17th Parliament · 3rd Session
Mr. Speaker (Hon. J. S.Rosevear) took the chair at 10.30 a.m., and read prayers.
Grovely Camp Inquiry: Report of Mr. Justice Reed; Private J. Wilson - New Guinea Campaign - Equipment
– I am anxious to learn the fate of Private J. Wilson, sentenced to five years’ imprisonment for a military offence, on whose behalf I first made representations several months ago. I understand that Mr. Justice Reed has completed his inquiry concerning the occurrences at Grovely camp, which formed the basis of the. sentence.Can the Minister for the Army advise the House of the decision which His Honour reached ?
Mr.FORDE. - by leave- On the 27th October, 1944, a deputation introduced by the honorable member for Martin (Mr. Daly) waited upon me in Sydney with regard to the cases of Private J. Wilson, Private J. Derrick and Sapper A. Chalmers.
At this deputation additional evidence was furnished to that which had previously been brought forward with regard to these cases, which caused mc to direct that a judicial inquiry should he made into the whole matter, and Mr. Justice Reed of South Australia was appointed to make this investigation. I am now in receipt of an interim report from Mr. Justice Reed, and the Commissioner’s findings are that there wasa mutiny in
Grovely detention barracks on the 7th October, 1943, and that the three men joined in it. The courts-martial were properly conducted, and each of the accused had a defending officer. In view of additional evidence tendered at the inquiry, which was not before the courts-martial, the commission is of the opinion that the three men were not the ringleaders and should not be sentenced as such, but a proper sentence would be two years’ hard labour, with certain reductions provided by the regulations. It is important to keep in mind that although these men were sentenced to five years’ imprisonment the sentences were subject to review at the end of two years, and they would have been released in October, 1945, subject to good behaviour in the meantime. The Commissioner recommends that the sentences be considered forthwith, with a view to remission. As a result of this recommendation I am arranging the immediate release of the three men. Mr. Justice Reed advises me that he will submit a further report on other matters in. the terms of reference, which include allegations regarding ill treatment of soldiers under sentence. Hestates, however, that it was already obvious that a number of the allegations made at a deputation which waited on me were ill founded and that I had been misinformed. I now lay on the table the following paper. -
Cases of Private J. Wilson, Private J. J. Derrickand Sapper A. L. Chalmers - Interim Report of Commissioner (Mr. Justice Reed) appointed under the National Security (Inquiries) Regulations.
– Has the Minister for the Army read the news item, published in the Canberra Times this morning, that wounded soldiers from battle areas take strong exception to recent public statements that Australian military forces are confined to mopping-up operations? One soldier is reported to have said, “ I’d like to organize a patrol of politicians who have been making these statements “.Will the Minister consider acting upon that suggestion, and organize a patrol of those members of the Opposition who have made these statements ?
– I have read the paragraph referred to, and I shall give immediate consideration to the honorable member’s suggestion.
– Has the Prime Minister read the statement in the Melbourne Herald by Dennis Warner, formerly of the Australian Imperial Force, that Australia lagged far behind the Americans in equipment necessary for waging war in the Pacific, and that the Australian’s personal equipment was about the worst in the world? In view of the grave nature of Mr. Warner’s statement, will the Prime Minister make a statement on the subject and, if necessary, take action to rectify the deficiencies?
– I have had a close consultation with the Chief of the General Staff concerning these allegations, and he has furnished me with a complete answer which makes it clear that the Australian Army is well equipped: for the duties which it has to perform. The criticism of their equipment is unfounded. There are many cases in which a pick and shovel are much more economical and effective than a bulldozer; there are others in which a bulldozer is more effective. There are places where bulldozers cannot be landed - for instance, where there is a 26-ft. surf. Having regard to all the circumstances I was perturbed by the allegations that had been made, perhaps by people who did not know the facts, and sponsored by those who might have examined them before giving them publicity. I asked the Chief of the General Staff to tell me just what was the position, and he gave me a full account of it. I cannot reveal where the troops are engaged, or just what they are doing, but I can say that their equipment is equal to that of any other first-class army.
– by leave - A decision has been taken by the Commonwealth Government, after consultation, with the Commander-in-Chief (Sir Thomas Blamey), that the operational position in relation to the Territory of Papua and certain parts of the Territory of New Guinea is such that steps may now be taken for the restoration of civil administration in the whole of the Territory of Papua and in that portion of the Territory of New Guinea that lies south of the Markham River. Full military control of this area, under the authority of National Security (Emergency Control) Regulations will, therefore, be terminated as soon as it is practicable to re-organize the civil administrative service. Other portions of the Territory of New Guinea that have been recovered from the Japanese will continue to be under the full administrative control of the military authorities until the operational position permits the transfer of control of those areas to civil administration.
When the Japanese invaded New Guinea in January, 1942, there were separate administrations for Papua and New Guinea, each with an Administrator, a separate judiciary and a separate Public Service. All persons employed by both administrations were suspended from office by National Security (External Territories) Regulations, and such functions of civil administration as were necessary to be performed have since been carried out by A.N.G.A.U. - The Australian New Guinea Administration Unit - which is a branch of the Australian Military Forces. The unit commenced operations in Papua, and progressively extended its activities to the Territory of New Guinea. For convenience, the two Territories have been regarded as one administrative area.
Although the Government does not propose, at this stage, to consider the matter of a combined public service for the two territories, it considers that it would not be desirable immediately to re-establish the two entirely separate services. It has, therefore, been decided to continue the suspension of the officers of the two services and to make temporary arrangements for the performance of functions of civil administration in the Territory of Papua and the portion of the Territory of New Guinea south of the Markham River, which will include Salamaua, Wau and the Bulolo River valley. These arrangements will provide for -
In view of the temporary nature of the arrangements outlined, action will not be taken to amend the Papua Act or the New Guinea Act, but all necessary legislative action will be taken under the National Security Act. Steps will now be taken to select an appointee for the office of provisional administrator, and to determine the details of the conditions under which officers will be employed in the provisional service.
Although the operational needs of the territories are now such as permit the restoration of civil administration, some time must elapse before normal conditions can be re-established, especially in r elation to the supply of stores and the provision of transport between Australia and the territories, and within the territories.
No indication can yet be given as to when the transfer of control from the military authorities will be effected, and it will be necessary for some time to maintain restrictions upon the entry of persons to the territories and upon activities generally. It is proposed that certain items of government policy affecting both Europeans and natives should be determined and announced before there is a general return of civilians to the territories. Furthermore, much reconstruction and re-building of public and. private utilities and living accommodation will be necessary, especially in the Territory of New Guinea, before any large number of civilians can be accommodated in the town areas. As far as possible, authority will be given for the return of persons to plantations; but such persons will, for the present, be subject to the control of the Australian New Guinea Production Control Board, under National Security (External Territories - Control of Industries) Regulations.
The number of vacancies that will need to be filled in the provisional administrative service will not be known until it if ascertained what officers of the public services of Papua and New Guinea are available, and desire appointment to the Provisional Service.
– Two days ago, the honorable member for Grey (Mr. Russell) addressed a question to the
Minister for Commerce and Agriculture, and the reply to it was tabled by the Minister yesterday. That reply is in the form of a speech. A portion of it reads -
I ask the indulgence of the House whileI trace the negotiations on government subsidy for wheat sold for stock-feed.
It then proceeds to engage in argument, and uses such phrases as these -
This is a clear indication that the honorable memberfor Indi is not speaking for the industry.
The honorable member for Indihas tried to capitalize my decision.
I ask you, Mr. Speaker, whether or not a Minister is in order in tabling a reply to a question which takes the form of an address and engages in argument? If not, what action do you propose to take?
– Last session, I referred to the growing practice whereby Ministers occupied valuable question time in the reading of lengthy replies to questions instead of adopting the normal process of tabling them for inclusion in Hansard. I pointed out that, if the matter were of general interest to honorable members, the leave of the House should be obtained to read the answer. I have a clear recollection of the Minister for Commerce and Agriculture tabling yesterday a reply to a question without seeking leave to read its terms. I am not aware of its nature, but I shall peruse it and refer to the matter again later.
Mr. CURTIN (Fremantle - Prime
Minister and Minister for Defence) [10.44]. - I move -
That the House, at its rising, adjourn to Wednesday next, at 3 p.m.
I shall take steps to realize the hope that the debate on the motion for the adoption of the Address-in-Reply will conclude next Thursday, so that there may be compliance with the law which makes it necessary to reach by next Friday a determination on the motion that appears on the notice-paper in the name of the honorable member for Maranoa (Mr. Adermann).
– Until the completion of the matters that have to be decided.
Question resolved in the affirmative.
Motion (by Mr. Curtin) agreed to -
That the following paper, laid on the table on the 7th March, be printed: -
War gratuity -Report of the committee of senators and members of the House of Representatives appointed to inquire into and report on methods of recognition of the services of the fighting forces.
Salaries and Allowances - Hours of Work -Superannuation
– Has the Prime Minister read the statement in to-day’s press that the Public Service Board has declared that the time has come to strengthen the staff of the Service? In view of the remarks attributed to the board, will the Prime Minister order an early review of salaries and conditions in the Public Service, especially as key public servants have been transferring to private enterprise, and officials representing Australia abroad, and sent there on important tasks, have found the allowances made to them totally inadequate to enable them to maintain their positions on anything like the scale of the nationals of overseas countries who fill similar posts?
– It is difficult for me to reply to a question asked without notice on such an important matter. I have been perturbed for a considerable time about it. In view of the pegging regulations with respect to wages, it would appear to me, as a matter of national consistency, to be contrary to the whole purpose and spirit of those regulations to deny increases of wages, and at the same time authorize substantial increases of salaries.
– That does not apply to the allowances of officers sent abroad.
– That is a separate matter. The allowances which govern service outside Australia have been constantly revised, but we cannot revise them on any general principle, because the justification for an increase of a particular allowance in one place would not apply in some other place. We treat each case on its merits, and changes are made very frequently. The salaries of those who serve Australia abroad are not, in many instances, comparable with those paid to their opposite numbers in the service of other governments. 1. have to confess that, and I also acknowledge that the salaries paid to the heads of departments, and to senior executive officers of the administration in this country, do not appear to mo to be comparable with those paid to men of like capacity employed in the private businesses of this country. I think that Australia owes a debt of acknowledgment of the patriotism of the Public Service generally, particularly those members of the Service with major responsibilities, for their devotion to the national interests, even at the sacrifice of considerable personal emoluments which they might earn if they retired from the Public .Service. The fact that the pegging regulations with regard to wages must be preserved in the interests of the nation compels me to view only with compassion the inequities in the salaries, for I think it would be impossible to maintain wage-pegging if the Government were to embark on a policy of substantial increases of what are called salaries. I ask the salaried services of the Commonwealth to accept a further test, which I think they will accept, of their devotion to the national interest over their own personal welfare; but, whether I continue as Prime Minister or not, when an opportunity comes for the Government’s attitude to the Public Service to be revised, I hope that this or a subsequent Ministry will make redress to the public servants for the sacrifices that they have made.
– Has the Vice-President of the Executive Council received a request from representatives of the Public Service that the hours of work which have been operating for some time under war conditions be revised? If it be found not practicable to do that, because of the shortage of man-power in certain departments, cannot the Government, despite wage-pegging considerations, pay overtime for work done beyond the normal working periods?
