22nd Parliament · 3rd Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
– I have received a return to the writ which I issued on 14th February last for the election of- a member to serve for the electoral division of Parramatta, in the State of New South Wales, to fill the vacancy caused by the resignation of the Honorable Howard Beale. By the endorsement on the writ, it is certified that Garfield Edward John Barwick has been elected-.
Sir Garfield’ Barwick made and subscribed the oath of allegiance.
Address-in-Reply - Presentation to the Governor-General.
– I desire to inform the House that on Friday last, accompanied by honorable members, I waited upon His Excellency the Governor-General at Government House, and presented to him the Address-in-Reply to His Excellency’s Speech on the opening of the Third Session of the Twenty-second Parliament, agreed to by the House on 13th March. His Excellency was pleased to make the following reply: -
Thank you for your Address-in-Reply which you have just presented to me.
It will afford me much pleasure to convey to Her Most Gracious Majesty The Queen the Message of Loyalty from the House of Representatives of the Commonwealth of Australia to which the Address gives expression.
– I direct my question to the Prime Minister, because, although, in the first instance, it affects another department, I should like him to bring it before the Government for consideration as a matter of urgency. It relates to the fighting in Indonesia as a result of what must be called a rebellion. I ask the Government to look again at the question which I addressed to the Minister for External Affairs before he left Australia to attend the Seato conference. Will the Government take some action, purely by way of conciliation, in an endeavour to end hostilities; between the Indonesian Government and the rival group or groups in order to prevent, if possible, any further loss of life, which must be considerable if the. fighting continues? As Indonesia is a neighbour of Australia this is a most important matter to us. Many yeats ago, intervention in the. same area took place, through the Unite,d’ Nations and I suggest that Australia, itself should see whether, it is possible, to take the steps that I now suggest.- and have suggested previously.
– The matter appears to concern the internal affairs of another country and; commonly, we do not intervene in such matters. However, as the right honorable gentleman has made his suggestion, I will discuss it with my colleagues.
– Is the PostmasterGeneral aware that a difference of opinion exists between the Royal Agricultural Society of New South Wales and television interests regarding the televising of some parts of the forthcoming agricultural show? Is the honorable gentleman aware that, while televiewers, who pay annual, licencefees as well as sales tax on their television sets, conceive themselves to be entitled to see spectacles of public interest, the organizations which stage such events also have a legitimate interest in protecting both their gate money and the character of the spectacle? Can he in these circumstances say whether the Government holds to the view that these differences are best settled by negotiation between the parties or whether it is considered desirable at this stage to set up a tribunal to adjudicate on such disputes?
– I am aware that there has been some discussion between television licensees, particularly the Australian Broadcasting Commission, and the Royal Agricultural Society of New South Wales regarding the televising of the forthcoming show. This introduces a matter which has been discussed at considerable length by the Government, and also in this House, namely, the right of television licensees to televise sporting and other events of national interest where promoters of those events feel that their own interests may not be properly served by such televising. It will be remembered that, prior to the introduction of the Broadcasting and Television Act some time ago, I conferred with representatives of sporting and kindred bodies and with television licensees. As a result, it was decided that the Government’s policy of not intruding too much into the affairs of private enterprise should be pursued and that matters of this kind could best be left to the parties concerned to determine by private treaty.
It will be realized, as the honorable member for Bradfield stated in his question, that the various interests associated in this matter - the licensees, the promoters of sporting and other events and the people who desire to view those events - all have certain rights. The Government feels that the best way, at present, to handle this matter is to leave it to the common sense and the national feeling of all those interested to determine the matter by private treaty. So far, that system has worked reasonably well. Problems have arisen recently, but in each instance some determination reasonably satisfactory to all parties has been reached. I sincerely hope that will continue to be so because it is not the desire of the Government to take legislative action which would impose a burden on any of the parties concerned.
As to the actual case referred to by the honorable member for Bradfield, although it is known that I have no power of direction over the Australian Broadcasting Commission, television licensees or the sporting bodies, I hope that good sense will prevail and that the people will be able to see at least some of the events at the Royal Agricultural Show. There is some merit in the suggestion that the appetite of the people generally can be whetted rather than allayed by the presentation of part, if not all, of the programme, and I should think discussions could take place on that level.
We have not yet enough experience to decide whether some other policy ought to be adopted by the Government, and it is not the intention of the Government at the present time, therefore, to set up a tribunal or proceed with any inquiry. However, if events in the years to come, when we have obtained more experience of this medium, show the need for an inquiry, I shall not hesitate to make a recommendation to the Government on those lines.
– I ask the Minister for Trade whether it is a fact that some time ago he declined to comment on allegations made by Mr. Anderson, federal director of the Associated Chambers of Manufactures of Australia, that Japan, in order to deceive importing countries into the belief that she was not dumping textiles, established a theoretical check price below which the export prices were not supposed to drop. Is it also a fact that he refused to comment on a further statement by Mr. Anderson that the federal Government would be compelled to make import licensing a permanent element in our protective machinery because overseas countries had skilfully developed techniques of overcoming tariffs by export subsidies and incentives? If these are facts, when does the Minister propose to declare the Government’s policy in respect of the two matters to which I have referred?
– It is a fact that 1 declined the invitation of journalists to comment upon Mr. Anderson’s statement as contained in the first portion of the honorable member’s question. My reason is quite clear. If Japanese merchants, or merchants of any other country, falsely invoice their goods to Australia - and that is reducing the matter to its simplest form because that is what is suggested in the question - or if they have a system of secret rebates that destroy the validity of the original invoice, that is an infringement of the Australian customs law for which penalties are provided. That matter falls within the jurisdiction of my colleague, the Minister for Customs and Excise. If Mr. Anderson, occupying the important office of director of the Associated Chambers of Manufactures of Australia, the members of which are so vitally interested in such an activity as this, has evidence on this point, I should think that it was his instant duty, both as a citizen and as the director of the organization, immediately to put the evidence before the Government through my colleague, the Minister for Customs and Excise. I have no further comment to make on that matter.
On the second point, Mr. Anderson said, so I have read in a report, that the federal Government had offered the opinion that it would be compelled to keep import licensing as a permanent feature. I have no doubt that Mr. Anderson is incorrect in that. Equally, I have no doubt that a broad swathe of the manufacturers in Australia recognize that they have a great deal to gain in the continuation of restrictive import licensing.
The real truth of the matter, pertinent to this question, is that this Government, in eight years, has generated and sustained such a high degree of internal prosperity in Australia that it has resulted in an immense demand by Australian citizens for the importation of goods from overseas. There is a tremendous demand for goods from overseas for which we are able to pay in our own currency. This has created obvious problems in connexion with our earning sufficient currency overseas to enable us to satisfy the demand of our own citizens for goods to maintain their very high standard of living and to sustain the extraordinary tempo of development in this country which comes not only from Government activities, but from the confidence of the entire business and financial world. We shall preserve a proper balance between this internal prosperity and the necessity to keep our overseas reserves in a healthy condition.
– Has the Minister for Air any information concerning a report that the rebels in Indonesia are receiving arms supposedly dropped from aircraft of the Royal Australian Air Force.
– I have no information about this report. I do not know where it comes from, but I can assure the honorable gentleman that there is no truth whatever in the suggestion.
– Is the Minister for Primary Industry satisfied with the progress of the first series of tobacco auction sales held at Brandon, North Queensland? Were both quality and price in keeping with his expectancy of high efficiency in the industry? Has he any information which might indicate the continuance of satisfactory prices at other sales, particularly in southern Queensland?
– This year, there has been a good tobacco crop throughout Australia. I think there may be an increase in the crop from approximately 4,600 tons to 5,700 tons, spread fairly evenly throughout Australia. I understand that the quality of the leaf is quite good, and that the purchasers are satisfied with it. The price, also, has been fairly good, and the Queensland Tobacco Board has informed me that it is satisfied with the price which, for the first four days of the sale, was about 133.3d. I cannot give the honorable member any further information. I cannot forecast what is likely to happen in south Queensland, nor do I know the state of the crop there. However, I shall make inquiries and advise the honorable member in due course.
– I ask the Prime Minister a question relating to the Committee of Inquiry into Public Service Recruitment, which is investigating recruitment and efficiency in the Commonwealth Public Service. I have been told that regulations under the Public Service Act forbid criticism of the administration and forbid a public servant from revealing knowledge gained in the course of official duties. I have been approached by members of the Service who are worried as to whether they will be able to give satisfactory evidence before the committee and yet not infringe the regulations. Would such persons be protected if they did infringe the regulations in the reasonable presentation of their evidence?
– The question relates to a committee that has been set up to advise the Government on proposals for recruitment to the Public Service. The Government felt that the whole matter was one that could well be reviewed, having regard to the position of the Public Service and the demands made upon governments and upon the efficiency of public departments. That committee has been established and is sitting. At present it is giving an opportunity to members of Parliament to offer any views that they have in relation to the subject of the committee’s inquiry. I have given no consideration to the point raised by the honorable member. In the first instance, I think it is a matter for the committee to consider, but if the honorable member receives a request to attend at a hearing before the committee, I suggest that he might with advantage raise his point there. In the meantime, I will have a look at the matter myself.
– I ask the acting Minister in charge of the Commonwealth Scientific and Industrial Research Organization a question. As the right honorable gentleman will be aware, the Tasmanian apple crop is expected to be an all time record one. However, due to the semidrought conditions prevailing, the size and quality of the fruit is seriously affected. Has the C.S.I.R.O. sufficiently advanced its experiments in rain-making to warrant an attempt by that organization to produce rain in the affected areas?
May I add that I asked a similar question in similar circumstances last year, as I think the Minister will remember. Immediately afterwards Tasmania suffered a very heavy deluge, which caused considerable damage and some danger to the island’s existence, for which I got no thanks from anybody. If the C.S.I.R.O. is able to assist in this matter, will the Minister ask those participating to keep the results within reasonable and beneficial limits?
– Knowing the keen interest and, indeed, the devotion that the honorable member gives to the apple industry of Tasmania, I admire the temerity that he is displaying on this occasion, but I regret that I must disappoint him with regard to his principal request. The Premier of Tasmania recently sent a telegram to the Prime Minister, asking whether an aircraft could be made available for the purposes outlined by the honorable member. That request was referred to the Commonwealth Scientific and Industrial Research Organization. The aircraft that are in the control of the C.S.I.R.O. are engaged on a regular programme of experiment and research into rain-making. The funds available to the Division of Radiophysics, which is responsible for this work, are limited. So far, the resources of the C.S.I.R.O. have been confined to this experi mental work. It is essential that the programme that was commenced some years ago should be continued to its logical conclusion without interruption, rather than have the limited resources scattered in the way they would be if the various requests received by the Government from time to time were acceded to. In the circumstances, it is regretted that the honorable member’s request cannot be met at this point of time.
– I ask the
Minister for Primary Industry whether he has seen the report of the decision of the New South Wales and Queensland Wool Buyers Association to go ahead with the boycott of Goulburn as a wool-selling centre from 1st July this year. Is this decision not only in defiance of the recommendation of the buyers’ own federal body, the Australian Council of Wool Buyers, but also a rejection of the requests of the Australian Wool Growers Council and the National Council of Wool Selling Brokers, and of the view, quite strongly expressed, of the Commonwealth Government itself? Has the Minister yet received an answer from the buyers’ association to his most recent letter to it on this matter? I take this opportunity of thanking the Minister for the help he has already given and ask him to continue to give all possible help to prevent an injury to the city of Goulburn, a blow to the cause of decentralization and the very serious unemployment which will follow in that district if the destruction of Goulburn as a wool-selling centre is permitted.
– I think the House knows that it is the wish of the Government - and, for that matter, of the wool-growers - that the Goulburn wool-selling centre should be retained in the interests of the growers themselves. On behalf of the Government, I have written expressing its view that this selling centre should be kept open. As the honorable member will know, I wrote to the buyers last week and to-day I received a letter from them. I only quickly glanced at it as I received it just as I was coming into the House, but they did inform me that a decision had not been reached as the proposal to close Goulburn as a wool-selling centre was not on their agenda. As soon as
I go back to my office 1 will have another look at the letter, and if it contains any further information I will convey it to the honorable member.
May I make this one suggestion? As I have said previously, I think there is a better prospect of getting a solution to this problem if we can get the buyers, the growers and the brokers together, and keep politics out of the matter. I have previously approached the graziers on this aspect of it, and they agree with me that if the matter is left to them there is a probability of a solution.
– I ask the acting Minister for External Affairs whether his attention has been directed to the recent refusal of the Chinese Communist Government to admit into China Lord Lindsay, a lecturer of the Australian National University, for the purpose of seeing his wife’s parents and of informing his mind as to the conditions which exist in Communist China. Is it reasonable to assume that this refusal was partly based upon the fact that Lord Lindsay speaks Chinese and, therefore, would not be entirely in the hands of Communist interpreters who are usually assigned to shepherd the innocents who visit Communist China from abroad? Will the Minister discuss with other democratic countries the possibility of establishing a corps of interpreters who would be available to members from these countries visiting Communist China in order that they might get a real and impartial view of what was happening there? I do not know whether it is possible to stress too much the extent to which a person who cannot read Chinese characters or speak Chinese is absolutely in the hands of the interpreters assigned to him.
– I did see a report in the press that Lord and Lady Lindsay had been refused entry into Communist China. I have no official cognizance as to whether they had vises for that trip. Since Australia has no official relations with Communist China, they would have to obtain vises from a country in which there was a representative of Communist China. I do not know the reasons for the refusal, but I agree that it was very strange that Lady Lindsay should have been deprived of an opportunity to see her parents in that country. I shall certainly examine the possibilities of the other suggestion made by the honorable member.
– 1 ask the Minister for Trade: In view of the importance to the Australian economy in the short term and to Australia’s development in the long term of the establishment on 1st January last of the European Economic Community with its unified market affecting 164,000,000 people, and in view of the possible establishment in the proximate future of a larger European free trade area with a market affecting 287,000,000 people, will he make a statement to the House at an early date giving all available information about these developments, and indicate the Government’s policy in regard to them?
– I doubt whether sufficient explicit information is available or whether events have unfolded sufficiently for it to be useful for me to undertake to make a statement to the House at a very early date. However, I shall be glad to undertake to make a statement as soon as there seems to be a basis for discussion. Broadly, the policy of the Government is to recognize the advantages that may flow in the direction of greater political unity and greater economic strength in Europe from the kind of arrangements which have partly been made and which partly are under discussion. In any thinking about this, of course, there must be a recognition of the fact that Australia’s vital trading interests could be touched by the details of such arrangements. The Government recognizes that very clearly, and the extent to which such arrangements, being a variation of prior arrangements, have touched the Australian interest has been the subject of expression by Australian representatives at the Gatt conferences that have been held over the last six months. Indeed, representatives at another conference that will be held in a month or so will again hear the Australian viewpoint and Australia’s interests stressed. The United Kingdom Government was made fully aware of the Australian viewpoint, both at the general level of relationship and as between the Prime Ministers when Mr. Macmillan was in Australia. We are assured that the Australian viewpoint is understood by the
British Government, and we are equally assured that that Government will not act without keeping the Australian Government fully informed of its acts, intentions and thinking.
– Will the Minister for Air inform the House whether he is aware of any official document or report that concerns the ejector seats of the Sabre jet aircraft that are soon to operate in Malaya with the Royal Australian Air Force? Can he also inform the House upon the necessity for equipping Australian-built Sabre jet aircraft with the fully automatic Martin Baker ejector seat?
– The only report I have heard about on this subject in recent times is a document, a copy of which I have recently been shown, which was produced by an employee of the Martin Baker company, in which he criticized the Royal Australian Air Force for not adopting the Martin Baker equipment. That, I think, suggests the whole background of this matter. In recent months there has been persistent criticism of the Air Force by one section of the press for not installing the Martin Baker seat in our front line fighters, the Sabres. I am quite satisfied that the criticism is ill-founded. The Sabre is fitted with a North American ejection seat, designed by the designers and original American builders of the aircraft. It is part of the design of the aircraft and was built into it. The criticism seems to be based on the assumption that there is only one good ejection seat in the world - the Martin Baker seat. That is not so. The Martin Baker company has done very fine work in this field. It was the originator of the ejector seat and it produces very fine equipment. am glad to acknowledge that, but it is not /rue to suggest that it is the only builder of a worth-while seat. As the honorable member for St. George is aware, advances in the design of aircraft equipment are rapid in these days, and an improvement produced by one company is quickly taken «p by another. As I have announced in the House before, all the Sabres of the Royal Australian Air Force which are going to Malaya will have ejection seats modified and improved to enable them to do all that ?.ny ejection seat in the world can do. They will be up to the highest standard. Those modifications are now being carried out. We have even been subject to the absurd criticism that we should not modify the existing seat but that we should throw it away and get a new one. In this very complicated technical field of aircraft equipment it is common practice to modify existing equipment to bring it up to new standards. The Martin Baker seat was considered some time ago by the Air Force for fitting in the Sabres at the suggestion of the Martin Baker company. On the advice of the technical experts of the Air Force, and of the Commonwealth Aircraft Corporation Proprietary Limited, the builders of the Sabre aircraft in Australia, the seat was not adopted. The only people whom I have heard question the wisdom of that decision are the Martin Baker company itself and its propagandists. Sabre aircraft are used or have been used by five different air forces - the United States Air Force, the United States Navy, the Royal Air Force, the Royal Canadian Air Force and the Royal Australian Air Force - and not one of those air forces has equipped its Sabres with the Martin Baker ejection seat. The gentleman who wrote this recent report claims that the Martin Baker company has recently completed a trial fitting of this equipment in a United States Navy aircraft of Sabre type. 1 have made inquiries about that and the advice that I have been given by our air staff is that the American Navy has definitely decided against installing Martin Baker seats in its Sabres. I think the House should remember that competition in this field is intense and that the techniques of high pressure salesmanship are quite ruthlessly employed. This criticism should be seen against that background.
– Is the
Minister for Health conscious of the need for liver extract in the treatment of pernicious anaemia? If so, is he aware that sufferers from this complaint, particularly members of families in the lower wage groups, are finding the cost very heavy because the treatment goes on for some considerable time? It is now becoming quite evident to those who have contact with the lower wage groups that the need for placing this drug on the free list is urgent. Can the Minister tell the House what is standing in the way of doing this so that needy sufferers from this disease may be assisted?
– This is by no means the first time that I have answered this question in the House. Liver extract has no particular virtues in old age that it does not possess at other ages. It has been replaced in the pharmaceutical benefits list by the active principle of liver extract, Vitamin B12, which is used for the treatment of pernicious anaemia. It has no particular virtues for treating old people for anything else. Drugs are placed on the list on the advice of the Pharmaceutical Benefits Advisory Committee’. As Minister, I have no power to put any drug on the list which is not recommended by the committee, and there seems to be no justification for doing so in this case.
– Recently, the Deputy Leader of the Opposition stated that the Constitution Review Committee - of which he is a distinguished member - would be furnishing a report before the end of the year. Is the Prime Minister in a position to say whether this will be done in time to permit the report to be debated by the present Parliament?
– I do not know when the report will be ready. I do not, in fact, sit on the committee. I know that it has been working pretty continuously on this matter, and has covered a great deal of ground, but I do not know when the report may be expected. I will ascertain from my colleague, the Attorney-General, his estimate on that point. I would certainly hope that it might be available in time to permit of adequate parliamentary discussion.
– My question to the Minister for Immigration relates to the naturalization ceremonies which are carried out by the local governing bodies. I take this opportunity to pay tribute to the excellent and dignified manner in which these ceremonies are performed. This work is being done quite voluntarily, but is somewhat hampered by the fact that the Commonwealth pays nothing towards the cost of social functions, or even of providing light refreshments after the ceremony so that citizens, new and old, may get together. As this is very important in breaking down barriers, and creating the right spirit between these sections of the community, will the Minister consider granting a small allowance to help defray the cost of such functions or, alternatively, spend on them some of the money now spent on the annual Citizenship Convention at Canberra, which appears to have become redundant, and is certainly less important than these local gatherings?
– As to the honorable member’s last comment, I would point out that the annual Citizenship Convention is attended by most of the people who take part in the activities which he has mentioned. I will consider the other matters which he has raised.
– Is the Treasurer aware that the Premier of Western Australia has expressed fears that Western Australia will receive no real benefit from the grant of £315,000, which was that State’s share of the special grant of £5,000,000 recently made by the Commonwealth? I refer to his statement that this will simply reduce by an equivalent sum the amount recommended by the Commonwealth Grants Commission. Is this in accordance with the principle upon which the Commonwealth Grants Commission usually bases its calculations? Without committing the Commonwealth Grants Commission, or trespassing on. its authority, can the Treasurer give some assurance that Western Australia will not be prejudiced in this way?
– Although 1 am not impressed by the argument put forward by the Premier of Western Australia. 1 should point out that the amount of special grant to certain States is a matter entirely for consideration by the Commonwealth Grants Commission, which reports to the Parliament. Therefore, I do not propose to follow the example of the Premier of Western Australia and engage in speculation as to the outcome of the commission’s deliberations. All I can add is that from my experience of the Commonwealth Grants Commission there is no justification for the fears expressed by the Premier of Western Australia. I think all honorable members will agree that the commission can be relied upon to give due and proper consideration to the position of the claimant States, as it has always done.
– My question, which is directed to the Minister for Trade, concerns the case submitted to the Department of Trade by the Tasmanian fish-canning industry for the introduction of emergency licensing regulations. Is the Minister aware that the industry now faces the threat of heavy retrenchments, and that purchases of fish from Tasmanian fishermen will have to be reduced this year to the extent of 25,000 cases? Is the Minister also aware that the industry has pointed out that these difficulties are the direct result of imports that have followed the implementation of theJapanese Trade Agreement? If the Minister is aware of these facts, will he arrange for a further examination of the points submitted by the industry, so as to ensure an adequate measure of protection?
– The honorable member for Bass, who, I acknowledge, interests himself in this matter, has premised his question on a declaration that certain matters are matters of fact. They are not acknowledged to be matters of fact. The industry has a panel of experts through which it can be kept fully informed of the trend of importations from Japan, not only of the actual imports, but also, with a general knowledge of applications for licences, of prospective imports. The industry applied for special protection as an emergency measure. The case was immediately referred to Mr. McCarthy, who is the advisory authority on these matters and is acknowledged by all parties to be not only highly competent, but also completely impartial. Mr. McCarthy has made a finding, after a meticulous examination of the whole industry, in which he states quite clearly that whatever problems the industry is encountering at present are not problems arising from anything that has occurred because of the Japanese-Australian trade treaty. Mr. McCarthy has recommended, therefore, that no emergency action should be taken, and the Government has accepted his recommendation.
Reserve Bank Bill 1957.
Commonwealth Banks Bill 1957.
Banking Bill 1957.
Banking (Transitional Provisions) Bill 1957. Audit Bill 1957.
Commonwealth Employees’ Furlough Bill 1957. Crimes Bill 1957.
Gold-mining Industry Assistance Bill (No. 2) 1957.
Income Tax and Social Services Contribution Assessment Bill (No. 2) 1957.
National Debt Sinking Fund Bill 1957.
Northern Territory (Lessees’ Loans Guarantee) Bill 1957.
Officers’ Rights Declaration Bill 1957.
Re-establishment and Employment Bill 1957.
Sales Tax (Exemptions and Classifications) Bill (No. 2) 1957.
Debate resumed from 13 th March, (vide page 285), on motion by Sir Arthur Fadden -
That the bills be now read a second time.
– When the measures that are now before the House were originally introduced, on 24th October of last year, the Leader of the Opposition (Dr. Evatt), on behalf of the Labour party, made a certain declaration. I intend to read that declaration, and to reaffirm, on behalf of the Labour party, that we take the same stand now as we did then. What the Leader of the Opposition said was this -
The Labour party is irrevocably opposed to the Government’s plan, which is clearly to divide and weaken the Commonwealth Bank, and procure its dismemberment as the supreme financial institution of the Australian people. The most vicious feature of the legislation is that the private banker? have combined to cripple the CommonwealthBank, to aggrandize their own profits, to get a domineering interest in the new reserve bank and, finally, to destroy the Commonwealth Trading Bank.It is these powerful financial interests that dominate the present Government, which shows complete indifference to public interest and public opinion as well. I repeat that Labour will fight all the way against the Government and its masters, who are the private banks.
We intend to continue to fight all the way. With every means at our disposal we shall resist the passage of the fourteen measures that are before us. Although they are fourteen in number, only four of them are of any great significance.
I think I should remind the House of the 1945 legislation, which we regard as a landmark in connexion with banking in Australia, because it established for the first time that banking is so much charged with public interest that, rather than being a private preserve, it should be adequately controlled, not in the interests of private profit but so as to ensure the best possible disposal of the economic resources of the Australian nation. These words were written into the banking legislation, as a result of the Commonwealth Bank Act of 1945, and they have appeared, for a good number of years now, at the commencement of each annual report of the Commonwealth Bank-
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the Bank, will best contribute to: (a) the stability of the currency of Australia; (b) the maintenance of full employment in Australia; and (c) the economic prosperity and welfare of the people of Australia.
