House of Representatives
26 November 1957

22nd Parliament · 2nd Session

  1. House of Representatives
  2. 22nd Parliament
  3. 1957

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

page 2495

UNIVERSITIES COMMITTEE REPORT

Mr MENZIES:
Prime Minister · Prime MinisterKooyong · LP

– by leave - I present to the House, in a rather out of the ordinary procedure, the report of the Committee on Australian Universities. I may say that copies are available through the Clerk for all honorable members. 1 propose, Sir, to make a statement on the report in the House next Thursday evening, if that is agreeable, and in doing that I shall be able to announce decisions already taken by the Government in relation to the matter. I am still engaged on the preparation of the form in which the report and its accompanying statement ought to be presented, but I shall be ready to make that statement on Thursday night. In the meantime, honorable members will have an opportunity of reading the report. I think this will greatly clarify what I may have to say about it. When I make that statement, I will move that the paper be printed so as to facilitate discussion on it.

Dr EVATT:
BARTON, NEW SOUTH WALES

– If the decisions which the Prime Minister proposes to announce are available in sufficient time, I propose, if time permits, to comment on them as well as on the report after the Prime Minister speaks next Thursday night.

page 2495

QUESTION

CENSORSHIP

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

– In view of the frequency with which speeches have been made in the Commonwealth Parliament, particularly of late, by Government supporters regarding the alarming growth of child and youth delinquency in this country, will the Prime Minister answer the following questions: - Has his attention been attracted to the comparatively recent growth in Australia of the publication of trashy weekend papers of which “Crowd” and “Weekend” are typical examples? Is it a fact that these low-type publications, depending almost exclusively upon impressionable teenage patronage, are entirely devoted to sordid stories of crime and sex? Is it a fact that the papers, “ Crowd “ and “ Weekend “ have been banned in the State of Queensland?

Is it a fact that “ Crowd “ is produced by the proprietors and publishers of the “Sydney Morning Herald “, commonly referred to as “ Old Granny “, in the editorial columns of which great concern has often been expressed at what it has described as the deteriorating standards of parliamentary conduct? Are there any powers available to the Commonwealth whereby, in the national interest, action may be taken against these’ profit-hungry interests to prevent the publication of such dangerous filth sheets which are conducive to the lowering of moral standards in this country and the creation of a decadent race? If the Commonwealth lacks the power to act, will the Prime Minister arrange for an early discussion with the State Premiers with a view to securing uniform action by all States to prevent publication of these valueless, low-type papers designed, solely from profit motives, to corrupt the youth of this nation? In any event, will he see that the PostmasterGeneral uses the powers which he undoubtedly possesses to take action to prohibit the carriage by post of obscene publications of the character that I have described?

Mr MENZIES:
LP

– I can conclude, only, that I ought to make it clear to all honorable members that this is not a “ Dorothy Dixer “. The matter that has been referred to by the honorable gentleman is, of course, a very difficult one. I have the lowest opinion of such copies of these journals as I have seen. But the whole problem of censorship in its various forms and of the exercise of the powers of any government in relation to arguable publications is a complex one which deserves more consideration than I can give it in answer to a question without notice. The matter will certainly be looked at.

page 2495

QUESTION

AIRCRAFT EJECTION SEATS

Mr FREETH:
FORREST, WESTERN AUSTRALIA

– I ask the Minister for Air whether any action is being taken to equip Royal Australian Air Force aircraft with the latest type of ejection seat. 1 refer, particularly, to the British Martin-Baker ejection seat, which operates at low levels. I understand that the United States of America is installing the British equipment in its aircraft, and I should like to know what steps the Commonwealth is taking to instal similar equipment.

Mr OSBORNE:
Minister for Air · EVANS, NEW SOUTH WALES · LP

– Steps are being taken to instal in the aircraft of the Royal Australian Air Force ejection seats capable of the highest performance that has been developed in recent times. Seats of an earlier pattern, made by the company to which the honorable member referred, are fitted in the Canberra, Meteor, and Vampire aircraft, and these are now being modified in order to bring them up to the standard which will enable them to be used at ground level or at any height up to which the aircraft are capable of operating. Our Sabre fighters were fitted with an ejection seat designed by the designers of the aircraft, the North American Company, and a modification which has been evolved by the designers to give these seats a performance at least as high as the type of seats referred to by the honorable member has been approved. The work, which will cost a considerable sum of money, has already been authorized. I should not like the honorable member for Forrest or any honorable member to think that the existing seats are ineffective in any way. They are subject to limitations not applicable to seats of the latest design, but these limitations will be overcome by the modification. The fact that they are effective was demonstrated very fully recently by the pilot of a Sabre aircraft who ejected over the sea at a height of about 20,000 feet when his aircraft got out of control near Newcastle, in New South Wales. He landed in the sea and was recovered unharmed.

page 2496

QUESTION

INTEREST RATES

Dr EVATT:

– I wish to ask the Treasurer a question which relates to a matter that was originally raised by the honorable member for Darling. Is it a fact that the private banks are increasing interest rates from 6 per cent, to 8 per cent, as from 2nd December on advances on all wool shipped for which payment is to be made on arrival at overseas destinations, or wool sent on consignment? Will the right honorable gentleman make a statement on the matter so that it can be debated? Can he tell the House now whether that increase in interest rates has come to the notice of the Government - particularly of the right honorable gentleman - and whether approval has been given to the increase?

Sir ARTHUR FADDEN:
Treasurer · MCPHERSON, QUEENSLAND · CP

– The answer to the last part of the right honorable member’s question is, “ Yes “. The increase was approved in the course of administration and of my usual association with the Commonwealth Bank. On 20th November, the honorable member for Darling asked the Prime Minister a question without notice about a minor adjustment in an interest rate. The trading banks have been told that they are permitted to charge up to 8 per cent, per annum on overdrafts for post-shipment wool finance, subject to the condition that the banks continue to ensure that their average rate of interest on all advances does not exceed 5i per cent. This approval refers only to overdraft accommodation on wool which has left Australia, not to the bulk of wool advances, which are against wool held in this country and for which finance is available at an interest rate of 5i per cent, per annum. The new interest rate applies only to overdrafts relating to wool shipped from Australia. It does not apply to advances for any other purpose. It is in the nature of a technical adjustment and does not involve any change in financial policy.

I consider that there are very good reasons why the banks should be permitted to quote a high rate on advances for postshipment wool. Due, no doubt, to the relatively high rates of interest now prevailing in many overseas countries, there has recently been a growing tendency for some overseas buyers to seek to continue overdraft finance in Australia after the wool has been shipped, instead of continuing the normal, well-established custom of clearing such overdrafts by negotiating drafts on London or some other financial centre abroad. Extensive development of this new practice is considered undesirable because, in many cases, it delays receipt of the overseas proceeds of our exports and because of security aspects. Wool exported is no longer available as security to the lending banks in Australia.

The purpose of the permitted increase in the interest rate is to discourage abnormal borrowing. Australia is a rapidly developing country and funds are required at home for many developmental purposes. We cannot, therefore, afford to be too generous in granting credit to overseas buyers. In deciding their advances policy, the Australian banks must pay due heed to their liquidity position. Delayed payment for our exports means a reduction in the liquidity of the banking system of Australia. Moreover, if the banks decide to expand advances in one direction, their ability to lend for other purposes is reduced.

The post-shipment rate of 8 per cent, is intended as a deterrent to borrowing on overdraft in Australia. The majority of wool buyers will be unaffected. Those affected will still have to compete at the auctions for their requirements. There does not seem to be any reason to believe that this change will have any material effect on the prices and sales of wool. Wool buyers have been expecting Australia to follow New Zealand’s decision to increase the maximum overdraft rate to 8 per cent, per annum. Indeed, since our decision was made known, the price of wool has firmed slightly.

The current approval will certainly be reviewed as and when there is any significant movement in overseas interest rates. The Commonwealth Bank approves of this increase from 6 per cent, to 8 per cent, for the very definite reasons that I have outlined.

Dr Evatt:

– That is the central bank?

Sir ARTHUR FADDEN:

– Yes.

page 2497

QUESTION

NATURALIZATION CEREMONIES

Mr WENTWORTH:
MACKELLAR, NEW SOUTH WALES

– The Minister for Immigration being absent from the chamber, I ask the Prime Minister a question without notice. Has the right honorable gentleman’s attention been drawn to allegations made last night in the Richmond Council, in Melbourne, to the effect that local members of the State Legislature and of municipal councils, who were members of the Australian Democratic Labour party, were not invited to a naturalization ceremony conducted by the council? Does the right honorable gentleman know whether these allegations are correct, and will he issue an instruction that in future all State and Federal members concerned are to be invited to such ceremonies that are conducted on behalf of the Commonwealth? In particular, will the right honorable gentleman see that anti-Communist parties, such as the Australian Democratic Labour party, are not victimized by proCommunist elements inside the Australian Labour party?

Mr MENZIES:
LP

– My attention was drawn to the report of this incident and, in the absence of the Minister for Immigration, I made an inquiry as to the procedure adopted. Most honorable members are probably familiar with the procedure adopted in respect of these naturalization ceremonies, but it might be useful to remind the House of it.

Mayors of municipalities throughout Australia conduct naturalization ceremonies as persons authorized by the Minister for Immigration to administer the oath of allegiance to candidates for citizenship. The local government authorities are supplied by the Department of Immigration with a hand-book of guidance in the organization of such ceremonies. This practice is not new by any means; it has been going on for some time. The hand-book also lists the parliamentarians who should be specially invited to such ceremonies. They are, first, the representative of the Minister for Immigration; secondly, the member for the district in the House of Representatives; thirdly, a senator from the political party opposite to that of the House of Representatives’ member; and fourthly, the local member in the State Parliament. I understand that in the area now in question the sitting member in the Legislative Assembly is a member of the Australian Democratic Labour party. In any case, it will be clear from what I have said that if a particular mayor fails to invite any State or Federal member of the district to such ceremonies, he does so in opposition to the expressed wishes of the department.

Eleswhere in the hand-book the point is made that naturalization ceremonies should be kept free of party political argument. All honorable members will agree with that. When difficulties have arisen in the past it has usually been possible for the department to straighten them out in discussion with the local government authorityconcerned. It is a good thing that difficulties should be cleared up in that way, because the only alternative would be a very drastic step, namely, to withdraw the authority of the mayor to preside. I am sure no honorable member would like to see that happen. In the present case, a discussion will take place and a report will be obtained on whatever difficulties arose.

page 2498

QUESTION

SUPERANNUATION PAYMENTS

Mr GEORGE LAWSON:
BRISBANE, QUEENSLAND

– I preface my question to the Treasurer by stating that in his Budget speech he said that the Government had decided to provide some relief to Commonwealth superannuation pensioners whose pension entitlements commenced a number of years ago, and that increases would be made on a sliding scale of Ss. per unit to those who retired prior to 14th May, 1952, reducing to 3s. 6d. per unit for those who retired on 5th May, 1947, or thereafter, wilh a pension entitlement which had not been increased by a salary adjustment. Does the Government intend to give effect to that proposal during the present session of the Parliament? If so, from what dates will the new pensions operate?

Sir ARTHUR FADDEN:
CP

– It is the Government’s intention to introduce a measure to implement the proposal outlined in the Budget speech; and I hope that the bill will be before the House next week.

page 2498

QUESTION

WATERFRONT EMPLOYMENT

Mr CHANEY:
PERTH, WESTERN AUSTRALIA

– I ask the Minister for Labour and National Service: Is he aware that one of the ships tied up in Sydney, the “ Westralia “, has on board 600 tons of Western Australian potatoes, and that delay in unloading such cargo will cause hardship to growers in Western Australia? Can he give any information as to the probable settlement of the dispute ?

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Dealing with the first aspect of the honorable member’s question, yesterday I received a telegram from interests concerned directing my attention to the fact that this perishable cargo was in danger of damage. I have learned today that steps were taken to unload the cargo. I understand the same action was taken in respect of a perishable cargo of fruit on the “Karuah”. With regard to the action being taken to effect a settlement of the dispute, there have been a number of developments since the House last met. An officer of my department in Sydney, with my authority, received a deputation from representatives of the local branch of the Waterside Workers Federation, and the views of that deputation were conveyed to me. I had made it quite clear that so far as a determination of the matters in dispute was concerned, proper channels existed through which that end should be pursued, and it was certainly not my intention toundermine the authority of the industrial court by dealing with this matter myself. However, the deputation raised various, points arising out of my own statements, which I said I would examine. I have done so. I have found no reason to alter the substance of the statements I made. In short, I found no cause to question their accuracy. This information, at my instruction, is being conveyed to the branch of the federation. The judge, who is a presidential member of the commission dealing with this industry, presided over a conference this morning, I gather, of representatives of the federation and the owners on the slingloads issue, which is one of the matters in dispute, but no agreement was reached. I am told that it is expected that the judgewill accordingly issue his own decision on the matter shortly.

One point which was raised by the members of the deputation should, I think, be referred to here because a good deal of publicity has been given to it. That is the allegation that disciplinary provisions in our legislation apply to members of the federation but do not apply to the stevedoring companies or the shipowners. That is not a fact, as a reference to sections 33 and’ 35 of the Stevedoring Industry Act will confirm. There are set out details of the penalties that can be applied - monetary penalties and the penalties of deregistration in appropriate cases on application made to the Commonwealth Industrial Court by the Stevedoring Industry Authority. I am advised that, while no prosecutions have so far been launched against employers, a number of warnings have been given and one case is at present with the Crown Law authorities with instructions that a prosecution should issue. In any event, I would point out to the federation that we now have a well-established channel of representation on matters of this kind, if any union or section of the trade union movement feels that the industrial law should be amended. The representations can come to me either through senior officials of the Australian Council of Trade Unions or through the Ministry of Labour Advisory Council, which meet periodically. As it happens, provisions already exist. If they are not considered adequate, I can hear discussion regarding them.

There is, I believe - and this again is a significant development - a meeting to be held this afternoon between representatives of the federation and of the foremen stevedores. That is a private conference of their own, and I am unable at this stage to give the House any information as to its outcome. I conclude by repeating in substance what I have said earlier: As to the principal matter in dispute - the deregistration of the man Krespi - a clear course is open to the federation if it wants to have an impartial determination of the facts and issues arising there. The other aspect - the sling-loads issue - is before the appropriate tribunal and, the conferences having failed to reach agreement, Mr. Justice Ashburner is in a position to give a judgment on it.

page 2499

QUESTION

CENSORSHIP

Mr R W HOLT:
WANNON, VICTORIA · LP

– I ask the Prime Minister a question. To overcome the difficulty of different action in the various States, which was referred to by the honorable member for East Sydney in a previous question to-day, and in view of recent attempts to extend the use of censorship boards, whose secret processes by-pass the open procedure of the ordinary courts, will the Prime Minister consider legislation for a constitutional amendment to guarantee freedom of speech and publication similar to the guarantees included in the constitution of the United States of America, with particular reference to the institution of a final determination in censorship appeals by the judiciary?

Mr MENZIES:
LP

– That is plainly a large matter of general policy and does not lend itself to an answer.

page 2499

QUESTION

SHIPOWNERS AND MARITIME UNIONS

Mr ASTON:
PHILLIP, NEW SOUTH WALES

– I preface my question, which, is directed to the Minister for Labour and National Service, by saying that previously I asked the Minister whether the Government had made any investigation into the secret payments to maritime unions by some shipping interests. I was informed that when the Government had in its possession all the information it could obtain, it would decide what course of action was proper in the circumstances. As some time has now elapsed, and the report of the Australian Council of Trade Unions on this matter has been completed and made public, will the Minister tell the House what action is contemplated?

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– It is clear, from press reports, that the committee of the Australian Council of Trade Unions has presented its report on this matter, and it is evident that the committee has condemned the practice which previously obtained. I said before that when the Government had all the information available to it, it would consider what action was appropriate. I have not yet had an opportunity to study in detail the report of the A.C.T.U. committee as presented to the interstate executive of the council. I hope to be able to do so within the course of the next day or so. I feel I should add that the view of the Government on these matters is that it would require circumstances of some special character to justify its intrusion into what might otherwise be considered the private affairs of a trade union, the trade union movement or an employer organization. I am not saying that there will not be grounds for such further action on our part. That is a matter which cannot be fairly resolved until all the information is before us. I do not, however, want to give the impression that we are merely looking for opportunities to interfere in matters which can normally be dealt with quite satisfactorily by the officials or the interests directly concerned in a particular section of industry, whether those interests be unions or employers’ organizations.

page 2499

QUESTION

GOVERNMENT LOANS AND FINANCE

Mr KEARNEY:
CUNNINGHAM, NEW SOUTH WALES

– Is the Treasurer aware of the great industrial and residential expansion which has occurred in Wollongong, Port Kembla and adjacent areas, and which is continuing on an extensive scale? Is he aware that a new steel plant, to be erected at Unanderra for the processing of stainless steel sheets and strip, is planned to be in production within two years? In view of the exceptionally heavy demands being made upon the financial resources of the Greater Wollongong City Council to cope with the provision of essential services, such as electricity and roads, required by industry and residents, will the Treasurer agree to initiate action, through the Australian Loan Council, to ensure that an increased loan allocation will be granted to the Greater Wollongong City Council? Furthermore, will he take action to ensure that finance will be forthcoming to enable the council to cope with industrial developments, which are of national importance, preferably by making a special grant to the council?

Sir ARTHUR FADDEN:
CP

– This question, by its very nature, is one that concerns the State of New South Wales, and I suggest that the honorable member address his request to the Premier of that State.

page 2500

QUESTION

LAND SETTLEMENT OF EX-SERVICEMEN

Mr TURNBULL:
MALLEE, VICTORIA

– 1 address a question to the Minister for Defence, in. his capacity as Minister acting for the Minister for Primary Industry, concerning the administration of the war service land settlement scheme by the Department of Primary Industry. Will the Minister consider a suggestion that I made in this House earlier this month that the Commonwealth Government should cooperate with the governments of Victoria and New South Wales, and perhaps South Australia, in order to arrange for the allocation to ex-servicemen still seeking land settlement, land which it will soon be possible to irrigate from the flow of water from the Snowy Mountains scheme? In considering this proposition, will the Minister take into account the fact that exservicemen could be given blocks now and granted the usual subsistence allowances while they were preparing the land for the irrigation that will be made possible as the Snowy Mountains scheme progresses?

Sir PHILIP McBRIDE:
Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

– I appreciate the interest that the honorable member has taken in this matter, but I remind him that war service land settlement schemes must be initiated by the States concerned, and that head-waters works for irrigation projects take a considerable time to complete. As far as I know, no work of that kind is being undertaken in the area mentioned by the honorable member. Therefore, I imagine that there can be no early settlement of returned servicemen there. I would say that, if the State governments concerned submit any proposal of the kind mentioned by the honorable member, the Commonwealth Government will certainly give it all possible consideration.

page 2500

QUESTION

COAL

Mr GRIFFITHS:
SHORTLAND, NEW SOUTH WALES

– I direct a question to the Prime Minister. Does the right honorable gentleman agree with, and support, the disastrous policy adopted by the Minister for National Development in his handling of the export of coal from New South Wales, and the development of the coalmining industry in that State? Is the Prime Minister aware that no further orders for the export of coal from Newcastle are being accepted until after July, 1958, allegedly because the present high rate of exports is straining the resources of the port? Does he know that waterfront organizations are continually complaining that the port’s coalloading facilities are not being used to the best advantage, and that many working hours are being lost almost every week, owing to the lack of coal and the failure of shipping companies to provide vessels to move coal? Is the right honorable gentleman aware that coal-loading facilities at Newcastle could handle a much greater volume of coal than is now being handled, if coal and ships were provided and their movements properly co-ordinated by colliery owners and shipping interests? Does the Prime Minister agree that the refusal to accept further orders for the export of coal for nine months is not in the best interests of the coal-mining industry, or of the economy of the nation? If the right honorable gentleman does so agree, will he take action to get rid of this hopeless and incompetent Minister, and replace him with a Minister who will be prepared to try to do something tangible to expand the coal export trade?

Mr MENZIES:
LP

– Apart from some of the adjectives, the matter seems to relate to the administration of my colleague, the Minister for National Development, to whom I will refer it. Apart from that, all I need say is that I admit very cheerfully that I support the policy and the administration of my colleague. I entirely disagree, and deny, that it is incompetent.

page 2501

QUESTION

ABORIGINES

Mr FOX:
HENTY, VICTORIA

– I address to the Minister for Territories a question based on a petition bearing 330 signatures that I presented to the Minister on behalf of three churches of the Oakleigh Methodist Circuit in relation to the plight of the native people in the Warburton Range area of Western Australia. Will the Minister take steps to ensure the immediate despatch to the area of urgently needed food and medical supplies, and to benefit all aboriginal people by endeavouring to bring about the abolition of separate State controls and the establishment of a federal body with sole responsibility for the welfare and advancement of aborigines?

Mr HASLUCK:
Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– As the honorable member has said, I have received a petition at his hands, and he has reinforced it with his personal representations. On the first item covered by the petition, the only suggestion I can make is that the petition should more properly be addressed to the Western Australian Government, as neither the Department of Territories nor any other Commonwealth department has direct responsibility in respect of the aborigines in the Warburton Range area. Regarding the second point covered by the petition, the honorable gentleman will realize that it would involve an amendment of the Australian Constitution, and that a fairly elaborate process is set down in the Constitution itself regarding the way in which amendments can be brought about. In view of the fact that the question of whether the Constitution should be amended is one of policy, and in view of the fact that a committee of this Parliament is at present examining the question of a review of the Constitution, I do not think that I should comment at this moment on the merits of the case.

page 2501

QUESTION

CUSTODY OF AUSTRALIAN CHILD IN AMERICA

Mr CURTIN:
KINGSFORD-SMITH, NEW SOUTH WALES

– In the absence of the Minister for External Affairs, I direct the following question to the Prime Minister: Is the right honorable gentleman aware that in America, this week, a court case is being held to determine the custody of an Australian-born child who was kidnapped by her father from her mother in Kensington, Sydney, last January, and spirited away to the United States of America? Is the

Prime Minister also aware that the custody of the child was granted to the mother under a court order issued by Mr. Justice Myers, of the Supreme Court of New South Wales, in Sydney?

Mr Menzies:

– I am not aware of any of those things.

Mr CURTIN:

– After issuing the order the judge stated that the action of the father was a fraud.

Mr SPEAKER:

– Order! What is the honorable gentleman’s question?

Mr CURTIN:

– In view of the-

Mr SPEAKER:

– Order! The honorable member will come to his question. He is giving information. Furthermore, the Prime Minister does not administer the Department of External Affairs.

Mr Menzies:

– Nor am I aware of the facts in this case.

Mr CURTIN:

– He is the Prime Minister of the Commonwealth and I want some protection for the mother.

Mr SPEAKER:

– Order! The honorable gentleman will refrain from arguing. He will ask his question.

Mr CURTIN:

– My question is as follows: In view of the strange features of this case, could the Prime Minister arrange for a legal officer from the appropriate Australian consulate in America to attend the hearing of the case in order to protect the interests of the Australian mother and her child, the mother, of course, being in Australia owing only to lack of finance? Further, in view of the greatly increased number of marriages between Australian and American nationals, will the Prime Minister open negotiations with a view to formulating an agreement to deal with any similar problems which may arise in the future?

Mr MENZIES:
LP

– I have not heard of this case or of any of the particulars referred to by the honorable member, but I shall point out to the Minister for External Affairs that the question has been asked.

page 2501

QUESTION

LAND SETTLEMENT OF EX-SERVICEMEN

Mr LUCK:
BRADDON, TASMANIA

– My question is directed to the Minister acting for the Minister for Primary Industry. Are costs of war service land settlement schemes estimated by the

Commonwealth, or are the cost figures provided by the various States? Can the honorable gentleman indicate the progress of the Montagu Swamp settlement scheme and the cost of this scheme to date?

Sir PHILIP MCBRIDE:
LP

– My attention was drawn to the fact that some discussion of this scheme took place in Parliament House, Hobart and, as a consequence, 1 have obtained some information which, I think, puts the Commonwealth’s interest in this matter in perspective. I should like to remind the House that the agent States - South Australia, Western Australia, and Tasmania - submit estimates for any projects for war service land settlement in their individual States. After the Commonwealth approves these projects funds are provided to enable the work to proceed. Each State authority makes a monthly return showing the money expended on each approved project, and progressive payments are made accordingly. It is from these returns that the Commonwealth obtains information of the costs of the projects. The Commonwealth depends on the States, with their audit arrangements, for the reliability of the figures supplied. It does not seek, or obtain, any other figures. At Montagu Swamp work almost ceased during 1956 and early 1957 due to excessive rainfall. Approximately 116 miles of drains have been dug and 4,000 acres of timber pushed down. Four settlers are in occupation of houses on blocks, but are employed by the development authorities. According to returns from the States the amount spent at Montagu Swamp to 31st October last was £1,160,680 9s. 8d. This includes the cost of development of holdings, and the digging of all drains, and a capital amount used to purchase plant, such as tractors, bulldozers and draglines, and for workshops and camp accommodation.

page 2502

QUESTION

COURT PROCEDURE

Mr WHITLAM:
WERRIWA, NEW SOUTH WALES

– I ask the Minister for Territories: How long have stipendiary magistrates in the Northern Territory been dissatisfied with being merely “ worshipped “? In particular, how long must the Crown and other litigants, in cases before these honorable gentlemen, face the alternative of paying unnecessary honours or unnecessary costs?

Mr HASLUCK:
LP

– The stipendiary magistrates of the Northern Territory come under the administration of my colleague, the Attorney-General, who is in another place. That being so, I shall not venture into a discussion of the styles and titles which are properly due to them.

page 2502

QUESTION

EXPORT OF DRILLING EQUIPMENT

Mr IAN ALLAN:
GWYDIR, NEW SOUTH WALES

– In view of the acute shortage of water in many country areas, I ask the Minister for Trade whether the Government will act to prevent the purchase, for export by government departments, of drilling machinery suitable for obtaining underground water while orders for this equipment, for local use, are outstanding or are expected to arrive. I ask this question because I have reason to believe that twenty large drilling rigs have been bought in recent weeks for shipment overseas under the Colombo plan, while orders placed by local firms have not been filled.

Mr McEWEN:
Minister for Trade · MURRAY, VICTORIA · CP

– On the points stated, the honorable member raises an issue of distinct interest in present circumstances. I am quite unaware of the facts in this matter, but I shall make inquiries and let the honorable member know the position.

page 2502

QUESTION

DOLLARS

Mr CAIRNS:
YARRA, VICTORIA

– I direct a question to the Treasurer. In view of the relation between the Japanese balance of payments problem and the Japanese Trade Agreement, is the right honorable gentleman aware that, recently, the Prime Minister answered a question in the course of which he indicated that Japan’s holdings of overseas funds had fallen by the equivalent of 461,000,000 dollars during the first half of 1957, and that the Prime Minister stated that the Treasurer would emphasize the proper significance of this at the recent conference of the International Monetary Fund? I now ask the right honorable gentleman whether this matter was raised at the conference. Did he emphasize the significance of the dollar problem in Japanese trade, and if so, what was done about it?

Sir ARTHUR FADDEN:
CP

– The honorable gentleman asked that question during my absence from the House, and I have a reply for him to-day. The 1957 annual report of the International Monetary Fund, a copy of which is available in the Parliamentary Library, contains comments on the international payments position of Japan. At the annual meeting last September, the governor from that country drew particular attention to the recent rapid loss of Japan’s foreign exchange holdings. It is not customary for governors attending the annual meeting to discuss in detail the balance of payments problems of other member countries. There was, however, a general discussion of the recent balance of payments difficulties experienced throughout the non-dollar world, and in my. statement to the meeting I stressed the importance for the rest of the world of the policies of countries with large and persistent surpluses in their balance of payments. As for the action taken by the fund, the honorable member will be aware of the very large use recently made of its resources of foreign exchange to meet the balance of -payments difficulties of member countries.

page 2503

QUESTION

GOVERNMENT LOANS AND FINANCE

Mr JEFF BATE:
MACARTHUR, NEW SOUTH WALES

– I ask the Treasurer a question supplementary to that asked by the honorable member for Cunningham, who touched upon the paramount needs of the City of Greater Wollongong for loan funds for essential services. I may say that the paramount needs of that city arise from the fact that it is becoming the steel metropolis of the western Pacific, and because it is trying to serve the needs for steel of three-fifths of the world’s population, which is to be found in the South-East Asia area. Is it a fact that the Labour Government of New South Wales not only refused to raise the inadequate amount of loan funds allocated to the City of Greater Wollongong last year, but actually reduced the figure for this year to an even more inadequate one?

Sir ARTHUR FADDEN:
CP

– I am not in a position to answer a question of that nature, because the discussions of the Australian Loan Council are held in camera.

page 2503

QUESTION

COMMONWEALTH INDUSTRIAL COURT

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I ask the

Prime Minister whether he is aware of a report which the Communist party is spreading throughout Australia which, on the face of it at any rate, appears to be a scandalous reflection on the reputation of certain judges of the Commonwealth Industrial Court, whose names I will not mention here for very good reasons. These judges are accused by the Communist party of having financial interests in some of the companies whose employees are members of unions which appear before them seeking industrial justice. Will the Prime Minister have inquiries made into this report? If it is found to be untrue will he take the strongest possible action against the Communist party? If the report is found to be true, will he take the strongest possible action to see that the good name and standing of the Commonwealth Industrial Court are not impaired by these persons being allowed to continue to exercise their judicial functions when they have financial interests in companies whose representatives appear before them against the unions?

