19th Parliament · 1st Session
The President (Senator the Hon. Gordon Brown) took the chair at 3 p.m., and read prayers.
Senator CRITCHLEY. - Has the Minister for Repatriation read the article in Smith’s Weekly of the 22nd April relating to certain ex-service personnel to which I have directed his attention ? If so, has he any comment to make upon it?
Senator COOPER. - I read the article to which the honorable Senator has referred. As his name was mentioned in it, I discussed the matter with him, and lie intimated that it was his intention to address a question to me upon it. Consequently, I am in a position to give a considered reply.
I can regard the article only as being detrimental to the mental state of those ex-servicemen who are, unfortunately, victims of war neurosis and have read it. First, I point out that the Minister for ‘Repatriation is not in any way “ used “ by the Repatriation Commission, as stated in the article. The Commission is charged with the general administration of the Australian Soldiers’ Repatriation Act. By section 1 of that Act, it is subject to the control of the Minister. The powers and duties of the Commission are fixed by law made by the Parliament and regulations made thereunder. The Commission has no power or authority to treat cases of neurosis that are not the result of war service; nor has it any power to compel ex-servicemen to submit themselves for medical examination or treatment. Only those who apply voluntarily for a pension or treatment can be medically examined or treated. However, there is an arrangement whereby all ex-service men and women who are admitted to mental hospitals by State authorities without having been the subject of a decision by Repatriation Department authorities have their cases investigated by the department to determine -whether their condition oan be regarded as a war-caused disability. Those are plain statements of facts. There is no question of “ dodging the issue “, as alleged by Smith’s Weekly. It is contended in the article that the mental illness of every ex-service man or woman in State mental hospitals is war-caused, and that it should be so accepted by the commission, and apparently also by the War Pensions Entitlement Appeal Tribunals, which function quite independently of the commission. That contention is untenable and is not in accordance with specialist medical ‘opinion. All State, repatriation boards, the commission and the appeal tribunals are composed entirely of ex-servicemen, and include representatives of exservicemen’s organizations throughout Australia.
These bodies .deal sympathetically with all: claims which come before them. As at the 30th June, 1949, there were 14,886= members of the forces in receipt of war pensions for neurosis accepted by theRepatriation Commission as resulting from war service. At law the Repatriation Commission has no power of restraint whatever over any patient. For that reason all patients who are so mentally ill as to require restraint can be treated’ by the commission only by arrangement with the State mental authorities under State law. For this reason the commission has built separate repatriation mental blocks adjacent to State mental, hospitals. These blocks, particularly in Queensland, New South Wales and Victoria - the latest to have been built - embody the most up-to-date designs and fittings, and have been most favorablycommented upon by specialists in theStates concerned and from overseas.
All eases of neurosis which are related to war service receive treatment prescribed by medical specialists. It is thepolicy of my department to keep such cases out of mental hospitals and to treat them either at repatriation general hospitals or at repatriation out-patient clinics. As soon as they are well enough they are returned to their places in the ordinary life of the community. Everything that it is physically possible to dofor war neurosis eases at present by -virtue of the Australian Soldiers’ Repatriation Act and the regulations thereunder is being done. More will bc done when additional trained staff, buildings, and other essentials are available.
– In view of the success that has been achieved in the dairy-farming industry in Sweden in making powdered butter that may bestored indefinitely without becoming rancid, will the Minister representing the Minister for Commerce and Agricultureinstitute an inquiry as to the practicability of producing’ such butter in Australia for use in the tropical and subtropical areas of this country?
– I shall be pleased to refer the honorable senator’s inquiry to my colleague, the Minister for Commerce and Agriculture, and will endeavour to obtain a reply for her as soon as possible^
– I preface ray question to the Minister for Trade and Customs by pointing out that nationalization of monopolies is part and parcel of the teachings of Karl Marx. As Mr. Playford, the Premier of South Australia, has nationalized the electricity undertaking in that State, and the Prime Minister (Mr. Menzies) has stated that he will nationalize certain monopolies, is it the intention of the Government to declare these two gentlemen under the antiCon; muni.– 1 legislation that is now before the Parliament?
– Either the honorable senator has completely misrepresented the position, or fails utterly to understand The difference between the public ownership of public utilities and t]’ e slave socialist state. If he should like me to explain the details to him at a suitable time I would be pleased to do so.
– Will the Minister representing the Minister for Trade and Customs inform the Senate whether any application has been made to lift the embargo on potatoes coming into Australia from New Zealand? If so, will he encourage his colleague not to make a decision until the Tasmanian potatogrowers have had an opportunity to make representations about the matter?
– Although at this stage I should not like to commit myself, I shall refer the matter to my colleague, :he Minister for Commerce and Agriculture.
– I have received a communication from South Australia to the effect that in the metropolitan area three flour mills are closed, two are working on two shifts a day, and three on one shift, and that in the country the position is’ as bad, some mills being idle, while others are working on reduced time. Is the Minister representing the Minister for Commerce and Agriculture aware that flour mills in South Australia have, in some instances, ceased production, while others are working short time? Is the Minister aware that this situation has led to a shortage of mill offal, which is essential for the feeding of certain kinds of livestock, and that it is also causing skilled mill workers to seek employment in nonessential industries? Will the Minister investigate the position with a view to arranging, if possible, for the export of more flour instead of whole wheat?
– This matter has been raised on numerous occasions, and I assure honorable senators that the Minister for Commerce and Agriculture is aware of the seriousness of the position. Everything possible is being done to arrange sales of flour abroad in order to remedy the position. I am not in possession of information about what has happened during the last few days, but as I regard the matter as of the greatest importance to flour millers, I shall obtain the latest information from my colleague, the Minister for Commerce and Agriculture, and furnish it to the honorable senator as soon as possible.
– In view of the disastrous shortage of wire netting, fencing wire and iron posts, will the Minister for Trade and Customs discuss the situation with the Minister for Commerce and Agriculture with a view to permitting the importation of such materials free of duty until local supplies become more plentiful?
– This matter has been frequently considered by the Government, which is sadly aware of the shortage of the commodities to which the honorable senator has referred. I assure him that the matter will be kept under constant observation, and that whatever relief can be afforded will be given without delay.
– Can the Minister for Fuel, Shipping and Transport say whether it is a fact, as reported in the Sydney Morning Herald, that a committee was set up to discover the reason for the slow turn-round of ships in Australian ports, and that it has submitted a report to the Minister? Is it true, as reported, that the committee consisted of representatives of the Department of Trade and Customs, the Marine Board, harbour authorities,
Overseas Shipping Representatives Association, Chambers of Commerce, carriers, importers, and the Australian Overseas Transport Association? Did the committee suggest that, in order to relieve the congestion of cargoes on wharfs, storage charges on wharfs should he heavily increased? Is it a fact that industrial firms in Sydney have been using wharfs as cheap storage places? Did the committee recommend a big reduction in the time allowed for the free storage of goods after a ship has berthed, and that for overseas vessels the time be reduced from six to three days? Did the committee recommend that two large stores be obtained, and that goods not cleared from the wharfs in the specified time, should be bonded and stored in those sheds at the owners’ expense? Is it a fact that the slow turnround of ships has been due mainly to the lack of storage space to receive cargo with the result that delays have occurred, leading to a reduction of cargo tonnage handled in a specified time?
– Honorable senators will appreciate that that is a fairly difficult question to remember. One of the main reasons for the slow turn-round in Sydney has been the tactics adopted by the Communists known as the rolling strike. The other questions raised are receiving the consideration of the committee that was appointed for the purpose. The various authorities in most ports of Australia have increased the charges for goods on the wharfs over a certain period, but I am pleased to be able to inform the Senate that where these committees have been established, there has been a genuine effort to iron out the bottle-necks. The essential need is peace on the waterfront, co-operation and co-ordination. That is my objective in order to bring about a better position, particularly in Sydney.
– As Tasmania is in a difficult position regarding shipping, will the Minister for Fuel, Shipping and Transport investigate the position at Strahan, on the west coast, where governmentowned vessels arrive weekly without any cargo, simply to load pyrites, whereas privately owned vessels carry general cargo? Can something be done to ensure that government-owned vessels carry cargo to Tasmania and then load pyrites at Strahan the same as private shipping lines, or is it another move to ensure that the government shipping line shall not pay ? As late as last Saturday the SS. Enfield arrived empty, as usual.
– I think the honorable senator is a little biased, judging from the tone of his question. I took the opportunity to visit Tasmania with the Director of the Australian Shipping Board, Mr. Hetherington, and Mr. “Williams, of the Department of Shipping, to investigate these problems at first hand.
I assure the honorable senator that everything that can be done is being done to give a better service to Tasmania becausof the importance of shipping to thar State. I shall have the position examined and let the honorable senator know the result.
– As the Minister has stated that the major cause of the delays in shipping in the port of Sydney was the adoption of the rolling strike technique, I now ask him whether he can indicate any strike that has taken place on the Sydney waterfront that can be attributed to the rolling strike technique? If the honorable senator did not mean to confine his answer to strikes on the Sydney waterfront, did he intend to imply that strikes at other ports throughout Australia have been due to the rolling strike technique? If so, can he name the ports where that technique has been put into operation?
– I suggest that the honorable senator should spend some of his time looking up the answers to his questions. To any one who takes any interest in what is happening on the waterfront it is quite obvious what strikes have been caused by Communist tactics.
– Will the Minister for Fuel, Shipping and Transport inform the Senate whether, since his recent visit to Albany in Western Australia, he has been able to make arrangements for ships to call at that port regularly in order to lift goods manufactured by the Albany woollen mills, and also primary produce from the hinterland?
– The matter raised by the honorable senator is at present being discussed not only by the Department of Shipping but also by the Australian ship-owners. I am hopeful that a regular service will be provided to that port in the near future.
– A3 the basic wage in Western Australia is now £7 a week, an increase of 4s. Id. since the declaration of October last, and as the cost of living is still increasing, will the Minister for Trade and Customs indicate what real efforts have been made by the Government to replace value in the £1 as promise’1 during the election campaign? When replying, will the Minister please supply specific information and not merely state that progress has been made in restoring purchasing value because of greater industrial peace and better relationship between employer and employee?
– Much as I would like to do so, it would not be fair of me to take the time of the Senate for the whole afternoon to explain what this Government has done to carry out it<-‘ pledge to restore purchasing power to thiCI but what the Government has been doing can be accelerated and improved on with the co-operation of the Opposition. F trust that the Government will get it.
– I ask the Minister representing the Prime Minister whether it is a fact that, prior to the 10th December, 1949, the members of the present Government said that, if they were returned, they would put the value back into the £1 ? Have the . prices 0/ consumer goods increased since then? Has the Government a formula for putting the value back into the £1? If so, will the Minister advise the Senate of the formula that is to be adopted?
– I have frequently pointed out to honorable senators, and particularly to Senator Morrow, that it is not the intention of the Government to disclose its policy in answer to questions.
– On the 30th March. Senator Tangney asked how many women were employed in Parliament House, and what provision, if any, was made for a rest room, a lounge room, or other amenities for them.
I am now able to supply the honorable senator with the following information : -
There are approximately 140 women employed in Parliament House. The desired information regarding rest rooms and other amenities is set out in the following schedule: -
– I desire to inform honorable senators that Lord Macdonald of Gwaenyagor, PaymasterGeneral of the Government of the United Kingdom, is within the precincts of the chamber. With the concurrence of honorable senators I shall invite him to take a seat on the floor of the Senate beside the President’s chair.
Honourable Senators. - Hear, hear!
Lord Macdonald thereupon entered the chamber and was seated accordingly.
– On the 29th March, during the debate on the motion for the adjournment of the Senate, Senator Murray asked a question regarding recognition of the services of members of garrison battalions in Australia who rendered outstanding service during the last war. The Prime Minister has supplied the following information : -
The question of granting posthumous awards to certain members of the garrison battalion involved in the outbreak at Cowra prisoner of war camp has been under consideration for some time, and it is anticipated that a decision in regard to such recommendations as have already been submitted will be reached shortly. During the war years the Australian Government submitted recommendations to His Majesty the King for the bestowal of honours and awards, operational and nonoperational, to members of the Australian Military Forces, irrespective of the unit or formation to which they belonged, or the area in which they were serving, and it was not until early 1940 that the then Prime Minister announced that only awards for conduct in operational areas would be recommended for bestowal in future. Prior to this decision being made, members of the garrison forces were fully entitled to be cited for services of an outstanding nature, notwithstanding that they were serving in a non-operational area. They may also be awarded war medals, subject to their having the requisite qualifying service and being eligible in other respects.
– On the 27th April, Senator Fraser asked the following questions of the Minister representing the Minister for Immigration, upon notice : -
I informed the honorable senator that I would direct the attention of the Minister for Immigration to the matter and obtain the information that he required. The following information has now been furnished by the Minister: -
asked the Minister representing the Minister for Immigration, upon notice - 1 : Has his - department established preschool groups in holding centres so that the children of New Australians who are Living in these centres may have the assistance of this very valuable service?
– The Minister for Immigration has supplied the following answers to the honorable senator’s questions : - 1 and 2. Kindergarten or pre-school groups ure established at all holding centres throughout the Commonwealth with the exception of the holding centre at Stuart, Queensland, which was occupied only recently. The honorable senator will be interested to know, howover, that the president of the Teachers’ College in Queensland is assisting my department to secure a trained teacher for that particular centre. The kindergarten unions in the various States are advising on pre- school training and where possible are supplying trained personnel. Buildings have been specially constructed and special equipment provided for the purpose of kindergartens and pre-school groups at all centres.
– In view of the fact chat the Government has no formula for putting the value back into the £1 and that it believes that it is the Communists who are preventing that from being done, will the Minister representing the Prime Minister state the reasons why the right honorable gentleman has refused to ask the people of Australia to give the Commonwealth power to control prices?
– The honorable senator’s question is based upon an entirely fallacious premise. He appears to be under the impression that the Government has no formula for restoring the purchasing power of the £1. I assure him that it has.
– Is the Minister representing the Prime Minister aware that there is no uniformity in regard to the conditions of entry to the Commonwealth Public Service in the various States? Is the matriculation standard of the University of Melbourne recognized as the basic requirement for admission to the Commonwealth Public Service in Melbourne and Canberra? If so, why is it not recognized as a qualification for admission to the Commonwealth Public Service in “Western Australia?
– I am not aware of the circumstances to which the honorable senator has referred, I assure her that the regulations governing admission to the Commonwealth Public Service have not been altered since this Government assumed office. I realize the value of uniformity in this matter, particularly in relation to Queensland and “Western Australia. The points that the honorable senator has raised are worthy of examination, and if she will put the question on the notice-paper I shall ensure that they are examined.
– Some time ago it was reported in the press that the managing director of Australian National Airways Proprietary Limited had made a public statement to the effect that a considerably reduced fare should be charged to passengers travelling by air between Australia and London, but that, owing to some arrangement as to fares, it was not possible to make the reduction. Will the Minister representing the Minister for Civil Aviation take this matter up with his colleague in order that lower fares may be charged on the AustraliaLondon route?
– I shall refer the question to the Minister for Civil Aviation.
– In view of the fact that yesterday the Minister for Health took students of the University of Sydney into his confidence regarding the Government’s national health proposals, will the Minister representing the Minister for Health direct the attention of the right honorable gentleman to the existence of the Commonwealth Parliament and ask when he is likely to condescend to extend to the Senate a courtesy similar to that which he extended to university students?
– I shall ensure that, the honorable senator’s question is brought to the notice of the Minister for Health.
– Will the Minister representing the Minister for Health inform the Senate whether an agreement has yet been reached between the Government and the British Medical Association in relation to the provision of pharmaceutical benefits? If not, when is it expected that an agreement will be concluded ?
– I understand that the Minister for Health is still negotiating with t«e British Medical Association, and that the result will be made known at an early date.
asked the Minister representing .the Minister for Health, upon notice -
Will the Minister inform the Senate as to how far consultations have proceeded between the Pharmaceutical Guild and the Minister for Health?
– The Minister for Health has supplied the following information : -
Consultations with various bodies, including the Pharmaceutical Guild, are proceeding but ‘ it is not proposed to make any statement regarding the progress of these negotiations for the time being.
PRIME Minister’s Second-beading Speech.
– I preface my question, which is addressed to the Minister representing the Prime Minister, by saying that during his second-reading speech on the Communist Party Dissolution Bill, on the 27th April last, the Prime Minister read a list of 53 alleged leading Communists, and that it has now been discovered that five of the persons who were mentioned by him are not now
Communists. In view of the great fear of persons who are not Communists that they will be declared to beCommunists, and bearing in mind that the five persons to whom I have referred were leading trade unionists of whom we would expect the Government to have at least some knowledge, will the Minister assure the people of this country that when the next list is published greaterprecautions will be taken to ensure that innocent people will not suffer in thesame way as those five trade unionists have undoubtedly suffered?
– It should’ be quite unnecessary for me to point out that in matters of parliamentary procedure, deportment and courtesy, the Prime Minister, by his own example, sets a very high standard. It is not my duty, audi indeed it would be presumptuous of meto do so, to attempt in ‘any way either, to explain or defend what the right honorable gentleman has done. He is quite capable of doing that himself, and I am sure that he will do it to the intense satisfaction, not only of members of the Parliament, but also of the people- of Australia.