I repeat those broad objectives - to administer banking in this country in such a manner as will best contribute to the stability of the currency of Australia, the maintenance of full employment in Australia,, and the economic prosperity and welfare of the people of Australia. When these measures were debated in this Parliament some four or five months ago, the Prime Minister (Mr. Menzies) gave us his defence of the legislation. He said, “These things will not weaken the banking structure in Australia “. I suggest that that is a negative approach for a government to take. If all that can be said is that these things will not weaken the banking structure, it seems to me that there is no case for this legislative change. If we ask ourselves whether banking policy has, during the past few years, achieved the avowed objectives of stability of the currency and the preservation of full employment, we must come to the conclusion that in these respects the banking system in Australia has failed. Inflation, with all its terrible effects, has been rampant since 1951, and the maintenance of full employment is no longer certain, as was amply demonstrated during a debate in this Parliament a few days ago. We suggest, therefore, that, rather than approaching the matter from the question of whether or not these measures weaken the structure of banking, the Government should adopt a more constructive approach, if legislation is regarded as being necessary, in order to strengthen the control which the public, through this Government and the Treasurer, is able to exercise over our great financial institution. No one can suggest that during the past four or five years the private banking institutions of Australian have suffered a decline. In fact, if their balancesheets are examined it will be seen that they are making greater and greater profits, than ever before in Australia’s history^
Between the time when the banking” legislation was defeated in December last and the meeting of the Parliament recently, the private- banking system has been given a new present, and we have not heard one word in this House officially from the Treasurer as to why this was done. I refer, as I referred the other evening, to the increase in the rate of interest payable on special accounts, because the special accounts, as we shall see shortly, are among the matters that are dealt with in one of the bills before us. At the moment the total amount of these special accounts, after the recent release of £15,000,000, is £325,000,000 in round figures. Of that amount £280,000,000 has been drawn off as part of the credit control machinery from the stream of activities in the hands of the private banks. Formerly, until 1st January this year, the private banks received only 5s. per cent, interest in respect of that £280,000,000; but from 1st January they are to be paid 15s. per cent, interest. That means that they are to receive i per cent, additional income in respect of £280,000,000 deposited at the moment with the central bank. The effect of that is an immediate increase in the earning power of the private banking system over a period of twelve months of £1,400,000,000 in round figures. Coupled with that is the recent announcement that some of the special accounts are to be unfrozen, and so far an amount of £15,000,000 has been so treated. A greater sum may be unfrozen later on. Thus, instead of earning interest on thai £15,000,000 at the new rate of t per cent, payable on money held in special accounts, the banks will be able to invest this at an average rate of 5i per cent. - sometimes at 5 per cent., sometimes at 51- per cent, and sometimes at 6 per cent. These two changes - the increase of the interest rate and the release of £15,000,000 from special accounts - will mean a net increase in the earning capacity of the private trading banks of £2,000,000 annually. lt is true that the two decisions were separately taken - that the increase in the interest rr.te on special accounts was given two or three months ago and that the decision to release some of the special accounts
Was taken only a week ago. It may be that each of the decisions is independent but, if that is the case, there is at least room now for modifying the increase granted and the overall amount payable in respect of special accounts. I suggest that in any case the Treasurer ought to have at least given in this House, the House of -Representatives of the Parliament of Australia, an explanation of why the increased amount was decided on. Too often, under this Government, important administrative acts for which the Government is ultimately responsible, are taken without our hearing about them officially in the Parliament. We read about them in the daily press. In fact, on this occasion, there was very little publicity anywhere in the press of Australia about the increase of the interest payable on special accounts. I suggest that that indicates the unholy line-up there is in the community .so far as the private banking system is concerned.
We of the Labour party established the Commonwealth Bank originally as a competitor of the private banking system, and since its establishment its functions have been modified, because it is recognized now in every modern community that control over the supply and issuance of credit is ultimately the responsibility of the government of the day. What final form the machinery takes in each country is largely conditioned by circumstances in that country.
On the last occasion that this legislation was before us we had the spectacle of very learned deliverances from honorable members on the Government .side who supposedly knew all about the business of banking. They were trying to rationalize the steps taken by the Government, trying to make us believe that these are matters of black and white. They are not matters of black and white at all. They are questions of degree which admit of differences of opinion. They are matters to which effect should be given only after a substantial examination of all the circumstances has been made and compelling reasons brought forward in support of any change. That was not done with the present legislation.
On this second occasion the Treasurer was very brief in his speech on the legislation. But if his speech on the last occasion is read carefully it can be seen clearly that he stated that the only people in the community who wanted changes in the banking structure were the private bankers themselves - and the private banks, after all, must inevitably be considerable beneficiaries of the banking system as it operates in Australia. We say that the private banks had no warrant to demand the changes that they have demanded, and which are intended by this legislation.
I shall outline briefly the four principal bills. It is true that there are fourteen bills in all, but ten of them largely deal with alterations of definitions. The first of the bills is the Reserve Bank Bill. This bill seeks to create a new institution to perform what are known as central banking activities in Australia. We have a central bank in Australia at the moment, which is part of that great institution, the Commonwealth Bank. Nobody who critically examines the operations of that bank can claim that the Commonwealth Bank has used any of its other functions and powers to abet or in any way influence adversely its central banking activities; nor, on the other hand, can it be truly said that the Commonwealth Bank, as the central bank, has leaned in the direction of its own child, the Commonwealth Trading Bank. That has never been seriously believed by anybody who honestly examines the situation. But the reason given for the creation of this new bank to exercise central banking functions is the lack of cooperation between the Commonwealth Bank and the private trading banks. Now, if there is lack of co-operation, on whom ought the indictment to fall? Surely the sinners in this matter are the private trading banks which, instead of allowing the Commonwealth Bank to exercise properly its centra] banking functions have, at every stage where possible, endeavoured to impede it.
Does this bill mean that the Government is satisfied that although co-operation has not existed in the past it will exist in the future merely because of an alteration of the law of the land? Do people to whom you capitulate respect you afterwards as having strength? I suggest that there is no guarantee that in the future there will be any more co-operation from the private banking system than there has been in the past.
The private banking system operates on criteria entirely different from those on which the Commonwealth Bank operates. It does not operate only on the basis of providing service. It operates on the basis of earning a profit from the services it provides, and the very nature of the financial machinery to-day makes it extremely doubtful whether profitmaking ought any more to be a function of banking. It is inevitable, while we have the system as it is, that in order to exist the private banks must borrow money at one rate of interest and lend the same money at a higher rate of interest; but I think a very good case can be made out at the moment that many of the charges associated with private banking in this country ought to be separately reckoned and not made to depend on the interest rate, which is variable. The interest rate has important repercussions on the whole economic destiny of the people.
If the Australian banking system has failed in anything over the last few years, it has failed to use the central banking machinery to control the interest rate. In consequence, we have the spectacle of hire-purchase companies offering rates of interest as high as 10 per cent, for three years. They, of course, lend the moneys invested with them at even higher rates - admittedly to perform a necessary service by providing for the production and distribution of goods. But that seems to me to be a most absurd way of going about it. When the Government is asked what it proposes to do to restrict the excessively high interest rates on hire purchase, it says, “ We cannot do anything. It is a matter for the States “. It wipes its hands of the matter. The State governments say “ We are not in a position to do anything either”.. As a result, the thing has snowballed to such proportions that it has become a serious economic problem in this country. We suggest that it is a problem that could be effectively tackled if a government really wanted to do something about it. If, as it may be, an alteration to the Australian Constitution is needed-
– The honorable member is coming to it now.
– I do not say that an alteration to the Constitution is needed, but if it is, the Government would have done much better to propose such an alteration than to thrust before us legislation such as this, which will not achieve any practical results, and will not remedy the very serious economic ills that are generally apparent in Australia to-day. The Government is merely dodging the main problems, and is doing as the private banking institutions want it to do. It has introduced unnecessary measures, which, as the Prime Minister (Mr. Menzies) has said, will not weaken the banking structure. However, there are serious weaknesses in the banking structure about which the Government proposes to do nothing. “ Nothing whatever “ may be regarded, in a year’s time, as the epitaph of this Government. There have been so many splendid opportunities for effective action that it could have taken, but it has not taken them for fear of offending the sacred cow of private profit or individual enterprise, whichever term may be chosen, despite the fact that thousands of people are already walking the streets looking for work, and hundreds of thousands have seen their savings eroded by inflation, which this Government has allowed to go unchecked over the last six or seven years of its term as the supposedly responsible caretaker of the Australian economy.
To get back more particularly to the measures now before the House, Mr. Speaker, the first of them is the Reserve Bank Bill 1957, which will create a separate institution to do the work that could be done by an already existing institution if the Government wished. The second measure is the Commonwealth Banks Bill 1957, which provides for the dismemberment of the great institution known to us as the Commonwealth Bank of Australia. The people’s bank is now to be handed over to a new body of outside people. Again, if the Government were looking for weaknesses in the administration of banking, it need only think over the experience of the United Kingdom six months ago as a result of so-called leakages of information about the proposal to increase the bank rate there. What was the problem there? It was that some individuals, who were supposed to have public responsibilities, had at the same time private responsibilities, and there were occasions when the public and private responsibilities clashed. It seems that the greatest measure of consideration was given by those so-called disinterested gentlemen to the private point of view. That is the kind of conflict of interest that will be able to intrude itself into the administration of the Commonwealth Bank in future if these measures become law. If people occupy positions of public authority and, at the same time, have private obligations, it is inevitable that, from time to time, information that is supposed to be secret, or to be derived from only one source, will be used to advantage in a private capacity.
I suggest that the Government, which thinks that this sort of thing will not weaken the banking structure, should carefully consider the very full report on the alleged disclosures of information about the raising of the bank rate in the United Kingdom made by what was known as the Parker tribunal. The minutes of evidence taken by that tribunal, which totalled some 300 pages, indicated the tortuous reasoning adopted sometimes by individuals when faced with a conflict of public and private interests. If such a conflict is likely to occur, the best thing to do would be to divorce the Commonwealth Bank entirely from control by persons with private interests. The proposed Commonwealth Banking Corporation Board, however, will make the bank subject to control by persons with private interests. The old argument, of course, is that such people will be disinterested and independent. Independent of what, and independent of whom? An individual can never be independent of his own intimate responsibilities. The Commonwealth Bank has functioned magnificently for more than 40 years, but the Government now proposes to inflict upon it administrative machinery that is likely to paralyse its activities in the various fields in which it functions.
As a sop to the Australian Country party, the Government proposes to combine the present Mortgage Bank Department and Industrial Finance Department, and make them into a Commonwealth Development Bank.
– What is wrong with that?
– I ask the honorable member: If there is a need in the Australian community for a development bank, has it suddenly emerged during the last few months, or has it existed for a great part of Australia’s history? I suggest that Government supporters should read the very valuable reports on agriculture made during the 1940’s by a committee under the chairmanship of Professor Wadham, the exact title of which I cannot recall for the moment. That body pointed to the lack of provision of long-term finance for agricultural activities. This Government has had more than eight years since 1949 in which to remedy the deficiency.
The functions that it is claimed could be performed by the proposed development bank could be performed by the Commonwealth Bank under the existing Commonwealth Bank Act and Banking Act. If there is any doubt about the bank’s powers to perform those functions under existing legislation, the bank’s authority could be made certain by a very simple amendment of the existing legislation. There is no need to graft such a proposal on to the Commonwealth Banks Bill 1957 in order to achieve the objectives that it is claimed will be achieved by the proposed Commonwealth Development Bank. There is a great need for agricultural development in Australia, and it is a good thing that the criterion to be adopted is, not private profit, but confidence in the ability of a settler to make good, given an opportunity. That is an excellent criterion in banking matters. But it may be found already in Labour’s 1945 legislation, which made provision for the Rural Credits Department and the Industrial Finance Department of the Commonwealth Bank. If the Government really wanted to promote agricultural development, it could do so under existing legislation.
My time, unfortunately, has nearly expired without my being able to deal with two other matters, particularly the banking legislation which alters the method of controlling the special account machinery as it has operated in this country for a good number of years. The special account machinery was weakened in its efficacy by an amendment made by this Government in 1951 or 1953 - I am not quite sure of the year - and this legislation will, in my view, further weaken that machinery. The test ought not to have been whether it was a weakness, but whether the structure of banking in Australia could be strengthened.
We believe that banking is so intimate in its operations that it demands a greater and greater measure of public control. If private institutions are operating in the banking field, there will always be difficulties of diplomacy and difficulties of management, but it is the job of the Government, if it feels that there is a weakness, to consider not only the point of view of the private operator in the field. The people who ought to be of first concern are the public who use the banking system, as they must use it, to deposit their money, and those who go to the banking system to get credit to enable them to perform the various economic activities in which, from time to time, they are called upon to engage. There is not any cut-and-dried solution to this problem, as I said earlier, and I think it is well summed up in a statement by Lord Pakenham, reported in the “ Bankers Magazine “, of April, 1 956. It is as follows: -
The problem … is how to find a method of inducing the banks to adjust their policies to the credit policy of the Government applied through the Bank of England, while leaving them free to operate on commercial lines and to compete freely with one another.
I suggest adapting the same argument to the Australian circumstances. While we have private banks, we will have difficulties, but the Commonwealth Bank, as an organ of the Government, should always be able to impose its will upon the whole banking system in the interests of the community as a whole, and not only a section of the community. Therefore, Mr. Deputy Speaker, we affirm, as we did before, our objection to these measures, which serve no good purpose and which can only weaken the economic structure of Australia.
– Order! The honorable member’s time has expired.
.- I regard it indeed a great privilege to follow the honorable member for Melbourne Ports (Mr. Crean). Although the adjournment of the debate was obtained by the Leader of the Opposition (Dr. Evatt), and another honorable member opposite may receive the call for the glamour hour of 8 o’clock, the really informed spokesman of the Opposition has been relegated to the tea interval. This, I suggest, is somewhat akin to the attitude of the Opposition as a whole to these banking measures.
When the bills related to banking were before this House during the last session, I listened with the greatest of care and attention to the speeches of honorable members opposite. Those speeches that I did not hear I read subsequently in “ Hansard “. Of all the contributions to the debate made from the other side in connexion with this legislation - however misguided they may have been - the contributions by the honorable member for Melbourne Ports, the honorable member for Yarra (Mr. Cairns), and one or two others, were quite outstanding in a vast wilderness of words. I submit that we have just been treated to informed argument by an informed man who thinks about these problems, and that at 8 o’clock to-night - the choicest broadcasting hour - the listening public will be treated to the usual nonsense delivered on the assumption that the great Australian public cannot be induced to understand these issues. I have the greatest respect for the intellect of the honorable member for Melbourne Ports. I hear an Opposition member ask, “ Who cares? “ No one in the Labour party cares about the intellectual status of its representatives, or the order in which they are to speak. Let us note that the Opposition say that this legislation is being pushed through the Parliament with indifference to public opinion. It is reasonable for honorable members on this side to assert that the results of several elections made quite clear what was the main body of Australian opinion in this matter.
The honorable member for Melbourne Ports pointed, with a degree of justice, to the 1945 landmark in banking. After all, up to that point no banking legislation had been introduced for many years, and the tide of public .opinion, informed and otherwise, had moved on. The honorable member asserted that three main principles were enshrined in that legislation, namely, that central banking should be adjusted towards a stable currency, towards full employment, and towards the economic welfare of the community. Those three principles,. enshrined in the 1945 legislation, have been entirely subscribed to ever since by this Government.
The honorable member said that the banking system failed, and that there had been inflation. I might say, Sir, that during the first two years of this Government’s term of office the main inflation that was experienced was largely a result of the Chifley chickens coming home to roost. Any one who thinks that inflation follows immediately the acts of a government reads the economic indicators in an entirely false manner. There is a time lag in all these matters, which the public would be well advised to watch. The public should watch particularly the advisers both inside the Parliament and outside it who have suggested a solution for the present very curious economic development. A solution is not so simple as the newspapers would have us believe, nor as the Opposition thinks; the factors that are now being brought to bear could by no means be easily solved by a simple expansion of credit. Time alone will tell whether that is the case, because if informed people brought pressure to bear, a modern government would certainly expand credit. But those prophets of unemployment during the last few years should learn that the historical problems of mankind cannot be solved by entirely novel methods.
The honorable member for Melbourne Ports also stated that the private banks had recently disclosed increased profits. So, indeed, has the Commonwealth bank, and so has the whole of Australia! That was rightly so, because the private banks, the Commonwealth bank, and all of the other main institutions of this country should prosper when Australia prospers; the reverse would be the case in times of depression.
– They did all right during the last depression.
– I have yet to know who does all right in a depression apart from those, some of whom, of course, sit on the front benches opposite, whose own unemployment problem is soluble only - on present indications - by the violent unemployment of others. Leaving them aside, very few people in this country wish to see a depression or would benefit by it. Least of all does the Government wish to see depression. There is no doubt whatever that the Government and all other responsible authorities in this country will do their utmost to prevent the development of any depression here, despite the great difficulties, quite beyond our control, which may well come from overseas.
The honorable member for Melbourne Ports referred to the 15s. per cent, on special accounts. For a time he seemed, in passing, almost to regret that the Commonwealth Bank had unfrozen a portion of the special accounts. In relation to what he and his fellows have been saying about expansion of credit, let it be remembered - it is overlooked in some quarters - that those unfrozen deposits will, in their effect on economic life and the advances of the banking system, be multiplied to a very large extent. It surprises me indeed that the unfreezing of £15,000,000 and the increase by 5s. to 15s. per cent, should be regarded as a major issue. In considering this great question of altering the permanent structure of the Australian banking system, the Opposition seems to me to be searching for something adverse when in fact there is very little to say against the proposals.
The overall responsibility of government in this sphere of credit creation is by now widely acknowledged, but what surprises me are the arguments advanced by the Opposition which suggest, by implication though not expressly, that this banking legislation will not increase the powers of control of the central bank over the trading banks. At least, informed members of the Opposition such as the honorable member for Melbourne Ports and the honorable member for Yarra have not, so far, expressly made that suggestion. The special accounts system which now operates permits the central bank to call up 75 per cent, of the increase in trading bank deposits since October, 1952. That surely is not nearly as strong as the proposed provision that 25 per cent, of all deposits may be required by the central bank and that on 45 days’ notice that figure may be increased to any level deemed advisable by the central bank. I have yet to hear any denial from the Opposition side that these proposed powers are in fact very much stronger than the present powers. They will enable the central bank to control the whole banking system in a way which has not been possible hitherto.
– They are much stronger, too, than the Chifley Government’s formula.
– They are certainly very much stronger. In fact, at the moment, it is open to any bank to take a flexible view of its own ratio of liquid resources. True, there is the appeal of the central government to keep to a certain level of liquid resources, but let it be admitted quite freely that, in practice, some banks have run down their liquid resources to a far lower ratio than would ever be permitted by a proper central bank armed with adequate powers. That will not be possible in the future. The more responsible of the trading banks may well say that this measure is to their advantage because in future the irresponsible will be brought into line with the more responsible, and the more responsibly minded comprise the overwhelming majority of the Australian trading banks. The new system will tie them up much more closely than does the existing legislation.
Therefore, one would have thought that, on genera] grounds, the Australian Labour party would at least have gone so far as to say, “ This is an improvement, from our point of view, in controlling the whole banking system in the national interest “. But no, every argument that comes forth suggests that this legislation is wholly in the interests of the private banks. If you, Mr. Deputy Speaker, were a trading banker would you like to see established a wholly new banking corporation under a board, free of domination by central banking considerations, which will not be obliged to say to its staff. “ Restrain yourselves because credit is being expanded too far. In the interests of the whole we must confine ourselves within certain limits “? To-day, we have a board which is dominantly a central banking organization.
Would you, Sir, if you were a private banker, welcome the establishment, under statutory auspices, of a board which was not part of the central bank, and the whole purpose of whose being was to expand and make prosperous the business of a government institution? I find the objections to this proposal indeed hard to comprehend, apart from the fact that, instead of a Commonwealth Bank Board which hitherto, to give it its due, has been seised with overall national considerations, there is now to be substituted a board which will have direct access to the government and which has amongst its members the Secretary of the Treasury. A government may, for better or worse - we cannot foretell the nature of future governments - be entirely disinterested in central banking principles or a sound currency. It may be interested wholly in expanding the interests of the government’s bank at the expense of everybody else. Would you, Sir, prefer a government institution, with all the advantages and privileges that such institutions enjoy, in direct contact with the Treasurer of the day, to the present arrangement, whereunder the central bank is also a trading bank engaged in all kinds of other widespread activities?
The idea that these measures are in the interests of the private banks is quite erroneous. This leaves aside altogether the question of the Development Bank, which the honorable member for Melbourne Ports said was apparently a good thing and which was established as such in his mind in the 1940’s, following Professor Wadham’s statement, but about which the Chifley Government chose to do precisely nothing. The proposed Development Bank, provided it acts within the central bank’s conception of what is in the interests of the country overall, has a very valuable contribution to make. From our various contacts those who are closely acquainted with these matters are all aware that there are many points at which the banking system does not meet all present-day requirements. After all, we are a young and growing country, and our banking system has, in fact, been inhibited by political and other considerations, including rigid interest rates and other kinds of political nonsense, which have restricted its proper working and have prevented it from expanding into new spheres as economic development proceeds. So, we have had growing up a number of other financial institutions, amongst which are the hirepurchase organizations. Tt may be said that some of their interest rates are excessive and some of their practices are undesirable. That is true, but those are not matters with which this Parliament has any power to deal. However, do not let us overlook the fact that the hire-purchase system, as such, is the poor man’s banking system. It is through that means that large numbers of people finance their purchases of the things they need. The rates of interest charged may be high, but they are not necessarily too high -having regard to the expense and risk involved in providing the services required. We on this side are constantly chided about the evils of hire purchase. Let me point out that, in part, the growth of the hire-purchase movement in Australia is a product of the rigidity imposed on the banking system because of the influence of political ideas instead of economic ideas.
We on this side have it continually drummed into our ears that interest rates are high. In my opinion, one of the worst features of the regime of the Chifley Government - I acknowledge the great achievements of that Government in some directions - was the attempt to pin the longterm interest rate in Australia to 3i per cent. A long-term interest rate of 3i per cent, might have made sense if the Government had been able to dam up all other business and prevent it from taking place, so that the limited amount of capital becoming available from savings could be directed, not by the ordinary channels of supply and demand, but by governmental edict. For a time in the immediate postwar period this policy of the Chifley Government with respect to the long-term interest rate may have made a certain amount of sense, but it did not make sense in the long-term view. This country is short of capital. It needs capital for developmental projects in every field, governmental and private. If capital is short, as it is now, capital must be given its proper reward in order to encourage, directly and indirectly, savings by the people. It is those savings alone which can make an adequate volume of investment possible.
– That is an old tory argument.
– Call it what you like. There are many things in life which change surprisingly little over the years. The fact is that water continues to flow downhill, as it did in the days of Archimedes 2,000 years ago. Water still finds its own level to-day. Any attempt to canalize savings or manipulate the economic system which does not recognize certain basic factors - however old and give them what label you like - is doomed to disaster.
The great advantage of this legislation is that it enshrines the basic principle that whoever decides the volume of credit which it is desirable to have from time to time shall be freed entirely from the taint of commercial considerations. The making of decisions as to the volume of credit that shall be available from time to time is one of the most important functions in this country. That the person making the decisions shall be free from the influence of commercial considerations is basic to our system. It is often said that we have the Commonwealth Bank, which is the people’s bank, and that if we split it we shall bring upon ourselves all kinds of woe. In fact, what is proposed now is that we shall take out of the Commonwealth’ Bank a relatively small handful of highly qualified and highly competent people, giving them the power to add to their numbers the staff they require. We propose to say to those .people, “ You will- be the controllers of the banking system. These are the lines on which you will proceed. They are lines known to everybody. Do your best. In your dealings with other bankers, you will not be continually faced with the charge that while you tell them to do so and so to-day, you took certain accounts from them a week before “.
It is true that people in the centre of officialdom assert from time to time that their views on these matters are completely objective, but the Commonwealth Bank is competing with the private banks. Competition is the life-blood of the banking system. In, say, Adelaide or Brisbane, the Commonwealth Bank man in the morning is a competitive banker. He is, very rightly, trying hard to take your account from another bank by giving you a better service. But in the afternoon, with his head not entirely empty of the figures and other details he has learned during the morning, he puts on the cap of the central bank and says to other bankers, “ Now I am a central banker; you will do this and that “.
That is what this legislation aims to remove from our banking system. In law, is is regarded as essential that the judge and counsel for a plaintiff shall not be one and the same person. In legal proceedings, those functions are discharged by different people. It is not strange that we in Australia should seek to separate the central bank from the trading banks. That has been done in every country of the world, where, for historical or other reasons, a central bank had attached to it commercial functions, as did the Bank of England. Let us take a sane and sensible example from a country which we would not regard as being highly developed. In Egypt, it was found that commercial and central bank functions did not mix. They never have mixed. That is the central principle enshrined in this legislation, which in that respect, as in all other respects, is designed to promote the national interest, certainly not that of the trading banks.
– The honorable member for Wentworth (Mr. Bury) is a man from whom we Gould have expected some common-sense arguments on banking. He has had a distinguished career as a banker with the International Bank, having been appointed to that position by the person whom he now condemns. Towards the close of his speech, the honorable member made the statement that it was not proper to have a central bank conducting at the same time trading bank activities. The honorable gentleman has a distinguished reputation as a banker, but I should like to refer the House to the views of a royal commission which spent a considerable time in examining all aspects of banking. I shall quote the decision of the Royal Commission on Monetary and Banking Systems held in 1’936. By unanimous decision the commissioners included in their report the remarks which appear in paragraph 521. On the question whether the central bank should be divorced from trading bank activities, the royal commissioners said: -
The present structure of the Commonwealth Bank, consisting as it does of a central bank with trading bank powers and a savings bank, is, in our opinion, essential to the efficient exercise of its functions as a central bank.
So much, therefore, for the opinions of the honorable gentleman as compared with the considered opinion of a royal commission which did not have to play up to the private trading banks as do honorable members on the Government -side for .reasons which I shall give in a few minutes.
I wish to deal now with the nature of the proposal that is before the House and to pose the question, “ Just what is this legislation designed to do ?” Then I shall ask the Government to tell me, if it can, who asked for this amazing piece of machinery to be put into operation, because unless the Government can give a valid explanation as to who wants the legislation introduced and why, it has no right to expect the Parliament to pass these bills. The proposal is this: There is to be established a Commonwealth Banking Corporation which is to have complete control of the running of the Commonwealth Trading Bank, the Commonwealth Savings Bank and a new bank to be called the Commonwealth Development Bank. But one remarkable thing about the proposal is that the Government takes special care to see that the members of the corporation which will control the affairs of the three banks know nothing about banking. To make certain that those banks will not succeed and will not have the benefit of banking experience from those who control them, the relevant bill carefully defines the qualifications of those who can sit on the corporation.
The bril provides that the corporation shall consist of a managing director, who, according to reports, is likely to be a member of the Australian Country party. Assisting him will be somebody called the assistant managing director and the Secretary to the Treasury. Then, .to make sure that, if these three men know something about banking as a consequence of indirect association with banking activities, they can be outvoted by eight other persons who are specifically prevented from being persons who know anything about banking activities, the bill provides that not one of those eight persons Who will constitute the majority on the Banking Corporation shall be a person employed by the Commonwealth Trading Bank or any of the auxiliaries of that bank. Nor is any of them to be a person - and I agree with this aspect - who has anything to do directly with the private trading banks. However, there is nothing to prevent the Government from appointing a person who is indirectly associated with the private trading banks, as it has already done with the Bank Board which is now in existence and controls the Reserve Bank and which will continue to operate as at present.
– Who would the honorable member put on the board?
– Nobody, because I do not believe in the Commonwealth Bank Board at all. I agree with the opinion that has been expressed by the royal commission on banking that there is no need, first of all, to have a separation of the banks and that, moreover, there is absolutely no need to have a bank board at all as experience during the second world war and immediately thereafter showed. As Mr. Chifley pointed out time and time again, what we should have in Australia is a people’s bank directly responsible to the people’s parliament. Therefore, all that is necessary is to have a governor of the Commonwealth Bank who understands banking and who is himself directly responsible to the government of the day which, in turn, should be responsible to the people who put it in office.
– Does that mean one bank?
