17th Parliament · 3rd Session
Mr. Spreaker (Hon. J. S.Rosevear) took the chair at 10.30 a.m., and read prayers.
Introduction of Debatable Matter
Mr. Harrison having addressed a question to the Acting Prime Minister,
– It must he distinctly understood that, under the Standing Orders, debatable matter may not be included in either a question or the reply to it. The practice is growing of quoting press ‘articles as the basis of questions. Some such articles - for example, that just quoted by the Deputy Leader of the Opposition - introduce debatable matter. It is no more in order to embody in a question debatable matter quoted from a newspaper article, than for an honorable member personally to debate the subject of a question. Consequently, I rule that the question just asked is out of order.
– I rise to order. Is it proper for you, sir, to allow the full statement of what is purely a propaganda question, and then refuse to the Minister the right to reply to it? If, in your opinion, a question has the character of propaganda, and on that account should not be allowed, should you permit it to be stated if the Minister is not to be permitted to reply to it?
– Obviously, the Chair cannot be a mind-reader. I have to hear a question fully stated before I can determine whether either the whole or a part of it is out of order. I have ruled that an honorable member is out of order if he introduces debate in a question, and that he is equally out of order if he makes a newspaper article containing debatable matter the basis of a question. Clearly, if an honorable member has not the right to introduce debate personally, he cannot have the right to introduce debate that is contained in a newspaper article. A question ruled out of order should not appear in Hansard.
Motion (by Mr. Chifley) - by leave - agreed to -
That leave of absence for two months he given to the right honorable member for Fremantle (Mr. Curtin) on the ground of ill health.
– As a statement appeared in the press this morning that arrangements had been made for a considerable quantity of cereals, presumably intended for fodder, to be ibrought from the United States of America under the lend-lease agreement, is the Minister representing the Minister for Trade and Customs in a position to tell the House when the arrival of any considerable quantity of that grain may be expected ?
– That matter directly concerns the Department of the Minister for Commerce and Agriculture, who informs me that he expects shipments of cereals from America early in July.
– Has the Minister for Commerce and Agriculture seen the amended statement by the Victorian Minister for Agriculture, Mr. Martin, that he is now in possession of information regarding Victorian hay stocks? In view of this statement, will the Minister examine a questionnaire received by me yesterday? Although it asks that the information should be furnished by the 15th May, it could not have been posted to me before the 21st May. If the Minister agrees with me that the questionnaire issued by the Victorian Department of Agriculture reads like one that might be sent to an entrant in the “ Quiz Kids “ session, and that it exhibits an almost childish approach to a serious problem, will he consider asking his officers to undertake a survey of fodder supplies in Victoria, since any one engaged in malpractices would not be influenced by the Victorian Minister’s handling of the matter?
– I shall have an investigation made as it seems apparent that the situation in regard to fodder supplies in Victoria is serious. I say advisedly thatthe proposed diversion of a certain amount of fodder from Western Australia to New South Wales to meet No. 1 priority requirements has been seized upon by the Victorian Minister for Agriculture as a means of providing a smoke screen to hide the bungling that has occurred in connexion with fodder supplies in his State. In the Victorian Legislative Assembly a motion’ for the adjournment of the House was made on this matter recently, and in the discussion which followed, during which some strong language was used, supporters of the State Government made serious charges of bungling on its part. I shall have a check made of the questionnaire to which reference has been made, but it would appear that it is a case of trying to shut the door after the horse has escaped from the stable, I assure the honorable member that in the disposal of the fodder that will be available the Commonwealth Government will act impartially. It has made arrangements for 6,000 tons of fodder to be cut and pressed in New South Wales and for a considerable portion of it to be diverted to Victoria. It would be improper for the Government to show favoritism to any State, and I assure the House that in no circumstances will any favoritism be shown. I deprecate any attempt to pit State against State.
-Will the Acting
Attorney-General state whether it is a fact that immediately after the May Day hold-up in the heavy industries of Port Kembla, officers of the Commonwealth Investigation Branch of the AttorneyGeneral’s Department visited the industries concerned, with the object of obtaining names of men against whom prosecutions might be launched for an illegal stoppage of work? On whose instructions were these officers sent to Port Kembla? Is it a fact that names and evidence were obtained, and that approximately 100 prosecutions were recommended by the officers of the Commonwealth Investigation Branch? Is it also a fact that no prosecutions have taken place in respect of this illegal stoppage? If so, can the Minister state whether instructions were issued that no prosecutions were to be initiated, and, if so, which Minister was responsible for such instructions?
– Investigations of this, nature are usually made in the ordinary way. A specific instruction to conduct certain inquiries is not necessarily always given, and as the officers of the Investigation Branch are employed for work of this kind, they may in this instancehave acted without special instructions.
– Was it accidental?
– No. Certain inquiries are a part of their job, and in this instance they may have been discharging their ordinary functions. They may have collected names and addresses, but I think I can say that no prosecutions were recommended.
– Is the Minister sure of that?
– No recommendations were made to me. More than that I cannot say without inquiry.
. -by leave - Immediately after questiontime yesterday, I instituted a mostthorough examination with regard to the allegations suggested in the question submitted by the honorable member for Richmond (Mr. Anthony) concerning the possibility of illicit trafficking in sub-machine guns, particularly of the Owen and Sten type, from rejected parts at the Lithgow Small Arms Factory. An examination at police head-quarters reveals that four of such guns have come into the hands of the police. One is of the Thompson type, which is of American manufacture; two are Austen guns, which are an Australian version of the Sten gun ; and one is an Owen gun.
Markings on one of the Sten guns show that it was made at Die Casters Limited, Melbourne. It bears all the Array markings and is a duly authorized issue to the Army. The other Austengun has certain of the parts marked with the Army inspection stamp, but other parts are not marked. However, the markings on some of the components identify them as having been made atCarmichael’s- Limited in Sydney. Further investigations will be made in respect of this particular gun. The Owen gun was made at Lysaght’s Limited, at Newcastle. It bears the regular markings of Army inspection, and is a duly authorized issue to the Army.
I may mention that the Owen and Austen guns have not been manufactured in the Small Arms Factory at Lithgow. Manufacture of the Owen gun was undertaken at Lysaght’s Limited, at Newcastle, and of the Austen gun at Die Casters Limited, of Melbourne, and Carmichael’s Limited, of Sydney. I have personally communicated with Mr. Newton, of Die Casters Limited, and he most emphatically repudiates any suggestion that rejected parts could have been taken from his factory and used in the way mentioned. He also indicates that twelve months have elapsed since the manufacture of this class of gun ceased at Die Casters Limited, andsince that period the manufacture of only certain parts, such as magazines, has been undertaken; that every effort has ‘been made to safeguard against any components or tools being removed in any unauthorized way from the factory premises. I have alsocommunicated with Mr. Wardell, of Lysaght’sLimited, and I am given the same positive assurance that the close supervision that was exorcised over the production of the Owen gun safeguarded, as far as it was physicallypossible, every aspect of production. As a matter of fact, rejects at Lysaght’s Limited were supervised by a trusted officer, who was specially detailed to place them in the open hearth for remelting. In the course of his question, the honorable member for Richmond made the following statement: -
Allegations have been conveyed to me that some of theseweapons have been applied to the underworld by certain employees of the Small Arms Factory at Lithgow, who appropriate weapons which arc not up to Army standards, or parts of such weapons, assemble them, put them into a usable condition and then dispose of them at highprices to members of the underworld.
I should like to advise the honorable member that no parts of the Austen gun have ever been received at the Lithgow Small Arms Factory, nor have they at’ any time been manufactured at the
Lithgow factory. The. residue of components which were surplus to the completion of the Owen gun order at Lysaght’ s Limited., Newcastle, and which was transferred to Lithgow, consisted of 25 different parts. This gun requires 110 parts for its completion. There is no possibility, therefore, that a single Owen gun could have been completed at Lithgow, and nO Owen gun or Austen gun has been reconditioned in the Small Arms Factory at Lithgow.
It is unfortunate that this kind of attack, which is utterly without foundation, should be made against a government owned and controlled factory. The honorable member for Richmond definitely singled out the Small Arms Factory at Lithgow for the most sinister allegations. I am happy to be able to report that there is not the slightest justification for any suspicion, and I strongly deprecate speculation upon matters ofl such grave concern. Before such allegations are made, there should be a reasonable basis of evidence to justify them. Otherwise, they can only do irreparable harm to all persons concerned - manufacturers and operatives alike - who have taken any part in the production of these weapons.
– I rise to make a per- . sonal explanation. The Minister for Munitions (Mr. Makin) endeavoured to convey the impression that I had acted improperly when I asked a question yesterday. I did not make an allegation, as the Minister has said ; I submitted a request to the Minister that he should investigate certain reports which had been made to me. As the source of my information was a gentleman closely associated with the police, I had reason to believe that his statement had a substantial foundation. Where the lives of citizens were at stake I considered that it was my duty to ask that such a statement should be thoroughly investigated by the Minister, who is the only person competent to do so.
– Following the adverse decision of the High Court regarding rates of pay for women, is the Minister for Labour and National Service in a position to advise the House of the action which the Government intends to take in this matter ?
– It is true that the adverse decision of the High Court left the Government in a difficulty, but what we can do to overcome the constitutional short-comings I do not know. We are thrown back on the necessity to have the court decide cases individually. One urgent case has been referred to the court as an individual application. . The idea behind the Government’s desire for a general decision was the saving of time. The Government still has under consideration what it can do to short-circuit a general review of women’s rates.
Australian Dead: Proposed Burial in Australia.
– Has the Acting Prime Minister seen the report that the Government of the United States of America proposes to have brought back to America for burial the bodies of American servicemen who died while fighting abroad ? Has the Australian Government considered a similar proposal in respect of Australian servicemen who have died outside Australia? . If not, will the honorable gentleman have the matter considered and make a statement to the House in due course i
– I have not seen the statement. I understand that the service Ministers have discussed this matter; but no decision has been made by the Government. However, I shall have the matter examined.
Mascot and Wynyard AerodromesCountry Landing Grounds.
– I ask the Minister for Civil Aviation whether, if it is intended to extend the Kingsford Smith Aerodrome at Mascot, the residents of the district can be informed of the details of the proposals so that they may have plenty of time in which to make their plans ?
– A survey of the requirements at the Mascot aerodrome is proceeding, but examination of what will be entailed in extensions has not yet been completed. It is proBable that some buildings will have to be removed in orderto extend’ the runways: When the scheme has been finally decided, considerable alterations will in all probability have to be made, but I am not yet able to give detailed information. As soon as it is available, I shall be glad to let the honorable member know in order that the residents, about whom he is justifiably concerned; may be informed as early as possible of what is to be done.
– Has the Minister for Civil Aviation seen the statement by the Tasmanian Premier that,, even if further improvements to the Wynyard aerodrome were .carried out, it was not certain that the Department of Civil Aviation would allow its use by planes capable of carrying passengers across Bass- Strait ? Can the Minister state what grounds exist for the doubt- expressed by the Premier? Between 2,000 and- 3,000 landings by planes which have carried passengers across Bass Strait have been made on Wynyard aerodrome:
– I have seen statements, but not. recently, relating to the Wynyard, aerodrome, and. I instituted inquiries- as to whether it would be usedfor ordinary air traffic. I have no information yet on that point; but unless that aerodrome complies with the measurements requisite for safety in landing, it will not.be used. No decision has, yet been made as to whether it will be extended, but when that information is available I. shall forward it to the honorable member: I ask honorable members generally to remember that matters of this- kind are the subjects of investigation in relation to development in the post-war period, and until general plans are developed. I cannot, give detailed information, at a- moment’s notice. However, I shall endeavour to obtain the information sought by- the honorable member for Darwin.
– In view of a statement in this morning’s press that £8,000,000 is being made available for the improvement of aerodromes– in capital cities, I ask the Minister for Air what sum is being put aside in order to establish suitable aerodromes in large country centres, not only to ensure safety, but also to provide passenger services to those centres.?-
– The newspaper report is incorrect, and,, therefore, I see no reason to answer the other portion of the right honorable gentleman’s question.
Absence op Members.
– I wish to make at personal explanation. I should like to make it clear that, when I referred yesterday to the absence of honorable members opposite from the chamber, I did not intend to reflect in any way upon honorable members who have legitimate reasons for being absent from their places at. various times. Very often, honorable members on both sides have good reasons for being absent, and that may be the case even in respect. of honorable members who a.t certain times do not appear to have any good reason for their absence. Therefore, I regret that my remarks have been: misconstrued. However, point is given to the absence of so many honorable members opposite at different times’ when the same honorable gentlemen are so ready to criticize absenteeism in industry.
– Order! The honorable member is- exceeding; the limits of a personal explanation.
– I ask the Minister for Commerce and Agriculture whether his department has issued instructions- for a reduction of potato acreages in Tasmania? If so, before such instructions were given, did the Government consider the disastrous results which followed the compulsory curtailment of wheat acreages I In view of the probable shortage of food in many parts- of the world during the next few years, does- the Minister consider it wise to curtail the production of1’ any class of food whatever- in the Commonwealth ?
– I am not aware of the issue of instructions of the kind referred to’ by the honorable member. Adjustments have been made in the contract’’ limits with respect to vegetables; but so far as I know there has not been any diminution of potato sowings with respect to next season’s programme. However, [ shall obtain the information sought by the honorable member.
– I understand that Australian prisoners of war who were rescued by American submarines when the Japanese ship on which they were travelling was torpedoed, have been granted the option of discharge from the forces. I ask the Minister representing the Minister for the Army whether it is true that men who accept that option are asked to sign a document which deprives them of future repatriation rights?
– It is true that the Government has decided that prisoners of war, including those mentioned by the honorable member, shall be given the option of discharge. I am not aware that any conditions have been laid down by anybody at all in connexion with their discharge. Certainly, such conditions Lave not been laid down under any decision of the Government. I shall inquire into the matter.
Materials in Northern Territory.
– Will the Minister representing the Minister for Supply and Shipping endeavour to make arrangements so that persons in the Northern Territory, who desire to buy military materials now lying idle and rusting, shall be given an opportunity to make a quick purchase? In some instances, applications were made as long ago as last November for the purchase of second-hand galvanized iron, motor trucks and piping, but so far, no one in authority is able to say whether the sales can be made, or to state the prices of the materials.
– An opportunity should be given to prospective purchasers in the Northern Territory to buy those stocks. The Commonwealth has been transporting by rail from the Northern Territory large quantities of these materials for disposal in Adelaide and elsewhere. If people in the Northern Territory urgently require them, they should be permitted to purchase them. 1 am prepared to ask the Minister for Supply and Shipping to issue an instruction to that effect.
– Will the Minister for Post-war Reconstruction expedite the issue of a permit for the extension of the Melbourne City Abattoirs ? I am informed that the State Minister for Health has approved the extension, and that the only obstacle to the commencement of the work is lack of authority from the Department of Post-war Reconstruction.
– Is not the abattoir in my electorate?
– Yes; but. the matter also concerns me.
– J am not aware that the Department of Health in Victoria lias approved this project, but I stall make investigations and inform the honorable member of the result.
– For the last eighteen months, I have been urging the completion of the construction of the Kenmore .Sanatorium. Recently, the Minister for Repatriation informed me that the building would be ready this month for occupation by unfortunate servicemen suffering from tuberculosis. Will the honorable gentleman inform me whether the sanatorium has yet been opened, and if it has not, what is the reason for the delay?
– On a previous occasion, L” explained to the honorable member that the department had experienced great difficulty in completing the building. The latest advice given to me is that the installation of the heating service has caused a short delay. At present, the furniture and fittings are being placed in the building.
– This delay is preposterous.
– It is not. The honorable member seems to forget that Australia is still at war, and that building materials are in short supply. The honorable member knows of that, yet he persists in asking questions. Patients will be occupying the hospital before the p.nd of this month.
– -I have received a letter from an original member of the 9th Division who, on his return from the Middle East, was discharged as medically unfit. He wrote -
I immediately lodged an application with the War Service Homes Commission, which was approved, and I was placed on a priority list and was informed that I was 90th on the list. After making inquiries, I find that 1 am now no higher on that list after waiting two years. I have married and have a child recently born, and have to live in a garage.
Will the Minister indicate when the War Service Homes Commission will build houses? Will the honorable gentleman also give this case special consideration?
– Cabinet has discussed proposals for the erection of “war service homes. At one period, the War Service Homes Commission allotted dwellings to persons in the order in which they lodged their applications, but that system has now been altered and homes are made available according to the relative needs of the applicants.
– This man’s need Ls urgent, and he should be allotted a home.
– The honorable member stated that this man’s application was lodged two years ago. Every one knows that very few homes’ have been built in Australia during the last four years. In 1940 when the Government of which the honorable member was a supporter, was in office, only one war service home was built, and in 1936, a previous administration of which he was a member, refused applications for war service homes. At that time, of course, ample supplies of material and manpower were available. I and the Government have done everything possible to alleviate the situation, and now that war conditions are improving, a scheme for the construction of war service houses is in train. Apparently the honorable member for Balaclava is afraid this Government will succeed where governments of which he was a supporter failed.
Proposed Releases from Service Base Establishments.
– Has the Acting Minister for Defence any information concerning a report that Army authori ties are placing obstacles in the way of the committee which las been set up by this Parliament to examine the staffing of Army base establishments. If the report is correct will he take steps to ensure that these obstacles shall be removed ?
– The Government regards the work of the committees set up to examine the service establishments as one of the most important jobs ever entrusted to a committee of this Parliament. It is vital that the services should be combed thoroughly. At this stage there is no evidence of interference with the work of these committees by service authorities. Yesterday we had a long discussion with the chairman of the committee which is to conduct the investigation into Army establishments. The discussion concerned the method of approaching the job, the setting up of sub-commnittees, and the appointment of investigators. I say frankly that if any obstacles are placed in the way of this investigation, the Government will brush them aside immediately.
House Tenancyofsoldier’s Wife
– In March last 1 directed the attention of Parliament to the eviction proceedings instituted in Canberra by the Department of the Interior against Mrs. Mary Pedvin, the wife of an8th Division soldier who, since early 1942, has been a prisoner of war in Japanese hands. I pointed out that Mrs. Pedvin had not been in arrears with her rent, but had disputed the disallowance of a concession given to dependants of servicemen, which previously had been granted to her. The amount involved was about £20. So seriously did the Prime Minister regard the allegations made about the treatment of this woman that he appointed an all-party committee to investigate and report on the case. As all the witnesses, and the whole of the evidence bearing on this case, are available in Canberra, does the Acting Prime Minister consider it fair treatment to the woman concerned, who, incidentally, is still being dunned by the Government, or courteous treatment to Parliament itself, that the determination of this case should be delayed any longer?
Mr. -BEASLEY. - The honorable member is not quite correct when he states that all the witnesses are available in Canberra. I have no wish to prejudge the case in any way, and it is my earnest desire that Mrs. Pedvin should have fair treatment. Members of the committee here had several meetings, but, unfortunately, one member is now in San Francisco - I refer to the honorable member for Ballarat (Mr. Pollard) - and another, a senator from South Australia, found it inconvenient to attend all the meetings. Consequently, it was decided to adjourn the investigation until further evidence, which is considered to be necessary to the case, could be called in Sydney. I hope that the delay will not be long. In the meantime, nothing has been done to deprive the woman of her home.
– Will the Minister see that the dunning letters which Mrs. Pedvin is still receiving from the Department of the Interior shall be stopped ?
– Yes. Frankly, I do not approve of that for a moment. Until the matter is finally adjusted it should remain as it was when the committee started its investigations. I shall take steps to see that no further letters are sent.
Debate resumed from the 6th June (wide page 2647), on motion by Mr. Chifley -
That the bill be now read a second time.
Upon which Mr. Fadden had moved by way of amendment -
That all the words after “That” be left out with a view to insert in lieu thereof the following words:- “ the Billbe withdrawn as a direction to the Government that it be redrafted, to provide, inter alia -
That the Commonwealth Bank Board be maintained in accordance with the decision and recommendation of the royal commission appointed to inquire into the monetary and banking systems in Australia.
That the note issue shouldbe limited by statute. (3)ThattheCommonwealth Bank be so constituted that each of its constituent parts shall be provided with separate management, and with whatever liaison as is necessary to ensure a co-ordinated policy.
That the Commonwealth General Trading Bank and IndustrialFinance Bank be treated, insofar as their relationship to the Central Bank is concerned, inexactly the same way as other trading banks.”
– I wish to make a statement on a matter which has been causing me grave concern, and which has caused difficulty to Speakers not only of this House, but also of the House of Commons. ‘I draw the attention of the House to therecent practice of some honorable members on occasions obviously reading portions of their speeches. The practice is not largely indulged in, but it has increased during the consideration of the proposed banking legislation. While Standing Order 256 provides that an honorable member shall not read his speech, the practice of this House has been to allow Ministers, in making important ministerial announcements and in moving the second reading of bills, to read prepared explanatory statements. Latitude is also extended to an honorable member by allowing him to refresh his memory by reference to his notes, and I see no objection to that; but there are many objections, apart from the contravention of a standing order, to thereading of speeches. The main objections are that it is repugnant to the spirit of debate and in factdestroys debate, and that it could enable persons outside the Parliament to address the Parliament by proxy. 1 remind honorable members that this chamber has a tradition of a high standard of parliamentary debate, and I consider that any further relaxation of the standing order would tend to destroy that tradition. I inform the House at this juncture, so thatno honorablemember will on any future occasion feel embarrassed or inconvenienced by my sudden intervention, that I propose to insist on the closer observance of Standing Order 256.
Question put -
That the words proposed to be left out (Mr. Fadden’s amendment) stand partofthe question.
The House divided. (Mb. Speaker - Hon. J. S.Rosevear.)
Question so resolved in the affirmative.
Question put -
That the bill be now read a second time.
The House divided. (Mr. Speaker - Hon. J. S.Rosevear.)
Majority . . 17
Question so resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 agreed to.
Clause 4 -
The Acts specified in ‘the First Schedule to this Act are repealed.
– I oppose the clause, because it provides for the repeal of the Commonwealth Housing Act of 1927. That act provided that not more than one-half of the increases of savings bank deposits should be applied to the purpose of home construction by municipal authorities, building societies, and State instrumentalities, and that the maximum amount of an advance should be 90 per cent. of the valuation of the property in respect of which it was made. That is generous compared with the provision in the bill that the maximum advance shall be 85 per cent. I cannot understand why a democratic administration should propose wantonly to make such a reduction. My second point is that, under the Commonwealth Housing Act of 1927, the fund for housing purposes was to be provided mainly by savings bank deposits. The present interest rate on such deposits is 2 per cent. Assuming the cost of administration to be at the rate of 1 per cent., the total interest charge if money for home construction were obtained from that source would be 3 per cent., whereas the housing department to be established under this legislation will obtain its funds from loans’ or from the Commonwealth Bank, which will cost at least 3i per cent. Assuming the addition of 1 per cent, for administration, the effect must be an extra impost of 1 per cent, on the interest chargeable throughout the period of repayment. That is a scandal, which should not be permitted by this Parliament. I intend to call for a division, and if Government supporters vote for the repeal of the Commonwealth Housing Act there will be a permanent record of their having supported an increase of the interest rate payable by the purchasers of homes. The Commonwealth Housing Acts operated for about eighteen months. I understand’ that its operation was discontinued while the right honorable member for Yarra (Mr. Scullin) was Prime Minister, during the depression period. Whatever may be done under the legislation we are now considering, should bc supplementary to, not a replacement of, the provisions of the Commonwealth Housing Acts. There could not be too many authorities associated with home construction in this country. I urge the Government not to persist with the repeal of the Commonwealth Housing Acts. Its continuance would not affect the other provisions of this legislation, but on the other hand would make more readily available assistance to housing authorities.
.- The right honorable member for Cowper (Sir Earle Page) overlooks the fact that, for the first time, there is to be a home building branch of the Commonwealth Bank, through which all housing transactions will be conducted. The right honorable gentleman has mentioned an interest rate of 3£ per cent. He ought to know that legislation cannot provide for the charging of a specific rate of interest. The measure provides that loans shall be made at the lowest practicable rates of interest. The aim of the Government is that the rate shall be as little above the cost of issuance as is possible. The right honorable gentleman has raised a storen in a teacup. It is obvious that the Commonwealth Housing Acts must be repealed, because there could not be two housing authorities in the one institution. The right honorable gentleman ought to know that.
.-! see no reason why the Commonwealth Housing Acts should not be retained. No one will contend that building construction is being effectively undertaken. This measure, like the Re-establishment and Employment Bill, is half-baked; it has not been given sufficient consideration by the Government, whose plans are nebulous and pitiful and have been the means of obstructing rather than of accelerating or assisting home construction. By means of a question that I asked last week, I discovered that regulations issued by the Directorate of War Organization of Industry prescribe what type and size of house shall be built. I was informed also that 29,634 applications for permits to build had been received, of which only 13,094 had been approved. The position is Gilbertian. Yesterday, I received a letter from an ex-serviceman who lodged an application for a permit to build a home in Brighton. The by-laws of the Brighton municipality prescribe that any house built in its area shall contain 1,200 square feet of space. It would appear that the Commonwealth requires that there shall be only 1,000 square feet. This man went to a good deal of expense and trouble. He has now been advised by his architect to prepare plans of a complete twostoried dwelling, of which only the ground floor and roof will be erected immediately. That is the effect of Commonwealth policy and administration. A similar position exists in the suburb of Caulfield. Because the Directorate of War Organization of Industry prescribes a size of only 1,000 square feet, whereas the municipal by-laws permit a size of 1,200 square feet, every house has to be left in an unfinished state. I asked the Minister last week to hasten the handling of applications for permits to build, and he replied that he was not aware of any delay. I mentioned yesterday two applications dating back to February, of which only an acknowledgment had so far been received. Why should we accept a promise by a Minister that the Government has plans for the establishment of another department to deal with housing? There are too many departments, too many plans, and too many bureaucrats. The Government’s excuse for lack of achievement is so often its great allies, the war and the drought. This morning I asked the Minister in charge of War Service Homes (Mr. Frost) a question concerning an original 9 th Division soldier in this war, who was discharged two years ago. He lives with his wife and infant child in a garage. When, two years ago, he applied to the War Service Homes Commission for a home, he was told that he had been placed on the priority list, on which his number was 90. The Minister in charge of War Service Homes admits that 21,000 of those homes were built prior to the war.
– I do not.
– An official statement was made to that effect in the answer to a question by me last week. The Minister apparently is> not acquainted with figures in his own department. Since the war only 31 houses have been_ built, and 37 are in course of construction in the various States. In New South Wales, fourteen have been built since the outbreak of war, and in Victoria, which is the most crowded State, we have the magnificent total of three!
– How many were built when the Opposition was in power in 1940?
– No servicemen . had returned from the war in that year. The position would be ludicrous, if it were not so tragic. Unless the Minister can galvanize the Cabinet into activity on the subject of housing he should not remain in his present position. A similar remark applies to the Minister for Post-war Reconstruction (Mr. Dedman), to whose department 29,634 applications have been made for building permits, of which only 13,094 have been granted. These Ministers are not doing their jobs. If this be the result of Government policy, the Government has miserably failed. If anything will aggravate the people more than monetary matters it is the absence of homes. The Acting Prime Minister (Mr. Chifley) said yesterday that trouble might be experienced throughout the country if the financial position were not adjusted, but I contend that the most combustible material is provided by reason of the lack of bouses.