– Representations have been made to me on this matter. Only this morning I had a long talk with the Public Service Commissioner about it. The matter has been giving mesome concern in connexion with the valuable work which the rank and file of the Public Service have given to the Government over the years. They have shown a readiness to work extra hours, while at the same time technically observing the awards. I have arranged to meet a deputation of representatives of the Service next week, and we hope to be able to devise a formula to meet the situation.
– Has the Prime Minister read in the press this morning a statement that the Labour caucus met yesterday and decided to increase the old-age pension by 5s. 6d. a week? On behalf of the superannuated government servants, I ask the right honorable gentleman whether he will have the Superannuation Act examined with a view to making the Commonwealth contribution to the lower-rate superannuation payments at least equal to that made in respect of old-age pensioners, who are non-contributors ?
– I shall ask for information concerning the effect of such a change, and then the Government can determine whether it will ask the Parliament to provide the requisite funds.
– Has the Prime Minister read a statement in the press this morning that trade union policy had resulted in the victimization of a returned serviceman? This was alleged at a meeting of the Industrial Commission yesterday. The report stated -
Mr. Mclntyre (for Lysaghts Newcastle Works Proprietary Limited) said the exserviceman F. Mayo had been forced by union pressure to accept a job with the company at a rate 30s. a week lower than he received on enlistment.
Lysaghts Newcastle Works ProprietaryLimited is seeking a court order defining the grounds to be considered in granting promotions.
As this case has been adjourned till nextWednesday, will the right honorable- gentleman- take action te see that the Commonwealth is represented at the inquiry, in order to protect, the rights of ex-servicemen to get ‘back their, jobs at the same salaries as those paid to them when, they enlisted, and to, ensure that there shalL ‘be no- victimization.?
– I shall have the matter investigated. I do- not quite know what the’ law on the subject is, but, broadly stated, the Government -will’ take nil possible steps to ensure that there shall ibo no victimization of ex-service personnel and that’ their undoubted reinstatement rights- shall be preserved.
– “Will the Minister for the Army have a statement prepared for the House showing the position of civilians’ who* desire- to. return to the Northern Territory, especially in view of the fact that though people- may go- to Papua and! New Guinea, they cannot travel from Adelaide to Alice’ Springs without the consent at the Army authorities ?
– I shall be pleased to comply’ with- the honorable member’s request.
Red Cross Assistance - Japanese Attitude
– Oan the- Prime Minister say whether it is a fact that the Japanese have refused to- allow Red Cross assistance to prisoners of war? Is? it true that prisoners of war are suffering and some are dying because of shortage of food and ill treatment? Will the Prime Minister request the Russian Government through its Minister to Australia to use i’ts influence to. induce the Japanese Government to allow full Red Cross assistance to prisoners of war?
– The Government has long known, thai Red Cross stores for the relief of prisoners- of wai- in Japanese hands have been delayed’ by the enemy in reaching the destination for which they were intended. The Russian’ Government lias- co-operated fully,- and has given maximum’ help. At one- time, stores- at Vladivostok wore choked -with Red Cross, provisions for the relief) of- prisoners in the hands of the Japanese1. It was only by exerting: the: combined pressure of. ali the- Allied- countries^, and; the: active exercise o£ all. his functions by the Geneva representative-, that: stores were shifted from Vladivostok to Japan. to be subsequently reticulated to> the’ camps under Japanese^ control. We> ha-ve been concerned, as- every one must be, at the fact that prisoners of! war in Japanese hands have not been treated- - as: I fully believe they have not - fir. accordance with the International Convention. One does’ not wish to make comparisons in this connexion’, but the prisoner-of-war camps in Germany have, as a- general’ rule, been managed in accordance with the convention. In Japan-, no - and’ I want the world to realize that the Japanese are a different force from the Germans. The German may Be, and’ probably is*, a- great fighter ; the Japanese is a formidable” and ruthless enemy, whose characteristics are the antithesis of those of civilized’ people. I want this country and the world to know that a maximum effort to “bring- the war to an early conclusion is the best way to afford relief to those of our gallant men who are now held by the enemy.
-In view, of the adverse effect. upon the wool. industry, and particularly having regard to the acute man-power shortage,, will the. Minister, for Post-war Reconstruction undertake, to give further consideration to the regulations, limiting the output of doubleweft cloth,, in. order- to. ascertain whether the. saving of man-power effected in the manufacture of cloth is: not more than offset by the; increase, of. labour necessary in. the clothing industry to- meet the frequent renewals, resulting from the. use of less: durable? materials ?-.
– The regulations dealing with tha kinds of cloth which may be manufactured are under the control of the Minister for Supply and Shipping. I. have only to. say that there are no regulations- in existence, nor have, there ever been any, to prevent the manufacture of double-weft cloth I shall refer the honorable member’s question to the appropriate Minister.
– In recent weeks I have received inquiries from interested persons regarding the prospects in Australia for British ex-service men and other residents of the United Kingdom who are contemplating migration to Australia. Will the Prime Minister inform the House as to the attitude of the Government to the attraction of trained craftsmen to Australia after the war? What is its attitude to prospective migrants with families of three or four children, and to people with a little capital, and what prospects have men who desire to settle on the land in this country? Will the Prime Minister arrange for that information tobe made available at an early date, so that it may be sent to people, not only in this country,but also in Great Britain?
– I shall endeavour to have such information as it is possible to supply at this stage prepared for the honorable member and the House generally, and also make it available for publication.
– Has the Prime Minister seen in the Sydney Daily Telegraph an item to the effect that many members of the Royal Navy in Australia have said that they would be glad if arrangements could be made for their families to migrate to Australia. Whilst this is, no doubt, a distant prospect, will the Prime Minister see that the Department of the Interior investigates what might be an opportunity to obtain valuable migrants?
– I have not seen the report, but I can appreciate that it may be well founded. For as far ahead as I can see, there is no possibility of the requisite transport facilities being available to bring to Australia the families of men serving in the Royal Navy. That is the chief impediment to the formulation of a migration policy. Honorable members had better know that it will be extraordinarily difficult to maintain the present war effort of the United Nations, having regard to shipping difficulties. Therefore, the movements of civilians, and the reorientation of civilian life, in so far as they depend on the use of shipping, must await the termination of the war.
Debate resumed from the 8th March (vide page 511), on motion by Mr. Fraser -
That the following Address-in-Reply to His Royal Highness the Governor-General’s Speech be agreed to -
We, the House of Representatives of the Parliament of the Commonwealth of Australia, in Parliament assembled, desire to expressour loyalty to our Most Gracious Sovereign, to extend to Your Royal Highness a welcome to Australia, and to thank Your Royal Highness for the Speech which you have been pleased to address to Parliament.
– Many of the matters upon which I had intended to speak have already been discussed with great earnestness and a good deal of ability by honorable members on both sides of the House. I intend, therefore, to apply myself to certain other matters which have not yet been sufficiently emphasized. The Prime Minister (Mr. Curtin) greatly impressed the House by his lucid account of Australia’s war effort. It is true that the people are suffering great inconvenience and hardship because of conditions arising out of the war, and because of the regulations appertaining to the conduct of the war. I was pleased to hear the Prime Minister say that there was likely to be a re-allocation of man-power inJune next. The Governor-General’s Speech is a very fine document. It is well written, and it was, if I may presume to say so, well delivered. It outlines a splendid legislative programme, and when that legislation is enacted the country will,I am sure, be the better for it. I war particularly pleased to hear the GovernorGeneral announce the Government’s intention to relax war-time controls inso far as that was possible. Here is the reference in his Speech -
It is the Government’s policy to relax wartime controls over private business transactions as soon as the need for them is past. All controls are being kept under review to ensure that none is unnecessarily maintained.
As a matter of fact, the need for some of the restrictions has already passed. If a man wants to build a small house or a shed on his farm, or to make improvements to his house, he must go cap in hand to some civil servant, who hears his case and decides whether or not he shall be allowed to do the work. I suggest that permits should not be required for the erection of any building, or for alterationsto an existing building, if the work is not to cost more than £1,000. In many cases, the persons desiring to build already have the timber, iron and other material on their properties. In respect of labour they are, perhaps, at an advantage because most of these people are willing and able to erect these buildings with their own labour. Nevertheless, for the sake of symmetry and the maintenance of uniformity, permits are refused. The gentlemen who have the privilege of granting these permits believe that if they grant a permit to one person they must grant permits to all applicants. It would be wiser to allow applicants to rely upon their ownresources for the procurement of the necessary materials. On this point the argument, of course, is that in such circumstances the small man would not be in the race for materials, because the big man would get in first. But has it not always been the case that the big man can outdo the small man in every way in business? There is nothing new in that contention. However, the small man wants to exert himself and we should allow full play to his initiative. By approaching the problem in this way, and giving permits to small men to build, we should help substantially to overcome the present shortage of houses. We need entertain no fear that inferior structures would be erected, because this matter is completely under the control of local government bodies. In fact, I should like to have seen the issue of building permits entrusted to local government bodies, who have the advantage of being on the spot and of knowing all the circumstances.I have not the slightest doubt that those bodies would invariably co-operate with the Government.
The present system under which permits for building must be obtained leads me to say something about our way of life generally. Bureaucracy has placed the people in chains for the duration, and, unfortunately, the system is most harsh upon the workers and their families. Very often. Ministers are unwilling, or unable, to interfere with decisions made by public officials, presumably because such interference; whether it be justified or not, would upset our war economy and the Government’s general stabilization plans. The ordinary man finds it difficult to answer such weighty arguments. I am not criticizing the Government in this matter. We must face up to the position in which we find ourselves. We are at war, the victims of circumstances. Nevertheless, we shall he wise to analyse the conditions under which we now live in order to see how we can best remedy them when improvement in the war situation justifies such action. The gentlemen who make thesedecisions to-day have to decide matters which touch intimately the ordinary life of the average man and woman. So far as the average man is concerned, administration has passed from the hands of the Government, the elected representatives of the people, into the hands of public servants. Of course, that position exists not only in Australia, but also in Great Britain, from which we have copied the bulk of these regulations. We know that the war situation in Great Britain was most acute long before J apan became a belligerent. Thus, when our position became precarious we readily copied the regulations already operating in the Old Country. In the United States of America, Washington is the seat of strength of the public service, and the development of bureaucracy is equally marked in that country. How can we control this development and revert to normal conditions when an improvement in the war justifies such action? At present we seem to be tied up in such a way that nothing but victory will break our bonds. We in Australia are fortunate that under the. Constitution these restrictions will automatically cease six months after the termination of hostilities. In Great Britain, however, discussions are already taking place with respect to the prolongation of very many of these irksome regulations which are bearing so harshly on the people. The question of whether these restrictions will be continued in peace has already been raised. The gentlemen who now make these decisions which touch so intimately the life of the ordinary man and woman are not very well acquainted with public opinion, and, indeed,seem to care very little for it. They maketheir decisions toa pattern, and refuse to bow to public opinion. I thought that face-saving was theunique characteristic of the Japanese ; but ourPublic Service to-day indulges in that practice.I am not attacking our public servants. Our officials are highminded, and undoubtedly, are endeavouringto carry out their duties to the best of their ability. My point is that very often they are out of touch with public opinion. I have not now in mind the big employer, but the working man who finds the present restrictions very irksomeindeed. I urge the Government to ensure that at the earliest possible opportunity it will enable the people to revert totheir normal way of life. If these gentlemen who are actually governing the country to-day had tof ace the electors every three, years they would be prepared to bow to the storms of public disapproval which occurfrom time totime. Of course, no government, regardless of party politics, can do very much about the position at the moment. One’s party political views are quite beside the point. Thewar position makes it impossible for us to do verymuch in the matter until we have at least defeated Germany. I repeat that the reference in the Speech of His Royal Highness to this aspect of the lifeofour people gives me very great pleasure, and. I look forward hopefully to the time when many of the present restrictions will be removed.