– One Commonwealth Bank; of course that is what it means. One Commonwealth Bank controlling central bank, hire purchase, savings bank and trading bank activities. That is the aim of the Australian Labour party and we believe that that is the only efficient way to handle the affairs of the people’s bank.
Now let me turn again to another strange ramification of the new proposal. Not only does the Government propose to split the Commonwealth Bank’s activities into three distinct segments but, in addition, it has made sure that each of those three banks shall individually be tied down completely to the politically appointed board to be known as the Commonwealth Banking Corporation; because over each of the three branches is to be appointed what is to be known as an executive committee of three men, all of whom will be drawn from the eleven men who are to constitute the Commonwealth Banking Corporation. In considering this aspect, I ask honorable members to remember, as I said earlier, that the Commonwealth Banking Corporation personnel are to be debarred from knowing anything about banking except through indirect commercial links that they may have had with private trading banks throughout the Commonwealth. Those three men who, in the terms of the bill, are to know nothing about banking are the men who will have the right to direct the three distinct departments of the Commonwealth Bank.
– Is the honorable member connected with banking?
– No, I am not connected with banking, and I do not think that I should be appointed to control the Commonwealth Bank. That is the very point I am making. I do not believe that any member of the Australian Country party should be appointed either to control the bank. People who do not know banking should not be appointed to control banking activities.
The worst feature of this proposal is that the manager of each of the three divisions of the Commonwealth Bank - that is to say, the Trading Bank, the Development Bank and the Savings Bank - is to be prohibited specifically by this legislation from being a member of the executive committees which are to control the Commonwealth Savings Bank, the Commonwealth Trading Bank or the Commonwealth Development Bank. What I should like to know is this: If the manager is to be prohibited from sitting on the executive committee of three which is to control the Commonwealth Trading Bank, what are to be his powers and functions? As the Government now proposes that the executive committee shall run the every-day affairs of the bank, what is to be the function of the manager? The whole of the policy-making and the general running of the bank is to be vested in the board and executive committee.
There is no doubt whatever that this is an attempt to put the Commonwealth Savings Bank, the Commonwealth Trading Bank and the Commonwealth Development Bank at a distinct disadvantage with, the private banks of Australia, because the private banks are not to be hamstrung as is now proposed for the three branches of the Commonwealth Bank. The managers of the private banks are not controlled by an executive committee consisting of men who are specifically precluded from knowing anything about banking. On the contrary, the managers of the private banks have the distinct advantage now of being able to carry on their activities without the hampering effect of an executive committee such as that which will stand over the managers of the three branches of the Commonwealth Bank’s activities.
I ask honorable members to try to imagine, if they can, the feelings, the attitude and the efficacy of the manager of any of these three banks who knows that every minute that he functions, he has an executive committee of three standing over him and in a position to direct him as to what he shall do, even though the directions may run counter to normal, safe and proper banking practice. That is what will happen under the proposal that is now being considered by the House. I should like the Treasurer (Sir Arthur Fadden) to tell us, if he will, why he has specifically precluded the manager of each of the three branches of the Commonwealth Bank from sitting on the executive committee that will control the respective branches of the bank’s activities. If he can give us a logical reason why the managers have been precluded from sitting on the executive committees which will control the affairs of their banks, I shall be prepared to support the bill. I will go as far as to say that. But the right honorable gentleman cannot give a logical reason because this proposal, like others that he has put forward, is without logic and should be condemned for that reason.
What is the purpose of the legislation that we are now considering? Has the Commonwealth Trading Bank asked for it? Has the central bank asked the Government to take this action? Have the officers of the Commonwealth Bank asked that this action be taken? Has the public asked for it? The answer to all those questions is an emphatic “ No “. There has been no demand by the public, by the officers of the banks, by the Common-, wealth Bank or the Central Bank for the action that the Government now contemplates. Can the Government truthfully say, on the other hand, that the Commonwealth Savings Bank has failed? Can it say that the Commonwealth Trading Bank, the central bank or any other activity of the Commonwealth Bank has failed in any way? Of course not! The reason for the Government’s action is not that the bank has failed, but that it has been too successful, and the private trading banks fear the effect which the Commonwealth Bank will have on their activities unless something is done to destroy it. And this is the legislation which will destroy it! This legislation, which appoints a banking corporation in the first place, which establishes three distinct executive committees, and under which the general managers, who ought to have some control and say in the banking activities of their respective departments are denied the right to make decisions or determinations with relation to policy, is the best and surest way of making the bank’s activities so top-heavy that the whole structure will break down under its own weight. That is exactly the Government’s aim. lt seems to me fantastic that the present situation is to be altered. At the present time, one can go into the Commonwealth Bank and transact Commonwealth Trading Bank activities, then go to another counter, if he wishes, and carry on savings bank business and then, if need be, and in the same building, transact business that has to do with the central bank but which, in future, will be reserved to the Reserve Bank. I believe that the existing system ought to continue. But no, this Government, so desperate is it to please the private bankers who support it, not only has decided to prevent the Reserve Bank officers from doing any work now carried out by the Commonwealth Trading Bank, but has gone further and says that the Reserve Bank officers are not allowed even to be housed in the same building as that occupied by the Trading Bank, the Development Bank or the Savings Bank.
It is nice to know that the private bankers are directly represented in the Parliament now by the honorable member for Parramatta (Sir Garfield Barwick), who, having accepted a brief from the private trading banks to appear before the High Court and the Privy Council on their behalf, is now in a position to come into Parliament and speak on their behalf. The private trading banks are extremely fortunate in that they are now able to get, free of charge, the services of one who is so well versed in constitutional law and ways of saving and protecting them. I have no doubt that as a consequence of the honorable member’s direct link with the private trading banks and the stranglehold the private trading bankers have over Liberal party campaign funds, it will not be very long before the private trading banks will be able to direct the Prime Minister to appoint the honorable member for Parramatta to the front benches. When that appointment comes, Jet us all remember the words I have spoken. Let us remember my assertion that the people who contribute to the funds of the Liberal party are in a position to determine not only Liberal party policy but also Liberal party appointments and promotions.
I do not think any one will hesitate to believe the words of the late Mr. Chifley in connexion with this and other matters. He was not prone to making wild and woolly statements about anybody or anything. For that reason, I propose to rely, not upon my own opinion of the private trading banks and the tremendous amount of money I personally know they put into Liberal party campaign funds, which has ensured slavish adherence by the Liberal party to the private trading banks’ interests, but upon the words of Mr. Chifley as reported on page 392 of volume 209 of “ Hansard “. He is reported as having said that the bankers subscribed hundreds of thousands of pounds to assist the antiLabour parties to defeat us at the previous election. I repeat, “ hundred of thousands of pounds “. It was not thousands of pounds, but hundreds of thousands of pounds. This was said by none other than Mr. Chifley, and neither friend nor foe would ever accuse him of being a liar. When honorable members opposite protested at his assertion, Mr. Chifley went on to say -
It is idle for honorable members opposite to deny .that .huge funds were made available to them-
And listen to this - because I can produce evidence to show the source of the funds, the amount subscribed and the purpose of the subscriptions.
I challenge any honorable member to rise in this chamber and say that Mr. Chifley was a man who could not be trusted. I challenge any honorable member to stand in this chamber and dare to say that Mr. Chifley would make a statement of that kind without being absolutely certain that what he was saying was correct. Of course it is true that the private trading banks have this Government so completely strangled that the Government is not in the position to resist the pressures put upon it by them! That is why the Government has brought down this legislation which it cannot justify and support by logical reasoning. After .all, you cannot support by logic something that is forced on you; and you have no alternative but to accept it. Having accepted money from the private trading banks, the Government has no alternative but to do exactly what the private trading banks direct.
I feel it important to refer, before my time expires, to hire purchase. The honorable member for Wentworth (Mr. Bury) seemed to suggest that hire purchase was a great thing in all respects. I agree that hire purchase is a good thing to the extent that it acts as a kind of poor man’s overdraft, and nobody on the Labour side of this Parliament is prepared to suggest for one minute that hire purchase should be abolished and the workers denied the right to obtain domestic appliances, motor cars and the like through the system. Our objection to hire purchase is not the fact that it makes money available but the exorbitant rates of interest charged, and the public are slowly but surely coming to our point of view.
The honorable member for Wentworth seemed to suggest that the private trading banks were forced into the hire-purchase field by the Chifley Government’s refusal to pay more than 3i per cent, interest on money that was borrowed by public loan. But how can the honorable member explain away the fact that the private trading banks have expanded into the hire-purchase field to a far greater extent since this Government has been in office, when the rates of interest have been high, than they ever did during the time of the Chifley Government, when rates of interest were low? Further, the rate of expansion in hire-purchase business is far greater to-day, when interest is rising to a record height, than ever it was when interest was low. That being so, the honorable member’s reasoning in that respect stands self-condemned.
I propose now to quote something else, and I hope members of the Australian Country party will listen to it, although, unfortunately, only two of them are sitting in the chamber.
– That is not true.
– There are two others, but they were asleep and I did not count them. Now that they are awake, I shall say there are four members of the Australian Country party in the chamber. I want those four members of the Australian Country party, who claim to represent the rural sections of the community, to listen carefully to the case that I will now present to the Parliament.
I have in my hand the original letters concerning the transactions about which I am about to speak. A grazier in South Australia, who on the admission of the Commercial Bank of Australia, owns a property worth £30,000, had a mortgage with the bank for £7,250 at 5i per cent, interest. As a result of the dry year just ended, the owner of this property was compelled to go to the Commercial Bank of Australia and ask for an overdraft of £2,000. He had good collateral, in addition to the £30,000 property. I emphasize that the £30,000 is the figure quoted in the carbon copy of the letter from the Commercial Bank of Australia to the hire-purchase company about which I shall speak shortly. It is not my estimate of the value of the property. The grazier also had a mortgage of £2,500 on another property, due for redemption in June of this year. He asked the Commercial Bank of Australia Limited for another £2,000. The manager of the bank told him, “ The Commercial Bank of Australia Limited has no money to lend, but I know a financial company which might help you. While you are here, write a letter to the finance company, send it off and see what eventuates “. He wrote the letter for the grazier stating: -
I wish to make a tentative inquiry as to whether you would be interested in advancing me £2,000 for a period up to two years against a second registered mortgage on my leasehold grazing property comprising 1,500 acres, valued at £30,000, on condition, of course, that the overdraft obtained at the Commercial Bank is limited to £7,250.
Then, other details are given. I will not read them because they would help to identify the person who gave me this letter. He received a reply from Lensworth Finance Limited in Adelaide, which said: -
We will make money available on first mortgage only. We will not make money available under any other circumstances. We would be prepared to consider taking a first mortgage for £9,250 repayable by monthly instalments over a period of seven years, and the interest for this advance would be at the rate of 7 per cent. flat.
That is not 7 per cent, simple interest, but a flat rate of 7 per cent., which is about 13£ per cent, simple interest. This man then sought the opinion of the Commercial Bank of Australia Limited as to whether he should be interested in this kind of proposition. This is the reply he received: -
We are pleased to acknowledge receipt of your letter and your advices are noted. It would appear that the company concerned has added interest, namely approximately £4,532, to loan, making a total of £13,782, which, divided into 84 monthly instalments, would be repayable at the rate of approximately £164 monthly. However, in the event of you desiring settlement at the end of, say, one or two years due to sale of the farm or other reasons, it is possible-
It is “possible”, that is all - that the company would allow a commensurate rebate of interest charges, and I would suggest that you call on them and ascertain if this is so and what the actual cost to you would be for the facility if settled at the end of, say, two years, as a guide. Whilst the cost would appear to be reasonably high-
They are the words - “ reasonably high “-
I would suggest that the same be judged in the terms of the degree of urgency in which the loan is required, together with the possible availability of loan moneys at improved terms and conditions.
That letter is signed by the manager of the Commercial Bank of Australia Limited. It is no use honorable members opposite saying that the private banks are not using pressure on their clients to compel them to enter into the hire-purchase field. It is monstrous that a farmer, who is struggling as a consequence of a bad season, due to no fault of his own or to bad management, should be compelled to go, cap in hand, to a private bank and to be sent by the private bank to a hire-purchase company, with the hire-purchase company insisting on taking over the private bank’s mortgage of £7,250 at 5i per cent., simple interest, so that it can charge a rate of 7 per cent. flat.
– Are the hire-purchase company and the bank connected?
– They are not connected officially, of course; they are too shrewd for that. But every one of the hire-purchase companies is indirectly connected with the private banks, if merely because the private banks are the bankers to the hire-purchase companies.
When the hire-purchase companies are short of money, the private banks approach their savings bank customers and say, “ You are silly to allow this money to remain in a savings bank account with us at the ordinary savings bank rate of interest. Why not transfer the money to one of the hirepurchase companies which are now offering 10 per cent, interest?” The customers say, “ Thank you very much. I did not know about this.” The bank then suggests that the money be made available to Custom
Credit Corporation Limited, Australian Guarantee Corporation Limited or some other company, directly controlled by the private bank. The hire-purchase companies never go short of finance because the private banks now encourage savings bank customers to invest their money in hirepurchase activities. This suits the private banks, because the demand for hire purchase to-day is so great that the only factor limiting a hire-purchase company’s profits is the amount of money available to it.
Let me answer at once the question whether hire-purchase companies need exorbitant rates of interest: The South Australian Co-operative Hire-purchase Company has proved that it can lend money on hire-purchase transactions at exactly half the rate now charged by the companies. The trade union movement in South Australia has established its own co-operative hire-purchase company. It is lending money for the purchase of secondhand motor cars at 4 per cent, flat, which is almost 8 per cent, simple interest; for the purchase of new motor cars at 3 per cent, flat, which is almost 6 per cent, simple interest; and for the purchase of domestic appliances at 5 per cent, flat, which is just on 10 per cent, simple interest. If the hire-purchase company controlled by the trade union movement in South Australia can do this, then we are entitled to ask why other hire-purchase companies cannot also lend money at a lower rate of interest.
I believe that the case against the private banks and against the Government is so strong that the Parliament should reject once and for all this atrocious piece of legislation. It is aimed specifically at destroying the Commonwealth Bank by making it top heavy, by preventing it from giving service of various kinds to its customers, all under the one roof, and by giving back to the private banks a distinct and unfair advantage over the people’s bank, which is operating so efficiently to-day.
.- The honorable member for Hindmarsh (Mr. Clyde Cameron) said that the honorable member for Wentworth (Mr. Bury), who spoke before him, should, from his background, be able to make a most constructive contribution to this debate. The honorable member for Hindmarsh was right; the honorable member for Wentworth made a most constructive contribution to the debate. That is more than can be said for the honorable member for Hindmarsh, both in terms of his background and in terms of the contribution he made.
One aspect of the Opposition’s case which has interested me - this came up particularly in the speech of the honorable member for Hindmarsh - is that not one single logical argument against the provisions of this legislation has been produced. Of course, the Opposition may regard as an argument the launching by speaker after speaker of a vicious and sustained attack on the private banks. It has become quite apparent to me that that viciousness extends not only to the private banks but also to private enterprise as a whole. I hope the people of Australia, who might have been lulled into a different impression by the way they have been soft-soaped in the last few years by the Opposition for electoral purposes, will take note of this viciousness. If anybody associated with, not only the private banks, but private enterprise as a whole as well, has any illusion as to what is likely to happen if the honorable gentlemen opposite ever come into power, he has only to look back over the pages of “ Hansard “ and listen to such vicious tubthumping efforts as the speech of the honorable member for Hindmarsh.
I wish to refer to only one matter mentioned by the honorable member. He attacked the setting up of boards and committees in the proposed Commonwealth Banking Corporation. He said how silly it is to take people who do not know anything about banking and put them on a board or an executive committee to control the experts. That sounds simple, but that is the way in which practically everything is done. That is why we have a Cabinet in this Parliament. It is well known - I know because he told me - that the honorable member for Hindmarsh hopes to be the Minister for External Affairs in the next Labour government. If one followed his argument in relation to the boards and executive committees of the Commonwealth Banking Corporation, one would pick as Minister for External Affairs, not the honorable member, but rather the permanent secretary to that department. That is an exact analogy to this matter.
Into the executive committees of the banking corporation will be brought the broad common sense and experience of people in various diverse activities to provide, not technical advice, which is handled by the experts, but “ know-how “ on a broad commonsense basis.
When I last spoke on this proposed legislation 1 gave it my complete support. Nothing has occurred in the intervening period to lead me to change my mind, certainly not the arguments put forward in the debate by the Opposition. Indeed, the events of recent weeks and months have under-scored the urgency of the proposed changes in the structure of the banking system. My remarks on the last occasion remain true. If our development is to proceed at the tremendous pace of recent years, our vital banking system must be brought into line with the maturer economy that has been created. The banking system which served our needs well over ten years ago is not necessarily fitted to serve our present needs.
The whole case of the Labour party in opposing these changes has been built on the opposite view. In effect, it says that what the late Mr. Chifley thought was good enough for 1945 must be good enough for 1957, and for ever. What a reactionary, puerile and tragic attitude to take!
However, it is not my intention to repeat the speech I made when this measure was last debated. My primary reason in rising is to speak about the proposed Development Bank. I do so partly because I do not believe the forward step being taken by the Government in setting up this institution is generally understood; partly because I wish to draw attention to the enormity of the damage that can be done by the Opposition in opposing this measure - and make no mistake about it, the Opposition is throwing it out with everything else in the legislation - and partly because I firmly believe that events which have occurred since the matter was last debated have made it vitally necessary to bring the Development Bank into being without further delay.
In speaking about the Development Bank I refer principally to that part of its functions which concerns the primary producing section of our economy. I am justified in doing so because it is principally in its application to rural industries that the proposed legislation makes major changes. With regard to secondary industries, no change will take place except that more money will be available for lending than under the present Industrial Finance Department of the Commonwealth Bank. The criteria on which funds will be made available to secondary industries will remain unchanged.
In deciding whether finance will be provided, the criteria will still be primarily whether the enterprise is likely to be successful or continue to be successful, and will not be related necessarily to the value of the security available. That state of affairs has applied to secondary industry since 1945 and will continue to apply under the proposed legislation.
The great advance contained in the measure is to extend that provision to rural as well as secondary industries. When, and if, this legislation is passed, the rural industry will be able to obtain finance for development purposes without worrying unduly about security in the conventional sense. In addition, of course, very much more money will be available for lending to the rural industry than under the set-up of the present Mortgage Bank Department of the Commonwealth Bank.
This is a great step forward because it helps to fill the gap that has been apparent in the credit structure of the rural industry for many years. It arises from the fact that unlike the secondary industries which can go to the market for their credit needs, the rural industry is almost entirely dependent on the banking system for outside developmental funds. That makes it all the more vital that the banking system should meet the whole range of the farmers’ needs.
However, we should not lose our sense of perspective. An enormous amount of the spectacular development in farm production that has taken place during this Government’s term of office has been financed out of income - development undertaken with the stimulus of taxation concessions, depreciation allowances and other measures introduced by the MenziesFadden Administration specifically for that purpose.
By 1956-57 agricultural production in Australia had risen to nearly 35 per cent, above the pre-war level. When the present
Government came into office production was lower than the pre-war level. What this increase of production has meant to Australia has been illustrated by events during the year. Australia commenced 1958 with overseas reserves amounting to £550,000,000, which, in turn, has made it possible to continue imports at a high level, despite a very large drop in our overseas income this year due to drought and a fall in world prices.
It is fair to say that the efforts of our rural industry in the past have provided a cushion, and the decline of our export income in this very difficult year has not affected the internal economic situation in Australia by one iota. This decline has not caused any unemployment this year, whereas ten years ago it may have done so to the extent of about 7 per cent, or 8 per cent.
As I have said, Mr. Acting Deputy Speaker, a large part of this spectacular increase of production has resulted from stimulation by the Government’s taxation measures, but there are some people who cannot undertake development out of income or benefit from taxation concessions. They are the people who have no excess of income over that required for the needs of themselves and their families. In the rural industries they comprise a considerable proportion of the total. When we consider that these people who cannot undertake development out of income are also finding it most difficult to obtain finance from the banks because they have not the security required, it is not difficult to see that there is a gap in the rural credit structure which is crying out to be filled. The proposed Development Bank is designed to fill it.
The most obvious example of the type of person whom the Development Bank is designed to assist is the young man starting out to develop a scrub block - a person with a stout heart, great determination, the necessary know-how, but not sufficient capital. Quite often, such a person succeeds in the end, but only after years of grinding toil and by subjecting himself and his family to the most abject and bitter poverty. They must live at a standard which would not be tolerated in any part of a metropolitan area, even in a country which does not pride itself on living standards as high as ours. While this is going on, land which could have been in full production in one-tenth of the time is lying idle. I can assure the House that the circumstances I have described are not a figment of my imagination. All honorable members who closely observe conditions in the rural industries will know that there are many cases such as I have described, even in the most productive areas. From a humanitarian point of view, such a thing cannot be condoned; from an economic point of view, it is shocking and unnecessary waste.
However, it is not only the man clearing scrub and bringing new land into production whom the Development Bank will assist. Perhaps even more important is the help that it will afford to the small farmer on an established property who, because of inadequate finance, is unable to take advantage of modern technical advances to raise the quantity and quality of his production. We pride ourselves on the rate of technical advance in our rural industries, and with some justification, because there is no doubt that these advances have helped the Australian farmer to maintain his natural lead over his overseas rivals at a time when costs outside his control have been rising constantly. But we sometimes forget that the implementation of technical advances, whether they be in respect of pastoral management, control of disease, stock management, fodder and water conservation, or anything else, requires capital, either from reserves or from financial institutions. Again, it is the small man who, because he is most inefficient and most in need of finance, is the least likely to obtain it, for the reason that he has not the conventional security with which to obtain accommodation. The Development Bank is designed to provide the finance to assist such people to raise their standards, to increase their production and to adopt the most efficient types of land use.
It is sometimes said that it is not so much that farmers cannot introduce the new methods which spring from technical advance, as that they will not do so. In a superficial sense, and in some instances, this is true, but it is only true for one reason; that, by the time many farmers are in a financial position to undertake improvements, they are old men and are no longer disposed, for that reason, to adopt innovations. In many cases, during that period of their lives when they are best able, mentally and physically, to undertake development programmes, family needs compete with farm improvement for current income. That is the time when a few thousand pounds, lent on long term at reasonable rates, would make all the difference between a life of poverty and inefficiency and one of relative affluence and great productivity.
The events of this season underline and emphasize the vital role which the Development Bank can play. It is estimated that this year, because of events overseas, farm income will decline to £370,000,000, the lowest figure since 1948-49, even in money terms. In real terms, it will probably be the lowest for about twenty years. This decline is due to factors beyond our control, but the consequences of it can nevertheless be alleviated. The great danger is that, with their declining income, farmers will choose to cut back on the magnificent programme of farm improvement which has meant so much to Australia in recent years. In effect, because of the overseas income that it has produced and the spending it has generated, this programme of farm improvement can be described as the broad shoulders upon which our immigration programme and our industrial expansion have been carried. Can we afford a situation in which those shoulders will no longer be so broad and so solid that they can carry the weight? Of course, we cannot! Can we afford a situation in which the programme of farm improvement will cease to expand at least at the same rate? Of course, we cannot! In Australia, the task is one not of merely increasing the efficiency of a constant or gradually rising output, but of maintaining a steady and high rate of expansion in order to meet the requirements of rapid population growth.
At a time when farm income is down to the extent that it is or will be this year, fewer people will be in a position to continue, from income, their programmes of improvements. Surely, this is a situation in which the Development Bank has a vital role to play, a role which revolves on filling the gap and assuring that the rural development programme will not cease or even fail to expand. Yet, despite this, and despite what I have said about the vital role that the Development Bank can play in many fields, the Australian Labour party does not want it. The supporters of that party have voted against it once, and I presume they will vote against it again. They do not want it, of course, because in their curious, crazy, mixed-up scheme of things, the rural industries count for precisely nothing. Consider their record.
The gap in the credit structure of our rural industries was apparent at the time of the 1945 banking legislation. The Labour party knew about that, because its own Rural Reconstruction Commission, which it established, drew attention to the matter and made appropriate recommendations. However, the response of Labour, as the party forming the government of the day, was to devise a situation in which credit was made available to secondary industry - and I do not quarrel with that - in a volume which exceeded that made available to primary industry by more man four times, and on much more liberal terms, the terms which we now propose to incorporate in the Development Bank for primary industry as well. All honorable members know why this happened as, indeed, they know why Opposition members are attempting to destroy the Development Bank. It is purely and simply because the electoral strength of the Labour party lies in the big cities and not in the rural areas. In other words, honorable members opposite are prepared, for purely political purposes, to destroy this vitally needed institution. All I can say is that I hope every primary producer in Australia will take note of the Opposition’s attitude and reflect deeply upon it.
.- I do not exactly find it a pleasure to follow the simple and light-hearted speech of the honorable member for Barker (Mr. Forbes;. He gave the House an “ all’s well with the world “ address, which was going fine until the closing stages, and then he descended to one of the cheapest political tricks in the book by saying that the Labour party does not support the Development Bank because the Labour party has no interest in rural industries, and is opposed to them. The Opposition is opposing the formation of the Development Bank because it is part and parcel of a measure that is generally bad, one from which the Development Bank cannot be separated. If the Government wanted a development bank, it has waited a long time to produce one. In 1945, the Labour party provided a Rural Credits Department, which had everything in it that the Development Bank has. The only thing that can be said for the Development Bank is that it might produce a better “ development “ outlook. That would be something of value, and other things being equal, the Development Bank is a good proposal. The Labour party does not oppose it because we lack interest in rural affairs. If Labour’s representation in rural areas is small at present, it will be much larger after the next elections. If the honorable member for Barker cannot submit more constructive suggestions than those put forward during his speech, the electors of Barker also might have different representation after the next elections.
The honorable member for Barker said that the people would be able to ascertain Labour’s attitude towards banking if they read “ Hansard “. The public may not discover what I say about banking by reading “ Hansard “, because they will not proceed beyond the speech by the honorable member for Barker.
I want to refer to the point raised by the honorable member for Wentworth (Mr. Bury). He asked: “Where does the public stand in relation to this legislation?” He said that there was public opinion to support it. 1 know where the honorable member was in 1953, and I suppose he did not have access to “ Hansard “, but I refer the honorable member, and anybody else who has misconceptions about the Government’s attitude, to banking amendments of the past. In 1953, the Prime Minister (Mr. Menzies) said -
If the amendments proposed in this bill-
That is, the bill of 1953- are considered . . . they will, we believe, place beyond doubt the continued operation of me Australian banking system in open and fair competition within the framework of central bank policy . . .
That was to be achieved in 1953. What more was necessary? Is there a mandate to go on and introduce legislation of this sort? The Prime Minister continued -
We will have produced in this measure and the other a scheme which reconciles the proper formulation and administration of central banking policy with true, genuine competition between the banks which attend to what I shall call the retail side of banking.
