18th Parliament · 1st Session
The President (Senator the Hon. Gordon Brown) took the chair -at 3 p.m., and read prayers.
NATIONALIZATION : Petition.
Senator COOPER presented a petition from certain electors of Queensland in relation to banking in Australia.
South Australian Quota
– Has the atten tion of the Minister representing the Minister for Immigration been drawn to a recent report in the Adelaide press to the effect that the Premier of South Australia had said that that State is not receiving a fair quota of immigrants? I am particularly concerned at the Premier’s complaint that two instances have been brought to his notice of ships which are capable of carrying large numbers of immigrants arriving in Australia practically empty. Oan the Minister inform me whether there is any foundation for this extraordinary allegation?
– In the course of the broadcast of proceedings of the House of Representatives last night, I heard a similar question asked of the Minister for Immigration (Mr. Calwell) by the honorable member for Boothby (Mr. Sheehy), and I later discussed the matter with the Minister. He informed me that following upon publication of the newspaper article which the honorable senator has mentioned, he despatched an urgent telegram to the Premier of South Australia inviting him to substantiate the statements which he is reported to have made. With regard to the allocation of migrants to SouthAustralia, 300 immigrants destined for South Australia are to arrive on Asturias very shortly. The statement that ships are arriving practically empty is absolutely untrue, but the Minister has afforded the Premier of South Australia an opportunity to produce evidence in support of his allegation. It is unfortunate that some people cannot resist fleeting opportunities to secure political publicity on subjects about which they obviously know very little.
– I have noticed the precautions taken by the Department of Health to safeguard Australia from the ravages of cholera and other epidemic diseases. As the prevention and cure of disease is a matter of international concern, can the Minister for
Health inform me whether the Government has made any offer of assistance to the Governments of Egypt, India and Pakistan to provide anti-cholera serum to combat the plague which is now ravaging those countries? Is Commonwealth Serum Laboratories in a position to manufacture and export large quantities of serum and vaccine at short notice ?
– The Government has communicated with the Governments of Egypt, India and Pakistan in regard to the outbreak of cholera in those countries. It offered to supply large quantities of cholera serum to Egypt, but the Government of that country declined the offer because it apparently possesses sufficient supplies. The Government also offered approximately 2,000,000c.c. of vaccine to India and Pakistan, but it transpired that India was able to produce all the vaccine and anti-bodies it requires at present. I have examined the position in regard to stocks held at Commonwealth Serum Laboratories. Ample supplies of cholera serum are on hand, providing a considerable surplus for export in case of need. The Government is able to assist other countries with biological supplies in the event of further outbreaks in other parts of the world.
– Can the PostmasterGeneral inform me whether it is possible to send aerograms from ‘planes operated by Trans-Australia Airlines? Is this service made available by the Postal Department only to TransAustralia Airlines, or is it also made available to private airlines! If any discrimination is shown by the Postal Department, will the Minister inform the Senate of the reason for it?
– The service to which the Leader of the Opposition has referred is made available to TransAustralia Airlines by the Postal Department, but no discrimination is made by that department in regard to the treatment of other airlines. So far as I am aware, all airlines are free to avail themselves of it.
– Has the Minister for Supply and Shipping read the statement in the Melbourne Herald of the 13th November and a leading article in the Melbourne Sun of the 14th November, .and seen a cartoon which appeared in the Melbourne Argus of the 17th November, to the effect that large quantities of worsted materials are shipped to Canada and New Zealand and later imported to Australia in the form of men’s suits? Did he also read the statement that his officers are conniving at the export of greater quantities of materials than has been authorized by the Government? If so, will the Minister indicate what action he proposes to take?
– My attention has been drawn to comment which appeared in the Melbourne press in regard to the export of suiting materials. I shall have a statement prepared in regard to the matter for the information of honorable senators.
– Can the Minister for Supply and Shipping inform the Senate what progress has been made in negotiations with Tasmanian Steamers Proprietary Limited for the retention of the vessel Nairana in the Bass Strait service during the forthcoming tourist season?
– Negotiations are taking place between the Department of Supply and .Shipping and the shipping company concerned in an endeavour to place the vessel mentioned in service during the holiday period. I am unable to inform the honorable senator of the present position in regard to those negotiations, but I shall make a statement larter.
– Last year, the Australian Government made available to the State Governments the sum of £250,000 for the purpose of assisting the dependants of sufferers from tuberculosis. Can the Minister for Health say whether the various State Governments have accepted the grant and, if so, what amount has been applied for by each State? ‘
– I cannot give, at such short notice, all the information asked for by the honorable senator, but I am in a position to inform him that all the State governments, with the possible exception of one of them, have applied for a share of the £250,000 made available for the purpose mentioned by the honorable senator. An allocation, on a uniform basis, to sufferers from tuberculosis and their dependants has been agreed to, and sums have been distributed for some time past. Within the next day or two I shall ascertain the amount allocated to each State and let the honorable senator know the result.
Message received from the House of Representatives intimating that it had agreed to the amendment made by the Senate to this bill.
The following bills were returned from the House of Representatives without amendment : -
Customs Bill 1047.
New Zealand Ee-exports Bill 1947.
Assent to the following bills reported : -
Appropriation Bill 1947-48. Appropriation (Works and Buildings) Bill 1947-48.
Salaries (Statutory Offices) Adjustment Bill 1047.
Dairy Produce Export Control Bill 1947.
Customs Bill 1947.
New Zealand Ee-exports Bill 1947.
Report on Calcium Carbide - Annual Report.
– I lay on the table the report of the Tariff Board on the following subject : -
Ordered to be printed.
SenatorCOURTICE (QueenslandMinister for Trade and Customs) [3.8]. - I also lay on the table the following paper : -
Tariff Board Act - Tariff Board - Annual Report for year 1946-47, together with summary of recommendations.
The report is accompanied by an annexure containing a summary of the recommendations of the Tariff Board and setting out the action taken. It is not proposed to print the annexure.
