the Treasurer yet in a position to answer the question on the alleged sale of Australian gold, through Hong Kong, to Communist China, which I asked last week?


– I have here a statement regarding Australian gold exports which was prepared in reply to a question without notice asked recently by the honorable member for Fremantle, and also in reply to statements made during the debate on the Gold-mining Industry Assistance Bill by the honorable member for Chisholm. In terms of the existing legislation, all gold produced in Australia must be sold to the Commonwealth Bank at a price fixed and published by the bank. Since November, 1951, however, the Commonwealth Government has permitted the bank to re-sell gold to producers who wish to sell it overseas in order to obtain the benefit of any premium above the fixed Australian price. This arrangement was entered into following a review by the International Monetary Fund of its gold policy in 1951, since when member countries are, in effect, free to decide their own policies regarding gold sales. The bank sells gold, at its fixed buying price, only to the Gold Producers Association Limited. Membership of this association is open to all gold-producers in Australia and the Territory of Papua and New Guinea. The maximum amount which may be purchased by the association is the amount delivered to the bank by its members, less what is required for industrial purposes. The association sells the gold to gold brokers in Australia, who arrange its export. AH exports of gold from Australia must be approved by the Commonwealth Bank. Such approval is given only if the proceeds of export are to be received in United States dollars, and the purchaser has any necessary import licence.

During the past four years, almost all Australian gold exported under the premium sales scheme has been shipped to Portuguese Macao via Hong Kong. Macao has been the most - and possibly the only - profitable market available. It is understood that, after conversion into bars acceptable to local traders, the gold is re-exported from Macao, through Hong Kong, mainly to Burma, Indonesia, Singapore, and South Viet Nam. There have been no reports of exports from Macao to red China. I am informed that the mainland Chinese authorities no longer permit the import of gold. In this connexion, it is relevant to mention that the Hong Kong authorities permit the import of gold only if it is re-exported within a specified period, and provided the re-export transaction complies with the import licensing requirements of the country of destination.

The policy of permitting exports of gold to overseas premium markets is in line with that of other sterling area countries, including the United Kingdom. The Hong KongMacao market is currently being supplied with gold exported from London. The Government, therefore, sees no reason why Australian producers should not have access to overseas premium markets.

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– Has the Minister for Territories yet received a report of the select committee which the Legislative Council for the Northern Territory appointed recently? If so, will the Minister consider making the report available to this House?

Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– The select committee has presented its report to the Legislative Council for the Northern Territory. Although I have seen some newspaper references to the fact that the report was presented, I have not yet received a copy of the report. I do not know whether the select committee will choose to send me a copy.

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– I ask a question without notice of the Minister for Health. I direct the honorable gentleman’s attention to the fact that I asked this question about six weeks ago. What percentage of the population in the individual States, the Northern Territory, and the Australian Capital Territory, and the Commonwealth of Australia, is covered by medical benefits and hospital benefits? If the figures reveal that many people do not contribute to the Commonwealth medical and hospital benefits scheme, would this be a contributing factor to the high medical and hospital costs, and to the heavy losses incurred by many hospitals? The Minister, on 10th October, said that inquiries were being made, and a reply would be furnished as soon as possible. Will he ensure that a reply is obtained fairly quickly?


– As the honorable member knows, I have been absent from the chamber for some time. However, I will obtain the figures as soon as possible, and will advise the honorable member.

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– I ask the Minister for the Interior a question without notice. Is it a fact that the building programme in Canberra is being seriously delayed owing to a shortage of bricks, and to production of inferior bricks by the Canberra brickworks? If so, can the Minister immediately investigate the position with a view to overcoming this shortage, and in the meantime, so that the building programme may go ahead, will the Minister consider action to stimulate, by subsidy or otherwise, the supply of bricks from outside the Australian Capital Territory, until the Canberra brick-works can be restored to normal production?

Minister for the Interior · PATERSON, NEW SOUTH WALES · LP

– I am not aware of any holdup in the Canberra building programme to this point due to the shortage of bricks. Nevertheless it remains true that the materials available to the Canberra brickworks have always been regarded as very difficult to handle, and consequently there has always been a high rejection rate. At the same time, constant pressure is being exerted on the brickworks for both increased and improved supplies. In the meantime we have made a contract for the supply of a considerable quantity from brickmakers outside the Australian Capital Territory, but in view of the availability of alternative materials which might have to be used quite extensively, I would not suggest at this stage that any form of subsidy would be helpful.

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– I direct my question to the Minister for External Affairs. A few moments ago he told us he nad been hearing the words that have fallen from the lips of the President of Indonesia. Has the Minister heard the words that have fallen from the lips of his own leader, during the Minister’s absence, with regard to changes in foreign policy to this effect -

Of course we ought to be willing to discuss matters with the Soviet Union.

Will the Minister inform us what progress, if any, has been made in reopening diplomatic relations with the Soviet Union?


– 1 apologize to the House for not being able to hear very well at the moment owing to the great deal of flying

I have done and also to the fact that I have a very heavy cold. As I understand the honorable member’s question, he referred to some difference of opinion between the Prime Minister and myself on foreign affairs. I am not conscious of any difference of opinion at all. I have had the benefit of seeing on paper what the Prime Minister has said, and with it I am in complete agreement. I do not see how any one «ould detect any difference of opinion between the Prime Minister and myself on any of the range of questions covered. As to diplomatic relations between Australia and the Soviet Union, so far as I am aware there has been no advance, movement 01 approach on either side in recent times, so the matter remains precisely where it was,

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– My question to the Treasurer is supplementary to that asked by the honorable member for Fremantle. Has the right honorable gentleman personally investigated the amount of gold that was transhipped in the last year from Macao through Hong Kong to Viet Nam, Burma, Malaya and Indonesia? If so, did he not find that as the amount is so small, compared with the amount that goes through Hong Kong to Macao, it would be impossible to draw the inference which the Treasury official who supplied the answer has drawn with regard to the destination of gold exported from Australia? Secondly, in view of the fact that a large amount of gold goes out of Macao to other places than those which have been mentioned - and I think it is reasonable to suppose a large amount goes to places where Treasury officials said it does not go, such as red China - and in view of the further fact that the premium price of gold has never been more than .5 of a dollar above the standard price - and it has sometimes been lower - would it not be better for us to sell our gold on the standard market and pay the small extra premium to the gold producers instead of selling it through a suspected quarter like Macao?


– Obviously, 1 have not personally investigated the subjectmatter of the statement I have just made, nor can I add anything to it at the present juncture. However, I will have the matter looked into to see what further information I can supply.

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– I ask the Minister for Trade: Is it a fact that in supporting the decision to dispose of the Government’s whaling station at Carnarvon in Western Australia he declared that the Government stood for private enterprise and that it was Government policy to vacate any field of activity where it was competitive with private enterprise? If these are not the exact words used by the Minister, will he agree that they are a fair interpretation of the view which he expressed? If so, will he state whether the logical result of such a policy will be the disposal, at a time deemed opportune by the Government, of TransAustralia Airlines and the Commonwealth Bank? If the Minister claims that the Government has no intention of disposing of these two great government undertakings, will he explain why the arguments which he advanced in support of the disposal of the Government’s whaling station have no application in respect of the Commonwealth’s interest in air transport and banking?


– The honorable member admits that the words he seeks to put into my mouth are very garbled and do not to any degree represent a true statement of the argument that I advanced. I remember quite clearly what I said. I said that the Government whaling station had been established for a certain reason by a government of which the honorable member was a Minister. The reason was that it would be advisable to establish a shore-based whaling station, adequately capitalized and fully equipped technically, to demonstrate the efficiency that should be achieved in shore-based whaling operations in Australia. That was done, and was done with great success. The purpose of the establishment being concluded, this Government had no intention of perpetuating the station merely to keep alive socialist doctrines to which this Government does not subscribe. The useful purpose of the whaling station having been achieved, it was sold.

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– My question is addressed to the Minister representing the Minister for Customs and Excise. As large users of automotive diesel oil, who are exempt from payment of tax, are to be issued with certificates of exemption which will enable them to purchase oil at the source of supply without paying the tax, will the Minister impress on his colleague, the Minister for National Development, the urgent need to extend the same privilege to primary producers?

Minister for Air · EVANS, NEW SOUTH WALES · LP

– I will glady convey the honorable member’s remarks to my colleague in the Senate. However, on the question of large users of diesel fuel being allowed to obtain fuel from the oil companies without first paying tax, I point out that, in applying such a system, the Government is wholly dependent on the cooperation of the oil companies. I understand that they have stated a level of consumption below which it is impracticable for them to deal with individual applications. In other words, they say that they cannot deal in a manner suitable to the Government with users of oil fuel in quantities smaller than a certain large fixed amount. The Government is dependent on them and, indeed, understands their attitude. Therefore, the wholesale application to small diesel fuel users of the system mentioned by the honorable member is quite impracticable.

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– I ask the Prime Minister whether there is any truth in the rumour circulating at present that the Commonwealth proposes to increase interest rates in keeping with the recent increase in the United Kingdom.


– This is the first that 1 have heard of it.

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– My question is addressed to the Minister for Trade. Is it a fact that several members of the Tariff Board will retire or complete their terms of appointment in the near future? As there is an urgent need to speed up and to complete hearings referred to the Tariff Board, will the Minister assure the House that there will be no delays because of appointments of new members to the board?


– It is a fact that the term of appointment of the chairman and, I think, three other members of the Tariff Board will expire al the end of this calendar year. The situation is under active consideration by the Government. There will be no delay through the Government failing to reach a decision promptly.

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– Is the Minister for the Interior in a position yet to make any announcement as to the appointment of personnel to the National Capital Development Commission?


– The answer is, “ Not yet “. I expect to have something in view in the course of the next week or two.

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– My question is directed to the Minister for Primary Industry. Is the Minister aware that the chairman of the Australian Meat Board has stated that very little was spent on meat publicity in the United Kingdom last year because the quantity and quality of Australian supplies were inadequate? Is it correct that, irrespective of quality or quantity, the British public has never been educated to regard Australian meat as worthwhile meat, and that to get it to do so would require a considerable publicity campaign? Is it not also a fact that Australian canned meat, which is of high quality and of which there is no shortage, had only £40,000 spent on it in publicity in the United Kingdom last year, and that this is a mere trickle if the sale of such an important product is to be promoted adequately?


– I was not aware of the statement that Mr. Shute made about advertising Australian meat in the United Kingdom. He makes quite a lot of statements, as do many other people associated with primary industries, and I am sometimes unable to see all of them. As to the second and third questions asked by the honorable member, the amount that is being spent on advertising Australian frozen beef in the United Kingdom does seem to me, on the facts as presented by the honorable gentleman, to be small. I shall have the department look into the matter and see whether something can be done about it. I agree with the honorable member that Australian canned meat that is sent to the United Kingdom is of a very high quality and, I think, is readily saleable. After the position has been further examined, I shall let the honorable member have a written answer.

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– Last Wednesday, the honorable member for Werriwa (Mr. Whitlam) asked me a question in connexion with the tabling and printing of papers during the present Parliament. After excluding regulations, land acquisitions, appointments and other papers of a formal character, the number of reports, returns and statements of material significance which have been tabled totals 283. Of these, 102 have been ordered by the House to be printed and, in addition, the printing of 44 has been recommended by the Printing Committee, making a total of 146. I have had prepared for the information of honorable members a list of the reports tabled, showing the date of tabling, the date of the Printing Committee’s recommendation to the House, and the date on which papers were ordered by the House to be printed. I now lay the statement on the table.

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Assent to the following bills reported: -

Appropriation Bill 1957-58.

Appropriation (Works and Services) Bill 1957-58.

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Motion (by Mr. Harold Holt) agreed to -

That leave of absence for one month be given to the honorable member for Franklin (Mr. Falkinder) on the ground of ill health.

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Mr SPEAKER (Hon John McLeay:

– I have received a letter from the honorable member for Macquarie (Mr. Luchetti) proposing that a definite matter of urgent public importance be submitted to the House for discussion, namely -

Recent dismissals of certain physically handicapped employees from Commonwealth Government establishments and the need to devise a plan for the employment of handicapped persons.

I call upon those members who approve of the proposed discussion to rise in their places. (More than the number of members required by the Standing Orders having risen in their places) -


– The conscience of the nation has been aroused by recent dismissals of physically handicapped persons from Commonwealth Government establishments. The plight of the handicapped is a matter of urgent public importance. Society owes to the disabled person a secure place in the social and economic life of the nation. That place must be not one of alms gatherer, but one in keeping with human dignity. Recent dismissals of disabled workers from the Commonwealth Small Arms Factory at Lithgow, and the case reported to the House by the honorable member for Cunningham (Mr. Kearney), concerning a young disabled employee, highlight the urgency of this human problem. I believe that it is the responsibility of the Commonwealth Government to give leadership in this matter. Whilst I find it necessary to deal with the circumstances that have led up to this proposal, I submit to the Parliament that it is necessary now to devise a plan whereby the physically handicapped people of this country will be able to find employment in keeping with their dignity. Surely we are not to descend to a state of affairs in which our industrial organization will be so geared that the only persons engaged will be those with superior physical fitness, and that only those who reach an almost sublime standard will obtain employment, while those who are not so fortunate will find themselves the recipients of social service payments and will become, as I have said, mere alms gatherers! I believe that we have travelled quite a long way in the direction of the welfare state, and our system of social service payments and our general approach to human problems are such that matters of this kind must be faced realistically, on a basis of human dignity and decency.

With regard to the problem at the Commonwealth Small Arms Factory, I want, first, to express concern about the unfortunate remarks of the Minister for Defence Production (Mr. Beale), when replying to a question asked by me in this place concerning a certain youth who had been dismissed from the factory. The Minister, perhaps in an unguarded moment, libelled this young lad in a wicked way. He did so in such a fashion that I understand that the boy intends to leave the Lithgow district because he does not feel inclined to remain there.

The Minister, in the course of his reply to me, said that the lad was mentally defective, although he is in fact a bright lad. He applied for a position at the factory. His application was supported by the New South Wales Society for Crippled Children, and he was given employment at the factory.

This unfortunate lad, who suffers from a disability, was unable to commence schooling until the age of twelve years, but on starting his education at a public school, he was given the requisite tests and it was found that his intelligence quotient was above the average. In fact, it was much superior to the average boy of his age. However, this lad, whose schooling obviously was neglected because of his unfortunate physical condition, has suffered. The Minister, in his reply, went further and stated that the boy had been tried in several jobs. He was tried not in several jobs but in only one job, and having been tried in that job, he was retained in it for almost three years, until recently, when he was dismissed from the factory.

With regard to this lad and to others also, I believe that, apart altogether from the shortcomings of the individual, we should not seek perfection. All that we are entitled to seek from human beings is that they shall contribute to the economy according to their ability and the capacity that they possess. That nothing has been done for this lad or others, is perfectly true. Last year, when 250 employees were dismissed from the Commonwealth Small Arms Factory, a number of legless persons were included among them. Many of those dismissed persons are in search of work to-day. They have not been placed by this Government and are in receipt of unemployment relief payments.

These are challenging matters. I know that when mass unemployment occurs, quite naturally there is the possibility that some of the weak will go with the strong, but on this occasion, I object most strenuously to the fact that a lad - and others, too, who find themselves disabled in some way - should have been singled out for treatment of this kind. The Minister would have done the right thing if he had tendered an apology to the young man at the earliest opportunity, admitting that he had made a mistake, and that he had since found out that the boy was not mentally defective but was quite a good lad in all respects, although not capable of performing a certain duty. Keen resentment was aroused throughout the whole factory and so strongly did the men feel about this dismissal that they took the unprecedented step of holding a mass meeting on the job and staging a march in the street in orderly fashion in order to register their protest against the action of the Government. The decision to dismiss this young man did not emanate from some small claim within the Lithgow factory but clearly represents the policy of the Government. It must undoubtedly represent, also, the attitude of the Minister. The resentment at the factory will continue. This is borne out by the fact that only to-day I received a letter from the Amalgamated Engineering Union voicing the strongest possible protest. It informs me that the union has written to the Minister for Defence Production on this matter.

The Minister, in his reply to me in the House, referred to the fact that the departmental industrial officer came to Lithgow and investigated this case. I say to the Minister that if that is so, it was a most unfortunate happening. Surely an industrial officer of the department has a responsibility to contact the unions there and to indicate to them his opinion and find out from them just what they feel in regard to problems of this kind. If the factory administration says there is no job for a disabled person and the union can show that a job can be found, then the industrial officer has a duty to confer with the unions concerned. The former Minister for Defence Production, Sir Eric Harrison, in conference with the unions on one occasion laid down what I think was a reasonable basis for the consideration of industrial disputes in any government undertaking and it was especially applicable to the Commonwealth Small Arms Factory at Lithgow. He said that in a dispute of any kind the men would first have access to the management and, if satisfaction was not obtained then they could have contact with Mr. Walsh, the industrial officer, for discussion in an effort to reach an understanding. In this case that was not done. The former Minister said that as the next step, the secretary of the department would be available for consultation, and finally, the Minister.

That was an important statement made by the former Minister, but it was not put into practice on this occasion. I say here and now, that even if only one lad has been dismissed from the Small Arms Factory and is obliged to leave Lithgow because he cannot find work there, neither the Government nor society is absolved from the responsibility of ensuring that the physically handicapped are provided with work in this country.

I ask the Minister now to give an unequivocal assurance that there will be no further dismissals from the factory of those men who have been interrogated by the medical officer or the industrial officer there. A feeling of disquiet has been aroused throughout the factory, and uneasiness has been created where there was harmony and the utmost goodwill hitherto. I put it to the Minister that in view of this position he has a responsibility to dispel this feeling of disquiet and uneasiness. He has a responsibility to the people of Australia to restore the harmony and state of affairs which existed previously. I do not want to think that the law of the jungle is going to prevail in regard to the physically handicapped. Surely the public conscience is alive to the needs of the position and there is an awareness among us all of our responsibility which distinguishes us from the beasts of the jungle.

When the dismissal of these physically handicapped workers took place at the Commonwealth Small Arms Factory it was not surprising that a spontaneous feeling of resentment swept throughout the works. There are 25 of these men at the factory and in various ways they have been quizzed. Again I say that the Minister has a responsibility to clarify this position and say what will be done. One of these men who have been interrogated is a lad who gave a most helpful suggestion to the management in the question box and received £1 for it. Surely that is a fact worthy of consideration. Are we going to descend to a level where the survival of the fittest is the law that will obtain? I think of what the honorable member for Cunningham has said. Surely we are not going to perpetuate the unhappiness of this junior at the Small Arms Factory and others there who are physically handicapped. The Government has a responsibility to ease the rigid medical examinations affecting employees in Com monwealth departments and to accept responsibility for engaging the physically handicapped of this country.

In the United Kingdom a basis has been laid down to deal with matters of this kind. There, the Disabled Persons (Employment) Act 1944 makes provision for enabling persons handicapped by disablement to secure employment. Quite recently, a report of a committee of inquiry on the rehabilitation, training and re-settlement of disabled persons was presented to the British Parliament. Other legislation in the United Kingdom includes the Education Act 1944, and the National Insurance Act 1946, which provide assistance for the disabled. All these matters are of the utmost importance, but no clear-cut pattern or policy has been put forward by the Government to deal with this challenging human question facing the people of Australia.

The Director-General of Social Services, Mr. F. H. Rowe, is keenly interested in this matter, and in his report for the year ended 30th June, 1957, he has dealt with it thoroughly. On page 12, he writes -

The number accepted for rehabilitation decreased slightly from the fairly high level reached in 1955-56.

He went on to say -

Acceptances during the year totalled 1,505, or 77 less than the previous year, made up as follows . . .

And he gives the details as to the number of invalid pensioners and others receiving benefits. He pointed out -

The number placed in employment during the year was 1,022, a decrease of 108 from the previous year’s figure of 1,130. Those awaiting placement at the end of June, 1957, numbered 166 compared with ISO at 30th June, 1956.

He went on to say -

It is disappointing to record that once again the development of a new combined centre at “ St. Margaret’s “ in Adelaide had to be deferred.

He spoke about the shortage of professional staff, and then said -

Substantial waiting lists for admission to some centres still exist.

He then dealt with the disturbing aspect of our lack of policy in regard to this allimportant human question. I raise this matter in the Parliament to-day with no feeling of bitterness or rancour, but simply for the purpose of asking the Parliament, on behalf of the invalids and the disabled, to take some positive steps along lines similar to those provided for in legislation in the United Kingdom so that the Commonwealth Government will accept its responsibilities. In the United Kingdom, every employer who employs twenty or more persons must employ at least 3 per cent, of physically handicapped persons. In certain other industries, additional numbers may be employed.

Mr Chaney:

– Does that apply only to ex-servicemen?


– No. It is an entirely complete and comprehensive plan covering all disabled persons, from whatever cause they may have been disabled. The responsibility rests upon this Government to institute a similar plan. Whilst perhaps, constitutionally, the Commonwealth Government may lack the power to deal with all phases of employment in this country, surely it has a responsibility in its own establishments such as its own factories and its post and telegraph services to make an examination of those who need employment and to do what is being done in the United Kingdom. That is to say, it should make a register of those requiring attention of this kind and do what can be done to employ them in useful work.

Mr. Lawrence

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

Minister for Supply and Minister for Defence Production · Parramatta · LP

– This debate, on a subject with which we all, on both sides of the House, feel a great deal of sympathy, is, I regret to say, based on the entirely false assumption that the Government does not do anything about disabled people in industry, and that it has not a policy with respect to this matter. My colleague, the Minister for Labour and National Service (Mr. Harold Holt), who will follow me in this debate, will say something about what the Government itself does, over the general range of its activities, in this unfortunate matter.

What I rise to speak about chiefly is the position in the industries within my own jurisdiction because the attack of the honorable member for Macquarie (Mr. Luchetti) has been directed against dismissals at Lithgow. Surely this is the most ill-advised subject that has been proposed for discussion in the history of this Parliament. The discussion of a matter, based on the incident at Lithgow, is a most foolish thing, for this reason: Here we have names dragged through the House, not by me and, indeed, not by the honorable member for Macquarie. But, of necessity, persons will be identified as a result of what is said here to-day. When the honorable member for Macquarie came to see me some weeks ago I requested him not to mention names. He agreed not to do so and he did not do so. He omitted names in asking me a question and, in answering him, I gave no names.

Unfortunately, the unions at Lithgow which had been making a demonstration about this matter had gone to the press, and were thus the cause of the boy in question having his name plastered across the Lithgow papers. That is very unfortunate. But everybody now knows the name of that boy and what is said here to-day will inevitably become associated with him. I deeply regret that, but it seems to be inevitable.

Another reason why this is a most illadvised subject for discussion is that the combined unions at Lithgow, only two or three days ago, passed a resolution stating -

The combined unions at the small arms factory, Lithgow, withdraw any further claim for representations for the reinstatement of . . .

The resolution then names the young man in question, I am surprised that the honorable member for Macquarie has not had a copy of that resolution. Having been informed of the full facts on this matter, the combined unions at Lithgow saw fit to take no further action. I should have thought, in those circumstances, that the honorable gentleman would have taken no further action in the matter. But he has done so and, as a result, things concerning the person involved will, unfortunately, have to be said to explain why the Government took the action that it did.

The young man was dismissed for the very simple reason that he was unable to perform any work which the Lithgow Small Arms Factory could offer him.

Mr Luchetti:

– They did not offer him another job.


– He was unable to perform any work at all which was available to him at Lithgow. He left school at the age of 15 years. He did not work for a year, quite obviously because he could not work. He was taken on at the Small Arms Factory after union representations, purely out of sympathy, as a messenger boy, a couple of years ago. The drift of the report of the doctor who examined him at that time was rather against employing him. Pointing out what the boy’s disabilities were, the doctor said, “ If he is employed, he must be kept away from machinery. The “ if “ contained a warning. Obviously, in view of other facts that I will mention, he had to be kept away from machinery.

He was not dismissed as, perhaps, he should have been in October, 1956, when there were heavy retrenchments at Lithgow. He was kept on, again out of sympathy, and so probably kept an able-bodied man out of employment. Perhaps that may have been the time to have dispensed with his services. But we kept him.

Mr Curtin:

– Very kind!


– I rebut entirely the suggestion of unkindness. We have acted with great sympathy and patience because we know of his disabilities. But sooner or later, the time for his dismissal had to come and it came recently. He had been employed in the simplest job in the place - that of a messenger boy.

I made a mistake in saying that we had tried him in several jobs. I correct that now. We persevered with him in this particular job which was the simplest, the most elementary, and therefore the only job available to him in the factory. He could not do that job or any other which we had available for him. So after the industrial officer came from Melbourne and sympathetically looked at this case, the medical reports, and the whole circumstances, the boy’s services were dispensed with. It was not done lightly. Some of the other facts illustrate the irresistibility of the decision to dispense with his services.

He is a spastic paraplegic. That is to say, either at birth of at some other time, there has been an injury to the cells of the brain as a result of which he is largely crippled. He is wasted down one side. His right leg is short; his right hand is flexed; his left thigh and leg are wasted; and he can only handle very light things. He is, moreover, subject to apopleptic fits. He had them before he was employed at the factory and the doctor told us about them and warned us that he should be medically examined after six months if he had any more of them. He has had five or six more apopleptic turns since he has been employed by us. He also has other disabilities. 1 have been criticized because of some words that I used about his mental condition. lt gave me no pleasure to use them, and I endeavoured to ensure that the person to whom I was referring remained unidentified. But on the facts reported to me by the officers of the department, his mental condition is clearly not good. I contradict the statement that has been made about his I.Q. I am told that his I.Q. when he was tested at the age of fifteen years, was extremely low indeed. He could not even do the job of getting lunches properly. He used to get the lunch money mixed up. How mixed up he used to get them can be illustrated by the fact that the mix up was frequently against his own interest, which is a little unusual.