The Prime Minister was quite satisfied in 1953. He assured the public, including supporters of the Liberal party, that he was satisfied. Yet supporters of the Government now say that it has a mandate to carry this matter further. In 1950, the Treasurer (Sir Arthur Fadden) said -
It would be undesirable to make frequent changes in legislative requirements affecting the banking system.
Now the Treasurer is presiding over the most extensive alterations to the banking system that have been brought about while he has been Treasurer. Where is the Government’s mandate?
This legislation affects two very fundamental and important aims. It affects the level of employment in the community, the level of income, and whether we have unemployment and inflation. It will also* affect the direction and nature of expenditure, thereby controlling the kind of economic activity that takes place in the community. The 1945 legislation, introduced by the Labour Government, was new, necessary, and effective. Broadly speaking, up to 1950 or 1951, the Government succeeded in achieving full employment with little or no inflation, and it achieved some beneficial effects upon the direction of expenditure in the country. But the legislation of 1945 has now become ineffective, because it was weakened in 1951 and 1953, and because the balance of power has been transferred to the private banks. The 1945 legislation has also become ineffective because the trading banks have, in their new savings and hire-purchase departments, escaped from legislative regulation. What is necessary to-day is not to reduce, weaken, or narrow the public control that is operating over the banking system in Australia, but to strengthen and widen it. That being the case, the existing legislation must completely fail. It still further weakens public control of the banking system. The present legislation has been less and less effective over the years. Inflation was not controlled by this Government, nor reduced by banking action, as it should have been, and the Government, from time to time, has admitted this. In 1950, the Treasurer said -
To make a further great addition to the volume of purchasing power, not matched by an equiva lent quantity of additional goods . . . would tend to disperse and weaken the national effort at a time when it should be more and more concentrated. . . . The Government will therefore bring down measures . . .
The Government did not do this. Bank advances at that time were £497,000,000, and by 1950-51 they had become £621 ,000,000. That is the greatest addition to bank credit, to bank purchasing power, to the money loaned by the banking system, that has ever taken place in such a period in this country. That was the origin of the inflationary condition that produced the problems of 1952. As though the Government had not learnt this lesson at all, the Treasurer, in 1954, said -
We had a grim experience of inflation up to 1952 and I should not need to recall them. . . . We should not need to be taught that lesson again, learnt as it was in the years of disruption and futility.
That was what the Treasurer said in 1954, just before his Government permitted another great inflationary onslaught on the economy. That was permitted, on the admission of the Treasurer himself, as a result of the Government’s banking policy. He said -
There has been a formidable upsurge of spending . . . It has been facilitated by a far too generous expansion of credit on the part of the banking system together with the rapid growth of hire-purchace finance.
So, was the legislation too weak, was the Government too weak? That is the question. The combination of those two factors - the provision of legislation and the attitude of the Government illustrates, to my mind, that this legislation was not effectively applied. Let us look at the presentday situation. The problem to-day is not so much one of inflation, but of the direction of resources in the national economy. It is the problem of what money shall be spent upon, whether it shall be spent upon things like housing or upon luxury buildings, whether it shall be spent upon the real requirements of national development or upon the superficial luxuries to which the economic policy of this Government is so much directed. That is the question to-day. The week before last, the Prime Minister in this House put his finger upon the problem when he said that if only the traditional lenders in this field, the banks and the insurance companies, would lend for housing, the housing problem would be solved.
But the legislation which the Government is introducing now does not provide anything that can lead or direct these traditional lenders in this field. This is the problem the Government should be tackling to-day. It should not be weakening or narrowing the legislation but rather strengthening and extending it into that field which the Prime Minister recognizes is necessary for national development. There can be no doubt that the existing banking legislation is not effective: it is weak, and it is narrow. In these circumstances I suggest that we should expect a government with some awareness of national responsibility to strengthen and widen the legislation.
But what is the Government doing? Does this legislation weaken the existing banking structure in Australia? I say that the answer to that question is “ Yes “. How can we answer that question? Who are the authorities? Who can we ask? I suggest that, first of all, we might ask the Prime Minister, and when we are finished with him we might ask the Treasurer, and when we are finished with him we might ask the Governor of the Commonwealth Bank whether this legislation weakens the existing banking structure in Australia. I want to put that question again to those three gentlemen. I did so on 19th November last, and I am still awaiting an answer.
No suggestion has come from any honorable member on the Government side that any of the opinions expressed by the Prime Minister, the Treasurer or the Governor of the Commonwealth Bank are wrong as to whether this legislation weakens the banking structure or not. Let us look at the first point at which this legislation, according to those three gentlemen, weakens the banking structure of Australia - that is, the removal of the central bank’s trading operations altogether. The honorable member for Wentworth (Mr. Bury) made out a rather academic case, which had some point, about the Governor of the Commonwealth Bank having to change the cap he wore during the morning when he was operating as a competitive trading banker, and in the afternoon placing upon his head the cap of the governor of the central bank.
This advantage - if it is an advantage - should be placed alongside the disadvantages of this change as recognized by the
Prime Minister, the Treasurer and the Governor of the Commonwealth Bank in relation to this point. In 1951, the Treasurer had this to say on this subject -
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.
But the Treasurer is now taking away that thing which he regarded, in 1951, as an advantage. Why is he doing that? He has listened to me saying this, two or three times during the last six months, but he has never tried to answer what I have said, nor have any of his friends or supporters - not one of those who come running into the House to defend those who are criticized fi om this side of the House. No one from the Government side has come into the House to defend the Treasurer on this remarkable change of front.
Let us see what, has happened to the Prime Minister - this great orator who uses “ the science of speech “ - I will not go further with the quotation; it comes from “ My Fair Lady “. He said-
We believe that the Commonwealth Bank’s general trading activities have great merit.
Can we not hear him saying that now? Can we not hear the walls of this chamber resounding to his magnificent voice? He said -
We believe that the Commonwealth Bank’s general trading activities have great merit because they act as a source of information to the central bank. They enable the central bank to have an instrument by which it may give leadership in banking policy. It has a great number of advantages that I need not discuss at this stage.
That was the Prime Minister in 1953. Why, now, is he taking away those things which have great merit? If we were not satisfied with the opinions of the Treasurer and the Prime Minister - who might be expected by uninformed people to know something about the subject - let us recall what the Governor of the Commonwealth Bank had to say. I expect that most people would accept his opinion. In 1955, he 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. There can be little doubt that this direct link gives to the Commonwealth Bank a source of strength which can be of particular value in times when the economy is threatened with declining activity and employment.
Just as it it to-day. The present Government, in this legislation, is taking away that thing which the Governor of the Commonwealth Bank, in 1955, said was of particular value in circumstances like those existing to-day. Not only does it apply to that. There is the division of staffs which was recognized by the Prime Minister in 1953 as a disadvantage if it were to be done, and which, he said, he would not do. That was in 1953, but that is exactly what he is doing to-day.
There is, next, the weakening of the special accounts procedure, and now its final removal. We saw this process of weakening, until by September, 1956, 1 think it was, there was no power whatever to call up money under the special accounts provisions. There was then no uncalled liability whatever. A government which allowed that situation to develop will, quite conceivably, destroy the whole system of special accounts. What was the attitude of those gentlemen to whom I have been referring, to the special accounts provisions? The Prime Minister, in his characteristic fashion, said -
No one seriously challenges the Special Accounts system. … We must have the Special Accounts procedure.
He himself was a great admirer of this system and that was his attitude to it in 1953. But to-day he is removing that thing which, in 1953, he said no one seriously challenged.
– Has not the position rather changed now?
– If we look at the position of Dr. Coombs - and I think this is the answer to the honorable member for Forrest, whom I would not expect to know because he interjects rather than listens - we find that in 1955 he stated -
Looking back over the history of the use of the special accounts, a student of credit policy can have little doubt that it is an instrument of great actual and potential value, especially in the Australian scene where more traditional instruments of credit policy are inevitably less effective than in more- developed money markets.
That is the answer to it. It is of particular importance in the Australian scene. The Governor of the Commonwealth Bank, in fact, said that. This remarkable change of front by the Government in relation to this legislation can only be answered, I suggest, by referring to the matter raised by the honorable member for Hindmarsh (Mr. Clyde Cameron). He said that this Government is the voice of the trading banks; this legislation is the answer to the trading banks’ requirements. The Government has been a little slow and dilatory in answering the trading banks’ requirements and, as Mr. Chifley said, in his remarks on this subject, there is a close financial link between the trading banks and the Government which now occupies the treasury bench. He said he could prove that link. A similar statement was made during the debate at the end of last year, but I do not think one newspaper in this country referred to it. The press is ever ready to refer to associations of the Australian Labour party with undesirable things, but it is never ready to refer to similar associations of other parties that have been raised in this national Parliament by men of the responsibility and stature of the late Mr. Chifley. I should have thought that we could have expected reference to be made by the press to that in explaining this remarkable change of front that the Government has effected.
Is this legislation necessary? If the Prime Minister was correct in 1953 when he said that the legislation then introduced would ensure fair competition between the banks and proper formulation and administration of central bank policy, the legislation now before us is by no means necessary. How, then, do we reconcile these measures with the present situation? I submit that, when the points that were raised by the Opposition at the end of last year and which have been raised again to-day are taken into account, the only conclusion that can be drawn is that this Government has slowly but definitely weakened the central bank control legislation since it assumed office. The legislation now before us provides for a further weakening of that control. It in no way fills any of the gaps or provides any kind of control, or attempt at control, of hire-purchase activities in order to give effect to essential investment as against less essential investment.
The measures now before the House provide for the establishment of a development bank, but they do not furnish the Commonwealth Bank with as much hirepurchase power as it has had hitherto.
Development is a matter of providing, not only farm equipment and factories, but also homes and durable goods to go into those homes for the workers who live in them and who work in the factories. If we want a proper development scheme, we should not adopt a scheme such as this which creates a bank for the sole purpose of lending to business men but which makes no corresponding provision to lend to the people who will work for those business men. Development includes what happens to the workers as well as what happens to the business men; but, as usual, this government is providing, in the proposed development bank, an institution which is directed to assist the people whom it has always assisted.
The honorable member for Wentworth referred to the inability of the trading banks to lend for housing and such essential purposes and explained the tendency to lend money at hire-purchase interest rates. He said the trading banks had been forced into the field of hire purchase because they had been restricted in the other field. But the trading banks did not allow central bank controls to restrict them in 1953 when they allowed their ratio of liquid assets to fall to as low as 6 per cent, or 7 per cent, in some cases and to 14 per cent, and 15 per cent, in the majority of cases. To-day, their liquid asset ratios are over 20 per cent. If they wanted to lend more money through low interest overdrafts, they could do what they did in 1953 and allow their liquid asset ratios to fall a little. Why do they not do so? Again, the honorable member for Hindmarsh has provided the answer. He showed the close link that existed between the high interest rate lenders and the trading banks.
The trading banks do not want to lend any more money than they possibly can at ordinary advance rates when they can advise and encourage people to go around the corner to hire-purchase concerns that are closely connected with them to get loans such as the one mentioned by the honorable member for Hindmarsh. The honorable member referred to a loan of £9,000 at an interest rate of 7 per cent, flat, the total interest payment being £4,000- £13,000 altogether- and that the borrower went back to the Commercial Bank of Australia and got a letter from the manager recommending the transaction and saying in effect, “ The interest payment is a little bit high, but in the present circumstances of urgency you had better take it.” It is no wonder that trading banks are turning in that direction, and it is not because of social legislation or a central bank controlled economy. It may be true, as the honorable member for Wentworth said, that water runs to the lowest point; but it is also true that loanable funds run to the highest point - to where the interest rate is highest. If this Government had concerned itself with national interest, this is the particular problem that it would be tackling. But I submit that it has not concerned itself with national interest; it is concerned with perpetuating the broad outline of a system which does not meet the overall and fundamental problem that is present to-day in the Australian economy.
On that particular point, I submit for reconsideration by the Government the view that all we need to do is to concern ourselves with the aggregate or total expenditure that takes place in an economy at a particular time and that, if we maintain something like full employment, we have a completely satisfactory result. That view is based upon the Keynesian” analysis of an economic structure which suggests, for all who accept it - I think the Government and many other people have accepted it - that, if you maintain full employment without inflation, you have an economy in which the resources of labour and capital and all the rest of it are being used in a satisfactory way. I suggest that that is not so, and that in an economy of full employment or near inflation we in Australia have shown that we cannot get an allocation of the resources of labour and capital in the right places to give us the kind of national development that we all agree is necessary. We can only do that if we are prepared to pass legislation that will provide some kind of social control, through the Parliament, -over the lending and direction of money through our economy. How are we to solve our housing problem in a free economy without full employment when investors can get only 5 per cent, or 6 per cent, on their investment in housing at the same time as an actual return of 14 per cent., 18 per cent., or 20 per cent, can be obtained on investment in other less essential activities?
During the last six months, time and time again the Opposition has brought this particular problem to the notice of the Prime Minister and the Treasurer, but the only answer we have got has been that the Government has no intention of giving any direction whatever to the trading banks about the way in which they shall lend their money, whether it be for housing or any other purpose. So, Mr. Speaker, is it surprising that in those circumstances, the value of houses under construction in Australia has fallen from £177,000,000 to £154,000,000 during the time this Government has been in office, and that the value of other forms of buildings, including the kind that contributes very little to national development, has risen from £125,000,000 to £235,000,000?
That is the kind of problem upon which the migration programme, as we have suggested in recent times, has foundered. Until we have adequate housing and adequate services for migrants, we shall never have the kind of migration programme that we set out to achieve. If the national objectives that we all substantially agree should be achieved, are to be achieved, this kind of legislation is to be condemned, because, as I have been endeavouring to show by quoting the considered opinions of the Prime Minister, the Treasurer, and the Governor of the Commonwealth Bank, it makes it even more difficult for any government, even if it has the will and the intention - I do not think this Government has either - to apply the kind of social policy that would enable us to achieve that national objective. If the Government thought that amendments of the banking legislation were necessary, instead of introducing narrow, restrictive legislation of this kind, it should have endeavoured to extend and broaden the powers of the central bank to achieve the kind of national spending that is necessary if our national objectives are to be achieved.
Not only members of this House, but members of the general public who have been able to listen to the broadcast of these debates and so have heard some of the facts about this legislation, will agree with the stand taken by the Australian Labour party in opposing unequivocally the whole of this legislation because of the significant ways in which it weakens the public banking system and because it does not provide any of the needed new provisions. Perhaps the proposed Development Bank would be an advantage, but we are opposing it mainly because it has to be accepted as a part of the total legislation which has so many serious defects and so, having to oppose all or none, we oppose all.
Order! The honorable member’s time has expired.
.- Time brings it revenges and, to me, it is almost worth while my having been here for 40 years to hear the honorable member for Yarra (Mr. Cairns) making a spirited defence of the central bank, and the honorable member for Parkes (Mr. Haylen) saying he believed that the Commonwealth Bank as it is to-day, with its employees, its equipment, its know-how, and above all its Australian sentiment, should not be destroyed. Then, of course, only a week or two ago, the honorable member for Melbourne Ports (Mr. Crean) said that he was against any change because the 1953 banking legislation did all he wanted.
When Labour is in opposition it is very hostile to any changes in the banking legislation, but 1 remember that, as Prime Minister, the late Mr. Chifley, in introducing his 1945 banking measures, used the words of a speech that I made in 1924. He commended my speech as the basis on which his legislation was constructed.
– What did he say?
– I could read the words, but I shall not waste my time on that just now. I was hounded throughout Australia for twenty years because I had had the courage to establish a central bank; because I had had the courage to do what King O’Malley desired to do in the beginning, namely, to give the Commonwealth Bank control of the currency of this country. The Labour party opposed that action. Now it is pleasing to me to see the converts who come to heel and to hear them say also that what the Prime Minister (Mr. Menzies) and the Treasurer (Sir Arthur Fadden) did in 1953 was very good. However, we are told that what the Government is doing now is terrible. In 1953 the Labour party said that the Government’s proposals would weaken the Commonwealth Bank. Now Opposition members say that the Government’s present proposals will weaken the bank. Every improvement that has been made to the bank during the last 40 years has been represented by the Labour party as something that would weaken the bank.
What has been the history of these changes? Every time a change has been made, the Commonwealth Bank has grown and has become stronger. I think it grew 300 per cent, in the five years after we brought in our legislation in 1924. Since 1951 the profits of the Commonwealth Bank have grown from £7,306,000 to £20,961,000. This is the bank which Labour members allege is becoming weaker! That is the story that they tell in opposition, but in government, they were forced to follow in our steps because the steps that we took were right. There must be a central control of currency and its control should be entirely independent of the Commonwealth Trading Bank. I have never altered my attitude on this subject.
I find a certain amount of hypocrisy in Labour’s attitude to this matter. When I spoke in this House on housing about a year ago Labour members, by interjection, approved of my proposal that we should increase the ability of the Commonwealth Savings Bank to lend money for building purposes. These bills provide for that to be done, yet the Opposition now intends to reject them! There are other proposals in this legislation which are important to Australia, as the honorable member for Barker (Mr. Forbes) has pointed out. A Development Bank is to be established, yet the Opposition chooses to seek rejection of the measures! I would not mind if the rejection were for ideological reasons, but it is for a miserable political reason. The reason is that Labour members are certain of the success of this banking legislation if it is brought into being in this form. They realize that the bank will be able to deal with unemployment, housing and development and they know that they will not then be able to capitalize on the misery and privation of the people. That is the real reason for their opposition to these bills.
Last week the Opposition condemned the Government for proposing to deal with the bills with such haste. In 1945 the Chifley Government wiped out thirteen acts in one section of its banking legislation. That section simply stated -
The acts specified as under in the first schedule are repealed.
Of those thirteen acts, four had been introduced by a Labour government. The Opposition has forgotten that. Later on, the Labour government had to replace some of the repealed legislation. A couple of the repealed measures related to housing. The Chifley Government removed some of the advantages that I gave to the Commonwealth Bank in 1927. These had to be restored to permit use to be made of the savings of the people in order to build farms and homes for the people.
The Opposition has condemned the Government, not only for introducing these bills, but also for proposing to deal with them quickly. But what about the action of the Opposition in the Senate in not allowing even the first reading of the bills? Could anything be more hypocritical than the action of the Labour party on the one hand, in stating that it was in favour of the Development Bank and, on the other hand, in refusing to allow even this proposal to be discussed in the Senate? I support the Government’s proposal to deal with this legislation quickly.
I believe that the action of the Labour party in the Senate in treating this important legislation in such an ignominious fashion, is something which the House of Representatives should not stand. I do not think that the people will stand it. The Labour party, as a result of its attitude to this legislation, will get the same response when it next goes to the people as it got after the double dissolution of 1951.
Already, this matter has been fought out three times - once on the question of nationalization in 1949 when the Labour party was hopelessly beaten; again at the general election in 1951 after the double dissolution; and again at the subsequent general election. Yet, last year, the Labour party refused to allow this matter to be discussed in another place! Some members gave one reason and some gave another. One Opposition member said that he was opposed to the legislation because it did not deal with hire-purchase finance. Soon, we shall have a Queen’s Counsel here who will be able to tell us whether we can deal with hire purchase. Of course, he will give us his advice free, on this occasion. Surely, when we have before us measures which provide for the liberalization of savings bank policy, the establishment of a develop ment bank, and the liberalization of trading bank policy, in addition to the advantages of the central bank’s freedom from trading activities, as mentioned by the honorable member for Wentworth (Mr. Bury), we should make these advantages available to the people of Australia.
As a practising surgeon, during my lifetime, I have seen all sorts of improvements in instruments used in operations, with good results. To-day, for instance, a surgeon who wants to operate on a brain can do it with an electric knife which does not draw blood, so that he has a clean field all the time. Apparently, members of the Opposition do not want any change. They are little better than troglodytes, and attempt to justify their attitude by giving all sorts of specious reasons. We ought, therefore, to examine these so-called terrific changes which have caused the Opposition to prevent discussion of the legislation in the Senate, and to turn it down here also. First, what is the position so far as the central bank is concerned? The control of the central bank is to be exactly the same as it is now. There will be an independent board, as there is now - an issue on which we fought a double dissolution in 1951. It is rather interesting to recall that recently when trouble arose over the control of the Bank of England, the Governor of the bank said -
The directors of the bank cover between them a very wide range of interests in banking, industry, commerce, trade unions, shipping and insurance . .
The same sort of situation exists here. Mr. M. B. Duffy, who was the president of either the Australian Council of Trade Unions, or of one of the big unions, was put on the Commonwealth Bank Board by Labour, and twice re-appointed by us. Both Labour and ourselves kept such people on the board. Labour re-appointed Sir Robert Gibson, and we re-appointed Dr. Coombs. The Governor of the Bank of England said further -
It is quite invaluable to the Governors to be able to draw on this fund of knowledge and experience in formulating policy and to be able to share with the Court responsibility for decisions which must affect sterling throughout the world . . . If the nature of the Court were to be altered so that it were not to be composed of active practical men of business, or if directors were to become mere figureheads divorced from the real affairs of the Bank, then it is my belief that the utility of the Bank to the public interest, in this country and in the Commonwealth, would disappear.
That is his feeling about the kind of board that we have in Australia. The existence of that board has been endorsed at every election since 1924, when it was first established. Labour has won on three occasions, and 1 think we have won on eleven or twelve. Whenever this matter has been put in issue - as it was during the last double dissolution - the public left us in no doubt about where they stood.
Are the powers of the central bank to be lessened? The honorable member for Yarra (Mr. Cairns) said that the rural credits system was brought in by Mr. Chifley ten or fifteen years ago. I assure him that it was inaugurated by me in 1926, and has remained unchanged - whatever government has been in office. Not one word of the original provision has been altered. The capital of the Rural Credits Department is to be increased by £2,000,000. The central bank controls the note issue, and has assets amounting to £1,000,000,000. That is not a bad sum to have under one’s control. All this, in addition to the bank’s control over special accounts, should surely enable it to do its job in this field.
When we think of special accounts, it is worth remembering that Mr. Charlton, when leader of the Australian Labour party in. 1924, moved in the Federal Parliament, which was then sitting in Melbourne, that deposits should be drawn from the banks for this purpose on a percentage basis. Mr. Theodore incorporated that principle in the legislation which he brought down in 1930. Thereafter, the central bank was to have always at its disposal, and for its special purposes, 10 per cent, of the money deposited in the private banks. Therefore, there is nothing sacrosanct about this question of whether there should be no limit, such as operated in former times, or whether the present percentage system should continue. I have always favoured the percentage basis because I have thought it fairer to the bankers that they should know exactly what they were doing. The honorable member for Wentworth (Mr. Bury) believes that it is rather more rigid than the other system. If that is so, then the Australian Labour party can hardly use it as an excuse for turning down the bill - and there is no question that the honorable member is an authority on this matter.
I pass now to the position of the Commonwealth Trading Bank. It is to have exactly the same powers and functions in regard to deposits and services, as it has now. The only change will be in the direction of granting it an extra £2,000,000 in capital. Is that why honorable members opposite reject the bill? They say that they are in favour of the Commonwealth Trading Bank, but when we seek to give it extra capital they say, “ Out with the whole bill, even though the bank is being given all kinds of opportunities to assist the development of Australia “. The capital increase to which I have referred’ does not diminish the powers of the Commonwealth Trading Bank in the slightest.
What is the position of the Commonwealth Savings Bank? Labour in 1911, in the very first bank bill which it brought down, established a separate savings bank. That bank has remained virtually independent ever since. Under the bill we are making it legally independent. We believe that it should be quite separate from other banking functions. Surely no one can growl about that. It is akin to the Opposition saying, “ Don’t let the old boy in. He doesn’t belong to the family.” When they are told that he has been here for twenty years they say, “ Oh, well, perhaps we had better let him come down and have a feed”. On second thoughts they say, “ Chuck him, out. He does not belong here. He has been away at the war “, or something like that.
New and specific powers are being given to help individuals buy farms and homes. Back in 1920 we were told by our legal advisors that the Commonwealth Savings Bank could not do this. For that reason, we found it necessary to bring into existence a housing commission. Now the concept of Commonwealth power has changed greatly, and apparently it is considered quite all right. The legislation is merely being altered to take advantage of that position. Moreover, the bank will be able to lend money at a lower rate of interest than is- at present charged on housing loans, for now the money has to be channelled mtngovernment loans, loaned back to the bank, and then distributed to home purchasers and farmers. The ability to lend money in a direct way should result in an interest saving of 2 per cent. This will enable people to get houses or farms very much more cheaply in annual cost than they do now. Is that any reason for throwing out the bill? No normal person would think so, though some persons who ought to be in mental homes might be of that opinion.
Power is also to be given the bank to invest in loans to building societies. They are to be loans on the security of land, the repayment of which is guaranteed by the Commonwealth, or a State, intended for housing or other purposes. New sections specify that preference shall be given to advances for the erection of homes, and for the purchase of newly erected homes. A direction is also given that loans shall be made at the lowest practical rates of interest. It would be worth passing this bill for that specific reason alone. I point out that what has been done in the case of the Commonwealth Savings Bank is to apply in future to the private savings banks also. Both now come under the same rule. I shall quote from the legislation itself -
That is a very good thing. It will ensure that the loan goes to the man who really needs it. I read further -
Of course, the loan may be paid off at any time. These are important provisions for the improvement of the housing and farm position in Australia.
I turn now to the Development Bank. I cannot understand the Opposition’s rejec tion of this measure, because it also involves rejection of the Development Bank. Honorable members opposite say, “ We do not agree with everything that is in it “, but I point out that there has never been an occasion in this Parliament when every one has agreed to everything in a bill. We are lucky if we can get people to agree to 50 per cent, or 60 per cent, of what is brought down. The honorable member for Bonython (Mr. Makin) who has been here for a long time, will agree with me about that. On this occasion Labour is being given about 98.5 per cent, of what it wants, yet is anxious to reject the bill because of something else with which it disagrees. I find it hard to imagine how any one could do that. Ought such people to be in the Parliament at all? Honorable members opposite cannot be sane if they refuse to accept this legislation. The functions of the Development Bank are, first, to finance primary production; and, secondly, to finance the establishment or development of industrial undertakings, particularly small undertakings, in cases in which, in the opinion of the Development Bank, the finance is available and would not otherwise be available on reasonable and suitable terms and conditions. Let me repeat that. One of the functions of the bank is to lend money in cases in which, in the opinion of the Development Bank, the finance is available and would not otherwise be available on reasonable and suitable terms and conditions. The third function of the bank is to provide advice and assistance with a view to permitting the efficient organization and conduct of primary production or industrial undertakings.
