22nd Parliament · 2nd Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
– My question is to the Minister for Defence, who is acting for the Minister for Primary Industry during that honorable gentleman’s absence from the House. I ask the Minister: Who will pay the freight charges on wheat proposed to be shipped from Western Australia and South Australia to certain eastern States, to off-set the wheat shortage there? Is any increase in the price of wheat for Australian consumption likely in the near future? In the event of wheat prices in Australia being increased, will wheat for stockfeed purposes in such industries as the poultry industry be exempted from such increase?
– I recall that my colleague, the Minister for Primary Industry, made a statement in reply to questions on all those matters. However, I shall have this question looked at and provide the honorable member with a reply.
– Has the Minister for External Affairs any knowledge of the origin of the fantastic rumour that Australian troops have been sent to Merauke, in the southern area of West New Guinea? Is publication of such nonsense in Indonesia a part of an attempt to influence the United Nations debate on West New Guinea? If so, will the Minister take steps to instruct our delegates to the United Nations to point out very strongly that this story is in line with much other false propaganda being circulated by the Communists and others in order to try to influence world opinion? Would it not be advisable to base our main argument in the United Nations on the premise that there is no difference between West and East New Guinea, the local people all being Melanesians, not Indonesians, and that the ultimate object of the Dutch and ourselves is to develop the three parts in that area - East New Guinea, Papua and West New Guinea - into one cohesive Melanesian nation?
– I have no knowledge of the origin of the fantastic story to which the honorable gentleman refers; that is, that Australian troops have been sent to Merauke, in Dutch New Guinea. As, I believe, has already been stated by my friend and colleague, the Minister for the Army, this story is entirely untrue. It appears to be part of a deliberate campaign which, one can only imagine, is being waged in Djakarta to influence the deliberations of the United Nations on the subject of Dutch New Guinea. So far as one can accept reports in the press, President Sukarno himself has made statements, with regard to the use of force, that are completely at odds with the facts. The same kind of thing was said in other words by the Minister of Information of the Government of Indonesia, when he declared that the situation was explosive and might lead to war.
One cannot too greatly deplore such inflammatory statements. There is no disturbance of any sort whatsoever in Dutch New Guinea such as that which has been referred to in governmental circles in Djakarta. As I say, this all appears to be part of a deliberate campaign of falsification from the mouths of responsible Ministers of the Government of Indonesia, and one cannot but deplore it. I can only say that if this campaign is designed to influence the minds of the members of the United Nations who, in the First Committee and subsequently, in the General Assembly, will be called upon to discuss the matter, I believe it will most certainly defeat its object. This campaign is greatly resented in Australia, both by the Australian Government and, I am sure, by the majority of the Australian people.
– My question, which is addressed to the Prime Minister, refers to the victims of the disastrous bush fires that are at present ravaging the Blue Mountains district of New South Wales. In view of the great misfortune that has been suffered by the people who have lost their homes and all their possessions, will the right honorable gentleman consider favorably making an immediate grant, in conjunction with the Government of New South Wales, to relieve the distress of the people of that area? I point out that a fund for that purpose has been established by the Mayor of the City of the Blue Mountains.
– I appreciate and sympathize with the anxiety of the honorable member, an anxiety which, I think, we all share, for those who have undergone a very unfortunate experience. My colleague, the Treasurer, is absent to-day by reason of a family bereavement, but he will be back some time to-morrow. I shall have a discussion with him about this matter, and put myself in a position to answer the honorable member’s question.
– Can the Minister for External Affairs give to the House any information regarding the purpose and the results of the recent visit to Egypt by Mr. Eugene Black, the president of the International Bank for Reconstruction and Development?
– I believe that Mr. Eugene Black was invited by the Government of Egypt to visit Cairo to discuss with the Egyptian authorities the possibility of the International Bank acting in some way in connexion with the, as yet, unresolved matter of compensation by Egypt as a result of the nationalization of the Suez Canal. I believe, also, that the visit was made at the instance of the Government of Egypt. I have no information concerning the result of Mr. Black’s visit.
– My question is addressed to the Minister for Labour and National Service. I preface it by stating that, last Thursday, the Minister, in reply to a question asked in this House, stated that an attempt was being made to tie up all the ports of Australia and, by a significant reference, conveyed the impression that officials of the Waterside Workers Federation were forcing such a condition on the community. I now ask the Minister whether he checked his information with either the Australian Council of Trade Unions or the Waterside Workers Federation to ascertain whether the statement that he proposed to make was correct. If he did make such a check, will he advise the House of the result of his inquiries? If no inquiry was made, will the Minister deny that his attitude in this matter is consistent with the general complaint of waterside workers that their members, officials and the federation itself are repeatedly condemned by the Minister and others without being heard? Furthermore, will the Minister deny that there is one law - preference and privilege - for the shipowners, and another law - abuse and condemnation - for the waterside workers?
– The information which I gave to the House, when dealing with this matter last week, was supplied to me by the official authority established by this Parliament to supervise the provision of labour and waterfront affairs generally, the Australian Stevedoring Industry Authority.
– The authority did not authorize your use of that information in this House.
– I do not know what the right honorable gentleman is trying to say. He clearly does not want me to state the actual position for the information of the House. This Parliament established the Australian Stevedoring Industry Authority. It comprises the chairman of the former Stevedoring Industry Board, who was appointed, I believe, by the government in which the Leader of the Opposition was a senior Minister. It includes, also, a senior and respected representative from the employers’ organization, and a former president of the New South Wales Trades and Labour Council in the person of Mr. Shortell. The information was official information sought by me from that body and given by me, in good faith, to this House. Far from invariably condemning the waterfront workers, on earlier occasions in this place I have recorded the favorable trend in waterfront affairs over recent months and I drew a contrast between what had occurred in those earlier months and what was now threatened as a result of activity which I believe to have been stimulated in a significant way by the present general secretary of the Waterside WorkersFederation.
I do not believe that there is one law for the waterside workers and another for the employers in the industry. Theauthority reports each month on matters, arising in the course of that month which call for criticism from the authority. It has not omitted to do that in relation to employers any more than it has omitted to do it in relation to members of the federation. As to the legislation and its effects in respect of disciplinary matters, that legislation was passed by this House. It places powers in the hands of the authority; and there are powers which can be exercised by a judge on application by the federation, should it care to exercise its rights.
– I ask the Minister a -supplementary question. Does the right honorable gentleman mean to say that the Australian Stevedoring Industry Authority in furnishing information to him intended that the material, including a list of alleged offences, should be published in this House under privilege, in which circumstances its truth or otherwise could not be tested normally? Does the Minister know from what sources that information was obtained by the authority? Does he believe that in a dispute of some significance in such a -sensitive industry as the waterfront industry, in which both sides are suspicious of each other’s motives, his action will help to produce a settlement?
– The information was sought by me and used by me in this House, and that is a matter for which I take full responsibility. It was done first to inform the House as to the facts which I, as a responsible Minister, could obtain from the official authority, and secondly, to direct attention to the situation being created by this waterside workers’ executive in seeking to embroil waterside workers in ports all around Australia in a hold-up of the shipping of this country. In that situation, I had a duty to inform, not only the House, but also the waterside workers concerned, and all those who had some interest in this matter.
– Why did the Minister not have a look for himself?
– I have had a look more than once, as the honorable member would know if he had followed events in this place. I would only hope, having received information which nobody on the other side has sought to challenge as to its accuracy, that those to whom it was directed will follow a course of responsibility, not only to their own union, but also to the country.
– Has the attention ot the Minister for External Affairs been drawn to an address given by the Leader of the Opposition to a church gathering in Manly last Sunday in which Mr. Foster Dulles’s bona fides in connexion with the recent disarmament conference were severely questioned by the right honorable gentleman? Does the Minister believe that such criticism is, indeed, based on any substantial grounds?
– I am not as well informed as 1 shall be on what the Leader of the Opposition said to the gathering that has been mentioned. I do realize that the right honorable gentleman apparently criticized in a very direct way Mr. John Foster Dulles, the Secretary of State of the United States of America, and, as I am informed, made no such criticism of the Soviet Union. I propose to study what the right honorable gentleman said and, if necessary, to make a statement in this House in respect of it.
– Will the Minister for External Affairs comment on the belief expressed by the Leader of the Opposition that the solution of the problem of Dutch New Guinea lies in the negotiation of a mutual regional pact?
– I understand that, when I was not in the House recently, the Leadeof the Opposition stated in answer to a portion of a debate, that the basic solution of the West New Guinea problem was a mutual regional pact. I would only say that a mutual regional pact would be no solution whatsoever to the present problem of Dutch New Guinea, which is solely one of disputed sovereignty. The right honorable gentleman has proposed a cure for a particular disease which is not the disease that is current. It is as if a doctor, unnamed, were to propose a cure for measles when the patient was suffering from a sore throat.
– The question which I address to the Minister for Defence relates to the necessity to import wheat from Western Australia to New South Wales and adjoining areas, and to a statement made by the Minister for Primary Industry last week, in relation to requests for Commonwealth subsidy payments on freights, to the effect that the New South Wales Government is a sovereign government and must accept its own responsibilities. I point out to the Minister that wheat and flour consumed in the Australian Capital Territory must come from or through the State of New South Wales. Can the Minister give an assurance that the Commonwealth Government, which has complete responsibility in this area, will consider subsidizing the freight payable on flour brought into this Territory or on wheat brought in for stock and poultry feed?
– I shall have a look at the proposition made by the honorable member for the Australian Capital Territory and give him a reply concerning Government policy on this matter at a later date.
– I ask the Minister for Labour and National Service whether his attention has been directed to an article appearing in the September number of the “ Communist Review “, being the report of a speech by Mr. Dixon to the central committee of the Australian Communist party. Did that speech contain instructions to waterside workers in Australia to adopt offensive tactics? Is it one of the reasons why trivial disputes on the waterfront are now being blown up into national issues? Is this being done in the Communist interest? Is it part of a world pattern? Does it have any relation to recent visits of Australian waterfront leaders to Communist Russia? Is it related to the re-establishment of the Comintern, about which statements have appeared in the press?
– I do not feel competent to offer an authoritative comment on the last question. The facts, I think, can be assessed by any one who cares to study them carefully. I can say, however, that there was a significant series of passages in the article by Mr. Dixon in the September issue of the “ Communist Review”, directed, in effect, to the waterfront union, pointing the contrast between the unity which developed when the union was engaged in strike action and what he declared to be the weaker position of the union since less strike action has been indulged in. There is no question, in my view, that the article can be interpreted as at attempt by Dixon to induce the Communists in the Waterside Workers Federation - and it is to be remembered that the general secretary of that union is a member of the central committee of the Communist party of Australia - to step up their strike action as a means not only of carrying on the class war, as the article pictures it, but also of developing a greater degree of unity, in the interests of the Communist party, between members of the Waterside Workers Federation.
– I ask the Minister for Labour and National Service whether the appointment of Mr. J. P. Horan to the sinecure of conciliation commissioner was a payment, or a pay-off, for services rendered to the Liberal party by the Democratic Labour party.
– I do not think the honorable member advances his stature in this place by this kind of cheap comment. The reference to the position of a commissioner as a sinecure is, indeed, a reflection on this Parliament, which, by a very great majority, established the amended system of conciliation and arbitration in quite recent times. The work of the commissioners has been reflected, I believe, in the fact that the number of working days lost through industrial disputes over the first nine months of this year was less than one-half of the number lost during the corresponding period of last year. If the conciliation commissioners are able, by their own efforts, to contribute to this very satisfactory result, it ill becomes any one in this place to refer to their positions as sinecures. Mr. Horan is not personally known to me, but he is very highly regarded inside the industrial movement of this country. He is a man of experience and capacity, and his appointment to his present position was motivated by no other consideration than that he appeared to us to be the best, man available for the position at the time.
– Will the Minister for Trade indicate to the House the progress made to date with the introduction of the import replacement plan for certain commodities? As this new scheme appears admirably to adjust many anomalies previously existing, is the Minister prepared to give an assurance that no modification of the plan is contemplated, but rather an expansion of import replacement to embrace other items subject to import control?
– The administration of this policy in respect of the 50-odd items to which it applies is proceeding as intended and to the satisfaction of all sections of commerce concerned. This action, which was instituted by the Government in pursuance of its policy of endeavouring to arrange the best distribution of available overseas resources to both consumers and traders, establishes equity as between traders and is a form of liberalization of import licensing, indeed the most efficient we have been able to devise. Of course, if it could be applied to all commodities, the need for import licensing, as I stated on another occasion, would no longer exist. As and when it becomes possible to liberalize licensing still further - and as to that I can make no predictions - I am sure this particular policy will be expanded within the complete scheme of import licensing. At the end of November, that being the end of a fourmonth licensing period, it is intended to review this matter fairly comprehensively at Cabinet level. At the present time the Government does not intend to go back on its tracks in regard to the import replacement policy. The policy will be continued for the foreseeable future at its present level and, at least, in respect of the items now being so treated.
– Early last week I asked the Minister for Immigration a question concerning the stranded seamen of the vessel “ Rose Pearl “ at present laid up at Darwin. On that occasion the Minister replied that he would secure the information for me. I now ask him whether he is yet in a position to reply to my original question.
– Although the honorable member addressed his question to me as Minister for Immigration, I found out subsequently that it concerned not my particular administration but the Department of External Affairs. I referred his question to that department, and I will follow it up to see whether I can hasten a reply.
– I preface my question to the Minister for Supply by directing his attention to an item which appeared in the United Kingdom Information Service News Sheet, dated 7th November, which stated that the British Railways have installed an electronic computer-
– Order! I think the honorable member is basing his question on a newspaper report.
– 1 rise to order, Mr. Speaker. This question is not based on a newspaper report.
– ls the honorable member doubting the decision of the Chair?
– I rise to order, Mr. Speaker. The question of whether or not something is a newspaper report must depend upon information conveyed by the honorable member in his question. I did not understand him to use words which conveyed the impression that he was basing his question upon a newspaper report.
– I am afraid the Minister was not listening. There is no point of order.
– Does the Prime Minister recall that, whilst the Treasurer was absent overseas, he answered a question to the effect that the fall in Japan’s overseas currency of the equivalent of 496,000,000 dollars during 1957 included a dollar content of 461,000,000 dollars and that the Treasurer would emphasize the proper significance of the dollar problem at the international monetary conference? Was Japan’s dollar shortage discussed at the international monetary conference? Did the Treasurer emphasize the significance of it? Was any action decided at that conference in relation to the dollar shortage?
– I suggest 10 the honorable member that it would be more satisfactory if he restated that question to tho Treasurer, perhaps on Thursday morning, at which time he will be here.
– Is the Minister for Supply aware that the British railways claimed to have installed an electronic computer to work out the wages of 10,000 employees at their locomotive and carriage works at Swindon? They claim that this is the first machine of its kind in the world and that it is capable of feeding, processing and punching up to 7,200 cards an hour and that some 3,000 switches are operated by each punched card as it passes through the machine. Can the Minister say whether an electronic computer which was designed and built by the Department df Defence Production at Salisbury, in South Australia, was built before that of the British railways, and is it not capable of an even greater volume and variety of work?
– I am glad to be able to inform the honorable gentleman that there are in Australia at least two computers which are capable of a bigger output than the one mentioned by him. I have no details, but I shall be glad to give him details at a later date, if he wishes to have them. I understand that the University of Sydney also has a digital computer of greater capacity than the one mentioned.
– Will the Prime Minister state the precise terms of reference given to a special committee under the chairmanship of Sir Leslie Morshead, which has been appointed to review the defence organization? Will he also state the precise reason for the appointment of the committee, in view of his recently repeated pronouncement that Australia’s defence preparedness has never previously, in a peacetime period, been better than it is at present? Can it be accepted that at the time he made this statement he did not know the position, or was he deliberately keeping from the Australian public the true position of inefficiency and waste that exists in our national defences?
– The honorable member for East Sydney has overlooked the very important fact that nothing is so good that it cannot be made better. The whole purpose of this committee, as I stated at the time of its appointment, is to examine the organization of the defence group of departments in order to avoid overlapping, in order to produce a greater measure of consultation at all levels and in order to produce a more efficient result. Sir Leslie Morshead has very kindly agreed to take the chair. The committee will, in addition to dealing with those matters, give consideration to the state of affairs which exists in one or two places in which civil and military production are conducted in the same department, to see whether any improvement to make that system better organized and more economical can be effected.
– My question is directed to the Minister for Labour and National Service, ls it a fact that a Commonwealth Employment Office was opened last week at Rainbow-street, Kingsford, New South Wales? If so, will the Minister say whether the federal member for the district was advised of that fact? Will the Minister inform me whether it is the policy of his department to ignore the local member only if the local member belongs to the Australian Labour party? Is it a fact that the discourtesy shown on the occasion of the opening of this office is typical of what regularly happens in Labour constituencies? Will the Minister inform me why his department could not have shown courtesy similar to that extended by the Minister for the Interior on the occasion of the opening of an electoral office in the same building? Will the Minister in future cultivate courtesy as a habit?
– As to the last part of the question, I am afraid I cannot learn very much from the honorable gentleman, but I can assure him that if he was ignorant of the fact that the Kingsford employment office was opened last Wednesday, that is a deficiency he shares with the Minister of the department concerned. If the office was opened, I do accept as a proper rebuke the honorable gentleman’s reminder that he was not notified. I shall make inquiries to learn why he was not notified. For my own purposes, too, I want to know the answer. Whatever grounds foi criticism I might have against the honorable gentleman, I am quite happy to acknowledge publicly the persistent advocacy he has pressed in this place for some considerable time to have an office opened in his electorate. At least we can rejoice together that his efforts and mine have produced a constructive result.
– I direct a question without notice to the Minister for Territories. Does the Minister consider the new capitation tax, which has been imposed at the rate of £2 a head on all males in the Territory of Papua and New Guinea, to be fair and satisfactory? How does the Minister justify this new tax, which fails to discriminate between the low income earning indigenes on the one hand, and prosperous Europeans on the other? Is it correct that European women, who earn good salaries in the Territory, are exempt from any kind of income tax or capitation tax?
– I remind the honorable gentleman that in this current year about £5,000,000 will be raised in the Territory of Papua and New Guinea by taxation. Of that £5,000,000, about £100,000 will be provided by this capitation tax. The remainder will be provided mainly by the European population in customs charges and imposts of that kind. The capitation tax is designed to serve other purposes as well as the raising of revenue. Advice given to me by people with long administrative experience in the Territory is that the imposition of a small capitation tax serves to inculcate a sense of responsibility in the people. Any person who is not in receipt of an income, or is in receipt of an income which is not capable of bearing this charge of £2 a year, can claim hardship, in which case the tax will be remitted.
– I ask the PostmasterGeneral a question without notice. Is it a fact that examinations are to be held on 23rd November for permanent female phonogram operators in the PostmasterGeneral’s Department? Is it a fact that young women are debarred from sitting for the examination if their ages are below fifteen years, despite the fact that they are completing their intermediate examinations at school by 29th November? Is the Postmaster-General aware that many girls reaching the age of fifteen years between November and December each year are being denied the opportunity of entering the Postmaster-General’s Department on leaving school, apparently because of an accident of birth? In future, will the Minister see whether girls who leave school in November after the intermediate examinations can be allowed to sit for Postal Department examinations so that they may have the opportunity of entering the service?
– I am not aware of all the details governing the many examinations conducted by the Postmaster-General’s Department for those who wish to enter its service. Consequently, I cannot answer the honorable member offhand. I will examine the matters he has raised, and will give him a considered reply.
– I ask the Minister for Trade whether it is a fact that imports of Japanese toys are estimated to be approximately £600,000 in value for the current year. Is it a fact, also, that this represents an increase of about 200 per cent, over last year’s imports of Japanese toys, which totalled £217,000? Is it a fact, further, that imports of Japanese toys for the December quarter alone are expected to total about £400,000 - an estimate that has been confirmed by the Japanese Ministry of Trade? Is it a fact that Australian toy manufacturers - who are engaged in an industry that offers useful employment, and a living, to many disabled Australian cx-servicemen and their families - have appealed to the Government to take action urgently to protect the Australian industry? If so. will the Minister state what action is to be taken, and when it will be taken?
– I am not able to confirm, or, for that matter, to deny, the accuracy of the figures that the honorable member has quoted. However, I would always endeavour to quote relevant figures. The honorable member has mentioned figures based on annual totals, and I do not think that those figures would be procurable. They could represent only the actual total of imports, arrived at after the goods had been received, or a prediction made on the basis of import licences taken put. Since licences are based on a fourmonthly period, 1 do not think that figures such as the honorable member has quoted would be available.
I am able to say, from actual knowledge I have, that it appears from the licences for the import of toys from Japan which have been taken out that there will be a substantial increase in the import of toys from Japan in the current quarter, compared with the comparable period of last year. I may add that this is one of the very few items of imports in respect of which that could be said. Relying on my memory, with some confidence - if my recollection proves to have been wrong when the matter is checked, I will make a correction -I can say that I have been told, quite recently, that notwithstanding the increase in the importation of Japanese toys which seems likely to occur, there has been no measurable decline in the placing of orders with Australian toy factories.
I can say with certainty that, under arrangements which the Government has made, and at my invitation - a couple of months ago J took the precaution of taking the initiative in relation to the Australian toy industry, because, as I think 1 mentioned in this House when dealing with the Japanese Trade Agreement, it was one of the industries that could be sensitive to Japanese competition - representatives of the toy industry had discussions with senior officers of the Department of Trade. At those discussions, consideration was given to the known facts presented by the toy industry, and to the known facts presented by the department arising from its knowedge of import licences taken out and from a check made with the sellers of toys with respect to those licences. Therefore, in accordance with the plans the Government has made, a full preliminary conference was held with respect to the problems of the industry. What has happened in the last week, if anything, I do not know, but up to a week ago, apart from a preliminary approach, the toy industry had not sought to have its problems - if it regarded itself as having any in this matter - examined by Mr. McCarthy, the advisory authority to the Government with respect to the operation of the Japanese Trade Agreement.
As a consequence, I can conclude only that all the evidence indicates that the Australian toy industry does not regard itself as being in jeopardy, notwithstanding the fact that imports of Japanese toys appear likely to increase.
Debate resumed from 14th November (vide page 2236), on motion by Sir Arthur Fadden -
That the bill be now read a second time.
.- The Minister for Air (Mr. Osborne), in speaking to this measure last Thursday, said -
Banking legislation in this country has a long, and at times, a turbulent, history. From that history, there has emerged a clear need for a strong and independent central bank, one which is able effectively to play its part in dampening the tendency to rapid swings in the Australian economy . .
With those remarks I wholeheartedly agree. The history of banking in Australia, particularly the history of the private trading banks, has been extremely turbulent and, at times, disastrous for the people of Australia. Those of us who are prepared to examine the history of Australia back to the ‘nineties of the last century will realize the disastrous roles that the private trading banks have played in the economy of this nation, and the huge cost they have been to the investors, the primary producers and the general public of Australia. The history of the bank crashes in those years is a very sorry one, and the way in which the private trading banks then controlled - and I use the word in its real sense - the various governments of the colonies, which later became the States of Australia, is really something which to-day would make the people of Australia shudder.
I know something of the history of the Queensland National Bank Limited, a private trading bank in which the leading statesmen of Queensland were large shareholders, and of the manner in which that bank was able to force Sir Hugh Nelson, the Treasurer of the day in Queensland, to introduce legislation to save that bank from bankruptcy and to enable it to obtain huge loans, at a minimum rate of interest, from the Queensland Treasury. The history of banking is a shocking history which shows how soulless the private trading banks are and how they will exercise control and maintain a firm grip over any government that is prepared to let itself drift into their hands.
The need for a strong central bank, independent of control by the private banking interests, had long been evident prior to 1911 when the Labour government, during the Prime Ministership of Mr. Andrew Fisher, established the Commonwealth Bank. The Labour party to-day sees no need for the introduction of the present banking measures, and is suspicious of any move made by the present Government to, as the Government calls it, “ reform “ the banking system of Australia. The Liberal party - the conservative party - has always been opposed to the Commonwealth Bank as an active competitor of the private trading banks. This has been borne out by the actions of the Liberal party in government over the years.
When the first Commonwealth Bank Bill was introduced into the Parliament of the Commonwealth, in Melbourne, the predecessors of the present members of the Liberal party were most critical of the proposals of the Labour government of that day, and fought very strongly against the establishment of the Commonwealth Bank. We know, from our reading of the history of the establishment of the bank, that the most dire consequences were foretold by the opponents of Labour at that time. We were told that the economy would rapidly drift into a state of bankruptcy, that the people’s savings would become worthless. The most irresponsible statements were made, the wildest threats were uttered, by the opponents of the Labour party at that time, in order to create an atmosphere of fear in the minds of the people and in the hope that the people would persuade their representatives in Parliament to oppose the bill. However, their efforts were of no avail. The bill was passed and the bank was established.
The bank, under its original charter, and under the able direction of its first Governor, Sir Denison Miller, rendered outstanding service to this nation during the period of the first world war. It financed the operations of the Government in the field of war. It financed the Government’s action in disposing of the primary products of Australia’s farmers in that period. Its action in assisting in the building of the east-west railway is now recognized and is a proud page in the bank’s history. When the primary producers of Australia were unable to move their products to the overseas markets, during the first world war, it was the Commonwealth Bank of Australia which made money available to the then Prime Minister, Mr. Hughes, to establish the Australian Commonwealth Line of Steamers.
All those things were of untold benefit to the people of Australia, and could not have been undertaken unless there had been in existence a people’s bank, a government bank such as the Commonwealth Bank of Australia, established in 1911 and operated under its original charter, as it was at that time.
The bank grew in strength, and the Nationalist Prime Minister, Mr. Hughes, remembering that he had played some role in establishing the people’s bank as AttorneyGeneral in a Labour government, refused to attack the bank. However, he passed from the office of Prime Minister, and his government was succeeded by a coalition government led by Mr. Bruce and Dr. Page. That Government was not slow to launch an attack on the Commonwealth Bank, and the present right honorable member for Cowper (Sir Earle Page), who was Treasurer in the Bruce-Page Government, introduced legislation in 1924 which established a board of directors to control the bank and withdrew the element of competition between the Commonwealth Bank and the private trading banks. This was the first concerted attack against the Commonwealth Bank by the predecessors of the present Liberal party. I suppose that action itself justified the expulsion of Mr. Hughes from the Prime Ministership, the elevation of Mr. Bruce to that office, and the establishment, with the Australian Country party, of the coalition government.