Mr MENZIES:
LP

– I hope that I may be permitted to point out to the honorable member that this article he refers to, and which, of course, I have not seen, appeared in a newspaper of limited and highly tendentious qualities. He has now succeeded in giving it a much wider circulation. However, I will have the matter looked into.

page 2503

ASSENT TO BILLS

Assent to the following bills reported: -

Customs Tariff Bill 1957. Customs Tariff Bill (No. 2) 1957. Customs Tariff (New Zealand Preference) Bill 1957.

Western Australia Grant (Water Supply) Bill 1957.

Gift Duty Assessment Bill 1957. States Grants (Special Financial Assistance) Bill 1957.

States Grants Bill 1957.

Estate Duty Assessment Bill 1957.

Coal Industry Bill 1957.

Income Tax and Social Services Contribution Bill 1957.

page 2503

AIR NAVIGATION (CHARGES) BILL 1957

Bill received from the Senate, and (on motion by Mr. Harold Holt) read a first time.

page 2503

RESERVE BANK BILL 1957

In committee: Consideration resumed from 21st November, (vide page 2479).

Clause 26 -

The Reserve Bank -

subject to this Act and to the Banking Act 1957, shall not carry on business otherwise than as a central bank.

Mr CREAN:
Melbourne Ports

– This clause, particularly paragraph (c), is really the whole substance of the bill. Although it is an apparently innocuous little paragraph it makes necessary the dismembering of the Commonwealth Bank. I move -

Omit paragraph (c).

The remarkable thing during this debate has been the attempt on the part of the Government to elevate what is really a matter of opinion into a matter of fact. That matter of opinion is that the central bank ought not, in any circumstances, engage in trading functions. The Treasurer (Sir Arthur Fadden) was careful to point out, and honest enough about the matter to say -

The question whether a central bank ought to engage, directly or indirectly, in trading bank activities, has been a matter of active controversy, here and elsewhere, for very many years; and there has never been anything like a consensus of opinion on it. Various authorities who have studied the matter closely have reached widely differing views.

That, again, is a statement of opinion on the part of the Treasurer that this matter is not, as the Government would have it, an open and shut question at all. The other afternoon an attempt was made by some honorable members opposite who ought to have known better to prove that all the weight of opinion is against the central bank engaging in trading bank activities, despite the fact that speakers on the Opposition side, during the debate, quoted the opinion of the present Governor of the Commonwealth Bank. I will quote it again. He said - lt 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 limits imposed by their commercial (and, in the case of the Commonwealth Trading Bank, competitive)- character, to influence their policy so that they contribute directly to the achievement of the objectives of central bank policy.

That opinion was expressed by the present governor of the bank in 1954. I suggest to the honorable member for Wentworth (Mr. Bury) that the governor is at least as competent an authority as is the honorable member; and it was his view, in 1954, that the central bank was a better central bank by reason of its engaging in normal trading activities. The honorable member for Balaclava (Mr. Joske) followed the honorable member for Wentworth. I respect the opinion of the honorable member for Balaclava on partnership and divorce law, but I have no respect at all for his opinion on economic principles. He said, in effect, that no substantial authority upholds the opinion that the central bank ought to engage in trading bank activities. In addition to quoting the opinion of the present Governor of the Commonwealth Bank, 1 shall refer to the opinions of two other authorities whom I think the committee will respect. The first is expressed in evidence which was given many years ago by a man who is regarded in many quarters as being the father of the modern central bank - the late Lord Montagu Norman. In a book entitled “ Central Banking in Undeveloped Money Markets “ the author, S. N. Sen, in a footnote on page 149, gives a statement of evidence by the late Lord Montagu Norman before the Royal Commission on Indian Currency and Finance in 1925. The footnote reads -

Those who are afraid that central banks might compete with other banks would do well to read the evidence of the late Lord Montagu Norman before the Royal Commission on the Indian Currency and Finance of 1925.

  1. As regards its business . . . apart from investments you would not restrict it entirely to rediscounts?

Lord Norman replied -

Oh, no.

The next question was -

You would allow it to lend money?

He replied -

Yes.

Q14922. So that to the extent it might be in competition with the banks?-

He replied -

I should certainly make no provision which would prevent the central bank, if it thought necessary, from competing with the other banks. It might be very necessary for it to do so.

A more modern authority whom I am now about to quote has recently been appointed by the Tory Government in the United Kingdom to sit on a commission known as the “ Radcliffe Commission “ in order to investigate the working of the banking system in the United Kingdom. He is Professor R. S. Sayers. Again, I think that anybody who knows much about this matter will accept him, at least, as having a reasonable point of view on these questions.

In his most recent book, “ Central Banking after Bagehot “, published only this year, he has quite a deal to say on the matter. I cannot quote his remarks in their entirety, but I refer honorable members to page 116 of his book in which he says that “ there are substantial advantages, at any rate in some countries, in the entry of the central bank into ordinary banking business for the general public “. He quotes the experience of Australia and says that because the Commonwealth Bank, when created in 1911, was created by the Labour party, the approach to this question of those who suggest that it ought not to engage in trading activities is largely coloured by their political attitude.

In other words, what is sought to be stated in clause 26 as a matter of fact, really is ultimately a matter of opinion. The Opposition reasserts that its opinion that the change is objectionable has been fortified by the Governor of the bank. It was expressed in 1937 by the royal commission. The two authorities whom I have cited, the late Lord Montagu Norman and, in present day times, Professor R. S. Sayers, both assert that a central bank, in some circumstances, by engaging in trading activities, can better promote its functions. Therefore, what is sought to be expressed in clause 26 seems to be dangerous because it is a limiting provision, despite the fact that the Prime Minister (Mr. Menzies) has said that, in his view, this legislation will not weaken central banking in any way. I suggest that the proper approach should not be based on the question, “ Do certain things weaken the central bank? “ but on the question, “ Do they, in fact, strengthen the position of the central bank? “

If this legislation is founded merely on the negative approach that it does not weaken the central bank I suggest that it is ill-founded. Any amendments made to banking legislation in 1957 ought to be designed to strengthen the banking system. They cannot be justified on the grounds that they do not weaken the system. Looking at this matter objectively, the Opposition says that the only reason for the legislation before the committee is, not that experts have expressed their opinions in favour of it, but that the private trading banks, which the central bank has the duty to limit in certain directions, have sought the changes.

The CHAIRMAN (Mr Adermann:
FISHER, QUEENSLAND

Order! The honorable member’s time has expired.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– I cannot accept the amendment put forward by the honorable member for Melbourne Ports (Mr. Crean) for the very simple reason that it would defeat the very intention of the bill and the re-arrangement of the banking system. I think that the time is opportune to draw the attention of honorable members opposite to the Theodore legislation of 1930, which was to establish a central reserve bank and for other purposes. Under that legislation, the reserve bank was not to be allowed to make ordinary advances and was to be precluded, in effect, from entering into general banking business. Clause 9 of that proposed legislation stated -

The reserve bank may not -

make advances against land or any estate or interest in land;

engage in trade or have a direct interest in any commercial or industrial undertaking;

purchase shares of trading companies or of other banks except the Bank for International Settlement;

accept moneys on deposit for a fixed term, or allow interest on current accounts except Commonwealth and State Government accounts.

Mr. Theodore is always held up by the Labour party as the acme of perfection on financial matters, and it is very hard to see why, in the year of grace 1957, when a government introduces legislation to set up a reserve bank to do central banking business only, the Opposition wants to amend that legislation in the way that the honorable member for Melbourne Ports has suggested.

It is interesting to notice the designation and the structure of the central bank that was proposed in the days when the honorable member for Bonython (Mr. Makin) was Speaker of this House and was a member of the party that sat behind Mr. Theodore. There was no protest then against abandoning the word “ Commonwealth “, about which crocodile tears were shed last week in discussing the designation “ Reserve Bank of Australia “. The Theodore bill was -

To provide for a Central Reserve Bank of Australia and for other purposes.

It is very hard to reconcile the Opposition’s present attitude with the attitude of Mr. Theodore and his supporters. The Government is not prepared to accept the proposed amendment because, by its very nature, it would destroy the foundations of the whole of this legislation.

Dr EVATT:
Leader of the Opposition · Barton

– The object of the amendment moved by the honorable member for Melbourne Ports (Mr. Crean) is, again, to seek the opinion of the committee on the point of view expressed by the Treasurer that no business should be associated with the central bank other than the business of central banking. That is an illogical point of view. It is no use the Treasurer pointing to a proposal that Mr. Theodore put forward in the 1930’s. Mr. Theodore was then putting forward proposals which he hoped to get through another chamber which was irrevocably opposed to Labour’s banking policy. Consequently, he put forward the minimum proposals that he thought would improve the situation and yet be accepted. So, it is useless to cite Mr. Theodore’s legislation to support this measure and the Treasurer knows that perfectly well.

The view of the Labour party on the 1945 legislation was expressed by the then Prime Minister, Mr. Chifley, who had been a member of the banking royal commission. The Treasurer has quoted Mr. Theodore’s view in 1930 in an extraordinary parliamentary situation in which many allegations had been made against the Labour government which wished, at the crucial moment, only to provide less than £20,000,000 to assist farmers and relieve unemployment. That amount was refused by the central bank. It is useless to quote the statement of the central bank of those days - the Gibson days. The Gibson statement which we read with amazement and horror was that the central banking people would decide the Commonwealth Government’s policy in this country. Therefore, the pensions of the aged had to be reduced and social services and wages had to be cut. This dangerous theory was the very opposite of the Labour party’s theory, and it made the depression ten times worse than it ought to have been. It has since been rejected by every banker. I suppose that the greatest of the authorities who have rejected it is Lord Keynes, who stated that in periods such as that it is necessary to provide additional finance, otherwise the whole economy must run down and unemployment must increase to gigantic proportions. Let the Treasurer face the fact. Mr. Chifley expressed those views, and so did the banking commission. It said that recourse must be had to other methods of carrying on banking business. The Commonwealth Bank also engaged in general trading business. It was in charge of the saving bank. Why is this Government attempting to destroy all that growth? What right has this Government to do that? What right has the Government to interfere with the previous control of the savings bank? The savings of the people will not be made more secure. If anything, this interference by the Government might render the savings insecure.

Why does the Treasurer direct attention to the 1930 legislation? Why does he not face the fact that the royal commission on banking, on which Mr. Chifley was the only Labour representative, after most careful inquiry on this particular point, arrived at a decision which is completely at variance with the Treasurer’s proposal? Why does the central bank need to engage in trade? We know that the central bank is loth to abandon altogether its trading activities be* cause of its desire to ensure the proper degree of liquidity of the holdings of the private banks. What notice did the private banks take of Dr. Coomb’s lecture in Queensland some years ago to the English Scottish and Australian Bank Limited? They treated his request with utter contempt. They did not attempt to comply with it.

Looking at the situation from that angle, the Opposition feels that it is its duty to fight this legislation to the last ditch in order that the principles of the royal commission on banking may be carried into effect. In 1945, the so-called central bank came into existence in the proper sense for the first time in Australia’s history. Up to that date, there had hardly been a central bank. Sir Robert Gibson never had the slightest notion of the functions of a central bank, and his evidence before the commission astounded students of banking throughout the world. Australia was led into that situation by having people with outside business interests on the Commonwealth Bank Board. Mr. Chifley showed intellectual superiority over everybody connected with the subject, and his simple words as a member of the royal commission on banking should be inscribed in letters of gold in every banking institution in this country. Those words have been proved true. Mr. Chifley introduced the legislation of 1945 with regard to the banks, and at the elections in 1946 the Treasurer and the Leader of the Liberal party attacked that legislation; yet the people returned a verdict in favour of the Labour government’s proposals. A similar decision was given on the occasion of the by-election for the se$t of Fremantle, caused by the death of Mr. Curtin. The Treasurer is mistaken if he thinks that the verdict of 1949, which dealt with nationalization, had anything to do with this point, which is whether the Commonwealth Bank should remain and continue to carry out its various functions, or whether it should be dismembered into various divisions. The dismembering of the Commonwealth Bank would ruin, in many respects, the services that it now renders.

The honorable member for East Sydney (Mr. Ward) quoted a letter from Dr. Coombs, in which that gentleman mentioned the damage that might be done to the service. Under the existing arrangement, a young officer in the Savings Bank, the Trading Bank, or perhaps the general division could, by appropriate effort and promotion, find his way into the central bank of the same Commonwealth Bank, but that will not be possible in future. The system of service in the Commonwealth Bank is being torn up without approval of the officers of the bank or of anybody connected with the bank, as far as I know.

What does my colleague, the honorable member for Melbourne Ports, propose? He proposes the omission of the prohibition on the carrying on of business otherwise than as a central bank. There is a notion in conservative circles, especially banking circles, in this country, that the Commonwealth Bank of Australia should be reduced to the status of a bankers’ bank, considering only the bankers and not the people of Australia. The adoption of such a proposal would destroy the older functions oi the bank. However, to cite an example of the hypocrisy of the Government in con nexion with this legislation, I point out that it is not even applying generally the restrictive provisions of the clause, lt is not limiting the central bank entirely to the functions of central banking. Rural credits are still to be associated with the central bank. Of course, rural credits should be associated with the central bank, but the Government’s argument is that the central bank must be pure and aloof from all the vital functions which the various segments of this great organization performed in one category or another. Now, the Government puts rural credits in. That completely destroys the argument that the Reserve Bank’s functions must be confined to central banking.

The Opposition will fight this legislation all the way, and in all its aspects. I am certain that the Treasurer would not have brought this bill down had it not been for the extreme pressure brought to bear upon him. In his second-reading speech, he was unable to deny statements made by the Opposition. It is shocking to think that a man occupying the supreme financial position in the Government has to yield to these people outside, who are bringing pressure to bear on the Government to tear up Australia’s banking legislation.

The CHAIRMAN:

– Order! The right honorable gentleman’s time has expired.

Mr TURNBULL:
Mallee

.- 1 should like to reply to three points made by the Leader of the Opposition (Dr. Evatt) when he was speaking to clause 26. The right honorable gentleman said that the Reserve Bank would become “just a bankers’ bank. In saying that he misconstrued what was said by a Minister earlier in the debate. The Reserve Bank will direct and control the private banks, and the right honorable gentleman suggests that such control will always be satisfactory to those banks. I« may be just the opposite. The Reserve Bank may decide to take certain action in the best interests of the economy of this country, which may not appear at all favorable to the trading banks. Therefore, under this legislation, if it becomes operative, the Reserve Bank will act independently of the trading banks, and will operate in the best interests of Australia. The points that have been put forward by the Leader of the Opposition in that regard have no substance in fact. They are founded on supposition, but he has attempted to convert them into factual statements. When light is thrown on them, his arguments cannot be sustained.

The right honorable gentleman also said that the central bank could not function properly. By interjection, the honorable member for Hume (Mr. - Anderson) asked the right honorable gentleman to give one instance but, of course, quite wisely, the right honorable gentleman disregarded that interjection. The right honorable gentleman is a master at picking up interjections and answering them if he can make a favorable reply, and I suggest that he did not reply to this interjection because there is really no answer to it. The Leader of the Opposition appears to be very concerned about the staff of the Commonwealth Bank. He said the staff will not be able to go into certain central bank or trading bank activities and gain the prominence it otherwise would if the present banking structure remained unaltered. That is rather an amusing statement to hear from the Leader of the Opposition, because honorable members who were in this House in 1947 know that the government of which he was deputy leader at that time absolutely disregarded the plight of the staffs of all the trading banks who were going to be put out of their jobs altogether. Honorable members must remember also that members of the staffs of the private banks, whether the Opposition likes it or not, are as much Australians as are the members of the staff of the Commonwealth Bank. However, when the Labour government in 1947 proposed the nationalization of banking and the setting up of a big monopoly bank, the Commonwealth Bank, the staffs in the other banks were to lose their jobs.

The Leader of the Opposition has taken umbrage at the fact that the staffs of the banks endeavoured to retain their jobs by campaigning against the Government which was seeking to bring about the nationalization of the banks.

Mr CHAIRMAN:

– Order! The honorable member is getting very wide of the question before the Chair.

Mr TURNBULL:

– I am going wide of it in order to answer a speech that was fairly wide of it also. To round up the many sheep that have been let loose by the Leader of the Opposition in his wool gathering I have to take a pretty wide sweep. The questions I have posed need answering by the Opposition if it is to put a case before the Parliament.

The honorable member for East Sydney (Mr. Ward) apparently is about to interject. He is always interjecting; he is always wide of the mark and always trying to stop any honorable member who opposes him. The points I have advanced require consideration. I believe they show the arguments of the Leader of the Opposition in the light in which they should be seen by the people of Australia.

Mr CAIRNS:
Yarra

.- The rather tendentious statements of the honorable member for Mallee (Mr. Turnbull) require very little attention. However one might talk about this new Reserve Bank, its main function will be to hold certain funds of the trading banks and, in substance, to be a bankers’ bank. Another point raised by the honorable member was that the Leader of the Opposition (Dr. Evatt) was insincere in defending the staff of the Commonwealth Bank because he did not defend the staffs of the trading banks. It is a clearly recognized fact that under the legislation of 1947 the staffs of the trading banks were guaranteed continuity and, in fact, superior positions in the new Commonwealth Bank to those they occupied in the old trading banks. I do not think it necessary to spend more time on these tendentious statements which we usually associate with the honorable member for Mallee.

The Treasurer is in a different position. However, the only answer he has given to the House in connexion with clause 26, the most important clause in this bill, is that in 1930 Mr. Theodore did the same thing. The Government tries to defend something it knows to be wrong by arguing that some years ago the Labour party, when in office, tried to do the same thing. At best, that argument means that the Government, 27 years later, has reached where the Labour party was in 1930. The Labour party was not in control of the Parliament in 1930 but had to submit measures for the development of the banking system in Australia within the limits of what was acceptable to a parliament controlled by the antiLabour parties in the Senate.

Secondly, there was no central bank in existence in Australia in 1930, and the legislation sponsored by Mr. Theodore in that year to establish a central bank was progressive legislation. However, we have had a central bank in existence for many years now, and there is no necessity to establish one to-day. So, the argument advanced by the Government as justification for this measure falls to the ground. Paragraph (c) of clause 26, which the honorable member for Melbourne Ports has moved to eliminate, seeks to prohibit the Commonwealth Bank - the central bank, the people’s bank - from engaging in activities other than central bank activities. At the outset, there is no clearly understood meaning of the words “ central bank “. Central banks differ in every country, as is clearly shown in an up to date study of modern banking systems by B. H. Beckhart. There are sixteen central banking systems in the world, every one of which is different because it is a natural growth in the country concerned to meet the particular financial and economic needs of that country. A central bank is noi designed on a theoretical blueprint.

In Australia the trading bank activities of the central bank have been valuable and important because they have met the natural requirements of the Australian economy, and when comparisons are made between this theoretical central bank, which the Government is now endeavouring to set up, and the Bank of England, it must not be forgotten that the Bank of England likewise is a natural growth in the British economy using important powers of banking which could not be used in Australia, namely, bank rate practice and trading and commercial power which is control of the money market in Great Britain. Can there be any doubt that in the absence of these powers here these trading bank activities are recognized in Australia as being of great importance?

T remind the Treasurer, if he has forgotten, that in 1951 he said -

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.

Does he say to-day that that is of no value to the Commonwealth Bank? Why has his opinion changed completely in five years? Have the economic and financial conditions in Australia changed? They have not. On this subject the Prime Minister (Mr. Menzies), in 1953, stated -

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.

The Prime Minister said they have great merit, but less than four years later he is taking away this thing of great merit. He went on to say -

They enable iiic central bank to have an instrument by which it may give leadership in banking policy.

Now, he is taking away this instrument of leadership in banking policy. What is the reason for this great change in four years? The Prime Minister continued -

It has a great number of advantages that I need not discuss at this stage.

He is taking away in 1957 something which he recognized in 1953 as having a great number of advantages. The people of Australia should ask this Government the reason for this complete turnabout on the question of the powers of the Commonwealth Bank.

The honorable member for Melbourne Ports quoted a statement made by the Governor of the Commonwealth Bank, Dr. Coombs, in 1955 after having examined the economic conditions of Australia, the way in which export income fluctuates, the occurrence of droughts and the need for the Commonwealth Bank to raise the level of bank lending in the case of recession. Dr. Coombs stated that those were peculiarly Australian conditions which the Commonwealth Bank, before it was interfered with by this Government, had grown naturally to meet. In 1955, the Governor of the Commonwealth Bank said -

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.

That influence is being taken away. Members of the Australian Country party, who were interjecting in such a chattering manner a short time ago, wanted to know in what way this legislation would weaken the bank. That is the answer to their question. Have a look at what the Treasurer said in 1951. Have a look at what the Prime Minister said in 1953. Have a look at what the Governor of the Commonwealth Bank said in 1955. If honorable members opposite do not come to the conclusion that the bank is being seriously weakened, and not strengthened, by this legislation, then they are beyond the powers of reason. They will have an opportunity when I conclude to explain why the Prime Minister and the Treasurer have changed their attitude. They will have an opportunity to say how the Governor of the Commonwealth Bank was wrong in 1955. I challenge them to do so. I challenge honorable members opposite to answer the questions I have asked, if they can.

This legislation was introduced with improper considerations. I do not believe that the Prime Minister or the Treasurer could so completely change decisions they have made unless some pressure or some consideration of an improper kind were working, through the Government parties, to produce this legislation. Improper considerations have been used in this matter. Those considerations have resulted in the central bank being fundamentally weakened because the powers that I have mentioned have been taken away. Why has this been done? The answer is that money has been provided for the Liberal party by financial interests. Every one knows that the Government parties are the servants of the financial interests and that their election expenses are paid by those financial interests.

The CHAIRMAN:

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

Mr ANDERSON:
Hume

.- The honorable member for Yarra (Mr. Cairns) referred to a leading authority who had studied the operations of sixteen central banks. If any of those sixteen central banks had a trading bank division, the honorable member would have mentioned it, but, although the sixteen modern systems of central banking have little variations, not one has a trading department. If one of them had a trading department, the honorable member would have made the point. The honorable member for Mallee (Mr. Turnbull) quickly took up my interjection to the Leader of the Opposition (Dr. Evatt) when I asked why no Opposition member has made one point to show how the central bank was weakened by this legislation. Opposition members talked a lot of rubbish and wasted our time, but did not give one concrete illustration to show how the central bank is weakened.

The Opposition has moved an amendment which is designed to undo the banking reform contained in the bill. The Opposition contends that the central bank should have the right to carry on other forms of business, but the amendment is designed to defeat the purpose of this legislation. However, not one Opposition member has attempted to show how the central bank has been weakened. We are presumably intelligent, mature people, but I have not been able to find one argument used by Opposition members that would be hard to answer. The honorable member for Yarra said that the legislation weakened the bank and is designed to destroy it, but he did not say how the bank is destroyed or weakened. We still have a Commonwealth Trading Bank working efficiently in the new system. The Opposition apparently is activated purely by doctrinaire motives. It has never accepted the ruling of the Privy Council and, by hook or by crook, it will attempt to nationalize banking. The royal commission on banking has been mentioned during the debate. That commission was held before the war and, since then, we have learnt a tremendous amount about banking and the control of finance. Mr. Chifley, in dissenting from the finding of the royal commission, said that it was impossible to conduct banking for the benefit of the community so long as there was a profit motive. Yet banking systems, which have a profit motive, are working efficiently in the civilized world.

Mr Ward:

– Rubbish!

Mr ANDERSON:

– If the honorable member for East Sydney wants to prove that what I say is rubbish, then he should show how the modern banking systems of the United States and the United Kingdom are inefficient. It is quite easy to say, “ Rubbish! “, but I have given facts. After all the proof of the pudding is in the eating. The Leader of the Opposition said that it was wrong for the Rural Credits Department to be attached to the central bank. I very much doubt whether the honorable gentleman knows what the Rural Credits Department does. How could its operations adversely affect the central bank?

Mr Bird:

– He did not say that.

Mr ANDERSON:

– Then he said it should be attached to the bank. Opposition members cannot have it both ways. I shall address my remarks to the Chairman.

The CHAIRMAN:

– 1 think we should leave the debate on the Rural Credits Department until later; it comes within the next group of clauses to be discussed.

Mr ANDERSON:

– The Opposition has not made one point to support its amendment. It contends that the amendment strengthens the central bank, but how does it strengthen the central bank? It does not strengthen it! Opposition members have suggested that staff problems will arise if the central bank is separated from the trading banks. It is extraordinary that the Australian Labour party should raise such a point. We know that a State Labour government continually makes political appointments over the heads of career men. Yet the Opposition says that this banking legislation will not work in the interests of employees of the Commonwealth Trading Bank. I have spoken to several senior officers of the Trading Bank in the country, and they all like this legislation. I oppose the amendment.

Mr MAKIN:
Bonython

.- This is the first time that I have heard the principle that to divide is to strengthen. Surely to divide is to weaken. That being so, in the situation we are now considering, the division of the functions of the Commonwealth Bank will mean that its power is weakened. Therefore, I cannot understand the attempt of the honorable member for Hume (Mr. Anderson) to justify his opposition to the amendment. The honorable member said that we have not given an instance of a central bank being associated with trading functions. Evidently, the honorable member is not aware of the principles that govern central bank and trading bank functions in South Africa.

Furthermore, he should know full well that the Bank of England conducts certain trading operations.

Mr Anderson:

– To a very limited extent.

Mr MAKIN:

– It may be, as the honorable member says, that certain restrictions or limitations are placed on those trading operations, but the principle is accepted even by such an institution as the Bank of England.

The honorable member for Mallee (Mr. Turnbull) has suggested that the Leader of the Opposition (Dr. Evatt) could not tell us why fears are held by some people as to the results of this legislation. The honorable member also contended that there is some advantage in dividing up the Commonwealth Bank’s functions, leaving the Commonwealth Bank itself purely as a central bank. It is my belief that the Commonwealth bank is being denied its rightful place in our financial system, because this legislation is being introduced at the request of the private banks. Those banks certainly will have no fears as to the result of the legislation, or as to any powers that the central bank may have to direct their operations, because the legislation is really of their own creation. It is the basis upon which they believe private banking institutions can best operate.

Furthermore, the private banks will, no doubt, have considerable -indirect influence upon the policy that will be followed by the central bank, because the central bank will be controlled by a board, certain members of which will come from outside industry. While not being immediately associated with the private trading banks, such members will probably have some influence in their affairs, and will no doubt have great sympathy for their interests. The influence of these members of the board will have the result that greater consideration will be given by the central bank to the interests of the private banking institutions than to those of the general community. With these arguments in mind, I suggest that the committee would be well advised to accept the amendment proposed by the Opposition, as the best means of preserving the essential powers of the Commonwealth Bank.

The honorable member for Hume quoted certain remarks of the late

Mr. Chifley, in order to make it appear that that gentleman did not believe in the proposition that a central bank should engage in trading activities. I wish to quote a passage from the report of the Royal Commission on Monetary and Banking Systems, of which Mr. Chifley was a member. At page 264 of that report, in the dissent, reservation and addenda of Mr. Chifley, we find the following remarks: -

In my opinion, the objectives of a monetary and banking system for Australia, as outlined in the Report, can only be achieved with the Common wealth Bank functioning in the following way: -

As a central bank controlling the volume of credit and currency.

The central bank to have a trading bank department through which this volume is distributed direct to industry.

That was the opinion of Mr. Chifley, and it shows that what the honorable member for Hume endeavoured to represent to this committee was not correct. His remarks did a grave injustice to the late Mr. Chifley and the views that he entertained.

Mr Anderson:

– I did not say what the honorable member suggests.

Mr MAKIN:

– The honorable member did seek to suggest to the committee that Mr. Chifley did not agree with the idea of the central bank engaging in any trading operations.

With regard to the proposition that the Reserve Bank will engage only in central banking functions, I ask honorable members opposite why that bank is to have a Rural Credits Department. If it is contended that the central bank should have no power to engage in other banking operations, why is the Rural Credits Department to be connected with the Reserve Bank? Until satisfactory reasons have been given for this, honorable members opposite should not quarrel with our suggestion that an adequate explanation of this aspect of the legislation has not been forthcoming.

The arguments advanced by Government supporters are largely without foundation, for the reasons that I have outlined. It is evident that even the Treasurer (Sir Arthur Fadden) has had to abandon views with regard to banking policy that he held in earlier times. That being so, surely we can expect from the Treasurer a fuller explanation of the Government’s intention in introducing this legislation.

The CHAIRMAN:

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

Mr BURY:
Wentworth

.- The Opposition seems to have overlooked one fundamental point when it seeks to make so much of the recommendation of the Royal Commission on Monetary and Banking Systems. In 1937, when the report of that commission was published, the trading wing of the Commonwealth Bank was not competitive. When, subsequently, the requirement that the Commonwealth Bank should compete actively with the trading banks was enshrined in legislation, the fundamental position changed and it became imperative to take a decision to separate the competitive activities of the bank from the function of judging the overall banking position and acting as leader to the rest of the system. The sorry feature of the matter is that we have waited so long for this legislation. Before the Commonwealth Bank competed actively with the trading banks, when its trading wing was engaged merely in keeping contact with other banks and performing certain rather limited and specialized functions, the position was entirely different.

Mr Cairns:

– What about the last five years?

Mr BURY:

– Five years has been too long to wait for this legislation. From the time when the Commonwealth Bank was exhorted to compete with the trading banks, its central banking functions should have been carried on separately from its trading functions. Any suggestion that this bill weakens or dismembers the Commonwealth Bank of Australia is absurd. Its central banking functions engage merely a small fraction of its staff.

The CHAIRMAN:

– Order! The time allotted for the committee stage to the end of clause 55 has expired.

Question put -

That the paragraph proposed to be omitted (Mr. Crean’s amendment) stand part of the clause.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 52

NOES: 28

Majority . . . . 24

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Question put -

That clause 26, and clauses 27 to 55 be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 51

NOES: 29

Majority . . . . 22

AYES

NOES

Question so resolved in the affirmative.

