17th Parliament · 3rd Session
The President (Senator the Hon. Gordon Brown) took the chair at 3 p.m., and read prayers.
– On the 29th June,
Senator Herbert Hays referred to deliveries of Bismarck potatoes in Tasmania. I am now in a position to furnish a reply to the honorable senator. Whilst the Government can understand the natural desire of growers to receive payment for potatoes grown under contract with the Australian Potato Committee at the earliest possible moment, the action of the Australian Potato Committee is reasonable. The contract provides for potatoes being held by growers for a reasonable time, and this is taken into account in the guaranteed price. It is incorrect to state that last year’s growers were especially requested to increase the area of Bismarcks. On the contrary, as farback as two years ago, growers were warned by the Potato Controller that they were running serious risks in overplanting Bismarcks, and were informed that, irrespective of the variety grown, growers would be required to spread their deliveries over the season. Notwithstanding that advice, a number of growers planted over 100 acres each of Bismarcks and very few Brownells or other latekeeping varieties. Following on this heavy planting, a record growing season was experienced with consequent heavy yields. The result has been a surplus of early season potatoes. Growers in Tasmania have been repeatedly advised to dig and store potatoes so as to make their land available for other crops, and have been assured that the Government would abide faithfully by the terms of its contract with growers, and that potatoes would be accepted before undue deterioration took place. Quite recently, it was reported to me that growers in the Glengarry- Winkleigh area were threatened with severe losses from storage deterioration; an immediate inspection was made and the report was found to be groundless. More recently, another report was made to me of a grower in the midlands of Tasmania who had a very large quantity of potatoes on hand and that the Australian PotatoCommittee had taken no steps to honour its obligations. Again, an immediate inspection was undertaken, which disclosed that the grower himself had nominated Launceston as his port of shipment, but was endeavouring to ship via Hobart; it was ascertained that, he had taken no steps to contact either the Distribution Manager in Launceston or the Tasmanian Deputy Potato Controller. This he frankly admitted and further stated that he had no complaint to make about the treatment he had received. The complaint which reached me apparently came from a relative without the grower’s authority. The point to he noticed in these cases is that there has not been undue deterioration to date, and I can assure Senator Herbert Hays that the position is being closely watched so that growers will not suffer. The effect of some of the requests would be to compensate growers for large quantities of potatoes still in the ground undug, and allow potatoes to go to waste. The attitude of the Australian Potato Committee was, and is, that it will not sanction the destruction, or writing off, of a single ounce of foodstuff unless that action became inevitable. It is admitted that some growers have been put to inconvenience in having to hold a portion of their crop longer than usual, but the net returns of growers have been exceptionally satisfactory and the Australian Potato Committee has kept a careful watch to ensure that growers did not suffer loss through any of its actions.
Demands for potatoes are likely to increase towards the end of the season, and in view of the guaranteed prices being paid by the Government and the assured position of the industry, it is only reasonable that growers should co-operate, even to the point of some inconvenience, in ensuring that supplies of potatoes will be available right throughout the season.
It is quite natural for growers to wish to deliver their potatoes at their own convenience, but one reason for control is the need to regulate supplies on to the market, and, as mentioned, this aspect was considered in fixing the guaranteed price. It is pointed out, also, that there are growers’ representatives on all State Potato Advisory Committees, and as a result any matters affecting growers can be ventilated readily,and usually can he adjusted quickly.
– On the 3rd July Senator Aylett directed my attention to the matter of payment to farmers for vegetable seeds. I now advise the honorable senator that before payment to primary producers for produce grown under contract for the Commonwealth is effected, it is necessary that proper verification be obtained of the service which involves such payment. Payment in respect of vegetable seeds grown under contract is dependent upon the results of purity and germination tests which involve a recognized procedure. My colleague, the Minister for Commerce and Agriculture, has specifically directed that in any matters where payment to primary producers is the responsibility of his department, there shall be no avoidable delays. If the honorable senator wishes to instance particular cases of delays in payment for vegetable seeds supplied. I shall have them inquired into.
asked the Minister for Trade and Customs, upon notice -
In view of the Government’s pronouncement of its policy to permit the importation of motor chassis into Australia for a period of time to encourage the acceleration of the motor building industry until such time as it is possible to manufacture the complete motor vehicle in Australia, will the Minister give the Senate and those interested in the develop ment of the motor industry in this country an assurance that the importation of pressed panels, which have been, and still can be, produced in Australia in sufficient quantity and quality to meet the requirements of the motor body-building industry, will be prohibited?
– The answer is as follows : -
It is not the policy of the Government to protect Australian industries by prohibiting importations. Manufacturers of pressed panels are protected by heavy tariff duties. It is considered that any decision by importers to import panels will be governed largely by a comparison of their landed cost with the price to be charged for similar locally produced panels.
Staffing of Departments
asked the Leader of the Senate, upon notice -
Will the Government consider setting up a royal commission in connexion with the Commonwealth Public Service to inquire into the following allegations, viz. -
Waste of man-power in government departmentsand governmentcontrolled organizations;
Unnecessary and wasteful setting up of heavily staffed Commonwealth departments to perform functions which existing State organizations could do as well, if not better, and with considerable saving of manpower ;
The unsatisfactory and uncontrolled fashion in which the Public Service has developed since the end of 1941 ;
Time-wasting and circumlocutory methods adopted by temporary public servants?
– It is not considered necessary to set up a royal commission to inquire into the allegations mentioned. The Government has appointed a committee to report on questions concerning civil staffing of wartime activities of Commonwealth departments. The committee, which has already commenced its inquiries, consists of Mr. J. T. Pinner, Assistant Commissioner, Public Service Board (as chairman) ; Mr. A. A. Fitzgerald, a wellknown practising accountant of Melbourne; and as third member an officer to be appointed from each department, or activity, which isbeing examined. The committee is required to present reports to the Prime Minister from time to time as its investigations proceed.
The terms of reference are -
asked the Minister representing the Minister for the Army, upon notice -
-The Minister for the Army has supplied the following answers: -
Bill received from the House of Representatives and (on motion by Senator Ashley) read a first time.
– 1 move -
That the bill be now read a second time.
The purpose of this bill is to regulate life insurance business conducted in Australia, and to protect the interests of persons who have effected life insurance policies. Life insurance business has been developed extensively, and there are now about. 4,500,000 policies in force in Australia. It has long been recognized that some form of public control is necessary over a business which affects such a large proportion of the people, and in fact various enactments with this object in view have been passed by the Commonwealth and State Parliaments. It if generally admitted, however, that the control exercised by existing legislation is not completely satisfactory, and it is the object of this bill to consolidate and extend the provisions of those acts.
To explain the type of control proposed by this bill it. is necessary to refer briefly to the historical development of life insurance business. The business was largely developed in G>reat Britain during the last century, and after the failure of one or two companies had attracted public attention, a system of legislative control was instituted in 1870. Under this system, the principles of which have been described as “ freedom with publicity “, a company is required to lodge a relatively small deposit with the Government as security for policy-holders, but otherwise it is allowed considerable freedom in the management of its business, provided that it. publishes its accounts and statistics in a standard form. In the past the publicity given to a company’s results, and the competition between various companies has been relied upon to ensure a minimum standard of protection for policy-holders. Life insurance in Australia is carried on mainly by local mutual companies on lines very similar to those adopted by
British companies, and the British system of legislative control, i.e., “freedom with publicity “, was adopted by all the States, with the important exception of New SouthWales, before the Commonwealth was founded in 1901. As these State enactments differed in details, though not in principle, the need for uniform insurance legislation was fore seen when the Commonwealth Constitution was drafted, and power was taken accordingly. As a step to implement this power, a royal commission was appointed in 1908. The commission reported in 1910, and although bills were twice prosented to the Senate, neither of them was proceeded with. On two special subjects only has the Commonwealth passed life insurance legislation. In 1905 it extended to life policies the limitation imposed upon friendly societies, regarding the amount that may be paid on the death of a child. In 1932 it assumed control over the deposits previously lodged by companies with some of the States, and imposed a uniform scale of deposits for the whole of Australia. It may be mentioned that this act effectively checked the formation of “mushroom” companies, many of which had previously commenced business in New South Wales, where no deposit was required. The first purpose of this bill is thus to consolidate these existing State and Commonwealth acts. It has become apparent, however, that the principles of “ freedom with publicity “ embodied in these acts require some modification in view of modern conditions. This fact was recognized in Great Britain in 1923, when, following an inquiry into the methods of transacting industrial insurance, an Industrial Insurance Commissioner was appointed, with wide powers of supervision ofthe companies. In the present bill it is proposed that a Commissioner be appointed to supervise the administration of the proposed act, both as regards ordinary and industrial insurance. A further point is that whereas the bulk of life insurance business in Australia is transacted by companies which have acquired a world-wide reputation for their soundness, there are a few companies that are not yet so firmly established. In the case of the strong companies it is antici pated that the duties of the Commissioner willbe largely of a supervisory nature. In the case of those companies which are not so well established, it isexpected that he will have to take more active steps to procure the maximum possible protec tion for the policy-holders. In such circumstances, British legislation provides only that the Commissioner can make application for the winding-up of the company by the court. It is thought, however, that in respect of a life insurance company, it will frequentlybe possible to make arrangements which are more satisfactory to the policy-owners than a complete winding-up of the company, and the bill provides the machinery whereby each case can be closely examined and, subject to directions of the High Court, the procedure most favorable to the policy-holders can be adopted. The procedure adopted has been modelled upon an enactment of the South African legislature.
It is appropriate at this stage to summarize the main objects of this bill, which have arisen from the foregoing historical discussion. These are -
I now propose to outline briefly some of the more important provisions of the bill. Before doing life insurance business in Australia, a company must lodge
It has long been recognized that the funds of life insurance companies are in the nature of trust funds, and that they should, subject to any proper allocation of profits, as decided by the members of the company, be applied solely for the benefit of the policy-owners. This principle is enforced in the bill by the establishment of statutory funds. All moneys received in respect of life insurance business must be carried to a statutory fund, the assets of which must be kept entirely separate from all other assets of the company, and no part of a statutory fund may be applied towards any purpose other than life insurance business. Thus, if a company transacts, say, fire insurance business, as well as life insurance, and suffers losses on its fire business, the life statutory funds cannot be charged with those losses. The bill provides that accounts and balance-sheets in respect of each statutory fund shall be prepared annually in a prescribed manner and that such accounts and balance-sheets shall be audited by cornpotent persons. A person must, in the first instance, secure the approval of the Commissioner before he undertakes the duties of auditor of a life insurance company. At least once in each five years the affairs of each company must be thoroughly investigated by an actuary. These provisions follow thos* set out in British legislation, with one or two further safeguards. Foi instance, it is provided that the basis of valuation adopted by the actuary shall be not less stringent than a prescriber “ minimum basis “. This minimum, basis cannot be called a severe one in present conditions, and no solvent company should have any difficulty in complying with it. For those companies whose position is not entirely satisfactory, however, the adoption of a uniform minimum bash of valuation, will assist the Commissioner lo determine the course of action heshould take. Besides being entrusted with the general administration of the proposed act, the Commissioner is to be given very full powers to make confidential inquiries into the business of any life insurance company. He can demand any relevant information from a company, and can, if he thinks fit, investigate any part of a company’s business. In the event of such an investigation, the legitimate interests of the company are preserved by the fact that the Commissioner must inform the company of the ground.on which the investigation is to be made, and of the results of an investigation. Also, the investigation must be conducted in secret, and no information may be divulged except in pursuance of a duty under the act. As a result of his investigations, the Commissioner may give snob directions to the company as he thinks necessary, but, in view of the fact that such directions might seriously affect the business of the company, it is provided that the company may appeal to the High Court against those directions. It is anticipated, however, that the Commissioner would normally give directions only on matters of minor importance. Should his investigations show that there is anything seriously wrong with the management of a company, his remedy would be to apply to the High Court for the appointment of a judicial manager to ‘ the company. If appointed, the judicial manager will, subject to directions from the court, take over all the powers and functions of the management of the company. The judicial management is intended to be only a temporary phase to protect the interests of the policy-owners, mid, as soon as practicable, the judicial manager will report to the court, indicating whether he considers the company should be wound up, or its business transferred to another company, or whether any better arrangement can be made in the interests of the policyowners. These, then, are the powers whereby the Commissioner will be able to ensure that all life insurance companies remain solvent, not only as “regards their immediate liabilities, but also as regards the actuarial reserves that must be built up to pay future claims. Tt will be noted that there is nothing arbitrary about hia powers on any question of ‘vital importance; if the company is not satisfied with the Commissioner’s decision, it can take the matter to the High Court for decision. -
A considerable part of the bill sets out certain minimum rights that a policy-owner shall have in relation to hia policy contract. These provisions, for the most part, follow similar provisions in the various State acts, and in any event, are merely privileges that the better companies have freely allowed to their policy-holders for many years. The object of the bill is to require all companies to maintain these minimum standards in all States.
In recent years the Victorian Government has taken an active interest in life insurance legislation of this nature. Senators will remember that a Royal Commission on Industrial Insurance was appointed in Victoria in 193S, and the recommendations of that royal commission were subsequently embodied in the legislation of that State.
The present bill has included all the provisions of recent Victorian legislation, with minor amendments, and thus extends to policy-owners in all States the benefits of the findings of that royal commission. The most important of these provisions is, perhaps, the institution of a minimum scale of surrender values and paid-up policy values which, as in Victoria, are extended to both ordinary and industrial insurance policies.
I do not propose at this stage to enter into details regarding the other provisions of the bill, some of which are of a technical nature, since they arc described in the memorandum which I am presenting for the information of honorable senators. I would, however, once more emphasize the need for uniform and comprehensive legislative control of this business which so closely affects the lives of the Australian people. Before this bill was drafted, an extensive study was made of comparable legislation, in Great Britain and in most of the British dominions, and I believe thai the form of control suggested by the bill is the most suitable to Australian conditions. The provisions of -the (bill are not unduly harsh on the management of life insurance companies; indeed, I think it can be said that the better companies have already voluntarily given to their policy-holders substantially all the rights conferred by the bill. The measure will, however, introduce improvements into the practices of some other companies that have not been so liberal in the past, and will also have the undoubted advantage of rendering the minimum rights of policy-owners uniform in all companies and in all States.
Debate (on motion by Senator Leckie) a d j o u rn ed . commonwealth: bank bill
In commit! ee: Consideration resumed from the 18th July (vide page 4160).
Clause 26 agreed to.