The directors of the board, under the bank’s new establishment in 1924, were drawn from industrial, banking and insurance institutions throughout Australia. The favours that were granted to the companies represented on the directorate of the Commonwealth Bank gave rise to serious scandals in those days. One which comes to mind is that concerning the first chairman of directors, Sir John Garvan, who was prominent in the insurance business. This control of the Commonwealth Bank continued right through the depression years, and although efforts were made by the Scullin Labour Government to amend the Bruce-Page legislation, those efforts were thwarted by a hostile Senate.
The role played by the Commonwealth Bank directorate, under the chairmanship of Sir Robert Gibson, during the depression years must fill all Australians with horror. Of course, under the Bruce-Page legislation Competition between the Commonwealth Bank and the private banks ceased, and this state of affairs continued during the depression years, at a time when finance was sorely needed to take unemployed men off the dole and place them in productive work for the development of the nation, and also to provide funds with which to help the farmers. The Commonwealth Bank refused to assist the Government, and it was the proud boast of Sir Robert Gibson, when called to the bar of the Senate to address the members of that noble House, that the bank would not assist the Government by making funds available for the worthy purposes that 1 have mentioned. The ignoble members of that chamber, who comprised the majority party, endorsed his refusal.
Sir Robert Gibson and his co directors of the Commonwealth Bank were willing partners of the trading banks in forcing the Government of Australia to introduce the infamous Premiers’ plan, a plan which served only to intensify the effects of the depression. As a result of it, we saw low wages and a reduction of social service benefits, including pensions. There were many cases of bankruptcy in business. People were driven to a terrible state of despair and hopelessness and, in many instances, ultimately to suicide. This, I say, was the result of the marriage of convenience which took place between the directors of the Commonwealth Bank, operating under the Bruce-Page legislation, and the private trading banks of Australia. At the first opportunity, however, this state of affairs was changed. The Chifley legislation of 1945 restored to the Commonwealth Bank its original place as leader in the field of banking in Australia, and it went further by giving added powers to the bank.
With the defeat of the Chifley Government in 1949, the members of the present Government were not slow to launch a further attack on the Commonwealth Bank, the people’s bank. Legislation introduced in 1951 was passed by this House but was later rejected by the Senate, in which place there was a majority of members who supported the Australian Labour party. A double dissolution was granted by the Governor-General and the Government appealed to the country, the issue being its banking legislation. This, however, was only a nominal issue, as all members of the Government parties, from the leaders down, introduced the issue of communism, branding all who opposed them either as Communists or the dupes of the Communist party. They did not mention the real issue of banking, although that was the cause of the double dissolution. The result of this display of McCarthyism by the supporters of the present Government frightened the Australian voters, and the Government was returned to office, although the real issue at the general election had been barely mentioned during the campaign.
The Government regarded this result as a triumph for its banking legislation and hastily ensured that its proposals were approved by the Senate. Further amendments of the legislation were made subsequent to that date, but the private banks, hungry for power and profits, were still not satisfied. A deputation recently waited on the Prime Minister at Canberra and, I understand, was feted in the Cabinet room. Its members demanded that further powers be given to the private banks and that another twist be given to the rope that the Government was placing round the neck of the Commonwealth Bank. Out of that interview arose the legislation that we are discussing to-day.
The Government has no mandate from the people for this legislation. It is true that, in 1949, it received from the people a mandate in relation to banking, and that it proceeded to honour the undertaking that it had given by introducing the 1951 legislation; but during the last general election campaign no powers, such as those which the Government is now seeking, were proposed to the people of Australia. I regard the action of the Government in introducing this measure as undemocratic and a denial of the rights of the people. This legislation has been dictated by outside interests, and the Parliament is being asked to accept the proposal merely because the private trading banks have demanded it of the Liberal party and the Australian Country party. I see no national need for the introduction of these measures.
The private trading banks are not serving the people of Australia as they should be served in the field of banking. They are, however, serving their own interests in the field of hire purchase, to the detriment of the Australian people. Recently, the honorable member for Stirling (Mr. Webb) gave to the House information which showed how the private trading banks were entering into the hire-purchase business, to the detriment of general banking business. If we appreciate that the purpose of banking is to finance business undertakings, to supply money for the construction of homes, and to assist governments in the development of the nation, we must also appreciate that the private banks are failing to play their essential part in banking. The information that the honorable member for Stirling gave to the House recently bears repetition, because it is most important that the people of Australia should know that the banks are using the funds which are in their possession, not to the advantage of the people, but to that of the shareholders of the banks.
The National Bank of Australasia Limited holds shares which represent 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 has been made by the Bank of New South Wales, which has acquired a 40 per cent, interest in the Australian Guarantee Corporation Limited, This illustrates why it is so difficult for people seeking credit for home construction, for business people seeking overdrafts for the expansion of their undertakings, and for farmers who desire bank assistance to purchase efficient farming equipment, to get money from these private trading banks.
Quite recently, I had brought home to me the disastrous effects that the action of the private trading banks, in channelling their funds into the hire-purchase business, is having on the national well-being - or in this case, the well-being of Queensland. Two months ago, I attended the opening of a fete which was held for the purpose of raising funds for the construction of the Mater Mothers Hospital in South Brisbane. I may add that there is no public maternity hospital on the south side of the Brisbane River, although this area contains 45 per cent, of Brisbane’s total population of more than 550,000 people. The hospital, which is being built by the Sisters of Mercy to provide accommodation for mothers of Australian babes, will be as modern as any in the Southern Hemisphere. It will cost £1,200,000, and a generous State government will grant a subsidy, on completion of the hospital, of £70,000. The balance of the money is being raised by fetes and by art unions in which ten Holden cars or ten Ford cars are disposed of periodically. Tickets in these art unions are sold for 2s. each. This is the principal method of obtaining revenue for the construction of this maternity hospital. Up to the present time almost £700,000 has been raised by this means and expended on its construction. However, the Sisters of Mercy have grown impatient at the delay and are anxious to complete and open the hospital so that it may be used for its worthy objectives.
The secretary of the appeal committee, when speaking at the opening of the fete, informed the gathering that an approach had been made to a bank - that is, of course, a private trading bank - for an advance of up to £500,000, which would enable the hospital to be completed, equipped and opened, but the bank flatly refused to make the advance. Here is a case in which an organization was prepared to render the most worthy public service possible in Australia. A hospital was to be opened in which new Australians would be born, but a private bank has refused to be associated with this worthy undertaking. There is no risk of the hospital defaulting. It is a good business investment for the bank at a normal overdraft rate of interest, but obviously the hire-purchase business, which brings in up to three times the normal overdraft rate of interest to the banks, is regarded as a better investment. This is an example of how the private banks are not assisting the development of the country.
The legislative action of the Liberal party and of the Liberal-Australian Country party Government and the behaviour of the private banks make the members of the Labour party suspicious of any move by the Government to alter the banking system. When legislation is introduced at the dictation of the private banks, the suspicion already in the minds of Labour men becomes confirmed, and the Labour party is determined to fight this legislation to the bitter end. It is obvious, however, that in this place where the Government has an overwhelming majority, its supporters are prepared to bow the knee to the moguls of finance in Sydney and Melbourne and agree, subserviently, to the dictates of these individuals. The legislation will be passed in this place with a very sound majority. Its fate in the Senate, however, is uncertain. I hope, in the interests of the people of Australia, that it will not be passed in that place.
It has been said that finance is the test of government and that a government can operate only on the availability of finance. The Labour party believes that the Parliament should control the financial and monetary affairs of the nation and that these should be administered by the Commonwealth Bank. This would mean that the financial policy of the nation would be controlled by the people of Australia; and that would be a true application of the principles of democracy. The fight in this case is whether Australia shall be governed by bankers for the banks or by the people for the people.
.- During this debate a number of thoughtful speeches have been made by members on both sides of the House. Many of them have been highly technical, but I want to try to deal with the bills before the House in a manner which will be easily understood by the man in the street. Undoubtedly, many people are puzzled by and probably apprehensive of Labour’s hysterical catch-cry, “ Hands off the people’s bank “, and the many assertions by honorable members opposite that this legislation is designed to weaken and destroy the Commonwealth Bank. Nobody knows better than honorabe members opposite just how false this is, but they are trying to divert attention from their intention to destroy the private banking system if ever they are returned to office.
The man in the street wants to know, first of all, why this legislation is necessary and what we hope to achieve by it. Secondly, he wants to know how it will affect him - in other words whom it will harm and who will benefit from it. It is my intention to make these matters perfectly clear. Let me begin by re-asserting that the policy of the Liberal party and also of the Australian Country party is that of free competition and opposition to monopolies, whether they be socialistic or of private enterprise. We believe that the public should have a choice and should not be obliged to accept anything. In any walk of life monopolies lead to a reduction in the quality of goods and services and a “ take it or leave it “ attitude. A strong opponent keeps a member of Parliament on his toes, and a strong Opposition is essential to good government. If a bank is to avoid stagnation it must progress. It can progress only if the service it offers is equal to or better than that of its competitors. At the present time, a businessman or an individual seeking assistance may place his proposition before the bank of his choice. Should he be unsuccessful he still has another six or seven banks to approach. When one is not prepared to help him, another may be. But if there is only one bank and that bank should turn a deaf ear to his plea, then, to use the vernacular, he has really had it.
Unless this legislation is passed, there is every possibility that there could be only one bank. The nationalization of banking is still one of the planks of the platform of the Australian Labour party; and that was re-affirmed at its last Brisbane conference. How the Labour party tried to bring this about by legislation in 1947 but was foiled by a decision of the Privy Council is now history. The Labour party now says that the nationalization of banking is no longer an issue because, as the Leader of the Opposition pointed out during his speech, that would require an alteration of the Constitution approved by the people at a referendum. But there are more ways of killing a goat than by choking it with butter; and members on this side of the House believe it is still the intention of the Labour party to gain control of the banking system. If the Constitution prevents this from being done by legislation, then the objective can be achieved by stealth by the slow strangulation of the private banks, as could happen under the existing legislation.
The simplest method of turning a democratic country into a totalitarian one is to gain control of a country’s finances, and the first move in that direction is to nationalize the banks. The purpose of this legislation is to prevent, as far as possible, any future socialist Treasurer from destroying the private banking system. The bills now before the House will prevent any Treasurer who may be opposed to competitive banking from discriminating unfairly between banks by means of the special account system. The purpose of the special account system is a laudable one. It was designed to curb inflation by taking funds from the trading banks so that that money could not be lent and so increase the total amount in circulation. At the present time, the central bank may compel the trading banks to place on deposit with the Commonwealth Bank an amount equal to 75 per cent, of the increase in their customers’ deposits over the amount held in the latter part of 1953 - that is to say, 15s. out of every £1 in addition to the sum of £186,000,000 that they were holding at the time of the 1953 act.
The present law gives the Treasurer (Sir Arthur Fadden), representing the Government of the day, power to instruct the central bank regarding banking policy. At the present time, it would be possible for the Treasurer to instruct the central bank not to touch any of the funds of the Commonwealth Trading Bank but to take up to 15s. out of every £1 of the increase in deposits of any or all of the private trading banks. This would give the Commonwealth Trading Bank a tremendous advantage and could force the’ other trading banks out of existence.
The legislation before the House will remove the possibility of discrimination. It will alter the provisions of the special account legislation so that the amount of reserve deposits of a trading bank to be placed with the Reserve Bank shall be not more than 25 per cent, of the trading bank’s total deposits. At the present time, the bank making the most progress would have to contribute the most in proportion to its total deposits. At the same time, provision is made for exceptional circumstances by providing that the Reserve Bank shall be given power to raise the percentage above 25 per cent, by giving 45 days’ notice. This statutory period is intended as a safeguard against any drastic action which could cripple the operations of the trading banks.
Let us see who is likely to be affected by the legislation. First of all, there are the employees of the Commonwealth Bank; secondly, there are the depositors; thirdly, the borrowers; and, if I may be permitted to add a fourth class, I would say, prospective home-builders. The officers of the Commonwealth Bank will be given a chance to indicate to what section of the Commonwealth Banking Corporation or the Reserve Bank they wish to be transferred, and every effort will be made to meet their wishes. If, within a period of three months, they wish to transfer to another department or section they may do so, upon making application in writing. Their accrued or accruing rights in respect of recreation leave, long service leave, or pay in lieu of long service leave, leave on the grounds of illness and superannuation benefits are fully preserved under section 19 and section 20 of the Banking (Transitional Provisions) Bill.
I have discussed this legislation with employees of the Commonwealth Bank, and the impression that I have gathered is that there is nothing hurtful in this legislation to the Commonwealth Bank. In fact, one manager said to me, “ Do not think we are against this. We are for it. We are sick and tired of being blamed every time the private banks turn down proposals. Whether it is justified or not, the blame is usually placed on the Commonwealth Bank. We think it is time that the private banks stood on their own feet “.
Now, let us look at the depositors. The Commonwealth Savings Bank will be free of income tax, as before. Its profits will still be divided between the reserve fund and the Commonwealth. Incidentally, in view of the propaganda put out by the Labour party alleging that allowing the trading banks to open and operate savings bank branches would result in a loss of business to the people’s savings banks, it is rather interesting to peruse the report of the State Savings Bank of Victoria for the year ended 30th June, 1957. This bank reports that the amount standing to the credit of its depositors increased during the year by nearly £2,000,000 and that, excluding school bank accounts, which also increased tremendously, the number of accounts was an all-time record, being an increase of 1 7, 1 30 accounts over the previous year. This shows that, provided a bank gives the public service, it will progress, whether it be government owned or privately owned. In passing, I may say that the Commonwealth Savings Bank also increased the amounts of its deposits and that so far as depositors arc concerned, there will be no change.
Now, let us consider the borrowers. The Development Bank is being formed to take over the Mortgage Bank Department and the Industrial Finance Department of the Commonwealth Bank and will operate in fields of both primary and secondary industry. It will not be subject to income tax and it will retain all of its profits. Its function will be to assist primary production and to help establish or develop smaller industrial undertakings, the requirements of which cannot be financed through normal channels or on suitable terms and conditions. In other words, it will be empowered and, indeed, encouraged, to take risks- without necessarily having regard for the security available, when it considers that the business has a good chance of becoming successful or of continuing to be successful.
The Development Bank will take over the present capital and reserve funds of the Mortgage Bank Department and the Industrial Finance Department, which amounts total nearly £14,500,000. To this amount will be added another £5,000,000 of capital. This bank will supply both technical and administrative advice to its clients in the fields of both primary and secondary industry. The capital of the Rural Credits Department, which will remain with the Reserve Bank, will be increased by £2,000,000, which will nearly double its present capital. The capital of the Trading Bank will also be increased by £2,000,000, so that the borrowers will be better off, and not worse off. They will have immediately an extra £9,000.000 at their disposal, and this will be augmented by half of the net profits of the Trading Bank after providing for income tax, and by all of the profits of the Development Bank. Prospective home-builders will be able to borrow on Credit Foncier terms from both the
Trading Bank and the Savings Bank. At the present time, housing can be financed only by the Trading Bank. Both of these banks will be empowered to lend to building societies, so prospective home-builders will be better off.
A number of speakers on the Labour side have stated that the private trading banks will not lend on overdraft, but will direct their customers to a hire-purchase organization in which they have a substantial interest. A lot of this criticism is unfair, untrue and unjustified. The facts are these: Of the total of approximately £1,550,000,000 deposited with the trading banks at the end of August, £860,000,000 has been lent to clients, £340,000,000 is in the special account with the central bank, and the trading banks receive one-quarter of 1 per cent, interest on it. The sum of £30,000,000 is required for the Exchange Settlement Account and £220,000,000, or 14 per cent, of the total deposits, is kept liquid, as required by the central bank, leaving the Trading Bank a total of £100,000,000 in reserve for an emergency. The fact is that the trading banks have very little money to lend, whatever may be the purpose of the prospective borrower.
Hire-purchase organizations are not bound by any of these restrictions and can attract public money by offering attractive rates of interest which the banks cannot offer, as their rates are fixed by law. The honorable member for Stirling (Mr. Webb), the honorable member for Hindmarsh (Mr. Clyde Cameron), and the honorable member for Griffith (Mr. Coutts), who spoke last, went to a great deal of trouble to point out what percentage of the capital of the various hire-purchase organizations is held by the trading banks. To say that 40 per cent, of the share capital is held in this way, makes it sound as though this is a lot of money, but, in reality, while the total deposits of the trading banks amounted to approximately £1,550,000,000 at the end of August, their total investment in hirepurchase companies at the same time was approximately £8,000,000.
All of this money was capital subscribed by shareholders. Not one penny of customers’ deposits is invested in hire purchase. The public should know and appreciate this. Yet we find the honorable member for Griffith, who spoke last in this debate, saying that the banks were using funds in their possession not in the interests of the people of Australia but in the interests of the shareholders. I have already pointed out that these moneys were not bank deposits at all, but share capital subscribed by shareholders. This kind of statement is typical of the approach of honorable members opposite, who distort facts and misrepresent figures. As an instance of this, let me quote a passage from the speech of the honorable member for Parkes, reported in “ Hansard “ of 12th November, 1957. The honorable member stated -
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.
What the honorable member did was to mix rates of interest with the percentage of profit on capital invested or capital funds, by giving both figures as percentages. He is trying to imply either that the Commonwealth Trading Bank can lend money at 5 per cent, and the other banks at 10 per cent., 20 per cent., 30 per cent, or 40 per cent., which is grossly untrue, or that the percentage of profit to capital in the case of the Commonwealth Trading Bank is 5 per cent., as against 10 per cent., 20 per cent., 30 per cent, or 40 per cent, in the case of the other trading banks. That is also untrue, because the total capital of the Commonwealth Trading Bank at present, including both reserve fund and capital, is in the vicinity of £8,000,000, and last year, after writing off about £135,000 against buildings, the bank’s net profit was still over £600,000. That is more than 5 per cent. Honorable members opposite give percentages regarding two different items in order to try to confuse the people.
Some of the bogies raised by the Leader of the Opposition look rather foolish when properly examined. For instance, the right honorable gentleman is reported at page 1988 of “ Hansard “, as saying -
The plan of action against the Commonwealth Trading Bank includes . . . placing the Trading Bank in a weak capital position.
He goes on to say -
The source of its capital accretion is to be limited to net profits. One-half of the net profits is to go to the Commonwealth and taxation is to be paid from the other half. So, in effect, 73 per cent, of the profits of the successful trading bank of the Commonwealth will be denied to it as a source of capital.
Let us see what this really means in pounds, shillings and pence. Last year the Com monwealth Trading Bank made a profit of approximately £600,000 after writing off the sum of £135,060 against bank premises. Half of this amount went to the National Debt Sinking Fund, and the other half, amounting to £300,444, went to the Reserve Fund. In other words, the capital accretion last year amounted to £300,444. If, as the Leader of the Opposition suggests, only 27 per cent, of the amount of £600,888 is available as capital, the capital accretion would be approximately £163,000, as against £300,000 under the present system. This shows a difference of about £137,000 in capital accretion for the year. This bill provides for an immediate increase in capital of the Commonwealth Bank of £2,000,000, and it is not hard to work out that it would have taken fifteen years, at the present rate of profit, to achieve the same result under existing legislation.
In view of the further fact that the sum total of both the capital and the Reserve Fund of the Commonwealth Trading Bank is at present a little over £8,000,000, an immediate increase of £2,000,000, or nearly 25 per cent., is rather generous treatment. Do not forget the important point that the profits of the central bank, the Note Issue Department, the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department, which last year totalled nearly £19,500,000, as against only £600,000 of the Commonwealth Trading Bank, will not be subject to taxation. In the light of these facts, the right honorable gentleman’s remarks represent a storm in a teacup, or, to use the words of Shakespeare, much ado about nothing.
The profits of the Commonwealth Savings Bank, which last year amounted to £580,386, will likewise not be subject to taxation. All of the figures that I have cited may be found in the report of the Commonwealth Bank for the year ended 30th June, 1957. Referring again to the Commonwealth Savings Bank’s profits last year of £580.386, it is rather amusing to note that the Leader of the Opposition, when suggesting that savings banks formed by the private banks were endeavouring to take savings accounts from the Commonwealth Savings Bank, said, as reported at page 1989 of “Hansard”-
Would it not be right for these bodies, if they have enough public spirit, not to seek to make profits from the ordinary savings of the people?
Yet he naively accepts as just the profits made by the Commonwealth Savings Bank, which offers to its depositors exactly the same rate of interest as is offered by the private savings banks. He went on to say -
Rivalry in this field should really be eliminated.
What he omitted to say is what he really believes, that rivalry in all fields of banking, and, indeed, rivalry of all successful major private enterprises with similar government undertakings, should be eliminated.
All this talk of the Government’s intention to destroy the people’s bank is so much humbug. As the honorable member for Macarthur (Mr. Jeff Bate) pointed out the other night, the Leader of the Opposition said the same thing in respect of the 1953 legislation. Yet, in speaking in the debate on this bill, on 7th November, he pointed out that between 1945 and this year the deposits in the Commonwealth Trading Bank increased from £50,000,000 to approximately £200,000,000, and he stated that this was by far the largest percentage increase in deposits of all the trading banks in Australia. The right honorable gentleman also said that the Commonwealth Trading Bank’s customers numbered not fewer than 500,000, and that they were still increasing at the rate of 40,000 a year. Does this indicate that the 1953 legislation crippled the people’s bank? Certainly not. Neither will this legislation harm it in any way.
IfI may borrow a paragraph from an article in the “ Australian Quarterly “, of September, 1 957, let me say in conclusion -
The emergence of a truly independent central bank will open a new phase in the political and economic development of Australia. With a government-owned competitor to sharpen their enterprise, rather than to drive them out of business, the trading banks have a vital role to play in the economic development of the country on sound lines of industrial expansion.
– I do not intend to cite a lot of figures in my speech on this legislation. We have already heard figures cited at length by other speakers in this debate. I do not set out to show any possible evil intention behind the introduction of these bills, but I do say that I have heard nothing from Government supporters to show that the Government has been justified in bringing in the legislation. The honorable member for Henty (Mr. Fox), who has just resumed his seat, spoke of the increase of 40,000 a year in the number of depositors with the Commonwealth Trading Bank, and compared this with the increase in the case of the other trading banks. His figures seemed to indicate that the Commonwealth Trading Bank is in a pretty healthy condition. The honorable member for Henty, and other Government supporters, have gone to great lengths to show that since 1951, when the 1945 act was first amended, and then since 1953, when the act was further amended, there has been a steady increase in the number of depositors and the amount of deposits in the Commonwealth Trading Bank. I was rather intrigued by what the Treasurer (Sir Arthur Fadden) had to say on this matter, I listened very carefully, because I wanted to know the real reasons behind this measure, but the more I go into it the less reason I can see for its introduction. I shall deal briefly with the statements of the Treasurer as to why this legislation is being enacted. But, first, what about the Commonwealth Bank? Do we want a Commonwealth Bank? Is it of any benefit? What is the aim of the Commonwealth Bank? On the first page of the report of the Commonwealth Bank for the year ended 30th June last, we read -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the Bank, will best contribute to the stability of the currency of Australia; the maintenance of full employment in Australia; and the economic prosperity and welfare of the people of Australia.
When I read that, I recall the statements that have been made in the House by the Prime Minister, and honorable members opposite, to the effect that we are enjoying the greatest period of prosperity we have ever had, and that compared with the rest of the world our financial position is the soundest. To maintain that state of affairs is the objective of the Commonwealth Bank. If honorable members mention unemployment they are told that present unemployment in Australia is only a passing phase and that the Government has taken the necessary action to reduce it and to keep unemployment to a minimum. We are told also about the great prosperity of the commercial institutions of this country. In every electorate, and in every capital, we see big factories being built. Old galvanized iron fronts are being pulled down and replaced by nice new brick fronts; and old offices are being replaced by nice executive offices. We all know what is going on and what has been going on. Yet, we are told it is necessary to do something to safeguard the private financial institutions in this country.
I contend that the existing legislation, as amended in 1951 and 1953 by the present Government, contains nothing that is detrimental to the best interests of the community. I have always felt that if a business is flourishing and everything is going along in a very satisfactory manner, one should not start tampering and playing about with it. It often happens that a motor car will run splendidly until one says, “ I am going to have a look at it. It might go wrong; something might happen “ - just as is now being said about banking - and one starts to work on the car and puts in another little gadget; and in a short time one is stranded on the road and ringing for a tow to a garage. That is what happens when one starts tampering with a machine that is in running order. The Treasurer stated -
At present, the Commonwealth group of banking institutions includes the Commonwealth Bank of Australia which acts as a central bank and which has, as special departments, the Rural Credits Department, the Mortgage Bank Department, and the Industrial Finance Department. The group also includes the Commonwealth Savings Bank and the Commonwealth Trading Bank. These several institutions are all constituted by the Commonwealth Bank Act 1945-1953. They all come under the control of the Commonwealth Bank Board and the Governor of the Commonwealth Bank.
Let me point out that in 1949 the present Government told the people that our system of banking was entirely wrong. We had a Governor of the Commonwealth Bank who was a great authority and was administering the financial policy of this country under the direction of the Treasurer. The Government said the policy was wrong and that it was going to alter it and form a Commonwealth Bank Board. I ask honorable members and the public generally, whether any of the present members of the board are likely to want to socialize and smash private industry and bring about the destruction of the private banks. The chairman of the board is Dr. H. C. Coombs. He was subjected to a lot of criticism at one time, but even under this legislation he is to con tinue in that position. He is the brain; he is a wonderful man so far as finance is concerned and knows what is necessary in Australia. If he were not, this Government would not have dared to re-appoint him after the criticisms that it had made of him. The deputy chairman is Mr. E. B. Richardson, C.B.E. I belong to the Transport Workers Union, and I have never heard of Mr. Richardson being a member of that union. The other members of the board are Messrs. G. H. Grimwade, W. A. Gunn, C.M.G., Professor T. Hytten, C.M.G., R. G. Osborne, W. L. Sanderson, O.B.E., M.C., A. E. Symons and Sir Roland Wilson. C.B.E. That is the board which has been running the show since this Government brought it into existence in 1951. That is the board in control of the sections of the bank I have mentioned. The Treasurer continued -
They have a common staff and they operate, for the most part, in the same premises in various centres.