Mr Curtin:

– At least he is honest.


– Nobody has said that this boy is not honest. Nobody has said anything against him, willingly, at all. All that I am trying to do is to report to the House the facts as I believe them to be.

We persevered with this boy. But ultimately he had to go. The result was strikes at Lithgow. Wages to the value of £2,000 were lost to the men. There was a degree of set-back to the FN rifle production programme at Lithgow. All this resulted from an impetuous and foolish - even if goodhearted - reaction by the men concerned. Their final comment is to withdraw all representations with respect to the boy.

That is not the whole story at Lithgow. One other person is under medical examination and has been sent on sick leave. There are three or four others in a similar position. One is blind. We shall continue his employment if we possibly can. One man has only one hand. We shall endeavour to keep him on. Another man has Parkinson’s disease. He, like one or two others of those that I have mentioned, is a good worker and we will endeavour to keep him on. Another man suffers from angina and has other disabilities. He is on sick leave. We will do the best we can for him. Each of those cases - and there are only four or five cases at the Lithgow factory immediately involved - will be sympathetically considered at all times.

We have a wonderful record at Lithgow, as we have in other Government factories, in the matter of looking after disabled men. I told the House the other day our policy in this regard. No disabled man is to be discharged if he can efficiently do a substantial portion of his duties. That rule applies not only at Lithgow but in all our factories. But there must, of course, be some limit, and in the case of the boy I mentioned the limit had been reached.

Let me now consider the position with regard to the other men at Lithgow. We have 51 disabled men in that factory. We have limbless men, men with bad hearts, men suffering from tuberculosis, cripples, blind men, men with war wounds or with various kinds of deformity, asthmatics, men suffering from dermatitis, one or two senility cases and a rheumatoid case. All of those men have been kept in employment, because we have been able to give them jobs in which they can perform a substantial part of their work. We give them time off, we let them leave early, and we give them other privileges. We do not regard them as privileges, but rather as concessions, in order to make life easier for these men, to some of whom life is a considerable burden, and so that they may continue to be employed.

When it is realized that at the Lithgow factory alone we employ 51 persons with disabilities of the kind I have mentioned, to say that we are not sympathetic, that we are not doing anything for these people and that we have no policy, is to distort the meaning of the English language. In that factory, as in others - and my colleague will tell honorable members the Government’s policy in other fields - we have shown sympathy and understanding. So long as there is some sort of a job for these men to do we will continue to employ them. The Government’s approach to this problem has always been one of human sympathy and understanding towards men to whom life is more of a burden than it is to the rest of us.

There is no necessity for the House to debate this subject as a matter of urgent public importance. The Government is looking after these physically handicapped persons, as it has always done, not only at Lithgow, but also in other Government factories. A debate on this matter merely creates a false impression and attracts attention to unfortunate persons whom we should all prefer to have remained anonymous. The Government’s record in this matter is an admirable one. The Government has shown its generosity, although that really does not matter, because it is not generosity that these men ask for. They ask for sympathetic understanding. We have given them sympathetic understanding, and we shall continue to do so.


.- I have listened with great care and attention to the speech of the Minister for Defence Production (Mr. Beale). I submit that what the Minister has said has merely indicated the necessity to devise some plan for maintaining physically handicapped persons in employment. In Bendigo, there is an ordnance factory from which, in October of last year, between 400 and 500 persons were dismissed as the result of a retrenchment policy that was being pursued. Some of those persons were physically handicapped. I raised no objection to their dismissal at the time, because it was the result of a reduction in the amount of work being done at the factory. I am assured by the factory management that as time goes on and more work becomes available those physically handicapped persons will be re-employed.

However, the Minister’s statements have indicated the necessity for government planning with regard to the whole question of the employment of physically handicapped persons in Australia. The statement that a lad was dismissed simply because he was incapable of performing certain work merely highlights one of the great problems connected with the employment of physically handicapped persons. This problem is to ascertain the particular job that a handicapped person can do, and then to find an occupation for him, either in government service or in private industry. In addressing the House in this debate, I shall, therefore, deal with the broad question of what we as a community can do to see that physically handicapped persons are given an opportunity to do productive work and to lead happy and useful lives.

Some persons, because of accident, illness or congenital disability, find themselves handicapped in the struggle for existence. These persons have the same aspirations, the same feelings, the same hopes, ambitions and desires, as those who are in full possession of all their faculties. The inability of society to find some niche in which those persons can serve a useful purpose in life creates bitterness and frustration. The problem, therefore, is essentially one for the legislature of this country, because, as the guardians of the economic, financial and human affairs of the country, it is our task to see that these handicapped persons have an opportunity to fit themselves into the normal life of the community. We should do our level best to ensure that happiness becomes their lot, instead of the bitterness, frustration and despair which, all too frequently, overwhelm them and prevent them from living the normal life that we would like to see them live.

Very often, the physically handicapped person possesses attributes and capacities that are of great value to mankind. I give only two illustrations to show what these people can do. I mention, first, the case of Miss Helen Keller, an international figure of great repute. She was born deaf, dumb and blind, and yet has given most valuable advice to a host of governments with regard to the problem of physically handicapped persons. I mention, too, the Australian novelist, Alan Marshall. As a lad, he was crippled by polio, but has become one of the foremost Australian writers, and has achieved an international reputation. If one considers the cases of physically handicapped persons employed in industry, one is impressed by the fact that they can hold their own with those who are not so handicapped, provided they are given the right kind of job.

I believe that it is the task of this Parliament and the Government to see that a suitable plan is drawn up to provide for the employment of our physically handicapped persons. I point out to the Minister for Labour and National Service (Mr. Harold Holt) that at present there are 20,000 physically handicapped children attending schools in Victoria alone, and it is estimated that by I960 the number will have reached 25,000. In England, this matter has been dealt with by the passing of the Disabled Persons Employment Act. The register that has been prepared in accordance with the terms of that act indicates that, at the present time, no fewer than 780,000 physically handicapped persons are available for training and employment.

In Australia, the difficulty is that only four organizations provide rehabilitation services. There is, first, the rehabilitation service of the Department of Social Services, and, secondly, the rehabilitation service of the Department of Repatriation. Both are government organizations, and their facilities are limited to certain persons. The Department of Social Services can rehabilitate only persons who, normally, would come under social welfare schemes. The Department of Repatriation deals solely with exservice personnel. The thousands of persons who could benefit from training are denied it because no provision is made to ensure that they may receive training. I agree wholeheartedly with the recommendation of the Director-General of Social Services that the rehabilitation centres under the control of the Department of Social Services should be expanded so as to give those who are handicapped as a result of accident or illness, and particularly those who are the subject of workers’ compensation, training in order to enable them to take their place in industry immediately they are restored to health, even if they have to undertake a job somewhat different from the one that they had previously. Apart from the government rehabilitation services, the only training centres are those provided by the deaf and dumb societies, and the blind institutes, which afford the opportunity of training and rehabilitation to the persons handicapped in a particular way with whom they deal.

I know that the placement section of the Department of Labour and National Service is doing an exceedingly good job, and that, last year, it was able to place close on 7,000 handicapped people. However, about 3,000 physically handicapped persons were still left on its books registered for employment. In view of the number of physically handicapped children, and the number of people who we know are physically handicapped and registered for employment, we can see that there is a great problem in Australia. Let me offer, as a plan, four suggestions. First, the Department of Social Services rehabilitation centres should be extended. Secondly, the Government should show greater interest in the employment of handicapped persons. 1 pay tribute to the Minister for Defence Production, and the department that he administers, for what it has done. But what has been done by other Commonwealth departments with respect to the employment of physically handicapped persons’.’ Thirdly, the rehabilitation centres should concentrate on finding the particular task that can best be performed by each handicapped person. Fourthly, and in addition to all these things, there should be close liaison between the Commonwealth and the other authorities concerned with physically handicapped persons, their training and employment.


Order! The honorable member’s time has expired.

Minister for Labour and National Service · HIGGINS, VICTORIA · LP

– My first reaction to the proposal of the honorable member for Macquarie (Mr. Luchetti) was one of astonishment, because it seemed to me to reveal complete ignorance of the active policy that this Government has pursued in relation to physically handicapped persons. Of course we have a plan in relation to the physically handicapped. Of course we are doing a great deal to see that those who can be placed in employment suited to their faculties, and their physical capacity, are so placed. I was glad to hear the honorable member for Bendigo (Mr. Clarey), at the conclusion of his remarks, acknowledge that this work was being done. True, he suggested some extension of it.

I think that, apart from the honorable member for Bendigo, Opposition members, and perhaps some other members of the Parliament, do not know how comprehensive have been this Government’s activities in relation to physically handicapped persons. These activities, Mr. Acting Deputy Speaker, are the outcome of close cooperation between the Commonwealth Employment Service, which is part of the Department of Labour and National Service, and the Department of Social Services. In more recent times, we have tried to enlist the co-operation of hospitals and other institutions dealing with physically handicapped persons, so that the shortest possible interval will elapse between the time of treatment at a hospital and the time at which we are able to take up the problem of the employment of the person concerned. The Government realizes as well as anybody does that a disabled person may suffer grave psychological deterioration if a long interval elapses between the occurrence of the disability and placement in suitable employment.

Mr Luchetti:

– Disabled persons who were sacked from the Lithgow Small Arms Factory last year are still unemployed.


– We will come to that in a moment. I do not suggest that it is possible to place every physically handicapped person in employment. Indeed, in fairness to the person concerned, and to those working around him, it may be desirable that he be not employed, and that he be treated, in fact, as a social services case, and a responsibility of the community.

My time is very limited, Sir, and 1 shall summarize the position in this way: It is now well recognized that suitable persons who have some physical handicap, not only may be able to do a satisfactory job, but also can show, on the average, rather better records in respect of the turn-over of labour, productivity, and absenteeism from work, than is shown by persons who are in no way physically handicapped. The reasons are obvious enough. A person who has a disability realizes that he is not easy to place. Therefore, there is less disposition on his part to absent himself from work or to engage in conduct that may invite dismissal, and greater disposition to maintain a degree of productivity that compares favorably with that of other employees. Part of the campaign conducted by the Department of Labour and National Service has been directed towards convincing employers that it is good business for them to employ a physically handicapped person if he can be placed in a suitable job.

The honorable member for Bendigo cited some figures, which, in themselves, were not unimpressive. He mentioned that, last year, the department placed almost 7,000 physically handicapped persons in employment. The actual figure was 6,982. But that docs not give the full story, because, for the purposes of our statistics, we do not classify as physically handicapped a person whose disability would not normally disqualify him for the kind of occupation in which he had been engaged. For example, a clerical worker is not physically handicapped as such if he happens to have only one leg. Similarly, there are other occupations in which what would be a physical handicap in another class of work does not constitute a disability. Of the hundreds of thousands of people placed in employment by the department last year, many more than the 6,982 mentioned had some physical disability. The people whom we classify as physically handicapped for our statistical purposes are those whose physical handicap is such that they cannot engage in the kind of work that they would otherwise be doing. In the first nine months of this year, although, admittedly, it has been a more difficult year from an employment stand-point, 4,393 physically handicapped persons were placed.

The problem of employing handicapped persons was one of the first matters considered by the Ministry of Labour Advisory Council when it was formed in 1955. Official representatives, in company with representatives from organizations of employers, and of the Interstate Executive of the Australian Council of Trade Unions, were able to examine the problem closely. I recommend honorable members who are interested in this matter - and I hope that we all are - to study the relevant publications prepared by the Department of Labour and National Service - “ Employing the Handicapped “, “ A Guide to the Special Facilities of the Commonwealth Employment Service for the Employment of Physically Handicapped Persons “, and another, directed to the physically handicapped person, which is entitled “ Your Future Employment “. In addition to publicity media of this sort we have, in each of 120 district employment offices throughout the Commonwealth, at least one officer who has been specially trained in the work of interviewing, and then placing in suitable employment, physically handicapped people. I mentioned earlier that research had shown that these people, when properly placed, can do work certainly no less effective than that done by those who are completely able bodied. However, our inquiries reveal that in other cases the indiscriminate placement, of a physically handicapped person may not only be a disadvantage to him but can also represent some hazard to the workers around him. It is a disadvantage to him because, if you strain his physical and mental resources beyond his capacity, you may, in the long run, create a worse situation, and a worse physical condition than would be the case if the attempt had not been made. The problem of hazard is one which requires no elaboration on my part.

The honorable member for Macquarie made two constructive suggestions which, on the face of them, were quite attractive. One was that we should follow the English system of having a compulsory quota of disabled persons employed in an establishment which has twenty or more employees. That would necessarily involve a register of physically handicapped persons, such as is kept in England. The fact that we do not have such a system in Australia does not mean that we have been casual or apathetic regarding this problem. On the contrary, we have given very close study to the manner in which the English system works, and we have rejected both of the latest proposals because we believe that, as we see the situation, there are arguments against them. If we made it compulsory that a minimum of 3 per cent, of employees in an establishment be disabled persons, that minimum requirement would tend to become the maximum in that establishment. The employer would feel that he had done his duty by employing 3 per cent, of disabled persons and would not increase the percentage. We prefer to persuade the employer that it is good business for him to have these people because they are more attentive to their work, tend to take more care to avoid industrial accidents, and are less prone to absenteeism. If we can convince the employer of that he does not stop at employing only 3 per cent. He goes beyond that, as is the case in so many industrial establishments.

In Lithgow, itself, which has been made the point of attack in this debate, my colleague, the Minister for Defence Production has employed double the percentage of physically handicapped persons that would be required under the English provision. The fact that a physically handicapped person is on a register of such persons tends to depress the person concerned.


– Order! The Minister’s time has expired.

Motion (by Mr. Beale) put -

That the business of the day be called on.

The House divided. (Mr. Acting Deputy Speaker - Mr. Lawrence.)

AYES: 50

NOES: 28

Majority . . 22



Question so resolved in the affirmative.

page 2039


Motion (by Sir Philip McBride, through Mr. Casey) agreed to -

That leave be given to bring in a bill for an act to enable effect to be given to certain Conventions done at Geneva on the twelfth day of August, One thousand nine hundred and fortynine, and for related purposes.

Bill presented, and read a first time.

Second Reading

Minister for External Affairs · La Trobe · LP

– by leave -I move -

That the bill be now read a second time.

The object of this bill is to make necessary provision to enable Australia to ratify four conventions drafted at an international conference - at which Australia was represented - held in Geneva in 1949. The conventions were all signed on behalf of Australia but have not yet been ratified. It is the intention of the Government to take steps to ratify the conventions, steps which I am sure that every member of this House will wholeheartedly approve, having regard to the humanitarian character of the conventions and their general purpose, which can be briefly described as comprising a code of rules for the protection of the unfortunate victims of war.

The texts of the four conventions are set out in the Schedules to the bill. The first convention concerns the amelioration of the condition of the wounded and sick in armies in the field, commonly known as the “ Red Cross Convention “, and is a revision of the earlier convention of 1929, to which Australia was a party. As the 1929 convention was itself a revision of an earlier convention of 1906, based upon experience during the first world war, so the 1949 convention is a revision of that of 1929, made in the light of experience during the second world war. This convention provides for respect, protection, and care for all sick or wounded persons officially attached to armies; the protection of medical units, establishments and material, medical and voluntary aid personnel, chaplains, medical transport and aircraft, hospitals, hospital zones and localities; and lays down rules concerning the use of the distinctive emblem of the Red Cross.

The second convention relates to the wounded, sick and shipwrecked members of the armed forces at sea. This convention is a revision of the Tenth Hague Convention of 1907, which adapted the provisions of the Red Cross Convention to maritime warfare.

The third convention deals with the treatment of prisoners of war. It defines what prisoners of war are, lays down general principles concerning their protection and rules governing their treatment in captivity, discipline, transfer, employment, notification of captures, and reports concerning state of health and various other matters affecting prisoners of war generally. The convention contains more detailed provisions than its earlier counterpart on such subjects as the employment of prisoners and their financial resources, and contains some innovations such as inclusion among prisoners of war of members of crews of merchant ships and civil aircraft.

The fourth convention, which deals with the protection of civilians in time of war, is new, and in some respects goes beyond what have hitherto been the normal obligations of international law. It provides, for example, that enemy aliens must be permitted to leave the country unless their departure would be contrary to the interest of the State, when the protecting power must be given reasons for the refusal. Enemy aliens who remain are, subject to national security requirements, to be treated as aliens in time of peace, must not be required to perform work directly related to the conduct of military operations, and can be interned only if security so necessitates or at their own request. Most of the provisions consist of regulations for the treatment of internees, who, generally speaking, are equated, in relation to their internment, to prisoners of war.

I have described in very general terms the objects of the conventions. Most of their provisions can be given effect under existing legislation or by way of administrative arrangement. But certain of the provisions of the conventions could not be given effect without legislative provision, which it is the purpose of the present bill to make. Tt will be seen that, apart from parts 1 and 5 of the bill, which relate to preliminary matters and empower the making of regulations, the bill deals with three main subjects, namely the punishment of offenders against the conventions, legal proceedings in respect of protected persons, and provisions designed to prevent abuse of the Red Cross and other distinctive emblems. I shall deal shortly with each of these matters.

Part 2 of the bill provides for punishment of persons who commit what are described in the conventions as “ grave breaches “. A “ grave breach “ is defined by reference to the articles of the respective conventions. It will be seen that “ grave breaches “ are breaches involving such acts as wilful killing, torture or inhuman treatment, wilfully causing great suffering and extensive destruction and appropriation of property. In relation to prisoners of war, a “ grave breach “ covers such matters as compelling a prisoner to serve in the forces of a hostile power or wilfully depriving him of the rights of fair trial. In the case of civilians, unlawful deportation or confinement is also included. All four conventions require contracting parties to enact legislation to provide penal sanctions for such “ grave breaches “, and it thus becomes necessary for Australia to make such provision if we are to carry out our obligations under the conventions. I should, perhaps, add that the conventions also require contracting parties to search for offenders and bring them, regardless of their nationality, before their own courts or, if preferred, to hand them over for trial to another high contracting party.

Part 3 of the bill is designed to give effect to the requirements of the Prisoners of War Convention and the Civilian Convention concerning safeguards for a fair and proper trial of prisoners of war and internees for offences against the law or regulations in force in the detaining country. They cover such matters as proper notice to a protecting power as well as the accused, legal representation and provision to secure rights of appeal.

Part 4 of the bill is designed to give effect to the requirements of the conventions that contracting parties shall prohibit the use, except in accordance with the conventions, of the Red Cross, or the Red Crescent and Red Lion and Sun, which certain countries use for the same purpose. The arms of the Swiss Confederation, i.e. the white cross on a red background, are also entitled to protection under the Wounded and Sick Convention. Section 15 is designed to meet with these requirements and will replace the similar prohibition which existed under the Geneva Conventions Act of 1938, which this bill will repeal.

The bill does not, of course, make legislative provision covering everything that is prescribed by the conventions - it makes only such provision as could not be made otherwise than by legislation. If this bill is passed into law, and I have no doubt all honorable members will be in accord with its basic objectives, Australia will be in a position to join the other sixty countries which have ratified or acceded to all four conventions, and thus not only advance the humanitarian principles behind the conventions, but also be in a position to secure for its own people, in the unfortunate event of war, the protection which the conventions assure. I commend this bill to honorable members.

Dr Evatt:

– Before I formally move the adjournment of the debate, I ask the Minister whether he can obtain for the information of honorable members the reports from the delegations to the original conventions in 1949.


– I shall look on that request sympathetically.

Debate (on motion by Dr. Evatt) adjourned.

page 2041


Second Reading

Debate resumed from 7th November (vide page 1984) on motion by Mr. McMahon -

That the bill be now read a second time.


.- This bill authorizes the raising of £8,000,000 for war service land settlement, the bulk of which is to be allotted to the agent States. New South Wales, being one of the principal States, receives an amount of £1,369,000. Until two years ago the principal States of New South Wales and Victoria - Queensland hardly entered into war service land settlement at all - financed their war service land settlement entirely by loans. For the last two years, however, the Commonwealth has been assisting those States by giving them £1 for every £2 they expended from their own funds. Whilst in the past we had perhaps no right to criticize the way in which the principal States con ducted their war service land settlement because they themselves were providing the requisite finance themselves, I feel we now have the right to overhaul their programmes when we are making such considerable contribution towards them - a total of something like £3,000,000 this year to ensure that the money is used to the best advantage.

The honorable member for Darebin (Mr. R. W. Holt) who spoke first on this measure on behalf of the Opposition, claimed that the two principal States were more efficient than the three agent States. He based his claim on the fact that more people had been settled on the land in those two States at a smaller cost than in the agent States. I disagree with him because I do not feel that the two programmes are at all comparable. Whilst the agent States to a certain extent have resumed and subdivided some estates and put soldier settlers on them, in the main they have tried to bring into production previously unproductive land. Obviously it costs far more to do that than to resume a property already in production, sub-divide it and put a settler on it to carry on exactly the same type of agriculture.

A number of schemes have been undertaken by the Commonwealth. For example, in Western Australia it has been found possible to bring completely wild bush land into production in a short time by clearing the small scrub growth, ploughing and sowing to pasture. That is being done also in Tasmania. I understand the Montague Swamp scheme has encountered considerable trouble. Plans were made to dredge that swamp at a cost of £1,850,000, and it was hoped eventually to bring into production about 37,000 acres on which ex-service personnel were to be settled. Unfortunately, problems far greater than those anticipated have arisen and it is unlikely now that more than about 8,000 acres will be brought into production. In my opinion the two types of settlement are different. One cannot compare the case of putting a person on a war service land settlement block where the land has to be developed, with the system operating in New South Wales, and I think in Victoria, of resuming land already in production, sub-dividing it and putting on it soldier settlers who continue producing exactly the same sort of crop.

This whole question involves the aims and objects of war service land settlement. The honorable member for Darebin claims that it was never intended that war service land settlement should be used for the development of land or to bring land into production. He claims it is only some sort of reward to people who fought for their country. I disagree with him because I feel that whilst on one hand we want to give some reward to those who fought for their country, on the other hand we also want to use this scheme as a means of developing land and increasing production. I am sure many people in the principal States agree with that view. Otherwise, why would New South Wales take land from ex-servicemen who have been decorated for bravery and make it available to exservicemen who did not volunteer and did not see service- outside Australia? I feel quite certain most people are of opinion, first, that there should be some reward to those who served their country; and secondly, that this scheme should be used as a means of improving our use of the land. How has the New South Wales Government’s policy fitted into these objects? I speak of New South Wales because I live in that State and have greater personal knowledge of it than I have of other States. I believe that New South Wales must receive the “ Oscar “ for the worst war service land settlement policy of any State in the Commonwealth.

I referred to the emphasis that should be laid upon developing unproductive land but New South Wales has not, to my knowledge, regarded war service land settlement from this point of view. There are many ways in which unproductive land can be used and brought up to a standard suitable for war service land settlement. The honorable member for Maranoa (Mr. Brimblecombe) on one occasion when we were flying over his electorate showed me large areas of land in which brigalow timber, which grows to a height of about 20 feet, was being pushed down by bulldozers and the land sown to pastures. That is being done in southern Queensland and northern New South Wales and a considerable amount of country that was previously bush is being brought into production. That, however, has been done only by private enterprise. In my opinion the practice should be followed in war service land settlement. I know that some honorable members have visited the Badgery’s Creek farm of the University of Sydney where the Commonwealth Scientific and Industrial Research Organization has been doing a considerable amount of work on what is known as water harvesting. Under that scheme dams are built and are filled either by drainage from the land or during the winter from any creek or river nearby when it is in flood. The dams are pumped full and the water is stored and used in the summer for irrigation. It appears to me that type of scheme could be used in the development of much of our land. In addition, it would be much cheaper than the present system of settling a person on a large area of land. Under an irrigation scheme of that nature a settler would require only a reasonably small acreage because if he had a dam, an irrigation plant and spraying equipment, he would be able to produce sufficient and would not require the large areas that people have been given in New South Wales and Victoria. I do not want to go into the economics of this matter but it is quite obvious that if this were done by the War Service Land Settlement Division, land could be purchased cheaply and developed at a small cost, and the settler could increase production considerably as compared with the previous owner. On the contrary, under the scheme now in operation in New South Wales, in some instances people have been put on a block to grow exactly the same crops that were produced there before, and sometimes they have not been able to produce even as much as was grown before.

New South Wales should have aimed at obtaining undeveloped land and placing on it contractors who would, if necessary, clear the land and then sow it down, top-dress it heavily and bring it into full production. After all, the difference between full production under pasture improvement, where one can carry four to five sheep lo the acre, and country in its natural state, which carries one sheep to the acre, is very considerable. This plan would not only help the country by bringing into production areas which were under-producing, but would also be an incentive to people to develop their land fully. I was talking to the Premier of South Australia, Sir Thomas Playford, not long after he had introduced war service land settlement. He told me that he had announced that a decision to take land for war service land settlement was based on whether the land was being productively used and not on the size of the land. He said that, as a result, the difference in the south-east corner of South Australia was tremendous. Within one year, the amount of superphosphate used in a year increased by more than 100,000 tons. A policy of that nature would increase production in the individual properties that were taken and would certainly not leave the soldier settler any worse off, because he would receive the property after it had been ploughed and sown under contract. Such a policy would also encourage people who had been backward in their farm practices to develop their properties as we know they can be effectively developed.