Clauses 56 to 65 - by leave - taken together.

Mr CREAN:
Melbourne Ports

.- Now that we have reached these clauses, I should like to correct the misinterpretation that was put on the words of the Leader of the Opposition (Dr. Evatt) by the honorable member for Hume (Mr. Anderson) earlier in the debate. The Leader of the Opposition said, in effect, that in view of the strict theory which was being used by the Government in clause 26 it could not be said that the function of the Rural Credits Department of the Commonwealth Bank was a pure central bank function, and that therefore the Government’s own argument was breached to the extent that the Rural Credits Department, which formerly was a trading division - a separate division, it is true - of the Commonwealth Bank, is now to be included as part of the functions of the Reserve Bank.

Gne cannot offer any objection to the role that the Rural Credits Department is intended to fill. One’ can only note that there is not very much logic in the attachment of that department to the Reserve Bank, because the function of the department is not strictly a central bank function. The department certainly fills a gap in the Australian credit system. It is intended to provide short-term credit only, and clause 57 (3) provides that an advance may not be made by the department for a period of more than one year. I do not know whether long practice in the operation of this department has shown that a period of one year is adequate, but that term certainly was included in the legislation as far back as 1945. However, it is hard to know why an exact limit of one calendar year should be imposed in respect of the granting of rural loans,

The various kinds of organizations that are eligible for assistance from the Rural Credits Department are set out in clause 57 (1.) as follows: -

  1. authorities formed under the law of the Commonwealth or of a State or Territory of the Commonwealth; and
  2. co-operative associations of persons engaged in farming, agricultural, horticultural, pastoral, grazing or fishing operations.

The second schedule to the bill gives the type of products which come within the definition of primary produce for the purposes of clause 57. I do not know whether the list is an all-embracing one, but it certainly appears to be comprehensive, ranging alphabetically from arrowroot and bran down to wine and wool - a total of 42 general items. For a number of years prior to the creation of the Rural Credits Department there was a real gap in our financial structure in the provision of credits of this kind. Later the Rural Reconstruction

Commission, which sat, I think, in the early post-war years, pointedto the fact that there were still deficiencies in the provision of long-term rural credits, and I have no doubt that that is one of the things which the new Development Bank, which we will discuss later, is intended to remedy.

Here, at any rate, embraced - rather curiously in terms of the logic of the Government - within the ambit of the Reserve Bank, is the Rural Credits Department, which has operated quite successfully for a number of years, although previously its function was part of the functions of the Commonwealth Bank. What buildings this department is to operate in I do not know. I am not aware whether or not, for the sake of convenience, it will operate in the buildings occupied by the various branches of the Commonwealth Trading Bank. There does not seprn to be much mention made here of that, although I suppose it does not require a great deal of branch organization.

Sir Arthur Fadden:

– It will be done mostly by agencies.

Mr CREAN:

– : Yes, but the point is whether the agencies will be conducted by the Commonwealth Banking Corporation or whether there will be separate offices for them in the country. I would suggest that that is another breach of logic. Perhaps it would have been better had the Rural Credits Department been included, not in the Reserve Bank, but as part of the functions of the new Commonwealth Banking Corporation.

The Opposition offers no objection to the terms governing the Rural Credits Department, but we take the opportunity to point out, and to endeavour to correct, the misinterpretation put by the honorable member for Hume on the words of the Leader of the Opposition. The honorable member implied that the Leader of the Opposition objected to the establishment of the Rural Credits Department. That was not the case. What the Leader of the Opposition endeavoured to say, with his usual logical clarity, was that tacking on this section to the Reserve Bank was inconsistent with the doctrinaire aim expressed in clause 26 which, unfortunately, the committee has refused to delete.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– I think it is opportune to give the committee, and through the committee the country, the reasons why the Government has decided to leave the Rural Credits Department with the Reserve -Bank. It is proposed under the legislation that the Rural Credits Department will continue as a department of the Reserve Bank, which will be the central bank. This was -decided for special and peculiar reasons, having regard to the nature of the function of the Rural Credits Department.

The function of the Rural Credits Department, which was established in 1925, is to assist in the orderly marketing of primary products by the provision of shortterm advances to co-operative marketing bodies. It does not engage in retail banking in that it does not make loans to individual persons, and it operates on a scale that is beyond the scope of a trading bank. The department’s continued association with the central bank is proposed for the following reasons:-

  1. The orderly marketing of primary produce is essential to the health of the national economy, and it is imperative for the department to have access to adequate financial resources, often very speedily, for the performance of this important function.
  2. The fluctuating fund requirements of the department are so large - on occasions they have reached a seasonal peak in excess of £100,000,000- that the only practical source from which to obtain them is the central bank.

Therefore, for those substantial reasons, it is eminently desirable, if not absolutely essential, that the operations of the Rural Credits Department should be directly controlled by the central bank.

Mr CAIRNS:
Yarra

.- I think it is quite clear, from the reasons the Treasurer (Sir Arthur Fadden) has given, that the Rural Credits Department should remain in close association with the central bank. The right honorable gentleman said that outstanding amounts from time to time reach as much as £100,000,000, and that the central bank is the only source from which an amount of this order can be obtained. This is all very valid, and it is the reason why, in the 1945 Banking Act, there was exactly the same provision as now appears in this bill. But this matter again raises the question already raised by the Leader of the Opposition (Dr. Evatt). If it is necessary to provide for rural industry a Rural Credits Department of this sort, with access not only to the central bank, but, as I shall show in a few moments, also to the Treasurer, because the call for funds from that bank might be so large that no other source of finance could supply them, surely it also is necessary to provide the same kind of banking facilities for other sections of industry so that they may obtain similar assistance.

This legislation will make the Rural Credits Department a very strong bank, and my submission, Mr. Temporary Chairman, is that we need also the provision of banking facilities of equal strength for other sections of industry, or else we need nothing more difficult than for the situation to be left as it is at the moment. The fact that discrimination has been made in favour of rural industry in this legislation raises the question, “ Why? “ I think that those of us who know the history of this legislation appreciate the attitude that has been taken, not only by the Treasurer, but also by the Australian Country party. The supporters of that party were not prepared to see this legislation go through unless their interests could be secured by means of the provision of sufficient financial support. I think that the country has a right to ask why, if the Government has seen fit to provide, for rural industry, financial assistance of the strength described in the part of the bill that we are now discussing, it has not seen fit to make similar provision for secondary industry.

I wish to refer to statements made by the Governor of the Commonwealth Bank, who has considered this matter carefully over the years and has made clear and unequivocal statements about it. The Government has endeavoured to give the impression, from time to time, that the Governor of the bank has been silent on this matter. In answer to a question that I placed on notice recently, the Government said that it was not the function of the Governor to express opinions about the legislation. Perhaps the Government thinks that that is not his function because it knows that the opinion of the Governor is against it on legislation of this sort.

Mr Forbes:

– He has a vested interest.

Mr CAIRNS:

– Vested interest is at the base of this legislation, but it is not the vested interest of the Governor of the Commonwealth Bank. It is that of the Liberal party, and of the trading banks and the other financial concerns which stand behind this Government. I am disappointed to see the honorable member for Barker (Mr. Forbes) so soon becoming involved in the party associations of those vested interests.

Let me point out the reasons why these other sections of the Commonwealth Bank should have the power that is present in the Rural Credits Department. What are the powers of that department? First, it has access to the central bank. Clause 61 provides -

The Bank may make advances to the Rural Credits Department of such amounts, and subject to such terms and conditions, as the Board determines.

That means that the Rural Credits Department has behind it not only the power of the central bank, but also that of the Treasurer, because clause 60 states -

The Treasurer may, from time to time, out of moneys legally available, lend to the Bank . . .

That would mean, of course, out of moneys legally available through the issue of treasurybills. Therefore, in addition to the power of the central bank, the Rural Credits Department has behind it the power of the Treasurer to issue treasury-bills. In other words, the total financial power of the Government of the Commonwealth of Australia stands behind this department. I suggest that something like that kind of banking institution is required to give assistance to other types of industry. My authority for saying so is the Governor of the Commonwealth Bank who, in the course of a lecture delivered in Queensland in 1954, and published in 1955, said -

There can be little doubt that this direct link-

The one that I am saying does not exist for the other types of banking institution, but which exists for the Rural Credits Department - gives to the Commonwealth Bank a source of strength-

That is missing as far as secondary industry is concerned - which can be of particular value in times when the economy is threatened with declining activity and employment.

We have been involved with the problems of inflation in recent years, but to my mind it is irresponsible of the Government to ignore the fact that, in the future, we shall be involved with the problems of deflation. In 1930, there were two joint problems: That of the provision of money as a subsidy to wheat-growers - the kind of thing which can be done by this Rural Credits Department - and that of the provision of money to industry to remove unemployment in the cities and industrial areas. Those two joint problems were the problems on which Australia foundered in the depression. This legislation provides ample financial power for the Rural Credits Department to subsidize wheat-growers to the extent of £100,000,000 or more, and that is the justification that the Treasurer has used for this part of the bill. But there is no corresponding power for the Trading Bank, or the Development Bank, to obtain access to that kind of money for the purposes I have described. This is a fundamental weakness in this legislation. It means that the source of strength, which the Governor of the Commonwealth Bank, in 1955, said could be of particular value in times when the economy was threatened with declining activity and employment, no longer exists.

I therefore put this question to the Treasurer and his colleagues on the Government side, and I hope that they will have an opportunity to answer it: Why have they not extended the same power to secondary industry, by the provision of finance to meet the difficulties of deflation and unemployment, that they have seen fit to provide for rural industry?

Mr Turnbull:

– The honorable member should know the answer to that question.

Mr CAIRNS:

– I do know it. I know that the answer lies in the small pressure group which continually chatters from the corner of this House and which, because of its numbers at division time, is able to influence the Government to decide that it should provide a facility for rural industry which it does not see fit to provide for secondary industry. The weakness of this decision will soon become apparent. The answer to the question I have asked will indicate the way in which the central and trading bank activities of banking structure are being weakened by this legislation. I do not intend to say any more on this point, because there are still two or three minutes left for the Treasurer, or some other member of the Government, to answer the questions I have submitted, if he can.

Mr HULME:
Petrie

.- I think that honorable members will appreciate that secondary industry has not the problems that confront primary industry. Most of us know that primary industry is the backbone of the economy of this country. 1 suggest that, in the legislation that is before us, there is no discrimination in favour of primary industry. The purpose of this Rural Credits Department is not, as the honorable member for Yarra (Mr. Cairns) has said, to provide subsidies, but to finance the sale of crops. In relation to the marketing of the wheat crop which is sold overseas, it is impossible to provide payments to the producers unless that is done with financial assistance from the Rural Credits Department.

I should like more time to discuss this matter, but I turn to another point which needs to be clarified. It relates to clause 60. The honorable member for Yarra referred to what the Treasurer may do to provide funds, and he gave the impression that unlimited funds could be provided by the Treasurer to the Rural Credits Department. I point out that clause 60 limits such funds to a total of £3,000,000. I think that every honorable member would appreciate that that is the situation.

The CHAIRMAN:

– Order.’ The time allotted for the committee stage to the end of clause 65 has expired.

Question put -

That the clauses be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 52

NOES: 28

Majority . . . . 24

AYES

NOES

Question so resolved in the affirmative.

Remainder of bill - by leave - taken as a whole.

Mr WARD:
East Sydney

.- The clauses to which I desire to direct my attention deal with the staffing of the Reserve Bank. I think it will be agreed by all honorable members that whatever views may be held about whether the opinion of the Governor of the bank should be sought in respect of the other provisions of the measure, there can be no doubt that on the question of staffing, the man who should be consulted is the Governor of the bank. If he has been consulted already by the Government, it has kept very quiet in respect of the opinions he has expressed. There are great difficulties in regard to the staffing of the Reserve Bank. If this bank fails to obtain adequate and properly trained staff its efficiency can be affected, and, as a result, the bank will be weakened. The governor has expressed great fears about obtaining adequate and proper staff.

I have here a copy of a letter which he wrote in respect of this particular problem. Evidently he was of the opinion that the Government, having the numbers and having received its orders from the private banks, the measure was sure to pass, at least through the House of Representatives, because on 28th June he wrote this letter regarding the staff position. I shall read some extracts from it to show the difficulties that he, as Governor of the bank, foresaw. He 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 positions available in (he past in the Commonwealth/Trading/Savings Bank.

I think it will be admitted by all honorable members that, as a result of separation and the Reserve Bank being obliged to set up its own staff, its staff will be comparatively small, and the bank will not be able to draw on the reserves of man-power that were previously available to it. It will be presented with that difficulty. The governor goes on to say -

Opportunities for promotion would no doubt develop in other ways, e.g., at the outset of separation a number of additional positions would need to be created and later on it was extremely likely that the Central Bank would develop new activities.

There is no certainty that it will be permitted to develop new activities. What does the governor mean when he talks about the possibility of its developing new activities? As a matter of fact, by the rejection of the amendment moved by my colleague, the honorable member for Melbourne Ports, the Reserve Bank will be prevented from developing new activities; it will be confined to the terms of this measure. It is quite obvious that there will be no extension of the activities of the bank. The governor went on -

Despite this, however, there could be fears that employment in the Central Bank would not attract the most able men and there would be some danger of stagnation within its specialized, com paratively 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.

What I should like to know is whether these terms of employment have yet been determined. They are to be left exclusively in. the hands of the Reserve Bank and those in control of it. I dare say the board, controlled by private interests, will determine the terms and conditions of employment. Evidently, the matter is sufficiently serious for the governor to have made some rather remarkable statements concerning the future set-up of the organization. In referring to the need for elasticity he said that the bank ought to be given the right to recruit at any age and educational standard and from any external source, for example from other banks and universities. He said that ths bank should be free - . . to develop a flexible system of promotions with salaries sufficiently adequate to hold the bank’s most promising officers and to attract from outside men of high ability and qualifications.

  1. to evolve a system of retirements which would enable officers who, while capable, were* unlikely to reach very senior positions, to bo retired on reasonable terms at relatively early ages.

If the Treasurer (Sir Arthur Fadden) is prepared to be frank with this Parliament he will admit that the Government has decided to fix the retiring age of future employees in the bank at a much lower age than that which is now provided in the ordinary Commonwealth Bank service. There is no doubt that the legislation has been designed to try to give to the present officers of the bank some sense of security. They are to be taken over under the present system of employment and their retiring age is to be that which at present obtains in the Commonwealth Bank service. But what about the new recruits who are to be brought into the Reserve Bank? At what age are they to retire and under what conditions? It is not a question merely of securing sufficient staff to control the Reserve Bank at this point. What about the future? How will the right men be attracted into the service? All these questions must be answered now because the bank will find it necessary, almost immediately, to commence recruitment.

There is to be no such thing as a classification board or an appeal board for the new employees of the Reserve Bank. The

Governor of the bank, Dr. Coombs, said that it would be unwise to try to fix such a system at the moment in regard to the Reserve Bank. He said that the bank and staff must learn by experience and then, later on, they could evolve some system which, as a result of this experience, would be satisfactory. I think that that is all completely unsatisfactory. In my opinion, it indicates that if the Governor of the bank had been afforded any opportunity, publicly or otherwise, of expressing an opinion he would have opposed the Government’s plans with respect to the existing bank structure.

Is it not rather significant that the governor was excluded from a number of conferences that were conducted with representatives of the private banks by the Prime Minister (Mr. Menzies) and the Treasurer? Although the governor is the most important man in the working out of this new organization, he was completely excluded from those deliberations.

Mr Curtin:

– Why was he excluded?

Mr WARD:

– The reason is obvious. The Government was afraid that if Dr. Coombs were given the opportunity of expressing his opinion he would have been opposed to the Government’s proposals with respect to the banking structure. Any number of authorities are available to indicate that the most effective system of central banking is to have a central bank associated with the ordinary business activities of the community through an allied trading bank establishment. The Treasurer has expressed that view, himself. But that opportunity is to be denied the central bank. Therefore, I ask the Treasurer why we cannot be told the new conditions of employment in the Reserve Bank. Surely this matter has been discussed. It is one of the obvious questions for discussion and determination. As I have said, it warranted the governor writing a two-page letter, dealing specifically with this very difficulty in regard to staff.

Therefore I invite the Treasurer to say whether the fears that Dr. Coombs expressed in his letter have been brought to the notice of the Government and what the Government proposes to do about them. The Government has left the terms of employment entirely in the hands of the bank. If the bank is to attract the right people and if it is to get the best banking brains available in the community, now is the time to indicate the terms and conditions under which officers will be employed. Members of the existing banking staff, according to the Government’s statement, are to be given the right to choose whether they will remain with the existing banking organization or transfer to the Reserve Bank. But, according to Dr. Coomb’s letter, that right is restricted. They can indicate their desires.

The CHAIRMAN:

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

Mr BURY:
Wentworth

.- It should be pointed out that there are advantages under the proposed legislation at least in connexion with the staffing of the central bank. In the past, one of the things that has made it difficult to get high quality staff for the central bank has been that the Commonwealth Bank could not offer sufficiently attractive conditions and a high enough rate of pay. The reason for that was that although the central bank section required officials of a much higher standard of attainment than did the other banking functions, the standards of those officers had to be related to the salaries paid to the rest of the bank staff, who numbered about 10,000. This has acted as a drag on the quality of personnel which the central bank section has been able to attract and maintain.

Even more serious, in the past, has been the fact that previous governors of the Commonwealth Bank have been, not central bankers, but trading bankers. This situation has arisen out of the unity of the central bank and the trading bank functions. This country would have got on a lot better in the past if the governors of the bank, however eminent and worthy in other respects, had understood the art of central banking. Whatever may be said here and there and in other places abou the present governor of the central bank, it can almost certainly be asserted that he is the first one who has known what central banking is all about. The very fact that this will be a small institution should not limit the quality of staff that it can recruit.

The particular problem is that its staff will be limited in total number. This problem has been very successfully overcome by both the Central Bank of Canada and the Reserve Bank of South Africa, very largely by offering excellent pay and conditions. The function of the people in the central bank is one of the most important in our whole economic life. The repercussions of what this very small group of people do will affect the whole country in a way which trading banking does not begin to do. Therefore, I regard it as absolutely essential that everything should be done to attract and retain the very highest quality staff. This can be done only by having a flexible relationship and flexible provisions which can be adapted from time to time.

I see no virtue whatever in laying down, line by line, a sort of trade union set-up for this kind of staff. In the Commonwealth Bank, where thousands of employees are engaged and where safeguards are necessary, an entirely different set of circumstances exists. I hope that we shall leave the staffing arrangements for the new central bank completely flexible. Other central banks have managed to do it. The Federal Reserve of the United States of America which, far and away, leads the world in these matters, has a superb staff which is certainly not controlled in detail by any legislative provisions. One of the greatest mistakes that we could make would be to lay down in detail how and by what means we should employ this particular set of people whose activities will be so highly important.

Mr CREAN:
Melbourne Ports

.- Before I move the amendment that I propose to move I should like to support the remarks of my colleague, the honorable member for East Sydney (Mr. Ward). It seems to me that the statements contained in the letter that he quoted are supported by the remarks of the honorable member for Wentworth (Mr. Bury). He said that Dr. Coombs could be said to be the only Governor of the Commonwealth Bank who had known anything about central banking. The letter that was quoted by the honorable member for East Sydney voiced the objections of Dr. Coombs to the disorganization of the staff that is taking place under the proposed legislation. It is interesting to note that the only objection raised by the honorable member for Wentworth (Mr. Bury) was that previously the employees of the central bank were not offered sufficient salary because to do so would have caused difficulties among banking staffs generally. That statement could be taken to mean that the general level of pay in all banks was too low for the services rendered. In that event, there is a good case for the officers concerned to seek a rise in their salary. In any event, the central banking functions have previously been kept separate and distinct. People in the central bank division could be moved to general banking, or vice versa, and in the view of the Governor of the bank the staff is better in consequence of that, because not only are members of the staff skilled in central banking, but in the normal fields of trade and commercial activity they have learnt to keep a finger on the economic pulse of the country. Whilst in the aggregate there may be fewer central bankers under that system, at least there is a better field of recruitment where there is movement from one division of the bank to the other.

On behalf of the Opposition, I therefore move -

That sub-clause (2.) of clause 74, be omitted.

The sub-clause states - (2.) After the expiration of a reasonable time after the commencement of this Act, the head office of the Bank shall not be in the same building as the head office of any other bank or of the Commonwealth Banking Corporation.

This seems to me to be taking to ridiculous levels the dogma of the Government that trading banking and central banking should not be carried on in the same institution. Apparently, the two aspects of banking cannot even have contact in the same building. The cost of this proposed change is a further factor which makes the reason for the introduction of the legislation all the more doubtful. This clause provides for the establishment of a head office of the bank at Sydney. The bill says nothing about whether the office now in Martinplace, Sydney, is subsequently to become the head office and the other sections of the bank are to be thrown out; whether there is to be erected a new building altogether, to be called the Reserve Bank of Australia; whether the situation will stop there; or whether branches may also be established in the other capitals of the Commonwealth, in regional cities, and also in Canberra.

The other bills also are strangely silent as to how premises are to be allocated among the various divisions of the bank in the future. One high authority in the Commonwealth Bank has suggested that the physical changes involved in separating staff, in providing new bank buildings, and in creating new positions, new managements, and the like, will involve an expenditure of as much as £12,000,000 to £15,000,000. The Government has been strangely silent about how the incurring of such a cost will strengthen banking activities in Australia, but there cannot be any doubt that the mere physical separation that is proposed in this bill, and in the other bills that are to come before the Parliament, will do nothing to strengthen banking in this country. Those other bills all flow from the simple proposition, as I think the “ Sydney Morning Herald “ calls it, that trading banking and central banking ought not be carried on together. To begin with, that is a dubious assumption, as honorable members on this side of the House have tried to point out, but apparently we have not convinced the honorable member for Hume (Mr. Anderson) about it. The change that is to be made will weaken the bank in its central and commercial activities. The integration of staff will weaken the bank. The cost involved in the erection of a considerable number of new buildings will also weaken it. Apparently, the Governor of the Reserve Bank could not occupy the top floor of a ten-story building if some other banking institution were in occupation of the same building. That is the height of absurdity. It means that later on, even when there are other very urgent requirements to be satisfied, we shall have to consider a proposal to erect a building worthy to house the new Reserve Bank of Australia, which initially must be in Sydney. No doubt, later it will be said that the bank must have offices in the other States as well, becoming to the dignity of the institution. I suggest that the committee should be given some indication of what these various separations will cost. Honorable members should be told of the weakening that will take place in banking practice, and the weakening that will also take place in the integration of staff. The camaraderie that has existed between the various staffs in the past is to be destroyed, even to the extent of not housing different staffs in the same building. For that reason the Opposition proposes that sub-clause (2.) of clause 74 be deleted from the bill now before the committee.

Sir ARTHUR FADDEN:
McphersonTreasurer · CP

, - I cannot accept the amendment put forward by the honorable member for Melbourne Ports (Mr. Crean). Sub-clause (2.) of clause 74 provides for physical separation of the Reserve Bank’s head office from the head office of the Commonwealth Banking Corporation or any other bank. It is considered that a provision to this effect is a necessary step in effectively separating the central banking and non-central banking components of the present Commonwealth Bank group of banks; it would be undesirable for officers engaged in policy work at the head office of the Reserve Bank to remain in close physical contact with the head office staff of the Commonwealth Banking Corporation, or of any other bank.

Mr Crean:

– They are not allowed to talk to one another.

Sir ARTHUR FADDEN:

– That is ridiculous. It is proposed that the present head office of the Commonwealth Bank’s group of banks in Martin-place, Sydney, will become the head office of the Commonwealth Banking Corporation and its constituent banks, and that the head office of the Reserve Bank will be established elsewhere. The Martin-place building, the ground floor of which is at present used for the transaction of banking business with the public, is ideally suited to the head office requirements of the Commonwealth Banking Corporation group of banks. The Reserve Bank will have few dealings with the public, and the establishment of its head office elsewhere will not have any adverse effect on the efficient conduct of its operations.

It is not yet known, of course, when it will be practicable for the head office of the Reserve Bank to be established in another building. For this reason, the clause provides that its establishment in a separate building is to be effected after the expiration of a reasonable time after the Reserve Bank Act comes into operation. The determination of “ a reasonable time “ will depend on the practical circumstances involved in establishing the Reserve Bank’s head office in a separate building. Meanwhile, it is proposed that steps will be taken to segregate the Reserve Bank and Commonwealth Banking Corporation officers in the Martin-place building.

It will be noted that the proposed statutory provision relating to “ physical separation “ refers only to head office buildings in Sydney. In other capital cities where the business of the Commonwealth Bank, group of banks is at present conducted in the same building, it is intended that Reserve Bank and Commonwealth Banking Corporation staffs will be accommodated in separated buildings as and when it is reasonably practicable to do so. It is, however, felt to be unnecessary to include provisions to this effect in these measures, because little work of a policy nature is performed outside the head office in Sydney.

There are other points with regard to the head office of the bank. Space is already short in the Martin-place building and would not meet the needs of the present group for any length of time. In any case, the building is not really suitable for central bank requirements, particularly with regard to facilities for handling notes and coins. It is proposed that the Commonwealth Banking Corporation will take over the building on the same basis as the central bank took it over from the old general banking division, namely, on the basis of cost less depreciation. That is the case for the physical separation of the two banks which is necessitated because of lack of accommodation.

Mr CLAREY:
Bendigo

.- I listened with a great deal of interest to the statement of the Treasurer in respect of the separation of the Reserve Bank from the Commonwealth Banking Corporation, but I must frankly admit that no reason has yet been given which would indicate that the physical separation as proposed in clause 74 is warranted. The Treasurer says that any physical contact between persons in the Reserve Bank and other associated with the head office, either of the Commonwealth Banking Corporation or any other banking authority is undesirable, but he has not yet stated how that physical contact would affect the operations of the Reserve Bank and lead to actions on the part of officers of the Reserve Bank that would be detrimental to the interests of Australia. The other reason advanced, that the accommodation that now exists in Martin-place is becoming rather cramped and it will be necessary to secure additional accommodation somewhere else in which to carry on some of the banking functions of the Commonwealth Bank, is surely a matter of administration and not a question of amending of the banking legislation in this way.

If the question of physical contamination of Reserve Bank officers is to be considered, one might also go a little further and suggest that in no circumstances should Reserve Bank officers talk by telephone to officers of other banks or of the Commonwealth Banking Corporation. From the stand-point of practicality and realism, one finds it very hard indeed to justify this clause, which seems to indicate that physical contamination is going to be ruinous to the economic and banking interests of Australia. I do not think sensible people will be prepared to accept that proposition.

I desire also to deal with Part VII. - the Reserve Bank Service - which affects the conditions of employment of officers of the Reserve Bank and, to the extent stated in clause 72, of persons who will, after the passing of these measures, be employed by the Commonwealth Banking Corporation. The Treasurer, in introducing these bills, stated that the matter of the staff had caused him a great deal of concern. I can appreciate his concern in that respect having regard to the opportunities for promotion and the degree of experience which officers have been able to obtain under existing conditions. Hitherto, young men and women who have entered the service of the Commonwealth Bank have had the opportunity of obtaining very wide experience in a variety of the operations and phases of banking ranging from the savings bank to the central bank. The dismemberment of the bank will mean that those opportunities will be lost to the staff. It would appear tha* the Reserve Bank will not be able to select for training in the various sections of the Commonwealth Bank bright, efficient and brilliant officers who, after gaining experience in the central bank and after being properly trained, have transferred to senior positionsin the Commonwealth Bank service. It is essential that officers employed in the Reserve Bank as well as those employed by the Commonwealth Banking Corporation should have the opportunity of obtaining the widest possible experience. These measures, in my opinion, will prevent officers from securing that experience, and to that extent both the Reserve Bank and the Commonwealth Banking Corporation will suffer.

My understanding of clause 72 is that up to a period of three months after the measure comes into operation officers will have the opportunity of being selected by the Reserve Bank for service with that bank, but after that period, no matter how brilliant or capable an officer may be or how necessary his services, already proven with the Commonwealth Banking Corporation, may be to the Reserve Bank, that officer will have no opportunity of being employed by the Reserve Bank. Conversely, the position can arise that officers who have been trained in the Reserve Bank and have gained wide experience and who could be usefully employed in the Commonwealth Banking Corporation will be lost to the corporation. The result will be that not only will the employees find themselves in a difficulty as a result of loss in experience and promotion, but at the same time the Commonwealth banking system, the system controlled by the Commonwealth Bank, will lose the value of the services of experienced officers. Therefore, I believe that Part VII. should be rejected.

Mr HULME:
Petrie

.- I have listened with great interest to the remarks of the honorable member for Melbourne Ports (Mr. Crean) and the honorable member for Bendigo (Mr. Clarey). I should like to correct the impression given by the honorable member for Melbourne Ports that the cost involved in relation to the adjustment as between the Reserve Bank and the Commonwealth Banking Corporation is likely to run into a figure of £12,000,000 or £15,000,000. I think his argument shows a lack of understanding, if not a complete misunderstanding, of what is involved in this particular problem. Similar statements were made when the 1953 banking legislation was before the House, but events have shown that an expense of that magnitude was not necessary in the actual transfer.

