17th Parliament · 3rd Session
Mr. Speaker (Hon.J.S.Rosevear) took the chair at 3 p.m., and read prayers.
– Will the Minister for Munitions guarantee that all the materials needed to repair the many homes unroofed in a 50-mile-an-hour gale during the week-end at Millswood, Goodwood, Marion,Warradale and Brighton in South Australia, shall be made available?
– I shall certainly consider most sympathetically making available the materials needed to repair homes damaged by storms.
ProductionTarget- Paris Conference.
– I ask the Acting Prime Minister whether the Government has fixed a target for coal production for the second half of 1945? If it has, what is the target, and what will be the minimum requirements of coal for that period? If not, what steps are intended for the establishment of essential reserves of coal?
Mr.CHIFLEY.- The target is the largest quantity that can be produced. That has always been the target, even when the administration of which the honorable gentleman was a member was in power, at which time also coal was badly needed. I shall endeavour to ascertain the minimum requirements for the period mentioned.
– Has the Acting Prime Minister received from the general secretary of the Australian miners’ federation, Mr. Grant, a copy of a letter from Mr. B. Edwards, secretary of the British Mine Workers Federation, and. also secretary of the International Miners Association, suggesting that a representative of the Australian federation should attend the forthcoming conference on the coal-mining industry, to be held in Paris from the 7th to the 15th August? In view of the importance of coal in the post-war world, does the Acting Prime Minister not agree that it would he advantageous to this country if the Government were to send a representative to the conference?
– I did receive a communication from the secretary of the miners’ federation, Mr. Grant, suggesting that the Government should appoint a representative of the coal-miners to attend the Paris conference. The matter has not yet been considered by the Government, but I understand that there is not complete unanimity amongst Australian miners’ officials in regard to the suggestion that the Government should appoint the delegate. However,I promise the honorable member that the matter will receive consideration.
Motion (by Mr. Chifley) agreed to -
That the House, at its rising, adjourn to to-morrow, at 10.30 a.m.
Distortion of News
– In view of the deliberate distortion of news of national importance by sections of the Australian press, and the likelihood of this growing practice proving a menace to the security and well-being of the nation, will the Acting Prime Minister consider the desirability of listing the matter for consideration at the next Premiers Conference, with a view to the passage of legislation to combat the evil?
– The Government is concerned merely with national security. To that end. there is censorship of all matter published in the press. Distortion has always been practised by the press of all countries. Fortunately, newspapers contradict one another from time to time, and thus furnish evidence of distortion. I do not consider that the subject should be listed for discussion at a Premiers Conference. The censor will ensure that nothing prejudicial to the security of Australia shall be published. I am not greatly concerned about political security, or press criticism of an individual ora party.
Releases - Statements by” Army Spokesman “ - Leave.
– Will the Acting Prime Minister inform the House whether the report in the Sydney Daily Telegraph to-day, that men released from the Australian Army are to ‘be compulsorily directed to specified civilian jobs, is correct? If it is, will he assure the House that this direction will not apply to men discharged on account of long service?
– The honorable member has asked me if a newspaper report is correct. Can ho guarantee the correctness ofthe report, before addressinga question to me on the matter? I have not read the report. I suggest that he should place the question on the noticepaper, or, if necessary, I shall arrange to have a statement prepared regarding the matter.
– I ask the Acting Prime Minister whether an inquiry has been made as to the terms and conditions under which releases of service personnel with five years’ service are to be made. My reason for asking this question is that I have a letter from a member of the 2nd/27th infantry battalion stating that he had been informed that infantrymen did not come into the release plan.
– As I mentioned in my statement to the House last week, releases from the services will be made ona graduated scale.I hope to be able to make a further statement to the House not later than Friday of this week after discussing several aspects of the matter with the War Advisory Council.
– In view of the proposed releases from the services and the rumours that thereare large numbers of lieutenant-generals, major-generals and brigadiers on the active list, can the Acting Prime Minister say whether it if the intention of the Government to reduce the number of these officers in order to prevent the Australian service from being overloaded with high ranking and expensive officers?
– The matter of excess officers has been examined. The honorable member may rest assured that corrective notion will be taken wherever it may be necessary.
– What appeared to be a strong case for the release of a soldier for work in a. rural area was presented by me recently, and the application was refused on the ground that releases are no longer being made on occupational grounds. Will the Acting Prime Minister state whether that decision is due to the fact that the quota of releases up to the end of June has been filled, and whether the review of manpower now in progress will result in lifting the embargo on releases on occupational grounds ? Will it now be necessary for persons who have already applied for release to renew their applications?
– A certain number of men were to be released for work in rural areas. Those men having, I understand, been released, some delay has naturally occurred with regard to further releases, and in some cases there has been a refusal to grant releases beyond the number determined upon. In the reallocation of man-power now being made, consideration is being given to rural needs. I shall ascertain and let the honorable member know whether a renewal of applications for release is required.
Mr.R ANKIN. - Is the Minister representing the Acting Minister for the Army yet in a position to inform the House of the nature of a report which, seven weeks ago, he said that the Acting Minister for the Army was furnishing, concerning statements made by an anonymous Army spokesman in reply to certain remarks made by the honorable member for Barker (Mr. Archie Cameron) ? If not, in view of the Minister’s comment on the8th May that the statements in question were forbidden by instructions, will the honorable gentleman inform the House of the results of the investigation and indicate what action has been taken against the person responsible?
-I shall have inquiries made into the questions asked by the honorable member.
– An extract from a letter from a soldier in New Guinea reads -
I have been in New Guinea for 23 months on Thursday next, without any leave to the mainland at all. It is just over two years since I have had any leave, and my friends a nd myself have seen units come and go, and still we seem to be kept on here. I don’t want you to think I am complaining, but I do feel that leave could be arranged, as other chaps around and about us seem to be able to get away on leave drafts.
Will the Minister representing the Minister for the Army state whether the practice of granting leave to troops in New Guinea has broken down? Why should a member of any unit in New Guinea have been without leave for 23 months?
– Because of the acute shortage of shipping, difficulty is experienced in giving leave to men from New Guinea on the scale decided on by Cabinet, but I was not aware that men had served in that area for such a long period as a year and eleven months without having had any leave at all. If the honorable member will supply to me the name of the individual to whom he has referred, and tell me the unit with which he is connected, I shall take up the matter with the Acting Minister for the Army and ascertain whether any relief can be afforded.
Passenger Services - Accident at Geraldton.
– At the outbreak of war, a shipping passenger service operated between Hobart and Sydney, but it was necessary to discontinue it in the interests of the war effort. In view of the fact that there is now no direct air service between Sydney and Hobart, and as compliance with my request would not prejudice any private company, will the Government consider immediately instituting a daily air service between Sydney and Hobart via Canberra and Flinders Island, as such a service would fulfil an urgent public need, and at the same time provide an improved air service to the Australian National Capital and demonstrate the Government’s capacity to give a first-class air passenger service to the Australian people?
Mr.DRAKEFORD.- I recognize that there is no direct shipping service between Hobart and Sydney, hut there is a fairly frequent air service between Sydney and Hobart via Melbourne. There is also an air service which touches at both Flinders Island and King Island en route to Launceston and Hobart. In view of the original suggestion made by the honorable member, I shall have it examined, in order to find out whether a service of a satisfactory kind could be provided on the lines desired by him. But I point out that services already giving full satisfaction could not be interfered with, without serious consideration being given to the matter.
– Has the attention of the Minister for Air been drawn to press reports of an accident at Geraldton to an aircraft on the civil service of Western Australian Airways? Have any steps been taken to have the matter investigated, and if so, will the Minister inform the House as to the action taken?
– I read with very great regret the press reports of the accident which took place at Geraldton. My inquires from the Department of Civil Aviation have elicited the fact that an officer was sent immediately to Geraldton, for the purpose of taking preliminary steps prior to an investigating committee arriving on the scene. An investigating committee left the following morning for “Western Australia for the purpose of making a complete inquiry into the accident. Its report will be furnished to me in due course.
– Has the Acting Prime Minister read a statement in yesterday’s Melbourne Herald that the Deputy Prime Minister (Mr. Forde) and Lord Cranborne had discussed the subject of migration from Great Britain to Australia in the post-war period, and had reviewed the matter from several aspects, and that a migration scheme is now the subject of negotiation between the Governments of Great Britain and the Commonwealth? Is such a scheme under consideration by the two Governments, and, if so, when will the Acting Prime Minister make a statement to the House regarding it?
– I have not read the’ statement to which the honorable member has referred. It is quite possible that the Deputy Prime Minister has discussed with Lord Cranborne some aspects of the matter mentioned. Discussions have already occurred between the Governments of Australia and the United Kingdom with regard to migration, and I think that I have already mentioned in the House that agreement has been reached on some points, and that I expected a statement to be made on the matter by the Government of Great Britain. There are still some points on which agreement has not yet been reached. I shallsee whether it is possible for information to be made available regarding the negotiations to date, because in one or two respects the agreement between the two Governments is fairly complete. I shall let the honorable member have whatever information is available regarding the matter.
Positionof Mr. Wainwright
– Is it a fact, as reported in the Adelaide Advertiser, that the Auditor-General of South Australia, Mr. Wainwright, is relinquishing his position with the State Government? Further, is it a fact that he is within a few years of the retiring age and that he is relinquishing the position in order to take over a permanent or temporary appointment as Deputy Director of Post-war Reconstruction for the Commonwealth ?
– Mr. Wainwright was Auditor-General of South Australia until very recently. I understand that he is very close to the retiring age, that, on several occasions, he requested that his resignation be considered by the State Government, and. that recently his resignation was accepted. While he was Auditor-General he also carried on the work of Deputy Director of War Organization of Industry in South Australia, and he will continue that work even though he has resigned from the State service. His Commonwealth appointment is not a permanent one. J ust how long the situation will remain as it is depends upon the availability for such jobs of permanent members of the Commonwealth Public Service, and also, of course, on the amount of work that remains to be done by the Deputy Director in South Australia, or in any other State.
Weather Reports - British Broadcasting Corporation Commentators
– Is it a fact that the New Zealand Government has, within the last few days, authorized a resumption of the broadcasting of weather forecasts? If so, and in view of the importance of such information to primary producers, will the Minister for Information consider authorizing the broadcasting of Australian weather information?
– This matter is under the control of the Minister for Air, and I have no doubt that his advisers will, at the proper time, ensure that the broadcasting of weather data shall be resumed. New Zealand’s position geographically is different from that of Australia. It would not be advisable to broadcast information as to weather conditions over the whole of the Australian continent, although it may be possible to do so in respect of areas far removed from any sphere in which Japanese aircraft can now operate. I have no doubt that in due course the restrictions which have been imposed for security purposes will be relaxed.
– In view of the lack of knowledge regarding Australian States displayed by commentators of the British Broadcasting Corporation, will the Minister for Information supply the corporation with copies of an Australian geography so that in future sporting broadcasts they will be in a position to refer to the Australian States with accuracy ?
– I shall interview the honorable member later with a view to ascertaining what is the reason for his question. If it is possible for me to improve the education of anybody in this country or abroad, I shall be only too happy to do so.
– Can the Minister for Information say whether it is correct, as reported in to-day’s press, that the Australian National Films Board proposes to obtain a chief production manager from overseas, and, if so, does he not think that that is a reflection on Australian professional men? Are there not available in Australia professional men capable of doing this work, instead of having to bring a man from overseas? Is the Minister aware that there is a general complaint by professional men generally that standards of remuneration in Australia are too low, and that the policy of various governments seems to be to ignore the claims of local men and to appoint persons from overseas to professional positions in this country ?
– I have not read the newspaper paragraph on which the honorable member’s question is. based. The engagement of an executive officer to the Australian National Films Board and a producer to work under his direction involves considerations that do not arise in any other branch of film production in this country. The Government desires to bring to Australia for a limited period two persons to teach Australians the technique of documentary film production. .So far, no documentary films have been produced in Australia, and, therefore, it is necessary to obtain the services of persons with experience in that sphere of activity. When they have finished their work here they will go back to the country from which they came, and their places will be taken by Australians. It is not a matter of bringing people here to fill permanent positions.
– ‘Must they go back?
– It is not necessary that they shall go back; but the proposal is that they shall be engaged only for a short period, at salaries which will attract the best persons available in such countries as Canada and Great Britain. The production of documentary films should not be confused with the making of films for theatrical purposes. In the latter class of work many Australians are experienced, but, as yet, Australians have not the knowledge necessary to perform the work that is proposed to be undertaken by the Australian National Films Board. In the steps that it has already taken, the Government has acted on the advice of competent authorities, and the honorable member may rest assured that the results will be satisfactory.
– There is considerable concern among propertyowners of moderate and small means because of the depreciation of wooden buildings in Queensland owing to a shortage of paint. In view of the fact that permits for painting are being granted more liberally than previously, and that returned soldier painters are being given permits to paint buildings, will the Minister representing the Minister for Trade and Customs arrange for increased supplies of the necessary basic pigments - carbonate of lead and zinc oxide - to be made available to manufacturers of paint, in order to enable them to cope with the demand for paint resulting from the greater number of permits now being issued?
– The honorable members for Griffith and Brisbane have already raised that matter in regard to Queensland generally. I am having it examined in the hope that we shall be able to do something to relieve the difficult position created by the shortage.
– During the war considerable labour has been taken out of various mining ventures in Australia, thus preventing developmental work. Will the Minister for Post-war Reconstruction ensure that among the men to be released from army service in the near future a quota shall be made available to the mining industry for developmental work, so that it shall be able to absorb considerable labour after general demobilization?
– It is true that out of certain sections of the mining industry very large numbers of men were taken in order to build up the war effort of this country. The managements of the mines co-operated very well with the Government in releasing man-power for urgent munitions requirements and production generally. Because of that, the Government is anxious to ensure the return of at least a small quota of men to the mining industry in order that it may prepare itself for the employment of larger numbers later. I am not able now to say whether the release of men that will be effected under the latest decision of the War Cabinet will result in very large numbers being available for the mining industry. I am inclined to think that the numbers will be small. However, I shall examine the matter to see what help can be given.
– Is it intended to set up
– It is the intention of the Government to set up a Commonwealth Social Services Department.
– With a staff in each State?
– With a staff in each State. It is a Commonwealth department and its services will be made available to the people of the Commonwealth wherever they may be. The staffs and office accommodation now being used by the Man Power Directorate will beusedto the limit. Any additional staff needed in new areas in order to take the services closer to the people will be established by the depart- m ent as it progresses.
– I wish to ask the Minister for Post-war Reconstruction a question relating to the limit of £25, including labour and material, placed by the National Security Regulations upon expenditure on repairs to buildings. In view of the period of years which has elapsed since owners have been able to carry out major repairs to their premises, and the increasing state of disrepair into which many buildings are falling, will the Minister give consideration to increasing the limit? I understand that, in America, the limit is two hundred dollars ?
– This matter was examined not very long ago. The honorable member will realize that if the limit were raised to £50 or £100, the demand for materials and labour would be increased considerably. I assure the honorable member that when a good case is put up to my department for permission to expend in excess of £25, it is given sympathetic consideration. I shall have the question examined once again and see whether it is possible to increase the limit.
– by leave - I wish to announce that there will be a guaranteed first advance of 4s. 3d. a bushel bagged, at growers’ sidings for next year’s wheat crop. This announcement is being made early because wheatgrowers will soon be starting to prepare land for next year’s crop, and they will be able to prepare fallow with the knowledge that a high first advance on the crop will he paid. The rate is the same as that for this year’s crop. This season’s planting has been delayed by drought, and much of it is now being done, following the break in the drought. Wheatgrowers will now have an assured return for the two years’ crops, and it is hoped that the substantial increase which wheat-farmers are making in the area under crop this year will be continued in 1946-47.
– It appears that the procedure with regard to the selection of applicants to fill vacancies on the staffs of individual employers is that the employer approaches the man-power authorities, who, in certain instances, arrange for advertisements to appear in the press calling for applications to be lodged through the Department of Labour and National Service. Applicants do not know who the prospective employer is. Their applicationsare acknowledged by man-power officials, and they have no assurance that the employer receives all the applications, or whether man-power makesa prior selection and sends a block of qualified applicants for the employer’s final selection. The position is not entirely satisfactory from the point of view of the employer or the applicant. Will the Minister for Labour and National Service state how recent High Court judgments delimiting the powers of the Commonwealth to continue to exercise jurisdiction under National Security Regulations affect those regulations that have to do with the filling of vacancies by private employers in the States of the Commonwealth? Will he examine the position with a view to suspending any regulation that might be inoperative as a result of these judgments ?
– I do not know of any difficulty that has arisen yet.
– I have received a number of complaints.
– I am not aware of the exact effect of the High Court judgments referred to by the honorable member, but I shall he conferring with the Director-General of Man Power this week and shall endeavour to obtain a reply to the honorable member’s question.
– I have received a letter from a merchant in Armidale which contains the following statement : -
During 1943 we wrote to you with reference to the supply of horse-shoes. In return we received letters from you, the Minister for Munitions and the Acme Horse Shoe Company,but up to the present time we have received only six pairs of horse-shoes.
The writer also states that the only blacksmith in Armidale has closed his shop, and horse-shoes smaller than size five are not procurable. Will the Minister for Munitions look into the production of horse-shoes in New South Wales and take steps to have increased supplies produced for country districts?
– I am surprised to hear the honorable member say that there is a shortage of horse-shoes in country districts. I had imagined that plenty were now available, hut I shall certainly have the position examined immediately.
– As the censorship of mails from Australia to Great Britain has been discontinued, I ask the Minister for Information what numerical reduction of the censorship staff may be expected ?
– The censorship of mails to and from Great Britain has been discontinued, and in consequence the staff has been reduced numerically. Whatever further reductions may be required to meet the changing circumstances of the war, will be made. I shall try to ascertain the number of persons whose services have been terminated, or whose occupations have lapsed in consequence of the discontinuance of the censorship communications.
-Can the Minister for Labour and National Service’ state whether there has been any change in the sugar dispute in Victoria, the extension of which to other States has been threatened ?
– The Disputes Committee held a meeting last Saturday morning, and the union last Monday. On Monday night, a mass meeting had placed before it the recommendation of the Disputes Committee that work be resumed forthwith and that the matter be submitted to a wages board for decision. The recommendation was adopted by the meeting. I understand, and hope, that all hands will recommence work to-morrow morning.
– I ask the Acting Prime Minister whether the Government has yet decided what its post-war rural policy is to be? If it has, will the right honorable gentleman make a statement on the matter? Will he also undertake to call a conference of representatives of organizations of wheat-growers, woolgrowers, dairymen, poultry-raisers, and other primary producers throughout Australia ?
– The Government is constantly reviewing various aspects of rural production. The House is aware that agreements have been made with the United Kingdom for the purchase of dairy products and meat for some time ahead. I informed the honorable member for New England (Mr. Abbott) recently that an agreement in relation to the surplus wool held by Great Britain, as well as the current clip, has been the subject of consultations in London. The Australian officers who participated are on their way back to Australia. I hope to be able to report shortly to the Government and the Parliament as to whether or not legislation will be needed to give effect to the recommendations.
The different aspects of primary production are considered from time to time. The prime responsibility in relation to domestic consumption rests with the State governments. The Commonwealth Government has not the constitutional power to deal with many of the problems that arise.
– It has the finance.
– The Commonwealth Government is expected to respond financially to every appeal that is made, yet it has not the constitutional authority to organize an industry or to control the production of any section of primary producers, and is consequently faced with great difficulty. It has endeavoured, and will endeavour, to deal with any matter that may arise, so far as its constitutional powers and the co-operation of the State governments will permit. I believe that the Prime Minister (Mr. Curtin) promised some time ago that he would consider calling a conference of primary producers, similar to his conference with manufacturers. However, so much of the time of Ministers is now occupied with the business of the Parliament or with Cabinet meetings, that not much time is left for conferences. Nevertheless, the honorable member may rest assured that his request will be considered.
– As the programme of works under the control of the Allied Works Council is diminishing, will the Minister for Works ensure that the labour employed by the council shall he reduced to the minimum, in order that as much as possible may be applied from this and all other sources to the purposes of homebuilding and other construction?
– The staff of the Allied Works Council has been reduced to less than one-half of its original complement. The matter is reviewed almost continuously, in order to determine what reductions may be made for the assistance of housing and other projects.