Unfortunately, the policy in New South Wales has been different from the policy I have mentioned. I shall outline to the House the case of two adjacent land-holders. One had 9,000 acres and the other had 5,000 acres. The 9,000-acre property was completely undeveloped and was an example of really poor farming. A considerable amount of erosion had occurred and the property had a very small carrying capacity. The smaller property was well developed, well run and had a high carrying capacity. When the war service land settlement authorities visited the district, they took three blocks from the owner of the 5,000 acres and left the other property completely untouched. That is one reason why I say that the New South Wales policy has been very backward by comparison with that of any of the other States.

New South Wales has made many more mistakes than have other States. It has followed a system of proclamation which, I believe, is untenable. To-day, more than 5,000,000 acres are under proclamation for war service land settlement. In the twelve years in which the scheme has been operating in New South Wales, 2.700,000 acres have been subdivided and given to war service land settlers. That means that New South Wales is to-day holding under proclamation sufficient land to last, at the current rate, for the next 23 or 24 years. That is completely stultifying development of the lands under proclamation. If a person develops any land that is under proclamation, he does so at the risk of losing all or most of the money that he puts into the development. Much of this land would have been subdivided in the normal process, if the dead hand of the proclamation had not been upon it - one of the best means of subdivision in Australia is the method of a father subdividing land for his children. Other blocks would have been subdivided in the normal course of events and perhaps portion or all of them put on the market. What better way of closer settlement could one have than that? Yet here the dead hand of proclamation has been resting on some estates for twelve or more years! An owner can do nothing about such a proclamation and it is completely stultifying development of those blocks.

I come now to the system of allocation of blocks in New South Wales. In every other State, an applicant is interviewed by a committee or a land board. Points are awarded partly on the applicant’s war service and partly on his ability as a farmer, his character and so on. In New South Wales, however, once an applicant receives a qualification certificate, he is entitled to be placed in a ballot. About 19,000 qualification certificates have been issued. Some of them should never have been issued because the applicants have insufficient ability; but any of these people could draw a block at a ballot. As a result, land has been given to some soldier settlers who were not fully qualified. The system in operation in other States is far better, and I hope that New South Wales will change its policy. Although war service land settlement is drawing to a close, probably some form of closer settlement will continue. It is no good crying over spilt milk. Many mistakes have been made, but we must see that the same mistakes are not made in a scheme of closer settlement.

I do not want to go into the question of payment for land that has been resumed. That matter has been rectified, but only as a result of the legislation introduced in this House which provided for a payment to the States on the basis of £1 for every £2 that they use. Because the Commonwealth provided money, the resumptions had to be at a just price. I congratulate the honorable member for Chisholm (Sir Wilfrid Kent Hughes) who at that time was the Minister and who succeeded in persuading the New South Wales Government to alter its legislation.

I believe that New South Wales has made a mistake in its land tenure. New South Wales is the only State out of step, though perhaps it thinks it is the only one in step. In every other State, people who go on the land are given the opportunity of some conditional purchase and to convert to freebold eventually. New South Wales uses the system of perpetual leasehold. I saw in the press to-day that a deputation from the Returned Servicemen’s League visited the New South Wales Minister, Mr. Nott, and asked that the system be altered and that soldier settlers have the right to convert to freehold. Some people may think that this is unimportant. They may say that land under perpetual leasehold can still be left in a will to the heir and that there is a complete right to the land in perpetuity. However, the most important effect of this system is that it has completely dried up the avenues through which soldier settlers could obtain finance. Because the State has the first mortgage on a block of land, a soldier settler cannot obtain a loan from a bank or other institutions. I had a case recently of a progressive soldier settler in my district who went to the bank and said, “ 1 have an asset here which I have conservatively valued at £14,000. Can I borrow on it? “ The answer was, “ No, the Department of Lands has the first mortgage. We would have absolutely no security. We cannot lend you anything.” If that soldier settler had had the right of purchase, he would have been able to borrow money and further develop his property. He says that he is now considering selling out and investing his money in a property of which he can get the freehold.

I know that the Minister wants to have the debate on this bill finished as soon as possible, and I conclude by saying that I believe that he should discuss all these matters, and also certain other aspects of war service land settlement in New South Wales, with the State Minister for Lands. It is of no use to say, “We disagree with the policy that New South Wales is following “, and at the same time bolster very considerably the funds that New South Wales makes available for land settlement purposes. When we make payments to the States, we have the right to say how the money should be used. We follow that principle in respect of other payments to the States and say that the money that is provided must be used in a certain way. I appeal to the Minister to take up these matters with the New South Wales Government. If that government is not prepared to see eye to eye with the Federal Government, we should say, “ All right. You carry on war service land settlement yourselves, as you have every right to do. We are not going to supplement your funds only to see them used in a way with which we disagree entirely.”


.- The honorable member for Farrer (Mr. Fairbairn) misrepresented the honorable member for Darebin (Mr. R. W. Holt), who preceded him in the debate. The honorable member for Farrer said that the honorable member for Darebin stated that war service land settlement blocks should be made available as a reward for service and not in order to increase rural production. My recollection of the remarks made last week by the honorable member for Darebin is that he said that the whole object, as far as the Commonwealth was concerned, in soldier settlement, was to rehabilitate people who had served in the forces; that there was no intention to reward them for their service; that the nature of the blocks they got was decided by reference, not to their war service, but purely to their capacity to work the land; and that anybody who had the capacity to work the land and had served overseas was eligible to participate in ballots for soldier settlement blocks. The honorable member for Darebin did not discourage the idea that the object should be to increase rural production. He merely said that for the Commonwealth this was a subsidiary objective. That is, his remarks were directed to the rehabilitation aspect.

Mr Fairbairn:

– He said that the scheme was not designed to be a means of developing our land.


– As I recall his remarks, he did not deny the desirability of increasing the productivity of land, but he said that the objective of the Commonwealth all along was primarily to rehabilitate servicemen and to help them to settle on the land, in the same way as the Commonwealth gives advantages to exservicement in other respects, such as housing through the War Service Homes Division, and medical treatment, through the Repatriation Commission. As I understood the honorable member for Darebin, he was far from denying that there had been an increase - a most desirable increase - in the productivity of land as a result of soldier settlement.

I venture another criticism of the remarks of the honorable member for Farrer. He voiced, as he has done on previous occasions, the objection of New South Wales’ graziers that large estates have been resumed for the purpose of soldier settlement. He compared, in too simple a fashion, the developmental projects which have gone on in the islands to the north of Tasmania, in the south-east of South Australia, and on the south coast of Western Australia, where large virgin tracts are being cleared and treated with trace elements to increase their productivity, with the development in New South Wales and Victoria where, of course, if you are to get blocks within the proper rainfall areas you have to take over land which is already largely developed and occupied. The fact is that, in every case in which one of these large properties has been taken over, productivity in the area has increased very greatly indeed. One has only to go to the “ Jemalong “ project near Parkes, or the “ Edgeroi “ project near Narrabri, to see that, by every standard of statistics, production has increased. It is only necessary to look at the rail freight inwards of superphosphate, and the freight outwards of sheep and wheat, to see that the demand and products from these districts have increased very greatly. In fact, anybody who goes to the townships in the vicinity of those projects will find the greatest support for soldier settlement, because the towns have revived and are relatively booming, whereas between the two world wars they just stagnated.

The honorable member for Farrer referred to the delay which has occurred in bringing land into production, or in subdividing properties over which there have been proclamations. The most flagrant example of that was the “ Ghoolendaadi “ estate, near Gunnedah, which was owned by the Pye family. There was a proclamation over the property for about ten years before it was subdivided. The delay in subdividing it was not the wish of the New South Wales Government nor, I think, of the Commonwealth Government, but was due purely to the legal manoeuvres of the Pye family.

Mr Ian Allan:

– What about the just price provision?


– The courts gave their decisions. There were several applications to the Land and Valuation Court of New South Wales, to single judges and the Full Court of the Supreme Court of New South Wales, to the High Court of Australia, and to the Privy Council. There were applications on more than one occasion to each of those tribunals, and in the end the property was subdivided. It is now in production, and in increased production compared with what it produced before it was subdivided. The Pye family, of course, are vastly amused by the crocodile tears which are shed by members of the Australian Country party and the Liberal party over their misfortunes, because throughout the protracted litigation they had possession of the property and were able to benefit from the boom wool prices during the early 1950’s. They received an excellent dividend from their legal investments and, in addition, they got their complete valuation price.

Mr Roberton:

– That is disgraceful.


– The Minister for Social Services (Mr. Roberton) says that it is disgraceful. If it is disgraceful, his Government participated in the disgrace.

Mr Roberton:

– I meant that the honorable member was disgraceful.

Mr. Timson

– Order!


– If there is any disgrace in the way in which the Pyes were treated, or the way in which other people who were less vocal and litigious in these matters were treated, then the Commonwealth Government and the State governments were equally to blame. Every year we are treated to this buck-passing between the Commonwealth and the States over soldier settlement. On previous occasions, we had it between the representatives of New South Wales and Queensland on the Government side of this chamber and Labour members on the government side in the State Parliaments of New South Wales and Queensland. It is a singularly profitless debate, because here we have opponents of the State governments abusing the practices of the State governments, and there we have supporters of the State governments abusing the Commonwealth Government. In fact, both State and Federal governments have to work together if we are to make a success of soldier settlement.

If there are faults in what the State governments have done, we have been responsible, too, because we do not make grants under section 96 of the Constitution to the principal States - New South Wales and Victoria, and Queensland while it continued the scheme - except on conditions of our own choosing. If the Government of New South Wales pays too little for these estates, then we help it to pay too little. Of course, in respect of the agent States, the three smaller States in population, we provide all the money, so that whatever faults there are in that respect are entirely of our own making. So we have this fruitless business of each abusing the other, while soldier settlement stagnates in the process. The honorable member for Farrer said very truly - although I hope it is not a fact - that soldier settlement appears to be coming to a close. I hope that is not so, because many potential soldier settlers will be disappointed.

Mr Fairbairn:

– The honorable member for Darebin said that, too.


– He said it was coming to a close because prices were making it impracticable. To the end of last June 8,042 people had been settled under the World War II soldier settlement schemes in the six Australian States. According to figures which the Minister for Primary Industry (Mr. McMahon) supplied to the Deputy Leader of the Opposition (Mr. Calwell) on 10th October last from estimates given him by the State Governments there are still 4,000 applicants wanting soldier settlement blocks. So, half as many people are still wanting to get on the land as have already been put on it. In the twelve or thirteen post-war years we have put on the land only two-thirds of the people who would like to go on it. If the prime object of this scheme is to rehabilitate people who served in the forces, then the governments in Australia are failing in their job.

Let me illustrate that view by what is happening in some States. The honorable member for Chisholm (Sir Wilfrid Kent Hughes), when he was Minister for the Interior, stated on 14th October, 1954, that in South Australia about 400 ex-servicemen were still awaiting settlement. The position at the end of June last was that the number of holdings allotted in South Australia has risen in three years from 603 to 793. That is, 190 settlers have been put on the land, out of the 400 who the honorable member for Chisholm, three years ago, estimated still wanted to go on the land. But according to the figures which the Minister for Primary Industry gave to the Deputy Leader of the Opposition last month, it is estimated by the South Australian Government that there are fewer than 400 people still to be settled in that State. At the recent rate, it will take six years to settle them on the land - not the one year remaining, the financial year which is already onethird gone, but six years.

Mr Chaney:

– The applicants will be getting a bit long in the tooth.


– That is true. They may not be in a fit condition to work the properties. The honorable member for Chisholm then quoted the case of Western Australia, where, he said, 400 genuine seekers of holdings remained unsatisfied. In the three years which have since elapsed, the number of settlers in Western Australia has increased from 695 to 791, that is by 96. In the figures which the Minister foi Primary Industry supplied to the Deputy Leader of the Opposition, it is estimated that fewer than 300 people are still to be settled in Western Australia. At the rate of 96 in three years, it will take nine years to settle this remainder.

I now come to the cases which the honorable member for Chisholm quoted on 15th September, 1955, after the present threeyear scheme had already started. He said that in one State - he did not say which State-

It has been estimated that approximately 1,200 genuine applicants … are still waiting for blocks. It is hoped that the State will be able to allocate 400 new blocks each year for the next three years.

If he was referring to Victoria, the position is that in the first two years of the scheme from July, 1955, to June, 1957, the number settled rose from 2,356 to 2,728, an increase of 372. The Minister for Primary Industry told the Deputy Leader of the Opposition that Victoria estimated there were fewer than 600 still to be settled. If the honorable member for Chisholm was referring to New South Wales, the number settled in the last two years in that State rose from 2,320 to 2,920, an increase of 600. According to what the Minister for Primary Industry told the Deputy Leader of the Opposition, fewer than 2,500 were still to be settled in New South Wales. I have quoted figures which were given by a former Minister in this House and those which have been given by the present Minister to the Deputy Leader of the Opposition.


– Perhaps the present Minister’s figures are not correct.


– To give the present Minister credit, he does not vouch for the figures he has given. He conveyed the estimates given by the various State governments as at last February. But it is pretty plain that, at the present rate, the 4,000 people whom it is estimated still have to be settled, will have to wait many years before they are settled. What are we doing about it? We were told that this year, 1957-58, was to be the third of the financial years in which the balance of applicants would be settled on the land. The previous Minister said that, in these three years, the settlers in the agent States - South Australia, Western Australia, and Tasmania - would be settled. They are settlers for whom the Commonwealth, and the Commonwealth alone, has accepted responsibility since the war. We were told also that to assist New South Wales and Victoria to settle the remainder of their applicants, we would loan them an extra £1 up to a maximum of £2,000,000 each for every £2 which those States made available from their loan funds to settle ex-servicemen. In none of the three years, including this year, have the State governments made out of their loan funds an allocation which would attract the maximum Commonwealth amount.

If the full amount had been provided by the Commonwealth, the States would have had to spend out of their loan funds, in each year, £4,000,000. In fact, neither State has ever spent that amount, and accordingly, the Commonwealth has not spent its full amount. At the end of the three years, taking the estimate in the Budget for the bill which is at present under discussion, New South Wales will have received from the Commonwealth £4,550,000 and Victoria £4,945,000 instead of £6,000,000 in each case.

The honorable member for Farrer said that the Minister ought to have a word with the New South Wales Minister concerning the position. In fact, the two Ministers have had a discussion. I believe that they had a discussion on 4th October last. The New South Wales Minister suggested that the Commonwealth should give its full amount of £2,000,000 irrespective of the New South Wales allocation for soldier settlement. If that were done, at least there would be a few score more people settled in New South Wales, and I am sure the same position would apply in Victoria. It is useless abusing one government without abusing all governments in this matter. The New South Wales Government has not allocated the full amount that it could allocate to attract the Commonwealth subsidy, nor has the Victorian Government; and those governments are of different political complexions. Let us be realistic about it. No party in a State parliament can afford to do more about it. They can hardly be blamed, because, in fact, their loan funds are pretty precious. On all these amounts which they take out of loan funds, they have to pay interest charges. In the course of this Government’s term of office the interest bills of State governments on their loans have trebled whereas the interest bill of the Commonwealth has remained stationary. We have taken all our capital expenditure out of taxation. Although we give the States half their capital expenditure out of taxation we pretend that it has been raised on the loan market and charge them interest for it. They have to consider all the claims of education, health, transport, electrification, and soil conservation as well as soldier settlement. We, in this Parliament, are relying on a technicality in this matter. We are holding out a carrot before the States, and saying to them, “ We will provide £1 for every £2 that you put up. We will lend you a maximum of £2,000,000, but if you do not put up the £4,000,000 you will not get the £2,000,000.” If we wished to provide soldier settlement genuinely we would give them the £2,000,000 without strings. I do not think that any State government objects to spending any amount of money which we make available and, in general, I have no brief for the State government in these matters. If a matter requires a lot of money the best authority to spend the money is the Commonwealth.

Soldier settlement is, we hope, a purely temporary phenomenon. It is an outcome of the last war and unless there are new wars we presume that it will not recur. So, in that matter, I am prepared to acquiesce in the Commonwealth’s providing the States with the full funds required. But the sham of our position is revealed by the fact that if we had made the £2,000,000 available to each of these States and if the States had made the £4,000,000 available each year instead of merely three-quarters of that amount, we still would not have set! led, within the three years, the full number of people who we knew wanted to go on to soldier settler blocks.


– And costs have been rising.


– Yes. We have made no allowance for that. We always object to the payment of anything less than current values for blocks which the State governments resume yet we refuse to give them the means to pay the current cost! Two years ago it was stated that, in three years the waiting list would be eliminated and that all the ex-servicemen who required land would have been settled on it. It was stated that the Commonwealth would provide all the funds for the three agent States and that it would give a subsidy to the principal States to enable them to clear up the backlog. It was stated that the amount of our subvention would clear up the waiting list in the principal States. From comparing the figures given by the honorable member for Chisholm (Sir Wilfrid Kent Hughes), when Minister for the Interior, two years ago, when this three-year scheme was introduced, with those given by the present Minister for the Interior (Mr. Fairhall) to the Deputy Leader of the Opposition (Mr. Calwell) a few weeks ago, I would think that the three-year scheme has failed badly. We have not been given any proposal for curing the position.

At the present rate, the number of people still to be settled on the land in the agent States for which we alone are responsible will not be settled for six to nine years.

In the principal States, for which the States themselves are also responsible, it will take a like time. If we want to see these men established on the land we shall have to act quickly because most ex-servicemen have been rehabilitated within twelve or thirteen years of their discharge from the services. If they have not been rehabilitated within that period, they are beyond rehabilitation. If we really want the people who served in the forces and who have the capacity to work the land to be settled on the land, we shall have to provide more money. We shall have to provide it ourselves in the agent States and we shall have to provide more of it in the principal States.

I have not gone into the detailed matters which the honorable member for Farrer (Mr. Fairbairn) raised concerning one State, alone. Frankly, I would not know the rural or political details to answer all his allegations. But I could not help noticing that he only gave a partial account of one matter he mentioned. He quoted the reply given by the New South Wales Minister for Lands to a deputation from the New South Wales branch of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, which had asked as a result of a decision made, I think, at the last State congress of the league, that soldier settlement blocks should be made freehold instead of perpetual leasehold. What the honorable member did not say was that the Minister for Lands in New South Wales pointed out to the deputation that the perpetual leasehold principle had been adopted as a result of a resolution passed by the returned servicemen’s league congress in New South Wales in 1941. He did not think that any reason had been shown for the league to change its previous decision, which the New South Wales Government had adopted.


– The honorable member for Chisholm, when he was a Minister, tried to force Victoria to accept the perpetual leasehold tenure.


– The honorable member for Darebin is well acquainted with the position in Victoria because he was a very successful Minister for Lands and Soldier Settlement in that State a few years ago. I think it can be said that the success of the soldier settlement scheme in Victoria has been largely due to the honorable member for Darebin and his predecessor as Minister, Mr. Galvin.

I conclude by referring to areas in which the Commonwealth, and the Commonwealth alone, can be responsible for land settlement - in Commonwealth Territories. A few years ago, a proposal was made when some estates in the Australian Capital Territory were being sold. They would not have had to be resumed. The Commonwealth could have bought those leases from the people who wanted to sell them. An urgency debate was initiated in this House in an effort to have the Government buy those estates on the market. The Commonwealth’s genuineness in this matter was well shown by the fact that the very large number of people from the Australian Capital Territory who had had rural experience before the war, who had served in the forces overseas, and who therefore had the qualifications necessary for a soldier settlement farm, were dropped in the lap of the New South Wales Government. That Government has the obligation, at our request, of settling Australian Capital Territory ex-servicemen.

The other territories for which we are responsible are the Northern Territory and the Territory of Papua and New Guinea. I would think that there are excellent opportunities for bringing into production the savannah area of the Northern Territory, but we have done nothing about soldier settlement there. Before we abuse the States for what they have failed to do, let us look at the beam in our own eye in this matter. What have we done in our mainland territories, which have plenty of land suitable for development? We have helped to settle no soldiers on that land.

I now refer to the remaining Territory of Papua and New Guinea, because speakers at the R.S.L. federal congress recently referred to it. It is a regular theme at such congresses. I disagree with a great number of the opinions stated at these congresses on this subject. I do not believe that they represent the considered opinion of the league throughout Australia, but they are regularly pushed by delegates from Papua and New Guinea.

A suggestion has been made that Australian ex-servicemen should be settled in Papua and New Guinea. I, for one, in this matter applaud the policy of the Minister for Territories (Mr. Hasluck), who has, despite a great deal of pressure, always resisted the suggestion that the highlands of New Guinea should be allocated to people from the mainland. The Minister has taken the proper attitude, for one must always have prime regard to the interests of the indigenous inhabitants of the territories. One should remember the comparable case, climatically and by latitude, of Kenya, where a great deal of the recent trouble has been due to the fact that European settlers have been given the choice parts of the highlands and consequently the whole of the indigenous economy has been upset.

If we yield to this clamour to settle returned soldiers from Australia in the highlands of Papua and New Guinea, we will be setting up another Kenya. I would like to say to the Minister for Territories in that regard that he has the support of all members on this side of the House. But I conclude by pointing out that, in the mainland territories of Australia, the Commonwealth has settled no returned soldiers at all; and that in the agent States where we alone provide the money and in the principal States, alike, the programme is so far behind that at the end of this financial year, when we were supposed to have settled all the remaining 4,000 soldier settlers, we will still, at the present rate, require another six or nine years to finish the job.


.- I have listened to this debate from the time it commenced. Indeed, I have heard all the speeches that have been made by honorable members on both sides of the House on this as on the many other occasions during my membership of the Parliament that this subject has been discussed. The honorable member for Werriwa (Mr. Whitlam) has said that he would not go into technicalities, but it appeared to me that most of the speeches in this debate were of a technical nature, and I did not hear any practical suggestions as to how ex-servicemen could be settled on the land, and the lag in the war service land settlement programme eliminated. The honorable member for Darebin (Mr. R. W. Holt) said that in Victoria land has become so expensive that it is impracticable to settle ex-servicemen on the land in that State, because the initial capital cost is so great that normal prices of primary products would not make land settlement an economic undertaking. My contribution to this debate will be quite brief, because I have just one definite suggestion to make, and I believe that one definite suggestion of a practical nature in a debate such as this will prove of more benefit than all the technicalities that we have heard from speakers on both sides of the House.

It is well known that within the next two or three years the additional water to be made available for irrigation purposes by the Snowy Mountains Scheme will start to flow. The Minister for National Development (Senator Spooner) has said that this additional water, in its full flow, will make possible the irrigation of 600,000 acres of land, and taking into account previous experience with irrigation areas in Victoria and New South Wales, that the productivity of this 600,000 acres of land will increase to the extent of £43 a year per acre. In the two States principally affected, Victoria and New South Wales, the opportunity now presents itself to settle ex-servicemen on this land in the Murrumbidgee and Murray valleys. The engineers can tell us what areas will be irrigated by the additional water, and the settlers could prepare their land and have it in readiness when the water is available. They should be paid a certain amount each week to enable them to carry on until they become established, as is done in the case of ex-servicemen who are settled on dry land in western Victoria and other places. This Government, in conjunction with the governments of Victoria and New South Wales, could acquire land now on just terms and settle ex-servicemen on it before the additional water becomes available. When it commences to flow, those settlers can immediately commence to operate as primary producers.

The scheme that I have outlined would be of three-fold benefit to Australia. First, it would enable the settlement of exservicemen on the land. Secondly, these exservicemen would produce goods for which there is a ready market. The third advantage is that the scheme would not result in taking land from persons who are at present actively engaged in primary production. We know that land which has been acquired for war service land settlement all over Australia has been taken from those in active production. Every farm that is taken up in this way means one less primary producer.


– The land is used for intense cultivation.


– I am not denying that, but 1 suggest that probably as many ex-servicemen have been settled on land already given over to intense cultivation as have been settled on dry land.

The land that will be affected by the additional water from the Snowy Mountains scheme is situated along the Murrumbidgee and Murray valleys in New South Wales and Victoria, and perhaps in South Australia as well. Negotiations are at present taking place as a result of which South Australia will almost certainly benefit to some extent from the extra flow.

My suggestion, in simple terms, is that the land should be acquired now and the soldiers settled on it. They should be paid in the same way as ex-servicemen who are settled on dry land are paid until they become established. The honorable member for Parkes (Mr. Haylen) seems to be completely opposed to this proposition. He is mumbling from time to time. I cannot hear what he is saying, and neither can anyone else. I suggest that he should make his own speech.

Mr Whitlam:

– He would be worth listening to.


– That is more than can be said of the honorable member for Werriwa, who “ still has hopes his booklearned skill to show “. When a person with some knowledge of the land comes into this House and puts up a practical proposition, the honorable member interjects, as does the honorable member for Parkes. My proposition is worthy of consideration, and if any honorable member thinks it is not, let him say so.

I submit that we have a God-given opportunity to settle ex-servicemen on this land. It is of no use to say that the water will not be available for some years. In terms of settlement, the time is close at hand. We know that it will take some little time, but I suggest that we should settle the men now, let them prepare their land and build their homes. Then when the water becomes available they will be ready to go into production. If any honorable member knows of a better scheme, let him say so.


.- I wish to make a few remarks arising out of what has been said by the honorable member for Mallee (Mr. Turnbull). The honorable member accused the honorable member for Werriwa (Mr. Whitlam) of being a man of book learning. No one would ever accuse the honorable member for Mallee of being a man of any sort of learning. He has introduced a very practical note into this debate. One might have expected such a practical note from one whose occupation was that of an auctioneer.

