10th Parliament · 1st Session
The President (Senator the Hon. SirJohn Newlands) took the chair at 11 a.m., and read prayers.
– I desire to ask the acting Leader of the Government in the Senate (Senator Glasgow) if he is aware that a statement, whichwill be given wide publicity, . appears in this morning’s press to the effect that the Federal Government has decided to sell the Australian Commonwealth Line of Steamers, and that its decision was endorsed at a joint meeting of the parties supporting the Government. Will the Minister say if the statement is correct? If it is, will he give the Senate an early opportunity to discuss the motion now on the notice-paper that the report by the Public Accounts Committee on the Commonwealth Government shipping activities be printed ?
Senator Sir WILLIAM GLASGOW.The honorable senator is aware that it is not customary to deal with matters of policy in answer to questions. If the Leader of the Opposition (Senator Needham), will be patient, he will be advised of the position in due course.
– In view of the far reaching importance of this matter, the uncertainty as to the real position, and the undoubted effect of such a pronouncement upon the revenue of the Line-
The PRESIDENT (Senator the Hon. Sir John Newlands). - Order! The honorable senator is not entitled to make a statement when asking a question.
– Will the Minister arrange the business on the noticepaper so that the motion for the printing of the report of the joint committee of Public Accounts on the Commonwealth Government shipping activities will be brought forward ‘next week, as early as possible ?
Senator Sir WILLIAM GLASGOW.The motion to which the honorable sen. tor ref ers will be discussed in the ordina course.
– Is the statement correct that at joint meeting of Nationalists and Country party members yesterday a desire was expressed by all the members of both parties present, with one exception, that the Australian Commonwealth Line of Steamers should be sold ?
Senator Sir WILLIAM GLASGOW It is not the practice for the members of any of the parties represented in this Parliament to disclose what transpires at party meetings. The Leader of the Opposition (Senator Needham) would not be willing to say what happened in caucus, and I do not propose to disclose the nature of the business transacted at the party meeting to which he refers.
– Can the Minister for Defence (Senator Glasgow) indicate when the discussion on the motion that the estimates and budget papers,1927-28 be printed, will be resumed and when it is likely to conclude. I think honorable senators should be supplied with this information so that they can make their arrangements.
Senator Sir WILLIAM GLASGOW.I regret that at present I am unable to inform the honorable senator when the discussion on the motion to which he refers is likely to be completed. I shall be absent next week; but the Leader of the Government in the Senate (Senator Sir George Pearce), will be here, and possibly he will be able to give the honorable senator definite information.
– Is it intended to dispose of the CommonwealthBank (Savings Bank) Bill and the Commonwealth Housing Bill before the debate on the budget is resumed?
Sena tor Sir WILLIAM GLASGOW.Yes.
– Will the discussion on the budget be resumed after those measures have been disposed of?
Senator Sir WILLIAM GLASGOW.Yes.
Income Taxation On Gold
– .Has the Minister (Senator Glasgow), noticed a statement to the effect that the Federal Income Tax Commissioner is levying full income taxation on the gross price of the gold which is being won in New Guinea and forwarded to Australia, and that if the present policy is continued, further consignments will possibly be sent to New Zealand?
– The matter is being considered.
asked the Minister representing the Minister for Trade and Customs, upon notice -
– The answers are as follow ; -
S boomi Reading.
Debate resumed from Srd November (vide page 932) on motion by Senator Sir William Glasgow -
That the bill be now read a second time.
; but instead of getting a fair deal it has been obstructed at every possible point. I say most emphatically that its operations have been hampered and the amount of deposits limited owing to the action of the directors, no doubt with the approval of the Government, in continuing to pay depositors in the- savings bank the nominal rate of 34% per annum, whilst the State savings banks pay at least one half per cent. more. There is no reason why that should be so when the security in each case is the same. So far as I have been able to judge, the objective is flic ultimate destruction of the trading section of the bank. If we examine the bill very closely and consider the action of the Government in endeavouring to destroy the trading section of the bank, we can only conclude that it is anxious that this class of business should revert to the private banks. 1 mentioned yesterday the bank crisis of the early, nineties ; if the Government is determined to destroy the trading facilities now possessed by the Commonwealth Bank, it will incur the risk of a crash similar to that which then occurred. I do not know whether honorable senators are fully aware of the extent of the calamity, concerning which a most informative and carefully prepared speech was delivered in the Legislative Council of New South Wales, on the 10th February of this “year by the Hon. James Ryan. He stated the position fully, frankly and fearlessly. Honorable senators will doubtless remember the outbreak of industrial unrest that occurred in 1S90 and culminated in the maritime strike and the birth of the Australian Labour Party. Up till that time the organized unions of Australia believed, quite erroneously, that industrial action would secure for them whatever they desired; but when they pitted their strength against that of the organized employers of the Commonwealth’ they learned that they were incapable of giving effect to their idi-n?. Acting upon the advice of certain sections of the daily press they adopted the practice of having representation in Parliament. They returned, first to the State. Parliaments- and subsequently to the Commonwealth Parliament, men who were pledged to a definite platform. It will be remembered that at that time, there was a land boom in Melbourne, Sydney and other large cities. The cessation of employment and consequent withdrawal of the wages of the workers brought about the collapse of building societies, and thirteen of the 25 trading banks in the Commonwealth were forced to suspend payment and hang out the sign “ Closed, pending re-construction.” As a result thousands of people were ruined. Every State Savings Bank, however, was able to weather the storm. Is it now the intention of the Government to render ineffective the savings bank branch of the Commonwealth Bank and destroy the trading facilities of that bank so as to bring about a crisis similar to that which overtook the Commonwealth in the early nineties? Whether or not that is the intention, there is a very serious danger of a repetition of those occurrences. Sir George Dibbs, the then Premier of New South Wales, was regarded as a shrewd financier. The banks found it necessary to have several acts passed by the Government of New South Wales before they were able to re-open their doors. They held deposits totalling £90,000,000 and a sum of £13,000,000 belonging to their shareholders. But for the State Savings Bank the calamity might have been very much worse. Pour of the banks that suspended payment went into liquidation and only- six met all their obligations. I shall refer particularly to the action of three - the A.J.S., “ the E.S., and A.C., and the Queensland National. I am pleased to be able to say that in March last the- A.J.S. Bank resolved to pay to its depositors the money which it owed to them.