The Government has not advanced any argument as to why the Reserve Bank should be separated from the Commonwealth Trading Bank, although there might be a strong case for doing so. A professor of economics or a financial expert could address honorable members, and at the conclusion of his speech lead them to conclude that nothing more remained to be said. On the other hand, another professor with a different viewpoint and a different idea as to economics and finance could lead honorable members to form a different conclusion. On one occasion my daughter said to me, “ You know, dad, I listen to the broadcast of proceedings in Parliament sometimes. I hear a Labour man speak and he seems pretty good, and then I hear a Liberal man speak and he seems pretty good too. I do not know what to think. I can only conclude that the Labour man is right every time “. On the one hand, a financial expert, or economic adviser, advances the reasoning we want to hear, and on the other hand, after hearing the views of a different expert we say, “ He has put up a pretty good case, but after all the man we believe in is right and we will have him “. That is the reasoning applied in a lot of these cases.
I have dealt with the functions of the bank and its different departments. We are not doing away with any of these departments. We still recognize they are necessary, as does the Treasurer who, in effect, said “ We will divide it up and instead of paying rent for one building where the whole business can be carried on we will put up another big building and pay rent in respect of it. And instead of having a common staff engaged in the different phases of the Commonwealth Bank’s activities from which to choose men who are eminently suitable to be allotted to a particular bank, members of the staff will have to choose from which bank they will seek employment. If you join the central bank, you will be a central bank officer and do only central bank work. If you join the Trading Bank, you will be tied to the Savings Bank or the Trading Bank.” I cannot understand how that fits in with the arguments used by honorable members opposite. When we say that we believe in seniority and preference to unionists, Government supporters say that they are not willing to adopt those principles in a private business, but will transfer a junior man to a senior position in another department if he has the brains and ability for the job. Yet, now they expect these bank officers to choose the section of the new banking structure in which they will work, and will then determine whether the officers will be appointed to those sections.
The various sections of the bank will remain. The only difference is that the Commonwealth Bank Board will not control the Trading Bank. The Government feels that the Commonwealth Bank Board being in control of the Trading Bank permits preference to be given to the Trading Bank at the expense of the private banks, and that is said to be unfair. If that is so, why has some action to meet that problem not been taken during the past seven or eight years? No facts have been put before us to show that some alteration is necessary. All that has been said is that something may happen. I was rather interested to read the following statement, made by the Treasurer: -
We believe - as indeed most people believe nowadays - that there must be a strong central bank to regulate trends in monetary and banking conditions.
Everybody believes that. I can recall the days when the central bank was strong enough to ruin the people. I have only to take my mind back 27 years, to 1930.
– Can you go back as far as that?
– Yes. My mind can go back even further than that. I remember the days when a person could not get money from the Commonwealth Bank, but had to go to the private banks; there was no option. I do not want to go into that; I know what the banks did. We believe in safe banking practices. The trading banks must have safe banking practices. If we do not have a Commonwealth Bank or a reserve bank, we will not have safe banking practices, and the primary producer, the small businessman, and perhaps the big businessman, will suffer as they did in the past when we did not have the safeguards that we have to-day.
The main argument used to-day is that the Commonwealth Bank may interfere with the private banks. I wonder what the solution will be. The honorable member for Henty (Mr. Fox) said that the amounts held by private trading banks could be frozen, as it were. He said that, under the present act, the Commonwealth Bank Board could, if it so desired, call up 75 per cent, of the annual increase in deposits, and that that power was to be removed. The bills now before us permit the board, on one day’s notice, to call up 25 per cent, of the deposits held by the private trading banks. Let us consider for a moment what could happen under that provision. I will take the position of a private trading bank with deposits of £100,000,000, of which £70,000,000 or £80,000,000 is on loan to depositors. Some banks may not lend such a percentage of deposits and some may lend more than that percentage, but a bank could lend 75 per cent, of its deposits and say, “ That is as far as we can go “. Suppose that we have a little depression, a slowing down in business activities and deposits begin to fall. Instead of having £100.000,000, deposits may quickly fall to £90,000,000.
We have been told that a Labour government could do much damage through the central bank. I will assume for the purposes of my illustration that a Labour government is in office. The Labour government could give directions on policy to the central bank and say that 25 per cent, of total deposits should be called up immediately. A bank with £75,000,000 on loan and only £90,000,000 in deposits would be compelled to call up overdrafts. Instead of providing safeguards, the new provisions permit the board to make the position of the private trading banks more difficult than ever. No bank would call up an overdraft if it had more money than it needed. A bank wants to get interest on the money it holds. The money lent by a bank is not the shareholders’ money - ‘that is only a drop in the bucket - ‘but money deposited with it. A trading bank must lend money deposited with it, but, on the other hand, depositors must be able to withdraw money placed on deposit when they need it. That does not include fixed deposits, but they represent only a small proportion of the money held by banks. Immediately the amount of money deposited is reduced, the same thing will happen as happened previously in times of drought and low prices for wheat and fodder. If a farmer is in difficulties, he may be able to pay the interest on an overdraft but would not be able to repay the principal. When depositors reduce the amount they have placed with a bank, the bank must call up part or the whole of an overdraft. Who obtain overdrafts? Not the working man or the trade unionist. Very few of them have an overdraft, although an odd one may.
– The honorable member should not believe that!
– I said an odd one may have an overdraft. The people with overdrafts are those who need them for business purposes. They may be storekeepers, big merchants or primary producers. They obtain overdrafts because they need capital to continue their activities.
– Are primary producers not workers?
– I referred previously to the ordinary worker in industry. I must apologize if the honorable member thought I meant that the farmer was not a worker. I did not mean that at all. I was referring to the ordinary worker in industry. The farmer may be a worker. Indeed, I think some of our biggest financiers are amongst the hardest workers in the country.
– What about Ministers?
– The Minister is a tartar for work. Some people are like a cow which gives a bucket of milk and, when the bucket is full, puts in its foot and upsets the lot. Some people may do a lot of work and then kick the bucket over. 1 am not referring to the Minister - 1 would not be personal with him - but others may do that.
Government supporters say that the Commonwealth Bank has many powers. I cannot understand the mentality of Government supporters, who claim to have higher education and to be more highly cultured than honorable members on this side of the House. They seem to forget that this legislation can be repealed when Labour regains the treasury bench.
– That makes you smile.
– It does. I know that the Government does not dare to get rid of the Commonwealth Bank. No government would dare to smash the Commonwealth Bank. However, this Government might try to put a leg rope on the bank. The Government might intend to restrict the Commonwealth Bank’s operations so that it does not gain any new depositors, but the Government cannot stop the Commonwealth Bank. There is an old saying that God must have loved the common people very much because he made so many of them. I think it could be said that the people of this country must love the Commonwealth Bank; otherwise, so many of them would not put their deposits in it. How much is deposited in the Commonwealth Bank? Deposits in the Trading Bank increased by £17,000,000 for the year ended 30th June, 1957. At that date, depositors’ balances in the Commonwealth Savings Bank amounted to £721,000,000. The number of active accounts was 4,700,000. I cannot believe that any Treasurer or any government, no matter what the pressure from back benchers, would try to throw all that to the wolves. The Treasurer is not very happy about this bill. What will it do for him? All I can see is that it might interfere with the private banks and injure them. That is all this legislation can do. There is nothing to prevent a future Labour government from repealing this legislation. The only thing to prevent it would be an antiLabour majority in another place. But when Labour assumes office, it will have a majority in the other place as well. The present Government has a majority in this chamber, not because of wonderful administration, not because of the way it runs the country, but because of the fears instilled into the people. In the same way, the Government is attempting to halter the Commonwealth Bank because of the fear that a Labour government could do something to interfere with it. The private banks are very sore to-day at the competition from the Commonwealth Bank.
– You are bitter about them.
– No, I am not. I am bitter at the people who want to place restrictions on the Commonwealth Bank. I do not blame Government supporters for what they are doing. They told the electors in 1949 that they would amend the banking legislation and would for ever stop the Labour party from nationalizing the private banks. Government supporters said that they would make the Commonwealth Bank safe for democracy. They said that they would help the people to build homes and would provide money at reasonable rates. Those promises were made to the electors, but they have not been fulfilled. This country is prosperous to-day not because of any legislation passed by this Government, but mainly because of the price of wool. Government supporters are well aware of that. They have no control over the price of wool. Another factor which has helped this country has been the price obtained overseas for wheat, butter, and other goods, that were exported to countries which were unable to produce those goods themselves. But the Government cannot always rely on Providence to maintain high standards of living in this country. Tt must do something itself.
The Opposition is totally opposed to this legislation. Honorable members on this side of the House cannot see any need for it. It is a retrogressive step instead of a progressive one. There is room for disagreement as to whether the central bank, the Reserve Bank and the Trading Bank should be attached. The proof of the pudding is in the eating. When the meals are placed on the table, it can be seen whether or not the cook is on the job, and if he has done a good job he will be retained. The Commonwealth Bank, even as it is constituted to-day, is able to do a good job. Why is that? The Commonwealth Bank is doing such a good job to-day because it was put on such a firm basis by Labour in 1945. It was so effectively dealt with at that time, in the interests of the people, that no Government can knock it back. This Government may halter it a little - or even put leg ropes on it - but it cannot stop the Commonwealth Bank from going forward. This bill contains a number of provisions that the Government might introduce, but no matter what the Government wants to do, it will not succeed. The Government cannot carry out its wishes in this respect because the Opposition will not allow it, and because the consensus of opinion among financial men, businessmen, members of Parliament, and the people generally is that the Commonwealth Bank as at present operating is doing no harm to the country. Australia is prospering under the Commonwealth Bank. The bank is meeting the needs of the people, and why should we seek to change it? Just look at the number of agencies the Commonwealth Savings Bank has. Why did the private banks want savings bank business? They coud see that there was money in it, and they decided to enter the savings bank field in opposition to the Commonwealth Savings Bank.
.- I always respect the opinion of the honorable member for Port Adelaide (Mr. Thompson), but I am at a loss to know whether he is for or against this bill.
– I am against it.
– Throughout his speech the honorable member eulogized the activities of the Commonwealth Bank, and he has effectively answered the Leader of the Opposition (Dr. Evatt) by stating that no government dare interfere with the activities of the Commonwealth Bank. The honorable member’s own leader mistakenly said that the Government was going to sell the bank. Sell it to whom? Sell what? Did the right honorable gentleman refer to goodwill, the services that cannot be sold, that are not material? There is no such thought in the mind of the Government. The honorable member for Port Adelaide eulogized the activities of the Commonwealth Bank and suggested that it be left alone, but he forgets that this
Government believes in progressive development, in further expansion where necessary. In the course of his remarks the honorable member made some references to the needs of certain classes of people who were not able to obtain finance. The new Development Bank will go a long way towards supplying those needs.
I did not hear any statement in the whole of the honorable member’s speech that was really against the introduction of this amending bill. What is the Labour party against when it opposes this bill? Is the Labour party opposed to the progress of the Commonwealth Bank? Is it opposed to meeting the extra needs of the people? Does it suggest that the Commonwealth Bank should remain stagnant or does it agree that the bank should expand its activities? Are Opposition members opposed to the creation of the development bank, which will fill a vacuum, and meet the needs of many people who are not catered for at the present time? Are they opposed to fair competition between all the trading banks? Do they think that the Commonwealth Trading Bank, at its present stage of growth, should not be able to compete fairly with the private trading banks? Are they opposed to equality of conditions as between the Commonwealth Savings Bank and the private savings banks? Are Opposition members opposed to the expansion of the activities for which, as indicated in the conditions attaching to the formation of the private savings banks, advances were to be made by those banks? Are they opposed to the statutory limit on deposits in the special accounts of the private banks with the proposed Reserve Bank provided for in the Banking Bill 1957? I should like to know, because, for want of an argument, all that Opposition members have been able to say is that the Government wants ; c sell the Commonwealth Bank of Australia.
The honorable member for Port Adelaide suggested that the present Government is fearful of what the Australian Labour party would do. No doubt the private trading banks are fearful. The honorable member gave ample justification for the Government’s proposals when he stated that it had a mandate to amend the Banking Act, and that it had proceeded in accordance with that mandate. The honorable member has at least credited the Government with sufficient honesty of purpose for that.I do not wish to be unkind, but I must confess that the same thing cannot be said about the Labour government, which, without a mandate from the electors, sought to nationalize and socialize the whole of our financial system.I can well understand that, as a consequence, the private trading banks have considerable fear of what Labour might do.
I am interested particularly in two aspects of the banking legislation now before the House. Some Opposition members have made observations about the Rural Credits Department of the present Commonwealth Bank, which, although not altogether smears, have been very close to smears. They have said, in effect, that the Rural Credits Department served no particular purpose. However, I remind the House that there is a real need for the kind of financial activity that is undertaken by that department. Wage-earners are very keen to receive payment, at the end of every pay period, for the work that they have done. Primary producers are no different, and they are just as entitled to payment for their work as are industrial workers. The Rural Credits Department advances funds to cooperative organizations, statutory marketing board, and the like, in order to enable those bodies to pay to primary producers the equivalent of their wages. I remind the House that producers do not receive payment for their crops when the crops are delivered to the marketing organizations. They receive payment in part only, and they have to wait for the balance. Therefore, they are not as well off, in this respect, as are the workers, who receive the full amount of their pay at the end of every pay period.
– Sometimes, they have to wait for two years.
– As my honorable friend has said, sometimes producers have to wait for two years to obtain payment for the products that they have marketed. The Rural Credits Department makes gross advances up to 80 per cent, of the estimated value of production being marketed. I use the term “ gross advances “ because the first advance made allows for the estimated cost of handling the crop, taking it to market, and distributing it. The grower receives the balance. Surely, he is entitled to payment on delivery of his crop to the marketing organization! If we are to have statutory marketing bodies - and primary industries cannot be stabilized without them - we must provide means for the industries concerned to obtain finance.
The Rural Credits Department of the present Commonwealth Bank was instituted in 1926. The interest charged on advances made by the department has been as low as 3i per cent. The present rate is 4i per cent., which I think is somewhat high in view of the purposes for which advances are made. Last financial year, the department made a profit of £194,679. I should like honorable members to know that the profits of this department are not just paid into Consolidated Revenue. Primary producers receive some benefit from them, although they do not revert directly to the producers. Portion of the profits - I think the amount for the last trading period was £71,000 - is paid into a reserve for future use. The balance is used for the advancement of research and the promotion of primary production in the interests of industry and of the economy of Australia. In other words, primary industries are paying a levy, represented by that portion of the profits of the Rural Credits Department, in order to improve production in those industries. I do not quarrel with that. It is a good thing, not only for the industries concerned, but also for the general economy. Under this scheme, last financial year, grants were made out of the Rural Credits Development Fund, for research and the promotion of primary production, to 32 organizations, to a total of £77,150. Let me remind Opposition members, several of whom seemed inclined to sneer at that fund, that the Government deserves credit for maintaining it.
It is vital that the Rural Credits Department should be placed under the control of the proposed Reserve Bank, because the department makes loans for short terms of only twelve months at a low rate of interest. Since the rate of interest charged is lower than the rates charged in normal banking activities, the trading banks, including the Commonwealth Trading Bank, are not interested in making loans of this kind. If the proposed Reserve Bank does not administer this department, the whole of Australia’s primary industries will be let down badly, because, as I repeat, the private trading banks are not interested in loans of this kind. We have to protect Australia’s primary industries, and the proposed Reserve Bank, which will perform the central banking functions at present undertaken by the Commonwealth Bank, is the only kind of bank that can cater for the needs of those industries. From the standpoint of the Australian Country party, and particularly from my stand-point, it is vital that the proposed Reserve Bank should control the Rural Credits Department. Had the Government decided otherwise, I should have been hostile to its decision.
The honorable member for Port Adelaide mentioned a class of people who were unable to obtain finance. I agree entirely with his observations in this matter. This defect in the present banking system has caused the Treasurer (Sir Arthur Fadden) and the Cabinet to provide for the establishment of what will be known as the Commonwealth Development Bank, which will take over the funds standing to the credit of the Mortgage Bank Department and the Industrial Finance Department of the present Commonwealth Bank, and will undertake the activities at present conducted by those two departments. I do not think that the Mortgage Bank Department undertook the activities for which it was created on a sufficiently large scale. Last financial year it made 260 loans totalling £177,570 and earned profits of £94,000. Now, there are only 1,928 loans current at present, involving outstanding balances of £5,300,000.
If we look at the present banking position we all must admit that, to a degree, the man with the money, the man with security, is the man who gets the advances. The man with character, integrity, ability to work, initiative and enterprise, who desires to start an industry, has not unless he has the security, the chance that he should have of getting finance. That is the vacuum to which I have referred. That is where, at the present time, no finance is available. I feel that the Development Bank will largely fill that gap. There is no reason why the many thousands of primary producers with experience, ability and a knowledge of the land who are applying unsuccessfully for land in the various States as it becomes available, but are unable to get it because they cannot even find the deposit, should not have the right to start in production. Some such people do not even apply for land because they lack the necessary deposit. They do not even enter the ballot. If these people could get advances from the financial institutions on the security of their character, integrity and ability they might be able to use it to buy land and start an industry for themselves. That is as it should be, and we in this corner of the House are very happy about the inclusion of provision for the establishment of the Development Bank in these present measures.
Some concern has been expressed that the private trading banks may not welcome the intrusion of the Development Bank into the banking field. But financing development is an aspect of banking which will not necessarily interfere with ordinary banking activities. All I can say is that what the trading banks need to be concerned about is not what is contained in this legislation but the question of to what degree they are themselves prepared to finance the kind of people I have mentioned. Some of my electors have told me that more and more the banks are urging farmers and others to go to the Agricultural Bank of Queensland - as an example - for their long-term financial requirements. That bank is somewhat similar to the present Mortgage Bank Department of the Commonwealth Bank. All J can say to the private banks is that the more they urge people to go to such banks as the Agricultural Bank of Queensland for accommodation the more they are losing the good will of the clients that could be theirs, and the more they are encouraging the operations of such a department of banking as the Mortgage Bank Department. I also tell them that the more they refuse to accept the transfer of clients from one bank to another, instead of maintaining competition the more ammunition they give to those who wish to nationalize the banks, I say to the banks, quite frankly - and my criticism is intended only to produce good - that when they do such things as I describe they are taking actions which are not conducive to open competitive banking.
– Nationalization is a dead horse.
– The honorable member interjects about nationalization. WhatI should like to know from him is what is his attitude and that of his party to nationalization. Do they intend to deceive the people in the future as they did in 1947, when they had no mandate to nationalize the banks but sought to do so?
– That has been decided by the Privy Council.
– It is not a dead horse, then?
– It is an enforced policy of the Labour party. Despite the decision of the Privy Council in the bank nationalization case, I have heard honorable members opposite say that when they get into power they will implement the same type of policy as before. Do they intend to implement it by stealth and take away the freedom of the banking system? I remind the honorable member for Griffith (Mr. Coutts) that when the socialist government - or the democratic socialist government, or whatever it would now call itself - put the Banking Act on the statutebook it did so unsolicited. I know that there were many Labour supporters all over my electorate who protested to me, as their parliamentary representative, against the Labour government’s legislation. The honorable member for Griffith and his party know quite well what is going to happen to them if they attempt again, openly, to do to the people of Australia what they attempted to do on that occasion. After all, what is banking? There is something more to banking than money lending. There is a humanitarian side to the money power. There should be a progressive evolution’ of banking technique to meet the changing conditions of modern life. That is why we have introduced this legislation. Just as the shareholders are entitled to recompense for the capital they have invested in a private bank, and will undoubtedly be cared for, the staff of the Commonwealth Bank has to be considered under this legislation, because this rearrangement may disturb somewhat the careers of its members. We know, of course, that they will have their rightful protection. But banks exist for the benefit of the members of the community, for whom the banks were created, and by whom alone they are sustained.
– In theory.
– If a banker is really honest he will recognize that although he deals in money, that is merely the symbol of his privilege and power; what he really deals in is human nature. The honorable member’s party found that out in 1949, when the electors had their first opportunity to show the Labour government what they thought of its action in 1947 in introducing the banking legislation to this Parliament. What a banker really deals in is human nature, that incalculable and intangible commodity that lies at the root of all our productive efforts and commercial transactions. A bank manager, then, deals with and has to assess integrity, business capacity, industry and skill. We know that when a manager is making loans, if he knows his job he will take into consideration the integrity of the borrower. He will not just make loans ad lib without considering the character of the borrowers. There are many great undertakings in every great country which have been built up from those beginnings of personal worth, individual enterprise and ability. In a government banking monopoly those vital factors are eliminated, and the result is a rigidly regimented system. We know that from our experience of controls during the war. These included controls that even members of the Opposition, who were then in office, were not too happy about themselves. So we know that a regimented and controlled system takes away individuality, takes away the manhood of man, and leaves the system only.
– You will admit that controls were essential during the war?
– That is not in issue. I did not even question that. But war-time controls gave us the experience of what controls really mean.
Whilst I believe in the system of free banking I still desire to offer some other criticisms. From day to day I have seen the need for training of bank officers, not only of the Commonwealth Trading Bank but also of private banks, who are sent to work in the country. They go into rural areas without knowing the first thing about the job that they will have to perform in those areas, because they have had no particular training in it. In this respect, I am reminded of a man whom I employed on a main road contract. He had previously been employed in Ipswich, and when I asked him to harness a horse he put the collar on upside down. He was a “ chum “. There are just as great “ chums “ as bank managers. A bank manager who recently came to a district that is unsurpassed in Queensland for fertility and prosperity said on arrival, “ There will be no advances made here, because the soil is so poor! “ In making these remarks, I do not differentiate between the managers of branches of the Commonwealth Bank and of those of the private trading banks. During the recent drought, a bank manager told a farmer to sell all his hay to reduce his overdraft, although had the farmer done so, his stock would have died, because that was all the feed that he had left. Some bank managers can see nothing beyond the overdraft. Until the members of bank staffs have had positive training in rural matters, about which they must acquire knowledge if they are to be successful managers, we shall not have the right kind of service from banks.
The banks ought to extend credit in time of need, and not as they did three or four years ago when, throughout my electorate, they almost chased people to get them to take loans. A couple of years later, when there was some restriction of credit, and although, in some cases, frosts had destroyed the pineapple crops, the farmers were told, “ You have to reduce your overdraft “, and it did not matter that there was not even a penny coming in. That illustrates that sometimes not even common sense is applied in banking matters. I believe that the banks have failed in not always adopting a humane approach to rural problems. As I have said, sometimes there is neither common sense nor logic in their management, and I criticize them on that ground.
Banks exist not only to make profits but also to provide service. No one can claim that an institution such as the Commonwealth Bank, which is something more than a material thing, and which is here to stay, is being sold out. When honorable members opposite say, with their tongues in their cheeks, that the Government parties are proposing to sell the Commonwealth Bank. I suggest that they know, as they utter the words, that their statement is not true. Why do they think that we have strengthened each department of the bank and made more money available to it? Why are we encouraging expansion, as we propose in this legislation, and why are we increasing the activities of the bank? To the degree that banks fail to give service, they compel business undertakings to transfer their accounts to other banks, and to the degree that they refuse to engage in open competition they invite other banks to take away their business. lt has been said that the Australian Country party is opposed to the legislation before the House. We of the Australian Country party are not opposed to it, because it includes two provisions, at least, about which we are very happy; namely, those which deal with the retention of the Rural Credits Department in the Reserve Bank, and the establishment of the Commonwealth Development Bank, which will engage in wide activities and fill a vacuum which previously has existed. We are not against the Commonwealth Trading Bank being placed in a position where it will be able to engage in fair and open competition with the other trading banks. After all, that bank, under our jurisdiction, has grown from childhood to manhood. If you coddle a child, he may not make good, particularly if he has been tied to his mother’s apron strings. Because of that, he may fail to make the best use of his ability. The same may be said of a bank. Now that the Commonwealth Trading Bank has grown to manhood, and has had experience of banking activity, it is in a position to go ahead, to compete fairly with the other trading banks, and to provide the service which it is intended it should provide. I commend this legislation and the way in which the Treasurer (Sir Arthur Fadden) has introduced it. I am sure that it will be for the good of Australia in the future.
.- The legislation before the House represents a further effort by the Government to interfere with the Commonwealth Bank. This is the fourth occasion on which the Government, since taking office in 1949, has sought to amend the Commonwealth Bank Act, and I am sure that the members of the public are saying to themselves, “ What, again! Why is this necessary? How will we be affected? What are we to get out of it? “ I think that the only possible answer to the last question is, “ A lemon “. The entire speech of the Treasurer (Sir Arthur Fadden), in presenting the bills to the House, suggested that the legislation was being introduced for the purpose of pleasing the private trading banks. The prime concern in this matter, of course, should be the welfare of the people. This legislation is designed to weaken, and ultimately to destroy, the
Commonwealth Bank, and to give greater power and benefits to the private banks. That is being done at the request of the banks concerned, as the pay-off for their personal and financial assistance in helping the Government to attain office.
– Who wrote that?
– I wrote it myself. Those are my opinions, and I make no apology for them. The Government has proceeded with caution in this matter because of its fear of public reaction. After the return to office of the present Government parties in 1949, they set about knighting some of the principals of the associated banks for the substantial financial assistance which they had provided. In 1951, the Government introduced legislation to alter the composition of the Commonwealth Bank Board for the purpose of giving a greater measure of control to the private interests represented on the board, and in 1953, it went part of the way towards achieving separation of the various activities of the Commonwealth Bank. Now, it is taking a fourth step. I believe that this probably will not be the ultimate step, and that it is, in effect, a semi-final action. The Government obviously is out to serve and to please the private banks, and nothing is more certain than that when the private banks gain control of the Commonwealth banking system and get the trading sections of the Commonwealth Bank out on a limb, the Government will proceed to cut off the limb and dispose of those sections of the Commonwealth Bank.