Mr Turnbull:

– That was fifteen years ago.


– He is still closely associated with the class of people with whom he was associated when he was an active auctioneer. It is not surprising, therefore, that he has put forward a proposal for the purchase of land in the Murray and Murrumbidgee regions which would benefit, if his reasoning is correct, those persons who at present own it and those in the auctioneering business who would sell it.

The suggestion put forward by the honorable member for Mallee is that when the extra water from the Snowy Mountains scheme flows through the two main rivers the productivity of the newly irrigated land will be greater by £43 an acre per annum than its productivity as dry land. It is only too obvious that the present owners of the land will benefit greatly from this additional water. The honorable member for Mallee spoke in this debate following a speech by the honorable member for Darebin (Mr. R. W. Holt), who was formerly Minister for Lands in the Victorian Government, and who said that the price of land in that State was so high that it was practically impossible to settle exservicemen successfully. The honorable member for Mallee, as I understand the position, rose to contest that proposition.

Mr Turnbull:

– Nothing of the kind!


– Did he do so? No! He further strengthened the proposition, by showing that if the value of land is allowed to rise - as it certainly will - after the extra water from the Snowy Mountains scheme becomes available, it will be even more difficult to settle ex-servicemen on the land in the Murray and Murrumbidgee valleys. If this bill is to have a successful application, the Government will have to come to grips, sooner or later, with the problem of the way in which land values in this country rise with every increase in national productivity, and with every project successfully completed by the Commonwealth on behalf of the public. All of these things benefit the land-owners. If this benefit is allowed to continue, it will certainly become increasingly difficult to place new settlers on the land.

It is fairly clear that this argument against regulation, coming from the practical experience of the honorable member foi Mallee, which, presumably, he uses as the sole criterion for his contribution to this debate, could, perhaps, be justified equally well by a person speaking about the regulation of the drug traffic as a result of practical experience gained from participation in it. I suggest that the buying and selling of land in Australia embraces evils that are just as serious for the community as is the drug traffic. Until we come to grips with the problem, and find a way to prevent every gain achieved for the community, as well as for the individual land-owner for the effort that he has put into his land, from being reflected in the inflation of land values, we shall not seriously attack the problems underlying the administration of this measure. Therefore, I think that it would be wrong to allow the submissions put forward by the honorable member for Mallee, from his very practical money-making point of view, to pass without pointing out their significance.

Every land measure enacted in the Commonwealth and State parliaments, right back into the 19th century, has had only limited success, because land settlement has run into the barrier represented by the way in which land values are inflated. A very sound remedy was proposed in the nineteenth century in the tax on land values associated with the name of Henry George, and had the colonial governments been wise enough to apply that remedy, the present difficulties would have been avoided. The Commonwealth and State Governments have refused to adopt what is in itself an extremely sound economic proposal, and have departed ever further from a system of taxing unimproved land values. I suggest that that is one purely fiscal measure that could be used for the benefit of those who are endeavouring to overcome the problems of land settlement in this country. Of course, it is not the only such measure, but it is one that governments would do well to adopt.

I was very pleased to hear the honorable member for Mallee cite such a strong argument in favour of a fiscal measure of this sort as that which he advanced in relation to the Snowy Mountains scheme. A large volume of water will be provided by the scheme for all the community. The scheme has been undertaken with the labour and capital of the country, not that of any one individual, and certainly not only that of the land-owners who will benefit from the increased supplies of water on their land. This is one example of how the productivity of land will increase by £43 an acre a year when the land is irrigated as a result of the Snowy Mountains scheme. If productivity of the land rises by £43 an acre a year, those who own it will benefit exclusively to that extent from the work of the community as represented by the scheme. Until we come to grips with fundamental economic problems of this sort, it is almost useless to pass legislation which is more the expression of good intent than of the practical considerations mentioned by the honorable member for Mallee.

Mr Turnbull:

– I wish to make a personal explanation.

Mr. SPEAKER (Hon. John McLeay).Order! Does the honorable member claim to have been misrepresented?

Mr Turnbull:

– Yes. My remarks were misrepresented by the honorable member for Yarra (Mr. Cairns). He referred to “ the suggestions put forward by the honorable member for Mallee, with his very money-making point of view “, and he tried to lead the House to think that, as I had said that the productivity of the land increased by £43 an acre a year, the landholders would receive that amount. I want to explain that I emphasized, as I have done on previous occasions in a way that Mr. Speaker may regard as tedious repetition - evidently, the honorable member for Yarra did not understand it - that the dry land should be acquired now before the water is available, so that, when the water is pro vided in the not too distant future, soldier settlers will receive the benefit. Surely any fair-minded man in this House or elsewhere would agree with that!


.- I do not propose to embark on any discussion about the merits of Henry George, and his land tax proposals, to which the honorable member for Yarra (Mr. Cairns) referred. They are hardly relevant to this debate. I should like to point out to both him and the honorable member for Werriwa (Mr. Whitlam) that the Commonwealth Government has never approved of land being taken from people at a value at which they themselves would not willingly part with it. The honorable member for Werriwa suggested that, when the New South Wales Government insisted on people giving up possession of their properties at 1942 values, the Commonwealth Government tacitly approved. The Commonwealth’s record is clear, because, in each of the States in which it has acted as principal, with the States acting as agents, all the land acquired for war service land settlement was in fact acquired at just values.

I wish to direct the attention of the honorable member for Werriwa to one other point. He suggested that the war service land settlement scheme was dragging on far longer than was desirable, and that it would not be completed for another eight or more years.

Mr Whitlam:

– I said that it would be six to eight years.


– Very well, six to eight years. I am happy to be able to give the honorable member the latest figures for Western Australia, where the scheme was carefully examined by a royal commission appointed by the Western Australian Parliament. The royal commission reported, in April of this year, that about 350 farmers were awaiting settlement.

Mr Whitlam:

– I said that.


– Yes, that is perfectly true. The royal commission reported that it was expected that those farmers would be settled by September, 1960, and it supported that opinion by reference to the work at present being done in the various project areas in the south and south-west of Western Australia. That belief is borne out, also, by figures given by the Minister for- Primary Industry- (Mn McMahon), who stated’ in: October, 1956; that: 692. farms had: actually been settled, and’ 450 were being prepared for settlement, and’ that- that number, was the maximum contemplated to be: necessary to complete the settlement of returned servicemen.

It is quite true, Mr. Speaker, that- the problem of waT service1 land settlement hasbeen aggravated- by increasing- costs, and I” wish to say something’ briefly about theproblems that- have been caused by excessive costs, and the increase of costs over the years.- In October of last year, the Minister for Primary Industry pointed out that, in Western Australia, the Commonwealth had’ spent £24,000,000 on war service land settlement, and that, for that expenditure, 692 farmers had been settled! The royal’ commission rightly pointed out that that £24,000,000 did not cover only the 692 farmers who had been settled but also covered the 450 farms which were in course of construction. The average cost a farm, if the total sum merely covered the 692 farms, would be £35,000 which, I think everyone will agree, would be a magnificent sum for the taxpayers of Australia to pay for the settlement of one exserviceman on the land. If the 450 farms projects is included in the total, the average cost works out at £21’,000. Of course, we have to add- to that total the amounts we will allocate over the succeeding years to I960, when the work will be completed. So it is safe to say that the figure will be well in excess of £21,000 per farm.

Over the years I have expressed many doubts and- criticisms of the administration of this scheme-. In its essence the scheme is excellent from both the point of view of rehabilitating ex-servicemen who came out of the war with no occupations to go to, and also of opening up undeveloped land and increasing primary production. But at this stage, twelve years after the war ended, I hardly think it could be called essentially a rehabilitation scheme. A person who has waited until now without having rehabilitated himself or doing something for himself since his war service ended is, I suggest, hardly capable of succeeding on what is essentially a> pioneering job, a young man’s job, which is involved’ in going onto a farm in its raw beginning and making a success of it. That is one of the problems which rising costs have forced on the Government. Of course, there are many other problems which cause delays in the- scheme - problems concerned’ with’ the- supply of material and delays and difficulties in getting work done. One of the great, difficulties’ is the administrative set-up. In. my references to that, I speak only from- my knowledge of. the relationship between the. Commonwealth and: an agent State.

There is no doubt that war service land settlement’ has done a great deal in Western Australia towards opening up land which would otherwise not have been opened up. The Commonwealth has accepted the responsibility for the rehabilitation of exservicemen which is, of course, essentially a human problem. But at every point where the human, relationship comes in. between government and individual you find, the intervention of State officials, and in many instances it has been difficult to sheet home the blame for delay or to discover what, is true in sets of. alleged circumstances. Indeed, that was why it was necessary to> establish a royal commission in Western, Australia to investigate the many points, of dissatisfaction among settlers. Not the least, of the causes of dissatisfaction was the very real fear, which I have mentioned in previous years in this House, and which, the. royal commission- found existed in fact, of victimization of individual settlers. In fact, individual settlers- were found to be unwilling or reluctant, in many cases* to giveevidence before the commission although they were given repeated assurances that every attempt had been made to ensure that there would be no actual victimization. That fear could not have arisen accidentally, or have, existed so universally, unless there was some foundation for it.

We find that on the lower levels of State administration- there, have been very many defects, in previous years. Happily, they have been corrected, largely because of strong criticism from- many- quarters. I suggest, however, that there are some matters which should be attended to by the Commonwealth. In the first place, to-day there is still certain delay after a property has been approved for leasehold conditions. When a place has been developed by a man- who has been an allotteedesignate for some years to the point at which- the property is considered’ of sufficient shape- to allot him’ a lease area, an examination is required by the Commonwealth representative in Western Australia in order to ascertain that it is in fact up to standard so that a lease may be issued. There are frequent complaints that after the property has been approved there is considerable delay in the issue of the lease. In the farm year, time means money at certain seasons. If a farmer knows that he is to go on a lease he wants to get busy preparing the ground for crops and buying stock and plant and machinery - as he is able to do with the advance made to him. If time is wasted he loses the greater part of the value of that season. So there is really no excuse for delay once the Commonwealth has approved the lease. There should be no delay in the preparation of the lease documents, bills of sale and the like, so that the farmer can get a prompt start on what he then regards as his own property.

Another difficulty settlers are meeting is the lack of information about detailed costs of their farms. It is excusable on the part of the Government, because new farms are completed on a project basis. A number of farms are prepared at the same time. In Western Australia the settler has the opportunity, after a certain time, of purchasing the freehold of his property, either at the then market value or at cost, but the cost is so prohibitive in any event and is so difficult to arrive at, that one of his alternatives is cut out; but that is probably largely academic, because the cost has been so high that no one in his right mind would ever contemplate purchasing a developed property at cost rather than at market value. Then we are faced with the difficulty of assessing the value of the work done by the settler, the contribution to the market value in, say, ten years’ time of the settler’s own efforts. I suggest that it would be a little unfair to ask the settler to contribute to the capital value of a property and then expect him to buy back what he himself has put in. So I suggest it will be necessary, if the settler is to receive justice when he wants to purchase his property, that a very careful record be kept of the work done by the settlers. It will still be desirable for very detailed records of the work done in relation to these project properties to be kept and, as far as possible, detailed accounts should also be kept, because one of the very great difficulties which will be faced is the ease with which administrative inefficiency can be covered up over a large project area, where no detailed accounts are kept in respect of each farm. I have often had in mind that it would have been far better to have interested private enterprise in carrying on the development of land, as the Australian Mutual Provident Society has done in South Australia.


– That is very costly.


– I am quite aware that it is a costly business. The honorable member for Barker (Mr. Forbes), who is very interested in this subject, has supplied me with some information on it. He tells me that it costs roughly about £21,000 to prepare a farm in that area. But many of those farms have now been taken over on a unit basis under war service land settlement. The productivity of those farms, which carry in the vicinity of 1,500 sheep, is very satisfactory indeed.


– How big are the properties?


– The properties are from 800 to 1,000 acres. They compare very favorably with farms in the Rocky Gully area of Western Australia, which are designed to carry 900 sheep on 800 acres. Despite the cost of the project, it is still arguable that the work could have been done cheaper if private enterprise could have been assured of finding somebody to supply the capital. We have the example of the Chase Syndicate in Western Australia, which is hoping to do something similar. The same sort of thing is being done in the Northern Territory, where undoubtedly an examination has been made of the economics of the project, which is expected to be a financial success. I believe there is great scope for private enterprise in land development. I do not see how millions of acres in Western Australia and other parts of Australia, which are awaiting development, can be brought into production if the enterprise is placed under government administration. Where a government tackles problems such as land development it is inevitable that there will be charges of inefficiency. I do not see how we can get away from that. There is an excellent case for firms such as the International Harvester Company of Australia Proprietary

Limited to take over land development projects and settle people on the land. If such firms desired they could use the project to advertise their machinery. They could, if necessary, attach conditions regarding the sale of their machinery to those settlers. I think that would be a far less costly way to develop the many millions of acres in Western Australia which need development.

An examination of the cost of this war service land settlement scheme indicates the difficulty which governments will inevitably face in the future when the people clamour for this land to be brought into production. People will urge that immigrants be brought to this country to settle, but if the taxpayer is asked whether he is willing to pay £21,000 for each immigrant put on to a farm, he will adopt a very different attitude.

I support this bill.

Mr Whitlam:

– I wish to make a personal explanation. The honorable member for Forrest (Mr. Freeth) misrepresented my remarks this afternoon.

I did not justify or mention the resumption of land by State governments at 1942 valuations. My reference was confined to the period since 1st July, 1955, when the present three-year scheme came in. Under that scheme the Commonwealth has loaned a further £1 for every £2 allocated from loan funds by the principal States for resuming and developing land. My point was that if unjust prices had been paid for Ghoolendaadi or any other property subdivided in the last two years and four months, then the Commonwealth was a participant in that injustice.

Question resolved in the affirmative.

Bill read a second time.

In committee:

The bill.


.- I should like to say something about the suggestion made by the honorable member for Mallee (Mr. Turnbull) regarding the acquisition of suitable lands so far as the irrigation scheme is concerned. If, by that statement, the honorable member wishes to imply that we should acquire dry farming lands which are capable of being irrigated - that is, are suitable and commanded areas - we can agree with him if the land is acquired at its price as dry farming land.

Usually these irrigation schemes take fifteen to twenty years to get under way. Everybody knows that the irrigation scheme is coming. When a court has to decide what is the fair market value of land, it invariably happens that the unearned increment, representing the enhanced value of the land because of irrigation, is loaded on to the price, and the soldier settler has to pay.

Mr Turnbull:

– I said that they should be put on the land now.


– Yes, and wait fifteen years for the water to come. It is ingenuous, to say the least.

Bill agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 2055


Second Reading

Debate resumed from 6th November (vide page 1870), on motion by Sir Arthur Fadden -

That the bill be now read a second time.


.- I want to direct a few remarks to this bill for several reasons - all of them, in my opinion, important. Unfortunately, owing to the limitation of time, I shall not be able to put the matter on behalf of Tasmania in the way I originally intended. The purpose of the bill is to ‘authorize a payment of £19,500,000 to the States during 1957-58, as authorized by the Commonwealth Grants Commission. In my opinion, the amount that will be payable to Tasmania under the tax reimbursement formula, under the special financial assistance grant, which was authorized in this House only a few days ago, and under the measure we are now debating, is insufficient having regard to the expenditure requirements of that State. I make no apology for confining my remarks to Tasmania, having regard to the short time available to me.

The commission adopts the attitude that, before it considers the amount which will be paid to any particular State in any one financial year, it must first of all direct its attention to the budget of that State and secondly to the amount spent by that State on social services which include health, education and other essential services. Unfortunately, the amount expended by the States on social services has, in the past, been considered to the detriment of the claimant States by the commission when framing its recommendations. Much of the increased expenditure by the claimant States of Western Australia, South Australia and Tasmania has been rendered necessary because of the increase in population during recent years. I concede at once that increase in population is taken into consideration under the tax reimbursement formula: and we know that amount is increased each year by 2i per cent, to meet the increase in population. However, although the population may be increasing by 2i per cent., school enrolments are increasing at the rate of 5 per cent. The expenditure in Tasmania is higher than that in .any of the other States in respect of -social services, education, health, hospitals, charities, law, order and public safety, which are taken into account by the Commonwealth Grants Commission in assessing the amount to be allotted in the financial year 1957-58. For example, the expenditure on education was 222.2 shillings per capita; on health, hospitals and charities. 158 shillings per capita; and on law, order and .public safety, 60.5 shillings per capita. Because Tasmania, since 1930 has, in my opinion, provided one of the finest examples of education in any country of the world, it has been penalized by the commission. I say at once that the amount made available to Tasmania for this financial year by way of all those grants to which I have referred is insufficient if due regard is paid to the State’s actual expenditure in respect of health, education and other essential services.

I shall confine my remarks in the few moments left to me to two other matters. Recently I directed a question to the Prime Minister (Mr. Menzies) relative to a special grant to Tasmania. On that occasion I placed before the right honorable gentleman a request that had been given due consideration by the Parliament of Tasmania and was, therefore, an all-party matter. The State government had asked for a special grant of £1,000,000 having regard to the increase in unemployment, the partial failure of the timber industry and the difficulties that had arisen in the fish canning industry to which I referred in this House only a few days ago. The request was immediately dismissed by the Prime Minister and the Treasurer (Sir Arthur Fadden) as being of little or no consequence. I have no hesitation in saying that the -Commonwealth has arrived at the conclusion, politically at least, that the State of Tasmania is expendable.

During the ‘financial year 1956-57, the Commonwealth made a special assistance grant of £2,000,000 to Western Australia in response to a request by the Premier of that State for a grant of £4,000,000, and during the last week additional finance was made available to Western Australia to assist it with the provision of the great southern water schemes. But the Treasurer has dismissed completely out of hand the request made by Tasmania for an additional grant of £1,000,000. This Government should re-consider the request that was made after full consideration of the facts by the Premier of Tasmania. If the Government is not prepared to do so, then it might consider the request that will be lodged in the very near future for a special grant to assist in a further hydro-electric scheme planned in that State. Unfortunately, I have not had the opportunity to develop fully the theme I desired to put before the House. I believe that there is justice in this claim by Tasmania, and I hope to have the opportunity of developing that argument at a later date.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

Sitting suspended from 6 to 8 p.m.

page 2056


Second Reading

Debate resumed from 7th November (vide page 2007), on motion by Sir Arthur Fadden) -

That the bill be now read a second time.

Minister for Primary Industry · Lowe · LP

– This is a memorable occasion - memorable m more than one sense. To-night we can take our minds back to ten years ago when the battle for nationalization of banking was joined and we can recall that, at that time and in the ten years following, this Liberal-Australian Country .party Government has sought to achieve banking reform for one purpose and for one purpose only. It has attempted to .establish a bulwark between a government bent on vandalism and the people who are prepared to place their deposits and savings with the private trading banks. Therefore, to-night let us remember those ten difficult years and let us remember what has happened in the intervening period.

This is a mammoth piece of legislation in the sense that it is both difficult and intricate. We find in this legislation the law that will cover the whole of the banking structure in this community. Therefore, great credit is due to the Treasurer (Sir Arthur Fadden) and to those officials who have given him advice and help to formulate the proposals now submitted to the House for approval.

I should have expected the Opposition, when debating those proposals, to have asked the questions: “ For better or for worse? Is the legislation now presented to the House better than the legislation now on the Statute Books? Will it introduce into the banking community a better system and a structural unity that must be more efficient than that which is now the law of this land? “ I expected the Leader of the Opposition (Dr. Evatt) to say something about the need for co-ordination between the Commonwealth Government and the central bank on the one hand and the private trading banks on the other hand. But not a bit of it! Instead, ancient jargon was brought into this House and we heard nothing of the justice of the case and nothing of the merits of the proposals put forward. Ancient hatreds were disinterred and, instead of an effort to make a positive contribution to the welfare and the future of the country, we found carping minor criticism on details which have nothing whatever to do with the structure of the central bank and the private trading banks. We take our minds back on this memorable occasion to ten. years ago when that mighty and persuasive voice from Kooyong fought the battle for the private banking system as part of a fight for civil liberties and as part of a contribution that was made to prevent an act of vandalism by a government facing a hostile community and facing defeat at an impending election, although it was too stupid to recognize that that was so. lt is my sincere hope that, when this legislation has been passed, it will place banking, at least for many years, beyond active political propaganda and will let the banking system settle down into something that can work effectively for the benefit of the community. I remind honorable members that, after all, the private banking system is based upon a voluntary system. It was created by people who, of their own wish and will, chose to deposit their funds with the banks and in that way gave the banks the opportunity to lend to those who wished to become their creditors. It is my great hope that, once this legislation is on the statute-book and becomes accepted - as I am sure it will be - at least for many years banking will move out of the political arena and will be permitted to function for the benefit of the industrial and commercial community of this country. When listening to the Leader of the Opposition, I wondered what was the substance of the Opposition’s objection to the bill. I did not hear anything constructive said. I did not hear an argument as to what we were trying to achieve or what the Opposition was trying to achieve. I heard nothing about the central banking system.

What would I wish to achieve? Quite quickly, I shall state my objectives, and I am certain that they are the objectives of the Government. First, I want to see established a banking system which is independent and which can stand as a bulwark between a government bent upon vandalism and the people who choose to deposit their money with the banks because they trust those banks. I am hopeful that this new mechanism will create a system in which the public will be confident and which will provide a safeguard against hostile and irresponsible action by any future Labour government. Secondly, I want to see - and I am sure the Government does - a strong central bank able to control trading banks, able to give them leadership and guidance and, above all, able to control the volume of credit and, through the volume of credit, able to give some stability to the monetary system. Thirdly, I want to see a strong and independent set of private trading banks, as well as the Commonwealth Trading Bank, administratively free, once the volume of credit has been established for them, and subject to direction from the central bank only as to the type of advances that should be made. Once that has been done, I hope that they will be left alone and that Labour will stop wanting to poke its nose into their business, irritating them and their customers. Therefore, the third column of this structure is the establishment of a strong and independent group of trading banks that are administratively free and able to carry out their functions in a sensible way.

The next question I ask is: Does this legislation carry out those purposes? Yes, I believe it does. In fact, 1 am sure that it does. As I have said, it creates a new system of banking which can stand between a difficult, arbitrary and capricious government and the people. It does that, first, by the continuance of the banking board, which can, if it feels that there may be difficulties, advise the public and, in the event of real difficulties, can resign. The central bank now becomes independent and will have no trading functions. Therefore, it can devote the whole of its attention to banking, and will not be obsessed with the difficulties of trading bank functions as well as central bank functions. I hope - and I think my hopes will materialize - that this will establish a central bank that will be a protection to the Australian people. Secondly, the central bank has been strengthened. The Leader of the Opposition conceded that some strengthened power had been given to it. I do not think that the word “ some “ is adequate, the central bank has been mightily strengthened in a way that no other central bank in the world has been strengthened. It now has more than adequate powers to carry out the job for which it was created. Thirdly, as I have said, the trading banks themselves will be given a new lease of life because they will be free from the worry that the central bank, and the Commonwealth Trading Bank associated with it, might become too big a competitor and in time might drive them out of the banking field. That is a justifiable fear. I am not for one moment saying that competition from the Commonwealth Bank has been too severe during the last seven or eight years, but there have been reasons why the banks might have had fears as to their power to continue to complete with the central bank and the Commonwealth Trading Bank. Now. 1 feel that that fear has been removed.

I can touch, only briefly on two additional reforms. The first is the change that has been made in regard to housing, in that the Commonwealth Trading Bank and the Commonwealth Savings Bank have been given special charter in regard to finance for housing. It is my opinion that they will, in time, be able to allocate an increasing amount of money for private home building. In addition, the ordinary banks - that is, the private trading banks - have established savings bank sections, and a part of their funds also may be devoted to financing housing in this country.

Secondly, there is the establishment of the Commonwealth Development Bank, about which there has been some discussion, but which, I think, will fill a gap in the financial and economic system of Australia. It is based upon the idea that a person who cannot get an advance from a private trading bank, but whose personal covenant and prospects are good, should be able to get from the Development Bank an advance, based not necessarily upon the security offered but primarily on his prospects, his mind, his intellect, his drive and his force of character. This is another development, one upon which the Leader of the Opposition did not touch, but it deserves to be applauded.

May I now turn to what is, after all, the critical feature of this legislation, a feature that has been barely touched upon at all by the Opposition? I refer to the establishment of an independent central bank without any trading activity associated with it, other than the rural credit section, which is there to protect the interests of the rural sector of the economy and to finance its marketing operations. I said, right at the beginning of my remarks, that I was puzzled by the approach of the Leader of the Opposition.

First, what do we mean by central banking? Most people know what a normal trading bank is. It is a place to which some people go to make deposits on which they will earn interest. Others go to it to open a cheque account, or to borrow money to use for their own purposes. The trading banks are the retailers of credit and the retailers of finance. But - and this is enormously important - no longer can the private trading banks, or the Commonwealth Trading Bank, create credit. Years ago, they could do so. Under the modern system, and particularly under this legislation, no longer can they do that. The creation of credit is now the function of the Government and of the central bank, with the central bank playing a dominant role in controlling the activities of the trading banks. The central bank is one of the great media of government. It co-operates with the Government, and its primary role is to regulate the volume of credit to ensure that there is enough credit, and no more than enough, to permit the commercial and business activities of the community to be carried on effectively. Of course, that is an enormously important role. If the central bank moves too slowly, or if the volume of credit is not sufficient, industry and commerce become gummed up, and we can run into unemployment and other difficulties and troubles. If it operates effectively and quickly it provides the oil for the mechanism. If the mechanism works freely and easily, the central bank has done its task.