The PRESIDENT (Senator the Hon. Sir John Newlands). - The honorable senator will> not be in order in discussing in detail the business of private banks.
– An effort is being made to minimize the importance of the
Commonwealth Bank by separating from it the savings bank branch. In those days of which I speak the private banks were unable to carry on without support from the State Savings Bank of New South Wales. The Barrack-street bran- h of the Savings Bank encountered difficulties, and I doubt whether it would have survived if it had not been tided over its troubles by the Post Office Savings Bank. The point I wish to make is that the Common wealth Bank receives substantial support from the Savings Bank branch, which collects and holds a large volume of deposits that in case of emergency are at the disposal of the general bank. Therefore any attempt to minimize the importance of the Savings Bank branch should be strenuously resisted. The effect of this legislation “ will be to destroy the trading facilities of the Commonwealth Bank and place the whole of the business in the hands of the private banks. At the time of the crisis to which I have referred, the E.S. and A.C. Bank held deposits totalling £4,000,000. It has repaid only £1,000,000. Ever since, however, it lias continued to pay dividends to its shareholders. I believe that the last dividend amounted to 124- per cent.
– 1 again ask the honorable senator not to discuss the business of the private banks. For the last five minutes he has been referring to those institutions. The senate is at present considering a bill dealing with the Commonwealth Bank.
– The bill proposes to detach the savings bank branch from the general bank. In 1S93 it was the State Savings Banks which saved the private banks.
– The honorable senator has already made that statement twice. I ask him not repeat it.
– If you, sir, rule that .1 am not entitled to make any reference to the private banks -
– The honorable senator has been allowed to make very extensive references to those banks. I now nsk him to confine his remarks to the bill, and not to repeat himself.
– All I wish to saT is that neither the English. Scottish and Australian Chartered Bank nor the
Queensland National Bank has repaid to its depositors the amount which it owes to them. If the savings bank branch is detached from the Commonwealth Bank and the latter is destroyed as a trading bank, I cannot see what is to prevent a recurrence of the disastrous events of the early nineties. I, in common with every honorable senator, wish the Commonwealth Bank to bo in a position at all times and in all places to satisfy the demands of its creditors. Most of the private banks were not able to do that, and the result was disastrous to tens of thousands of people. If this or any other government attempts to destroy the Commonwealth Bank it will not receive any. support from me. Let us take another view of the situation. The Commonwealth Bank was controlled originally, to a very large extent, .by Sir Denison Miller. The public rallied round him because it knew that he and the bank had behind them the credit of the community and that their money would be safe. It was under his control that the savings bank branch was established. The bank has a number of branches throughout the Commonwealth. According to the latest figures obtainable, its assets, including accrued interest, amount to about £46,479,000. It is now proposed to transfer those assets to a commission, which is to have the power to carry on the general business of a savings bank; to acquire and to hold land on any tenure ; to receive money on deposit either for a fixed terra or on current account ; to make advances by way of loan or otherwise; and to do anything incidental to any of its powers. I take strong exception to the bank being given the power to acquire and to hold land on any tenure. That is not the business of any banking institution. One reason for the financial crisis of 1893 was that building societies and trading banks held large areas of land. Their assets were not in a liquid condition, and when called upon to find money they could not do so. In spite of that experience, it is now proposed that the Commonwealth Savings Bank shall have power to acquire and to hold land. It will not plough one acre of any land which it may acquire. If I had my way no banking institution would be permitted to hold land for more than a few months, after which it would have to be sold. Clause S, which enables the bank to engage in land speculation, is sufficient to condemn the bill. I have been unable to ascertain how much land in the various States is held by private banking institutions ; but, some time ago, I saw a map of a portion of New South Wales which showed the owner of each block of land. It astounded me to see so many blocks marked with the names of private banking institutions. The bill should provide that the Commonwealth Savings Bank shall not hold land for more than a certain limited period, after which it must be offered for sale. I should go further, and provide that similar restrictions should apply to all banks. The bill also provides that of the half-yearly net profits of the savings bank, one-half shall be placed to the credit of a fund to be called the savings bank reserve fund, and that one-half shall be paid into the national debt sinkingfund as soon as practicable after the preparation of each balance-sheet. The only reason for providing that one-half of the profits shall be devoted to the national debt sinking fund is to ensure that the bank shall be crippled. No State savings bank is required to set aside one-half of its profits in the manner indicated in this bill. The Government has deliberately introduced- this provision in order to destroy the usefulness of the bank. The profits of the bank should be utilized to pay increased interest to depositors, to reduce the interest on overdraft, and to extend the operations of the bank. The Government is not prepared to do this. When the Common- wealth Bank was established, it wa3 expected that it would soon have branches in almost every important town in the Commonwealth. But what do we find ? In a large State like New South Wales, it has only eighteen branches. Yet in almost every township one can find a branch of the Bank of New South Wales, the Commercial Bank, the English, Scottish and Australian Bank, the Union Bank, or some other private bank. In not establishing more branches the Directors of the Commonwealth Bank have neglected their duty. In the whole of Australia and New Guinea there are only 75 branches of the Commonwealth Bank doing general business. In addition, there are two branches in Great Britain, making a total of 77 branches in all countries.
– Does the honorable senator know of any other bank which in the same period, has established more branches?
– If the number of branches of the various private banking institutions in Australia could be ascertained, the 77 branches of the Commonwealth Bank would, by comparison, sink into insignificance.
– But they have not established so many in the same period.
– I am unable to say that; but it is not improbable that since the Commonwealth Bank was established in 1910, the private banks have established 700 branches in Australia, as against the 77 branches established by the Commonwealth Bank. Honorable senators opposite appear to be determined to aggrandize the private banking institutions, and to detract from ‘the Commonwealth Bank. Except to approve of the profits made by the Commonwealth Bank, and of the purposes to which they are devoted, honorable senators supporting the Government have not one word to say in support of the Commonwealth Bank. It is contended that the separation of the Savings Bank branch from the other operations of the Commonwealth Bank is necessary, because of the housing scheme proposed by the Government.