As has been pointed out by the right honorable member for Cowper (,Sir Earle Page), the measures already on the statute-book authorizing the building of houses should be retained. Building societies are erecting homes at present from £750 to £1,200. The Government has thousands of allotments on which it could build homes. The War Service Homes Department has land in every State. I have been informed officially that it has approximately 3,829 building allotments, including those which are estimated to become available from, unsubdivided land. The department has all the paraphernalia and architects necessary for the work.
– Most of the architects are in the fighting services. We are working on only a skeleton staff.
– There are a director and six deputy-directors, and there is a principal architect in each State. There are approximately 100 employees doing various jobs, such as rent collecting and about 40 are in the fighting services, yet the department is sterile. It lacks policy and punch.
.- 1 should like to think that the right honorable member for Cowper (Sir Earle Page) was sincere in protesting vigorously against the repeal of the housing legislation which has been in operation for eighteen years. He ought to know something about it, having been associated1 with its introduction, but it has never been brought into full operation. I understand that no individual advance has been made. It seems purely hypocritical for honorable members of the Opposition to object to the repeal of measures which have proved to be virtually white elephants. The Government, desires to substitute for them provisions which are solid and sound. Clause 8 of the bill provides -
It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary financial 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 hank, will best contribute to -
the stability of the currency of Australia ; and
the maintenance of full employment in Australia; and
the economic prosperity and welfare of the people of Australia.
When the war broke out, there was a shortage of 100,000 homes in Australia.
– And 250,000 persons were unemployed.
– During the depression the unemployed totalled 750,000. Artisans who could have been usefully employed in the building trade were looking for work, and that position was due to lack of a proper financial policy. Had the Opposition parties pursued a practical housing policy when in office, there would have been no depression, because adequate housing is the key to prosperity. It is estimated that 600 people are directly or indirectly interested in the construction of one home, and that there are over 100 allied trades in the building industry. The sincerity of the Government with regard to housing is shown by the White Paper recently tabled in this House, indicating that when war conditions will permit the Government will go ahead with a housing policy that will ensure to ex-service personnel and. everybody else in the community a home on reasonable terms. Of what use is it for the Opposition to indicate that, when in office, it was willing to provide advances up to 90 per cent. of the valuation of the property under a system wbich has never operated? The criticism has been offered that under this measure the advance will not exceed 85 per cent. of the value, but that would be more liberal than any advance likely to be made by private financial institutions. The limit of their advances is usually 60 per cent. or 70 per cent. of the value. In New South Wales, even under present conditions, the Commonwealth Bank advances up to 90 per cent. of the value of the security through building societies. If this bill becomes law, the bank may advance the full 100 per cent. of the sum required by the home builder, because that is the policy of the New South Wales Labour Government in relation to building societies. The Commonwealth Bank will make advances in accordance with the policy of the State governments. There is no reason why rates of interest should not come down still further if the credit resources of the nation are used for the benefit of the people. In New Zealand, the rate of interest on advances for home building is11/2 per cent., and to other borrowers 8 per cent. I realize that the Commonwealth Bank, when handling the savings of the people, must keep on the safe side, but interest rates should be kept as low as possible commensurate with this requirement, and this bill provides for that. The Government is to be commended for its determination to do something definite to provide housing for the people.
– I support the right honorable member for Cowper (Sir Earle Page) in his opposition to the repeal of the Commonwealth Housing Acts which have been on the statute-book since 1927.
– How many houses have been built under that act?
– Twenty-one thousand houses have been built under it. As the right honorable member for Cowper said, there are men in this building who can thank those responsible for passing that act for the houses in which they live to-day.
– Did the right honorable member say 21,000 houses?
– Some one suggested th at figure to me, and I used it. Anyway, several houses were built under it. The honorable member for Reid (Mr. Morgan) said that the act was dormant. The Immigration Act is also dormant; but no one suggests that it should be repealed. The Commonwealth Housing Acts are better measures than the one now before us. For instance, it provides for the maximum use of savings bank funds for housing purposes, and it is obvious that such funds could not be used for a better purpose. They represent the savings of people on the lower and middle ranges of income, and thus the risks, as well as the benefits, are spread as widely as possible. The act provides -
Whereas it is by the Commonwealth Bank Act 1911-1927 amongst other things provided that the Savings Bank may invest any moneys held by it in advancing money in accordance with this Act, for the purchase or erection of dwelling houses, and for the discharge of mortgages on dwelling houses.
It was also provided that a . fund of £20,000,000 should be set up for housing purposes, the money to be drawn from the deposits in the savings banks. This provision continues -
The Housing Fund shall consist of -
such proportion not exceeding onehalf of all increases in deposits over the total amount of the deposits existing at the commencement of this Act, as, in the judgment of the Commission, is available for investment by the Commission in pursuance of this Act.
Thus there was to be an original fund of £20,000,000, which was to be supplemented by 50 per cent. of the increase of Commonwealth Savings Bank deposits each year. No such provision is made in this bill. No special fund is set aside, and no provision is made to keep interest rates as low as possible. The Government would have been wise to have applied the provisions of the Commonwealth Housing Act rather than to repeal it, and substitute for it something of much less value. In the Commonwealth Housing Acts it is provided that the Commonwealth Bank shall advance up to 90 per cent. of the approved value of the dwelling, but under the bill the amount of the advance is limited to 85 per cent. Moreover, under the act, the maximum amount which could be advanced was £1,800, but under the bill the maximum amount is only £1,250. The difference is even greater than the figures suggest, because the value of money has declined. An advance of £1,800 in 1927 would be equivalent to one of about £2,500 to-day.
.- The right honorable member for Darling Downs (Mr. Fadden) spoke airly of thousands of houses having been built under the Commonwealth Housing Act of 1927. They must have been shacks because the total amount of money expended under the act in sixteen years was £1,458,000.
– Most of that was spent in the first year, and then the Labour Government sabotaged the act.
– That is nonsense. A Labour government was in power for only two years during the period when the houses should have been built. It was the action of the right honorable member for Cowper (Sir Earle Page), in restricting the operations of the Commonwealth Bank, that prevented the expansion of the housing programme by making it impossible for the bank to do what it could have done had it been a free institution.
– Was the whole of the. money from the housing fund expended before 1929?
– No; the act was only passed in 1927. The right honorable member for Cowper overlooks the fact that that act provides that advances may only be made to authorities, and not to individual persons. Should those authorities, in which are included building societies, municipal councils and State governments, not initiate action, the law remains a dead letter. Therefore, if action has not been taken, the responsibility lies with the authorities which could have initiated housing schemes. While the right honorable gentleman was Treasurer of the Commonwealth, he should have seen that those authorities did something in the matter. His protest this morning is a hollow sham, and he knows it. He has spoken only for party political purposes. The bill now before the committee provides for a proper housing department of the Commonwealth Bank, and for moneys under the control of the Commonwealth Savings Bank to be utilized for that purpose, if necessary. It is because this bill does provide for a proper housing scheme that honorable gentlemen opposite are trying to defeat it. An expenditure of £1,458,000 in sixteen or seventeen years reflects the interest of the right honorable gentleman and his colleagues in previous governments in the important matter of providing homes for the people. He says that previous governments built thousands of houses under the act mentioned, but for that sum of money good houses in great numbers could not have been provided. Perhaps the right honorable gentleman would regard a hole in the ground as a home.
.- I move -
That, after the word “Act”, the following words be inserted : - “ other than the Commonwealth Housing Act 1927, and the Commonwealth Housing Act 1928 “.
I am indebted to the Minister for Home Security (Mr. Lazzarini) for recalling to my mind another excellent reason why the procedure which I suggest should be adopted. He has reminded me of the method by which the Commonwealth Housing Act was brought )into being. There was then some doubt as to the constitutional power of the Commonwealth Parliament to build houses. One of the best lawyers of the day insisted that the matter should be handled in the manner set out in the Housing Act. The position, therefore, is that if those acts be repealed, and should the direct method of building houses be deemed to be unconstitutional, there will be no power at all to build houses, except under the defence power which permits the building of war services homes.
– That is wrong, because elsewhere in the bill there are provisions relating to authorities.
– I repeat that the Labour party has sabotaged the Commonwealth Housing Acts. On the 26th November, 19’29, the then Treasurer, Mr. Theodore, in reply to a question by the then honorable member for Lilley, Mr. Mackay, as to the . total number of applications received for houses under the Commonwealth housing scheme, said that the total number of applications received were : From the Government Savings Bank of New South Wales 1,014, representing an estimated expenditure of £944,475 ; from the State Bank of South Australia, 614 applications, involving an expenditure of £603,268; from the Workers’ Homes Board, Perth, 348 applications for houses estimated to cost £267,000; and from the Federal Capital Commission, 114 applications to build houses to cost approximately £122,891. I do not know of any house in the Australian Capital Territory which has been built under legislation passed by a government other than one with which T was associated. Government members talk a lot about various schemes, as, for instance, water conservation and irrigation schemes, but can they tell me of a big national undertaking of any value anywhere in Australia which was initiated by a Labour government? I can point to many valuable national works which were put in hand by nonLabour governments. As soon as the Labour party gets into power there is considerable unemployment; yet the present Government claims to have a scheme to provide full employment. I’ talks to-day of standardizing the railway gauges, but Labour members voted against the proposal to construct a railway of standard gauge between Kyogle and South Brisbane. They also voted against the proposal to construct the Hume Weir and the Wyangala Dam. and a non-Labour government rushed through the act to build the Sydney Harbour Bridge. Now, having sabotaged the Commonwealth Housing Acts passed by previous governments, they say that only £1,458,000 was expended under it iri the erection of homes. 1 remind the committee that that expenditure was incurred’ in one year. If the present Government were to be as active in the building of homes as was the government of that day, the present chaotic state of affairs would not exist.
.- The right honorable member for Cowper (Sir Earle Page) has talked a great deal more, and has done a great deal less, than most honorable members. As the Minister for Home Security (Mr. Lazzarini) has pointed out. although the Commonwealth Housing Act was passed in 1927 and another similar measure in 1928, only about £.1,458,000 has been expended under that legislation in nearly seventeen years. As those acts provided for a maximum of. £1,800 in respect of any house, it will be seen that on that basis the total expenditure would have provided fewer than 1,000 homes. The right honorable gentleman has admitted that most of the homes built under that act. were erected in the first year after it was passed. That shows how little has been done in the last sixteen years to provide homes for the people. Part XT. of the bill, which deals with housing loans, empowers the Commonwealth Bank to make housing loans on Credit Foncier terms. In addition to direct loans to individuals, loans may be made to approved building societies to enable them to lend to their members. That part will replace the Commonwealth Housing Act which, in practice, has been entirely inoperative for many years. There is therefore, no necessity to repeal that legislation. If any body of men should be ashamed of their record in regard to the building of homes, it is the right honorable member for Cowper and those who were associated with him in previous governments, because for the last 25 years non-Labour governments have been in power in the Commonwealth. There was a short period when a Labour government was in office, but it did not have a majority in the Senate and cannot be said to have been in power. What did those governments do to relieve the housing shortage? During the depression years, they allowed men who could have been employed in building homes to walk the roads seeking work, while their families lived on the dole and were undernourished and underclothed. Now those honorable members have the audacity to boast of what they did when in office. The present Government is determined to go ahead with a housing programme; but, while the war lasts, it will not be able to do all that it would like to see done. There is a serious shortage of materials and man-power, but as quickly as possible men with the necessary qualifications are being released from the Army for the building of homes. When the necessary arrangements have been completed, the people need have no fear that homes will not be provided. If any government will build homes, it will be a Labour Government, because only Labour governments are really progressive. The Leader of the Australian Country party (Mr. Fadden) protested about the amount of money to be made available for housing purposes, but I ask him how many workers could expect to purchase homes to the value of £2,500? Very few of them would ever own homes costing that much. For £1,200 a home suitable for a worker can be provided, but even at that price some time will elapse before he can complete the purchase. The bill also provides that the rate of interest shall be as low as practicable. In order to encourage people to purchase homes, I hope that the Government will make the maximum rate of interest 3 per cent.
– I listened with interest to the chief apologist for the Government, the honorable member for Griffith (Mr. Conelan), who pointed out that lack of labour and material had caused the housing shortage.
– I did not say that.
– That is what I understood the honorable member to say.
– I said that antiLabour governments had caused the housing shortage.
– Well, I will give the honorable memberan instance of the sort of thing that is happening. A returned soldier on his discharge bought a bouse which he cannot occupy because it is already tenanted. About three months ago, he applied to the Directorate of War Organization of Industry for a permit to convert it into two selfcontained flats. He would do the work himself, because he is a carpenter by trade. I have raised the matter of his application in this chamber several times. To-day I received from the Minister for Post-warReconstruction (Mr. Dedman) a letter in which he stated that, as the house, which this soldier - who has married since his discharge and wants to provide a home for his bride - proposes to add to is already occupied, and he and his wife are reasonably accommodated where they are at present boarding, the honorable gentleman regrets his inability to authorize the issue of the desired permit. He suggests that the application be deferred and renewed at a later date, “ when the shortage of building resources is not so acute”. This man served with the Australian Army for five years and four months, including seven and a half months at Tobruk. He is denied the right to expend his own money, skill and time on dividing his own property so that it shall accommodate not only the present tenants but also himself and his wife. The White Paper on Full Employment, upon which the honorable member for Reid (Mr.. Morgan) pins so much faith, as if it will provide thousands of homes, is only a paper. The people want homes. It seems that we shall soon have enough papers to build homes with. I support the amendment moved by the right honorable member for Cowper (Sir Earle Page) to retain the Commonwealth Housing Acts, on the statute-book. That legislation provides for advances for home building on liberal terms. The honorable member for Griffith said that it was. impossible for a working man to pay the interest on a house costing £1,200. I remind the honorable gentleman that, although the interest rates were higher fifteen years ago, the capital cost of building was nothing like so great as it is now, and that even 3 per cent. interest would be a lifetime burden at the present prohibitive building costs. Any one who wants a costly home would be well advised to have it built under a government scheme. In the last two or three years in my travels I have seen the results of this Government’s housing policy, for instance, the three-roomed shacks at Lismore built at a cost of £800 each.
– Built by our Government?
– For flax-workers at Lismore, Victoria. Probably that type of accommodation will be provided by the Government under its housing policy..
-We will ensure that the Government shall not be sold worthless land at inflated prices for soldier settlement as was done after the last war.
– In the last war I was busy fighting, not selling property to the Government. I do not ask the honorable gentleman what be was doing. Private enterprise will provide a very orach better housing scheme than the Governrnpnt could offer. The stupidity of the Government’s policy is welldisplayed by the fact that a man wanting to convert a house bv his own labour is refused a permit, whilst, at the same time, the Government is wasting millions of pound’s on Wildings which will never be used for their original purpose.
– Most of the reply to the right honorable member for Cowper (Sir Earle Page), who wants to retain the Commonwealth Housing Acts has been allegations about what previous governments failed to do twenty or so years ago. I remind honorable members’ opposite that we are concerned, not with thepast, but with the formulation of a housing policy for the future. On present indications the people’s hopes of obtaining homes through this Government arc limited. The Minister in charge of War Service Homes (Mr. Frost) has been criticized for what has not been done.
– The honorable member knows that what I have said is correct.
– We fully appreciate the Minister’s difficulties, and realize that he is quite incapable of promoting a scheme which would give war-service homes to those needing them.
– That is all that one would expect from such an irresponsible person as the honorable member.
The CHAIRMAN (Mr. Riordan).Order !
– The clause abolishes, in common with a number of other acts, the Commonwealth Housing Act. The point that the Opposition stresses is that, particularly under existing conditions, every act which facilitates the provision of houses ought to be retained; and every instrumentality which promotes the erection of houses, whether by building societies or corporations, should be retained, particularly at this time. Various suggestions have been made for the provision of money on the easiest practicable terms for the purpose of erecting houses; but the borrower knows that generally he has to pay the ruling rate of interest. Whether he obtains finance through the New South Wales Savings Bank, the Rural Bank or the Commonwealth Bank, he does not find, as he is frequently led to believe,, that the rate of interest charged by those institutionsis lower than the prevailing market rate. Invariably, he is obliged to pay themarket rate. However, the lowest rate is provided under the Commonwealth Housing Act by virtue of the utilization of the savings banks deposits. Therefore, that act shouldnot be repealed. The Minister says that under this measure it will be possible to do everything which can now be done under the Commonwealth Housing Act. That is not the case. In the town of Casino, a railway centre situated in my electorate, several! hundred railway employees; including a large number employed in the locomotive section and their wives’, and families; are unable to secure housing accommodation. Recently, a. public meeting was held in that town to try to. devise a solution of the serious local housing problem. The municipal council of Casino is itself anxious to build homes for these railway workers. Under the Commonwealth Housing Acts, it could undertake that work provided it constituted itself an authority as prescribed by that act, and provided that it could obtain the necessary material and labour. But, under this measure, no provision is made to enable a local government, authority to undertake the building of homes in that way.
– Cannot individuals now make arrangements through State instrumentalities for the erection of homes ?
– At present, local government authorities can make the necessary arrangements under the Commonwealth Housing Acts, and there is no reason why such bodies which wish to pursue. a local policy of development should not be able to avail themselves of the facilities which that act provides. It. has been said that sufficient use has not been made of the facilities provided under that act, and, therefore, it should be repealed. There may be many reasons for failure to take advantage of those facilities. At. any rate, it is an, unsound argument to say that, because for a number of years past the facilities provided under that act have not been fully availed of, it should be abandoned. Indeed, in view of the enormous demand for houses in the post-war years every possible avenue for the erection of homes will be fully availed of.
– The honorable member has said that six times already.
– ShouldI say it for the seventh time perhaps, the Minister for Home Security might comprehend my point; because, after reading his pamphlet entitled The ” How ” in Post -war Planning, I am certain that the only kind of houses- which individuals would be able to obtain under his scheme would be paper houses. I hope that the Government will give some consideration to our criticism of. the less contentious provisions of this measure. No serious difference of opinion should exist between the Ministerial and Opposition parties inrespect of this clause, because all honorable members are desirous of providing; the. maximum facilities to enable our people to obtain homes. If that be the intention of the Government, I see no, reason why it should refuse to accept the proposal made by the right honorable member for Cowper.
.- Under this clause it is proposed to repeal certain acts because the facilities provided under them will be provided under this measure. It is significant that governments have not utilized the facilities provided under the Commonwealth Housing Acts, under which the Commonwealth Savings Bank is enabled? to advance money for housing purposes at a low rate of interest. However, thismeasure will enable advances to be made on still easier terms. It provides for the making, of loans to building societies, or individuals, whereas under the Commonwealth. Housing Act such advances could, be made only through certain instrumentalities. The. right honorable member for Cowper (Sir Earle Page), stated that that course was adopted in order to overcome certain constitutional difficulties; and he has expressed doubt as to whether the Commonwealth has power to provide funds for housing as is proposed under this measure. He has had sufficient parliamentary experience to know that a constitutional difficulty does not arise in this case, because the Commonwealth Bank has power to carry on all the functions of banking, and one of those functions is the financing of the building of homes. The bank, and not the Government, will make these advances; and the bank is not limited in this respect by the Constitution as is the Government, or any special body it set up for this purpose. The Commonwealth Bank has. f ull and. complete authority and power to do this job ; and will proceed to do it. I can see no reason for a lengthy debate on this provision. The difficulties directly associated’ with housing can be more appropriately dealt with under Part XI. of the measure. I repeat that it is unnecessary to have two measures covering the same activities; and the housing provisions under this measure are far preferable to those contained in the Commonwealth Housing Acts. I agree with the view expressed by some honorable members that the amount and percentage of the advance proposed to be made available under this measure are inadequate; and I believe that when we are dealing with Part XI. of the bill the Government should be prepared to liberalize those provisions. A maximum advance of £1,250 will not adequately meet the financial requirements of many people who desire to build better class homes. The Government desires the Commonwealth Bank to engage freely in all branches of banking, and undoubtedly an otherwise wide field of operation would be limited if advances were restricted to £1,250. Home builders would then have to seek financial accommodation from life assurance companies and other private financial institutions. If honorable members desire to increase the maximum of the advance that may be made, the appropriate time to raise the matter will be when the relevant clause is under consideration. Until then, discussion of the repeal of existing acts may well be postponed.
.- The point taken by the right honorable member for Cowper (Sir Earle Page) should receive serious consideration. The Government proposes to repeal an act that functioned perfectly in the early stages of its operation, although a decision by a later government imposed restrictions that prevented it from functioning as satisfactorily as it should. Evidently, anti-Labour governments failed to grasp the opportunity to correct that position, but that is no reason why we ‘ should now repeal the act without substituting something for it. What the Government proposes to do in the way of housing under this legislation is not exactly the same as what can be done under the existing act. They are two different things.
Out of this discussion has arisen an argument, which I have heard before, regarding the amount that should be expended on the construction of a dwelling, and whether these houses can be built more effectively by State enterprise than by private enterprise. Whenever I have submitted an application to the Minister for Post-war Reconstruction (Mr. Dedman) for approval to obtain labour and materials for the erection of a house for urgent personal reasons in war time, the largest amount that 1 have seen approved was £350. I have seen some of the houses that have been built to the order of the Commonwealth Government for the accommodation of persons in various parts of the country. One of the most lamentable exhibitions of war-time construction by the Government is to be seen at Essendon, where employees of the Maribyrnong munitions establishment are accommodated. I doubt whether any of the slums in Melbourne - I do not claim any great knowledge of them - are worse than those wartime constructions.
The right honorable member for Cowper referred, with some heat, to the failure of Labour governments to operate successful housing schemes. In South Australia in 1924, the Gunn Ministry - a Labour Government - undertook to provide houses, and launched its famous “ One Thousand Homes Scheme “ on the site of the old Mitcham military camp. The Attorney-General of the day, Mr. Denny, was particularly interested in the project. I heard a debate on the subject in the Parliament of South Australia, and a member of the Labour party referred to the lack of conveniences in those homes, although they had been built to the order of a Labour government, and, in addition, he mentioned certain inconveniences. One statement which impressed me particularly, was that the timber used in the construction of the doors was so green that it split. There was no need to have a letter-box at the gate, because the postman could always push the letters and newspapers through the cracks in the doors. Those statements, which are on record, were made by a member of the Labour party, who afterwards became a Labour Minister. He occupied one of the homes.
A former member for Adelaide often referred to the excellent record of the South Australian Housing Trust in the erection of homes. The trust was the creation, not of a Labour government, but of an anti-Labour government. The Premier of the day was Mr., later Sir Richard, Butler, and the housing scheme was carried to fruition by Mr. Playford, the capable gentleman who is Premier of South Australia to-day. If more men of his type entered politics, it would be to the advantage of the Commonwealth of Australia. The latest figures which I saw, showed that homes were being built by the trust for £850 each.
– They are still being built at that price.
– The homes have been adjudged satisfactory by every one who ‘has inspected them. I have never heard any person, regardless of his political beliefs or whether he was a visitor to South Australia, or a local resident, condemn the workmanship, the conveniences or space provided for the families occupying the dwellings. As the honorable member for Boothby (Mr. Sheehy) knows, the rental is about 12k fid. a week. This Government should take those matters into consideration.
Some honorable members have urged that before the Commonwealth Government, undertakes a housing scheme, it should closely examine the successful methods adopted by the South Australian Housing Trust. However, I have a strong suspicion that that will not be done, unless some of my recently-arrived Labour colleagues from South Australia, such as the honorable member for Boothby, the honorable member for Adelaide (Mr. Chambers), the honorable member for Grey (Mr. Russell) and the honorable member for Wakefield (Mr. Smith), all of whose constituencies, with the exception of Wakefield, impinge on the metropolitan area - insist on it. The housing scheme will be a much greater project than Australia has yet undertaken, and I do not desire to see the Commonwealth incur, by bad administration, losses similar to those made by the One Thousand Homes Scheme in stituted by the Gunn Government in South Australia. Perhaps the honorable member for Boothby will address himself to this subject in a moment, because those homes1 are situated in his electorate, and doubtless he, like myself, has examined some of them. Therefore, on these matters, we can well afford to walk warily. The Government has adopted the practice of proclaiming that everything that emanated from anti-Labour governments was bad and, therefore, should be abolished. That is not the judgment of the electorate of Australia. In due course, the electorate will pronounce judgment on those matters, and its present temper regarding housing should influence the Government to proceed quietly and carefully rather than hastily and haphazardly as it is doing ai present.
.- Like the honorable mem!ber for Barker (Mr. Archie Cameron), I do not intend to become heated on this subject. Honorable members should approach this matter with an open mind with a view to devising the best possible scheme for meeting the urgent demand for homes. As the honorable member for Barker has said, the Gunn housing scheme in South Australia was the work of a Labour government. That scheme is the only monument of ite kind to any South Australian government. This garden suburb is a. credit to the State and the people concerned, of whom most now own their property. The South Australian Housing Trust has carried out a considerable amount of home-building. As a building contractor in South Australia, I have had considerable experience of home- construction, including work for the Commonwealth and State Governments, and for a leading architect in Adelaide. I was not impressed with the South Australian Housing Trust’s scheme in the first place, because I considered that the areas occupied by the houses were far too small. The honorable member for Barker will agree that in this country there is ample land to enable the provision of an adequate block for each house. There ib no necessity for the construction of semidetached dwellings as ha.s been done by the trust. I was pleased to see that, later in the scheme, the size of the blocks was increased. During the depression, all my building plant was forced to lie idle for some years because no jobs were available. Of course, I could have done as some other builders did at that time, and contracted for a job at a price which could not possibly pay expenses, thus becoming bankrupt. I believe that homes of a good type could be built to-day for about £850. It will be recalled that recently I stated that, in my opinion, the walls of a concrete dwelling could be “poured” in one day. Last week-end, I visited a concrete home-building project and saw nine men erect a concrete dwelling in one day. I could not see anything wrong with that home. It was of an excellent type and its finish was good.
In any housing scheme undertaken by the Commonwealth, home purchasers must be given an opportunity to pay for their dwellings within their lifetime. That means, of course, that the rate of interest must be low. I see no reason why money for home-building should not be made available by the Commonwealth Bank at low interest.
– Then the honorable member does believe in private property ?
– Yes. As the honorable member for Barker said, the rents for houses erected by the South Australian Housing Trust were originally 12s., and later were increased to 17s. for bigger homes. The point I wish to make is that these homes will never become the property of the tenants. These people will go on paying rent for the rest of their lives. True, it is a nominal rent, but the fact remains that the property will never be their own. A man should have a stake in his country.
– Many people decline to own homes. They prefer to pay rent all their lives; why, I do not know.
– That is quite true; but the average Australian is the most independent and resourceful man in the world. Ho likes to stand on his own property. What stops many people from owning their own homes at present is the high rate of interest charged upon housing loans. When a man ‘has» to pay 5 per cent, interest on a loan of £700 oi £S00, he is faced with a difficult task. .1 am convinced that this Government will do the right thing. We are determined
On that. When the late Mr. Lyons was Prime Minister, he said that his Government would clear the slums and build new homes. At one stage, people were even praying that Mr. Lyons would fulfil his promise, but it was never fulfilled. I do not think that it will ever be necessary for people to pray that this Government will carry out its housing plans.