Clause 27 (Deputy Governor to act when no Governor).
.-The clause reads -
In the event of a vacancy in the office of Governor, the Deputy Governor shall perform the duties of the Governor and shall have and may exercise the powers and functions of tile Governor.
Apparently, no provision is made to enable the Deputy Governor to perform the duties of the Governor should the latter suddenly take ill, or be unable to perform his duties for some other reason. It is true that clause 26 provides that the Deputy Governor shall perform such duties as the Governor directs. But the clause now before the committee only gives power to the Deputy Governor to act should the Governor die, or the office become vacant for any other reason. The Minister should examine the clause to ensure that provision is made to enable the Deputy Governor to carry on during such periods as the Governor is absent on leave or owing to illness or other causes.
.- The clause enables the Deputy Governor to take control of the bank if, for instance, the Governor dies. In such circumstances, the Deputy Governor would remain in control until another Governor is appointed by the Governor-General. The act of 1911 provided that “if the Governor is absent from the Commonwealth, or is absent from duty on leave, or is unableby reason of illness or other cause to perform his duty, or if any vacancy exists in the office of Governor, the Deputy Governor shall have and exercise all the powers and functions of theGovernor during his absence, or while the inability continues or the vacancy exists “. In 1924, that section was repealed and, in lieu thereof the existing section 23 was inserted. The reason for the wording of the clause now before the committee is that it is more appropriate in relation to statutory appointments.
– The Minister will realize that probably the reason why the section to which he referred was repealed was that the bank was placed under the control of a hoard, and the board could immediately grant all necessary powers to the Deputy Governor, it would seem that the matter I have raised has been overlooked. An amendment should be inserted in order to give to the Deputy Governor power to carry on in the event of the illness of the Governor, or incapacity from other causes to perform his duties.
– I think that the clause is adequate.
Clause agreed to.
Clause 28 agreed to.
Clause 29 (Advisory Council).
.- The Government has decided to substitute an Advisory Council for the present board. Apparently, it deems this method the best way of supplementing any wisdom which the Governor may possess in his management of the bank. It is curious to note how this provision fits into the scheme of the measure, the object of which is to make the bank completely subservient to the Treasurer of the day.
Sub-clause 2 provides -
The Advisory Council shall consist of -
the Secretary to the Department or the Treasury;
an additional representative of the Department of the Treasury, who shall be an officer of the Public Service of the Commonwealth and shall be appointed by the GovernorGeneral ; and
two officers of the Bank, who shall be appointed by the Treasurer, on the recommendation of the Governor.
Every one of those officers is subject to the Treasurer of the day, and his appointment will depend upon the Treasurer of the day. It is hardly likely that an Advisory Council so constituted would at any time oppose the wishes of the Treasurer of the day who holds their livelihood in his hand.
– The Treasury officers at present often go against the Treasurer’s opinion.
– They might. All of the members of the proposed Advisory Council will be paid officers of the Treasury, and it is not likely that they would go against the wishes of the Treasurer.
– They are the most persistent bull-dogs I have ever met.
– This proposal seems to me to be like the fifth wheel of the coach. It is merely a trimming to lead the people to believe that the Governor will be guided by the Advisory Council. It may be better than nothing, but compared with board control it will be practically useless. This proposal is designed to lead the people concerned with the bank to believe that they will still have some interest in it. The measure as a whole, and particularly this clause, reduces the status of the Commonwealth Bank to a public department. The Government seeks to achieve that objective by appointing officers of a government department to advise the Governor of the bank on financial matters. But such officers will have no responsibilities and no powers. The Governor need not take rue slightest notice of any advice they may tender.
– They are not political; that is the important point.
– They should not *e.’
– But some advisers in the past were political.
– These officers will have no responsibility and no power. It would be an improvement to provide that the Advisory Council shall report to Parliament in respect of any difference of opinion with the Governor. That would bt ti safeguard, but under the clause the Governor can ignore any advice which the council may give, and he cannot be called to account for such action because no one except himself will know what advice the council may offer. The council will report to him alone, and he may simply sweep their advice aside. I do not propose to move an amendment, but I point out the uselessness of the proposed council. It will be of no value in looking after the affairs of the bank. The Governor with the Treasurer standing over him will simply run the bank. Obviously, the proposal is intended to lead people to believe that the Advisory Council will have some responsibility and power. That is not the case. The council will not even have the power to submit its advice to the Treasurer.
-. - The Minister, by interjection, said that the members of the Advisory Council would be non-political. That is probably true; but an earlier clause passed by the committee provides that in the event of disagreement the Treasurer’s view shall prevail. In effect, that means that the council must work under the control and direction of the Treasurer of the day. The Treasurer, whoever he may be, will be distinctly political and it is useless to say that the Advisory Council will not be political, because the bill is political from beginning to end. That is indicated by the provision that in the event of disagreement, the will of the Government shall prevail. The Leader of the Opposition in the House of Representa.tives (Mr. Menzies) has announced that when the Liberal party gains the treasury bench, the Bank Board will be re-established. Henceforth, every general election will be fought on banking. The stability of banking ‘ depends on the application of a constant policy. People a ling with banks, and they are legion, ought to be able to ascertain exactly what the banking policy is, but they will not be able to do so, because with every change of government, there will be a change of the banking legislation. That will destroy stability. At the next general elections, the people will be asked whether they prefer the Commonwealth Bank to be administered by politician? or independent men. I have no doubt what the people will say. The Government should seriously reconsider thi? extremely dangerous substitution of political control for the independent control of the Bank Board.
– Sub-clause 5 provides -
Each of the members of the Advisory Council referred to in paragraphs (a) and (c) of sub-section (2.) of this (section shall bt paid an allowance by the Bank at the rate of Six hundred .pounds per annum.
The members of the Advisory Council referred to in that sub-clause are the Secretary to the Treasury and the other representative of the Treasury. I assume that they are adequately paid by the Government. If the are to be additionally remunerated for their work as members of the Advisory Council, why is it not proposed that the other members of the Advisory Council shall be simi1larly remunerated?
.- The payment of £600 a year to the representatives of the Treasury on the Advisory Council will be in accordance with the present practice under which the Secretary of the Treasury, as a member of the Commonwealth Bank Board, receive* an extra £600 a vear. The representatives of the Commonwealth Bank on the Advisory ‘Council, I assume, will be reclassified for their higher duties and paid accordingly.
– An outstanding feature of this clause is that all the members of the Advisory Council will be nominated by the Government. Some provision should be made for an independent mind to be brought to bear on the matters on which the council will be required to give advice to the Governor. That is the great weakness in the constitution of the Advisory Council.
Clause agreed to.
Clause 30 (Governor to preside at meetings of Council).
– This clause is peculiar in that it provides that the Governor shall attend and preside at all meetings of the Advisory -Council but shall not be entitled to vote. The Deputy Governor will have a vote. The Minister should explain the need for the differentiation.
– This clause provides that the Governor shall attend and preside at all meetings. What would be the position if he were absent on leave or through illness ?
.- The obvious explanation is that the Governor is the controller of the whole concern. The members of the Advisory Council are to be his advisers. He will meet them for the purpose of receiving advice. He does not need to have a vote on advice to be tendered- to him.
– The Minister (Senator Keane) has not explained the point raised by Senator J. B. Hayes as to whether the Advisory Council can meet in the absence of the Governor. It seems to me that insufficient consideration has been given to this clause.
.- The Acting Leader of the Opposition (Senator Leckie) is raising a question on almost every line of this bill. The honorable senator could as well ask me how many letters are in the Post Office as to nsk some of the questions he is putting to me. I do not. intend to debate clauses which are obviously clear.
– At last we have a definite statement from the Minister. He does not know what the clause means, or, if he does know, he does not intend to tell us.
– The clause is quiteplain.
– Even if we are able to point out faulty drafting, theMinister’s attitude seems to be, “We have the numbers and, faulty or not, the bill is going through “.
Clause agreed to.
Clauses 31 to 34 agreed to.
Clause 35 (Agents).
– After the outburst by the Minister for Trade and Customs (Senator Keane) in response to my last inquiry, it hardly seems worth while asking questions on these clauses. However, I should like to know if this clause means that the bank may arrange with any individual - not a company or an organization, but a single individual who is not a member of thebank staff - to act as its agent? One can understand a branch manager acting as an agent, but not a person who has noconnexion whatever with the bank.
– This is done at present in regard to post office branches..
– That is a different matter. Those are small savings bank branches. I presume that the agents provided for in this clause will be called’ upon to carry out the administration of” rural credits, general banking business,, and other branches.
.- This clause follows the lines of section 41 of the existing act, except that the provision has been widened so that any person,, not only a bank, may act as an agent of the bank. In addition to having banksoverseas acting, as its agents, it is necessary to provide that persons may be appointed to act similarly. A shipping or travel company may be needed in connexion with the cashing of travellers* cheques, or letters of credit issued by the bank. It is essential that the bank have power to appoint either agents, companies or persons both within and outside: Australia.
Clause agreed to.
Clauses 36 and 37 agreed to.
The Bank may, with the approval of the Treasurer, enter into an arrangement with any other hank for the transfer to the Bank, upon such terms and conditions as are agreed upon between the Bank and that other bank, of the whole or any part of the assets, liabilities and business of that other bank.
– I have no objection to this clause as it stands, but I should like to know why no provision is made for the staffs of banks which will be absorbed by the Commonwealth Bank. Those staffs will include many men who have spent their lives in the service of the private banks, and this clause does not impose any obligation upon the Government to provide employment for them, or to pay compensation for the loss of employment. I point out also that officers of private banks have their own superannuation funds. What payments are proposed to compensate private bank officers for the money which they have paid into their superannuation funds? To safeguard the position of these officers I move -
That the following proviso be added: - “ Provided that in any such transfer, the stuff of the Bank taken over shall be absorbed in the Commonwealth Bank staff so as to preserve to them the same status and rights as in their original employment.”
– Clause 156, sub-clause 3 provides -
Where the Bank enters into an arrangement under section thirty-eight of this Act, or the Savings Bank enters into an arrangement under section one hundred and twentyfive of this Act, the Bank may appoint to the Service of the Bank officers of the body corporate or Savings Bank with which the arrangement is made although they have not passed a prescribed entrance examination.
When this legislation becomes operative, it will be necessary for recruits for the Commonwealth Bank staff to pass a prescribed entrance examination. That, however, does not apply to officers of banks taken over by the Commonwealth Bank. Although clause 156 does not go so far as the amendment does, it provides adequate protection. The object of the amendment is to have officers of private banks taken over by the Commonwealth bank accepted in the Commonwealth Bank on the same status and with the same rights as they held in their original employment. It is reasonable to assume that any officer who held a position of importance in a private bank will not be derated when he is absorbed into the Commonwealth Bank staff. However, there may be other officers who because of drunken habits, or for some other valid reason, cannot be regarded as desirable members of the Commonwealth Bank staff. The Commonwealth Bank should not be under an obligation to employ people of that type. I admit that this is one of the main objections of certain bank officers’ organizations to this legislation. Representatives of these organizations have been conducting a campaign throughout the Commonwealth, and telling bank officers that if this legislation becomes law they will lose their jobs. That is not so. The interests of officers of private banks will be protected adequately.
.- The Minister for Trade and Customs (Senator Keane) has said that the Commonwealth Bank will take over the best of the officers of the private banks which are to be absorbed, but will reject anybody who is considered undesirable. I point out that undesirable individuals are not employed by the private banks. These institutions employ only competent officers of high personal integrity and competence.
– I support the arguments that have been advanced by the Leader of the Opposition (Senator Leckie). As the honorable gentleman has said, officers of private banks are contributors to superannuation funds. If a bank is taken over by the Commonwealth Bank and no provision is made for the absorption of all its employees, what will happen to the superannuation contributions of employees who lose their jobs? There should be a liability upon the Commonwealth to pay compensation in these cases. There is an obligation to make superannuation provision for these men. What will happen to the staff of a private bank should the Commonwealth Bank take it over and the superannuation payments be only partly paid?
Senator KEANE (Victoria- Minister is a fair question, but I remind the committee that when the Commonwealth Bank took over certain banks in Western Australia and Queensland, it absorbed 1 00 per cent, of their staffs whose rights were amply protected. Under certain social service legislation, which will come before the Parliament soon, it may be necessary to take over some State officers. Before the Commonwealth Government asks them to accept transfer to the Commonwealth Public Service, legislation will have to be passed to preserve their rights. Honorable senators opposite may rely upon the ‘Commonwealth Bank doing the right thing in the circumstances outlined by Senator Herbert Hays, with whose representations I am in sympathy.
. Clause 38 does not deal with the compulsory acquisition of another bank by The ‘Commonwealth Bank, but with a voluntary arrangement between banks. Tn that event, I suggest that it would be The duty of the trading bank, which is negotiating for the sale of its assets to the Commonwealth Bank, to include in r.he proposed agreement provisions for the protection of its staff. It would not be reasonable to suggest that the Commonwealth Bank should take over every member of the staff of a bank which was being acquired.
– What about the superannuation rights of the bank officers ?
– Adequate provision should be made in that connexion. Representations have already been made to the Treasurer (Mr. Chifley) on that subject, and they are being given careful consideration. I understand that the right honorable gentleman is not prepared to make an announcement at this stage, but that he will do so after this legislation has passed through the Parliament.
– If there is to be an announcement by the Treasurer (Mr. Chifley), it should be made now, before it is too late, because should the bill be passed in its present form, the staff of any banking institution which may be taken over by the Com monwealth Bank will be left in a stateof uncertainty. It is all very well for the Minister for Trade and Custom* (Senator Keane) to say that ample provision is made in clause 156, but all that that clause provides, in sub-clause 2, i* that “ the Bank may appoint person* who have not. passed a prescribed! entrance examination to such positions or to positions of such classes,, as are prescribed “. Sub-clause 3 goes a little farther; it provides that officers of a bank which is taken over by the Commonwealth Bank may be appointed although they - have not passed the prescribed examination. That means only that the staff of any bank which is taken over will be at the mercy of the Governor of the Commonwealth Bank.
– It will be the duty of the private bank to protect ite officers when entering into an agreement with the Commonwealth Bank.