Iwaspleased to hear the PrimeMinister (Mr. Curtin) state in this House recently that a re-allocation of manpower would probably be made in June. The Speechof His Royal Highness praises the workthat has been done by the farmersin our war effort. But we mustgive morethan mere praise to the rural producers.Iftheyare to continue inproductionwe must make available to themall the tools and equipment they require. Let me mention a few of the difficulties under which our farmers are carrying on today. They areseriously short of almost everything that they require forthe production of essential foodstuffs. It might be said that similar shortagesare toeing experiencedby the community as a whole;but we must realize thatthe production of foodis just as important as is the production of munitions.Perhaps as thewar progresses the production of food will become the more important,because it is notunlikely that we have been able to build up vast reserves of war materials,whereas the farmer must continueto produce. He must sow in season, and reap in season; and if he is to be able to produce all the food which we and our allies require, we must make available to him the necessary tools and equipment to enable him to keep production at its peak. The failure to make available to farmers adequate supplies of such essential materials as fencing wire, wire netting, galvanized iron, irrigation pumps and irrigation piping is causing serious difficulties for primaryproducers. Vegetables were grown on the understanding that wire netting would be provided,but it has not been supplied in adequate quantities, with the result that valuable crops have been lost. The rabbit pest in some parts of my electorate is reaching alarming proportions. Any one who knows anything about the land recognizes that the first thing a man must do when he starts producing is to control the rabbits. A great number of men have been released from theservices for primary production. However, it is useless to make their services available to farmers if we cannot give the farmers the equipment which they need, and help them to combat pests. In such circumstances it would be better not to releaseany men at all from the Army for this purpose. A great mistake has been made in this respect. We should have ensured that the production of essential commodities did not lag. To-day when a farmer wants wire netting,galvanized iron, fencing wire, barbed wire, electric motors orirrigation pipes and articles of that kind he has to put in his order and wait many months. Some farmers have waited more than twelvemonths before being supplied with such requirements. I hope that the Government will take heed of these matters, and will make adequateman-power and materials available for the production of essential materialsfor the primary producers.
Of course, the old question arises as to where we shall find the requisite man-power. The Prime Minister has emphasized the shortage of manpower. I suggest that the position can be relieved by transferring man-power from non-essential industries, whilst I have no doubt that a careful combing of essential industries could also produce worthwhile results. I urge the Government to take i mimed late and effective action in this direction.
The following passage in the GovernorGeneral’s Speech gives us great hope for the future: -
My Government’s economic policy after the war will be directed to ensuring that all available resources are employed in ways that contribute most effectively to raising standards of living, developing productive capacity and making adequate provision for defence. A statement will be presented to Parliament describing how it is proposed to maintain employment, production and expenditure in the transition from war to peace.
No greater contribution could be made to the development of our productive capacity than by a policy of water conservation. Water has always been the primary producers’ most precious possession, but there arc vast areas the productivity of which could be increased tenfold if our great rivers too dammed and the land irrigated. I do not deny that, under the present set-up, water conservation is .the direct responsibility of the States, but the Commonwealth cannot ignore its responsibility for the welfare, of Australia as a whole, and, with all the emphasis nt my command, I urge the Prime Minister to confer with the Premiers in order that the Commonwealth Government may co-operate with the States in the carrying out of the great schemes contemplated for the future development that is so imperative if we are to .fit ourselves to defend this land. I commend the Government for its establishment in June, 1943, of the National Works Council, at meetings of which the Prime Minister and the Premiers plan new works of urgent importance for the absorption of ex-servicemen and munitions workers. The greatest new work that that council could plan is the construction of dams to save our precious water from running to waste in the sea. However great the cost may be, the carrying out of that policy will pay enormous dividends. In the announcement ‘by the Premier of New South Wales that a great dam is planned for the Hunter River, I see the beginnings of a realization that water is the keystone of our development.
Bound up with the policy of water conservation is the subject of immigration, because, unless we develop the fertile parts of this country and increase our productivity tenfold, we shall not be able to attract migrants to settle on the land. The subject of immigration is the one important matter not, emphasized in the Governor-General’s Speech. We have a great fertile country with perhaps the best climate in the world, a climate in which white people thrive, but we have only 7,000,000 inhabitants, against the 900,000,000 living within 3,000 miles from the north of Australia, 90,000,000 of whom are our avowed enemies. No doubt we shall beat Japan to its knees, but it will take a long time, and we know that nations rise phoenixlike from the ashes of defeat. So we must look to our defences. We cannot continue to rely on Great Britain and the United States of America. We must at least treble our numbers in the interests of our safety. When we have finally achieved victory in this war, we shall not be able to afford to return to our former complacency, ‘because, until human nature changes, wars will recur. The only hope of avoidance of international conflict lies in raising the standards of peoples all over the world. They must be educated to understand their duty to each other. I am pessimistic as to that. Let us guard, therefore, against another shock such as that which we experienced when the Japanese threatened to overrun us; perhaps they would have overrun us had they adopted a different strategy. To protect ourselves from such shocks we must have more people. Authorities estimate that this country could support a population of at least 20,000,000. In the next ten years, wo ought to be able to get another three or four millions. We can do that in two ways: First, by natural increase, and, secondly, by immigration. I agree with those who say that people will not leave their native lands to come to Australia unless they are assured that they are coming to a better place. To induce migrants to Australia, we must be able to offer great attractions to people to uproot themselves and their families and settle here. Objection to the bringing of foreigners to Australia consists in the fear that they will settle in colonies and continue their own languages and customs. I am not concerned so much about that as E am with the necessity to populate this country. I think, too, that once they do settle here, if not they themselves, their children and their children’s children will be real Australians, in whose hands the country’s security may safely lie. I hope that, in the development of our immigration policy, we si all rid ourselves of the old fear that immigrants will rob us of our jobs. Our approach must be national, not individual. We must think of Australia first, for we cannot hope to continue as an independent nation unless we take steps to justify our independence. Two of those steps are the wedded policies of water conservation and immigration.
The right honorable member for North Sydney (Mr. Hughes) dealt thoroughly with the birth-rate; so I do not intend to traverse in detail the same ground
– So did some honorable members on our side.
– Yes; the subject has been debated by several honorable members. I was present when the right honorable member for North Sydney spoke and I think that he very adequately covered the subject. [Extension of time granted.]
The matters with which I have dealt to-day are of extreme importance to. this country. I am pleased that the Speech of His Royal Highness the Governor-General touched upon so many of our great problems. I look forward with interest to the remainder of this session of Parliament which I am sure will be one of the most vital in the history of the Commonwealth. We shall be called upon to discuss matters of deep concern o this nation, and I am sure that the debates will be characterized by earnestness and ability. I am confident that the reforms forecast by His Royal Highness will come to pass, and will make of this country a better nation.
– I join in welcoming Their Royal Highnesses the Duke and Duchess of Gloucester to this country, and 1 trust that their stay here will be a happy one. We all appreciate the honour that Australia enjoys in the presence of Their Royal Highnesses, and we realize thai this honour is possible only within the British Commonwealth of Nations. We share the hope expressed by His Royal Highness that this dreadful war will soon reach a successful termination both against Germany and against Japan. We have a full appreciation of the part thai has been played by Great Britain in this conflict, and we are not unmindful of the splendid work of Australian men and women, and of the citizens of our sister dominions and the colonies of the Empire. The achievements of the British armed forces on land, on sea, and in the air. and the heroic sacrifices of the fighting mcn of our great allies, Russia, and the United States of America, have made possible the present hopeful outlook. A troubled world, fighting for ite existence, and for the democratic way of life, hopes soon to shed the shackles of bureaucracy which it hmsassumed willingly to fight totalitarianism overseas; but the people of this country, through their representative* in Parliament, must bc on the alert to ensure that democracy and freedom, their faith in which they avowed in no uncertain voice at the recent referendum, shall not be lost because of the activities of those who utter threats for legislation of the kind that we find even in the Speech that we are discussing now. The impressive and vital parts played in this world conflict by the great allied leaders, Mr. Churchill, President Roosevelt, and Marshal Stalin will find their rightful place in history. The sufferings of the British people and their valour and determination became the pivot upon which all future operations and developments of munitions and equipment throughout the allied countries revolved. Their sacrifices and their grit set for the peoples of the Dominions and colonies a standard hitherto unthought of.
Wo are glad to welcome to our shores formidable units of the Royal Navy, and we must not allow statements alleging incompetence to deprive that great service of its position of world leadership, or its place of affection in our hearts and in the hearts of a suffering and grateful world. I read in yesterday’s press an article by the New York correspondent of the London Daily Mail concerning the British Navy, which I am sure does nol reflect the honest opinion of the United States of America. It alleged that the British Fleet would have only a minor role in the Pacific war, and that changed strategy would keep .units of the British Navy out of Japanese home waters. The correspondent claims that Admiral Sir Bruce Fraser’s announcement that the British Fleet in the Pacific is ready and waiting for action is regarded as a veiled protest against the revised strategy. STow .we read the statement of Charles McMurtry, an American Associated Press correspondent, who claims to have had. two or three years’ experience with the American Fleet, that joint action by the British and American fleets in the Pacific is impracticable because -
The British Fleet is intended for defensive action at considerably slower speeds than most American warships, which were built for offensive action.