The Development Bank must have regard primarily, in financing any person, to the prospects of the person becoming or continuing to be successful, and shall not necessarily have regard to the value of the security available in respect of the finance provided. I shall repeat that statement also, for the sake of emphasis. The Development Bank must have regard primarily, in financing any person, to the prospects of the person becoming or continuing to be successful, and shall not necessarily have regard to the value of the security available in respect of the finance provided. This is the first time in the history of Australia that any Parliament, Commonwealth or
State, has brought down a proposal so obviously designed to help the real trier who does not have sufficient money, yet the Labour party claims that it will turn the legislation down. If these measures are accepted, there is sure to be plenty of security, plenty of employment and plenty of prosperity, and Opposition supporters fear that in those circumstances they will not be able to capitalize on misery and privation.
It is proposed that the Development Bank shall be given the present capital of the Mortgage Bank, the capital of the Industrial Finance Department of the Commonwealth Bank, the sum of £5,000,000 which shall be paid by the central bank to the Development Bank on the date on which the legislation comes into effect, and other sums transferred from the Commonwealth Development Bank Reserve Fund. The Prime Minister told us the other day that £15,000,000 was to be transferred to the trading banks from the special account of the Commonwealth Bank. The legislation now before us provides for another £5,000,000 to be paid to the Development Bank, but honorable members opposite adopt this peculiar and stupid attitude and oppose the legislation.
The amount of the reserve of the Mortgage Bank and Industrial Finance Department, and such sums as the Commonwealth Development Bank Reserve Fund determines, will be available and will help to make an enormously strong organization to perform the job for which it is designed. Obviously the purpose of the Development Bank is to help the lame dog over the stile, to give a good start to a man with capacity, energy, enthusiasm and ambition, who has not quite enough money to establish himself. These, surely, are the people who should be given every assistance. For over a century the real triers in Australia have been waiting for such a bank as this one, yet Opposition supporters will not accept it. One cannot imagine anybody outside a lunatic asylum adopting such an attitude. I certainly cannot. I am a doctor, and there is a doctor seated at the table, and I am sure we could certify Opposition supporters who oppose this measure. This is a bank of special value at this time of depression and drought, but the members of the Labour party are trying to prevent the people who need assistance from obtaining it. These new provisions regarding the Savings Bank and the Development Bank can be of extraordinary value in getting ready for times of drought.
Sitting suspended from 5.59 to 8 p.m.
– The new provisions could also assist in the establishment of a national fodder conservation scheme and in helping institutions which finance farmers. The bank could also make additional advances to cover experiments in regard to the storing of fodder and the building of more dams, so that in dry weather the feed in the paddocks will not become useless because it is too far away from water.
I believe that these provisions will help the individual man to get more dams, and to conserve fodder, and that the Development Bank may put money behind a national policy to eliminate the worst effects of droughts and floods and enable men on the land and in country towns to get water supplies. It may also assist small communities to establish their own water supplies.
I know that there is an immense amount of data buried in State and Commonwealth departmental offices. The Development Bank, with the money it will have at its disposal, may be able to bring those old reports to the light of day and infuse a breath of life into them.
I am hoping that as a result of the establishment of the Development Bank we shall see the setting up of a Commonwealth-State organization at the highest ministerial level, supported by a standing committee of experts, as in the case of the Loan Council and the Australian Agricultural Council, to handle the general question of development and defence co-ordination. These two important activities have been too long separated. The staffs connected with the two activities could be brought together in a development and defence council, and would be able to co-ordinate Commonwealth and State policy, determine priority of projects and achieve integration in Commonwealth and State action.
I remember that in the 1930’s the Commonwealth Government was assisting financially in the establishment of water and sewerage services in country towns ‘throughout Australia. About 1’20 towns had such services established as a result of that scheme, under which the States put up onethird of the money required, the Commonwealth one-third and the people concerned the remaining third. It seems .to me that schemes like this will be well within the compass of the Development Bank. The existence of such a voluntary body as the development and defence council would permit great advances in the financing of undertakings agreed upon, which would relieve unemployment and stimulate the timber industry and the home-building industries, as well as farm production. The effect on Australia of a world economic recession, and especially of the economic troubles of the United States of America, might ultimately be removed by the discovery and development -of new resources of raw materials in Australia resulting from the activities of such a body. If we could secure the introduction of millions of pounds of American capital to help us to exploit newly discovered mineral resources, we would be able to give employment in every field of activity, and thus attract still more foreign capital that would enable us to maintain our immigration programme at the desired level without damage to our economy.
I must admit that I am an optimist, and the older I get the more I realize that such events could be set in train within a very short time. I remember that in 1922 I raised the flag in the campaign for the establishment of the Australian Loan Council. The first meeting of that body was held in December, 1923, In 1933, I raised the flag in a similar campaign for the establishment of the Australian Agricultural Council, and that body was actually functioning in 1934.
Apparent difficulties in the way of the establishment of a development and defence council could be overcome by investment through the Development Bank. This would remove the worry we now have because the trading banks are loath to lend money on projects that do not show a quick return, although such projects may ultimately show good returns. For these reasons 1 intend to support the legislation.
Debate (on motion by Dr. Evatt) adjourned.
– I .move -
That the ‘bill be now >read a second time.
I suggest, Mr. Speaker, that as this bill and the Stevedoring Industry Charge Assessment Bill are closely related, it will suit the convenience of the House if they are debated together. The bills are short, and their purposes are clear. The first increases the rate of stevedoring industry charge; the second cures some defects, of a purely technical ‘Character, arising, for the most part, from the repeal by the Stevedoring Industry Act 1956 .of the earlier legislation.
The Stevedoring Industry Charge Bill increases the charge from 2s. to 2s. 6d. a man-hour on a continuing basis, and adds a temporary surcharge of 6d. a man-hour to operate until June, 1959. These increases are to take effect from the beginning of April. As honorable members are aware, the stevedoring industry charge is the amount added by way of levy to the hourly pay of waterside workers engaged by stevedoring employers. It finances the operations of the Australian Stevedoring Industry Authority. These operations include payment of attendance money to waterside workers on days when no work is available for them, and the payments awarded for sick leave and statutory holidays. In other industries, payments of this character would be made by the employer for whom the person to benefit was working on a regular basis. Waterside workers differ in that they have various employers. It is necessary for some central organization to distribute these payments, in effect on behalf of all the employers, to those who have been engaged from time to time by them. The Australian Stevedoring Industry Authority performs this function.
It will be recalled that the levy was increased in October, 1956. Earlier that year, Mr. Justice Ashburner, who deals with industrial issues in this jurisdiction, had awarded an increase of 50 per cent, in attendance money rates, raising them from 16s. to 24s. a day, and, for the first time in the history of the industry, had awarded payments for sick leave and statutory holidays. A further increase in the charge, of 5d. a man-hour, was made in May, 1957. Experience had shown that the lower rate of levy fixed in October, 1956, was not providing sufficient revenue to cover the authority’s outgoings. There were various reasons for this. The volume of imports proved to be lower than expected. There was a further decline in the tonnage of general cargoes handled by our interstate shipping. There was also some improvement in stevedoring performance. All these factors taken together meant that fewer man-hours were actually worked. As a result, the income was less than had been anticipated and aggregate attendance money payments higher.
A further increase in the levy is now necessary if the affairs of this industry are to be managed on a pay-as-you-go basis. This has been the general principle followed ever since a statutory authority was constituted. Indeed, the authority is faced with the necessity of securing not only sufficient revenue to meet its outgoings, but also sufficient additional funds to bring its finances back on an even keel. If the current position is not remedied, the authority will be in deficit to the extent of £650,000 by 30th June next.
This recital might suggest bad budgeting. That has not been the case. Except for the largely unpredictable factor of attendance money, outgoing expenditure items have been working out much as anticipated. Attendance money payments, however, seem likely to exceed the estimate made last year by more than £500,000, and, on the revenue side, income is likely to be some £200,000 less than expected.
Let me explain, briefly, how the movement in these two items has occurred. First, there have been fewer interruptions to work by industrial disputes and rain. This may seem strange to honorable gentlemen, who read only too frequently of the industrial disputes occurring in this industry. There are still far too many industrial disputes, but 1956-57 showed a substantial improvement over 1955-56, and the first half of 1957-58, although a little worse than the average for the previous year, was a good deal better than 1955-56. Industrial disputes, in 1955-56, cost 3,350,000 manhours; in 1956-57, 1,280,000; and in the first half of 1957-58, 760,000. The manhours lost through rain in those three periods were as follows: 1955-56, 2,040,000; 1956- 57, 1,450,000; and in the first” half of 1957- 58, 690,000. Over the period - and this is all wrapped up with the factor that I have included under the first heading - more overtime hours have been worked, which has meant that work has been done more expeditiously and with fewer workers. It may sound rather paradoxical that, in circumstances of less demand overall for stevedoring labour, more overtime has been worked. The explanation is that, with more labour available and less rain occurring, there has been more opportunity for employers who want to get their ships turned round quickly to work second and third shifts in the one day, and this second and third shift work is, of course, included under the overtime rates. These factors have combined to produce more attendance money payments for those who did not obtain work on particular days.
The second factor to which I direct the attention of honorable members is that import tonnages did not increase as much as might reasonably have been expected. Export tonnages were less than anticipated, and again, following the pattern of earlier years, there was a further decline in interstate general cargoes. That aspect, I think, is worthy of some emphasis. There are many unhappy features about this industry. One of them has been the decline in work opportunities brought about by the loss of customers for sea transport to the more reliable and regular delivery services offered by rail and road transport.
The third factor bearing on the position - and this is a happier note - has been a useful increase in stevedoring efficiency. There has been an improvement in cargo handling rates, and more efficient methods of handling cargoes, including increased mechanization and the pre-slinging of cargoes, have been adopted. These processes have proceeded more rapidly than was foreseen when estimates were being prepared early last year, and this, too, has meant heavier attendance money payments.
The problem that has faced the Government in considering how to deal with the Australian Stevedoring Industry Authority’s finances is, in essence, very simple to state.
First, of course, we had to satisfy ourselves that the authority’s affairs were being conducted efficiently, in order to ensure that all possible economies are made. But the nub of the matter faces us with two alternatives - either to reduce drastically - and now - the waterfront labour force, or to give the industry - both sides of it - a further opportunity to solve the problems that face it. This latter course would be in the spirit of the 1956 legislation, which tried to throw more responsibility for their own well-being on both sides of the industry, and, in effect, brought a new approach to the problems of the waterfront. Even had the Government chosen to follow the first course and drastically reduce the labour force, some increase in the current levy would be necessary.
It is a matter of common knowledge that there are, at present, more men on the waterfront than are actually needed, although there may be differences of opinion as to the actual extent of the surplus. The present stevedoring industry legislation, which was passed by the Parliament in 1956, gives to both sides the right to invite the authority to deal with any labour surplus problem. Neither side has exercised this right. Clearly, the surplus will grow even greater if there is a continued falling off of the type of cargoes which require large numbers of men. These are the very cargoes that the industry has been losing to road and rail transport - the general cargoes that should normally be carried by our interstate shipping. New recruitment has ceased, for all practical purposes. The key to the future lies in the labour force becoming more closely equated to the work available. The industry, Mr. Speaker, has it in its power to help itself. Undoubtedly, it could attract a great deal more business to coastal shipping if cargo rates were favorable and competitive with those charged by the various forms of land transport - this, I believe, is an even more important factor in the picture at the present time - and if prospective shippers could be assured of promptness and regularity in the deliveries of their goods.
– Why does the Government not have a go at the shipowners?
– We have had plenty of criticism of the shipowners from time to time.
– Plenty of criticism, but no action.
– We have had plenty of action, too. Sometimes, when I consider the incidence of industrial trouble in this industry, I despair of its ever developing the good sense to help itself. Surely, by now, the rank-and-file members of the Waterside Workers Federation of Australia must have realized the losses, in terms of work opportunities, that they have inflicted on themselves by following the misguided policies of the union’s turbulent and Communist-influenced leadership. In 1957, the waterside worker averaged 40 times the loss of working time through industrial disputes that obtained in industry generally throughout Australia.
I understand, Mr. Speaker, that there is in China a torture called the death of a thousand cuts. Minor but numerous cuts are inflicted upon the body of the person tortured and, gradually, he is brought to his death. Knowing the history of this industry for many years now, I feel that, here, we have, applied by the waterside workers to their own situation, the selfinflicted death of a thousand cuts, because, every time a hold-up of work occurs on the waterfront, a customer who has been in the habit of shipping his goods around the coast, decides that the game is not worth the candle, and that, even if it costs a little more, there is a greater return, in terms of promptness and reliability of delivery, in sending his goods by rail or road transport. We have seen this process going on all over Australia. The waterfront employers find that it pays them to mechanize more if they cannot rely upon the human factor to do the job for them regularly and efficiently. So, here is this sick industry which, by its own course of conduct, is making its cure all the more difficult. Yet it is within its own power to improve the position quite dramatically.
Stevedoring employers, also, have responsibilities, Mr. Speaker. We have directed attention to them more than once in this place. The facts indicate that - at least in recent years - they have been making a determined effort to bring about this improvement. Mechanization has been increased, and supervision has been made more effective. They have been, as I shall indicate in a moment, willing to carry some of the increased costs that award determinations in the industry have brought them in order to hold their freight rates down. One result of the better waterfront performance secured has been the absence of any general increase in freight rates since the first quarter of 1957 in the case of overseas lines, and since October, 1956, in the case of interstate owners. In that time, an increase of 10s. in the basic wage has been absorbed, and so, too, has the increase of 5d. a man-hour in the stevedoring charge of May last year. Thus, taking these two items together, approximately £1 a week of additional labour cost per man has been absorbed by the employers without making any corresponding freight increase. They would not have been able to do this unless efficiency in the industry had been improved.
On the financial side there are, as I have said earlier, two problems. The first is to put the authority on a pay-as-you-go basis; the second is to discharge its accumulated deficit. Dealing with the first aspect, I inform the House that it is proposed to increase the charge by 6d. To liquidate the deficit, the Government proposes what is, in effect, a surcharge of 6d., terminating on 30th June, 1959. In short, it is proposed that the levy will be 3s. a man-hour from 1st April, 1958, to 30th June, 1959, and thereafter, unless the Parliament otherwise determines, 2s. 6d. a man-hour.
I have not sought in what is a financial measure of this character to deal with a number of quite important and topical waterfront issues which are giving us concern at the present time. There has been a spate of unauthorized stoppages of work in various ports for the holding of meetings which the authority has not sanctioned. There has been the series of sordid and, I suggest, entirely disgraceful episodes in the port of Hobart over the Hursey issue. I only want to make the point here that if I have not touched on these and various other matters bearing on the waterfront, it is not because they are being ignored by this Government, but because there will be more appropriate occasions when we can invite the Parliament to discuss them and perhaps deal with them.
I have brought this financial measure forward and linked with it the second measure, one to amend the Stevedoring
Industry Charge Assessment Act. This measure relates to the machinery for the collection of the stevedoring industry levy. As will be seen from a glance at the bill, the amendments are purely technical. They are almost entirely consequential on the enactment of the Stevedoring Industry Act in 1956. The rest are purely verbal. I commend both bills to tie House.
– Is it the desire of the House that the bills be debated together, as suggested by the Minister?
– I should like to have that determined, and move that the debate be adjourned.
– The Minister suggested that the two bills be taken together. At the time, I did not seek the authority of the House for the adoption of that procedure, because the Leader of the Opposition was busy elsewhere, but I seek it now.
– I suggest that it might come to that - probably will come to that - and I should like it to be determined when we look at the bills. Is that all right?
– The bills must be taken separately unless we have the authority of the House to take them together. The question is that the Stevedoring Industry Charge Bill 1958 be read a second time.
Debate (on motion by Dr. Evatt) adjourned.
– In regard to the second measure, the question now is-
– I rise to order. The Minister has not moved that the bill be read a second time. I object to the question being put before the motion is proposed.
– Speaking to the point of order, in the first sentence I uttered I moved that the bill be read a second time.
– That was in relation to the first bill, the Stevedoring Industry Charge Bill 1958.
– If a formal motion is desired I will move -
That the bill be now read a second time.
– In the circumstances, the second bill has not yet been called on. We are still dealing with the first measure, the Stevedoring Industry Charge Bill 1958.
Motion (by Mr. Harold Holt) agreed to -
That the adjourned debate be made an order of the day for the next day of sitting.
– I move -
That the bill be now read a second time.
As I indicated in the concluding sentences of my remarks on the Stevedoring Industry Charge Bill 1958, this measure is purely technical. The amendments it will effect to the principal act are of a machinery and verbal order. I commend the bill to the House.
Debate (on motion by Dr. Evatt) adjourned.
Reserve Sank Bill 1957.
Commonwealth Banks Bill 1957.
Banking Bill 1957.
Banking (Transitional Provisions) Bill 1957.
Audit Bill 1957.
Commonwealth Employees’ Furlough Bill 1957. Crimes Bill 1957.
Gold-mining Industry Assistance Bill (No. 2) 1957.
Income Tax and Social Services Contribution Assessment Bill (No. 2) 1957.
National Debt Sinking Fund Bill 1957.
Northern Territory (Lessees’ Loans Guarantee) Bill 1957.
Officers’ Rights Declaration Bill 1957.
Re-establishment and Employment Bill 1957.
Sales Tax (Exemptions and Classifications) Bill (No. 2) 1957.
Debate resumed (vide page 388).
– I propose, first, to examine again the main statements of the Treasurer (Sir Arthur Fadden) when he brought down the legislation, because I think his speech itself told us and the people of Australia what the purpose of the legislation is, at whose instance it has been brought in and at whose dictation it is to be passed. The right honorable gentleman brought down his legislation in October last, and in the course of his second-reading speech he referred to the necessity of having harmony between the Commonwealth Bank of Australia and the private trading banks. Then he said -
If, however, a system which includes both a government-owned central bank and a number of private trading banks is to work smoothly and effectively in the national interest, certain funda mental conditions must be fulfilled. One condition is that the central bank should have a foundation of adequate legal powers;
Of course, that carries with it the necessity for being able to exercise the powers if the occasion arises but that by itself, says the Treasurer, is not enough -
There must be mutual understanding between the central bank and the private banks, mutual confidence and a will to co-operate. . . .
This points to a major difficulty inherent in our banking system as we have known it hitherto. The private banks have consistently - maintained that they cannot enter into fully confidential relationship with the central bank so long as it has, under its control and operation as an adjunct to itself, a major trading bank which is a competitor of theirs.
So it is quite obvious that the source from which the demand for the legislation proceeded was not the Government, not the Prime Minister (Mr. Menzies), certainly not the Treasurer - he least of all - and certainly not the Governor of the bank. It came from the interested people, and there is nothing to be said more than that they are not conducting their businesses except for one purpose, that is, the making of profits for their shareholders. If they were not so doing, they would be guilty of neglect of duty to their shareholders. The making of profit is all that they are aiming at. Therefore, it has been found essential, and the Royal Commission on Banking confirmed it, that in this system there must be a central bank that will be the watchdog for the people of Australia and see that the desire of the private banks for profit - it may be moderate, it may be very great, or it may become insatiable - is kept under due restraint. That is really where this situation commences. The honorable member for Yarra (Mr. Cairns) this afternoon quoted what the Prime Minister (Mr. Menzies) said very clearly about the 1953 amending legislation. Honorable members will remember what that legislation did. Private banks were not allowed under the war-time legislation to purchase government securities without consent, because of the danger of secondary inflation through the building up of credits on the basis of the securities which they were purchasing. That matter was looked at very strictly, and the restriction played a big part in limiting inflation during the most perilous days that. ever faced this country. But the 1953 legislation went further. It gave the power to purchase bonds, a power that has been gravely misused by the trading banks, in my opinion, because it is quite obvious that the extra profits that they have made by way of interest in later years have stemmed to some extent from that.
The 1953 act, which is now to be changed, was not an act of the Labour government. It was an act of this Government. This Government had its first bite with the act of 1951 when it set up a board system for the Commonwealth Bank and formally repealed sections of the nationalization legislation. That was the position in 1951. The 1951 election was not a banking election. We know that although a double dissolution was granted on the ground of banking, and although those persons responsible for advising the GovernorGeneral know that the dispute between the Houses related to banking, the election was fought on other issues, such as the Communist Party Dissolution Bill, and so forth. The second bite at the legislation was in 1953. The Prime Minister, in the course of his speech at that time, said -
If the amendments proposed in this bill are considered they will, we believe, place beyond doubt the continued operation of the Australian banking system in open and fair competition within the framework of central bank policy. We will have produced in this measure and the other a scheme which reconciles the proper formulation and administration of central banking policy with sane, genuine competition between the banks.
Previously, the Treasurer had said that it was undesirable to have frequent changes in legislation relating to the banking system. He said, further, in 1951 -
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.
Of course, other statements have been made by honorable gentlemen opposite or their representatives. I think the report of the Royal Commission on Banking and Monetary Systems also mentions this matter - about the great value to the central bank, the Commonwealth Bank of Australia, of the general banking business, now called the Commonwealth Trading Bank, and the Commonwealth Savings Bank. The asso ciation of those institutions opens up avenues of knowledge and information to the central bank of what the general public wants and what it is doing.
– You have the wrong bank.
– I said both banks, and that is stated in the report. I wish you would read it instead of interrupting. What the Treasurer said in regard to the Commonwealth Trading Bank is quite true, but the same argument would apply to the Commonwealth Savings Bank, because through that bank, which holds the small savings of large numbers of customers, information becomes known to the Commonwealth Bank as a whole and, possibly, to the trading section.
The Prime Minister also said in 1953 -
We believe that the Commonwealth Bank’s general trading activities have great merit. . . .
He used the same argument, saying -
They act as a source of information to the central bank. They enable the central bank to have an instrument by which it may give leadership in banking policy. It has a great number of advantages that I need not discuss at this stage.
The Governor of the Commonwealth Bank said the same thing in 1955. He said that the policy had to be based on facts and that knowledge of those facts had to be obtained. Apart from the value of the Trading Bank and the Savings Bank in themselves, as instruments for the public welfare in this country, they were part and parcel of the system of the central bank itself, the Commonwealth Bank of Australia.
In giving reasons for this bill, the Treasurer went on to say that the private banks felt that they must have a central bank with which they could do business and that they could not do business with a bank which itself was engaged in trading activities. But the Commonwealth Bank has been trading in general business ever since it was started, away back in 1912. The central banking system came later. Altogether for, I suppose, 25 years - perhaps longer - there was a central bank, a savings bank, and a trading bank. They were not three separate banks. They were one great institution, each supporting the others and each informing the others. They were not seeking profit or gain at the expense of anybody in the community. On the contrary, the Commonwealth Bank of Australia in its various branches has in a period of over 40 years made profits amounting to about £180,000,000, all of which has gone into Government funds entirely for the benefit of the people of Australia. That is what we have to remember.
The contest that was fought last year, that is being fought here to-day and that has yet to be resolved, is, so far as this crucial matter is concerned, between, on the one hand, financially interested parties seeking gain, and on the other hand the people of Australia. We call this bank the people’s bank, not because that is a political name, but because that is the truth. The bank belongs to the people and all its profits go to the people. I have no doubt that it upsets those honorable gentlemen opposite who are sensitive to words, but that is the truth. The Treasurer, in his first speech, said -
As I have said, the need for a strong central bank is not in question. But we have to ask ourselves whether the central bank is, in fact, stronger or weaker for its association with the Commonwealth Trading Bank.
Even if we take that test, who is the best judge of whether it is stronger or weaker for its association? Not the private trading banks. Who would take their opinion? It is worth nothing. It is simply the biased opinion of malevolent rivals. That is the truth of the matter and this show of words will not conceal it from the people of Australia. We have to look at the position in a broad way. The private banks are running their business for profit. We have the Commonwealth Bank, including the central bank, the Savings Bank, and the Trading Bank. They were all at one stage one bank. Some changes were made in 1953, but the substance of the operations for present purposes must be considered to be unchanged. So far as the law and practice of this country are concerned, the position to-day is that the private banks are entitled to conduct their own business. That was determined by decision of the courts. The private banks cannot be nationalized. An attempt to do so was made by a Labour government in 1 947, but that attempt was defeated. The private banks can now be nationalized only after vote of the people of Australia at a referendum for an alteration of the Constitution. 1 said that last time. Therefore, the private banks are in a peculiar position so far as their basic right is concerned.
But the fact that there is a government in power favourable to the interests of the private banks does not mean that that government can weaken the strength and interfere with the fair functioning of the bank which represents the people. I concede that the Australian people accepted the view that the private banks should be able to continue with their businesses. We can take the 1949 general election as endorsing that, but we cannot take the 1949 general election as an endorsement of a policy of interference with the real strength of the Commonwealth Bank - the people’s own bank. That is the fallacy underlying the Government’s actions. It thinks that the result of the 1949 general election represented an endorsement by the people of a policy of interference. That is not so. As a matter of fact, the great question of whether there was popular support for our banking legislation was decided in 1946. In that year, after the 1945 legislation had been passed, the people returned the Chifley Government to power.
– The 1947 legislation was not mentioned in Labour’s policy speech then.
– After the 1946 general election there was a clear vote in favour of our legislation. That is a fact. There was a by-election fought on the issue in Fremantle after the death of Mr. Curtin. Nobody knows that better than does the Minister.
– It was not mentioned in Labour’s policy speech.
– What was not mentioned in our policy speech?
– The banking legislation of 1947.
– Of course it was not. I have never said it was. I am saying something quite different. The basic Commonwealth Bank Act of 1945, providing for the special deposits system and the continuance of the linking of the central bank with the trading bank activities, savings bank activities and other activities of the Commonwealth Bank, was passed long before the 1946 election. There is no doubt about that. The right honorable gentleman made a slip in thinking that I was referring to our 1947 legislation. I concede with regard to the 1947 legislation that in 1949 the people adopted what was, in effect, the legal position.
We have to face the position that the private banks are entitled to carry on their businesses. But the Commonwealth Bank also is entitled to carry on its business, including the business of a central bank, ls not that the position? The people have given no authority to the Government to interfere with the basic decision, not only indicated by election results but contained in such great documents as the report of the Royal Commission on Monetary and Banking Systems.
The great wrong that is being threatened by this legislation may be summed up by emphasizing what is to be done. Fancy anybody, simply because the private banks say so, coming to the conclusion that it is an interference with the rights of the private banks that the central bank has associated with it a trading bank and a savings bank! lt is absurd to say that that is in some way an interference with the private banks. Some of these people are never satisfied with banking legislation. They will not be satisfied until they get the Commonwealth Bank into their possession. What right have they got to it? The people have approved of the present position.