I refer also to the remarks of the honorable member for Bendigo. I appreciate that Opposition members may find a little difficulty in understanding what is involved in service with the Commonwealth Banking Corporation as against service with the Reserve Bank. The service to be rendered in each of these institutions is entirely different. With the Reserve Bank, it is very much a specialized service. Therefore, it is quite reasonable for us to expect that those who go into the service as junior clerks should concentrate their careers on the type of work that is associated with a reserve bank. If a man reaches 45 or 50 years of age in the Reserve Bank, I fail to see how he would be of tremendous value to the Commonwealth Banking Corporation, in which he would undertake an entirely different type of work. I cannot see how, after 20 or 30 years’ experience in the Reserve Bank, he would be as valuable an officer in the Commonwealth Banking Corporation as he is in the specialized service in which he has been engaged for those years. The same view obtains in relation to those who have had 20 or 30 years’ service in the Commonwealth Banking Corporation. I cannot believe that the experience that they have gained, be it in the savings bank division or in the general bank division, will be of tremendous value in the service of the Reserve Bank. As I said earlier, these are two specialized services, and there is no reason to believe that the experience gained in one can be of tremendous value in the other.

The honorable member for East Sydney (Mr. Ward) referred to a letter which had allegedly been written by Dr. Coombs. If the expressions that were read by the honorable member for East Sydney were in fact the expressions of Dr. Coombs, then they suggest a lack of confidence by Dr. Coombs in himself and in the board which he serves as governor. However, I have very grave doubt whether Dr. Coombs did in fact make the type of statement that has been read to the committee by the honorable member for East Sydney. I have sufficient regard for Dr. Coombs’s ability as an administrator, as proven over the years, to say that he is quite capable of adjusting, within the terms of this legislation, the staffing requirements of the Reserve Bank. I believe that within a very short time of the separation of the central bank from the trading bank activities, we will have a central bank staff equally as efficient as the staff at present.

One, of course, would not expect the honorable member for East Sydney to know very much about these matters. It would be reasonable to say that he shows considerable ignorance about the conduct of business. I cannot see any great difference between the number of employees engaged by the Reserve Bank and the number of employees engaged by hundreds of institutions throughout this country. Surely the Australian Labour party does not claim that adequate opportunity for advancement is not offered in all these industries which are scattered throughout Australia! If every person in a staff of 300 to 1,000 people in other activities within the community has an opportunity for advancement, then, within the staff of the Reserve Bank, there is an equal opportunity for advancement for the person who comes in at the bottom and stays in the bank until his retirement. Everybody, of course, may not reach the top, but that applies in every industry.

The CHAIRMAN:

– Order! The time allotted for the remainder of the committee stage of the bill has expired.

Question put -

That the sub-clause proposed to be omitted (Mr. Crean’s amendment) stand part of the clause.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 52

NOES: 27

Majority . . 25

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Question put -

That the remainder of the bill be agreed to, and that the bill be reported with amendments.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 52

NOES: 29

Majority . . . . 23

AYES

NOES

Question so resolved in the affirmative.

Bill reported with amendments; report adopted.

Third Reading

Motion (by Sir Arthur Fadden) proposed -

That the bill be now read a third time.

Mr CREAN:
Melbourne Ports

– The Opposition opposes the third reading of this bill. For the reasons already stated, we regard the whole measure as obnoxious. No good reason, apart from the political doctrines of the Liberal party, has been advanced for the making of this change in our banking system. The legislation proposes to disrupt a banking system which, within constitutional limitations, has worked reasonably satisfactorily for the people of Australia. The Reserve Bank Bill proposes to erect an entirely new structure, which will separate the central banking activities from the other functions of the Commonwealth Bank as we have known them. There will in future be no bank known as the Commonwealth Bank of Australia. The people will be involved in heavy expenditure in separating the various sections of the institution. Disruption will occur in the functioning and the integration of the Commonwealth banking service as we have known it. Persons who, for 20 or 30 years or more, have thought that they could carve out for themselves a career in an integrated unit offer ing variety of work, now must opt to continue their work in one of the various banks that will be instituted.

In defending themselves against the Opposition’s charges, Government supporters have contended that the proposed changes will not weaken the banking system in Australia, but they have not shown that the changes will in any way strengthen the banking system. After all, the object of any legislation of this kind should be to strengthen the banking system. There are indications that since the introduction of the board system in 1951, and particularly since 1953, the banking system has needed strengthening, mainly against the effects of the greed of the private trading banks. This measure is a capitulation to the private banks, and the reason given for it is that the Government can now hope to get better co-operation between them and the central bank. We have yet to learn that any government can get co-operation or respect from organizations to which it has capitulated. These proposals are an indication of this Government’s subservience.

Mr SPEAKER (Hon John McLeay:
BOOTHBY, SOUTH AUSTRALIA

Order! The time allotted for the remaining stage of the bill has expired.

Question put -

That the bill be now read a third time.

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

AYES: 53

NOES: 28

Majority . . . . 25

AYES

NOES

Question so resolved in the affirmative.

Bill read a third time.

page 2526

COMMONWEALTH BANKS BILL 1957

Second Reading

Debate resumed from 24th October (vide page 1777), on motion by Sir Arthur Fadden -

That the bill be now read a second time.

Mr. CREAN (Melbourne Ports [5.52].- This, of course, is the second of the measures that are part of the one scheme, because as it provides, it shall come into operation on the date on which the measure that we have just passed comes into operation. The purpose of-

Motion (by Mr. Harold Holt) put -

That the question be now put.

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

AYES: 53

NOES: 28

Majority . . . . 25

AYES

NOES

Question so resolved in the affirmative.

Original question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

Sitting suspended from 5.58 to 8 p.m.

Declaration of Urgency.

Mr HAROLD HOLT:
Minister for Labour and National Service · HIGGINS, VICTORIA · LP

– I declare that the Commonwealth Banks Bill 1957 is an urgent bill.

Question put -

That the bill be considered an urgent bill.

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

AYES: 49

NOES: 26

Majority . . 23

AYES

NOES

Question so resolved in the affirmative.

Allotment of Time.

Mr HAROLD HOLT:
Minister for Labour and National Service · HIGGINS, VICTORIA · LP

– I move -

That the time allotted in connexion with the bill be as follows: -

For the committee stage, until 12.45 a.m., Wednesday, 27th November.

For the remaining stages, until 12.55 a.m., Wednesday, 27th November.

It will be seen, Mr. Speaker, from the times that I have indicated, that we have set aside, under the guillotine process, approximately five hours for the committee discussion. The question now before us is whether the time is. in all circumstances, adequate for the purposes of the committee and the House. I want to point out, not only to honorable gentlemen opposite, but also to the country, that any one who followed the events in this chamber last Thursday night will realize how impossible it has become to proceed with an orderly debate on the banking measures which have been, and are, before us. On that night, instead of using the available time for the purposes of discussing a bill to which honorable gentlemen opposite had already shown, by their vote on the second-reading, they were opposed, but which had been carried by a majority of 24 at the second-reading stage, honorable gentlemen opposite called for twenty divisions. Each of these divisions took an average time of probably seven minutes. They called for seven more divisions in the course of this afternoon. So, more than three hours of debating time was taken up on useless divisions which merely recorded again the majority support which had already been demonstrated at the second-reading stage- (Opposition members interjecting) -

Mr SPEAKER:

– Order! There are too many interjections. I also warn the Minister that he is possibly convassing matters outside the motion.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

- Mr. Speaker, I wish to indicate that the time proposed is adequate, and that it is common knowledge that honorable gentlemen opposite and their party as a whole in this Parliament have determined on a course of obstruction of legislation which enjoys overwhelming majority support in this popular chamber - the people’s chamber. Labour, which has always protested that there should be no obstruction to legislation carried by this chamber has, as is known, brought the halt, the sick and the lame to Canberra in order to obstruct, in another place, legislation carried by an overwhelming majority in this chamber. What hypocrisy it is for honorable gentlemen opposite to claim to be democrats and then lo organize their forces in another place to frustrate the popular democratic will of this chamber. (Opposition members interjecting) -

Mr SPEAKER:

-Order! The right honorable gentleman will take his seat for a moment. I ask the House to come to order. This is beyond a fair thing. The Minister for Labour and National Service has the floor, and other honorable members will have their opportunity to speak later.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I merely point out, Mr. Speaker, that the Reserve Bank Bill was agreed to by an overwhelming majority of 25 votes on the third reading. Also, it is now common knowledge that the Labour party, in another place, although it was defeated in terms of numbers at the last election, is employing all the devices of which it is capable in order to block and obstruct legislation-

Opposition Members. - Hear, hear!

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Of course, honorable members opposite cheer that now, but how often have we heard them say that the Senate is a house of review?

Mr J R FRASER:
ALP

– On a point of order, Mr. Speaker, I would like to know whether, under the Standing Orders, the right honorable gentleman is entitled to reflect on proceedings which occur, or may occur, in another place.

Mr SPEAKER:

– Order! The Minister is not reflecting on another place. He may continue.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– The only other thing I want to add is that when we are considering the adequacy of the time that is being given for debate, we must remember that, in a swiftly moving world, this Parliament has a great deal of varied business to transact. Between now and the rising of the Parliament, there are 32 bills to be dealt with, including thirteen remaining banking bills.

Mr SPEAKER:

– Order! The right honorable gentleman’s time has expired.

Mr CALWELL:
Melbourne

– The Opposition opposes the application of the “ guillotine “ on this bill, a bill of 129 clauses printed in 35 pages, a bill to maul and mutilate, a bill to dismember and disrupt, a bill to cripple and harm the people’s bank, a bill to annul the legislation passed by the Fisher Government in 1911, and a bill for which the Government has no mandate. The 1945 legislation was approved by the people at the 1946 general election, and all that is happening now is that this Government, under pressure from the private bankers-

Mr Anderson:

– I rise to order. Is the honorable gentleman in order in discussing the merits of the bill?

Mr SPEAKER:

– Order! I ask the honorable member for Melbourne to confine his remarks to the motion before the Chair, and I again ask the House to cooperate.

Mr CALWELL:

– With deference, Mr. Speaker, I suggest that I am more inside the limits of the debate than the Minister was. He wandered to the Senate and abused the Labour party for exercising its constitutional right to bring every senator into his place to defeat a nefarious piece of legislation which has been forced on this Parliament by the Government, because of pressure from outside interests.

The supporters of the Government have revealed themselves, all through this debate, as the stooges of the private banking institutions, the minions of the money power, and the willing serfs and marionettes of the forces that dictate international finance. They are trying by the legislation they have sponsored to corrupt the government of this country. We have always believed that the history of the private banks in Australia is a history of fraud, failure and corruption. That is why we have always hated them. We hate them with a holy hate.

Mr Hulme:

– I rise to order. I ask you, Mr. Speaker, whether the honorable member for Melbourne is confining himself to the motion before the Chair.

Mr SPEAKER:

– Order! The Deputy Leader of the Opposition is in order.

Mr CALWELL:

– Thank you, Mr. Speaker. I am not only in order, but I am absolutely right in what I say about the private banks of this country. Five hours for debate is not enough. How can we discuss all these clauses in five hours only? In the case of the 1945 banking legislation, the Chifley Government allowed every member to speak on the second reading and at the committee stage.

Mr Turnbull:

– You did not in 1947.

Mr CALWELL:

– We did. We allowed discussion of all our legislation, even the 1947 legislation, which we were in a hurry to pass. We still did not deny the right of members of the Parliament to discuss every aspect of the legislation in the House and in committee. Mr. Speaker, Hitlerism will never be dead in this country while this Government can abuse the privileges of Parliament and deny members of this House, and of another place, the right of free expression of their views and adequate time in which to say them.

Mr BEALE:
Minister for Supply and Minister for Defence Production · Parramatta · LP

– The honorable member for Melbourne (Mr. Calwell), like the Mauretanian tiger, lashes himself into a fury with his own tail. (Honorable members interjecting) -

Mr SPEAKER:

– Order ! This disturbance has to stop. I ask honorable members to contain themselves. The dignity of the House must be maintained. I ask the Minister for Supply to proceed.

Mr Curtin:

– Introducing His Excellency!

Mr SPEAKER:

– Order! The honorable member for Kingsford-Smith is in his wrong place. He will remain silent.

Mr BEALE:

– As I have said, the honorable member for Melbourne is like the Mauretanian tiger lashing himself into a fury with his own tail. In other words, he gets up and tears a passion to tatters, and in a fit of spurious eloquence seeks to convey to this House that he is ravished, that he is insulted and outraged by the fact that we are putting. a guillotine down on this bill. Sir, a guillotine has been put down on this bill because the members of the Opposition themselves have wasted hour after hour, in division after division, quite unnecessarily. If they had avoided those divisions, they themselves would have had more hours in which to debate the bill.

We had an arrangement with the Opposition under which all bills were to be debated at the second-reading stage of the Reserve Bank Bill. That gave everybody in this House ample time in which to express his views on principle and on detail.

Mr Calwell:

– I was cut out.

Mr BEALE:

– The honorable member for Melbourne was cut out because his own party broke the agreement which he made with the Leader of the House (Mr. Harold Holt). Day after day, and night after night, in this place we find people like the honorable member for East Sydney (Mr. Ward) breaking honorable agreements entered into by the deputy leader of the Labour party. In those circumstances, Sir, surely some order must be brought into this debate. We are proposing to bring order into it to-night by allowing five hours in which to debate this second bill. There are further bills to be debated. Are we to go on for month after month debating, in a useless fashion, clauses the principle and detail of which already have been debated by everybody with a worth-while contribution to make?

I hear the honorable member for Melbourne, Mr. Calwell, complaining. I suggest that attention ought to be directed to his name, because he has complained that this is a wicked bill and that the rights of the people are being frustrated. It is worth while, in connexion with this bill, to recall what he himself said in a broadcast only a few days ago. He said that any harm done to the Commonwealth Bank must hurt the average citizen. We can almost hear the crocodile tears dropping on the carpet! He went on to say, however, that few protests had been heard outside the Labour party. He is so upset because the public of Australia, realizing that this is a good bill, is not prepared to support the Labour party! He asked, “Why should there be such public apathy when everybody knows that the public is being exploited? “ Why is there such apathy? I suggest it is because the public of Australia realizes that this is good legislation, and that the Labour party is making a meretricious and phony, a weak and hypocritical attack on this legislation. The time that has been allotted for this debate is ample for all points of view to be put, if the Labour party has a point of view to put, which it has not.

Mr THOMPSON:
Port Adelaide

– I am astounded to hear the Minister for Supply (Mr. Beale) trying to put these things over the Labour party. Can you tell me, Mr. Speaker, of anything lower, meaner and more despicable than a government that says to a man, who is lying in bed in hospital, “ We cannot give you a pair “? Have you ever heard of greater meanness than that of the Leader of the House (Mr. Harold Holt) when he referred to the maimed and the halt being brought here? Who brought them here? The Government brought them here! The very thing that Government supporters are accusing us of doing they are doing here to-night by their weight of numbers. Talk about putting the boots in! The Government says to us on this side of the House, “ We are not going to let you talk. We shall give you only five hours “ - it will in fact be only a little over four hours - “ to discuss this measure.” Why does the Government say that? It is simply because it does not want it to be discussed. It wants members on this side to speak on one clause only and so deny us the opportunity to deal with the remaining clauses of the bill. The Minister knows that under these conditions it is impossible to deal properly with the 129 clauses which the bill contains. We talk about being a democracy. We talk about people having the right to send their representatives to this Parliament so that they might express on their behalf what they want said. The Government says, “ We have the numbers. We glory in the fact that we had 25 more than you had in the division on the third reading of the Reserve Bank Bill. We have the numbers; you can say what you like, we will put the boots in and when the time for this discussion expires we will carry the bill through.”

But why is the Government sore in spite of this position? Simply because it has not a majority in another place. It has not the numbers there. It can force measures through this House. It can say to any member of the Opposition, “ We can sit you down. If you say anything out of place we will move a motion to have you suspended.” But the Government cannot do that in another place. The Opposition has the pull on the Government there, and it is going to use it. Our colleagues there will pull the Government back and prevent it from racing ahead. We have told the Government, first and foremost, “ Hands off the people’s bank. We cannot stop you here, but we can stop you in another place.” We are going to see whether the Government is game to follow the usual procedure. I challenge the Government to send as quickly as it can to the other place the relevant message in respect of the passing of. the Reserve Bank Bill, and see how it willi get on. Is the Government game to da that? Has it the courage to throw down the gauntlet, or does it still want to have more time to organize its tactics here and send out more statements to the people as to’ the need for these bills? The Government could have had a showdown twenty minutes ago in another place, if it had wanted it. If the Government had introduced the bill in another place and moved that it be read a first time, it would have soon seen where it was getting with this legislation. We invite the Government to do that. Let the Government take its legislation into that House where the people have sent members of the Labour party and others on the Labour side equal in numbers with the members of Government parties. There are sufficient members on the Opposition side in another place to protect the interests of the people. We will protect the people’s bank to the best of our ability. We will do all we can to stop the Government from forcing upon this community a bill that will destroy the people’s bank.

The Government cannot show one valid reason for pushing this bill through Parliament so quickly. If the Government could prove to the Opposition that the present banking legislation was inadequate, that the present banking system was inefficient or that the Commonwealth Bank was functioning in a way that was detrimental to the interests of people, it would have an excuse for applying the “ guillotine “. But the Government cannot produce any reason or proof of that kind. Not one Minister or private member on the Government side has been able to show us in any way where the present banking system has failed.

Mr SPEAKER:

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

Mr HASLUCK:
Minister for Territories · Curtin · LP

– Mr. Speaker-

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– You are the greatest bunch of burglars ever born.

Mr SPEAKER:

– Order! The honorable member for Hindmarsh will remain silent.

Mr Ward:

– You are the paid agent of the private banks.

Mr SPEAKER:

– Order! If the honorable member interjects again, I will name him.

Mr HASLUCK:

– The only comment I would make on the recent demonstration is-

Mr Beale:

– I rise to order, Mr. Speaker. Did you hear the honorable member for East Sydney (Mr. Ward) say that the Minister was the paid agent of the private banks?

Mr Ward:

– So he is.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– The whole lot of you are; he is not the only one. You are all in it.

Mr SPEAKER:

– Order! I ask the honorable member for East Sydney to withdraw the remark he made about the Minister for Territories.

Mr Ward:

– I withdraw.

Mr HASLUCK:

– My only comment on the recent demonstration is a Shakespearian comment - Sound and fury, signifying nothing. The point we are discussing-

Mr SPEAKER:

– Order ! The time allotted for the discussion of this motion has expired.

Question put -

That the motion (vide page 2527) be agreed to.

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

AYES: 51

NOES: 28

Majority . . . . 23

AYES

NOES

Question so resolved in the affirmative.

Opposition, who is authorized by his party to make the most satisfactory arrangements that he can - and very properly so - for the conduct of business. I can assure members of the Opposition that it has been to their advantage that they have had a responsible and experienced parliamentarian making these arrangements. But the arrangements were also endorsed by the Leader of the Opposition (Dr. Evatt), who was given unlimited time in which to speak to the four bills. Up to that point, the arrangement was observed. There was a breach of our understanding in two directions. I think it is important that they should be stated. First of all, in accordance with the agreement entered into, and endorsed by the Leader of the Opposition and other members of the Opposition a single secondreading debate was conducted on the four bills. The Deputy Leader of the Opposition should not be required to carry the responsibility for this arrangement on his own. The arrangement was endorsed by his party.

By the indulgence of the House, a Member may explain matters of a personal nature, although there may be no Question before the House; but such matters may not be debated.

The honorable member for Melbourne made a personal explanation and the Leader of the House is now debating it.

Mr. Harold Holt. - I am only too willing to confine myself to it, Mr. Speaker, if you can restrain honorable gentlemen from interjecting while I am speaking.

That the right honorable member be not further heard.

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

AYES: 29

NOES: 51

Majority . . . . 22

AYES

NOES

Question so resolved in the negative.

I have not alleged any breach of agreement against the Deputy Leader of the Opposition, and if my colleague has done so, then he had misunderstood the position. There has been, on the part of the Opposition, a breach of certain understandings that had been reached, and I think that was indeed unfortunate. I make the final comment that, in a House of this size, and with the amount of business that comes before this Parliament, unless a sensible arrangement is worked out between the representatives of the Government and the representative of the Opposition, then this Parliament simply could not function. I remind the House that 32 bills remain to be passed before the Christmas recess begins, and unless there is some orderly arrangement of business between the Opposition and the Government we will be here until the following Christmas. I hope that puts the record straight.

In committee: Consideration resumed.

Clauses 1 to 6 - by leave - taken together, and agreed to.

Clause 7 (The Commonwealth Banking Corporation).

Mr CREAN:
Melbourne Ports

– Certain clauses in these bills are more vital than others, and it is the group of clauses dealing with the Commonwealth Banking Corporation to which we shall devote a fair proportion of the limited time allotted for the committee stage. We propose to take a vote on this clause to indicate our root and branch objection to the reconstitution of the Commonwealth Bank as it has been known in Australia in one form or another since 1911. The name has been changed. We have severed the central bank activity by the passage of the Reserve Bank Bill, and the Commonwealth Banking Corporation is to embrace all the remaining functions of the existing bank with the exception of the Rural Credits Department which will be under the control of the Reserve Bank of Australia.

This new corporation, which one honorable member opposite referred to as a tri-legged monster bestriding the banking system in Australia, is to be divided into a trading bank, a savings bank and a development bank. As the following clauses will show, this is a most ponderous and topheavy method of administration. Despite what the Government may say about trying to take politics out of banking, every significant appointment in the new Commonwealth Banking Corporation will be a party political appointment. We shall discuss that matter in greater detail when dealing with some of the remaining clauses. On behalf of honorable members on this side of the House, at this stage I formally register our opposition to clause 7, which provides for the establishment of the Commonwealth Banking Corporation.

Mr CAIRNS:
Yarra

.- I direct the attention of the committee and the people of Australia to certain elements contained in clause 7, which provides for this new organization, which will be called the Commonwealth Banking Corporation, to take control of all the activities of what was formerly the Commonwealth Bank, other than the activities of the central bank and the Rural Credits Department. It is most unfortunate that the Government has chosen to use the term “ corporation “ in relation to this bank because that term in the United States of America and elsewhere has a long association with industrial and financial empires controlled by monopolized private capital, and has practically no association with any kind of public institution responsible to the people. This term has been used on several occasions in other countries, and in Victoria in relation to a public corporation, the Gas and Fuel Corporation; but I suggest that the term historically has been used strictly in relation to private business monopolies and not public institutions.

The remarks made in relation to an earlier measure apply with equal force to the provisions of sub-clause (3.) of clause 7, by which the corporation is to provide a staff for the Trading Bank, Savings Bank and Development Bank. This is the other side of the coin to an earlier provision which we examined, and it means the separation of what was formerly the staff of the Commonwealth Bank into two clearly defined departments. The Government, in 1957, is prepared to continue the separation. The Prime Minister (Mr. Menzies) is his secondreading speech on a bill introduced in 1953 in relation to banking said that he had considered very carefully this matter of separation of staff. He took a considerable amount of time to state the results of his consideraion and eventually the Government decided against separating the staff of the bank. On that occasion the Prime Minister stated -

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 to whether they are on the central bank side or on the trading bank side.

The very thing that the Government is proposing in 1957. The Prime Minister 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 considers very desirable.

So, late in 1953, after having considered carefully all aspects of the question of separating the staff of the Commonwealth Bank into two clearly defined sections, the Government decided there would be one service and one series of avenues of promotion, which the Government considered very desirable. If the Government considered that was very desirable in 1953, why does it now consider the opposite course is very desirable? This is one further example of the completely contradictory views the Government expresses in this proposed legislation compared with its attitude in 1953 and 1951. This poses again the question: Why has the Government taken up a completely contradictory position on these measures?

This has become a matter of such urgency that the people should test the Government on its complete about-change on these measures, and if the Government desires to test its position it can do so in another place at the earliest opportunity. There are seven clearly denned ways in which the Government has changed its position as established in 1953 and 1951, and this is one of them. Clause 7 is fundamental to the establishment of the Commonwealth Banking Corporation, and we are called upon, if we are mindful of the interests of the community, to deal with the clause in that light.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I have not very much to say on this matter, but my remarks are of great importance to Australia. Clause 7 of this bill begins by saying -

There shall be a Commonwealth Banking Corporation.

The Opposition is fundamentally opposed to the establishment of a Commonwealth banking corporation in place of the Commonwealth Bank of Australia because that is, in effect, what it does. The Opposition asks whether the Government can advance one single, valid reason for eliminating completely from the statute-book of this country the proud and famous name, “ The Commonwealth Bank of Australia “, and putting in its place a completely new name, the Commonwealth Banking Corporation. Undoubtedly, clause 7 is specially designed to enable the private trading banks to acquire an interest - and, what is more important, a controlling interest - in the Commonwealth Banking Corporation. I have no doubt whatever that the aim of the Government was to design this legislation in such a way as to enable the private trading banks to acquire financial control of the

Commonwealth Banking Corporation, in very much the same way as the Government allowed private interests to gain complete control of the Commonwealth Oil Refineries Limited, Amalgamated Wireless (Australasia) Limited and Commonwealth Engineering Company Limited. Unless the Parliament is vigilant, in the very near future we will find that, piece by piece, the Commonwealth Banking Corporation will be handed over to private banking interests. If not the whole of it, then a portion of it will be sold as A.W.A. and C.O.R. were eventually sold to private interests.

It has already been stated - the information comes from sources that are usually reliable - that the intention of the Government is to allow the private banks to transfer what should be their proper payments to the reserve deposit accounts of the Commonwealth Development Bank, to be used as part of the capital of that bank. If the private banks are able to become part owners of the capital of the Commonwealth Development Bank, it will not be long before the next step is taken, and that is the complete sell-out of the Commonwealth Banking Corporation.

This legislation represents the blackest page in Australia’s legislative history. Here we have a banking corporation established for the purpose of destroying the Commonwealth Trading Bank. The private banks failed to destroy it by fair means and now they are attempting to achieve their purpose by foul means. This course is followed by a Government that claims to believe in healthy and fair competition! But the Government represents the private trading banks which give only great lip service to the theory of healthy competition. When they are faced with the very thing that they claim is so essential to good government and to healthy commerce, they take every possible step to prevent healthy competition.

At one time more than 100 private trading banks were operating in Australia. One by one, they swallowed each other until after World War I. only 20 or 30 were left. Now we find that slowly but surely the number of active trading banks operating in Australia has been reduced to seven, two controlled from Great Britain and five controlled by Australian interests. Although we have seven private trading banks, do not imagine that there is any real competition between them. Any one foolish enough to believe that there is real competition between them need only try to get an overdraft from one at a quarter per cent, less than the others are charging to find how wrong he is. But the position is worse than that. No one refused an overdraft by one bank because his collateral is not sufficient can get an overdraft from any of the other banks.

This bill proposes to wipe out the name, the “ Commonwealth Bank of Australia “, though that is the organization which has stood between the avarice of the private trading banks and the interests of the people of Australia.

Mr Ian Allan:

– A rose by any other name!

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– If the argument of the honorable member for Gwydir were valid, then it would be quite legitimate to bring in an act of Parliament prohibiting the Rolls Royce people from calling their cars “ Rolls Royce “ and forcing them to call their cars “ Holden “ or some other name. The fact is that the “ Commonwealth Bank of Australia “ is a name which carries with it much goodwill and esteem, and has done so since 1911. It is a tragedy and a piece of sophistry on the part of the private trading banks for them to direct the Government now to alter the grand name of the Commonwealth Bank of Australia to this new thing, the Commonwealth Banking Corportion, which has yet to establish itself.

I feel for the Treasurer (Sir Arthur Fadden). He has not looked happy through one second of this debate. However, I congratulate the right honorable gentleman on the fact that he has gained something for the Australian Country party. This is the only time that I have ever known the Australian Country party to do any good since I have been a member of the Parliament. Australian Country party members have at least been able to drag out of members of the Liberal party, who are the real stooges of the private trading banks, the Commonwealth Development Bank which will give to the farming community only, unfortunately, special privileges which previously the Commonwealth Trading Bank was prepared to give to the whole community. I congratulate the Treasurer on the fact that he has been selfish enough to guarantee to the people who elected him special privileges which are not enjoyed by other members of the community. However, it is not a very great attribute for a statesman to be selfish. The greatest statesman is the statesman who wants to do the greatest good for the greatest number. Therefore, it is a tragedy that the Treasurer has not stuck to his guns and forced the Liberal party to abandon this whole scheme which is aimed at crippling the grand and famous Commonwealth Bank of Australia - the people’s bank!

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– If the honorable member for Hindmarsh (Mr. Clyde Cameron) were serious, it would be tragic. Knowing him as I do, I cannot believe that he was serious. He weeps crocodile tears about the removal of the great name, “ Commonwealth Bank “, from the group of banks dealt with in this legislation. I know the honorable member well enough to know how he worshipped the Honorable E. G. Theodore. It was Mr. Theodore who first endeavoured to establish a reserve bank. Did Mr. Theodore have no regard for Australia or the goodwill and esteem of the name, “ Commonwealth Bank “?

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I am sorry to interrupt, Mr. Chairman, but I thought we had dealt with the Reserve Bank Bill.

Sir ARTHUR FADDEN:

– This is all associated with the name, the “ Commonwealth Bank”. This idol, Mr. Theodore, did not think of the name, “ Commonwealth Bank “, when he tried to establish a reserve bank. He called it the “ Reserve Bank of Australia “. I shall now take honorable members into my confidence. When this subject was being discussed in Cabinet, my colleagues asked, “ What name will we give to this infant? “ One Minister said, “ It is Artie’s baby; let him christen it “. I christened it the “ Reserve Bank of Australia “.

Mr Webb:

– Did you have any “ reserve “ about that?

Sir ARTHUR FADDEN:

– It had a birth certificate.