- -Mr. President-
– Order! I point out that questions dealing with somethingthat occurred in another place are not in order. If a senator read a report in a newspaper, he could base a question upon it, but questions that relate todebates that have occurred in anotherplace are not in order.
– I direct a question to you, Mr. President. Reference has been made to the courtesy of a certain gentleman. I direct your attention tothe fact that last evening, with some friends of mine, I tried to listen to the Right Honorable J. B. Chifley speaking in the House of Representatives. During his speech sotto voce conversations were carried on-
– I rise to order. Standing Order 416 reads as follows: -
No senator shall allude to any debate of thecurrent session in the House of Representativesor to any measure impending therein.
I submit that that is what Senator Grant is attempting to do.
– I have already pointed out that honorable senators must not refer to debates in another place. Questions that refer to proceedings during the current session in another place are not in order.
– I should like your assurance, Mr. President, that in future, during debates in this chamber, continued conversation, to the inconvenience of members of the public who are listening to the broadcast of the proceedings, shall not be permitted.
– Order ! I think that the debates in this chamber have been carried out on a very high plane. As President, I have always endeavoured to ensure that when an honorable senator was speaking he could be heard distinctly not only by other honorable senators, but also, I hope, by members of the outside public when the proceedings were broadcast.
– Will the Minister representing the Minister for Supply inform the Senate what steps are being taken by the Government to overcome the great shortage of accommodation for visitors and tourists to Australia from overseas? Are State governments co-operating with the Commonwealth in this matter, in order to ensure that this very important method of showing the world what Australia has to offer can be proceeded with without undue delay?
– I understand that my colleague, the Minister for Supply, has already requested the various States to consider methods of promoting tourist traffic in Australia. It has only recently been possible for him to arrange such investigations. I shall inform the honorable senator of developments as soon as they become known to me.
– In view of the lack of uniformity throughout Australian States in the matter of divorce and other matrimonial causes such as maintenance proceedings, will the AttorneyGeneral consider endeavouring to induce
State Premiers to decide upon common action, particularly in instances in which wives are deserted in one State and are unable to obtain maintenance from their husbands in another State unless they incur the expense of travelling to that State in order to institute police action ?
– I appreciate that difficulties such as the honorable senator has referred do arise through the existence of different laws in relation to these matters. However, I doubt very much whether anything could be done to overcome some of the difficulties to which she has referred. For instance, if a wife is deserted by her husband and it becomes necessary for her to sue for maintenance in the State where she resides, she has tce bring the proceedings before a court and have the papers served on her husband. After all he is entitled to be heard. Those difficulties are almost insuperable in a legal system that is designed to ensure that justice shall be done. I shall have a look at the matters that have been raised by the honorable senator, and if I can provide her with any useful information on the subject I shall do so.
asked the Minister representing the Postmaster-General, upon notice -
– The PostmasterGeneral has supplied the following answer : -
asked the Minister representing the Minister for Works and Housing, upon notice -
– The Minister for Works and Housing has supplied the following information: -
asked the Minister representing the Minister for Works and Housing, upon notice - 1. (a) Is it a fact that, owing to the scarcity of labour and materials, the cost of the erection of a laundry is approximately £200? (6) Is it a fact that an up-to-date washing machine, which could be placed on a back verandah, costs less than £200?
– The Minister for Works and Housing has advised as follows : -
Steps are being taken to examine the aspects involved in the proposal put forward by the honorable senator, and a reply will be prepared as soon as possible.
asked the Minister representing the Postmaster-General, upon notice -
What decision has been arrived at in regard to the site for a new post office at St. Mary’s, Tasmania?
– The PostmasterGeneral has supplied the following answers : -
After consulting the town and country planning commissioner in Tasmania, action is proceeding to purchase a suitable site in the main street, St. Mary’s, for a new post office building.
asked the Minister representing the Postmaster-General, upon notice -
What progress has been made with the establishment of new line yards at Wynyard, Smithton, Deloraine, Devonport and Burnie in Tasmania ?
– The PostmasterGeneral has supplied the following answer : -
Devonport. - A suitable building for line depot purposes has been obtained and is already occupied by the line staff attached to this district. Steps are being taken to provide the building with standard amenities.
Smithton. - A requisition for the erection of a new line depot at this centre has been placed with the Department of Works and Housing. Working drawings and specifications are being prepared, and it is expected that the construction of the building will be commenced at the latter end of this year.
Wynyard and Deloraine. - Sketch plans and estimate of the proposed new line depots have been prepared and requisitions will be placed immediately with the Department of Works and Housing.
Burnie. - Preliminary plans have been developed and approved and work upon sketch plans and estimate is proceeding.
asked the Minister representing the Postmaster-General. upon notice -
As evidence of the Government’s sincerity in implementing its policy of putting more value into the fi, will the Postmaster-General take immediate steps to reduce the letter rate of postage by id. for the first ounce and thus give a benefit to all sections of the community?
– The PostmasterGeneral has supplied the following information : -
The reduction of present letter rates by 1/2d would lower postal revenue by over £1,250,000 per annum. Therefore, if charges were reduced, . either the Postal Service would have to be seriously restricted, or the loss would have to be made up out of Consolidated Revenue, as the increased tariffs imposed on other postal articles are not expected to cover more than portion of the deficit incurred in the postal ranch in the financial year 1948-49.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable senator’s questions are -
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answers : -
asked the Minister representing the Minister for Works and
Housing the following question, upon notice: -
Does the Government intend to hold an international architectural competition for plans for a new Parliament House, and if so, when?
– The Minister for Works and Housing has supplied the following answer: -
Priorities accorded to other large-scale Commonwealth construction commitments at Canberra (including housing) preclude, for a considerable period, any possibility of proceeding with the project mentioned. No governmental consideration has yet been given to the desirability of holding a competition such as that suggested by the honorable senator. The proposal will receive further attention at the appropriate time.
asked the Minister representing the Minister for the Navy, upon notice -
Will the Government give consideration to the question of providing a more modern uniform for naval personnel?
– The Minister for the Navy has supplied the following answer : -
There is no intention at present of altering the traditional dress of the Navy. Steps have been taken to bring naval uniforms up to peace-time standards as to the quality of material and fit, as supplies become available. Certain war-time improvements in the formal uniform and a better working dress for use on board have been introduced.
asked the Minister representing the Minister for the Navy, upon notice -
– The Minister for the Navy has supplied the following information : -
asked the Minister representing the Minister for Health, upon notice -
In view of the press allegations regarding a “racket” in patent medicines, will the Minister consider the setting up of a royal’ commission to investigate this matter?
– The Minister for Health has supplied the following information : - _ In view of the Australian Government’s limited jurisdiction in relation to the sale of patent medicines, it is not considered that any good purpose would be served by the appointment of a royal commission.
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following information : -
L The Australian Stevedoring Industry advises that shipowners deny that ships were deliberately worked under the rotation of batches system as alleged. The Waterside Workers Federation has now lodged an application for an extension to Port Brisbane of the system of rotation of hatches, and the hearing has been fixed for the 20th April. As such, the whole question is now sub judice.
The proclamation under the Crimes Act has been revoked.
– On the 27th April, Senator O’Byrne addressed a question to me concerning football broadcasts from Hobart. I have now to advise that the Australian Broadcasting Commission has informed my colleague, the PostmasterGeneral, that the commission and other broadcasting organizations consider that in view of the extensive publicity given to sporting bodies, no payment, should be made for broadcasting rights, and that broadcasters should be accorded the same facilities as the press enjoys. The commissioner states that many sporting bodies have accepted this principle, and that it therefore finds itself unable to agree to making any additional payment to the Tasmanian-Australian National Football League at Hobart. However, in order to keep faith with the public, the commission has offered to make the same payment as previously to that body which has refused this offer, although the Northern Tasmanian Football Association at Launceston has agreed to accept the same payment as was made last year. The commission has informed the Postmaster-General that if it is unable to reach agreement with the Hobart league, it will substitute other sporting descriptions.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
In 1945 and 1947, banking bills of major importance were introduced into this Parliament and, on each occasion, the views of the present Government were clearly stated. In 1945, we foreshadowed that, when re-elected to the treasury bench we would regard ourselves as being obliged to review the working of the 1945 banking legislation and that we would reconstitute a Commonwealth
Bank Board. In 1947, we left no doubt whatever of our intention to defeat the nationalization proposals by every constitutional means at our command. Not only did we announce in this Parliament our proposals with respect’ to banking, but the policy speech delivered by the Prime Minister, on behalf of the Liberal party and the Australian Country party, made specific reference to our intention to repeal the 1947 act and to our proposals regarding the Commonwealth Bank. The bill now before the Senate gives effect to that policy. So far as the 1947 act is concerned, there is little that need be said. The act is a violation of the principles for which this Government stands, and we gave an undertaking to the people of Australia that we would repeal the act if we were returned to office. In accordance with the mandate which the people have given to us, the bill provides for the repeal of the 1947 act. Moreover, the High Court of Australia and the Privy Council have declared this act to be invalid in major respects.
In reviewing the 1945 banking legislation, and in the preparation of this bill, the Government has been deeply conscious of its responsibilities to the people, and particularly of the fact that these responsibilities require -
In respect of central banking operations and otherwise, the Commonwealth Bank and the other banks have achieved a. considerable measure of harmony and co-operation, and the Government is satisfied that the broad purposes of monetary and banking policy are being achieved. For this reason and the fact that it would be undesirable to make frequent changes in legislative requirements affecting the banking system, the Government has decided to preserve the general pattern of control by the Commonwealth Bank over the banking system and the broad structure of the Commonwealth Bank.
I remind honorable senators that there are few countries in the world with banking systems as highly organized and efficient as the Australian banking system. Moreover, it is, I feel, appropriate to recall that the essential features of the 1945 banking legislation were based upon the war-time banking control regulations, which themselves were based upon an agreement arranged between the Commonwealth Bank and the private banks in 1941, during the term of office of the present Treasurer (Mr. Fadden).
At that time we were faced with the danger that secondary expansion of credit and excessive private bank profits might occur as a result of the use of treasury-bill finance for war purposes. To meet this danger the present Treasurer secured from the private banks a firm undertaking that they would cooperate in the institution of arrangements which included -
When the Labour party came into office, the basic elements of this agreement were embodied in the war-time banking control regulations under the National Security Act, and the substance of those regulations was subsequently incorporated in the banking legislation of 1945. The pattern of central bankprivate bank relationships at present embodied in legislation does not differ in essentials from the arrangements which were instituted in 1941. The importance of monetary policy has frequently been stressed in Parliament and the fact that it has a significant effect upon the welfare of the people has been fully recognized. Although it is easy to fall into the error of thinking that monetary policy can cure all economic ills, it is nevertheless true, as the Prime Minister pointed out in his policy speech, that great financial decisions, if they are wrong, are wrong on so vast a scale as to injure many thousands of people.We therefore believe that such decisions should not be made by one man either in the bank or in the Government. We are convinced that responsibility for the determination of monetary and hanking policy should be a collective responsibility, and the bill now before the Senate is designed to give effect to this principle by setting up a Commonwealth Bank Board under the chairmanship of the Governor and by restoring to the elected representatives of the people the ultimate responsibility for monetary and banking policy. The same principle was embodied in the Commonwealth Bank Bill which was introduced by the right honorable member for Cowper (Sir Earle Page) as Treasurer, in 1924. By that act, the control of the note issue was vested in the bank and provision made for a board of eight directors.
When the board was established in 1924, the technique of central banking had not been developed in Australia. Even among the older central banks in Europe, centra] banking policy and technique had not been fully developed, and, in any case, their experience was hardly applicable to Australian conditions. In these circumstances, the board, of necessity, had to feel its way and no doubt, on looking back, it is possible to see how the work of the board could have been improved. To some extent, its difficulties arose from the fact that the Governor of the bank was not chairman of the board. This tended to divide responsibility. With the passage of time, however, many of the board’s difficulties were overcome. The members developed knowledge and understanding of the problems with which they had to deal. Knowledge in relation to these problems in Australia had been built up. and a growing body of expert technical advice was available from the bank’s staff, and by 1939, the bank, under the board, was operating efficiently both in its cen.tr p’ banking and trading banking activities and a satisfactory co-ordination of the bank’s policy with that of the Government had been achieved.
During the war years, the responsibilities devolving upon the bank and the board were greatly increased. War-time control of banking, exchange control, loan raisings and the financing of various commodity schemes, involved problems of considerable magnitude, and there welmany other requirements in the financial field for which it was necessary for the board to make provision. Many of th problems encountered were new to Australia, but under the direction of the board, the bank undertook the tremendous responsibilities of war-time finance with outstanding success. The record of the bank during those difficult years is a tribute to the effectiveness of the system of board management as then developed.
There is wide recognition overseas of the principle that the management of a central bank should be vested in a board of directors. Taking other Commonwealth countries, for example, I would point out that the Bank of Canada and the reserve banks of South Africa, India and New Zealand are in each case managed by a board of directors. Moreover, when the Bank of England was nationalized in 1946 it is significant that the system of management by a board was retained. However, in 1945 the Commonwealth Bank Board was abolished under the legislation of that year and the management of the bank was vested solely in the Governor, who was assisted, in the determination of monetary and banking policy, by an Advisory Council. In the determination of monetary and banking policy, there is a great advantage in maintaining continuity. Furthermore, the Government recognizes that the monetary and banking policy of the bank is closely interwoven with the financial and economic policy of the Government and that, therefore, the board must include men familiar with these matters. Accordingly, the Government has decided that some members of the board will be drawn from the -present Advisory Council, all of whom have had wide experience of the relationship between banking policy and governmental financial and economic policy and administration.
As provided for in the bill, the board is to consist of the Governor of the bank, who shall be chairman, the Deputy Governor of the bank, who shall be deputy chairman, the Secretary to the Department of the Treasury and seven other members, of whom two may be officials of the bank or of the Public Service. The Government proposes to appoint the following officials to the board: Mr. L. G. Melville, who has been Economic Adviser to the Commonwealth Bank for some twenty years, and Dr. Boland Wilson, the Commonwealth Statistician and Economic Adviser to the Government. Both these men are of outstanding capacity and are members of the present Advisory Council. The board will have five other members. In appointing these members, who will not be representative of any sectional interests within the community, and will not have any association with other banks, the Government will be fully conscious of the need for men of wide knowledge and experience. The inclusion of such men will bring to the board’s deliberations the views of men who are not directly associated with government administration and policy. The periods of the original appointments of these members will range from one to five years and thereafter each appointment will be for a period of five years. This arrangement will result in one member retiring each year, thus ensuring a proper measure of continuity in the personnel of the board. In the event of an equality of votes upon any question, the chairman will have a casting vote.
It is the Government’s view that the proposed composition of the board will result in balanced judgments by a body of men appropriately chosen for their various abilities and knowledge: due integration with the Government’s general financial and economic policy is likely to result and, at the same time, the board is given an appropriate measure of independence. The board’s functions will be to determine the policy of the Commonwealth Bank in its central banking and trading activities. The policy of the Commonwealth Savings Bank will also be a matter for determination by the board. In short, the bill provides that the board’s power over policy matters will extend to the performance of all functions of the bank, including those entrusted to it under the Banking Act 1945. It will be the function of the Governor to administer the bank in accordance with the policy laid down by the board. The Government does not contemplate that the board will concern itself with matters of day-to-day administration such as applications for advances or detailed staff management.
In respect of the monetary and banking policy of the bank, the legislation provides that the bank shall keep the
Government informed. If the Government and the bank differ on a policy matter, the Treasurer and the board are to endeavour to reach agreement. If the Treasurer and the board are unable to reach agreement, the board is to furnish a statement of its views and the Treasurer may submit a recommendation to the Governor-General who, acting with the advice of the Federal Executive Council, may determine the policy to be adopted by the bank. This procedure will ensure that any submission to the Governor-General on this matter will be made after full consideration by the Government.
Where in such circumstances the Government determines the policy to be adopted by the bank, the legislation requires the Treasurer to inform the bank accordingly, and to have a statement of the policy, together with a statement of the views of the Government and of the bank, laid before each House of the Parliament within fifteen sitting days after the policy has been communicated to the bank. The relevant provisions of the bill are framed to meet administrative requirements and to give effect to the principle that great financial issues shall be the ultimate responsibility of the elected representatives of the people. In the opinion of the Government, the amended section will give the fullest possible effect to the principles underlying the views expressed in 1937 by the Royal Commission on Monetary and Banking Systems, on the relationship between Parliament, the Government and the Commonwealth Bank.
