9th Parliament · 3rd Session
Mr. Speaker (Rt. Hon. W. A. Watt) took the chair at3 p.m., and read prayers.
– I have to report that, accompanied by honorable members, I waited upon His Excellency the GovernorGeneral this day and presented to him the Address-in-Reply to His ‘Excellency’s Speech at the opening of Parliament, agreed to by the House on the 11th June last. His Excellency was pleased to make the following reply: -
It gives me much pleasure to recoive the Address which has been adopted by the House of Representatives in reply to the speech which I delivered on the occasion oi the opening of the third session of the ninth Parliament of the Commonwealth, and I desire to thank you for your expressions of loyalty to His Majesty the King.
Mr. GREGORY, as Chairman, presonted the report of the Public Works Committee in connexion with the proposed erection of Hotel No. 4, Canberra.
Ordered to be printed.
Report No. 1 of the Joint Printing Committee presented by Mr. Corser, read by the Clerk, and agreed to.
The following papers were presented : -
Invalid and Old-age Pensions Act - Statement for 1924-25.
Ordered to be printed.
Public Service Act - Appointment of E. E. L. Lloyd, Attorney-General’s Department.
War Service Homes Act - Report ofthe War Service Homes Commission, together with Statements andBalance Sheets. 1st July, 1924, to 30th June,1925.
-I have received an intimation from the honorable member for the Northern Territory (Mr. Nelson) that he desires to move the adjournment of the House this afternoon for the purpose of discussing a definite matter of urgent public importance, namely, “ The Births and Deaths Ordinance, Northern Territory, No. 13, of 1925.”
Five honorable membershaving risen in their places,
.- Mr. Speaker-
– Did the honorable mem ber intimate to any one that he proposed to take this action ?
– Yes ; I rang up the department. The reason I move the motion for the adjournment of the House to-day is to bring under its notice Ordinance No. 13 of 1925 of the Northern Territory, whioh is characteristic of the many ordinances affecting the Territory, inasmuch asit deprives the people resident there of a right which is commonly enjoyed by citizens, elsewhere throughout the Commonwealth. The ordinance deals with the registration of births and deaths, and was passed for the purpose of amending, in its application to the Northern Territory, section 23 of the South Australian Act of 1874 dealing with the registration of births and deaths by the insertion after the word “and,” line 6, of the words “ if he satisfies the registrar that he requires the certified copy for a lawful purpose.” Section 23 of the South Australian act reads -
The Registrar-General and every district registrar shall causa indexes of the register books in his office to be made and kept with the other records of his office, and every person shall be entitled at all reasonable hours to require search to be made in the said indexes, and to have a certified copy of any entry or entries in the said register books under tho hand and seal of the Registrar-General, Deputy Registrar or district registrar on payment of thu fees hereinafter mentioned.
The ordinance to which I tako exception may appear to be a very mild enactment, but its effect is that, in the Northern Territory, any one who requires a certificate of birth has to prove to the Registrar that he requires the certified copy for a lawful purpose. That may seem a not unreasonable condition, but it is not imposed in any other part of Australia. Members of the legal profession, if they require a birth certificate, can obtain it by paying the prescribed fee, and without disclosing their reason for asking for it.
– A similiar condition is imposed, I think, in New South Wales.
– I think not. The Northern Territory is the only part of the Commonwealth where the registrar has to be satisfied that the certificate is required for a lawful purpose. Moreover the registrars in New South Wales are exclusively engaged on duties relating ‘to the registration of births, marriages, and deaths, and should be officers who could in ordinary circumstances be trusted with confidential information; but the registrar in tho Northern Territory probably has a dozen different clerical jobs to perform, and this particular work is tacked on to his duties as a side line. His position, therefore, cannot be regarded as identical with that of’ the registrars in the various States. These certificates are public documents, and it is only right that members of the public should be allowed to obtain them with as little inconvenience as possible. The ordinance deprives the people of the Northern Territory of a privilege enjoyed by citizens in all other parts of the Commonwealth. It is another instance of the tantalizing treatment inflicted on people who have not sufficient political influence to obtain treatment similar to that meted out to electors in other portions of Australia. I venture to suggest that no Minister would dare to impose this condition in Victoria, Western Australia, or any other State, because the legal profession and other persons would object to having to disclose the purpose for which the certificates were required. Letme give an illustration of what might happen under this unjust ordinance. A man might be under the impression that he had certain money coming to him, as a legacy or in some other form, andmight wish to get tho birth certificates of certain individuals who had already taken steps to annex it. He might desire secrecy to be maintained in regard to his actions, but under this ordinance he would have to disclose the nature of his business to the registrar ; in fact, he would be put on trial with regard to his honesty and morality before he could obtain the necessary certificates. Again, let us suppose that a man has reason to believe that he has been blackmailed for an alleged offence against a girl under the age of consent. If he desires to secure a copy of the birth certificate of the girl in order to defend himself, he must go before the registrar and disclose tho nature of his business, although that officer is merely carrying out the work of a registrar in addition to many other duties. Such a position would not be tolerated in any other part of the Commonwealth. I bring this matter up for the purpose of showing that- the ordinance is class legislation in so far as it has been applied only to one portion of Australia. I know that the Minister will state in reply that the object of the ordinance is to prevent Chinese from trading in birth certificates in the endeavour to get into the Commonwealth prohibited immigrants. But that seems to me to be a very weak excuse. It should be remembered that the Chinese population of the Northern Territory is only from 500 to 600. and this amendment will not be a panacea for the evil it is intended to remedy. Besides, the alien population of the. Territory is 1,018, including Chinese, Japanese, Cingalese, Indian, Javanese, Manilamen, and others, and this population has de creased by 814 during the last few years - a decrease that is certainly to our advantage from the point of view of the White Australia policy. The Northern Territory has an excess of European population over Asiatics of 1,231, whereas in New Guinea there are 1,816 Asiatics, and only 1,228 Europeans. Although the Asiatic population is in excess of the European population, no such ordinance as this is in operation in New Guinea, where certificates can be obtained by the payment of the ordinary prescribed fee. I think that all honorable members will agree that residents of the Northern Territory should be entitled to obtain public documents with as little possible trouble as the department finds it necessary to inflict. The object of the ordinance is to prevent the importation of “ cooked “ birth certificates with respect to Chinese. New South Wales has 7,282 Chinese, as against only from 500 to 600 in the Northern Territory, and honorable members are well aware that Queensland is full of Chinese. Therefore, if the object is to prevent trafficking in birth certificates, why has the ordinance not been made applicable to the whole Commonwealth? Thousands of Chinese are scattered throughout the Commonwealth, and the opportunities of securing faked birth certificates are greater in the various states than in the Northern Territory. Those engagedin the business of trafficking in these certificates could afford to drop Darwin out altogether. Yet the whole European population of the Northern Territory is being penalized as well as the Chinese. An Australian citizen should not be subjected to the humiliation of crossquestioning by a registrar, and able to get a certificate only if he approves. If the trafficking in birth certificates requires to he dealt with, it must be tackled generally; it is useless to apply a restriction to afew people in the Northern Territory, and leave the great mass of Chinese in other parts of the Commonwealth untrammelled. If the honorable member for Fawkner (Mr. Maxwell) required a birth certificate for a legal client, he would resent having to disclose to the registrar the purpose for which he needed it.
– I have at no time asked fora birth certificate.
– Probably the honorable member’s clerk has obtained certificates for the honorable member and his clients. Throughout the British Empire, I believe, citizens are entitled to get a birth certificate “without having to state why they want it. Many of the Chinese in the Northern Territory are native born; some of them are highly respected citizens, and merely because one or two have infringed the law the Government has unjustly introduced this drastic ordinance. It might as well prohibit the use of penknives because somebody had been stabbed with one. No ordinance that menaces the liberties of the people should be proclaimed without previous discussion by this Parliament. If the purpose of the Government in making this law is to prevent the influx of prohibited immigrants under cover of birth certificates unlawfully used, it should apply the restriction to the whole of the citizens of the Commonwealth, and not merely to one section. This is another instance of the iniquity of the system of governing by ordinance. I have Known a person to be committed for trial, and before the trial could take place an ordinance to be brought into being in order to defeat the ends of justice. Government of this kind is a menace to liberty in the Northern Territory. I hope that the Minister will see fit to at least amend the ordinance so that it may not be offensive to all the residents in that part of Australia. If people in New South Wales, Queensland, and other states can obtain as many birth certificates as they pay for, trafficking in certificates will not be prevented by restrictions upon the issue of them to the few people living in the Northern Territory. This motion has been moved to-day, not? because of any personal feeling against the Minister, but because of the duty I owe to my constituents. People who are pioneering in the north should not be deprived of privileges that are enjoyed by other citizens of the Commonwealth. I do not’ know whether I can move that this ordinance be disallowed
– The honorable member has already moved the motion “ that the House do now adjourn.”
– If I placed, a motion on the notice-paper, it might never be readied, and as this matter requires ventilation, I had no alternative but to move the adjournment of the House. If the Minister will review the ordinance, he will realize that it acts harshly on the people of the Northern Territory, and will not accomplish the purpose for which it was framed.
– The honorable member for the Northern Territory (Mr. Nelson) has brought forward this ordinance as “ a definite matter of urgent public importance.” So urgent does he regard it that he has allowed two weeks to elapse since it was laid on the table before calling attention to it, although there have been plenty of opportunities to discuss it. The Commonwealth Government has the responsi- ‘ bility of administering the laws that protect the White Australia policy. The Department has evidence of trafficking in birth and death certificates in the Northern Territory, and therefore it is necessary to take steps to prevent that. The charge of trafficking is made not against the white but against the Chinese population. Honorable members know that Chinese have done this sort of thing throughout Australia. The Department is charged with the administration of the White Australia policy and the immigration restriction laws, and it cannot do its duty unless it has power to prevent this traffic. If any white resident of the Territory objected to the ordinance, he would surely voice his objection; but can the honorable member cite one white person who has done so? All honorable members have experienced difficulty in obtaining birth certificates, even for their relatives. The ordinance provides that if a person who desires a birth certificate pays a small fee, and states definitely why he requires the certificate, it shall bo issued. No one can object to that. The ordinance can have no ill effect on the white residents of the Territory. The reasons given by a person who wants a copy of a birth certificate are not published to the world; he merely has to satisfy the registrar of births and deaths that he requires the certificate for a legitimate purpose. The honorable member failed to show that any hardship had been inflicted upon any resident of the Territory. He said that the ordinance should have been discussed in this House, but there have been many opportunities for its discussion during the past fortnight. He has, on several occasions, availed himself of opportunities to discuss Northern Territory affairs. Honorable members are fair-minded enough to listen to any honorable member who complains of a hardship, and if he can make his case good, they will support him. If the honorable member canshow that the people of the Northern Territory are suffering as a result of the ordinance, I will have the matter reconsidered.
– Why is the same law not applied to New South Wales?
– Because New South Wales has its own laws covering birth and death certificates, as the Commonwealth has for its Territory, and in any case that State has a large population and a better-protected coastline than the Northern Territory. Consequently, it is much easier for a person to enter northern Australia than to enter New South Wales.
.- I cannot congratulate the Minister on his reply; it was too much like a schoolmaster’s lecture to a student. I have been in Darwin twice, and I cannot see why a white resident of the Northern Territory should have to answer questions that a white resident of any other part of Australia is not required to answer. There is some logic in what the honorable member for the Northern Territory (Mr. Nelson) has said. If the object of the ordinance is to prevent the influx of Chinese, why is it not made applicable only to Chinese births? The Chinese are a much-maligned race, and there are in this country many of them for whom I have great sympathy. Their treatment by the white races has often been brutal. Is it even remotely possible for a Chinese to enter Australia on the birth certificate of a white man? The suggestion is too ridiculous to be entertained.
– I did not say that was done. The trouble is with death certificates.
– Is not a. Chinese entitled to a death certificate?
– Yes, but he has no right to sell it. They sell these certificates, and then bring more Chinamen into the country.
– When Iwas an. officer of a ship I had some experience of the Department, and I can hardly think it possible forundesirable immigrants to escape the vigilance of the departmental officers. The thumb print, which is the most modern method of tracing human malefactors, is far more accurate than the photograph, which can be faked. I cannot understand why the conditions applying to death certificates in Darwin should be different from those applying in Sydney. Obviously, where there is a larger population there will be a larger number of clever people, and there are far more clever and more highlycultured Chinese in Sydney and Melbourne than in the Northern Territory. The Minister should treat the Chinese as fairly as the Japanese are treated; both belong to great Eastern races, and no preference should be shown to the members of the race that is more powerful in arms.
– There is no difference in the treatment of the two.
– No doubt the Minister thinks so, but his statement will not convince an old stager like me. An ordinance should not be applied to one part only of Australia. The Minister blamed the honorable member for the Northern Territory for not taking the first available opportunity to voice his criticism of the ordinance. These ordinances are produced like sausages from a machine, and during one year they were issued at the rate of more than one a day. An honorable member, therefore, cannot be blamed for not protesting the day after the publication of the ordinance in the Government Gazette. In my 38 years’ experience of political life I have not met a man who has read an issue of the Gazettethrough, although I have known legal men to read the legal notices, as a matter of business. Seeing that the people of Australia all speak and write the same language, they should be governed by uniform laws.
– If this ordinance were applied uniformly, there would be no objection to it.
– I congratulate the Minister on the issue of the ordinance. He cited an instance of trafficking in birth certificates, and that alone justifies the ordinance. I do not believe in the indiscriminate issue of copies of birth certificates. In every community there is a number of undesirable people, known as “sticky beaks,” who make inquiries for them for no other reason than that they may damage the reputation of others. I have heard of an instance in which a young girl, who was unfortunate enough to have given birth to an illegitimate child; she left her home in the country to be confined in Sydney. So far as was possible, the matter was hushed up. But, because of his right to obtain a copy of the child’s birth certificate, a person in the neighbourhood ascertained the true state of affairs, and made the information public. That sort of thing should be prevented. Copies of birth, death, and marriage certificates should not be supplied to persons who are unable to give a legitimate reason for obtaining them. I congratulate the Commonwealth Government on its action, and should like to see its example followed by the States.
– There would be no complaint if the practice were general.
– The Commonwealth has no control over the states in this matter, but I am glad that in the Northern Territory, which is under the control of the Commonwealth, this ordinance is in operation, and that restrictions are imposed on the issue of copies of birth certificates.
Question resolved in the negative.
Statute of Limitations
asked the AttorneyGeneral, upon notice -
– The answers to the honorable member’s question are as follow: - 1 and 2. It is not the practice to answer questions involving questions of law.
– In compliance with the request made by the honorable member for Riverina (Mr. Killen), on the 20th August, I now desire to state that the report made by Mr. Ross Grant, Veterinary Officer in London attached to the Department of Trade and Customs, relative to a trial shipment of chilled beef from Australia to London per s.s. Port Darwin under the Rayson process, has been laid on the table of the Library.
– On the 20th August the honorable member for Wentworth (Mr. Marks) asked the following question: -
I have been asked by certain residents of Brighton who are keenly interested in aviation to draw tho Minister’s attention to the very skilful but foolhardy antics of an airman at Brighton about 11 a.m. yesterday,who was stunting at a low altitude over the houses. Was the aviator a civil or an Air Force pilot, and will the Minister take steps to prevent the recurrence of similar exhibitions, which, if continued, will end in a tragedy?
I am now in a position to inform the honorable member that the airman referred to was an officer of the Royal Australian Air Force. Steps have been taken to prevent a recurrence.
– I move -
That, in accordance with the provisions of the Commonwealth Public Works Committee Act 1913-21, the following work be referred to the Parliamentary Standing Committee on Public Works for its investigation and report thereon, viz.: - Construction of Boys’ Naval Training Establishment at Geelong (Victoria).
At the present time, boys for the Royal Australian Navy are trained aboard the training ship H.M.A.S. Tingira, stationed at Sydney. This vessel was purchased by the Commonwealth fourteen years ago, and is now 60 years of age. Should the vessel be retained for training purposes, it will be necessary, within the next eighteen months, to spend a considerable sum for repairs and altera- tions. Even then, the accommodation would be limited to 250 boys, with entirely inadequate arrangements for officers and ship’s company. To provide a proper establishment afloat, carrying the requisite minimum of 300 boys, and with room for expansion, it would be necessary to purchase and refit another suitable hulk. At present there is none available. As a result of investigation abroad, it has been decided that a shore establishment offers better training facilities and better living conditions than a training ship. It has been ascertained that the cost per head of training on shore, as against afloat, is 92 per cent, in favour of a shore establishment. It is, therefore, proposed to provide a shore establishment on a site of approximately 40 acres, in the vicinity of the North Geelong railway station, Victoria, having frontages to Melbourne-road, Maguire-street, and Corio Bay, and intersected by the main Melbourne-Geelong railway. This site is owned by the state of Victoria, and portion is under the control of the Geelong Harbour Trust. The portion containing “ Osborne House “ has been occupied by the Commonwealth for some years for naval purposes. Negotiations are now proceeding for the acquisition by the Commonwealth of the whole property. The projected establishment entails the erection, in the first instance, of messing and sleeping accommodation for 300 boys; buildings for instructional purposes, such as gymnasium, school, seamanship block, gun drill, battery; hospital and isolation huts; messing and sleeping accommodation for the ship’s company, together with stores building and so on. The existing buildings will be altered and converted for the use of the administration staff and as officers’ quarters. The buildings are simply designed, with a view to future expansion, and will be constructed of timber framing, covered with hardwood to dado height, fibro-cement panelling above, and roofed with iron. The total estimated cost of buildings, together with accessory civil, mechanical, and electrical engineering services, is £86,700. This estimate covers the works comprised in the first stage, preceding occupation for the training of 300 boys.