The Bank of New South Wales conducted a campaign of its own to assist to office the present honorable member for Hume (Mr. Anderson) in 1949. Special efforts also were made in the Eden-Monaro and St. George electorates. The support that the private banks are receiving to-day is in recompense, as I have said, for the services that they have rendered to the Government parties. The Australian Country party was once opposed to interference with the Commonwealth Trading Bank, and some of its members still pretend to adopt that attitude, but I believe that they have abandoned their policy in that regard in return for the negotiation of the Japanese Trade Agreement. However, they have sought to keep one security, in case the Commonwealth Bank should be disposed of by a future anti-Labour govenment; that is, they have proposed that the Rural Credits Department should be kept with the Reserve Bank. The Government cannot dispose of the Reserve Bank, and if the Rural Credits Department is contained in that bank, the other trading sections of the Commonwealth Bank can be sold. I shall give reasons for that opinion later.
I believe that the supporters of the Australian Country party think that it is possible to dispose of the trading sections of the Commonwealth Bank and to retain the Rural Credits Department, which will continue to provide service for them. The Government professes to believe in a policy of open competition and free enterprise, but when it comes to government enterprises competing with private enterprise it is entirely opposed to the idea. As a matter of fact, I believe that it is a very sound principle that government enterprise should be able to compete with private enterprise, because in that way both give better and more efficient service to the people.
– Like the airlines.
– Let us look at the airlines. The Government, which the honorable member for Mallee supports, set about to prop up a private combine, Australian National Airways Limited; and it proposes to do the same to-day for the private banking institutions, lt has placed restrictions upon the Commonwealth’s Savings Bank’s funds and allowed the private banks to set up savings banks departments in opposition to it. But the only security the public has for its deposits is in the Commonwealth Savings Bank. The people have no guarantee or security in respect of deposits in the savings banks of the private banks. If a run were to take place on those banks they would have no means of meeting a demand on those institutions. The deposits of the people in the Commonwealth Savings Bank are safer than in the private banks because it has the capital of the nation behind it.
The capital resources of the Commonwealth Trading Bank appear to be substantially restricted under this measure. As a matter of fact, the various establishments which the Government is proposing to set up seem to have wider powers than the Commonwealth Trading Bank. Because the Commonwealth Trading Bank is chief competitor with the private banks the Government is setting about to place considerable restrictions upon it. To strengthen the Commonwealth Trading Bank finances, the Government is proposing to give it only £2,000,000 additional capital. But the Government gave £4,000,000 to the Ansett-A.N.A. set-up with much more willingness than it is giving the Commonwealth Trading Bank this £2,000,000. It certainly needs more capital to carry on its functions than that airline company does.
The gauge of successful banking is whether it is run for profit or service. The private banks are run for profit. In times of prosperity they are anxious to lend money. They actually go out and seek customers, and their interest rates are low. But in times of difficulty they immediately try to recall their overdrafts, restrict their lending and raise their interest rates. Their individual interests are served by the maintenance of their security and by the profits they are able to make, whereas the Commonwealth Trading Bank is in a different position altogether. It should try to render service to the community and make funds available in times of difficulty when the other banks are not prepared to lend money. It is a very important function indeed for a bank to be able and willing to lend money in times of difficulty. That is when the nation needs most help from the financial institutions.
When the Minister for Primary Industry (Mr. McMahon) was speaking in this debate he said that this legislation would take banking out of politics. He hoped that the banks would be left alone to carry out their functions. Because it has a material influence on the life and welfare of the people of this country, the general policy of banking should be subject to the policy of the Government through the Parliament. The very purpose of government is to provide for the security and needs of the people. I think that that can be amply provided for through financial legislation. No government has power to govern unless it has some authority in relation to finance. Finance is an essential part of the life and function of government, and government participation in general policy in relation to banking is most important indeed.
I believe that the Government desires to hand over profits to the private banks instead of to the people. It wants to restrict credit through the activities of the Commonwealth instrumentalities and give greater profits and benefits to the private banking institutions. In relation to the Commonwealth Bank, half of its profits go to the Government, lt has to pay taxes also, and its profits are reduced to the extent of its taxation payments. If the major portion of banking profits were to go to the Government, a substantial reduction in taxes could be effected. Who would be opposed to a substantial reduction in taxes being brought about by the Commonwealth Bank taking the major part of banking business and making its profits available to the Government?
Which is the more important: The Government’s policy of protecting the rights of private banks and their exorbitant profits, or the social and economic welfare of the people? As I said earlier, I believe that the greatest and most important function that the banks have to carry out is to provide for the economic welfare of the people of this country. The Government proposes to restrict the Commonwealth Bank in times of inflation, calling in the deposits of the associated banks so as to prevent them from setting up a pyramid of inflation. I think the power should be very flexible and that the Commonwealth Bank should not be tied as it is at the present time by all sorts of restrictions. It should be able to take quick action in calling up deposits such as special accounts. In a time of emergency the Commonwealth Bank should be able also to use its resources to sustain industry and maintain full employment among our people. In a time of depression work can be found for the unemployed on public works projects, because these, of necessity, must go on.
If the measures now before the House are implemented, the economic operations of the Commonwealth Bank will be destroyed. New buildings will have to be provided, and this will add to overhead expenses. One of the principles of business in these days is to try to amalgamate activities in order to reduce expenses and carry on business in a more economic fashion. Under this legislation exactly the opposite is being proposed in regard to the various Commonwealth banking instrumentalities. If we are to give the Commonwealth Bank a fair chance we should give it every opportunity to carry on under the one roof and so reduce the cost of its operations. As I said earlier, the proposal to isolate and dispose of the Commonwealth Trading Bank is significant. The Government proposes to add the Rural Credits Department to the Reserve Bank. I feel very strongly on this matter. It seems to me to be the final plunge by the Government before it actually disposes of the trading business of the Commonwealth Bank. I believe that the Government is trying to put the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Development Bank out on a limb, separate and apart from the Reserve Bank, which cannot be disposed of, so that it can dispose of these other instrumentalities. Government supporters say that the Government is not likely to dispose of the Commonwealth Bank, but some Ministers have freely stated that they are in favour of such a proposal. When the Minister for the Interior (Mr. Fairhall) was speaking in this debate, on 7th November, and was challenged about the Government’s disposal of the Commonwealth Oil Refineries Limited and other industries, he said -
If it comes to Commonwealth Oil Refineries, whaling or anything else-
I draw attention to those words particularly - the philosophy of this Government is that we are here to govern and not to trade. The Government has no function in trade, and wherever a government trades it finally starts to prostitute its legislative powers in order to protect the business which it has no right to be in, anyway.
That is the opinion of the Minister for the Interior, who is now at the table.
– If the honorable member would read the rest of my speech he would see that that was qualified.
– The Commonwealth Trading Bank is a trading instrumentality. The court held that banking was trading and private banks could not be interfered with under section 92 of the Constitution. For that reason the Government should not quibble about this matter. The Minister for Supply (Mr. Beale), in a debate on 15th June, 1956, speaking in relation to the Australian shipping line, said -
If we wanted to destroy the Government line, surely we would have sold it long ago.
The honorable member for Werriwa (Mr. Whitlam) interjected, “ You tried “, and the Minister replied -
Of course we tried. This is a private-enterprise Government.
He went on, further, to state that the Labour party was opposed to the disposal of this trading enterprise, and that the Government was in favour of its disposal. The Minister for Trade (Mr. McEwen) made a similar statement in this House. I have not his actual words, but I have heard him make such a statement. Members of the Government make no apologies for their desire to dispose of trading enterprise. It is not the Government’s policy to keep them. The Minister for National Development (Senator Spooner), in another place, made a similar statement.
In the light of the statement from those Ministers on this matter, I think that this side of the House is entitled to be a bit wary of their future attitude. This legislation will not bind the Government not to dispose of the Commonwealth Trading Bank. As I pointed out in my earlier remarks, the Government has had four different bites at the Commonwealth Bank in order to weaken it. It has tried to get the bank out on a limb, and is now doing so by means of this legislation. The remaining step is to dispose of the trading operations of the bank. The Government will be unable to use the credit of the nation to the fullest extent if the Commonwealth Bank is placed under the control proposed in this legislation.
I think that the use of credit is one of the most important functions of government. The present Government’s policy of obtaining money for capital works and development from taxation cannot continue. The Government’s credit is bad. It lacks public confidence, and has been unable to raise loans. With the restricted credit available to the Government from that source, no other avenue is left than that of credit from the Commonwealth Bank, which will have to be obtained by the Government, just as private individuals obtain it, to carry on the affairs of the nation.
The associated banks are not prepared to make credit available to the Government in difficult periods. Their policy, as I have said, is to seek custom in good times and to restrict their operations in difficult times. Credit restriction cannot be tolerated by any government at all, because we cannot afford a further depression. During the last depression the banks dictated the policy of the government. In those days, when I first came to this Parliament, I saw hundreds of thousands of unemployed persons throughout the length and breadth of this land. We were told that work could not be made available because we were in a difficult period. We were told that we were suffering from a depression, and that the supply of money was short. The Government had not the money to carry out public works. In recent times, we have heard the Government use the other cry that money cannot be made available for housing and public works because we are in a period of inflation and prosperity and the spending of money must be restricted in the community. If money cannot be made available in time of depression in order to carry out public works and provide a livelihood for those who are unemployed, and if money cannot be made available in time of prosperity or inflation, when can money be made available? It is an entirely stupid and erroneous policy that results in contradiction of that kind.
Another matter which I believe has been overlooked in the legislation before the House relates to finance for hire purchase. Facilities for hire purchase have become one of the most important phases of finance and banking. The private banks are indulging in hire-purchase business as a side-line from which they are reaping rich rewards. I think that the Development Bank or the Trading Bank should be empowered to make money available under hire-purchase agreement for the purchase of household commodities, motor cars, and other things of that nature, at a reasonable rate of interest. People should not have to pay substantial rates of interest to hire-purchase companies.
Many primary producers are being forced to go to hire-purchase companies and pay high rates of interest in order to purchase necessary implements for their farms. This is a very stupid way in which to finance primary industry. The high rates of interest charged by the hire-purchase companies are nothing short of usury, which, I think, in the days of old was looked upon as a grievous offence. It was a practice which was severely dealt with. I say that the
Government should take some steps to try to prevent usury and the exploitation of people for profit by charging them excessive rates of interest. Usury is being practised to-day to the greatest extent by hirepurchase companies. The Government could most effectively defeat the usury practised by these companies by making money available for hire-purchase transactions at lower rates of interest.
My main opposition to this measure springs from the experience that I have gained over the past 24 years in this Parliament. Many people have come to me who have been in financial difficulties with the associated banks. Some of them have been through droughts, have been left without stock on their properties, and the banks have recalled their overdrafts, threatening foreclosure unless immediate repayment of capital and interest owing was made. In some cases, I have been able to get the Commonwealth Bank to take over the mortgages of the people affected and make further money available to put stock on their property. Some of those men are now prosperous graziers whereas, otherwise, they would have lost the whole of their assets.
The Rural Bank of New South Wales is a government bank which grew out of the depression. In the 1920’s, when there was a severe drought throughout the country and many primary producers were facing foreclosure, the Rural Bank took over many hundreds of mortgages. It gave the farmers money to pay off their overdrafts with the associated banks and to re-stock their properties. In almost every case these men came good because of the assistance given by this government banking instrumentality in time of difficulty. As I said earlier, that action was entirely opposed to the principle and policy of the associated banks, because they lend freely in good times and demand their money back when times get bad and the people are not in a position to pay it back.
Even at the present time, there is a credit squeeze. On the 10th of this month the “ Sunday Telegraph “ published the following article: -
by Roger Randall.
We can now see who have been hurt most by the severe contraction of bank credit over the past two years.
Bank overdrafts totalled £927,000,000 by June, 1955. They had been reduced to £882,000,000 by June of this year - a reduction of £45,000,000. But the actual withdrawal of bank credit from Australians and their industries was probably closer to £71,000,000 during the two-year period.
The article further stated that during this period the following groups lost most in the credit squeeze: -
While credit was being restricted to this extent by the associated banks during the last two years, the total amount outstanding on account of hire-purchase transactions increased by £52,200,000, and hirepurchase interest rates ranged from 10 per cent, to 18 per cent. While credit was being restricted by the banks, and, at the same time, hire purchase advances were increasing, the Menzies-Fadden Administration took about £400,000,000 from the people in taxes and spent it on capital works and services. This, I suggest, is entirely wrong in principle, because capital works that will be enjoyed by future generations should not be paid for now by the people. We should not be taxed to-day to pay for such works as the Snowy Mountains Scheme or for the building of homes for the people. Those undertakings should be financed from loan moneys or bank credits.
I believe that we on this side of the House should do all we can to protect the interests of the Commonwealth Bank. If we allow this Government to divide up the bank as it proposes to do by the legislation before us, it will ultimately dispose of the bank. It is a function of Parliament, 1 believe, to protect the people. The Parliament was elected to govern, and it will be unable to govern if it loses control of financial policy. It is for this reason that the Commonwealth Bank is a very important part of our financial system, as central banks in other countries are important components of the financial systems of those countries.
We have in Australia an expanding economy. We are a young country with tremendous resources, and our banking policy should not merely copy that of a country like the United Kingdom, which is a trading country depending on its export income. Australia has great natural resources to develop, and we should have a different banking policy, one that is free and liberal and will allow credit to be made available in bad times as well as good, in order to ensure the granting of assistance for the general welfare of the people. The true value of the Commonwealth Trading Bank cannot be realized under the MenziesFadden Administration, which has no desire to improve the banking system in the interests of the people. I believe that only under a Labour government can the bank show its full value, because the Labour party believes in the Commonwealth Bank and in its ability and its right to give service to the people.
There has been much discussion of government use of bank credit. I believe that the Commonwealth Bank’s powers to extend credit to a government in difficult times will be severely restricted by this legislation. This is a most important and vital aspect of banking and government policy, because if the power of the bank to make credit available is restricted, all government activities are handicapped to a like extent.
I believe that government instrumentalities should operate in essentia] industries in order to protect the interests of the people. One of these essential industries is banking. Banking is undoubtedly a business, and the government bank should continue to function in active competition with the private banks. The Commonwealth Bank should make rates of interest substantially lower than they are to-day. By doing so it would render a great service to the community. Australia is a primary producing country. Our secondary industries are developed on foundations laid by the primary industries. If credit were made available at lower rates of interest, we could more readily develop our secondary industries and achieve a more rapid rate of progress.
The legislation before us proposes to place the Development Bank and the Saving Bank out on a limb, and I feel that in the very near future this Government, when it feels more secure in office than it does now, will lop off that limb, and that the people will suffer as a consequence.
.- The honorable member for Darling (Mr. Clark) went to some length and to some bother to endeavour to prove that this legislation was an indication of the Government’s intention to sell the Commonwealth Trading Bank. Of course that is not an original allegation. This fantastic idea was first enunciated by the Leader of the Opposition (Dr. Evatt) in his speech during this debate. It is a further example of an old trick that is constantly used by honorable members opposite. When they are faced with a problem they look about them to find an allegation that will attract support - whether it is true or not matters little - and then they think of all the arguments with which they can surround it in order to make it appear reasonable and sound. Of course, the idea of this Government selling the Commonwealth Trading Bank is completely fantastic. Any one interested enough can look at the history of this Government to see how the Commonwealth Trading Bank has been encouraged, how it has grown and what good service it has given and still gives to the people of Australia.
If any one were in doubt about the need of the legislation now before the House, his doubts would vanish after listening to speeches of members of the Opposition. As in previous debates, honorable gentlemen opposite have made it quite clear that they still intend, when they get the opportunity, to nationalize, amongst other things, the trading banks of Australia. This plank in their platform still exists, whether the platform is now described as democratic socialism or by whatever other name they may choose in the future. I might say at this point that no single word has been misused, throughout the world, to the same extent as the one I have just mentioned, “ democratic “. The Opposition has used it to describe its new policy, democratic socialism, but I remind the House that other nations in this world and other philosophies have referred to the democratic people’s republics, which we know are truly Communist states, with all the ruthlessness, cruelty and oppression of human beings associated therewith. I think it only wise, therefore, to remind the House of what we associate in our minds with the word “ democratic “ because of its so frequent misuse by persons such as honorable members opposite.
This legislation is in keeping with the philosophy of the Government parties. I think it would be wise for me to summarize briefly facts that are well known to the Australian people but which have evidently been forgotten by Opposition members. We on this side of the House believe that the strength of the nation lies in the calibre of its individual citizens, who collectively make up its people. Therefore we believe in the individual. We stand positively for the free man, his initiative, his individuality, and his acceptance of responsibilties. The legislation now before us is essentially in keeping with that philosophy.
Before dealing with the legislation itself I should like to reply to some of the remarks made by members of the Opposition, because 1 believe that those honorable members either have been completely confused in their own minds or have been deliberately misleading the persons to whom they have addressed their remarks. Let me give some examples. Opposition speakers have said that Government supporters are agents of the so-called private banks. They have referred to these private banks as monopolies and as profiteers, and I believe every Opposition speaker so far has said that this Government is selling out the people’s bank. Those are some of the more common accusations that have been made by honorable members opposite, to which I shall reply by reference to the facts. It is completely untrue to refer to any honorable member on this side of the House as being in any way a representative or an agent of a trading bank. It ill becomes any honorable member opposite to do so when the great majority of their number are direct representatives of the political wing of the trade union movement. They are the agents and representatives of that outside body. Once again, the criticism by Opposition members is factually wrong.
Honorable members on this side of the chamber who, for a number of years, have busied themselves in the matter of amendments to the banking legislation have done so because they uphold private enterprise, the freedom of the individual and the importance of the individual exercising his freedom in the community. They have been so energetic because this Government believes it is absolutely necessary for the full development of our nation to have a free and competitive banking enterprise, which means a strong Commonwealth Trading Bank - I mention briefly that this legislation does much to make the Commonwealth Trading Bank stronger, and I shall return to this point later - and to ensure that the trading banks are placed on an equal footing with it. There will, therefore, be this free and energetic competition between the trading banks, on the one hand, and the Commonwealth Trading Bank on the other hand, and as between the trading banks themselves competing one against the other.
Honorable members opposite have also stated that the banks are monopolies. It may interest them to know that the trading banks are not monopolies in any sense of the word. To call these institutions private banks is completely wrong. They are joint stock trading banks with quite a large number of shareholders, the total being approximately 100,000, and the majority of those shareholders are Australians. It is well known to honorable members opposite, although they care to overlook it, that any one who so desires can buy shares in the trading banks on the stock exchange. It has been pointed out to me that many nominees for trustee organizations, employees’ organizations, pension funds and similar bodies are shareholders. That means, in effect, that the number of real shareholders in these joint stock trading banks is considerably larger than appears from their share registers. Once again, the arguments and statements of the Opposition fall to the ground because they are not factual.
Honorable members opposite repeatedly refer to the Commonwealth Bank as being essentially the people’s bank; but there are approximately four times as many active customers of the trading banks in Australia as of the Commonwealth Bank. That is no criticism of the Commonwealth Bank. We wish to maintain the principle that the people of Australia may trade with whatever bank they choose, as the bank which provides them with the best service for their particular business or domestic purposes. The figures I have quoted relating to the great number of shareholders and clients of the trading banks show how false are the arguments and statements advanced by honorable members opposite when they refer to the trading banks in Australia as monopolies. They are also wrong when they refer to the Commonwealth Bank as being essentially the people’s bank, because the trading banks are equally the people’s banks. In its policy speech in 1949, this Government made clear its principles in relation to free enterprise and the banking system of Australia, and therefore we have a moral obligation to those people who completely understood what we meant, who completely understood the objectives of the democratic socialists, who voted us into power and have kept us in power since that time, to see that this free and competitive banking system is maintained and encouraged in Australia.
I shall now reply to the point made by the honorable member for Darling (Mr. Clark) relating to hire purchase companies in Australia. I do not wish to enter into an argument with him; but some of his statements were not factually correct. I have some information which I shall summarize by saying that since the war it is generally accepted that Australia has been indeed fortunate in its growth, national development and improvement in its standards of living. We have had what has been termed over-full employment, with very little unemployment at any one time. So far as improved standards of living are concerned, we know there have been increases in the number of domestic appliances available for the Australian home, and the number of motor vehicles. At the present time this country is ranked third to the United States of America and New Zealand on the basis of ownership of motor cars in relation to population. Figures have been quoted during this debate to prove the increase in personal savings, especially in regard to the savings bank conducted by the Government and those allied with the trading banks. At certain times money has been what has been described as being “ tight “. Various reasons have been advanced for that - quite a number of them understandable - by some of the trading banks.
Under present conditions, the trading banks are not able to attract the large numbers of depositors that they were able to attract in the past. That has been brought about to a large extent by the growth of hire-purchase companies. As I said, the banks cannot attract sufficient funds to enable them to lend as much as they would like to lend in several directions. For example, the law provides that the interest rate on a fixed deposit for two years shall be 3-]- per cent., but a hire-purchase company can ofT:r far more than that. We know of instances where the interest rate has been 7 per cent., 10 per cent, and, on occasions, up to 12 per cent. Because of these higher rates of interest and certain other factors, money is not being deposited with trading banks at the same rate as it is being provided for other financial organizations. As deposits are the true basis of banking business, the trading banks have not had the funds to expand their advances adequately, in such circumstances, it is understandable that the trading banks have had to look to other avenues and have allied themselves, in varying degrees, with certain hire-purchase companies. By that means, they have been able to put funds that would not otherwise be available at the disposal of some of their clients.
I remind the honorable member for Darling and some other Opposition members that the hire-purchase section of the Commonwealth central bank was first established by the Chifley Labour Government. There is one big difference between its operation and the operation of trading banks in any alliance that they have with a hire-purchase company. That difference is that the hire-purchase section of the Commonwealth central bank operates on funds that it borrows entirely from the Commonwealth Savings Bank, and is, therefore, using depositors’ funds. The trading banks, on the other hand, have not used any of the depositors’ funds in their association with the hire-purchase companies; they have used only shareholders’ funds.
I should like to reply now to some of the comments made by the honorable member for Kingsford-Smith (Mr. Curtin) and those who followed him concerning the profits made by the trading banks. The trading banks have not in fact been making high profits in relation to shareholders’ funds. It is interesting to see that the average profit for all groups of companies in Australia for 1956 was 9.8 per cent. The profit on shareholders’ funds of mining companies was 22.8 per cent., of manufacturing companies 9.7 per cent., of wholesale and retail trading companies 9.1 per cent., of transport, power and other services 7.3 per cent, and of trading banks 5.6 per cent. - the lowest of them all. Therefore, the argument advanced by honorable gentlemen opposite falls to the ground. I shall give one further answer to the criticisms that are quite wrongly but quite constantly made by Opposition members. I have with me a chart showing how each £1 of a trading bank’s expenditure was broken up into various sections. This should be of interest to honorable gentlemen when next they are preparing a speech. Of every £1 of this bank’s expenditure, lis. 9£d. was spent on salaries, wages, contributions to staff pension funds and other payments to or on account of the staff; 4s. Hd. on management expenses; id. on directors’ and auditors’ fees; 2s. id. on taxes and ls. 6£d. on dividends. Far more was spent on taxes than on the payment of dividends to shareholders. The balance carried forward to the profit and loss account and to reserves was only 5id. Therefore, the argument advanced by Opposition members once again falls to the ground.
I shall now mention some of the points included in the bills now before the House, and summarize several of the statements I have already made. These bills do not give any priorities or privileges to the trading banks. The central bank will certainly be strengthened, and strengthened far more than it ever has been during any period when Labour has been in office. One important and essential difference between this legislation and any proposals that would be made by the Opposition is that for the first time the Commonwealth central bank must, by law, apply its policies equally to the Commonwealth Trading Bank and to the joint stock trading bank companies. The Commonwealth Trading Bank is required to pay taxes and a proportion of its net profits to its shareholders - the Treasury - and is therefore placed as nearly as possible in a position of trading equality with other trading banks, which also pay taxes and- then pay dividends to shareholders. Surely those two points bear out what I said at the beginning of my remarks about the need for us as a Government to ensure that we have in this country a free and competitive banking system.
The proposals now before the House also go a long way towards ensuring that the banking system will have an equal opportunity all round. I hope that when these measures have passed through the Parliament and have become law, as I believe they will be, the banking system will have a holiday from politics. It has been for too long the subject of attack and too often the subject of abuse from certain sections of the community. The banking system is a most important part of our economic and social structure. As the honorable member for Fisher (Mr. Adermann) quite rightly pointed out when he addressed the House earlier, it has far greater responsibility than just being a money-lending house. Therefore, the Government has a great responsibility to see that the banking system and the banking institutions of Australia are able, through their own energy and their own initiative, to supply those services to the people which will allow this country to continue its national development and which will allow the individual to select his own way of life, his own employment and his own type of business. In other words, we have a responsibility to ensure that the people of Australia have the best living conditions possible.
Sitting suspended from 5.55 to 8 p.m.
.- Mr. Speaker, only four years have elapsed since legislation designed to appease the private financial interests was before this Parliament. That legislation was intended to divide the Commonwealth Bank into two separate entities - a trading bank and a savings bank. At the time, the Prime Minister (Mr. Menzies), the Treasurer (Sir Arthur Fadden), and other Government spokesmen stated that the decision to divide the Commonwealth Bank into trading and savings sections was necessary in order to reassure private trading banks and to protect them from unfair competition. The 1953 legislation was to achieve that purpose, and the Prime Minister was sure that the bills then before the House would have that effect. The Prime Minister said that careful consideration had been given to the whole problem. On 19th February, 1953, speaking in the second-reading debate on the Commonwealth Bank Bill, the Prime Minister said -
The Government has not produced this legislation hastily. It is. the result of a very long and very close examination of the former legislation and the way it works out, and I want to say at once that we have given the fullest opportunity to various people to offer their views and their criticisms so that we might ultimately be in a position to form a sensible and balanced judgment. We have come to the conclusion that the existing legislation requires amendment if the position of the trading banks in our banking system is to be protected in the future against unfair attack by a central bank operating under a government with socialist objectives.
They were the words of the Prime Minister, on 19th February, 1953. One would have imagined that they were the final words, that the Prime Minister had made up his mind with regard to the latitude and scope of the Commonwealth Bank. As the Prime Minister said, a very searching, thorough, and exhaustive inquiry had been made into banking practice in this country.