– I believe it to be the policy of the Government to discontinue boards and directorates that are regarded as obsolete. Will the Minister for Munitions state whether the Directorate of Materials Supply, which controls the issue of priorities in connexion with certain materials, occupies the full time of two officers and part of the time of another officer. Does not the Minister regard as superfluous the activities of this authority? Will he arrange to transfer its officers to more useful employment and, perhaps, have its work carried out by the Department of Commerce and Agriculture?
– As the honorable gentleman has said, the work of the Directorate of Materials Supply is diminishing. I am hopeful that the controls which affect the distribution of many materials will be discontinued almost immediately, and that those persons who have done this work in the past will be directed to other employment or used to the best advantage in the Department of Munitions.
Appointment of Organizer
– Has the Minister for Labour and National Service seen the press advertisements, in which the Liberal party is calling, through his department, applications for the position of organizer? In view of the acute shortage of man-power, is there no other employment which would better promote the war effort?
– .1 have not seen the advertisements. Applicants for the position of organizer for the Liberal party will be treated on the same basis as applications for organizers for any other political party.
– Will the Minister representing the Minister for Supply and Shipping inform the House whether consideration has been given to the quality of the petrol now being supplied to the public, with a view to ascertaining whether the mileage obtainable from it is as great as that obtained from the petrol previously supplied ? If the quality has been found to be inferior, is an increased allowance to be made to petrol users, and is the price likely to be reduced. in order to compensate for the reduced efficiency of the petrol now distributed ?
– A statement on the matter was made last week by the Minister for Supply and Shipping. He said that his department was considering an adjustment of the allowance, owing to the inferior quality of the petrol now being supplied to the public. The honorable member wishes to be informed as to the possibility of a reduction of the price of petrol. That is an entirely different matter, and I shall have to look into it before replying to the latter part of his question.
Debate resumed from the 22nd June (vide page 3556), on the motion by Mr. Chifley) -
That the bill be now read a second time.
.- Certain statements have been made outside this House about objection on the part of the general public to the banking proposals of the Curtin Government. I have received no fewer than 350 letters and telegrams from persons in my electorate with regard to those proposals, and I should say that 95 per cent, of the communications have emanated from the National Bank of Australia, because the letters were obviously typed on the same machine and were similarly worded. I have several official envelopes bearing the name of that bank, and in them some of the communications were enclosed. I can safely say that that bank is apparently anxious to give the impression that the public generally is opposed to the Government’s banking proposals. I have received numerous letters on the subject from the Home Hill, Ayr and other districts. Of 181 protests received from the Home Hill area, 134 were from primary producers, and of that number 55 were from Italians. Some of the letters had four or five names attached to them, and 1 suggest that they were signed at a bank counter, taking advantage of the presence of the individuals concerned. To letters from individuals who were obviously expressing their personal views regarding the Government’s proposals, I forwarded courteous replies. I stated I was not in a position at that stage to inform them as to the nature and object of the proposed legislation, as the bill had not been submitted to the Parliament, but that, when the measures had been introduced, I should endeavour to supply copies to them, so that they might judge of the contents for themselves.
From Mackay, I received about 33 telegrams, all of which were in practically identical terms, and apparently from the same source. Except in two cases, the words of the telegrams were either identical or similar. No doubt their despatch was instigated by the same people or organization. There are over 72,000 electors in the division of Herbert, and the fact that only 350 persons protested against the Government’s banking proposals, shows clearly that the protests are not of great significance. The objection has been made by certain private banks and other institutions. I received a communication from the Innisfail Chamber of Commerce protesting against the banking legislation of the Curtin Government before the bills had been introduced. I replied to the letter that I could not state the nature of the legislation, or the probable effect on the private banks. I was astonished to receive protests from people of that class. It is ridiculous that men with many years of experience as managers of big commercial firms should write to members of Parliament to oppose a measure that had not been submitted to Parliament and, in fact, had not even been considered by Cabinet at that time. Therefore, the protests were not genuine. Among the protests which I received were some from men holding positions with the Queensland National Bank. They ought to say very little about anything to do with banking. The older members of the bank’s staff must know what happened when the bank went smash in 1893. The general manager left the country and, unlike another man who was in the public eye a year or two ago, and who was brought back and imprisoned, he has not been heard of in Australia since. We have heard a great deal from honorable members opposite about broken promises.
They allege that the Government promised the electors that, in view of the referendum result, no legislation of the kind now before the House would be enacted. I deny that such a promise was made. In any case, the Government would be entitled to break its promise, and I say that on the authority of many prominent British statesmen and others who have never supported the Labour party. I refer, for instance, to what Benjamin Disraeli, who could hardly be regarded as a Labour man, had to say about war-time promises -
Every government is justified in promising anything and everything during war-time, whether for fulfilment or otherwise.
No government can be held responsible for its debts or promises made during war-time.
The Marquis of Salisbury said -
Governments are allowed to repudiate all debts and promises made during war-time.
Mr. Joseph Chamberlain said ;
Repudiation of national debt and promises are only natural after every war.
Many such statements have been made by men who opposed the Labour party. Therefore, it ill-becomes gentlemen of the same political beliefs to accuse the Government of sinning in this way. Honorable members opposite have said that the Labour party was responsible for Australia going off the gold standard and that the Government should take action to restore it. I sincerely trust that Australia will never return to the gold standard, which, as the Acting Prime Minister (Mr. Chifley) has said, is a hollow, meaningless, sham. Gold may be a convenient medium for paying international debts or for carrying on external trade, but it is of absolutely no value to our internal economy. We ought to leave our gold in the ground. Many lives have been lost in digging it out of holes, and more have been lost in putting it back into other holes.
When Mr. Theodore was Treasurer of the Commonwealth he brought down a bill providing for a fiduciary note issue, which was passed by this House but rejected by the Senate. It was looked uponby the Government’s opponents as a terrible measure. They claimed that notes should not he issued without some real backing. The truth is that there never has been any real backing to our note issue. At the best of times, the banks have held in gold not more than 33 per cent, of the total value of our currency. When the present Australian High Commissioner in London, Mr. Bruce, was Treasurer in the Lyons Government he introduced a bill for the transportation overseas of our gold reserve. I then asked whether he would have removed from the face of our currency the lying promise to pay in gold, on demand-, the face value of each note. The then Speaker of this House called me to order for using such words, but, although they won? not parliamentary, they were true. The great bulk of the Commonwealth’s gold reserves was in bar form anyhow, and could not have been exchanged for notes. In any case, only one-third of the currency issue could have been redeemed. When I. asked the then Treasurer what backing was to be used in place of gold, he answered, “ British sterling “. British sterling is another myth. The only true backing to our currency is the wealthproducing capacity of the people. ‘ There can be no other substantial backing to any currency. In fact, 97 per cent, of our currency is in the form of “ cheque pounds “. and that is backed mostly by the mortgaged properties of poor people. When Mr. Theodore was Treasurer there was violent opposition to a measure ‘providing for the exportation of £5,000,000 worth of gold to meet certain Commonwealth obligations that had fallen due in London. On that occasion the right honorable member for Cowper (Sir Earle Page) and the late Mr. Lyons were running about with their hands in. the air deploring the proposal. Mr. Lyons came out of the party room into the lobby and said, “ I declare to my God that T will never be a party to transporting: gold out of the country. The nation will bc ruined; its credit will be gone “. But not lone after that gentleman became Prime Minister a bill was introduced by Mr. Bruce to transport all of our gold overseas, and neither the right honorable member for Cowper nor Mr. Lyons voiced any protest: They said nothing about the danger to our overseas credit. There was a time, I believe, when the Government of the United States of America said that, it did not want any more gold. It had too much of it.
– Most of it i3 buried in vaults.
– It ought .to have been left in the ground in the first place. The Government was well advised in introducing this bill. I wish it had done so sooner. The Opposition’s attitude to this measure reminds me of the days of the Scullin Government, when i lie Senate brought Sir Robert Gibson before it to ask him whether it would be safe to export £5,000,000 worth of gold. His answer to the question was clear. He said, “ Yes. So long as the Parliament accepts the responsibility of inducing the amount of gold backing to the note issue the transaction will be in order’”’’. That gold was exported, and later the Lyons Government exported the remainder of our gold, and nobody worried about it. Not many people knew how much gold we held -in Australia, and fewer cared whether it was sent out of the country or not. The masses of the people have never been able to obtain sufficient money to provide themselves with the things which are necessary for decent living conditions. There is no need for anybody to worry about this bill. It is a good measure, and I hope that it will be the means of providing cheap money to the primary producers and others engaged in worth-while productive work. We have been told that the bill can lead to inflation. That is a matter of theory. One positive result will be the assisting of our primary and secondary producers, particularly the small men, to function successfully, which is essential to the prosperity of the nation. They will not receive financial assistance unless they provide security, but, so long as their security is worth while and the work in which they are engaged is important, the cheaper they can borrow money from the bank the better it will be for the nation. The Governor of the Commonwealth Bank, Mr. Riddell, once said, at a meeting in England, that the hank was not able to do the things that he believed it should do, because of the restrictive action of the bank board. The town of Gordonvale, which is now in the Kennedy electorate, but was then in the district of Herbert, had no branch of th© Commonwealth Bank. On behalf of a number of people in the district, who desired that a branch of the bank be established there, I made representations to the Commonwealth Bank authorities, only to receive the stereotyped reply that ample banking facilities to meet all reasonable requirements already existed in the town. That reply was given despite the fact that the only banking facilities in Gordonvale at the time were a branch of the Commonwealth Savings Bank, in the local post office, and agencies of two private banks -I think the Bank of New South Wales and the Queensland National Bank. I then got in touch with Sir Ernest Riddell, the then Governor of the Commonwealth Bank, and arranged for an interview. During our talk, Sir Ernest Riddell called Mr. Armitage, the present Governor of the Commonwealth Bank, into the room. I told them of the banking facilities which existed, in Gordonvale and emphasized that the two private banking agencies operated only on two days in each week, and then for only two hours each day. I pointed out that there were a big sugar mill and a number of fairly large businesses in the district, and that the existing banking facilities were not at all adequate. After further conversation, I suggested that Mr. Armitage should visit Gordonvale to ascertain the facts. My suggestion was acted upon, and in his report, Mr. Armitage confirmed what I had said. Thereupon, Sir Ernest Riddell said that the Commonwealth Bank could not establish a branch at Gordonvale until it had ascertained whether the two private banks which had agencies in the town were prepared to establish branches there. They then established branches which still remain. No branch of the Commonwealth Bank has been opened in that town. That has happened in other places also. It is idle to say that a person with an account at one bank can easily transfer it to another bank. The Commonwealth Bank has refused to make advances to men who have asked for financial accommodation until such time as the local manager got in touch with the banks with which they had previously dealt. On numerous occasions branch managers of the Commonwealth Bank have told prospective customers that, although they believed that advances to them would be justified, they could not make them available unless the private banks with which they had previously dealt refused to do so. In many instances, branch managers of the Commonwealth Bank have recommended to managers of private banks that advances should be made; and if those private institutions then agreed to make money available, the Commonwealth Bank took no further action. That policy is wrong. I should like to see a branch of the Commonwealth Bank established in every town in which the Governor of that institution thinks a branch should be established. I do not favour a decision being made by a board which takes into account the effect that the establishment of a branch of the Commonwealth Bani would have on private banks.
In my opinion, this country owes very little to its private banks. If the Commonwealth Bank is prepared to make money available to people who need it. at rates of interest which are lower than those charged by the private banks, and if the private banks come into line and reduce their interest charges, they need not fear that they will be nationalized. No one is anxious to nationalize the banks, because that would mean purchasing their assets. I believe that an expansion of the activities of the Commonwealth Bank would not seriously affect the men now employed in private banks, because men with their training and experience would be taken over by the Commonwealth Bank. Their services would be of value to the community and I trust that they will be treated fairly, but I do not believe that hanking is such an intricate science as some persons would have us believe. I hope that the Commonwealth Bank will in future be the institution that its founders intended it to be. The Leader of the Opposition (Mr. Menzies) said that under thi? bill all that a person would have to do would be to ask the Governor of the Commonwealth Bank for so much money and he would receive it. That is nonsense. When the late Sir Denison
Miller was Governor of the Commonwealth Bank, he told a deputation that, if the Parliament would accept the responsibility, he was prepared to make money available for constructive purposes as freely as it was made available during the war of 1914-18 for purposes of destruction. I firmly believe that if money can be provided for war it can be provided in peace-time to construct assets of value to the nation. Men of the calibre of Sir Denison Miller can do these things if Parliament accepts the responsibility. When the late Sir Robert Gibson was Chairman of the Commonwealth Bank, he was called to the bar of the Senate where he said that if the Parliament would accept the responsibility, the bank could make money available for various purposes. In my opinion, the responsibility for such things should rest with the Parliament; it should not be vested in any other authority. I believe that “ finance is government and government is finance “, and that those who control the finances of the country also control its government.
Any person who has studied the history of the “ old lady of Threadneedlestreet “ knows that Disraeli told the Governor of the Bank of England on a number of occasions when the Government of Great Britain wanted money, “ Go away and make the necessary arrangements. We must have the money”. During the last two or three hundred years’, large sums of money have been borrowed by the British Government from the Rothschild family. In the aggregate hundreds of millions of pounds have been borrowed from members of that family, but only a. small proportion of it has been repaid. That money was obtained because wars had to be paid for. No one will claim that the cost of the present war is being met by taxes extracted from the people. Money for war purposes has been released in Australia through the banks, particularly theCommonwealth Bank. If money can be made available in war-time for purposes of destruction, it can be made available in peace-time for reproductive works which will constitute a national asset. Surely no one will argue that money cannot be provided after the war to build homes for the people, to establish irrigation schemes, to supply electric power to the community and for similar purposes. Surely such undertakings as the locking of our rivers to provide water for irrigation purposes, and the harnessing of falls for the generation of electric power, are matters for which money should be forthcoming at low rates of interest. Unless this legislation means’ that such things will be done, it will be of little value. I believe that the proposals of the Government will be beneficial to Australia, and that if money is released to local governing bodies, big industrial concerns and other authorities for building homes and constructing works of a reproductive character it will be of great benefit to Australia generally. If we are to have in this country people willing to fight for it because they believe in it, the better their living conditions the better they will fight. I sincerely trust that they will not have to fight, but I have no illusions. This war, like that of 1914-18 and all other wars down the centuries, has been fought to save democracy, and for the establishment of a new order, but, now that Germany has been defeated and the war against Japan is receding farther from Australia and nearer Japan, the attitude of honorable gentlemen opposite, despite their earlier brave promises of a better democracy, is, “ We need not worry about a new order to any extent “.
– The honorable member for Herbert (Mr. Martens), like other honorable gentlemen on the Government side, said, in effect, that this bill did not make for the nationalization of banking.
– Order! The honorable member for Hume (Mr. Fuller) is not in order in reading a newspaper in the House.
– If the honorable member for Herbert meant by that that it did not make provision only for nationalization of banking, I would agree, because, in my opinion, it does much more than that. It is aimed at the complete nationalization of industry through the method of controlling the banks. On pages 47-48 of the Rules, Constitution, Policy and Platform of the
Australian Labour Partythere appears this plank -
That is what the bill is designed to do. As honorable gentlemen opposite have said repeatedly, it puts the complete control of banking in the hands of the people. Therefore, under their own policy, they claim that they can socialize industry by controlling the banks. We have been saying that ever since the debate on the Commonwealth Bank Bill and this bill started. The Labour policy continues -
The Bank Board is to be abolished when the Commonwealth Bank Bill, which we have already passed, becomes law -
That policy is to be put into effect under these bills -
There we have the complete policy of the Labour party with regard to banking under the heading “ Socialization of Industry”. Therefore, when honorable gentlemen opposite say that this bill is not intended to nationalize banking, 1 take it that they are talking in the wider sense and mean that it is intended not only to nationalize banking, and that, indeed, under their own platform, it is intended to socialize industry completely. I place on record that fact so that there shall be no doubt in the public mind as to what is intended under these bills. I do so because of the various denials of honorable gentlemen opposite of what we claim will be done under this legislation. This being the policy of the Australian Labour party, all that was needed to bring it into effect was a direction, and that direction was given to the Government. I ask the House to note that no mention was made of a banking policy in the policy speech of the Prime Minister (Mr. Curtin). The Australian Labour party federal conference was held in Melbourne in December, 1943 - that was four months after the last federal general elections. It gave the Government firm instructions to proceed with the party’s banking programme. The immediate steps laid down by this conference were -
That is being done under these two bills -
That the legislation secure -
Again honorable members will note that that is aimed at in these bills -
Under a direction from the Australian Labour party conference, these things are to he brought about under the two measures ‘ now before Parliament. So that there shall be no doubt about the authenticity of this direction I state my source of information as The Official Report of Proceedings of16th Commonwealth A..L.P. Conference, at page 32. There you have the complete set-up: the policy of the Labour party, which aims at complete socialization of industry; a direction given by the Australian Labour party conference that that policy shall be given immediate effect; and, in Parliament, two bills introduced to give legislative effect to that policy. Honorable members will remember the controversy that raged around the “ No socialization “ pledge of the Prime Minister at the last general elections. The Sydney Morning Herald, on the 1st May, 1943 - and I direct attention to the fact that that, paper was giving at that juncture the maximum support to the Labour party - said -
Mr. Curtin, denying that the Government, had attempted to socialize Australia, said, “ We do not intend to do it just because we are at war . . . Such interferences, restraints and adjustments as we make will be made only because they are necessary effectively to prosecute the war”.
I ask honorable members to take notice of that, because, in my opinion, it was a definite attempt to mislead the public by a vague promise as to the Government’s intention, and by failure to get n mandate from the people. It is important also to place on record that on the 12th May the Sydney Morning Herald said -
Shortly after Mr. Curtin hail made this statement-
That is the statement to which I referred, that there would be no socialization of industry in time of war -
Mr. Ward, then Minister for Labour, said in Western Australia that banking and insurance should bc nationalized if Labour had control of both federal Houses after the election.
– On a point of order. Is the honorable member addressing himself to the Banking Bill?
– Of course I am.
– There is no point of order. The honorable member for Wentworth is making references relevant to the matter before the Chair.
– I am sorry the honorable gentleman does not like my references. The article continued -
When this statement was referred to Mr. Curtin, lie replied that it had no Cabinet sanction. Asked whether the Government would, if returned to power, consider itself bound for the next three years by the programme which would bc defined in its policy speech, Mr. Curtin said that it would. That was clear and unequivocal. It is equally clear that no proposals to interfere with the Australian hanking structure were included in the programme defined in the Government’s policy speech.
Indeed, there was no indication in the policy speech that the banking structure would be altered during the life of the present Parliament. Therefore, when the people of this country cast their votes at that election, they were entirely unaware of the Government’s intention in regard to banking. The direction was not given to the Prime Minister until four months after the elections, prior to which the right honorable gentleman had stated unequivocally that no attempt would be made by his Government to do other than implement the programme outlined in his policy speech, and that, nationalization or socialization would not be undertaken during the war. That was the assurance of the Prime Minister of this country, and there could not be any higher pledge in the political field than that; but the promise has been broken deliberately by the Prime Minister and his supporters. Had the people of this country any suspicion that the Prime Minister’s promise would not be kept, they would have refused to return the Labour Government, just as they refused at the recent referendum to hand over certain powers to the Commonwealth. The introduction of this legislation, despite the Prime Minister’s promise, may be considered smart politics by honorable members opposite; but is it honest? I suggest that it is not honest; it is a political confidence trick in the worst sense of the term. Is it any wonder that the people of this country view with suspicion any statement of a political nature made by the Government? I am not concerned with any declaration by the Acting Prime Minister, or by any other honor ah1 e member opposite, of the Government’s intentions in regard to this legislation. I am concerned only with the powers which these bills embody, and by whom they are likely to be exercised. I agree with all that has been said by Opposition speakers in regard to the danger of handing over too much power to the Executive. I am not so foolish as not to realize that it is necessary to hand over great powers to the Executive in time of war. During an emergency, a government must exercise many economic controls, and must even impose industrial conscription, in a modified form at least. But because of the effect of such controls on” the natural expansion of industry and the civil freedom of the people, they should not be retained for one moment longer than is necessary.