Question resolved in the affirmative.
Debate resumed from 20th August (vide page 1640), on motion by Dr. Earle Page -
That the bill be now read a second time.
.- The purpose of this bill is to create, in connexion with the Commonwealth Bank, a separate department to deal with rural credits. With this purpose I am in agreement. When the Commonwealth Bank was established by the Labour party, it was considered that ample provision for this purpose was made, but, unfortunately, the bank has not made the progress that we desired. On the contrary, it appears that no progress at all has been made recently, as so far from conferring a.ny benefits on the primary producers or the general public, the bank is practically at a standstill. This is largely due to the legislation recently introduced by the Government. I realize how necessary it. is that primary producers should be enabled to finance themselves over seasonal periods in connexion with production. They are frequently compelled to enter into arrangements with private individuals or banks to obtain sufficient funds to enable them to continue their operations. So far aa the object of this bill is to assist producers in obtaining advances it is a good measure, but I venture to say that there is absolutely no necessity for it if the Government will permit the Commonwealth Bank to function as it was intended to do. Under the Commonwealth Bank Act advances might be made to rural settlers if the bank were operated as it should be. It is rather strange that wo should be asked to pass legislation to make provision for a rural credit department of the Commonwealth Bank when there is power under existing legislation to have advances made by the bank directly to producers requiring money.
A3 members of the Labour party, honorable members on this side have already tried to effect the purpose for which the Government is now asking the House to pass this bill. It will be found on reference to Hansard for 1924, page 1976, that on the 9th July in that year, when a bill to amend the Commonwealth Bank Act was under consideration, the honorable member for Bourke (Mr. Anstey) moved the following motion : -
That the bill be referred to a select committee to consider the advisability of extending the functions of the Commonwealth Bank, to provide rural credits for the following purposes : -
I seconded that very comprehensive motion, but, instead of permitting the full discussion of a matter of so much importance to rural settlers, the Government promptly moved the closure. Notwithstanding this, honorable members of the Country party claim that legislation of this kind is necessary to assist rural producers.
– It is a member of the Country party who has introduced this bill.
– The honorable gentleman has introduced this and other measures which will be discussed later on in their proper place. The only members of this House who voted *for the motion moved by the honorable member for Bourke were members of the Labour party. No honorable member on the Government side supported that motion. The Treasurer (Dr. Earle Page) then had nothing to say. Now he introduces the bill under discussion, probably because an election is approaching. That may have a lot to do with it.
– I said, last year, that I would do it this year.
– The honorable gentleman is doing many things this year that he did not do last year. The party controlling the affairs of this House at the present juncture is the Nationalist party.
– And a very good party, too.
– No doubt it is in the opinion of the honorable member, but unfortunately for him the electors will shortly be called upon to decide whether it is a good party or not. I have stated that the Commonwealth Bank Act makes provision for the advancing of money to rural settlers. Section 7 of the Com monwealth Bank Act of 1911 provides that-
The Bank shall in addition to any other powers conferred by this act have power -
To make advances by way of loan overdraft, or otherwise;
to discount bills and drafts;
to issuebills and drafts, and grant letters of credit.
to do anything incidental to any of its powers.
Section 53 of Part VI. of the act of 1911 provides -
The bank may from time to time issue debentures to such amount as it thinks necessary, but so that the total amount thereof current at any one time shall not exceed One million pounds.
I think there can be no doubt that, under those provisions, advances might be made to rural settlers.
– Then why did Mr. King O’Malley bring in a measure to provide for rural credits?
– I do not know. I am arguing that the act is sufficiently wide in its scope to permit of advances being made to rural settlers, and special legislation of this character for the purpose is not necessary. The trouble is that the operations of the Commonwealth Bank have been restricted from its inception. They have not been extended as they should have been, and since the death of the late Governor, Sir Denison Miller, the position in this respect is very much worse than it was previously. I ask the Treasurer to account for the fact that, at a time when every other bank in Australia is showing progress and increased profits, the Commonwealth Bank shows no improvement at all. It has remained stagnant since the Government passed its recent legislation dealing with it. Will the Treasurer say why the national bank of Australia does not show the same progress as private banks ? The fact goes to support the claim that honorable members of this side made last year, that, with the Commonwealth Bank Bill then introduced, the Government were ham-stringing the Commonwealth Bank. The bank is not making the progress which private banks are making, and that requires some explanation. Whilst every State savings bank in Australia is increasing its deposits, and making progress, the savings bank department of the Commonwealth Bank shows a decrease in the amount of its deposits. Surely there is need for some explanation when what should be the chief bank of Australia shows a decrease in its business, when every State savings bank and private bank shows an increase.
– Interest lower and costs greater.
– -I do not know what the explanation is, but I say that the facts indicate that there is room for improvement in the management of the bank. It is not doing the business it was intended to do, and for which it was established by the Labour party. It is proposed under this bill to permit of the issue of debentures in connexion with rural credits to a much larger extent than is provided for in connexion with the general banking business of the Commonwealth Bank. I do not know how this will work out. In connexion with its general business, the bank has power under the existing act to issue debentures up to only £1,000,000. Under this bill, it will be able, through its rural credits department to lend up to £3,000,000- Twenty-five per cent. of the net annual profits of the note issue department are to be paid into the rural credits department until the amount so paid reaches a total of £2,000,000. As this would not provide sufficient funds, the bank is being given power to issue debentures. The amount of debentures issued and not repaid shall not at any time exceed -
four timesthe amount of the aggregate of -
I do not think that the Treasurer or any other man can estimate more than approximately the amount of debentures that can be issued through the rural credits department. It is certain, however, that the amount may be twelve times more than the bank can issue in connexion with its general banking operations. There may be some reason for this, but it seems not to have been considered necessary to permit of the issue of debentures to such an amount in connexion with the general banking business of the institution. Under the rural credits department debentures may be issued up to £12,000,000, and I leave it to the Treasurer to say how much more. There may be good reasons for this, ‘but we should know what they are.
– Nobody can say at this stage how much will be lent. A limit is set down in the bill.
– I see a limit of £12,000,000, but debentures may be issued to a greater amount, and I should like to hear from the Treasurer what he thinks about it himself. It is one of the matters to which he omitted to refer in moving the second reading of the bill. He gave us a lot of information about other banking institutions throughout the world, but very little about the bill. After all, what the House is interested in, is the effect of the provisions of the bill. That is the information by which we must be guided in dealing with it. I notice that under the bill, provision is made to advance money not only to rural producers, bub also to other banks or financial companies. I should like to know how it is that in connexion with all this legislation affecting the Commonwealth Bank private banks are permitted to come in. If we desire that rural producers shall be able to get money as cheaply as possible for short periods, they should be allowed to deal directly with the Commonwealth Bank. We should not allow other banks to come into the matter. This bill permits the advance of money not only to private banks, but also to other financial institutions which apparently are to be provided with money to advance to the farmers. Is this another way of fleecing the farmer? Is it another way by which these institutions can continue to make money at the expense of the farmer ? What we want to do is to deal directly with the farmers, and in order to do that we should encourage co-operation amongst them by the establishment of pools or other cooperative organizations which might be assisted for the benefit of the producers. The rural producers should not be placed at the mercy of private banks or individuals when they require money. That is not in the best interest of producer or consumer. The Treasurer claimed that the establishment of a rural credits department of the Commonwealth Bank would benefit producer and consumer.
– Hear, hear !
– I am very doubtful of the benefit to producer or consumer if money is to be lent through the rural credits department to private banks and corporations before ib reaches the producer. We have to consider the interests of producer and consumer. There are too many middlemen operating between the two. The middleman, makes considerable profits out of the producer. The establishment of cold storage, for instance, should be of considerable assistance to producers and the great mass of the people, and, whilst I will not say that it is not of some assistance, it should be of much greater assistance than it is.
– lt enables those who possess .cold storage to corner the. producers’ goods.
– Of course it does. It enables the middleman to store produce against bad seasons. If the producer is compelled r/o sell, he cannot spread the sale of his produce over a period. The middleman, therefore, gets hold of it, and puts it into cold storage in order to maintain an even supply. This involves certain charges, and when eventually the produce is released in such quantities that the market is not glutted, a steady price is maintained. This often causes the consumer to be charged more than he ought to pay, and I think that the time has arrived when legislation should be introduced to deal with this matter. W© should say that whoever puts produce into cold stores shall be allowed a certain margin of profit, but shall not be permitted to fleece the public when supplies become scarce. There is no such provision in this bill. The producers should be able to handle their produce through a co-operative society or pool dealing direct with the Commonwealth Bank.
– The producer may deal direct through his pool.
– It should be made compulsory to deal direct either through a pool or a co-operative society.
– He will deal through’ the channel that suits him best.
– Unfortunately, when private buyers send their agents throughout the country, and there is no pool or co-operative society through which the producers may deal, they will not get the benefit that the bill contemplates. Under the present system the cool stores release the produce at a time convenient to the holders of it, when they are able to take advantage of high prices, and, in that way, not only is the producer fleeced, but the consumer is forced to pay more for the goods than the middlemen are entitled to charge. That is how private enterprise maintains what the Treasurer calls a fair supply throughout the season, ensuring a reasonable price to the consumers, and a fair return’ to the producers. That is. the pivot upon which the whole matter turns. It will not be possible to obtain the result aimed at if we permit this business to fall into the hands of private agents. I wish to remind honorable members of how little has been done by the Commonwealth Bank in the direction of assisting the farmers. In Western Australia there is a voluntary pool, and an effort was made to obtain financial assistance for it from the Commonwealth Bank, but without success. Accommodation could not be obtained from the Commonwealth Bank, and it acted in concert with the associated banks. The Commonwealth Bank is becoming subordinate to the private banks. It is a banker’s bank, and we cannot ‘ expect it to be anything else, since the Government has appointed to the board of management men who are the customers of private banks, and support private enterprise as against State enterprise. The associated banks acting in concert with the Commonwealth Bank did everything possible to hinder the pool. They would not deal with the pool as with other clients, by granting a temporary loan as each shipment was sent away, unless documents giving title to wheat could be presented in London and the loan liquidated. Eventually- the Cooperative Wholesale Society of Great Britain offered to make the cash available for telegraphic transfer to Australia, and this was agreed to. The pool made an arrangement with this society to obtain the financial assistance which it could not secure in our own country, but its efforts were frustrated by reason of the concerted action of the private banks and the Commonwealth Bank. When the British Wholesale Co-operative Society paid in the money to the London branch of the Commonwealth Bank, instead of transferring the money to its Perth branch, the Commonwealth Bank transferred it in quotas of one-fifth to each of the five associated banks operating in Perth. What have honorable members to say to such a transaction? What do the representatives of the farmers in this House think of it? Instead of making the money available in Perth to the wheat-growers, it was sent to- the various associated banks in Perth, thus adding to the charges of transfer. There were five cablegrams instead of one; five partners each getting its share of the wanton exploitation of the farmers; and five banks to visit in order to collect the money. What a state of affairs to be sure !
– Was the present Treasurer head of the Treasury at that time?
– Yes; this happened only recently. It shows how little this Government is carrying out its policy of assisting the men on the land. When the pool, unable to secure the necessary money in Australia obtained it from the Old Country, the banks determined to get even with it.
– Would it surprise the honorable member to learn that the pool in Western Australia considers that this bill will remove all its difficulties?
– I know nothing about that, But I do say that the pool was unable to secure the financial assistance it required from the Commonwealth Bank, largely because the men put on the board are not in sympathy with the men on the land. I am afraid that this bank is losing its prestige.
– It is gaining in prestige.
– It will soon be subordinated to the private banks. Everybody knows thatup to September, 1924, its business was stationary so far as deposits in Australia were concerned.
– Some of the branches refused business.
– Probably that is because the bank has no desire to deal with the small man. I was told recently, on good authority, that a farmer in New
South Wales approached the bank for money. The manager in Sydney was satisfied that the security offered was good, but he would make no loan to the applicant, who wanted the money to tide him over a short period, as is provided for under the bill. Why was this application refused ? His case isonly one among hundreds. It is well known that the Commonwealth Bank is not lending money to-day.
– And under this bill it can still refuse.
– Yes ; because the management is unsatisfactory. The new board was appointed eight or ten months ago, but no progress has been made. Now the Treasurer comes along with this bill, for he knows of cases similar to the one I have just cited. It is common knowledge that the bank refuses to do business.
– If it is offered business it gives it away to the private banks.
– Yes. The Commonwealth Bank co-operated with the private banks in their attempt to smash the Western Australian pool.
– Nothing of the sort ; it gave substantial assistance to the pool.
– In this case, it refused to finance it. It is a travesty on our banking system that a pool of primary producers should have to go abroad for money, and it says very little for the Commonwealth Bank. The wheat-growers in Western Australia paid £35,000 to the bank as a tax levied on the money transferred from London to Perth. Imagine the Commonwealth Bank refusing to finance a pool of wheat-farmers in Western Australia, and the farmers, through having to get the money from abroad, being put to the expense of £35,000 for the transference to Australia of the money raised in London! It is time we ceased talking about making amendments to our Commonwealth Bank Act. We should proceed to reconstruct the bank. Evidently that will have to be done soon. It is well to remember the following item from an official statement of the Country party, which was issued on the 13th October, 1924: -
The Bruce-Page Government took the bold step of converting the Commonwealth Bank into a bank for the bankers.
It is, no doubt, a bank for the bankers. It is certainly not a bank for the people, for it is not extending its operations. It has, at the outside, 70 or 80 branches.
– It has established eight or nine new branches in the last year.
– The private banks are increasing all the time, but the Commonwealth Bank is gradually diminishing.
– It has established one branch in my district, but it is turning away the business that is offered.
– The Treasurer tells us that the Commonwealth Bank has assisted the pool in Western Australia, but I fail to see it.
– It helped the transfer of that money materially, and the wheat-growers in Western Australia were very grateful.
– When men are hard up they will accept any assistance.
– Yes. When they are badly in need of money they will get it by hook or by crook; but we should recognize that the Commonwealth Bank should facilitate the efforts of producers to finance themselves, if we are to assist in the settlement of the land. There is little prospect of the soldier settlement schemes being a success if they cannot obtain the necessary finance, and there is no guarantee under this bill that provision will be made for them. Unless the settlers are induced to enter some pool or co-operative society and deal with the Commonwealth Bank,they will suffer at the hands of the private banks and the middlemen.
– The interest will remain high, too.
– Of course it will.
– The Commonwealth Savings Bank does not give as good interest as the State savings banks.
– That has been its policy since its establishment by a Labour administration.
– My desire is to assist the men on the land, and that was the object of the Labour party in establishing the bank. The bankhas not made the progress which we anticipated. In fact, since the death of the late Governor, Sir Denison Miller, it has retrograded, and the time has arrived when this House should take some cognizance of its present position. It was contended after the last amending act had been passed that the bank’s position had been strengthened. There is no evidence of that. The functions of the Bank should be extended; it should compete actively with the private banks instead of working in conjunction with them. It should establish branches wherever an opportunity to do so occurs in any part of Australia. There are hundreds of towns in which the establishment of a branch of the Commonwealth Bank is warranted. In all parts of Australia business men say, “ Why not establish a branch of the Commonwealth Bank in this town? We would do business with it.” That policy is not pursued, and as a result the business of the bank is not increasing as it should. It is futile for the Treasurer to boast of having made the bank a central bank; it should be the people’s bank. This bill is quite unnecessary. The bank has power under the act to advance money to the producers, but it has never functioned in that way, and will not do so while it is worked in collaboration with the private banks. Although it may not be apparent to honorable members, the influence of the private banks affects the control and development of the Commonwealth Bank.
– Secret conferences.
– Yes, and so long as the Commonwealth Bank directorate meets in consultation with the directors of the private banks, and agrees to a policy that suits them, so long will it fail to make progress. The Commonwealth Bank should be a beacon light in Australian finance; it should be the foundation of the whole financial structure of the Commonwealth. Instead of that, the institution is being made subordinate to the private banks.
– During the last year we made it the dominant factor in Australian finance.
– It has been made a central bank; it refuses to lend money to people who need it, and can offer acceptable security, and its activities are being curtailed in every way possible. I shall not be surprised if its next balancesheet shows that the bank is in a worse position now than it occupied six months ago. We know that its savings bank department is receding every year in comparison with the State savings banks. Surely the Commonwealth institution should be stronger and more progressive than either State or private institutions. Yet the reverse is the case, and whereas the profits of private banks are greater than they were a few years ago, those of the Commonwealth Bank are less. This House should seriously consider the amendments that have been made in the Commonwealth Bank Act during recent years. They are quite unnecessary, and are designed merely as electioneering placards. The Government has done nothing during the last three years to assist people on the land through the instrumentality of the Commonwealth Bank, but now, in the last session of this Parliament, when an appeal to the electors is imminent, the Treasurer and the party to which he belongs desire to be in a position to claim that they have done something for the primary producers.
– It has only been half done, anyhow.