On the same evening, in the secondreading debate on the Banking Bill, the Prime Minister said -
In going through the Banking Act 1945, and in considering what experience has taught us about its workings in the years that have gone by since the legislation was enacted, the Government made a very close study of many problems connected with the relations between the Commonwealth Bank, the central bank and the trading banks. They are problems which, of course, must always arise. They are of the essence of central bank and trading bank relations. I want to say at once, because it is as well that, as far as possible, we should fight this matter out on clear ground, that in my opinion there is no cause for believing that the Commonwealth Bank has used its powers under the Act otherwise than in promoting economic stability and carying out its other central bank responsibilities.
At that time, the Prime Minister was satisfied that the Commonwealth Bank was doing its job. He was satisfied that the central bank was performing its useful task, its legitimate role, in the affairs of the nation in conformity with the charter laid down in 1945, which says -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the Bank, will best contribute to the stability of the currency of Australia; the maintenance of full employment in Australia; and the economic prosperity and welfare of the people of Australia.
That is what this legislation is supposed to serve. But the Prime Minister continues to take one step after another, despite protestations that all is well, that the Commonwealth Bank has done a good job, that it is performing its duties within its charter, and that it is serving the nation well. This legislation sets out to dismember further the Commonwealth Bank and make it more difficult for the bank to render service to the people of Australia. In his speech on the Banking Bill in 1953 the Prime Minister went on to say -
Our prime task in this bill has been to reconcile two things - proper and adequate powers for the central bank, because if it is to be a competent central bank it must have them, and a proper measure of protection of the trading banks- against the possibility of excessive or unjust action on the part of the central bank. In order to achieve our purpose we have incorporated in the bill two very far-reaching amendments.
One would conclude from those statements that the relative merits of the position had been weighed fully and appreciated by the government of the day, and that the steps taken in 1953 were the final steps in dealing with the problem that the Government had before it in attempting to appease the private financial institutions of this country. In the same speech the Prime Minister said -
All T want to say to those who, like my colleagues, want to pursue a sound course to achieve both of the objectives - central bank and trading bank - that I have referred to, is that this legislation achieves a high measure of fairness and good sense and will, I believe, be warmly welcomed by the majority of the people.
The Prime Minister stated in 1953 that the legislation had operated fairly, and had achieved what fair-minded and reasonable people in Australia would expect from a government dedicated to the service of the people. But this Government has been pushed along the road willy-nilly by men like the honorable member for Macarthur (Mr. Jeff Bate), the Minister for Air (Mr. Osborne), and others, who come into this House as a torpedo brigade on behalf of the financial institutions. Honorable members will recall the utterances made in 1 953 by the Prime Minister, the Treasurer, and others in rebuttal of the claims made by the gentlemen I have just named. I have quoted the speeches made by the Prime Minister in 1953 in order to indicate to the House that the right honorable gentleman had a mind on these matters in those days, but he has changed his course considerably since then. The Treasurer himself said in 1950- . . the administration of the Commonwealth Bank should not be subject to frequent and violent change. . . the Government is satisfied that the broad purposes of monetary and- banking policy are being achieved. For this reason, and because it would be undesirable to make frequent changes in legislative requirements affecting the banking system, the Government has decided to preserve the general pattern of control by the Commonwealth Bank over the banking system and the broad structure of the Commonwealth Bank.
Those were the views of the Treasurer in 1950. He was opposed to violent changes in the management of the Commonwealth Bank. Yet to-day, bills are before the House for the very purpose of dismembering and destroying the Commonwealth Bank. The viewpoints of the Prime Minister and the Treasurer are on record. The responsibility rests with the Government to make out a case now for this legislation. Up to date no case has been made out by the Treasurer, who introduced the bills to the House. He laid them on the table and walked out and abandoned them to the tender mercies of honorable members, he himself being quite satisfied that what he had done was not in the best interests of the Commonwealth Bank and certainly not in the best interests of the people of Australia.
I agree that changes of this kind are not desirable. Who would want to make such vital and fundamental changes in the structure and management of even the smallest business? The proposals to dismember the Commonwealth Bank of Australia are of such far-reaching importance and significance that all the people of Australia should indicate quite clearly that they are opposed to the measures that the Government is taking, because they are not in the best interests of the nation. The great name of the bank itself will be destroyed by this legislation. This Government, bending before the sectional pressure of private financial interests, has jettisoned the findings of the Royal Commission on Monetary and Banking Systems, which was appointed by an anti-Labour government. Its members were persons who were well known in the financial and commercial world, and whose names are linked with the politics of the anti-Labour parties. The royal commission made a most voluminous report in relation to banking matters. Not only did it uphold the Commonwealth Bank on all counts, but also it made it abundantly clear that it was not in the best interests of the bank, or of the people of Australia, to separate the central bank from the trading bank and the savings bank as is now proposed.
– How long ago was that?
– I remind the honorable member that these fundamental truths were subscribed to by eminent economists, members of the Australian Country party and of the Liberal party, and by my predecessor, as member for Macquarie, the late J. B. Chifley, who was the only member of the royal commission who was identified with the spirit of Labour. In relation to the organization of a central bank, the royal commission, at paragraph 519 of its report, stated -
The central bank should be the Commonwealth Bank, organized mainly in the form in which it exists at present. Because its sole concern is the general public interest, the central bank should be publicly owned and controlled.
I do not think that anything has happened in the intervening years to change the view of this House about that. If there is a view contrary to that, it is about time that Government supporters voiced it in this chamber.
With regard to the structure of a central bank, the royal commission’s report stated, at paragraph 521 -
The present structure of the Commonwealth Bank, consisting as it does of a central bank with trading bank powers and a savings bank, is, in our opinion, essential to the efficient exercise of its functions as a central bank.
In relation to the functions of a central bank, the royal commission, at paragraph 522, confirmed that view. Throughout, the report of the royal commission supports to the hilt the views expressed by the Australian Labour party. With respect to the conduct of a central bank, in its conclusions and recommendations, at paragraph 574, the royal commission stated -
The full development of the Commonwealth Bank into a central bank, which occurred in a few crowded years, has contributed greatly to the strength of the Australian banking system. It was not to be expected that the Bank should have been able, at the commencement of the depression, to produce a fully considered and appropriate policy to meet it. During the next few years, as the Bank developed the exercises of its central bank powers, mistakes were made, but this does not detract from our conclusion that the existence of the Commonwealth Bank, exercising central bank powers, has been of the utmost importance to the banking system and to the community.
One could say quite a lot about the errors made by the Commonwealth Bank during the depression.
It is fundamental to the bills now before the House that it is important to understand, not only the structure of the central bank, but also the kind of people who will control the banks in their reconstructed form. However the Commonwealth Bank is reconstructed, unless those who control it are dependable, and sympathetic to its objectives, it will surely suffer. It is allimportant that persons in tune with the bank’s principal objectives, and able to work harmoniously towards achieving them, should be appointed to direct it. Unless such people are appointed - and I think that, in this instance, they may not be - the future of the people’s bank can be viewed only with apprehension and pessimism. At paragraph 577, in its conclusions and recommendations, the Royal Commission on Monetary and Banking Systems stated also -
Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should do both. Through its trading bank activities it possesses powers of competing with the trading banks which can be exercised as and when required. Similarly, its savings bank activities add to its ability to regulate the volume of credit and enable it to compete, if necessary, with the State savings banks. We are of opinion that the use of its trading bank activities as an adjunct to central banking policy is in keeping with its central bank functions and is to be approved.
Those are the recommendations of a royal commission that, in a thorough investigation of these matters, was not actuated by any thought of advantage for any special pressure group or section of the community, or with any thought of serving the special interests of such a group or section. It sifted the whole of the evidence with due regard to the needs of Australia’s development, and I submit its recommendations to the House as unassailable evidence. The people who have 4,700,000 active accounts with the Commonwealth Savings Bank have not asked for these measures. Those depositors are the solid core of good, thrifty citizens, who will express their wrath at the Government’s meddling with the people’s bank.
What did the Treasurer mean when he spoke of the independence of the central bank, and of fair competition between the Commonwealth Trading Bank and the private trading banks? He meant only one thing - the subservience of the central bank and the Commonwealth Trading Bank to private financial interests. These bills surrender the national well-being to vested interests, the gods of mammon, and dividends. The Treasurer has been at great pains to say that the Commonwealth Bank has discharged its duties with competence, integrity, and impartiality. At page 537 of “ Hansard “, of 4th March, 1953, speaking in the debate on the Commonwealth Bank Bill 1953, the Treasurer referred to the opinion of the Royal Commission on Monetary and Banking Systems, which at paragraph 577 in its conclusions and recommendations, stated -
We are of opinion that the use of its trading bank activities as an adjunct to central banking policy is in keeping with its central bank functions and is to be approved.
He then stated -
The Government fully agrees with that view . . .
So we find the honorable member for Petrie (Mr. Hulme), the pretender who has set himself up in this chamber as an authority on financial affairs and banking, at cross purposes with the Treasurer, who said that the Government agreed with that opinion expressed by the royal commission. The Treasurer continued -
These are the unequivocal remarks, at that time, of the Treasurer. He went on to amplify his point of view on the findings of the Royal Commission on Monetary and Banking Systems, and on the reason why the Commonwealth Trading Bank and the Commonwealth Savings Bank should be amalgamated with the reserve bank. I have not time to continue to read that excerpt, but I do say that the Commonwealth Bank has discharged its duties with competence and integrity, as the Treasurer said.
Let us review how the scales of justice have been held by the Menzies-Fadden Government with the Commonwealth Bank on one side and the private financial institutions on the other. Let the people see the real position unmasked. The Commonwealth Government has taken this course with regard to the Commonwealth Bank: It has separated the Savings Bank from the Trading Bank. It has restricted the operations of the Industrial Finance Department of the Commonwealth Bank. It has made hire purchase available only to producers, and not consumers, through the Commonwealth Bank. Now, finally, in balancing the scales “ fairly, evenly and justly “, the Government proposes, through these measures, to dismember the Commonwealth Bank, to separate the central bank from the Trading Bank, to tax the Trading Bank and to open the gateway to all the evils inherent in these changes - the violent changes to which the Treasurer referred.
To the private trading banks the Commonwealth Government is giving all the advantages of monolithic development and the authority to conduct savings bank departments and hire-purchase activities for producers’ and consumers’ needs. It is abundantly clear that under this Government, a policy of restriction and control has been used against the Commonwealth Bank, while an open cheque for expansion has been given to the private financial houses. The Government stands condemned for this discrimination against the Commonwealth Bank. The Labour party has rightly pointed out the inherent dangers in the Commonwealth Trading Bank organization and one has to consider the difficulties that will arise with the taxing of the new banking organization. What is likely to emerge is what we have heard before in expressions from those people who are dictating the financial policy of this Government. We had it from the “ Australian Quarterly “, at page 13 in its issue of September this year, where an officer of the Bank of New South Wales advocated shares being accepted by the Commonwealth Bank for the purpose of sustaining it and maintaining the necessary capital for carrying out its organization. This is not a very novel plan, because such a proposal was made by the right honorable member for Cowper (Sir Earle Page) on 11th June, 1930, as is reported in “ Hansard “, volume 124 at page 2619. Time does not permit me to read the exact quotation, but the right honorable member for Cowper did advocate that course on that occasion. Leopards do not change their spots. Those people who wanted to throw away the Commonwealth Bank in Other days would gladly do it to-day. This is not merely an academic subject. It is one of great concern to all of Australia. The attitude of the private trading banks in refusing to make funds available for homes, farms and other legitimate purposes, while making advances for hire purchase, cannot be too strongly condemned.
I have one or two extracts from the daily press which give a deal of point to the statements I propose to make. Let us take one from the “ Sydney Morning Herald “ of the 5th June of this year, which appeared in an article under the heading “ The Other Banking System “, written by the financial editor of the newspaper. The article read in part -
When a bank manager has to play the part of a salesman of hire purchase, as a substitute for lending at ordinary bank overdraft rates on producer’s equipment, he must feel that he has become a dealer in a kind of legal black market.
Call it a substitute market if you want to be polite.
But it has grown up in a period of credit tightness to perform some functions that the banks used to do, and on terms that cost the public far more than in the orthodox way.
That answers to a good part of the definition of a black market.
Those are the views of the financial editor of the “ Sydney Morning Herald “. Now let us see what was stated in the same newspaper on the 26th June last in an article by Mrs. I. L. Waight, federal secretary of the Australian Primary Producer* Union. I know that members of the Australian Country party who are interjecting are ashamed of the role that they play here. They have never been on the side of the farmer. They have never advocated that credit be made available to the farmers. They have allowed the farmers to go without the necessary bank advances while hire purchase has been freely available. They have allowed the farmers to be taken down in a shameful way, and I suggest that the comments from the press that I am about to read are worthy of the consideration and the respect - and the silent hearing - which the Australian Country party ought to afford to opinions of this kind. This is what Mrs. I. L. Waight had to say in the “ Sydney Morning Herald “-
In rural Australia to-day, young, vigorous men are being kept out of primary production, because there is no credit available for the purchase of properties.
Aging owners, apprehensive of death duties, make no improvements out of current funds. It is impossible to arrange a fixed mortgage on property offered for sale, thus keeping even those with some finance out of the field of primary industries.
Again, on the 5th June, under the heading “ The Countryman and Hire Purchase “, the financial editor of the “ Sydney Morning Herald “ had this to say -
A flash of enlightenment in Dubbo recently brought me to the end of my quest for an understanding of the countryman’s attitude towards banking and hire purchase.
The article then goes on to point out that advances to farmers in that particular area were impossible to obtain except under hire-purchase terms, which are much higher than overdraft terms.
I submit that such articles as I have quoted from ought to convince honorable members of the true position in regard to these matters. Clearly the private banks want the central bank to become their agency. They want it to be a bankers’ bank, not a people’s bank. Plainly, they want to turn the hands of the clock back to the 1930 period of the depresson when the Commonwealth Bank Board dictated policy to the Government of this country. I have before me portion of a letter to the Treasurer of that day, written by Sir Robert Gibson, the then Governor of the Commonwealth Bank, telling the Government the terms on which money would be made available for the purpose of carrying on the government of this country. When we remember the queues of unemployed at that time, the young men leaving their homes in search of work - they are obliged to leave home in order to obtain track rations - and the depressed condition of the nation at that time, surely we should say now that if banking is to remain independent, at least it ought to be tied to the nation’s need, geared to the nation’s responsibilities, and should serve the nation. Yet we find this outstanding record of a scandalous age and a shocking period. The letter from Sir Robert Gibson, to which I have referred, said -
Subject to adequate and equitable reductions in all wages, salaries, and allowances, pensions, social benefits of all kind, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively cooperate with the trading banks and the governments of Australia in sustaining industry and restoring employment.
Those were the words of Sir Robert Gibson at that time. That was the time when the Commonwealth Bank was a bankers’ bank and not a people’s bank. Do we want to see the hands of the clock turned back to those conditions again, or do we want to see continued a new enlightened period, such as we had throughout the war when the Commonwealth Bank assisted in maintaining this nation, as the Minister for Labour and National Service (Mr. Harold Holt) testified in a speech which is reproduced in a volume that I have in my hand? I want to say that when we have all the evidence of Sir Arthur Rymill and Mr. Staniforth Ricketson, setting out the course they would like the nation to follow in regard to banking, surely there is a clear-cut case for that course. I submit that the spirit of Andrew Fisher, King O’Malley and Denison Miller should not be allowed to die in this country and that the Commonwealth Bank, which was established for the people of Australia, and to serve this nation in peace and war, should be developed so that it will provide the needs of the people. It should be permitted to work henceforth for the fulfilment of the destiny of the people of this country.
– I have no particular ambition, Mr. Speaker, to disturb what was, until five minutes ago, the unruffled calm of this debate, but as one of the many people in this House with a very high personal regard for the honorable member for Macquarie (Mr. Luchetti), I should like to give him a friendly warning. I think that, in the course of his speech, and particularly towards the end of it, he came somewhat into conflict with his own leader. The honorable member said that under this Government, which is now almost eight years old - it seems longer to me-
– It seems longer to us!
– I am sure it does, but honorable members opposite will have more experience of it as time goes on. The honorable member for Macquarie said that, under this Government, there had been restriction of the Commonwealth Bank and discrimination against it. Indeed, the whole picture that he painted, in lively colours towards the end, was one of a Commonwealth Bank which had been beaten to the ground as a result of the activities of this Government; but unhappily, he has forgotten - as no doubt most people have - the speech made by the Leader of the Opposition (Dr. Evatt) in opening this debate for the Opposition. 1 took the trouble just now to recapture it.
The right honorable gentleman, so far from thinking that the Commonwealth Bank had been beaten into the ground, was at pains to point out that the Commonwealth Trading Bank, during the last twelve years, had increased its deposits from £50,000,000 to £200,000,000, by far the largest percentage increase of deposits of all the trading banks in Australia. Those were his words. He went on to say - and who am I to deny it? - that so far as loans to the public are concerned, the increase had been eight-fold. Then, in case anybody might think that all of that progress had been made between 1945 and 1949, the right honorable gentleman said that in 1956 - which I might, with respect, describe as my own time - the customers of the Commonwealth Trading Bank numbered not fewer than 500,000, and that they were increasing at the rate of 40,000 a year. So, all I say to my friend from Macquarie is, “ You had better get this ironed out with your leader. You do not want to add to the long list of matters on which you disagree with him “.
I said that I did not propose to ruffle the calm of this debate, because nobody really has produced any opposition to these bills that has been worth much attention nor, so far as I can judge, has the public been at all affected by the arguments that have been presented. But there are three questions on which I should, perhaps, endeavour to say something, very largely of an explanatory kind. These three questions go to the root of this matter. The first question is this: Is the central bank, the Reserve Bank, weakened by this legislation in the performance of its essential duties, because if it is, that is a matter to which everybody who has an interest in central banking and its great responsibilities must have regard. The second material question is: Is the Commonwealth Trading Bank, as a result of these bills, placed at any competitive disadvantage in relation to the other trading banks? The third question is: Does the new Development Bank offer a threat to the trading bank structure?
Speeches have been made on each of these matters. In the case of the third one, there was a characteristically thoughtful speech by the honorable member for Maribyrnong (Mr. Stokes). I propose to say something about each of these matters. The functions of the Reserve Bank will remain exactly the same under this scheme. Those functions are vital. They are: To act as banker to the Government; to be the lender of last resort to the trading banks; to regulate banking policy in respect of advances, interest rates, and so on; and to regulate the note issue and foreign exchange transactions. All those things are the essential functions of a central bank, because the central bank, which must always act in the closest harmony with the government of the country, has an overall, or perhaps I might say a wholesale, financial responsibility for credit and currency matters generally.
The Leader of the Opposition did not deny that the functions of the central bank would remain unimpaired, except for two comments that he made. Therefore, perhaps, I should address myself to those two comments. First, he conceded, in his speech, that the making of statutory reserve deposits by the trading banks would be better, in some respects, than is the existing special accounts procedure, a procedure which has been a matter of acute discussion in this country ever since it was established. The right honorable gentleman conceded that the substitution of statutory reserve deposits would make that scheme better in some respects than the existing one, but he criticized the new method which, otherwise, he did not find open to criticism, by saying that he objected to the time limit of 45 days on the notice to make an emergency call-up, or a special call-up beyond the normal limit established by the legislation. He said that a delay of 45 days, if you were going to call up additional deposits, was preposterous and fantastic. He thought that it ought to be possible to call them up in what? Two days? Three days? Seven days? He must envisage a very small number of days, although he did not tell us what he thought the period should be, because he said that 45 days was preposterous.
Now, Sir, the answer to that criticism is very simple. A sudden alteration in the deposits, and therefore in the advances position, of trading banks could have a dislocating effect, not only on their business, but also on the business of their customers. It is a very great mistake to think that a bank conducts its operations without customers, of that the interests of the bank are hostile to those of the customers. The fact is that the whole control of finance policy, the whole significance of the control of deposits by calling them up, either into special accounts or on a special deposits reserve basis is, as has been described, to do with counter-inflationary measures. If there were not a reasonable period of notice for calling up more than the statutory amounts, then the business of the banks, and the business of their customers, could be entirely dislocated, because they would not have time to make the adjustments that were needed, to make the necessary calling-in, and to make the necessary accommodation between their advances and their deposits. In those circumstances, I venture to say that nobody with even a nodding acquaintance with the business of banking in this country, or in any other country, would suppose that a period of 45 days was an extravagant time to allow for the making of those adjustments pending the extra calling up of reserve deposits. So that criticism falls to the ground.
The right honorable gentleman went on to say - and I am a little puzzled by this one - that the policy of the bank to maintain full employment had been changed “ by omitting this objective “. Yet I venture to say that if honorable members will look at clause 10 of the Reserve Bank Bill, a copy of which I have in front of me, they will find that that is one of the objectives of the bill stated - and not for the first time - in legislative form. So, that appears to be a somewhat illusory objection to the legislation.
– Yes, but it is in the Reserve Bank Bill.
– My friend says now, “ I admit it is in the Reserve Bank Bill, and is part of the charter of the central bank, but it is not in the Banking Corporation bill “. The bank of all banks, which is responsible for the purposes of monetary and banking policy, is the central bank, and here, in the case of the central bank, it is completely stated - a fact to which the right honorable gentleman did not think fit to refer in his speech, but which remains, still, an unanswerable fact.
To go away from the two criticisms which he made, it is quite true that the Commonwealth Trading Bank is, in this legislation, taken away from the direct control and management of the central bank. That is one of the purposes of this legislation. But that does not weaken the central bank any more than the Bank of England is handicapped by not having a fully fledged trading bank at its side. It is true, as a matter of historic fact, that the Bank of England - that very model of central banks - still has a few private cheque-writing customers, but they are survivors from the past. It does not, in reality, carry on with any trading bank activities. The remaining activities on that side have diminished and have become almost non-existent. The fact is that the Bank of England which, as I repeat, is the example on these matters, has dealt with the trading bank structure in Great Britain not by a series of peremptory orders but by co-operation, by mutual understanding, by regular meetings and by leadership. It has found leadership all the more possible because, when it gathered together the representatives of the trading banks it was not gathering together people who felt that it was their competitor. It gathered together people who felt that it was their leader and guide - the central bank, with special knowledge and with special authority - and in the result nobody has ever argued in Great Britain as to whether the Bank of England should have done this or that. These matters are discussed from time to time and there is complete mutual trust and mutual confidence. That is the most essential element to be found in a structure of banking which must be one that includes a central bank and a series of trading banks.
Now I turn away from that, because 1 think one has only to mention these facts to indicate that the suggestion that the central bank is weakened is entirely without foundation. I come to the second question: Has the Commonwealth Trading Bank been placed at any competitive disadvantage? I have already said something about that in my little preliminary reply to my friend from Macquarie. But why should it be assumed that under the new legislation the Commonwealth Trading Bank, under its own board of directors, will be handicapped or crippled? I think that is a fair question. It still possesses - I am sure, somewhat to the disappointment of the Opposition - its statutory charter to expand and develop its business. Why does the right honorable gentleman assume that a board of directors will want to prevent their own bank from growing? The only reason that one can think of quickly, in answer to that rather remarkable question, is that according to the right honorable gentleman the trading bank will not be deficient in the goodwill and earnest desires of its board of directors but it will be deficient in funds; it will be starved of capital. That is the point that he got on to. He said that although this bank has been doing magnificiently and has been growing, even over the last eight years in the way which he described, it is going to be starved of capital and funds. In fact, he stated - and I quote his words -
Access by the Trading Bank to central bank sources is cut off by the 1953 and 1957 legislation, although such access is admitted in the 1957 legislation to be necessary for the new Development Bank.
MayI just repeat those words, so that honorable members will see the significance of that statement. The right honorable gentleman said -
Access by the Trading Bank to central bank sources is cut off by the 1953 and 1957 legislation.
On that matter he is simply and egregiously wrong. It is not. The fact is that, in common with the other trading banks, the Commonwealth Trading Bank will have a right of recourse to the central bank for funds, a right which the trading banks have enjoyed for years, now, and a right which is restricted only by the judgment of the central bank itself. There has been no change in that matter and there cannot be any change in that matter because anybody who understands anything about central banking realizes at once that one of the tasks of a central bank, as a bankers’ bank and as a lender of last resort, is to be able to find money for central bank purposes - to correct dangers of liquidity - to do all sorts of things connected with the exercise of the central banking functions. That right which existed, continues. I am dealing with the allegation that it has been cut off. The answer is that it has not been cut off.
When the right honorable gentleman refers to the Development Bank and says, as he did in the passage I quoted, that such access is admitted in the 1957 legislation to be necessary for the new Development Bank, he again falls into error because the only provision that is made about the new Development Bank - and I want to make this clear to all honorable members - is that it may not, at any given time, owe more to the central bank on advances than £2,000,000, except with the Treasurer’s consent. The right honorable gentleman thinks that that gives the Development Bank a £2,000,000 start on the field. In fact, if I am to pursue these racing terms, the other banks will never leave the barrier, because, according to him, they are cut off from this source. What he has failed to understand is that there is no restriction, except the judgment of the central bank, on the recourse of trading banks to the central bank, but there is a limitation of £2,000,000, in the case of the Development Bank unless the Treasurer consents to an amount greater than that.
– I notice you have rocked a few to sleep over there.
– I do not need to rock them to sleep, because I am bound to say that when I came in here to-night it seemed almost indelicate to walk into such a somnolent assembly. I looked at the Opposition, and although I counted them I could not make them more than twelve - full of passionate hostility! May I pursue the topic that I was on? The right honorable gentleman fears that the Commonwealth Trading Bank will be short of funds. Provision is made in clause 30 of the Commonwealth Banks Bill for an increase of £2,000,000 in the Trading Bank’s capital. The capital of the bank has always been controlled by Parliament. Here is a statutory provision for an addition of £2,000,000 to it! In addition to that, the Commonwealth Trading Bank will continue to have what I have just been describing as its right to borrow money, which will be found in clause 29. This includes the right which is shared by all the trading banks to borrow from the central bank.
As, in future, the Reserve Bank will carry on its business as a central bank, strictly so called, it will have full power to make loans to the Commonwealth Trading Bank or to any other trading bank for legitimate central bank purposes. When I say that, I am repeating what I have said, but I think that it deserves to be clearly understood.
– What about capital purposes?