Obviously, he was referring to speed in coming into the war. The correspondent said also -
The British Fleet is designed primarily for close-range defence of the British Isles and for engagements such as the Battle of Jutland. Admiral Nimitz’s fleet is capable of striking with 2,000 carrier planes, whereas the entire British Fleet could not .put a fraction of that number into the air. [ think that it is noteworthy that what has been accomplished by the British Navy in this war has been done without the assistance of 2,000 carrier planes. Mr. McMurtry further said that ‘ the British Fleet was too slow in itS, retirement from action, judged by American standards. Perhaps Mr. McMurtry does not remember Pearl Harbour. He should realize that sometimes it is other fleets that are slow. The Royal Navy is one of attack; it is a blue water navy of five oceans. Does he not recall the sinking of the Graf Spee by Achilles, Ajax and Exeter ? These light cruisers attacked and sank one of the most formidable units of the German Navy, despite the fact that they were operating further from their bases than any other fleet, has ever made an assault. Mr. McMurtry must have forgotten also the attack on the “hell ship” Altmark, off the coast of Norway. That action resulted in the freeing of British prisoners of war, and was carried out by means other than the employment of 2,000 carrier-based aircraft. Has he forgotten also the sinking of the German battleship Bismarck by units of the British Home Fleet. And what, of the battles of Matapau and Dakar and the fight against- submarines? Mr. McMurtry has not referred to the magnificent work of the British Navy in convoying war supplies to Russian Arctic ports, nor does he seem to remember, in his dangerous: propaganda, that the British Fl ee carried on the battle alone for some time; th’at it was severely mauled before any nation joined Great Britain in - the fight for democracy. The British Fleet fought single-handed, the fleets of Germany and Italy; it destroyed them and acquitted itself with honour. Our own Royal Australian Navy also has played an outstanding part in the war,, and on all occasions has fought with valour and honour to itself and to this country. The correspondent apparently forgets also the gallant last action of Jervis Bay, an armed merchant cruiser, which, unaided, engaged a German battle-cruiser, thus permitting ships of the convoy which it was guarding to escape. Jervis Bay was sunk with all hands, but its action was a brilliant one, which will go down in history. N”o carrier planes came to her assistance. Perhaps this aggravating gentleman of the American press might reflect, too, on the activities of units of our own small navy. Australian, warships were fighting in this war long before the American Fleet was prepared for battle. H.M.A.S. Canberra guarded many Indian Ocean convoys and sank the raiders Coburg and Ra,nb I. That gallant vessel was sunk in the Coral Sea Battle. H.M.A.S. Sydney served with the British Navy in the Mediterranean long before the United States Fleet entered the fight, and sank four German and Italian destroyers, a cruiser and raiders. Eventually, Sydney was sunk in the Indian Ocean, all lives being lost. H.M.A.S. Perth escorted the British aircraft carrier Illustrious to Malta, participated in the evacuation of Greece and Crete and assisted in the Syrian campaign. 1T.M.A.S. Hobart, served in t lie Indian Ocean and the Red Sea, and was the last ship to leave Berbera in the evacuation of British Somaliland. The destroyer flotilla leader Stuart saw action in the Mediterranean, participated in the evacuation of Greece and Crete, and was mentioned for distinguished service in the Cape Matapau and Libyan coast engagements. The destroyers Vampire, Vendetta, Waterhen and Voyager served with great distinction in the Mediterranean at a time when the British Fleet fought alone. If the British Fleet is not required in the northern Pacific waters to-day, it is because the world has been freed from the menace of the Italian an>l Gorman Navies. The small ships of thu Australian Navy served with distinction in the Mediterranean, participating in major actions at Greece, Crete, Syria, Libya and Tobruk. H.M.A.S. Parramatta was destroyed by bombers in the Mediterranean, as were other small Australian naval units at a time when things looked very black for Britain and the world. We are proud indeed that the British Fleet is with us to-day, and we all should play our part in extending a sincere welcome to British naval men. They have, like the merchantmen, upheld the traditions of Britain. Now that they have disposed of formidable enemy warships in European waters, we trust that they will be able to play their part in cleaning up the Pacific.
Our attention is now focussed on the San Franscisco conference, to which we are sending a large delegation. The decisions of that conference may profoundly affect Pacific relations for many years. They may be of great value to Australia, and the lives of our people in the future may depend upon the policy that will be formulated there. Nearly every month, international conferences are. held to discuss a variety of subjects, but one vital matter appears to have been overlooked. I refer to the necessity for an agreement among the nations to relieve the great burden imposed by war debts. I have always fought the dangers of inflation, and I have heard expounded many theories which, if given effect, would have endangered the financial stability of this country. But the nations should make an endeavour to share equitably in an arrangement to provide relief from the great war debts that had accumulated. This can be done with safety and wilh honour.
We must prepare for peace-time conditions, which appear to bc returning, and the first consideration must be given to the rehabilitation of ex-servicemen and servicewomen. At an early date, the Prime Minister should give to the House an opportunity to discuss what has been done, or perhaps what the Government proposes to do for their welfare. Other nations are already preparing for the re-establishment of exservicemen in industry. Their reemployment must be on a basis of absolute preference to returned soldiers, and others. In business and in industry, there is a place for them. Experts declare, that Australia will experience a great shortage of manpower for many years, and that prediction is easy to understand. Funds for developmental purposes have been locked up in this country, and after the war, they will be released. Although there will be no shortage of work, real preference in employment must be granted to ex-servicemen. Apart from industry, they will find opportunities on the land. The success of their efforts in rural pursuits will depend upon international treaties and agreements, the conditions under which they live, and the prices which Australians are prepared to pay for their products. I have always been opposed to the fixation of a maximum price without also fixing a mini mum price. The fallacy of the present method may be illustrated by an example. Last week, beans marketed in great quantities in Sydney sold for ls. a bushel. The necessity to fix a maximum price did not exist. What the producers require is the fixation of a minimum Brice. Incidentally, t hose cheap beans were purchased by Government controlled organizations for the dehydration plants. The return of 1s. a bushel to the growers did not cover marketing expenses. This instance reveals the utter uselessness of claiming that we are giving close attention to the development of our primary industries, because apparently, the Government is not prepared to safeguard the growers against loss. Although arbitration courts fix a minimum wage for workers in industry, we overlook the necessity to guarantee to primary producers a minimum return. Unfortunately, this shortsighted policy continues.
We must also ensure that the States shall make adequate provision, through Commonwealth instrumentalities, for the settlement of ex-servicemen on the land. I do not mean the kind of settlement as we knew it after the last war, when some of the worst possible country was made available for returned soldier settlers. To our ex-servicemen, we must give the best that the country has to offer. Excellent land is still available. In Queensland, for example, only7 per cent. of the land has been alienated or is in the process of alienation. Some of our richest heritage is still available to ex-service men and the conditions of settlement should make it possible for them to succeed. Whilst the States should bo responsible for making the land available, the Commonwealth itself, which finds the money, should ensure that the conditions of settlement are so generous that an industrious man cannot fail. That generosity must be extended to the market prices for their produce. We cannot tolerate a condition of affairs that will not return to primary producers a reasonable reward for their labour and difficulties. We must also assist them to develop their land by providing the latest agricultural machinery. Just as aircraft becomes obsolete in a very short time, so do agricultural implements quickly become out of date. If we manufacture farm machinery for primary production, we must ensure that the machines shall be of the most modern types. In addition, science must be summoned to the aid of primary producers in order to relieve them of many troubles that now beset them. Russia and the United States of America have probably made the greatest progress in applying science to agriculture, although the pioneer was Great Britain. For 56 years, Canada has followed Great Britain’s example, but Australia has not progressed. Although the Com mon wealth Government established the Council for Scientific and Industrial Research, the efforts of primary producers have been defeated by pests and plagues that science could have destroyed. I was gratified to hear His Royal Highness declares that the activities of the Council for Scientific and Industrial Research would bo reviewed. I believe that I was partly instrumental for that decision, because I directed the attention of the Government to the necessity for this alteration of policy by adjourning the Parliament for that very reason.
For ex-service men, the Government must provide generous gratuities for the purpose of compensating them for their long years of service and loss of opportunity, which, in some instances, has been grabbed by others who remained at home. I have in mind men formerly employed in rural industries, who left the farms and enlisted in the early stages of the war. Workers in secondary industries were restrained in our large cities from entering the services, because they were required for the production of armaments and munitions. If Australia desires to attract trade and commerce, it must increase its population. That may be achieved by safeguarding the welfare of primary producers, as other nations have done. Neglect to do so will cause Australia to become decadent or be lost to us.
We must be sincere in our determination to fulfill our obligations to exservice men. This is not always done. For example, soldiers suffering from tuberculosis arc obliged to enter an ordinary institution such as that at Rosemount. The sick, maimed and blind must be catered for more adequately in this country, because the opportunities here should be greater than they are elsewhere. Honorable members should recognize the wisdom of abolishing much of our party politics as we know them to-day, and should discard the belief that all the achievements of this country are due to the policy of one party. Let us adopt an Australian policy. We must encourage the development of private enterprise and thrift. The Premier of Queensland, Mr. Cooper, has gone abroad in an endeavour to encourage the establishment of new secondary industries in Queensland. Before his mission can succeed, we must alter our present policy. As soon as private enterprise succeeds with a venture, as the civil airline companies have done, the Commonwealth Government desires to nationalize them. That policy must be abandoned. Our great democracy must be administered to serve the interests of the whole of the people, instead of the interests of a selfish few. Those who operate secondary industries should be permitted to earmark a portion of their profits for future expansion. This war has shown that Australia must have a substantially greater population.
Water conservation schemes are of primary importance. We should be prepared to dam the rivers and store the waters to flood the parched lands for the purpose of ensuring continuity of production. The drought has caused disappointment and loss in New South Wales, Victoria and South Australia. Instead of formulating plans for water conservation, we are talking about constructing battleships for the next war. In fact, we are now building one, at a cost of over £4,000,000, and the ship will not be completed for six years. Some people advocate the standardization of railway gauges throughout Australia at an estimated cost of £120,000,000. Water conservation is more important than that project, because it will safeguard Australia against the ravages of drought in the future. Periodically, this Parliament is required to grant financial relief to drought-stricken farmers. Whilst the amount is only a pittance, the payment could be avoided by the provision of adequate water conservation schemes. By the damming of our rivers, by the conservation of their waters, we can create hydro-electric power. No country in the world claiming to be a great primary producing country is as backward in the application of hydro-electric power as is Australia. New South Wales is farther ahead respecting the employment of its water-power resources than any other States of the Commonwealth. Unfortunately, my own State has hardly touched the hydro-electric possibilities existing there in its natural water systems; yet the foundation of huge schemes is possible. Great power schemes could be inaugurated, for example, by damming the rapids of the Barambah Creek. Such projects would be of vast importance in the establishment and extension of both primary and secondary production and would provide power from Rockhampton to Brisbane. Further great possibilities for water and power are presented by the Mary, Burnett and Burrum rivers.
We are sorely troubled by the numerous restrictions that have been imposed upon our people. The Speech of His Royal Highness the Governor-General announces -
It is the Government’s policy to relax wartime controls over private business transactions as soon as the need for them is past. All controls are being kept under review to ensure that none is unnecessarily maintained.
But in contrast with that statement of policy we read, two paragraphs farther on in the Speech -
During the present session, my Government will propose certain legislation regarding hanking, designed to extend the functions and powers of the Commonwealth Bank, particularly in its Central Banking activities, and al60 to make provision for the regulation of the banking system generally along the lines which war-time experience has shown to be desirable in the national interest.
How can it be claimed that it is the policy of the Government to relax war-time controls over private business transactions when we know full well that the Government is not able to relax them? We know that there are interests outside the Government which are determined that it shall not relax but shall fasten an even stronger grip on the people’s financial institutions of the country. When the Government claims that its policy is to relax war-time controls as soon as possible, and that it is watching for the moment when it can repeal restrictive regulations, we can only express our amazement to find almost side by side with that intimation in the GovernorGeneral’s Speech a statement that the Government is about to get its claws into the banking system of Australia in order to grab the credits of the private banks and the people’s sayings. There are people who imagine that it is the banks which restrict credit in this country. No sensible member of the Government would dare to say that that is true.
– It is true.
– The whole credit system of the Commonwealth is handled by the Commonwealth Bank. That will and must continue.
– The honorable member is talking rubbish - arrant nonsense.
– Then I must have been quoting from the Minister’s book.
– Sheer rubbish !
– It has been alleged that the banks claim all the credit for the success of our war loans. Unfortunately, there are many people who think that is so. The fact is that the banks are not permitted to put their money into loans. They are not allowed to make loans available even to local government authorities. They are compelled to charge more for a private loan than they otherwise would, solely because of the actions of this Government. It is evidently intended by the Government, if it succeeds in passing its proposed banking legislation, to continue its existing policy respecting such loans whereby - under its regulations - it can seize banking balances over and above those made in 1939, and return to the banks only 15s. per cent.