.- I wish to be constructive, and I hope that my criticism of the Government’s proposals will have some effect. I draw attention to the following statement made some time ago by the Minister for Labour and National .Service (Mr. Holloway) : -
I admit there is no answer to the statement that the shortage of homes and living accommodation is undermining the physical and moral characters of our people, holding up marriages and thu natural flow of population, and imposing greater burdens on people with young families. When the building position eases, probably in a few months, every atom of effort will bo directed to home construction.
The Minister then urged people to endeavour to “ stick it out “ for another six months, which be believed would make all the difference. It is now some time since that period elapsed, I am convinced that much of the confusion over housing to-day arises from the fact that there is a division of responsibility within the Government. There is the War Service
Home3 Commission, the Department of Post-war Reconstruction, to which applications for permits to build homes must be made, and the Department of Supply and Shipping which deals with the release of materials. Then, of course, there is the Minister for Works (Mr. Lazzarini), whose department deals with public works. If the housing activities of all these authorities were co-ordinated under one Minister, better results could be achieved, and the Government should take the matter more seriously in an endeavour to bring about these results. We on this side of the chamber do not like to be criticizing Ministers continually, but -I have not much faith in the Minister for Works. I believe that much of the material which is being used on public .projects to-day should be made available for home: building. I. refer to undertakings such as the new offices for the Prices Branch at. Canberra, the new Arbitration Courtbuilding atMelbourne, new defence stores at Tottenham and Broadmeadows, and so on. All these projects, should bere-examined with a view to diverting materials to the construction of homes. I am sure that every , fair minded honorable member will agree that, in the main, public works should be reserved for depression periods when there are large numbers of unemployed.
Sitting suspended from 12.45 to 2.15 p.m.
– I have already urged in this chamber that the branch of the Commonwealth Bank which deals with home building should be retained, because all means of expediting the construction of houses should be employed. Also, it might be advisable to appoint a Commonwealth Minister for housing in place of the Minister for Works. Public works are using materials and manpower that should be used in the construction of war service homes and private homes,and are thus retarding the housing programme. I have also pointed but previously the ridiculous results of government regulations dealing with house construction. Because the Commonwealth Government has stipulated that permits will not be issued for the construction of houses with more than 1,000 square feet of floor space, whilst Melbourne municipalities insist on a minimum of 1,200 square feet, now houses must be left unfinished. The only way in which a citizen of Brighton can build a twostorey house is by leaving out the stairway and the dividing floor. In Caulfield, also, conflicting regulations prevent builders from finishing houses. Of 29,000 applications for permission to build houses, only 13,000 have been approved, and the housing position is becoming worse. I have referred to the case of a former member of the 9th Division of the Australian Imperial Force, who was living with his wife and baby in a garage. That man is the 90th applicant on the priority list for war service homes. I ask the Government to take heed of the growing unrest arising from the unsatisfactory housing position. A procession of servicemen marched through Melbourne last week to -agitate for homes. The Government is playing withfire, andif itcontinuestoignore the increasing symptomsofpublic dissatisfaction, all thetrouble thatwill occurwillbe of its own making. Itshould call a halt to public -works andtransfer -menfrom those undertakings tothe building industry. Thebuilding industry lost more men to Other war-time activitiesthan did any other civil industry. TheMaster Builders Association ofMelbourne has prepared statistics which show that, during the war, building activity in Australia on the one hand has decreased by 66 per cent. On the other hand, there has been an increase of 65per cent. in government departments. Apparently, the world has been made safe for bureaucracy, whilst democracy has been forgotten. Only 5.6 per cent. of the men who left the building industry for other war-time occupations have returned to it. The Government should do everything possible to expedite the restoration of artisans to the building trades. In Adelaide last week. a man was prosecuted because, in building a home for himself, he made concrete bricks after waiting eight months for permission to build. Another man, who has six children, was fined because he continued to live in a house that had been condemned, although he had nowhere else to go. The Government should appoint a Minister for Housing immediately, and initiate a comprehensive building programme.
– The honorable member for Balaclava (Mr. White) has covered almost precisely the same ground as was covered during the censure motion debate last week. I remind the committee that important legislation has to be passed, and we cannot afford to have lengthy repetitions of earlier debates. This clause of the bill deals with loans through the Commonwealth Bank.
– Does the honorable gentleman consider that this is more important?
– I consider that the committee should, not be hindered in its consideration of this bill by honorable members who want to discuss matters which they regard as more important but which cannot be dealt with on this measure. I have made this digression in order to warn honorable members that this sort of thing must not continue. The right honorable member for Cowper (Sir Earle Page) said that the Commonwealth Housing Act of 1927, which will be repealed by :his bill, should remain in operation. Advances totalling only about £1,500,000 were made under that act, and for the last twelve years it has been practically a dead letter. The right honorable member said that the making of advances under the act was stopped when the right honorable member for Yarra (Mr. Scullin) became Prime Minister. I remind him that, under the banking legislation which he put on the statute-book, the Government had no powers to direct the Commonwealth Bank Board as to what it, should do. Under this bill, the Government will have some control over the bank’s policy. I remind him further that governments of which he was a Minister took no advantage of the Commonwealth Housing Act. That legislation made no provision for advances to individuals; it provided only for advances to organizations such as building societies, and this class of business is dealt, with under clause 121 of the bill. .Since 1937, the Commonwealth Bank has advanced about £2,500,000 for house construction through its ordinary trading department. Furthermore, the bank, in an endeavour to give co-operative building societies a chance to operate, has agreed to .provide over £1,000,000 for housing purposes as soon as building can be resumed. This bill is designed to help low sala ry -earners to build homes at the lowest practicable rate of interest. It contains nothing which would prevent the Commonwealth Bank from making advances .to any individual through its ordinary trading department: for the purpose of building a house of any value. It is true that such advances might be regarded as overdraft? rather than as long-term fixed loans. The same thing applies to the Mortgage Bank Department. Any individual, provided his security is satisfactory, can secure an advance from the trading department of
Ifr. Chifley. the Commonwealth bank at the 10wes rate of interest charged by any bank in Australia, namely per cent. That rate operated even when the bank overdraft rate was as high as 6 per cent. I emphasize again that under the provisions of clause 121 advances may be made to building societies, up to a maximum of 90 per cent, of the value, on such terms and conditions as the bank may see fit to impose.
Probably there has not been a more futile piece of legislation than the Commonwealth Housing Act. If the right honorable member for Cowper had faith in it, he should have seen that it was operated by the Commonwealth ‘Bani while he was a Minister.
– All that is needed if finance; the framework is provided.
– That act does not contain a provision enabling borrowings to be made for bousing purposes from the Savings .Bank.
– There are specific provision.”;. An initial fund of £20,000,000 was to be provided from 50 per cent, of the increase of savings bank deposits.
– I do not think so. [f advances were discontinued, the bank was responsible. The government of the day should have ensured that the operation of the act was maintained, and that advances were continued. With the onset of the depression, although men and materials for house construction were available all over the country, the bank, being independent of the Government, ceased to operate the act. I repeat that r.he measure we are now considering provides for advances to building societies up to a maximum of 90 per cent, on value, on terms prescribed by the Commonwealth Bank. It has been specially designed to help the working person to build a home, at the lowest .practicable rate of interest. I hope that ‘the rate fixed will be much lower than any rate which the right honorable member for Cowper attempted to fix when he was Treasurer.
Question put -
That the words proposed to be inserted (Sir Earle Page’s amendment) be «o inserted.
The committee divided. (The Chairman - Mr. W. j. F. Riordan.)
Majority . . . . 17
Question so resolved in the negative.
Clause agreed to.
Clause 5 (Definitions).
– The clause defines “‘bank” as “a person carrying on the business of banking”. We might go further and say that a banker is a man who works in a bank, and that banking is the business carried on by a banker in a bank. Even that would not clarify the position. The Government should so amend the clause as to make the definitions much more explicit. The Acting Prime Minister (Mr. Chifley) will recollect that when he and I were members of theRoyal Commission on Monetary and Banking
Systems the representatives of many institutions discharging largely the functions of a bank, appeared before us. Such institutions will not come under this legislation; probably, provision ought to be made for them. On one occasion, we were shown 5s. promissory notes issued by a man in the northwest of Australia and used as local currency, because there was not a bank within 300 miles of where he lived. Of course, they were illegal tender; but they did harm to nobody. If the matter be left undefined, it will probably be defined in a series of decisions by the High Court, or other courts in the land. Barristers may have a monetary feast, but the process of secur- ing an interpretation will be costly to those who move in the matter, whilst organizations and companies which may be permitted to act as bankers will not come under the act even though, possibly, they should.
– The matter will be examined.
– I support the suggestion of the honorable member for New England (Mr. Abbott). The present lack of clarity in the definitions may lead to chaos. Is it intended that every company or partnership which receives unsecured deposits from its directors’, shareholders, partners or customers shall come under the act? Are clubs and other unincorporated bodies to be prohibited from holding money on deposit from members or subscribers? The matter should be clearly defined. The honorable member for New England has had practical experience as a member of theRoyal Commission on Monetary and Banking Systems, and his advice should be heeded.
– The term “bank” is not defined, as honorable members opposite have said. Nor is it defined in the Australian Constitution. The inclusion in this measure of a definition of “bank” might have the effect of limiting what the courts would hold to be a bank. With great respect, I cannot see any sense in the suggestion of the honorable member for New England (Mr. Abbott).
I am not satisfied with the definitions clause, Considerable additions couldbemade to it, giving a “wider interpretation and conveying, what actually is meant. Under this legislation, the Treasurer will assume full responsibility for the financial policy of the Commonwealth Bank, including the matter of the note issue. Indeed, the honorable gentleman will fix? a financial dictator in Australia. He will be under the direc- tion of caucus,Caueus will be under the direction of the Australian Labour party, and the Australian Labour party will be controlled by the Communist party. I suggest the inclusion of this new definition: “Treasurer’ means caucus;Caucus means Australian Labour party;Australian Labour party’ means Communist party “. That would enable the people fully to realize who ultimately will assume control of financial policy in this country.
.- This clause states that “ bank “ means “ a person carrying on the business of banking “. In what category does the Treasurer (Mr. Chifley) place the big stock firms of Australia, with which one may open current accounts and draw cheques, and which are not banks in the ordinary acceptation of the word ? I also draw attention to the definition of “primary produce”. Hides and skins are primary produce, and so is meat, but cattle, sheep, pigs, and other livestock, apparently, are not, because they are not mentioned. This clause is the best exhibition of jerry-built definitions that I have seen for a long time.
Clause agreed to.
Clauses 6 to 8 agreed to.
Clause 9 - (1.) The Bank shall, from time to time, inform the Treasurer of its monetary and banking policy. (2.) In the event of any difference of opinion between the Bank and the Government as to whether the monetary and banking policy of the Bank is directed to the greatest advantage of. the people of Australia, the Treasurer and the Bank shall endeavour to reach agreement. (3.) If the Treasurer and the Bank arc unable to reach agreement, the Treasurer may informed the Bank that the Government accepts responsibility for the. adoption by the Bank of a policy in accordance with the opinion of (the Government and will take such action (if any) within its powers as the Government considers to be necessary, by reason of the adoption of that policy. (4.) The Bank shall then give effect to that policy.
– I move -
That, in sub-clause-(3), after the word “ Government “, second occurring, the following words be inserted’: - “ that it is in a posi tion to take”.
I submit that amendment in conformity with the finding of the Royal Commission on Monetary and Banking Systems, which, at page 206 of its report, stated -
In cases in which it is clear beyond doubt that the differences arc irreconcilable; the Government shouldgive the Bank an assurance that it accepts full responsibility for the proposed policy and is in a position to take, mid will take, any action necessary to. implement it.
Sub-clause 3 does not provide that the Government shall give an undertaking that it will take any action that may be necessary by reason of the adoption of the policy. It merely accepts responsibility for any action taken. Therefore the provision in the clause differs from that intended by the royal commission.
.- I support the contention of the Leader of the Australian Country party (Mr. Fadden), and I now indicate that I intend to move for the insertion, after sub-clause 3, of the following new subclause: - (3a.) The Treasurer shall then submit the amended policy for the approval of Parliament, together with the reasons of the Treasurer and of the Bank for their respective views.
Sub-clause 4 now reads: “The bank shall then give effect to that policy’”. I intend to move to insert at the end of the sub-clause the words “ if approved by Parliament “. This clause purports to give to the Treasurer power to override the decisions of the expert authorities appointed by him to control the bank. There will be a governor, a deputy governor, and other expert officers chosen from the Treasury and the bank. These men will displace the present Commonwealth Bank Board. The Treasurer (Mr. Chifley) virtually states in this clause that, despite the fact, that these men will be. experts chosen by himself, if he disagrees with their views- he will’ be able to override the policy that they have laid down. It seems to me that the reasons for doing that should be brought to the notice of the Parliament. Such action would not be taken in respect of a trivial matter, aird the- proper thing- to do is; first, publicly to give a direction, and, secondly, Ho1 permit the .reasons of both’ the Treasurer and! the* governor of the bank to be laid’ before the Parliament. Consider the difficulty that would necessitate action of this kind. Obviously it would not relate to an administrative matter of minor importance. No doubt in that case1 the Government and the expert appointees would reach a compromise which- would not necessitate- overriding the- authority of the* Treasurer; but in- an important matter such as the interest rate- to1 be charged by the banks they might consider that the only way to! insure their solvency and that of the general financial structure- of Australia would be to charge a- certain rate of interest on1 advances. It might be in connexion witha direction as to the manner- in which the trading banks were using the deposits entrusted1 to their care. The Treasurer might say to the ©overnor of the Commonwealth Bank that the deposits should be used only in assisting primary and secondary industries or certain sections of those industries. Surely matters of such magnitude should not be dealt with in a Hole-and-corner fashion, hut should be Drought before the Parliament, because they are of such a nature as to- need parliamentary ratification.
The reason why the board of the Com”monweal’th Bank is to be displaced is, 1 understand, that it- is said to rep-resent outside interests, and is not composed of experts. The Treasurer stated last night that one member of the board was known to the public only as a polo player on one day, and on the next day, when he was appointed to the board, he became a first-class hawking expert. The Prime Minister (Mr. Curtin) has said that another member of the board was a trade union secretary one day and a. financial expert the next. The experts to be appointed to the Advisory Council surely ought to have the status of High Court judges’ in the matter of removal from office. They will have to deal with assets to the value of at least £500,000,000 or £600,000,000, and when their opinion is overridden by the Treasurer, surely the Parliament should be notified as to what is being done. Let Us consider the contest that occurred between the Treasury and the Bank of the United States of America which had control of the issue of currency and acted as the Government’s bank. In the thirties of the last century, in the United States of America, there was- incredible financial panic and years of suffering, unemployment and inflation. All’ of that resulted from the Treasury interfering with the control of the Bank of the United States, not for financial, but for political reasons. That bank was given its charter in 1791 - (he Treasury interfered with its management in 1836,. and from 1836 to 1S40 the history of the United States was one of the most critical and depressing that any young country has passed through. Every historian emphasizes that this crisis was due to the fact that political and not financial considerations dictated the banking policy of the country. If we do not secure parliamentary control of the Commonwealth Bank, and if banking policy can be influenced by the Treasurer at the. behest of the caucus and outside interests, there will be a possibility of wrong action which would never be known by the public until the actual results had struck the nation a most serious blow. The right time in a democracy to deal with matters of such importance to the community that they cause the Treasurer of the day to override the views of his expert servants, is when the dispute arises, and when action can be taken- in time to prevent the damage which would otherwise occur. This Parliament should have an opportunity to say whether it ratifies the Treasurer’s actions or not. What took place in the last depression? In 1930 to 1931 the hands of the right honorable member for Yarra (Mr. Scullin) were strengthened by the fact that he followed the proper- parliamentary course of submitting his financial proposals to the Parliament,, in which they were- discussed openly, with the result that the action he took, had the solid Backing of the nation.
.- [ shall support the amendment foreshadowed by the right honorable member for Cowper (Sir Earle Page). I stated in my second-reading speech on this bill that it is necessary for Parliament to express its views with regard to major matters of policy. I should have hoped that the Government would have made an acknowledgment that Parliament stood supreme in respect of matters of financial policy. The amendment forecast would seemingly not interfere with the right of the Government to impose its policy on the bank, but would insure that when that policy has been so asserted and the bank had been called upon to implement it, the matter must come before this Parliament for ratification. That seems to be an elementary requirement and the proper procedure to adopt in a democratic country. [ am not hopeful that the amendment will be accepted, because the Government seems to have fixed views regarding all legislative proposals and is not prepared to accept, amendments submitted by the Opposition. For that reason I foreshadow another amendment. It is very unlikely that a division of opinion between the bank and the Treasurer will arise on other than a major matter of policy, and when it does the fact should be recorded so that the public will know who was responsible for the policy subsequently applied, particularly if it should produce disastrous results. The clause provides that if a difference of opinion arises on a matter of policy the Treasurer may inform the bank that the Government accepts responsibility for its decision, but it is not provided that he shall inform the bank in writing. T suggest that this should be specifically provided and I ask the Government to give favorable consideration to the suggestion that the cla.use be amended to this effect. If the Treasurer will not do so, will he state why? I am strongly opposed to back-stage manipulation and to the bringing of pressure to bear on public servants. I know that, on more than one occasion pressure has been applied to the quasi public servants who control the Australian Broadcasting Commission. On the assumption that the Government, will not accept the amendment foreshadowed by the right honor able member for Cowper, I ask it to include a sub-clause providing that, after the Treasurer has informed the bank in writing that the policy of the Government must prevail, he shall report to that effect to Parliament at its next meeting. That is a minimum requirement and I hope it will receive support, even from honorable members opposite.
– I agree with the observations of the right honorable member for Cowper (Sir Earle Page) and the honorable member for Warringah (Mr. Spender) regarding the importance of restoring to Parliament its authority on this matter, by assuring that Parliament shall be supplied with full information regarding any difference of opinion between the Government and the bank, together with a statement of the views of each side. I draw the attention of the honorable member for Warringah to the fact that sub-clause 1 of clause 9 provides that the bank shall, from time to time, inform the Treasurer of its monetary and banking policy. I presume the honorable member would wish that information to be supplied in writing, just as he wants the Treasurer to submit his representations in writing. This is a strange clause, particularly when considered in conjunction with clause 28, which provides for the setting u,p of an Advisory Council consisting of Treasury officers and bank officers. However, one of the members of the council which is to be set up for the very purpose of advising the Governor of the bank is to be the secretary to the Department of the Treasury. Is it proposed that the information which the Treasurer is to receive from time to time from the bank regarding its monetary and banking policy is to be obtained through the Advisory Council, or does clause 9 contemplate the giving of separate and specific advice, and if so, on what conditions? The phrase “from time to time” is vague. Will the Governor himself decide when he shall put before the Treasurer matters of policy, or is he to make regular reports?
In sub-clause 2 there is a further reference to “ monetary and banking policy “. What is meant by this expression? Does it refer to matters of general policy, or is the Treasurer, by virtue of this provision, to be empowered to go right down into the very details of banking administration ? Will it cover the making of an advance to one person or one public authority, or will it cover only the making of advances in general ? There is nothing in the clause to help us to resolve this problem. I venture to say that the Treasurer himself does not know what is embraced in the word “ policy “ any more than I do. As a Minister in a Victorian government, I was at one time engaged in the administration of the Railways Act in that State. It was realized that differences of opinion might arise between the Minister and the Railways Commissioners, and section 101 of the Victorian Railways Act of 1928 provides, in relation to that possibility, that the only policy which the commissioners are bound to accept is general policy, and if there is a dispute between the Minister and the commissioners as to whether any matter is one of policy it is to be referred r,o the Governor in Council, and determined by an order in council. I do not say that that, provides particularly abundant protection for the commissioners. It does not, but at least it ensures that, a second look shall be taken at the matter, while this clause does not. The clause gives power to the Treasurer to overrule the Governor of the bank. If he says that such a thing is a matter of policy, his will must prevail.
The next point is in connexion with sub-clause 3, and was touched upon by the Leader of the Australian Country party (Mr. Fadden). Sub-clause 3 is as follows : - (3.) If the Treasurer and thu Bank are liable to reach agreement, the Treasurer may inform the Bank that the Government accepts responsibility for the adoption by the Bank of a policy in accordance with the opinion of the Government and will take such action (if any) within its powers as the Government considers to be necessary by reason of the adoption of that policy.
Last night, the Treasurer, when, replying to the second-reading debate on the bill, persistently addressed members of the Australian Country party, and said, “ Does the Australian Country party stand by the report of the Royal Commission on Monetary and Banking
Systems ? “ - the implication being that it was not doing so. Well, in this clause the Government is departing from a recommendation of the royal commission. Ostensibly, it is accepting the recommendation, but in actual fact it is abandoning it. In paragraph 530 of its report, the royal commission said -
The important thing is that the Government should be in a position to take any action necessary to implement its policy. In other words, it should be able to assure the bank that it is in a position to pass legislation on the matter if it chooses to do so - that it commands a majority in both Houses of Parliament, and can ensure that a bill will be passed, if necessary. The second point is that the Government should make it clear, not only that it possesses the power to implement its policy, but also that it will, in fact, do so. In this clause, however, it is merely provided that the Treasurer may inform the bank that the Government “will takesuch action (if any) within its powers, as the Government considers to be necessary …” In other words, the Government will not have to guarantee that ithas the power, but only that it will act to the extent that it has power. That, is an entirely different proposition. In order to test the matter, let us assume that the Government is in command of the House of Representatives, but not of the Senate, as was the case when the right honorable member for Yarra (Mr. Scullin) was Prime Minister. In such circumstances, the Government could easily bring itself within the terms of this clause by saying, “ We will take such action as is within our power, insofar a? we consider it necessary “. This would be an assurance within the terms of th,clause, but it would not be within the terms of the recommendation of the royal commission. Nothing would be further from the truth than to say that the royal commission was expressing the view that the government of the day, however placed in relation to Parliament, should be able to overrule the bank simply by saying to the Governor, “You must do this because, if we feel that it is necessary to take action, and we find that we have the power to do so, we may take action “, and on those tenuous conditions to insist that the bank should comply. Any such claim is a mere sham. Under clause 9, the Treasurer need only say, “ This is my view, Governor, and now it is yours. In the terms of this act of Parliament yon will obey, and apply the policy of the Government “. This, from the point of view of honorable gentlemen on the Government side, may be excellent. I am not debating that at present, but I am concerned to show that it has no relation whatever to the royal commission’s recommendation.
– I am very pleased that the Leader of the Opposition (Mr. Menzies) has set out fairly and concisely what these clauses mean. The Treasurer (Mr. Chifley) was told last night that the Opposition would explain the actual meaning of the recommendation of the Royal Commission on Monetary and Banking Systems on this point, and where it differed from his interpretation. Now that he has been given that explanation, I hope that he will take it to heart. As the Leader of the Opposition has pointed out, a government whose tenure of office depends on the support of independents as did the Menzies and Fadden Governments, or a government faced with a hostile Senate, as was the iScullin Government, may not be able to apply the policy on which it has determined. It is patent that the royal commission considered the practical position. What the Government is aiming at is to give a semblance of effect to the commission’s recommendation, but to reserve the right of dictation.
Sub-clause 1 provides that “ the bank shall, from time to time, inform the Treasurer of its monetary and banking policy”. The Leader of the Opposition dealt with that at length, but I wish to add a few thoughts. Central banking policy covers a wide field and it may not be possible for a full report to be made at any moment about any particular aspect of policy. I agree with the Leader of the Opposition that the Treasurer will be adequately informed by the Treasury officers on the Advisory Council. Cen tral banking policy will be influenced not only by the internal political policy of the Government to-day but also by world affairs. Clause 8 reads -
It shall be the duty of the Common wealth 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 policy determined by the central bank may very easily conflict with the Government’s political policy. In both his second-reading speech and his speech in reply the Treasurer (Mr. Chifley) declared that the Government was taking complete control over banking policy, but not over every detail of administration. Rut how will the Governor be able to resist pressure brought to bear on him through the Treasurer in regard to any matter? I am not specifically referringto this Government, and the Treasurer will not always be the honorable member for Macquarie, Mr. Chifley. The present incumbent may be in some other position soon. He could be succeeded by the honorable member for Werriwa (Mr. Lazzarini), who has written a book aboutbanking and has fanatical ideas about the monetary system. The Governor would be subject to pressure from him. Until these powers are vested in Parliament, instead of the Treasurer, this legislation will be dynamite and I suggest that for the sake of the country, and the consciences of the Labour party and the Government, the Treasurer should accept the amendments.
– Regarding the provision in clause 9 (1) that “the bank shall, from time to time, inform the Treasurer of its monetary and banking policy”, I think that every one who has been Treasurer of the Commonwealth realizes that such information can be given either in writing or in conversation. I am certain every former Treasurer has had discussions with chairmen of the Commonwealth Bank Board and Governors of the Commonwealth Bank; I have had plenty. I have no liking for writing innumerable letters. I have discussed many matters with both the chairman and the Governor, more frequently with the Governor, and in three and a half years I have found no difficulty in satisfactorily hammering out differences. There are two ways of approaching points of difference. One is to say, “ We think this should be done, and I leave you to think it over “. That is not the proper way. The other way is to talk over the differences and arrive at a compromise. The Prime Minister (Mr. Curtin) has been with me on a number of occasions when we have had discussions with the chairman of the Commonwealth Bank Board or the Governor of the bank. To suggest that every time the bank has to inform the Treasurer about a particular phase of monetary policy in a long letter, or any letter at all, is to carry formality too far.
– Surely not, because there has to be disagreement. That is the point.
– I am dealing only with sub-clause 1 of clause 9, which requires that the bank shall inform the Treasurer of its monetary and banking policy.
– I agree with that.
– That point is not under criticism.
– The Leader of the Opposition (Mr. Menzies), I think, mentioned sub-clause 1.
– What the honorable gentleman has said answers my point on sub-clause 1. The principal matter is when there is disagreement.
– The right honorable gentleman himself, the right honorable member for Darling Downs (Mr. Fadden) and the honorable member for Warringah (Mr. Spender) all preceded me as Treasurer. I have not the slightest doubt that they followed the same course as I have followed, and hammered out matters in conference. I am sure the honorable member for Warringah, who has strong views about certain things, not necessarily banking, has hammered out matters with different bodies. When I was chair man of the Capital Issues Board I paid regard to the views of the honorable member, who was the then Treasurer - not that I had had personal discussions with him, but there were ways of learning what he thought.
I am informed that, despite what my distinguished legal friend, the right honorable member for Kooyong (Mr. Menzies) has said, this clause is the closest that can be got in legal phraseology to the recommendation of the Royal Commission on Monetary and Banking Systems. I should imagine that where irreconcilable differences occur the Governor of the Commonwealth Bank would ask that the Government’s policy be set out in writing and would himself similarly set out his point of view. Major matters would be stated in writing. The Governor would say, as he always says, “ Well, I think you had better give me a letter about that, so that I shall know exactly where I stand “.