– 1 do not know whether it ihas been even half done. Unless the general public is safeguarded in connexion with cold storage, and the principle of co-operation is inculcated into the minds of people upon the land, so that they may act unitedly and get advances from the Commonwealth Bank direct instead of through other institutions and middlemen, not only they, but the consumers also, will continue to be bled. These are matters which should receive attention in an amending bill. We shall not vote against this measure but if we see opportunities to improve it we shall avail ourselves of them. It is the desire of the Labour party to do everything possible to assist the man on the land, but I believe that before long the people will demand that this tinkering with the Commonwealth Bank shall cease, and that it shall be placed on a proper basis and operated in their interests, instead of for the advantage of private institutions.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 -
After Part VIa. of the Principal Act the following Part is inserted: - “ Part VIb. - Rural Credits Department. “60aba. In this Part, unless the contrary intention appears, ‘ primary produce’ means wool, grain, butter, cheese, fresh, preserved or dried fruits, hops, cotton, sugar and such other produce as is prescribed. 60abe. - (1.) For the purposes of this Part, the Bank may issue debentures. “ (2.) The amount of. debentures issued under this section and not repaid shall not at any time exceed -
the amount advanced on primary produce by the Rural Credits Department and still outstanding as at the date of the issue of the debentures; or
four times the amount of the aggre gate of -
the sums lent by the Treasurer, to the Rural Credits Department and not repaid;
moneys paid to the Rural Credits Department out of the net profits of the Note Issue Department; and
moneys at credit of the Rural Credits Department Reserve Fund, whichever is the greater. “60abg. The dates for the redemption of the debentures shall be fixed so as to coincide, as nearly as practicable, with the dates at which advances made by the Rural Credits Department are repayable. “ 60abh. The Bank may make advances to the Rural Credits Department of such amounts, and subject to such terms and conditions, as the board determines. “ 60abi. Advances may be made by the Rural Credits Department, upon the security of primary produce placed under the legal control of the Bank, to -
the Bank or other banks:
co-operative associations formed under the law of the Commonwealth, a State , or a. territory under the authority of the Commonwealth; and
such corporations or unincorporate bodies, formed under the law of the Commonwealth,a State ora territory under the authority of the Commonwealth, as are specified by Proclamation.
– I call the attention of the Committee to the broad definition of “primary produce”; it will enable the benefits of the rural credits department to be extended to all produce. The Leader of the Opposition (Mr. Charlton) referred to the amount of the debentures that could be issued. Honorable members will see the limit that is imposed by the proposed section abe.
– What will the amount be this year- £20,000,000 ?
– The rural credits Department will start with an advance of not more than £3,000,000 loaned by the Treasurer, and 25 per cent. of the net annual profits of the Note Issue Department to an amount not exceeding £2,000,000. That amount of capital would enable £20,000,000 worth of debentures to be issued if it happened to be greater than the amount advanced on primary produce and still outstanding, but the amount advanced on primary produce might be greater than £20,000,000. For instance, the value of the Wheat Pool last year was £50,000,000 or £60,000,000. A considerable portion of the wheat was handled by co-operative companies, and a large sum of money was required to finance the pool.
– There would be no limit to the issue of debentures against products properly stored.
– That is so. There would be a margin of safety in the difference between the value of the produce and the amount advanced. In addition, there would be the whole capital of the Commonwealth Bank, and behind that the security of the Commonwealth itself. The security for the debentures cannot be over-estimated.
In regard to proposed section 60abg, the intention is to make the debentures selfliquidating; that is to say, the term for which they are current will correspond exactly to the term for which the produce is held. If wheat is being held for five months, debentures will be issued for that period. The purpose of’ that form of finance is to secure the lowest possible rate for the holding of produce, so that the charges in connexion with the marketing of it will be reduced to a minimum. It is hoped by this means to secure a new form of stock that will be highly sought after. People who are likely to have money lying idle for two or three months will take up these debentures and get 4 per cent. or 4½ per cent. on them, and the rural credits department will be able to lend at a slightly higher rate of interest. In that way the cost to the producer of holding his goods will be very small.
Proposed section abh may require a little explanation. First of all there will be available for the rural credits department the money obtained from the sale of debentures issued against primary produce. In addition to that the department will be able to obtain advances from the general bank if occasion requires. In other words, the department will be a customer of the general bank.
.- The proposed new sub-section 60 abi provides for advances by the rural credits department to the Commonwealth Bank or other banks. I am not satisfied that we should make advances to other banks. The Government should deal directly with the producer through the Commonwealth Bank. Those who require financial assistance should apply to the Commonwealth Bank, and receive assistance through the rural credits department of that bank. I move -
That the words “ or other banks,” paragraph (a), proposed new sub-section 60abi, be left out.
I move that amendment because my mind is not clear about the purpose of this provision. To make the advances through the associated banks must increase ex.penses, and, therefore, must tend to increase the rate of interest charged to the borrower. The cost should be reduced to the cost of the accommodation provided by the Commonwealth Bank. If the Treasurer can show that this provision is necessary, I may be disposed to withdraw the amendment.
– The clause provides that -
Advances may be mads by the rural credits department, upon the security of primary produce placed under the legal control of the bank, to -
the bank or other banks.
That means the general department of the Commonwealth Bank or other trading banks. The clause then proceeds -
That includes practically all pools and cooperative associations, whether of consumers or producers. The third provision is for advances to -
That includes such bodies as the boards appointed last year to control the export of butter and dried fruits.
– It may include a combination of men not incorporated.
– That is so; it may include any body of co-operative people. Unincorporate bodies can receive advances only if they are approved by the Commonwealth, and are specified by proclamation. The provision is intended to apply to certain bodies in Queensland, such as cheese factories and other concerns, which are not actually incorporated. The producer, if he is not dealing through a co-operative association or pool, may go to the ordinary department of the bank, or he may go to any bank where he keeps his account. If he has 10,000 bushels of wheat, he obtains a warehouse receipt for it, and by presentation of that receipt at the Commonwealth Bank or a private bank, he can obtain financial accommodation. If the Commonwealth Bank or a trading bank finds that it needs accommodation, it can go to the rural credits department for an advance on the warehouse receipt.
– That will increase the producer’s liability, for he will have to pay for the extra accommodation.
– He will not have to pay for any extra accommodation. The provision will meet the needs of individuals who do not desire to put their produce into pools. Some producers do not desire to participate in pools, but prefer to handle their own produce. To require all the business to be transacted by the Commonwealth Bank would be an intolerable hardship to people in places where there is no branch of that bank. A producer may have an account in a local branch of an associated bank, and may wish to deal through that bank. That is why it is essential to retain the words “or other banks.” If the producer desires to utilize a co-operative pool he will place his 10,000 bushels of wheat in it. The pool will take his scrip, and, by virtue of having the wheat stored, will be able to obtain an advance from the Rural Credits Department. In that way it will be possible for a pool to finance itself, instead of, as in the past, coming to the Government for guarantees. The provision makes it possible for a pool to say to the Commonwealth Bank, “We have 2,000,000, 4,000,000, or 6,000,000 bushels of wheat, or bales of wool, in our legal control,” and by virtue of that fact to obtain a certain and automatic advance. For these reasons I hope the
Leader of the Opposition will not press his amendment.
.- I am not satisfied with the explanation of the Treasurer. One would think that the Government, in bringing down a bill to provide for rural credits, would create machinery so that the primary producer could get advances from the nation’s bank. The Treasurer’s explanation indicates that his scheme is intended to act only as a feeder and nursery to tho private banks. Can he cite a private bank or a business firm that is doing business in the way proposed? If a producer has 100 bushels of wheat in a warehouse, and takes the receipt for it to an associated bank, the bank will give him the accommodation he requires, and the Commonwealth Bank and the nation will stand behind it. The Leader of the Opposition (Mr. Charlton) has placed his finger on one of the weaknesses of the bill. There is obviously “ a catch in it,” just as there was in previous banking legislation brought down by this Government. Previous legislation made the Commonwealth Bank the banker of the associated banks, and this bill will make it, as I have said, the nursery and the feeder of those banks. The Government seems to be incapable of submitting banking legislation to the House except to provide assistance for the associated banks. The Treasurer has spoken of places where the Commonwealth Bank has no branches, but, judging by the policy of the past three years, the bank will not open any more branches while the present Government remains in office. This provision, which makes a joke of the bill, will relieve the associated banks of all risks. The associated banks use the Commonwealth Bank as a central bank only when they wish to do so. This bill has been brought down by the Treasurer at this late hour of the session, although he promised to introduce it earlier. He pretends that its object is to assist the rural producer, whereas it is to assist the associated banks. I hope that the Leader of the Opposition will persist in his amendment. If the Treasurer is honest and really desires to have a rural bank, he can use the skeleton bill he has submitted. It is. however, only a skeleton; and, unless he extends the rural credits department of the bank throughout the length and breadth of the country, and opens agencies in every centre, it will be a meaningless sham. Oau any honorable member imagine the Bank of New South Wales saying to a farmer, “‘You can deal with me, or, if you like, you can go to the nation’s bank, and I will back the bill.” The associated banks will get all the benefit from this bill.
.- I am surprised at the objections of honorable members opposite to the provisions of this clause. Surely they must know that there are thousands of primary producers and others who have for many years done their business through branches of the associated banks, and have been assisted out of their financial difficulties by those banks. If it is the desire, as it appears to be, of honorable members opposite to make the Commonwealth Bank a close corporation, to the exclusion of other banks, and if that policy is carried out, injury will be done to the people of this country. A case came under my notice some time ago in which a co-operative company, which was a customer of the Commonwealth Bank, applied to that bank for a loan, only to find that the rate of interest asked was 1 per cent, more than that at which the money could have been obtained from a private bank.
– The Commonwealth Bank is playing into the hands of the private banks.
-The desire of members opposite seems to be to do away with the private banks, but I contend that it is absolutely necessary that this bill should provide for advances to be made to them ; otherwise, it will act detrimentally to the interests of those whom .honorable members opposite desire to assist.
.- The’ more I read this bill and listen to the arguments of honorable members in relation to it, the more I am convinced that it is pure camouflage.
– It is not.
– I admit that it takes the place of a government guarantee in regard to a pool. The Treasurer may say that the bill makes possible advances to co-operative associations and corporations, but when he says that, because the Commonwealth Bank, has not branches in every town, the primary producers will not be able to get advances directly from the rural credits department, it shows either that the new department will not extend throughout the country and thus become effective, or that the Government does not mean what it says. I give notice of a further amendment to paragraph a of sub-clause 60 ABI. namely -
That the word “ or “ be left out, and that the words “ or a primary producer “ be added.
The sub-clause would then read -
Advances may be made by the rural credits department, upon the security of primary produce placed under the legal control of the bank, to - (a) the bank, other banks, or a primary producer.
If it is not possible for a primary producer to deal directly with the rural credits department, there is very little in the proposal before us. .Seeing that this department is to be called the rural credits department, I should like the Treasurer to explain the reason why primary produce is to be the only security upon which advances may be made. If that is intended, the department should be called by some other name, as, for instance, the primary products department. It should not be necessary for the primary producers to go to a private bank to obtain an advance from the rural credits department of the Commonwealth Bank. The sincerity of the Government in this matter should be tested. The Treasurer, if he desires to help the people out-back, should, instead of endeavouring to strangle the Commonwealth Bank, do something to extend it to country districts. Even if the Commonwealth Bank has not sufficient branches throughout the country, its inspectors, in the “performance of their ordinary duties, travel over the whole of the States, and could do the work of this branch as well as carry out that now performed by them. If this bill is meant to be more than a pretence to keep the promise of the Leader of the Country party, my amendment should be accepted in order that the primary producers may be able to deal directly with the rural credits department.
– They can approach the Commonwealth Bank.
– Apart from the fact that one has unlimited credit, and the other has not, what is the difference?
– Their functions are entirely different.
– The Commonwealth Bank Act already provides for’ that being done which this bill sets out to do. As an excuse for introducing this bill, the Treasurer has endeavoured to hoodwink honorable members by saying that the Commonwealth Bank, without amending legislation, could not have acted in the direction desired. If the Commonwealth Bank is a bank in the true sense of the word, it can do what is now contemplated by the establishment of a rural credits department. The introduction of this measure is merely an attempt to prove that the Country party has kept its preelection promise. If the Treasurer really means business, he should accept my amendment.
– I should like some information from the Treasurer regarding the sufficiency of the security offered. If an advance is made by the Commonwealth Bank to another bank upon the security of primary produce placed under the legal control of the bank, and that advance is excessive, on whom does the liability rest ? Is the private bank which has borrowed the money to be responsible to the Commonwealth Bank?
– The private bank is to be responsible.
– Will the rural credits department of the Commonwealth Bank have a right of action against the private bank in the first place, leaving that bank to deal with the primary producer: or will the rural credits department proceed directly against the producer who has deposited his produce? In the former case, it would mean that the private bank, while guaranteeing to the Commonwealth Bank that the advance was a proper one to make, was merely borrowing money from the rural credits department because it had insufficient money available for the advance. The honorable member for Angas (Mr. Gabb) suggested that the private banks should be entirely disregarded, and that the Commonwealth Bank should operate everywhere; but any one who knows anything of the ramifications- of the various, banks must admit that at the present time that is impossible. These banks have branches in all parts of the country, and to replace them with’ branches of .the Commonwealth Bank would be the work of years, and would necessitate the employment of a multitude of officials. Even under the bill as now framed, it will be necessary to employ additional officers to make such inspections as may be necessary.
– The honorable member for Riverina (Mr. Killen) said that in one instance the Commonwealth Bank charged as interest 1 per cent, more than that at which the money could have been obtained from a private bank. That merely strengthens the argument of honorable members on this side that the Commonwealth Bank in recent years has practically been made a branch of the private banks, and has not been administered on proper lines,- although established to assist primary producers. Actions of that nature are not in the interests of the Commonwealth Bank or of the producers. Moreover, when we remember that the. Commonwealth Bank lends to the private banks money at 3 per cent., and that the private banks charge 5 per cent, or 6 per cent, for that money, it will be evident that the time is ripe for the appointment of a royal commission to inquire into the conduct of the bank. When men want money to assist them in developing the country, the Commonwealth Bank should not hinder them by raising the rate of interest. The amendment of the -Leader of the Opposition would protect the mau who has produce to sell. There is nothing in the bill to enable a producer to get an advance directly . from the rural credits department : he must obtain it through a private bank.
– He can obtain it from a pool or a corporation.
– He must get it through a bank.
– But not necessarily a private bank.
– I understand that it is proposed to allow the private banks to deal with this business. Why should producers be required to go to a private bank?
– They can go to the Commonwealth Bank.
– Why should they not be able to go to the local post-office savings bank ? Competent men should be appointed to travel throughout the country and value produce upon the security of which advances are applied for. They should be able to give the producer a certificate, and when he presented it at a post-office the money could be advanced. To allow private banks to handle these advances will only increase the charges to the producer.
– It will have the opposite effect, and will keep charges down.
– Apparently it did not keep charges down in the case referred to by the honorable member. If members of the Country party are satisfied to allow private banks to deal with these advances upon produce, instead of the rural credits department of the Commonwealth Bank, they must take the responsibility. If the business is handled by two or three different persons the costs must be increased.
.- I am satisfied that if the amendment moved by the Leader of the Opposition to cut out the participation of private banks in the handling of rural credits were carried, the effect would be to restrict- the usefulness of this particular measure. Honorable members opposite ignore the fact that there is often a close personal relationship established between clients and managers of banks. Some men with apparently very few assets seem to be able to inspire bank managers with confidence to such an extent that they are able to obtain far bigger overdrafts than can other men whose assets on paper are very much greater. It appears to me that if, instead of being able to go to a banker who knows him and trusts him, the representative of an association or corporation must go to a bank to whose officials he is quite a stranger, he will be unable to get as good terms as he could otherwise get. I do not know the facts of the case referred to by the honorable member for Riverina (Mr. Killen), but I suspect that the reason why the man to whom he referred got’ better terms from the bank with which he was accustomed to deal than were offered by the Commonwealth Bank was simply that in the one case he was dealing with a man who knew him, and in the other attempting to deal with banking officials who did not know him. I shall be interested to hear the reply of the Treasurer (Dr. ‘ Earle Page) to the question asked by the honorable member for Boothby (Mr. Duncan-Hughes). It seems to me that private banks doing business with their clients under this measure must take any risks incidental thereto. If they receive advances from the Commonwealth Bank for the pur/pose of providing rural credits they must take the risks of their dealings with their clients.
.- The more the clause is discussed the more doubtful it becomes. If honorable members will take the trouble to read it, they will find that under it no individual can get an advance from the rural credits department of the Commonwealth Bank.
– That is nonsense.
– Then I ask the honorable member to show me where such a provision is. The clause reads -
Advances may be made by the rural credits department upon the security of primary produce placed under the legal control of the bank, to-
the bank or other banks. . . .
– The other banks will deal with the Commonwealth Bank.
– That is what the Treasurer stated. It is obvious that all producers will not go into a pool or a co-operative concern, and there must be some provision made to enable them to approach the bank. The only way in which such individuals will be able to secure advances under this bill will be by applying to a private bank. The Treasurer and other honorable members admit this and say that because the Commonwealth Bank is not established in many centres in the Commonwealth, it is impossible for the business to be carried out through that bank. But is it not a fact that to-day the rural credits departments of the States are directly advancing money to rural producers? The New South Wales institution advances money in this way to individuals throughout New South Wales, and even in this State, when applications are made to it for advances. Money is advanced to individuals for the purpose of carrying on their business as primary producers, and it is not necessary for them to do their work through a private bank. The institution is very successful and its operations enable primary producers to obtain advances more cheaply “than they could from a private bank. Competent valuers are sent round the country, and when applications for advances are made they value the security offered, and if they are satisfied, issue a certificate on which the rural credits department advances the money without further trouble to the producer.
– Does the ‘honorable member not think that the producer will probably have to pay more for his advance if the ‘Commonwealth Bank is the only bank with which he can deal?
– The ‘ honorable member is introducing another argument now. I am considering the interests of the individual producer. There are many who cannot -be induced to go into a pool or join a co-operative organization, and there is no provision in this ‘bill to enable such men to obtain any advance .from the rural credits department of the Commonwealth Bank.