So far as the Note Issue is concerned, the Government, in preparing this bill, considered whether statutory provision should be made for a limitation upon the amount of notes that could be issued, but, having made provision for the Government to bring policy issues before Parliament where the bank is required to adopt a policy determined by the Government, it has decided that further statutory provision in respect of the Note Issue is not necessary. It is clear that in Australia to-day, as in other modern communities, the note issue is an indicator of the general credit situation rather than a means of controlling credit and, to reverse trends in the note issue, it may be necessary to modify the whole credit policy. The policy of the bank in relation to the note issue is thus part of the monetary and banking policy of the bank, and is a matter upon which the bank is required to keep the Government informed and one which the Government may, if necessary, bring to the notice of the Parliament. It is also covered by the provisions relating to a disagreement between the bank and the Government on monetary and banking policy. With the establishment of a board to determine the policy of the bank, it is necessary to make consequential alterations in certain provisions of the existing act under which the Governor is given power to determine various matters. These amendments are set out in the schedule to the bill.
So far, I have been dealing with the Commonwealth Bank “primarily ‘in its capacity as a central bank. With respect t£ the trading sections of the Commonwealth Bank, the policy of the Government, as announced by the Prime Minister, is that the bank’s trading activities will be continued in fair competition with the private banks. The Government is of opinion that such a policy will serve the public interest by ensuring an adequate development of Australian banking services. In the light of this policy, the Government has given consideration to the position of the General Banking Division and of the several departments of the bank. The General Banking Division of the Commonwealth Bank operates in competition with the private banks and has made a valuable contribution to the welfare of the community, particularly in relation to housing finance. The Rural Credits Department, which was established under a bill introduced in 1925 by the right honorable member for Cowper has facilitated the production and orderly marketing of a wide range of basic foodstaffs and other primary products on a scale that has increased tremendously in recent years. The Mortgage Bank Department provides long-term loans to primary producers, and the Industrial Finance Department, which has only been in operation for a little over four years, has been of great benefit to industry. In order to ensure that these sections of the bank will be able to continue to offer to the community the facilities now available, the bill provides a means for the board, within specified limits, to add to their capital resources as such additional resources are needed. The additional resources will come from the profits derived from central banking business and from profits of the note issue. It is from these sources that the capital of the Mortgage Bank Department is being built up at present. Under existing legislation it is provided that until the capital of the Mortgage Bank Department has reached £4,000,000, one-quarter of the annual profits of the central bank and £150,000 per annum from the profits derived from the note issue shall be paid to that department. These provisions will be replaced by the proposals in the bill.
Although the Central Banking Division operates in competition with the private banks, the Government, having regard to its policy of continuing the trading activities of the Commonwealth Bank in fair competition with the private banks, has examined the activities of the General Banking Division and has found that the main pressure upon the division’s resources is for housing, especially from co-operative building societies. In this field the responsibility is falling heavily and to an increasing extent upon the Commonwealth Bank. The Rural Credits and Mortgage Bank Departments of the Commonwealth Bank were established to meet special needs, and competition between these departments and the private banks is of a limited kind. In the case of the Industrial Finance Department, there is a particularly heavy demand for hire-purchase facilities to finance the purchase of industrial and farm equipment, trucks and other motor vehicles. The private banks do not provide these facilities for the public. The additional resources which are being provided, whilst permitting reasonable development in the trading sections of the Commonwealth Bank, will, thus, not be used as a basis for unfair competition with the private banks.
The detailed provision regarding capital is that the board will have discretion to transfer an amount not exceeding £500,000 a year to the bank’s trading sections out of the half share of the profits from central banking business which are now retained by the bank as reserves of the central bank or as capital of the Mortgage Bank Department. The other half of the profits from this source is paid to the National Debt Sinking Fund, and the bill maintains this provision. In addition, the bill provides that the amount transferred from the profits of the central bank shall be supplemented by an equal sum, but not exceeding £500,000, from the profits of the Note Issue Department. The maximum amount transferable in any year is, therefore, £1,000,000, and as the arrangement is to be limited to a period of five years the maximum amount which can be added to the capital of the trading sections of the bank under the provisions of the bill is £5,000,000. The additional capital is to be divided among the trading sections of the bank in proportion to their present nominal capitals, but the board may vary the proportions with the consent of the Treasurer. Assuming that over the five year period the maximum addition of £5,000,000 is made to the capital of the trading sections by the board in the proportions shown in the bill, the present capital of the various sections of the bank would be increased as follows : -
In conclusion, I invite the attention of honorable senators particularly to the following points : -
The Government is convinced that the primary responsibility of the Commonwealth Bank is its responsibility as a central bank for the continued health and progress of the banking system as a whole. Part of the strength of the Commonwealth Bank as a central bank is, however, derived from the direct contact with the financial and industrial system which it maintains through its trading sections. The proposals of the Government are designed to strengthen the Commonwealth Bank both as Australia’s central bank and a? an essential part of the commercial banking structure of the country. I commend the bill to honorable senators.
– The second-reading speech delivered by the Minister for Social Services (Senator Spooner) was in part a recital of the activities of the Commonwealth Bank. He referred to the administration and the banking operations of that institution. He said that there are few countries in the world that have such a highly organized and efficient banking system as has Australia. Some credit for that satisfactory position must be given to the Commonwealth Bank for the part that it has played in the banking and financial affairs of this nation.
The bill proposes to repeal the Banking Act of 1947 and to amend the Commonwealth Bank Act of 1945. One question to be considered is the effect that the legislation will have upon the future control of the Commonwealth Bank. It must be borne in mind that the Commonwealth Bank is owned completely by the people of Australia. That remark applies to all departments of the bank.
It rendered a service of untold value to this nation during two wars, and it will continue to make a contribution to the welfare and development of Australia provided there is no alteration of or impediment to the present system of control.
The Commonwealth Bank, as a central bank, possesses two very important powers in relation to private trading banks. An indication of the control that it exercises over private banks is that at the present time it holds the huge sum of ?460,000,000 on their behalf. The purpose of depositing that huge sum, which represents the surplus investible funds of the private trading banks, with the Commonwealth Bank, is to assist in preventing inflation. Control of banking business in Australia is exercised with a view to promoting general prosperity and, particularly, to maintaining full employment and preventing depressions. It cannot be claimed that private banking organizations have always contributed to the prosperity of this country. When the Royal Commission on Monetary and Banking Systems of Australia was taking evidence from Mr. O. L. Isaachsen, who was at that time the assistant general manager of the Bank of Adelaide, the chairman of the commission said -
It has been put to us that the amalgamation of banks with separate territories and different classes of business has enabled banks to spread their risks and thereby employ their resources to greater advantage.
Mr. Isaachsen replied ;
There is the opposite view, that it enables banks to transfer their risks; in other words, if there is a bad time in one State-
I emphasize those words -
Therefore, as I have claimed before, the private banks of this country have not given as much assistance to Australia’s economy or industry as has the Commonwealth Bank. Mr. Isaacsen continued -
A bank dealing in a State which is having a bad time is not going to put its money into that State, but into a State where the bank is going to have a better chance of success.
I shall deal fully with this phase of the matter in due course. It is very evident that private banks are interested only in the earning of profit. The transcription of Mr. Isaacsen’s evidence continues -
Hie CHAIRMAN. - You say there is a danger that the people in a State needing assistance are going to be left without it? - A. That is for other people to say.
– This is a matter for us to infer? - A. What you infer is your own business.
From 1910 until June, 1949, the Commonwealth Bank earned a profit of ?85,000,000, which has been utilized for the benefit of the nation. The Commonwealth Bank also embraces the Commonwealth Savings Bank, with which practically all of the savings of the people of Australia are deposited. For the year ended June, 1948, the Commonwealth Bank earned a profit of approximately ?1,250,000 in respect of general banking business. The profits of the private banks during the same period amounted to approximately ?2,500,000. Greater service has been rendered to the country by the Commonwealth Bank than by the private trading banks. I shall also cite a portion of the transcript of evidence of Mr. P. F. G. Gordon, general manager. Commercial Bank of Australia Limited, before the royal commission. It reads-
– Take a case such as this: A man comes to you with first-class security which will amply secure the advance he asks for. Would you, merely because you knew some other bank had been charging more than that, refuse business that you were in the habit of doing with other clients? - A. In the first place he is the customer of another bank. I presume that is the question you are referring to, Mr. Chairman?
– He happens to be dealing with another bank, and in the ordinary course he is a customer. Do you think that your understanding would carry you as far as that? - A. My strict interpretation of it is that I would not quote him a lower rate.
– Although the rate which the other bank is charging appeared to you to he utterly extravagant and unfair ? - A. Yes.
Yet the Government consistently supports private enterprise, and claims that competition is beneficial to this country!
The evidence that I have cited proves that there is no real competition between the trading hanks in this country.
Clause 3 of the bill proposes to repeal the Banking Act 1947.
– Hear, hear !
– The honorable senator who has just interjected is a bit late. He should have exclaimed “ Hear, hear ! “ some months ago when both the High Court of Australia and the Privy Council announced their decisions. That act, with the exception of some minor aspects of little consequence, has been declared invalid. Clause 7 of the measure before the Senate provides for the repeal of section 9 of the Commonwealth Bank Act 1945-48, and for the insertion of the following section in its stead : - “9. - (1.) There shall be a Commonwealth Bank Board, which shall be constituted in accordance with Part V. of this Act. “(2.) Subject to this Part, the Board shall have power to determine the policy of the Bank or of the Savings Bank in relation to any matter and to take such action as is necessary to ensure that effect is given by the Bank or the Savings Bank to the policy so determined.
It is proposed not only to alter the control and management of the Commonwealth Bank, but also to alter the management and control of the savings of the people of this country. The proposed new section greatly concerns the Opposition, and it is also of paramount importance to the people of Australia. It will account for the main opposition to the bill from this side of the chamber. I should be glad if the Minister would review the management of the Commonwealth Bank since the 1945 legislation became operative, and inform honorable senators of the actions of the management to which exception could be taken. Has any action contrary to the national interest been taken by successive governors of the bank since 1945? Has any such action been contrary to the welfare of the Australian people and not in the interests of efficient control of the bank in relation to the finances of the nation? The joint policy speech of the parties opposite which was delivered by the present Prime Minister (Mr. Menzies) has been subjected to variation and amendment when given legislative effect.
I have before me a booklet that purports to contain an authentic copy of that policy speech.
– The honorable senator should study it.
– The fact that the Prime Minister’s photograph adorns the front cover should be some guarantee that it is authentic.
– Apparently the honorable senator has not yet got past looking only at the pictures.
– It contains the following paragraphs in relation to banking : -
We therefore propose -
To set up under control by Parliament, a small Board of Directors of the Commonwealth Bank, on which the Governor shall be Chairman;
I draw the attention of honorable senators particularly to the phrase “ small board of directors “. The bill provides that the proposed board shall comprise ten directors -
That is very interesting. It means that the Government, quite apart from the Treasurer, will now control the bank board and direct the monetary policy of all departments of the Commonwealth Bank.
– Who directed it previously?
– Until now the Treasurer has directed it. I did not interrupt the Minister for Trade and Customs (Senator O’Sullivan) when he was speaking, and I should be glad if he would permit me to continue in my own way.
– I am sorry.
– The Opposition has been unable to find any provision in this measure that Parliament shall have the right to disagree with, or nullify, a decision by the board. The joint policy statement issued by the Government parties contains this passage -
To provide some much-needed check to inflation of the currency we shall restore Parliamentary control over the Commonwealth note issue.
I am astonished that a statement of that kind should have been published by responsible political parties. I “wish to be fair to the Treasurer (Mr. Fadden), who, when speaking on this measure in the House of Representatives, repudiated that part of the joint policy statement of the Government parties. He said that the note issue was only an indicator, and in actual fact had nothing to do with control of inflationary tendencies. That confession by the Treasurer is further proof of the deception practised by Government parties during the recent election campaign. The Treasurer was humiliated by having to repudiate publicly in the House cf Representatives a portion of the election platform of the Government parties, f give credit to the Treasurer for having corrected a false statement on banking policy, and I hope that the Minister, when replying, will explain the reason for the change of policy that is evident in the bill.
The Minister said that the bill effected little alteration of the Commonwealth Bank Act of 1945, except that it proposed to substitute control of the bank by a board for control by the Governor. The Minister claimed that the 1945 act was based on an agreement reached between the Commonwealth Bank and the trading banks in 1941, and I do not deny it. The 1945 act gives the Commonwealth Bank general jurisdiction over the policy of advances by the private banks, inasmuch as it decides whether, in the public interest, their lending is to be restricted or encouraged, and the rates of interest they should pay and receive. Under the 1945 act, the Commonwealth Bank is also empowered to regulate the investible funds of the private banks.
It will be claimed by the Government that the 1945 act will not be materially altered by this legislation; that its essential features are being retained. I agree that some of the features of the 1945 legislation have been retained, but the Opposition is concerned over the proposal to substitute control by a board for control by a governor. By such an alteration, the administrative machinery of the bank will be changed, and that, in turn, can lead to a change of policy iri regard to bank advances. It is proposed that the bank shall be placed under the control of a board of ten directors. There is no need for a move of that kind unless it has for its object a change in the policy of the Commonwealth Bank in relation to the private banks. Under the present act, the Governor administers the Commonwealth Bank as a central bank, as a trading bank, and as a savings bank. To assist him, there is an. Advisory Council, consisting of men of great financial experience. The Minister for Social Services (Senator Spooner) referred to them as men of great capacity, and they undoubtedly are. The Secretary to the Treasury, and other distinguished officials, advise the Governor of the bank in the exercise of his important duties.
This bill proposes to transfer responsibility for monetary policy from the Governor of the bank to a board of ten members, some of whom, I admit, have had experience of banking, and are men of great capacity, but five other members are to be appointed to the board, and of them we know nothing. “When it is proposed to change so drastically the method of control of the bank, and place responsibility for financial policy-making in the hands of a board, we should be told at this stage the name of every member of the board whom it is proposed to appoint. That information should be given, not just for the benefit of honorable senators, but primarily for the benefit of the Australian people. It is proposed to abolish the present Advisory Council, although some of its members will be included in the new board. Under the new arrangement, responsibility for administering the monetary policy of the nation will rest with the board. The Royal Commission on Banking and Monetary Systems, which was appointed by a government of .the same political faith as the present Government, stated in paragraph 528 of its report, at page 205 -
RELATIONS with Governments.
There are limitations on the power of a central hank tu reduce fluctuations and to maintain reasonable stability in the internal economy. Too much should not be expected, even from the most enlightened policy of an all-powerful central bank. Much will’ depend upon the relations established between the Commonwealth Bank and the Commonwealth Government, which is responsible for monetary policy. In Australia the Federal Parliament is given, by section SI of the Constitution, “’“‘power to make laws for the peace, order and good government of the Commonwealth with respect to: (xii) Currency, coinage and legal tender: and (xiii) banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money “. In part, the responsibility for monetary policy is delegated to the Commonwealth Bank by the Federal Parliament in the legislation under this section establishing the Bank and conferring upon it certain powers, but in part the responsibility is with the Commonwealth Government.
That recommendation is very definite, and the policy of the Labour party is that the Government should ultimately be responsible for banking and the monetary policy. I~n order to ensure that the Commonwealth Bank can carry on its own banking business, and also exercise central bank jurisdiction over the trading banks so that the prosperity which this Government inherited from the Labour Government may be preserved and unemployment prevented, the Government itself should accept responsibility for monetary policy. The present Government, however, is passing that responsibility over to a board. When unpopular decisions have to be made in the future - and one or two such decisions will have to be made - the Government will say that .they are the decisions of the bank board. For instance, if the overseas exchange rate is reduced so that the primary producers lose 25 per cent, on their overseas sales, who will be asked to accept the responsibility? I am certain that Ministers and their supporters will say, “ That was the act of the bank board “.
It is proposed that, in future, the bank shall be controlled by a board consisting of the Governor of the bank, the DeputyGovernor, the Secretary to the Treasury, Professor E. G. Melville, Economic Adviser to the Commonwealth Bank, Dr. Boland Wilson, Commonwealth Statistician, and five other members, the identity of whom is to be kept secret, as was the threat to the Senate in certain current legislation until it was disclosed by the Prime Minister (Mr. Menzies) the other day with the explosive force of an atomic bomb. It is rumoured that Professor Hytten has been suggested as a prospective member of the board. He is the man who proposed a plan for eight per cent, of unemployment in Australia to assist in ensuring national stability. Professor Hytten and four other appointees might be regarded by the Government as competent men but the question is whether they would administer the Commonwealth Bank in the interests of the people of Australia. I put it to the Senate with all sincerity that the Commonwealth Bank should be free of suspicion of political influence where the appointments are concerned. Those appointed should not be representatives of any particular party or any selected ideology.
I ask honorable senators to consider what would be the position if Senator Wright, for example, were appointed to the board. I make no reflection on the honorable senator but would anybody in this chamber have the temerity to suggest that Senator Wright would not be biased towards private enterprise as a member of a bank board? Senator Spicer has a similar outlook. From the soles of his feet to the hairs of his head he is steeped in conservatism. I invite honorable senators to imagine’ what the Attorney-General’s interest would be if he were appointed a member of the board. Nobody would suggest that Senator Spicer would put his weight behind the development of that great socialist institution, the Commonwealth Bank, in opposition to private enterprise. That statement would apply also to Senator George Rankin. Who would expect him to work in the interests of a socialist institution like the Commonwealth Bank if he were a member of the bank board?