The Leader of the Opposition referred to the situation which may arise when the Government has not a majority in the Senate. The party which occupies the treasury bench constitutes the Government of this country, and it would be foolish for the Administration to be called the Government if it could not govern. The final remedy would lie with the people, or with honorable members. The Scullin Government became almost impotent to implement major legislation because it did not possess a majority in the Senate. But a government has the responsibility to govern, and therefore should have the last word. It is perfectly true that in the final analysis, the Government is responsible to the Parliament. If the Parliament can defeat the Governrnent the electors are called upon to make a decision. But until the Government is defeated, it has the constitutional right to govern. While that authority is vested in the administration, it mustexercise it.
Some honorable members declared that financial policy should be debated frequently in the Parliament. Does any former Treasurer, or any one who has given any deep thought to this subject, believe that every subject of discussion between the Government and the Bank
Board should be raised in this House? Such a practice would be stupid, and the people who suggest it either are politically insincere or do not understand the subject.
– The matter would be raised in the Parliament only when the differences between the Government and the Bank Board were irreconcilable. The honorable gentleman has applied a general argument to a particular case.
– As a former Treasurer, the Leader of the Australian Country party (Mr. Fadden) knows that the best way in which to conduct the financial affairs of the country is to proceed quietly, smoothly, and efficiently, with as little talk as possible. When a previous government proposed to export £8,000,000 of the gold reserve, the right honorable member for Cowper (Sir Earle Page) stated that the proposal emanated from either a lunatic or a reckless gambler. The right honorable gentleman is a responsible citizen, yet he made that charge against the government of the day. .Subsequently, another government wa3 prepared to ship overseas the whole of the gold reserve. Those accusations are made for political purposes. If a member of the Opposition sees an opportunity to criticize the Government, he does not mind exaggerating the facts.
– Does the honorable gentleman say that the right honorable member for Cowper should not have been allowed to make such a statement?
– No; but when a finance measure is introduced in this chamber, all sorts of statements are made which are calculated to impair the confidence of the people in the financial system of the country. Unjustified fears are inspired by idle and reckless statements made in this chamber by persons who either do not understand what they are talking about or hope ito gain some political advantage from them. Discussions on finance between the Bank of England and the British Treasury are not dragged into the House of Commons whenever a difference of opinion arises. The Chancellor of the Exchequer indicates to the bank what the Government considers the institution should do.
– But there is no legal compulsion on the bank to comply with the Government’s wishes. It. is a purely co-operative system.
– When a difference of opinion arises, the Chancellor of the Exchequer asks the bank to reconsider its attitude. That is not a direction. But the bank has always carried out the Government’s wishes.
– Yet the Treasurer considers that it is necessary to have a legislative bludgeon in Australia.
– I do not. The Treasurer of the day is the Government’? spokesman on financial matters. He speaks, not as an individual, but on behalf of the Government, with the authority of the Government, and after consultation with the Government. When he does speak with that authority, the wishes of the Government should be observed.
– The Royal Commission on Monetary and Banking Systems considered that the principle embodied in this clause wai of great importance. Undoubtedly, the Parliament must be responsible for the monetary and banking policy of the country, but as the royal commission pointed out, the Parliament has delegated certain of its powers to the Commonwealth Bant Board to exercise in the interests of the people of Australia as a whole. The royal commission indicated that an all-powerful central bank would not be capable alone of evolving a policy which would prevent depressions or fluctuations in the economy of the country. It has to work in conjunction with the Government. The commission pointed out also that the Central Bank could either be under the thumb of the Government all the time, giving effect to any instructions that the Government issued to it, or, on the other hand, could take no instructions from the Government and probably should not even confer with it. In the latter case, if the Government were dissatisfied with the way in which the Central Bank was exercising its delegated powers, it should introduce legislation to correct the position. However, the royal commission came to the conclusion that neither of those courses would be satisfactory, and proceeded to evolve a formula by which, it believed, the smoothest possible working would be achieved to the advantage of the people, and to relations between the central bank and the government of the day.
The royal commission considered - and this has not been emphasized by the Treasurer - that every avenue must be explored between the Commonwealth Bank Board and the Government of the day for the purpose of ascertaining whether the differences between them could be ironed out. The Treasurer said that in most cases a. roundtable discussion between bodies like the Commonwealth Bank Board and the government of the day generally produces a solution. But the royal commission visualized that an occasion might arise when the differences between the parties would be irreconcilable, and it submitted a formula for overcoming that difficulty. The royal commission believed that if the government of the day gave an undertaking that it was in a position to carry out a certain policy, and would do so, the duty of the bank board would be to conform to the wishes of the government. As a member of that royal commission, I would not depart one inch from its recommendations on that subject. But 1 point out - and I hope that it will be realized by the public - that there is an essential difference between the recommendation of the royal commission and what the Government proposes under this legislation.
The royal commission agreed that the monetary and banking system of Australia was best controlled by a central bank, under a board of directors. That was a fundamental axiom which the commission laid down for dealing with the financial problems of Australia. If an. irreconcilable difference were to arise, the directors of the bank, being free and independent men, could tender their resignations. When I say “ free and independent “ men, I mean that they are not civil servants dependent for their livelihood on the whim of the government of the day. Unlike the governor, they are not solely employees of the bank. Everything that the Treasurer stated about the relationship between the British Treasury and the Bank of England applies with equal force to the relationship between the Commonwealth Govern ment and the Commonwealth Bank, under a board of directors.
– The Bank of England is a private bank.
– The Treasurer cited the Bank of England as an example of a central bank which bowed to the will of the Treasurer. The time might have come when directors of the bank might consider that the policy of the Government was so inimical to the interests of the people of Australia as a whole that they must decide whether they were prepared to remain as directors, or direct public attention to the fact that they were not in agreement with the Government’s policy by placing their resignations in the hands of the Treasurer. But that tremendous power, which lies in the hands of the directors, will be abolished under this legislation, because the governor of the bank or the civil servants, who will be members of the Advisory Council, are dependent for their livelihood on the government of the day. Acting under the direction of the Treasurer, the bank might easily do things which, if exposed, might be entirely unsatisfactory to the people. In the face of hostile public opinion, the government might be unwilling to introduce legislation to implement the policy which it endeavoured to compel the board to carry out. Under the force of public opinion aroused by the resignation of the directors, the government would probably bend.
Listening to the speech of the Treasurer, one would imagine that the board of the Commonwealth Bank in the past, particularly when Sir Robert Gibson was chairman, had never turned to the Government for an expression of opinion regarding the monetary and banking policy that it should pursue. Sir Robert Gibson wrote to a former Prime Minister, Mr. Scullin, in reference to the pressure that was being exerted on the exchange rate. He said that it was more than a matter of mere banking policy; it was a matter which impinged upon national policy, and the bank board desired the opinion of, or a direction from, the Government. There has not been a failure in the past by the directors of the bank to consult, the Government. I cannot vote for the clause as it stands. I support the views that have been expressed by the Leader of the Australian Country party (Mr.. Fadden), the honorable member for Warringah (Mr. Spender) and the right honorable member for Cowper (Sir Earle Page), and I shall vote for the amendment. It is absolutely essential, in my view, that safeguards shall be provided, so that if any irreconcilable disagreement occurs between the bank and the Government in the future the matter shall be brought to the attention of the Parliament, and the elected representatives of the people given an opportunity to present their views.
– I listened with interest to the lucid remarks of the Leader of the Opposition (Mr. Menzies) on this subject, but after I had heard the Treasurer (Mr. Chifley) on the point, I was convinced that my view of die intentions of the Royal Commission on Monetary and Banking Systems was correct. The commission expressed the definite opinion that if an irreconcilable difference of opinion occurred between the bank and the Government, the latter must accept full responsibility for imposing its will. That appears to me to be reasonable. Therefore, the Government is proposing that an advisory body shall be appointed. Whether a government accepts the advice of the advisory body or not, it ultimately will have to accept the verdict of the electors on its conduct. I am determined nOt to vote for a provision which will leave a government in the position in which the Scullin Government found itself in relation to the bank. The honorable member for New England (Mr. Abbott) stated that Sir Robert Gibson and the bank board had co-operated in certain circumstances with the Government of that day.
– I said that Sir Robert Gibson had written to the Government asking for instructions.
– During the depression Sir Robert Gibson, in a letter which he wrote to Mr. Theodore, then Commonwealth Treasurer, attempted to dictate financial policy. The letter, which was dated the 13th February, 1931, stated-
Dear Mr. Theodore,
With reference to your discussions with the directors of the bank board on the subject of the rehabilitation of the financial and industrial position of Australia, when it was agreed that some concerted effort must be made to cope with the situation and so avoid, if possible, the ultimate disaster which will otherwise eventually face the country, I am requested by my board to convey to you a resolution of the board as set forth hereunder.
It was in the resolution that the dictation occurred, for the resolution read -
Subject to adequate and equitable reductions in all wages, salaries and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the governments of Australia in sustaining industry and restoring employment.
That is what the Scullin Government had to contend with. It is intolerable that a bank board should be in a position to dictate financial policy to a government, and I shall not stand for it. We must bear in mind that ultimately every Treasurer and every Government must face the people and accept’ their judgment. Within eighteen months we all shall be required to appear before the people, our masters, and every three years in this country the members of this House have to give to the people an account of their stewardship in respect of banking and all other subjects of public policy. I have no doubt that when the time comes this Government will give to the people a good account of its stewardship.
.- This is a key provision of the bill. We are living in a democratic community and the Parliament is a democratic institution. I am greatly concerned, therefore, that so few honorable members who support the Government appreciate the real significance of the clause. If they dud so, they surely would realize that its enactment must result in a diminution of the capacity of the Parliament to control the financial affairs of the country. If the clause becomes law, it will bring about a reversal of the traditional and historic role of the Parliament in relation to finance. One of the important duties of the Parliament is to supervise financial operations. The Parliament should be informed of all proposed expenditure by the Crown and should authorize the raising of the necessary money; but if we accept this clausewe, as members of the Parliament, will,. in effect, throw asideour responsibilities inthis regard. For this reason, I appeal to honorable members to give their closest attention to the matter. If we had needed any additional reasons for supporting the amendment, the Treasurer himself gave them to us in the remarks he made a few moments ago. Honorable gentlemen opposite have spoken at some length about the political background ofsome of the present members of the Commonwealth Bank Board; but, as the Treasurer has observed, this Government, in a time of unprecedented crisis involving financial operations of unexampled magnitude, has been able to do all that it desired to do without any serious disagreement with the board. Throughout the whole war period the board and the Government have found common ground on which to stand. We shallprobablyfaceunprecedented conditions also after the war. I suggest, therefore, that there is the greatest possible justification for our continuing the board system which has alreadyserved our needs so well.
Ipass on to a consideration of the transcendently important feature of the clause. We are being asked to agree to a diminution of the ‘authority of the Parliament. Although, under this legislation, political control of banking is foreshadowed, the passage of the bill will result, paradoxically, in a cutting away of parliamentary) power over banking and finance generally, for the power would be exercised, not by the Parliament, but by a single politician, or a group of politicians. I shall give three results which may follow the passage of the bill. The first relates to taxation, both direct and indirect. Hitherto, the practice has been for governments tosubmit to Parliament estimates o’f ‘proposed expenditure and to seek parliamentary approval for the measures necessary to raise the required revenue. In that way the Parliament has had control of the finances of the country. If this legislation becomes fully operative the Treasurer of the day will not be under any necessity to submit his proposals to Parliament. For example, by a devaluation of the currency he may meet his financial needs, and the Australian citizens may not immediately feel the effects of his policy. A Treasurer may give effect to either his own or the Government’s pet schemes behind the back of the Parliament by the imposition of certain levies.
– What does the honorable member mean by “levies”?
– The devaluation of the currency, which might result in reducing the purchasing power of the £1 from 20s. to 14s. would undoubtedly be a levy on the people. I hearan honorable member say thatthat has happened under these proposals during the war.I have no doubt that it will happen alsoduring the peace.
In the past theParliament also has? exercised authority overthe note issue. Before a government could increase the note issue beyond the legal maximum it had to seek parliamentary authority to do so. That necessity is being swept aside under this bill. In the future the Treasurer will be under no necessity to seek parliamentary authority for an increase of ‘the note issue, so, again, the role of the Parliament as the watchdog o’f finance is being made less important. Hitherto, also, the note issue has required a gold or sterling backing of not less than 25 per cent. That provision is being removed and, in the future, the Parliament will have no authority whatever over that important subject. For these reasonsI say that the historic function of the Parliament as the watchdog of public finance is being sadly interfered with, and the results may be extremely serious to the people at large.
I consider therefore thatit is essential that provision should be made in this clause to ensure that, in the event . of any disagreement on a vital matter between the Treasurer of the day and the Governor of the bank, all the facts shall be sub-‘ mitted tothe Parliament. It is clear from what the Treasurer has said that such disagreements will be rare. As we have been able to carry out the gigantic financial transactions necessary for war purposes with a substantial measure of agreement between the bank and the Government, it is not likely that serious disagreements will occur frequently in the future; but when they do occur the whole of the factsshould be submitted to the Parliament . for consideration,. so that the
Parliament may reach a decision on them. The enactment of this clause will undoubtedly bring about the evacuation of a hig territory of parliamentary control over finance. For that reason I appeal to honorable members to support the amendment. By so doing they will indicate that they are not regardless of their historic responsibilities as members of a democratic institution.
.- The clause deals with differences of opinion in matters of policy between the Government and the Commonwealth Bank. It is one of the very important clauses of the bill. The Government has acted fairly in having paraphrased, as faithfully as possible, paragraph 530 of the report of the Royal Commission on Monetary and Banking Systems.
– That is absolutely untrue.
– It is not untrue. The -clause is a paraphrase of that paragraph ;and gives effect to the recommendation of the commission.
– Not at all.
– The paragraph reads - tn 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.
On several occasions subsequently the paragraph refers, not to the Parliament but to the Government. These are some of the references -
Where there is a conflict between the -Government’s view . . . The Government should give the Bank an assurance … It is the duty of the Bank to accept this assurance and to carry out the policy of the -Government . . .
The government of the day will be responsible for carrying out financial policy, which will be one of the most important factors in the situation. Previous speakers have mentioned the influence which the Commonwealth Bank was able to wield in the depression, in preventing the Government from carrying out a policy designed to improve and make more secure the economic conditions of the people of this country. The honorable member for Griffith (Mr. Conelan) read a letter addressed by the Chairman of the Commonwealth Bank Board to the Treasurer of the day. I have a copy of a letter addressed by Sir Robert Gibson, chairman of the board, to the Honorable E. G. Theodore, chairman of the Loan ‘Council, dated the 2nd April, 1931. A portion of that letter reads -
I om, therefore, to advise you that in the light of all existing circumstances and future forecasts, the Bank will not be able to exceed a total of £25,000,000 represented by treasurybills or overdrafts within Australia, and the present total advanced in London upon treasury-bills and debentures amounting to £25,125,000.
In his reply, Mr. Theodore left Sir Robert Gibson in no uncertainty as to the opinion and desire of the Government. His letter, dated the 15th April, read -
In February last 1 submitted to the Com monwealth Bank Board comprehensive proposals which had been adopted by the Government as a means to ease the financial stringency and assist the nation towards bugetary stability. The co-operation of the Bank in giving effect to these proposals was sought by the Government, but was refused by the Bank.
The Board now intimates to the Government that it will not provide financial accommodation to the Commonwealth or State Governments beyond a point which will be readied in a week or two: The attitude of the Board throughout the recent negotiations, and as disclosed in the letter now referred to. nan only be regarded by the Commonwealth Government as an attempt on the part of the Bank to arrogate to itself a supremacy over the Government in the determination of the financial policy of the Commonwealth, a supremacy which, I am sure, was never contemplated by the framers of the Australian Constitution, and has never been sanctioned by the Australian people.
These calamities could have been mitigated, if not wholly avoided, if the Commonwealth Bank, with the co-operation of the private banks, had adopted a more liberal policy.
If, instead of starving the community of credit in this period of crisis, they had pursued a policy of sustaining industry until it could adjust itself gradually to the altered economic conditions, Australia could easily have weathered the storm.
That this was within the power oi the banks cannot seriously be denied. The ban la themselves have given a clear indication of their ability in this respect in their communications to the Commonwealth Government. In a communication from the Commonwealth Bank Board in February the undertaking was given that, conditional upon wages, salaries, pensions and social service? being adequately reduced, the banks would provide funds to sustain industry and restore employment.
The point definitely made in that communication was that the banks were dictating financial policy. The Government was absolutely powerless to insist upon the acceptance of its proposals. The royal commission took evidence in connexion with all the factors that were associated with that period and made the special recommendation that, when differences of opinion arose, there should be consultation between the parties, the opinion of the government of the day to prevail if agreement could not be reached. The Government, said the commission, is the Executive of the Parliament. The claim made to-day, that power is being taken from the Parliament, is entirely erroneous and misleading. The Parliament controls the Government. The people elect the Parliament, and the majority in the Parliament elect an execuive to control the affairs of this country. It is open to the Opposition to initiate a debate at any time. Last week, the Leader of the Opposition (Mr. Menzies) submitted a censure motion, challenging the authority of the Government, but his efforts were of no avail, because the Government has a majority in this chamber. The Treasurer is the nominee of the Ministry in this matter, and is controlled by it. The Government has control of Ministers, and the Parliament has control of the Government. If honorable members opposite could persuade a majority of honorable members to support their view they would be able to carry motions submitted by them. The good judgment of the country must prevail. The party that sits on this side of the chamber is in the majority, and is required by the people to implement its policy. A small minority should not be able to interfere with policy. [Quorum formed.]
– I have an amendment earlier in the clause than the one now before the committee.
– To enable that amendment to be moved, will the Leader of the Australian Country party agree to withdraw his amendment temporarily?
– I ask leave to withdraw my amendment temporarily, reserving to myself the right to re-submit it later.
Amendment - by leave - temporarily withdrawn.
.- I move -
That, in sub-clause (3.), after the words “ the Bank “, second occurring, the following words be inserted: - “in writing”.
The amendment consists of only two words, but they have vital significance in what is probably the most important clause in the bill. I have no desire to domore than reiterate, with all the emphasis of which I am capable, that if this Parliament does not insist upon the insertion, of these words it will make a final surrender of its authority to the Executive.. The purpose of the amendment is to preserve a record, so that nothing may bedone without the Parliament ultimately learning of it. The Treasurer (Mr. Chifley) has not advanced one convincingreason in opposition to this proposal. Clause 23 of the Banking Bill, dealing with the mobilization of foreign currency, provides that the Commonwealth Bank, may, from time to time, in writing, require certain things to be done. Clauses- 12, 54 and 55 of that bill also provide for the written word, in some instances when dealing with important matters in which regard should be had to what takes place.. I cannot imagine a more important matter than a conflict between the Governor of the bank and the Treasurer. Thereshould be a record of all such conflicts.. I have never disputed that monetary policy has a supreme bearing on the livesof the people and the total industrial structure of this country. I have, however, always asserted the right of theParliament to play an important part, in determining financial policy. It must be conceded that only differences on matters of major policy between theCommonwealth Bank and the Treasurer could be incapable of resolution. That being the position, the committee should agree to the insertion of the words “ in writing “, as I have proposed. “We are losing sight of the functions of this Parliament in dealing with bills of thisdescription. In committee, we deal primarily with the drafting of measures, not with matters of policy. The general principles of a bill are agreed to in thesecondreading stage. In committee we are asked to draft provisions consistent with the general principles agreed upon.
The Houses agreed to the general principles of this measure, but it is not inconsistent with that fact, to assert that at. all times the powers of Parliament shall be respected. I’ was astounded to hear it suggested that all power in respect of1 this, measure, must be handed over to the Government because the- Executivecommands a majority in Parliament. If that , idea is. to prevail, I cannot see that there is much use- in Parliament, meeting at all, and certainly private members can. serve no useful purpose, by proposing amendments. There is no party flavour about the amendment which I have moved, and private members should . assert their rights to have amendments moved by them . considered by the committee. Honorable members, opposite are bound by the decision of caucus . to , support the motion, for the second ‘ reading of. the bill,- but they are still ‘free to support amendments moved from this side of the House. It becomes necessary for- me to bring to the notice of the people the fact that the power of Parliament is steadily diminishing: - that this House is, in fact, no longer a deliberative body. I regard my amendment as vital, because it is. necessary that there should be a record kept of clashes of opinion between the Government and the Governor of ‘the bank. I also foreshadow the following additional amendment, which! will take the form of a new sub-clause’ -5 -
The Treasurer shall report any action taken by him under sub-clause 3 thereof to Parliament at its .next meeting, or within seven days thereof.
In this proposed amendment, also, there is nothing to : conflict with the Govern-, ment policy:
.- I support the amendment. Clause 9 might be designated the torpedo clause of1 the bill, because its effect will be totorpedo the Commonwealth Bank Board as ‘its reward for co-operating with the Government- during the war. The board has met- every request’ of the Government - I do. not’ use the word “ demand “ because no demand was necessary - and it is . now to - be abolished so that the Treasurer- may take over the command, as- General Officer- Commanding the; Commonwealth Bank. In order: to -justify this action,’ and1 to persuade- the public that the Government is acting -in accordance with the recommendations of the Royal Commission- on Monetary and Banking Systems,- the Treasurer (Mr. Chifley) quoted certain- passages- from the report, but he paraphrased them in such a way as - completely to alter- their meaning.- This is what the royal commission did, in fact, say on this subject - 528. There are limitations on the power of a central bank to reduce fluctuations and to maintain- reasonable stability in the- internal economy. Too much should not be expected, even i from the most enlightened policy of an all-powerful central bank. Much will depend upon the relations established between the Commonwealth Bank and the Commonwealth Government,- which is responsible, for monetary policy, … In part, the responsibility for monetary policy is delegated to the Common wealth Bank’ by the Federal Parliament in the legislation under this section, establishing the Bank and conferring upon it certain, powers, but in part the responsibility is with, the . Commonwealth Government. 520. Where responsibility is divided between two authorities, the ‘ question may arise as to- -which- authority -is to decide upon monetary policy. An answer to this question might be to provide that the Commonwealth Bank shall be .at all times under the direction of the Government.. In: this case, there can’ be no conflict between., the. two authorities. But where the Commonwealth Bank is not- under this direction, the question arises as to which view is to prevail ‘ if the Government’s view and . that of the Bank differ on a matter of monetary policy. An. answer to- this -question might be that, in exercising the authority delegated by Parliament; the Commonwealth Bank should be entirely independent and should refuse to accept direction from-‘ the Government. Then, if the Government is determined upon a policy which the Bank Board will not accept, the Government will have to obtain any legislation required, and if -necessary appoint a- board which will carry out that policy. 530. Neither of these . answers commends itself to us. 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 Bank has 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, and1 the Hoard’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 clear 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 Lt.
The amendment moved by the Leader of the Australian Country party would, if agreed to, give effect to that recommendation. In order to ensure that the bank shall be kept as free as possible from direct political control, the commission recommended that the Governor should be chairman of the board by virtue of his office, and that there should be six directors other than the Governor. The behaviour of Ministers this’ afternoon shows what the Governor of the Commonwealth Bank may expect should any difference of opinion arise on matters of policy between him and the Treasurer. No consideration whatever has been given to suggestions by honorable members on this side of the House to make the bill a workable instrument. The amendment moved by the honorable member for Warringah is entirely reasonable, and if there is any real ground for objection, it has not been stated. The only motive which the Government can have in refusing to accept the amendment is that it wishes discussions between the Treasurer and the Governor of the bank on matters of policy to be verbal, so that it can afterwards, if it so desires, give a distorted account of what took place. There is no valid ground for objection to the proposal that a record should be kept of differences of opinion between the Treasurer and the Governor of the bank so that the actual negotiations may be made known to Parliament and, through Parliament, to the nation. This is the most vital clause in the bill.
Clause 9 provides for the abolition of the Bank Board and the substitution therefor of the direct authority of the Treasurer. That alters the whole structure of our command of this country’s finances. More consideration should be given to this clause and to the bona fide amendment moved by the honorable member for Warringah (Mr. Spender). It is not to embarrass the Government, because there could be no embarrassment in the simple proposal contained therein; yet it is treated as cavilierly as we may expect the Governor of the bank to be treated when this bill becomes law.
.- Confusion on the Government side as to the meaning of this clause is obvious. The honorable member for Griffith (Mr. Conelan) declared that the control of banking policy should be in the hands of the people. That necessarily means the Parliament. There is a great distinction between the Parliament and the Executive. The Executive is subject to the will of Parliament. Governments may be formed or dismissed according to its will. Therefore, Parliament, not the Government, should control the making of policy. Strength is given to that submission by no less an authority than the Minister for Information (Mr. Calwell), in a statement reported in the Sydney Morning Herald to-day -
But we believe that the ultimate responsibility for the determination of banking policy rests in this Parliament and nowhere else.
The Minister himself, therefore, must be opposed to this clause in its present form. Why does the Government not accept the amendment? Is it because it thinks that it will have something to hide. The effect of the amendment would be that differences between the Treasurer and the bank would be set down in black and white. The attitude of the Government shows that it wishes to be able to avoid written evidence that it has forced upon the bank at the behest of outside influences a policy not in the interests of Australia. It wants everything to be done in secret. That opens the way to behind-the-scene bribery and corruption of which the people may never know. If the Minister for Works (Mr. Lazzarini) wishes to remove his party from that suspicion, he will accept the amendment on behalf of the Treasurer so that, at all times, there shall be a written record of any direction given by the Treasurer to the Governor of the bank. Left as it is, this clause may alter the whole economic structure of this country.
– I do not wish to obstruct, but I can imagine no clause of greater importance to the Parliament than this. The first matter with which I wish to deal is that dealt with at length by the honorable member for Richmond (Mr. Anthony), namely, the attempt by the Government to link the clause with the recommendation of the Royal Commission on Monetary and Banking Systems. I direct the attention of the committee to the note appended to this clause in the explanatory memorandum circulated by the Treasurer (Mr. Chifley) -
This clause gives practical effect to the views of the Banking Commission.
I have never seen a more misleading statement in a government memorandum. One has only to read what appears above it to see how misleading it is. The banking commission not only used different language but also, at all times, recognized in the bank board the strength of the whole banking edifice. The moment the Government wipes out the board as the supervising authority over the bank’s activities, it takes away from practically all the recommendations of the commission the full effect intended for them. If the Government removes the central pillar of the commission’s recommendations and then claims that it is adopting the recommendations, it is misleading the public, because it is utterly distorting what the commission had in mind. So the committee should not be deluded by this so-called explanatory memorandum into the belief that this is what the commission intended. The second matter is that the committee is being asked to surrender for ever to the Executive a great measure of the authority of the Parliament. In the course of this war, the Parliament has surrendered much of its powers to the Executive in the interest of national security, and continuously we have pressed for a restoration to the Parliament of the controls formerly exercised by it over various branches of the administration. We have not been alone in that, but have had the support of many honorable members opposite. Deliberately, honorable members are, like the Minister for Information (Mr. Calwell) and the Minister for Transport (Mr. Ward), who have always claimed to be upholders of the parliamentary institution and the champions of the rights of the people, setting out to torpedo the Parliament as a democratic instrument of authority. I am not surprised to see the Minister for Information display uneasiness. I was particularly impressed by an interjection from him when the honorable member for Richmond (Mr. Anthony) was speaking, “ What is to prevent the Commonwealth Bank from mentioning these matters in its annual report?” What sort of a democrat is he who says that? Carried to its logical conclusion, that could mean that the Government could shut down the Parliament and issue to the people an annual report on its operations.