– I have already mentioned capital purposes. I referred to an increase of capital of £2,000,000 provided in this legislation. There are other important facts about the Commonwealth Trading Bank which ha%’e been completely overlooked, not only by the right honorable gentleman, but by his advisers. The first of them is that the Commonwealth Trading Bank, unlike the other trading banks, operates under a Commonwealth guarantee. That is a very important advantage to the Commonwealth Trading Bank. The ability of a trading bank to expand is determined primarily, not by some alteration in nominal capital, but by the amount of deposits that it can attract, capital and reserve funds really constituting a relatively minor part of any trading bank’s total investible funds.
The right honorable gentleman himself takes pride in the fact that the Commonwealth Trading Bank is able to attract deposits in competition with other banks. I do not doubt that it will continue to do so and, to the extent to which it does, its business will grow, its availability of funds will increase, and the result will be an extension of its operations. All that one need add to that - because that relates to the real problem of banking funds for investment - is that if the situation in future demands some further increase in the capital, as distinct from the deposits and investible funds, having regard to the growth of the business of the Commonwealth Trading Bank, it will always be open to this Parliament to make an increase, as it has done in the past, by specific legislation. I say no more about that matter which related to my second question. The first question was, “ Is the central bank weakened? “ No. The second was, “ Is the Commonwealth Trading Bank placed in a position of competitive disadvantage? “ No.
Therefore, I come to my third question as to whether the Development Bank offers some threat to the Trading Bank. With very great respect to opinions that have been offered in various quarters on this matter, I want to put the view that it does not. On the contrary, the Development Bank is designed - and I think appropriately designed - to do very important business of a kind which the trading banks do not customarily handle and, in fact, have not handled in the past. It fills a gap in the banking structure and every man, particularly those engaged in country pursuits, will know how true that is. The Development Bank is designed to fill a real gap in the banking structure and it should, therefore, prove to be of very great benefit, particularly in the fields of primary production and the establishment and development of industrial undertakings - and here I quote the words of the bill - especially the small ones. All that will be found in clause 72 of the Commonwealth Banks Bill.
The Development Bank is given power to accept deposits. That fact, I think, has attracted some criticism. The reason why it is given power to accept deposits, apart from anything else, is this: Without the power to accept deposits it would be open to some constitutional challenge on the ground that it was not a bank at all; in other words, on the ground that the acceptance of deposits is an essential ingredient in banking. Of course, if it turned out not to be a bank at all, not only would it be invalid, but other strange consequences would follow, under our Constitution, because there would be two subjects of legislation in the bill. I do not need to dwell on that. Therefore, I say, of course it has to be given power to accept deposits although it is most unlikely that it will get deposits on any great scale. There have been those who have feared that it would be a great competitor for deposits; that it would offer special rates of interest and special inducements to get money. It could not offer favorable rates of interest because the interest rates themselves, under this very legislation, as in the past, are controlled uniformly by the central bank. Again, if the Development Bank’s lending rates are to be reasonable - and if they are not it has a poor future in this field that I have been describing - it cannot afford to pay too much for its money. Even if it could do so, it would not pay it to allow fancy rates of interest on deposits.
Of course, on top of that, I hope that it will not be overlooked, in a practical world, that fixed deposits or demand deposits are a pretty poor foundation for long-term lending, and unless the Development Bank goes in for relatively long-term lending it will not be able to do much good to the primary producer who is the very man for whom it is designed to cater. Therefore, the idea that the acceptance of deposits by the Development Bank in some way constitutes a threat to the trading banks is, I think, one that does not really survive examination.
Again, it has been argued that the Development Bank should not be exempted, as it is in this bill, from the reserve deposits provisions which affect the other trading banks. But it would be manifestly unfair to the Development Bank to make it subject to those rules. It might well be that the deposits of the trading banks, operating in an entirely different field and under conditions of boom, would rise very rapidly anr” ‘hat a stiff reserve ratio would have to be applied to their deposits. But the Development Bank which, on the hypothesis I have mentioned, probably would not have participated in the increase of deposits in. that boom at all, could easily have its business disrupted if it had to meet central bank demands by finding, at short notice, substantial amounts of cash. I hope I convey that clearly to honorable members. You cannot draw a complete parallel between the trading banks, which depend essentially on their capacity to get deposits and to make advances, and another bank in which deposits will be a relatively minor consideration. [Extension of time granted.]
I am grateful to the House and to the honorable member for Melbourne (Mr. Calwell) for my extension of time. I assure honorable members that I shall not take very much longer. I have no intention of trespassing on the time of the House on this somewhat peaceful occasion. I was talking about the Development Bank and the matter of the application of the reserve deposits system to the deposits of that bank. All I need to add to what I have said is that, under the provisions of clause 25 of the Banking Bill, the reserve deposits system must be applied without discrimination. The application of it to a Development Bank with a relatively small holding of deposits, as well as to trading banks with very large deposits, might easily be ruinous, because in point of fact, in the set-up which will immediately follow on this legislation, the application of that system to the Development Bank would probably mean, from the very beginning, that it would have to call in money. To impose that liability on it and not upon the other trading banks would, in substance, defeat the very non-discrimination that the law aims at.
Reference has been made to access by the Development Bank to the Commonwealth Savings Bank. This can easily be exaggerated. The Development Bank will start off with a loan from the Savings Bank, inherited from the Industrial Finance Department, of £17,000,000, and because the Savings Bank normally has fairly large deposits with the Trading Bank for working purposes, the effect of applying the 2i per cent. Savings Bank-Trading Bank formula to the Development Bank would, on present figures, be to compel the Savings Bank actually to call in money from either the Trading Bank or the Development Bank or both. Therefore, we decided not to apply that role to the Development Bank.
Apart from the reserve deposits system question that I have mentioned, the Banking Bill seeks to make the Development Bank subject to all the controls of the Reserve Bank, including those in relation to advances policy, interest rates, protection of depositors and the mobilization of foreign currency. All those controls apply to the Development Bank in common with the other banks.
I have already pointed out, and therefore need do no more than mention it again, that borrowing from the central bank is subject to a special limitation of £2,000,000 without the Treasurer’s consent. The limitation does not apply to the borrowing by the trading banks from the same central institution. Of course, one can understand this, because central bank lending in these circumstances is an emergency operation and is not a normal or current operation.
The provision in clause 85 of the Commonwealth Banks Bill that the Treasurer may lend to the Development Bank is, of course, restricted by the provision that such lending is to be out of moneys legally available. To be legally available, the moneys would normally need to be the subject of a parliamentary appropriation. The honorable member for Maribyrnong (Mr. Stokes), in his very thoughtful observations on this matter, raised the question whether, apart altogether from parliamentary appropriation, it might be possible to lend out of trust funds or funds of that kind. Under the Audit Act it would appear, at a quick glance, that this is theoretically possible, but in point of fact it has never occurred.
It is a possibility so theoretical that no one has taken account of it. However, I can assure the honorable gentleman that I will look at this question, together with my colleague after he returns, and see whether it is a matter of sufficient substance to warrant some particular provision. All that can be said at the moment is that theoretically it may be possible, but that in substance moneys legally available are moneys made available under an appropriation of Parliament. Therefore, the bill does not provide an unlimited right to lend money.
The Development Bank, of course, has a power to borrow money, but whether those borrowings are overseas with the consent of the Treasurer or take the form of loans in the open market, they are subject to Australian Loan Council approval. This power, therefore, should not excite in our minds, I think, any particular fears that it will be extravagantly exercised. It is very difficult to have loans approved by the Loan Council unless they apply to every member of the council. I do not anticipate, therefore, that there will be a rollicking borrowing party as a result of this power that is given to the Development Bank.
I apologize for having taken up the time of the House. The matter is not an exciting matter. It has not given rise to very much controversy. As everyone will agree, it is generally accepted by the public. I have dealt with these three questions because it seemed to me that they were the three questions that sensible men might legitimately ask, and, therefore, were questions that one man who hopes to be sensible might legitimately try to answer.
.- The Prime Minister (Mr. Menzies) commenced his speech with rather a peculiar argument. In endeavouring to answer the case put by the honorable member for Macquarie (Mr. Luchetti), he referred to the great success of the Commonwealth Bank since 1945. A very obvious question then arises. The Prime Minister himself has admitted that there is no great public demand for any banking reform in this country. If the Commonwealth Bank has been so successful under the legislation passed in 1945, why does the Government now seek to change the situation? It cannot possibly be to assist the Commonwealth Bank, because honorable members remember that the Minister for the Interior (Mr. Fairhall), in his speech during this debate, appealed for a fair go for the private banks. If the private banks are to be given a fair go, the obvious assumption if that they are not getting a fair go now. If the Commonwealth Bank is to go on expanding and taking a wider area of the banking business in Australia, how are the private banks to get the fair go that the Minister for the Interior demands for them?
What we have heard in the Parliament this evening cannot be regarded as a speech of the Prime Minister of this country. What we have heard is a speech by the advocate of the private banking institutions, because the Government has sold out to the private banks, as I shall endeavour to prove. The right honorable gentleman said that this legislation strengthens the central bank, that it strengthens the Banking Corporation, and evidently, from the speeches made by his colleagues, it likewise strengthens the position of the private banks. This is an utterly ridiculous assumption to make. I have here a copy of the “ Financial Review “, which is published by the “ Sydney Morning Herald “. In its issue of 31st October, 1957, this publication said -
What do the trading banks think they have achieved by the pressure which eventually forced a reluctant Government’s hand towards “ reform “?
It is referred to as “ a reluctant government “. Since it took office in 1949 it has amended banking legislation twice, in 1951 and in 1953, but the private banks are not yet satisfied. They are still demanding of this Government. The “ Financial Review “ goes on to say -
The Government has leant over in some respects to help them-
That is the private banks - for example, in the device of the three executive committees of the Commonwealth Banking Corporation and in the limitation of the use of savings bank funds by trading banks, both of which measures were intended to weaken the power of the corporation.
I dare say the Prime Minister, who tries to brush aside the case submitted against this legislation, would not contest the viewpoint that at least on the matter of orthodox financial thinking to-day the “ Financial Review “, published by the “ Sydney Morning Herald “, would know as much if not more than he does; and it says, in effect, that this is weakening the corporation.
There is no doubt about the intention of the Government, lt has never liked the Commonwealth Bank; in fact, it has always hated the Commonwealth Bank. It hates government undertakings in their entirety, and the Commonwealth Bank is no exception to the general rule of hate and venom poured out by members of the Government. If honorable members care to trace the history of banking back to 1911, the old tories of the day, who are represented by the tories of to-day, were opposed to the establishment of the Commonwealth Bank. As I say, the intention of the Government is to weaken the bank with the object eventually of destroying it.
There are. several, ways in which the bank can be destroyed. It has been, proved in the past that the mere fact that, a- government undertaking is successful- does not make it secure. The mere fact, that the Commonwealth Bank is successful, therefore, does not make it secure. The Govern^ ment can sell it out completely to private interests when it thinks the- time is opportune, or pursue the intention originated in 1938. At that time, the present Minister for External Affairs (Mr. Casey) was Treasurer, and he introduced an impudent piece of legislation into this Parliament designed to open the way for the infusion of private capital into the Commonwealth Bank structure. What was the Government’s intention? The profits of the Commonwealth Bank, as established by the Labour Government, go to the benefit of the community, build up banking reserves and reduce the national indebtedness; but if this Government can introduce a volume of private capital into the structure of the bank it can drain off profits into private pockets while at the same time putting up the pretence that the bank is continuing as a government-owned bank.
The Government’s history since it took office, with regard to government undertakings, presents a very sorry record. It has destroyed the Commonwealth’s interest in Commonwealth Oil Refineries Limited and Amalgamated Wireless (Australasia) Limited; it has sold a profitable whaling station in Western Australia; it now proposes to sell successfully-operated coal mines, and to dispose of the Commonwealth Handling Equipment Pool; and it has disposed of the Commonwealth’s interest in
Commonwealth Engineering Company Limited. If it is the aim of this Government to destroy all government enterprises, why should it stop at the Commonwealth Bank or Trans-Australia Airlines? We know it is the intention of the Government eventually to destroy completely these government instrumentalities.
When I challenged the Minister for Trade (Mr. McEwen) early last week in regard to a statement which he had made during the debate on the disposal of the whaling station, he quite frankly said, “The Government’s intention is to get out of business, whether it be successful or otherwise “. The Minister then contradicted that, and said he had not. stated exactly what I suggested he had. Reference to page 56 of “ Hansard “ of 16th’ February, 1956, shows that the Minister said;-
Speaking with the authority of the Government
Not speaking as an individual member -
I said several, years ago that the Government believed there was no purpose, other than that which could be derived from a socialistic doctrine, in the Government’ continuing to operate either a whaling station-
And to emphasize his point he went on and said - or a wheat farm.
I continue for him and say, “ or an airline, or a Commonwealth bank”. I say it is the intention of this Government eventually to get away completely from government enterprise. There is no doubt in the world that this proposal is a private bankers’ plan. Time will not permit me to give all the evidence that is available to prove that statement, but I think I shall be able to convince any reasonable member of the community. The chairman of Capel Court Investment Company (Australia) Limited at its twentieth annual meeting on 18th March of this year 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;
Not the public of this country, not the ordinary subscribers in the bank, but those who control the private banks “ made strong and persistent representation “. I inform honorable members now that this matter is being treated as one of urgency. The Government wants it disposed of before the end of this year. Why? I shall read to honorable members the remarks of Mr. Staniforth Ricketson, chairman of directors, of Haliburton Investments (Australia) Limited at its sixth annual meeting on 26th January, 1957. Mr. Ricketson said -
This is the last opportunity for the banks. By the time the new legislation became operative the elections would be not more than a year off. If, however, the decision on banking is now delayed the Government could not logically be expected to take effective action at any later stage and risk giving the Labour party, on the eve of the next elections, an issue which they could capitalize vigorously throughout the campaign.
Does that indicate that it is the public demanding this change? As a matter of fact, this financial journal, and the statement made by a financial authority well known to the Prime Minister, stated, in effect, that it was now or never; and so the Government is determined to force this legislation through the Parliament this year.
We know that the Government in 1951 reconstituted the Commonwealth Bank Board and revised the special account provisions at the wish of the private banks in order to afford them some relief. On 9th August, 1951, the Prime Minister and the Treasurer had a secret conference with the private bankers from which Dr. H. C. Coombs, Governor of the Commonwealth Bank, was excluded. If this Government is not under the direct control of the private banks why would the highest governmental banking authority in this country be excluded from those deliberations?
Quoting again from the annual report of Capel Court Investment Company (Australia) Limited, the following appears: -
The Government again evaded the issue, and the provisions of the new banking act which came into force in April, 1953, fell far short of expectations.
In May, 1956, the honorable member for Macarthur (Mr. Jeff Bate) gave notice in this Parliament of the introduction of a bill designed to separate the central bark from the Commonwealth Trading Bank. He beat the gun because there was a group of socalled rebels on the Government side who were determined to force the hand of the Government on this question of separation, because at that time neither the Prime Minister nor the Treasurer was supporting the move for separation, as I shall prove in a moment. The report of Capel Court Investment Company (Australia) Limited1’ continued -
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.
A further conference with the privatebankers was arranged in February of this year. On 25th October, 1956, the Prime Minister said that at the February meeting - that is the meeting with the private bankers - he would ask for specific proposals which the banks would like to seeincorporated in any banking legislation. Can honorable members imagine such an astounding statement coming from a person who claims to be the Prime Minister of this country? It meant, in effect, that the private banks had won the fight; the Prime Minister had capitulated; they could write their own cheque, and that is exactly what they continue to do. The chairman of Capel Court Investment Company (Australia) Limited later said -
The early attempt to fob off the private banks with more apparent than real reforms was not tamely accepted.
They stood up to the Government and to the Prime Minister (Mr. Menzies). I shall show that the banks got their way at the conference on 12th February. We find that the banks proposed separation of the central bank from the Trading Bank and replacement of special accounts with a system of statutory reserve deposits. Both those principles appear in the measures now before the House. The private bankers were so impudent about the victory that they had gained that on 19th September, 1957 - I ask honorable members to remember that the Treasurer’s second-reading speech was made in this House on 24th October, 1957 - full details of the proposed legislation were printed in the “Parliamentary Review “ published by the Victorian Chamber of Manufactures. That is a scandalous state of affairs!
Let us examine the Treasurer’s attitude. A full meeting of Cabinet followed the conference with the private bankers on 12th February, and there was a leak to the press. Honorable members will recall it. I think it was one of those leaks that is deliberately given to the press to create a certain situation. The press report of the Cabinet meeting which was held following the meeting with the bankers said -
Sir Arthur Fadden had expressed uncompromising opposition to the creation of a separate central bank and had the Country party behind him in this attitude.
No denial of the accuracy of that statement was ever forthcoming from the Treasurer or from the Australian Country party. As a matter of fact, on the day the conference was held with the private bankers, the “ Sydney Morning Herald “ said -
Sir Arthur Fadden is intractable in his opposition.
If I know anything about the English language, “ intractable “ means a firm determination to resist at all costs any change in the banking legislation. Let me turn to the Prime Minister’s attitude. The “ Sydney Morning Herald “ said -
Mr. Menzies has so far resisted moves for complete separation. Mr. Menzies has remained imperturbable, despite all the pressure for banking reform.
He was holding the fort! Why has there been a change of attitude? The private banks have been standing over this Government, demanding a return for their investment at the elections in 1949. We have heard Government supporters in this debate refer to the revered Mr. Chifley, the late leader of the Australian Labour party. I shall repeat a statement made by Mr. Chifley in 1950. This statement was referred to by the Leader of the Opposition (Dr. Evatt). Mr. Chifley said -
The bankers subscribed hundreds of thousands of pounds to defeat Labour. I can produce evidence to show the source of the funds, the amount subscribed and the purpose of the subscriptions.
No demand was made then or has been made since by any Government supporter for a complete investigation into the allegations made by the late leader of the Australian Labour party to ascertain whether they were true or not. They were accepted by Government supporters in this chamber. It is a well-known fact that the private bankers were subscribing heavily to the election funds of the party that sits in Government to-day. I have never seen- a man who was so upset and who so disliked the task that had been allotted to him as the Treasurer when he had to make the second-reading speech on this legislation.
Everybody present in this chamber must have realized that he was distressed when he made the speech. The Treasurer said that there was one main reason for this legislation. He continued -
Experience has shown that there cannot be full harmony within the Australian banking system . unless and until this separation is effected.
He went on to ask, “ Is separation necessary? “ In the same speech, the Treasurer said -
Various authorities who have studied the matter closely have reached widely differing views. There has never been anything like a concensus of opinion on it.
Of course there has not! But why does the Government suddenly make up its mind to effect this change? The royal commission into banking a few years ago reported -
Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should do both.
The royal commission comprised a majority of anti-Labour representatives. According to the Treasurer, the private banks have given certain undertakings. That is very generous of them! I thought that in a country such as this, which claims to have democratic government, no outside influence was strong enough to control governments, but evidently the private banks are able to control this Government, which merely acts as the proxy of the private banks. Referring to these measures, the Treasurer said -
If it functions as a true central bank, they are prepared to accept its leadership.
That means, in effect, that, if it suits them, the private banks are prepared to obey the law of the land. He continued, referring to the private banks -
They do not object to the competition of the Commonwealth Trading Bank as long as it is fair competition.
But they will determine whether the competition is fair. The Treasurer went on to say -
There has been no criticism of the way in which the central bank has used its powers. Their fears-
He was referring to the private banks - relate wholly to the wrong uses that might ba made of the present legislation if a government hostile to their interests came to power.
That means, in effect, that this Government, which claims to believe in democracy, by its own statement is now deliberately trying to rig the political arrangements and the machinery of this country to prevent a succeeding Labour government having the opportunity to implement its policy. The Labour party’s policy is against the interests of the private banks and, therefore, they would not regard the Labour party as standing in their interests. We believe in public service before profit. That is the attitude of the Labour party.
When this debate was introduced, I delved a little into the past. I found that on 17th February, 1943, the Minister for Trade (Mr. McEwen) made a very interesting comment about the private banks. Any one who heard the Minister for the Interior (Mr. Fairhall) talking about giving them a fair go would imagine that the private banks at no stage in the history of this country had ever abused their authority or powers. In 1943, when we were discussing in the Parliament a proposal to construct a mortgage bank, the Minister for Trade said -
The practice of this department of the bank-
He was referring to the Mortgage Bank Department - wilt not be comparable in any way with the coldblooded normal banking practice which is determined by the objective of direct profit making. Normally, profit making is a legitimate objective of banks, but it should not be the objective of this department of the Commonwealth Bank.
The measures now before the House propose to set up a Reserve Bank and a Commonwealth Banking Corporation, which will comprise the Trading Bank, the Savings Bank and the Development Bank. The Development Bank combines the Mortgage Bank Department and the Industrial Finance Department. Strangely enough, although we were told that this was a great feature of the bills, the central bank is still to retain the Rural Credits Department. Let me turn to the Development Bank. This is one point upon which I agree with the Prime Minister. I do not think that the Development Bank will be a strong competitor with the trading banks. I am perfectly satisfied that if the terms of the bill permitted it to be a strong competitor, the Government would never have introduced the legislation and the private banks would never have approved of it. But this is parr of the price that the Liberal party had to pay for Australian Country party support! The Development Bank will undertake the risky business which the private trading banks are not anxious to undertake. So, to that extent, I agree with the Prime Minister that the Development Bank will not become strongly competitive with the private trading banks. In actual fact the terms of the bill provide that finance shall be made available when it would not otherwise be available on reasonable and suitable terms and conditions, and that is the only time the Development Bank can come to the assistance of the applicants. Clause 73 of the Commonwealth Banks Bill states - . . the Development Bank . . . shall not necessarily have regard to the security available . . .
Does anybody imagine that that is competition with the private banks? Has anybody ever heard of a private bank, no matter how worthy the objective, ever making an advance without adequate security? The Development Bank is to be obliged to disregard completely the security available. This is what the private banks regard as fair competition. All the business that is regarded as good banking business goes to the private banks and all the risky transactions are left to the Development Bank conducted by the Commonwealth.
I now turn to the hire purchase activities of the private trading banks. All honorable members know what has happened - how the private trading banks have entered the hire purchase field because they find it so profitable. If they can get 10 per cent, or 12 per cent, by lending their money under hire purchase contracts, they are unlikely to advance it to primary producers, home builders, and home purchasers at a low rate of interest. Even while this debate is proceeding the Minister for National Development (Senator Spooner) is criticizing the banks for not having made available sufficient money for the construction of homes. The banks are not making the money available because they can find more profitable avenues for lending.
Some years ago the Prime Minister was answering some criticism levelled by Mr. S. J. Gandon, a director of the Bank of New South Wales in Sydney. This banker had criticized the Government’s 1951 legislation, claiming that both the central bank and trading bank functions of the Commonwealth Bank would still be under the same administration. In reply the Prime Minister said that Mr. Gandon’s comments were the expression of a rigid, uncompromising, and extreme view and that the Government was pledged to fair competition, not destruction. Honorable members should remember those words, because the Prime Minister has now changed his tune. Apparently, the Government’s policy to-day is not fair competition but destruction of the Commonwealth Bank. In 1951 the Prime Minister said that the Rural Credits Department, the Mortgage Bank Department, and the Industrial Finance Department had all worked most satisfactory in conjunction with the central bank and could hardly have worked at all except in such association. Yet, the Prime Minister comes into the House tonight and declares in favour of separation and offers no explanation for his changed attitude in those comparatively few years. I should like to ask the Prime Minister whether he has been converted to this policy of destruction of the Commonwealth Bank.
I turn for a moment to the question of the special account provisions. A Labour government first made these provisions effective. It is perfectly true that when the Menzies Government was in control at the outbreak of the war, by agreement with the private banks it introduced a certain form of control for war purposes only. But we all know that there was such a public demand for some positive action to be taken at that time that the Government and the private bankers accepted it as inevitable and came to this voluntary agreement. When Labour assumed office, in 1941, it reinforced the position by bringing down National Security Regulations to deal with banking control. If you listen to Government supporters, they will tell you that the private banks voluntarily accepted this system of special accounts, but the private banks did nothing of the kind. In December, 1944, the English, Scottish and Australian Bank Limited issued a circular. This was prior to the 1945 act, and it was at a time when there was discussion about proposed amendments of the banking legislation. That circular said -
The management of this bank feels it must give to customers and other associates its views on the persistent press reports of probable early legislation designed to bring the banks and the affairs of bank customers permanently under political control.
During the war the trading banks and their customers have willingly and properly accepted war-time control and direction, but judging from recent reports it would appear that legislation is to be enacted under which political control over banks and banking affairs generally will beimposed for all time.
So, the private banks were never in favour of these controls, which the Government now says were accepted voluntarily. [Extension of time granted.] The circular went on to say -
This bank does not advocate the immediate removal of all controls-
Honorable members should note the words “ immediate removal “, which imply that at the proper time the banks wanted all controls to go - after the war, but feels it must emphasize that permanent rigid political control over the banking structure would shut off the all-important safety valve of competition between banks and would permanently give the Government vast powers over industry and substantial control over the individual.
Then we came to the 1949 situation, when an anti-Labour government took control. What was the situation? The Government, on the basis that it was giving a fair go to the private banks, compelled the Commonwealth Trading Bank to observe the conditions laid down by the central bank with regard to special accounts. I think that was a restriction unnecessarily imposed on the Commonwealth Bank with the idea of restricting its development. The provisions with regard to special accounts were modified at the request of the private banks, and to-day those provisions are to be replaced by what is termed a system of reserve deposits. One point with regard to the Government’s proposal is interesting. When Labour introduced this special accounts provision it provided for a limitation in respect of the interest that would be paid by the central bank upon these deposits of the private banks, and we made the ceiling limit i per cent. But the limit has been removed so that these deposits have to be placed in a special deposit account and the banks can draw off whatever rate of interest is determined by a Government decision favorable to the trading banks. These deposits represent only 25 per cent, of the private banks’ deposits, which in any case they are obliged to retain under the directions given by the central bank, because they must maintain 25 per cent, liquidity. It is evident that this legislation is designed to give material benefit to the private banks out of the Commonwealth Treasury.
On 12th February, 1957, the Financial Editor of the “ Sydney Morning Herald “ stated that the only effective weapon available to the Commonwealth Bank was the special accounts procedure, and that Dr. Coombs, the present Governor had employed it skilfully and fairly. If it has been employed skilfully and fairly, why should there be any urge for a change at the present time? The Prime Minister was opposed to this change in 1953. In “ Hansard “, of 19th February, 1953, at page 129, he is recorded as having stated
It has been suggested . . . that the right way to deal with this 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 . . . That system has received close consideration in Australia … As a Government we do not find ourselves able to accept it.