Ordered that the report be printed.
Representation in the House of Representatives.
– I lay on the table the following paper: -
Notification, dated 17th November, 1947. setting forth the number of members of the House of Representatives to be chosen in the several States.
Certificate of the Chief Electoral Officer, dated 17th November, 1947, of the numbers of people of the Commonwealth and of the several States, as at30th June 1947.
– I lay on the ta ble the following paper : -
Meat Export Control Act - Twelfth Annual Report of the Australian Meat Board, for year 1946-47, together with Statement by Minister regarding the operation of the Act.
The report shows that exports for the year under review were nearly double those of previous years, and that all classes of meat, with the exception of pig meat, contributed to the increase. During the year the board launched an appeal to producers, the consuming public, and other sections of the industry, for assistance in supplying additional meat for export to the United Kingdom. The appeal has had good results in New South Wales and Victoria, notwithstanding that the period covered the normal off-season for supplies.
Senator ARNOLD (through Senator
Amour) asked the Minister representing the Minister for Civil Aviation, upon notice -
In view of the fact that Newcastle is the sixth largest city in Australia, will the Minister arrange for aircraft to land at Newcastle so that passengers will not have to proceed to Sydney when using the airways?
– The Minister for Civil Aviation has supplied the following answer to the honorable senator’s question : -
The claims of Newcastle for inclusion in any network of air services have been given considerable thought but it was found that the aerodrome at that centre was entirely inadequate for commercial aircraft. In addition the aerodrome is situated in such a position that it would be impracticable to make the extensions necessary to bring it up to the standard required.
asked the Minister representing the Minister for Air, upon notice -
– The Minister for Air has suppliedthe following answers to the honorable senator’s questions : -
Twenty-one medical officers have been compulsorily retained in the Royal Australian Air Force, Interim Force. Of that number, one officer is now in process of release and two others will be released on the expiration of their tour of duty with the occupation forces in Japan, for which duty they volunteered. The appointments of the remaining eighteen personnel will be terminated, if they so desire, immediately sufficient suitable replacements become available. 2. (a) Advertisements have been inserted in newspapers and appropriate medical journals throughout Australia inviting members of the medical profession to apply for appointment to the medical service of the Royal Australian Air Force. Circulars have also been forwarded to the medical schools at Universities, teaching schools, College of Surgeons and the College of Physicians, while further, personal approaches have been made by the Royal Australian Air Force medical authorities to certain medical institutions and organizations.
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers to the honorable senator’s questions: -
Legislation - Australian Broadcasting Commission - Position of Mr. McCarthy.
asked the PostmasterGeneral, upon notice -
Is it a fact that the Australian Broadcasting Act as amended was proclaimed on the 1st October, 1946?
– The answers to the honorable senator’s questions are as follows: - 1 and 2. The Australian Broadcasting Act 1940, with the exception of sections 3, 4, 0, 7 and 19, came into operation on 1st October, 1940.
The commission has informed me that the Australian .Journalists’ .Association did not submit a .panel of names. The association nominated one of its members, who is an officer of .the commission, and he acted on the appeals committee.
asked the Minister representing the Minister for Wor.k9 and Housing, upon notice -
– The Minister for Works and Housing has supplied the .following answers : -
asked the Minister representing the Minister for Repatriation, upon notice -
– The Minister for Repatriation has supplied the following answers: -
Yes. 3. (a) In respect of the 1914-18 war the number of claims for pensions received from members of the forces in New South Wales is approximately the same as in Victoria, but, as regards the 1939-45 war, the number of claims received in New South Wales was approximately 25,000 more than in Victoria.
– On the 23rd
October, Senator O’Flaherty asked whether Villiers engines, suitable for concrete mixers, may be imported from Great Britain without a permit. I now inform the honorable senator that licences are not required to import the machines re- ferred to when they are of United King- dom origin.
Sittingsuspendedfrom3.40to 8.15 p.m.
Ssnator ASHLEY (New South Wales - Minister for Supply and Shipping). -by leave - I desire to inform honorable senators that the Prime Minister (Mr.
Chifley) has advised me that he will act as Minister for Defence as. from the. 14th November, during the absence abroad of Mr. Dedman, M.P. They Prime Minister has asked the Ministerfor Commerce and Agriculture (Mr: Pollard) to act as Minister for Post-war Reconstruction, and the Minister for the Navy (Mr. Riordan) to act as Minister in charge of the Council for Scientific and Industrial Research, also from the 14th November, for the period of Mr.Dedman’s absence.
Marriage to Lieutenant Philip mountbatten;
– by leave - I move -
That the following joint address be presented to His Majesty the King: -
To The King’s Most Excellent Majesty:
Most Gracious Sovereign :
We, the members of. the Senate and the House of Representatives of the Commonwealth of Australia in Parliament assembled, tender to Your Majesty and to Her Majesty the Queen greetings on the occasion of the forthcoming marriage of your elder daughter and Heir Presumptive to the Throne, Her Royal Highness the Princess Elizabeth, with Lieutenant Philip Mountbatten.
We desire to express the happiness felt by the people of Australia at this event and ask Your Majesty to convey to Her Royal Highness and to Lieutenant Mountbatten our wishes for a happy future marked by good health and the absence of anxieties occasioned by war or by any other calamity which could fall upon the peoples of the Empire.
We take this opportunity of expressing our continued loyalty to the Throne and. Person of Your Majesty and to Her Maj’esty. the Queen “.
