23rd Parliament · 1st Session
The PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at 11 a.m., and read prayers.
– 1 address a question to the Minister representing the Minister for Trade. May 1 preface it by saying that it deals with trade relations between New Zealand and Australia. I am sure that we in this Parliament have the most friendly feelings towards the people of New Zealand, who are related to us in Australia and with whom we have had close associations in both war and peace. Is the Minister aware that Mr. W. Fisher, the head of the New Zealand trade mission at present in Australia, stated in Canberra on 6lh April that Australian exports to New Zealand could be doubled, from £55,000,000 to more than £100,000,000, in a short period of time if it were not for the restrictive trade practices of this Government? Is the Minister also aware that Mr. J. Wattie, a leading food processor in New Zealand, has claimed that import restrictions imposed by this Government amount almost to a total prohibition on imports from New Zealand? Will the Minister, if these statements are true, have the position examined with a view to action being taken to improve trade between New Zealand and Australia? Will he also, at a later date, report to the Senate the position of our trade relations with New Zealand and the possibility of improving them?
– I am sorry to say that I did not see the press statement to which Senator Cooke has referred. Recently, I had the pleasure of meeting Mr. Fisher and I formed a very high opinion of his capabilities and the way in which he was going about the task of improving trade relations between Australia and New Zealand. As the honorable senator knows, Mr. Fisher is at the present time leading a very large delegation of New Zealand commercial people to Australia, seeking out ways and means in which trade relations may be improved. I also know that the Minister for Trade has been talking to his opposite number, the New Zealand Minister for Trade, who was over here two or three weeks ago. They have the common objective of trying to see how the trade barriers between Australia and New Zealand may be lowered, each country, of course, having the same difficulty in that there is a ceiling on the extent to which imports can be approved. Against that background, the honorable senator’s question, although it might be called a provocative one - provocative in terms of provoking thought-
– lt is in the terms of the reported statements.
– Yes. It is a good question and it shows that the honorable senator is watching developments, lt will, I think, provoke some attention by the Department of Trade. I do not think it lends itself to action, and I do not think it would be appropriate at this stage to attempt to prepare any formal report upon the commercial relations between Australia and New Zealand, because I am aware of the negotiations that are proceeding at the present time.
– I wish to direct a question to the Minister representing the Minister for External Affairs concerning the Russian Embassy. Has his attention been drawn to the recent cabled report from Moscow “ Pravda “ - meaning truth - that the resumption of diplomatic relations between this country and Russia was being brought about at the request of the Australian Government? Can the Minister advise me whether there is any truth in this report of the Moscow “ Truth “? Has the Government’s attention been drawn to the virulent attack by the Russians on the Seato alliance appearing in the press of Tuesday last? In view of this further evidence that there has been no change in Russian outlook since the Petrov affair, and in view also of the sadistic butchery of Hungary and of the Tibetan adventure of the Soviet’s Chinese allies, will the Government review its reported decision and accordingly refuse to permit the Soviet spy-hole to be re-opened in Canberra?
– Mr. President, I do not think it profits us to commence a discussion as to who initiated the proposal to re-establish diplomatic relations between Australia and Russia. A statement has been made by the respective responsible Ministers of each government, and there I think the matter may rest. I might perhaps admit, or say, that I share to some extent the views that the honorable senator so forcibly expresses against Soviet Russia, even though I may not be prepared to go as far as he does, but I think that in matters of such importance it is unwise to attempt to deal with them by way of question and answer. A government decision has been made to re-open the embassy in Canberra, and for my part I believe it is a sound decision in all the circumstances.
– I desire to ask the Minister representing the Treasurer a question. As it is a fact that Australians are eating less butter per head than they did when butter rationing was in existence prior to 1950, does the Minister agree that this has been caused by the low wages received by most working people, and that such wages are insufficient to provide necessary material comforts and at the same time maintain an adequate diet?
– Speaking on behalf of the Treasurer, I should say at once to the Deputy Leader of the Opposition that I cannot accept at all his proposition that a reduced consumption of butter per head might arise from the cause to which he attributes it - the inability of the Australian wage-earners to buy more butter. Indeed, the proposition which he puts forward might best be answered by my directing his attention, not to a downward trend in butter consumption, but to the increased consumption per head of beer and spirits.
– Will the Minister for Civil Aviation inform the Senate whether it is a fact, as stated publicly by the honorable member for Werriwa in another place on a number of occasions in recent months, that Trans-Australia Airlines has been negotiating with the New South Wales Government with a view to commencing intra-state services to operate in New South Wales?
– Naturally enough I have noticed a number of references to suggestions by the honorable member for Werriwa, both in the Parliament and outside of it, that Trans-Australia Airlines has been negotiating with the Government of New South Wales with a view to commencing intra-state services there. I can only think that the honorable member must be singularly ill-informed, or is being deliberately mischievous, because no negotiations have taken place between T.A.A. and the Government of New South Wales for the purpose mentioned - and I speak with the authority of the chairman of the Australian National Airlines Commission.
– Will the Minister representing the Minister for External Affairs inform the Senate of the present position in the matter of representation of the Government of Eire in this country? Has the situation reached a deadlock, or are discussions still proceeding between the governments concerned?
– I think that in the realms of diplomacy a deadlock never occurs. Always an attempt is being made to find a way through difficulties.
– Even on salary bills.
– Yes, even on salary bills. As all honorable senators know, a difficulty has been created in the appointment of an ambassador to Ireland concerning the manner in which such a person would be accredited. The Republic of Ireland lays claim to sovereignty, ownership - or whatever the correct legal term may be - over portion of what I think we call “ Her Majesty’s Realm “. In any such appointment of an ambassador to Ireland the terms of accreditation must obviously be in the interests of Australia and of Great Britain as a whole, being carefully prepared in a way which involves no acknowledgment of the incorrect claim on the part of Ireland to the sovereignty mentioned. That is where the position rests but, as I have said, it is the profession of a diplomat to resolve difficulties like that.
– My question is directed to the Minister for Civil Aviation and is along the lines of a question asked earlier by Senator Laught concerning the possibility of Trans-Australia Airlines operating intra-state services in New South Wales. Is the Minister aware that in the last week the Tasmanian Government has granted T.A.A. permission to operate intrastate services in Tasmania? In view of the lead given by that State in allowing this progressive and reliable airline to gain access to all the business that it can get in competition with any other airline, will the Minister, who has charge of the national airline activities, and who appreciates what a fine job T.A.A. is doing in this country, arrange a conference of State Ministers of Transport with a view to obtaining similar permission for T.A.A. to operate in every State?
– I am positive Senator O’Byrne will remember that recently he assisted the passage or the obstruction - I am not sure of his role - of a bill which had something to do with this matter. During the Easter recess, members of the Opposition, with commendable alacrity, contacted their confreres in Tasmania with a view to securing the proclamation of the act. Because of that, it will be possible from this day for Trans-Australia Airlines to operate intra-state in Tasmania. I commend the Opposition for its quick movement, the practical result of which is precisely nil.
As for the other States, I can only say, as I have said before, that as applications are made with respect to intra-state services they will be considered in the light of public requirements and the general state of the airline industry in Australia.
– I ask the
Minister for Customs and Excise whether he has granted a permit for the export to California of koala bears, and, if he has, whether he has received adequate assurances that they can live comfortably in their new habitat.
– Yes, an application was received from Sir Edward Hallstrom for permission to export six koala bears to California, three to zoos at San Diego and three to zoos at San Francisco. Before approving of the export of the koalas, I asked the Wild Life Survey Section of the Commonwealth Scientific and Industrial Research Organization to- advise me as to the climatic environment and the availability of food for koalas in California. The assurances I got from that section satisfied me that koalas would be happy and would live in California. Therefore I granted permission for them to be exported.
May I recount one incident which occurred during the course of those investigations, even though it is somewhat in the lighter vein. We learn things from these investigations, and I learned a good deal about koalas. I understand that they reproduce their kind only once every two years and in the ratio of eight males to one female. I was telling an audience about this in Tasmania recently and one of the brighter of the female members of the audience said to me, “ Did you say, ‘ in the ratio of eight males to one female?’ “ I said, “ Yes “. She said, “ I believe in reincarnation and I am going to stake my claim to come back to this world as a female koala “.
– My question is addressed to the Minister representing the Attorney-General. Has the AttorneyGeneral’s notice been attracted to the fact that on the 3rd instant, when the Brisbane City Council invited tenders for the supply of insulated copper cable for its electricity department, nineteen firms tendered exactly the same price, namely, £27,578 14s. 2d.? Will he investigate the matter to ascertain whether a cartel operates in the Commonwealth for the supply of insulated copper cable and, if the result of the investigation shows that a cartel does operate, will he introduce a law which will safeguard the public interest?
– I do not know whether the Attorney-General has noticed the report mentioned by the honorable senator. As his representative in this chamber, I have not noticed it. We do not know whether some firms submitted a tender price different from the price submitted by the nineteen firms referred to. However, I shall direct the attention of the Attorney-General to the honorable senator’s question, and shall communicate with the honorable senator in due course.
– My question, directed to- the Minister representing the Treasurer, concerns the conference held recently to discuss the subject of uniform legislation on hire purchase. Was the Commonwealth represented at that conference? If so, by whom? Did the Commonwealth representative represent the Treasury or the Department of the Interior?
– The conference to which the honorable senator has referred was held within the last couple of days. I understand that the Minister for the Interior represented the Commonwealth at the conference. I have no other details, but I shall obtain a full reply from the Treasurer.
– Has the attention of the Minister for Civil Aviation been directed to the statement that AnsettA.N.A. proposes to fly an Electra aircraft on the east-west run on Saturdays only? As the majority of Western Australian members of Parliament use the AnsettA.N.A. airline, will the Minister use his influence to have this service made available on Fridays and so meet the convenience of Western Australian members and, at the same time, ensure increased patronage for the service?
– I am very much aware that the convenience of Western Australian members and senators would best be served by operating this aircraft on another day. I understand, however, that the service is to be put into operation on Saturdays to meet the overall Australian programming requirements. I should not be prepared to disturb that arrangement as I am aware of the condition of the industry and of how important it is that the utmost utilization be made of each unit of a company’s aircraft,
– I preface my question to the Minister for Shipping and Transport by saying that on another occasion, in reply to a question as to why Commonwealth ships are not used in the overseas shipping trade, he stated that Australian vessels are not able to carry cargo at competitive prices. I now ask the Minister: Is this because Australian vessels cannot secure return cargoes? In any case, will the Minister prepare a survey setting out the evidence upon which he bases his assertion that Commonwealth ships cannot compete in price with other vessels?
– I should be delighted to make available to the Deputy Leader of the Opposition all the material which leads to the unfortunately inescapable conclusion that the cost factor operates to the detriment of Australian ships in overseas trade. As to the other portion of the honorable senator’s question dealing with the inability of ships put into overseas trade to operate profitably due to their failure to secure return cargo, it is a fact that the inability referred to does add to the cost of the return journey of a vessel from one port to another or from one country to another. If we could enter the charter market at competitive prices, we could always pick up cargoes in any port of the world for shipment elsewhere.
– I ask the Minister for Customs and Excise: Are licences to export koalas from Australia granted to organizations other than zoos?
– I understand that, in the recollection of the department, only one permit has been given for the export of koalas to places other than zoos. I understand that a motion picture being made in California required the appearance of some half ,a dozen koalas. Permission was given to the film company to export the koalas, the condition of their export being that they were to come back to Australia after the picture was made. However, Australian quarantine laws apparently would not let them come back, so they were then placed in zoos in California. The permission of the Minister for Customs and Excise has to be obtained before any koalas can be exported. Up to the present time, no permission has been given for the export of koalas to any places other than zoos, except in the case I have mentioned.
– My question is directed to the Minister representing the Minister for External Affairs. In view of the precedent set by the decision of Dr.
Adenauer, the Chancellor of West Germany, to resign and be appointed to the exalted position of President of the West German Republic, can the Minister say whether there is any substance in the speculation that the old gentleman who is now Minister for External Affairs in this country-
– Order! The honorable senator must not refer to the Minister for External Affairs in that way.
– I desire to address a question to the Minister for National Development. 1 invite the attention of the Minister to the increasing emphasis being placed on the worsening of air pollution in Australian cities through industrial plants, power stations, motor exhaust fumes and domestic fires. Dr. F. R. Heinrich, of Simon Carves, a well-known British engineering firm, is reported as having said yesterday-
If you live in a polluted area for a long time your eyes will begin to water, you will develop a cough and the particles will affect the lungs.
Could the Minister cause discussions to take place between officers of the Department of National Development, the Department of Health and the Commonwealth Scientific and Industrial Research Organization on the subject of air pollution, on which he could base a report for presentation to the Senate?
– I am indebted to Senator Laught for his suggestion. I will discuss the matter with my department and I shall let him know the result. I have some information in my recollection about the matter because, as the honorable senator will recognize, it is one of the matters that are constantly under consideration in the coal-mining industry. The research activities relating to coal-mining in some directions are aimed at reducing the volume of smoke produced from coal in order to get better coal utilization. I know that the general question of air pollution comes under the control of the State governments, but, going down a bit deeper than that, work on it is being done by municipalities by arrangement with State governments. In other words, you have a general problem. It is a very great problem in a city like London; but in Australia, where it is spread over great areas, it becomes in some ways a local matter rather than a State matter, let alone a federal matter. So I think that what needs to be done may well be better done on the State level. However, I shall make inquiries and if I am wrong I shall let Senator Laught know.
– Has the Minister representing the Treasurer seen reported statements by the chairman of the Capel Court Investment Company that of 1,385 company dividend declarations since last June, 300 or 21.7 per cent, of the companies concerned have increased their dividends, 968 or 69.9 per cent, of the dividends have remained steady, and only 117 or 8.4 per cent, have been reduced? Is it correct to infer from these figures that company profits this year are higher than in previous years? If that is so, will the Commonwealth intervene in the arbitration court to support union applications for an increase of wages?
– I have not seen the statements referred to, nor would I think it would be possible to draw any conclusions from them as presented by Senator Sandford. The honorable senator must realize that, without an examination of the balance-sheets of all the companies concerned, it would be quite impossible to say what factors made any variation in dividends necessary.
– I address to the Minister representing the Minister for External Affairs a question which, in a manner, is supplementary to the one I have already asked him about the re-opening of the Russian Embassy. I ask the Minister whether any specific promise has been given to the Australian Government that, if we permit the Russians to re-open their embassy in this country, the nationals of satellite countries who wish to migrate to Australia will be permitted to do so.
– The honorable senator certainly asks difficult questions. I think it is necessary to start on the basis that the re-opening of the Russian Embassy here is a practical business arrangement. Diplomatic relations between Australia anc) Russia were never severed. What happened was that the Russians removed their staff after the Petrov occurrence and they asked us to do likewise in Russia. We did that. Now there has been this decision to return to normal relations. I describe them as normal relations, because diplomatic relations were not broken off. In no circumstances is that return to normal relations, because of the material advantages that accrue, to be construed as meaning that Australia is putting any seal on, or is displaying any approbation of, Russian ideologies, objectives and policy.
We have resumed normal diplomatic business relations, and we have done it in a businesslike way. We have taken full precautions to cover the interests of the Australian people, and there has been what the diplomats are pleased to call mutuality in the making of those arrangements. In other word’s, in regard to the number of officials and their travel, there has been an agreement which well covers Australian interests. The honorable senator starts from that foundation and asks questions in relation to movements from satellite countries. 1 can only come back to what I said previously and repeat that this is a business arrangement. We have entered into it because we think that it is in Australian interests that we should have people abroad to know, and to acquaint us with, what is going on in Russia. As it is a business arrangement and is being approached on that basis, the other matters that the honorable senator mentioned will be approached in a similar atmosphere.
– Can the Minister representing the Minister for Immigration say whether it is correct, as was stated recently in the British House of Commons, that child migration to Australia virtually has ceased? If this is so, will the Minister consider ways and means of .reviving child migration? As twelve years have elapsed since the first child migrants arrived in Australia, and as many of those children are now adults, will the Minister have the whole position examined with a view to ascertaining how those children have been absorber! into the community, the jobs that they are doing, and any other matters of interest with regard to the child migration scheme, in order that any future scheme may be the better for the experience gained over the years?
– I did see the article referred to by the honorable senator, stating that child migration had almost ceased. No doubt my colleague, the Minister for Immigration, also has seen it and is at the present time applying his very keen and fertile mind to this problem. I am confident that he will produce a satisfactory answer when he has considered the problem in all its aspects.
asked the Minister representing the Minister for Trade, upon notice -
– This is indeed a case of service with a smile, because this is a question about which Senator Cooke complained only yesterday. The following answer is furnished, and it is quite an interesting one: -
I would observe, however, that over the past two years the rates charged by the conference cargo vessels have, with the exception of some refrigerated cargo to the United Kingdom/Continent, been fairly stable. Bulk cargoes such as wheat and sugar have enjoyed relatively favorable charter rates over the last twelve months, and significant shipping tonnage in this sector is still laid up because of the low rates offering.
I have arranged for the honorable senator to receive a copy of the 1958 report prepared by the General Agreement on Tariffs and Trade dealing with subsidies operated by member countries which might affect trade. This report covers the major trading nations of the world.
The Genera] Agreement on Tariffs and Trade limits the extent to which export subsidies may be used. It provides that export subsidies on primary products must be applied in a way that will not acquire for the subsidizing country more than an equitable share of the world export trade :n the product, and that, pending agreement on the general discontinuance of export subsidies on non-primary products, no new or increased subsidies should be granted on non-primary products.
In addition to these subsidies, several countries take measures, including shipbuilding and shipoperating subsidies, to assist vessels of their own flag which engage in overseas trade. The objective is to bring the costs of these vessels down to the level of the lower cost shipping operators, who would otherwise be expected to displace the high cost vessels.
Most countries also assist exporters by such methods as export payments insurance, and trade promotion and intelligence through a trade commissioner service.
The Australian Government provides Australian exporters with the trade promotion facilities which I mentioned in the preceding section of this reply. There are 28 Australian trade commissioner posts; eight trade missions have already been completed and a further mission is scheduled to Central and West Africa; the overseas trade publicity vote this year has been increased to over £500,000 and the complementary publicity contributions made by the boards and commercial interests have also increased; and the liability and capital limits of the Export Payments Insurance Corporation were recently doubled to meet the requirements of Australian exporters for this facility.
In 1957, the Government established the Stevedoring Industry Authority. In recent years there has been a noticeable improvement in shipping turn-round times in Australia and the authority has played its part in bringing this about.
Insurance is the only other significant invisible charge on exports. Australian rates are the result of open competition and there has been no suggestion that rates on Australian goods are unreasonable when compared with those payable by our competitors.
asked the Minister representing the Prime Minister, upon notice -
– The following replies have been furnished: -
asked the Minister for Shipping and Transport, upon notice -
– I now answer the honorable senator in the following terms: -
Coast Steamships appoints ils own agents for ‘ Enfield “ which it has on charter. Colonial Sugar Refining Co. appoints its own agents for “ Inyula “ which it has on charter.
Shipping Board on 1st January, 1957. Fees paid by the Australian National Line to companies which acted as agents for its interstate trade are -
Note. - Companies mentioned above which are not included in the answer to question 1 act as agents only for particular ports or trades where nominated agents for a vessel do not maintain a branch office.
asked the Minister representing the Minister for Labour and National Service, upon notice -
– The Minister for Labour and National Service has furnished the following answers: -
Motion (by Senator Spooner) agreed to -
That Government business take precedence of general business after 8 p.m. this sitting.
Bill returned from the House of Representatives without amendment.
Debate resumed from 8th April (vide page 644), on motion by Senator Paltridge -
Thai the bill be now read a second time.
– In resuming the debate on the banking legislation, 1 should just like to say that last evening, when referring to the Royal Commission on Banking and Monetary Systems that was set up in 1937, I stated that the late Mr. Curtin was a member of that body. Obviously, that was a slip of the tongue; I was referring to the late Mr. Chifley. 1 should like to make that correction which, as a matter of fact, “ Hansard “ has already very kindly made for me.
In proceeding with the discussion of the banking bills themselves that are at present before us, I make it clear that the Opposition is opposed to them because of the manner in which the Commonwealth Bank is to be cut up by them. Instead of the one institution which, for the past 47 years, has done much magnificent work in the community, the Commonwealth Bank is to be sub-divided into three parts, and its very name is to be changed. In no case does the word “ Australia “ appear in relation to the Trading Bank, the Savings Bank and the Development Bank. To political parties which have no compunction about changing their names, this means very little, but to those of us who have great pride in the Commonwealth Bank of Australia, this is something that we cannot let go unchallenged. With regard to the separation of the two divisions of the Commonwealth Bank - the Trading Bank and the Savings Bank - we are told that one purpose of this legislation is to enable the private savings banks to compete fairly with the Commonwealth Savings Bank. Yet we find that a restriction is to be placed upon the Commonwealth Savings Bank which is not placed upon the private savings banks, because the two functions - -the trading bank and savings bank - are not separated in those banks.
Many expedients which are not very acceptable are being imposed on the community to divert custom from the Commonwealth Savings Bank. I shall quote one example. Quite recently in Western Australia officials of a private savings bank called at a private school that a niece of mine attends and tried to get customers among the children. When my niece said, “ I have already an account with the Commonwealth Savings Bank “, an official said to her, “ That is not much good to you: You would find an account with our bank to be much better. We are establishing a section of the bank at the school here, and you will find it much handier to bank with us.” Although my niece is only fourteen years of age, she stood her ground and did not swallow the bait.
I listened with great interest to Senator Branson’s remarks last night about the functions of the Development Bank. I know that the honorable senator has a firm grip of the agricultural problems that beset the people, and that he has done a very good job of work for the people in the outback areas. However, I am afraid that the honorable senator is expecting a great deal too much from the Development Bank. The first proposition I pose is: Is this really a bank at all or only a fund? Is not the work that it is proposed this bank will do already being adequately covered by the sections of the Commonwealth Bank that it will replace - the Industrial Finance Department and the Mortgage Bank Department? These departments have done a very good job, and I think there is still plenty of room for their expansion within the present framework of the bank. In referring to the Development Bank, the Treasurer (Mr. Harold Holt) said -
We do not think that in practice deposits, which are an essential part of any banking system, will be a major source of funds because it cannot provide the same sort of facilities for clients as other banks can. So it is less likely that depositors will be attracted to this bank.
Therefore, the Development Bank is to rely for its finance upon grants from the Savings Bank, but more directly upon appropriations by the Parliament. As the institution will receive its finance in that way, it cannot be said to be a bank in the strictest sense of the term, and no matter how well intentioned it may be and how good its purpose - its facilities will be used for the good of the community - I still feel that the same work could be done by an expansion, perhaps, of those two present departments of the Commonwealth Bank which it is intended that the Development Bank will replace. Moreover, we are told that the bank is to have a capital of £20,000,000, £15,000,000 of which has already been allocated. Only £5,000,000 remains to be distributed. How many people will this expenditure assist? We all know how much it costs to put a pastoralist on the land. Certainly, it does not take a great deal to put a dairy farmer on the land, but it is interesting to note that research in Canada has revealed that more than £10,000 is being lent to pastoralists there to help establish them on a paying basis. One realizes that a very similar sum would be required in Australia, so if we are to gain very much from having this new bank we shall have to give it much more capital than is at present proposed.