– The honorable senator will not be in order in discussing the Commonwealth Housing Bill in connexion with this measure.
– I shall reserve my remarks on the Government’s housing scheme until the bill dealing with it is before us. At this juncture, I shall content myself by saying that the Government does not intend to buy one brick or one tile - not even a tile mad,: in Melbourne. I intend to submit an amendment to the bill. Again I protest against the proposal of the Government to separate the savings bank branch from the general business of the bank, and also against the appointment of a new board of commissioners. No sound reason has been advanced for this course. There has been no indication of the salary to be paid to the Chief Commissioner, but the other two Commissioners will each receive a salary of £500 a year. It is provided that they must meet at least once a month. I do not like the idea of paying men £40 and a few odd shillings for one meeting a month.
– Does the honorable senator suggest that they will meet only once a month?
– The provision in the bill states that they must meet at least once a month.
– And that will mean one meeting a month.
– In actual practice the bank directors often meet several times in a week.
– Not at all. I should be in favour of increasing the salaries of the commissioners to at least £600, so that they would get the round sum of £50 for each sitting. It is proposed to appoint them for a period of seven years. The proposal from start to finish is objectionable. When the per capita payments were under discussion some time ago, strong objection was taken by members of the party opposite to a departure from the principle that the authority which raised the revenue should also spend it. I do not know whether honorable senators opposite believe in that principle now, because of recent events ; but they/ have nothing to say against it. The bill will serve no useful purpose. On the contrary it will do much to destroy the efficiency of the Commonwealth Bank. For this reason I move the following amendment: -
That all the words after “ now “ be left out with ii view to insert in lieu thereof the words - ‘”’ referred to u. select committee for the purpose nf ascertaining the views of the authorities of the Commonwealth Bank on the proposals contained in the bill.”
The Minister in charge of the measure has not stated whether the managers of the Commonwealth Bank in the several capital cities are, in favour of the scheme. We are entitled to this information, because the proposal vitally affects their administration. There is no justification whatever for the proposed separation of the savings bank branch from the general banking business of the Com monwealth Bank. Before any action is taken the fullest inquiry should he made by a committee of members of both Houses, and a report presented to Parliament. Sound reasons should be advanced before the Senate agrees to the partial destruction of the Commonwealth Bank.
[11.55]. - I sincerely hope that the Senate will not agree to the amendment. Obviously it is intended to destroy the bill. On only one occasion in the history of the Federal Parliament has a bill been referred to a select committee. When the original Commonwealth Bank Bill was introduced by the Fisher Government, Mr. Deakin, the then Leader of the Opposition, moved an amendment to have it referred to a select committee, but Mr. Fisher strongly opposed it and it was. defeated. No good purpose can be served by referring this measure to a select committee of both Houses. Senator Grant has not advanced any reasons why the Senate should- agree to his amendment. We know, of course, that honorable senators opposite believe it to be their duty to find fault with, and object to, every proposal submitted by the Government. The separation of the Savings Bank business from the general banking business of the Commonwealth Bank will facilitate the financing of the Government’s housing proposals, and I can assure honorable ‘ senators opposite that there is no ground whatever for doubting the sincerity of the Government in this matter.
– Every true friend of the Commonwealth Bank will deplore the tone of the speeches delivered by honorable senators opposite. Banks, like all great financial institutions, can only operate effectively whilst they retain the confidence of the general public. The speeches and arguments of honorable senators opposite, if one can regard their objections as arguments, have been advanced not so much for the purpose of delaying the passage of the measure, as to destroy the confidence of the people of Australia in the Commonwealth Bank, which was established by the Labour party. They suggest that there is some sinister motive behind the introduction of the bill, and that the Government wishes to destroy the bank. Do they realize what would be the effect on the people in regard to the bank, if their arguments carried any weight outside? Public confidence in the Commonwealth Bank would immediately be destroyed. There might be a feeling of security as to deposits, but there would be no feeling of security in regard to continuity, and it is more than likely that a great many people who run accounts with the bank would feel inclined to transfer them to existing banks that were not likely to go out of existence in the near future. The greatest damage would be done in another direction. The receipt of deposits is only portion of a bank’s business, whether it be a savings bank or a general trading bank; the more profitable section of a. banking business is the use of deposits for the purpose of making advances.
– That is wherein lies the risk.
– Yes. If our honorable friends opposite succeed in creating in the minds of the public outside the belief that the Commonwealth Bank is not likely to continue its operations for any reasonable length of time, people who want accommodation in the shape pf loans to enable them to carry on business will hesitate before going to that bank. Like the other class of people to whom I have just referred, they will prefer to go to another bank where they can be reasonably assured of some continuity of business. When honorable senators opposite realize the effect of the arguments they have been using and the insinuations they have made, that the Government is out to destroy the Commonwealth Bank and that this legislation will have that effect, I feel sure that they will regret what they have done. Senator Grant devoted practically the whole of his speech to an attempt to create in the minds of the public the belief that because the Government was proposing to take a certain action there would be in Australia a crisis similar to that of years gone by. He presented a most awful picture of what would happen in that event, the only purpose of which was to indicate that what had happened in the past must inevitably recur as the result of the action taken by this Government. A man with a sense of the responsibility attaching to his position as a member of this Senate should hesitate to create want of confidence on the part of the public in such a great institution as the Commonwealth Bank. Every credit must be given to the Labour party for the establishment of the bank, but there are also other honorable senators who keenly desire that the bank shall prosper and become a great financial institution.
– L rise to a point of of order. Senator Duncan is incorrect in saying that honorable senators of the Opposition are out to destroy public confidence in the Commonwealth Bank. What I said was that I objected to the action of the Government in seeking to destroy the trading section of the bank. Senator Duncan stands for the destruction of that section of the bank ; whereas I do not.
The PRESIDENT (Senator the Hon. Sir John Newlands). - No point of order is involved. The honorable senator devoted nearly the whole of his speech to a criticism of what he described as the Government’s intention to destroy the Commonwealth Bank, and so far as I can judge Senator Duncan is merely crediting the honorable senator with the charge he made against the Government.