– The honorable gentleman is right there.
– I think there should be such a provision, and money should be advanced by the rural credits department of the Commonwealth Bank to any individual who makes application for an .advance if he has the necessary security. That is the only way in which we can help the primary producers. It is idle to say that they must apply to a private bank in their vicinity, and get the accommodation they require through that bank. It will have to go to the rural -credits department of the Commonwealth Bank fiar the advance, and no one can contend that .this . will not add to the .cost to the producer. The banks axe financial institutions .trading fair profit. They will not do this -wark for primary producers for nothing. If the private banks in the first instance must go to the rural credits department of the Commonwealth Bank for .the money to be advanced, they will probably make a charge of an additional 1 per cent, to the producer dealing with .them, and to that extent the producer will be at a disadvantage as compared to the position which he would occupy if he could make his application directly to the rural credits department of the Commonwealth Bank. If I can be shown that under this 4:11: individuals may ‘Obtain rural credits directly from the branch of -the Commonwealth iBank proposed to be established for the purpose, I shall be satisfied. We are all, I think, favorable ito the measure, but we should not allow it to pass in a form in which it would be detrimental to individual producers who are not members of some co-opera- five organization or parties to a pool that could secure loans collectively.
– Cannot an individual go directly- to the Commonwealth Bank?
– Yes; the bill says so definitely.
– That is the point I have raised, and I have learned from the Treasurer that the individual is to be placed in .the hands of .a private bank. He cannot go directly to the rural credits department of the Commonwealth Bank, and that is one of the objections I have to the measure. I am informed that he
Must go to the nearest private bank if there is no Commonwealth Barak established in his vicinity, and if he does, he must pay for any assistance he receives through lie private bank over and above what he might be -cabled upon to pay if he could go directly to a branch of the rural credits department of the Commonwealth Bank. Branches of this department could be established in different parts of the country. It should be the duty of those in charge to get into touch with producers requiring advances, and if they were satisfied with the security offered, the advances required could be made directly through the local branch of the Commonwealth Bank, through a post office, or any agency of the bank, and in that way morney would be cheapened to the rural producers. Ho one will contend that the private banks are not going *bo make some profit out of these transactions. I <lo not see why they should be allowed to make these profits if that oan be avoided. There are .thousands of men, including, many returned soldiers, who have gone o& the land, and are nut making a success of their operations. The Commonwealth has written off a £10,000,000 advance to them, and the States will have to write off many millions more. These ‘Settlers require all the assistance that «an be given to them, and they will net get the assistance they require if they are compelled to do their business through the private banks. What they need is to be able Ito make direct application to the rural credits department of the Commonwealth Bank, and so obtain the money they require as cheaply as possible. Without the -passing of this measure at- all I could go to a private bank to secure an advance.
– The honorable member has already admitted that the authorities in control of the Western Australian pool could not do so.
Ma-. CHARLTON.- That is because the private banks desired to break the pool, and wanted to deal only with individuals. That is a justification for legislation to prevent that condition of things from obtaining in any part of Australia.
– This legislation will do that.
– The honorable gentleman says so, but there is a great deal of legislation passed here which it is found necessary subsequently to amend. We have the spectacle week after week of measures introduced to validate action taken under defective legislation. This is due to carelessness on our part, to say nothing of those who are charged with the drafting of the measures introduced into this House. If we allow measures to goi through containing serious defects we are to blame. I say that there is no provision in this bill to enable an individual to apply to the rural credits department cif the Commonwealth Bank. If he wants an advanoe he must apply through a private bank. At present a rural producer requiring an advance, and going to a private bank, may show that he has produce worth £1,000, and ask for an advance of 60 or 70 per cent. of that amount. If the authorities of the bank are satisfied with the security, they may make the advance, and charge interest upon it. Individual producers will be in just the same position under this bill.
– Does the honorable member contend that under the. bill a customer of the Commonwealth Bank will not be able to get an advance from the rural credits department?
– He will have to make an application to the Commonwealth Bank or a private bank. I am dealing with the private banks. I think he should be able to go directly to the Commonwealth Bank.
– So he can.
– Yes : but we have not sufficient agencies established throughout the Commonwealth for the purpose of dealing with these advances. The result is that the producer must go to a private bank. The Treasurer says that this is provided for in order to facilitate advances, and that as the Commonwealth Bank is not established in various centres throughout the state we must permit the producers to apply for advances to private banks. We should aim at keeping down, as far as possible, the cost to the producer.
– If they wish to avoid the banks they will go into cooperative societies.
– Unfortunately they cannot always be induced to do that. The Treasurer knows, as I know, of an industry in which, although they have a pool, some of the producers sell privately ata much lower price than the pool charges.
– Will not this proposal induce them to sell through the pool?
– I am hopeful that it will, but I doubt it.
– It should encourage them to do so.
– It should, but the fact remains that a large number of producers do not believe in pools, and in consequence they have to secure financial accommodation privately. Some of them have never been clients of the bank. What of the thousands who are struggling to get on their feet, and have never been able to have private banking accounts? They have no credit.
– The possession of primary produce will enable them to obtain credit.
– This measure is exactly what is needed to enable them to obtain it.
– Yes, but at addi-. tional cost to themselves. If they were to get accommodation direct from the rural credits department of the bank, they might be charged in a year or two 1 per cent, less than they will have to pay under the present proposal. We have to consider what the producers will have to pay for the accommodation, remembering that an extra charge to them means a corresponding increase in prices to the consumers. I desire to see that the consumers are treated fairly. The national bank should not be subordinated to the private banks. It is regrettable that there is no competition, and that the Commonwealth Bank will not advance money to private producers.
– Therewill be no competition at all if the private banks are wiped out.
– If the Commonwealth Bank made an effort it could double its business.
– It has orders not to compete.
– If we legislate in this way we shall kill the Commonwealth Bank.
– Do not worry.
– Honorable members opposite are shareholders in the private banks.
– There may be some honorable members who are opposed to the scheme on that account, but there is not one who dares talk of repealing the Commomwealth Bank Act. No doubt efforts are being made in that direction, and that is the trend of recent legislation. The fact remains that the bank is not progressing as it should.
.- The Leader of the Opposition (Mr. Charlton) desires to eliminate the private banks in this matter, and keep the business entirely in the hands of the Commonwealth Bank. The honorable member for Angas (Mr. Gabb) not only wants the private banks to be able to operate through the Commomvealth Bank, but also desires that the Commonwealth Bank be enabled to deal directly with individual producers.
– No: I want the rural credits department to deal directly with them.
– This bill provides for a rural credits department, and I am referring to the authority controlling it. An individual producer may go to the Commonwealth Bank, and under the bill the bank may deal directly with him if it thinks proper and desirable.
– Will that not increase the charges ?
– I shall answer that question in a moment. The establishment of this department is on all-fours with the guarantee given by the Government through the Commonwealth Bank in connexion with voluntary wheat pools. It would not result in economy to eliminate the private banks and confine the operations under this measure to the Commonwealth Bank.The national bank would not be operating to the best advantage if it were established in every little settlement throughout the Commonwealth, and it would not be to the advantage of individual producers or of cooperative societies - for this measure provides for either or both - if branches of the bank were scattered throughout the country. Such agencies cannot be established except at great expense, and the overhead charges would be increased enormously.
– And the capital outlay.
– Yes. It would be impossible for the Commonwealth Bank to handle the business as effectively as it will be dealt with under the bill. The measure is intended to stimulate producers to greater efforts than they have put forward in the past, and this is to be accomplished not only through the medium of the rural credits department, but also through the agencies of the banks already established. It has been remarked that savings bank branches of the Commonwealth Bank have been placed throughout Australia, but it should be remembered that in nineteen out of twenty cases the officers who operate these branches are not bankers. They are postmasters or postal assistants, whose business is merely to receive deposits and transfer their balances to the head office. These officers could not be made responsible for the investigation of applications for advances by cooperative societies or individual producers. They could not be expected to make valuations in connexion with every application. I spent the whole of the last week-end among producers who are in financial difficulties today:I refer to the vine-growers and those engaged in the production of dried fruits on the river Murray. I explained the provisions of the bill to four different gatherings, and the people concerned regard it as a most welcome ray of sunshine. The bill is just what they desire, and it will go a long way encouraging them to remain on their holdings and put forth their best efforts in future. If the measure comes into immediate operation it will do incalculable benefit in that direction.
– If it means business, and is not mere bluff.
– Having discussed the proposal with the fruit-growers, those who handle the fruit, and the bankers, I maintain that the industry needs the combined services and resources of both the Commonwealth and the private banks. The settlers, along the river Murray are: most anxiously waiting for the passage of this- bill.. One section of these- unfortunate people is only now receiving the first instalment of the payments for the last harvest. If this scheme had been in existence last year- these men would have received progress payments long’ ago-.
– The honorable member expects that they will be dealt with much more sympathetically under this proposal than they have been treated by the banks?
– Did not the guarantee given by the Commonwealth Government through the Commonwealth Bank in connexion ‘ with the wheat pool operate without a hitch of any kind? The Commonwealth Bank will not employ the private banks to operate this measure, and allow them to charge what they like. I understand that many of the details are necessarily to be left to the judgment of the directors of the Commonwealth Bank, and very properly so; but their decisions in this matter have to be satisfactory to the Treasurer.
– They must run the bank themselves.
– I refer to the fact that since the Commonwealth Government gives them half the profits of the note issue for a certain period under stipulated conditions- they are independent, and it is a great blessing that the bank was established under the guidance of a very able man. It would have been unfortunate for the Commonwealth if in the appointment of the first governor of that bank the government of the. day had made an unwise selection,, and every Australian patriot i3. grateful that the bank succeeded as it did under the control of the late Sir Denison Miller. Yet it is a sounder arrangement to have an institution of that size controlled by five men of knowledge and experience than to have its destinies guided by one man, for whom a fit successor might not be found. This bill gives all the powers that are necessary to enable the bank to assist, the primary producers’. I assume that at its. commencement the rural credits department will confine its operations to perishable products, but will later extend them to wheat,, if necessary. In fact, the activities of the department can develop indefinitely. Had such a system been in operation in the past, many men upon the land would be much more comfortable than they are to-day. It is well known that at the present time the Commonwealth is experiencing depression, with a resultant scarcity of money for investment. The Treasurer is largely responsible for that,, because by borrowing from the pockets of the Australian people he has withdrawn capital from the ordinary channels of industry, and development is checked. It is high time that he discontinued’ that policy and obtained his loan requirements from abroad. I know of one settlement - and it is typical of many - where the harvest has been reaped and sold, but the producers can get no money until their crop has been transferred to the other side of the world and payment for it has been sent to Australia. This bill will enable the producer to get money as soon- as his asset is handed over, and it will be of immenseassistance to those men along the Murray River, who for years have struggled like heroes. Thank God, for them the tide of adversity is turning, and I believe that instead of rooting up their vines,, as was prophesied, they will extend their plantations.
– Will the Treasurer give me his assurance that the agricultural bank in Western- Australia is included in the “ other banks “ mentioned in paragraph a of proposed section 60abi?
– It is automatically included..
.- I rise in support of the bill, the purpose of which is to amend the Commonwealth Bank Act to provide a rural credits- department. I oppose the amendment. The rural credits department will supply a long-felt want, and. we should not limit its efficiency by paralyzing the other agencies- which are already assisting, greatly the development of Australia. We require all the capital we can get for thedevelopment of our national’ resources. . I conceive that the. rural- credits department will have a beneficial effect in keeping the private- institutions in check, and bringing about healthy competition in finance; Honorable members opposite recently proclaimed their belief in comptdsory pools. I ask them to be consistent, and to realize that this means of financing pools will automatically bring pools into existence, and compel loyalty thereto.
– We are not opposing the bill.
– Well, if there is no opposition, there is no need for me to speak further; let us have a vote.
– The manner in which the alleged representatives of the primary producers? rush to tho defence- of the private banks is remarkable. Prom the time of the land boom until to-day the associated! banks have fattened! upon the- primary producer. They evicted thousandls of them from their holdings, and1 the large dividends, they pay to-day are largely due. to’ their persecution and squeezing of th© man on the land. Yet, honorable members of the Country party say that the private ‘ bankers- can; be trusted, ‘ and should, therefore^ have a finger in. this rural credits pie. The honorable member for Wakefield spokei of the success of the wheat pool in 1920, when the Commonwealth Bank financed it. What happened when the associated banks had to finance the wheat pool? They told Sir Joseph Cook, when he was Treasurer, as: they probably wiH teB the present Treasurer, that they could not advance more than 2s. 6d.. of the 5s,. pex bushel which the Government had guaranteed: yet. in the f ollowing January they were taking up the scrip for tho balance at a discount of 2d. in the half-crown. Evrery day the private banks are robbing the primary producer by taking advantage of his necessity. The honorable- member for Wakefield said that the manager of a savings bank has no banking experience which would fit him to handle rural credit’s. It will be- a good thing for the farmer- if the man who handles- these rural credits does’ not pride himself on banking experience. One of the men on the directorate of the Commonwealth Bank is connected with a private institution that made a net- profit of £5,000,000 in eight years, most of which came from the financing of primary produce pools.. I am opposed to- giving’ private banks an oppor tunity to meddle in this business’. The honorable member for Gippsland (Mr: Paterson’) argued that a person might- on personal seeuTity get from a private- Dank’ manager an advance in’ excess of what liis assets justified. Pew managers woulddare to make advances in that way.. A’ manager who did would be advancimg money on bad security ; the- certificate lodged with the rural credits department; would be- the only security upon wMcfeS the department could: realize. The honorable member for Riverina (Mr. Killen) said that the Commonwealth Bank charges a higher rate of. interest than do tie private banks.
– Of. cousse; that is the policy of the directors, who are largely interested in the associated, banks and big; financial companies. Within: the last eighteen months I have heaord of one countryman in New South Wales. who approached tho Commonwealth Bank id: Sydneyfor an advance not exceeding onatenth of the value of his security. Bust the manaiger said, “What would our friends,, the associated banks, in yonr town, say, if we in Sydney did business willi you?’” That is an instance of’ the way in which the present directorate^ acting in the interests of the private financial institutions, discourages business. For that reason, again I object to the bringing in’ of the privatebanks. Who, will control this business ? Will the advances be made to- other banks and be controlled by the directors of those banks ? The- honorable member for Forrest (Mr. Prowse) spoke of compulsory pools. I agree with him to a large extent. We should say to the primary producer, “ If you want the benefit of a rural credit, yon must go- to- the Commonwealth Fank, but if you- want to deal with the associated ‘ banks, you cam do so.” There would then be competition. Under this bill there will be no competition, for there can he no competition- where there- is amatgaanation. The honorable member for Riverina (Mr. Killen) said that if the associated banks were closed there woiild be no competition. Is there amy competition to-d’ay? All the banks charge the same rate of interest, and aiH the other conditions imposed by them are the same. There’ is no competition between the associated’ banks and the Commonwealth Bank, and there will be none under this bill. If we want to make pooling compulsory, let us do it openly, and not by subterfuge and camouflage, as w© do now. The managers and officers of the savings banks are more capable of doing the ordinary work of a bank, and of judging of the value of securities in the interests of the primary producers and primary production, than are the managers or inspectors of the associated banks. The employees of the savings banks are reared in an atmosphere of service, not of profit and interest. The environment of an inspector of an associated bank teaches him to squeeze the last fraction of interest and profit out of the bank’s customers, and that statement is true of the employees of financial institutions the world over. On the other hand the employee of a savings bank is taught that his first duty is to render service to the people, and that he must approach a proposition from the stand-point of national development. The. two points of view are as far apart as the poles. I hope that the amendment will be carried, and that it will be made clear that the associated banks are not “in the picture.” The object of the bill is to provide for the granting of rural credits, backed by the financial resources of the nation. The Government should be prepared to establish branches of the Commonwealth Bank all over this country, and should manage them in the interests of the primary producer and the out-back pioneer. The Commonwealth Bank should not be managed in the interests of those institutions that have exploited the people and squeezed the last fraction of profit out of them.
.- I oppose the amendment, which is silly and absurd. If branches of the Commonwealth Bank are established throughout the length and breadth of this country for the supposed welfare of the primary producers, an expenditure of several million pounds will be entailed. Before any branch of the bank could pay one man £400 a year and make a profit it would require £20,000 in deposits, and would need to advance £201,000. Let honorable members put that in their pipes and smoke it ! It is of no use wasting time on this measure. Many of us, who are well versed in little things, are most ignorant of what we feel most assured of. It would be wise of members of the Op position not te have anything to do with this bill. Banking is a specialized business, the management of which requires skilled men, especially for advancing money on the security of perishable products. Cereals and similar products must be quickly consumed, within twelve months of production, or they return to the earth from which they sprang, because they rapidly decay or are spoiled by various agencies. It is quite different with mineral products. I advise the board to conduct its operations carefully. When as much as 80 per cent, has been advanced on a perishable product, that product must be disposed of quickly, or the security will disappear. The advancing of money on such a security is a hazardous procedure. While I congratulate the Treasurer on doing his best for the primary producers, I advise the board to tread softly.