In submitting this motion I am confident that all members of this Parliament would wish tobe associated directly with the general rejoicing throughout the Empire on the occasion of the marriage of Her Royal Highness the Princess Elizabeth to Lieutenant Philip Mountbatten. Although we have not yet had the pleasure of seeing Princess Elizabeth in this country, all Australians regard with deep affection this charming girl whose’ natural dignity, intelligence and’ nobility of mind so well equip her to become the ruler of the British Commonwealth of Nations. The greatness of a nation is reflected in the family life of its people, and we know that His Majesty the King and Her Majesty the Queen, notwithstanding their many regal duties and responsibilities, have always found the greatest pleasure in the simple family life in their home and with their children. Therefore, we rejoice in the knowledge that Princess Elizabeth is now to be married, and we offer to Her Royal Highness and to Lieutenant Mountbatten our congratulations and best wishes for a happy future.
– The Opposition warmly associates itself with the joint address and the remarks of the Minister for Supply and Shipping (Senator Ashley). As Heir Presumptive to the Throne, Princess Elizabeth will have a life of great responsibility, but we are happy to know that it will be shared with a splendid young man who served his country ably in the recent war. Princess Elizabeth also played her part as a driver of the Auxiliary Transport Service in the defence of the Mother Country. On behalf of the Opposition we extend to Princess Elizabeth and Lieutenant Philip Mountbatten every good wish for health and happiness in the future.
Question resolved in the affirmative.
Bill received from the House of Representatives.
Motion (by Senator Ashley) proposed -
That so much of the Standing and Sessional Orders be suspended as would prevent the bill being passed through all its stages without delay.
– I oppose the motion for the suspension of the Standing Orders. The bill now before us was passed by the House of Representatives after 6 p.m. to-day. As it is a most important measure, which will affect the welfare of the Australian community for many years to come, it should not be dealt with hastily. There is no evidence that a state of emergency exists such as would warrant an alteration of the usual procedure in this chamber. On the contrary, all the circumstances associated with this legislation emphasize that it should be given the most serious consideration. We are now being asked to vote upon a motion to suspend the Standing Orders so that the second reading of the bill may be taken almost immediately. In the opinion of the Opposition, this legislation, if agreed to, will revolutionize the whole of the financial structure upon which the nation’s economy is based. The Government has no mandate to introduce this legislation at this time, and, therefore, it is most important that this measure should be dealt with in an atmosphere of calm and unhurried deliberation.
Question put -
That so much of the Standing and Sessional Orders be suspended as would prevent the bill being passed through all its stages without delay.
The Senate divided. (The President - Senator the Hon. gordon Brown.)
Majority . . 25
Question so resolvedin the affirmative.
Motion (by Senator Ashley) put -
That the bill be now read a first time.
The Senate divided. (The President - Senator the Hon. Gordon Brown.)
Majority . . . . 25
Question so resolved in the affirmative.
Bill read a first time.
Senator ASHLEY (New South Wales-
Minister for Supply and Shipping) [8.3.1].- I move-
That the bill be now read a second time.
The purpose of this bill is to empower the Commonwealth Bank to take over the banking business at present conducted in Australia by private banks. State banks and savings banks will not be affected. It will be the responsibility of the Commonwealth Bank, under this legislation - (ft) to provide, in accordance with the conditions of normal banking business, adequate banking facilities for any State or person requiring them; (b) to conduct its business without discrimination; (c) to observe, except as otherwise required by law, the practices and usages customary among bankers and, in particular, to maintain strict secrecy within the law as to. the affairs and dealings of its customers. The bill also envisages the development, under public ownership, of a comprehensive banking service that will strengthen and assist the growth of the Australian economy and provide facilities adequate to its rapidly expanding and changing needs.
The principle underlying this bill is that the control of money and credit, which is vital to economic stability and to the social welfare of the community, ought to rest solely in the handsof authorities responsible, through the Government and the Parliament, to the people. This principle has been maintained for many years by the Labour party, which regards the ownership of banks by private interests concerned primarily with the making of profits as fundamentally undemocratic and opposed to the basic interests of the Australian nation. Banking to-day must be regarded as a vital public utility. It has too great and too intimate a bearing on social and economic conditions to be left in the control of people who have no special responsibility to the electors or to any one beyond those who have invested in bank shares.
In 1911, the Labour Government established the Commonwealth Bank, primarily to compete with the private banks and break the monopoly they had developed in the field of commercial banking. The Commonwealth Bank was bitterly opposed by private interests at that time and it has been ever since. In 1924 the Bruce-Page Government set up the Bank Board, composed mainly of representatives of private business whose policy was to turn the Commonwealth Bank into a bankers’ hank and prevent it from competing with the private banks as it had originally been intended to do. The bank board, in collaboration with the trading banks, set itself in opposition to the Scullin Government in 1930-32 and sought to impose upon the Australian people a. policy of deflation and of reducing wages, pensions and all social benefits.
In spite of these handicaps the Commonwealth Bank, including the Commonwealth Savings Bank, has made remarkable progress and to-day gives to Australia the services of a many-sided and highly competent banking institution. It has far surpassed any of the private banks in size and has proved beyond all doubt the capacity of a public bank to perform all kinds of banking services at the highest standard.
During the war governmental expenditure added greatly to the liquid resources of the trading banks and the danger arose that if the banks increased lending on the basis of these additional funds a secondary inflation of the purchasing power of the community would occur. In 1941, the then Treasurer, Mr. Fadden, obtained an undertaking from the banks that they would inform the Commonwealth Bank of the amount of surplus investible funds they held from time to time and would deposit with the Commonwealth Bank such amounts as- were determined, by that bank.
On assuming office in November, 1941, the Labour Government carefully examined the arrangements made by the previous Government and decided that it was necessary to introduce the National Security (War-time Banking Control) Regulations. These regulations greatly strengthened and increased, in scope the arrangements agreed to by the previous government. They also ensured that the private banks should not make unreasonable, profits out of the war and. implemented certain recommendations of the royal commission which inquired into the monetary and banking systems.