– I made my position clear. It was that I objected to the destruction of the trading section of the bank.
– That is not a point of order.
– Further evidence of the charge I am making against Senator Grant and others of his party, is to be found iu t-he amendment submitted by Senator Grant, the sole object of which is to create an impression in the minds of the people that the Government is acting contrary to the wishes of the board of directors of the Commonwealth Bank. If the public outside can be made to believe that the directors of the bank are not in favour of the action contemplated by the Government, the impression is immediately created that they see grave danger in the action, and weight is lent to the argument put forward by Senator Grant and others that the only effect of this legislation can be the destruction of the Commonwealth Bank. It is not fair to move an amendment dragging in, as it were, the directors of the Commonwealth Bank and implying that if they had ‘been given a chance to say what they thought, they would have declared against the bill.
– They passed a resolution in favour of it.
– I am aware of that, but they cannot come out and declare it publicly. Looking at the matter in a purely impartial way there are, I must admit, certain considerations to which one must give weight in favour of making no change in the allocation of the functions of the Commonwealth Bank, but there are many good reasons why the trading business of the Commonwealth Bank should be separated from the purely savings bank business. Ir must be remembered that to-day our Commonwealth Bank is a great and growing financial institution. It is even contemplated that the day will come when it will be the great controlling agency so far as Commonwealth finance is concerned, both public and private, lt will have to deal with big business in a very big way. We must admit that the enormous financial transactions to which the directors of the bank have to give their attention, even to-day are a sufficient task for them, without saddling them with the responsibility of paying attention Ho many minor matters of an entirely different class. I am confident that the whole of the attention of the board of directors of the Commonwealth Bank must be devoted to bigger business or more national business, speaking from a financial standpoint, .than would be handled by commissioners of a savings bank.
– Surely a manager under a board of directors could handle the savings bank business.
– I do not know. Savings bank business carries with it certain responsibilities, and as we contemplate an extension of the scope of the savings bank in a direction not hitherto proposed, I do not think it would be wise to saddle the directors of the Commonwealth Bank with the added responsibility of giving attention to these minor matters.
– The honorable senator should not forget that the details will be the responsibility of the States.
– I know that, but I feel that the board of directors of the Commonwealth Bank will have quite enough to do in directing the affairs of the Commonwealth Bank itself. The savings bank will not be an entirely separate institution. It will not have a separate board of commissioners with full power to do as they please quite irrespective of the Commonwealth Bank itself. One director of the Commonwealth Bank will also be a commissioner of the savings bank. This liaison is evidently to be created so that the savings bank will not be an entirely separate institution able to go along in its own sweet way and at its own sweet will without any consideration for the Commonwealth Bank as a whole.
– In what way will the two institutions be connected?
– Under this bill they will both be Commonwealth Banks. One will be the Commonwealth Bank in name and the other will be the Commonwealth Savings Bank. It is not proposed to hand over the savings bank business of the Commonwealth Bank to private enterprise or some outside agency. The bill merely sets up a separate organization for the purpose of dealing more effectively with the savings bank end’ of the business of the Commonwealth Bank. The savings bank commissioners will have to make provision for all sorts of things that do not ordinarily come within the scope of a general bank. To my mind it is extremely wise to have a separate board of commissioners, seeing that there will always be the safeguard that one commissioner will also be a member of the board of directors of the Commonwealth Bank. It is questionable whether the Commonwealth is justified in going into the savings bank end of the business to any considerable extent. Of course honorable senators opposite are prepared to make any raids whatsoever upon the State savings banks.
Honorable senators opposite want an institution that will offer such inducements to depositors that the State Savings Bank will have to close its doors. The Government or the party of which I am a member do not wish to do anything of that nature. “We recognize the enormous value of the work that is being done today by the State Savings Bank, and that it is wise that the savings of the people deposited in a State shall be applied to the development of that State. The assets of the Commonwealth Savings Bank, however, may be transferred from one State to another, and used in the general development of the resources of the Commonwealth. I have heard the argument adduced very effectively that the money deposited in State Savings Banks - savings- are quite different from returns from investments - should be used exclusively for improving the conditions and facilities in the State in which they are deposited.
– And invested only in safe avenues.
– Exactly. The attack upon the State Savings Banks, which is contemplated by honorable senators opposite, cannot be justified in any circumstances whatever. It is true that the Commonwealth Bank has not attempted to enlarge the scope of its savings bank activities to any considerable extent’; but as honorable senators are aware war occurred shortly after the Commonwealth Bank was established, and into the financial responsibilities associated with this great international conflict the bank threw the whole of its organization and energies in an endeavour to conserve national interests. The bank had not the time or opportunity to establish Commonwealth Savings Banks all over Australia.
– But it is nine years since the armistice was signed.
– Moreover, the State Governments through their savings banks have been providing the necessary facilities in this direction. The Leader of the Opposition (Senator Needham) who says that it is nine years since the armistice was signed infers that branches of the bank should be established everywhere in Australia; but before such establishments can be opened the bank authorities must be sure that the business offering will be sufficient to warrant the expenditure to be incurred. It would be easy for the Commonwealth Bank through its savings bank department to erect costly buildings all over Australia, and to appoint a staff of clerks who would be waiting for business. Such an undertaking would be costly, exceedingly difficult to justify, and could succeed only to the extent to which business was withdrawn from the State Savings Bank. There was no indication to the Governor of the bank when it was under the efficient control of the late Sir Denison Miller, or subsequently to the board of directors, that depositors generally desired to transfer their accounts from the State Savings Bank to the Commonwealth Savings Bank.
– Agencies are established at every post office.
– Tes, and they are handling all the business that is offering. Whenever the business transacted at an agency reaches a certain figure a newbranch is established. Generally speaking, only small sums are deposited in post office agencies, and it would not pay the bank to establish branches to do the business which is now being very effectively handled through those agencies. It would be an easy matter for the Common - wealth Savings Bank to pay a higher rate of interest to depositors as suggested bv. Senator Grant.
– The Commonwealth Savings Bank should at least pay the same rate of interest as is paid by the State Savings Bank.