– The nation is entitled to the profits of tho banks.
– Does the honorable member really claim that the nation is entitled to the private banks’ profits?
– That money, small as it is, belongs to the shareholders, and if the Government is entitled to the profits on the money held by the banks it is just as much entitled to the money itself. The programme placed before us in the Speech of the Governor-General is the forerunner of that complete policy which provides for the socialization of the farm, the home, and- the cheque book - the socialization of all industry. By taking from the banks all balances above those held in 1939, and returning to them only 15s. per cent., the banks are compelled’, when lending money to the people, to lend at a higher rate of interest in order to overcome the loss sustained through the grab that is permitted by regulation. It may be admitted that the people do not object to certain actions of a Government in time of war, but this Government wants to continue its actions in respect of bank profits when peace has returned. It proposes to give the banks not higher than 17s. 6d. per cent. In taking this money from the private institutions, the Government leaves so much less to be made available foi” industry. [Extension of time granted.”) Instead of relaxing control of private industry, the Government seems to be getting a greater grip of it. For instance, every timber mill in Australia is working at its top capacity, from Western Australia to the north of Queensland ; yet one cannot get timber supplies with which to build a home.
–Because the Government will not permit the release of timber supplies.
– That is nonsense.
– Let me tell the honorable member of the position existing in Queensland to-day with respect to an institution for tubercular soldiers. The Tubercular Sailors and Soldiers Association in Queensland has been thwarted in its desire to have constructed nurses’ quarters at the new tuberculosis institution, and the sole reason is that the contractor for the building of those quarters is unable to obtain the necessary materials. Timber supplies are said to be obtainable, but they have ‘ been taken somewhere else by somebody else for some other purposes whenever the contractor applies for his requirements. I know of a man and his wife and two daughters who are living in a single room of the home which they occupied while the owner was away. When the owner returned, he permitted those people to retain one room, but they were obliged to store their furniture under the house, where, subject to all weather, it was rapidly deteriorating. This unfortunate man - the husband and father - is a builder and is prepared to construct a home for his family, but ho cannot obtain supplies of timber. What is the mystery with respect to the distribution of timber supplies? The prior requirements of the American Army have no longer to be considered in this country. The construction of Army huts and various other types of buildings surely had not to be continued after those forces departed from our shores. Official control is urgently in need of revision and relaxation. The wisest policy that this Parliament could adopt would be one of progress and development. We have the raw material in abundance with which to make progress; but the Government apparently prefers to conspire in secret caucus to bring down .measures calculated to satisfy the socialistic desires of certain people outside. Ministers are subservient to their supporters and are prepared to carry out their orders even to the extent of taking determined action to seize the control of our banking institutions. The Government is obeying the behest of people who have gathered their ideas and formulated their ideals on the writings of foreigners which have been rejected by all democratic countries. We need capital. We need to encourage in this country the expansion of industries. Unless we can attract more capital and more industries here we cannot hope for an increase of our population, which for a long time has remained at 7,250,000. JJ ut the old world will want new spaces after the war; we must make available our own vast spaces or we shall be forced to do so. Millions of people in Europe will want to overflow into other countries, and there is no country that presents greater opportunities for them, than does our own land. To secure a marked increase of our population, as well as of capital, we must encourage newcomers and reward thrift. We must give up such ideas as seizing on the profits hitherto obtained by private enterprise from, the operation of interstate airways. We must refrain from undermining the confidence of our people in the banking institutions of this country. We must realize that those institutions belong to the people, to the shareholders who have put their money into them.
– What do the banks do when they go broke? They pay about 7s. or 8s. in the £1.
– Has the honorable member forgotten what Mr. Lang did with the New South Wales Savings Bank? If he wants to know exactly what Mr. Lang did he had better whisper in that gentleman’s ear.
– He has whispered in the honorable member’s ear to-day.
– There is no need to whisper in the ears of the people what Mr. Lang did with the people’s money, which had been deposited in complete confidence in the people’s bank.
– The honorable member knows that that bank was the most sound institution in the world.
– I quite agree; it was one of the most solvent institutions in this country; but Mr. Lang got his claws on the cash and used it up, and after that he had nothing with which to pay the civil servants. He took the people’s deposits from the bank, and the bank “ went broke “.
– What would happen to a bank if every depositor went for his money at the same time?
– That question was answered by the words and actions of the Governor of the Commonwealth Bank at the time; he said that every depositor would be paid.
– And the bank did pay everybody !
– Yes, after the Commonwealth Government arranged for the Commonwealth Bank to take it over, and had restored security to the institution. It was then that everybody was paid. As a matter of fact, the bank did not necessarily pay the original depositor; it did not pay the unfortunate widow who had had her money lodged there. She lost. Sue had to sell her pass book, and the buyer was able to cash in by buying it for 7s. 6d. in the £1. It was he who was paid. That is something about which some honorable members opposite ought to go down on their knees and ask forgiveness. If those who are behind the Government, in this matter of proposed banking legislation oan, through the Government, get their claws on the people’s capital-
– On the money of the capitalists.
– Yes, and of the people generally whether their capital is £20 or £500; if they can get their hands on the credits of those citizens who have placed their money in the savings banks for absolute security they will use those credits, and eventually the same trouble will arise in this land as in the days when Mr. Lang was in control of the New South Wales Savings Bank. During the last war the sound financial position of this country was assured only by the co-operation of the private banking institutions and the Commonwealth Bank. The war-time controls to which the people of this country have ‘been subjected have resulted in much hardship and loss, not only to individuals, but also to the nation as a whole. Many gallant sons of farmers offered their services when war broke out, and since then others have followed their example; still others have been called up for service. The result has been that the conduct of farming and pastoral operations has largely devolved upon their parents. Now, after nearly six years of war, some of these older men and women are showing signs, of the physical and mental strain that they have had to endure. Yet when representations are made to the Government for the release from the fighting forces of sons of farmers, many applications are rejected. Twelve months ago, I advocated that 200,000 men should be released from the fighting services in order to engage in primary and secondary production, but my request was not acceded to. Those men are still in Australia. In the Army to-day, there are large numbers of men who will never leave Australia. When the release of men to engage in primary production is sought, the reply generally is that the soldier is not eligible under the Government plan. Refusal to release men for work on farms hampers primary producers and seriously affects production. lt affects the production of wire netting, tyres, spare parts, machinery and conveniences for the aged and sick. The release of 200,000 men for primary production would have increased the quantities of food produced, thereby providing funds to meet some of the national debt, and at the same time we should have obtained a footing in markets which aru now being supplied by Canada and New Zealand.
– Is the honorable member serious in advocating the release of 200,000 men from the services?
– Their release is possible, and necessary for the nation, and the producers whose conditions I know. Before long the need to release them will be recognized.
When Australia was threatened with invasion, the Government seized motor vehicles of various kinds throughout the country, and placed severe restrictions on the sale of .petrol and tyres. Although the threat of invasion has passed, no improvement of the transport system hae been made: the Army authorities still hold most of those vehicles which they commandeered. To-day in our city streets more motor vehicles in charge of service personnel are to be seen than at any previous time. Those vehicles, and the tyres on. them as well as increased supplies of petrol, should be made available to primary producers and citizens generally who need them. I do not agree that the petrol or tyre supply position is as serious as the Government would have us believe. I claim that there is more petrol in Australia to-day , than at any previous time; throughout the country many stores are bulging with petrol, and every tank built for the storage of petrol is full. I say, too, that with the approach of the end of the war in Europe the rubber position cannot, be so serious as it is said to be. Where in the Asiatic war theatre can the many thousands of vehicles in the possession of the Army authorities be used? It would appear that there is a strong desire in some quarters to maintain the controls which were, imposed when the country was in grave danger. There is no justification for the restrictions on petrol and tyres that are still in force, because, as I have said, there will be no road systems in the Asiatic war zone on which motor vehicles can be used when the war in Europe is over, and I’ would not be a party to sending motor tyres from this country to Europe. The trouble is that those persons in the community who have got a grip on the nation do not wish to relinquish their hold. What is the further need to continue the rationing of tea? Many of the controls now being exercised are unnecessary; indeed, they represent a menace to the freedom of the people. [ Further extension of time granted.]
Before the war, large quantities of arsenic were produced in the Eastern States, but in recent years the output of arsenic has practically been restricted to mines at Wiluna, in Western Australia. I understand, however, that those deposits are likely to be exhausted in about another two and a half years. Arsenic is an essential commodity to those engaged in primary production, as it is used largely in the destruction of various pests which destroy vegetation, and for dipping sheep and cattle. The closing down of the mines at Stanthorpe and in the New England district has resulted in a shortage of arsenic. I hope that in the near future those mines will be re-opened, and that the Australian product will be ready to meet the competition of arsenic from Swedish mines which is likely to flood the world’s markets.
I conclude by again appealing for a fair deal for the man on the land. For too long those engaged in primary production have been denied a reasonable return for their labour. It is not sufficient to grant to them a subsidy to cover a part of their losses. The maximum price which prevails for most primary products leads to injustices. I do not say that there should not be some control of these things, but I contend that if there is to be a maximum price, there should be a minimum price also. Growers should be assured of a reasonable price for their products, but the practice is to pay as little as possible in a flush season. The result is that growers become disheartened, and many are ruined. We have not to seek further for an explanation of the decline of our rural population. Primary producers do not forget the old adage, “ Once bitten, twice shy “ ; one experience of producing at a loss makes them cautious, with tie result that in subsequent years they produce less’ and get higher prices for their products. In the marketing and sale of primary produce common sense and scientific methods must be applied. We must follow a sane policy in regard to both primary and secondary industries if this young country is to develop on sound lines.
Sitting suspended from12.45 to 2.15 p.m.
Debate (on motion by Mr. Smith) adjourned.
Motion (by Mr. Curtin) - by leave - agreed to -
That so much of the Standing Ordersbe suspended as would prevent, before the Address-in-Reply is adopted, the introduction and consideration of the Commonwealth Bank Bill 1945 and the Banking Bill 1945.
Motion (by Mr. Chifley) agreed to -
That leave be given to bring in a bill for an act relating to the Commonwealth Bank of Australia and the Commonwealth Savings Bank of Australia, and for other purposes.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
It can generally be agreed that banking policy plays an important part in the economic life of every country. At the present time, when we are facing a future that is full of problems involving momentous economic issues, any legislation affecting the banking system is, therefore, of vital national importance. A banking system always must be in process of evolution, continuously adapting itself to changing conditions. This adaptation, in the past, has taken place largely under the slow pressure of events. Since the depression of 1929-33 it has come to be recognized throughout the world that changes in the banking system should be the result of conscious decisions of policy.
The legislation that I am proposing to-day is based on the conviction that the Government must accept responsibility for the economic condition of the nation. The problems of the post-war period - of employment, development and trade, are of such magnitude, and involve such serious consequences, that no other attitude could be maintained. Accordingly, the Government has decided to assume the powers which are necessary over banking policy to assist it in maintaining national economic health and prosperity.
The Commonwealth Bank was established by the Fisher Government in 1911, and was placed under the sole control of a Governor, Sir Denison Miller. For the first twelve years, its chief activities were : assistance to governments and industry during the 1914-18 war; the establishment on a growing basis of the Commonwealth Savings Bank; and the development of general banking business.