In the light of experience gained in the administration of these regulations, the Government decided in 1945 that the main principles on which they were based should be embodied in substantive legislation. At. the same time the Government decided to reconstitute the Common:wealth Bank and to assume greater powers over banking policy. The main objects of the system of control provided by this legislation were - (a) to strengthen the central banking functions of the Commonwealth Bank, especially by providing for (i) the co-ordination of banking, policy under the direction of the Commonwealth Bank, (ii) control through the special account system ot the volume of credit, in circulation,, (iii) control of bank, interest rates and: bank advance policy, (iv) the mobilization and control, of. the foreign exchange and gold resources of the Australian economy;. (&) to ensure that the financial, policy of the Commonwealth Bank, should’ be in harmony with the general economic and financial policy of the Government and in the interest of the people of Australia ; (c) to reserve to publicly owned and controlled banks the banking business of governments and governmental authorities; (at) to safeguard .the depositors _ of the banks against loss of their deposits. The Bank Board was abolished and management of the bank was entrusted to the Governor, assisted by an advisory council.
This legislation was very strongly opposed by the trading banks, by some sections of the business community, and by the Opposition parties. It was said that the legislation would hand over the banking system to political control, that it was “nationalization on the cheap “ and that it would open the way to the general socialization of industry by indirect means. In his second-reading speech on the legislation, the Leader of the Opposition (Mr. Menzies)’ made- a pledge that, if he and his colleagues were returned to office, they would restore the former method of control of the1 Commonwealth Bank by a board and would hold themselves obliged instantly to review the working of the legislation.
In spite of the sectional clamour against the legislation and the prediction of dire consequences to follow from it, the Go,vernment was returned to office at the general elections last year. It may- he said, therefore, that a majority of the electors have endorsed the Government’s 1945 banking legislation and have approved the purpose for which it was enacted, namely, to give the’ Governmentfull and effective control over monetary and banking policy in Australia. That object was made clear to Parliament and to- the country.
The Banking Act of 1945 was’ framed on the best” constitutional advice, and the Government was confident that it- would withstand any legal challenge, that might be directed against it.- For example, it seemed quite clear that the Parliament had made a law with respect to banking, and had thus acted within the scope of the powers conferred by section 51 (xiii.) of the Constitution when it- enacted section 48 of the Banking Act:, This section prohibited trading banks other than State- banks from carrying, out’ banking business for a State or any authority of a State, including a local governing authority. The provision was regarded by the Government as’ an important part of the legislation. It embodied the’ principle that the banking business” of all public -bodies should be reserved to publicly owned and controlled banks. Further, in most other countries’ it has long- been accepted thai all government banking business should be conducted through the central bank so as to give the central bank added strength to control the supply of credit and to enable it to take action in time to offset any disturbance to credit’ conditions resulting” from government operations. In the aggregate, the banking business of State governments and S’tate authorities is l’arge and so are some- of their individual transactions. They have an important bearing on current financial conditions. It was the Government’s view that the powers of the central bank should be strengthened by making it, as far as practicable, the banker for public authorities.
When challenged in the High Court, however, section 4S was held to be in» valid on the ground that so long as private banks existed, States and State authorities could not be denied the use of their facilities. The decision showed that full public control of banking as sought under the 1945 legislation could not be secured without public ownership of banking. The decision forced the Government to re-examine all the circumstances, constitutional and otherwise, surrounding the legislation of 1945. In particular, the Government has had to reconsider the constitutional basis of sections 18. to 22 of the Banking Act, which required the private banks to make deposits in special accounts with the Commonwealth Bank and also the attitude of the private banks towards those sections. The special accounts are the crux, of the control of credit given to the Commonwealth Bank by the Banking Act of 1945. The necessities of war-time finance greatly increased the base of liquid reserves on which trading banks normally build a superstructure of secondary credit. In order to prevent secondary inflation, with rising prices, it was necessary to immobilize some part of the banks’ deposits in special accounts with the Commonwealth’ Bank from which the banks were not’ allowed to withdraw any amounts, except with the consent of the Commonwealth Bank. If the amounts in these special accounts were freely available to the trading banks,
Chey could, by increasing their advances, build” up a secondary credit expansion of formidable dimensions. Added to the spending power already available to the public, this might easily produce a dangerous inflationary situation. It would be disastrous, from the point of view of the people of Australia and the prospects of economic stability if sections 18 to 22 of the Banking Act were held to be invalid, and the consequent loss of control over the banking system led to an inflation of credit, with all the loss and disorder which inflation entails, these sections necessarily severely limit the freedom of action of the trading banks. This was their intention. The Government was determined that the control of the Commonwealth Bank in this field should be absolute and beyond dispute.
While the precise form of special accounts provided for in the Banking Act of 1945 was peculiar to Australia, the essential features of the control of credit by this means are to be found in operation in the United Kingdom, Canada, and a number of other countries. The same conditions which made a control of this kind essential in Australia have forced governments elsewhere to adopt similar measures. They are to-day an accepted part of central bank technique in many parts of the world. The private banks in Australia, however, have always bitterly resented any attempt to place restrictions on their power to create or restrict credit. When the 1945 Banking Bill was before the Parliament, they fought these provisions with all the means at their disposal. Towards the end of 1945, when the bill had become law,- they were required to transfer their war-time, special deposits to the special accounts established under the new legislation and to make their first monthly lodgment to these accounts. The private banks, obviously acting in concert and on> legal advice, made it clear at that time that while- they were submitting to the legislation for the time being, they were reserving the right to challenge it at a suitable opportunity. The following reservation was made by one of the banks in a letter to the Commonwealth Bank : -
We are most anxious to co-operate with your bank to ensure the continuance of our present harmonious relations, hut you will appreciate that our duty to our shareholders compels us to have regard to our legal position: therefore, we. feel it necessary to advise you. with all due respect, that acquiescence or compliance on this bank’s part! with any request or directions from you is not to be taken to import any contract with your bankin the terms of. the act.