Here, I want to make an observation about one of the myths in which, I think, Labour has believed for so long. All that the banking mechanism deals with is money and credit. It cannot produce; it can facilitate and it can ease the processes of production, but it cannot produce anything. It is but an ancillary of industry, commerce and transport, and it helps them with the job of production, of doing better with national resources, of ensuring full employment, and of getting better and better standards of living. Labour has never understood that that is so. Its supporters have appeared to think along the lines that if you can create more money, muck about with the banking system, and destroy the private trading banks, there will be no need to produce, and we shall be able to live on our goodwill and on the blown-up promises that Labour made during the seven or eight years that it was in government. Do not let us expect too much from the banking system. The governor of the central bank of the United Kingdom recently issued the same warning. The banking system does not produce. All that it does is to facilitate commerce and permit the industrial, commercial and transport machine to work fluently and efficiently.

I come now to the argument of the Leader of the Opposition. First, as I have mentioned, he said little or nothing about central banking. After all, the central feature of this legislation is the separation of the central bank from the rest of the Com monwealth Bank. What was his criticism? lt concerned a statement made by a leader of the Bank of New South Wales in 1955. Nothing more was said, and therefore we are entitled to think that Labour has little or nothing to say about the creation of an independent central bank. 1 think that if we examine not only the history but also the philosophy, of this matter we must appreciate why Labour has said nothing. The first bill to establish a central bank in Australia was introduced into this House in 1930 by a Labour government under the leadership of the late Mr. Scullin, and if honorable members check the division lists as I have checked them to-night, they will find that two inspired Labour Prime Ministers voted for the second reading of thai bill. The revered Mr. Chifley voted for it, and also the late Mr. Curtin, a leader whom every one, regardless of political affiliations, respected for his intelligence and integrity. These men voted for the measure. We are, therefore, entitled to say that, traditionally, the Labour party does not oppose central banking. I feel that if we could lever away all the humbug that now surrounds the Labour party, its members would be prepared to agree to the present proposal regarding a central bank. I am positive that there is nothing in the genuine principles of the Labour party that is hostile to central banking. There is nothing in the platform of the Fabian socialists in the United Kingdom that is opposed to it. either.

It can be understood why the Labour party focuses atention on the trading bank section of the Commonwealth Bank, because here we see a part of the mechanism that affects the pocket of the voter, and the Labour party knows only too well that if you can control the pockets of the voters, in time you can control them too. Therefore, I say that, so far as the Labour party and genuine Labour principles are concerned, there is not hostility to central banking. Labour supporters have no objection to the principle, and it is only those who are governed by dogma and by old opinions who oppose this particular section.

I wish immediately to draw a distinction between what I call genuine Labour principles and the principles of the I.W.W. section of the Labour party, led by people like Albert Willis and the friend of the honorable member for East Sydney, Jock

Garden, who nearly took the honorable member for a trip on his extended holiday. Neither of those men could speak Australian. So I draw that distinction between what I regard as genuine Labour principles and the teachings of some people, which are completely alien- to the Labour party philosophy.

May I now touch on two other objections that have been raised or debated by the Leader of the Opposition. The first of these is that the new system of what is called reserve deposits might act tardily or slowly, and. therefore something which he calls “secondary inflation” - frankly, I do not understand what he means, and I cannot get any other person to interpret the term for me - might occur before the central bank can get the deposit system into effective operation. How does that arise? lt arises in this way: Under the present legislation we have what is called a system of special reserve deposits. Under that a base date is taken - say, somewhere in October, 1 952 - and the amount of the trading bank deposits that cam be called up by the central bank is 75 per cent, of the increase in deposits. It cannot call up the total amount, but only 75 per cent, of the increase. The new system permits 25 per cent, of the total deposits to be called up, and on giving 45 days’ notice, theoretically the total of all deposits of the trading banks can be called up. The honorable gentleman argues that this might be too slow and might cause secondary inflation to develop.

Could that happen? Let us look at the facts. First of all, it has never been thought necessary by the central bank to call up more than 25 per cent, of total deposits. Secondly, under the existing system a number of days’ notice has to be given, and the banks- have always been given until the end of the month to make payments to special account. So that if the central bank made a call-up on the tenth of the month, it would be giving the private trading banks 21 days’ notice, until the end of the month, to make the payment. Thirdly, this new system applies without the need to establish an emergency - theoretically, in any event. The central bank can give 45 days’ notice and can then call up any amount of the private banks’ deposits above 25 per cent. - not that that is likely to happen, and I hope conditions will not emerge under which it will be compelled to call up more than 25 per cent. We think 25 per cent, is adequate.

But we have to remember two other facts. The first of them is that, after all, we should think of the private trading banks and of their customers as well. Surely, they are entitled to think that the fellow who is carrying on his business and has his account with the trading bank has a right to know that- his commercial and business transactions are not to be quickly disrupted. Secondly, the giving’ of notice operates as a signal to the private1 trading banks that’ they arc slowly to cut down advances. As I have said, there will have to be an extraordinary combination of circumstances, such as overfull employment, strong inflation, a balanceofpayments problem with terms of trade moving strongly in our favour - all sorts of things would’ need to happen before the central, bank could contemplate calling up an amount substantially in excess of 25 per cent, of the banks’ deposits. But this argument about the slowness of operation is a reflection upon the Governor of the Commonwealth Bank and” its staff. If a governor could not forecast the trend of events for the following 45 days, he should not be in that position. The arguments of the Opposition on this particular aspect are not based on central banking experience or the terms of the legislation.

The second problem that has been debated by the right honorable gentleman is that the Commonwealth Trading Bank has been weakened. Letters have been written by the inimitable Mr. Arndt - or Professor Arndt I think they call him - and he has written a book on banking although he has had no practical experience of either central banks or trading banks whatsoever. That gentleman and those who asked questions in the House this morning say that the Commonwealth Trading Bank has been weakened to the advantage of the private trading banks and therefore private capital will have to be subscribed to support the Commonwealth Trading Bank. Let us examine this argument. First of all. the Commonwealth Trading Bank has been placed in an enormously strengthened position. It has a high liquidity ratio and therefore it can now expand its advances much more rapidly than can any of the trading banks. Secondly, it has’ been given an increased capital of £2,000,000. Thirdly, it can get from the Savings Bank £2,000,000 plus 2* per cent, of its deposits, a total of £20,000,000. Is this weakening it or strengthening it? 1 say, positively, that this bank is being strengthened and I, for one, am glad that this is so. Further, 50 per cent, of its total profits can be ploughed back into its own business. No existing private trading bank can put more than 25 per cent, to 30 per cent, of its profits back - plough them back - so that it can expand its activities in the future.

One other point is this: The Commonwealth Trading Bank is a Commonwealth instrumentality, lt can receive extra capital as a result of legislation passed through this House. Similarly, the private trading banks can get extra capital by turning to their own subscribers. To put it as frankly as 1 can, the position of the Commonwealth Trading Bank, in this respect is much the same as that of private trading banks. Let me now come to Professor Arndt’s statement. He has said - and his words have been echoed in this House in questions - that perhaps there may be some .doubt .as to the strength of the Commonwealth Trading Bank; its structure may not be strong enough and there may be a weakening of public confidence and a run on it. I regret that the Leader of the Opposition has been advised by this man, because he would not have made the statements he made if he realized the dominant fact that the Commonwealth Trading Bank is guaranteed by the Government of the Commonwealth. Is it likely .under such conditions for a .run on the -Commonwealth Trading Bank to be made? This bank is guaranteed by this Government; it is preposterous and nonsensical to make such a suggestion. The suggestion is typical of the attitude of the Labour party. It .has never been confident, itself, of governing, and it is impossible for it to think of others governing satisfactorily.

I have dealt with the three arguments of the Opposition. I am certain that the new .structure will be ‘a monument to the work of ;the Treasurer. We now have .a central bank, independent, divorced from trading bank activities. It will be able to play an important part for the benefit of this country. The private banking system will be free from doubts and irritations that have beset it in recent years. I have con fidence in the Commonwealth Trading Bank. I am sure that this legislation will do much to strengthen its independence and authority. I have great trust and confidence in the private banks, also. I know many of the officials and 1 know how they are dedicated to the welfare of this country. I am certain that, given freedom from intrusion by the Labour party, they will play an increasingly important part in building up this wonderful country in which from what we have heard so far not a member ot the Labour party seems to have very much pride.

Melbourne Ports

.- The Minister for Primary Industry (Mr. McMahon) has been at great pains to defend, as is his job, the action of the Government in bringing in what he has called “ monumental legislation “. He has made no attempt, despite what he might think he has done, to get down to the roots of this matter. Although he has hoped that this measure will take politics out of banking he has indicated in no practical form, as distinct from the political dogma of the -Liberal party, where the existing Australian banking system has failed. Nor did the Treasurer (Sir Arthur Fadden), when introducing the bill the other evening, indicate that there was any public clamour whatever for a change in Australia’s banking system.

I ask honorable members to read and analyse the speech of the Treasurer. I suggest that, considering .that it relates -to a measure which proposes to change so fundamentally such .an important system -as banking, the Treasurer’s speeches <on .this subject, despite the time that they took and despite the amount of -printed matter that they contained, were shallow indeed in their analysis of the situation. The only reason that the Treasurer gave for a change in the Australian banking system was that the private banks wanted a change. I shall not deny that the private banks want changes in the banking system. But the question that ought to interest this House and the people of Australia is, “ Is a banking system which suits the requirements of the private trading banks of Australia necessarily the best banking system ‘for this country? “

The reasons given by the Treasurer for changing the banking system can be boiled down to two and ‘these are the objections of the private trading banks, not of any representative body. In my opinion, this debate ought to hinge upon the two points on which the objections of the private banks to the present system centre. One of those objections is “ the link between the central bank and the Commonwealth Trading Bank “; the other objection concerns the special accounts system “ which the private trading banks believe could be used to damage them in vital ways “. I want to take each of these points in turn, lt is not possible in the half-hour at my disposal to cover all the matters embraced in the four proposed laws but there will be opportunities later to go into those that 1 do not deal with now.

The first point with which 1 want to deal is the objection that has been raised to the link between the central bank and the Commonwealth Trading Bank. A rather hoary argument has been trotted out here, lt has been raised in the press in Sydney and repeated in this House by the Minister for Primary Industry. It is that 27 years ago the Australian Labour party proposed what was called a “ reserve bank “. The Minister for Primary Industry may believe that the role of a central bank in 1930 was the same as the role of the central bank in 1957. But just to refresh the minds of honorable members as to what was thought about central banks in 1930 I shall quote a few words from a book called, “ Gold, Unemployment and Capitalism “ by Professor T. E. Gregory. It contains a memorandum relating to the organization and function of central banks with special reference to the proposed reserve bank of Australia. This was submitted to the select committee of the Parliament on the Central Reserve Bank Bill in 1930. This is what Professor Gregory thought of central banking in the 1930’s and it repeats fairly faithfully what people imagined was the role of a central bank in those times. He said -

The two primary functions of a central bank - functions so important as to swamp all other considerations - are to secure financial stability at home and parity of the local currency with the international gold standard.

That expresses a theory which is archaic, yet it has been quoted by a gentleman who is apparently able to draw a salary as a competent financial writer for the leading newspaper in Sydney. One of the proposals in relation to the reserve bank plan of 1930 was that when the deposits of the banks in Australia exceeded, I think, £20,000,000, a reserve of 50 per cent, should be held in gold. Apparently, such a proposal is not contemplated by any honorable member in this House now. I suggest that it is beside the point to bring up this hoary argument about the 1930 proposals. If honorable members want to consider the approach that was taken to this matter by a body which was supposedly conversant with the functions of banking in Australia they should examine the report of the Royal Commission on Monetary and Banking Systems of 1937. That commission was not swamped by men with a Labour point of view. The commission included a man who was probably the greatest financial genius that this country has ever known, the late Mr. Chifley, but his view on many points was a minority view. The view of the majority of the members of the commission, some of whom were practical bankers and experienced men. is stated in paragraph 521 of the report of the commission which reads as follows: -

The present structure of the Commonwealth Bank, consisting as it does of a central bank, with trading bank powers and savings bank, is, in our opinion, essential to the efficient exercise of its functions as a central bank.

That statement was made in 1937. Has any indication been given that the changes proposed in this legislation will make the Australian banking system a more efficient banking system? Is not that the test that we should apply to this legislation?

I now turn to a much later authority and, I submit, one who was quoted with approval by the Minister for Primary Industry a few minutes ago. I refer to the present Governor of the Commonwealth Bank, Dr. Coombs, who, in Queensland, as recently as 15th September, 1954, delivered a lecture sponsored by the English, Scottish and Australian Bank Limited. It was a research lecture for 1954 entitled, “ The Development of Monetary Policy in Australia “. At page 2 1 of that lecture which was delivered less than three years ago, Dr. Coombs said -

There can be little doubt that this direct link-

He was talking about the link between the central bank and the trading bank - gives to the Commonwealth Bank a source of strength which can be of particular value in times when the economy is threatened with declining employment.

That is one proposition. The private trading banks say that this link is a bad link.

All that I suggest is that at least two responsible authorities have stated that this link has made the central bank a better central bank. One of those authorities was the royal commission of 1937 which had made an exhaustive examination of the situation; and the other is the present Governor of the Bank, speaking as recently as 1954. I again appeal to more recent history and ask those who would see consistency as a virtue this question - What has happened since the Prime Minister, when speaking in this House on Thursday, 19th February, 1953, in the debate on the banking legislation, said this -

We must have the special account provisions- 1 am speaking now of the second of the two objections that have been raised -

I [the Prime Minister] am a great believer in the special account procedure and a great believer in the proper authority of the central bank?

He then goes further. He was talking about the proposed change to variable ratios -

I think that it is a view entertained by some eminent bankers in this country whose views 1 respect - that the right way to deal with the matter is to do what is done by a number of overseas banks and that is to limit the liability of the trading banks to pay into special deposits by reference to a percentage of deposits, say, noi more than 5 per cent., 7 per cent, or 8 per cent., whatever it may be. That system has received close consideration in Australia. I have no doubt that it received close consideration by our predecessors. As a government we do not find ourselves able to accept it.

That was the opinion of the Government as recently as 1953.

Mr Buchanan:

– That was four years ago.


– Even accepting that it was four years ago, what substantial reason has been advanced in any of the speeches of the Treasurer (Sir Arthur Fadden) why the virtues that the Government saw in the special account system in 1953 have now disappeared? Referring again to the lecture that I mentioned, delivered by Dr. Coombs, we find that the Governor of the Commonwealth Bank says this of the special account system -

They have a good deal in common with the “ variable minimum deposit “ powers exercised by central banks in other countries, but the greater flexibility of Special Accounts is a special advantage to a country such as Australia, which is subject to wide fluctuations in its balance of payments and therefore in the levels of bank deposits and liquid assets.

Again 1 ask: What has happened to warrant a change of front, not since the days of Mr. Theodore and Mr. Scullin, 27 years ago, but only since the views that I have mentioned were put forward by the present Prime Minister and the present Governor of the Commonwealth Bank, to the effect that the system that has been in force in Australia is specially suitable and adapted to the circumstances of Australia? Is noi that the way in which these measures ought to be appraised, not, as the “ Sydney Morning Herald “ writer suggested, by a comparison of our banking system with the systems of other countries? I suggest that each country should work out its own destiny so far as a central banking system is concerned, and should adopt that system which is most suitable in terms of all the circumstances and limitations existing in that country.

The “ Sydney Morning Herald “ writer suggests that the three countries to whom we should look for comparison are Great Britain, the United States of America and New Zealand. Let us compare the circumstances existing in Australia with those in Great Britain and the United States of America, taking the two big countries for comparison and leaving New Zealand aside for the moment. The great difference between our banking system and theirs - and not only their banking system, because it goes deeper, even to the whole machinery of monetary control - is that those countries have weapons and devices available which are not available or developed here, and consequently controls can be exercised which may not be resorted to in Australia. In this connexion, too, we will have more time in committee to develop the arguments, but, speaking in banking terms, there are in Great Britain and the United States of America what are known as open market operations on the one hand and bank rate on the other. Bank rate, as such, virtually does not exist in Australia, and it is one of the most effective mechanisms for controlling, as the “ Sydney Morning Herald “ correspondent rightly said, the volume of credit in the two countries I mentioned. Similarly, there are open market operations in those two countries. We have had a tragic example here during the past three or four years of what have been called open market operations. They have brought about the ruination of many small investors in this country, and have thrust upon Australia an intolerable interest burden. That weapon simply has not worked in this country. In Australia; therefore, we must have a strong method of controlling the volume of credit. The method that has been used is the special account system.

The Government has given very little explanation of the legislation before us. It has paid no more attention to the problem than to listen to the views of certain private bankers in the community. In my view, the arrogance of the private bankers and the subservience of this Government are indicated in the words of the Treasurer, when he said -

They (the private banks) recognize the need for a strong central bank, and they say that if it functions as a true central bank they are prepared to accept its leadership.

A true central bank is apparently a bank that functions as the private trading banks of Australia want it to function. The real objective of a central bank is to bring to heel and to control all banks within Australia, in the interests not of the banking system.but of the economy as a whole. The honorable gentleman who preceded me in this debate seemed to remember a few of the rudiments of the subject, learned at the feet of Professor Arndt very many years ago, but, like a lot of other people, he stopped thinking about those things many years ago, and in this debate he hurriedly got away from the fundamentals of banking and on to a few minor elements of the legislation, such as that dealing with the Development Bank, and then he spoke of the need for greater housing loans. No one denies the need for greater housing loans, but it is not a. need that has been created only in 1957. It. has been in existence ever since this Government came to power eight or nine years ago. In relying on an odd limb or two of the legislation and ignoring the fundamentals of the matter, the Government is being recreant to. its responsibility to the Australian community.

We of the Labour party believe that the banking legislation of 1945 was a landmark in our efforts to ensure the welfare of the Australian people. We are proud of the objectives of the original Commonwealth Bank Act; to provide full employment and otherwise ensure the security of our people. Sometimes one has to go to overseas publications to find honesty of discussion on banking in Australia, and on this occasion I refer honorable members to the “ Bankers’ Magazine “, a technical journal published in London. I refer to the July 1957 issue, in which appears an article by Mr. W. F. Crick. I have no doubt that some people in this House will respect the opinion of Mr. Crick. In a footnote he says -

One commentator on Australian arrangements, for example, in a privately-circulated critique expresses this view as follows: - “ The prime need is to amend the Commonwealth Bank Act so that the central bank’s main task is unequivocally stated as the preservation of the stability of the currency in place of the present pious hotch-potch of intention about full employment and welfare.”

We on this side of the House do not regard full employment and welfare as a pious hotch-poch. We regard these things as the fundamental rights of the Australian community. We do not regard the banking system as being able to overide the economic interests of the people and what is called economic stability. How little economic stability have we seen under this Government, in any case! Inflation has raced away, with ruinous effects to the majority of people in Australia.

We come back, as we ought to come back, to the arguments stated by the Treasurer in his second-reading speech. They boil down to two. Apart from the technicalities of deciding to do what is being done, they mean, in effect, that he has to dismember the whole of the banking, system as it operates in this country. Again it is not possible for me, in the few minutes remaining, to go over those arguments. I think that, at this stage, the principal task ought to be to point out that it is the Government, and not the Australian Labour party, that ought to be on the defensive in this matter, because no concrete reason for the Government’s proposals has been advanced, despite the unanimity of the press and business circles, which tell us that the new formula, whichthey were frightened was going to damage them in vital ways really contains more powers than the old. It seems to me to be at least a little ambivalent to say that you are changing one thing because you think that it may damage some one. in one way, and then, by. way of consolation for the public, who do not understand these things very well anyway, to say that there is really more power in reserve. Of course there is more power, if the Government intends it ever to operate. But, if it were intended ever to operate, the Government would not have introduced the legislation that is now before us.

Again, it is. all very well for the Treasurer to point to the fact that, over a period of years,, the deposit ratio of call-up has never exceeded 25 per cent. What he did not say was that there have been times when it sailed very close to that figure, and that it would have been more had not the amendments, made in the 1953. act prevented the central bank from calling up more funds. As a consequence, for some months, no power remained, to be exercised in, this important dir.ection. in this country. It seems, that the proportion of 25 per. cent, is the magic proportion that this Government relies upon as. the safety valve.

New Zealand, the. other- country, I have mentioned, was- referred to by- the “ Sydney, Morning Herald “ writer.. New Zealand may be thought to be a. country, somewhat similar to Australia. It has what economists refer, to as a. dependent economy, lt depends, to a great extent, on the sale of one or two major exports for all its import income. It is interesting to note that, in order to preserve the balance of the economy, a non-Labour government in New Zealand, a- year or- two- ago, appointed a royal”- commission to inquire into the monetary and banking system operating in that country. The royal- commission produced a. very valuable, and very voluminous report, as a result, of which certain changes, in the banking mechanism have been made. Certain observations made in the last annual report of the Reserve Bank of New Zealand - that for the year ended 31st March, 1957 - are illuminating in the context that we are now considering. The report, which was signed by- the Governor and the Deputy Governor on- behalf of the Board of Directors, stated’ -

  1. . the Bank has again placed its main reliance on- variable reserve ratios for the trading banks, accompanied by a high rate of interest on loans obtained by them from the Reserve Bank whenever necessary to build their cash up to the statutory minimum level. This technique, a new one in New Zealand experience, is proving that it can be effective.

The important thing about that is that New Zealand has not only adopted the variable ratio system, which is acclaimed here, but also fortified it with another weapon, whereas the Australian Government has not fortified its proposition with any other weapon. That is interesting, also, to those people who believe that no danger is attached to the giving of notice, or the making of public announcements, about the changing of these ratios from time to time. The report of the Reserve Bank of New Zealand went on to say that it has been necessary from time to time to change those ratios, as it will be in Australia, and it pointed out that, if the bank did’ not have the weapons of the variable ratio, and also of the bank rate, in order to get. the same effective control’ as it has now, it would have been necessary to call up something like 40 per cent, of the level of deposits. But changes have been necessary, and the report stated- -

Such frequent changes, are often interpreted as relaxation or tightening of credit policy, when in fact they are- merely technical changes which arenecessary, if a constant policy is to be followed. It is not the level of the ratios which counts, but the level of net; free- cash left in the hands of the banks. To minimise; the possibility of such misunderstanding it is the Bank’s intention to discontinue issuing press statements when the ratios are- altered’ in future, unless a change in the- tightness of credit policy is involved.

I submit, Mr. Speaker, that changes so fundamental as- those proposed should not be made in this way. The need for them is not, as the private banks and’ certain people would’ have us believe, a matter of unassailable fact; it is primarily a matter of opinion. I indicated’ earlier that, in my view, there were in Australia authorities more weighty, and less biased, than the private banks who would’ Hold views opposed to the major objections that have been voiced1 by the private banks-. The first proposition was that we should” sever- the link between the Central’ Bank and the Com? monwealth Trading Bank - and I repeat that both1 the Royal Commission on Monetary and; Banking Systems, twenty years ago, and: the- Governor of the Commonwealth Bank of Australia, less- than three years ago, submitted- that this, link made the Central Bank in Australia a better bank. The other proposition, which was that the special accounts mechanism- has proved very satisfactory in Australian circumstances, came, as recently as 1953, from the Prime Minister, and, not very much later, from the Governor- of the- Bank. Why are these objections just being made? I submit that the House should have been told whether the Governor of the Bank thinks these changes would bf more effective than the machinery that is being disposed of nas been, or that he should have been brought to the bar of the House in order that we might ask him whether he thinks the proposed scheme would be more effective than the old.

That is how the House should look at these measures. They are, admittedly, technical measures, upon which it is easy to blind the public, because the majority of the people do not inquire about the technicalities. However, the majority of the people at least expect a government noi to regard full employment and welfare as pious hotch-potch. If that is the attitude of some of the spokesmen of the banks who want these changes, and who want economic tidiness for themselves rather than the economic welfare of the community, these measures ought to be opposed.


.- The House should be grateful to the honorable member for Melbourne Ports (Mr. Crean) for his considered and thoughtful address. He approached the problem in the way in which it should be approached - not from the stand-point of what one might call synthetic emotions, but from the stand-point of reason. When I think of the past, I very much regret that the honorable member did not sit in this House in 1945 or 1947. The whole of his thesis is that if a thing is working well we should leave it alone. The position in 1945, of course, was that the bank, which had been established in 1924, had carried us through a great economic depression, had carried us through a war, and there had been created an extraordinarily good feeling between the various elements in the banking system, both Commonwealth and private. The truth of that is contained in the foreword by Mr. Armitage, Governor of the bank in 1947, to the “ History of the Commonwealth Bank of Australia in the Second World War”. He said -

It is appropriate to mention the extremely cordial relationships which prevailed throughout the war between the Commonwealth Bank and the Treasury and various other Government Departments. The co-operation of the trading banks is unreservedly acknowledged. Their readiness to carry out the financial policy approved by the Government and administered by the Bank, contributed materially to the successful operation of the system of war finance.

When war broke out in September, 1939, the Bank had, for instance, effective control over the exchange rates and could exercise some influence on interest rates by competition and persuasion. It was in a position to state its views to the Government on major financial problems and to have due consideration given to them. It had a moral leadership of the trading banks and generally those banks and the Government regarded the Commonwealth Bank as the central bank of Australia.