– If the same rate or even a higher rate were paid, deposits might be withdrawn from the State Savings Bank. These deposits are not lying idle in the vaults as some appear to think, but are loaned to farmers, producers, and workers. If there was a sudden rush upon the State Savings Bank funds caused by a general transferring of accounts, advances would be called in, and possibly a financial crisis would result. That is something which th’e directors wish to avoid. I submit that they have acted wisely in adopting a cautious policy, instead of going out with carpet bags, so to speak, looking for business. The directors now find that if the activities of the bank are separated as proposed, they will be untrammelled and that a new organization will be able to handle new business in a proper way, and give effect to certain Government proposals including a housing scheme. When the Commonwealth Bank was first established it commenced operation with many advantages, one of which was that it handled all Government business and had control of the important financial transactions arising out of the war. Possibly the bank would not be in the sound position it is to-day if the war had not eventuated. The new savings bank organization which is to be established under the control of the Commonwealth Bank, will also commence with a big advantage, because of the fact that the housing scheme and other good undertakings will be handled by the bank and its branches and agencies throughout the Commonwealth, which may result in its immediate success. If this scheme had not been brought forward I do not think that the Commonwealth Savings Bank would have made greater progress during the next few years than it has made in recent years. Under this proposal it will become a large financial institution controlling more particularly the savings of the people, as against returns from investments, and will be carrying out a useful service to the community. It is difficult to understand the attitude of honorable senators opposite, and I can only suggest that they are anxious to cause trouble, financial or otherwise, in order to injure the Government.
.- The Minister (Senator Glasgow) has said that the object of the amendment is to destroy the bill; but that is not the intention of “its mover or of those supporting it. It has been submitted with the intention of obtaining information which so far has not been supplied by the Minister or any one else. Senator Duncan contends that those opposed to this measure wish to destroy the confidence of the people in the Commonwealth Bank.
– I said their action would have that effect.
– Our object is to prevent the Government from destroying the status of the bank. We are anxious to ascertain if the proposals submitted to the board of directors are similar to those embodied in the bill and whether the reasons given at a meeting of the board at which a certain resolution was carried, were those which actuated the Government in proposing to separate the two departments of thebank. After reading the resolution to whichI have referred I believe there is prima facie evidence that the board had before it an entirely different proposal from that embodied in the bill when the resolution was carried. It is not the desire of honorable senators on this side to attack the hoard of directors, as suggested by some honorable senators, but merely to ascertain what was the actual position when the meeting was held. I do not think that the hoard of directors would have suggested a separation of the bank’s activities if they had known that the Government’s proposals merely involved loaning money to the state authorities who would have to do the whole of the work. In these circumstances the board would not have said that it would be overworked. If it had the responsibility of controlling a housing scheme involving the employment of skilled and unskilled tradesmen, lands officers, surveyors, conveyancers, draftsmen and others, it might have objected to such a proposal; but whenwe examine the scheme we find that the commission has only to pass the money on to certain State authorities.
– If the honorable senator will refer to clause8 he will find that the commission has more than that to do.
– In discussing the amendment I am not entitled to refer in detail to that provision. The board of directors must have had before them some other proposal which caused them to pass the resolution to which reference has been made. It is because of the doubt which exists in my mind that I consider the bill should be referred to a select committee. The committee would need to invite the authorities of the bank to appear before it and supply it with the information which has been sought in vain fromthe Government. I hope that honorable senators will give the amendment serious consideration and agree to refer thebill to a select committee.
– I am not a banking authority, and therefore do not intend to discuss the intricate subject of banking; but I. wish to give reasons for my intention to oppose the second reading of the bill. Ido not charge the Government with having any ulterior motive. Unlike some honorable senators, I do not say that there is a desire to destroy the confidence of the public in the Commonwealth Bank. I am rather inclined to believe that the object of honorable senators of the Opposition is to destroy public confidence in the Government. It is a pity that we cannot discuss these questions on their merits. I hold the view that the introduction of this measure was prompted by the directors of the Commonwealth Bank. Unquestionably the institution has beenestedcarefullyandcapablymanaged. Ithasinv its funds judiciously, and has built up an organization which possesses the confidence of the public and also other financial institutions. The bill proposes to separate the business of the savings bank from that of the general bank. Such action will not weaken, but on the contrary will strengthen, the general bank. My objection to the measure is that, as the savings bank is the people’s bank, we ought not to do anything which will lessen the confidence of the public in it. The reason for this separation is to be found, I think, in the fact that the Government at the last election foolishly and inadvisedlycommitted itself to a housing scheme. That is not a proper function of the Commonwealth Government; it should not attempt to interfere with what is essentially a prerogative of the States. I believe that the directors of the Commonwealth Bank hold this view : “If the Government intends to utilize the funds of the savings bank for the construction ofhomes for the people, and erecting warehouses and storage facilities it had better separate the business of the savings bank from that of the general bank, because we do not wish to have any connexion with such doubtful investments.” The proposed now section 33w, provides:
The savings bank may invest any moneys held by it -
That is all right -
Those avenues of investment were doubtless distasteful to the directors of the Commonwealth ‘Bank, and rather than accept the responsibility of conducting that form of business, which is considered by financial institutions to be neither safe nor sound, they invited the Government to separate the business of the savings bank from that of the general bank. Other directions in which the new bank may invest any moneys that are held by it are -
I fear that, by placing the management of the savings bank in the bands of a separate set of commissioners, we may leave it to some extent at the mercy of an idealistic treasurer or government, and the confidence of the public in it may be destroyed. That is why I oppose the measure. If the Government considers that it is necessary to give effect to its pledge in regard to housing, it can do so without separating the business of the savings bank from that of the general bank.
– Is not the Government destroying the trading section of the Commonwealth Bank?
– No, it is strengthening it by leaving it free from the necessity to undertake doubtful investments.
– Does the honorable senator suggest that, the investments provided for by the bill are risky or doubtful ?
– I do; especially if the savings bank attempts to do the work itself. It certainly is better to make advances to authorities; but we do not know who their authorities are to be. This move will have the effect of strengthening the general business of the Commonwealth Bank at the expense of the savings bank, which is the bank of the people.