Statements to a similar effect were made in letters sent by six of the other banks. These reservations, were brought, to the notice of. the Commonwealth Government at the time for legal, considera-lion. This indication of the attitude of t lie hanks assumed greater significance when the special account system was challenged in the statement of claim made by the Melbourne City Council in connexion with the section 48 case, even although eventually the challenge to sections 18 to 22 of the Banking Act was not pressed. It assumed still greater significance when the High Court decision on section 48 made it clear that, although the Commonwealth Parliament had, by the Constitution, been given power to legislate on banking, nevertheless, a law which was clearly a law with respect to banking, could be held invalid on other constitutional considerations.
It -has been stated that sections IS to 22 of the Banking Act 1945 were not, in fact, challenged. But this is not so. In the statement of claim by the Melbourne City Council a declaration was sought that the Banking Act as a whole was beyond the powers of the Commonwealth Parliament, and was void. Since the act iis a whole was challenged, it follows that the sections IS to 22 were challenged. It has also been contended that sections 18 to 22 are not in any way doubtful from a legal stand-point. But that is beyond the capacity of any one to say until the High Court has given a judgment on the point. Lawyers generally regarded section 48 of the Banking Act as legally sound. But that section has since been held invalid by a five-to-one majority of the High Court, and, as already stated, the High Court judgments have made clear that a law which is, undoubtedly, a law with respect to banking, and comes under section 51 (xiii.) of the Constitution, can still be held invalid on other constitutional grounds. The position which confronted the Government was that while doubts had arisen as to the constitutional validity of its banking legislation, there was evidence that the private banks were maintaining their hostility towards this legislation and were biding their time against a suitable opportunity to challenge it, in the hope of throwing off the restraints they so strongly disliked.
To deal with the economic and financial problems, both of the transition period and of the following years, the Government must have the necessary powers over banking and monetary policy. Fluctuations in business activity and employment are not solely clue to mone- tary causes, but they are certainly greatly influenced by financial policy. The Government would not be justified in gambling on the outcome of possible threats to the 1945 legislation. The structure of banking based upon the legislation of 1945 went part of the way towards the objectives which the Labour party has long advocated in regard to banking. At the same time, it offered to the .private banks the opportunity to co-operate within a national system of banking, subject to overall control by thd Commonwealth Bank, as they had, in fact, done during the war period. That position was never accepted without reservation by the private banks, and now that the legal foundations of the system have been challenged, the Government has decided to proceed with its long-standing policy of full public ownership.
Under this measure, there will be no interruption or disturbance of the usual banking facilities available to the Australian community. The bill provides that the private banks shall maintain their services until they are taken over by the Commonwealth Bank. As the banks are taken over, either through the acquisition of their shares or of their assets, they will be kept in operation as going concerns. Customers will not notice any difference after the control of the hank with which they have been dealing has passed to the Commonwealth Bank. They will be able to continue their banking business without change or interruption. The bill imposes on the Commonwealth Bank an obligation to conduct its banking transactions in accordance with the practices and usages customary among bankers, particularly in regard to the nondisclosure of information concerning the affairs of its customers. The confidential nature of the relationship between banker and customer is well established in law; and, subject to certain exceptions sanctioned or required by law, bankers are under an obligation of secrecy with respect to their customers’ affairs. The bill specifically provides that this position shall be preserved.
Differences between the constitutions of the various private banks and the fact that some are incorporated in Australia and some overseas, make it desirable to provide alternative ways in which the Commonwealth Bank may acquire their business. Accordingly the bill provides for two main processes of acquisition, viz. -
The first process could be applied to all banks, whether incorporated in Australia or overseas, and in the case of banks incorporated in Australia, any part of their overseas assets may also be acquired compulsorily. Under the alternative process, the shares of a private bank may be compulsorily acquired if the Treasurer is satisfied that the majority of its shares are registered in Australia. This process would be applied only to banks incorporated in Australia, and would be the initial step towards an eventual transfer of their businesses to the Commonwealth Bank.
As a preliminary step to the acquisition of the business of a private bank, provision is made for the Treasurer, by due notice, to invite the private bank to make an agreement with the Commonwealth Bank for the transfer of its business on a specified date, which must be not more than two months later than the date on which the notice is given. If an agreement for the transfer of the business of a private bank, which it is willing to negotiate, is not completed by the specified date, the Treasurer may extend the currency of the notice until agreement is reached. Agreement must, however, be reached - if there is to be agreement at all - before the notice expires. Once the notice expires, the assets of the banks concerned forthwith become vested in, and its liabilities are assumed by, the Commonwealth Bank. There is, of course, nothing in the bill to prevent the Commonwealth Bank from reaching an agreement with a private bank for the acquisition of its business before any notice is issued at all; but all agreements, whether made before or after notice is given, will he subject to the approval of the Treasurer. The bill also includes a provision whereby the Treasurer may, after the business of a private bank is acquired by the Commonwealth Bank, require that private bank to cease carrying on further banking business in Australia.
If a private bank enters into a voluntary agreement for the acquisition of its business by the Commonwealth Bank, it will be entitled to receive an exemption from taxation on the amount paid to it in pursuance of the agreement. It is further provided in the bill that shareholders of the bank shall be exempt from taxation on any dividend or distribution which directly results from the payment received from the Commonwealth Bank under the agreement. These concessions will not apply in the case of a compulsory acquisition. The exemptions referred to will not relieve the private bank from liability for any tax payable by the bank in respect of profits derived in the normal course of its business but upon which the ordinary tax liability has not been met. The bank and its shareholders will still be liableto taxation in relation to profits earned after the year of income ended the 30th June, 1947, or any accounting period substituted therefor, and before the date of transfer, or in relation to any interest which may become payable under the agreement.