In his second-reading speech on 13th March, the Treasurer said that last year the bills were rejected by the Senate without consideration of their contents. Just think of that statement! Technically there is some truth in it, but substantially it is untrue. The reason why the bills were rejected by the Opposition in the Senate was that the Government, through its representatives in that chamber, refused pairs to members of the Labour party, including one man who was desperately ill. What kind of people have we in this Parliament? I am trying to reply to a statement made by the Treasurer, but people on the other side are howling like a lot of dingoes. We tried to get a pair for a very sick man who had just undergone a severe operation, but he was kept within the precincts. Doctors had to come here to attend to him. I have mentioned those facts to show that it is not true to say that senators did not wish to debate the bills.
– They may have wished to do so, but they did not debate them.
– They did not debate the bills because you stopped them from doing so.
– That is what I said.
– No, you did not. You said that the bills were rejected by the Senate without consideration of their contents. Nonsense! The Labour party decided the issue after debate. Many of the senators heard the debates in this chamber. They decided the issue after consideration, but without debate. There was no debate in the Senate, due only to the vicious exercise of power by the Government’s representatives there.
– The fact remains that the bills were not debated in the Senate.
– That is true, but the right honorable gentleman’s statement was only a half-truth. He did not tell us the facts, although he must have known them. They were common knowledge in the Parliament.
The argument of the Treasurer is that these changes are necessary for the harmonious and efficient operation of the banking system. When we turn to his speech, we find that it amounts, in short, to a statement that the private banks do not want the present system. They say that things will be more harmonious if it is abolished, so the Government proceeds to do that. It is an outrageous decision. No real reason is given for the change. The Royal Commission on Monetary and Banking Systems was composed of very distinguished men - the Chief Justice of South Australia, Mr. Nixon, Professor Mills, Mr. Chifley, Mr. Pitt of the Victorian Treasury and Mr. Abbott. They dealt, unanimously I think, with the association of the central bank with a savings bank and a general trading bank and said that that was a part of the efficient running of the central bank. How has that been altered? The Prime Minister said in 1953, in substance, supported by the Treasurer and by the Governor of the banks, that, after the banking legislation of that year, there would be a balance which was reasonable. What has brought about his change of that view? I am afraid that the cause is the relationship between the private banks and the Government. I want the House to understand the implications of the argument. Because the private banks would prefer a different system, there is to be a tearing up of the main charter of the Commonwealth Bank. The charter states -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such manner as, in the opinion of the Bank, will best contribute to -
the stability of the currency of Australia;
the maintenance of full employment in Australia; . . ,
We know that honorable members opposite give a meaning to full employment which is not the true meaning. They have said, in effect, “You cannot have full employment. You can have only a high degree of employment “. The Minister at the table has made that statement in the House. A high degree of employment is not the same as full employment. The Minister would understand that if he would read the Declaration of Human Rights as set out in the Charter of the United Nations. The statutory direction to the Commonwealth Bank is that it will exercise its powers in such a manner as, in the opinion of the bank, will best contribute to-
What the Government is now doing, in effect, is to add the proviso that the Commonwealth Bank shall not take any action for these purposes without the consent of the private trading banks.
That is exactly what the argument is, and whatever may be the motives of the private banks, such a proposal is ridiculous. Even if the private banks believe that the introduction of these drastic changes, which have been analysed by my colleagues in this and previous debates, will benefit the people of Australia, it is not for them to say what should be done because the act states -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers … in such a manner as, in the opinion of the Bank, will best contribute - to the objectives I have already cited. Now, the Government has the idea that it can aid the private banks in some way, by separating the Commonwealth Trading Bank from the central bank under a system under which everything will not depend upon the management of the bank which has been enormously successful owing to the devotion and ability of its officers. No; the private banks want a system under which the manager and other high officers of the Commonwealth Trading Bank will have other persons put over them. There will be eleven members of the proposed corporation board, of whom the private banks will pick up eight.
What moral right has a government to do that to a successful institution? What the Government plans to do is to tear up the charter of the Commonwealth Bank and allow the private trading banks to come down with their proposals; and simply because it has a temporary majority in the Parliament refuse to give the people an opportunity to consider them. That is not all; the issue goes deeper. I do not think there is anything in the political history of Australia to equal the insolence of the private trading banks. Usually, they are in the habit of acting carefully and putting their case fairly, but this was a dead issue until they awakened it. The 1953 act, which the Prime Minister, the Treasurer and the Governor of the Commonwealth Bank thought was the final chapter in this struggle, was torn up. We know perfectly well that the Treasurer himself was against this legislation. That was stated previously in this House and was not contradicted by him. How is it that the right honorable gentleman favours it now?
– He will still get a good job out of it.
– He has done his best for the Government, but I repeat that this proposal will cause grave instability in the community. In a struggle like this the Government must not assume that it can act as it is doing because it has a temporary majority in the Parliament. The Commonwealth Bank of Australia is part of our history. It made tremendous contributions to our victories in two world wars. Those things are looked upon as part of the Australian tradition, and I do not believe that honorable members opposite realize how strong that tradition is. After the measures were defeated in this Parliament a few months ago, all honorable members on the Opposition side were bombarded with messages from all sorts of people. They were not all supporters of the Australian Labour party; they were just good Australians. They were so patriotic that they put Australia before party political viewpoints. Have I not stated the’ true position?
The great Commonwealth Bank was started without capital. That was stated by Sir Denison Miller, the first governor of the bank, in a speech he made on the occasion pf the opening of the bank for general banking business in 1913. He stated -
The bani is being started without capita], as none is required at the present time, but it is backed by the entire wealth and credit of the whole of the Commonwealth of Australia. It is intended to conduct the business on sound lines and, at the same time, to extend every reasonable facility to meet the growing requirements of our trade and commerce, and the development of our national resources in a way which should alike commend itself to the people and gain their confidence and support. Its success, in the measure we hope and anticipate, will, to a large extent, depend on the continued prosperity of the States of the Commonwealth, and the support of the people, whose bank it is, and in whose interests no efforts will be spared to make this national institution one of great strength and assistance in maintaining the financial equilibrium on safe lines, so that its expansion will be concurrent with an ever increasing volume of wealth of the Commonwealth of Australia.’
So, when some people ask why the Commonwealth Bank is called he people’s bank, I quote the words pf the first great governor of the bank, Denison Miller. In his speech he also said -
It must become an important factor in dealing with the finances of the States and the Commonwealth, and there is little doubt that in time it will be classed as one of the great banks cf the world.
So it is. That is not recognized in certain private banking circles, but the Commonwealth Bank is one of the great banks of the world. Then there is the extraordinary position about the private banks. Professor E. L. Wheelwright, in a book published recently analysing the source of control of company institutions in Australia, reached a conclusion very much like that which was reached by Berle and Means in their great book on ownership of corporations and private property in the United States of
America to the effect that the control of, bodies like private banks is not limited to shareholders or directors. They interlock with other institutions so that tremendous political power and pressure is exerted by them. That was pointed out by the honorable member for Hindmarsh (Mr. Clyde Cameron) previously. These people think they have in their armoury all the force of public opinion and the great capital interests in Australia. That is what enables them to be so bold and daring.
No doubt, the Government - and, unfortunately, the Australian Country party has joined it for the moment in that endeavour - plans to subvert the Commonwealth Bank of Australia; that is to say, it seeks to weaken its fabric and structure. The Government should examine what it is doing. Look at the effects of its proposals. Let us take the Commonwealth Trading Bank. It has half a million customers. I; has been conducted with brilliant success by its officers who are part of the Commonwealth Bank service. Until this bill is passed, each one of those officers is eligible for appointment in any part of the Commonwealth Bank service, but that situation will be changed by the bill that is before the House. The whole Commonwealth Bank service is to be reorganized and reallocated. The great Commonwealth Trading Bank has been housed for a long time in a huge building in Sydney. Once its officers are scattered, the Government will have to find accommodation for them somewhere else. I wonder where? It will be somewhere around the town. What does it matter in the eyes pf the Government? It is trying to destroy the goodwill of the Commonwealth Bank. Feeling among the people will be so strong that they will regard this situation as intolerable.
I do not propose to go into all the provisions of these bills. First, there is the change in the Commonwealth Bank in respect of the protection now afforded against a quick rise in credits in the private banks. How are liquid securities and .Government securities to be kep,t in hand ip relation to deposits? No wonder Dr. Coombs and the Prime Minister are sick to death of the claims of the private banks. The private banks made an arrangement that a certain liquidity would be preserved, but the only organizations which kept their bargain with the Commonwealth were two banks - the Commercial Banking Company of Sydney and the Commonwealth Trading Bank. It was a gentleman’s agreement, and, of course, the gentlemen kept it; the others tore it up. What can you do with them? That was a wicked and dishonest act after the other two banks kept their agreement.
As to the proposal itself, it seems to me that there lies a weakness in the fact that action might have to be taken quickly, and in certain circumstances notice is required to be given. I know others differ from that opinion, but I also know that when the great war crisis confronted Australia and questions of credit either to or away from this country arose, action had to be taken very quickly in special fields, otherwise no good would have resulted. That is why I object to that provision.
This idea of separating the savings bank from the Commonwealth Bank or central bank is absolutely abhorrent. After all, what does it mean? The whole situation might be likened to that of a child playing with toys. For the Development Bank, the Trading Bank and the Savings Bank, there will be a new organization; indeed, there is to be a position in which there will be all harness and no horse! All sorts of restrictions are to be imposed. At the top, there is to be a board of eleven, of whom I think eight are to come from outside. No doubt the appointments will be made by the government of the day. What knowledge of the business or affairs of trading banks will these appointees have? If they are men with previous experience of trading banks and if, because of their past association with trading banks, they are not rendered ineligible by the statute, what view are they likely to have? Why should such men have power over managers of proven brilliance and experience? The Government does not do these things for the private banks. It is not bringing down similar legislation to exercise the same control over the managers of private banks. On the contrary, such managers are given very wide discretion. The proposed new board, however, will have power to interfere and give rulings on every part of the business done each day. Its decisions are not confined to matters of policy; it has power to decide on day-to-day affairs. Why, this cumbrous machinery at the top level can give a ruling on every loan transaction!
But that is not all. Over each of these three sections, the Trading Bank, the Development Bank and the Savings Bank, there is to be another committee of five. Under these committees are all the people who have run the bank and made it successful. Why, if one wanted to weaken that institution and perhaps injure it irreparably, one could not find anything more effective than this unwieldy machinery at the top level.
It is interesting to note that in the directives to the management of these banks, the reference to full employment is omitted. That is a very dangerous omission, for the people believe in full employment, and although Australia is committed to that policy, the Government carefully omits that provision from the bill in connexion with this banking corporation.
Mr. Speaker, that, to my mind, is the choice that has to be made in connexion with this legislation. The reason for this legislation cannot be that the private banks are worried about their profits, for they have “ done very well, thank you “, under this Government. The published profits of the banks are worth quoting. They show a sharp rise from £10,500,000 in 1951-52 and 1952-53 to £14,600,000 in 1954-55, but there was some fall in 1955-56. This is plausible. Company profits generally have risen little in the past two years. The published profits are not exactly comparable to the Taxation Commissioner’s figures for taxable income. The authority from whom I have obtained information relating to published profits of the banks offers this opinion -
The figures for “taxable income” and my direct estimate suggested that there was relatively little concealment of profits.
We are talking about the private banks now. He says -
There was relatively little concealment of profits, that is, additions to secret reserves, until 1951-52.
Apparently this Government had not been in power for more than twelve months before the old method was adopted again. The quotation continues -
But there was a very large understatement in the published accounts in 1952-53.
These are serious matters, and the authority to whom I have referred continues -
No figures for “ taxable income “ or direct estimate are available for the later years, lt seems likely that understatement of profits was again high in 19S3-S4 and 1954-55, though possibly less than in 19S2-S3. (Government supporters interjecting) -
Or. EVATT. - What were the questions? 1 ask honorable members not to be modest when they interject, but to say who they are and what their questions are. I do not mind these interjections a bit, but the real fact is that those who are interjecting in a manner which, to call it silly would be flattering it, are the very people who are deciding whether what is proposed in this legislation is to become the law of the land. They do not want to hear the case for the people; they think they know everything. They do not want to hear any criticism of the way in which profits have increased over a large portion of the period under consideration, nor do they pay any attention to the remarks contained in the report on the Royal Commission on Banking about the old habit. There cannot be a banking system in Australia for private profit without getting back to the old method of secret reserves, a system under which the values of the buildings erected by the private banks are written down two, three, four and even five times, in order to conceal profits. There ought to be an examination of the true profit position of the private banks. We should certainly agree to am amendment of the bill designed to bring that about, or even to a bill specially designed for that purpose. No doubt such legislation would not be welcomed by the private banks.
But there is something much worse than that behind this. The honorable member for Wentworth (Mr. Bury) stated his position quite clearly this afternoon. Apparently he does not believe in running anything for public benefit. He thinks that the whole trend towards being critical of profit making in a modern world has gone too far. We join issue with him there. We think there are some things in which private profit is perfectly legitimate, so long as the profit is reasonable, but we also think that it is not safe in the field of banking. With banking, we have a case in which there is no production in the money sense of the term. Great service, of course, is rendered, but is it right that in such cases there should be a profit motive in the operations’?
After all, the banks create credit. I hope that is no longer disputed. I hear no denial from the Government side. At one time it was disputed, and long debates were held in connexion with this question, but it is now admitted that the banks do create credit. It is also true that they are making a profit, especially in the new domain in which they now travel because in their present operations they are able to orbit themselves out to the field of hire purchase, something which, of course, would never be done by the respectable private banks of fifteen or twenty years ago. The banks are making great profits in that field. What moral right have these organizations, which have now established savings banks, to use their general banking system as the organizing centre for hirepurchase business, as was pointed out by the honorable member for Hindmarsh (Mr. Clyde Cameron)? Is it right that these private trading banks, which now have savings bank organizations, should have the unlimited right so to organize their affairs as to compel people to change their accounts from government savings banks to the savings bank departments of the trading banks? That is a contemptible practice, for, after all, nobody denies the tremendous value of the service rendered in the early days by the government savings banks of the various States and the Commonwealth Savings Bank.
The private banks are seeking every possible avenue of getting to the money to-day. They have now crept into the savings bank activities and into the hirepurchase business. At the rate they are going, the time will come when all repossessed appliances such as television receivers and refrigerators will be returned not to the store, as was the practice, but to the offices of the private banks. That is a ridiculous situation. Of course, they are permitted to do these things by this Government’s legislation, but that does not make it right in principle.
Above and beyond all that is the fact that these private banks have been a corrupt influence in this country, as Mr. Chifley proved. Mr. Chifley established facts and produced evidence to that effect in 1951, and I believe that what he said then was true. Under those circumstances, it simply means that irrespective of what its own opinion might have been, this Government has not been free to make its own decisions on these matters. Why, the Prime Minister was against this practice in 1953! The Treasurer admits that he has been opposed to it! We must not allow legislation to be framed and passed in this way.
Finally, I should like to sum up my party’s attitude towards this question. For the reasons given so far by my colleagues and myself, and for the reasons to be given by others on this side, the Australian Labour party is irrevocably opposed to the Government’s plan, which is clearly to divide and weaken the Commonwealth Bank, to procure its dismemberment as the supreme financial institution of the Australian people. The most vicious feature of the legislation is that the private bankers have combined to cripple the Commonwealth Bank, to aggrandize their own profits, to get a domineering interest in the new Reserve Bank and, finally, to destroy the Commonwealth Trading Bank, These powerful financial interests dominate the present Government, which shows complete indifference to public opinion and to the public interest. Labour will fight all the way against the Government and its masters - the private banks!
– I do not know whether other members will be able to follow the arguments of the Leader of the Opposition (Dr. Evatt) better than I have. I sat here during the whole of his speech, and, frankly, he has jumped so much from subject to subject without developing a logical argument on any particular point that it is extremely difficult to frame cogent and consistent arguments to refute what he said and to try to prove that the arguments and the facts that he presented to this House are wrong. I shall be interested to learn whether the newspapers are able to interpret more intelligently what he has said. Certainly, few on this side of the House have the foggiest notion of what his main arguments are.
Let us first try to put the matter into a proper context. First, these banking bills have been debated on many occasions in the past and I doubt whether anything can be said to-night, either by Government supporters or by Opposition members, that will add to what is already known by most honorable members and by interested members of the public. The public has shown its great confidence in the private banking system over the years because by far and away the greatest numbers of people still put their deposits, and therefore their trust, in the private trading banks, and numberless people also get their advances from them. As I have said, we know the arguments; we know them backwards, and nothing that has been said by the right honorable gentleman adds to our store of knowledge.
Secondly, we are compelled to debate these measures again, because, when these bills went to another place, they were rejected without any debate. Indeed, it is doubtful whether these bills would have come back to this House had they been properly and effectively debated by the Senate.
The right honorable gentleman has submitted that the bills were not debated in that other place because one senator was sick. We were very sorry to hear of his sickness; he was respected on this side of the House far more than he was by members of the Opposition. There was regret that he suffered inconvenience. It was regrettable that the Opposition should have compelled him to vote. Such action was avoidable and totally unnecessary. What should have happened, if common sense had prevailed, was that the first reading should have been agreed to and the second reading debate completed. Then, if the Labour party wished, on the merits of the bills, on the facts and on the arguments, to vote against the second reading, that was the appropriate occasion for the vote to have been taken.
– Why did you apply the gag?
– The right honorable gentleman from Barton is not even bothering to listen to the debate, so I do not know that you should interject.
If proceedings on these measures had been handled according to democratic and constitutional practices, the bills would have been debated by the Senate and the facts made known to honorable senators. We on this side of the House are unable to accept the arguments that have been put by the right honorable gentleman as to the reason for the rejection of the bills.
I should have expected the right honorable gentleman to argue this evening only on one point: What are we doing? Are we acting for the benefit of the people of
Australia? If we are, do these measures strengthen the banking system as A. means of fostering the public welfare. As an alternative do they weaken it? We have not heard one logical and consistently developed argument showing that the Commonwealth Bank is being weakened and, conversely, that the private banks are being strengthened at the expense of the Commonwealth banking system. Therefore, the Opposition has failed in the very first purpose of an Opposition, which is to isolate the issue and then to argue about it in an effort to persuade the people of Australia that something is being done that is not to their benefit.
What are the purposes of these bills which my colleague, the Treasurer (Sir Arthur Fadden) has presented to the House? If we look not only at the Reserve Bank Bill, but also at the legislation which constitutes the Commonwealth Banking Corporation, we will see written into it the purposes of the Commonwealth Government. They are that the banking system - and for that matter, the whole system of Government - is for the betterment of the interests of the people; so far as banking is concerned, to maintain the stability of the economy; and, so far as the Government, the central bank and the Commonwealth banking system are concerned, to maintain full employment in Australia. We have not heard those great ideals of government stated by the Opposition. They are the objectives. To-night, we are debating one of the means by which we can achieve the purpose of government. When these bills pass through the Senate, we will have considerably strengthened the banking system. As I have said, the banking system is one of the means by which we can achieve our objective and, much more important, we will have considerably strengthened the Commonwealth system of banks which includes the central bank and the Commonwealth Banking Corporation.
What do we want to achieve? First, we want a strong central bank. We ‘want a central bank that can co-operate with the Government in maintaining a sufficient amount of money within the community to prevent too many inflationary forces developing, that can co-operate to keep full employment and that can ensure that the interests of the people are sustained, lt must have adequate powers. Adequate powers are given to it. I venture to say that no other central bank in the world will have greater central banking powers than we will confer upon the Reserve Bank when it is finally incorporated. Secondly, we want a healthy private trading bank system and a strong and vigorous Commonwealth Trading Bank. We want them to be competitive, but we want them to operate under conditions of fair competition, not giving advantage to one and not discriminating against one, but giving them opportunities for expansion of business for the benefit of the people under conditions of fair and equitable trading. Finally, we want, and we have attempted to ensure, that the Commonwealth banking system - that is, the Development Bank, the Savings Bank and the other sections, particularly the Rural Credits Department - are strengthened and permitted to expand their activities.
Those are our objectives. As I have argued before, and as my colleagues in this House have argued, not so much persuasively but, I believe, conclusively, our objectives will be achieved by this legislation. The Labour party has not bothered to argue about that. A mass of somewhat garrulously put statements, lacking consistency, lacking logic and developed arguments has been advanced but nowhere do we find either fact or argument to support the view that this legislation will work to the detriment of the people of Australia.
May I now take the first point that I think has been put by the Leader of the Opposition; that is the question of the creation of a separate central bank. He said that under other conditions and in other days we had three banks in the one organization, each informing the other and each supporting the other. What were the reasons why the Treasurer thought that the separation of the central and trading bank functions was wise? He argued, first of all, that in a developing and evolving economy one must always look to the future and endeavour to adapt the banking system to changing conditions. The late Mr. Chifley, when discussing the earlier banking legislation, used precisely the same argument, and I venture to say if he had followed his own argument to a logical conclusion he would have established at that time a separate central bank.
My colleague, the Treasurer, went on to argue that the major reason for separation was that it was not practical or possible to have real trust and confidence as between the central bank and the trading bank whilst the central bank carried out trading bank activities and was, therefore, a competitor as well as an adviser to the private trading banks. I believe it to be the essential of good central banking and banking practice that the central bank must not only give leadership but also guidance and direction to the trading banks. That cannot be so if any grave doubt exists in the minds of the directors of the trading banks that the central bank will one day exercise its powers arbitrarily or unfairly against them or in competition for trading bank accounts.
I think that argument would be unanswerable were it not for the fact that the Leader of the Opposition dissented from the proposition on at least three occasions to-night.
It is a well-stated principle of equity - and I put this to-night even in the presence of my colleague and friend from Parramatta (Sir Garfield Barwick) - that one must not put a person in a position where his interests and duties might conflict. That is a sound principle to apply to banking as to equity. If the central bank has competitive trading functions and at the same time is endeavouring to guide and influence the destiny of the whole banking system, it might find itself in the position where its interests and duties conflict. My colleague, the Treasurer, has decided therefore - and the Government supports him - that there should be a separation of functions. The possible conflict of interest and duty should be prevented.
Is there any reason why, in terms of doctrine or well-established Labour party principles, the Opposition should object to this separation of functions? Most of us know, because we have heard it stated before, that as early as 1930 the Labour Government under Mr. Scullin attempted to put on the statute-book a bill to establish a separate central bank. At that time two of the great leaders of the Labour party, the late Mr. Chifley and the late Mr. Curtin, voted for the bill. The Opposition cannot argue therefore - and no one would be prepared to argue - that the Labour party has any real reason for objecting to the separation of the central and the trading bank functions.
Secondly, we say the need exists to establish confidence as between the central and trading banks which will immeasurably increase the prestige and standing of the central bank itself and introduce a spirit of goodwill and co-operation to the banking system that has been lacking during the last ten, twenty or thirty years. These are the Government’s arguments in favour of the need to establish a strong and independent central bank.
I make it clear immediately that neither the private trading banks nor the Government criticizes the present Commonwealth Bank Board and the way in which it has carried out its activities. In fact, the trading banks themselves have said, “ It is not the present Governor and the board about whom we have doubts, but what may be done under a hostile government”. I add, particularly a government which could be led by the Leader of the Opposition who to-night has made statements that no responsible person would make unless he was prepared to support them by argument. He said that the trading banks had not acted - using Mr. Chifley’s words but not willing to produce any facts to support his argument - in a proper manner, but had acted contrary to the interests of the Commonwealth. He said that the private banks had been a corrupt influence. Would the private trading banks and their depositors and customers trust a potential government when their present leader makes much scurrilous and slanderous statements and has not the courage to produce one fact to support them? If one wishes, therefore, to find a reason why the creation of a separate central bank is desirable, one may find it in the words of the right honorable gentleman himself.
I venture to say that the central bank has been strengthened, not only because it now becomes independent; not only because it is also in a position where it can use its influence freely and without suspicion, but also because the special accounts system has been replaced by a system of statutory reserve deposits. The trading banks have been extremely generous in suggesting this proposal. By making the suggestion they have indicated they are thinking, not of their own immediate interests, but of the interests of the banking system as a whole and the Australian people generally.
Under the old system of special accounts the central bank set a base amount and had the right to call up a specified amount of the increase in deposits - not a percentage of the total amount of deposits. Under the proposed new system, the central bank will have the power to call up 25 per cent, of the deposits and, on giving 45 days’ notice, the balance of the deposits to an unlimited amount. Admittedly, the central bank can only do that for a limited period unless notice of intention to extend the period is given, but none-the-less the central bank will be permitted to call up a larger amount of the total deposits under the proposed system than at present. The powers of the central bank, therefore, have been considerably strengthened so as to control the monetary system of the Commonwealth. That statesmanlike suggestion which will considerably strengthen the system of central banking emanated from the trading banks themselves. They will, it is true, be given the protection they need because, first, they will now receive notice of any intention to call up deposits in excess of 25 per cent.; secondly, arbitrariness will be ruled out; and thirdly, the proposal will prevent discrimination as between the various banks because the same amount will be called up from each bank.
Not only will the separation strengthen the central bank but it will make a real contribution towards securing the interests of the trading banks and the trading bank depositors and customers. I think - and T am sure this is the opinion of the Treasurer and of the Government - that the separation will do much for the banking system of Australia.
The Leader of the Opposition stated that the trading banks initiated all these measures and that the Government has acted not so much on their recommendation but under compulsion from the private trading bank interests. I state quite categorically that that argument and statement are not correct. The proposed action came from the Government itself and from the Government parties.
– Tell that to the Marines!
– Honorable members opposite would not know where the pro posals originated. That would not be within their own knowledge. Most of the proposals came from the Government parties and from the Government itself. To state that the Government is acting on compulsion from some one else is completely false. I repeat that this measure has the endorsement and the support of the Government parties and of the Government itself. It originated on this side of the House. The whole of the proposals, with the possible exception of that in connexion with the reserve deposit system, have come from us and have worked through the party itself.
It has amazed me that the great things that this banking legislation will achieve have not been mentioned by honorable members opposite to-night. First, may I state what I regard as some of the important changes, or series of changes, that will be made and which deserve special attention. The first one is the proposal to establish what is called a Commonwealth Development Bank, or a bank that has the right to carry out development projects of a kind that would not normally be carried out by the banking system. What will this Development Bank do? It will have the right to make advances, particularly to people engaged in small businesses, whether on the land or in secondary industry, under conditions where they might not be able to get advances from the banking system because they did not have sufficient security. The Development Bank is to be given certain powers. I should like to repeat to the House what those powers are, as stated by my colleague, the Treasurer (Sir Arthur Fadden). First, the bank does not necessarily have to look to the security; secondly, it can make an advance for a long term; and, thirdly, restrictions as to the amount that could previously be lent by the Mortgage Finance Department or the Industrial Finance Department have been removed. This is what the Treasurer has said about it, and this is its charter -
The Development Bank shall have regard primarily to the prospects of the enterprise becoming, or continuing to be, successful, and shall not necessarily have regard to the value of the security available. We have had very much in mind here the position of people who would have good chances of making a success of farming or some other form of production but who cannot get sufficient initial finance because they cannot offer the requisite amount of security.