The honorable member for Hindmarsh, whom I respect very much, said that it is a dreadful act to dissipate the goodwill of this group of banks by removing the name “ Commonwealth Bank “. Let us have a look at the facts. First, we have the Commonwealth Banking Corporation. Secondly, we have the Commonwealth Trading Bank. Thirdly, we have the Commonwealth Savings Bank, and, fourthly, the Commonwealth Development Bank. Goodness gracious, do honorable members opposite want the word “ Commonwealth “ on everything? This complaint by the Opposition is all nonsense. The word “ Commonwealth “ is associated in every possible way with these banks. Besides the Reserve Bank, there are the Commonwealth Banking Corportion, the Commonwealth Trading Bank, the Commonwealth Savings Bank, and the Commonwealth Development Bank. What more do honorable members opposite want?

Mr BRYANT:
Wills

.- The Treasurer seemed to claim some credit for, and to take some pride in, paternity of what he called an infant or a baby. The unfortunate feature is that there are quadruplets, and, as we all know, quadruplets are much harder to rear than a single child. The whole purpose of the new system that is being introduced is to weaken the Commonwealth Bank structure in the eyes of the people, and, in fact, in its banking operations and functions. The point that interests me mostly is the basic motive of the Liberal party in bringing forward these various banking bills. Four years ago we saw the word “ Trading “ added to the name of the Commonwealth Bank. It was no longer simply the Commonwealth Bank of Australia, which had so many years of tradition behind it. Now we find introduced into the field the Commonwealth Banking Corporation. As the honorable member for Yarra (Mr. Cairns) has pointed out, the terms that are being used are those commonly associated with private enterprise. The insidious nature of the plan is apparent when we consider that the terms used to describe the banks have been so closely associated with private enterprise that eventually the people will not realize that these banks belong to them.

One has only to listen to the remarks of honorable members opposite, particularly of the honorable member for Wentworth (Mr. Bury), to realize what a completely doctrinaire approach is being brought to this question by Government supporters. Any person interested in politics should turn the searchlight on the political philosophies of honorable members on the Government side of the committee. A few years ago I would not have believed that the Liberal party could become so rigid, so inflexible and so doctrinaire in its approach to political problems as to present the arguments that we have heard over the last few weeks. It is absolutely indefensible that honorable members opposite should turn their destructive talents on to the Commonwealth Bank of Australia.

The Treasurer has brought up the subject of the naming of the various banks. The word “ Commonwealth “ means a great deal in Australian history. It was chosen, in the first instance, after debates that took place before federation became a fact. It was chosen because of its inherent meaning, after extensive debate, and the federation of States became known as the Commonwealth of Australia. In ever-y document associated with this Parliament we find the word used, the Parliament being described as “ the Parliament of the Commonwealth “. Historically, the word has always been associated with organizations of the people. I believe that the changing of the name of the Commonwealth Bank is a part of the insidious attempt to reduce the effectiveness of the bank, and to break it up into various parts so that it will not mean as much in the community. Sub-clause (3) of clause 7 of the Commonwealth Bank Bill says -

The Corporation shall provide and make available to the Trading Bank, the Savings Bank and the Development Bank such officers and employees as are necessary for efficiently conducting the business of each of those banks.

This has the simple effect of introducing into the field another level of authority. We have heard continually, from both sides of the Parliament, statements regarding the importance of the banking system. We have only to read the report of the Royal Commission on Monetary and Banking Systems in Australia, which was published twenty years ago, or the report furnished last year on monetary banking and credit systems in New Zealand - both of them almost completely objective reports - to realize the importance of the financial structure of a country to the well-being of all its citizens, and how important it is that the financial system shall be flexible enough for the Government to use it to cope with problems that arise from time to time. The banking system should, in fact, be an effective instrument of Government policy. As we heard during the debate on the previous banking measure, the Commonwealth Bank has become almost a department of state. This legislation proposes to break it up into segments and fragments. There will be the Development Bank, the Savings Bank, the Trading Bank and the Reserve Bank, which will all be different institutions. The employees of the Commonwealth Bank will be split up and transferred to these various new institutions.

The proposal to make the Reserve Bank completely separate by removing it to another building is a ridiculous and farcical aspect of the legislation. It is merely on-; step on the road along which the Governnent will later seek to propel all these various banks. It will not be long, if this Government survives, before we will find instructions being issued to the Savings Bank, and then to the Trading Bank and the Development Bank, to force them to operate from different premises and so become completely separate, one from the other.

The people of Australia should very carefully study the doctrinaire approach that the Government parties, particularly the Liberal party on this occasion, bring to the question of finance. They should study the whole problem of banking, even though it is very involved, the techniques that the Government is using and the mystique with which the Government has surrounded the question.

The legislation boils down to this: Into a very important piece of political machinery, the financial system, have been introduced more difficulties in exercising control. The legislation will reduce the capacity of the Government to take at any particular time adequate precautions to protect the people, and the whole financial structure of the community will be weakened thereby.

Mr BURY:
Wentworth

– I believe that no honorable member on this side of the Parliament will deny that two of the greatest assets of any bank are, first, goodwill and esteem, and secondly, a good name. But let us consider where these matters are important. They are mainly important in relation to the hundreds of thousands of people with whom a bank deals. The two sections of the Commonwealth Bank that deal with the public are the Commonwealth Trading Bank and the Commonwealth Savings Bank. These two sections of the bank which the public knows, and which really matter in the daily lives of the people, have for a number of years been operating under the very same names that they will use under the new legislation. Therefore, any suggestion that the bill will destroy goodwill is entirely unfounded.

The Commonwealth Trading Bank and the Commonwealth Savings Bank, operating under these names, have expanded rapidly over recent years, and there is every reason to suppose that they will continue to do so. Any argument concerning names should properly be centred around the odd central bank functions. We are starting a new institution, because we have never yet had a fully fledged central bank, and let us not forget that the bill, besides changing the name, will make the central bank, as such, a lot more effective than it has ever been before. The Opposition is inclined to gloss over the essential and basic fact that the control over reserve ratios which will exist under the new legislation will be much closer and tighter than has been the case hitherto. The complaints that have been made - to some extent rightly - about some of the banks ignoring the edicts of the central bank in the past, will no longer be possible under the new legislation. Let us, therefore, at least get rid of the idea that we are weakening the central bank. For the first time we will have a proper central bank with adequate powers, and free from the taint that it is competing with the banks that it is supposed to lead. Surely, Opposition members will acknowledge that the extensive trading functions of this corporation will be continued under the names in which they have been conducted for some years.

The proposed corporation has been referred to as a baby. The baby is, in fact, a monster. Not only does it take up all the existing structure of the Commonwealth Trading Bank and the Commonwealth Savings Bank, but also it adds yet another field of activity. It is hardly to be supposed that its trading bank and savings bank business will not increase, or that the business of the new Commonwealth Development Bank will not develop greatly. There is nothing in the idea that the Government is dismembering the Commonwealth Bank of Australia. What it is, in fact, doing is, on the one hand, promoting a powerful central bank, and, on the other, greatly increasing the whole scope of the government banking framework. Therefore, the suggestion that the Commonwealth Bank is being dismembered does not bear examination.

The honorable member for Hindmarsh <Mr. Clyde Cameron) gave a very curious interpretation of the meaning of clause 7 (2.) (c). As I read it, it provides, not for what other institutions may do in relation to the proposed Commonwealth Banking Corporation, but for what the corporation itself may do. It provides that it shall be “ capable of acquiring, holding and disposing of real and personal property and of suing and being sued”. That provision constitutes a grant of power to the corporation. I cannot see how it can constitute a grant of power over the corporation to any other institution. Whatever fears the honorable gentleman may have about the ultimate intentions of any other authority with respect to the corporation, there is certainly no foundation for them in this bill. It is extremely difficult to read into clause 7 (2.) (c) any such interpretation as he suggests, and it is not easy to see how any banking corporation could function properly if it were not endowed with the powers conferred by this provision upon the proposed Commonwealth Banking Corporation.

Mr CLAREY:
Bendigo

.- Clause 7(2.) is one of the most curious provisions in this bill. With respect to the proposed Commonwealth Banking Corporation, it provides -

The Corporation -

is a body corporate;

shall have a seal; and

is capable of acquiring, holding and disposing of real and personal property and of suing and being sued.

The framework of which the proposed corporation is to be part is exceedingly sketchy, and the bill does not indicate clearly where the corporation’s revenue is to come from, whether it will be a holding corporation, without some of the rights of a holding corporation, whether it is to have capital, what its disbursements will be, Or what will be done with its profits, if any.

Sub-clauses (1.) and (2.) merely provide for the formation of a Commonwealth Banking Corporation. Sub-clause (3.) reads -

The Corporation shall provide and make available to the Trading Bank, the Savings Bank and the Development Bank such officers and employees as are necessary for efficiently conducting the business of each of those banks.

The clause provides that a Commonwealth Banking Corporation shall exist, but the bill makes no provision to enable it to exercise its functions, except indirectly, by providing that it is to have control of three big banking institutions, is to supply the staff for those institutions, and is itself to present a balance-sheet as a corporation, and have it audited by the Auditor-General. It is by no means clear exactly how it will function financially.

Although it is stated that the proposed corporation shall be capable of acquiring, holding, and disposing of real and personal property, and of suing and being sued, the bill does not state clearly what will be the position with respect to the property held by any of the three banks that it will control. All of those banks will have property which, no doubt, will be registered in their names, or will be secured in their respective names. In addition, the proposed corporation will itself have power to acquire property. Yet the bill gives no indication of where the necessary money is to come from. It is true that clauses 36, 48 and 81 provide that the three banks under its control shall pay to the corporation moneys in payment for the expenses of the corporation attributable to those banks. The corporation itself will consist of a number of persons, who will have certain functions to perform. There will be a managing director. There will be three executive committees of the Commonwealth Banking Corporation Board, each with certain functions. All those things require money.

I point out that the proposed corporation will be an entirely new authority. This proposal involves more than the mere conduct of the Commonwealth Trading Bank as a trading bank on its own, the Commonwealth Savings Bank as a savings bank on its own, or the proposed Commonwealth Development Bank as a development bank on its own. The entirely new authority that will control all three will have to be financed, and I can find no provision in this bill for financing it. Provision is made for the capital of the Commonwealth Trading Bank, and for increasing its capital. Provision is made, also, for financing the Commonwealth Savings Bank, and for capital for the proposed Commonwealth Development Bank. We are told exactly how those three banks are to function. But there is no provision in the bill, except that relating to payment for the expenses of the corporation attributable to these three banks, for the financing of the corporation, which will control and direct the three banks, enforce policy laid down from time to time by the proposed Reserve Bank of Australia, provide the necessary staff for the three banks, and provide for staff administration, for the establishment of a superannuation fund, and for staff appeals. Nothing is provided as to how the amount payable by each of the three banks for the expenses of the corporation attributable to it shall be calculated. No provision is made for the corporation to receive any of the profits of the three banks. But it will have to prepare a balance-sheet, and indicate to the Auditor-General and the Government in a report what its revenue is, what its disbursements have been, and what profit, if any, it has made.

In view of the vagueness of this measure with respect to the financing of the proposed corporation, and, indeed, the ambiguities apparent in this respect, the committee should have from the Treasurer (Sir Arthur Fadden) a statement indicating exactly how the corporation will be financed, and where its revenue will come from.

Sir Philip McBride:

– Has the honorable member read clause 36?

Mr CLAREY:

– I have read clauses 36, 48 and 81. All that I can find is provision that the three banks under the control of the proposed corporation shall make payment for services rendered. The bill is silent on how the charges for those services are to be assessed or based. I suggest that some further information should be given to the committee as to how this project is to be financed. Is the corporation to take over the property of each of the organizations over which it will have control? Is it to take over the property and the vested interests of the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Commonwealth Development

Bank? If that is done, are the properties so taken over to be included in the balancesheet of the Commonwealth Banking Corporation, or are they to be included in the balance-sheets of each of these authorities? Whatever the answer may be, the bill does not give us the information to which, I think we as a committee, are entitled.

Mr DRUMMOND:
New England

– I should not have risen to speak on this subject had it not been for certain remarks that were made concerning the purposes and intentions which are bound up in the wording of clause 7. One statement made, I think by the honorable member for Hindmarsh (Mr. Clyde Cameron), which had been stressed by previous Opposition speakers, was to the effect that the Commonwealth Bank, under its original name, had rendered certain services to the people of Australia since 1911, when it was established, and that there was something sinister in an attempt now to depart from that name. Objection was raised to the name “ Reserve Bank of Australia “. I do not propose to follow that matter through, but I want to suggest to honorable members, particularly those like the honorable member for Yarra (Mr. Cairns), who is a young and aspiring man in public life and is no doubt imbued with what he regards as ideas of progress, that it is reasonable to suppose that the banking frame-work which suited the needs of this country 46 years ago, and at times since, may now require some examination to see whether it will suitably encompass the financial needs of Australia, not only now, but in the reasonably near future.

The development which has taken place, not only in Australia itself, but also in the banking system, has meant that in the Commonwealth Bank there have emerged, and are emerging, very great organizations. An instance is the Commonwealth Savings Bank, which controls £700,000,000 of deposits. Even now Australia is on the threshold of wider development, and it is quite obvious that the Commonwealth Bank must follow the normal procedures which are adopted in every other business I know of. Whatever concentration of control there may be at the centre the activities of the business have to be departmentalized, because it is only that which makes it possible for the business to develop. Without departmentalization of activities a business would die of strangulation at the centre. All great enterprises in history have had to branch out into new sections in accordance with the development of business. For instance, Colonial Sugar Refining Limited moved into the making of sugar alone, into the manufacture of building materials and then into higher technological projects such as the production of acetate rayon. Every big enterprise of that character has to put some of its activities into the hands of subsidiary organizations which work in with the general scheme as a whole. I suggest that what the Government intends to do by this legislation is merely to apply that same principle. The sub-division of the great activities of the Commonwealth Bank is merely an indication of what is necessary at present and will become increasingly important as the days go by.

I now want to allude to one remark made by the honorable member for Hindmarsh (Mr. Clyde Cameron). The honorable member twitted the Treasurer (Sir Arthur Fadden) that the Development Bank would help only people on the land. I suggest to the honorable member, who does not happen to be in the chamber at the moment, that he give further study to the measure. He will find that the Development Bank is to incorporate the Industrial Finance Department of the Commonwealth Bank, and will therefore carry on the activities of that department, which have included giving financial assistance to industrial concerns. Now it is to include also the struggling man on the land. People on the land who desire it will receive a type of financial assistance which is not commonly supplied by the normal banking institutions of this country because that kind of activity could not mix with normal banking activity. It is a form of risk which can be taken by the nation as a whole but can seldom, or never, be taken by a purely commercial private enterprise.

It is quite wrong for the honorable member for Hindmarsh or any other honorable member to suggest that because it is proposed in this clause to give to people on the land and people in industry a kind of assistance which has been available to them for years there is something wrong and socialistic in the proposal. As a matter of fact, the proposal constitutes a long-delayed measure of justice, and I am extraordinarily surprised to find members of the Opposition casting doubt upon the bona fides of that proposal, just as I am surprised that people outside should allow themselves to be led by stupid talk into thinking that this represents some form of socialization. I repeat, it is simply a delayed form of justice to the primary industries of this country - a justice which has been given, and a service which has been given, for years to the smaller industrial side in our community.

Mr CAIRNS:
Yarra

.- It would be wrong to delay the committee too much with a discussion of clause 7 when we still have another 122 clauses to consider before the “ guillotine “ falls. But several important points have been raised, first by the honorable member for Wentworth (Mr. Bury) and then by the honorable member for New England (Mr. Drummond), which amount to statements that this legislation to establish a Commonwealth Banking Corporation will strengthen, rather than weaken, the banking structure. I think we ought to come to grips with this question. We ought to be able to decide for ourselves, and make clear to everybody else, the truth of this question. The honorable member for Wentworth has quite clearly come down on the side that the central bank in Australia will be stronger after this legislation becomes law than it was before, and that the Commonwealth Trading Bank, having been separated from the central bank, will not be weakened in any way by that separation. I want to remind the committee again of statements that have come from this side of the chamber throughout the debate on this matter and which have not been answered by anybody on the other side.

The first point to which I wish to redirect the attention of the committee is that in 1951 this Government considered every aspect of the private and public banking legislation of this country, and that then the Treasurer (Sir Arthur Fadden) pronounced his judgment, in 1951, to the effect that a part of the strength of the Commonwealth Bank as a central bank was derived from the direct contact with the financial and industrial systems which it maintained through its trading bank section. The Treasurer gave that decision in 1951, but the Government has now completely changed its opinion. Was the Treasurer wrong in 1951, or is he wrong to-day? Will some member of the Government answer that question? If we are to come to grips with the problem whether the bank is stronger tfr weaker, that is one of the questions- that has to be answered.

Secondly, after the Government had considered for two more years the functioning of the banking system, following upon its legislation of 1951 - consideration which the Prime Minister, in this chamber, said had covered every aspect of that banking legislation and the way in which it operated - the right honorable gentleman said, speaking for the Government, “ We believe that the Commonwealth Bank’s general trading activities have great merit “. He went on to make many other statements in that form. He said that the general trading activities of the bank had great merit because they added to the strength of the public banking institutions. Was the Prime Minister wrong in 1953, or is he wrong to-day? I ask the honorable member for Wentworth, who has had experience of banking, to answer that question, if he is concerned with the question of the strength of this bank.

The CHAiRMAN - Order ! I think that the matter that the honorable gentleman is discussing would be more relevant when we come to discuss the various departments of the bank.

Mr CAIRNS:

– This matter was raised by the honorable member for Wentworth, and you did not call him to order, Mr. Chairman. However, I shall move away from the point, because I think that it is all too clear and hardly needs further emphasis.

There is another aspect of this question which is quite relevant to the establishment of a Commonwealth Banking Corporation. The position is that any of this machinery, whatever is denned in the form of legislation, can be operated in either one way or another, depending altogether on the ideas and political philosophy of the directors of these banks, and the way in which they consider that the machinery should be operated. This is not a piece of machinery that operates itself. It operates in the way in which if is told to operate by the managers and governors concerned with it. The fundamental doubt that the Opposition has ire relation to this matter is strengthened when we look back over the history of this board during the last three or four years. We believe that the weakening of the public control of banking in Australia, which has been evidenced during the last three, four or five years, will continue with the operation of this legislation. We are not prepared to take the legislation on trust. We are not prepared to accept from those who have advocated the interests of the private banks, in this Parliament and out of this Parliament, in season and out, statements to the effect that the banking corporation to be established under clause 7 of the bill will operate any differently from the way in which the board has operated in the past.

The significant thing is not the board, in terms of title or any kind of abstraction, but the people who are appointed to it. Is this Government going to appoint people who have socialistic ideas? Having regard to the view that it takes of socialistic ideas, I know that people who agree with me are to the left. The views that this Government considers to be socialistic are those held by people who disagree with it, and by people who would vote for the Australian Labour party. The only way in which you can be free of socialistic ideas in this country, according to the Government, is to support thoroughly either the Liberal party or the so-called Democratic Labour party. Otherwise, you have socialistic ideas.

The significant feature of this legislation is that it is a part of the continuing process of conditioning the attitude of the people of this country further and further to the right. McCarthyism here has been much more subtle and significant than it has been in the United States of America. It was much easier to come to grips with McCarthyism in America than it has been to come to grips with it here. The essential conservatism and apathy which is growing in this community towards important public questions is just a part of the process upon which this Government has lived and upon which its political reputation depends.

So, Mr. Chairman, is it any wonder that the Australian Labour party sees in this legislation to create a board for a banking corporation a continuation of the trend that we have witnessed on every side in the last ten years? The political and economic pendulum has swung far to the right in this country. In the political sense, that means political caution and unwillingness to consider new ideas, lt means that the label of communism is attached to anybody who has a radical idea, who disagrees with the most conservative ideas, who criticizes the Prime Minister or the Minister for Defence, or even a Minister in a friendly country outside Australia. In the economic sense, the swing of the pendulum means that two or three hundred millions of pounds of national income has been transferred from the wage and salary earning section of the community to the property owners.

The CHAIRMAN:

– Order! I think that such general discussion is very wide of the clause.

Mr Webb:

– It is the truth, though.

The CHAIRMAN:

– Order! It is not a question of whether it is the truth.

Mr CAIRNS:

– With respect, Mr. Chairman, these remarks can be regarded as being wide of the clause only if you take a narrow view. I am referring to something that affects the life of every person in the community. I can well understand that the supporters of the Government are unable to see the matter in that way, and I can also understand why some people take a theoretical view and fail to appreciate its importance.

Let me refer to the nature of the powers that are to be given to the bank under this legislation. I suggest that it will be found on every score that those powers are not being increased. The only way in which it is possible to argue that there is to be an increase of powers-

The CHAIRMAN:

– Order! That subject comes under clauses that are to be dealt with later.

Sir Philip McBride:

– The honorable member cannot discuss the clause that is being considered by the committee because he has nothing to say.

Mr CAIRNS:

– The Minister for Defence never has anything worth while to say on any subject when he comes into this chamber.

The CHAIRMAN:

– Order! If the honorable gentleman is not going to discuss the clause I shall ask him to resume his seat.

Mr CAIRNS:

– This clause is fundamental in the sense that it is the clause on which the new banking structure is established. I believe that it has very wide implications and that its implications extend to the aspects I have mentioned. Those aspects were introduced into this debate, not ‘from this side of the chamber, but from the other. The matter has clarified itself completely, and the outstanding questions still to be answered are those that have been raised from this side of the committee ever since the beginning of the debate.

The CHAIRMAN:

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

Mr HULME:
Petrie

.- It was rather extraordinary that the honorable member for Yarra (Mr. Cairns), having said that there were still more than 100 clauses to be debated, should then have proceeded to stone-wall to the best of his ability for eight minutes of the ten minutes allowed to him, thus withholding from his colleagues the opportunity to debate some of the other clauses to which he referred. The honorable member spoke of statements by the Treasurer and the Prime Minister in 1951 and 1953. I remind him, as I remind others, that he was not in the Parliament .at that time. Therefore, I doubt whether he has a complete understanding of the situation as it then was. Although I am not a member of the Government, I believe I am correct in saying that this Government has never adopted the attitude that legislation it has introduced has been perfect and not capable of improvement at some future time. The view of the Government in relation to the legislation now before the committee is that it is an improvement on the legislation which it introduced in 1951 and 1953.

The next point was that raised by the honorable member for Yarra (Mr. Cairns) as to whether this proposed legislation weakens the actual Commonwealth Bank structure. The other day I quoted figures which showed quite clearly that as a result of the 1953 legislation, the bank, under the control of the Commonwealth Bank Board functioned so efficiently that deposits as well as advances of the Commonwealth Trading Bank increased by something like 70 per cent. In 1953, when the legislation was under discussion, comments made by the colleagues of the honorable member for Yarra were exactly of the same type as those which he made to-night. They were to the effect that the legislation would weaken the Commonwealth Bank. In the four years from 1953 to 1957 the Commonwealth Bank, operating under the Commonwealth Bank Board has not been weakened but on the contrary its resources have been substantially strengthened, as the figures I gave show. I quoted figures also in relation to the savings bank which clearly indicated the development that has taken place in that section of the bank during the same period.

However, my main purpose in rising was to answer the comments made a few moments ago by the honorable member for Bendigo (Mr. Clarey). He raised a question which relates particularly to clause 7. He suggested that the bill does not clearly show from what source the corporation will receive its money. He added that clauses 36, 49 and 81, deal with contributions that may be received by the corporation from the Trading Bank, the Savings Bank and the Development Bank as reimbursements of expenses. I think we should have a look at what is likely to be the nature of the expenditure of the corporation. I suggest that it is most unlikely, in the set-up outlined in this bill, that there will be any purchase in the nature of real property. There may be some purchases in the nature of personal property but I suggest that, in the first place, they will not be much more than some furniture. There will be a reimbursement in relation to that item of expenditure as there will be in relation to directors’ fees and incidentals such as postage stamps purchased by the corporation. That reimbursement will come from each of the three sections of the Commonwealth Banking Corporation. At this stage, that is practically the limit of the commitments likely to be incurred by the Commonwealth Banking Corporation.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– What does the honorable member mean by “ at this stage “.

Mr HULME:

– I do not know what the future holds, any more than does the honorable member for Hindmarsh. I would feel, even at this stage - to use the term again - that it is most unlikely, looking a long way into the future, that the corporation will hold real property. I think that that will be held by the trading bank, the savings bank and the development bank.

This type of administration is not greatly different from that of a holding company, although I appreciate there is some difference. The holding company usually holds the capital and passes it out to its subsidiaries. In point of fact, however, the holding company itself does not undertake any trading. In many cases the holding company does not hold any real property; that is held by the subsidiary companies. The expenses of the holding company, such as directors’ fees or other incidentals which I have mentioned in relation to the Commonwealth Banking Corporation, are charged to each of the subsidiary companies. That principle is accepted by the Taxation Branch as being a very reasonable approach to the work conducted by those in charge of the holding company.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– But the corporation controls the policy of the subsidiaries.

Mr HULME:

– That is so. And the holding company also controls the policy of the subsidiary companies. That is a further indication that the Commonwealth Banking Corporation will be in much the same position as a holding company. On the basis of this explanation, it is quite understandable that the bill does not provide for substantial capital - or for any capital, for that matter - for the corporation. All that it will require will be a sum sufficient to meet the cost of the few items I have mentioned; and that would amount perhaps to a few thousand pounds per annum at the most. The total will be apportioned between the three subsidiaries, which are the Trading Bank, the Savings Bank and the Development Bank.

Mr Clarey:

– Would not the holding company receive the profits of each of its subsidiaries?

Mr HULME:

– No. The holding company does not necessarily receive the profits of the subsidiaries at all. However, this is not the place to debate that particular aspect. All that I have said is based on my own knowledge and experience; and I think that the honorable member for Melbourne Ports (Mr. Crean) will agree that profits of subsidiary companies do not go automatically to the holding company. I think that the comments I have made adequately cover the points which have been raised by the honorable member for Bendigo.

Mr TURNBULL:
Mallee

.- I waited purposely, Mr. Chairman, until you put the question and I looked around the chamber to see if any member of the Opposition would rise to speak. My reason for doing so was that the first member of the Opposition to speak on this clause said that it was the principal clause of the bill - indeed, the whole substance of the bill - and that it dealt with a very vital part so far as Labour is concerned. Most of the other clauses are only machinery clauses.

Mr Bird:

– They are not.

Mr TURNBULL:

– Most of them are machinery clauses. However, the Labour party in not debating this measure fully, and in adopting stonewalling tactics as the honorable member for Yarra (Mr. Cairns) did, it has proved conclusively that its arguments are very few and very weak. However, I want to deal with this clause apart from criticizing the Labour party. Sub-clause (3.) provides -

The corporation shall provide and make available to the Trading Bank, the Savings Bank and the Development Bank such officers and employees as are necessary for efficiently conducting the business of each of those banks.

That is one of the chief clauses in the bill. As far as the Savings Bank and the Trading Bank are concerned, many people throughout Australia are well versed in the business of banking and it will not be very hard for the authorities to staff these branches very effectively. But the Development Bank is a different proposition. With the indulgence of the committee I may say that under the bill dealing with the Development Bank the provision of loans shall depend chiefly on the success or continued success, of the project in respect which an application is made rather than on the security it offers. Responsible people in the Development Bank will have to decide whether a project will be a success or otherwise. Therefore, they must be men not merely versed in the ordinary business of banking but men who know something about primary production and land settlement.

At the present time in Australia, much finance is made available to primary producers through auctioneering firms. The reason for that is that employees of those firms are well acquainted with the values of land and of sheep and cattle, lt must be said, however reluctant one may be to say it, that not many people who are engaged in banking have any idea of the value of a sheep or of the wool on the sheep. They know the value of wool once it has been put into a bale, weighed, and appraised, but they have very little idea of the value of sheep in the wool or the weight of the sheep or store sheep values. This is important when dealing with this, the greatest industry in Australia. The same can be said about most other fields of primary production.

Mr Ward:

– What points is the honorable member making?

Mr TURNBULL:

– They are very apparent to all honorable members except the honorable member for East Sydney (Mr. Ward). The first point that I made was that the Development Bank must have sufficient staff with a knowledge of primary production so that it may operate fully in the interests, not only of the man on the land, but of this Commonwealth and all its people. That can be accomplished through the successful settlement of men on land.

The CHAIRMAN:

– Order! I must rule that the functions and powers of the Development Bank come within clauses 71 to 86 and must be debated on those clauses, not on clause 7.

Mr TURNBULL:

– Clause 7 (3.) states-

The Corporation shall provide and make available to the Trading Bank, the Savings Bank and the Development Bank such officers and employees as are necessary for efficiently conducting the business of each of those banks.

Therefore, surely I have a right to speak about the officers-

The CHAIRMAN:

– You cannot discuss the functions and powers of the Development Bank and the finance that it will lend under this clause.

Mr TURNBULL:

– Very well, Sir, I will abide by your ruling. I shall deal with the subject of the staff that will be provided for the different banks by the Commonwealth Banking Corporation. The main point that I make is that the staff must include men who have an intimate knowledge of primary production, if the Development Bank is to function satisfactorily. I want the Government to look at this point carefully because, without properly qualified men on the staff of the Development Bank, the bill will not give the great benefit that we envisage.

Question put -

That the clause be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 52

NOES: 28

Majority . . . . 24

AYES

NOES

Question so resolved in the affirmative.

Clauses 8 to 13 - by leave - taken together.