This section places banks that negotiate the transfer of their assets by voluntary agreement on the same footing as those whose businesses are acquired by the purchase of their shares. In the latter case, except in the relatively few cases of shares held by people who deal in shares as a business, income tax is not attracted to any profit which may be made on the sale of shares. The businesses of banks incorporated outside Australia cannot be acquired by the method of purchasing shares. Therefore, this section opens to such banks a chance of entering a type of arrangement which will place them broadly on the same footing as regards taxation as Australian banks whose shares are acquired. The Government does not, however, consider it reasonable to extend these exemptions to banks other than those willing to negotiate, and thus provision is made in the bill that tax concessions shall not apply in the case of compulsory acquisition.
If shares are acquired by voluntary purchase, the price paid by the Commonwealth Bank must not be less than the market value in Australia of those shares us at the loth August, 1947. These prices have been carefully ascertained and are specified in he second schedule to the bill. The provision made for the compulsory acquisition of shares will apply only to the shares of private banks incorporated in Australia, which are the institutions referred to in Part I. of the first schedule to the bill. Where the majority in number of the shares of any of these banks are situated, in Australia, the bill provides that the Treasurer may, by notice published in the Gazette, declare l hat the shares in the bank, concerned shall be vested in the Commonwealth Bank on a date specified by the Treasurer; and on that date the Commonwealth Bank will, by force of the legislation, become the holder of the shares and a member of the bank in question.
It is provided that the directors of an Australian private bank, the shares of which- have been compulsorily acquired by the Commonwealth Bank, shall cease to hold office on the date on which the compulsory acquisition, becomes effective. The Governor of the Commonwealth Bank will, with the approval of the Treasurer, thereupon appoint directors, including a chairman of directors. The directors’ appointed by the Governor of the Commonwealth Bank will have full power to manage the bank in question, to dispose of its business in Australia to the Commonwealth. Bank and to dispose also of the bank’s business outside Australia; but any arrangement for disposal may only be concluded if approved, by the Treasurer after be has received a recommendation from the Governor of. the Commonwealth Bank.
For all property or shares of the banks, compulsorily acquired, fair and reasonable compensation will be payable. The compensation payable may be determined by agreement, approved by the Treasurer;; or, failing agreement, the amount payable will be determined by the Federal Court of Claims to be established under the proposed legislation. The bill sets out. the procedure to be followed in reaching agreement or, alternatively, in referring claims to the court for determination.
The main reason for the establishment of a Federal Court of Claims,, which is provided for in Part V. of the bill, is- to bc found in the numerous claims which will arise under this bill. But for many years the need has been felt for a permanent tribunal exercising jurisdiction, in the whole field of compensation under Commonwealth law. Apart from the fact that the problems of compensation are very specialized, work of this kind has in the past made an onerous addition to the ordinary duties of the High Court in its original jurisdiction, and of the State courts exercising Federal jurisdiction The Federal Court of Claims, which will be a superior federal court, consisting of a Chief Judge and such other judges as are appointed, will therefore1 be en> powered not only to determine claims for compensation arising under this bill, but also to determine claims arising under other Commonwealth acts under which regulations are made to confer jurisdiction upon the Court in respect of those acts.
In relation to compensation under this bill, the jurisdiction of the Court will be exercised by a Full Court of not fewer than three judges, who may, if they think fit, appoint two assessors to assist the court. Jurisdiction may, however, be exercised by fewer than three judges by agreement between the parties concerned. It is considered desirable that, unless there is agreement to the contrary; a; Full Court, should deal with claims for compensation under the bill partly because of the inherent importance of such claims, and partly because of the fact that judgments and orders of the court will be final and not subject to appeal to the High Court.
The bill provides that the qualifications of a judge of the Federal Court of Claims shall be the same as those which are, and always have been-, required of a judge of the Commonwealth Arbitration Court. The provision prescribing the qualification of judges of the Federal Court of Claims has been so expressed that one or more judges of other federal courts, can be appointed to it.. A judge, appointed in this way will not need to resign from the other court, but will be available to sit in either court as the work of each requires.
The bill makes provision for the protection of officers of private banks in respect of continuance of employment, sa.la.rips and: conditions of service. The bill provides that when the Commonwealth Bank proceeds by way of acquisition of the shares of a private bank, the salary and general conditions of service of officers of the private bank shall not be disturbed, and shall be secured to them. Similarly, when the Commonwealth Bank takes over the assets of a private bank, including the assets of a bank whose shares have previously been acquired, each officer of the private bank will be employed by the Commonwealth Bank at the salary and on the general conditions of service applicable to his existing employment. The Commonwealth Bank will be obliged to appoint each such officer, “being a British subject, to an appropriate position in the Commonwealth Bank service. This will be done as soon as practicable after employment commences with the Commonwealth Bank. Special provision also is made to enable that service to absorb all officers stationed outside Australia whose duties are connected with the Australian business.
It will be seen that during the period necessarily elapsing between the date of acquisition of a private bank, either by way of shares or assets of the private, bank, and the date when an officer of that bank is appointed to an appropriate position in the Commonwealth Bank service, hil is fully safeguarded. He will continue ‘to be employed with salary, pension benefits, and sick and long-service leave, at least as favorable as when in the employ of the private bank. When later appointed to the Commonwealth Bank service, he will enjoy all the rights and privileges of an officer of that service, with protection in respect of existing salary, -pension benefits, and sick and long-service leave. The officers of private banks which are in the first place taken over by acquisition of share, will also be fully protected. After control is assumed by this method, and the directors appointed by the Governor of the Commonwealth Bank have agreed to transfer the assets of the private banks concerned to the Commonwealth Bank, officers will then be in a comparable position to officers of private banks which are initially taken over by way of acquisition of assets.