. -I am very glad that the amendment has been moved, because it will give honorable senators opposite time for reflection and further consideration. As an observer of events and the dispositions of human beings, it appears to me that on the other side of the chamber there are some honorable senators who are not altogether in favour of the measure. Senator Ogden has expressed an opinion, which to a degree is shared by other honorable senators opposite. Senator Thompson, by his interjections, has convinced me that he is not a whole-hearted supporter of the bill.
– I support the principle whole-heartedly, but I. am opposed to the methods that are proposed.
– When the proposals that are embodied in the billwere placed before the Government party for a full-dress rehearsal, there was not absolute unanimity among its members. Whenever a measure has the unequivocal support of honorable senators opposite, they lose no time in expressing themselves fully and enthusiastically upon it. Not one has so far displayed any enthusiasm for this measure. The discussion upon the motion for the second reading would not have been continued yesterday had I not risen and prevented it from going through. It has been said that the authorities of the Commonwealth Bank are not wholly in favour of these proposals, and that they believe such functions ought not to be undertaken by them. If that be correct, what objection can honorable senators opposite have to the appointment of a select committee which would ascertain the opinions of those gentlemen? Possibly the Government has been obliged to propose the appointment of three commissioners, because the directors of the Commonwealth Bank are not disposed to do this work. A select committee would be able to make an exhaustive inquiry, not only into the proposals embodied in this bill, but also as to the duties which the new commissioners will be called upon to perform. Senator Duncan said that there was no necessity for the establishment of the Commonwealth Savings Bank seeing that in all the States there were then in existence State savings banks in which the people’s savings, could be placed. He also said that the money deposited in those banks was utilized for the development of the States. Iri the face of those remarks, I cannot understand his concluding statement that the commission will be able to establish new branches of the savings bank, and thus further increase .the usefulness of the institution.
– Order ! The honorable senator will not be in order in following that line of reasoning any further. He must confine himself to the amendment before the chair.
– A select committee would be able to remove any doubt which now exists in the minds of honorable senators opposite whether the resources of the Commonwealth Savings Bank should be applied to the whole Commonwealth, or whether the savings of the people in each State should be utilized in that State. There is nothing in the bill to indicate the intention of the Government in that connexion. A select committee would be able to enlighten us. The object of thu amendment is to ensure that only the best legislation shall be placed upon the statute-book. We on this side are not opposed to a genuine housing scheme; on the contrary, it would receive our wholehearted support. But we are in doubt whether the Government’s pro posals are the best that could be brought forward. In1 what better way could that doubt be removed than by the appointment of a select committee to inquire intothe whole matter? The Government hasnot hesitated to appoint select committees to inquire into matters of lessimportance than the future of the Commonwealth Bank. Senator Duncan is a member of a royal commission - it was at first’ a select committee - which has travelled throughout Australia, and now desires to pursue overseas its investigations into the film industry a matter not nearly- so important asthat now before the Senate. Theappointment of a select committee does not necessarily mean the expenditure of large sums of money. In any case, the cost of a select committee, as is proposed in the amendment,, would be infinitesimal compared with that of the royal commission to which I have referred. If thought, necessary the committee could be restricted to a certain period in which to make its investigations and present its report. After full inquiry by a committee it should be possible to introduce a scheme worthy of the Commonwealth, and concerning which there could be little or no difference of opinion. Nothing could be worse, from the point of view of the future of the Commonwealth Bank, than that there should be division among its directors, or that the new commissioners should not work in co-operation with the directors to whom is entrusted the general administration of the bank. A select committee would be able to ascertain whether such co-operation was possible, or likely.
– Is it not selfevident that there will be that cooperation, seeing that one of the commissioners will be a director of the Commonwealth Bank?
– There is to. be one full-time commissioner and two parttime commissioners. Even assuming that the chief commissioner will be in the closest co-operation with the directors of the Commonwealth Bank, we do not know how many commissioners will constitute a quorum.
– I ask the honorable senator to confine himself to the amendment before the Senate.
– It has been said that the success of the savings bank will depend largely on whether there is the closest co-operation between the two boards of directors. I was contending that that is a matter of such importance that it warrants investigation by a select committee.
– -Does the honorable senator not- think that the opinion of a manager working under a board of directors, would be of more value than that of themembers of a select committee?
– -Order ! Discussion along that line must not continue. Honorable senators must confine their remarks to the amendment now before the Senate.
– I hope that honorable senators on the other side will not feel that in this matter they must necessarily follow the dictates of the Minister; but that they will give the amendment the consideration that it deserves. If they do that, I feel sure that they will support it.
– I have been interested in observing how honorable senators opposite have seized on this amendment to further their desire to destroy the bill. We have had before us many measures more important than this; yet honorable senators have not advocated the appointment of a select committee to inquire into the matters covered by them. They have been contend to debate the measures fully in the light of the information contained in them and of any further particulars given by the Ministers in charge. By agreeing to the amendment the Senate would be shirking its duty. The bill before us is one which should be dealt with by the representatives of the people.
Sitting suspended from 1 to 2.30 p.m.
Question - That the words proposed to be left out be left out (Senator Grant’s amendment) - put. The Senate divided.
Majority . . 13
Question so resolved in the negative.
Senator Sir WILLIAM GLASGOW (Queensland - Minister for Defence) [2.35]. - Honorable senators opposite, in their criticism of the bill, suggested that there was something sinister behind the action of the Government in bringing forward a proposal to separate the savings bank branch from the general business of the bank. They also asserted that the Government appeared to be anxious to interfere with the status of the bank itself, and proposed to make it the puppet of the associated banks. As a matter of fact, quite the reverse is the case. On several occasions the Government has taken legislative action to increase the activities of the bank. In 1920 the note issue was transferred from the Treasury to the Commonwealth Bank. Subsequently the bank was placed under the control of a board of directors, and later a rural credits branch was established. The Government now proposes to separate the savings branch from the general bank to facilitate the financing of the housing scheme. In every instance the intention has been to strengthen the position of the bank.
Times. Those are the various functions the bank has been carrying out, and I think that honorable senators will agree that they have been carried out in the best interests of the people generally. Senator Needham drew attention to the fact that the bank has now seven directors in addition to a governor and a deputy governor. It is rather strange to hear honorable senators opposite suggesting that one man should be placed in control of anything.