This bill is designed for peace-time purposes and under the National Security Act, most of the powers which it contains are already in the hands of the Government or may be exercised by the Government if it so desires. Therefore, if parliamentary institutions are to continue, we, as members of Parliament, must consider very carefully what powers we hand over to the Executive to he exercised in time of peace. ‘Surely the history of Germany, Italy and Russia - all totalitarian nations - whose governments before the war imposed economic and industrial controls similar to Australia’s wartime measures, backed by secret police, concentration camps, and firing squads. should cause Parliament and the people of this country furiously to think before granting to any government the power sought under this bill. Make no mistake; the power embodied in this bill is complete. It will enable any government to change our entire economic and industrial way of life. Indeed, it could change this democracy of ours into a highly socialized state. I have already quoted the policy of the Labour party in regard to the socialization of industry and banking. Is it not the intention of the Government, directed by the Australian Labour Party Conference, to socialize industry, first by assuming complete control of the financial institutions of this country? Clauses 16 to 22 of this measure, which limit the funds private trading banks may lend, are symptomatic of the control that is likely to be exercised over borrowing. Borrowers who are not able to secure from the private banks the financial accommodation that they require - the assets of the private banks have been frozen at the 1939 level, or in fact, 25 per cent, below that level because of the depreciation of the value of the currency - will be forced to go to the Commonwealth Bank. The policy of the trading banks in lending the limited funds which will be left to them, i3 restricted by clauses 27 and 28, thus completing the control.
Before we pass legislation aimed at the strangulation of the trading banks and the demolition of the entire structure built by them, we should consider whether or not these institutions are essential to our financial system. As all honorable members are aware, a royal commission inquired into the monetary and banking systems of this country and reported to Parliament. Extracts from the report of that commission have been read from time to time in this chamber, Indeed the Government claims that this legislation is based largely on that report. The present Treasurer (Mr. Chifley), who was a member of the commission, dissented from paragraph 669 of the report which I am about to quote, but that does not make it any less forceful. It states -
The view of the Commission … is that the most desirable banking system in the present circumstances of Australia is one which includes privately-owned trading banks. The system which we contemplate is one in which a strong central bank regulates the volume of credit, and pays some attention to Us distribution. We are of opinion that the adoption of our recommendations will place the Commonwealth Bank in that position. We are satisfied to have the distribution of credit to privately-owned trading banks, working foi profit, but regulated in the manner indicated in our recommendations. A strong central bank, publicly owned, and not dominated by the desire to make profit, will exercise the necessary control over the activities of the trading banks, and the organization of these banks on a profit-making basis will conduce to efficiency while the area of choice afforded to borrowers will be greater than i,f all banking were nationalized and brought under one control. We think that in this way the national interest will best be served.
After making an exhaustive inquiry into the financial system, the royal commission’s report declared beyond any doubt that trading banks are essential in Australia. The report also contained the recommendation that the powers of the central bank should be made stronger, and that it should exercise control on a non-profit basis - it should be the “ big brother “ of the banking system. I find no fault with that suggestion, and if honorable, members are true to their interpretation of the royal commission’s report, they will agree. The opinion of the royal commission concerning trading banks has been underlined by the choice that industry has made of the banks in which to make deposits and from which to obtain loans. In December last, the Sydney Morning Herald published a statement showing the aggregate of assets and liabilities of nine trading banks. It revealed that the deposits for the twelve months ended October had increased by £74,000,000, while those of the Commonwealth Bank for the same period had increased by only £14,000,000. Clause 48 effectively bludgeons localgoverning bodies into submission, but it is noticeable that in the past they have chosen the private banks for their business. The huge excess of deposits in private banks over those in the Commonwealth Bank shows where the confidence of the trading community is reposed. The flexibility of trading banks is preferred to the rigidity now exercised by the Commonwealth Bank in its trading relations. According to all indices in the trading community, the private banking system appears to be satisfactory, and that backs up completely the royal commission’s question : If trading banks are satisfactory, why change the system? . The only reason I can find for the change is the direction given by the sixteenth conference of the Australian Labour party that the policy of socialization of industry should be implemented.
I shall not traverse all the clauses in the bill, because there will be opportunity to deal with them fully in committee. The control of borrowing is dealt with in clauses 16 to 22 and clauses 27 and 28. lt appears that the special account mechanism provided in clause 18 enables the Commonwealth Bank to limit the lending of trading bank funds to prewar levels. I have already pointed out that as money value has altered, those levels would be 25 per cent, or 27 per cent, less than present-day values. That means that the business of many borrowers will be diverted to the Commonwealth Bank. According to sub-clause.’- 1. and 2 of clause 27, however, the Commonwealth Bank will authorize advances by the banks only in conformity with the Government’s current policy. The sub-clauses provide - (1. ) Where the Commonwealth Bank is satisfied that it is necessary or expedient to do so in the public interest, the Commonwealth Bank may determine the policy in relation to advances to be followed by banks and each bank shall follow the policy .so determined. (2.) Without limiting the generality of the last-preceding sub-section the Commonwealth Bank may give directions as to the classes ot purposes for which advances may or may not he made by banks and each bank shall comply with any directions so given.
In each case the penalty imposed for the contravention of those provisions is £1,000. If the bill means what it says, then, under the conditions laid down, loans for special purposes may be made by the Commonwealth Bank to special classes of borrowers. For example, a special class of borrower might be a trade union - such as one of those constituting the conference which gave directions that this banking policy should be enacted. So much for the first “ barrel “ of clause 27. With the other “ barrel “ the Commonwealth Bank will be able to “ bring down “ those classes of borrowers who can get . advances from trading banks, and the trading banks will not be able to resist any interference. Recently, the Minister foi Labour and National Services (Mr. Holloway) stated, in reference to the strike of certain employees of the Colonial Sugar Refining Company Limited in Melbourne, that it was time the company was brought under control. It a direction were given to the trading banks forbidding further advances for the purposes of sugar processing, the control visualized by the Minister would become effective.
– Then we would get no “ sugar “ at all !
– Honorable members opposite may contend that what ] have stated is not the intention df the Government; nevertheless the power is contained in the bill for such control to be exercised. In the light of the Government’s policy, and the directions it has given the Government will certainly exercise those powers. Who would have thought that the Government would have used its war-time powers to penalize employers? Recently, however, because a mine-owner obeyed the law, his coal mine was taken over by the Government, and the mine deputies who precipitated the strike were merely warned thai if they did not resume work within a certain time they would be prosecuted. They were allowed to work on a holiday which fell on a Monday after the Government’s warning had been issued and for which they received double pay - but they resumed their strike on the following day in spite of the fact that that mine was then under government control ! Who would have thought that the powers possessed by any responsible government would have been exercised in such an illegal and unjust manner? In the light of that event, it is only logical to assume that when the powers contained in thi? bill are placed in the hands of the Government it will exercise them also Wit equal injustice. By exercising control over borrowing, the Government will be able to take to itself power which th< people at the last referendum denied to it. The Prime Minister (Mr. Curtin) made no mention of the nationalization of banking in his policy-speech at the last
Commonwealth elections, but on the contrary gave the assurance that his party, if returned to power, would not nationalize or socialize an industry in time of war, in that respect repudiating a statement that had been made in Western Australia by the Minister for Transport (Mr. Ward). Although no mandate was sought or given, the Government now proposes to nationalize banking, and thus take Australia a long way towards socialization. Individual liberty is to be circumscribed, because the Government will be able to insist that an industry which seeks financial accommodation shall undertake to give preference to unionists in its employment.
– The honorable gentleman should write fairy stories.
– The Minister, obviously, does not understand the nature of the power that will be given to the Government by the bill. Does he deny that socialization of industry is a plank in the platform of the Labour party, that four weeks after the last elections the annual conference of that party directed the Government to legislate in that way, and that that policy is being given effect in thebanking bills? Correct answers to those questions will show whether or not I am right. Clause 13 is designed to permit the Commonwealth Bank to assume control of private banks after they have been financially weakened. The machinery for that purpose is complete. [ have said that the Commonwealth Bank will issue directions; but the Governor of the bank will himself be directed by the Treasurer, who is a senior member of the Government, and, in consequence, there will be political control of banking.I have endeavoured to show that nationalization of banking will do more than merely enable the Government to control financial institutions. Its aim is to socialize industry.
There is one other matter that exercises my mind, and it should exercise the mind of every other honorable member. What effect will this legislation have upon the introduction of foreign capital for post-war development, and upon migration generally? The object of a migrant is to securegreater opportunities in the country to which he proposes to migrate. Therefore, if the opportunities are greater in Australia than in other countries, migrants will be attracted here. That is fundamental, as well as logically sound. I cannot visualize greater opportunities in Australia under government control of finance and the threat to socialize industry, than there are in a country that is controlled almost exclusively according to the principles of private enterprise. The Commonwealth Statistician’s figures show that in Australia there are 525,000 government employees and 1,250,000 employees in private enterprises. That number of government employees is a fairly high proportion in a population of 7,000,000. What would be the prospects of a migrant who obtained government employment, which implies the stifling of free enterprise, initiative, and all the other qualities which make for better citizenship and a degree of independence? Could a migrant view with equanimity the prospect of his employment being controlled by the Government? What opportunity will there be for a man of ability and enterprise?
– The honorable member must deal with the bill.
– The matter to which I am referring is closely related to the bill. The whole of the financial, industrial and economic structure of this country is to be altered. I consider that, I am entitled to discuss the possible effects on our overseas markets, foreign exchange, and the variety of other subjects which are related to the national economy. Surely the population of Australia is a vital factor; and if it is likely to be affected by this legislation, are we not entitled to draw attention to that fact? From the nationalization of banking will emerge a government-managed industrial structure, and a policy of jobs for political supporters. Therefore, a migrant would have little opportunity to make progress in this country unless he became an active political supporter of the party in power. The Government is even insisting that ex-servicemen shall join unions before they will be entitled to employment. How much more would that apply to migrants, who, it is claimed, would undermine the labour structure.
Lot us now consider the position of a nian who has capital to invest. Is he likely to come to Australia? From 1930 to 1939, refugee money totalling $14,000,000,000, mostly from Europe, was received into the United States of America. It has been pointed out to me that had Australia received of that sum a proportion commensurate with its population, the amount would have been £220,000,000, which is equal to three times the total amount of shareholders’ funds in all the trading banks. I understand that the total output of the Australian steel industry - the industry^ of which we are most. proud - is about 1,500,000 tons. The expansion in five years of the steel industry of the United States of America, resulting from the great flow of refugee money into that country, was more than forty times the total Australian production. Surely that should give honorable members food for thought! Will we not markedly prejudice the development of Australia and the expansion of our industries by preventing investment, and scaring away foreign capital as the result of our control of the currency? Surely we should consider the attraction of not only migrants but also foreign capital ! The one cannot be attracted without the other. Under the control of finance and banking, the tendency will be to scare away investment.
– The honorable member is attempting to prove that the expansion of the American steel industry during the war has been due to the use of refugee money. That is a fallacious argument.
– I am merely stating facts. America gives every encouragement to investment. We should attract capital by the means that it adopts.
– Australia has not lacked investment capital in the last five years. Our industries have expanded during that period.
– I am not denying that, but am pointing out how much more could have been achieved. We have limited the number of refugees who could come to this country. If the necessary incentive were given, many migrants and much foreign capital would come to Australia in the post-war years. But in- centive will be withdrawn by financial and banking control. The incentive in the United States of America is the scope for private enterprise. That would be the position in Australia also if these measures were not placed on the statutebook.
-The honorable member’s time has expired.
.- I should not have taken part in this debate had it not been for the vicious attacks made on the Government by members of the Opposition with regard to the purpose of this all-important bill. It must be apparent to even the most casual observer that a savage campaign is being waged against the Labour movement, and especially against the Labour Government, by the traditional enemies of organized Labour. Every reactionary agency and instrumentality has been mobilized for that purpose. Proof of this savage campaign may be read in practically every issue of the capitalist press throughout Australia. Further proof of it is given in addresses over the air from most of the capitalistcontrolled broadcasting stations and in the speeches made in this Parliament by members of the Opposition parties. From wherever the political agents of vested interests are found assembled tirades of abuse and unjust criticism are hurled with ever increasing bitterness against the Labour party. The immediate objective of this campaign, of course, is to prejudice and inflame the minds of the people against the Labour Government. In Australia we have now reached an important phase of our social and political life, when we must determine definitely, for many years to come, whether this community shall continue to progress on sound democratic lines, or be soon overwhelmed by yet another period of exploitation by the forces of reaction and conservatism.
From the aspects of economic freedom and social security, the people of Australia have never been more favorably situated than they are to-day. The main concern of the Government in power is the happiness and security of all- That, the present Government is outstandingly efficient has been revealed many rimes since the most critical period of the war, when the responsibility of saving the nation from destruction devolved upon a Labour Administration. The Government has shown judgment and foresight, and has displayed a determination to give effect wherever possible to the democratic policy since embodied in the Atlantic Charter, which has been the noble objective of the Labour movement. Should this bill be rejected, there is nothing surer than a re-occurrence of the depression experienced a comparatively few years ago. When a so-called depression overwhelms the community many people lose all that they possess - businesses, investments, homes, jobs, everything. Poverty and misery stalk the land. Incomes are reduced, or cease altogether. There are fewer people to buy the products of industry, and industry will not produce what it cannot sell. Unemployment is rife, and many people who believed that their position was safe find that their security has vanished. Many elderly people who have taken the precaution to ensure for themselves a reasonable income in the evening of their lives become dependent on the old-age-pension in order to keep body and soul together. Youths reach manhood without obtaining employment. Young people desiring to marry are unable to do so. Women become aged before they should have ceased being young. Little children suffer from malnutrition. That is a euphenistic way to describe semi-starvation.
A few days ago I heard the honorable member for Balaclava (Mr. White) say that, in 193S, only 10 per cent, of the people of this country were unemployed, but how can that statement be reconciled with the following comments by the author of a booklet entitled Money., thu Question of the Age: -
During the 1937 federal election, Mr. W. M. Hughes, then federal Minister for Health, said: “ The function of government is to govern for the good of the governed “. Their condition is an answer to the question, “ Have we good government? “ On our standards of production and our industrial power of twenty years ago, the present condition of the people may have reflected good government then, but thi6 is 1938, not 1018. Our real standards of living have not improved in that time. On the contrary, they have worsened. You would hardly find an ill-nourished child in those days, but what is the position now?
In an address to the Millions Club a few months prior to those elections, Mr. Hughe* stated that 40 per cent, of the 2,000,000 children in Australia, of an under-school age. were suffering malnutrition ; 800,000 children were 121 a state of ill health due to the lack of nourishing food.
If the present bill does not become law, Australia will return to the dark days of the depression, when factory machines rusted, wheat rotted in the silos, and fruit was buried. Our standard of health, once our proud boast, then deteriorated to that of a third-rate people. Yet there was no shortage of materials. The people still had the will to work and were in dire need of the products of the farms and factories. It was a financial depression. All depressions are manmade, and they must be man-cured. The community was short of nothing but money. Business people could not sell goods, because the people did not have enough money with which to buy them. After all, what is money? Apart from the spinelessness of governments in financial matters, which has strengthened the hand of the banker, his power over the community arises from the very faults’ which cause depressions. It is not surprising that the bankers themselves refuse to correct them. From the community’s point of view, the chief faults of the banking system arise from the fact that it releases money only as an interest-bearing debt. Nobody ever gets money from it on loan in any other way. Not only is the principal, which must be repaid, a debt, but the money required to pay the interest is also in the first instance an interest-bearing debt to somebody in the community. We are expected to pay back in principal and interest more than the sum issued. We are set the task of trying to borrow ourselves out of debt, but that cannot be done. Therefore, it is essential that this bill shall be placed on the statute-hook.
Mr. C. S. Sheperd, chief stipendiary magistrate of Sydney, when retiring in September, 1936, made an interesting statement from his desk at the Central Police Court. In an interview with a representative of the Sydney Sun, he stated -
The principal cause of crime, great and small, is poverty. That ie the big thing which 26 years on the bench has shown me. In nearly every case I have handled in that time there has been the one great reason - a man has done something becausehe had no money. Kill poverty and you kill crime.
The most tragic casesI have ever had to handle - the ones that move me most - are those of the men who never had a chance. Brought up in a criminal environment and chained by poverty, they go astray, but the fault is not altogether theirs.
Whilst our wealth and the capacity to create even greater wealth - the things man needs for his sustenance and happiness - have increased enormously, the standard of living of the people asa whole has not been raised in keeping with that increase, but has actually declined. Another article which I propose to quote shows the need for the transformation of the Commonwealth Bank from a bankers’ bank to a people’s bank. It states -
In 1912 the Commonwealth Bank was formed under the Governorship of Sir Denison Miller, on an overdraft of only £10,000, and no other backing except confidence in the Australian people. Its profit to 30th June, 1938 (including Note Issue), was £33,594,949, ana this was returned to the Nation as its absolute property.
In 1924 the Bank was effectively strangled (this means Dead) by the Government in office, and the Bank was changed from a People’s Bank to a Bankers’ Bank. Prior to 1924 Sir Denison Miller, Governor of the Bank, financed the East-West Railway out of the profits of the Bank, built the Perth Post Office, assisted the farmers of West Australia, and prevented a depression in Australia in 1920; also financed fruit industries to the extent of £11,500,000, and financed Australia during the last war for £350.000,000. The Bank also found £4,000,000 for Australian homes and lent £9,360,000 to Local Government bodies for constructional work. It paid profits to the Commonwealth of £3,000,000, and by 1924 it made £4,500,000 further profit available for the redemption of the debt of the Commonwealth. On the 25th November, 1938, an attempt was made to complete a 15-year plan to deprive the people of Australia of the power to control the money supply of this country by introducing the Commonwealth Bank Act Amendment Bill. The plan wasto sell the Bank’s debentures to private interests. This plan was defeated by the upsurge of public opinion and the outcry and protest of the electors.
If the Commonwealth Bank had not been as effectively strangled as it was in 1924 and had been permitted to function as it did at the commencement of its career, Australia would have been helped over the Years of Depression as it was helped over the war period (1914- 1918). Many prosperous business firms would have been saved from ruin and somewhere about one-third charity. Neither would all the people have to submit to the ruinous debt and taxation burden imposed upon them to-day, for Sir Denison Miller said at a function in his honour - “ I have found 350 millions for war, and I would find 350 millions just as easy for the act of peace if called upon to do so.”
To-day, the Commonwealth Government with a majority in both Houses, has the power under Section 51 of the Constitution Actto reinstate the Commonwealth Bank to function under the original charter, and to release the people from the dictation of the private bank ing monopoly and their counterparts of Debt and Taxation.
That is what is proposed in the bill. I believe that this legislation will be a beacon light showing the way towards the haven of social security. I compliment the Treasurer on the vast amount of work that he has devoted to its preparation, and I proclaim that I am mighty proud to be a supporter of the Government which has produced it. It will prove to be an instrument whereby future generations will secure freedom from want to such a degree that other nations will emulate our example. We shall help to mould the new world of the future which, I hope, will be free from fear.
– This bill is rather important and I have no doubt that the Government is anxious to rush it through the committee stage and have it placed on the statute-book. The Minister assisting the Treasurer (Mr. Lazzarini), who is usually in charge of the measure, is temporarily absent in order, I suppose, that he may return refreshed to the fray in committee and tell us about the bill, even though his remarks may be confined to one statement, namely, that “ the clause means what it says “. The honorable member for Hume (Mr. Fuller) produced some familiar arguments, which are as false as they are old. He said that the construction of the East- West railway was financed by the Commonwealth Bank. If the honorable gentleman is interested enough, I shall supply him with a brochure setting out the correspondence between certain people in Sydney and the Commonwealth Bank, in which the bank stated emphatically and categorically that it did none of the thing which the honorable gentleman has alleged that it did. The East- West railway was paid for out of revenue and loans. The rate of interest on the loans, and the amount which was provided annually from taxation, are se.t out in the brochure. The bank states without equivocation that it provided not one brass farthing towards the cost of the work.
– That is what the honorable member says.
– No, that is what the bank says. Furthermore, the bank also states that it did not provide any of the war loans of the last war. It acted as the agent of the Commonwealth Government, at a fee, in raising loans from the public. That is true. It is time that some of these ancient lies were nailed down. Honorable mem- bers who support the Government should not be entitled to make such misstatements, whether deliberately or otherwise. I hope that they do not do so deliberately, but if their knowledge of the history of Australian finance is to be gauged by their misstatements, their ignorance of Australian history - and recent history at that - is of such a nature that they are not qualified to occupy seats in this chamber. The objective of the Government in introducing this legislation is clearly to place all banks, and probably all banking business, under the control of the Commonwealth Bank. That means, as has been argued and later admitted, that it intends to place the banks under the control of the Treasurer. Under the political set-up that exists to-day, the Treasurer is responsible to a very powerful, though sometimes recalcitrant, caucus.