– No doubt it will do so to the best of its ability, but a private bank which is carrying on business successfully and is making profit? is not likely to want to hand over its business to the Commonwealth Bank. Only when a private bank is experiencing difficulties will it be willing to enter into negotiations with the Commonwealth Bank, and, therefore, it may nol be in a position to lay down, hard and fast, the conditions which shall apply to its staff. I cannot understand why the Government proposes to treat the staff of private banks so badly. Most of these officers are not highly paid and after many years of service with a bank they will not be fitted for other classes of work. The Government’s duty is to see that officers of a bank which ie being taken over by the Commonwealth Bank shall be adequately safeguarded. T cannot understand the reluctance ob the part of the Government to accept the amendment. I wish to make it cleaT that I have not consulted with any bank officer in his matter, and that no representations on this subject have been mad* to me. When I saw this clause, I marked it immediately as one deserving of further consideration, because I foresaw that it could cause hardship. 1 am. astonished that the Ministry hae not taken the opportunity to reassure officers of private banks that their interests will be safeguarded. The Government professes to represent the working people of this country and I cannot understand its attitude in this matter.
Clause agreed to.
Clauses 39 to 41 agreed to.
Australian notes may bc issued in any of the following denominations, namely, Five -shillings, Ten shillings, One pound, Five pounds, Ten pounds or any .multiple of Ten pounds.
– This clause provides for a departure from “the existing practice in respect of the note issue and cannot be allowed to pass without comment. For many years the note issue has had a backing of either gold or other suitable security, but now the Government says that there is no necessity for any such backing. Clearly, the Government wants the power to print, as many notes as it thinks fit; it wants freedom to act wildly, and to print notes without limit and without supporting security of any kind.
– The honorable senator is repeating a story which is 40 years old. When the Commonwealth Bank was established derogatory references were made to “ Fisher’s flimsies “.
– The Minister for Supply and Shipping (.Senator Ashley) will not deny that, so far, the note issue has had either a gold or a security backing, and that now the Government proposes to depart from the practice of generations.
– The resources of the nation stand behind the note issue.
– I have heard that before, but those resources are already heavily mortgaged. The existence of a backing, in either gold or other security, to the note issue would give the people confidence that the currency was being safeguarded. Moreover, such a backing would constitute a valuable nest-egg for use in connexion with foreign transactions. The Minister knows that Australian notes are not accepted outside Australia. Most of our transactions overseas will have to be paid for either in gold or in goods and, as I have said, the existence of a backing to the note issue would be valuable should the trade balance be against Australia.
– This clause deal? only with the denomination of notes and has nothing to do with a gold backing to the note issue.
– Nowhere in the bill is there any reference to a gold backing to the note issue. I am drawing attention to the omission.
– The honorable senator is out of order.
– There should be such a provision in the bill, and I intend to move accordingly.
– Gold is not referred to in the bill. The Lyons Government got rid of the gold backing to the note issue.
– It is because there is no reference to gold in the bill that 1 refer to it. At least, the Government should have regard to the amount of the note issue, and ‘should agree vo some limitation being placed on it. Before the war, Australian notes in circulation represented about £6 or £7 per head of the population ; to-day notes to the value of from £28 to £30 per head of the population are in circulation. What proportion of those notes is held by banks, and what proportion is held by the public, 1 do not know, but I suggest that a limit of £25 per head of population would adequately serve all currency requirements and buying necessities of thicountry. Such a limit would be flexible, because it would vary with any increase of the population. I move -
That the following proviso be added: - “ Provided that the total issue of note- docs not exceed £25 per head of the population of Australia, without the consent of Parliament.”
The. CHAIRMAN (Senator Courtice). - The amendment is not in order as this clause deals only with the denomination of notes.
– I wish to place a limit upon the value of notes which may be printed in the denominations set out in the clause.
– As the clause deals specifically with denominations of notes the Acting Leader of the Opposition would not be in order in seeking to amend the clause along the lines he has intimated. He may propose a new subclause to achieve the intention that he has in mind. The number of notes does not arise under the clause. The clause deals with classes of notes.
– Under the clause at it stands, will the bank have power to issue notes to an unlimited amount?
– The clause does not refer to the number of notes that may be issued. It deals specifically with denominations.
– I address my question to the Minister in charge of the bill.
SenatorLeckie. - In order to enable us to get out of our difficulty, will the Minister agree to the recommittal of clause 21?
Clause agreed to.
New clause 42a.
: - I move -
That the following new clause he inserted: - “42a. - Nothing in section forty-two shall enable the Note Issue Department of the Bank to issue notes of a total value exceeding £25 per head of the population.”
My amendment would limit the note issue to approximately £180,000,000. That amount shouldbe sufficient for the ordinary transactions of the community. However, my main objective is to place some limit upon the total value of the note issue in order to prevent this, or any government in the future, from wildly printing notes. I know that it will be argued that notes in excess of what is demanded by the public will not be printed. However, the people do not hold all the notes now on issue. Notes are held also by banks and other institutions. I suggest that when we come to the appropriate clause, the Minister should make a statement setting out not only the value of the notes now on issue, but also how these notes are distributed as between private individuals and institutions. I am not exactly wedded to the basis of £25 per capita mentioned in my amendment. although I think that that amount would be ample. My objective is to place a limit upon the value of the note issue. This is imperative having regard to the fact that the Government has abolished the note issue reserve, which, in the past, restricted the issue of notes. Under this bill, no limit whatever is provided with respect to the printing of notes. I wish to protect the people of Australia from the ruinous experience of Germany, and other continental countries, where administrations printed notes ad lib Surely, the Government does not wish to see such a state of affairs occur in Australia? However, if it refuses to set a limit to the note issue as I now propose, one can only conclude that it intends to print bank notes adlib. I also point out that my amendment provides that the Treasurer of the day may seek the permission of Parliament to increase the note issue. I have no doubt that should sound reasonsbe advanced for such a course, Parliament would give its consent. Does the Minister refuse to put any limit on the value of the bank notes which may be printed?
.- I support the amendment moved by the Acting Leader of theOpposition (Senator Leckie). It is a very fair proposal. In1938 the amount of money in circulation averaged £7 per capita, whereas to-day the amount is about £25 per capita. The amendment proposes to limit the note issue at that level, unless Parliament consents to exceed that limit. It is obvious that to-day many people are hoarding bank notes, because all of the notes issued are not in circulation. With freer circulation of notes the present note issue could be greatly reduced. The main reason for the present shortage of notes is that notes arebeing hoarded by many people who seem to think they are hoarding something of value, whereas the notes they hold would be just as safe in the hands of banking institutions. A limit of £25 per capita wouldbe the equivalent of a total note issue of approximately £180,000,000.
.- For practical purposes the effect of the amendment moved by the Acting Leader of the Opposition (Senator Leckie) would be to impose a maximum limit on the note issue of approximately £165,000,000 except with the consent of Parliament. In deciding to abolish the note issue reserve the Government gave careful consideration to the alternative of placing a statutory limit on the note issue. During the last six yearsthe note issue has, for war reasons, increased from approximately £50,000,000 to a high water mark of about £200,000,000. It is now about £185,000,000. The Government considers that this war-time expansion which may be followed by a large contraction, makes it inappropriate at the present, stage to impose a maximum limit on the note issue. The Government also considers that under modern conditions control of bank credit is more important as aprotection against inflation than the placing of a legislative limit of the note issue.
Question put -
That the proposed new clause (Senator
Leckie’s amendment) be inserted.
The committee divided.
Ayes .. . . 9
Noes .. ….16
Question so resolved in the negative.
Clauses 43 to 47 agreed to.
Clause 48 (Monthly statement of notes issued).
– Clause 48 provides - (1.) As soon as practicable after the last Monday in each month, an officer appointed for the purpose by the Governor shall prepare and sign a statement showing, as at the close of business on that day, the number and amount of Australian notes on issue.
I should like the clause to provide that that statement shall show not only the number and amount of Australian notes on issue, but also the number and amount held by the banks, and the number and amount held by the public. If there should be any great difficulty in making such a return I would not persist, but I can see no such difficulty. It willbe realized that money in the hands of private persons is not all thrown onto the market at once, but there could be a great danger in a sudden flooding of the market with money by a financial institution.
– The Banking Bill provides that the trading banks shall furnish regular returns of the notes held by them. By a simple process of deduction the division of the notes as between the banks and the public could be ascertained.
– Sub-clause 2 provides -
In preparing any such statement, notes of a denomination not exceeding One pound which have been on issue more than 20 years, and notes of a denomination exceeding One pound which have been on issue for more than forty years, shall not be included.
What is the reason for that provision? Obviously, ifthey are omitted, we shall not have a correct statement of the number and amount of notes on issue. Perhaps they could be shown in an addendum. Then one could arrive at the correct figure.
– In reply to Senator Leckie, the amount and number of Australian notes held by the Commonwealth Bank, the trading banks and the public are published weekly.
– Why is that not provided for in this bill?
– There is no need for such provisions when the figures are already published weekly.
– Will they continue ro be published weekly?
– Yes. With regard to the matter raised by Senator Mattner, for the purposes of calculating the note issue reserve to be held in terms of section 109 of the existing act. notes of a denomination not exceeding £1 which have not been presented for payment within twenty years from the date of issue, and notes of a denomination exceeding £1 which have not been presented for payment within 40 years from the date of issue are deemed to have been redeemed.
– The honorable gentleman does not mean to imply that such notes will no longer be redeemable and. will be valueless?
Clause agreed to.
Clauses 49 to 55 agreed to.
Clause 56 (Making, &c, of false forms).
– Some explanation is needed of this clause which provides a penalty of imprisonment for four years for the possession of “ any instrument or thing which may be used in making any form of any Australian note “. All printers engaging in delicate work like the printing of cheque forms have printing machinery capable of being used in the making of any form of any Australian note. It seems rather rough that they should be liable to imprisonment for four years, when their only purpose is to carry on a legitimate trade in which they are engaged. There should be some qualification, perhaps a licensing system, to enable them to carry on without fear of sudden imprisonment for having been engaged in a legitimate enterprise. I do not suggest that thai is the intention of the Government, but there should be no possibility of such a happening.
– To be guilty of a criminal offence, a person must possess what is commonly referred to as mens raa, that is, a guilty in indi or purpose. A person having an instrument for an honest purpose, therefore, would not be guilty of an offence. This provision has been in force since 1920 and no difficulty has occurred or is expected.
Clause agreed to.
Clauses 57 to 63 agreed to.
Clause, 64 (Capital of Department).
– This clause provides that the capital of the Sural Credits Department shall b<- £2,000,000. Clause 65 provides that a further £3,000,000 may be loaned to th,department by the Treasurer, making a total of £5,000,000. That hardly seemssufficient to conduct the activities of <tb<.Rural Credits .Department?
– Especially as a first payment on wheat mav involve £30,000.000.
– That is so.
– In tb terms of section 130 of the existing act, 2[> per cent, of the net annual profits of the Note Issue Department have been paid to the Rural Credits Department until the amount paid readied a total of £2,000,000. This sum is not described in the present legislation as capital, but in fact, it is capital, and has been treated as such. The balance sheet of the bank has shown the capital account of the Rural Credits Department at £2,000,000. The bank regards this amount as sufficient for immediate requirements.
– Presumably the Rural. Credits Department will be called upon to finance large transactions in wheat, butter, wool, and other primary products. The money involved will amount to many million? of pounds. If these activities were to be carried out by the General Banking Department, of course, all the money in the bank would be available; but responsibility for these functions rests upon the Rural ‘Credits Department, which I have said will have a. total capital of only £5,000,000.
– Clause 66 providesthat the bank may make advances to tb,Rural Credits Department of such amounts, and subject to such terms and conditions, as the Governor determines.
Clause agreed to.
Clauses 65 to 79 agreed to.
Clause80- (1.) Subject to th is Part, loans may be made by the Bank through the Mortgage Bank Department to any person engaged in farming, agricultural, horticultural, pastoral or grazing operations, or in such other form of primary production as the Bank thinks fit, upon the security of a mortgage to the Bank of an estate or interest in land in the Commonwealth owned by the borrower, where the land is used or is to be used primarily for farming, agricultural, horticultural, pastoral or grazing operations or in such other form of primary production as the Bank thinks fit.
.- I move -
That the following words be added to subclause (1.) : - and, in addition, loans may be made by the Bank on live-stock and machinery”.
These words appear in the Victorian Closer Settlement Act. I move this amendment because at present, the Mortgage Bank Department does not make loans on machinery or anything incidental to farming or land settlement. The amendment if carried would enable the Mortgage Bank Department to carry on a farmer’s entirebanking business, that is, his overdraft as well as his mortgage. At present the Mortgage Bank Department can make loans by way of mortgage only on land. Thus, a farmer may be compelled to take a second mortgage, and I assume that if the Government holds the first mortgage, no other institution would take a second mortgage. If my amendment be made the Mortgage Bank Department will be able to make advances on machinery, livestock and plant. It is advisable that a primary producer’s accounts should be kept by one institution. If that were done, the Mortgage Bank Department would know immediately the total amount that it bad advanced and the security that it held. Clause 141 of the Victorian Closer Settlement Act enables advances to be made on implements, livestock and even manures. To date, the total number of applications granted by the Mortgage Bank Department of the Commonwealth Bank is 814, but 819 applications have been rejected, no doubt mainly for the reason which I have stated. The Minister would be wise to accept the amendment. Land values are now being deter mined by government valuers on the conservative side. The Mortgage Bank Department will advance up to 70 per cent., leaving a 30 per cent. equity for the farmer in his property. If a man has a 30 per cent. equity, he has a good hold on his property, and the bank is not likely to lose anything by the acceptance of this amendment which would permit the Mortgage Bank Department to grat loans for the purpose which I have stated.
-Will that position not be covered by the general banking provisions?
– No. That would necessitate a farmer having two accounts, which I do not think is fair.
.- The purpose of the Mortgage Bank Departmentis to make long-term loans to rural producers on the security of land. The Government considers that it would be inappropriate to make loans on livestock and machinery under this part. However, it is open to the Commonwealth Bank to make loans to rural producers on livestock and machinery under the general banking provisions.
– I support the amendment that has been moved by Senator Gibson. True, these loans could be made available under the general banking provisions, but that would mean two separate accounts. Also, the position is most difficult for primary producers in Queensland where the bulk of pastoral land is held on Crown lease. I cannot find any provisions in this bill for advancing money against a leaseof Crown land. If there is no such provision, a farmer could obtain a loan only in respect of stock and machinery. I ask the Minister to explain this point.