In 1924, the bank was placed by the . Bruce-Page Government under the control of a board, consisting of two ex officio members and six other members who had been actively engaged in agriculture, commerce, finance or industry. At the same ‘time the board was given control of the note issue. For some years the board was not faced with any acute problems. But in 1929, when Australia was overtaken by the world depression, central banking responsibilities began to develop. The bank assumed control of gold in 1929, and two years later took over management of the exchange rate. During the four years 1929-33, the bank discounted treasurybills amounting to approximately £55,000,000 towards the finance of Commonwealth and State Governments and also provided £35,000,000 overseas.
Thus the necessities of the economic situation in Australia produced a central bank. But it did not fully measure up to its responsibilities. In the opinion of the Government, the Commonwealth Bank and the banking system should have done more to mitigate the distress of the depression years. A similar view was expressed by the Royal Commission on Monetary and Banking Systems in para graph 543 of its report of 1937, in these words -
Two of the most important monetary measures taken during the depression were the expansion of central bank credit by means of treasury-bills in 1931 and 1932, and the movement in the exchange rate in January, 1931.’ In each case, in our opinion, the depression would have been lightened, and some its worst effects avoided, if these measures had been taken earlier.
In 1931, in the depths of the depression, the Commonwealth Bank and the private banks refused to assist the rehabilitation plan of the Commonwealth and State Governments designed to relieve acute unemployment and to restore industry. The present Government is determined to ensure, so far as lies within its power, that this will not be repeated.
It is appropriate at this point to refer briefly to the report of the Royal Commission on the Monetary and Banking Systems of Australia. This commission was appointed in 1935, by the Lyons Government, at a time when the experiences of financial and economic depression had aroused great public interest in monetary and banking policy. Its 30 separate recommendations, some of which were majority decisions, must form the starting point for any review of the functions of the Commonwealth Bank. The commission reporting in 1937, recognized that the- Commonwealth Bank had developed into a central bank. But the commission believed that certain extensions of the powers and functions of the bank were required to enable it to carry out its responsibilities. The relations of the bank with the Government also were considered by the commission and various detailed recommendations were submitted, which will be referred to in their appropriate context. Following a consideration of the commission’s report by the Lyons Government, a bill to amend the Commonwealth Bank Act actually was brought clown to Parliament in 1938, but it was not taken beyond the second-reading speech of the Minister who introduced it.
In the absence of appropriate statutory powers, it was found necessary during the war to use national security powers to bring the banking system under greater control, in order to check any tendencies towards inflation and to aid the war effort. The banking controls, embodied in the war-time banking control regulations and the economic organization regulations, have worked satisfactorily, and I have not received any complaints, that they have operated harshly. In at least one respect they have effected a substantial benefit to the community through the reduction of interest rates. They have provided experience in the operation of banking controls, which will be of very considerable benefit, and a number of the principles On which they are based should be embodied in permanent legislation to meet the problems of the post-war period.
Immediately after the war Australia will be faced with unprecedented economic problems. Banking control, to safeguard the nation from the perils of inflation, will be urgently needed. The increase of retail prices by about 29 per cent, in two year® following the last war must not be forgotten. The Government is determined to grapple with this danger, and, in doing so, it will take full advantage of the experience that has been gained in operating war-time controls. In addition, certain special .problems’ will arise in the post-war period, particularly in. the sphere of housing and industrial finance. The Government is also convinced that active competition by the Commonwealth Bank with the trading banks and other financial institutions will ensure that these services shall be supplied1 to the people of Australia adequately and cheaply.
The necessity for changes in hanking legislation has been demonstrated by the report of the Royal Commission on Monetary and Banking Systems confirmed hy the experience of war, and established ‘beyond question by the requirements of the future. There appears, indeed, to be a general agreement that amending legislation is needed. After full consideration, the Government has decided to introduce legislation in the form of two separate bills, namely, a Commonwealth Bank Bill and a Banking Bill. I may explain that a completely new Commonwealth Bank Bill has been prepared so as to present a clearer picture of what is proposed than would be possible if an amending bill with a large number of amendments were presented. But the continuity of the Common wealth Bank as a legal entity will be preserved. The mia in purposes of this .bill are, in short, to strengthen the central banking functions of the Common wealth Bank; to’ ensure that the monetary and banking policy of the Commonwealth Bank shall be in harmony with the main decisions ‘ on matters of government policy and in the interests of the people of Australia; to ensure the development and expansion of its general hanking business by active competition with the trading banks; to return the control of the Commonwealth Bank to the governor, who -will be assisted by an advisory council; and to assist in developing small industries and in enabling the people to secure homes.
The principal function of the Soonmonwealth Bank must be to fulfil its responsibilities and duties as a central bank. The royal commission stated in paragraph 135 that the chief function of a central bank may ‘be said to be the regulation of the volume of credit, including currency. What this, involves was put more fully by the right honorable member for Cowper (Sir Earle Page) when, as Treasurer, he introduced amendments of the Commonwealth Bank Act twenty years ago. He then said -
The important functions of banking can properly be performed only with the guidance and control of a central bank. Decision and settled policy are essential. Divided counsel and clashing interests of individual bankers must in the end be fatal to good credit management, and banking can bc raised to its greatest .perfection only by the action of a central bank working always for the good of all.
Reduced to its simplest terms, one of the main responsibilities of a central bank is to control the issue of bank credit by all . the banks in such a manner as to avoid expansion of credit in times of boom, and contraction of credit in times of depression.
Whilst there is now a better understanding of central bank responsibilities, it is nevertheless essential to ensure, by appropriate legislative action, that the central banking functions and powers of the Commonwealth Bank shall be strengthened, so that thebroad lines of its monetary and financial policy will be in harmony with the economic policy of the Government and in the interests of the people of Australia. In order that the status of the Commonwealth Bank as a central bank may be put into proper perspective, suitable provisions have been made in Part II. of the bill, “Constitution of the Commonwealth Bank “, and Part III., “Central Banking”. The general functions of the bank are set out in the form of a charter. Clause 8 is particularly important, and reads as follows : -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and banking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1945 in such a manner as, in the opinion of the Bank, will best contribute to -
the stability of the currency of
It is necessary to provide for possible differences of opinion between the bank and the Government on matters of policy. The royal commission contemplated such differences of opinion arising, and the majority view of the procedure that should be followed in those circumstances was set out in paragraph 530 of the report, which states -
In our view, the proper relations between the two authorities are these: The Federal Parliament is ultimately responsible for monetary policy, and the Government of the day is the executive of the Parliament. The Commonwealth Bankhas certain powers delegated to it by statute, and the Board’s duty to the community is to exercise those powers to the best of its ability. Where there is a conflict between the Government’s view of what is best in the national interest, and the Board’s view, the first essential is full and frank discussion between the two authorities, with a view to exploring the whole problem.In most cases this should ensure agreement on a policy to be carried out by the Bank which it can reconcile with its duty to the community, and which has the approval of the Government. In cases in which it is dear beyond doubt that the differences are irreconcilable, the Government should give the Bank an assurance that it accepts full responsibility for the proposed policy, and is in a position to take, and will take, any action necessary to implement it. It is then the duty of the Bank to accept this assurance and to carry out the policy of the Government. This does not imply that there should at any time be interference by the Government or by any member of the Government, in the administration of the Commonwealth Bank. Once the question of authority is decided there shouldbe little difficulty in preserving close and cordial relations between the Commonwealth Government and the Commonwealth Bank.
– Could there be cordial relations with a tiger?
– I have tried that form of co-operation for the last three years.
Clause 9 of the bill gives practical effect to that recommendation of the royal commission. This procedure is to be invoked only in matters of policy affecting the interests of Australia and there can be no interference in the relationship of the bank with its customers, or in matters of day-to-day administration.
The Government has also given consideration to the measures which will be necessary to develop the central banking functions of the Commonwealth Bank. The present act contains no reference to the Commonwealth Bank as a central bank. Part III. of the bill now prescribes a number of general powers, including control over the note issue. These powers, together with those proposed in the Banking Bill, will enable the Commonwealth Bank to fulfil its functions as a central bank.
It is not to be expected that the powers which a central bank in Australia will require in order to discharge its duties effectively will be the same as those which have been in operation in more highly developed countries. The Royal Commission on Monetary and Banking Systems reported as follows: -
It may be said that, for Australia, any power which enables the Commonwealth Bank to exercise control over the volume of credit is a central bank power, irrespective of whether the power in question has been used by any other central bank, or is appropriate to any other central banking system. It is not to be expected that the regulation of the volume of credit in Australia could be achieved by a central bank which merely copied the methods appropriate to a different and much more highly specialized monetary and banking system. (Para.139.)
The main powers required by a central bank are those which enable it to control the policy and activities of the banking system of which it is the head. These powers will be of the utmost importance in the post-war period for the proper disposition of the available credit resources, and they have been fully provided for in this bill and the Banking Bill.
It has been held that a central bank should not compete with the members of the banking system which it supervises. This view has had considerable influence on the administration of the Commonwealth Bank for many years, and has largely been responsible for the lack of development of its general banking business. It. is the Government’s view that a government bank should participate in active competition with the private banks, and that this function can be most suitably performed by a separate division of the Commonwealth Bank. It is therefore proposed that its general banking activities shall be expanded. Provision has accordingly been made in the bill that-
It is provided that the deposits of the trading banks with the Commonwealth Bank shall not be kept with the General Banking Division, and consequently this will remove any grounds for complaint that competitive activities may be conducted with funds depositedby the trading banks.
Consideration has also been given to the question of the Note Issue Reserve. The presentact provides for a reserve of 25 per cent. to be kept in the form of gold or English sterling. The present note issue is about £190,000,000, and practically the whole of the reserve is kept in English sterling. One of the weaknesses of the present arrangement is that if the reserve is required in an emergency to meet overseas obligations, it would be necessary to obtain an amendment of the law. The royal commission referred to this, and mentioned the tendency under such provisions, to hold a reserve in excess of the legal minimum. The essential characteristic of a reserve, now that notes are no longer redeemable in gold, is that it should be available for use as required to meet external commitments. A perusal of the commission’s report, paragraph 579, quoted in the explanatory notes on the bill, shows that the commission realized the importance of this point. It is the Government’s view that the Australian reserves of sterling and foreign currency ought not to be immobilized by a legal relationship with the note issue, of a type which may, in the words of the commission, become “embarrassing”, and which can be dispensed with now without harmful consequences.
The royal commission also considered the purpose of the reserve requirements as a method of limiting the volume of notes, but concluded that the present reserve limitation was of little use. The commission, therefore, recommended: -
The statutory provisions which require the Commonwealth Bank to hold gold or sterling in proportion to the amount of Australian notes on issue shouldbe repealed.
The note issue should he limited by law to a fixed maximum (for example, £60,000,000 ) subject to the right of the bank to exceed the maximum by a stated amount (for example, £10,000,000) with the consent of the Treasurer. (Para.580.)
It is apparent that the expansion of the note issue during the war up to about £190,000,000, which may be followed by a large contraction, makes it inappropriate at the present stage to institute arrangements of the type contemplated in the second paragraph of the recommendation. It must also be appreciated that in modern banking policy more emphasis needs to be placed on the control over that part of the credit base which consists of deposits with the central bank, rather than over the note issue, which is only a reflection of credit policy. With these considerations in mind, the ‘Government feels that the reserve requirements should be abolished. Provision is made accordingly.