It is interesting that the bill contains no definition of “ banking business “, although it refers to “ banking business “, “ general banking business “, and “ any banking business “. The Government ought to step off on the right foot by telling us exactly what it means by “ banking business “. When discussing the Commonwealth Bank Bill, I referred to the position of the stock firms of Australia, and of some of the co-operative societies which are lenders and borrowers of money, and which operate with cheques, accept money on fixed deposits and conduct current accounts. As this bill stands, it is too dangerous to be allowed to become operative. If it be passed in its present form, it will contain absolutely no definition of “ banking busi ness “, and the Minister assisting the Treasurer may speak truthfully when he tells us, in the committee stages, that the clauses mean what they say. They will mean exactly what the Minister wants them to mean. Without a definition, the various references to “ banking business “ will form a dragnet which can be used as the Government considers fit. When a term is defined, limitations are immediately placed upon it. By defining it, certain boundaries are laid down and certain matters which will arise will fall outside those boundaries. For this reason, I want the Government, for once in its life, to make a clear statement of what it means by “banking business “.
The next matter of grave concern is the new order under which all banks, other than the Commonwealth Bank, will operate when thebill becomes law. I have studied the bill very carefully for the second time within the last few days, and I have noticed that certain restrictions will be placed upon the private banks. I do not apologize for speaking for the private banks. Some of them are Australian institutions and some are partlyowned overseas, but they all furnish) a service which the people of Australia appreciate, as they have shown by the extent to which they have placed their business with them in preference to the Commonwealth Bank.
– They have had no alternative.
– Even where they have an alternative, they go to the private banks. Consider towns where branches of the Commonwealth Bank and the private banks are operating side by side. Mount Gambier, in my electorate, one of the few places in South Australia outside Adelaide where the Commonwealth Bank has a branch, has six or seven bank branches. I am sure that the business done by the Commonwealth Bank in that place is much smaller than that done by any other bank.
– The people cannot change their accounts because the private banks have a stranglehold on them.
– The honorable gentleman ought to confine his attention to reading about Goldilocks and the Three Bears. I know enough about the banking system to be able to assure the honorable gentleman that there are plenty of accounts which the trading banks would be quite happy to hand over. The fact is that the customers are not anxious to leave the trading banks and igo to the Commonwealth Bank.
I shall now refer to the most outstanding things that will happen to the trading banks under this legislation. Under clause 27 the banks must conform to the Commonwealth Bank’s policy. That is one of the most important items. Special war-time accounts will become permanent accounts with the Commonwealth Bank, and the private banks will not be able to withdraw their money except with the consent of the Commonwealth Bank. The lodgment of special deposits - that is, new profits - is provided for in clause 20. “Foreign exchange must be delivered to the Commonwealth Bank on demand, according to clause 23. The trading banks will be prevented, by clause 28, from investing in Commonwealth, State, or local government securities, or in any other security listed on -the Stock Exchange. They will be forced to submit to exchange control by clause 29. They shall cease to pay gold, export it or hold it, under Part IV. They shall pay interest by Commonwealth direction. In other words, the rates of interest will be fixed by the Commonwealth Bank. That is laid down by Tart V. They shall render certain statistics, which they do not render to-day, under Part VI. The compilation of these statistics will be a very onerous and difficult job, because it is laid down that, in certain cases, the banks will be allowed a period of six months in which to prepare figures. That allotment of time is a clear indication of. the nature of the information which the Government will demand, and. of the difficulty of the job imposed on the banks. It is reminiscent of the task of extracting information from some Ministers. It is supplied to us in time, if we are patient.
– It is good information though.
– It is not. T speak feelingly about the information which the Minister gave to me last Tuesday night. The banks shall refrain from doing business with the States and local governing bodies, and they shall submit their affairs to the examination of the Auditor-General. They shall supply ‘ unlimited information at the discretion of the Commonwealth Bank, on any subject under the sun, under clause 50. They shall not sell out, reconstruct, or amalgamate with any other bank, under clause 51. They shall hand over unclaimed money to the Commonwealth. This money does not belong to the Commonwealth, it belongs to the people, who, in their wisdom or otherwise, have seen fit to lodge it with private banks. The Commonwealth now demands that such money shall be handed over to the Treasurer, and is good enough to say that, after a certain time, it will become part pf general revenue.
– A very wise provision.
– I disagree with the Minister. They shall also submit to any regulation which so far has not even been thought of. That is provided for in clause 60, which sets out that regulations may be made on any random thought of the Treasurer of the day, or of a majority of caucus. A minority consisting of one person less than half of those who constitute the caucus, as well as the whole of the members of the Opposition may be opposed to the regulation, and yet a slender majority of the caucus will determine what shall be done. We are told that this bill is for the protection of the currency, over which private bankers will have no control whatever, and also for the protection of depositors who have lodged their money with the trading banks! These are truly amazing restrictions.
– All of them ar, necessary.
– This bill shows the length to which a socialist government will go in looking after the people’s affairs. The Government is not only its brother’s keeper, but also the keeper of every man’s banking account; it will do for him everything necessary in connexion with his financial affairs, either directly through the Commonwealth bank, or indirectly through restrictions which it intends to impose on the private banks.
The next thing that strikes me is that every trading bank will be placed on the horns of a dilemma. First, the trading banks must conform to Commonwealth banking policy, and, secondly, they must disclose their inner business, and the affairs of their customers, to a competitor which the Parliament has ordered to take their business from them. I am reminded of the advice given by an old Scot to his son who was about to leave home to make his own way in the world: “Go out and get money; get it honestly if you can, but get it”. That is virtually the instruction that is given to the Commonwealth Bank in this bill. First, it instructs the Commonwealth Bank to go out and expand its activities; and then it. instructs the private banks to submit everything in their possession to the inspection of a competitor which the Parliament has ordered to expand its business.
– That is not correct.
– That is provided for in a bill which was passed during the temporary absence from the chamber of the honorable member for Batman (Mr. Brennan). The honorable member will find that provision in the Commonwealth Bank Bill, and a similar provision is contained in the present bill.
– There is no provision in any bill that has come before us which enables the Commonwealth Bank to interfere with the customers of other banks.
– I draw the attention of the honorable member for Batman to clause 50 of this bill, which reads -
Penalty: One thousand pounds. (2.) A direction under this section shall not require information to be furnished with respect to the affairs of any individual customer.
– The clause expressly excludes relations between customer and banker.
– The honorable member for Batman was once h Minister, and he is still, I believe, a lawyer,’ and therefore he should know that the Commonwealth Bank will need to know certain things about foreign exchange and foreign currencies and that the only way in which it will be able to get that information in certain instances will be by having information concerning the financial affairs of the persons with whom it will be dealing. There will be no other way to find out, and so it is clear that nobody will bc protected. But let me get back to the dilemma in which the trading banks will find themselves.
– The honorable member himself is in a dilemma.
– Thai may bo a new experience for me, but not for the Minister for Home Security (Mr. Lazzarini). Having laid down that the Commonwealth Bank shall have the power to direct banking policy, that the private banks must conform to that policy, and further, must lay bare their financial soul to the Commonwealth Bank and the Auditor-General when ordered to do so, the bill provides, also, that if, in spite of those handicaps, the private banks do make a profit, every penny of that profit shall be placed in another special account with the Commonwealth Bank at the amazingly low interest rate of 17s. 6d. per cent. I come now to the other horn of the dilemma: If, as the result of the banking policy dictated by the Commonwealth Bank, the private banks fail to make profits and get into “ Queer-street “, as some honorable gentlemen opposite have reminded us happened to certain banks in 1893, the Commonwealth Bank will come to their rescue.
– The Commonwealth Bank will look after them both ways.
– It is most amazing to find that should these private financial institutions, as the result of incompetence on the part of the Commonwealth Bank, get into financial difficulties, the Commonwealth Bank is to be the custodian of their affairsWhy should the Commonwealth Bank, which will cause their losses, be selected to save them? The task which this legislation imposes on the private banks is another case of an angel in Heaven trying to boil a pot while the devil pours water on the fire. I remind the Minister for
Home Security that the competition which the private hanks will have to meet will not be fair competition, because the Commonwealth Bank will not have to bear the same burden of taxation as is imposed on the private banks.
– Yes, it will.
– That is a point which the Minister might elaborate in a later speech.
– Fifty per cent, of the profits of the Commonwealth Bank must go into Consolidated Revenue.
– That does not affect the matter at all, because the Commonwealth Bank is a government institution. If the Government were to lay down that 100 per cent, of the profits of the Commonwealth Bank were to be paid into Consolidated Revenue the position would not be affected in the slightest degree. Nor would that interfere with the capacity of the Commonwealth Bank to get business. There can be no comparison between the Commonwealth Bank, which is under no obligation to pay taxes, and the private banking institutions, which must pay them. Take, for instance, the effect of land tax on them. The Commonwealth Bank does not pay land tax, but the amount paid as taxes by the private banks for their properties in Sydney alone would amount to a considerable sum. If the Commonwealth Bank had to pay taxes on its valuable properties in Martin Place, Sydney, and elsewhere, the position would be very different. The bill also provides for the compulsory lodgment with the Commonwealth Bank of moneys belonging to the private banks. The delightful word “lodgment” either means acquisition or that the private banks will make compulsory loans to the Commonwealth Bank.
I am not a lawyer, but I should like the one or two distinguished lawyers who sometimes sit in this chamber, but at the moment are distinguished by their absence, to consider one or two things about this bill. I want to know whether this compulsory lodgment of surplus funds is a loan, or amounts to acquisition. If the lodgment is to be a loan, where does the Government get its authority to require the banks to make compulsory- loans? I have read the Commonwealth Constitution carefully, and although I am not a lawyer I claim to understand it as well as most people on the land do. I know that section 51 of the Constitution empowers the Commonwealth to acquire property on just terms, but I do not know of any provision in it to compel people to lend to the Commonwealth on any terms. If there be any right residing in the Commonwealth Government to compel people to lend anything to the Government, 1 submit that that loan must be on just terms. I suggest that the compulsory lodgment of moneys with the Commonwealth Bank at 17s. 6d. per cent, interest would not be considered just terms if the matter were submitted to the High Court for adjudication. Similarly, if the money is to be acquired, another problem arises, because, according to the Constitution, the Commonwealth Government may acquire property only on just terms. I should say that “just terms” would involve the Commonwealth paying a reasonable money price for any property which it acquired. If money is compulsorily acquired from a person how is it to be paid for on just terms? That is a question which I ask the financial genius at the table - I refer to the Minister for Home Security - to answer. The Constitution clearly contemplates the acquisition of property, and the payment for it in money. If acquisition is what the Government has- in mind in this legislation, I do not see how it can pay for Australian currency with Australian currency. If overseas currency, such as dollars, lira or marks, were acquired, I could understand it being acquired on just terms, because foreign currency could be paid for in Australian currency, either justly or unjustly. But if Australian currency be acquired I do not know what would represent acquisition in just terms. “ If the salt have lost his savour, wherewith shall it be salted?’” That is about how this needs to be put. If it can be paid in any other medium than money, I should like to know what it is. Does the Government propose to acquire money from the hanks and compel them to take something else in exchange?
– Probably treasurybills.
– Yes, t reasury-bills at “ five bob “ per cent. or something like that. I point out to the Minister assisting the Treasurer that the bill does not provide that, as a condition to their being licensed, the private banks shall pay their surplus funds into the Commonwealth Bank; it occurs only as the result of the banks’ operations under the licence. I think that is an important point, too. If the Government laid it down that the only terms on which itwould allow the banks to operate were that they paid in surplus funds, that part of it would stand, I believe, on entirely different ground. I do not think it would get over the compulsory lodgment argument even that way; nor d o I think it would get over the argument that could be raised in regard to restraint of trade, which also is something which the Commonwealth has no right to impose upon anybody. However, I leave that aspect for the time being in order to ask the Minister assisting the Treasurer whether he can clear up the lodgment issue? It appears to me that lodgment is a penalty on success imposed on a competitor and that it is an act in restraint of trade and, furthermore, an act in restraint of investments. I do notknow exactly where the Commonwealth stands in that regard either. The Privy Council not long ago decided a case in regard to freedom of trade, commerce and intercourse as between the States, and I am afraid that something of the same sort may arise raider this policy. Then I want to know from the Minister assisting the Treasurer whether the lodgments of profits imposed on the banks is, if lawful, to be applied to stock agents who do banking business. If the Government has the right to say that a bank, because it comesunder the first schedule to the bill, shall, if it makes a profit, deposit that profit with the Commonwealth Bank, logically it has the right to say to every stock agent, cooperative society, or other organization or person dealing in money, accepting money on fixed deposit, and engaging in other monetary transactions which result in profit, “ You must lodge that extra profit with the Commonwealth Bank “.
– Does the honorable member mean to say that we should widen the bill?
– I am not asking that the bill be widened. I am asking why the stupid, provision is put in at all. There is an old saying which even the Minister assisting the Treasurer should understand, “What is sauce for the goose is sauce for the gander “.
– Not necessarily.
– Then there is another saying, which rather cancelsthat out, that when things are different they are not the same.
– And when the bill means what it says it does not mean that at all.
– Yes. The next thing I want is a definition of the term “ sterling “. I thought I understood what sterling meant until a High Court decision was given in Melbourne not long ago. I formed an impression of that decision. Lawyers may be able to correct me. It was an insurance case. The court ordered that the man concerned was to get the £1,000 concerned in the case in Australian currency, although the term used in the policy was “£1,000 sterling”. That is a rather strange thing.
– What does the honora ble member mean by “ sterling “ ?
– English currency or, as would rather appeal to the honorable member, British currency. English and Australian currency had the same value at one stage, but Australia went off sterling and our money depreciated in terms of sterling, so that £108 in Australian currency was required to buy £100 of sterling. The rate of exchange rose so that it took £133 Australian to buy £100 sterling. To-day we pay £125 Australian to buy £100 sterling. That High Court decision is important. It is recent; it was given this year while this Parliament was sitting.
– The case conce rned a debt in Australia?
– A debt in Australia and the policy was taken out in Australia, yes; but the terms of the policy were expressed in sterling, and the High Court ruled that sterling meant Australian currency. It is not for me to question the reasons why the High Court came to that judgment, but, as one who is concerned for the export industries of Australia, both primary and secondary, but much more the primary than the secondary, may I say that this decision could carry with it very great consequences. Consequently, in committee, I intend to ask the Ministor to say whether a clause will bo put into the bill to declare that sterling means British currency and not Australian currency, so that we shall know.
– All transactions in Australia are carried out with Australian currency.
– But the bill refers to sterling. “What does the Minister mean by sterling?
– “We shall tell the honorable member.
– If he means English currency, as I took it to mean before the High Court decision, that should be put into the bill . so that every producer, particularly every exporter, in this country shall know exactly where he stands in regard to the value of Australian currency and the difference between it and English currency. That is a question which I think the honorable gentleman will have handed up to him by primary producers’ organizations before very long, if he is not careful.
The last question with which I wish to deal is one to which I referred before, but I wish to refer to it now in a different way. It is the power granted to the Commonwealth Bank in regard to the control of gold prices. It appears to me that the Commonwealth Bank is authorized by this bill to acquire gold, because it is said that the Commonwealth Bank is to be the only authority to buy gold in Australia. “Well, if the Commonwealth Bank is buying gold, I remind the Minister that the Constitution lays it down that the Commonwealth may acquire goods or property only on just terms, and the terms on which gold is to be acquired are not to be the price fixed by the Commonwealth Bank. In times past the
Commonwealth Government has had no price-fixing powers whatever. The price has had to be the world market price for gold, not some lower price decided on by the Commonwealth Government, through the Commonwealth Bank. 1 am not going into the points which I could raise about the taxation of gold at present. I heard other arguments on that in this chamber in 1939, and very interesting arguments they were. The right honorable member for Darling Down; (Mr. Fadden) will remember the first Gold Tax Bill, which was rejected by the Senate, and, perhaps, a certain Minister might have been less happy if we had not done a certain thing here. But thai is history, although it is very important. I want to know whether the Government thinks it has the right to acquire gold except on just terms, because I argue that the Commonwealth Government cannot lay it down in this, or any other bill, that the Commonwealth Bank is to be able to be the only buyer of gold, and then argue, at the same time, that buying under those conditions is not compulsory acquisition. No man is compelled to go out and mine gold, but there is on the statute-book the Gold Encouragement Act and alongside that the Gold Tax Act. I remember when the Gold Encouragement Act went through this chamber. Under it we paid a bounty of £1 an oz. for all gold mined. The Government goes on another tack now, and lays it down that in future the Commonwealth Government may declare the Commonwealth Bank as the only goldpurchasing authority in Australia. In times past the Commonwealth Bank and the Commonwealth Government have had no price-fixing powers whatever. The only price at which gold could be acquired from a person was ai the world market price. It can only acquire it at lower prices now because there is no free market for gold to-day. The power of collecting half, the increment on gold, for which the present law provides, that increment being based on the £9 an oz. purchase price, will depend entirely on the price-fixing power of the Commonwealth. In time of peace it does not have that power, and, therefore, its power of collecting 50 per cent, of the so-called increment over £9 an oz. will go by the board. So, on this question of the acquisition of gold, the Commonwealth Government will do well to examine the limits of its powers. That is the list of my complaints about this bill. It is a very interesting and a fairly long list of complaints about matters that are not clear and which will have to be cleared up. I have a feeling that this bill did not receive quite so . much consideration as it should have received. Ft has been attended to, no doubt, by a number of gentlemen who know a lot about banking and finance and how the world should be run. In the words of Omar Khayyam they want -
To grasp this sorry Scheme of Things entire, and then Remould it nearer to the Heart’s Desire.
The Government is trying to do that n this bill and will have as much success as Omar would have had in his day. There are certain things which the Commonwealth Government cannot do. One, of course, is its desire to use this legislation as a means of controlling all industry in Australia.
– That is right: socialize it!
– Yes. The Australian Labour party thinks that as long as it has control of the financial institutions of Australia it can wreck or reconstruct everything in the Commonwealth. The Minister is an honorable gentleman with those ideals, who has moved in the metropolitan parts of Australia-
– I have lived in the country all my life.
– The Minister does not sound like it, and certainly does not look like it. I put it to him, as a man who knows the cities of Australia, that before you can erect a fine, big new building, you generally have to get hold of an old one and knock it down. The Government is trying to knock down the private banking institutions of Australia. The blow it is dealing, in my opinion, is directed not so much at the banking institutions as at their customers. What it is attempting to do is to tell the people where they shall bank, ft is doing so, whether legally or not I do not know, but certainly immorally, unmorally or amorally in regard to the States and local governing authorities. There are certain sovereign rights which the States of Australia still enjoy, and certain sovereign precautions which they are still obliged to accord to localgoverning authorities, which function under their authority. Whatever may be the legal position, this is one of the most miserable efforts that I have ever seen devised to avoid what should be the straightforward procedure. There is nothing honest or straightforward about a clause which says that a bank shall not conduct business with State Governments. That, too, is not a term of the licence. The Government proposes to license unconditionally every trading bank named in the first schedule. I contend that it has no right to go in fox underground, doubtful methods of attempting to circumscribe the right of other authorities of Australia by imposing limits on the banking institutions. That is not its function. It is too much to hope that in committee this Government, with a huge, unthinking majority, will insert in the bill improvements which should be looked at for the benefit of the community. The bill will go through with as little consideration as was given to the Commonwealth Bank Bill that preceded it. I tell the Treasurer and those behind him that he has not heard the last of this bill. As a matter of fact, he has not heard the first of it, because fourteen months hence somebody will say from that table, “ The gates are open to the people “.
– South Australia will not have one representative then.
– The Minister need not worry about that. The more he and his colleagues come into my electorate, the greater my majority will be. I am prepared to go to any part of my electorate accompanied by any member of the Ministry. It might be in the interests of the political life of this country if, at election times, all candidates for each electorate stood on the same public platform. In that way issues might be clarified considerably, and if any speaker knowing the financial history of this country and the happening!1 during the last war, made a statement of the kind made by the honorable member for Hume this afternoon, he would do so only once.
– I invite the honorable member to visit my electorate of Werriwa some time.
– In the past eighteen years I have spoken in many electorates in New South Wales, and have not had any difficulty in getting a hearing.
Sitting suspended from 6 to 8 p.m.