A great deal is expected of the Development Bank. Labour is in favour of plans for development by the Commonwealth Bank. We think that that is one of its essential functions. That was the main reason why Labour established it. The bank was to help the development of the country, not only through Government instrumentalities, but also by helping private individuals who were intent upon expanding industrial or rural enterprises. 1 should like to refer to something that was said recently by Dr. Coombs, the Governor of the Commonwealth Bank. That gentleman is a very fine and astute economist who happens to be a graduate of my own university and a former colleague of mine in the Education Department of Western Australia. At the annual conference of the Australian Agricultural Economic Society in 1959 he pointed out something of interest about the Development Bank. He said: -
The real question of the adequacy of rural credit is therefore one of deciding whether rural industries get a reasonable share of the available resources or whether a greater increase in productivity could be obtained by diverting to the rural economy some of the credit at present provided for other sections of the economy.
There does seem to be some weakness in the Australian rural credits system when it comes to the provision of finance for farm improvement, development and for increasing productivity. I believe that there is, therefore, need for a specialized institution or institutions designed to satisfy this need. It will not, however, be a simple institution to administer.
It may be that the new Development Bank proposed by the Government will be able to contribute to the filling of this gap. I hope, however, that too much will not be expected of it.
That is a thought that I should like to commend to Senator Branson and others who are expecting a great deal, very soon, from this bank. Dr. Coombs said further -
Although I believe that this specialized task calls basically for a specialized institution there is still much that can be done within the structure of the existing banking system.
That is the opinion of an expert banker, a man who has the confidence of the Government as well as of the Opposition - a man who knows his business. He has issued a note of warning lest too much should be expected of the proposed bank, yet expectation of that kind is the very reason Why the Australian Country Party has in the main lent its support to the bill.
The honorable member for Fremantle (Mr. Beazley) made a very good observation on this whole matter. He said that the tendency on the part of most antiLabour people was to socialize their losses and capitalize their profits. That is quite true because although, when the going is a bit tough, such people want assistance from Government instrumentalities - from Government banks - as soon as they are making a profit they want more consideration to be given to the private banking institutions. Labour is not opposed to private enterprise as such. It is not opposed to the private banks - operating in fair competition with the Commonwealth Bank. We hear a great deal of talk about the private banks being unfairly placed as compared with the Commonwealth Bank, and suffering hardship thereby, yet those very banks have had little consideration for their fellows over the years. Of the 70 private banks which were in operation in Australia at the turn of the century, only seven remain, and each of the seven have ramifications extending not only throughout Australia but beyond the seas. There is hardly any big enterprise, newspaper or form of communication capable of influencing public opinion, that is not directly linked with the private banks. In truth, it is the Commonwealth Bank that is unfairly treated in this respect.
Last night, Senator O’Flaherty produced quite alarming facts and figures for the information of the Senate. They were so comprehensive that they could not properly be digested upon a first hearing. If honorable senators would study Senator O’Flaherty’s figures over the week-end they would have cause for very serious thought about the position of big combines and companies in Australia.
The Government has the numbers, and this legislation will undoubtedly become law. When that happens the Government will appoint a bank board of eight private individuals and three persons who are more or less Commonwealth officials. The private individuals are to be drawn from the ranks of commerce and industry. It would be very difficult for the Government to find eight men of the calibre required to operate the corporation who were not interested in some way, either directly or through affiliation, in private banks. It is going to be very interesting to see how that position is resolved in the next few months.
Labour opposes this legislation, at this time particularly, because it feels that there is no need for its introduction. The Commonwealth Bank has done a good job over the years, and will continue to do a good job. We say that there is room for further extension of the development side of the present bank. We deplore the splitting up of its staff into three, the super-imposition upon the existing structure of three different managerial groups, and the superimposition upon them of a co-ordinating board. We feel that this will result in a very clumsy structure indeed. It does not simplify the matter at all and will not help solve the developmental problems of this country.
This Government came into office in 1949 and it is strange that these moves should have been left until now. It came to office after one of the most vicious campaigns that I have experienced. For months after the introduction of the 1947 banking legislation, which was subsequently proved invalid, honorable members and honorable senators were absolutely besieged with telegrams. The only person who could have been happy about that situation was the Postmaster-General. I am certain that postal revenues rose sharply during that period. I received anything up to 200 and 300 telegrams a day. Finally, I reached the position where I was able to analyse them a little. I found that many were being sent from post offices in such numbers as almost to exceed the total population of the particular centre - including men, women and children. I found that agents were going around the country putting a whole group of telegrams in at one country post office. Honorable members and honorable senators were getting the lot. I was interested in one telegram particularly. It happened to be in the name of my own cousin. When I taxed him with it he was very hostile because he thoroughly agreed with Labour’s proposition. His name had apparently been taken from the telephone book, or something of the kind. I still have the telegram downstairs in my room, with many others that were sent at the time. We were all subjected to this terrific attack. Apparently, money was no object.
A friend of mine, whose husband was a manager of a private bank in Western Australia, said to me just after the election, “Dorothy, I am a bit sorry your government was defeated, but, in other ways. I am glad because I have a new refrigerator. I have been waiting for one for ages.” I said, “ How does that tie up with the defeat of our government? “ She said, “My husband got a bonus of £175 and I grabbed the lot for a refrigerator. Bonuses were paid to members of the staff right down to the office boy who got £5. My husband said that it was necessary to give them something for all the inconvenience they suffered during the time members of the staff were out canvassing against the government.” What I have stated is a fact, and I can give the names to the Minister for Shipping and Transport (Senator Paltridge) if he does not believe me. What happened in that case was typical of what happened generally. Money was of no object when it was for propaganda for the defeat of the Labour government.
Yet, ten years have elapsed and the Government only now is bringing down legislation to justify that expenditure on its defeat of the Labour government. That is why one begins to wonder when one reads the annual reports of the various companies. If one takes the trouble to read a report published recently by the Capel Court Investment Company, one find’s this statement -
The early attempt to fob off the private banks with more apparent than real reforms was not tamely accepted, and vigorous endeavours were made in 1952 to bring about the creation of a genuine central bank.
That is, genuine from the point of view of the private banks, not from the point of view of the people of Australia -
The general views of the banking and financial community were then cogently expressed by the then president of the Bank of New South Wales. Revival of the fight occurred when a strong section of the parliamentary Liberal party made strong demands upon the Prime Minister.
We all know who the strong members of the Parliamentary Liberal Party who made the strong demands upon the Prime Minister were, but it has taken seven years for even those strong demands to meet with this modicum of success.
J feel that the Government is not really sincere when it makes these attacks on the Commonwealth Bank. It surely could not possibly justify its action in mutilating that bank by any necessity that has arisen through the failure of the bank to fulfil the objectives for which it was created. It has been the Government’s proud boast that the Commonwealth Bank of Australia has been able to hold up its head amongst not only the other banking institutions of this country, but many of the banking institutions in other parts of the world. It has never defaulted. On the contrary, it has come to the aid of other business organizations that have done so.
A great deal has been said during the debate about hire purchase, the inference being that the Labour Party is opposed to the hire-purchase system. We members ot the Labour Party are not opposed to the hire-purchase system, because many of those who support us could not have the few creature comforts they have in their homes without it. But we do object to the exorbitant rates of interest charged by hirepurchase companies, and we do object to the fact that many of the private banks have entered into the hire-purchase field because of those high rates of interest, leaving the much less attractive forms of investment to the Commonwealth Bank.
It is true that a certain section of the Commonwealth Bank is devoted to hire purchase, but its activities are very small in comparison with what is being done by the private banks. Many of the private banks have almost completely thrown over their other investments because of the very high return from the hire-purchase field. lt seems strange that to-day a person may buy a television set without paying a deposit yet cannot obtain finance for a house in which to put that set. It is also strange that refrigerators and many other things can be obtained with very little or no deposit, that firms are vying with each other for custom, putting expensive advertisements over the air and in the newspapers and in fact giving things away allegedly for nothing in their attempts to inveigle customers into buying and then being faced with a terrific hire-purchase bill.
In many cases the interest debt under hire purchase amounts to more than the original cost of the article. I know that to be a fact because I have personal knowledge of two people in Western Australia whose refrigerators have been repossessed even though they have paid off a considerable sum. After paying off that money, they found that their indebtedness for interest was greater than the original cost of the refrigerator.
That is why we of the Labour Party oppose any attempt by these financial institutions to burden the Australian community with terrific hire-purchase rates of interest. The Commonwealth Government has said that it cannot interfere with hire purchase, that this is a matter for the States. lt could interfere through the Commonwealth Bank in that, through the Commonwealth Bank, it should be able to give a lead to the States in this matter. Some of the hire-purchase companies are owned by the banks which are not really fulfilling their functions as banks when they enter this field. At the moment, they have a virtual monopoly over hire purchase.
When we are discussing the banking bills separately in committee, a great deal more can be said about the Labour Party’s attitude to the banks. Honorable senators on the Government side talk about the Labour Party being pledged to the nationalization of the banks. We are, but we realize that if our ideal is not possible of attainment within the bounds of the Constitution we cannot go beyond the limits of the Constitution and do something illegal. Although we may still have an ideal, if it is impossible of attainment, then it is no longer feasible that the Labour Party should be attacked for being pledged to the nationalization of the banks. That argument by our opponents is simply a bogy which is almost on a par with that of communism. The cry about the socialization of the banks attained its objective in 1949, .and now a new attack is coming forward. Those who profited most by the 1949 elections have decided that they must keep the Government up to the mark, that they must obtain their reward. The legislation before us is the result of that effort and I am confident that one person in Australia who is extremely glad that he is out of the Parliament now that this legislation is before us is the former Treasurer, Sir Arthur Fadden. I feel quite certain that he was entirely opposed to it just as the Labour Party strenuously opposes it.
– 1 support the four main banking bills and the ten ancillary bills. I could give them my whole-hearted support for one reason, if one reason alone were necessary - they show a stern and strong face against monopolistic practices. I have never been able to understand the frequentlypropounded claim of members of the Labour Party that they are interested in the control and suppression of monopolies when we know that in so much of the Labour legislation that has been before this Parliament in the past there is a specific desire or intention to create not a normal monopoly but the worst monopoly of all - a State monopoly. That was the intention of Mr. Chifley’s ill-fated banking legislation.
About three weeks or a month ago, we also had the pleasure of throwing out other monopoly legislation which was passed by the Labour Government a few years ago. I refer to the monopoly provisions in that government’s airlines legis lation. In that legislation, the party which said it had an interest in repressing monopolies sought to kill a pioneer airline in this country. Sometimes honorable senators opposite have agreed with some of the remarks I have made about the Australian Industries Preservation Act, and have said they are opposed to monopolies. But if I take that principle the whole way through and argue, as I have done, that we must combat monopolies of labour just as much as monopolies of capital, honorable senators opposite certainly part company with me.
Senator Tangney repeated some of the statements already made during this debate about banks and hire purchase, and 1 think it is necessary to state simply the amounts let out by the banks on general loan together with the amounts invested by them in hire purchase. General bank lending totals £840,000,000, whereas the amount involved in hire purchase is only £10,000,000. Where on earth does the Opposition get this nonsense that the banks are continually asking customers to move along the counter from the normal banking section to the hire-purchase section? After all, hire purchase has been referred to by Australian Labour Party spokesmen as the poor man’s bank. Does the Labour Party wish to deprive the poor man of the benefit of hire purchase? Does the Labour Party wish to deprive the poor man’s wife of the opportunity to secure a washing machine, a refrigerator, a carpet sweeper and the other comforts that she can obtain by means of hire purchase?
As to the rate of interest charged, 1 remind honorable senators opposite that the Labour Party in New South Wales fixed a maximum rate of interest of 12i per cent., a rate so high that no reputable hirepurchase company dares apply it. I am not interested in the activities of the snide, fly-by-night companies, but I repeat that no reputable firm applies the maximum rate of interest fixed by the Labour Party in that State.
Senator McKenna said that the legislation now before us was the first step towards the sale of the bank by the Government. He knows full well that the assets of the Commonwealth Savings Bank alone are in excess of £730,000,000. The value of these assets, added to the assets of the
Trading Bank - which would be very difficul to assess - would bring the purchase price of the bank to the vicinity of £1,500,000,000 to £2,000,000,000. I do not think there are very many purchasers in a position to pay the price, so we can dismiss the honorable senator’s statement as a flight of fancy. How could the Government sell the bank? Frankly, I do not know. As the honorable senator well knows, before any such action could be taken an act of Parliament would have to be passed, and that is not something that cannot be done without the full knowledge of the Australian public.
Perhaps it is redundant at this stage to point out the objectives of the four main measures, but in order to outline the ambit of my remarks I must do so. The legislation seeks to establish a true reserve bank; to separate the functions of the Commonwealth Trading Bank and the Reserve Bank; to amend the special deposits system and to set up a Development Bank. Unfortunately, the Australian Labour Party has such a phobia about banking that it is very difficult to discuss the subject calmly and dispassionately. One gathers the impression that banking was discovered in 1936 by Mr. Chifley in a minority report of a famous royal commission. The truth is very far from that. In the year 2,000 B.C. the Babylonian temples were operating banks in competition with each other. The various gods and goddesses had their own banks at the temples and they provided accommodation for suppliants at different rates of interest. By the year 575 B.C. the private enterprise banker was operating in full swing in Babylon. The “ Igibi “ Bank of Babylon commenced to operate about 600 B.C. It acted1 as a buying agent for clients; it loaned money on crops, attaching them in advance to ensure that the bank was reimbursed - much as present-day banks do - it loaned money on the signatures of clients and on objects deposited, and it paid interest on deposits. In the fourth century B.C. banking was well established on a competitive basis. The Greeks had state or city banks run by the temples of the deities, operating in competition with private banking institutions. They had no government or city bank monopoly in those days. Even in those days the Greeks found it desirable to separate the various functions of banking.
That is not something that we discovered in 1959. However, because of the refusal of the Labour Party to go back in history beyond 1936, it is necessary to refer to some of these matters.
The Government is seeking to do exactly what the ancients did 2,000 years ago. We are seeking to separate the functions of the bank. The “ Encyclopaedia Britannica “ states that there was some concentration of functions in some of the large Greek institutions, and it goes on to state that the different operations of banking were performed by various kinds of bankers. There was no central bank at the time simply because there was no central state authority, although in Greece the great temples of Ephesus and Delphi were in hot and successful competition with the private banks. We can draw two lessons from the very successful economic system of the ancients - first, that we must have competition in banking, and secondly, that we must separate the various functions of the bank.
Coming to more modern times, about the year 200 B.C. we find the Roman system which was very similar in principle to our own. The Roman legislation was codified in very minute form. For instance, the protection taken against fraud was remarkable. In the year 210 B.C. the earliest legislation on banking of which we have precise record prescribed the places which the various officers of the banks were entitled to occupy in the forum. The Romans did not follow the Greeks precisely, but their intricate and minute regulations were of such a nature as to inspire the utmost confidence of the Roman community in the private banks.
– Did the Romans impose crucifixion as a deterrent to wrongdoers?
– I am unable to answer that question. As I have said, we are following the system of the ancients. The fourteen bank bills before us codify and lay down in precise and determined fashion the law in relation to banking in Australia. Incidentally, the Romans also were aware of the necessity to separate banking functions. In Egypt the temple banks and the private banks carried on in competition, and the scribe has it that only the private enterprise bank at Alexandria had sufficient initiative to open for business at night, when most vessels could enter Alexandria harbour, when the state banks were closed.
Honorable senators will be relieved to know that I do not propose to deal with banking through the Middle Ages and the periods when the Lombards and the Rothchilds operated. I have said enough to impress on honorable senators opposite that we are building our financial structure on a sound, well-tried and successful foundation. Dealing now with the position in Australia in more recent times, in August, 1947, the then Prime Minister received a severe setback. The Banking Act of 1945 had become law. One of the sections of that act gave to the Treasurer of the day the power to direct municipalities and public authorities to bank only with the Commonwealth Bank. The power to direct .s so beloved of the Australian Labour Party. I am very proud to be a citizen of the great city which first rose up in revolt against that outrageous piece of legislation. The Melbourne City Council was successful before the High Court of Australia and had that iniquitous section thrown out. Having received the decision of the High Court on the matter, and seeing that that little bit of dictatorship could not be stomached, the then Prime Minister, as Senator Anderson has remarked, announced that Cabinet had authorized Dr. Evatt and himself to prepare legislation for submission to the Australian Labour Party for the nationalization of the banks. I nave mentioned that statement not because it refers to nationalization, but because it was said that the legislation was to be submitted for discussion, not to Parliament but to the Australian Labour Party. That was the height of socialistic arrogance and the height of contempt for the institution of Parliament, but it was typical of the socialist approach to economic and many other matters.
I turn now from the Labour Party’s phobia of the past. Some of the remarks that have been made in the debate by honorable senators opposite have reflected the prejudices of past ages and the wornout, ancient shibboleths of class hatred rather than a dispassionate criticism of the legislation under review. I am glad to have the benefit of Senator O’Byrne’s presence at the moment, because I recall that on the last occasion that this legislation was before the Parliament he told us of a certain parrot which acted as a financial adviser to a certain ruler. Judging by the parrot cries of “ You are weakening the people’s hank “, that parrot has secured alternative employment.
How any fair-minded person, not imbued with the desire for nationalization or confiscation, could object to separate boards for the Reserve Bank and the Commonwealth Trading Bank is beyond me. In law there is a maxim that no man shall be a judge in his own cause, and Lord Acton said that justice not only must be done but also must seem to be done. If the Opposition were fair in this matter it would concede the utter impossibility of harmony existing in banking business when seven banks are compelled to divulge their whole trading operations to a competitor which has no similar reciprocal obligation. I would think that even the Archangel Gabriel would have difficulty in carrying out with impartiality the job of controlling a central bank under those circumstances. I do not know whether Dr. Coombs is an archangel. We believe that it is a government’s duty to lay down the financial policy of the nation. Professor John Jewkes - he was originally a socialist Professor of Economics, but having seen the error of his ways he naturally ended up as a sound supporter of private enterprise - said that it is the duty of the Government to influence the economic weather without rationing raindrops. Hence the strengthening of the central bank’s control over special deposits.
I recall Senator McKenna giving a number of reasons for his opposition to this legislation. They were really nominal reasons, because I do not think he sincerely believed them, just as I do not think the Labour Party’s opposition to the bill is sincere. The Labour Party knows, just as the private banks know, that the structure of the Commonwealth Bank is going to be substantially strengthened and that the profits which the bank has earned over the past few years under its board will continue to grow. Senator Vincent, I think, completely demolished the demolition theory that has been advanced by the Opposition when he indicated the vast increase in the number of branches, the thriving state of the trading accounts and the extremely good repute in which the Commonwealth Bank is held by the Australian people. If those things are the results of the actions of a government which is determined to destroy the Commonwealth Bank, I think words have lost their meaning and we might just as well converse in pure jibberish
I know that Labour Party members are in complete agreement - I do not like to nail this down inclusively - with Lenin, one of their prophets on this subject. Lenin said, “ We must secure control of the banking system for the complete implementation of socialism “. I know that all members of the Labour Party are not Communists. I do not suggest for a moment that they are; it would be too silly for words. I know that a number of the members of the Opposition are really opposed to communism, although they keep very quiet about it, but I think the position that obtains is that under a veneer of respectability - “ respectability “ might be a a strong word to apply - very many Communist ideas, Communist thoughts and Communist measures are propounded by the Labour Party which the Communists themselves would have no possible chance of bringing adequately before the Australian public. Lenin stated his position on banking succinctly, and it has been followed by members of the Labour Party.
How on earth honorable senators opposite can say that they would defeat a monopoly and give the people a choice in banking by destroying eight banks and replacing them with one, I simply cannot understand.
I think that the question of special deposits, even at this stage of the debate, is worthy of mention. During the war, in order to control prices and inflation, Labour introduced, by statutory regulation, a requirement that all the trading banks should open an account with the Commonwealth Bank in which they were to deposit a percentage of the increase of their assets, taking the base year as 1942. I do not challenge the necessity for the introduction of that statutory regulation during wartime. After all, the Labour Party was simply building upon the National Security Act and the regulations made thereunder, which were introduced by the Menzies’ Government at the outbreak of the war. I do not challenge the necessity for the special deposit system as introduced by the Labour Party during a time of hostilities. The fact that the system was unfair was shown subsequently, although I do not suggest that during the time of its implementation by Labour it was administered unfairly. Under that system it was possible for the Treasurer of the day to discriminate against a particular bank by calling up a special deposit. He had power to call on one bank and noi on another. Naturally, with a proper appreciation of justice and equity, we cannot have a bar of that type of nonsense, and the power of the Treasurer to discriminate has been removed.
We are supposed to be toadying to the private banks in this legislation, but I would remind the chamber that a right to call for 25 per cent, of the increase in deposits over the base year is provided for. That percentage of the increase can be called up on 24 hours’ notice, and the whole increase can be called up on 45 days’ notice. It is obviously necessary, when calling in the full balance, that a reasonable period like 45 days should be given to the bank so that it will not crash as a result of the sudden drain on its liquidity.
Senator Kennelly said, by way of interjection, that the special deposits provisions of this legislation would not be operated. What a shocking insult it is to Dr. Coombs to suggest that a piece of machinery which I thought both sides of the Parliament would concede to be necessary would not be acted upon by the Chairman of the Reserve Bank Board!
I think it was on the last occasion on which this legislation was before us the Leader of the Opposition said that we could not have expected harmony from this legislation, otherwise we would have repealed the penalties provided for failure to comply with a Reserve Bank directive. I do not think the honorable senator is serious about that. What a scream about bank stooges and what cries of “ Sell-out!” and “ Election expenses!” would have followed if we had removed the sanctions provisions from this legislation! All legislation which orders something to be done must provide either expressly or by way of a general section that, if the law is disobeyed, a certain penalty shall be imposed. I do not think the honorable senator can name any legislation of comparable importance in which no sanctions are provided for refusal to obey the law.
On the question of liquidity, I think it was in an earlier debate on this subject that the Leader of the Opposition appealed to the authority of Professor Arndt’s book. 1 remind the honorable senator that in 1956 this economist delivered the Chifley Memorial Lecture, in which he said -
Labour has made no progress in economic thought for a quarter of a century.
Honorable senators opposite cannot get any comfort from Professor Arndt, even though 1 rather thought that I recognized certain phrases used last night by Senator Kennelly.
There is one other remark by Senator Kennelly which cannot be allowed to go unchallenged or not commented upon. The purport of his remark was this: “ The banks are paying you for this legislation. You are toadying to the private banks. You are going to destroy the Commonwealth Bank, and it is all very wicked “. Of course, that is arrant and absolute nonsense. If we are to talk about money coming from various places - presumably the honorable senator wanted us to do so - let me ask him how much Comrade Elliott and his Communist-controlled Seamen’s Union paid into the Australian Labour Party’s funds for the election in November last.
– What about in 1949?