– It is the same principle. Honorable members opposite to-day may, by the swing of the political pendulum, find themselves on this side in the not far . distant future. I do not say that as a threat, because I believe in Parliament and in the enhancement of its authority and prestige, but what this committee is doing is a bad thing for the Parliament and parliamentary government. I only ask that when the committee is called upon to vote it shall recognize the full implications of what, the Executive has called upon it to do.
Question put -
That the words proposed to be inserted (Mr. Spender’s amendment), be so inserted.
The committee divided. (The ‘Chairman- Mr. W. J. F. RlORDAN.)
Majority . . 12
Question so resolved in the negative.
Amendment (by Mr. Fadden) put -
That, in sub-clause (3.), after the word “Government”, second occurring, the following words be inserted: - “that it is in a position to take”.
The committee divided. (The Chairman - MR. W. J. F. Riordan.)
Majority - . . 12
Question so resolved in the negative.
Amendment (by Sir Earle Page) put -
That, after sub-clause (3.), the following new sub-clause be inserted: - “ (3a.) The Treasurer shall then submit the amended policy for approval of Parliament together with the reasons of the Treasurer and of the Bank for their respective views.”
The committee divided. (The Chairman- Mr. W. j. F. RlORDAN.)
Majority . . 14
Question so resolved in the negative.
.- I move -
That, at the end of sub-clause (4.), the following words be added: - “if approved by Parliament”.
The amendment is necessary to ensure that any direction given by the Treasurer shall be brought before the Parliament for ratification before it becomes operative. Statements that have been made in the committee to-day show clearly that no real reason exists why this should not be done. The Treasurer has explained to us the procedure that he would adopt in order to secure the acceptance of Government policy by the bank, but I consider that there is still more need for the matter to be brought to the attention of the Parliament. Several letters that have passed between the management of the Commonwealth Bank and governments at various times, which, in my opinion, should have been regarded as confidential documents, have been read to us since this bill has been under consideration. Letters of such importance should come to us direct from the Treasurer if they are to be published at all. I hope that the Government will accept my amendment, for it would ensure that all such communications would be put before the Parliament in a proper way. It is important to realize that on at least two occasions transactions between the bank and the Government have become acute election issues. In 1925, after the banking reforms of 1924 were effected by the Bruce-Page Government, an election was held which resulted in the return of that government by the biggest majority ever secured. Inthe new Parliament our Government held 52 seals against 23 held by the Opposition. In 1931 the Labour Government advanced a certain banking policy closely related to its present one, and again the electors of the day returned with a very big majority a non-Labour government, thus indicating public approval of its policy and antagonism to the policy of the Labour party. It is highly desirable that any directions given by a government to the bank should be ratified by Parliament. I therefore hope that my amendment will be accepted.
Question put -
That the words proposed to be added (Sir Earle Page’s amendment) be so added.
The committee divided. (The Chairman - Mr. W. J. F. Riordan.)
Majority . . . . 15
Question so resolved in the negative.
.- I move -
That the following new sub-clause be added: - “ (5.) The Treasurer shall report any action taken by him under sub-section (3.) of this section to Parliament at its next meeting, or within seven days thereof.”.
Such an amendment would be quite consistent with the stated intentions of the Government, and if the Treasurer is not prepared to accept it I ask him to tell us why he will not do so. Obviously, it is desirable that a report should be made to the Parliament within a reasonable time of any disagreement with the Governor of the bank, for the matter would be one of vital financial importance, the details of which should be made public. The Government surely will not refuse to take the public into its confidence on a matter of this description. All the brains of the community on this or any other subject are not possessed by Ministers, or ‘by members of one side of the Parliament, or, for that matter, by all the members of the Parliament, and it is therefore desirable that the public should be informed of the nature of the points at issue.
.- I support the amendment. I had hoped that the Treasurer would indicate his assent to it, but his silence shows that my hope was ill-founded. The amendment is reasonable and should commend itself to the committee. As the honorable member for Warringah (Mr. Spender) has said, disputes between the Governor of the bank and the Treasurer on vital financial subjects should be submitted by the Government to the Parliament for consideration. In that way, all the facts of the case could be considered, whereas if information in regard to the points at issue had to be obtained in some unofficial manner by a private member, certain details might not be brought to light. Private members cannot always obtain precise information on such issues. Disagreements on major financial issues may disorganize the business life of a community, and it is desirable, therefore, that the Parliament should be informed of them at the earliest possible moment. If the Government will not accept the amendment, I shall join the honorable member for Warringah in calling for a division, so that the people may know who are for and who are against the exercise of parliamentary authority.
.- I support the amendment and hope that the Government will accept it. Its inclusion in the bill would place the whole subject in proper perspective. By this means a deadlock such as that which occurred in 1931, at a time when the government had a majority in only one House of the Parliament, could be avoided. A responsibility should rest upon the Treasurer to inform the Parliament on vital subjects of disagreement between the
Governor of the bank and himself. The amendment is reasonable, and its inclusion would improve the bill. If, upon the submission to the Parliament of the particulars of any disagreement, honorable members were not satisfied that the Government had acted wisely, a motion of want of confidence could be submitted. That would be the proper way to deal with the subject. The Government should consider the acceptance of the amendment making it obligatory on the Treasurer to report his action to this Parliament, and obtain its tacit approval.
Question put -
That the new sub-clause proposed to be added (Mr. Spender’s amendment) be so added.
The committee divided. (The Chairman- Mr. W. j. F. Riordan.)
Majority . . 12
Question so resolved in the negative.
Clause agreed to.
Clause 10 agreed to.
Clause 11 (Commonwealth Bank to act as a central bank).
– I cannot assign a reason for this clause. The Commonwealth Bank is acting as a central bank at the present time. When this measure becomes law, it will no longer be a central bank, as such institutions are known, but will be also an industrial bank, a rural credits bank, a housepurchase bank, and a general bank.I submit that the clause is superfluous.
.- In view of what the constitution of the bank will be when the bill becomes law, should not the central banking functions be separated entirely from the trading functions? In 1930, Mr. Theodore, as Treasurer in the Scullin Administration, brought down a measure which separated the central bank completely from the trading bank. The relationship that is to exist between the central bank and the trading bank, as defined in the Banking Bill is practically being merged in their internal control. As I said in my second-reading speech, I have no objection to the existence of the trading bank. But it should be an entity entirely separate from the central bank, and be treated in regard to deposits with the central bank on terms identical with those imposed on the private trading banks. The Industrial Finance Department should also be treated in that way. Even if the Government cannot do now what I suggest, it should consider the matter with a view to future action. The operation of the central bank will be much more satisfactory if that institution is not “ cluttered up “ with other activities An essential function of a central bank is to keep its funds fluid, so that it may assist all banking as quickly as possible if a crisis arises. It is regrettable that provision has not been made for the retention of the utmost liquidity in the central bank. The central bank should deal with fluid securities rather than with a multiplicity of organizations.
Clause agreed to.
Clause 12 agreed to.
Clause 13 (General Powers).
– By paragraph g, the Commonwealth Bank will be authorized to buy, sell and otherwise deal in foreign currency, specie, gold and other precious metals. The Government intends to dispense with a gold reserve as a backing for the Australian note issue.
– The government of which the honorable gentleman was a member dispensed with that backing years ago.
– The Minister is not accurate. Perhaps I should say that he is more inaccurate than usual. Last night, the Treasurer (Mr. Chifley), replying to the second reading said, in effect, my remarks on the note issue transported him back to the Victorian age. That may be so, but it does not deal with the issue that if the Government no longer regards gold as necessary as a backing for the currency, thereis no reason why the Commonwealth Bank should have accorded to it special powers to deal in gold. I shall raise the subject again when the Banking Bill is under consideration, because it authorizes the Commonwealth Bank to fix’ the price of gold. If gold is to be divorced from the currency, it should have an absolutely free and open market, in which anybody may buy and sell, and the Commonwealth Bank should not have a monopoly of the dealing.
.- The committee should be given to understand whether or not the bill is to be taken to the next stagewithout the Minister at the table explaining the matters that are raised by members of the Opposition with a view to an improvement of its provisions. The Treasurer (Mr. Chifley) should be present to afford enlightenment. The honorable member for Barker (Mr. Archie Cameron), the right honorable member for Cowper (Sir Earle Page), and other honorable members have made certain inquiries, but have not received replies. Are we to be accorded that courtesy which we have a right to expect during the committee stage of a bill ? I ask for a reply by the Minister to. the points that have been raised by the honorable member for Barker.
Clause agreed to.
Clause 14 agreed to.
Clause 15 (Profits andReserve Fund).
.- An explanation in regard to the distribution of profits is due to the committee. The clause reads - ( 1. ) The net profits of the Bank in each year arising from business carried on under this Part shall be dealt with as follows: -
Is the amount which is to be paid into the Mortgage Bank fund to be in addition to that provided for in the Commonwealth Bank Act of 1943, which stipulates that a certain amount shall be available each year from the note issue in order to supply interest-free capital for the department?. If it is proposed that the profits are to replace that capital I protest, because I hold the view that the more interest-free capital we can get into the Mortgage Bank Department the lower will be the rate of interest which can be charged on advances.
.- This clause provides for the distribution of the profits of the bank, and the words of the clause mean what they say. The Mortgage Bank Department of the Commonwealth Bank has its own charter, under which it was given a capital of £4,000,000. If atsome future time the Mortgage Bank needs more capital, provision can be made to alter its charter accordingly. At the present time, there is no provision for giving it more capital than the £4,000,000 provided for in the act.
– Part 9 of the Commonwealth Bank Act provides for the setting up of a Mortgage Bank
Department and it is provided in section 144 that-
The capital of the Mortgage Bank Department shall be the aggregate, not exceeding Four million pounds of the following amounts: -
the sum of One million pounds transferred from the special reserve account in pursuance of sub-section (5.) of section one hundred and nine of this Act;
) the amounts paid to the Mortgage Bank Department from the net profits of the Bank; and
the amounts paid to the Mortgage Bank Department from the profits derived from the issue of Australian notes.
That provision is. included in the present bill, although many provisions of the Commonwealth Bank Act are omitted, for reasons which I cannot understand.
– When the bill speaks of the profits of the bank, what bank is meant ? The bank is divided into several parts.
– Admittedly, this is a very inartistic piece of drafting. It is true that the clause under discussion is in that part of the bill which deals with the Central Bank, but all departments are one bank, as is laid down in clause 8. Therefore, clause 15 must deal with the profits of the bank as a whole, and the financial position of the Mortgage Bank is untouched by anything in this clause.
Clause agreed to.
Clause 16 - (l.) The Commonwealth Bank shall carry on general banking business. (2.) The Bank shall have such powers as are necessary for the purpose of carrying on general banking business and shall, without limiting the generality of the foregoing, have all the powers referred to in paragraphs (6) to (I) (inclusive) of section thirteen of this Act. (3.) The Bank shall carry on its general banking business in a division of the Bank to be known as the General Banking Division. (4.) The Bank shall keep the accounts and transactions of the General Banking Division separate and distinct from the other accounts and transactions of the Bank.
– It is only make-believe to say, as is provided in sub-clause 3, that the bank shall carry on its general banking business in a division of the bank to be known as the General Banking Division. All the departments of the bank will be under the control of the one government, and there is no guarantee that funds from one division of the bank will not be used to carry on business in competition with the private trading banks. Clause 97 provides that the Treasurer may make advances to the bank for the purposes of the Industrial Finance Department, whilst sub-clause 3 of clause 16 provides that general banking business shall be carried on in the General Banking Division. This pretence of keeping the various activities of the bank separate will not deceive any one. Actually, there is nothing to prevent the use of the deposits of the private banks in the Commonwealth Bank for the purpose of competing in general banking business with the private banks themselves. The private banks will be compelled by law to make the deposits which can then be used against them.
.- When reading the clauses of the bill, it is difficult to realize that the various divisions of the bank are, in fact, all parts of the one organism. Apparently, the capital of the Mortgage Bank is to be limited to £4,000,000, and such other sums as shall be transferred to it from the Commonwealth Bank Reserve Fund. It is also provided that the capital of the General Banking Division shall be £4,000,000. Is this the same £4,000,000 or is each to have a capital of £4,000,000 ? There are conflicting provisions in the bill regarding the disposal of net profits. In the case of the Central Bank, the provision is -
The net profits of the Bank in each year arising from business carried on under this Parliament shall be dealt with as follows: -
One-quarter shall be placed to the credit of a fund to be called the Commonwealth Bank Reserve Fund;
one-quarter shall be paid to the Mortgage Bank Department; and
one-half shall he paid into the National Debt Sinking Fund.
However, in the case of the General Banking Division, it is provided that the net profits shall be dealt with in this way - (a.) one-half shall be placed to the credit of a fund to be called the General Banking Division Reserve Fund; and
For the sake of clarity, it would be better if the original idea put forward by the Labour Government of 1930 were reverted to, and two separate organizations were brought into being.
Clause agreed to.
Clause 17 - (1.) It shall be the duty of . the Bank, through the General Banking Division, to develop and expand its general banking business. (2.) The Bank, through the General Banking Division, shall not refuse to conduct banking business for any person, by reason only of the fact . that to conduct that business would have the effect of taking away business from another bank.
– The wording of sub-clause 1 places an absolute obligation upon the bank to expand its general banking business, a fact which will place an additional burden upon those managing the General Banking Division. In sub-clause 2, it is laid down that the bank shall not refuse to conduct banking business merely because to do so would have the effect of taking business away from another bank. A good deal of play has been made by the Government with the report of the Royal Commission on Monetary and Banking Systems when it thinks fit to do so, but in this provision, as in others, the Government has departed from the recommendations of the commission. In paragraph 559 of its report, the commission stated -
Since 1930, the Commonwealth Bank, as a matter of policy,has restricted its trading bank activities. The Bank has not refused credit accounts, but it has not sought clients from a trading bank where it considered that the latter was giving satisfactory service. The Bank’s view has been that its trading bank activities are “ a favorable adjunct to central bank control in the power . they confer to influence interest rates, to expand advances, if necessary, and to provide facilities which the trading banks may refuse or may not be in a position . to supply “. In our opinion, this is a proper practice for a central bank to adopt.
In that passage, the royal commission approved of the practice of the Commonwealth Bank. This clause cuts right across that practice. It says, not merely that the bank may engage in general banking business, but that it must do so, and that it must develop and increase the volume of business on that side.
– Ti at is the Labour party’s policy.
– Then it is even more foolish than most policies sponsored by the Labour party. This duty imposed on the bank to increase its business is associated with the freeing of the bank from taxation, so that competition in the securing of business will be loaded in favour of the Commonwealth Bank. Clause 182 of the bill reads -
The property, income and operations o£ the Bank and of the Savings Bank shall not be liable, and shall bc deemed never to have been liable, to income tax or land tax under a-ny law of the Commonwealth, or to taxation under any law of a State to which the Commonwealth is not subject.
Competition will be on the basis of one competitor being tax-free and the other being subject to all the burdens of taxation, with its influence on interest rates and other technical practice. That is the second aspect. Elsewhere in this bill, or, more particularly, in the Banking Bill, we have provisions for the freezing of deposits made by the trading banks with the central bank, and, in effect, we have a restriction of the volume of business of the trading banks to that which they had in September, 1939. First, there is the general restriction of the business of the trading banks; secondly, there is the loading of competition in favour of their competitor by the taxation provisions, and, thirdly, there is direction from the Parliament to the Commonwealth Bank that, assisted by both those, it must, as a statutory duty, increase its trading bank activities.
– And, fourthly, there ‘is the availability to the Commonwealth Bank for its use of the funds of the trading banks in the special accounts.
– Yes, I did not intend to refer to those special accounts until we reached clause 21, but, since the right honorable gentleman has mentioned them, I say now that there is no protection at all in clause 21 of the funds in those special accounts; on the contrary, it is quite clear, if one looks at the highly innocuous provisions of clause 21, that the money in those special accounts will be available to the trading banks’ competitor, the Commonwealth Bank. I do not want to repeat what I have already said at some length in my second-reading speech on the confusion between the functions of the central bank and the functions of a trading bank. All I need say in a very summary fashion is that if ever there were one bank which should preserve liquidity to the highest possible degree, it is the central bank, having regard, to its functions. But there is a direction that the central bank - because it is all one bank - is to rid itself of its liquidity by going into a series of trading bank operations, many of which, of course, would involve longterm accommodation. In the second place, the trading banks under the central banking system make, and will make, large deposits with the central bank, and if those large deposits are to be used for competition in trading bank business, I think a new low in public morality has been reached in this legislation. In the third place, the bill entirely overlooks that what is essential, if we are to have an effective banking system - and we see it at its best in Great Britain - is cooperation between the central bank and the trading banks, and you do not get cooperation of that kind if the central bank - again, I emphasize that it is the one bank - is under statutory direction that it shall be a competitor with the trading banks1 in the very field in which they expect to work.
– Clause 17 gives effect to the express policy of the Government clearly laid down by the Treasurer (Mr. Chifley) in his second-reading speech. If it is so vital, as the Leader of the Opposition (Mr. Menzies) says, why did the Opposition parties not vote against the second reading?
Opposition Members. - We did. We divided the House.
– I had forgotten. The right honorable gentleman said that the Commonwealth Bank did not have to pay taxes’. I remind him that we have just agreed to a clause under which 50 per cent, of its profits shall go to the National Debt Sinking Fund, 25 per cent, to the Commonwealth Bank reserve - and that is all that may be placed in the reserve - and, the remaining 25 per cent, to the reserve of the. Mortgage Bank Department. I do not know that taxes make greater inroads on the profits of private banks than do those provisions on the profits of the Commonwealth Bank. That disposes of the right honorable gentleman’s argument.
– I am glad the Minister thinks so.
– It is correct. The Government makes no apology for clause 17 which strikes off the shackles placed on the Commonwealth Bank by the Bruce-Page Government in 1924. Hence-, forth the Commonwealth Bank will be directed to seek the business that the right honorable member for Cowper (Sir Earle Page), as Treasurer, directed it not to seek.
– Since 1924 the assets, employees and branches of the Commonwealth Bank have been quadrupled.
– The right honora bie gentleman can squeal his loudest, but the fact remains that primary producers, industrialists and business men could not get accommodation from the Commonwealth Bank, and had to go to private banks. That was the policy laid down by the right honorable gentleman during his control of the Treasury, when he earned the soubriquet “the Tragic Treasurer “. Under that policy the Commonwealth Bank could neither seek nor take the custom of private individuals in order to expand itself. The purpose of this clause is that it shall do such business. Honorable gentlemen opposite can talk till they are black in the face. The clause stands because it expresses the emphatic policy of the Government. That is all I shall say about the clause.
. I was very interested to hear the Minister for Home Security (Mr. Lazzarini) say that this was the last argument of the Government.
– On this clause, yes.
– The last time I saw the words “the last argument of the Government” was when I saw them in Latin on the breech of a German gun. The destructive power of this clause is equal to that, of the gun. From the
Government benches we constantly hear profits being decried, but, throughout thisbill, there is a profit motive on the part of the Commonwealth Bank. One principle laid down by the Royal Commission! on Monetary and Banking Systems for a central bank is that it should not b<subservient to the profit motive. Thi.* commission reported that the centra f bank should be prepared to make heavy losses in order to maintain economic conditions to the best advantage of the people of the Commonwealth. If the provisions of this clause are mandatory and the central bank must continually expand iti* trading bank activities, when the time comes to lower the rate of interest on overdrafts the Commonwealth Bank may’ not face the issue because of the losses involved. According to paragraph’ 559 of the report -
The hank’s view has been that its trading bank activities are “ a favorable adjunct to central hank control in the power they confer to influence interest rates, to expand advances, if necessary, and to provide facilities which the trading banks may refuse or may not be in a position to supply “.
In paragraph 563 of its report the commission said -
There is, however, a clear instance where the trading bank powers of the Commonwealth Bank were used to influence certain rates through the financing of some of the pastoral finance companies. The Commonwealth Bank usually quotes a rate for advances lower than the ruling rate for trading bank advances. In November, 1934, the bank bought its overdraft rate for all customers down to l4i per cent. Certain pastoral companies were customers of the bank. When a pastoral company makes a loan to a customer, it is not so much attracted by the rate of interest as by the commission and other business which the loan brings. It will, therefore, lend its funds either at cost or with a very small margin. When the Commonwealth Bank lent money to its customer companies at 4i per cent., and this money was re-lent at approximately the same rate, it tended to bring down the rate at which money waa lent by other pastoral companies. While this continues, the bank influences the rate of interest on seasonal loans in the pastoral industry. Where the trading banks make this type of seasonal advance, pastoral companies compete with them, and in that particular field of their operations the action of the Commonwealth Bank influences their rates, but in relation to other types of loans which the companies do not seek, this form of indirect competition with the trading banks does not operate.
Speaking from memory, I believe that only three pastoral companies were customers of the bank in Sydney at that time. - But the institution was able to reduce the rate of interest payable by those three companies, because the question of profit did not arise. The institution, in view -of the small amount lent to those companies in proportion to the total amount lent to clients on overdraft, bore little loss in reducing the interest rates to 4^ per cent. ; any loss was incurred ‘by firms not financed by the Commonwealth Bank. When this institution reduced the interest rate, every pastoral house in New South Wales was obliged to follow suit, and the concession was granted in other States. The Minister for Home Security (Mr. Lazzarini) declared that this represents the Government’s last word on this matter. When thousands of people begin to suffer from the effects of this policy, this may be not the Government’s last word, but its last curse inflicted on the community by a central bank, controlled by the Treasurer and forced to undertake a large volume of trading activity which the central bank, in its wisdom, has never regarded as being necessary or helpful in the development and operation of central banking in Australia.
.- This clause places emphasis on the duty of the bank to engage freely in general banking business. Although this business is very profitable, the policy of the Commonwealth Bank in the past has been to refuse to accept the accounts of those persons who, in the opinion of the bank, were suitably accommodated by a private trading bank. The private financial institutions give excellent service to the people to-day, because they are able to undertake general banking business and lend money far in excess of their actual deposits, as the result of the movement of currency and the circulation of credit. The truth of that statement cannot be denied. In fact, the trading banks are dealers in debt. Any bank which conducted general banking business and whose customers’ accounts were all in credit, could not give that service, at the present minimum cost, unless it had been able to earn profits through extension of credit. I see no objection to the Commonwealth Bank engaging in this business. The profits, instead of being paid to private shareholders, will be credited to Commonwealth revenue, and be devoted to reducing the national debt, providing funds for the Mortgage Bank Department, and other equally useful purposes.
I intended to make the point which the Minister assisting the Treasurer (Mr. Lazzarini) made, namely, the fact that the Commonwealth Bank is not required to pay Commonwealth, State or municipal taxation, does not place it on a very advantageous footing compared with the private banks. The money that would otherwise be absorbed in taxation, will flow into Commonwealth revenue for the benefit of the people as a whole.
.- I. direct attention to the mandatory terms of these two sub-clauses. For example, sub-clause 1 provides1 -
It shall be the duty of the bank, through the General Banking Division, to develop and expand its general banking business. “Shall be” is a mandatory term. A definite direction is given to the Commonwealth Bank, through the General Banking Division, to develop and expand its business, presumably at the expense of the private trading banks. But banking requires something more than mere capital, offices and staff. A bank must have customers to enable it to develop and expand. If the bank is not able to expand, will it not be breaking the law as set out in sub-clause 1?
Sub-clause 2 provides -
The bank, through the General Banking Division, shall not refuse to conduct banking business for any person by reason only of the fact that to conduct that business would have the effect of taking away business from another bank.
– In the past the bank has refused to do so.
– The bank may have refused, because, of its conception of its functions as- a central bank. However, I direct attention to the fact that the words “ shall not refuse “ are obviously mandatory. The bank will not be able to refuse to accept the business of a client, regardless of his reputation or financial standing. An official publication issued by the Commonwealth Bank, dealing with the early history of the institution, published the following: - .
As is usual with a new bank, many “ lame ducks” whose business hadnot been favorably regarded by the private banks offered their patronage, but the Commonwealth Bank, from its beginning, was very discriminating and only accepted first-class business.
As the result of this mandatory provision, the Commonwealth Bank will not be able to refuse the business of a client who had previously been rejected by a private trading bank. I can easily imagine that a person who has been rejected by the Commonwealth Bank will protest that sub-clause 2 has been violated, and even political pressure may be brought to bear on the institution to accept the “ lame duck”, thereby jeopardizing the trading activities of the bank. I should like the Minister to explain the effects of this clause.
.- The Minister assisting the Treasurer (Mr. Lazzarini) admitted that the Government desires the Commonwealth Bank to seek new business.
-Certainly. The Treasurer made that clear in his secondreading speech.
– The Commonwealth Bank, under this clause, must seek new business. Of interest to me, as a representative of a farming district, are the terms on which the new business will be accepted by the Commonwealth Bank. Is it proposed to afford the primary producer in particular any relief from existing conditions?
Sitting suspended from 6 to 8 p.m.
– Before the suspension of the sitting I had asked the Minister whether it was the policy of the Government that the Commonwealth Bank should seek to extend its general trading business.
– Cannot the honorable member read plain English? The bill is clear enough.
– I am glad to hear the Minister’s interjection, for it indicates beyond question that the Government intends that the Commonwealth Bank shall extend its general trading business. To whose advantage that will be is quite another matter. Our experience of the Mortgage
Bank Department of the bank reveals that the unfortunate farmer will not be helped by the Commonwealth Bank seeking additional general trading business. The farmers have had a sorry experience of the Mortgage Bank Department of the bank since it was established about two years ago. On the 15th March the Leader of the Australian Country party (Mr. Fadden) asked the Treasurer -
When the Minister’s reply was received some time afterwards, it showed that the farmers can expect very little consideration from the Mortgage Bank Department in the form of concessions. I ask the Minister at the table (Mr. Lazzarini) to explain why, in the period from the 27th September, 1943, when the MortgageBank Department was established, to the 25th February, 1945, only 814 applications for advances were approved by the Mortgage Bank Department out of 1,687 submitted to it? Why were 819 applicants refused assistance?
– They may have been some of the “ lame ducks “ that the private banks would not assist.