– I am pleased to have the opportunity to associate myself with this important measure, which, I am sure, will have a wide influence on the life and development of this great nation. In my view, all other legislative enactments pale into insignificance ,by comparison with the financial bills now before the Parliament, because all social reforms and developmental activities are dependent largely upon the success or failure of our financial institutions. In the course of this debate we have heard the views of leading experts on finance quoted by many speakers. In supporting their case against this legislation, honorable members opposite have spared no effort in their search far and wide for suitable quotations. I shall not assume the role of an expert on finance, but shall endeavour to deal with this measure in the light of my own practical knowledge of two of the greatest primary producing industries of this country, namely, r.he wheat and wool industries. Any one who has a personal knowledge of the struggles of the pastoral and agricultural industries in this country, will welcome the effort by this Government to restore full power to the Commonwealth Bank. I shall refer briefly to the reports of royal commissions set up by the Governments of Western Australia- and Queensland to inquire into the wool industry in those States. Since 1906 I have been closely associated with the pastoral industry of Western Australia. I know of its difficulties and of its successes. I know the dreadful conditions that have been endured by pastoralists during devastating droughts. In 1939 the Government of Western Australia appointed
Mr. Fyffe, SurveyorGeneral of that State, as a royal commission to inquire into the condition of the pastoral industry, which at that time had just passed through six years of the worst drought in history. To demonstrate the great influence which the banking institutions had upon that industry, I shall quote paragraph 508 of the royal commission’s report, which states -
The staggering effect of the drought is mnphasized by the above figures. Not only did station owners, starting in 1035 with 5,500,000 sheep, lose 4,182,000 in the five following years (which was very greatly in excess of five years’ normal losses) , but their natural increase was 3,137,000 sheep below that which they should have obtained according to the average derived from pre-drought experience.
That passage shows clearly the position in which the pastoral industry was placed as a result of the drought. I turn now to the financial ‘position. In paragraph 734. the commissioner said -
Many pastoralists have not been able to carry on without financial assistance! and each year have submitted budgets to the banks and firms for sums for the working and maintenance of their stations. They have Been the previous debt which they had incurred increasing at, perhaps five or five and a half per cent, interest calculated half-yearly, and haw reached a stage when they are entirely dependent on the secured creditors.
Paragraph 773, which relates to interest charges, says -
Many protests were heard during the course of the Commission’s inquiries that the practiceadopted by the financial institutions (including the stock and wool-broking firms) of debiting interest half-yearly, and if unpaid thus including it for the calculation of interest on the daily balance or other system, was not warranted, having in mind the rates of interest charged, and the extreme adversity which s great many of the pastoralists had suffered during thb drought. In some extreme cases this hue hean avoided by only charging interest on unpaid interest on an annual basis where the debtor is suffering severe financial hardship.
I quote those passages to demonstrate to honorable members the difficulties associated with the development of our primary industries. The commissioner, whose report I have quoted, did not hare any Labour leanings, and his findings must be regarded as impartial. A long exhaustive inquiry was made, and the report sets out clearly the condition? which were found to exist. I come now to the report of the Payne royal commission, which was set up by the Government of Queensland to investigate the production of wool in that State. The report of that commission confirmed exactly the findings of the Western Australian commission. Paragraph 141 of the Payne report states -
Information and data before the commission leads to the conclusion that the average debt per sheep is not lower than 21s. Interest on this sum at o-i per cent, per annum, which is the usual rate now being charged, would amount to 13.80d. per head, or at 8 lb. of wool per sheep to 1.73d. per lb. of wool. Discounting this amount by 20 per cent, to provide for proportionate charge to stock and other station produce, a figure of 1.39d. per lb., is arrived nt as the interest charge for wool only in respect of borrowed money.
In this chamber one hears frequently the assertion that by increasing the wages of. workers, the arbitration courts of this country have contributed largely to the increased costs of production. The findings of the royal commission I have quoted show clearly the effect of interest charges upon these costs. I am convinced that in the passage of this legislation, the Commonwealth Bank, particularly the Mortgage Bank Department, will give to the primary producers of this country encouragement to open up new country in accordance with the Government’s policy of decentralization, and will enable people in rural areas to enjoy some of the amenities of city life. The only official inquiry into the cost of wheat production was that made in 1934 by the Royal Commission on the Wheat, Flour and Bread Industries. The report of that commission indicated that of an average cost of production of 4s. 3d. a .bushel, at growers5 sidings, interest charges on borrowed money accounted for Sd. or 15.7 per cent. That is a disastrous state of affairs. Primaryproducers have to overcome, not only the disabilities of adverse seasons and falling prices, but also they have to carry a colossal burden of interest which in many cases is responsible for complete failure and bankruptcy. Therefore -I submit that if a policy of decentralization is to be pursued finance must be made to play a most important part. The sooner Australia realizes its responsibility in regard to development and population the better. It cannot be expected that the people should have to endure again the failures of the past which were the result of bad administration. Settlers were expected to go into areas without facilities, necessary to give them a fighting chance to establish themselves. 1 welcome this measure as one of the greatest pieces of banking legislation brought down since the Fisher Government went out of office. During the debate my mind went back to the year 1910, when the Commonwealth Bank was established. As a result of an argument I left my employment at that time because my employer was a victim of the propaganda which swept through the country like a bushfire. It was suggested that the Commonwealth Bank would be a failure and that Fisher’s “ flimsies “ would destroy the financial system. What has been the record of the Commonwealth Bank? No Australian, irrespective of his political outlook, would be prepared to say thai the Fisher Government made a mistake in establishing the Commonwealth Bank 1 should like to see the Mortgage Bank Department further developed so that people might be assisted to go into unsettled areas and pioneer the way for their development and the establishment of new industries. Our aim should be to decentralize population and build up the country towns so that the residents in those areas might have the same amenities and privileges as people in the cities. What happens when a bank manager’s agent visits a farm or station to-day, the owner of which cannot meet his arrears of interest? The agent says, “You have a wireless and a motor car; you have no right to these things. You ought to pay your interest and live out here without a wireless or motor car. After you pay the interest you owe us then you might have some justification for purchasing these and other amenities.” Too long have country people been subjected to that kind of treatment. I believe thi? Government is tackling the problems confronting Australia in a way that will earn for it and the people a hundred-fold return of benefits. It is ready to encourage and assist people who are prepared to engage in developmental work.
Recently I asked the Treasurer (Mr. Chifley) whether the Government would be willing to appoint a delegation of representatives of all parties in this House and send it to the Kimberley district to inspect and report on the prospects of development there. The long undeveloped coast-line ofWestern Australia, with its meagre population, must stand out as a menace to the nation. Vast areas of good country are awaiting development and crying out for attention. The problem of water conservation must be tackled in a genuine manner. There are those who say there is nothing wrong with Australia’s financial system; that it has operated fairly and in the interests of every one. If that is so, why are flood waters allowed to rush out to the sea year after year without any attempt being made to impound them? As Henry Lawson wrote in “ The Storm is yet to come “ -
The rain comes down on the western land
And the rivers run to waste,
While the townsfolk rush for the special tram
In their childish, senseless haste,
And never a pile of a lock we drive
Buta few mean tanks we scratch,
For the fate of the nation is naught, compared
With the turn of a cricket match.
If water was properly conserved there would be an adequate supply to meet drought periods; but the difficult experience through which the country has just passed is a glaring reminder of the fact that no genuine effort has been made to provide an adequate water supply. If people can borrow money at a reasonable rate of interest for settlement and development purposes Australia will thrive. If that assistance is not given, however, some other nation will come and do what we have failed to do. Murmurings and warnings have been heard recently to the effect that our white Australia policy is breaking down. Every Australian would be prepared to lay down his life in defence of that policy, but it will be impossible to maintain that ideal if the country is not developed and fresh industries are not founded because financial assistance and encouragement are lacking. I remind members of the Opposition that when the Fyffe report was submitted showing, among other things, that more than 5,000,000 sheep in Western Australia had perished because of the drought, the Commonwealth Government then in office - consisting of members of the Opposition parties - did nothing to revive or assist the pastoral industry in that State. Yet members of the Opposition tell us that theirs was the Government that looked after the interests of the man on the land. That Government did so while big firms such as Dalgety and Company Limited, Elder Smith and Company Limited, and others fleeced the men on the land by way of exorbitant interest charges.
I repeat my confidence in this measure. If any advantage is to be gained by the control of the banking and monetary systems it should be applied to Australia’s development. If it is left in the hands of a few hankers who would rigidly control industries, the congestion in the cities will increase and sparsely populated areas will be further depopulated. One has only to travel through the country to be impressed by its great possibilities, but nothing has been done over the years owing to the neglect of the non-labour governments.
Soon after I entered this Parliament I met one of my former school teachers and while discussing finance I said that the banking system was somewhat intricate and difficult to understand. She replied, “ Never make that admission again; the banking system is the most simple in the world. It is only those who have created a false atmosphere of difficulty who lead others to believe that the control of our monetary system is intricate and hard for the average man to understand “. She was a wise woman and after I gave further study to the subject I found that the monetary system was not so involved or shrouded in mystery as those in control of it would have the average man believe. The trouble has been that many people have been given the idea that banking is a subject for only the learned to handle, and, therefore, it has been left in the hands of a few to administer. These, in turn, have exercised a control over the individual from the cradle to the grave. The proper persons to control finance are the elected representatives: one reason being that they are compelled to go to the people every three years to secure their approval or rejection. It has been suggested that if the right to make decisions on banking policy now vested in the Commonwealth Bank Board were placed in the hands of the Treasurer, such right would be taken away from highly trained persons and given to some one who would not be able to discharge such a responsibility. I know of no person in Australia better qualified or entitled to make such a decision than the Treasurer because he is responsible to this Parliament, and if he errs then Parliament errs and the people will pronounce their judgment.
I have received many protests about this bill which were obviously inspired by banking interests. A parcel containing 50 typewritten slips bearing the words, “I protest against the Government’s Banking Bill “, and signed by the persons protesting, was sent to me. I discarded them all and made no reply to the people who sent them. When the honorable member for Wentworth (Mr. Harrison) was citing certain names the other day, I noticed that the name of the honorable member for Kalgoorlie was not among them. I refuse to allow anybody to dictate to me or to tell me that I should say yes or no to any proposition. I am the elected representative of the people of Kalgoorlie and I am responsible to those people for my actions - not to any individual who desires to put the “ third degree “ on me although that has been attempted more than once, but without success. As a member of the Labour party, I am proud to have played some part in placing this legislation on the statute-book. It is vital to the country, and if any benefit is to be gained by the control of banking, then that benefit should be shared by all and not by a chosen few.
– I have listened with great interest to the honorable member for Kalgoorlie (Mr. Johnson). I suppose no member of this chamber knows more about the “ wide open spaces “ of Australia, or the trials and troubles of the man on the land, the curious uncertainty of the climate of this Commonwealth bringing thereby drought and flood; of diseases among stock, or the difficulties of living on the land, than he does. I am sure the honorable member will agree with me that because of these things the most flexible banking system of which human ingenuity can devise is required in Australia. The bill contains clauses which are by no means flexible, but rather lend rigidity to the country’s banking structure. These clauses probably could only be equalled by the full implementation of the pre-war gold standard. I refer particularly to Part III. of the bill which deals with foreign exchange, and to clause 29 which provides - (1.) Where the Governor-General is satis fied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth, or in order to conserve, in the national interest, the foreign exchange resources of the Commonwealth, he may make regulations, not inconsistent with this Act. making provision for and in relation to the control of foreign exchange and, in particular, but without limiting the generality of the foregoing, for or in relation to -
That clause envisages the strictest exchange control which any country has ever embodied in any banking legislation. Let us consider who was responsible for instigating this kind of extreme rigidity. If honorable members will turn to page 1117 of the minutes of evidence given before the Royal Commission on Monetary and Banking Systems, they will there find a record of the evidence given by Mr. L. G. Melville, Economic
Adviser to the Commonwealth Bank. Referring to the economic system of Australia, Mr. Melville said -
To make the problem simple enough for practical purposes we must select one factor in the economy and attempt to fix it, at the same time endeavouring, as far as possible, to make every other factor in the economy adapt itself to the fixed factor . .
Having regard to the necessity for Australia to trade on friendly terms with other countries, her need for overseas capital, and the convenience of traders and financiers, it seems best in her case to fix the exchange rate and adapt the economy to that fixed rate.
That means that any ill wind, any drop of price levels, which occurs outside Australia, must be instantly reflected in the Australian economy by reason of the very rigidity of the exchange rate. We know what happened during the great depression because of the attempt to maintain in this country parity first with gold and then with sterling, and the reinvigoration of the national economy when the exchange rate was driven from parity and rose to what one might describe as its equilibrium level, to cover the difference between the purchasing power of sterling and of the Australian £1. Throughout his evidence, Mr. Melville adhered to the point that there must be a fixed and rigid exchange rate, around which the Australian economy must be made to revolve. He quoted an extract from a book by Professor Gustav Cassel, of Sweden, On Quantitative Thinking in Economics -
In order to reduce subsequent disturbances to a minimum, care should bc taken that this rate corresponds as nearly as can be ascertained to the purchasing-power parity of the currencies concerned.
If the internal economy is fixed at a purchasing power parity with other countries currencies expressed by rates of exchange, and the purchasing power parities of other currencies suddenly alter, with an inflexible exchange rate such as Mr. Melville proposed and this legislation will endeavour to implement, there would be imported into the internal economy, which would have to share in them, the whole of the troubles of the outside world. Mr. Melville further said -
The fixing of the rate of exchange as an objective of monetary policy does not mean that the rate selected should be maintained at all costs.
Yet he would maintain it, at a heavy cost. He went on to say -
Thus, with a fixed rate of exchange, a sudden increase or decrease in prices, a cessation of foreign lending, or the production of a substitute for one of the principal exports may require a sudden and substantial change in nominal wages and in fixed charges, such as interest, commissions, fares, and freights. If this sudden change is impracticable for economic, political, or social reasons, then there is no alternative to the selection of a new rate of exchange. But the rate of exchange should not be altered arbitrarily or for unsubstantial changes in the economic environment. In particular, there is no case for a depreciation of the currency when, us at present in Australia, there has been selected and maintained unaltered for some years a rate which permits an expanding production for export at a profit to the producers, and when there is reason to believe that the maintenance of the rate will make it possible for all but a small proportion of the population to find employment. It may be that some change in the layout of employment in Australia is necessary to give full work at existing wage rates. This change, however, is more likely to be hindered than aided by a depreciation of the currency. If, in these circumstances, a fall in London funds threatens a depreciation of the currency, the solution is clearly to be sought in a contraction of credit.
Therefore, he admitted that he would carry back into the Australian economy all the disasters that might occur in the outside world. At page 1135, he was cross-examined - 13y tub Chairman. - Your suggestion is not to make a stable exchange the end, but only a sort of working hypothesis? - Yes, I think wc should think in terms of a stable exchange for all ordinary occasions.
Until you find there is some reason why you should make an alteration? - Yes, an overwhelming reason for an alteration.
Although he said that he did not propose that the attempt should bc made to keep the exchange rate stable in all circumstances, there is not the slightest doubt that he would maintain it, at very great cost, with a readjustment of internal values in Australia which would be even more severe than that which Professor Copland, the present Economic Adviser to the Government, put into force in the great depression. Other evidence on the exchange rate was given by very high banking authorities. I shall first quote what Sir Alfred Davidson, of the Bank of New South Wales, said in reply to the evidence given by Mr. Melville. Sir Alfred Davidson and the Bank of New South
Wales forced the breaking of the exchange rate in 1931, when it rose rapidly from £115 to £130. The royal commission found that no single factor in the whole of the depression had been more responsible for infusing life-blood into the community, and easing clown the unemployment rate, than had been the depreciation of the Australian currency in relation to sterling. Sir Alfred Davidson said in evidence -
My first fundamental criticism is that he appears to have been led, through a knowledge of the factors which preclude a precise monetary policy being carried out according, to mathematical principles, to accept unquestionably a monetary policy which has the specious merit of being simple.
This policy, namely, the maintenance of a rigid exchange rate, has been proved through experience over a great number of years in most countries of the world, to be generally incompatible with’ the steady progress of internal economies and the absence of marked fluctuations. It closely resembles the maintenance of a gold standard, the fundamental weaknesses of which I have stressed in my previous evidence.
He went on to speak of the effects which this rigidity would have -
Thus, it is reasoned that, in order to secure the maintenance of the official rate of exchange fixed by the central bank, complete control of the proceeds of export is necessary.
That would mean complete regimentation of an individual’s funds. Whether he sold his wool locally, or shipped it overseas, he would not be allowed to buy what, commodities he liked overseas, or even make the proceeds available to an importer. Sir Alfred went on to say -
The artificial prevention of the development of an outside market will lead to the bureaucratic determination of a price - namely the rate of exchange. The market will then have no right of appeal but must accept the ar.bitra.rv decision of the Commonwealth Bank.
That has been borne out again recently. A cable published in the Sydney Morning Herald to-day, stated that the Federation of British Industries, commenting on the Bretton Woods plan, had said in regard to the rigid fixation of exchange rates -
There are recognized rules by which reliable rates can then be established, it states, and the only test of a true equilibrium rate of exchange between two countries engaged in international trade is practically the test of trial and error.
Sir Alfred Davidson pointed out thatjustifiable and necessary depreciation of the currency might be left too long because of the possible addition to costs of government and the fear of the central bank that it would get out of control. That, was demonstrated most strongly in 1931. He continued -
This may cause the monetary authorities to shirk action for a long time when a calamity confronts Australia.
He went on to criticize Mr. Melville for other views which he had expressed in regard to this matter. Professor Hytten, a graduate of the University of Tasmania, also contradicted evidence given by Mr. Melville. At page 1238, speaking of the exchange rate, he said -
There can be no one guide to the. fixation of the Australian exchange rate. The chief thing to be remembered is that the rate must not be kept stable just for the sake of stability, but that exchange stability should be subservient to the wider economic needs of the country. Internal stability is far more important, mid if that should happen to mean changes in the rate from time to time, these must be undertaken.
Later, he said -
Tn thu long run international trade is mure likely to be increased by making internal stability the first consideration than by rigid adherence to a given exchange rate.
All those who have read reports of the international discussions at Bretton Woods, the Dumbarton Oaks Conference, and the United Nations Conference on International Organization, at San Francisco, will agree that the argument most consistently advanced by the Australian delegates was that there should be the highest degree of employment in every country of the world. The Atlantic Charter and the Mutual Aid agreement, envisaged the greatest possible international trade. I agree entirely with Professor Hytten, that if we are to have prosperity and full employment, it is infinitely better not to worship a fetish such as a. fixed exchange rate, in conjunction with which the whole economy must be maintained.
Another interesting feature of Part [II. of the bill is that it appears to be completely contrary to certain of the provisions of the Bretton Woods monetary agreement, embodied in the white paper containing the discussions from the 1st to the 22nd July, 1944, issued by the Parliament of the Commonwealth in 1944. Mr. Melville, in a general review of the proceedings, said -
We could vary our exchange rate, without the approval of the fund, provided that the change, together with all previous changes, whether increases or decreases, did not exceed 10 per cent. of the initial par value.
If we consent to the Bretton Woods agreement, Ave shall be committed to a rigid exchange variable only to the extent of 10 per cent. ; not quite so rigid as that envisaged by the bill, but still very rigid. Paragraph 22, which is headed “ The Ban on Exchange Control “, states -
The other major obligation which membership of the Fund would place upon us is not to impose exchange control except to prevent capital movements. Import restrictions, however, are permitted and could be used to reduce the drain on our external funds, although they would have this effect only after the lapse of some time after they had been applied.
If that be correct, it means that a good deal of the clause will he ultra vires for what the Attorney-General (Dr. Evatt) has said with regard to the treaty-making powers envisaged under the Constitution. This rigid restriction of the movement of the foreign exchange rate seems to run contrary to certain clauses of the Bretton Woods agreement.
I shall put, before honorable members certain points with regard to the exchange rate and its incidence on primary production. The honorable member for Kalgoorlie (Mr. Johnson) has referred to difficulties which producers suffer. From 1929 to 1932 there was a colossal fall of the prices of primary products. At no time during 1931 or 1932 did I ever receive more than 10s. a head for fat sheep sold on my property. As soon as the depreciation of the exchange rate came, the Australian price level for exports improved. Nothing helped Australia more than the action taken at that time. What, did the Royal Commission on Monetary and Banking Systems say in that regard? In paragraph 551 it stated -
The movement in the exchange rate in January, . 1931, was one of the major contributions of monetary policy to recovery in Australia.
At paragraph 554 the commission stated -
In the belated movement of the official exchange rate to 130 in January, 1931, the initiative was taken by the Bank of New South Wales. By that time, the Commonwealth Bank should have realized the value of exchange depreciation as a means of meeting an emergency, and have raised the rate to a height which would have restricted imports and maintained exports.