I have referred briefly to the management of the Commonwealth Bank, and stated that in 1924 there was a change from single control under a governor to a board which consisted of six members, who had been “ actively engaged in agriculture, commerce, finance or industry “, and two ex officio members, namely, the Secretary to the Treasury and the governor of the bank.
The selection of persons who have the qualifications and experience to manage a central bank, but at the same time no other business interests in the community, is obviously a difficult if not an impossible task. Most persons with suitable qualifications have other interests which might at times conflict with their duties as members of the board. It may be that these interests can be completely submerged when affairs of State are under consideration. Nevertheless, the Government feels that an institution of this character should be under management which is entirely divorced from private interests.
After careful consideration, the Government has decided to revert to the original conception of control by a governor. There will, however, be an advisory council consisting of the Secretary to the Treasury, the deputy governor, an additional representative of the Treasury, who shall be an officer of the Commonwealth Public Service and shall be appointed by the GovernorGeneral, and two officers of the bank, who shall be appointed by the Treasurer on the recommendation of the governor. The Advisory Council will advise the governor with respect to the monetary and banking policy of the bank and such other matters as are referred by the governor. The Advisory Council will not deal with ordinary matters of administration.
The question of adapting modern banking to give assistance to industries, particularly small industries, outside the ambit of ordinary banking practice, has received consideration in other parts of the world, notably in Great Britain and Canada, and special provisions have been made in these countries to meet the expected needs of secondary industry in the post-war period. Some similar provision is required in Australia. The Royal Commission on Monetary and Banking Systems pointed out that in general the Australian banks avoided long-term investments in industry in order to maintain the liquidity of their assets. The commission expressed the view that there was a lack of facilities for providing long-term capital for small-scale industry. It is therefore proposed to expand the Commonwealth Bank by the creation of an Industrial Finance Department in order to bridge the gap in the existing facilities. In a recent report the present Commonwealth Bank Board commented on this particular need.
It is not intended that the Industrial Finance Department will assist an industrial undertaking without proper investigation. It will be necessary for the undertaking to have reasonable prospects of continuing to be, or of becoming, a profitable undertaking before it will be assisted. The Commonwealth Bank, through the Industrial Finance Department, is therefore empowered to lend money to establish and develop such undertakings. It may also extend assistance to an undertaking by direct investment in the shares and securities of that undertaking.
The new department will require specialized knowledge apart from ordinary banking. The general manager who will administer the department, subject to the governor of the bank, is therefore to be appointed by the Governor-General. Given appropriate management, there is every reason to hope that the Industrial Finance Department will render valuable service in the future development of Australian secondary industry.
In the interests of the Australian people, the Commonwealth Bank must assist in the development of post-war housing programmes. Provision has therefore been made for. loans on the Credit Foncier system from the General Bank Division to individuals and to prescribed building societies for the erection and purchase of homes or the discharge of mortgages on homes. In view of the number of demands that is likely to be made, priority will be given to borrowers who wish to build their own homes. Subject to a limit of £1,250, loans will be made to individuals up to 85 per cent, of the value of the security. The loans will be repayable by instalments over a period of not less than five years or more than 35 years, and rates of interest will be as low as practicable.
It is not intended that assistance for housing loans through the Commonwealth Bank should overlap the valuable activities of State housing authorities. They have performed, and will no doubt continue to perform, an excellent service to the community in erecting new homes. Nor is this provision intended to conflict with the agreement which has already been reached with State governments, under which the States are to play their part to overtake the shortage of housing. The closest co-ordination of activities is necessary to ensure that the public will get the maximum benefit from all the authorities concerned.
Up to the present the recruitment, promotion and dismissal of the staff of the Commonwealth Bank has been at the discretion of the board. After reviewing the position the Government considers that equality of opportunity should be provided for entry to the bank’s service, and also that the position of officers already in the bank’s service should be protected with respect to promotion, dismissal and disciplinary action. It is proposed that candidates for appointment to the bank’s staff should be required to pass a prescribed entrance examination in open competition, and that appointments should then be made in order of merit. This is the practice in the Commonwealth Public Service, and also in the British Civil Service. There will, of course, be need for some flexibility so that exemptions can be granted in special cases. This can lie explained at the committee stage.
It is also proposed that officers should have a right of appeal against promotions made by the bank. As in the Commonwealth Public Service the grounds of appeal will be cither superior efficiency or equal efficiency combined with seniority. Appeals against promotions will be decided by a Promotions Appeal Board, consisting of an independent chairman appointed by the Governor-General, an officer of the bank appointed by the governor, and another elected by officers in the service of the bank. The establishment of a right of appeal will, of course, necessitate the classification of all positions in the bank and the determination of relative seniority of officers. Accordingly it is proposed to provide that all positions in the bank will be classified as soon as practicable after the commencement of the act, and that the classification of each position, the name of the officer Occupying the position and the salary of the officer will be notified in the Gazette. Thereafter similar details will be published annually.
It is also proposed to establish an Appeal Board to decide appeals against any decision of the bank which involves punishment, dismissal or reduction of status. The members of the disciplinary Appeal Board will be a chairman with experience as a stipendiary magistrate, appointed by the Governor-General, an officer of the bank appointed by the governor, and another elected by officers in the service of the bank. The decision of the appeal board on matters which come within its jurisdiction will be final. This board will take the place of the Appeal Board, provided in the existing act, to which any officer of the bank could appeal with respect to any decision, other than a decision of the board, affecting bis employment.
The Commonwealth Savings Bank has recorded the most satisfactory development of the various activities of the bank, and to-day deposits exceed £300,000,000. The Commonwealth Savings Bank is a separate incorporation, and the separation is retained in the new bill. It is proposed, however, to repeal the provision in the present act for management by a commission. That provision was never put into operation, and it is unnecessary. It is proposed that the Commonwealth Savings Bank will be under the control of the governor of the bank.
Advantage has been taken of the opportunity to make in this bill a number of machinery and other minor amendments and alterations to the present act.
I refer honorable members to the memorandum which will be circulated, explaining in greater detail the provisions of the bill.
The close of the war will undoubtedly bring with it increasing responsibilities and functions for the Commonwealth Government, and a strong central bank will become an even more essential part of the equipment of government than it has been in the past. The Commonwealth Bank was founded by legislation passed by the Labour party over 30 years ago, and the party can point with pride to its success as a great Australian institution.
– But it has been kept free from political control.
– I do not think that anything can be more disconcerting to honorable members opposite than the history of the opposition to the establishment of the bank, which has now grown to such a magnificent institution. They must have very great feelings of shame when they read the remarks of some of their predecessors who opposed the establishment of the bank. It has grown steadily, and built up a solid foundation for future development. But at certain stages the bank has been unduly conservative in its policy, and at the present time there are some gaps in the powers which will need to be filled before the post-war period. These deficiencies will be removed by the bill which is now before the House and the companion bill for a banking act. Under the provisions of these bills, the Commonwealth Bank will grow to full stature. It will be shaped to meet distinctively Australian requirements and, on the lines now proposed, it will undoubtedly develop as one of the principal agents of national stability and progress.
Debate (on motion by Mr. Menzies) adjourned.
Motion (by Mr. Chifley) agreed to -
That leave be given to tiring in a bill for an act to regulate banking, to make provision for the protection of the currency and of the public credit of the Commonwealth, and for other purposes.
Bill presented,, and read a first time.
– by leave - I move -
That the bill be now read a second time.
The purpose of. this bill is to regulate banking and to make provision for the protection of the currency and the public credit of the Commonwealth. The regulation of the banking system is an essential accompaniment to the revision of Commonwealth Bank powers. The conviction has prevailed for many years that some supervision of the activities of the trading banks is necessary, and the appropriate measures have been frequently canvassed. In fact, the reform of the trading bank system was one of the main themes of the report of the Royal Commission on Monetary and Banking Systems, and the principal subject of its various recommendations. These recommendations cover some very important aspects of banking control. They embrace a statutory provision for the banks to carry on business under licence from the Treasurer of the Commonwealth ; the requirement of minimum deposits from the trading banks : guidance to the trading banks on advance policy ; a revised exchange mobilization agreement to provide access to London funds; and a recommendation that the Commonwealth Bank should take control of the affairs of any bank unable to meet its immediate obligations. Other recommendations relate to accounts and balance sheets, and the investigation of the affairs of any bank by the Auditor-General, at the direction of the Treasurer. The war intervened before any of these recommendations were acted upon, and some re-consideration of the report of the commission has become necessary in consequence of the changes that have occurred in the banking system during the war. Various National Security Regulations promulgated by this Government were designed to prevent the onset of inflation, and to ensure that the activities of the private banks should coincide with the requirements of the war effort. Some of the important features of the regulations were the provision for control over credit resources by means of special deposits with the Commonwealth Bank; control over the investments and the advance policy of the banks; control of interest rates; and provision for investigations of the trading banks by the AuditorGeneral. In addition, arrangements were made to control the purchase and sale of foreign exchange, and to acquire holdings of foreign exchange. These controls have operated satisfactorily. The relative regulations will in course of time cease to operate, but many of the problems which they were designed to solve will continue into the post-war period. The Government believes that these problems can be overcome very largely along the lines recommended by the royal commission. But additional measures will be required to meet theabnormal conditions of the postwar years, and to obtain the benefit of the experience gained in administering the war-time controls.
After taking these considerations into account, the Government has framed a bill designed to secure the following objects : -
The general lines of the royal commission’s recommendations have been followed in drafting the provisions concerning the authority to carry on banking business. The main provision is that, after six months from the date on which the act becomes operative, the general business of banking shall not be carried on without authority from the Governor-General. A schedule of institutions at present carrying on general banking business is attached to the bill, and it is provided than an authority shall be issued to those bodies on application.
One of the recommendations of the commission was that -
In the public interest, the Commonwealth Bank should take control of the affairs of any bank which is unable to meet its immediate obligations, and should be given any additional powers which it may require for this purpose. (Paragraph 617.)
In the bill the duty is now specifically laid on the Commonwealth Bank to exercise its powers and functions for the protection of the depositors of the banks. Where a bank considers that it is likely to become unable to meet its obligations or is about to suspend payment, it is required forthwith to inform the Commonwealth Bank. The Commonwealth Bank may then conduct an investigation of the affairs of the bank concerned and assume control of and carry on its business, and it must remain in control of the bank, and carry on its business until such time as the deposits of the hank have been repaid or suitable provision has been made for their repayment. Similar provisions will apply if, in the opinion of the Commonwealth Bank, a bank is likely to become unable to meet its obligations or is about to suspend payment.
Each bank is also required, except with the authority of the Commonwealth Bank, to hold tangible assets in Australia of a value not less than the total amount of its deposit liabilities in Australia, and those assets are to be available to meet deposit liabilities in priority to all other liabilities of the bank. In view of the Commonwealth Bank’s responsibilities in this connexion, the governor of the Commonwealth Bank is empowered to require any bank to supply information relating to the financial stability of that bank.
These provisions embody an important protection to depositors with banks operating in Australia. In that connexion, I may mention that for some months considerable propaganda has been distributed to a large section of the public, particularly trading bank depositors, informing them that their interests would suffer under the proposed legislation. These statements have been made by persons who could not possibly have known the nature or content of the Government’s proposals, and were apparently intended to create general uneasiness in the minds of bank customers and the public. I particularly want to reassure the depositors of all banks, and to dispel any uneasiness that may have been created by what I believe has been unfair propaganda. The Government’s desire in framing these measures has been both to serve the best interests of Australia generally, and to protect the depositors of the banks. I believe that these objects will be achieved, and I am convinced that the provisions of this bill will contribute to the general economic interests of the country.