So, Sir, we do find here something pf a constructive, and even of a radical nature. We are departing from the normal banking practice of making advances based upon either the personal covenant of the individual, or on security. Now, it will be possible to look entirely to the prospects and to whether the person concerned is likely to be successful. I am extremely surprised that nothing has been said by honorable members opposite about those provisions.
Proceeding a little further with this matter, I have heard it argued that this Development Bank will be but an appendage to the Commonwealth banking system. I think it wise to make it clear that it will not be an appendage but, on the contrary, will have its own charter, its own finance and its own executive board, which will be responsible only to the board of the Commonwealth Banking Corporation and, finally, to the Reserve Bank itself. It will have adequate finance. It has approximately £14,300,000 in present capital, and it is proposed to give it £5,000,000 by way pf additional capital from the reserve of the central bank. It will have adequate borrowing powers, including the power to borrow £2,000,000 from the Reserve Bank, in addition to money that it can borrow from the Treasury. Here we see a radical development that in time, I hope, will play an increasingly important part in permitting rural industry to develop - based, as I have said, not on the necessity to give security, but on the prospects, on the reputation, and on the character of the individual, as well as on his ability to earn reasonable profits and make his way in life.
The second point I want to mention - it is peculiar that an Opposition which has been making so much play on unemployment and housing has not mentioned it - is that in the legislation dealing with both the Commonwealth Trading Bank and the Commonwealth Savings Bank, special provision is made for savings to be applied for the development of housing. Looking at this matter as a matter of argument and debate, it must seem extraordinary and even hypocritical that the Labour party should stop the legislation from being passed by this Parliament and, a few months later, argue that not sufficient money is being provided for housing for the people of the Commonwealth. Had Labour supporters been sincere, they would have let the legislation go through” the other chamber. They could at least have said, “ Here is a real contribution to the solution of the housing problem. More finance will be provided in the future and here is something we can do for the betterment of the people of this country.”
The next point I wish to make is associated with the problem of full employment. The Leader of the Opposition again raised this question of full employment and virtually said that the policy of the central bank could be frustrated by the private trading banks. Well, the private trading banks would not wish to frustrate that policy. I am positive, and those who sit behind me also are certain, that the private trading banks would do all in their power to sustain the Commonwealth policy of full employment. Also it is written into the charter, both of the central bank and of the Commonwealth system of banks, that full employment shall be one of their objectives, and that they must direct their policies to that purpose. Again, it becomes a matter for comment in this chamber that an Opposition which frustrated the placing of these bills on the statute-book, and which prevented these ideals from becoming law, should later argue that the Government was not using the best means available to it to increase employment or to maintain full employment and to implement an effective housing policy.
Those are the points I wish to put to the House this evening. As I have said, the issues have been debated over and over again. We know the facts and we know the arguments. I base my argument for supporting the bills on several grounds. First, I think that the central bank itself has been strengthened, particularly by being made independent and by being put in a postiion where it can exercise true leadership and provide true guidance; secondly, I think it has been strengthened by a change from the system of special accounts for deposits to the system of statutory reserve deposits; and thirdly, I think it has been strengthened by being given considerably increased central banking powers. I know those powers will be exercised with wisdom. We can argue that the legislation will strengthen the banking system, because it will put the central bank, the Commonwealth Banking
Corporation and the private trading banks in a much stronger position than that in which they were previously.
When this legislation is passed, we will not only have improved and strengthened the financial position of the Commonwealth Trading Bank, but in addition, we will have given a degree of confidence to the private trading banks that they previously did not have. I am positive that, under conditions of fair competition, and under conditions in which the trading banks will be protected from arbitrariness and irresponsible action by a hostile Labour government, those banks will be able better to carry out their responsibilities for the betterment of the people of Australia.
I am amazed that the Opposition has missed the critical point of this argument. It has not said that the system of banking will be weakened by this legislation. It has, in effect, argued that the system will be considerably strengthened, but because of a mean streak running through the Labour party, because of some extraordinary inability to look at this issue on its merits, it is now asking that the bills be rejected. We on this side of the House say that if they do not argue that the legislation will weaken the central banking and Commonwealth banking systems, they should pass it, and as quickly as possible.
The private trading banking system is a voluntary one. It is built on the goodwill and the deposits of a large number of Australian depositors. The Government has the duty to protect them, and they have the right to be protected. While the Government remains in office they will be protected. After listening to the Leader of the Opposition to:night, I think there must be a grave doubt in the minds of depositors and customers of the banks whether they would not be severely penalized if the right honorable gentleman ever, unfortunately, became leader of the Government.
– The Minister for Primary Industry (Mr. McMahon), in opening his speech asked the rhetorical question, “ Are we here for the benefit of this nation? “. That is, as you will agree, Mr. Deputy Speaker, a question that is very easily answered. The Government is certainly not here for the benefit of the nation, and the people, at the first opportunity they get of passing judg ment, will show in overwhelming fashion that they want the Government here no longer.
The Minister made a series of assertions that it is not possible to answer by argument, but insofar as he brought argument to the table, I shall endeavour to reply to him. He said that he could visualize no real reason why the central bank should not be separated from the remaining portions of the Commonwealth Bank. Perhaps the simplest way to answer him is to quote a passage from the report of the Royal Commission on Monetary and Banking Systems, which states -
Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should dc both. Through its trading bank activities it possesses powers of competing with the trading banks which can be exercised as and when required. Similarly, its savings bank activities add to its ability to regulate the volume of credit and enable it to compete, if necessary, with the State savings banks. We are of opinion that the use of its trading bank activities as an adjunct to central banking policy is in keeping with its central bank functions, and is to be approved.
That is not the argument of a Labour supporter; it is the considered finding of the Royal Commission on Monetary and Banking Systems. Against that the Minister, who claims to have knowledge of the subject, says that he cannot visualize any real reason why these functions should not be separated. The finding of the royal commission continues -
The present structure of the Commonwealth Bank, consisting as it does of a central bank, trading bank powers, and a savings bank, is in our opinion essential to the efficient exercise of its functions as a central bank.
If there is any stronger reply that could be made to the Minister than that, I cannot imagine it.
The Minister was good enough to say that men should not be appointed to positions where their duties and interest conflict. That is a remarkable statement, coming from a Minister of this Government, which is constantly appointing men to the control of boards where their interests as private individuals, and their business interests, conflict with the duties that they should properly perform as members of these boards. Under this legislation, the Government is about to appoint a board and ten of the eleven members will almost certainly be political appointees and friends of the Government, all men whose interests will certainly conflict with their duties under this legislation. The history of the Liberal party in relation to appointments to boards has always been the same.
When the Minister dealt with the statutory reserve provisions of this bill, he made what I think is the most naive statement ever to be made in this Parliament. Either the Minister is exceedingly naive or he imagines that those who are listening to him are exceedingly naive. He said, in putting forward these new proposals dealing with the statutory reserve deposits, that the private banks have been extremely generous. According to the Minister, they have been thinking, not of their own interests, but of the interests of the people. That is laughable. Whatever else is said about these new provisions, it is clear that their whole purpose is to delay Reserve Bank action, although the need to deal with any sudden inflationary or deflationary situation arising in the country would be urgent. The very thing that should be urgent, in which speedy action is obviously necessary, is, by these provisions, to be delayed for 45 days at least.
The Minister said that the Government, in introducing this legislation, had not been dictated to by the private banks. The Minister is perfectly entitled to say that. All I can say is that he will find it very difficult to obtain public acceptance of that statement when one remembers the rearguard action fought for so long by the Treasurer (Sir Arthur Fadden), and by some other members of the Government, against the increasing pressure brought by backbench Liberal members, who were acting as the deliberate spokesmen of the private trading banks, and who were joined eventually by several senior Liberal Ministers and finally obtained the support of the Prime Minister. By following the daily press reports of the battle in Cabinet we were able to see that they finally achieved the acceptance of almost all the proposals that the trading banks had insisted should be written into the new legislation.
So, after a delay of eight years, the legislation finally came to Parliament at the dictates of the private bankers and those who were their servants among the back-bench members of the Liberal party, and finally senior Ministers of the Government on whom pressure had been successfully exerted. The Minister, in an endeavour to excuse the obnoxious provisions of this legislation, spoke about the magnificent possibilities that existed with the use of the powers now to be given to the Development Bank. I am not denying that the Development Bank, as envisaged in this legislation, could use those powers most usefully indeed, but all the necessary provisions in that respect are already on the statute-book of this country in sections 80 and 101 of the Commonwealth Bank Act 1945, passed by the Chifley Government.
The same can be said of the Minister’s remarks with regard to housing. All the necessary provisions are in the existing law. What is wrong with housing to-day is that interest rates are too high. Not one Minister is prepared to endeavour to obtain an effective reduction in the rates of interest, which are crippling the building of homes in this country in so many ways.
The fight that is now proceeding over the Commonwealth Bank is, after all, part of the historic fight that has been proceeding over the Commonwealth Bank ever since the first proposal for its establishment. I have a great respect for the Minister for Primary Industry. He is a Liberal in the true traditions of the Liberal party. The history of the Liberal party is that ever since 1911 or 1912 it has consistently fought, first, the establishment of the Commonwealth Bank, and, secondly, every proposal to increase and extend the bank’s powers. The fight to abolish the Commonwealth Bank was maintained right up to the outbreak of the first world war. When the proposal for the establishment of this bank was brought before the House of Representatives of that day, every member of the Liberal party bitterly opposed it, and every form of this House was used in an endeavour to prevent the establishment of the Commonwealth Bank. Right up to the outbreak of the first world war members of the Liberal party, their press supporters, and their private banking friends consistently endeavoured to cripple and destroy this infant institution. However, during the first world war the value of the Commonwealth bank was so adequately proved that from then on no Liberal government has ever again dared to seek the abolition of the bank, but instead has sought at every opportunity to sabotage it, to limit its operations, and to weaken it. The Liberals’ first opportunity came on their re-election to office in February, 1923, under Stanley Melbourne Bruce, with Sir Earle Page as Treasurer. When the Liberal-Country party Government - I do not know what the parties were calling themselves at the time, but they are now known as the LiberalCountry party Government - brought down the legislation, it effectively destroyed, for many years, the Commonwealth Bank as the people’s bank. It was placed under the control of a board of directors whose duties certainly were at variance with their own private interests. They put their private interests and the interests of the private institutions with which they were connected above their public duty, so that the Commonwealth Bank of Australia, for the succeeding decade or more, was prohibited from competing for business with the private trading banks of this country.
Indeed, the position was created in which the manager of a branch of the Commonwealth Bank dared not accept a new customer unless he had first satisfied himself that that customer was not already a customer of an existing private trading bank. The board of the Commonwealth Bank, as then appointed, represented purely the interests of private financial institutions throughout Australia and was a body which, when the onset of depression caused widespread unemployment in this country, prevented the release of any credit whatever to relieve the situation. It opposed the shipment abroad of £5,000,000 in gold, forced the cutting of pensions, wages and salaries, as well as interest rates, and precipitated a situation in which the total number unemployed grew to 700,000. One in every three workers in this country was living on the dole - the weekly dole being 6s. 6d. for a man, 13s. for a man and wife, and 19s. for a man, wife and one child.
– It was 4s. 1 1 d. in South Australia.
– As my friend reminds me, in South Australia it was as low as 4s. lid. a week. Every step insisted upon by the Commonwealth Bank Board at that time - which was the real government in Australia in conjunction with the anti-Labour majority in the Senate - was cheered, applauded and supported by the Liberal party majority in the Senate, which was the only body which could have effectively curbed them. Similarly, the Liberal party and the Australian Country party, both in 1945 and in 1947, opposed the legislation which took the control of credit finally out of private hands in this country and placed it in the hands of public officials, operating a system for the public good instead of, as it had been before, for the profit of private bank shareholders.
Honorable members will remember the tremendous fight that the Liberal party and Country party put up in this chamber against that legislation; and when the concept of full employment for which they now mouth support was announced every one of them sneered at it. Who will deny that the present Prime Minister at that time rose in his place and denounced that doctrine of full employment? He said that the most we could afford to have in Australia was high employment.
– Your government never achieved full employment.
– Yes we did, and as soon as the people of Australia regain their opportunity they will never again permit any substantial departure from the principle of full employment, as the parties now in government have done. At that time it was argued that public control of credit meant political control of credit and that political control of credit was infinitely dangerous to the interests of the people of Australia. Right up to the last ditch they fought to maintain control of credit in this country in the hands of private financiers. Now, that having been lost, they say that they do not believe in anything of the kind.
The whole history of this matter shows that, from the very beginning of the proposal to establish the Commonwealth Bank, the anti-Labour parties fought with whatever weapons were at their hands. So, when the present members of the Government come before the people and say, “ We have new legislation affecting banking in Australia “, they need not be surprised if the people choose to believe that what they are doing now is exactly in accord with the pattern of what they have done over the years that they have been a political party coalition.
– That is why they will return us to power.
– The Minister for Defence (Sir Philip McBride) said that that is why the present Government parties will be returned to power. The people will return them, but not to the treasury bench.
– They will return them to the place from whence they came.
– As my leader says, they will be returned to the place from whence they came. If there should be any doubt about that, I wonder that the Government should lose any time in testing the people of Australia on this issue. I happen to represent what is called a marginal electorate. There is no issue on which I would rather fight an election than on the issue of the present Government’s banking proposals. If there is one thing which the people of Australia are concerned about, it is that the private trading banks shall not be allowed to cripple the Commonwealth Bank, which they know as the people’s bank. After the anti-Labour parties had unsuccessfully fought the Chifley Government’s 1945 and 1947 legislation, the agents of the private trading banks, in a final endeavour to defeat the measure, took it to the court in what was known as the “ Melbourne City Council “ case, and succeeded in establishing a legal breach in the wall of security which that legislation had established for the Australian people. It was from that, of course, that sprang the issue of nationalization of banking, which was ended when the High Court of Australia declared that under the present constitutional powers of the Commonwealth the nationalization of banking could not be established.
But the issues that were raised in that great debate still stand. One is that the public control of credit is essential to full employment in this country. From now on, the people of Australia will insist on the maintenance of full employment and they will never allow this or any other government to go back to the days when private financiers controlled the credit of this country and in a time of depression, in order to protect their investments, immediately called in credit at the very time when they should have expanded it. It is obvious that under private control of credit, that must always happen, whereas under public control of credit it is possible to curb the supply of credit in boom times and to expand it. when times are bad.
– It is as easy as that, do you think?
– It is as easy as that to state the fundamental difference between the private control of credit and the public control of credit. The Minister who, for so many years, fought for the private control of credit, should know how easy that issue is. Never again will he dare to stand up and repeat the speeches he made in 1945 and 1947 in favour of the private control of credit. I ask him whether he would care to repeat the speeches hemade in those days in support of the privatecontrol of credit. I should like to hear him do so.
It is most astonishing to hear honorable members on the Government side now soglibly accept these points of policy on which they have been divided over theyears. At the same time they are attempting, as far as they can, to resist any further progress in financial policy and to undermine and weaken the Commonwealth Bank which they no longer dare, openly, to try todestroy. This legislation seeks to separate, complicate and weaken the trading section of the Commonwealth Bank. It paves the way for the transformation of the private trading banks into high interest flat ratelenders through hire purchase - a path that they are already following and which) this legislation would make so much easier for them. Of course, this legislation is part of the dear money policy of this Government. It is part of the successivs steps that the Government has taken in that direction. The first step was the lifting of the Government bond rate, the second step was thi development of hire purchase projects, and now we have these proposals for the separation and capital crippling of the Commonwealth Trading Bank.
In this debate, we are faced with a conflict between the interests of the money-sellers of Australia and the interests of the ordinary people. Exactly the same issue has confronted this Parliament in every piece of financial and banking legislation that has been placed before it. If we can accept what supporters of the Government now say, it must be admitted that on even’ -previous occasion the Labour party has been in the right and the Government has been in the wrong.
– The people do not think that.
– But you do.
– Oh, no!
– Indeed, you do, unless what you say is different from what you think, because now you are conceding every issue that you fought so vigorously on previous occasions when financial legislation was before the Parliament.
– They are only words.
– You are now conceding the wisdom of the establishment of the Commonwealth Bank. In fact, you have claimed to be the champions of it. You want to strengthen it. But as the Liberal party, you fought unanimously, -strongly and to the bitter end against its very establishment. So you were wrong then.
– That is complete nonsense, as you know.
– I do not think it adds anything to the debate to say that it is complete nonsense.
– The Liberal party was not in existence at that time.
– I do not think it is complete nonsense to say that the Liberal party was opposed to the establishment of the Commonwealth Bank.
– The party was not in existence then.
– It was not the same party?
Mr. ACTING DEPUTY SPEAKEROrder! Will the honorable member resume his seat for a moment? If he addresses the Chair, his speech will not be interrupted with interjections-
– I shall have the greatest pleasure in addressing you, Sir.
– Why does not the Chair deal with honorable members who interject?
Mr. ACTING DEPUTY SPEAKEROrder! I do not intend to allow these interjections to continue. I ask the honorable member for Eden-Monaro to proceed with his speech.
– I shall continue to address you, Mr. Acting Deputy Speaker, and when I hear an interjection that is relevant I shall, through you, use it in my argument. As I was saying when I was so rudely interrupted, the Liberal party opposed the establishment of the Commonwealth Bank. Was the Liberal party right or wrong? Obviously, it was wrong, because to-day the gentlemen of the Liberal party say that they support the Commonwealth Bank and want to see it strengthened.
In 1923, the Liberal party, which was then in office, prevented the Commonwealth Bank from competing with the private trading banks. Was it right or was it wrong? Obviously, it was wrong, because Liberal members opposite now say that they want to see the Commonwealth Trading Bank most actively competing with the private trading banks. In 1945, the Liberal party - we cannot say now that it was a different party, because some honorable members sitting opposite me were here at the time - bitterly, vigorously and to the last ditch opposed public control of the credit system of this country. Were they right then, or were they wrong? Obviously, they were wrong, because to-day they insist that they are firmly in favour of public control of credit, that they recognize it is essential to full employment, and that indeed they could not think of anything else.
At every stage until now they have been wrong. Obviously, at every stage until now the battle has been between the interests of the money sellers and the interests of the ordinary people of Australia. Until now the Liberal party has been wrong all along the line. It is pretty clear that the issue is the same now. It is obvious that the Labour party is battling not for the interests of the money sellers, but for the interests of the people of Australia. It follows, therefore, that once again you are battling for the interests of the money sellers, and I congratulate you upon it.
Mr. ACTING DEPUTY SPEAKEROrder! The honorable member will address the Chair.
– I congratulate honorable members opposite, because they represent the money sellers of Australia. It is right and proper that they should do their duty by those who finance them into power and by those whom they represent.
– Does the honorable member think that the trading banks should be closed up?
- Sir, I should like to have an opportunity to answer that interjection. The money sellers in this country want money at the highest price that can possibly be obtained; they want the highest interest rates. That is obviously their purpose and interest.
– And so does the Government.
– As the Leader of the Opposition says, so does the Government. This Government, ever since it has assumed office, has proved itself to be a high interest government. On the other hand, the people need money in sufficient supply and at the cheapest rate that can be obtained. That has always been the policy of the Labour party - a policy that it implemented when it was in office but which members of the present Government opposed so vigorously and which they have rejected since they assumed office.
The legislation that we are now considering is in line with all previous legislation affecting the Commonwealth Bank. The struggle is between those who would expand and strengthen the Commonwealth Bank and those on the Government side of the House, who, not daring now to seek to abolish it, instead seek once again to restrict and to weaken it.
.- Mr. Acting Deputy Speaker, the honorable member for Eden-Monaro (Mr. Allan Fraser) has treated the House to one of his fine synthetic furies to which we have become accustomed over the years. I am afraid, though, that he has only added to the general smoke screen that has been put up by the Opposition in this debate. We did not hear very much from him, nor indeed have we heard very much from his leader and most honorable members opposite, about the details of this legislation.
I wish to commence my remarks by putting a question directly to honorable members opposite, because I believe that almost” everything that they have said during thisdebate has been designed deliberately to distract the attention of honorable membersand of the public from their real policy in. relation to banking. I need to go back a. few years to demonstrate what I am saying. In the course of this debate this afternoonand to-night, honorable members oppositehave made various references to the lateMr. Chifley. I propose to quote something; that Mr. Chifley wrote in 1937. I preface it by saying that, over the years, members, of the Australian Labour party have repeatedly stated that nationalization of banking is to be achieved by extending the activities of the Commonwealth Bank and by crushing or absorbing the trading banks. This is what Mr. Chifley wrote in 1937, as recorded at page 263 of the report of the Royal Commission on Monetary and Banking Systems -
In my opinion, the best service to the community can be given only by a banking . . . system entirely under national control.
– Hear, hear! That was a great statement, and a very true one.
– That interjection is very interesting. That is what I had hoped for. Mr. Chifley further said -
– Hear, hear!
– The honorable member’s interjection confirms the p’oint that I am trying to make and which I think needs to be kept continually under the notice of the people of this country - that the people who would implement Labour policy if the Labour party assumed office in this place are the people who are still saying the same sort of thing that Mr. Chifley said in relation to banking a number of years ago. The honorable member for East Sydney quite unashamedly admits by saying “ Hear, hear! “-
– I am very’ proud of it.
– The honorable member admits that he is still in favour of the nationalization of banking. My question to members of the Labour party is this: What is your policy on banking? Have honorable members opposite renegued their policy on the nationalization of banking?
– For years and years that policy has stood high on their platform. Have they renegued that policy?
– If they have, let their leader declare that to be the case and let the people of Australia be under no misapprehension on the point. I believe it is of fundamental importance. One honorable member said this afternoon that an election had never been fought on banking issues. I have never heard a more fatuous statement from any member. If the 1949 general election and the 1951 double dissolution election were not fought, very largely at least, on banking issues, I should like to know what issues were involved. If a poll were to be taken of intelligent and informed citizens the answer would be definitely that, in 1949, the Government was given a mandate to put the banking of this country on a sound footing and to repeal the nationalization legislation which was introduced by the Chifley Government in 1947 and which, at that time, was clearly against the wishes of the overwhelming majority of the people. Protests flowed in to the Chifley Government in 1947 from all the corners of the Commonwealth. Protest meetings were held throughout the length and breadth of the land against the Labour party’s policy of bank nationalization.
To-night, the Leader of the Opposition (Dr. Evatt) said, very quietly, of course, “The courts have ruled that we cannot nationalize the banks “, as though that were completely accepted by him and by all his followers. But the honorable member for East Sydney has helped me by making an interjection and snowing that there is a cleavage. [Quorum formed.] As I was saying, before the tender susceptibilities of the honorable member for East Sydney were hurt by my remarks, it is all very well for the Leader of the Opposition to brush off this question of the nationalization of banking by saying that there has been a legal decision, under section 92 of the Constitution, precluding such a straight-out attempt as was made by the Chifley Government in 1947. But so long as the nationalization of banking is still on the platform of the Australian Labour party, and so long as there are members of the Labour party, particularly leading members such as the honorable member for East Sydney and the honorable member for Hindmarsh (Mr. Clyde Cameron), who advocate bank nationalization, there is. a danger that the banks will be nationalized.
That is the crux of the whole matter of banking. Honorable members have been hearing various statements about private and public control of credit. We have heard it stated that the Government has been defeated on points of policy. According to the honorable member for EdenMonaro (Mr. Allan Fraser) the Liberal party has consistently fought the Commonwealth Bank. He railed for some time tonight against the “private financiers”, as he called them - the “money sellers” of this country. Like his leader earlier in the evening, he accused us, on this side of the House, of endeavouring to implement this legislation at the specific behest of the private trading banks. Those are statements which cannot be sustained. It is easy enough for honorable members opposite to make these statements, but I challenge them to prove them. They cannot be proved because they are not true.
I come back to the main question of what the Labour party’ would do with the banking system if it got a chance. It is because we are anxious to make it as impossible as we can for the banking system to be put under a single monopoly control that we are desirous of straightening out the legislation and putting the banking system on the soundest possible basis. That is what the Government is aiming to do in this legislation. Banking is everybody’s business. It affects every single person in the community. We on this side of the House have made it clear consistently, over the years, that competitive banking is our policy, that we consider it a necessary part of the free enterprise system, and that we shall uphold it to the death.
The fourteen bills that we are considering, four of them major bills, and ten of them minor ones, seek to alter the banking structure in order to ensure, in the first place, a greater confidence and harmony amongst the various component parts of the banking system; and, in the second place, greater efficiency in the operation of the Australian banking system. It is very obvious, from reports in the press and from polls that have been taken, that an overwhelming majority of people do not want bank nationalization and that they do want a free competitive system of banking to continue. I believe that the series of bills now before the House has very strong support, not only in this chamber, but throughout the country.
It is all very well for honorable members opposite to interject. It is all very well for them to talk glibly about not having a mandate for this or that. I should like to ask the honorable member for Yarra (Mr. Cairns) who does not happen to be in the chamber at the moment, whether he would claim that the Chifley Government was given a mandate in 1946 to introduce the legislation on banking which it introduced in 1947. I should like to hear his remarks on that subject. 1 think that we, on this side of the House, can claim that we definitely have a mandate from a majority of the people of Australia to take such steps as we consider necessary to preserve the free banking system. Banking is an unhappy matter with the Labour party because it produces dissension in the ranks, as has been shown clearly to-night by my straight-out question as to where honorable members opposite stand on the question of bank nationalization. Some of them, quite clearly, still believe in bank nationalization. If Labour were in power, that element would undoubtedly continue to press for it. There is a danger to the people of this country as long as nationalization of banking, in any form, is on the programme of the Australian Labour party.
Honorable members opposite are very fond of using slogans. We have heard a number of slogans and cliches in the course of this debate. In particular, Opposition members have spoken about the “ people’s bank”. Government supporters have been accused of making an attack on the “ people’s bank “. I should like to emphasize one point in relation to the term “ people’s bank “. It is very true that a vast number of people deal with the Commonwealth Trading Bank. It is equally true that a much vaster number of people have deposits with the Commonwealth Savings Bank. But it is also true that there are tens of thousands of people who deal with and have deposits in the private trading banks. We have not any brief for one particular section of the community but we are earnestly concerned with establishing a sound, workable banking system in which there will be an atmosphere of confidence and mutual trust between the various elements that make up the banking system.