– I shall just deal with the matter of which we have immediate knowledge. Last year, the Senate appointed a committee, under the chairmanship of Senator Wright, to investigate certain actions which were found to be industrial extortion. I refer to the Senate Select Committee on Indemnity Payments to Maritime Unions. During the committee’s investigations it was disclosed that the Seamen’s Union had obtained approximately £40,000 by way of indemnity payments, which the committee found to be industrial blackmail. Comrade Elliott said that those indemnity payments, which were paid into the Peace and Progress Fund, were to be used for the destruction of the Menzies Government. As Senator Kennelly is not in the chamber, would any other honorable senator opposite like to take his place and deny that before the federal election in November last the Australian Labour Party received £3,200 from the Communist-controlled Seamen’s Union?
I wonder how much money flowed into Labour’s coffers from the Communistcontrolled Waterside Workers Federation levy at Hobart. 1 have no desire to refer to the Hurseys, as I understand there is still some litigation in train in regard to them; but 1 shall refer to Mr. Colrain, in respect of whom no writ has been issued.
– Yes, a writ has been issued.
– Well, I defer to my friend, Senator Wright. I shall have to go back to an earlier state of affairs. I do not know what money has flowed to the Australian Labour Party as a result of the compulsory levy at Hobart. That is really blood money, of course. I do not accept Dougherty of the Australian Workers Union as an authority on many things, but when he says that the indemnity payments were blood money I accept his statement. Mr. Monk described them as being immoral. This tainted money flowed into the coffers of the Australian Labour Party from the Peace and Progress Fund for the destruction of the Menzies Government.
It is drivelling nonsense to talk about the banks paying us for this legislation. I can recall a solid anti-Communist member of the Labour Party who was Prime Minister of this country and who had the respect of members on both sides of the Parliament - I refer to the late James Scullin - being compelled to say away back in the ‘thirties, “ How can the A.L.P. fight communism? It needs the support of unions like the Ironworkers Union. It needs their affiliation fees at election times.” I suggest that that position has not substantially changed. I had not intended to digress in this manner, but in my view the remarks of the Deputy Leader of the Opposition called for some form of comment.
I have no doubt that the codification which 1 hope will become law in this country very soon will be used wisely and well. The institution of the Development Bank is in itself a radical improvement in the financial arrangements that are available to the citizens of Australia. I have a particular interest in the fight against restrictive trade practices and monopolies. Very often a small manufacturer or a small man in any other sphere is unable to put up the kind of fiscal and material security against which a bank might normally advance funds. The special function of the Development Bank, as I see it, will be to give the small man a chance.
Sitting suspended from 12.45 to 2.15 p.m.
– 1 had almost reached the terminal point of my remarks when the sitting was suspended. I merely want to say, in conclusion, that I appeal to honorable senators opposite to give this legislation a fair trial. 1 ask them to forget outworn and outmoded shibboleths of the past, to forget all the badges and catchcries of class hatred and to think of the warning issued by Professor Arndt, to which I referred earlier, to the effect that the Labour Party’s economic thinking has made no progress in 25 years. I ask them to forget about 1893 and1 1931, and to think about 1959 and the future. Let them take a lesson, certainly, from the experience of history. 1 have never heard a supporter of the Labour Party allege that Babylon fell because of the private banks, but 1 think that that is about the only allegation that has not been made against them. I look forward, Mr. President, to the implementation of this legislation as constituting a sound economic charter for Australia’s future.
.- The late Mr. Frank Anstey, who was at one time the member for Bourke in this Parliament, in his book “ Money Power “, published in 1921, quoted from a report in the New Zealand “ Post “ of 16th March, 1916, in which Sir Denison Miller, the first Governor of the Commonwealth Bank, had stated that banking had its own language which was not understood by the people and not intended to be understood. That can be said with added emphasis by any one who attempts to read closely and critically the second-reading speeches of the Minister who introduced the bills now before the Senate. From my own point of view, they represent just so many phrasemaking generalities and contradictions. Their objective is to overwhelm us with an avalanche of words which subsequently will become the barricades, in the form of acts, behind which it is intended that the private banks shall have a perfectly free hand to control the economic policy of this, country.
I agree with Senator McKenna when he points out that the bills are sinister and dangerous. In the light of the dangerously unbalanced economy of this country, J should say that these banking bills indicate that the Government is determined to act: in the interests of the privately owned banks and financial companies in order to facilitate their merging more profitably with industrial capital. That is already taking place to-day. Senator Kennelly referred on several occasions to instances in which the banks were coming more and more into commerce and virtually setting out to control the whole of the nation’s economy. For the time being, that is being done mainly by increasing the powers of the private banks to control the modem banking system of Australia at the expense of the Commonwealth Bank.
The Commonwealth Bank, as originally designed, is to be disintegrated to suit the policy of the private banks. In this connexion, we should never lose sight of the fact that the real purpose of those who control the private banks is not to abolish the scourge of poverty and its tragic and far-reaching effects, but simply to increase the profits and capital holdings of the wealthy shareholders of the banks. That becomes quite evident when we look at the colossal, palatial buildings that have been erected during recent years in the capital cities and compare them with the miserable hovels in which thousands of age pensioners and others have to live. There, we see the two extremes of an unbalanced economy - extreme wealth on the one hand and extreme poverty on the other.
The Government makes no attempt whatever to rectify that state of affairs. Instead, it intends that the banks shall continue in the future as they have in the past. That position will continue while it is tolerated by the impoverished victims, actual and potential. The economy of the nation will be controlled by boards of directors, representing the private banks, which will defy or ignore with impunity democratically elected governments, as happens at times even now. Senator McKenna stated, and correctly so in my opinion, that nationalization of banking is unquestionably an Australian Labour Party objective. I should add that the attainment of that objective will ultimately become more and more a national necessity.
I wish to quote from a book entitled ** Modern Banking “, by Leslie C. Jauncey, Ph.D., an Australian by birth who was a student at the Adelaide University and subsequently graduated from Harvard University in the United States of America. In 1934, he wrote a book called “Australia’s Government Bank “, in which he stated that the Commonwealth Bank was the only government-owned commercial and central bank in the English-speaking world. I corresponded with him for years. He died a few weeks ago, while he was engaged in writing a book on the modern banking system of America. When he learned, in 1947, that we intended to nationalize the banks here in Australia, he came out to this country and wrote the book “ Modern Banking “, which was published in Australia. I was in consultation with him from time to time, and I want to refer to what he wrote, as an expert, on nationalization in Australia. We should try to understand the reasoning or the approach in coming to that conclusion. In that respect, the author states -
The position of central banking under nationalization in Australia would be different from what it has been in the past. A unified banking system simplifies many problems. First, the Government bank would be able to effect a policy throughout the banking system with dispatch. It is true that the State banks would not be directly under control of the system, but they are not an important factor in the financial structure of Australia. If difficulty arises with State banks, then section 51 (xiii.) of the Federal Constitution gives the Commonwealth power to legislate in “ State banking extending beyond the limits of the State concerned “.
That is already in the Constitution -
Right of note issue also gives an advantage to the Commonwealth Bank.
In passing, 1 should like to say that that has been proved in the past, as I shall show. “When the banks have had a free hand to issue intrinsically valueless notes, there has always been chaos and crisis. He went on to say -
Under nationalization the reserves of commercial banks would be centred in the Commonwealth Bank. The need for “ Special Deposits “ would cease. There would be no necessity for clearance reserves for many separate commercial banks. The entire banking system commercially would be similar to the position inside an individual commercial bank.
We found that we had to take steps in that direction during the war years. It was necessary, as far as was physically and financially possible, to organize team work not only with hanks but also with industrial organizations which at that time were working at cross purposes and were impeding the efforts of the Government to defend this country. He went on to say -
A system of bookkeeping would perform most of the internal clearing of commercial banking debits and credits. The Government bank would set all interest rates, and so there would be no need for legislation stating that the central bank had power to set interest rates and give directions to individual banks on the kind of loans to be made. Stipulations of that kind would become unnecessary. So would all the measures compelling private banks to act through the central bank in foreign exchange and gold transactions. One of the improvements under bank nationalization can be the simplification of many phases of present-day banking.
His reference to interest is appropriate at the moment when certain financial companies are offering to pay interest of from 10 per cent, to 20 per cent, on loans. The amount of interest plus their own profit all goes into the prices of the articles purchased, particularly under the hire-purchase system. So that there must be some control, otherwise the banks and financial companies are practically laws unto themselves. That has been the position until recent years. The passage continues -
During the past few years extension of government ownership of central banking in many parts of the world has strengthened co-ordination between governments and their central banks.
That is perfectly true. As I have said, this book is available in the Library, and honorable senators who read it will find that the author has set out all the countries that have been, virtually forced by economic and financial necessity to take control or to exercise greater control over banking than they have done in the past. The author says -
Laws nationalizing central banks usually state that the Government is to be the final authority in matters of financial policy.
During the past few years government finance has become an important factor in the credit position of many nations. Under democracy it is essential that the government should have control over the credit organization of the community.
Well, the Australian Labour Party will agree that that is so. It is not merely a matter of the wish being father to the thought, because a study of economic science, to which Senator Hannan referred, proves - anyhow, from my point of view - that the economist to-day is a highly qualified person by university standards. He knows everything about accumulating capital. He concentrates on that and says how it can be done, but there is not ons word about the abolition of poverty. I had personal experience of those gentlemen in 1931. The book continues -
Extending public ownership from the central to the commercial banks will give the community a uniform credit system involving the Government, the central bank and the commercial banks of the country. In Australia about 98 per cent, of the savings bank business is government-owned, and the agricultural banks are in the hands of the Governments. With the nationalization of the commercial banks, a uniform credit policy would cover a wide sector of the financial organization of the Commonwealth and so strengthen Australia’s economic structure.
The author’s reference to savings banks was made in 1949. Since then the private banks have come into the scheme of things and they are now operating savings banks. Our opposition in that connexion is based on our belief that in the event of a crisis, the savings banks will not be even as safe as they were in 1893 when the banks crashed here in Australia. With regard to the nationalization of commercial banking, the book states -
Under nationalization of commercial banking the Government bank would continue to be the bank of issue. In Australia the note issue would remain legal tender, as at present, and would circulate so long as it had the confidence of the people. The note issue department of the Commonwealth Bank would continue to supervise this financial instrument. The Commonwealth Bank would, as before, be the Government’s banker, agent and financial adviser. The Government bank will be the custodian of the nation’s reserves of international currency, and it would be the controller of credit in the community. Operations of central banking would come under different emphasis with the banks in one organization.
There you have, multum in parvo, a scheme for nationalization set out by one who was highly qualified to judge and who had made a lifetime study of banking in Australia and in America as well. I have taken the opportunity of quoting his remarks so that honorable senators, who are sufficiently interested, may refer to them further. Next time Government supporters have anything to say about banking they should try to fault the opinions of this expert. I do not think they will be able to do so. As I have said, I attended several meetings with Dr. Jauncey when he wrote this book, and I am certain that what he called “ the effects of economic development “ will force the issue here just as it has forced the issue in other countries.
Senator Wright made a remark which I think is worthy of notice. He said -
After parliamentary vicissitudes that took an extraordinary turn last year we now have the satisfaction of seeing the old spirit expressed in a number of bills which I believe will become acts.
What was the “ old spirit “? It was the spirit that operated so greatly to the detriment of the people of England before 1844 that the government of the day had to adopt what was known as the Peel Act to prevent the Bank of England from inflating the currency by over-issuing bank notes. The act has since become a dead letter, for governments, at the behest of the Bank of England and other banks in that country, now continually inflate the currency. The old spirit to which Senator Wright referred impoverished thousand of people and made necessary the introduction of the legislation which I have mentioned. The State, for all practical purposes, made common cause with the banks. In the September, 1940, issue of “ The Banker “, the official publication of the English banks, the following appeared under the caption, “ Monetary Illusions and the War Effort “: -
It is not in the least true that the production of arms could not take place, or would take place on a smaller scale, if the public were not providing the money in the form of gifts or loans or taxes. If the money were not forthcoming in one of these ways it would have to be created. And this, the State, as the monetary authority, can do perfectly well, at negligible cost, and practically without limit.
It was apparent that after the Peel Act of 1944 had become a dead letter the British Government could collaborate with the banks in inflating the currency to any extent. That meant that millions of pounds worth of goods and services could be obtained for intrinsically worthless bits of paper. That practice began during the First World War and continued during the Second World War with the result that what we call the “ national debt “ was built up to colossal proportions. 1 remind honorable senators that there is no such thing as a national debt in the full and complete sense of the word. A national debt is an aggregate of privately owned debts. The owners are mostly private banks or financial institutions. The cost of the war was met in terms of the destruction of human life and material, but the legal money debt remained to be paid by those who fought and worked. These people must pay perpetual tribute to financiers who never raised a hand to help production in the homeland, or to serve on the fighting front. That is the system under which we work to-day.
Speaking from memory, what we call the national debt approximates £3,500,000,000 and the annual interest thereon is approximately £145,000,000. That extensive amount of tribute comes out of the pockets of the people who do the actual work of society, and is paid to those who own the bonds. Therefore, the law has delivered up a veritable harvest for the bond-holders in English-speaking and other countries. A similar policy has been adopted by governments in all countries where private banking systems operate independently. The purchasing power of the paper money issued in the name of such governments is gradually being reduced to the irreducible minimum. Indeed, it is exactly what has happened in Australia. “ Hansard “ of October, 1958, records what I quoted from the English “Hansard” of April, 1957. Figures were given showing the extent to which the purchasing power of sterling had been depreciated as from 1914 to 1956, with the exception of the second world war period. That is the only comparison that can be made because inflation began in 1914 and has continued right up to this day. In 1956, the Secretary to the Chancellor of the Exchequer said that the purchasing power of the £1 sterling had been depreciated by 78 per cent, compared with the purchasing power of the £1 sterling in 1914. In other words, the £1 sterling was worth 4s. 4d. in 1956 compared with 20s. in 1914. There has been further depreciation of the currency in England since 1956, so it is safe to say that to-day the £1 sterling is worth approximately 4s. compared with 20s. in 1914. If we apply our adverse exchange rate of 25 per cent., the £l Australian to-day is worth only 3s. The effect of that depreciation has been to enable the banks and financial institutions to build up their profits to colossal proportions. So great have these profits been that the Bank of Adelaide is erecting a fine building in Melbourne at a cost of £600,000. While 200,000 people, mostly young couples, need homes and are unable to get them, financial institutions are converting all their available liquid capital - their profits - into fixed capital on which no income taxation is paid.
This being the case, it is obvious that the victims of this inflationary policy - the wage and small salary earners, together with the recipients of small pensions and persons on fixed incomes - are being reduced more or less to the level of subsidized pauperism. Why, according to the Director-General of Social Services, the number of age pensioners in Australia in 1958 reached the alltime high of 500,000, while the proportion of age pensioners to the number of people of pensionable age stood at the record level of 48.2 per cent.
Thousands of these age pensioners are people who have been retired by private enterprise simply because they had reached an age at which it was considered by private enterprise that they could no longer be profitably employed. Thousands of these people are years younger than I am and more vigorous physically. They are capable of being employed usefully, and they should be employed, but they are condemned to live in a state of solitary confinement and to exist as best they can on a paltry pension of £4 7s. 6d. a week. In many cases - I know of hundreds of them - they pay anything from £2 10s. to £3 a week for a room, and it is suggested that the balance is sufficient for them to live on.
With inflation and depreciation of currency, prices have risen sky-high. The only control over them is that exercised by manufacturers and producers. It is almost impossible for those unfortunates who are reduced to the level of paupers to buy the ordinary necessaries of life. And that is justified by this Government because it has taken no action to rectify that state of affairs! I am not suggesting that this position is peculiar to Australia; a similar state of affairs applies in other countries, and so long as the present system continues that state of affairs will exist. As has been said by many Opposition speakers, those honorable senators of the Government side who would be reduced to the same level if they lost their seats in the Senate have no sympathy at all for the other fellow’s point of view. They simply say that it is financially impossible to improve the lot of these unfortunate people. I point out that finance is not required in many thousands of cases. I emphasize that there are thousands of experienced tradesmen and others who are capable of doing the work that is necessary to be done.
To support my assertion that they are capable of doing the work, I mention what happened in connexion with aircraft production during the war-time period between 1941 and 1945, and what took place in the Postal Department between 1945 and 1949. In aircraft production, we reemployed superannuitants to supervise thousands of trainees. The same thing was done in the Postal Department. In aircraft production, many machinists were educated and trained by experienced engineers who had been superannuated, and aircraft production succeeded beyond all expectations. But when the war ended, the Labour Government was defeated and all these people were sacked and reduced to living as best they could on the dole. In the face of this treatment, the Government speaks of British justice and its desire to do the fair and honest thing by all the people! Why, the people of this country are just as viciously and maliciously classdivided as the people of any other country!
That reminds me of what Senator Hannan has to say. He spoke of the banks of Babylon, ancient Greece and Rome, but he did not say that in those days bank debts were secured by not only a mortgage on land but also a warrant on the body of the debtor. The first strikes that took place in those days were strikes by the debtors against the creditors and they were conducted for the same reason as employees go on strike against employers to-day - because they had been starved by the creditors to a stage beyond the limits of physical endurance. I complain to-day, as I have complained on thousands of occasions, at the readiness with which so many splendid working men and women acquiesce in their own subjection at the hands of a government similar to the Government which controls us to-day. At present we have 500,000 age pensioners and many thousands of miners who are getting a raw deal. Recently, Senator Spooner said that the output from the New South Wales coal mines for the period from 1954 to 1958 had increased by 54 per cent., yet 7,000 miners have been thrown on the scrapheap to struggle for existence in the best way they can. I suppose at this moment most of them are receiving unemployment relief benefits and are being forced to live as paupers until such time as private enterprise, or the Government, sees fit to employ them under decent conditions.
In the days to which Senator Hannan referred, the banks were interested primarily in slavery and in financing wars. They were not concerned about doing justice to human beings who have as much right to live at a decent standard as the bankers themselves. But that has been going on ever since the world began. Senator Hannan urged members of theOpposition to forget the past, but to do that would be to ignore all that is evil; to ignore the sufferings of the people, and to ignore the frustration to which the people are subjected by Government policy. Every time that I hear the Lord’s Prayer recited in this chamber I hope that some action will be taken by the Government to translate the noblest of sentiments into the noblest of actions. Unfortunately, the reverse position applies - the noblest of sentiments are being used to justify the most ignoble of practices.
Much has been said about free enterprise and competition. The “ Boston Globe “ of 21st December, 1958, contained this statement -
The logic of free enterprise is competition, and competition carried to its logical extreme is violence.
Although that statement refers particularly to international competition, I feel that competition carried to the extreme within national boundaries is the cause of increasing poverty. I am speaking of my own knowledge, and not repeating statements I have read. When I was a boy very many years ago the poverty I saw made a vivid impression on my mind. I saw thousands of men in the industrial suburbs evicted from their homes and their furniture thrown on the streets. They were expected to exist as best they could on food handed out at soup kitchens. In the ‘twenties after the First World War we saw soup kitchens in Sydney and Melbourne that were the direct result of the implementation of a banking system controlled by the banks practically independently of the Government. The same spectacle faced us in the thirties. At that time Professor Copland, Professor Giblin and others had much to say about the problem. Professor Giblin wrote thirteen letters to John Smith, the man in the street, which were published in the Melbourne “ Herald “, giving his reasons why he should tighten his belt and agree to a reduction in wages. At that time I was president of the Melbourne Trades Hall and I said that the professor either was afraid to admit the truth or was ignorant of it. I was selected to reply in the press to his letters and when I commenced to do so Sir Keith Murdoch called the whole thing off. The main objective of these academically qualified economists is to tell the bankers how to increase their wealth at the expense of the wage-earners, but they do not say one word or advance one suggestion as to how poverty can be abolished. Professor Giblin did not utter one word along those lines.
I was voted into the Senate in 1937 and took my seat in the chamber in 1938. At that time approximately 500,000 workers and their families were forced to live on the dole. When war broke out in 1939 and the prospect of large profits became apparent, money was found to clothe, feed and house those thousands of men and women who had been living in conditions of semistarvation. Everything was done to make them physically fit to work in the homeland and to fight at the front. Those conditions always apply whenever war breaks out.
Senator Wright has <said that these bills aim to get back to the old system of the banks controlling the economy of the country. Let us see what happened in England. Mr. V. C. Vickers, who had been Governor of the Bank of England from 1910 to 1919, resigned because of the arrangements that were then -being made to return to the gold standard. In his book he described the people with whom he was associated as financial gangsters. That is a very appropriate term. He was succeeded by Mr. Montagu Norman, who suggested that an outside committee - something of the order of the Richardson committee - be set up to inquire into the possibility of returning to the gold standard. That was done from about 1925 until 1931, but what was the result? Hundreds of thousands of debtors were ruined because at the time they received their loans the £1 was worth 9s. or 10s., but they were required to make their repayments with the £1 worth 20s. in gold. When the position became so desperate that millions were unemployed in England, the nation went off the gold standard and has been off it ever since. If you want to assess the value of a currency to-day, you cannot get away from the gold basis. That is the measure of the purchasing power of all currencies in the Englishspeaking world. If you study the whole position as closely and as critically as you can, you will find that there was never another age when the victims of private banking were impoverished to the extent that they were in the days to which I have referred and at the present time. These bills will accelerate the process and give to the banks a freer hand to make the position worse than it is to-day. Provided we keep out of another war, we will have a depression that will probably be a great deal worse than the depression of the thirties, simply because the economy is unbalanced in the direction that I have indicated and the Government is not taking any action to remedy the position.
I have felt it incumbent upon me to say these things so that when the time comes when things are far worse than they are to-day, it cannot be said that I was remiss in my duty. I would recommend that those who are sufficiently interested read a great deal more about this subject than they have apparently read. So far as I can judge, the Minister simply repeated what had been written for him. I repeat that his speeches were a mass of phrases, generalities and contradictions. They were so worded as to give the Government an opportunity to prove anything it wants to prove to justify the impoverishment that the banking system is .causing.
Let me say finally that the only remedy for the time being under existing conditions - not as an end in itself but as a means to an end - is national control of banking by men who have some idea of currency stabilization. If that is done, we may be able to weather the storm. If it is not done, we will have to face up to the storm just as we faced up to it in the past.
.- I rise with enthusiasm to support this legislation because it gives effect to two basic principles that are very dear to my heart. First, it is designed to prevent the nationalization of banking by stealth or duress, and secondly, it will encourage private enterprise in the development of this country. 1 make no apology whatsoever for supporting legislation that is designed to encourage private enterprise. This is a young country, the youngest settled country in the world, and it is not just mere chance that to-day we have the highest standard of living of any country in the world. 1 am bound to say that we are indebted to a system of government and a way of life that is founded on private enterprise. I do not hold any brief for the banks, but I do hold a brief for the people of Victoria who, in 1949, at the first opportunity they had to lodge their protest against Labour’s bank nationalization legislation, lodged it in no uncertain manner, and sent to this Parliament a body of men pledged to defend private enterprise and to prevent the nationalization of our banking institutions. It was in 1947 that banking nationalization first raised its ugly head. The people dealt with it by way of referendum in no uncertain way. At the very first election at which they had the opportunity to express themselves - the 1949 election - they chose a parliament comprised mainly of men who were pledged to maintain the private enterprise system of government and economics. It is true, Sir, that on every occasion since then the people of Australia have re-affirmed their decision to maintain private enterprise and to keep nationalization and socialism at bay. Even as recently as 22nd November, the people again sent back to this Parliament, in record numbers, men who were pledged to do just that. Tt amazes me when I hear my colleagues of the Opposition suggest that the supporters of the Democratic Labour Party were responsible for the defeat of the would-be Labour Government.