– Now we have it I am grateful to the Minister for his interjection. No doubt the “ lame ducks “ are the unfortunate primary producers of whom the honorable member for Wannon (Mr. McLeod) speaks so often. When the Mortgage Bank Department was established these “lame ducks” believed that they would receive some assistance from it. Why was assistance refused? It was because their security was not good enough to satisfy the Mortgage Bank Department. In other words, the private banks were ready to advance more than the Mortgage Bank Department of the Commonwealth Bank would advance. More than 50 per cent. of these “ lame ducks “ were turned down cold “ by the Mortgage Bank Department. So much for the claim by honorable members opposite when this department was established that it would provide advances for primary producers at low interest rates and so assist them to overcome their financial difficulties. It is quite apparent that this Mortgage Bank Department is operating on a basis which will yield it the highest possible profit, though honorable members opposite, including the Minister for Home Security, would have us believe that the profit motive is anathema to them. It is clear to me that the Mortgage Bank Department will not assist primary producers even to the degree that private banks have helped them in the past. I direct the attention of the honorable member for Wannon and the mealy-mouthed honorable member for Wimmera (Mr. Wilson) to the fact that in Victoria only 231 applications were approved out of 592 made to the Mortgage Bank Department for assistance. The remaining 342 applicants were left to turn to the trading banks for assistance. Yet the Government’s policy is designed to destroy the private banks. Its procedure is to keep frozen the assets of the private banks at. the point of development they had reached on the 3rd September, 1939, and to oblige the banks to deposit with the Commonwealth Bank a certain percentage of their assets, which the Commonwealth Bank will use, no doubt, for its own purposes.
– The Government’s policy is also to stop inflation.
– It is rather to stop expansion by the trading banks in order that the Commonwealth Bank may expand. Under the policy of the Government the people will be forced to deal with only one bank. They will not have the option of going to another bank if one bank will not help them. They should have that option just as people have the option of turning from one political party to another if they are dissatisfied. Under the Government’s banking policy the competitive element will be entirely removed from banking practice. I ask the Minister for Home Security to explain why so many applications for assistance have been rejected by the Mortgage Bank Department of the Commonwealth Bank.
.- I cannot allow the verbose but illogical remarks of the honorable member for Richmond (Mr. Anthony) to pass with out reply. I shall tell him why the Mortgage Bank Department of the Commonwealth Bank has rejected some applications for assistance. In brief, the answer is, in the main, not that the security of the applicants was insufficient, but that it was too good.
– Tell that to tha farmers !
– I am an operative farmer, and I know the facts. The Mortgage Bank Department was obliged to reject many applications for assistance because, under National Security Regulations, clients are debarred from transferring their accounts from one bank uo another unless the bank with which they are trading attempts to withdraw their overdraft or to foreclose. Many farmers endeavoured to transfer their business to the Mortgage Bank Department because its interest rate was lower than that of the trading banks.
– Let me tell the honorable member-
– I am not interested in what the honorable member for New England (Mr. Abbott) can tell me.
– I want the honorable member to know the truth.
– It will be a bad day for me when I have to go to the honorable member for the truth. A second reason why application for advances have been refused by the Mortgage Bank Department of the Commonwealth Bank is that the department has probably received instructions from the Commonwealth Bank Board to refuse certain applications on the ground that the security offered is sufficiently good for them to obtain advances from the trading banks. The Bank Board, which this Government intends to abolish, issues instructions, the effect of which is to oblige applicants to apply to private banks. Such cases, no doubt, contribute largely to the total number of rejected applications referred to by the honorable member for Richmond, yet, he has th, audacity to say that the Mortgage Bank Department will not help applicants. The purpose of the Mortgage Bank Department is to provide loans at a lower interest rate than that of the private banks for farmers who are in difficulties, and to arrange for the amortization of the loans over a long period. There are two main methods by which primary producers, in the ordinary way, may obtain advances. One is by direct loan, and the other is by the daily balance method. But there is a third class which sometimes seeks assistance. The case came before me within the last six months of the son of a farmer, who desired to purchase a property. It was a “cleanskinned “ proposition ; in other words, the property had no mortgage on it. The son applied to the Commonwealth Bank for a loan, and the application was received favorably. ‘Some time afterwards, however, when he was ready to proceed farther with the transaction the local manager of the Commonwealth Bank said to him, “I am sorry that I cannot do anything about this matter, after all “. The applicant asked why, and the Commonwealth Bank manager replied that as the applicant’s grandfather and father had had their accounts with the Bank of New South Wales he had been instructed not to accept the new account. That is a sample of the competitive business to which the honorable member for Richmond referred.
– I view with some concern the limitation proposed to be placed on the private trading banks, because I know of applications having been rejected by the Mortgage Bank Department of the Commonwealth Bank. I cite the case of a man who worked on a farm for some years, and eventually leased another farm of 100 acres at £3 an acre. In ten years, after payment of rent, he had saved £2,000, and he had plant and stock which were unencumbered. He had an opportunity to purchase the property, because it was held by the trustees of a deceased estate, at £45 an acre. When he learned of this legislation, he wrote to me asking whether the Commonwealth Bank would be prepared to do business with such as he. He had nine children. He made an application to the Commonwealth Bank, but it was rejected. When he communicated with me, I wrote to the Treasurer (Mr. Chifley), stating the circumstances, and. pointing out that this man was of the very type that should be encouraged by the Commonwealth Bank. For ten years, he paid £300 a year in rent. Had he had to pay 4^ per cent, on the whole of the purchase money, his liability would have been reduced to £202 a year. I pay this tribute to the Treasurer - that after his attention had been drawn to the case, and he saw how unfairly the man had been treated, a notification was sent to the applicant that the Commonwealth Bank was prepared to provide the full cash payment on the farm. The point that I emphasize is, that it should not have been necessary for a nian whose, reputation and record stood so high, to ask a politician to make representations on his behalf to the Treasurer, because he could not obtain that to which he was justly entitled. It is because of cases of this sort that I view with alarm the proposal to restrict the business of the private trading banks, and to leave those whose applications have been rejected by the Commonwealth Bank to the mercy of the financial wolves.
.- -I am thankful to the honorable member for Corangamite (Mr. McDonald) for having proved the necessity for the proposal of the Government to change the method of control of the Commonwealth Bank. The reason for the existence of cases such as he has cited, has been the policy of the Commonwealth Bank Board. I have had a similar experience. The so-called farmers’ friend from Richmond (Mr. Anthony) referred to “ lame ducks “. The policy followed by the private banks some years ago compelled farmers to borrow, with the result that the price of wheat, properties rose to £20 an acre; and there were persons who were willing to pay it. Within two years, the price of wheat dropped to ls. 6d. a bushel, and those who had purchased properties at that high figure had no equity in them. Because the banks could not recoup their outlay, they kept the owners on the land pending inflation, and then off they would go. As farmers, they were assets to the nation. I have always been an advocate for them, and always will’ be, against any bank manipulation. The honorable member claimed that they would be refused accommodation in the future. At least they will never be led into such a trap as borrowing four times the value of the property and then being evicted from it. As the honorable member for Corangamite has pointed out, such is the present liaison between the private banks and the administration of the Commonwealth Bank that the latter institution will not accept good business. He has correctly stated- the position.
– The honorable member for Richmond (Mr. Anthony) has produced figures showing that in New South Wales the Mortgage Bank Department of the Commonwealth Bank ha9 approved, 814 applications and rejected 819.
– The figures for Victoria are worse than that.
– The Victorian figures are 231 applications approved and 342 declined. It is ridiculous to say that the reason for rejections has been that the private banks already had the accounts of the applicants, or that men were driven to do business with the private banks. I received this letter from the Treasurer (Mr. Chifley), dated the ‘9th April last-
I refer to the question that you asked in ibc House of Representatives on the 23rd March, 1945, regarding the policy of the Commonwealth Bank in relation to loans on the security of live-stock.
As promised in reply to your question, I have made inquiries of the Commonwealth Bank and have been informed that, in accordance with normal banking practice in Australia, the bank does not consider mortgages over live-stock to be first-class security for overdraft accommodation, and that only in very special cases are advances so made without other cover.
Advances against the security of live-stock ure regarded by the Commonwealth Bank as being more within the sphere of pastoral companies, which do a considerable volume of such business.
The case that I had raised was that of a man who had saved a few hundred pounds and desired to buy a dairy farm in my electorate. He had not quite sufficient cash to enable him to borrow up to 70 per cent, of the value of the farm; but he had live-stock assets on which he would have been able to raise a loan from a private bank by giving a second mortgage as collateral security over the real estate asset of the dairy farm.
The CHAIRMAN (Mr. Riordan).I ask the honorable member to connect his remarks with the clause.
– I have borrowed money against live-stock from a private trading bank. The Commonwealth Bank refused to lend money against livestock, because the real estate assets of the borrower could not be given as collateral security in a second mortgage to the general trading department. The Royal Commission on Monetary and Banking Systems said that the Australian economy required a banking system of great flexibility. The regimented system put forward by the Government in this bill in connexion with both the general trading department and the mortgage department will not give that flexibility which is so necessary. The honorable member for Wannon (Mr. McLeod) has spoken of loans being forced on farmers by the private banks. He said that these men were led into traps, and that having borrowed, the wicked bank squeezed them when prices were low and drove them off their properties-.
– No one knows that better than the honorable gentleman.
– The wisdom of the Minister for Commerce and Agriculture (Mr. Scully) in this matter is no greater than that which he has displayed in his policy for the feeding of this country. I pay much more heed to what the Acting Prime Minister says than to what is said by either the honorable member for Wannon or the Minister for Commerce and Agriculture. In paragraph 565, the commission reported in these terms -
There is no justification for the view that the trading banks in order to enlarge their profits, deliberately expanded credit to produce a boom and then contracted so as to produce a depression. In their efforts to contract advances, the trading banks in some cases caused hardship by forcing realization of assets.
That report was signed by the present Acting Prime Minister. The honorable member for Wannon and the Minister for Commerce and Agriculture pose as Delphic oracles when speaking on farming matters. It may interest them to leant that the royal commission travelled throughout Australia and took evidence in every capital city. Its sittings numbered approximately 200. By means of press advertisements and statements by the chairman to the press, persons who were dissatisfied with the treatment they had received from the private banks were asked to state their case before the commission; yet there was practically no response. If the treatment spoken of by the honorable member for Wannon were general in the farming community, surely some persons would have appeared before the royal commission to tell the story of the harsh treatment that had been meted out to them ! There will be grave danger in the proposed extension of the general banking business of the Commonwealth Bank, to the detriment of the central bank. The last -evil may be much worse than the first, and the people of Australia may be forced into paying high rates of interest. If they are crippled by a bureaucratic institution, they will curse the day on which it was given sole control.
Mr. LEMMON (Forrest) [S.28J.- Two points were made by the honorable member for New England (Mr. Abbott). He stated that under the general banking provisions that are now before the committee, the Commonwealth Bank would lack flexibility in comparison with private banking institutions. He quoted a letter in which the Treasurer (Mr. Chifley) stated that the Bank Board does not regard live-stock as a good security. Nor does any private bank. Those who regard live-stock as a good security are, in the main, Dalgety and Company, Elder Smith, Goldsbrough Mort, and similar firms, which, by means of bills of sale, are able to collect the proceeds of the sale of progeny and the wool clip. It is recognized in financial circles that far more can be obtained from a live-stock firm on a bill of sale on stock than from a private bank, which does not want the business and has not the outside organization that would enable it to keep a check on assets, which quickly deteriorate, particularly when there is a shortage of feed. The honorable member for New England has proved that live-stock is a bad security, because he said that a second mortgage or collateral security would have to be given. The general banking department of the Commonwealth Bank accepts the’ ordinary mortgage on a farm - the interest is 1 per cent, cheaper on a daily balance - and also takes into consideration the assets of machinery and live-stock Although it will not lend as much as the wool-brokers, it will lend quite as much as any other bank. The honorable member for New England (Mr. Abbott) said that he had travelled about the country, and did not hear any complaints from farmers.
– I said that the royal commission had done so.
– Well, the honorable member was himself a member of the royal commission. It is easy to understand why farmers did not come forward with complaints. Here is a letter which was sent by the National Bank of Australasia to one of its clients asking him to sign a circular letter protesting .against the banking proposals -
With reference to your recent interview with us regarding our printed circular on Threatened Banking Control and the action you would take in regard .to same.
We have prepared a letter of protest which we would ask you to be good enough to sign and return to us as early as you can conveniently do so. We shall then- forward the letter on to .the Federal Member at Canberra.
He wrote to me saying that he had to sign the circular, but he- did not want me to take any notice of it because he wanted the Government to go on with its banking legislation. I have here another letter from a farmer in Western Australia. I know the man well, and I know his farm. This is what he wrote -
T was asked yesterday by the local bank manager to sign a letter typed by the bank, and which he was intending to keep in case I forgot to post as well as write, asking you to vote against government control of banking. I was not prepared to do so, but on the contrary desire you to vote to control ba liking. . . .
I would .prefer that you do not use my name in any use you make of the above.
Honorable members opposite talk of bureaucratic control, but there could be no more rigid control than that which the banks seek to exercise over those who are in their debt. These letters indicate very plainly why the farmers ore afraid to come forward and give evidence against the banks.
– This debate has taken a twist which I did not expect. I was not a member of the Royal Commission on Monetary and Banking Systems, but I was a member of a commission which inquired into the wheat industry, and many farmers came forward to tell us of their experiences at the hands of the banks. We learned of all too many cases in which men had borrowed from the private banks in order to buy wheat land at prices which the land could not sustain unless every season was good and the price of wheat was at least 5s. a bushel. We learned of farmers in South Australia, north-western Victoria, and south-western New South Wales who were trying to grow wheat on land that nature never intended to grow wheat. Even if clause 17 is applied, and the Commonwealth Bank is as successful as some vociferous Ministers would like, some farmers will still be up against the problem of trying to grow wheat on land which is incapable of producing wheat probably even if the price were £1 a bushel. Whilst I oppose this clause, I am not blind to some of the things done in financial circles. I was taught by a former Attorney-General in- South Australia that no legislature can devise a law that will protect a fool from his folly. There are gamblers in production just as there are gamblers on race-horses and greyhounds. The undisclosed intention behind clause 17 is, not so much the financing of primary production, as the. introduction of a method by which the trading banks will be starved out of existence. I believe that the individual should have the right to decide where he will conduct his business - whether with the Commonwealth Bank or with a private bank.
– He has no choice now as to where he will buy a postage stamp.
– No; and if this bill be passed, he will have no choice as to where he may keep his bank account, either. We know that the policy of the Labour party includes nationalization of banking, but why does it not seek to give effect to that policy openly and in the light of day ? Why try to do it by such methods as this? The clause provides that the Commonwealth Bank shall not refuse to make an advance on the ground that to do so would take business away from a private bank. I say that if people wanted to deal with the Commonwealth Bank they have had ample opportunity to do so at any time during the last 30 years. No amount of propaganda will induce people to take their business away from a bank with which they are satisfied.
– They will go to tha Commonwealth Bank because there they will get accommodation at 1 per cent. less. In the past, they were not able to avail themselves of this because of the policy of the Commonwealth Bank Board.
– Are we to assume that it is intended to fix the rate of interest on advances by the Commonwealth Bank at a lower figure than the rate charged by the trading banks? Does the Government intend to fix a higher rate for deposits with the Commonwealth Bank than will be paid by the trading banks? A mortgage bank has been set up to cater for the needs of primary producers, but there is nothing to compel a land-holder to deal with the mortgage bank. He may walk into the General Banking Division of the Commonwealth Bank, and get accommodation there. I was amazed at the story told by the honorable member for Forrest (Mr. Lemmon) about the bank which refused a man financial accommodation because his business was too good. That must be a most unusual experience. When government banks were set up in the various States, such as the Rural Bank of Western Australia and the Rural Bank of New South Wales, they had no difficulty in getting business from the private banks. The “lame ducks” referred to by the Minister assisting the Treasurer (Mr. Lazzarini) came along in droves, and any private bank which objected to such persons transferring their accounts would be stupid. Those who were offered better terms by the State banks, naturally, took their business there. The Minister for Information (Mr. Calwell) has unwittingly disclosed that it is the intention of the Government to lay down one set of rules regarding interest that may be charged by the private banks and another set for the Commonwealth Bank.
– I said that the practice to-day was for the Commonwealth Bank to make advances at a lower rate of interest than the private banks, but that many people were unable to take advantage of this because of the action of the Commonwealth Bank Board in refusing to accept transfer of accounts from the private banks.
– It is proposed that the Commonwealth Bank shall have power to fix rates of interest charged by the private banks. Are we to understand that the Commonwealth Bank will fix one rate of interest for itself and another rate for the private banks? Are we to have the same state of affairs in connexion with banking as exists in the Public Service, where the amount of a man’s salary, and the travelling expenses he may receive, depend upon whether he is a unionist or not ? Is this invidious discrimination to be introduced into every walk of life ? The Australian community will reject that proposition if it is put up. On another clause, I asked this afternoon what would happen to the stock agents if this bill became law. I am still awaiting the answer. Those firms carry out banking activities every day and in every State of the Commonwealth.
– Order ! That has nothing to do with Part IV. of this bill.
– It has everything to do with it. The Commonwealth Bank is instructed by this Parliament to compete with other banks for banking business and it will compete with other cheque-paying institutions in Australia, amongst which are practically all stock agencies in Australia. I ask what their position will be. They carry on a most useful and important vocation in this country. They have been responsible for the development of a lot of the back country of Australia. They have taken risks which no Commonwealth Government institution would be game to take, for the simple reason as you, Mr. Chairman, with your out-back constituency, should know, that they are prepared to back the man and risk the season. That is why, if the Commonwealth Bank gets the business that the Government hopes that it will get under this bill, it will be on a very different basis from that on which business has been secured by the stock firms and private banks in Australia. There is a case for the Government to answer.
Sub-clause 2 of clause 17 provides -
The bank, through the General Banking Division, shall not refuse to conduct banking business for any person, by reason only of the fact that to conduct that business would have the effect of taking away business from another bank.
That does not mean anything. Except for the Minister for Information (Mr. Calwell), all members of the Curtin Government have held ministerial rank for nearly four years, during which the Commonwealth Bank has refused to accept accounts transferred from other banks. They have had the power, under National Security Regulations, to give any instruction they like to the Commonwealth Bank and, if they have allowed the state of affairs of which they now complain so bitterly to persist for three years and eight months, without having attempted to rectify it, they are not worthy of the trust reposed in them by the people of Australia at the last general elections and have badly let the country down.
– We have rectified it to-night.
– Perhaps the honorable gentleman’s policy is “ better late than never “.
– He said “ rectified “.
– Oh!I thought he said “ wrecked “.
– This clause is one of the most important in the bill. It is eloquent, not in what it says, but in what it tries to conceal. It is eloquent inasfar as it provides that the Commonwealth Bank shall be instructed to attempt to put out of business the private banks of Australia.
– Order ! The honorable member’s time has expired.
.- One gets dizzy trying to follow honorable members opposite; Ministers and supporters alike, speak with two voices. In one breath they bless, and in the next they curse the Commonwealth Bank. In one breath they say that it is the most flexible instrument we have and that it does cater for the people. They cite instances of what it has done. In the next breath, they say, “What a rotten board it has. The board will not let the bank do anything at all “. The Minister for Works (Mr. Lazzarini) gave us the impression that the bank had been shrinking in size, was not doing any general banking business, and had not opened any new branches. The figures give that the lie. In 1922, just before the Commonwealth Bank Board was appointed, there were 62 full branches of the Commonwealth Bank an Australia. To-day, there are 275 - more than four rimes as many.
– Not enough !
– Perhaps not, but I. tell the honorable gentleman that the most modern building in every country town in New South Wales is the branch of the Commonwealth Bank erected in the last ten years. There is the lie direct to the Minister’s claims’ that the bank has dwindled. If that be insufficient to convince him that he is wrong, I instance the fact, that, whereas, in 1922, there was a staff of only 1,800, to-day there is a staff of 6,300 - more than three times as many. Moreover, the assets have risen from £134,000,000 to £457,000,000 in the same period. Then we hear honorable gentlemen opposite say that the bank will do nothing for the primary producer. It cannot because the Mortgage Bank Department was crucified in this very building. Honorable members will recall how 1, with the honorable member for Wimmera (Mr. Wilson) and other members of the Australian Country party, tried to ensure that it should be of some real assistance to the men on the land when the legislation establishing it was before us. We failed. To-day, I tried to have the capital of the Mortgage Bank Department increased, instead of depleted, as it will be by the provisions of this ‘bill, which specify that, instead of the capital provided for the bank by the legislation under which it was set up, the capital now shall be 25 per cent, of the profits of one part only of the Commonwealth Bank. I tried without avail to have additional capital set aside. The capital provided for the Mortgage Bank is not sufficient to enable it to lift the. burden of mortgages from those who are struggling under them. Honorable gentlemen opposite have also averred that the Commonwealth Bank Board has not done its job. Rmit what has -happened in respect of primary producers? Before the war the Rural Credits Department had lent £125,000,000. In the last four and a half years, according to figures given by the Commonwealth Bank itself on the 27th March last, the bank itself has advanced £244,000,000 on the sale of primary products. Honorable gentlemen opposite have said, on the one hand, that the bank is prosperous and has done a good job, and, on the other, that it is halt, maimed, and hamstringed. Statements that the bank is flexible and that the bank is inflexible come from honorable gentlemen opposite alternately. They revolve like a merry-go-round. So do we, and no wonder, because clause 17 is the woolliest ever put into Commonwealth legislation. What does it say? Subclause 1 says -
It shall be the duty of the bank, through the General Banking Division, to develop and expand its general banking business.
What is the use of the bank if its pur- pose is not to develop and expand? abour caucus members must be very thick in the head if they think that must be provided for when it is automatic. Even a fool ought to realize that that is the purpose of the bank. So why is it provided for? I agree with the honorable member for Barker (Mr. Archie Cameron) that no one knows what the clause really means. Then subclause 2 provides1 -
The Bank, through the General Banking Division, shall not refuse to conduct banking business for any person . . . and certain reasons are given. There is only one reason, why the Commonwealth Bank has developed its immensity.
– It is no thanks to the right honorable member.
– It is thanks to me. The bank has developed so greatly because of the confidence that I engendered in it by the management it was given. That is why it has developed fourfold. The honorable member would think that if he was becoming fatter and fatter and stronger and stronger he was going into a decline and was about to be buried, because that is the way in which he looks at the Commonwealth Bank. The position is that the Commonwealth Bank has been growing all the time because the Australian people have confidence in it. The hank has carried on its work in a wonderful way during this war and has earned the eternal gratitude of our people. Now, after six years of war work, the Commonwealth Bank Board is to he kicked out without one word of thanks from the Government - -with nothing hut condemnation and contempt. The hank has been able to do that wonderful work because it has enjoyed the confidence of the people and because it has maintained proper banking procedure. If the bank regards a man as not having a good security, or doe3 not like the way he conducts his business, or does not like the business he proposes to undertake, it should be free to say, “We are dealing with the deposits of the people of Australia. The money we hold has been lent to us because the people trust us. It is up to us, as a banking institution, to make certain that the money we lend shall be wisely and safely used “. But to tell the bank that it must not refuse to lend to any person is a travesty of law which could only come from a permanent inmate of a lunatic asylum. The administration of the bank must be free to judge the facts. The purpose of this bill is to ensure that the Commonwealth Bank shall be under the control of experts. Of what use is that if you say to them, “ No matter what your expert knowledge tells you should be done, you must not refuse to lend to any person “. “ What a stupid position ! That is the most foolish clause ever put into a bill. That alone is sufficient to condemn it, but there is something else. Not merely is the Commonwealth Bank to use for banking purposes the deposits and the credit of the people of Australia, but, under clause 21, it will be able to use money which people have deposited with other banks because they trust the management of those banks. It is infamous and scandalous to take money deposited in the Bank of New South Wales, or some other private bank, into the central bank so that it may be used in the Commonwealth Bank’s general banking business. Mr. Theodore, a former Commonwealth Treasurer, pointed out, fifteen years ago, that it was wrong to place the Commonwealth trading bank in a position different from that of other trading banks; and to use the money saved by the people of Australia, and placed on deposit with other banks, under an instruction that the Commonwealth Bank must lend to any person is a disgrace, and I shall be astonished if this is passed into law by any intelligentHouse.
.- This clause has amused me more than it has amazed me. Clause 16 (1) says -
The Commonwealth Bank shall carry on general banking business.
Ever since its establishment, it has been the policy of the Commonwealth Bank to carry on general banking business. The figures cited by the right honorable member for Cowper (Sir Earle Page) prove that that is so. Clause 17 is political window-dressing of no real value to th,bill, and will have little effect on the management of the bank. Sub-clause 1 says -
It shall be the duty of the bank, through the General Banking Division, to develop and expand its general banking business.
That is a ridiculous statement. If it read -
It shall be the aim or objective of the bank to carry on general banking business- it would merely repeat the preceding clause. The words “ it shall be the duty of the bank, through the general banking division, to develop and expand its general banking business “ are a sop to those people who desire the Commonwealth Bank to seize a part, if not all, of the business of the private trading banks. Will the Governor of the bank be failing in his duty if he does not establish a branch in every town throughout the Commonwealth? That is what is implied by those words. A horse can be led to water but cannot be made to drink: and no governor of a bank can expand and develop the institution beyond the limits of the business that the community will give it. Sub-clause 2 is pure nonsense, because there are numerous reasons why a bank may refuse to grant a client an overdraft without explaining them to him. This clause is an amateurish way of endeavouring to write into the bill that the governor of the Commonwealth Bank shall be not empowered to enter into an agreement with the private trading banks for the general exchange of business. The bill is marred by the inclusion of this clause, which should be abandoned, because it is redundant.
– This clause is not so innocent as it appears, because it is a definite declaration of the policy of the Government. Honorable members should not forget that the policy of the bank is the policy of the Government, as the Treasurer will be the financial and economic dictator of the banking structure. For that reason, this clause has been specially drafted in its present form. “Without any camouflage, it may be described as the “ nationalization of banking “ clause. If it be implemented, the trading banks will be strangled, and the Commonwealth Bank will be an ill-balanced financial structure that may bring disaster to this country. During this discussion the statement has been made that the Commonwealth Bank has restricted its trading activities, and has not been so generous to its clients as it might have been. The right honorable member for Cowper (Sir Earle Page) expressed the opposite view. I do not propose to discuss the merits and demerits of the previous policy of the Commonwealth Bank, except to emphasize that the institution is not subject at the present time to any legal restrictions onthe nature and scope of its business. It may engage quite freely in competition with the private trading banks. But the institution must carry out the policy of the Commonwealth Bank Board, and that policy has been defined by the Royal Commission on Monetary and Banking Systems, as follows : -
The Commonwealth Bank has taken the view that its central bank activities are of paramount importance, and that its development as a central bank should go hand in hand with some limitation of its trading activities.
– We do not admit that.
– Of course not, yet, the Government has the audacity to tell the country that in this legislation it is giving effect to the recommendations of the royal commission! The quotation continues -
The possession by the Commonwealth Bank of trading powers derives, as we have seen, from the fact that it was not originally set up as a central bank but only acquired this function gradually at later stages of its development. In refraining from pressing its powers of competition with the trading banks, the Commonwealth Bank conforms to modern trends in central banking thought and practice. All central banks which originally carried on trading bank or ordinary commercial banking business have recognized the wisdom of curtailing their trading activities in favour of concentration on central banking.