– I thought that the honorable senator rose to order when his party was termed .Socialist.
– I was generous to the Minister for Social Services because I thought that he should be allowed to continue uninterrupted when he made his speech but in future I shall adopt a different attitude. Another question is whether it is not unsafe to take the risk that the private banks will no longer be directed to the extent that is desirable in the interests of the nation. The people of Australia have had experience of an outside commercial Commonwealth Bank: Board previously. The first bank board was appointed in 1924 by the right honorable member for Cowper (Sir Earle Page) and it carried on until 1945 when the board was abolished by a Labour Government. In the depths of the depression, the board refused a request of the Labour Government for £.18,000,000 credit to provide work for the unemployed and the primary producers. The Opposition requires to be convinced that it would not be dangerous to set up another such board.
The Governor’s wishes could be vetoed at the direction of the five outside appointees and the Secretary of the Treasury who would be representing the government of the day. I cast no aspersions on the Secretary of the Treasury who is a distinguished public servant, but he would be subject to the direction of the government of the day, and rightly so. He would support any move by the five members appointed from outside. Consequently the control of the Governor of the bank would diminish and, the wishes of the bank would be subject to five men who, probably, would have had no experience in banking. The advice of the Governor of the bank, the Deputy Governor and other officials would be ignored and the five new members and the government representatives could carry the day on any proposition. The question before the bank board might be one of great importance to the nation.
The Minister referred to statements made in 1947 and claimed that this bill is in accord with a mandate from the people. A study of the policy speeches of the Prime Minister and the Treasurer denies that assertion. In those speeches, the right honorable gentlemen suggested a small board. They suggested also that in the event of disagreement between the Treasurer and the bank board, the matter would go to the Parliament for decision.
– That is what the bill provides.
– That would be futile. The matter probably would not go to Parliament at all because a decision would be reached by the board. The wishes of the Government would bt carried out whether the Governor of the bank or the Deputy Governor were in favour of the decision or not. The policy proposals are not in the bill and the proposed board is not a small board. Parliament will have no effective control over the decision of the Treasurer and the Governor. Probably in his reply the Minister will answer that statement. If the actual decision is forwarded to the Parliament, it could not disallow such a decision as it normally can in the case of a regulation. I want to know what is going to happen if the Parliament is in recess for two or three months. Will the Minister summon the Parliament to deal with some financial problem that might need immediate attention or daily decisions?
The Opposition accepts all the other portions of the bill. I am pleased to note that the reserve bank functions will be continued and that jurisdiction will be exercised by the Commonwealth Bank over the advances policy of the private banks. Under this bill, Parliament will be unable to disallow statements tabled in the Parliament indicating that under sub-section (7.) of proposed new section 9a the Treasurer had directed the bank board to pursue any particular policy. It is doubtful if there would be disagreement between the Treasurer and the board, as it is clear that the nominees of the Government will ensure that Government policy is carried out. I say fairly and frankly that if a Labour government were in power and government nominees were on the bank board, the instructions that were given by the Labour Government to those officials would be implemented, just as they will be for the present Government. But when an unpopular decision has to be made, the Government can evade responsibility by blaming the bank board. That could happen in regard to an alteration in the exchange rates whether a reduction of 10, 15 or the whole 25 per cent, were involved. I know that there has been some conflict already between the composite parties comprising the Government in regard to that matter. Pressure is being exerted by certain interests to have the exchange differentiation between Australian currency and sterling reduced or even eliminated. The
Government knows that that would be an unpopular move, and probably that is the first buck that it would pass to the Commonwealth Bank Board. A similar responsibility may be put on the board in relation to interest rates, but, surely no honorable senator opposite will argue that the Government is not concerned whether interest rates are reduced or increased. The same may be said of the expansion of credit at a time of falling prices, and the development of depression conditions. There is no guarantee that whatever government happens to be in office in such circumstances, will not find itself in exactly the same position as the Scullin Government was in during the last depression. It will no doubt be argued that board control of the Commonwealth Bank is more democratic.
– It is more democratic than one-man control.
– There is not oneman control at present. When the Labour Government was in office, the nineteen members of Cabinet determined issues on which there was disagreement. The Attorney-General (Senator Spicer) knows that. If he must interject, he should be fair. Since when has democracy meant that experts in banking should be overridden by men who have had no practical experience of banking or finance generally ? It is obvious that the five nongovernment members of the board will not be people who share Labour’s political aims. They will be appointed to the board regardless of their capacity to administer or their knowledge of banking and finance.
Before making a major alteration such a.s that proposed in this measure, the Government should endeavour to show the people of this country that the present administration has failed in some respects at least. Of course, it has not failed at all, as the expansion of the Commonwealth Bank’s business shows. From the foundation of the bank until 1924, it was managed by a governor, and, in that period, major progress was made. As far as I am aware, no one has been able to show that mistakes were made in those years. After 1.024, under board management of the kind that the Government now seeks to re-introduce, grave mistakes were undoubtedly made which had farreaching consequences to industry and to the people of this country. Instead of expanding credit, the bank board contracted credit, thus accentuating the semistarvation conditions that this country experienced during the depression. It is all very well for some honorable senators to smile. Probably they did not feel the effects of the depression.
– Do not make any error about that.
– The honorable senator may have lost something, but he did not starve as many Australian’s did.
– Possibly not.
– Of course not. A second period of governor-control similar to the first has proved an outstanding success. I am referring to the years since 1945. The profits of the bank have been high, but more important still, the implementation of a wise banking policy has assisted national stability and promoted industrial expansion. No one can deny that industrial expansion in this country since the war has been rapid or that the Commonwealth Bank has made a major contribution to that development. I have before me a statement that was published in the Sydney Morning Herald.
– Surely the honorable senator does not believe what he reads in that newspaper?
– I do not give credence to every newspaper statement I read, but I concede that newspapers generally do accept some degree of responsibility for their reports. Their political reports vary considerably but usually some degree of accuracy is observed in general news items. On the financial page of the Sydney Morning Herald of the Sth May, the following report appeared : -
Kenworth (Australia), makers of rubber goods, has run into difficulties and pays no interim* dividend. A post-war flotation, the company is another to disappoint hopes raised in the prospectus. Fortunately for shareholders, the Industrial Finance Department of the Commonwealth Bank has made a quarter of a million available to the company - and is providing help in re-organization and management.
The Industrial Finance Section of the Commonwealth Bank was established under Labour’s 1945 legislation, against the strong opposition of the present Government parties, not only in the Senate but also in the House of Representatives. Therefore, I was glad to hear the Minister for Social Services pay a tribute to the work of the Industrial Finance Section in his second-reading speech to-day. I am sure that honorable senators from rural districts will agree also that the Commonwealth Bank has done much to assist primary producers. The newspaper report continues -
By the way, this is the third instance I have noted of the I.F. department coming to the rescue of a newly formed company. A. E. Goodwin and Euston Lead are the other two. So far as I can judge, A. E. Goodwin is well on the way to recovery, but it must be some time before it is out of the hands of the Receiver. The market has been quick to sense the value of the company’s “ wonderheat “ radiator.
Is it aware, however, that this product only represents a small part of the company’s total production? Unless another company is prepared to amalgamate with A. E. Goodwin, it will be some time before the present price can be justified by dividends.
Euston Lead now seems to be getting along nicely with production. Rising cost caused it to under-estimate its capital requirements, and, when underwriting of an issue became difficult, the company approached the Commonwealth Bank.
That shows clearly the benefit that the Commonwealth Bank is to this country. [Extension of time granted.] I am sure that the Minister for Social Services (Senator Spooner) who has had considerable experience of company matters, will concede that, occasionally, business organizations find themselves in financial difficulties through no fault of their own. There are many reasons for that. They include such disabilities as shortages of labour and raw materials. In such circumstances, the assistance of the Commonwealth Bank is of great value, not only to the company concerned, but also in the development of this country, the employment of our people, and the general prosperity of Australia. No doubt the Minister, in his reply, will endeavour to justify the proposed change of control of the bank, but I am sure he will admit that, under the present system, nothing has been done by the bank, either internally, or in its control of the private banks, which warrants criticism. If I am wrong in that assumption, I invite the Minister to show me where I am wrong, it is quite clear that private banking interests are not satisfied with the present method of control. There was abundant evidence of that during the recent Commonwealth election campaign. The private banks and other financial institutions not only provided huge sums of money to assist the Liberal party and the Australian Country party, but they also arranged for members of their staffs to be placed at the disposal of the conservatives for electioneering purposes.
– Australian Workers Union organizers were doing the same kind of work.
– The Royal Commission on Monetary and Banking Systems that was appointed in 1935 by an administration of the same political colour as the present Government declared that private trading banks were a semi-public utility. I think that that statement is rather important, and I shall quote from the commission’s report. Under the heading, “ Conclusions and Recommendations “, paragraph 653, which is entitled “Regulation of Bank Profits “, states -
Under modern industrial conditions practically no branch of industry can be carried on without adequate supplies of bank credit. In practice this is controlled by the trading banks, and in our opinion, therefore, those banks should be regarded as enjoying a privileged position which closely resembles that of a public utility. They are entitled to a fair return for the services which they render. If our recommendations relating to the statement of the profit and loss account are adopted, the actual profits will be disclosed. If these are found to exceed what may be regarded as a fair return for the services rendered, the Government should consider whether the profits of the trading banks should be regulated or limited as in the case of some public utility.
That is a very clear recommendation by the royal commission. I have cited evidence this afternoon, including some from the report of the royal commission, to show that private banks would not invest their money in a particular State when conditions were not prosperous in that State but preferred to invest it in another State where there was the prospect of a better return on their money. Is that consistent with the function of a public utility? I suggest that the conduct of the trading banks does not in any way resemble the role discharged by. public utilities in the community. Those who invest in shares in trading banks or in any other enterprise - and this remark could apply to myself - do not do so for the benefit of the country, but for personal profit and gain. That cannot be denied. What semblance of public duty has been exhibited by the trading banks in the past? Of course, I have a full appreciation of the assistance rendered by the trading banks to the anti-Labour parties during the recent election campaign, and we all know that the Government feels itself impelled to reward that assistance. No one will deny that representatives of the trading banks went from house to house and from door to door in every city and town in Australia inciting people to vote against the Labour party. They did not do that without hope of reward.
In moving the second reading of the bill, the Minister said that the five “ outside “ members of the proposed board will not be representative of any sectional interests in the country. That provision is in keeping with the recommendation of the royal commission to which I have already referred. The Minister also said that the five members will not have any association with trading banks; but will the Government know whether or not any individual who is appointed to the proposed board has any shares in a trading bank?
– The bill provides for that.
– The bill provides that they shall not have any association with banking, and that provision is in accordance with the recommendation of the royal commission. In any event, I agree that it is highly undesirable that the members appointed should have any association with banking. However, there is nol bing to prevent those members, or any of them, from holding shares in a trading bank. Notwithstanding the legal knowledge possessed by the Attorney-General (Senator Spicer) and Senator Wright, I defy them to tell me how it will be practicable to prevent a person who holds shares in a trading bank from being appointed to the proposed board. Of course, I concede that there is nothing wrong in a person investing his money in a trading bank or in any other concern. The point I make is that people do not invest their money in banks in order to render any service to the country, but in order to make a profit.
– Does the honorable senator object to profit?
– No. I said earlier, however, that no one who purchases shares in a business does so in order to serve the nation. The reason why people purchase shares is that they hope to obtain some financial return. I thought that I had made that clear. There have been instances of people in high positions who had some association with hanking legislation having been interested, directly or indirectly, in banking through the ownership of shares in trading banks. However, I do not suppose that members of the Opposition - even the legal members of the Opposition - know anything about that matter ! To repeat the point that I have already made, whilst I do not suggest that there is any harm in an individual holding shares in a trading bank or in any other concern, in the opinion of the Australian Labour party no person who holds a share in a trading bank should be a member of the board that will determine the policy of the Commonwealth Bank. I have already stated that the five “ secret “ members to be appointed to the proposed board will undoubtedly hold the same views as the conservative political parties of this country. When I say “ secret “, I have no doubt that when the appointments are made they will be as big an atomic shock to this country as has been the Communist Party Dissolution Bill and the Constitution Alteration (Avoidance of Double Dissolution Deadlocks) Bill that have just been introduced to the Parliament. Naturally it is to the interest of the conservatives of this country to restrict the activities of the Commonwealth Bank and, if possible, to destroy that institution. I ask quite sincerely: Is it to be expected that the representatives of the conservatives in the Parliament will favour the Commonwealth Bank, which is the greatest socialist institution in Australia? Both the Prime Minister and the Treasurer have stated very definitely that they favour free enterprise and are opposed to socialism.
– Hear, hear!
– What is the answer then to the future of the Commonwealth Bank, which is a socialist institution? Because it is a socialist institution it is hated by the Prime Minister, the Treasurer, the Government and Senator Wright, and all other conservatives. What will the Government do with the hank? Undoubtedly it will do everything possible to retard the progress of the Commonwealth Bank in the interests of the private financial institutions of this country.
As I have already pointed out, the Commonwealth Bank has been extremely successful, particularly since the passage of the Comonwealth Bank Act 1945. The Government and its supporters believe that its progress should be impeded because it will be difficult to destroy the hank later on. Indeed, it has been suggested that a member of the House of Representatives, the honorable member for Mackellar (Mr. Wentworth), will resign his seat in order to become a member of the proposed board, and I should like the Minister later to give me an assurance that that is not intended. Sitting suspended from 5.59 to 8 p.m.
– When the sitting was suspended I was dealing with the proposed new section 9a, sub-sections (1.) and (2.) of which read a3 follows: - (1.) The Bank shall, from time to time, inform the Government of the monetary and banking policy of the Bank. (2.) In the event of a difference of opinion between the Government and the Bank as to whether the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia, the Treasurer and the Board shall endeavour to reach agreement.
I confirm the statement that I made earlier that, under this bill, the Treasurer will be able, through the Secretary to the Department of the Treasury, who is a highly efficient and capable official, to direct the five private individuals who will be members of the board to formulate a policy that may restrict the activities of the bank, but be will not be forced to accept responsibility for it. When the present Government parties were in Opposition, they condemned the principle of direction of the bank’s policy by the Treasurer. It will be of interest to recall some of the views that were expressed by honorable senators opposite upon the Commonwealth Bank Act 1945. The Minister for Repatriation (Senator Cooper), for example, made the following statement: -
That brings the bank, through direct intervention of the Treasurer, under political control.
In 1945 the present Government parties expressed their violent opposition to direction of the policy of the bank by the Treasurer, but this bill will not remove that power from the Treasurer. It will leave him with the right, through the board, to override the management of the bank. That was the very thing that the present Government parties opposed strenuously in 1945. The bill will give the Treasurer the right to overrule, not the Governor of the bank but the members of the board, should he disagree with them. The proposal that Executive Council minutes should be tabled in the Parliament is futile. As I have already said, when a decision is made by the Executive Council the Parliament may not be in session and it may be many months before an opportunity presents itself for the Parliament to review the decision. That procedure would be useless in the case of important financial decisions that have to be made in haste. If the Treasurer desires to overrule the board, he will be able to do so under the provisions of this bill, just as, under the provisions of the principal act, as amended by the act of 1945, he could overrule the Governor of the bank. That is the only difference. The fina! decision upon national financial matters should rest always with the government of the day, regardless of its political colour, because it is charged with the responsibility for governing the country. A government has many financial decisions to make, and it would be fatal to the economic interests of this country if those decisions had to remain in doubt pending a debate in the Parliament.
The Leader of the Opposition in the House of Representatives (Mr. Chifley) has made the following statement : -
During the eight years that I was Treasurer, including the period of four years since the 1045 Commonwealth Bank Art has been in operation, I did not at any time overrule the
Governor of the Commonwealth Bank. There was never any need for me to do so because I was always able to come to a satisfactory decision. That observation applies in respect of not only Or. Coombs and Mr. Armitage who preceded him as Governor of the bank, *mt even when there was a Commonwealth Bank Board in existence. I have never issued a written instruction yet. I have expressed any views about what I thought should be done but at no time was it necessary for me to <exercise that particular power.
The Labour party believes ‘that the Commonwealth Bank should be entirely free of interference from or control by -outside interests, that its function should be to serve all the people, wealthy and poor alike, and that it should advise the Government on all financial transactions. It is absolutely essential to the best interests of Australia that this great national institution should have, to a large degree, the advice of the Treasurer. There is ample evidence available that the Commonwealth Bank is functioning in the best interests of the Australian people. On the Government side, the Treasurer has the other members of Cabinet to assist him. Associated with the Commonwealth Bank, there are men of great ability. They are the Governor and the Deputy Governor of the bank and the manager of the Industrial Finance Department. The Governor also has available to him the advice of the bank’s economic adviser, Professor Melville. Those are men of outstanding capacity, who would be worth much more to private enterprise than they are receiving from the Government. It would be a tragic loss to the Commonwealth Bank and to the nation if their services were not available.