In 1953, the Government was prepared to stand by the special accounts provisions, but, again, it has capitulated to the private banks. In 1953, he Prime Minister said that the Government did not intend to take any action to change the situation. Continuing the speech from which I have just quoted, the right honorable gentleman said -
It is a rather common error to assume that the economic circumstances and pattern for Australia are the same as they are in other countries. The fact is that in Australia we have great and sometimes sudden changes and very wide fluctuations in the economy.
The Prime Minister then argued that the central bank had to be in a position to act swiftly in any of these crises that may occur from time to time. Yet he is now satisfied to accept a provision for a delay of 45 days before any action can be taken! Why is the 45 days’ interval so imperative now, if it was not considered to be essential when the special accounts procedure operated? The Government wants the interval so that the efforts of a future Labour government to bring under control any situation that may merit such a government’s attention may be sabotaged.
In his second-reading speech on the Reserve Bank Bill, the Treasurer said -
Eventually the private banks submitted revised proposals which, while not wholly satisfactory from our stand-point, did offer a basis on which we could create a new system in place of special accounts, a system which would provide safeguards of the kind the banks desire . . .
So this change was not made as the result of a determination by the Government, because, as the Treasurer has pointed out, the proposals put forward by the private banks, although not wholly satisfactory from the Government’s stand-point, were accepted by it. It is obvious that what we are getting in Australia is control by monopoly capitalism, the controlling interests in which are represented by this Government. The Treasurer said also -
I shall explain the proposed new system-
It was proposed by the private banks - in detail when I introduce the Banking Bill . . .
In the few minutes that remain to me, I propose to discuss the staffing situation in the proposed banks. It is interesting to note that, in this debate, no one has mentioned the attitude of Dr. Coombs, the present Governor of the Commonwealth Bank of Australia. I am able to tell the House what his attitude is, because I have in my possession a letter written by him. It was not directed to me, but it has come into my possession.
– I came by it because it was handed to me by a person who is interested in public affairs. In this letter, Dr. Coombs has expressed great concern over the staffing position in relation to the proposed banks. The situation is very serious, because it involves the breaking up of a successful banking organization working as one instrument in the community. The proposed division will require the division of the staff also. In relation to this matter, Dr. Coombs wrote -
With separation the Central Bank would be a comparatively small unit which may not be able to provide opportunities for promotion and experience in the variety of position available in the past in the Commonwealth Trading and Savings Banks… There could be fears that em ployment in the Central Bank would not attract the most able men, and there would be some danger of stagnation within its specialized comparatively small staff.
To combat these dangers there was a need for a considerable degree of elasticity in the conditions of service for the Central Bank in order that it would be free -
To recruit at any age and educational standard, and from any external source, e.g., other Banks, Universities, &c.
To develop a flexible system of promotions with salaries adequate to hold the
Bank’s most promising officers and to attract from outside men of high ability and qualifications.
To evolve a system of retirements which would enable officers who, while capable, were unlikely to reach very senior positions, to be retired on reasonable terms at relatively early ages.
The only way out of the difficulty that Dr. Coombs can see is to forget all about any classification of the central banking staff, or any provision for appeals, and to provide for a system of early retirements in order to create the avenues of promotion needed to encourage the right men to enter the service of the banks. Is that an advance? Is it in the public interest? The Banking (Transitional Provisions) Bill 1957 preserves the existing retiring age only for employees taken over from the present Commonwealth Bank. All new employees will work under conditions, including conditions as to retiring age, determined by the Reserve Bank Board and the Commonwealth Banking Corporation Board.
In his second-reading speech on the Commonwealth Banks Bill 1957, the Treasurer said that officers may elect the bank to which they desire to be attached, but Dr. Coombs has stated that, if necessary, direction will be employed. Although the employee may elect the bank in which he wishes to serve, the actual determination will not be made by himself, but may be forced upon him by those in control of the bank.
– Order! The honorable member’s extension of time has expired.
– I think that only two parts of the speech made by the honorable member for East Sydney (Mr. Ward) need any reply. In discussing the merits of special accounts and statutory reserve deposits, he has evidently overlooked the fact that there is provision, in both the existing legislation and the new legislation, that interest shall be paid at the same rate on the balances of all the banks held by the central bank. The private banks cannot be paid either more or less than the Commonwealth Trading Bank pays. The honorable gentleman stated that the statutory reserve deposit provisions were part of a plot to enable the private banks to receive big interest payments. That statement was entirely without foundation.
The honorable gentleman said, also, that, in 1938, I, as Treasurer, had introduced a bill that would have had the effect of introducing private capital into the Commonwealth Bank. The simple facts of that matter, Mr. Acting Deputy Speaker, are: As honorable members well know, the Royal Commission on Monetary and Banking Systems, of which Mr. Chifley was a member, unanimously recommended in 1937 that the Commonwealth Parliament should legislate for the establishment of a Mortgage Bank Department of the Commonwealth Bank, and that public debentures in the Mortgage Bank Department should be offered for subscription by the public. I introduced a bill to amend the Commonwealth Bank Act in order to give effect to the unanimous recommendation of the royal commission. That was the proposal that the honorable member has described as a proposal to introduce private capital into the Commonwealth Bank. The amending bill lapsed because of the imminence of World War II.
Having dealt with the only two points in the speech made by the honorable member for East Sydney that warrant any reply from the Government side of the House, I shall deal with the measures now before us. I think that the purpose of this legislation, and its general framework, are already well known to honorable members. The general plan of this series of bills was briefly described by the Treasurer (Sir Arthur Fadden) in his second-reading speech on the Reserve Bank Bill 1957.
Perhaps I might be allowed to endeavour to give a realistic, factual and truthful account of what has made this legislation necessary. I think that, political and banking attitudes apart, this legislation represents a much overdue banking reform. I believe that what is being done now should have been done a great many years earlier, possibly pre-war, possibly in 1945, possibly in 1953. I believe that, in any event, it would have had to be done at some time, and the longer it was allowed to go undone the more difficult it would have been to do. The simple fact is that the groups of banks previously, and now, known as the Commonwealth Bank of Australia, grew up over a period of 40 years in a pretty haphazard way, reflecting the various ideas and motives that were current at different times, until the Commonwealth government banking structure became a huge, over-complicated and not very cohesive organisation. There was a central bank designed to serve the purpose of monetary control. On the central bank was superimposed a savings bank and a trading bank, both created long before the central bank. Then again, there had appeared over the years an array of special departments serving various purposes, none of them closely related to central banking.
It has been obvious, I think, for some time that there has been a certain confusion of ideas as to the purposes of the whole of this governmental banking institution. Was it, as a whole, to serve the principal single purpose of regulating monetary and economic conditions? Were the trading bank and the savings bank to be regarded as adjuncts of the central bank, or were they to have policies and objectives of their own? And were these objectives necessarily always to be harmonized with those of the central bank. Those issues, I believe, became more clouded in people’s minds as the years went on. Meanwhile, the whole of the governmental banking structure has grown very greatly and indeed, for that matter, is still growing. Administratively, it has been a most unwieldly set-up. This cluster of closely interwoven organizations came under one board and was the managerial responsibility of one man - the Governor of the Commonwealth Bank. I say nothing derogatory or critical about the present Governor, but I believe that the task of administering this great conglomeration of banking units has become too much for any one man. I believe that the enormity of the problem of administering this ganglion of banking units militated against clear and firm lines of policy and the translation of policy into sound administration.
We on this side of the House believe that it is quite a big enough job for any one board and any one man, as governor, to frame a policy for and administer the central bank without adding to that job the potentially conflicting responsibilities of all the other banks associated with the central bank up to the present - the savings bank, the trading bank and the group of specialized sub-banking institutions that up to now have been part of the Commonwealth Trading Bank. For those simple reasons, and some others which I shall cover, the Government has taken the whole of this Commonwealth banking group apart, examined the separate units to determine their functions and has put the whole thing together again in what we believe to be a very much more logical and workmanlike way.
The central bank, now to be called the Reserve Bank, is now set apart from the rest of the institutions, with clearly denned responsibilities and quite adequate powers. Each of the other banking entities has been given full-blooded legal status, a charter of its own and as much independence of management as could be devised. Each institution now is a separate entity able to stand on its own feet, and it knows what its role and its purpose are. In addition, the separation of the central bank from the rest of the group, and particularly from the trading bank, removes a long-standing source of distrust between the private trading banks and the central bank. With the removal of that distrust there is potentially, for the future, a much greater opportunity for close, intimate and confident co-operation between the two sides of banking. The private trading banks, as we know, were unhappy by reason of their fear of a leakage of high level information about their trading bank business arising from the fact that, up to the present, individual bank officers in the Commonwealth banking structure could be transferred at will between the Commonwealth Trading Bank and the central bank, to the potentially competitive disadvantage of the private trading banks. These fears have not been related to any present disability on the part of the commercial trading banks; it was fear for the future, fear of what might happen under some future administration, that worried the private banks. There was also the fear in the minds of many people because in this last generation a government banking colossus had grown up - the central bank, the Commonwealth Trading Bank, the Commonwealth Savings Bank, the Mortgage Bank Department of the Commonwealth Bank, the Rural Credit Departments, the Industrial Finance Department - all under one single direction, with the obvious possibility that private trading banks might be squeezed, and that the nationalization of banking generally would be at any rate a great deal easier to bring about without legislation.
The Prime Minister (Mr. Menzies) set out to examine the situations of the central bank, which will in future be known as the Reserve Bank, and of the Trading Bank to see whether they would be better off or worse off under these new banking circumstances. I should like to go a little further than that and to consider all the banking units of consequence in this banking ganglion, and also the sections of the community which have relationship with the banks, either as depositors or borrowers; to put every one of those units of importance to the test and see whether they will be better off or worse off, more powerful or less powerful, under this legislation, and also to see whether the general situation of borrowers and depositors will be better or worse than it has been in the past.
As the Prime Minister said, the Reserve Bank will retain all the essential banking powers of the present central bank, including control of the note issue and regulation of trading bank interest rates. The new reserve deposits provisions give greater control over the volume of credit than do the present special accounts provisions. At present the central bank can call up, at most, 75 per cent, of the increase in trading bank deposits over a given period. Under the new reserve deposits provisions it will be possible for the Reserve Bank to call up 25 per cent, of the total deposits of the trading banks on 24 hours’ notice and any higher percentage on 45 days’ notice, which, as the Prime Minister has said, is not too long a time to enable the trading banks to adjust their borrowing and lending. The Reserve Bank will retain all the present resources of the central bank except for a relatively small amount of £9,000,000 which is to be taken from it to provide additional capital for rural credits and for the Trading Bank and the Development Bank. In mid-1957, the total reserves of the central bank stood at more than £1,000,000,000. That is the amount of the assets that stand as security for the note issue, for the currency. It also includes the central banks’ own funds in Australia and overseas. So, out of a total of over £1,000,000,000, a sum of £9,000,000 is to be taken towards increasing the capital of the three banking units that I have mentioned.
Although the central bank governor will no longer administer the Trading Bank and the Savings Bank, the Reserve Bank will have the power to determine the advances policies of these banks as well as the advances policies of all the other trading banks and savings banks. In addition, the removal of distrust between the central bank and the commercial trading banks will certainly, I believe, improve the ability of the central bank to do its task of economic and financial regulation of the nation’s economy. So it cannot be said that the Reserve Bank will be in any way in a worse position in the future than the central bank was in the past. In fact, I believe that this legislation will put it in a better position to do its main task as a central bank. As the Prime Minister also has said, the Commonwealth Trading Bank will retain its present charter to develop and expand its activities. It will receive £2,000,000 additional capital from the reserves of the central bank, and although it will in the future be subject to income tax, it is being given the right to retain one-half of its profits after payment of tax. Therefore, I believe it is reasonable to say that, on balance, the Commonwealth Trading Bank, under this legislation, will be neither weaker nor stronger than it is now. During recent years it has made great progress in its banking activities, and there is every prospect of that progress continuing.
I come now to the Commonwealth Savings Bank. Will it be better off or worse off under this legislation? The depositors will still be protected by the guarantee of the Commonwealth Government, which, of course, stands behind the Commonwealth Savings Bank, and, for the first time, the bank will receive legislative instructions to encourage saving and to promote the interests of its depositors. Will the depositors be worse off or better off? I believe that their position will be precisely the same as it is now. The provisions of the present legislation which relate to the protection of depositors will remain precisely as they are.
Will the employees of the bank be better off or worse off in the future? The fact is that the great body of the employees of the existing banking system will remain with the Commonwealth Banking Corporation, and that their present rights will be preserved by legislation, and otherwise, in detail. Although the theoretical area for promotion of bank employees, other than those of the Reserve Bank, will be slightly reduced because of the reduction from 10,000 to 9,000, the fact is that the total number of bank employees is likely to grow with the growth of the business of the bank. The present rights of the bank employees who are to be transferred to the Reserve Bank will be preserved by legislation. Provision has been made so that any bank employee who is dissatisfied with his allocation to a particular bank service may make application, within three months, to be re-allocated elsewhere.
Let us consider the position of borrowers from any one of the Commonwealth banking units. There will be no diminution of the lending potential of any of the banking instrumentalities involved. In fact, by reason of the increase of capital of the rural credits side of the Commonwealth Trading Bank and of the Development Bank, it is reasonable to assume that the increased capital will result in increased lending potential for the various units of the Commonwealth Bank complex. I think it is fair to say, without political bias, that no one of the banking units concerned, and no section of the people, is going to be worse off, and that it is possible that they will be slightly better off than they are at present. I believe that I have given a rational description of the principal reasons for the action of the Government in attempting this fairly widespread banking reform, this reorganization of the governmentally created banking units.
When this legislation comes into operation there will be a more logical and a more defensible system of banking than we have had in the past. We have had from the Opposition neither proposals nor objections that will stand examination. As the Prime Minister has said, neither in this House nor in the country itself has there been any appreciable or even noticeable reaction against the legislation. Therefore, I believe that it will go through. The debate has been a dull one, and the contributions to it by the Opposition have been inconsequential. I am of the opinion that this legislation will result in an improvement of the whole Australian financial and economic structure.
.- There is no doubt that the last quarter of an hour of this debate has been very dull. It is somewhat astounding that the contribution of a senior Minister to the debate on a subject of this kind should last no longer than a quarter of an hour. Having listened to the Minister for External Affairs (Mr. Casey), I now know of one reason why he lost the deputy leadership of his party a little while ago.
The right honorable gentleman argued that the Commonwealth group of banks has been unwieldly. Then he used an expression that was typical of him. He referred to a ganglion of banking units. I suggest that the Minister should reconcile his views with those of his leader on more matters than foreign policy, because had he been present in the House to hear the debate and the statements made by the Prime Minister (Mr. Menzies) and the Treasurer (Sir Arthur Fadden), he would have heard them say that no one had found any fault whatever with the way in which the Commonwealth group of banks had functioned, nor had any one found fault with the relation of that group with the trading banks. Yet the Minister for External Affairs devoted a half of his quarter-hour speech ;o arguing that the Commonwealth r,roup of banks was an unwieldy organization!
The right honorable gentleman expressed great concern about the fear of leakage of information from the central bank to the Commonwealth Trading Bank. I remind him, and also the House, that under the 1953 act, sponsored by this Government, special provision is made, by sub-section (3) of section 43, that it shall be unlawful for the central bank to make use of any information obtained from the trading banks for other than central bank purposes. The attempted justification of this legislation by the Minister for External Affairs and other speakers from the opposite side of the chamber, by reference to the fear of leakage of information, therefore is shown to be insincere. The existing legislation, provides against such a thing happening.
This bill involves the question of public versus private banking interests, and also that of the people versus monopoly capitalism. In this legislation, as in the past, the Government has come down on the side
Of private capital and private monopoly. It did so in the 1951 legislation, and again in 1953. It has done so in relation to its sale of public assets, such as the Commonwealth Oil Refineries Limited, Amalgamated Wireless (Australasia) Limited and the assets of the Australian Whaling Commission. It did so in regard to the action that it took against Trans- Australia Airlines, and it has done so in the case of almost every one of its budget provisions which, this year, will result in the distribution of more than £41,000,000, by way of taxation concessions, for the benefit of private and public companies. The Government has not gone quite so far as some of its more extreme supporters would go, but it is not surprising that it has again come down on the side of private interests rather than those of the public. Most of its senior Ministers - as the honorable member for East Sydney (Mr. Ward) said a short time ago in relation to the Minister for Trade (Mr. McEwen) - have stated that there is no justification whatever for the conduct of enterprises by public authorities, except upon socialist doctrines. If the members of the Government apply that reasoning to public utilities, such as the Australian Whaling Commission, why should they not also apply it to banking? We know that they intend to do so.
The members of the Government have come down on the side of the private interests because, only too clearly, they are of the same type of person - although, in many instances, just faint shadows of those who are running the monopolies - that they serve in this House. There is no doubt, too, that they have come down on the side of private interests rather than public interests because of the financial considerations involved. The honorable member for East Sydney referred to statements made by the late Mr. J. B. Chifley as evidence of that kind of association. This conflict of public and private interest has always been present in banking and in the record of this Government. I wish to refer to a speech made in 1947 by the late Mr. Chifley, in the course of which he said -
The Government has made its choice in favour of that kind of person. Mr. Chifley went on -
Time and again the policies of the private banks have run counter to national needs for steady growth and high levels of employment . . . the private banks fed the boom in the twenties . . they restricted activity in the thirties. . . .
The. private banks in Australia . . . have always bitterly resented any attempt to place restrictions on their power to create or restrict credit. . .
They have always fought against new developments whilst belatedly approving such changes as have been made and which they had originally opposed. In 1937 they criticized the Report of the Royal Commisison . and defended the old system. In 1945 they nailed their colours to the Report and resisted implacably the legislation of that year. Now, in 1947, they seem disposed to make the 1945 legislation their rallying cry whilst they prepare themselves once again to dic in the last ditch against a new logical and necessary development.
Of course, the private trading banks’ acceptance of the 1945 legislation was only tactics. As soon as a government willing to serve their purposes was elected they began to turn back the clock to well before 1945. First, the 1951 legislation set up a Commonwealth Bank Board to complicate, impede and dilute decisions in accordance with the ideas of the private banks. In 1953, the Government, answering the needs of the private banks as expressed by them in their private conferences with the Government - very often, I understand, in the Cabinet room - removed most of the effective strength of the special account procedures. Now the Government is taking another series of steps to the 1957 tune of the private trading banks. There are those who say the private trading banks have changed; they are not like they were in the 1890’s, or 1920’s or 1930’s, they say.
Let us look at the record of the private trading banks since this Government came into office in 1949. The evils of inflation had long been recognized before 1949. But in 1950 the Treasurer, in his Budget speech of that year, said -
To make a further great addition to the volume of purchasing power, not matched by an equivalent quantity of additional goods . . . would tend to disperse and weaken the national effort at a time when it should be more and more concentrated. . . . The Government will therefore bring down measures to restrain the effects which this excess purchasing power would have upon the economy.
But the Government was not able to restrain the effects of excess purchasing power. Trading bank advances were £479,000,000 in 1950-51, and they amounted to £621,000,000 in 1951-52. They increased by £142,000,000 in one year. This increase of 41 per cent, in private trading bank advances in one year was the worst case of feeding the boom that has ever occurred in Australian history. That is part of the record of the trading banks which this Government is at present defending and answering to in this legislation. Was the record of the trading banks any better in that year than it was in the 1890’s or the 1920’s? That was the year in which the most evil effects of inflation were set at liberty in Australia much of which came from the action of the private trading banks in putting profit ahead of public interest.
But that was not the end of it. In 1953, the Treasurer announced that we had had a reprieve from the economic brink. He said -
We must now press on with the great tasks of developing our resources, expanding our industries, increasing our population and building up our national standards of life.
But what happened? Did we do these things? Inflation continued into recession, and the figures tell the story. Immigration, which has been put forward as such a great government and national aim, was responsible for over 120,000 people coming to Australia in 1950-51. In 1951-52 100,000 arrived, but in 1952-53, the figure dropped to 60,000 and in 1953-54 to 48,000. So, this Government’s much-vaunted immigration programme was more than cut in half over those few years. Houses under construction in 1950-51 and 1951-52 were more than 80,000. In 1952-53 and 1953-54 the number had dropped to 69,000, in 1954-55 to 65,000, and in 1955-56 to 60,000. In another place the Minister for National Development (Senator Spooner) has complained that the savings banks are not prepared to lend money for housing. Of course, the trading banks have been fundamentally concerned with this cut in the number of houses being built. Their policy has had a fundamental effect in cutting the immigration programme by more than half. All that the trading banks have been doing, having cut back their funds for relatively low interest housing purposes, has been to lend money for hire purchase and other building interests. The “ other buildings “ rose in value from £90,000,000 in 1950-51 to £220,000,000 in 1955-56. That is the kind of diversion of resources that has gone on under the influence of these trad ing banks. These are the bodies that are supposed not to have changed in their attitude to public questions. Not only have private trading banks contributed to the recession in home-building and immigration but they have, on the other hand, contributed more and more money to highinterest luxury demands and less to the great task of the development of our resources upon which we really depend.
What is the use of Government supporters indulging in flights of oratory about our national aims and achievements when we can see that the fundamental role which the trading banks are playing in our economic structure is to prevent the achievement of those very aims? This is not just my opinion. I invite honorable members on the Government side to hear the words of their own Treasurer as to the role of trading banks. In his Budget speech of 1954, he said-
We had a grim experience of inflation up to 1952 and I should not need to recall them. . . . We should not need to be taught that lesson again, learnt as it was in the years of disruption and futility.
But we had to learn that lesson again. One year later, in his next Budget speech in this House, the same Treasurer said this -
There has been a formidable upsurge of spending … It has been facilitated by a far too generous expansion of credit on the part of the banking system together with a rapid growth of hire purchase finance. Here unquestionably is the chief reason for the tensions and pressures in our economy.
I remind honorable members on the Government side that their own Treasurer uttered those words. They indicate the economic conditions which disturbed the country in those years. According to the Treasurer the private trading banks in 1955 were responsible for more “ disruption and futility “ and for “ the tensions and pressures in our economy “ than anything else. These conditions were not the result of Communist activity. According to the Treasurer, the disruption and futility were the result of the economic policies of the private trading banks.
Can there be any doubt that the private trading banks were as guilty in the 1950’s of what Mr. Chifley said they had been guilty in earlier years? But despite the record of the private trading banks, the Government again, in 1957, proposes to answer their demands. The pendulum in this country has swung a long way in the direction of the interests of the powerful and wealthy since this Government came into office. It is time that that swing was brought to a stop. Let us examine the way in which these bills represent further gains to the powerful and the wealthy. Earlier this evening the Prime Minister, in one of his flights of oratory, raised the question, “ Do these bills weaken the public banking structure? “ I am convinced that they do in seven ways. Since 1949, the trend in most countries has been to strengthen the public banking system. In most countries with central banks the powers of public banking are stronger than they are in Australia.
These bills weaken the public system of banking in Australia in seven clearly defined ways. The first is the separation of the central bank from the Commonwealth Trading Bank and the Commonwealth Savings Bank. In 1951, the Treasurer said this -
Part of the strength of the Commonwealth Bank, as a central bank, is, however, derived from the direct contact with the financial and industrial system which it maintains through its trading sections.
Part of the strength of the central bank was represented in its contact with the business world through its trading and financial sections. To-night, in justification of this separation, the Prime Minister was able to say only that the Bank of England, the very model of a central bank, was in favour of it. But what did he say in 1953? He said -
We believe that the Commonwealth Bank’s general trading activities have great merit because they act as a source of information to the central bank. They enable the central bank to have an instrument by which it may give leadership in banking policy. It has a great number of advantages that I need not discuss at this stage.
Those were the words in 1953 of the Prime Minister who, to-night, sees no advantage in any of these things.
The Governor of the Commonwealth Bank, Dr. Coombs, who is supposed to be silent upon these matters, said in a lecture delivered in Brisbane on 20th June, 1955 -
It is important to realize that, by the direct influence which the Commonwealth Bank exercises over the family of banks of which it is the head, it is able, within the limits imposed by their commercial . . . character, to influence their policy so that they contribute directly to the achievements of the objectives of central bank policy. There can be little doubt that this direct link gives to the Commonwealth Bank a source of strength which can be of particular value in times when the economy is threatened with declining activity and employment.
That is the opinion of the Governor of the. Commonwealth Bank and it is against one of the fundamental proposals of this bill. In 1951 the Treasurer was against the proposal; in 1953 the Prime Minister was against it; in 1955 the Governor of the Commonwealth Bank was against it.
The association of the central bank and the trading bank, according to the Treasurer, was part of the strength of the Commonwealth Bank, as a central bank. According to the Prime Minister this association had great merit. It was one of the factors in its leadership. It had a great number of advantages. According to the Governor of the Commonwealth Bank, there could be little doubt that this direct link gave the Commonwealth Bank a source of strength. So, is it not clear that the breaking of this link must weaken the Commonwealth Bank? I suggest that this, my first point, is quite fully proven by statements from the Prime Minister himself, from the Treasurer himself, and from the Governor of the Commonwealth Bank.
Under this legislation, the central bank will lose a part of its strength. It will lose something which, according to the Prime Minister, was of great merit and which had a great number of advantages. It will lose something which, according to the Governor of the Commonwealth Bank, was a source of strength. Does that not mean that this legislation must weaken the central bank? Is not that the answer to the rhetorical question which the Prime Minister asked in this House a little while ago?
Let me look at the second way in which this bank will be weakened. It will be weakened because of a division of staff between the central bank and the other banks. The Prime Minister made no reference to this point to-night, but went into a number of other things which had little relationship to the significant question of whether the bank would be weakened or not. In 1953 the Prime Minister said -
We do not believe that it is desirable that those officers who are now in the service of the Commonwealth Bank should be put to a final election as io whether they are on the central bank side or on the trading bank side.
In other words, he did not believe, in 1953, in what he is doing in 1957. He went on to say -
The Government believes that it should preserve the greatest fluidity of promotion among the Commonwealth Bank’s officers, because the experience gained in both sections of the bank will be of great value . . Consequently, there will be one service and one series of avenues of promotion which is a result that the Government consider very desirable.