The reasons for this trend towards the restriction of direct dealings with the public have been summarized as follows: -
That the central bank should aim at maintaining a position of great strength and liquidity in normal times in order not only to cope with unusual seasonal demands for credit, but also to deal effectively with emergencies and periods of general financial strain ;
that if the central bank is also engaged in a large commercial banking business its liquidity is likely to be affected for the same reasons and in the same manner as that of the commercial banks and other credit institutions, and, consequently, that its capacity to come to their aid with rediscounts in times of emergency would be impaired depending upon the extent to which it was involved in ordinary banking transactions;
that the use of direct dealing with the public as a measure of credit control either as an alternative or an addition to open-market operations, if of limited scope, since in contrast to the indirect and impersonal nature of the latter it involves direct and personal contact with the borrower and a certain amount of responsibility for meeting his legitimate requirements, which would tend to prevent the central bank from applying drastic contraction of credit to its customers as a means of reducing the credit base and bringing about credit contraction generall y;
that in the interests of the banking and credit structure as a whole it is highly desirable for the commercial banks to keep their excess cash reserves (i.e. over and above their till money requirements) with the central bank, and that where the commercial banks are not required by law to maintain minimum reserves with the central bank they cannot be expected to do so voluntarily to any great extent if it actively competes with them in their special fields of business, and that where statutory minimum reserves are laid down the commercial banks cannot altogether be blamed for resenting what they consider to be the central bank’s use of their own funds against them in competition for business.
In. that regard, I desire to direct attention to the extent to which the Commonwealth Bank is continuing to utilize the special deposits which the private trading banks have lodged with it. ‘ The lodgment of those deposits was necessary as a war-time measure, and an undertaking was given that the Commonwealth ‘ Bank would not enter into active competition with the trading banks so long as it held those deposits. According to the balance-sheet of the Commonwealth Bank at the 30th June, 1944, those special war-time deposits totalled £185,000,000. I have examined the disposition of the money, and find that the Commonwealth Government securities, including treasury-bills, amounted to £223,000,000 ; money at short call in London, £119,000,000; and bills discounted, loans and advances to customers, and other assets, £35,000,000. The total of the funds is £411,000,000. Of that sum, the private trading banks have contributed £185,000,000.
– Where did the right honorable gentleman find the undertaking by the Commonwealth Bank not to compete with the trading banks?
– I have heard of it and read of it.
– 1 know that the undertaking was given by the board a long while ago, but I thought that the right honorable gentleman suggested that it had been given by this Government.
– No; but that undertaking was given to the trading banks.
– Long ago.
– The undertaking was given when the trading banks first lodged their special deposits with the Commonwealth Bank. The undertaking was an honorable and proper one, because the lodgment of those deposits was a necessary war-time measure. But under peace-time conditions, the Commonwealth Bank will “ develop and expand “ its general banking business at the expense of the trading banks, and common decency demands that the Commonwealth Bank should not use the deposits of the trading banks as ammunition with which to shoot them. The latest figures available to me show that the special deposits now total £240,000,000.
Honorable members should not forge?that in adapting” itself to perform thefunctions of a central bank, the Common wealth Bank is able to draw on th? experience and traditions of older institutions that have long engaged ii central banking practice. The Bank of England, in its evolution from a commercial bank to a central bank, provides a lesson from which the Commonwealth Bank has benefited. The story will interest honorable members -
In its early years at the end of the seventeenth century and during the eighteenth, the Bank of England was a commercial bank. If has, during the course of its history, dealt Ur a very great extent in the same types of operation as arc carried on to-day by thegreat deposit banks. This characteristic was also maintained to a certain degree during the nineteenth century; as, however, the big deposit banks ‘were founded and developed in England, the central bank showed a tendency to abstain more and more from any operations which might compete with these new institutions.
At present, the Bank of England has still a special clientele in the commercial _ and industrial world, hut does not encourage the development of their operations. In the words of Sir Ernest Harvey, “ They let this commercial policy die a natural death “. The official viewis to close down progressively all operations which might be done equally well by other banks1, but retaining at the same time the complete liberty of the central bank, in theory, to engage in such operations. The central bank should have a liberty which it should not necessarily exercise. Where banks were specially established as central banks, it is significant that ordinary trading was generally held to be undesirable. No power to carry on general commercial banking was vested in the Reserve Bank . of New Zealand when it was constituted, nor was such an extension of its activities brought into effect when the Labour Government assumed control of it in 1936. Similarly, the Bank of Canada is prevented, by itfConstitution, from competing with the general public in commercial banking business.
It has been claimed by the Commonwealth Bank that its existing trading activities should be maintained, but not extended because they - are a favorable adjunct to central bank control in the power they confer to influence interest rates, to expand advances, if neces sary, and to provide facilities which the trading banks may refuse or may not be in a position to supply.
The banking commission, with only Mr. Chifley dissenting, added that -
In our opinion this is a proper practice for a Gentral bank to adopt.
An examination of the South African Reserve Bank is instructive. The directors of that institution considered that they would not be able to supervise interest rates and the volume of credit unless the bank “ went a little way into the commercial banking business itself “’. So the bank opened, in the main ports and cities of the union, five branches which accepted deposits and discounted bills for commercial clients. The Governor stated that he hoped thereby to build up “ such a modicum of sound business as will make our bank rate effective “. This moderate policy has been maintained. No overdrafts are granted and the bank has not, in practice, competed to any extent in “the commercial banking field. On principle, it refrains from doing so, and the result has been that the volume of business taken away from the trading banks has been very small.
Those statements show that nowhere else has there been a departure from the true interpretation of central or reserve banking. But by developing and expanding the central bank in Australia for the purpose of competing with the private trading banks, the Government will jeopardize the real purpose of the central bank, which is to safeguard pur national economy.
– wish to clarify some of the points to which the Leader of the Australian Country party (Mr. Fadden) referred. The right honorable gentleman implied in his remarks, though I do not say that he intended to do so, that this Government had given an undertaking of some description to the private banks that the Commonwealth B.ank would not enter intocompetition with them.
– I said . that it had been given, but I did not say by this Government.
– It is true that by the administration of the Commonwealth
Bank, the private banks may have been led to believe that the Commonwealth Bank would not enter into competition with them. The bank board may have issued instructions to its managers that they were not to take business that was already held by the private banks if the business was being conducted in a satisfactory way. The honorable member for New England (Mr. Abbott) may remember that at one of the meetings of the Royal Commission on Monetary and Banking Systems I asked Sir Ernest Riddle whether it was true that instructions had been issued to managers of Commonwealth Bank branches that they were not to seek business from the customers of the private banks if such business was being conducted satisfactorily. I do not remember either my own exact words or the exact words of Sir Ernest Riddle in reply, but he gave me a fairly clear indication that such business was not being accepted by the Commonwealth Bank. My own personal experience was also that that way the case. It seems to me to be quite fantastic that the people’s own bank should be debarred from accepting business from any citizen who desired to do business with it.
– - I think that was in consideration of the trading banks lodging their reserves with the Commonwealth Bank in 1928.
– I agree with the honorable member. The suggestion was that the Central Bank would not compete with the private banks if they lodged their reserves with it.
– There was a condition that the business between the trading banks and their customers must be oh a satisfactory footing.
– I have already stated that point. To me it is ridiculous that the people at large, who are shareholders in the Commonwealth Bank, should be debarred from doing business with it. The Leader of the Australian Country party spoke, at some length, about Central Bank traditions. The Labour party is not worried about banking traditions which, in the past, have brought ruin to people in many countries of the world. We are seeking a new order in finance.
– I referred to South. Africa, Canada, and England.
– The right honorable gentleman instanced banks, which had followed traditional practice. This Government does not propose to be bound by traditions. The power which the Government is seeking to restore to the bank was a power that was provided in the. bank’s original charter. The Government is not acting in malice, but in what it conceives to be the best interests of the people of Australia. The Leader of the Australian Country party also made reference to the use of deposits lodged by the private banks with the Commonwealth Bank and suggested that such deposits could be used by the Commonwealth Bank for the purpose of competing against the private banks. It is not the intention of the Government that that shall be done, and the bill was not drafted to give effect, to any such policy ; on the contrary, an endeavour was made, in the drafting of clause 21, to state clearly that it should not be done. I have no wish to misrepresent the views of the Leader of the Australian Country party, but he seemed to suggest that under this legislation the Central Bank would be able to lend money to the Treasurer, and that the Treasurer could then lend it to the general trading department of the Commonwealth Bank. That was pulling a fairly long bow. It is perfectly true that to-day the Central Bank may lend money to the Treasurer, and that it may be made available subsequently to the Mortgage Bank Department of the Commonwealth Bank. That could have been done before the introduction of the existing special deposits provisions in our banking legislation. The Government has no intention that anything of that kind shall be done with the special deposits.
– Then that is one amendment that will be accepted, I take it?
– My foreshadowed amendment to clause 21 is apparently already accepted!
– I say to the Leader of the Opposition and to the Leader of the Australian Country party that the provisions of this bill were drafted only after very careful consideration. I discussed them with the best legal authori ties available to the Commonwealth, including my eminent legal colleague, the Attorney-General (Dr. Evatt). I also took the opportunity to discuss the provisions of the bill with the Governor of the bank, though I do not desire honorable members to assume that I always accepted the advice that he tendered to me. I would not like it to be thought that this is his bill.
– Is the Treasurer leading us up to the point of saying that he will not accept any amendments to the bill? I hope not, for that would be a shock to us all, though we rather thought that that would be the case in view of the fact that the Minister for Security has been left in charge of the measure.
– The Opposition may take it that it is “ odds on “ that the Government will not accept amendments - at least not at this stage. If some points arise in the course of the discussion which we think should be examined, they will be examined, for we are not infallible insofar as drafting is concerned, though I am not admitting that we may not be very nearly infallible in our judgment. But whether our judgment is good or bad will become apparent only by the effluxion of time and the operation of the legislation. If it appears from experience that some of the provisions of the legislation are wrong in principle, I hope that no government will be so stupid as to persist in retaining them. However, I go so far as to say that I do not think that the Opposition would be game to amend the measure for purely political reasons, even if, after some time, it had the opportunity to do so. The two points I wish to make specifically are, first, that the legislation was not drafted with the object of providing that special deposits should be used by the Central Bank for ordinary trading purposes; and, secondly, that it is the policy of the Government, and it was the policy of the Labour party long before the Government came into office, that the Commonwealth Bank in its general trading operations, should accept business from any person in the community.
.- The Treasurer has made it very clear that he does not intend to accept any amendments to the bill, even for the purpose of amending drafting errors, if they should be discovered, notwithstanding the fact that two eminent King’s Counsel on this side of the chamber are prepared to give the Government the benefit of their wide legal experience. For this reason the committee discussion of the measure will not follow the usual form. The purpose of committee discussion is to try to improve the legislation under consideration, but the Treasurer has made it clear that the most the Opposition can hope to achieve in regard to this bill is to point out its faults, to offer suggestions for its improvement, and to contradict the misstatements of the Government supporters on banking and monetary policy and practice. We shall do our best to enlighten the public on the purposes of the bill as we see them. I wish to correct a statement made by the Treasurer in relation to evidence tendered before the Royal Commission on Monetary and Banking Systems. He said that no undertaking had been given that the Commonwealth Bank would refrain from accepting business which a customer desired to transfer to it from a private bank. On this point the commission stated, in paragraph 142, of its report -
In 1928 the Commonwealth Bank requested the trading banks to keep their reserves with it, and gave an undertaking that if this were done these reserves would not be used in competition with the trading banks.
Other comments were made to the same effect. In other words the Commonwealth Bank was to be regarded as the Central Bank, and the understanding was that if the private banks deposited their reserves with it as the Central Bank the funds would not be used by that bank to compete with the private banks. Such statements by the royal commission have been used for many years to support the contention that the Commonwealth Bank had refused to take the accounts of clients from private banks.
– Such accounts have been refused on many occasions.
– That is not correct.
– The Commonwealth Bank refused to accept the account of the Victorian Labour Government which it desired to transfer from another bank.
– If these interjections are true, how is it that the Commonwealth Bank has been able to expand its operations so remarkably throughout the country? In every country town the Commonwealth Bank has been steadily increasing its operations during the last ten or fifteen years. How could it do so unless it accepted the customers of other banks?
– It has been largely due to the great expansion of its savings bank business.
– That is not so. I have a personal knowledge of the operations of banks in my electorate, and bank managers in many places have told me that the statement is not true that the Commonwealth Bank will not accept accounts transferred from private banks unless the clients were not receiving satisfactory treatment. In fact, the Commonwealth Bank has accepted a great deal of business in the last decade which certainly was not all new business. In my district during the last fifteen years or so, thousands of persons who were customers of the private trading banks have become customers of the Commonwealth Bank. That gives the lie direct to the statement that the Commonwealth Bank is not allowed to accept, business on transfer from private trading banks. Four speeches have been made from the Government side, all of them different. When I pointed out that the Mortgage Department of the Commonwealth Bank had accepted only one-half of the applications that had been made by farmers for their accounts to he taken over, the Minister at the table (Mr. Lazzarini) interjected something about “lame ducks”, implying that the Commonwealth Bank would not take business which did not offer proper security. Seeing that the Minister had get himself into trouble, the honorable member for Wannon (Mr. McLeod) intervened, and said that the great crime of the trading banks had been that they had loaned too much to the farmers and, having got them into trouble because they had forced money on them, sold their properties when they were compelled to default in their payments. Could anything be more absurd? The honorable member for Forrest (Mr. Lemmon), realizing that both the Minister and the honorable member for Wannon had “ mulled the ball tried to plant it squarely between the goal posts, by saying that 819 unfortunate farmers had had their accounts refused because the security was too good and the Commonwealth Bank was not allowed to take them from the trading banks. Honorable members may choose which of those three stories they will accept. According to honorable members opposite, the. private banks are wrong whatever they do. The honorable member for Grey (Mr. Russell) will agree : that a bank which tries to sell out a farmer, or anybody else, usually shows a loss on the transaction. Any one with an ounce of experience, especially of country conditions, knows that if a bank has loaned such an amount on a farm or a grazing property that it is compelled to liquidate the debt, it receives far less than if the original customer had been able to ‘retain the .security. The misstatements of honorable members opposite have been clearly revealed on halfadozen counts. Dairy-farmers especially will be prejudiced by the Commonwealth Bank freezing out the trading banks, and then refusing to make advances against -the -.security of live-stock. There are many hundreds, perhaps .thousands, of dairy-farmers in my electorate who commenced life in a .humble way, working for wages or on shares. Having saved a moderate .amount as .a deposit on a herd -of their own, ‘they secured financial -assistance from .a bank on that security, and ultimately .made themselves financially strong .enough to -obtain .a farm for them selves. They are to be deprived of that kind of financial -assistance, because the -Commonwealth Bank -will not accept live-stock as security, considering that it is not good enough cover. This has been shown .in the letter read by the honorable member for New England (Mr. Abbott). The trading banks will ‘be prevented from making .advances, because they will have been squeezed out, -and between the two, the small ma.n who is trying to ‘make a start in life will be prejudiced. By the points that I have raised, I have endeavoured to show the fallacies that are spread abroad by Government members fin relation to .the activities .of the trading banks, compared with those .of the
Commonwealth Bank. I am sure thatthis legislation will be prejudicial, particularly to the opportunities of thu younger men, and to those who are trying to make a start in life without assistance from outside sources.
Mr. WILLIAMS (Robertson) [9.39 J. - It is rather difficult to follow the arguments of honorable members opposite. For some years, the Commonwealth Bank has not traded openly in competition with the private banks. I speak from personal experience. Three or four years ago, I had a client with a property worth £40,000. The security was examined, and the local manager of the Commonwealth Bank was prepared to make an advance of £20,000 on it. He then questioned the client as to where he was banking, and was informed that the account of this man was with the Commercial Banking Company of Sydney. Thereupon ‘he said : “ We are not permitted to -take customers away from other banks. T shall have to submit the matter to head office, and shall let you know the result in a day or two “. Subsequently, he informed me that head office would not permit him to do the business. The security was excellent, yet the business was turned down because -my client, already had am .account >with a private bank. A few weeks ago, I introduced to one of the leading .officers in the ‘head office of the Commoil wealth Bank in Sydney, the manager of a leading cooperative concern who wanted to enlarge the business, for which purpose he needed to borrow £15,000. .During the discussion that ensued, the bank officer informed us that he could not .accept the business. I questioned him as to whether or not he was permitted to compete with the trading banks .and ^received merely the reply that he could not do the business as the co-operative company was .also doing business with another bank. S. mention these cases because of what has been said by honorable members opposite, particularly the honorable member for Richmond (Mr. Anthony), and . also because of what nas appeared recently in the press concerning this ‘legislation. The aim of the Government is to implant in the Commonwealth Bank .a new outlook towards the business ‘world. I am mot one who says that the Commonwealth Bank has always been well conducted. It has been managed in such a way as not to be at a disadvantage to the private trading banks, and has acted too slowly in arranging loans. The actions of some officers who are in charge of branches would give the impression that they do not want to compete with the trading banks in any shape or form. I want the Commonwealth Bank to be given a good “ shakeup “, and I have no doubt that that will happen. The Government has done excellently in having introduced this legislation. Clause 17 of the measure under consideration, which states that it shall be the duty of the Commonwealth Bank to develop and expand its general business, is a necessary provision, The further provision that the bank, through the general banking division, shall not refuse to conduct banking business for any person’, by reason only of the fact that to conduct that business would have the effect of taking away business from another bank, also is excellent, and no’ doubt has been included because of the public knowledge that the Commonwealth Bank will not compete with the private banks. This legislation will tell the world that the Commonwealth Bank is willing arid anxious to do business with everybody, including those who already have accounts with private banks. It will not be giving anything away. The public should know that when they go to either the Commonwealth Bank or a private bank for a loan they must produce appropriate security. No doubt the Commonwealth Bank, no less than the private banks, will examine the security carefully, in order to ensure the bank’s own proper protection.
.- In the course of this debate, reference has been made to the fact that the Mortgage Bank Department of the Commonwealth Bank has declined a large number of applications for loans, particularly in Victoria. I was very interested in the figures, and upon inquiry I found that the reason lay in the fact that in the country towns df Victoria there are hardly any branches df the Commonwealth Bank, whereas iri New South Wales the Government Savings Bank premises taken oVer by tie Commonwealth Bank throughout the State have for years been used for general banking purposes. At each branch there is a manager, who can make personal contact with applicants for loans. In this way, the managers are able to shoo the “lame ducks” off iri the first instance, so that, they are never registered as applicants. The position is different in Victoria, where every application for an advancemust be made on the prescribed form, which is duly registered. I do not make: that point iri order to praise the Mortgage Bank Department. On the contrary, I believe that there is much -room for improvement in the way it is conducted, but we must recognize that the bank cannot make loans except on sound security. Hand in hand with the system of mortgage banking there will have to go some method of financial reconstruction,, so that those in need of assistance may be able to receive it. I have no criticism to offer of the service which the tradingbanks have rendered in a general way tothe public. The service has been good in the case of clients who are able to conduct their affairs successfully. When trouble overtakes them, the usual consequencesfollow, and it is then that bad feeling is engendered against the banks. In view: of the previous policy of the Commonwealth Bank Board in regard to general banking business, the clauses of the bill which we are how discussing are riot redundant as it is desirable that the wishes of Parliament should be clearly expressed in the legislation.
Clause agreed to.
Clause 18 agreed to.
Clause 19 (Profits arid Reserve Fund).
– This clause deals with the net profits- of the General Banking Division, and is one of several clauses in the bill dealing with the distribution of profits. The right honorable member for Cowper (Sir EarlePage) asked, a little while ago, how far that capital structure of the Mortgage Bank Department was affected by this bill. . I gave an explanation, at the time which, on reflection, I think was not very accurate, and I should like toput the matter more accurately now. As I understand it, the position of the Mortgage Bank Department as to capital depends upon three sections of the existing Commonwealth Bank Act as reprinted up to 1943. Section 47 of that act, dealing with the profits of the bank as a whole, provides that one-quarter shall be paid to the Mortgage Bank Department. Section 108 provides that out of the profits of the note issue a certain sum shall be paid to the Mortgage Bank Department at the rate of £150,000 a year. Finally, in section 109, there is a provision that premiums on the sale of gold shall be transferred from the special reserve account to the Mortgage Bank Department. Then, in section 144, it is provided that the capital of the Mortgage Bank Department shall be made up of the following amounts: -
My previous impression was that this position was substantially untouched by this bill, but that is not so. Clause 15 of the bill provides that one-quarter of the net profits from the business of the central bank shall be paid into the Mortgage Bank Department - not onequarter of the total profits of the bank, but only one-quarter of the profits of the central banking division. Clause 19 of the bill deals with the net profits of the General Banking Division, which were formerly paid into the general profits of the bank. The clause provides that one-half of these profits shall be paid into the General Banking Division Reserve Fund, and one-half to the National Debt Sinking Fund. Thus, no part of the profit of the General Banking Division will now go to the Mortgage Bank Department. Under clause 46, the same payments will be made out of the profits of the note issue, but under clause 70 no part of the profits of the Rural Credits Department are to go to the Mortgage Bank Department. Therefore, the position is that, whereas under the act as it stands one-quarter of the profits of the bank as a whole go to the Mortgage Bank Department, plus a share of the profits of the note issue, plus a payment from the proceeds of the sale of the gold reserve, under this bill one-quarter of the profits from the activities of the central bank only will go to the Mortgage Bank Department. Apart from that, no share of the profits of the bank as such will be payable to the Mortgage Bank Department.
Clause agreed to.
Clause 20 agreed to.
Clause 21 -
The Special Accounts established by bank under Division 3 of Part II. of the Banking Act 1945, and the accounts established by banks for the purposes of section fifty-two of the Banking Act 1945, shall not be kept in the General Banking Division.
– A little while ago, the Treasurer (Mr. Chifley) made an extraordinary and discouraging statement to the committee. Although our purpose in going into committee is that we may examine the bill clause by clause in order to see whether they commend themselves to us, the Treasurer said that no matter what arguments might be advanced in its favour, no amendmentwould be accepted. In that statement, he expressed the utter contempt which the Government has for Parliament, and for the machinery of law making. That his statement commands the warm support of his followers there is no doubt, because during the consideration in committee of this bill, as when a previous important measure was being considered, there have been no more than three or four Government supporters in the chamber. Once a bill has been accepted by caucus, the Government’s injunction to the party would appear to be “ Gape, sinner, and swallow “.
– We are only doing what the right honorable member did when he was in power.
– I have never believed that iniquity becomes less because the offender is frank about it. Although frankness is engaging, I would not, because of it, be moved to reduce the sentence. If I were permitted to do so I should describe clause 21 as a piece of humbug. It mentions special accounts to be established by the private banks under the Banking Act 1945. This is a reference to the Banking Bill which, although it has been debated in a general way, it not yet before us. In clauses 18, 19, 20 and 21 of that bill there are provisions for converting into statutory form the obligation now imposed on the trading banks by regulation to make large, special deposits with the Commonwealth Bank. These deposits now amount to well over £200,000,000. The provisions of this bill will mean not only that the amount now deposited will be impounded, for it must be borne in mind all the time that the trading banks’ assets are not to be increased beyond what they were at the outbreak ofl war. The result is that the trading banks of this country have deposited between £200,000,000 and £300,000,000 and may deposit more with the Commonwealth Bank in special accounts, which are, so to say, frozen. Those moneys are not the moneys of the trading hanks. So far as the trading banks are concerned, they are deposits; they are moneys owing by them to their depositors. If those depositors come along and ask for their money, it will be very odd if the banks are not in a position to satisfy their demands. Under these two bills, these moneys are placed into the- hands of the Commonwealth Bank, and we find that in the next breath the Commonwealth Bank is told that it is to go into competition with the trading banks for ordinary banking business. The immediate comment from many fair minded men would be, “ That is pretty rough; you are compelling the trading banks to hypothecate to the central bank hundreds of millions of pounds, and, at the same time, enabling it to ase those hundreds of millions of pounds in order to compete with the trading banks, and drive them off the -field. By no system ofl fairness can this be approved ? “ Clause 21 says not a word about the moneys that have been so deposited. All it says is -
The Special Accounts established by banks under Division 3 of Part LT. of the Banking Act 1045, and the accounts established by banks for the purposes of section fifty-two of the Banking Act 1945, shall not be kept :n the General Banking Division.
Is that supposed to mean that the moneys in these accounts cannot be used by the Commonwealth Bank? Of course not! It merely relates to the location of an account, and, when the committee remembers that all those accounts, in whatever division they may be kept, are accounts with one bank - this is one legal entity with one Governor and one structure - they will begin to see that the alleged protection of clause 21 is a mere will-o’-the-wisp. I go farther, and invite the attention of the committee to two later clauses, clauses 78 and 97. If we look at clause 78 we find this - (1.) The Treasurer may make advances to the Bank, for the purposes of the Mortgage Bank Department, of such amounts, and subject to such terms and conditions, as are agreed upon between the Treasurer and the Bank.
That is easy so far. It is in the hands of the Treasurer. He can advance whatever money he chooses to the Mortgage Bank Department. Sub-clause 2 says-
The Treasurer may, from time to time, under the provisions of the Commonwealth Inscribed Stock Act 1911-1943, borrow money for the purpose of making advances to the Mortgage Bank Department under this section.
So what the Treasurer does is borrow all or some of the money standing in these special accounts. He borrows it under the terms of the -Commonwealth Inscribed Stock Act. He then proceeds to lend it to the Mortgage Bank Department of the Commonwealth Bank. We have a similar provision in clause 97 - (1.) Hie Treasurer may make advances to the Bank, for the purposes of the Industrial Finance Department, of such amounts, and subject to such terms and conditions, as are agreed upon between the Treasurer and the Bank.
Again he may borrow under the Commonwealth Inscribed Stock Act for the purpose of making these advances. The Industrial Advances Department may very well turn out to be the most active section of the general banking activity of the Commonwealth Bank, because it introduces it at once into the whole field of industrial finance after the war. On both these matters, and more particularly on the second, it is quite clear that clause 21 affords no protection at all, because, in spite of it, the Treasurer can still raid these deposits and use the moneys produced by them for the purpose of the Commonwealth Bank in at least the two respects that I have quoted literally chapter and verse. First of all, this clause has nothing whatever to do with the use to which these moneys can be put and it therefore affords no protection against any misuse of those moneys. In the second place, the rest of the bill provides ample ways and means to facilitate the use of those deposits by the Coin.monwealth Bank in business in which it will actively and directly compete with the trading banks, which have to put up the money. I do not want to labour the matter. Nothing was ever clearer. In order to test the bona fides of the Government in its approach to this problem, I move -
That the following words be added : - “ and the funds comprised in such special or other accounts shall not be used by the Bank directly or indirectly so as to compete with the business of the banks establishing such accounts.”
If that amendment be accepted, it will show that the Government is not seeking to achieve the results that I have said it aims at, and we can all agree with the clause. If it is rejected, it will be conclusive evidence that what is desired to-day is to take the moneys deposited by the trading banks under war regulations for war purposes and use them for the purpose of assisting competition with, the trading banks by the new competitor driven into the field by the earlier clauses of the bill.