The honorable member for Eden-Monaro and the Leader of the Opposition referred to the question of hire purchase and the honorable member for Eden-Monaro tied that in with his attack on the “ moneysellers “ and the “ private financiers “. I should like to clarify the point by giving a few figures. According to the latest figures that I have been able to find, the Commonwealth Bank has investments through hire-purchase channels to the extent of approximately £16,000,000. The private trading banks have investments in hirepurchase channels to a total of approximately £11,000,000 which is £5,000,000 less than the investments of the Commonwealth Bank. The total private investment, outside the banking system, in hire-purchase channels is estimated to approximate £300,000,000. Therefore, it can be said quite clearly and emphatically that on those figures the interest of the private trading banks in the hire-purchase field is negligible by comparison with the overall total. I think that that disposes quite effectively of the argument of the honorable member for Eden-Monaro.
These four main bills have not been discussed very much. I fear that the smokescreen which has been put up by honorable members opposite for the purposes which I have described has tended to obscure the fundamental principles of the legislation before us and I want, in the time left to me, to mention a few of the main aspects. The first bill deals with the setting up of a reserve bank of Australia. In order to refresh the memories of honorable members I would point out that it is designed to reconstitute the central bank, a section of the Commonwealth Bank, and that it will incorporate the Rural Credits Department.
The second bill sets up a Commonwealth Banking Corporation, which will comprise various elements - the Commonwealth Savings Bank, the Commonwealth Trading Bank and a third, and new, element, the Commonwealth Development Bank.
The third measure, the Banking Bill, is designed to regulate banking, to protect the currency and the public credit of the Commonwealth, and, in particular, to replace, with a system of reserve deposits, the existing system of special account deposits which the trading banks must keep with the central bank.
The fourth main bill, the Banking (Transitional Provisions) Bill, deals with the transitional stage only. Its purpose is to enact certain transitional provisions which are consequential upon the enactment of the other three main bills. Naturally, the changeover will involve a considerable amount of work and detailed planning.
In addition to these four main bills, there are ten minor bills, which deal with necessary consequential amendments affecting matters not related to banking.
I shall have to be brief because the honorable member for East Sydney (Mr. Ward) wasted some of my time by calling for a quorum - and then left the House. Dealing very briefly first with the Reserve Bank of Australia, I would like to refer to a passage in “ Central Bank “, a book by Dr. M. H. de Kock - a central banking authority who was a leading member of the South African Reserve Bank - which was published in 1939. It reads-
That supports our argument that central banking should be removed completely (from the area of competition. Other authorities giving the same point .of view have already been quoted by speakers from this side of the chamber. We feel that, if mutual confidence and trust are to be engendered, it is absolutely essential that the central bank under the .new title of Reserve Bank, should be in a distinct compartment of its own, with its own specialized staff and its own board of control. This legislation seeks to bring that about. At present the Governor of the
Commonwealth Bank controls the whole of that great structure, and it is hard to imagine that any human being, with the best will in the world, could completely divorce his interest as Governor of the central bank from his other interest as Governor of the Trading Bank, though these interests obviously conflict. I am not referring to personalities, but I doubt “whether any one could be such a split personality as to be able to do that with complete success and impartiality. Most enlightened countries have adopted the system of central banking. They believe, as we on this side of the House believe, in a strong, independent, controlled central bank with adequate powers to deal with emergencies as they arise from time to time, to cope with sudden fluctuations, and to regulate trends in monetary and banking conditions.
Originally the Commonwealth Bank was founded solely as a trading bank. It was not until many years later - in fact, 1945 - that legislation was brought down to give it central banking functions. We believe that, in the interests of the nation as a whole, present weaknesses in the banking structure should be eliminated. Far from intending to maul or dismember the Commonwealth Bank, the legislation before us strengthens the financial fabric of this country. We believe that it will meet with the approval of the great majority of Australians who think about it at all. A lot of study and thought has been put into the preparation of this legislation; these bills have not just been cooked up over-night. Far from it. They have been worked out with great care and attention to detail. We believe that they represent the best that we can offer to the people of Australia in the way of a sound, workable banking system.
I should like to say something about the Commonwealth Banking Corporation and then go on to say something about the new Commonwealth Development Bank. I would like every one to be clear about the fact that the Commonwealth Development Bank will comprise the Mortgage Bank Department and the Industrial Finance Department, which are already part of the Commonwealth Bank structure. However, each is to be given more capital and wider borrowing powers. The Treasurer dealt with this matter in very great detail during his second-reading speech. He was very explicit, and pointed out that there would be a common staff for all three sections of the new Commonwealth Banking Corporalion - the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Commonwealth Development Bank, but that their separate identities would be maintained. Each would have its own charter, its own assets and liabilities, and its own set of accounts. Each would be under the control of the board of the Commonwealth Banking Corporation and in turn, under a separate, executive committee of that board.
The honorable member for EdenMonaro was very critical of the Government’s method of appointing people to boards. With reference to that question, I should like to read to the House some remarks by the Deputy Governor of the South African Reserve Bank, other comments of whom I quoted earlier to honorable members. He said -
A large part of the central bank’s duties, as we have already indicated, will always be the task of regulating the volume of credit in the community with the object of maintaining economic stability. This task, of great importance to the whole community, requires expert knowledge, training and experience. It can best be performed, therefore, by trained specialists, controlled and guided in broad policy by a board drawn from men with wide experience in Australia’s economic life, who without having special banking knowledge, will bring sound judgment and experience of Australia’s special problems to the task.
The people of this country can rest assured that these requirements will be kept in mind when appointments are made to the Commonwealth Banking Corporation Board and the other boards that will be established under this legislation. The best possible men with the best qualifications will be placed in these jobs. The only link between the new Reserve Bank on the one hand, and the Commonwealth Banking Corporation on the other, will follow from the fact that on each of the two boards there will be a representative of the Treasury. In all other respects the two boards will be completely distinct.
I do not think time will permit to deal in any great detail with the Development Bank. I think I should repeat, however, that the role of this bank will be to assist people who wish to start in industry or primary -production, and to promote new methods and forms of production, thus adding to the productivity of existing enterprises. The Government has made it very clear that it is not intended that the new Development Bank shall cut across existing financial institutions to any degree, but rather that it shall co-operate with them and supplement the types of finance that they provide. In particular, it is pointed out that the main function of the bank will be to assist small farmers and persons conducting small industrial undertakings or starting off in new businesses. It is also stated quite specifically, in clause 73 (1) of the relevant bill, that it will be the duty of the Development Bank to have regard to the prospects of a particular undertaking rather than to the value of the security available for a loan.
Much has been said during this debate about the special accounts provisions. The crux of the Labour party’s attack on these bills stems from the fact that they remove the possibility of discrimination against the private trading banks. It is the aim of this legislation to remove any possibility of such unfair discrimination. The private banks have contended for some time that the present power with relation to special accounts places them in an unfair position. The legislation before us removes this contingent threat to the private banks and to their customers. When this legislation becomes law, the Commonwealth Trading Bank will be in a position no more favoured than that of the private trading banks.
We believe that these various bills will, when they become law, ensure a smoother and more soundly based banking system for Australia, and that their provisions will play an important part in our rapidly expanding economy.
.- One fact, stark and undeniable, stands out in the Government’s handling of this legislation. That fact is the desire of the Government to confuse the people as to its real intentions. The honorable member for Ryan (Mr. Drury) has excelled himself, and should be rewarded by the Government for confusing the nation still further with his dismal speech of foreboding and gloom. Evidently the Government fears that after the next general election there will be a Labour government on the treasury bench and believes that some iron safeguards should be imposed to prevent a future Labour government from giving effect to the will of the people.
The honorable member for Ryan made a number of statements. His speech was a mixture of gloom and despair, with some misstatements of fact with regard to a number of matters. He said that if there were a poll to-morrow the people of Australia would declare themselves in favour of the Government’s legislation. I remind the honorable member, as I remind the Government, that quite recently a poll was held in Parramatta, and the people of that electorate had an opportunity to judge this Government, its legislation and its conduct. At that poll the majority of 10,223 recorded by a member of the Government at the previous general election was reduced to less than 5,000. If one were to consider the overall figure, it would be found that the majority was less than 4,000. Consequently, when the honorable member speaks of a poll, I have only to refer him to the recent vote in the Parramatta by-election, in which the people registered their opinions very clearly. The electorate of Parramatta is a blue-ribbon Liberal electorate which has not been greatly affected by problems such as the unemployment problem which effects my own electorate and many others. The Government put forward a candidate of the calibre of the present honorable member for Parramatta (Sir Garfield Barwick), who took his seat in the House to-day. Despite all these facts, the people of Parramatta declared that they were dissatisfied with the Government. They censured and rebuked it. They clearly indicated their opinion that the Government’s conduct generally, especially in regard to financial matters, was not in the best interests of Australia.
The honorable member for Ryan made another extraordinary statement when he said that this legislation was intended more or less to satisfy public demand, and that there was a desire on the part of the people for some new legislation to deal with the Commonwealth Bank. The Commonwealth Bank is the people’s bank. It has served them in war and in peace, through the trials and tribulations of the nation. It served Australia with particular distinction and credit during World War II. It has been the prop and pillar of the country during the post-war period. Yet the Government seeks to create the impression that it is an evil thing and that its activities should be restricted in some manner. The honorable member for Ryan was at pains to impress upon us that these bills were not presented at the behest of the private banking institutions. He claimed, as an innocent abroad, that the legislation was introduced because a group of well-meaning citizens wanted to see this action taken. I should like to read, for the edification of the honorable member and the House, an article that appeared in the “Sydney Morning Herald “ of 14th November, 1957. It was headed “ More Effective Banking System “, and it was as follows: -
The proposed banking legislation closely followed the recommendation long urged by the private trading banks, said the chairman of the Bank of Adelaide, Sir Arthur Rymill, at the annual meeting yesterday.
The proposals were not a form of sectional legislation, but had been framed in the best interests of the community. They would result in a more harmonious and effective working of the banking system, Sir Arthur said.
Under the proposed legislation, interest was to be paid on the reserve deposit accounts at a rate determined by the Reserve Bank with the approval of the Treasurer. “ It is to be hoped that, in deciding an appropriate rate of interest, proper consideration will be given to the need for the trading banks to build up further reserves to provide for expansion in serving the needs of a rapidly developing economy “, Sir Arthur said.
Referring to the movement of banks into the hire purchase field, he said that the bank’s investment in 40 per cent, of the shares of Finance Corporation of Australia Limited had so far shown a steady return of 10 per cent.
That is precisely the desire of Sir Arthur Rymill - that further funds shall be made available to the private banks for investment in hire purchase and other lucrative fields, although the money should be used for housing development and the other essential purposes. The Government’s proposals find support also from Mr. Staniforth Ricketson, the chairman of directors of Jason Investments Company (Australia) Limited, who declared -
Recognition of the services rendered to the community by the Commonwealth Trading Bank should not blind our eyes to the defect that many of Australia’s present difficulties, as was the case also in 1951-52, are directly traceable to the fact that the real keystone in any monetary system ismissing as far as this country is concerned. In other words, although central banking functions. amongst others, are carried out by the Commonwealth Bank, Australia lacks the advantage of a separate central bank, which could command the full trust, friendship and willing co-operation of the private trading banks.
That is an extract from a statement by Mr. Ricketson which is contained in a publication issued at the time of the introduction of the similar legislation last year. It is abundantly clear that this legislation is required, not by the Australian people, who include the 4,700,000 depositors in the Commonwealth Savings Bank, but by private interests. It has not been sought hy Dr. Coombs, the Governor of the Commonwealth Bank; it has not been sought by Mr. Armstrong, the manager of the Commonwealth Savings Bank; it has not been sought by the captains of industry; and it certainly has not been sought by the ordinary people. They wish to see full employment the regular order in Australia. They want the help of the Commonwealth Bank to be available, in conformity with the bank’s charter, so that full employment can be maintained.
I believe that if this legislation, by any mischance, becomes law, we will see the reverse of the honoring by the Commonwealth Bank of the principle expressed in its charter relating to full employment. Instead of the Commonwealth Bank rendering service to the people of Australia, doing the job that the mass of the people expect it to do, we will see the reverse. The pledge contained in the bank’s charter, which appears on the opening page of the bank’s annual report, is as follows -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the bank, will best contribute to the stability of the currency of Australia;, the maintenance of full employment in Australia; and the economic prosperity and welfare of the people of Australia.
That is a very laudable objective;, but can that objective be achieved if the changes proposed are made? If the central bank is governed by a group of men recruited from the business field, with ties with the private banking institutions, we may see some day in Australia a situation which will parallel a recent happening in the United Kingdom. Directors of the Bank of England who had ties with private trading banks found themselves greatly embarrassed by a leakage to those private banks of confidential information from the Bank of England - a leakage which profited those banks to the detriment of the nation and the well-being of the people of the United Kingdom and the British Commonwealth. Is that the kind of legislation we seek?
The honorable member for Ryan speaks about dual personalities. I have greater faith in the management of the Commonwealth Bank, constituted as at present, after the modifications of its structure made by the Chifley legislation and also by this Government, than I would have if the bank were to be restricted in the manner proposed in the legislation. The intention is to recruit to the directorate of the bank gentlemen of distinction, men who have had rich experience in banking, to use the terms of those who advocate this new course. These gentlemen undoubtedly would be rich, but not only in experience. They would profit very greatly from their association with the Commonwealth Bank, ls this desirable? Who clamours for it? Who asks for it? Over a period of years, when other amending legislation has been before the Parliament, the Government has, time and time again, stated, through the Prime Minister (Mr. Menzies), the Treasurer (Sir Arthur Fadden), and other Ministers, including the Minister for Labour and National Service (Mr. Harold Holt), who is now at the table, that it was thoroughly satisfied that a further separation of the Commonwealth Bank’s activities was unnecessary and undesirable. If the Government was satisfied that the provision in the 1953 legislation for the separation of the savings bank and the trading bank was ample to deal with the problem of banking in this country, why does it seek to go further now? The Treasurer paid a tribute to the Commonwealth Bank - a tribute which, I suggest, the honorable member for Ryan should read. In the course of his speech on the legislation last year, the right honorable gentleman said -
The private banks have made it plain that they do not criticize the way in which the central bank has used the powers and functions it has under present legislation. On the contrary, they have been at pains to commend the competence, integrity and impartiality of the central bank. They say that their complaint is simply and solely against the banking legislation as it stands, and that their fears relate wholly to the wrong uses that might be made of that legislation. Their objections centre on two main points. One is the link between the central bank and the Trading Bank. The other is the Special Account system which they also believe could be used to damage them in vital ways. On this latter point, I shall say more presently.
Now, as to those fears expressed by the private banks, let it be clearly understood that there is no issue in regard to nationalization. That is beyond any question at all. The courts have determined that matter, and the issue rests now with the electorate - with the people. If the people want nationalization of banking, then it is for the people to say so. No parliament at the present time could legislate to change basically the present concept of banking in Australia. That is fundamental, and I greatly deplore the attitude of those honorable members who drag this red herring of bank nationalization across the chamber in an attempt to confuse and mislead the Australian people. That red herring should not be dragged in.
There are four principal bills in the fourteen at present before the House. It is impossible to deal adequately even with the four principal ones. The special accounts provisions would be changed if these measures were to become law. Only a few days ago, I asked the Treasurer a question about the special accounts procedure. He failed to answer it on the day on which it was asked, but he gave a considered written reply the next day, and was at pains to point out that the present special accounts procedure is working satisfactorily, that there is no duress on the private trading banks, that funds are being called up freely and without any disharmony with the private trading banks, that funds are being freed from time to time in conformity with the needs of the private trading banks, and that the only restriction is that the moneys that have been released in order to promote productive activity in the community shall not be used to promote hire-purchase and similar activities. That was made clear by the Treasurer when he was out to defend the present practice. Yet he now proposes to destroy that procedure, by means of the measures now before the House, and substitute a new procedure under which higher interest rates will be paid on the funds held in the special accounts by the central bank, which is to be placed under the control of a new directorate. What will be the composition of that directorate? We know that it cannot embrace persons who have graduated through the service of the Commonwealth Bank of Australia, and who therefore have an appreciation of banking problems and an understanding of the inherent needs of the people and of the Commonwealth Bank’s historic mission for the Australian people. Such persons are to be automatically disqualified from office on the proposed Reserve Bank Board, the members of which must come from other fields of activity.
Honorable members will recall that the Prime Minister, the Treasurer and other Ministers, were at great pains to emphasize, in 1953, when banking measures were before the Parliament, that there was no need to separate the various functions of the Commonwealth Bank. The House will recall, also, the occasion when the honorable member for Macarthur (Mr. Jeff Bate) attempted to introduce a private member’s bill to deal with the bank, and how stoutly his proposal was resisted by the Prime Minister and the Treasurer, who would have’ no truck with it.
– The honorable member for Macarthur was not able to get a seconder for his motion for leave to introduce the bill.
– That is so. He could not get a seconder for his proposal, because, at that time, the Government had not been subjected to the full pressure of the private financial institutions which provide the financial sinews on which it depends. Because the Government had not been subjected to the full pressure of which the private financial institutions are capable, it was not prepared to come to heel.
Let us take these proposals feature by feature. The amazing thing about the proposal to dismember and divide the Commonwealth Bank - the people’s bank - is the inconsistency of the Government’s attitude. It maintains that it is wholly desirable and necessary to divide the Commonwealth Bank, to establish a reserve bank under a directorate the members of which are as yet only question marks, and to establish a Commonwealth Banking Corporation with a variety of functions embracing other sections of the bank. The Government says that the Commonwealth Bank shall undertake no hire-purchase dealings, and, indeed, in recent years, it has restricted the hirepurchase activities of the bank. Yet, it has told the private banks that they may conduct hire-purchase activities, savings banking, and trading banking, in the one building. In such a unified monolithic banking enterprise, a customer who seeks financial assistance at the general banking counter may be directed, if there is no money available from that section of the bank, to another counter under the same roof at which hire-purchase business is done at a higher rate of interest. As the “ Sydney Morning Herald “ pointed out not long ago, by this means, the private banks may participate in a legal blackmarket.
The Government’s attitude is reprehensible, and will not be accepted by the people. At the present time, the Commonwealth Bank of Australia is clothed with all the authority it needs to serve the people, and to provide all the credit that is needed for the things that ought to be done, including the standardization of rail gauges, the promotion of war service land settlement, and the construction of roads and houses. All these things can be done as the banking system at present stands. If the people feel that they have been let down, they ought to remember that they have been let down, not by the Commonwealth Bank, but by this Government, which is failing them miserably and dismally.
The Opposition has made a strong case against these measures, for which the Government has no mandate, and the need for which it has failed to establish. It is not the responsibility of the Opposition to make a case for the Government. That is the Government’s own responsibility, and no fair-minded person could say that it has made a satisfactory case in support of these measures. The Opposition, on the other hand, has made a very strong, definite, and positive case, which has been stated by the Leader of the Opposition (Dr. Evatt) and other Opposition speakers. The Government has failed, and the Opposition’s case will be accepted by the people, who will voice their support of it at the first available opportunity.
Debate (on motion by Mr. Hasluck) adjourned.
House adjourned at 10.56 p.m.
The following answers to questions were circulated:’ -
d asked the Prime Minister, upon notice -
What Commonwealth public servants who have proceeded overseas on official business since 1949 have been accompanied by their wives at public expense?
– On 15th October, 1957, in answer to a question without notice from the the honorable member for Hindmarsh (Mr. Clyde Cameron) about travel by departmental heads, I indicated the general considerations which apply in the matter of a departmental officer being accompanied by his wife when going abroad on official business. I refer the honorable member to my answer on that occasion. The same considerations apply now as then. I do not propose to make a list of approvals public. It has not been the practice to do so either under this administration or the previous administration, and I see no reason for not abiding by the usual practice.
d asked the Minister for Immigration, upon notice -
– The answer to the honorable member’s questions is as follows: -
The Department of Immigration does not make an assessment of the total intake of British migrants; it maintains records of assisted British migrants only and these, naturally, do not include returning Australians, or persons visiting Australia.
Figures for total arrivals to, and departures from, Australia are periodically published by the Commonwealth Statistician in his Demographic Reviews. The figures published by him, however, do not purport to represent permanent migration as such, and Demographic Reviews have regularly included an introductory note to avoid any misunderstanding on this point, viz. -
The movements of overseas travellers are classified as permanent or temporary on the basis that “ permanent “ means residence for one year or longer (in Australia in the case of arrivals; abroad in the case of departures) irrespective of the stated intention of the passenger. These definitions were adopted in accordance with international usage and do not purport to represent permanent migration as such.
It is accordingly incorrect to suggest that returning Australians or visitors are counted as migrants, either by the Commonwealth Statistician or by the Department of Immigration.
As the honorable member will be aware,the lack of information regarding the number of migrants who travel under other than assisted passage arrangements to settle in Australia has been a matter for concern for some lime. In fact, on 21st September, 1956, the then Minister for Immigration referred to this point, and the honorable member may find it interesting to refer to his comments, which appear at page 841 of “ Hansard “.
In this respect, the Commonwealth Statistician, in the Demographic Review No. 84, Part II., issued on 24th February, 1958, has traced the evolution of the present method of compiling statistics of arrivals and departures, and has indicated that there is no prospect of eventually being able to distinguish fully between “ migrants “ and other long-term arrivals. In particular, many people at time of arrival have not made a definite decision whether to settle permanently in Australia or not, and it is impracticable to follow up all such cases to determine what the eventual decision is. The Commonwealth Statistician has, however, announced in this Review that he will in future show arrivals and departures under the headings “ Short Term Movement “ and “ Long Term and Permanent Movement “. These terms will replace the terms “ Temporary Movement “ and “ Permanent Movement “ previously used. The object of the change is to avoid misinterpretation of arrival figures as indicating actual permanent migration.
In addition, as I mentioned in my letter of 18th December last, in reply to this question which has been previously submitted by the honorable member, the Commonwealth Statistician had been examining the possibility of producing additional dissections of the arrival figures from existing sources, but has concluded that the basic documents used for statistical purposes do not allow this to be done in a satisfactory manner. Accordingly, proposals for amended forms were then under consideration which had to be examined by a number of different authorities, including the Co-ordinating Committee for Facilitating Air Travel. The Commonwealth Statistician consequently has also indicated in the Demographic Review No. 84 that -
As from 1st July, 1958, fuller particulars will be sought from each oversea passenger on arrival or departure. The aim of this is to provide more specific classifications than are available with existing data. The outcome will depend largely on the precision of the information supplied by overseas travellers.
e asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
z asked the Minister for Primary Industry, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are as follows: -
m asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
Over the four-year period, management expenses absorbed 15 per cent, of contributions, while £9,150,000 was placed in reserves held by the 202 registered funds to meet benefit liabilities already incurred and future benefits for the 6,000,000 persons covered for hospital benefits and the 5,900,000 persons covered for medical benefits.
n. - On 13 th March, the honorable member for Gellibrand (Mr. Mclvor) asked the following question: -
Is the Minister for Social Services aware that an apparatus known as the Aplivox speech training nearing aid is being installed in schools for the deaf in Great Britain and in many other parts of the world? Does he know that this instrument is proving a great boon to deaf mutes, as such hearing as they have is being developed to enable them to hear speech, and so learn to use it? Will the Minister investigate this matter and secure these instruments for use in our own institutions in order that the inmates may benefit from this great gift of scientific development?
The officers and resources of the Commonwealth Acoustic Laboratories are available at all times to give assistance to deaf school children and ex-servicemen and to supply technical advice to institutions for the deaf. They have some knowledge of the appliance referred to by the honorable member and will be pleased to supply deaf institutions with advice in relation to this appliance.
y asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: - 1 and 2. The Pharmaceutical Benefits Advisory Committee consists of an officer, with pharmaceutical qualifications, of the Commonwealth Department of Health, four medical practitioners appointed from six medical practitioners nominated by the federal council of the British Medical Association in Australia, a pharmaceutical chemist appointed from among three pharmaceutical chemists nominated by the Federal Pharmaceutical Service Guild of Australia and a pharmacologist.
a asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows: -
Transfer Proposals for Department of the Army.
t asked the Minister for the Army, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister representing the Minister for National Development, upon notice -
– The Minister for National Development has supplied the following answers to the honorable member’s questions: -
b asked the Minister representing the Minister for National Development, upon notice -
Will the Minister consider permitting the War Service Homes Division to make a loan to an ex-servicemen for the purpose of clearing an existing mortgage on his home?
– The Minister for National Development has supplied the following answer to the honorable member’s question: -
This question is one which has been reviewed frequently. The decision to discontinue assistance to discharge mortgages on existing properties was made in November, 1951, following a full review to determine the purposes for which the available funds should be used in the best interests of applicants. It was the Government’s view that it was belter to utilize those funds for the provision of homes for applicants who did not own homes rather to improve the financial arrangements of applicants who already own homes. There are still many thousands of applicants awaiting assistance for war service homes and it is not proposed to consider any revision of the existing policy until those applicants who do not own homes are reasonably satisfied.
t asked the Minister representing the Minister for National Development, upon notice -
A fortnight ago, the Prime Minister indicated, in answer to a question, that the waiting time for applicants for war service homes finance varied according to whether the applicant wished to build a new home, in which case he could obtain the funds immediately, or whether he desired to buy a standing home, in which case he still had to wait eighteen months for his money. What is the reason for this differentiation between ex-servicemen, since the War Service Homes Division was established, not to force ex-servicemen to build homes, but to assist all ex-servicemen to obtain homes in return for the service that they had given to their country? Will the Minister see that this policy is modified so that there will be no differentiation between ex-servicemen?
– The Minister for National Development has supplied the following answer to the honorable member’s question: -
The present position is that an applicant who desires to build a war service home with assistance from the War Service Homes Division is able to proceed without delay. Upon determination of that applicant’s eligibility action is taken with a view to the ultimate signing of a contract. Experience has shown that because of the desire of applicants to consider various alternatives and for other reasons, this stage takes approximately five months on an average. The contract is then signed and in the ordinary course the home would be completed in approximately eight months. This would result in a total of thirteen months from the date of receipt of his application until he obtains occupancy of the home.
Where an applicant desires finance to purchase a home his eligibility is established and a valuation of the home is completed. If the home is regarded as a satisfactory security the applicant is informed and is given permission to raise temporary finance during the waiting period, which is approximately fifteen months. In these cases the applicant obtains occupancy without delay and to that extent is in a better position than is the building case. Until this Government took action by increasing the funds available to the War Service Homes Division the position was that applicants who desired to build had to wait for approximately fifteen months before action in their case could commence and it was approximately 28 months before they obtained occupancy of the home. It was important and reasonable to use the additional funds in the interests of the applicants who desired to build and who were awaiting accommodation. This policy had the further advantages that it increased the number of homes in Australia and provided additional work, both of which are important in the development of Australia. Now that the waiting period has been eliminated in respect of applicants who desire to build, action will be taken progressively, as far as the economic position permits, to reduce the waiting period for those applicants who desire finance to purchase a home.
Cite as: Australia, House of Representatives, Debates, 18 March 1958, viewed 22 October 2017, <http://historichansard.net/hofreps/1958/19580318_reps_22_hor18/>.