Just as the continuity of employment of all bank officers is guaranteed before appointment to the Commonwealth Bank service, .so will they - be assured of employment after appointment .to that service. Section 169 of .the Commonwealth Bank Act, which relates to the discharge of excess Commonwealth Bank officers, is being reviewed, and any amendment considered necessary in the light of the Government’s guarantees to officers of the private banks will be introduced. Service in the private bank, continuous with service with the Commonwealth Bank, will count as service with the Commonwealth Bank for purposes of promotion, leave and pensions. In order to establish an officer’s present entitlements to pension benefits and sick and long-service leave, the bill provides for the appointment of a committee in respect of each private bank affected, consisting of a judge, or a person qualified to be a judge, an officer of the Commonwealth Bank, and a representative of the bank officers concerned, to ascertain the benefits which are, or would have been, granted in accordance with the practice of private banks concerned, or of the superannuation fund of that bank. The findings of this committee will then become a legally enforceable right in respect of the future employment of these officers, even though they may not have at present any such legal protection.
The industrial awards now governing the employment of persons in private banks will continue in force until appointment to the Commonwealth Bank service is made. Further, during this period, officers will continue to have the right to apply to the appropriate tribunal for variations of these awards. Upon appointment to the Commonwealth Bank service, they will have the same rights in respect of industrial matters as are now enjoyed by officers of the Commonwealth Bank.
The Commonwealth Bank is recognized as a good employer. On the whole, the general conditions of employment in its service are as good as, if not better than, those provided by the private banks. Its employees are given special legal protection as to promotion, dismissal and disciplinary action. Under Part XIII. of the Commonwealth Bank Act, promotion and disciplinary appeal boards have been constituted. Those boards, which function under an independent chairman and include representatives of employees, .are empowered to give final decisions on :i’11 i)ea Is relating to the promotion, punishment, dismissal or reduction in status of officers. Such rights of appeal ure not at present enjoyed by employees of the private banks. The proposed change in conditions of employees of the expanded Commonwealth Bank will, of course, render it necessary to examine the provisions of the Commonwealth Bank Act relating to the Commonwealth Bank service, and any amendments considered desirable to meet the position will be brought forward at an early date.
With regard to former officers of the private banks who have retired on pension from the private banks’ services, their position, as well as that of dependants of deceased officers, is also fully safeguarded. The Commonwealth Bank will assume responsibility for the payment of pensions in accordance with existing rights, which will be converted into legally enforceable claims. As the Commonwealth Bank is required to assume liability for payment of pensions to retired officers and to officers at present serving, it is necessary that an appropriate amount of the superannuation fund established in association with the private banks to meet these obligations be transferred to the Commonwealth Bank. The bill contains provisions to give effect to this requirement.
Parliamentary appropriation will not be required to provide funds for the payment of compensation. In acquiring the business of the private banks the Commonwealth Bank will also assume the liabilities of those institutions. The amount of compensation payable will necessarily have regard to present liabilities, and it will be well within the capacity of the Common wealth Bank to meet the payment from its own resources. The Commonwealth Bank will make payment in cash or government bonds as desired.
As I said before, the Government believes that a publicly owned and controlled banking system, in which final responsibility for policy rests in the hands of a government directly responsible to the electors, conforms much more closely to the requirements of a democratic community than the system advocated in 1945 by the Leader of the Opposition (Mr. Menzies), who pledged his party to restore control of hanking and monetary policy to a body having no responsibility to the electors. In most advanced countries, there has been during recent years a strong trend towards public ownership of key public utilities, and this trend has not been, confined to governments representing particular political parties. Such projects have been introduced in Australia and elsewhere, not only by Labour governments but also by nonLabour governments, which have recognized that in the circumstances of the case the balance of advantages from the community standpoint lies in national rather than private ownership and control. But if any service fits the description of a “ key public utility “ it is banking. As I said earlier, no element in the working of our economy has a greater influence for good or evil upon economic and social welfare than the management of money and credit.
The Government is convinced that under public ownership the banking system will have immense opportunities for serving Australia. It will have the backing of the entire credit resources of the nation. It will be free from the cramping limitations of sectional private ownership, which bid the private banks to serve this interest but not that interest, and to judge all business from the narrow standpoint of maximum profits for the smallest outlay. It will be able to take longer term views of projects requiring finance and, since the whole Australian economy will be its field, it will have the widest scope for initiative and for the spread of its investments. Essentially, the task of the new organization will be to provide a financial mechanism appropriate to the needs of a rapidly growing economy. Australia is destined to see great developments in the coming years, and this process, which is already under way, must be promoted by every means possible. There will be a great increase of our population. Industries will expand in all fields and we must extend our markets abroad. The basic services of transport and communications, water supply, power, housing, health and education must be enlarged to meet the needs of a larger community working at higher levels of technique and productivity. The stress everywhere will be upon new forms of enterprise, new methods of production, and new uses for the resources of this country. “Finance must, co-operate and take the initiative in this progress. As new types of industries are developed, new types of finance will be required and the banking system should anticipate those needs and be in the field with the right kind of facilities to assist and encourage such developments. Moreover, there can be no doubt that a bank should be more than a mere money lender. A banking system created to serve the welfare of the community can aid industry by the quality of its advice and the incidental services it renders as well as by the financial accommodation it provides. Hence the Government sets particular store on the development of those ancillary services. It has in view the building up of a highly qualified staff that will enable the Commonwealth Bank to give skilled advice as part of its banking service. Secondary industries, for example, will be able to turn to the bank for the assistance of production engineers and cost accountants to help them with their problems. Primary industries will have the aid of agricultural experts. It is contemplated, too, that the bank will establish, at least in the capital cities, departments of advice which will help individuals with their daily financial problems. Whether any charge will be made by the bank will naturally depend upon the circumstances of each case, but as far as possible those facilities will be provided freely as part of a strengthened banking service. But if the financial system is to meet those requirements it must be comprehensive, strong and flexible. It must be alive to the requirements of the times and be capable of seeing ahead. It must have one goal for its policies and one standard for “its work - the service of the nation in all its interests, great or small. The Government believes that only under a national system of banking can this ideal be approached. Only under such a system will finance be a. real servant of industry and not its master.