– I support the amendment. An honorable member has mentioned a bank that advanced more than the equivalent of the tangible security offered to it, the margin being covered by the personal security of the borrower. As an old bank clerk. I can only say that if an inspector caught a manager doing that sort of business often, his chance of remaining in the service of the bank would be very small; he would be sent to the head office and severely reprimanded, if not suspended. I can imagine Mr. Boully, one of the keenest bank inspectors Melbourne ever had, handling an employee of that sort. It would be a case of Lord help the unfortunate bank manager who did that! I have no special regard for banks, but I recognize that they are established to make money. If we were to judge banks by the experience of the land boom, there would be a sad story to tell, for they then displayed a degree of selfishness which I cannot imagine even a moneylender equalling. In those troubled times I went to the Bank of New South Wales, and had the utmost difficulty in obtaining an advance of £50 for an unfortunate man who had £3,000 on deposit with the bank. He was grateful to obtain even that, and, in order to get it, I actually had to threaten the manager that I would state the facts at a public meeting of the unemployed. How many of the depositors in the banks were repaid 20s. in the £1? It is an unpleasant subject to recall. Banking at the present day is on a much higher plane, and Australian banks are now following the better examples of the Homeland. They are also, perhaps, meeting possible danger by consolidating and strengthening themselves. I want co see the Commonwealth Bank become a real bank, a people’s bank, and not a bank for banks. Anything could happen in the Commonwealth Bank under the management of a certain gentleman whose nepotism has been exposed in this House, but the Treasurer can say whether it is true that £2,000,000 has been lent to a financial institution-
– The honorable member is not in order in discussing the actions of the late manager of the bank.
– The chairman of directors of the Commonwealth Bank is also managing director of the financial institution referred to. If that £2.000,000 had been spent on advances to the primary producers, it would have done more good. I object to the people’s money being paid in large sums to private financial institutions, especially as the primary argument advanced for the establishment of the Commonwealth Bank was that it would be a- people’s bank, an Australian bank for the Australian people. If we make it a central bank we rob the people of their rights. Why, in the name of common sense, does the Commonwealth Savings Bank pay 4 per cent, less interest than the other savings banks ? The State Savings Bank of Victoria has a splendid building in Elizabeth-street, and another at the corner of Little Flindersstreet and Swanston-street”. There is no need for those buildings. While it is said that competition is the life of trade, there is no true competition in the banking business. Mr. Prendergast. Leader of the Opposition in the Legislative Assembly of Victoria, stated some time ago that the reason for the difference between the rates of interest was that it was not desired that the savings bank of Victoria should compete with the ordinary banks. The ordinary banks advance money on the production of documents, and, in normal times, have treated their customers fairly well. When I took my small account away from the Commonwealth Bank, I did so as a protest against the action of the then manager, who sweated his clerks and did not pay depositors a fair rate of interest. Whom do we want the national bank to help? Are the people with small savings helped most at the present time? No. Up to a little while ago, the State Savings Bank of Victoria did a great deal of good by advancing money at a fair rate of interest, not only to townspeople, but also to any one who wished to build a home. I am sorry to say that much of that assistance is now withheld, and that loans now granted are limited to £800, by which the bank hopes to build more houses in Melbourne and suburbs. Nevertheless, I believe that the Minister is endeavouring to carry out the intention of Parliament when the Commonwealth Bank Act was enacted. I am glad that the Leader of the Opposition is supporting the bill, although, with him, I consider that it would be better if the words “ or other banks “ were omitted. Nothing tends more to develop a country than that those in need, whether producers of wheat, fruit, wool, or live-stock, should be able to obtain money at low rates of interest. No- honorable member will deny that during the period of the war the Commonwealth Bank did magnificent service for Australia, and those who remember the crash which followed the land boom will not fail to give the bank credit for having kept the rate of interest as low as 6 per cent. That the Commonwealth Savings Bank is not giving a satisfactory return is no evidence of any lack of ability on the part of its officers; rather it shows that the depositors prefer to obtain 4 per cent, from the State savings banks than 3£ per cent, from the Commonwealth institution. The honorable member for Kalgoorlie (Mr. A. Green) referred to the Agricultural Bank of Western Australia, and asked whether it would come within the scope of this bill. Perhaps the Treasurer can tell us in which States similar banks now operate.
– I understand that the establishment of a rural bank is contemplated both in Victoria, and in South Australia. There is one in New South Wales. In each case it is a government institution.
– They should be branches of the Commonwealth Bank. I have no great objection to the other clauses of the bill, and if it is the intention of the Government, as I believe it is of the Treasurer, to carry out the original intention of Parliament with respect .to the bank, I have no more to say. I agree with .my Leader that this measure has been introduced because of legal technicalities, amd that if the Government we»e firm in carrying out the existing legislation, it would not be required.
.- The honorable member for Wakefield ,(Mr. Foster) said that this measure, if carried in ‘its present form, would be .of material assistance to the primary producers, and added that, having visited the Murray Valley recently, and conversed with a number of producers there, he learned that they regarded it as a veritable godsend. .
– More than this bill is required.
– During the last weekend I met a number of primary producers with whom I discussed this measure. All of them are thankful to the Government for having introduced a. measure which will afford them some measure of relief. While I -have no .desire to speak at length, I feel that I must express disagreement with the amendment moved by the Leader of the Opposition in his desire to omit private banks from the clause. Due hears from time to time many diatribes regarding .private institutions, , but such attacks ave not always justified. While 1 am not at present defending private banking institutions, I feel that we should approach this measure with unbiased minds, and be prepared to give credit where .credit is due. ‘ As a justice of the peace dm Queensland I had a fairly extensive experience in dealing with applications for assistance from the Agricultural Bank of that State. In the newly-settled districts, hundreds of men who were engaged in agricultural pursuits had originally taken up virgin land, and practically with no other assistance than that afforded them by the local storekeepers, they made good. They persevered against difficulties, only to find that when their produce was ready for market, they were absolutely at (the mercy of city agents, and nad to accept practically .any offer that was made to them. This .bill provides against difficulties of that nature so that men in need of financial assistance will be able to secure it more easily than in the past. Because of the delay which frequently occurred in obtaining loans from .the agricultural bank in Queensland, many farmers were at times faced with’ difficulties, rendering necessary the withdrawal of their applications for assistance. I have known of cases in which the .necessary inspection was not made until four months had elapsed from the lodging with the authorities of the agricultural bank of the application for an advance, whereas those who applied to private institutions frequently obtained advances within a fortnight. I admit that those advances were at a higher rate of interest, but in many instances time was of the essence of the contract, and numbers of men who to-day are in fairly prosperous circumstances owe their prosperity to the timely assistance afforded them by private banks. We should not continually denounce private institutions, but should face these matters fairly and squarely. If we accept the amendment of the Leader of the Opposition, w,e shall restrict to one channel the granting of assistance to producers, and make it impossible for many of these men who are .outside of associations ito secure advances in time to avert disaster, whereas by allowing other banks to operate, we shall make it possible for those in need to obtain advances when they are required, and frequently muck earlier than would be the case if the amendment were .carried.
.- I support the amendment of the Leader of the Opposition for the reason for which the honorable member for Corio (Mr. Lister) opposes it. I have nothing to say against private banks., or their treatment of rural industries, but if the primary producers of Western Australia in the early days of the State had had to depend, on private banks, they would ‘soon have’ been in difficulties. I have frequently asked that the functions of the Commonwealth Bank in Western Australia should be extended, but on each occasion the Treasurer has replied that that was .a matter for the directors of the bank. Letters that I have addressed te the Treasurer on the subject have been passed .on to the ‘Governor of .the Bank ; in no case have I received a reply from the Treasurer. I do not say that it is his duty to reply to every communication from members of Parliament, brat to do so would be courteous. Except at. FrenaiantLe, Perth, and Kalgoorlie, the-re aire no branches of the Commonwealth Bank in Western Australia. The whole- of the wheafc-faxmiiag areas of Western Australia are without a branch of the Commonwealth Bank. Thehonorable member for Wakefield (Mr.Foster) said that if a larger number of branches of the Commonwealth Bank were established in the rural districts, the- coat of their upkeep would be such that the Government could not expect money to be advanced so cheaply as, it would be through the private banks. I hold an entirely different opinion. In Western Australia the struggling farmers cannot depend upon the private banks. Many electors in the districts of the honorable members for Forrest (Mr. Prowse) and- for Swan (Mr. Gregory) during difficult times would have found themselves in> the bankruptcy court: had. it not been for. the operations of the Agricultural Bank of Western Australia. Owing to the limited scope of the operations- of theCommonwealth Bank in. that State, the Agricultural Bank and the Industries Assistance Board were introduced. I know, from my present knowledge and experience, that those institutions have assisted the rural producers when private banks- had refused to do- so. The honorable member for Forrest knows that that statement is perfectly true. I hold in my hand a document, issued by the Agricultural Bank, informing a producer in the electorate of Swan that he is granted £450 to assist him to clear 300 acres of land. There is also on this form provision for advances for part clearing, ring-barking, sinking wells, and constructing reservoirs, for drainage, erection, of buildings and fencing, and for the purchase of stock, and machinery: I hand the document to the Treasurer to let him see what is being done by the Agricultural Bank of Western Australia. The Treasurer should make possible in that State the establishment of branches of the Commonwealth Bank, similarly to what has been done in Queensland.
– The Agricultural Bank of Western Australia has no branches at all.
– That difficulty was overcome by the appointment of district officers. For instance, the settler that, I have- mentioned, instead of applyingto the Agricultural Bank in Perth, would make application for assistance through the Kununoppin district officer, who in turn would notify the district inspector. If his report were favorable the application would immediately be granted. In Western Australia there is no delay in granting assistance such as the honorable member for Corio (Mr. Lister) stated existed’ in Queensland under a former government. I doubt whether the same delay occurs there under a Labour government. I trust that the Treasurer will accept the amendment moved by the Leader of the Opposition (Mr. Charlton). The Labour party is in favour of this measure as fax as it goes, birt to be of utility to the producer, it must providfe for an extension of the functions- of the Commonwealth Bank and establishment of’ more’ branches throughout the nural districts.
– How would it be possible to extend the functions of the Commonwealth Bank immediately?
– If the Treasurer wished to extend the functions of the Commonwealth Bank, he could’ do so tomorrow by establishing branches of the Commonwealth Bank throughout Australia. We have been told that the time is not opportune. I wrote’ some time ago regarding the establishment of a- branch of the Commonwealth Bank at Geraldton. I received a reply- that it was not desirable to establish a branch there at present. At about that time a small bank -I shall not mention its- name - with very little- capital, established within- two years , and’ six months 70 branches throughout the rural” districts of the- Commonwealth, twelve of which, are in Western Australia. The Commonwealth Bank, with the’ backing of the Treasurer, should;, under this- or some other legislation, be able to establish branches throughout Australia, and thus give: the primary producers: the advantage of: rural credits. This could have> been done under, the direct auspices- of the Commonwealth. Bank.
Sitting suspended from 6.30 to8 p.m..
.-The proposed new section 60abi, now under discussion is the very essence of the bill. It really seta out the functions of the rural credits department of the Commonwealth Bank which it is the intention of the bill to establish. There seems to be some misapprehension amongst honorable members as to its functions, but I think it .was made clear by the Treasurer that its purpose is to finance the primary producers, through their organized bodies, during the period between production and sale. Hitherto there has been no satisfactory scheme for the financing of producers during that period. It is true that private banks could be appealed -to, but because of the inflation of values and other reasons a greater amount of currency has become necessary, and almost every industry, and particularly rural industries, require money at the present time. Every time that an organized body has been formed to pool products until they could be sold, it has had to go cap in hand to one Government or another to guarantee its overdrafts with the banks. The purpose of this bill is to lift rural producers out of this difficulty, and place them on the same footing with respect to advances as the ordinary business man, who, possessing the necessary security, can secure an advance from a bank. The idea is to enable primary producers to present their certificates of the value of their products and get the credit they require until those products are sold. The proposed new section sets out that advances may be made to the Commonwealth Bank or other banks, co-operative associations, or corporations or unincorporate bodies. Cooperative marketing is more and more coming into favour, and it is only a matter of time when we shall find that very little of the produce of the ‘farmer will be sold directly by himself. That is true now of wheat, butter, and a number of other products. The main business of the rural credits department will be done with corporations, and not private individuals. Speaking for my own State of Queensland, which I knowbest, the bill will not benefit individuals to any great extent. No scheme of rural credits would do so, for the simple reason that the dairy farmer, for instance, who produces cream, gets his money from the butter factory which he supplies. But the butter factory or the butter pool must be financed in order to be in a position to pay the individual producer. In the same way, pools formed for the storing of fodder to tide over dry periods can be financed under this measure, whilst no individual could go to the rural credits department and ask that his stock of wheat or fodder should be covered by an advance. The rural credits department, dealing with one body, and not with individuals scattered throughout the country, will be more ready to make advances upon the total quantity of fodder under its control than upon the small quantities which may be held by individuals up and down the country. Such a measure as this is scarcely necessary for the individual producer. There will, no doubt, be times when individual producers will need money, but they can meet their financial difficulties under state acts. At the present time there is in Queensland an agricultural bank, which helps the individual from the time he goes on to his land. It helps him to develop it, and to stock his property. The only link missing is the financing of the finished product in the hands, not of the individual farmer, but of the organization marketing his produce for him. The Leader of the Opposition (Mr. Charlton) has moved the omission of the words “or other banks.” I think the omission of those words would be a mistake. Much of the work of financing industries is done by private banks. The Commonwealth Bank does only a comparatively small amount of the work, and it is desirable that the whole of the finances of the country should be available to the whole of the people, if necessary. “With the co-operation in this matter of the private banks the producers will be able to command the assistance of a greater volume of the money available for advances than would be open to them if they were confined to the Commonwealth Bank. It is possible that at times there might be a run on the money of the rural credits department, and the private banks might come to its assistance. With the rural credits department carrying out this class of business private banks will not be making these advances to the same extent as at present; and, having money to lend they can, under this measure, come to the relief of the proposed rural credits department. It is said that it would be a good idea to allow individuals to apply direct to the rural credits department of the Commonwealth Bank, but this would require the establishment throughout the Commonwealth of branches of the rural credits department, and in the majority of them very little business would be done, seeing that we are dealing with a marketing proposition. I cannot conceive of any- way in which the individual producer would need this help, but if he did need it he could go to the Commonwealth Bank or a private bank. The only individual producer who would be likely to want to apply to the rural credits department for advances is the wool-grower. But he would be a wool-grower on a large scale, and one who was in the habit of shipping his wool himself to London. I cannot see that this proposal will be of much benefit to the small individual producer.
– What about ‘the producer of fresh fruit.
– His case would be met by an organization or a pool. An advantage in connexion with this collective bargaining is that the rural credits department in making these advances would not have to depend upon the security of a great number of individuals in different parts of the country,’ but would take as collateral security only the security upon which the private bank has advanced. If there should be any loss it will be the bank making the advance to the individual who will be responsible for it. The rural credits department of the Commonwealth Bank will make its advances to a private bank on the collateral security, and if that is not sufficient to make up any loss the private bank making the advance in the first instance will have to meet the loss. In making provision for the co-operation of the private banks the Treasurer is asking them to help to extend the influence of the proposed rural credits department. This will not be doing a favour to the private banks, but it will be doing a favour to the rural credits department itself, and a great favour to the producer. If operations under the bill were restricted to the Commonwealth Bank any losses made would have to be met by the people of Australia, whereas if losses are made through the co-operation of private banks in this business the private banks will be the losers^. . : . .’>&
– The honorable member’s argument would apply with equal force to profits.
– I think there will be very little profit from these transactions. The greatest amount of business will be done directly with the rural credits department. People are not fools. When they want money they look around to see from whom they can borrow it to the best advantage. If the private banks find that under the operation of this bill their business is getting away from them, and. they have surplus money to lend, it is a moral certainty that they will compete against the rural credits department of the Commonwealth Bank, and this competition will benefit the people who are in need of advances. Under the bill no one is forced to go to a private bank and no one will go to a private bank and pay a certain rate- of interest for an advance if he can get the money from the rural credits department of the Commonwealth Bank at a lower rate of interest. The whole trend of these operations will be direct application to the rural credits department. It is only in .those cases in which, for one reason or another, they are in a position to offer greater inducement to borrowers that private banks will get the business. I congratulate the Treasurer upon the introduction of this bill. I have been pleased to notice the generally good reception it has met with from honorable members. I feel sure that it will fill a long-felt want. Not only will it help producers by making money more readily available to their organizations, but it will at the same time benefit the community as a whole.