That is what the man actually in control of the bank had to say. I raised this question in 1945 with Mr. Chifley. I asked him why, in view of the high praise he gave the bank, it was necessary to alter the legislation in the direction he proposed. Honorable members may recall that in 1945 Mr. Chifley quoted with approval my own speech of 1924 as to the manner in which a central bank should work. To get this whole problem in its proper perspective it is necessary to ascertain what the bills seek to do in connexion with the bank. I know from my association with banking history, both from the Labour side and from the other side, that in the whole 46 years of its life there has been an organic growth in this bank. That is not something that happened by fits and starts. The proof of that is the extraordinary change that takes place in Labour thinking as soon as the Labour party gets the responsibilities of office. Now let us look at what is being done in these measures.

I congratulate the Treasurer (Sir Arthur Fadden) on the all-embracing legislation that he has brought down, the main features of which, I venture to prophesy, will stand unchanged as long as have the main features of my legislation of 1924, which is still really the basis of the present system. I am sure that any future change that takes place, as suggested by experience, will be found to incorporate these present changes. Every part of the banking structure in Australia will be made stronger and more fit for its job by this legislation. The facts set out in the bills completely contradict the suggestion of the Leader of the Opposition (Dr. Evatt) that the Commonwealth Bank has been sold out, because I will show, in a second or two, that more money and more power are being given to every section of the bank dealt with in these measures. First of all, the central bank has at last been freed of its entanglements to do the special job that the honorable member for Melbourne Ports (Mr. Crean) said was its necessary duty.

Mr Ward:

– What about the Rural Credits Department?


– The capital of the Rural Credits Department is being increased by £2,000,000. I may tell the honorable member that only about six months earlier the authorities of the Commonwealth Bank asked me to write a foreword to a book on the rural credit services of the bank, because they said but for me this section of the bank, which had been of extraordinary help to this country, would perhaps never have been established. This increase of capital is essential, because the Rural Credits Department is a shortterm loan agent. It is necessary that this department should be with the central bank, whose job is to keep its funds always liquid. The Rural Credits Department only lends money on bills of less than 12 months’ duration, mostly two or three months, so that they can be liquidated if there is any strain on the economy.

Dr Evatt:

– That is part of central bank activities.


– It is part of the central bank’s activities, and I suggest that the Rural Credits Department is operating it in a very useful way. In fact, hundreds of millions of pounds have been paid to the producers of this country.

The profits of the Rural Credits Department are still divided equally between the department’s reserve fund and the Rural Credit Development Fund in exactly the same way as they were under the 1925 legislation. The Rural Credits Development Fund has been one of the greatest benefits to rural people in Australia by financing research by the C.S.I. R.O. and the various universities. At the present moment money from this source is financing the veterinary school in Sydney, the rural science school in New England, and other schools in Adelaide and Melbourne. The Government has increased the department’s capital by £2.000.000 to enable it to extend its work. Therefore. I say that what is being done to make the central bank a completely fluid bank is a very great step in the right direction. T should like to point out that this arrangement of making the central bank completely fluid is in accordance with the original principle adopted at the Brisbane Labour Conference of 1908, which led to the initiation of the Commonwealth Bank. That conference carried a resolution for the creation of a central bank for the purpose of ensuring the safety of the operations of the trading banks. It will be recalled that Mr. King O’Malley told the story of how that principle was defeated but finally was accepted.

The legislation separates the Commonwealth Trading Bank from the central bank. The Commonwealth Trading Bank, which has over £200,000,000 worth of assets - a substantial sum of money to have under its control - is being given exactly the same treatment as other trading banks with regard to its deposits and reserves with the central bank.

Dr Evatt:

– What about its capital?


– It is given an extra £2,000,000 of capital under the legislation. This does not look like a sell-out either. How can it be said that the Government is selling out the bank when it is giving it extra capital amounting to £2,000,000? I take it that you would have some difficulty in raising £2,000.000 extra capital for any other trading bank on the market. You would have to offer fairly decent terms. The trading bank is being treated in an exactly similar way to every other trading bank in Australia. I have never heard any grumble from the Commonwealth Trading Bank, or anybody associated with the Commonwealth Bank, about such treatment. They are satisfied-

Mr Ward:

– They are not satisfied.


– They are satisfied, and they say so. The figures quoted by the Leader of the Opposition showed that the bank was more than able to compete with other banks, and it is growing and expanding continually at the same time. One member of the Opposition says that the bank is not permitted to grow and another says that it is growing. Who is telling the truth? So. there is no sell-out of the trading bank,

Now we come to the Commonwealth Savings Bank. This has been practically independent since 1927, when T brought down a measure to separate its accounts and its management from those of the Commonwealth Bank. Unfortunately, complete independence could not be obtained from the Parliament in 1927. Under this legislation the Savings Bank is made completely independent and is given a completely separate management. It is given back the powers that I gave it by an act of Parliament in 1927, under which the Savings Bank was forced, practically, to use 50 per cent. of the increases in its deposits for the purpose of helping home building and financing the purchase of farms. NowI am glad to see that there is a specific provision that loans for housing may be made not merely to building societies, which are guaranteed by governments, but also to individuals direct at a low rate of interest from the savings bank itself.

Is that not a very great improvement on the present position? The measure provides that the interest that shall be charged shall be at the lowest practicable rate and it also lays down the manner in which money shall be lent. Preference must be given to loans for the erection of homes or for the purchase of newly erected homes. It is provided that housing loans to individuals may be made on credit foncier terms from five years to 35 years and up to 90 per cent. of the value of the asset if the bank is satisfied that the individual will reside in the home within a reasonable period. No income tax is to be levied on the profits of the Savings Bank, and to ensure that the funds are used to the utmost in assisting home building and farm buying, that bank - not only the Commonwealth Savings Bank, but also every savings bank attached to any bank - is prohibited from lending more than £2,000,000 of its deposits to the mother trading bank with which it is associated, plus2½ per cent. of its total deposits. It must use the money in this way because there is no other avenue. I am surprised that the Labour party says nothing about this provision. In 1927 the Labour party unanimously supported me when I submitted a similar proposal to Parliament; and I think it was just an oversight that that provision was repealed in 1945 when Labour repealed fifteen acts. When I spoke about this matter six months ago I heard, “ Hear, hear! “ from Opposition members, who supported the proposal as being one which would undoubtedly hasten the construction of homes throughout the country and encourage young men to go on the land.

Now, I come to the Development Bank. This subject is somewhat like the devil and holy water, as far as the Labour party is concerned. The Labour party does not like to discuss the Development Bank. The function of this bank will be to assist the hard-up man over the stile. That will be its real job. The functions of the Development Bank will be -

  1. to provide finance for persons -

    1. for the purposes of primary production; or
    2. for the establishment or development of industrial undertakings, particularly small undertakings, in cases where, in the opinion of the Development Bank, the provision of the finance is desirable and the finance would not otherwise be available on reasonable and suitable terms and conditions; and
  2. to provide advice and assistance with a view to promoting the efficient organization and conduct of primary production or of industrial undertakings.

In determining whether or not finance shall be provided for a person, the Development Bank shall have regard primarily to the prospects of the operations of that person becoming, or continuing to be, successful and shall not necessarily have regard to the value of the security available in respect of that finance.

The Development Bank shall not provide finance for a person to enable that person to acquire goods for use otherwise than in the course of his business.

The Development Bank will be a tremendous asset to Australia. Years ago, when I was endeavouring to set up a new practice, I was very short of money. I went to a private bank and found that my assets fell far short of what I needed. This was before the birth of the Commonwealth Bank. The banker said to me, “ If you insure yourself for £3,000 or £4,000 we will advance you the money against your own personal security “. Thousands of young men in this country want only a chance. They have the personality and the skill, but they do not have the extra little bit of money necessary to start them on their way. This Development Bank will be the first bank in this country to be specifically set up to deal with problems such as those I have just mentioned. There has been criticism of this proposed bank. The Labour party has nothing to say in praise of it, and criticism of it comes from those who think that the bank should have a different objective. This is a bank in which Labour’s interests are properly preserved, and also the interests of the public and those of all other banks.

In order that the Development Bank, which will have to take certain risks, will not overlend, it is to be prevented from getting advances in excess of £2,000,000 from the Reserve Bank. That means that there can be no inflation by reason of advances from the Reserve Bank. The Treasurer may lend moneys raised by loans to the Development Bank on terms agreed between the Treasurer and the board. Provisions such as this have been put into many acts by Labour governments, and by other governments, but it has been very hard to get these loans from the Treasurer when they were wanted. The reason my government’s housing bill failed was because Mr. Scullin could not raise the requisite money at a time when deposits were not going into the Savings Bank. I have no hesitation in saying that all the talk about danger in this legislation is just so much idle gossip. The Development Bank is to be subject to the same Reserve Bank directives as the trading banks will be in respect of advances, rates of interest, and general policy. To say that the Commonwealth Bank has been sold out when the Development Bank is to be given £5,000,000 extra, the Rural Credits Department £2,000,000 extra, and the Trading Bank £2,000,000 extra, is surely the grossest misuse of words. These facts completely dispose of the case that the Leader df the Opposition has attempted to make. It is obvious that his case has -jio real substance.

The development of the Commonwealth Bank has been due to an organic growth. I wish to take the story .from the beginning. The idea of its formation first came from King 0’Malley, and it was brought into practical politics at the Brisbane Labour conference in 1908. The resolution carried at that conference was that the bank should be a bank of reserve for the deposit of reserves of the banking companies operating in Australia. That is to say, it was to be a central bank and was not to destroy the other banks. It was to deal with trading banks in the same way as they are being dealt with at the present time. Members of the Opposition know better than I the difficulties that faced that legislation. They know the fight that King ©’Malley, Frank Anstey and other men waged over this matter. -Some members of the government of the day were against the proposals. and when Labour gained office in 1910 the intention of the legislation was defeated by handing control of the Note Issue to the Treasury. When Labour brought down its bill in 1911 two clauses of the original measure were inserted. First of all, the Commonwealth Bank was prevented from acting as a central bank by a specific instruction that the bank should not issue bills or notes of the bank for payment of money payable to bearer on demand and intended for circulation. It is rather strange to recall, in view of Labour’s professed terror of private capital, that the proposed capital of the Commonwealth Bank, under section 9 of the Commonwealth Bank Act->1911. was to be £1,000,000, to be raised by the sale and issue of debentures to the public.

So, all the principles that seem to be sacrosanct to the Labour party at the present time were not in the original legislation. The bank functioned under this charter, a charter which was not 100 per cent, effective. When World War I. broke out the Commonwealth Bank did a good job. It was helped because it was a government bank. Treasury balances totalling over £200,000,000 were deposited in the bank and the bank paid no interest on that money. There is no doubt that the bank acquitted itself well.

The war proved that the Treasury was the worst possible place in which to place control of the Note Issue. It was like putting it into a safe, locking the door, and losing the key. The Note Issue had to be controlled in such a -way that it was capable of being translated into quick action, so Mr. Hughes instituted the Note Issue Board in 1920. That board was given the function of issuing notes. It was not joined to the Commonwealth Bank. It was like a shag on a rock, like Robinson Crusoe on his island, unable to operate properly. As a result, in 1924, the Bruce-Page Government said, “We must give this to the Commonwealth Bank “; and control of the note issue was handed to the Commonwealth Bank, making it a central bank. On that point the former Prime Minister, the Right Honorable J. ‘B. Chifley was quite specific as to the value of the work done when he stated -

The principal function of the Commonwealth Bank must be to fulfil its responsibilities and duties as a Central Bank. The Royal Commission stated in paragraph 135 that the chief function of a central -bank may be said to be the regulation of the volume of credit, including currency. What this involves was put more fully by the right honorable member for Cowper when, as Federal Treasurer, he introduced amendments of the Commonwealth Bank Act twenty years ago. He then said -

The important functions of banking can properly be performed only with the guidance and control of a central bank. Decision and settled policy are essential. Divided counsel and clashing interests of individual bankers must in the end be fatal to good credit management, and banking can be raised to its greatest perfection only by the action of a central bank working always for the good of all.

What was said in 1924 was true in 1945, and is equally true to-day. As the Treasurer has said, in effect, whoever freed the central bank, the bank of issue and reserve and exchange, from all the impedimenta surrounding it, did a great job for Australia which will never be forgotten and will ensure tremendous advantage.

It is rather interesting to note that when the Bruce-Page Government brought down its legislation in 1924 the then Deputy Leader of the Opposition, Mr. Anstey, moved a motion in committee and repeated it on the third reading. He prophesied the formation of the Development Bank in the following words in his motion: -

That the Government should consider the advisability of extending the functions of the Commonwealth Bank to provide rural credits for the following purposes: - (1) to advance upon broad acres; (2) to assist co-operative finance in primary and secondary production; (3) to assist in land settlement and development, and (4) to establish a grain and fodder reserve against periods of drought.

Mr. Anstey got that idea from the Australian Country party’s platform and thought he was doing a great job of work by embodying it in his motion. He moved it again on the third reading to show his earnestness in the matter. It seems to me that what he said in 1924 applies with equal force to the Opposition to-day and indicates that it should stand solidly behind the proposed Development Bank.

During World War II. the trading banks - they have always had the interests of the people of Australia at heart because their whole welfare depends on the solidity, safety and stability of the economy of Australia - in the person of Mr. G. D. Healy, the then chairman of the Associated Banks, said that as a result of a discussion by the Associated Banks they were prepared to allow the Commonwealth Bank to say exactly what deposits should be lodged with the central bank. They voluntarily offered those deposits. Reference to the Budget speech of the Treasurer, Sir Arthur Fadden, in 1941 bears out that fact. Shortly afterwards the Labour party came into office and embodied that arrangement in legislation. That was the beginning of the long association between the Commonwealth Bank and the trading banks which Mr. H. T. Armitage, Governor of the Commonwealth Bank at that time, described as being productive of tremendous good for the people of Australia.

We must look at this legislation as an organic growth. In 1936 a royal commission which was appointed to report on the growth of the Commonwealth Bank proposed that there should be some control by the Parliament of the policy of the board. That provision, which was incorporated in the 1945 legislation and has continued to date, is to the effect that any difference of opinion on major matters between the board and the Government should be referred to Parliament. That surely safeguards the position. Mr. Chifley was instrumental in securing that reform and having it incorporated in the commission’s report. It was part and parcel of the organic growth of this particular matter.

Here is the central Reserve Bank which has assets of over £1,000,000,000, the Savings Bank with assets of over £750,000,000, and the Trading Bank with assets of over £200,000,000, whilst the Development Bank is being placed in a pretty substantial position by a gift of £5,000,000. This is a balanced and well-modelled structure. It is something that will work; and it will be brought into active contact at a very high level with the Commonwealth Banking Corporation which is to be established to control those banks with the exception of the Reserve Bank. The individual banks will be run by executives of the main board which will meet and discuss those problems which require specialists’ attention, but which are all the better for being handled in the broadest possible way.

Therefore, I urge the Parliament to show its appreciation of the tremendous work that has been done by the Treasurer in introducing this well-balanced and well-founded legislation to the House. In many respects the bills must commend themselves to all honorable members. Of course, no bill could commend itself on every point to every honorable member, but I believe that these bills commend themselves to such a degree that they should receive unanimous support in this House.


.- After hearing the speech of the Minister for Primary Industry (Mr. McMahon), followed by the speech of the former Treasurer, the right honorable member for Cowper (Sir Earle Page), I think we do this legislation too much honour by discussing it as banking legislation before reviewing the actual reason for these bills. As I said, we as a Labour party do too much honour to what, in my mind, is a simple case of collusion between the Government and the trading banks. I do not say that as a simple unsubstantiated statement; I hope to prove it. The Minister, who made a speech full of hot breath and little substance, and the reminiscences of the old tragic Treasurer of a horrible by-gone day, surely cannot give any feeling of uplift and surge-forward to the Australian people on this issue. The Commonwealth Bank is to be tinkered at without any reasons of a valid nature being given. The honorable member for Melbourne Ports (Mr. Crean) was decent enough to go through the mechanics and the machinery of this legislation and prove its faults in that direction with great skill and effect, but before we even reach that stage I submit that the banking legislation itself is wicked in its approach to the question of the future of the Commonwealth Bank.

The authority I have for saying that the Government has had its overdraft called up and must now pay the piper is none other than the former Prime Minister, the Right Honorable J. B. Chifley. We on this side of the House feel sick when, to decorate a little cheap speech, some member on the other side who had, perhaps, seen Mr. Chifley in his heyday, or perhaps had not, says, “ These are the words of your great leader “. During his lifetime, he was called a Communist by the same speaker. I shall read from the irrefutable pages of “ Hansard “ the statements made by the Leader of the Opposition, as Mr. Chifley was at that time. He had come to the conclusion then - and we still hold this opinion - that the policy must be “ Hands off the Commonwealth Bank “. He said that he knew of this dirty deal and the pages of “ Hansard “ contain his remarks in which he revealed how this dirty deal was dreamed up. In 1949, when the only way to get rid of the Chifley Government was to consolidate the forces of finance and to force it out by fighting it with money that it did not possess, a deal was made between this Government and the trading banks. That is completely irrefutable; it is true. That action was not confined to Australia. The gentleman who is now the Minister for External Affairs (Mr. Casey) came to this country with £200,000 from overseas sources to slash into the situation of strength created by the Australian Labour party in the war years. The way in which that situation was to be tackled was by an all-out assault on the Labour party; first on the banking structure, then on its social legislation in regard to medicine and services generally, and finally on all the principles that were built up during the war.

Mr. Chifley was fully aware of what was going on. He was a man of calm judgment and studied thought, and not given to making exaggerated statements. He made the charge that I have mentioned during the debate on the Commonwealth Bank Bill (1950) (No. 2), and his comments are to be found on page 392 of Volume 209 of “ Hansard “. He said that he knew why the bill then being discussed had been introduced. The bill now before the House is a further instalment of the Government’s intention. Mr. Chifley said -

It is idle for honorable members opposite-

That is, the Government supporters - to deny that huge funds were made available to them because I can produce evidence to show the sources of the funds, the amount subscribed and the purpose of the subscriptions.

That is a complete and absolute statement made by Mr. Chifley, who knew that money had come into this country for an ulterior purpose - the destruction of the Commonwealth Bank. Mr. Chifley continued -

Every one remembers, too, that during the election campaign bank officers ran around from house to house in the time of the banks canvassing support for the anti-Labour parties.

That is the case presented by a former Prime Minister of this country, whom the Minister for Primary Industry stopped in pursuit of his own case to praise. It has been made apparent that the bills now before the House are not a genuine attempt to do something with the trading banks; they are in answer to a firm demand from the banks that something be done before the next elections: The Government has nibbled at legislation of this kind from time to time. The first attempt was in 1950, the next in 1952; it was sold down the river for a while and then retrieved.

If evidence of a similar straight-out character to that supplied in Mr. Chifley’s statement contained in “ Hansard “ is required, I refer to a booklet issued by Capel Court Investment Company (Australia) Limited, which is high-powered finance in. this country. Its dictatorial statements to the Government on what the Government should do with the Commonwealth Bank is irrefutable evidence that it has the whiphand. The overdraft has been called in and the Government has to pay the piper. The booklet to which I have referred contains the chairman’s address at the twentieth annual general meeting. He referred at great length to the question of the banks and to why the Government has to be brought to heel. In effect, the booklet suggests that the trading banks will bring the Government to heel. It pays tribute to those who have gone all the way and denounces the Treasurer (Sir Arthur Fadden) and sometimes the Prime Minister (Mr. Menzies) for not having been circumspect and quick enough in doing the job. According to the booklet, the chairman said -

After trustfully waiting for two years for Government action, the private trading banks in 1951 made strong and persistent representations for a complete revision of the Curtin-Chifley banking laws . . . The discussions continued over many months and attracted considerable attention amongst Parliamentarians and the general, public, and also in the Press, but no significant, results ensued.

Later, the chairman: said -

The early attempt to fob off the private banks with more-apparent-than-real reforms was not tamely accepted, and- vigorous endeavours were made in 1952 to bring about the creation of a genuine Central Bank. The general views of the banking and financial community were cogently expressed by the then President of the Bank of New South Wales.

That is the story. Me. Chifley told us why the money was- there, and the old gentleman from the Bank of New South Wales says, “ Look out, it will not be long before I will want more collateral or I will be calling up the overdraft”. Some one has to pay, and it certainly will not be the trading banks. As the heat goes on, the language changes in this little booklet. Later on, the chairman said -

Subsequent to the banking fiascos of the early nineteen-fifties, the private trading banks apparently lost heart. At any rate they did not press their case with the vigor and persistence required to spur political parties to action.

In effect, that means, “ Treat them as cart horses, something to prod along. We have them in our possession. They belong to us. Why do they not canter when we say- Canter ‘? Why do they not trot when we say ‘ Trot ‘? Why do they not deliver the goods when we say ‘ We want the. goods delivered ‘? “ That, is a horrible and. con:temptible position for a government tofind itself in to-day. It is the thing of the trading banks, bound hand and foot.

When, people talk about emotional reaction, the only real reaction is the emotional reaction of the true Australian who feels, that his own bank is being sold down the river. If it is logical to go through every little trifling line of argument about amendments and so on, I have no desire. to discuss the legislation, but, if we can get on to the true functions of the bank and what is being done to destroy it, we on this side of the House can. prove that the position is as we. state it to be. The little booklet to which I have referred then contains the following statement: -

The revival of the fight* occurred! when1 a-, strong section, of the- Parliamentary Liberal Party,, dissatisfied with the manner in which the accepted policy of the Party had been ignored, made strong demands on the Prime- Minister. . .

I ask honorable members to listen to the composition of the strong section. The honorable member for Macarthur (Mr. Jeff Bate) was the strong man who rose from his dairy farm, walked into the trading banks of Sydney and said, “Tell me how strong I can be, because I want to talk to my Prime Minister about the reform of the Commonwealth Bank “. The honorable member for Mitchell (Mr. Wheeler) is a stockbroker. He is overseas at the moment, and I will- not discuss him in his absence, except to say that I can find no evidence of strength there. The present Minister for Air (Mr. Osborne) has been associated on legal and other aspects with the Commercial Banking Company of Sydney Limited. The firm with which the

Minister for Primary Industry was associated acted as solicitors for the Bank of New South Wales. They are all bonded and tied men, all bound to those banks not only by their background but also by the very means by which they obtained a living before they came into this House. They have joined the treadmill, with the weary little circus pony going round and round, saying, “ We cannot do much with the “treasurer, we cannot do’ much with the Prime Minister, give us a chance until after the next election. Something will turn up.”

So we have the absurd situation in which the little men - the manikins, - of this Parliament were able to prod the giants for the simple reason that they were actually the motive force, behind the struggle. The struggle, as we on this side of the House, believe it to be, was. the struggle, of the trading banks for the body and soul of the. Commonwealth Bank of Australia. The language gets- tougher as it goes along. This is the same gentleman of money, finance and position who is telling the Government what to do from his office in Collins-street. He said -

Once again in October last, when the representatives of the private trading banks approached the Government leaders, they were fobbed off with promises of full consideration for their case later’ on.

So the heat goes on. The position worsens, and the bankers and the bankers’ friends come right out in the open and say what the Government should’ do. It is said, later, that the banks have been too trusting, and the Government has let them down. The address continued -

Whilst the private banks have shown admirable restraint in all their dealings with the authorities, realistic observers believe that they would have got much further if they had embarked on a full-blooded campaign, with the help of their hundreds of. thousands of employees, customers, and share-holders, to obtain public support for their case-

Against the Commonwealth Bank. Surely, even the Minister for the Interior (Mr. Fairhall), who is at the table, will agree that, in effect, it is then coldly and cynically stated by the wealthy organizations of this country, “ We do not care who knows it. The target for to-night is the Commonwealth Bank and nothing else.” The Government may try to smother up this matter, but I think that the Leader of the Opposition and the honorable member for Melbourne Ports (Mr. Crean) have proved the case.

In the first place, we know where the money comes from for the fight against the Labour party: In- the second place, we know that the debt has now to be paid. Next year, the Government will go to the country, and it has to pay its debt before it does so. Its debt will be paid by handing over the Commonwealth Bank, like John the Baptist’s head, on a charger. There we have it.


– Who is Salome?


– I do- not know any of the economists who would qualify for that role. I have no desire- to tear the veil away from such a subject, but I go on to say that the ordinary Australian is concerned about this matter. He is concerned, not so much about whether the trading banks get a- little more finance or are left without finance, whether the production bank has the facilities for loans for housing: and other matters; that look quite useful and important at first blush, but to know why, after the years of development of this country and the slow growth of federation, there- should now be this determined and persistent, assault on the Commonwealth Bank, which always: has been a- structure by itself. The Trading Bank, and the reserve bank have gone- together, as created by the Labour government of the; day;.’ and brought to perfection by Sir Denison Miller. Why is. there this desire to cut the- bank into segments? As the Leader of the Opposition made- very clear, it is a question of dividingand conquering: The Commonwealth Trading Bank is vulnerable, and the production bank also is- vulnerable. Of course, the reserve- bank will- still Have- a function and will remain.

The. Australian Country party has made a splendid, deal. It- says, “ We must have a reserve bank free from all associations with the taint of trading in money, which is too horrible to contemplate. The reserve bank rules over the economy, and keeps the level o£ credit in this country; it makes high and dominating policy in regard to finance, but- just in case there is a drought, or in case we get into trouble, we had better hang on to the Rural Credits Department”. Everybody knows that the- Rural Credits Department finances every bounty and every marketing plan that the Commonwealth Bank has rostered or fathered. So it is a complete lie to say that the Australian Country party is independent. The Commonwealth Bank is still the best little bank for the Australian Country party. No wonder the Treasurer, who is the Leader of the Australian Country party, was not interested in removing the Rural Credits Department. Supporters of the Country party are sitting pretty and could not care less about the dilemma that the Liberal party is in.