.- The Minister for Trade and Customs (Senator Keane) has stated that itis not appropriate for the Rural CreditsDepartment to make loans on livestock and machinery. The words which I propose should be inserted in this clause have been taken from the Victorian Closer Settlement Act, which deals wholly and solely with land. Provision is made in that legislation for a farmer to borrow up to80 per cent. of the value of his property. In addition, he may borrow from the same bank on his livestock, machinery and manures. I am asking only that primary producers should be able to borrow from the Rural Credits Department for implements and livestock. Apart from soldier settlement undertakings, the Victorian Government has not lost money on its closer settlement schemes. Up to date, the Mortgage Bank Department of the Commonwealth Bank has refused applications totalling £1,S19,000, chiefly because the applicants did not have a 30 per cent, equity in their properties. Under the Victorian system, those applications probably would have been successful, because the equity required is less. I ask the Minister to consider seriously the amendment which I have moved. Competent officers will be available to determine whether or not the risk involved m lending money on marchinery and livestock is reasonable.
– Senator Gibson has submitted a reasonable proposal. The explanation of the Minister for Trade and Customs (Senator Keane) was that, under this clause, the Mortgage Bank Department of the Commonwealth Bank would have a mortgage on either freehold or leasehold land. Senator Gibson has pointed out that the land-holder would have difficulty in borrowing money elsewhere, but the Minister answered that objection by saying that he could borrow money from the General Banking Division of the Commonwealth Bank. Let us consider the position of a man who receives from the Mortgage Bank Department a loan of 70 per cent, of the value of his land and then needs more money with which to purchase live-stock, or plant and machinery. He would be unable to get that money from any private institution, and, therefore, he must go to the Commonwealth Bank for it. That means that he must enter into a new instrument of mortgage with the General Banking Division of the Commonwealth Bank and give additional security for his borrowings in respect of plant, machinery and livestock. That complicates the transactions unduly ; a single mortgage with the Commonwealth Bank would be much better because it would obviate dealings with two different departments. As has already been pointed out, the Victorian act has worked well.
– That is a closer settlement act.
– Of course it is. Is not this also a closer settlement provision? It provides for mortgages on broad acres, which means primary producing land. This bill places impossible conditions upon a man who has not sufficient money to buy the live-stock necessary to stock his land which is already mortgaged. The only inference that can be drawn from the attitude of the Government is that after the Commonwealth Bank has accepted a mortgage over a man’s land, the land-holder will be compelled to apply to the Commonwealth Bank for any further financial accommodation that .he may require. Senator Gibson’s proposal is reasonable, and I cannot see why the Minister cannot accept it, unless it be that he is acting under strict instructions. Acceptance of Senator Gibson’s proposal would undoubtedly make things easier for the man on the land.
.- If a man has to go to the Commonwealth Bank for financial assistance he must give a lien on his stock. Once a man has given to another a lien on, his stock, he is under an obligation to sell that stock, not when it suits him, but when it suits the other party to the transaction. Many men who may ask for assistance from the Mortgage Bank Department, would be helped if provision were made for them along the lines that I have indicated.
Clause agreed to.
Clauses SI and 82 agreed to.
The amount of any loan under this Part . . shall not exceed seventy per centum of the value … of the estate or interest in land on which the loan or loans are secured, or Five thousand pounds, whichever is the less.
, - I move -
That the word “ seventy “ be left out with a view to insert in lieu thereof the word “ eighty “.
The amendment would bring this legislation into conformity with the Victorian Closer Settlement Act. In his amend- ment to clause SO, Senator Gibson said that a man who had an equity of 30 per cent, in his land was in a sound position. Acceptance of my amendment would be of considerable benefit to a man when stocking or improving his property, and I ask the Minister to accept it.
.- I support the amendment for the reasons given by Senator ‘Cooper and also those which I gave in support of the previous amendment. Although the Mortgage Bank Department of the Commonwealth Bank was established in order to benefit the man on the land, it has rejected 819 applications for loans amounting to £1,819,000. Probably many of those applications were rejected because they would have represented more than 70 per cent, of the value of the estate or the land-holder’s interest in the land. Honorable senators know that Commonwealth Government valuations of land are exceedingly low. Had the Mortgage Bank Department been authorized to make advances up to 80 per cent, of the value of the land, it is probable that few of those applications would have been rejected. Those unsuccessful applicants have ‘been f orced to seek money elsewhere. Unfortunately it frequently happens that the man whose application is rejected is the man who is most in need of financial assistance. The margin of 30 per cent, should be reduced to 20 per cent. The alteration proposed by Senator ‘Cooper is more necessary now than at any other time during the last 30 years, because of the losses which men have suffered through drought and the depreciation of their properties because of war conditions. I hope that the Minister will accept the amendment.
– This matter was carefully considered in 194)3, when the ‘Government established the Mortgage Bank Department of the Commonwealth Bank. After taking into account all circumstances, the Government considers that the existing provisions for loans up to 70 per cent, of the value of the land, or £5,000, whichever is the less, are adequate.
. .-A fixed percentage of 70 per cent, of the value of the land must have been decided on by men who do not understand the difficulties which face the man on the land. In my second-reading speech, I said that a governmentcontrolled bank does not allow of that flexibility which is one of the greatest assets of the private banks. A man is most in need’ of financial help when he is in difficulties. There may be times when 70 per cent, or even 80 per cent., of the value of his land would not be sufficient to meet a man’s needs. In such circumstances, private banks do not follow an inflexible rule; they take into consideration the character of the applicant, and the reason for his losses, and they make advances to him, not so much on the value of his land, as on their assessment of his character. In practically 100 per cent, of the cases in which private banks have acted generously, the men have succeeded, whereas if the banks had been subjected to an inflexible rule the men might have been forced off their holdings. Even a loan of 80 per cent, of the value of the land is not as much as I would like to see provided for, but an increase from 70 per cent, to 80 per cent, would help many men who are facing the results of droughts, bush fires, and ‘ other catastrophes.
– I was a member of a parliamentary committee, consisting of members of both Houses of the Parliament and representing all parties, which considered the establishment of a Mortgage Bank Department of the Commonwealth Bank in 1943. Other members included the honorable member for Indi (Mr. McEwen) and Senator Allan MacDonald. One of the most contentious matters with which that committee dealt was the limit which should be placed on loans. Ultimately, a limit of 70 per cent, was agreed to, but during the discussions, Senator Allan MacDonald contended that the limit should be 60 per cent. I am, therefore, astonished to hear honorable senators opposite now asserting that a limit of 70 per cent, is too low.
.- I am not influenced by the views of the committee, to which the Minister for
Health and Minister for Social Services (Senator Fraser) has referred. I assure the Minister that the limit set out in this clause will force many landholders to apply to the private trading banks for financial assistance. In these days, most land-holders are without cash reserves, and must obtain finance somewhere. This clause aims at assisting men who are primary producers in a small way, because the amount of the loan which may be granted to any man is limited to £5,000. It is not too much to ask that .the struggling land-holders should be entitled to advances up to 80 per cent, of the value of their holdings. That is generally the limit of the trading banks. A reluctance to increase the percentage is an indication that the sufferings which men on the land have endured during recent years, are not understood.
– The Government makes rosy promises of relief to the man on the land and then refuses to honour them. The fact is that up to the present the man on the land has been able to obtain financial accommodation on more liberal terms from the private banks and the State financial agencies than from the Mortgage Bank Department, because he could give a lien on his machinery and live-stock. The Government says that the Mortgage Bank Department was established for the purpose of benefiting the small man who wants to borrow up to, say, £5,000, and it adopts the attitude that it is making a very practical proposition; but when we examine that ‘ proposition we find that the conditions imposed upon the borrower are not so easy, because, first, valuations given by the Commonwealth are lower than those given by other financial houses, and, secondly, the amounts advanced are less than those made by outside institutions. Nevertheless, I have no doubt that at the next general elections the Government will boast that it has set up a mortgage bank to help the man on the land.
– And that is true.
– Yes, but of what value is it? It has been found that less than one half of the people who apply to the bank are being accommodated-.
– Because the valuations of the bank are so low as to render the advances insufficient for borrowers’ needs, and, further, the mortgage terms will not admit any lien on stock or machinery. In modern farming practice stock and machinery represent considerable value. In ordinary circumstances, a man with capital only sufficient to buy land would be obliged to mortgage the land up to 50 per cent, of its value in order to enable him to purchase stock and implements. Therefore, this limitation on the Mortgage Bank Department will greatly ‘ hamper its ability to help the small man who wants to borrow up to £5,000. Under it, borrowers will not be able to obtain terms as liberal as those which they have been able to obtain up to the present from other institutions. In addition, the managers of wool firms and private banks take’ a personal interest in the affairs of clients, whereas no such policy will be adopted by a mortgage bank of this kind. In this instance, applicants will be obliged to deal only with the head office. The promise made by the Government to provide easy money for the man on the land is merely “ eye-wash “.
– The Acting Leader of the Opposition (Senator Leckie) has shown the inconsistency of the arguments adduced by honorable senators opposite in respect of this measure. He and his colleagues now say that this provision will drive the small man on the land into the hands of the private banks. But during the secondreading debate, those honorable senators declared that the objective of the measure was to destroy the private banks by driving them out of business. Honorable senators opposite cannot have it both ways. I believe that the Minister in charge of the bill can give good and sufficient reasons why it is proposed to limit the amount of the advance to 70 per cent, of the valuation of the security. The Minister for Health and Social Services (Senator Fraser) has pointed out that when the original measure to establish the Mortgage Bank Department was before Parliament, Senator Allan MacDonald and the honorable member for Indi (Mr. McEwen) in the House of Representatives, were not prepared to allow the bank to make advances of even up to 70 per cent, of the valuation of the security. On the basis of the arguments now advanced by honorable senators opposite, the purpose of those two gentlemen, apparently, was to cause the Mortgage Bank Department to fail in its objectives.
– It is comforting to hear a little argument now and again from honorable senators opposite. Senator Sheehan’s contention that the arguments of members of the Opposition are inconsistent is ridiculous. We have said that the bill is hostile to the interests of the private banks. Now, we say that in ordinary circumstances, borrowers, up to the present, could obtain from private banks more liberal accommodation than is provided under this clause. Senator Sheehan should not forget that the Commonwealth Bank will have at its disposal surplus funds of the private banks amounting to £240,000,000. Deprived of those resources, the private banks, obviously, will not be able to continue to provide accommodation on the liberal terms they offered in the past. Therefore, we are not inconsistent. The honorable senator conveniently forgets that the measure takes funds from the private banks, and also restricts the classes of advances which those institutions will be permitted to make. Private institutions in future may not advance money on certain classes of property in respect of which the Commonwealth Bank may do so. By that means the man on the land will be forced to deal with the Mortgage Bank Department. Therefore, the honorable senator’s charge of inconsistency is. absurd.
– It is difficult to understand the attitude of the Government with respect to this clause. Only for this measure, the private banks would have sufficient capital to make advances on easy terms to the man on the land who will now have to seek accommodation from the Mortgage Bank Department. The inconsistency of the Government’s proposal lies in the fact that up to the present borrowers could obtain more liberal terms from the private and State financial agencies. It is extraordinary that the Government should curtail the resources of the private banks, and thus prevent them from doing their ordinary business in an ordinary way. The State financial agencies are making advances up to 80 per cent, of the valuation of securities. Yet this Government has boasted for years that it would do more to help the man on the land. Under the bill, the Mortgage Bank Department will not only provide less liberal accommodation than that provided by existing State financial agencies, but, at the same time, the Government will limit resources of private institutions which have rendered better service in the past. To-day, the Tasmanian Government, under its housing scheme, is providing finance up to the full cost of homes, and under the scheme losses to date have been practically nil. When the people realize exactly the conditions governing advances from the Mortgage Bank Department they will treat the Government’s boasts with contempt, and will fall back upon the State financial agencies. Senator Sheehan said that honorable senators on this side have been inconsistent in their attitude towards the measure. We voted against the second-reading of the bill, because we believe that it is unnecessary, and that the interests of the community would be better served under the old system of board-control of the Commonwealth Bank. However, as we have not sufficient numbers to carry our point, it is- our purpose to try to improve the bill as much as possible.
Honorable senators opposite have always had much to say about what the Government should do for the primary producer. They now have an opportunity to enable the Mortgage Bank Department to render very great assistance in the extensive land settlement schemes envisaged in the post-war period. At the same time, honorable senators opposite speak about expanding credit. They argue that there is no need for bank deposits and that the Commonwealth Bank can create credit against the resources of the nation. Contrast that attitude with their refusal to enable ti*
Mortgage Bank Department to provide terms even as generous as those provided by private institutions up to the present. We should make a special effort to enable the Mortgages Bank Department, even at the risk of incurring a small loss, to give the most generous terms to borrowers. Let us recall the risks run by the private hanks, particularly in times of drought. The private banks and the pastoral finance companies of this country have greatly assisted the development of Australia. They have come to the rescue of primary producers in times of stress such as in the recent drought. We on this side are often charged with being tories, but the real conservatives are shown to he on the Government side by this very conservative provision that the Mortgage Bank Department shall advance only 70 per cent, of the value of the asset. If the Government is as concerned as it professes to be for the man on the land and had the interest it claims in decentralization, it would comply with our reasonable request that, the Mortgage Bank Department should be authorized to advance up to 80 per cent, of the value of the security offered. Here is a chance for the Minister to prove the Government’s sincerity.
.- My last word on this matter is to say that I had some justification for saying that men would be compelled to leave the Mortgage Bank Department and go back to the trading banks. The last time I was home a young man came to me and said, “ The mortgage on my property is due What do you advise me to do?” I said, “ Get your money from the Mortgage Bank Department of the Commonwealth Bank “. He said, “ What are the terms ? “ I told him what they were. He then saw the manager of the branch of the bank with which he had been dealing, who quoted better terms than were obtainable from the Mortgage Bank Department. The next time I saw the young man, he said, “ I have made arrangements to get the money from my bank “. He named the bank. He got on overdraft the same amount of money as the Mortgage Bank Department would have given on mortgage at the same amount of interest. Scores of men are being compelled to go to trading banks to get advances that they cannot get from the Mortgage Bank Department. I hope that the Minister will see his way to accept the amendment. Otherwise, even more men will be driven to the private banks to get at the same rate of interest a greater amount of money than they could get from the Mortgage Bank Department.
– Members opposite visualize the day when the Commonwealth Bank will monopolize banking in Australia.
– What has that to do with this clause ?
– Everything. It has been proved in Victoria that it is sound finance to advance 80 per cent, of the value of the security offered, but this Government is providing that the Mortgage Bank Department shall oblige applicants: to retain a 30 per cent, equity.