I believe that that action was one of the most powerful factors in the economic recovery of this country. There is the greatest possible danger in putting a clause like this into thebill, for it is like a dagger pointed at the hearts of the people when world prices are falling, if we are locked with rigidity to sterling or with the rate of any foreign country. Sub-clause 1 of clause 39 provides that the Commonwealth Bank may, with the approval of the Treasurer, make regulations -
making provision for and in relation to the control of rates of interest payable to or by banks, or to or by other persons in the course of any banking business carried on by them;
making provision for and in relation to the control of rates of discount chargeable by banks . . .
The royal commission, in its report, realized that there was a great necessity to control interest rates charged by banks to borrowers. Three methods were suggested by the commission. One was that the rates of interest should be controlled by the central hank operating in the open market in government debentures and bonds, and buying them in if it wanted to make the credit structure more liquid. If, on the other hand, it was desired to restrict the credit base of Australia, the method to be adopted would be to sell securities on the open market, and bring back cash into the central bank and immobilize it for the time being. The commission recommended the fixation of interest rates on deposits with the trading banks, so that there would be control of the average margin between deposit rates and the rates charged to borrowers. The third method related to the competition of the central bank with the trading banks as an adjunct to its central banking powers. The royal commission instanced how the Commonwealth Bank had brought down the rate of interest on pastoral advances in New South Wales to 4^ per cent., when the ruling rate at that time had been much higher. There were some three pastoral firms in New South Wales which banked with the Commonwealth Bank, and all that the latter had to do was to say, “ We will advance funds to you for your clients at 4J per cent.”. On the evidence given to the commission, it was shown that the money which they borrowed was lent to their clients at the same rate of interest as was paid for it. Their profit arose from the fact that they obtained commission from the sale of their client’s stock and wool.
To lay down a rigid rate of interest and say that no bank is to be allowed to advance money at a higher rate would cause certain borrowers to bo refused accommodation by the .trading banks. The bill does not provide that a bankshall lend money to any borrower. The bank may say to some borrowers that they are not as credit-worthy as others and they may wish to charge a slightly higher rate, but those borrowers would get a lower rate of interest from the banks than if they obtained their accommodation from a money lender who had three golden balls hanging over his door, from whom the lowest rate of interest obtainable would be about 48 per cent, [f, on the other han.1. they paid a rate of interest equivalent to that operating under the cash order system, they would be charged approximately 100 per cent. If they went to a long-term lender through a solicitor, they would probably pay a good deal more than they would have to pay a trading bank. Thousands of people in the Commonwealth to-day have had to pay comparatively high rates of interest for the money that they have needed for the projects which they have undertaken, and which might not have been regarded as credit-worthy by a bank, yet by their hard labour they have made those projects entirely successful. Paragraph c of sub-clause 1 of clause 39 provides that the Commonwealth Bank may make regulations providing that interest shall not be payable in respect, of-
That provision shows that whilst those who drafted the bill may have obtained university degrees, they lack a practical knowledge of what is taking place in the community. I particularly draw attention to the evidence given before the royal commission by Mr. Bloomfield, of the Mutual Life and Citizens Assurance Company, Sydney, who said that his company accepted deposits on seven-day terms. He added that in 1926 th, deposits amounted to £1,147,000, and in 1927 the total was £1,428,000. People were able to get 2 per cent, on that money, and the effect would be to force down the rate of interest. There would be a tendency on. the part of gas companies, depositing funds there, for instance, to reduce the price of gas to the consumers owing to the savings made. This system was having a beneficial effect, but because a gentleman had rigid ideas about placing full control in the hands of the Commonwealth Bank, this excellent seven days’ market has been cut out, despite the fact that it was of great service to the- community.
Turning to Division 5 of the bill, which relates to advances and investments, we find that clause 27 provides - (I.) Where the Commonwealth Bank U satisfied that it is necessary or expedient to do so in the public interest, the Commonwealth Bank may determine the policy in relation to advances to be followed by banks and each bank shall follow the policy so determined.
Penalty: One thousand pounds. (2.) Without limiting the generality of the last preceding sub-section, the Commonwealth Bank may give directions as to the classes of purposes for which advances may or may not be made by banks and each bank shall comply with any directions so given.
Penalty: One thousand pounds.
That provision is typical of the desire for rigidity in the banking structure of Australia and is a monument to the vanity of the economic advisers to the Government who drew up the bill. They always set themselves up as having superior wisdom and even a sort of divine guidance, by which they can tell us what is most advantageous for the people. This clause would limit classes of borrowers. The bank could say that there were too many, borrowers of a certain type although they might be more efficient producers than some others. I have heard it stated that the erection of the Palace of Versailles was one of the greatest wastes of money which Louis XIV. ever perpetrated, but it would be found that when he built that palace he gave a great deal -of employment to the people in the neighbourhood. He created an enormous asset from the point of view of the tourist trade of Prance, which has paid large dividends for many decades. I do not believe that these people can say with certainty whether or not a loan will be advantageous. A third point is that under this clause it will be possible to make every trading bank refer to the Commonwealth Bank any application for h loan above a certain amount, and should the “Brain Trust” not think that the loan should be granted, it will not be granted. There will no longer be the chance to apply to different institutions; everything will be concentrated in the one bank. I have in mind an instance which came to my notice some time ago. A small butter factory wished ro change its location, and needed £16,000 for the purpose. Tho bank with which it had done business previously refused to make a. loan, but another bank agreed to advance £16,000. So successful was the change that within fifteen years the factory was able to construct improvements to its property valued at £120,000; to create a reserve fund of £20,000; and to repay the advance of £16,000. All the time it paid to the suppliers of cream higher prices than were paid by other factories. Under the system for which this bill provides that might not have been possible, and a factory which was so successful because it was able to obtain a small loan, might have been doomed to failure since once approval for the application was refused by the Commonwealth Bank it could not have been granted. The bill which contains evidence of the outstanding influence of Mr. Melville may prove to be disastrous to the primary producers of this country. And when their position is unsatisfactory a similar state of affairs exists among all other sections of the community.
.- Much that was said when the Commonwealth Bank Bill was before this House has been repeated in the discussion of this measure, but because suggestions made in committee to improve legislation introduced by the Government are for the most part unheeded, I shall make a few observations at this stage. Despite the general assurances of the Treasurer (Mr. Chifley) that there is no sinister purpose underlying the bill or any intention to disrupt the country’s finances, and notwithstanding that he probably believes what he says, the fact remains that the right honorable gentleman is not master of his own destiny because, like every other member of the Labour party, be must accept the decision of a majority of caucus.
– Does not the honorable member believe in majority rule?
– Yes; I also believe that minorities have rights. It is because minorities have rights that the Allied Nations are fighting the present war. This bill indicates that, in the opinion of the Government, those who do not subscribe to the views held by the majority have no rights at all. Under the caucus system of the Labour party every Minister, including the Prime Minister, must accept the decision of a majority of caucus, and therefore should that majority decide to alter the country’s financial system, Ministers will have to carry out its decision. That system is dangerous because it may easily lead to our economic structure being completely revolutionized. Those who have studied communism know that one of its first objectives is to revolutionize the financial system. Communists set about creating chaotic conditions, thereby making it easy for extremist influences to work.
– A depression has the same effect.
– That is so, but inflation will bring about those results more rapidly. This bill will cause inflation; it will destroy the savings of many of the people; it will reduce the living standard of others; it will reduce the value of life assurance policies, pensions, and all fixed incomes; and in so doing it creates conditions favorable to the growth of Communist ideas. The history of revolutions in other countries shows that one of the first objectives has always been the destruction of the financial system. I believe that the Treasurer and his colleagues in the Ministry, as well as most of the supporters of the Government, have no sinister intentions, but that does not apply to all honorable members opposite. How was Hitler able to rise to power in Germany? In this connexion I desire to read an article from a recent issue of the magazine Life.
-What has Hitler to do with this bill?
– The article shows how the banks were used in Germany.
– That, has norelation to the bill.
– I shall relate the article in Life to the bill.
– The Chair has ruled that it is not related to the bill.
– You, Mr. Speaker, have not heard one word of whatis in this article.
– So far, the Chair has not heard one word about the bill from the honorable member.
– Should I be called upon to resume my seat I shall have to do so, but I repeat that I have not yet read one word from the magazine Life and therefore you, Mr. Speaker, cannot know what I was going to say.
– The honorable member has indicated the nature of the article from which he proposes to quote. The Chair does not want to hear it.
– Wh at I propose to say is - I shall not quote from Life - that one of the reasons for the state of affairs in Germany which made Hitlerism possible was an attack on the banks, Jews and various other influences in the community. A similar state of affairs is being created in this country by continued attacks on the private banks. Everything harmful that has happened during the last twenty years is attributed by some people to the influence of these institutions. The private banks are blamed for the depression, and financial institutions in other countries are said to have caused the present war. The bill sets out what can be done with the private banks, but I should like to know what the Government intends shall be done. It is clear from the bill that in a country which we believe is capable of great development the banks are to he brought to the position in which they were on the 3rd September, 1939, and are to be pegged there indefinitely. Their assets are to be frozen as at that date. I shall say a few words in support of the private banks.
– That is not surprising.
– If honorable members opposite were sincere they would give to the private banks credit for what they have done, instead of blaming them as they do. I do not claim that banks are philanthropic institutions.
– They are business institutions.
– Yes. The private banks and their managers have done much for the development of Australia. A man who applies to a private trading bank for financial assistance is judged on three points. The first is character; the second is the nature of the venture and its prospects of success, and the third is the value of the asset upon which the loan is being sought.
– The honorable member shouldput the last first.
– It is not the first now, but, under government control, the last will he first. The only thing upon which a struggling individual wanting a start in the world but with very little in the way of assets will be granted an advance will he the value of the asset that he can produce. That is how it is in every government-controlled system - a mass of red tape from beginning to end ! A man’s character and capacity will not mean much. Everything will be assessed on the worth placed on the asset by the manager who does not want to lose his job. I should have had a long hard struggle unless the local bank manager had not very often backed me financially far in excess of the value of the asset that I had to offer from time to time. I am glad to say that in no case did I cost him anything for his confidence. That experience has been common throughout the country. Tens of thousands of our best citizens have made their start, not by virtue of the amount of the asset that they could produce, but because of the confidence in their character that the bank managers had in them. That will all go down the drain under the system that the Government proposes to bring into force. By a process of squeezing the private banks’ businesses will be destroyed without compensation. The prohibition of expansion of business, among other things, will mean that in the course of time managers of the Commonwealth Bank branch in country towns, being the only bank managers there, as undoubtedly is the intention of this bill because the private banks must be squeezed out, will be financial autocrats and, if they do not like the way in which clients conduct their businesses or do any of the things for which men may dislike other men, they will be unable to continue in business. Under the competitive system, the lifeblood of democracy, if one does not like one firm one can go to’ another. That keeps the whole system in balance, but, under the system proposed by the Government financial autocrats will be set up all over the country. I protest against the abolition of the spirit of private enterprise in this country, because that is what it means, arid the substitution therefor of a governmentcontrolled financial system which will make an autocrat of every Commonwealth Bank manager. It will be an extremely bad thing when men have to depend on the judgment of one man’s likes or dislikes for the development of the country.
– Give us another depression.
– No one regrets depressions more than do members on all sides of the House.
– The last depression was an evil which the Opposition did not do much to remove.
– When honorable members opposite throw out the taunt that we or the banks did not do much to relieve the depression -
– The honorable member’s party did not do much.
The .SPEAKER.- ‘Order ! The honorable member for Hume must . cease interjecting. *
– Such a taunt is n reflection on the humanity of all Australians. Every member of the community realizes the terrific suffering the depression caused to countless thousands of some of our very ‘best citizens. Anybody who knew the remedy, whether he belonged to that side or this, and failed to apply it was a traitor to his country and devoid of all human instincts. History shows that the then government did everything humanly possible to lessen the evils of the depression, but it was something which went far beyond Australia; it had world wide implications. I ask the honorable members opposite to remember that the depression in Australia was substantially due to our failure to obtain payable prices for our primary products.
– It was wholly due to that.
– Yes, the whole cause of the depression in this country was the fall by millions of pounds of the values of our exports of wool, butter, meat and wheat. The money that previously came, to Australia from abroad no longer circulated. That meant that the farmers could no’t buy the goods they used to buy. The merchants, having fewer purchasers dismissed some of their employees. They, in. their turn, could not patronize the butcher, the baker and the milkman. So the vicious circle went round. That was the reason. It was not a local depression; it was world-wide. Perhaps the proposals now taking shape in the councils of the world will end the fear of depressions, but nothing can be done bv local action in Australia itself. Therefore, when honorable gentlemen opposite interject, “ Remember the depression “, and, by inference, express their belief that by the manipulation of the currency they will end depressions, I tell them that, with this bill in force, the next depression, if one does occur, will be worse than the last, because it will affect, not only those who will lose their jobs, but also, if the banking system i.e used as is implied by the interjectors, those with savings in banks and life insurance companies and all kinds of people with fixed incomes, the value of which will depreciate as the result of the inflation of the currency. The SuKgestions made from Government supporters can only mean that the currency will be inflated. I will not examine this bill clause by clause, because that has already been done, but I do sincerely ask the Treasurer not to treat this measure in committee in the arbitrary manner in which the Commonwealth Bank Bill was treated. “When amendments are moved, even from this side, which do not directly cut across policy and which improve the measure, I ask him not to dismiss them with a wave of the hand but to give them serious consideration.
– in reply - The honorable member for Richmond (Mr. Anthony) asked the intentions of the Government in bringing down this legislation. That can be stated in a few words. The intention of this legislation is to ensure that the banking system of this country shall work in the interests of the people as a whole. It ha3 been planned in such a way as to ensure that final authority as to monetary policy of the country shall rest with the Government, which is responsible to the Parliament and to the people. No longer will we leave the control of the monetary system of this country in the bands of individuals with no special training, whose interests are personal and material and are associated with “big business “. The intentions of the Government are plain. I do not propose to traverse the ground that I traversed in my second-reading speech on the Commonwealth Bank Bill, because I am quite sure that honorable gentlemen do not want a tedious repetition of previous arguments. I do propose, however, to reply to the tirade of the honorable member- for New England (Mr. Abbott) about interest rates. I do not think that there has been anything better for the primary producers of this country than the control of interest rates under National Security Regulations.
– I am in favour of controlling interest rates. The right honorable gentleman either was not here or did not listen when I spoke.
– I listened to all I thought worth listening to about interestrates. One of the greatest abuses, both before and during the depression, was the exorbitant interest rates charged by the private banks of this country. In the last war the interest rates charged on treasury-bills issued to finance war expenditure constituted one of the greatest financial scandals that this country has ever seen. Compare the interest charges on treasury-bills to-day to those charged then by the private banks.
– The Treasurer must not overlook the fact that the Government gets deposits from the trading banks at 15s. per cent.
– The honorable gentleman knows well that if there had not been an increase of deposits by the private banks with the Commonwealth Bank the Commonwealth Government would still have issued treasury-bills at a very low rate of interest.
– Nonsense !
– I admit that .at the beginning of the war the rate was not so low as now, but I do not think it was ever more than l£ per cent, and it was never more than If per cent., even in the earlier stages of the war, whereas, in the last war, the rates charged on treasury-bills were as high as 6 per cent. However, I did not rise to go over the same ground again, but to answer one or two points raised by the Leader of the Opposition (Mr. Menzies) and one or two points raised by the Leader of the Australian Country party (Mr. Fadden). One of the point* raised by the Leader of the Opposition was in relation to clause 27, under which - the Commonwealth Bank may determine the policy in relation to advances to be followed by banks and each bank shall follow the policy so determined.
That clause states specifically that th Commonwealth Bank is not entitled to interfere with advances by the private- hanks to individuals. If the right honorable gentleman looks at the report of the Royal Commission on Monetary and Banking Systems, T think he will be satisfied. I also invite the honorable member for New England to take his mind back to that commission’s operations. T am quite sum that some members of that commission approached its work firmly convinced that the banking system of Australia was all right. After examination, however, they became con- v inced of the room for great reform. The honorable member for New England was one of those who could take an impartial view at that time, but I am afraid that his association with politics has rather tainted that impartiality. That could not be said of me, because I had already been associated with politics. So he can say that I was influenced by political considerations I have always favored the reform of our banking system. Bitter experience during my membership of this Parliament prior to the setting up of the royal commission confirmed all my worst fears about the manner in which the banking system could operate. On the question of controlling the general policy in regard to advances, the commission recommended that the Commonwealth Bank should advise as to the general terms of advances, but should not interfere with the granting of particular advances. Not only should the bank itself have power to control the volume of credit, but also ii is essential in the economic interests of the country that it should have a voice in the distribution of the volume of credit.
– The only voice?
– I am dealing with the general policy of advances. The honorable member will recall that this matter was the subject of a great deal of consideration by the commission. As I said previously, certain private banks were encouraging people to engage in an avenue of primary production which later was shown to be completely uneconomical. This led to grave financial disaster and to a prejudice against certain forms of primary production. Isay frankly that the bank itself could not decline to take action to prevent extreme inflationary or deflationary tendencies in the economic life of the community. That is the general opinion of all those who have studied the principles of the control of banking. The honorable member for New England claimed that certain economists have been associated with the preparation of this legislation. I remind him that there were not many economists associated with the inquiry by the Royal Commission on Monetary and Banking Systems, yet that body came to the very clear decision that a great deal of reform was required in our banking structure.
– But the Government has not accepted those recommendations.
– They have been substantially accepted.
The Leader of the Opposition (Mr. Menzies) raised certain points in regard to clause 28. He spoke of the private banks being able to purchase securities, and suggested that under this legislation, they could not purchase shares on the stock exchange. The right honorable gentleman admitted himself that it was not the practice of the private banks to do that, and pointed out that the Industrial Finance Department of the Commonwealth Bank would have power to purchase shares. I dealt with this matter previously and indicated that the Industrial Finance Department was designed to assist certain classes of industry. The only point I wish to make now is this: The word “ securities “, I am informed, is not deemed to cover shares.
The Leader of the Opposition also spoke about the mobilization of foreign currency. This measure gives to the Commonwealth Bank power to deal with any excess accumulation overseas of trading bank funds. The Leader of the Australian Country party referred to the mobilization and exchange agreement which was in operation some time ago, but that agreement only gave the bank power to acquire exchange to service debts overseas. The Government does not regard that power as sufficient. It is generally recognized by the United Kingdom and by other important overseas countries, that power to control foreign exchange must be wider than that.
The Leader of the Opposition referred also to pastoral companies. This matter bears some relation to what was said by the Leader of the Australian Country party, namely, that there was no definitionof “ banking “ in the bill ;but neither is there a definition of “ banking” in the Commonwealth Constitution. It seems to me that the matter could only be decided finally by the High
Court itself. The insertion in the bill of a definition of “ banking “ would not prevent the High Court at a later date, from determining some other definition, if the matter were ever brought before that tribunal. The commission found that, quite a number of organizations were engaged partly in the business of banking. I recall that when the commission was meeting, in a building in Collins-street, Melbourne, a building society had on exhibition a notice inviting deposits of money, and offering a higher rate of interest than that then being paid by the trading banks. Organizations such as that arc actually engaged in some phases of the business of banking. They accept deposits and make advances, but of course they do not carry on general trading bank business. Some pastoral companies are in a similar position. It is quite a common thing for a pastoral company when it receives money on behalf of a client, to retain that money and to pay the client interest upon it. I do not suggest that these companies invite deposits from the public; but certainly they do accept deposits, and in that sense they take part in the business of banking. Licences are issued automatically to institutions engaged in general trading bank business, but the other organizations have to be investigated to ascertain whether or not they actually carry on any banking business. Then they may be either exempted, or given authority to carry on their activities under certain conditions. We had some experience of these institutions, largely in regard to interest rates, in the administration of the Banking Control Regulations. I refer to this matter because we on this side of the chamber believe - I have no doubt the belief is shared also by honorable members opposite who have overdrafts at their banks - that the rate of interest is a very important matter. Under the Banking Control Regulations the Commonwealth Bank, in consultation with myself as Treasurer, has done its best to ensure that interest rates shall be kept as low as possible without doing a grave injustice to anybody. Obviously, if interest rates were forced down suddenly, trading banks holding deposits for, say, twelve months or two years would suffer a pro- portionate drop in their deposits, .and, therefore, could sustain grievous financial harm. That has not been done. Carefully balanced judgment has been used in regard to this matter, and as soon as it is seen that a reduction of interest rates is giving financial benefit to the trading banks over a period, then automatically advance rates are forced down. That system has been of substantial advantage to people who have bank overdrafts or loans. It has affected the whole interest rate. Honorable members will agree that the interest charged by the banks has a very important bearing on interest rates on money lent by private organizations such as pastoral companies and trustee companies and, in fact, upon the whole interest structure of the community. For the sake of the primary producers themselves the honorable member for New England should be one of the first to support a policy which has brought interest rates down to their present level, and I hope, will force then even lower.