What are the ordinary people concerned about in these subtle differences between six banks, four banks, or three banks? Approximately 500,000 people are banking in various ways with the Commonwealth Bank. Nobody has suggested that those people should be asked whether they approve of this bisecting and dissecting of the Commonwealth Bank, although a roar rose to high heaven when it was suggested that there should be some control of the trading banks. Nobody cares about John Citizen and his ideas, but if it is fair constitutionally to do what the Government proposes, surely it is fair to consult the people who bank with the Commonwealth Bank. I know that this is not a constitutional issue, but morally and spiritually it is a matter of some value to Australians. The line that the Government is taking will lead inevitably to the Commonwealth Bank losing power and being controlled by some investment organization. That being so, why does not the Government ask the people about the matter? Why does the Government smother it under a lot of rhetorical nonsense? That is not what the people want. They believe that their Commonwealth Bank will help to finance a war or to prevent them from having a depression again.

The right honorable member for Cowper (Sir Earle Page) spoke of boards of directors of banks. That subject is complete anathema to the Labour party. It was a director of a bank board who thought that his own country was not worth £1 8,000,000 potentially to save the lives of the Australian people and to keep them from years of poverty and despair. Sir Robert Gibson was haled to the bar of the Senate to give his ideas to the people. He, too, had a “ trading banks “ idea; he, too, was a director. Yet the Government suggests that we should have more directors, or more inexperienced men on the board. Incidentally, 1 understand that Sir Robert Gibson’s real life work was the making of bedsteads with inner-spring mattresses attached - quite a splendid and highly successful venture.

Sir Robert was called upon by those in power at that time to control our finances. When Scullin went cap in hand to the bank for £18,000,000, he was turned down. Honorable members know that, to-day, we have already given away £36,000,000 to the Colombo plan. I am not making a contrast between the two things, but I point out that that is why Labour can never be sold on the idea that the Commonwealth Bank can be changed over to these other instrumentalities by the interpolation of a few clever little gimmicks. There are no gimmicks in the Commonwealth Bank. It embodies the Australian’s idea of using his own money rationally. We believe in free social use of money in this country, and this attempt to take anything away from the present arrangement is resented with all the ferocity and anger of the Labour movement. We say that “ Hands off the Commonwealth Bank “ is more than an empty slogan.

When we examine this matter, apart from all the hyperbole which surrounds it, what does the average worker want to-day? He wants more money for consumer credit. He wants to buy a television set, a motor car, a washing machine, and all the things which are required for the standard of Australian living. He wants to buy those things through the Commonwealth Bank. The production bank can do many things, but it has no facilities for lending money for consumer credit of this type. The Commonwealth Trading Bank can lend money at 5 per cent., or the outside banks can make a profit of 10 per cent., 20 per cent., 30 per cent, or 40 per cent. If the Government wants to do something vital with the Commonwealth Bank, it should give to the production bank the right to make small loans to the Australian people for consumer goods, for, after all. the money in the Commonwealth Bank is, in the aggregate, the small man’s money. It was that money that built the bank. There may be other funds that it controls to-day, but in the aggregate and in the main its funds consist of the savings and the small trading accounts of the Australian people. Yet one of the vital things that those people require to-day cannot be obtained from their bank.

In short, that lush kind of business is kept, not for the trading banks, but for the “trading banks of the trading banks - the trading banks’ time payment companies. I think that the trading banks of Australia have breached their charters. I would like to see what their charters are, because I think that they provide that the banks shall assist in the development of trade by the lending of money. They do nothing of the sort. You cannot get a “ quid “ from a trading bank. The small man cannot get money for development, but if he requires washing machines or other consumer goods he can get them from the cash order companies. It is the consumer credit firms that are making the money. So the private banks are moneylenders to money-lenders.

The honorable member for Melbourne Ports referred very cleverly to this new black market in banking. Why is not the Government attending to that instead of trying to destroy the Commonwealth Bank by paying off a miserable racketeering debt to the trading banks? If it would forget it and denounce this deal, the people of Australia would think more of it because it said, “ Thus far and no farther. So far as we are concerned, the Commonwealth Bank remains sacrosanct in the minds of the people.” While this is going on and while the Government is suffering from the inertia with which the “ Sydney Morning Herald “ is dealing so trenchantly at the moment, one can see what has crept up on it. Referring to this world-wide move for consumer credit, in a booklet that I commend to all honorable members, the honorable member for Melbourne Ports wrote as follows: -

In fact, of recent years, it might be necessary to add a fourth category of banking called, Hire Purchase Financing, which has been described as “ what amounts to a rival banking system, competing for deposits and short-term funds amongst the money in the community “. . . .

What has this Government done about that except to talk of inflation and allow this careering inflation to go on and on. The honorable member for Melbourne Ports was drawing on the annual report of the Bank of Canada for this description from which he quoted; and it continued -

  1. . This hire purchase financing is without supervision or regulation and out of step with the trend of credit policy in the regular banking system.

Is it not so much hooey that we hear about the fine distinctions that will come about in the breaking down of the Commonwealth Bank? Everybody, honorable members and every one listening to this debate, should remember the warning issued by the Leader of the Opposition. He asked, in effect, if there is to be no sale of the Commonwealth Trading Bank or if, at a future date there is to be no interference with the production bank or other ancillary banks which will now be created in this deployment of the solidarity and the monolithic structure of the Commonwealth Bank, why is this Government changing its policy on banking? It has done that very thing with regard to electronics, whaling, our oil supplies and the Commonwealth Oil Refineries Limited, and it has done that very thing in regard to shale oil leases. All along the line the Government has displayed fantastic eagerness to give back to private enterprise that to which it is not entitled - the national asset of this country - whether it happens to be a coal mine, a shale oil deposit or a hard-won share in the electronics industry of this country. And all the time a dark shadow is over Trans-Australia Airlines for the same reason. Are we expected to be naive enough to believe that the Government of this country, at the earliest opportunity, under pressure from its bankers, to whom it is in debt for its political existence, would not answer the call and say, “ It is going to be pretty difficult but nevertheless we will try to do something about it “.

In the few moments left to me I think it would be well to traverse my testament of faith in the Commonwealth Bank and my complete unconcern for how the machinery works. I feel that the machinery should never be set rolling. I believe that the Commonwealth Bank, as it is to-day, with its employees, its equipment, its “ knowhow “ and above all its Australian sentiment, is something that should not be destroyed. Sacrilegious hands should not be laid upon it, particularly the sacrilegious hands of the trading banks - the money grubbers and the incorporated banks from overseas which do not even deign to spend their profits in this country. The fundamental principle of the Labour party, as the leader of this party and others have stated, is the question of the credit of this country, the finance of this country and the control of this country. We will resist to the bitter end any alteration to the solid structure of the Commonwealth Bank. These so-called improvements are not improvements at all. We have had the grace to discuss the machinery with our economists, who prove the proposals wrong. We go back to where we started and say that this legislation should not have been presented. It would not have happened had the Government not ,got itself into difficulties by buying itself the government of the country and now finding itself forced to be the victim and tool of the trading banks of this country.

Very many people in this country, not necessarily Labour supporters, have no time for trading banks. The right honorable member for Cowper (Sir Earle Page) talked pathetically about the good old days. One could feel the hair prickling at the back of one’s neck at the thought of the tragedy that should never have happened, the cruel practices of the master bankers who did not understand the economics of their own profession. One of the lessons to be learned from the history of this country is that you are better off if you have got something more solid than the trading banks to rely upon. I submit that that solidity should be conveyed to the people by the strength and purpose of the Commonwealth Bank.

Members on this side of the House will not stand this legislation for a moment when we are returned to government. The present Government is cutting through the banking structures of this country. It is putting them on the chopping block because it has to pay a debt to its bailiffs. We feel quite differently about this matter. We feel that the Commonwealth Bank has its great functions to discharge in this country. Nobody has spoken about the employees. They will be run, helter-skelter, around. Nobody can tell me that when a structure is cut into four parts you cannot do without some of the employees. Secondly, the Reserve Bank is to be thrown out of its building. I feel that this is a “blitz on the Commonwealth Bank.

I say, with all the conviction of which I am capable, that if the Commonwealth Bank were left alone with its present general manager, Mr. Armstrong - who is a magnificent banker and has done a tremendous task for this country under difficulties of which he does not talk because he is a loyal servant of the Commonwealth Bank - on level pegging it would leave the trading banks for dead. That is why the trading, banks, with their greater amount of capitalisation and their strong pressure upon the Government have come to their friend, the Government of Australia, asking it to do this overt, horrible act to the Commonwealth Bank. It cannot, and it will not, survive, because the whole proposition is based on indecency. In my view that indecency is best expressed by what a Prime Minister of another day has said and which I have quoted. Everybody admits to-day that his words have the ring of prophesy in them.


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


.- I have not been a member of this House for very long. Therefore I am not bound, hand and foot, by what has happened here in the past, as is obviously the honorable member for Parkes (Mr. Haylen), who has just concluded his speech. I am not interested in irrelevant motives as that honorable member seems to be. Unlike him, I am interested solely in the legislation before this House and the effect it is likely to have on this country. I should like to congratulate the Government and particularly the Treasurer (Sir Arthur Fadden) on a very fine piece of legislation. It shapes and adapts the banking system in this country to the current needs of the Australian economy. It is a piece of legislation adapted to the requirements of Australian development and stability, not as they existed in 1911 or 1931 or 1945, but, as the honorable member for Parkes should know, to the needs of 1957.

It is not often that a government bestirs itself to reshape an institution to bring it into line with present needs. Yet that is what this Government has done by this legislation in relation to the banking system of this country. That it has been overcoming the inertia that might be expected in such circumstances is a tribute to the vitality and forward-looking spirit of the Government. It is a tribute to its determination to assess the present, predict the future, and re-shape institutions in the’- light of such’ assessments and predictions.

Before 1 go on to tell the House why I consider that this legislation will produce a better banking system, I should like to refer to one aspect of the attitude of honorable gentlemen opposite, particularly the Leader of the Opposition (Dr. Evatt) and the honorable member for Parkes. They have referred, ad nauseam, to the consultations that the Government has had with the private banks. They have stated that- pressure had been exerted by the private banks. They have accused the Government of a sell-out to the private banks.

Honorable members will see the line of approach. Because the Government- consulted with the banks, a fact which is well known and which was publicized by the Government, the inference drawn by the Australian Labour party is that this legislation represents a betrayal of the interests of the people of Australia to the advantage ofthe private banks. What sort of an argument is this? It is an argument, mark you, based not on the legislation, and not on the new banking system proposed to be created, but on the fact that the Government consulted with the private banks and that the private banks had views to express.

Does the Opposition suggest that the Government should not have obtained the views of the banks before embarking on a major reconstruction of the banking system of this country? After all, the business of the banks is banking and this bill is about banking. Would honorable members opposite suggest that a government which was about to embark on a major piece of legislation concerning conciliation and arbitration, for instance, should not consult the trade unions and hear their views? Of course they would not. It is a standard practice in our democratic community for a government to take into account the views of persons who are most vitally affected, before passing legislation. The Government’s task is, surely, to examine those views in the light of the needs and interests of the community as a whole and to accept or reject them accordingly. That is what the Government has done in this case. It would certainly have received censure from me and,- I believe, from any true democrat if it had not ascertained the views of the banks on such an important banking matter.

There comes a point, it seems to me, at which a person can be so blinded by prejudice that he is incapable of rational thought. I would say that, on this issue, the Opposition has reached that point. My principal concern is that we should devise a banking system which will best serve the needs and interests of Australia and of the whole Australian community. 1 have tried to judge the legislation by that criterion - not by the criterion of the sectional interests of the private banks or of anybody else. By the criterion of public interest, and that criterion alone, I find it good’. That is why I support it. I believe that we shall have a better banking system after this legislation comes into force - and it will - than we have at present.

There are three reasons why I believethat when- this legislation comes into’ forcewe shall have a better banking.’ system. The first is that it guarantees, so far as it is possible, that we -will retain the private banks as a feature of the banking system of this country. It will be more difficult, that is, for a vindicative socialist government; which wishes the private banks ill, to destroy them by stealth rather than through an open act of this Parliament. Secondly, 1 believe that the legislation now before the House will create a better banking system because it will strengthen the central bank; and, thirdly, because, by removing the necessity for restraint, previously imposed on the Commonwealth Trading Bank, more vigorous competition will be introduced into the banking field. This cannot help but react to the benefit of the consumer of credit, that is, any one who requires a loan. I should like to deal briefly with each of these points in turn.

There is one thing on which the Opposition and myself and, indeed, I would say most honorable members on this side of the House, are in agreement. It is a pretty important point. We agree that in the light of our present-day knowledge, and in the more- mature and complex economy in which we live, the trading banks cannot be permitted, without guidance, to act and take decisions which affect the overall’ economic health of the country. In this field, the central bank and, in the last resort, the Government, does and must take responsibility. Thus far, honorable gentlemen opposite and myself are in agreement. But they then go on to argue, if we can judge by their previous argument in this case - “ In these circumstances, let us destroy the private banks and set up a great monolithic, government-run institution in its place “. At this point, the Opposition and I part company.

What a senseless piece of self-defeating vandalism that would be! What a disastrous offering on the altar of socialist dogma i; would be to destroy a system which, in the realm of banking services, has provided and is providing the best and cheapest in the world! As any one with even a nodding acquaintance with other countries will know, the vigour and enterprise of the Australian banks have given the Australian people an unequalled range of banking services. The Opposition would destroy the source of this vigour and enterprise of the Australian socialist dogma, arguing, if you please, from the premise that it is no longer the role of the banks to take unguided action which affects the Australian economy, a premise which this side of the House and, indeed, the banks themselves, accept. Anything which ensures that it will be more difficult for anyone to destroy the system which has brought this country such benefits is worthy of the utmost support.

The second reason why I consider that this legislation will produce a better banking system is that it will bring into being a stronger and more effective central bank. As I said earlier, in the circumstances oi to-day, effective central bank control over the banking system is vital to the economic health and future progress of this country. This proposition is accepted by virtually every advanced country in the world. It is probably even more vital in Australia than in most countries. Our dependence for our overseas income on a few products, which are subject to violent fluctuations in price and quantity of production, makes it essential that effective central bank control should cushion the effect of such variations on the Australian economy.

Virtually every authority on central banking explicitly states that there is one prerequisite to effective central bank control which overshadows all others. The central bank must have the confidence and respect of the banks it is attempting to influence. Without that confidence, no amount of statutory compulsion will succeed. I shalL cite only one such authority, Professor Arndt. If the Leader of the Opposition (Dr. Evatt) can cite Professor Arndt about 40 times, as he did in his speech in thisdebate, I think I may be permitted to quote him once or twice. Professor Arndt, who isnot generally regarded as sharing the viewsof honorable members on this side of the. House, said in his recent book on the Australian banks -

There is no doubt that this situation-

That is, the Commonwealth central bank, and the Commonwealth Trading Bank being . under a single control - has greatly aggravated the difficulties of the Commonwealth Bank in developing central banking ona basis of mutual trust and voluntary co-operation > by the private banks.

I agree. The precise objective of this legislation is to remove that barrier to central’ bank effectiveness. By separating the central bank from the trading bank, this, cause of lack of confidence and trust by thetrading banks will be removed. The way will then be open to a stronger and morepowerful central bank. There is no substance in the argument put forward by thehonorable member for Melbourne Ports(Mr. Crean) that such a gain in central, bank effectiveness is more than counterbalanced by the loss to the central bank of” the trading bank as a direct instrument in the implementation of central bank policy. It cannot be denied, of course, that thecentral bank has used the Commonwealth. Trading Bank in this way.

Why has the central bank found it necessary to use the trading bank for this purpose? No other central bank in the world’ needs to control a trading bank in order toimplement its policy, not even in countrieswith a less well-developed financial systemthan ours. I will tell you why it has been, found necessary, Mr. Deputy Speaker. Itis precisely because the central bank doescontrol the Commonwealth Trading Bank in this country, and therefore lacks the full’ confidence of the other trading banks, that it is necessary to use the Commonwealth Trading Bank for the implementation of central bank policy. I confidently expect that when this barrier to mutual trust has been removed, as it will be by this legisla- tion, there will be no longer a necessity to use the Commonwealth Trading Bank for such purposes.

There is one further point that I wish to make before 1 leave this aspect of the matter. Honorable gentlemen opposite have expended much energy and generated much heat in attempting to prove that the private trading banks are unjustified in lacking confidence in the central bank, and that the competition of the Commonwealth Trading Bank has been fair. Such considerations appear to me to be absolutely and utterly irrelevant. The important point is that the private trading banks do lack confidence, and for the reason that I have stated. This is a fact, and considerations of justification just do not enter into the matter. In my opinion, confidence must be restored if the central bank is to operate effectively.

The final reason why I consider this legislation paves the way for a better banking system is that it will still further develop the competitive element in the banking system - a development which can not help but react to the advantage of those who require bank accommodation. My prediction is that with the complete separation of the Commonwealth Trading Bank from the central bank, and its merging into the closely knit structure of the new Banking Corporation, the Commonwealth Trading Bank will become, for the first time in its history, a really formidable competitor of the private trading banks. Honorable members know that for most of its history prior to 1945 the Commonwealth Bank refrained from active competition in the field of general banking business, in order to gain the confidence of the private trading banks so that its central banking activities would be more effective. This policy was changed by the legislation of 1945. The Commonwealth Bank was instructed to compete actively for general banking business. The operative clause of the 1945 legislation - which is retained in the measure before the House - was as follows: -

It is the duty of the Trading Bank to develop and expand its business.

Between that time and 1953 the Commonwealth Bank gradually increased its share of the total general banking business. In 1953 the Commonwealth Trading Bank became, for the first time, a separate entity, though still under the same control. Its share of the general banking business continued to increase but at a much faster rate than between 1945 and 1953. In the six years from 1946 to 1952 the share of the Commonwealth Bank in total bank business - deposits plus advances - increased from 6.9 per cent, to 8.2 per cent., while in the three years from 1953 to 1956 it increased from 8.2 per cent, to 11.4 per cent. This means that although the Commonwealth Bank’s share increased by 1.3 per cent, in the six years prior to partial separation, it increased by 3.2 per cent, in the three years after partial separation - an increase 2i times as great in a period half as long.

The implications of this are clear. As Professor Arndt says in his book -

The Commonwealth Trading Bank’s subordination to direct central bank control has been a continuous restraining influence on its competition with the private banks. If the partial separation of 1953 had any effect at all, it was to free the Commonwealth Bank in some measure from this restraint. Complete separation would increase, not reduce the Trading Bank’s freedom to compete with the private banks.

Mr Hulme:

– Who said that?


– Professor Arndt. Again I agree. That is one of the reasons why I support this legislation. I believe that the greater the competition between the trading banks the better the Australian people will be served.

If I may give an indication of what is likely to happen when separation is effected and the Commonwealth Trading Bank is no longer subjected to central bank control over and above that which is imposed on any other trading bank, I need only compare the ratio of liquid assets and government securities to total assets, as maintained by the Commonwealth Trading Bank, with the average ratio for the private trading banks. This is commonly called the L.G.S. ratio. In January, 1954, the ratio for the Commonwealth Trading Bank was 42 per cent., compared with 27 per cent, for the private trading banks. In January, 1955. the relevant figures were 34 per cent, and 20 per cent., and in January, 1956, they were 30 per cent, and 17 per cent. Thus the Commonwealth Trading Bank has consistently maintained an L.G.S. ratio nearly twice as great as that of the private trading banks, and considerably higher than the 25 per cent laid down by the central bank as desirable for the private trading banks. Honorable members will see the significance of this. As the L.G.S. ratio is the base from which the banks are able to expand their advances, the Commonwealth Trading Bank has a great deal of room for expansion the moment it is released from the extra burdens at present imposed on it by the central bank.

Finally, Mr. Deputy Speaker, I am led to ask, as I am sure are all Government supporters: What can possibly be the motive behind the Opposition’s attitude to this bill? If we look back at the objectives of the Australian Labour party, as stated when the Labour government introduced the Banking Bill of 1945, which it afterwards threw overboard when it commenced its vindictive attempt to destroy the private trading banks, we find an .interesting parallel with the legislation now before the House. In 1945, Mr. Chifley stated that, in the interests of stability and expansion, the banking system must be under the general control of a central bank with adequate powers to determine the general level of credit. Have we destroyed that system? Of course we have not! On the contrary, we have strengthened the Central Bank’s capacity to exercise its functions. In 1945, Mr. Chifley referred to the need for active competition by the Commonwealth Trading Bank with the private trading banks, if the high standard of the services provided by those banks was to be maintained. Have we destroyed that principle? Of course we have not! On the contrary, we have strengthened the capacity of the Commonwealth Trading Bank to compete with the private trading banks.

I think that we have to look elsewhere than to the principles laid down by Labour in 1945, if we are to discover the motive behind its opposition to this legislation. Could it be that Labour supporters oppose it purely because it creates a banking system different from the one that Labour itself created in 1945? Or could it be that they oppose this legislation because it will make it more difficult for them to knife the private trading banks in the back, or squeeze the life out of them, if Labour is ever returned to office? Both explanations, Sir, are likely, and, indeed, in character, if I may say so. The first is a reactionary motive. We know that the Australian Labour party has become a party of reaction, incapable of constructive thought, and able to fix its attention only on what it did in 1945, without regard to the circumstances of the present, and the advances in the Australian economy that have taken place since that time. It is a party that has outlived its usefulness. The second motive that I mentioned - a desire to oppose anything that would prevent a future Labour government from destroying the banks by stealth - again, is completely in character, and has been proved in experience.

All that I can say is that the Australian people will judge what the true motive behind Labour’s opposition to this legislation may be, and, in my opinion, having judged, will condemn Labour supporters for the political confidence trick that they are attempting in their opposition to this legislation.


.- The honorable member for Barker (Mr. Forbes) made an obviously biased speech in support of the private banks, and I have no doubt that the Bank of Adelaide assisted him to prepare it. I will deal with some of the points he attempted to make. I am satisfied that the people will take a very keen interest in this legislation, because they realize that it constitutes an attack upon their bank, and, therefore, upon them. There is no doubt that the purpose of this legislation is to weaken, and, indeed, to destroy, the Commonwealth Bank of Australia. These measures have been introduced, as the Treasurer (Sir Arthur Fadden) has admitted, at the direction of the private banks, and they constitute a diabolical plot to strangle the people’s bank. It is shocking that outside interests - and the shareholders and directors of the private banks - have sufficient influence over the Government to be able to force it to introduce legislation that will, in effect, make the Commonwealth Bank subservient to the private banks. Of course, this is only one of several attempts to do harm to the Commonwealth Bank since this Government took office. The legislation of 1950, that of 1951, and this legislation of 1957, all have been designed for the same purpose.

Let us go back a little through the history of banking in this country in order to see what part the private trading banks have played. Prior to 1941, when, under the National Security Regulations, the private banks were brought into line, so that “they would not make profit-making their main aim during World War II., to the detriment of the aim of winning the war, the private banks had had a complete grip on banking in Australia since 1924. After World War I., the Commonwealth Bank was the major financial institution, and it was able to do its job as the major financial institution up to the passage of the banking legislation of 1924. It was the government banker. It was in charge of the Note Issue, lt was the people’s savings bank, and, very much more important, it was a vigorous competitor of ‘the private banks. This gave rise to the great fear of ‘the private trading banks - the fear of prospective central bank control.

How did private banks face that threat? At the time, the Bruce-Page Government, which was of the same political complexion as the present Government, was in office. The private banks brought to bear on that Government pressure that resulted in the introduction of the Commonwealth Bank Bill of 1924, which converted the Commonwealth Bank from a people’s bank into a bankers’ bank. It removed the Commonwealth Bank from the direct control of the Government and placed it under the control of a board of eight members, six of whom were, or had been, actively engaged in agriculture, commerce, finance, or industry. The banking bill now before the House provides for control by a similar kind of board.

As a result of the legislation of 1924, control of the Commonwealth Bank was placed in the hands of the private capital interests, where it stayed until 1941. Throughout that period, the Commonwealth Bank Board in fact functioned as an associate of the private trading banks, and in their interests. The ‘Commonwealth Bank was reduced to the status of a savings bank, and was merely a financial agent of the Commonwealth, but was independent of the Commonwealth Government. The private banks used another weapon in their attempt to defeat the power that the Commonwealth Bank was acquiring in the community. They reduced their numbers by amalgamation and so created a monopoly. The honorable member for ‘Barker said that the private banks were interested in greater competition because that would be more to the interests of the people. He omitted to say that what the private banks really believe in is monopoly in banking, in their own interests and not in the interests of the people. If people analysed the set-up of the private trading banks they would realize just what is happening. It is well known that groups of Commonwealthwide enterprises are represented on the boards of directors of the private banks. We know that when the 1924 legislation was passed it was revealed that on the board of directors of the Bank of New South Wales were represented trustee companies, stock and station agents, insurance companies, foodstuff manufacturing companies, brewery interests, pastoral, produce and newspaper companies. Similar representation existed on the directorates of all the other banks. It is in this way, of course, that big business is enabled to maintain monopolistic advantages through interlocking directorates. It is the same to-day. An analysis of the share holding of private banks would show that big business is represented right throughout and, consequently, .though many people do not realize it, the representatives on the bank boards of big business are able to discriminate against prospective competitors. For instance, how many small businessmen who are refused loans by private trading banks realize that the real reason for the refusals is that some one on the bank’s directorate in a similar line of business wants to prevent a competitor from obtaining the necessary financial accommodation? That is how monopolistic control is created and exercised.