.- I support the amendment. Whilst I welcome any scheme for the financing of rural or pastoral industries during times of drought or flood, or in the case of damage the result of bush-fires, I am extremely doubtful whether this bill as introduced by the Treasurer will achieve that object. I remember that in 1918 I introduced a deputation to the then Acting Prime Minister of the Commonwealth, Sir Joseph Cook. Owing to many adverse conditions the men on the land, and particularly the smaller men about whom I was most concerned, were in a pretty bad way. After a lot of correspondence and representations, I suggested that settlers t Quambone, Quirindi, Coonamble, and around that district should form a deputation and go to Melbourne “to interview the Acting Prime Minister. The deputation came to Melbourne and put its case before ‘Sir Joseph -Cook, but ne could give them no assistance. He would not make money directly available to the settlers or available to them through the Commonwealth Bank. I took the deputation to Sydney! and we waited upon the late ‘Sir Denison Miller. We wanted something like £200,000 in order to tide settlers over difficulties in which they were placed as dle result of bush-fires, droughts, and floods. Many of them bad to Te-stock, re-fence, and replace burnt-out woolsheds and so on. The late Sir Denison Miller ‘said it was not a fun’ction of the Commonwealth ‘Bank, and as the private banks were operating, their assistance should be sought by faha settlers. Ais -the Government of hae day was noi sympathetically disposed towards the Commonwealth Bank, it was Mat likely to do anything to interfere with the profits of the associated banks. The Commonwealth Bask was the people’s bank under a Labour ad ministration, font it has now ceased to function in that way. It cannot be expected to .operate in the in: terestsof -the people when the .government in pow-er is more friendly towards the private banking institutions than, it is towards this socialistic’ financial institution. It is .unlikely to function to-day in the interests of the primary producers, as .exactly the same ‘conditions prevail now as prevailed -in 1,91 8 when the settlers came to it for financial assistance. Ultimately the members of .that deputation waited upon the Labour Government of New South “Wales,, then led by Mr. James Dooley, which made available over £200,000 for the men on the land in the Coonamble district; a sum sufficient to enable them to liquidate some of .their liabilities to the banks and the storekeepers. The Commonwealth Bank at that time absolutely refused to .give any assistance, because it would not interfere with the operation of private enterprise. The instance I ‘have quoted was the Beginning of the rural bank in New South Wales, which is now truly functioning in. the interests of the man ion the land. The best that can foe : said ,©f the private bank- ing institutions is that, instead of performing important work in the development of the country, they are engaged in producing satisfactory balance-sheets and in paying dividends to their shareholders. Private banks are not ‘established for developmental purposes.. Their primary function, is to make a profit on the capital employed, and if they do not do that, they must go out of business. By the Commonwealth Bank advancing money to private institutions for the purpose of making advances to settlers, it will be merely establishing agencies for performing work which it was expected by the Labour party when it was established that it would do itself. One naturally wonders what amount will be made available to the private banks, .at what rate it will be loaned to them, and what interest will be charged’ to those who receive advances. Squatters or wheat farmers who sell their wool or their wheat through an agent or a broker will have to pay for services rendered, and if the private banks are the agents for advances from the rural credits department they are sure to take their toll from the primary producers. The honorable member for Wakefield (Mr. Foster) said that Lt would be impossible under present conditions for -the Commonwealth Bank to function in this matter, because there are not enough branches of the bank, and even if there were, the cost of maintaining them would be so great as to render the institution insolvent.’ But the fact remains that the intention of those responsible for the establishment of the Commonwealth Bank was that it should be a people’s bank, and one which would function, in the interests of business men, the men on the land, and the workers. When the Labour party -went out of power the process of strangling the Commonwealth Bank commenced. The bank is now acting as a foster-mother to the associated banks. I am wondering whether (this measure provides another sop to the associated banks. It is not long since those in control of the private banks informed the Government that owing ito the scarcity of money it was desirable that the Commonwealth Bank should make £5,000,000 available to them. The Government hastened to assure the banks that it would come to their aid, and in doing so made the amount I have men- tioned available at 4 per cent., the private banking institutions loaning it out at from 6 per cent- upwards. A profit of at least 2 per cent, was made by them out of a transaction which should have been carried out by the Commonwealth Bank. Later the private banking institutions asked the Government for more money. They were told that they could have it; but some of the money asked for was not even removed from the Commonwealth Bank. The fact that it was available, if needed, however,” enabled the private banks to increase their credit, and make a profit of 2 per cent, on money which they did not even borrow. A great deal was involved in the transaction, and I can imagine some of the shareholders of the associated banks praying that the Government might continue in its good work of advancing money in order that they might carry on their profitable work unhampered.
– Does the honorable member mean by the issue of Commonwealth notes?
– They cannot be regarded as money.
– The banks were able to establish credits on that basis, and the honorable member for Darwin (Mr. Whitsitt) knows that if some benefactor, such as the Commonwealth Bank, informed him that £5,000,000 would be made available to him for twelve months, he would be able to make a considerable profit without actually lifting the full amount borrowed. Is this another way of the private banks obtaining something for nothing from the Commonwealth Government? The establishment of a rural credits bank has been upon the Labour party’s platform for years, and the principle is one which we have always advocated. Whilst we are not satisfied with the machinery of the bill, we realize that it bears some slight resemblance to the scheme which we shall very soon have an opportunity to bring into operation. When that time arrives we shall establish the necessary branches of the Commonwealth ‘ Bank throughout the whole of Australia, which will eventually undertake the work now being performed by private banking institutions. The people will lien be able to obtain cheaper money, and receive more than the private banks are now prepared to loan. We do not wish to make a profit of 10 per cent., 15 per cent., or 20 per cent, on our transactions.
– Would the people not have to be taxed to do that?
– If the Commonwealth Government loans the people’s money at 4 per cent, to the associated banks, which lend it at 6 per cent., it must be at the expense of the people. Iri the case I have quoted the people subsidized the associated banks to the extent of 2 per cent., and allowed them by subterfuge and financial trickery to take money to which they were not entitled. One wonders whether similar juggling will be done under this bill. If such action is taken it, will only be during a short period.
– -It is owing solely to a failure to comprehend the purpose of the bill that an amendment has been submitted by the Leader -of the Opposition (Mr. Charlton) that a suggested amendment has been mentioned by the honorable member for Angas (Mr. Gabb), and that the honorable member for Darling (Mr. Blakeley) has delivered the speech which we have just heard. The object of the measure is to provide the machinery necessary to finance the regular marketing of seasonal crops. Other means are already available for dealing with other branches of rural activities and the general financial arrangements of the Commonwealth. Prior to the introduction of this measure no Commonwealth statute has really covered what has been termed in the United States of America and Canada the barren area of credit - that is, the area of credit that it is necessary to cover to permit the producer to retain continuous control of his crop from the time it is harvested until it is actually sold.
– Why has he not had this credit before ? Is it because the advancing of money has been considered too risky ?
– In the first place, there are some who, like the Leader of the Opposition (Mr. Charlton), have thought that such financial assistance could be given under the principal act. Although the Commonwealth Bank Bill was introduced by the Labour party in 1911, and that party was in office, with the exception of one year, until 1916, no attempt was made during its regime to allow the bank to function in the manner for which this measure provides.
– It supplied money to the big corporations while it was under Labour administration.
-Nearly all the transactions complained of occurred during that particular period.
– Is the Treasurer criticizing the management of the bank?
– No; I am merely pointing out what actually occurred. After the Labour Government left office the prime mover in the establishment of the Commonwealth Bank (Mr. King O’Malley) introduced a measure for the establishment of a rural credits department, proving conclusively that, in his opinion at least, this particular branch of banking was not provided for in the Commonwealth Bank Act. We are justified, therefore, in assuming that legislative machinery such as we now wish to provide does not now exist, and, admittedly, the bank has never functioned in the manner desired. On every occasion, when we have attempted to procure the ordinary marketing of produce by means of pools, or otherwise, it has been found necessary to go beyond the bank, and to obtain from the Government a guarantee to enable the necessary financing to be done. Some honorable members have complained that the bill does not provide for such action as the honorable member for Darling (Mr. Blakeley) mentioned, namely, the advancing of £200,000 to producers who had suffered severe losses. Other honorable members say that the measure does not provide for long-term loans for land settlement purposes. Itdoes not pretend to deal with any of those matters. It is a measure for the specific purpose. of assisting the marketing of produce by enabling the producer to retain au interest in his crop until it has been disposed of, although the marketing of it may be spread over a whole year. After ‘ a careful study of the legislation in other parts of the world I venture to say that the provision in the various Australian States for advances to settlers on the land is the most liberal in the world. Under the scheme far soldier settlement up to 96 per cent, of the total value of the property may be advanced to the settlers, and the liberal proVisions of the acts passed in South Australia, Victoria, New South Wales, and Queensland indicate how fully the field of government assistance has been covered. I find that in the United States of America- only 50’ per cent, of the value of a property is advanced by the federal farm loan banks. The actual handling and the immediate disposal of the farmers’’ crops is dealt with also by means of other financial institutions throughout the Commonwealth, which, on the whole, have operated fairly satisfactorily; I refer to the general banking department of the Commonwealth Bank and to our other financial institutions. If we are to secure the regular and orderly marketing of the producer’s crop it will not be done by individual farmers handling wheat in lots of, say, 1,000 bags, on their own account. Marketing must be done in a collective way. That is the reason for the establishment of pools, and that is why the Government say in this bill that there will be advances made to co-operative associations formed under the law of the Commonwealth, a state, or a territory to enable small men to form collective organizations which will be able to control a substantial percentage of the production of Australia.
– What about the percentage that they do not control?
– If small men endeavour to handle their own crop independently they will not have the knowledge that would be possessed, by large organizations having ramifications such as those of the voluntary pools and the big overseas buyers. It will lead to speculating, and the defeat of the object we have in view, which is to secure something like a stable price throughout the year to the consumer, and to enable the producer to be paid promptly. There is no necessity, therefore, for direct advances, because, as the honorable member for Maranoa (Mr. Hunter) has pointed out, the only men who would be able to deal independently would be the big pastoral men who would make private arrangements with their own institutions. In Western Australia there is the State Industries Board and the Agricultural Bank, and in South Australia a State bank. If the amendment were carried it would mean that the rural credits department could not make advances either to a State bank or to any other bank. The Government is not proposing this department as a placard, but is trying to establish a sound and permanent institution. But it cannot become permanent unless it is established on the most strict and commercially sound lines. To make sure that it shall be founded on a proper basis, we propose to apply out of the profits of the note issue department a sum not exceeding £2,000,000, free of interest, which will form a solid foundation upon which the department may be established. In North and South Dakota, during the last four or five years, attempts have been made to carry on not merely marketing operations such as those suggested under this proposal, but various other activities such, as honorable members have indicated, with the result that the machinery established for the purpose has practically broken down, although it was supposed to have behind it the almost unlimited credit of those States. Under this bill an advance cannot be made for a period greater than one year - from one harvest to the next. It is not intended to hold the products of the soil for years, but only during the period required for their distribution.
– And to clear up each year’s operations, I presume?
– Yes. If we endeavour to introduce all sorts of other governmental activities we shall get into a perilous condition indeed. One reason for dissociating the rural credits department from the general bank is that the latter institution stands behind the currency of the whole country, and acts as a bank of reserve. It would be required to serve the nation in a sudden crisis, and therefore its assets must be liquid. It is provided that its securities must be Australian or British stock, or bills for terms of not more than 90 days. If the rural credits department were part and parcel of the general bank, it would have a lot of paper for terms of up to twelve months, which could not be liquified and brought into use in a sudden emergency. For that reason it is essential to nave a separate department, which will conduct its operations entirely independently of the general operations of the bank, such as the granting of overdrafts and the ordinary daily transactions of banking. When the department begins to operate - and I hope that it will do so during the present year - I think it will be found necessary to have inspectors available to visit the various warehouses, storehouses, and cold storage places, to ensure that the goods against which advances are made are in a perfect condition and worth more than the money advanced upon them. “ For that reason I appeal to the Leader of the Opposition (Mr. Charlton) not to press his amendment, because it would defeat the very object of the bill, which is to try to secure the utmost soundness in the institution which is being created, and to use to the fullest extent the financial machinery and institutions that now exist in the Commonwealth. Every agency we have must function in the best and smoothest possible way if we are to handle our national problems satisfactorily. The question of the honorable member for Boothby (Mr. Duncan-Hughes), who asked whether the bank or the producer would be ultimately liable to the department for an advance, brings to light the essential soundness of the bill. It is the bank that presents the warehouse certificate that is liable to the rural credits department for the advance.
– It will be well paid for its services.
– If the producer desires to operate through a private bank it is his own concern. He has the opportunity of combining with other producers, either through a co-operative society or through a corporate or incorporate body, and handling his produce direct.
– But he cannot apply direct.
– What good could result from his applying direct? He could only do harm to himself by attempting to handle a small amount of produce on his own account. Such a system would result, not in the orderly marketing of the crop, but in chaos.
– What other organizations do this?
– I have already mentioned the Export Control Boards in regard to butter and dried fruits. I understand that there are, in Queensland, certain organizations which are not incorporated bodies under the law of that State, but which also need, to be included. What is desired most of all is to induce the producers to keep together so that they may receive the benefit of their own labour, and the full value of their products so that our industries: may be more prosperous and ourfarmersmore progressive, enterprising, and successful than they have been in the past.
Question - That the amendment (Mr. Charlton’s) be agreed to - put. The committee divided.
Majority . . . . 15
Question so resolved in the negative.
.- I move-
That after the word “banks,” paragraph (a), the words” or a primary producer “ be inserted.
If the amendment is made, the sub-clause will read - 60ab1.Advances may be made by the rural credits department upon the security of primary produce placed under the legal control of the bank, to -
The Treasurer, when replying a few moments ago to the remarks, of the honorable member forWerriwa (Mr. Lazzarini), said: that it would be of no good for individual producers to approach the rural credits department. The bill provides that they may apply individually to a private: bank of to the Commonwealth Bank,but not individually to the proposed rural creditsdepartment. This only bears outwhat I have already said, namely, that the Treasureris offering the primary producers something which, on his own admission, is of no good to them. Hemay attempt toexplain away his statement, but that is what he said. He also suggested thatindividuallythey would not avail themselves of the provisions of the bill. It may happen that two or three growers in a district may be producing a certain commodity, whilst the main industryof that district may be the production of some other commodity. Must those few producersapproach a private bank orthe Commonwealth Bank itself for any assistance under this bill? I cannot see what argument can be used against my amendment unless the Treasurer believes that there will be too many individual applicants and intends to force them to approach that private banks or the Commonwealth. Bank itself. It is generally admitted that the rural credits department will be obliged to employ a number of inspectors,whose duty it will be to inspect all cool stores, and other places utilized for the storage of produce. If the scheme develops asit should, the Commonwealth, willhave to be divided into districts to which inspectors will be appointed. Therefore the cost of inspection to individual applicants to the rural credits department should not be much greaterthan the cost to collective applicants, because naturally the producers of themain crop in a district would apply for an advance and the same inspectors could attend to the individual applicants. I fail, to see why individual producers, who may be unable to establish a pool or form’ a co-operative society, should1 be debarred from the right to. apply direct, to the rural credits department. The honorable member for Wakefield (Mr. Foster) said that the bill was looked Upon’ as a .godsend by the primary producer. Like myself, the- honorable member wishes to assist our dried-fruit growers. He knows as well’ as I do that, at the present time, they may place their product, under the control of the Dried Fruits Export Control Board, and receive up to SO per cent, of its. value, less marketing charges. If people engaged’ in that industry are to be assisted they must get more than this bill proposes to give them, because, unfortunately, many of them have given liens over their crops, and therefore will not; be able to take advantage of the provisions of this measure. That being so, I cannot see how they can regard the bill as a god-send.
– If this rural credits scheme had been- in operation, they would have their money now.
– Many of the producers of dried fruits in South Australia could not have known of the possibility of an 8Q1 per cent, advance under existing legislation, or more of them would have taken advantage of it. To-night we have the peculiar spectacle of honorable members 07i the other side endeavouring to force the primary producers into co-operative action, whilst I am standing for . the fundamental right of the individual to dispose of his product as he pleases. Notwithstanding that honorable members opposite pose as the advocates- of. individualism, they will oppose my amendment, apparently on the principle that no good thing, can come out o£ Nazareth. I cannot see that this bill is much of an advance on existing legislation, except that organizations of producers, instead of. having to ask the Government to finance pools, may automatically get the assistance they require through the Commonwealth Bank.. If the Government will agree to extend that principle to individual growers, the measure will be much improved.
.- The rural credits department to be created under this bill is designed for wholesale rather than retail service.. Most States have agricultural’ banks, which understand the requirements of the producers much better than- a Commonwealth institution can possibly do. If at the- outset the mural credits department confines its’ operations to the financing of co-operative bodies and pools, it will do’ a great service to the community, but it may ultimately, go further, and help to finance the State agricultural banks. I doubt the sincerity of the honorable member foi” Angas- (‘Mr. Gabb) in proposing the amendment that is before the committee. The financing of individuals would entail the- creation of cumbersome and expensive machinery. Imagine a farmer approaching the bank for an advance on a couple of tons of fodder or 100’ bags of wheat, and’ having to bear the cost of the- inspection’ and valuation of his security !’ Surely such an advance’ is* more properly the function of a State institution. The amendment, if carried, would probably destroy the rural credits, department by. overloading it with cumbersome routine and administrative expense. The bill is framed on sound lines-, but if after twelve months’ operation need for improvement is shown, the scheme can be enlarged’ or amended. I must oppose the amendment.
– I am delighted that the honorable member for Angas has seen the light. At last he recognizes that the mental and physical powers of each individual were given to him by the Creator.- to be used by him for his own welfare and gain. Individualism is a splendid doctrine; how much, more prosperous would Australia be if it were in operation at the present juncture, and there were not so much turmoil1 over the right of the individual to think and act as he pleases ! . The amendment which the honorable member for Angas has proposed would not improve the bill in any way. It is impossible for a farmer *o progress if his land is mortgaged, if he has given a bill of sale over his furniture, and if on- top of those burdens he desires to mortgage his. crop. A man- who does that is, financially,, down and out. The wise farmer never gets into debt if he can possibly avoid it. If he does,, he continues throughout life working,, not for himself,, but for the next generation.
– For the private banks.
– The private banks have made Australia. Doubtless they have saved many a man by refusing to allow him to become “ a jubilee plunger.”
The average Australian is never happy unless he is in debt. That fault extends to governments ; and, having borrowed, they never think of repayment. It is unsound legislation that encourages people to borrow, borrow, borrow, with nothing but ruin at the end !
– This bill will confer upon the producers of dried fruits benefits which are not available under the export control legislation. The existing law only enables an advance to be made in respect of exports, whereas under this bill the producer may get an advance upon the whole of his crop.
– This bill supplies the link that is missing from existing legislation.
– That is so. For orderly marketing collective action is essential, and that this bill is designed to encourage.
Question - That the amendment (Mr. Gabb’s) be agreed to - put. The committee divided.