– The only point which I made was that pastoral finance companies were within the terms- of the bill. The Treasurer agrees with that?
– Yes, and other organizations as well. I have given reasons why these institutions have been included. I understand that the Leader of the Opposition raised this matter not as a criticism of this legislation, but as an inquiry as to whether certain organizations were actually covered by the bill.
– After an investigation has been made of these organizations, they can be either exempted or allowed to carry on under certain conditions.
– Does the bill cover cash order companies which accept deposits?
– The Leader of the Australian Country party referred to hire purchase companies and I thank him for his suggestion. I have received some very welcome suggestions from the Opposition during this debate. I am informed by the Government’s legal advisers that this measure was not intended to, and does not, cover hire purchase companies. The honorable member for New England now asks whether cash order companies are covered. I must confess that the Government did not have in mind such matters. The honorable member for Richmond expressed great sympathy with people who suffered in the last depression, but added that it could not have been rectified in Australia because it was a world-wide condition. This country’s financial policy, therefore, according to the honorable member, in common, with those of others, contributed to the world depression, which affected the price of primary products. In my reply to the second-reading debate on the Commonwealth Bank Bill, I stated that the control of monetary policy cannot alone cure the economic ills from which any country might suffer, but it is a most powerful economic weapon to prevent a deflation such as occurred in the years 1929-30. If other countries had adopted an enlightened economic and financial policy they could have played their part in preventing that depression. The Royal Commission on Monetary and Banking Systems made it perfectly clear that although it did not believe that monetary policy could have relieved or prevented the depression, a different form of monetary policy in 1929 could have done a great deal towards mitigating it. Does any honorable member deny that if some action such as the issue of treasury-bills had been taken in the earlier stages of the depression, instead of too late, there would have been a tremendous lessening of the depression, despite the prices obtained for our exports? The intention of the Government and the design of this bill, in conjunction with the Commonwealth Bank Bill is to prevent further depressions. No one who has given any thought to financial policy, or who had any association with the Premiers plan could help but admit that the policy followed in 1929 was wrong. The honorable member for Richmond stated that the government of that day did all that it could to prevent a’ depression, but it was hindered by eight men who were not responsible to any one in Australia.
– They protested against any depression of the currency.
– The legislation controlling the Commonwealth Bank and the trading banks prevented the seven governments of Australia from having any voice in determining financial and economic policy. They were beholden entirely to seven or eight members of the Commonwealth Bank Board, and who were never responsible to the people. I have recently been looking into the way in which they were appointed. They did not submit themselves for selection or election to any body except the Cabinet and the general managers and boards of private trading banks, whose business it is to make a profit, irrespective of what happens.
– That is not fair; they could not make a profit out of the depression.
– It has been said: somewhat facetiously - but the statement contains an element of truth - that people who lend money for the purpose of making profit are like a man who lendsan umbrella on a fine day but who asksfor its return as soon as the rain begins to fall. That is an excellent illustration,, and it is true of any money-lending institution. I am not charging the trading banks with dishonesty. It is thebusiness of a bank manager to makea profit for the share-holders, topreserve the solvency of his bank and maintain the confidence of his customers. No matter what the national interests might be those are his dutiesas a paid officer of the bank. He must protect the shareholders and also the depositors because he knows that if thereis a run on the bank and its funds areexhausted the whole institution will crash.
– Ought not the borrowersto be protected?
– The borrowers havenever been protected up to date.
– “Will the Government protect them now?
– In reply to the honorable member I would mention a discussion which took place concerning a company with which the Prime Ministerwas concerned. It was deemed to be> solvent and a private bank was prepared to lend money to it. The Commonwealth Bank, however, demanded a reduction of the overdraft that had been granted to the company-
– Should the Commonwealth Bank protect the borrowers ?
– The Commonwealth Bank ought not as a matter of general policy, when a deflationary process is in operation, be a party to forcing people whose assets are perfectly good to reduce their overdrafts. In the case of this company, as soon as the Commonwealth Bank insisted on reducing the overdraft, a fear complex arose among the private banks; the company’s credit was destroyed, it could not proceed with its business and its employees were discharged and thrown on the unemployment market. It is better that risks should be taken under a national financial system in the interests of the nation’s welfare than that thousands of people should starve or be maintained on a miserable pittance. It would be better to keep them engaged in useful and productive work. Honorable members may go on living in the dark ages of banking if they choose, but throughout the world there is a growing belief that the control of finance is safest when it is placed in the hands of the elected representatives of the people. Only recently General de Gaulle intimated that the national control of finance in France was a matter of prime importance requiring immediate attention. I do not care what reason is given - whether it is cupidity or stupidity - the financial system of this and other countries has been operated purely for the purpose of profit and with a total disregard of the interests of the masses.
Question put -
That the bill be now read a second time.
The House divided. (Mr. Speaker - Hon.j. S. Rosevear.)
Question so resolved in the affirmative.
Bill read a second time and committed pro forma; progress reported.
Message recommending appropriation reported.
In committee (Consideration of GovernorGeneral’s message) :
Motion (byMr. Lazzarini) agreed to-
That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to regulate banking, to make provision for the protection of the currency and of the public credit of the Commonwealth, and for other purposes.
Resolution reported and - by leave - adopted.
In committee (Consideration resumed) :
Clauses 1 to 3 agreed to.
Clause 4 (Definitions).
– In reply to remarks made by the Leader of the Australian Country party (Mr. Fadden) and the Leader of the Opposition .(Mr- Menzies) the Treasurer (Mr. Chifley) said that it would be impracticable to put in the bill a definition of “ banking “ because banking is not defined in the Constitution and that it would have to be settled by the High Court. I notice that a definition of life insurance “ appears in the Life I Insurance Bill which the Government has introduced. It would seem therefore that the Government can frame a definition when it desires to do so, but cannot frame <me when it does not desire to do so.
Clause agreed to.
Clauses 5 and 6 agreed to.
Clause 7 (Banking business not to be carried on without authority).
– This clause provides that a body corporate -shall not carry on any banking business in Australia unless it is in possession of an authority in writing, or, in effect, a licence. Clause 8 provides that the Treasurer may receive applications for licences and may grant or refuse them. So far as T can see the bill contains no provision whatsoever for an appeal against a decision of the Treasurer to refuse a licence. In my second-reading speech I referred to this point, and also brought to the notice of the Government the ‘position of the great, pastoral finance companies that operate in Australia. The Treasurer agreed that such companies are covered by this bill. The reason for that i3 to be found in the expression “ any banking business “. At one stage I was puzzled by the absence from the bill of a definition of “ banking business “, the point referred to hy the honorable member for Barker (Mr. Archie Cameron), but on reflection and on consideration of the English statutes dealing with the subject, I” can appreciate the Government’s difficulty. It would not be easy to define “ banking business “ A definition might narrow the matter far more than was anticipated, lt is quite clear, however, that the pastoral finance companies carry on some descriptions of banking business, such as, for example, the receipt of deposits, the provision of some kind of cheque service, or some other financial operations associated with banking. Provision is made in the bill that licences shall be issued as a right to the trading banks and that is proper, because they are very great concerns, and it is in the interests of the people that they should be allowed to continue their operations. Under this measure the pastoral finance companies, however, have no right to a licence. If the Treasurer were to say, tomorrow, to any one of half a dozen pastoral finance companies in Australia, which have made advances of perhaps £30,000,000 to our rural producers, “3 decline to grant you a licence “, that company would have no right of appeal against his decision. When the Parliament gives to the Executive of the day, as it is doing in this bill, the power to grant or refuse licences, or authority to carry on business which, without such licence, could not be carried on, provision should bc made also for an appeal against the refusal of a licence, particularly as the refusal might be quite arbitrary, for no rules governing the granting of licences are being laid down. Clause 8 makes it quite clear that a body which does not possess a licence may not continue thai part of its operations for which a licence is necessary. I am sure that some of my colleagues of the Australian Country party could not regard the refusal of a licence to the pastoral finance companies as of assistance to the man on the land
Mr. FADDEN (Darling DownsLeader of the Australian Country party) l~10.10]. - I agree entirely with the remarks of the Leader of the Opposition (Mr. Menzies). For that reason, I intend to move for the addition to clause 8 of a new sub-clause, to read - (10.) Where an authority under this section is refused, an appeal against such refusal may be made to the full court of the High Court, constituted by not less than three Justices.
The Leader of the Opposition has given ample reason for the establishment of a right of appeal. The ‘bill sets out the class of institution which will automatically be licensed ; but the Treasurer (Mr. Chifley) has also confirmed the idea which both the Leader of the Opposition and I advanced at the second-reading stage, thai pastoral companies and similar institutions which carry on a form of banking. although not general banking, will come within the scope of thebill but will not be automatically granted a licence. It will be remembered that I drew attention to the report made by the Payne Commission in 1939, after it bad conducted an investigation of the Queensland wool industry. The relevant portion of that report iswell worth repeating. In paragraph 184, it stated -
The wool brokers also act as bankers for their grazier clients. Liberal financial accommodation is granted on the security of holdings and current advances are made on stock mortgages and wool liens. The wool brokers then share with the banks the financing of the Queensland wool industry.
Under this measure, those concerns will have to apply for authority, and the Treasurer willbe empowered to grant it cither conditionally or unconditionally, or arbitrarily to refuse it. The democratic procedure would be to have the right of appeal.
. With all due respect to the Acting Prime Minister (Mr. Chifley), the Leader of the Opposition (Mr. Menzies) and the Leader of the Australian Country party (Mr. Fadden), it cannot be claimed that all pastoral companies conduct banking operations. Certain of them do not accept, and never have accepted, money on deposit. They make loans, either out of their own funds or from money borrowed from the banks. Wharton’s Law Dictionary defines “ banker “ as -
A person who receives the money of his customers on deposit and pays it out again in a manner agreed upon.
The definition in the Internal Revenue Act of the United States of America is -
Every person, firm or company, having a place of business where credits are opened by the deposit or collection of money or currency. Subject to be remitted or paid upon draft, cheque, or order, or where money is advanced or loaned upon stocks, bonds, bullion, bills of exchange or promissory notes, or where stocks, bonds, bullion, bills of exchange or promissory notes are received for discount or for sale.
The Oxford English Dictionary has this definition of “ bank “ -
The establishment for the custody of money received from,or on behalf of, its customers. Its essential duty is the payment of the orders given on it by the customers.
The implication of those definitions seems to be, that a bank is an institution which receives money on deposit. Some pastoral firms in Australia at one time gave cheque-drawing facilities to their clients, such as are given, by a bank, but the evidence given before the Royal Commisson on Monetary and Banking Systems made it plain that as far back as 1936-37 such services by pastoral houses were rapidly disappearing. The Minister for Commerce and Agriculture (Mr. Scully) will agree that probably not more than two or three pastoral firms in New South Wales now follow the practice.
– But even though there are only two, surely the point is a good one?
– The point is a very good one. I am merely putting the other point, that it would be entirely wrong to claim that certain pastoral firms transact banking business. They should not be prevented from carrying on their legitimate business, and they should not be forced to apply for a licence. The point made by the Leader of the Opposition, and supported by the Leader of the Australian Country party, applies only to certain houses which may be doing a form of banking business and may desire to have a licence. The insertion of a provision protecting those companies that I have in mind, from being penalized by being forced to obtain a licence, is both necessary and desirable.
.- With due deference to the submission of the Leader of the Opposition (Mr. Menzies), I submit that there is a full right of appeal. The authority for the granting of the licence conferring the right to carry on banking is the GovernorGeneral, who is the highest authority in the land, higher even than the courts. There will be nothing to prevent any institution from re-applying from time to time, submitting fresh facts and adducing additional reasons for the granting of the authority. That would be in the nature of an appeal to the GovernorGeneral. It is not within the province of the courts, particularly the High Court, to deal with the issue of licences giving authority to carry on business. The province of the courts is to interpret the law, and to deal with disputes between litigants. If it were to grant licences, that would be an entirely new procedure.
– This would be au appeal against an arbitrary withholding of a licence.-
– The GovernorGeneral will have full authority, and will be guided by the government of the day, which is charged with the carrying out of policy, and will deal with any situation according to the circumstances. There is no reason why authority should be vested in either the High Court or any other outside body.
– I agree with the honorable member for New England (Mr. Abbott) ; but his point might be investigated a little further. By passing clause 6, the committee has already agreed that, after the commencement of this act, only bodies “corporate may engage in banking business. If the Minister assisting the Treasurer (Mr. Lazzarini) has a look round the capital cities, he will find that banking business of some kind is carried on by bodies that are other than corporate, in some instances by persons. I am very doubtful whether the Government is seised of the full implication of what it is enacting. Maybe it is, and does not care. From its point of view, the arguments of the honorable member for Reid (Mr. Morgan) may be excellent, namely, that appeal may be made to the Governor-General, who has already refused to grant a licence. It should not go down in the records of this Parliament that the Governor-General handles such matters; they are handled by the Ministers who advise him, and he merely holds a courtesy position in respect of them. The decision rests with the Treasurer, and is dictated by the seventy-odd Labour members of this Parliament, of whom the honorable member for Reid is one.
The knowledge of many of my friends opposite in regard to banking and pastoral matters is somewhat meagre. Matters such as’ this should not be passed over lightly. The whole question is, what are the rights of certain people? Businesses that have been conducted for a long time are involved. If the argument of the honorable member for Reid is accepted, it stands to reason that a business may be closed down for lack of a licence and its owner will have tq pull political strings in order that the Treasurer may agree to, and the GovernorGeneral ultimately issue, a licence. But what is to become of the customers of such a firm while this gentle process of persuasion is proceeding to a successful or some other conclusion? The Government has not given the matter very much thought. This is more a rough than a ready way of achieving a political objective. The real objective of the Government, unstated in the clause, is to force banking of all forms into the Commonwealth Bank. If, by acts of misjudgment, certain persons and firms are prevented from carrying on banking business, such conduct will not be likely to endear the Commonwealth Bank to them. The Treasurer may think that immediately a business is closed down, the persons involved will rush off at great speed to lay their worries at the door of the Commonwealth Bank. Under this proposal they are much more likely to go in another direction. Little consideration has been given to this matter, unless we proceed on the assumption that the Government intends to close down their business.
Mr. HUTCHINSON (Deakin) [10.21 J. - Clause 7 provides that a body corporate shall not, at any time after the expiration of six months from the commencement of this part of the bill, carry on any banking business in Australia, unless it is in possession of an authority in writing granted by the Governor-General to carry on hanking business. For ea. day during which the. contravention continues the penalty is £5,000. Paragraph 403 of the report of the Royal Commission on Monetary and Banking Systems, states -
Pastoral finance companies borrow on overdraft at certain times during the year when their customers’ demands are at the maximum. They do not usually seek deposits from the public but accept them from their ow-n customers.
Paragraph 104 of the report reads as follows : -
Short-term or seasonal advances are made usually to pastoralists or farmers who will use the services of the companies. These advances are made sometime before the (induce is sold, and are generally used by the primary producer as working capital.
The total amount of seasonal advances outstanding varies considerably during the year, usually reaching a peak in the third quarter, and falling to the lowest point during the first three months of the year. [ point out that the third quarter is. the period of the year when the producers are put to the maximum expense, because the shearing then takes place. In the last two or three years Australia has passed through a period of unprecedented drought, and in the months immediately ahead the primary producers will need assistance from banks, pastoral companies, or stock and station agents to enable them to restock their properties. Yet this clause states that a body corporate, unless it has an authority in writing granted by the Governor-General, shall not at any time after the expiration of six months from the commencement of this legislation carry on any banking business in this country. If a stock and station agent is to be regarded as carrying on a banking business it will be necessary for him to apply for authority to do so. If a pastoral company or a stock and station agent felt doubtful as to whether the necessary authority would be granted, the interests of many primary producers would be seriously prejudiced. That uncertainty cannot be tolerated, because the next few months will be all-important to’ the producers. The uncertainty will be increased by the fact that a penalty of £5,000 is to be provided for each day during which the contravention continues. The report of the royal commission stated that in 1936 the total of outstanding loans made by pastoral companies in Australia was not less than £25,232,000. That shows how great a part the pastoral companies, and particularly the large wool-broking firms, play in the financing of the wool industry. Oversea* businessmen who have visited Australia have been surprised at the readiness of these companies to grant financial assistance to the producers. It is possible for a client, whose standing in the community has been investigated by a pastoral company, to obtain finance running into an amount exceeding the value of his wool-clip, without even being asked to furnish his signature to a document. As the Treasurer is now present, I shall re-state some of my points. Because of the severe drought conditions which this country has experienced during the last two or three years there will be many claims on pastoral companies and stock and station agents for financial assistance. They will be dealt with according to the standing of the applicants. Undoubtedly, these companies will be called upon to provide a great deal of finance in the near future, but if they are uncertain as to whether they will be granted an authority under this clause the consequences may be serious indeed. I hope that the Minister will explain the meaning of this most important clause and particularly that he will say whether or not it includes stock and station agents.
– It will depend on the kind of business in which they are engaged. If they are engaged in banking business, the clause will apply to them.
– Should they advance money on bills, will the clause cover them ?
– If they are corporate bodies the clause unquestionably covers them.
– I have in mind particularly wool-broking companies which make advances on wool or stock - securities on which the trading banks do not usually make advances. If the clause refers to them they may have to wait for six months before they can get an authority to carry on an important phase of their business. Any uncertainty as to their obtaining an authority might have serious results.
– That matter is controlled by the Banking Control Regulations. These people know exactly where they stand.
– Many of those regulations have been incorporated in this bill and will have the effect of law when this bill is passed.
– Some matters covered by regulations will not be covered by the bill.
– Is it not a fact that this legislation will supersede any of those regulations?
– That is a legal point.
– I should say that it is a matter of common sense. I have asked these questions particularly because of the need to restock holdings after the disastrous drought in which 20,000,000 sheep, as well as large numbers of other stock, have been lost.
The CHAIRMAN (Mr. Riordan).The honorable member’s time has expired.
. -I hope that the Treasurer (Mr. Chifley) will accept the suggestions of the Leader of the Opposition (Mr. Menzies) and the Leader of the Australian Country party (Mr. Fadden).
– Their remarks related to the next clause.
– The two clauses mustbe read together. Should any company or body corporate carry on any banking business without having first obtained authority to do so it will be liable to a penalty of £5,000 for each day during which the contravention continues.
– It will have six months in which to apply for an authority.
– As the honorable member for New England (Mr. Abbott) pointed out, there may be companies which will not desire an authority. Should they not apply for an authority, or should they be refused an authority, and afterwards continue in business, they will be subject to an exceedingly heavy penalty. Pastoral finance companies are responsible for the financing of numerous graziers and farmers; the total amount involved runs into many millions of pounds. These companies form an important part of our financial system, and should any of them be refused an authority considerable dislocation, amounting even to chaos, may result. Those who will suffer most will be the primary producers who do business with them, because they will be compelled to seek financial accommodation elsewhere. In that event, they will be able to turn only to the Commonwealth Bank, because under other provisions of this measure the private banks will be prevented from accepting additional business. The Commonwealth Bank, therefore, will be in a position arbitrarily to refuse to make advances to them. I point out that the Governor-General may not only refuse to grant an authority but he may also at any time revoke an authority already given, apparently without reason. In practice, that means the Treasurer will have that power. I submit that this clause is a very powerful one. There should be some right of appeal, either by a bank or by an institution. The Minister assisting the Treasurer (Mr. Lazzarini) will see what I am referring to if he examines clause 8, which should be read in conjunction with clause 7.
– It should not!
– It should. Clause 8 relates to the power of the GovernorGeneral to revoke the authority of any body corporate. That means that the Treasurer of the day may wipe out of existence overnight any banking concern without right of appeal. People have the right to appeal to as high an authority as the High Court against the decisions of the Taxation Department, of which the Treasurer is the political head, but banks or corporations have no right of appeal against an authority being refused or revoked and are completely at the mercy of the political head of the Treasury. Under any system of fair play or any system which has respect for the institutions which we have set up to give all’ sections of the community service there mustbe a tribunal of some sort to which they may appeal. A special judicial committee set up to handle such appeals may solve the problem, but the recognized tribunal to which such appeals should go is undoubtedly the High Court. A licence could be revoked because of political animus of the Treasurer against a particular bank or company and it would simply have to take it.