That was what the Prime Minister said on behalf of the Government in 1953. But in 1957 the Government is undoing something which, in 1953, it deemed very desirable. Less than four years later, the Government is taking away something which it considered was important and valuable to the Commonwealth Bank in 1953. In that year the Prime Minister considered that there should be “ the greatest fluidity of promotion among the Commonwealth Bank’s officers because experience gained in both sections of the bank will be of great value “. But it had nothing to do with the position of the service.
The matter raised by the honorable member for East Sydney (Mr. Ward) takes this a step further. He quoted a letter from the Governor of the Commonwealth Bank which showed that, in the view of Dr. Coombs, this would lead to overspecialization in certain fields in the new bank. It would lead to inflexibility. The solution suggested to overcome some of these problems would be nothing better than early retirements. Quite clearly, it is demonstated by the statements made by the Prime Minister and the Governor of the bank that the separation of the central bank and the trading bank will weaken the public banking structure.
The third point to which I want to refer is the restriction of the capital of the Trading Bank. I submit that the Prime Minister either completely misunderstood this matter, does not understand the situation, or was endeavouring to divert the attention of the House from the fundamental aspect. Under this legislation, the Trading Bank is dependent upon its profits for its capital requirements. I am not talking about what it might need to carry on its ordinary day-to-day banking business; I am talking about what it needs to build new branches in the country, to stock and equip them, and to operate them in effective competition with the private trading banks. That is where the restriction of capital will hit it most severely. First of all, 50 per cent, of the profits of the Trading Bank will be taken from it and transferred to the Commonwealth Government. Out of the 50 per cent, that is left, the Trading Bank will have to pay taxation. It will have to pay no less than half of its remaining profits in taxation and possibly more, so that the bank will have only 25 per cent, of its accumulated profits for capital investment. In other words, the resources previously available to it for capital development will be halved.
It has been said that this legislation will put the Commonwealth Trading Bank on an equal footing with the other banks, because 50 per cent, of its profits will have to be transferred to the Commonwealth Government, corresponding to the payment by the private banks of dividends to their shareholders. But statements made in this House to-day have been to the effect that only Ti per cent, of the profits of the private banks is paid in dividends. Clearly the claim that the 50 per cent, of profits which the Commonwealth Trading Bank will be required to pay to the Government will be offset by the 7i per cent, of profits which the private trading banks will pay in dividends is an example of the perverted reasoning of this Government and its supporters.
My fourth point concerns the creation of boards, executive committees, general managers and governors. The Minister for External Affairs (Mr. Casey), after spending a quarter of an hour on a speech which he read carefully, has now left the House. He pointed out the objection which the Government found in the existing law to the complex situation, resulting from the unwieldy nature of the ganglion of banking units. The Government is adding to the complexities. It is going to create three boards instead of one. It is going to have three executive committees instead of one. It is going to have a group of managers and governors. There will be more harness than horse. It is openly admitted that the boards and committees will hold up and obstruct decisions. The very purpose of the multiplicity of committees and boards is to make the situation more complex so that the private banks will know, beforehand, what is going on. I suggest that the complexity of the boards and committees will considerably weaken the Trading Bank.
My fifth point concerns the obstruction and delay of the statutory reserve deposit system. The central bank under this legislation will be able to call up only 25 per cent, of the trading banks’ deposits. The calling up of more than 25 per cent, will require 45 days’ notice. That lasts for six months. When the six months runs out another 45 days’ notice must be given, and that lasts for only three months. The Prime Minister talks about this dislocating the business of the bank’s customers. This is not supposed to affect, nor will it affect, the existing relations of the banks and their customers. It is directed towards preventing increased lending, new lending, not to affect old lending.
These provisions are again in answer to the demands of the private banks. The effectiveness of the central bank’s position will be weakened by the amount of time that has to pass before the provisions can become effective. It is quite clear that this will weaken the position of the central bank.
The sixth point to which I wish to refer concerns the loss of the special account procedure. Dr. Coombs, at page 18 of the lecture to which I have already referred, said -
Looking back over the history of the use of the special accounts, a student of credit policy can have little doubt that it is an instrument of great actual and potential value, especially in the Australian scene where more traditional instruments of credit policy are inevitably less effective than in more developed money markets.
The Governor of the Commonwealth Bank was there referring to the special account procedure as something of great actual and potential value to the Commonwealth Bank. Obviously the sweeping aside of that special account procedure must weaken the bank. I refer now to the opinion held by the Prime Minister (Mr. Menzies) in 1953. The right honorable gentleman has changed his tune more on this legislation than on anything else in his political life and that is saying something. In 1953 he said -
We must have the special account procedure. I am a great believer in the special account procedure.
Can you not hear him, standing at the table, and saying that? In 1953 he professed to be a great believer in the special account procedure, but in 1957 he sweeps it aside. In 1953, he said -
No one seriously challenges the system.
There have been some serious challenges to it in the last four years. They have come from the private trading banks. Now the Prime Minister has completely changed his view of the situation. I suggest that the reason for this change is to be found only in the comments of Mr. Chifley in 1950, when he spoke of the money that the trading banks had paid for the conduct of election campaigns by the parties that now govern this country.
I refer now to the seventh point regarding the weakening of the Commonwealth Bank. This has reference to the restriction of lending by the Commonwealth Bank itself. The Commonwealth Bank, through its Industrial Finance and Mortgage Bank Departments, may lend to consumers and to employees for hire-purchase purposes. The Development Bank, however, may lend only to property owners and business people. The powers of the Commonwealth Bank will again be weakened to this extent.
The proposed changes, which will weaken the central bank, the Trading Bank, the Savings Bank and every other part of the institution in the seven ways that I have mentioned, are quite unnecessary. The Prime Minister said in 1953 -
If the amendments proposed in this bill are considered . . . they will, we believe, place beyond doubt the continued operation of the Australian banking system in open and fair competition within the framework of central bank policy . . . We will have produced in this measure and the other a scheme which reconciles the proper formulation and administration of central ‘banking policy with true, genuine competition between the banks which attend to what I shall call the retail side of banking.
The complete job was done in 1953; but now it is found necessary to make these vast changes! What is the explanation of this amazing change of front by the Prime Minister? In 1950 the Treasurer (Sir Arthur Fadden), in introducing the first of these attacks on the people’s banking system, said -
It would be undesirable to make frequent changes in legislative requirements affecting the banking system.
That was said in 1950, but the Government made one change in 1951 and another in 1953. Another change is to be made in 1957. All these changes have been made to serve the interests of the private banking system.
Mr. ACTING DEPUTY SPEAKER (Mr. Timson). - Order! The honorable member’s time has expired.
.- Once again it is my privilege to follow the honorable member for Yarra (Mr. Cairns), and once again I find, as on a previous occasion a couple of years ago, that he has misquoted not only statements of honorable members, but also the legislation itself. I thought the Prime Minister (Mr. Menzies) had dealt quite adequately with the subject of the capital of the Commonwealth Trading Bank, but the honorable member for Yarra stated that the Prime Minister merely glossed over the matter. He then told us that of the profits of the Trading Bank, onehalf would go to the Government, and the bank would pay income tax out of the other half and place the balance into its reserve fund. I shall read section 32 of the Commonwealth Banks Act, the provisions of which are absolutely contrary to what the honorable member said. The section says -
The net profits of the Trading Bank in each year, after provision for income tax, shall be dealt with as follows: -
one-half shall be placed to the credit of the Commonwealth Trading Bank Reserve Fund; and
one-half shall be paid to the Commonwealth
That is completely different from the interpretation given by the honorable member for Yarra. As my colleague, the honorable member for Gwydir (Mr. Ian Allan) points out, the honorable member for Yarra did not read the clause. This is a habit of his. He misquotes not only statements by honorable members but also the legislation itself. The honorable member would have us believe that a terrible state of affairs exists in Australia, that the economy has gone all to pieces, and that there is tragedy right and left. Yet it is only a month and nine days since the same honorable member said in this House that we were living in a progressive community with rising living standards. Whichever horse he backs, the honorable member likes to have a couple of shillings each way. It is all very well for him to try to interject now. Probably he will try again when I make my next point.
In this debate Labour party supporters have frequently quoted statements made by present and past members of this Parliament. One statement that has been quoted freely was made by the late Mr. Chifley in 1950. The proof of that statement has never yet been forthcoming in this place or anywhere else. The right honorable gentleman said at that time that the present Government parties had received large sums of money from the trading banks, and that the legislation then introduced was their pay-off. I do not know whether there is any truth in that allegation. I know that I never received a penny. We on this side of the House, however, would prefer to get money from that source than from the source from which the Labour party, according to the previous honorable member for Fawkner, received money. That honorable member told us that the Communist party had paid amounts of money into a Labour party slush fund. No member of the Labour party, either here or outside, has yet seen fit to contest that statement.
– Order! I suggest that the honorable member confine his remarks to the banking legislation before the House.
– I am talking about funds. Members of the Labour party have never yet produced the books of the party to disprove the allegation to which I have referred.
We know of all sorts of slogans used by the Opposition in this Parliament. Honorable members of the Opposition have called themselves democratic socialists. They have tried to instil into the minds of the people the idea that the Government intends to sell the people’s assets. They have said that this legislation is designed to weaken and destroy the Commonweath Bank. They have said that the separation of the various components of the Commonwealth Bank is being effected at the behest of the private trading banks and that it constitutes an attack on the people’s bank. Let me deal with the suggestion that the separation is being carried out at the behest of the trading banks. I do not deny for one moment that the representatives of the trading banks had some discussion with the Government with respect to this question, with the object of having the banking system work more harmoniously. Do Opposition members contend that they have not received protests and suggestions, both when they have been in office and in Opposition, designed, for instance, to improve industrial conditions and provide for more harmonious relations between employers and employees? Those of us who have been in this Parliament for some time recall very clearly an occasion when the present Leader of the Opposition (Dr. Evatt), as Attorney-General in a Labour government, introduced a stevedoring bill, commonly called Healy’s bill. Before that bill went beyond the second-reading stage, 53 amendments to it were circulated. Where did those amendments spring from? They came from one section of the community outside this Parliament. I give every credit to any government, of whatever political complexion, for doing what it can to bring about peace and harmony in industry in Australia.
It has been proved conclusively that no attack is being made on the people’s bank. I shall refer to this matter again later in my speech. The honorable member for Darebin (Mr. R. W. Holt) said -
They are exploiting the people, and the people’s bank, which could provide some relief, is deliberately debarred from doing so.
It is obvious he did not look at the bill before he spoke, because sub-clause 2 of clause 9 of the Commonwealth Banks Bill reads -
It is the duty of the Board, within the limits of its powers, to ensure that the policy of the Corporation, and the banking policy of the Trading Bank, of the Savings Bank and of the Development Bank, are directed to the greatest advantage of the people of Australia and have due regard to the stability and balanced development of the Australian economy.
Did the Labour party when it was in office incorporate anything in the 1945 act which would empower the Commonwealth Savings Bank to ensure that same policy? It merely said the Commonwealth Bank was to pursue a certain policy.
The honorable member for Darebin, when criticizing the bills before the House, referred to a book, “ Central Banking “, written by the Governor of the South African Reserve Bank, but he omitted to read page 106, which is in these terms -
Whilst almost all the older central banks, and many of the newer ones, have power to deal directly with the public, they have come more and more to accept the principle that a central bank should not ordinarily engage in general banking business with the private customers to any great extent.
That is the policy that is being adopted in the legislation now before the House.
The facts completely disprove the assertion of honorable members opposite that the Government is weakening the Commonwealth Bank with the idea of destroying it. We need only look at Professor Arndt’s book, “ The Australian Trading Banks “, which was referred to by the Leader of the Opposition. Dealing with monetary policy, Professor Arndt said -
Certainly, the private trading banks have found to their cost that the separation of the Commonwealth Trading Bank from the Central Bank in 19S3, for which they had been pressing so vigorously, has strengthened rather than weakened the former Commonwealth Trading Bank as a competitor since, by loosening its formal ties with the central bank, it has freed it in some measure from the inhibitions which naturally afflicted the general banking division of the central bank.
In the postscript on page 201, which would appear to have been written very recently, Professor Arndt stated -
If the partial separation of 1953 had any effect at all it was to free the Commonwealth Trading Bank in some measure from this restraint. Complete separation would increase, not reduce, the Trading Bank’s freedom to compete with the private banks.
Honorable members opposite have often referred to the “ Sydney Morning Herald “ and stated that certain articles appearing therein are true. I read the following extract from that newspaper of 9th February, 1957:-
These trading bankers are well aware that the competitive abilities of the Commonwealth Trading Bank are more likely to be stimulated if the Federal Cabinet meets their own request.
Yet, honorable members opposite say that this legislation is designed to weaken and destroy the Commonwealth Bank.
I shall quote again from Professor Arndt’s book because the Leader of the Opposition brought this particular publication so clearly before us. Professor Arndt stated that the Commonwealth Bank in its share of all business of cheque-paying banks, in 1938 had 7.7 per cent, of the business and in 1946 it had 6.9 per cent. - that was immediately after the introduction of the Banking Act 1945 by the Labour government - but in 1951 it rose to 8.2 per cent., and then by 1956, a period of four years, it jumped to 11.4 per cent, of the total business of the banks in Australia. That was after the 1953 legislation, which gave partial separation to the Commonwealth Trading Bank.
I shall now quote some of the figures given by the Treasurer which were referred to by the honorable member for Hume (Mr.
Anderson). In June, 1946, after the introduction by the Labour government of the Banking Bill 1945, the deposits were £58,000,000; in June, 1947, they were £58,600,000, and in June, 1948, they were £60,600,000. Then there was a gradual increase in June, 1949, to £68,200,000 whilst in June, 1950, the figure was £84,400,000, no doubt due to the restoration of some confidence in the minds of the people as a result of the election to office of this Government on 10th December, 1949. In June, 1951, the figure was £119,700,000. That was the year in which wool prices reached their peak as a result of the war scare. In June, 1952, deposits amounted to £109,100,000; in June, 1953, the figure was £135,700,000; in June, 1954, it reached £165,700,000; in June, 1955, it reached £181,100,000; in June, 1956, the figure was £179,100,000, and in June, 1957, deposits amounted to £193,900,000. Those figures indicate the remarkable increase in deposits in the Commonwealth Trading Bank after its partial separation from the central bank in 1953.
As a further indication of the confidence of the people in this bank since this Government took office, the number of branches and agencies increased from 423 in 1950, to 440 in 1953; but from 1953 to 1957 there has been an increase of 149 branches. The claim of the Opposition that the Government is trying to weaken and destroy this bank is so much poppycock. The Leader of the Opposition criticized the Government about the omission of full employment terms and other matters. I remind him and those who sit behind him that there appears to have been a violent change in their thinking over the years. The honorable member for Melbourne Ports (Mr. Crean) referred to the late Mr. J. B. Chifley as a specialist in banking. For the purposes of my argument I am not going to deny that, but reference to the division lists in 1930, when Mr. Theodore wanted to introduce the Central Reserve Bank, will indicate that Mr. Chifley supported it. We find that Mr. Theodore has this to say -
We must, however, recognize the rights of the private trading banks-
I ask honorable members to remember those words - and if we want a central reserve bank in Australia, it must be an institution separate from the Commonwealth Bank.
That statement can be found at page 1335 of volume 123 of “Hansard”. The late Mr. Chifley, who is said to have been a specialist in these matters, supported that legislation right up to the hilt. No one can say that Mr. Theodore was not a solid Labour man; yet he had the sense of proportion to realize that, if a successful banking system were to operate in this country, some recognition would have to be given to the private trading banks, if they were to be part of it. Any sensible man would give that recognition, but the Labour party at this juncture does not seem to be doing so.
Let us come a little closer to the present. Another Minister of the Labour Government in 1945, the Honorable John Dedman, who at the time was Minister for Post-war Reconstruction, spoke in the Parliament on the 1945 banking legislation. His remarks can be found at page 802 of volume 181 of “Hansard”. The Prime Minister, the late John Curtin, moved the suspension of standing orders so that Mr. Dedman could complete his speech without limitation of time. I think a move of that kind would be proof positive that what the Minister was saying was accepted by the Prime Minister of the day.
– Mr. Dedman spoke for the Government.
– That is so. Referring to the then Leader of the Opposition, who is now the Prime Minister (Mr. Menzies), Mr. Dedman said -
Does the right honorable gentleman think that the system as it stands, with the central bank also undertaking trading bank activities, is the one that should continue in Australia? Apparently from his speech he does, because he did not indicate any alteration of the present system which he would make.
He went on -
I suggest to the House that, from the point of view of the trading banks themselves, it is a better proposition for them to have the activities of the central bank entirely separated from the trading bank activities of the Commonwealth Bank than to have the two combined as they are now.
Those remarks were made when the 1945 banking legislation was being discussed. Mr. Dedman continued -
I am not one of those who believe that merely because you can control the monetary system, you can bring about a paradisein this or any other country. The real welfare of the people depends upon their skill and efficiency and the work and services that they perform.
We do not hear similar statements from Opposition members now. The Opposition says that there is no need for the separation of the Reserve Bank from the Trading Bank, as proposed in this legislation. In 1945, Mr. Chifley - I mention him because he has been referred to so many times by honorable members opposite - in mentioning opinions held that a central bank should not compete with the members of the banking system which it supervised, said - lt is the Government’s view that a government should participate in active competition with the private banks and that this function can be most suitably performed by a separate division of the Commonwealth Bank.
Various Opposition members have referred to the royal commission on banking, but they did not refer to Mr. Chifley’s comments about the separation of the two banks. If any one doubts my word, I can find the exact passage. Mr. Chifley said that there were well-founded arguments in favour of a bank separate from the central bank, but as far as he was concerned there should be a link between the two. When he came to make his report, he held a slightly different view. In concluding his speech on the 1945 banking bill, Mr. Chifley said that under the legislation the Commonwealth Bank would grow to its full stature. I ask Opposition members, through you, Mr. Speaker, whether the bank did grow to its full stature. They know quite well that it did not, and all this sham fighting they are putting up at the moment is merely whistling to keep up their courage. They are trying to whip up opposition to this legislation so that next year they might have a chance of winning the election. They are in such desperate straits to regain the treasury benches that they have invited two overseas socialists to come here. What have they been told? They have been told that those men are not keen to come here at election time to help Opposition members. That is because these two leading socialists from England would not be associated with the tactics employed by the gentlemen occupying the Opposition benches.
The Leader of the Opposition (Dr. Evatt) has made great play of the fact that, on his reading of the legislation, there is a complete omission of the undertaking to maintain full employment. He did not »ay whether he was referring to the Reserve
Bank or the Commonwealth Banking Corporation. He knows, or he should know, as all Opposition members should know, *hat that provision is written into the Reserve Bank Bill, and that is where it should be. It is not a responsibility that can be placed on the Trading Bank. I comeback to the financial genius mentioned by honorable members opposite. They must recall that, when Mr. Chifley introduced his. 1945 banking legislation, he said -
The principal function of the Commonwealth. Bank must be to fulfil its responsibilities and duties as a central bank.
That statement is to be found at page 548- of volume 181 of “ Hansard “. If the Commonwealth Bank were to fulfil its duties as a central bank, then the provision for full employment could be retained in legislation for the Commonwealth Bank. We find in “ Hansard “ that, when Mr. Chifley introduced the 1945 legislation, he said -
The general functions of the bank are set out in the form of a charter. Clause 8 is particularly important.
He quoted clause 8 and, if honorable members care to look at clause 8 of the 1945 legislation, they will find that, except perhaps for a change of tense of one word, it is identical with clause 10 (2) of the Reserve Bank Bill. Opposition members know the facts as well as Government supporters do, but they are trying to put out stories that this horrible Government, as they call it, will destroy the people’s assets. They know very well that clauses in the bills now before the House cater more for the needs of the people than the 1945 act or any alterations made by a Labour government at any time did, except perhaps the initial establishment of the Commonwealth Bank. They know very well that clause 9 (2) of the bill dealing with the Commonwealth Banking Corporation provides that that bank shall work to the best advantage of the people of Australia. They know, also, that other features of this legislation will be for the benefit of the people, and I hope to touch on those features in a few moments.
I wish to deal now with the Rural Credits Department. The Leader of the Opposition was the first to criticize this department, and he was supported by the honorable member for Parkes (Mr. Haylen) and the honorable member for Hindmarsh (Mr. Clyde Cameron). Those who were in the
House at the time will recall that the honorable member for Parkes said quite clearly, “ What have they done with the Rural Credits Department? “ Looking at the Australian Country party he said, “ Supporters of the Australian Country party are sitting pretty “. At that moment he was referring to the Development Bank. Opposition members should welcome the Development Bank with open arms. It could be of inestimable value to some of them after the next election. There is only one thing that I am afraid of on their behalf as individuals. I wonder whether they can satisfy the bank that they are persons of the type mentioned in clause 73 of the bill. That provides that they must show some signs of being able to make a success of the job that they propose to undertake. If they cannot measure up to that requirement, the Development Bank cannot be of any use to them. Nevertheless, it may come in very handy.
We recall the honorable member for Hindmarsh criticizing the party to which I belong for the removal of the Rural Credits Department from the Commonwealth Bank. He must have read section 11 of the 1945 act and section 29 of the 1953 act. As a result, the honorable member must have known that the Rural Credits Department never came under the trading bank section. The Leader of the Opposition (Dr. Evatt) dealt at great length with this matter. He asked why it was proposed that the Rural Credits Department should continue to be associated with the central bank. He said that a part of the central bank organization will be the Rural Credits Department, which has nothing to do with the central bank. This is a sham argument.
It is refreshing for honorable members to hear the leader of the democratic socialists in this country, the Leader of the Opposition, putting forward the same case as the private trading banks in this country. That is what they are seeking - that the Rural Credits Department should be put into the Trading Bank. They will not take it on themselves. Yet if we stop to think for a few minutes, we must realize that a trading bank could not handle such business. If the normal wheat crop is 160,000,000 bushels, what private trading bank could find the amount necessary to pay the first advance on that crop? Obviously the Rural Credits Department must be a part of the central bank.
Opposition members have freely criticized this legislation, saying that it will smash this and that, but not one word has been said of the benefits that might accrue to the people in respect of housing. Did the Labour party, when it was in power, make provision for the Commonwealth Savings Bank to make advances for housing? It did not. But such a provision exists in this legislation. There are other provisions relating to money being made available for housing. All the noise, all the froth and bubble, emanating from the Opposition side of the House over this legislation will fail to stir the people.
Opposition members cited the report of the Royal Commission on Banking, which stated that the ultimate responsibility for the monetary system of this country rested with the Federal Parliament. Did that financial specialist, the late J. B. Chifley, write that into section 9 of the 1945 act? No, he did not. He skated around that problem and left the monetary system in the complete control of the Executive. But this legislation provides that Parliament shall be the final arbitrator in any dispute between the Bank Board and the Government. That is as it should be.
– Where do you get that from?
– It is in the bill.
– Parliament does not have to approve of it at all.
– The statement of the matter in dispute has to be laid on the table of the Parliament and honorable members can object to the decision given, if they wish. The Labour party is in favour of giving power to the Executive and taking it away from the Parliament. If honorable members on this side of the House permit such a thing, we will find ourselves in a lot of bother when we wake up one bright morning.
Members of the Opposition, in criticizing this legislation, are just whistling to keep up their courage, and hoping to stir up the people to support them at the next election. However, by that time the people will have realized that this change in the Commonwealth Bank is to their advantage, and that they will have the benefit of facilities that they never enjoyed before. I only hope that the Development Bank will be of inestimable value to some honorable members opposite when they are no longer here.
Debate (on motion by Mr. Russell) adjourned.
House adjourned at 11.4 p.m.
The following answers to questions were circulated: -
d asked the Minister representing the Attorney-General, upon notice: -
– The Attorney-General has supplied the following replies: -
d asked the Prime Minister, upon notice: -
– The answer to the honorable member’s questions is as follows: - 1 and 2. No expenditure by the Commonwealth was involved.
d asked the Minister for Immigration, upon notice: -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for Immigration, upon notice -
Will he furnish the following information in respect of persons deported from Australia, following their conviction on criminal charges, in each of the last ten years: - (a) The names of the persons concerned; (b) the nature of the charge and the sentence imposed; (c) the details of cases in which the date of departure from Australia preceded the termination of the prison sentence, showing the period of imprisonment served in each instance; (d) in each case where the full gaol term had not been served prior to departure, advise as to who initiated the action for release and deportation; (e) the instances in which the deportee had previous convictions for criminal offencs prior to arrival in this country?
– The honorable member was informed as follows in answer to a question in March last: -
Between 1st January, 1946, and 31st December, 1956,, 612 persons were deported as a result of convictions for crime. Such deportations do not take place until the State authorities are prepared to release the convicted person. It is the general rule that gaol sentence must be served before deportation.
This is the general answer to the honorable member’s present question also. The question of remission of any part of a sentence is a matter for determination by the State authorities. However, it would appear that their general rule is to require the sentence imposed to be served before releasing to enable my department to carry out deportation proceedings. To supply the many details of 612 individual cases requested by the honorable member would entail a great amount of work by the department, which is already fully occupied. It is regretted, therefore, that these details cannot be supplied to the honorable member.
Homes for the Aged.
e asked the Minister for Social Services, upon notice -
Is it a fact that under the Aged Persons Homes Act grants are not made to any organization that (a) builds a home as a single unit in a country district, or (b) builds a home on government property even though on this property a State home for the aged is already erected?
– The answer to the honorable member’s question is as follows: -
e asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
z asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
i asked the Minister representing the Minister for National Development, upon notice -
– The Minister for National Development has furnished the following replies: - 1 and 2. It is assumed that the questions asked “by the honorable member relate to the washing plant at Lidsdale installed by the New South Wales Mining Company, a subsidiary company of the Joint Coal Board. The total cost of this washing plant, together with all the related necessary plant and equipment, was £301,370.
z asked the Minister representing the Minister for National Development, upon notice -
– The Minister for National Development has furnished the following replies: -
olt asked the Minister for Immigration, upon notice -
– The answers to the honorable member’s questions are as follows: -
Cite as: Australia, House of Representatives, Debates, 19 November 1957, viewed 22 October 2017, <http://historichansard.net/hofreps/1957/19571119_reps_22_hor17/>.