– They are the very men that need help.
– Yes. They can get an 80 per cent, advance from trading banks. To provide for an advance of only 70 per cent, is retrograde. I take it that it is the desire of this Government to assist the small man on whom the security of this country rests. His financial stability must be assured, but the Government is not willing to ensure it in the interests of the prosperity of the country.
– I rise to answer Senator Sheehan’s accusation that we are inconsistent. I believe that the eventual effect of this legislation will be the closing of the private banks. That is why I so strongly advocate provision in this clause for an 80 per cent, advance. When the Commonwealth Bank is the only bank, its policy may be to reduce the maximum advance to 60 per cent, or 50 per cent., and those seeking advances will have no redress, because they will have no choice but to take what the Common.wealth Bank offers, in the absence of other means of obtaining finance.
Question put -
That the word proposed to be left out (Senator Cooper’s amendment) be left out.
The committee divided. (The Chairman - Senator B. Courtice.)
Majority . . . . 8
Question so resolvedin the negative.
Clause agreed to.
Clauses 84 to 91 agreed to.
Clause 92 (Establishment of Industrial Finance Department).
– The Commonwealth Bank is directed by this bill to develop its general banking business, but I fail to see what general banking business will be left for it to do after all the various departments proposed have done their business. This clause provides for the establishment of an Industrial Finance Department. Already we have the Rural Credits Department, the Mortgage Bank Department, the central bank and the Note Issue Department, and we shall soon be dealing with the Savings Bank. The provisions relating to the Industrial Finance Department, are among the most dangerous in the bill. Some of the clauses, not any of which are cleverly drafted, leave the Commonwealth open to vast losses. The Government’s control of banking under this legislation will enable it to enforce the nationalization or socialization of almost any industry. It may buy or sell shares, or do anything else necessary to set up an industrial organization. Sub-clause 2 provides -
The Bank shall keep the accounts and transactions of the Industrial Finance Department separate and distinct from the other accounts and transactions of the Bank.
How the bank will be able to keep the Industrial Finance Department accounts and transactions distinct from those of the general bank, I cannot understand. That will be most difficult. A man engaged in industry may require money for that industry, and for other purposes as well. I realize, of course, that it is useless to ask the Minister to eliminate the part of this measure dealing with the Industrial Finance Department. Therefore, I shall reserve further remarks on this subject until later clauses are under discussion.
Clause agreed to.
Clause 93 (General Manager of Department).
– The general manager of the Industrial Finance Department is to be appointed not by the Governor of the bank but by the Governor-General, which, of course, means that he will be appointed by the Treasurer. Once again, the cloven hoof is evident in the operations of the bank. The Treasurer will determine also the salary and allowance’s of the general manager of the Industrial Finance Department. Obviously, this officer is to be at the beck and call of the Treasurer, and, in fact, will not be a servant of the Governor. He is to be appointed for a period not exceeding seven years. No minimum period of appointment is prescribed. He may be appointed for three months, six months or twelve months if the Treasurer so desires. We can well imagine the hold upon the general manager that this provision will give to the Treasurer. The Treasurer will be able to appoint a general manager virtually on probation for a short period to determine whether or not he is prepared to carry out the wishes of the Government. Ordinary business acumen suggests that a minimum term of office should be prescribed, of say, three years. This is further evidence of the Government’s intention to grasp all possible power. Ostensibly, the bank is to be controlled by the Governor, but here is an instance of authority being taken completely out of the Governor’s hands. In these circumstances, what class of officer will accept this position? The job is a most important one and should be attractive to the shrewdest banker in the country - a specially trained officerwith first-class credentials and wide experience. Does the Government really believe that a man of that calibrewill accept the position under the conditions prescribed in this measure? He will be liable to dismissal at a moment’s notice. The job is worth £3,000 or £4,000 a year at least, and unless it is held by a competent officer complete failure of the department may result. The proposal is fraught with dangerous risks. Whoever is appointed to the position of general manager should devote his full time to the job, and should hold office for a minimum period of three years.
– This provision represents a complete departure from established practice. The Industrial Finance Department is part of the Commonwealth Bank organization which is to be controlled by the Governor ; yet the Governor will not have a voice in the appointment of the general manager. Differences of opinion may arise between the Governor and the general manager of the Industrial Finance Department, but the Governor will not be able to take disciplinary action against the general manager. The general manager will be at liberty to act entirely on his own authority. That may place the Governor in a most awkward situation.
– Clause 94 states that the general manager of the Industrial Finance Department shall, under the Governor, manage that department.
– But just what do the words “under the Governor.” mean? The Governor will not have a voice in the appointment of the general manager.
– Or in the fixing of his remuneration.
– That is so. The position of general manager of the Industrial Finance Department is most important, and it is possible that the gen er al manager may be paid more than the Governor. I object to the provision that the appointment of the general manager shall be made by the GovernorGeneral. The officer should be appointed by the Governor of the bank and should devote his whole time to his duties.
Clause agreed to.
Clause 94 agreed to.
Sitting suspended from 5.55 to 8 p.m.
Clause 95 -
The functions of the Industrial Finance Department shallbe -
to provide finance for the establishment and development of industrial undertakings, particularly small undertakings ;
to assist in the establishment and development of industrial undertakings; and industrial undertakings with a view to promoting the efficient organization and conduct thereof.
– Hitherto, the policy of the Government has been to bolster up large industries and to drive small industries out of existence. Does paragraph a mean that the Government has undergone a change of heart and in future will look after the interests of the small business man? For instance, if a man wants to start a small engineering establishment does paragraph a mean that all that he will have to do to obtain sufficient finance to enable him to purchase machinery and plant, and probably buildings also, will be to go to the Industrial Finance Department of the Commonwealth Bank and ask for the money ? I have always understood that a bank is an institution to provide finance for various purchases. Does paragraph b mean more than that the Industrial Finance Department will grant financial assistance to enable industrial undertakings to be established and developed? It would appear that this paragraph is redundant. But the most amazing of the three paragraphs is paragraph c.
– Its object is to ensure that the money granted to assist in the establishment and development of industrial undertakings will not be wasted.
– It would appear that the Government, which knows nothing about industrial undertakings, is about to give advice to men who have already made a success of their businesses. Paragraphs b and c are not necessary.
– It would be interesting to know what economists have been chosen to fill these positions.
– The Government probably has in mind Dr. Coombs or Professor Copland. No doubt those estimable gentlemen would be able to offer Senator Finlay advice as to the manufacture of motor car panels, but if they did so I imagine that the honorable senator would laugh at them. Advice by bureaucrats and hank officers to experienced manufacturers would be of little value.
– The men to whom the honorable senator has referred would be as good judges as are most bank managers.
– The average bank manager does not give advice as to how a man shall conduct his factory. Nor would he attempt to tell Senator Gibson how to raise sheep. The ordinary banker does not give advice except on matters of finance. As I consider that paragraph b is unnecessary, I move -
That paragraph (6) be left out.
– It is the intention of the Government that the Industrial Finance Department of the Commonwealth Bank shall assist in the establishment and development of industrial undertakings, not only by the provision of finance and advice on operations, but also by the granting of assistance during the difficult period of the initiation and establishment of such undertakings. Assistance during that period could take the form of providing advice as to the best means of floating a company and complying with the various formalities necessary before business could be commenced. The amendment is not acceptable to the Government.
– I should like the Minister to explain the meaning of paragraph c. ‘For many years I have heard Ministers in the present Government denounce companies of all kinds but now it appears that they wish to encourage the formation of companies. Does that mean that Ministers favour the making of profits? I should like to know who is to provide the advice referred to in this paragraph, and what its nature will be.
– It will be sound advice.
– I have no doubt that it will be mostly sound. I do not suppose that much harm will be done by the offering of advice, but the paragraph is absurd, because no manufacturer is likely to take the slightest notice of the pet economists whom the Government will send to offer advice. I should like some enlightenment regarding this paragraph.
.Paragraph c means what it says. Its object is to prevent the squandering of money as the result of muddling methods.
Clause agreed to.
The Bank shall have, and may exercise through the Industrial Finance Department, such powers as are necessary for the exercise of the functions of the Industrial Finance Department under the last preceding section and, without limiting the generality of the foregoing, may, through the Industrial Finance Department -
>.- This is probably the cleverest and most dangerous clause in the bill. It authorizes a departure from well-established banking practice. Under Paragraph b the bank is to have power to “ purchase or otherwise acquire shares and securities and sell or otherwise dispose of shares and securities so purchased and. acquired “. Under clause 95 c advice is to be given about the formation of companies. This clause empowers the bank to acquire shares in a company. I suppose that the intention is that the bank shall acquire more than 50 per cent, of the shares of certain industrial undertakings, so that it will be able to control those undertakings. That is merely another method of socializing an industry. Ordinarily, banks do not buy shares in industrial concerns. Indeed, the acquisition of shares is forbidden by the articles of association of most banks, except as collateral security, and then only for the purpose of selling them again. This is a new departure in share dealing .by the Commonwealth Government. _ Under this clause, the Government will be empowered to take over practically any industry.’ I believe that in a later clause, or perhaps it is in a clause of another bill, it is provided that the bank shall not deal in shares which are sold on the stock exchange. I can understand a bank lending money to a manufacturer on the security of certain assets, but that a bank should acquire shares and retain them, thereby accepting hateful profits, is beyond my understanding. That is a departure from ordinary banking practice. If this provision does not give power to the Government to take over companies and factories, what does it mean? That is the only interpretation that I can place upon it. It is a dangerous provision which may involve the Commonwealth in heavy losses. I regard the clause as one of the worst in the measure. I should like the Minister to explain why the Government proposes to depart from ordinary banking practice by giving to the ‘Commonwealth Bank the power provided under the clause. I move -
That, at the end of paragraph (b), the following proviso be added: - “ Provided that shares shall be purchased or otherwise acquired only with a view to resale thereof.”.
– Undoubtedly’ paragraph Z> gives the bank power to own and control any industrial undertaking. Under the clause the bank may acquire a controlling interest in any such undertaking. I fail to see what that has to do with banking. The bank could take such action without parliamentary sanction.
– It is one way of getting round the Constitution.
– Yes. Considerable doubt exists as to whether the Commonwealth has power to engage in industrial undertakings; but the clause gives to the bank, as an instrumentality of the Government, power to take com plete control of industrial undertakings. That is a departure from normal banking practice. It seems that the Government intends to adopt the German method of industrial finance, which I need hardly point out will not be tolerated in this country.
.- The purpose of the clause is to enable the Industrial Finance Department to acquire shares in a company where circumstances indicate that that course is more advantageous than the making of a fixed loan. Shareholding confers certain rights which could be of assistance to the department in rendering assistance to clients. The amendment would tend to nullify the advantages of this procedure. Accordingly, it is considered that the Industrial Finance Department should not in any way be limited as to the period which it considers would be advantageous for it to hold shares in any company.
– I intend to persist with my amendment, the object of which is to provide that the bank shall not hold shares of any company in perpetuity. The explanation just made by the Minister in charge of the bill bears out all that I have said to the effect that the Government intends to acquire shares in companies. Under the Constitution, the ‘Commonwealth has no power to conduct private industries. I doubt very much whether this procedure will survive a test in the High Court. I should be very surprised -if the Government is not prevented from driving through the Constitution in this fashion. This provision is merely a subterfuge to enable the Government to get round the Constitution. In this instance, the Government is absolutely defying the verdict given by the people at the recent referendum, when, by a very large majority, they decided that the Commonwealth should not be given the very powers which the Government is taking under this measure. In effect, the Government says that despite the verdict of the people at the recent referendum it will acquire enterprises through this department which, under the bill will be given power to purchase, own and conduct factories.
– This has nothing to do with banking.
– Apparently, the Government need only say that the proposal is concerned with banking. The Government, instead of bowing to the decision of the people at the recent referendum, as it would do if it were a democratic government, intends to defy the people in this matter.
– Under the Constitution, the Commonwealth has always had power in respect of banking.
– That is so; but how does the Minister reconcile the fact that the Commonwealth has not the power to engage in industrial undertakings with the fact that under the clause it is giving to the Commonwealth Bank, as an instrument of the Government, power to acquire and control such undertakings ?
– We are doing that under theCommonwealth banking powers.
– I disagree with the Minister on that point. Under this provision the Commonwealth is likely to incur very serious losses. This provision represents the first step in a plan under which the Commonwealth is to own businesses and departments of businesses. Then, apparently, the Government proposes to poke its nose into industry to give advice upon manufacturing. Such an idea, of course, is preposterous, when it is clear that the Government, owing to faulty organization, is not able to cope with its own small problems. Although it recently announced that all service personnel who had been in the forces for five years would be released, it now finds that its organization is so faulty that it is unable to implement that decision. Despite these facts, however, it now proposes to enter upon industrial undertakings, and, as it were, teach its grandmother to suck eggs. I shall persist with my amendment.
Question put -
That the proviso proposed to be added (Senator Leckie’s amendment) be added.
The committee divided. (The Chairman - Senator B. Courtice.)
Majority . . 7
Question so resolved in the negative.
– I should like the Minister to define “ Industrial Finance Department “. I take the expression to mean industry as we generally understand the term, that is, secondary industry, such as factories and the like. I should like to know whether under this Part the bank will be empowered to finance persons for the purpose of setting up, say, drapery or grocery shops. I should like a clear definition of what the Industrial Finance Department will deal with. If it is only factories, that is one thing, but if it can embark on any enterprise that is something entirely different.
– The class of business which the Industrial Finance Department will deal with is set out in clause 95.
– I have never before heard such an explanation. Clause 95 provides -
The functions of the Industrial Finance Department shall be -
To provide finance for the establishment and development of industrial undertakings, particularly small undertakings.
What is an industrial undertaking? Could the department provide money to set up an emporium?
– A commercial firm?
– A wholesale draper’s shop?
– Then I have it definitely that it will deal only with manufacturing.
– Yes, particularly small undertakings; we emphasize that.
– The Minister says that these provisions will not apply to anything hut manufacturing enterprises.
– I assure the honorable senator that the department will not take over the Myer Emporium.
– I do not expect that, but I could understand the establishment of another .business of that sort in Bourke-street or Pitt-sreet.
– That is not intended.
– I could understand pressure being applied for the department to advance money for the provision of a decent store in Adelaide. I only want to be sure that money will not be advanced through this department for the setting up, say, of chain stores. The Chairman of the Rationing Commission, Mr. Coles, operates chain stores. I suppose, as a reward for his undoubted loyalty to the Labour party, the ‘Government will ensure that the bank shall not advance money to a rival.