Much is being made of the view that people will lose something valuable by reason of having only one bank to deal with instead of several as at present. The truth is that competition between private banks has meant little for the public for some time past and would probably have meant less in future. The number of private banks has been greatly reduced over the years through amalgamations, and between the remaining banks there has been only a very limited kind of competition. Those banks and the interest behind them did their utmost to stifle competition by the Commonwealth Bank and to preserve for themselves a monopolistic control of the field of commercial lending. On the other hand, J. may point out that the Commonwealth Bank is charged under the legislation to be strictly impartial a9 between customers and to avoid all discrimination. A system of appeal will be provided so that a person who considers he has not had reasonable treatment from a local manager will be able to refer his case to a regional authority for reconsideration. Special arrangements will be made to ensure that this reconsideration is given without delay. In view of these considerations, it appears to me that the advantages of having a choice between several private banks as compared with a single national bank are largely illusory.
It has been said that this bill has been designed to give the Government full control over all industry, and that it is the first step in a full-scale programme of socialization. The truth is that the measure proposes Ihe transfer of a vital public utility to public ownership - and has no aim beyond this. There has been no political interference in banking under the 1945 legislation, and there will be none under the new system. In not one instance since the banking legislation of 1945 was passed has the Government intervened in the administration of the Commonwealth Bank. Within the framework of the broad economic and financial policy laid down by the Government, the bank has carried on its work successfully and harmoniously. On broad policy issues it has, in turn, advised the Government, and been advised by the Government. Conflict has not arisen at any stage.
Business people and private citizens will have all the safeguards as to the conduct of their banking business which can be given by law, and by the long and honorable administrative tradition of the Commonwealth Bank. On acquisition
Of a bank, shareholders are assured of just compensation, bank employees are protected, depositors are guaranteed and business will be carried on without interruption. In brief, nothing that can be done under this measure will interfere in any way with the steady progress of private enterprise in this country. On the other hand, it will make possible the development of a truly national monetary and banking system which will be conducted not for private gain, but for the stability and advancement of Australia.
Debate (on motion by Senator Cooper) adjourned.
The following papers were presented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - 1947 -
No. 77 - Australian Journalists’ Association.
No. 78 - Federated Ironworkers’ Association of Australia, and others.
No. 79 - Federated Clerks’ Union of Australia and Commonwealth Temporary Clerks’ Association.
No. 80 - Federated Ironworkers’ Association of Australia, and others.
No. 81 - Australian Workers’ Union.
No. 82 - Federated Ironworkers’ Association of Australia, and others.
No. 83 - Commonwealth Telephone Officers’ Association.
No. 84 - Commonwealth Public Service Artisans’ Association.
No. 85 - Federated Ironworkers’ Association of Australia.
No. 86 - Commonwealth Temporary Clerks’ Association, and others.
No. 87 - Peace Officer Guard Association. Australian Soldiers’ Repatriation Act - Regulations - Statutory Rules 1947 - No. 149.
Canned Fruits Export Control Act - Twentyfirst Annual Report of the Australian Canned Fruits Board for year 1946-47, together with Statement by Minister regarding the operation of the Act.
Commonwealth Bank Act - Appointment - H. A. Butler.
Commonwealth Public Service Act - Appointments - Department -
Interior - K. M. Blakeway, R. R. Dunstan, W. R. Egan, R. D. Fitzgerald, M. C. Hall, G. F. Moor, J. Tyler, H. T. Vallender, W. J. E. White.
Labour and National Service - E. C. Hing, A. M. Stephen, A. A. Willats.
Supply and Shipping; - J. J. Delany, D. J. Guppy.
Treasury - A. H. Simpson.
Works and Housing - S. C. Banbrook, K. L. Crowe, H. V. Elcock, H. H. ) Forder, R. C. Frith, H. K. Graham, R. H. Greenwood, G. H. V. Hewitt, W. R. Moir, J. A. O’Neill, H. G. Pechey, R. E. Pennington, W. A. Stoker, R. G. Thornthwaite, A. J. Try.
Regulations - Statutory Rules 1947 - Nos. 140, 147.
Commonwealth Railways Act - Report on Commonwealth Railways operations for year 1946-47.
Customs Act - Regulations - Statutory Rules 1947, Nos. 152, 153.
Defence (Transitional Provisions) Act -
National Security (Ecrnomic Organization) Regulations - Orders - War service land settlement -
Victoria (dated 17th October, 1947). Western Australia (dated 23rd October, 1947).
National Security (Industrial Property) Regulations - Orders - Inventions and designs (34).
National Security (Prices) Regulations - Declaration - No. 104. Orders- Nos. 3114-3103.
National Security (Tea Control) Regulations - Order - Tea and coffee control - Revocation.
Regulations - Statutory Rules 1947, Nos. 150, 151.
International Labour Organization- Twentyninth Session, Montreal, SeptemberOctober, 1946 - Reports of the Australian Government and Employers’ Delegates.
Lands Acquisition Act - Land acquired for - Defence purposes -
Charters Towers, Queensland.
Department of Trade and Customs purposes - Cairns, Queensland.
Postal purposes -
Fortitude Valley, Brisbane, Queensland. Richmond, Victoria.
Northern Territory Acceptance Act and Northern Territory ( Administration ) Act - Regulations - 1947 - No. 2 (Public Service Ordinance).
Northern Territory Representation Act, Northern Territory (Administration) Act and Commonwealth Electoral Act - RegulationsStatutory Rules 1947, No. 148.
Papua-New Guinea Provisional Administration Act - Ordinance - 1947 - No. 11 - Supply (No. 1) 1947-48.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance - 1947 - No. 10 - Canberra Community Hospital (No. 2).
Wine Overseas Marketing Act - Nineteenth Annual Report of the Australian Wine Board, for year 1946-47, together with Statement by Minister regarding the operation of the Act.
Senateadjourned at 9.29 p.m.
Cite as: Australia, Senate, Debates, 19 November 1947, viewed 22 October 2017, <http://historichansard.net/senate/1947/19471119_senate_18_194/>.