The Opposition proposes to oppose all clauses of the bill that make provision for the control of the Commonwealth Bank by a board. We claim that the establishment of a board would impair the efficiency of the present management of the bank. During the depression, housing schemes and public works schemes were denied to the people of Australia by the refusal of the Commonwealth Bank Board to assist in financing such projects, the cost of which would have been less than one-tenth of the cost of the Snowy Mountains hydro-electric scheme. The Opposition believes that a great disservice would be done to this country if the legislation, in its present form, providing for the establishment of a Commonwealth Bank Board, were placed upon the statutebook, Therefore, as I have said, we propose to oppose the establishment of a board. I am convinced that the object of the Government in seeking to appoint a board is to restrict the progress of the Commonwealth Bank, and in my opinion it could not do a greater disservice to this country. I say, “ Hands off the people’s bank, hands off the Commonwealth Bank” - the bank which has played such an important part in the defence of Australia and which has made a major contribution to the industrial life and national development of this great country of ours.
.- This bill is a further instalment in the implementation of the policy upon which this Government was elected by the people of Australia at the recent general election. Like other measures that have been introduced into the Parliament, it is entirely in accord with the policy that the present Government parties then propounded. If we believe in the principles of democracy - and I shall assume that members of the Opposition still believe in them, although I have very grave doubts about it - it must be perfectly clear that if this chamber refuses to give effect to this measure it will be refusing to accede to the wishes of the electors of this country.
The bill can conveniently be divided into two parts. The first part to which T wish to make some reference is clause 8. It is a simple clause, expressed in very few words, but it is one that is of great importance in the political history of this country. It reads as follows : -
The Banking Act 194” is repealed.
It is designed to expunge from the statutebook a measure that was enacted when the Labour party was in power.
– We raise no objection to the repeal of that act.
– That is no reason why I should not make a few remarks, which may not be very palatable to the Opposition, upon the legislation that it is proposed to repeal and the circumstances in which the Labour party sought to force it upon an unwilling public.
– It was shocking, was it not?
– To be perfectly frank, in my view it was. It is worth while to recall the circumstances in which that measure had its birth. If I remember correctly, the position was that a decision was given by the High Court in relation to the invalidity of a section of the Commonwealth Bank Act 1945, and within - at the most - 4S hours of the announcement of that decision, the then Prime Minister, without consulting his party and without any mandate from the people of Australia-
– Who told the Minister that- he did not consult his party?
– I should he interested to receive evidence from the Opposition that he did so. If I remember aright, the Parliament, was not in session at the time and Cabinet was not meeting. The decision of the High Court was announced on a Thursday morning and it was reported in the press on Saturday evening that the then Prime Minister had decided that the banking structure of this country was to be nationalized.
– A one-man decision.
– It was an excellent example of one-man control. Without any mandate from the people and without the approval of the party of which he was the leader-
– That is not correct.
– I suggest that the decision was made without first seeking the approval of the party. From that point onwards, the Labour party resorted to every device of which it could think to impose upon the people of this country a banking structure that they did not desire and to which it was perfectly clear that they were completely opposed.
– It was agreed to at one of our conferences.
– At another conference it was decided that Labour should support the socialization of the means of production, distribution and exchangeHonorable senators opposite find it convenient at times to run away from the plank of the party that they support.
– That is not fair.
– It is well that the people of this country should be reminded of the history of this matter. At no time has Labour demonstrated a very keen desire to maintain the principles and practices of democracy. On the contrary, it demonstrated perfectly clearly that it was prepared to impose upon the people of Australia legislation about which they had never been consulted. At the time, Labour declared that the eggs were going to be scrambled, and that they could not be unscrambled no matter what might be the result of the election to take place in 1949. Fortunately for the preservation of the freedom of the Australian people, the powers’ of the Parliament are limited by the Constitution. The people can resort to the courts of this country, and to the Privy Council in a case such as that, in order to prevent the Government from pursuing an unlawful course. That is what saved the people of this country from the nationalization of the banking structure, which a they did not desire. We were saved from the complete nationalization of banking in this country, and we can now look forward to an era in which the banking structure will, quite properly, be carried on subject to the control of a central bank. The ordinary banking activities will be carried on by private banks for the benefit of the people of this country.
I shall now refer to the other important provision of this bill, that which provides for the establishment of a board to direct the activities of the Commonwealth Bank in place of one man, the Governor of the bank, who performs those functions to-day. I must confess that I have always found it very puzzling- indeed to understand why it is that, in relation to one of the most important institutions in this country, the Labourparty insists on one-man control. The main issue between us is whether the direction of the Commonwealth Bank isto be in the hands of a Governor, subject to the Parliament, or in the hands of a hoard, subject to the Parliament-
– Supposing the Parliament is not sitting?
– My friend the Leader of the Opposition (Senator Ashley) emphasized this afternoon the very important functions that this institution performs in thi3 country. I venture to say that no other institution, outside the Parliament, is more important from the point of view of the welfare of the people of Australia, than the Commonwealth Bank. Therefore its management is a matter of supreme importance.
– So it was during the depression.
– It is strange that nowhere else in the world, outside perhaps Communist-controlled territory, has an institution of this kind been placed under one-man control. I challenge the Opposition to cite one instance of an institution of this character, at least anywhere in the democratic world, which is under the control of a single .person called a Governor, or with any other title. Although the Bank of England was nationalized the Parliament of the United Kingdom never dreamt of putting it under one-man control. The Federal Reserve Bank of the United States of America is not controlled by one man. I suggest that the Commonwealth Bank is unique in that respect. It is not uninteresting to speculate why that is so. I have given some thought to the matter and I believe, quite seriously, that it is due to the innate conservatism which characterizes the Labour party in this country. By that I mean that its members never learn ; their ideas never change despite changing conditions and circumstances.
In 1911 the Labour party established the Commonwealth Bank, then a very small institution, but destined to grow. At that time it was merely a trading and savings bank, with a capital of £1,000,000. In 1911 the control of the bank was placed in the hands of a very worthy gentleman, Mr. Miller, later Sir Denison Miller. Since then the members of the Australian Labour party have never been able to get it out of their minds that the proper way to run the Commonwealth Bank is by one-man control. Honorable senators opposite forget that this institution has ceased to be merely a trading bank and a savings bank, ft has become the pivot of the banking system in this country. It performs some of the most important functions in this community. Forgetting all those things honorable senators opposite still say, in effect, “ “We can run the Commonwealth Bank in exactly the same way as when it was started in 1911, when the institution was of little consequence to the people of this country as a whole”. Why is it that one-man control should be applied to the central bank in this country, but not to anything else ? Only a few years ago - just prior to the introduction by Labour of the 1947 banking legislation - a government airline service was established by Labour. It was placed not under one-man control, but under a commission. If that principle is sound in respect of airlines and other activities in this country that were established by the Labour administration, it is equally sound in relation to this important institution. It seems to me that no argument at all can be advanced in favour of the view that the interests of the people of this country would be better served by the bank continuing to be controlled by a governor rather than by a board.
The Leader of the Opposition has relied at length on the report of the Royal Commission on Banking and Monetary Systems. One would have thought when he outlined its findings to-day that its report was virtually the bible on this subject. I propose to turn to it now because the proposal that we are debating to-night is in conformity with the recommendations of that commission. The commission published a report, a copy of which I have before me. It did not say, “ Put this institution under the control of one individual “. The Leader of the Opposition did not read all of the relevant portions of the report. The portion that I shall now cite refers to the method of government of the Commonwealth Bank. Paragraph 575 of the report reads -
The present method of government of the Commonwealth Bank is by a Board, appointed by the Commonwealth Government, and consisting of a Governor, the Secretary to the Treasury, and six Directors, who hold office for a term of years and retire in rotation. The Board elects its own Chairman. We are of opinion that this method of government is generally satisfactory.
SenatorFraser. - What was said in the minority report?
– I have more interest in majorities than in minorities, and it is a pity that the Labour party does not pay more attention to the will of the majority of the people. Paragraph 576 of the report is as follows: -
We recommend -
1 ) The Governor should be Chairman of the Board by virtue of his office and should possess qualifications and receive a salary commensurate with the importance of the office. The appointment of the Governor should not be made on the basis of seniority, nor is it even essential that he should already be in the service of the Bank.
The six Directors other than the Governor and the Secretary to the treasury should be appointed for a term of six years, instead of seven as at present, one should retire each year, and be eligible for reappointment, but provision should be made that no director shall continue to hold office after reaching the age of 70.
That is the recommendation of a majority of the commission, and the bill now before the Senate conforms in principle with the recommendation. There is no support whatever in the commission’s report for the idea that the bank should be placed under the control of one person. Surely there is merit in the conception that the important policies which the Commonwealth Bank has to develop and apply should be the product of the wisdom of a number of men. Surely there is some safety in numbers in a matter of this kind. I do not care how wise the Governor may be, or how good the Advisory Committee may be-
– The Advisory Committee has done good work.
– I am concerned with the future, and I am not prepared to support the view that we should continue to take the risk of leaving this important institution under the control of a Governor. The Governor will not always he the same person as now. To-day, it is Dr. Coombs: to-morrow it may be Mr. Chifley, and the next day it may be Mr. Menzies. I do not think that honorable senators opposite would be so enthusiastic in their support of one-man control if the man in question had not been appointed by their own Government. However that may be, it would be flying in the face of experience to say, in effect : “ We, in Australa, are the wisest people in the world, we know how to run a central bank, and we do not intend to run it as such banks are run in the older countries where they have had centuries of experience. We are prepared to put all our eggs in one basket. We are prepared to take the risk of placing our central bank under the control of one person, although we have the opportunity to place it under the control of a board of competent persons who, by conferring together, might be able to deal much more satisfactorily with the problems that confront them “. Senator Ashley commended the present members of the Advisory Committee. I have nothing against them, but I would feel much easier in mind if those very estimable persons were not merely advisers to the Governor, but were taking part with him in the management of the bank, and taking responsibility for the formulation of policy. If these men are as good as Senator Ashley has said - and I do not dispute it - surely we may expect to get better results if they and the Governor are together responsible for the control of the bank, than if they are mere advisers, and the Governor himself is the person, who, in the end, has to take responsibility for the formulalation of policy.
I now come to those provisions in the bill designed to deal with the situation when a difference arises, as it may, between the bank board on the one hand and the Government of the day on the other. Under the law as it now stands, it is provided that in the event of a dispute between the bank and the Government, the matter shall be decided by the Treasurer, which means, in effect, by the government of the day. It could, of course, be determined behind closed doors, the people having no knowledge of the matter in dispute.
– What about Parliament?
– I am coming to that. We believe that, in the final analysis, the Parliament, consisting of the elected representatives of the people, should have an opportunity to decide such a dispute, and certain provisions have been introduced into the bill to give effect to that principle. Thus, instead of a dispute being decided behind closed doors by the Treasurer, instead of having, in effect, one-man control, the elected representatives of the people in the Parliament will become aware of the nature of the dispute, and once they are in possession of that knowledge the matter will be in their hands for determination.
– They will not be able to alter the decision.
– Of course they will.
Opposition Senators interjecting,
– There are too many interjections. I ask honorable senators to give the Minister a hearing. Honorable senators on myleft will have an opportunity later to place their case before the Senate and the people of Australia.
– The bill provides that, in the event of a dispute between the bank board and the Government relevant documents shall be laid before the Parliament from which the Parliament and the public may learn the nature of the dispute that has arisen. Such a dispute could arise only over some great issue, which would be of tremendous importance to the people of this country. The moment that the relevant documents were laid upon the table in each house of the Parliament, everybody in Australia would know what was the nature of the dispute, and it wouldprobably become a matter for determination in the Parliament whether the course proposed by the Government was in the best interest of the people, or whether the course that the bank board wished to follow was more likely to prove the proper one.
-Where is that provided for in the bill ?
– It is to be found in proposed new section 9a, sub-section (5.) of which is as follows: -
The Treasurer shall inform the Bank of the policy so determined and shall at the same time inform the Bank that the Government accepts responsibility for the adoption by the
Bank of that policy and will take such action (if any) within its powers as the Government considers to he necessary byreason of the adoption of that policy.
Sub-section (7.) states -
The Treasurer shall cause to be laid before each House of the Parliament, within fifteen sitting days of that House after the Treasurer has informed the Bank of the policy determined under sub-section (4.) of this section -
a copy of the order determining the policy;
a statement by the Government in relation to the matter in respect of which the difference of opinion arose: and
a copy of the statement furnished to the Treasurer by the Board under sub-section (3.) of this section.
– The documents may be laid on the table, but what action can the Parliament take?
– The matter can be debated. If the dispute were in relation to some hot political subject the Opposition could, and probably would if it were like the present Opposition, submit a motion of no-confidence in the Government. The bill makes provision for applying the proper parliamentary remedy, and the Parliament, being fully acquainted with the dispute, would be in a position to deal with it. Surely I do not have to instruct Senator Ashley in the ways of the Parliament. He is not such an innocent as all that. Suppose a situation developed similar to that which existed in 1931, about which we have heard so much. We have been told that there was then a dispute between the Commonwealth Bank Board and the government of the day. Supposing an act like this were in operation and the Government had instructed the bank board to issue £18,000,000 in fiduciary notes and had laid before the Parliament the papers relating to that decision. Assuming that it was a hot political issue, as it was in 1931, the moment that was done, the Opposition would move that the Government had lost the confidence of the House. The whole matter would be debated in Parliament and if the Opposition could convince the majority of the members of the Parliament that the Government was in the wrong and that the bank was in the right, it would carry its motion and there would be an election. Surely nothing is more democratic than that.
I have spoken about the issues of the year 1931 because they have been referred to by the Leader of the Opposition in this chamber. For years the people of this country have been fed with fairy tales from the Labour party about the events of that year. There are one or two things about 1931 that are worth recalling. The Opposition has stated that the bank board of that day did some terrible things to the people of this country. I assume that the people who lived in the conditions of that year were in a. better position to judge that question than we are to-day. All questions have to he determined very largely in the atmosphere which exists at the particular moment, and the truth is that if the bank board took the action of which the Opposition complains so persistently, the electors would have an opportunity to express their judgment on the issue and they may not support the government of the day. That is overlooked by the Opposition when its members discuss this problem. In relation to an issue such as that, one cannot re-create the exact circumstances which existed in 1931. It would be strange if bankers and those who control monetary policy did not learn something from that experience. It is just as well that there are people who can learn from experience even if they cannot be found in the Labour party. I do not assume necessarily that the remedies which were applied in 1931 would be applied by the same people to-day. But I insist that after this great issue had arisen and after the Commonwealth Bank Board had refused advances sought by the Government, and declared that government expenditure must be reduced, the Government did not take the decision willingly, it was defeated in the- House of Representatives and an election was held. As a result, the people destroyed the Scullin Labour Government. In other words, the people did not support the policy that the Government was putting forward. If they supported anybody, they supported the bank board of that time on that issue.
That is merely a demonstration of the fact that when these issues arise it well that the chosen representatives of the people in the Parliament should have an opportunity in the first place to express their views. If they do, it may well be that the people of the country at large will also get an opportunity to express their view. As far as that broad matter is concerned, this bill simply insists that in the case of a dispute between the bank board and the Government, the Government should be in a position to direct the hoard as to the course that it will pursue. That is the position to-day and to that point I think both sides of the chamber are in agreement. The Leader of the Opposition in the Senate and other members of the Opposition believe in the principle that in the final analysis the view of the government of the day must prevail. This section goes just one step further. It provides that if the Government intends to override the members of the bank board and assume that responsibility on its own shoulders, it must tell the chosen representatives of the people in the Parliament what it has done and why. By that means the Government will give to the people’s chosen representatives the opportunity to express their view on the Government’s action. The Leader of the Opposition has said in the course of the debate in this chamber that the statements that may be laid on the table cannot be disallowed because they are not regulations. That is perfectly true, but the whole purpose of this sub-section is to have the matter placed before Parliament so that the Parliament will have the opportunity to discuss the issues.
– My point is that effective action could not be taken.
– Of course effective action could be taken. Surely such an interjection is an acknowledgement of complete ineptitude on the part of one who has been in Parliament for a generation. It is suggested by the responsible leader of a political party that when something is presented to both Houses of the Parliament nothing can be done about it. That is just plain nonsense.
– Honorable senators could only talk about it.
– There are times when honorable senators can do more than talk; and the issues are not always determined by some party alignment which might exist prior to the raising of the particular issue in question.
– They never twist on banking. They are always alined on that question.
– I have endeavoured, perhaps without success, to enlighten honorable senators on the Opposition side as to the precise nature of these provisions and what they are intended to do. Honorable senators hear mixed views from the Leader of the Opposition. As I understand it, he believes that in the final analysis, governments should control these big decisions. Yet he went to great pains to criticize the clause in this bill which seeks to establish the bank board upon the ground that it would enable the Government to control the decisions of the bank. The honorable senator said, in effect, “ There will be five non-official members on the board as well as the present five members of the advisory committee, and among the members of the board there will be the representative of the Treasurer. That representative, with the five non-official members, could override the other members. They could insist that the Government policy should be carried out “.
– That is quite correct.
– But when the honorable senator said that, I understood that he was advancing arguments against the proposed section.
– The Leader of the Opposition had a bit both ways.