The Savings Bank may invest any moneys held by it -
in advancing money, in accordance with the Commonwealth Housing Act 1927, for the purchase or erection of dwelling-houses, and for the discharge of mortgages on dwellinghouses.
Under that provision money will be made available to the State Savings Banks and other authorities already engaged in building homes. Those institutions have not sufficient money now to comply with the demand for houses.
The savings bank may invest any money held by it-
It will be quite safe to advance money against such assets; they are not likely to depreciate to any great extent.
Senator Sir WILLIAM GLASGOW.Yes, if the interest is credited to the accounts.
Question - That the bill be now read a second time - put. The Senate divided.
Majority . . . . 14
Question so resolved in the affirmative.
Bill read a second time.
In committee :
Clauses 1 to 5 agreed to.
Clause 6 (Statement of combined account of bank and savings bank).
– This clause reads -
After section twenty of the Principal Act the following section is inserted in Part III.: - “20a. - (1) The Treasurer shall, at least twice in each year, prepare a statement of the combined accounts of the bank and savings bank in accordance with the prescribed form.
The Treasurer shall submit the state, ment to the Auditor-General for the Commonwealth for certification as to its correctness.
The statement shall, within fourteen days of its being so certified, be laid before both Houses of the Parliament if the Parliament is then sitting, and, if not, then within fourteen days after the next meeting of the Parliament.”
Section 20 of the Principal Act reads -
The Governor, at least twice in each year, shall prepare a balance-sheet in accordance with theprescribed form and submit it to the Auditor-General for report as to its correctness or otherwise, and transmit it with the report of the Auditor-General to the Treasurer, and shall also transmit a true copy of the balancesheet and report to the President of the Senate and to the Speaker of the House of Representatives to be laid before the Senate and the House of Representatives respectively.
Under this clause the Treasurer, instead of the Governor of the bank, will prepare and submit a statement for presentation to both Houses of Parliament.
– The honorable senator will find that the point is covered by clause 9.
– That clause does not meet my objection.
– The Treasurer will prepare a statement of the combined accounts, because the Governor of the Commonwealth Bank will not have jurisdiction over the savings bank.
– The Governor should prepare a combined statement. Perhaps the Minister will explain the position ?
Senator Sir WILLIAM GLASGOW (Queensland - Minister for Defence) [3.15]. - Section 20 of the principal act which the Leader of the Opposition has just quoted will still apply to the board of the general bank. The Treasurer will prepare a statement combining the two accounts, and present it to both Houses of Parliament.
– Does the Treasurer do that now?
– No, because there is now only one account. This provision has been inserted because, in future, there will be two accounts, and it is thought wise to combine them.
– Could not the Governor of the bank do that work?
– He will be responsible only for the general bank and not for the savings bank. Under the new arrangement there will be two authorities: The board of directors will prepare a financial statement in respect of the general bank, and the commissioners a statement in relation to the savings bank. Those statements will be combined by the Treasurer.
– If this bill becomes law the Chief Commissioner will be responsible for the preparation of the statement of accounts so far as the savings bank’ is concerned, while the Governor will be responsible for the financial statement in relation to the general banking business. Both their statements will have to be sent to the Auditor-General for verification. That having been done, the two statements will be combined by the Treasurer, and again sent to the Auditor-General for examination. Seeing that the two separate statements will be examined by the AuditorGeneral, what necessity will there be for the combined statement to be submitted to him? Surely the Treasurer can be relied upon to total the figures in the two statements. It would appear that, merely as a matter of form, the combined statement will be forwarded to the AuditorGeneral
– The Minister’s statement has thrown some light on this difficulty; nevertheless. I contend that a departure from the procedure now followed is being made. Under the new proposal the Governor of the bank will be responsible for the preparation of a statement only in respect of the general bank, while the Chief Commissioner will assume a similar responsibility in relation to the accounts of the savings bank. Later, those separate statements will be combined by the Treasurer. What is the necessity for auditing the combined statement, seeing that the two statements comprising it will already have been certified by the AuditorGeneral ? The clause will impose additional and unnecessary work on the Auditor-General.
Senator Sir WILLIAM GLASGOW (Queensland - Minister for Defence) [3.24]. - This provision was included to meet the objection that by the division of the accounts the prestige of thebank would be affected. I remind honorable senators that it is notusual forany statements of accounts, which has not been certified by the Auditor-General to be presented to Parliament. I can imagine the indignation of honorable senators opposite if that were done.
– I want the statement to be verified by the AuditorGeneral.
– That is what theclause provides. The combined statement of accounts will be prepared by the Treasurer and submitted to the Auditor-General for verification.
Clause agreed to.
Clause 7 agreed to.
Section 35 of the principal act is repealed and the following sections are inserted in its stead : -
A Commonwealth Savings Bank, to be calledthe Commonwealth Savings Bank of Australia, is hereby established.
– The proposed section 35 involves a vital principle. It proposes to separate the savings bank branch from the Commonwealth Bank and to hand it over to a commission. Notwithstanding the Minister’s statement when replying to the second-reading debate that this separation will not destroy the utility of the bank, I hold that it . will certainly lower its prestige. If honorable senators will bear in mind that the assets of the general bank are about £32,000,000, while those of the savings bank amount to approximately £46,000,000, and that the interest paid to savings bank depositors is only31/2 per cent., as compared with 5 per cent, paid by the general bank, on fixed deposits for two years they will see that the savings bank busi- ness is responsible for alarger proportion of the bank’s profit than is the general banking business. We should be careful lest we do anything to endanger the standing of the Commonwealth Bank among the financial institutions of the world.
SenatorChapman. - Have not the world’s financial authorities said that the Government’s proposals will strengthen the Commonwealth Bank?