Majority . . . . 17
Question so resolved in the negative.
.- The proposed new section 60 abj provides that no advance shall be made for a period of more than one year. Does the Treasurer (Dr. Earle Page) consider that that period will meet all requirements ? There may be occasions on which it will be found very difficult to repay the advance within twelve months. What provision will there be for meeting such cases ?
– Supposing the advance has a currency of nine months, at the end of which period the product is not sold, and it is found necessary to hold it for a further three months. If it is in good condition, a new warehouse receipt will be issued and a new loan made for the further period required.
.- Take the case of a wheat pool. As a rule, wheat is put in about January or February. In the ensuing twelve months, let us assume, a drought sweeps through Australia., and at the end of the period covered by the advance a shortage seems likely. What will be the position of those who hold the wheat from the previous crop ? Will they have to wipe out the first advance, and on the wheat they have in hand secure a new advance ?
– That is what I have just said.
– I do not want to see the private speculator jump in and secure the benefit of a shortage after the wheat has been held for twelve months by the pool.
– A new advance will be made for a shorter term.
Proposed new section 60 abm -
The assets of the rural credits department shall be available, firstly, for meeting the liabilities of the department other than loans made to it by the Treasurer under this part and interest thereon, and secondly, for repaying those loans and paying that interest.
Proposed new section 60 abn -
The net profits of the rural credits department shall be dealt with as follows : -
One-half shall be placed to the credit of a fund to be called the “ Rural Credits Department ReserveFund “ ; and
One-half shall be placed to the credit of the rural credits development fund, to be used, in such manner as the board directs, for the promotion of primary production.
– The proposed new section 60 abm is designed to protect the public. The money advanced by the Treasurer will be the last amount to be paid by the department. All other indebtedness and liabilities will be met by the department before the Government loan is repaid. The proposed new section 60 abn provides two methods for dealing with the profits of the rural credits department. One-half is to be used to create a reserve-, to be used in the business of the department, and the other to create a rural credits development fund, to enable the rural credits department to better deal with methods of packing, marketing, and so on, with a view to improving the opportunities of the producer for obtaining better prices on the other side of the world .
Clause 3 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Motion (by Dr. Earle Page) proposed -
That the bill be now read a third time.
.- I did not address myself to the second reading of the bill, nor did I speak in committee, for the simple reason that I thought there was no possibility of my being allowed to improve it. Before the measure passes, however, there are a few remarks that I should like to address to honorable members. This purports- to be a bill for the establishment of a rural credits department of the Commonwealth Bank. I draw your attention, sir, to the fact that whilst it is ostensibly designed to enlarge the functions of the bank, its terminology is such that any powers and prerogatives that the bank now possesses will in future be restricted and limited. The constitution of the bank gives it unlimited power. ‘ It specifies that it can exercise any function in connexion with banking. Originally, with a view to meeting the protests that were made in regard to the possibility of political and other influences, being exercised, the affairs of the bank were placed under the autocratic control of a- governor. He could do whatever lie wished. If he extended or limited the functions of the institution . he, and not the Government that gave away its powers to him, took whatever credit or discredit followed. That was the positionwhen, the governor died in 1922. Shortly after his death the present Government came into power.
– We came into power before he died.
– The two events were practically simultaneous. Shortly after his death notices appeared in the English and Australian press to the effect that the Commonwealth Bank had been pushed into the combine, and made to act as part of it. The press of Great Britain day after day asked whether the- Prime Minister of Australia was going to permit the Commonwealth Bank to remain within the combine. A denial was not given to that statement, but it is a significant fact that the rates charged by the associated banks immediately began to rise upon primary and all other produce. Whenever the other banks said “ jump “ the Commonwealth Bank had to jump. There was not a month in which the rates were not raised by 5s. or 10s., until they were practically doubled in relation to the exportable products of Australia. During the season 1924-5 the primary producers paid in bank rates and charges millions more than they had paid in previous years. The excuses offered were numerous. Explanations appeared in the daily papers, and were made upon the floor of this chamber. It was said that, on account of the excessive exports there was a superabundance of Australian money in London, and not sufficient in Australia. The present Minister for Trade and Customs (Mr. Pratten) exploded that idea upon the floor of this. House before he became a Cabinet Minister. He analyzed the facts, went into the question of exports and imports, took all the surrounding factors into consideration, and told this House andthe country’ that there was ito justification for the attitude that was then. taken up. The Prime Minister himself, in a speech at Lithgow, when asked for an expression of opinion, said, “ I cannot give any explanation of that particular position.” The Industrial Australian, a newspaper that is not in any way representative of the Labour party, discussing the matter, said that it was a most remarkable thing that no action for the protection of the primary, producers had been taken by Dr. Earle Page, although he was Treasurer of Australia, and was in control of the Commonwealth Bank.
– He did take action.
– I know that he did. I intend to analyze that action, and to show in whose interest it was taken. That same newspaper said that it would have been more decent for the Prime Minister to have explained to the farmers why he permitted them to be exploited to the extent of millions of pounds sterling as a result of the operations of the banking combine, backed up by the Commonwealth Bank. Every newspaper throughout Australia commented ‘ upon the anomalous situation. The statement went from one end of- Australia to the other that, because of the immense amount of funds overseas, and the shortage in Australia, the banks here were unable to finance industry. It was said that the Commonwealth Bank had to go to their assistance. Everybody knows what happened. The associated banks absolutely refused credit to many businesses. Factories had to close down because of that refusal. Then, as my friend the honorable member for Indi (Mr. Cook) stated by way of interjection, the Treasurer came to their assistance. The associated banks said, “Give us some reserves in the shape of notes, and Ave will” immediately ease the market, and reduce rates.” That was in September last. The Treasurer advanced Commonwealth notes to the extent of £5,000,000, giving the banks security which went to extend their reserves. The day after they received that concession, they increased their charges upon the exportable products by 10s. per cent., which enabled them to rake off £750,000 at one stroke. In the following month, they demanded an additional £10,000;000 ‘ of Commonwealth notes, saying that unless they got it, they could not give further credit. Let us not forget that, on the floor of this House, the Treasurer, in the early part of last year, absolutely refused to accede to the demands of the associated banks. He told us that to do so would be injurious to this country, as the building up of an immense credit would lead to enormously increased prices, that would be immensely detrimental to the working class community, and- even to the primary producers themselves. I draw attention to the fact that that was the attitude of the Treasurer of a Government which, as a result of the immense pressure of financial interests outside, eventually conceded what it formerly would not concede. It gave the first £5,000,000 in September, and as a result the banks raised their charges upon the products of this country. In October a newspaper, I think the Sun, said that some people were making immense fortunes, and the Herald said that industries were tied up and paralyzed for want of credit. The new Bank Board came into existence, a conference was- held, and then the Country party came forward and said, “We relieved the situation. Our Government made advances to the banks.” Another £10,000,000 of Commonwealth notes was conceded. This Government, which had control over the Commonwealth Bank, saw that the exports of the country were tied up, and that exchange rates for 60 day bills were increasing from 40s. to 60s., 70s., and 92s.. 6d. per £100. It had £15,000,000 of credit that it could have conceded to the primary producers and export agencies. Instead of advancing the money to them, it linked itself with the private banks. It made no concessions whatever to the primary producers, although it is self-evident that it could just as well have advanced the money directly to the primary producers and exporting agencies. It gave this credit to the private banks, to enable them to issue further credits, and extort exorbitant rates of interest from the people of this country. If this Government, through the instrumentality of the Commonwealth Bank, could do that for the private banks, it could have done it for the primary producers. Then Senator Pearce went to Kalgoorlie, and told a public audience that the banks of this country were short of money, and could not make advances. He said in effect, “We called the private banks together, and offered them £15,000,000 of public money if they would carry on their operations.” Although they were told that this concession was to enable them to extend their resources, and was to be the basis for the issue of increased credits; although they promised that they would furnish credits at a lower rate of interest ; and although the concession was made on the 14th October, the banks raised the rate of interest 10s. per cent, on the 15th October, and made for themselves another £750,000. What the Commonwealth Bank did for the private banks it could have done directly for the primary producers and export agencies. In doing the business itself it could have relieved the situation, but it preferred, instead, to force the business into the hands of private corporations, and to finance them in the doing of it. It entered into these agreements. Six per cent, interest had previously been -charged, and one of the terms of the agreements was that notes were to be issued to the banks. The Treasurer had pointed out that the banks could issue a superstructure of credit upon the basis of the notes. He issued notes to the banks, and for them they paid 4 per cent.., if they drew them. They could, however, pile tip their credits upon the right to draw, and for that right . they paid nothing. The Government, through the Commonwealth Bank, gave national credit, national notes, and national stability to the private banking corporations at 4 per cent., but it did not advance national credit, national notes, and national stability to the primary producers, who had good security. The private banks re-loaned it at from 6 to 7 per cent, to the export agencies, and reaped enormous profits out of the security of the Commonwealth Government. After that the Government has the impudence to say that it represents the interests of the primary producers of this country. That is the first thing the ‘Government has done. It “ helped “ the primary producers of this country by aiding and abetting the banks in exploiting the producers on the products of the 1924-5 season. The producers had to pay £7,000,000 to the banks, as against £3,000,000 for the previous year. The Commonwealth Bank, which could be of national service, is being hamstrung and sabotaged. Its finances .are restricted, and it is the orgy financial institution in this country whose deposits are steadily diminishing. A financial institution in Newcastle which was doing £250,000 worth of business through the Commonwealth Bank, wanted an overdraft, but the bank refused to grant it, although current -money was passing through. The institution went over to the Bank of Australasia, which did what the Commonwealth Bank had refused to do. In Western Australia there is a similar state of affairs. There are certain institutions there that deal with the primary producers’ affairs. There is, ‘first of all, the farmers’ co-operative organisation, which deals with nine-tenths of the wheat grown. That is a voluntary pool. There are other organizations that handle onetenth of the products. Last year the private banks of Western Australia furnished ample facilities and necessary credit to those firms and’ export agencies that handled one-tenth of the produce,, but to the co-operative society that represents the organized power of ninetenths of the farmers, they refused to. give credit, although the products were being exported. The Commonwealth Bank had formerly done the business, and preliminary to the private banks refusing to give credit, the Commonwealth Bank had also refused assistance. It said, “ Our morney is tied up overseas. We have nothing available locally. We are sorry, but we cannot give you anything.” In order to get out of the difficulty, the society made arrangements with private importers. It said to them, “ You have to import goods, and have to send money oversea. We have money oversea which we wish to get here, and you have money here which you wish to get oversea. We will give you our oversea money for your local money.” Then the Commonwealth Bank ‘ came to the society’s aid, and said, “ All right; we will do your business.” Arrangements had previously been made with the Cooperative Wholesale Society of Great Britain to obtain credit. The Cooperative Wholesale Society paid the money into the Commonwealth Bank in London, and one would naturally assume that it would be transmitted through the Commonwealth Bank in Australia. Instead, the money was sent to each of the associated banks in Western Australia. The Commonwealth Bank said, in effect, to the farmers, “ We do not want your business, but if you are determined to do business with us, you must do it through the private banks. We oau only transmit money to you through the private banks, and, moreover, we will not put it in one bank, but in five banks, which is as many as there are in Western Australia. You must, therefore, go to five banks to draw your money.” In the issue of the Primary Producer, of Western Australia, published last Friday, the chairman of directors of the Co-operative Society draws public attention to the facts. He lays special emphasis upon the sabotage of the Commonwealth Government in acting on behalf of, and in the interests of, private financial institutions, and, secondly, he points out how the private banks refused to advance money to the society, although they were advancing it to rival organizations. Thus the Commonwealth Bank has become the instrument of the private capitalistic export agencies, and has linked itself with the private banks in an attempt to break the co-operative organization of “Western Australian farmers. Four million bushels of wheat were exported at a total cost of about ls. per bushel. Let us compare that with the bank charges for transmitting the money. Exchange on remittances, interest on advances, commission on London credits, and various other charges made by the’ banks, amounted to £60,000. To pay Australian wages on the wharf, and in many cases on the ship, to pay the cost of loading and transport for a distance of 12,000 miles, and of unloading in Liverpool or elsewhere, cost the society ls. a bushel, including a margin of profit for the transporters ; but the banks, for transmitting money from London to Australia, charged practically 3Jd. a bushel. The Commonwealth Bank, therefore, did not in any shape or form come to the assistance of the primary producers. Under the agency of the present Government, the bank is merely what the Go’vernment claims it to be - a bank for bankers. The bank to-day, under its present directors, could advance money and enlarge its functions, just as it could have done under its late manager. It could be made into a great instrument for aiding producers of all kinds. But do the directors of the bank do that? They do not. The bill states that the bank may advance money to other banks. The private banks apparently are to be the middlemen, who will advance the money to those who- handle the products of the primary producers. I do not wish to discuss the convenience or inconvenience of that arrangement, and I can understand that ample facilities are now in existence to meet the situation; but it may be laid down as a sound principle that if a primary producer wants assistance on broad acres for the development of his property, he ought to be able to go directly to the rural credits department of the Commonwealth Bank. If the security is good enough for private banking institutions to lend on, it should also be good enough for the rural credits department of the Commonwealth Bank. The Treasurer has said that even if producers cannot get an advance from the rural credits department of the bank they can get it from the bank in the ordinary way; but he knows very well that the bank will not lend. The producers are asked to go to a closed door. The door is always closed to them. It is not to be expected that they will continually make requests when they know that they will be met with refusals. I protest against being asked to accept the scheme of this bill, for it is fundamentally bad. The bill provides, in effect, that a farmer who owns farm implements and land, and who has expectation of a crop in due season, but who wants a loan to tide him over until he reaps the reward of his industry, must go to the private banks to get it, the private banks having previously got it from the rural credits department of the Commonwealth Bank. It is quite clear that no individual will be able to get an advance from this rural credits department. If he wants an advance of, say, £500, £600, or £700, by way of mortgage, he is compelled under this scheme to lodge his security with a private bank, and the private bank can take that security, which has been lodged by the borrower, to the rural credits department and obtain upon it what the actual owner cannot himself obtain from the department. That is the fundamental and iniquitous principle of this bill. It is outrageous, and cannot be justified in any way whatever. Mr. Alexander Monger also made these, remarks -
The banks were asked to deal with the pool in the same way as they do with their other clients, including foreign organizations, which, as each shipment is sent away, necessitates the banks granting a temporary loan until the documents giving title to the wheat can he presented in London, and the loan liquidated. The banks, however, would not accede to our request.
The proposal of the bill is most outrageous. I object altogether to the Government buttressing up middlemen and enabling them to traffic in the deeds, securities, and produce of the primary producers of this country. I move the following amendment: -
That all the words after the word “That” be left out, with a view to insert in lieu thereof the words “ the bill be referred back to the committee with instructions to include in the bill provisions enabling the primary producers to borrow directly from the rural credits department without going through private banks acting as middlemen between the producers and the department, and without the intermediaries of institutions trafficking in the products of primary producers.”
– As I read the honorable member’s amendment, it is not in accordance with our Standing Orders or practice. The standing order governing this matter states that no bill can be recommitted after the motion “ That the bill.be now read a third time “ has been made and put. The honorable member has missed his opportunity to move the amendment.
– I should have moved at the report stage ?
– Yes. It is too late after the. motion for the third reading of the bill has been made. I am obliged, therefore, to rule the amendment out of order.
– Mr. Speaker-
– Will this close the debate?
– For the information of honorable members, I may say that the Treasurer formally moved the motion for the third reading, but made no speech on it. According to former rulings, he is, . therefore, entitled at this stage to address the House, and his speech will not necessarily close the debate.