Mr CREAN:
Melbourne Ports

.- The next group of clauses deal with what might be called the administrative arrangements and management of the Commonwealth Banking Corporation. They provide for a board and this side of the chamber reiterates the objection which it voiced on another measure to control by a board. We believe that in a government undertaking such as the Commonwealth Banking Corporation will be, the management ought not to be handed over to an outside body which, except in very limited circumstances, is responsible to nobody but itself. Each and every one of the appointments to this board, as will be seen in the subsequent clause, will be a political appointment. The board will lend itself to outside domination. Yet, the whole management of this government banking organization will be vested in this board which, under clause 9, sub-clause 2, will be charged with the duty of directing the policy of the bank to the greatest advantage of the people of Australia, having due regard to the stability and balanced development of the Australian economy. That clause indicates how difficult and how wrong it was to separate central banking activity from the whole structure. Those powers are wide and they are subject only to political direction. It is true that a subsequent clause provides that in the event of certain disagreements, the Treasurer and the board may consult together, although the machinery for consulting is very difficult to set in motion and an obdurate board might be able to thwart a Government by seeing that technically a dispute did not occur, although it was carrying out a policy detrimental to the welfare of Australia.

Under the board, which is charged with the responsibility for the whole corporation, a series of executive committees are set up. These committees are composed of selected members of the board of eleven people, and certain people are excluded from membership of these executive committees. The committees will be charged with the detailed administration of the Savings Bank, the Trading Bank and the Development Bank respectively. Between the board and the executive committees are the managing director and the deputy managing director. These two people are appointed by the Governor-in-Council, which means primarily that they are two more political appointments. The Opposition challenges the Government, which stated that it was endeavouring to take politics out of banking. How can the Government explain the fact that the Commonwealth Banking Corporation will be subject to domination by a board, each and every member of which shall be appointed politically, or by the government of the day, as also will the people who are supposed to be the experts - the managing director and the deputy managing director?

In subsequent clauses we can see some other weaknesses in the structure of the board. The chairman is to be a person other than the manager, and, as occurred in the early days of the Commonwealth Bank Board, there could be a conflict between the chairman, the outside person, Who may only be a dilettante and not very conversant with affairs, and the managing director, who is supposed to be the technical person responsible for the control and management of the bank. The Opposition suggests that the whole administrative structure is top-heavy, that it lends itself entirely to political domination. The Opposition Will deal with that criticism in more detail when the appropriate clauses come before the Chair.

The Opposition takes the opportunity here to voice its objection to the principle of what is virtually a government bank, which should be responsible to the people of Australia, being handed over to a board of political puppets, who, except in very limited circumstances, cannot be held responsible for the acts that they may or may not perform. Ostensibly they are supposed to govern or control this bank to the greatest advantage of the Australian people, and having due regard to the stability and balanced development of the Australian economy. Here again, the Government has sold out on political grounds, lt is handing over a structure which has worked well for the people of Australia, which has built up a great deal of goodwill and which has passing through its hands the accounts of 4,500,000 people in the Commonwealth Savings Bank, and some 500,000 or more accounts in its trading sections. Goodness knows what will be the business that will flow into the new phase of the bank’s activity, the Development Bank! This is a great institution with a long tradition of service to the Australian public. Under the control of a single governor and without being shredded off into various parts, as is provided by these measures, the bank was of considerable benefit to the Australian people, both in years of depression and later in years of war.

Mr Hulme:

– What about the last four years?

Mr CREAN:

– The Government is creating a second board here, and we submit that under the control of a board the activities of the bank have deteriorated, because it is not being run in the interests of the people of Australia, but is being run in the limited interests of the people who are put on that board mainly for political and social reasons. These people are by no means experts in the field of banking. The Government now proposes to add to its sins by establishing a second board, each and every member of which is appointed technically by the Governor-in-Council, but in reality is appointed at the behest of the government of the day. One of the reasons given for the creation of such an instrument is that the Government is taking politics out of banking.

Earlier in the debate to-day mention was made of the central reserve bank that was proposed by Mr. Theodore. It is ironical that one of the reasons why people of the political persuasion of the honorable member for Petrie (Mr. Hulme) rejected that measure was because they said they could not trust the personnel of the board who would be appointed on purely political grounds. The Opposition says the same of this board, and on that ground the whole scheme of management is suspect and is detrimental to the health of banking in Australia. It is a weakening of the banking structure as it now exists in the Commonwealth.

Sir ARTHUR FADDEN:
McphersonTreasurer · CP

– The rapid evolution of Labour thought in these matters is beyond my comprehension, because under the Theodore bill the very thing to which the honorable member for Melbourne Ports (Mr. Crean) objects was agreed upon by the Labour party of that day. The Reserve Bank was to be controlled by a board. The members of the board were to be two deputy governors of the Reserve Bank, the secretary to the Treasurer, and five other persons representing respectively the interests of banking, commerce, labour, manufacturing, and primary production. Need I go further to prove the hypocrisy of modern Labour in respect of the set-up that was advocated and brought in by the man of the day, who, I am sure, no honorable member opposite would disown. He has always been held up by the Opposition as the financial genius of his day. I cannot, by any stretch of the imagination, understand why the Labour party of to-day objects to a banking structure that is absolutely the same as that which was embodied in the Theodore bill.

Mr Makin:

– Which you voted against.

Sir ARTHUR FADDEN:

– I was not here at that time, but you voted for it. Honorable members opposite should get together and find out where they are heading.

Mr BIRD:
Batman

.- I direct my comments to clause 11, which deals with the settlement of differences of opinion on questions of policy. This particular clause has been taken from the Commonwealth Bank Act 1951 and, as far as I can recollect, it has never been invoked. The reason is quite obvious, because a detailed examination of the clause shows clearly that the proposals it contains are cumbersome, unwieldy, ambiguous and, in some respects, unworkable. This is a very important clause, because it deals with the ultimate control of the monetary policy of the bank. The Labour party has always contended that the Government should make all major decisions on monetary policy. We contend that as those decisions are bread and butter issues affecting the very lives of the people, and are of such fundamental and transcendent importance, the only people who can ultimately make a decision on them are the elected representatives of the people who, in due course, face their masters to see whether they approve the policy enunciated or decided upon by their representatives.

The Opposition believes that monetary policy should not be abdicated to some outside board, and that it is the Government’s responsibility to decide the financial policy of the nation. In other words, the Government should not abdicate its authority to some body which, although it may be composed of estimable gentlemen, is not directly responsible to the people. The proposals envisaged in this particular clause are put forward by the Government with the idea of hoodwinking and confusing the people in an endeavour to lead them to believe that the utmost democratic control by the Parliament is being exercised over the functions and activities of the board. These proposals are put forward in the same way as one dangles a carrot in front of a donkey’s nose. The Government is doing this, just as it did during the election campaign in 1951, with the idea of hoodwinking the electors and leading them to believe that this proposal protects the interests of the people in every respect.

On desultory examination let alone close examination of the clause honorable members will see that the whole conception of parliamentary control which is ostensibly provided for is only a sham and a delusion. The clause proposes to do something which it will not do. The Treasurer knows perfectly well that it has no substance because in the six years in which it has been on the statute-book it has never been utilized by the parliamentary machine for the reasons I will now enunciate. Under this provision, an excellent opportunity is afforded to the Government to transfer responsibility for unpopular decisions to the board. If something is put forward to which the electors are totally opposed, the Government, in effect, can say to the electors, “ We would like to do something along the lines you have indicated, but the board has made the decision and unfortunately we can do nothing about it “.

Under this proposal the board and the Government, if the necessity arises, can stage a sham fight, and while awaiting the decision of the Parliament the board can do something very detrimental to the interests of the people. In effect, that is what this measure really sets out to achieve. In the case of an acute difference of opinion between the Government and the board, many months could elapse before any finality is reached. At its best, this proposal is no better than what the Government has set out to achieve in other parts of this proposed legislation, that is, to nullify the desires of the people by Trojan horse tactics because the Government hopes ultimately to stultify the Commonwealth Bank. The provision in the 1945 legislation covering any difference of opinion between the governor of the bank and the Government worked satisfactorily, but the Government saw fit in 1951 to alter the system, and that alteration is now being perpetuated in these measures; but it is something that has never worked, will never work, and will never achieve the aims which the Treasurer would have us believe it will achieve.

Sub-clause (1.) of clause 11 states -

The Board shall, from time to time, inform the Government of -

any policy of the Corporation which, in the opinion of the Board, should be made known to the Government; and

the banking policy of the Trading Bank, the Savings Bank and the Development Bank.

This clause is most ambiguous; it means exactly nothing.It is a mere collection of words which tend to confuse the minds of the people. It offers all the loop-holes necessary for a policy of procrastination and collusion between the Government and the board. Alternatively, if the board desires a conflict with the Government, numerous opportunities are offered to it to circumvent the will of the Government. Sub-clause 2 states -

In the event of a difference of opinion between the Government and the Board whether any policy referred to in the last preceding sub-section is directed to the greatest advantage of the people of Australia and has due regard to the stability and balanced development of the Australian economy, the Treasurer and the Board shall endeavour to reach agreement.

For how long are they to endeavour to reach agreement? They could discuss it ad infinitum, and the interests of the Australian people would be thrust aside contemptuously. This sub-clause does nothing to serve the interests of the Australian people. Sub-clause 3 states -

If the Treasurer and the Board are unable to reach agreement, the Board shall forthwith furnish to the Treasurer a statement in relation to the matter in respect of which the difference of opinion has arisen.

A board could easily be hostile to the next Labour government, because I have no doubt that the Government will appoint members whose political convictions are well known to it. It will not appoint any one who supports Labour’s ideas on banking. The Government will appoint its social friends and business confreres to the eight positions on the board. Therefore, when a Labour government takes office after the next election, it will be confronted with a hostile board and the hostile board will not give to the Treasurer in a quick way a statement of its point of view on any dispute under consideration. Sub-clause (3.) is meaningless in regard to the settlement of any dispute that may arise.

Sub-clause (4.) sets out what the Treasurer may do if there is a conflict of opinion. He may submit a recommendation to the Governor-General, and then we will get a Federal Executive Council minute on the policy to be adopted. That does not mean anything. The sub-clause does not have any teeth in it, but merely states what the Treasurer may do.

The TEMPORARY CHAIRMAN (Mr Lawrence:
WIMMERA, VICTORIA

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

Mr ANDERSON:
Hume

.- I am most surprised at the honorable member for Batman (Mr. Bird). Usually he is quite cheerful, but he must have been in contact with calamity howlers. The board constituted by this legislation is no different from the present board of the Commonwealth Bank. One point that the Australian Labour party has been making is that the present system is working very satisfactorily. If the system is working very satisfactorily with the present bank board, why should not the board contemplated in this bill work equally as satisfactorily? It does not seem to me to make sense to consider a clause word by word and then make a gloomy forecast, as the honorable member for Batman did. Indeed, I do not believe that he meant what he said.

The constitution of the board in this bill is identical with the constitution of the present bank board, which has been functioning very well. The Opposition has said constantly that the bank has been functioning very well and has asked, “ Why change it?” The board contemplated in this legislation will be exactly the same as the present board, and I do think that Labour is wasting our time in arguing about it.

Mr WHITLAM:
Werriwa

.- The honorable member for Hume (Mr. Anderson) is, I am told, always most gallant when on the defensive. As has happened previously in other circumstances, it is not altogether his fault that he has not understood the attack made on the forces he is leading. The honorable member for Batman (Mr. Bird) conceded that the procedure under clause 11 is exactly the same as the procedure under the clauses which were introduced in 1951 and altered once again in 1953 by this Government. But the honorable member for Batman pointed out that those sections have not worked well, and there is all the more reason for thinking that this new clause will not work well, either. It is a fact, which we all know, that the Parliament has never had to determine any matter of dispute between the board and the Treasurer. It is also believed to be a matter of fact that there has never been a dispute between the board and the Treasurer in the six years that this system has operated. Therefore, unless we are satisfied with every feature of banking policy during the last six years, it must follow that the system has not worked satisfactorily. It may be that the honorable member for Hume is one of those placid persons who is completely satisfied with the hit and miss,, fits and starts, economic policy and banking: policy of the Government during the last six years.

The honorable member for Batman made out a convincing case about the faults in clause 11, even if one were looking at it for the first time. The clause begins - (1.) The Board shall, from time to time, inform the Government of -

  1. any policy of the Corporation which, in the opinion of the Board, should be made known to the Government;

The difference between that and the 1945 policy is clear. In 1945, the bank had from time to time to inform the Government of its policy. The bank was managed by a governor and the governor was advised by an advisory council, the majority of whose members were appointed by the Government. If any differences of opinion arose between the Treasurer of the day and the bank managed by the governor, they would soon be known to the Treasurer, revealed by the Treasurer and corrected by the Treasurer. It is quite obvious from the present clause 11, perpetuating the old section 9a introduced by the Commonwealth Bank Acts of 1951 and 1953, that the board and the board alone - presumably a majority of the board - will chose what it will tell the Treasurer. The Treasurer has no power to require the board to tell him what its policy is on any matter. Unless the board chooses to tell the Treasurer of its policy and the Treasurer disapproves of that policy, no correction is open to this Parliament, the elected representatives of the people.

Clause 11 of the Commonwealth Banks Bill is in much the same terms as clause 11 of the Reserve Bank Bill, which we passed earlier to-day. It runs parallel with clause 36 of the Banking Bill, which has passed the second-reading stage, and corresponds to section 27 of the Banking Act 1945. The two sections of the legislation which we previously had and the three clauses of the legislation we are now considering are the cornerstone of democratic control of the Australian economy. They provide that in certain circumstances the people’s elected representatives shall have the power to correct any banking policy of which the Government disapproves. The fatal flaw of this clause preserving the old sections is that it is only when a majority of the board chooses to report a policy to the Treasurer that the Government has the opportunity to correct that policy.

The objection we have made to all this legislation is twofold. First, it is the Government obeying the behest of the private banks, which have never had any faith in or loyalty to central banking. Secondly, we criticise the Government for failing to tighten the legislation, which was already Weakened by the amendments in 1951 and 1953. One would think, after the experience of the last six and four years, that the weaknesses of the legislation would be all too clear. However, the Government has not taken advantage of the opportunity to strengthen the legislation, but is further weakening it.

There is a very real doubt as to what use clause 11 is in any circumstance. There is a further doubt as to what use the present Treasurer feels it is. Let me read a reply which he gave to the honorable member for Macquarie (Mr. Luchetti) on 4th September last, when the honorable member asked, as many of us have asked, a question regarding the housing advance policy of the banks. The Treasurer said -

Neither the Government nor the central bank is empowered to direct the private banks to invest a greater proportion of their funds in a particular form of investment.

The Treasurer was referring to the legislation then in force. That legislation, I would have thought, enabled the Government in the circumstances I have mentioned, to direct the central bank as to the policy it should follow, and certainly enabled the central bank to direct the private banks as to the policy they were to pursue. We are now making confusion worse confounded, because we are explicitly introducing with regard to the Commonwealth banks the procedure that the Treasurer said prevented him from directing the private banks. The Treasurer now, presumably, will take the attitude that the new legislation still leaves his Government and the central bank without power to direct either the trading banks or the Commonwealth Bank on the policy that they shall pursue.

Mr Jeff Bate:

– We still have the Commonwealth and State Housing Agreement to assist in that regard, have we not?

Mr WHITLAM:

– I would have thought that that matter was too irrelevant even for the honorable member for Macarthur to interpolate into this discussion. I am referring to the money made available for housing through the banking system. Most people who want to borrow money to buy or build a house borrow that money from the banks. The banks have been the traditional borrowing avenue; and there has been very grave discontent in the community because in recent years the proportion of bank advances for housing has dropped, and the amount of money made available by the banks for housing has similarly dropped.

The Treasurer said two months ago that the legislation then in existence gave him no power, and gave the central bank no power, to direct what advances the private banks should make. Our complaint, then, is that the Commonwealth Bank also, on the Treasurer’s interpretation, cannot now be directed as to the purpose for which it shall make advances. This is a very clear case in which weaknesses of the legislation, as known for six years and for four years, and as interpreted by the Treasurer, could have been eliminated.

Mr Ian Allan:

– That is a socialist idea.

Mr WHITLAM:

– lt is a democratic conception. However progressive or democratic a suggestion is, in the eyes of the honorable member Gwydir (Mr. Ian Allan) it is a socialist concept. It is about time he got out of the nineteenth century and away from financial feudalism and brought himself into line with modern parliamentary practice. Clause 11 of this bill is supposed to provide democratic control of our banking system as far as the Commonwealth Bank is concerned. We are preserving machinery which we already know to be inadequate.

The CHAIRMAN:

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

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– We are dealing now with clauses 8 to 13 of the bill. Clause 8 provides for the establishment of a board to control the Commonwealth Banking Corporation. The Australian Labour party has always opposed the appointment of boards to control the people’s bank, because past experience has shown that the members of such boards invariably include representatives of private banking interests, whose very purpose it is to destroy the bank on the board of which they are supposed to represent the people.

Let us have a look at what this Government has already done with regard to appointments to the Commonwealth Bank Board. Among the people who have been appointed by this Government to control the Commonwealth Bank is a gentleman by the name of Mr. Grimwade. He is a gentleman connected with some of the wealthiest monopolies in the country.

Mr Jeff Bate:

– He is not a Communist, is he?

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I do not know whether he is a Communist or a fascist. I think there is very little difference between the Communists and men like Mr. Grimwade, because they all act in such a way as to create more Communists. Mr. Grimwade represents the great monopolies of this country, and although he is a member of the board of directors of such organizations as Cortaulds (Aust.) Ltd., Drug Houses of Australia -

Mr Cope:

– And Australian Consolidated Industries Ltd.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– Yes, and of Australian Consolidated Industries Ltd., and other organizations, he is able to accept a position on the Commonwealth Bank Board, and, presumably, cut himself completely adrift from the monopoly interests that he controls. I say that it is not human nature to be able to do so. It is not possible for that to be done. There is no shadow of doubt that when the Government appoints the board envisaged under clause 8 of this legislation, it will be concerned to see how many directors of big monopoly organizations it can secure. If it does not, then it will be doing something different from what it has done in the past.

The Treasurer made reference to the fact that Mr. Theodore brought down a proposal for the establishment of a reserve bank, but the right honorable gentleman was not fair enough to tell us that Mr. Theodore’s proposal, as specifically stated in the legislation, was that there should be. among those appointed to the board, representatives of the trade union movement, banking, the farming community and commerce. Although I disagree with the proposal that Mr. Theodore put forward, at least it had far more to commend it than the proposal we now have before us. I venture to say - and I am prepared to stake my political reputation on this prognosis - that there will be no trade union representative appointed to this board.

Mr Hulme:

– Why should there be?

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– The honorable member for Petrie says “ Why should there be?” There ought to be, because the trade unions represent some 3,000,000 electors in this country, and if any organizations are entitled to be represented on a Commonwealth Bank Board controlling the very life-blood of the community, surely the trade unions are. At least one of the eleven board members should be selected from the trade union movement.

Mr Hulme:

– Nonsense!

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

-“ Nonsense “, says the honorable member.

The CHAIRMAN:

– The subject now being discussed comes under the next batch of clauses, of course.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I appreciate that. Perhaps I did elaborate too much on the matter. The fact is that it has reference to Part III., with which we can deal later. I shall move on to another section:

I think the honorable member for Werriwa (Mr. Whitlam) is to be commended on the able manner in which he exposed the proposals contained in clause 11. The honorable member pointed out, I thought very ably, that although the board is obliged from time to time to inform the Government of any policy of the corporation, the clause goes on to say that it shall do so only on matter upon which, in the opinion of the board, it ought to advise the Government. Suppose the board decides that an important matter of policy ought not to be conveyed to the Government. Clause 1 1 allows the board to keep the Government in complete ignorance of that aspect of its policy. This is an important matter, because the very point of policy on which the board expected opposition from the Government could be the point of policy upon which the board decided that the Government should not be advised. I believe that the board should be compelled to advise the Government on all points of policy, and not just on those that the board thinks the Government ought to know about. It should advise the Government on all matters of policy, so that the Government may keep a careful check on whatever the board does with respect to policy from time to time.

The honorable member for Hume (Mr. Anderson), of course, said that there was no difference between the proposed board and the present Commonwealth Bank Board. We do not expect the honorable member ever to worry about reading a clause or a bill. He just rises and says whatever comes into his head. On this occasion, we have had another example of his talking about things of which he has not the slightest knowledge. Apparently, he has not even noticed that the chairman of the board will not be an officer of the bank. Clause 18 makes it perfectly clear that the chairman and the deputy chairman of the proposed Commonwealth Banking Corporation Board shall come from the ranks of the eight members of the board who are not directly associated with either the Commonwealth Bank or the private banks. They may be bedstead makers, champion polo players, or even perhaps merino breeders, or anything else, whereas the chairman of the present Commonwealth Bank Board is the governor of the bank. Apparently, the honorable member for Hume has not bothered to see what is proposed. However, that need not worry us, because it conforms with his usual practice. It is typical of the general way in which he deals with all measures.

I turn now to clause 13, which provides -

The Managing Director and the Secretary to the Department of the Treasury shall establish a close liaison with each other and shall keep each other fully informed on all matters which jointly concern the Corporation, the Trading Bank, the Savings Bank or the Development Bank and the Department of the Treasury.

Here the Government has fallen down once again. It has told us that it is terribly important in the interests of banking generally that the proposed Reserve Bank of Australia should be completely severed from the trading banks.

Mr ANTHONY:
RICHMOND, NEW SOUTH WALES · CP; NCP from May 1975

– Hear, hear!

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– “ Hear, hear”, says the honorable member for Richmond (Mr. Anthony). I am glad to know that we are in agreement on this point. It is a pity that the honorable member has not noticed that the Government has not made this severance. It has taken special care that there shall not be complete severance of the central bank, or the Reserve Bank of Australia, as it will be known, from the Commonwealth Trading Bank of Australia. Although there will be complete severance of the Reserve Bank from the other trading banks, there will not be that complete severance of the Reserve Bank from the Commonwealth Trading Bank. The honorable member for Warringah (Mr. Bland) smiles. Apparently, he also has not read this bill and the Reserve Bank Bill 1957. If he had done so, he would have found that the Secretary to the Treasury will sit on both the Commonwealth Banking Corporation Board and the Reserve Bank Board. Knowing everything that goes on in the functioning of the board that controls the Commonwealth Banking Corporation, he will sit as a member of the Reserve Bank Board. The Commonwealth Banking Corporation will be either at a disadvantage or at an advantage as a consequence.

Mr ANTHONY:
RICHMOND, NEW SOUTH WALES · CP; NCP from May 1975

– The Secretary to the Treasury cannot control the corporation.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– He cannot control the corporation, it is true, but he can go to the Treasurer and say, “ Look here, Sir,- “

The CHAIRMAN:

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

Mr BURY:
Wentworth

.- The honorable member for Werriwa (Mr. Whitlam) and the honorable member for Hindmarsh (Mr. Clyde Cameron) have made great play with the idea that the proposed Commonwealth Banking Corporation Board could in fact hide things from the Government and make things known to the Government only if and when the board saw fit. I should like to ask what they think the Secretary to the Treasury will do. I remind you, Mr. Chairman, that clause 14 provides that he shall be, ex officio, a member of the board. If any honorable member believes that, with the Secretary to the Treasury sitting on the board, the Treasurer and the government of the day are likely to be in ignorance of what the board does, he entirely misunderstands the whole working of the proposed new system.

The real danger with respect to clause 1 1 is, not that the Government will not know about something, but that, in practice, the Parliament may not be made aware of any difference between the Government and the central bank. The Parliament will not necessarily be made aware of such differences. I may be wrong, Mr. Chairman, but I cannot remember one instance, under the existing legislation, which has enshrined this principle for some years, in which the Treasurer has in fact instructed the present Commonwealth Bank of Australia in such a way as to be required to lay particulars of the matter on the table in each House of the Parliament. I cannot be absolutely certain about that, but I am almost certain about it. The real weakness in the procedure provided for in clause 11 is that there is no way in which, as a matter of practice, differences between the bank and the Treasurer would in fact come to light. Such differences would concern serious matters that greatly affect our economic future. Differences can only come to light if there is an independent board of persons who, if they do not see eye to eye with the Government, are able to resign. If, as was the case with the Commonwealth Bank Board under the 1945 act, every member of the governing board was, directly or indirectly, a paid official of the Government, there would be no real independence of view, and many of the most far-reaching decisions could be taken without the country or the Parliament being in any way aware of them. If any criticism can be offered, it is, not that the Government may be kept in dark ignorance, but that important differences between the board and the Government are unlikely to come before the Parliament.

A number of Opposition members - and particularly the honorable member for Hindmarsh - have referred to the board as if it would be composed of wicked people. The honorable member suggested that trade unionists, who, he said, control the very life-blood of the community, should be represented on the board. If trade unionists of high quality who are well versed in the financial and industrial structure of this country can be found, they should receive equal consideration with any one else for appointment to the board. But to whom would we turn for appointment to a board discharging important economic and financial functions other than those people in the community who are well versed in the matters with which the proposed Commonwealth Banking Corporation Board will have to deal? If we excluded from the board every one who, by his talents, has won a position of responsibility, and become a director of one of a very large number of private companies, we should be left with almost no one to turn to except paid government officials. Views other than those of persons who are directly or indirectly completely dependent on the government of the day for the financial well-being of themselves and their families should be brought to bear in the deliberations of the board, and the proposed constitution of the board is a sound guarantee that proper independent judgments will in fact be brought to bear in its deliberations,

Mr R W HOLT:
WANNON, VICTORIA · LP

.- This group of clauses - and particularly clause 11 - constitutes one of the Opposition’s fundamental objections to the Government’s banking legislation, as has already been pointed out. As clause succeeds clause, and bill succeeds bill, the inexorable process of grinding down the people’s bank into a form more acceptable to the private banking institutions is perfected by the Government. A corporation implies that there will be a board of directors, so to speak, and the greatest feature of disquiet for the Opposition is naturally the composition of the proposed Commonwealth Banking Corporation Board. The associations of members of the board with the various private banks, which are inimical to the operation of the principle of public interest and to the public good, because they favour private interests, will only heighten the tension, and the conflict between the views expressed by the Opposition and by this Government in this matter. It is one of those things that you cannot compose, so far as legislation is concerned. You cannot make provision for the type of personnel to be appointed to the board, except within certain general limits. If provision is made that no one already connected with an existing banking business is to be appointed, you are faced with such questions as, “ What would be the position of a person who is a director of a hirepurchase company? Would he be held to be a person connected with an institution whose business is primarily that of banking? “ I would say that, on a legal definition of banking, he would not. However, because of the tie-up between the banks and the hire-purchase companies, it is quite obvious that a person who is a managing director, or just a director, of a hirepurchase company would automatically be interested in banking. Therefore, the question of the type of personnel on the board is vital and fundamental.

This point has been stressed again and again by various persons who have commented on the motives of the Government in bringing down legislation such as this, including a clause providing for the appointment of a board to carry out the work hitherto done by one particular person. It has been suggested that, in the absence of any express or real reason for such legislation, it must be assumed that the private banks hope for sufficient representation on the board to ensure that competition from the Commonwealth Trading Bank will be restrained in their interests. In other words, it will be the first step in the process of de-nationalizing the Commonwealth Bank.

Mr Hulme:

– What about section 16?

Mr R W HOLT:
WANNON, VICTORIA · LP

– Unfortunately, I cannot comment on section 16 at this stage. Part III. of the bill is not yet before us, and if I discussed it I imagine that I could expect a warning from the Chairman.

The second argument, which also concerns the question of separation, is that the appointment of a board which is sympathetic to the aims of the private banks will present them with a less vigorous competitor. It will also enable them to avoid some of the control of a central bank. However, the question of the central bank has been dealt with. I shall make only passing reference to it, and say that its ineffectiveness as a result of separation will be further enhanced by the appointment of a board which is sympathetic to, and directly represents, the interests of the private banks.

We have been told, ever since 1949, that if certain things were conceded, the private trading banks would come in behind the central bank and support its policy. In 1955-56 we saw the complete failure of the voluntary, co-operative system. Central bank policy broke down completely because the private banks would not voluntarily cooperate. In 1949, the private trading banks were prepared to accept central bank policy if nationalization were abandoned. Similarly, in 1950-51, we were told that if the bank board were restored, and a degree of separation were carried out, there would be co-operation. But did the private trading banks co-operate? Of course they did not. Their action, which was directly contrary to the policy of the Commonwealth Bank, resulted in the recession of 1951-52. Again, refusal to co-operate resulted in the high inflationary stress which was felt in 1955-56. The price of co-operation was limited separation and the concessions made in 1953. To-day, the price that the private banks ask for co-operation is the creation of a bank board to control their keenest competitor. I suggest that when the Government has paid this price it will still find it insufficient, and that the private trading banks will not be satisfied with their bargain. We know, of course, that the private banks would like to see the central bank control end completely. The separation of the two banks, and the appointment of a board on which they could have substantive control, could enable them to avoid central bank influence completely.

The separation of the two banks, and the imposition on the Commonwealth Trading Bank of a board which is more than sympathetic to the private trading banks will prove insufficient as a price for central bank control. The private trading banks will not live up to their obligations and the Government, in following this unreasonable course of appeasement, may have to yield still further later on. There is every indication at the moment that this legislation will so effectively undermine central bank control, and remove the competition offered by the Commonwealth Trading Bank, that there will be no need for further appeasement. That is a matter on which we in the Opposition are not prepared to give the Government even the benefit of the doubt. That is why we oppose this measure. The constitution of the board is one of the main features to which we object, one of the features upon which the whole Commonwealth Trading Bank can founder.