– That is what the Labour party is continually doing - having a bit each way. But this is :a matter of such transcendant importance that it should be approached broadly and not in such a narrow-minded fashion. Does this bill provide for the people of Australia a secure and sound foundation for a .banking system?
Opposition Senators. - No 1
– Does it give the people a more satisfactory control over this great institution than one-man control?
Opposition Senators. - No !
– I suggest that it does. The honorable senators who have just said “ No “ do not advance one reason why resort should not be made to the board.
– Has the AttorneyGeneral any complaints about control by the Governor of the bank since 1945?
– I do not think that I have. But what of it? Because there happens to have been a period of four years under a particular Governor, and in that period of unparalleled prosperity there have been no complaints about him, is that any reason why it should be concluded that the same position will be reached in regard to the same Governor over the next ten years? That implies dependence on the decisions and responsibility of one individual.
– The honorable senator says “No” but I will be interested to know why he says that. The management and control of the bank to-day is in the hands of the Governor.
Honorable senators interjecting,
– Order ! There is too much interjection. One honorable senator is constantly interjecting.
– I am inclined to rise to order.
– What is the honorable senator’s point of order?
– My point is that the honorable senator said that I interjected “ No “, and that he would be interested to know why I said “ No “. That is provoking me to an answer. The point that I am making is that the Attorney-General has no right to invite me to answer his statements, and so have me called to order by the Chair.
– I remind the honorable senator that he has interjected constantly in the course of the AttorneyGeneral’s speech.
– The Leader of the Opposition was subjected to interjections throughout his speech.
– There have been many interjections from both sides of this chamber. I have tried to be as fair as possible, but all interjections are disorderly. Obviously, I cannot remain silent when speeches are being consistently interrupted by interjections. The point that Senator Large has raised is not a point of order.
– I apologize to my friend Senator Large for having provoked him into making interjections. What I was saying, and what I shall’ persist in saying, is that the management of the Commonwealth Bank is at present the responsibility of one man, the Governor. It is quite true that there is an Advisory Council, but that council does not make decisions. They are made by the Governor alone, and we object to that system. We believe that the interests of the people will be much better served if the management of the bank is in the hands of a board. Now, I turn to the other side of the picture. What is the procedure to-day when a dispute occurs between the Governor of the Bank and the Treasurer? The Treasurer determines what the policy of the bank shall be. He can override the Governor. There again we object to one-man control. We believe that procedure should be followed which will enable the Parliament to express its view on disputes that may arise.
– Supposing the Parliament is in recess?
– The Parliament may be summoned at any time. When great issues arise - and this would be a great issue - the public can demand that the Parliament be summoned. In that respect, the bill could not make better provision than it does. It says that within fifteen sitting days, the documents relating to a dispute shall he laid before both Houses of the Parliament. Both Houses would then have a full opportunity to discuss the matter. This bill is designed to ensure that the Commonwealth Bank shall continue to be the great and important institution that it is in this country to-day, and that it shall be governed in such a manner that the people of this country will have the greatest possible confidence in the decisions that will be made by the body of men whose responsibility it will be to carry out the policy of the bank. It is most important that the public should have complete confidence in decisions relating to the policy of the bank. I believe that, in introducing this measure, the Government is: taking a stride forward. It is true that we are restoring to the bank a system of control, similar to that which existed before 1945, but we are doing that becausewe believe that that system is better than the one that the Labour partydevised for the bank originally in 1911.. We realize that the Commonwealth Bank, to-day is not the same institution as that which was established in 19>11.
– Will the proposed board have the same power that theprevious board had, or will it have lesspower ?
– It will have lesspower because there is in this measure,, as there was in the 1945 legislation, a provision that, in the event of a difference of opinion between the Government and the board, the ultimate decision, will rest with the Government, which of course must eventually submit the matter to the Parliament. That is a restriction on the power that the board exercised,, technically or legally, before 1945, and I suggest that that provision, which after all is only in accord with the recommendation of the majority of the Royal Commission on Banking and MonetarySystems, together with the kind of board that will be established, will ensure that the bank shall continue to serve the interests of the people of this country and, what is equally important, that the people of this country shall have continued confidence in those who control the bank’s activities.
– We have just listened to the Attorney-General (Senator Spicer) who, I understand, practices at the bar, and therefore is a barrister, lawyer, or something of that kind.
– Not “ something of that kind “, please.
– I should not like any one to think that I am trying tobelittle the ability of the AttorneyGeneral. Let me put it in another way.The honorable senator practises in the highest courts of the land, and, to do that,, he must have had a specialized training. To-night however, he has played on words as all lawyers do, and,, again like ail lawyers, he has not always stuck absolutely to the truth. The honorable senator said that on a certain Thursday the High Court had announced its decision on the validity of part of the 1945 legislation, and that on the following Saturday the then Prime Minister (Mr. Chifley) had stated without having consulted any body at all, that the Labour Government would nationalize banking. That allegation is far from the truth, as are other statements of the AttorneyGeneral to which I shall refer later. On the Friday following the High Court’s decision, there was a Cabinet meeting, and the statement made by Mr. Chifley on the following day was that a proposal to nationalize banking in this country would be submitted to caucus.
– And it was submitted.
– Yes. It was submitted to the members of this Parliament who supported the government of th, day. In addition, consultations were held amongst the constituent organizations of the Australian Labour party. The Attorney-General’s statement about the announcement of Labour’s decision to nationalize banking was made first by the press, as usual, in headlines. The Attorney-General apparently fell into the trap that has caught so many other honorable senators opposite. The honorable senator also claimed that the Commonwealth Bank is at present under oneman control. That is not so. Another mis-statement made by the honorable senator was that the Labour Government made its nationalization proposals merely because the High Court had ruled against it ou one phase of the 1945 legislation. He knows quite well of course, although he did not say so to-night, that a challenge to all the vital principles of the 1945 legislation was filed with the High Court at that time.
– Not in that case.
– -It has never been withdrawn. Labour’s decision to nationalize banking did not result entirely from the High Court’s decision to which 1 have referred. It was made because the entire banking control by the Commonwealth Bank was being challenged.
The Attorney-General said that the issue now before the Senate was one-man control against board control, and that the decisions of the board would be subject to the will of the Parliament. Every honorable senator who has read the bil J knows of course that the board’s decisions will not be subject to the will of the Parliament at all. Sub-sections (5.) and (6.) of proposed new section 9a state - (5.) The Treasurer shall inform the Bank of the policy so determined and shall at the same time inform the Bank that the Government accepts responsibility for the adoption by the Bank of that policy and will take such action (if any) within its powers as the Government considers to be necessary by reason of the adoption of that policy. (6.) The Bank shall thereupon give effect to the policy determined by the order and shall, if the order so requires, continue to give effect to that policy while the order remains in operation.
Clearly the Parliament will not have any authority. The Attorney-General said that “the documents relating to a dispute would be tabled in each House. I shall not argue at length about what will happen if the Parliament is not in session when a dispute arises, but everybody knows that once a policy has been put into operation during a recess, that policy will not be reviewed until the Parliament meets in the ordinary course. The Attorney-General said that when the documents were tabled, a motion of nc confidence in the Government could bemoved in either House. Obviously such a motion would not affect the Government’s decision in any dispute that may have arisen with the Commonwealth Bank Board, and would only be a roundabout way of dealing with the matter. The Parliament would still not have any control over the policy of the bank. I also point out that although the bill provides that the bank shall inform the Treasurer from time to time of the policy of the bank, the method of doing so is most round-about. Under the present arrangements co-operation exists between the Treasurer and the Governor of the bank, and if a difference of opinion arises the Treasurer must take responsibility for the financial and economic policy of the nation. This measure provides that in the event of a dispute between the Treasurer and the proposed bank board the matter shall be referred to the GovernorGeneral, which means that the Governor-General may be drawn into political controversies. That is a most objectionable feature of the Government’s proposals, but it can be overcome by amending that particular provision and allowing the present system of cooperation between the Treasurer and the Commonwealth Bank to continue.
The Attorney-General also said that members of the Australian Labour party never learned anything and never changed their minds, but while I have been sitting in my place I have heard Government supporters almost continuously twitting members of the Opposition with having changed their minds on another matter-
– And they will change their minds again on that issue.
– That may be so, but why accuse us of being unable to learn or to change our minds while attacking us because we have the courage to do so in certain other directions? The Attorney-General also said that he is not concerned with minority reports, and that if members of the Australian Labour party concerned themselves less with minority reports they would be better informed and would do more for the country. Of course, he was not hinting at the minority report that was quoted extensively in the debate on other legislation that was recently introduced to this chamber. However, the fact remains that that legislation was based on a minority report, which had been virtually adopted by honorable senators opposite-
– Particularly by the legal gentlemen opposite.
– That is so. The Attorney-General chose his words very carefully when he said that the proposed board would control the policy of the bank, and urged that board control is preferable to the present system of control by one. individual. Generally speaking, the only matter at issue is control of the financial policy as it affects the national economy. The actual administration of whatever policy may be decided upon for the bank will inevitably be carried out by one individual, and even if a board were appointed one individual would still administer the policy laid down by the board. However, the AttorneyGeneral endeavoured to lead us to believe that the board would actually administer the bank. When the Minister for Social Services (Senator Spooner) introduced the bill he said -
Collective responsibility for the determination of policy will be restored by the reestablishment of a board comprising men of wide knowledge and experience, which will ensure the integration of the policy of the bank with economic and financial policy generally without impairing the independence of the bank.
While policy will be determined by the board, the day-to-day administration of the bank will be in the hands of the Governor.
It is clear, therefore, that the administration of the bank will still be carried on by the Governor of the bank, irrespective of the existence of the proposed board, just as it was in 1924. The Minister also said -
The Government is convinced that the primary responsibility of the Commonwealth Bank is its responsibility as a central bank for the continued health and progress of the banking system as a whole. Part of the strength of the Commonwealth Bank as a central bank is, however, derived from the direct contact with the financial and industrial system which it maintains through its trading sections. The proposals of the Government are designed to strengthen the Commonwealth Bank both as Australia s central bank and as an essential part of the commercial banking structure of the country.
What does that mean? It is quite plain that by transforming the Commonwealth Bank into a central bank the Government proposes to permit private financial interests, through the instrumentality of the proposed board, to dominate the economic life of the community. Let us recall what happened under the previous board. The Attorney-General, and every honorable senator who has any knowledge of the recent economic history of this country and the activities of the Commonwealth Bank, will admit that while that bank functioned under a governor, and without the interference of a hoard, it progressed splendidly. From 1924, when the former board was established, the bank’s activities were confined within the restrictive policy laid down by the board. Restrictions were placed upon the trading bank section, so that citizens were discouraged from opening trading accounts with the bank.
Under the orders issued to the officers of the hank by the board people who desired to open an account with the bank were told that they could not do so if they had previously had an account with a trading bank, and even if they had not had such an account, they should take their account to a trading bank. Notwithstanding such restrictions the bank continued to make good progress. The members of the board, who had been appointed by the Bruce-Page Government, and occupied a strategic position in the financial and economic structure of the country, so directed the financial policy of the country that although our storehouses became filled with wheat, grain, dairy produce, boots, shoes, and clothing, they could not be sold because the wage-earners of this country simply could not obtain work and therefore had no money to spend on the purchase of goods. Sir Robert Gibson, who was then chairman of the board, said that if certain things were done the Commonwealth Bank would co-operate with the private banks to supply some money to do the job which should have been done before. That was what happened under the previous bank board. Of course, the Attorney-General argued that the Scullin Government which was a Labour administration, should have gone to the people, but he conveniently forgot to mention that the Scullin Government was opposed by a hostile majority in the Senate, which blocked every proposal that it introduced to this chamber. In fact, the Scullin Administration was in much the same position in relation to the Senate as is the present Government, and I hope that the Menzies Government will go out as discredited as did the Scullin administration. The plain fact is that the Scullin Government was not in power but was merely in office because it did not possess a majority in this chamber.
In another flight of words, the Attorney-General said that although he was prepared to give control of the bank to a board he was not prepared to give the control of the bank to the government of the country. He said, in effect : “ The Government might be led by Coombs, by Chifley or by Menzies; but it is far better to place the administration of the bank under stable control by confiding it to a board “. What did he mean ? Does not the Government intend that the board shall control the bank irrespective of, or even in spite of, the government of the day? Even the Minister who introduced the bill admitted that.
To resume the brief account that 1 am giving of the development of the Commonwealth Bank, I remind honorable senators that about 1939 a kind of “ gentleman’s agreement “ to meet wartime emergency conditions was made between the then anti-labour government, of which the present right honorable member for MacPherson (Mr. Fadden’ was Treasurer, and the private financial institutions. That agreement continued to operate until 1945, when it was embodied in the Commonwealth Bank Act of that year. However, an important feature of that legislation, which was introduced by a Labour government, was that it took the control of the bank away from the board. Since then the trading banks have entered the political fray. They went to the courts, and they also financed political campaigns against the previous Labour administration, as was mentioned by the Leader of the Opposition (Senator Ashley). There is no doubt that they expended a great amount of money.
The Sydney Sun of the 31st January, 1950, published an advertisement, apparently paid for by the Union Bank of Australia Limited, containing extracts from a report to the bank’s shareholders by the chairman, Mr. Hugh D. Flowers, who was stated to have said -
We are in full agreement with, and observe closely, the policy indicated by the Commonwealth Bank with regard to advances. Conferences are held at regular intervals between the Governor and the General Managers. We welcome this practice, which helps to maintain the cordial relations that exist between this and the Central Bank.
On that occasion the bank praised the present system, but it made another comment which, I suggest, goes to the root of the matter. It said that there should be some modification of the central bank’s attitude to restrictions on the special accounts. It pointed out that the private banks are compelled to lodge with the
Commonwealth Bank large sums at low rates of interest and are obliged to accept deposits from it on much more onerous terms. It said that it considered that the private banks should be allowed to draw on the special account to meet their needs, as required. That is one of the matters that the banks decided to contest in the High Court. When the Privy Council gave its judgment upon the Banking Act 1947, it held that some sections of the legislation were invalid, but it said that that did not mean that banking controls were invalid. It cited other decisions that it had given to the effect that banking could be controlled. The Commonwealth Bank Act 1945 does control banking, and the Union Bank of Australia Limited has said that something should he done about it.
A report by the chairman of the Bank of Australasia, the Honorable G. 0. Gibbs to the shareholders of the hank, was published in the Daily Mirror of the 27th January, 1950. It appeared in the form of an advertisement inserted in the paper by the bank. The chairman criticized the special accounts system. He pointed out that £29,441,000 of the funds of the bank was compulsorily tied up with the Commonwealth Bank at a rate of interest of one-half of 1 per cent., but if the bank borrowed from the Commonwealth Bank, apparently on the security of its special account, it was charged interest at 3^ per cent, on the loan; I mention in passing that that is in accord with the general policy of the trading banks. If a person deposits money with a trading bank on fixed deposit and then borrows money from the bank on overdraft, he is charged a higher rate of interest on the overdraft than that which he receives in. respect of the money that he has deposited. Th, Honorable G. C. Gibbs is also reported to have said that the trading banks had won a hard and expensive battle with the Australian Government. It cost the banking institutions of this country a great deal of money to fight the Chifley Government, as the chairman of the Bank of Australasia admitted in a report to the shareholders of the bank that was published in the Australian press. Consequently, the private banks now expect the present system of control of banking to be altered.
I point out that at the present time the Australian Government is responsible for making decisions in regard to the exchange rate. Certain groups are now bringing pressure to bear upon it to alter the exchange rate and appreciate the Australian £1. If a Commonwealth Bank Board is appointed, it will be the authority responsible for formulating policy in relation to the exchange rate. The responsibility will be removed from the Government. Doubtless the Government will say that the members of the board, whom they will laud as experts, are the persons to decide what must be done in the best interests of the economy of this country. This bill, if passed in its present form, will enable the Government to “ get out from under “ the responsibility that is cast upon it by the Commonwealth Bank Act 1945.
– The Government will find it much harder than that to get out from under.
– Apparently it wants to find a way out. The private banks desire the special accounts system that is now in operation to be modified. It should not be forgotten that a challenge to that system was filed in the High Court of Australia.
The Commonwealth Bank Act 1945 was approved by the people at the 1946 general elections, when the Labour party was challenged upon it by its opponents. The people were told much more about the situation then than they were told during the last general election campaign. The restricted proposals that were made by the present Prime Minister (Mr. Menzies) and the present Treasurer (Mr. Fadden) in the course of the last general campaign do not, in my opinion, give them a mandate to do what they are now attempting to do. They dealt only with certain phases of the problem.
Proposed new section 26, which deals with disqualifications from membership of the board, reads as follows : -
A person who is a director or employee of a corporation (other than the Bank) the business of which is wholly or mainly that of banking shall not be capable of appointment, or of continuing to act, as a member of the Board.