– I am very glad that the honorable member for Bourke (Mr. Anstey) has made the speech that we have just heard, for it gives me an opportunity to expose the fundamental fallacy of the whole of his arguments and also to “ scotch “ once and for all the slanders that have been continually uttered regarding the effect of the measure which we passed last year to amend the Commonwealth Bank Act. ‘A great deal of water has run under the bridge since the honorable member made his impassioned speech on this very subject last year, and there will be far less credence given to his statements to-night than was given to those which he made on that occasion since, in its actual operation, the amending bill that we passed last year has achieved to a very large extent our anticipations and prognostications that it would make the Commonwealth Bank more important, more influential, and more beneficial to the community at large. It is recognized, not only in Australia but all over the world, that, as the result of the action taken by the Government last year, the Commonwealth Bank is now the dominating factor in the financial world of Australia. No one who has had tho experience that I have had in tho last twelve months could fail to realize that that is so. A couple of illustrations that I shall submit presently will prove it. I should like, first of all, however, to deal with the opening assertion made by the honorable member for Bourke (Mr. Anstey) with regard to the powers of the bank under the original act. The honorable member said that the powers that we conferred on the bank by the amending measure passed last year were really included in the original Commonwealth Bank Act, and that there was no need for us to pass last year’s bill. . I’ need only say, in reply, that although the Labour party was in office for five years after - the original act was passed, it did nothing whatever to put into operation these powers, which the honorable member for Bourke contends were provided for in that act. The first governor of the bank, the late Sir Denison Miller, apparently possessed the complete confidence of the Labour party during that period, but, so far as I can learn, he made no effort whatever to give effect to these powers which we are told are latent in the principal act. During the last three or four months of his life I was in very close association with him, and he did not indicate to me in any manner whatever that he believed these powers were contained in the act as originally passed. On the contrary, he recognized that there was necessity for the action we took last year. I also call attention to the fact that the Hon. King O’Malley in 1917 attempted to have a bill passed to provide a rural credits scheme in connexion- with.’ the bani:. That disproves bite contention- of tbe honorable1 member for Bourke- that this measure is unnecessary. It must be’ well within the recollection of honorable’ members that Mr. KingO’Malley was primarily responsible for tire establishment of the bank. He wasresponsible for its creation and its being included in the fighting platform of the Labour party, and the action which he took in this House in 1917 demonstrated that he realized quite well that the original measure made no provision for a rural credits scheme. The honorable member for Bourke was also hi error in stating that the bank was engaged in a nefarious conspiracy with, the private banks to keep up the exchange rates. The facts ace that for a time the late- governor of the bank used the bank’s funds to a very great degree in London in order to- make profits. Many other banks- did the same- tiling. When, the turn came in the exchange rates, they were, all caught with . their money in London, and need for it here. The high exchange rates prevailing- here were not due to- any nefaiiious combine. Nobody wanted such a combine. Nobody wanted to cause high- rates of exchange. The Bank ofNew Zealand was- able, by careful foresight, to put itself in a better position than the banks of Australia when the. turn came. The Commonwealth Bank has not been in association with any banks for the purpose of keeping, up the exchange rates. That is proved conclusively by its action as soon, as the gold basis was restored. The Commonwealth Bank Board had urged for several months that the gold basis should be restored as soon, as possible. What happened at its restoration? Within a week from the time when gold could be handled freely, the exchange rate was reduced from £3 10s. or £4 per £100 to 15s.’ per £100. That indicates that the Commonwealth Bank management had no desire whatever to keep up the rates, and this change was due to our action in inserting in the act a proviso which enabled the Common - weallh Bank to use its funds in such a way as to obviate the necessity for shifting gold. As I have said, within a week the exchange rate was reduced to 15s., and within a month it was brought down to os. That was worth something like 2d. or 2½d. on, every bushel of wheat grown in Australia, and from½d. to ¾d. on every pound, of butterproduced. The exchange rate is now lower than it has been for many years: That is the direct result of the Commonwealth Bank being a really national bank of issue, discount, exchange, and reserve. Everybody knows that since it has- been such, it has operated much more- beneficially and widely than ever it did in the old’ days. It penetrates more than ever into the business of the country, and1 it is touching, industry to a very much greater extent.. The honorable member tot Bourke referred to- certain- advances made by the Commonwealth Bank to the other banks, and’ stated that huge profits were made, by the private banking companies in consequence of. these- advances.. I do not kmrw what profits the private banks made, but I do know that but fou aws action last year in. respect of the Commonwealth Bank, our wool sales would not have been held, and the producers would have lost £20,000,000, As things were, everybody knows that the early wool sales were very profitable; that we received more for part of our clip than we have ever previously received for- the whole- of it, and that we still have some of the wool in hand.. The operations of the bank in that respect have enhanced’ the prosperity of our producers. I come now to’ this other cock and bull story that is being, carried round! the, country to the effect that the private- banks have been making wonderful profits, by reason of the advances of Commonwealth notes made to them by the Commonwealth Bank. What was done in that connexion was that the Commonwealth Bank said to the other banks, “ We, as a bank, of issue,, discount, exchange, and. reserve, are willing to make available to you. £15,000,000 in notes on certain defined securities.” They were to be charged a certain: rate for- the accommodation!.. Because the banks knew that thereafter they would be able to carry on, not only their wool business, but their ordinary business also-, confidence was restored:, and the general business- of the country went oii. Had it been otherwise, there would have been distress and unemployment. These slanders have already had sufficient currency, andI am glad of the opportunity to nail them to the counter.
– Wewill repeat the statements.
– I know that; but my statement will .enable the Com.munity to appreciate the exact position. The honorable member for Bourke (Mr. Anstey) has frequently ‘expressed lus idea of the way in which the production of Australia should be financed. His idea for the proper financing of the .country, as his motion suggests, is that there should be a continuous issue of notes to the producers as they come along to the bank. That action would result in the currency being inflated, until we arrived at a position similar to that recently experienced by -Germany., or that of Prance at present. No one can charge the .Commonwealth Bank Board or the Government with having done anything to cause an inflation of the currency in Australia. Let us consider for a moment the terms upon which the advances of notes were made by the board. They were made against definite security, and had ito be returned by a certain definite date. That absolutely prevented the edifice of credit being built upon, as the honorable member for Bourke has suggested. It is true, as I said last year, that if we issue to the public notes representing £5,000,000, or even £100,000,000, and have no means of bringing them back, they will be used as a basis of credit to five times the amount. On the other hand, if the people to whom they are issued are informed that they must be returned by a definite date, they are unable to erect an edifice of credit upon them. Because these advances were seasonal, as are similar advances in Canada .and the United States of America, they did not bring about any inflation of the currency in Australia. Nor did they increase the cost of living - which, after all, is the real test - as would have beenthe case had the honorable member’s scheme been in operation. If the honorable member for Bourke ever gets the opportunity to put his ideas into practice, we must -expect destitution, unemployment, and conditions .similar to those existing lately in Germany.
I shall now deal with tie other question raised by the honorable member, namely, the effect of this bill upon the farmers in “Western Australia. In .this connexion also, I am glad to have the opportunity of placing the facts on record. lini November let last year, and again this year, shortly before he died, Mr.. Basil Murray, and this year Mr. Monger and Mr. Thompson, ‘ the latter only a fortnight ago, thanked me. and expressed their gratitude to .the Commonwealth Bank for enabling them to carry ion with their pool last year. What was the* position regarding that pool ? The Common wealth Government had told the States that it was prepared to stand behind a Commonwealthwide pool, with ,one chartering agency, one shipping agency, .and one shipping agreement. The then Labour ‘Government of Victoria refused to come in, and w.e were unable., therefore, to get an agreement. Those who were forming the pool in Western Australia then approached the Labour Government of that State with a request that something be done. That Government agreed to give a guarantee which would ‘enable -the project to go through., but wanted to impose contain conditions regarding the price at which their produce should be sold locally. Those conditions the organizers of the pool considered t© be intolerable, and therefore the guarantee was rejected. It was then decided to ascertain what financial arrangements could be made, and it was found that the Co-operative Wholesale Society of -Great Britain was willing, for the sake of co-operation, to make finance available. At that, time the wheat-buyers of Australia were paying up to £6 13s. per cent, for exchange. The authorities of the Commonwealth Bank said that there would be difficulty, nut after full discussion, and recognizing that these men were ready to help themselves, the Commonwealth Bank agreed to handle the transaction. This it did, charging reasonable rates. The result was that the responsible officers of the pool expressed their thanks to me for what was done. They have also stated publicly .-that the bill now “before the House is exactly the class of measure which will obviate the necessity of their having to go overseas for finance in the future. I have no hesitation in asking the House to pass this bill. It will prove a boon to the producers of Australia. It will stimulate the co-operative movement throughout the country, and give to the producers confidence and a greater pride in their own organization, <as well as a better knowledge of their marketing conditions. Ultimately it will link producer and consumer, which is one of the ways to reduce the cost of living. It will enable the consumer to obtain his requirements at a reasonable price, while giving a fair return to the producer.
Mr. GABB (Angas; [10.8].- I listened attentively to the speech of the Treasurer, and noted that he made no attempt to deal with the charge of the honorable member for Bourke, that the Commonwealth Bank has gradually withdrawn from business in Australia.
– That is not so. A short time ago I gave a list of the new branches which had been opened.
– In that case I ask the Treasurer to explain the following extract from the Adelaide Register of the 27th July last: -
The return of the Commonwealth Bank for South Australia was notable also for the shrinkage* in current- accounts and the increase of balances at fixed deposits. Ordinary advances of that bank were reduced from £436,892 in June, 1924, to £296,881 for the June quarter of this year.
If, in face of those figures, the Treasurer still contends that there is no undue influence behind the Commonwealth Bank, he must be a political babe- in the wood.
– The position is much the same in each of the States.
– I am dealing only with my own State, but I should be safe in inferring that what has taken place in that. State has occurred also in others. Some honorable members opposite may be inclined to say that the private banks also had a shrinkage. That is true, but in South Australia it was only about 3 per cent., whereas that of the Commonwealth Bank was 33 per cent. I cannot accept the statement that there is that much difference in the operations of and facilities offered by the two classes of banks. There is only one reason for this shrinkage, and that is that the Government has placed the Commonwealth Bank under the control of a board of directors on which are some of the wealthiest men in the country. No doubt some of them are shareholders in private banks. With such a board in control of it, it is only natural that instead of being a people’s bank as it was intended to be, entering into competition with private institutions, it is, in the Treasurer’s words, simply a banker’s bank. The South ‘Australian Register of the 1st June last, commenting on a speech de livered by Sir John Grice, chairman of the board of directors of the National Bank of Australasia, at the annual meeting of shareholders of the bank, said - Free admission was made by the chairman of the fact that when the Australian note issue was in the hands of the original small board there was a great difference of opinion between it and the associated banks with regard to an increase of currency. He confirmed the impression prevalent in financial circles that a better Understanding now exists between the trading banks and the notes board and between the trading- banks and the Commonwealth Bank.
– Is that not a desirable state of affairs?
– I do not claim that it is so. I hope to see the Commonwealth Bank a truly competitive bank without any of those honorable understandings so familiar in the wheat business. The Labour party did not establish the bank for that purpose, and when I find the chairman of a private bank pouring words of eulogy on the Commonwealth Bank I am not at all satisfied. It is not our idea, as one honorable member has suggested, that the Commonwealth Bank should immediately supplant private banking agencies; I. hope, however, that it will go on slowly but surely competing with private banks, and giving better facilities and extending more sympathetic consideration to a man when things are going against him, until it gradually supplants the other banking institutions of the country, and becomes what we all hope it will become, the great national bank of Australia. I do not wish to hurl a tirade of abuse at the private banks, but every one knows that they are run for the making of profits, and that if in the earning of dividends for shareholders they crush 1,000 or even 10,000 individuals it is no concern of the management of the banks. Our experience proves that.
– They cannot make profits if they crush all their customers
– I did not say that they do so. I am speaking of the banks as a whole, and of their policy of making dividends; and I say that the prospect that they may crush 10,000 people, the number I mentioned, will not deter them from grasping every opportunity to make big dividends for their shareholders. When the Treasurer was speaking I asked him three times by interjection why the Commonwealth Bank note issue department reduced the rate of in- tcrest on the £15,000,000 of notes made available to the private banks from 6 per cent. to 4 per cent. I ask him now why it was done after the conference last October ? What advantage did the Commonwealth Bank receive in return? The honorable gentleman may claim that the Government brought down the rate of exchange.
– I said that the Commonwealth Bank had helped to bring about a reduction.
– The Treasurer may claim that the Commonwealth Bank did so. The private banks forced the Commonwealth Bank to make the increased currency available, and what upset their plans was the fact that the British Government was moving for the restoration of the gold standard. Even if the Treasurer is correct in his claim that the restoration of the gold standard brought about a reduction in the rate of exchange, every one knows that with a gold standard the cost of exchange reverts to the actual cost cf transmitting gold. But I want to know what the Commonwealth Bank did to try to ease the position when the rate of exchange was up to over £4 per centum ? I ask the Treasurer that question, and I should like to get an answer.
– It is in order for the honorable member to ask; it is not in order for the Treasurer to reply.
– If that is so, it is the first time I have been so instructed. It may be, sir, that you take it that I am wrong in inciting interjections.
– I take it that way.
– I am asking these questions, not to throw mud at the private banks, but because these matters are close to my heart, and because the more I have tried to study them the more I have come to the conclusion that if we want to free the primary producers from exploitation, we must gradually take them out of the clutches of the biggest exploiting agency in Australia, and that is the associated banks. The Treasurer claims that the honorable member for Bourke (Mr. Anstey) advocated a, continuous inflation of currency until Australia would, perhaps, reach the stage Germany reached recently. But the Treasurer knows that the course Germany followed was taken for a particularpurpose. In any case, his statement is only akin to one which
I have read in Hansard as being made many years ago in this House - “It will not be long before we will be able to buy a bran-bag of Fisher’s flimsies for two bob.” The same kind of “tripe” is talked now. Isthat in order. Mr. Speaker ?
– At any rate the Treasurer’s statement is akin to that which was trotted out years ago. The Treasurer knows very well that he was not interpreting the honorable member for Bourke correctly when he said that the honorable member would issue these notes, and there would be no chance, of them coming back again - that they would not be issued on conditions requiring their return and cancellation at a given time. The Treasurer was imputing unworthy motives and wrong intentions to the honorable member for Bourke in order to avoid the specific charge made by the honorable member for Bourke. He is still burking it. He has utterly failed to answer the honorable member’s charge regarding the loss of business on the part of the Commonwealth Bank, which we think is brought about by some undue influence behind the scenes; and I hope that on some future occasion, when he deals with the bank he will address himself to that particular phase of the question.
.- I wish to reply to the honorable member who has just spoken. He asked the simple question : Why were the associated banks allowed an advance by way of Commonwealth notes at an interest charge of 4 per cent.? It was for the simple reason that they had no right to issue their own notes.
– They had no right to issue their own notes when they were charged 6 per cent.
– The associated banks were allowed to issue their own notes against their own assets prior to the introduction of Commonwealth notes at any time required by them to tide them over that particular period. Again, the honorable member asked why were the advances of the Commonwealth Bank reduced. The answer is that it was owing to the good seasons and the prosperity of the country. The clients of the Commonwealth Bank were able toreduce their indebtedness.The honorable member was condemning his own people of South Australia for being in a position to reduce their indebtedness to the Commonwealth Bank. I was surprised to hear what he said. What knowledge has heof banking?
– What knowledge has the honorable member of banking?
– I have had thirteen years’ experience of banking, and I am in a position from my experience to say that if banking business was conducted in the manner advocated by honorable members opposite, Australia would be very soon down and out.
– The honorable member was against the establishment of the Commonwealth Bank.
– I was not. I was against the issue of notes unless the issue was adequately backed by gold.
– What did the honorable member say about “ Fisher’s flimsies ?”
– I shall say no more about the flimsies. I know too much about them. I do not wish to alarm people. I wish to say that, so far as banking methods are concerned, Australia is second to no other part of the world. I sincerely trust that honorable members opposite who know little or nothing about banking, will refrain from commenting upon the financial situation. They have not sufficient knowledge to form an opinion about it. They should leave the expressions of opinion upon our financial situation to those who are on the job. If banking were carried on as proposed by honorable members opposite we would have to put up the shutters in less than three years. The Commonwealth Bank has no right to advance the people’s money except on good security. If it advanced our money without being sure of ite return, that would not be business.. We are taxed to supply the Commonwealth Bank with money, and we donot want to be taxed to meet liabilities recklessly incurred. If the Commonwealth Bank makes a loss, the burden will be upon the taxpayer. It is about time this discussion ceased. I shall not prolong it. I close by asking honorable members to let this measure go through. Let the financial institutions do their job, and let us- do ours.
– I wish to refer only to one charge made by the honorable member for Bourke (Mr. Anstey) which was not replied to by the Treasurer (Dr. Earle Page), perhaps because the honorable gentleman forgot it. The charge was that the bill does not permit the grower of the product to go straight to the rural credits department of the Commonwealth Bank for an advance upon the security he has to offer. He must borrow from a private bank or money-lender, and the money-lender can go to the rural credits department of the bank and obtain an advance on the same security. That is a serious charge against the bill, and the Treasurer did not answer it.
– I dealt with that objection fully in reply to the remarks of the Leader of the Opposition (Mr. Charlton).
– I wish only to say, further, that no credit can. be given to the Commonwealth Bank for restoring the gold currency. In my opinion, the credit is due to action taken by the people of South Africa in December last. SouthAfrica produces about £8,000,000 of gold every month. From £36,000,000 to £40,000,000 of gold was sent from that country to England, at a cost for special packing, insurance, and freight. But the people of South. Africa found that the bankers of the Homeland charged them £8 15s. per cent., on the credit sent to South Africa for the gold that was sent to England. The exportation of that large amount of gold made the value of the exports of South Africa far greater than the value ofits imports. When the exports of a country exceed in value its imports the exchange, as a rule,is made by the banks against that country. The gold producers in South Africa, as a result of the exchange charged against them, became so incensed that last December they sent £500,000 worth of gold to be minted into sovereigns in Pretoria. That was the beginning of the return to gold currency. When the financial authorities in England found that it was the intention of the South African people to mint their gold in Pretoria, they saw the necessity for restoring the gold currency.
– I wish to say something in connexion with the bouquets which the Treasurer (Dr. Earle Page) has thrown to himself on the strength of the passage of the last
Commonwealth Bank Bill. I propose to quote from the December issue of The Round Table, a very conservative journal published to conserve established interests. Dealing with the Commonwealth Bank Bill passed last year, and referring to the Treasurer, it says -
In his speech in the House of Representatives, when introducing the till, Dr. Page pointed out that the expectation in which the bank was founded had not been realized inasmuch as” When the bank began to function it became perfectly clear that a national bank had not been established.” He emphasized the need for a central bank as “the pivot of Australian banking - a bank of issue, deposit, discount, exchange, and reserve.”
A little later in the same article the statement is made -
The changes effected by the new act do not appear fundamentally to” alter the character of the bank, or to constitute it “ a national hank “ or the “ pivot of Australian banking “ any more than rt has ever been. It still remains a trading bank. It is not a central reserve bank. True, it mast publish the rates at which it will discount bills of exchange, but the volume of that class of business is not likely to be large for many years to come,
Question resolved in the affirmative.
Bill read a third time.
House adjourned at 10.30 p.m.
Cite as: Australia, House of Representatives, Debates, 26 August 1925, viewed 22 October 2017, <http://historichansard.net/hofreps/1925/19250826_reps_9_111/>.