Mr HULME:
Petrie

.- It surprises me that, at this late hour, the Australian Labour party should still be trying to put over its propaganda about this measure. It has been suggested that those who are likely to be appointed to the board of the Banking Corporation will be biased, or at any rate sympathetic to the aims of the private banks; and that this will result in less enthusiastic competition from the Commonwealth Trading Bank. I could not imagine anything more ridiculous. That kind of statement might be considered reasonable if we had not such a wealth of experience behind us in this matter. The honorable member for Melbourne Ports (Mr. Crean) said that during the period for which this board has been in charge of Commonwealth Bank activities, the bank has deteriorated. Every reasonable person, even among the Opposition - if any such may be found - would admit that statements which have been made on this side clearly indicate that the bank has progressed substantially since 1953 when the board was appointed. If any member of the Opposition were to compare the development which has taken place in the Commonwealth Bank, whether it be in relation to deposits or advances, with the development that has taken place in the major private trading banks, he would find that the Commonwealth Bank is ahead of the others. In those circumstances, how can honorable members claim that the board which has controlled the Commonwealth Bank has brought about a deterioration in the bank’s activities? I suggest that it is an unfortunate situation when members of the Opposition make the kind of reflections they have made against those who are likely to be appointed as members of the board.

The honorable member for Hindmarsh (Mr. Clyde Cameron) suggested that there will not be a trades union representative on the board. I do not for a moment believe that because a person is a trade union representative he will be excluded, but I think that, as with any other person appointed to such a board, it will be necessary for the Government to show that he is a person so skilled in financial matters and matters closely resembling the activities of a bank that it is justified in appointing him to the board.

The Opposition rejects the idea of having a board, and I should like to know why, because during the war, both the Curtin and Chifley Governments sought the assistance of many people in industry in the conduct of the war effort. If it was reasonable to ask people to give assistance and advice in those circumstances, what is wrong with asking the same kind of people to give assistance in the conduct of banking activities? I cannot, for the life of me, understand why the Opposition adopts its present attitude to this legislation. While the honorable member for Darebin (Mr. R. W. Holt) was speaking, I referred to clause 16, because it seemed to me that his remarks were very close to the subject of that clause. He suggested that it would be possible for a director, manager, or somebody else associated with a private trading bank to be appointed a director of the Commonwealth Banking Corporation. I do not want to deal with clause 16, but I think it is pertinent to say that the bill provides that such a person cannot be appointed a member of the board. It is also suggested that an appointee might be a director of a hire-purchase company in which one of the private trading banks has some interest, or even a substantial interest. I feel that the Government would not make that kind of appointment. The identities of the persons who were appointed to the Commonwealth Bank Board in 1953 give a clear indication of the type of person whom the Government would appoint and would expect to undertake the responsibilities imposed by this legislation. I hope that we are not going to discard those people in the community who have had a very broad experience of business activities generally. I do not say for one moment that any person appointed to a bank board must have had actual banking experience. If that had been a necessity it would seem to me reasonable to say that every one of the private banks would have been out of existence many long years ago, because most of the directors of the private banks over a period of 50, or even 100, years have been people who, in the main, have been selected from industry because of their experience - people who have understood the requirements of industry and the requirements of our financial system. I believe that in those circumstances there is no justification for the objections raised by the Opposition, particularly by the honorable member for Melbourne Ports (Mr. Crean) and the honorable member for Darebin, to this group of clauses.

Mr BRYANT:
Wills

.- The honorable member for Petrie (Mr. Hulme) seemed a little puzzled that we should be opposing the control of the banking structure by a board. We thought we had made this point pretty clear. I thought that the honorable member for Batman (Mr. Bird) had made it very clear in his definition of the responsibilities that should come under discussion, and of where responsibility lies.

We say that the introduction of a board will simply reduce the degree of parliamentary responsibility. The Parliament should be responsible for the financial fate of the nation. The responsibility should lie here, with the Treasurer himself in charge of the financial side of the nation’s affairs being answerable and responsible in the last detail for everything undertaken in that particular sphere. We say that this proposed board, and any such board introduced in this way, reduces that responsibility and is simply another shield behind which the Government can hide in order to dodge its responsibilities. That is our first and principal point in opposing the appointment of a board.

Several points have been raised by honorable members opposite on this group of clauses, and I would say that the discussion on the group is clear evidence that we needed much greater time in which to discuss the whole bill. Our discussion on one-sixth of the bill has already taken a considerable time, and I think that the contributions from both sides of the chamber have been thoughtful and have attempted to put points of view. We have had a clear and reasonable discussion - the sort of discussion we should be allowed to have on every one of the hundreds of clauses in these banking measures that remain to be dealt with. Even the honorable member for Petrie put his points, and they were points worth taking because 1 presume that they expressed the doctrinal side of the Government’s position, and they ought to enable the people of Australia to see into what kind of fixed and inflexible system they will be running if this Government continues in office for much longer.

One of the people who always intrigues me is the Treasurer (Sir Arthur Fadden). He continually harks back to Labour history for his precedents, as do other honorable members opposite. When repatriation was under discussion they went back to what Labour did in 1949. When age pensions were under discussion they went back to what Labour did in 1948. Now that we are discussing banking they go back even further into the past to what Theodore did in 1930. I want to point out to the Treasurer that I had no control whatsoever over Mr. Theodore’s actions in 1930. I did not even have a vote then. For his basic political philosophy the Treasurer turns back to the seventeenth century. I should say that he dipped into about the time of John Locke - about 1680. He apparently believes in the philosophy of breaking up governmental powers in the community into small pieces so that they cannot be exercised.

The honorable member for Hume (Mr. Anderson) missed completely the point made by the honorable member for Batman, and I was rather astonished at this, because he had rather an unfortunate incident in his own career in 1951 when, as a result of his opposition to banking legislation, he was temporarily removed from this place. I would say that history will repeat itself, and that the people of Australia will soon realize the simple implications of this Government’s actions in relation to banking. Just as in 1929 the actions of a government of the same political colour as the present Government in relation to the Commonwealth Arbitration Court put that government out of office-

The CHAIRMAN:

– Order! Will the honorable member please get on to the batch of clauses with which we are dealing?

Mr BRYANT:

– I thought that during the committee stage we were allowed to answer the arguments of the Government. If that is not to be permitted I shall turn my attention to clause 8. I see that another temporary chairman who is a member of the Liberal party is about to take the chair, and I hope that with the advent of liberalism to the chair we shall have a more liberal interpretation of one’s freedom in this place.

The honorable member for Wentworth (Mr. Bury) is looking for some independent spirits to carry the control of the banking system. Independent of whom? Are they to be independent of the Government, independent of the people, independent of the private banking institutions? What is the reason for this wild desire to introduce into the banking system what are, after all, a number of amateurs? Are the people who are to be on the Commonwealth Banking Corporation Board and thus control the destiny of our greatest banking institution to be full-time banking people? They are not to come from banking institutions, we are told, but from some other field. They are to be introduced into the structure as the veriest amateurs, as part-timers, yet they will control one-fifth of the national wealth. The last report of the Savings Bank indicates that depositors’ balances totalled £721,000,000, in 4,700,000 accounts. The Trading Bank had deposits totalling £243,000,000 in about 500,000 accounts. The total of the amounts deposited in the Savings Bank and the Trading Bank is about £1,000,000,000. That is a very important sector of our national wealth. It is against our political philosophy for people who are not responsible directly to this Parliament to exercise control over the banking structure. Honorable members opposite may call that socialism or anything else that they like; it is simply a recognition of the fact that responsibility for the control of the destiny of the nation should lie in this Parliament.

By this measure, the Government is introducing into the level of decision on financial matters another group of people who can defy control by this Parliament. That is evident from clause 11. In the years that the present board has been in existence, nothing has ever been referred to the Parliament. This provision is against the present practice in the whole field of finance. It will bring about the fragmentation of the banking structure. Honorable members opposite are deeply impressed by commercial banking terms and trading terms, and the result is to be seen here. We must have a managing director. The honorable member for Petrie (Mr. Hulme) has referred to the corporation as a holding company. We say that the general conception of private banking is against the conception of national banking. National banking for the people’s benefit is entirely different from banking for private profit.

Supporters of the Government talk about holding companies. In the banking field, the banks are very careful, when they set up organizations to control different fields of their activity, that the same people control them. The last report of the Australia and New Zealand Bank Limited shows that the directors of that bank - I believe they are all domiciled in England - are identical with the people who control its subsidiary, the Australia and New Zealand Savings Bank Limited. So in the banking field at least the people who establish subsidiaries take very great care that they control them completely. But in this measure the Government is doing the opposite; it is going against that principle.

The Bank of New South Wales does not even bother to list a different set of directors to control its savings bank. But the Government proposes to introduce to control the bank people who are not responsible in any way to the actual shareholders - the people of Australia. We oppose that proposal. Do not make any mistake about it! We believe that banking is a fundamental part of the financial structure of the nation. The Commonwealth Bank is almost a department of State, and just as amateurs would not be placed in control of the running of the Post Office, the Department of Social Services or anything else, it is even more important that the control of the corporation should be reserved exclusively to people who are responsible to Parliament. Therefore, we oppose the general structure that the Government has decided to set up. We oppose the philosophy behind it. I believe that honorable members on this side have put their points very clearly.

The TEMPORARY CHAIRMAN (Mr Lawrence:

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

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– On these clauses, the honorable gentlemen from the Opposition who have spoken have refused to accept the position in relation to this board. They have refused to recognize what has been accomplished under the Commonwealth Bank Board since 1951. They have persisted with the charge that people will be appointed to the Commonwealth Banking Corporation Board who have no responsibility to Parliament and who have some kind of private or sectional interest. If they had chosen to look at the record of the Commonwealth Bank Board since 1951 they would have seen that the very opposite is the case. They would have seen that only people of the very highest integrity have been appointed to the board, and that the functions that the board has carried out have been in the interests of the people of Australia.

The honorable member for Wills (Mr. Bryant) made one or two points which are directly contrary to the facts. He said that the Government will appoint a board that will be independent of and not responsible to the Parliament. He said that the Government wants to control the Commonwealth Banking Corporation people who will be completely outside the affairs and control of the Parliament, and he, as well as other honorable members opposite, implied that the members of the board will be responsible to no one but themselves.

If honorable gentlemen opposite had bothered to read the clause that they are attempting to debate, or had bothered - and this may be more true - to be honest in their criticism, they would have admitted that the board would be responsible to the Treasurer and to this Parliament, and that the Parliament could enforce its will on the board if it so wished. If honorable gentlemen of the Opposition ever regain the government benches - an unlikely event - and if they disagree with the board they will be able to enforce their will, whatever it may be at the time, on the board under subclause (4.) pf clause 11. If they do not choose to use the powers set out in that clause, that again will be a matter for their own decision at that particular time. Quite clearly, the clause gives the Government control of the financial policy to be carried out by the Commonwealth Banking Corporation Board. The general financial policy shall be determined not by the board of the Banking Corporation but by the board of the Reserve Bank, and there will be the closest possible co-operation at all times between the Treasurer and the governor of the Reserve Bank.

In addition to that provision, there are some clauses relating to the board of the Reserve Bank of Australia, by which the Treasurer and the government of the day, even if it is a Labour government - which is extremely unlikely under present circumstances - could still enforce its will on the board of that particular instrumentality. So the charge that honorable gentlemen opposite continually lay against the Government that we are instituting boards that will be completely outside the control of the Parliament, of the Government, and of the people of Australia is completely untrue. When honorable gentlemen opposite say anything to the contrary, they know very well that they are not speaking the truth.

Mr CAIRNS:
Yarra

.- It is not very often that one hears such unsupported assertive statements even from young members of the community, either inside or outside Parliament as the statement by the honorable member for Wannon (Mr. Malcolm Fraser) that statements made by others are quite untrue. The submissions which some of the young Liberal members of this Parliament make surpass my understanding. However, I did not rise to debate this clause on that ground. The submission made by the honorable member for Batman (Mr. Bird) and other members on this side is that clause 11 is unworkable. It has been made deliberately complex and difficult to operate so that the will of the Parliament, which has always been expressed with difficulty in respect of banking, will be made even more difficult than before to apply. The Treasurer may have a very sentimental attachment for Queenslanders such as the late E. G. Theodore, but mention of him has been about the only defence that the Treasurer has put up in this debate for the establishment of a reserve bank and of the Commonwealth Bank Board. The committee has a right to expect more than that from the Treasurer. He very well knows that the legislation of 1930 - 27 years ago - was brought down at a time when there was no central bank or reserve bank in this country. It was designed so as to be acceptable to the anti-Labour parties which had a majority in the Senate. To suggest that the best that could be achieved 27 years ago in those circumstances is not much of a defence of what is being done to-day.

I submit that clause 11 has been made complicated and most difficult to work compared with the corresponding provision in the 1945 legislation, designed by the late

  1. B. Chifley. That legislation provided that where a difference of opinion arose between the board and the Treasurerthere was no detailed provision of how the Treasurer was to be made aware of that difference of opinion - the Treasurer, upon his own responsibility - that meant himself and the Government - immediately informed the bank that the Government took responsibility for the implementation of the policy in question and that the bank had to do everything in its power to implement it. It was a simple, straight ahead procedure. From 1951, when this Government began to work on it to make it more difficult to operate, the first of its requirements was that the board had to make a report. The board could delay making that report and so conceal a position from time to time if it desired, as it did in 1930. When the report had been made, the Treasurer and the Government had to submit it to the Governor-General, and the Governor-General made the decision, not the Government or the Treasurer. The Governor-General is supposed to follow the advice of his Government, but he need not do so. In a critical position, such as occurred in 1930, the Governor-General might be of such a conservative character that he might not quickly or readily accept the advice of the Government. In such circumstances delay would follow and the situation would become very complex.

The complexity of the legislation in that respect must have done much to produce within the last few years a situation that was difficult to handle, because in 1955 the Treasurer, in his Budget speech, said that there had been a great upsurge of inflation. He recognized that as a fact. He went on to say -

It has been facilitated by a far too generous expansion of credit on the part of the banking system, together with the rapid growth of hirepurchase finance. Here, unquestionably, is the reason for the tensions and pressures in our economy.

That was the position in 1955 which the Treasurer recognized. There were tensions and pressures in our economy of a pretty serious nature. If they arose chiefly as a result of actions by the banks, did the Treasurer consider this was undesirable and, if so, did a difference of opinion arise between the bank board and the Treasurer? If there was a difference of opinion at that time, what did the Treasurer do about it? I do not believe that the last five or six years have passed without a difference of opinion arising between the Treasurer and the bank board. If a difference of opinion did arise, the Treasurer was remiss because he allowed the difference to come and pass which, on his own admission, resulted in great tensions and pressures in the economy. If that was so, why did we not hear something about it?

The provisions of clause 11 should besimplified. Five or six sub-clauses have been inserted for no other reason than to make the clause complicated, because it is not in the interests of the private banks to have applied through the Commonwealth Bank a policy different from that which they want, lt has always been the object of the banking system to prevent, as far as possible, an unqualified decision on policy by the Parliament unless it is sponsored by a government which is of the same nature as the controlling authority of the banks, and then the banks do not worry. I suggest that in clause 11 the Government has done a pretty good job in providing barriers to prevent the policy of a Labour government from getting through to the banking system. It has designed a barrier to the implementation of Labour policy through the banking system. This clause does not apply, strictly, to the private trading banks; but it applies indirectly to them. If the main policy laid down for the Commonwealth Bank is implemented, the trading banks could not depart widely from it. This provision conforms to a pattern which has been clearly revealed at least in one case while this Government has been in office. Did any difference of opinion arise when, as the Treasurer said, the private banks contributed considerably to tensions and pressures in the economy? In those circumstances a difference of opinion between the Government and the Commonwealth Bank Board should have arisen. So, why was not action taken as prescribed by the existing legislation?

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– The honorable member for Yarra (Mr. Cairns) has given me an opportunity to prove that the close cooperation between the Treasury and the Commonwealth Bank Board has been of tremendous benefit to Australia. The proof of the pudding is in the eating. Australia to-day is in the most prosperous position in which it has ever been, particularly in comparison with other countries. Recently, I was privileged to attend a conference of the International Bank for Reconstruction and Development, and I can say, unhesitatingly and with pride, that the Australian economy is an example to the rest of the free nations. There is no doubt about that. From whatever angle the searchlight of investigation is thrown on world finance, that is in the free world - I do not include Russia, of course - Australia stands preeminent, and every Australian should be proud of that fact. Our employment position is second to none; and our economic stability is second to none. That has all been due to-

Mr Bryant:

– You inherited it.

Sir ARTHUR FADDEN:

– Inherited it? It has all been due to one ingredient in the recipe for the stability that we enjoy. It would be amusing, if it were not tragic, to hear the honorable member for Yarra talk about clause 11. He has said that he objects to it because there is a liaison between the Treasury on one side and the bank board on another side, with the Parliament as the third side of the triangle. What was the position under the 1945 legislation that was happily amended by our legislation of 1953? In the legislation of which the honorable member is so proud, sponsored by the man whom he believes was a genius of finance in Australia, Mr. Chifley, the provision was - (1.) The Bank shall, from time to time, inform the Treasurer of its monetary and banking policy. (2.) In the event of any difference of opinion between the Bank and the Government as to whether the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia, the Treasurer and the Bank shall endeavour to reach agreement.

But what is the position under this legislation? The Treasurer has to report to Parliament on any disagreement, Parliament being representative of the people. I have never heard such arrant humbug as was spoken by the honorable member for Yarra. Our legislation provides for reference directly to the representatives of the people - the people from whom we have our mandate and who, thank goodness, voted against the nationalization of banking.

Mr LUCHETTI:
Macquarie

– We have seen the amazing Treasurer (Sir

Arthur Fadden) go to great pains to tell us of his experiences at a meeting of the World Bank and of the great opinion in which this country is held by the persons who were at that meeting to consider the relative prosperity of the various nations of the world. Yet the right honorable gentleman is asking us to alter the basic state of affairs which, in his own words, was responsible for the solidity and strength of this nation. If the nation has prospered under a banking system which has existed since 1945 and, more especially from the Government’s point of view, since 1951 and 1953, why change the system? The Treasurer said that we had a perfect banking structure and a system which was meeting delightfully the requirements of the nation, but, although it had been satisfactory, the Government thought it ought to be changed. That system has played its part in preserving the nation’s economy and has helped to extricate this deplorable Government, this hopeless Government, from the various difficulties into which it has fallen in recent years. That system has helped the Government to overcome the problems of the horror Budget and the little horror Budget, and it has helped the economy in a variety of ways.

I believe that it is fundamental to good government that the Treasurer should be supreme in matters of finance. I am not concerned with whether it be another Treasurer or the present tragic Treasurer, who has come into this matter in a halfhearted way. He is not at all interested in the subject of altering the present structure of the Commonwealth Bank”. It is vital for good government under a bi-cameral system that in matters of finance the view of the Treasurer shall prevail at all times.

What sort of a situation have we had this very evening? 1 want to emphasize this point especially for the benefit of the Leader of the House (Mr. Harold Holt). Why has the Government failed this evening to present its banking legislation to another place? Why has it squibbed the issue there? It is merely because the Government knows that to-night the numbers would have been against it.

What sort of a situation would arise on some future occasion under similar circumstances, if there were a disagreement between the bank board and the Treasurer and the matter in dispute were referred to the Parliament? Let us suppose that some vital question were at stake in regard to national development - the employment of needy unemployed or some matter of policy which the Government, elected by the will of the people, believed was necessary for the building of the nation. The hands of the Government would be tied. It would be frustrated and would be unable to proceed with the policy that it desired to implement. The Treasurer knows that to be a weakness. He has been compelled to accept these provisions much against his own wishes. He has accepted them because he knows that this is one way in which the hands of some future government could be tied and that government prevented from carrying out the legislative programme that it had enunciated to the people. My mind, like the mind of every other honorable member, goes back to other days, when bank boards defied governments in this country. It is not good for democracy, it is not good for the parliamentary system, when a bank board or any other authority can refuse to accept the guidance of the Government or the Treasurer of the day.

In view of the delicate constitutional situation which exists at the present time, I say that great problems may face responsible governments in Australia in the future. As a result of future elections, there may be established in another place a majority of people who will be able to_ dictate to the parties charged with the responsibility for the government of this land. Because of that, I believe that clause 11, in particular, ought to be amended. There should be a responsibility on the board to accept the Treasurer’s judgment in these matters, because the Treasurer for the time being expresses the political viewpoint which the people then favour, and to which the Government is expected to give legislative effect.

The Treasurer appreciates these points. His view, as expressed in 1953, clearly was that what I am saying now is perfectly true, and that the situation which we have to-day is not desirable or in the best interests of the nation and should be avoided. He and other honorable members on that side of the chamber have not hesitated to tell the committee of the great advantages of the proposal of the late Mr. E. G. Theodore and how the

Central Reserve Bank Bill, discussed some years ago, would have been to the benefit of the people of this nation. I remind the Treasurer of what he said in 1953 in respect of this very matter. He has a very short and convenient memory. I can only hopethat his conscience has not been jarred or damaged too severely.

Mr MACKINNON:
Corangamite

– I deplore the remarks of the honorable member for Macquarie (Mr. Luchetti), but I realize that he is in an awkward position and that he has to make his apologia for the delicate situation in which he finds himself, so I qualify my attitude to his remarks accordingly. Whilst he has gone fairly wide of the clauses before the committee, it is quite obvious that the opinions he has expressed are those of the people who want to see Australia’s banking activities directed into one channel. During the second-reading debate on this subject, that matter was thrashed out, so at this point it is quite easy to avoid making any further commentsabout it. If the committee understands that the whole of the remarks made in connexion with the series of clauses we are now discussing are concerned with the philosophy of politics as related to banking, it will realize why the honorable member for Macquarie expressed himself in that way. It is quite obvious that the committee would get a completely false impression of clause 11 if it accepted the remarks of the honorable member for Macquarie. He tried to give honorable members the impression that the Government and the Treasurer (Sir Arthur Fadden) would not have power to direct the Commonwealth Banking Corporation Board in regard to banking policy. I may be completely wrong, but I think that anybody who listened to the honorable member would say that he gave that impression to the committee. I suggest to him, as a reasonably intelligent member, that he read sub-clause (4.) of clause 11, which states -

The Treasurer may then submit a recommendation to the Governor-General- that is in the case of a dispute - and the Governor-General, acting with the advice of the Federal Executive Council, may, by order, determine the policy to be adopted by the Corporation

If that does not give to the government of the day some power of direction over the policy of the Commonwealth Banking Corporation Board I cannot read English. I suggest to the honorable member that his rather impassioned address, as I suggested earlier, was based on a political apologia rather than on logic. He should read clause 11 again.

Mr THOMPSON:
Port Adelaide

– Mr. Chairman-

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I move -

That the question be now put.

The TEMPORARY CHAIRMAN:

– This clause is subject to the guillotine.

Mr THOMPSON:

– I must say that I do not agree with a lot of opinions that have been expressed on clause 1 1, even by members on my own side of the chamber.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I rise to order. I gather that you have ruled, Mr. Temporary Chairman, that the closure cannot be used while the guillotine applies to this committee discussion. I understand that there has been, by some agreement-

Mr Luchetti:

– Is the Minister disagreeing with the Chairman’s ruling?

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I am not canvassing the ruling. I am putting this point of order: Apparently it has been agreed that a group of clauses be taken together. That being so, surely it is in order to put the question, “That the question be now put”, not in relation to the whole range of clauses now under the guillotine, but in relation to a group of clauses inside that range.

The TEMPORARY CHAIRMAN:

– The position is covered by Standing Order 93, paragraph (h) of which states -

Standing Order No. 94 shall not apply to any proceedings in respect of which time has been allotted in pursuance of this Standing Order.

That refers to the standing order relating to the guillotine.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– But I submit, with respect, that time has not been allotted in relation to this group of clauses. It has been allotted in relation to the bill as a whole.

The TEMPORARY CHAIRMAN:

– I cannot let you canvass my ruling. (Opposition members interjecting) -

The TEMPORARY CHAIRMAN:

–

Order! I am not going to tolerate these noises. Somebody will find himself outside if he is not careful.

Mr THOMPSON:

– I agree with some Opposition members who cannot see much value in clause 11, but this would only be so when the board was of the same opinion as the government of the day. In that case, there would not be any likelihood of a dispute arising. I take it that, under clause 11, the Treasurer of the day will not have necessarily to bring a policy direction to the notice of the Parliament. He will only have to make a report to the Parliament if there has been a disagreement between him and the board, and he has got the Governor-General, acting with the advice of the Executive Council, to determine the policy of the corporation. The only real value that I can see in clause 1 1 is where a government has a majority in this House but not in another place. If a government had a majority in both Houses it could amend legislation that it did not regard as suitable, and the need for the safeguard in clause 11 would not arise. In the event of a hostile Senate, however, the Treasurer could utilize the provisions of clause 11 to direct the bank on policy matters.

I look upon this clause as a great protection to a government against a board that is unwilling to do what the Government wants it to do. In 1931, when the Scullin Government faced a hostile Senate, that government had no power to direct the bank board. Even though this clause has all the imperfections that have been, mentioned by honorable members, if Mr. Theodore, the Treasurer in the Scullin Government, had had the power that is given to the Treasurer in this clause, he could have directed the Commonwealth Bank Board to carry out his policy and there would have been a different position in the depression years.

I feel that this clause gives some authority to the Parliament. Obviously, if a Treasurer had not a majority to support him, he would not remain Treasurer for very long. Under our party system, the Treasurer goes to members of his party and tells them what policy he is going to put into effect. If they are agreeable to that, it is the Government that makes the decision, not Parliament. Although, under this clause, the Treasurer will have to table in each House the instructions that he has given to the board, in the event of a dispute, it does not follow that Parliament will alter those instructions. No Treasurer would give instructions on a policy to which his party would not agree. No matter how strong a Treasurer may be, he is dependent on a majority in the House of Representatives to keep his position and he is particularly dependent on a majority in his own party.

However, as 1 have said, I do not think that clause 1 1 will have much effect while a government is in office which is of the same opinion as the board. I agree with the honorable member for Batman (Mr. Bird) on that point. The clause will be of value when there is a government that does not agree with the policy of the board, and the board is not prepared to carry out the policy of the Government. That is what happened in the time of the Scullin Government. Because a government is elected by the people, it has every right to give effect to its policy on these matters.

I rose to speak on this clause because, in speaking to the motion for the second reading of the bill, I stated that this was the clause that the banks did not like. I still think that the banks do not like it. Of course, the Treasurer is not able to get up and say that. Although honorable members opposite have said that this legislation is designed to prevent a socialist government from nationalizing the banks, the banks know, that, under this clause, a Labour government could take action to implement its policy. I am glad that the Treasurer is prepared to stand up to the banks on this matter. I do not know what the banks have told the Government, but I am of the firm opinion that the banks do not like this clause because it will give power to a government, through the Treasurer, to issue instructions to the board. And, of course, the government of the day expresses the views of Parliament because, without a majority in this place no government could continue. In the circumstances, while I agree that this clause might be regarded as a dead letter at the present time, it could become very effective with a change of government.

Wednesday, 27 November 1957

Question put -

That clauses 8 to 13 be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 51

NOES: 25

Majority . . 26

AYES

NOES

Question so resolved in the affirmative.

Clauses 14 to 26 - by leave - taken together.

Mr CREAN:
Melbourne Ports

– This group of clauses deals with the constitution of the board. The clauses also deal with various executive committees-, the appointment of the chairman, both of the board and the executive committees; and the qualifications or otherwise of those people who can sit on the board.

It is rather ironical that the Central Reserve Bank Bill of 1930 should have been referred to time and again during the debate on this bill. The Central Reserve Bank Bill was laid aside by the Senate, which appointed a select committee to examine the matter. The managers of the various associated banks came before that committee and stated, for one reason or another, that the time was not right for the passing of the Central Reserve Bank Bill. Mr. Charles Herbert Tranter, who was general manager of the Commercial Bank of Australia Ltd., stated as his objections -

If it were decided to set up such a bank I assume that the appointment of the board would be left to Parliament, and to that extent the institution would be subject to political influence.

It is rather odd how the political wheel appears to have made a full turn. In 1930 the now government parties rejected that bill because the private banks did not want it. Those same parties are now supporting this bill because the private banks apparently now want the changes to be made. Each and every one of the eleven people who can be appointed to the Commonwealth Banking Corporation is a political appointee. There is no provision here, as there was in respect of the board with which we have dealt, for the existing governor and deputy governor to be automatically reappointed. The only appointment to this board about which there is no doubt is the Secretary to the Treasury. He is the only person named in his own right. There is no guarantee that the managing director of the new Commonwealth Banking Corporation will be the manager of any of the sections of the Commonwealth Bank as we know it, nor that the deputy managing director will not be taken from the present staff of the bank. Each of the other eight people is to be appointed directly by the Governor-General. Clause 16, which is supposed to be a safeguard against the appointment of certain people, is no safeguard at all, because it does not prevent what was done in respect of the Commonwealth Bank Board 20 or 30 years ago, when a person from a private bank resigned one day before and thereby made himself eligible to be appointed to the new board. That could be done under this legislation. Clause 16, which is supposed to disqualify certain people, is theoretically a safeguard. I refer particularly to subclause (0, which refers to -

A director, officer or employee of a corporation the business of which is wholly or mainly that of banking.

The ostensible purpose of that clause is to meet the claim of people, such as members of the Opposition, that this board could be stacked with representatives or directors of the private trading banks. For the restriction contained in the clause to have any force, it ought to be accompanied by a provision that a member of the board must not be a person who was a director, officer or employee of such a corporation either at the time when this bill was introduced into the Parliament or when it was proclaimed. As I have said, the clause provides no safeguard whatever against the possibility of somebody resigning from a position which theoretically would disqualify him from membership of this board on the day before he was appointed to the board. That is why the Opposition says that this provision does not give the protection that is claimed. It is open for the board to be stacked with the very people the Treasurer says he wishes to avoid being appointed to the board.

In contrast with the board of the new Reserve Bank, of which the Governor of the bank is to be the chairman, in this case the chairman of the board will be somebody other than the managing director or the deputy managing director of the corporation. I would suggest that it will be possible to get in this board the same kind of tensions that existed in the old Commo wealth Bank Board, the board that was in existence years ago. An outside or part-time chairman may be able to dictate to the general manager, who is supposed to be responsible for the day-to-day administration. It will be possible to have conflicts between those two which will make for friction and lack of efficiency in the new organization.