– The power to revoke applies only in cases where banking business has ceased.
– The authority can be revoked conditionally or unconditionally. I hope the Treasurer will accept the amendment foreshadowed by the Leader of the Australian Country party. It in no way cuts across the political principles of the Government if its intention is to give a reasonable degree of justice to all parties concerned.
– The honorable member for Deakin (Mr. Hutchinson) has certainly raised a point of the greatest importance (0 Australia and the institutions that have been so prominent in promoting the development of the pastoral industry. Without their aid, pastoralists would not have been able to contend with the vicissitudes of life in the way of drought and other setbacks. We need to have some definition of “ banking “. We know what banks have to do under this bill, but are companies, which make advances to pastoralists, banks? We have not yet received from the Treasurer (Mr. Chifley) a definition of “ banking “. I think honorable members will agree that those companies have carried pastoralists for years, specially in periods of drought. If -they are not ito receive authority to carry on, they may have to go out of business and those to whom they have made advances without any security will also be in difficulty. There is nothing in this bill to ensure that such firms shall receive licences within six months. I know people whose applications to build even a verandah have been held up for nine months.
– Order ! That has nothing to do with this clause.
– I appeal to the Treasurer to make it clear whether the institutions mentioned come within the definition of those carrying on “ banking business If they are to be treated as banks, and a permit is not to be issued to them, a great injustice will be done not only to them but also to the primary producers in the far outback who have suffered severely in this drought and will have to be carried by the companies with further advances, also unsecured, in the hope that eventually they will get back what they have loaned.
.- As the Treasurer (Mr. Chifley) is present, I take leave to put the position very briefly before him. Clause 7 deals with the licensing of the banking businesses and uses the expression “ any banking business “. As the right honorable gentleman will recall, in clause 10 a distinction is made in terms between a person who desires to carry on “ any banking business and a person who desires to carry on “ the general business of banking “ in Australia, and it is for that reason that the right honorable gentleman has already agreed that clause 1 does cover such bodies corporate as pastoral finance companies, which carry on some banking business. The point which has been raised - and in relation to it the Leader of the Australian Country party (Mr. Fadden) has foreshadowed an amendment to clause 8 - is this: should there not be an appeal against the refusal of the Treasurer to grant a licence to some company placed in that position? Trading banks get a licence as a right. Companies like pastoral companies will not get, a licence as a right. It may be refused, or, having been granted, it may be revoked, .and there is no provision for appeal. The honorable member for Reid (Mr. Morgan) took the view that to provide for some appeal to the High Court in a matter of this kind would be quite unprecedented, but there again I remind the Treasurer that clause 53 provides that, when a trading bank has been convicted of a breach of this proposed statute, the High Court, consisting of not less than three Justices, is to have the right to determine whether the Commonwealth Bank is to assume control of the business of that bank, so that the procedure of having some form of appeal to the High Court constituted of at least three justices is already recognized in a rather similar clause later in the bill.
– Yes, that is where 1 picked it up.
– As the honorable member for Richmond has said, this is not a matter which touches the real principles of this legislation. No matter of real Government policy is involved. It is merely a question of whether a business, or some concern which may have very far-reaching operations, should depend upon a single administrative discretion. I suggest that the Treasurer report progress, and give some consideration to the desirability of providing some kind of appeal. If he comes to the conclusion that an appeal is desirable, he will have ample opportunity between now and when the bill comes before the Senate to amend the legislation accordingly.
– I cannot agree to a postponement of the clause. The fears expressed by honorable members opposite are quite unfounded. However, I am prepared to examine certain points that havebeen raised by the Leader of the Opposition (Mr. Menzies) before the bill goes to the Senate.
Under the Banking Control Regulations, pastoral companies have not been licensed. The Government believes that there should be some power of direction over those institutions. Generally speaking, they could I suppose be covered by licences but that has not been the practice provided that the companies concerned agreed to some general principle in regard to conditions. “We must keep in mind the general policy in regard to advances. It is indicated in the existing regulations, many of which will be replaced by this legislation. There has not been any complaint from the pastoral companies about the general administrative control.
– But this bill will operate in peace-time, after the operation of the regulations has ceased.
-I quite understand that. I have already made the point that in both peace and war the general policy in regard to advances should be a matter for direction and supervision by the Commonwealth Bank. From an administrative point of view the position in peace-time will be the same under this legislation as exists now. These companies will be exempt from licences under certain conditions. Interest rates can be controlled under another section of the banking legislation. It would not be fair to impose restrictions upon banks conducting general trading business and to exempt other institutions engaged partly in banking business. Honorable members opposite have accused the Government of not being solicitous of the welfare of the trading banks, but here is one instance in which it is protecting their interests.
I shall examine the points that have been raised by the Leader of the Opposition before this measure reaches the Senate, although I am not hopeful that any change will be made. I repeat that, in my opinion, the fears expressed by honorable members opposite are quite unfounded.
– When speaking on the second reading of this measure I asked whether wool-broking firms and hire purchase organizations would come within the scope of clause 7. I pointed out that certain wool-broking institutions which are now carrying on banking business are included, whereas hire purchase organizations are not. On my interpretation of the clause, I cannot see how one can be included and the other excluded. Clause 7 provides -
Subject to this Act, a body corporate shall not, at any time after the expiration ofsix months from the commencement of this Part. carry on any banking business in Australia unless the body corporate is in possession of an authority in writing granted by the Governor-General under this Part to carry on banking business.
The discounting of promissory notes is certainly part and parcel of banking business, and if the obvious interpretation of the clause be correct, hire purchase and cash-order companies would come within the scope of the provisions as being bodies carrying on banking business. They do not carry on general banking business, but they certainly discharge other functions which are within the general functions of a banking business. I cannot see why hire-purchase companies which discount promissory notes are not included.
– Does the honorable member wish them included?
– That is not the point. The people of this country have the right to know which organizations are included and which are excluded from the provisions of this measure. The merits or demerits of the inclusion or exclusion of certain organizations is not the point at issue.
– I informed the right honorable gentleman that in tie framing of the legislation it was not intended to include those organizations, andI thanked him for his suggestion.
– The Acting Prime Minister (Mr. Chifley) has said that this clause applies to pastoral companies. I have already indicated that there are different type? of pastoral firms. Some of them do not exercise any of the functions of a bank.
I do not know whether or not the Treasurer intends that these organizations should be licensed. Then, of course, there are stock and station agents, many of whom accept money on deposit, and finance their clients. Clause7 provides -
Subject to this act, a person other than a body corporate shall not at any time after the expiration of six months from the commencement of this part, carry on any banking business in Australia. . . .
Pastoral companies are rendering a considerable service to many primary producers in this country. If they are to be prevented from carrying on as at present, quite a lot of pastoral activity in the Commonwealth will he tied up. Then we come to the question whether an organization discounting promissory notes, &c, is a banking institution and will have to be licensed under this legislation.For instance, importers buy 60- day wool bills on sight on London, at a small rate of discount. Are these people to be prevented from carrying on their business? In my opinion, licensing should apply only to institutions giving a fulltime banking service. There seems to he no end to the organizations which may be included if that principle is departed from. I am not raising these matters as bogies. They need investigating, hut I do not think the Government has ever considered them.
– Both the honorable member and I took a great interest in the pastoral companies years ago.
– That is so, but since that time we have learned a good many things. The provision is so inflexible that in the absence of a definition of “ banking “ a considerable disservice can be rendered to people engaged in various types of industry.
The following papers were pre sented : -
Air Force Act - Regulations - Statutory Rules 1945, Nos. 95, 96.
Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - 1945 - No. 39 - Common Rule re Sick Leave.
Customs Act - Customs ProclamationsNos. 632, 633.
Defence Act - Regulations - Statutory Rules 1945, No. 94.
Defence Act and Naval Defence Act - Regulations - Statutory Rules 1945, No. 93.
National Security Act -
National Security (General) Regulations - Orders -
Prohibited places (2).
Prohibiting work on land, and use of land.
Taking possession of land, &c. (22).
Use of land (2).
Regulations - Statutory Rules 1945, No. 91.
House adjourned at 11.2 p.m.
The following answers to questions were circulated: -
n asked the Minister representing the Minister for Supply and Shipping, upon notice -
– The Minister for Supply and Shipping has supplied the following answers: - 1 and 2. On the 1st June I advised the honorable member of the result of the inquiries made through the Royal Australian Air Force following his representations concerning stocks of high octane petrol held by that service in remote areas. I am now able to advise that the Army has no surplus stocks of petrol stored for defence purposes in remote areas. The stocks of petrol held by the Army have been reduced progressively from time to time in line with the improved war position and this process will continue.
t. - On the 21st June, the honorable member for Adelaide (Mr. Chambers) asked the Minister for Repatriation, upon notice -
Compilation of the information asked for by the honorable member will necessitate a close review of the records of the Parliament and the War Service Homes Commission. The details will be obtained and furnished as soon as possible.
n asked the Minister for Commerce and Agriculture, upon notice -
Will he supply a statement explaining the surcharge of a farthing per lb. which has been imposed by the Meat Controller on purchases by wholesale buyers of pig meat?
– The surcharge of one farthing per lb., imposed by the Commonwealth Government on pigs acquired from licensees under the pig plan and released back to them for distribution and consumption through existing trade channels, covers costs of administration of the plan together with freezing charges, storage, freight and other expenses incurred when excess supplies of pig meats available in the peak production periods of the year are held in cold storage for manufacture during periods of low production. The surcharge is not borne by licensees under the plan, as provision for it has been made in the prices allowed to them for the disposal of the processed or finished product to the ultimate consumer.
Mr. - Fadden asked the Minister for Commerce and Agriculture, upon notice -
How many claims were lodged with the committee appointed to investigate potato losses in Queensland in 1042 attributable to the ban on railing potatoes?
What amount of money was involved in these claims?
How many claims were admitted?
What compensation, if any, was paid in respect of such claims?
What is the reason for the lengthy delay in advising claimants of the decision of the investigating committee?
y. - The answers to the honorable member’s questions are as follows: -
asked the Acting Prime Minister,’ upon notice -
In view of the great international activity in securing leases of oil-bearing country throughout the world, will the Government consider acquiring by lease or otherwise the mineral rights on oil-bearing islands to the north of Australia in the interests of future security of development, industrially and otherwise, in this country?
y. - The Government is. well aware of the importance to Australia of the availability of supplies of oil derived from nearby islands, and the honorable member’s views will be borne in mind.
t asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : -
n asked the Minister representing the Minister for the Interior, upon notice -
Upon what terms and conditions are scholarships in South Australian secondary schools awarded to children of the Northern Territory ?
– The Minister for the Interior has supplied the following answer : -
Up till the end of the 1943 school year, the Commonwealth Government made available a number of scholarships each year to pupils of Northern Territory schools which at the time provided education to the primary stan dard only. In the case of pupils from the southern end of the Territory, these scholarships provided for three years’ tuition at any approved secondary school in South Australia with eligibility for an extension for a further two years if an approved pass in the Intermediate examination of the Adelaide University is gained during the currency of the initial period.
The scholarship provided for one first-class return rail fare between Adelaide and Alice Springs annually, a sustenance allowance at the rate of £50 per annum, a book allowance not exceeding £12 per annum and a school fees allowance not exceeding £12 per annum.
Commencing this school year, the Territory schools arc staffed and controlled by the Education Department of South Australia. Post-primary education to the Intermediate standard is available in the Territory to all pupils of Northern Territory schools.
A progress allowance scheme, similar to that in operation in South Australia, has been approved for Northern Territory pupils. This will replace the scholarship system. The concessions payable under the new scheme are book allowance £3 per annum, boarding allowance not exceeding £40 per annum, and actual travelling costs up to but not exceeding £25 per annum.
It is proposed to consider the granting of bursaries to enable Territory pupils to carry on to the Leaving Certificate and university standards.
Department of Post-war Reconstruction
n. - On the 7th March, the right honorable member for Darling Downs (Mr. Fadden) asked the following questions, upon notice -
The answers are as follows, as at the 19th February, 1945 : -
All those officers possess essential qualifications and considerable experience in the work which they are required to perforin.
y. - On the 22nd November, 1944, the honorable member for Deakin (Mr. Hutchinson) asked the following questions, upon notice: -
The answers to the honorable member’s questions are as follows: -
The work of public relations officers of this department includes the distribution of departmental publications of a general nature and in particular the distribution of material to and the general organization of discussion groups. There are already upwards of 10,000 of these groups operating throughout Australia. Day-to-day inquiries from organizations and individuals concerning the problems of reconstruction can only be handled efficiently and with satisfaction to the public if there is a full-time officer in each capital city with a general and detailed knowledge of the work of the department.
n asked the Minister for Commerce and Agriculture, upon notice -
– The answers to the honorable member’s questions are as follows : -
t asked1 the Minister for Commerce and Agriculture, upon notice -
– The answers to the honorable member’s questions are as follows : -
n asked the Minister for
Commerce and Agriculture, upon notice -
– The answers to the right honorable member’s questions are as follows : -
The greater portion of the produce comprising (b) and (c) above was supplied to the services.
Commonwealth Disposals Commission : Bren Gun Carriers; Surplus Army Vehicles.
y. - On the 22nd June the right honorable member for Darling Downs (Mr. Fadden) referred to the sale of Bren gun carriers by the Commonwealth Disposals Commission at Bandiana on the Victorian border. He asked whether the Minister for Supply and Shipping would arrange for a certain number of carriers to be made available in each State.
This matter has received the attention of the Minister for Supply and Shipping, who has supplied the following answers : -
Bren gun carriers will be available within the next few weeks from the Commonwealth Disposals Commission’s depots at Bandiana on the New South Wales-Victorian border, and at Brisbane and Charters Towers in Queensland. Demands from New South Wales and Victoria can be met by the depot at Bandiana, whilst the depots at Brisbane and Charters Towers can deal with Queensland demands. It is hoped to make an announcement shortly regarding the availability of carriers in South Australia,. Western Australia and Tasmania.
– On the 22nd June the honorable member forWilmot (Mr. Guy) asked whether the Minister for Supply and Shipping would make arrangements for further supplies of surplus Army vehicles which are being disposed of by the Commonwealth Disposals Commission to be made available in Tasmania.
The Minister for Supply and Shipping has examined this position and has supplied the following answer : -
Up to date 154 vehicles have been declared surplus in Tasmania and 131 of these have already been sold, the majority having been sold to primary producers. In addition to these, ten 3-ton trucks released in Victoria have been sold to essential users in Tasmania. The Commonwealth Disposals Commission is continually reviewing the question of distribution in order to ensure that all parts of the Commonwealth receive a fair share of the vehicles available. If additional stocks do not become available in Tasmania arrangements will be made to release additional supplies from the mainland.
Taxation : Pay-as-you-Earn System.
n asked the Treasurer, upon notice -
Will he have an immediate review made of the pay-as-you-earn provisions of the income tax law, to ascertain whether producers in drought-stricken areas are being inequitably treated through being compelled to meet an unduly high provisional tax based, not on present, income, but on that, for the previous year? In cases where it is obvious that, because of drought conditions, a large proportion of the provisional tax will 1 I refundable, will the Treasurer, in consultation with the Commissioner of Taxation, endeavour to devise ft formula whereby such provisional tax will be reduced by the appropriate amount of the ultimate refund?
– In accordance with my promise to the right honorable member, I. have inquired into the position, and [ am of the opinion that an amendment of the provisions of the Income Tax Assessment Act relating to the imposition of provisional tax is not. necessary. I point out that taxpayers carrying on business are in practically the same position this year as would have applied if the old system of taxation had continued to operate. Under the old system, a taxpayer would have been required to pay tax this year on income derived by him during the year ended the 30th June, 1944. Under the present system, provisional tax for this year is an amount equal to the tax that would have been imposed on the taxable income of the year ended the 30th June, 1944. The main difference between the two systems is, of course, that if a taxpayer suffers a loss this year, the provisional tax paid by him will be refunded next year. This would not Iki ve been the position under the old system. The Commissioner of Taxation has power under the act to gram extensions of time for payment of tax or to accept payment by instalments if he is satisfied that the circumstances of tho case justify such action. The Commissioner has instructed his deputies to defer payment of the part or whole of the provisional tax payable for the year ended the 30th June, 1945, where primary producers establish that their taxable incomes for that year will be substantially less than their taxable incomes for the preceding year, provided that representations are made by the taxpayers concerned and their financial circumstances are such that deferment of payment is warranted.
n.- -On the 30th May, the honorable member for Wentworth (Mr. Harrison) asked a question, upon notice, concerning the amount of recreation leave granted to members of the 7th Brigade, as compared with an Australian Imperial Force brigade.
An interim reply was furnished on the 5th June. The Acting Minister for the Army has now supplied the following additional answer: -
The comparison of the leave position of the 7th Australian Infantry Brigade and an original Australian Imperial Force brigade serving in a similar area is as follows: -
The leave position in the original Australian Imperial Force brigade referred to is the more favorable, because many members were granted their total period of accrued recreation leave when the brigade was last on the mainland as a complete unit.
The normal procedure is to grant a maximum of 24 days’ leave to members granted leave under the quota system, by which a certain percentage of a unit may be on leave at a time, but when a whole unit is relieved and returned to the mainland of Australia this maximum is not normally adhered to. The procedure adopted for the 7th Australian in- fantry Brigade will depend on whether complete units arc relieved and returned to the mainland for leave and also on the operational situation at the time the leave is granted.
The three infantry battalions of the 7th Australian Brigade are Militia, although approximately 37 per cent. of the members are Australian Imperial Force.
n asked the Minister in charge of the Council for Scientific and Industrial Research, upon notice -
– The answers to the right honorable members questions are as follows : -
n asked the Minister for Post-war Reconstruction, upon notice -
– The answers to the honorable member’s questions are as follows : -
Victoria. -Burge Brothers; Frank Fitz- simmons; Terang and District Co-operative Society; Glazebrooks Limited; Bedggoods Limited;Myrl Shoes Limited; S. A. Benwell and Company; Ogden Industries Limited; C. E. Miller and Company;Rola Limited; Kraft Walker Cheese Limited; William Lawrence (Globe Dye Works) Limited;. Prestige Limited; Moulded Products Limited; C. and N. Myers and Company; Melbourne and Metropolitan Tramways Board; State Rivers and Water Supply; MetropolitanGas Company; Phoenix Biscuit Company; W. and P. Smith; Grant and Wilson; Daylesford Woollen Mills; James Munro; and Metropolitan Gas Company. - Twenty-four projects.
New South Wales. - Australian Durex Pro ducts: Grafton Co-operative Dairy Company; Electric Lamp Company ; Commonwealth Steel Company; Edward Bentley and Company; Esquire Proprietary Limited; Qantas Airways Limited; Newcastle Abattoirs; D. and W. Murray : Australian Glass Manufacturers ; W. T. Carmichael and Company; Egg Marketing Board; Berlei Limited; Industrial Equipment; Nestles Anglo Swiss Milk Company Smithtown; W. Anglissand Company; Egg Marketing Board; Shell Company of Australia; Qantas Airways Limited; Wingham Investment Company; Conkey Brothers; Super Insulated Products; Nestles Anglo Swiss Company; Irwin and Sheehan; Holbrooks (Australia) Limited; Tancred Brothers; and Standard Telephones and Cables. - Twenty seven projects.
Queensland. - James Whitelaw; Emerald Creek Tobacco Company; Wunderlich Limited, Gaythorne; and Walkers Limited. - Four projects.
South Australia. - Metropolitan and Export Abattoirs Limited; Australian Cotton Textiles;’ Adelaide Hope and Nail Company ; Gumeracha Fruit-growers Association; Alma Shoes Limited ; O. Heyson and Company ; and Barmera Co-operative Packing Company. - Seven projects.
Western Australia. - Australian Iron ami Steel Company; Shell Oil Company of Australia Limited; Paterson and Company; G. Wood and Son; Plaistowe and Company; Fremantle Gas and Coke Company; and Hume Steel Company. - Seven projects.
Tasmania. - Electrolytic Zinc Company ; L. C. W. Smith; Fish Canneries Limited; Circular Head Marine Board; James Bulman; and H. Jones and Company.- Six projects.
Cite as: Australia, House of Representatives, Debates, 26 June 1945, viewed 22 October 2017, <http://historichansard.net/hofreps/1945/19450626_reps_17_183/>.