– What percentage of votes did your party get in the recent federal elections?
– Honorable senators opposite are very anxious to speak about percentages. Results show that the great majority of people who really matter in this country are determined to prevent nationalization and socialism. When my friends of the Opposition suggest that Democratic Labour Party supporters were misguided in giving their preferences to the Liberal and Country parties, I remind them that to-day, after having listened to the avowed intentions of members of the Opposition, the people’s judgment on that day has been vindicated. They had to choose whether they wanted free enterprise or whether they wanted to be represented by a body of men who have repeatedly, during this very debate, said that they are intent upon the nationalization of banks, and upon pursuing a socialistic policy. In fairness I say that the members of the Opposition have admitted that, even if they were returned to the treasury bench, there is a constitutional bar, for the moment, to the implementation of their policy, but I suggest, with the greatest respect, having listened to the fervour of their affirmations and the determination with which they approach this subject, that that constitutional bar would be no bar in fact. Therefore, any legislation designed to maintain free enterprise for this country is legislation that I am particularly happy to support.
Let us look at some of the charges that have been levelled against this legislation by honorable senators opposite. If members of the Opposition want confirmation of my assertions, I invite them to read the reports of their own speeches. I say to them quite kindly that they are so devoid of imagination and constructive thought that they have been compelled to delve into the past in order to discover some reason why the legislation should not be implemented.
– We have not gone back as far as Senator Hannan went.
– That is true, but he was just a bit before my time. In an effort to bolster a weak case, Opposition senators have gone back to what I .agree was a melancholy chapter in our history. I refer to the decade of the ‘thirties. It is true that there was hardship, suffering and soul-destroying unemployment. I speak with some personal knowledge of the difficulties of those times. But in an effort to support their allegations about this legislation, our friends opposite have declared unceasingly that the conditions of those times were brought about specifically by the wicked trading banks. Of course we had trading banks then, and we had the Commonwealth Bank, too. But 1 remind honorable senators that there then existed throughout the world a state of affairs that had not been seen before and which has not been witnessed since. I hope it will never recur. Our wool was selling at lOd. per lb. and our wheat at ls. 6d. a bushel. We had no secondary industries; this was the youngest country in the world.
The conditions that obtained here were world-wide. It is futile to lay the blame for those conditions at the door of the banks. If it gives the Opposition any pleasure, I admit that the financial institutions were not entirely blameless. The same remark applies to the governments of the clay and also to us as a people for allowing those things to happen. This Government is seised of its responsibilities and has introduced this legislation to prevent a recurrence of the conditions to which I have been referring. It seems to me, Sir, that the Opposition relishes delving into the unhappy past. Are our friends opposite so bereft of vision, imagination and policy that they believe their only chance of attaining the treasury bench is to have a repetition of those conditions? Let me assure them that this Government is determined to prevent such a thing happening.
The second allegation, upon which honorable senators opposite have dwelt at great length, is almost farcical because it is a contradiction of all the other allegations they have made. They say that the Government has introduced this legislation as a pay-off to its masters, the banks. Honorable senators opposite go back to 1949 and say that the banks then allowed their staffs to work for the Government - in fact, directed them to work for it.
– They did not allow them to work for the Government; they encouraged them to do so.
– I used the word “ directed “, which was the word used in the Opposition’s allegation. Opposition senators say that the banks poured money into the coffers of the Government parties to defeat the Labour Party. That is a real classic! To-day, ten years later, according to my Opposition friends, we are about to pay our debt. If any one can tell me where I can get ten years’ credit without security, the sooner I get there the better. But that is the kind of allegation that is being made. The Leader of the Opposition (Senator McKenna), who is a distinguished lawyer, has remained in the chamber and listened to that kind of allegation from his followers. The allegation has not any substance in it. The honorable senator, as a distinguished lawyer, knows that individuals who charge us without any evidence to support their charge are irresponsible. I challenge remaining speakers on the other side of the chamber to supply us with one tittle of evidence in support of the allegations that have been made.
– I shall do it with pleasure.
– I believe that no proof exists. For years and years we have been listening to the monotonous chant, “ Hands off the people’s bank. You are out to weaken and destroy the Commonwealth Bank.” Labour senators have prophesied all the gloom and tragedy that they have been able to conjure up in their minds. But what has been the history of the last ten years? I can do no better than to repeat some of the figures that my colleagues have forced honorable senators opposite to listen to. I am afraid that our friends opposite cannot assimilate and therefore cannot appreciate, but for the sake of the record I shall repeat the figures. Let us see how we have destroyed the Commonwealth Bank. In 1950 the Commonwealth Bank had 423 branches. In 1958, eight years later, it had 649 branches - an increase of 226. That is the way in which we are destroying the bank.
– That is an increase of 50 per cent.
– Yes, an increase of 50 per cent, in eight years. When we assumed office in 1950, the Commonwealth Savings Bank had 4,642 branches and agencies; to-day it has 6,844, an increase of 2,202 in eight years. Do not those figures refute the allegations that have been made? Business transacted by the trading section of the Commonwealth Bank in 1950 was represented by deposits totalling £84,000,000. To-day, those deposits total £272,000,000. In 1950, trade advances by the Commonwealth Bank totalled £62,500,000; to-day, they total £118,000,000, which is almost double. Yet all we hear from honorable senators opposite here and on the hustings is that we are out to weaken and destroy the Commonwealth Bank!
Let us see how the activities of the Commonwealth Bank have grown since 1950 in comparison with those of the trading banks. In 1950, the Commonwealth Bank had 7.7 per cent, of the total deposits. To-day, it has 13.6 per cent., an increase of 100 per cent, since this Government assumed office. We believe in the Commonwealth Bank. We believe in the system of private banking. We believe there is room for both. To-day, the Commonwealth Trading Bank has 600,000 customers and the Commonwealth Savings Bank has 5,100,000 active accounts. In the last seven years, savings deposited in the Commonwealth Bank have increased by £200,000,000.
That, Sir, is the record of the steady growth of a great institution in a country that is fast developing. Does it not indicate to any thinking person who is prepared to approach economic problems with a fair and analytical mind, that the Opposition must indeed be barren of criticism when it has to resort to the old chant, “ You are destroying the Commonwealth Bank “? All the statistics that can be produced prove that that is not the case. Of course, that allegation is on all fours with the others that they have been hurling against this legislation.
Let us have a look at the fruits of this legislation. The fruit is somewhat intangible, but I believe that it will have a tremendous effect on the development of this country.
– We are now in the Garden of Eden!
– I have heard the honorable senator speak of Queensland in glowing terms and I should not like to think that he is now sarcastically referring to that State. I ask honorable senators to cast their minds back to 22nd November, 1958, when the eyes of the world were on
Australia. At that time, the free world was watching to see whether the people of this country would yield to the lush offers, almost amounting to political bribery, that were dangled before their eyes by the Labour Party, or whether they would decide to continue to support the Government that had been in office for nine years, a government that made no rash promises but said to the people, “ We come to you on our record. Our determination is to preserve private enterprise and to re-introduce the banking legislation in the Parliament.”
The people gave an emphatic answer in favour of the Government. As I have said previously, they returned the Government parties to both Houses of the Parliament, with record majorities, to permit them to pursue a policy that is based on private enterprise and freedom of thought and action. It is not as a result of mere chance, Sir, that overseas capital has been rolling into Victoria and South Australia like a great tidal wave, nor is it mere chance that other States of the Commonwealth with Liberal and Country Party governments are receiving such capital. The decision made by the people on 22nd November last to return a private enterprise government that is determined to fight socialism and nationalization will have a tremendous effect on the economy of this country.
Lastly, I wish to refer to the Development Bank. I have been amazed by the way that my colleagues of the Opposition have manipulated their thinking on this matter. Some of them have almost damned the Development Bank with faint praise. Others have castigated the Government for not bringing it into being twelve months ago.
– Hear, hear!
– Some people say, “ Hear, hear “. They are the people who got together and wheeled into this chamber dangerously ill senators so that the banking legislation could not be taken to the second-reading stage. To-day, they say that it is the fault of the Government that legislation to establish a Development Bank was not introduced1 twelve months ago. I suggest, Mr. Acting Deputy President, that it is arrant humbug for people with their tongues in their cheeks to say that the Government should have done that, when they themselves were parties to making history in the way that I have indicated.
They refused to allow the Government to take the legislation beyond the first-reading stage.
Let us have a brief look at some of the really worthwhile provisions relating to the Development Bank. Clause 73 of the Commonwealth Banks Bill is indicative of new thinking so far as financial legislation is concerned, lt states - (J.) In determining whether or not finance shall be provided for a person, the Development Bank shall have regard primarily to the prospects of the operations of that person becoming, or continuing to be, successful and shall not necessarily have regard to the value of the security available in respect of that finance.
That, Sir, I think is something completely new in Australian legislation. It is true that at this stage the capital of the bank may appear to be insufficient. The Industrial Finance Department and the Mortgage Bank Department have already taken up £15,000,000 of the £20,000,000 available, leaving £5,000,000 for lending, but I think that it is appropriate to say that this Development Bank is not intended to be a cure-all for all the disabilities that the primary and secondary industries are suffering. Those who think that it will be arcgoing to be disappointed. But there is a tremendous potential in this legislation. I believe that the successful development of that potential depends on the personnel who are entrusted with the management of the bank.
– Does the honorable senator think that Sir Artie will do a good job?
– I did not know that Sir Arthur Fadden had even been approached to take on that job, but having regard to the well-informed sources from which the honorable senator obtains his information, perhaps he can lead me on this matter, too.
I suggest that the Development Bank must aim at balanced development. I, and my colleagues, could tell the Senate at length of the possibilities of rural areas where there are good tracts of land, enjoying adequate rainfall, that are crying out for development. We know that there are hundreds of young men with the will and the knowledge to develop this country. I think that that is taken for granted and I believe that eventually their ambition will be catered for by this legislation. But there is another section of the community which I believe can be helped tremendously by the Development Bank, lt has amazed me that honorable senators opposite, who at all times claim unto themselves the right to identify themselves with the interests of the person they call the worker, have not referred to this subject.
Almost every country town in Australia is languishing because of the lack of secondary industries, lt is obvious that the pull of the great metropolitan areas is overpowering. When this Development Bani begins to operate, 1 urge the Government to advise the managers of the bank to consider the development of secondary industries in country areas, so that people who leave school fully qualified to take an academic position may have the opportunity to live and work in their home town amongst the people with whom they grew up. I can give the Senate a classic example in this respect. Quite recently, in my own town, an English firm closed down an iron foundry without any warning, thereby displacing from employment some 80 men. That was a major catastrophe for the town because there were no other secondary industries there. Had the Development Bank been in operation, a tortuous, tedious fight by the local people could have been avoided. The State Government - and I give it full credit for its action - said to the people, “ Our resources are limited, but if you can raise sufficient capital to refloat this organization we will match your efforts £1 for £1 “. That has been done. Again that industry is about the flourish. But just in passing, let me remind those who advocate only one bank and who tell us that the only bank capable of meeting the needs of the people is a Commonwealth Bank, that a private trading bank tided that industry without any security over a most difficult period. And that is not unique in the annals of banking history.
So, Sir, I am bound to say, in conclusion, that this debate has served this country well for the reason that if ever there was any doubt about the nationalization and socialization objectives of members of the Labour Party individually and collectively, it has been made abundantly clear in this debate that if ever they get the chance they will do just those two things that the people of Australia said in 1949, 1952 and in every subsequent election they will not allow them to do. If they are brave enough to go onto the hustings in three years’ time and make those same statements, I have not the slightest doubt that this country will be blessed with a Menzies-McEwen Government for many years to come.
– 1 do not propose to repeat the terms of the fourteen bills that are before the Senate. 1 think that all honorable senators are sufficiently acquainted not only with the verbiage of them, but also the machinery. The purpose of the four measures under consideration is to separate the functions of the Commonwealth Bank. In the opinion of honorable senators on this side of the chamber, at least, this will dismember the bank which was established by the Labour Party. That, of course, is the basic reason why opposition is forthcoming from this side of the chamber. I intend, just for a minute or two, to touch on several points in the second-reading speech of the Minister for Shipping and Transport (Senator Paltridge). He said -
The Commonwealth Development Bank will comprise basically an amalgamation of the present Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank, with some increase in resources and with a new charter for assisting the development of worth-while enterprises in the field of both primary and secondary industry which would otherwise be unable to obtain the necessary finance on reasonable and suitable terms and conditions.
That is a complete admission by the Government that the private banking institutions of this country have failed the sections of industry referred to. In effect, the Government says quite clearly that the private banking institutions are not able and are not, in fact, ready or willing to serve the needs of industry and rural development and it says, in consequence of that. “We are going to establish a section of the Commonwealth Bank to remedy the failure of the private banking institutions to do what normally would be expected of them if they have the interests of the community at heart “.
I wish now to deal with the question of the Reserve Bank Board, which has been referred to by honorable senators on this side of the chamber. I feel that I should make some comment in this connexion because we can see grave dangers in what may happen when this board is constituted. Several of my colleagues have already dealt with this matter. The Minister stated -
The Reserve Bank Board will comprise the Governor and Deputy Governor of the Bank, the Secretary to the Treasury, and seven other members appointed by the Governor-General. These seven other members must be persons who are not associated with any other bank, and at least five of them must be persons who are not officers of the Reserve Bank or of the Commonwealth Public Service.
It is perfectly obvious that this is mere camouflage to give the impression that the Government has been carefully selective in respect of the type of board that it proposes to put in charge of the operations. As Senator O’Flaherty very clearly outlined when he made his contribution to this debate, if these men are drawn from the fields of finance and commerce, it will be impossible to select five men who have not a tie-up in some way or other through the companies with which they are associated with the private banking institutions. All this camouflage and the suggestion that we are going to be scrupulous about this matter cannot conceal that fact.
Another point I want to touch upon is this part of the Minister’s second-reading speech -
The board will determine the policy of the Reserve Bank and ensure that effect is given to that policy.
I have always stated - I said this on the last occasion that this measure was before the Senate and I now repeat it - that one of the functions and intentions of this legislation is to destroy the Commonwealth Bank at the managerial level. We can see in every clause of this legislation propositions which take away authority from those who formerly had the right of decision in respect of matters on the managerial level, and the managers of the various sections of the bank will become nothing more than glorified office boys in the future. This is something that has been done deliberately and with absolute judgment.
During the course of this debate we have heard a lot of remarks about socialism. The previous intention of the Australian Labour Party to nationalize the banking institutions has intruded very deeply into the debate and all sorts of claims have been made about socialist measures which have been advocated and implemented by the Labour Party. We have been told that the Government, in bringing down legislation of this character, will be assisting that spirited form of competition that is so necessary to our economic life. The word “ competition “ has been used repeatedly. Honorable senators opposite have glossed over the fact that the banks do not, in fact, compete with each other. They have also glossed over the fact that interest rates are uniform, and they have talked about this great spirit of competition which is associated with their conception of an ideal world. Senator Wade is interjecting. If he will be patient, I shall have something to say a little later about his contribution to the debate.
It is interesting to note a statement that was made by the late Pierpont Morgan who was a not inconsiderable figure in big business in the United States of America. He was associated with monopolies, and he had no inhibitions such as have been voiced by honorable senators on the Government side. He was perfectly frank about the position, and he made some rather interesting comments in relation to socialism. After he had effected the great American monopoly of shipping, he is reported to have said during his exhilaration -
We arc the advanced socialists; we have discovered that combination, not competition, means success in trade, and wc are going to take the profits of combination until the people are sufficiently intelligent to take the profits for themselves.
I feel that if the leaders of the private banking institutions of this country were as frank as the late Pierpont Morgan, we would have a proper understanding and appreciation of just where they intended to go with respect to their monopolistic intentions in this country. But as I have said, this great financial genius who controlled - to use an American term - half of the United States, was not ashamed to class himself as a socialist. He implied very clearly that all who were associated with him in the financial world - perhaps on lower levels, but nevertheless looming large therein - were in fact socialists. His statement should not be forgotten, I found it very interesting indeed.
Turning now to Labour’s attitude to the Commonwealth Bank, honorable senators on this side have a perfect right not only to be jealous of the welfare and future of that great national institution, but also to oppose with determination any attempt to destroy it. I say that because it was a Labour government that set up the Commonwealth Bank. Even Government supporters, though secretly wanting to destroy the Commonwealth Bank, have conceded that it has played a notable part in the development of this country. If it is left alone and given an opportunity to function as it should, it will play an even more notable part in Australia’s future.
I heard Senator Wade challenge honorable senators to prove that the private banking institutions of this country ha~ given assistance to the Liberal Party an the Australian Country Party. I said that I would take up that challenge, and I now draw attention to the fact that during the debate on this legislation in another place a Liberal member, whose name is well known to Government supporters, admitted quite clearly - and it is recorded in “ Hansard “ - that he did, in fact, receive considerable assistance from the private banking institutions in his election. He was quite frank about it. In fact, he defended their right to assist him and made no bones about the fact that considerable sums of money were spent in his electorate on his behalf by people who obviously had a personal and pecuniary interest in the result of that election. That is now on record in “ Hansard “, and it is a pity that Senator Wade is not here to take note oi that fact.
– Can you give us the “ Hansard “ reference?
– It is in “ Hansard “.
– Give us the reference.
– I can show it to you.
– Tell us now.
– I have not got it before me, but I am prepared to show it to the honorable senator. If he wishes 1 will name the honorable member concerned.
– I want the reference. I want to see what he said - not what you said he said.
– I have read what he said.
– I am not interested in that.
– He said, in effect, that he had received substantial assistance in his electorate from the banks, and if the Minister for Civil Aviation can prove that I am lying he can. tell me so at some future time.
– I merely asked the honorable senator to give me the reference.
– I do not intend to allow myself to be diverted any further, and i” a tend now to refer to a statement made by Senator Wright. In making his contribuion to this debate I have a feeling that Senator Wright was labouring somewhat. I am prepared1 to say that his speeches in this chamber vary from, fair to very good. I have never known him to make a bad speech, but I felt that in speaking to the banking legislation he was by no means at his top. Before he reached the end of his remarks he appeared to be labouring considerably. He made the rather remarkable statement that the expressed desire of the Australian Labour Party to nationalize the banks of this country had sent the blood coursing through the veins of every true Liberal. I suggest that the blood was moving sluggishly through the veins of the Liberals until the private banks injected into those veins a powerful ingredient known as L.S.D. That injection might have sharpened up the flow a little and will doubtless have a considerable influence on its future state also.
– Dr. Evatt has been talking to you on salaries.
– Let us not talk about salaries. I understand that you, too, are having your difficulties in respect of them. I am sure that some of your colleagues are having their difficulties as well. I want also to refer to some comments that were made by Senator Henty. At the beginning of his speech I thought that he was referring to something other than the banking bills by way of a sinister attempt to throw the Opposition off the scent, but I found out afterwards that, in point of fact, he was doing his best to speak on this legislation. One of the highlights of his contribution was his production of a rather amazing booklet which he said contained absolute proof that the proposed legislation was correct. When he was asked about the booklet he said that it was a report of the Jason Investment Company. The gentleman who had made the statement proving the Government’s legislation correct was one Staniforth Ricketson. We had been under the impression that the Minister was quoting some impartial economic authority but Mr. Ricketson is without doubt closely associated with the trading banks and therefore his viewpoint could not be considered impartial. Honorable senators mav recall that in Greek mythology a gentleman named Jason went out in search of the Golden Fleece and had to go through much trouble and tribulation before he reached his journey’s end. I have no doubt that Mr. Staniforth Ricketson and his associates found the Golden Fleece with much less trouble.
– Jason’s expedition was fitted out by private enterprise.
– Unfortunately private enterprise has a rather tortuous way of becoming involved with other private enterprises. No one knows that better than Senator Hannan.
Another rather amusing statement was made by Senator Wright when he was dealing with the question of hire purchase. I intend to spend some little time referring to that subject later, but at this stage I cannot help recalling his statement that the banks entered the hire-purchase field only because they felt insecure about the legislation that the Australian Labour Party had in mind. Apparently, in an act of frustration, they decided to go into hire purchase but it is significant that even when frustrated the banks can always make a profitable deal. Hire purchase is undoubtedly an extremely rewarding outlet for frustration. Senator Wright also said that in 1945 the Australian Labour Party, which was then in office, passed legislation in respect of banking which was arbitrary in the extreme. It is rather peculiar how conveniently Government supporters change their attitude to banking. I can recall the Prime Minister (Mr. Menzies) saying in 1949, when nationalization of banking was a big issue, that there was nothing wrong with the 1945 legislation; that it ought to be left as it was. None of these things add up except the fact that Government supporters change their minds as often as they change their underwear.
Senator Hannan made his usual contribution to this debate. He had been speaking for only about a minute and a half before he got on to the subject of communism. He remained there for the rest of his time. He was wallowing round in the mud, but when he came out with a handful Senator Wright looked at him disapprovingly and said, “ Don’t throw that. Legal considerations are involved.” Senator Hannan then picked up another handful of mud and Senator Wright again said, “ No. That is a legal matter too.” As a result, Senator Hannan was rather hampered and that fact was reflected in the remainder of his remarks. I will say for the honorable senator that he did give us a lengthy discourse on the history of banking, commencing, I think, with the year 2000 B.C. Yet his colleagues had the temerity to attack Senator Branson for giving us a history of banking dating from the year 1691 A.D.!
– The Babylonians knew more then than you know now.
– I would not deny that, and I think it is possible that they knew more even than Senator Hannan knows now, although I say that with a certain amount of deference. The honorable senator had much to say about the banking institutions at that time and the methods they employed, but he omitted something which I think he should have mentioned. He omitted to tell us about the time when Christ threw the money lenders out of the Temple. I am not sure whether, on that occasion, the money lenders were working under a central banking system or whether their functions had been separated, but the result was the same.
I shall not go back very far into the history of banking; I propose to go back to the establishment of the first bank in Australia because I think the Senate ought to know why that bank was established. It is a very interesting story. It was known as Campbell’s bank. The first savings bank in Australia was opened in New South Wales in 1819 to remedy the extravagance and improvidence which the poor settlers, mechanics and labourers of this colony had fallen into by reason, first, of their having no encouragement to save their earnings and, secondly, of their having no place of safe deposit for those earnings.
So it will be seen that right from the beginning of banking in this country the paramount thought of those people who have been associated with banking has been to assist the poor, underprivileged people of this country. Of course, the fact that in so doing they gained a considerable amount of private wealth and prestige was only something that happened as a consequence; the paramount thought in their minds was to assist the little people. It is very interesting to note that the private banks are saying to-day the same things as were said in 1819 when the first bank was established in this country.