There is provision also for three executive committees, one to deal with the Savings Bank, one with the Trading Bank and one with the Development Bank. Each executive committee will consist of the managing director and four other members of the board. The only restriction is that the Secretary to the Treasury is not to be a member of the Trading Bank or Development Bank executive committee. He is to be a member of the Savings Bank executive committee. There is to be this managerial hotch-potch. Underneath each executive committee there is to be a manager and deputy manager of each of the various sections. I should like to know where the final management of this great institution will be found amidst this fabric of administration.

Theoretically, the ultimate policy is to be determined by the board. We have already argued at great length whether clause 11 provides any safeguard in the event of a dispute arising between the board and the Government. Of course, the Opposition suggests that a dispute between the board and the Government is not likely to occur when the board is, as it were, a hand-picked political creature of the Government. There is no likelihood of any conflict to warrant that alleged safeguard coming into operation. It will be the endeavour of the board to see, perhaps, that matters which would benefit the general health of the Australian economy are not brought to the notice of the Treasurer.

I mention these various clauses because of their importance. The Leader of the House (Mr. Harold Holt) suggested that the Opposition was wasting its time or was spending too much time in dealing with these clauses, but the six or eight clauses in this section of the bill, by their very nature, present great technical difficulties. They provide for entirely new forms of administration for a going concern. We feel that they are so cluttered up that they will not preserve the general health of the banking organization. There is to be a board and there are to be executive committees. In between, there are to be managing directors. Underneath, there is to be a set of managers.

The CHAIRMAN:

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

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– I refer to clause 14, which reads in part - (2.) A member of the Board appointed under paragraph (d) of the last preceding sub-section shall, subject to this section, be appointed for a period of five years, but is eligible for reappointment upon the expiration of his period of office. and move -

Omit sub-clause (2.), and insert the following sub-clause: - “ (2.) A member of the Board appointed under paragraph (d) of the last preceding sub-section -

shall, subject to this section, be appointed for a period of five years but is eligible for re-appointment; and

holds office subject to good behaviour.”.

I have often heard the old expression, “ making bricks without straw “. I am afraid that is what the honorable member for Melbourne Ports (Mr. Crean) has been endeavouring to do. The purpose of this amendment is exactly the same as that of the comparable amendment which was made to clause 14 of the Reserve Bank Bill. In the section of the present Commonwealth Bank Act relating to the appointment of board members - section 13 - there is a provision that board members appointed by the Governor-General shall hold office during the periods of their appointment, “ subject to good behaviour “.

As in the case of the Reserve Bank Bill, this provision was deleted in the drafting of clause 14 of the Commonwealth Banks Bill and was replaced by a new provision in sub-clause (1) of clause 17 empowering the Governor-General to terminate the appointment of a member of the Commonwealth Banking Corporation Board on account of misbehaviour. This change was made purely as a drafting measure in accordance with current practice in this respect. lt has been suggested, however, that the change might have a significance that was not intended, in that it could operate to enable a board member to be removed from office more readily than is the case under the wording used in the present Commonwealth Bank Act. This possibility arises because, unlike the position under the present act, it is doubtful, under the wording of sub-clause (1) of clause 17 of the bill as it stands, whether a board member who was removed from office allegedly on account of misbehaviour, but who was subsequently held by the court not to have been guilty of misbehaviour, would have the right to be reinstated. It could be that his only redress would be to seek damages for wrongful termination of his appointment.

The effect of the amendment now proposed, together with the omission of subclause (1) of clause 17 of the bill, is to restore the wording of the Commonwealth Bank Act and so put it beyond doubt that the position regarding termination of a board member’s appointment for reasons of misbehaviour will be the same as it now is in the case of members of the Commonwealth Bank Board.

Replying to the honorable member for Melbourne Ports, I should like to direct his attention to a little history, which 1 think does not come amiss in matters of this sort. The Honorable E. G. Theodore was, and still is, held by the Labour party to be a financial genius. Let us have a look at the proposition he put forward. He suggested that the Reserve Bank should be managed by a board of directors composed of a governor and eight other directors appointed in the manner set out in the bill. The proposal went on -

Subject to this act, the eight other directors shall consist of two deputy governors of the Reserve Bank, the Secretary to the Treasury and five other persons representing respectively the following interests: (1) banking, (2) commerce, (3) labour, (4) manufacturing and (5) primary production.

There is no disqualification in that proposal. However, clause 16 of this bill provides -

A person who is -

a member of the Reserve Bank Board appointed under paragraph (d) of subsection (1.) of section fourteen of the Reserve Bank Act 1957;

the Governor, the Deputy Governor or an officer or employee of the Reserve Bank;

an officer or employee of the Corporation (other than the Managing Director or the Deputy Managing Director);

the General Manager of the Trading Bank, of the Savings Bank or of the Development Bank;

an officer of the Public Service of the Commonwealth (other than the Secretary to the Department of the Treasury); or

a director, officer or employee of a corporation the business of which is wholly or mainly that of banking, is not capable of appointment, or of continuing to act, as a member of the Board.

What arrant humbug emanates from the Opposition!

Mr CALWELL:
Melbourne

– The Treasurer says, “What arrant humbug this is “ - that the Labour party should oppose the establishment of this board - because he says that the late Mr. Theodore, who was without question the greatest of Australian Treasurers-

Sir Arthur Fadden:

– Greatest?

Mr CALWELL:

– Do not take my word for it; ask Stanley Melbourne Bruce who, in his opinion, was Australia’s greatest Treasurer. Mr. Theodore suggested a board for a proposed reserve bank. Why did the tories of that day in this House vote against the proposition, and why was it rejected in the Senate? Can the Treasurer answer those questions?

Sir Arthur Fadden:

– I can answer them; Labour did not have enough votes.

Mr CALWELL:

– It was because every member of the Australian Country party and the Nationalist party of that day voted against it in accordance with the direction they received from the banks. Mr. Theodore would never have submitted his legislation had he been able to survive the depression by counteracting the tactics of such people as Gibson, McComas, Drummond and Ashton while they were members of the Commonwealth Bank Board. They were the people who ruined Australia’s economy. We have no faith in- anybody whom this Government would appoint. The Treasurer would do his best, but what hope would he have? There are only two members of his party in the first eleven of the Cabinet, so he will have to take the people whom ‘ the banks want and whom Liberal Ministers, want; and the banks want the spiritual descendants or successors of people like Gibson, McComas, Drummond, Ashton and the rest, the people who, in the depression years, refused to finance and help the Commonwealth and State Governments. When Gibson came to the bar of the Senate he used his position to persuade that chamber to hamper the government of the day from carrying out its work.

We do not want a board composed of men like them, and we have resolved to fight against any bank board in any of these fourteen bills. We will never have anything to do with any bank board at any time. One member of the board could be a trade union official or a Labour party man, as Mr. Duffy was, but the numbers will be provided from those who have the approval and bear the imprimatur of the Union Club, the Melbourne Club and the

Adelaide Club. They will be the stooges for the money power. The people who constitute these boards are never practical bankers. Like the directors of the private banks, they do not necessarily know anything about banking, but in most cases are there to see profits are earned. They are guided by the advice of practical men who are the chief managers of their banks.

We have always believed that the man to give advice to the Government is the Governor of the Commonwealth Bank, unimpeded by boards. We were compelled to accept an advisory board in the days of the Curtin Administration because the then Governor of the bank, Mr. Armitage, wanted an advisory board. As I have said, we do not believe in the principle of a bank board, advisory or otherwise.

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– Why did Mr. Armitage want an advisory board?

Mr CALWELL:

– He felt he ought to have the advice of others so that he could fortify his own judgment on various matters.

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– Cannot the proposed board perform the same functions?

Mr CALWELL:

– This board is going to have greater powers than an advisory board. It is going to make policy, and the Treasurer of the day will have to upset its policy should the necessity arise. As advisory board could have assisted Mr. Armitage without provision having been made in the legislation for its establishment Our objection is that this board will be composed of people who are not necessarily bankers - in fact persons associated with banks are excluded from being on the board - and they will decide the policy, and the Treasurer will then have the task of altering that policy. Why waste time on the matter? These measures will not be passed anyhow. We will see to that. The Government can co-Tie back in the autumn and try again, or it can come back at some other time after the n ;xi elections.

To see the performance of the Treasurer to-night one would almost believe he had his heart in this proposed legislation. If ever a man believed a bill ought to be thrown into the wastepaper basket, the Treasurer is that man and this measure is that bill.

Sir Arthur Fadden:

– Do not assume the role of a clairvoyant.

Mr CALWELL:

– I am not. I am just interpreting events. I know what the Treasurer’s views have been in the past. This is bad legislation, and this particular provision is the worst part of it because the destiny of the people’s bank is being handed over to those who are determined to destroy it. The Minister who will probably follow me in this debate is one of the representatives of the private banks in the Cabinet who is largely responsible for this proposed legislation because he mistakenly and foolishly believes in it. Between now and next autumn I hope he will think about the position again and join in our cry, “ Hands off the people’s bank “.

Mr HULME:
Petrie

.- It is rather surprising that the Deputy Leader of the Opposition (Mr. Calwell) at this late hour enters into this debate, which commenced shortly after 8 o’clock to-night. The question of the establishment of the bank board was discussed on clause 8. It seems a pity that because the Deputy Leader of the Opposition comes in at this belated hour we have to traverse the ground that has already been covered. He is the honorable member who, only four hours ago, was objecting strongly against the limitation of time for the debate. Perhaps it is a pity; nevertheless, his remarks call for one or two comments. In the first instance, he refers to the depression and blames the Commonwealth Bank Board for the problems which arose at that time. It is well known as a matter of history that there were very few people, if any - whether one looked in the United Kingdom, United States of America or in any other country - who knew how to deal with the monetary problems which arose during the period of the depression. That was not something peculiar to. Australia or to the Commonwealth Bank; that position existed throughout the world. The fact that we happen to have learned something from the depression surely cannot be used as an argument against the steps we are taking in 1957. The lessons were learned then. I believe that, whether we have a board or not. what will be done in relation to central banking in Australia will be entirely different from anything that was done during the depression years.

No objections have been raised by honorable members opposite to the present members of the Commonwealth Bank Board. There has been no suggestion throughout this debate that the men who have had control of the board for- the past four years have done anything to destroy it or to retard the progress of the Commonwealth Bank. Surely that must be an indication that the Opposition does not really believe in the statements that have been made on that side of the chamber in the course of this debate.

It is certain that the members of the board are men of experience and integrity. They were chosen by the Government because they had those qualities. They have had wide experience of business activity, though perhaps not in relation to banking. As I have said before, and repeat now for the benefit of the Deputy Leader of the Opposition, the men who are in control of the private trading banks as directors are not, in the main, men who have been brought up in the world of banking. Have they failed in their control of those banks? If they have, the views that have been expressed by honorable members on the Opposition side are very strange, because they have been suggesting throughout the debate on these bills that the private trading banks have been powerful and want to be still more powerful in the future.

After the banking legislation was passed in 1953, we were able to find suitable men for appointment to the Commonwealth Bank Board. I believe that that will be our experience again, and that we shall be able to find many men who have had sufficiently wide business experience to be able to control the affairs of the Commonwealth Banking Corporation. I hope that the Deputy Leader of the Opposition will not revert to these matters, for they have already been discussed fully, and it is unfortunate that he was not in the chamber to hear the sensible explanations that were advanced by honorable members on this side.

Question put -

That the amendment (Sir Arthur Fadden’s) be agreed to. .

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 49

NOES: 27

Majority . . . . 22

AYES

NOES

Question so resolved in the affirmative.

Clause 17- (1.) The Governor-General may terminate the appointment of a member of the Board appointed under paragraph (d) of sub-section (1.) of section fourteen of this Act on account of misbehaviour.

Amendment (by Sir Arthur Fadden) agreed to -

That sub-clause (1.) be omitted.

Clause 25 - (1.) The Managing Director and the Deputy Managing Director shall be appointed by the Governor-General and shall hold office, subject to the next succeeding section, for such period, not exceeding seven years, as the Governor-General determines, but are eligible for re-appointment.

Amendment (by Sir Arthur Fadden) agreed to -

That sub-clause (1.) be omitted and the following sub-clause be inserted: - “ (1.) The Managing Director and the Deputy Managing Director-

General determines but are eligible for re-appointment; and

Clause 26 - (1.) The Governor-General may terminate the appointment of the Managing Director or of the Deputy Managing Director on account of misbehaviour.

Amendment (by Sir Arthur Fadden) agreed to -

That sub-clause (1.) be omitted.

Question put -

That clauses 14 to 26, as amended, be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 49

NOES: 27

Majority . . . . 22

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the remainder of the bill and the circulated amendments of the Government be agreed to, and that the bill be reported with amendments.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 49

NOES: 27

Majority . . . . 22

AYES

NOES

Question so resolved in the affirmative

Circulated amendments - [Clause 33- (1.) There shall be a General Manager of the Trading Bank, who shall be appointed by the Governor-General upon the recommendation of the Board and shall hold office, subject to the next succeeding section, for such period, not exceeding seven years, as the Governor-General determines, but is eligible for re-appointment.

Amendment. - Omit sub-clause (1.), insert the following sub-clauses: - “ (1.) There shall be a General Manager of the Trading Bank, who shall be appointed by the Governor-General upon the recommendation of the Board. “ (1A.) The General Manager of the Trading Bank-

Clause 34 - (1.) The Governor-General may terminate the appointment of the General Manager of the Trading Bank on account of misbehaviour.

Amendment. - Omit sub-clause (1.).

Clause 45 - (1.) There shall be a General Manager of the Savings Bank, who shall be appointed by the Governor-General upon the recommendation of the Board and shall hold office, subject to the next succeeding section, for such period, not exceeding seven years, as the Governor-General determines, but is eligible for re-appointment.

Amendment. - Omit sub-clause (1.), insert the following sub-clauses: - “ (1.) There shall be a General Manager of the Savings Bank, who shall be appointed by the Governor-General upon the recommendation of the Board. “ (1a.) The General Manager of the Savings Bank -

Clause 46 - (1.) The Governor-General may terminate the appointment of the General Manager of the Savings Bank on account of misbehaviour.

Amendment. - Omit sub-clause (1.).

Clause 78- (1.) There shall be a General Manager of the Development Bank, who shall be appointed by the Governor-General upon the recommendation of the Board and shall hold office, subject to the next succeeding section, for such period, not exceeding seven years, as the Governor-General determines, but is eligible for re-appointment.

Amendment. - Omit sub-clause (1.), insert the following sub-clauses: - “ (1.) There shall be a General Manager of the Development Bank, who shall be appointed by the Governor-General upon the recommendation of the Board. “ (1a.) The General Manager of the Development Bank -

Clause 79 - (1.) The Governor-General may terminate the appointment of the General Manager of the Development Bank on account of misbehaviour.

Amendment. - Omit sub-clause (1.).

Clause 85 -

The Treasurer may, from time to time, out of moneys legally available, lend to the Development Bank such amounts, and subject to such terms and conditions, as are agreed upon between the Treasurer and the Board.

Amendment. - Omit “ out of moneys legally available “, insert . “ out of moneys appropriated by the Parliament for the purpose, but not otherwise “.]

Bill reported with amendments; report adopted.

Third Reading

Motion (by Mr. Harold Holt) proposed -

That the bill be now read a third time.

Mr CREAN:
Melbourne Ports

– In the few moments that remain, I intimate that we oppose the third reading of this bill as evidence that we propose to carry on the fight which we believe should be carried on to the last of our resources. We also repeat our protest at the way in which this measure has been handled.

We on the Opposition make no apologies about the fact that we got only to the end of clause 26 in dealing with a bill containing 129 clauses. We feel that there are many matters covered by the remaining 103 clauses that should be discussed thoroughly. Amongst them are such subjects as loans for housing and the establishment of the new Development Bank, which adopts a practice so far not followed by any bank. I refer to the principle of having regard primarily to the prospects of the operations of the applicant becoming or continuing to be successful. We welcome the introduction of a new principle into banking, but we suggest that the question whether this new Development Bank plays the part envisaged in the bill will depend entirely upon the kind of board selected by this Government. We, at any rate, have grave doubts that the board that is to be chosen will be anything other than the tool of the private banking system. For those reasons, in the 30 or so seconds that remain to me, I formally move -

That the third reading be postponed-

Mr SPEAKER:

– Order! The time allotted for the remaining stages has expired.

Question put -

That the bill be now read a third time.

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

AYES: 50

NOES: 27

Majority . . . . ‘ 23

AYES

NOES

Question so resolved in the affirmative.

Bill read a third time.

page 2573

BILLS RETURNED FROM THE SENATE

The following bills were returned from the Senate without amendment: -

Loan (War Service Land Settlement) Bill 1957.

Pay-roll Tax Assessment Bill 1957.

House adjourned at 1.1 a.m. (Wednesday).

page 2573

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Australasian Performing Right Association Limited.

Cabinet Transport Committee

Mr Webb:

b asked the Prime Minister, upon notice -

  1. Has the committee of six Ministers which was appointed to survey the transport position, with the object of bringing about a reduction in transport costs, completed its deliberations?
  2. If not, (a) when is it likely to Jo so, and (b) when will the House be advised of the results of the Committee’s recommendations?
Mr Menzies:
LP

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

  1. A Cabinet committee was set up in April, 1957, to consider policy aspects of the problems of transport by sea, air, road and rail. Because of the extensive and continuing nature of these problems and changes which are constantly occurring in the transport situation, the work of the committee will not terminate in any single report or set of recommendations. The committee has already considered a number of major transport policy matters and has made recommendations on them. It will continue to keep under review the total problem of transport in Australia. The question of reduction in - transport costs is not a specific function of the committee but improved efficiency and consequent lowering of costs may be expected to result from the carrying out of the committee’s recommendations. 1. (a) See 1 above, (b) The House has already been advised of a number of decisions arising from the committee’s examination. They include financial assistance for the standardization of the Melbourne-Albury railway link, the imposition of taxes on automotive diesel oil and aviation turbine fuel, special assistance to the States for road works to the extent of £3,000,000 per annum over the next two financial years and the recently announced policy for civil aviation, which includes financial assistance to stabilize the industry.

States Grants

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA

asked the Treasurer, upon notice -

  1. What is the adjusted population basis on which the tax reimbursement formula grant will be made to the States for the first time in this financial year?
  2. On what basis did the Government decide that a special financial assistance grant of £23,800,000, in addition to the formula grant, should be made to the States for this financial year?
Sir Arthur Fadden:
CP

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

  1. The States Grants (Tax Reimbursement) Act 1946-1948 defines the adjusted population basis in the following terms: - “ The adjusted population of each State in any year shall be calculated by adding four times the number of children aged five to fifteen years inclusive living in that State at the beginning of that year to the population of that State at that time, and by increasing the number so arrived at by a percentage equal to the percentage which the sum of -

    1. three-quarters of the population living in that State at that time in areas with a population of less than one person per square mile;
    2. half the population living in that State at that time in areas with a population of not less than one but less than two persons per square mile; and
    3. one-quarter of the population living in that State at that time in areas with a population of not less than two but less than three persons per square mile, is of the population of that State at that lime.”

Calculations of adjusted population are, in accordance with the act, made by the Commonwealth Statistician. The final calculations in respect of 1957-58 have not yet been made but the Statistician has made the following preliminary calculations: -

  1. In 1956-57 the tax reimbursement and special financial assistance grants amounted respectively to £154,650,000 and £19,400,000, a total of £174,050,000. The tax reimbursement formula grant for 1957-58 is estimated at £166,200,000. Thus, in the absence of a supplementary grant, the States would have received nearly £8,000,000 less this year than in 1956-57. At a Premiers conference in May, 1957, the Commonwealth indicated that it would be proposed to increase the total tax reimbursement grants to £190,000,000, including a supplementary grant of approximately £23,800,000. In augmenting, to this extent, the financial resources available to the States, the Commonwealth had regard to the trends in the States’ finances and also to the Commonwealth’s own budgetary position.

Road Construction

Mr Cleaver:
SWAN, WESTERN AUSTRALIA

r asked the Minister representing the Minister for Shipping and Transport, upon notice -

  1. Has the United Kingdom devoted considerable research to the use of natural rubber in the construction of roads?
  2. What experimental rubberized roads have been laid in Australia?
  3. What reports on research in Australia are available with respect to (a) rubberized bitumen and (b) stable mixtures of rubber and tar?
  4. Would there be any major difficulty in obtaining supplies of natural rubber in this country for the purpose of road construction?
Mr Townley:
Minister for Immigration · DENISON, TASMANIA · LP

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

  1. Yes. The Road Research Laboratory of the British Department of Scientific and Industrial Research has since 1951 been carrying out a co-operative programme of research and experiment into the problem of the use of rubber in bituminous road surfaces. Extensive research is being done in the United States of America also. Trial lengths of rubberized road have been laid in many countries, including Australia.
  2. Experiments were made in Queensland as early as 1929 and in New South Wales between 1937 and 1940. In 1951 and subsequent years test lengths of sprayed surface courses and premixed surface courses using crumb rubber in bitumen have been constructed in several States and there are now about 40 such lengths in Australia. Rubberized bitumen is also being used for airport runways and aprons.
  3. Insufficient time has yet elapsed to enable definite general conclusions to be drawn from these trials, the experimental lengths of rubberized surface are still under observation. However, reports on the use of rubber in roads can be obtained from the Natural Rubber Development Board, which has an office at 4 Bank-place, Melbourne.
  4. Imports of natural rubber are subject to import licensing control. Natural rubber is included in “ A “ category for licensing purposes which means that licences are granted in accordance with monetary quotas established in the name of the rubber importing house. The degree of difficulty in obtaining supplies would be affected by the quantities required but it does not appear that import controls are preventing current total needs of rubber being imported as there is and has been a fairly substantial underusage of import quotas for rubber.

Repatriation Benefits

Mr Bryant:

t asked the Minister representing the Minister for Repatriation, upon notice -

  1. How many wives of totally and permanently incapacitated ex-servicemen are qualified to receive Repatriation Department hospital and medical benefits?
  2. How many wives are unqualified to receive these benefits?
  3. What is the basis of qualification?
  4. What is the average annual cost to the department in respect of each beneficiary?
  5. Has the department investigated the possibilities of anomalies occurring as the result of the exclusion of some wives from benefits?
  6. In deciding the entitlement of a pensioner’s wife, is any consideration given to needs based on time given to the case of an incapacitated husband?
Dr DONALD CAMERON:
OXLEY, QUEENSLAND · LP

– I am advised by the Minister for Repatriation that wives of totally and permanently incapacitated ex-servicemen unless they themselves are “ members of the Forces “ and eligible to receive treatment under the Repatriation Regulations are not qualified to receive hospital and medical benefits from the Repatriation Department.

Repatriation General Hospital, Heidelberg.

Dr DONALD CAMERON:
OXLEY, QUEENSLAND · LP

n. - On 5th November, the honorable member for Yarra (Mr. Cairns) asked the following question: -

I ask the Postmaster-General as the Minister representing the Minister for Repatriation, whether he is aware that at the Repatriation General Hospital at Heidelberg in Victoria, up to October this year, fresh milk and eggs and good quality meat were supplied through the catering department, but since the appointment of a new caterer in October, skim milk, pulp eggs - of which twelve months’ supply has been purchased and “ cracker “ beef and mutton are being used. If the Minister is not aware of these matters, will he bring them to the notice of the Minister for Repatriation so that immediate action can be taken to safeguard the health of many patients, including tuberculosis patients, which is being endangered by this change of food?

I have been informed by the Minister for Repatriation that the high standard of food supplied to patients and staff at Repatriation General Hospital, Heidelberg, has not deteriorated since the appointment of the new catering officer in August, 1957. Fresh milk and eggs, and good quality meat are provided in adequate quantities, and in conformity with normal commercial practices, skim milk powder and pulped fresh eggs have been introduced by the catering officer for cooking purposes only. All meat is supplied to departmental specifications and there has been no change to these specifications or any reduction in the quality required, during recent months.

Recent inquiries indicate that no complaints have been received from either patients or staff; moreover, it is considered that as a result of continuing efforts by the administration, with due regard to economy, the already high standard of food provided at Repatriation General Hospital, Heidelberg, has been further raised in respect of both quality and variety.

Pearl Culture.

Mr Swartz:
DARLING DOWNS, QUEENSLAND

z asked the Minister acting for the Minister for Primary Industry -

  1. What stage has been reached with experiments conducted at Thursday Island into the technique of pearl culture using Australian pearl oysters?
  2. Have operations on a commercial basis been commenced in the pearl culture industry in the north-west Australia area; if so, to what extent has the company concerned developed production?
Sir Philip McBride:
LP

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

  1. The experiments conducted at Thursday Island were carried out by the Commonwealth

Scientific and Industrial Research Organization Division of Fisheries and Oceanography and the subject is, therefore, a matter for the Minister controlling C.S.I.R.O. An account of the experiments carried out at Thursday Island is included, however, in the September, 1957, issue of “ Fisheries Newsletter “ that is published by my department.

  1. Yes. Actual pearl culture operations commenced at Augustus Island, north-western Australia in August, 1956, and were subsequently transferred to Brecknock Harbour in the same area. By the end of the 1956 season a considerable number of pinctada maxima were operated on for half pearls and spherical pearls. Operations were resumed last May for the 1957 season. During these early stages many difficulties are being overcome and this season’s results should show a big improvement over those of 1956. Half pearls have been successfully cultured but it is too early to gauge the degree of success with spherical pearl culture.

Headstones for Graves of Ex-servicemen.

Mr Ward:

d asked the Minister for the Interior, upon notice -

  1. Is a headstone provided at Commonwealth expense for the grave of a member or ex-member of the armed services whose death is accepted as being attributable to war service?
  2. Is it a fact that the same provision is not made in respect of a member of the armed services who, during peace-time, loses his life by accident whilst in the course of his duty?
  3. If so, does this practice create an anomalous position?
  4. If an anomaly is created, will he take action to see that a headstone, at Commonwealth expense, is placed over the grave of every man who loses his life, either during or after service in the armed forces, as a result of injuries received whilst on duty, whether in a period of war or peace?
  5. If he is not prepared to act as requested, will he state his reasons for not doing so?
Mr Fairhall:
Minister for the Interior · PATERSON, NEW SOUTH WALES · LP

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

  1. Yes.
  2. Yes.
  3. It is not considered that it does.
  4. See answer to 3.
  5. The existing arrangements under which war graves treatment is given in respect of service personnel was outlined by my colleague, the Minister for Defence, in an answer given to the honorable member on 14th May, 1957. As stated by him, these arrangements have operated since 1948, before the present Government assumed office, and have not since been varied as they are considered to provide a reasonable basis for acceptance by the Government of responsibility in this matter.

Rifle Clubs

Mr Stokes:
MARIBYRNONG, VICTORIA

s asked the Minister for the Army, upon notice -

  1. What is the total annual cost to the Army of 303 ammunition used by rifle clubs?
  2. How much is issued free to the clubs and how much is paid for?
  3. Of that paid for, what, per 1,000 rounds, is (a) the price to the clubs and (b) the cost to the Army?
  4. Does the Army pay freight on ammunition issued to clubs throughout Australia; if so, what does this cost?
  5. Do clubs return empty cartridge cases and ammunition boxes; if not, what loss does the Government incur, and what is the estimated gain to the clubs, from this source?
Mr Cramer:
Minister for the Army · BENNELONG, NEW SOUTH WALES · LP

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

  1. In the year ended 30th June, 1957, rifle clubs were supplied with 11,586,391 rounds of .303-in. ammunition. The cost to the Army was approximately £400,000.
  2. In the year ended 30th June, 1957- (a) Free issues, 7,018,000 rounds; (b) Purchase issues, 4,568,000 rounds. 3. (a) £2 10s. (b) £35. (Note.- The actual cost per thousand rounds varies slightly with production schedules, cost of raw materials, labour costs, &c.)
  3. The cost of freight for moving ammunition from central depots after its receipt from the factory to command depots for issue to rifle clubs is borne by Army votes. The freight from command ammunition depots to individual rifle clubs is borne by the rifle club vote. The cost borne by the Army vote in 1956-57 was approximately £11,500.
  4. Empty cartridge cases are not returned. Under Australian Rifle Clubs Regulations, rifle clubs are required to collect the empty cartridge cases after shoots and sell the brass as scrap. The proceeds are credited to individual rifle clubs. The issue of ammunition in 1957 was approximately 11,600,000 rounds and the income which could be derived from the sale of cartridge cases from the above number of rounds would be approximately £24,000. Ammunition packed in boxes is only issued to country rifle clubs and these are returned when it is economical to do so.

Constitution Review Committee.

Mr Menzies:
LP

s. - On 21st November, the honorable member for Farrer (Mr. Fairbairn) asked the following question: -

I desire to ask the Prime Minister a question. Can the right honorable gentleman inform me and the House what progress has been made by the all-party committee that was appointed about fifteen months ago to review the Australian Constitution? Shall we receive an interim report from this committee during the current sessional period? If not, has the Prime Minister impressed upon the committee the need for the report to be tabled in time for action upon it to be taken reasonably soon?

My colleague the Attorney-General, who is the chairman of the committee, has informed me that the committee has heard the views of many representative people and organizations. It has made good pro gress in its deliberations, but it would obviously be undesirable to give an account of these before the committee reports to the Parliament. An interim report will not be submitted this year, but I expect a report will be presented in the early part of the parliamentary session of next year. The committee is fully aware of the necessity to avoid delay.

Cite as: Australia, House of Representatives, Debates, 26 November 1957, viewed 22 October 2017, <http://historichansard.net/hofreps/1957/19571126_reps_22_hor17/>.

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