That sounds very nice. The AttorneyGeneral said that no person engaged in banking would he appointed to the board. Let us consider the ramifications of the private trading banks of this country. The Bank of New South Wales, through its directors, is interlocked with the Australian Mutual Provident Society, the Sydney Morning Herald. Fairfax Proprietary Limited, Royal Insurance Company Limited, McIlraith’s Proprietary Limited, North-Western Pastoral Company, Perpetual Trustee Company Limited, Tooth and Company Limited, and Sydney Smelters. The Government could appoint to the board somebody who was connected with the North- Western Pastoral Company and declare that he was not engaged in banking, yet his interests would be linked with those of the Bank of New South Wales. The ramifications of that bank are so wide that if the Government appointed to the board a person associated with any of the other organizations to which I have referred, it could not be certain that he was not associated with the bank and taking direction from it in relation to the financial policy of Australia.
– It would be something like the Communist organization in Australia.
– Probably the Communists have taken a leaf from the book of the private banks. I do not know. Senator George Rankin seems to know.
The Commercial Banking Company of Sydney Limited is interlocked with the Colonial Sugar Refining Company Limited, United Insurance Company Limited, Perpetual Trustee Company Limited, Tooth and Company Limited, North Coast Steam Navigation Company Limited, the Sydney Morning Herald, Fairfax Proprietary Limited, and John Vicars and Company Proprietary Limited. The English, Scottish and Australian Bank Limited is interlocked with The Australian Estates Company Limited, Anthony Gibbs and Sons (English bankers), the Bank of Westminster, Australian Pastoral Company, Commercial Union Assurance Company Limited, Dunlop Rubber Australia Limited. Imperial Smelters Company Limited, Zinc Corporation Limited, with its link-, with Broken Hill Proprietary Company Limited and its subsidiary companies, Midland Bank, Westminster
Foreign Bank, Bank of New Zealand, New Zealand Loan and Mercantile Agency Company Limited, and many lesser organizations.
The Union Bank of Australia Limited is interlocked, through its directors, with the Gresham Fire and Accident Insurance Society, Dalgety and Company Limited, Vickers Limited - and, through that company, with Broken Hill Proprietary Company Limited and its subsidiaries in the iron and steel industry - the Marine Insurance Company, Westminster Bank, and Glyn Mills and Company. The Bank of Australasia is interlocked with Anthony Gibbs and Company, and was linked with the Bank of England until it was nationalized.
The Commercial Bank of Australasia Limited is interlocked with Hebbern Limited, Metro-Coal Company, and Huddart Parker Limited, with its subsidiaries in coal. It is linked with the sugar industry through Farrymead Sugar Company; with the transport industry through Fleetways Transport Agency Proprietary Limited, Overseas Shipping Representatives Association, United Stevedoring Proprietary Limited, and United Ships Services. It is linked with the assurance industry through Atlas Assurance Company Limited, National Mutual Life Association of Australasia Limited, and South British Insurance Company Limited. It is linked with investment and finance through the Capal Court group of investment companies, and the New Zealand Loan and Mercantile Agency Company Limited. It is linked with the oil industries through Colonial Oil Refineries Limited, and with other industries and utilities through Gollin and Company Proprietary Limited, La Mode Industries, and Metropolitan Gas Company. The banks have very wide ramifications, yet the Government talks of appointing persons to the board who have no connexion with them. The National Bank of Australasia Limited is interlocked with the Herald and Weekly Times Limited and its subsidiaries.
– What does the honorable senator mean by interlocked”?
– I mean that one man, or a number of men, are directors of the respective companies.
– Those directors would be selected as members of the proposed bank board.
– Does the honorable senator imply that because a man is a member of the directorates of various companies, the companies are interlocked ?
– That is precisely what I mean. They are linked in the economic sphere and obey the policy set by the banks.
– The honorable senator could keep on interlocking in that way until his arithmetic ran out.
– The remainder of the companies with which the National Bank of Australasia Limited are interlocked are Australian Newsprint Mills Proprietary Limited, Australian Mutual Provident Society, Goldsbrough Mort and Company Limited, G. J. Coles and Company Limited, Melbourne Steamship Campany Limited, Hobson’s Bay Docks and Engineering Company Proprietary Limited, Metropolitan Gas Company, the Mount Lyell Mining and Railway Company Limited, Mount Pleasant Coke Limited, and Australian Mines and Metals Association. The Queensland National Bank Limited is interlocked with Burns Philp and Company Limited and the numerous industries with which that company is associated, the Queensland Insurance Company Limited, and Airways Limited. The Bank of Adelaide is interlocked with the South Australian Brewing Company Limited, which is a subsidiary of Carlton and United Breweries Limited, which controls breweries in all parts of Australia. If the director of a brewery were appointed to the bank board he could receive his directions from the directorate of the Bank of Adelaide.
– The honorable senator certainly makes life easy.
– The list continues: Australian Alliance Assurance Company, Royal Insurance Company Limited, Bagots Executor and Trustee Company Limited, Executor Trustee and Agency Company of South Australia Limited, Waymouth Motor
Company Limited, Wallaroo-Mount Lyell Fertilizers Limited, Fertilizer Sales Limited, George Wills and Company Limited, Wills Gilchrist and Sanderson, and the South Australian Portland Cement Company Limited. In all of the banks that I have mentioned there are 35 directors who, in addition, are ma the directorates of and form a direct link with shipping, coal, and iron and steel interests, insurance, executor and trustee companies, newspapers, breweries, and pastoral companies. In addition through the subsidiaries of the major companies, they have a direct link with the directing of practically every business, trade and calling in Australia. To make sure that the directing is done correctly and in accordance with policy there is theBankers Association, which, we are- told, “ just meets for fun “.
– Does the honorablesenator suggest that the 35 directors that he has mentioned rule this country ?
– The AttorueyGeneral has asserted that men not associated with the banks will be selected’ for appointment to the bank board.
– If men other than the 35 that I have mentioned are selected we should obtain an independent board-
– The Minister for Social Services is narrowing thefield considerably. The 35 directors that [ have mentioned, together with 47 other gentlemen with whom they are associated, act under the control of the private banking directorates throughout Australia. They are the people who give all thedirections in connexion with the financial policy of the private trading banks in this country. That is the unfortunateaspect of this matter.
– Do I understand the honorable senator to now suggest that the 82 directors that he has mentioned control Australia?
– The relevant section provides that a person whois a director or employee of a corporation other than a bank, the business of which is wholly or mainly that of banking, shall not be capable of appointment. But it does not mention all of the subsidiariesof the banking institutions of this country that I have enumerated. There could be elected to the proposed bani board a person “who was the director of a business interlocked with a bank, and who would take his orders from the private banking institutions in this country. As I have mentioned before, the private banks had control of this country when the previous board was in operation prior to 1942. They controlled strategically the economic life of this country. In effect, they controlled Australia’s financial policy. They made and unmade governments between 1924 and 1939. Yet the Attorney-General has had the audacity to say that we should revert to the old system of control. He claimed that there would be an appropriate safeguard because minutes would be tabled in the Parliament. He suggested that although the Parliament would have some control over those minutes it would have no direct control, that there would be indirect control because a no-confidence motion could be moved against the Government. That would not affect a decision that was made by the Government and acquiesced in by the board. I am not questioning the Government’s desire to do certain things. It has been the policy of honorable senators opposite for some considerable time to allow the control of the .financial policy of this country to be dictated by what they term the financial interests. When the decision to establish a national bank in Australia was taken years ago members of the Australian Labour party were told that they were a lot of dreamers and that people would be able to buy “Fisher’s flimsies “ for about a “ bob “ a sugarbagful. As I have stated previously, time has shown that our fancies of those days have proved of immense value to this country.
– “ Chifley’s flimsies” were not very valuable, either.
– The honor-
Able senator who has just interjected has made a very wild statement. In many instances his statements are as woolly as those of the Attorney-General, who makes one statement one minute and a conflicting one the next minute. If at all possible honorable senators should make only accurate statements. Of course, I realize that any one might make a slip of the tongue occasionally.
– The former Government made a big slip when it agreed with the British Chancellor of the Exchequer, Sir Stafford Cripps, to devalue our currency.
– The dreams of the Australian Labour party when its members were traduced and laughed at and told that they were up in the clouds, have come true. As the Leader of the Opposition rightly said this afternoon, they have proved of immense benefit to the nation. Since the Commonwealth Bank was established it has earned profits aggregating about £85,000,000. Some of those profits were paid into the coffers of the government of the day, some were placed in reserves of the bank, and some were applied to reduce the national debt. That is all a help to the economy of this country. Yet the AttorneyGeneral claims that honorable senators on this side of the chamber never learn. Time and again honorable senators opposite have referred to what they call the hypocrisy of the Labour party. I throw those words back into their teeth. I have illustrated clearly the beliefs of the Labour movement. From time to time it has changed its opinions about various matters according to changing circumstances. The Attorney-General has stated that because control of the Commonwealth Bank was originally vested in a governor, the Labour party still insists upon one-man control. The Minister omitted to mention that the Governor of the Commonwealth Bank consults the Treasurer of the day, who, in turn consults his colleagues in the Ministry. In turn, the government of the day is answerable to the people at least every three years. The position to-day is distinctly different from the practice that obtained between 1913 and 1924 under a Governor, and also between 1924 and 1945 when financial policy was decided by a board. At that time the kind of men - according to their avocations - who could be appointed to the board, was specified. The Attorney-General stated that he believed that it is better to stabilize policy in the hands of a board rather than in changing governments. That is why he mentioned the former Prime Minister (Mr. Chifley), and the present Prime Minister (Mr. Menzies) as possible members of the board with Dr. Coombs the present Governor. He said that control would be far better if placed in the hands of a board that knew something of the matter. That is what we are fighting. We have no quarrel with the other provisions of the bill, one of which repeals the Banking Act 1947. As I have pointed out before, irrespective of what the Attorney-General may consider to be the position, the former Labour Government gained some opinions as a result of the Privy Council decision in connexion with the control of banking in this country. Now, in a snide manner, the bankers of this country are using the present Government in order to regain the control that I have mentioned. We are not prepared to let them do it. That is air there is to the matter. It is futile for the Attorney-General to make threats, because honorable senators on this side of the chamber will call his bluff. I emphasize that threats are futile things. Matters must be handled in a logical and proper way in order that the people will understand the feeling in the political sphere.
I shall now refer briefly to the alteration to the exchange rate. As I have mentioned before, pressure of all descriptions is being ‘brought to bear on the Government, particularly by the newspaper publishers in this country, who control the importation of newsprint, and, to a degree, in association with private banking institutions, the manufacture of newsprint. It has been pointed out before in this Senate that if the £1 is appreciated, those interests stand to make hundreds of thousands of pounds. Those were the interests that refused to give publicity to the Labour party, although we were prepared to pay for it. They now expect some return from the Government. The trading banks expect to be rewarded, also, by being given a say in the control of the Commonwealth Bank. The private banks in Great Britain have their links with hanking institutions in Australia, and they have admitted in their reports that it cost them a tremendous sum of money to defeat the Chifley Government. They, too, want a return for their money. We believe that the Governor of the Com monwealth Bank has done a wonderfully good job in controlling that institution, and in directing the financial policy of the country. So good a job has he done that never once has any disagreement arisen between him and the Treasurer. ‘The directors of the trading banks admit that the present method of control by the Commonwealth Bank is much better than any system previously in operation, but they wish for certain alterations so that they may be able to make more profit out of the people of Australia.
The Government now proposes to vary the procedure laid down in the 1945 act, and to place the Commonwealth Bank under the control of a board. We object to the proposed constitution of the board. Tt will be almost impossible to find men, other than public servants, for appointment to the board who are not connected with some activity that is controlled by financial institutions, whether insurance companies or subsidiary organizations, which are themselves linked with, or in some way controlled by, the trading banks. During the election campaign, the parties that support the present Government told the people that the Labour Government intended to confiscate the savings of the people. As a matter of fact, the savings of the people, whether deposited in the Commonwealth Bank or in any of the trading banks, are guaranteed under the 1945 act, so that persons who have deposited their money, in a trading bank are in no danger of losing it even if the bank should go to the wall. Yet the Attorney-General had the audacity to say that the Labour party, which was responsible for the 1945 legislation, has never learned from experience. The Labour party recalls what happened during the economic depressions in the past, from that of the 90’s to the most recent one in 1931-32, and the Labour Government introduced the 1945 banking legislation in order to protect the savings of the people and the economy of the country. Control of the financial policy of the country does not mean control of the disposal of every shilling, it menus that the government of the day. rather than the trading banks, shall direct the financial policy of the nation. The Labour party will not agree to hand that control back to the trading banks so that they may crush the people and the producers, while making huge profits out of their activities. We are not prepared to let the Government get away with any proposal that will have that effect.
– Who is making threats now?
– The AttorneyGeneral, although a lawyer, apparently does not yet understand the difference between law and fact. [Extension of time granted.] I have not made any threats, but the AttorneyGeneral said that the Opposition would have to agree to what the Government wanted, or take the consequences.
– I do not think that I used those words.
– The Government has announced its policy and will try to implement it, but we will not allow it to interfere with the vitalprovisions of the 1945 legislation which has worked so well. Operating under that legislation, the Commonwealth Bank has brought Australia through an extraordinary period of transition from the end of the war up to the present time. During no other period in our history have such remarkable changes taken place in the economy of the country. The Commonwealth Bank, co-operating with the Treasury and with other financial institutions, has done a magnificent job. No one can point to a single mistake that has been made.
– If the 1945 act was so wonderful, why did the Labour Government chop it to pieces in the banking act of 1947 ?
– Evidently, the honorable senator was not listening to me when I referred to the 1947 act. However, he may study the Hansard report of what I said. So far as I am concerned, the Government may amend the 1945 act, except insofar as it proposes to interfere with the present system of control of the Commonwealth Bank.
.- Senator O’Flaherty declared that the re-establishment of the Commonwealth Bank Board would have the effect of handing the Commonwealth Bank over to the control of the trading banks or other financial institutions. I have here documentary evidence which shows that if that will he the effect of the present bill, the Labour party in the past attempted to do the very same thing. The board is to consist of the Governor of the bank, the Deputy-Governor, the Secretary to the Treasury, and two very distinguished public servants, Professor Melville and Dr. Roland Wilson, as well as five un-named gentlemen not connected with any particular interest. No qualification is stipulated in respect of those five. In 1930, when a Labour government was in power, a Commonwealth Bank Bill was introduced by the then Treasurer, Mr. Theodore. It was not passed, because the government was defeated through internal disruption before the Parliament had run its full course.
– That government was in a minority in the Senate, as the present Government is.
– I am trying to develop an argument, and I wish it to be understood that I am not inviting interjections.
– The honorable senator himself interjected fairly freely.
– I made two interjections, and they were both relevant, but interjections that are intended merely to break the thread of an argument, and to prevent honorable senators from hearing what I am trying to say, are out of place. They not only constitute a breach of the rules, but they are also bad taste. The Commonwealth Bank Bill, which was introduced by Mr. Theodore in 1930, contained this provision -
– (1.) The Bank shall be managedby a Board of Directors composed of the Governor and seven other Directors. (2.) Subject to this Act, the seven other Directors shall consist of -
It will be seen that provision was made for the appointment of businessmen to the board, and the bill even specified the interests that were to be represented. If the present Government’s proposal to appoint a bank board of the kind specified in the bill has behind it a sinister purpose, then the clause which I have just quoted from the bill introduced by Mr. Theodore must have had behind it an exactly similar purpose. The bill now before the Senate follows the lines of the Theodore bill, rather than the lines of the Commonwealth Bank Act of 1925, which was introduced by the Bruce-Page Government. There is no justification for concluding that, because it is proposed to place the bank under the control of a board, it is intended to divert the bank from its original purpose, or to place it under the domination of private interests. That being so, the arguments of the Leader of the Opposition (Senator Ashley) and of Senator 0’Flaherty fall to the ground. This measure of control is for the purpose that has been explained by the Treasurer (Mr. Fadden) and by the Minister for Social Services (Senator Spooner) in this chamber. What are those purposes? Clearly when such important matters as the exchange rate, the amount of credit in the country or anything else that affects the commerce and industry of the nation arise, it is not wise to leave them under the control of one man. In the considered opinion of people in all parts of the civilized world, it is possible to get men of wisdom and experience who are not tied up with any particular interest to give sound advice. Every country in Western Europe except Spain has a bank board to administer its central bank. The only countries with autocratic control similar to that upon which the Australian Labour party has insisted since 1945 are Spain, Russia, and the satellite countries of Russia. Australia draws the whole of its inheritance from Western Europe, and the practices of the people of Great Britain, Western Europe, the United States and the English-speaking world are the practices that fit this nation.
The rather far-fetched attempt of Senator O’Flaherty to prove that it is impossible to get anybody for the bank board who is not under the control of some private bank or other is futile. When one notes that a certain man is interested in a directorate, it merely indicates that this is a small community in which people have diverse interests. If persons completely divorced from any private enterprise are sought, they can Le found on this side of the chamber. Everything that I have except some chattels is in the Commonwealth Bank. I have my current account there. My ordinary savings are in the Savings Bank and anything that I put away except insurance is in government bonus which are held by the Commonwealth Bank as custodian. The argument that this Government represents only wealthy private institutions is no longer valid if it ever was valid. The falsity of that argument was proved by the support given to this Government by the people at the general election.