I should like to refer now to the proposed Development Bank. Senator Wade said that we on this side had prevented that bank from becoming effective when banking legislation was last before the Senate. That is not true because, in addition to Senator McManus, who said that he was prepared to support the establishment of a development bank if a separate piece of legislation were brought down for that purpose, the members of the Australian Labour Party said they would be prepared to support separate legislation for that purpose. It is wrong to say that at that time we prevented the establishment of the Development Bank. We were prepared to see it established, and we say that the blame for the twelve months’ delay in its establishment lies fairly and squarely with the Government. Senator Wade had much to say about his hopes for the Development Bank. Irrespective of what our attitude towards the rest of the legislation may be, I think we all hope that the Development Bank will be a success. But I am not so confident as Senator Wade is and I have grave doubts as to whether it will be permitted to operate in the way in which we expect it to function. Admittedly, according to the Minister’s second-reading speech, the Development Bank will be starting off in a fairly small way, but I have a horrible suspicion that it will always be operating only in a fairly small way.
I come now to a point associated with this debate which I think has not been stressed enough. I refer to hire purchase.
We know that the banks intruded - in a moment of frustration, according to Senator Wright - into the field of hire purchase. We know that they did very well indeed as a result of that intrusion. We know that the question of hire purchase is exercising the mind of every responsible person in the community to-day. The States are seriously troubled by it, as is evidenced by the fact that even as this debate proceeds in the Senate a conference is being held between the representatives of State governments to determine ways and means of controlling some of the evil consequences which flow from this system.
We have made it perfectly clear that we do not oppose hire purchase as a system. We know that the average family in this country is entitled to buy things under a system of weekly payments if it wishes to do so, and, in fact, we are aware that in many instances that is the only way in which families can hope to get certain things. But we have always been opposed to the exorbitant rates of interest charges, and the fact that the States are now moving in the matter gives us at least some heart.
I have said before, and I now repeat, that this Government has not taken sufficient interest in the evils which flow from hire purchase. The Government has avoided its obligations in this direction although we have repeatedly reminded the Ministers of the evils. One of the Government’s actions which gave the private banks the opportunity to move into this field and which permitted the finance corporations to reap fantastic profits at the expense of the ordinary people was its failure to continue the hire-purchase section of the Commonwealth Bank. The Government should have expanded that section when it saw the hire purchase racket growing in this country. And the Government could have acted without making any great amendment to the law! The expanded operations of that section of the Commonwealth Bank could have acted as the greatest barrier that the people could have had to protect them against the fantastic interest rates now being charged. The Government has failed in its duty to the Australian people with the result that the situation now is shocking in the extreme.
I have before me a booklet published by J. B. Were and Son in which an effort is made to show just how respectable investing in hire purchase can be. In attempting to emphasize the respectability of investing in hire purchase, the booklet points out that almost every private bank in this country has moved heavily into the field. If the Senate will be patient with me for a moment, I shall read a few passages from the foreword of that booklet. The first is -
Some years elapsed before hire-purchase companies were accepted by the general run of investors. In the minds of the public (and ignoring the legal implications), hire-purchase companies were lenders far less august in status than the trading banks. This line of thought changed, however, when the trading banks one by one forged links with individual hire-purchase companies.
Every one of the major trading banks now has a share interest in a hire-purchase company. These range from the A.N.Z. Bank’s 14 per cent, ordinary shareholding in Industrial Acceptance Holdings Limited to the E.S. & A.’s 100 per cent, ownership of Esanda Limited. In the United Kingdom, where the banks have been slower to move into the field than their counterparts in Australia, it was recently announced that Barclay’s Bank, one of the “ big five “, has paid £4 a share for a million £1 shares in United Dominions Trust - Britain’s largest hire-purchase financier. Other banks subsequently moved into the hire-purchase field.
The article continued -
The hire-purchase industry in Australia is still in its formative stages. With an ever-changing pattern, some of the details of individual companies briefly reviewed in this booklet could well be changed beyond recognition in a matter of days by mergers, takeovers and other arrangements.
Let us now turn to the interesting information contained in the booklet as to the holdings of the private banks in some of these hire-purchase companies. The Bank of New South Wales, holding 40 per cent, of the issued ordinary shares, is the major shareholder in Australian Guarantee Corporation Limited which has a paid-up capital of £6,875,000; the Commercial Banking Company of Sydney Limited, holding 40 per cent, of the issued ordinary shares in Commercial and1 General Acceptance Limited, is the major shareholder ;n that company; the National Bank of Australasia Limited, holding 40 per cent, of the ordinary shares, is the major shareholder in Custom Credit Corporation Limited; the Bank of Adelaide, holding 40 per cent, of the ordinary shares, is the major shareholder in the Finance Corporation of Australia; the Commercial Bank of Australia Limited and the Automobile Fire and General Insurance Company of Australia Limited are the major shareholders in General Credits Limited, holding 45 per cent, and 20 per cent, respectively of the ordinary shares; the Australia and New Zealand Bank Limited, holding 14 per cent, of the ordinary shares, is the major shareholder in Industrial Acceptance Corporation Limited; and so it goes on.
The private banks have moved into the field of hire purchase and, in the process, have upset the recognized status of banking transactions as we knew them previously. So lucrative is this particular field and so fantastically high are the profits to be made that the ordinary processes of normal banking have become peanuts to the private banks. If this situation is allowed to continue, we will find before very long that the private banks have swallowed up this field completely. All honorable senators must see the trend of events.
I shall now deal with the nationalization of banking. Practically every speaker on the Government side has mentioned the declared intention of the Australian Labour Party to nationalize the banks. Let me put the position to the Senate fairly and squarely. If we had the opportunity, we would nationalize the banks to-morrow. We have never concealed that fact. Neither have we concealed the fact - it is no use begging the question - that Australia’s Constitution does not provide any avenue whereby the Australian Labour Party can nationalize the banks by legislation.
– That is not true.
– The Labour Party feels that that fact has been clearly demonstrated by the Privy Council, that great body located 12,000 miles away. If the honorable senator thinks that the decision of the Privy Council is wrong, he gives us new hope because, according to the Privy Council, the power to nationalize the banks by legislation does not exist in the Constitution. Of course, it could be done by a referendum. The Government has been talking about this issue being so terribly unpopular so, instead of dealing with it by legislation, I suggest the Government holds a referendum to ascertain the wishes of the people.
– Would the honorable senator like the Government to hold the referendum in conjunction with the next election?
– Yes, that is a new idea - something that will establish without doubt for some considerable time the attitude of the people of this country. Yes, give it a go! The Government has nothing to lose.
Communism has been mentioned by honorable senators opposite. Senator Hannan had quite a considerable amount to say about it. Very generously, I thought, he said that he did not think that all members of the Australian Labour Party were Communists. We appreciate generosity like that. I remind the honorable senator of the famous occasion when the Government of which he is a member brought down the Communist Party Dissolution Bill which defined a Communist as a person who believed and enunciated one or all of the principles of Marx and Lenin. When we examined the principles of Marx and Lenin we found that the Government had described every member of its parties as Communists because two of the principles of Marx and Lenin were the institution of graduated tax on income, and free education. In the terms of its own legislation the Government described itself as Communist, and no member of the Government parties has bothered to deny it since. Senator Hannan may know something about the pronouncements of Marx and Lenin, but I am sure he has gained his knowledge by reading them at a distance of 3 or 4 feet with the aid of a magnifying glass because he would be afraid to touch the book. Some honorable senators opposite seem to think that Marx is a well-known Hollywood character and Lenin is the man who built the hotel at Surfers Paradise. The people who talk most of Communists are those who would not know a Communist if they fell over one. They repeat the parrot cry, “ I hate communism “, and then assume that any person who disagrees with them in any way must be a Communist. That has been Senator Hannan’s favorite pastime for a considerable period.
The introduction of this legislation is not the first attempt made by this Government since it assumed office to dismember our great Commonwealth Bank. I am confident that it will not be the last attempt because I believe that the Government’s obligation to the private banks is so deep and lasting that it will be required in the not-too-distant future again to assault the Commonwealth Bank. I quote the old Eastern proverb, “ He who rides the tiger cannot dismount” - so very true. This Government is so wedded to, so obligated to and so caught up in the toils of the private banking institutions that it will be forced to introduce more and more legislation until eventually the Commonwealth Bank is destroyed.
– I regret that the Government has not provided another speaker to take part in this debate. By the introduction of this legislation the Government is repaying a liability to the private banks, and I agree with my colleagues that these bills are bills of obligation. If the Government continues along the course it has followed up to date, the Commonwealth Bank will be weakened, but it is too strong and efficient and too necessary to the nation to be destroyed. The bank is part of the fabric of our nation, and anyone who seeks to weaken it strikes a severe body blow at the nation. I am sure that the back-benchers on the Government side do not realize that they are attacking and weakening that great institution when they support this legislation. The bank has always been opposed by liberalism and the Australian Country Party has been subjected to the will of the Liberal Party. The great national developmental projects that have been undertaken in Australia would not have been possible if the Commonwealth Bank had not been in existence. We have only to look at the Commonwealth Railways, the Snowy Mountains scheme, Amalgamated Wireless (Australasia) Limited to a point, Commonwealth Oil Refineries Limited, the Australian Whaling Commission and Trans-Australia Airlines to realize the important part that has been played by the Commonwealth Bank in the development of Australia, aided by the initiative and effort of the Australian Labour Party. Not one of those national undertakings would have been possible if the Commonwealth Bank had not been in existence. If the bank had been kept in subjection, as this Government keeps it, those activities would not have been under taken so successfully. What has happened under this Government? Honorable senators opposite say that it is unwarranted for us to charge the Government with wanting to destroy or weaken the Commonwealth Bank, but we know that Amalgamated Wireless (Australasia) Limited, Commonwealth Oil Refineries Limited, and the Australian whaling station were absolutely destroyed from the point of view of the national interest. Trans-Australia Airlines is suffering under the formula that the Government intends to apply in respect of the Commonwealth Bank, under the hypocritical pretence that it is providing fair competition. The Government is going to put shackles on to the Commonwealth Bank in the same manner as it has put shackles on Trans-Australia Airlines, in the hope that the Commonwealth Bank will become ineffective. The reason for this legislation is not that the Commonwealth Bank is not a great national institution, not that its administration has been unsuccessful and inefficient, not that it has failed to provide everything that the community and the Government has required of it, but because it has been too successful. Government supporters have put up the argument from time to time that they have not stultified the Commonwealth Bank and they have quoted in support of that argument the fact that it has exceeded expectations in the number of branches it has established. In fact, in its rate of expansion it has exceeded their desires. The bank has expanded, not because the Government wants it to succeed, but because it is too efficient and too necessary to the national structure for the Government to hold it back. i In 1953 the Prime Minister (Mr.
Menzies) said that all that had to be done to the Commonwealth Bank had been done. He said that the Government had dealt with the banking question. We in this Senate, both Opposition and Government supporters, know full well that the decade of inactivity, of failure on the part of the Government to deal with the issues that it wanted to get at, was due to the fact that the Government parties could not obtain unity in their ranks to weaken - I will not say destroy, because they cannot destroy it - the structure of this great national banking institution. It is well known that the Country Party would not agree to that, and there were good reasons why it should not. 1 was privileged or perhaps unfortunate - I do not know which word to use - to be the president of the Western Australia branch of the Australian Labour Party at the time when John Curtin took over the government of this country during the war. One of our earliest jobs was to call together all persons interested in Australia - representatives of the workers, the unions, commerce, and primary and secondary industry - and get them to co-operate. We also endeavoured to get the co-operation of the financiers, but we found that they were the weak reed. They offered only a lot of advice and made a lot of threats, but every other section of the community said that it would put every possible effort into the war. The other sections said, in effect, “ Save our assets, and we will not bother about the cost “. But what happened in relation to the private banks? Not only did they embarrass the Curtin Government and the Chifley Government, but they embarrassed the then Menzies Government before it was forced out of office. Probably the fact that most embarrassed the leader of the present Government, Robert Gordon Menzies, when he was shamed out of office during the war was that he could not control the great financial institutions and obtain the finance needed to carry out the big jobs that were necessary in wartime. He could not feel that he had the co-operation of that very essential section of the nation. There is no doubt that in the re-orientation of our economy during war-time, the main weakness was found in the banking structure and the credit systems of the country.
Then came the 1945 banking legislation. That legislation was passed and it operated very effectively. There never was another time in the history of Australia when the people in rural industry and secondary industry, or those trying to establish new enterprises, had such an excellent opportunity to obtain assistance to develop their enterprises. Primary producers previously had been able to obtain only short-term loans. That is something the Country Party should never forget. Farmers were successfully producing bountiful crops but, as Senator Wade told us, they were receiving only Hid. per lb. for wool and ls. 6d. per bushel for wheat. Wheat could not be sold overseas. The private banks refused to advance credit to a nation in that state. There were no lucrative and profitable markets, but there were people in need overseas as well as in Australia. The private banks would not contribute anything to relieve the situation. The Australian Wheat Board negotiated with the co-operative societies of Great Britain, which, together with the farmers’ cooperative societies in Australia, helped to raise credit and lift this nation from a very low ebb. That was the position of banking then.
As I have said, during the war we found again that we could not get co-operation from the banks. The banks had always had an open field during a war, and they realized that if they were to be restricted, then they would not be able to take full advantage of what I may call really big red letter days. The nation was struggling for its existence, but in the history of private banking a time of war is the occasion when banks make their greatest profits.
Therefore, the 1945 legislation was brought in. It trimmed the sails of the banks considerably. The legislation made it possible for rural and secondary industries to obtain long-term loans. Under the legislation, people could obtain up to £5,000 on a 60 per cent, security, repayable over periods of five, 30 or 40 years. Prior to that time, farmers had to go cap in hand to the banks and mortgage the production of one season in order to obtain a loan at a high rate of interest, probably repayable during the next year. Farmers had to go each year to obtain bank approval for their overdrafts, and were kept in the clutches of the banks. The 1945 legislation was passed and was eminently successful. It made possible the organization of the wool industry and the stabilization of the wheat industry in this country. It advanced national credit, and enabled the successful marketing or holding of stocks of wool and wheat in this country. The banks were forced by the legislation to talk with the Government. They came into the field and said they were anxious to co-operate. They said that they did not admit that the legislation was in accordance with the Constitution or that it was legal. They said that they would not challenge it then but, if necessary, would challenge it at a later stage. If they could see their opportunity to get to grips with the 1945 legislation, they would challenge it.
During the rehabilitation period after the war they had been continually levelling charges against and holding a gun at the head of the Labour Government, in an effort to relieve the pressure of the 1945 legislation. They said the Government should do that - or else. What was the “ or else “? They threatened to bring to bear their combined power inside and outside Australia in order to bring about a collapse in the Government, and a collapse in the economy of Australia. This threat was made to a government that had raised the farmers from their knees and had commenced great national projects such as the Snowy Mountains scheme. The Government said to the private banks, “ We can do without you “. Unfortunately, however, because we did not know our constitutional power, we were forced to consider a revision of the legislation. I was on the executive at the time, and it was our firm opinion that, whatever new act was passed, it would be sufficient to raise the bile and the spleen of the private banks and make them challenge it in the court. Legislation to nationalize the banks was introduced; this brought the private banks to contest the validity of Labour’s banking legislation.
The banks went to the court, and after the case was heard we knew to what extent the Commonwealth Government could legally and constitutionally protect the people and the nation by legislation in respect of banking. We called the bluff that had held this nation in subjection for years. We found that we had power to provide for national development and long-term loans, and to free the individual not from the business of banking - there is nothing wrong with legitimate banking - but from that usury that was practised by the banks when they prostituted their power. The remaining sections of the 1945 legislation were within the terms of the Constitution, so this Government could not find fault with them. As a matter of fact, members of the anti-Labour parties cornmended the legislation both on the public platform and in this chamber. They commended the Commonwealth Bank for the work it had done.
But the Government is frightened of the progress the Commonwealth Bank has made. Pressure has been put on the Government by the private banks to do something about it or else, just as they tried to put pressure on us. lt is idle to say that the Government had no pressure placed upon it by the private banks and that it did not get assistance from them in 1949 when it defeated Labour. Of course, there may have been other factors such as petrol rationing that led to a change of government on that occasion. Young relatives of mine who worked with the banks and who were told to go out and work for the Liberal Party against the Labour Party were paid bonuses in that year for their services, but they have never received them since. It was made quite clear that that additional remuneration was paid because of their sterling efforts. But those young disillusioned people came to me later and asked me whether I would present a case for the bank officers because any advantage they had received had been offset by retarded promotions and changes in conditions of service. They were very sore about it.
Let us look at the structure of this legislation. The legislation could be used advantageously, but it is quite unnecessary for the provision of good banking. If successfully implemented, it will cost this nation millions of pounds in duplication of costs for administration, buildings and overhead charges. But there will be another side to the ledger; the Government may feel that it is not doing such a desperate thing, because the Commonwealth Bank will increase its buildings and other assets. Let us analyse some of the Government’s suggestions about fair competition. Not with any naughty thought in mind, of course, it has introduced legislation to provide that the Development Bank shall be the institution that will issue credit for the development and expansion of industry. But it was quite logical to assume that, if the Development Bank was utilized to provide money for rural and secondary development, such a large asset would accrue to that bank that the private banks’ clients would leave them as quickly as possible. So some other provision had to be made.
What was that provision? The Government knew that, although this was a legitimate and not a prostituted field of banking it was not a very lucrative field and that the private banks did not seem very interested in it. But it saw the moral effect of letting the Development Bank alone handle this class of business. It saw that, although the kind of person who wanted to get money from the Development Bank might not be the representative of a big combine, he would be a challenging man who ultimately would become something in industry. He would normally be the client of a private bank but he would go to the Development Bank for cheaper money for the establishment or development of an industry. Thereafter he would be a client of the Commonwealth Bank. So the Government, after having another look at the matter - not under pressure from the private banks but for the purpose of preventing the Commonwealth banking structure from being as strong as possible - made it possible for the private bank to retain its client by saying, “ Don’t go over to the Development Bank for your advances for development. We will act as your agent.” This is what the act permits the private bank to do and so the Commonwealth Bank provides the service but the private bank retains the client.
Then there is the question of administation. If the Administration is favorably disposed towards the development of Australia and an equitable distribution of prosperity to all the people of this country, and if its policy is to have gainfully employed every man who is willing and able to work, all that can be achieved under the present structure just as easily as under any other structure. But what has happened? The Government, in a moment of embarrassment, has seen fit to alter the structure of the Commonwealth Bank. It has altered it in such a manner as to meet the deficiencies of the private banks, because no sane government - and I say this Government is a sane government - wants the national economy to collapse.
But the Government feels that some lucrative field must be left open to the private banks. At the same time, it wants to be able to keep a collar and rein on the Commonwealth Bank so it will not enter into that lucrative field and destroy that prostitution of banking, that money-lending tendency, whereby persons who are buying war service homes may be able to obtain temporary credit only at rates of interest of up to 10 and 12 per cent. The Commonwealth Bank will not be very interested in that field of activity, but the private banks and the hire purchase companies will be. The victims of this lucrative scheme will be the indefensible little people who mortgage their wages before they receive them and who mortgage their children before they are born so they can get a house in which to live.
If the national bank did its task, it would relieve those pressures. But the resources of the private banks will be so taken up in this lucrative field of high interest rates that if additional legislative provision had not been made there would have been a collapse of the national economy. The Government has seen fit to legislate that any of the less lucrative but more legitimate aspects of banking in which provision is made for production and marketing shall be left to the Commonwealth Bank organization.
Mark you, this legislation has not been introduced for the destruction of the Commonwealth Bank, because that institution is a part of the national fabric. It is necessary to retain it, and no sane government would destroy it. But the legislation is a severe body blow to national development and to people in industry who are trying, by using their own knowledge and ingenuity, to establish themselves. I am not surprised at what has happened; it was to be expected. The Government has been trying for ten years to do what it is now doing. If the time ever comes - I hope it never will - that the farmers get into the plight they were in on an earlier occasion when they were rejected by the banks, the services of the Commonwealth Bank can still be utilized.
But we are gradually rolling back from the point that was reached with the 1945 legislation where the interest rates charged by the banks could be regulated, and where the banks could be prevented from working against the national interest by infusing money into unessential and high profitmaking ventures. The banks could not sustain their challenge to many of the provisions of the 1945 legislation that they wanted to challenge. There was a much bigger thing on the horizon - the nationalization of the banks. But we had the right under the 1945 legislation to interfere. The court ruled that, in the main, the 1945 banking legislation was valid. The Government has a duty to regulate the economy and the banking system, but this Government, under the hypocrisy of ensuring fair competition, has put shackles on every successful national enterprise established by Labour which subsequently has been either sold to private investors or weakened and hampered in the field in which it operates. Such a result will be evident in the administration of this legislation.
I do not wish to reflect in any way on, the officers of the Commonwealth Bank. I believe them to be most efficient and conscientious. I should say that 98 per cent, of them are thoroughly satisfied with the bank as it is and are proud of the set-up that they have now. I am sure that the officers feel that the bank is thoroughly competent to serve the demands of the nation. The Commonwealth Bank, in a time of emergency, such as war or economic stress, should be able to do as it; did previously, when it saved the nation from the embarrassment of being held to ransom by a combine of banks which were not prepared to co-operate even with the present leader of the Government, at a time when war was threatening the safety of this country desperately. I do not think that we on this side of the House are wrong in our opinion of the Government, despite all the statements that have been made by honorable senators opposite during the debate.
Let us trace again the chain of destruction, the burnt earth policy, of the Government. First, let us consider what happened to Amalgamated Wireless (Australasia) Limited. This Government knew that that organization could provide us in war-time with grade A electrical equipment at the lowest possible rates. It knew that A.W.A. had invented equipment that no other country of the world had, and that it could produce such equipment at an absolutely minimum cost. We know that it provided our Navy and our Air Force in the islands with the equipment they needed and in that way helped to protect us, a young country almost uninitiated in warfare. The com pany did that by its capacity to invent and produce, at the lowest possible cost, the things that were needed. Yet the Government without any equivocation handed over this great national asset to private enterprise.
Commonwealth Oil Refineries Limited, when it was a government instrumentality, enabled the Government to keep the price of petrol and oil down in the national interest and in the interests of conserving dollars. While we had C.O.R. we could not be held to ransom by the oil companies. But this Government did not value this successful company which protected the Australian consumers of petrol and oil from exploitation. The Government has sold C.O.R. to private investors.
Trans-Australia Airlines, which has the best safety record of any civil airline in the world, was brought into being with the assistance of finance from the Commonwealth Bank. The airline has provided the absolute acme of air services in Australia. By its example, it has improved the standards of other airlines in this country, and it has provided more than keen competition for them. That organization has been shackled in every possible way. It has been dragged down to f.a.q. standards in order to allow its competitors to make bigger profits.
There is some need for government assistance for private enterprise, and I think that such assistance should be given on a fair basis and not by obstructing successful government enterprises. When the government breaks down competition by such obstruction, the taxpayer has to pay twice. The destruction of the successful national enterprises to which I have referred has resulted in a loss of revenue for the Commonwealth. If the earning capacity of the Commonwealth Bank is weakened, the national debt will not be reduced at the same rate as it has been in the past, when 50 per cent, of the profits of the bank have been applied in that way. As a result, more revenue will have to be collected from the general public by means of increased taxes or other imposts.
I say, therefore, that this legislation is doing a disservice to Australia. Nevertheless, I still have great faith that this bank that the Labour Party established and that we used in time of national stress, both in depression and in war, will be too strong for the Government to destroy completely. The bank may contribute less to government revenues, but its assets will continue to expand. Its efficiency will carry it through. However, the nation will have to meet the loss of revenue that will result from the efforts of this Government to impede and shackle the bank, as it has done in the case of other great governmentowned enterprises.