– Some of them may have said so; but, as yet, we have not, had the views of the financial authorities controlling the Commonwealth Bank. Their request to be relieved of the savings bank business was based on entirely different ground from that which forms the foundation of another measure with which we shall shortly be called upon to deal. The Commonwealth Bank should be in active competition with the private banks instead of working in co-operation with thom. No valid reason has been advanced in the discussion on the hill, either here or in another place, for the separation of the savings bank branch from the general business of the bank. I was hoping that the Minister, in his reply to the second reading debate, would, indicate in what way the present directors would be handicapped if they were obliged to administer the proposed building scheme. We have had no assurance so far that the States will come into line and alter their existing legislation to enable them to take advantage of the assistance that will be available to them under this bill. Certain of the States may not be disposed to agree to it because their own building activities are working quite satisfactorily.
– If some of the States do not accept the proposal, there will bo nothing to prevent the Government from going on with the scheme.
– Nevertheless, the committee is entitled to know if negotiations have been conducted’ between the Government and the different States. It is reasonable to suppose that a measure such as this would not have been introduced unless the Ministry had been advised that the States were agreeable to it; but it would help honorable senators if they knew that Western Australia, for example, intended to come into the scheme, and that the Government of that State would appoint the necessary authority to take advantage of the provisions of this measure. I am afraid that the proposal will vitally affect the interests of primary producers, because if, as we fear, the prestige of the general bank suffers, it will not be in a position to render financial assistance to primary producers in the event of drought, or war. We should not forget the important part played by the Common wealth Bank in maintaining the stability of primary production in Australia during the war. Therefore we should not take any action which may weaken the bank’s position. The adoption of the housing scheme is no justification for the Government’s proposal to interfere withthe present system of control. If money is required for the building of bornes, it can be made available through the Commonwealth Bank or through the Treasury. There is no need for this measure, no need to divorce the savings bank branch from the general business of the bank, and no need to appoint another board of commissioners, who will have little or nothing to do. I hope that the committee will reject the clause.
– . Before the committee agrees to the clause it should be furnished with the fullest information as to whether the Government has at any time been in communication with any or all of the State Governments with a view to ascertaining if they will amend their existing legislation to take advantage of it. It has been stated that unless they do this, the bill whichwe are now considering will be ineffective. Will the Minister inform honorable senators if a conference has been hold between the Commonwealthand State Governments to consider this matter? I have seen no reference to any such conference in the newspapers. It would be extraordinary, and certainly most unbusinesslike, for a government to pass legislation which, to be effective, depended upon, certain actions by the States without first having had an assurance of the co-operation of the States. The usual procedure is to convene a conference and agree as to the details. I do not propose, at this stage, to offer any opinion about the Government’s housing scheme. I shall have another opportunity to say what I think of it. In the meantime, in fairness to the committee, we are entitled to more information. To a certain extent the bill is a camouflage. Possibly there would be some justification for it if the Ministry could show that ithad been introduced as the result of representations made by the different States of the Commonwealth. I have not heard of any State Government applying to the Commonwealth for financial assistance in respect to its housing proposals. In Victoria the State Savings Bank, which probably will be named as the housing authority for that State if this bill goes through is proceeding rapidly with the erection of houses in different parts of the metropolitan area, and I am not aware that it has requested the Commonwealth to come to its assistance.
– The Victorian authoritieswill rush it.
– The Minister should tell this committee, and the people of Australia, the real reasons for the introduction of the bill, and state definitely whether any of the State governments have asked for it. As all the States have housing schemes in operation, the Minister should state definitelywhat are the intentions of the State authorities in regard to the Government’s proposal. I shall awaitwith interest the reply of the Minister in charge of the bill.
– I am rather surprised at the strong opposition to the Government’s proposals on the part of honorable senators opposite. It is a. laudable object to liberalize the Commonwealth Bank in order to evolve a housing scheme more generous than those already in existence in the various States. The State schemes are not liberal enough. A class of peoplewhom we are anxious to providewith homes are prevented from getting them. Under this bill the States will be enabled to advance money to that class of people, so that they may acquire homes. When the citizens of a country possess theirown homes they are, as a rule, more stable. They realize that they have an interest in their country, and they are anxious to see it progress and develop. After the war Great Britainwent in for a very extensive housing scheme.
The CHAIRMAN (Senator Plain).The honorable senator cannot now deal with the Housing Bill.
– In 1924 the Commonwealth Bankwas given charge of the note issue. The result of that changewas to reduce the discount and exchange rates and stabilize the financial condition of the Commonwealth. In 1925 a rural credit sectionwas added to the Commonwealth Bank.
– The proposed section does not dealwith the matter to which the honorable senator is referring.
– I am surprised that such strenuous opposition should be raised to the Government’s scheme to assist the masses and make them more contented.
[3.50]. - Senator Needham need have no fear that the adoption of the Commonwealth housing scheme will affect the amount of credit available for handling primary produce.
– I said that by the separation of the savings bank from the Commonwealth Bank the whole structurewould be weakened, and the prestige of the Commonwealth Bank lowered.
– The honorable senator said that it would affect the financing of primary produce.
– Yes, in times of stress.
– If the fundswere not available to it, the bank would not be of much assistance at such times. I remind the honorable senator that, at the present time, 85 per cent, of the deposits in the Commonwealth Savings Bank are invested in State and municipal securities, leaving only 15 per cent, to be held in cash. The Government’s reason for adopting a housing scheme is the fact that the States have not at. the moment sufficient money to meet the demand for advances under their housing schemes.
– The States have had no difficulty in that respect, so far.
– Another reason is that certain provisions limiting the maximum amount available to the individual under the State schemes should, in the opinion of the Commonwealth Government, be liberalized, and the Government believes that the money it proposes to make available will enable the State authorities to liberalize them.
SenatorFindley. - Has any State government made representations to the Commonwealth Government to get this money ?
– As a result of conferences between the various housing authorities of the States and the Commonwealth Treasurer, there are indications that the States will take advantage of the money which will be made available if this bill is passed. On the second reading honorable senators had a full opportunity of discussing the principles of the measure, and all that they are doing now is to make further second-reading speeches, with the idea of delaying its passage.
Question. - That clause 8, to the end of proposed section 35 stand as printed - put. The committee divided.
Majority . . 13
Question so resolved in the affirmative.
Senate adjourned at 4.2 p.m.
Cite as: Australia, Senate, Debates, 4 November 1927, viewed 22 October 2017, <http://historichansard.net/senate/1927/19271104_senate_10_116/>.