The royal commission on banking revealed that in Victoria the Associated Banks, a ring of seven banks, by mutual agreement, were fixing main charges for services. Some of the bankers denied that, of course, but they broke down under cross-examination and were forced to admit that they were not in competition with .each other. What does that mean? It simply means that the financial power in this community is being concentrated in fewer .and fewer hands. After all, only comparatively few people control the private banks of Australia. They are not responsible to the people of Australia, “but only to the shareholders of the banks, some of whom, do not forget, are overseas shareholders. The interests of these bank directors are more horizontal than perpendicular, more in common with those of the bankers of the United States of America, Germany, Switzerland and all the other banking countries than with the interests of the Australian people. The only interest they have in the Australian people is to get whatever profit can be got from them. The experience of the depression years is all the evidence necessary to support that contention.

Honorable members know what the private banks did during the depression. They restricted new lending. They called in advances and, as a result, there was a contraction of business, followed by mass unemployment to such a degree that nearly one-third of the Australian work force was out of employment. When attempts were made to bring about an economic recovery the private banks did nothing to help. They left the initiative to others, but when they saw that conditions were right for them to make more huge profits they came into the picture again.

The Commonwealth Bank Board about which the right honorable member for Cowper (Sir Earle Page) seems to be so keen was alined with the private banks. During the depression it forced on Australian governments a policy of deflation. It made them reduce their social service payments and reduce wages. The then chairman of the Commonwealth Bank, Sir Robert Gibson, in a letter to the Commonwealth Treasurer in 1931 said -

Subject to adequate and equitable reductions in all wages, salaries, and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the Governments of Australia in sustaining industry and restoring employment.

That was the bank board, controlled by the reactionary private banks! It forced on the governments of Australia a policy which was violently opposed to the interests of the Australian people. As a result of the terrific power of the bank board to control money the governments of the day were forced to reduce wages and pensions.

The right honorable member for Cowper said that the Commonwealth Bank Board and the private banks of that day had car ried Australia through. As a matter of fact, they nearly carried Australia out, not through. Here is what Lord Keynes, whom everybody recognizes as a celebrated economist, had to say about the position at that time -

Every country in the world has the same problem as Australia in some shape or form. If each attempted to solve it by competitive wage reductions and competitive currency depreciations nobody would be better off. There is no exit along that route.

That is what the right honorable member for Cowper considers was a bank board carrying us through. Now we find that this Government is setting up two bank boards - one, already in existence, to look after the reserve bank, and one to look after the Commonwealth Banking Corporation, consisting of eleven members, eight of them to be from outside the Public Service. Not satisfied with the harm one bank board could do during the depression years two bank boards are to be given the job now, and possibly will do twice as much harm! What are the members to be? Nobody can tell me that the boards will not include people who are interested in the private banks, people whose policy on the boards will have some bearing on their interests in and connexion with the private banks. We will have the 1924 Commonwealth Bank Board all over again.

Actually, this legislation is for the purpose, in the long run, of restoring the private banks to their 1924 position. The Treasurer (Sir Arthur Fadden) said in his second -read ing speech that the existing bank board had not handed the Commonwealth Bank over to private interests. Of course it had not! The time was not ripe for it to do so. Neither did the 1 924 board immediately hand the bank over to private interests; but as soon as things got a bit difficult the Commonwealth Bank was handed over, shackled, to private interests. When we analyse this legislation, we find, as was pointed out by the Leader of the Opposition (Dr. Evatt) the other night, that the question of full employment has been ignored. This is in line with the Government’s policy. We have some unemployment now. About 40,000 people are registered as unemployed, but a lot more than that are unemployed if the truth were known. It was the present Prime Minister (Mr. Menzies) who said, when he was

Leader of the Opposition, that there should be a pool of unemployed to discipline the worker. He made that statement in 1945, and it was recorded in the “ Wheat-grower “. My friend, the honorable member for Corangamite (Mr. Mackinnon), who is shaking his head, can find the report in the “Wheat-grower”, of 24th April, 1946, if he wants to check the veracity of my statement. It was this Government which appointed the notorious Professor Hytten to the Commonwealth Bank Board, and it was the notorious Professor Hytten who recommended a pool of 6 per cent, to 8 per cent, of unemployed. You can see the pattern gradually developing, getting back to the situation that existed prior to the 1940’s. The Commonwealth Bank Act of 1945 certainly restored some lost power to the Commonwealth Bank. For instance, it became the central bank for the first time. It is that 1945 legislation which this Government is now trying to whittle away - legislation that was endorsed by the electors in 1946. I am satisfied that the main aim of the banks, although they may not have reached that stage yet, is to abolish the system of special accounts provided. I think that is the real issue. Possibly the Country party may have prevented the Government from going that far at the present time, but it has whittled the provision down well and truly in the interests of the private trading banks. For instance, the reduced reserved deposit ratio is to be 25 per cent. It may be increased on 45 days notice. But as has been pointed out, much can happen in 45 days. The economy could be in serious peril. By the time 45 days had elapsed anything could have happened. A state of economic emergency might have arisen and got completely out of hand. On the other hand, delaying tactics could be indulged in by the private trading banks. They could take action through the courts with respect to a notice from the reserve bank that a greater percentage of deposits was required. The Leader of the Opposition points out that one of the advantages of the special accounts system is that deposits can be got quickly to prevent secondary inflation. This legislation is designed to cause delay and, of course, may cause incalculable harm to Australia’s economy when it is very urgent that something should be done quickly.

The Minister for the Interior (Mr. Fairhall) said during his speech that the reason for the legislation was that private banks feared that a Labour government in the future would attempt to destroy them. The Minister seemed to prophesy that Labour would be in power sooner than a lot of people think. The Leader of the Opposition quite clearly pointed out that no government could use the special accounts to destroy the private banks, and drew attention to section 92 of the Constitution, which prevents that. The right honorable gentleman emphasized that bank nationalization could only be effected after a referendum to amend the Constitution had been taken.

Mr Howson:

– Do you believe that?


– I do, and I have no doubt about it. The honorable member for Fawkner (Mr. Howson) would also believe it if he had studied this matter thoroughly. The next move may come from the private banks, and could be a move through the courts to do away altogether with the special accounts system. We know that section 48 of the Banking Act 1945 was wiped out by the courts and there is a danger always that other sections could be wiped out. The banks some time ago indicated their intention in that regard, and the Prime Minister, when he was Leader of the Opposition, said that he would wipe out the 1945 legislation altogether. He has done that to some extent now. The other step could come a little later. There could be a complete sell-out of the Commonwealth Trading Bank. There is no reason at all why, under this legislation, there should not be a sale of debentures to private shareholders, as was proposed in 1938. Such action would be in line with the Government’s policy of selling out the enterprises that belong to the people. Some of these undertakings were mentioned by the honorable member for Parkes (Mr. Haylen) to-night. They include Commonwealth Oil Refineries Limited, Amalgamated Wireless (Australasia) Limited, and the whaling station at Carnarvon. In addition, an attempt has been made to wreck Trans-Australia Airlines.

It is true that some control was exercised over the private trading bank per medium of the 1945 legislation. But when a government such as the present one is in office, the private banks can get around that legislation to a large extent. The private banks’ have- a certain amount- of power over the Government, so1 much so that they were able to force interest rates up from 3-J- per cent., which had prevailed under the Chifley Government, to 5 per cent, at the present time. That is because the private banks have so much control over the policy of this Government. If Labour- had remained in office, interest rates would have beenkept down, because- it is Labour’s policy to keep interest rates down in the interest of the people. If interest rates had been kept down, finance for housing would have been much easier to obtain and would have been available at reasonable rates of interest. Industry would’ have been enabled to obtain finance at low rates of interest. Interest rates have been forced up because of’ the- greed of the private banks for profit. In addition, in order to get still higher interest rates, the private trading banks have gone- into the field of hire purchase. The Treasurer, in answer to a question, has supplied me with certain information. It is that the National Bank of Australia Limited holds shares representing a 40 per cent, interest in Custom Credit Corporation Limited’. The Bank of Adelaide holds a 40 per’ cent, interest in Finance Corporation of Australia Limited. The English, Scottish and Australian Bank Limited subscribed all the capital of £2,000,000 of Esanda Limited, and the Commercial Bank of Australia Limited holds a 45 per cent, interest in General Credits Limited. The latest move in this field’ is by the Bank of New South Wales, which has acquired a 40 per cent, interest in the Australian Guarantee Corporation. The banks have entered into these finance companies because of the higher rates of interest they can obtain - from 10 per cent, to 17 per cent. When those rates of interest are compared with rates provided by the Industrial Finance Department of the Commonwealth Bank, one can see how the private banks’ greed for profit is paramount. It is an example of how they act and have always acted to the detriment of the country. The experience has always been that they lend more when times are good and call their money in when times are bad. As Mark Twain said, the private banks are like an umbrella shop that lends you an umbrella when it is fine and takes it from you when it is wet. By their credit policy they aggravate the instability of private investment and consequently do harm to the community. The harm they can doi becomes much more acute whenlarge monopolistic banks exist, as they do in- Australia at the present time.

I want to emphasize a point that was mentioned by the honorable member for Parkes. It will be remembered that, in 1949, when- one of the issues before the people was- the nationalization of banks, the banks poured hundreds of thousands of pounds into the election campaign against Labour. It? will be remembered that bank officers were sent from door to door. Honorable members will remember the double-page spread that appeared’ in some newspapers, showing a working man with a worthless insurance policy in his hand. They always depicted a working man, never a successful businessman. By this means the banks frightened’ the people into voting against Labour. Women with one or two threepenceaweek insurance policies on their children were frightened-. So, too, were others.

Mr: Chifley’s speech in the debate on theCommonwealth Bank Bill in 1950 is worth repeating. He said= -

Having placed these matters clearly before the House and the public, as I have done on previous occasions, I am led to enquire now why the Government is so anxious to transfer the control of the bank to a board. Members of the Government say that they proposed’ to do so in order to fulfill an election promise. I do not know of any promise made by the present Government during the last election campaign that it has fulfilled. In any event, the establishment of the proposed board will fall far short of the expectations held by the bankers, who subscribed hundreds of thousands of pounds to assist the anti-Labour parties to defeat us at the last election. It is idle for honorable members opposite-

Meaning Government supporters - to deny that huge funds, were made available to them, because I can produce evidence to show the source of the funds, the amount subscribed, and’ the purpose of the subscriptions.

Every one- remembers, too, that during- the election campaign bank officers ran around from house to house in the time of the banks canvassing support for the anti-Labour parties.

That indicates how the private banks on that occasion were determined that the Labour Government should go out of office, and it indicates how keen they are to-day that any banking legislation that is introduced shall be in their own interests. They are prepared” to finance the Government now, just as they did previously.

The purpose of monetary policy always should be to ensure maximum production through full employment. That was not so during the depression years, when hundreds of thousands of people - one-third of the Australian work force - were unemployed. Those who are now trying to smash the 1945 legislation did not lift a finger then to defend the rights of the masses of the people. Reference to the report of the Royal Commission on Monetary and Banking Systems reveals how the people have been let down by the private trading banks.

I shall not go through the report in detail because I have not the time to do so, but there are one or two extracts I commend to honorable members on both sides of the House. They are contained in chapter VII. of the report and represent a damning indictment of the private banks. When honorable members realize that, with the exception of the late Mr. J. B. Chifley, every member of that commission was not associated with the Labour party, they will appreciate what a damning indictment it really was. During the debate in 1947 on the bill to nationalize the banks, the present Prime Minister (Mr. Menzies), then the Leader of the Opposition, said that the people, at the 1946 elections, had endorsed the 1945 banking legislation. He stated -

If they endorse the 1945 legislation they utterly condemn the 1947 bill.

Now the Prime Minister wants to amend that legislation, endorsed then by the people, in favour of the private trading banks. We say that if the people endorsed the 1945 legislation, they utterly condemn the 1957 bills. I sincerely hope that the real reason why the private banks are anxious to smash the Commonwealth Bank - namely the profit motive - becames clear to the people of Australia. The Treasurer (Sir Arthur Fadden) advised me in reply to a question only a few days ago that the Commonwealth Trading Bank has made a profit since 1911 of £183,941,480. That, of course, has been ploughed back in the interests of the people. The private banks are anxious to get their hands on such high profits, but, instead of using them in the interests of the people, they are concerned only with returns to their shareholders. I hope the people of Australia will rise in their wrath against this legislation. This Government is trying to smash the people’s bank. I hope the people themselves will smash this Government as soon as the opportunity presents itself.

Debate (on motion by Mr. Stokes) adjourned.

page 2085


Motion (by Mr. Cramer) proposed -

That the House do now adjourn.

East Sydney

.- Mr. Speaker-

Motion (by Mr. Cramer) put -

That the question be now put.

The House divided. (Mr. Speaker - Hon. John McLeay.)

AYES: 51

NOES: 27

Majority . . . . 24



Question so resolved in the affirmative.

Original question resolved in the affirmative.

House adjourned at 11 p.m.

page 2086


The following answers to questions were circulated: -

Housing Finance.

Liquidation of Insurance Company

Mr Griffiths:

s asked the Treasurer, upon notice -

  1. Is it a fact that the Associated Dominions Assurance Company went into liquidation nearly four years ago and that Messrs. Hungerford and Spooner were appointed receivers?
  2. Will he ascertain why no public statement has yet been made by the receivers as to when a distribution of assets will be made?
  3. How many policy holders were there in the company at the date when the closure of business was made?
  4. How much is to be distributed among policy holders and what is to be the basis of distribution?
  5. What was the cost to the 30th September, 1957, of administering the liquidation?
Sir Arthur Fadden:

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

  1. Yes.
  2. In a circular letter dated 31st May, 1954 explaining the position to policy holders, it was emphasized that the process of realization and distribution would be along one. Between January and March this year all policy holders were advised as to the amounts at which their policies had been actuarily valued. A first dividend to policy holders will be paid as soon as approval has been granted by the High Court.
  3. The number of policies at the date of liquidation was 25,464.
  4. The estimated amount available for distribution to policy holders is £340,000 subject to further costs, charges and expenses of winding up. In accordance with the provisions of the Life Insurance Act 1945-1953 the funds will be distributed ratably according to the actuarial valuation of the individual policies. Owing to the fact that about £66,000 of the assets is invested in long term mortgages it is estimated the first distribution will not exceed the rate of about 7s. per £1 of actuarial liability.
  5. The cost of administering the liquidation to 30th September, 1957 has been about £35,800 mainly in respect of the salaries of staff engaged in preparation of actuarial valuations, mortgage loan collections and the maintenance of policy holders’ records, &c. The costs have been more than offset by the income received since liquidation.

Migrant Hostels

Mr Whitlam:

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

  1. At what centres were migrant hostels (a) in operation, (b) under construction and (c) on order before he became the Minister?
  2. At what centres and on what dates were hostls placed (a) in operation, (b) under construction and (c) on order after he became the Minister?
  3. At what centres and on what dates (a) were hostels closed down (b) was was construction of hostels suspended and (c) were orders for the construction of hostels cancelled after he became the Minister?
  4. At what centres and on what dates have uncompleted buildings or hostels been (a) disposed of, and (b) put up for disposal since he became the Minister?

– The answers to the honorable member’s questions are as follows: - 1 (a). New South Wales - Bankstown (No. 1), Bradfield Park, Broughton (Burwood), Cronulla, Nelson Bay, Wallgrove, Meadowbank, St. Mary’s, Schofields, Unanderra (No. 1), Kyeemagh (Mascot), Dundas. Victoria - Broadmeadows, Fishermen’s Bend, Maribyrnong, Royal Park, Williamstown. South Australia - Gawler, Smithfield. Western Australia - -Dunreath. Queensland - Colmslie. Tasmania - Brighton. 1 (b) and (c). New South Wales - Bunnerong. Matraville, Mayfield, Orange, Unanderra (No. 2), “Villawood. Victoria - Ballarat, Geelong (Belmont), Brooklyn, Coburg, Geelong (Norlane), Holmesglen, Wangaratta, Yallourn. South Australia - Finsbury, Glenelg, Rosewater.


  1. New South Wales - Balgownie, 19th April, 1951; Bankstown No. 2, 8th December, 1950; Berkeley No. 1, 27th December, 1951; Bunnerong, 1st April, 1950; Cabramatta, 10th April, 1952; East Hills, 1st May, 1951; Goulburn, 23rd March, 1951; Heathcoteroad, 1st May, 1951; Matraville, 7th June, 1950; Mayfield, 22nd December, 1949; North Head, 15th October, 1951; Orange, 15th February, 1951; Unanderra No. 2, 19th March, 1951; Villawood, 29th December, 1949. Victoria -Ararat, 17th July, 1950; Ballarat, 16th November, 1950; Geelong (Belmont), 17th October, 1950; Brooklyn, 29th December, 1949; Coburg, 4th March, 1950; Geelong (Norlane), 14th July, 1950; Holmesglen, 6th January, 1951; Nunawading, 20th September, 1952; Preston, 30th July, 1951; Wangaratta, 3rd November, 1950; Yallourn, 12th August, 1950. South Australia - Finsbury, 20th December, 1949; Gepp’s Cross, 7th July, 1951; Glenelg, 20th December, 1949; Rosewater, 20th August, 1950. Western Australia - Graylands, 9th May, 1952. Australian Capital Territory - Ainslie, 11th February, 1955.
  2. and (c) New South Wales - Balgownie, Bankstown No. 2, Berkeley, Cabramatta, Goulburn, North Head, East Hills, Heathcote-road. Victoria - Ararat, Bendigo, Nunawading, Preston. South Australia - Gepp’s Cross. Western Australia - Graylands. Tasmania - Launceston.
  3. New South Wales - Bankstown No. 1 unit, on 2nd May, 1953; Bankstown No. 2 unit, on 2nd May, 1953; Goulburn, 1st May, 1954; Meadowbank, 8th November, 1952; Nelson Bay, 27th August, 1955; North Head, 4th October, 1952; St. Mary’s, 11th February, 1954; Kyeemagh (Mascot), 1st November, 1952. Victoria - Ararat, 18th October, 1952; Ballarat, 24th October, 1953; Geelong (Belmont), 28th September, 1956; Coburg, 15th November, 1952; Royal Park, 15th November, 1952; Wangaratta, 20th December, 1952; Yallourn, 10th January, 1953. South Australia - Gepp’s Cross, 31st March, 1953; Gawler, 8th December, 1956; Rosewater, 28th February, 1953. Western Australia - Dunreath, 25th August, 1956. Tasmania - Brighton, 9th November, 1951.
  4. New South Wales - Heathcote-road, as to one unit; East Hills, as to one half of one unit; Berkeley, as to one unit.
  5. New South Wales- East Hills, unit 3. 4 (a) and (b) New South Wales - Bankstown No. 1, returned to Royal Australian Air Force in 1953; Goulburn, notified to Interior as available for disposal; Heathcote-road, incomplete buildings notified to Interior as available for disposal; East Hills, incomplete buildings notified to Interior as available for disposal; Kyeemagh (Mascot), returned to Department of Civil Aviation in connexion with Sydney airport construction; Meadowbank, part returned to the State Education Department and balance sold by Interior; Nelson Bay, notified to Interior as available for disposal; North Head, returned to Army in 1953; Schofields, returned to Royal Australian Air Force in 1951; St. Mary’s, returned to Department of Defence Production in 1955. Victoria - Ararat, sold by Interior; Ballarat, transferred to Postmaster-General in 1957; Bendigo, transferred to State Health Department (1954); Coburg, transferred to State Education Department (1954); Royal Park, returned to Army (1953); Wangaratta, sold by Interior; Yallourn, sold by Interior. South Australia - Gepp’s Cross, transferred to State Housing Trust, 1953; Rosewater, returned to Australian Wool Bureau. Western Australia - -Dunreath, notified to Interior as available for disposal. Tasmania - Brighton, returned to Army, 1951; Launceston, half transferred to State Housing, 1953, balance sold by Interior, 1956.

Notes. - (i) Hostels that were planned but never commenced have not been included, (ii) Particulars have not been included of closings of hostels where they have later been re-opened, (iii) The further details sought would require a disproportionate staff effort to provide.


Mr Bryant:

t asked the Minister for Immigration, upon notice -

  1. What tests are applied when rejecting on political grounds applications for naturalization or registration as Australian citizens?
  2. How many applications have been rejected on these grounds?
  3. Has he had any cases investigated by a competent independent person to test the validity of his advisors’ opinions and to check on the possibility of injustices occurring?
Mr Townley:

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

  1. Applications for naturalization or registration as Australian citizens are not rejected on political grounds.
  2. In view of the answer to question 1, this does not arise.
  3. In view of the answer to question 1, this does not arise.

Bulk Handling of Wheat

Mr Swartz:

z asked the Minister represent ing the Minister for Shipping and Transport, upon notice-

Are facilities available in the major Australian ports for the handling of bulk shipments of imported grains?

Mr Townley:

– The Minister for Shipping and Transport has furnished the following reply: -

The existing bulk-handling facilities at major Australian mainland ports are designed for the export of wheat, not for importation, therefore it is necessary to improvise equipment on the wharves to handle bulk grain imported from overseas or from other Australian ports. At ports where bulk importations are to take place it is proposed to discharge bulk wheat from the ship’s hold by the use of grabs, to portable hoppers on the ship’s deck from which the wheat will be gravity fed to trucks. Wheat imported into Tasmania in the past has been bagged but bulk discharging facilities of the suction type are at present being constructed in Launceston and Hobart. However, the first of these is not expected to be in operation until about March, 1958.

Child Health

Mr Swartz:

z asked the Minister for Health, upon notice -

  1. What are the principal activities undertaken by the Australian Institute of Child Health?
  2. Are any reports available from the institute dealing with the problems of teaching and research?

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

  1. The principal activities of the Institute of Child Health are divided into two fields - teaching and research.

    1. Teaching of Paediatrics. - In undergraduate teaching and introductory lectures, clinical demonstrations and discussions for undergraduates are held throughout the year. Post-graduate discussions of selected clinical problems are held twice a week in the Clinical Unit at the Royal Alexandra Hospital for Children. The Director has also given clinical lectures and demonstrations in paediatrics at post-graduate courses in various country centres.
    2. Research. - The institute has undertaken research into rheumatic fever, pink disease, tuberculosis during infancy and childhood, problems of adreno-cortical hyperplasia and related disorders, emotional development of pre-school children, stress in children, accidents in childhood, goitre and other miscellaneous studies.
  2. The June, 1957, issue of “ Health “, the journal of the Commonwealth Department of Health, is devoted to a report of the activities of the Institute of Child Health. Scientific publications by the Director and staff of the Institute are listed in this report.

Pharmaceutical Benefits

Mr Whitlam:

m asked the Minister for Health, upon notice -

On what dates (a) did the Pharmaceutical Benefits Advisory Committee recommend, (b) did he accept the recommendation and (c) were regulations gazetted to permit that the list of pharmaceutical benefits should include calcium benzoyl para-amino-salicylate (B-pas) nystatin and penicillin with streptomycin?


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

Calcium benzoyl para-amino-salicylate (B-pas) (a) 5th July, 1957, (b) 28th August, 1957, (c) 26th September, 1957.

Nystatin (a) 5th July, 1957, (b) 28th August, 1957, (c) 26th September, 1957.

Penicillin with streptomycin (a) 5th July, 1957, (b) 28th August, 1957, (c) 26th September, 1957.

Mr Whitlam:

m asked the Minister for Health, upon notice -

On what dates (a) did the Pharmaceutical Benefits Advisory Committee recommend, (b) did he accept the recommendation and (c) were regulations gazetted to permit that the list of pharmaceutical benefits should include mestinon, myleran, prednisolone prednisone, chlormerodin, phensuximide, busulphan, chlortetracycline, erythromycin, hydrocortisone, mercaptorpurine, nitrofurantoin, pyridostigmine bromide, suprarenal cortex extract, tetracycline with oleandomycin, tetracycline with sodium metaphosphate and trimetaphan camphorsulphonate?


– The following are the dates in question: -

Chlortetracycline was originally included as a benefit under its trade name of Aureomycin and Suprarenal Cortex Extract was originally included under its trade name of Eschatin

Dollars and Imported Television Programmes

Mr Ward:

d asked the Postmaster-General, upon notice -

  1. What is the total expenditure of United States dollars to date upon the importation into Australia of material for television programmes?
  2. Is there any government imposed limitation upon the availability of dollars for this purpose; if so, what are the details?
  3. What is the anticipated expenditure of dollars upon these imports in the current financial year?
Mr Davidson:
Postmaster-General · DAWSON, QUEENSLAND · CP

– The Treasurer has supplied me with the following information: -

  1. Up to 15th October, 1957, importers of television programme material had been given approval to enter into dollar contractual commitments to the extent of 2.46 million dollars. Of this amount, 1.03 million dollars had been approved for remittance up to that date.
  2. Yes. The limitation, however, no longer takes the form of a fixed dollar amount as a ceiling figure available to cover the acquisition of programmes. The restrictions currently imposed operate on the basis of permitting dollar expenditure only for programme material necessary to meet reasonable current and continuing needs, and with a view to preventing importers from building up unnecessarily large stocks of imported programmes. Importers still have to secure exchange control approval for all contracts they wish to enter into, and contracts for the supply of material may not be entered into if they have a duration of more than three years.
  3. As the present restrictions do not involve control over costs of programmes, it is impossible, at this stage, to give any indication as to what expenditure in the current financial year will be.

Cite as: Australia, House of Representatives, Debates, 12 November 1957, viewed 22 October 2017, <>.