– We are not in opposition to him, at all events.
– I should not think the Government would be. Anyway, the Minister says that the Industrial Finance Department cannot enter into commercial undertakings and that its operations will be confined to manufacturing. If that is correct I approve, but I should like to be clear on the point.
Clause agreed to.
Clauses 97 and 98 agreed to.
Clause 99 (Advances to Department by Bank and Savings Bank).
– This clause provides - (1.) The Bank may make advances to the Industrial Finance Department of such amounts, and subject to such terms and conditions, as the Governor determines, but so that the total amount of those advances not repaid shall not at any time exceed One million pounds. (2.) The Savings Bank may make advances to the Bank, for use in the Industrial Finance Department of such amounts, and subject to such terms and conditions, as the Governor determines.
That means that the savings of the “ little people “ are to be risked in the most hazardous branch of the Commonwealth Bank’s operations. Their money is to be lent by the Savings Bank to the Commonwealth Bank for investment in crooked industrial undertakings run by a Government which cannot organize anything. We have been wondering whence the money for the operations of the Industrial Finance Department will come. Now we know. Tucked away in this clause, which is, I think, designedly far away from the clause setting up the Industrial Finance Department, is the provision that the savings of the people are to be hazarded, in operating the department most likely to incur losses. There are other dangers in this clause. For instance, it is provided that at no time shall outstanding advances exceed £1,000,000. Then we have the provision that the Savings Bank’s funds, the deposits of, I repeat, the “ little people “, whom the Labour party should cherish, are to be used to whatever degree the Government determines. The money that may be borrowed from the Savings Bank is unlimited. It would be a good thing if the funds of the Savings Bank could be invested in something tangible such as houses, rural credits, and mortgages, but to venture those funds in dubious undertakings like the aluminium industry, with losses staring us in the face, is beyond understanding. Capital invested in manufacturing enterprises is largely used in the purchase and installation of machinery. That machinery is bought at high prices, but immediately it is used it becomes second-hand, and, should the venture be a failure, the price it will command on the open market is very often, only the price that scrap iron fetches. If the people stand for this they will stand for anything.
– This is the most dangerous of all clauses relating to the Industrial Finance Department. The risking of the savings of the people is the manner envisaged is a flagrant departure from hanking practice, because not only will the money be tied up for indefinite periods but also the investment will be made in enterprises in which the risk is greater than usual. Particularly would that be so if the Industrial Finance Department were pressed into making advances to bolster up unsuccessful undertakings that the Government desired to keep afloat. In order to impress upon honorable senators the danger of that, I need only refer them to clause 9, which empowers the Government to force the bank to make loans which it may not favour. Investment of the people’s savings deposited in the Savings Bank in business undertakings is improper. Honorable senators opposite may talk until they are black in the face, but they will not convince me that it is not absolutely unsound to use savings bank deposits for the purposes set out in this Part. Sub-clause 2’ provides -
The Savings Bank may make advances to the Bank, for use in the Industrial Finance Department of such amounts, and subject to such terms and conditions, as the Governor determines.
That means that the funds of the Savings Bank are to be used to an unlimited extent. Sub-clause 2 should most certainly .be deleted.
Clause agreed to.
Clause 100 agreed to.
Clause 101- (2.) In determining whether or not finance shall be provided under this Fart for the establishment or development of an industrial undertaking, the Bank shall have regard primarily to the prospects of the undertaking continuing to be, or becoming, a profitable undertaking and shall not necessarily have regard to the present value of the assets of the undertaking.
– The industrial finance Part of this bill is certainly notable for its many mad clauses. This clause provides - (1.) That the Bank shall not provide finance under this Fart for the establishment or development of an industrial undertaking, unless the Bank is satisfied that the industrial undertaking has reasonable prospects of continuing to be, or of becoming, a profitable undertaking. (2.) In determining whether or not finance shall be provided under this Part for the establishment or development of an industrial undertaking, the Bank shall have regard primarily to the prospects of the undertaking continuing to be, or becoming, a profitable undertaking and shall not necessarily have regard to the present value of the assets of the undertaking.
– That is sound.
– I have been in business for a long time, and if the proposals in the clause are not unsound business practice I do not know what is. The bank need not even value the asset before making an advance. All it has to do in order to justify an advance is to take into account the fact that ten, fifteen or twenty years later an enterprise may be worth money. Could there be anything more unsound than that? The Mortgage Bank Department is forbidden from making an advance of more than 70 per cent, of the value of the substantial asset represented in farm lands and may not make an advance on buildings or stock.
– Once machinery is used, as the honorable gentleman himself said, it becomes second-hand.
– But under this clause the department can advance any amount whatever regardless of the value of the asset. Money may be advanced solely on a pious hope that at some future date an industry may be successful. If there could be any more unsound proposition than that J. should be interested to hear of it. This clause is outrageous.
– The activities of the department will be of a specialized nature, and loans will have to be measured by different standards from those usually associated with bank loans. An undertaking may not be able to provide full security based on normal banking standards, yet with some assistance it may have every prospect of success. On the other hand, loans may not be made unless the hank is satisfied that the project has a reasonable prospect of success. There’ is nothing wrong with any part of this clause.
– ‘The explanation that the Minister for Trade and Customs (Senator Keane) has given makes the position even worse. The Minister said that although an undertaking might not be able to provide full security based on normal banking standards, with some assistance it might have every prospect of success. That, of course, implies pure speculation and not investment. . Worse still, it is speculation with trust money. If the trustee of an estate were to speculate in that manner with money in his keeping he could be sent to gaol. Trustees are permitted to invest only in certain securities prescribed by law; yet, under the industrial finance provisions of this measure, trust money - in the form, of the savings of the people - is to he used, for speculation. That is a most unsound and unethical proposal.
– In view of the importance of this matter, I move -
That sub-clause (2.) be left out.
I cannot imagine anything more prejudicial to the success and prestige of the Commonwealth Bank than unsound propositions of this kind. If this is an example of the manner in which the Government proposes to conduct the banking business of this country, the entire community is heading for disaster. This proposal savours very much of “ salting “ a gold-mine, by the shooting of some gold dust into the ground and then selling the property at an exorbitant price .as gold-bearing land. I can visualize the “gold bricks” which will be sold to the Government should this provision become law. Every inventor believes that he can make a fortune out of his proposition if he has the financial backing. Under this provision, all he will have to do is to persuade a credulous member of caucus to bring pressure to bear upon the Treasurer, and through him upon the bank, to advance money for his undertaking. Could any business proposition be more unsound?
– I support the amendment. Sub-clause 2 makes mandatory a practice which, for a centra] bank, is dangerous and open to grave abuse. Advancing money to a business which has insufficient assets, and only has a prospect of success in the future, is a private commercial risk, and one which should not be taken by a trustee of public funds.
.- It will be recalled that during the discussion of the portion of this legislation relating to the Mortgage Bank Department, under which it is proposed that advances should be limited to 70 per cent., the Opposition argued that the limit should be raised to 80 per cent, A great deal has been said by honorable senators opposite about the risks that private banks were prepared to take to encourage business enterprises, but now, when we are dealing with a service which is urgently required in this community, namely the provision of loans to assist small business, the cry is that, the Commonwealth Bank will be taking undue risks. Honorable senators opposite should be consistent. The aim of this provision is to make money available to small enterprises which’ require funds to set them on their feet.
– It is difficult to understand the Government’s inconsistency in the framing of certain clauses of this measure. Earlier to-day the committee discussed the activities of the Mortgage Bank Department, and we on this side of the chamber, argued that that department was completely out of step with all other similar lending institutions’ and that the limit of advances should, be 80 per cent, and. not 70 per cent. This country depends upon its primary industries for its overseas funds, and for its solvency. Can there be anything more important from a national point of view than the making of advances to assist primary producers? The Government, in effect, is saying to primary producers : “ You need not turn to the Commonwealth Bank for assistance, because other banking institutions will give you more generous treatment “. Yet this clause enables the Government to dabble in private industry. Have the people of this country not had enough of government-controlled enterprises? In Queensland at one time many important industries were under government control, and to-d’ay the countryside is strewn with their wreckage. The Minister for Trade and Customs’ (Senator Keane) claims that the object of this clause is to enable the bank to assist the small business man to establish his undertaking on a firm foundation. To what “ small business man “ does he refer. Where does this clause provide that small industries shall be assisted? The attitude of the Government all along has been, to freeze small industries out of existence. The small business man has practically disappeared from the industrial landscape.
– Is the honorable senator in favour of government support for the aluminium industry in Tasmania ?
– That industry has been undertaken as a wartime measure. It was upon that basis that the legislation relating to its establishment was passed through this ‘Parliament. Had it not. been for the war, the establishment -of the aluminium industry in this country would not have been entertained.
– Is the honorable senator in favour of continuing the aluminium industry in peace-time?
– As a defence precaution there is as much justification for the continuation of the aluminium industry in peace-time as there is for the maintenance of service establishments such as Duntroon Military College or Flinders Naval Base. The proposal to use the savings of the people in this manner cannot be justified. Those savings are held in trust for investment, but not speculation. Private individuals are prevented by law from handling trust funds in this manner, and the Government is establishing a dangerous precedent. Yet the Government, as trustee for the people of Australia, is prepared to speculate. with their money. I support the amendment.
.–Senator Herbert Hays has told us of the failures associated with government enterprise in Queensland, but he supported the establishment of an industry in Tasmania in which £3,000,000 of the people’s money will be invested. That industry must continue after the war. He has told us that the aluminium industry is to be set up in Tasmania because Australia is at war. It may be true that legislation for the establishment of that industry was introduced in war-time, but I should like the honorable senator to say whether he supports its maintenance as a peace-time industry. I remind him that considerable risks are associated with it. It is all right for the honorable senator to say that legislation to establish the aluminium industry is justified as a wartime measure, but he must realize that it must be continued after the war if the people are to receive back the £3,000,000 of public money which is at stake.
– A perusal of Hansard will show clearly that I voted for the establishment of the aluminium industry because it was necessary in the interests of the defence of this country. Honorable senators know that at one stage of the war aluminium was unobtainable in Australia. When the Aluminium Industry Bill was before the Senate I said that we should take steps to ensure that we should not again be in a position when aluminium was not available, and that whether the industry proved profitable or otherwise as a financial enterprise, the production of aluminium in this country was necessary in the interests of the nation. I shall not allow the Minister for Health (Senator Fraser) to put into my mouth words that I did not use.
– The point is that the honorable senator was prepared for the country to accept risks in order to establish the aluminium industry in Tasmania. . ‘
– I regard the production of aluminium in this country as a measure of insurance of the same kind as the establishment and maintenance of the Royal Military College, or of the existence of a navy, an army or an air force. It was because of the importance of aluminium to the defence of Australia that I supported the establishment of that industry.
– I can understand the opposition of Senator Leckie to this clausebut I cannot understand why Senator Herbert Hays should oppose it. It would appear that the latter opposes it because of pique rather than because he believes that it will serve no useful purpose. Some honorable senators who claim to represent country interests are willing that credit shall be granted almost without limit to assist the owners of properties in country districts.
– Up to 80 per cent.
– In his heart I believe that the honorable senator would like advances to primary producers to be up to 100 per cent. of the value of their property, or even more. I suggest that it is because the bill does not make provision for limitless advances on rural properties that the honorable senator is opposing it. The opposition of Senator Leckie is understandable; he has voiced his real reasons for opposing it. The honorable senator has been in business for many years, and I believe is closely associated with “big business”. Naturally, he does not desire to see on the statute-book legislation which will help small businesses to develop. The day of development has passed for the honorable senator and his friends, because they have already “cornered “ all the markets that they wish to “corner”. This bill makes provision for competitors, and for that reason the honorable senator is opposing it. “ Big business “ desires to reserve to itself the right to say what businesses shall be established and allowed to develop in this country. This clause takes from “ big business “ the right to dominate industry. The bill seeks to allow the development of industries free from the controlling influences of monopolies. We are living in an age of invention, in which improvements to existing means of production are made almost weekly. Let us suppose that some new process which will constitute a threat to existing big business concerns is invented. Under this clause, the inventor or those about to develop the new process, could go to the Commonwealth Bank for financial accommodation, and the bank, free from domination by “big business” as when it was under a board, could grant their request. In that way a new industry could be established. I recognize that in opposing the bill, Senator Leckie is acting in the interests of those who sent him here, and who want to control the industries of this country by confining them to a comparatively few persons in the community. The Senate would do well to reject the amendment.
– SenatorSheehan paid me a great compliment when he said that I was connected with “ big business “. His remarks embarrass me, but I wish that they were true. The fact is, however, that since I became a member of the Senate my business has largely disappeared. I rose to say that in his anxiety to score against Senator Herbert Hays, the Minister for Health (Senator Fraser) unwittingly made a disclosure which I expected to be made at some time, for he admitted that huge losses are likely to be incurred in connexion with the establishment of the aluminium industry in Tasmania. That is entirely different from what he said when the bill to authorize the establishment of that industry was before the Senate.
– I said no such thing.
– The honorable senator said that risks were associated with the establishment of that industry.
– The Minister now admits that that risk is considerable; he said that huge losses are likely to be incurred in connexion with the aluminium industry. The sooner the Minister for Health refrains from trying to assist the Minister in charge of the bill the better. He should be more tactful. The Minister says that losses will he incurred in connexion with the aluminium industry, Senator Sheehan says that it is a proper business practice to advance 200 to 300 times the value of goods, in the hope that some day the business will prove successful. If the Commonwealth Bank is to be conducted on that principle we shall see some remarkable happenings during the next few years. I predict trouble between those who believe in sound finance and those who wish the clause to stand in its present form. What the
CommonwealthBankwilldoafterthis bill kas been passed will depend on the Treasurer of the day. What a Labour Treasurer will do will depend on the Ministry of which he is a. ‘member; what the Ministry will do will depend on caucus; and what the caucus will do will depend on outside people.
– That means that the electors will decide.
– Senator Sheehan represents those outside people, and is a member of the caucus. He “will be one of those who will say, “I am going to bring pressure to bear on the bank so that it will advance any amount of money to crook shows “. The honorable senator may not have intended to say that, but in blunt language that is the meaning of what he said. Briefly, it means that, financially and economically, the country is to be “ taken for a ride “.