The Commonwealth Government, in order to obtain man-power and materials required for the effective prosecution of the war. had to obtain finance, in addition to the revenue derived from greatly increased rates of taxation, by borrowing from the public and the Commonwealth Bank. The result has been a considerable increase of the amount of purchasing power in the hands of the public, comprising notes, savings banks deposits, and deposits with the trading banks. The increase of the deposit liabilities of the trading banks was balanced roughly by an increase of the deposits they lodged with the Commonwealth Bank. The base of liquid reserves, on which trading banks normally build a superstructure of secondary credit, was therefore enlarged.. To prevent secondary inflation, it was necessary to immobilize some part of the banks’ deposits with the Commonwealth Bank in special accounts, from which the banks were not allowed to withdraw any amounts, except with the consent of the Commonwealth Bank. In the aggregate these special deposits at present amount to about £230,000,000.
If, after the war, the trading banks’ holdings of liquid reserves with the Commonwealth Bank were placed freely at their disposal, they would be able by increasing their advances and purchases of securities to build up a secondary credit expansion of formidable dimensions. Added to the spending power already available to the public, this might easily produce a dangerous inflationary situation. It would be disastrous, from the point of view of the people of Australia and the prospects of post-war stability, if the withdrawal of the war-tune control over the banking system led to inflation, with all the loss and disorder which inflation entails. The Commonwealth Bank must be given authority to immobilize 1 the liquid reserves of the trading banks to whatever extant may be desirable, having regard to the total quantity of credit which the community requires.
The continuation of the special account procedure would give to the Commonwealth Bank control, not only over the war-time increases in liquid reserves, but also over any future increase. This control could, perhaps, be secured in other ways, as, for example, by giving to the Commonwealth Bank the similar but potentially wider powers recommended by the Royal Commission on Monetary and Banking Systems, under which the Commonwealth Bank could have required every trading bank, subject to the consent of the Treasurer, to keep deposits with the Commonwealth Bank up to any percentage of its Australian deposit liabilities. After full consideration, the Government prefers the special account procedure which is already in operation under the war-time banking control regulations and which has been proved to be a simple, elastic, and effective instrument of credit control.
The bill therefore requires each bank to establish with the Commonwealth Bank a “Special Account”, as from a date to be fixed by the Treasurer. The amount standing to the credit of each bank’s War-time Special Account will be transferred automatically to the Special Accounts established under this legislation. Thereafter the Commonwealth Bank may require each bank to lodge in its Special Account each month such amount as is specified by notice in writing. The amount which any bank is required to lodge in any month, however, must not be such that the balance in its Special Account would then exceed the original transfer from the War-time Special Account plus any increase in that bank’s assets since the commencement of these provisions. Withdrawals from the Special Accounts may not be made except with the consent of the Commonwealth Bank. The banks, however, would be able to approach the Commonwealth Bank for withdrawals of funds, and the Commonwealth Bank would allow withdrawals for purposes of which it approved. Interest is to he paid on these accounts at a rate not exceeding 17s. 6d. per cent, per annum, determined from time to time by the Commonwealth Bank with the approval of the Treasurer.
The assumption, which is so frequently made, that the trading banks should be entitled to handle the excess- investible funds arising from war-time finance in whatever way they think best, has no logical justification. The increase- of credit resulting from war expenditure must always retain a special character and be subject ito special treatment, depending on current requirements’, and the existing credit situation. Various procedures with the same objectives have been adopted in other countries. In the United Kingdom, arrangements- were made for the banks to purchase treasury deposit receipts, which served fundamentally the same purpose as the special accounts held with the Commonwealth Bank. In other dominions various types of controls have been applied in order to prevent secondary inflation.
The bill provides that, where the Commonwealth Bank is satisfied that it is necessary or expedient to do so in the public interest, it may determine the general advance policy to be followed by the banks. The object of any advance policy laid down by the Commonwealth Bank would be to ensure that advances were made by the trading banks for purposes consistent with current economic and financial needs. Any such policy would be revised from time to time and would operate only for such periods as might be appropriate to existing conditions. The Commonwealth Bank will not hare power to direct that a bank shall or shall not make an advance to a particular person. In laying down its policy, it will deal purely with principles and classes of advances. In addition, it has been decided to continue the provision of the banking control regulations which require the consent of the Commonwealth Bank to the purchase by any bank of government or local government securities or securities listed on an Australian stock exchange.
Another division in the bill provides for the mobilization of foreign currency. This will give to the Commonwealth
Bank power to purchase from the trading banks whatever amount of the foreign currency acquired by the banks from their Australian business may be necessary for financing Australia’s overseas obligations for imports and interest. The Commonwealth Bank is also given discretionary power to sell foreign currency to any bank. There is no intention to restrict the banks in their exchange business, and the proposed provisions will not prevent them from retaining sufficient working balances to conduct their normal operations in foreign exchange. In an emergency, however, it may be necessary to exercise additional control over our resources of foreign currency and gold. Our overseas reserves may not always be sufficient to meet our requirements, and it may at times be necessary to control movements of capital. It is proposed, therefore, to take power to control foreign exchange and gold whenever the Governor-General is satisfied that it is expedient, to do so for the protection of the currency, or for the public credit of the Commonwealth, or in order to conserve in the national interest the foreign exchange resources of the Commonwealth. Regulations made under this power will apply not only to banks but. also to persons. Control over foreign exchange and gold is at present imposed by National Security Regulations, and it will therefore be possible, if necessary, to reimpose regulations under this legislation when the national security powers lapse.
Under Part V. of the bill the Commonwealth Bank is- given power, with the approval of the Treasurer, to make regulations controlling rates of interest in .respect of advances made by the banks, deposits made with banks., or rates of discount chargeable by banks, or any person, in the course of banking business. The rate of interest is one of the strategic points of economic activity. A low interest rate is conductive to the maintenance of high industrial activity, and it is therefore imperative, if employment and incomes are to be adequately sustained, that the rate of interest should be supervised and kept at a level which accords with the requirements of economic policy. Control over interest, rates is all the more important, because experience shows that increases of interest rates have always been associated with increases of unemployment. It is, therefore, proposed to continue the control -over interest rates, which has been very successfully exercised by the Commonwealth Bank under the war-time regulations.
The Government considers that it is reasonable to expect that governments and public bodies, which are responsible for public moneys, should conduct their banking business with a publicly owned bank. Provision has been made in the bill that the banking business of such institutions and bodies should not be conducted with a private trading bank, unless the Treasurer agrees. It is intended that adequate time shall be allowed to enable the necessary transfers to be effected. In conformity with the requirements of the Commonwealth Constitution, certain parts of this bill do not apply to State banking. However, the provisions regarding exchange control, gold and certain miscellaneous . matters are applicable to State banking without infringement of the Constitution.
Pastoral companies, building societies, and other institutions or persons who do not desire to carry on the general business of banking, but wish to undertake some banking business are covered by the bill. They will be required to obtain from the Treasurer an exemption from the provisions prohibiting any person from conducting banking business unless he is in possession of an authority from the Governor-General. An exemption granted by the Treasurer may be subject to such conditions as the Treasurer thinks fit to impose. The provisions relating to the control of interest rates apply also to any banking business carried on by persons other than banks.
In Part VI., provision is made for the supply of balance-sheets, and various statistical statements by each bank to the Commonwealth Statistician and Commonwealth Bank. In addition, the banks are required to furnish the Commonwealth Bank with such information about their business as the Commonwealth Bank directs, other than information about the accounts of individual customers. The Auditor-General is also to investigate periodically the transactions of each bank, and at the direction of the Treasurer, furnish reports to him and the Commonwealth Bank. These provisions are along the lines recommended by the Royal Commission on Monetary and Banking Systems and, in the main, are already in operation under the war-time regulations.
It is also proposed that, in the event of any bank being convicted of an offence against the act, the Full High Court may, upon the application of the Attorney-General, direct the .bank to comply within a specified period with the provisions of the act. In default of compliance by the bank, the court may authorize the Commonwealth Bank to assume control of, and to carry on, the business of that bank. The Government also considers that any future banking amalgamations or reconstructions should require the prior consent of the Treasurer, and provision has been made accordingly.
This brief summary covers the general description of the bill. Some of its technical details are necessarily complex and further information will be found in the memorandum explaining the detailed provisions of the bill. But the main purpose of the provisions is clear. They are intended to equip the Commonwealth Bank with adequate powers to supervise the banking system. The increase of the powers of the Commonwealth Bank, which was considered necessary even before the war, has been rendered inevitable by the events of the war. No responsible government could afford to move forward into the post-war period without adequate means at its disposal to cope with inflationary and deflationary movements in the monetary and banking system.
Eight years ago, the Royal Commission on Monetary and Banking Systems made several recommendations for banking legislation, which were not acted upon because of the war. The war itself has demonstrated the need for further changes, and the post-war problems, which we must face, have accentuated this need. We have experienced important changes in our economic system, and the requirements of monetary policy are becoming more exacting. The bills which have been brought down, are designed to adapt the banking system to the changing conditions and to provide the
Commonwealth Bank, as leader of the banking system, with adequate powers to serve the national interest.
The House has before it two bills that are so closely inter-related that the Government considers it desirable that the second-reading debate on the Commonwealth Bank Bill should cover both measures, though necessarily, the committee and other stages of the bills will be taken separately.
– I consider that the suggestion of the Treasurer (Mr. Chifley) may well be adopted. The two bills are closely interrelated, and I see no reason why, as they are cognate bills, they should not be debated together.
Debate (on motion by Mr. Menzies) adjourned.
The following papers were pre sented : -
National Security Act-
National Security (Man Power)Regulations - Orders - Protected undertakings (52).
National Security (Rationing) Regulations - Order - No. 74.
National Security (Shipping Coordination) Regulations - Orders - Nos. 81-73. House adjourned at 3.22 p.m.
The following answers to questions were circulated: -
Brown) who reports on the programmes to the National Works Council.
Royal Australian Air Force: Service Personnel in Aircraft Accident - LossofAmerican Transport Aircraft.
With reference to the unfortunate air accident in which it is feared two of Australia’s best-known generals and nine other members of the services were lost, will he state -
Why was the flight undertaken during a north Queensland cyclone, knowledge of which was known as far south as Brisbane?
If it is a fact that official warnings of the disturbance which had Hooded north Queensland towns over the week-end were issued by the Meteorological Bureau, now under the control of the Department of Air?
Who accepts responsibility for flying those important army officers in such weather?
Whether the trip was undertaken in the face of official advice against the safety of flying in that locality at that period?
Who makes the final decision whether a Royal Australian Air Force plane should be grounded or not under such circumstances?
Has a Royal Australian Air Force pilot a similar responsibility to make a decision on non-operational flights and under such circumstances as a civil airline pilot?
How many similar aircraft accidents have occurred in that locality since Japan entered the war?
How old was the Hudson machine in which the unfortunate officers and men were travelling?
Force officers, in conjunction with United States of America authorities has been held into the circumstances surrounding the disappearance of the American transport aircraft VH-CGC on the 21st November, 1943.
Cite as: Australia, House of Representatives, Debates, 9 March 1945, viewed 22 October 2017, <http://historichansard.net/hofreps/1945/19450309_reps_17_181/>.