– During the course of the speeches of Senator Spooner and Senator Paltridge, both referred to the great achievement of the Government in reaching the day when the banking legislation could be carried through both Houses of the Parliament and be embodied in the statutes of this country. The year 1912, which was the year of the foundation of the Commonwealth Bank, was a very important one as far as I personally am concerned because I was born then. During the 47 years that have elapsed since that time, the Commonwealth Bank has developed and matured. Now, through the political spite of this Government, its very name is to be erased from the dictionary of Australian phraseology.
The supporters of the Government have, no doubt, faithfully carried out their job in preparing this legislation and in going through the various processes of obtaining a majority in both Houses of the Parliament. They perhaps have done a better job in that respect than even the vested interests which they are elected to serve here expected them to do. I do not think that, when the campaign was waged against the Labour Government on the issue of banking from 1947 onwards, the private banking organizations of Australia ever dreamed that within ten years there would no longer be a Commonwealth Bank of Australia. It has been said that the evil that men do lives after them, while the good is oft interred with their bones. I should say that this legislation is the most evil of all banking legislation during the history of this country, and I certainly hope that it will be buried with the bones of this Government at the first opportunity that the electors have, as I am sure that it will be when the people realize the significance of these bills.
Not only is the Government meddling with a trusted and tried and thoroughly efficient organization which has been, and will be again, the citadel of stability in the economic life of this Commonwealth, but it even proposes to remove from use the words “ Commonwealth Bank “, after 47 years. The name “ Commonwealth Bank “, with the implication of “ common wealth “, has become a symbol of stable banking in this country. The bank has been a very sure friend to many people in the uncertain times of economic instability. I wish to say to the Senate, first as a client of the Commonwealth Bank, secondly as an admirer of its great progress and prestige, and thirdly, as a believer in its importance in a unified and all-embracing form, that 1 pledge myself, whenever and wherever the opportunity arises, to help to restore the great name of the Commonwealth Bank of Australia to the component institutions thai are to be separated under this legislation, and to try to erase the travesty that this legislation will perpetrate. Probably 1 shall have that opportunity during my lifetime and I may be able to assist to erase the blot on the history of the Commonwealth Bank that will be made by the legislation now before this chamber.
Many honorable senators have referred during this debate to the tie-up between vested interests and the Government. It is interesting to note that a new and significant development has been evolved in the short-term money market. Recently, the Government directed the central bank to act as a lender of last resort to a privileged small group of dealers who accept large amounts of money on deposit at interest for short periods of a few months, a few weeks, or even a few days, which the private trading banks do not normally accept. This departure from normal banking practice illustrates the extent to which friends of the Government are receiving their pay-off. I should like to mention that in this departure from normal banking practice four dealers have been so authorized - two in Sydney and two in Melbourne. The Sydney companies are a subsidiary of Development Finance Corporation Limited and a subsidiary of Ralph King and Yuill, sharebrokers. The Melbourne companies are Capel Court Securities Proprietary Limited, a subsidiary of
Apart from Tan Potter and Company, prominent shareholders in United Discount Company include the Bank of New South Wales Limited, Colonial Mutual Life Assurance Company Limited, Malleson Stewart and Company, Morgan Grenfell and Company, and Lazard Brothers and Company Limited. These last three are overseas finance companies. Malleson Stewart and Company and Lazard Brothers first came before public notice at the time the English bank rate was raised. Both companies, which were represented on the directorate of the Bank of England and knew of the pending bank rate increase in advance, were able to clean up a nice little nest egg. This is a wonderful tie-up. The more you delve into it the more you see that the Commonwealth Bank is becoming an instrument of private and privileged sections of the community, a function that it was never designed to perform. It was direct favouritism to allow four companies authorized as dealers to be able to get money from the central bank. That was not thought of as a part of the policy of the private banks.
The whole t-nor of the speeches of Government senators has been the great advantages that will come from the dissection of the Commonwealth Bank. Tt is difficult for me to see whether they are blind or purblind in their outlook. Such a backward turn in thinking could help to make the economic system return to what they call normalcy, or they can turn the clock back sufficiently to make the old capitalist system work. It is rather a basic contradiction for the government to want to disturb the old Commonwealth Bank of Australia organization and to divide it into components - to dissect it - because the Government is at present involved in defence expenditure which, during the short term it has been in office, has amounted to over £1,200,000,000. Over a period of nine years, the Government has steadily dissipated the composite structure of the Commonwealth Bank, which was equally important in prosecuting the last war as were our factories and other industries. The fact that the Commonwealth Bank carried on trading activities and industrial finance and these other functions as a composite organization was one of the main factors which provided Australia with the means to assist in the successful prosecution of the war.
Another very interesting feature of the thinking of Government senators is that they have continually stressed their belief in private enterprise and freedom of competition. I am amused by the suggestion that private enterprise and competition exist in the field of high finance to-day. In a few years we have seen a whittling down of the number of private banks in this country. In view of the statements that have been made during this debate, and the graphs that have been produced showing the link-up between the private banks and other companies, it is ludicrous for Government senators to claim that private enterprise and competition exist in this field. A small man operates to-day only if it suits the monopolists for him to operate; he is virtually a front man for big business. Figuratively speaking, he is the wood and water joey and does other chores for the big companies. Yet, to hear Government senators speak of him one would think that he reigns supreme.
It is interesting to hear the replies that business people who are trading in the towns and cities of this country make when they are asked how they fare when they go to their bank managers to ask for an extension of time to meet their overdrafts, or for short-term finance. I invite honorable senators to ask them what sort of reception they have been getting for a considerable time now. Here we see the close friend and supporter of the Government, Ian Potter and Company, a trustee of the Liberal Party, able to avail itself of terms that would be unthinkable under the orthodox private banking set-up.
Another thing that Government supporters fail to understand is that to-day all governments in the Western world must intervene to an ever-increasing degree in the workings of the economic system. During the war the Government of the United Kingdom, under Sir Winston Churchill, the Government of the United States of America, under President Roosevelt and President Truman, and the Australian Government found it necessary to intervene for the common purpose of winning the war. Intervention was necessary to control production and capital investment. That has become a common practice but, fundamentally, it cuts across the old concept of private enterprise and freedom of competition. That is the fallacy in the thinking of Government supporters. They stand up here and extol the great advantages enjoyed by the traditional private enterpriser under freedom of competition, when, in fact, that state of affairs simply does not exist in any great degree.
Another objective attained by Government intervention in the economic system has been the provision of full employment. That state of affairs occurred at the end of the war and for a short period thereafter. There were also guaranteed markets for producers, both primary and secondary, and increased production could always be disposed of. The present picture is that banking interests in the United States of America, the United Kingdom and Australia have tried to hand over these functions to the so-called private enterprisers, but the end result has been the production of a monopolistic combination of another kind, in which the private banking organizations have always taken a leading part. These institutions have become absolute oligarchies, with the very characteristics that Government supporters attempt to ascribe to the Commonwealth Bank, or to any bank set up by Labour.
– How do you get rid of one monopoly by creating another?
– A monopoly is desirable if its purpose is the promotion of the common wealth and the common good, but a monopoly whose sole purpose is the pursuit of profit for exploitation and the perpetuation of privilege and inequality is undesirable. Monopoly is, to a certain extent, inevitable in the modern world. You cannot dissipate your energies. You must unite your forces because the problems of national development and finance, and the accumulation of the means of production, are assuming ever-increasing proportions. Senator Hannan spoke of the total funds of the Commonwealth Bank.
– I put a purchase price of about £2,000,000,000 on the bank.
– That represents a great accumulation of funds. To all intents and purposes, one could say that that section of banking had become a virtual monopoly. No other bank could compete with it on all levels. However, there is no doubt that the private banks, through the bankers’ association, operate as a monopoly for a different purpose altogether. As has been pointed out, they are not even faithfully carrying out the terms of their charter. The economy has been built up on the basis of our having certain institutions with defined responsibilities to the community. We have traditionally regarded a bank as a place to put our savings; a place in which one could put one’s shilling or penny - as Senator McCallum did when he was a boy - or perhaps one’s £100 or £200. One has always regarded the bank as being a safe place. We all recall the old saying, “ As safe as a bank “. Any one who was in business and needed a safe deposit, or a little credit from day to day, happily looked on the bank as being a very worth-while institution for it helped him to continue to carry on. As his business developed perhaps his equity grew also and he was able to obtain further accommodation from his banker. To-day, the private banks are departing from the important function which they have traditionally fulfilled in the community and have gone off into the field of hire purchase, which is really money lending in its worst form.
The banks are using in this way the money that has been deposited with them in good faith by their clients. They are using it to finance a form of economic activity which cannot fail to have a deleterious effect upon the stability of this country. Hire purchase, in developing so rapidly as a result of the departure from orthodox banking policy, has become a menace to the community. The average man has committed himself to the demands of hire purchase - no doubt with justification, because every one has a right to lift his standards and expand his status in the community. If one can get needed goods immediately, one is prepared to pay for them as one’s wages come along. The purchaser is encouraged in every way by the small deposits demanded, but when he becomes involved he must meet an exorbitant interest rate. The flat interest rate is something which should be prohibited like the plague because it is an ulcerous and gaping sore on the economic body of this community. That is plain from the fantastic figures published of the get-rich-quick profits of the subsidiaries of the private hanks.
Hire purchase has made an impact upon the community in another way also. Men who could previously afford to stand up for their rights and say, “ I am going to tell my employer that I am not getting a fair go “, are now so deeply involved in hire purchase that they dare not miss a day’s work or a week’s work. They know that if they do they may get behind in the payments on their television set, or whatever they are paying off, and the goods may be seized by the finance company. His equity and his contributions are lost to him. This has brought about a new standard of industrial relations in Australia. The employees have been sucked into the vortex created by the hire-purchase companies and a tremendous section of the community is now in economic bondage.
I admit that people enter into hirepurchase agreements of their own accord, but it is very easy for some people to become deeply involved. With inflation running rife over the years and ample employment because of great development, husbands and wives have been working, with the result that the average income of the household has been rather large and people have committed themselves. Now, with a pool of unemployed, fewer wives are working and incomes are lower. Woollen mills and other industries that were working full time are now reducing production because of the invasion of synthetics, trade agreements and so on, and employment for wives is not so readily available. Those persons who entered into commitments when the family income was high are now virtually in economic bondage because of the activities of hire-purchase companies. I am very pleased to see that the States are taking some action and I hope that good will result from it. The private banks are not carrying out their traditional functions to-day.
If I remember rightly, when I said, during a debate in 1951, that the private banks had the happy knack of giving one an umbrella on a fine day and taking it back on a rainy day, Senator Maher interjected, “ The banks did not take the umbrella away from me on a rainy day “. He was very fortunate, because the first thing banks do when they see a threat to the repayment of their advances is to call on their clients to reduce their overdrafts. I know a number of people who are experiencing that difficulty to-day.
– I have had some rainy days, but the banks have never put that one on to me.
– I can only say that the honorable senator must have been home and dry. Woolbroking agencies and others are having financial difficulties. The price of wool has dropped by 30 per cent. Men on the land who had entered into commitments for the carrying out of improvements or the purchase of equipment while the price was good are now forced to revise their budget because all they can do at the moment is keep their heads above water. Similar conditions apply in all primary industries and in wholesale and retail businesses and the clothing and furniture trades. All are feeling the pinch of decreased business activity and all are being told by their bankers to cut their coats according to their cloth. A country that is vigorous, far-seeing, ambitious and idealistic goes forward with confidence towards the goal that it has set, but in a country such as ours where we suffer variations in the stability of the economic system, the future sometimes looks uncertain, with the result that everyone in the community goes slower.
The interesting feature of all this is that in the decade just passed the present Government has been blessed with abnormal conditions in many directions. We have been able to avoid a repetition of the bad conditions of the 1930’s because of a combination of such factors as a war, a succession of bountiful seasons previously unknown in our history, a vigorous immigration policy and an active development policy. All these factors have created abnormal economic conditions. The most stabilizing of all factors over that period was the high prices for our primary products. Now, however, we are suffering the effects of widespread drought and a decline in prices for primary products. We do not want to return to the unresolved crisis that existed before the war. lt must be admitted that the period from 1940 to 1959 has been abnormal economically. During that time, we have had five years of war, three or four years of transition from war-time to peacetime conditions and ten years of high prices and bountiful seasons.
What are the responsibilities of the private banks for the future? We have ample evidence that the private banking institutions are unwilling to come into the breach voluntarily and help out. These are times when the private banks traditionally take the umbrella away. Like other business people, they curtail their risks. Bank managers are blowing chill winds on many people by calling them into their offices to tell them to tighten their belts. A flower by any other name smells the same, and the flower before us bears the outside appearance of the flower we saw some years ago when the banks began to contract their credit.
Honorable senators on the Government side, in extolling the virtues of the private banking system, referred repeatedly to the days of untrammelled free enterprise and the unlimited scope which should be given to competition, such unlimited scope to reside in the private banks. They believe that we can return to the days when economic recessions and slumps were regarded as temporary interruptions to economic progress which did not basically threaten the old routine of economic activity under the capitalist system. But in those days capitalism was expanding; there were great new fields to conquer; there were new countries to be won; the vast areas of Asia and other parts of the world were exporting goods to the great powers. Enormous changes have taken place in the world and the Western - economic system has found that a change must be made from the old system of allowing untrammelled private enterprise to have free rein. People were confident that after the storm would come the sunshine, but until 1939 and the outbreak of the Second World War there was no sign of sunshine breaking through the clouds of the subnormal period we were experiencing. That crisis was relieved, not by sunshine, but by the darker clouds of war. Preparations to wage the war were put in hand, new industries were developed and surpluses were absorbed for war purposes.
At present the Minister for Trade (Mr. McEwen) is overseas trying to patch up our trade agreements. New Zealand is complaining about its treatment in the matter of balance of payments; we have a tremendously complex structure of import controls; and agreements affecting Australia are due for revision. Very often we find that we are not now being treated as favorably as we were previously. The factors that led to the crisis that confronted us some years ago are developing again. We must face up to the position. Previous experience has shown that the private banking institutions are incapable of meeting the challenge. We, as commonsense people, having in mind the unified purpose of expansion and development to the benefit of the people of Australia, should do all in our power to strengthen and expand the Commonwealth Bank to meet the chill winds of the economic blizzard that will soon be blowing on us. Instead of that, we have before us legislation which will dissipate the banks’ strength, its energy and its efficiency.
Irrespective of what honorable senators opposite may say, we are now facing the conditions that confronted us before the Second World War. We have falling markets and a chronic state of unemployment. The United States of America enjoyed full employment during and shortly after the war, but in that country the figure of unemployed has now reached 5,000,000. The United Kingdom has a pool of unemployed, and in our own country the number of persons unemployed fluctuates between 60,000 and 80,000, according to official figures, but the true position probably is that we have 100,000 unemployed. A British White Paper was published some time ago in anticipation of rising unemployment. At that time a coalition government headed by Mr. Winston Churchill, as he then was, was in power in the United Kingdom. That White Paper contradicts completely the attitude of members on the Government side towards private enterprise being allowed a free rein. The opening passage of the White Paper states: -
The Government accepts as one of its primary aims and responsibilities the maintenance of a high and stable level of employment. The Government are prepared to accept in future the responsibility for taking action at the earliest possible stage to arrest a threatened slump. This involves a new approach and a new responsibility for the State.
Instead of sharpening our tools - I refer to that wonderful instrumentality that has served Australia so well, the Commonwealth Bank, and to its component parts - we are dissipating the bank’s energy, reducing its efficiency and dividing its functions.
When honorable senators opposite say that trade recessions automatically correct themselves, they forget that in these days one consequence does not necessarily follow another in sequence according to the principles laid down in some of the older books on economics. The old thought was that a fall of prices and wages as the result of a recession would be followed by an increase in demand and a restoration of employment. That may have been true in the past, but those days have gone for ever. The Government cannot turn back the clock. It needs an instrumentality, such as the Commonwealth Bank which is the direct instrument of the State, to deal with the great problems that face a modern economy such as ours, and it is doing a great disservice to Australia by separating the functions of the bank and setting up the proposed Development Bank. Government and banking should be closely wedded to meet the crises which inevitably will face us in the future. The proposed set-up is more in the nature of a divorce than a wedding. Experience since the war has shown that under modern conditions the process of self-recovery, with or without the assistance of the private banking institutions to finance and stabilize development, will take a very long time. It could be accompanied by widespread distress, particularly in a complex and growing industrial society such as the one in which we live. I believe that Government members are simply closing their eyes to these factors when they say that they are improving the whole of the banking structure by putting portion of the Commonwealth Bank into a position where it can be competed with more effectively by the private banks, as is being done in this legislation. It would appear that honorable senators opposite are just resigning themselves, adopting the old philosophy of “ Praise the Lord and pass the ammunition “, and hoping that they can muddle through if a time of distress comes to the people of this country. They take the view that they would be able to adopt measures such as the institution of the New Guard, or some of the other organizations that are inherent in their thinking, to deal with the troubles, rather than attack them on a positive level, as they would be able to do if there were a wedding between the Commonwealth Bank and the Government.
Government members also fail to realize that there is a basic instability in the private banking system. It ebbs and flows with the tide of economic activity. Private banks are expected to produce dividends for their investors. They water down their shares and make extra issues in the same way as other businesses. They keep from the public the correct amount of the profit they make. That is done by bookkeeping and other methods with which modern accountants are well acquainted. Because brewery companies, and organizations such as the Broken Hill Proprietary Company Limited, can produce dividends of up to 10 per cent, there is an increasing demand by investors in banks for those institutions to declare, over the years, large dividends. There is a growing demand by the investors for greater profits and the policy of the banks must become tougher and more ruthless in order to satisfy that constant demand.
– The investors in banks are generally little men financially.
– A very small section consists of little men. To-day Senator Toohey was challenged when he quoted the percentage of capital that banks have in hire-purchase organizations. The fact that a bank held 40 per cent, of the authorized share issue of a hire-purchase organization could mean that it held 80 per cent, or even 90 per cent, of the shares actually issued. Although a limit is placed on the number of shares that can be issued, all the shares need not necessarily be issued. The fact that a bank had 40 per cent, of the total number of shares authorized could mean that it had more than a majority of the shares issued by a hire-purchase company.
Senator Hannan took us back through the history of banking in Babylon, Greece and the Roman empire. No doubt, private banksoperated in Assyria and Carthage. Private banks, more recently, have operated in the British Empire. We have seen the pages of history slowly turn and every one of those institutions or assemblies fade out. Babylon, Greece, Rome, Carthage, Assyria and the British Empire have all faded out of the picture and have been replaced by something else.
– The private banks did not do that.
– The private banks have been a factor in the rise and fall of empires. It is my opinion that because of the power that the banks exercised they caused these empires to fall. Private money-seeking and private profit-seeking have caused most of the wars that have taken place, and have been the reason in many cases for the denuding and sacking of countries. Behind it all is the section of the community that holds the power that comes from having money in its hands. It controls the destiny of countries and is answerable to no one. History has shown what has happened to the countries in which the bankers have held sway. One after another those countries have gone into decline and then into oblivion.
– The Americans seem to be battling on pretty well.
– They are battling on, but on a very false economy. This morning’s press disclosed that 7,500,000,000 dollars, or £3,375,000,000, worth of goods had been written off the books of the United States defence department last year. That represents much more than the defence vote of this country during the whole period since the war. As a matter of fact, it is much more than any Budget since this Government has been in power.
– It would break any other country.
– That is true. That is the only way that America is keeping its head above water. It is taking in its own washing. It still has 5,000,000 unemployed. It is putting this stuff into store, restricting acreages planted and, at the same time, dumping goods on our markets. My point is that money power is the driving force in most countries, but it has a disastrous net result. Until financial power is taken out of the hands of the banks and placed in the hands of democratic governments, such as we could have here, and until such time as there is a wedding between governments and finance, or between finance and governments - which is the same thing, or should be the same thing - we will never have lasting peace, and we will have no hope of co-operation between the nations and peoples of the world.
I mentioned for a purpose the British Empire, which has been replaced by the British Commonwealth. It is signficant that the British people, with their great knowledge of the English language - I must say it is great, because they have nurtured it, developed it, and excelled in it - have found the word “ Commonwealth “ to replace the word “ Empire “. Now here are we transient moths before the flame of history dropping the title “ Commonwealth Bank of Australia”.
– Is it not to be the Commonwealth Banking Corporation?
– It is the Commonwealth Bank of Australia that is being destroyed. If I went to Launceston and said that I wanted to go to Denham Henty Proprietary Limited, people would not know who I meant; but if I said I wanted to see T. Norman Henty Proprietary Limited, they would say, “ Go to Cimitierestreet. It has been there for one hundred years “. This Government had no right to alter the name “ Commonwealth Bank of Australia “.
– I do not see why
Senator Henty should get a free advertisement.
– He was interjecting. The Government is only a temporary trustee of this institution. Politicians come and go, but institutions go on for ever.
– We can change the name. What is in a name, when all is said and done?
– The Liberal Party has often changed its name, but it smells just the same to me. It is most interesting to note that the various countries about which Senator Hannan spoke were noted for their privileged sections and caste systems on the one hand and, on the other hand, the inequalities, injustices and ignorance that have all been part and parcel of systems that have incorporated private banking institutions. The private banking system has been successful in destroying every empire in which it has been given full rein. I hope the people of Australia will realize the process that has been set in train by this legislation and that they will do something about it at the earliest opportunity.
I should like to join other Opposition senators in referring to the assistance that has been accorded to the Government in the introduction of this legislation by the political hermaphrodites who sit on the cross-benches under the cognomen Australian Democratic Labour Party. By way of interjection, they stated, as an excuse for their perfidy, that they would rather give away the Commonwealth Bank than the country.
– That is correct.
– You have given the Commonwealth Bank away!
– That is nonsense.
– The country is in the process of being sold out, anyway, to overseas banking institutions.
– I would much sooner give it to America than to Russia.
– You have a Com. phobia. Have you ever found that Com. you have been looking for under the bed for the last ten years?
– Order! The honorable senator’s time has expired.
Question put -
That the bill be now read a second time.
The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)
Majority . . . . 8
Question so resolved in the affirmative.
Bill read a second time.
Sitting suspended from 5.44 to 8 p.m.
Bill committed pro forma; progress reported.
Debate resumed from 7th April (vide page 557), on motion by Senator Paltridge -
That the bill be now read a second time.
– I rise at this late stage of the consideration of this group of bills, first, because I suggest that it must be obvious to any fair-minded person that the Government has completely failed to make out a case for the radical changes that are to be brought about in the banking system of Australia. Of course, this is not the first occasion on which these bills have been before the Parliament. I know that a certain decision was made this afternoon. Indeed, it was forecast by Senator Paltridge in his second-reading speech.
That decision brought forth quite a theatrical display on the part of honorable senators opposite. Personally, I want to go on record as opposing the proposition which looks like being approved by the Senate, and I also want to have recorded, for reference in years to come, my belief that the forecasts that the Australian Labour Party is making will be borne out.