Mr. fadden (Darling DownsLeader of the Australian Country party) [10.8] . - I support the amendment moved by the Leader of the Opposition (Mr. Menzies) for the reasons that he has clearly and concisely stated to the committee. I dealt with this matter on clause 17, but I again emphasize the degree to which the Commonwealth Bank now uses the surplus funds of the trading banks deposited in the Commonwealth Bank, although this bill states that those deposits shall not be kept in the general banking division. The Leader of the Opposition has drawn attention, as I did, to the avenues that exist for the Treasurer, consistent with Government policy, to use those deposits in order to strangle ‘the activities of the trading banks. The special war-time deposits of the private banks held by the Commonwealth Bank amount to £240,000,000. On the 30th June last, they amounted to £185,000,000. The Commonwealth Government’s securitiescontained among the liquid assets of the Commonwealth Bank total £223,000,000. I remind honorable members and the country that the trading banks’ deposits with the Commonwealth Bank which constituted that £185,000,000 carry interest at the rate of 15s. per cent. It can be safely said that all that money is invested by the Commonwealth Bank in Commonwealth Government securities at £3 5s. per cent. What will be .the position if there is no proper safeguard with regard to the utilization of these ever-increasing funds, which rightly belong to the trading banks, in the peace, period when the reason for their utilization as the banks intended has passed? There is a provision in the Banking Bill as to the maximum rate of interest that the funds are to carry, but that matter is not now under review.
As the Leader of the Opposition has said, this money does not belong to the trading banks as such, but to their customers, and that the banks are actually trustees of the funds. The moneys we’re handed over to the Com.monwealth Bank under a voluntary arrangement first entered into by the Government of which I was Treasurer, and it was intended that they should be utilized- as the trading banks’ contribution to the financing of the war. The trading banks did not desire to invest their surplus funds in Commonwealth loans. They were prepared to hand them over to the Commonwealth Bank as special war-time deposits. For these funds the trading banks are obtaining 15s. per cent, from the Commonwealth Bank, which, in turn, is lending them to the Commonwealth Government at the rate, I repeat, of £3 5s. per cent. The whole intention of the Government is to whittle down as quickly and as effectively as possible the competition of the ‘trading banks, and the most effective way in which it can do it, apart from the way provided for in the Constitution, namely, by the payment of adequate compensation, is to strangle the trading -banks, and thus obviate the necessity for the payment of compensation.
There will be a most effective strangling of the trading banks by the Commonwealth Bank, not only entering into active competition with them, as is contemplated in clause 17, but also taking their surplus funds in order to prevent their development, and even the maintenance of their business, so that they shall not effectively compete. The assets and turnover of the trading banks are to be pegged and frozen, and the surplus deposits from their satisfied customers are to be used by the Commonwealth Bank in the manner which I have stated. The Treasurer gave an assurance this evening that nothing is further from the minds of the Government than to utilize unduly these special war-time deposits in competition with the. trading banks. There is only one way to give effect to that assurance, and that is to embody it in the bill.
.- The general impression that has been conveyed by orthodox financiers is that the banks as a rule do not lend a great deal of their deposits that are on current account. The banks, in effect, pay for the use of the funds which they let out at interest. I presume that the war-time deposits with the trading banks would be generally of the nature of current accounts. Paragraph 297 of the report of the Royal Commission on the Monetary and Banking Systems states that approximately 40 per cent, of the total deposits of the trading banks of Australia would be on current account, and that 60 per cent, would be fixed for various terms. Paragraph 299 of the report shows that advances represent 67.08 per cent, of the total assets of the trading banks. The total assets would include fixed and current deposits and other assets which the banks might have. Paragraph 300 of the report gives a comparison between the operations of British and Australian banks and states that 85.21 per cent, of the deposits of the Australian trading banks are lent. If we are to accept the report of the royal commission as a true picture of banking procedure, and agree that the trading banks in reality lend money for which they pay, and if my assumptions be correct that most of the war-time deposits of the trading banks with the central bank are of the current account type, those banks are not making a great sacrifice in depositing such funds with the Commonwealth Bank. According to the royal commission they lend, in effect, only money which they get on fixed deposit and not on current account. That, I think, answers the argument of honorable members that the Commonwealth Bank will, under this bill, be using funds which the trading banks could otherwise use if the funds were not frozen in the vaults of the Commonwealth Bank.
– I support the amendment moved by the Leader of the Opposition (Mr. Menzies), but I shall not repeat his arguments. He has given a correct interpretation of the position and the Government even now does not dispute it. The honorable member for Calare (Mr. Breen) spoke of a strange method of finance which I found difficulty in following. These special accounts were established for the purpose of preventing any secondary inflation as a result of the credit policy pursued by the Government in time of war. It is right that the funds should be temporarily frozen, and the trading banks co-operate with the Commonwealth Bank in the matter. We are now coming to a peace-time economy and the Commonwealth Bank is to be told to compete with the private banks. What I am specially concerned about happens to be something which the Government is completely careless about and that is the funds of the shareholders of the trading banks., 1 am also very concerned about the depositors. It is clear that the Government intends so to compete with the private trading banks as to destroy piecemeal their goodwill and assets. How do funds first find their way into the trading banks? The explanation is that depositors go to them. That was a part of the goodwill of the trading banks. For the purposes of war, those funds were frozen in the manner that has been described during this discussion. Now, the Commonwealth Bank will compete with the trading banks, and the Government evidently intends to destroy them, and the assets of their shareholders, without paying compensation to them. The Government proposes to set a limit to the amount of funds that shall be available to the trading banks. In other words, the Government will stabilize, at the figure existing at the outbreak of war, the amount which the trading banks may lend,. But that is only a nominal figure in terms of real money, because the cost of living in the meantime has increased by 20 per cent. So, the trading banks will be told that the Commonwealth Bank will compete with them under certain advantageous conditions. (First, the Commonwealth Bank is not liable to pay taxation. Secondly, the Government will freeze the funds of the trading banks so that they will not be able to lend more than the funds that they possessed at the outbreak of war. As I have shown, the value of those fund’s, in terms of real money, has been substantially reduced. Thirdly,, the Government will prescribe the conditions under which the trading banks shall lend money, and the persons to whom they shall lend it. Fourthly, the trading banks will not be entitled to accept deposits from specific sections of the community. Those conditions do not commend themselves to me as constituting a fair and equitable method of competition. When we speak of “banks”, we refer to those people whose money has been lodged with the institutions. The practice of speaking about a bank as if it were merely a building is a complete misconception. We refer, in reality, to the human beings behind the banks, whether they be shareholders or depositors, who invested their money in the institution. The Government has declared that it does not intend to do the very thing which this amendment will ensure, cannot be done. Why, then, does the Treasurer refuse to accept the amendment 1
– I contend that the necessary provision is made in clause 21.
– Obviously, the Treasurer (Mr. Chifley) has not carefully considered clause 21. The Leader of the Opposition (Mr. Menzies) who analysed it closely, pointed out that the clause dealt merely with the location of the money in the various divisions of the Commonwealth Bank, and had no relation to the use of the money. Obviously, clause 21 deals with the location of the money. At all events, if the matter is open to argument, the Government should accept a reasonable amendment to make assurance double sure. All parties agree with the principle of the amendment, but I suspect that these funds are being used for certain purposes. The balance sheet of the Commonwealth Bank at the 30th June, 1944, indicates total liabilities of £411,000,000. One big item is £184,000,000, being special war-time deposits by the trading banks. At present, those deposits total £240,000,000. On the assets side of the balance sheet, I find two big items. The first is money at short call in London, £119,000,000, and the second is Commonwealth Treasury securities, including treasury-bills, £223,000,000. Obviously, a percentage of the special war-time deposits has been used by the Commonwealth for the purpose of investing in Commonwealth government securities. What has been done? The Commonwealth has taken the depositors’ money. I do not quarrel with the temporary purpose for which it has been done, because I realize the necessity for preventing secondary inflation. The important point is the use to which the Government has put the depositors’ money. As I stated, the Government has taken the depositors’ money, and paid to the trading banks 15s. per cent. That must be less than the actual management in respect of the funds in this deposit. The Government is investing the money in Commonwealth securities at one per cent, and at 3i per cent. Consequently, the Government appears to be making a profit out. of depositors’ funds, and this action has the effect of diminishing the goodwill of the trading banks. I ask the Treasurer: Is it not a fact that clause 21 provides only for the location of the money in various divisions of the bank? If itdoes, no protection whatever is provided to meet the danger against which the amendment will be a safeguard. The Government has not shown why the amendment should not be accepted.
Mr. LAZZARINI (Werriwa- Minister for Home Security and Minister for
Works) [10.26]. - Lawyers usually submit arguments to suit the case that they are presenting. Although the’ Leader of the Opposition (Mr. Menzies) and: the honorable member for Warringah (Mr. Spender) have taken one view, the Government still contends that the position is legally covered by clauses 21 and 98. Even though the bank is one legal entity under a Governor, the legal effect of clause 21, in association with clause 98, is to prevent the use of the special deposit moneys iri the General Banking Division. The Leader ofl the Opposition pointed out that the Industrial Finance department would probably become very large, and that the Treasurer might borrow money from the reserve bank under the Inscribed Stock Act, and lend it to the Industrial Finance Department. But clause 98 (1) provides -
The Bank may make advances to the Industrial Finance Department of such amounts, and subject to such terms and conditions as the Governor determines, but so that the total amount of those advances not repaid shall not at any time exceed One million pounds.
– What has that to do with the case?
– It explodes the contention of the Leader of the Opposition that the Treasurer might borrow millions of pounds for the purposes of the Industrial Finance Department.
– Is the Minister seriously telling us that the limit of £1,000,000 applies to clause 97 ?
– It applies to thIndustrial Finance Department.
– The Minister is wrong.
– Even though thu Treasurer does borrow money under the Inscribed Stock Act, interest will have to be paid upon the sum. The Leader of the Australian Country party (Mr. Fadden) said that the Government would take those funds, and use them without paying interest on them.
– I did not say that. T said that the Government could take the funds, and use them in competition with the trading banks.
– An honorable gentleman opposite stated that the Government would use the funds to compete with the associated banks, and would not pay interest on the money. The Government contends that the legal position is completely covered, and therefore, cannot accept the amendment.
– The statement to which the committee has just listened is the most fantastic that I have heard in this Parliament.
– The right honorable gentleman has said that before.
– If that be so, I probably said it in respect of a previous statement by the Minister for Home Security (Mr. Lazzarini). The Minister is confronted with an argument based on clause 97. Honorable members will recall that I previously referred to clauses 78 and 97. The latter clause contains no limit at all in point of amount. It provides - (1.) The Treasurer may make advances to the Bank, for the purposes of the Industrial Finance Department, of such amounts, and subject to such terms and conditions, as are agreed upon between the Treasurer and the Bank. (2.) The Treasurer may from time to time, under the provisions of the Inscribed Stock Act 1911-1943, borrow money for the purposes of making advances to the Industrial Finance Department under this section.
That refers to an advance by the Treasurer, and is without limit. I have lived long enough to hear a Minister - not the Treasurer - say that that does not matter, because if we look at another clause dealing with another matter it will be found that there is a limit of £1,000,000. I daresay that if I were to look at another act dealing with, say, workers’ compensation, I would find a reference to £750; or in legislation relating to invalid and old-age pensions, a reference to 32s. 6d. I am happy to say that whatever the Minister for Home Security has to say about lawyers, they have at least learned something about the relevancy of argument.
– The honorable member for Warringah (Mr. Spender) seemed to suggest that money now being held on deposit with the trading banks was used as an investment in government securities. I understand from inquiry that the normal securities, other than treasury-bills, held by the banks total about £50,000,000. As treasury-bills carry interest at only 1 per cent., there cannot be much chance that the Commonwealth Bank is paying 15s. per cent. interest to the trading banks and getting 3 per cent. or 4 per cent. for the same money.
– That must be so in respect of some of the money.
– I shall not attempt to analyse the figures. Before these special deposits were provided for, the Commonwealth Bank did hold government securities from time to time.
– That was only relevant to this matter to show that the very thing that the Leader of the Opposition says may be done in respect of the Mortgage Bank Department or the Industrial Finance Department could be done.
– So long as it is clear that it is not suggested that the Commonwealth Bank is lending at31/4 per cent. or 21/2 per cent. money which it received from special deposits, I am satisfied. The amount of government securities held by the trading banks has varied from time to time, and as every px-Treasurer knows, the Commonwealth Bank ‘has always bought government ?ecurities.
As to the point raised by the Leader of the Opposition (Mr. Menzies), I understand that the legal terms used in the clause cover all that the Government intended. The right honorable gentleman suggested that that was not so. As intimated by the Minister for Home Security (Mr. Lazzarini), the Government does not propose to accept amendments, but I assure the Leader of the Opposition and the honorable member for “Warringah that the legal point to which reference has been made will be closely examined, although I am assured that the legal position is sound. At this stage, I cannot accept the amendment.
– I take it that the Acting Prime Minister agrees with the principle that these moneys ought not to be used competitively.
– I thought that I had made that clear. I shall have inquiries made as to whether the intention of the Government is adequately expressed in the clause.
– Although the Treasurer (Mr. Chifley), in his usual suave manner, has assured the committee that his legal advisers say that everything in the garden is lovely, he promises to ask them to have another look at the clause. Notwithstanding his assurances, he has not contradicted the Minister for Home Security (Mr.. Lazzarini), who claims that the legal safeguards are ample, and should leave no doubt that the point raised has been covered. I am not satisfied, and I hope that the Leader of the Opposition (Mr. Menzies) will press his amendment to a division. In my opinion, there is no sufficient guarantee. In 1928 the Commonwealth Bank gave to the trading banks an undertaking that it would not use their funds which had been deposited with the Commonwealth Bank. Owing to the exigencies of war, special deposits have had to be made by the trading banks with the Commonwealth Bank, but that was done solely for war-time purposes. Now the Government claims that ample safeguards exist in clause 21 against any misuse of those funds. The Government claims that that clause is evidence of its bona fides. Clause 21 provides -
The special accounts established by banks under Division 3 of Fart II. of the Banking Act 1945, and the accounts established by banks for the purposes of Section 52 of the Banking Act 1945, shall not bc kept in the General Banking Division.
The clause provides only that those special accounts shall not be kept in the General Banking Division; it does not say that the Treasurer will not borrow money from the Central Banking Section against treasurybills, and lend the money to the Industrial Finance Department of the Commonwealth Bank. This, of course, means, and the general public will be aware of the fact, that the funds of the trading banks will be used by the Industrial Finance Department of the Commonwealth Bank to compete with the trading banks under the direction to begiven to that department under this measure. The trading banks will not be allowed to expand their deposits beyond their 1939 limit. During the secondreading debate, the honorable member for Warringah (Mr. Spender) and other honorable members including myself pointed out that that limit will be reduced still further because of the devaluation of money at present by approximately 20 per cent. Under clause 17 of this measure the Commonwealth Bank is directed to expand. How is it going to expand? The Minister for Home Security might be able to explain that “How” as he endeavoured to explain the “ How “ in his pamphlet The “How”in Post-war Planning. Tinder this measure the Commonwealth Bank is given a direct command to expand; and it will expand by using the deposits of the trading banks deposited with the Commonwealth Bank, because as has been pointed out by the Leader of the Opposition, power is given under this measure to the Treasurer to borrow money and to lend it to the Industrial Finance Department of the Commonwealth Bank which will compete with the trading banks. When it is said that clause 21 safeguards the interests of the trading banks in that respect, I confess that I do not understand the meaning of words.
– We say that it does.
– The Treasurer says that he will have another look at this clause. Apparently, there is a doubt in his mind. Until such time as some additional assurance can be given to honorable members that proper safeguards will be provided I propose to support the amendment.
.- The Treasurer (Mr. Chifley) has undertaken to have another look at the matter in order to see to what degree he can meet the argument put forward by the Leader of the Opposition (Mr. Menzies). In these circumstances I suggest that the amendment be withdrawn, and consideration of the clause postponed.
– Will the Treasurer agree to a postponement of the clause ?
– No. I said that I would examine it before the bill went to the Senate.
Question put; -
That the words proposed to be added (Mr. Menzies’s amendment) be so added.
The committee divided. (The Chairman- Mr. W. J. F. RlORDAN.)
Question so resolved in the negative.
Clause agreed to.
Service Prisoners in Civil Gaols - Canberra : Housing ; Man-power Office.
Motion (by Mr. Chifley-) proposed -
That the House do now adjourn.
.- I bring before the House a matter which I consider to be of great importance. Thousands of men are serving sentences in civil gaols throughout Australia for purely military offences which are not recognized as crimes under the civil code. In most cases the only interest that the Army has in these men is purely a vindictive one. Long ago it gave up hope of making soldiers of them and it would have been much better if they had been discharged as hopeless cases. Most of them were never likely to make good soldi ers. Probably they are being kept in gaol only as an example to others, and I have no doubt that most of them would be quite good civilians again because their records prior to the war were unblemished. I know of one case concerning a family, of which seven sons are in the fighting services - six in the Army and one in the Navy. One of these lads came home on leave and found that his sister was very ill. When he was due to return to camp, he applied for compassionate leave because his sister would require medical treatment within a day or two, and there was only his aged mother in the home. His application was refused, but he remained at home to look after his sister whose husband also was in the Army. A week or two elapsed before the expected event occurred, but fearing the repercussions of his act in not returning to camp on the due date, the soldier remained absent without leave and was out of camp for a considerable time. Upon his return, he was sentenced to a term. of detention despite the fact that he had served in the Army for almost three and a half years prior to this incident. In my opinion, in a case like that, a soldier should not be given detention at all. Representations were made on his behalf, and he was not sent to a civilian gaol as many others were. When these men are sent to civilian gaols, they are discharged from the Army, and their dependants, being deprived of their Army allowances, are forced to depend’ on social welfare assistance, or the dole. They are innocent victims of a very cruel system of punishment. The Army has no further use for the offenders, and it would be much better if they were returned to civil life, especially in view of the great man-power shortage. I thought that when the war in Europe ended, a free pardon would have been extended to prisoners in detention for breaches of ordinary military discipline, but no such pardon was granted. My view is that they should be released on parole to undertake work in industry. I am sure that most of them would do a good job. If they did not behave themselves, they could be returned to gaol to serve the remainder of their sentences; but at least they should be given an opportunity to redeem themselves in civil life. It is shameful that innocent wives and children should have to suffer whilst their husbands, most of whom were excellent citizens before the war, are forced’ to associate with criminals. Referring to this matter recently the honorable member for Batman (Mr. Brennan) expressed the opinion that owing to a legal technicality it was not lawful to hold service offenders in civil gaols after they have been discharged from the services. As I have said, many of these men were not likely to make good soldiers, but on the other hand, some of them are “ Tobruk Rats “, or have served elsewhere in the Middle East, including Greece and Crete. Their nerves are run down, and it is unjust that they should be incarcerated in civil gaols. I trust that the Government will take some action in this matter.
.- I draw attention to a matter which is of serious concern to returned soldiers in Canberra. The circumstances which I shall bring to the notice of honorable members indicate complete indifference on the part of the Government to exservicemen. I base my observations on the answers to the following questions which I asked the Minister representing the Minister for the Interior: -
To each of these questions the answer was in the negative. I also asked if it was a fact that Canberra was exempt from the returned soldier preference clauses of the housing regulations. I received the following reply: -
I have some doubt as to which particular housing regulation the honorable member is referring. If he is referring to the National Security (Housing and Accommodation ) Regulations, I can inform him that Canberra has not been specified as an area to which these regulations apply.
If, on the other hand, he is referring to the National Security (War Service Moratorium) Regulations, the answer is that Canberra has not been exempted from these regulations.
I waa referring, of course, to the National Security (Housing and Accommodation) Regulations. The Minister’s reply makes the astounding admission that regulations which require that 50 per cent, of the available housing accommodation shall be reserved for applicants who are ex-servicemen, are imposed on the rest of Australia; but in a completely highhanded manner the Government has exempted from them this National Capital, of which it is in direct and sole control. “We might expect from the Government a frank disregard of the interests of ex-servicemen ; but even when it is dealing with a matter affecting a voteless population, one would hardly expect such an impertinent reply as that which the Minister has given. It is astounding that the admission that the Government considers itself above its own regulations in its own territory should bc made without any explanation. Exservicemen are informed, in the AttorneyGeneral’s guide to their legal problems, that the housing and accommodation regulations are binding, on the Crown. Is Canberra not subject to the Crown? Or was the Minister for the Interior right when he told an exserviceman who interviewed him, as I am informed that he did, that when it was a question of what was the law in Canberra, he, the Minister, was the law. Such an attitude is intolerable, and should be bitterly resisted. I demand to know now whether the Government proposes to flout its own regulations, or intends to fall into line with the rest of Australia’s responsible governments by making those regulations applicable to Canberra. If preference is to be of any consequence, there is no doubt that many ex-servicemen will seek employment in this territory. They will need houses, and will suffer a great hardship if the stipulation that 50 per cent, of all housing accommodation shall be reserved to ex-servicemen does not apply to them. I know that the Government has no housing policy, and does not intend to propound one. Nevertheless, it should not shirk its responsibility by suspending laws to meet its own convenience in the National Capital. I do not know whether this evasion of the law is not more serious, but certainly there is a very serious implication in the remainder of the Minister’s answer to my question, because it is nothing less than that he has made himself a party to a falsehood. I asked him whether ex-servicemen who were waiting to interview the man-power officer in Canberra were accommodated on forms outside the building, and were obliged to stand while they were interviewing that official. I also asked whether the forms were those used during the depression period by applicants for the dole. These allegations have been curtly denied by the Minister.
– On a point of order, 1 desire to know whether, in view of the ruling which you gave this morning, Mr. Speaker, the honorable member is in order in reading the whole of his speech.
– Is the honorable member reading the whole of his speech?
– I am not reading any portion of my speech. I now propose to read a copy of a letter which I received to-day.
– I hope that the honorable member does not evade my ruling.
– The letter was received from Mr. A. W. Crawford, president of the Australian Capital Territory branch of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia. In the course of it he said -
For some time past the Executive has been, endeavouring to bring about an improvement in the conditions under which exservicemen returning to the A.C.T. are rehabilitated in civil employment.
The league therefore watched with interest the answers to your questions in Parliament on May -29 touching upon this matter. The Minister for the Interior was asked whether it was a fact that returned soldiers who are waiting to interview the man-power officer in Canberra are accommodated on forms outside the building, and are obliged to stand when answering the official’s questions.
To put it mildly the Executive is astounded by the denial given in the House on behalf of the responsible Minister. In submitting this answer, the Minister either had not taken the trouble to inform himself of the actual facts, or he has been misinformed concerning them. Unfortunately for the Minister’s version, there are many exservicemen in Canberra who have had personal experience and knowledge of the industrial employment agency of the Government in Oanberra for nearly twenty years, including the depression period, when relief work was handed out arbitrarily at the same dismal quarters as are now claimed to be adequate for dealing with the re-employment and reestablishment of ex-servicemen.
Unlike the Minister, who apparently has to depend upon information supplied to him upon facts which could be established beyond doubt by a few minutes’ surprise inspection, the Branch took the precaution of having -some of its executive officers make such a visit in company with an independent witness. The result of this observation completely substantiated the numerous complaints which had been received.
If the Minister persists in keeping his head in the sand and will not acknowledge the facts which the League is in a position to substantiate, the issue would appear to be one for the Head of the Government, or some other Minister more interested in the welfare of returned soldiers.
The writer of that letter, despite the denial of the Minister-
– Does the honorable member mean to say that he is not reading?
– I ask for your protection, Mr. Speaker, against the Minister for Transport.
– The interjection is out of order; but so is the honorable member, if he is reading his speech.
– I am not reading my speech.
– I accept the honorable member’s assurance.
– The president of the Australian Capital Territory branch of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, and independent witnesses, have borne out what I inferred in my questions. Canberra has been placed outside the housing regulations. That is unfair and unjust. The witnesses are prepared to substantiate the statements that Mr. Crawford has made. Bureaucrats are in control of Canberra, and some Ministers are entirely indifferent to what they are doing. If this matter did not affect ex-servicemen, the Minister for Transport would not indulge in by-play. It is about time he and the Government showed some interest in ex-servicemen. Those men who live in the Australian Capital Territory have not a vote, and cannot voice grievances except through the agency of exservicemen in this House, whose record proves their interest in the welfare of these men. I insist upon their rights being observed. There should be a full inquiry of the statements that I have made, which have been substantiated in the letter that I have read. An explanation should be obtained of the obvious attempt to hide unpleasant facts. The matter is of considerable importance to all ex-servicemen in the Territory. J udging by my observations, the. Minister for Transport has never shown any interest in these men. I hope that he will do so in the future. I ask the Minister in charge of the House at the moment (Mr. Holloway) to institute the inquiry for which I have asked.
– I shall bring the matter of housing . in the Australian Capital Territory to the notice of the Minister for the Interior (Senator Collings). I shall be very surprised if the statements made by the honorable member for Moreton (Mr. Francis) are correct.
– They have been substantiated by the whole of the executive of the league.
– I know that throughout the Commonwealth, preference is given to ex-servicemen up to 50 per cent, of all the homes that are built. I understood that that was the position in Canberra.
I shall discuss with the Acting Attor - neyGeneral (Mr. Beasley) the matter of the detention of ex-servicemen who have committed military offences, raised by the honorable member for Cook (Mr. Sheehan), in order to see what may be done.
Question resolved in the affirmative.
The following papers were presented : -
National Security Act -
National Security (General) Regulations - Order - Fly and insect sprays - Revocation.
National Security (Land Transport) Regulations - Order - South Australia (No. 13).
National Security (Rationing) Regulations - Orders - Nos. 84, 85.
House adjournal at 11.10 p.m.
The following answers to questions were circulated: -
– The answers to the honorable member’s questions are as follows : - 1 and 2. The production of Webley type revolvers was approved and commenced during the term of office of the Menzies Government and the original contract was placed with Howard Auto Cultivators Limited in October, 1940. The project was subsequently placed under the management of Hastings Deering Limited in June, 1943, and production was subsequently stopped following the cancellation of the order by the Department of the Army in December, 1943. The capital expenditure involved in developing manufacture of Webley type revolvers was £116,866. The amount incurred in production costs, including labour, materials and overhead expenses, when production was stopped by direction of the armed services was £237,636. When production was terminated, only a few hundred weapons had been completed and, consequently, there are no means of ascertaining what production costs might have been had full production beet’ attained.
– The answers to the honorable member’s questions are as follows: -
– The answers to the honorable member’s questions are as follows : -
n asked the Treasurer, upon notice -
Is he yet in a position to inform the House, in connexion with the Third Victory Loan, what were the amounts subscribed in cash by each of the following: (a) Individuals; (b) companies (excluding banks) ; (c) trading banks (excluding the Commonwealth Bank of Australia); (d) savings banks (excluding the Commonwealth Savings Bank of Australia; (e) the Commonwealth Bank of Australia (excluding the Note Issue Department); [f) the Commonwealth Savings Bank of Australia; (g) the Note Issue Department of the Commonwealth Bank of Australia; and (h) the State governments (seriatim) ?
– I hope to furnish a reply to the right honorable gentleman during the next few days.
n asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : -
Cite as: Australia, House of Representatives, Debates, 7 June 1945, viewed 22 October 2017, <http://historichansard.net/hofreps/1945/19450607_reps_17_182/>.