Senator MATTNER (South Australia) 9.16]. - I support the amendment. Subclause 1 provides a sufficient safeguard, whereas sub-clause 2 is not only a departure from established hanking practice but is also dangerous. We should bear in mind that the Industrial Finance Department will employ in its activities funds transferred from the savings bank, namely, the savings of the people. We must also remember that industrial undertakings, of all the undertakings which the bank will assist in the post-war period, will involve the greatest risk. Therefore, any provision that, in financing such concerns, the department shall not have regard primarily to the assets of the undertaking, is most dangerous.
Clause agreed to.
Clause 102 agreed to.
Clause 103 (Provision of staff and expert advice).
– Paragraph a of the clause provides that the bank shall “employ officers adequately experienced in the financing, organization and conduct of industrial undertakings “. It would be interesting to learn where it is proposed that the bank shall obtain officers who are adequately experienced. What is the object of that provision? Naturally, the bank, being obliged to carry out the orders of the Government, will endeavour to get the best officers available; hut where does it expect to get such experts? Is this provision designed to make jobs for large numbers of people who, since the outbreak of the war, have been running round in departments like the Departments for Munitions and Supply and Shipping giving advice to those engaged in industry as to how they should run their industry? During the war those little tin gods have had a good innings. Since the outbreak of war, artificial conditions have obtained in industry. However, to-day, those people are regarded as experts. Is it the object of the clause to provide jobs for these “ dud “ experts, and so remove the danger of their dismissal? It would appear that the purpose of the clause is to provide jobs for people of that kind who cannot qualify for jobs in ordinary circumstances.
Clause agreed to.
Clauses 104 to 107 agreed to.
Clause 108- (1.) .Subject to this Part, loans may be made by the Bank, through the General Banking Division, - to individuals and to building societies, for the erection or purchase of homes or for the discharge of mortgages on homes.
.- I move -
That, in sub-clause (1.), after the word “societies “ the following words bo inserted : - “ local governing authorities, government or semi-government authorities which administer schemes for providing or assisting in providing dwelling-houses “.
It is gratifying to find that the Government intends to provide finance for building homes. The more agencies and institutions we have helping to solve the housing problem the better it will be for everybody. As the number of houses increase, rents will tend to fall. The Commonwealth Housing Act 1928, which is repealed by this bill, made provision to allot finance to the instrumentalities I have mentioned. This clause seeks to delete that provision. Various official and semi-official estimates have been given of the number of homes required. Some estimates include families living in slum areas. Distressful though the conditions in those areas may be, the occupants have at least a home. I suggest that those without a home shouldbe given priority. A scheme for the abolition of slum areas can be tackled later. The estimate that 300,000 homes are needed is probably nearer the mark, and that should be the first objective. In the years immediately preceding the outbreak of war, the average annual expenditure on home building was about £27,000,000. Based on an average cost of £900, the number of dwellings built was 30,000. At this rate it will take ten years to overtake the arrears caused mainly by the restriction of building for so long. That restriction was necessary so that men and materials could be conserved in the interest of the war effort. The marriages of hundreds of service personnel, and the unwillingness of scores of pre-war rural workers to return to the country after engaging in essential war industries in the capital cities, has swelled the number of homes necessary.With the decentralization of secondary industries and the brighter prospects of primary producers, homes must be built in country centres. That is why I suggest local governing authorities should be included in clause 108.
It is useless to blame any particular government for the present deplorable housing situation. The problem must be tackled and solved no matter what government be in office now, or in the future. The appointment ofa Minister for Housing is a step forward. But is the Minister to be hampered by the departments which control man-power and the release of building material? Restrictions were necessary during the peak period of the war, but surely the stage has been reached when a tapering-off policy should be adopted. The need to meet the accommodation requirements of the British Pacific Fleet is not a sufficient reason for failure to undertake a more vigorous housing programme.
At the outbreak of the war 63,000 tradesmen were associated with the building industry. I do not know how many have been released from the fighting services and essential war industries. A strong suspicion exists that those who have been released are not being used in meeting the most vital problem confront ing the Government, that is in providing building material and erecting homes.
Recently at a meeting of master builders and representatives of unions connected with the building industry, held at the Melbourne Town Hall, to which the general public were admitted, statements were made that there was no shortage of timber and that millions of feet of seasoned timber was stacked at certain railway stations in Gippsland and elsewhere in Victoria. No doubt there are similar stocks in other States. There was a shortage temporarily of certain other necessary materials which could be produced as soon as approval was given by the appropriate departments. I urge the Minister to accept my amendment.
.- The purpose of the amendment will be covered at a later stageby the signing of agreements between the Commonwealth Government and theState Governments which will provide for the needs of those sections of the community which the honorable senator seeks to cover in his amendment. The clause now before the committee is primarily designed to aid individuals apart from the organizations mentioned by the honorable senator. Up to the outbreak of the war, in New South Wales alone, co-operative building societies had expended about £11,000,000 on the construction of homes. If I were a young man without money, and wanted to build a home which I could obtain at a cost of £800 inclusive of the land, I should combine with my mates to form a cooperative society. To this society we would pay a small sum each week, until the total funds equalled one-tenth of the amount of capital required for the purchase of a home. When I obtained £80 in that way, I would arrange through some banking or financial organization for the immediate construction of a home. The primary objective of the clause is to help individuals along those lines. The honorable senator’s amendment will be fully met under legislation which will be introduced at an early date to meet the requirements of bodies of the class he has mentioned.
Clause agreed to.
Clauses 109 to 115 agreed to.
Clause 116 (Amount of loans).
– I do not object to this clause, but I point out again the absolute inconsistency of the Government in providing that home builders shall be entitled to an advance of 85 per cent, of the value of the asset and that industrialists shall be entitled to advances without limit, whereas it rejected an amendment by Senator Cooper providing for advances of 80 per cent, on mortagage to primary producers whose properties would be much more substantial security than would bea home or an industrial undertaking the prospects of which would be uncertain when the advance was made.
– There is a great deal of difference between a home and a farm, or, for that matter, any other asset on which advances may be made. The provision That advances of 85 per cent, of the value of the asset shall be made is in keeping with the practice adopted by private banks, so often cited by the Opposition, which, on occasions, advance up to 100 per cent, on homes. I am sure the Leader of the Opposition does not object to this provision.
– I am not objecting.
– The honorable senator, then, suggests the existence of an anomaly in this respect.
– That is so.
– I see no objection to the provision.
– 1 am not objecting to it.
.- I agree with the Minister that there is a difference between homes and farm lands, but I do not accept his inference that a home represents the better security. Farm lands should command higher advances than homes, but the Government is prepared to allow the bank to advance up to 85 per cent, of the value of a home, but only 70 per cent, of the value of a farm. Where is the consistency? The Government should reconsider the amendment moved by Senator Cooper with the object of increasing the advances on mortgage to primary producers from 70 per cent, to 80 per cent.
Clause agreed to.
Clause 117 agreed to.
Clause 118 (Power to insure homes).
– Under this clause the Commonwealth Government intends to enter the insurance business. A substantial pant of the Life Insurance Bill, the second reading of which was moved to-day by the Minister for Trade and Customs (Senator Keane), has been drafted for the purpose of authorizing the Government to establish a Commonwealth Government Insurance Office by regulation and without reference to Parliament. This clause provides -
The Bank may undertake the insurance of any home in respect of which a loan is made under this Division.
Does that mean that the hank is to set up a fire insurance department, or will it take the risk?
– The War Service Homes Commission insures its homes.
– That is the usual practice.
– I only want to know what is to be done. Does the Government contemplate that the bank will set up its own fire insurance office? Will it collect premiums from those who have borrowed from it in order to build homes and then itself pay premiums to a fire insurance office or will it take the risk itself?
– The bank will collect the premiums.
– That means that it will establish an insurance office?
– Within the bank, yes.
– That is an interesting admission. The prospective owners of homes will not be able to decide with which company they will insure their property. The hank itself will create a fire insurance office. That is flying in the face of the assurance given in the House of Representatives by a responsible Minister that the Commonwealth Government does not intend to do anything of the sort.
– This clause is neither strange nor new. lt provides that the bank may follow a common practice to-day.
– The State Savings Bank of Victoria insures homes built with money borrowed from it.
– Not only the State Savings Bank of Victoria, but also the War Service Homes Commission effects its own insurance.
– That is so.
– Many large employers accept the risk in respect of workers’ compensation insurance. For instance, the Victorian Railways Commissioners accept the risk in respect of their thousands of employees because it pays to do so, as the number of accidents involving their employees is insufficient to warrant the payment of huge sums in premiums to some insurance company. I understand that the Royal Automobile Club, the Associated Chambers of Commerce and the Associated Chambers of Manufactures have similar schemes. The provision is wise. The bank will be able to please itself whether it accepts the risk or not, I think it would be well advised to accept it because fire insurance is not a bad risk. Most fire insurance companies do very well. Of course, the risk varies according to circumstances, but there is not a great fire risk in homes. There is not the slightest doubt that the bank will do its best to protect the interests not only of the home-builder but also of the bank itself.
Clause agreed to.
Clauses 119 to 14S agreed to.
Clause 149 (Deposits by societies).
.- I should like to know whether clause 140, which gives the Governor of the bank the right to determine rates of interest to be paid on deposits with the Savings Bank will be applied to organizations specified in clause 149. In the past interest has not been payable upon deposits exceeding £300 by those organizations. That is a wrong practice. A trade union, hospital board, the Australian Comforts Fund, the Australian Red Cross Society, and all like organizations, should be . permitted to draw interest on deposits. I ask the Minister for an assurance that this will be done in future.
– I give that assurance.
Clause agreed to.
Clauses 150 to 152 agreed to.
Clause 153 - (].) The Bank shall appoint such officers as are necessary for the efficient conduct of the business of the Bank.
– I move -
That, at the end of the clause, the following new sub-clause be added: - “ (4.) In all appointments the principle of preference to ex-service men and women shall be observed.”
The policy of the Government envisages a big expansion of the Commonwealth Bank. By a process of infiltration and strangulation, . private trading banks will gradually disappear. A commencement in that direction was made soon after the present Government came into office, when approximately 500 country branches of the private banks were closed. Their business, substantially reduced because of the war, was transferred to city branches. When an inquiry was made as to the Government’s real objective, it was stated that the action was taken merely to conserve man-power. We know now that the intention is to keep these branches closed’ permanently. In the near future, suburban branches also will cease to operate, and the same fate awaits city branches. With the cessation of hostilities against Japan, there will be a vast increase in banking business. What is to- become of private bank officials, of whom 8,884, out of 13,913, have served or are still serving in the fighting forces? Unfortunately, 474 have been killed. No doubt, the Commonwealth Bank, under its new regime, will select officials with banking knowledge, who for good and sufficient reason did not don the King’s uniform. Sub-clause 1 of this clause provides for such transfers or appointments, and that provision, read in conjunction with sub-clause 2 of clause 156, provides a loophole by means of which the bank may appoint persons who have not passed the prescribed entrance examination.
I move this amendment to ensure that preference shall be given, not only to the ex-servicemen employed by the trading banks, but also to other exservicemen who, although they may never have been on a bank’s payroll, have special qualifications for positions in the Commonwealth Bank. The Minister, no doubt, will say that the provisions of the lie-establishment and Employment Act protect such persons, but that is not good enough. Up to the present, the Commonwealth Bank has been most sympathetic towards returned servicemen, but under the new regime there may he some doubt, and I want preference in employment in the enlarged Commonwealth Bank to be specified in clear and unmistakable terms. Under section 10 of the Re-establishment and Employment Act, the Commonwealth Bank is an employer, and it would be embarrassing to the Government, if a Commonwealth instrumentality like the bank had to pay a fine of £100 for contravening the provisions of that act.
I am sure that honorable senators will appreciate the justice of, and necessity for, this additional sub-clause, and I hope the amendment will be agreed to.
.- ‘Commonwealth legal officers advise that the amendment proposed by Senator Brand is unnecessary. The Re-establishment and Employment Act provides for preference to ex-service men and. women in new appointments, and -the provisions of that measure already apply to appointments to the service of the Commonwealth Bank.
Amendment negatived. ‘
Clause agreed to.
Clauses 154 and 155 .agreed to.
Clause 156 (Requirements for appointment to service of the Bank).
– This is an ill-considered clause. If applicants for appointment to the service of the Commonwealth Bank only have to pass a prescribed entrance examination, all kinds of individuals who are unfitted for bank work, may enter that service. It is true that this provision is similar to that in the Commonwealth Public Service
Act, but I point out that if a Public Service appointee is not suited to the department with which he is first associated, there are many other departments to which he may be transferred to ascertain for what type of work he is. best suited. Once an applicant has been appointed to the staff of the Commonwealth Bank, however, there will not be anywhere else for him to go if he is not suited to financial work. I suggest that provision should be made for appointment on probation for ‘a period of six months.
.- The object of this clause is to eliminate the grossly unfair procedure which has been followed in the past, of appointing Commonwealth Bank officers through the “ back-door “. In the existing legislation, there is no provision for an entrance examination, and a person who has some “ pull “ with the hank is able to have his son or daughter appointed to the staff.
– The Minister does not suggest that the present staff is inefficient?
– No, but the work of a bank officer is not so highly technical as some people would have us believe. It is work that can he carried out efficiently by the average young man or woman. During my association with the Australian Railways Union, I carried out banking work of all kinds without any difficulty, as did a score or more of young men in that organization. All this talk of great skill being required for bank work is rubbish.
Clause agreed to.
A person shall not be admitted to a prescribed entrance examination unless that person is of the required sex and age and the Bank is satisfied, upon the certificate of a person included in a prescribed class of persons, as to his good character.
.- I move -
That the words “ sex and “ be left out.
The omission of these words would enable young women to compete for any first appointment vacancy. Some people believe in equality of the sexes in employment, and some do not. In this war, women have responded handsomely to the call to take up positions vacated by men entering the fighting services. To-day, women are employed’ in industries which hitherto have been regarded as offering employment suitable only for males. N ot only in war factories, but also in insurance companies, banks, solicitors’ offices, and in other professional callings young women proved that they have the intelligence and aptitude for their jobs. There is no discrimination against women in the medical profession, journalism, film work, pharmacy, or in the legal profession. In America and in Great Britain, there are women executives in many big industrial establishments. All these women draw the same salaries as males who do similar work. Why should not women be given an opportunity to enter and advance in banking work ?
Many women have to assist in the upkeep of a home, or in maintaining, wholly or partially, aged parents. Discrimination in these cases is particularly unjust. Many women, too, have had to forgo marriagebecause of the necessity to care for aged parents, as well as to assist in maintaining them. The Government allowed no discrimination between the sexes when granting the same unemployment allowance under the Re-establishment and Employment Act Am endment negatived.