We now find ourselves somewhat in the position that we occupied at the end of last year, because, as the Minister for Shipping and Transport (Senator Paltridge) pointed out in his second-reading speech, the bills are substantially the same as those we had before us at that time. In fact, he exhorted us or commanded us, I do not quite know which, to read the secondreading speech of the Minister for National Development (Senator Spooner), who represented the Treasurer on that occasion, because it contained basically the explanation for the bills being before the Parliament. The Minister criticized the Senate for the vote that had been cast on that occasion. In doing so, I do not know whether he impinged on the Standing Order which provides that there shall be no reflection on a vote of the Senate, or whether, when such matters are elevated to the level of statements made in secondreading speeches read by Ministers, some special privilege operates.
If the bills are substantially the same, certainly the arguments are the same. No matter how assiduously we search through the second-reading speeches and the speeches made by Government supporters both in the Senate and in another place, during 1958 and also on this occasion, I defy anybody to find one solid reason that has been advanced for the radical changes that are to take place in the very important field of banking. There are, of course, certain generalities, which I think may be placed under three heads: First, the alleged fear of nationalization; secondly, the right of choice of banks; and thirdly, the question of providing a better banking system for Australia.
This fear of nationalization, Mr. President, on which the Government has been living ever since 1947, of course, is a completely fictitious one. But because the Government knows that the strongest emotion of most people is fear, it clings to this story about what a terrible Labour government would do in the future to nationalize the people’s possessions, and all the rest of it. I make no denial that, in 1947, when the late Ben Chifley announced the proposal to nationalize banking, he threw a tremendous scare into the banking institutions of Australia. Those who controlled the banks did what normal people could be expected to do and resisted with all the weapons at their command. Finally, they took the matter to the High Court and then to the highest tribunal in the British Commonwealth of Nations, the Privy Council. The ruling of those tribunals was so clear that not even the lawyers on the Government side could convince anybody who cared to listen to them that there was any shadow of doubt. Those tribunals said that as long as the Australian Constitution remains as it is and is interpreted as it was at that time, there is no chance that the banks of Australia will be nationalized. Nobody knows the truth of that better than the members of the Government, or the lawyers on the Government side, although they continually talk about nationalization by stealth, and so on. They know perfectly well that that could not be done, but they also know that the threat of nationalization is the only justification that they can bring into this place for these changes of the banking structure.
If it were true, Mr. President, that the banks could be nationalized as the supporters of the Government claim, why have they waited for nine years to try to remove this overt threat of nationalization? They have claimed, probably with some justification, that the 1949 general election placed a seal on the issue of nationalization in Australia. They say that, as a result, they have a mandate from the people of Australia to oppose nationalization and socialization of industry. They have taken that stand when it has suited them. Why, if that has been their attitude, have they taken nine long years to move in and say, “ This is the final seal to prevent nationalization in the future “?
The thing that amuses me most of all is this question of right of choice of banks. On the last occasion that this legislation was before the Senate, I remember the Minister for Customs and Excise (Senator Henty) saying that his grocery shop had once been in dire trouble - there must have been a glut of cabbages, or something of the kind, in Tasmania - and that the bank was going to close down on him. He offered his cabbages, carrots and everything else to the bank manager. Finally, at the last minute, as in all dramas, he was able to extricate himself. He did it by going to another bank. Senator Gorton on that occasion said that the thing he stood for was freedom of choice of banks for the Australian community. To listen to them, any one would think that we had never had such freedom during the years that the Commonwealth Bank had been in existence. The fact that Senator Henty was able to go from one bank to another, and the fact that there had not been one iota of difference in the banking structure, surely indicates to any reasonable person that there was such freedom of choice. In other words, honorable senators opposite have been setting up a paper man and knocking him down.
There is no question that in the Australian community to-day you can move from one banking institution to another, although, since the Liberal Party has been in office, it has deliberately hamstrung the Commonwealth Bank and prevented it from moving into certain classes of finance for the people. That has resulted not so much in freedom of choice of banks as restrictions of the Commonwealth Bank. Broadly speaking, however, there has been no alteration of the banking structure over the years. For people, such as Senator Gorton, who is now a Minister, and Senator Henty, who was a Minister when this legislation was previously before the Senate, to say that they are fighting and pouring out their lifeblood on the altar of sacrifice merely to keep freedom of choice for the people, is laughable.
Then, we had Senator Spooner, who stood up in his best manner to-day and told us that what he wanted to see was a better banking system for Australia. I remember that, on the occasion of the very first effort that this Government made, away back in 1951 or 1952, to hamstring the Commonwealth group of banks, when we asked, “ Why? What is wrong with the banking system of Australia to-day? Why are you trying to alter it? “ we got exactly the same reply - “ We want to improve it and to make it easier for the Commonwealth Bank to compete with the trading banks. We want the Commonwealth group of banks to have a bigger share of the business, and we want to have a fair competition between the two groups of trading banks.”
Of course, there has been no evidence at all that there is anything wrong with the banking system as it is to-day, although if we do as Senator Paltridge said we should do, and read the second-reading speech of Senator Spooner on the previous occasion that these bills were before the Senate, we shall find ample evidence to show why these changes are being brought about. Of course, it is in every line, every word and every page of that document. It is under the direct request, or almost the direction of the private trading banks. This Government never tires of abusing departments. So, it is amusing indeed when the Government comes out and says that it is the champion of the Commonwealth group of banks and that this legislation will make things easier for them. This Government’s history shows that it has plumped for the private banks ever since it has been in office. Day by day, and in speech after speech, the expert politicians on the Government side have told us what they are going to do by means of this banking legislation without offering a shred of evidence on the matter. If you look for any unbiased expert opinion, it has certainly never been given in favour of this bill, because if there had been such evidence the Minister would have mentioned it. He is not a poor advocate. He would certainly have brought up that particularly valuable evidence, and so would every other member of the Liberal and Country Parties. The fact that this evidence has never been put before you for your consideration, Mr. President, is proof positive to me that nothing has come forward. When I look at the statements dealing specifically with the Reserve Bank, I suggest that you look at the evidence of three important men in the community. I refer to the Prime Minister (Mr. Menzies), the Minister for National Development (Senator Spooner) and Dr. Coombs, the Governor of the Commonwealth Bank. I do not think that there can be a complete examination of the position unless regard is had to a statement that was made by Dr. Coombs. Obviously, he has never controverted it, because if he had done so, we would have heard about it from the
Government side. I want this written into the record. When Dr. Coombs was dealing with the question of whether or not there should be a link between the Commonwealth Bank and the rest of the banking system, he had this to say - lt is important to realize that, by the direct influence which the Commonwealth Bank exercises over the family of banks of which it is the head, it is able, within limits imposed by their commercial (and, in the case of the Commonwealth Trading Bank, competitive) character, to influence their policy so that they contribute directly to the achievement of the objectives of central bank policy - (a) the stability of the currency; and (b) the maintenance of full employment.
That is the view that he held as far back as 1936. As I remember the position, the Royal Commission on Monetary and Banking Systems advocated that very system. It is all very well for honorable senators opposite to say that one is living in the past and that things change. I point out that it took a long time for this Government to change its views, because on the occasion to which I refer both the Prime Minister and Senator Spooner eulogized this system and defended it. The Prime Minister said that he would not go into the details because it was unnecessary for him to do so. At least he has been perfectly consistent, because he has not gone into the details of why he has completely reversed his opinion on this occasion. Therefore, I think Mr. President, that perforce you must ask yourself this question: If this was the decision of the leader of the Government both in politics and finance in 1953, after the Government had been in office for four years, why all of a sudden should the right honorable gentleman turn round and say that all the things that were said earlier were wrong and that the Government would reverse them? it is interesting to note that the only nonpolitical and expert evidence, that given by Dr. Coombs, has never been altered by Dr. Coombs himself. It is amusing to me because I have never seen the Prime Minister and the Minister for National Development - those two sympathetic gentlemen - so amenable to reason and willing to change their opinion so much. They have had all sorts of advocacy before them on various bills both in this chamber and another place and they have been very stubborn persons. But now they say that all the things they said in 1953 were wrong and therefore they must do something about the matter. You would have thought that there would be some evidence in support of this change which suggested to the Government that it should alter the system, but when we look at the policy speech which we were told to have a look at and consider the speech of the Treasurer of that time we find a few most revealing sentences. Sir Arthur Fadden said -
The private banks have made it plain thai they do not criticize the way in which the central bank has used the powers and functions it has under present legislation. On the contrary, they have been at pains to commend the competence, integrity and impartiality of the central bank.
All I ask is this: What else does the Government want? The then Treasurer went on to say -
The banks fear that a hostile government in the future may do something that will affect them adversely.
It seems to me that the private banks are saying, in effect, that everything in the Australian community is apparently okay, but in the future some evil fellow may win an obscure seat, may subsequently become the Prime Minister, and may say that he does not like legislation on this level, and so the last position may be worse than the first. I do not know where that would finish.
I also suggest to you, Mr. President, that it is completely immoral for the Government to say “ No matter what the people of Australia may decide in future elections, we are going to tie irrevocably the hands of future governments, because the narrow section of people we represent, the financial interests in this country, are not to be touched “. I do not see any other way of looking at it. The banks agree that it is all right to insure against their future while they still have an insurable risk with an insurance company, the insurance company on this occasion being the bank itself. After all, if a government does its best for three years it remains with the people to say whether or not it shall carry on. If policies are altered after that period, both the majority and the minority accept them. In Australian sporting parlance, you take it on the chin. That seems to be okay for every section of the Australian community except the private banks.
Senator Wright was probably not at his best when he spoke, because he was agreeing with the Government; he is never at his best when he is agreeing with the Government.
– What an unworthy remark!
– I personally must tell the truth.
– The honorable senator should be wearing the white rose of purity.
– If I am not wearing the white rose of purity, at least on behalf of the Australian Labour Party, I am displaying the red rose of courage. As I said, Senator Wright was not at his best when he was supporting this legislation. He went on to say that there would be meddlesome political interference. I seem to have heard those words before from Senator Sir Neil O’sullivan, who is sitting alongside him, when Sir Neil was the Leader of the Government in this Senate. Senator Wright seems to take the peculiar attitude that if a future government dealt with the banking system it would be meddlesome political interference, but if a government alters the whole set-up and puts its own nominees on the board, that is statesmanship of the highest order. That is a different matter altogether. That is not meddlesome, political interference! It is as clear as crystal, no matter what way you look at this - particularly if you do as the Minister suggests and examine the second-reading speech of Senator Spooner on the last occasion - that the only reason this is before the legislature is that the private banks have demanded it. There is no other reason.
As for this business of trying to create fair competition, let us be a little realistic about that. Honorable senators know that the feeling between the Commonwealth Bank group and the private banks is as bitter as gall, especially since the 1945 attempt to nationalize the private banks. In the circumstances, is it not reasonable to assume that if those banks could strike a blow at the head of the Commonwealth Bank they would do so? It is all so much poppycock, after having bowed your knee to the private banks to attempt to say that this legislation is designed merely to provide fair competition and put the Com monwealth Bank on a better footing. I should have thought that the extra few months given the Government to consider the bills, and the intervening Christmas spirit, would have removed the myth that the Commonwealth Bank was to be made completely independent. One need only glance at the legislation to see what has happened. A board is to be set up for the Reserve Bank and another for the Trading Bank. They are to be separate banks. They are not even to be in the same building. Apparently every big business interest in Australia could be in the same building but not the Trading Bank and the Reserve Bank - one must be in Pitt-street and the other in Castlereagh-street. It is amazing to me that the Treasurer (Mr. Harold Holt) has not put one of them down in Melbourne. Apparently it is something he has not got around to yet.
One sees that the Secretary to the Treasury is on both boards. Apparently he is to be a full member of one board and an ex-officio member of the other; yet those boards are to be kept quite separate. Apparently he could be required to sit on one board on the Monday and on the next on Tuesday - being required to forget completely what has happened at the previous meeting, and vice versa. All I can say is that it is strange to suggest that these banks should be completely divorced and yet provide a double pipeline - a two-way traffic - between them. I merely point that out because, though I do not care who is appointed to the board, it is complete hyprocrisy to say that the Government’s reason for separating the Trading Bank from the Commonwealth Bank is anything other than an intention to weaken the Commonwealth banking structure. That is merely an attempt to get around the truth. I should like the Minister for Civil Aviation (Senator Paltridge) to explain why a full member of one board is to be an ex-officio member of another. It would seem to me that a future secretary to the Treasury could be on one board ex-officio but that it would be left to the government of the day to say whether he should go on the other board at all.
Senator O’Flaherty exploded completely the suggestion that the members of the bank boards would not be associated with other banks. It all sounds very nice, but as Senator O’Flaherty so trenchantly and clearly pointed out, through interlocking directorates, companies interested in newspapers, television and banks extend throughout this country and beyond the confines of the Australian continent, lt would be simplicity itself to put on the bank boards people who were not directors of another bank but who were directors of companies which direct bank policy throughout Australia. For that reason, it is merely a myth - a trap thrown in to catch the unsuspecting - to say that members of boards will not have an association with the private banks. Senator O’Flaherty destroyed that assertion more effectively than I could hope to do to-night.
I want very briefly to deal w!ith the matter of the Development Bank. If there is any truth in rumour it certainly had a strange genesis in this place. The Minister, in his second-reading speech, said - the Development Bank will be prohibited from providing finance for the purchase of goods otherwise than for use in the course of the borrower’s business, and all of its resources will thereby be devoted to productive purposes.
That is all very nice, but we know that the whole business has been very cleverly arranged. The great unmentionable thing in banking, so far as Government supporters are concerned, is the question of hirepurchase finance. It is as plain as a pikestaff that over the last few years the private banking system has ducked the efforts of this Government to try and keep down inflation. The private banks have merely transferred their funds into the more lucrative hire-purchase field. In the existing Commonwealth Bank Act there is power for the bank to lend money under hire purchase and so compete with the hirepurchase companies of Australia. The bank did, in fact, compete when Labour was in office. The bank has been prevented from doing so by this Government. Authority for the bank to act is in the existing legislation but the legislation now before us will place the private trading banks in the unique position of knowing that, so far from there being free competition of the kind that Government supporters are always talking about, the Development Bank will be prohibited by law from competing in this lucrative field. If you want to buy a tractor or something of the sort you will be able to go to the Development Bank and borrow at a low rate of interest, but if you want to buy something for your home, or for your wife, you will have to enter the highly lucrative field of private banking finance. You will not be able to take that business to the Development Bank. It is almost like two people going into partnership with one saying to the other, “You can work down that end of the counter and handle all the low-profit business while I stay at this end and handle all the highprofit business “. The position is quite farcical.
The Minister said further -
There has been included in clause 83 of the bill a provision to the effect that, if they so desire, the trading banks will be appointed as agents of the Development Bank . . .
I direct the attention of honorable senators to the words, “ if they so desire “ - for the receipt and transmission of applications for assistance. This provision should ensure the continuance of present arrangements under which the trading banks commonly refer to the Mortgage Bank and Industrial Finance Departments applications which are not suitable for trading bank loans but which the trading banks feel would be considered by those two departments.
How this will work out, and what powers will be put into the hands of the private banks, I just do not know. I should like the Minister to say whether they are going to agree as to policy. Suppose I go into one bank and an official says to me, “ I do not know. I do not think you are a suitable case, therefore we will pass you on.” Perhaps if I am a pretty good touch - in Australian parlance - they will decide to keep me within the confines of their bank. If I am a bit risky they may shoot me on to the Trading Bank. It was a dangerous enough provision when it was left in the old legislation, but this is to be not only a division as between low-profit business and high-profit business but also a further hamstringing of the bank by saying, “ We are going to scatter it to the four winds, so that the trading banks can decide whether to refer applications or to hold on to them for themselves “. I should have thought, after reading the legislation introduced last year, that the private banks would have come to the end of their territorial demands, but evidently we did them a good turn by rejecting the legislation on that occasion. They have been able to pick up a lot of new points over the Christmas period. As Senator Courtice remarks, that is a matter of freedom of contract.
Senator McManus referred last night to the whittling down of the Commonwealth Bank. He said that there was no danger of that bank finally being sold. After thinking a great deal about it, I am not as convinced as Senator McManus is that we need have no fear. It might sound fantastic to say to-day that the time could come when the Commonwealth Bank would become so hamstrung that it might as well be handed over to the private trading banks. I would have argued in exactly the same way in 1949 when it was suggested, during a period of cold war, that the Government would hand over complete control of radio, petrol and so on, when it was suggested that the Government would try to hamstring aviation, despite its defence potential, to such an extent that private enterprise would have a virtual monopoly. But I have seen these things happen within a very short time.
Now, when I see the private trading banks advocating that the Commonwealth Bank should seek its capital from the common market, that it should not get handouts from the Government but should go to the common market to raise funds, I become a little suspicious. When you go on to the common market to raise the millions of pounds which a bank wants, who are the people who will subscribe the money? Such moneys are not subscribed by the man who lends £5 and £10; they will be provided by the big corporations. 1 suggest that big insurance companies and even some other trading banks would subscribe the money and it could happen that these subscribers, by virtue of the voting power they would hold, would gain control of the Commonwealth Bank. That is not beyond my comprehension in view of what has happened over the last ten years. If that procedure takes place, then we shall find eventually that even if the Commonwealth Bank is not sold there will be a complete by-passing of its functions. And this Government says that it wishes to have a true banking system in the Commonwealth!
The debates on this occasion and when the banking legislation was introduced previously have emphasized the fundamental difference, the big gulf dividing Liberal thinking and Australian Labour Party thinking. If we sheer away from the hypocrisy of the Government’s arguments, if we get down to true fundamentals and examine the position carefully, we find that the whole of the Government’s arguments have been in support of a private banking system working under normal business methods which will run with the trade cycle for the benefit of the shareholders of the private banks. The whole of the arguments adduced by the Australian Labour Party, not only during this debate but in all debates since 1949 while I have been here, and even before that, have been in favour of a government banking system which will have the courage to fly in the face of the trade cycle and to function for the benefit, not of the shareholders, but of the people of Australia. That sums up briefly the great gulf between us not only in relation to finance but in connexion with our general attitude towards the people of Australia.
I know that this is a traditional difference. I know it is a wide gulf which is emphasized by politics. I do not deny for a moment that both parties have added fuel to the flames which have flared whenever banking legislation has been introduced in Australia. But, allowing for all that, there is still no justification for governments to be run by pressure groups and the position is even worse when the government is run by one pressure group. It is a disgrace to this Government and to the legislative halls of the country that, when one group of people - the private trading banks - sounds the tocsin the Government genuflects. Such a state of affairs can only react to the detriment of the people of Australia in the long run, to the eternal disgrace of this Government.
– in reply - It was not my intention to speak during the second-reading debate on this bill as I thought I could save the time of the Senate by dealing with the points raised during the second-reading debate when we go into committee. I had been encouraged to believe that that would be the correct and more expeditious way of handling this debate, especially as my colleagues have so effectively answered the case put up by the Opposition on this occasion, and 1 take this opportunity to express my gratitude to all those of my colleagues who have spoken during this debate for the most effective manner in which they have crushed every suggestion of an argument that has come from the Opposition benches.
But Senator Willesee brings me to my feet because he has the coolness to express some mystification as to why we should be introducing this legislation. He suggests that not one person in Australia, and not one organization in Australia wants to see any change in the present banking system. Mr. President, I go back over the years and I look at the policy speeches on banking delivered in the clear and precise terms of the Right Honorable R. G. Menzies. I look at the speeches he delivered in 1949, 1951, 1953, 1954, 1955 and 1958 and I find that every one of them expresses in cold terms what is the policy of this Government.
Then I look at the miserable document which I have in my hand. It is the only policy speech distributed on behalf of the Labour Party in all those years. It is the policy speech delivered on behalf of the Labour Party during the last election campaign. I mention here that this copy was given to me by a union steward on a boat. He is a great friend of mine. He sent the copy to me with his compliments and good wishes, hoping that I would use it to the best effect in defeating the Labour Party. I look at the document in order to discover what is the policy of the Labour Party with respect to banking. We have heard the statement repeatedly made by Senator Kennelly and others, in cold and emphatic terms, “ our policy is the nationalization of banking “. A similar statement was made by Mr. Ward and Mr. Calwell in another place. But Senator McKenna did not say so. He is rather too smart for that.
What does this policy speech say about banking? Does it say anything about the nationalization of banking? It is the most evasive statement ever to be presented to the Australian people. If Senator Willesee has any doubt as to why he continues to sit to the left of you, Mr. President, I suggest that he need only examine the policy speech of his own leader and compare it with the policy speech of the leader of my party to resolve his doubt. If he does so, he will find out what is the true decision of the vast majority of the people of Australia.
The people of Australia have sent this Government back to office at election after election since 1949 to put into operation its policy with respect to banking and to prevent placing on the statute-book of this country the nationalization policy of the Australian Labour Party. Let me now refer to one or two statements that have been made by Opposition senators during this debate. They have followed the usual pattern - the Government is whittling away the powers of the Commonwealth Bank. Senator McKenna said that the Government has taken the first step towards disposing of the Commonwealth Bank. He knows as well as I or any other honorable senator knows that such an action could not be taken unless it was approved by a legislative act of this Parliament.
– The Government gave away the whaling industry and has given away others as well. What is to stop the Government from whittling away the Commonwealth Bank?
– I say specifically that disposal of the Commonwealth Bank - indeed the admission of any outside capital - requires an act of this Parliament. As I have said, the Opposition has charged the Government with whittling away the influence of the Commonwealth Bank. Will honorable senators opposite tell me by interjection, because none of them has mentioned it during debate, how that has been done? Not one scintilla of evidence has been advanced in support of the Opposition statement. What is the evidence? There is none!
I am indebted to my friend, Senator Wade, who quoted some rather illuminating figures this afternoon indicating the growth of the Commonwealth Bank during the period that this Government has been in office. To the further confusion of the Opposition, I shall quote additional figures. Taking deposits in the various banks - after all, deposits are the best guide as to the progress which any bank is making - we find that from 1946 to 1959 deposits held by the Commonwealth Bank rose from 8.5 per cent, to 13.7 per cent. However, deposits held by the largest private bank which, 1 should imagine, would be the bank regarded as the direct opposition to the Commonwealth Bank, fell from 25.4 per cent, to 24.1 per cent. The figures of deposits in all major trading banks at the present time as compared with 1946 show a downward movement from 91.5 per cent, to 86.3 per cent, while, as I have just stated, the Commonwealth Bank deposits have risen from 8.5 per cent, to 13.7 per cent. The same position applies in advances, the number of staff employed and the number of new branches opened during that period. Those facts show a picture of expansion which completely debunks the criticism that has come from the Opposition to the effect that this Government has used its influence to whittle away the power or the influence of the Commonwealth Bank and to hinder its growth.
– Since the Minister has invited interjections from the Opposition as to the case or evidence that we submitted in support of our belief that this Government was preparing to dispose of the Commonwealth Trading Bank, I refer the Minister to my speech on Tuesday, 7th April, the whole theme of which was directed to that point.
– Precisely, and the Leader of the Opposition made that assertion knowing full well that the Government, if it proposed to dispose of the bank, would have to obtain legislative sanction from this Parliament before doing so.
– What is to stop the Government from doing as it wishes? It has the numbers.