The Government represents the general body of the people and particularly those who have small savings. It is impossible for the Government to destroy those savings and the Commonwealth Bank even if it wanted to. The Government depends on the votes of people who use the Commonwealth Bank. Members of the Government use the bank themselves. We believe that the report of the Royal Commission on Monetary and Banking Systems was sound and that this legislation follows it. The Leader of the Oppo.sition (Mr. Chifley) was a member of that commission. He dissented from some of its proposals and’ presented one or two individual reports but he did not dissent from all the conclusions of the commission and he worked in the utmost harmony with its members. The commission recommended that the banking system of Australia should consist of public and private banks, that the Commonwealth Bank should operate as an ordinary trading bank in competition with the private trading banks and that it should carry out all the functions of a reserve bank. The commission recommended a committee of exactly the same type as that which the Treasurer (Mr. Fadden) proposes to set up. It is also the type of committee that was recommended by the late Mr. E. 6. Theodore who was an intellectual and a financial giant.
– They all say that when a man is dead.
– I said it when Mr. Theodore was alive. I stood by him in his political defeat but there are honorable senators and honorable members in another place who did not stand by him. I have nothing to retract in regard to banking policy. I say that there is no sinister purpose in this bill. The attempt not by argument but by innuendo to make the people believe that has failed completely. There is little else in the bill that is controversial and most of the arguments that honorable senators have heard to-night should have been reserved for the committee stages. Honorable senators opposite have made the bank board proposal the main point of their speeches. Apparently because of that proposal alone they believe that they must oppose the bill.
The attempt to represent the Commonwealth Bank as entirely the creation of the Labour party is completely wrong and false. The Commonwealth Bank was founded by the Labour party. Nobody denies that. It was founded by the Andrew Fisher Government, which was different from some of the Labour governments that followed it. The bank functioned quite well through World War I. largely because of the skilled administration of Sir Denison Miller and later it was reconstituted by the Bruce-Page Government. I did not support certain parts of the Bruce-Page legislation and I would not support them now but according to the opinions of the times that was considered to be the way to develop the bank. By establishing a bank board, the Bruce-Page Government was able to introduce the central bank functions in embryo without forfeiting the confidence of the private banks, and as long as the private banks are retained it is essential to have their confidence. The Scullin Government then tried to develop the bank along lines which would have improved it. Then followed successful changes under the Lyons Government and subsequently under the Menzies Government and the Chifley Government.
The Government proposes in this bill to repeal certain parts of the legislation introduced by the Chifley Government, but in the main it has followed all the banking developments of that government that the economists and the other people who understand banking consider to belegitimate. This bill is not a party measure and I deplore the party heatthat has been injected into the debate.. It is a measure to strengthen the Commonwealth Bank and make it the kind of bank that this country needs. All parties have contributed to its development. The Government proposes to abandon all existing measures that are shown to be obsolete or ill-advised, no matter from what source they have sprung. For that reason I urge that this bill be passed, and that the attempt to destroy it that has been foreshadowed should be abandoned. I ask honorable senators to pass this bill in the interests of the people of Australia.
– Senator McCallum indicated that this is a measure to strengthen the Commonwealth Bank and to make it something which the country needs. I hope that his opinion will be proved correct and that he has some foundation on which to base his assertion. I am very suspicious of the intentions behind this legislation. I may be quite wrong, and in fact I hope that I am wrong, but I have very sound reasons to believe sincerely that the appointment of a Commonwealth Bank Board will mean a return to what obtained in this country some years ago.
This bill will repeal the Banking Act 1947. The Attorney-General (Senator Spicer) has had something to say in that connexion. He tried to indicate that the Chifley Labour Government attempted to do something heinous by seeking to have the banking system of Australia nationalized. In reaching that determination at the time, the Labour Government was quite sincere. Honorable senators know that as a result of litigation before the High Court of Australia and the Privy Council, determinations were given on various aspects of that legislation. Those findings did not relate to the complete legislation. In fact it canrightly bp claimed that in some- of the determinations of those high tribunals, there was nothing against the Australian Government nationalizing the banks. The adverse findings were only in respect to the application of certain aspects of that legislation. On the 28th October, JU49, the then Prime Minister (Mr. Chifley) pointed out to the people that the decision of the Privy Council that the Government could not nationalize banking was sufficient as far as he was concerned. He indicated that as a result of that decision the Government could not nationalize the banks of Australia, and had no intention to do so. Mr. Chifley indicated that before the 10th December and during the election campaign. He told the people without equivocation that in view of the decisions of the august bodies to which I have referred the Labour Government would not endeavour to bring about banking nationalization in Australia. Did the supporters of the Government that is now in office tell the people that? No. Their propaganda had the very opposite intention. Employees of the private banks went from door to door telling untruths about the then Government’s banking proposal.
– That is a slander on one section of the community.
– It is not a slander. It is the truth, and it can be verified by more than one member of this chamber. We all know that the private banks paid their employees to do that joh.
– Just as the Australian Workers Union paid its organizers to do a similar job.
– The Australian Workers Union always has organizers in the field. We do not deny that, but they are engaged on their legitimate jobs. It was not the legitimate job of bank clerks to make a house to house canvass in the interests of the present Government parties. The Labour Government’s attempt to nationalize banking in this country was made as a result of the declared intention of the then Leader of the Opposition (Mr. Menzies) to restore the Commonwealth Bank Board should the parties for which he was then sneaking ever be elected to office. That is why the 1945 legislation had to be viewed from a different angle. Strangely enough, the controls contained in the 1945 legislation were laid down originally in national security regulations by the present Treasurer (Mr. Fadden). Under those regulations, the private banks were subject to certain directions. Legislation was introduced in 1945 to give permanent effect to the war-time provisions, the validity of which was in grave doubt when the war ended. What was behind the statement made by Mr. Menzies, that, if elected to office he would restore the Commonwealth Bank Board? Did he believe that the restoration of the board would be in the interests of the people, or did he believe that it would be in the interests of the private institutions? My own view is that the then Leader of the Opposition was concerned more with the interests of the private banks. The Privy Council’s decision in the bank nationalization case did not mean that all the controls exercised under the 1945 legislation were invalid. That is something that should be borne in mind. The Commonwealth Bank still has the right to compete openly with the private trading banks. Because of that, I believe, and because since 1945, the Commonwealth Bank has competed most successfully with the private banks, increased its general banking facilities, as well as the number of its employees to approximately 10,000, and expanded its business considerably by functioning as it was intended to function by its founders, the Government wishes now to restore the Commonwealth Bank Board, so that once again the hank can be instructed to refrain from undertaking general banking business, except business of the type that the private ‘banks do not want. In my opinion the Government is seeking to force the Commonwealth Bank back to the position that it previously occupied under board control when its activities were greatly restricted. I may be wrong in holding that view, but I have a shrewd suspicion that I am right.
The Minister, in his second-reading speech, said that in 1945 and 1947 banking bills of major importance had been introduced into this Parliament and that on each occasion the views of the present Government parties had been clearly stated. I propose to quote some statements that were made by the present Treasurer when the Commonwealth Bank Bill was before the Parliament in 1945. Hansard, volume 1S1, page 786, contains the following statement made by the present Treasurer on the 22nd March, 1.945 :-
A further important observation that must be made concerning this revolutionary reform is in regard to the manner of its acceptance and its likely effect upon us overseas. When it becomes known in greater detail, the reaction will be most detrimental to Australia, particularly in connexion with impending commitments.
This bill represents a complete change of front on the part of the right honorable gentleman, because when we analyse the measure we find that, with the exception of the re-introduction of the Commonwealth Bank Board, there is practically no departure from the 1945 legislation. The Treasurer has been forced to eat humble pie. Can any honorable senator say that the 1945 Commonwealth Bank Act has proved detrimental to Australia overseas? Clearly no such statement could be made with any degree of truth. For instance, our London funds have reached the highest level in our history. Obviously there must be confidence in this country overseas, because no country with an unstable banking system can command the confidence of other countries. The Treasurer’s gloomy predictions in 1945 have not been realized. The right honorable gentleman also said - . . legislation of so rigid a character as that now before the House is more likely to hamstring the Australian banking system than to give to it the additional flexibility which naturally should be associated with it.
Has the 1945 act in any way hamstrung the Australian banking system? Has it interfered with the flexibility which naturally should be associated with banking? On- the contrary, banking in Australia to-day is more sound than ever before. Once again the right honorable gentleman has had to eat humble pie because his 1945 fears have proved to be completely unreal. In the same speech the right honorable gentleman said -
The. grave danger which I and other members of the Australian Country party- see in this bill is that the avowed intention of the measure is to give to the Government increased power over the policy nf the bank, and that can lead only to instability and lack of confidence.
Why did the right honorable gentleman say that? Was it because the measure with which he was dealing provided for the abolition of the Commonwealth Bank Board? We have heard a lot about one-man bank control, and political interference with banking. Can any honorable senator opposite point to any disadvantages that have accrued from oneman control of the Commonwealth Bank or to any instance of interference with banking since 1945 ? The present Leader of the Opposition in the House of Representatives and former Prime Minister and Treasurer (Mr. Chifley) indicated very clearly in the course of a speech that he made on the 23rd March last that during the four years that elapsed after the passage of the 1945 legislation he had not at any time overridden the Governor of the Commonwealth Bank. The right honorable gentleman said that although he had expressed his views to the Governor of the bank, at no time did he find it necessary to exercise the powers of control that he enjoyed under the 1945 legislation. So what becomes of all these assertions of one-man control under the 1945 legislation? I ask honorable senators, is there any lack of confidence in the financial stability of the Commonwealth Bank to-day? I do not think that any one would suggest that there is anything but absolute confidence in the bank’s stability. Have not all the public loans been oversubscribed, not only during the war but also since the war and since the proclamation of the 1945 legislation ? Is it not a fact that under Labour administration the whole system of raising money in Australia has undergone a revolutionary change? According to mv recollection, the finance required for World War I. was obtained from the tra.din.er banks of this country, and ordinary private citizens were not given an opportunity to subscribe small amounts of £10, as they were during the recent war. The finance for World War I. was advanced by the trading banks at interest rates of from 6 per cent, to 8 per cent.
– Does the honorable senator suggest that any bonds were issued at interest of 8 per cent.?
– I repeat that according to my recollection the interest paid on moneys lent to the government of the time by the trading banks was as high as 8 per cent.
– I challenge the honorable senator to prove that.
– Senator Wright oan consult the records and disprove my assertion if he is able.
– Is the honorable senator speaking from memory or from authority?
– I am speaking from memory, and my recollection is that the interest rates charged by the trading banks were as high as 8 per cent. The point that I make now is that during World War I. the Government went to tha private banks for financial accommodation, but during the recent war the Labour Government went to the people for .accommodation and the private banks “were not permitted, without the permission -©f the Treasurer, to invest in war loans. Incidentally, the highest interest rate payable on Money subscribed to the loans was 3£ per cent. It is well known that during the war, and since, loans of as much as £150,000,000 have been subscribed hy the people of this country in small subscriptions of £10. So that whatever might be said in criticism of Labour’s financial policy, our handling* of the national finances during the war saved this country many millions of pounds in interest payments. Nevertheless, when the Commonwealth Bank Act 1945 was introduced, the present Treasurer, who waa then in Opposition, said -
Nothing can be more disturbing to confidence than political tinkering with the currency.
Has there been any political tinkering with the currency since 1945? I submit that the fears expressed by the right honorable gentleman at that time were exaggerated and have proved to be groundless. The Ronsard record of his remarks at that time also shows that he said -
There has never been a lack of co-operation in the past between the Treasurer and the Commonwealth Bank Board
That is an interesting statement. As we know, the Commonwealth Bank Board was abolished hy the 1945 legislation, but we are quite entitled to ask ourselves” what co-operation that board gave to the government of the day during the depression. In 1931, when the Scullin Administration required £18,000,000, which is a paltry amount in comparison with the sum of £180,000,000 that will be expended upon the Snowy Mountains development scheme, to tide the community over a time of dire distress, the Commonwealth Bank Board refused to make the money available. What attitude did the board adopt? It said that the suggestion of a fiduciary issue that was involved in the Government’s request would disturb the financial stability of Australia and impair our credit overseas. However, at a later stage it stated, in the course of correspondence with the Treasurer, that the money would be made available if certain conditions were fulfilled. The Scullin Government was confronted by a hostile majority in the Senate, and it had to accede to the conditions imposed upon it by the board, and as a result of the board’s insistence the salaries of public servants were reduced by from 18 per cent, to 22$ per cent. The board also insisted on a reduction of social services, and age pensioners had their pensions reduced to, I think, 1.8s. 6d. a week. In other words, the Commonwealth Bank Board dictated to the Government.
– That has nothing to do with the present measure.
– That has a lot to do with the present measure, because the present Government proposes to reestablish the Commonwealth Bank Board.
– But under the control of the Parliament.
– The honorable senator should not try to put that story over. I was pointing out what occurred under the previous bank board, and my point now is that the establishment of another board may result in a recurrence of the happenings of 1931.
I remind honorable senators that immediately prior to the 1946 elections the then Leader of the Opposition (Mr. Menzies) said that if the anti-Labour parties were returned to power he would re-institute the Commonwealth Bank
Board. I mention that fact because something has been said by honorable senators opposite about the attitude of thepeople tothe proposals ofthe present Government. In 1945, twelve months before the 1946 election, the Commonwealth BankAct 1945 was introduced by Labour and passed by the Parliament, so that at the election of 1946 the people knew exactly what Labour’s attitude towards the Commonwealth Bank was. At that election did not the people return Labour with a substantial majority? Whilst the anti-Labour parties that are now in office may claim that they have a mandate from the people from the 1949 election to repeal the Banking Act 1947, it is obvious that they have no such mandate to interfere with the 1945 legislation by reestablishing the Commonwealth Bank Board.
During the last election campaign the anti-Labour parties certainly told the people that they proposed again to place the control of the Commonwealth Bank under a board, but they alleged that the reason for doing so was that it was not desirable to leave the control of the bank in the hands of one individual. They did not tell the people that their real object was to take the control of thebank entirely out of the hands of the Government. History has a habit of repeating itself, and we do not want the people’s bank again to become the servant of the private financial institutions of this country. I ask for leave to continue my remarks at a later stage.
Leave granted; debate adjourned.
Motion (by Senator O’Sullivan) agreed to -
That the Senate, at its rising, adjourn to to-morrow, at 11 a.m.
The following papers were presented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator. &c. - 1960 -
No. 9 - Australian Third Division Telegraphists and Postal Clerks’ Union.
No. 10 - Professional Officers’ Association, Commonwealth Public Service.
No. 11 - Amalgamated Postal Workers’ Union of Australia.
No. 12 - Professional Officers’ Association, Commonwealth Public Service.
No. 13 - Commonwealth Storemen and Packers’ Union of Australia, and Federated Ironworkers’ Association of Australia.
No. 14 - Commonwealth Storemen and Packers’ Union of Australia.
No. 15 - Federated Ironworkers’ Association of Australia, and others.
No.16 - Electrical Trades Union of Australia.
No. 17 - Vehicle Builders Employees’ Federation of Australia, and Australian Federated Union of Locomotive Enginemen.
No. 18- Commonwealth Public Service Artisans’ Association.
No.19 - Commonwealth Public Service Clerical Association.
No. 20 - Australian Workers’ Union, and others.
No. 21 - Association of Railway Professional Officers of Australia.
No. 22 - Commonwealth Public Service Artisans’ Association.
No. 23 - Australian Workers’ Union.
Bankruptcy Act - Twenty-first AnnualReport by Attorney-General, for yearended 31st July, 1949.
Commonwealth Bank Act - AppointmentR.G. Reeves.
Commonwealth Public Service Act - Appointments - Department -
Commerce and Agriculture - K. O. D. Davis.
Defence - R. B. Dodman.
Repatriation - R. S. Kennedy, N. P.G. Little.
Social Services- B. P. Bate, S. B. Benson, M. H. Ramsay.
Works and Housing - D. G. Campbell, A. N. Duff-Gordon, C. T. Eeles, H. Foskett, H. L. Jones, R. E. Robb, L. L. Simon.
Defence Act- Regulations - Statutory Rules 1950, No. 21.
Defence (Transitional Provisions) Act -
National Security (Industrial Property) Regulations - Orders - Inventions and designs (5).
Regulations - Statutory Rules 1950, No. 20.
Lands Acquisition Act- Land acquired for -
Defence purposes - Richmond, New South Wales.
Postal purposes -
Emerald Hill, New South Wales.
Haymarket (Sydney), New South Wales.
Mount Barker, South Australia.
Sandigo. New South Wales.
Nauru - Report to General Assembly of the United Nations on Administration of
Nauru for year 1948-49.
New Guinea - Report to General Assembly of the United Nations on Administration of New Gnineafor year 1948-49.
Papua - Report for year 1948-49.
Wheat Indusry Stabilization Act - Regulations Statutory Rules 1950, No. 19.
Senate adjourned at 11 p.m.
Cite as: Australia, Senate, Debates, 10 May 1950, viewed 22 October 2017, <http://historichansard.net/senate/1950/19500510_senate_19_207/>.