– I move -
That the words “ person included in a prescribed class of persons “ be left out with a view to insert in lieu thereof, the following words : - “ headamaster, a clergyman and a well-known citizen “.
I should like to know why the present conditions for first appointment to the Conwnonwealth Bank are to be set aside. For 32 years, before a person could be admitted to the service of the bank he or she had to be in possession of the Intermediate or Leaving Certificate, and be recommended by three persons - a headmaster or headmistress, a clergyman, and a well-known citizen. ‘So far as I have been able to ascertain, this system has worked satisfactorily. No one can truthfully say that, on the average, the appointees during that period were incompetent. What is to be the standard of the proposed entrance examination ? In what subjects will candidates be examined? Has the curriculum been made public yet?
Clause 156 (1) (c) provides for open competition. Appointments are to be made in the order of merit in which those persons passed the examination. A certificate of one person - not three - as to character will be the deciding factor. That person may be the applicant’s uncle, or a political friend of the father. How different from three independent certificates, particularly when one is from a headmaster or headmistress who has had opportunities to assess the applicant’s character!
It is contended that as there is a competitive entrance examination for the Commonwealth Public Service, there should also be one for the Commonwealth Bank, but the two services are totally different. Young men entering the bank service are prospective managers, assistant managers, or future occupants of positions requiring the specialized technique of hanking. From the first day that they enter the bank, training with that object in view commences. If a young man turns out to he a misfit, the bank will have to carry him; he will be a deadweight on the other bank officers. A youth entering the hank must have a reasonably high standard of education; he must also be of good character, and adaptable. For entrance to the Commonwealth Public Service also, a reasonably high standard of education and good character are necessary. Having these two qualifications, the successful candidate in the competitive examination is appointed. Should he prove to be a misfit, or unadapted to his first position, he can be allotted to one of scores of other positions in the Public Service until he finds his niche. In the bank service that cannot be done. Every possible precaution has to be taken to ensure that from the commencement of his. service the confidence of his seniors in the young fellow’s ability to rise in the service of the bank shall he unshaken. The passing of an academic examination after months of cramming, together with a certificate from one person, is not a substitute for the present policy for first appointments. Strong exception is taken to one person making a recommendation as to character. My amendment will make it obligatory to secure certificates from three persons.
– I support the amendment. So far as I know, bank officials, unlike officers of the Taxation Department, are not sworn to secrecy, and, accordingly, it is important that only persons of good character, who are not likely to disclose the business of the customers of the bank, shall be appointed. I lay some stress on this point, because character is important. It may be easy to get a certificate from one person. Every member of Parliament knows how difficult it is to refuse to sign a recommendation in favour of some person of whom he has little knowledge. The amendment is on right lines.
– It is old-fashioned.
– That may be, but it has real merit. An indiscreet or unscrupulous bank officer may do a lot of damage. Before any person is appointed toa position in a bank he should produce the highest credentials as to his character.
Clause agreed to.
Clauses 158 to 160 agreed to.
Clause 161 (Appointment of persons without examination).
.- This is an important clause, of which I hope the Commonwealth Bank will take full advantage. In the service of the Commonwealth Bank there are many worthy people who are classified as temporary employees. Among them are returned soldiers employed as liftmen, attendants and cleaners, who have been in the service of the bank for from ten to twenty years. A person who has been in the employ of the bank for more than five years should be appointed to the permanent staff, and be entitled to all the privileges associated with permanency. As under this clause appointment can be made to the staff without examination, I hope that the Minister will take steps to make many of these worthy people permanent employees.
Clause agreed to.
Clause 162- (2.) The classification of each position, the name of the officer occupying the position and the salary of the. officer shall be notified in the Gazette.
.- I move -
That, in sub-clause (2,), the words “notified in the Gazette “ be left out, with a view to insert in lieu thereof the following words: - “ made known to the officers of the Bank in the prescribed manner “.
It is proposed to delete the provision for publication in the Gazette of the Commonwealth Bank staff list, and to substitute a provision that copies shall be circulated among the staff, and a copy forwarded to the Treasurer for presentation to the Parliament. This procedure will save considerable expense, and, at the same time, it will ensure that members of the staff of the bank, as well as members of the Parliament, shall be fully a ware of the staff classification.
Amendment agreed to.
Amendment (by Senator Keane) agreed to -
That at the end of the clause, the following new sub-clause be added: - “ (3.) A statement showing the classification of each position, the name of the officer occupying the position and the salary of the officer shall be forwarded to the Treasurer, for presentation to the Parliament.”.
Clause, as amended, agreed to.
Clauses 163 to 166 agreed to.
Clause 167- (2.) The Promotions Appeal Board shall consist of -
.- I move -
That, at the end of paragraph (c) of subclause (2.), the following words be added: - “, in this section referred to as the ‘officers’ representative ‘ “.
This is a machinery amendment to avoid repetition in the proposed sub-clauses 3, 4, 5, 6 and 7 of the lengthy phrase “ officer elected by the officers of the Bank “.
Amendment agreed to.
– I move -
That, at the end of the clause, the following new sub-clauses he added: - “ (3.) The officers’ representative shall hold office for such period as is prescribed but shall be eligible for re-election. “ (4.) The officers of the Bank may, in the prescribed manner, elect a deputy of the officers’ representative and the deputy so elected shall hold office for such period as is prescribedbut shall be eligible for reelection. “ (5.) A deputy so elected may, in the event of there being a vacancy in the office of officers’ representative, or in the event of the absence of the officers’ representative (whether in pursuance of a direction given under the next succeeding sub-section, or through illness or otherwise), attend and vote at meetings of the Promotions Appeal Board, and, when so attending and voting at a meeting, shall for the purposes of sub-section (7.) of this section, be deemed to he a member of the Promotions Appeal Board in lieu of the officers’ representative. “ (6.) Where the Chairman of the Promotions Appeal Board is of opinion that the officers’ representative is personally interested in, or affected by, any question to be considered at a meeting of the Promotions Appeal Board, the Chairman may direct that the officers’ representative shall absent himself from that meeting while that question is considered and decided. (7.) Where, at any meeting of the Promotions Appeal Board, the members are divided in opinion on any question, that question shall he decided according to the decision of the majority.”.
The purpose of sub-clause 3 is to enable the officers’ representative to be elected periodically. The purpose of sub-clauses 4, 5 and 6 is to provide for the election of a deputy to act in lieu of the representative of the staff on the Promotions Appeal Board in any of the following circumstances : -
In the case of the Appeal Board constituted under the existing Commonwealth Bank Act, a deputy representative is elected periodically by the staff to act in lieu of the representative during his absence.
The purpose of sub-clause 7 is to make clear that questions considered by the Promotions Appeal Board may be decided according to the decision of the majority of the members.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 168 and 169 agreed to.
Clause 170 (Employment of married women).
– This clause reads - (1.) A married women shall not be appointed to the service of the Bank except in special cases. (2.) Every female officer shall cease to be an officer on her marriage unless the Bank is satisfied that there are special circumstances which make it desirable that she should continue in the service of the Bank.
That seems to be a harsh provision in that it differentiates sharply between men and women officers of the bank. If a female bank officer wishes to marry, but knows that if she does so she will lose her job-
– She will get married.
– That may be, but she may try to keep her marriage a secret. I should imagine that the objective would be to keep or retain in the bank’s services all officers capable of doing their jobs. Why should we differentiate between a single girl and a married girl when both are equally capable of doing this work? The Government apparently does not desire to see large numbers of women employed on work of this kind. Bearing in mind modern conditions, this is rather a severe differentiation.
.- This provision is in accordance with public service practice. Apart from that fact, however, the Acting Leader of the Opposition (Senator Leckie) should realize that when a female employee marries she undertakes a full-time job, and should not have a second job. Such a policy is in the interests of the nation as a whole.
Clause agreed to.
Clauses 171 to 174 agreed to.
Clause 175 - (2.) The Disciplinary Appeal Board shall consist of -
– I move -
That, at the end of paragraph (c) of subclause (2.) the following words be added: - “in this section referred as the ‘officers’ representative ‘ “.
The clause deals with the Disciplinary Appeal Board, and it hasbeen found necessary to make this and the following amendment which, in all respects, are similar to those already made to clause 167.
Amendment agreed to.
Amendment (by Senator Keane) agreed to -
That, at the end of the clause, the following new sub-clauses be added: - “ (4.) The officers’ representative shall hold office for such period as is prescribed but shall be eligible for re-election. “ (5.) The officers of the Bank may, in the prescribed manner, elect a deputy of the officers’ representative and the deputy so elected shall hold office for such period as is proscribed but shall be eligible for re-election. “ (6.) A deputy so elected may, in the event of there being a vacancy in the office of officers’ representative, or in the event of the absence of the officers’ representative (whether in pursuance of a direction under the next succeeding subsection, or through illness or otherwise), attend and vote at meetings of the Disciplinary Appeal Board, and, when so attending and voting at a meeting, shall, for the purposes of sub-section (8.) of this section, be deemed to be a member of the Disciplinary Appeal Board in lieu of the officers’ representative. “ (7.) Where the Chairman of the Disciplinary Appeal Board is of opinion that the officers’ representative is personally interested in, or affected by, any question to be consideredat a meeting of the Disciplinary Appeal Board, the Chairman may direct that the officers’ representative shall absent himself from that meeting while that question is considered and decided. “ (8.) Where, at any meeting of the Disciplinary Appeal Board,” the members are divided in opinion on any question, that question shall be decided according to the decision of the majority.”.
Clause, as amended, agreed to.
Clauses 176 and 177 agreed to.
The Bank shall, as soon as practicable after the thirtieth day of June in each year, publish in the Gazette a list of all officers in the Service of the Bank on that date, together with particulars of the classification and salary of each officer.
.-I move -
That the words “ publish in the Gazette “ be left out with a view to insert in lieu thereof the word “ prepare “.
This amendment, and the two following amendments, are similar in all respects to those made to clause 162.
Amendment agreed to.
Amendments (by Senator Keane) agreed to -
That after theword “officer”, the following words be added: - “, and shall circulate copies of the list among the officers of the Bank in the prescribed manner.”
That, at the end of the clause, the following new sub-clause be added: - “ (2.) The Bank shall forward a copy of the list to the Treasurer, for presentation to the Parliament.”
Clause, as amended, agreed to.
Clauses 179 to188 agreed to.
New clause 188a.
.- I move -
That, after clause 188, the following new clause be inserted: - “ 188a. A trustee, executor or administrator may invest any trust moneys in his hands on deposit with the Bank or the Savings Bank.”.
This new clause is proposed in order to set aside doubts which have arisen as to the power of trustees to invest surplus funds in the bank or the Savings Bank. It is clearly desirable that trustees should have this power.
New clause agreed to.
Clause 189 agreed to.
The Governor-General may make regulations, not inconsistent with this Act. prescribing all matters which are required or permitted to be prescribed, or which are necessary or convenient , to be prescribed for carrying out or giving effect to this Act or for the conduct of business by the Commonwealth Bank or the Commonwealth Savings Bank.
.- I move -
That the following wordsbe added: - “and in particular for prescribing penalties not exceeding Fifty pounds for any offence against the regulations “.
In order that the Disciplinary Appeal Board to be established under the bill may function effectively it will be necessary in the Commonwealth Bank Regulations to give the chairman powers to summon witnesses who may he required to give evidence or to produce documents. In order to make this power effective, it is necessary to penalize failure to attend when summoned and the giving of false evidence. Hence, it is necessary to empower the inclusion of penalties in the regulations.
Amendment agreed to.
Clause, as amended, agreed to.
Postponed Clause 5 (Definitions).
.- Consideration of this clause was postponed to enable the definition of “ bank “ to be examined. This has now been done and I am advised that the definition in its present form is satisfactory and not likely to cause any difficulty. The definition says that “bank” means a person carrying on the business of banking. By reason of the diversity of banking business, it is difficult to define explicitly what is comprehended in the term “ business of banking”. Whether or not an institution is carrying on the business of banking is a question of fact which can only be determined by examining the facts of each particular case.
On the few occasions on which the expression “ bank “ is used in the bill, there would not be any difficulty in applying the definition. For instance, under clause 36 provision is made whereby the Commonwealth Bank may act as the agent of any bank. Under clause 38 the Commonwealth Bank may enter into arrangements with another bank to take over that other bank’s business. In each of those cases there would be no difficulty in determining whether or not a particular institution was or was not a bank, that is, whether it was or was not carrying on banking business.
It should be remembered that this bill relates to the Commonwealth Bank and not to the trading banks. In the Banking Bill, which deals with the trading banks, a different definition of “ bank “ is used. The word is there defined as meaning a body corporate authorized under that act to carry on banking business in Australia. There will be no difficulty, therefore, in identifying the banks to which the Banking Bill applies. It would be a mistake to think that the definition of “ bank “ in this bill operates for the purposes of the Banking Bill.
– As I thought the “ bank “ means any institution that the Commonwealth Bank chooses to designate as a bank. And it will designate as a bank any institution), individual or company which is likely to take business away from it. Thus, we are now back where we started. Under this measure, and the Banking Bill, the Government itself will have power to declare what is a bank. Parliament is not to be consulted on the matter. The Commonwealth Bank - and that means the Treasurer of the day - will have the right to say what is a bank. The Government’s purpose is to ensure that the Commonwealth Bank shall have no rival in its field. I despair of getting anything more satisfactory from the Minister. The definition reflects the totalitarian and dictatorial attitude of the Government towards every person or thing with which it has anything to do.
.- I rely on the assurance of the Minister for Trade and Customs (Senator Keane) that pastoral and wool selling firms which carry on exactly the same class of business as banking are not to be included as banks.
Postponed clause agreed to.
First and Second schedules agreed to.
Title agreed to.
Bill reported with amendments.
Standing and Sessional Orders suspended; report adopted.
Bill read a third time.
The following papers were pre sented : -
Excise Act - Regulations - Statutory Rules 1945, No. 103.
Lands Acquisition Act- Land acquired for -
Commonwealth purposes -
Rathmines, New South Wales.
St. Mary’s, New South Wales.
Postal purposes - Werribee, Victoria.
Senate adjourned at 10.33 p.m.
Cite as: Australia, Senate, Debates, 19 July 1945, viewed 22 October 2017, <http://historichansard.net/senate/1945/19450719_senate_17_183/>.