– I suggest, Mr. President, that the proposition advanced by the Leader of the Opposition at this moment, when we are taking the most extraordinary steps to set up a Commonwealth Trading Bank in its own right, to provide additional capital for a development bank, to strengthen the Savings Bank and to make every arrangement it is possible for the wit of man to devise to ensure that the Commonwealth group of banks shall take its place in the banking system of this country alongside the trading banks, operating in fair and equal competition with them, is ludicrous. It is ridiculous that at this point of history the Leader of the Opposition should say that the steps the Government has taken bespeak a preparation to dispose of the Commonwealth Bank. Might I say that that proposition is similar to the old-fashioned, time-worn argument recently advanced by the Opposition in respect of the government airline when we were debating a bill to provide greater capital for a private airline and stronger guarantees to enable that airline to purchase additional equipment.
– By that legislation the Government was assisting the private airline to operate more competitively against its own airline.
– Not at all. The Government was acting in terms of an agreement entered into years ago. I put this question to the Senate, and to the country, for consideration: How has any action taken by this Government during its ten years of office been directed towards the dismemberment or the destruction of the Commonwealth Bank? Where is the evidence to support any such contention? The Opposition has failed pitiably to advance any such evidence.
– What about hire purchase? The Government has left the field open to the private banks. The Government has also restricted housing loans.
– If Senator O’Byrne looks a little more closely at the legislation even he will be able to see that it provides that both the Savings Bank and the Trading Bank will advance housing loans. That is something that the Labour legislation did not do. In fact, that legislation was restricted to only one bank.
Senator Willesee has stated that the Government is playing something of a double game with the proposal to establish the Development Bank. He put the case of a person seeking a loan to assist the development of his business or property approaching an agency - his own trading bank - and putting his case. That bank might say to him, “This is something of a marginal case but we think we might take this business. Do not go to the Developmental Bank. We will advance the money “. That proposition is completely unreal for a number of reasons. The client, on being given that information by the agency, is perfectly at liberty to go direct to the Development Bank. What is the position with a trading bank? Will a trading bank take on advance business which is not fully secured in the normal way of banking? In trying to make his case, Senator Willesee has gone altogether too far and has stated exaggerated circumstances.
Let me now refer to hire purchase because a moment ago Senator O’Byrne interjected regarding this matter. It is as well that we keep in perspective the position of the banks and their connexion with hire purchase and hire-purchase companies. Advances by banks to hire-purchase companies totalled 1 .2 per cent, of their business -some £10,000,000 out of £840,000,000. During the last four and one-half years, because of action taken by the central bank, no increases in advances have been made by banks to hire-purchase companies. The trading banks have subscribed their shareholders’ funds, not their deposits, to hirepurchase companies. Is there anything wrong with that? Will any one on the Labour side say that there is something wrong with that transaction?
– Usurious interest is morally wrong.
– Senator O’Byrne says that it is morally wrong. Why should not a shareholder in a bank be permitted to have his funds invested in a hire-purchase company, as any other citizen in Australia can do? Why should he be discriminated against? I will do a bit of tear-jerking from this side of the chamber for a change. Take the case of a widow with a family - I do not know that I have the right inflection for this - who has been left a small amount by her husband as a stockholding in a bank. Why should not that poor widow be permitted to invest her capital in a hire-purchase company, in the same way as the Leader of the Opposition, or any other member of the Labour Party, could invest in a hire-purchase company? Do you discriminate against her? Of course, not.
I say to honorable senators opposite that when they advocate that sort of discrimination, once again they show their socialistic hand and their desire for complete dictatorship as to where and how certain classes of people should be permitted to invest their funds.
I got to my feet some twenty minutes ago merely because I was provoked into saying a few words by Senator Willesee. I hope that what I have said has had the effect - I am sure it has - of throwing a bit of cold water on some of the criticism that has come from the other side, or of letting in a bit of the light of day. We must be realistic about the matter. I shall be delighted to continue this debate, Mr. President, in committee.
Question put -
That the bill be now read a second time.
The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)
Majority . . 9
Question so resolved in the affirmative.
Bill read a second time, and committed pro forma; progress reported.
Consideration resumed from 7th April (vide page 559), on motion by Senator Paltridge-
That the bill be now read a second time.
Question put. The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)
Majority . . . . 9
Question so resolved in the affirmative.
Bill read a second time, and committed pro forma; progress reported.
Consideration resumed from 7th April (vide page 560), on motion by Senator Paltridge -
That the bill be now read a second time.
Question put. The Senate divided. (The President - Senator the Hon. Sir Alister McMullin.)
Majority . . . . 9
Question so resolved in the affirmative.
Bill read a second time, and committed pro forma; progress reported.
In committee (Consideration of House of Representatives’ amendments):
Clause 15 -
In assessing damages in respect of liability under the Convention there shall not be taken into account by way of reduction of the damages -
a sum paid or payable out of a superannuation, provident or like fund, or by way of benefit from a friendly society, benefit society or trade union; or
in the case of death, a premium that would have become payable under a contract of insurance in respect of the life of the deceased passenger if he had lived after the time at which he died.
House of Representatives’ amendment No. 1-
Clause 15, paragraph (b), omit “or” (last occurring).
House of Representatives’ amendment No. 2-
Clause 15, after paragraph (b) insert the following paragraphs: - “ (ba) any sum in respect of a pension, social service benefit or repatriation benefit paid or payable, consequent upon the death or injury, by any government or person; “ (bb) in the case of death, any sum in respect of the acquisition by a spouse or child of the deceased, consequent upon the death, of, or of an interest in, a dwelling used at any time as the home of that spouse or child, or of, or of an interest in, the household contents of any such dwelling: or “.
Clause 38 -
In assessing damages in respect of liability under this Part there shall not be taken into account by way of reduction of the damages -
a sum paid or payable out of a superannuation, provident or like fund, or by way of benefit from a friendly society, benefit society or trade union; or
a premium that would have become payable under a contract of insurance in respect of the life of a deceased passenger if he had lived beyond the time at which he died.
House of Representatives’ amendment No. 3-
Clause 38, paragraph (b), omit “ or “ (last occurring).
House of Representatives’ amendment No. 4-
Clause 38, after paragraph (b) insert the following paragraphs: - “ (ba) any sum in respect of a pension, social service benefit or repatriation benefit paid or payable, consequent upon the death or injury, by any government or person;
*’;(bb) in the case of death, any sum in respect of the acquisition by a spouse or child of the deceased, consequent upon the death, of, or of an interest in, a dwelling used at any time as the home of that spouse or child, or of, or of an interest in, the household contents of any such dwelling; or “.
Clause 41 -
The regulations may provide for applying, with such exceptions, adaptations and modifications as are prescribed, the provisions of the Warsaw Convention and the Hague Protocol and any of the provisions of this Act to and in relation to the carriage of cargo, being carriage in relation to which, if it wei e the carriage of passengers, this Part would apply.
House of Representatives’ amendment No. 5-
Clause 41 at the end of the clause add the following: - “, but so that no adaptation or modification of the provisions of Article 22 of the Warsaw Convention, as replaced by Article XI. of the Hague Protocol, shall have the effect of limiting the liability of the carrier to a sum less than the sum to which his liability would be limited if those provisions were applied without adaptation or modification.”.
– I move -
That the amendments be agreed to.
The bill, as originally distributed, provided in clauses 15 and 38 that in assessing damages there would not be taken into account, so as to reduce the damages awarded, a sum payable on death or injury under a contract of insurance; a sum payable out of a superannuation or similar fund, or by way of benefit from a friendly society, benefit society or trade union; or an insurance premium that would have become payable but for death.
During the debate, Senator McKenna moved that clause 38 be amended to exclude also social service and repatriation pensions and allowances, and the value of such portion of the estate of a deceased passenger as passed to a dependant or member of his family. That motion was defeated, but I indicated at the time that the matter of social service and repatriation benefits was under consideration by the Government and that when a decision was taken, the bill would be amended at the first opportunity. Such a decision was made, and appropriate amendments of clauses 15 and 38 moved and adopted in another place. The opportunity also was taken to amend these two clauses so as to exclude from reckoning any interest in the family dwelling and its contents which devolves upon a spouse or child as a result of the death. This provision is not as wide as that proposed by Senator McKenna, in that it is restricted to the family home and its contents.
.- I wish to speak to the proposals to amend clauses 15 and 38 by inserting paragraph (bb) in each case. I acknowledge with gratitude that the Government proposes to insert paragraph (ba) in each of those clauses, but I should like the Minister to explain to me whether the term “ government “ has any legal definition in the Acts Interpretation Act, or what the legal significance of it is. Passing now to the provision which deals with the home, it will be recalled that when we were discussing, under this bill, the rules for the assessment of the family’s compensation in the event of the death of a passenger by air, the view was put during the debate that, having regard to the limitation of the amount to be recovered to £7,400, it was specially necessary that there should not be taken into account, thereby reducing the family’s recovery, property that accrued to the family by virtue of the will or intestacy of the deceased breadwinner. The attention of the Minister was directed to a provision in the Tasmanian Fatal Accidents Act which excluded from reckoning as a deduction from the widow’s recovery so much of the deceased’s estate as did not exceed £5,000.
The Minister was good enough, after his officers had made some research in the matter, to state to the Senate that Tasmania had the honour of being the only State in which such a remedial exception had been introduced. The Minister and his colleagues in the House of Representatives have had those provisions before them and have had the opportunity to consider them. I express my dismay that the amendment that is now brought before us is cast in the unsatisfactory form in which it is presented.
I first comment on the complete inappropriateness, in my opinion, of the term “ acquisition “. I invite the Minister - and I am not hastening unduly, so that those at his elbow will have the advantage of the delay between syllables - to produce any textbook authority, or any statute or legal language whatsoever, that uses the term “ acquisition “ in relation to transmission of property on the death of a deceased person. That is, I expect that any court to-day taking the provision in hand would realize that the statute has to be construed. I do not think that the inappropriateness of the expression would defeat the purpose, but I ask why we deliberately depart from the terms of recognized connotation to create doubt, indefiniteness and ambiguity. However, that is only a preliminary observation and is not of great consequence. What I wish to submit in regard to the contents of the amendment is of great consequence, in my submission.
What the amendment proposes to exclude from being taken into account as a deduction, Mr. Chairman, is an interest in a dwelling house used at any time as the home of that spouse or child, or the household contents acquired by her in consequence of the decease. I can think of widows whose homes are worth £50,000 - in a case where they occupy a curtilage in the city containing a castle - which would come clearly within the definition of a dwelling. But if I go into suburban lands I can see farmlets where castles have been erected on fourteen acres of land. In the spirit of the lines from the poet - looking upon it as the owner of all I survey - in that expansive moment I would regard the whole of the area as my home. Certainly the amendment refers to “ dwelling “, but how much of the area around it is included in the case of a farmlet? The value of some of those properties will go into five figures.
But the widow, for whom I speak on this occasion, is one who occupies a humble cottage as a tenant, whose husband had the misfortune of investing £5,000 or £6,000 of his savings in Commonwealth stock after listening to the advice of a government. In that situation the language that has been chosen, deliberately different from the Tasmanian provision., creates a discrimination between the widow who inherits the castle and the widow-tenant whose husband was ill-advised enough to invest, not in a home, but in shares and stocks, now worth only a few thousand valueless pounds. She is excluded from the benefit of this provision.
It is little wonder, Mr. Chairman, that I rise here with a degree of resentment. After deliberate and well-conducted debate for a whole week, I find that an obvious injustice such as is apparent on this language, persists.
And then, why have the words “ at any time “ been introduced? If the expression were confined to a dwelling used as the home at the time of death, it would have some relation to reason. But, Mr. Chairman, I invite the Minister to contest the suggestion that is impressed on my mind on the first reading of the language, that a case such as this would attract a deduction, If, in the last ten years before a husband met his death in an aircraft disaster, he had moved every two years - he moved through five households, each of which was used as his home - each home that was acquired in the terms of this incongruous and inappropriate language, typical of this place, would be included. If I mistake not, the singular includes the plural. Why should a succession of five dwelling houses used as homes at any time be taken into account to effect a reduction? I put these matters with deliberation and indefiniteness only for the purpose of evoking an explanation. I am dismayed.
– I am pleased to have the opportunity of thanking the
Minister for his approach to the suggestions that were made to him in this place. The substance of Amendment No. 2 and Amendment No. 4 was originated in debate by Senator Wright, and it formed the subject of amendments in some wider terms by the Opposition. I take the opportunity to say to the Minister that the Opposition thanks him for the earnestness with which he listened to arguments and his readiness to consider an argument soundly based.
Whilst the Minister collects what information he may require on the point submitted by Senator Wright, I shall refer very briefly to what the honorable senator has said and indicate my attitude in respect of the matters raised. I suggest that the draftsman, having heard Senator O’Flaherty upon tort-feasor, in order to get away from the word “ devolution “, or something akin to it, may have selected the word “ acquisition “. I realize that Senator Wright acknowledges that the desired effect would be achieved by what has been done in regard to the acquisition of an interest, and I have no further comment to make upon that matter.
I come to the next point raised by Senator Wright. It is a matter of significance. I accept his reasoning concerning the words “ at any time “ - that if the spouse or child of the deceased acquires through the deceased at any time an interest in a dwelling house as the home of that spouse or child, that that could let in, if the circumstances were real, five or six houses as the honorable senator indicates, provided that in the move from one to the other they still remained in the ownership of the individual. It would be a most unlikely, but not impossible situation. I concede the possibility but I suggest that it would be unlikely that the type of person we are envisaging would live in one home, sell it, buy another one, live in that and keep repeating the process a number of times. It would certainly be rare. The normal individual whose interests we are seeking to protect would be the humble person mentioned by Senator Wright, in particular the widow.
Frankly, I do not understand why the words, “ at any time “ were included. I should like the Minister to inform me upon it. I have no doubt that the draftsman had something firmly in mind when he put the words there. I should not think of opposing the provision if it had the effect indicated by Senator Wright because the proposition that I affirm on behalf of the Opposition is that the whole of the deceased estate should be excluded from assessment of damages. Accordingly, if this lets more than one house in, it is entirely in line with the Opposition’s outlook. The amendment which I proposed went very much further than the Minister is prepared to go now, but even if the case postulated by Senator Wright does occur, my proposal is that the whole of the estate of the deceased should be disregarded - not considered in reduction of damages properly assessed. Therefore, if the Minister concedes me one home, I am quite prepared to take five or six, and a whole lot of other things with it. It is a widening of the position beyond one house, and I have no objection to that. Accordingly, I support the five amendments. My comments at the moment relate to four of them in particular. As for the fifth, which was argued, the Minister has given me a preview of the amendment and I acknowledge that it completely fulfils the undertaking that he gave to the Senate on the matter.
– I shall attempt to reply to the proposition put by Senator Wright. I would ask the Senate to realize that the Government did give particular consideration to the debate in this chamber. Although I cannot explain with precision, I at once acknowledge the intricacies of the drafting. I know that this matter received close attention by the department, in collaboration with the AttorneyGeneral. I hasten to say, though I do not advance it as an argument that the provision is perfect, that the Attorney-General himself devoted his attention to this matter, and to the drafting. The note that I have from my legal advisers is that the Government considers that there is no justification for making too radical a departure from the general principle that applies under State law - that financial gain resulting from the death must be taken into account when assessing damages. It is possible, however, that there is merit in the view expressed by a number of senators that where the widow or the children inherit a home in which they lived with the deceased, that home should not be taken into account so as to reduce the damages awarded.
As was stated during the debate on the bill, the practice of the courts in such a situation is to take the home into account only to the extent of what is referred to as the “ accelerated enjoyment of ownership resulting from the death “. This is a difficult matter to calculate and frequently results in very little or even nothing being deducted from the damages awarded. The Government has now taken the view that instead of entering into this somewhat unreal calculation, it is preferable to disregard the home entirely for the purpose of assessing the damage.
.- I realize the difficulty of the Minister, but he would be the last to advance that as a consideration relieving me of my duty to strive for sensible legislation. It is completely indefensible to create a discrimination between the wealthy home-owner and the person who is unfortunate enough to be a tenant and has her husband’s few thousand pounds invested in Commonwealth stock. In the one case, by virtue of this provision, the wealthy home is not used as a reduction of her recovery. In the other case, the few thousand pounds of Commonwealth stock is used to reduce the widow’s recovery. In order to put myself on record in this matter - because you never know what historical interest there may be in it - I move -
Amendment No. 2, paragraph (bb), leave out all words after “ death “ (first occurring), insert, “ the value of such portion of the estate of the deceased as passes to his spouse or child except so far as the value exceeds the sum of five thousand pounds “.
A similar amendment should be made to the House of Representatives amendment No. 4, paragraph (bb).
That satisfies my purpose to the extent that it ensures that at least the small widow, the widow whose deceased husband’s estate amounts to some £4,000 or £5,000 - in whatever form it is transferred to her by his death - will not be deprived of damages against the airline company to the extent to which there is accelerated enjoyment of the estate by reason of the husband’s death.
The incongruities of the proposition put to us are amazing. I can envisage the difficulties that will confront the court in interpreting the legislation. True, as Senator McKenna has said, there will be few occasions when, in the course of ten years, five changes will take place in the family home, the previous four homes being retained by the owner and let, but there will often be two such homes. The natural course for prudent Scots - whose blood I share - is to buy a small home and, when one feels able to throw off the mortgage, to buy, if one is sufficiently ambitious, a little better home and let the first. A person who qualifies under this provision may have two homes, neither of which operates to reduce the damages paid to the widow, but where a deceased person has accepted advice to put money in Commonwealth stock, his widow will have that sum deducted from her recovery. That is completely indefensible. I quite realize Senator McKenna’s anxiety to get the whole of the husband’s estate excluded from consideration. He put that amendment before us when this bill was before the Senate. I do not go that far with him. I share the Government’s view that in certain cases large estates should come in on acknowledged principles, but I am striving to get the committee of the Senate to accept the principle of protecting every widow from having her husband’s assets used to reduce her damages up to the extent of £5,000, whatever form her husband’s assets happen to take at the time of death.
That is the substance of my proposal. I hope the spirit and equity of it will appeal to every honorable senator. I ask the Minister to trust his judgment, because I am sure he is convinced that there is equity and merit in what I have said, without any undue inflection as to the term “ widow “ which is not the subject of anything but earnest consideration here.
– I suggest that there is a vital matter involved in what Senator Wright has put to the committee. Let me put a suppositious case to the Minister. Let us suppose that two families are very friendly, that they win a lottery of £10,000 which is shared equally between the breadwinners, that they go away in a plane and the two breadwinners are killed. Let us suppose also that just beforehand they had arranged to live side by side, that one man bought one of two joint cottages and the other man rented the second. In such cases, the only estate one man would have would be the house while the other man’s estate would comprise £5,000 in the bank. The lady who will be claiming damages cannot have deducted from her damages the value of the house her husband bought. Under the proposed amendment, the lady who has £5,000 in the bank will have that deducted.
– Under the Government’s proposal.
– Yes. We are considering the Government’s proposal. She will have that £5,000 deducted from the damages. I put it to the Minister quite earnestly that that would be a completely anomalous result. The relief that is accorded by this particular provision extends in respect of certain property only - a home and contents. To get the benefit of this deduction, the estate of the deceased in respect of whose death the claim arises must be in bricks and mortar or household goods. If it is in any other form, then no relief is accorded.
I do not think I can put the position more plainly than that. If I am assessing the position accurately, I am sure the Minister will feel that it would be worth consideration. Instead of making the benefit depend upon the form in which the deceased’s assets are, I suggest that it should be related to the means. 1 am not satisfied that I could accept, at this stage, the amendment moved by Senator Wright. Quite frankly, I prefer an alternative. 1 prefer wording such as, “ Either the home and the contents or the sum of £5,000 “. Let us have alternatives rather than the one fixed thing. I think honorable senators will appreciate my reason for that.
– I would willingly accept that.
– It broadens the position a little, but not very much. I suggest it to the Minister in these circumstances when I have not the time, while on my feet, to draft the highly technical amendment that would satisfy even me, let alone the Minister and his legal advisers, and that would meet what Senator Wright wants. It is also possible that I would use a word like “ tort-feasor “ to which Senator O’Flaherty objects. In the circumstances, I suggest that it is worthy of mature consideration, having regard to the whole position. My mind would flow to an amendment that would provide alternatives such as a home and contents or a sum of money, to allow for undefined assets.
– I was not uninfluenced by the points put very powerfully by Senator Wright last week when he proposed carrying into the Commonwealth legislation a provision which, I think he said, exists in the Tasmanian legislation now. So, when I conferred with the Attorney-General (Sir Garfield Barwick), I discussed with him this position and the possibility of an extension to include a provision similar to that which Senator Wright now proposes by way of amendment. The advice which I received, after close examination, was that there were difficulties and anomalies that could arise in applying the provision and that it would not be possible at this stage to write the proposed amendment into the legislation.
I regret that 1 am unable to give further detailed explanation as to what the anomalies and the difficulties are, but I inform the committee of that advice in order to indicate that I have, in complete good faith, pursued the matter as far as my own knowledge of the legislation permitted. I regret that the consideration given by the Attorney-General’s Department does not permit me to accept the amendment now, but I do say to the committee that it raises in my mind a matter which is well worthy of consideration, and T shall be prepared to pursue the matter further in an attempt to reach a solution of an anomalous situation and one from which 1 do not derive complete satisfaction. I regret that I am unable to accept the amendment now.
– I wish, first to acknowledge this statement made by the Minister and to note the indication given by the Leader of the Opposition (Senator McKenna). In the circumstances, I do not suppose it is of much use pushing my proposal to a division because before many disasters of this sort occur, and deaths are entailed, we shall have an opportunity, even by way of a private member’s bill if necessary, to present it in a form that will permit no one to escape a disclosure of his knowledge and earnestness for justice on behalf of small people, without the discrimination which produces a sense of injustice that is rancorous to the small man. I merely wish the committee to know that my amendment is couched in the same language as the Tasmanian statute of 1955, which passed through the crucible of the Tasmanian Parliamentary Draftsman’s office and earlier was considered by the committee of the Bar Association of Tasmania, which indulges in the exercise of promoting law reform to obtain equity in the expressed law. I should have thought that any honorable senator who took a little time to read that statute, even though it be a Tasmanian statute, would need considerable justification for departing from its terms and adopting the incongruous and completely inappropriate language of the amendment proposed by the Government.
I speak in these terms because the attitude adopted by the Minister creates a situation that is completely unjustifiable - the production of legislation pregnant with inequity. However, I hope that in the future we will not be presented with the excuse that there is not sufficient time to deal with the legislation in the way it should be dealt with. When that time arrives, the legislation will be debated fully and I hope that honorable senators will be ready to take part in a division. At the moment, unless support is evinced by those who have heard the debate and who have a judgment to express, I shall not push the question to a division but shall accept a vote on the voices.
– I should like to say to the Minister for Civil Aviation (Senator Paltridge) through you, Mr. Chairman, that I accept the assurance that he has given. Having regard to his actions in recent days, I am quite confident that we shall be hearing from him again in the very near future. I have already stated that I will join with Senator Wright - and will urge my colleagues to do likewise - in requesting the Government to consider the proposals we have submitted.
Question resolved in the affirmative.
Resolution reported; report adopted.
Senate adjourned at 9.55 p.m.
Cite as: Australia, Senate, Debates, 9 April 1959, viewed 22 October 2017, <http://historichansard.net/senate/1959/19590409_senate_23_s14/>.